Q2 2024 Allot Ltd Earnings Call
[noise], ladies and gentlemen, thank you for standing by the call will begin shortly.
Operator: Ladies and gentlemen, thank you for standing by. The call will begin shortly.
[music].
Hum.
Yeah.
Yeah.
[noise].
Operator: Ladies and gentlemen, thank you for standing by. Welcome to a Loads Results conference call. All participants are at present in listen-only mode.
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to our lowest results conference call. All participants are at present in listen only mode. Following management's formal presentation instructions will be good.
Operator: Falling managed in formal presentation. Instructions will be given for the question and answer session. As a reminder, this conference is being recorded. You should have all received by now the company's press release.
Speaker Change: For the question and answer session. As a reminder, this conference is being recorded you should have all received by now the Companys press release, if you have not please check the company's website at www dot alone dot com or call U K Global Investor Relations.
Operator: If you have not, please check the company's website at www.alotes.com or call EK Global Investor Relations.
Kenny Green: I would now hand over the call to a Loat Investor Relations Officer, Mr. Kenny Green of EK Global Investor Relations.
Speaker Change: I would now hand over the call to a low <unk> Investor Relations Officer, Mr. Kenny Green of Ek Global Investor Relations, Mr. Green would you like to begin.
Kenny Green: Mr. Green, would you like to begin?
Kenny Green: Thank you. Good day to all of you, and welcome to a Loads Conference call to discuss its financial results for the quarter. I would like to thank Loads Management for hosting this conference call.
Speaker Change: Thank you.
Speaker Change: Thanks to all of you and welcome to the last conference call to discuss its financial results for the quarter.
Speaker Change: I would like to thank management for hosting this conference call.
Kenny Green: With me today on the call, I'm Mr. Ayaharari, CEO, and Mr. Liat Nahum, CFO. Following Ayah's program, marks will open the call for the question and answer session, and both Ayah and Liat will be available to answer those questions. You can all find the highlights of the quarter, including financial highlights and metrics, including those we typically discuss on the conference call, in today's bonus release.
Kenny Green: With me today on the call.
Speaker Change: All Harare CEO, Mr Young CFO.
Kenny Green: Alright.
Speaker Change: All right.
Speaker Change: Open the call for question and answer session.
Speaker Change: Yeah, Neil will be available to answer those questions.
Speaker Change: You can all find the highlights of the quarter, including financial highlights and metrics, including those we typically discussed on the conference call in today's earnings release before we start I'd like to point out the following Safe Harbor statement. This conference call may contain projections or other forward looking statements regarding future events.
Kenny Green: Before we start, I'd like to point out the following same harvest statements. This conference call may contain projections of other four different statements regarding future events or the future performance of the company. Those statements are early predictions, and a lot cannot guarantee that they will in fact occur. A lot does not assume that any obligation to update that information. Actual events or results made it and materially from those projected, including as a result of changing market trends, delays in the launch of services by lot customers, reduced demands, and the competitive nature of the securities services industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.
Speaker Change: The future performance of the company.
Speaker Change: These statements are only predictions and allot cannot guarantee that they will in fact occur.
Speaker Change: It does not assume any obligation to update that information.
In all events or results may differ materially from those projected including as a result of changing market trends.
Speaker Change: And the launch of service in pilot customers.
Speaker Change: Demands and the competitive nature of the <unk> services industry as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.
Kenny Green: Also, the financial results in this call will be presented mainly on a non-GAAP basis. A lot believes that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand a lot's operating performance in the courts.
Speaker Change: Also the financial results in this call will be presented on a non-GAAP basis.
Speaker Change: These non-GAAP financial measures provide more consistent and comparable measures to help investors understand.
Speaker Change: Operating performance in the quarter.
Kenny Green: For all the data, please refer to the financial tables published in the results press release issued earlier today, which also include the gaps of non-GAAP financial reconciliation tables.
All the data please refer to the financial tables published in the results press release issued earlier today, which also include the GAAP to non-GAAP financial reconciliation tables.
Eyal Harari: And with that, I would now like to hand the call over to Eyal Harari, CEO. I would like to hand the call over to Eyal Harari, CEO of the second quarter, as we have clearly made good progress. Most notably, I am happy that the law generated positive operating cash flow and increase its overall net cash position for the first time in three years. This success was driven by our efforts, which drove a significant decrease in operating expenses while also stabilizing revenue and cost margins. In the past couple of quarters, we have significantly optimized operation and expenses, which are approximately 25% lower than last year.
Speaker Change: With that I would now like to hand, the call over to <unk>.
Harare: Harare CEO of Yelp.
Speaker Change: Please go ahead.
Harare: Thank you Kenny.
Speaker Change: I would like to welcome all of you to our results conference call and thank you for joining us today.
Speaker Change: I'm pleased with the results of the second quarter, it's weird.
Speaker Change: Hey, good focus.
Most notably I'm, asking a little generated positive operating cash flow and increase its overall net cash position for the first time two three years.
Speaker Change: This success was driven by all the airports, which drove a significant decrease in operating expenses was also subsidizing revenue and gross margins.
Speaker Change: In the past couple of quarters, we have significantly optimized operation expenses, which are approximately 25% lower than last year.
Eyal Harari: We undertook these actions to bring the business to sustainable profitability and to grow the cash position.
Speaker Change: We undertook actions to bring the business to sustainable profitability.
Speaker Change: To go with the cash position.
Eyal Harari: I want to spend a few moments talking about the various parts of our business. Starting with a low secure, our main growth engine. We continue to invest in our thicker growth engine, and the business continue to gain traction. In the second quarter, figures revenue increased by 54% year-over-year. More extensively of T1 customer, in order to pursue further extensions between these large accounts, while also providing gas with high quality reference as we look to attract new locals. We recently signed an extension agreement with one of our T1 European CSP customers for the provision of T-CAS to its customer base.
Speaker Change: I want to spend few moments talking about the various spouses all goodness.
Speaker Change: Starting with our north skew our main growth engine.
Speaker Change: We continue to invest in all of it because the gold Shenzhen and the business continues to gain traction.
Speaker Change: In the second quarter, because revenue increased by 54% year over year.
Speaker Change: Extensive loose stool, one customer enabled us to pursue further expansion within these large accounts, while also providing us with high quality references as we look to attract new logos.
Speaker Change: We recently signed an expansion agreement with one of our tier one European CSP customers political vision of she's got to each customer base.
Eyal Harari: The extension agreement should start contributing to our revenue at the end of this year, representing the additional T-CAS growth potential for a low in 2025. Our most exciting secret launch last year was with Verizon Business. The engagement continues to be mutually beneficial, and as a result, we are discussing several potential extension opportunities within Verizon's different customer segments. I want to point out that Verizon highlighted a lot of contribution to their security solution in the recent published 2024 Mobile Security Index report, validating a lot as one of the trusted partners in protecting their network and customers.
Speaker Change: The extension agreement should start contributing to our revenue at the end of the season, representing the addition of <unk> gross potential for <unk> and 'twenty to 'twenty five.
Speaker Change: Our most exciting seek us launch last year was with Verizon business.
Speaker Change: The engagement continues to be mutually beneficial.
Speaker Change: The engagement continues to be mutually beneficial.
Speaker Change: And as a result, we are discussing several potential expansion opportunities into verizon's different customer segments.
Speaker Change: I want to point out that Verizon highlighted the loss contribution to their security solution. You did recently published when frequency for mobile security index before.
Speaker Change: I look it as one of their trusted partners protect them doing this work and customers.
Eyal Harari: Specifically, the report noted that the growth of the mobile computing and IoT is exponentially expanding the attack surface that needs protection, which in turn would require a matching focus on ensuring sufficient mobile security processes, policies, and investments. Overall, I believe the thicker solution is the key long-term growth driver for a lot in the security space. For a lot of smart, in the second quarter, we saw increased interaction, converting some of our pipeline into contracts. We achieved an improved level of sale to new customers, as well as an extension of sales to current customers. Allot is a trusted, long-term supplier of its smart products to a strong customer base.
Speaker Change: Specifically did he both noted.
Speaker Change: The growth of the mobile computing and Iot use exponentially expanding the attack surface distributes protection.
Speaker Change: Ladies and gentlemen, thank you for standing by. The call will begin shortly. Ladies and gentlemen, thank you for standing by.
Operator: Ladies and gentlemen, thank you for standing by. The call will begin shortly. Ladies and gentlemen, thank you for standing by.
John: Sure John would require a massive focus on ensuring sufficient mobile security processes policies and investments overhaul I believe to seek a solution is the key.
Speaker Change: <unk> long term growth driver for a lot in the security space.
Speaker Change: For a lot of smoke in the second quarter, we saw increasing traction converting some of our pipeline into contracts. We achieved an improved level of sales to new customers as well as an expansion sales to current customers.
Speaker Change: I know he is a trusted long term supplier of its.
Speaker Change: Hold us to a strong customer base.
Eyal Harari: This is highlighted by our relationship with Rakuten Mobile. Rakuten is the fourth mobile network operator in Japan with a fully virtualized cloud-native network. Allot has been working closely with Rakuten since 2019, when they were rolling out their network infrastructure. Rakuten recently announced that they are a subscriber growth of 7 million. Allot continues to provide Rakuten with solutions as they grow the network to support an expanding subscriber base.
Speaker Change: This is highlighted by our relationship with Rakuten mobile.
Speaker Change: I Cook time is the false mobile network, operator in Japan with a fully Virtualized cloud Native network alone has been working closely with reference and she's Wednesday 19, when they were rolling out their network infrastructure.
Speaker Change: Welcome to the recently announced digital subscriber growth.
Speaker Change: Welcome to a Loads Results Conference call. All participants are at present in listen only mode. Falling management formal presentation instructions will be given for the question and answer session. As a reminder this conference is being recorded, you should have all received by now the company's press release. If you have not, please check the company's website at www.allotes.com or call EK Global Investor Relations.
Kenny Green: Welcome to a Loads Results Conference call. All participants are at present in listen only mode. Falling management formal presentation instructions will be given for the question and answer session. As a reminder this conference is being recorded, you should have all received by now the company's press release. If you have not, please check the company's website at www.allote.com or call EK Global Investor Relations.
Speaker Change: Gross 7 million.
Although it continues to provide rakuten with solutions I think over the next little to support an expanding subscriber base fees.
Eyal Harari: Since joining the lot earlier this year, I have been meeting with our key customers and partners globally. I am focused on identifying ways we can leverage our technology to better serve our customers with a goal to read my growth by expanding within our install base. Allot has a long tradition of innovation with differentiated technology and a top-tier global customer base. I have spent time with employees. We have a strong team of professional and talented individuals. Many we do technology and know-how and capabilities in the network thing in the security space, which stands at the epicenter of TIT's standing priorities.
Speaker Change: He joins a little earlier this year I've been meeting with key customers and partners globally.
I am focused on identifying ways, we can leverage our technology to better serve our customers with a goal to reignite both by expanding within our install base.
Speaker Change: I would now hand over the call to a Load Investor Relations Officer, Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin? Thank you.
Kenny Green: I would now hand over the call to a Loat Investor Relations Officer, Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin? Thank you. Good day to all of you and welcome to a Loads Conference call to discuss its financial results for the quarter. I would like to thank a Loads Management for hosting this conference call. With me today on the call, I'm Mr. Eyal Harari, CEO and Mr. Liat Nahum, CFO.
Speaker Change: I know, it's a long tradition of innovation with differentiated technology, and I've talked to the global customer base.
Speaker Change: Good day to all of you and welcome to a Loads Conference call to discuss its financial results for the quarter. I would like to thank a Loads Management for hosting this conference call. With me today on the call, I'm Mr. Eyal Harari, CEO and Mr. Yatna Hum, CFO. Following Eyal's program marks will open the call for the question and answer session, and both Eyal and Lea will be available to answer those questions.
Kenny Green: Following Eyal's program marks will open the call for the question and answer session, and both Eyal and Liat will be available to answer those questions. You can all find the highlights of the quarter, including financial highlights and metrics, including those we typically discuss on the conference call, into day's burdens release. Before we start, I'd like to point out the following same harvest statements. This conference call, main contains projections of other four different statements regarding future events or the future performance of the company.
Speaker Change: I have spent time with the employees, we have a strong team a fisherman and talented individuals. Many we do pick knowledge and knowhow and capabilities in the network security space, which sense.
Speaker Change: At the center of the HQ spending going overseas.
Eyal Harari: I am currently working closely with the Bolden management, including our new CFO in the Atma-Hoon, who joined us at the beginning of Q3 to formulate a strategic plan to drive the new revenue growth and long-term profitability. I want to share my initial thoughts. We are looking for long-term profitable growth opportunities that leverage a lot's co-capability. The cyber security market continues to experience rapid growth as threats continue to emerge and increase insufficient. The mobile cyber security market is projected by analysts to be an $8 billion market with over 20% compound average growth over the next decade.
Speaker Change: I'm currently walking closely with the board and management, including government and you'll see the fall would be up in the home who joined US at the beginning of excuse me.
Speaker Change: You can all find the highlights of the quarter, including financial highlights and metrics, including those we typically discuss on the conference call, into day's burdens release. Before we start, I'd like to point out the following same harvest statements. This conference call, main contains projections of other four different statements regarding future events or the future performance of the company. Those statements are early predictions, and a lot cannot guarantee that they will in fact occur.
Speaker Change: To formulate a strategic plan to drive continued revenue growth and long term possibility.
Speaker Change: I want to share my initial thoughts.
Kenny Green: Those statements are early predictions and a lot cannot guarantee that they will in fact occur. A lot does not assume any obligation to update that information. Actual events or results made it and materially from those projected, including as a result of changing market trends, delays in the launch of services by lot customers, reduced demands and the competitive nature of securities services industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.
Speaker Change: We are looking for long term profitable growth opportunities that leverage our core capabilities.
Speaker Change: The cyber security market continues to experience rapid growth.
Speaker Change: <unk> continued to emerge and increase in sophistication.
Speaker Change: The mobile the cyber security market is projected by analysts to be an $8 billion market.
Speaker Change: A lot does not assume any obligation to update that information. Actual events or results made it and materially from those projected, including as a result of changing market trends, delays in the launch of services by a lot of customers, reduced demands, and the competitive nature of securities services industry, as well as other risks identified in the documents filed by the company with the Security and Exchange Commission. Also, the financial results in this call will be presented mainly on a non-gap basis.
Speaker Change: We'd always 20% compounded average growth over the next decade.
Eyal Harari: Cyber security is one of a lot of growth engines, and we are considering improvements in innovations to our CQS solution to bring additional value and even better cyber protection to our customers. We are also looking at additional gold to market strategies for CQS to expand our customer base and address the market. Another trend we are looking at is 5G revolution. As new 5G networks continue to be rolled out, the demand for advanced security solutions is growing significantly, with analysts expecting compound annual growth rate in access of 40% over the next five years. A recent report indicates that around 70% of large companies and 40% of small businesses have adopted at least one cloud service today.
Speaker Change: Cyber security is one of golf's engines, and we are considering improvements and innovations to our <unk> solution to bring additional value and even better cyclical protection to our customers.
Speaker Change: We are also looking at traditional go to market strategies for sika to expand our customer base and addressable market.
Kenny Green: Also, the financial results in this call will be presented mainly on a non-gap basis. A lot believes that these non-gap financial measures provide more consistent and comparable measures to help investors understand a lot's operating performance in the courts, for all the data. Please refer to the financial tables published in the results press release issued earlier today which also include the gaps of non-gap financial reconciliation tables.
Speaker Change: A lot believes that these non-gap financial measures provide more consistent and comparable measures to help investors understand a lot's operating performance in the courts. For all the data, please refer to the financial tables published in the results press release issued earlier today, which also include the gaps of non-gap financial reconciliation tables.
Speaker Change: Another trend we are looking at besides due to pollution.
As new factory metals continue to be rolled out the demand for advanced security solution is growing significantly we've done at least expecting compound annual growth rate in excess of 40% over the next five years.
Eyal Harari: And with that, I would now like to hand the call over to Eyal Harari CEO. Eyal, please go ahead. The first of the second quarter as we have clearly made good progress.
Speaker Change: Recently fault indicates that their own 70% of large companies and 40% of small businesses.
Speaker Change: There's at least one cloud service to date.
Eyal Harari: The movement to the cloud is being driven by the increasing need for remote world solution digital transformation initiatives and the desire to optimize costs and enhance business agility. We are exploring the potential of our products to address and provide additional value to the cloud and 5G markets as we strive for further penetrate these models.
Speaker Change: Moving to the cloud is being driven by the increasing need for remote work solution did you sell transformation initiatives and their desire to optimize cost and enhance the business. The geography, we are exploring the potential for a call.
Speaker Change: The first of the second quarter as we have clearly made good progress. Most notably, I am happy that the law generated positive operating cash flow and increase its overall net cash position for the first time in three years. This success was driven by our efforts, which draw of a significant decrease in operating expenses, while also subsidizing revenue and cost margins. In the past couple of quarters, we have significantly optimized operation and expenses, which are approximately 25% lower than last year. We undertook these actions to bring the business to sustainable profitability and to grow the cash position.
Eyal Harari: Most notably, I am happy that the law generated positive operating cash flow and increase its overall net cash position for the first time in three years. This success was driven by our efforts, which drove a significant decrease in operating expenses, while also subsidizing revenue and cost margins. In the past couple of quarters, we have significantly optimized operation and expenses, which are approximately 25% lower than last year. Eyal, we undertook these actions to bring the business to sustainable profitability and to grow the cash position.
Speaker Change: To address and provide additional value to the cloud in 50 markets as we strive for further penetrate these markets.
Eyal Harari: While our go-to-market strategy is global in its outlook, we are under-penetrated in the North America market. A lot has seen initial success in the region in recent years, and we have strong references including the horizon. We are exploring ways in which we can leverage our early success to deepen our engagement in this region, which today is leading many of the security growth trends. We see a significant opportunity for a lot in North America. A lot of walks with many large enterprises and living CSP, and it is clear that customer success and deepening relationships are key drivers to potentially expanding our business within our install days.
Speaker Change: While our go to market strategies globally.
Speaker Change: We are underpenetrated in the North America market.
Michele: I look and see me Michele success in the region in recent years and we have a strong references.
Michele: Including the horizon we.
Speaker Change: We are exploring ways in which we can leverage our early success to deepen our engagement in this region, which two days he is leading many of the security growth strengths.
Speaker Change: We see a significant opportunity for all of North America.
Speaker Change: I want to spend few moments talking about the various parts of our business. Starting with a lot secure, our main growth engine. We continue to invest in our stickers, gold engine and the business continue to gain traction. In the second quarter, stickers revenue increased by 54% year over year. More extensively of T1 customer, in order to pursue further extensions within these large accounts, while also providing gas with high quality reference as we look to attract new logos.
Eyal Harari: I want to spend few moments talking about the various parts of our business. Starting with a lot secure, our main growth engine. We continue to invest in our speaker's growth engine and the business continue to gain traction. In the second quarter, success revenue increased by 54% year-over-year, or a sensitive list of tier 1 customers, in order to pursue further extensions within these large accounts, while also providing gas with high quality reference as we look to attract new locals.
Speaker Change: Walsh with many large enterprises and you can see your skus and it can skew the customer success and deepening relationships are key drivers to potentially extending golf business, we've seen our installed base.
Eyal Harari: We are looking at ways to make a lot more customer centric as we strive to further cement customer relationships, enabling us to penetrate further into organizations with our products and services. A goal would be to structure our organization to better support our customer's business goals, as we believe this will allow us to increase business from existing customers.
Speaker Change: We are looking at ways to make a lot more customer centric as we strive to further cement customer relationships and exiting Josh to penetrate further into organizations with our products and services.
Speaker Change: With reconstruction of our organization to better support our customers business goals as we believe this will allow us to increase the business from existing customers.
Speaker Change: We recently signed an extension agreement with one of our T1 European CSP customers for the provision of stickers to its customer base. The extension agreement should start contributing to our revenue at the end of this year, representing the additional stickers goals potential for a loss in 2025. Our most exciting stickers launch last year was with Verizon business. The engagement continues to be mutually beneficial, and as a result, we are discussing several potential extension opportunities within Verizon's different customer segments.
Eyal Harari: We recently signed an extension agreement with one of our tier 1 European CSP customers for the provision of tickets to its customer base. The extension agreement should start contributing to our revenue at the end of this year, representing the additional tickets goals potential for a loss in 2025. Our most exciting tickets launch last year was with Verizon Business. The engagement continues to be mutually beneficial, and as a result, we are discussing several potential extension opportunities within Verizon's different customer segments.
Eyal Harari: I'm working closely with the board and the management on a strategic plan for renewing revenue growth and low term profitability. We will provide more details as we progress.
Speaker Change: Working closely with our board and the management on a strategic plan for renewed revenue growth and long term profitability, we will provide more details as we progress.
Eyal Harari: In summary, with the research management, we believe we are at the start of a new chapter for a lot. In the second quarter, we stabilize revenues and significantly reduce expenses. We return the business to the operating profit breakeven range with positive cash generation. I believe we are both positioned to drive sustainable, profitable, long-term growth, and I am optimistic that a lot will execute on the many opportunities ahead.
Speaker Change: In summary, we do resource management, we believe we are south of a new chapter for allot.
Speaker Change: In the second quarter, we stabilized revenues and significantly reduce expensive we returned the business to the operating profit breakeven range with positive cash generation.
Speaker Change: I believe we are well positioned to drive sustainable profitable long term growth and I'm optimistic that the last one is execute on the many opportunities ahead.
Eyal Harari: I want to point out that Verizon highlighted a lot of contribution to the security solution in the recent published 2024 Mobile Security Index report, validating a lot as one of the trusted partners in protecting their network and customers. Specifically, the report noted that the growth of the mobile computing and IoT is exponentially expanding the attack surface that needs protection, which in turn would require a matching focus on ensuring sufficient mobile security processes, policies, and investments.
Speaker Change: I want to point out that Verizon highlighted a lot of contribution to the security solution in the recent published 2024 Mobile Security Index report validating a lot as one of the trusted partners in protecting their network and customers. Specifically, the report noted that the growth of the mobile computing and IoT is exponentially expanding the attack surface that needs protection, which in turn would require a matching focus on ensuring sufficient mobile security processes, policies and investments.
Kenny Green: And now, I would like to end it over to our CFO in the afternoon for the financial summary.
Speaker Change: Now I would like to win to talk with all of that so you're probably up in the home for the financial Saturday, Yes. Please.
Liat Nahum: Yes, please. Thanks, Eyal. We reported revenue of 22.2 million in the quarter. We are presenting a year of the year decline of 12 percent, but at 1 percent versus the prior quarter. Revenue from our growth center in CICAS was 3.7 million in the quarter, up 54 percent year of the year and comprising 17 percent of our revenue in the quarter. Our CICAS annual recurring revenue as of June 2024 was 14.6 million. As we discussed in our press release, fully of CICAS revenue and CICAS ARR are expected to continue experiencing accelerated growth at around 50 percent year of the year.
Dan: Thanks, Dan.
Speaker Change: Reported revenue of 22 2 million in the quarter, representing a year over year decline of 12% that's up 1% versus the prior quarter.
Speaker Change: And your final class family sitcoms like $8 7 million in the quarter up 54% year over year, and comprising 17% of our revenue in the quarter.
Speaker Change: I think that's annualized recurring revenue as of June 2024 was $14 6 million as we discussed in our press release full year revenue and pick up a O L. I.
Speaker Change: Overall, I believe the sticker solution is the key long-term growth driver for a lot in the security space. For a lot of smart, in the second quarter we saw increased interaction, converting some of our pipeline into contracts. We achieved an improved level of sale to new customers as well as an extension of sales to current customers. Allot is a trusted long-term supplier of its smart products to a strong customer base. This is highlighted by our relationship with Rakuten Mobile.
Eyal Harari: Overall, I believe the thicker solution is the key long-term growth driver for a lot in the security space. For a lot of smart, in the second quarter, we saw increased interaction, converting some of our pipeline into contracts. We achieved an improved level of sale to new customers, as well as an extension of sales to current customers. Allot is a trusted, long-term supplier of its smart products to a strong customer base. This is highlighted by our relationship with Rakuten Mobile.
Speaker Change: I expect that to continue experiencing accelerated close at around 50% year over year.
Liat Nahum: You can find a very breakdowns of our revenue in the table in our press release. Our growth margin in the quarter was 70.6 percent. In the second quarter last year, our growth margin was 71.4 percent, and in the prior quarter, it was 70.4 percent.
Speaker Change: You can find the breakdowns of our revenue in the table in our press release.
Speaker Change: Our gross margin in the quarter was 17, 6% in the second quarter last year. Our gross margin was 71, 4% in the prior quarter it was 74%.
Eyal Harari: Rakuten is the fourth mobile network operator in Japan with a fully virtualized cloud-native network. Allot has been working closely with Rakuten since 2019, when they were rolling out their network infrastructure. Rakuten recently announced that their subscribers cost $7 million. Allot continues to provide Rakuten with solutions as they grow the network to support an expanding supplier base.
Liat Nahum: While the growth margin depends on the specific product mixed in the quarter, the long-term target for cost margin is an average of 70 percent, and we have to wait with the returns to the 70 percent levels in the first half of 2024. As Eyal mentioned, we reduce expenses considerably over the past year. We did not get upx at 16.7 million, similar to that of last quarter and down by over 25 percent from the second quarter of last year.
Speaker Change: While the gross margin depends on the specific product mix sold in the quarter. The long term target for gross margin even ever just 70% and we'd have to wait to see the returns today, 70% level in the first half of 2024.
Speaker Change: Rakuten is the fourth mobile network operator in Japan with a fully virtual cloud-native network. Allot has been working closely with Rakuten since 2019 when they were rolling out their network infrastructure. Rakuten recently announced that their subscribe will best cost seven million. Allot continues to provide Rakuten with solutions as they grow the network to support an expanding subscribe database.
al: As Al mentioned, we reduced expenses consistent with me over the past year, we did non-GAAP opex at $16 7 million similar to the death of a flat quarter and down by over 25% from the second quarter of last year.
Liat Nahum: has 500 full-time employees of June 2024. The non-gap operating loss shows significant improvement, with a 95 percent reduction on a non-gap basis from 18.9 million in Q2 last year and 1.2 million in last quarter to 1 million in Q2 2024. For the second half of 2024, we expect the non-GAAP operating profit at a round break even. In terms of non-GAAP net loss, we reported 0.8 million in the Q2 or a loss of 2 cents per share as compared with a non-GAAP net loss of 18.3 million or a loss of 49 cents per share in the second quarter of last year and net loss of 0.9 million or a loss of 3 cents per share in the previous quarter.
Speaker Change: I Love hedged 500 full time employees as of June 2024.
Speaker Change: The non-GAAP operating loss showed significant improvement with a 95% reduction on a non-GAAP basis from $18 9 million in Q2 last year and one 2 million in last call tier two 1 million in Q2, 'twenty 'twenty four for the second half of 'twenty 'twenty four we expect a non-GAAP.
Eyal Harari: Since joining the lot earlier this year, I have been meeting with our key customers and partners globally. I am focused on identifying ways we can leverage our technology to better serve our customers with a goal to read my growth by expanding within our install base. Allot has a long tradition of innovation, we differentiate the technology in a top-tier global customer base. I have spent time with employees. We have a strong team of professional and talented individuals.
Speaker Change: Since joining a lot earlier this year, I have been meeting with our three customers and partners globally. I am focused on identifying ways we can leverage our technology to better serve our customers with a goal to re-ignite both by expanding within our install base. Allot has a long tradition of innovation. We differentiate the technology and a top-tier global customer base. I have spent time with employees. We have a strong team of professional and talented individuals. Many we do technology and know-how and capabilities in the network thing in the security space which stands at the epicenter of CIT standing priorities.
Speaker Change: Operating profit at around breakeven.
Speaker Change: In terms of non-GAAP net loss.
Speaker Change: Parking airplanes, a chameleon into caulking or a lot of sense for sure.
Speaker Change: Compared with a non-GAAP net loss of $18 3 million or a loss of 49 cents per share in the second quarter of last year.
Eyal Harari: Many we do technology and know-how and capabilities in the network thing in the security space, which stands at the epicenter of CIT standing priorities. I am currently working closely with the bold and management, including our new CFO, the Atmohun, who joined us at the beginning of Q3 to formulate a strategic plan to drive the new revenue growth and long-term profitability.
Speaker Change: Net loss of <unk> 9 million or a loss of three cents per share, indicating what's caused that.
Speaker Change: I am currently working closely with the bold and management, including our new CFO, the Atma-Hoon, who joined us at the beginning of CIT's week to formulate a strategic plan to drive renewed revenue growth and long-term profitability. I want to share my initial thoughts. We are looking for long-term, profitable growth opportunities that leverage a lot's capabilities. The cyber security market continues to experience rapid growth as threats continue to emerge and increase in sophistication.
Liat Nahum: Operating cash flow in the second quarter was 1.2 million, cash short and ban deposit and investment as of June 30, 2024, till 2023.2 million, an increase of 0.6 million versus 52.6 million at the end of prior quarter, demonstrating stability in the cash level. Looking ahead, we expect our net cash position to not decrease below the current point.
Speaker Change: Operating cash flow in the second quarter was $1 2 million cash short term bank deposits and investments as of June 32024, built out was $53 2 million and <unk>.
Speaker Change: Increase of 0.6 million versus $52 6 million at the end of prior quarter demonstrating stability in the cache of them.
Eyal Harari: I want to share my initial thoughts. We are looking for long-term, profitable growth opportunities that leverage a lot of goal capabilities. The cyber security market continues to experience rapid growth, as threats continue to emerge and increase in sophistication. The mobile cyber security market is projected by analysts to be an $8 billion market with over 20% compound average goal over the next decade. Cyber security is one of a lot of goal sanctions and we are considering improvements in innovations to our CICAS solution to bring additional value and even better cyber protection to our customers. We are also looking at additional goal-to-market strategies for CICAS to expand our customer base and address the market.
Speaker Change: Looking ahead, we expect our net cash position to not degrees below the current point cash short term bank deposits and investments as of year end 2023, or 54 point Delta.
Liat Nahum: Cash short and ban deposit will be an investment as of year end 2023, or 54.8 million. That's my final rate.
Speaker Change: The mobile cyber security market is projected by analysts to be an $8 billion market with over 20% compound average growth over the next decade. Cyber security is one of a lot of growth sanctions and we are considering improvements in innovations to our CIT's solution to bring additional value and even better cyber protection to our customers. We are also looking at additional go-to-market strategies for CIT's to expand our customer base and address the market.
Speaker Change: <unk> five a gallon myself would now be happy to take your questions.
Kenny Green: AYL and myself would now be happy to take your questions.
Operator: Thank you, ladies and gentlemen. At this time, we will begin the question in the insertion. If you have a question, please press the star followed by the one on your touch-tone phone. If you wish to decline from the polling process, please press star followed by a two. Your questions will be pulled in the order they are received.
Speaker Change: Thank you ladies and gentlemen at this time, we will begin the question answer session.
Speaker Change: Do you have a question. Please press the star followed by the one on your Touchtone phone.
Speaker Change: If you wish to decline from the polling process. Please press star followed by up to your questions will be pulled in the order they are received.
Nehal Chokshi: The first question is from Nihao Chokshi of Northland Capital Markets. Please go ahead.
Speaker Change: The first question is from Niihau, Chuck she of Northland Capital markets. Please go ahead.
Speaker Change: Another trend we are looking at is 5G revolution. As new 5G networks continue to be rolled out, the demand for advanced security solution is growing significantly with analysts expecting compound annual growth rate in access of 40% over the next five years. A recent report indicates that around 70% of large companies and 40% of small businesses have adopted at least one cloud service to date. The movement to the cloud is being driven by the increasing need for remote work solution digital transformation initiatives and the desire to optimize costs and enhance business activity. We are exploring the potential of our products to address and provide additional value to the cloud and 5G markets as we strive for further penetrate these models.
Eyal Harari: Another trend we are looking at is 5G revolution. As new 5G networks continue to be rolled out, the demand for advanced security solution is growing significantly with analysts expecting compound annual growth rate in access of 40% over the next five years. A recent report indicates that around 70% of large companies and 40% of small businesses have adopted at least one cloud service to date. The movement to the cloud is being driven by the increasing need for remote world solution digital transformation initiatives and the desire to optimize costs and enhance business activity. We are exploring the potential of our products to address and provide additional value to the cloud and 5G markets as we strive for further penetrate these models.
Nehal Chokshi: Thank you, and good to talk with you here. I'd like to focus on the guidance, especially the CCAS ARR guidance. When you say the same, 50, around 50% year-year growth, that translates to a ARR around 19 million, correct, versus 14.6 million at the end of June quarter.
Speaker Change: Oh, yeah, Thank you and.
Speaker Change: Just talk with both of you here.
Speaker Change:
Speaker Change: I'd like to focus on the guidance, especially because a our guidance.
Speaker Change: When you say sustained 50 around 50% year over year growth that translates to a R. R.
Speaker Change: Around 19 million correct versus $14 6 million into the June quarter.
Liat Nahum: Yes, this is correct. We continue to see an increased demand for the CCAS service, and we reported 50% growth.
Speaker Change: Yes. This is correct we continue to see.
Speaker Change: Increased demand for always seek a series and we reported because we felt that these schools over 54% goals.
Liat Nahum: We expect this demand to continue in the current quarters.
Speaker Change: He's going to continue in the coming quarters.
Nehal Chokshi: Okay.
Okay.
Liat Nahum: When you think about your CCAS ARR guidance, how do you build up that guidance? Are you thinking about what are the incremental subscriptions you are going to likely see over the September and December quarter, or are you really taking me more in terms of that this is the year-of-year growth that can be sustained?
Speaker Change: So when you think about your see cats are our guidance how do you build up that guidance are you thinking about what are the incremental subscriptions are going to likely see over the September and December quarter or are you really thinking more in terms of that this is the year over year growth that can.
Eyal Harari: While our go-to-market strategy is global in its outlook, we are under penetrated in North America market. A lot has seen initial success in the region in recent years and we have strong references including the horizon. We are exploring ways in which we can leverage our early success to deepen our engagement in this region, which today is leading many of the security growth trends. We see a significant opportunity for a lot in North America.
Speaker Change: While our go-to-market strategy is global in its outlook, we are under penetrated in North America market. A lot has seen initial success in the region in recent years and we have strong references including the horizon. We are exploring ways in which we can leverage our early success to deepen our engagement in this region, which today is leading many of the security growth trends. We see a significant opportunity for a lot in North America.
Speaker Change: Be sustained.
Liat Nahum: The CCAS goals is comprised from multi-conceems. The first is obviously winning new accounts that are implemented in our CCAS service. This adds to our install rates and provide addition on revenue. But we also see that between the existing customers, we are able to expand our CCAS additional services and address additional time, and by that expand our business and embedding you from our existing tasks.
Speaker Change: So the FICO score suits comprised school man with the completion of the first few.
Speaker Change: Obviously, winning new accounts with the implementation of a secret service. This adds to our installed base and provide a decent amount of ribbon.
Eyal Harari: A lot of walks with many large enterprises and leading CFP and it is clear that customer success and deepening relationships are key drivers to potentially expanding our business within our install days. We are looking at ways to make a lot more customer centric as we strive to further cement customer relationships, enabling us to penetrate further into organizations with our product and services. A goal would be to structure our organization to better support our customer's business goals as we believe this will allow us to increase business from existing customers. I'm working closely with the board and the management on a strategic plan for renew and revenue goals and long-term profitability.
Speaker Change: A lot of walls with many large enterprises and leading CSP and it is clear that customer success and deepening relationships are key drivers to potentially expanding our business within our install days. We are looking at ways to make a lot more customer centric as we strive to further cement customer relationships, enabling us to penetrate further into organizations with our products and services. A goal would be to structure our organization to better support our customer's business goals as we believe this will allow us to increase business from existing customers.
Speaker Change: But we also see that within the existing customers, we are able to expand our chico's through additional services and address additional Tam.
Speaker Change: And they did extend all of their business and revenue from all of it because its importance.
Liat Nahum: I will also mention that some of the nature of the business is after we lean and launch a service, it takes time for the service to update and the operator is starting to market and offer these services to customers and therefore even within the specific service there is a potential to grow. So overall we see a mix of three dimensions that are progressing and can grow. Obviously, in some services, we reach to that plateau where the operator reaches the maximum level of revenue that it can generate, and the 50% is built out of those three growths between both the growth of the service within what we already launched, launching new services within the services within.
Speaker Change: I would also mentioned that some of the <unk>.
Speaker Change: Nature of the businesses after the Union loans yourself. It takes some time for the service to uptake and as the opioid coulee stuff into market and also would be service to its customers.
Speaker Change: And therefore, even seen the specifics there with very good potential to grow.
Speaker Change: I'm working closely with the board and the management on a strategic plan for renewing revenue goals and long-term profitability. We will provide more details as we progress.
Speaker Change: Overall, we see a mix of three and.
Speaker Change: They mentioned that the progression can go obviously, some silly says when you reach to that where the operator reach today.
Eyal Harari: We will provide more details as we progress. In summary, with the research management, we believe we are at the start of a new chapter for a lot. In the second quarter we stabilize revenues and significantly reduce expenses. We return the business to the operating profit break even range with positivity generation. I believe we are both positioned to drive sustainable, profitable, long-term growth and I am optimistic that a lot will execute on the many opportunities ahead.
Speaker Change: In summary, with the research management, we believe we are at the start of a new chapter for a lot. In the second quarter, we stabilize revenues and significantly reduce expenses. We return the business to the operating profit breakeven range with positive cash generation. I believe we are in a bad position to drive sustainable, profitable long-term growth and I am optimistic that a lot will execute on the many opportunities ahead.
Speaker Change: Yeah Max lives in revenue you can generate.
Speaker Change: And the 50% is build out of those three close the.
Speaker Change: Yeah.
Speaker Change: We'll see.
Speaker Change: Global for.
Speaker Change: Use of the field, we can see what the reorder would be launched launching new services.
Speaker Change: Our existing base and winning new accounts and starting to launch and it services with them.
Nehal Chokshi: Okay, that's great. That's really helpful.
Speaker Change: Okay. That's great that's really helpful. So thinking about the.
Speaker Change: And now, I would like to end it over to our CFO Lyapun Hume for the financial summary. Lyapun Hume, please. Thanks, Ayal. We reported revenue of 22.2 million in the quarter. We are presenting a year of decline of 12 percent, but at one percent versus the prior quarter. Revenue for my growth sentence in CICAS was 3.7 million in the quarter, up 54 percent year of value and comprising 17 percent of our revenue in the quarter.
Liat Nahum: And now I would like to end it over to our CFP only at home for the financial summary. We reported revenue of 22.2 million in the quarter, representing a year-over year decline of 12%, but at 1% versus the prior quarter. Revenue from our growth percentage in CICAS was 3.7 million in the quarter, up 54% year-over year and comprising 17% of our revenue in the quarter. Our CICAS annual recurring revenue as of June 2024 was 14.6 million.
Nehal Chokshi: So now thinking about the, in terms of like the actual incremental CTAC ARR that you're guiding to for the rest of the year, that basically, you know, 4 to 5 million here, which would represent the most incremental CTAC ARR for two quarters in a row.
Speaker Change: In terms of like the actual incremental see cats are are that you're guiding to for the rest of the year. That's basically you know four to 5 million here.
What she would represent the most.
Incremental CCAR they are for two quarters in a row or are you expecting that the most of this four to 5 million say had come in the fourth quarter as opposed to being distributed between the third and fourth quarter.
Liat Nahum: Or are you expecting that most of the 4 to 5 million is going to come in the 4th quarter as it goes to be being distributed between the 3rd and 4th quarter?
Speaker Change: Our CICAS annual recurring revenue as of June 2024 was 14.6 million. As we discussed in our press release, fully of CICAS revenue and CICAS ARR are expected to continue experiencing accelerated growth at around 50 percent year of a year. You can find very breakdowns of our revenue in the table in our press release. Our growth margin in the quarter was 70.6 percent. In the second quarter last year, our growth margin was 71.4 percent and in the prior quarter, it was 70.4 percent.
Liat Nahum: If it would come gradually, I would say more on the last quarter, but you also feel increasing the Q3. Some of the goals that come in Q3, and I have goals in Q4.
Speaker Change: It will come gradually I would say are more in the last quarter, but you're also full screen creeps in the NICU.
Liat Nahum: As we discussed in our press release, fully of CICAS revenue and CICAS ARR are expected to continue experiencing accelerated growth at around 50% year-over year. You can find various breakdowns of our revenue in the table in our press release. Our growth margin in the quarter was 70.6%. In the second quarter last year, our growth margin was 71.4% and in the prior quarter, it was 70.4%. While the growth margin depends on the specific products mixed in the quarter, the long-term target for growth margin is an average of 70%.
Speaker Change: Q3.
Speaker Change: Some of the growth will come in Q3, and I will go through in Q4.
Nehal Chokshi: Okay, and we mentioned that there is a something that's happening at the end of the calendar 24 that's going to be a target of CTAC ARR. What is that driver there at the end of the 24th quarter?
Okay, and you mentioned that there is a.
Speaker Change: Something that's happening at the end of it.
Speaker Change: Calendar 'twenty four.
Speaker Change: It'd be a driver to see cash they are what is that a driver there at the end.
Speaker Change: 24.
Liat Nahum: So one of our existing customers, looking to agreement to expand our CTAC services to customers. This is going to be implemented in the coming couple of quarters. And by the end of the year, we are looking to extend our CTAC service to be a near customer.
Speaker Change: So one floor or existing customers.
Speaker Change: While the growth margin depends on the specific products mixed in the quarter, the long-term target for cost margin is an average of 70 percent and we have to raise with the returns to the 70 percent levels in the first half of 2024. As Ayal mentioned, we reduce expenses considerably over the past year. We did not get off X at 16.7 million, similar to that of last quarter and down by over 25 percent from the second quarter of last year, has 500 full-time employers of June 2024.
Speaker Change: Yeah.
Speaker Change: We got into the agreement to extend our streak of serving the customers do.
Liat Nahum: And we have to wait with the returns to the 70% level in the first half of 2024. As ARR mentioned, we reduce expenses considerably over the past year. We denon that of X at 16.7 million, similar to that of last quarter and down by over 25% from the second quarter of last year, has 500 full-time employees of June 2024. The non-gap operating loss shows significant improvement with a 95 percent reduction on a non-gap basis from 18.9 million in Q2 last year and 1.2 million in last quarter to 1 million in Q2 2024.
Speaker Change: D C is going to be implemented.
Speaker Change: In the coming couple of quarters and by the end of the year. We are looking to extend our streak of say, we can beef yeah, yeah customer.
Liat Nahum: After it will be launched, we are looking to see goals in 2025 for this new service. This is a very encouraging agreement that we got as this customer was using our CTAC service in a perpetual way and a one-time fee and now it's going to contribute to our CTAC revenue moving forward.
Speaker Change: After these would be loans.
Speaker Change: We are looking to see growth in 2025 will be for new service.
Speaker Change: This is a very encouraging to.
Speaker Change: Agreement that we got as these customer was using <unk>.
Speaker Change: The non-gap operating loss shows significant improvement with a 95 percent reduction on a non-gap basis from 18.9 million in Q2 last year and 1.2 million in last quarter to 1 million in Q2 2024. For the second half of 2024, we expect the non-gap operating profit at a round break even. In terms of non-gap net loss, we reported 0.8 million in the Q2 or a loss of 2 cents per share, as compared with a non-gap net loss of 18.3 million or a loss of 49 cents per share in the second quarter of last year and net loss of 0.9 million or a loss of 3 cents per share in the previous quarter.
Speaker Change: That's everything.
Speaker Change: Perpetual way in a one time fee and now it's going to contribute to our revenue moving forward.
Liat Nahum: Okay, so I think that you guys had a relatively well-known perpetual CTAC customer and wrote a phone, one of Geo's with wrote a phone. So presumably, that's the one that you're referring to. Okay, we didn't bring the name, and we are the subject to India, but one of our customers that is working with us is going to continue in the CTAC ribbon.
Speaker Change: Got it okay.
Liat Nahum: For the second half of 2024, we expect the non-gap operating profit at a round break even. In terms of non-gap net loss, we reported 0.8 million in the Q2 or a loss of 2 cents per share as compared with the non-gap net loss of 18.3 million or a loss of 49 cents per share in the second quarter of last year and net loss of 0.9 million or a loss of 3 cents per share in the previous quarter.
Speaker Change:
Speaker Change: I think.
Speaker Change: You guys had a relatively well known perpetual see cats customer and Vodafone what geos with Vodafone.
Presumably.
Speaker Change: That's the one that you're referring to.
Speaker Change: We didn't the pin the name is Oh, we are subject to NDA is but one of our customers as.
Speaker Change: Welcome to the bathroom willing to cooperate with them just because revenue I think most important is nothing the customer but.
Speaker Change: Operating cash flow in the second quarter was 1.2 million, cash short and bank deposit and investment as of June 30th, 2024, totaled 53.2 million, an increase of 0.6 million versus 52.6 million at the end of prior quarter, demonstrating stability in the cash level. Looking ahead, we expect our net cash position to not decrease below the current point. Cash short and bank before we can investment as of year end 2023 or 54.8 million. That ends my family.
Liat Nahum: Operating cash flow in the second quarter was 1.2 million, cash short and bank deposit and investment as of June 30th, 2024, until 2023.2 million, an increase of 0.6 million versus 52.6 million at the end of prior quarter, demonstrating stability in the cash level. Looking ahead, we expect our net cash position to not decrease below the current point. Cash short and bank deposit and investment as of year end 2023 were 54.8 million.
Liat Nahum: I think most important is not the customer, but the ability and the importance of the service and the speakers and critical for them and they are looking to continue along to the relationship with us providing the customer the right security protections. Right, sure, very good point. And I guess the key point here is that this is a customer that had the perpetual lessons for existing set of customers. And now that they see the value that.
Speaker Change: The ability and the importance of the therapy.
Speaker Change: Because it's critical for them and they are looking to continue a long term relationship with us and provide even discussing another REIT stipulate people evictions.
Speaker Change: Right sure very good point.
Speaker Change: And I guess the key point here is that this is a customer.
Speaker Change: That has a perpetual license for this instead of customers and now that they see the value of that.
Liat Nahum: Presumably, they would prefer to get another perpetual lessons, but because of the strong value, they agreed to the CKAS revenue sharing.
Presumably they would prefer to get another perpetual license, but because of the strong value they've agreed to D. C.
Liat Nahum: That ends my family.
Kenny Green: A gallon myself would now be happy to take your questions. Thank you.
Speaker Change: Ayalin myself would now be happy to take your questions. Thank you.
Speaker Change: She has brought new sharing.
Operator: Ladies and gentlemen, at this time, we will begin the question in the insertion. If you have a question, please press the star followed by the one on your touch-tone phone. If you wish to decline from the polling process, please press star followed by a two. Your questions will be pulled in the order they are received.
Speaker Change: Ladies and gentlemen, at this time we will begin the question in the insertion. If you have a question, please press the star followed by the one on your touch-tone phone. If you wish to decline from the polling process, please press star followed by a two. Your questions will be pulled in the order they are received.
Speaker Change: Yes.
Nehal Chokshi: Okay, great.
Speaker Change: Okay great.
Nehal Chokshi: And then it's what's your level, what's the level of risk that this customer's intention to roll out to additional to next set of customers flips out into calendar 25 as opposed to launching within calendar 24. And if that does occur, you know, what's the, you know, potential impact your guidance then.
Speaker Change: Great.
Speaker Change: And then.
Speaker Change: So what's your level, what's the level of risk that those customers are intentional rollout to additional two.
Speaker Change: The next set of customers slips out into calendar 'twenty five as opposed to watching within calendar 'twenty four and if that does occur.
Speaker Change: The first question is from Nihao Chokshi of Northland capital markets. Please go ahead. Thank you and good to talk with you here.
Nehal Chokshi: The first question is from Nihao Chokshi of Northland Capital Markets. Please go ahead. Thank you and good to talk with you here. I'd like to focus on the guidance, especially the CKAS ARR guidance. When you say the same, 50, around 50% year of year growth, that translates to ARR around 19 million, correct, versus 14.6 million at the end of June quarter. Yes, this is correct. We continue to see increased demand for all the CKAS service and we reported this quarter with 54% growth.
What's the potential impact to your guidance then.
Liat Nahum: We have very good visibility in terms of our CKAS revenue. This is based on the agreement already in place.
Speaker Change: So there we have very good visibility in terms of our.
Speaker Change: I'd like to focus on the guidance, especially as CKAS ARR guidance. When you say the same 50 around 50% year-year growth, that translates to a ARR around 19 million correct versus 14.6 million at the end of June quarter. Yes, this is correct. We continue to see increased demand for the CKAS service and we reported this quarter of 54% growth. We expect this to end to continuing their common quarters. Okay, so when you think about your CKAS ARR guidance, how do you build up that guidance?
Nehal Chokshi: We expect this current to continue in their common quarters. Okay, so let me think about your CKAS ARR guidance. How do you build up that guidance? Are you thinking about what are the incremental subscriptions you're going to likely see over the September and December quarter? Or are you really thinking more in terms of that this is the year of year growth that can be sustained? So the CKAS goals is comprised from multi-contains.
Speaker Change: Seacoast revenue is due to the.
Speaker Change: And based on the agreement already in place of coal says there is some of the projects we have implementation time that might fluctuate.
Liat Nahum: Of course, there are some of the projects we have implementation time that might fluctuate. And we are implementing within the token environment that always requires some integration and some work, and things may take time. But overall, we are feeling very confident with the progress, and this is why we indicate this.
Speaker Change: And we are implementing within the telco environment it as always.
Speaker Change: Yeah.
Speaker Change: It requires some integration and some work and things may take time, but overall we are there.
And we're feeling very confident we've been.
Speaker Change: We did a fabulous and this is why we indicate you soon.
Liat Nahum: Now, it's a nice move. I don't support this; it might move the quarter, but it's based on our already secured agreement, so you might say it's quite.
Speaker Change: This guidance now it's nice movie.
Speaker Change: For the quarter, but the peaks are based.
Speaker Change: Based on that.
We're already executed agreements you might say it's worked.
Speaker Change: Thank you.
Speaker Change: Are you thinking about what are the incremental subscriptions you're going to likely see over the September and December quarter? Or are you really thinking more in terms of that this is the year-of-year growth that can be sustained? So the CKAS goals is comprised from multi-concene. The first is obviously winning new accounts with the implementation of our CKAS service. This adds to our install rates and provide additional revenue. But we also see that between the existing customers we are able to expand our CKAS additional services and address additional time and by that we get to expand our business and revenue from our existing staff.
Nehal Chokshi: Okay, all right. And then looking at the June Q CKAS ARR results. That is an incremental point nine million dollars of CKAS ARR, very close to the one million that your quarter for the March quarter.
Speaker Change: Okay Alright.
Speaker Change: And then looking at the June Q C. Kaz are our results, but that was an incremental $9 million of CCAR for air are very close to 1 million that you reported for the March quarter.
Liat Nahum: And I don't believe we had any new CSPs that launched within the June quarter. So can you talk about what was the driver of sustaining basically one million dollars in parental ARR in the June quarter?
Speaker Change: Believe we had any new CSP Ah that launched within the June quarter. So can you talk about what was the driver was a sustaining basically $1 billion of incremental air or are in the June quarter.
Nehal Chokshi: The first is obviously winning new accounts that are implemented in our CKAS service. This adds to our install rates and provide addition and revenue. But we also see that in between the existing customers, we are able to expand our CKAS additional services and address additional time and by that expand our business and revenue from our existing top. I will also mention that some of the nature of the business is after we lean and launch a service, it takes time for the service to update and the operator is starting to market and offer these service to customers, and therefore even within the specific service there is a potential to grow.
Liat Nahum: So yes, it's gone to that before we did see increase usage that some of our within customer managed to penetrate in deeper into the install base. So more of their customers are using now our service as well as some of the customer and launched additional protections.
Speaker Change: So yes, there's going to that was before we did see an increase of usage there.
Speaker Change: This new customer manage to penetrate.
Speaker Change: Deeper into the installed base so more of their customers are using now our service as well as some of the customer launched conditional.
Speaker Change: I will also mention that some of the nature of the business is after we lean and launch a service, it takes time for the service to update and the operator is starting to market and offer these service to customers and therefore even within the specific service there is a potential to grow. So overall, we see a mix of three dimensions that are progressing and can grow. Obviously in some services we reach to the plateau where the operator reach to the max level of revenue that it can generate and the 50% is built out of those three growth between four seats, both grow of the use of the service within what we already launched, launching a new service that we would always use in banks and really new accounts and stopping to launch services within.
Liat Nahum: For example, one of the some couple of our customer launched on secure to not only cover and protect the customer from the network side, but also protecting from the home router. Well, these are incremental extensions between those existing customers that contribute to the revenue goals. And we expect this to continue to continue. And we still have in our install base customers that didn't fully maximize the potential of their revenue and penetration. And this is why we are expecting goals to continue.
Speaker Change: Protections for example, one of the.
Speaker Change: Some couple of forward customer launched homesick Youll do would not only cover and protect their customers from the network side, but also protect them from the home router.
Speaker Change: So these are incremental expansions within those.
Nehal Chokshi: So overall we see a mix of three dimensions that are progressing and can grow, obviously in some services we reach to that plateau where the operator reaches the max level of revenue that it can generate, and the 50% is built out of those three growth between the four seats, both growth, the use of the service within what we already launched, launching new services with our zipping banks and really new accounts and stopping to launch services within.
Speaker Change: Some customers are contributing to revenue growth and we expect these to continue strength to continue.
Speaker Change: We still have a you know what.
Speaker Change: The installed base customers that you didn't fully.
Speaker Change: To maximize the potential of there because.
Speaker Change: Revenue in penetration and this is why we are expecting growth to continue even with the installed base.
Okay, and so I think this is the third quarter availability within the Verizon S. M D.
Nehal Chokshi: Okay, so I think this is a third quarter availability within the Verizon SMB.
Nehal Chokshi: How does the trajectory of the tax rates within Verizon look? Is that continuing to stay steady from when you launched, or has it started to, you know, the tax rates are starting to come down here? No, so overall we feel that the trend is to continue to go, and the adoption should increase. We are still have a big potential of install base, of business customers to address. We are working closely with Verizon to see best ways to market our solutions into the customers.
Speaker Change #100: How does the trajectory of attach rates.
Speaker Change #101: Then raising a look is that continuing to stay steady from a when you watched or has it.
Eyal Harari: Okay, that's great, that's really helpful. So now, thinking about the, in terms of the actual incremental CTAC ARR that you're guiding to for the rest of the year, that's basically four to five million here, which would represent the most incremental CTAC ARR for two quarters in a row, or are you expecting that most of the four to five million is going to come in the fourth quarter as opposed to being distributed between the third and fourth quarter?
Speaker Change #101: Okay, that's great. That's really helpful. So now, thinking about the, in terms of the actual incremental CTAC ARR that you're guiding to for the rest of the year, that's basically, you know, four to five million here, which would represent the most incremental CTAC ARR for two quarters in a row or are you expecting that most of the four to five million is going to come in the fourth quarter as opposed to being distributed between the third and fourth quarter?
Speaker Change #102: Yeah, the attach rates are starting to come down here.
Speaker Change #103: So overall, we feel that there are.
Speaker Change #104: The trend is to continue to grow and adoption should increase.
Speaker Change #104: We'll still have.
Speaker Change #104: B potential of installed base of our.
Speaker Change #104: Business customers to address well.
Speaker Change #104: Walking closely with Verizon to see best ways to market our solutions.
Eyal Harari: If we come gradually, I would say more in the last quarter, but you'll also see increase in the Q3. Some of the goals are coming to three and I have goal in Q4. Okay, and we mentioned that there is a something that's happening at the end of the calendar 24 that's going to be a target of CTAC ARR. What is that driver there at the end of calendar 24? So one of our existing customers, going into an agreement to expand our FICA services to its customers, this is going to be implemented in the coming couple of quarters and by the end of the year, we are looking to expand our FICA services to this unique customer.
Speaker Change #104: If we come gradually, I would say more on the last quarter, but you also feel three increase in the Q3. Kind of the goals in coming Q3 and I have goal in Q4. Okay, and we mentioned that there is a something that's happening at the end of the calendar 24 that's going to be a target of CTAC ARR. What is that driver there at the end of calendar 24? So one of our existing customers, going into agreement to expand our CTAC ARR services to customers, this is going to be implemented in the coming couple of quarters.
Eyal Harari: Also, it's pointed out in my previous comments, looking into expansion to additional services. I believe the Verizon relationship is something we need to look at on the terms strategically, and we are very optimistic on our ability to further draw within the Verizon.
Speaker Change #104: Customers also as pointed out in my previous comments looking into expansion through additional services.
Speaker Change #104: I believe the Verizon relationship and it's something that we need to look long term strategically and we are very optimistic on our ability to further grow we think that runs off.
Nehal Chokshi: Okay, just to be clear, when I was talking about a tax rate, my impression is that, you know, when you get an incremental subscriber through this in CSP, it's usually because that CSP has signed up a new subscriber. It's at that point of sale that the CT has attached; most likely, it occurs. So that's the attached rate. I'm talking about the attached rate to new subscribers for getting CSP. Yeah, so we see both new attached subscribers. Verizon are reporting goals in the business customers and the fixed wireless service, and we are enjoying this growth. We also have the install base, so existing customers that have the potential to use our service and not only install this is already never doing that, and we are looking on ways to both the texture as much as bigger share as possible from the new subscribers as well as the install base.
Speaker Change #104: Okay.
Speaker Change #105: Just to be clear when I was talking about attach rate my impression is that you know.
Speaker Change #106: When you get incremental subscriber through this thing CSP, it's usually because that DSP has signed up a new subscriber that's at that point of sale that they see catch attached most likely occurs and so that's the attach rate that I'm talking about the attach rate to new subscribers forgive me.
Speaker Change #106: And by the end of the year, we are looking to extend our CTAC ARR to be a media customer. After it will be launched, we are looking to see goals in 2025 for this new service. This is a very encouraging agreement that we got as this customer was using our CTAC ARR service in a perpetual way and a one time fee. And now it's going to contribute to our CTAC revenue moving forward.
Speaker Change #106: C S P.
Speaker Change #106: So we see both.
Speaker Change #107: New York touched subscribers Verizon are reporting growth in the business customers in the fixed wireless service.
Eyal Harari: After it will be launched, we are looking to see goals in 2025 for this new service. This is a very encouraging agreement that we got as this customer was using our FICA service in a potential way and one time fee and now it's going to contribute to our FICA revenue moving forward. Okay, so I think that you guys had a relatively well-known professional CTAC customer and RotoFone, one of GAOs with RotoFone, so presumably that's the one that you're referring to.
Speaker Change #107: And we are enjoying this globe.
We also have the installed base of existing customers with the potential to use our service and not all the installed base is already never do that and we are looking on ways to both the capsule.
Speaker Change #107: Much.
Speaker Change #108: We do share as possible from the new subscribers as well as being in school.
Speaker Change #108: Okay, so I think that you guys had a relatively well known perpetual CTAC customer and wrote a phone, one of Geo's with wrote a phone. So presumably that's the one that you're referring to. Okay, we didn't agree the name and we are the subject to India, but one of our customers that is working with us is going to continue in the CTAC ARR. I think most important is not the customer, but.., the ability and the importance of the service and the speakers and critical for them and they are looking to continue along to relationship with us providing the customer the right security protections.
Nehal Chokshi: Well, in the normal world, we see more potential to grow there.
Speaker Change #108: So you know overall, we see more potential to grow with them.
Nehal Chokshi: Okay, so the bottom line is that the attached rate to new subscribers for the fixed wireless customers of Verizon has stayed relatively steady from March 2 to June 2.
Speaker Change #108: Got it okay.
Speaker Change #109: The bottom line is that the attach rate to new subscribers for the fixed wireless customers.
Speaker Change #109: And has that.
Speaker Change #109: A relatively steady from the watch through to June two.
Eyal Harari: We didn't bring the name and we are the subject to NDAs, but one of our customers that is working with us, are working to continue in the FICA service. I think most importantly is not the exact customer back. The ability and the importance of the service and the seekers and critical for them and they're looking to continue along to relationship with us, providing the customer the right security protections. Right, sure, very good point.
Nehal Chokshi: You can say no. Okay, all right, great.
Speaker Change #110: You could say that.
Speaker Change #111: Okay, Alright, great and is that in contrast to most of your prior CST watches.
Liat Nahum: And is that in contrast to most of your prior CSP launches? No, we see that there is, you know, depends on the business model; the operator will be sized to promote the service. Some of them might offer it as a bundle and included as part of the package, so it's some offer it to everyone and some operators and apps. And if you offer it as an app, like Verizon, operators and incremental service, then it's an opportunity to increase over time. It also depends on the network service that we are connected to.
Speaker Change #112: No we see that there is you know it.
Speaker Change #112: It depends on the business model the operator, besides to promote the service.
Speaker Change #113: Some of them might offer because the bundle and included as part of the package. So there is some offering to everyone and some.
Speaker Change #113: Right, sure, very good point. And I guess the key point here is that this is a customer that had the perpetual lessons for the systems of customers. And now that they see the value that. Presumably they would prefer to get another perpetual lessons, but because of the strong value they agreed to the CKAS revenue sharing. Okay, great. And then it's a what's your level, what's the level of risk that this customer's intention to roll out to additional to the next set of customers flips out into calendar 25 as opposed to launching within calendar 24.
Eyal Harari: And I guess the key point here is that this is a customer that had the perpetual lessons were in the sense that the customers and now that they see the value that. Presumably, they would prefer to get another perpetual lessons, but because of the strong value, they agreed to the CKAS revenue sharing. Okay, great. And then it's a, what's your level, what's the level of risk that this customer's intention to roll out to additional to the next set of customers flips out into calendar 25 as opposed to launching within calendar 24.
Speaker Change #113: Hopefully cause an upset.
Speaker Change #113: And if you offer it as an episode.
Speaker Change #113: Like Verizon ultimately cause incremental share with them.
Speaker Change #113: It's a it's an opportunity to increase overtime.
Speaker Change #115: It also depends on the network services, who are connected to different if you are.
Liat Nahum: It's different if you are protecting the mobile consumer that already, we know we can expect to make it market everyone as a phone and you need to find the right timing for engaging with the customer to do this app. So, as opposed to fixed wireless factors, that is a new service to the operator and it's still growing, and it's one of the growth engines of many of the carriers from children of America. And we are attached to a growing service, and by that, we are expecting to grow as part of the natural service growth in the FOSINQ.
Speaker Change #115: Protecting the mobile consumer that already we know exactly what could market that everyone has a phone and you need to find the right timing for their hum.
Speaker Change #116: With the customer to do the softer as opposed to fixed wireless access and ease of use of it we still broker Rachel.
Speaker Change #116: Keep going.
Speaker Change #118: And it's one of the goldfinch and so many of the carriers I'm truly North America, and we are attached to a growing so we shouldn't forget that we are expecting to grow this part of the mutual series as well.
Eyal Harari: And if that does occur, you know, what's the, you know, potential impact your guidance then. So there, we have very good visibility in terms of our seekers revenue. This is based on the agreement already in place. Of course, there's some of the projects we have implementation time that might fluctuate. And we are implementing within the token environment that is always requires some integration and some walk and things may take time. But overall, we are feeling very confident with the progress and this is why we indicate this.
Speaker Change #118: And if that does occur, you know, what's the, you know, potential impact your guidance then. We have very good visibility in terms of our CKAS revenue. This is based on the agreement already in place. Of course, as some of the projects we have implementation time that might fluctuate. And we are implementing within the token environment that is always requires some integration and some work and things may take time. But overall, we are.
Speaker Change #118: The foreseen future.
Nehal Chokshi: Great.
Speaker Change #119: Okay great.
Liat Nahum: And then there's something that would say a DPI portion of the business can believe P Complier or Sandbine reported significant layoffs. Is this part of the increased pipeline that you're talking about? And we are mainly focused on what we do and what we're focused on with our customers. We know that we have a very competitive product for the smart, for the traffic management and DPI. Overall, we know that this market is a legacy market with a specific customer requirement that we know that there are not so many competitors that can fulfill. And we are happy to see more and more requests from customers to.
Speaker Change #120: So shifting over say a DPI cautionary business.
Speaker Change #121: I can't believe he can player sandbank reported significant layoffs.
Speaker Change #121: It's just part of the.
Speaker Change #121: Increased pipeline that you're talking about.
Speaker Change #122: And we will mainly focus on the what can we do and work with both with our customers. We know that we have a very competitive product.
Speaker Change #122: For the small for the traffic management and PPI.
Speaker Change #122: We are feeling very confident with the progress and this is why we indicate this. And this guidance now, it's nice to move down the port or this might move the quarter, but it's based on our already secured agreement. So you might say it's quite good. Okay, all right. And then looking at the June Q CKAS ARR results. That is an incremental 0.9 million dollars of CKAS ARR, very close to 1 million that your quarter for the March quarter.
Speaker Change #122: Overall, we know that this molecule if he's there.
Speaker Change #122: Yeah.
Speaker Change #122: Is the legacy market there right.
Eyal Harari: This guidance now, it's nice move. Founder for this might move the quarter, but it's based on our already secured agreement. So you might say it's quite. Okay, all right. And then looking at the June Q CKAS ARR results. That is an incremental point nine million dollars of CKAS ARR, very close to one million that your quarter for the March quarter. And I don't believe we had any new CSPs that launched within the June quarter.
Speaker Change #122: It's 50 customer requirements, but we know that there are not so many competitors and a few in there.
Speaker Change #122: You can see more and more requests from customers too.
Liat Nahum: And we don't know if necessary count on our competitor situation. We may be focused on our ability to deliver. But still, we see that there is the. The demand is still lower than previous news. And we are looking to see ways how we can increase our pipeline in this area as well.
Speaker Change #123: I don't know if.
Speaker Change #123: Necessarily coming from our competitive situations, we mainly focus on our ability to deliver there.
Speaker Change #123: We see that there is there.
Speaker Change #123: Yeah.
Speaker Change #124: The demand is still lower than previous years.
Speaker Change #124: And I don't believe you had any new CSPs that launched within the June quarter. So can you talk about what was the driver of sustaining basically 1 million dollars of incremental ARR in the June quarter? So yes, it's going to be before we did see increase usage that some of our existing customer managed to penetrate in deeper into the install base. So more of their customers are using now our service as well as some of the customer and launched additional protections.
Speaker Change #125: We are looking to see ways, how we can increase our pipeline would you say the guy as well and how we can leverage that short term opportunity that there might be a raise due to market dynamics.
Eyal Harari: So can you talk about what was the driver of sustaining basically one million dollars in parental ARR in the June quarter? So yes, it's gone to that before we did see increase usage that some of our within customer managed to penetrate in deeper into the install base. So more of their customers are using now our service as well as some of the customer and launched additional protections. For example, one of the some couple of our customer launched on secure to not only cover and protect the customer from the network side, but also protecting from the home router.
Liat Nahum: And now we can leverage the short-term opportunity that there might be a raise due to market dynamics.
Nehal Chokshi: Okay. So can you give some qualification of how much improved is the pipeline that you're seeing? And is it showing up in bookings already?
Speaker Change #125: Okay.
Speaker Change #126: So can you give some quantification of.
Speaker Change #127: How much improved as a pipeline that you're seeing.
Speaker Change #128: And as it shows up in bookings already.
Liat Nahum: So it's not; it's so early to say, and it's not something we have a. We're not sharing that with pipeline information.
So it's it's not it's too early to say and it's not something that we are there.
Speaker Change #129: I'm not sharing that with park information I would say that these are now being vendor analysis and looking for where is the best way to leverage the business potential.
Speaker Change #129: For example, one of the some couple of our customer launched on secure to not only cover and protect the customer from the network side, but also protecting from the home router. So these are incremental extensions between those existing customers that contribute to the revenue goals and we expect this to continue as we still have in our install base customers that didn't fully maximize the potential of their revenue and penetration. And this is why we are expecting growth to continue in the beginning.
Liat Nahum: I would say that it's now being under analysis, and we're looking forward the best way to leverage the business potential.
Nehal Chokshi: Okay.
Okay great.
Nehal Chokshi: Great.
Nehal Chokshi: And then I did notice that you had a relatively large tap tax in the quarter of a 1 million. So it's a lot of money. It's a lot of money.
Speaker Change #130: And then I did notice that he had a relatively large capex in the quarter, but 1 million relative to prior quarters.
Eyal Harari: Well, these are incremental extensions between those existing customer that contribute to the revenue goals. And we expect this to continue to continue as we still have in our install base customers that didn't fully maximize the potential of their revenue and penetration. And this is why we are expecting growth to continue in the beginning. Okay. And so I think this is a third quarter of the ability within the Verizon SMB. How does the trajectory of the tax rates within Verizon look?
Speaker Change #131: Any particular reason to call out for that.
Speaker Change #132: And the Capex is it mix.
Speaker Change #132: Sure.
Speaker Change #133: Because the customers that we invest in some capex investment into our own environments and you have maybe you want to add.
No. So nothing special basically just additional investment around the business or do you think about and I think I've mentioned.
Speaker Change #133: Okay, so I think this is a third quarter availability within the Verizon SMB. How does the trajectory of the tax rates within Verizon look? Is that continuing to stay steady from when you launched or has it started to, you know, the tax rates are starting to come down here? No, so overall we feel that the trend is to continue to go and the adoption should increase. We are still have a big potential of install base of business customers to address.
Speaker Change #134: Okay. Thank you.
Speaker Change #135: Adjusted all my questions.
Eyal Harari: Is that continuing to stay steady from when you launched or has it started to, you know, the tax rates are starting to come down here? No, so overall we feel that the trend is to continue to go and adoption should increase. We are still have a big potential of install base of business customers to address. We are working closely with Verizon to see best ways to market our solutions into the customers.
Speaker Change #135: Yeah.
Speaker Change #136: Is there any additional questions. Please press star one if you wish to cancel your request. Please press star two please standby, while we poll for more questions.
Operator: There are no further questions at this time.
Speaker Change #137: There are no further questions at this time. This concludes the allo second quarter 'twenty 'twenty four.
Speaker Change #138: Paul Please go ahead.
Paul: We are working closely with Verizon to see best ways to market our solutions into the customers. Also, it's pointed out in my previous comments looking into expansion to additional services. I believe the Verizon relationship is something we need to look at on the terms strategically and we are very optimistic on our ability to further draw within the Verizon. Okay, just to be clear, when I was talking about a tax rate, my impression is that, you know, when you get an incremental subscriber through this in CSP, it's usually because that CSP has signed up a new subscriber.
Paul: Thank you for calling in.
Eyal Harari: Also is pointed out in my previous comments looking into expansion to additional services. I believe the rise on the relationship is something we need to look at on terms strategically and we are very optimistic on our ability to further grow within the Verizon. Okay, just to be clear, when I was talking about a tax rate, my impression is that, you know, when you get an incremental subscriber through using CSP, it's usually because that CSP has signed up a new subscriber.
Paul: [noise].
Paul: It's at that point of sale that the CTAS attached most likely occurs. So that's the attached rate. I'm talking about the attached rate to new subscribers for getting CSP. So we see both a new attached subscriber, the Verizon reporting growth in the business customers and the fixed-wire service, and we are enjoying this growth. We also have the install base of existing customers with our potential to use our service and not only install base is already never doing that.
Eyal Harari: Is that that point of sale that the CT has attached most likely occurs? So that's the attachment. I'm talking about the attachment to new subscribers for getting CSP. Yeah, so we see both a new attached subscriber, the rise on our reporting growth in the business customers and the fixed wireless service. And we are enjoying this growth. We also have the install base of existing customers that are potential to use our service and not only install this is already never doing that.
Paul: And we are looking on ways to both the texture as much as we do share as possible from the new subscribers as well as the installed base. So in the overall, we see more potential to grow them. Okay, so the bottom line is that the attached rate to new subscribers for the fixed-wireless customers Verizon has stayed relatively steady from the March 2 to June 2. You can say no. And is that in contrast to most of your prior CSP launches?
Eyal Harari: And we are looking on ways to both the texture as much as big of a share as possible from the new subscribers as well as the install base. So in the normal world, we see more potential to grow them. Okay, so the bottom line is that the attached rate to new subscribers for the fixed wireless customers of Verizon has stayed relatively steady from the March 2 to June 2. You can say that.
Eyal Harari: Okay, great. And is that in contrast to most of your prior CSP launches? No, we see that there is, you know, depends on the business model. The operator will be trying to promote the service. Some of them might offer it as a bundle and included as part of the package. So it is some offer it to everyone and some offer it as an absolute. And if you offer it as an absolute, like Verizon offer it as an incremental service, then it's an opportunity to increase over time.
Paul: No, we see that there is, you know, depends on the business model, the operator decides to promote the service. Some of them might offer it as a bundle and include it as part of the package. So it's some offer it to everyone and some offer it as an app service. And if you offer it as an app service, like Verizon offer it as an incremental service, then it's an opportunity to increase over time.
Eyal Harari: It also depends on the network service that we are connected to. It's different if you are protecting the mobile consumer that already, you know, we can start to make it market everyone as a phone. And you need to find the right timing for engagement with the customer to do this up. As opposed to fixed wireless factors that is a new service to the operator. And it's been growing. And it's one of the growth engines of many of the carriers from children of America. And we are attached to a growing service. And by that, we are expecting to grow this part of the natural service role in the forcing future.
Paul: It also depends on the network service that we are connected to. It's different if you are protecting them all by consumer that already, we know it's activated, market everyone as a phone. And you need to find the right timing for engaging with the customer to do this app service. As opposed to fixed-wireless factors that is a new service to the operator and it's still growing. And it's one of the growth engines of many of the carriers from children of America.
Paul: And we are attached to a growing service and by that we are expecting to grow as part of the natural service growth in the forcing future. [inaudible] Thank you. Thank you. [inaudible] you. Thank you. [inaudible] Thank you. Thank you. [inaudible] Thank you. Thank you. [inaudible]
Operator: [inaudible] Thank you. Thank you. [inaudible] you. Thank you. [inaudible] Thank you. Thank you. [inaudible] Thank you. Thank you. [inaudible]