Vecima Networks Inc.

Welcome to Vesima Network's third quarter fiscal 2022 earnings conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Analysts and institutional investors who wish to join the question queue, simply press star and 1 on your touchtone phone. You will hear a tone acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. Should anyone need assistance during the conference call, they may signal an operator by pressing star and 0 on their telephone. Presenting today on behalf of Vesima Networks are Sumit Kumar, President and CEO, and Dale Booth, Chief Financial Officer. Today's call will begin with executive commentary on Vesima's financial and operational performance for the third quarter fiscal 2022 results. Lastly, the call will finish with a question and answer period for analysts and institutional investors. The press release announcing the company's third quarter fiscal 2022 results, as well as detailed supplemental investor information are posted on Vesima's website at www.vesima.com. Under the investor relations heading, The highlights provided in this call should be understood in conjunction with the company's interim condensed consolidated financial statements and accompanying notes for the three and nine months ended March 31, 2022 and 2021. Certain statements in this conference call and webcast may constitute forward-looking statements within the meaning of applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These statements include but are not limited to statements regarding management's intentions, belief, or current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs, and operating performance. These statements are guarantees of future performance and involve risks and uncertainties that are difficult to predict and or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include but are not limited to the current significant general economic uncertainty and credit and financial market volatility, including the impact of COVID-19 and the distinctive characteristics of Vesima's operations and industry and customer demand that may have a material impact on or constitute risk factors in respect of Vesima's future financial performance. As set forth under the heading Risk Factors in the company's Annual Information Form dated September 23, 2021, a copy of which is available at www.setter.com. In addition, although the forward-looking statements in this earnings call are based on what management believes are reasonable assumptions, such assumptions may prove to be incorrect. Consequently, attendees should now place undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. VESIMA disclaims any intention or obligation to update or revise any forward-looking statements. As a result of new information, future events or otherwise except as required by law. At this time, I would like to turn the conference over to Mr. Kumar to proceed with his remarks. Please go ahead.

Thank you. Good morning and welcome everyone. Thank you for joining us. The third quarter was another terrific one for Vesma with our remarkable growth momentum continuing and where we set new all-time best quarterly results yet again. Gail and I will tell you more about our financial performance on today's call. I also want to provide some color on recent operational highlights and, of course, talk about our outlook. Much to cover, so let's get started. The two dominant themes of the third quarter were high growth and innovation. On the growth front, our momentum continued to build with total sales climbing 60% year-over-year, and climbing 17% versus Q2 to $50.9 million. That's once again the best quarterly results for sales in Vesma's history, and this was after already delivering sales growth of 35% sequentially in Q2. We paired our record sales with a gross margin of 47%, which was right in line with our short-term expectations, given global supply chain management costs and foreign exchange headwinds. The combination of record sales and a solid gross margin helped us achieve adjusted EBITDA of $8.1 million, up over four times from a year ago. And we grew adjusted earnings per share to $0.13, up from $0.02 in the same period last year. So of course, we're very proud of these results. Our growth performance was led by our video and broadband solution segment, where sales rose again sharply to $37 million, largely on the momentum of another remarkable quarter for our next-generation Entra DAA portfolio. Entra's sales soared to $30.8 million, by far our best result to date as the scaling rollouts of Entra continue. To put that achievement into perspective, consider that just five quarters ago, Vesima's total sales, including all segments and all product lines, amounted to $29.7 million. As you see, Entra sales on their own surpassed that mark in Q3. Looking at the tempo from another angle, Entra sales grew a phenomenal 67% on a sequential quarterly basis, and compared to a year ago, they were up 142%. So that's quite the growth trajectory, and it's driven by multiple customers drawing from all across our Entra fiber and cable access portfolio. During the third quarter, we supported a world-leading Tier 1 operator involved in the massive rural broadband rollout getting underway in the U.S. This long-term project is generating significant demand for our 10-gig PON fiber-to-the-home solutions, and it's a demand we expect will continue growing for many years. We also deployed our MACFI solutions with multiple customers, including Liberty Latin America, as we supported that operator's ultra-broadband rollout across Latin America and the Caribbean. And we secured new interim MACFI wins with Blue Peak in the US Midwest, as well as with the top 10 operator in North America. We also won a new remote PHY deployment with a Tier 1 operator in the APAC region in Q3. And this was all in addition, of course, to continued scale deployment of our remote PHY solutions with multiple customers, remote PHY, remote MACFI, and of 10-gig EFON. So a truly satisfying quarter for Entra with highlights, wins, and new highs all across the board. And as I've said many times, we're still in the early days of DAA adoption as a global transformation of internet access networks. So this is a once-in-a-generation industry-wide technology shift. And Vesma's pioneering technologies are right at the forefront of this wave, and there's much more to come. Looking now at other contributors to our BBS segment performance in Q3, it was another strong quarter for Terrace Qualm, with sales of $5 million as our lead customer continued to expand its hospitality footprint. The demand run rate has remained incredibly stable for this platform for years, and we see this continuing. And remember that every Terrace Qualm platform we sell is eventually upgradable to our new next-generation Terrace IQ platform. On our last call, I talked in some detail about the significant growth potential that creates as we start to upgrade our widely deployed base of Terrace QAM platforms to Terrace IQ, a transition that we and customers are nearing. In the interim, we continue to further differentiate our Terrace IQ solution with new feature sets that widen our leading streaming functionality and provide customers with maximum flexibility, all being best of my hallmarks. Turning to our content delivery and storage segment, we achieved year-over-year revenue growth of 43% as we grew segment sales to $12.5 million. This was a strong result for CDS, although not on par with the record results we achieved in Q2. You'll recall that multiple customers started to accelerate their IPTV upgrades and expansion programs at once in the second quarter, following some pandemic-related project kickoff delays. That led to exceptionally strong Q2 results. The third quarter brought continued deployments and expansions, including our rollout with top 10 U.S. operator BreezeLine, formerly Atlantic Broadband. We also secured a new customer win with an operator in the southeastern U.S. and four significant IPTV expansions across various regions in the U.S. Our MediaScaleX IPTV solutions are in use by over 35 operators worldwide. And we expect that number to keep growing as the industry-wide transition to IPTV continues to build momentum. In our telematics segment, the third quarter brought continued strong performance in cash flow. We once again increased our deployments in high-value verticals as we brought on nine new customers for our Nero asset tracking platform. We're now monitoring over 20,000 units with the asset tracking solution. And as always, our telematics segment achieved excellent profitability generating trailing 12-month adjusted EBITDA of $1.8 million and an adjusted EBITDA margin of 32%. Overall, it was just an excellent third quarter for Vesma with incredible growth and rock-solid financial performance. And we also have some key achievements on the innovation front, of course, to tell you about as well. First relates to DOCSIS 4.0, which is the next generation DAA pathway to achieving multi-gigabit symmetrical speeds on existing cable networks. the 10G future of cable access. The beauty of DOCSIS 4.0 is that it will enable cable operators to leverage their existing cable plants to bring the cable networks to symmetrical gigabit speeds relatively quickly and with minimal hassle. But it requires the distributed access technology at the node to be upgraded, and that's where we come in. As you may recall, in the second quarter, Vesima, together with Charter Communications, demonstrated the reality of DOCSIS 4.0's 10G potential as we clocked in the world's best multi-gigabit download and upload broadband speeds on the cable access network. That was an industry first, and we've since surpassed it. Just two weeks ago, Vesma demonstrated even faster speeds of 8.9 gigabits per second downstream and 6.2 gigabits per second upstream in a multi-vendor, real-world network environment. using our Enter Remote MACFI technology operating in DOCSIS 4.0 Extended Spectrum mode. That demonstration took place at CableLabs' 10G showcase, and it was notable not just for being another industry first, but for clearly demonstrating how Vesma is paving the way for true 10G service on existing networks with natural and cost-effective upgrades. So at a time when the cable industry is facing significant push from competitive broadband service providers in their footprints, as demand for broadband, of course, remains insatiable, our DOCSIS 4.0 solution is one that the cable operators will need. It gives them a major advantage in that existing cable access infrastructure can once again be leveraged in the brownfield footprint for 10G symmetrical gigabit speeds. And meanwhile, their capital investments in fiber can be focused on new greenfield builds and further expanding their networks or edge outs using our fiber access solutions. So we expect to be at the forefront of supplying the full suite of broadband access solutions, fiber and cable access. Another investment technology milestone relates to the content delivery side of our business and our recent advancements with open caching. Open caching defines a set of interfaces that enable streaming IP video content to be delivered more efficiently, at lower cost, and with higher quality across multiple networks. The goal is to deliver video that looks and performs better on consumer viewing screens, but open caching also offers several business advantages for the various stakeholders involved in delivering content. Specifically, it enhances the video monetization model for internet service providers, like cable operators, while at the same time reducing the video distribution costs and increasing the quality for streaming providers. During the third quarter, Vesma successfully demonstrated our standards-compliant open caching solution. We also significantly advanced an open caching engagement with a globally leading Tier 1 content provider. We strongly believe open caching is the future of video streaming, and Bessima is laying the groundwork today with our combined technology, software, and business. So two very big technology developments this past quarter that are core to our vision and our strategy for the future. At this point, I'll call on Dale to provide our financial review. Dale?

Thank you, Sumit. For the purposes of this call, we assume that everyone has seen our third quarter fiscal 2022 news release, MD&A, and financial statements that are posted on BESMA's website. I will present the relevant numbers in discussions around overall results, market segments, operational expenses, and the balance sheet. Starting with consolidated sales. For the three months ended March 31, 2022, we generated sales of $50.9 million. This was an increase of 17% over the $43.6 million in Q2 fiscal 2022 and an increase of 60% from the $31.9 million in Q3 last year. Led by significant sales demand for our ENTRE family of DAA products, and another strong quarter for our MediaScaleX IPTV solutions. The year-over-year increase reflects the growth of the video and broadband solution segment, driven by our new ENTRE family, as our DAA customers drew from across our ENTRE portfolio. Within the video and broadband solution segment, we generated sales of $37 million for the third quarter. This was up 70% from the $21.8 million in Q3 last year and 36% higher than the $27.2 million last quarter as Bessemer's award-winning solutions were being used by customers as a transition to next-generation networks. Once again, our Entra DAA products contributed record revenue in the third quarter with sales of $30.8 million. up 142% from the $12.7 million in Q3 fiscal 2021, and up 67% from the $18.5 million in Q2 last quarter. This was a very strong quarter for Entra Achievements, even while we were in the midst of unprecedented worldwide supply chain challenges. Commercial video family sales for the quarter were $6.2 million, down 29% from the $8.6 million in Q3 fiscal 2021 and the $8.7 million in Q2 last quarter. This change reflected the anticipated tapering of demand for our legacy products, offset by continued demand for our Terrace QAM platform, as operators continued their commercial rollout for their current generation while preparing for the next generation Terrace IQ platform. In the content delivery and storage segment, third quarter revenues were up 43% to $12.5 million from the $8.8 million in Q3 last year, but down 16% from the record $15 million in Q2 last quarter. Segment sales for the Q3 fiscal 2022 period included $8.2 million of product sales and $4.3 million of services revenue. The significant year over year increase reflects a return to activity on certain projects previously delayed by pandemic related issues, as well as early movement on IPTV expansions to customer networks. The quarter over quarter variance primarily reflects a return to a more typical sales base for the segment. On a full year basis, we now anticipate single digit growth for the content delivery and storage segment for fiscal 2022. Turning to the telematics segment, as expected, sales of $1.4 million in the third quarter of fiscal 2022 were on par with the $1.4 million achieved in the same period last year and in Q2 last quarter. Total gross margin for the third quarter was 47.1%. up from 45.0% in Q3 of fiscal 2021, but down from 50.1% in Q2 2022. The year-over-year improvement reflects a higher margin product mix, partially offset by continued foreign exchange headwinds related to a strengthening Canadian dollar, and increased expediting costs related to supply chain constraints. Video and broadband solutions gross profit margin was 44% in the current year quarter. This is higher than 43% a year ago, but down from 47% in Q2 fiscal 22. The year-over-year increase in VBS gross profit reflects higher sales as well as a slightly higher gross margin. Gross margin in the content delivery and storage segment was at 55% in the third quarter, up from the 54% in Q2 last quarter and the 47% in Q3 last year, due to variations in the product and customer mix. In the telematics segment, gross margin for Q3 fiscal 2022 was 63%, down from the 66% in Q3 last year and the 69% in Q2 last quarter. Turning to third quarter operating expenses, The notable changes year over year were as follows. R&D expenses increased to $8.8 million in Q3 this year from $7.5 million in Q3 fiscal 2021. The increase reflects an increase in R&D staffing, amortization of deferred development costs, and higher costs for subcontracting and software licensing, offset by an increase in deferred development costs. We continue to invest in research and development to support the launch of new products. These new products are commercialized. Development costs are deferred to future periods. Sales and marketing expenses for Q3 fiscal 22 increased to $4.7 million from $3.6 million in the same period last year. The increase in sales and marketing expense primarily reflects higher staffing costs to support the increase of sales year over year, as well as an increase in travel, entertainment, and trade show expenses, as travel and business restrictions due to COVID-19 have been reduced. G&A expenses at $6.1 million in the third quarter were up from $4.4 million in Q3 fiscal 21, reflecting additional new hires, subcontracting costs, ERP implementation, and software licensing costs. Total OpEx in Q3 increased to $19.8 million from $15.7 million during the same period last year. This reflects higher operating expenses in both the VBS and CDS segments, related to costs to support the increased sales activity, as well as the increase in R&D to support the development of our next generation of products. I note that reported R&D expense in a period is typically different than the actual expenditure. That's because certain R&D expenditures are deferred until product commercialization. Adjusting for deferrals, amortization of deferred development costs, and income tax credits, actual R&D investment for the third quarter increased to $11.5 million, or 23% of sales, from $9.2 million or 29% of sales in the same period last year. This increase reflects higher staffing costs, increased software licensing costs, and a general increase in overhead as we move our next generation product families closer to commercial development. We reported operating income of $4.1 million in Q3 fiscal 2022 as compared to an operating loss of $1.4 million in the same period last year. The $5.5 million increase in operating income was driven by an increase in contribution from the video and broadband solutions and the content delivery and storage segments, partially offset by a slightly lower operating income from the telematics segment year-over-year. Net income for the quarter was $3 million, or 13 cents per share, as compared to net income of $400,000, or 2 cents per share, in Q3 fiscal 21. Turning to the balance sheet, we ended the third quarter with $10.6 million in cash. The $0.3 million increase in cash in the quarter mainly reflects the $12.2 million from mortgaging our Saskatoon production facility, as well as positive cash flow of $7.5 million, before deferred development of $5.1 million, all offset by the continued strategic buildup of inventory of $11.1 million in the quarter, other working capital increases of $0.3 million, capital expenditures of $1.6 million, and dividends of $1.3 million. Working capital increased to $54.9 million from $44.8 million at June 2021. We note that working capital balances can be subject to significant swings from quarter to quarter. The timing of our product shipments are lumpy, reflecting the requirements of our major customers. Finally, cash flow from operations for the third quarter increased to cash used in operations of $3.9 million from cash provided by operations of $4.2 million during the same period last year. The $8.1 million decrease reflects a $13.5 million decrease from non-cash working capital, offset by a $5.4 million increase in operating cash flow from operations. Now back to Sumit.

Thank you, Dale. Turning now to our outlook. In our video and broadband solution segment, We anticipate the acceleration demand to continue for our Entra cable fiber access product through the fourth quarter and well beyond. We've said from the beginning that Entra would really start to ramp as more operators started moving to scale deployment with DAA. That's precisely what's happening with multiple customers now undertaking a capital investment to upgrade their networks to DAA. An architecture Vesma has been a pioneer of and that will be deployed globally across the industry. And demand is being further fueled by the massive rural fiber broadband expansion now underway, particularly in the U.S. With our very large and growing backlog of purchase orders and customer commitments providing excellent visibility, we expect Entra's sales pace to continue to build. In our Terrace family of products, we anticipate continued demand for the current generation Terrace QAM, making way again for the migration to next generation Terrace IQ, alongside the overall transition to IPTV in the network. Looking at the content delivery and storage segment, demand for our IPTV solutions remains robust, and we anticipate a very solid end to the year for CDS. On a full year basis, we're now anticipating single digit growth from the segment in fiscal 2022. Finally, in our telematics business, we expect consistent incremental growth from the fleet tracking market, and increasing demand for our new removable asset tracking services. I want to again remind investors that the global supply chain situation remains highly challenging for all vendors and can potentially constrain our revenue growth and margin potential going forward. That said, we have significantly expanded our inventories, backed by customer visibility, expedited working capital to ensure we can support our customers in the near term and continue translating demand into results. while taking a long-term view of the significant value of customer network design wins. Overall, we anticipate a very strong finish to our fiscal 2022 year, one that's been purely pivotal in terms of the growth of ESMA we're achieving. Our multi-year investments in DAA and IPTV are taking off as more and more customers deploy at scale. We've also continued to be very successful in managing our supply chains to capitalize on the rising demand. And we see an extraordinary and lengthy runway for growth in the burgeoning DAA and IPTV markets, enhanced, of course, by our industry-leading product portfolio and commitment to remaining at the forefront of the technology development. This is a tremendously exciting time for Vesaba, with many more achievements to come. That concludes our formal comments for today. We'd now be happy to take questions. Operator?

Thank you. We will now begin the question and answer session for analysts and institutional investors. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To redraw your question, please press star, then two. We will pause for a moment as callers join the queue.

The first question comes from Jim Byrne with Ackman Capital.

Please go ahead.

Good morning, guys. Just a couple of questions for me. Maybe you could talk about your sales capacity or production capacity and obviously experiencing hyper growth Are there limits to that growth? Are there limits to your production capacity in the near term that we should be aware of or any bottlenecks to some of that growth in the near term?

Yeah, so, of course, I've talked about, you know, of course, we've had the growth that we've already achieved and then the strong visibility into accumulating growth and backlog we're getting from a wide group of customers now and forecasting activity. And, of course, that's giving us good, you know, data to conduct our planning with. And with that said, you know, we've stayed far ahead of it and, you know, the Saskatoon production facility together with some of our EMS contract manufacturing partners are situated for a long runway of scale and capacity from what we see in terms of the footprint and CAPEX point of view. So, you know, that's all very incremental and well within our capabilities. So no ceilings, you know, in the And, you know, any conceivable, you know, growth over the next few years, you know, we've got covered on the scale point of view. I think, of course, like we've been saying, like everyone's been working within the confines of, you know, the supply chain situation is as it is on a global basis, a macro basis. We've been working very hard and feeling quite good about how we've managed that throughout fiscal 22. So, you know, that remains the key kind of driver of our capacity is how fast we can roll up the materials. We've been building up our inventory, of course, as we've seen in our working capital war chest is at the ready. And, you know, we've been pleased that we've been in a position to be able to build a very strong pipeline for continued growth in our But, you know, I think we're looking at it as still for the time being that the materials are the dictator of how fast we can go. And capacity-wise, we're feeling really good about how far we can take that.

All right. Thanks for that, Sumit. And maybe just thinking about inflation and pressure on inputs. Any thoughts towards price increases on your end to help offset some of that? Or maybe talk about where we are in that sales cycle in terms of the pricing power that you do have.

Yeah, so of course we've been saying that DA in particular is implicitly necessary for the networks of our customers to respond to this growing and insatiable demand for broadband. together with, you know, of course, a highly competitive environment for broadband service providers to respond to, you know, consumer demand for broadband. So, you know, in that sense, you know, we see a lot of focus from the point of view of customers in upgrading their networks through the gigabit realm with DAA. And that has, you know, a very strong profile of ROI for them. With that said, we've been able to have very good partnership with our customers and to account for the realities of what's happening on the materials side. Through that partnership, we feel like we've done some great management of our pricing. You see that reflected in our consistency and margin. Our costs have gone up, but we've had great partnership with our customers and engagement and managing through that.

Okay, and then maybe you touched on it in your opening remarks there, Suman, about kind of pockets or different entry products and the demand for each of them. Maybe you could just, is there a particular line, whether it's remote MAC-5 or the 10 gig line,

uh on networks like is there anything in particular that it's that's really accelerating relative to other portions of the of the enter product line or is it kind of a broad-based uh growth across that whole segment i think from a high level you know remains the case and this is part of our you know strategic portfolio design is that it is very broad-based you know we've got uh you know customers across the board being added and scaling across all the technologies But with that said, you know, at the same time, we're also seeing this gradual migration to a view that we have that, you know, going to a fully distributed architecture is the pathway to the 10G future. And we are seeing, as we, you know, plan for and expect it, a gradual migration to some of the more distributed products like the Entra Remote MacFi and, of course, the fiber to the home, the 10-gig pond fiber to the home that we have. as network expansions happen in areas like greenfield, rural environments, and network edge outs as our customers are performing to expand their footprints using fiber. But the leverage that they're gaining over the cable access network with products like our MagFi is starting to gain more proportion of our product mix gradually over time. So we'll see that. We'll have an update. We have that pie chart where we track our percentage of engagements, and you'll see that showing that continuity of more migration to max line fiber. Okay, so that's it for me.

Thanks, guys.

Thanks, Jim.

Thanks, Jim.

The next question is from Steven Lee with Raymond James. Please go ahead.

Hey, thanks. Hey, guys. So it looks like revenue for this year is going to be up at least 40% year-over-year. Given your backlog and the visibility you talk about, Sumit, can you repeat that 40% for next year, 2023?

Yeah, so I think we're in the throes of looking at fiscal 2023, as you can imagine, as we start to approach it. And it remains the case that we're looking at long-term forecasts and accumulating backlog together with this parallel aspect of the supply chain scenario playing out. throughout the course of at least calendar 22, potentially into early 23. So when we look at the visibility we're getting from customers and the ads we're seeing, we do feel like we have a very strong potential to maintain some excellent growth in fiscal 23. I'm not going to put a percentage on it yet. but we're feeling like continued growth is ahead of us, and it'll be largely dictated by how we continue to be successful in managing the supply chain environment.

Got it. Actually, on backlog and bookings, is that a metric you can share with us?

We're not there yet. We're ready to share that. You know, suffice it to say it's multiple quarters at the current run rate that we've got in backlog, and that's as far as I want to go today. But, you know, it is very significant and higher than it's been in any prior period for VESMA and reflects, you know, what I just said about the potential for carrying on this major growth.

Got it. Okay. And then shifting gears here, if I look at your DAA business, what's the split between Fiber, MacFi and AllFi? I guess I was just curious how that mix has been trending the last few quarters.

Sure. Yeah, no, so I mentioned when I spoke with Jim just a moment ago that that's evolving over time gradually. So you'll see that of our engagements, we have, you know, we increased to 83 engagements. As of Q3, 50% are EntraMacFi, 23% are fiber to the home, 10 gig fiber to the home, PON, and 28% are RemoteFi.

Okay, so given higher margins in magfi and fiber, should that not mean your VBS gross margins trend towards 50%?

Yeah, so we're looking for that accretion. You know, I've said throughout fiscal 22 that we're expecting, you know, our target range is 48% to 52% consolidated, and we've expected 2% to 3%, you know, of headwind relative to that because of the supply chain factors and some of the product mix scenarios we're in today, but over time agreed, you know, as our mix shifts to those higher margin enter products, they are higher margin, of course, because more of the scope of the network is fully contained in those DAA nodes, of course, with the MACFI and the 10 gig fiber to the home solution. we have the opportunity to start creating increasing margin flow in our VBS segment, and that'll translate into the consolidation. So we still have the headwinds in the area of the supply chain factors, of course, but we do expect as our growth continues in DAA that we'll have some opportunity to capture tailwinds.

Very helpful. Thanks, Timmy.

Thanks, Stephen.

Once again, analysts and institutional investors who would like to ask a question should press star and one on their touchstone phone.

The next question is from Jesse Pitlak with Cormark Securities.

Please go ahead.

Hey, guys. In your prepared remarks, you kind of commented on expectations for single-digit four-year growth in CDS. I think last quarter the expectations were for high single digit to low double digit. So I'm just kind of curious what changed here.

Yeah, so I think, you know, one of the things we've been contending with, and we've talked about this, is that we had some timing shifts in some of the projects in CDS that occurred with our customer set. We've got over 35 customers for the IPTV platforms in CDS. And some of those did move in time throughout fiscal 22. So, you know, we had that surge in the second quarter with some of the catch-up from the first quarter, I would say. And we've had some expansions, you know, kick off. We talked today about, you know, four of the expansions kicking off in CDS where, of course, they're adding more subscribers, more capacity to the deployments, those customers that we've had. And that's, you know, because that's been deferred a little bit in time with the the pandemic delays on some of these projects, that starts to move things over a little bit out from the fiscal year perspective. So, you know, we wanted to dial that in a little bit more for our current visibility. We're very close to the end of the fiscal year now, halfway through the fourth quarter, so we've got it pretty dialed in and what we expect out of the out of the timing of the last bit of revenue for the year on CDS. So, you know, it's just made a marginal change in the overall result. So just kind of fine-tune that guidance.

Okay, understood. And then, you know, I think this was touched on a bit earlier with one of Jim's questions, but just kind of given the inflationary environment and with higher interest rates, Typically, what kind of impacts do these have on cable company CapEx spending? Maybe you can speak to what you've seen historically in these types of situations.

Yeah, so, you know, I can't say that... You know, I can track through from when the last time we saw an environment like this with the cable industry managed through. I think, you know, what's more important on a broader scale for cable capex cycles is it gets very network driven and, you know, as we approach capacity constraints in a competitive environment like we have for broadband service providers, you know, the a portioning of their CapEx profile, which does remain relatively consistent year over year, translates to the network side of the equation. And we talked about how we free up the spend on the customer premise equipment by leveraging IPTV and reducing some of the legacy set-top box costs. CapEx allocation, for example, and that's part of the reason IPTP plays in so well with capacity expansion with DAA. So, you know, for everything we're seeing, the great visibility we are getting is that, you know, there's a nice runway of focus in the CapEx cycle on the network continuing, you know, as we stand today. And, you know, I haven't seen any real influence from the inflationary environment.

Okay, that's great. And then maybe just lastly, any kind of updates on what you're seeing supply chain-wise, pre-status quote from last quarter, or any positive or negative things to call out?

You know, things are continuing as they were. A lot of fraud in the supply chain environment. We're managing a lot of, you know, our attention span is there. And, you know, I think I'm proud to say that the You know, that attention that we put on it translated into our growth in Q2 and Q3, great growth. So we were able to be very effective in management. You know, I think a lot of people are talking about when the relief or some of the constraints abate. Scenario happens, I think, like I said a little bit earlier, calendar 22 is still going to be a frothy environment. With that said, we've been investing in working capital. We've had great forecast visibility, so our pipeline of working capital is nicely situated to carry on with this growth profile. But we do have to continue to be very active with some of the things that change on a weekly basis, decommits and changes in production delivery time, schedules from suppliers, freight, It has some choppiness to it from time to time, as we've seen. So that's the type of real-world situation we're in, and we expect to be that way in fiscal 22. But we've got to be quite sophisticated in how we manage supply chain.

Got it. I'll leave it there. Thanks, guys. Thanks.

Thanks, Jesse.

As there appears to be no further questions, this concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.