Q3 2024 Boxlight Corp Earnings Call
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Speaker Change: Good afternoon and welcome to the BoxLight Corporation third quarter financial results call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Speaker Change: You can submit a question via the web at any time by typing them in the Ask Question field. Type in your question and hit Submit. For questions from the phone lines, you may press Star 1 to access the queue.
Please note that this conference is being recorded.
Speaker Change: I will now turn the conference over to our host, Jeff Stanlis of FNK-IR. You may begin.
Speaker Change: Thank you, Operator, and thank you, everyone, for joining. Earlier today, BoxLight issued a press release providing an operational update and discussing financial results for the third quarter ended September 30, 2024.
Speaker Change: This release is available on the investor relations section of the company's website at www.boxlight.com. Hosting the call today are Dale Strang, Chief Executive Officer, and Greg Wiggins, the company's Chief Financial Officer.
Speaker Change: Before we begin, I would like to remind participants that during the call, management will be making forward-looking statements.
Speaker Change: These statements may contain information about BoxLight's view of its future expectations, plans, and prospects that constitute forward-looking statements.
Speaker Change: Variability of Operating Results, its development and introduction of new products and services, marketing and other business development initiatives, and competition in the industry, among other things.
Speaker Change: BoxLight encourages you to review other factors that may affect its future results and performance in BoxLight's filings with the Securities and Exchange Commission.
Speaker Change: The company does not undertake and specifically disclaims any obligation to update or revise such forward-looking statements to reflect new circumstances or unanticipated events as they occur, except as required by law. And with that, I'd like to now turn the call over to Dale Strang, CEO of Boxlight. Dale, the call is yours.
Dale Strang: Thank you, Jeff, and thank you to everyone for joining us today.
Speaker Change: Over the past several months, BlockSite has proven its ability to efficiently operate in what is a challenging environment, while still positioning the company to thrive in anticipation of improved market conditions.
Speaker Change: We're continuing to align our expenses with our current revenue levels, and we're effectively communicating our strategic advantages to the market while simultaneously strengthening our product and solution suites.
Speaker Change: The primary goal of the company is to clearly and effectively deliver increased value.
to our partners, customers, and stakeholders.
Speaker Change: We're laser focused on simplifying our business and our solutions, our messaging, and ultimately having that be reflected with more efficient operational expenses.
Speaker Change: A current example of this focus, we are simplifying our brand structure in which our major product lines will be organized under three solution categories.
Speaker Change: Our worldwide IFPD and display products will all be under the CleverTouch label.
Speaker Change: Front Row will be our global brand for all audio and communication solutions, while our STEM solutions, curricula, software, professional development will continue to feature Mimeo and Eos identities.
Speaker Change: Everything we do will carry the quote-unquote buy BoxLite umbrella company brand. We'll be rolling these changes out through the first half of 2025.
Speaker Change: Among the benefits of these moves, we now have the ability to offer the highly regarded CleverTouch IFPD brand to our entire market, specifically the U.S. and America's.
Speaker Change: We'll have a unified product lineup and a unified roadmap for our entire customer base globally. We'll have a simplified supply chain and logistics mechanism.
Speaker Change: all while leveraging the CleverTouch, FrontRow, and Mimeo brand equity that's been created by decades of dedicated market presence.
Speaker Change: We believe this clarity and expanded opportunity for our sales partners will provide flexibility, heightened focus, and will benefit our partners and customers alike.
Speaker Change: We plan these adjustments carefully with the needs of these customers and partners top of mind.
Speaker Change: All services and warranties will remain exactly as our customers have come to expect, and the new user experience we provide will be the best of the best in technology with ease of use in mind so users can select a user experience that's familiar to them.
Speaker Change: We've had preliminary conversations with partners about these plans to consolidate, and it's been very well received. Our internal teams share this enthusiasm.
Speaker Change: So streamlining our brands and products is critical to our long-term success.
Speaker Change: Equally critical is a constant attention to building on what is the most robust end-to-end suite of solutions in our industry.
Speaker Change: BoxLite's broad portfolio gives us a significant competitive advantage against other players in the industry who often participate in one or maybe two areas.
and often with an inferior set of solutions.
Here's one example.
of our ongoing focus.
Speaker Change: We recently launched the new upgraded Impact Max 2 interactive panel. This panel comes with upgraded storage, an exclusive chipset for a faster, more intuitive display, and a unique, first-of-its-kind multi-configuration UI, all at a very competitive price point.
Speaker Change: We will have a number of product line expansions to announce in the months and weeks to come that will support both our education and our enterprise customers modernization efforts.
Speaker Change: Boxlight Solutions continue to win industry acclaim. Recently our Clever Touch Edge won a prestigious ProAV Best-in-Market Award for 2024. We also achieved an important Cyber Essentials Certification, demonstrating our commitment to product safety and security across our whole product line.
Speaker Change: I'd also note that, as expected, our new front-row Unity and front-row TimeSign solutions, which I discussed on our last call, are now shipping.
Speaker Change: Both products support another important growth opportunity for box-life pertaining to school safety and communications, and as such, we're receiving very positive, encouraging feedback.
Speaker Change: As we continue to expand the ecosystem of compatible bauxite audio and video solutions, we're giving customers a simple interface to communicate broadly or narrowly to address threats and improve school-wide communication.
Speaker Change: As part of this, we're adding integration partnerships between BoxLight and major third-party emergency management platforms, and we expect to add additional related platforms in the months to come.
Speaker Change: I believe we're better positioned today than we were at the beginning of 2024. We have a more robust suite of solutions, a more streamlined go-to-market message.
Speaker Change: We've expanded our sales channels, we've deepened our offerings, and we're aligning our teams.
but IFP D demand remains soft.
Speaker Change: versus prior periods, particularly in some of our largest markets, particularly in the U.S.
Speaker Change: Europe has been notably stronger than the U.S. For example, returns in Germany and Belgium and Q3 were up 29% and 18% respectively.
and this benefits us.
Speaker Change: due to our global presence. But as I said, we're aligning all of our resources with our current revenue reality, all while strengthening our business for the better days ahead.
Speaker Change: This will enable us to meet our profitability targets despite persistent revenue headwinds.
Speaker Change: We're bullish on the long-term outlook for our market. Our classroom solutions, featuring campus communications convergence, addressing school safety and security needs.
Speaker Change: Our ever-improving digital signage platform and our growth in higher ed and enterprise markets all represent growth areas that will only enhance our core position in K-12 interactive classrooms.
Speaker Change: As I've said, this progress will likely not be linear with challenging market conditions, making quarter to quarter volatility an ongoing reality, but we are on the right path.
Speaker Change: With that, I'll now turn the call over to Greg to discuss our third quarter results.
Greg Wiggins: Thanks Dale and good afternoon everyone. Before we review the financial results for Q3, I want to provide an update regarding our debt facility and our ongoing plans to reduce operating costs.
Greg Wiggins: Earlier this year our current lenders provided a four million bridge loan to help meet the company's short-term seasonal working capital needs.
Greg Wiggins: As stated on previous earnings calls, our operations are seasonal, with Q2 and Q3 being our busiest periods, and the additional liquidity ensured that we would have the necessary inventory on hand to meet our customers' demand.
Greg Wiggins: These amounts were required to be repaid by the end of November 2024. We are pleased to announce that these amounts have been repaid in full.
Greg Wiggins: Aligning operating expenses with operational performance continues to be a priority.
Greg Wiggins: In late Q1, we announced that we would target an annual operating expense run rate of $12 to $13 million per quarter, and we are expecting to achieve that target by the end of 2024.
Greg Wiggins: However, the prolonged industry softness requires that we continue to manage operating expenses to align with current revenue demand.
Greg Wiggins: To that end, we are actively identifying additional savings across our organization and we plan to share with you more detail of this initiative on our next earnings call.
Greg Wiggins: Now, turning to our third quarter results, revenues for Q3 2024 were $36.3 million as compared to $49.7 million for Q3 2023, resulting in a 26.9% decrease.
Greg Wiggins: EMEA revenues comprised approximately 49% or 18 million of our total revenues.
Greg Wiggins: America's revenues total approximately 48 percent or 17 million of our total revenues, while revenues from other markets total approximately 3 percent of our total revenues.
Greg Wiggins: Flat panel displays comprise approximately 72% of total revenues. Audio solutions comprise 12% of total revenues, with the balance of our revenues comprised of device accessories, software, professional services, and STEM solutions.
Greg Wiggins: Gross profit for the quarter was $12.3 million, as compared to $18 million for the prior year period.
Greg Wiggins: Gross profit margin for the quarter was 33.8%, which is a decrease of 250 basis points over the comparable three months in 2023, and is the result of competitive pricing pressures and changes in sales mix between IFPD and audio products.
Greg Wiggins: Total operating expenses for Q3 2024 were $13.1 million, compared to $29.6 million in Q3 2023, or $16.4 million in Q3 2023, excluding non-occurring goodwill impairment charges.
Greg Wiggins: Other expense for Q3 2024 was a net expense of $2.2 million, as compared to net expense of $3.1 million for Q3 2023.
Greg Wiggins: The majority of other expense is related to interest expense on our current credit facility and gain loss on foreign currency exchange.
Greg Wiggins: The company reported a net loss of $3.1 million or $0.34 per basic and diluted share for the quarter as compared to net loss of approximately $17.8 million or $1.90 per basic and diluted share for the prior year quarter.
Greg Wiggins: Adjusted EBITDA for Q3 2024 was $2.2 million as compared to $4.9 million for Q3 2023.
Greg Wiggins: Adjustments to EBITDA include stock-based compensation expense, severance charges, gains losses from the remeasurement of derivative liabilities, goodwill impairment charges, and the effects of purchase accounting adjustments in connection with prior acquisitions.
Greg Wiggins: Turning to the balance sheet, at September 30, 2024, BoxLite had $10.5 million in cash.
Greg Wiggins: $45.8 million in working capital, $42.3 million in inventory, $141.5 million in total assets.
Greg Wiggins: $38.8 million in debt, net of debt issuance cost of $1.3 million, and $6.5 million in stockholders' equity. At September 30, 2024, BoxLight had $9.8 million common shares issued and outstanding, and $3.1 million preferred shares issued and outstanding.
Greg Wiggins: Subsequent to quarter end, the company paid down $0.5 million additional principal on its term loan, including the remaining amounts due under the short-term borrowings from Q2 and Q3 2024.
Greg Wiggins: Our current term loan balance is $39.3 million. With that, we'll open up the call for questions.
Speaker Change: Certainly. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speaker phone to provide optimum sound quality. Please hold just a moment while we poll for questions.
Speaker Change: Your first question is coming from Brian Kinslinger with Alliance Global Partners. Please pose your question. Your line is live.
Thanks so much. I've got a couple of questions.
and you consolidate to one brand, Clever Touch.
What is the impact on your exclusive channel partner agreements?
Speaker Change: If at all, and if the Clever Touch brand, I think you said, isn't that widely sold in the U.S., do you see any, do you see losing any market share before you educate the market and then regain share?
Dale Strang: Thanks Brian, that's a great question and it's just a, maybe I can answer it, this is Dale. A few things.
Dale Strang: CleverTouch has been established in the U.S. for years, but on a limited basis. We had a series of exclusive CleverTouch relationships that both predated and postdated our acquisition of that company about four years ago.
Dale Strang: But we view this move as a way to expand the clever touch reach.
Dale Strang: and we're actually hearing from people that have wanted to... let me back up.
Dale Strang: We've addressed the exclusivity provisions with our channel partners and settled them perfectly amicably.
Dale Strang: In one case, we had a partial state-by-state exclusive for CleverTouch with one major reseller.
Dale Strang: And what this move allows us to do is to make CleverTouch available to all their market, not just the limited geographic region in which we had that carved out. Secondly,
The worldwide...
Dale Strang: Mindshare that Clever Touch enjoys has already been present in the U.S. for quite a long time, and we've found that worldwide ...
Dale Strang: brand equity is translating really well in these conversations. So we view it as an expansionary move without short-term market share risk.
Dale Strang: The one thing you alluded to that I think is important is
Dale Strang: we aren't orphaning the people who have chosen MIMI over the course of our box flight days.
Dale Strang: It's actually the opposite. The products that we're shipping as we go through this transition will give those customers
Dale Strang: the opportunity to choose at the time they install and first provision their device.
to run it with the same Mimeo software stack.
Dale Strang: and UI experience that they're used to, or they can choose the CleverTouch one. It's a toggle that we've engineered and spent some months doing. So, that in addition to the fact that all the same support, warranty, and other coverage will be there makes us feel really good about this transition.
Speaker Change: Alright, so you can still buy Mimeo, it'll just be under a different brand name.
Yes, these panels have...
Speaker Change: been in close resemblance to each other in terms of the hardware itself, the functionality, the chipsets and so on, and there's been some minimal differences.
Speaker Change: And in the case of preferences for how people have it look and feel and what they're used to using for software, we're addressing that. But by having one supply chain and one product pipeline, we're going to eliminate conflicts in our supply logistics, but also in our sales conversation.
Speaker Change: And I think that that's going to be a really good move towards clarity.
Speaker Change: Great. Second question I've got, especially as it relates to the U.S.
You know, deep decline.
Speaker Change: It is a global phenomenon. It's exactly what you described. It's just a period of heavy spending.
Speaker Change: packed into an 18-month, 2-year period has just led to a sort of
Speaker Change: hangover of the amount of money that's available to school districts around the country. And it's, this situation is more exacerbated or more.
Speaker Change: are glaring, I think, in the U.S. and elsewhere. One other point that I think the industry didn't know and is learning is that these devices are really well engineered and really well built and they last really long.
Speaker Change: So what the refresh cycle, the replacement cycle that people were anticipating to not only, nevermind adding to their existing footprint, but simply upgrading and updating the products they have installed,
Speaker Change: in a way that these products are lasting and are more bulletproof over time than anyone anticipated.
That's the good news for us is that the commitment.
educators have.
Speaker Change: to interactive flat panels as a really keystone technology for education and student empowerment.
Speaker Change: That isn't wavering. It's just a question of ... I think it's almost a question of timing, both for budget availability and for glaring need that we think is going to be mitigated in the months to come.
Speaker Change: Two more questions. The first one is, Dale, you used the word bullish on, I believe, the market opportunity or the business. I guess in the face of this...
Speaker Change: multi-year weakening demand trends. What makes you bullish and do you have any insight maybe on how long this downturn might last?
Dale Strang: Well, we have our own observation and our own customer and partner conversations to lead us that way.
We also have...
you know, a lot of history.
Dale Strang: 20, 25, and almost 40 years. So it's not a cyclical business that we're unfamiliar with.
That's one point. Second point is...
Dale Strang: When I say I'm bullish, I'm bullish that we can not only enjoy the cyclical rebound when it happens and the upside
Dale Strang: Outside researchers indicate that that will begin next year, although we're seeing some signs of it already this year in pockets and particularly in EMEA.
Dale Strang: but it's also just conversational people. We have had a lot of anecdotal conversations of school districts or partners that have anticipated efforts or initiatives this year.
Dale Strang: All year that have are now starting to come into clarity for next year. So
Dale Strang: We're cautiously optimistic in the short term, we're bullish in the longer term because we think these industries and the way they relate to each other, as well as the growth vectors we've identified that are adjacent to our core market, all add up to a robust long-term future for the company.
Speaker Change: My last question is for Greg on the balance sheet. You highlighted the four million dollar bridge loaners were paid.
When I go through your press release
Speaker Change: You mentioned not being in compliance with your senior credit agreement. I think that's different, and so are you not in compliance right now? Maybe if so, talk us through, you know, what negotiations are like right now there and when you expect to get a waiver or an amendment.
Speaker Change: Sure, yeah, so these are two different issues to think about. So earlier in the year we did...
receive a $4 million...
Speaker Change: a smaller amount bridge loan just to meet, you know, seasonal working capital needs.
as our busier periods are in the summer months.
That $4 million was...
Speaker Change: to be repaid by the end of November of this year.
Speaker Change: and we have actually repaid the $4 million early. So that obligation has been satisfied.
Speaker Change: Your reference to working through a waiver with our lender. So that is in relation to a senior leverage ratio covenant that's contained in our
Speaker Change: in our agreement and was not met for Q3. We're in the process of finalizing a waiver. We do not anticipate there being any difficulty in obtaining it.
Speaker Change: But just in the sense that it hasn't been finalized as of today, you know, they're...
Speaker Change: It could always be a chance something we'll not be able to finalize, but we don't expect that. We've maintained good relationships with our lenders, so we have every expectation that we'll finalize that in the very near term.
Speaker Change: Can you remind us what the interest coverage ratio that was tripped needs to be at and then do you foresee any penalty that you need to pay?
Speaker Change: Yes, so on the leverage ratio, the required covenant was 1.75 times. And our original credit agreement, as most do, has stepped down over time.
Speaker Change: You know, as we've said on our prior calls, you know, we are actively looking to...
try and refinance our debt, so we're working through that.
Speaker Change: But obviously 1.75 times, you know, for the current trailing 12-month period.
It's a low bar.
Speaker Change: something that was going to be difficult to clear. You know, as far as the remedies are concerned, you know, in terms of what, you know, a potential waiver will look like, you know, we can't comment on at this time.
Speaker Change: But we don't expect it to be anything that we wouldn't be able to fulfill on our part as an obligation.
Speaker Change: I think we're, you know, as a big picture, I think, you know, the company's been able to pay down a significant amount of debt earlier than anticipated, you know, such that our debt balance is under $40 million, which I think we're
Speaker Change: very pleased with at the moment. So, yeah, to answer your question, I don't think anything, any requirements that might be needed for us to finalize this waiver is gonna be something that the company won't be able to fulfill.
Okay, thank you.
Speaker Change: Once again, if you do have any questions or comments, please press star 1 at this time. Your next question is coming from Jack Vander Aard with Maxim Group. Please pose your question. Your line is live.
Speaker Change: Okay, great. Hey, good to see you guys continue to tame the OpEx line items despite this kind of tough
Speaker Change: tough revenue market for you guys. But thanks for the update and taking my questions. So Dale, you know, historically, I'm just wondering if I can just...
Speaker Change: Get your get get a sense here for Sandy check historically the third quarter has been the seasonally strongest quarter for the company. I know a lot. There's a lot of moving parts involved in the market, but I mean, do you have a line of sight of maybe when you'll see?
Speaker Change: Stabilize sales trends, or are we just still just not at that point yet? Because eventually I want to get a sense of do you have any line of sight of when you may return a year of your growth Just said any color would be would be helpful. Yes
Speaker Change: I think there's multiple answers, I think, Jack. Nice to chat with you.
Speaker Change: One is the Americas and EMEA are really different stories in terms of the trajectory, they're on the same overall.
Speaker Change: cyclical nature of the market, but with different bumps and valleys, as you can imagine. A couple of things about the U.S. market that I think really differentiate
Speaker Change: A lot of our, and you're right, Q3 has traditionally been, and it will be again. We think next year will be a traditional seasonal cluster of revenue. What has changed, I think, this year and to some extent last year was
Speaker Change: That was really driven often in the past by large purchases by a handful of districts.
Speaker Change: these, you know, whopping where people have taken months and quarters to line up their funding, but then they finally get the funding and they say, okay, we're going to spend millions of dollars and we need it all right away. That has not been present this year, largely for the
Speaker Change: for the reasons we talked about before, that the funding is difficult and it takes a lot of time, the bonds are being delayed. That has happened more so this year than any year in the past.
If the public money is there, then the spending happens.
Speaker Change: So I guess the best way to answer your question is that seasonality was particularly, the seasonality deviation was particularly strong this year. That's largely due to overall funding pressure, but especially funding for large initiatives.
Speaker Change: And we see signs for that, both from external sources and from our own conversations with partners.
Speaker Change: already beginning to ease in EMEA and you can see some of our summer markets are up this year and some of them are, for instance, the UK is down single digits, low single digits year-on-year.
Speaker Change: So that's starting to mitigate already. U.S. we expect will happen next year.
Speaker Change: Okay, great. That's helpful, Cutler. I appreciate that. And, you know, maybe it's too early to tell, but, you know, there was a major U.S. election here, obviously, recently. And just wondering, have you thought of – your gross margins have been high. I mean, they've kicked down a bit this quarter, but still they're stronger than historically.
Speaker Change: you know, over the large historical portion of Boxlight's tenure here. So, you know, any thoughts, initial thoughts on just how U.S. tariffs might impact your existing strategy and manufacturing footprint? Just any color there would be helpful if you're thinking about it. Thanks.
Speaker Change: Well, we've dealt with it before, and so it's not an entirely new dynamic for us.
Speaker Change: First of all, no one knows, right, what sort of stuff is going to emanate as a result of the election. I will say this, though.
Speaker Change: Our main suppliers, who are China-based, are well aware of this, as are we. We've been coordinating with them for months about backup plans, about ways to mitigate in the event the...
The tariffs come in really hard and really high.
Speaker Change: and we felt like we're well prepared to deal with that as well as anyone on the market.
Thank you.
Speaker Change: Specifically, it all depends upon, of course, which countries might be affected and what the nature of those tariffs might be.
Speaker Change: But we're not sitting and waiting for them to happen. We're trying to be ahead of it. And with our suppliers, I feel like we are.
Speaker Change: How it affects the school funding stuff, I think, is going to become more of a local and state issue. Maybe then, if you look at the boom that occurred during the pandemic, much of that was driven by large...
macro federal initiatives.
Speaker Change: I think what we're going to see is it's going to go back to being more local and more state. And that's going to be more driven by the demands of the parents, teachers, educators, and so on.
I'm sorry, Greg, did you have something to add?
Greg Wiggins: No, I think I think you covered it Dale. I think them, you know, the main takeaway is
Greg Wiggins: is the fact that we've, you know, our suppliers, you know,
Greg Wiggins: kind of experienced this before, you know, to some magnitude. And so, you know, there's been a lot of preparation, you know, that's gone into you know, what might happen, you know.
Greg Wiggins: that might have happened with the election. So, you know, there's been a lot of advanced planning and certainly something we've been able to, you know, try and get out ahead of with them to, you know, potentially mitigate any negative consequences that may come from it.
Speaker Change: Okay, well, I appreciate the color there, gentlemen. That makes a lot of sense. And maybe just one more for me, kind of more looking down the road here in terms of upside drivers.
Speaker Change: You know, higher education and enterprise have been kind of a smaller piece of Boxlight's kind of historical focus and run rates. But, and I think enterprise has been around 10% of the business, give or take. But you highlight these as long-term growth areas and bright spots. So, Dale, maybe can you just provide any color on the enterprise and higher ed verticals? Just where do these...
Speaker Change: Just your perspective on the opportunities you see and how it may become a bigger focus of BoxLight in the future. Thank you.
Thank you.
Speaker Change: Well, thanks, Jack. First, at a high level, we know there's more meeting rooms, even today, with a hybrid workplace than there are classrooms, right? So, we know that there's lots of places where we're enhanced communication and technology can be deployed.
Speaker Change: And so we know the opportunity, and we also know that there's different buckets of money represented by both higher ed and corporate. And that can be SMB as well as, you know, pure Fortune 1000 companies. It's lacked from a box-like perspective over time.
Speaker Change: in some markets, we haven't had the right mechanisms in place. We haven't had the right dealer relationships and sales relationships in order to really go out and speak to those people effectively. We've spent a lot of time.
walking before we run, but we're methodically building that.
Speaker Change: The other more critical piece is that we have product now that it really matches the needs of enterprise, maybe more exactly than certainly last year. And by that, I mean things that have the sort of built-in conferencing features.
Speaker Change: characterized by our high-end edge panel, which has been responded to very favorably in the market. And we're using as partially a guideline here our business in EMEA. In EMEA, we have somewhere around 20% of our business
that comes from these end customers.
Speaker Change: There are differences in terms of the channel partners we use, but we think that is positive, and we think it has a lot of growth built in, using both our success to date and also what we're learning in the U.S. and building on that.
Speaker Change: We think it's going to be a slow-growth thing. It's not going to be explosive, but we're going to do it methodically. And we think that it isn't as...
Speaker Change: brought on a bit necessarily as K-12. That's going to remain at our core for quite some time because it's kind of really critical to classroom instruction, to interactive classrooms, but we think our upside there is very strong.
Okay, I appreciate the color. I'll hop back into queue.
Speaker Change: Once again, if you do have remaining questions or comments, please press star 1 at this time. You have a follow-up question coming from Brian Kinslinger with Alliance Global Partners. One moment.
Brian Kinslinger: Thanks for taking my follow-up. You talked about pricing pressure as the market is been shrinking and even as it starts to recover.
Brian Kinslinger: Do you see pricing pressure being more pronounced as your competitors as well as yourself try to gain that market share back or do you see pricing pressures easing at any time in the next 12 to 18 months?
Yeah, I...
Go ahead.
Speaker Change: I was going to say, I'll start with an explanation and maybe Dale can jump in. I think we're still seeing it, at least in the short to midterm, as there's competitiveness in a slower industry.
Speaker Change: You know, I think we, you know, we start to see this, you know, stabilize a little more in the longer term, you know, as we start to see the industry return to growth.
Gregory Wiggins, Jeff Stanlis.
I would just be saying the past.
Speaker Change: and this probably predates you guys, but the gross margin of this business was in the high 20s for a while. And so I'm wondering, are we headed back to like 30% range?
Speaker Change: at a sustainable basis, or do you think that's overstating what might happen?
Speaker Change: I think there's going to be downward pressure in the IFPD market.
on certain deals.
Speaker Change: and at certain time frames, and I don't believe that's ever going to go away.
Speaker Change: because the range of products that we're bringing to market, we and our competitors are bringing them.
Speaker Change: market is broadening, right? We're pushing the envelope as these technologies get cheaper to produce and more efficient. We're pushing the downward price entry point and we're pushing the upward price point and performance threshold. We and everyone else. I think the key though
Speaker Change: And we're confident that we can continue to produce better than industry average margins for a couple of reasons. One is by having the...
Speaker Change: By having the experience and the volume that we do with our provider, we're a top five provider of the biggest manufacturer of these devices in the world. We're going to continue to have buying leverage that's going to enable us to get the cost as low as they could be.
Speaker Change: Secondly, we, as well as anyone, understand the tradeoff at some point between price performance and the desired
efficacy of the product and
Speaker Change: Smart buyers who are buying for the second or third time are recognizing that the absolute low end of it doesn't perform the way they need it to perform. It doesn't do everything they need it to do.
Speaker Change: And we work with our customers and our resellers to do that, and the resellers understand it as well as anyone. And the third thing is,
Speaker Change: We are dedicated to the sort of integrated solution aspect of this as opposed to product by product, you know, dollar by dollar. And the way these things work together is going to become increasingly important over time, and our positioning there I think really helps us.
Speaker Change: So, I'm not sure, I don't know for sure, Brian, where the margins for the industry sort of settle out. I think it's going to be an ongoing thing. But we are not...
Speaker Change: We're not resigned to a race to the bottom at all. We think that there's loads of value we can add at every price point that favors us and the outcomes we're providing.
Great. Thank you. Good luck.
Speaker Change: Thank you, everyone. This does conclude our Q&A section of the call. I would now like to turn the floor back over to Dale Strang for any closing remarks.
Dale Strang: Thank you, everyone, for your support and for joining us today. As I indicated, BoxFlight's competitive position continues to improve.
Dale Strang: We're making progress to align our costs with current revenue levels and, despite less than desired visibility, working to position BoxLite to thrive when those market conditions improve.
Dale Strang: With the broadest and deepest offering and industry-leading solutions in several key categories, we're capturing market share today and bolstering our position for the future.
Dale Strang: I am increasingly confident we're on a sustainable path for ultimate success. I'm incredibly proud of the BoxLite team for responding to our industry challenges and operating with both professionalism as well as integrity.
Dale Strang: With that, I'd like to thank you and wish you the best.