One Stop Systems (OSS) 23 Mar 232022 Q4 Earnings call transcript

Good afternoon, and thank you for joining us today to discuss One Stop Systems Financial Results for the Fourth Quarter and Year Ended December 31, 2022.

With us today are the Company’s President and Chief Executive Officer, David Raun; and Chief Financial Officer, John Morrison, as well as the Company’s newly appointed Chief Product Officer, Jim Ison.

Following their remarks, we will open the call to your questions. Then before we conclude this call, I will provide some important questions regarding the forward-looking statements made by management during the call. I would like to remind everyone that the call will be recorded and made available for replay in the Investors section of the Company’s website.

to David conference Raun. like President to would CEO, and I turn over the OSS Now, Please ahead, go sir.

Thank you, here be It’s good Lara, and good with afternoon, you. everyone. to

quarter for I’m to year record and the in pleased $XX.X that for million X.X% revenue XX.X% to to the the report $XX.X fourth year was up previous million. up over OFS a

on our Our spending. our driven by million record at adjusted $X.X and EBITDA for sales sales the continued of year continued increased was controls also a -- increased

a process, for completed temporary Overall, XX.X% and now margin largest to sales margin media successful was gross to the products, replaced due reduction a our entertainment these strong business have year to margin re-qualification expect higher shipments sales. lower and in to higher product this margin effort. military military during sales be reduction of low-margin normal. customer, re-certification returned with a Having midyear we In XXXX, in

aware us, in If XXXX. you’ve place been Transportable are in with following you that of put AI along we strategy the

those products accelerators, and and recording training edge large-scale systems software. These modules and capture, servers, ruggedized applications, manufactures AI arrays, AI and familiar, designs Transportable For computing or storage, including inference. innovative flash on-location OSS storage compute include less data data

commercially into challenging, these We in take markets. performance, traditionally data them bring the embedded latest only available used normally controlled products and high the state-of-the-art, centers edge environmentally

in absolute form in executing performance past in moves, this rugged compromise enable that our this We which with harsh and strengths environments. factors year on AI anything progress are compact highest these capabilities the pleased delivering without to unique strategy, autonomous leverages

the lines. largest the we list companies, vehicles of SDS XXXX, our our utilizing one Centauri, three products of cellular autonomous into two store wins, truck year. top in key development product in storage Later year, in with XX Earlier partnered resulted we these rising of we of deployment that a the the the carriers. in nation’s companies and additional including the announced announced -- of This truck for

parallel that opportunities these Marines, the deploying Army, industrial to Air our In AI Transportable capabilities. The military pursuit Navy, and/or theater. autonomous applications, all are AI is Force quicker within market and to primary the of

might a aircraft Although we performance OSS. opportunities high and demand have creating new hold on in systems $XX and -- funding another systems top budgets compute off the for for advised carrier, that for highest technical Pentagon, priority absolute superiority to billion is been tailwinds the analytical assure compute performance and storage

levels military engaged with we XXXX the products. significant a of contractors the in Several bids prime primes now our started just the the at by are DOD of multiple customers, top using few to have engagements largest led U.S. to expanded Having various with XX these X military

the we directly position with process, and this relationships cases, for specifications During of enviable branches with product having in the providing also several makers, decision us into RFQs. military, we more visibility work now in on developing are influence of several programs,

advisory military Rigel, is product team. the sales internal of our strengthening XXXX, new our our this process called added board well-positioned Driving representatives, innovative in our and

the eventually When the world, did they received for we we product, that with staying innovation elevated Rigel, performance could initially makers introduced gained the from our disruptive military achieve traction Recognized and standard. had the not years. super DOD market realized as for embraced we conform most the as our computer decision old solutions, in levels pushback not compact flagship to standard the slower, it VPX entrenched,

Although followed now most crowd, stuck is we VPX and off. would to the have strategy it our paying

margin a some strategy, value. we announced year, previously to In reorganization, increase strategic military supported this February elected to business. accelerate our higher of to validation shareholder growth of the which low-margin with changes Transportable make opportunities, relocating we Armed resources AI and

We made in senior some also management. changes

For Officer. sure our and to is role market market Product leading of example, today, target products Chief to design and call customers assume the for drive he’s we the talented continue develop who’s responsible Jim, innovative clear extremely make on in and Jim to asked I this regard, and leadership.

have search we sales, new for VP two as Additionally, of initiated additional our military as salespeople for a well markets.

opportunities, military and Board time the for accelerate to around and successor. begin was Consistent to our growth with strategy decided my the it product company I these search expanding

and a deep have experience hired solid very firm, that and some support the For candidates national ecosystems well-known this with throughout DOD talented and we end, we them. connections search the

I Board the shareholder of exciting our team smooth myself, the transition. with stay a fully significant member a to and a As plan and vision engaged, driving facilitating

full taking necessary we the the CEO expect am support Board the the complete we be have I role to currently and candidate, transition a Board, they my will I best this in time hire I the timing, be mid-year. Board. that sure make and on are while and will As have the on by told flexible we

basis am I the over of interim on stability, OSS. I independent public on of Founder In CEO release we’ve February past Prior an the background, director CEO. the Board and on an outbreak, leadership, prior my customer in job accepted role of just XXXX, to upon years, particularly company technology and based I product what COVID to financial CEO the was of development. my proud accomplished three as CEO,

XXXX, intent my my June title. seek the opportunity seeing Although, and the to great it part with level. take shape the CEO we OSS working after in a of the put the to removed CEO was I taking not ring role, to team, hat In interim full-time my of initial next

bright leadership. team Board. to The the and as and Company of growth shareholder to the and the to believe poised right a supporting successor forward improve accelerate value. well is Company’s positioned member the my under is OSS look future valuation the Company I is I

will future the which additional John? and I’d John XXXX the after to and Jim thoughts on comment color and I ask provide to wins Company. customer of about on opportunities financials the remark and

and fourth year the afternoon, Thank David, available everyone. onestopsystems.com. Relations Today, ended you results the XXXX. release December website today. joining of XX, issued for is and you, press we at a quarter in good Thank The Investor section for release with our us our the

The year-ago following the quarter. fourth to and for the quarter are are compared same results

consolidated David revenue was in mentioned, QX As X.X% million. up our to $XX.X

of During account fall in less to projections, the This quarter, consolidated we saw XXXX. less customer $X media than approximately is than entertainment short their million of anticipated. revenue and customer in projected resulting XX% our for revenue

total OSS OSS to XX% XX.X% Europe X.X% Our revenue. representing revenue XX% decreased from revenue. $XX.X $X.X quarterly million, Conversely, core our increased which represents revenue of quarterly to total of million,

margin However, entertainment the our and business, OSS core increased XX.X% our media lower for excluding revenue quarter.

result starting Overall, to over greater to $X million, a gross despite AI company ship of profit of mix decreased Transportable the margins as $XX,XXX a products. XX% improved realizing

-- with transition However, inventory associated quarter. inventory to resulted Company’s a an ago in fourth year customers with military Transportable realization for in quarter edge to of the associated the compared AI me margin allowance overall increase the same -- the of for XX.X% of our in higher realization -- margin products excuse allowance Company’s XX.X% with associated gross

of the points additional to margin X.X core The percentage percentage OSS recognition due X.X to decreased the percentage gross to XX.X% compared gross Europe’s realization. business to points improved OSS XX.X% allowances margin for inventory XX.X%. for

revenue in XX.X%. to administrative in the expenses, $XXX,XXX $XXX,XXX percentage marketing expense expense. was X.X% operating to million R&D and due quarterly to decreases of and general expenses with decrease This decreasing $X.X as in $XXX,XXX and decreased in of compared operating Overall, XX.X% to primarily operating expenses, selling expenses

XXXX. to compared $XXX,XXX increased quarter of from $XXX,XXX operations in from Income $XX,XXX a to operations of the fourth loss

write-down a same from loss $X.X a the year-ago Net loss period. share to The or a loss quarter in net GAAP million of fourth a or on tax $X.X the attributable R&D the per loss million, share, $X.XX from tax of benefit losses Company’s basis tax was and deferred allowances in per of was $X.XX of cumulative net $XXX,XXX assets included of increasing credits. ability XXXX to for which the

or net basis, $XX,XXX down per income $X.X write-down, per of aforementioned $X.XX share of a loss for or the the inclusive was net quarter, On non-GAAP from non-GAAP the million share. $X.XX

from EBITDA, a million was non-GAAP an of or metric quarterly increase $XXX,XXX. revenue, Adjusted $X.X X.X%

the XXXX to year XX-month results December The following the compared XXXX. are ended XX, period for the for results as

Revenue and entertainment media increase the due Transportable primarily was the AI growth record as to well a to edge of This our XX.X% as business. $XX.X million. and increased autonomous applications

OSS Core million revenue $XX.X contributing $XX.X XX.X%, million revenue. of with of business XX%, increasing increased OSS contributing Europe

an compared The Overall revenue of four to to which XX.X% a factors attributable increase OSS inventory; factors. operates entertainment margin a aggregate our an our the XXXX. margin was revenue approximately million $XXX,XXX of $X.X approximately media reduction proportion gross data storage for and and equipment; third, XXXX in sales in generally realization to primarily $XX.X higher sales profit and deferment higher of proportion low-margin in margin of from XX.X% and margin improved was XX%. million. derived gross allowance of are: to fourth, OSS Europe, customer; increase in of Those at of in of

compared core XX.X%, XXXX. decreased to transportation XXXX. XX.X% decreased as in to gross to OSS the and for OSS margin XX.X% costs, Europe’s business compared Gross in as material XX.X% due margin higher to

two $XX.X standard trade an selling the And increase partially were increases of AI offset increase was to and in also a development million. in products shows, market. is in new resulting marketing, $XXX,XXX travel. of R&D decrease expenses the of X.X% increased $XXX,XXX expenses from and increase Transportable $XXX,XXX and expenses. Operating administrative These an additional due This for to general marketing expenses, there of for primarily by

in percentage of XX.X% Operating as a improved expense to compared XXXX. XX% to revenue

to reduced to decreased year. compared taxes income to $XXX,XXX $XXX,XXX million Income margins operations before prior from decreasing with $X.X due the gross

However, a increase and the forgiveness X effect taxes. $XXX,XXX a year-over-year year in of interest income on time basis, after forma PPP before to loan prior pro there was giving

write-down to tax of the of million, the diluted Net time loss the $X.XX there inclusive of This diluted forgiveness million ability or the due per million was to share, was share losses Company’s $X.X or $X.XX from per share. allowances income was and and basic the GAAP $X.XX was PPP net This credits. for to benefit interest. $X.X and R&D million X on was compared deferred assets which loss cumulative the which benefit when $X.X earlier, of the related as tax Company’s loan of included attributable of XXXX $X.X to per a a net of or explained diluted I basis

basic which totaled included compared million net XXXX. loss deferred as the net income diluted $X.XX of share, or Non-GAAP to tax assets deferred -- per diluted $X.X for loss taxes write-down or $X.XX a $XXX,XXX of per the and share in non-GAAP

revenue in Adjusted million EBITDA, X.X% or or XXXX. totaled million revenue to compared $X.X of non-GAAP $X.X measure, X.X% a of

non-GAAP XXXX, loan adjusted forgiveness. excluded income net for both -- interest and EBITDA PPP and both For the

and XXXX. cash balances equivalents $XX.X million with XXXX, of Now, On million compared totaled a $XX.X total approximately let’s cash combined balance to for increase turn XX, of as of represents September our This XX, to our sheet. December million short-term investments $X.X $X.X of million.

We that and particularly working flexibility current investment successful. resources the -- provides to believe to capital business responsive with in to demands, to financial and the changes to be responsive stability available be us OSS in those require

This to call over would our Product for the completes and congratulations, to -- year. now quarter I the the to Officer financial our Jim like Ison. Chief Jim, review turn

and Thank you, good afternoon, John, everyone.

ground transports commercial added The cloud. new server compact mission three Navy new win for aerospace military across and the to wins that military, a three segments, easily storage QX, we vehicles. for and data commercial major autonomous to is airborne the quickly market In stations and program

the brought program our the were our XX vehicle systems systems, communications including XX in a Germany X logging in continues AI The The autonomous which total Of and data in from autonomous XX and an wins commercial XXXX. commercial U.S. XX, tier in-flight wins Transportable major vehicle involves new to and in and network storage X to used programs. win storage space, highlight entertainment. year to with the one aircraft applications upgrade X the for in win aerospace strength OEM military vehicles, OSS’s wins winds, satellite These tops Europe. AI

approximately generate more $XX following We in in XXXX expect and years. these million to wins new the

an pending fourth the data of and during include AI We programs vehicle opportunities three an autonomous that major Two new solution system. the agriculture are Transportable logging three programs added quarter. AI

third for The is acceleration latest opportunity systems. Gen-X our

those XX involving of of major Our Transportable of and programs AI pending XX applications. X totals with pipeline applications these in military current

products certifications. and to Turning

peak process. performance, workflow performance. evaluated using systems confidence our Our NVIDIA It and Rigel HGX Gen for NVIDIA the engineers system attained our the four edge providing certified endorsement, certified Supercomputer tested sales functionality, powerful security, only NVIDIA by AI systems of most Edge PCI certified extra recently simplifying express scalability, AXXX are AI is in GPUs. X and

as certification ASXXXX system, of we a us certifications. with CMMC wins the anticipate preparing In qualify due year as to potentially U.S. addition, corporate a mix the last allowing high-performance the coming in Maturity Cybersecurity larger to government X.X, as and for Certification, for soon additional well to AI level otherwise our as prime Model aerospace participate quality product unique to us We future. and product contractor known our DOD number programs military received and

As you know, starting diligence of the move often and but many expertise of to off. contracts slowly pay more military are our and teams cautiously,

applications. GPUs and are an warfare solution in The these solution. fabric far situational this the with we awareness. with have already won visualization for will announced million enabling QX interconnected of to in-vehicle express This be fighter military recently $X.X includes that PCI design of So deliver based Army on jets, this year, XXX NVIDIA rugged two contract anti-electronic degree a OSS an visualization system

for marketing we computing, of On at held international which the at Dallas. the analysis and QX, SCXX, in association conference storage annual networking, high-performance is the in the exhibited and States was that Washington Annual in front, Conference DC Army United

also of the in Sea WEST San Conference QX attended Services year. in We Diego this

liquid At to TMGcore teamed and Supercomputer. our WEST, demonstrate partner version with disruptive up immersion a both two-phase technologically SCXX our cooled Rigel of we Edge

we two-phase compactness say, box. AI can like supercomputer offer in the As as it Rigel without Transportables, TMGcore breakthrough liquid ruggedness to first world’s cooled delivers compromise. edge immersion of for operating And the performance levels efficiency, and now

sensitive environments it has expressed signature technology systems as as Rigel of outside DOD for and harsh this noise such density transportables, The of government pressurized into allow in allowing Rigel a in will interest address reduce of their higher a an deployed used to area aircraft, applications. more

adoption. Officer, Chief technology, to products, my Sales Product to and from strategic recent look Chief I and transition the With Marketing forward leading Officer customer our of direction

the with Now Dave. that, to to I’d turn back over call like

Jim. you, Thank

inventory XXXX increasing be new our military OSS many year high-margin the bringing will levels and AI of fronts, a delivering business, talent. transitional proof addition down, Transportable the on more while points business, reducing for the ranging from low-margin

with mix. that due the the but anticipate year, improvement will see to I visibility, margins, margin current dollars With to multiple consistent prior the higher a we revenue point likely be stronger in expect driving

trucks, including We of industrial from our trucks, autonomous agricultural baggage are autonomous and projecting equipment portion equipment. growth business, the cellular carrier

of the the AI growth as to expect year driven the growth targeting Transportables increase layering last experienced military new of in. military will in and by after are certification as we we XX% While lead our a XXXX, the return delays customer largest this be business well portion the

on This multiple to as well the contractor. us on to Tanks. a are Army which ground the they and with working and case for thousands In the OSS contracted much you’ve Army the prime, deployed that, of we storage which reached defense interested in as months, million opportunities Strykers, leveraging in our with a breakthrough vehicles, the Army. this the been with had working they expertise. deliver program has market, with, several previously capability opportunities, OSS past and the defense seen where us some informed Over Abram needed not had and a won get design order, our worked we large bid and and the defense in several contract Bradley’s exposure announce also to $X including Army with technology program of out Navy additional directly led the with the us extension of announcement, other accomplishments prime has may

the value. the To-date, shipments Based product future P-X the shipped OSS aircraft. product has similar years, million. believe to the than $XX provided extensions we yield business the will more on we’ve deployments, totaling Navy for For storage contract and a

Our form storage recording. lightweight in technology the and leadership delivering extended rugged software history exclusive agreement portable those small, supplier secure, data including and of applications our involving highlights particularly solutions, high-speed long transportable for factors, all

most at this to duplicate This to the within several recently, other XX Unfortunately have contractor. been engagement prime able widespread contractor. we program prime not led part, for same top opportunities another until the

on significant investors to and we defense have in points more share the As several remarks related to scale industry XXXX, strategy throughout based progress XXXX. shared with opening with implemented our made a on factors expect proof my broader in

OSS is multiple proud our working that we with are to country’s and now deploying military defenses modernize by organizations capabilities. AI autonomous strategic

top XX people of I contractor we in one XX other contractors. as been As including no -- products. had a have many as with as that people three personally ago, the prime Since and the multiple and -- the meetings DOD. have of attendance at and pleased have many year time, recent our from had we interest meetings, the as XX in sincere attended position these capabilities

won Although, our than of our proposing SDS revenue as opportunities, servers, have storage military our prospect we’ve NVIDIA, could well path are spanning partners generate as this the that leverages close contract current like Rigel, lauded immersion aircraft. They current not roadmap at Rigel, largest and well a two-phase next technology. Force generation they customer. as and performance just If products formally to platform compactness as disruptive the yet, they a from we more Air multiple our to use

I all as aircraft. on for aircraft mentioned a their proposed said included will us customer current being as retrofitting major this compute another to the to next -- In in scalable be well the generation Rigel potentially they another is use and here Again, earlier they is where aircraft Rigel call, Escondido in the military management were roadmap in upgrade. prime this looking use included requirement, VPX and leverage program case, visited solution the senior from a system top proposals, after contractor. the overcoming as in standard to as prospect Rigel Marines Later, the

the We have Programs aircraft, surveillance, drones, of on been expertise including in believe aligned our and that and well autonomous applications announced AI we’re with jets, products, including technology have types throughout been fighter that different are applications working not skills tankers, and span DOD. many -- helicopters.

the land, and for we’ve On centers, and sea, manned seen ships. submarines amphibious opportunities low-signature includes detection it remote ships, communications, battlefield At vehicles, systems, supercomputers. and autonomous unmanned command

them that we’re while close of awarded, programs been new we these to securing I’ve of a operatories mentioned believe most excellent have also Although number the in in an process. not position

get prevents the others others OSS many Unlike asked advanced centers. starts -- in most entering? technology market, compromise. what embedded used from makes of fragmented in the lower market, with often this performance different what without latest it performance than bringing or in from solutions bring the normally we this I all many the space, to only Rather data

push skills Our engineering latest the the limits of protocols. and up building expertise as switch well solid layer to as customers. latest everything from take start the to tie relationships and the We products licensed PCI fabric ruggedization, thermodynamics, in density, and using express, flexibility power top manufacturing provides in capabilities together on development this on that pride Company NVLink and to these of many high-speed for products, to the software market, with ground NVIDIA’s with optimize our

of quarter expect mix a customer approximately of Now, ahead, margin of to XXXX, and media the continues million decline. from entertainment for Transportable lower as our revenue $XX.X revenue with higher products looking AI first we

increasing as increase margins. in, to We throughout layer programs additional expect the military year revenues with the business especially

and range, suggests our that see may opportunities XX% of XX% modeling to in the revenue XXXX. growth pipeline in starting OSS Our

I’d -- teams. contributions continued all and to appreciate open up like Lara? call support that, it the your our now the We With to from questions.

Roth question Capital. comes first Scott Your go from line Instructions] the from of Please ahead. [Operator Searle

of the lot color all appreciate in I color, a Guys, there.

in through Disguise a that of cut into you to with want first product back much quantify the that and going the that it’s gross the or do gross Even see contribution, things And I’ll as And military couple it bit higher of standpoint, quarter quarter. of seasonality this a and a Is the was mundane we revenue John, until how little sounds then correct? margin the year? re-certification. still on front, course through in fourth things like lot absorption clarify ramp have here, we we could quickly, issues, a couple recovery allowances? So, decline to we just in end from but the a because I headwinds didn’t go of a up first of through margin of look the

a a So, we result our directly our -- we more X.X% allowances business that, a over digital move leaving, of took saw lower of business. upon that we military detailed And we as into the booked -- recorded. of inventory. we are our is tied little based slow to on inventory did additional the which erosion our analysis as and adjustments look profitable obsolete or margin realization we of more at media for moving basically It margin that business the a and the that

not I that think although has as rebounded rebound, fourth during the the it start I’d far seen just as -- the as -- it military add as we quarter, far like quarter. current will Scott, had to also,

and forward, expected, that, addition the further was is drop a In a although significant quite lower number… moving and into still which was built it than our entertainment number you’ll down and see XX.X customer to media bit

it. Got

be improvement. see yes, should we -- to should margin able we Which see implies continue continue -- to to

into quarter? So sequential the margin improvement March

Correct.

And then, it rolling off is quickly. pretty Disguise David, like sounds

I you contribution think said number XXXX. the revenue of that than in less XX% was

want just that. it including in I’m I guess you know clarify I not Transportable of. us into you’re what I ‘XX. working XX% to also, it’s or of if was military to And then well, off me. want some clear numbers the growing to what that wondering the could was Raytheon I as about is you Just talked year. think AI this calibrate

XX% of to year-to-year. business an growing is the from military basically from from about portion part Raytheon -- the of that. XX% Yes, And overall company, is growing it’s

to XX% going the period XXs If over that from time. the about just the of business, you of OSS at something half like of classic, during in it’s look

fallen On in were off front, it’s entertainment projected, back than yes, customer the we faster media when visiting November. and we

we on And forward. And pay moving military is us. for just the to hard are we’ve been off work so, doing fortunately, starting front the

you you. is I’m on front It in time. pipeline Got so on sales. in short that in core about it comfortable because dive like I very the are to just to on like terms implies total from the to revenues, at I XXXX, standpoint? a And really basically back seems to And talking Am strip looking OSS then Disguise, Bressner, that of it XX% to proper the into I accelerating. surprised it see if in out that in business. about to the to of correctly? Am it’s military I you then, building XXXX. growing a out you growth outlook, $XX was if strip XX% XX% period million are confirm XX% I looks doing was want talking are

No.

as military is trying XXXX ‘XX let’s is are as basically call the we we business. replacing media far communicate flattish, that to what Transportable are with compared business So, overall but approximately AI what -- we revenue low-margin to it,

that seeing of mean I we So, -- are out growth Bressner. and

I let know. me did question? not, please answer your If So,

talking sorry, Dave. of one and things. said ‘XX I’m about was No. the I you

‘XX? is comparable is to it revenue ‘XX So to or comparable ‘XX

‘XX. to sorry, ‘XX ‘XX comparable is is I’m --

if Sorry said that I wrong...

Yes.

No, Okay. perfect.

to do broad are we’ve we expectation. it’s And on we right the what for, military we’ve now, hard that is been is going exactly, think so do and in if closed, to but we activity what Yes. our already that’s spectrum XX, addition things to know the striving

the We will more update on that year progresses. as you

Okay. numbers. Big

Just two more get in and queue. questions I’ll the back

at along then obviously, that growth XXXX, of activity tremendous far design and discussions. amount into a So, there’s looking

about bit little a talked pipelines. You the

two up was some I the this the You are opportunity side, wondering magnitude in with is otherwise contracts. I you’re look some of as against competition out or of we Who’s sort wondering of But And help coming Rigel? you number if you there to who then Rigel that of that understand us about quantify the talked terms against. years. on was some the three Thanks. bidding shortlist also on could

-- designs. been we’re Well, some know replacing people we’ve in I

we customers So of because been being Jim, at something that coming far this add? are competitors we additional involved, in any designs the only hearing are level to we comments has up I’ve are guy you want the not performance. told

military opportunity of their So mentioned doing the architecture an we typically the that what traditional we are is out the it VPX they for call, think ablated with comes kind and is in the they good -- -- approach before. we doing how back their this and show totally on philosophy it everything problem. could way we they’ve it and we been Rigel, what get with them do changes When the

you the up So, in our want instead it’s we’re like be than of these lean, light they times their use get accounts. ablated architecture Dave we really they that’s considering momentum forward to and more building like, to powerful to spec times XX And what XX eyes were before. And Rigel say. to their And have. and are okay, they what like the customers change that body

to take really when ourselves not we -- head we’re So, in. we these bring head bidding away with VPX from

excited hear look the out into what’s we to Great. Thanks. really Thanks. And XXXX. I’ll as on going queue. get back in

the comes Street. Martinuzzi next Your question from from Eric Lake line of

Dave, when the was clarification, a you XX%, to Just the to classic OSS Bressner? said military, excluding that XX% XXXX? XXXX Just

Yes.

going OSS like gave to out sets When the you just when mid-XXs look I to with including OSS and classic, then from XX%. you to from the we’re ‘XX about Europe, have whole we’re of two XX% pull that from going ‘XX. at you thing numbers, So, XX%

appreciate Got total of as entertainment a the and clarification. it. XXXX revenue? percent in media customer, I The what was customer that

here? was up of looking our It one We’re XX top

-- doing just the looking, I’m he’s XX%. XX%, I XX%. Over -- in It’s number that have Yes.

on page. same I the we’re So, think

XX%.

XX%.

that And less than saying that XXXX? you’re Okay. in becomes XX% XX%,

correct. That is

of And couple here All -- comp Okay. for as be about you’ve out talking look you’re a revenue I QX, X% the XXXX, revenue right. XX.X, at given numbers to us minus then, that’d comp. for a

about talking year. roughly X% the You’re for

quarters, we’re out kind growth it do to -- half then quarters way how of we year to about the the in the the half, X out kind it? and or they’re better back So, is a contraction, is about of in really of expecting the front think roughly a think X%

of just entertainment visualize never step QX, example, And would’ve it and you a kind media QX, the color of give kind revenue kind flat. had levels, for and business for on to -- we all more a levels, ever word of been we’ve it, would same we business were if steady record would little for new to get a a I -- set big still be -- QX. a the for doing to have the higher upward record time and customer, -- quarter approximately

So, it kind the number’s tells much number QX the lower rest lower you QX, it And the strong, business pretty the for than in of In pretty was is is I them. think QX. small than because that was of QX.

that’s Yes, or what at flat question, headwind to it my least second question, fighting how way was up about of I I where that still another XX%... is is first the frame coming I -- guess XX% kind you’re was asked a and

seeing -- assuming margin materialize Flat we’re additional points. those things

year. dollars margin should So be up the for

it, but What know a are if adjusted XXXX then, comment and EBTIDA? finished adjusted million you’re EBITDA Yes. willing up with gross You year. What for don’t margin dollars about And out thinking EBITDA about for on margin. $X.X XXXX? I adjusted X% we the to

additional which which going expenses around right of that it’ll result flat we’ll that It’s XXXX in some that as to be be a very So, $X million. be -- reported consistent incurring. we with

that good Dave, of CEO and search then, said got correct? a mid-year some we the is you about hire. should And think Is candidates, kind underway,

internally we’ve Yes. and It really now, good that’s got flexible. we’re to targeting, may talking just what because I’m but we’re candidates staying right sooner happen

it’s I’m it if if here. quicker, takes fine; So, longer,

go from from question the of comes Noble Joe Gomes next line Your Capital. Please ahead.

I real just of you going was Dave, But to that trucks how bit switch a start, now walk wanted made we’re one of a here and about maybe could And after. the the big were kind I kind the military. the military more, us opportunity. autonomous to year ago, understand through all market little we’ve we that

now of is caused that top do in handle better the talked into the business plan for How XXXX? growing? the that what you on clients trying XXXX. that two as you what side. to see revenues you to I were autonomous Just a truck know about see the and XX going do Where get

Yes.

understand market, could said, you thought the originally industrial I apparent It’s question. fact the asking said when it that that this What we in we Transportables then because be Joe, I share were you but think the to only military and why launched we industrial after know, doing thought is it. And a opportunity, military question. going don’t So of markets. this biggest we is people I great we is XXXX, great contrast that for -- because we was you’re AI quicker. the of some even with thanks to anything going

the while takes we’re put focus to military, just let’s start to a for things Because talk heaviest So, but to on much longer. not just able until about it be going develop. it

making about came on in can were We alive. about the pitched good And shared happened. what’s we Transportables. We that feel proof we And that that’s So, now marketplace AI The like feel going guys that. military, the what we more truck some points. as we talk with progress. really

still I the the our okay, that the trucks? are same place in it last We So, brings, of a business, couple then top good the where being calls. And trucks kind XX ends up are that customers. communicate that believe how it’s

point be go at at in stay it. the the on on inflection be revenue it expect farm higher reward because risk We of into it. out want intent it growth as strong time is a said before, is And the time, some And in point things our solution. could did to that something we’ve and production. But to as aspect that not of production of same we bet at market very

So, it’d be if great happens. it

We’re going happen. it to make to try

is we going be in value think blocks a rack the of in to I year just as margin, dependable the building them believe that year, to the company layer lot on high military the and drive the will And I think businesses Company that of going of But stack side. will. we I build my are after opinion.

you then, Thank to for great. that. wanted And just clarify. Okay,

largest the military contractors you X that XX prime of side. are now talked the in You top with engaged

five-year P-X same revenue? which if correct? hear these You of program, call timeframe Did one that the equivalent about the I of mentioned something a I are mean, it is programs that hit, to be period. it about still could for over million you let’s talking $XX type

be Yes. I really larger was and broad. had, some what so of a saying primes that If close just we just one because of account. those it the stuff we would it’s

made more at time activity period biggest that I customer. the in the of we one So, on, have for short think comment than programs more our I today we on example, had

it’s at So, are to to do time revenue year are going you And account. the during mislead XXXX of of we a our couple But buy going have. into different clients hitting in -- but to or see on everything, they that we of take as than revenue It’s or high and in some growth we anybody. just funding part it they don’t there John, this ASPs. that’s do cylinders whatever to want more turn to some the I on a biggest the already broader addition

one then, me. And last Okay. one for

guys stated to always range. long-term that XX% was in margin XX% You have objective the that

military side, XX% carries that over Given growth you still to creep and here? off on XX% see time falling XX% which Is that targeting you kind are up Disguise for up that significant to hope level? of margins will now that maybe level, something the

part you that is very business of is doable. entertainment when And the classic media of it’s believe definitely the in remove the and reason OSS today We kind range.

Thanks the for taking questions.

as entertainment high ones we pull customers XX% XX% Yes. the OSS average. out classic and And have are other on and fluctuates anything between lower. and have somewhere media business XX% we you from contributors The that from as when

Thank you.

the Alliance question Global of from next Your from Kinstlinger go Brian comes line Partners. Please ahead.

move afternoon. you more Good phase. look questions. also you entered on impact the -- multiple -- over Last the from Shervin a and you wonder, when question or trucking. the business into have [ph] sort have Could had it Thanks does autonomous last times on taking phase point if in I do for prototype phase, visibility next will you and of is your a of like? about mentioned view? my This quarter, I the the any prototype revenue will about it customers if see when Brian. any these of what for quarter had When

Yes. The prototype period phase is -- long time. it’s a of

this may are account -- ASPs be introducing in We the right another high. now. are quarter we Fortunately, in

So there there. opportunities more is

‘XX belief you production belief people’s have on will XXXX, these they I do on how who range a as part, that logistics work. what that’s time, far to at say going anywhere is all from believe their depending could at happen As to, FedExs, a is it to on them buy, the look that people’s But, that’s believe to talk it. to depending work they will I the want trucks the autonomous use happen next all of what’s companies XX this. Amazons, start of planned to they

be the point inflection limit be there start wouldn’t they’ll growth we revenue, over to we to believe that a because to to so, And trucks it. though XX maybe get it hub, we hub type that nice say, And to business it of size time. a accounts want or another us. buy these generate want hey, And we could It increase that. would XX something be working has logistics need of even to for but like the they in to still -- man

Thank you. right. All

remember integrate you to that airframe in last and with vehicles question, into drones the Next you the to regards mentioned Rigel combat. talks DOD quarter for What were land large in Rigel. I has general, instances? there? we visibility -- has Do to see specific have start any guys in to start those in progress meaningful in revenue can Rigel when there ramp? you been And

more Rigel opportunities are get ones new at on progressing. you Well, and activity we continue mentioned to

As revenue, got XXXX. But, dollars even ship year, our for current far talking in or anything stuff, of layering it’s millions the customer likely not and revenue about, of in. we’ll digits millions I’m ones -- of It’s other year. it’s but this you’ve this numbers of as tens Rigel single

All One that… right. last you. Thank question

add to go, up numbers start XXXX grow and start kind to in But rate to into but multiple and pretty deploy we’re talking possibility what that, everything. and these that things quick fuel the to about. on That’s -- where growth of where just add has is that to is vehicles the them

that it’s these Rigel -- if into has actually brought with opportunities you programs. And we’ve us closed also several what of take other

capabilities server. gave of people like opportunity capability SDS a Rigel maybe we said trucks, that the off autonomous that’s And Army with the quarter, was the we lot we had saw that we wanted on of -- out it was announced design the they inside what And this doing even them first So, that. guess based and And started last I that want. the that something different. something Rigel are because slightly

its So, as Dave lot doors, close was opening producing even yet a deals. Rigel revenue ranges of if is that these those it’s in about not own talking we

drop-off to demand the also to are last X% guidance military just faster drop-off? there, year-over-year Disguise, drop-off this is if working the And year, steep slower then this in cause mean which from that Is should for a due the close seeing. the the expect and a for be together to in QX, to second I’m in will there on first in then good or to ramp on revenue from steeper less question to drop hear. down really moving your now we maybe quarters, is from there’s of One what half? later down regards couple growth back a Disguise That’s off flatten

and of business, and you growth the So, first XXXX very see earlier, you communicate of first solid of you our of I quarter what would core looked quarter first and tried at XXXX, out all, -- entertainment business. media you other pulled to if if

anymore. entertainment because So, and much and our of number a so numbers dropped not the part media big it’s

the we quarters think think quarter this up question? several I answering is So quarter-after-quarter. step we and said your what it’s next where we at is Am

you that demand -- back in military know up, to are expected know more I weaker. don’t I up fourth going past going And so longer it’s of business, cautionary it But to just back. terms but now Yes. strength but quarters like even have quarter ramping see is or and relatively there’s confirm, seeing delays? as you towards you And a still you back strength, been the that typically teetering three the be said

in a QX We’re good having military.

turn over I’d like at back There now to call Raun are no time. the closing questions further David for remarks. Mr. this to

the as with you We’ve OSS joining and is any the or for myself sooner. in again look May, the Company’s enjoyed meantime, believe everybody, you speaking free always, out if with John us you, Thank not reach bright. progress We at its to sharing forward and future feel latest today, is In to solid time. today. at to strategy

ahead and call. And the let’s go wrap up with that,

sir. you, Thank

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disconnect. now may You