Q4 2024 Allot Ltd Earnings Call
Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to our last fourth quarter, 2024 results conference call.
Speaker Change: Predictions cannot guarantee that they will start to come.
Speaker Change: That does not assume any obligation to update that information actual events or results may differ materially from those projected.
Speaker Change: Of changing market trends.
Speaker Change: It's evidenced by the customers.
Speaker Change: Houston bonds.
Speaker Change: That's the nature of the securities services industry as well as other risks identified.
Speaker Change: In the documents filed by the company with the Securities and Exchange Commission.
Speaker Change: Also about yourselves in this call will be protected mainly on a non-GAAP basis.
Speaker Change: I believe that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand.
Speaker Change: Operating performance in the quarter.
Speaker Change: All the data.
Speaker Change: So that's a natural tables published in the results press release issued earlier today, which also include the GAAP to non-GAAP financial reconciliation tables.
Y'all Harare: With that I would now like to hand, the call over to Y'all Harare.
Speaker Change: Please go ahead, thank you Kenny.
Speaker Change: I would like to welcome all of you well results conference call.
Speaker Change: Thank you for joining us today.
Speaker Change: We are very pleased to report strong fourth quarter and full year 'twenty 'twenty four weeks out.
Speaker Change: Demonstrating this I know you.
Speaker Change: Do you think the key inflection point you need to turn around.
Speaker Change: Our fourth quarter revenues increased both year over year.
Speaker Change: Representing the return to revenue growth.
Speaker Change: For the full year 'twenty 'twenty four we bolted revenues.
Speaker Change: Similar levels to those of last year.
Speaker Change: A strong contributor to revenues was our growth engine the security as a service solution seek us.
Speaker Change: She couldn't be growing sequentially and year over year.
Speaker Change: Sure.
Speaker Change: For the full year seacoast contributed revenues of $16 5 million.
Speaker Change: 6% over the previous year.
Speaker Change: You then was $18 2 million up 43% year over year.
Speaker Change: We bought the gross margin back to download wrongdoing range of around 70%.
Speaker Change: You should keep the recovery.
Speaker Change: 57% in 2023.
Speaker Change: Our research shows that return to profitability with the non-GAAP net income of $5 6 million for the year versus a loss of 53 million last year.
Speaker Change: Importantly, both as positive cash flow generation for the first time in several years generating full union in 2024.
Speaker Change: As a result, our cash position decreased from $59 million positive trend, which we expect to continue going forward.
Speaker Change: I would very much like a fantastic team.
Speaker Change: For their hard work last year supporting in bringing about the successful journey.
Speaker Change: I admire the determination and dedication which was key in achieving the strong results of 2024.
Speaker Change: I'm incredibly proud of what we have accomplished together and I look forward to building, we'll do some momentum.
Speaker Change: Years ahead.
Speaker Change: Our security first strategy.
Speaker Change: Go to market focus are gaining strong traction and momentum.
Speaker Change: A recent highlight was securing significant new contracts, which included major telecom operators in key markets.
Speaker Change: I'm, especially excited with our recent wins because of Ireland, which I will elaborate on in a few of them.
Speaker Change: Thanks.
Speaker Change: I loved continues to gain strong traction among the telcos and fewer skus.
Speaker Change: As we work closely with them to market, our cyber security solution and help their end consumers.
Speaker Change: Our solutions.
Speaker Change: The continued successful because it demonstrates that consumers and small businesses appreciate the importance of being seriously and fully protected by just service provider.
As we move through 'twenty 'twenty, five and continue to successfully advance our security first strategy and also is well positioned and very much at the inflection point of a new long term trend of growth and profitability.
Speaker Change: Good day or a small product line you sold as part of our unified security business structure.
Speaker Change: It is a solid product.
Speaker Change: Excellent technology and use of innovation and it continues to provide significant revenue.
Speaker Change: Looking ahead, we expect to save the lives of the revenue from all those small product line during the coming year.
Speaker Change: While these product lines long term disability is less predictable than I would.
Speaker Change: Cyclical decline, we have a solid pipeline and it went to 25 and we believe there is a potential for upside.
Speaker Change: Now moving to go over this law was close engine I wouldn't see Crystal city.
Speaker Change: Although she cause revenue continued to grow contributing to an increasing share of our business as each quarter passes.
Speaker Change: Looking ahead to 'twenty to 'twenty five we expect another year of strong double digit seek us revenue growth and improved profitability.
Gross would be driven largely by our extensive and growing list of top tier customers launching our solution as well as the increased traction of our security solution and won the subscriber bases of those customers.
Speaker Change: We have a strong pipeline of opportunities that we have.
Speaker Change: Walk in on some of which we hope to convert to new contracts in the coming quarters.
Speaker Change: To demonstrate the growing momentum and strong construction I want to highlight a few examples of recent service provider lunches you know it was because of the business.
We were very happy to announce the signing of the new agreement between the last thing, but I've done business.
Speaker Change: We support them with cyber security solution for the mobile phone business customers we.
Speaker Change: We are thoughtful bother with Verizon one of the largest and most prestige wireless provider in the United States and the world.
Speaker Change: Since late 2022 with partners, who have been excellent to provide them with a nickel based cyber security protection to Iceland business fixed wireless access customers using $1 5 million subscriber the option to use all of the seventies.
Speaker Change: This service has experienced strong adoption over the past year and continue to grow and want the Verizon business customer base.
Speaker Change: This new agreement makes all solution potentially available to the extended the Hudson business mobile customer base is the 2020 full year and the Hudson business reported over 30 million subscribers, representing significant targeted the rest of the market and long term growth opportunity for allot.
Speaker Change: Although the Netflix video product, we support Verizon business extend security capabilities offering customers zero touch protection from a wide range of cyber threats.
Speaker Change: We have built a solid strong royalties relationship with Verizon business and we hope to extend our collaboration we then further over the coming years.
Speaker Change: In November we announced a new contract with Vodafone UK and our relationship with them continues to grow.
Speaker Change: Together, we launched a protection so there'll be some fixed broadband customers.
Speaker Change: Complementing the cyber security protection do you already provide mobile customer at all.
Speaker Change: So in their little services.
Speaker Change: Our solution enhances stressed protection close blips, Vodafone UK mobile and broadband networks and cost.
Speaker Change: Customer devices on their home network.
Speaker Change: And the only a few bonds since launch although solution has gained strong traction and notably Greece customer satisfaction and Vodafone UK.
Speaker Change: Last month's Ot, Czech Republic Boston.
Speaker Change: Group.
Launched a cyber security solutions for both mobile and fixed broadband customers, followed by I love to go and execute.
Speaker Change: Oh to use now this is something that I thought you'd be at school to deploy security solution.
Speaker Change: Further strengthening our footprint, we see in the group.
Speaker Change: Last quarter I discussed the organizational structure instructed your full year goals.
Speaker Change: I will recap our strategy, especially for new investors.
Speaker Change: A lot is becoming security first company operating under one unified business unit.
Speaker Change: Our foundation is deep expertise and proven capabilities, combining two key areas cyber security and network intelligence.
Speaker Change: Been walking holiday levels ex synergies between all of us using that called intelligent assay.
Speaker Change: As a security offering.
Speaker Change: You did make a cloud based solution focused on network visibility traffic management and cyber security for the five Giga era.
Speaker Change: The combination creates a compelling value proposition, enabling us to deliver the highly differentiated fully integrated solution.
Speaker Change: One is the only handful of companies worldwide.
Speaker Change: Mitch.
For example, you see strong values and also the CSP customers.
Speaker Change: Additionally network intelligence customers a combined offering.
Speaker Change: And hence the ability to protect networks, while maintaining deep visibility into traffic.
Speaker Change: So I've been threats are constantly expanding and finding new ways to take advantage of the consumer.
Speaker Change: We're looking to stay ahead of those stretched by broadening our security offering to offer the 360 degree cyber security protection, both on and off next.
Speaker Change: Today telco customers can seamlessly provide cyber security to end users was connected to their networks.
Speaker Change: Our vision is that our customers will be able to provide consumer protection at all times whatever the network they choose to use.
Speaker Change: Our product and R&D teams are constantly walking the walk.
Speaker Change: Within our security as a service offering looking to it ever growing value to our customers who choose our solution maintaining its unique value proposition.
Speaker Change: We'd always strong market presence expanding portfolio of innovative solution and agility in meeting customer needs, we are well positioned to win new customers, but also.
Speaker Change: To expand within our existing customer base.
Speaker Change: This brings me to our customer centers of go to market approach.
Speaker Change: We have structured the organization to better support evolving customer demands.
Speaker Change: Marketing and sales team now we have a regional focus on sales and customer success empowering them to function effectively while enabling a more personalized approach.
Speaker Change: We believe this new structure is already creating opportunities for us expanding our installed base and attracting new customers.
Speaker Change: In summary, we are pleased with our performance in 'twenty 'twenty four.
Call me and 19 in a strong full smoker, we gathered did you see cause some revenue and our growth and the positive profits and cash flow.
Speaker Change: It is clear that the loyalty is a key inflection point of all six of our goals.
Speaker Change: Our first full suitable year when they know about basis in a very long time.
Speaker Change: Our security offering continues to gain momentum.
Speaker Change: This is demonstrated by recent new contract wins and so these launches with leading customers.
Speaker Change: Our unified security strategy, integrating cybersecurity and network intelligence differentiates us in the market delivering fully integrated solution, it's widening and enhance value for both existing and new customers.
Speaker Change: Looking ahead to 'twenty to 'twenty five we remain focused on advancing our strategy and executing on another year of double digit revenue and they are all growth and improved profitability.
Speaker Change: I'm increasingly optimistic about the expanding opportunities ahead.
Speaker Change: And now I would like to hand, it over to our CFO, you're asking a home for the financial summary.
Speaker Change: You got please go ahead.
Speaker Change: Thanks.
Speaker Change: We reported revenue of $24 $9 million in the quarter.
Speaker Change: So Chris Santy I'll be here for.
Speaker Change: For 'twenty 'twenty, four we posted revenues of $92.2 million.
Speaker Change: Just 1% below those of 2022.
Speaker Change: Revenue from Argos engine, Sekos were $4.8 million in the quarter in line with our expectations and 40.
Speaker Change: 49% year over year.
Comprising 19% of our revenue in the quarter.
Speaker Change: Our speakers for any of our recurring revenues as of December 'twenty, 'twenty, four or $18.2 million.
Speaker Change: I will now discuss the non-GAAP financial measures.
Speaker Change: All our financial results, including the GAAP financial measures and the various other breakdowns of our revenue.
Speaker Change: Please refer to the table in our results press release.
Speaker Change: Our non-GAAP gross margin in the quarter was 69.7% a significant improvement from 51, 7% in the fourth quarter of last year.
Speaker Change: For the full year gross margin dramatically improved to 17.6% versus 59, 6% last year.
Speaker Change: One of the non-GAAP gross margin depends on the specific product mix sold in the quarter, our expectation for gross margin in the coming year is in the range of 70%, we reduced expenses considerably over the past year, we've been non-GAAP opex at $15.6 million.
Speaker Change: 47% below those of fourth quarter of last year.
2024, Opex was $64.4 million versus $111 million in 2023.
Speaker Change: A lot of pets 500 than four full time employees as of December 20 plentiful.
Speaker Change: We reported non-GAAP operating income of $1.8 million, which is a significant improvement compared with a non-GAAP operating loss of $17 million in Q4 of last year.
Speaker Change: 'twenty 'twenty fall, we had thought that the non-GAAP operating income of zero point $6 million versus $55 million non-GAAP operating loss in 2023.
Speaker Change: In terms of its non-GAAP Tonight coffee, we reported $12 million in the call. Okay Alright.
Speaker Change: Or a profit of five cents per diluted share.
Speaker Change: Compared with a non-GAAP net loss of $16.5 million or a loss of 43 cents per basic share in the fourth quarter of last year.
Speaker Change: Sorry, 'twenty 'twenty four we thought that the non-GAAP net income of one 6 million dollar or four cents per diluted share that says and non-GAAP net loss of $53.3 million or a loss of one point to $41 per share in 2012.
Speaker Change: P T.
Speaker Change: Well, a part that positive operating cash flow in the fourth quarter of 4.1 million dollar and a positive operating cash flow of $4.8 million in 2024.
Speaker Change: Sorry from bank deposits and investments as of December 31st 2024.
Speaker Change: 58.8 million dollar there.
Speaker Change: This $54 $8 million as of year end 2023.
Speaker Change: That ends my summary, and Yale and myself would now be happy to take your questions.
Speaker Change: Thank you ladies and gentlemen at this time, we will begin the question and answer session. You will have a question. Please press star one if you wish to cancel your request. Please press star two if you are using speaker equipment kind of with the handset before pressing the numbers.
Speaker Change: <unk> will be pulp in the order. They are received please standby while we poll for your questions.
Speaker Change: The first question is from <unk>.
Chuck G: I'll Chuck G of Northland Capital markets. Please go ahead.
Chuck G: Alright, Thank you hey, congrats on the strong free cash flow generation for the quarter.
Chuck G: What would you say, it's a driver of that.
Chuck G: Thank you and the house.
Chuck G: Yeah.
Chuck G: We did see continuous close them they seek us and it's mainly based on that.
Chuck G: Or do you think.
Chuck G: Because customer base as well as the new announcement of new service since launch.
Chuck G: We mentioned, we the customers like Vodafone, Neil and Oh too.
Chuck G: Obviously, some of the or one.
Chuck G: One of the most exciting to document the vote for Iceland.
Chuck G: Yeah, it's something we definitely contribute more.
Chuck G: And FICO scores in the future, but is not yet contributing to these schools or numbers.
Chuck G: We see that the the growth engine.
Chuck G: Is there.
Chuck G: Do you think the growth we expect as the boats that we didn't really counts, we need new services within the existing accounts and expanding the adoption of the N customers within the existing services with existing homes. So all of them are walking didn't go all distribution and growth in beef.
Chuck G: Supposed to get into his new role.
Chuck G: Very nice goes we feel.
Okay.
Chuck G: Hmm.
Chuck G: So I did notice that you know within the revenue segmentation provided.
Chuck G: Support and maintenance was up almost 4 million QQ.
Chuck G: That's the.
Chuck G: What are the biggest amounts like taken a long time, what was the driver of that increase was this basically the new customers that were being on boarded.
Chuck G: Support and maintenance is mainly based on all of the small decline is the secrecy is a software model and does not support does not provide any.
Chuck G: So both the maintenance revenue reason is due to Q4.
Chuck G: The catch up on support and maintenance agreement.
Chuck G: Typically end up do you have a very strong year.
Chuck G: Yes.
Chuck G: Strong who's out there in a similar level to what we had last year.
Chuck G: I see okay.
Speaker Change: You all.
Chuck G: Agreement that we manage to do.
Chuck G: Leveraging the end of the year or two.
I'm doing that.
Chuck G: So in terms of like this catch up it was actually a positive cash flow contributor, though it wasn't just simply an accounting reflection.
Chuck G: No no.
Chuck G: The older but you will see that increase that a little business alumni support and maintenance.
Chuck G: Gross cash and value.
Chuck G: Got it okay.
Chuck G: And then product revenue that was down 55% year over year.
Chuck G: Why is that.
Chuck G: Well, we get can you repeat the question.
Chuck G: Product revenue was $4 8 million for the December quarter, I believe that was down 55% year over year why why is it down so much.
Chuck G: That's going to take it.
Chuck G: Yeah sure. So as we stated it also in previous quarters.
Chuck G: Rather meal, which is may be D I b.
Chuck G: Can fluctuate between quarters.
Chuck G: And it really depends on them.
Chuck G: In each cohort.
Chuck G: In general we can say that of course as you can see.
Chuck G: Each quarter, the sneak past, whereas with you percentage out of the total is increasing.
Chuck G: And therefore, you know what he thinks about the rest of the percentages, but overall it really depends on this because theyre just seasonality and yeah.
Chuck G: Yeah I large.
Chuck G: Okay Alright.
Chuck G: So.
Chuck G: Because we'd be.
Chuck G: Looking at the December quarter year over year trajectory as an indicator of how things are going to go for calendar 'twenty five in terms of the product revenue or is that more a reflection of the lumpiness and how would you suggest thinking about product revenue starting in calendar 'twenty five mm.
Chuck G: So I believe that there's like I've mentioned in my previous people do love the small product line as you know it's harder to predict.
Chuck G: And it can fluctuate between quarters seem to get there. The current ball thing is it is a good baseline.
Chuck G: What we see is what we all want consistent and are going is on the if I'm to seek us well this should continue.
Chuck G: Continue to grow in high double digit rates.
Chuck G: And we expect similar level of for a.
Chuck G: Small business to continue with the less visibility, which means that there could be an upside.
Chuck G: Due to some.
Chuck G: Yeah.
Chuck G: In times like these when we have but on a quarterly level.
Chuck G: They're still fluctuate.
Chuck G: This is normally calling either.
Speaker Change: Yeah understood and then when you say seed has continued to grow in high double digit rates.
Chuck G:
Chuck G: I mean, that's high double digit mean loving per cent or do you mean like more like you know 30 plus percent like what you have been doing.
Chuck G: This year, we were doing.
Chuck G: 40% to 50% and we our goal is to maintain this.
Chuck G: Success, it's a little depends on the adoption of the survey along those are new wins, we've had and continue to execute well and win new accounts.
Chuck G: If we look on the on the recent announcement, we made around perhaps in earlier.
Chuck G: It could be amazing.
Chuck G: The opportunity for us to really scale those.
Chuck G: Security service offering.
Chuck G: Millions of customers.
Chuck G: The pace is really hard to predict because its always depends not only on us but.
Chuck G: On the service providers the channel.
Chuck G: But definitely we have all day.
Chuck G: We don't do recent wins, we have are really well positioned to keep simulators.
Chuck G: Rates and we are targeting to continue to work and execute well to maintain it in the next years to come.
Chuck G: Got it and then when you talked about this a.
Chuck G: Verizon business mobile Internet security offering.
Chuck G: They have 30 million customers a is that base, they're growing and then b.
Do you have a sense as to what are the gross adds for that portion of Verizon business versus their fix wires wireless access that I believe has been feeding largely our 1 billion per quarter incremental air RNC Cas.
Chuck G: Yeah, so the the mobile industry as a whole doesn't grow much as opposed to the SWA, which is a niche that is growing.
Chuck G: I believe we can look into this as a stable installed base.
Chuck G: But there is.
Speaker Change: Pamela suite 30 million customers who's now.
Speaker Change: The option to join our cyber protection services.
Speaker Change: And I think this is definitely a very significant opportunity for us.
Speaker Change: We just announced.
Speaker Change: On this new service, we don't have it.
Speaker Change: Yes, the boutiques on the attach rates and that of course, it's a lot.
Speaker Change: It depends on how Verizon will market to their customers, we are walking them different go to market strategies.
Speaker Change: But.
Speaker Change: Because a lot of sepsis today is only $1 5 billion lines and you were talking about 30 million devices and I think it's not only about this new service. It's also very important.
Speaker Change: Cement our relationship with Verizon and then shows their satisfaction fully formed.
Speaker Change: The solution that they want to expand outside the protection in all of your customers.
Speaker Change: And we are going to work closely with them.
Speaker Change: I'm sure there will be like that for more of a solution and hopefully we have.
Speaker Change: No that'll be says, we can potentially tap and protect moved those customers to move to services produces really extracting good.
Speaker Change: Could you review for us.
Speaker Change: Okay.
Have a sense as far as what is the rate of gross adds for that 30 million base I mean, there's a churn rate and so with a stable base, there's usually some churn and I think that's a good use for it.
Speaker Change: Exercises.
Speaker Change: 30 million these even further.
Speaker Change: He married and you say if I can.
Speaker Change: Sharing formation under financials that.
Speaker Change: You can view, but it's quite stable base and the question is now how to market. These new add on that would be used to their customer.
Speaker Change: The.
Speaker Change: And not necessarily just I'm, assuming would compete in the space over the replacement completely space.
Speaker Change: Okay Alright.
Speaker Change: And then.
Speaker Change: You know you are into muscle are offered a December quarter was $1 million versus the September quarter being $2 6 million.
Speaker Change: So and I realize it's a September quarter was a record quarter unusual quarter, but can you just go over the drivers of that.
Speaker Change: Down in the incremental <unk>.
Speaker Change: So as he mentioned incrementally on all counts by winning new accounts and launching new services and adoption, we do the services Donald.
Speaker Change: It's not linear glows because once we introduce new service and it does create some.
Speaker Change: Gross and for example, there.
Speaker Change: Last quarter, we announced when Theyre at Vodafone and that.
Speaker Change: Th Samsung extraordinary gross for the quarter.
Speaker Change: Yeah.
Speaker Change: So.
Speaker Change: Nothing specific that the molded thinking shale well.
Speaker Change: We don't expect to see steady growth, we still woke, we'd love Chanos telcos as the channels and the.
Speaker Change: Opportunities are relative to the big so it's been some quarter, we could see accelerated bulls and some and more modest but the overall, where we're looking to.
Speaker Change: And it keeps strong double digit growth rate.
Speaker Change: And just to be clear is that means that the December quarter. It did not have any material new customer launches or segments within those customers.
Speaker Change: And won't just happened and they will contribute only in Q1 for example.
Speaker Change: So he's always the timing when you launch the service live on old customers, then you need to add the customers now.
Speaker Change: Depends on campaigns.
Speaker Change: Mary's offering good.
Speaker Change: Different campaigns to increase the attach rate you can put us in an uptake.
Speaker Change: A lot of moving parts evil.
Speaker Change: And because we were welcomed we'd love channels.
Speaker Change: Yeah, sometimes you know if you ever promotion, we did significant customer dispute.
Speaker Change: The.
Speaker Change: First the increase in the quarter in that.
Speaker Change: A few other areas.
Speaker Change: And smoke if you expect it to be.
Speaker Change: You know, Steve the growth quarter over quarter.
Speaker Change: Okay, Alright, I realize I've asked a lot questions here I do you have more questions, but I'll give others a chance to ask a question. So I'll just get back into queue here. Thank you.
Neil: Thank you Neil.
Neil: Okay.
Neil: Darren.
Neil: The next question.
Speaker Change: The next question is a follow up question from Chuck She Niihau. Please go ahead.
Neil: Alright, guys. Thanks.
Neil: So just a few more cleanups here.
Neil: So gross margin ticked down 200 basis points Q O Q to $69 seven per cent I presume that that's a product revenue driven is that correct.
Neil: Yes, correct. Our gross margin is that dependent on product mix than we had been comping up.
Neil: Or that's what they said.
Neil: In the quarter.
Neil: Okay.
Neil: What gives you confidence that it was product mix as opposed to potentially some new elements of pricing pressure on the products.
Neil: No I think that there you saw the improvement to Europe, we had a tremendous.
Neil: Tremendous turnaround and we go to the.
Neil: 70% range.
Neil: You can still change it it's likely between the quarters, but this is a when you usually live with the numbers that we are expecting to be in the seventies.
And long term, we expect this to further improve with scale and with more customers.
Neil: No weapon culture is coming from the few cause that in general the Italian gross margin by nature. Because this is a service as opposed to the small product line that is sometimes and I will close the complements.
Neil: No.
Neil: I would say that when you usually level, we expect to see a similar gross margin with some improvement over the time, we close end.
Neil: Moving from revenue between.
Neil: Yeah.
Neil: The pullback there.
Neil: Revenues into this because revenue.
Neil: Okay. So are you seeing said buying to make back into their markets are.
Neil: What's the what are you seeing on the competitive front from a smart product line.
Neil: We don't prefer to.
Speaker Change: Equivalent on competition, obviously, we are there.
Speaker Change: And we believe we have a good product and then we have a strong pipeline for our product.
Speaker Change: We continue to work with their multiple existing and new customers and potential expansions, we're not trying to grow into a low mileage and they're doing so well I suppose.
Speaker Change: The real focus is on the ideal customers and.
Speaker Change: Yeah.
Speaker Change: Some of it can be a 32 hour business.
Speaker Change: Yeah.
Speaker Change: And there is a good solution and I wish them the best and we are continuing to make all of them. Most focus on data security first strategy, which is anyhow.
Speaker Change: We are facing new competitors in your market and this is where most of our airports.
Speaker Change: That's great and then Opex for the quarter was $15 6 million on a non-GAAP basis flat to requeue.
Speaker Change: Does it make sense for a lot to start to now invest in opex.
Speaker Change: The security as a service is driving the growth here.
I actually think this is in both and pushing us.
Speaker Change: I believe that what we.
Speaker Change: We do these theories mainly focused on the internal transformation.
Believe now we have the good fundamental model to allow us to be well positioned for the next year growth.
Speaker Change: We changed we focus on some area and we are looking to further grow over over the time.
Speaker Change: The growth is.
Speaker Change: It's going to be mainly driving more.
Speaker Change: This meant towards ours and.
Speaker Change: Most engines both on the go to market side and R&D on the coming few quarters. I believe you can see the see some of the savings.
Speaker Change: Palo Verde two cycles in your investments so I would say that overall in the numbers to be sluggish.
Speaker Change: Increase still holds.
Speaker Change: Part of the year.
Speaker Change: Okay.
Speaker Change: Great.
Speaker Change: I think that's everything all our Oh actually you know one other thing.
Speaker Change: Hey, Al you mentioned that you're looking to broaden your security offering can you detail a little bit more on how you're going to do that.
Speaker Change: So we are walking than investing R&D around universities like views.
Speaker Change: Uh huh.
Speaker Change: I mentioned in my previous comment one of the most important Paul philosophy is to see how we can make sure that the customer is always secured.
Speaker Change: As providing security for the network side.
Speaker Change: Providing excellent protection for the customer while he's on the Smith well once we identified that some of the operators are looking to see how they can extend it securely to huge also to win the customer is often and this is an area. We are trying to.
Speaker Change: Bringing new innovation.
Speaker Change: This is an area we infusion that we can provide more value how we can still.
Speaker Change: Well make the customer to the network security protection, while the customer is now all needs lifestyle there.
Nicholas: Nicholas This is not the service provider. Once this is creaky called full there.
Speaker Change: CST is to improve their customer data.
Speaker Change: Tension and satisfaction and we are walking in some.
Speaker Change: And I guess, one piece direction, which will share later in the year. Once we are getting closer to product launch.
Speaker Change: Got to be clear at this point in time be.
Speaker Change:
Speaker Change: Telecom customers provide the off network security protection through a third party a security product.
Speaker Change: That is not necessarily as well integrated as what you're basically envisioning here.
Speaker Change: Yes.
Speaker Change: Got it okay.
Speaker Change: Very good thank you very much Cynthia.
Speaker Change: The next question is from David Cannon of Cannon wealth management. Please go ahead.
David Cannon: Hi, guys. Thanks for taking my questions and congratulations.
Speaker Change: I know that.
Speaker Change: In the last Ah segment, you were asked about attachment and you kind of took a pass on that but could you address it a different way, possibly like with horizon.
Speaker Change: Based on turning on other carriers in the past what kind of attachment could you get and then is this done primarily.
Speaker Change: At the point of activation when somebody upgrades their phone longer they subscribe for new service for me.
Speaker Change: You know, we're turning it on or activating a is that typically when neighborhood uptake for security. Thank you.
Speaker Change: Yeah.
Speaker Change: Turning to David So it really depends on the go to market of the <unk>.
Speaker Change: All of the CSB and there are many.
Speaker Change: Considerations, which depends because they also need to as an opt in or opt out obviously definitely affect our attach rates.
Different operators choose a different way some of them are really trying to.
Speaker Change: Combined with we do selling the new service and typically you do need the compelling event.
Speaker Change: Two.
Speaker Change: To make the customer will join your servicing fees changing is the plan.
Speaker Change: Device.
Speaker Change: Join me there.
Speaker Change: So at least I would say that based on past experience, we don't worry till we see it at its peak, we get close to 50% attach rates.
Speaker Change: Typically if you ultimately cause he's doing a.
Speaker Change: Decent job and taken strategically.
Speaker Change: 15% to 20% definitely.
Speaker Change: Yeah.
Speaker Change: Everage attachments Oh for customers.
Speaker Change: And then.
Speaker Change: Maybe based on how they are positioning.
Speaker Change: And then if they'd add on you know what.
Speaker Change: It's usually a slow uptake if we'd been opened up it's much faster because it's bundled with a package than.
We grow with a package that is attached and so on and so on so.
Different Mexico to Stu to see but some of this statistic we shared in the past.
Speaker Change: Sue the.
Speaker Change: Documents get close to 50% and average I believe is around 15 20, 25% really use your bill go.
Speaker Change: Okay. Thank you for explaining that and then if I could ask a question about your D. P. I legacy business with the troubles that plan by has.
Speaker Change: That's right.
Speaker Change: And then you have some upgrades and integration with you.
Speaker Change: New offering do you expect for 2025 that this is a business that could actually start growing, albeit modestly or it's something that we'll continue to contract.
Speaker Change: Oh, it's a micro.
Speaker Change: Because ivanka I mentioned, we are looking to our best estimate is to have similar level. If you ask me, where there could be an upside.
Speaker Change: Definitely I think there could be an upside.
Speaker Change: It's really depends on who we knew very Newport.
Speaker Change: New projects and the timing of the revenue, we do see more opportunities.
Speaker Change: In the pipeline based on our engagement with customers, we do invest in that.
Speaker Change: Yeah.
Speaker Change: And part of the change will move into huge in the structure.
Speaker Change: This is a small market focus and more engagement with the customers that we see that generally like the summer.
Speaker Change: Nice opportunities in the five times, but this being said predictability of this business is it's much lower.
Speaker Change: These abilities there is different because we.
Speaker Change: No.
Speaker Change: Non recurrent business and it really depends on when the projects don't want.
Speaker Change: So currently.
Speaker Change: And we actually make similar levels, but there could be an upside.
Speaker Change: Based on some customer success.
Speaker Change: It depends on the scale of the largest food.
Speaker Change: I hope this okay.
Speaker Change: Yeah. That's helpful. The way you answered it and then last question is in your prepared remarks, you said something like we have a strong pipeline that we expect to convert and I believe you were referring to see past. So are you are you, indicating that you have been.
Speaker Change: <unk> pipeline of C class.
Speaker Change: Prospective C pass some customers are similar to.
Meanwhile, in Verizon and a large Japanese carrier recently landed is this incremental and could you give us a little more color on that and quantify it and maybe what the tenders there.
Speaker Change: So the comment was a generic and we have a mix of opportunities both on the free cups for new services within our existing customers we have.
Speaker Change: Ill speak us potential.
Speaker Change: Potential customers, we have also new smile with potential customers and then I think we are starting the year very well positioned.
Speaker Change: Yeah.
Speaker Change: Strong too to address those opportunities.
Speaker Change: And then nothing more that thank goodness Adam at this point.
Speaker Change: Okay. Thank you wish you well.
Speaker Change: Forward to Jonathan border.
Jonathan: Thank you David.
Speaker Change: Okay.
Speaker Change: There are no further questions at this time. This concludes our question and answer session. Thank you for joining us the recording will be available on the website. You may go ahead and disconnect.
Speaker Change: [music].