Q3 2023 Peraso Inc Earnings Call
[music].
Good afternoon, and welcome to Perazzo Inc's third quarter 2023 conference call. At this time, all participants are in a listen only mode.
If anyone needs assistance at any time during the conference call. Please press the star key followed by the zero on your Touchtone phone.
As a reminder, this conference call is being recorded today Monday November 13th 20 twenty-three.
I would now like to turn the call over to the host for todays program. Mr. Jim Sullivan. Please go ahead.
Thanks, operator.
Good afternoon, and thank you all for joining today's conference call to discuss process third quarter 2023 financial results I'm, Jim Sullivan, CFO Fausto and joining me today is Brian Goldberg our CEO.
Today after the market closed we issued a press release and related form 8-K, which was filed with the SEC. The press release and form 8-K are available on <unk> website at Www Dot Perasa, Inc. Dot com under the Investor Relations section. There was also a slide presentation that we will be using in conjunction with today's call.
So through the webcast link on the IR website.
As a reminder comments made during today's conference call May include forward looking statements all statements other than statements of historical fact could be deemed as forward looking.
We're also advises caution and reliance on forward looking statements.
Statements include without limitation any projections of revenue margins expenses non-GAAP gross profit non-GAAP gross margin non-GAAP operating expenses adjusted EBITDA non-GAAP loss cash flows or other financial items, including anticipated cost savings.
Also any statements concerning the expected development performance market share or competitive performance of our products and technologies.
All forward looking statements are based on information available to cross sell on the date hereof.
These statements involve known and unknown risks uncertainties and other factors that may cause process actual results to differ materially from those implied by the forward looking statements, including unexpected changes in the company's business.
More detailed information about these risk factors and additional risk factors are set forth in process process public filings with the SEC.
We're also expressly disclaims any obligation or alter its forward looking statements, whether as a result of new information future events or otherwise.
Sept as required by applicable law.
Additionally, the company's press release the management statements. During this conference call will include discussions of certain measures and financial information in terms of GAAP.
non-GAAP with respect to remarks on today's call involving non-GAAP numbers, unless otherwise indicated weapons amounts exclude stock based compensation expense amortization of reported intangible assets and the change in fair value of warrant liability.
These non-GAAP financial measures definitions and a reconciliation of the differences between them and comparable GAAP measures are presented in our press release, our related form 8-K, which was filed today with the FCC, which.
Provides additional details for.
For those of you unable to listen to the entire call at this time, a recording will be available on the Investor Relations section of our website.
Now I would like to turn the call over to our CEO, rather glibly Chris' prepared remarks Ron.
Thank you Jim Good afternoon, and welcome. We appreciate you joining us on today's call.
I'm pleased to report that our third quarter financial results marked a significant improvement over the prior quarter with total revenue, increasing 87% sequentially and 36% year over year.
Although M M away business continued to reflect lower customer demand due to the ongoing industry inventory correction during the quarter. We commercially commenced initial shipments against the large order backlog associated with the end of life or the memory IC products. This increased revenue contribution from our higher margin memory IC products combined with a sequential increase in sales.
And then way products drove solid gross profit expansion as well as improvement in our bottom line results.
Looking at slide four I want to begin with an update on the end of life of our memory IC products, given a significant positive contribution towards third quarter results.
As a reminder, in may of this year, we notified our memory customers at the end of life. After learning that our foundry partner would be discontinuing the manufacturing process used to fabricate wafers for these products.
The response from customers. Thus far has been very strong to date, we received purchase orders for last time buys from multiple customers totaling $11 $3 million. We commence initial shipments in the third quarter, resulting in revenue of $3 $1 million with the majority of these initial order shipments being fulfilled from the existing inventory.
Our remaining backlog of these end of life orders was approximately $8 $2 million at quarter end and we also have an additional $2 $5 million of backlog associated with production orders based on current manufacturing schedules that are foundry partner, we expect to complete shipments and fulfillment of all outstanding backlog by second half of 2020.
Sure.
The deadline for customers to place final purchase orders for end of life products as late December of this year and we continue to expect total E O L orders to amount between $15 million to $20 million importantly.
Importantly, these collective you end of life orders and shipments are anticipated to contribute meaningful revenue and cash flow over the next several quarters.
As we continue to focus on expanding the customer base for a N N way products.
Turning to slide five and an update on the MMA business with demand from our largest existing customers continued to be impacted by the ongoing industry inventory correction, a large portion of our team's energy and efforts have been centered around our engagement pipeline.
Since August we have increased the combined number of engagements from 80 to 87, primarily reflecting the shades of additional new funnel opportunities. The number of active engagements as of October remained about the same however, I want to highlight this is in part reflective of our recent decision to place a small number of previous engagements on hold and therefore, we exclude them for these metrics.
As we continue to source and evaluate new potential opportunities, we are putting an even greater emphasis on prioritizing the highest quality engagements in terms of both projected economic value and anticipated time to market. We are also diligently allocating their design and engineering resources, coupled with enhancing workflow efficiencies in support of maximizing or expect.
The near term return on investment.
As stated in the past we view our overall pipeline is a leading indicator of progress toward a more diversified customer base and I continue to be encouraged by our expanding number of high quality active engagements.
Within our memory business I'd like to highlight one of the new markets, where we're seeing activity in which is aerospace and defense.
They may have a way to provide some distinct advantages over traditional wireless technologies.
Minimum wage delivers the standard benefits, including high data rates and low latency, however, as compared to the traditional radio signals that radiate in all directions for us it was able to create very narrow focused beams that are more difficult to detect.
And then way provides an inherently stealthy protocol low probability of interception low probability of detection and anti jamming all of which are quite desirable for military communications.
To these ends we received we recently secured our first commercial engagement for the use of it and then wait technology for millimeter wave can be ultra military communications. We are in a customer funded proof of concept stage now and we'd like to be shipping in volume in the second half of 2024 in the meantime, we are engaged on other defense oriented opportunities and we hope to be speaking to that.
On future conference calls.
Moving to slide seven there continues to be strong evidence for accelerating market adoption of 60 gigahertz fixed wireless access in the past two months members of prizes team have participated in.
And three wives industry trade shows all of which feature featured a recognition of the growing momentum around 60 gigahertz and millimeter wave solutions for fixed wireless access applications.
In September we had multiple business development and product executives attend mobile World Congress in Las Vegas, where they showcased prizes latest them and can wave solutions for fixed wireless access in customer premise equipment.
Also in September browser senior director of product marketing Dr. Nadine Hydro was invited to participate on a Q&A panel at Wi Fi World Congress in North America in.
In addition to be joined on the panel by Representatives from airline and Cambium networks DOCSIS.
Doctors, how does Doctor had those participation serves as a great opportunity to elevate awareness of the multi gigabit performance appraisals and EM wave solutions for 60 gigahertz fixed wireless access applications.
More recently, our team hosted meetings with current and prospective customers and partners at Whistler Palooza show in Las Vegas Perazzo also participated in in a vendor spotlight session, which provided a unique opportunity to highlight the growing number of 60 gigahertz unlicensed wireless deployments utilizing our solutions to enable multi gigabit connectivity.
Separately also notable that we're supposed to lose it was ubiquity significant presence given they are the leading fixed wireless access equipment vendor.
So.
Yeah.
You said to deliver multi gigabit connectivity separately also note about whats palooza with ubiquity significant presence given they're the leading fixed wireless access equipment vendor to the wisp market in fact, ubiquity showcase seven different 60 gigahertz products at its booth, including its newest wave pro point to point 60, gigahertz radio that enable speeds of up to three point too.
Gigabits per second this increasing commercial availability of products that support multi gigabit connectivity makes 60 gigahertz of reliable and lower cost competitive alternative to fiber.
Turning to slide eight I want to briefly discuss another new emerging market opportunity that we're seeing and how and then leave solves the challenges faced by other technologies in dense urban environments take.
Take for example, the densely concentrated centers found in emerging markets such as India.
Southeast Asia and parts of Africa, there is rapidly growing demand for internet connectivity in these areas. However, the population density presents a unique set of technology challenges.
First the cost associated with deployment and then also physically security infrastructure make fiber annex at an economical and unrealistic in many of these markets.
Additionally, the sheer number and density of connections contribute to significant wireless congestion interference exceeding the capable tolerances that are suitable for Wi Fi.
Lastly, these emerging geographies frequently have less reliable electricity service, making it important for deployed equipment to sustain operations on low power sources, such as solar and battery power.
Inherently M M way provides a solution to each of these challenges it's beam forming capability minimizing that overcomes the density wireless connection points, enabling more reliable and high bandwidth service.
Remember wave solutions can also be implemented with much lower upfront cost, making deployments more economical for service providers.
Additionally, the higher power efficiency, and then waste solutions enables longer operation on temporary power sources, resulting in reduced service interruptions.
During the third quarter, we formally introduced the Perazzo P. R. M 21, 44 acts as the latest addition to our prospectus series M M wave modules.
Utilizing our X 720, 60 gigahertz chipset, the new P. R. M. 21, 44 acts incorporates 128 element phasor antenna that provides high gain and narrow baked bean with making it an ideal solution for delivering reliable connectivity in dense urban environments.
Looking at slide nine I wanted to show. This updated overview of the risks that are currently use utilizing perazzo enabled hardware today as part of the 60 gigahertz deployments.
To date, we've identified over twenty-five wisps spanning 14 states in the U S and at least for Western Canada. Additionally, we recently confirmed more than one planned 60 gigahertz deployment utilizing our technology outside of North America.
We view this growing list of Louis deployments as further validation of both a growing market traction for 60 gigahertz technology as well as proud of those leading positions and 60 gigahertz M M wave solutions for fixed wireless access.
As demonstrated on the rates that are on the right side of the slide the overall trend and outlook continue to be favorable for fixed wireless access market. In addition to third party research forecasting sustained growth with subscribers over the next several years. The U S. Federal Communications Commission or C. C. Recently published a notice of inquiry.
Vacating for an increase to the standard minimum benchmark for fixed broadband.
As a first step the FCC has proposed an increase from an existing twenty-five three megabits per second benchmark to 120 Megabits per second. Moreover, they are also soliciting comment on a potential longer term goal of one gigabit per second 500 Megabits per second in the future. We believe this and other growing support for gigabit connectivity.
But he will serve as strong drivers for expanded.
Adoption of the N M <unk> fixed wireless access.
As a reminder, perazzo as existing M M waste solutions already fully support and enable multi gigabit connectivity.
In closing we continue to believe there's a substantial market opportunity for president and then wave technology spanning both unlicensed 60 gigahertz unlicensed five G fixed wireless access.
Although we expect the recent headwinds in inventory correction in this.
The area of our business to extend into 2024, we remain encouraged by the continued expansion of our sales engagement pipeline. We are committed to advancing these engagements for an MAA solutions in support of building, a more diversified customer base and achieving sustained future revenue growth.
With that I'll turn the call back to Jim to review third quarter financials and speak to the outlook.
Thank you Ron turning to the results total revenue in the third quarter increased to $4 $5 million, a significant increase from the $2 $4 million in the prior quarter and $3.3 million during the same quarter a year ago.
Product revenue from the sale of our memory integrated circuits and millimeter wave integrated antenna solutions in the third quarter was $4 $3 million.
Paired with $2.2 million in the prior quarter and $3 $1 million in the third quarter of 2022 you.
The sequential and year over year increase in third quarter product revenue was driven by increased shipments in memory IC products, primarily reflecting the initial fulfillment of purchase orders for last time buys.
Royalty and other revenue for the third quarter of 2023 comprised a 0.2 million of royalties from licensees of our memory technology and other revenues for the performance of nonrecurring engineering services for millimeter wave customers.
GAAP gross margin increased to 45, 4% in the third quarter compared with 25, 3% in the prior quarter and 39, 3% in the year ago quarter.
non-GAAP basis, excluding amortization of acquired intangible assets gross margin for the third quarter was 58% compared with 45, 9% in the prior quarter and 52% in the third quarter of 2022.
The higher gross margin for the third quarter was attributable to revenue mix.
The increased revenue contribution from memory IC products.
GAAP operating expenses for the third quarter were $5 $6 million consistent with the $5 $6 million in the prior quarter and compared with $5 $3 million in the third quarter of 2022, which reflected a $2 6 million dollar gain from a license and asset sale transactions.
Total operating expenses for the third quarter of 2023 on a non-GAAP basis, which excludes stock based comp or comp.
Compensation and amortization of reported intangible assets were $4 million.
Paired with $4 $1 million in the prior quarter and $3 $7 million in the same quarter, a year ago, which reflected the $2.6 million gains in license an acid gel transaction.
The decreases in operating expenses reflect the incremental benefits from the cost reduction initiatives I know the previous actions. We began implementing during the second half of 2022 to streamline operations, including the license and asset sale transactions in certain memory technology closed in the third quarter of 2022.
In addition to these previous initiatives earlier. This week, we took further action to reduce operating expenses and implemented an employee layoff and terminated certain consulting positions to further reduce the company's operating expense and cash burn.
The company continues to prioritize business activities and projects that it believes it will have a higher return on investment there.
The reductions impacted 19 full time equivalent positions were approximately 28% of the company's workforce.
As part of the reductions the company implemented a temporary lay offs that impacted its Canadian subsidiary and the company will be determined in 2020 poor weather, the companys financial and business conditions will commit the recall of the impacted employees.
Initial cost reduction benefits and these most recent actions will be realized beginning in the fourth quarter with total annualized savings of up to approximately $2 $2 million. If the company does not recall the impacted employees.
GAAP net loss for the third quarter of 2023, with zero point $6 million or a loss of two cents per share.
Compared with a net loss of $4 $1 million or <unk> 17 per share in the prior quarter and a net loss of $4 million or <unk> 20 per share in the same quarter a year ago.
On a non-GAAP basis net loss for the third quarter of 2023 was $1 $1 million or a loss of four cents per share.
Once you exclude the stock based compensation.
Amortization of acquired intangibles and change in fair value of warrant liability.
This compared with a non-GAAP net loss of $3 million or 12 cents per share in the prior quarter and a net loss of $2 million or a loss per share of 10 cents in the same quarter a year ago.
The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for the third quarter of 2023 was approximately $28 6 million shares, which excludes $1 8 million shares of our common stock and exchangeable shares shares that are currently escrowed.
Adjusted EBITDA, which we define as GAAP net income or loss as reported excluding stock based compensation.
Amortization of acquired intangibles change in fair value of warrant liability interest expense depreciation amortization and the provision for income taxes was negative zero point $9 million in the third quarter compared with negative $2 $8 million in the prior quarter and negative $1 $8 million in the prior year period.
From a balance sheet perspective as of September 30th 2023, the company had cash and cash equivalents of approximately zero point $7 million.
Subsequent to September 30 of 'twenty to 'twenty, three we collected approximately $3 7 million or <unk>.
Memory into life proceeds.
Including 2.2 million included in accounts receivable at September 30th Zero.
$4 million related to October shipments and a possible $1 $1 million of customer deposits to fund inventory purchases.
As discussed in my earlier remarks, we recently implemented steps to meaningfully reduce the company's near term operating expenses and cash burn.
However, due to our expectation for continued operating losses and cash burn the company will need to raise additional capital the capital through equity or debt arrangements as described in our quarterly report on Form 10-Q for the quarterly period ended September 32023.
With respect to our business outlook, our near term visibility continues to be impacted by multiple factors that make it difficult to confidently forecast the full range of potential outcomes specific to the fourth quarter.
These factors primarily include the channel and uncertainty associated with the broader macro environment and end market demand as well as the yet to be determined duration of the ongoing inventory correction.
As such today, we are not in a position should provide specific guidance for the current quarter.
Do you sense that one or more of these factors become more certain we will consider providing future potential updates relating to our near.
Jeremy expectations.
This concludes our prepared remarks, and now I'll turn the call back over to the operator to assist us with the Q&A session.
Operator.
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions. Once again Thats Star one if you have a question or comment.
The first question comes from Kevin Liu with K, Liu <unk> Company. Please proceed.
Hi, good afternoon, guys and congrats on the improved results this quarter.
That's the point.
Question I had was just on the memory IC end of life.
In terms of the backlog that you see currently in the purchase orders you anticipate that the shipments against those to be fairly consistent as you make your way through the middle of next year.
Or are there going to be periods, where you know those shipments are more heavily concentrated.
Yeah, I would say of the current you know on September 30th we had $8 million of backlog just a rate rally in the backlog still sitting there.
We expect that to ship through the third quarter of 2024.
Obviously, we are projecting additional orders to be received there in late December ideally prior to the holidays.
Right now we currently see that shipping into you know kind of the first half of 2025.
Hum.
You know, it's it's really going to pick up I would say there is definitely an increase in the.
Starting in the second quarter of 'twenty four.
Part of it was obviously for the first quarter of 'twenty four we were awaiting orders. So we didn't build inventory.
We basically shipped everything we could in this third quarter and we're in the process of building additional product.
But we really don't ramp until the second quarter of 'twenty four and that continues you know kind of second and right now second and third quarters of 'twenty, four or probably the heaviest and then it starts to.
You know reduce but not in an extreme slope.
Understood that's helpful.
Just on the inventory position how much of a build sequentially was it tied to the memory business versus millimeter wave and then more generally as you look forward and you start to build up the additional orders and so we expect that inventory to continue to build through kind of the middle of next year or do you think you're at a fairly healthy level now where you can.
You know kind of based on the orders coming in.
You know right now we you know the.
Majority of the inventory at September 30 was on a millimeter wave products. So.
We did have an increase during the quarter ended September 30th as we had commitments for wafers, which were shipped to us by our foundry.
So we were able to cancel some of those orders or at least delay them you know starting in the third quarter. So the inventory increase was primarily there.
On the memory side, we've you know base as I said basically we shipped what we could and it was obviously work in process of war.
For our bandwidth engine three product, where we are awaiting orders, we expect to come from two customers. There we've had that inventory and frankly don't need to build anymore, unless the orders really exceed our expectations.
I think we'll see some increases in in memory of inventory in the fourth quarter is where you don't put in place a regular wafer orders.
And in some cases, maybe some so straits to and hopefully that will be offset by reductions in millimeter wave as we see our millimeter wave customers beginning to get on your own.
Back on track, particularly in early 'twenty four.
Got it and cutting to millimeter wave for a second you guys talked about some interesting kind of new markets from your aerospace and defense as well as a bit uncertain environment, but maybe give us a sense for how significant are the initial customers youre talking to could be in terms of revenue next year.
And in General you know, how youre thinking about the overall market sizing relative to that kind of a fixed wireless access market.
Sure Kevin Thanks for the question like AR on the so the dense urban environment. You know is it is a you know in a new it. It's obviously a commercial environment not a military environment and it's it's it's actually the customer forecasts are equal anything we've seen.
You know so far in terms of the volume so but you know it's we need the proof is in the pudding, obviously, but one of the nice thing about the market as the cat like the opportunity is significant right. I mean, there's always a billion people that live in dense urban environments around the world and you know it's kind of interesting because over the last you know.
A few months, we realized them in millimeter wave the challenge and maybe you know we went through it quickly in the call, but you know.
You know the real advantage. We bring here is there's a couple of really important again is just the ability to service dense environments. I mean, very very dense environments and were talking you know customers who are 10 15.
15 15 feet apart.
But the other one that's actually quite interesting is our ability to transmit and you know again this isn't a in a dark but I mean to transmit at full at full rates under 10 watts. So so basically these many of these places have run on battery life have very poor electricity infrastructure. So they run off.
Battery powered so it was it was vital that we you know we're able to write up that batteries for problem probably half the time, so our ability to run it at full full full performance with with reduced battery with reduced power consumption was critical so we actually I think were twenty-four it's gonna be a ramp year.
But we should see it you know we're hoping you know later this year and get into early Q1, but obviously, we'd like to explore you know [laughter] you know other opportunities globally for for this market. So its something that we do really well we were exposed to this opportunity over the last few months and it's something we're going to expand on.
That's good to hear the second part of my question right.
Right.
Now the second part of that was just also on the A&D side of the equation and just kind of the opportunity there.
Yeah, that's more exploratory, let's say like I said it was a proof of concept like I think that again on the military side of things I mean, whether the value proposition is one of the keys there as we as the stealth ability of millimeter wave in the on the battlefield.
Where we're still exploring that in terms of what the volumes look like dense urban is really more of a more of an opportunity like a shorter term higher volume opportunity that we can get our arms around right now.
Sounds good good luck against those initiatives and then I'll turn it over thanks.
Thanks, Thanks, Kevin Thanks, Kevin.
The next question comes from David Williams with benchmark David. Please proceed.
Hey, good afternoon, gentlemen, and thank for the let me ask a question here.
I'm just kind of wanted to touch on on the the funnel that you have in your presentation and can you just kind of walk through that and help us understand I mean, you're getting some really nice growth. There in terms of the funnel and things are moving through just hoping for maybe a little more color on how youre seeing the final how things are developing and if theres anything thats moving there that's either in la.
Or maybe out of line with what your expectations are thanks.
Well for sure Dave the you know the way the market's shaping up is and again I think the theme generally has cut congestion or Wi Fi right and so basically you know obviously the market and we've talked about for several quarters as big like let's call. It North American fixed wireless access right and that's more of a suburban rural.
And that's the with that we've been talking about it and so that's you know that's that's constitutes a certain segment of the pipeline.
We our analysis, which we are starting to see some consumer electronics.
And you know the value against kind of the same value proposition is that you know high data rates, but again, I mean congested environment and I think you know we.
Obviously realize now that millimeter wave does a great job in a congested environment and so were seeing up so some so I'm actually quite quite nice volume opportunities in consumer electronics. So that's constituting a certain portion of our pipeline.
You know other you know other opportunities are in transportation, we're seeing some some opportunities in transportation, mostly in Asia I would say specifically so that's you know part of that pipeline and.
And then of course aerospace.
The military so I would say those are the kind of the main drivers for the pipeline right now if you will.
We've also got I mean this is public information. We also have a very good relationship with Richardson R. A P. D and you know there are you know.
That relationship is really paying off and it really hadn't coloring some terrific opportunities for us so that helps with our pipeline as well both in North America as well as around the world. So that's been a great relationship as well for ourselves and for our sales pipeline.
Okay fantastic. Thanks.
And then if you think about your your millimeter wave inventory, that's either a in house or maybe are sitting at your customers. What is it going to take do you think to get through this how much just sitting out there and and you said you think maybe the first part of the year is there anything that gives you hope maybe that we could see something kind of kick in at the end of this year and I guess, you're trying to under.
Stand up the inventory impact and how long it will take to really digest that.
You know we were at Las Vegas, Whisper Pellucid, three weeks ago, and I you know I think that so the good news is that you know guys like ubiquity, who are the market leaders in fixed wireless.
You know had seven or eight products on display and so that was and you know I mean, the test that the feedback we did get from West was that you know those promos 60 gigahertz products or are they call them bulletproof right. I mean, they worked really really well and probably exceeded expectations.
Problem is there's more of an education process.
Going on in that market and and so you because he's done a fantastic job of starting to promote it.
In fact, we've done some kind of videos with their with their distributors now so I would say really more into Q1 Q2 is when we're going to start to see the new orders come online right. Because you know they just it's taken a little longer for them to reach their their volumes than they were hoping and then obviously with the whole inventory correction where people.
We're already ahead of the curve you know we've got a bleed through that so I'd say no.
So hard to hard to imagine that over the next eight weeks, we're going to see a lot of orders, but you know hopefully into late Q1 early Q2, we'll start to see that shift.
That makes sense.
It does very helpful. Thank you and then maybe Jim just just thinking about the balance sheet, obviously, you're a little low on cash there, but you've got some nice a build up in inventory and the working capital. So it'd be good to see that get freed up but I guess in the in the near term.
What do you what do you think are the or I guess, how are you feeling about your your liquidity here and are there any puts and takes things that we should be thinking about as we kind of kind of parts of it.
Yeah sure no I mean, it's a you know an important question here.
Yeah cash flows low at the end of the quarter, but Fortunately you know as I highlighted in my script, you know about $3 7 million came in from the O L alone.
You know between.
You know the end of the quarter and I think up through last week.
So that's definitely given US you know a lot more breathing room and visibility and particularly the the prepayment to fund you know wafer purchases, which we have been making which I you know I think speaks to our confidence in our business. We didn't you know we had held off on some back in the summer, but I'd turn the turn the faucet back on there.
You know right now it's a function of building inventory to just shipped to the memory orders. Both you know we kind of look at them internally is D. O L. And then there are still regular production running as well so like I said, we shipped what we could in the you know in the third quarter.
To fulfill orders our customers have been very supportive of taking inventory and in addition, accelerating payment terms to generally pay within.
10 to 14 days, which as you know huge to improve our working capital.
Yeah, we are expecting to bring the burn down there and you know obviously you talked about some of the you know paying for cost reduction actions, we took specifically last week, which was.
Difficult, but unfortunately, you know we had to reduce opex and burn, but we remain optimistic optimistic about prospects and are still chasing you know I think a quarter or two had talked about you know opportunities for funded development et cetera.
Current macroeconomic environment and uncertainties have really slowed those down but we are still looking to chase one of those down in and.
Have a need to.
You know a business needs to bring folks back to to support those but you know looking out here.
I will say in our 10-Q, where you now funded into the first quarter. We're obviously taking actions to to dress up a D O L.
Having the visibility of those orders here in the next you know kind of you.
You know six to 10 weeks or six eight weeks it'll be a critical as we as we assess it you know we are you know are always alert to financing opportunities as well.
You know as any company in our position.
Position and it should be.
Yeah.
Okay, great. Thanks, so much Joe and I certainly appreciate the time.
Thank you Dave.
Okay. We have reached the end of the question and answer session. There are no further questions in queue. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.