Q2 2024 Mobix Labs Inc Earnings Call
Good afternoon. Thank you for standing by and welcome Tim Obese Slobs, Inc. Second fiscal quarter 'twenty 'twenty four financial results conference call.
Operator: Good afternoon. Thank you for standing by, and welcome to Mobix Labs, Inc.'s second fiscal quarter 2024 financial results conference call. Please be advised that today's conference is being recorded and a replay will be available on Mobix's Investor Relations website. In addition, this call includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our second quarter earnings release posted on the Investor Relations section of our website. I would now like to hand the conference over to Lori Barker, Director of Investor Relations. Please go ahead.
Speaker Change: He's been advised todays conference is being recorded and a replay will be available on mobile <unk> Investor Relations website.
Speaker Change: In addition, this call includes non-GAAP financial measures reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our second quarter earnings release posted on the Investor Relations section of our website.
Speaker Change: I would now like to hand, the conference over to Lori Parker Investor Relations. Please go ahead.
Lory Barker: Thank you good afternoon, everyone I'm Lory Barker Investor relations for <unk> slabs, and I'd like to thank you for joining us today as we report <unk>.
Lori Barker: Thank you. Good afternoon, everyone.
Lori Barker: I'm Lori Barker, investor relations for Mobix Labs, and I'd like to thank you for joining us today as we report Mobix's second fiscal quarter 2024 financial results for the period ending March 31st. With me on the call today are Fabian Battaglia, Mobix's Chief Executive Officer, and Kayvon Samini, President and Chief Financial Officer. This call is simultaneously being webcast on the Investor Relations section of our website at MovixLabs.com. Before we get started, I would like to remind everyone of our Safe Harbor Policy.
Lory Barker: Second fiscal quarter 2020 for financial results for the period ending March 31.
Speaker Change: With me on the call today are Fabian the tagline <unk>, Chief Executive Officer, <unk>, <unk>, President and Chief Financial Officer.
Speaker Change: This call is simultaneously being webcast on the Investor Relations section of our website at <unk> Dot com.
Lori Barker: Comments made during this conference call and webcast contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. For example, any statement that refers to expectations, projections, or other characterizations of future events, including financial projections, future market conditions, or future product enhancements or developments, is a forward-looking statement. Movix's actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in our SEC filings.
Speaker Change: Before we get started I would like to remind everyone of our safe Harbor policy comments made during this conference call and webcast contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties any statements that refers to <unk>.
Lori Barker: Mobix assumes no obligation to update any forward-looking statements, except as required by law. For greater detail about risks and uncertainties, please see our SEC filings, including our Form 10-Q for the quarter ended December 31, 2023, and the section titled Risk Factors in our Form S-1 Amendment, filed on May 2, 2024. With that, I will turn the call over to Fabian Battaglia. Fabian, please go ahead. Thank you
Speaker Change: Patients projections or other characterizations of future events, including financial projections future market conditions for future product enhancements for development is a forward looking statement.
Speaker Change: <unk> actual future results could differ materially from those expressed in such forward looking statements for any reason, including those listed in our SEC filings.
Speaker Change: Thanks assumes no obligation to update any forward looking statements, except as required by law.
Speaker Change: For greater detail about risks and uncertainties. Please see our SEC filings, including our Form 10-Q for the quarter ended December 31, 2023, and the section titled Risk factors in our form S. One amendment filed on May <unk> 2024.
Speaker Change: With that I will turn the call over to Fabian Fabian. Please go ahead.
Fabian Fabian: Thank you Laurie today, we are excited to host our first earnings call as a public company we've.
Fabian Battaglia: Thank you, Lori. Today, we are excited to host our first earnings call as a public company. We have had several exciting developments so far in 2024, and today, I'll review the March quarter and share our overarching strategy with you. Kayvon, our President and CFO, will follow with financial comments.
Fabian Fabian: We've had several exciting developments so far in 2024 and today I'll review the March quarter and share our overarching strategy with you.
Fabian Battaglia: In the March quarter, we grew revenue sequentially by more than 300 percent, and it was a record quarter for product revenue. This confirms that our acquisition strategy is successfully expanding our portfolio of innovative products and extending our customer base and related SAM. In the first few months as a public company, we've already executed foundational milestones. We signed a committed equity facility that provides for up to $100 million, which we believe positions us well for acquisitions, including the recently announced acquisition of Rage Systems.
Speaker Change: Kayvon, our president and CFO will follow with financial comments.
Speaker Change: In the March quarter, we grew revenue sequentially by more than 300% and it was a record quarter for product revenue.
Speaker Change: This confirms that our acquisition strategy is successfully expanding our portfolio of innovative products and extending our customer base and related Sam.
Speaker Change: And the first few months as a public company, we've already executed foundational milestones.
Speaker Change: We signed a committed equity facility that provides for up to a $100 million.
Speaker Change: Which we believe positions us well for acquisitions, including the recently announced acquisition of Rage systems.
Speaker Change: Right systems as a provider of joint design and manufacturing services for the development of radio frequency technologies for a variety of customers in the fields of millimeter wave <unk> communications radar sensors and imaging sensors.
Fabian Battaglia: Rage Systems is a provider of joint design and manufacturing services for the development of radio frequency technologies for a variety of customers in the fields of millimeter-wave 5G communications, radar sensors, and imaging sensors. Tremendous synergies exist between our products and those that Rage brings to us, and we believe customers from both companies will benefit substantially from our expanded offering. As a past customer of Mobix Labs, we know the team at Rage well.
Speaker Change: Tremendous synergies exist between our products and those that rage brings to us and we believe customers from both companies will benefit substantially from our expanded offering.
Speaker Change: As the past customer of <unk> labs, we know the team at range well. We are excited to have Russell sphere, and Jeff door rages co founders and their team joined <unk> labs, as we accelerate our comprehensive industry, leading tech portfolio and next generation wireless communications.
Fabian Battaglia: We are excited to have Russell Sear and Jeff Daw, Rage's co-founders, and their team join Mobix Labs as we accelerate our comprehensive, industry-leading tech portfolio in next-generation wireless communication. This RAGE acquisition follows quickly on the heels of the acquisition of EMI in late December. Integration of EMI is completed, and we have announced several critical contracts for electromagnetic interference filtering products to defense and aerospace customers, serving well-known companies like BAE, General Dynamics, Raytheon, and Lockheed Martin.
Speaker Change: This rage acquisition follow up quickly on the heels of the acquisition of EMI in late December.
Speaker Change: Integration of EMI is completed and we have announced several critical contracts for electromagnetic interference filtering products to defense and aerospace customers.
Speaker Change: <unk> well known companies like VA General dynamics, Raytheon and Lockheed Martin.
Fabian Battaglia: Most recently, we announced the delivery of EMI solutions to the U.S. military for the Tomahawk missile systems, and we have been awarded contracts for the M1 Abrams tank and the Javelin missile system. We are excited about what the EMI and RAGE acquisitions bring to Mobix Labs, and along with the up to $100 million equity facility, we feel confident that we are rapidly and efficiently assembling the foundational elements necessary to execute our strategy Also, we have announced the addition of Aeroelectronics as our global distribution partner to support our growing business. In this first call as a public company, I'll discuss our history, our strategy, our markets, and our products.
Speaker Change: Most recently, we announced the delivery of EMR solutions to the U S military for the Tomahawk missile systems, and we are awarded contracts for the M. One Abrams tank and the javelin missile system.
Speaker Change: We are excited about what the EMI rage acquisitions bring to <unk> labs, and along with the up to $100 million equity facility. We feel confident that we are rapidly and efficiently assembling the foundational elements necessary to execute our strategy.
Speaker Change: Also we have announced the addition of Arrow electronics is our global distribution partner to support our growing business.
Speaker Change: In this first call as a public company I will discuss our history, our strategy markets and products.
Speaker Change: We were founded to simplify development reduce costs and maximize performance of wireless millimeter wave <unk> products used primarily for infrastructure applications.
Fabian Battaglia: We were founded to simplify development, reduce costs, and maximize performance of wireless millimeter-wave 5G products used primarily for infrastructure applications. Innovation is at our core, and we already have over 40 patents issued or pending. Like past transformations from 1G through 4G, demand continues to expand for both bandwidth and coverage, and infrastructure gets built over many years as it becomes economically viable. With the advancements in the areas of AI, autonomous vehicles, remote surgery, and other high-bandwidth, data-intensive applications, the need for innovative solutions at the component level, like our IP-rich solutions, will contribute to the deployment of advanced wireless infrastructure.
Speaker Change: Innovation is at our core and we already have over 40 patents issued or pending.
Speaker Change: Like past transformations from <unk> through <unk> demand continues to expand for both bandwidth and coverage and infrastructure gets built over many years as it becomes economically viable.
Speaker Change: With the advancements in the areas of AI autonomous vehicles remote surgery and other high bandwidth data intensive applications the need for innovative solutions at the component level like our IP rich solutions will contribute to the deployment of advanced wireless infrastructure.
Speaker Change: But today.
Fabian Battaglia: But today, while the 5G mmWave market is nascent, we are leveraging these early investments and diversifying into other synergistic applications. We believe that, along with our acquisitions, these synergistic products will fuel our revenue growth and help build deeper customer relationships, which, when combined with our continued innovation, will be instrumental to Mobix Labs' growth as the 5G market emerges. Today, we are proud to be doing business with more than 200 customers.
Speaker Change: While the <unk> millimeter wave market is nascent.
Speaker Change: We are leveraging these early investments and diversifying into other synergistic applications.
Speaker Change: We believe that along with our acquisitions. These synergistic products will fuel our revenue growth and help build deeper customer relationships, which when combined with our continued innovation.
Speaker Change: We will be instrumental to mobile slabs growth as the <unk> market emerges.
Speaker Change: Today, we are proud to be doing business with more than 200 customers.
Speaker Change: We anticipate this number to grow as we introduce more products like the recently announced high power RF switches focused on the land and mobile radio or LMR market.
Fabian Battaglia: We anticipate this number to grow as we introduce more products like the recently announced high-power RF switches focused on the land and mobile radio, or LMR, market. The LMR market is going through a transition from the current push to talk to utilizing a higher frequency spectrum and providing data and video. This allows first responders, firefighters, police, and military personnel to send secure data or still photos over standard wireless radio.
Speaker Change: The LMR market is going through a transition from the current push to talk to utilizing a higher frequency spectrum and providing data and video.
Speaker Change: This allows first responders firefighters police and military personnel to send secure data, we're still photos over standard wireless radio.
Fabian Battaglia: This development validates our strategy to continue developing state-of-the-art solutions for the infrastructure and wireless markets. Our innovative products provide the necessary technology to enhance future devices in the field. Since our inception, as part of our commitment to enhancing communication services, our corporate strategy has evolved to encompass the pursuit of synergistic product acquisitions in diverse industry sectors, including aerospace, defense, medical, and automotive. This strategy not only expands our customer base but also extends our current customer footprint, making Mobix Labs a key partner in allowing our customers to reduce their number of suppliers.
Speaker Change: This development validates our strategy to continue developing state of the art solutions for infrastructure and wireless markets.
Speaker Change: Our innovative products provide the necessary technology to enhance future devices in the field.
Speaker Change: Since our inception as part of our commitment to enhancing communication services. Our corporate strategy has evolved to encompass the pursuit of synergistic product acquisitions and diverse industry sectors, including aerospace defense medical and automotive.
Speaker Change: This strategy not only expands our customer base, but also extends our current customer footprint, making mortgage labs, a key partner and allowing our customers to reduce their number of suppliers.
Speaker Change: Each acquisition.
Fabian Battaglia: Each acquisition must meet strict criteria to help accelerate Mobix Labs' growth and cash generation, and Rage System is an excellent example of a company expected to grow by more than 40% in the remainder of our fiscal year. Also, the acquisition is projected to be immediately accretive.
Speaker Change: Must meet strict criteria to help accelerate <unk> growth and cash generation and rate system is an excellent example of a company expected to grow by more than 40% and the remainder of our fiscal year.
Speaker Change: Also the acquisition is projected to be immediately accretive.
Speaker Change: Earlier in my remarks, you heard how both EMI in the rage acquisitions. During the last few months continued to add to our scale and accelerate our innovative offerings.
Fabian Battaglia: Earlier in my remarks, you heard how both the EMI and the RAGE acquisitions during the last few months continued to add to our scale and accelerate our innovative offering. This has led to expanding our end markets and diversifying our offerings, which in turn has added to the stability of our business. Also, in 2021, we acquired CoSemi, a global supplier of high-speed connectivity solutions, including a broad range of AOCs and optical engines.
Speaker Change: This has led to expanding our end markets and diversifying our offerings, which in turn added to the stability of our business.
co semi: Also in 2021, we acquired co semi.
Speaker Change: A global supplier of high speed connectivity solutions, including a broad range of Alc's and optical engines.
Fabian Battaglia: This acquisition was an earlier validation of our ability to acquire and integrate teams and technology. Our leadership has a solid track record of identifying the right assets and integrating teams and technology. You might have seen our recent announcement of the appointment of Mike Long, former CEO of Arrow Electronics, to our Board of Directors.
Speaker Change: This acquisition wasn't earlier validation of our ability to acquire and integrate teams and technology.
Speaker Change: Our leadership has a solid track record of identifying the right assets and integrating the teams and technologies.
Speaker Change: You might have seen our recent announcement of the appointment of Mike long former CEO of Arrow electronics to our board of directors.
Fabian Battaglia: Mike is an excellent example of the Board's impressive track record, including several of us who have been instrumental in growing well-known companies such as MicroSemi, Skyworks, and Broadcom. Another unique part of our strategy is how we go to market. We believe our strategy is highly scalable and allows us to quickly integrate acquisitions using manufacturing reps and distributors as extended resources. We believe this model enables us to blanket wide geographies and can help support high growth. It is made possible by leveraging strong relationships developed over multiple decades.
Speaker Change: Mike is an excellent example of the board's impressive track record, including several of US who are instrumental in growing well known companies such as micro semi skywards and broadcom.
Speaker Change: Another unique part of our strategy is how we go to market we believe.
Mike Long: Our strategy is highly scalable and allows us to quickly integrate acquisitions using manufacturing reps and distributors has extended resources.
Speaker Change: We believe this model enables us to blanket wide geographies and can help support high growth it.
Speaker Change: It is made possible by leveraging the strong relationships developed over multiple decades.
Speaker Change: Through our acquisitions and go to market strategy, we've amassed four product lines.
Fabian Battaglia: Through our acquisitions and go-to-market strategy, we have amassed four product lines. First, Wireless Components. Demand for data has exploded to enable many current and future data-intensive applications, including Alternative Reality, Virtual Reality, Autonomous Vehicles, and the Internet of Things, or IoT sensors. All of these and others in development will impose added strain on existing wireless networks. The next generation of wireless networks, including 5G mmWave and beyond, is expected to revolutionize the way data is transferred worldwide. However, due to the complexities of 5G millimeter wave, substantially more complicated systems will be required, needing multiple antennas and RF front-end devices.
Speaker Change: First wireless components.
Speaker Change: Demand for data has exploded to enable many current and future data intensive applications, including alternative reality virtual reality autonomous vehicles, and the internet of things for Iot sensors.
Speaker Change: All of these and others in development.
Speaker Change: Will impose added strain on existing wireless networks the.
unknown: The next generation of wireless networks, including <unk> millimeter wave and beyond is expected to revolutionize the way data is transferred worldwide.
Speaker Change: Due to the complexities of hygiene millimeter wave substantially more complicated systems will be required needing multiple antennas and RF front end devices.
Speaker Change: RF front ends for wireless enabled products and infrastructure will be driven by cost and power efficiency and they need to be highly integrated and manufactured in high volumes utilizing low cost and readily available manufacturing such as Cmos technology to reduce per unit.
Fabian Battaglia: RF front ends for wireless-enabled products and infrastructure will be driven by cost and power efficiency, and they need to be highly integrated and manufactured in high volumes utilizing low-cost and readily available manufacturing, such as CMOS technology, to reduce per-unit costs. Our second product line is EMfilter. The electromagnetic filtering market is experiencing significant growth due to increased demand for noise reduction and signal integrity in electronic devices. Our filtering devices are designed to reduce electromagnetic interference. Our high-reliability filters are designed to consistently meet or exceed performance requirements and are vitally important to any industry with a high cost of failure.
Speaker Change: Cost.
Speaker Change: Our second product line is M filters electric.
Speaker Change: Electromagnetic filtering market is experiencing significant growth due to increased demand for noise reduction and signal integrity and electronic devices.
Speaker Change: Our filtering devices are designed to reduce electromagnetic interference.
Speaker Change: Our high reliability filters are designed to consistently meet or exceed performance requirements and are vitally important to any industry with a high cost of failure.
Fabian Battaglia: Currently, our filtering products from the EMI acquisition are widely used in various applications and industries, including aerospace, military, defense, and healthcare. In the summary of the March quarter, you heard me mention several key wins, particularly in the military and defense, third product line. This is our exciting new offering mentioned earlier from the acquisition of Rage Systems.
Speaker Change: Currently our filtering products from the <unk> acquisition are widely used in various applications and industries, including aerospace military defence and healthcare.
Speaker Change: In the summary of the March quarter, you heard me mentioned several key wins, particularly in military and defense.
Speaker Change: The third product line.
Speaker Change: Airless systems.
Rage systems: This is our exciting new offering mentioned earlier from the acquisition of Rage systems.
Fabian Battaglia: These are specialized products for 5G communications, millimeter-wave imaging, and software-defined radios. Our wireless systems offerings are targeted at a number of markets, including physical security, defense, industrial, and communication. Typical products designed and manufactured include 2, 3, 4, and 5G O-RAN systems and subsystems, millimeter wave modules for threat scanning, and highly integrated systems for multiple aerospace and defense applications.
Speaker Change: These are specialized products for <unk> communications millimeter wave imaging and software defined radios.
Speaker Change: Our wireless systems offerings are targeted a number of markets, including physical security defense industrial and communications.
Speaker Change: Typical products designed and manufactured include 234, and five <unk> systems and subsystems millimeter wave modules for threat scanning and highly integrated systems for multiple aerospace and defense applications.
Fourth Aoc: Fourth Aoc or active optical connectors.
Fabian Battaglia: Connectivity demand for high bandwidth and low latency connections is necessary for both wireless and optical connections for many applications. For example, professional audio-video or pro-AV systems, such as video conferencing, are capitalizing on the advantages of AOC connections to provide high bandwidth and uncompressed high-definition signals with low latency over greater distances. These four product lines combine to serve diverse end markets, such as infrastructure, automotive, consumer premise equipment, high reliability, military aerospace, satellite communications, medical, and security.
Speaker Change: Connectivity demand for high bandwidth and low latency connections as necessary for both wireless and optical connections for many applications. For example, professional audio video or pro Avi systems, such as video conferencing are capitalizing on the advantages of ALC connections to provide.
Speaker Change: High bandwidth in uncompressed high definition signal with with low latency over greater distances.
Speaker Change: These four product lines combined to serve diverse end markets infrastructure automotive consumer premise equipment high reliability military aerospace satellite communications medical and security.
Fabian Battaglia: In the future, I will tell you more about these markets. In addition to these diversified markets and products, and our strong leadership team focused on acquisitions, I want to tell you more about our other competitive strengths. Our millimeter-wave 5G chip designs are based on a CMOS process, which enables higher levels of integration, leading to more cost-effective solutions that accelerate our customers' time to market.
Speaker Change: In the future I will tell you more about these markets.
Speaker Change: In addition to these diversified markets and products and our strong leadership team focused on acquisitions I want to tell you more about our other competitive strengths our millimeter wave <unk> chip designs are based on our Cmos process, which enables higher levels of integration leading to more cost effective solutions.
Speaker Change: Does that accelerate our customers' time to market.
Fabian Battaglia: Another competitive strength and customer benefit is that we are a U.S.-based supplier. Many of our customers produce mission-critical applications for wireless communications, defense, and medical markets, with domestic manufacturing preferred. Additionally, nearly all of our offerings are proprietary in nature.
Speaker Change: Another competitive strength and customer benefit is that we are a U S based supplier.
Speaker Change: Many of our customers produce mission critical applications in the wireless communications defense and medical markets.
Speaker Change: With domestic manufacturing preferred.
Speaker Change: Nearly all of our offerings are proprietary in nature, our customer engagements are directly with their development teams, where we work side by side to help solve technical challenges.
Fabian Battaglia: Our customer engagements are directly with their development teams, where we work side by side to help solve technical challenges. It's this design-centric methodology that leads to technological breakthroughs and creates value for our customers and Mobix Labs. In future calls, I will be highlighting key design wins as they are core to our operating strategy. In summary, I'm excited about March quarter's execution on Fundamental Milestones and our recent synergistic product acquisition of Rage Systems.
Speaker Change: This design centric methodology that leads to technology breakthroughs and creates value for our customers and <unk> labs.
Speaker Change: In future calls I will be highlighting key design wins as it is core to our operating strategy.
Speaker Change: In summary, I am excited about March quarters execution on fundamental milestones and our recent synergistic product acquisition of <unk> systems.
Fabian Battaglia: Looking ahead, we believe we have set the stage for Mobix Labs' continued best-in-class innovative solutions to capture opportunities in the wireless, connectivity, and electromagnetic filtering industries, which we expect will create a versatile company that serves diverse marketing needs. Now Kayvon will take you through our financials.
Speaker Change: Looking ahead, we believe we have set the stage for mobile labs continued best in class innovative solutions to capture opportunities in wireless connectivity electromagnetic filtering industries, which we expect will create a versatile company is that serves diverse end markets.
Speaker Change: Now we will take you through our financials Kayla.
Kayvon Samini: Thanks, Fabian. In my comments today, I will take you through the financial highlights of our recent acquisition of Rage, review our second fiscal quarter ending March 31st, and I'll provide our outlook for the third and fourth fiscal quarters. The numbers I will be discussing represent non-GAAP unless otherwise stated. I'm thrilled to report that we've not only met but exceeded our top-line expectations for the second quarter.
Kayla: Thanks, Vivien and my comments today I will take you through the financial highlights of our recent acquisition of Rage review, our second fiscal quarter, ending March 31, and I'll provide our outlook for the third and fourth fiscal quarters. The numbers I will be discussing represent non-GAAP unless otherwise stated.
Speaker Change: I am thrilled to report that we've not only met but exceeded our top line expectations for the second quarter, our financial performance for our second fiscal quarter ending March 31, 2024 was exceptionally strong we saw more than 300% sequential increase in revenue quarter over quarter, our gross margin increased to three.
Kayvon Samini: Our financial performance for our second fiscal quarter, ending March 31, 2024, was exceptionally strong. We saw more than a 300% sequential increase in revenue quarter over quarter. Our gross margin increased to 33.7% of net revenue, up from 8.4% for the immediately preceding quarter. In the longer term, we are committed to achieving a 60% gross margin and a 30% operating margin. We plan to ramp up our R&D spending and SG&A expenses as we grow. However, we foresee gross profits increasing more significantly than operating expenses due to the synergies we expect to capture. Our loss from operations held steady at $4.1 million, mirroring the prior quarter.
Speaker Change: 33, 7% of net revenue up from eight 4% for the immediately preceding quarter.
Speaker Change: In the longer term, we are committed to achieving a 60% gross margin and a 30% operating margin we plan to ramp up our R&D spending and SG&A expense as we grow however, we foresee gross profits increasing more significantly than operating expenses due to the synergies weeks expect to capture our.
Speaker Change: Loss from operations held steady at $4 1 million marrying the prior quarter. Our loss from operations has decreased by $1 6 million compared to last year, driven by higher revenue better gross margins and improved operating expense leverage.
Kayvon Samini: Our loss from operations has decreased by $1.6 million compared to last year, driven by higher revenue, better gross margins, and improved operating expense leverage. Recently, we finalized an agreement to acquire Rage Systems. This strategic acquisition, valued at 1.4 times Rage's projected calendar 2024 revenue of $8.5 million, is poised for substantial growth with just north of a 40% increase in revenue expected in both 2024 and 2025. As we move forward, the integration of RAGE systems is expected to significantly increase our revenue.
Speaker Change: Recently, we finalized an agreement to acquire <unk> systems. This strategic acquisition valued at one four times rages projected calendar 2020 for revenue of $8 5 million is poised for substantial growth with just north of a 40% increase in revenue expected in both 2024 and.
Speaker Change: 2025 as.
Company CEO: As we move forward the integration of range systems is expected to significantly increase our revenue.
Kayvon Samini: For the third fiscal quarter of 2024, we are forecasting consolidated revenues between $1.8 million and $2.2 million. To provide a perspective, our total revenue for the 2023 fiscal year was $1.2 million. We forecast robust revenue growth in our fourth fiscal quarter ending September 30th of $2.6 to $3.2 million. Looking at our balance sheet, we ended the quarter with $3 million of cash compared to $14.8 million at the end of our prior quarter.
Company CEO: For the third fiscal quarter of 2024, we are forecasting consolidated revenues between $1 8 million and $2 $2 million to provide a perspective, our total revenue for 2023 fiscal year was $1 $2 million.
Company CEO: We forecast robust revenue growth in our fourth fiscal quarter ending September 30 of.
Company CEO: Of two six to $3 2 million looking at our balance sheet, we ended the quarter with $3 million cash compared to the $14 8 million at the end of our prior quarter. The change in our cash balance includes the repayment of debt payments for the acquisition of EMI merger related cost and cash used in our op.
Kayvon Samini: The change in our cash balance includes repayment of debt, payments for the acquisition of EMI, merger-related costs, and cash used in our operations. Thanks to a $100 million equity line of credit from B Riley Securities, we have access to substantial liquidity to support our ambitious growth through strategic acquisitions. Each acquisition is targeted to be quickly accretive as we work diligently to enhance our revenue, gross margins, and operating income over the coming year.
Company CEO: <unk>.
Company CEO: Thanks to a $100 million equity line of credit from B Riley Securities, we have access to substantial liquidity to support our ambitious growth through strategic acquisitions. Each acquisition is targeted to be quickly accretive as we worked diligently to enhance our revenue gross margins and operating income over the coming year.
As the operator prepares us for questions and answers I would like to mention that we look forward to seeing some of you in may at the upcoming B Riley conference in California, and the TD Cowen TMT Conference in New York.
Kayvon Samini: As the operator prepares us for questions and answers, I'd like to mention that we look forward to seeing some of you in May at the upcoming B. Reilly Conference in California and the T.D. Cowan TMT Conference in New York. Operator, we're now ready to take questions. Thank you. The floor is now open to questions.
Speaker Change: Operator, we're now ready to take questions.
Operator: Thank you. The floor is now open to questions. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. We will pause for a moment. Your first question comes from the line of Craig Ellis with B Raleigh Securities. Your line is open.
Speaker Change: Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star One again, we will pause for a moment.
Speaker Change: Your first question comes from the line of Craig Ellis with B Riley Securities. Your line is open.
Craig Ellis: Yes, thanks for taking the question and appreciate all the information on this call team, So Phoebe and I wanted to go back to some of the prepared remarks you have.
Craig Ellis: Yeah, thanks for taking the question and I appreciate all the information on this call team. So, Fabian, I wanted to go back to some of the prepared remarks you have and focus in on your description of the four product lines for the company. I'm hoping you could provide some qualitative color on your view of the relative growth potential of those businesses, both near term and longer term, so we have a better sense of how you're seeing growth unfold for the company.
Speaker Change: And and focus in on on your description of the four product clients for the company.
Speaker Change: What you could do is provide some qualitative color on your view on the relative growth potential of those businesses.
Speaker Change: The near term and longer term. So we have a better sense of how you're seeing gross growth unfold for the company.
Speaker Change: Sure.
Fabian Battaglia: Well, first of all, thanks for calling in, Craig. I appreciate the question. So all four of our product lines, we are anticipating growth; there are varying degrees of growth with each. But again, our criteria that we use when we look at acquisitions is, you know, number one, is it synergistic to what we're developing internally? Is it bringing us new markets? Is it bringing us new customers, or is it bringing us an added footprint to an existing project that we're interested in?
Speaker Change: First of all thanks, Carl and Craig I appreciate the question.
Speaker Change: So all four of our product lines, we are anticipating growth there is.
Speaker Change: Various degrees of growth with each.
Speaker Change: But with.
Speaker Change: Again, our criteria that we use when we look at acquisitions is number one is it synergistic to what we're developing internally.
Speaker Change: Is it bringing us new markets.
Speaker Change: Is it bring us new customers or is it bringing us.
Speaker Change: Added footprint to an existing project debt that we're interested in so all four of those product lines go through that criteria, we anticipate growth in all four of those product lines.
Fabian Battaglia: So all four of those product lines go through that criteria. We anticipate growth in all four of those product lines, and you can see our opportunity funnel in our CRM. There are more opportunities coming in each and every day, and we're very pleased with the growth.
Speaker Change: And you could you could see our opportunity funnel and our CRM.
Speaker Change: There is more opportunities coming in each and every day and we're very pleased with the growth.
Fabian Battaglia: Yeah, nice to hear. And then on the related question, you've made clear that you expect to be acquisitive with the business, and that's one of the uses of resources that you have at your disposal and plan to have at your disposal. The question is this, as we look at the four product groups, beyond wireless systems, where we've got the in-progress Rage Deal, is there equal or particularly notable potential for inorganic growth in the other three segments or further in wireless systems? Yeah.
Speaker Change: Nice to hear and then the related question you've made clear that you expect to be acquisitive with the business.
Speaker Change: It's one of the uses of resources that you have.
Speaker Change: At your disposal and plan to have at your disposal. So the question is this as we look at the four product groups beyond wireless systems, where we got to.
Speaker Change: In progress Rage deal.
Speaker Change: Is there equal or or particularly notable.
Speaker Change:
Speaker Change: Potential for for inorganic growth and the other three segments or further on wireless systems.
Fabian Battaglia: Yeah, I would say that in the business that Rage brings to us, those customers are, I would say, more defined, and there are projects that are being developed specifically for those customers. If you look at our other product lines, it's a combination of development that's targeted at specific customers, but I would say more so for a market segment.
Speaker Change: I would say that in the business that rage brings to us those customers are.
Speaker Change: I'd say more defined and there are projects that are being developed specifically for those customers.
Speaker Change: If you look at our other product lines, it's a combination of.
Speaker Change: Development, that's targeted for specific customers, but I would say more so for a market segment.
Speaker Change: Yeah.
Speaker Change: That's helpful. And then I was hoping I could just get some further insight on the Aero distribution agreement, so nice to see a global leader.
Fabian Battaglia: That's helpful. And then I was hoping I could just get some further insight on the Arrow distribution agreement. So, nice to see, you know, a global leader as one of the ways you can go to market. The question is this, as we think about any distributor's capability to serve either a demand generation or a fulfillment function, how do we think about the way Arrow augments the Mobix business? And as we think about that, how should we think about the mix of go-to-market capability between direct sales and direct outreach versus what you'll try to do via distribution?
Speaker Change: It was one of the ways you can go to market. The question is this.
Speaker Change: As we think about any distributors capability to serve either a demand generation.
Speaker Change: Or fulfillment function, how do we think about the way arrow augments the <unk> business.
Speaker Change: And as we think about that how should we think about the mix of go to market capability between.
Speaker Change: Direct sales in direct outreach versus what youll try to do via distribution.
Speaker Change: So we look at distribution for both fulfillment and demand creation and Thats why we chose to connect with Arrow and we've had a lot of experience with arrow.
Fabian Battaglia: So, we look at distribution for both fulfillment and demand creation, and that's why we chose to connect with Arrow. And we've had a lot of experience with Arrow, so again, we look at it from both directions. We obviously, with our internal resources, we're connected directly to the design teams at our customers. And in many cases, we'll do the heavy lifting on the design side, but we do lean on Arrow, and we have a high degree of confidence that Arrow can help on the demand creation side, as obviously they're gonna be supporting the fulfillment side.
Speaker Change: So again, we look at it from both directions.
Speaker Change: We obviously with our internal resources, we're connected directly with the design teams at our customers and in.
Speaker Change: Many cases will do the heavy lifting on the design side, but we do lean on Arrow and we have high degree of confidence that <unk> can help on the demand creation side is obviously theyre going to be supporting the fulfillment side.
Kayvon Samini: Yep, and then lastly one for Kayvon, and I'll get back in the queue. Kayvon really appreciates getting the further color just beyond calendar 2Q with calendar 3Q on revenue potential. Can you just confirm the relative contribution between what RAGE is adding to the guidance for the immediate and at quarter versus what the organic business is doing. Thanks very much, guys.
And then lastly, one for <unk> and I'll get back in the queue Kayvon really appreciate getting the further color just beyond a calendar <unk> calendar <unk> on revenue potential can you just confirm the relative contribution between what rages, adding into.
Speaker Change: The guidance for the immediate.
Speaker Change: <unk> versus <unk>.
Speaker Change: The organic business is doing thanks, very much guys.
Speaker Change: Yes, so we expect that range will will provide a sizable.
Kayvon Samini: Yes, so we expect that RAGE will provide a sizable portion of our Q3 and Q4 revenue. However, we're not really ready to break that down in any great detail simply because we have a pretty aggressive M&A strategy in place, and we don't think it's going to serve the market or us well to start breaking those numbers down right now.
Speaker Change: Portion of the Q3 and Q4 revenue however.
Speaker Change: We're not really ready to break that down in any great detail simply because we have a.
Speaker Change: We've got a pretty aggressive M&A strategy in place and we don't think it's going to serve the market or S welfare to start breaking those numbers down right now.
Speaker Change: Got it.
Speaker Change: Thanks, guys.
Speaker Change: Thank you. Thank you.
Speaker Change: Your next question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.
Tevin Cassidy: Your next question comes from the line of Tevin Cassidy with Rosenblatt Securities. Your line is open.
Tevin Cassidy: Yes, thanks for taking my question and congratulations on the milestones you achieved and the great progress you're making. My questions are maybe along those lines with the distributors, but even the manufacturing rep strategy for go-to-market. And as you're making acquisitions, I guess right now you're already saying you're supplying 200 customers. Are there reps in place around the country or worldwide? Or what's the strategy as you grow the market for your manufacturing rep?
Kevin Cassidy: Yes, Thanks for taking my question and congratulations on the milestones we achieved in the great progress Youre, making.
Kevin Cassidy: My questions are maybe along those lines with the distributors, but even the manufacturing strategy.
Speaker Change: Strategy for go to market.
Speaker Change: As you are making acquisitions I guess right now you're already saying youre supplying 200 customers.
Speaker Change: Their reps in place around the country are worldwide or what's the strategy as you grow the market for your manufacturing reps.
Speaker Change: Sure.
Fabian Battaglia: Sure. Yes, we do have manufacturer's reps. They are in place today. We do make good use of them, and they do help with the design and cycle, or the demand creation part of it. Going forward, we anticipate that we will have a hybrid sales model. So we'll make use of external resources as well as our internal resources. I think what you'll see going forward is that we're going to be adding more resources in the form of FAEs and AEs that will work alongside both our reps and our distributors.
Sure Yes.
Speaker Change: Yes, we do have manufacturers reps they are in place today.
Speaker Change: We do make good use of them and they do help with the design in cycle or the demand creation part of it.
Speaker Change: We going forward, we anticipate that we will have a hybrid sales model. So we will make use of extended resources as well as our internal resources I think what youll see going forward, we're going to be adding more resources in the form of FAA ease in aes that we will work alongside both our rep.
Speaker Change: And our distributors, but we will lean on our extended resources to do some of the demand creation.
Fabian Battaglia: But we will lean on our extended resources to do some of the demand creation work for us. And we have high confidence in those that we're engaged with now. And we've had longstanding relationships with them, and we've had great success with them in the past. So we're highly confident that our model is effective, and we do intend to use all three.
Speaker Change: Work for Us and we have high confidence with those that were engaged with now and we've had long standing relationships with them and we've had great success with them in the past. So we're highly confident that our model.
Speaker Change: It is effective and.
Speaker Change: We do intend to use all three.
Tevin Cassidy: Okay, great. I understand.
Speaker Change: Okay, Great I understand.
Speaker Change: Maybe.
Speaker Change: Ed.
Tevin Cassidy: And maybe on the great expansion of gross margin, quarter over quarter. Can you talk about that? You went from 8.4% to 33.7%. You know, what drove that expansion. Right.
Speaker Change: Great expansion of gross margin quarter over quarter can you talk about that.
Speaker Change: Eight 4% 33, 7%.
Speaker Change: What drove that expansion.
Kayvon Samini: Right, so the expansion of that gross margin is based on a mix of our higher margin business, which is with the filters and connectors, and with our lower margin, which are the other products that we have in our in our portfolio.
Speaker Change: Right so the expansion of that.
Speaker Change: Of that gross margin is based on a mix of our higher margin business, which is with the filters connectors and with our lower margin.
Speaker Change: Which are the other products that we that we have in our.
Speaker Change: And our portfolio.
Speaker Change: Yes.
Tevin Cassidy: I see. And so going to your target for 60% gross margin will be like a similar mix as you grow each one of those product segments.
Speaker Change: Going to your target for a 60% gross margins will it be like a similar mix as you grow each one of those product segments.
Kayvon Samini: No, our growth towards the 60 and 40 percent is based on our strategy that we plan to execute on as we move forward with additional M&A and also as we gain further operating expense leverage as we continue to grow, be able to reduce our operating expenses, and increase our operating margin.
Speaker Change: No our growth towards the 60 and 40% is is based on.
Speaker Change: Based on our strategy that we plan to execute on as we move forward with with additional M&A and also as we gain further operating expense leverage.
Speaker Change: As we continue to grow be able to reduce our operating expenses increase our operating margin.
Speaker Change: Okay, Okay, great. Thanks.
Tevin Cassidy: I see. Okay, great. Thanks.
Speaker Change: Okay.
Speaker Change: There are no further questions at this time this will conclude today's conference call. We thank you for joining.
Operator: There are no further questions at this time. This will conclude today's conference call. We thank you for joining us. You may now disconnect your line.
Speaker Change: You may now disconnect your lines.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.