Q3 2023 One Stop Systems Inc Earnings Call
[music].
Yes.
Good day, and thank you for joining us today to discuss one stop systems' financial results for the third quarter ended September 30th 2023.
With us today are the company's President and Chief Executive Officer, Mike No and its finance and Chief Financial Officer, John Morrison. Following their remarks, we will open the call to your questions. Before we conclude this call I will provide some important information regarding the forward looking statements made by management during this call.
I would like to remind everyone that the call will be recorded and made available for replay in the investors section of the company's website now I would like to turn the call over to O S. S President and CEO, Mike knows Sir. Please go ahead.
Thank you Morgan and good afternoon, everyone.
Excessively completed my first full quarter as CEO and I am pleased with the building momentum and confidence in the rugged edge processing market, we are well positioned for future growth.
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Our engagement with customers and participation in global trade shows over this past quarter reaffirmed our unique position in the robust growth markets driven by artificial intelligence and sensor fusion, particularly in rugged high performance compute demand at the edge.
In many instances OSF has recognized that an expert in these markets and in fact in October I participated on a panel at the aerospace event in Washington, DC regarding the technical demand for high performance compute for artificial intelligence applications in commercial and defense markets.
In Q3, we secured several significant wins across commercial and defense markets. These successes align with our strategy to broaden the number of prime and customer contract increase our presence on more platform and pursue multiyear contracts that can boost our pipeline and future revenue.
Key wins include a liquid cooled server solution for sonar processing for a foreign Navy submarine class.
Follow on wind in hardware by for an additional storage system product for the P. Eight.
The new contract with an existing defense prime contractor for a new classified platform.
Our commercial order and when to the dynamic racing industry encompassing our product at this new Oss customer.
The award from the Foreign Navy submarine program is especially noteworthy.
How it exemplifies our key objectives, we successfully established a new military customer a new defense Prime and a new international customer while securing a position on a new platform. We believe this will lead to a multiyear product and support contract contract commencing as early as 2020 for.
This sale of cultivated captured and close by our present sales team with support from our Oss team validating president as a channel to market for Oss product.
In addition to the key word noted our teams are actively engaged in multiple proposal on program pursuits.
We're currently responding to an exclusive opportunity to design develop produce and support a rugged edge compute solution for the commercial aerospace market. This effort would add a new product or an existing customer and establish a multi year contract.
OSF has engaged in two potential exclusive opportunities in the commercial data center market with our latest PCI Express Gen five four U P.
And internally developed UBM software. These efforts would broaden our customer base and provide for a multi year hardware and software demand opportunity.
The team is working to close a large competitive opportunity for design development production and support for our rugged compute and storage system in autonomous trucking market that would expand our platform position in the market and lead to another multi year demand opportunity.
We're responding to a competitive opportunity for our rugged edge processing solution for our military classified program. This capture involved the new prime a new platform and provides a multiyear production and support opportunity.
Also on the defense side, we are well engaged with potential sole source opportunity for rugged edge processing and storage for a multi vehicle platform support activity. This opportunity would be with the new organization within a branch of the U S Armed forces.
These represented sample of increased activity in pursuit. Our teams are diligently working for competitive reasons I havent provided specific technical information or contract value.
Looking ahead, we remain committed to expanding our efforts to secure new <unk>, new prime contractor vehicle platform and multi year contracts, both domestically and internationally.
Our broad market activity is already increasing the number of customer engagements and request for information and proposals bolstering our confidence in our strategy and our ability to grow our robust multiyear pipeline.
Financially our results in Q3 reflects a continued transition we embarked upon last year to focus more on rugged edge in defense market opportunity, we successfully shifted away from our former low margin media customer and we're concentrating our resources on growth opportunities and edge computing computing driven by sensor processing sensor fusion artificial.
The machine learning despite.
Despite the expected challenges, we achieved $13 $7 million in revenue in Q3, while effectively executing our cost containment plan.
There are as Martin discussed, but before I go further I would like to turn the call over to our CFO, John Morrison to provide the financial details for the quarter John good.
Good afternoon, everyone. Thank you for joining joining us today.
Earlier today, we issued a press release with our results for the third quarter ended September 32023, a copy of the release is available in the Investor Relations section of our website at one stop systems Dot com.
For the third quarter, we reported consolidated revenue of $13 7 million.
Oss contributed $5 5 million and Brashear contributed $8 2 million inclusive of 377000 of Oss products.
Quarterly revenue reflects a reduction of $5 1 million or 26, 9% compared to the same period in 2022.
Ultimately for $3 million of such reduction was attributable to the loss of our former media customer for whom we do not expect for the revenue.
The balance of the revenue reduction was associated with delays in certain customer orders.
Defense applications lack of revenue from a bankrupt.
<unk> customer as well as a slowdown in general malaise and commercial markets as well.
Most of you are aware.
I think the two segments.
<unk>, which is located.
And <unk>, which is located in Munich, Germany.
Oss is involved in the design menu and manufacturer of high performance Ruggedized edge processing and storage systems and connectivity.
<unk> operates as a system integrator with standard and custom all in one hardware systems and components.
Also serve as a channel for Oss products to the ERP and middle Eastern market.
Gross profit in the third quarter decreased to $3 7 million with overall gross margin percentage decreasing 40 basis points to 26, 6% due to a higher mix of Brexit revenue.
Gross margin for Oss business improved one seven percentage points to $32 four which is what the attributable the absence of lower margin sales of the customers' former media customer and a higher mix of its rugged edge processing crop products How's.
Over the improvements in margin were offset by under utilization and absorption of production since.
Costs due to excess capacity, resulting from lower revenue.
We're actually at the gross margin percentage improved 40 basis points to 22, 6% largely due to product mix.
Sell higher margin Oss product and haven't sought after product readily available and sold at a premium.
The company will.
Reduced operating expenses by four 3% to <unk> 40.
$4 $7 million through cost containment efforts.
<unk> in the quarter. This is exclusive of a $2 $90 million write down of transit attributable to an impairment of goodwill, resulting from the overall financial performance.
Impaired to plan, our increased focus on the defense industry and revised timing for our forecast of certain revenue opportunity.
Loss from operations totaled $4 million compared to income from operations of 163000 in the same period in 2022.
The reduction was predominantly attributable to lower revenue and the write down associated with the impairment of goodwill.
Loss before income taxes in Q3 also included a onetime benefit of 418000.
Attributable to the receipt of funds and the government employee retention credit program.
Net loss on a GAAP basis with the point was $3 6 million or <unk> 18 per share as compared to net income.
133000, or one <unk> per share in the same period in 2022.
non-GAAP net loss.
With 597 or loss of <unk> <unk> per share.
As compared to non-GAAP net income of 691000 or three in the same period in 2022.
Adjusted EBITDA, a non-GAAP metric was negative 248000, a decrease from positive adjusted EBITDA of $1 million in the year ago quarter.
Each of these non-GAAP metrics exclude the $2 9 million impairment of goodwill and the 418000.
Employee retention credit.
Now moving to our year to date metrics are highlighted compare these highlights compared to the same period in 2022.
They include consolidated.
Consolidated revenue was down 11, 9% from $54 2 million to $47 7 million predominantly due to a decrease of $10 5 million in media revenue.
Gross margins were 28, 3% compared to the prior year of $28 five.
Operating expenses, including the charge for goodwill impairment is up $1 3 million inclusive of approximately $1 5 million attributed attributable 2020 through a CEO transition costs.
Other income and expense includes $1 7 million for employee retention credit, resulting in net other income.
322000, and this is compared to net other expense of 106000 from the prior year.
Loss before taxes, excluding the goodwill impairment charge and the employee retention credit benefit was $1 6 million. In contrast, the income before taxes of $1 3 million in the prior year.
non-GAAP net loss was 592000.
Or <unk> <unk> per share adjusted EBITDA.
Our non-GAAP metric was 768.
Now I look at the balance sheet.
On October 32023, cash and short term investments equaled $13 2 million.
This combined total represents a decrease of $2 2 million as compared to Q2 2023.
This decrease is primarily due to an increase in working capital requirements for inventory.
Inventory continues to increase to the noncancelable nonrefundable.
Inventory orders placed in previous previous periods, which are now being delivered we expect this inventory increase to be released in 2024.
As the company continues to transition.
And evolving business from being largely dependent on maybe a derived revenue the company will operationally focus on maximizing growth gross profit contribution in the near term. This may include accepting lower margin business that incrementally contribute to gross profit but may be.
And consistent with our long term objective of increasing consolidated gross margin percentage.
Jack this effort is to have sustainable cash flow as the company and bridges our revenue model.
Now looking forward to the fourth quarter of 2023.
Expect revenue of approximately $13 million.
We are witnessing some impact from the defense budget, continuing resolution manifest as late funding and awards on US full floor on sole source opportunity we could experience further impact going forward. If the budget approval continues to be delayed.
Also continued to see a commercial slowness.
General malaise that has manifest some delay the end or reduced award.
Have not seen signs of overall improvement and do not know when we may be able to see them.
This will lead our financial review for the quarter I would now like to turn the call back over to Mike Mike.
Thank you John.
Last quarter, we announced the departure to Oss directors as well as the appointment of bite them reflect demand and myself and the board of directors. We also reconfirmed our commitment to continue the re profiling of the board to align with the strategic path and desired skill sets of directors as noted in the 8-K and earnings release, Joe Mango, managing member and senior principal at Horton capital.
Management has been selected and appointed to serve on the board effective November 10 2023.
Mr. <unk> has been serving as a managing member and senior principal of Horton capital management. The investment funds since 2013 as prior asset management and investment banking experience, having served in executive position at BG Fund management Deutsche Bank in Merrill Lynch and also legal experience, having served as corporate finance attorney at Skadden, Arps slate may rent.
Mr. Menke also served as a director on the board to safeguard scientific and corridor medical system and has previously served as a director on the board to create a reality and wireless Telecom group.
The one stop systems Board is unanimously voted to temporarily increase the size of the board from seven to eight at this time and appoint Mr. Mako to fill the vacancy created by the increase.
The board intends to further temporarily increased the size of the board to no more than nine and add one additional board member with relevant defense experience. During the Q4 timeframe. There are candidates actively reviewed and reviewed to fill this position but.
The directors slate to presented for election by the company's shareholders at its 2024 annual shareholder meeting in May will be a seven person slate. This director slate will be chosen by the board prior to filing the 2024 annual meeting proxy we are adding the additional board members at this time to take advantage of the unique skill expertise and fresh perspective that these.
Individually <unk> brand.
Aligned with our pursuit of greater defense revenues, which many times include classified program I am pleased to announce that we recently received our site facility clearer.
This is key to our strategy and that clears the way for us to address address additional market opportunity and the classifieds space.
In addition to all the opportunities and engagements I shared earlier on the call. We continue to increase our market engagement exposure through participation in several industry events for both commercial and defense markets as we broadly disseminate Oss unique messaging and moved to identify opportunities and expand our pipeline.
In mid September we showcased our specialized high performance AI computing solution at defense and security equipment International also known as the Sci The trade show held in London is the world's largest land sea and air biannual defense and security acquisition.
The team and I attended the event at the Excel, London Exhibition Center, where we displayed our full line of rugged edge processing products for AI sensor processing and sensor fusion application right.
<unk> our flagship rugged supercomputing edge processor won best in show, while our three USDA server journeys in RV products received the vast amount of venture.
With the largest dependents the show Athene, we were able to engage with military prime contractors and serve customers from multiple countries around the world expanding from our primarily focused U S market in.
In addition to solidifying relationships with current customers, we were able to expand our engagement within countries in Asia, Europe, and the middle East.
We were able to leverage our bremner team and these engagements are strengthen our channel to market for Oss products in Europe, and the Middle East.
Firstly, we continued to do a better job of promoting to higher margin Oss product.
Also in the <unk>.
We exhibited at.
Yes, Tom This vehicle technology excellent conference at the Santa Clara Convention Center, California.
We showcased our latest solutions and autonomous vehicle technology, including Rigel, as well as rugged edge storage and compute solutions such as <unk> 40, 403, USPS, we did notice an increase level of interest and activity in the autonomous driving space and received some additional request for information and proposals we remain vigilant in this market space and <unk>.
To monitor it.
October we showcased our specialized high performance Ruggedized processing solution at the association of the United States Army annual meeting.
This show is considered the largest land power acquisition in North America and had an excess of 40000 people attended.
The event was held at the Walter Washington Convention Center in Arlington, Virginia. It was clear across all venues of the show that sensor fusion and artificial intelligence, we are driving the future of army weapon system <unk>.
Our display of our rugged line of high performance compute product from Rigel discerning to deny resonated in relation to the themes of demands presented at the show.
As with DSS, we were able to advance existing efforts and establish new pursuit of opportunities with new prime and new divisions within the U S Army.
For example, we were able to establish a meeting with the new Prime and two of their business unit BP and three directors.
These efforts have led to receipt of our first RFP and a multi business unit engagement at the customer site in November and.
In addition, we established a connection with a new major defense Prime with key product offerings for the U S Army in the armored vehicle market building off our success on <unk> and denied.
While the DC region. We also held an Offsite meeting with an armed forces service unit operating classified mission with focus on high performance compute at the rugged edge. We're looking forward to attending the Supercomputing 23 conference being held in Denver next week is the world's largest international conference for high performance computing.
We will be showcasing our latest and greatest with advanced <unk> solutions that are ideal for bringing data center class performance to the mobile edge it.
We will incur a lineup of ruggedized servers storage accelerated and innovative flash storage rate some of which use destructive disruptive disruptive technologies, such as coal plate directed chip liquid cooling and liquid emerging cooling technologies.
We expect to release more information about this in our new product released in our press release, we are planning to issue next week.
Last quarter, we introduced Robert <unk>, as our new VP of sales and business development and spoke about efforts to increase our market engagement across commercial and defense market.
We also highlighted the efforts to re image our pipeline to address probability weighting in timing and update our application of salesforce to align with sales and capture execution.
Our efforts have proceeded to date as plan. We are in the final stages of testing and validating salesforce updates to enhance operations and reporting. We also have been able to complete an initial instantiation of a five year pipeline.
While there is still more work to do to mature our pipeline model. We are pleased to see that we have a robust and growing set of opportunities at this point, we supported on factored five year pipeline in excess of $900 million.
Efforts continue to utilize our research to not only expand our pipeline, but the transition opportunity to achievable high probability awards with accurate time.
We expect that we will continue to see longer timeline characteristic of this market, though we are seeing near term opportunities, where we can intersect platform architecture upgrade.
We believe there is continued room for expansion more broadly internationally.
We also will be looking to identify and address the opportunity in the classified space leveraging our recently granted facility cleared.
We are encouraged that these pipeline opportunities across commercial defense market will go a long way to replace low margin media business and support growth.
Now with that we'd like to open the call to your questions.
<unk>.
Thank you.
I'd like to ask a question at this time. Please press Star then the number one on your telephone keypad now.
If you are calling from a speaker phone. Please make sure your mute function is off to ensure your signal can reach our equipment. Once again. Please press star then the number one on your telephone keypad now to ask a question.
We will go to Brian singer with Alliance Global Partners. Your line is open.
Okay.
Hi, guys. Thanks for taking my questions.
Is there any way Mike to quantify the pipeline next year, if I heard it in defense today compared to either when you join which I think it was a little bit depleted.
Or versus a year ago I'm, just trying to gauge.
How well you're building pipeline since you've joined.
Yes, prior announcements had the pipeline structure of opportunities around $800 million. It's about 850, so with some of the additional work in the last quarter with foundation and going through each of those efforts line by line. We're comfortable now that our pipeline five year on factor pipeline is in excess.
A $900 million.
How much of that it's such a big number in that section.
So far away how much of that do you think it's addressable or biddable.
A through next year.
Yes, Brian when I said, when I say, a five year plan. So what we do as we build out five years of pipeline opportunity broken out by year. So there's some of those five years as the 900 million.
So there are elements of that.
Our biddable in as early as 2023 growing through 2024, so that five years Ive discussed was really 24 through 28.
Okay.
And then maybe you can talk pipeline within defense, but what about for your AI excellence portables in commercial.
And then you talked about maybe some slower decisions right now on the commercial side, but.
How do you see that opportunity there.
The near term.
So the pipeline that I discussed was across both our commercial and defense markets. So it's all of the AI transferable rugged edge processing capabilities and products that we're doing.
I don't have the percentage mix between commercial and defense here with me.
It's probably fairly close to 50 50.
Based on last time I scan through.
And then the second part of your question again.
Brian No that was it.
It was going to be just on that but.
I guess now you've been there a full quarter.
As you evaluated your business is there any investments you think are necessary.
Phil visible holes that you think are necessary to help you return to growth.
Yes, so as I mentioned earlier with the engagement the number of increase engagements, where we're going and I also mentioned to more broad opportunity internationally. One of the areas, we'll be looking to augment and invest there will be to kind of continue to build out our sales team. So we can get to capturing and.
Executing against that the resources against that $900 billion pipeline, but we need the resources to help execute and convert that from pipeline into <unk>.
<unk> capture both programs and elements that we can we can get.
And then our product lines as I mentioned we.
Released Rigel recently, turning to non interest commodity so <unk> has been strong so from a product perspective, we are in a good place right now.
We will be making investments in 2024, as we look to the next generation of our product line. So we continue to stay at the front end of.
The market in terms of technology.
And then as I had mentioned I think it was last earnings call, we will be looking to augment the team.
We're starting to get more discrete.
First contracts now so we will look to augment the team with some contract support probably part time to start.
Then.
<unk>.
Talk about adding some additional program management support to support running the programs as we as we win them and also to support our capture of these bigger broader multi year contracts.
Okay last one from me.
This one's probably for Jon.
Core Oss gross margin recovered nicely I assume the P&L without immediate customer was the major driver there.
And then I also heard your comments on potentially taking on.
Some lower priced or lower margin business.
<unk> improved the cash flow, even if it's just a little bit so.
How should we think about where you are today or just reported and the core OSA is gross margin should we expect.
It will be softer in the coming quarters, giving your comments or given the mix.
Indicative or even stronger as you book New business just help us from this new point without that medium customer.
I would at this point, we're thinking it's Glenn we are projecting it's going to be flat.
Largely because we are dealing with the underutilization in our production facility.
On revenue.
We need to get back to more of an lineup Duane about $9 million a quarter.
From Oss that site to be fully utilized.
Many of these resources are resources that are involved in the planning purchasing.
And management of inventory as well as obviously the production for people, but we have already gone through a reduction in force back in April of 2023, we believe that as we recover these resources will be fully utilized but until then weighing down on the overall margin per hour.
Yes.
Obviously dentists in proportion to the Dresden revenue, that's increasing is having a significant impact on the consolidated margin percentage.
Alright.
<unk> begun to one more Tom at $9 million.
<unk> and just core Oss that gets you back to approaching 40% gross margin for that segment or is that a little too optimistic.
It's more of the 35% to 40% range.
Great. Thank you guys.
Thank you Brian Thanks, Brian.
Your next question comes from David Williams with Benchmark. Your line is open.
Hey, good afternoon. Thanks for letting me ask a question.
Hi.
I guess, maybe Mike on just thinking about the defense industry and it seems to have held in well during this down cycle.
It seems to suggest that we're spending still remains favorable I know you've touched on this.
In the script, but how does the timing of the budgets and some of the approvals it feels like youre, gaining some really good momentum, but could you talk maybe a little bit about the hurdles.
The difference between here and going into production and just what is it timing of flex that we have a better understanding on how we should think phase progressed through the channel here. Thank you.
Yes, sure David I think.
And one part you are referencing.
Continuing resolution of the CR, we have a couple of sole source awards we've been.
Looking to get in to be able to.
Proposals on that had been held up for the CR. So we expect the near term to come across as soon as the CR.
Is resolved the issue it seems every year now.
The defense companies have to deal with.
I think if you look at how is the defense elements come alive.
As we build out a lot of the efforts and all we're doing now will see will find.
Homes, New procurements in late 'twenty four 'twenty five in 2026, however, there are opportunities in there we're finding.
Where if you can intercept a platform upgrade for tech refresh cycle.
Opportunity to make things happen a little bit faster.
An example is the.
Or Navy submarine program that I talked about they happen to be in a tech refresh cycles that we caught early and we were able to get in there with our technology and from the time, we identify that opportunity through our browser unit two contract award with less than a year.
Probably usually a lot of times unheard of in the defense market, but it is doable when you catch catch those timeframe. There are a number of prime contractors and vehicles and platforms that we're talking to and.
<unk> services.
Both in the U S and globally.
We have in those discussions and seeing where their technology refresh upgrades are and we've positioned ourselves to be in those competitions and then those discussions for the architecture upgrades and those start to span the years from 24 through 26 and beyond.
And then we buy those are ones, where we would have identified put into our pipeline and now have a signed a resource into to capture those going forward.
Great. Thanks for that and I intended to say congrats earlier, but just on the on the success in acceleration.
Youre, gaining a lot of interest here and its great to hear the enthusiasm and see the progress.
I guess on that Mike just kind of given your time in the seat now you've had some time to settle in and look through things is there anything today that you see that's different than previously either more positive or things that are just different than you had thought anything that gives you I guess more optimism today than you might have had as you came into the role. Thank you.
Yes, great David So probably two things.
First as we call it a little bit of a new norm around here as I mentioned the number of proposals where we're working on I would say there is a.
A heightened level of energy excitement activity and sense of urgency in the business.
To grow and address the opportunities.
We're seeing them come in the defense market as we had expected with the addition of Robert Cal bought myself as we increased focus in doing so.
But we're seeing ample elements inside the commercial market too that are raising some some interest and some activity for us so I'm.
I'm excited about the new normal the pace that we're working at here too to get after growth, which is why I mentioned the augmenting the team to continue to try to build upon that momentum.
And I guess, maybe another example from the defense side.
Had the opportunity to spend a week on capital in DC.
Interfacing with the Congress the House Appropriations Committee of the House Armed Services Committee and.
Be able to tell the Oss story and with.
I was quite enthused define how well our story resonated with the opportunity to bring advanced high performance compute artificial intelligence machine learning to the battlefield.
Given the.
Given what's going on in the world today, and the opportunity to be able to arm Warfighters right is something that that resonates in services is resonating through the through the half and half and being able to tell our story, there and see it resonate so well again gives me.
Optimism that we're on a good track and we are going to have support not only from our customers.
But our government also.
Thanks, so much for the color.
Your next question comes from Joe Gomes with Noble capital. Your line is open.
Good evening, Thanks for taking my questions.
Hey, Jo mill.
So just.
Your press release, you talk about an overall delay in deployment of the technology.
I was wondering if you get some more color on that statement is that more just due to the economy or is that potential customers just having.
Concern about applying leading edge technology is there something else going on there just wondering if you could add a little more color to that.
Yes, Joe and I think.
Earlier in the statements about kind of a general malaise in the commercial market.
The defense market move out short of the continuing resolution effects on the on the commercial market side I would say absolutely not the slow adoption of the technology there is.
From the technical engineers in the applications.
Plenty of interest and discussion going on about how to move forward and utilize the benefits of the compute in artificial intelligence machine learning to get it out to the edge.
<unk> really comes along when you try to convert into.
A request for proposal and a funded program off the door to make a purchase and a buy and what we've seen there is the kind of just general tendency to not have the sense of urgency to make it happen this month.
Its okay. If it happens next month or next quarter.
Don't see.
People are.
Companies are efforts.
Looking to push things out by years, but theres, just been kind of a malaise in general ability to wage or delay another month or quarter or two for things to align if that makes sense.
Okay.
And then.
Last quarter, you talked about you thought somewhere in the nature of $5 million to $6 million defense work had been pushed out into 2024.
Has that number grown since then.
It'll be about that number we will see how Q4 ends, but we will be in that it will be that that general range.
Okay. Thank you for that.
Congrats on getting the security clearance for the facility.
<unk>.
Again.
One of the issues that seems to be.
Repeating.
The difficulty in finding and hiring.
People with security clearances.
Just there is a big demand and limited supply it appears and just wondering how you guys are finding that and if that is an issue at all.
Yes, Jeff Thanks for the question. So I think the one of the benefits. We have today is the kind of work we're doing right now doesn't require us to have the.
Cleared individuals that would.
That you might align with the.
Market Youre talking about people with it.
For STI clearances.
Where we're operating here in the near term, we can get our own people class.
And or the workforce, especially in San Diego or remote you guys the remote.
Can find we can find individuals to fill that and the reason is for right now with the products and the work we're doing there.
The use of the clearance for us is really more about being able to get inside the understanding of the mission and the application of the technology and that allows us to.
Floor, the ability to broaden our.
On an effort we've.
We've had two such.
Actually more than two.
Meetings, probably in the last few months where Mike.
Myself, Robert both have clearances, where we've been able to explore more broadly what our platform does and in doing so we were able to come back and identify broader scope of work or effort that Oss could do and could bring with our our technology and that's where we're going to see the benefit here in the near term over the next couple.
Quarters, as we build out into the years.
And established position.
Use of a <unk>.
<unk> classified information facility and people have the clearances I discussed.
They would come up they would come along but we'll have some runway to be able to identify that.
Okay, Great and one more from me if I may and historically you guys have given the quarter and pipeline in terms of the number of opportunities for those million dollar plus.
But I think at the end of last quarter. You were 33 opportunities do you have that same number.
For the end of the third quarter.
We don't have that number in part were transitioning from the kind of those prior definition, we are going to involve our evolve our pipeline.
Information of data here to start to give you insight into awards.
And we will be aligning along some of the themes I mentioned earlier in the earnings call.
There were really two key strategic for us is adding new customers new prime.
Then getting an additional platform to getting multiyear contracts. So we'll look to engage across all those elements are way too.
To provide enough information to give you maybe even more in depth the sense of how we're doing on securing.
Borders.
Okay, great. Thank you.
Thank you. Thank you Joe.
Your next question comes from Max Michael with Lake Street Capital. Your line is open.
Hey, guys. Thanks for taking my question just looking at it.
Looking at the slowing economy ended share in Germany.
Impacted your outlook on the breadth of your business.
Okay.
So to date, we haven't seen.
A major impact of a slowing the business.
We're at the end of the quarter and move we're seeing some timing or alignment.
But we haven't seen the cancellation of orders or.
Or a downtick there.
Our bookings are continuing to be generally in line quarter to quarter.
So at this point, we're still seeing them be able to work through.
<unk> worked through any slowness in Germany.
Okay.
Okay, and then last one from me just given the push out in orders in the autonomous trucking space.
Margaret maybe what are some areas you can highlight I know you talked about.
Auto racing industry, but maybe some areas other areas in the commercial market. What are your sales force to that Youre seeing maybe pockets of strength.
Mr. Matt. Thanks, I mentioned two of them in the earnings release, there on the commercial side of that.
We're quite excited about it.
Two were in the datacenter space using our four <unk>.
Spansion chassis.
With the with the onslaught of the Hyperscale is and others buying large massive massive gpus gpus need to go somewhere.
In areas where.
Some leach areas in the Datacenters, where theyre looking to manage the utilization of those gpus.
Let them into servers.
There are some interesting areas with a couple of companies were finding some.
Some good traction with so we see that as a nice area for us to go and work through in.
In addition, I mentioned the multiyear contract that we're working to finalize here.
In the commercial aerospace market.
We'll be able to bring some edge processing into that market. So we will be looking to provide more insight on both of those efforts, we see those as potentially good ones on the commercial side.
And then as I mentioned, we are working RFP now for a time as trucking.
We're seeing vigil in that market.
It had a lot of promise has had some slowing.
I used a cautious optimism monarch, we continue to refine we work through these.
Luckily for us design and efforts in solutions, we use for autonomous trucking are the same ones we use.
And a lot of the defense work, so we're not having to invest special product development or anything in that market. So we can be quick to respond.
If anything we're finding a lot of the work we're doing in defense market create more flexibility in our offerings for their autonomous truck market. So.
We will continue to monitor them, but we.
Like I said, we have cautious optimism on that one.
Alright, thanks, guys.
Thank you.
At this time, we have no further questions I'd like to turn the conference back to our speakers for any closing remarks.
Morgan Thanks, Thanks for that.
We look forward to speaking with you again, when we report in March and we hope everybody has a great day.
Thank you.
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