Velo3D, Inc.

Good afternoon, and welcome to Velo's 3D Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. As a reminder, today's conference call is being recorded. I'll now turn the call over to Mr. Bob Okenski, Vice President of Investor Relations at Velo 3D Corporation. Thank you, sir. You may begin.

Thanks, Alicia. I'd like to welcome everyone to our third quarter 2023 earnings conference call. On the call today, we will start out with comments from Benny Butler, CEO of Hello3D, who will provide a summary of the quarter as well as an update on certain key strategic priorities for 2023. Following Benny's comments, Bernie Chung, our CFO, will then review our third quarter 2023 financial results and provide our guidance. As a reminder, a replay of this call will be available later today on the Investor Relations page of our website. During today's call, we will make forward-looking statements that are subject to various risks and uncertainties that are described in the Safe Harbor slide of today's presentation, today's press release, as well as our 2022 10-K and additional 2023 SEC filings. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. Also, we will reference certain non-GAAP metrics during today's call. Please refer to the appendix of our presentation as well as today's earnings press release for the appropriate GAAP to non-GAAP reconciliations. Finally, to enhance this call, we have also posted a set of PowerPoint slides which we will reference during the call on the events and presentations page of our investor relations website. With that, I'd like to turn the call over to Benny Buller, CEO of Velo3D. Benny?

Thanks, Bob. And I'd like to welcome everyone to our third quarter earnings call. Prior to starting our review of the quarter, I would like to provide some context for my upcoming remarks. As we have discussed many times, we firmly believe that we are just beginning to see how additive manufacturing is rapidly changing the way high value metal parts are produced across many industries. While our ability to capitalize on this opportunity has driven our industry leading growth over the last two years, we now realize that our focus on top line revenue has come at the expense of customer service, profitability, and cash flow. Essentially, we grew too fast. Given the current conditions, we have made a strategic decision to focus our efforts on optimizing free cash flow before resuming our strong growth emphasis. As a result, last month we initiated a company realignment to reduce costs, rebuild our bookings pipeline, and recommit ourselves to ensuring our customers are successful. I'll provide greater detail on these topics later on in my remarks. We strongly believe that this strategic realignment will enable us to achieve sustainable profitability in 2024. With that in mind, I would like now to discuss the specifics of our third quarter. Please turn to slide three. As we highlighted last quarter, one of our key initiatives for the balance of the year was to show measurable progress on improving our free cash flow. Our successful efforts in this area were reflected in our Q3 results as we reduced our sequential free cash burn by more than 30% to $23 million. We expect further quarterly improvement through 2024 given our realignment. In relation to revenue and bookings, We continue to see solid customer demand for the third quarter as revenue rose 26% year over year. However, revenue declined sequentially due to a single delayed shipment at the end of the quarter. Third quarter bookings were $11 million as we saw bookings delays with both new and existing customers. I'll provide greater color on this later on. As a result of our Q3 bookings, we are reducing our fiscal year 2023 revenue guidance to $91,203 million. As I mentioned at the beginning of this call, we have initiated a strategic realignment that we believe is critical for us to achieve our free cash flow and profitability goals in 2024. Some of the key initiatives include a 40% reduction in cash expenses through the first quarter of next year. the implementation of a new go-to-market strategy to rebuild our bookings pipeline for 2024. As a result, we expect the fourth quarter to be a transition quarter as we implement our new initiatives. Given that we expect to see the full benefits of these programs in the first quarter of 2024, we believe we will be in a much stronger position entering 2024 to drive free cash flow and long-term profitability. I would now like to highlight our key four strategic initiatives for the fourth quarter. Please turn to slide four. First, we have embarked on a significant expense reduction program across the entire company in order to align our cost structure with current business conditions. Second, increased focus on optimizing our inventory and reducing our working capital needs. As a result, we have paused all new inventory procurement It is important to mention that we have significant inventory on hand, allowing us to supply all the systems we believe we will need to ship in Q4 and Q1. However, we will be much more cautious procuring inventory for production going forward with purchases based on backlog growth instead of forecasts. Third, implementing programs to materially improve customer satisfaction and system performance. which have direct impact on increasing existing customer demand. Finally, we have implemented a number of initiatives to improve our sales execution that we believe will be vital to rebuilding our bookings pipeline. Let me now provide some specifics around each initiative. Please turn to slide five. In relation to reducing expenditures, we expect to lower our total quarterly cash spent by 40% in Q124 compared to Q3 23. We will accomplish this by lowering cash OPEX and fixed costs. Primary drivers of this reduction include our recently announced 20% headcount reduction, as well as cost savings associated with our facility consolidation that should be completed by the end of this year. For inventory and working capital spend, we have now paused the purchase of all new inventory as we are shifting to procurement based on current backlog rather than a forecast-based production approach. We will also be conducting a comprehensive inventory review by the end of the year to help us identify any additional changes we need to implement to maximize cash. I want to iterate again that this strategy will not affect our ability to ship products in Q4 and Q1. However, we will procure additional material for Q2 and beyond only once we will have clear buildup of backlog and a reduction in inventory requiring us to procure more material to meet the bookings and backlog demand for H224. Additional programs we have implemented include an ROI-based evaluation of new research and development projects to prioritize our spend to only those projects that meet a certain internal return threshold. Finally, we are optimizing all of our corporate G&A expenses as we look to prudently manage our discretionary spending levels. Next, I'd like to address one of the most important initiatives ensuring customer success. This success is critical as it is the primary driver of follow-on orders from existing customers. Please turn to slide six. First, some background. We saw significant growth in 2022 as revenue tripled and we more than doubled our customer base. This reflected strong customer demand for our systems as we successfully launched three new products in the Cephar family during the year. However, this rapid growth affected our ability to properly support our base as our customer support organization didn't expand quickly enough to keep pace with our significant install crap. We were also impacted by insufficient field service training on the newly released products. This led to issues in the field taking longer than expected to resolve. As a result, we saw a significant drop in customer satisfaction, which led to lower than anticipated existing customer demand in bookings in 2023. We have already made multiple changes in our customer support organization to address this issue, and we are seeing early success. We are reallocating resources to grow and strengthen our customer support organization, including adding additional headcount and forming dedicated issue resolution teams to resolve issues quickly. We have also increased investment in our new product training programs to ensure our field service team is up to date on all recent changes. Finally, we have adjusted our workflows to drive a closer partnership between engineering and our customer support teams in order to quickly identify and address field issues. Our success depends on our customers' success. We are already seeing progress as a result of these changes. For example, in the last two months, we have seen a step function improvement in the performance of our new products in the field. Additionally, customer satisfaction is increasing, and we are starting to see a turnaround in demand for systems from existing customers. I can confidently report that our determined actions are yielding results. We will remain focused on ensuring the success of our customers as we look to improve the efficiency and sustainability of our systems to meet the growing needs of our customers. Moving on to slide seven, I'd like to highlight what we are doing to improve our booking success that has lagged forecast over the last three quarters. As I just discussed, Our bookings growth has been impacted by slower than expected existing customer sales this year. Additionally, bookings growth was affected by weaker new customer acquisitions over the same period. We believe the slower pace of new customer bookings is due to a number of factors, including the lack of an effective new customer sales process, as well as proof of concept execution. While these issues were offset Given our strong existing customer demand last year, they became more pronounced as repeat business declined in 2023. As a result, we made a strategic decision to restructure our sales organization to significantly improve execution and increase bookings. This started with the hiring of Michelle Sidwell as our new EVP of sales in our effort to build a world-class sales organization. Michelle brings a wealth of sales experience to the company and has already instituted a new discipline sales process that is already showing early success. A key part of this process is to refocus our team on markets where we have had significant success in the past. These sectors include space, where we are the leading AM suppliers to many of the top launch companies. Additionally, the opportunity in defense is significant, and the addition of the three new defense customers earlier this year reflects this potential. Finally, leveraging a growing footprint in the aerospace sector. We believe these are the right sectors to be addressing given our experience and significant customer footprint. We are also developing partnerships to expand our reach in certain international markets, as well as potentially partnering to develop new materials and applications. Finally, we are working closely with our customers and internal teams to refine and clarify our value proposition to drive improved sales economics and productivity. In summary, we are pleased with our progress to date. We expect that by combining these sales initiatives with our customer satisfaction focus, we will start to see a rebound in our customers' bookings. On slide eight, we are providing a brief summary of our strategic initiatives that we believe will drive free cash flow and sustainable profitability in 2024. We expect Q4 to be a transition quarter as we execute on our realignment initiatives. Our business is now right-sized for current conditions, and our cost reduction programs will result in quarterly cash savings of 40% starting in the first quarter of next year. We have also adjusted our procurement and manufacturing plan to maximize free cash flow. Additionally, our investments in improving our customer service are already showing success, which will drive growth in existing customer sales. And finally, our new go-to-market strategy, disciplined sales process, and focus on our strong markets will provide a strong foundation to rebuild our backlog and pipeline for 2024 success. In closing, We remain excited about our future opportunity and believe our realignment puts us in a much stronger position to achieve our profitability goal next year. With that, I would like to turn the call over to Bernie to discuss our financials and provide our guidance. As we announced, Bernie was appointed CFO last quarter, and I would like to welcome him to the team. Given his operational and financial experience, he is the right person to help lead us through the next phase of our success.

Thanks, Benny. Welcome, everyone, before getting started. I want to say how excited I am to be joining the executive team. I see a significant opportunity in front of us and looking forward to working with the team to bring about the changes needed to really showcase Velo3D's value. Moving on to our quarterly financial performance, please turn to slide 10. Third quarter revenue of $24.1 million was slightly below our Q3 guidance, due primarily to a delayed system shipment. Compared to Q2, Q3 year of sale revenues declined slightly due to the shipment delay and lower transfer pricing resulting from mix. Transaction pricing. Recurring and service revenue for the quarter rose sequentially to 2.4 million. On a year-over-year basis, year of sale revenue was up 31% from 16.5 million, and recurring and service revenue was in line at 2.4 million. Gross margin for the quarter was 7.2% and down sequentially. This decline was driven by reduced system volume as well as a lower average selling price due to product mix and higher inventory adjustments. We expect gross margin to recover in Q4 with further quarterly expansion through then end of 2024. This improvement will be driven by an expected improvement in ASPs, as we will benefit from a shift back in our product mix to a higher percentage of higher-priced Sapphire XC shipments, improved efficiency in our manufacturing operations, and a reduction in bill of material costs as we receive more materials under new long-term lower-cost supply contracts. We will also benefit from increased volumes and the investments we have made will drive labor and production efficiency. We expect labor, overhead, and other factory costs to decline as a percentage of revenue in 2024. Non-GAAP operating expenses for the quarter, which excludes stock-based compensation, were $20 million, down approximately 10% sequentially. The decrease in operating expenses was primarily driven by a $2.6 million reduction in research and development as we rationalized the number of new product development programs. Specifically on this basis, R&D expenses declined to $9.8 million. G&A rose $1 million, primarily related to our realignment, and sales and marketing was stable. As Benny mentioned, we expect overall costs to decline 40% through Q1-24. GapNet's loss for the quarter was $17.1 million, including a non-cash gain of approximately $8.7 million related to changes in the fair value of our warrants, earn-out, and debt derivative liabilities. On a non-GAAP basis, which excludes this loss in stock-based compensation expense, net loss was $18.9 million. An adjusted EBITDA for the quarter excluding the same items was a loss of $16.3 million. Finally, as Benny mentioned, bookings for the quarter was $11 million. We have instituted a number of initiatives to drive free cash flow improvement. I wanted to briefly discuss our recent success in this area. Please turn to slide 11. This chart breaks out our cost structure by operating costs as well as fixed manufacturing and service costs. As you can see, we have made significant progress in improving free cash flow as we materially reduced our overall costs in Q3. This improvement was primarily driven by lower operating costs, which declined by more than 30% sequentially, as we saw the initial benefits of our efficiency initiatives that we implemented over the last six months. Looking forward, we expect a similar decline on a percentage basis in the fourth quarter given our realignment followed by additional savings in the first half of 2024. As a result, we believe we will achieve free cash flow breakeven excluding financings in the second quarter of next year. Finally, we exited the quarter with $72 million in cash and investments. Given our free cash flow improvement success to date, we firmly believe we have more than enough liquidity to achieve our profitability goal in 2024. Before turning to guidance, I would like to review the one-time costs associated with our realignment strategy as well as additional Q4 cash flow highlights. Please turn to slide 12. We now expect severance costs related to our recent workforce reduction to be in the range of $1 to $2 million, down slightly from our previous estimates. As Benny mentioned, we are in the process of consolidating our office and manufacturing footprint into a single facility at our headquarters in Fremont, California. Completion is expected by the end of the year. As a result, we expect to incur a non-cash charge in the range of $2 to $3 million. We will also begin our annual physical inventory review this quarter, as well as reviewing our inventory valuation methodology. Additional Q4 cash flow highlights include a one-time cash inflow in the range of $3 to $6 million resulting from a lease termination as a customer has decided to buy out its existing lease. Additionally, earlier this year, we announced a partnership with PhysicsX, which included a seed investment. As a result of their recent funding round, we elected to redeem our $3 million investment while maintaining our partnership. Finally, we expect fourth quarter cash usage in the range of $15 to $18 million including one-time payments for severance and facility consolidations. I'd now like to provide our outlook for Q4 and fiscal year 2023. Please turn to slide 13. As we mentioned, we expect Q4 to be a transition quarter as we execute on our realignment initiatives. We expect fourth quarter 2023 revenue to be in the range of $15 to $27 million, and gross margin to be in the range of 5% to 17%, excluding non-recurring items. Non-GAAP OPEX will be in the range of $15 to $18 million, down from $20 million in Q3 as we start to see the initial benefits from our realignment. Our updated full-year 2023 guidance is as follows. We now expect revenue to be in the range of $91 million to $103 million. We expect gross margin for the year to be in the range of 9% to 12%. non-GAAP operating expenses in the range of $78 million to $81 million. In conclusion, we are focused on executing our realignment strategy with a clear path to profitability through improvements in operating efficiency, margins, and cash flow. Our strong balance sheet and improving cash flow gives us significant runway to achieve sustainable profitability in 2024. With that, I'd now like to turn the call over for questions. Operator?

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 questions. Thank you. Our first question comes from the line of Brian Drapp with William Blair. Please proceed with your question.

Hi. Thanks for taking my questions. Thanks. Regarding the macro backdrop and the financing challenges that your customers are probably having, can you talk about how much of an impact is that having on on sales and the extended sales cycles that you're seeing versus, I guess, you're pointing out some execution issues and a need to change the go-to-market strategy. And the point I guess I'm getting at is just how can you give us more confidence that changes that you're making in this environment will actually lead to this change? you know, improvement in the pipeline.

So, you know, it's the easiest excuse in the world for a CEO to, you know, blame the economy for what's happening. But I actually don't see the signs of that, right? So when we look at the vast majority of our customers and the customers we are working with, they are generally well financed. And this is not a driver, a major driver, in procurement decisions or delays or capital budgets. When we buy, when we sell, sorry, to contract manufacturers, it's a slightly different story. With contract manufacturers, those generally have to finance the systems in general, many of them. And those are a little more, I would say, cautious and want to see the map before they make decisions. So I would say that on the contract manufacturers, there's clearly more conservatism right now. But in the big picture, I don't think that that's a driver, kind of a dominant driver in our dynamics right now. We don't see that as the driver. In the deals we are talking and the customers we are discussing and the opportunities we are seeing, that's not the number one driver.

Okay. And is the, you know, I'm trying to sort through the comments that you made regarding the go-to-market and how you're improving that, but is part of it that, you know, customers, like existing customers needed more help and support before they'd be okay buying the second machine? Is that? part of the dynamic?

Yeah, you know, some of them is the second machine, some of them is the fourth machine, right? In general, we have seen in the last year a pretty sharp drop in the performance of our systems in a lot of customers, and we basically did a pretty serious shakeup in how we support customers as we saw The decline, if you recall historically, about 50% of revenue give or take was coming from existing customers. We have seen a pretty sharp decline in that in the last few quarters, and this was really strictly related to customer dissatisfaction because we performed poorly there. A lot of systems took tremendously longer to install than we planned, and the customer planned a lot of systems their uptime and yield was lower than we thought was possible, than we demonstrated was possible in other customers. So we had to take it very seriously and kind of took a lot of actions to improve how we execute in the field. And we have a lot of indicators that we already start to show us after about I would say six weeks or so that we have been doing this, that this is showing very concrete fruits. So I'm very optimistic that, and we are already starting to see customers that were very disappointed by us earlier coming back and having discussions about procurement of more machines. So I can see this, the tide is turning on this.

Hey, Brian, this is Bernie. Thanks for adding a little color to the go-to-market initiatives because I think that customer experience is definitely very important to us. But in addition to us improving our customer experience, and that would be for the resale, multiple systems for those customers, the recent addition of Michelle Sidwell, she brings a very disciplined approach back to our sales force and One thing too is we're going to focus on our partnerships. So we signed recently with SDOT to really help us expand our networking for sales. So this is kind of a big part of the sales growth that we're going to bring back to our pipeline. So there's opportunities out there. especially in the defense. And we're doing a lot more market research to understand where those opportunities are going. And we've kind of realigned our teams to focus on those opportunities.

Okay, thanks. And then just one follow-up further on, Benny, what you're saying about the performance of the machines. I just want to make sure I'm clear. It's really not, my impression is it's not a, An issue with a core issue or fundamental issue with the technology, it's more the issue is setting up the machine, getting it stabilized at the customer site?

Yeah, correct. And the way we actually identified the core thing that we want to focus on is the time that it takes us to resolve issues that happen in the field. And this time has... escalated a lot. It grew very steeply in the last year. And we took actions to dramatically reduce that. And I kind of touched upon this a little bit in my presentation. There is a lot of new products that we put together. We expanded a lot the install-based boss of customers and systems while we didn't hire enough enough customer support people and we didn't have the opportunity to train them on the new product. So a lot of the repairs, a lot of the troubleshooting when things were happening were just taking too long and sometimes mistakes were made in the repair and that would prolong the time that it takes to bring the system back And that applies both to when the system is shipping, right, and the initial installation, as well as if something happens after installation, it just was taking too long to fix. And that is where we see the traumatic improvement. And that's kind of where we identified as the thing that where we can make the biggest impact because we have seen with customers and systems that were maintained properly and were operated properly. very good results and identical systems scattered between other customers performed much, much poorer. And we have seen in the last few weeks that when we properly maintained them, when we properly brought the knowledge to fix them, they started to perform fantastically. So yes, this is not a product problem. It is, I would say, kind of an organizational commitment to fixing issues quickly in the field.

Yeah. Okay. All right. Thank you very much. That's fine. Thank you.

Thank you. Our next question comes from Jim Ricciuti with Needham and Company. Please proceed with your question.

Hi. Good afternoon. This is actually Chris Gringone for Jim. Thank you for taking the questions. Sure. You noted the sequential mix shift, and I'm just curious, you know, what visibility you have into that mix shifting back towards more XC machines going forward and, you know, what kind of confidence you have around the XC becoming a larger part of the mix in the quarters ahead. Thank you.

Yeah, so, you know, we have partial confidence in that, right? The general trend we have seen is that the Sephora XE and the newer systems becoming a dominant part of our products. When we see a lot of the opportunities we are engaged now, the XE is dominating our opportunity space. But there is also demand for SAFIRE. And until you have solid bookings, it's difficult to predict how it's going to be. So I wouldn't necessarily overstate our confidence on the mix. The mix could be different. We do see long term that the SAFIRE XC is selling more. I do want to mention something because we didn't, it wasn't probably super clear from that, but some of the systems that we sold last quarter were used systems at the discounted prices. So because they were used systems, pretty old systems that were used. So that was one of the reason for the lower, gross margin. Generally, Cephar systems, even though they are lower priced, they actually have pretty good gross margin. So the mix is not necessarily the driving issue. The driving issue was that the volume was generally lower, and then the adjustments in the inventory are contributed to the cost. As you can understand, if you take the fixed cost of production, the fixed COGS, and you amortize that over less systems, that affects your gross margin in a negative way.

Got it. Thank you. And with the The go-to-market realignment you had mentioned, the end markets that you intend to double down on and focus on, to the extent you could, could you elaborate a little bit on the demand environment for each of those end markets and maybe what drivers you're seeing in terms of what drivers are creating more urgency for customers to adopt this technology and use these machines and also maybe

discuss the the demand environment by geography what you're seeing in North America versus Europe yes so we still operate vastly mostly in North America right so our footprint in North America is much much stronger and in most of the business we're driving is still coming from North America so a lot of that is is kind of extremely North America tilted what we are seeing and And so space and launch programs, specifically launch and specifically turbo machinery and rocket engines, is what's driving a lot of our demands in space. And then engines and near-engine components in hypersonics is one of the main drivers for our demand in defense. These are the two most obvious specific that I can mention. And the ability to produce high-quality parts with tremendous complexity very quickly at very large sizes and with a lot of details, that's really what enables our customers in their programs, and that's what drives the demand for those.

Got it. Do you have any insight into the utilization trends of the installed base and how, I guess, how that's evolved in recent quarters?

I do, but I will not share that. Fair enough. As you can imagine, we are a public company, but we are operating in an environment with competitors. Yep.

Thanks very much. Appreciate it.

Great. Thanks, Chris.

Thank you. Our next question comes from Jacob Stephan with Lake Street Capital Markets. Please proceed with your question.

Hey, guys. Thanks for taking my questions. I just kind of want to focus on the quarter. So what kind of verticals are you seeing where orders are more, I guess retailers are more reluctant to get the product? Obviously aerospace was a strength in the quarter, but where are you seeing push out into the right?

I would say that a lot of the places where we started to engage with customers in applications that we have not proven yet value are places that take longer. And these are basically a lot of the segments that we didn't touch upon in this as kind of areas of focus. So these are areas where our footprint is very preliminary. Usually one system, maybe two systems. And until we have demonstrated traction in those, we can expect longer sales cycles for those markets.

Okay. And then I just want to touch on the guidance real quick. You know, obviously Q4 guidance, the range is roughly $12 million. You know, what could give us more confidence in hitting that high end, and what could be some factors that would kind of push the number to the low end?

Hey, Jacob, this is Bernie. We definitely have a path. to get to our high end of our range, and that's our focus. You know, with our, going back to our go-to-market, you know, there's a lot of things that we're doing that are gonna help us get that next level of engagement of our customers, and simple things as, you know, when we put a quote out there, we'll put an option to purchase a second machine, right? So we can build, get into their project plan to see their future development You know, we're not trying to be short-sighted with just one sale. And so, you know, by just doing simple actions like that, it's making our part of the sales cycle and part of their projects with our customers to really engage. And that's where we're trying to bring the customer experience and value to these guys. And that's where it takes time. And obviously we've had some hiccups on that, but we are continuing to focus on those areas that we do well in to get those customers to actually come through with those orders.

Okay. And maybe just kind of one last one here. When you think about the new inventory kind of alignment strategy, when you think about, you know, new orders coming in, does that affect essentially the, you know, the build time or the shipment time? Or is there kind of precautions that you've taken to assemble some of the basic parts? Tell me, kind of just walk us through that.

Yeah, sure. So we have, as I mentioned, the inventory to build what we think we need to ship in Q4 and Q1. Here and there, we might find that we lack some material, you know, 5%, 10% of an existing office system. And, of course, we are going to buy what we need in order to be able to build that. So it's really important to understand that the kind of build to order applies to buy material to order, not to start actually the production machine. Once we have the material, there is absolutely no reason for us not to start building it because we have the people, we have the material, so we absolutely are going to start building it. And the machines we are building are actually dependent on the forecast. What we are saying is that we are not going to buy additional material based on a top-down revenue plan that we had in the past, a top-down forecast of machines that we will need to ship in future quarters. where you basically look at that and you say, well, in order to be able to ship this amount of revenue, this amount of machine, I need to buy material now. We basically say, well, let's say that we actually ship material. Let's say that we build backlog, that the inventory start dropping. As we see those indicators, then we start making assessment when we need to buy more material. So basically, you are not making commitment to buy material before we actually see the growth of backlog and the depletion of inventory that warrants that. So at this moment, this doesn't affect our ability to deliver the lead times, but it could be that come Q3 next year or come Q2 next year, it will affect the lead time on some of our systems. Not all of them, but some flavors of our systems. That definitely could be one of the outcomes of that. come Q2 or Q3 next year.

Okay. Yeah, that's helpful. I appreciate the color.

And when this will be the case, you know, we will know that that's the case. And we'll be talking about this. I think you'll have the signals from what we report to recognize.

Okay. Got it. Good luck going forward here, guys. I'll see you this week.

Sounds good, Jacob. Thank you. Thank you so much, Jacob. Thank you.

Thank you. As a reminder, press star 1 to ask a question at this time. There are no further questions. I would like to turn the floor back over to Benny for closing remarks.

Thank you everyone for joining our call. I'd like to summarize the strategic move that we have done, right-sizing our operation and our company to much more sustainable growth, growth that gives us much more time to build the foundations and to grow profitably from that moment. So thank you so much for the call and looking forward to answer any more questions. Thank you.

Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.