Q3 2023 BK Technologies Corp Earnings Call
Speaker 1: Good morning ladies and gentlemen, and welcome to the BK Technologies Corporation conference call for a third quarter 2023. This call is being recorded. All participants have been placed on a listen-only mode.
Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference call for third quarter 2023.
This call is being recorded all.
All participants have been placed on a listen only mode.
Following management's remarks, the call will be opened for questions. There is a slide presentation that accompanies today's remarks that can be accessed via the webcast.
Speaker 2: There is a slide presentation at a company today's remarks that can be accessed via the webcast.
Speaker 3: At this time, it is now my pleasure to turn the floor over to your host for today, Jen Belladoe. Ma'am, please go ahead.
At this time it is now my pleasure to turn the floor over to your host for today Jim Peladeau.
Please go ahead.
Speaker 4: Thank you. Good morning and welcome to our conference call to discuss BK Technologies results for the third quarter of 2020.
Thank you good morning, and welcome to our conference call to discuss BK technologies results for the third quarter of 2020.
Speaker 5: On the call today are John Suzuki Chief Executive Officer and Scott Melminder Chief Financial Officer. I will take a moment to read to see if Harbors-
On the call today are John <unk>, Chief Executive Officer, and Scott and I'm in your Chief Financial Officer, I will take a moment to read the safe Harbor statements statements made during this conference call and presented in the presentation that are not based on historical facts are forward looking statements. Such statements include but are not limited to projections or statements of future goals and targets regard.
Speaker 6: Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenue and profits. These statements are subject to known and unknown factors and risks. The company's actual results, performance or achievements made different materially from those expressed or implied by these forward-looking statements.
The companys revenue and profit.
These statements are subject to known and unknown factors and risks the company's actual results performance or achievements may differ materially from those expressed or implied by these forward looking statements.
Speaker 7: and some of the factors and risks that could cause or contribute to such material differences have been described in this morning's press release and in VK's filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings that are believed to be accurate as of today and we do not undertake any duty to update such forward-looking statements. Okay, but that out of the way I'll turn the call over to John Sadootty, CEO of VK Technologies. Go ahead, John . Thank you, Jen. Thank you, everyone.
And some of the factors and risks that could cause or contribute to such material differences have been described in this morning's press release and in Bk's filings with the U S Securities and Exchange Commission. These statements are based on information and understanding that are believed to be accurate as of today and we do not undertake any duty to update such forward looking statements. Okay with that out of the way I'll turn the call over to <unk>.
John <unk> CEO of BK technologies go ahead John.
Thank you Dan.
Thank you everyone for joining today ill.
Speaker 8: I'll start by reviewing some of the highlights of our operations and financial results during the quarter. Then I'll turn it over to our Chief Financial Officer, Scott Mowmanger for a deeper dive into our financial results.
I'll start by reviewing some of the highlights of our operations and financial results. During the quarter, then I'll turn it over to our Chief Financial Officer, Scott Burell manager for a deeper dive into our financial results.
Speaker 9: We'll conclude by opening up the call for a brief Q&A.
We will conclude by opening up the call for <unk>.
Brief Q&A.
Turning to slide three.
Speaker 10: We delivered strong third quarter results, which included a 68% increase in revenue to 20.1 million improved gross margins, and a return.
We delivered strong third quarter results, which included a 68% increase in revenue to $20 1 million improved gross margins.
And a return to profitability.
Speaker 11: During the quarter, we shipped 9,310 radios, bringing our shipment total to 28,249 for the first nine months of 2023. And we remain on track to achieve our target range, a shipping between 32 and 36,000 radios for the full year.
During the quarter, we shipped 9310 radios, bringing our shipment total to 28249 for the first nine months of 2023.
And we remain on track to achieve our target range of shipping between 32, and 36000 radios for the full year.
Speaker 12: With our visibility today, we believe we have a very good chance to achieve the high end of our radio delivery guide.
With our visibility today, we believe we have a very good chance to achieve the high end of our radio delivery guidance.
Speaker 13: In the third quarter, we continued to ship not just the BKR 5000, but also our BKR 9000 multiband radio.
In the third quarter, we continued to ship not just the beak here 5000, but also our <unk> 9000 multi band radio.
Speaker 14: In fact, in September , we received an emergency order for the BKR9000 from the state of Hawaii as they contended with the aftermath of the devastating wildfires in Maui County.
In fact in September we received an emergency order for the <unk> 9000 from the state of Hawaii as a contended with the aftermath of the devastating wildfires in Maui County.
Speaker 15: We mobilized quickly to get a shipment out to this new customer and we're pleased to have had the opportunity to assist during a difficult time and to launch what we hope will be an ongoing relationship with the state. We continue to see a great deal of market interest in the BKR 9000, which with its enhanced multiband capabilities and cost effective price point is an attractive offering in a portable communication space.
We mobilized quickly to get a shipment out to this new customer and we're pleased to have had the opportunity to assist during a difficult time and to launch what we hope will be an ongoing relationship with the state we.
We continue to see great deal of market interest in the <unk> 9000, which with its enhanced multi band capabilities and cost effective price point is an attractive offering in a portable communication space.
Speaker 16: The BKR 9000 has completed field tests on more than 19 P25 trunks.
The Big here 9000 has completed field tests on more than 19 P 25 trunk systems.
Speaker 17: and there are 30 plus additional system tests underway.
And there are 30, plus additional system tests underway.
Speaker 18: BK has years of experience acquiring system approval for our legacy P25 radios. And this history is helping to expedite the individual approval process.
BK has years of experience acquiring system approval for our legacy twenty-five radios.
And this history is helping to expedite the individual approval process.
Speaker 19: As we move forward, we expect the success of these field tests will serve as further verification of the radio's multi-bank capabilities and reliability, opening up opportunities for us to address a larger and more diverse market vertical. Turning to slide four.
As we move forward, we expect the success of these field tests will serve as further verification of the radios multibank capabilities and reliability opening up opportunities for us to address a larger and more diverse market vertical.
Turning to slide four.
We saw significant order activity during the third quarter in.
Speaker 20: In addition to the BCare 9000 order from the State of Hawaii, that I just mentioned, we also received an order from the Fendival County, New Mexico, valued at 963,000.
In addition to the <unk> 9000 order from the state of Hawaii that I. Just mentioned, we also received an order from Sandoval County, New Mexico valued at 963000.
Speaker 21: I highlight ten of O'County because they are a good example of what we define as a tier three county in terms of population bench.
I highlight Sandoval county, because they are a good example of what we define as a tier three county in terms of population density.
Speaker 22: There's an estimated 750 Tier III suburb and to rural counties in the US that we're targeting for the Bcare 9000 because we believe the radio is a great fit. Not just in its multi-band capabilities, but its cost-effective price point positioning us to gain market share.
There is an estimated 750 tier three suburban to rural counties in the U S that we're targeting for the <unk> 9000, because we believe the radio is a great fit.
Not just in its multibank capabilities, but its cost effective price point positioning us to gain market share.
Speaker 23: For the BKR 5000, there continues to be strong demand. As demonstrated by a $3.4 million order we received from the National Interagency Incident Communications Division.
For the <unk> 5000, there continues to continues to be strong demand as demonstrated by a $3 4 million order. We received from the National Inter Agency incident Communications Division.
Speaker 24: and a 2.1 million order from the Bureau of Land Management.
And a $2 1 million order from the Bureau of land management, which also included some be care 9000 radios for test and evaluation.
Speaker 25: which also included some BKR9000 radials for test and evaluation.
Speaker 26: So it's been a very busy quarter in terms of order activity, and we ended the quarter with an order backlog of $21.8 million as of September 30, 2023.
So it's been a very busy quarter in terms of order activity and we ended the quarter with an order backlog of $21 8 million as of September 32023.
Slide five.
Speaker 27: Slide five illustrates the continued traction we're seeing with our radios. As I mentioned a moment ago, in the third quarter, we shipped 9,310 units.
Slide five illustrates the continued traction we're seeing with our radios as I mentioned, a moment ago in the third quarter, we shipped 9310 units.
Speaker 28: bringing us to a total of 28,249 radios shipped year-to-date. And I will repeat my point from a moment ago that we believe we'll close the year out on the high end of our targeted range of 32,000 to 36,000 shipments for the full year 2023.
Bringing us to a total of 28249 radios shipped year to date and I will repeat my point from a moment ago that we believe we will close the year out on the high end of our targeted range of 32 to 36000 shipments for the full year 2023.
Turning to slide six.
Speaker 29: Our gross margin performance continues to make progress and we are seeing the positive impact of our cost reduction initiatives and higher revenue.
Our gross margin performance continues to make progress.
And we are seeing the positive impact of our cost reduction initiatives and higher revenue our gross margin improvement in the third quarter represents our fifth consecutive quarter of sequential margin improvement with the continuation of our initiatives to reduce product costs, coupled with the addition of the higher margin <unk> 9000, multi band radar.
Speaker 30: Our gross margin improvement in the third quarter represents our fifth consecutive quarter, a sequential margin improvement. With the continuation of our initiatives to reduce product costs, coupled with the addition of the higher margin BKR 9000 multiband radio to our product mix, we expect to see gross margin continue to improve through the fourth quarter and into 2024.
Two our product mix, we expect to see gross margin continued to improve through the fourth quarter and into 2024.
Now I'll turn it over to Scott <unk> CFO to take you through the financials Scott.
John on slide seven Youll see a summary of our financial and operating results for the period ending September 32023.
Sales for the third quarter totaled approximately $21 million compared with $11 9 million for the same quarter last year.
Revenues of more than $57 million for the September year to date have surpassed the prior full year record of $51 million achieved in 2022.
As John mentioned, we closed the third quarter with an order backlog of 21 8 million.
Gross profit margin in the third quarter was 32% compared with 19% in the third quarter last year.
Selling general and administrative expenses or SG&A total approximately $5 8 million for the third quarter compared with $4 6 million for the same quarter last year.
Our operating income totaled $594000.
Compared with an operating loss of $2 4 million for the third quarter of last year.
In the third quarter of 2023, we recognized a net unrealized loss of 342000 on our investments compared with the net realized gain of 76000 in the same quarter last year.
We recorded net income of $90000 or <unk> <unk> per basic and diluted share in the third quarter of 2023, compared with a net loss of $2 4 million or <unk> 71.
Per basic and diluted share in the prior year period.
And finally as September 32023, we have approximately $4 1 million of cash and cash equivalents and no long term debt.
From a liquidity standpoint, we believe that our current cash position combined with anticipated cash generated primarily by radio sales and borrowing availability under our credit facility.
<unk> with the working capital that we need to grow our business.
The additional $2 million in cash expected from the east West transaction is expected to be used to pay down our line of credit.
I will now turn the call back over to John.
Thanks Scott.
Turning to slide eight.
I'd like to provide you an update on our SaaS business. We previously detailed that the public safety market represents a tremendous opportunity for SaaS solutions.
<unk> regularly publishes their update public safety first net subscribers with the latest announcing $5 3 million connections over 27000 public safety agencies.
<unk> does not publish their frontline public safety connections, but it is believed to be similar in size to AT&T.
With more first responders being equipped with smartphones.
BK firmly believes that the next focus in public safety communication spend will be to make the first responders safer and more effective as a step out of their out of their connected vehicle.
Slide nine.
Slide nine provides a timeline of our SaaS business unit, which began with our applications for three patents in December of 2021.
The three patent applications envisioned a set of new public safety services and features which would be delivered through BK smartphone application <unk>.
In February 2022, we formalized our SaaS vision.
With the formation of a new business unit led by industry veteran James Teal.
Eight months later in October 2022, VK launched its first SaaS service Interop one.
Interop won a push to talk over cellular service, which was quickly recognized for its unique patent pending capability to form on demand talk groups in five minutes or less.
Using any smartphone associated with any cellular carrier.
Our first paying interrupt one subscriber was officially on boarded in January of 2023.
Since the launch several federal state and local government agencies have been field Trialing the service.
Based on this customer feedback in August 2023, VK released new features enhancing the user experience when using Interop one.
Recently, our Interop one customer base expanded to include our first international customer from Canada.
Our second patent application looked at an innovative approach to bridge LMR radios with LTE smartphones.
In October 23, we demonstrated our patent pending interrupt one tethering feature which enables first responders using <unk> radios the option to communicate over a private P 25 network or a public cellular network.
Slide 10.
Slide 10 highlights an example of how Interop one tethering.
And Interop push to talk over cellular service can drive <unk> 9000 and sales.
Our recent $315000 contract award from the U S Department of defense required multi band P 25 network ready and be LTE capable.
<unk> 9000 within our up one tailoring presented an alternative solution that met all requirements at a compelling price point.
It's always great to expand our relationship with the U S Department of defense, particularly when we do so by beating an incumbent competitor with a new innovative solution.
Turning to slide 11.
We recently announced our strategic decision to shift our production operation to East West manufacturing.
After careful analysis and consideration we believe it makes sense strategic sense to shift to an asset light model.
As many of.
You know we have always relied on <unk> to some extent on contract manufacturers to support our in house efforts and East West has been a reliable partner to us for several years.
We believe that outsourcing our manufacturing operations, we will simplify our supply chain management, which has become a challenging part of our day to day operations.
And will enable us to continue reducing both production and product costs.
Additionally, by moving supply chain management and production to east West we can focus on our core competencies the development and marketing of LMR Communications technology.
In addition to the operational benefits East West a portfolio company of MSP partners has become a shareholder of BK based on their confidence in our products and the long term market opportunity.
We anticipate that the transition to east West will take place over a six month period commencing in Q1, 2024, and we do not anticipate disruptions in our production schedules.
With the move our existing Melbourne facility will now focus on new product introduction in support of our engineering efforts.
We're we're confident that the move to an asset light model will help us ensure efficient fulfillment of the high demand, we're seeing for our products, while also strengthening margins over time.
Moving to our final slide slide 12.
We are energized by the market interest, we're seeing in our for our products and optimistic about the opportunities we're seeing to expand our customer base by tapping new vertical markets.
Our operational strategy remains focused on maximizing production efficiency and as I mentioned earlier, we believe we are on well pace to meet our high end of our stated annual shipment target of between 32 and 36000 radios for the full year.
<unk> reputation as a premier communications technology provider for the public safety and critical communication market is established and growing.
<unk> 5000 has demonstrated proven success and its appeal to existing and new customers as they move through equipment upgrade cycle cycles.
Likewise, the multi band capabilities of the <unk> 9000 provide us the opportunity to significantly expand our target markets and grow our brand recognition among our new customer audience.
Finally, we think Interop one has the ideal capabilities to improve communications between first responders, which.
Which will in turn improve safety and response time potentially saving lives.
As a SaaS service, we anticipate and are up one will play a meaningful role in delivering high margin reoccurring revenue as we gain market presence over time.
With that I'll turn the call over to the operator for questions Matt.
Certainly everyone. At this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.
We do ask that while posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Once again, if you have any questions or comments. Please press star one on your phone.
Please hold while we poll for questions.
Thank you. Your first question is coming from Aaron Martin from AIG H investments your line is live.
Hi, good morning, congratulations on the progress.
Gross margin of the return to profitability.
On the gross margin.
I know youre, not providing a breakdown between the <unk> 9005.
1000 <unk>.
Can we sort of breakdown.
Sequential improvement in gross margin.
The factors, obviously you'd last.
Last quarter. There was you were talking about supply chain.
The exports.
Improvement.
How much of the improvement really came from mix versus coming from working out the supply chain issues.
Yes. Thanks for the question I would answer to that that base.
Basically most of it is still due to our cost reduction efforts are our efforts to.
Impact production cost so I would say that we continue to expect margin improvement as we.
Realize lower production costs associated with the East West arrangement and then as you know for 2425 as our mix continues to improve with the 9000 product in the SaaS business I think that's where we'll have continued margin improvement over.
The 24 25 period.
Got it.
And so just big picture.
Should we think about.
The transition from 5000 to 9000 and mix.
Forward.
'twenty four 'twenty five.
Do you anticipate them sort of.
Side by side.
Yes.
Yes, thanks for the question Erin so.
So we view these products as addressing two separate markets.
The 5000.
Embedded itself now.
Not only in our in our core legacy customers, which is wildland fire, but also in other rural communities. So as firefighters are buying the big care 5000, we're finding that law enforcement within those communities.
Their fire departments are buying the same radio for their day to day operations. So so what was used primarily for going on a mission for fighting fires is now becoming more of a mains mainstay radio.
On the 9000.
That radio is over twice as expensive as the 5000 and it addresses basically of different market. It's really targeted for those customers who are looking at operating in multiple frequency bands because they have they have to inter operates.
Perhaps with the statewide system or an adjacent county system and there's no guarantees on what frequency bands. These systems would would reside on and again. These radios are 9000, and this and that particular case, that's their day to day radio Okay. That's what they are using.
So.
Although the 9000 can be used for wildland fire, it's really being purchased for day to day operations and so.
There will be some small overlap between the customer base, who are buying the 5000 or 9000, but these are going to be different market. So if I look at.
So if I look going forward.
The adoption rate of the 9000 is still still to be determined but if I looked at the adoption rate of the 5000, and just kind of break out the the base customer base. It was still fairly significant but it took about 18 months before it started to really gain some traction and so we expect something similar for the 9000, where the initial orders, which we have.
Seeing our small quantities people testing the radio and then as they build confidence in the radio they'll start replacing their fleet with the 9000 and so we'll see.
Quarter over quarter increases in order volume.
Through through 2024, and then we are expecting a larger increase in 2025 as.
As more and more of the people have have have confidence in the radio.
Okay. So then.
In the shorter term, we've talked about gross margins sequentially improving in Q4 and then.
2024, as well that is basically being driven.
Operational Idaho.
Rather than <unk>.
Pretty much yeah.
I think the I think the simplistic way to look at it as well.
Our historical margins for the company has been between 35 and 40% so.
We're still not there right and so we still have activities that we're doing to get us to that point and then you can layer in the 9000 margins on top of that and then you can layer in a factor for our new relationship with East West.
Just because of their production capabilities, we're expecting.
Additional cost downs across the board and that's why we.
We targeted in 2025, we believe.
Our gross margins for 2025, we'll be at 50% and the long journey Erin <unk>.
To get there, but we believe there's a path to get there.
Okay, and then the relationship with East West Mr. Existing contract manufacturer, that's why I guess, we shouldn't really have any disruption.
There's a six month process is just transferring over more and more lines them. One at a time is that how we should think about it.
That's exactly right Eric.
Taking one line at a time.
Okay.
Going back to the overall volume I mean, it seems that we have a slightly better pricing environment this quarter.
You've in the past you've talked a lot of that has to do with the accessories that are that gets shipped together with it but it's nice to see that.
But I look at the overall volume, but then be the guide for the year. It's nice that you talked about being at the high end of that.
Of the 32 to 36000.
<unk> thousand radios, but considering where you are right now for the year, even the high end of that is kind of below where you've been any quarter. So far this year.
How do we think about that especially with the.
The 20 plus million dollar backlog that you have at the end of the quarter.
Yes, I think you know when I started this year.
I had talked about 8000 to 10000 radios shipping every quarter.
And if you remember walking into this year, we had this enormous backlog from from 2022 because for most of 'twenty. Two we couldnt ship, we started shipping in Q4, and so we kept it at an accelerated pace.
Throughout the year.
So that we can.
Normalize our backlog we've been on extended lead times.
FERC for quite a period, we believe that will be through that backlog and back to normalized.
Normalized lead times, probably by the first or second quarter of next year.
So we were definitely at an elevated rate.
First half of this year, just to try and catch up on our on our backlog, but that's starting to normalize now.
Okay. Thank you then to the order rate, obviously backlog was down sequentially quarter over quarter.
A little bit about $2 million.
That should continue as lead times come down or at the same time, though as lead times are coming down we are.
<unk> is growing.
5000, and that was up the mine builds on top of that so how should we think about backlog going forward and the ordering trends.
So for because we are a bit of a seasonal business right. The peak season for wildland fire and order intakes and shipments into Q2 and Q3 historically.
Our weakest quarter for new orders is Q4, and then it gets better in Q1, and then link goes forward.
Because we are still driving our backlog down we will continue to have good shipments in the quarter, but the backlog will definitely go down because.
The fourth quarter order intake tends to be.
A lot smaller than say Q3 Q2.
We believe it will still be larger than it was year over year.
Yes year over year.
Got it.
Yes.
Going back to Scott on the.
Obviously nice to see EPS again.
In terms of the calculation of the non cash loss.
On the FG financial.
Investments.
If I were to sort of create a non-GAAP EPS number would there be a tax difference or just add back in that.
Over $40000 assume theres, there would be non-GAAP net income.
Origin 30 or so.
<unk> 13 cents of non-GAAP EPS is that.
Proper calculation or would there be an adjustment on the tax line.
Now we get tax loss carryforwards. So that number is correct I did the same math and I agree with your math of about 13.
Yeah.
Got it okay.
Definitely put it out there.
That calculation is correctly up to your financials, just noncash nonoperating item.
The company to report more reflective non-GAAP EPS number.
Good point Erin thank you for that input.
Okay. Thank you and congratulations on the progress.
Thank you. Thank you.
Thank you. Your next question is coming from Brett Weiss from Janney Montgomery Scott Your line is live.
Hi, John Hi, Scott.
Good morning, Brett.
John I Havent had a chance to read the 8-K on the agreement between Us and East West.
When I read it.
What are the key.
Clauses in that contract that I should focus on what's important for us in this type of.
Arrangement and.
Putting yourself in the shoes of east West what what was important for them.
Yes.
Sure.
Let me, let me just step back a little bit.
So first.
This is not a new relationship we've been working with east West for over two years and we've had.
Progressive scope.
Increase with them over that period in fact, <unk> first time I met with their CEO is a year last may and June the supply chain crisis in our soliciting their help which they were very nice and accommodating. So we've had a long term relationship and and a successful one in terms of overall performance.
And we've been taking advantage of their global reach and they have I believe 12 manufacturing facilities across the world.
The other comment I would make is.
When you.
When you take a step like this it's a major step because now where we're dependent on east west for making our revenues for our company.
And we don't take that lightly.
And picking the right partner is critical.
One of the criteria.
We used and looked at was.
Picking a partner that was a good fit in terms of size and comparison to BK.
And so when I say that I mean, there are a lot larger contract manufacturers out there.
But if you look at the size of East West.
And you look at the size of BK.
We're in their top 10.
Their customer base.
And so that was an important factor for me.
As I wanted to make sure that when we did have problems in the supply chain and of course it happens.
That they pay attention to us and that we're just not a small customer on their list.
But that we are a significant customer on their list and so those are some of the criteria that we looked at.
When we started down the path with with East West now you can get into a lot of the other details which are in the contract rate their delivery requirements and quality requirements.
But.
At the end of the day I think the important thing for this relationship to be successful is four one BK. We should never forget that these are our products. They just happened to be manufactured in a different facility right. So we almost product. That's one of the reasons why I kept all the machinery and the <unk>.
<unk> lines in our factory so that when we make any changes on our product we can run it through our own facility <unk>.
Before we introduce it into into east West and in production and that does two things right. One we get confidence that the change actually works, we understand the impacts on it before we start to introduce it into production in the second is the time to introducing their production is very short so youre just disruption in production is very short.
We did not enjoy that.
Under our previous arrangements. It was always a battle between getting validation of new products and production. So I.
I think it's more than what you can see in the in the contract specifically I think that the contract is a pretty standard contract that you would see with between that contract manufacturer and a company I think we covered our bases.
In terms of.
Ensuring deliveries and quality.
And again I think it's more about the partner we chosen why we chose east west in the first place.
Great.
Thank you for the answer.
That's all for me.
Thank you.
Thank you. Your next question is coming from Orin Hirschman from AIG H investment partners. Your line is live.
Hi, congratulations on the progress overall, especially the gross margin.
Can you tell US you mentioned another customer.
I assume there's a lots of lots of tests going on.
On the SaaS offering can you kind of bring us up to date are there multiple customers in our lives have they added.
Any additional clients so that you could see how this scales for them.
Whatever you can tell us at this point and there are a lot of tests going on currently.
Yes.
Theres about 20 field trials going on Orange, roughly Wow, so pretty it's pretty significant let.
Let me.
Yes, so from a total revenue standpoint is still very small and it's a handful of customers that have actually paying customers right. So it's not that big but let me let me walk you through and this is this this we see almost every week right. We're at a trade show.
And we had a state customer come by and the salesperson pitched Interop, one says hey, here's here's a here's a solution that provides on demand emergency communications using your smartphone and cellular system.
And the person was so intrigued that the we.
We were invited back to make a presentation to the broader audience at the state level.
And so we did that expecting it would be like a one hour meeting.
The meeting took six hours.
And the beauty of the meeting was it started off as an interop one conversation, but it quickly moved to a b cure and 9000.
Had we had not got in front of this customer with this new radio and for the next five hours. They spent time getting that radio operating on the state system and they were just totally excited about about the radio and then the connection of the radio to Interop, one and that whole vision of tethering. These device.
<unk> together.
And so I kind of look at Interop won on a on a service on its own.
Still TBD in terms of how much revenue that is going to generate for the business, but in terms of pull through and our ability to get in front of customers that perhaps it.
It would be more difficult for us to get in front of us if we didn't have it.
That's really proven itself out people are people are interested in this service and it gives us a great opportunity to present the 9000.
It was going to ask it specifically it goes together nicely with the nine thousands or close even with the 5000 or 9000, and that's why you keep mentioning like that yes.
Yes, it's both radios, but to be honest with you when we're in front of those types of customers. They are interested in a multi band radio.
So yes, it tethers with the BK series radio. So the 5000 9000 any other radio that we bring on under the <unk> series Radio line.
Okay, Great I mean, even if it's small revenues, obviously a million or $2 million as higher margin recurring.
Yes.
5 million share count.
Meaningful.
Yes.
And obviously, it's nice to pull to pull through the hardware will saw the 9000 and the high margin line. Thanks, so much.
Thank you for the question.
Thank you that concludes our Q&A session I will now hand, the conference back to Johnson for closing remarks. Please go ahead.
Thanks, Matt Thank.
Thank you all for participating in today's call. We look forward to speaking with you again, when we report our Q4, all the best to all of you and have a great day.