Haivision Systems Inc.

Ladies and gentlemen this is the operator. Today's conference is scheduled to begin momentarily. Thank you for your patience. Thank you. Thank you. Ladies and gentlemen, thank you for standing by. And welcome to the High Vision Systems third quarter fiscal 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Mirko Wicca, Chairman, CEO, and President, you may begin your conference.

Thank you, Josh, and good afternoon, everyone. Thank you for joining us. I'm thrilled to be back today to discuss our Q3 fiscal 2022 results. Hopefully, some of you have seen our press release that went out just earlier and was demonstrated by the results that we announced. Demand for our products remains strong, and our business fundamentals have never been stronger. We have been working diligently over the past several months on our fiscal 2023 planning, which actually begins in only six weeks, realigning our combined product roadmaps, identifying integration areas of the AviWest and HiVision teams. I'm happy to announce that we are now ready to implement the necessary actions to realize the full synergies that we anticipated when we acquired the company back in April. We've also been making progress in the synaptic integration and feel that we are ready to push forward in integrating all groups into a unified single vision for high vision. All these actions will result in significant office savings across the board to prepare for the growth ahead in both revenue, and profitability. We really expect to finalize these plans within the next three to four weeks. And of course, all associated costs will be included in our Q4 results end of October as part of our eventual fiscal 2022 results. Dan will elaborate more on our detailed financials shortly. A few key highlights to note from the last quarter. Our company, as you know, has achieved Revenue of $29.6 million, which represents a whopping 42.9% growth during the first full quarter of the combined business units over Q3 of last year, as we continue to deliver on our promise to increase top-line growth. Visibility into future quarters and strong customer demand supports continued record organic growth from the combined business. And since the AVI was acquisition in April, our management has focused on integration of the business units, on identifying areas of cost savings and synergies of the combined businesses, and on a new and exciting branding strategy. We have now completed this process. We also introduced our new critical visual collaboration platform, the HiVision Command 360. This is an innovative, easy-to-use, easy to install, mission critical, yet powerful, secure platform for all enterprises and governments. The new platform will also enable us to scale this business internationally much quicker as it was specifically designed for ease of deployment, which is critical for global resource integrators. We have launched our bold new brand identity, reflecting the company's evolution, growth, and strategic direction for the future. At the IBC show in Amsterdam, which just finished yesterday, our entire booth of products displayed this exciting new brand look that was extremely well received by everyone. And the company's new branding represents its deep expertise in mission-critical live video networking and collaboration, inspired by the core values of security, reliability, quality, and performance. inherent in all high-vision solutions and services that customers have come to know and rely on. The rebranding of the company's visual identity solidifies our position as an industry pioneer and leader in mission-critical live visual solutions. We also expect higher revenues going forward from our announced pricing increase of 10% across the board to better reflect inflation-related costs. We also expect to maintain our historical margin profiles while still delivering the best price-for-value combination in the industry for all customers. In fact, the price increase announcement has gone out to the entire install base two weeks ago and becomes effective as of October 1st, thus allowing clients to take full advantage of current pricing for the month of September and for the end of the U.S. government year-end. In fact, we already see clients taking advantage of these announcements and moving orders up into September, which is great. Now, with our new and existing branding of strong customer demand, we anticipate record revenues at historical margin levels. In fact, with the elimination of transaction costs related to the AVI-REST acquisition, and most importantly, anticipated cost savings to identify synergies to return the business to strong profit levels near term. Also, our SRT Alliance reached another significant milestone of 575 members. It's only joining the global movement to a unified industry standard for low-latency streaming. And finally, our percentage of international revenue has grown in Q3 to now actually represent 34% of our global revenue, which is the full quarter addition of the international weighted AWS revenue. And this shows that we are building a global company with higher international revenue as promised. Now, our nine-month international revenue and the percentage of global revenue is still about 26%, as it only includes five months of AWS. I'd like to share with you a few selected Q3 sales highlights. Our global defense team has had some significant long-term wins during the last quarter, a couple of which, L3, Leonardo, and the U.S. Space Force are particularly interesting. We also had great news on a very, very significantly large multi-year U.S. defense rollout, which is currently planned to begin in late 2023 and go through all the way to 2030. And I think our focus on multi-year government programmatic business is progressing very well. I maintain my strong belief that this coordinated focus Attention and investment in your programmatic business will help fuel a long-term growth for HiVision. Now, the MCS enterprise team had many great wins and new logos that were added to the HiVision family. Several large and significant deals were, for example, California Office of Emergency Services ordered several command centers for the state of California's Emergency Coordination Operations Center. which is one of the most important public safety agencies in the U.S. The U.S. Department of Energy, a key part of America's national security infrastructure, and our presence as their operation center of choice, speaks to the trust and mission-critical capabilities of high-vision platforms. A, quote, major tech social media platform in Silicon Valley continues to add data centers globally, to provide both local visibility and global oversight. They have been using us in the global security operation centers and network operation centers for years. Some real exciting list of some new public safety business. In fact, some collected new logos for Hivision are pretty impressive. We've got the Kern County California Fire Department. We've got the City of Livermore California Police Department. We've got the Michigan State. Emergency 911 centers, the New York State Unified Court System, City of Tallahassee Traffic Management Center, and the State of Vermont Emergency Management, just to name a few. In fact, CP Communications, a very large company, they're using the AVUS Pro Series transmitters, along with Hydrogen, to provide the data plans on the trucks to do remote production for sporting events. And the PGA Tour entertainment used the Pro Series to cover the Champions and Corn Fairy tournaments. They chose to go with Pro Series solutions mainly because of the remote control capability, the ability to select multiple cellular bands, and overall performance. Let me turn to Europe. A few key and noteworthy wins, you know. TV on Portugal and private television both continue to increase their fleet of AWS Pro Series transmitters, which is great to see. A large global international soccer association added more Pro Series systems for remote production. And a large documentary and sport producer also added more Pro Series for their remote productions. Swing over to Asia Pacific, some pretty interesting wins there. The Shanghai Emergency Community Communications Office, using our Makito to transport all our soccer game content from the Chinese Super League for their international viewers. The CT Group, using our systems for their remote production workflow. And the Hong Kong Police, using our systems for events and mass gatherings, streaming workflow. And I will add to that, in the Middle East, some really noteworthy wins. The Qatar Ministry of Interior, using our Pro Series to transmit, manage, receive, and distribute live low-latency encrypted video feeds from UAVs and drones to command and control centers to ensure crucial real-time field information and to manage the critical security and safety at the upcoming World Cup, such as event security, spec data, and crime control and safety. The Qatar Media Corporation, Qatar TV, invested in over 19 of our newest UHD Pro 460s to complete management and reception systems. The systems will be deployed in different locations around the country to ensure complete coverage of news and events. In addition, the broadcasters will rely on the Stream Hub transceiver to distribute the footage to affiliates and other international broadcasters during major international events. Finally, OutKast Sports TV channel selected also our new Pro460 systems to provide live feeds during sports events and to produce live sports matches. And finally, I'll add, in Latin America, as you can hopefully get the picture, we're really becoming a global company. The Mexican Baseball League is using the T-Rex encoders, decoders, and high-resolution gateways to send live signals from tennis stadiums like Televisa and Fox Sports Mexico. The Igreja Universal is Brazil's biggest evangelical church and owner of TV records, which is the second biggest broadcaster in Brazil. And the estimated number of followers is over 8 million people all around the world. They purchased Airtree 230s, Rock 200s, and StreamHub licenses for their full live event production workflow. And finally, Global TV, which is Brazil's biggest broadcaster and the second largest TV in the world, TV network in the world, added StreamHub licenses to their software for their live events operations. With the added emphasis of integrating our acquisitions during the next few weeks into a unified vision and strategy, I couldn't be more excited for our fiscal 2023 year coming and beyond. In closing, despite the economic headwinds and continuous supply chain challenges, we expect a very, very strong Q4, which has been traditionally our strongest quarter for exactly a year's government year-end. Thus, we are very excited for a record-breaking Q4 performance and the upcoming exciting fiscal 2023. I'll pass it on to Dan, our CFO. Dan, it's all yours.

Thank you, Mirko. I know it's almost midnight in Europe, where you are. You sounded as if you were still in the morning in Montreal. Let's get into the numbers. Revenue for this third quarter of fiscal 2022 was $29.6 million, representing an increase of $8.9 million. or 42.9% from the same period in the prior year. Revenue for the nine months ended July 31st, 2022, was 87.8 million, representing an increase of 22.3 million, or 34% from the same period prior year. As was the case last quarter, much of the year-over-year growth can be attributed to the acquisitions of HiVision MCS, in August of 2021, just over a year ago, and Abby West in April of 2022, just five and a half months ago. With COVID seemingly behind us, we seem to be reverting back to our historical seasonal pattern, where our first quarter is traditionally our smallest quarter, representing about 20% of our overall annual revenue, and our fourth quarter, which is commensurate with the U.S. government year-end, is traditionally our largest quarter, representing about 30% of our overall annual revenue. With our October 31st year-end approaching in six weeks, we have significant visibility into this fourth quarter and expect our fourth quarter results to represent record-breaking performance in terms of revenue. Our business remains healthy, and we expect revenue to continue to grow from these levels. Recurring revenue, which we define as our cloud solution and maintenance and support, was slightly ahead of last quarter's performance. Recurring revenue was $6.8 million and represented 23% of this quarter's revenue. We believe we still have upward opportunity to increase our maintenance and support revenue as we conform our high vision MCF and Abby West maintenance and support offerings. However, we are witnessing weakness in our House of Worship business that will likely impact our level of cloud revenues going forward. Revenue related to the House of Worship offering is somewhat dependent on the price of bandwidth, transcoding, and the like. And although we continue to add customers, we are competing with lower cost alternatives, including free offerings from YouTube and other companies. These competitive offerings are putting downward pressure on cloud revenues and putting downward pressure on gross margins. For this quarter, gross margins were 66.1%, whereas gross margins on a year-to-date basis were 69.0%. We had anticipated margins to slip from historical experience as margins for HiVision MCS and Abby West offerings were below our historical margins. The good news is that our supply chain teams continue to supply our customers with their mission-critical needs. However, it hasn't been without costs to high vision, which amounted to over $200,000 this quarter and $1.1 million on a year-to-date basis. Whereas we had believed that the supply chain constraints and resulting price increases would be temporary, we don't expect these costs to revert back to historical levels in the foreseeable future. To address what we believe to be a fundamental change in supply chain, we have imposed a price increase effective October 1st. We expect that this price increase will enable us to maintain our historical margin profile while still delivering industry leading price to value offerings to our customers. As presented, our total expenses for the third quarter were $24.4 million. an increase of $6.6 million when compared to the same period in the prior year, and an increase of $3.2 million when compared to last quarter. As Mirko mentioned, this third quarter represents the first quarter operating on a consolidated basis with the cost structures of both recent acquisitions. And these total expenses included certain non-cash expenses such as amortization of intangible assets of about $1.9 million, depreciation of fixed assets and right of use assets of $700,000, and share-based payments of $600,000. Operating on a consolidated basis enabled us to identify best practices across all of our entities, and we have identified significant synergies in terms of product offerings, synergistic sales opportunities, and stellar back-office processes. we believe we can take full advantage of these synergies in this fourth quarter. On a year-to-date basis, total expenses were $65.3 million, an increase of $10.2 million when compared to the same period in the prior year. Year-to-date expenses not only included the full cost structure of High Vision MCS for nine months, but also included the cost structure of Abby West for four months. And total new-to-date expenses included non-cash expenses, such as those share-based payments of $2.1 million, depreciation of fixed assets and right-of-use assets of $1.8 million, and amortization of intangible assets of $4 million, the predominance of which was the result of those two recent acquisitions. When we normalize for these share-based payments the depreciation of fixed assets and amortization of intangibles, Total year-to-date expenses were $56.6 million, an increase of $19.7 million from the same period last year. As we have discussed on previous calls, our cost structure is largely made up of people costs. In fact, approximately 70% of our total expenses consist of compensation and related benefits. Now, it shouldn't be much of a surprise that much of the increase in total year-to-date expenses is related to the HiVision MCS transaction in August 2021 and the ABBUS transaction in April 2022. To give you a sense of the impact of these two acquisitions, our total headcount at July 31st, 2022 was 418 people, compared to only 262 people in July 31st of 2021. HiVision MCS added 64 people, while Abby West added another 81 people. Or said another way, the two acquisitions represented a 35% increase in total headcount. Beyond the headcount increases, we are seeing increases in the cost of our labor, in the amount of travel and the cost of that travel, increases in marketing spend, and the cost of just about everything else as our vendors are increasingly passing their increasing cost structures onto us. The result of these cost increases was an adjusted EBITDA for the quarter of a negative $1.6 million. That's a decrease of $5 million compared to the same period in the prior year. Adjusted EBITDA for the nine months was $3.1 million, a decrease of $7.4 million compared to the same period in the prior year. EBITDA margins have certainly compressed a bit in recent periods due to the higher headcount and increasing labor costs. supply chain issues, which cost us about $1.1 million on a year-to-date basis, and transactional costs related to recent acquisitions, which cost us about $900,000 on a year-to-date basis. I should add that increases in traveling and marketing spend exceeded last year's spend by $3,800,000 respectively, although some of that increase in travel expense is really related to HiVision's MCS's install business. Net loss for the quarter was $4.2 million compared to a net income of $1.9 million for the same period in the prior year. And as was the case with EBITDA, this quarter's net income was impacted by increased headcounts, additional depreciation and amortization, travel and marketing, and transaction costs. The net loss for the nine month period was $5.1 million, $3.9 million improvement from the same period last year. Although the year-to-date net loss suffered from the increased expenses related to the two acquisitions and amortization and transactions costs, much of the year-to-date improvement can be attributed to last year's share-based payments of $14.1 million related to the legacy employee stock option plan. And that represented the culmination of a 14-year program. Looking at the balance sheet. We ended the quarter with cash balances of 8.9 million, but much of that was funded through our credit facility, which had 13 million outstanding at the end of the quarter. Again, the big movements in the balance sheet items is related to the confirmation of the Abby West transaction in early April. The transaction itself consumed about 21.9 million in cash, and we assumed 5.5 million in their term debt. On an aside, The term debt consists of 13 individual debt instruments, but priced quite favorably from non-interest-bearing debt on the low end to interest-bearing debt with an interest rate of just under 3%. Now, assuming that there are no indemnity claims to be paid, HiVision will pay an additional $2.7 million in two future payments related to the Abby West transaction. Total assets at quarter end were 139.1 million. That's an increase of 16.6 million from fiscal 2021 year end. And it's no surprise the increase in assets is largely the result of the Abby West transaction. We assumed assets of 11.7 million, including inventories, receivables, property and equipment, and rights of use assets. We also acquired intangibles of $13.3 million and goodwill of $9.7 million. These working capital increases were offset by the $18 million decrease in cash from the prior year end. Total liabilities at quarter end were $53.2 million, an increase of $19.6 million from fiscal 2021 year end, Similarly, the increase in liabilities is largely the result of the Abby West transaction. As I mentioned, we had assumed $5.8 million in liabilities related to trade payables, deferred revenue, deferred taxes, and the like. We assumed $5.5 million in term debt, of which $5 million is still outstanding. And we have that $13 million outstanding on our credit facility. So let's talk a little bit about where we are on integration plans. For HiVision MCS, the integration has been a bit complicated and progress has been slower than we had hoped. However, at this juncture, our government and enterprise sales teams have been integrated. HiVision MCS is on a common payroll system. HiVision MCS is on a common accounting system. And our next areas of focus will be increasing the flexibility of HiVision MCS supply chain. implementing procurement best practices to reduce the order to cash cycle time, and bringing high vision MCS to international markets. The good news is that we still have vast opportunities and we expect the pace of exploiting these opportunities to speed up. For Abby West, the integration has been less complicated and progress continues to be swift. Sales teams have been fully integrated, and AviWest is operating under a common sales management system. Products are already being integrated. AviWest solutions already support SRT, allowing interoperability with the high-vision product portfolio, and plans are underway to integrate Makito products into AviWest solutions. Our next areas of focus continue to be increasing the flexibility of Abbey West supply chain, porting Abbey West to a common accounting system, and bringing Abbey West products to North America. As discussed on our last call, we have been facing significant headwinds. So as an update, our supply chain specialists have largely addressed component issues for the foreseeable future. We are beginning to see a degree of stabilization, albeit at levels with unacceptably long lead times and higher than usual component costs. However, the success has had its costs. As an example, in the last quarter, we incurred approximately $200,000 in higher component costs, expediting fees, contingency part purchases, et cetera, to deal with this worldwide shortage in components. The good news is that this quarter's expenditures were significantly lower than the previous two quarters. On a year-to-date basis, we've incurred approximately $1.1 million of such expenses. Now, to secure our six-month needs for parts and components, we have increased the level of our deposits with our contract manufacturers by approximately $2.5 million. We have made $2 million in commitments for high-value, long lead-time componentry. We've redesigned certain of our boards to accommodate readily available componentry, and we've qualified alternative manufacturers for difficult to procure items. We've insourced certain mechanical assembly to mitigate the increasing cost of goods, and we've invested in third party systems to provide real time assessments of our supply chain resiliency. The hard costs are easy to quantify, but the soft costs have also taken its toll on the organization. Nevertheless, there is still some additional work, particularly in relation to AviWest products, and we don't know whether, or if for that matter, whether our supply chains will ever revert back to historical levels. So again, to offset what appears to be a persistent increase in these component costs, we have imposed a price increase effective October 1st. And we should see this have some impact on this fourth quarter, but more likely the impact will be seen in fiscal 2023 and beyond. Thus far, we've been able to serve all our customers with their mission-critical needs. Our thanks to our supply chain team for navigating us through this turbulent time. The people side of the equation seems to be easing as well, but continues to be a challenge. Labor costs continue to increase, and retention is still a challenge for us. With that said, we have seen the response rate to our job postings increase in the last few months. However, positions that have always been difficult to fill remain difficult to fill. I suppose on a positive note, the number of offers extended to qualified candidates that were subsequently rejected seems to be declining. On top of supply chains and employment issues, our vendors are increasingly passing their higher cost structures on to their customers like us. Travel appears to be back in a big way. Face-to-face interactions are still important. And it certainly hasn't helped that the cost of airfare and the cost of hotels are at levels we haven't seen in the past. Marketing is also back, including a return to trade shows. And as Mirko mentioned, the IBC show just ended yesterday. In terms of expectations for the remainder of the year, our customers, our enterprises, and governments around the world, and there is no question that our customers are feeling some of the same pains we are experiencing. Nevertheless, our business is still buoyant, and we expect a sound fourth quarter. Thus, our revenue guidance for the full year is still expected to be between $123 million, $123 million, and $127 million, although likely closer to the lower end of the range. And based on third quarter performance, full year adjusted EBITDA will be lower than previously conveyed due to Q3 performance and the expanded OPEX we are addressing in this fourth quarter. Although still a bit early, we have already begun working on our plans for 2023 and are quite buoyant on the industry and our position within this industry. So with all that said, we are now ready to take questions.

At this time, I would like to remind everyone, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad. Your first question comes from Nick Corcoran with Acumen Capital. Your line is open.

Hey, guys. Thanks, Jake. My question is maybe starting with the top line. You mentioned that the fourth quarter set a record. Are there any notable sales that might have slipped from Q3 into Q4?

Sorry, Nick, good to hear from you. I missed the last part, sorry.

Yeah, I'm trying to quantify if any sales slipped from the third quarter to the fourth quarter.

Yeah, great question. I mean, we definitely had a programmatic deal that slipped from Q3 and Q4, which will be covered up in Q4. As a result, we expect that to be added to Q4 typical revenue, and as a result, we're expecting a much larger Q4. So definitely.

Great. And then switching gears to Cinemassive, have you received the security clearance for that?

Nick, I think, let me see if I can address that. First of all, I understand that the company Cinemassive has always had a security clearance. That's not the issue. The issue is that having purchased the company, now we have a Canadian entity that owns a secure facility. and we have to put mitigation steps in place to make sure that any secured information, any classified information doesn't make its way to the parent's entity. So we're in the process of going through a mitigation strategy, and that's why the integration has been a little bit slower than it had been in the past. Now the good news is we were told we're gonna get our final approval on board members by tomorrow. I have heard that before, so I'm hoping Not holding my breath, per se. But we have had a meeting of the newly established board that will be running High Vision MCS. They are on board. They understand their roles. And we believe that we can start making additional moves much more faster than we had in the past.

Great. And then it was the first full quarter with Ivy West. How has it performed in terms of the revenue contribution and the gross margin?

The gross margins have been performing at expectation. They too are faced with component challenges that we're helping to mitigate. I'd say revenue has exceeded our expectations in the four months that we've been together, and we have visibility that suggests that the remaining year will be also very good.

And you mentioned in your prepared remarks that there's some integration going on in the supply chain. Should we expect gross margin from Abby West and Cinemassive to improve with time?

I'd certainly like to see gross margins improve. Right now, our goal is to make sure they have resilient supply chains. And what we mean by resiliency is that when we make sales, we're able to fulfill those sales in quick order rather than having to wait 14 weeks to procure product to be able to sell those products to the customer. So we want to make sure that we have ample access to items so that we can meet the top line if we sell those products.

Great. That's all from me.

Thanks a lot. Our next question comes from the line of Robert Young with Canaccord. Your line is open.

Hi. In the prepared comments, which were very detailed, thanks, you went through a lot of margin headwinds, not a lot of tailwinds, and so I wanted to revisit, you know, the near-term, sort of medium-term margin structure. I mean, the question that Nick asked around gross margin profile in the short run, at 66%, I think you highlighted House of Worship as a headwind in the short run, plus the recent acquisitions of MCS and AviWest. plus the supply chain. And so, I mean, as we sort of look at the next year, is that something that could get back up above 70% or just any color that you can give on, you know, the gross margin recovery, how that might play out?

Well, I think this third quarter was a bit of an anomaly in terms of gross margin. I think we had a significant mix that contributed significantly to the 66% that we realize. I don't expect the 66% to be a long-term number. In fact, our planning for 2023 and beyond suggests that we'll be just under 70%. That doesn't mean that we don't have opportunity. We are looking at their supply chains. We are looking at their contract manufacturing to see if we can evolve that a little bit and bring them up to levels that we were at, that high vision has historically been at. Now, Abby West has introduced new products and part of our exercise with our new sales management is to make sure that they're sort of holding to our discount strategies as it relates to resellers and to end users. And I think that will go a long way in assisting in getting their margins back up.

Okay. And then walking down the income statement down towards EBITDA margins, um you know the higher cost of travel and wage inflation and um it just maybe if you could give us a sense of the cadence of ebitda margins just from a modeling perspective how how we should be thinking about that it's negative this quarter maybe should we expect it to be negative in q4 and then improve steadily or um maybe just any any any help there would be much appreciated

Well, if you're looking at adjusted EBITDA, adjusted EBITDA, my sense will be that it will be significantly positive. We have identified synergies, and we're going to start pulling the trigger on those synergies in the fourth quarter, and thus we're going to sort of right-size the business during this quarter and realize the benefits in 2023 and beyond.

Okay, okay. And then... Should we think of M&A in the short run as a focus area? It sounds like you're doing a lot of work around integration and some of the cost out. So is that going to be a focus?

Well, I would say M&A has always been a focus, and we're constantly talking to all sorts of industry players. But I would say that we don't have any conversations that represent a deal in tow. I don't see that happening in the very short term here. But again, we've always been very opportunistic. If something comes our way, we'll figure out a way to get it done.

Okay. And maybe the last question before I pass the line would be around, Mirko, you mentioned a new programmatic opportunity that would run over a significant time period. How should we think of that as, relative to the financial performance of the company. Is that like a significant driver of revenue growth? Is it, you know, accretive or not to a margin? Just any color there on what that could mean. And then I'll pass the line.

Yeah, great question, Robert. I was kind of expecting that. As you can appreciate, it's difficult to talk about some of these things. But again, it's, you know, we invested heavily in putting resources to go after these large multi-year contracts. I mean, it's nothing new to us, right? We've been doing these multi-year programmatic businesses before, and the benefits are obvious. So, yeah, we definitely have several large deals in tow. And I wish I could say more, but I would expect that the... the success of our execution in these programmatic deals really help in sustaining long-term growth for the company. I think that's one of the things I'm a big believer in, that if you do it right and you invest up front, that these are gifts that keep on giving. And we've seen in the past, you know, from the State Department, from the Predator programs, and from the Kings programs, et cetera. We've been doing these multi-year deals. And sometimes it takes a lot of money up front, a lot of effort up front. But for the long-term sustainability of the company, it's critical. So I wish I could go into more detail, but I can tell you that all our investments paying off, stuff we can't talk about. And hopefully, you know, when 2023 gets rolling, we'll be able to show more data. But I just see it as a significant instrument in helping and much further and higher growth rate to propel the company in the future. That's all I can say at this point.

All right. One more question on that. Maybe I'll push this a little bit harder. Is it an extension of something existing or would it be net new? Would it be additive? Is it an expansion of one?

No, it's completely new and part also additive. So it's a double... The answer is yes. Okay.

Thanks. I'll pass the line.

Again, if you would like to ask a question at this time, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile any remaining questions. There are no further questions at this time. I'll turn the call back to Mirko Wika for closing remarks.

Okay. Thanks, Josh. Everyone, I appreciate your time. And I know it's been a challenging quarter in Q3, but the good news is that we are, just want you to know, we are working very diligently on really, I think this is the next phase and stage of Hibishon that's coming forward. And as we prepare the company for massive scale, these are the things that we need to put in place. And we're going to be doing that in the next three to four weeks. We're really focused. We're looking at not only consolidating all the products and architectures, but we're focusing on core competencies. We're going to make sure we only work on things that align to our core competencies. I just want to remind everybody, anything that requires quality, reliability, security, and performance is what builds hydrogen, and this is what we're true to. We're going to really evaluate all our verticals. And anything that doesn't align to these principles, we're not going to be doing going forward. We're going to focus, focus, and focus. And we're really going to take the immediate action in the next few weeks to realign the company really for the next phase. So I think it's a pretty exciting time for the company as we scale. And we're doing so many great long-term things that are going to really show up in 2023 and 2024. And all I can say is everybody in the company, we're all excited about what's going on. And I think Q3 is honestly a blip. Q4 is going to be a massive quarter and 2023 is going to be very exciting. So just leave me with that thought. And thank you for everybody for attending and can't wait to talk to you when we have our year-end Q4 results. We'll probably sometime in January we'll have our call. And I look forward to seeing you then. Take care.

This concludes today's conference call. You may now disconnect.