Starry Group Holdings, Inc.

Hello everyone and welcome to the Starry Group Holdings Inc second quarter 2022 earnings call. My name is Seb and I'll be the operator for your call today. There will be an opportunity to ask questions and you can do so by pressing star 1 on your telephone keypad or you can press star 2 if you wish to withdraw your question. If you need assistance at any time please press star 0 to flag an operator. I will now hand the floor over to Ben Barrett to begin. Please go ahead.

Thank you, Seb, and good morning, everyone. Welcome to our second quarter call. I'm Ben Barrett, head of investor relations for Starry. Joining me on the call today are Chet Knojia, our CEO, Komal Misra, our CFO, and Alex Moulet-Burteau, our COO. By now, you should have received a copy of Starry's earnings release for the second quarter 22 results. If you have not, copies are available on our investor relations website. Before we begin, I would note that some of our comments today may be forward-looking statements. As such, they're subject to risks and uncertainties described in SART's earnings press release and SEC filings, and results may differ materially. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors. Reconciliations of non-GAAP financial measures, where appropriate, to the corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC. With that, I'll turn the call over to Jeff.

Thank you, Ben. Thank you, everyone, for joining. It's been a busy earnings season, and we are almost at the end of it, so let's jump in. I want to leave with some highlights. First, our execution, we had a best quarter date with more than 9,700 net new customer additions. We performed better than almost every other fixed provider in the country, and I cannot overstate how strong this performance was, especially given our scale and capital constraints. We have a laser focus on customer experience and value, which is a good place to be in the current climate. Second, and this is an important one, earlier today we released an analysis that shows we quickly achieved cohort level profitability across our buildings launched in 2020 and first quarter of 2021 within three or four quarters after launch. This is a really constructive operational building block towards the profitability across the company. Just to say this one more time, our 2020 and first quarter 2021 building cohorts gets profitable in under 12 months, which I think is remarkable. And third, we are thrilled to announce our newest market, Las Vegas, Nevada, which we are actively building and plan to launch in the third quarter. Before I dig into substance, I want to give an update on our funding situation. As you know, we went public in March 29, 2020, raising total net proceeds of about $255 million. Given the market conditions when we went public, we raised approximately half of what we had initially expected to raise in the offering. Since then, we've been open about the reality that we require more capital to get to break even. We talked about this in the first quarter call when I explained that we had some runway and multiple pathways, and we were exploring a combination of debt, equity, and other financing vehicles. Today, I want to give an update on where we stand. The process is not yet concluded, but we have made significant progress on several fronts. First, we set up a committed equity facility with a financial partner that lets us raise up to $100 million in capital before fees. This is a low-cost way to raise incremental funding exclusively at our discretion. Second, we are in advanced discussions with multiple parties about potential additional investment. I can't go into specifics now, and I caution that nothing is yet complete and may not ultimately occur, but I look forward to reaching agreement in the short term that can provide us the capital to get to break even. Ultimately, on this topic, I'm extremely confident in our model and our differentiated economics and the customer demand for our product and our strong record of sustained successful execution. History has shown that good companies find funding support in even difficult times. In my opinion, we're a great company and expect to resolve this funding gap shortly. Stay tuned. Moving on to the next topic, I want to talk briefly about the macro environment. Generally, I think broadband performs well in soft market conditions given that it's an essential service. And I think within the industry, we are incredibly well positioned because broadband is not discretionary. No one wants to give up their connection to the Internet. Starry's value proposition is simple, better, faster, cheaper. We focus on providing customers a really great service at a fair price with no nonsense. Also, we are a prepaid business and have minimal to no bad debt and collection exposure. And we have a very specific focus. We have a density-based model focused mostly on MDUs today and a significant focus on underserved communities subsidized by the federal government. This is not to minimize concerns of the current environment, but we believe we can continue to be a growth company despite macro headwinds. With just about everyone now reported, it looks like the market for in-home broadband services remains healthy overall, and it's a massive industry still growing at about 3% to 4% of subscribers compared to prior year. In my view, the story here, the interesting story here is the share shift that we're seeing. Cable clearly lost share in the quarter, fixed wireless gained dramatically, fiber did okay, and DSL continues to bleed as you would expect. The takeaway from this result These results play to Starry's strength. There is a flight to better value plans, to standalone broadband over expensive bundles, and to services that put customers first instead of taking them for granted. And I think the share shift away from cable will continue as more competitors emerge with fiber and fixed wireless, especially in suburban rural areas. It is worth pointing out that the urban service is very different, and Starry is the only provider coming in at any scale in this segment. This is great news for story as we don't need a big market share to succeed, we have the potential to break even at around 4% of penetration of our home serviceable because we have a differentiated technology stack and the cost of the last mile. Also, we continue to expand our network this quarter our home serviceable grew by 20% over year over year to 5.7 million housing units. and we deployed about 10,000 new units per month in the second quarter, bringing our total deployment to roughly 400,000 activated units. Looking at these numbers another way, we have only deployed about roughly 7% of our serviceable area to date, so we have a lot of runway left for the immediate future. Usage in our network remains robust. During the second quarter, our average usage was 432 gigabytes per month, with the top 5% consuming more than one terabyte. More customers and increased usage typically slows down a network, but we continue to deliver speeds above our advertised levels. As we build out and densify our network, we are confident that the combination of our licensed millimeter wave spectrum and our network architecture will be able to continue to meet customer demand. I want to take some time to discuss an analysis of the operational performance of buildings launched in 2020 and the first quarter of 2021 that we released this morning. This presentation is on our investor relations website, which you should review in full, but I'll summarize it briefly here. For the purposes of this analysis, I want to provide a very simple visual of our business, almost how I think about it myself. We install transmitters on towers and tall buildings, then we work with property management company and real estate companies to gain access to MDUs in the coverage area. We then activate MDUs using radios on the roofs of the buildings and then start signing up customers in those buildings. Once we hit our penetration targets in a building, it is important to keep the penetration stable and growing until we hit the full utilization of the transmission site on the tower. We did this analysis that extracts the buildings that we launch in a given period and shows how quickly they turn profitable. This is how we run the business and drive our capital allocation. The analysis looks at all the buildings activated in each quarter of 2020 and the first quarter of 2021 by dividing them into cohorts based on the quarter in which they were launched. By looking at how the cohorts develop and grow over time, you can see profitability on a granular basis, something that is not obvious based on our current growth trajectory. And what it shows is that we quickly generate revenue and launch buildings and become profitable across all cohorts in three to four quarters. All of the cohorts of buildings launched in 2020 and the first quarter of 2021 are consistently growing revenue as penetration within the cohorts of buildings increases. Our average MDU penetration across our entire network as of last quarter is 16 percent 30 days after launch, 24 percent or more one year after launch, and 30 percent or more after three years after launch. There is a tremendous demand for our product. Our oldest cohort in the analysis, the first quarter of 2020, grew revenues at 25% year-over-year in 1Q22, even eight quarters post-launch. Now turning to profitability, our analysis shows that all the cohorts turned profitable within three or four quarters. Despite the fact that each cohort is a unique mix and makeup of buildings, the time to profitability was similar, and the time to profitability has decreased when compared to 1Q22. 2020 cohort, which I think is great. Cohort profitability also continues to improve after breakeven, and the margins for our 2020 cohorts continue to scale into the 40-plus percent range. This rapid turn to profitability is due to our operating model. We have relatively low fixed costs, which is supported by our continued focus on reducing our unit economics over time. As highlighted in the analysis, we saw an 18 percent decline in our cost of vertical asset hardware, over the last two years and a 70 percent decline in hardware costs per MDU building in the same timeframe. We absorbed these fixed costs relatively quickly and operated a largely variable cost operating model going forward. This cohort analysis should give investors a unique insight and confidence in StarE's business model as it shows how well we've performed in deployed buildings in our base over the last two to three years. With that, let me turn it over to Alex Muliberto, our Chief Operating Officer, to go through the operational details for the quarter.

Thanks, Chet, and hello, everyone.

We announced our second quarter operational results a few weeks back, so I'll recap at a high level and talk about ACP and our Las Vegas launch. So let's jump in. I'll start at the customer level and build up to addressable homes. Our customer relationships increased by over 9,700 net ads in the quarter to end at nearly 81,000, up 69% year over year. We saw growth in customer relationships in each of our six markets during the quarter, with continued strength in the MDU category. Our deployment, sales, marketing, install, and customer service engines are running very smoothly. We're extremely proud of our team and confident about our continued execution in subsequent quarters. Serviceable homes increased by 20% year over year to 5.7 million homes. This network growth is from continuing to expand in our existing markets. Addressable homes, which we define as households in a total market boundary, remained at 9.7 million units in the six live markets as we didn't launch any new markets in the quarter. We also made great progress with Starry Connect, our digital equity program that now reaches more than 77,000 units of public and private affordable housing. That increased by 14,000 households since last quarter, notably with the inclusion of the Jersey City Housing Authority. The affordable connectivity program is an important part of our business and extremely core to our mission as a company. With these customers, we see below company average move out rates, higher penetration rates in the buildings where we offer this service, and we are paid in full by the federal government through the ACP. We really like this business. It's a mission we truly believe in. It's focused on communities that really need better service offerings. And our low-cost structure means we can successfully execute at these price points. And in the last two quarters, we successfully transitioned qualifying customers from the emergency broadband benefit into ACP while continuing to grow enrollment in the program. We intend to continue to pursue all available ACP growth opportunities in coordination with our program partners. After the quarter closed, we announced Las Vegas as our seventh market. We expect the market to go live in the third quarter of this year. Our expansion strategy focuses on balancing capital allocation across existing and new markets to maximize the efficiency of deployed capital in areas that lead the best customer performance. By launching a new market, we add significantly to the serviceable household universe while strategically focusing the network build on household density. The combination of continued penetration within built networks and launching a metered number of new networks maximizes yield from our serviceable network and drives our growth plan. We selected Las Vegas because of its attractive demographics. It is a young, diverse, and growing market dominated by cable and telco duopoly. We've had success with this formula before. We also selected Las Vegas because we believe we can make a real difference in serving households that lack access to quality broadband at a value price. Nevada ranks 35th in terms of connectivity, and we want to improve that ranking. We are pleased with the network build thus far. We're working with our construction partner, Quanta, to build out the coverage network. which we expect to cover approximately 500,000 homes in Las Vegas and the surrounding area at launch using our 24 gigahertz spectrum. So it's full speed ahead on all fronts in Las Vegas, progress on ACP, and ongoing execution on the operating front. Now I'll turn things over to Komal to go through the financial results.

Thank you, Alex, and good morning, everyone. Today, I will go through the financial highlights of the quarter and will touch on our guidance as well. Let me start by saying how pleased I am with these results. They show that Starry's value proposition is resonating with customers, helping Starry deliver industry-leading growth in customer relationships. Now on to the financials. Revenue of $7.8 million increased 52% year-over-year, driven by an increase in net customer relationships. This demonstrates the obvious correlation between our record customer growth and the revenue that it drives. Let me provide a little more color as it relates to the ARPU we realized. The ARPU we realized this quarter was 33.96, and we continue to see no impact on demand for Starry services at our prices, which remain below competitors. As mentioned last quarter, We offer our customers a free period at sign-up instead of using teaser rates or other anti-consumer tactics. We don't recognize any revenue during these free trial periods, and because of the length of trial periods ranging between seven days to two months, depending on the customer, subscribers added later in the quarter may contribute little to the revenue base for the quarter being reported. In other words, the combination of our pace of growth and our accounting for trial periods can depress the ARPU we realize in a quarter despite consistent plan pricing. We have also seen a change in mix as ACP customers now comprise more than 10% of total customers, which is a significant increase from our EBB levels last year. As Alex mentioned before, these are attractive customers that the market has largely ignored and the economics make sense to us given our industry leading cost structure. We will continue to pursue ACP customers as an avenue of growth going forward. In the long term, we expect the ARPU we realize to flatten out and increase as we see more growth in the overall mix with higher price plans based on either personalization or higher speeds or SMB service launch. The other impact to revenue, separate from our core operating activities, is the government subsidy revenue, which we will receive through the Rural Digital Opportunity Fund, or RDOF. We are aware that the FCC staff has completed its review of our long-form application, and it's awaiting a final decision. We are confident it will be approved, but we have not yet received any regulatory revenue under the program. This impacts the rateable portion that we can recognize, and we will update you once the FCC finishes its review process. Now let's flip to the cost side. Cost of revenues was $20.7 million, up 56% year-over-year, due to network expansion and a higher depreciation expense related to our deployed equipment, as well as an increase in headcount expenses and network service costs. Non-cash DNA was... 46% of GAAP cost of revenues. We continue to see positive signs of leverage in this expense as the business scales and the per unit cost of hardware continues to decline. SG&A expense was $25.1 million and increased by 57% year-over-year due to higher headcount and corporate service functions. Our SG&A expense includes SAC, which naturally grows with an increase in customer relationships. Our corporate expenses continue to grow at a slower rate than our revenue growth. R&D expense was $7.8 million and increased by 21% year-over-year due to headcount costs to support the product development for our network. As a reminder, we invest in R&D as the tool to drive down unit costs over time. So we realize the impact of this investment through future deployments. We anticipate that R&D expenses will grow at a reduced rate in the future quarters as we are well-staffed for the current product roadmap that Starry has in place. Net loss was $36.3 million compared to a net loss of $38.6 million in the second quarter of 2021. The net margin improved by nearly 300 percentage points year-over-year. The adjusted EBITDA loss increased to $33.9 million as we invested in our networks systems and staff to support growth in the current and future quarters. But I want to highlight that the adjusted EBITDA margin improved by 25 percentage points year over year, another sign of operating leverage in our business. CapEx, which includes cap labor, was 20.8 million, up 4% year over year, as we invested in our network and customer expansion, as well as initiated the network build-out in Las Vegas. Now on to the guidance. We continue to expect customer relationships to be greater than 100,000 at the end of fiscal year 22, reflecting growth of greater than 58% year-over-year. This guidance remains unchanged from the guidance provided in our first quarter earnings call. In addition, as discussed, the FCC is in the final stages of its review of our RDOF long-form application. and we are confident it will be granted in the near term. We had included approximately seven months of RDOF regulatory revenue in our 22 guidance provided in the first quarter earnings call earlier this year, and we will provide an update on this once we have additional clarity on timing of this revenue. In conclusion, as you can see, we reported very strong results this quarter, highlighted by industry-leading customer growth, rapid financial growth, and strong operating leverage as we continue to build scale in our business. We are confident that we can maintain our current business momentum, and we look forward to sharing the results of our continued success with you every quarter. Now, Chet, Alex, and I are ready to take your questions.

Operator, we're ready for Q&A. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad or press star 2 to withdraw your question. First question today comes from Brett Feldman at Goldman Sachs. Please go ahead.

Yeah, just two if you don't mind. You had mentioned that the strength of the subscriber growth that you put up this quarter came despite being what has historically been a seasonally slow period. It does look like we've seen seasonality across the sector. As you know, the cable company suggested that maybe the third quarter wasn't starting off particularly fast. So I was hoping maybe you can give us a little bit of a real-time update in terms of what you're seeing, particularly as you're getting closer to the back-to-school period, which I would assume is probably going to be a tailwind for you guys. I think just on the capital raise, you know, it's good to see that you have a little bit more flexibility in terms of being able to take down some equity if you want. Obviously, it would be fairly dilutive if you were to go ahead and pull all that down. So we'll certainly wait to see what you're able to announce. I think the bigger question we get is, you know, what are you hoping to accomplish being a capital raise? It sounded like from your prepared remarks, the goal would be to pull in enough capital to actually get to break even, and I'm wondering if that's something you would expect to be able to do under the business plan you'd outlined before, or if there is some opportunity to maybe modify what your outlays would be going forward so you could break even perhaps sooner. Thank you.

Thanks, Brad. I think you're absolutely right. Typically, sort of second quarter tends to be the level of softness. There's a seasonality, move-ins, move-outs. I think there are a couple of dimensions to that. Number one, we're seeing occupancy rates rise and be high compared to sort of what I will call the 2020-2021 COVID period. But I think despite that, what we are seeing is there is – and we're not prepared yet to sort of fully – talk about the mix on customers in terms of actual switchers that are coming in. But in STARI, I think historically, if you look at it, the switcher percentage tends to be a majority of our customers, greater than 50% coming in. And I expect that that trend to continue along with the back to school plus renewal of leases in these areas with high occupancy. So we feel pretty good about sort of going forward the rest of the Q3, Q4. from that point. So that's item number one. I think you're absolutely right, Brett. We put this ELOC in place as a flexible component at our discretion. We intend to be very judicious about the use of this thing. And yes, you're correct. The goal is to get sufficient capital in. And I think as we have gotten a little bit more, you know, centered around focus in a big way on breakeven, we think that that number, I think if you go back to where we had originally in Q1 and even to our PI process talked about, the need for the company was somewhat in the 340 to 370-ish range total. We ended up at 150 ballpark. So you're really looking at a gap of 200, and that's what we're really triangulating and solving on as a first step. Assuming we do that, I would imagine us to continue to execute on our plan. And I think we're not prepared today to talk about future plans in 23-24 from a guidance perspective. But looking at what we are seeing, I think there is an opportunity to continue to be very disciplined about deploying the capital towards a break-even line and maintaining a very healthy growth rate that gets us there. Because as you can imagine in this business, right? You can grow at a much slower rate, but the path to profitability requires you to have a certain amount of customer base to absorb the fixed costs in the business, and that varies by market. But again, I think where you are seeing us be a little bit more judicious is driving a better return on the existing markets where we have existing operations and metering out newer markets until we get to that point. Given the fact that the TAM in our cities is so massive, there is no reason not to exploit that opportunity to a fullest extent without changing course.

Thank you.

Operator, next question, please.

Our next question comes from Craig Moffitt from Moffitt Nathanson. Please go ahead.

Hi, thank you. A couple of questions, if I could. First, I just want to make sure I fully understand the Cantor financing. Chet, you said in your remarks that it was up to $100 million. But if I understand the 5% limit on the common shares at your current price, that would be about $30 million. And I just want to make sure I'm understanding that correctly. And then second, if you could just give us an update on the cost trajectory of the comet and what your latest thinking is with respect to single-family homes and smaller MDUs. And then finally, an update also on your thinking about licensing your technology internationally, potentially as a path to, I suppose, somewhat more painlessly raised capital if necessary.

So let me take the question about the ELOC. I think the way to think about it is, firstly, we are continuing to pursue other avenues for a capital raise. And this is certainly something that we will access very judiciously. From a usage point of view, it allows us the ability to raise the way that the deal is structured is at most through this you can raise up to 19.9% of shares outstanding of a company. So we will be well below that limit with this capital raise. And like I said, the plan is not to use this in any aggressive fashion. We do have other discussions that are ongoing to raise other capital.

Craig, I would probably just accentuate that in a little bit. The focus for us is long-term capital partners. We feel very good about the progress we've made and really with multiple parties that fit that long-term capital partner profile. And so this is what I will call an extra more than the final solution more than anything else. On your question around cost curves, comment, our next generation, we will be, you know, I don't want to give a specific date, but later this year, really high performance, two dimensions of that. Number one, effective range increases because we've been successfully jacking up our transmit power on the return channel side. So that allows us to exploit the TAM even more effectively off of our current network. So if you recall, right, we've historically been in the 1.3 to 1.6 kilometer range. And the goal of this next generation device at a probably about a 20, 25% cost reduction is to be able to drive that higher as well from a power perspective. So a bunch of engineering, but looks really good. And we expect to be able to showcase that later this year. Which will, as you correctly point out, unlock the smaller multifamily premises We have been starting to do what I will call, Alex can correct me if I'm wrong, we're touching now, you know, 20-ish apartment buildings and greater, and in some cases, in certain markets, 10 and greater as well. As you guys have, as you folks have seen us do, you know, we have a discipline towards learn, iterate, and then, you know, accelerate. And so with that, we are, you know, we take the small, medium family a multifamily is a right market for us. And as you will, you know, we're experiencing tremendous sort of take rates in New York, Boston, LA, where those densities exist. Single family we've constrained today is largely to Columbus, mainly because that, you know, and it's purely a question on capital allocation from our side, which is there is so much time on the multifamily side where we have network built So first priority, first order of business, get as many customers and get that utilization up as much as you can. And as you continue to drive cost reductions, then focus on single families. So as you see in Columbus and as you will see in Vegas, we will have the opportunity to be able to serve single families as well. But in the core markets that we are in, just the opportunity set on the multifamily down to two or three apartments is just so great. that it makes no logical sense to go after single family in there. And then licensing. Oh, yes. Sorry, I forgot the last question. So licensing dimension, Craig, we've engaged in about three to four conversations that are progressing internationally, and I'm optimistic we'll have a more firmer update at some point over the next 60, 90 days. But there seems to be a real demand in the emerging markets is probably the best way I would characterize it. combination of Asia and Latin America where people are viewing this as a really cost-effective way to drive broadband connectivity. In addition to that, we've been having multitudes of conversation on the wholesale side within domestic applications as well. I will not go into any more detail as they get a little bit more flushed out, but think of it as adding taking additional capacity from the Starry Network, which, you know, as we've talked about in the past, you know, any of our sites today are running low-end 30 to 40 gigabits a second, high-end 80 gigabits a second. So even as we get to, you know, 10, 15 percent of passing from a take-rate perspective, there's a ton of excess capacity. So there seems to be emerging demand on that dimension as well.

That's helpful. I'll throw your next question.

Thank you. Our next question comes from Michael Rowlands from Citi. Please go ahead.

Thanks, and good morning. Two topics. First, on the R2 front, can you provide just some additional context of what's happening in terms of that R2 performance relative to the pricing of the rate plans? It sounds like ACP getting over 10% may also be a contributor to what's happening in ARPU, but if you could just kind of maybe take us through a little bit of a journey of what this is going to look like over time. And then secondly, I was looking at the cohort analysis that you provided in the slides, and it looks like about 35% of the revenue is in the cohorts, I guess five of them, that were disclosed, but only 4% of the cost of service is in those cohorts. And I was just curious if you could unpack a little bit more of what might be for the cost of service, for example, what might be in the cohorts, what might not be in the cohorts, and how that plays out over time, just given the percentage of cost differentials versus the revenue picture. Thank you.

Hi, Mike. I'll touch briefly upon the ARPU side. A vast majority of the fluctuation, you will see this fluctuation on what I will call realized ARPU from quarter to quarter from us. And that is largely a function of, so let's play this out for a second, right? So let's assume that we're offering an averaged out four weeks of free, you know, incentive to sign up for STARI. So any customer that's really signed up in June hasn't contributed any revenue. Any customer that really signed up towards the end of May hasn't contributed any revenue. But as a proportion of net ads, you know, those were big months for us. So as a result of that, you're seeing a pull down of that irrespective of what the plan the customer is signing up for. So that's one. And that is the majority of the fluctuation that you see. Yes, you're correct that ACP will impact that. It is difficult to today completely parse that out and say it's 30 because a portion of those ACP customers actually end up taking an upgrade to the $50 plan as well and paying the net differential of 20 bucks to us. So my long-term sort of view is as we continue to grow at this aggressive pace, you will on a quarter to quarter, you will see that fluctuation and we monitor internally what happens two or three quarters on a trailing basis across different markets and across areas where the proportion of net ads to the base of that market is lower. And I can tell you that that number tends to be, you know, 15, 20 percent higher, 30 percent higher depending on as you mature out of those cohorts.

So let me just give you a little bit of color on what is in and what's out of those expense items. You're right that the expenses are a little bit higher relative to the revenue in terms of exclusions. And the reason for that is a large chunk of those expenses are really at the corporate level. So things like R&D, a large part of the site-related expenses which are related to office, et cetera, are corporate GNA. These were all expenses that are at a corporate level and are excluded from the allocations to the individual cohorts. When we looked at the cohort level revenue, we tried to match up for all the subscribers that we have within that cohort, all the expenses, all the OPEX that is related to servicing those customers or deploying them. So it's a very simple way of getting to the incremental margins that you will get out of that cohort level, and that's the view that we've given you.

And Mike, one probably addition to that I would probably point out, and Kamal can correct me if I'm wrong, but we took a very conservative view and we said, so let's assume you've built up Tower A on day one, and you have three buildings underneath it in that quarter, for example, and we allocated all of the cost of that Tower A on those three buildings, as opposed to saying we're going to save some proration for later on. And as those in the subsequent quarters, let's assume you move from three buildings to 15 buildings, that quarter's OPEX for that tower is then allocated across all those 15s. But that's why you see a big negative the first quarter because we're hitting everything that the cost structure has to just those limited number of buildings. But as you can imagine, we continue to sell into that territory over time and continue to not only add buildings but add customers over that as well.

That's right. And the other piece I'd point out is we did not include any of the ACP or EBB revenues because we get that in lump sum payments from the various government entities, and it was very hard for us to go back and correlate exactly to the subscribers within certain buildings. In the future, when we share additional analysis around this, we will get that color. But to a certain extent, Some of the revenue, especially given that ACP is now 10% of our mix, some of the revenue is understated in this cohort analysis.

Again, we took the view coming out of the gate, let's be conservative, take out things that we couldn't have a direct attribution from the customer's credit card, lump all the costs into any relevant building in that area, and not save any future allocations. I think the methodology is laid out in the presentation, Mike, as well, but I'm happy to have further questions on that if necessary.

And just one other, and I apologize if this is disclosed somewhere in the materials, what's the ending sell site number for the quarter for the whole company?

So we don't really disclose the ending sell site number, but I think in the past we have said it is more than 250, and we continue to grow our network. I think a good proxy for where we are from a network point of view is the color that we give you on a balance sheet and also the DNA, right? Because the depreciation expense is a good proxy for the expansion of the network.

But if we were to spitball it, kind of in the 300 range.

Yes.

Sorry, in what range?

300 range.

Thank you so much for the details. Thanks.

Operator, next question, please.

Our next question is from Dan McDermott from Oppenheimer.

Please go ahead. Hi, everyone. Thanks for your time. I'm here on behalf of Tim Horan. I have two questions, if I may. My first is, cable clearly appears to be weakening, as you touched on before, perhaps even quicker than many have expected. What kind of response have you seen or expected seen from cable in order to compete with fixed wireless? And my second is, Are you seeing any impact from the current macro environment? And sort of a follow-up to that, are there any issues on the supply chain? Thanks.

I'll do a rhetorical thing, I guess, on the cable response side of the start. And I think the core question for the investor base would be, can cable be a viable business at a $40 or $50 price point? And I think that's sort of the crux of the issue here is technology fundamentally is deflationary. And the only reason in a deflationary environment, which is driven by technology, you would expect high prices is where there's a structural imbalance in the market. And I think what investors and others are hopefully beginning to see is the technological impact of eliminating that structural entry point and providing competitive response. And I think that's what you're beginning to see play out. I think our experience on the competitive response tends to be bundling as opposed to competing on price. Alex, your thoughts?

No, that's right.

And it tends to be sort of offering higher speed tier plans of similar pricing that we don't see price lowering because it would mean restructuring the rate base for the entire subscriber base. So that tends to be the dynamic we experience.

And I think as we have disclosed in the past, we are like 9.25% or 9.5% or 10%, whatever the number is, ballpark of the Boston market. So it's not like we're an isolated... overbuilder in like four streets in, you know, Topeka, Kansas, right? This is a completely different way of sort of thinking about it. So either you're willing to completely rethink your cost structure and reprice the product, or you're basically saying, look, there's a way for me to make it up, preserve margin, add bundling, add other features and products, and lose some share. And I think that's what we're dynamic that we're seeing play out. And I think that plays in FWA's, you know, favor quite dramatically. Your question on the supply chain, I think last year was a very difficult year, and I think we redesigned pretty much every product in our product line to eliminate difficult components. Anecdotally, and I don't really have any hard data to suggest that I have a hard view into this, anecdotally our view is that seems to be easing off. It may be a combination of the product redesigns that we've done and eliminating the difficult to find components, or in general easing up of some of those supply chain concerns on our side. And then third with the macro. Sorry, would you repeat the question on the third side? Third question?

Yeah, just in general, is there any impact from the macro environment, whether it's inflationary, et cetera?

In general, we have not seen, and I think you can look at on year-on-year, our labor utilization rates and labor numbers are not that different. We're fortunate that way. I think for a certain set of knowledge workers, I will say that number has escalated, but our total base is small enough that I don't think it has a material impact on the business. I'm sure there is some impact of, you know, higher fuel prices, but our fleets tend to be relatively small at this point, so not a material impact in those things. Keeping a close eye on the labor supply chain combination, but we have not, in fact, we've not seen that impact over the last, I would say, 10, 12 months in any material way.

Got it. Thanks so much.

Operator, are there any other questions on the line?

At this time, we have no other questions in the queue.

Okay, I'll hand back to Chet for some closing remarks, if you have any.

Thank you, everyone. I'll probably just end up closing with, you know, probably two or three themes. Number one, When you look at this company, it is executing on all cylinders at this point. I look at this as a very unique opportunity where there are very few companies, in my view, that can continue to do what they're doing and have a near infinite runway, assuming we find all the right capital partners, which I'm confident we will, number one. Number two, I think our thesis, which was There will be incumbents that will continue to raise prices. It will create an opportunity for us. I'm just going to pick a number between $50 and $75 for a great product mix opportunity. And as continuously as we personalize the experience for these consumers, we'll continue to – I'm very confident we'll continue to take share in these things. Some of the early moves that we made in consolidating supply chain, driving yields of our equipment higher, paying great dividends for us in terms of cost control. it's just been a tough journey, but a journey that is showing its results in terms of the fundamental execution and customer response, customer acceptance of us.

Great. Thanks, everyone, and we'll see you next quarter or speak to you before then. Thank you, everyone.

This concludes today's conference call. Thank you all for joining. You may now disconnect your