Holdings, Inc.

Q1 2023 Earnings Conference Call


spk03: Good day and thank you for standing by. Welcome to the first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Matt Sartman, please go ahead.
spk09: Good afternoon, everyone, and welcome to's first quarter 2023 earnings conference call. Please know that this call is being recorded. Joining us today from are Steve Trundle, our CEO, Steve Valenzuela, our CFO, and Jeff Bedell, president of our Ventures Business and Corporate Strategy. During today's call, we will be making forward-looking statements, which are predictions, projections, estimates, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. We refer you to the risk factors discussed in our quarterly report on Form 10-Q and our form 8K, which will be filed shortly after this call with the SEC, along with the associated press release. This call is subject to these risk factors, and we encourage you to review them. assumes no obligation to update any forward-looking statements or information, which speaks as of their respective dates. In addition, several non-GAAP financial measures will be used in this call. A reconciliation of the GAAP and non-GAAP measures can be found in today's press release on our investor relations website. I'll now turn the call over to Steve Trundle. You may begin. Thank you, Matt.
spk06: Good afternoon and welcome to everyone. We are pleased to report first quarter results that exceeded our expectations. SAS and license revenue in the first quarter was $135.4 million resulting in a non-GAAP growth rate of 14.9% over the last year, excluding Vivint. Our adjusted EBITDA in the first quarter was $30.6 million. I'm going to touch on a couple of things in the core business, and then I'm excited to have Jeff Bedell, the president of our Ventures Business and Corporate Strategy, join in the call today. I'll be looking to include Jeff or Dan Kersner, the president of our platforms business, in future quarterly updates so that we can provide a deeper review of some areas of the business. I'll start things off with a few takeaways from our recent presence at ISC West, the largest trade show for the physical security industry.'s presence this year reflected our increasingly diversified business profile with, OpenEye, and shooter detection systems each having a dedicated presence. Overall attendance at the show returned to pre-pandemic levels. The commercial market was a significant theme during IFC West. Most of the service provider partners that I met were expanding their use of our commercial services. Recently released products have also helped our partners become better at targeting our platform at specific verticals where they are developing expertise. One of the things we highlighted was our expanded range of third-party camera support. Our video solution will be able to support 80% to 90% of third-party cameras that have been installed in mid-sized and large commercial settings since 2018. With a more flexible video solution, our service providers can support businesses that want the benefits of our integrated video solution without the costs of replacing existing installed video cameras. As we've expanded and enhanced our access control solution, it continues to gain momentum. During the first quarter, access control door installations increased 45% over the first quarter of last year. At ISC, we introduced a new access control product called Cell Connector. Cell Connector is a door controller that leverages our work with 4G, LTE cellular networks to connect directly to the platform where system data is aggregated. Bypassing the customer's local network reduces installation complexity and enables an affordable and effective access control system. For example, larger, more sophisticated commercial customers and corporate accounts typically have rigorous approval processes for third-party devices to connect to their local area network. Cell Connector significantly streamlines the sales and installation process and makes it easier for these customers to acquire an system. In the residential market, our service providers continue to report steady demand. Despite the macro environment, we've also continued to expand our partnerships with builders. New RMR creation from our home builder program increased 14% during the first quarter as compared to last year. We also continue to expand our services to fully address the long-term opportunity we see in the residential market. A recent report by Strategy Analytics estimated that about 40% of households with an active, professionally monitored security system are still limited to traditional system capabilities that do not include any smart home capabilities like those that service providers offer. Our goal is to maintain and build on our service providers strong competitive position so they can steadily expand their account base as the market continues shifting to smart home systems. Shifting to our operations during the first quarter, we continue to focus on driving increased efficiency and focus which will allow us to perform against our corporate EBITDA objectives for the year. We did this without undermining the R&D investments that drive future opportunities and feel like we have struck the right balance overall. We will continue to invest in innovation to continue to build the company for the future while also maintaining discipline through profitability. Overall, I'm pleased with our first quarter results. Our performance reflects our continuing momentum, and the significant and diverse opportunities that we are addressing. I want to thank our service provider partners and our team for their hard work and our investors for their continued trust in our business. Now I'll hand things over to Jeff to provide a little more detail on two of the areas he oversees. Jeff?
spk05: Thanks, Steve. It's great to speak with everyone today, and I look forward to getting to know many of you. I'll start with an update on OpenEye and their cloud-managed video surveillance solution for the commercial market. Video surveillance is a critical system for commercial businesses. Today, many businesses have deployed video systems, but using legacy analog devices. A major technology shift is underway, moving from these older on-premises analog systems to digital devices at the edge, coupled with cloud-based solutions that form the foundation for delivering robust AI-powered video analytics. We continue to invest in the expansion of OpenEye's platform and business to capture share as this technology shift unfolds. Our recent acquisition of Ventra expands our AI program and will accelerate the development of video analytics capabilities across our platforms, beginning with delivering innovative models to the OpenEye platform. This quarter, OpenEye launched a few new solutions enabled through its open ecosystem architecture. The OpenEye platform allows data from third party devices to be married to OpenEye video data to generate alerts and enable forensic search capabilities. This allows users to find video content based on external data inputs. The first new offering is OpenEye's point of sale solution called Sales Connect, which integrates transaction data from leading suppliers of point of sale systems. Sales Connect triggers real-time alerts for point-of-sales exceptions, such as voids, refunds, and overrides, and retrieves the corresponding video of the transaction. Sales Connect is sold as an additional SaaS module and significantly strengthens OpenEye's position in the retail, grocery, and quick-serve restaurant verticals. Next, OpenEye launched an integration with third-party environmental sensors, which detect smoke from cigarettes and vapes, monitor temperature, humidity, and air quality, and detect sound anomalies. This integration enables OpenEye to associate video with more environmental events, generating, as an example, vape alerts, and providing valuable capabilities that have been heavily requested by secondary schools. Shifting to Energy Hub, I want to touch on a recent milestone. Recall that Energy Hub provides a SaaS platform for electric utilities that is known as a Distributed Energy Resource Management System, or DERMS. The Energy Hub solution allows utilities to manage grid load by controlling demand-side management, leveraging smart thermostats, EVs, connected EV chargers, and other grid-edge devices. Energy Hub's proprietary artificial intelligence and machine learning models allow utilities to fine-tune load shape on the grid and to balance energy demand with supply. Energy Hub recently announced that it is the first DERMS platform to exceed one million devices under management. Collectively, these devices provide 1.35 gigawatts of flexibility to North America's electrical grid, which is greater than the generation capacity of a medium-sized nuclear power plant. Extreme weather events like heat waves, the rising adoption of EVs, and the intermittent nature of many renewable energy sources are making grid stability increasingly challenging and complex. Utilities around the country are actively developing load flexibility strategies and investing in DERMS technology. Energy Hub's platform is directly addressing these macro trends. To sum up, we've made continued progress with OpenEye and Energy Hub's businesses. They are important to the expansion of our addressable markets and are two key components of our overall growth strategy. Steve Valenzuela will now cover our financials. Steve?
spk08: Thanks, Jeff. I'll begin with a review of our first quarter 2023 financial results. and then provide our updated guidance before opening the call for questions. First quarter SAS and license revenue of $135.4 million grew 9.9% from the same quarter last year. Excluding Vivint license revenue, first quarter 2023 non-GAAP SAS and license revenue grew 14.9% year-over-year on a comparable basis. SAS and license revenue includes Connect software license revenue, of approximately 6.2 million for the first quarter, down, as expected, from 7.1 million in the year-ago quarter. Our SAS and license revenue visibility remains high, with a revenue renewal rate of 93% in the first quarter, in the middle of our long-term range. Part of another revenue in the first quarter was 74.3 million, down from 82.2 million in Q1 2022, mainly due to fewer cellular module sales from the end of the 3G upgrade cycle and fewer camera sales as service providers worked down their inventory levels. Total revenue, $209.7 million for the first quarter, grew 2.1% year-over-year. SAS and license gross margin for the first quarter was 85.5%, down slightly from 86.3% in the year-ago quarter. Hardware growth margin was 23.9% for the first quarter, consistent with historical trends, and up from 11% in Q1 2022, mainly due to improving supply chain dynamics and favorable product mix with more commercial offerings. Total growth margin was 63.7% for the first quarter, up from 56.1% for Q1 2022, mainly due to the improvement in hardware margins and a mixed shift to SAS revenue. Turning to operating expenses, R&D expenses in the first quarter were $61.9 million compared to $51.5 million for the first quarter of 2022, mainly due to an increase in headcount and related compensation expenses and reflecting the cost of acquired teams. We ended the first quarter with 1,042 employees in R&D, up from 892 employees in Q1 2022. Total headcount increased to 1,858 employees for the first quarter, compared to 1,565 employees in the year-ago quarter. Sales and marketing expenses in the first quarter were $26.6 million, or 12.7% of total revenue, compared to $23.2 million, or 11.3% of revenue in the same quarter last year, mainly due to increased headcount and more employees traveling with the easing of COVID restrictions. Our G&A expenses in the first quarter were $28.5 million compared to $24 million in the year-ago quarter, mainly due to acquisition costs, increased personnel costs, and accounting fees. G&A expense in the first quarter includes non-ordinary course litigation expense of $800,000 and acquisition-related costs of $800,000. Non-ordinary course litigation and acquisition expenses are part of our adjusted measures and are excluded from our measurement of our non-GAAP financial performance. In the first quarter, GAAP net income was $14.4 million compared to GAAP net income of $9.1 million for Q1 2022. Non-GAAP adjusted EBITDA in the first quarter was $30.6 million compared to $29.9 million in Q1 2022. Non-GAAP adjusted net income was $22 million or $0.41 per diluted share in the first quarter compared to $21.3 million or $0.39 per share for the first quarter of 2022. Turning to our balance sheet. We ended the first quarter with $606.4 million of cash and cash equivalents, down from $622.2 million at December 31st, 2022, mainly due to payments for estimated federal tax, acquisition costs, and employee annual bonus payments. Turning to our financial outlook, for the second quarter of 2023, we expect SAS and license revenue of $137.2 to $137.4 million. For the full year of 2023, we now expect SAS and license revenue to be between $555.9 to $556.5 million, up from our prior guidance of $551.5 to $552.5 million. We are projecting total revenue for 2023 of $855.9 to $881.5 million increased from our prior guidance of $851.5 to $877.5 million, which includes estimated hardware and other revenue of $300 to $325 million. We estimate that adjusted EBITDA for 2023 will be between $120 to $125 million compared to our prior guidance of $115 to $125 million. We expect adjusted EBITDA for the second quarter of 2023 to represent approximately 23 to 24% of our annual guide. Non-GAAP net income for 2023 is projected to be 84.6 to 87.5 million for $1.55 to $1.60 per diluted share, up from our prior guidance of 79.7 to 86.5 million or $1.44 to $1.57 per diluted share. EPS is based on an estimate of 54.7 million weighted average diluted shares outstanding. We currently project our non-GAAP tax rate for 2023 to remain at 21% under current tax rules. We expect full year 2023 stock-based compensation expense of 54 to 56 million. In summary, We are focused on executing on our strategic business plan and investing in our long-term strategy while continuing to deliver profitable growth. And with that, operator, please open the call for Q&A.
spk03: Thank you. As a reminder, to ask a question, press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from Michael Funk with Bank of America. Your line is open.
spk11: Hi, yeah, this is Matt Bullock on for Mike Funk. Thanks for taking the questions. It was great to hear all that detail about some of your AI products. I was hoping you could give us a little bit more color on how we should think about the artificial intelligence roadmap and then any additional detail on future monetization in terms of whether or not you're going to leverage it as primarily a product enhancement or as a vector for new logo additions.
spk06: Hey, Michael. This is Steve speaking. Well, I think it's, you know, one of the reasons we actually did the, just as evidence of our commitment to that arena, the venture acquisition during the quarter that was recently announced where we picked up, you know, based on expansion on our AI video analytics team of about 35% in terms of headcount. In terms of the overall roadmap, I think any company that's not sort of looking universally at everything they're doing, both from an operating standpoint, but also from the perspective of user interfaces that they provide to the customer, would be sort of not looking at things the correct way. So we're looking at essentially everything we do, both internally in terms of processes, but also in terms of the way we present UIs. to the customer. And of course, we've got a pretty long history, though, on the video analytics side of using AI to improve the insight that we deliver to the customer. We would expect to continue to expand that. Obviously, the more insight, the more intelligence we can deliver to the consumer, the more valuable the experience. And so it's sort of right in our crosshairs, I would say. That's helpful. Thanks. And then
spk11: Just one quick follow-up. Have you noticed any material changes or subtle changes in the competitive environment following some of the M&A activity of competitors?
spk06: I haven't really noticed any changes in the competitive environment. I'm imagining probably what you're referring to is one of the recent more significant acquisitions where a utility or an energy company acquired a service provider that competes with many of our dealers. I haven't heard yet that there's been any sort of change, though, in the overall competitive dynamic. And, you know, it's sort of business as usual so far.
spk11: Excellent. Thanks very much. I'll pass it on.
spk06: Yep.
spk03: Thank you. One moment. Our next question comes from Sakit. Kalia from Barclays, your line is open.
spk02: Okay, great. Hey, good afternoon, guys. Thanks for taking my questions here. Steve Trundle, maybe for you, just always appreciate kind of just updated thinking that you have on ADT and them as a customer and how things are changing there. And so maybe the question for you is, can we just talk a little bit about any revised thinking on how you're thinking about command and control and ADT subscribers kind of starting to roll in? Anything that you can give us just on how that's sort of, you know, rolling into the model, if at all.
spk06: Sure. Yes, okay. Good question. And first, just at a macro level, we continue to collaborate, you know, with ADT on multiple fronts. We have, you know, I think a great relationship there. I'm very pleased with the record sort of attrition levels that they're getting as a higher and higher percentage of their base or on a smart platform like command and control. So things are generally going, I think, relatively well. We watch, of course, exactly what they're, as much as we can, what they're presenting to the public markets about their internal plans related to their work with Google. And I think we commented publicly at the end of Q4 that we anticipated an increased use by ADT of their new platform at the end of Q2. That was based on what Jim and the team had presented, and maybe we're being a little conservative in the model. But they've had a couple of reports since then, and I'd say we're probably now looking really more for that to be something that maybe happens towards the end of the year in Q4. And I want to remind people, of course, that there will be lots of areas, but the partnership with ADT is pretty broad. So there is commercial, there's S&B, there's something called custom home. There are lots of different areas, and no single solution is a fit for every area. But we expect, based on their most recent report, that we begin to see some transition there in the Q4 timeframe, and we've updated our models accordingly.
spk02: Got it. That's super helpful. Steve Valenzuela, maybe for you, great to hear just the operational rigor of the company. I think there was a reference made just to some cost savings. I was just wondering if you could just talk about some of the cost savings that you folks started this quarter, how much you sort of expect to save annually, and whether we should think about those being reinvested or maybe falling to the bottom line.
spk08: Yes, Zach, good point. I mean, we did a little cost rationalization, really. And if you think about it, most companies actually look at, you know, look at their cost structure, look at their headcount every year and kind of make adjustments. So it was fairly minor on our side. And we're continuing to invest, so we're continuing to hire employees. So the savings from that small reduction really is going to translate into continual hiring. So we've reflected that into our guidance. And so we're going to continue to hire, especially in the R&D area. And so that's really factored into the guidance we provided for the quarter, for the year.
spk02: Very helpful, guys. Thanks so much.
spk03: Thank you. Our next question comes from Matthew Fall with William Blair. Your line is open.
spk01: Hey, great. Thanks for taking my questions. First, I wanted to ask on the commentary around access control and that 45% year-over-year growth rate of door installations in the first quarter. I'm guessing that's higher than what you've been seeing, and that's why you called it out. But maybe if you could just give us some context around that number. And then, you know, if so, you've been clearly improving that product for some time. If you're seeing an inflection there, what's helping to drive that? Thanks.
spk06: Yeah, good question. I called it out because we were pleasantly, I guess, surprised by the uptick on access control installation velocity. The business is not yet the largest business at by any stretch, but we're continuing to grow there. I think we saw what happened in the first quarter. We had had some supply chain issues in that category the last two years. We began to sort of thin those problems out. And the dealer adoption has been good. So just in general, we saw kind of a material uptick there. In terms of overall scale, we're talking about between 50,000 and 100,000 doors right now on the access control platform. obviously continue to grow, but just to give you a feel for the size of that business at the moment. Looking forward, I also talked about CellConnect. So what we're doing there is enabling the access control solution to be more easily installed by service providers, and we would hope that that further puts some win in the sales there.
spk01: Great. And then on the commercial opportunity more broadly, You mentioned at IAC West that partners were expanding the use and partly released new services that help target specific verticals, some of the ones you called out with OpenEye. Is that an important piece of the strategy going forward to gain more traction in commercial? Is that maybe something you feel you've been missing as some of this vertical specific functionality to help drive adoption in that market?
spk06: I think so, and Jeff spoke about it a little bit when we talked specifically about OpenEye, but I feel like the closer you get to a ready-to-install sort of vertical solution that has a set of key integrations with it, the more sort of differentiated your service provider can be in the sales process. So we've seen that in the MDU business, for example, Point Central, we have an integration with an entity called uTour And that helps create some pull-through there where we can do self-guided tours day one. On the OpenEye side, they made some strides during the quarter to add certain retail analytic integrations that really not just retail, quick-serve restaurant integrations that really make the solution sort of a better fit for that segment of the market and give them a story they can talk to, so there was an earlier question about AI, and as we move forward, I think the more we can leverage some of the capabilities that we're developing to tailor solutions for specific use cases and be more relevant to a given vertical, A, it's a great problem for B, if you're in the software business, you wanna have really solutions that are vertically inclined, and B, I think it'll just make the offering more relevant, so it is a focus.
spk01: Great, thank you. Thanks.
spk03: Thank you. One moment. Our next question comes from Mark Cash with Raymond James. Your line is open.
spk10: Yes, this is Mark. Thanks for taking our question. So, maybe first starting with Steve T and if Jeff wants to weigh in on this. But considering the macro and the growth opportunities, so first, how are you allocating resources across the four key growth areas of commercial, video software, international, and new venture? And as part of that question, you had plans to expand the support for security control payments internationally this year. So how is that coming along? And would you say you've integrated the ones that really opened up the opportunity at this point?
spk06: Yeah, so good question. You said, Steve, I... There's one Steve that tends to speak probably too much, but I'll take it. In terms of the allocation of resources across the different growth areas, we're basically looking at the long-term SAS growth potential in each domain, modeling that out, looking at what we need to do to either compete or to remain more sticky with our service providers and allocating resources accordingly. In terms of some of the efficiency shaping we did earlier this year, I would say there was generally a move to paper some the investment we're making in some of the areas that aren't growing as fast and reallocate some of that investment to commercial, to video, to international, and then to our other segment business, especially energy hubs. So we're favoring these growth areas. We're willing to live with negative cash contribution for a meaningful period of time so long as we're getting or we can see daylight on 25% plus growth rates in these domains, and that's what we're seeing so far. So as they come to scale, we would expect them to continue to contribute to the overall company's growth, and therefore they warrant sort of excessive, if you will, excessive resource allocations. With regard to the international piece specifically and comments I made last quarter about a desire to support a wider array of equipment there. We did complete in the first quarter an acquisition of a company called EBS based in Europe that has been in the business for some time of building universal communicators that work with a lot of the legacy control panels that are already installed by our international dealers. That's always been a soft spot for We come in, they love the solution, but they may have a base of 100,000, 200,000, whatever number of customers that are working on older equipment. So what we're doing there is really taking that universal communicator technology and integrating that into the platform so that we can get back to some of those legacy customers where the cost to replace all their hardware would be prohibitive. So I think that's, we're not, in terms of timeframe for that, you know, we just finished that in Q1, finished sort of the deal, and now there's a lot of wood to chop, and we're probably into the third quarter before we're actually able to go to market and say we're supporting all the controls that we would like to. That was the purpose.
spk10: Okay, great. And as a follow-up, last week ADP pointed out seeing impacts from customers not paying. So I guess first, are you seeing that through your partners? And secondly, could you just comment on the makeup of the business today versus previous macro spending pullbacks, like say in 08, and the resiliency you see now in the business?
spk06: Sure. The first part of the question is, are we seeing an impact from customers not paying? So obviously our customer is the service provider, not the end consumer.
spk00: Correct.
spk06: And most of our service providers are pretty robust, and I don't think we've seen any kind of uptick in bad debt. Have we, at least not at a meaningful level?
spk08: Not at a meaningful level.
spk06: Yeah, in terms of are we hearing anything anecdotally, ADT is really the only company that reports publicly on a routine basis. We obviously would look to what they say, but I've not been hearing from our other service providers that that's been a material issue. Everyone goes to market differently, so it can be where you are geographically or what type of customer you serve, whatever. With regard to the second question, I'm trying to remember, it was... time to make it today you know like versus you know versus like an 08 a big poll by Catherine the housing crisis yeah good question I don't think we've seen kind of things be a quite as dire as maybe they seemed in 2008 I'll just remind folks that generally in a bad market or in a bad macro environment security tends to be pretty resilient people tend to want to tend to get more focused on protecting their assets and protecting their home. They become worried about strangers wandering through the neighborhood who may be unemployed. So we didn't see a huge problem in 08 or 09 either. You generally get fewer moves, and that results in less attrition. You may get a slight headwind in terms of new accounts created at the same time. I'd say we're seeing about the same. I mean, we were pleasantly surprised. The housing market's very hard to figure out right now in that, you know, there's a shortage of housing stocks. Builders continue to do relatively well in our universe. I commented on that. And, you know, things look generally, I'd say, less at the moment, a little less compressed than 08 or 09. All right.
spk10: Thanks so much for taking our questions. Much appreciated.
spk06: Thank you.
spk03: Thank you. Our next question looks like it comes from Darren. With Ross, your line is open.
spk07: Hey, guys. Thanks for taking my questions. First one, I don't know if you mentioned, what were the growth rates on the commercial business and international in the quarter? And I guess, Steve, your comments about ISC West. Like, are you more positive, neutral, sort of coming out of that conference as it relates to commercial business.
spk08: Darren, it's Steve Ellenswell. I'll take the first question. The growth rates both for international commercial continue to do really well in the mid-25% range. Last quarter, we gave those metrics that we don't typically give it every quarter, but they're still running at about both at around 25% growth year over year, doing quite well.
spk06: Yeah, and the second question, you know, coming out of ISC West, how do we feel about commercial I think we've been feeling there's definitely a sentiment now where a wider and wider array of service providers have at least a portion of their business allocated to commercial and small business so there seems to be you know a bit more of a green field there those a lot of those entities you know I'd say we brought sort of the mobile and smart experience to the residential world three, four, five years before it really hit in the commercial world. A lot of the stuff we've been doing for a while, putting control of your home, or now in the case of commercial, control of the enterprise in your hand with a mobile app, is a little bit newer in the commercial space. So there are more folks looking to be in the market, be upgrading commercial customers, be upgrading SMB customers. And then I'm enthusiastic because I thought our teams executed pretty well at the show or had good things to show, had good booth traffic. So I'd say I was overall just pleased with the sentiment, the momentum on the commercial side, and the feedback that we were getting from service providers there. Thanks.
spk04: Sure.
spk03: Okay, our next question comes from Jack Codera from Maxim Group. Your line is open.
spk12: Hi, thank you for taking my question. This is Jack Codera calling in for Jack Mandarard. You know, got a lot of great color on the commercial side of the business. Last quarter, you guys mentioned how ARPUs are a lot higher. You know, I was wondering if you could give any color longer term for expectations of revenue mix between residential and commercial? And I have one follow-up.
spk08: The commercial this quarter was about 8.5% of total SaaS. It was about 7% a year ago. So commercial certainly is growing faster than residential. We haven't really given a longer-term projection, but if you continue to see the trend, certainly commercial is growing at a faster rate. We'll be a larger and larger percentage of our SAS revenue going forward. We haven't really broken out what that would be, though.
spk12: Okay, understood. That's helpful, Colin. And then, you know, given the macroeconomic effects, you know, I think the explanation you guys have given is, you know, makes sense, although a little jarring. But I was wondering if, you know, you could share any other anecdotal evidence. You know, is there any effect on residential attachments or Any regions where you're seeing different products or different changes in market dynamics being affected by macro at all? Thank you so much.
spk06: Yeah, I mean, regionally, there are definitely areas of strength, those being Texas and Florida. I mean, you visit... As examples, there are probably more, but those are two where when I go visit a service provider, they're... You know, they're basically as busy as we can be in these markets, so they're continuing to sort of see robust, you know, good robust macro conditions. We've also seen strength in the last quarter in Canada. We're not exactly sure yet why, but Canada has performed well. Some of the markets you might expect where you have either declining population or whatnot, you know, are maybe not quite as strong, but we haven't We haven't seen any really dramatic macro level impacts thus far. I'd say probably the biggest thing is a slightly smaller footprint in terms of the number of devices that the consumer is choosing to purchase at the time of new account installation, where maybe they're watching sort of their, we haven't seen a decline in activations, but we've seen them put slightly less hardware on each installation than what we were seeing a year ago. And that's probably the biggest takeaway on the residential side that I think we've noticed.
spk12: Thank you. That's helpful, Colin.
spk06: Sure.
spk03: Thank you. And as a reminder, to ask a question, press star 11 again. One moment for our next question.
spk04: I'm showing no other questions in the queue.
spk03: This does conclude today's conference call. Thank you for participating. You may now disconnect.

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