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spk01: Good afternoon. Welcome to Eviat Network's first quarter fiscal 2022 earnings call. At this time, our participants are in a listen-only mode. A question and answer session will follow the former presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Keith Vannaren, Vice President of Global Finance and Investor Relations. Thank you. You may begin.
spk07: Thank you, and welcome to Aviat Network's first quarter fiscal 2022 results conference call and webcast. You can find our Form 10-2 press release and updated investor presentation in the IR section of our website at www.aviatnetworks.com, along with a replay of today's call in approximately two hours. With me today are Pete Smith, Aviat's President and CEO, who will begin with opening remarks on the company's first fiscal quarter. followed by David Gray, our CFO, who will review the financial results for the first fiscal quarter. He will then provide closing remarks on Aviat's strategy and outlook, followed by Q&A. As a reminder, during today's call and webcast, management may make forward-looking statements regarding Aviat's business, including but not limited to statements relating to financial projections, business drivers, new products and expansions, the impact of COVID-19, and economic activity in different regions. These and other forward-looking statements reflect the company's opinions only as of the date of this call and webcast and involve assumptions, risks, and uncertainties that could cause actual results to differ material from those statements. Additional information on factors that could cause actual results to differ material from the statements made on this call can be found in our annual report on Form 10-K, filed with the SEC on August 25, 2021. The company undertakes no obligation to revise or make public any revision of these forward-looking statements in light of new information or future events. Additionally, during today's call and webcast, management will reference both GAAP and non-GAAP financial measures. Please refer to our press release, which is available in the IR section of our website at www.aviatnetworks.com and financial tables therein, which include a GAAP to non-GAAP reconciliation and other supplemental financial information. At this time, I'd like to turn the call over to AVIAT's President and CEO, Pete Smith. Pete?
spk06: Thanks, Keith, and good afternoon, everyone. Thanks for joining us to review a successful quarter. The company continued to execute on our key long-term focus areas of growth, margin expansion, and meaningful bottom line improvements. The Aviat team commitment resulted in first quarter revenue of $73.2 million, growth of 10.4% from the first quarter of fiscal year 2021. First quarter adjusted EBITDA margins of 13.0% compared to 12.7% for the first quarter of fiscal year 2021. And a solid balance sheet and liquidity position with net cash at $47.3 million. North American first quarter revenue increased 12.0% or $5.4 million year-over-year. International first quarter revenue increased 6.9% or $1.4 million year-over-year. Adjusted EBITDA was $9.6 million for the first quarter, representing an improvement of $1.2 million versus the same period last year. The improvement in revenue and adjusted EBITDA for the first quarter was primarily due to higher volume of private network business, increased sales through our Aviat store, which serves primarily rural broadband space, improved international business driven by multi-man wins, and an increase in software and license sales. To achieve these results, we must recognize our suppliers and the Aviat supply chain team. The current supply environment is incredibly challenging, and we thank our suppliers and our team for continued performance. On our last call, I outlined the differentiation in our radio products, specifically the WTM 4000 platform, which has played a significant role in our recent growth in 5G and rural broadband. In today's call, I will reiterate some of the key points and subsequently highlight some of the wins that this platform has delivered this quarter. The Aviat WTM4000 leads the industry in system gain, enabling radio links to go further in distance, have greater ability to overcome weather effects like rain, and use smaller antennas, which is an important element in Aviat's total cost of ownership value propositions. and our WTM4000 portfolio includes the industry's only single box multi-band radio for 10 gigabits per second capacity. Along with our software and e-commerce differentiation, this product has led to some positive developments in the market this quarter. We have seen strong growth in our North American rural broadband segment. We now supply to 15 of the top 30 Rural Digital Opportunity Fund, or RDOF, winners and are in advanced discussions with five others of the top 30. This business is based on our WTM4000 platform and is going strong for us. Internationally, AVIAD has had one of the best quarters in our history with regards to winning new accounts. Many are share gains impacting revenue in future quarters, including a large Ministry of Defense network in Northern Africa. Two new Tier 2 operator wins in Africa, one in Chad and another in Angola, which included a hosted frequency assurance software recurring revenue win, our first fast win in Africa. Two new operator wins in Southeastern Europe, and in APAC this quarter, we penetrated one of the largest mobile operators, a Tier 1 operator, achieving first ever sales for Aviat based on our multi-band solution. We are extremely excited about this development as well as all the other new accounts mentioned here. On top of all these market successes, in the quarter Aviat announced a significant new product for operators, high availability routing software running on our CTR 8740 router platform. This new high availability routing software is a compelling choice for operators seeking an affordable routing solution that is reliable, scalable, and secure. Aviata is now one of only a few router vendors on the market to support high availability software. While this software was designed for North American mission critical private networks, we are starting to see demand in 5G networks worldwide as they evolve to meet the needs of critical use cases. such as connected cars, industrial IoT, machine-to-machine communications, and public safety applications. As 5G transport networks work to become more reliable, this offering, along with our proven portfolio of highly reliable, high system gain radios, gives Avia a strong value proposition. With that, let me introduce David Gray, CFO, and then turn the call over to him to review our financials before coming back for some final comments. David came to Aviat from Superior Essex, where he was CFO of the approximately $2.6 billion multinational company with a significant telecom equipment presence. Prior to his seven-plus years with Superior Essex, David held financial leadership positions of increasing responsibility at a number of prominent companies, including Cooper Eaton, Newell Brands, and Phillips Electronics. We're thrilled to have him on board as we continue to focus on corporate growth and margin expansion.
spk09: Thank you, Pete, and good afternoon, everyone. During my remarks today, I'll review some of the key first quarter financial highlights. Please note that our detailed financials can be found in our form 10Q and earnings release, both of which were filed this afternoon. For the first quarter, we reported total revenues of $73.2 million, as compared to $71.7 million for the prior fiscal quarter, a sequential increase of $1.5 million, or 2.1%. And as compared to $66.3 million for the first quarter of fiscal 2021, a year-on-year increase of $6.9 million, or 10.4%. The North American team continued to focus on expanding sales and seizing upon Avia's unique product and service differentiations. North American revenue, which comprised approximately 70% of total revenue for the first quarter, was $15.9 million, an increase of $5.4 million, or 12% from the first quarter of fiscal 2021. The increase was driven primarily by our private networks business, rural broadband, and software. International revenue for the first quarter came in at $22.2 million, compared to $20.8 million for the first quarter of fiscal 2021, an increase of $1.4 million, or 6.9%. Our book-to-bill ratio for the last 12 months was above 1, and our backlog remains above $200 million. First quarter gross margin was 35.7% on both a GAAP and non-GAAP basis, as compared to 36.1% GAAP and 36.2% non-GAAP for fourth quarter fiscal 2021, and 36.6% GAAP and 36.7% non-GAAP for the first quarter of fiscal 2021. Our margins in the current quarter were negatively impacted by inflationary pressures and significant expedite fees incurred to overcome supply chain and logistical bottlenecks. These were partially offset by price increases, surcharges, and favorable mix. The net impact of these factors was approximately 100 basis points. First quarter gap operating expenses, which include restructuring charges and share-based compensation, were $19.3 million compared to $22.1 million for the fourth quarter of fiscal 2021 and $17.7 million for the first quarter of fiscal 2021. First quarter non-GAAP operating expenses, which exclude the impact of restructuring charges and share-based compensation, were $17.9 million, compared to $20.4 million for the prior fiscal quarter and $17.2 million for the first quarter of fiscal 2021. We continue to make R&D investments with savings from previously announced G&A restructuring. First quarter GAAP net income, which includes restructuring charges and share-based compensation, was $4.7 million compared to $2.8 million for the prior fiscal quarter and $5.9 million for the first fiscal quarter of 2021. The year-over-year decline was due to $0.7 million of restructuring charges in the current quarter and $1.5 million higher tax expense resulting from the release of the U.S. deferred tax asset valuation allowance as reported in our fiscal Q3 2021 results. As a reminder, the company has over $500 million of NOLs that will continue to generate shareholder value for the foreseeable future. First quarter non-GAAP net income was $8.0 million compared to $5.3 million for the prior fiscal quarter and $6.9 million for the first quarter of fiscal 2021. First quarter non-GAAP came in at $0.67 per share compared to $0.45 per share for the prior quarter and $0.62 per share for the first fiscal quarter of 2021. Adjusted EBITDA for the first quarter was $9.6 million compared to $7.0 million for the prior fiscal quarter, an increase of $2.5 million, or 38%. Compared to Q1 of fiscal 2021, adjusted EBITDA increased by $1.2 million, or 14%. Our adjusted EBITDA margins came in at 13% for the quarter compared to 9.7% for the prior fiscal quarter and 12.7% for the first fiscal quarter of 2021. In terms of profitability, this was the second highest adjusted EBITDA percentage in the history of the company. Impressive accomplishments given the inflationary environment we were all operating in. Moving on to the balance sheet. Our cash and cash equivalents at the end of the fourth quarter were $47.3 million, compared to $47.9 million at the end of the fourth quarter of fiscal 2021, and $36.2 million at the end of the first quarter of 2021. We have no debt. During Q1, we repurchased $0.7 million of our common stock. Our balance sheet remains very solid, leaving us well positioned to execute our long-term plans. With that, I turn it back to Pete for some final comments.
spk06: Thanks, David. Just a few additional comments before opening up for Q&A. I'm extremely proud of the entire AVIAD team for their significant contributions to our results for the first quarter of fiscal year 2022. We are executing well given the constrained supply situation and the inflationary environment. Despite the environmental challenges, we affirm our previously announced annual guidance of $283 to $293 million in revenue and $35 to $38 million in adjusted EBITDA. We anticipate achieving the high end of the range. Providing our customers with the most advanced, reliable, and best total cost of ownership systems for mission-critical work and our shareholders with profitable growth remains our goal. With that, operator, let's open it up for questions.
spk01: At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.
spk03: Your first question comes from the line of Theodore O'Neill with Litchfield Hills.
spk11: Thanks very much. Congratulations on the good quarter and welcome aboard, David.
spk09: Thank you.
spk11: Yeah, so some questions. First question is about margin. My second question is about SG&A. So in the queue and in your prepared remarks, you mentioned margins this quarter compared to previous year were impacted by inflationary pressures, supply chain, logistic bottlenecks. You just mentioned that it was expedite fees was an issue to get around the supply chain, logistic bottlenecks. And I know that last quarter you talked about trying to keep a higher level of inventory on hand to avoid running into some of these issues. So can you talk a little more specifically about where you're seeing both the inflationary issues and the logistic bottlenecks?
spk06: Yeah, thanks, Theo. The inflationary aspects and the logistic bottlenecks are in the same, coming from the same place, principally the semiconductor suppliers, right? So sometimes our suppliers decide to increase price, and other times they, you know, to get chips, you need to pay an expedite fee. And what, you know, what I want to do is talk a little bit about that. So in the quarter, we had, you know, what we call cost inflation of 440 bps. And, you know, David Kang asked last quarter about whether or not we were going after price or surcharges or recovery, and we are doing that. We were able to execute on 110 bps of price recovery, and then we had favorable mix of 240, and that left us net 100 bps. What we would say about the environment is that inflation is moderating. Hopefully that persists. And our recovery, as we look forward, will improve, right? And I'll talk a little bit about the recovery in a second and how it lines up with our business, right? Some of these expedite charges or these cost increases, they're nearly instantaneous. So, the recovery takes a little bit of time. So, we think, you know, with the environment given no change in inflation, that will be net positive by our Q4 fiscal year 22. And a little more color on the recovery, our business cycle. You know, we kind of have three different business cycles. Our short cycle business, which is really tied to our e-commerce, and all of our price slash surcharge actions are in. Our mid-cycle business, which is our international mobile network operators, that takes about a quarter or so to get in progress or in place, or for that backlog to work its way out. And we have that in place and we'll start to get some lift from that going forward. And then our private network business is a long cycle business. And that'll take a little bit longer to play out. So the kind of highlights are we did have significant cost inflation in the quarter. We have started to execute on our price surcharge recoveries. We thank our customers for their incredible cooperation in the difficult environment. And we think over the next couple of quarters, we'll be able to fully offset the inflationary pressures as long as the inflationary environment does not deteriorate.
spk11: Okay.
spk06: Is that helpful to you?
spk11: Yeah, that's helpful. That's good. So the next question I have is about SG&A, which was below a year ago and down sequentially. I know you don't give out guidance for SG&A, but since you talked about it coming down as a result of some restructuring, can you give us an idea, at least qualitatively, about whether this should rise through the rest of the year or stay the same or continue to go down?
spk09: We expect there to be a little bit of seasonality as there has been historically in our overall OPEX. So Q1 should be the low point for the year. Having said that, we continue to invest the savings from much of the restructuring into R&D projects that get greenlit. You know, there should be, you know, a reasonable lift from what we currently have, but it shouldn't be anything out of the ordinary that you haven't seen before.
spk11: Okay. Thank you very much.
spk09: Thanks.
spk06: Thanks, Phil.
spk03: Your next question is from Scott Searle with Roth Capital.
spk10: Hey, good afternoon. Thanks for taking my questions. Nice quarter, and David, welcome board. Congratulations. Just to dive in quickly and follow up to the prior questions, looking at the favorable mix in the quarter, I was wondering if you could provide a little bit more color. I'm assuming that's more private networks, but wondering if there was something else that was going on on that front. Also, given the supply constraints, I'm wondering if there were any sales that were left on the table in the September quarter and kind of how you're feeling sequentially as we go into the December quarter. You know, given the backlog in the book to bill over one, but also those supply constraints, you have pretty good visibility in terms of your ability to deliver, you know, in the near term and kind of what are the concerns there. And also directionally, how you're thinking about gross margin. Sounds like there are a lot of moving parts here that get you higher by the June quarter, but kind of wondering what you're seeing in the near term.
spk09: I'll start off with the mix, then you can take the next point. But the mix is driven primarily, you're right, by private networks, as evidenced by the larger increase in North American volume than anywhere else where private networks dominate. So that was certainly the big driver, as well as some software and licensing revenue as well.
spk06: So in terms of revenue that we didn't get out to, I would say it would be $2 million to $3 million that if we had a better performing supply chain, we would have been able to achieve. And so, Scott, what did we not answer?
spk10: Oh, and looking forward to the December quarter, how are you feeling directionally then given You know, given the supply chain, your inventory levels seem like they're okay. I think they're flattish with the June quarter. So are there any concerns? How do you think things progress directionally from there? Are there anything in particular that you're worried about from a supply standpoint?
spk06: Yeah. So, you know, we think that we're managing the supply chain better than a lot of folks in the industry. With that said, you know... thousands of components go into a microwave radio, and if one of them doesn't come, then we'll get hurt. But we're starting to feel that we, right, so let's, if you give me the exception that I might get impacted by a single supplier at the end of the quarter, we're feeling neutral to positive on our ability to navigate the supply chain. But I also need be out because of the uncertainty overall. But if we don't have a one-off event, we feel that the supply chain will be the same, if not slightly better in the next quarter.
spk10: That's great. I'll take neutral positive all day long. Hey, digging in a little bit on some of the geographic mix, it sounds like you started to get some wins in Europe. Historically, that just hasn't been a big revenue base for you guys. So I'm wondering if you could elaborate on that a little bit in terms of what's going on in the pipeline. Is that a bigger opportunity for you? And maybe weave Wavi into the conversation there. What are you seeing? Where are they showing up? Are they not showing up?
spk06: So that European win that's in our shareholder letter, that was – Airwave in the UK. Our leadership, we changed leadership about a little over a year ago in the EMEA region. He's building the funnel and we think that Europe is on the upswing. So we feel very good about Europe with respect to private networks and our Tier 2 operators. So Steve's doing a good job there. And then with respect to Huawei share gains, we see that those opportunities in Eastern Europe, Africa, and Asia-Pac, and a little bit in Europe, Latin America. And we think that, well, we know that our funnel, and we don't know what the conversion rate is going to be and how the cycle is going to be, but we have $60 million of opportunity in our funnel. This opportunity is new to us and a bunch of other folks, so we don't know how the competitive dynamics are going to play out and what the timing is going to be. But there are $60 million of, you know, Huawei, you know, formerly, you know, Huawei had a lock hold on and were strangled. And now we're getting up to bat. So we're encouraged about that. And, you know, we hope over the next couple quarters, we can talk about some share gains there.
spk10: Great. Very helpful. And lastly, if I could, just to dig in on your commentary related to RDOF funding, you've got 15 of the top 30. I believe a lot of that funding has not really been released yet. So I'm wondering if you've actually seen the benefit of that, or we should expect all the benefit of that to start to come in calendar 22 timeframe. Thanks.
spk06: Yeah, I think you've got that right, that that would be a positive catalyst in... calendar year 22 as the RDOPS funding hits.
spk10: Great. Thanks so much. Nice quarter.
spk06: Thank you.
spk03: Your next question comes from Dave Kang with B. Riley.
spk08: Thank you. Good afternoon. I guess my first question is regarding chips. So last quarter you thought that the pressure, inflationary pressure was stabilizing because the You mentioned that lead times were, you know, stabilizing or hasn't stretched out in the last couple of months. Is that still the case or has things changed since then?
spk06: Yeah, I think neutral, you know, neutral to positive is the same as last quarter, right? And some folks have asked me when do I think this gets better, right? I listen to all the CEOs of semiconductor companies and read all the literature and My guess, and this is a guess and you can take it for whatever it's worth, is I think the environment starts to improve in April after we get through the Christmas season and Chinese New Year. but that's my guess. I would say, though, just the environment that Aviat's exposed is neutral, and where the positive comes from is we're not getting worse. Lead times are stable, and we've had a couple months of stability, so we think that it should start to get better. But with that said, if one of our suppliers has an exceptional event, we will get hurt. So I'd like to be more precise, not so that we could run our business better, but that's the best information I can give you. Is that helpful at all?
spk08: Got it. Yes, very helpful. Just on the gross margins regarding your outlook for the year, I know you didn't talk about next quarter, but assuming sort of a neutral as far as the supply chain situation is concerned, so should we expect gross margin? It was down a little bit sequentially in the first quarter. What about second quarter? Should we be thinking kind of flattish or maybe even further step down? How should we think about December quarter gross margin in terms of trend or trajectory?
spk06: Yeah, so we think it should be incrementally up, provided we don't have any additional inflation excursions, right? So we got ready for inflation starting last January to start to put our processes in to figure out how we were going to pass on price and surcharges. But the problem with that is we didn't know how much was going to come and how it was going to be delivered. So we're working through that. So we think we should get more price recovery in the next quarter. And, you know, if mix was flattish, then our margins should tick up. And I don't want to be specific on that because I can't You know, I can't tell you what mix is going to be. I can't tell you, you know, the full uptake of our price actions. But, you know, what I'd like our investors to know is we recognize inflation. We think we have enough differentiation in our products, and our customers are cooperating as we work to offset this difficulty.
spk08: Got it. My last question is, you said you raised prices on your products. When was that done and when was that communicated to your customers and did that cause sort of a surge in orders as they tried to take advantage of prices before they go up?
spk06: Yeah, so, you know, this environment is, you know, everybody likes to throw around the word unprecedented. That is unprecedented. And, you know, so for our short cycle or e-commerce, that was done instantaneously. And then for our bigger customers, it was a negotiation and effective. But we, you know, I'm pretty familiar with, you know, bringing in demand ahead of a price increase. And I would have to say that that was de minimis, and it's certainly not material. To be honest, in my past roles, I've seen that. I can't point to a single example where we saw demand pull in ahead of a price increase.
spk08: Got it. Thank you.
spk03: Your next question comes from Tim Savago with Northland.
spk05: Good afternoon, and congrats on the quarter. Let's talk a little bit about rural broadband. Pete, I don't think you're going to guess my first question, whether what sort of proximity we are to that magic 10% revenue number with regard to rural broadband or any update as to when we might get there. And I guess I'll couch it. with the following premise, which is when you were at our rural broadband forum, I think you'd mentioned an additional four RDOF wins to get you to 13. Apparently, you've been busy in the last month and picked up two more. So as you look at that and considering the addressable market out there, I guess in addition to that, you know, achieving that milestone, you talked about kind of a 40% or so market share.
spk06: in rural broadband do you think you're in a position to run above that now um and i'll i'll follow up in a second here so yeah we put in uh our investor presentation our estimate is pretty close to 40 percent share you know look with these new wins um it's possible that we could uh could trend up as the RDOF funding takes hold. And I think, you know, a couple more quarters of performance and the flow of the RDOF funding should bounce us over that 10 percent hurdle. So, we're getting, right, look, you know, I think I said that we'd get there by the end of this fiscal year, and I'm more confident in that. And if it's not by the end of this fiscal year, it might be sooner. Tim, is that helpful?
spk05: Got it. It sure is. And just to follow up on the ARDA front, and I'll have one more after that. So you talked about now 15 of the top 30 overall Ward recipients, I guess. And then I'd ask two questions on that, which is, can you estimate the total funding received by those 15 that you've won from art off. Question number one. And question number two, are those only wireless guys. I mean, to the extent you've got 15 and you're working on five or it seems like there could be some fiber guys in there too, or is this all fixed wireless in terms of access technology?
spk06: No, it's, we, right, while we can't get the, so we should tell you, let me go back and figure out how many of the guys that we can never get because they're fiber, but there are some of them in the top 30. And your question about estimate the funding received, we haven't done that, but we'll take that as an action. So those are both fair questions.
spk05: Yeah, I think that's worth doing. And shifting over internationally, you mentioned a pretty strong order quarter. I don't know if you want to throw out any kind of international book-to-bill metrics, but if you did, that would be great. But the interesting thing is that based on some of the locations that you've called out, these are not locations that are legendary for booting out Huawei. And so when you when you talk about not all of them talked about a very large tier one, you know, maybe that's it. So when you I want to dig into that dynamic a bit more when you talk about share game, you know, can you be more granular about that, given that, again, it's not like you know, we're talking about, you know, UK or the Western Europe or Japan or areas that have been explicitly kind of moving Huawei out, but some of the locales are probably the areas that they're hanging on the best. So are those competitive wins and not political wins? I guess I'd say on the one hand and on the other, if there's another share gain dynamic outside of Huawei, I'd love to hear more about that.
spk06: So, so, um, You ask a hard question. So the dynamics, it's difficult for us to decipher. And in our voice of the customer process, we ask whether the engagements are due to politics or supply chain. And the answers are both or mixed. Sometimes it's supply chain, sometimes it's politics. And, you know, we want to know so that we understand the dynamics so we can try and replicate it. But we were getting both answers. And, you know, at the end of the day, we're kind of indifferent as long as we get up to that. And then a little more color on where they're coming from. Our value proposition internationally is strongest with our multiband and with our in regions that have high spectrum costs because our total cost of ownership is strongest. So we're seeing operators that are having difficulty with either Huawei's supply chain or the geopolitical environment is changing. And the high spectrum cost, that's where we are seeing the biggest opportunities. Have I been fully responsive to your question?
spk05: Absolutely. Thanks very much. Sure.
spk03: Again, if you would like to ask a question, please press star, then the number one on your telephone keypad. That's star one. Your next question comes from Aaron Martin with AIG Investment Partners.
spk04: Hi, it's Aaron Martin with AIG. A lot of my questions have been asked already, particularly by Scott, but congratulations on a nice quarter. I appreciate you breaking out your revenue buckets in those three pieces of e-commerce in the mid-market and as large as it retains to passing through the price increases. If I were to look at those three buckets and sort of how much of your revenue can you cut, you know, how much of your revenue is in each one of those buckets?
spk06: So it kind of goes, the smallest is the shortest cycle and the biggest is the longest cycle. And so, so look for, for passing on price, our longest cycle business is our biggest. So that's why, you know, if mix is flat and there's no additional upticks in inflation, we feel good about expanding our gross margins going forward.
spk04: Got it. But it's going to be more gradual as we get in over the next, you know, nine to 12 months because of the long lead on the vast majority of the business.
spk06: That's fair. Yep.
spk04: Got it. And just a clarification on the book to bill. Was it the book to bill above one for the past 12 months or for the quarter itself?
spk06: Yeah, we typically only talk about 12 months trailing due to the project nature, you know, the project nature and the fluctuation. So we look at our book to bill over 12 months, and that's what we are comfortable disclosing here. But let me give a little more color. When we were writing the script, I was going to talk more about supply chain and the difficulties and how comfortable we are with the demand environment. So we're pretty comfortable with demand and, you know, a lot of our management team's focus is going towards delivery. So we feel good about the demand environment.
spk04: Okay, thanks. Congratulations on that nice quarter and wishing you continued progress. Oh, one more thing. I want to congratulate you on actually buying back stock this quarter.
spk06: Well, thank you. That's all I'll say. I wish it was trading at a higher than our triggers.
spk04: Well, it's depressing to get to keep buying back more.
spk06: Very good.
spk04: Thank you.
spk03: Your next question comes from Oren Hirschman with AIGH Investment Partners.
spk02: Hi, how are you? You have to increase the trigger, you know. As long as it's accretive, that's my personal opinion. But just in terms of the overall business, if there would not have been constraints on supply, do you have any clue how much more you could have shipped in the quarter?
spk06: I think we said two to three million.
spk02: Okay. And in terms of the overall momentum on the private network side, keeping in mind, keeping aside the competition aspect of it, you know, how would you characterize that momentum compared to six months ago or a year ago?
spk06: I'd say it's the same. Yeah, I think the momentum is the same. The private network teams are doing a great job. The opportunities are the same. And there's potential positive catalysts around ARPA funding and we build that better. So I'd say it's the same with some possibility for improving.
spk02: Is the drivers for the customers the same, you know, being led by security? Or has anything changed there in terms of the drivers?
spk06: No. So our private network customers are principally, you know, 911 first responder networks. Secondly, would be utilities. You know, I think long-term the utility market is improving with further focus on security, more sensors in utility yards. Water, waste water would be third. Fourth would be oil and gas. And I would say that, which is a really small part of our business. The demand drivers are about the same as they were six to 12 months ago. You know, with the one caveat that utilities, the macro trend would be favorable for private network demand.
spk02: Okay. And last but not least, on the software side, I know it's just a tiny piece of sliver of the sale today. but it can just kind of update how that's going, particularly on the staff side. And I know you're developing additional applications. How's that going? That's it for me for now.
spk06: Yeah. So the additional applications we expect in the next 12 months to launch a follow on offering, to FAST that would, you know, we're not ready to talk about or detail, but would be additive to FAST and would solve more network operator problems. And, you know, we would say our software business is still small, it's going well, and it was a positive contributor to the mix that we cited as the mix which was we had favorable mix and part of that was due to software. And the last thing I would say, while this is not standalone software, but our high availability routing software was released in the quarter and what we are, we think that's going to help with private networks, but we're also starting to find internationally that there are could be traction, and that's a positive surprise for us.
spk02: Great. Okay, thanks so much. Thank you.
spk03: Again, if you would like to ask a question, please press star, then the number one on your telephone keypad. There are no additional questions in queue. I would like to turn it back over to management for closing remarks.
spk06: Thanks. Thanks, everyone, for your support and your participation in the call. You know, in the quarter, we executed well. We're building a foundation for our future. We're really excited about the business, and we can't wait to talk to you again in 90 days. Thanks, everyone.
spk03: Thank you. This concludes today's conference call. You may now disconnect.
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