Q1 2025 Ocean Power Technologies Inc Earnings Call

Operator: Greetings and welcome to the Ocean Power Technologies Fiscal Year 2025 Q1 earnings conference call. At this time, we'll discuss concerning listening-only mode. If anyone would require operator assistance, please press star zero under telephone keypad.

Greetings and welcome to the Ocean power technologies fiscal year, 'twenty 25, Q1 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: Do you watch it require operator assistance. Please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. You may be pleased in the question queued any time by pressing star one under telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: May be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded.

Robert Powers: It's not my pleasure to turn the call over to Chief Financial Officer Bob Powers. Please go ahead, sir.

Speaker Change: It's now my pleasure to turn the call over to Chief Financial Officer, Bob Powers. Please go ahead Sir.

Robert Powers: Thank you and good morning. After the market closed yesterday, we issued our earnings press release and filed our quarterly report on Form 10-Q for the period in July 31st, 2024. Our public cloudings are available on the SEC website and within the Investor Relations section of the OPP website.

Bob Powers: Thank you and good morning all.

Bob Powers: After the market closed yesterday, we issued our earnings press release and filed our quarterly report on Form 10-Q for the period ended July 31 2024.

Speaker Change: Our public filings are available on the Sec's website within the Investor Relations section of the O P T website.

Robert Powers: During this call, we will make forward-looking statements that are within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include financial projections or other statements of the company's plans, objectives, expectations, or intentions. These statements are based on the assumptions made by management regarding future circumstances over which the company may have little or no control and involve risks of certain keys and other factors that may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. Additional information about these risks and uncertainties can be found in the company's Form 10-K and subsequent filings with the SEC.

Speaker Change: During this call we will make forward looking statements that are within the state Harbor provisions of the private Securities Litigation Reform Act of 1995.

Speaker Change: Forward looking statements mean Jackson.

These actions or other statements of the company's plans objectives expectations or intentions.

Speaker Change: These statements are based on assumptions made by management regarding future circumstances over which the company may have little or no control and involve risks uncertainties and other factors that may cause actual results.

Speaker Change: Materially different from any future results expressed or implied by such forward looking statements.

Speaker Change: Additional information about these risks and uncertainties can be found in the company's Form 10-K.

Speaker Change: Subsequent filings with the SEC.

Robert Powers: The company disclaims any obligation or intention to update the forward-looking statements made on this call.

Speaker Change: The company disclaims any obligation or intention to update the forward looking statements made on this call.

Robert Powers: Finally, we posted an updated investor presentation on our IR website. Please take a moment to review it as it provides a nice overview of our company and strategy.

Speaker Change: Finally, we posted an updated investor presentation on our IR website.

Speaker Change: Please take a moment to review it as it provides a nice overview of our company and strategy.

Philipp Stratmann: Now, I am pleased to introduce Dr. Philip Strabett. Thank you, Bob. Good morning. We appreciate you joining us. The first quarter of fiscal 2025 saw us continue to make significant progress towards positive cash flow in calendar year 2025 for our company. This quarter saw us advance several strategic partnerships with established and highly reputable companies. Materially reduced our operating expenses, progress our technical advancements to support further commercial growth, and build upon the significant increase in pipeline we achieved during fiscal 2024.

Speaker Change: Now I am pleased to introduce Dr. Philip scrap it.

Speaker Change: Thank you Bob Good morning, we appreciate you joining us.

Speaker Change: The first quarter of fiscal 2025, so it's continued to make significant progress towards positive cash flow in calendar year 'twenty 'twenty five for our company.

Speaker Change: This quarter. So what was it bond several strategic partnerships with established and highly reputable companies materially reduce our operating expenses.

Speaker Change: Progress our technical advancement to support for the commercial Greg.

Speaker Change: And build upon the significant increase in pipe, what we achieved during fiscal 'twenty 'twenty four.

Philipp Stratmann: Today, our focus is on the significant developments occurring recently and the resulting confidence they provide toward achieving our goals for fiscal 2025. First, we recently announced that we completed more than four months of offshore testing of our next-generation power buoy in the Atlantic Ocean of New Jersey. This solar and wind power equipped next-generation power buoy was equipped with our proprietary artificial intelligence capable, marrow suite of solutions. The system maintained 100% data uptime, and the state of charge of the batteries remained over 90% throughout the deployment. During the deployment, several intelligence, surveillance, and reconnaissance demonstrations for potential customers were completed.

Speaker Change: Today, I will focus on the significant developments occurring recently and the resulting confidence they provide toward achieving our goals for fiscal 2025.

Speaker Change: First we recently announced that we completed more than four months of offshore testing of our next generation power buoy in the Atlantic Ocean off New Jersey.

Speaker Change: So that in the wind power equate next generation powered with me was equipped with our proprietary artificial intelligence capable marrow suite of solutions.

Speaker Change: System maintained 100% data uptime and the state of charge up the batteries remained over 90% throughout the deployment.

Speaker Change: During the deployment several intelligence surveillance and reconnaissance demonstrations for potential customers who have completed.

Philipp Stratmann: Additionally, in May 2024, we announced we were approaching 15 megawatt hours of renewable energy production from our family of powerboos. The just mentioned deployment of our next generation powerboot of the course of New Jersey materially accelerated average energy production by combining solar, wind, and wave energy production capabilities. Our energy production numbers show that non-grid connected marine energy production is not just for the R&D community, but is a commercially available solution.

Speaker Change: Additionally, in May 'twenty 'twenty, four we announced we were approaching 15 megawatt hours of renewable energy production from our family of apologies.

Speaker Change: The just mentioned deployment of our next generation power off the coast of New Jersey materially accelerated average energy production.

Speaker Change: Binding solar wind and wave energy production capabilities.

Speaker Change: Our energy production numbers show that non grid connected marine energy production is not just for the R&D community is a commercially available solution.

Philipp Stratmann: Finally, we recently announced our patent application for docking and recharging buoy technology specifically designed for the WAMB. This advanced system has already been successfully demonstrated, showcasing its potential to revolutionize the operational efficiency of autonomous marine vessels. This development aligns with our broader strategy to enhance the functionality and versatility of our Mara's platform, bringing artificial intelligence-capable solutions to the ocean, thereby expanding our market reach and supporting a variety of customers. Each of these innovations started a testament to OPT's dedication and leadership role in supporting the security and protection of global waterways, and positioned us to capitalize on the expected growth in these areas while solidifying the company's unique position as a groundbreaking systems provider.

Finally, we recently announced a patent application for docking in recharging buoy technology, specifically designed for the Wendy.

Speaker Change: This advanced system has already been successfully demonstrated showcasing its potential to revolutionize the operational efficiency of autonomous marine vessels.

Speaker Change: This development aligns with our broader strategy to enhance the functionality invested penalty versatility of our platform.

Bringing artificial intelligence capable solutions to the ocean, thereby expanding our market reach and supporting a variety of customer needs.

Speaker Change: Each of these innovations stands as a testament to a P. T. His dedication and leadership role in supporting the security and protection of global waterways.

Speaker Change: Positions us to capitalize on the expected growth in these areas, while solidifying the company's unique position as a ground breaking systems provider.

Philipp Stratmann: In addition, we advanced strategic alliances with a number of complementary industry leaders. In August 2024, we announced the signing of the latest of four new reseller agreements targeted at supporting global critical services. These agreements include opportunities for partnering with allied nations in areas like the South China Sea, previously announced efforts in Latin America and the Middle East, and servicing global commercial markets. We also announced additional developments in our integration of AT&T's 5G systems for our powerboots, most notably for the deployment of the Naval Postgraduate School and the integration of Teladine Marines, industry-leading suite of underwater sensors.

Speaker Change: In addition, we advanced strategic alliances with a number of complementary industry need us.

Speaker Change: August 2024, we announced the signing of the latest of four new reseller agreements targeted supporting global critical services. These agreements include opportunities for partnering with Allied nations in areas like the South China Sea.

Speaker Change: Previously announced efforts in Latin America, and the Middle East.

Speaker Change: Servicing global commercial market.

Speaker Change: We also announced additional developments and our integration of At&t's five G systems for all apologies.

Speaker Change: Most notably for the deployment of the Naval postgraduate school I'm, the integration of Teledyne Marine industry, leading suite of water sensors.

Philipp Stratmann: These partnerships provide the application for us to proactively serve the demand for our autonomous maritime technologies. We believe these partnerships will further accelerate our growth and drive additional revenue streams. We look forward to further strategic partnerships in the near future, specifically focus on supporting our expanding efforts in Latin America and the Middle East.

Speaker Change: These partnerships provide the application amplification for us to proactively serve the demand for our autonomous Maritime technologies.

Speaker Change: We believe these partnerships will further accelerate our growth and drive additional revenue streams. We look forward to further strategic partnerships in the near future that specifically focus on supporting our expanding efforts in Latin America, and the Middle East.

Philipp Stratmann: Finally, as Bob will detail momentarily, during Q1, we realize the initial benefits of the significant cost reduction activities we implemented at the end of fiscal 2024, including significant reductions in cash burn and operating expenses. In closing, our business is performing well. As a result of the foundation and opportunities I've just described, we remain on track to achieve our previously stated goal of attaining profitability during the fourth quarter of calendar 2025.

Speaker Change: Finally, as Bob will detail momentarily during Q1, when you realize the initial benefits of the significant cost reduction activities, we implemented at the end of fiscal 2024.

Speaker Change: Including significant reductions in cash burn on operating expenses.

Speaker Change: In closing our business is performing well.

Speaker Change: As a result of the foundation and opportunities I've. Just described we remain on track to achieve our previously stated goal of attaining profitability during the fourth quarter of calendar 2025.

Robert Powers: Now I will hand it over to Bob to discuss our financial performance in more detail. detail.

Speaker Change: Now I will hand, it over to Bob to discuss our friendship financial performance in more detail.

Robert Powers: Thanks, folks. Let's begin with revenue. In Q125, our revenues are $1.3 million. Inline with the $1.3 million in revenue we experienced in Q1 24. A number of opportunities in our backlog experience delays beyond our control, and these are now expected to be realized in Q2 and Q3 of FY25. Our pipeline stands at approximately $92 million and represents the largest pipeline in the history of the company. Our operating expenses for Q125 amounted to $4.9 million, a 39 percent decrease as compared to the operating expenses last year. This reduction with the result of discount optimization, material reductions in third-party spend, and efforts that tightly control and contain costs.

Bob Powers: Thank you Bill, let's begin with revenue.

Bob Powers: In Q1 25, our revenues were $1.3 million in line with the $1.3 million in revenue we experienced in Q1 24.

Speaker Change: A number of opportunities in our backlog experienced delays beyond our control and these are now expected to be realized in Q2, and Q3 of FY 'twenty five.

Speaker Change: Our pipeline stands at approximately $92 million and represents the largest pipeline in the history from the company.

Speaker Change: Our operating expenses for Q1, 'twenty five amounted to $4 $9 million, a 39% decrease as compared to the operating expenses last year.

Speaker Change: This reduction was the result of head count optimization material reductions in third party spend and efforts to tightly control and contain costs.

Robert Powers: As for the net result, we reported a decrease in our net loss of over 35 percent per Q125. Primarily driven by the decrease in operating expenses, I just noted. Finally, our backlog at July 31, 2024, stands at $5.3 million. A 71 percent increase as compared to the 3.1 million in the prior year. A significant portion of this increase is driven by our previously announced recent expansion into Latin America, as well as the recurring revenue to be generated under long-term recent contracts. On the balance sheet front, our combined cash, restricted cash, cash equivalents, and short-term investments as of July 31, 2024, total $3.3 million as compared to the $26.9 million balance for Q124.

Speaker Change: As for the net result.

Speaker Change: We reported a decrease in our net loss of over 35% for Q1, 'twenty five primarily driven by the decrease in operating expenses I just noted.

Speaker Change: Finally, our backlog at July 31, 2024 stands at $5.3 million.

Speaker Change: 71% increase as compared to the $3 1 million in the prior year.

Speaker Change: A significant portion of this increase is driven by our previously announced recent expansion into Latin America as well as the recurring revenue to be generated under long term leasing contracts.

Speaker Change: On the balance sheet front, our combined cash restricted cash cash equivalents and short term investments as of July 31, 'twenty 'twenty four totaled $3.3 million as compared to the $26 $9 million balance for Q1 24.

Robert Powers: Notably, we continue to maintain a debt-free balance sheet with no bank debt and our financial structure. In terms of cash flow, the net cash used in operating activities for the first quarter amount of $6.1 million. This primarily reflects our net loss; the payout of employment, bonus is accrued during fiscal year 2024, and the payment of the urn out accrued during fiscal 24. Investment in inventory necessary in order to satisfy the increase in backlog previously noted, as well as our planned growth in revenue for fiscal 2025.

Speaker Change: Notably we continued to maintain a debt free balance sheet with no bank debt and a financial structure.

Speaker Change: In terms of cash flow the net cash used in operating activities for the first quarter amounted to $6 $1 million.

Speaker Change: This primarily reflects our net loss the pay out of employment bonuses accrued during fiscal year 'twenty 'twenty four and the payment of the earn out accrued during fiscal 'twenty four.

Speaker Change: Investments in inventory necessary in order to satisfy the increasing backlog previously noted.

Speaker Change: As well as our planned growth in revenue for fiscal 2025.

Robert Powers: That covers our financial update. Before we enter Q&A, I'd like to remind everyone that the purpose of today's call is to discuss our fiscal 2025 first quarter results as well as our financial outlook. As we head into the Q&A, we ask you to limit your questions to these topics.

Speaker Change: That covers our financial update.

Speaker Change: Before we enter Q&A I'd like to remind everyone that the purpose of today's call is to discuss our fiscal 2025 first quarter results as well as our financial outlook.

As we head into the Q&A, we ask that you limit your questions to these topics. Thank you.

Robert Powers: Thank you.

Operator: Thank you. Now that you've got your question and answer session, if you'd like to be placed in question Q, please press star one at this time.

Speaker Change: Thank you will now be conducting a question answer session, if you'd like to be placed in the question queue. Please press star one at this time one moment, please while we poll for questions.

Operator: One woman, please, while we pull for questions.

Jeffrey Grampp: Our first question is coming from Jeff Graham from Alliance Global Partners. Your line is now live. Morning, guys. Morning.

Speaker Change: Our first question is coming from Jeff Gramm from Alliance Global Partners. Your line is not a lot.

Speaker Change: Good morning, guys.

Good morning.

Philipp Stratmann: First question on the pipeline. Can you guys maybe peel the onion back a little bit more? What do you guys kind of attribute the main drivers for the continued increase there? And also related, I guess curious, if you can touch on, you know, perhaps how the sales team has evolved. I don't know, either in terms of size or approach. Maybe over the last few quarters or a year, that might also be driving that pipeline growth.

Speaker Change: First question on the pipeline can.

Speaker Change: Can you guys, maybe pill Peel the onion back a little bit more what are you guys kind of attribute.

Speaker Change: The main drivers for the continued increase there and then also related I guess curious if you can touch on you know, perhaps how the sales team has evolved I don't know either in terms of size or approach over the last few quarters or a year that might also be driving that pipeline growth.

Philipp Stratmann: Yeah, good morning, and thanks for the question. I think there's a range of factors. I mean, there is one broader geopolitical factor that impacts an increasing demand for autonomous ocean security and ocean monitoring systems. And I think that's on the defense and security side; you see it every day; you look at the news. There is also, on the domestic side, an increasing appetite and funding available from our government to help support standing up the next generation of autonomous systems to be deployed within the US Warfighter community. So that's on the geopolitical side. I think on the other side, what we have done over the past few years is making sure that our systems are ready, commercially available, and able to be dropped into exercises where we can then showcase their capabilities to the end of the community and then drive that growth forward.

Speaker Change: Yeah, Jeff Yeah, good morning, and thanks for the question I think there's there's a range of factors I mean, there is.

Speaker Change: One is a broader geopolitical.

Speaker Change: Factors that impact an increasing demand for autonomous Ocean security and Ocean monitoring systems.

Speaker Change: That's on the defense and security side, you see it every day you look at the news.

Speaker Change: It was all say.

Speaker Change: On the domestic side, a an increasing appetite on funding available from our government to help support standing up the next generation of autonomous systems to be deployed within the U S. We will fight to community.

Speaker Change: So that's on the geopolitical side I think on the other side, what we have done over the past few years is making sure that our systems are ready commercially available and able to be dropped into exercises, where we can then showcase their capabilities.

Speaker Change: To the end user community and then drive drive that growth forward. Today. That's you know that's what the defense and security side. There's also an ongoing desire for anybody operating offshore to lower that opex, lower capex requirements and get access to more ocean data.

Philipp Stratmann: So that's, you know, that's on the defense and security side.

Philipp Stratmann: There is also an ongoing desire for anybody operating offshore to lower their OPEX, lower CAPEX requirements, and get access to more ocean data at a much lower cost point and with less carbon emissions than would have been done through traditional means. And all of those factors combined are helping you know, keep on increasing the backlog at the same time as we are, you know, maintaining revenues, gross margin, and blurring our overall burn.

Speaker Change: At a much lower cost point and with less carbon emissions than would've been done through traditional means when all of those factors combined are helping us.

Speaker Change: Keep on increasing the backlog at the same time as we are maintaining.

Speaker Change: <unk> revenues gross margin and lowering our our overall Budd.

Philipp Stratmann: To the other point on the sales team, one of the big evolutions that the sales team has gone through is that we have a sales team that is focused and understands the US government, defense and security, overseas government, and also understands the kind of the overall marine technology sector. And because of that, they are able to help create solutions that our end customers can then take to their end customers and help have that integrated. I think all of that combined is what keeps on growing the pipeline and helps us convert pipeline to backlog, which, you know, we're excited about. Then we'll lead to increased revenues.

Speaker Change: The other point on the sales team one of the big evolutions that the sales team has gone through is that we have a we have a sales team that is focused and understands the U S government defense and security overseas government and I also understand the kind of the overall marine technology sector.

Speaker Change: And because of that they are able to help create solutions that our end customers can then take to their end customers and how has that integration and I think all of that combined is what keeps on growing the pipeline and and helps us convert pipeline to backlog, which you know we're excited about them.

Speaker Change: Will lead to increased revenues.

Speaker Change: Okay.

Jeffrey Grampp: Great, I appreciate all those details. And with respect to the orders and the guidance you guys put out last quarter, I don't know if you just closed orders explicitly. I kind of backed into a number maybe a little short of $2 million for the quarter because I guess first does that sound about right? And then I'm just wanting to make sure you guys still feel good or on track about that order guidance for the school year.

Speaker Change: Great I appreciate all those details.

Speaker Change: And with respect to the.

Speaker Change: The orders and the guidance you guys put out last quarter I don't know if you just closed doors explicitly I kind of backed into a number maybe a little short of $2 million for the quarter, because I guess first does that sound about right and then just wanted to make sure you guys still feel.

Good or are on track about that order guidance for this fiscal year.

Philipp Stratmann: Yeah, we still feel good about where things are heading and trending. You've seen the increase in backlog from what we had at the beginning of the fiscal year. You know, so we've increased backlog, but we also maintained revenues versus this quarter a year ago. So I think combined with those efforts and with what we're seeing in the growth of the pipeline, we feel good with where we're heading. I think.

Speaker Change: Yeah, we we still feel good about where where things are heading in trending yeah, and you've seen the increase in backlog from what we had at the beginning of the fiscal year and I said, we've increased backlog.

Speaker Change: We also maintained revenues versus this quarter a year ago. So I think combined with those efforts and with what we're seeing and the growth in the pipeline, we feel good with where we're heading.

Jeffrey Grampp: Perfect. Now, if I can just sneak one more in, OpEx obviously came down pretty nicely year-to-year.

Speaker Change: Perfect and if I can just sneak one more in Opex, obviously came down pretty nicely year over year.

Philipp Stratmann: Is there anything left to do on that front, or is that kind of a reasonable steady state to think about going forward, at least in kind of the near-medium term? Yeah, I think we've done a lot of the hard work that was required to really bring OpEx down. I think you will see potentially some marginal fluctuation, but that's really going to be due to embedding and having full quarter effect of the last efforts that were implemented. And we continue to make sure that we manage and contain costs tightly.

Speaker Change: Is there anything left to do on that front or is that kind of a reasonable steady state to think about going forward at least in kind of the near medium term.

Speaker Change: Yeah, I think we've we've we've done a lot of the hard work that was required to really bring opex down you know I think we you will see potentially some marginal.

Speaker Change: Marginal fluctuation, but that's really going to be June two and bedding and having a full quarter effect of the lost efforts that were implemented.

Speaker Change: Yeah, and we we continue to make sure that we manage and contain costs tightly.

Jeffrey Grampp: Perfect.

Jeffrey Grampp: Thank you guys for the time. Thanks, Jeff.

Speaker Change: Alright, Thank you guys for the time.

Jeff Gramm: Thanks, Jeff.

Shawn Severson: Next question is coming from Shawn Severson from Water Teller Researcher Linus. Thanks.

Thank you next question is coming from Shawn Severson from water Tower research your line of sight of life right.

Shawn Severson: Good morning, gentlemen. I was looking at the new deck. You have a slide in there about market capitalization upside. And my question kind of relates to the commercial readiness of the sector overall. I know you put some different sectors in there and talked about market valuation. But my question is more about where do you compare and contrast in terms of your commercialization and flexion point, let's say, versus some of these other companies that are in the industry. And again, many of them are private. I don't think investors fully know or understand where they are at.

Speaker Change: Great. Thanks, good morning, gentlemen.

Jeff Gramm: I Wonder if you are talking about.

Shawn Severson: I'm looking at your and Jack you had a slide in there about market capitalization upside my question kind of relates to the to the commercial readiness of the sector. Overall I know you put some different factors in there and talked about market valuation, but my my question is more about where do you compare.

Speaker Change: In contrast in terms of your commercialization inflection point, let's say right versus some of these other companies that are in the industry to get many of them are private I don't think investors fully understand where they're at so can you give us some color on where you are in the greater scheme versus versus Dot Com group website.

Philipp Stratmann: So can you give us some color on where you are in the greater scheme versus that comp group, let's say.

Philipp Stratmann: Yeah, thanks, Shawn. I appreciate the question where we see OPT, and you look at it. You know, we, you know, Jeff just asked the question, you know, and you've seen it in our numbers. You know, the pipeline continues to grow. But it's in the, you know, the backlog continues to grow. You know, we we've achieved a good level of gross margin. So, from a commercial readiness perspective, you know, we're ready. The systems are there, and the demand signals are there, and it's no longer demand signals. You know, the demand signals are being converted into actual, you know, backlog and then into revenues.

Speaker Change: Yeah, Hi, Thanks, Sean.

Speaker Change: I appreciate the question well, where we see a P. T and you look at it you know we you know Jeff just asked the question you know and you've seen it in our numbers you know the pipeline continues to grow but isn't it.

Speaker Change: Backlog continues to grow we we've achieved a good level of gross margin. So from a commercial readiness perspective, you know we're already the systems are there and the demand signals are there and it's no longer demand signals the demand signals are being converted into actual.

Speaker Change: You know backlog and then into the into revenues I think.

Philipp Stratmann: I think when you're looking at what's going on in the market in general, I think the market overall is very ready. And there is a good combination of technologies that are available commercially in the market, particularly on the autonomy side. I would say that on the booze side where we're at, you know, we feel strongly that, you know, the systems we have are commercially deployable and ready. And we're seeing that through the projects like, you know, the further advances we are making with Labour push graduate school in AT&T, with the efforts that we've got ongoing with the booze that we're shipping to the Middle East.

Speaker Change: When you're looking at what's going on in the market in general I think the market. Overall is is very ready and there is a good combination of technologies that is available commercially in the market, particularly on the autonomy side.

Speaker Change: I would say that on the buoy side, where as you know we we we feel strongly that you know the systems, we have commercially deployable and ready and were seeing that through the projects like and are there further advances we are making with naval postgraduate school in AT&T.

Speaker Change: With the efforts that we've got ongoing with the bogey that we're shipping to the middle East.

Philipp Stratmann: You know, those are all really encouraging because what those show is that those are projects now being done through third parties that are not ground funded. You know, this is this is this is actual use cases for these systems being deployed.

Speaker Change: These are all really encouraging because what they showed is that there is a project now being done through third parties that are not grant funded you know. This is this is this is actual use cases for these systems being deployed.

Philipp Stratmann: and I think, but probably because there's, you know, introduced the other part of your question, there's probably less of visibility into what goes on in the public market, mainly because there aren't many ocean technology providers that aren't the public side. So I think, you know, we feel good about where we are commercially. We think it is a very robust market with a large term, and we feel comfortable and confident in the growth that we're seeing and that it will continue to accelerate and help deliver value for all of our shareholders.

Speaker Change: And I think.

Speaker Change: Probably because they stay in tune to the other part of your question, there's probably less.

Speaker Change: Visibility into what goes on in the public market, mainly because there aren't many ocean Tango would you provide us the on the public side. So I think you know we feel good about where we ought commercially we think it is a it is a very robust market with a large tam.

Speaker Change: And we feel comfortable and confident in the growth that we're seeing and that they will continue to accelerate and help deliver value for all of our shareholders.

Shawn Severson: Thanks for that, Philip. And next question is a long-term modeling question. As we're trying to build out, you know, the, as the pipeline and backlog starts to convert, try to understand what the mix of the business, whether it's a targeted mix of the business would look like between data as a service and equipment sales.

Speaker Change: Thanks for that stuff up and next question is a long term modeling question as we're trying to build out.

Speaker Change: There is the <unk>.

Speaker Change: Pipeline and backlog starts to convert trying to understand what the mix of the business, whether it's a targeted mix of the business would look like between yeah.

Speaker Change: Data as a service and equipment sales. So again this is from a long term modeling perspective trying to understand what you think the business will look like when it's a little.

Philipp Stratmann: So again, this is from a long-term modeling perspective, trying to understand what you think the business would look like when it's a little, when it's matured a bit more in import commercialization scale. Yeah, I think, well, you know, I think let's, let's look at this, you know, take a step back from that, from, from that, and let's look at really what the end customer industry mixes. You know, I think we see about, you know, 50 plus percent of the business being in the defense and security side, you know, and the balance really being on commercial with a little bit of, of, of research and science type work.

Speaker Change: Chart, a bit more of an import commercialization scale.

Speaker Change: Yeah, and I think well you know I think let's let's look at this and I take a step back from that from from that and it is look at really what the.

Speaker Change: And its customer industry mixes yeah, I think we we see a about 50.

Speaker Change: 50, plus percent of the business being in the defense and security side, you know in the balance really being on commercial with a little bit of research on.

Speaker Change: On science type work.

Philipp Stratmann: And it's going to vary across the segments. And if you're looking at the commercial side, that is a strong and robust long-term leasing model. You know, we're pleased and thankful for the partnership we have with companies like Samara, who've got several of our systems on long-term leases. You know, that is a great recurring revenue business, you know, where we're layering in maintenance into that. And it helps both sides of the equation. Then there's others where we're doing, you know, long-term leases during exercise phases for defense and security customers. And I think then what we are going to start seeing is increasing sales to defense and security customers, particularly on, I think, on some of the buoy sites, but then with additional service layered on top of that.

Speaker Change: And it's going to vary across the segments and if he doesn't get on the commercial side that has a strong and robust long term leasing model.

Speaker Change: We're very pleased and thankful for the partnership we have with companies like Samara who've got several of our systems on long term leases.

Speaker Change: That is a great recurring revenue business, where we're layering in maintenance into that and it. It helps both sides of the equation.

Speaker Change: And then there's others, where we're doing long term leases during exercise phases for defense and security customers.

Speaker Change: And I think then what we're going to start seeing is increasing sales to defense and security customers, particularly on I think on some of the buoy sites, but then with additional service layered on top of that and that's really going to come down to the fact that you know.

Philipp Stratmann: And that's really going to come down to the fact that, you know, if it is short-term deployments for monitoring, yeah, that's probably going to be leased. If it is long-term deployments into a specific region for a specifically customer who wants to own it and have it in that region, that's going to be a sale. And as we've said before, sales is what's going to help us scale up quickly. But the leased model is what's going to give us the long-term free cash flow and healthy margins that, you know, we're all looking forward to.

Speaker Change: If it is short term deployments for monitoring yeah, that's probably going to be leased if it is long term deployments into a specific region for a specific customer who wants to own it and have it in that region. That's gonna be a sale and as we've said before sounds it's what's going to help us.

Speaker Change: Scale up quickly, but the lease model is what's going to give us the long term free cash flow and healthy margins that that you know we are looking forward to.

Shawn Severson: Based on my last question, is on a technology roadmap. And I'm fully aware that you guys have this. You've already made a significant investment. The technology is there. It's commercial.

Speaker Change: Thank you My last question is on the Technology Road map and I'm fully aware that you guys says this is you've already made significant investments in technology is there it's commercial but when you look out to the future. So what do you see as you.

Philipp Stratmann: But when you look out to the future, so what do you see as, you know, a couple other points where you think, well, if we could, if we could do this or we could do that to improve it maybe, you know, not necessarily reinventing the wheel, but do you have things that you're focused on for technology improvements over the next 24 months? Thanks, Shawn.

Speaker Change: A couple of other points, where you say boy if we could if we could do that so we can do that to improve it maybe not necessarily reinventing the wheel, but do you have things that you're focused on for technology improvements over the next 24 months.

Speaker Change: Thanks, Sean Yeah, that's it.

Philipp Stratmann: It varies. Obviously, we never stand still. Our customers know that we are continuously working on integrating any feedback they have from having operated our systems in regions where we haven't previously operated, or towing systems we haven't previously towed. Then we'll issue a field service bulletin, and then we'll work through some continuous improvement program, and then we'll provide additional maintenance systems, say, for example, at a later stage.

Speaker Change: It varies I mean, obviously, we you know we never stand still.

Speaker Change: Our customers know that we are continuously working on integrating any feedback they have from having operated our systems in regions, where we haven't previously operated or tolling systems that we haven't previously told you know and then we'll issue had field service Bulletin and then well you know we worked through some and I.

Speaker Change: Continues improvement program and then you know where it will will provide additional maintenance system say for example at a later stage.

Philipp Stratmann: At the bigger level, we're obviously we just announced that we completed the four months of offshore testing for the next gen power buoy. We're really glad that performed above and beyond any expectations that we had. We are continuing to work on the integration of the remote charging and docking opportunities, and I think that is really exciting, because that is what's going to enable collaboration not just with our systems, but with a whole range of autonomous systems out on the ocean. Imagine a system where you have buoys deployed that essentially add like charging stations out in the ocean, and then you have a range of autonomous vehicles, initially hours and later on others that can go and do their work, come alongside a buoy, charge up, offload the data, the data gets processed, and then you retask it.

Speaker Change: <unk>.

Speaker Change: Bigger level.

Speaker Change: Obviously, we just announced that we completed the full month of offshore testing for the Nexgen powered to me I think that's obviously you know we were really glad that that perform yeah.

Above and beyond any expectations that we had.

Speaker Change: We are continuing to work on the integration of the remote charging and unlocking opportunities and I think that that is really exciting because that is what's going to enable collaboration not just with our systems, but with a whole range of autonomous systems out in the ocean.

Speaker Change: Imagine a system, where you have buoys deployed that essentially act like charging stations I'm out in the Ocean and then you have a range of autonomous vehicles initially hours and later on others.

Speaker Change: Can go and do that work come alongside a buoy chart job.

Speaker Change: Offload the data the data gets processed and then you read Tosca you know at that point, you really start moving into autonomous offshore operations.

Philipp Stratmann: At that point, you really start moving into autonomous offshore operations.

Philipp Stratmann: We've already got, we already announced that we filed a patent for the remote charging and docking systems, and we look forward to continuing to work on integration in this kind of system of systems approach for autonomous ocean technology that uses zero or low carbon production. Thank you.

Speaker Change: We've already got you know, we've already announced that we filed a patent for the remote charging and.

I'm talking systems, and we look forward to continuing working on integration in this kind of system of systems approach for autonomous Ocean technology that uses zero carbon production.

Speaker Change: Great. Thank you.

Philipp Stratmann: Thank you, Sean. Thank you.

Speaker Change: Thanks, Sean.

Operator: We reached out of our question and suggestion.

Speaker Change: Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.

Philipp Stratmann: I'd like to turn the floor back over for any further closing comments. Thank you for being a shareholder, and for supporting our ongoing growth and execution of our strategy. We look forward to continuing to deliver for you, our customers, and all of our stakeholders.

Speaker Change: Thank you for being a shareholder and for supporting our ongoing growth and execution of our strategy.

Speaker Change: We look forward to continuing to deliver for you our customers and all of our stakeholders. Thank you and have a great day.

Operator: Thank you, and have a great day.

Operator: Thank you.

Operator: That does conclude today's telecom producer webcast. Me, this director by laptop. It's time, and have a wonderful day. We thank you for your participation today.

Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Speaker Change: Yeah.