Q2 2024 Haivision Systems Inc Earnings Call
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Krista: My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Haivision second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Christa: Thank you for standing by my name is Christa and I will be your conference operator today at this time I would like to welcome everyone to the high vision second quarter 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question.
Krista: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I will now turn the conference over to Miko Wischka, Chairman and Chief Executive Officer. You may begin. Thank you, Christa, and good afternoon,
Speaker Change: And the answer session, if you'd like to ask a question during that time simply press star followed by the number one on your telephone keypad and if he likes to withdraw that question again press Star one. Thank you I will now turn the conference over to me go, which Scott Chairman and Chief Executive Officer, you may begin.
Christa: Dan.
Miroslav Wicha: Thank you, everyone, on the call for joining us today to discuss our second quarter and six-month results for our fiscal year 2024, ended on April 30th. As demonstrated by the results we announced earlier today, business fundamentals just keep getting stronger. We've been telling you that we would significantly increase our operational efficiency in adjusted EBITDA throughout the past 18 months, and our Q2 performance continues in that direction, with some noteworthy highlights. I'd like to begin with exciting news regarding our control room business transformation, to a higher margin, quote, and manufacturer model from the old bespoke full integrator model. This transition has exceeded our expectations and is progressing much quicker than previously planned. Now, we have always said that this transformation... will be at the expense of Topline.
Christa: Thank you Christa and good afternoon, everybody well. Thank you everyone on the call for joining us today to discuss our second quarter and six month results for fiscal year 2024, which ended on April 30th.
Miroslav Wicha: However, what is left is a proprietary high-margin business. It's just good business; it's something we've been planning for and working towards all year. The great news is that we can see positive results already within the first six months of 2024. We expected this to be an 18- to 24-month transition.
Christa: Oh demonstrated by the results, we announced earlier today.
Christa: Our business fundamentals just keeps getting stronger.
Speaker Change: We've been telling you that we will significantly increase our operational efficiency and adjusted EBITDA throughout the past 18 months.
Speaker Change: And our Q2 performance continue in that direction.
Speaker Change: With some noteworthy highlights.
Miroslav Wicha: But it now looks like we'll accomplish the business transition within this fiscal year, which is great news. Our partners and resellers globally are very happy to see us embracing partner models, scale this business, and getting away from being an integrator and basically seen as a competitor supplying these complete custom installations, including selling the third-party screens, keyboards, networking equipment, and even furniture. Now, this time next year, the net positive revenue gain will be more apparent, together with solid and consistent high growth margins.
Speaker Change: I'd like to begin with exciting news regarding our controllable and business transformation.
Speaker Change: Our higher margin quote manufacturer model from the old bespoke full integrator model.
Speaker Change: This transition has exceeded our expectations.
Speaker Change: And it's progressing much quicker than previously planned.
Speaker Change: Now we have always said that this transformation will be at the expense of top line.
Speaker Change: However, what is left is a proprietary high margin business, which is good business. This is something we've been planning for and working towards all year.
Speaker Change: Great News is that we can see positive results already within the first six months of 2024.
Speaker Change: We expected this to be an 18 to 24 months transition.
Speaker Change: But now it looks like we will accomplish the business transition within this fiscal year, which is great news.
Speaker Change: Our partners and resellers globally are very happy to see us embracing the partner model to scale this business and getting away from being an integrator and basically is seen as a competitor supplying these complete custom installations, including selling the third party screen.
Speaker Change: <unk> networking equipment and even furniture.
Speaker Change: Now this time next year, the net positive revenue gains will be more apparent together was solid and consistent high gross margins.
Miroslav Wicha: We expect to be training and preparing many of our strategic partners worldwide on the new Command360 fully scalable platform by the end of this year in preparations for a full-blown rollout in fiscal 2025, a full year ahead of schedule.
Speaker Change: We expect to be training them preparing many of our strategic partners worldwide on the new <unk> hundred 60 fully scalable platform by the end of this year in preparation for a full blown rollout in fiscal 2025 a.
A full year ahead of schedule.
Miroslav Wicha: Now, let me briefly discuss some of the numbers. Our Q2 gross margins were significantly higher than last year's Q2, going from 68.9 to 71.7. We've been saying all along that we would deliver increased gross margins, but once again, we continue to deliver what we said we would. We also delivered an adjusted EBITDA of $5.1 million, which represents a whopping 92% improvement from our previous... and an impressive 14.8% operating margin. It's also the third quarter in a row with the mid-teens level of operational performance. Exactly as we promised, we will deliver.
Speaker Change: Now, let me briefly discuss some of the numbers.
Speaker Change: Our Q2 gross margins were significantly higher than last year's Q2 going from $68 nine to $71 seven.
Speaker Change: All along that we would deliver increased gross margins. Once again, we continue to deliver what we said we would.
Speaker Change: We also delivered adjusted EBITDA of $5 1 billion.
Speaker Change: Which represents a whopping 92% improvement.
Speaker Change: Previous Q2.
Speaker Change: And the impressive 14.8% operating margin was also the third quarter in a row, we've seen the mid teens level of operational performance again exactly as we promised we would deliver.
Speaker Change: Okay.
Miroslav Wicha: It's also noteworthy to mention that our Q2 performance now gives us a 12-month trailing adjusted EBITDA of $20.3 million. Another impressive metric, promised to deliver back in 2023, safely say that we are well on our path to delivering on our promise of a two-year adjusted EBITDA nearly tripling. The EBITDA performance from the $8 million derived in fiscal 2020.
Speaker Change: Also noteworthy to mention that our Q2 performance now.
Speaker Change: It gives us a 12 month trailing adjusted EBITDA of $23 million. Another impressive metric, we promised to deliver back in 2023.
Speaker Change: I can safely say that we are well on our path on delivering on our promise of a two year adjusted EBITDA nearly tripling you.
Speaker Change: EBITDA performance from the $8 million derived in fiscal 'twenty to 2022.
Miroslav Wicha: I'd say not many tech companies can say that these days. Now we have also delivered yet another positive net income quarter, with a noteworthy 162% increase over the last year's Q2. Again, demonstrating what we have been saying all along, that we will show much higher increases in our profitability, and we expect this trend to continue throughout 2024 and 2025. Let me also add that our balance sheet has never looked so strong.
Speaker Change: No I'd say not many tech companies can say that these days.
Speaker Change: Now we have also delivered yet another positive net income quarter with.
Speaker Change: With a noteworthy 162% increase over last year's Q2.
Speaker Change: Again, demonstrating well we've been saying all along that we will show much higher increase in our profitability and we expect this trend to continue throughout 'twenty four 'twenty five.
Let me also add that our balance sheet has never look so strong.
Miroslav Wicha: As we have been saying over and over, we are moving quickly towards achieving our goal of delivering 20% EBITDA performance. With our Q2 performance, it should give you even more comfort that this is going to happen. Let me quickly touch on some of the latest U.S. federal government budget delays and the continuing resolutions that marred the first half of the year for all federal government suppliers, not just Haivision. Constant political bickering and congressional delays in approving the budget have stalled or delayed projects within the military and federal government institutions throughout the year.
Speaker Change: As we've been saying over and over we are moving quickly towards achieving our goal of delivering 20% EBITDA performance.
Speaker Change: Our Q2 performance it should give you even more comfort that this is going to happen.
Miroslav Wicha: We have seen many government suppliers feeling this pain throughout the industry. Now, the good news for Haivision is that we didn't lose any deals, and no deals that we were working on were canceled. Although several projects have been pushed to the right and have been delayed due to the inability for Congress to approve them, Unfortunately, I don't think we can expect to see any federal employees working overtime to catch up on the backlog.
Speaker Change: Let me quickly touch on some of the latest U S Federal government budget delays.
Speaker Change: And the continuing resolutions that marred the first half of the year for all federal government suppliers not just high vision.
Speaker Change: Constant political bickering and congressional delays in approving the budget has stalled or delayed projects within the military and federal government institutions throughout the U S.
Speaker Change: Now we have seen many government supplier feeling this pain throughout the industry. The good news for high vision.
Speaker Change: Is that we didn't lose any deal and.
Speaker Change: And no deals that were working on were canceled.
Speaker Change: Although several projects have been pushed to the right and had been delayed due to the inability for Congress to approve a timely budget.
Speaker Change: Unfortunately, I don't think we can expect to see any federal employees working overtime to catch up on the backlog.
Miroslav Wicha: Thus, we should see projects eventually coming back within the next few quarters. The good news is that the money is starting to flow again, but it will take a while to catch up to the normal levels expected at this time of year. We do, however, anticipate the year-end buying cycle to be strong for the government's September year-end, which is especially typical during election season. And we continue to see strong demand for our global security operational centers within the global financial banking industry. Cybersecurity, police centers, federal installations, public safety, and, in fact, all defense sectors.
We should see the projects eventually coming back within the next few quarters and the good news is that the money is starting to flow again, but we'll take take a while to catch up to the normal levels expected at this time of the year.
Speaker Change: We do however, anticipate the year end buying cycle to be strong for the government's September year end, which is especially typical during the election year.
Speaker Change: We.
Speaker Change: You see strong demand for our global security operational centers.
Within the global financial banking industry.
Speaker Change: Cyber Security Police center federal installations public safety and in fact, all defense sectors on the need for our customers to have real time mission critical and secure access to all their video sources and assets for real time analysis or situational awareness is even more critical.
Miroslav Wicha: The need for our customers to have real-time, mission-critical, and secure access to all their video sources and assets for real-time analysis or situational awareness is even more critical. Our investments in additional salespeople and focused business development worldwide with strategic partners set us up for solid growth in 2020 and beyond. But Dan will go through all the finances in detail. Let me reiterate the annual guidance we gave back in January, delivering an adjusted ibadah in the mid-teens, well on target, while delivering higher margins and growth in operational performance is also well on target, considering our planned transformation in the control room business is way ahead of schedule.
Our investments in additional salespeople and bulk of business development worldwide with strategic partners will set us up for solid growth in 2000 20-F.
Speaker Change: And beyond.
Speaker Change: Dan will go through all the financials in detail but.
Speaker Change: Let me reiterate our annual guidance, we gave back in January <unk>.
Dan: Delivering an adjusted EBITDA in the mid teens as well on target.
Dan: While delivering higher margins and growth and operational performance.
Dan: So well on target.
Dan: Considering our planned transformation on the control of our business is way ahead of schedule and.
Miroslav Wicha: Due to some delays in federal spending, our top line will be lower than anticipated, but all of our profitability metrics are well on track. And this has been our main focus and the most important metrics for this fiscal year. A better-than-expected transformation of controlling business will set us up for a much healthier and profitable business moving forward. All in all, a great performance.
Dan: Some of the delays in federal spending our top line will be lower than anticipated.
Dan: All of our profitability metrics are all on track.
Dan: And this has been our main focus in the most important metrics for this fiscal year.
Dan: Our better than expected transformation, our controller business will set us up for a much healthier profitable business moving forward.
Dan: In all a great performance.
Speaker Change: Now finally.
Miroslav Wicha: [inaudible] We believe that Haivision has a very bright future because we have now delivered, not just promised, delivered. Trailing 12 months of Justin Ibbidorf, $20.3 million, as I said. That cannot be taken away from us.
Speaker Change: We believe that hydrogen is a very bright future ahead.
Speaker Change: As we have now delivered not just promise are delivered.
Speaker Change: Trailing 12 month, adjusted EBITDA of $20 3 million as I said.
Miroslav Wicha: It is no longer a promise. It is our actual performance. We are committed to maximizing long-term value for all of our shareholders. We are confident in our ability to execute on our strategic plan and deliver continued growth and even higher operational performance. And I hope that the investment community will finally realize that we are significantly undervalued, in terms of both revenue and now even our EBITDA. So Dan, please feel free to continue with the detailed financial analysis. Thank you.
That cannot be taken away from us it is no longer a promise it is our actual performance.
Speaker Change: We're committed to maximizing long term value for all of our shareholders. We are confident in our ability to execute on our strategic plan and deliver continued growth and even higher operational performance.
Speaker Change: I hope that the investment community will finally realize that we are significantly undervalued in terms of both revenue and now even on our EBITDA multiples.
So Dan please feel free to continue with the detailed financials.
Speaker Change: Thank you.
Dan Rabinowitz: Now that Mirko has already stolen most of my thunder, I'm going to try to make the numbers a bit interesting. Here is the revenue for the second quarter of fiscal 2024. There are 34.2 million. That's a modest decrease of 900,000 or 2.7% from the prior year. But as we've discussed on previous calls, we fully exited the managed services business focused on house and church customers in April of 2023. The second quarter 2023 revenues included $1.2 million in cloud solutions revenue versus only $100,000 in the second quarter of fiscal 2024. That is a $1.1 million decrease year over year. However, normalizing to the decision to exit the house of worship verticals, we did experience growth, albeit modest growth.
Dan: Now that Marco has already stolen most of my Thunder I'm going to try to make the numbers a bit interesting.
Revenue for the second quarter of fiscal 2024 was $34 2 million.
Dan: Modest decrease of 900000 or two 7% in the prior year.
Dan: But as we've discussed on previous calls we fully exited the managed services business focused on households ship customers in April of 2023.
Dan: The second quarter 2023 revenues included $1 2 million in cloud solutions revenue versus only 100000 in the second quarter of fiscal 2024.
Dan: That is a $1 $1 million decrease year over year.
Dan: Normalizing for the decision to exit the house of worship vertical we did experienced growth, albeit modest growth.
Dan Rabinowitz: But there is more to this revenue story. As Mirko alluded to, we have been transitioning our control room business away from that of a system integrator, where we provide bespoke solutions that include such low-margin, third-party components like screens, and in some cases, even furniture, to that of a manufacturer of proprietary hardware and software systems. This transition will enable us to scale the business much more quickly, particularly in international markets.
Dan: But there is more to this revenue story.
Dan Rabinowitz: It will also enable existing and new channel partners to offer those same third-party components to end-users and derive the benefit from the incremental margins that may result. In other words, it's an added incentive for those channel partners to want to work with Haivision in this control room space. This transition, particularly in the public safety and enterprise verticals, is happening at a much faster rate than originally anticipated; we will likely see increasing gross margins in that space as it's difficult for us to charge a premium for these off-the-shelf third-party components. However, this transition will be at the expense of top-line revenue, albeit at the expense of a less profitable top line. Additionally, we introduced a long-term rental program, which was initially focused on the transmitter market.
Speaker Change: As miracle alluded to we've been transitioning our control room business away from that of a system integrator.
Speaker Change: We provide the spoke solution that includes such low margin third party components like screens and in some cases, even furniture to that of a manufacturer of proprietary hardware and software systems.
Speaker Change: This transition will enable us to scale the business much more quickly, particularly in international markets.
Speaker Change: It will also enable existing and new channel partners to offer those same third party components to end users and derive the benefit from the incremental margins that may result.
Speaker Change: In other words, it's an added incentive for those channel partners partners to want to work with hydrogen in this control room space.
Speaker Change: This transition, particularly in the public safety and enterprise verticals is happening at a much faster rate than originally anticipated.
Speaker Change: We will likely see increasing gross margins in that space.
Speaker Change: It's difficult for us to charge a premium for these off the shelf third party components.
Speaker Change: However, this transition will be at the expense of top line revenue.
Speaker Change: Albeit at the expense of lapsed less profitable topline revenue.
Speaker Change: Additionally, we introduced our long term rental program, which was initially focused in the transmitter markets.
Dan Rabinowitz: This initiative enables our customers to recognize an ongoing operating experience, rather than a capital expense. It also enables them to future-proof their purchases as they would have access to the newest technologies when available. The fact of the matter is that our competitors offer such a program in the transmitter space, and those sales would not be otherwise available to us if we didn't offer a program that is very competitive with our competitors. However, for Haivision, there are additional benefits.
Speaker Change: This initiative enables our customers to recognize an ongoing operating expense.
Speaker Change: Other than a capital expense.
Speaker Change: It also enables them to future proof their purchases as they would have access to the newest technologies when available.
Speaker Change: The fact of the matter is that our competitors offers such a program in the transmitter space and those sales would not be otherwise available to us. If we didn't offer program that is very competitive those of our competitors.
Speaker Change: However for high vision there are additional benefits.
Dan Rabinowitz: First of all, it enables us to increase our recurring revenue posture, which is a key focus for us, and it enables us to derive higher gross margins over the life of these agreements. We are happy to say that we've already experienced significant success having converted a high-profile customer away from our competitors. Revenue for the six months ended April 30th was $68.7 million, a very modest $400,000 decrease from the prior year comparative period.
Speaker Change: First of all it enables us to increase our recurring revenue posture, which is a key focus for us.
Speaker Change: And it enables us to derive higher gross margins over the life of these agreements.
Speaker Change: We are happy to say that we've already experienced significant success, having converted a high profile of customer away from our competitors.
Speaker Change: Revenue for the six months ended April 30 was $68 7 million.
Speaker Change: A very modest $400000 decrease from the prior year comparative period.
Dan Rabinowitz: Again, this year-over-year comparison is impacted by the decision to exit the House of Worship vertical in April 2023. Year-to-date, we had cloud solutions revenues of only $300,000, compared to 3.2 million in the prior year comparable period.
Speaker Change: Again this year over year comparison is impacted by the decision to exit the house of worship vertical in April 2023.
Speaker Change: Year to date, we had cloud solutions revenues of only $300000 compared to $3 2 million in the prior year comparable period.
Dan Rabinowitz: That is a $2.8 million decrease year over year. However, normalizing for the decision to exit the house of worship vertical, we actually experienced a growth of about four percent. And let's not forget that year-to-date results are also being impacted by our transition away from that of a system integrator in the control room space and our long-term rental program. Recurring revenue, which we define as cloud solutions and maintenance and support, was $6.5 million in the second quarter and about $12.9 million on a year-to-date basis, representing approximately 19% of total revenue.
Speaker Change: That is a two $8 million decrease year over year.
Speaker Change: And normalizing for the decision to exit the hazard wish a vertical we actually experienced a growth of about 4%.
Speaker Change: And let's not forget that year to date results are also being impacted by our transition away from that of a system integrator in the control room space and our long term rental program.
Speaker Change: Recurring revenue, which we define as cloud cloud solutions and maintenance and support for $6 5 million in the second quarter and about $12 $9 million on a year to date basis, representing approximately 19% of total revenue.
Dan Rabinowitz: As has been the case for the last four quarters, recurring revenue as a percentage of revenue is down from prior year comparative periods. However, we anticipated the decline once we exited the House of Worship vertical with our managed service offering.
Speaker Change: As has been the case for the last four quarters recurring revenue as a percentage of revenue is down from prior year comparative periods. However, we had anticipated the decline once we exited the hustle, which vertical with our managed service offering.
Dan Rabinowitz: For this quarter, gross margins were 71.7%, a significant improvement from the 68.9% realized the prior year, and we are seeing similar improvements on a year-to-date basis. Gross margins on a year-to-date basis were 72.3%, compared to 67.8% in the prior year compared to the same period. That is a 450 basis point improvement. Now, I want to mention that gross margins for the last four quarters have been fairly consistent, averaging around 72.5%. At the risk of sounding like a broken record, The improvements can be attributed to four factors.
Speaker Change: But this quarter.
Speaker Change: Gross margins were 71, 7% a significant improvement from the 68, 9% realize the prior year.
Speaker Change: And we are seeing similar improvements on a year to date basis.
Speaker Change: Most margins I mean year to date basis were 72, 3% compared to 67, 8% in the prior year comparative period that is a 450 basis point improvement.
Speaker Change: Now I want to mention that gross margins for the last four quarters have been fairly consistent averaging around 72, 5%.
Speaker Change: At the risk of sounding like a broken record.
Speaker Change: The improvements can be attributed to four factors.
Dan Rabinowitz: First, our decision to exit the House of Worship vertical, which had high relative fixed costs and the margins for bandwidth and storage were being squeezed. Secondly, we have digested the majority of high-priced, difficult-to-secure components that we purchased to secure top-line revenue. So we're seeing our margins on our proprietary products reverting to historical averages. We completed our migration of ERP systems at both MCS and AVI West, so our supply chain folks have more visibility into these day-to-day operations.
Speaker Change: First our decision to exit the house of worship vertical which had high relative fixed cost.
Speaker Change: The margins for bandwidth and storage were being squeezed.
Speaker Change: Secondly, we have digested the majority of high priced difficult to share.
Our components that we purchased to secure topline revenue.
Speaker Change: So we're seeing our margins on our proprietary products reverting to historical averages.
Speaker Change: We completed our migration of ERP systems at both Mcs and Abbvie West So our supply chain folks have more visibility to these day to day operations.
Dan Rabinowitz: And as more of our business transitions away from bespoke implementations or migrates to longer-term rentals, margins may continue to improve just a bit. With that said, there is still some degree of seasonality with respect to the timing of revenues by vertical market. Thus, we may continue to see some variability in gross margins based on the mix of solutions sold in any given quarter.
Speaker Change: And as more of our business trends.
Speaker Change: <unk> away from the spoke implementations.
Speaker Change: Or migrates to longer term rentals margins may continue to improve just a bit.
Speaker Change: With that said there is still some degree of seasonality with respect to the timing of revenues by vertical market.
Speaker Change: Thus, we may continue to see some variability in gross margins based on the mix and solutions.
Speaker Change: In any given quarter.
Dan Rabinowitz: To give you a sense of how the seasonality in our business may impact margins, our fourth quarter is commensurate with the U.S. government's year end. Our revenues are typically disproportionately weighted to our performance hardware products like the Makito, which have robust gross margins. We will likely continue to see our fourth quarter margins being slightly better than that of other quarters. Total expenses for the second quarter were $22.7 million.
Speaker Change: To give you a sense of how the seasonality in our business may impact margins, our fourth quarter is commensurate with the U S government year end.
Speaker Change: Our revenues are typically disproportionately weighted to our performance hardware products like the mosquito, which have robust gross margins.
Speaker Change: We will continue we will likely continue to see our fourth quarter margins being slightly better than that of other quarters.
Speaker Change: Total expenses for the second quarter were $22 7 million.
Dan Rabinowitz: That's a decrease of 2.4 million when compared to the same period in the prior year. As we've said before, our cost structure is heavily weighted towards compensation and related expenses. We ended the quarter with 365 employees compared to 380 employees a year ago. Approximately half of the year-over-year decrease can be attributed to compensation-related expenses, particularly in the research and development and sales and marketing areas, the focus of recent restructuring efforts. The remaining year-over-year differences can be attributed to occupancy expenses as we continue to rationalize our space decisions, and decreases in amortization and depreciation expense.
Speaker Change: That's a decrease of $2 4 million when compared to the same period in the prior year.
Speaker Change: As we've said before our cost structure is heavily weighted towards compensation and related expenses.
Speaker Change: We ended the quarter with 365 employees compared to 380 employees a year ago.
Speaker Change: Approximately half of the year over year decrease can be attributed to compensation related expenses, particularly in the research and development and sales and marketing areas. The focus of recent restructuring efforts.
Speaker Change: The remaining year over year differences can be attributed to occupancy expenses as we continue to rationalize our space decisions.
Speaker Change: Decreases in amortization and depreciation expense.
Dan Rabinowitz: Decreases in professional services and technology and communications as our back office continues to become more efficient and the more efficient use of digital marketing. On a year-to-date basis, total expenses were $45.5 million, a decrease of $33.2 million when compared to the prior year comparative period. The reasons for the year-to-year decreases are similar. Compensation-related expenses decreased by $2.2 million, while the remaining decreases can be found in amortization and depreciation, technology, and telecommunications, marketing, and professional services.
Speaker Change: Decreases in professional services and technology and communications as our back office continues to become more efficient.
Speaker Change: And the more efficient use of digital marketing.
Speaker Change: On a year to date basis total expenses were $45 5 million a decrease of $33 2 million when compared to the prior year comparative period.
The reason for the year to year decrease interest similar.
Speaker Change: Compensation related expenses decreased by $2 2 million.
Speaker Change: While the remaining decreases can be found in amortization and depreciation technology and telecommunications marketing and professional services.
Dan Rabinowitz: The real news this quarter is that the result of higher gross margins and lower expenses is an adjusted EBITDA for the quarter of $5.1 million. That's a $2.4 million improvement, or a 92% improvement from the same prior year period. Further to this point, the adjusted EBITDA margin for this quarter was 14.8%, a notable improvement when compared to the 7.5% adjusted EBITDA for the prior year period. On an aside, this is the third consecutive quarter with adjusted EBITDA in excess of $5 million. For the six months ended April 30th, our adjusted EBITDA was $10.2 million.
The real news this quarter is that the result of higher gross margins and lower expenses within adjusted EBITDA for the quarter of $5 1 million.
Speaker Change: That's a $2 $4 million improvement, where a 92% improvement from the same prior year period.
Speaker Change: Further to the point the adjusted EBITDA margin for this quarter was 14, 8%.
Speaker Change: Notable improvement when compared to the seven 5%.
Speaker Change: Adjusted EBITDA for the prior year period.
On an aside this is the third consecutive quarter with adjusted EBITDA in excess of $5 million.
Speaker Change: For the six months ended April 30, our adjusted EBITDA was $10 2 million.
Dan Rabinowitz: That's a 5.5 million, or 116% improvement from the same prior-year period, and the adjusted EPA margin on a year-to-date basis is 14.9 percent, an even more impressive improvement compared to the 6.9 percent in the same prior-year period. As Mirko mentioned, our trailing 12-month adjusted EBITDA is $20.3 million, and our adjusted EBITDA margin is securely in the mid-teens, as we promised It should become self-evident that there is now a level of consistency in gross margins and adjusted EBITDA that should be well received by the investment community.
Speaker Change: That's a $5 5 million or 116% improvement from the same prior year period.
Speaker Change: And the adjusted EBITDA margin on a year to date basis is 14, 9%, even more impressive improvement compared to the six 9% in the same prior year period.
Speaker Change: As Mark mentioned, our trailing 12 month adjusted EBITDA is $23 million.
And our adjusted EBITDA margin is securely in the mid teens as we promised to deliver over a year ago.
Speaker Change: It should become self evident that there is now a level of consistency in gross margins and adjusted EBITDA. It should be well received by the investment community.
Dan Rabinowitz: And it should become self-evident that we are building a very valuable business that may not yet be reflected in today's stock price. Operating profit for the quarter was $1.8 million. That's a $2.8 million improvement over the same prior-year period, or a 302% improvement. And when you look at it on a year-to-date basis, our operating profit was $4.1 million. That's a $6.1 million improvement over the same prior-year period, and that's also over a 300% improvement. Net income for the quarter was $900,000, that's a $2.4 million improvement compared to the $1.5 million loss that we incurred last year.
Speaker Change: And it should become self evident that we are building a very valuable business that may not yet be reflected in today's stock price.
Speaker Change: Operating profit for the quarter was $1 8 million.
That's a $2 $8 million improvement over the same prior year period, or a 302% improvement.
Speaker Change: And when you look at it on a year to date basis, our operating profit was $4 1 million.
Speaker Change: That's a $6 $1 million improvement over the same prior year period.
Speaker Change: It also over a 300% improvement.
Speaker Change: Net income for the quarter was 900000, that's a $2 $4 million improvement.
Speaker Change: Third to the $1 5 million loss that.
Speaker Change: That we incurred last year.
Speaker Change: And on a year to date basis.
Speaker Change: Net income was $2 2 million.
Speaker Change: And that's a $5 $1 million improvement when compared to the net loss of $2 9 million in the prior year.
Dan Rabinowitz: And on a year-to-date basis, our net income was $2.2 million, and that's a $5.1 million improvement when compared to the net loss of $2.9 million in the prior year. But there is a very interesting trend that I want to point to. If you take a look at our full year net loss in 2021, it was $8.8 million.
Speaker Change: But there is a very interesting trend that I want to point to you take a look at our full year net loss in 2021, it was $8.8 million.
Dan Rabinowitz: In 2022, our net loss was $6.2 million, though. In 2023, our net loss was $1.3 million. Here we are, halfway through fiscal 2024, and our net income is a positive $2.2 million. With respect to the balance sheet, we ended the quarter with cash balances of about $11.2 million.
Speaker Change: In 2022, our net loss was $6 $2 million.
Speaker Change: In 2023, our net loss was $1 3 million.
Speaker Change: Here, we are halfway through fiscal 2024, and our net income is a positive $2 2 million.
Speaker Change: Okay.
Speaker Change: With respect to the balance sheet, we ended the quarter with cash balances of about $11 2 million.
Dan Rabinowitz: That does represent a decrease of $1.9 million from the prior quarter end. However, we ended the quarter with $1.7 million outstanding on the line of credit, which is also a decrease of $1.9 million from the prior quarter end. The timing of revenue within any given quarter has an impact on our level of accounts receivable and the resulting cash generation in a given quarter. To illustrate this point, in our first quarter of fiscal 2024, approximately 65% of our revenue was derived in the first two months of the quarter. Calendar year and spending accelerated the timing of revenue in that first quarter of 2024.
Speaker Change: That does represent a decrease of $1 9 million from the prior quarter end.
Speaker Change: However, we ended the quarter with $1 7 million outstanding on our line of credit, which is also a decrease of $1 9 million from the prior quarter end.
Speaker Change: The timing of revenue within any given quarter has an impact on our level of accounts receivable and the resulting cash generation in a given quarter.
Speaker Change: To give you to illustrate the point here in our first quarter of fiscal 2020 for approximately 65% of our revenue was derived in the first two months of the quarter.
Speaker Change: Calendar year end spending accelerated the timing of revenue in that first quarter of 2024.
Dan Rabinowitz: Obviously, the earlier in the quarter we invoice, the higher the chances are to collect those receivables within the same quarter. However, in our second quarter of this fiscal year, less than 50% of our revenue came in the first two months of the quarter.
Speaker Change: Obviously, the earlier in the quarter, we invoice the higher the chances to collect those receivables within the same quarter.
However, in our second quarter of this fiscal year.
Speaker Change: Less than 50% of our revenue came in the first two months of the quarter.
Dan Rabinowitz: That's more typical of our intra-quarter seasonality. The good news is that cash collections have been good, and we should see the benefit by the time we report our next quarterly result. Total assets on April 30th were $140.3 million. That is a decrease of $3.8 million from October 31st, our fiscal year-end. The decrease in assets during the six-month period includes a $3.8 million reduction in intangible assets, the result of ongoing amortization expenses, and a $2.5 million reduction in inventory, as we continue to squeeze out efficiencies in our supply chain.
Speaker Change: That's more typical of our intra quarter seasonality.
Speaker Change: The good news is that cash collections have been good and we should see the benefit by the time, We report our next quarterly results.
Speaker Change: Okay.
Dan Rabinowitz: The $1.5 million dollar reduction in trade and other receivables and a $900,000 reduction in the right-of-use assets, the result of an ongoing rent obligation. These decreases were offset by the $2.9 million increase in cash and the $1.6 million increase in investment tax credit receivables.
Speaker Change: Total assets at April 30 were $140 3 million.
Speaker Change: That is a decrease of $3 8 million from October 31, our fiscal year end.
Speaker Change: The decrease in assets during the six months period includes a $3 $8 million reduction in intangible assets. The result of ongoing amortization expenses.
Speaker Change: A $2 5 million dollar reduction in inventories as we continue to squeeze out efficiencies in our supply chain.
Speaker Change: The $1 $5 million reduction in trade and other receivables.
Speaker Change: And a $900000 reduction in the right of use assets. The result of ongoing rent obligations.
Speaker Change: These decreases were offset by the $2 $9 million increase in cash and the $1 6 million increase in investment tax credit receivables.
Dan Rabinowitz: The story about liabilities is also compelling. Total liabilities at April 30th were $45.2 million, a decrease of $4.8 million from October 31st. This decrease in liabilities includes a $3 million decrease in trade payables and other accruals, a $3 million decrease in the line of credit as extended, and a $1.4 million decrease in lease liabilities and term loans, again, the result of ongoing rent obligations and term loan repayment. These decreases were offset by an increase in deferred revenue by $2.5 million, another indicator of the efficacy of our maintenance and support program.
Speaker Change: The story about liabilities is also compelling.
Total liabilities at April 30th were $45 2 million a decrease of $4 8 million from October 31.
This decrease in liabilities includes a $3 million decrease in trade payables and other accruals.
Speaker Change: A $3 million decrease in our line of credit.
Speaker Change: <unk>.
Speaker Change: And a $1 4 million decrease in lease liabilities and term loans again, the result of ongoing rent obligations and term loan repayments.
Speaker Change: Now these decreases were offset by an increase of deferred revenue by $2 5 million.
Speaker Change: Another indicator of the efficacy of our maintenance and support programs.
Dan Rabinowitz: So decreasing liabilities and increasing deferred revenue is a pretty solid story. In terms of expectations for fiscal 2024, we are revising our revenue guidance for the full year. Our revenue guidance for the full year now factors in the much quicker-than-anticipated transition away from the integrator model, which included those lower-margin third-party components in the control room space, the delayed approval of the U.S. federal budget and the resulting lethargy in government purchasing, and our exit from the House of Worship vertical in April 2023. To a lesser degree, a long-term rental program that exchanges longer-term recurring revenue at the expense of short-term product sales.
Speaker Change: So decreasing liabilities and increasing deferred revenue is a pretty solid story.
Speaker Change: In terms of expectations for fiscal 2024.
Speaker Change: We are revising our revenue guidance for the full year.
Speaker Change: Our revenue guidance for the full year now factors in a much quicker than anticipated transition away from the integrator model, which included those lower margin third party components in the control room space.
Speaker Change: Delayed approval of U S federal budget, and the resulting lethargy in government purchasing.
Speaker Change: And our exit from the house of worship vertical in April 2023.
Speaker Change: And to a lesser degree our long term rental program, which exchanges longer term recurring revenue at the expense of short term product sales.
Dan Rabinowitz: Thus, we are now projecting revenues for this fiscal year to be between $140 and $142 million. We still anticipate adjusted EBITDA margins in the mid-teens, as has been our guidance for the entire year. And we still anticipate seeing one quarter of this fiscal year knocking on the door of our long-term adjusted EBITDA margin goal of 20 percent. That concludes my prepared remarks.
Speaker Change: Thus, we are now projecting revenues for this fiscal year to be between 140 and $142 million.
Speaker Change: We still anticipate adjusted EBITDA margins in the mid teens has been as has been our guidance for the entire year.
Speaker Change: And we still anticipate seeing one quarter this fiscal year, knocking on the door of our long term adjusted EBITDA margin goal of 20%.
Speaker Change: That concludes my prepared remarks, so I'm going to pass the microphone back to yourself and then we'll open the floor to questions.
Miroslav Wicha: I'm going to pass the microphone back to you, Mirko, and then we'll open the floor to questions. Okay, thanks Jeff. Well, I guess we can open up to questions, Krista. If you'd like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.
Speaker Change: Okay. Thanks Deb.
Krista: Oh, I guess, we could open up to questions Krista.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad, you raise your hand and join the queue if you'd like to withdraw that question again press star one.
Krista: If you'd like to withdraw that question, again, press star 1. Your first question comes from Nick Corcoran. Please go ahead.
Speaker Change: Your first question comes from Nick.
Speaker Change: Core Corin. Please go ahead.
Nick Corcoran: Hey guys, thanks for taking my questions. My first question is just for you on US federal spending. I'm wondering what we should see in terms of the trend through the third and fourth quarters and with revenue. Well, good question.
Hey, guys. Thanks for taking my questions.
Speaker Change: My first question is just to do with U S federal spending.
Speaker Change: I'm wondering what we should see in terms of the trend through the third and fourth quarter.
Speaker Change: With revenue.
Miroslav Wicha: I mean, I think Q4 is... is prepping up to be a pretty solid quarter because it is a government year-end. At the moment, we're just monitoring Q3, to see how quickly the money is trickling in. So we do see some softness in Q3. It'll be very similar to our Q2, but it is picking up. So that's the good news. The question is how quickly can some of these people actually get back to work and get back to some of these projects.
Well good question I mean, I think Q4 is.
Speaker Change:
Speaker Change: Perhaps up to be a pretty solid quarter, because it was the government year end at.
Speaker Change: At the moment is.
Speaker Change: We're just monitoring in Q3.
Speaker Change: To see how quickly the money you strictly and so we do see some softness in Q3.
Speaker Change: So it would be very similar to like acute like our Q2, but it is picking up.
Speaker Change: So that's the good news the question of how quickly can cause some of these people actually.
Speaker Change: It will get back to work and get back to some of these projects. So I'm still I'm still feeling a little soft in Q3 from the government perspective.
Miroslav Wicha: So, I'm still feeling a little soft on Q3 from the government perspective, much better in Q4. But we still feel that the guidance that Dan just gave should be bang on, and we feel pretty confident. Yeah, that's helpful. And maybe if we can just think about the organic growth by end markets between government, enterprise, and defense, what are you seeing there? between government and defense or non-government?
Speaker Change: Much better in Q4.
Speaker Change: <unk>.
Speaker Change: But we still feel that the guidance that just gave should be bang on and we feel pretty confident.
Speaker Change: Okay.
Speaker Change: Okay. That's helpful and maybe if we can just think about the organic growth by end markets between government enterprise and.
Speaker Change: And defense what are you seeing there.
Speaker Change: Okay.
Speaker Change: So between government and defense or are nongovernment.
Miroslav Wicha: government, enterprise, and defense, and I guess protests as well, sorry. Yeah. Broadcast, yeah.
Government enterprise.
Speaker Change: Good sense, and I guess broadcast of all sorry.
Speaker Change: Yes.
Got it.
Miroslav Wicha: It's getting increasingly difficult for us to be sort of looking at this vertically given the amount of cross-selling that we're doing right now. And as we kind of alluded to in the past, it's almost like we have a portfolio of vertical focus, again, broadcast, enterprise, and defense. And sometimes we see strength in certain verticals, and sometimes we see some weakness in certain verticals. In the first two quarters, obviously, we were seeing some weakness in government defense spending, largely related to the budget and the deferral of a firm budget there.
Speaker Change: So that you won't take all around.
Speaker Change: Well.
It's getting increasingly difficult for us to be sort of looking at this on vertical given the amount of cross selling that we're doing right now and as we kind of alluded to in the past. It's almost like we have a portfolio of vertical focus again broadcast enterprise and defense.
Speaker Change: And sometimes we see strength in certain verticals and sometimes we have seen some weakness in certain verticals in the first two quarters. Obviously, we were seeing some weakness in the government government.
Speaker Change: <unk> spending.
Speaker Change: Largely related to the budgets and the deferral of.
Speaker Change: A firm budget, there and we started seeing a pickup in the broadcast business some of which is related to the Olympics. This summer.
Miroslav Wicha: And we started seeing a pickup in the broadcast business, some of which is related to the Olympics this summer. I'd say that we're going to start seeing government space and defense and government space picking up in the third and the fourth quarter, probably more so in the fourth quarter than in the third quarter, although we are seeing sales increase in the third quarter. And I'd say the other two businesses are relatively stable at this point.
Speaker Change: I'd say that we're going to start seeing the government space defense and government space picking up in the third and the fourth quarter, probably more so in the fourth quarter than in the third quarter. Although we are seeing sales increase in the third quarter and I'd say the other two businesses are relatively.
Speaker Change: Stable at the point at this point.
Miroslav Wicha: Yeah, I mean, I would just add to that that, you know, it is an Olympic year, and we've been doing some good broadcast business throughout the last quarter but also coming into this quarter. So that's actually been very, very healthy, as is typical in a large sporting event year. That's helpful.
Speaker Change: Yes, I mean, I would just add to that.
Speaker Change: We've been that we've been seeing good.
Speaker Change: Good solid business I mean, it is an Olympic year right, we're doing a lot with some good good broadcast business throughout <unk>.
Speaker Change: Last quarter, but also coming into this quarter.
Speaker Change: So that's actually been very very healthy.
Speaker Change: As is typical in.
Speaker Change: Large sporting events here.
Nick Corcoran: And maybe one more question for me just on the M&A pipeline. Are you still actively pursuing the M&A pipeline? And could we potentially see a deal done in the next kind of 12 to 18 months?
Speaker Change: That's helpful and maybe one more question for me just on the M&A pipeline.
Speaker Change: Are you are you still actively pursuing the M&A pipeline and could we potentially see a deal done in the next 12 to 18 months.
Miroslav Wicha: Well, I mean, we're definitely continuing talking to people. And so we have not, you know, stepped off the gas on that, except just for being realistic. I mean, there's nothing really, you know, I would say in the oven that's that's hot that would even remotely close in a short period of time.
Speaker Change: Well I mean, we're definitely continuing talking to people and so we have not stepped off the gas on that accept.
Speaker Change: But being realistic.
Theres nothing really.
I would say in the oven that's hot that would even remotely close in that short period of time.
Miroslav Wicha: So even if we, even if we started to have serious discussions, I don't even see anything closing this fiscal year, but I think within the next, you know, 12 to 18 months, I think it's very reasonable to think that we would be targeting an M&A. If I could just sort of...
Speaker Change: Even if we even if we.
Speaker Change: Started to have serious discussions I don't even see it I mean closing this fiscal year, but I think within the next 12 months to 18 months I think.
It's very reasonable to think that we are.
Speaker Change: We will be targeting an M&A event.
Great if I can just.
Dan Rabinowitz: If I could add a tiny bit of color to that, right? I mean, obviously, we're constantly talking to people here, but our focus for 2024, obviously, was to demonstrate the profitability of the business, the efficacy of the business, and what have you. And one of our hopes is that the profitability of the business will be reflected in a buoyant stock price. And that may give us yet another arrow in the quiver to use in our M&A endeavors, right? It's not going to stop us from doing the right thing for our business, the stock price, but it would be another tool that would be beneficial as we're talking to people. It's helpful. Thanks again.
Speaker Change: If I could add a tiny bit of color on that right.
Speaker Change: Obviously, we constantly are talking to people here, but our focus for 2024, obviously was to demonstrate.
Speaker Change: The profitability of the business the efficacy of the business and what have you and one of our hope one of our hopes is that the.
Speaker Change: The profitability of the business will be reflected in our.
Speaker Change: Stock price and that May give us yet another arrow in the quiver to use.
Speaker Change: M&A endeavors right.
Speaker Change: It's not going to stop us from doing the right thing for our business the stock price, but it would be another tool that would be beneficial as we're talking to people.
Speaker Change: That's helpful. Thanks, Kevin.
Speaker Change: Your next question comes from Robert Young. Please go ahead.
Robert Young: Your next question comes from Robert Young. Please go ahead. Hi, I was hoping to get a little more detail around this transition from the integrator model more towards higher margins, solution providers. Is there any way to maybe put a finer point around the margin impact from that, like the overall company margin? We've been toying with that quite a bit. I've been trying to sketch that out for some period of time.
Speaker Change: Heightened.
Robert Young: Was hoping to get a little more detail around this transition from the integrator model more towards higher.
Speaker Change: Higher margin.
Speaker Change: Solution provider is there.
Speaker Change: There any way to maybe put a finer point around the margin impact from that like the overall company margins.
Speaker Change: We've been toying with that quite a bit I've been trying to sketch that out for some period of time I'm not sure I have.
Dan Rabinowitz: I'm not sure I have a tremendous amount of visibility as to how it's going to impact the overall organization. I do think that we may see an increase in our gross margin as a result of that initiative. Is it going to add a point?
Speaker Change: A tremendous amount of visibility as to how it's going to impact. The overall organization I do think that we may see.
Speaker Change: An increase in our gross margin as a result of that initiative.
Speaker Change: Is it going to add a point that would be I would think thats way over optimistic maybe a half a point.
Dan Rabinowitz: That would be — I would think that's way overoptimistic, maybe a half a point. But it will be better business for us. It'll enable us to deliver more on time, it'll enable us to deliver more quickly, and it'll enable us to expand more aggressively. Okay, that's great to hear. I think last quarter you suggested something about the U.S. focus on the development of a partner network around this initiative. I'm just curious; did I hear that right? Is this something, a U.S. focus?
Speaker Change: But it will be better business for us it'll be it'll enable us to deliver more timely it'll enable us to deliver more quickly and will enable us to expand more aggressively.
Okay, that's great to hear.
Speaker Change: I think last quarter, you suggested something about a U S focused on the development of our partner network around this initiative I was just curious as it did.
Speaker Change: Did I hear that right.
Speaker Change: Somebody a U S focus is there in international.
Robert Young: Is there an international opportunity with partners, maybe to expand? Yep, you know, the control market business. Oh, absolutely. Great question.
Opportunity with partners maybe to expand.
Speaker Change: Yes, the control arm market business.
Miroslav Wicha: I mean, I think early on, we talked about specifically an international audience, but it actually is global, which includes the US. So, in fact, we are spending a lot of time on some very large US partnerships as we transform this model. And then once we get well advanced on that, we're gonna basically carbon copy that and move it international. So we are talking to a lot of international partners. But the first phase right now is to work with some of our big, big potential partners in the U.S., where that's where the majority of the business is.
Speaker Change: So absolutely.
Speaker Change: Great question.
Speaker Change: I think early on we talked about specifically in international but it's actually is global which includes the U S. So in fact, we.
Speaker Change: We are spending a lot of time on some very large.
Speaker Change: U S partnerships as we transformed this model and then once we get well in advance of that we're going to have basically a carbon copy of that.
Speaker Change: Moving international So we are talking to a lot of it national partners.
Speaker Change: But the first phase right now is to work with some of our big Big potential partners in the U S. Well, that's where the majority of the businesses.
Miroslav Wicha: And remember, this has been a difficult challenge, and amazingly enough, it's going so much better than we anticipated, because when we were perceived, or instead of massive, was perceived before we bought them, and even after we bought them, as a competitor to all of these guys, right? I mean, as a full integrator, that's what these partners are. So we've been working hard to talk to these partners and explain to them why that's not what we want to do.
Speaker Change: And remember we're already.
Speaker Change: Does this is this has been a difficult challenge and amazingly enough is going much better than we anticipated.
Speaker Change: We were perceived or to the massive was perceived before we bought them and even after we bought them as a competitor to all of these guys right.
Speaker Change: Full integrator, that's what these partners to do so.
Speaker Change: So we've been working hard to talk to these partners and explained to them.
Speaker Change: What we wanted to do we don't want to be in integration business. That's your business.
Miroslav Wicha: We don't want to be in the integration business. That's your business, and we want to work with you guys. So it's going to take a little bit more time to get their buy-in, but we're actually seeing some pretty amazing progress, and that is the only way you can sell internationally. I mean, it all has to be through partners. So, the good news is we're ahead of the program, but it's still going to require training and rolling out.
Speaker Change: And we want to work with you guys. So it's going to take a little bit more time to get to to get there.
Speaker Change: To get to get their buy in but we're actually seeing some pretty amazing progress and that's that is the only way you can sell internationally I mean, it's all has to be through partners.
Speaker Change: The good news is we're ahead of that program.
Speaker Change: And but it's still going to require training.
Speaker Change: Rolling out but I'll.
Miroslav Wicha: But, you know, starting at the end of this fiscal year, we're going to be on full-blown rollout. At the same time, what we really haven't talked about is our development in our platform is really tackling the beauty of rolling out a partner-friendly application software hardware platform. So we'll be able to scale much quicker than we ever could have imagined as an integrator. So uh, it's setting us up really nicely for 2025, and it starts with the U.S., right? I mean, you've got to get the U.S. right; that is, the biggest market, and then we take it over in our. Okay, one more question on this.
Speaker Change: Starting.
At the end of this fiscal year, we're going to be on a full blown rollout at the same time, but we really haven't talked about is our development.
Miroslav Wicha: The thread would be around partner development, I guess. Some of the comments suggest to me that you already have partners working with you on this given the channel confusion you're talking about that you've cleared up. Is there an effort to expand the partner network or is there an onboarding process, you noted training, like is there anything maybe around the timing of that or any details you can share? Not too many details.
Speaker Change: In our platform is really tackling the.
Speaker Change: No.
Speaker Change: The beauty of rolling out partner friendly application software hardware platform. So we will be able to scale much quicker than we ever could have imagined as an integrator. So.
Speaker Change: It's setting us up really nicely for 2025, and but it starts with the U S. Right and then you've got to get the U S. Right that is the biggest market and then we take it over international.
Speaker Change: Okay and one more question on this.
Speaker Change: Thread would be around the partner development I guess.
Speaker Change: Some of the comments I got it.
Speaker Change: Yes that means that you already have partners working with you on this given the channel confusion you were talking about that you've cleared up.
Speaker Change: Is there a is there an effort to expand the partner network or is there an onboarding process you'd noted training like is there anything maybe around the timing of that or any details you can share.
Robert Young: I mean, the fact that we are adding more partners. [inaudible] The training is going to obviously take some time. I mean, for the next two quarters, we're really focusing on building that trust, getting the people trained. So that's gonna take about two quarters, and then we're gonna be rolling that out to the international market. Last question for me is just maybe clarify the rental component.
Speaker Change: Not too many details I mean, the fact that we are adding more partners for sure.
Speaker Change: It's not like we want.
Speaker Change: As many players as possible.
We're managing a bye bye markets by segment by territory, but we are working with all of the largest integrators.
Speaker Change: The training is going to obviously take.
Some good time for the next.
Speaker Change: Two quarters, we're really focusing on building that trust getting that getting the people trained.
Speaker Change: So let's call. It takes about two quarters and then we're gonna be rolling that out to the international market.
Speaker Change: Okay.
Miroslav Wicha: I think you suggested it was to do with the transmitter market. So maybe it is limited to the AWS business? And I think you also suggested there was a strong benefit in the high event year. I assume that means the Summer Olympics, but is the Summer Olympics like a big driver of rental opportunities for you on like, products in general? Maybe you could just expand on that to better understand it, and then I'll pass the line. Sure. No, that's a good question.
Speaker Change: Last question from me is just maybe clarify the rental.
Speaker Change: And I think you suggested it was to do with the transmitter markets maybe is that limited to the <unk> business and that's the eats up Okay. I think you also suggested there was it was a strong benefit in the high event year.
Speaker Change: That means the summer Olympics, but as the Summer Olympics like a big driver of rental opportunity for you on.
Speaker Change: The <unk> product the products just in general maybe you could just expand on that to better understand it and then I'll pass the line.
Miroslav Wicha: Yes, absolutely. We have seen that any major world event, like the World Cup, like the Euro Cup that's going on, like the Olympics, absolutely has a major rental component to it. And that's one of the reasons why we've been working on not just short-term rentals, but we've been negotiating with a lot of broadcasters for long-term rentals, which is also part of the business. So yeah, we've seen a nice pick-up on that. In fact, we've converted one major account that we can't talk about from a major competitor over a two-year long-term rental. It's a big deal.
Speaker Change: Sure No Thats a good question, yes, absolutely we have seen any any major world event.
Speaker Change: The World Cup like.
Like the Euro Cup, that's going on like the Olympics, absolutely has a major rental component to it and that's one that's one of the reasons why we've been working on.
Speaker Change: Not just short term rentals, but we've been talking a lot of the broadcasters for long term rentals, which is also part of the business. So.
Speaker Change: So yes, we've seen a nice pickup of that in fact, we've converted one major account that we can't talk about from a cohort.
Speaker Change: Major competitor over a two year long term rental was a big deal.
Miroslav Wicha: So it's progressing very well. The rental business is growing. It's something we have been investing in, and it's part of the business going forward. As Dan alluded to, it is, you know, sacrificing short-term revenue for longer-term better revenue. And the higher-margin revenue going forward, just like an SAS model, right? It's the same thing.
Speaker Change: So its progressing very well so the rental business is going up something we we have been investing in and it's part of the business going forward as Dan alluded to it is.
Sacrificing short term revenue for longer term better revenue.
Speaker Change: And the higher margin revenue going forward, just like a SaaS model right the same thing.
Miroslav Wicha: So that's progressing very well, but again, it's not significantly different. It's not. But we have also been selling a lot of our products, not just rental equipment, because of the Olympics. And we're actually having a pretty significant technology demonstration at the Olympics. But again, we can't even talk about that because we're not allowed. The Olympics are very, very strict, but I think after they're finished, you'll be able to read up and see some of the really cool stuff that we're pushing the envelopes of low latency wireless 5G technology from the transmitter side. A very, very cool project.
So that's progressing very well, but again, it's not significantly it's not huge.
Speaker Change: But we have but we have also been selling.
Speaker Change: A lot of our products not just rentals because of the Olympics and we're actually having.
Speaker Change: A pretty significant technology demonstration that the Olympics. So again, we can't even talk about that because we're not allowed.
Speaker Change: Olympic So very very strict.
Speaker Change: I think after they're finished youll be able to read up and see some really cool stuff that we're pushing the envelope.
Speaker Change: Low latency wireless <unk> technology.
Speaker Change: From the transmitter side very very cool projects.
Miroslav Wicha: We've always been in the short-term rental program, particularly in Europe, and that business is expanding, and that business does increase when there are big events like the Olympics or whatever the case may be. We were specifically talking about a long-term rental program where companies might rent our equipment for years on end, one, two, or three years. That is a different business model, and that is the business model that we initiated in the second quarter here.
Speaker Change: For any questions.
Speaker Change: Forgive me.
Speaker Change: Sir I was just going to add we've always been in the short term rental program.
Speaker Change: Particularly in.
Speaker Change: In Europe and that business is expanding in that business does does increase when there's big events like the Olympics or whatever the case might be but we were specifically talking about our long term rental program, where our company is Mike rent our equipment for years on end, one two or three years.
Speaker Change: That is that is a different business model and that is the model that we initiated in the second quarter here.
Speaker Change: Okay great.
Miroslav Wicha: And then just the last little question is just around the inventory. No down quarter, Corey, you've been doing some good work managing that over the last several quarters. Is there more to come down, or should we expect that to start moving up given the comments around Q3 and Q4, you know, the government business? and then I'll pass the line.
And then just last little question is just around the inventory.
Speaker Change: It's down quarter, Corey even doing some good work.
Speaker Change: Managing that over the last several quarters is there more to come down or should we expect that to start moving up given the comments around Q3 and Q4.
Speaker Change: The government business.
Speaker Change: And then I'll pass the line.
Dan Rabinowitz: Well, no, I think that the reason why the inventory went from our historical low levels to where, to the $22, $23 million level at some point in time here is because we were buying inventory that we thought we might be able to sell, particularly in the MCF space, in the Haivision MCF space. Our business has always been reliant on our ability to forecast the business, and so we buy to forecast. And usually, we're able to sell that business, sell that product very quickly within the same quarter that we procure it.
Speaker Change: Well no I think that the reason why the inventory went from our historical low levels to where.
Speaker Change: To the 22 $23 million level at some point in time here because.
Speaker Change: We were buying inventory.
Speaker Change: That we thought we might be able to solve particularly in the Mcs space in the high vision Mcs space. Our business has always been reliant on our ability to forecast the business and so we.
Speaker Change: Cure to forecast.
Speaker Change: And usually we were able to sell that business and sell that product very quickly within the same quarter that we procure so we're not I don't expect inventories to be going up I don't see inventories going up because of the third quarter to fourth quarter increase in revenues per se I.
Dan Rabinowitz: So we're not, I don't expect inventories to be going up. I don't see inventories going up because of the third quarter or the fourth quarter increase in revenues per se. I'd say that if the business goes up by $10 million, we're going to have a working capital need related to AR and inventory, but we're not talking about those kinds of things in the next couple of quarters. Thanks a lot.
Speaker Change: I'd say that if the business goes up by $10 million, we're going to we're going to have a working capital need related to AAR in inventories, but but we're not talking about those kinds of things in the next couple of quarters.
Speaker Change: Thanks, a lot.
Speaker Change: Okay.
Daniel Rosenberg: Your next question comes from Daniel Rosenberg, please go ahead. Hi Mirko and Dan, thanks for taking my question. My first one concerns the sales mix. I'm just wondering how this channel partner strategy currently stands up in terms of direct sales versus sales coming through channel partners, and what does that look like into the future as you scale with channel partners? Well, it's, again, we're talking about the control rooms, right?
Speaker Change: Your next question comes from Daniel Rosenberg. Please go ahead.
Miroslav Wicha: So, it's that specific market that has been going from an integrator, more of a direct sales, to partners. In other markets, we deal with partners on an ongoing basis, so it's not a new concept for us. Remember, we fulfill orders through partners and integrators, both in defense, in ISR, and in enterprises, as well as broadcast, right? So, but the control room market is a significant piece that was, I would say, more like, 80-90% of the defense business was direct integrator business, probably about 60% of the enterprise was direct business, right? So we're transforming the defense and government enterprise business to, as much as possible, a partner model.
Anna: America and then Anna Thanks for taking my question My first one comes around.
Speaker Change: The sales.
Speaker Change: I'm just wondering how this channel partner strategy.
Speaker Change: Currently stands.
Speaker Change: In terms of direct sales versus sales coming through channel partners and what does that look like.
Speaker Change: Into the future as you scale with channel partners.
Speaker Change: Well, it's again.
Speaker Change: We were talking at the control rooms right. So.
Speaker Change: Is that specific market.
Speaker Change: It has been going from an integrator or more of a direct sales to partners. The other markets. We do deep sorry, we deal with partners on an ongoing basis. So it's not a not a new concept for us remember we.
Speaker Change: We fulfill through partners and integrators Bolton defence.
Speaker Change: And ISR and in enterprises.
Speaker Change: As well as broadcast right so but.
Speaker Change: But the control room market has been a significant piece that was I would say what more more like.
Speaker Change: 80%, 90% of the defense business was was direct integrator business.
Speaker Change: Probably about 60% of the enterprise.
Speaker Change: Was direct business so we're transforming.
Speaker Change: The defense.
Speaker Change: And the government enterprise business.
Speaker Change: Two as much as possible partner model and I think we're probably going to go down.
Miroslav Wicha: And I think we're probably gonna go down to less than five or 10% in the defense because some of the defense clients still require a little bit of an end-to-end solution from the vet for the manufacturer, but that's the longer-term goal. I don't know if you want to give more clarity, Dan, on the numbers or percentages, but it's really hard to dissect. This is a controlled market that we're specifically talking about. It is not insignificant. I would put it this way: we have always been a channel-friendly company.
Speaker Change: Less than five or 10% and the defense because some of the defense clients still require a little bit of a end to end solution from the event for the manufacturer, but thats a longer term goal.
Speaker Change: I thought no I don't know if you want to take give them more clarity Dan on the numbers or percentages, but it's really hard to dissect because this is a controller market that we're supposed to be talking about that which is not insignificant.
Speaker Change: I would say I would put it this way we have always been a channel friendly company. The preponderance of our revenues are coming through channels, one way or another.
Dan Rabinowitz: The preponderance of our revenues are coming through channels in one way or another. Now, in the control room space, it's a little bit more complicated because we still have channel partners there, but the complexity of the installation results in delays in delivery. It results in complexities that we have to overcome, and we want to take out that complexity. I'll give it to the experts, the system integrators that do this for a living, and let us focus on the proprietary technology that feeds it, feeds these control rooms. It will enable us to expand our breath much more quickly than we can do today.
Speaker Change: Now in the control space, it's a little bit more complicated because we still have channel partners, there, but the complexity of the install.
Speaker Change: <unk> has resulted in delays in delivery results and complexities that we have to overcome and we wanted to take out that complexity I'll give it to the experts the system integrators that do this for living and let us focus on the proprietary technology that speeds.
Speaker Change: Since these control rooms.
Speaker Change: It will enable us to expand our breadth much more quicker.
Speaker Change: Quickly then we can do today.
Miroslav Wicha: Okay, understood. And this transition, I mean, I imagine this is a multi-year process to get there, or I mean, you said it's going faster than anticipated, but what does that look like? I think we're definitely way ahead of the cycle, right? We were expecting this to be at least a two-year process.
Speaker Change: Okay understood.
Speaker Change: This transition I mean I imagine this is a multi year process to get there I mean, you said, it's going faster than anticipated but.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Well I think we're definitely way ahead of the cycle I mean, we were expecting it to be at least a two year process.
Miroslav Wicha: I would say this time next year, we're going to be very little doing direct integration business, if any at all. So I think this is a we're moving very, very quickly. It's more like a 12-month, let's say maybe 18-month from when we started. So I would say next year, 2025, you're gonna see by far a majority of all of our control of business going through part. Okay, thanks. And I'm wondering, you know, as this occurs, is there any impact on kind of the maintenance and support revenue that you traditionally booked, or is that a separate piece? It's a separate piece. I mean, it's difficult to charge maintenance and support for third-party screens, as an example, when those screen manufacturers have their own warranty.
Speaker Change: I'd say this time next year, we'll gloomy very little doing direct integration business if any at all so I think this is a.
Speaker Change: We're moving very very quickly.
Speaker Change: It's more like a 12 months, let's say, maybe 18 months from when we started.
Speaker Change: But so I would say next year 2025.
Speaker Change: You're going to see by far.
Speaker Change: A majority of all of our controller business.
Speaker Change: Going through partners.
Speaker Change: Okay, Thanks, and I am wondering.
Speaker Change: As this occurs is there any impact to kind of the maintenance and support revenue.
That traditionally booked or is that a separate piece.
Speaker Change #100: It's a separate piece I mean, it's difficult to charge.
Speaker Change #100: Maintenance and support on third party screens as an example, when the screen manufacturers have their own warranty so it will be.
Dan Rabinowitz: So, it will be... As a percentage of revenue, it'll be more robust, and it'll be more sound. It'll be more consistent with our existing businesses. Perhaps we'll lose a little maintenance and support because we're not deriving the maintenance and support from those third-party components, but we couldn't really do very much in those areas anyway. Okay, and then lastly for me, so driving towards this long-term 20% goal or approaching it in the coming quarters, so the drivers there, is it really just a combination of scale and this transition that you speak of, or are there other levers that I would say it's a question of scale at this point.
Speaker Change #100: It will not as a percentage of revenue it will make it will be more robust and will be more sound it'll be more consistent with R. R.
Speaker Change #100: With our existing businesses.
Speaker Change #101: Perhaps we'll lose a little maintenance and support because we're not we're not driving the maintenance and support on those third party components, but we couldnt really do very much in those areas anyway.
Dan Rabinowitz: Voice. Okay, and then lastly, for me, so driving towards this long term, 20% goal or approaching it in the coming quarters. So the driver's there; is it a combination of scale and this transition that you speak of, or are there other levers that you're working with to get there? I would say it's a scale question at this point here. We built an efficient operation. We, we, you know, we probably have squeezed as much from our optics as we planet this juncture. We've become exceedingly efficient.
Speaker Change #101: Yeah.
Speaker Change #101: Okay.
Speaker Change #102: And then lastly for me, so driving towards long term, 20% goal or approaching it.
Speaker Change #102: In the coming quarters.
So the drivers there isn't it's a combination of scale and this transition that you speak of time or are there other leavers and that you're working with to get there.
I would say it's a scale question at this point here, we built an efficient operation we.
Dan Rabinowitz: We've built an efficient operation. We, you know, probably have squeezed as much from our OPEX as we can at this juncture. We've become exceedingly efficient. There may be some small opportunities on the gross margin line, but it's going to be confusing to sort of look at that gross margin line given the seasonality we may see in the business and suggest that the incremental gross margin is solely related to this transition to a manufacturing model of sorts. So I'm still looking at 72.5%.
Speaker Change #102: We probably have squeezed as much from our Opex as we can at this juncture, we'd become exceedingly efficient there may be some small opportunities on the gross margin line, but it's going to be confusing to sort of look at that gross margin line given the seasonality we may see in the business.
Dan Rabinowitz: There may be some small opportunities on the gross margin line, but it's going to be confusing to sort of look at that gross margin line, given the feasibility we may see in the business and suggest that the incremental gross margin is solely related to this transition to a manufacturing model of sorts. So I'm still looking at a 72 and a half percent, gross margin is a long term margin. Very consistent to what our average has been over the last three or four quarters. I think the rest of it is really, really to scale at this point.
Speaker Change #102: And suggest that the incremental gross margin is solely related to.
Speaker Change #102: This transition.
Speaker Change #102: To a manufacturing model of sorts so I'm.
Speaker Change #103: Still looking at a 72, 5% gross margin as a long term margin very consistent to what our average has been over the last three or four quarters.
Dan Rabinowitz: Gross margin is a long-term margin, very consistent with what our average has been over the last three or four quarters. I think the rest of it is really related to scale at this point. Okay, great. Thank you for taking my question, and Pat Saline. Your final question today comes from Venakata Vallagapudi. Please go ahead. That was good.
Speaker Change #104: Okay I think the rest of it is really related to scale at this point.
Speaker Change #104: Okay.
Speaker: Okay, great.
Speaker Change #105: Okay, great. Thank you for taking my questions ill pass the line.
Speaker: Thank you for taking my questions.
Venkata Velagapudi: I'll pass the line. Your final question today comes from Venet, Katta, Vala, Gapudi. Please go ahead.
Speaker Change #106: Your final question today comes from <unk> <unk>.
Speaker Change #107: So that was good.
Speaker: That was good. Thank you.
Good.
Venakata Vallagapudi: Thank you, Dan and Mirko, thanks for taking my question. I have a question on your gross margin in Q2. Dan, it's easy to understand the increase in gross margin on an annual basis, but how do we interpret a slight dip in gross margin in Q2? Is it something related to revenue mix, or is there something else to look at? Well, you do have sort of an eagle eye on that.
Speaker Change #107: Okay.
Venkata Velagapudi: Thank you, Dan, and Mirko. Thanks for taking my question. I have a question on your gross margin in Q2, Dan. So it's easy to understand the increase in gross margin on any year on your basis, but how do we interpret a slight dip in gross margin in Q2? Is it something related to the revenue mix, or is there something else to look at?
Ben: Thanks Ben.
Speaker Change #109: Thanks for taking my question.
Dan Rabinowitz: There is a small factor that did affect gross margins in the second quarter, and that is we did increase our reserves for obsolescence, and we did increase our scrap, and that actually represented almost a one percent difference between the second quarter of this year and the second quarter of last year. And you may see that as part of the variation between the first quarter and the second quarter. But again, our business is complex, and we have lots of different products and lots of different margins, and it is hard for anyone to be able to look at that gross margin and say specifically that it's related to mix or specifically related, in this case, to scrap. But I will tell you that the second quarter did have a higher, [inaudible] Okay, thank you. And I have another question about your SG&A.
Speaker Change #110: Yes, I have a question on Europe.
Speaker Change #110: Gross margin.
Speaker Change #110: In Q2, then.
Speaker Change #111: So it's easy to understand.
Speaker Change #112: The increase in gross margin on an year on year basis.
But how do we.
Speaker Change #112: Interest rate.
Speaker Change #113: Gross margin in Q2 is it something related to revenue mix.
Is there something else.
Speaker Change #113: To look at.
Dan Rabinowitz: Well, you do have sort of an eagle eye on that.
Speaker Change #114: Well you do have sort of an eagle eye on that there is a small factor that.
Dan Rabinowitz: There is a small factor that did a such gross margins in the second quarter, and that is we did increase our reserves for out cell lessons, and we did increase our scrap, and that actually represented almost a 1% difference between the second quarter of this year and second quarter of last year. And you may see that as part of the variation from the first quarter and the second quarter. But again, this is as complex, and we have lots of different products and lots of different margins, and it is hard for anyone to be able to look at that gross margin, say specifically it's related to mix or it's specifically related, in this case, to scrap.
Speaker Change #114: That did affect gross margins in the second quarter.
Speaker Change #114: And that is we did increase our reserves for obsolescence and we did increase our scrap and that actually represented almost a 1% difference between second quarter of this year and second quarter of last year and you may see that as part of the variation from the first quarter in the second quarter, but again our business is complex.
Speaker Change #114: And we have lots of different products and lots of different margins and and it is hard for anyone to be able to look at that gross margin say, specifically it is related to mix or specifically related in this case scrap but I will tell you that second quarter did have.
Dan Rabinowitz: But I will tell you that second quarter did have a higher expense related to scrap or reserves than in prior quarters.
Speaker Change #114: A higher.
Speaker Change #114: Expense related to scrap or reserves then.
Speaker Change #114: Then in prior quarters.
Dan Rabinowitz: That is going to disappear in the third quarter, so we'll probably revert back to that 72 and a half percent number that we've been talking about earlier.
Speaker Change #114: <unk> is going to disappear in the third quarter. So it will probably revert back to that 72, 5% number that we've been talking about earlier.
Speaker Change #114: Okay.
Speaker: Okay, thank you.
Venkata Velagapudi: And I have another question about your region. Yeah, as per your guidance, you guys have successfully managed to decline this finite and consistently roughly half a million quarter over the last four quarters. So, should we, should we, how do we interpret this going forward? Should we expect something in the same lines for the next two quarters, or will it be much less significant?
Speaker Change #115: And then I have another question about Europe.
Speaker Change #115: Yes.
Speaker Change #116: That's probably all the guidance you guys have successfully manage it to be clean this line item.
Venakata Vallagapudi: Yeah, as per your guidance, you guys have successfully managed to decline this line item consistently, roughly half a million per quarter over the last four quarters. So, how do we interpret this going forward? Should we expect something along the same lines for the next two quarters, or will it be much less significant? I kind of missed it. You said half a million; what we were referring to was half a million.
Speaker Change #117: Roughly half a million.
Speaker Change #117: Over the last four quarters. So would we expect should we how do we.
Speaker Change #118: <unk> implemented this thing going forward should we expect something in the same lanes, but over the next two quarters.
Speaker Change #118: B.
Speaker Change #118: And that's significant.
Dan Rabinowitz: I kind of missed it as we said a half a million. What were referring to? It was a half a million. In July in the quarter and in July last year, SGA with 15.4, then 15, then 15.5, and in this quarter it's 15, so roughly you have managed to reduce this line and then by half a million per quarter. Yeah, no, I think that if I don't think there's a trend there that you should be looking at. I've been looking at OPEX on a general level here, and if you were to exclude the amortization and depreciation and some of the other things that are more accounting calculations than sort of the actual OPEX, our OPEX was flat in the second quarter to the first quarter.
Speaker Change #119: I kind of missed instead of half a million dollars.
Speaker Change #120: You're referring to was a half a million dollars.
Speaker Change #120: In July in.
Speaker Change #120: In the quarter ending July last year.
Speaker Change #120: And yet we could pinpoint or <unk> pinpoint fight.
Speaker Change #121: This quarter. It's 15, so roughly you have managed to reduce this line has been with half a million dollars per quarter.
Dan Rabinowitz: [inaudible] Yeah, no, I think that I don't think there's a trend there that you should be looking at. I've been looking at OPEX on a general level here. And if you were to exclude the amortization and depreciation and some of the other things that are more accounting calculations than sort of the actual OPEX, our OPEX was flat in the second quarter compared to the first quarter.
Yes no.
Speaker Change #122: I think Thats fair.
Speaker Change #123: I don't think Theres a trend there that you should be looking at I've been looking at Opex on a general level here and if you were to exclude the amortization and depreciation and some of the other things that are.
Speaker Change #123: More accounting calculations than sort of the actual opex.
Speaker Change #123: Our opex was flat in the second quarter to the first quarter.
Dan Rabinowitz: And so we believe that we've arrived at stability in terms of OPEX. The only variability that we might see in the OPEX is related to marketing initiatives, and Margie, it's related to those large trade shows that we have in the second quarter and then again in the fourth quarter. But beyond that, it's relatively fixed in the short term.
Venakata Vallagapudi: And so we believe that we've arrived at stability in terms of OPEX. The only variability that we might see in OPEX is related to marketing initiatives, and largely it's related to those large trade shows that we have in the second quarter and then again in the fourth quarter. It's relatively fixed in the short term. Okay, yeah, and when you see the long-term gross margin, you are looking at 72.5 percent. Are you looking at this year, or is it something we should consider as a long-term target? I think it's more of a long-term position. I'm not prepared to suggest that it's going to deviate much from where we are these days, but change will change things.
Speaker Change #123: And so we believe that we have.
Speaker Change #123: Ah arrived at.
Speaker Change #123: Stability in terms of Opex, the only variability that we might see in the Opex is related to marketing initiatives and margin related to those large trade shows that we have in the second quarter and then again in the fourth quarter.
Speaker Change #123: But beyond that.
Speaker Change #123: It's relatively fixed in the short term.
Venkata Velagapudi: Okay, and when you say the long-term growth margin, you are looking at 72.5%? Are you looking at this year, or is it something we should consider as a long-term target? I think it's more of a long-term standing.
Speaker Change #123: Okay.
Speaker Change #123: When you see the long term gross margin.
Speaker Change #124: You are looking at 72.5 person are you looking at.
Speaker Change #125: This year you did something.
Speaker Change #125: We should.
Consider that as a long term long term.
Speaker Change #125: I think it's more of a long term standing I'm I'm not.
Dan Rabinowitz: I'm not prepared to suggest that it's going to deviate much from where we are these days. Next we'll change things. We may see an increase in our fourth quarter, but I'm a little bit more conservative as to whether this transition is going to result in that uplift immediately.
Speaker Change #125: I'm not prepared to suggest that it's going to deviate much much from where we are these dates mix will change things, we may see an increase in our fourth quarter, but.
Dan Rabinowitz: We may see an increase in our fourth quarter. I'm a little bit more conservative as to whether this transition is going to result in that uplift immediately. Okay. Thank you, Dan, for taking my question. That's it for me.
Speaker Change #125: I'm, a little bit more conservative as to whether this transition is going to result in that uplift immediately.
Venkata Velagapudi: Okay, thank you then for taking my question.
Speaker Change #126: Okay. Thank you for taking my questions.
Speaker Change #127: For me.
Miroslav Wicha: I will now turn it back over to Merkel for closing remarks. Thank you, Christophe. I just want to thank all of our shareholders and all the analysts online today for their continued support of High-Vision and look forward to speaking with all of you. In mid-September, when we'll discuss the Q324 results, and just a heads up, I'll be taking that call from Europe. We're going to do early morning before the market opens in September, so we'll have to deviate from the usual after-market close. But look forward to talking to all of you then.
Miroslav Wicha: I will now turn it back over to Merkel for her closing remarks. Thank you, Christophe. I just want to thank all of our shareholders and all the analysts online today for their continued support of Haivision and look forward to speaking with all of you in mid-September when we'll discuss the Q3-24 results. And, just a heads up, I'll be taking that call from Europe. We're going to do an early morning call before the market opens in September, so we'll have to deviate from the usual after the market closes. I look forward to talking to all of you then; thanks. This concludes today's conference call. Thank you for your participation, and you may now disconnect. Please wait; the conference will begin shortly.
Michael: I will now turn it back over to Michael for closing remarks.
Michael: Thank you Christa I just want to thank all of our shareholders and all the analysts on the line today for their continued support of high vision and look forward to speaking with all of you.
In mid September when we will discuss the Q3 24 results.
Michael: Just a heads up.
Speaker Change #129: <unk> taken that call from Europe, we're going to do.
Speaker Change #129: Early morning before the market opens in September so we'll have to deviate from the usual after the market close.
Speaker Change #129: But look forward to talking to all of you then.
Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.
Speaker Change #130: This concludes today's conference call. Thank you for your participation and you may now disconnect.
Operator: Please wait. The conference will begin shortly.
Speaker Change #131: Please wait the conference will begin shortly.
Speaker Change #131: [music].
Speaker Change #131: Okay.
Speaker Change #131: Yes.
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