5/13/2025

speaker
Operator
Conference Call Operator

Good morning and welcome to the Gauzy-Lemmison first quarter 10-25 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Dan Scott, Investor Relations. Thank you. You may begin.

speaker
Dan Scott
Investor Relations

Thank you, operator, and thank you everyone for joining us today. Hosting the call today are Gauzy's CEO and co-founder, Eyal Peso, and Chief Financial Officer, Mayer Pellig. On this call, management will be making forward-looking statements, not historical facts, which are based on management's current expectations, beliefs, projections, and assumptions, many of which, by their nature, are inherently uncertain. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key expectations, beliefs, projections, or assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call or in our latest report and filings with the Securities and Exchange Commission, each of which can be found on our website, .gauzy.com. We do not undertake any duty to update any forward-looking statements. This call contains time-sensitive information that is accurate only as of today, May 13, 2025. Except as required by law, Gauzy disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's first quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures. With that, let me turn Nicole over to AL.

speaker
Eyal Peso
CEO and Co-Founder

Thank you very much, Dan, and good morning, everyone. Thank you for joining us today as we discuss our first quarter 2025 results. For today's call, I'd like you to focus on three key takeaways. First, our solid first quarter performance in the face of global uncertainty for our customers, which underscores the strength of our business model and the growing demand for our technologies. Second, the significant business milestones we've achieved during the quarter, in subsequent to its end, that will drive our growth in 2025 and beyond. Third, we have signed the first 10 million out of a previously announced 20 million planned debt financing under significantly more favorable terms, as compared to our borrowings as a private company. And finally, our reaffirmed 2025 guidance, supported by a strong backlog of purchase orders and enhanced balance sheets. We delivered a solid start to the year despite a two to three week period in March 2025 of As customers attempted to assess tariff impact and risks. Revenue growth in the automotive and safety tech divisions was offset by some timing shifts in deliveries in the aero and architecture divisions, which we expect to revert to a more normal cadence across the balance of the year. This view is supported by the record spike in the backlog of purchase orders to be shipped in the next few months. We're excited to execute against the backlog after a quarter in which we demonstrated our ability to deliver significant gross margin expansion as we accelerate revenues into the back half of 2025. Now let me highlight some of the key business milestones we achieved during the first quarter and subsequent period. On our last call, we told you about our new Black SPD Smart Black technology introduced at CES, our partnership with Jurnio to enhance London's 8,500 bus fleet with ADAS, our partnership with Umbrella to enhance ADAS for customers such as Ford Trucks, and our FMCSA exemption renewal to accelerate adoption of ADAS in commercial vehicles across the US. I'll now focus my comments on three recent announcements. First, we announced that Air France KLM Group has selected our advanced shading system for the new La Premiere first class suites in the Boeing 777 aircraft. These five window suites represent a significant opportunity in the airline shading market valued at $600 million annually with .4% projected growth through 2028. Gauzy has captured over 95% of the cockpit shading market and works with OEMs including Embraer, HondaJet, Dahir, and others. The double pleated system allows passengers to choose between translucent and blackout settings while providing centralized control for crew members. This is another example of our goal of transferring our cockpit shading success to cabin applications. Second, we announced that Mercedes-Benz has implemented our Smart Black technologies in Mercedes-Benz has used 75% of the glazing in the new Vision Z show car which premiered in the Auto Show in Shanghai 2025. This marks Mercedes-Benz's first use of Gauzy's dual technology windows combining SPD and PDLC for enhanced shading, privacy, and digital application. Mercedes previously used SPD in its Magic Sky control. In the Vision Z, these technologies allowed transitions between transparent, shaded, and private states while creating projection surfaces. The solution reduces glare and cabin temperature while maintaining visibility. A segmented PDLC partition provides flexible privacy between cabins. And importantly, today we're excited to announce the ramp-up of shipments for the sugar production of the Cadillac Celestique EV with four-zone SPD sunroof marking the continuation of business with GM. These collaborations with Cadillac and Mercedes-Benz are yet another example of growing demand for our automotive Smart Black technologies with the market projected to reach $25 billion by 2028. Before I turn it over to Mea, I want to emphasize that our backlog of purchase orders which was below $31 million at year-end 2024 expanded to almost $36 million at the end of March, indicative of the strong continued demand for our product. As a reminder, purchase order backlog represents orders we have in hand and expect to ship in the next few months. The entire Gauzy organization is excited to deliver on this tremendous momentum. With that, I will turn it over to Mea for an update on Gauzy's financial results.

speaker
Mayer Pellig
Chief Financial Officer

Thank you, Eyal. I'd like to begin by providing a detailed overview of our first quarter 2025 financial results which highlights the strength of our customer relationships and the fast improvement in operational efficiency as we progress towards our long-term financial objectives. For the first quarter, we generated revenues of $22.4 million compared to $24.7 million in the prior year period. We saw growth in both automotive and safety tech as compared to prior year period. This was offset by error in architecture where we experienced a momentary pause towards the end of the quarter as customers sought to determine any potential tariff impact. Importantly, we saw no cancellations and in certain cases, by the end of the quarter and subsequent to its end, customers placed orders above their contractual minimums. Even with the revenue dynamic, our gross margin increased to .6% compared to .1% in the prior year period. This 50 basis points expansion was primarily the result of improved operational efficiencies which continued our progress towards profitability. Total operating expenses for the first quarter were $14.4 million, down 9% compared to $15.8 million in supplier year quarter. This decrease was mainly due to lower R&D, G&A, and sales and marketing expenses, partially offset by higher DNA. A generous average of the quarter was negative $5.5 million compared to negative $4.8 million in the prior year quarter. This decrease was primarily driven by the factors already discussed for gross profit and operating expenses. Now, turning to our segments results, starting with safety tech. Revenue in the segment was $10.8 million in the first quarter, up .5% compared to $10.7 million in the prior year quarter. The gross was driven by continued demand across the segment's product lines. Gross margin improved dramatically to .7% compared to .8% in the prior year period, primarily due to the benefit of scale. In aero, revenue was $7.6 million in the first quarter, up .6% compared to $10.1 million in the prior year quarter. Gross margin was .9% compared to .1% in the prior year period. This decline reflects momentary pauses as customers sought to determine any potential tariff impact and the resulting shifting of some shipments to the second quarter. In architecture, revenue was $2.4 million in the first quarter, down .2% compared to $2.6 million in the prior year quarter. As we have said before, architectural revenues can be particularly lumpy throughout the year, though this quarter was also impacted by macro uncertainties similar to what I just discussed in aero. Gross margin expanded to .1% up from .9% in the prior year period, driven primarily by the benefit of scales and operational efficiencies. In automotive, revenue was $1.5 million in the first quarter compared to $1.3 million in the prior year quarter. The dramatic gross margin improvement we delivered is aligned with the broader operational improvements we are making across GAUSI. We expect our automotive segment to continue showing improved results in 2025 as our new programs with major OEMs begin to ramp up as well as the beginning of recent serial production wins. Turning to our dollar sheet and liquidity position, we ended the quarter with total liquidity of $36.2 million, including $1.2 million of cash and cash equivalents, and $35 million of available capacity under our unzoned credit line. Total debt at quarter end was $37.3 million, including $12.5 million of short-term receivable finances. In terms of cash flow, our first quarter results included cash use in operating activities of $0.6 million, a significant improvement from a use of $6.9 million in the prior year period. The result was free cash flow of negative $2.3 million compared to negative $8.4 million in the prior year quarter. We are excited today to announce that subsequent to quarter end, we signed a new $10 million debt facility with Mizrahi, the third largest bank in Israel. This is important because it is the first step in securing a total of $20 million of debt financing as previously announced. We obtained this debt financing under a much more favorable terms as compared to our pre-IPO lending facility. The improvements included $370 basis point interest rate reduction and no prepayment penalties. This increased liquidity enhances the revenue capital that in turn supports our full year goals. I'm also pleased to announce that we are reiterating our guidance for full year 2025. We continue to expect revenue to be in the range of $130 million to $140 million, representing more than 30% growth at the midpoint compared to 2024. Based on the benefit of scale, federal operating leverage, and strong recurring revenue base that we have, we also reaffirm a justice abidant to be positive for the full year 2025. Given our typical seasonality and latest visibility into our end market, we expect the second half to be stronger than the first half and drive a full year growth and profitability. This guidance reflects the strong demands we're seeing across all of our segments, the growing reduction of our technology by leading OEMs and an expanded production capacity we're putting in place to meet these demands. Now I will turn it back over to Eyal for closing remarks.

speaker
Eyal Peso
CEO and Co-Founder

Thank you, Mayor. As we look across the balance of 2025, we remain incredibly excited about the opportunities in front of us. Even with the uncertainty in the market, the momentum in our business continues to build. Direct impact from tariffs on GOWD has been minimal and customer purchase orders remain strong. We're excited for what this year holds for us. The resilience of our long-term backlog, growing pipeline of innovation and enhanced liquidity position with our new debt facility reinforce our confidence in our growth trajectory. We'll continue investing in innovation, expanding our leadership in light and vision control technologies. Our future product roadmap includes promising developments across all four business divisions that we expect to accelerate adoption and expand our markets. Operationally, we're focused on scaling efficiently, balancing growth with margin expansion and progress toward profitability. We remain well positioned to deliver our reiterated 2025 guidance, accelerating growth and deliver outstanding value. In closing, I want to express my gratitude to our employees, customers, partners and shareholders for their continued support and confidence in GOWD. Thank you for your time

speaker
Eyal Peso
CEO and Co-Founder

today. Now we'll open up the line for questions.

speaker
Operator
Conference Call Operator

Thank you, ladies and gentlemen. We will now begin the question and answer session. And if you wish to ask a question, please press star and 1 on your telephone keypad and wait for your name to be announced. Once again, star and 1 if you wish to ask a question. Please stand by

speaker
Eyal Peso
CEO and Co-Founder

while we'll compile the Q&A roster. And we

speaker
Operator
Conference Call Operator

now have our first question. This comes from Dan Levy from Barclays. Your lines now open. Please go ahead.

speaker
Dan Levy
Analyst, Barclays

Hi. Good morning. Thank you for taking the questions. I wanted to first just start with a question on the cadence and appreciate the commentary that there were some delays in architecture, aerospace, and that the second half is more, it's going to be stronger than the first half. But what's the line of sight on second quarter and what's the line of sight on converting that backlog order book that you have into firm ready? Should we expect a sharp step up in the second quarter on revenue for a recorder?

speaker
Eyal Peso
CEO and Co-Founder

Hi, Dan. This is Eyal.

speaker
Eyal Peso
CEO and Co-Founder

Thanks for joining and thanks for the question. Start with the end basically yes. I think that if you look at what we have reported, shipping and Q1, and then add that to our POs in the backlog to be shipped soon. So, yeah, you should expect Q2 to always, as always, but also to be as strong as expected. And we reiterated and reaffirmed the guidance for the full year right now mid Q2 because even though last two weeks, last three weeks of March, there was some hesitance among customers by in matters of shipment, were there going to be any tariffs? Let's just wait and see. And if you remember, 2nd of April was Liberation Day where there was determination about tariffs, but there's a lot of questions and some hesitation in March. But nothing affected the business. It's important for me to say this again. And again, nothing affected the real business. It's all there. We had no cancellations. It's a little bit of push in the last two weeks of March. There was a lot of uncertainty, especially with things that were just ready for shipment. And okay, just wait a second. Maybe we'll ship it from here, ship it from there to U.S. customers. So, but all the business is there. And we're, you know, more than anything, I'd like to say that the cadence right now within Q2 and the POs that we have now to ship is exactly, if not better than what we saw late December or beginning of 25. So that's why we're very confident that we're going to deliver on our

speaker
Eyal Peso
CEO and Co-Founder

guidance for the full year. Okay. Thank you.

speaker
Dan Levy
Analyst, Barclays

Second, if we could just go into the free cash flow. So you did EBITDA of roughly negative $5, negative $6 million, but the free cash flow was substantially better. So could you just talk about what the offsets were? Is it, you know, one-time benefits on working capital, some reversals there and how sustainable that is?

speaker
Mayer Pellig
Chief Financial Officer

So as you can see, good morning, first, the mayor is here. As you can see, the cash flow, the main, I would say, impact on the cash flow is the working capital. Part of it is timely. Okay. But it comes from a strong and continuous working on the cash management, improving, for instance, our paymentors with suppliers, financing invoices, which gives us cash much more fast and then be able to improve our cash flow, although growing in general the working capital. I'd

speaker
Eyal Peso
CEO and Co-Founder

like to maybe add to that, that a big part of this, and we should expect that throughout the year, towards being cash flow positive in 2016 is that every 30 days that we can get from our suppliers, net 30 to net 60 or cash in advance to net 30 or net 60 to net 90, you know, gives us while we're factoring about 80% of our invoices today, gives us a much more healthy inflow, outflow of cash. And that's a big, big focus for this year for while we're still factoring. So that also has a big effect on the improvement in operational cash flow for this quarter. Okay, thanks.

speaker
Dan Levy
Analyst, Barclays

If I could just squeeze in one more. What's the line of sight on that additional $10 million financing that you talk to?

speaker
Eyal Peso
CEO and Co-Founder

So it's

speaker
Eyal Peso
CEO and Co-Founder

basically we're signed off. It's all signed. Between signing and closing, there are a few deliverables that we need to provide like, you know, liens. But I see no, there's no risk here. It's going to close hopefully even this week, maybe next week. But it's really, it's done. It's a done deal. If that's the question, done. It's not, there's no maybe here. Oh, you're talking about the second million? I'm sorry. Sorry, sorry, Dan. The second 10 million. Yeah, my bad. Sorry about that. The second 10, again, I don't want to give, I don't want to give a commitment to Dana. It's going to look like guidance, but it should be, we're trying our best to do, to sign that off even if not before Q2, somewhere in early Q3. We don't have, you know, we don't have that signed off. But that's my, you know, my,

speaker
Eyal Peso
CEO and Co-Founder

my expectations. Okay, thank you. Thank you. And the next question

speaker
Operator
Conference Call Operator

comes from Josh Nichols from DeRiley Securities. Your lines now open. Please go ahead and ask your question.

speaker
Matthew (on behalf of Josh Nichols)
Analyst, DeRiley Securities

Hi, this is Matthew on for Josh Nichols. Thanks for taking my questions. I guess to start off, touching on the macro uncertainty that caused the hiccup in Q1, would you say it's just mainly off of peak uncertainty on liberation day and from there things just looked more smoothly in terms of orders and timing? Or what should we look out for in terms of possible additional hiccups in the future?

speaker
Eyal Peso
CEO and Co-Founder

Hi,

speaker
Eyal Peso
CEO and Co-Founder

Josh. This is Eyal. Thanks for the question. So, you know, I want to, I want to say this just again, loud and clear. There is no effect to the real business in GALSY by the tariff. But if you, if you put yourself as a production company importing into or that while its products are imported into the US in March, there was simply a lot of hesitation and a lot of question marks. Where do I take this product from? Even a Boeing where their cockpit shade is manufactured, that's the only aero product we're actually manufacturing for US customer outside the US, which had no issues. You know, if you have enough inventory, you can just, you know, just wait a minute. Maybe I won't be taking this from France. Maybe we'll just wait to see what's going to be the actual tariff. And that was only on the 2nd of April. So I'm saying hesitation caused some delays. But if you just add up what we have reported shipped and then and recognize across recognition, remember is approval of the customer at its site many times of our product. So that had to be shipped even though it was ready. If you just look at what we had finished goods at 31st of March, if you add that to our reported revenues and our POs in the system, which, you know, we're reporting a spike of about more than half more than $5 million. You're looking at together with the POs end of March about 60

speaker
Unidentified Speaker

minutes

speaker
Eyal Peso
CEO and Co-Founder

about a little bit shy of $60 million that has been shipped or is going to be shipped very soon. So I'd like to say again, this is this is with some hesitation, but we had we had reported mid April, about a week after liberation day that it had minimal effects to our business to know if the effects and today we can say much with much more confidence that it's mostly mostly we get exempt because of the different reasons. So we're in a much better place. So, you know, it's just that there was a little bit hesitation and that's that's what caused some shifting in shifts in timing of delivery. But nothing at all has changed from our overall business that we have reported we're going to do this year. Actually, in some cases we had increases and we had customers ordering more than expected that had nothing to do with the US specifically in other places around the world. So I'm very confident that you're going to see you're going to see our guidance met throughout the year. This is why we're not also giving quarterly guidance. It's hard for us to be accurate. These kind of events are extreme, but you know, it comes together. But within a full year, even these events are kind of washed away. And so we're reiterating here, reaffirming our guidance for the full year.

speaker
Matthew (on behalf of Josh Nichols)
Analyst, DeRiley Securities

Got it. Very helpful. And regarding the large spike in purpose orders, which segment would you say is getting most of those orders or what is the split there?

speaker
Eyal Peso
CEO and Co-Founder

Yeah,

speaker
Eyal Peso
CEO and Co-Founder

I was backlogged. I think we have a very good, you know, it's a very good mix of 15.5 million dollars is arrow just to show that, you know, yeah, it was, you know, if you look to Q2Q on last year, it's going to see a difference of two and a half million dollars. But it's all the deals. It's all there. It's all going to be shipped in Q2 and Q3, Q4. It's all in the book. So there's no there's no no issue that there was another 17, I think, or $18 million with safety tech, which we're experiencing, you know, the significant growth we expected, but even more in some cases. So you know that these are the main two I think we had about quite, quite extraordinary, about $6 million of POs. Some of it really was already manufactured, just not recognized in Q1. So it's still a PO in, you know, in the backlog, but it's really done. So we have that $6 million in automotive, which is unique. We have a very good visibility. So the smart glass portion of the of our business in automotive, we also announced that we for the first time by name GM, the Cabot Celestics starting to ramp up its production this year, reported to start shipping cars very, very soon to their customers. So I mean, we're so I think that's the takeaway from from the back fog. So it's and the rest is architecture about to to a point $2 million of POs for architecture to be shipped.

speaker
Eyal Peso
CEO and Co-Founder

Well, April, May, if you look at end of March.

speaker
Matthew (on behalf of Josh Nichols)
Analyst, DeRiley Securities

Got

speaker
Eyal Peso
CEO and Co-Founder

it. Thank

speaker
Matthew (on behalf of Josh Nichols)
Analyst, DeRiley Securities

you. I guess last one for me, it's somewhat of a related question, I guess, to get to the to your guide a full year, you could profitability or to get a positive on that side. What would you say is in terms of segments or maybe even products that you're most excited about?

speaker
Eyal Peso
CEO and Co-Founder

What do you see getting you there? What would what would contribute what

speaker
Eyal Peso
CEO and Co-Founder

would contribute to the positive? Just to see if I answer the question, if I'm looking now towards that, you know, for the for the full year, what would be the contributor of the positive that we have guided for the full year? 25. But I think that, you know, just very easy to I say just bridge Q4. I say just people with rich. But you see that if you double for Q4, you're at 125 million for the year, we're guiding on a midpoint, $10 million more, and we're now reaffirming it. And you see if we if we hit numbers like Q4, let's say on average for the full year, we're in a gross margin of 50% in arrow. We're on a very healthy 20 plus in safety tech, we're your bigger portions of the business. If you see what we're doing in Odo, I know it's small numbers, and it's insignificant. But you know, it's even harder to jump 16 points per quarter every quarter when you're only doing shipping a million and a half or 2 million, 3 million kind of cadence of quarters. But we're doing it because we're working very closely with the OEM to improve yield. So I mean, I mean, we're, you know, I say that, you know, if you, it's gonna come, it's gonna come every every business division has its own contribution. But as long as we meet top line, and we're now reaffirming that for arrow is going to have a huge impact on our gross margin, because every dollar up on top line is improving our gross margin significantly. Same with safety tech. If you see the comparison between Q1 and Q1, 12 to 19% in gross margin shows you how well we have improved our, you know, our cost of sales available materials because the big contributor this quarter for safety tech is SmartVision. So, you know, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're going to be very, very careful with our expenses to make sure that we're, that our guidance is going to be met. And, and, and, and, you know, and, and anyway, a bit

speaker
Eyal Peso
CEO and Co-Founder

of positive for the full year is, is, is the guidance. Got it. Thanks. That was really helpful. That was it for me.

speaker
Operator
Conference Call Operator

Thank you. Once again, for those who want to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. Star and one for question. And the next question comes from the time. Kelly from the Cowan, your lens, no, please go ahead.

speaker
Tim Kelly
Analyst, Cowan

Great. Thank you. Good morning. Everybody. I just had to follow up. First, maybe to pick up on the last question. Maybe you could just talk a little bit about what you expect for optics directionally the rest of the years. He did come down in Q1. Just curious how you're thinking about that for the rest of 2025.

speaker
Eyal Peso
CEO and Co-Founder

Good morning. Thanks for the question. But I was a little bit breaking off at the beginning of the question. Can you, can you just repeat? I'm sorry.

speaker
Tim Kelly
Analyst, Cowan

Yeah, no, no. Sorry about that. Yeah, just hope you can hear me now. Just maybe you could comment a bit more on what you expect for the rest of the year. I see it did come down in Q1. Just curious how you're thinking about that for the rest of the year.

speaker
Eyal Peso
CEO and Co-Founder

Okay, got it. So I think you should see a very steady OPEC. And as I said, you know, just to follow up on my last answer is that we're going to be very, very disciplined in our OPEC. I mean, we have a big portion of that kind of set up for the year. There are things we need to do to be able to ship, you know, if it's 135 on midpoint of the guidance or more. And but we're going to be very, very careful with anything. I think I think it shows for in Q1 on any expense to make sure that we, you know, we keep that guidance of EBITDA positive for the full year intact. We have set up we have set up the SGA expense structure beginning of the year to support to support much, much bigger quarters throughout the year. So what would you see on OPEC in Q1 is that of what will support also And as always, our strongest quarter in Q4 and a much stronger quarter in Q2. So, you know, that's, that's already set. So you should consider the OPEC in Q1 as a base for the full year for the full year guidance.

speaker
Mayer Pellig
Chief Financial Officer

Yeah, that is, as I said, it's more that will be stable at the same as Q1 a bit more, mainly in sales and marketing to support the growth. But you should expect about the same OPEC a bit higher than in Q1.

speaker
Eyal Peso
CEO and Co-Founder

Yeah, well, sales and marketing sometimes goes up because you have to pay, you know, it shows for in the numbers, paying commissions and things like that. But yeah, we're trying to yeah, a little bit higher, but it's mainly for sales and marketing and, you know, just higher numbers.

speaker
Tim Kelly
Analyst, Cowan

Terrific, very helpful. Thank you. And as a follow up, as your revenue kind of grows in the next three quarters towards your guidance, how should we think about working capital? You're able to actually release a fair amount this quarter in Q1. But as revenue grows, is there more opportunity in working capital or could actually become a use as you support growth?

speaker
Mayer Pellig
Chief Financial Officer

So, as I said before, of course, when the business is growing, the working capital grows as well. And the need of cash is also growing. But in order to to face this, we're doing continuous work in order to better our payment terms with suppliers. And that's part of you can see in Q1 results. In addition, we're financing and again, working to increases to other locations, we're financing part of our invoices in order to make the cycle of this working capital much faster. So, of course, when growing the working capital will grow as well, but we're trying to reduce this growth by what

speaker
Eyal Peso
CEO and Co-Founder

I just mentioned. And I'd like to add to that just for the sake of everyone, very quickly, but a very simple math equation. If Gauzy has, let's say, just, you know, 24, 25 million dollars of sales, you know, a quarter or 30 million dollars of sales like Q4, that means cash in has factoring 80% or financing invoices 80, 85%. So that is like eight to seven to take seven to ten million dollars cash in every 30 days. Just think of if we push, if we get the help of our suppliers to get us another 30 days on their net, if it's net 30, make it net 60, if it's net 60, make it net 90. If we just average better on supply terms, net 30, that's working capital of eight, nine, 10 million dollars of cash for our working capital every month. So that's how, you know, you should think about improving cash flow, operational cash flow. It seems easy, it's not easy, but that very simple shift 30 days, that's how much influence it has on our working capital. That's our main target. It's a big target of ours.

speaker
Mayer Pellig
Chief Financial Officer

I want to add that we don't expect 2025 to be a positive free cash flow. Okay, we only expected in 2026. So we're going to understand that we'll have a negative free cash flow in 2025.

speaker
Tim Kelly
Analyst, Cowan

Absolutely. That's all very helpful. Thank you.

speaker
Operator
Conference Call Operator

Thank you. And no further questions that came through at this time. I will now turn the call over to Eyal Peso for closing remarks. Please go ahead,

speaker
Eyal Peso
CEO and Co-Founder

sir. Thank you very much for joining us today. We look forward to future discussions and announcements to update you on our progress. Have a great rest of your day. Thank you, everyone. Thank you. This concludes our conference call

speaker
Operator
Conference Call Operator

for today. Thank you all for participating. You may now disconnect.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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