KORE Group Holdings, Inc.

Please note that this webcast includes forward-looking statements, statements about the company's beliefs and expectations containing words such as may, will, could, believe, expect, anticipate, and similar expressions are forward-looking statements and are based on assumptions and beliefs as of today. The company encourages you to review the safe harbor statements, risk factors, and other disclaimers contained on this slide and today's press release as well as in the company's filings with the Securities and Exchange Commission, which identifies specific risk factors that may cause actual results or events to differ materially from those described in our forward-looking statements. The company does not undertake to publicly update or revise any forward-looking statements after this webcast. The company also notes that it will be discussing non-GAAP financial information on this call. The company is providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in the United States or GAAP. You can find a reconciliation of these metrics to the company's reported GAAP results in the reconciliation tables provided in today's earnings release and presentation. I'll now turn the call over to Ronald Weil, company's president and chief executive officer.

Thank you, Charlie. Good afternoon, everyone, and thank you for joining us today for our second quarter 2023 earnings call. With me is Paul Holtz, Core's Chief Financial Officer. Before we get started, a warm welcome to our newest IoTers, many of whom joined Core with the acquisition of Twilio's IoT business. And now, let's get to the meat of our earnings call. As always, I'll start with a brief overview of the key events and announcements from the second quarter, and I will be followed by Paul, who will discuss our financial results. We will finish with a Q&A session. Slide four presents some key announcements from the second quarter. On June 1st, we closed the acquisition of Twilio's IoT business, marking a key milestone in accelerating our journey to being the world's first IoT hyperscaler. This acquisition, apart from providing us a world-class IoT connectivity product in SuperSim, expands Core's one-stop shop position by adding build to our deploy, manage, and scale value proposition. Needless to say, we remain excited about the additional growth opportunities created by the combination of core and the Twilio IoT business. In May, we announced the launch of our pre-configured managed solution to offer retailers, restaurants, and other multi-site companies high bandwidth 5G cellular connectivity through fixed wireless access, or FWA. Core's FWA solution will allow customers to access high-speed internet that has traditionally been available only through wireline applications. Retailers, restaurants, and other consumer-facing companies are increasingly seeing the benefits of 5G solutions to support point-of-sale devices, digital ordering, and integrating with third-party delivery services across multiple locations. This FWA solution positions Core to attack a growing high bandwidth use case and further expand our addressable market. As I'm sure you are all aware, ESG and sustainability have become important topics for companies and investors. With IoT increasingly playing a role in supporting ESG initiatives, We are seeing more opportunities where CORE can play a part, aligning with our purpose statement, IoT for good. Along these lines, in the second quarter, CORE announced its participation and support of two sustainability initiatives. We will provide scalable global IoT connectivity to a biodiversity sensor project conducted by ag tech company Syngenta. Syngenta's biodiversity project is digitally connecting farmlands across the globe to provide farmers with analytics to aid them in adapting to climate change and improving biodiversity to protect crops. Last year, Syngenta connected over 200 hectares of land and has a goal to connect 1 billion hectares over the next three years. To further support sustainability and waste reduction, CORE has launched an initiative to reduce the amount of plastic used in SIM card bodies by 50%. In addition to cutting SIM card plastic waste by half, this initiative will lower SIM card shipping costs by 50% and reduce core's carbon footprint related to SIM cards by 16%. Now, let's turn to our second quarter financial results and 2023 guidance on slide five. Our second quarter results continued the momentum established in the first quarter with Q2 revenue of $69.5 million, increasing sequentially from the first quarter by approximately 5%. On a year-over-year basis, revenue declined slightly by 2%, primarily due to a difficult comparison to the second quarter of 22, which had revenue from 2G, 3G customers and the LTE transition project at our largest customer. Absent the 2G, 3G, and LTE transition project revenue in 2022, second quarter 2023 revenue increased over 2% year over year. Our 2023 second quarter was the last quarterly year over year comparison impacted by the LTE transition project revenue, and the true organic growth of the company will be more evident going forward. While we have experienced some delays in IoT solutions revenue at a few customers, we continue to expect sequential quarterly revenue growth for the remainder of 2023 and year-over-year growth beginning in the third quarter. Gross margin increased 180 basis points year-over-year to 54.4% and benefited from continuing carrier cost optimization and a lower mix of hardware revenue. Second quarter 2023, adjusted EBITDA of $14.2 million increased approximately 7% sequentially from the first quarter, and adjusted EBITDA margin improved 30 basis points to 20.5% from 20.2%. Compared to the second quarter of 2022, adjusted EBITDA declined approximately 15%. We are reiterating our 2023 revenue and adjusted EBITDA guidance. We expect revenue to grow in the low to mid teens, resulting in revenue in a range of $300 to $310 million. This guidance includes absorbing the $24 million in year-over-year headwinds from the 2G and 3G sunsets in the U.S. and the LTE transition project at our largest customer, somewhat offset by the partial year contribution of the Twilio IoT business acquisition. Our reiterated guidance assumes that much of the IoT solutions revenue pushback that we started to see in the second quarter and will see in the third quarter will be made up in Q4. We remain confident in our adjusted EBITDA guidance range of $60 to $62 million and margin of approximately 20% as margins in the Twilio IoT business are improving slightly faster than we initially projected, which should offset any potential impact from the revenue delays I mentioned. With that, I will now hand the call over to Paul to cover the financials in more detail. Paul?

Thanks, Ronald, and good afternoon, everyone. Turning to our results on slide six, second quarter revenue declined 2% year-over-year to $69.5 million. compared to 70.9 million in the second quarter of 2022, and did increase 5% sequentially in the first quarter of 2023. By segment, IoT connectivity revenue of 48.3 million, including one month of revenue from the Twilio IoT acquisition, increased 8% year-over-year. Q2 2023 marked the first quarter sequentially in many years, that IoT connectivity revenue was not affected by the 2G, 3G sunsets in the U.S. IoT connectivity revenue is forecast to grow year-over-year and sequentially for the rest of 2023. Moving to IoT solutions, revenue declined 19% year-over-year to 21.3 million. The decline was again driven by the difficult year-over-year comparison due to the LTE transition project revenue at our largest customer in the prior year. The LTE transition project concluded in the second quarter of 2022, so going forward, this will not impact the year-over-year quarterly comparison. Total gross margin in Q2 2023 was 54.4%, an increase of 180 basis points year-over-year. The second quarter marks the highest gross margin since CORE went public in the third quarter of 2021. IoT connectivity gross margin of 65.2%, was down slightly year over year. IoT connectivity gross margins for the last four quarters have remained stable in the 65% range, but will decline overall in the second half of 2023 with the addition of the lower margin IoT connectivity revenue from the Twilio IoT acquisition. The good news is that, as Romo mentioned, margins from the Twilio IoT business are expected to improve slightly quicker than we thought throughout the rest of 2023. IoT solutions gross margins declined approximately 90 basis points year-over-year. The decline was mainly just due to the mix of hardware versus service risk. Total connections at the end of the second quarter were 18.5 million, including approximately 2.9 million connections from the acquisition of the Twilio IoT business. Excluding the Twilio IoT connections, Core's organic connections increased by 400,000 in the second quarter of 2022. Dollar-based net expansion rate, or DBNER, for the 12 months ended June 30, 2023, was 99% compared to 114% in the prior year. As a reminder, DBNER measures the growth from existing customers in the trailing 12 months compared to the same customer cohort in the year-ago period, much like same-store sales growth rate. As I said on our last quarterly call, with the anniversary of the BNP Simon acquisition in the first quarter of this year, These customers are now included in the calculation. The new customers from the Twilio IoT acquisition are not included. CBNER year-over-year continues to be impacted by the LTE transition project revenue from our largest customer that began in June 2021 and ended in June 2022. During this time period, our largest customer's revenue more than doubled from this one-time project. IF WE EXCLUDE TOTAL REVENUE FROM OUR LARGEST CUSTOMER BECAUSE OF THIS SIGNIFICANT NON-RECURRING EVENT, DBNER AT THE END OF THE QUARTER WOULD HAVE BEEN 115% COMPARED TO 109% AT THE END OF THE SECOND QUARTER OF 2022. OPERATING EXPENSES INCLUDING DEPRECIATION AND AMortIZATION IN THE SECOND QUARTER WERE 47.4 MILLION, AN INCREASE OF 4.2 MILLION OR 10% COMPARED TO THE SAME PERIOD LAST YEAR. THE INCREASE IS ATTRIBUTED to an increase in headcount-related costs, the inclusion of the TwilioILT business, stock-based compensation, and higher depreciation and amortization expense compared to Q2 2022 due to the BNP acquisition in the prior year. Second quarter interest expense, including amortization of deferred financing fees, increased year-over-year to $10.4 million versus $7.3 million in Q2 2022. due to the increased borrowing costs on our senior secured term loan. Net loss in the second quarter was $19.5 million compared to $10.8 million in the same period in the prior year. The year-over-year increase in net loss was due to increased operating expenses, which were partially attributed to the inclusion of the Twilio IoT headcount, higher depreciation and amortization expense, increased interest expense, and a lower income tax benefit compared to the year-ago. Adjusted EBITDA in the second quarter was 14.2 million, a decline of 2.6 million, or approximately 15% compared to the same period last year. Our adjusted EBITDA margin in the second quarter was 20.5%, down 320 basis points compared to the same period in the prior year. However, we did experience a 7% sequential improvement in adjusted EBITDA and a 30 basis point improvement in adjusted EBITDA margin from the first quarter of this year. The year-over-year decline in adjusted EBITDA and adjusted EBITDA margin were impacted by increased costs for headcount to invest in the company's growth, the additional Twilio IoT headcount, and costs to enhance public company processes and systems, including SOX compliance. Moving to cash flow. Cash used in operations for the three months ended June 30th, 2023 was approximately 0.7 million compared to cash provided by operations of 14.7 million for the same period in the prior year. The change was mainly due to abnormally high collections from our largest customer in Q2 2022 related to their LTE transition project. This compares to incremental cash outflows in Q2 2023 related to the Twilio IOT acquisition plus their incremental headcount costs paid in the quarter. These incremental cash outflows from the Twilio acquisition were not offset by any Twilio revenue collections as these won't begin until Q3 2023. At the end of the second quarter, cash excluding restricted cash was $22.9 million compared to $34.7 million as of December 31st, 2022. This change was primarily related to cash outflows from the Twilio IT acquisition, annual bonus payments, and increase in interest and income tax payments. Before passing it back to Romo, I would like to make a couple of comments on our 2023 annual guidance that we are maintaining for both revenue and adjusted EBITDA. For revenue, we had a strong first half of the year with no headwinds from the 2G, 3G sunsets in the US. positive organic growth in IoT connectivity, and the completion of the Twilio IoT acquisition. In the second half of the year, IoT connectivity revenue is expected to continue its positive momentum, and we will have a full six months of revenue from the Twilio IoT business. We are, however, more cautious regarding the IoT solutions revenue, as some of these customers have indicated they are pushing orders to the fourth quarter, which increases the risk that these orders could slip even further, meaning into 2024. At this point, we see Q4 being the largest quarter of the year for IoT solutions, when it has typically been our lowest quarter. We are much more confident about adjusting EBITDA because of the strong momentum in IoT connectivity and the faster improving Twilio IoT margins. On the OpEx side, we had built in incremental sales headcount into our guidance, in the second half of 2023, which we could delay if needed. And with that, I'll pass it back to Roman.

Thanks, Paul. As you have heard, and to reiterate, with the second quarter complete, the difficult year-over-year revenue growth comparison from the LTE transition project at our largest customer is now behind us. As a result, we expect to generate year-over-year growth beginning in the third quarter and further we are on track to achieve double-digit revenue growth in 2024 as evidenced by our increasing global sales pipeline. Slide 8 presents a snapshot of our global sales pipeline as of June 30, 2023. Our sales pipeline now includes almost 1,500 opportunities with an estimated potential total contract value, or TCV, of approximately $660 million. In the second quarter, we generated an incremental $32 million of closed one TCV, bringing the year-to-date total to $60 million. We continue to progress towards exceeding the $102 million closed one TCV in 2022 and delivering a fifth consecutive year of TCV growth. As a reminder, the majority of sold TCV is recognized as revenue over four years, and it is important to note that the closed TCV figure is aggregated across all of our business lines, which have different durations of revenue recognition. For instance, IoT connectivity revenue tends to have a slower ramp and can go out beyond the four years we use for TCV calculations. while IoT managed services include both one-time revenue projects that are generally recognized in one to two years and recurring revenue usually recognized over three years. Slide nine showcases a few examples of our wins in the second quarter that contributed to the closed one TCV of $32 million. These recent contract wins highlight the success of our growth strategy and demonstrate the expansion of new use cases for our products. Core has continued to have success in increasing its wallet share at existing customers. In the second quarter, we secured three contracts with TCVs of over $9 million, $6 million, and $1.5 million from customers in the fleet, asset tracking, and healthcare markets, respectively. These customers are seeking to improve operational efficiency and effectiveness by consolidating IoT connectivity to a single platform, single partner in Core. We continue to see customers taking advantage of Core's full range of capabilities and product offerings to support their growth. For example, Core recently won a $500,000 TCV engagement to support IoT managed services for a usage-based insurance company seeking to upgrade and improve their logistics. As an example of effective land and expand execution, Core followed on a recent win at a major restaurant chain with another engagement, whereby Core will provide fixed wireless access services to 650 of the customer's locations and will upgrade these locations to 5G technology. This contract has a TCV of $850,000. We also continue to win customers outside the U.S. In 2.2, Core One contracts from a leader in fleet AI video telematics headquartered in the U.K. and a leading medical equipment and remote patient monitoring provider based in France to support their entries into the U.S. market. These contracts have a combined TCV of approximately $1.5 million. On to the final slide, slide 10. As I said at the beginning of this call, we started the year with good momentum, which continued through the second quarter. We organically grew connections by half a million SIMs. We added $32 million in TCV and delivered sequential quarterly growth. As we move into the second half of the year, we expect revenue to continue to increase sequentially each quarter and, importantly, generate year-over-year growth beginning in the third quarter. As covered on our funnel chart, our global sales pipeline is approaching 1,500 opportunities with a potential new business TCV of approximately $660 million, which provides a solid backdrop for growth over the coming years. This sales pipeline, coupled with our approximately 80% recurring revenue, gives us confidence that we can achieve our medium-term goal of generating top-line revenue growth of at least 20% with an EBITDA margin of 20% or better, thus becoming a rule of 40 company. As always, creating value for our shareholders remains a top priority, and we believe we are well-positioned to do that. In closing, I wish to thank all of our global employees, the core IOTers, for working hard every day to drive growth and serve our customers.

With that, let's start the Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions.

Our first questions come from the line of Michael Lattimore with Northland Capital Markets.

Please proceed with your questions.

Great. Thanks very much. The TCV funnel is really large, grew nicely. Does that include the Twilio business, or is that organic?

That's actually organic, Mike. You know, we really only kind of, I'll say, owned the Twilio IoT business for a month in Q2, as you know. And, you know, so far we're just going off even revenue recognition and so forth still provided by, you know, the Twilio back office and so forth. So we haven't quite had a chance to consolidate everything. But hopefully when we're speaking to you in mid-November about Q3, we'll have that done.

And what sort of use cases or applications are most pronounced in that funnel?

We're continuing to see just sort of a – inexorable lift, Mike, in some of these high bandwidth use cases. A lot of fleet. You've seen the momentum since really the beginning of the year in fleet. In fact, right at about 60% of the $32 million we closed in Q2 was fleet. So there's a lot of video telematics and higher bandwidth as people are continuing to Look at more of that, more AI at the edge, those kinds of things. But there's others, right? I mean, you saw, I suspect, you saw a press release we put out on a large restaurant chain. In fact, we had a follow-up win at that chain here that we announced in Q2. So there's good momentum in FWA, and the dollars add up quicker there, hence the TCV sort of funnel growing.

Yeah. Obviously, you're expecting good year-over-year growth in the second half. In the third quarter, do you think you will get back to year-over-year organic growth?

Yeah, we certainly believe that to be the case despite what both Paul and I talked about around the pushbacks we're seeing from IoT Managed Services, NetSolutions customers. But, you know, pending where all that falls out, we're still fairly confident there's organic growth there, yeah.

Great. Thanks a lot. Thank you.

Thank you. Our next questions come from the line of Scott Searle with Roth MKM. Please proceed with your questions.

Hey, good afternoon. Thanks for taking my questions. And maybe to follow up quickly on Mike's question, you know, in terms of returning to organic growth in the third quarter, I'm not sure I heard a Twilio contribution number in the second quarter. I'm wondering if you could calibrate us on that front, remind us how many employees also are coming on board as part of the transaction.

Yeah, so, Scott, we haven't disclosed any of all of that. It's so small and sort of generally small. you know, kind of not material, but we did disclose this time because we could, because we got a count from them of their connections at the end of June. And of course, we had our own connections count. So you could see, you know, kind of a 2.9 million number there. There are pools right around ours. I guess you could get a general idea of size from there, but it's just not something we've disclosed per se.

And then, Scott, on the people we have disclosed, it's just A little bit over 50 people that came over. That will be in the queue, too.

Right. Okay. Great. Thank you. And, you know, Ramal, maybe to go back to the FWA opportunity, I'm wondering if you could dig into that a little bit more in detail. I'd like to understand if you guys are just doing the device management of it, or are you doing the full managed service capability for that fixed wireless access system? And I was wondering if you could also frame the opportunity there as well. I imagine it comes with much higher ARPUs. So I'd love to kind of get my hands around that and what your broad-based expectations for that type of an end market or use case would be as we get into 24, 25.

Yeah, no, that's a great question, Scott. So, you know, the first thing I'll say is we're now, gosh, about four years since we first started to sort of prioritize ARPUs. the general use case in this area. In those days, though, it was backup. You remember it was like failover, right? It was like, all right, you know, when power fails, Wi-Fi fails, whatever, you can go to a cellular backup. Well, just in a scant four years or three years since we put our first kind of solution out there, you know, we've grown by leaps and bounds in terms of just the bandwidth and the technology and what's possible. And now People are talking about cellular as primary, right? Who needs to dig holes in the ground and put fixed lines and fiber into places when you can get the kinds of speed we're getting on cellular as a primary? This particular solution that we talked about as a press release and then highlighted here on the call, or easy consumption for those customers. And to your point, it includes hardware and connectivity, right? So it's a fully managed solution, true definition of sort of as a service. And by the way, specifically supports 5G, right? And just basically enables businesses to cut the cord entirely, just like we're cutting the cord on landlines into our homes. And it's, yeah, I mean, it's got solid partnerships on the hardware side that we're going to market with.

Okay. Okay. Great. And lastly, if I could, you know, looking out to 2024, it sounds like ending this year, there are some big opportunities that look like they're going to catalyze in the fourth quarter around some device deployments and product sales. It sounds like it's setting you up for a nice return to organic growth, ex-Twilio, you know, going into the 2024 time period. So, will you back to 15% plus kind of organic growth on IoT connectivity in 24, or is it still a little bit early to be making that call? Thanks.

Yeah, no, again, you know, Scott, we will to the question that was just asked earlier on this call here, right? We are back to organic growth year over year in Q3. Obviously, the Twilio contribution was smaller than we had hoped for, you know, a year ago, a year and a half ago when we first saw their forecasts and so on. will also contribute, right? And then some of this imbalance between Q3 and Q4, as Paul said, is customers that normally would have placed POs in sort of the May-June timeframe for Q3 sort of said to us, hey, 90-day delay, 120-day delay. So in theory, if all those come back in, that's moving revenue effectively from Q3 into Q4, right? But if you looked at it, you know, regardless, even with that move, we should eke out organic growth in Q3. Certainly Q4 should be sort of very, very good growth. And then, yeah, and hopefully that continues and the sequential quarter streak continues and ends. Now, on the question of is next year, are we ready to talk about sort of 15% on connectivity? I'll stop short of saying that. I mean, again, we're bullish. You just saw an 8% type growth Q2 over Q1 on connectivity, which is, Very encouraging. So, yeah, the eights and tens possible for sure. How do we creep higher than that? How do we get to 15s and 20s? We need the economy and the macro to settle down. We need the supply chain issues to settle down. We need to see upward movement on ARPU, all of which we think will happen. We certainly think we can get there. I'll just stop short of promising it in 2024.

Great, thank you. Nice to see you return to growth. Yeah, thank you.

Thank you. Our next questions come from the line of Meta Marshall with Morgan Stanley. Please proceed with your questions.

Great, thanks. Maybe first question just on Twilio. You know, it sounds, I just wanted to get a sense of, you know, how is it different now that you've actually been able to get your hands on it and kind of see the organization and you know, were you able to kind of hold on to some of the key engineering talent that comes over that you were most excited about?

Yeah, thanks, Mita. Look, I think the first thing I'll say is the strategic rationale for the deal absolutely remains in place in terms of how excited we are about the engineering talent that you mentioned. Much of the core network team is actually in Germany. I was able to visit with them, have a really productive visit. And so, you know, very much looking forward to as early here as this quarter to seeing sort of a, you know, combined next generation product roadmap to seeing a accelerated plan of building out that digital front end, which clearly, you know, these guys, these guys just were born digital, were easily the best digital consumption of IoT sort of business model in the market. And we're, Looking forward to having them help us build this here at lower cost, obviously with cost savings that we talked about when we did the acquisition. So I would say all of those sort of strategic rationale points stay very much in place. The cultural fit points also very encouraged. I mean, as I alluded to in Germany, but also in the UK, here in the United States, we've had excellent meetings with them. In some respects, the integration is going sort of better and faster. than we could have hoped, including, by the way, on the gross margin line, which is kind of nice to get really confident that we can get to break even here, even this year, you know, sort of in the fourth quarter, and obviously our promise of being accretive next year, therefore, becomes completely de-risked, right? So the only thing that I would say that, you know, if you had to scratch for kind of a, you know, negative is that, again, alluding to my comment 18 months ago when we saw the plan and what they were supposed to be at, they're obviously sort of far off that, you know, smaller entity in terms of revenue today. And even the growth rate is damper than we were hoping and sort of, again, what the plan said. Some of that, look, it's just, you know, it's 12 and 18 months of distraction for this team when obviously they sort of you know, had heard rumors first and then confirmation that they were not strategic to the future of Twilio. People started looking for jobs. They've had attrition, especially in their sales force. Really, really hard to sell without sales force. So, you know, so yeah, they've come in smaller, but we've embraced the challenge. Our new CRO is all over working with the Twilio leaders on, I'll say, rebuilding the momentum that we know they can have and can be accretive to our growth.

Great, thanks. And maybe just a follow-up question. If you could just kind of remind us of how much of the solutions business is kind of what you would deem more recurring versus project-based.

Yeah, it is rough 60-40. Again, it depends. It will vary each quarter, but That 60% has been pretty consistent on customers who either order annually, so one PO, or order on a quarterly basis. But, yeah, it's 60-40.

Sort of programmatically recurring, as we call it, yeah.

Got it. Okay, perfect. Thanks so much, guys.

Thank you, Amita. Thank you. Do we still have the operator? Yes, I'm here. I apologize. My computer froze. Our next question comes from the line of Matt Nicknam with Georgia Bank.

Please proceed with your questions.

Hey, guys. Thanks for taking the question. So maybe first on adjusted EBITDA. So I think year-to-date you've generated a little under $28 million in You're reaffirming the guide for 60 to 62 mil for the year. I'm just wondering, as we think about just initially, I think the expectation was the Twilio deal would be somewhat dilutive up front. So I'm just wondering, you mentioned maybe a little bit more optimism there around the profitability prospect. So if you can maybe help us think about the bridge in the second half of the year to hitting the adjusted EBITDA target. And maybe secondarily, as you think about the IoT solutions business, I'm just wondering if you can help maybe help quantify the headwind from the push out of orders. And is the assumption then that 3Q still remains challenged and the deferred orders show up in 4Q? Thanks.

Okay, so I'll take the profitability one. So yeah, year to date, we've done around 27, so 13-ish in the first quarter and 14.2. Just remember, Matt, that the first half of the year is really front-end loaded from a cost perspective. And going back to Q1, we did have additional costs from the audit and so forth there. So we typically do see EBITDA grow throughout the year as we are growing. But to your point, we originally had Twilio to be accretive right out of the get-go, which for June, they were negative. But we're seeing that improvement. And as Romo mentioned, by Q4, we have a good chance of them being break-even and then obviously then positive into 2024. But really the bridge to get to the 60-62 is where we are from a revenue perspective and growth with a lot of the growth coming from the connectivity business at the higher margins and Q4 being where we expect all the additional solutions revenue to come back in which will make it the biggest quarter of the year, will get us to that 60 to 62 range. We had also built in, like I had mentioned, some incremental headcount in the back end for growth and so forth. And right now we'll take a look at that and monitor that as we see what goes on with the solution pushback. But again, that was a little bit of a buffer that we can use if needed.

Then there was a question about just the confidence around the push, well, quantifying the amount of pushback and then how much shows back up in Q4.

Yeah, so we saw about a million-ish starting in Q2 at the end, so mainly in June here at the end. So for the back half of the year, it's the number between Q3 and Q4, we estimate between 5 and 10 million. So again, depending on timing and where that is, we do expect most of that to be in the back end in Q4.

Right, so to be clear, between 5 and 10, we'll move, we hope, only from Q3 to Q4.

Right, yeah, we're assuming, just to be clear, Romo and Paul, so June was about a million. You're assuming that this kind of accumulates in 3Q and falls into 4Q. That gets you to that 5 to 10 mil?

Yeah, correct. That's right. Okay, great. Thank you. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. I'm showing no further questions at this time.

I would like to turn the floor back over to Romuald Ball for closing comments.

Thank you very much for your attention here today on our second quarter call. We certainly appreciate you taking the time to listen and to ask your questions. We look forward to updating you in mid-November with our third quarter results. Goodbye.

Thanks. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your evening.