Q1 2025 Gauzy Ltd Earnings Call
Daniel Scott, Daniel Scott, Daniel Scott, Dan Levy, Michael Nichols, Michael Nichols
Speaker Change: Good morning and welcome to Gossily Missed, First Quartered and Dependent of Five Earnings Conference Call. Today's call is being recorded and we have allocated one hour for Prepared remarks and QA. At this time, I would like to turn the conference over to Dan Scott and the Western Relations. Thank you. You may begin. Thank you very much.
Speaker Change: Thank you, operator, and thank you everyone for joining us today.
Speaker Change: Hosting the call today are Gauzy's CEO and co-founder, Eyal Peso.
and Chief Financial Officer, Meir Peleg.
Speaker Change: On this call, management will be making forward-looking statements, not historical facts, which are based on management's current expectations, beliefs, projections and assumptions.
Many of which, by their nature, are inherently uncertain.
These forward-looking statements are subject to risks and uncertainties.
Speaker Change: Ash Results could differ materially from our forward-looking statements if any of Archaeus expectations
Speaker Change: Would you not undertake any duty to update any forward-looking statements?
Speaker Change: This call contains time-sensitive information that is accurate only as of today, May 13, 2025.
Speaker Change: Acceptors required by law, Gauzy disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.
Speaker Change: Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's first quarter press release for definitional information and reconciliation of historical non-GAAP measures to the comparable financial measures.
With that, let me turn the call over to Eyal.
Nicole: Thank you very much, Dan. Good morning, everyone. Thank you for joining us today as we discuss our first quarter 2025 results.
Speaker Change: For today's call, I'd like you to focus on three key takeaways.
Speaker Change: First, our solid first quarter performance in the face of global uncertainty for our customers, which underscores the strength of our business model and the growing demand for our technologies.
Speaker Change: Second, the significant business milestones we've achieved during the quarter in subsequent to its end that will drive our growth in 2025 and beyond.
Speaker Change: Third, we have signed the first 10 million out of a previously announced 20 million planned debt financing under significantly more favorable terms as compared to our borrowings as a private company.
Speaker Change: And finally, our reaffirmed 2025 guidance supported by strong backlog of purchase orders and enhanced balance sheet.
Speaker Change: We delivered a solid start to the year, despite a two to three-week period in March 2025 of market uncertainty as customers attempted to assess tariff impact and risks.
Speaker Change: Revenue Growth in the Automotive and Safety Tech Divisions was offset by some timing shifts in deliveries in the Arrow and Architecture Divisions, which we expect to revert to a more normal cadence across the balance of the year.
Speaker Change: This view is supported by the records spike in the backlog of purchase orders to be shipped in the next few months.
Speaker Change: We're excited to execute against the backlog after a quarter in which we demonstrated our ability to deliver significant gross margin expansion as we accelerate revenues into the back half of 2025.
Speaker Change: Now, let me highlight some of the key business milestones we achieved during the first quarter and subsequent period.
Speaker Change: On our last call, we told you about our new Black SPD smart lab technology introduced at CES, our partnership with Jornail to enhance London's 8,500 bus fleet with ADAS, our partnership with Umbrella to enhance ADAS for customers such as Ford Tracks.
Speaker Change: and our FMCSA exemption renewal to accelerate adoption of ADAS in commercial vehicles across the US.
I'll now focus my comments on three recent announcements.
Speaker Change: First, we announced that Air France KLM Group has selected our advanced shading system for the new La Première First Class seats in the Boeing 777 aircraft.
Speaker Change: The five window suites represent a significant opportunity in the airline-shading market valued at $600 million annually with 6.4% projected growth through 2028.
Speaker Change: Gauzy has captured over 95% of the cockpit-shading market and works with OEMs, including Editing Embryer on the jet, Daher and others.
Speaker Change: The double-plated system allows passengers to choose between translucent and blackout settings while providing centralized control for crew members. This is another example of our goal of transferring our cockpit-shading success to cabin applications.
Speaker Change: Second, we announce that Mercedes-Benz has implemented our smart lab technologies in 75% of the glazing in the new Vision V show car which premiered in the Auto Show in Shanghai 2025.
Speaker Change: This marks Mercedes-Benz's first use of Gauzy's dual technology windows, combining SPD and PDLC for enhanced shading, privacy, and digital application. Mercedes previously used SPD in its Magic Sky Control.
Speaker Change: In Division V, these technologies allowed transitions between transparent, shaded, and private states while creating projection surfaces.
Speaker Change: The solution reduces glare and cabin temperature while maintaining visibility. A segmented PDLC partition provides flexible privacy between cabins.
Speaker Change: And, importantly, today we're excited to announce the ramp-up of shipments for the sewer production of the Cadillac Celesteak EV with four-zone SPD suns, marking the continuation of business with GM.
Speaker Change: Before I turn it over to Matt I want to emphasize that our backlog of purchase orders, which was below $31 million at year end 2024 expanded almost $36 million at the end of March indicative of the strong continued demand for our products.
Speaker Change: As a reminder, purchase order backlog represents orders we have in hand and expect to ship in the next few months the entire Galaxy organization is excited to deliver on this tremendous momentum.
Speaker Change: With that I will turn it over to me for an update on <unk> financial results.
Eyal Peso: Thank you Eyal.
Eyal Peso: I'd like to begin by providing a detailed overview of our first quarter FY 'twenty five financial results, which highlight the strength of our customer relationships and the fast improvement in operational efficiency as we progress towards our long term financial objectives.
Eyal Peso: For the first quarter, we generated revenues of $22 4 million compared to $24 7 million at prior year periods.
Eyal Peso: We saw growth in both automotive and safety tech as compared to prior year periods.
Eyal Peso: This was offset by Arrow and architecture, where we experience a momentary pause towards the end of the quarter as customers sake, chairman any potential tariff impacts.
Eyal Peso: Importantly, we so no cancellations and in certain cases by the end of the quarter and subsequent to its end customers place orders above their contractual minimums.
Eyal Peso: Even with the revenue dynamics, our gross margin increased to 25, 6% compared to 25, 1% in the prior year period.
Eyal Peso: This 50 basis points expansion was primarily the result of improved operational efficiencies, which continues our progress towards profitability.
Eyal Peso: Total operating expenses for the first quarter were $14 4 million down 9% compared to $15 8 million in the prior year quarter.
Eyal Peso: This decrease was mainly due to lower R&D, G&A and sales and marketing expenses, partially offset by higher D&A.
Eyal Peso: Adjusted EBITDA in the quarter was negative $5 5 million compared to a negative $4 8 million is the prior year quarter.
Eyal Peso: This decrease was primarily driven by the factors already scottsville gross profit and operating expenses.
Eyal Peso: Now turning to our segments, because as starting with safety Tech.
Eyal Peso: Revenue in this segment was $10 8 million in the first quarter.
Eyal Peso: One 5% compared to $10 7 million is the prior year quarter.
Eyal Peso: The growth was driven by continued demand across the segments product lines.
Eyal Peso: Margin improved dramatically to 19, 7% compared to 12, 8% in the prior year period, primarily due to the benefits of scale.
Eyal Peso: Aero revenue was $7 6 million in the first quarter of 24, 6% compared with $10 1 million in the prior year quarter.
Eyal Peso: Gross margin was 33, 9% compared to 44, 1%.
Eyal Peso: <unk> period this decline reflects momentary pause.
Eyal Peso: Customers talking Germany, any potential tariff impact and the resulting shifting of some shipments secondly quarter.
Eyal Peso: In architecture.
Eyal Peso: Revenue was two 4 million in the first quarter down eight 2% compared to $2 6 million in the prior year quarter.
Eyal Peso: As we have said before I could ever revenues can be particularly lumpy throughout the year, though this quarter was also impacted by macro uncertainties similar to what I just discussed in Aero.
Eyal Peso: Gross margin expanded to 32, 1% up from 48, 9% is the prior year period, using it primarily by the benefit of scale and operational efficiencies.
Eyal Peso: You know what the motive revenue was $1 5 million is the first quarter compared to $1 3 million is the prior year quarter.
Eyal Peso: The dramatic gross margin improvement, we delivered is aligned with the broader operational improvements we are making of course ghazi.
Eyal Peso: We expect our automotive segment to continue showing improved results at 125 is our new programs with major Oems begin to ramp up as well as the beginning of risk in serial production wins.
Eyal Peso: Turning to our balance sheet and liquidity position. We ended the quarter was total liquidity of $36 2 million, including $1 2 million of cash and cash equities and 35 million of available capacity under our Undrawn credit line.
Eyal Peso: Total debt at quarter end was $37 3 million, including $12 5 billion of short term receivables financing.
Eyal Peso: In terms of cash flow our first quarter results included cash used in operating activities of 0.6 million a significant improvement from a use of $6 9 million is the prior year period.
Eyal Peso: The result was free cash flow of negative $2 3 million compared to negative 8.4 million is if I E quarter.
Eyal Peso: We're excited today to announce that subsequent to quarter end, we signed a new 10 million debt facility was exactly the third largest bank in Israel.
Eyal Peso: This is important because it's the first step in securing it all over $20 million of debt financing as previously announced.
Eyal Peso: We have obtained his dad financing under a much more favorable terms as compared to our pre IPO lending facility.
Eyal Peso: The improvement includes 370 basis point interest rate reduction no prepay prepayment penalties.
Eyal Peso: This increased liquidity enhances the working capital, which in turn supports our full year goals.
Eyal Peso: I'm also pleased to announce that we are reiterating our guidance for full year 2025.
Eyal Peso: We continue to expect revenue to be in the range of $130 million to $140 million, representing more than 30% growth at the midpoint compared with words windfall.
Eyal Peso: The benefit of scale favorable operating leverage and strong recurring revenue base. If we have also reaffirmed adjusted EBITDA to be positive for the full year <unk> fine.
Eyal Peso: Given our typical seasonality and latest visibility into our end markets. We expect the second half to be stronger than the first half and drive a full year growth and profitability.
Eyal Peso: This guidance reflects the strong demand, we're seeing across all of our segments. The growing adoption of our technology by a leading Oems and an expanded production capacity, we're putting in place to meet this demand.
Speaker Change: Now I will turn it back over to al for closing remarks.
Speaker Change: Thank you man.
Speaker Change: As we look across the balance of 2025, we remain incredibly excited about the opportunities in front of us even with the uncertainty in the market the momentum in our business continues to build direct impact from tariffs on <unk> has been minimal and customer purchase orders remain strong.
Speaker Change: We're excited for what this year holds for us the resilience of our long term backlog growing pipeline of innovation and enhanced liquidity position with our new debt facility reinforced our confidence in our growth trajectory.
Speaker Change: We will continue investing in innovation, expanding our leadership in light envision control technologies.
Speaker Change: Our future product roadmap includes promising developments across all four business divisions that we expect to accelerate adoption and expand our market.
Speaker Change: Operationally, we're focused on scaling efficiently balancing growth with margin expansion and progress towards profitability.
Speaker Change: We remain well positioned to deliver our reiterated 2025 guidance accelerating growth and deliver outstanding values.
Speaker Change: In closing I want to express my gratitude to our employees customers partners and shareholders for their continued support and confidence in reality.
Speaker Change: Thank you for your time today now we will open up the line for questions.
Speaker Change: Okay.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: And if you wish to ask a question. Please press star and one on your telephone keypad and wait for your name to be announced.
Speaker Change: Once again star one if you wish to ask a question.
Speaker Change: These standby, while we compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: And we now have our first question. This comes from Dan Levy from Barclays. Your line is now open. Please go ahead.
Dan Levy: Hi, Good morning, Thank you for taking the questions.
Dan Levy: Wanted to first just start with a question.
Dan Levy: The cadence and I appreciate the commentary that.
Dan Levy: There were some delays in architecture aerospace and <unk>.
Dan Levy: Second happened.
Dan Levy: More.
Dan Levy: It's going to be stronger than the first half, but what's the line of sight on second quarter.
Dan Levy: And what's the line of sight on converting that.
Dan Levy: Backlog order book that you have into firm rather you should we expect a sharp step up in the second quarter of <unk>.
Dan Levy: Quarter over quarter.
Dan Levy: Hi, Dan This is Dave.
Dan Levy: Thanks for joining and thanks for the question.
Dan Levy: It's not always the end basically yes, I think that if you look.
Dan Levy: We look at what we have reported shipping in Q1, and then add that to our.
Dan Levy: Yes.
Dan Levy: In the in the backlog to be shipped soon so yes, you should expect.
Dan Levy: <unk> you should expect you to be Q2 to always as always but also to be.
Dan Levy: As strong as as expected and we iterate and reaffirmed the guidance for the full year right now mid Q2.
Dan Levy: Because even though.
Dan Levy: Last two weeks the last three weeks of March there was some hesitancy among.
Dan Levy: Among customers.
Dan Levy: Bye.
Dan Levy: Matters of shipments, where theyre going to be any tariffs, let's just wait and see and if you remember second of April was liberation day, wherein there was determination about that but there's a lot of question.
And you know some hesitation in March but nothing affected the business. It's important for me to say this again and again nothing affected the real business is all there we had no cancellations no. It's it's a little bit of push in the last two weeks of March there was a lot of and.
Dan Levy: The uncertainty is.
Dan Levy: Especially with things that are just you know are ready for shipment and okay. Just wait wait a second maybe we'll ship it from here ship it from there.
Dan Levy: So U S customers, so, but all the businesses, there and where you know more.
Dan Levy: More than anything you'd like to say that the cadence right now within Q2, and the bulk and the P. O is that we have now to ship it exactly if not better than what we saw.
Dan Levy: In late December or beginning of 'twenty five so thats why were very confident.
Dan Levy: That we're getting out we're going to deliver on our guidance for the full year.
Speaker Change: Okay. Thank you.
Dan Levy: The second.
Dan Levy: If we could just go into the free cash flow so.
Dan Levy: Thank you.
Dan Levy: You did EBITDA roughly negative five negative $6 million, but the free cash flow with substantially better. So could you just talk about what the <unk>.
Dan Levy: Offsets were is it onetime.
Dan Levy: I'm benefit.
Dan Levy: On working capital.
Dan Levy: Reversals, there and how sustainable that is.
Mary: So as you can see good morning first to Mary.
Mary: As you can see in the cash flow the main I would say it impacts on the cash flow.
Mary: The working capital Okay.
Mary: All right.
Mary: It is timely okay, but it's it it comes from a strong and continuous and working on the on the cash management improving for instance, our payment terms with suppliers financing invoices, which gives us a cash.
Mary: Cash much more fast and then be able to.
Mary: To improve our cash flow, although growing in general the working capital.
Mary: I'd like to maybe add to that debt.
Mary: A big part of this and we should expect that throughout the year towards being cash flow positive. In 2006 is is that every 30 days that we can get.
Mary: From our suppliers net 30 to net 60 or cash in advance of net 30, a net 60 to net 90.
Mary: It gives us.
Mary: And while we're factoring about 80% of our invoicing they get their voices today. It gives us a much a much more healthy inflow outflow of cash and that's a big big focus for this year.
Mary: Four.
Mary: For a while where it's still factoring.
Mary: So that also has a big effect on the improvement in operating cash flow for this quarter.
Mary: Okay. Thanks, if I could just squeeze in one more what's the line of sight on that additional $10 million.
Mary: Financing that you're that you've talked to.
Mary: So it's basically.
Mary: <unk> signed up it's all site between signing and closing there are a few a few deliverables that.
Mary: We need to we need to provide like a you know liens, but.
Mary: I see no theres no a riskier it's going on.
Mary: Hopefully.
Mary: Even this week, maybe next week, but it's really it's done its a done deal. If that's the question that it thought.
Speaker Change: There is no.
Mary: No maybe here.
Mary: Oh, you're talking about $70 million I'm, sorry, sorry, sorry.
Mary: Yes, My second time, sorry about that.
Mary: The second 10.
Speaker Change: Again, I don't want to give a I would only give a commitment that then.
Mary: It looks like guidance, but it should be.
Mary: We're trying our best to do it.
Speaker Change: Sign that off even.
Mary: If not before Q2.
Speaker Change: Somewhere and.
Early Q3, we don't have.
Speaker Change: We don't have that signed off but Thats My my my expectation.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you and the next question comes from Josh Nichols from B Riley Securities. Your line is now open. Please go ahead and ask your question.
Speaker Change: Hi, This is Matthew on for Josh Nichols, Thanks for taking my questions I guess to start off.
Speaker Change: <unk> on the macro uncertainty that caused a hiccup in Q1.
Speaker Change: Did you say, it's just mainly off of peak uncertainty on the race day and from there things just looked more smoothly in terms of orders and timing or what should we look out for in terms of possible.
Speaker Change: Additional hiccups in the future.
Josh Nichols: Hi, Josh is Oh.
Josh Nichols: Thanks for the question. So I went out and we don't want to say it is just again loud and clear there is no effect.
Josh Nichols: The real business and Galaxy Bye bye.
Josh Nichols: By the tariff, but if you if you put yourself as a production company importing into or that its products are imported into the U S. In March.
Josh Nichols: There was simply a lot of patients and a lot of question marks.
Josh Nichols: Where do I take this product from even a Boeing where they are cockpit shade is manufacturer that the only arrow product, we're actually manufacturing for U S customer outside the U S had no issues.
Josh Nichols: You know if you have enough inventory Hugh you can just.
Josh Nichols: Wait a minute maybe I won't be taking this from France, maybe we'll just wait to see what's going to be the actual tariff that was only on the second of April so im saying.
Josh Nichols: Hesitation caused some delays, but if you just add up what we have reported shipped.
Josh Nichols: And then and recognize it for US recognition remember is the approval of the customer added site. Many times of our products. So that has to be shipped even though it was ready. If you just look at what we had finished goods at 31 March if you add that to our reported revenues and our <unk> in the system, which really were reported to the spike of about more.
Josh Nichols: And then you have more than $5 million.
Josh Nichols: Youre looking at together with the end.
Josh Nichols: End of March about 60 about a little bit a little bit shy of $60 million.
Josh Nichols: That had been shipped or is going to be here very soon.
Josh Nichols: So I'd like to say again. This is this is Wilson hesitation, but we had.
Josh Nichols: Reported mid April.
About a week after separation day that it had minimal effect to our business to no effect and today, we can say.
Josh Nichols: With much more confidence that it's mostly mostly we get exempt.
Josh Nichols: Because of different reasons so.
Josh Nichols: We're in a much better place. So it's just that there was a little bit hesitation and that's that's what caused some shifting any shifts in timing of delivery, but nothing at all as changed from our overall.
Josh Nichols: Hum.
Josh Nichols: Business.
Josh Nichols: We have reported we're going to do this year.
Josh Nichols: Actually in some cases, we had increases we had customers ordering more than expected.
Josh Nichols: That had nothing to do with the U S. Specifically in other places around the world.
Josh Nichols: I'm very.
Josh Nichols: Confident that youre going to see.
Josh Nichols: You're going to see our guidance mix.
Josh Nichols: Throughout the year. This is why we're not also giving quarterly guidance its hard for us to be accurate. These kind of events for extreme but it comes together, but within our full year. Even these events are kind of washed away and so while reiterating here reaffirming our guidance for the full year.
Speaker Change: Got it very helpful and regarding the large spike in purchase orders.
Speaker Change: Segment would you say is getting most of those orders or what is the split there.
Speaker Change: Yes, there was a backlog I think we have a.
Speaker Change: Very good.
Speaker Change: It's a very good mix of.
Speaker Change: $15 $5 million is Aero just to show that you know, yes. It was.
Speaker Change: With Q to Q1 last year, and so you're going to see a difference.
Speaker Change: $5 million, but it's all of the deal is it's all there it's all going to be shipped in Q2 and Q3 Q4, it's all in the book. So there is no. There is no no issue that there was another 17, I think our $18 million of safety Tech.
Speaker Change: Which we're experiencing the.
Speaker Change: Significant growth, we expected, but even more.
Speaker Change: In some cases.
Speaker Change: So we know that these are the main two I think we had about.
Speaker Change: Quite quite extraordinary.
Speaker Change: $6 million of.
Speaker Change: <unk>.
Speaker Change: Some of it really was already manufactured just not recognized in Q1, so it's still a P O.
Speaker Change: In the backlog, but it's really.
Speaker Change: So we have about $6 million in automotive, which is quite unique we have a very good visibility.
Speaker Change: So the smart glass portion of the.
Speaker Change: All of our business in automotive.
Speaker Change: Also announced that we have.
Speaker Change: For the first time by name GM, the calix less exciting to ramp up its production this year.
Speaker Change: Reported to start shipping cars very very soon to their customers.
Speaker Change: So I mean, so I think that's the takeaway from from the backlog.
Speaker Change: And the rest is architecture.
Speaker Change: Two to appoint a $2 million.
Speaker Change: P O four architecture to be shipped.
Speaker Change: Well April May if you look at end of March.
Speaker Change: Got it thank you and I guess last one for me, it's somewhat of a related question.
Speaker Change: I guess to get to the to your guide a full year EBITDA.
Speaker Change: <unk> ability or to get a positive on that side.
Speaker Change: What would you say is.
Speaker Change: In terms of segments or maybe even proud.
Speaker Change: Products that you're most excited about what do you see getting you there.
Speaker Change: So what would.
Speaker Change: What would contribute.
Speaker Change: What will contribute to the EBITDA positive.
Speaker Change: Just to see if I understood. The question if I'm looking now.
Speaker Change: Towards that.
Speaker Change: For the full year, what would be the contributor of the EBITDA positive that we have guided for the full year 'twenty five.
Speaker Change: I think that you know just.
Speaker Change: Very easy to.
Speaker Change: I'd say just bridge Q4, I'd say just people bridge.
Speaker Change: So you see that if we double for Q4.
Speaker Change: $125 million for the year, we're guiding on a midpoint $10 million more and we're now reaffirming it.
Speaker Change: And you see if we if we hit numbers like Q4, let's say on average for the full year. We're in a gross margin of 50% and arrow we're on.
Speaker Change: Healthy 20, plus and in safety Tech.
Speaker Change: Bigger portions of the business if you see what we're doing in auto I know, it's small numbers and its insignificant, but it's even harder to jump 16 points per quarter every quarter when youre only doing ship.
Speaker Change: Shipping 1 million and a half or 2 million 3 million kind of.
Speaker Change: Cadence of quarters, but we're doing it because we're working very closely with the Oems to improve yield.
Speaker Change: So I mean I mean, we're.
Speaker Change: I would say that.
Speaker Change: It's going to come it's going to come every every business division has its own <unk>.
Speaker Change: Contribution, but as long as we meet topline and we're now reaffirming that for arrow.
Speaker Change: Going to have a huge impact on our gross margin because every dollar up on top line is improving our gross margin significantly.
Speaker Change: Same with <unk>, if you see the comparison between Q1 and Q1, 12% to 19% and gross margin shows you.
Speaker Change: How well we have improved.
Speaker Change: Our cost of sales of bill of materials, because the big contributor this quarter for safety Tech.
Speaker Change: Is my vision to is our Adas product.
Speaker Change: Which traditionally had lower.
Speaker Change: Gross margin, but we have improved that significantly so.
Speaker Change: I'd say I'd say I'd say they are just a few bridge Q4, you look at the gross margins there, that's where that's where our EBITDA is going to be coming from we're very very disciplined opex. If you see our opex in <unk> in Q1.
Speaker Change: Where we're at.
Speaker Change: As we targeted as we budgeted and.
Speaker Change: We're going to be very very careful.
Speaker Change: With our expenses to make sure that we're.
Speaker Change: Our guidance is going to be met and.
Speaker Change: And and and.
Any way ended up positive for the full year.
Speaker Change:
Is the guidance.
Speaker Change: Got it thanks, those really helpful that was it for me.
Speaker Change: Thank you once again for those who want to ask a question. Please press star and one on your telephone keypad and wait for your name to be announced.
Speaker Change: Star N one part question and.
Speaker Change: The next question comes from the time of Kelly from.
Speaker Change: TD Cowen Your line is now open. Please go ahead.
Speaker Change: Great. Thank you good morning, everybody I.
Speaker Change: I just had two follow ups.
Speaker Change: First maybe to pick up off the last question, maybe you could just talk a little bit about what you expect for <unk>.
Speaker Change: Opex directionally in the rest of the year as it did come down in Q1, just curious how you're thinking about that for the rest of 2025.
Speaker Change: Hi, good morning, Thanks for the question, but.
Speaker Change: It was a little bit breaking off in the beginning of the question can you can you just repeat.
Speaker Change: I'm sorry, yes, so sorry about that yes. So just hoping to hear me now just maybe you could comment a bit more on what you expect for Opex. The rest of the EIC to come down in Q1, just curious how youre thinking about that for the rest of the year.
Speaker Change: Okay got it so I think you should see a very steady opex.
Speaker Change: And as I say.
Speaker Change: Bob on my last answer is that.
Speaker Change: We're going to be very very disciplined in our Opex I mean, we are we have a.
Speaker Change: A big portion of that kind of.
Speaker Change: Set.
Speaker Change: For the year, there are things, we need to do to be able to ship.
Speaker Change: If it's 135 on midpoint of the guidance or more and but we're going to be very very careful.
Speaker Change: I think I think I think it shows four in Q in Q1.
Speaker Change: On any any expense.
Speaker Change: To make sure that we keep that guidance of EBIT positive for the full year intact.
Speaker Change: We have setup, we have setup.
SG&A.
Speaker Change: <unk> structure, beginning of the year to support to support.
Speaker Change: Much much bigger quarters throughout the year. So what would you see on Opex in Q1 is that of what will support also.
Speaker Change: And as always our strongest quarter.
Speaker Change: Four in a much stronger quarter in Q2. So that's that's already set so you should should consider the opex in Q1 as the base for <unk> as a base for the full year.
Speaker Change: For the full year guidance matter that beds as they are.
Speaker Change: I've said it.
Speaker Change: More or less will be stable at the same as Q1, a bit more mainly in sales and marketing to support the growth, but you should expect.
Speaker Change: About.
Speaker Change: The same opex that would be higher than in Q1.
Speaker Change: While sales and marketing sometimes goes up.
Speaker Change: You have to pay.
Speaker Change: Chose for in the numbers being commissions and things like that but yet, but where we are.
Speaker Change: Yes.
Speaker Change: Importantly.
Speaker Change: Little bit higher but mainly per se.
Speaker Change: The marketing and it's.
Speaker Change: Just a high numbers there.
Speaker Change: Terrific.
Speaker Change: Helpful. Thank you and then as a follow up as your revenue grows in next three quarters to towards your guidance. How should we think about working capital Youre able to actually released a fair amount this quarter in Q1, but as revenue grows is there more opportunity in working capital or could actually become a use as you support growth.
Speaker Change: So as I said before of.
Speaker Change: Of course, when the business is growing the working capital grows as well and he was the need of cash is also growing but in order to too.
Speaker Change: Two phases, we're doing continuous work in order to better our payment terms with suppliers and that's part of you can see in Q1 results. In addition, we are financing.
Speaker Change: Working to to increases to other locations, where financing part of our invoices in order to make the cycle of its working capital much faster. So of course, when growing the working capital will grow as well, but we are trying to reduce this grows by what.
Speaker Change: What I, just mentioned and any time I would like to add to that just for the sake of everyone very quickly but.
Speaker Change: A very simple math equation, if gal E.
Speaker Change: Let's say just.
Speaker Change: $24 million to $25 million of our sales.
Speaker Change: A quarter or a $30 million of sales like Q4 that means cash in factoring 80% financing invoices 80, 85%. So that that is like eight to seven to 10, that's a $7 million to $10 million cash in every 30 days.
Speaker Change: It just just think of if I, if we if we and that's a big part of it like if we push if we get the health of our suppliers to get another 30 days on their net net 30 make it <unk> make a net 90, if we just averaged better on supplies rooms net 30, that's working capital of eight 910.
Speaker Change: Of cash for our working capital every month. So that's how you should think about improving cash operating cash flow.
Speaker Change: It seems easy its not easy but that's.
Speaker Change: Very simple.
Speaker Change: Shift 30 days that how much influence it has on where he got but thats what were.
Speaker Change: So that's our main target for there is a big target for us.
Speaker Change: I wanted to add that we don't expect 25 to be a.
Positive free cash flow, Okay, we only expect that in towards 26. So we just wanted to understand that we are doing.
Speaker Change: We will have a negative free cash flow in 2005.
Speaker Change: Absolutely that's all very helpful. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you and no further questions that came through at this time.
Speaker Change: I will turn the call over to <unk>.
Speaker Change: El Paso for closing remarks. Please go ahead Sir.
So thank you very much for joining us today, and we look forward to future discussions and announcements to update you on our progress have a great rest of your day. Thank you everyone.
Speaker Change: Thank you. This concludes our conference call for today. Thank you all for participating you may now disconnect.
Speaker Change: Yes.
Speaker Change: Yeah.