Vecima Networks Q3 2023 Earnings Call Transcript

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Provided by Quartr
May 11, 2023

Key Takeaways

  • Record Q3 revenues of $78.3 million, up 54% year-over-year, driven by the Video & Broadband Solutions segment and next-generation Entra products, which more than doubled to $62.7 million.
  • Expanded customer base to 106 broadband service providers from 83 a year ago, including Charter Communications’ selection of ERM3 for a major cable upgrade and a strategic remote Wi-Fi win with Taiwan’s largest cable operator.
  • Maintained market leadership in global DAA, ranking #1 in remote optical line terminals and remote MAC-PHY, while growing share across both cable and fiber access categories.
  • Content Delivery & Storage sales reached $11.8 million (services up 31% YoY), and Telematics delivered 20% sales growth to $1.7 million, tracking over 40,000 assets at a 65% gross margin.
  • Consolidated gross margin dipped to 43.5% due to elevated supply-chain costs and a shift toward higher-volume, lower-margin access products; management expects these headwinds to ease by calendar 2024 and forecasts full-year revenue growth exceeding 50% with a strong long-term outlook in DAA and IPTV markets.
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Earnings Conference Call
Vecima Networks Q3 2023
00:00 / 00:00

There are 5 speakers on the call.

Operator

This is the Chorus Call conference operator. Welcome to the Bessemer Networks Third Quarter Fiscal 2023 Earnings Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. You will hear a tone acknowledging your request.

Operator

Presenting today on behalf of SEMA Networks are Sumit Kumar, President and CEO and Dale Booth, Chief Financial Officer. Today's call will begin with executive commentary on Bessemer's financial and operational performance for the Q3 fiscal 2023 Results. Lastly, the call will finish with a question and answer period for analysts and institutional investors. The press release announcing the company's Q3 fiscal 2023 results as well as a detailed supplemental investor information are posted on Vesema's website at www.vesema.com under the Investor Relations heading. The highlights provided in this call should be understood in conjunction with the company's interim, condensed consolidated financial statements and accompanying notes for the 3 9 months ended March 31, 2023, 2022.

Operator

Certain statements in this conference call and webcast may constitute forward looking statements within the meaning of applicable securities law. All statements, other than statements of historical fact, forward looking statements. These statements include, but are not limited to, statements regarding management's intentions, believes our current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs and operating performance. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward looking statements.

Operator

These factors include, but are not limited to, the current significant general economic uncertainty and credit and financial market volatility, including the impact of COVID-nineteen and the distinctive material impact on or constitute risk factors in respect of Wissima's future financial performance as set forth under the heading Risk Factors in the company's annual information form dated September 22, 2022, a copy of which is available at www.sedar.com. In addition, although the forward looking statements in these earnings calls are based on what management believes are reasonable assumptions. Such assumptions may prove to be incorrect. Consequently, attendees should not place undue reliance on such forward looking statements. In addition, these forward looking statements relate to the date on which they are made.

Operator

Vesema disclaims any intention or obligation to update or revise any forward looking statements as a result of new information, future events or otherwise, except as required by law. At this time, I would like to turn the conference over to Mr. Kumar to proceed with his remarks. Please go ahead.

Speaker 1

Thank you, and welcome, everyone, to our Q3 conference call. With 12 quarters of rapid growth behind us And a remarkable more than 2.5 times rise in run rate revenues in just 2 years, I'm pleased to report that Vessma's strong performance continued in Q3 as we set another high watermark for consolidated sales. Our 3rd quarter revenues climbed an impressive 54% year over year, culminating in new quarterly consolidated sales, a new record of $78,300,000 As we expected, our Video and Broadband Solutions segment And specifically, our next generation Entra products were the primary driver of these results. Entra sales climbed to $62,700,000 during the quarter, more than double what we achieved in the same period last year. This was driven in part by the best quarter yet for our Entra optical products as we supported scale rollouts for broadly funded rural broadband expansions with fiber to the home.

Speaker 1

We also continue to realize strong sales for other Entra family products, including our Remote PHY nodes. Looking at interest sales as a whole, Vessma is clearly benefiting from our industry leading portfolio of DAA, cable and fiber access products, as well as our growing base of customers. Our total customer engagements for Entra grew to 106 broadband service providers worldwide in Q3, up from 83 a year earlier. And we've built up not just a number of relationships, but the depth and breadth of these relationships as well. In many cases, with multiple network rollout programs across multiple product categories in cable and fiber access.

Speaker 1

As an example, during Q3, Charter Communications selected Bessemer to provide our new ERM3 next generation remote PHY devices for their planned cable access network upgrade. We expect our solution will be used for a substantial portion of Charter's footprint wide cable access network upgrade to DAA. We also grew our presence in Asia with a strategic remote Wi Fi win with Taiwan's largest cable operator. As we've expanded our customer base and built volumes, our share of the expanded global market for broadband access has grown as well. Delauro Group, a leading research group in the telecommunications space, recently released its market share calculations for the global DAA market in 2022.

Speaker 1

VESMA was again identified as the global market share leader in 2 key categories, remote optical line terminals and remote MAC5, And our shares grown in other categories as well. Looking at other contributors to our Q3 results, Our Content Delivery and Storage segment generated a solid sales contribution of $11,800,000 in Q3 on strong IPTV demand as well as significant increase in CDS services revenues. The latter was up 31% year over year to a record $5,600,000 in services and CDS. In terms of IPTV expansion activity, 6 of our existing customers undertook network expansions during the quarter, including a top 10 U. S.

Speaker 1

Cable operator. This customer is growing their network footprint to give a larger subscriber base access to state of the art live, on demand and cloud DVR streaming services on the IPTV fabric. Subsequent to the quarter end, we established a new partnership with Kadant, The largest independent platform for advanced TV advertising. Nexmo is partnering with Kadant to use our media scale streaming solution with Kadant's Aperture platform to support and protect existing linear ad revenue as operators migrate to new IPTV platforms. This combination will also create opportunities for incremental dynamically targeted advertising revenue.

Speaker 1

One additional I want to mention is the continued success of our CDS solutions in supporting very large scale live streaming events. During Q3, our IPTV customers streamed the Super Bowl live using our Mediascale platform with network capacity utilization Exceeded all prior peaks in streaming traffic. Not only were these operators able to support a record level of traffic during the game, They did so while maintaining 100 percent uptime and leading video quality. In the process, we continue to demonstrate the robustness and reliability of Esma's streaming solutions at major viewership scales. Turning to our Telematics segment, we achieved an excellent quarter with a 20% year over year increase in sales.

Speaker 1

It was our best quarter to date for movable asset customer wins. We added 60 new customers in all in assets, which combined represent over 300 new subscriptions. And we significantly increased the number of movable assets being monitored to over 40,000 units. That represents a 2 66% increase over a period of 8 Our results are further supported by continued rollout related to recent municipal government win. I should add that telematics also continues to be a highly profitable part of our business with the segment achieving gross margin percentage of 65.1% in the 3rd quarter.

Speaker 1

So it was another quarter of broad execution for Bessemer and that included the bottom line where we grew adjusted EBITDA by 44% year over year $11,700,000 and earnings per share to $0.18 from $0.13 last year. But we also continue to see effects from the shifting landscape in terms of the supply chain and inventory. As you know, we've been highly successful in supporting our customers' network upgrades even in the midst of very demanding and in some cases extreme global supply chain conditions. We've worked diligently to support customer demand and to fulfill large orders despite these major macro issues in the supply chain over the last 2 years. That execution has served to fuel the exceptional growth we've achieved over the past 2 years and also cemented our position as a go to vendor for our customers.

Speaker 1

But it's come with higher materials, freight and logistics costs, which have put pressure on our margins over the same period. In concert with that, as we've indicated before, Different categories of cable and fiber access products carry varied margin profiles. As a larger industry wide DAA rollout ramps, Architecture trends in the marketplace are leading to an expected shift in product mix. We saw the margin impact of this in Q3, as Dale will discuss momentarily, and it influences our forward expectations as well. In addition, we've also begun to see the supply chain landscape start to shift relatively quickly to where supply in the pipeline has temporarily outpaced our customers' ability to physically get some of their installations done.

Speaker 1

The demand for network upgrades remains very strong and the capacity increases are essential. But in some cases, there simply aren't enough workers, trucks, permitting inventory environment. And I'll talk more about how that influences our near term delivery expectations when I return to discuss our outlook in a few minutes. So first, I'll pass the call over to Dale to provide more detail on our financial results. Dale?

Speaker 2

Thank you, Sumit. For the purposes of this call, we assume that everyone has seen our Q3 fiscal 2023 news release, MD and A and financial statements that are posted on Bessemer's website. I will present the relevant numbers and discussions around overall results, Market segments, operational expenses and the balance sheet. Starting with consolidated sales, For the 3 months ended March 31, 2023, we generated record sales of $78,300,000 This was an increase of 54% over the $50,900,000 in Q3 last year and an increase of 3 from the $76,200,000 in Q2 fiscal 2023. The significant year over year increase reflects sharp increase in video and broadband solution sales and the positive foreign exchange impact of a weaker Canadian dollar, partially offset by lower content delivery and storage sales year over year.

Speaker 2

Within the Video and Broadband Solutions segment, we generated sales of $64,800,000 This was up 75% from the $37,000,000 in Q3 last year and 4% higher than the $62,300,000 last quarter as customers continued their transition to next generation networks using Bessemer's solutions as well as our success in meeting our customers' undertaking of large scale DAA fiber access deployments during the quarter. Our Entra next generation DAA products contributed 3rd quarter sales of $62,700,000 Up a significant 104 percent from the $30,800,000 in Q3 fiscal 2022 and up 13% from the 55 were $2,100,000 down 66% from $6,200,000 in Q3 fiscal 2022 and down 68% from $6,500,000 in Q2 fiscal 2023. As expected, Commercial video sales are lower year over year as customers transition to next generation solutions And as a portion of our commercial video solutions become DAA driven and are accounted for as part of Entra family sales. In the Content Delivery and Storage segment, 3rd quarter revenues were $11,800,000 or 6% lower than the $12,500,000 in the prior year quarter and 5% lower than the $12,400,000 in Q2 fiscal 'twenty three. GDS segment sales for the Q3 fiscal 'twenty three period included $6,200,000 of product sales and $5,600,000 of services revenue.

Speaker 2

TDS sales reflects IPTV expansions with 6 existing customers, including a top 10 U. S. Cable operator during the period. As always, we note that quarterly sales variances are typical for the CDS segment. The demand for Vessima's IPTV and Open Caching solutions continues to increase as IPTV customers initiate network expansions And we expect a strong finish for the Content Delivery and Storage segment in the last quarter of fiscal 'twenty three.

Speaker 2

Turning to the Telematics segment, sales of $1,700,000 in the 3rd quarter were 20% higher than the $1,400,000 in Q3 of fiscal 2022 and 8% higher than the $1,500,000 in Q2 last quarter, Reflecting an increase in the customer base and number of assets and tags being monitored in our Telematics segment. Consolidated gross margin for the Q3 was 43.5 percent, down from 47.1% in Q3 fiscal 2022 and 47.3% in Q2 of fiscal 2023. This primarily reflects a different product mix between the periods. Supply chain constraints, including elevated freight and logistics costs, as well as a more volume oriented margin profile profile in our Entra cable and fiber access product lines as the DAA market further scales. We expect in the next several quarters that gross margin will trend slightly below or in the lower end of this range, while elevated expedite costs from past supply chain constraints remain within our cost of goods sold as materials transition from the balance sheet to product deliveries.

Speaker 2

Video and Broadband Solutions gross margin was 41% in the current quarter. This was lower than the 44% in Q3 of last year and the 46% in Q2 last quarter. The VBS gross margin primarily reflects Significantly stronger sales, partially offset by a different product mix with lower margins compared to the prior year period. Gross margin in the Content Delivery and Storage segment increased to 53% from 51% in Q2 last quarter, but down from the 55% in Q3 last year. The year over year change reflects a change in customer and product mix.

Speaker 2

In the Telematics segment, gross margin of 65% in the 3rd quarter was higher than the 63% in Q3 fiscal 'twenty two, lower than the 68% in Q2 fiscal 2023. Turning to 3rd quarter operating expenses, the notable Changes year over year were as follows. R and D expenses increased to $12,100,000 in the 3rd quarter from $8,800,000 in Q3 fiscal 2022 as we continue to invest in research and development to support the launch of new products. The increase reflects hiring of additional R and D employees and higher licensing and prototyping costs And higher amortization, partially offset by an increase in capitalized development costs. Expenses increased to $6,900,000 from $4,700,000 in the same period last year.

Speaker 2

This increase primarily reflects higher staffing as well as an increase in travel and entertainment as COVID-nineteen travel restrictions have lifted. G and A expenses increased to $8,400,000 in the quarter from $6,100,000 in Q3 fiscal 'twenty two, Primarily reflects higher staffing costs, increase in insurance costs and professional fees. Total OpEx in Q3 fiscal 'twenty three increased to $27,900,000 from $19,800,000 during the same period last year. The year over year increase primarily reflects additional operating expenses related to higher sales in the Video and Broadband Solutions segment and associated support costs. I note that reported R and D expense in a period It's typically different than the actual expenditure.

Speaker 2

That's because certain R and D expenditures are deferred until product commercialization. Adjusting for deferrals, amortization of deferred development costs and income tax credits, actual R and D investment for the quarter increased $15,400,000 or 20 percent of sales from $11,500,000 or 23 percent of sales in the same period last this year. The increase reflects higher staffing costs and increased costs for software licensing and prototyping in the current year quarter as our next generation products move closer to commercial deployment. We reported an operating income of $6,100,000 in Q3 fiscal 23 as compared to operating income of $4,100,000 in Q3 fiscal 2022. The increase was primarily due to higher VBS sales, partially offset by a different product mix and increased operating expenses to operate the year over year increases in sales.

Speaker 2

Net income for the quarter, Q3 increased to $4,500,000 or $0.18 per share from 3,000,000 or $0.13 per share in Q3 fiscal 2022. Turning to the balance sheet. We ended the Q3 with $12,300,000 in net bank overdraft compared to $8,100,000 as at the end of the prior quarter. The decrease in cash in the quarter mainly reflects deferred development costs of $6,400,000 capital expenditures of $1,100,000 Dividends paid of $1,300,000 partially offset by positive cash flow from operating activities of $3,800,000 Proceeds from exercise options of $500,000 and net repayment of debt of $300,000 Moving on, our strong working capital position increased to $91,100,000 from $89,100,000 as at the end of the prior quarter. We note that working capital balances can be subject to significant swings from quarter to quarter.

Speaker 2

Our product shipments are lumpy, reflecting the requirements our major customers. Finally, cash provided by operating activities for the Q3 was $3,800,000 As compared to cash flow used in operating activities of $3,900,000 during the same period last year, The $7,700,000 increase in cash provided by operating activities reflects a $4,400,000 increase in cash flow from non cash working capital combined with a $3,300,000 improvement in operating cash flow year over year. I will now turn it back to Sumit.

Speaker 1

Thank you, Dale. Looking at our outlook, we continue to anticipate very strong full year results with revenue growth well exceeding the 50% year over year gain we achieved last year. That said, we also expect some demand variability in Q4 and early fiscal 2024 as customers focus on managing the DAA rollout logistics I mentioned earlier. We also believe that customers build higher than normal run rate working capital balances in response to the supply chain constraints in prior periods, much like the entire global landscape of businesses in every sector all across the supply chain. These influences are likely to lead We'll be working to manage our own supply chain inventories carefully during this period.

Speaker 1

But overall, we expect this to be a relatively short term transition. We expect that deliveries and customer inventories could start to come into better balance as we enter calendar 2024. The rollout of new incremental program wins are set to initiate in the same timeframe, making way for a continued ramp up in customer deliveries In terms of our broader outlook for DAA, our prospects remain excellent. The latest market research updates forecast even higher long term increases in annual capital investments in the Access network. This is essential as service providers worldwide continue to grapple with competitors and invest in their core broadband business to protect and enhance market share, while also expanding their footprints.

Speaker 1

We're exceedingly well positioned in this large and growing market The industry's best portfolio of cable and fiber access products, relationships with 106 of the world's leading operators, Amongst them, a number of the largest globally and a proven suite of IP services and talent to fulfill a once in a lifetime Global Network Technology Evolution. Remember, the industry is in the early stages of DAA adoption and we continue to see significant and long term growth runway ahead for along with year over year and long term sales growth. In our Content Delivery and Storage segment, we expect Demand for our IPTV and open caching solutions will continue to build through Q4. We're anticipating a strong finish to fiscal future growth potential as IPTV continues to gain momentum and newer open caching solutions become an important driver of CDS performance. As we've said previously, our large base of IPTV customers is providing an inbuilt growth platform as operators begin to initiate broader IPTV network expansions, while at the same time we continue to win new business with additional operators.

Speaker 1

Finally, in our telematics business, expect consistent incremental growth from the fleet tracking market and increasing demand for our new removable asset tracking services. Overall, we remain highly confident in our market position and Envestnet's ability to capture the major multiyear opportunities In the compelling DAA and IPTV markets over the long term, we see a very bright future for Besmo. That concludes our formal comments. We'd now be happy to take questions. Operator?

Operator

Thank you. We will now begin the question and answer session for analysts and Institutional Investors. The first question comes from Jim Byrne with Acumen. Please go ahead.

Speaker 3

Yes. Good morning, guys. Thanks for taking my questions. Sumit, maybe I'd just one for you to start. Great color on kind of the short to medium term outlook.

Speaker 3

I'm guessing I just wanted to get a sense of that long term vision, your 2025 outlook. I mean, it still feels like all of that is in place, but maybe Have we shifted maybe 6 to 12 months in that outlook? Maybe just get your thoughts on that.

Speaker 1

Yes. No, thanks, Jim, correct, long term, my outlook remains equal to what it was before that our penetration is increasing. The industry is broadly Scaling in the evolution to 10 gs fiber access rollouts in Greenfield are ramping and cable access rollouts Brownfield are moving to DAA, and we're seeing that across the board and across the industry. So that entirely remains the Our market share has grown. I think we've evidenced that our portfolio is one of the best in the industry, as kind of conveyed And the continued growth in customer engagements and order flow we've had, including some of the largest operators in the world that have selected us.

Speaker 1

But we have some timing lumpiness. That is the nature of the industry. We've had this we've had to go through as an industry and As the entire tech sector has this lumpiness or volatility in the supply chain where we've been working To pursue our backlog and go after the supply chain and we've delivered, that's culminated in this incredible growth we've had quarter after quarter after quarter. But our customers have also had to manage their projects carefully, their large scale programs with infrastructure deployment. And they we're also contending with supply chain outside of what Bessemer is involved in things like Cables and fibers, labor, workforce construction.

Speaker 1

So now that we've opened up, thanks to vendors like Bessemer that have opened up The supply flow for these projects, now it's time to let them wind up on the anticipated Significant growth they have and capacity rollouts through calendar 2024. So a short term period of consuming some of this inventory we've unlocked Tying to calendar 'twenty three, but that's making way for continued averaging this kind of volatility And then carrying on with the long term profile we've always anticipated.

Speaker 3

Sure. And that Kind of feeds into my next question. I think one of your peers competitors on their call was mentioning, I think it was 4 of the top 10 Tier 1 operators are still relatively behind in terms of their deployment of DAA and market expansion. So maybe just get your thoughts on where you guys See that and how does that feed into your long term vision?

Speaker 1

Yes, I think like I said, customers clearly identified the upgrades they want to make And we do expect that we've seen that they haven't been able to go as fast as they would have liked because of the supply chain. Naturally, they When you're talking about labor, construction, permitting, all that, they are not going to ramp that up if they don't see product in the pipeline. And Up until late calendar 'twenty three, product was the critical path and the gate. And We've solved that. So operators are well fueled to move forward.

Speaker 1

I do think that There's some catch up to be done there on the deployment side, but our customers are very strong in their capability and we've

Speaker 3

Okay. And then maybe just last one for me on the margin side. Obviously, some near term pressure on gross margins. When do you ultimately see that improving? Is that Back half of fiscal 'twenty four, I guess that would be, and then that longer term trajectory, I know kind of 20% plus EBITDA margins were something that was is that still long term?

Speaker 1

Yes. It's still in our sights in the long term Going into the EBITDA margin, we've had 20 percent EBITDA margin year to date in fiscal 2023 already. But I've said that we need to continue to invest in As we continue to grow the top line in the long term, so we'll model the business with those targets in mind. I think in terms of some of the residual costs associated with the supply Management, they're still in the system, still in our working capital. So we entered fiscal 2023 expecting to see The COGS headwinds from the supply chain expedites in our margin profile and that has happened.

Speaker 1

But we will continue to see it in calendar 'twenty three to the extent that we still have that in our balance sheet. But as we look to calendar 2024, we also see prospects for that abating in terms of The influence on our COGS. But in parallel and probably more of a factor, I think, is that we've provided this color from the outset On the mix, the product mix, that insofar as certain categories of products related to some of the specific DAA Architectures and cable access, they can carry higher volume, but they can carry a lower gross margin profile. And we as we've said, we always approach the market with this agnostic to the architecture approach and giving all the flexibility to our customers that they need. And we look to manage our operating expenses rather and go after that overall business model, As you mentioned, the EBITDA margin and how we look at that in the long term.

Speaker 1

So we're seeing that play out in the marketplace unlike with these Major Tier 1 wins, cable access products tend to have a more volume oriented profile And the fiber access products have opportunity to be accretive to our margin range. So a lot of it will depend on the In a given period of time and when we have such large scale customers relative to our size, the mix can move around a bit. But on balance, The overall long term view on margins combining cable and fiber access is consistent with what we need to see

Operator

The next question comes from Dave Kams with B. Riley. Please go ahead.

Speaker 4

Thank you. My first question is regarding the current softness that you're seeing. Just wanted to make sure it's not because of market share changes Or your customers are opting for new technology?

Speaker 1

In fact, we've seen, like I said, with the Dolores reporting that our market share has Grown through calendar 2022 and remains very strong in fiber access and in MAC PHY and cable access. And it's been growing in remote PHY and cable access as well. We announced some very important customer wins and I provided some color in terms of that Ramping as we enter calendar 'twenty four, and we see those new programs being reflective of a growing share position for us that It's consistent with everything that's happened so far. So nothing's changed there.

Speaker 4

Got it. And just A couple of questions regarding Charter. When do you expect them to ramp the expected duration? And just wondering if you can kind of quantify the potential revenue?

Speaker 1

Yes. So I'm not going to get too specific on My customers' plans, they've talked publicly about their plans to upgrade the network over the next 3 years. And they're working diligently and effectively and building out the process and the Pipeline to drive that very strong rollout of capability that they plan in And we are working with them in that regard and consistent with their targeted timeline. We expect great things out of customers and their ability to leverage the network that they have, It's very broad and growing network. So we'll be pleased to see them successful as we expect.

Speaker 4

Got it. Just one for Dale, actually a couple of them maybe. Can you talk about CapEx going forward and also stock compensation? How should we think about stock compensation going forward?

Speaker 2

Sure. So on the CapEx side, we had spent on a year to date basis $2,300,000 Q3 was heavy at $1,100,000 of that. We had guided Previously that we would be back end loaded and I would expect that you'll see Q4 probably be Similar or just slightly under what we saw in Q3, and that's Traditionally, that $3,000,000 mark, get to $4,000,000 mark is what we would be spending on our CapEx. And on the was that on our share based comp that on our P and L? Yes.

Speaker 2

So what we're going to see in Q4 is that we did have some PSUs that one tranche had divested During that quarter, so we are going to see approximately $1,400,000 of share compensation in Q4 as a result of Vesting of a PSU that we you make an estimate of when you think that was going to vest and amortize that out When you initially set those PSUs up and this is just pulling it in a little bit early. So we will see A little bit of a spike in that share based compensation in Q4.

Speaker 4

Okay. And lastly on OpEx, are you planning to make any kind of adjustments because of the

Speaker 2

I'll let Sumit discuss that one.

Speaker 1

Yes. So I think as we've said, we've been incrementally growing OpEx and we monitor the EBITDA margin. So we We expect operating expenses to leverage as we continue to grow. And to the extent that we have this transitory period of time where We'll see some softness in calendar 'twenty three. We will be looking to manage the OpEx effectively, but always maintaining our view on the big picture Sure.

Speaker 1

And long term positioning we need with our engineering investments, our sales and marketing investments, and a little bit of our G and A. So we're going to be managing that. But I wouldn't want to color any specific changes at this time.

Speaker 4

Got it. Thank you.

Operator

As there appears to be no further questions, this concludes today's conference call.

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