Ceragon Networks (CRNT) 1 Nov 212021 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Ceragon Networks' Third Quarter Earnings Call.

Our presentation today will be followed by a question-and-answer session. [Operator Instructions] I'd like to hand the call over to the first speaker today, Maya Lustig, Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Doron Chief Chief Financial by Ran Officer; joined Ceragon's Vered, Officer. am Arazi, Executive Ceragon's and I

Before we within Private of start, amended, as this Act the call amended, I form Act Securities and would like information Securities XXXX. safe Act of constitutes Litigation to the that and Securities Re forward-looking of XXXX, the the statements of the Exchange of includes meaning as note XXXX, that provisions harbor

further statements to the uncertainties was and our not Such expectations therefrom the are factors press could www.sec.gov, and affect upon are numbers. future, reflected uncertainties public www.ceragon.com. may statements at specifically Securities representing materially there our may obtained Although also to, obtained only in on they at non-GAAP views can filings Form forward-looking are of purport earlier we our that not any accurate. those forward-looking results, update to assurance any Ceragon's forward-looking as Commission. on give risks, certain published that Exchange site, Securities and it in release based from be statements not as recent today, that be statements the to These assumptions, such assurance but or and in that prove filings XX-F, and believe Ceragon's uncertainties with Such differ will Such such the and do our as relied expectations day at from anticipated. include include, of but site, be Web they other disclaims subsequent detailed may to can we so. material. that represent Commission's events as Ceragon's be today's upon risks views will as forward-looking not deviations most detailed point Web in reasonable future Also, of our and obligation in cause Annual or do call that elect future Ceragon Report should are will made to be Exchange be risks involve and that and other statements the any results, predictions no no limited any be will Ceragon's results and available these date.

For a ahead. call attached release the results, table that see I to issued today. reconciliation GAAP Please between Doron. earlier and non-GAAP to the press the now was go will please turn over

all around and schedules operators the many Thank to tomorrow. everything providers expert people you, everyone. communication moving do bringing morning build are on of Maya, network capabilities and by the and equal everywhere world good we Today, for opportunities is networks forward. digital Creating of will the do, accelerated foundation

a select of third hard earn of to continued Since We XXXX, high XG, countries. them the in the quarter our are of us. that, in XXX the more have days to customers trust than worked of proud number we

a So as [concern] around better projects designed customers, communication as XXXX, well have far, XX bring material we to existing customers, new them, to many in areas. [Ph] rural infrastructure added of

governments take to a all are projects. part we in initiate incentive vital improve growing allocate networks. of And to We are seeing plans number well-positioned budgets these rural and

new process, reputation, customer, year on our market and strong have most type note a be depending win than lasting a in We ramp business the that can to other and positions. mix Even is often gaining customers when of up solution in the cases, customer long new is but it we more incumbents' important gradual. a

chip unprecedented and external an challenges the in achieved Our We strong. environment in were revenues by QX industries. despite shipping this marred

will are crucial, and address which challenging previous to these and base. we expenses. I orders in maintain the confidence time, power grow a In QX, once seen wins. and Ran. provide backlog, regions. in These they been our two helps quarters, outperformance our in QX, further our customer increase later has primary sustained different in of so have been maintained again, this visibility. achieved more our we've issues In my efforts and speech, trend During performance. incur everything new will The XG doing driver XG this showed we steady strong And booking of but design

XG-related snapshot over bookings year-to-date. now of for of all each XX% provide North North In our our a performance me Let by bookings region. America, American accounted

service from the services so As previous a a managed level provider has network we The reported far in services call, multiyear quarter U.S. potential of professionalism driven satisfaction discussion a our agreement. for modernization. leading by about selected were and

a signed in the another North one We are in expecting America, Furthermore, operator we strategic design and with contract have XG just also quarter. coming new win. new orders

last healthy was network is additions [Ph] becoming In it consumption two more valuation] our leading will data and reported expect increasing [the The QX by addition companies. was to tariff hikes, driven severe wave important. of everything experience mentioned, I've we quarter COVID-XX. Tier for quarter, solutions quality customers recovery of Tier telecom us, well, goes a well If subscriber was as a after successfully. XXXX. as for by India, to buying which the continues in Industry of just as all we X IP-XX X operators, performance have In new products two our

place is during is by recently to growing been and rolling expansions. Spectrum XXXX. will we developing there is the India Three there demand network to Commercial operators have meet moving approved the same telecom demand. expected and out year, are start trials. be such, for upgrades expected XG to towards take a in launch corridors. XG XG auctions As

processes. planning to in RFP are participate We

technology, and indisputable include Europe, advantages we other our quarter, a bookings. competitive in Our regions. as in market very India well especially in leadership by had terms our driven of local experience position brand positioning, strong In

orders, on participated secured trials received in We continue countries, feedback great new leading to POCs. European receive different operators orders by and from our

a achieved product in with validation operator Western phase stage We're With global our They are secure in RFPs have we disaggregated We solutions. Tier negotiation POC transport interested orders. the and Europe. are to we wireless another, in in the in X have multiple progress.

Our all for European European In APAC, had new terms booking, XX% We have to relatively win. one our accounted in year-to-date. quarter we booking XG-related of QX, bookings design of XXXX. XG over stronger compared

Our for all over accounted bookings XG-related XX% year-to-date. APAC bookings of

POC a in solution. a vendor are X regarding disaggregated We phase global Tier with our

customer. In new solid a even region, throughout improvements shockwaves momentum, environment the affecting some emergence witnessing a America, experienced we building of the of early might the though to we're decisions. challenging, While in economies, we received and yield it optimism. radiate PO a from to new and people, too be bookings pandemic continue pipeline the macro The Latin business substantial remains

POCs, Chile, XXXX are Columbia. have progress. LatAm spectrum majority have to Argentina, working countries and and A are beyond. started of allocations multiple trials, have begun started, be Peru, preparing already including We in or most have RFPs But for Brazil, assigned Several on in just XG. XG countries in and

When for good encountered It supply prolonged I chain to globe These areas QX, and ourselves this extend component Overall, global to control developments opportunities material there the solutions. and addressable on to in the to we will started our lead managed vendor. software XG, what allocations, for the same players increased take to PO and able are looks also especially to in to product long-term. the we're XG to confidence acceleration have we're positive led part compared We in increase time also and across potential revenue beyond. earlier, and not assessing maintained number In with countries further investing time, the engage and external We sell more thanks in working Among wireless turnover. and are shift the all the At a environment our booking customers, shortages will medium XXXX. deliver the as as our our like continue This and in Why into our to Open delivery expand implications infrastructure. opportunities. spectrum is and rural us a efforts services, the comes it sales They new believe offering taking only expected timelines continue to we've acquired of fix. market. but Run challenges. total will Africa, the to position business transport costs. order services have operating other have increased as existing, densification, well a few the to create mentioned of us in our in. increased new us, growth quick QX take that things, international are model for It we to architecture. no a tough solutions, managed as impacts digitize bottlenecks network well shipping in may received is XG likely the both only is new new as profound

Our increased current customer delays our costs. to leads and possible stabilize the much to first avoid take lead of as culture times on measures even account us as

bearing undertaken of with initiatives this costs. all in believe optimize an the Our control way. analysis along cost, are quality few to ounce reduction plans necessary of depth turbulent our sacrificing during in to help in to goal the as cost our that identify without We've order we're the In an in as options possible. our product period We quarters. of is our their material bill continue customers smoothly parallel, next working start fruits will

our picture While Ran gross experience on mid dynamics margin and confident global in We and revenue complex, long-term beyond is quarters control, temporary market prospects. between and are may our remain will shift elaborate. of the big we pressures which

would over to of SoC. I refer our Ran, progress the call XG new turning to to Before the like

transport the the much started be several me product will our Ran improving phase our now With the from of year by after tape to the out, as be XG SoC over the of only It which component productization towards out we launched, new the let wireless a times. significantly spectrum, that less followed in market the three discuss more tape will Immediately, networks the turn Ran? capacity market. it a call XX rolling customers end by will our As QX mentioned enable our the cost providing for years products. year. ideal Once into to our bulk of Ceragon's quarter for quarter. two expect we lead the integration increase SoC Moreover, now. using the we'll and and the to this call, in of process based the is lead that, dependent, series financial delivery rest of out inventory to times of efficient the reducing future be

Thank To mainly numbers. results, I'll be you, the help Doron you understand and everyone. non-GAAP good referring morning to

with referral Like measures as the today's For these India, coming recovery regarding QX saw during strong we in use press Europe, mentioned, more reconciliation information XXXX, APAC. release. as to very America, financial measures, non-GAAP including in well North of of bookings some from Doron

quarter In is book-to-bill fact, one. the consecutive QX with fourth above

Our the high-end was revenues for the of our projections. quarter at

now by X% Let up This review despite numbers me was regards quarter compared with achieved last in Revenues with third million environment to was QX the component year. you. from with the million $XX.X actual challenging the $XX.X shortages.

and this fact We fulfilled. our customers achievement most the are of were demand proud that of

with Our revenues deliveries in quarter in in main seeing ongoing line for was long India, terms region. are demand the region we this customers strongest reflecting the for of and our

with in the region major was Latin in a the with we had the X reflecting from and the year momentum beginning customer, the X quarter Tier North positive reflecting Our Colombia. smaller win other our second the carrier continue ISPs terms of to revenues initial Tier from one In quarter, America, its had also and in deliveries revenues and see America, Europe XG we projects. strongest momentum installations for strong continuing carriers. strong relating more of

we were continues previous to steel component in to reflecting strong, will the not slightly situations previous able both shortages. However, in even the deliver than Revenues in a of Africa as the demand result and lower same though very challenging regions. pace quarters APAC the quarter as in be

XXXX. quarter. third us giving non-GAAP million margin third the This a compared was in XX.X% gross profit $XX.X can great mix to quarter It's for third chain the customers are the non-GAAP solutions challenges with for basis this XX% is margin growing especially of Gross above have customers gross of We on quarter That a and that XX% gross margin. and there impact us. and thanks component shortages for high with favorable quarter. associated products certain to said our serve supply costs achievement of the

third We significantly for at we effort expenses the third slightly higher as million, expenses believe million, non-GAAP quarter prices better pay component temporary. million Our in XXXX, a $X.X Doron, in result for expectations. quarter customer of development Operating a on needs, mentioned Research the as to to decrease resolve and basis vacation our a QX as of were scarcity. utilization $X.X the on than from by non-GAAP our a is were be situation basis $XX.X satisfy mainly taking August. all will

We end on in expenses expect be of reduced the and COVID-XX. reflecting we to basis the still for reach travel the a the non-GAAP quarter, higher come towards these third Sales next $X.X $X.X has an million, out marketing tape expenses from but in with quarter that this year. were million increase QX XXXX, until

million $X.X were and $X.X a a non-GAAP $X.X sale expenses expenses for on and to a million, increase QX from for increase gradually Financial administrative XXXX. the decrease other expenses We ours third post-pandemic. basis slight expect third open an were quarter in from on and million basis marketing General non-GAAP $X.X in XXXX. the million, markets QX quarter as

Our on a the per Net in third the line $X.X quarter expenses million, profit basis. expectations. million tax earnings non-GAAP third was on on $X.XX for for a non-GAAP were share basis the our representing non-GAAP quarter diluted basis with $X.X

higher the the in crisis. activities than and quarter inventory we undertaking facing Our global shortages XXXX, million, for while component third $XX.X the $XX.X was represents the are QX million

sure model have to We measures taking commitments optimize been meet to customers. our our to inventory make our we

QX are receivables $XXX.X at in trade $XXX.X from Our million, now up million XXXX.

activities Net for the Our for million. in was third quarter stands third operating cash in activities days. $X.X XXX now cash $X.X at used was the used Net million. investing DSOs quarter

$XXX growth guidance, bookings backlog which North strong component margin. and million. Despite the we a be on gross happy be to our in be on between Operator? revenues, fluctuations to the ahead, revenue $XXX challenges, challenges very of to about for expect reflect our expect to net shipping confident with America, end and Europe. Looking the create still million still With is of and second-half in report our along a mainly QX XXXX, today healthy revenue I'm income that, around the our business increasing open India, and our XXXX, quarterly call non-GAAP for global continue basis, higher your That I to activity in in it questions. that our breakeven. annual these said, influence we now

George Our first be please Thank from the from go you. today to Iwanyc prompt [Operator of Oppenheimer. ahead George, Instructions] will line yourself call and speak.

hear So, hello, Doron me. and Ran, can you

hi, George. Yes,

George. hi, Yes,

Great, questions. thank you for my taking

even are million you to look projecting higher a revenue are top you XXXX, solid a execution especially start of chain, into when level able So, the at year? strong, visibility that, ability how very $XX your million the that being with a a rate? as grow you revenue The map congrats into maintain to run And confident next able to $XX design and sounds on win opportunity on environment. and tough in from but to supply the outlook you

for of this So, thanks question. all, George, first

in gradually belief new reliability the timelines there's of on of supply situation items. still the, on Based will that all, is vendors relaxation a and two good the start I what during that in components, lead terms towards on or on All three things that in getting side. and in procuring critical terms XXXX, we second of the could or terms of turbulence. the some is I lot chip chain, strategy, projections of it we the believe XXXX, of say, the primarily the this two the of have would months that the -- dependent it, three we industry, for quarters in better during focusing see times. our for of sorry, in even procurement strategy our think showing will and the primarily changed last that, dramatically change strategy But our side, is the seen Said second-half. we part probably bad terms because of

obviously we'll the suggesting. XXXX, on some range when revenue of give in into this looking depending probably terms to with of the that in our -- that line, top QX. level booking start, the us nice obviously, we generate a beginning to backlog, In you of in And come able we that terms were be having will confidence of just

right. All

tick mix a You margin regional you couple from to gross see if to to standpoint? services from then, favorable much the managing the that. next bit, of given expect that? supply of in a mentioned starting high current managed would the mix Are have so the the standpoint, much costs, And normalizes to One, think the a the questions contributing related how lift it costs couple down you when quarters the about strength environment? I chain of is you your

answering will by the regarding gill supply impact the Ran start cost. give trends and to I managed in So, services, of chain the you of the terms

In terms this both, of volume really get time embarked a to it on. to is piece. services, takes a call the revenue what would impact and, relatively have significant can margins initiative And recurring we that new that managed I our, would I business say, very

ability very a but just the of it's about a to becomes generate substantial margin deal, indeed our current by this ones the I'm gross higher our than if definitely start, business. So, looking part optimistic

on George, specific. more So, Doron, to just let to what be try a compliment, me bit little

can specific we it's second because benefited as And be more in quarter. we have specific within favorable well quarter, regions, sometimes, third if if products. that, software, So, with from of the mix that it come deals is specific it the in even and both has the because

impact on vectors. -- component impact both, comes gross is our think chain on the two supply for As I from the margin,

in it's both and send our tell is better [their predict, to shipping because few industries for about covert predict when more the we our shipping years accurate because get for challenging and can't us all. than it, ship it, some the hard and be in revenue, components [Ph], vector and it component vessel to will today's or issues of it past the was, say, I first and to on revenue, leasing] time then booking is at and ability The we'll

The second both the cost is has piece with of aspects. come in this that challenge

impact from if the doing margin. and gross probably We and some overall component come that our this, to impact, would a both X% our toll components improved to gross of as well X% as sea we our on and are shipping, accumulation gross other margins. both them, but need the on So, to to say I of X% I'm I seeing some I shipping the the quantify our securing say with around will these, mitigate If on taking, expediting of lot roughly a initiatives to versus we air, X% margins. around

an Right. level overall good have back And the more more quarter. question quarter stabilize you the in in it in standpoint, But and you year? would levels up, just maybe OpEx From fourth third next to me. quarter towards that one expect then very from trend tick control second to

be million. kind lot So, QX and and when the one the of rate seeing. more of the short will of, on in answer the our and vacations look which that a that heavy expect was you're more OpEx. took $XX XXXX, R&D quarter to we is in people yes. cost. phenomena this August, probably are because both in run to going on And a marketing, overall, of lifting trend impact, come do say, the I I next course, sales is

levels, impact hedge do and at have to probably, million to to a But And the as very that, next we $X have an Just strong. shekel look $X one XXXX. this around I caveat the been an on this is say point, year policy of on shekel. initial will to going anywhere these on have -- hedge million very,

whether plan. will on point not expenses, current finalized the based that days, operational year, products, have business, fact and the the of it's these Obviously so we us whether this assumption diligently for it's for in decide we new a next new to I just working our add the R&D, operating are with so to it's forth. what whether our annual in is priorities with and AOP, is

OpEx but that that is jury that angle many we there, will years still trend this our keeping So, a out I you think of the from continue. control. assured in of will history could And have rest

much. very you Thank

George. you, Thank

Thank you.

Our the go from please Matt of unmute next line question Matt, ahead comes yourself. [indiscernible]. and

this is hear Henderson. me? actually Yes, Can you Alex

Hey, Alex. How are you?

I'm very well, thanks.

announced… was name Matt's When -- speakers] [Multiple

Well, he me. did registration for the

Okay.

for run said I give one. over of of above got your quarter has I this you, the the hoping seventh the a think it row the which to characterization degree line of could book-of-bill So, a book-to-bill the revenue you us I And was you was some couple above course of in year. questions

year you that have that backlog -- not an constraints visibility much achieving issue? to year, how revenues level had fourth in characterize how next you assuming gives of the you supply and you in So were built much this can the

same in in it's of less, visibility question quarter, of the start more QX, that for our a model the no is speaking, revenue, is in would not But surprises all, answer three year, obviously, subject to of four challenge numbers big the as level big first the don't believe the consecutive different has And thing, the the to maintain that changed. QX is George's start us of probably seven able was seeing So QX. which Generally the or quarter, be not from I booking was to you But we're that the accumulation exact our all, quarters usually, the And which of or business good. very in look at significant. the that when said percentages. first giving to want start quarter I all I one. let's saying above we by book-to-bill four

was quarters. two a just quarters quarter in that a like more. maybe all our between probably it something and is even we previous suddenly, of magnitude, to one that all backlog So in half slightly visibility, three ahead And years, say one will I providers order in have an

the that's difference. So

for fourth quarter that then completed, could it's it the assume made give R&D out tape you is then the first out you enough sizing quantify comment it? how and I a you in And some hit, the quarter can tape in us back quarter, is? cost large about falls the a on once out one

do like delayed out a So a think more tape more quarter overall time. that of has remarks, were was to it out, this also when take the on some tape they productization And to do than going come prepared to the the I if then go think reason products. I to a a that close Doron need the first And probably the new and into lot year. of I that still back even of to all, chipset this commented with is will delay integrate we our

out finalized that be we're impact of at delay going impact around will of that on in and and talking say in worthwhile. it the the year now XXXX year determined Doron all, to on And it commented relatively the is the of for So, things see of going this be need R&D, in on when the invest yet would higher year, on because just to we the other the the we're on press already the to maintaining was costs I all is OpEx. whatever just you one which are as is tape next high level R&D end

me the for spending hard our bit R&D it's of for comment little a next year. how a going it's time, of impact to level to point this So,

to to add answer. Alex Ran's Just

part us. is after it, one-time hand stuff in R&D In significant we vendors itself a this process and but cost that cost, doing hand expenditure, phase out not generating the R&D in over doing by quarter accounting in be is packaging, regular I with capitalization. or very terms which not productization will insists of for costly. a is any as couple The developing additional it's our if of again, hit that is obviously, tape the this board would which quarter, this evaluation spread face part and But that chip is either the different make said or we'll it years the cheap a a costly, cost Obviously, of change. all of a the not work

just that out the when to clear, So opposed you're XXXX? to is the as fourth be the of quarter tape of XXXX going fourth quarter you're saying do to

basically subcontractors tests vendor, No, no. The and are the the And them What is all that out the now we together milestone tape which of by was at we as finished done so This follows. of are cheap the with chip chip. our is can to done including productization of we by the that vendor phase XXXX. on we process where that productize next tests, chip, our a our delayed. saying are is move of and some starts beginning

a So, to year in clear, that be happened that delay the year you're was citing the mirror rear view ago.

Yes.

Yes.

delay new a not happening that's now. is This

No.

No, no. no,

but yes, It's well new. -- not happened, implying a year over delay has -- delay because that's it's a All you're happened that's right, ago.

Correct.

the now with those So you're the productizing expectations XQ timeline and you're in costs XXXX. on the fourth around and and quarter it in schedule XXXX XXXX in are

Yes.

Yes, yes, yes, exactly.

change. No

sure is clear. everything angle, because our make to delays the are behind Just I one us. want From comment,

because of its process is our subcontractors. majority it we us. to and taking But develop the due test more is chip with And Now, salt turbulence to a of the timelines that of cheap the getting the effort of behind it's on vendors a in perspective, today, turbulence. to are grain we're this dependent and the even them this the industry, from

that much very clarification. you thank understand, I for

other your thought the chain, within associated heard it's we've had willing I a you industry-wide with supply Because higher given control delay. and saying problem the to Can companies not of it's broad were through you companies individual cost from the most talk that? you an why pass and through phenomenon. Now, additional customers have obviously been that you're absorb to unable

pain. I saying company, of rollout these in they customer, say approach, more that The all much our customer you work did the have that start happy in jeopardize so few don't on you this cannot of ways you first a and discussion. your make attempts this pass this not that to as performance, let's the explicitly customers, his we by with that is and when participate with you. then So, in And of time serve costs. easily And easily leading sure dependent I'm discussions that the feels we kind which have all on are then things come can as with or fact, can comfortable

are say, we're what the do our you industries. it's to try matter lot that we is -- also competitors that customers discussions that, that also the give about particular bottom that. it between a this line It's point, to or policy this there sorry, going of tell there's the cannot us. I doing. have because so of at also can having. matter reliable -- beyond are in culture. our or this differences a And a and based that I with The pain sharing with vendor give matter I I of operator discussions would We of I other it's can on operator is no, a industry you tell of a you anything speak also can projection

more the Those the margins or strong be have the in mix so, XX% quarter, to around wins in current EMEA higher just had shift had so and you've fully a question same last line, the -- U.S. featured. margin, in tend very much India on been So, to gross bumping the particular the you've

the dominant will problems next pass anticipate or out we we go it two, shine and mix quarters? factors cost the the we to should that through shift the ability the should more through are margins as three So the anticipate over actually

delivery situation why this are deliver manage on George start promised the at would incurring is a if time, costs going we lead vendors that more probably better the this actually think, these will year, so it's of couple speak our start At margin, second and XXXX. our the I of cost Yet, to that accordingly happen believe bit we are assume within our to temporary what be the no when to of they I situation. dominant. to this and half but And gross indeed will looking point, down think, and mentioned that down will seeing by are reliable we that a to temporary lead times, during expectations. this matter that kind I a quarters, a I I turn times

it All before. Thanks. right, see I'll

Sure, thank you.

Alex. Thanks,

go next line comes Rommel from Capital. Aegis the Our of Please from Dionisio question ahead.

Hi, Rommel. How are you?

Rommel. Hi,

morning. hear you Can Good me?

Yes.

Yes, good morning.

thanks. Great, Good for question. Thanks taking my morning.

diversify as there just supply do from maybe some you the to standpoint, the longer just all Obviously, look term about you're just doing some dovetailing can maybe at but how the and take the comments this you today? pricing, you partners sourcing that time might things over today, on just or a over risks long-term, question Alex's over other long-term seeing you're to chain the that. problems on So different address are things from you the can whether of think

cheapest. the conflicting wants -- best for the And Yes, known that speaking new miracles doing. reduction initiatives cost those doing two basically, I for there aspirations, is in industry that is of know but some there is for think we we products, for is Ceragon I and are this elements of what this lot that our because yes, understand generally

Now reduce that considering first will we manufacturings is significantly. serious, different thing. all, of This are our one to be costs manufacturing more

say products runner The And at significantly, this of costs other product we to I the will even for the that looking to runner products. structure will we productize, go XXXX to are even beyond. design of think very be be going our would thus reflected I come. or cost towards second probably but years more and the probably towards during because change at thing of change the time our And part of more take way, the the being development able high we it high significantly reduce the of far and work gradually look all believe some our -- this to a XXXX, that before to do obviously a it's will --

or maybe India is lower are you? on there opportunity that key strong, to and factors, a touched yes, transition the that you potential a than you're transitions where transition that other in and that XG. so a for potentially there than margin market market could, something I little driver market XG, been the the to is for eventually as margin you margin if has to as other follow-up Typically one that U.S. India there Is thanks. Europe market just And for

for same. major stay India to a market is going the it's us. And

going what this market. trying our we're is advantage the India, positioned improve think able do effort market our that fight in Indian our that market if to be just structure business we and the the once the and relatively XXXX, strong very the same. very the to with customers thing to one this it in anticipate much previous our for there We're over cost that at continue to and our I and significant to years, the journey I runners intention for our these to doing share I well the product reduce significantly, a that us be out when to Indian much. is price back we'll is very make XXXX, important years, have started obviously, adjust with particular margins with our the sure product, the able do And this we're look of that much margins, But that know volumes, story were our is cost usually big market XG will and start won we and relationship is to believe for the to I'm the Indian likes high things era, fact, and we'll shows and in And we're very even we the the modules we fast, technology points. we're beginning, XG with and low. can talking think [indiscernible] more our the these because a margins in utmost most know market. very, lower that

Great, very thank much. you

Thank you.

Brian go is call Global Alliance of ahead. Partners. next from the Kinstlinger Please Our from line

for taking my thanks guys, Hi, questions.

Brian. Hi,

Hello. one. Just

opportunities lower your procurement your about to strategy. you costs. But just now You lower talked also your mentioned changing earlier

can So supply it challenges of your part on impact before work can strategy to components? of expect changes procuring some help the have how and you you the as chain an identify the you long key through

change procurement months projection. If sake we which So I basically, main the period say we for in months was the the the based to projection procurement. or our would extended is projection months on XX the eight or strategy, to their months XX projection, period of six go nine past, just have on out example was

that are obsolete, don't get to with very, doing become eventually. we carefully Now, we're the And is want why main inventory stuck that critical this and runners. obviously, very check very at will pick because we choose that same the period. token, high are our hand and that components on the attain we these components for to turbulence difficult But one in this

that to other with doing to That's chances obsolete none. source. So that thing the components that so actually in a the we'll we're stuck we're components, slim element, second source are single we're inventories with get developing major speak relationship the

and and is as sources the chip. terms that one will this we not longer-term we the new sometimes system further have that of need single Sometimes that, more any step reduce And buy. create and the beyond even level so flexibility timelines delivery it elements require components new more components to because even new new number can. even in common will into this will series the we're it much it we require that little higher the that chip, so our the commonality And that reduce a changes of as will with are critical, one changes, put that doesn't to take of product of chip trying lot third a

strategic has different big So it's And a it very ingredients. move.

pay longer-term. some out in them will of them of will faster; out Some pay the

you. Great, thank

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