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spk03: Good afternoon. Welcome to Airgain's fourth quarter and full year 2022 earnings conference call. My name is Shamali, and I will be your coordinator for today's call. Joining us for today's call are Airgain's president and CEO, Jacob Suen, and CFO, Michael Eldaz. As a reminder, this call will be recorded and made available for replay via a link found in the investor relations section of Airgain's website at www.airgain.com. Following management's prepared remarks, the call will be open for questions from Airgain's sell-side analysts. I caution listeners that during this call, Airgain management will be making forward-looking statements about future events and Airgain's business strategy and future financial and operating performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the carcenary statements contained in today's earnings release and Ergain's SEC filings. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 9th, 2023. Ergain undertakes no obligation to revise or update any forward-looking statements to reflect the events or circumstances after the date of this conference call. In addition, This conference call may include a discussion of non-GAAP financial measures. Please see today's earnings release for further details, including a reconciliation of the GAAP to non-GAAP results. Now, I'd like to turn the call over to our CEO, Jacob Suen. Jacob?
spk02: Thank you, Operator. Welcome, everyone, and thank you for joining us today. For today's call, I will first cover our operational highlights and achievements for Q4 in 2022. Then I will hand it over to Michael to walk you through our financial performance for the fourth quarter and full year. Afterwards, I will provide an update on our strategic product and marketing initiatives and then share our 2023 outlook before opening the call for questions. As you saw from our earnings release, the fourth quarter was another record sales quarter at $19.9 million, up 4% sequentially and 41% year-over-year, bringing our fiscal year sales to $75.9 million. This annual sales milestone reflects an 18% year-over-year increase driven by solid contribution from our enterprise market which accounted for $10 million in the quarter. Our strong results in the enterprise vertical were driven by higher Wi-Fi access points and industrial IoT sales, both vectors that we expect to continue through 2023. Overall, our financial performance in 2022 and solid balance sheet coupled with our expanding product offerings, will enable us to successfully mitigate the near-term headwinds we are experiencing in our current quarter, while positioning our company for even greater success in 2023. A key financial highlight for the fourth quarter was the record sales contribution from the enterprise market. Success came as we capitalize on our expanding backlog, video surveillance as a service offering, and so growth from the connected EV charging market. With market forces driving adoption in these key industries, AirGain has adeptly capitalized by offering solutions and expertise to meet the strong demand to bring products to market quickly. In the quarter, we secure several opportunities in both new and existing markets, further supporting our strategic move into IoT. Now that we have reorganized our sales team around verticals instead of product lines, our teams are gaining traction in cross-selling and upselling new and existing customers.
spk01: In addition,
spk02: We recently partnered with one of the leading European IoT network providers to connect our asset tracking devices for a best-in-class solution. This allows Airgain to bundle connectivity with our asset tracking customers across Europe, the Middle East, and Africa, as well as within the US. This strategic partnership gives Airgain added global reach and capabilities for future IoT projects globally. On the automotive front, our focus continues to be on the aftermarket and first responder segments. Though we saw significant interest in improved coverage within the first responder market, the adoption rate of our HPE product was slower than anticipated due to the limitations of the total offering. With that, we're transitioning the AirGain Connect platform to the next generation product, taking key learnings from the previous product. We are working with the customers on our latest vehicle networking trials and look forward to providing superior connectivity to a broadening set of customers. We find the demand for improved fleet connectivity to be stronger than ever. influencing the speed of our transition our consumer vertical experienced a slight step back quarter over quarter in q4 a trend that we expect to continue in q1 due to a combination of seasonality and demand softness from supply shortage in technology transitions seasonality It's a historical trend we have seen and communicated in the past and is typically made up for in the latter quarters of the year. However, supply chain issues have caused many of our customers to delay development in order to transition directly from Wi-Fi 6 to Wi-Fi 7. Though softness in market-wide chipsets and excessive inventory play their role in Q4, On a year-over-year basis, we reported a 160% increase from the $2.5 million in 2021 to the $6.5 million in 2022. Recently, we announced that AirGames embedded antennas were selected to power the Wi-Fi 6-based VR AirBridge by D-Link Corporation, which allows PC gamers who use their VR headset without the hassle of a cable or Wi-Fi router. AIGN's custom design, testing, and optimization services simplify the delivery of enhanced signal in challenging environments as we showcase our Wi-Fi 6 capabilities in a data-rich setting like gaming. Continuing with consumer, our increased focus on the development of new products and solutions over the last few years is beginning to bear fruit. We have built relationships over the years with service providers that now have even greater reason to turn to Airgame for solutions to their needs. Exciting developments in 5G connectivity have opened the door for more solutions-based offerings, and we have commenced trials on major U.S. operator networks. In a sense, our step into new markets is ushered in by established long-term relationships. Our commitment to being a systems company and our emerging leadership in 5G has opened market avenues in high growth verticals. With the recent introduction of our Lighthouse smart repeaters, we are streamlining our end-to-end 5G development that includes fixed wireless access, repeaters, and enterprise software management solutions. This transition from exclusively component design to full systems targeted as service providers increases our serviceable available market, or SEM, by $7.2 billion. As we mentioned last quarter, we have identified three key differentiators Ergen has in relation to the market in our competition. First, our core competency has always been simplifying wireless connectivity. Second, we provide a breadth of product line that spans across the entire value chain, whether a customer is trying to solve a connectivity issue in a product design or in an operating environment. The third is Eragon's focus on high-growth technologies, particularly in reference to our RF expertise. These three differentiators continue to shape our approach to addressing the market in developing solutions that meet our customers' needs. Moving forward, we are laser focused on executing the roadmap we have put into motion, and I look forward to providing updates on our programs in future quarters. With that, I'll turn the call over to Michael. Michael.
spk04: Thank you, Jacob. Before diving into the numbers, please note that my review of our financial results and guidance refers to non-GAAP figures. Information about the non-GAAP financial measures, including GAAP to non-GAAP reconciliations, are found in our earnings release. Now let's turn to this quarter's results. Ergen delivered a quarter of strong sales and cash flows. As Jacob mentioned, Q4 sales were $19.9 million within our guidance range of $19.7 to $21.1 million. Our sales grew 4% sequentially, driven by a strong performance in our enterprise market. Enterprise sales were $10 million, which increased sequentially by $3.2 million on higher shipments of our industrial IoT and Wi-Fi access products. Automotive sales were $3.4 million, reflecting a sequential decrease of $1.7 million. Consumer sales totaled $6.5 million, reflecting a sequential decrease of $0.8 million. Q4 gross margin was 30.5%, as we recorded a one-time $1.1 million inventory charge related to our ACHPUE product. This non-cash charge was primarily due to excess inventory as we transition our focus to our next generation of AirGainConnect product. In addition, we recognize higher than expected purchase price variances during the quarter. These purchase price variances or PPVs generated from prior chorus purchases of enterprise components at higher market costs due to supply chain shortages. As we had higher than expected enterprise product shipments, these PPVs negatively impacted our gross margin. Net of the ACHPUE inventory charge and the PPV releases our gross margin would have been 39%, in line with the midpoint of our guidance range. Q4 operating expenses totaled $7.2 million, lower than our guidance of $7.4 million, primarily due to tight expense management while we prioritize our focus on our engineering programs. As a result, our Q4 adjusted EBITDA was negative $0.9 million, and non-GAAP EPS was negative 11 cents. Excluding the ACHPUE inventory charge of $1.1 million, adjusted EBITDA and non-GAAP EPS would have been positive. Our cash balance as of December 31st was $11.9 million. 30% higher sequentially, driven by working capital improvements. Day sales outstanding, or DSOs, for the quarter was 40, the lowest DSO result we experienced in the past two years. Net inventory was $4.2 million, $5.1 million lower sequentially. Net of the ACHPE excess inventory charge our inventory balance declined across all of our product lines. On a fiscal year basis, our sales totaled $75.9 million, $11.6 million, or 18% higher year-over-year. Enterprise sales increased $7.1 million, driven by higher sales of industrial IoT and Wi-Fi access products. Automotive sales grew $5 million on higher aftermarket sales. Consumer sales declined by $.5 million, resulting from the global supply shortage we experienced last year. Fiscal year 22 gross margin was 37.6%, 180 basis points lower than the prior year driven by the ACHPUE inventory charge in Q2 of 2022, and an unfavorable sales mix on lower year-over-year consumer sales. Fiscal year 22 operating expenses totaled $29.1 million, 5% higher year-over-year on conservative expense management. Adjusted EBITDA at $.1 million was slightly positive for fiscal year 22, compared to a negative $2 million in the prior year. Now, moving to our outlook for the first quarter ending March 31, 2023. We expect sales to be in the range of $15.7 and $17.3 million, or $16.5 million at the midpoint of the range. We expect gross margin for the first quarter to be in the range of 37.5% to 40.5%. We project our expenses to be approximately $7 million. Adjusted EBITDA is expected to be negative $4 million at the midpoint of our guidance range. NUM.EPS is expected to be negative $0.06 at the midpoint of our guidance range. Now, I would like to turn the call back over to Jacob, who will walk us through our product and marketing initiatives. Jacob?
spk02: Thanks, Michael. With our transition to solution-based selling, we have dug deeper into markets where we found a well-suited niche, such as electric vehicle, or EV charging, and video surveillance as a service, or VSAT. The common thread between these industries is that they build products that need to be brought to market quickly. On the EV front, there is a convergence of government investment, automakers increased emphasis on building EVs, and consumers increasing demand for buying these vehicles. The bottleneck in this case is the charging network, which in turn created a need for our products and services. Our neighboring embedded modems are used by several top manufacturers who require reliable connectivity for building, maintenance, data tracking, usage monitoring, and more. EGIN provides an elegant solution that shortens time to market and eliminates the needs for in-house RF expertise. On the Vsauce front, where end customers similarly need to roll out new technology quickly who prove return on investment. Our design capabilities, support, and future-proof products have helped a multitude of customers in this market get connected quickly. Our partners in this space operate on subscription-based models, minimizing the focus on proprietary hardware design and manufacturing, and opening the door for third-party collaboration during the design process. Most of the leaders in the space focus on differentiating through software and partner with AirGain on the hardware to deliver complete solutions to their customers. This has resulted in a growing revenue stream for AirGain from this market. We also continue to find success in bundling our aftermarket antennas with fleet and first responder solutions. We work with key players in each industry to provide a reliable signal with which to operate their technology. With the longest limited warranty in the industry at five years, AirGain antennas are designed to enhance performance in challenging conditions. In addition, we feel strongly about the initiatives we have put in place thus far on the IoT front. we have finalized a master supply agreement with one of the largest railroad companies in the U.S. to provide a unique solution to their railcar trucking needs. We look forward to share more about this development at our NLS Day next week. In addition to growing our existing product lines, we have announced several new offerings that will help AirGain for its leadership in 5G connectivity. We recently announced the release of our fully integrated outdoor 5G fixed wireless access reference design. WANDA comes with an optimized antenna system, a 5G NR modem, an enterprise software management system, and an easy installation kit. This latest reference design expands our position as a leader in fixed wireless access antenna design by simplifying the process of bringing a full FWA device to market. Overall, this helps AirGain tackle a greater share of the rapidly expanding 5G market on both the enterprise and private networks side of the equation. In order for our customers to effectively manage our growing portfolio of connected devices. We also announced a partnership with Ergo to develop a simplified end-to-end platform that provides wireless networking monitoring management tools for both network infrastructure and client devices, simplifying the deployment and management of our solutions. The collaboration aims to combine Ergon's innovations in wireless systems and Ergo's expertise in software development and cloud management services to allow users to manage network worldwide via an easy-to-use digital interface. Finally, we recently announced a partnership to develop a reference design for a 64T64R antenna array to pair with the partners' massive MIMO radio units. Typically used in 5G infrastructure, such as space stations, massive MIMO can offer a significant improvement over traditional MIMO systems. Combined with Arrogant Lighthouse smart repeaters, outdoor FWA, and enterprise network management, massive MIMO adds another product line to Arrogant's growing portfolio of 5G connectivity systems for network operators intended to simplify 5G deployment, save operational costs, and improve the customer experience. In closing, while we are facing near-term headwinds, we are optimistic about our long-term prospects and remain focused on growth in our three markets. we expect strong growth from our enterprise market as we continue to expand our product portfolio and international footprint with our IoT solutions. We anticipate meaningful growth with our aftermarket automotive vertical upon the introductions of our latest offerings from the AirGain Connect product family, as well as expanded distribution for our aftermarket antennas. For our consumer vertical, we expect continued long-term consumer growth will be driven by our integrated product launches with the major global service providers customers that we have built great partnerships with throughout the years. Our roadmap is paved with ambitious product initiatives. Given the products we have and the breadth of systems-based solutions we have introduced, our same has more than doubled from $7.6 billion to $16.5 billion. These new products are designed to address coverage issues on the service provider side, reduce deployment costs, and improve the customer experience. The changes to Ergan's executive team over the past year have set the company in a position to better support sustainable growth in the coming years. The leadership team and I feel strongly about the position the company is in with its steady sales base in financial discipline. I am confident these initiatives will generate positive top and bottom line results, as well as better position again for key customer wins in new markets. I want to thank all of our team members for their dedication to our mission and ongoing commitment to our customers. Our analyst day next week will provide us with the opportunity to share the progress we have made in a greater fashion, showcase our latest innovative technology, and better introduce our management team to the market. And with that, We are ready to open the call for your questions. Operator, please provide the appropriate instructions.
spk03: Thank you. We will now take questions from AirGain's cell side analysts. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Scott Cyril with Roth MKM. Please proceed with your question.
spk06: Hey, good afternoon. Thanks for taking my question. Hey, Jacob, maybe just to dive in on the enterprise front, it was a great quarter. Could you talk a little bit about the visibility that you have on that front in terms of linearity and otherwise? It sounds like there's some large EV charging opportunities. How long does that last? What else is filling in the pipeline? And how should we think about that $10 million over the next couple of quarters? Is that a sustainable number? Do we grow from that? Is there seasonality involved? And then I've got a couple of follow-ups.
spk02: Yeah, sure. Thank you, Scott. Yeah, so on the enterprise side, especially pertaining to IoT, certainly we do anticipate the EV charging market to continue to grow. You know, we actually mentioned in previous quiz release about a couple significant design wins, and we expect that to continue throughout the years. As I indicated in the first release, it's absolutely a growing market with government support and then with, you know, more customers wanting to buy electrical vehicles. I think that it's really creating a great opportunity for us. So it's just not a one-time thing, but we do see that the economy is going to grow. Now, as far as the next couple of quarters or beyond, is it sustainable? I think that, you know, certainly as I indicated, we have some headwinds that we have to deal with. And certainly, there's also seasonality that we have to encounter. But overall, we do see that the IoT as a whole, we do see that grow throughout the year.
spk06: Great, very helpful. And maybe if I could just hit on 5G coming back from Mobile World Congress. I'm wondering if you could provide a little bit of color in terms of interest level from customers. I know it's very early. You know, but what sort of level of engagements do you have? And when will we expect to see some of the first revenues on this front? Maybe if you could as well, you know, geographies, frequencies that we should be paying attention to, that'll be the first areas of deployment for you guys.
spk02: Yeah. Yes. MWC, and I just got back, you know, we actually have a nice booth there in demonstrating our latest technology. And I think that people were pleasantly surprised actually to see us having a live demo of in a bg you know environment you know such as mwc and i think that was really well received i would have high quality meetings we met with uh some existing customers and several potential customers and we also got a lot of the network operators even in europe in middle east that came and expressed interest to really want to evaluate some of our up-and-coming products, such as the smart repeaters on the network side, the SOHO side, and the fixed wireless access. So I think that we have more than 100 plus meetings throughout those three, four days, and some really high quality meetings as a result of that. So that really gives us optimism about where we're heading as a company.
spk06: And so, Jacob, does that mean 2024 is when we should expect the first revenue contribution from the 5G portfolio?
spk02: I would like to, you know, count on that one, although I do not want to make that as a guidance. But given what we see, and we actually have, you know, technology product for them to do trial on, that will be the plan that we hope that, you know, in 2024, we can see material revenue contribution from the numerous products we're launching this quarter.
spk06: Very helpful. And lastly, if I could, just to follow up on the NextGen HPU UE product, there was a lot of excitement around the initial launch of the first product through AT&T, but it was a difficult process, I think, being controlled through one carrier. What's different this time around as you start to move into the next generation solution, either across carriers, geographies, or otherwise, That gives you a little bit more diversity and opportunity for better success than you had being controlled through AT&T and FirstNet. Thanks.
spk02: Yeah, great question, Scott. Yes, we would have to admit that we were disappointed about the, you know, the adaptation rate, you know, due to the total, you know, overall the total offering, right? And the things we learned is that it's important to be service provider agnostic. I cannot stress more about the fact that it's just difficult to be, you know, just be tied to a particular service provider. And that's what we learned. We're also understanding some of the, you know, the sensitivity to performance versus cost. While people appreciate, you know, some of the performance benefit, you know, they also have to really evaluate the cost factor. So we are taking all of that into the next generation product that we're going to build a product that it's, you know, it's going to be hitting that right, the sweet spot, so to speak. And certainly we also made a number of improvement on how we're going to launch the product. We also learned that working very closely with viable installers are critical to the success of the deployment, right? Because to get it right the first time, it's critical. And when I say get it right the first time, I'm talking about installing the device properly. So all of that are the lessons we learned. And, again, going back to the demand, all of this is that we see a clear demand. We see a clear market that if we have the right product at the right price point, there's absolutely demand for us to take advantage of. And, you know, with our unique design, it's something that, you know, we have the IP on. It's a really, you know, especially with the newer product, we're actually adding other features potentially into it. And I think that's going to really help support the rollout of this next generation product.
spk06: Great. Thanks. I'll get back in the queue.
spk03: Our next question comes from the line of Anthony Stoss with Craig Hallam. Please proceed with your question.
spk07: Hey, Jacob and Michael. Jacob, I wanted to focus on a comment you made on the weakness on the consumer Wi-Fi side. Did you say your carrier customers want to skip Wi-Fi 6 and now they're waiting for Wi-Fi 7? Also, can you give us a sense of what you expect that business to be this year? Is it going to be down year-over-year, or how do you view it for the full year?
spk02: Anthony, yes, I'll speak a little bit, and then we'll go for, you know, Michael to chime in as well. And a lot of the things, and I think I want to caution that, you know, it's more about the forecast we're seeing is soft, but some of the reasoning, you know, we still want to spend more time to dive into it. But clearly, you know, we also know that every few years, you know, the carriers start their transitioning into a new technology, and typically it lasts about three to four years. And, you know, in this case, due to the pandemic, due to the, you know, some of the, you know, the supply shortage issue, the roll-up of the, you know, the Wi-Fi 6 was delayed. And now that, you know, in the next cycle, which is the Wi-Fi 7 or even the Wi-Fi 6E, it's already here. So how are they going to smooth that transition? That's what, you know, we also monitor closely. I think that the things within our control, I always talk to the team, is that, you know, let's do the things within our control. And the things within our control is to assure you that we have not lost any skill to our competition. And then it's more of a demand issue, a robot issue by the carrier, which we monitor closely. As well as this year, I think that, you know, given some of the softness on the demand, we already got. We want to be cautious, especially with the first half of the year.
spk04: Tony, just to echo what Jacob mentioned, this is Michael. Yes, we don't have a whole lot of visibility currently. The feedback that we're getting from our partners, from our customers, event service providers, is that there is a lot to be sorted out from a demand standpoint. But we do expect some recovery the second half of the year. As to the overall four-year guidance, it is just too early to talk about that right now.
spk07: Got it. And then I guess a similar question, and maybe you've already kind of already answered it. The IoT group has done phenomenally well. By our math, close to 30% growth in calendar 2022 year over year. Clearly, you're expecting that to grow again year over year. The rest of the business, though, seems like it's going to be down pretty, pretty a large amount year over year. What can you do to try to offset some of the costs in that legacy business that's been weak right now?
spk02: Yeah, I think that we also expect the automotive market that we're going to see some growth as well. I think that consumer, you know, we have a lot better control on the automotive in the enterprise market. That's where we actually have our own product. And that's why we transition from a component company to a system company is that we have a lot more control with our own destiny, if you want to call it. Consumer, it's more about winning skills and just hoping the rollout's going to come, right? Versus the automotive and the enterprise IoT, we're actually selling our own product most of the time. And we feel strongly that we're going to be able to grow the IoT and the automotive business in this coming year or this year, 2023.
spk07: And then my last question for Michael on the gross margin side of things. The purchase price variance, do you think you guys have your arms around on the gross margin? We'll call it 39%. Do you think it will remain at that level for the rest of the year, or is there anything else that you could see that would have a negative impact?
spk04: Thank you, Tony. That's a very good question, actually, because it really speaks to the PPV item. It really speaks to the broader inventory management and also the gross margin improvement objectives that we have. And just to clarify on the BPVs, those are material costs that we are purchasing basically since the beginning of 2021. And those are basically applied to specific products and being released at time of shipment. And at this point, we have had quite a bit of a large increase in demand and shipments in the Q4 quarter for specific products They really carried quite a bit of PPVs, which was a bit of a surprise to us. But the silver lining is that we are pretty much done with all the PPVs on our inventory. This was one of the drivers of the inventory decrease. Our inventory decreased by 55%, $5 million. $1 million of that was at HPE inventory reserve. The rest was really the laser focus on inventory management. Once we have now our inventory down to that level, we can take advantage of re-driving gross margin improvement that will result into some noticeable improvements in the second half of the year. So this is still being worked on. Right now, to your point, 39% is where we are guiding Q1. It's in our run rate or even a normalized number for the Q4 quarter. We expect to see the same level in Q2, but some improvements taking place. And that improvement is coming from the leverage of the CM or contract manufacturing model. Even with the demand softness that we're seeing right now, there's quite a bit of activity going on among the CMs, specifically the regional CMs, which are looking to capture a higher share and therefore are becoming a whole lot more competitive from a cost and quality standpoint. So those are the advantages and the opportunities that we're going to be looking at and leveraging throughout the year. Got it. Thanks for all the detail, Michael, and good job on the cash management, by the way.
spk03: Thank you. Thank you. Our next question comes from the line of Craig Ellis with B Riley Securities. Please proceed with your question.
spk05: Yeah, thanks for taking the question, and Michael, welcome aboard. Look forward to working with you. So I just wanted to start with a clarifying question as we look at the first quarter. So in the first quarter revenue guide, we're clearly down meaningful quarter on quarter, and we would always expect there to be seasonality in the quarter. But could you provide a little bit more color around what's at play because it It seems like we wouldn't have any air-gain connect in the quarter, although it's not clear if we had in the fourth quarter, so maybe you can clarify that. And is it just declines in each segment, or is it more pronounced declines in auto and enterprise, given the fact that gross margins are staying very resilient despite the significant revenue decrease?
spk04: Hi, Craig. Thank you very much for the welcome. The Q1 number, as you pointed out, at the midpoint is about 17% down sequentially, which would have expected a drop because of seasonality. Compared to last year, it's about 6% down, and that is me speaking about the demand softness that Jacob was mentioning on some of the inventory level that we currently are seeing, and the market is trying to sort through over the next few months. The aftermarket business on the automotive, the aftermarket business remains a bright spot. We do expect some continued improvement on that. To your question on the Aragon Connect, we did have some shipment of Aragon Connect HPE in the Q4 quarter. And overall, it basically speaks mostly from the demand softness that we're seeing right now for the Q1 quarter.
spk05: Got it. And then, Jacob, I wanted to cycle back to an issue that was brought up by a few of the others that inquired earlier and just focus on calendar 23 and where you think the business can grow year on year as you look down through your three primary segments and subsegments. So clearly in consumer carriers, you're trying to sort out what they do with Wi-Fi 6E and 6 versus just hopping straight to 7. But can you talk about what your sense is for whether or not that business can grow. And when you look at enterprise and auto, what the potential is for those businesses to grow as we think about kind of the exit philosophy of the business overall as we work through the back half of the year.
spk02: Yeah, sure, Craig. So as I indicated in the press release, with the new products that we just recently announced, We actually have expanding our SAM, which is actually our addressable market. It's more than double what we have. And one of the new reasons is the new product that we now have with the service provider market that's under consumer. And really now we're executing on the strategy that we lay out to you guys actually a couple of years ago. is that how do we excel to the service providers that we have built a strong relationship, we have earned their trust throughout the years. So instead of selling them a $2 to $3, you know, antenna content on the component side, we're now able to sell them a system product that are tens, hundreds times more than what we're able to do. And as a result of that, you know, and the trials already alluding to that, we actually already have commands trial with one of the largest operators in the U.S. today. And I expect more to come. Indicated earlier, even in NWC, we received quite a few inquiries to do trials. And these are major operators globally. So I feel strongly about the prospect of taking, we've got some really, really highly definitional products. You know, products that really, I think, differentiate where we are as a company. And then, you know, in the space wireless access, there's also the networking equipment product that we're going to be launching. So overall, I feel good about where we're heading as a company. Now, specifically about 2023, I think we're going to focus on heading the milestones, right? How do we get more customer trials? How do we get the trust to be successful and then get the certification, right? And then ultimately winning the skill. So that's what we're going to be focusing a lot on. But meanwhile, we still have a steady stream of revenue that's going to support the company's growth. But I think the bigger growth is going to be 2024 and beyond. Does that answer your questions quick?
spk05: Yeah, and we can follow up with more detail offline. Michael, I did want to cycle back on the cash point. Really nice to see it pop by $3 million in the fourth quarter. What's your expectation for what can happen in the first quarter? Can we get another 3 million increase and bring it to 15 million, or would it be flatter? Thank you.
spk04: So Q1 quarter is a bit challenging because it tends to be operationally a cash outflow type of a quarter net. We are definitely very laser focused on our cash balance and really optimizing that. and through really our working capital management. So in Q1, I do not expect it to be growing or to be flat. I'm hoping to be above the $10 million mark on that. But hopefully over the next few quarters, as we strive to be EBITDA positive, is really a question of optimizing this overall cash balance. Got it.
spk05: Thanks, Michael. Thanks, Jacob. Thanks, Jacob.
spk03: Thank you. And as a reminder, if anyone has any questions, you may press star one on your telephone keypad to join the question and answer queue. And at this time, this concludes our question and answer session. If your question was not taken, you may contact AirGames Investor Relations at AIRG at gatewayir.com. I'd now like to turn the call back over to Mr. Suen for his closing remarks.
spk02: Thank you for joining us on today's call. We look forward to updating you on our next call. Up later.
spk03: Thank you for joining us today for Eric Gaines' fourth quarter and full year 2022 earnings call. You may now disconnect.
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