Q2 2024 Boxlight Corp Earnings Call
Speaker Change: Good afternoon and welcome to the Boxlight Corporation second quarter financial results call.
Operator: in Quarter Financial Results Call. At this time, all participants are in a listen-only mode. And a question-and-answer session will follow the form of presentation. You could submit a question via the web at any time by typing the main the ask-question box on the left side of your screen and hitting submit. For those who wish to ask a question via the telephone lines, you may press star 1 on your telephone keypad. Please note, this conference is being recorded.
Speaker Change: At this time all participants are on a listen-only mode, and a question and answer session will follow the formal presentation.
Operator: You can submit a question via the web at any time by typing it in the ask question box on the left side of your screen and hitting submit. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Jeff Stanlis of FNK-IR. Sir, you may begin.
Speaker Change: You could submit a question via the web at any time by typing them in the ask question box on the left side of your screen and hitting submit.
Speaker Change: For those who wish to ask a question via the telephone lines, you may press star 1 on your telephone keypad.
Jeff Stanlis: Are there no turn to conference over to your host, Mr. Jeff Stanlis of FNKIR? Sir, you may begin.
Speaker Change: Please note, this conference is being recorded.
Speaker Change: I will now turn the conference over to your host, Mr. Jeff Stanlis of FNK IR. Sir, you may begin.
Jeff Stanlis: Thank you, operator, and thank you everybody for joining. Earlier today, Boxlight issued a press release providing an operational update and discussing financial results for the second quarter and June 30, 2024. This release is available on the Investor Relations section of the company's website at Boxlight.com.
Jeff Stanlis: Thank you, Operator, and thank you, everybody, for joining. Earlier today, Boxlight issued a press release providing an operational update and discussing financial results for the second quarter ended June 30, 2024. This release is available on the Investor Relations section of the company's website at boxlight.com.
Jeff Stanlis: Hosting the call today are Dale Strang, Chief Executive Officer, and Greg Wiggins, the company's Chief Financial Officer. Before we begin, I would like to remind participants that during the call, management will be making forward-looking statements. These statements may contain information about Boxlight's view of its future expectations, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from historical results, or those indicated by these forward-looking statements, as a result of a variety of factors, including, but not limited to, risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results, its development and introduction of new products and services, marketing, and other business development initiatives, and competition in the industry, among many other things.
Speaker Change: Hosting the call today are Dale Strang, Chief Executive Officer, and Greg Wiggins, the company's Chief Financial Officer.
Jeff Stanlis: Before we begin, I would like to remind participants that during the call, management will be making a forward-looking statement. And with that, I'd like to turn the call over to Dale Strang, CEO of Boxlight. Dale, the call is yours. Thank you, Jim.
Speaker Change: Before we begin, I would like to remind participants that during the call, management will be making forward-looking statements.
Speaker Change: These statements may contain information about Boxlight's view of its future expectations, plans, and prospects that constitute forward-looking statements.
Speaker Change: Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results,
Speaker Change: its development and introduction of new products and services, marketing and other business development initiatives, and competition in the industry, among many other things.
Jeff Stanlis: Boxlight encourages you to review other factors that may affect its future results and performance in Boxlight's filings with the Securities and Exchange Commission. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances, or in unanticipated events as they occur, except as required by law.
BoxLite: BoxLite encourages you to review other factors that may affect its future results and performance in BoxLite's filings with the Securities and Exchange Commission.
Dale Strang: The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by law. And with that, I'd like to turn the call over to Dale Strang, CEO of Boxlight. Dale, the call is yours.
Jeff Stanlis: And with that, I'd like to turn the call over to Dale Strang, CEO of Boxlight. Dale, the call is yours.
Dale Strang: Thank you, Jeff, and thank you to everyone who's joining us today. Thankfully, we've made substantial progress in our business streamlining, as evidenced by us meeting our profitability targets despite persistent revenue headwinds. Obviously, we're not immune to the effects of the market, but we believe we're navigating these conditions better than most. And we're well poised to gain significant market share as we progress through this. Here's why. First,
Dale Strang: Thank you, Jeff, and thank you to everyone who's joining us today. When I took over as CEO in January, we indicated that we expected it would take several quarters for the demand cycle in our markets to turn positive again. We therefore made it our priority to focus on adjusting our organization, specifically our cost structure, in order to align with the current market reality and to set us up for ongoing consistent profitability. That initial assessment has largely held true. Demand remains rather soft versus prior periods, particularly in some of our largest markets. Thankfully, we made substantial progress in our business streamlining, as evidenced by us meeting our profitability targets despite persistent revenue headlines.
Dale Strang: Thank you, Jeff, and thank you to everyone who's joining us today.
Dale Strang: When I took over as CEO in January , we indicated that we expected it would take several quarters for the demand cycle in our markets to turn positive again.
Dale Strang: We therefore made it our priority to focus on adjusting our organization, specifically our cost structure, in order to align with the current market reality and to set us up for ongoing consistent profitability.
Dale Strang: That initial assessment has largely held true. Demand remains rather soft versus prior periods, particularly in some of our largest markets.
Dale Strang: Thankfully, we've made substantial progress in our business streamlining as evidenced by us meeting our profitability targets despite persistent revenue headwinds.
Dale Strang: The current market conditions are certainly challenging and are expected to stay that way until the market returns to a broad growth cycle. Obviously, we're not immune to the effects of the market, but believe we're navigating these conditions better than most. And we're well poised to gain significant market shares as we progress through that cycle.
Dale Strang: The current market conditions are certainly challenging and are expected to stay that way until the market returns to a broad growth cycle. Obviously, we're not immune to the effects of the market, but believe we're navigating these conditions better than most.
Dale Strang: And we're well-poised to gain significant market share as we progress through that cycle. Here's why.
Dale Strang: Here's why. First, we're responding to the market reality with assertive action. Our immediate focus on continued operational discipline has enabled us to streamline our organization's team, product, and go-to-market processes. And we're committed to ongoing application of this discipline to ensure that consistent profitability. Second, we're both anticipating and responding to our customers' needs with updated products and services. These new offerings are driving demand, and they're aligned with industry catalysts. The industry is increasingly focused on things like emergency preparedness and school safety, immediate communication that goes campus wide, and accelerating curriculum focused on fast growing market-flank STEM.
Dale Strang: First.
Dale Strang: We're responding to the market reality with assertive action. Our immediate focus on continued operational discipline has enabled us to streamline our organization's team, product, and go-to-market processes, and we're committed to ongoing application of this discipline to ensure that consistent profitability.
Dale Strang: Second, we're both anticipating and responding to our customers' needs with updated products and services. These new offerings are driving demand, and they're lined with industry-leading cattle. The industry is increasingly focused on things like emergency preparedness and school safety, immediate communication that goes campus-wide, and accelerating curriculum focused on fast-growing markets like STEM. In recent weeks, we introduced several solutions, each integrating multiple capabilities and aligning with these demands. Unity is full of connections and is almost infinitely flexible.
Dale Strang: Second, we're both anticipating and responding to our customers' needs with updated products and services.
Dale Strang: These new offerings are driving demand, and they're lined with industry catalysts.
Speaker Change: The industry is increasingly focused on things like emergency preparedness and school safety, immediate communication that goes campus-wide, and accelerating curriculum focused on fast-growing markets like STEM.
Dale Strang: We're well positioned to meet these challenges and have meticulously developed solutions to solve for these evolving needs. We also maintain a broader range of both price and performance in IFPDs and a wide range of both hardware and software in our STEM offerings. In recent weeks, we introduced several of the solutions, each integrating multiple capabilities and aligning with these demand catalysts.
Dale Strang: We're well positioned to meet these challenges and have meticulously developed solutions to solve for these evolving needs.
Dale Strang: We also maintain a broader range of both price and performance in IFPDs and a wide range of both hardware and software in our STEM offerings.
Dale Strang: In recent weeks, we introduced several new solutions, each integrating multiple capabilities and aligning with these demand catalysts.
Dale Strang: In the safety and security portion of our business, we developed a longevity. Unity is a small profile, all-in-one hardware device used in classrooms and campus wide to unite and to manage audio communication, safety ecosystems, providing audio, bells, paging, and alerts integration. Whether used by a teacher in the classroom for audio while giving full control over all devices via mic controller. On campus, Unity enables swift campus-wide communications, emergency notifications, and alerts, providing two-way communication and is customizable to work with in the district's emergency operations plan. Unity's full of connections and is almost infinitely flexible. It's a small profile device that can be mastered or placed virtually anywhere for flexible installations and retrofits.
Dale Strang: In the safety and security portion of our business, we developed and launched Unity. Unity is a small profile, all-in-one hardware device.
Dale Strang: used in classrooms and campus-wide to unite and to manage audio communication safety ecosystems providing audio, bells, paging, and alerts integration.
Dale Strang: whether used by a teacher in the classroom for audio while giving full control over all devices via a mic controller.
Dale Strang: On campus, Unity enables swift campus-wide communications, emergency notifications, and alert, providing two-way communication and is customizable to work within the district's emergency operations plan.
Dale Strang: Unity is full of connections and is almost infinitely flexible.
Dale Strang: It's a small profile device that can be mounted or placed virtually anywhere for flexible installations and retrofits.
Dale Strang: Getting started has never been easier, as this device is one device with a plethora of uses.
Dale Strang: Getting started has never been easier, as this device is one device with a plethora of uses.
Dale Strang: We also launch time signs. Time signs an affordable 22-inch customizable digital clock display, which can be used for various aspects of campus communication, signage, and messaging. Displayed content is completely customizable through the included Clever Live software, which makes this solution easy and affordable.
Dale Strang: We also launched TimeSign. TimeSign is an affordable 22-inch customizable digital clock display that can be used for various aspects of campus communication, signage, and messaging. Our new version is one of the quickest, most accurate, yet most affordable 3D printers on the market, and it's backed with hundreds of lessons and curriculum and aligned to national K-12 standards. The Robo E4 is the most compelling 3D printer on the market for K-12 STEM education.
Dale Strang: We also launched TimeSign. TimeSign is an affordable 22-inch customizable digital clock display which can be used for various aspects of campus communication, signage, and messaging.
Dale Strang: Displayed content is completely customizable through the included Clever Live software, which makes this solution easy and affordable.
Dale Strang: In the STEM space, we recently launched an update of our Steam Drobot 3D printer. Our new version is one of the quickest, most accurate, yet most affordable 3D printers on the market, and it's backed with hundreds of lessons and curriculum and aligned to national K-12 standards. The Robo E4 is the most compelling 3D printer on the market for K-12 STEM education. And as a reminder, STEM is a fast-growing segment we participated in with a projected category of almost 15% through the 2030.
Dale Strang: In the STEM space, we recently launched an update of our esteemed Robo3D printer.
Dale Strang: Our new version is one of the quickest, most accurate, yet most affordable 3D printers on the market, and it's backed with hundreds of lessons and curriculum and aligned to national K-12 standards.
Speaker Change: The Robo E4 is the most compelling 3D printer on the market for K-12 STEM education.
Speaker Change: And as a reminder, STEM is a fast-growing segment we participate in with a projected CAGR of almost 15% through 2030.
Dale Strang: Both Unity and the Robo 3D printer, one best-of-show award that is in June 2024, which confirms our commitment to ongoing innovation. Our diligence in developing a best-in-class ecosystem of ed tech solutions puts us in a unique position to capture multiple levels of technology investment. No other vendor offers the set of solutions as comprehensive, integrated, and complementary as the Box of Light suite. And this continued innovation is critical to our long-term success and explains why we're so confident in our current competitive position. We're leaning into our advantages to best position our company for that next phase of sector growth.
Speaker Change: Both Unity and the Robo 3D printer won Best of Show awards at ISTE in June 2024, which confirms our commitment to ongoing innovation.
Speaker Change: our diligence and developing a best-in-class ecosystem ofeventtech solutions puts us in a unique position to capture multiple levels of technology investment
Speaker Change: No other vendor offers the set of solutions as comprehensive, integrated, and complementary as the Boxlight Suite.
Dale Strang: This continued innovation is critical to our long-term success and explains why we're so confident in our current competitive position. We're leaning into our advantages to best position our company for that next phase of sector growth.
Dale Strang: and the breath and quality of our suite today helps us create incremental demand and win business from new and existing customers. Just two recent examples from the Midwest. First, one of our partners in Michigan recognized the value of adding a Boxlight front or audio solution to an existing deployment of flat panel displays in a school district with hundreds of classrooms. This audio add-on enabled a state-of-the-art campus safety and communications capability while leveraging our attention software that ties all these the hardware together and aligns simultaneous audio video for notifications and awards campus wide. Similar exercises playing out in school district in Iowa where we have a fairly large deployment of Indian interactive panels installed in the middle and high schools, that's being augmented with upgrades for existing non-interactive displays and the neighboring elementary schools.
Speaker Change: And the breadth and quality of our suite today helps us create incremental demand and win business from new and existing customers. Just two recent examples from the Midwest.
Speaker Change: First, one of our partners in Michigan recognized the value of adding a BoxLite front row audio solution to an existing deployment of flat panel displays in school districts with hundreds of classrooms.
Speaker Change: This audio add-on enabled a state-of-the-art campus safety and communications capability
Speaker Change: while leveraging our ATTENTION software that ties all the hardware together and aligns simultaneous audio-video for notifications and alerts campus-wide.
Speaker Change: similar exercises playing out in the school district in Iowa where we have a fairly large deployment of MIMEO interactive panels installed in the middle and high schools that's being augmented with upgrades for existing non-interactive displays in the neighboring elementary schools.
Dale Strang: They'll soon be adding front row conductor, which is enables IP based campus control communication. It's a total solution that's only available from Boxlight. Our target of investments in new and upgraded products, in conjunction with our ongoing focus on operational display, are both key to us making improvements to our capital structure. We're working collaboratively with our banking partners, and I wonder to identify and secure the best long-term alternative to our current credit facility. I continue to be very confident that Boxlight is on the right path. We're bullish on the long-term outlook for our market, and our products and team are outstanding.
Speaker Change: You'll soon be adding Front Row Conductor, which enables IP-based campus control and communication. It's a total solution that's only available from Boxlight.
Speaker Change: are targeted investments in new and upgraded products.
Speaker Change: in conjunction with our ongoing focus on operational discipline, are both key to us making improvements to our capital structure.
Dale Strang: We're working collaboratively with our banking partners and our lender to identify and secure the best long-term alternative to our current credit. However, market conditions remain challenging, and this exacerbates quarter-to-quarter volatility. With that, I'll now turn the call over to Greg to discuss our second quarter meeting.
Speaker Change: We're working collaboratively with our banking partners and our lender to identify and secure the best long-term alternative to our current credit facility.
Speaker Change: I continue to be very confident that Boxlight is on the right path. We're bullish on the long-term outlook for our market and our products and team are outstanding.
Dale Strang: Still, our progress will likely not be linear. Market conditions remain challenging, and this exacerbates quarter-to-quarter volatility. Our mission is to position Boxlight to successfully navigate these current challenges and simultaneously position Boxlight to thrive as these conditions improve.
Speaker Change: Still, our progress will likely not be linear.
Speaker Change: market conditions remain challenging and this exacerbates quarter-to-quarter volatility.
Speaker Change: Our mission is to position Boxlight to successfully navigate these current challenges.
Speaker Change: and simultaneously positioned Boxlight to thrive as these conditions improve.
Dale Strang: We're on the right path with much work still to do, but the pieces are in place.
Speaker Change: We're on the right path, with much work still to do, but the pieces are in place.
Greg Wiggins: With that, I'll turn the call over to Greg to discuss our second quarter results. Thanks, Dale, and good afternoon, everyone. Before we review the financial results for Q2, I want to provide an update regarding some of our recent initiatives with respect to bolstering our balance sheet and reducing our operating costs. In mid-April, our current lender provided an additional 2 million bridge loan to help meet the company's short-term seasonal working capital needs, with the flexibility to bar an additional 3 million in June. As stated on previous earnings calls, our operations are seasonal, with Q2 and Q3 being our busiest periods.
Greg Wiggins: With that, I'll now turn the call over to Greg to discuss our second quarter results.
Greg Wiggins: Thanks, Dale, and good afternoon, everyone. Before we review the financial results for Q2, I want to provide an update regarding some of our recent initiatives with respect to bolstering our balance sheet and reducing our operating costs.
Greg Wiggins: In mid-April, our current lender provided an additional $2 million bridge loan to help meet the company's short-term seasonal working capital needs, with the flexibility to borrow an additional $3 million in June .
Speaker Change: As stated on previous earnings calls, our operations are seasonal, with Q2 and Q3 being our busiest periods, and the additional liquidity ensure that we will have the necessary inventory on hand to meet our customers' demand.
Greg Wiggins: And the additional liquidity ensure that we will have the necessary inventory on hand to meet our customers' demand. Recent improvements in cash flow, attributable in part to recent operating expense reductions, resulted in us only barring 2 million of the additional 3 million in July. We expect to pay these amounts by the end of November. Aligning operating expenses with operational performance continues to be a priority.
Speaker Change: Recent improvements in cash flow, attributable in part to recent operating expense reductions, resulted in us only borrowing $2 million of the additional $3 million in July . We expect to pay these amounts by the end of November .
Gregory Wiggins: Aligning operating expenses with operational performance continues to be a priority. As a result of this cost reduction strategy, operating expenses decreased 15.8% quarter over quarter to $13.3 million. This marks our lowest quarterly operating expense total since Q3 2021, prior to our acquisition of Front Row. We are not done yet, and we expect additional reductions benefiting the balance of the year.
Speaker Change: Aligning operating expenses with operational performance continues to be a priority.
Greg Wiggins: As we shared with you on our Q1 earnings call, the company eliminated approximately 5 million in fixed cost in the first quarter, mostly through headcount reductions that did not impact our sales teams or other revenue-generating departments within the organization. Foundation other initiatives to reduce operating expenses, such as eliminating duplicative processes and related costs, are also in place and are expected to contribute to continued savings in the coming quarters. As a result of this cost reduction strategy, operating expenses decreased 15.8% quarter over quarter to 13.3 million. This marks our lowest quarterly operating expense total since Q3 2021, prior to our acquisition of Front Row.
Speaker Change: As we shared with you on our Q1 earnings call, the company eliminated approximately $5 million in fixed costs in the first quarter, mostly through headcount reductions that did not impact our sales teams or other revenue-generating departments within the organization.
Speaker Change: Other initiatives to reduce operating expenses, such as eliminating duplicative processes and related costs, are also in place and are expected to contribute to continued savings in the coming quarters.
Speaker Change: As a result of this cost reduction strategy, operating expenses decreased 15.8% quarter over quarter to $13.3 million. This marks our lowest quarterly operating expense total since Q3 2021, prior to our acquisition of Front Row.
Greg Wiggins: We are not done yet, and we expect additional reductions benefiting the balance of the year. Our stated goal at the beginning of the year was to achieve a quarterly off-ex run rate by the end of 2024 of 12 to 13 million per quarter. However, as Dale mentioned, our ultimate goal is to align operating expenses with revenue generation, and we are committed to making continued changes to reflect operational trends.
Speaker Change: We are not done yet, and we expect additional reductions benefiting the balance of the year.
Speaker Change: Our stated goal at the beginning of the year was to achieve a quarterly OpEx run rate by the end of 2024 of $12 to $13 million per quarter.
Speaker Change: However, as Dale mentioned, our ultimate goal is to align operating expenses with revenue generation and we are committed to making continued changes to reflect operational trends.
Greg Wiggins: I will now review our second quarter results. Revenues for Q2 2024 were 38.5 million as compared to 47.1 million for Q2 2023, resulting in an 18.1% decrease. Emilia revenues comprised approximately 44% or 17 million of our total revenues. America's revenues totaled approximately 55% or 21 million of our total revenues, while revenues from other markets totaled approximately 1% of our total revenues. Flat panel displays comprised approximately 71% of total revenues. Audio solutions comprised 12% of total revenues. With the balance of our revenues comprised of divide accessories, software, professional services, and STEM solutions. Gross profit for the quarter was 14.5 million, as compared to 17.8 million for the prior year period.
Gregory Wiggins: Revenues for Q2 2024 were $38.5 million, as compared to $47.1 million for Q2 2023, resulting in an 18.1% decrease. EMEA revenues comprised approximately 44%, or $17 million, of our total revenues. Flat panel displays comprised approximately 71% of total revenues.
Dale Strang: I will now review our second quarter results.
Speaker Change: Revenues for Q2 2024 were $38.5 million, as compared to $47.1 million for Q2 2023, resulting in an 18.1% decrease.
Speaker Change: andtheo revenues comprised approximately forty-four percent or seventeen million of our total revenues
Speaker Change: America's revenues totaled approximately 55% or $21 million of our total revenues, while revenues from other markets totaled approximately 1% of our total revenues.
Speaker Change: Flat panel displays comprised approximately 71% of total revenues, audio solutions comprised 12% of total revenues, with the balance of our revenues comprised of device accessories, software, professional services, and STEM solutions.
Gregory Wiggins: Audio solutions comprised 12% of total revenues, with the balance of our revenues comprised of device accessories, software, professional services, and STEM solutions. Total operating expenses for Q2 2024 were $13.3 million compared to $15.8 million in Q2 2023. Other expense for Q2 2024 was a net expense of $2.8 million as compared to a net expense of $2.6 million for Q2 2023. The industry downturn has persisted longer than expected, and we do not anticipate an immediate turnaround in Q3. We expect Q3 revenues will reflect the broader market dynamics for the first half of 2024, while we focus on operating expense reductions to generate positive EBITDA for the balance of the year.
Speaker Change: Gross profit for the quarter was $14.5 million, as compared to $17.8 million for the prior year period. Gross profit margin for the quarter was 37.7%, which is a decrease of 20 basis points over the comparable three months in 2023.
Greg Wiggins: Gross profit margin for the quarter was 37.7%, which is a decrease of 20 basis points over the comparable three months in 2023. Total operating expenses for Q2 2024 were 13.3 million compared to 15.8 million in Q2 2023. Other expense for Q2 2024 was a net expense of 2.8 million, as compared to net expense of 2.6 million for Q2 2023. The majority of other expense is related to interest expense on our current credit facility. The company reported a net loss of 1.5 million, or 18 cents per basic and diluted share, for the quarter as compared to a net loss of approximately 800,000, or 12 cents per basic and diluted share, for the prior year quarter.
Speaker Change: Total operating expenses for Q2 2024 were $13.3 million compared to $15.8 million in Q2 2023.
Speaker Change: Other expense for Q2 2024 was a net expense of $2.8 million as compared to net expense of $2.6 million for Q2 2023. The majority of other expense is related to interest expense on our current credit facility.
Speaker Change: The company reported a net loss of $1.5 million, or $0.18 per basic and diluted share, for the quarter as compared to net loss of approximately $800,000, or $0.12 per basic and diluted share for the prior year quarter.
Greg Wiggins: Adjusted EBITDA for Q2 2024 was 3.7 million, as compared to adjusted EBITDA of 5.4 million for Q2 2023. Adjustments to EBITDA include stock-based compensation expense, severance charges, gains losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with recent acquisitions. Turning to the balance sheet, at June 30, 2024, Boxlight had 7.5 million in cash. Cash, 46.7 million in working capital, 37.8 million in inventory, 138.8 million in total assets, 40.3 million in debt, net of debt issuance cost of 1.9 million, and 7.5 million in stockholders' equity. At June 30, 2024, Boxlight had 9.8 million common shares issued in outstanding, and 3.1 million preferred shares issued in outstanding.
Speaker Change: Adjusted EBITDA for Q2 2024 was $3.7 million, as compared to adjusted EBITDA of $5.4 million for Q2 2023.
Speaker Change: Adjustments to EBITDA include stock based compensation expense, severance charges, gains losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with recent acquisitions.
Speaker Change: Turning to the balance sheet, at June 30, 2024, Boxlight had $7.5 million in cash.
Speaker Change: $46.7 million in working capital, $37.8 million in inventory, $138.8 million in total assets,
Speaker Change: $40.3 million in debt, net of debt issuance cost of $1.9 million, and $7.5 million in stockholders' equity.
Speaker Change: At June 30, 2024, Boxlight had 9.8 million common shares issued in Outstanding and 3.1 million preferred shares issued in Outstanding.
Greg Wiggins: Following the 2 million borrowings in April and July respectively, the principal amount of the company's term loan is 44.3 million. The industry downturn has persisted longer than expected, and we do not anticipate an immediate turnaround in Q3. We expect Q3 revenues will reflect the broader market dynamic for the first half of 2024, while we focus on operating expense reductions to generate positive EBITDA for the balance of the year.
Speaker Change: Following the $2 million borrowings in April and July , respectively, the principal amount of the company's term loan is $44.3 million.
Speaker Change: The industry downturn has persisted longer than expected and we do not anticipate an immediate turnaround in Q3. We expect Q3 revenues will reflect the broader market dynamic for the first half of 2024 while we focus on operating expense reductions to generate positive EBITDA for the balance of the year.
Operator: With that, we'll open up the call for questions. Thank you. At this time, we'll be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question key, and you may press star two if you would like to move your question from the key. As participants using Speak recruitment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we pull for questions. Thank you.
Speaker Change: With that, we'll open up the call for questions.
Speaker Change: Thank you. At this time, we'll be conducting our question and answer session.
Operator: If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate that your line is in the question key.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: The confirmation tone will indicate your line is in the question key.
Speaker Change: and you may press star 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment please while we poll for questions.
Brian Kinstlinger: Our first question is coming from Brian Kinslinger with Alliance Global Partners. Your line is live.
Speaker Change: Thank you.
Speaker Change: Our first question is coming from Brian Kinstlinger with Alliance Global Partners. Your line is live.
Brian Kinstlinger: Great. Thanks so much for taking my questions. Last quarter, you guys talked about improving market conditions that should drive second-half growth. Your last comment there was the third quarter. That wouldn't be the case, and I'm guessing in the fourth quarter, probably not two, given some of the other pieces of the discussion you talked about, top market conditions in Lesslinger in the recovery.
Speaker Change: Great, thanks so much for taking my questions.
Speaker Change: Last quarter you guys talked about
Unidentified Speaker: Since your last comment there was about the third quarter, that wouldn't be the case, and I'm guessing in the fourth quarter, probably not too, given some of the other pieces of the discussion you talked about, tough market conditions, and less linear in the recovery. Can you talk about what's changed in the last three months that has changed your view? Has the market gotten weaker, has it not recovered as you expected? Maybe some more clarity on what's going on in the last three months.
Speaker Change: improving market conditions that should drive second-half growth.
Speaker Change: Your last comment there was the third quarter.
Speaker Change: That wouldn't be the case, and I'm guessing in the fourth quarter, probably not too, given some of the other...
Speaker Change: pieces of the discussion. You talked about tough market conditions and less linear in the recovery.
Dale Strang: Can you talk about what's changed in the last three months that has changed your view? Has the market gotten weaker? Has not recovered as you expected? Maybe some more clarity on what's going on in the last three months. Sure. Thanks, Brian. This is Dale. I think your question hints at the answer, but one thing is it's not one market. We are in every market in Europe, and of course, are well established here in the US and Canada. Some of those markets are growing. Some of them are recovering after a period of softness, and some of them are, you know, it's clear that they're on the mend, and others, the outlook remains really murky.
Speaker Change: Can you talk about what's changed in the last three months that has changed your view? Has the market gotten weaker? Has it not recovered as you expected? Maybe some more clarity on what's going on in the last three months.
Speaker Change: Sure. Thanks, Brian . This is Dale.
Speaker Change: I think your question kind of hints at the answer, but one thing is, it's not one market, right? We are in every market in Europe .
Speaker Change: and of course they're well-established here in the U.S. and Canada and some of them some of those markets are growing some of them are recovering after a period of softness and some of them are you know it's
Speaker Change: it's clear that they're on the mend, and in others,
Dale Strang: I would say that overall, the US market in our core market, which is interactive flat panel displays, has remained soft for a longer period than we anticipated, and that trend is slowly improving, but not as quickly as maybe we'd hoped. In other markets, we're seeing really pretty solid improvement. I think the quick answer to your question is we know that these markets are somewhat cyclical and they change each time, but they'll be developing and going into a growth cycle in each of the geographies we serve. The timing will differ, and in some cases, in some of our largest markets, it's been floored, and we saw one example would be the UK.
Dale Strang: The overall U.S. market for our core market, which is interactive flat panel displays, has remained soft for a longer period than we anticipated. And that trend is slowly improving, but not as quickly as maybe we'd hoped. And in other markets, we're seeing really, you know, pretty solid improvement, the recent political situation being clarified with the new election will lead to
Speaker Change: The overall the US market in our core market, which is interactive flat panel displays
Speaker Change: has remained soft for a longer period than we anticipated.
Speaker Change: And that trend is slowly improving, but not as quickly as maybe we'd hoped. And in other markets, we're seeing really, you know, pretty solid improvement.
Speaker Change: I think the quick answer to your question is we know that these markets are somewhat cyclical and they change each time, but they'll be developing and going into a growth cycle in each of the geographies we serve.
Speaker Change: The timing will differ, and in some cases on some of our largest markets, it's been slower than we thought. One example would be the UK. That's been a really powerful market for us in the past.
Dale Strang: OK, that's been a really powerful market for us in the past, and there's been a great deal of uncertainty around that market until, I guess, fairly recently, where the speculation seems to be that the recent political situation being clarified with the new election will lead to some kicking out some stops for some growth there. That's an example of where maybe we thought it would recover more quickly than it has, but now it's the outlook is looking relatively positive there.
Speaker Change: And there's been a great deal of uncertainty around that market until, I guess, fairly recently, where the speculation seems to be that the...
Speaker Change: recent political situation being clarified with the new election will will lead to some, you know, kicking out some some stops for for some growth there. That's an example of where
Speaker Change: Maybe we thought it would recover more quickly than it has, but now the outlook is looking relatively positive there. But it's going to be uncertain for quite a while.
Brian Kinstlinger: But it's going to be uncertain for quite a while. It was helpful. Thank you. And then the growth margin was quite strong in the quarter, and one of the best for the company. Was this about the mix or pricing?
Speaker Change: The Gross Margin was quite strong in the quarter, one of the best from the company.
Greg Wiggins: I guess I'm just trying to understand the performance, and then as we look forward, been long communicated by you guys as well as the management before you at long term sustainable growth margins somewhere in 30 to 33%. What will drive that pressure and when will that happen over the long term? Yeah, so to kind of address where we work for Q2 is really a couple factors that are kind of offsetting each other to some extent. So we've already started to see a little bit of margin pressure just from the competition, you know, within our various markets.
Speaker Change: Was this about the mix?
Speaker Change: pricing. I guess I'm just trying to understand the performance. And then as we look forward, what's been long communicated by you guys as well as the management before you, that long-term sustainable growth margin somewhere in 30 to 33 percent.
Speaker Change: What will drive that pressure and when will that happen over the long term?
Speaker Change: Yeah. So... Okay.
Speaker Change: To kind of address where we were for Q2 is really a couple factors that are kind of offsetting each other to some extent.
Speaker Change: And we've already started to see a little bit of margin pressure just from...
Greg Wiggins: What has helped in Q2 for us to maintain such a strong margin has been the result of positive mix shift with increasing audio sales, which carry a higher margin as a percent of our total sales, probably helping us buy a hundred basis points or so in margin up. If we are starting to see the competitive pricing in the markets and that was expected, I think they've actually held up better than we anticipated. I think coming into 2024 on a consolidated basis, we viewed a gross margin of 34%, you know, as a possibility. In our margins have held up above that throughout the year.
Speaker Change: the competition.
Speaker Change: What has helped in Q2 for us to maintain such a strong margin has been the result of a positive mix shift with
Speaker Change: increasing audio sales, which carry a higher margin as a percent of our total sales.
Speaker Change: probably helping us by 100 basis points or so, you know, in margin uplift. We are starting to see, you know, the
Speaker Change: competitive pricing, you know, in the markets, and that was expected. I think they've actually held up better than we anticipated, I think, coming into 2024.
Speaker Change: on a consolidated basis we view a gross margin
Speaker Change: of 34%, you know, is a possibility. Our margins have held up above that throughout the year, and I think we...
Brian Kinstlinger: And I think while we still expect to see some pressure throughout the remainder of the year, I think we still expect our margins to come in better than what we anticipated in the year. And I think part of that is just attributable to some of the various market demand considerations where we're starting to see a little bit of competitive pricing. But certainly, mix is helping in one of the reasons why we're very encouraged by the audio business complimenting our panel business. Yes. You only think of that when you're starting. Oh, sorry, go ahead. I was going to say, to be clear, if you're saying it's a hundred dips because audio sales are up, that still gets you to a relatively high margin, gross margin for Boxlight historically.
Speaker Change: While we still expect to see some pressure throughout the remainder of the year, I think we still expect our margins to come in better than what we anticipated in the year. And I think part of that's just attributable to some of the...
Speaker Change: you know, various market, you know,
Speaker Change: you know, demand considerations where, you know, we're starting to see a little bit of competitive pricing. But certainly mix is helping, and one of the reasons why, you know, we're very encouraged by the audio business complementing our panel business.
Speaker Change: The only thing I'd add, Brian... Oh, I'm sorry. Go ahead.
Brian Kinslinger: I was just going to say, to be clear, if you're saying it's 100 bips because audio sales are up...
Speaker Change: That still gets you to a relatively high margin, gross margin for Boxlight historically. That 30 to 33 percent, is that low end?
Brian Kinstlinger: That 30 to 33% that low end much, much further away, and what we're looking at is more like 34 to 35% in the year term when you look at the mix changes, is that how to think about it? That's how I think of it. Go ahead, I'm sorry, I keep stepping on you. No, no, no worries. So, yes, to answer your question, Brian, I think that's how we view it in the short term as far as you know. I don't think the decline is quite as drastic or as steep as you know we were originally anticipating, which has been good.
Unidentified Speaker: That 30 to 33 percent, is that the low end?
Speaker Change: much much further away and what we're looking at is more like 34 to 35% in the near term when if the mix changes. Is that how to think about it?
Unidentified Speaker: Go ahead. I'm sorry. I keep stepping on you.
Speaker Change: Go ahead, I'm sorry, I keep stepping on you.
Speaker Change: To answer your question, Brian , I think that's how we view it in the short term. I don't think the decline is quite as drastic or as steep as we were originally anticipating, which has been good. I think we've been able to be very competitive.
Dale Strang: I think we've been able to be very competitive with our products, the quality of the products, you know, that we're selling. So, you know, definitely, you know, we think there will be a longer term, you know, continued pressures, which will drive it down, but that I think our original, original estimates, you know, that we've been making in the past maybe pushed out a little further than we originally anticipated. The only thing I would add is that mixes mixes a little bit more multi; there's a few elements to mix. Certainly, the higher percentage of audio we sell is going to move several basis points on our gross margin.
Speaker Change: competitive with our products, the quality of the products, you know, that we're that we're selling. So, you know, definitely, you know, we think there will be a longer term, you know, continued pressures, which which will drive it down. But I think
Speaker Change: Our original estimates that we've been making in the past may be pushed out a little further than we originally anticipated.
Speaker Change: The only thing I would add is that mix is a little bit more multi...there's a few elements to mix. Certainly...
Speaker Change: The higher percentage of audio we sell is going to move several basis points on our gross margin. Other factors include the mix within the product lineup. For instance,
Dale Strang: Other factors include the mix within the product lineup. For instance, in the panel market, there's a sort of mainstream, you know, midpoint of price and performance that we're really well known for and we perform really well with. But we've also introduced some really high performing, really top-end panels that have lots of features, lots of technology that tend to be both higher price and higher margin. Those figure into it as well because those have been well received. Other factors include the advantageous way in which we're able to buy our components. There's timing around that, and we work very closely with our sourcing partners to ensure that we're super competitive all the time.
Dale Strang: In the panel market, there's a sort of mainstream, you know, midpoint of price and performance that we're really well known for, and we perform really well with. But we've also introduced some really high performing, really top-end panels. Other factors include the advantageous way in which we're able to buy our components; there's timing around that, and we work very closely with our sourcing partners to ensure that we're super competitive all the time.
Speaker Change: In the panel market, there's a sort of mainstream midpoint of price and performance that we're really well-known for and we perform really well with. But we've also introduced some really high-performing...
Speaker Change: really top-end panels.
Speaker Change: that have lots of features, lots of technology that tend to be both higher price and higher and higher margin, those figure into it as well because those have been well received.
Speaker Change: Other factors include the advantageous way in which we're able to buy our components. There's timing around that, and we work very closely.
Dale Strang: And the last thing is that not every country is the same. There are countries that are known for being price-driven first and only, and there are others that really want to find the right mix between performance, support, and feature set, and those are reflected in the margins as well.
Dale Strang: And the last thing is not every country is the same. There are countries where that are known for being price driven first and only, and there's others that really want to find the right mix between performance and support. And feature set, and those are reflected in the margins as well.
Speaker Change: with our sourcing partners to ensure that we're super competitive all the time. And the last thing is not every country is the same. There are countries that are known for being price-driven.
Speaker Change: first and only, and there's others that really want to find the right mix between performance and support and feature set, and those are reflected in the margins as well.
Dale Strang: Great. My last question, Dale, when you joined, you talked about improving the balance sheet. You talked about it here. I know it's a focus of yours. Are we any closer, do you think, to making some changes on the balance sheet, or is it still a bit away? It's not pending, but I think we're closer. Yeah, we've, as Greg and I both mentioned, we're tight with the folks that are balance sheet. And we talk all the time about what the right approaches and when and how we do it. So I don't really not answered other than that.
Unidentified Speaker: Great. My last question, Dale, when you joined, you talked about improving the balance sheet. You talked about it here. I know it's a focus of yours.
Dale Strang: Great. My last question, Dale, when you joined, you talked about improving the balance sheet. You talked about it here. I know it's a focus of yours.
Speaker Change: Are we any closer do you think to making some changes on the balance sheet or is it still a bit away?
Dale Strang: It's not pending, but I think we're close there. Yeah, as Greg and I both mentioned, we're tight with the folks on our balance sheet.
Speaker Change: And we talk all the time about what the right approach is and when and how we do it. So, I don't really know how to answer it other than that. It certainly is a priority.
Dale Strang: It's it's it's fairly is a priority. I'm sorry. but there's nothing that we're going to do that says anyway rash or you know we don't need we need don't need to rush we just need to do it right and we're working closely with everyone involved to make sure we do that.
Dale Strang: But there's nothing that we're going to do that's in any way rash or, you know, we don't need to rush. We just need to do it right. And we're working closely with everyone involved to make sure we do that.
Dale Strang: But there's nothing that we're going to do that's in any way rash or, you know, we don't need to rush. We just need to do it right. And we're working closely with everyone involved to make sure we do that.
Unidentified Speaker: Okay, thanks so much.
Speaker Change: Okay, thanks so much.
Speaker Change: Thank you. Once again, if you have any questions or comments, please press star 1 on your phone at this time.
Operator: Our next question is coming from Jack Van Der Arde with Maxim Group. Your line is live.
Speaker Change: Our next question is coming from Jack Van Der Arde with Maxim Group. Your line is live.
Operator: Your line is life. Okay, great.
Jack van der Aarde: Okay, great. Hey, Dale. Hey, Greg.
Jack Aarde: Hey Dale, Greg, despite the top line softness, it is good to see the strong margins, strong adjustment, positive adjustment, but I guess I just want to circle back. I guess on the OPEX, so you've previously talked about moving toward a normalized quarterly OPEX level as much lower than it was historically. You've done a great job of that. You're in that range, actually close to this quarter. Greg, you did mention, I believe, aligning OPEX based on revenue and business conditions. So just so understand that does that sort of imply you know you're kind of you've kind of done a good job of getting to that normalized OPEX range and you guys stated you're moving towards.
Jack van der Aarde: You know, despite the top line softness, it is good to see the strong margins, strong adjusted EBITDA, and positive adjusted EBITDA. I guess I'll, I just want to circle back, I guess, on OPEX. So, you previously talked about moving toward a normalized quarterly OPEX level that was much lower than it was historically. You've done a great job with that. You're in that range, actually, close to it this quarter.
Speaker Change: Okay, great. Hey, Dale. Hey, Greg.
Speaker Change: Despite the top line softness, it is good to see the strong margins, strong adjustability, but positive adjustability.
Speaker Change: I guess I'll, I just want to circle back, I guess, on the OPEX. So, you previously talked about moving toward a normalized quarterly OPEX level. That was much lower than it was historically. You've done a great job of that. You're in that range, actually, close to it this quarter.
Jack van der Aarde: Greg, you did mention, I believe, aligning OPEX based on revenue and business conditions. So, just to understand that, does that sort of imply, you know, you've kind of done a good job of getting to that normalized OPEX range that you guys stated you're moving towards? However, there's still an opportunity, maybe for further cost reduction, pending the demand environment, I suppose. But I wouldn't expect further increases to OPEX, is what I'm thinking.
Speaker Change: Greg, you did mention, I believe, aligning OPEX based on revenue and business conditions. So, just so I understand that, does that sort of imply, you know, you've kind of done a good job of getting
Greg Wiggins: However, there's still an opportunity maybe for further cost reductions pending the demand environment, I suppose, but I wouldn't expect further increases to OPEX is what I'm thinking. Yeah, so the way we've kind of looked at it, so going in, going into the year, based on you know our initial initial thoughts early in the year in Q1 Q2, you know we wanted to target 12 and a half. 12 and a half million per quarter OPEX range, and we've made, you know, a large number of changes to execute on that. And as you, as you noted, you know, a lot of that's already starting to bear itself out in our financial results for Q2. And as we, you know, progress through Q3 Q4, we think we're, you know, well on our way toward, you know, arriving at that number.
Speaker Change: to that normalized OPEX range that you guys stated you're moving towards. However, there's still an opportunity maybe for further cost reductions.
Greg Wiggins: pending the demand environment, I suppose. But I wouldn't expect further increases to OPEX is what I'm thinking.
Gregory Wiggins: Yeah, so the way we've kind of looked at it, so going into the year, based on our initial thoughts early in the year in Q1, Q2, we wanted to target a $12.5 million per quarter OPEX range, and we've made a large number of changes to execute on that. And as you noted, a lot of that's already starting to bear itself out in our financial results for Q2. And as we progress through Q3, Q4, we think we're well on our way toward Q4.
Greg Wiggins: Yeah, so the way we've kind of looked at it, so going into the year, based on, you know, our initial thoughts early in the year in Q1, Q2, you know, we wanted to target 12 and a half
Speaker Change: 25 million per quarter OpEx range and we've made you know a large number of changes to execute on that and as you as you noted you know a lot of that's already starting to
Speaker Change: bear itself out in our financial results for Q2, and as we, you know, progress through Q3, Q4, we think we're, you know, well on our way toward
Greg Wiggins: I think just stepping back at a high level you know we're you know we don't have necessarily all the answers at this point as far as you know exactly you know when and to what extent them you know the market will you know completely turned. I think in the past you know admittedly you know I think we would say the company hasn't always been as proactive about managing the OPEX spend in relation to you know where the market's been as far as you know customer demand and revenue generation. And I think from our point of view now it's, you know, we we, you know, are much more aligned with, you know, looking at the current market trends and adapting accordingly to our OPEX structure. Now, certainly there are fixed costs, you know, within our OPEX, within our OPEX structure, but I think we do have some, you know, ability to control some variable expenses, you know, as we move forward, but also just to really make the necessary change.
Speaker Change: you know, toward arriving at that number. I think just stepping back at a high level, you know, we're
Gregory Wiggins: You know, we don't necessarily have all the answers at this point as far as exactly when and to what extent the market will completely turn. I think in the past, you know, admittedly, you know, I think we would say the company hasn't always been as proactive about managing the op-ex spend in relation to where the market is as far as customer demand and revenue generation. And I think from our point of view now, it's, you know, we, we, you know, are much more aligned with, you know.
Speaker Change: You know, we don't have necessarily all the answers at this point as far as, you know, exactly, you know, when and to what extent the, you know, the market will, you know, completely turn.
Speaker Change: I think in the past, you know, admittedly, you know, I think we would say the company hasn't always been as proactive about managing the OPEX spend in relation to
Speaker Change: where the market's been as far as customer demand and revenue generation. And I think from our point of view now, we are much more aligned with
Speaker Change: Looking at the current market trends and adapting accordingly to our OPEX structure. Now certainly there are fixed costs within our OPEX.
Speaker Change: within our OPEX structure, but I think we do have some, you know, ability to control some variable expenses, you know, as we move forward, but also just to really make the necessary changes proactively based on how the market is trending on the top line.
Greg Wiggins: Just proactively based on how the market is trending on the top line.
Dale Strang: Okay, guys, that's really helpful, and maybe a question for Dale: maybe qualitatively, can you provide some color, maybe on just like the tone of some of the discussions you're having with your customers? Potential customers across all your markets and verticals. Whatever just stands out up the top of your head. What are you hearing from your customers? Is there a pause? Is there optimism at all? How has that changed? I know there's a lot of moving parts here, but that'd be helpful. Jack, I think that's a great question. It's an interesting one because, as you know, I spend as much time as I can.
Speaker Change: Okay, got it. That's really helpful. Maybe a question for Dale.
Jack van der Aarde: Maybe qualitatively, can you provide some color maybe on just the tone of some of the discussions you're having with your customers? Potential customers across all your markets and in verticals, whatever just stands out at the top of your head, wondering just kind of, you know, what are you hearing from your customers? Is there a pause? Is there optimism at all?
Dale Strang: Maybe qualitatively, can you provide some color maybe on just like the tone of some of the discussions you're having with your customers?
Dale Strang: potential customers across all your markets and verticals, whatever just stands out at the top of your head.
Dale Strang: How has that changed? I know there's a lot of moving parts here, but that would be helpful. Jack, that's a great question. And it's an interesting one, because, as you know, I spend as much time as I can talking to those customers, and you might even put them in a couple different buckets, right? One bucket being the people who really are... what some people would call box movers.
Dale Strang: Wondering, just kind of, you know, what are you hearing from your customers?
Speaker Change: Is there a pause? Is there optimism at all? How has that changed?
Speaker Change: I know there's a lot of moving parts here, but that'd be helpful. Jack, I think that's a great question, and it's an interesting one because, as you know, I spend as much time as I can talking to those customers.
Dale Strang: I've been talking to those customers, and it's tough to generalize, but one way to look at it is our channel partners; you might even put them in a couple of different buckets, right? One bucket being the people who really consult hatefully work with their end user customers to provide a solution that is exactly meeting their needs and really is built for the future. And then there are others that maybe fall on the other partners that maybe fall on the category of sort of volume producers or catalog providers or what some people would call box movers.
Speaker Change: It's tough to generalize, but one way to look at it is, our channel partners...
Jack: you might even put them in a couple different buckets, right?
Jack: consultatively work with their end-user customers to provide a solution that is
Jack: that is exactly meeting their needs and really is built for the future. And then there's others that maybe fall in the, other projects that maybe fall in the category of sort of volume producers or catalog providers.
Dale Strang: And I see a real disparity between the tenor of the conversations based on how I might characterize those people. By the way, all partners claim that they're the big value add solution provider, you know, and nobody wants to accept the short box movers. So, I'm being disparaging without meaning to. But my point is the people who are based on volume moving without really enhanced value being part of the conversation; those people are the ones that have the most dismay about the overall market turn. Those are the ones that are wondering what's going to happen. They view it as more of a commodity, and they see the commodity as not being as much demand, maybe as it was two years ago.
Dale Strang: I see a real disparity between the tenor of the conversations based on... Those are the ones that are wondering what's going to happen. They view it as more of a commodity, and they see the commodity as not being in as much demand, maybe, as it was two years ago. The solution providers are the people that we work best with... And that's true in every market. The ones who really are more curated in their approach, some of them are having record years, and they tend to be
Jack: what some people would call boxmovers.
Speaker Change: I see a real disparity between the tenor of the conversations based on
Jack: on how I might characterize those people. By the way, all partners claim that they're the big value add solution provider, you know, and nobody wants to accept the box movers. So I'm being disparaging without meaning to. But my point is, the people who are based on volume moving without
Jack: without really enhanced value being part of the conversation. Those people are the ones that have the most dismay about the overall market turn.
Jack: Those are the ones that are wondering what's what's going to happen. They view it as more of a commodity and they see the commodity as not being in as much demand maybe as it was two years ago. The solution providers, the people that we work best with,
Jack Aarde: The solution providers, the people that we work best with, and that's true in every market, the ones who really are more curated in their approach, some of them are having record years. And they tend to be, they, they, I'm over generalizing, but many of them feel like the corner is about to turn or has been turned to turn to overall demand. And we find that super encouraging because that fits our competitive position really well. Very interesting. No, that's a really helpful color. I appreciate that. And then maybe just some of the metrics you guys have provided in the past.
Jack: and that's true in every market the ones who really are more curated in their approach some of them were having record years and they tend to the they
Jack: I'm overgeneralizing, but many of them feel like the corner is about to turn or has been turned in terms of overall demand. And we find that super encouraging because that fits our competitive position really well.
Speaker Change: Very interesting. No, that's really helpful color. I appreciate that. And then maybe just some of the metrics you guys have provided in the past. And I don't, I kind of get the idea here in the near term. There's so
Dale Strang: And I don't; I kind of get the idea here in the near term. There's still sort of this unclear visibility. I guess on the demand front. But, you know, mix, mix conversation somewhere; somewhere are warming up. It sounds like you have these new products you've launched that they're actually pretty innovative from what I could tell you with the Unity product offering. Can you just talk about are these are these actively being ordered by customers? What's sort of just like the general idea of, you know, what these contribute to your run rate or just incremental sales in the back half of the year.
Bill Gates: and Bill Gates.
Speaker Change: Unclear visibility, I guess, on the demand front.
Jack: But, you know, mix.
Speaker Change: Mixed conversation. Some are warming up, it sounds like. You have these new products you've launched that are actually pretty innovative.
Speaker Change: from what I can tell, especially with the Unity product offering. Can you just talk about, are these actively being ordered by customers? What's sort of just like the general idea of, you know, what these contribute to your run rate or just incremental sales in the back half of the year? Thanks.
Dale Strang: Thanks. They are just really, they're literally just announced a couple of weeks ago for the most part these, these, and we have more coming more that'll come in the third and fourth quarter. And so we're just now accepting orders on some, on some of these products. So it's too soon to really build it into the forecast, but we do believe it's going to. and they're all going to contribute positively to our US result this year. Most of the products that we describe are US-focused as opposed to Europe, although we think long-term, they'll do really well there as well.
Dale Strang: They literally just announced them a couple of weeks ago, for the most part, and we have more coming, more that will come in the third and fourth quarter. And so we're just now accepting orders on some of these products.
Speaker Change: They literally just announced a couple of weeks ago, for the most part, and we have more coming, more that will come in the third and fourth quarter. And so we're just now accepting orders on some of these products.
Dale Strang: So it's too soon to really build it into the forecast, but we do believe it's going to They're all going to contribute positively to our U.S. result this year. Most of the products that we describe are U.S. focused as opposed to Europe. Although we think, long-term, they'll do really well there as well. It's just the market for classroom audio, for instance, hasn't developed in most European markets the way it has here.
Jack: Too soon to really build it into the forecast, but we do believe it's going to
Jack: They're all going to contribute positively to our U.S. result this year.
Jack: Most of the products that we describe are U.S. focused as opposed to Europe . Although we think long term, they'll do really well there as well. It's just the market for classroom audio, for instance, hasn't developed in most European markets the way it has here.
Jack Aarde: It's just a market for classroom audio; for instance, has a result in most of your peer markets the way it has here. Gotcha. That was definitely getting ahead of my sees there, but that's good to hear. I look forward to tracking that as well, see how those products are received and how that contributes to demand and orders.
Speaker Change: Gotcha. No, that was definitely getting ahead of myself there, but that's good to hear. And I look forward to tracking that as well, see how those products are received and how that contributes to demand and orders.
Jack Aarde: Maybe just one more last one. I know you guys can provide guidance, but it is the third quarter, which historically can be a stronger quarter. Would you maybe, you know, maybe your declines are still likely, but would you expect a sequential uptick from the second quarter in this third quarter as typical, or is that just something where you're unclear on it? Don't want to comment on that this time. I have my point of view on this, but so far this year, and really much of last year, history has not been a reliable guide we hoped it would be.
Speaker Change: Maybe just one more last one, just because I know you guys didn't provide guidance, but it is the third quarter, which, you know, historically can be a stronger quarter. Would you maybe, you know, I know,
Jack: Maybe year-over-year declines are still likely, but would you expect a sequential uptick from the second quarter in this third quarter as typical, or is that just something you're unclear on and don't want to comment on at this time?
Unidentified Speaker: in this third quarter as typical? Or is that just something you're unclear on and don't wanna comment on?
Speaker Change: I have my point of view on this, but so far this year and really much of last year, history has not been the reliable guide we hoped it would be.
Dale Strang: We were; I got here in January. Our team put together a really detailed plan for what we thought the first half of the year would look like, and we were spot on right up until the middle of June, you know. So I would say that in the US, the outlook remains quite murky. We have a lot going on, but it still remains quite murky. I think we have a little more visibility, or a little more certainty coming from several other markets, but I'm not even prepared to guarantee that just yet. Guy, that's fair enough. I appreciate it.
Speaker Change: We were, I got here in January , our team put together a
Speaker Change: detailed plan for what we thought the first half of the year would look like, and we were spot on, right up until the middle of June.
Speaker Change: so i would say that in the u us the outlook remains quite murky we have a lot going on but it still remains quite murky i think the i think we have a little more visibility or a little more certainty coming from sover other markets
Speaker Change: But I'm not I'm not even prepared to to guarantee that just yet
Jack Aarde: It is really volatile. The market is really volatile right now, and there's a lot of reasons for that at the top end of the funnel, meaning funding sources, the certainty with which the funding is being delivered and so on, and at the, you know, at the final decision making, all the things through there, it's volatile. So we'll know more soon, but I hesitate to close my eyes and stick a finger on a number, given the conflicting signals we're getting. Yep, no, that's totally reasonable, and I appreciate you providing us some extra color there. Well, I look forward to the story, gentlemen.
Speaker Change: That's fair enough. I appreciate that. It is really volatile. The market is really volatile right now.
Speaker Change: And there's a lot of reasons for that at the top end of the funnel, meaning funding sources, the certainty with which the funding is...
Speaker Change: is being delivered and so on, and at the final decision-making, all the things through there, it's volatile. So, we'll know more soon, but I hesitate to...
Unidentified Speaker: you know, at the final decision-making stage. All the things through there, it's volatile.
Jack van der Aarde: So, we'll know more soon, but I hesitate to... Yep, no, that's totally reasonable. And I appreciate you providing some extra color there. Well, I look forward to tracking the story, gentlemen. Thank you.
Speaker Change: to close my eyes and stick a finger on a number given the conflicting signals we're getting.
Speaker Change: Yep, no, that's totally reasonable and I appreciate you providing some extra color there. Well, I look forward to tracking the story, gentlemen. Thank you.
Operator: Thank you. Thank you, Jack. Thank you. If there will be any final questions or comments, please indicate so now by pressing star one on your telephone keypad.
Speaker Change: Thanks, Jack. Thank you, Jack.
Speaker Change: Thank you. If there will be any final questions or comments, please indicate so now by pressing star 1 on your telephone keypad.
Dale Strang: Okay, as we have no further questions at this time, I will hand it back over to Mr. String for any closing comments. Well, thank you, everyone, for your support for joining us today. As I indicated, boxlights compared to the position continues to improve. We're making progress to line our costs to their current revenue levels, and despite less than desired visibility, we're working to position Boxlight to thrive when market conditions improve. With the broadest and deepest offering in industry-leading solutions of several key categories, we're capturing market share today and bolstering our position for the future. I'm increasingly confident we're on a sustainable path for success.
mr string: okay as we have no further questions at this time i will hand the back over to mr string for any closensing comments
Speaker Change: Well, thank you, everyone, for your support and for joining us today.
Mr String: As I indicated, Boxlight's competitive position continues to improve. We're making progress to align our costs with our current revenue levels and, despite less than desired visibility, we're working to position Boxlight to thrive when market conditions improve.
Mr String: with the broadest and deepest offering and industry-leading solutions in several key categories. We're capturing market share today and bolstering our position for the future.
Mr String: I'm increasingly confident we're on a sustainable path for success.
Dale Strang: I'm incredibly proud of the Boxlight team for responding to the challenges we've talked about and operating with both professionalism as well as energy and creativity.
Speaker Change: I'm incredibly proud of the Boxlight team for responding to the challenges we've talked about and operating with both professionalism as well as energy and creativity.
Dale Strang: We look forward to speaking to you again when we report our Q3 2024 results. Thank you.
Unidentified Speaker: 2024 results
Unidentified Speaker: we look forward to speaking to you again when when we report our q three two thousand and twenty-four results
Operator: This concludes today's call, and you may disconnect your lines at this time, and we thank you for your participation.
Operator: This concludes today's call, and you may disconnect your lines at this time. We thank you for your participation.
Mr String: Thank you.
Speaker Change: This concludes today's call and you may disconnect your lines at this time and we thank you for your participation.