One Stop Systems (OSS) 10 Aug 232023 Q2 Earnings call transcript

Good afternoon, and thank you for joining us today to discuss One Stop Systems Financial Results for the Second Quarter ended June 30, 2023. With us today are the Company's President and Chief Executive Officer, Mike Knowles; and its Chief Financial Officer, John Morrison. They are joined by the Company's Chief Product Officer, Jim Ison.

Following their remarks, we will open the call to your questions. Then, before we conclude the call, I will provide some important information regarding the forward-looking statements made by management during the call.

remind available the Investors for the website. to recorded will section like Company's made and replay would everyone call that be of I in the

OSS, to go please call Now, Knowles. ahead. turn would CEO, Mike like over I to President and Sir, the

support OSS To our defense Darryl, XXXX sales. growth, Transportable on up good June me our particularly and me half and leverage commercial changes our product in organizational on revenue. you, everyone. In the this focused strategic and Thank first designed business AI the afternoon, my President of grow implemented defense and accelerate global expertise appointed strategy, implementation to accelerate company the ramping Xth, strategy of and CEO, and to allowing to the our markets experience

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as Admiral career American Directors. NORAD. known of announce Dumont Commander Marines’ experience of national the end effective and Maritime of and of well Association, Board. three-star of is Coalition, the the the Command, of and U.S. the Vice Dumont Aerospace President Global He attorney a the is their Dumont of place, currently In of a Board on I'm Defense advisors as otherwise security board Northern pleased having QX, The serves Mr. whose the commercial of the joining admiral Board that includes serves as advisory with OSS the also Michael and U.S. Directors Academy. of Leadership both as North deputy as as Dataminr State Memorial of OSS Command I licensed California Advisory be retired currently University defense served and will Interim commander council

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discussions We this multiple with at primes engaged are in actively time.

opportunity existing consistent in forecast stage the improvement maturation market. and further developing identification the timing. the need allow opportunity the these models and of year. anticipate areas assessment This forecast a and Improvement process OSS in over is this defense second also pipeline seen of modeling better I our in half will approach. I've for for with of

indicate rugged reputation. performance the that Additional motivated future environment existing products datacenter-class we There and processing. will over This are deliver months newest base. requirements market and and made has strong past a remain talented a that which of meet that technical the innovation-driven will an for edge introducing employee can of observations OSS in and on forefront ensure the product expertise highest have we level on for few

a an to environments succeed. products customers price and engagements meet to the culture the Overall, high-end the success Donati the from SDS in have greatest I've scalable excited also our where of we Reminiscent have to mid-tier and points, flexibility experienced Rigel I'm to bring products I've lower-end operations us can commercial deliver scale my with growth Cernis the we company capability our our solutions both sense and which worked urgency and and I'm to align products defense performance of give pleased projected that validated demand. at an with The energetic with scale capacity varying markets. and and customer's that to the facilities requirements. growth. team seen has

attaining dimension express Additionally, customers levels compute, highest products of storage flexible also to solutions. of not the and lowest most our provide only value added PCIe and but performance an the and latency storage our and

due opportunity we performance, at company's As will to forecasted revenue the met be look delays. with I challenges

delays, market, inconsistent experience reflection these the not Fortunately, or of my market. strategy, with the and this in especially a offerings, defense not in value of are product are opportunity

increasing commercial of a including also approach the to in market, seeing are and timing delays and softening the We spending. trucking hardware in autonomous a conservative consolidation

Having offerings, a pipeline. ability in I confidence and said our strategy, our robust have that, to product our build

focus we QX, and As here upon accelerate today have to and QX to execute I discussed build be what in sales our revenue. and will grow

customer to and coming Jim before to John for further, to further details the and Now, products. financial I'd expand on like provide the John? ask wins quarter,

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

Our consolidated million, year-ago sequentially, totaled from the up declined same $XX.X revenue X.X% X% in QX period. but

entertainment our trucking and which reduction consolidation the into autonomous industry, and shipments anticipated, shipments to a the As in financial media due through product going to decline decreased is was and customer hardships. legacy

We also experienced delays in defense orders.

We have we and with customer, further our remaining from them. associated media substantially not business fulfilled do expect measurable the orders

towards As at level less virtual typically investment covered intelligent particularly in our our this in drive the capability business in technology true the not require entertainment previous operated drop calls, not the in resulted compute this This of system harsh a which in of as products, and do same environments. is ruggedization edge. the cloud is acceleration from customer's

revenue in quarter the decline Transportable legacy offset the business, our by was which million Approximately margin our quarterly $X.X of partly revenue. from low AI was in media

While second we've it to remained levels. in is note that experienced previous has some our win quarter, at rate the during delays orders important

comprised segments: our Europe. you business know, As two OSS Classic and of company's OSS is

selling performance with in focus high products operates OSS flash reseller and connectivity. core the Classic of arrays, primarily is on into Europe and value-added as ruggedized increased computers, design community. OSS manufacturer and involved the customization an OSS minimum a European product

the Europe XX.X% revenue factors In the in more of the OSS to $X.X million increase to additional $X.X million increased same accounts, mentioned, Classic number having Europe second to including to quarter. as year-ago inventory due as and quarter, XX.X% while increase declined $X.X the small OSS an ship OSS available The core business, revenue OSS to previously project-based to well as compared of due was products million.

$X.X in gross higher decreased points customer for margin gross third-party Classic also margin to in OSS overall components. the attributable The in was our predominance XX.X%, percentage lower margin gross to of quarter XX.X% XX.X% media sales the the compared and company's period same Overall, the million. percentage to was X.X to profit The of mix business second was XXXX. which as

sale the improved points as X.X compared at OSS to premium. XX.X% sought-after XX.X%, core margin OSS to Europe's in products, margin higher and percentage having same the product gross percentage products in period mix, XXXX, due a sold of readily to

$X.X expenses to this transition expenses Transportables $X.X OSS to lastly, to and write-down percentage the component XX.X% most of the the attributable with in of from of to an as in million, financial the increasing The XXXX. Classic significant our of a orders. to resulting compared plan, million a was industry Overall, XX.X% of focus operating increase compared in certain increased same defense impairment of to deferment AI quarterly revenue XX.X% as operating performance the goodwill overall period

in Another was outside expenses, and increase Such services. operating by of $X.X costs in transition additional wages, was of legal $XXX,XXX increase attributable associated compensation and professional and an senior fees, expenses to strategic marketing partially administrative our and increased search organizational fees, with the offset expenses in costs compensation, significant million with include This and $XXX,XXX selling additional transitioning general expense. restructuring transition stock of strategic R&D $X.X to component decreases and million attributable in committee. management

from compared This operations the revenue, Loss totaled operations of $X.X attributable write-down predominantly and to the to impairment of $XXX,XXX costs. same lower from in reduction transition period attributable the was in goodwill, to XXXX. million, income

a $XXX,XXX the of of income employee attributable Net receipt share, per benefit under loss retention $X.XX $X.X COVID-XX loss to per net government's Net on loss the as million GAAP credit funds one-time or the $X.X also million included share. was or second quarter a $X.XX program. basis in of compared of to

EBITDA, of or $X.X or or non-GAAP include $X.X of from a loss Each $X.XX credit. $XXX,XXX, goodwill compared Non-GAAP revenue. or non-GAAP $XX,XXX million decrease $X.XX share metric, retention a to per of $X.X was was metrics employee adjustments Adjusted $XXX,XXX X.X% of for X.X% of million net and impairment non-GAAP per the revenue, these million for share. the net of income

Now, the as of half for of the results first first turning XXXX. the compared to XXXX, half to

the decrease in Our decreased the half due XXXX is first to of million. to to reasons discussed consolidated QX. The X.X% revenue $XX reference in in revenue

million believe in represents be to year-over-year. XXXX XX.X% product and deferral-only Classic Europe to million, which the Classic revenue of will Our orders markets, product inclusive million while is opportunities. OSS commercial experiencing million, XX.X% OSS $X $X.X increased $XX.X core delays which represent of pushed of $XX.X revenue revenue OSS sales. growing revenue, and million revenue defense to from decreased to OSS XXXX we of from OSS $X is core

Europe As is a throughout U.S. Similarly, defined all core Europe originating products from delivered the operations reminder, from all in designed world. defined OSS the as shipments is Classic as OSS OSS same shipments as operations. margins. was period U.S. in in and XX%, both The and tend through compared was yield margin percentage sold $X.X profit operations overall to gross Overall XX.X% higher XXXX. to the million. gross are

to was percentage of compared higher to customer of This lower OSS’ percentage due the Classic content. mix XX.X%, as with media decrease points margin XX.X%. was sales products of gross margin to a third-party a predominance X.X and our

gross contributed OSS of increase sought-after core due to Europe XX.X%, sale of products product OSS to rate of margin X.X an at XX.X%, percentage compared products, sold increased at mix a having premium. and as points, a and

to Total million. write-down increased $XX.X $X.X which operating and due was in goodwill compensation costs the organizational firm included increase the restructuring of primarily an legal fees, professional to increased an $X.X to is committee. and expenses wages, million XX.X% equity attributable of company's million The associated with services. search to attributable and non-recurring Such transition the due impairment to expenses, increase strategic compensation, and fees, additional operating general of increase $X.X million of outside costs

by increase being chargeable a The deployed expense that from more in $XXX,XXX classified decrease which R&D was a offset work operating revenue. on expense as of cost partially engineers of in resulting is for expenses

a $X.X totaled to employee net $X.XX compared as Loss a $X.XX diluted per diluted on operations of was of $X.XX million basis GAAP GAAP share, operations $X.X million basis loss or compared $XXX,XXX, per the $X.XX totaled in retention inclusive million period. $X.X compared million or from or Non-GAAP Net to credit $X.X per $X,XXX share. or income $X.X share on million. the per net diluted share year-ago same diluted income of to income from

or of revenue. non-GAAP million Both of EBITDA Adjusted and to goodwill and million adjusted included $X.X the employee revenue, the $X.X credit. retention $X compared million of adjustments net income impairment or million X.X% of $X.X EBITDA X% totaled

total due cash retention cash to $X.X to short-term working and Now, million, turning a totaled compared to as the combined of of The $X.X decrease $X.X increase total million, XXXX, quarter. and XX, This of the increase a with the balance employee an sheet. primarily million. $XX.X combined in On June requirements. for prior equivalents represents million investments is capital credit

that review XXXX, Form Form Consistent will this completes for expired filing in month. we prior our registration with S-X a file our such and statement renew the new we S-X financial This registration shelf anticipate later that May, quarter.

now to Jim Chief turn over call Officer, I to would like the Jim? Ison. our Product

program Thank you, John, six wins. everyone. QX, new afternoon, In good and major we added

of industrial both OSS million and commercial and these this wins including year in remaining yield trucking and in these The AI wins and to $X.X were wins two datacenter expect We autonomous watercraft Transportables, revenue Classic composable a application. about infrastructure autonomous included across OSS IoT Europe. Three an server, defense submersible applications.

The application the perform combine This services. imagery data from provide craft fuse watercraft resolution server. and the video, escort, to allows to various infrared harbor applications other to spatial several ability patrol commercial AI single self SDS our full awareness. high sensors watercraft port vessel and OSS second fusion sensor win security, identification, with a into combine is the for customer navigation customers autonomous These functionality that

providing new The the company application is first a within transportation. campus autonomous autonomous customer goods server navigation truck

The competition. third server techniques win a with win our noise well customer for to application under AI sonar This capable combines Transportable the defense datacenter signature our processing. sea OSS that innovative reducing AI the of while capabilities submarine SDS platform cooling liquid highly provide below was

program storage simulation $X.X new During Warfare servers. win the our Electronic Force million the Air we quarter, announced prime U.S. also contractor for SDS a through

leadership AI Our is ability within then customers to expand for position our multiple our footprint various to win strategy growth Transportable an our in applications. key with and strengthening designs account

new seven major quarter. pending programs added also We the during

greater over or likelihood pending more revenue with to $X years closing. XX% such of in expect a million major four generate programs each or We

of applications Our of of Europe. the programs major involving AI with QX, and at totaled Pacific the end XX XX pending those Asia pipeline Transportable in U.S.,

line sea the bridge government enhance complete while have that rugged, our front, which critical application the air performance On express Donati ultra-rugged the high for product we government technologies deployments. applications expanded AI vehicles commercial to compute AI Supercomputer these edge to and product integrated deployments and switch fabric vehicle latency, vehicle over core SDS is Transportable storage multiple This product government and year, storage land significantly and XU from and for in the target performance Edge line includes our to Rigel highly deployments. domains systems last that and reducing Cernis PCIe the

technologies we storage and movement, These complete we X As product cooling line system improvements remote software continue PCIe in well valuable in the plans solve to management, positioned creating products evolve edge computing the during our monitoring challenges. make include latest year, software fast Gen to data and control. products licensable to fabric switch express to

product software revenue solution are offering in larger that and for tend attracting complete margin term higher commercial longer software sticky line and more and deployments more full full and recurring opportunities make market. The customers system where to defense

quarterly autonomous Since X Baseboard deployments. Unified SDS truck system previous orders government and deployed in or proprietary our products our conference accelerator and include infrastructure, our received edged to to initial additional used Gen in year. vehicle composable On introducing with it the for and U-BMC, be we U-BMC Pro Rigel Both announced be call, I XU later have our Management introduced Controller U-BMC.

Now, to Mike. turn back with I'd call that, the to over like

warfighter Transportable our We believe promising We superior OSS a as Thank you, business growing with see and Transportable inflection the storage commercial objectives. computing AI our readiness and on dramatic unique a adoption can have and Jim. point edge solutions of AI technology. impact

The been named edge because driving market, approach distributed sensor Defense or adopted Control the and and and This been processing by have fusion autonomy command and AI-enabled decentralized the of All-Domain simulation. the allies the Command computing a it important or Department Joint control demand has chosen increased and JADCX, strategy. has edge defense for is its In U.S. and

strategy According ability be than sensor, centralized its to to to communications the fuse command at to integrate adversaries. decide, assess, act and command able edge operations commanders the this is faster and and of control battlefield for data and

Our implement the capabilities and to and products in to AI are processing this ability environment. our strategy most rugged key

and now from AI where considered is action. being revolution, market, the can implementation commercial interact part rapid the fourth to required In support systems military similar the conversion of sensor to see at edge the assessment industrial we to so decision

and year, in operations. such we notably, lidar, laser, the support see are infrared workflow processed autonomous elements to and as or this in Most of first with and industries all sensor commercial contributing In our collated edge radar, by Transportables commercial where during we of military continue AI fusion the advance this solutions ruggedized to half our market the position AI to future processing.

our now driving today while build I'm communicated I'm for and the right and reflects company to of had meeting succeed the some has in thoughts strong forward innovation and commitment over company. creating with products I OSS and and by marketplace. powerful opportunity in share team, strategy on defense to the global the business both excited position growth encouraged and model. talking markets strategy. and to it the believe commercial a the the same past I path months, the two our investors to I've

have I third quarter for the near-term, of at market delays we we'll As impact XXXX, witness discussed. the the the however, look of

approximately of As anticipate million. a result, revenues we $XX.X

to of a consolidation autonomous trucking spend. investment is result As is the market delays it conservative in delays market in defense the market and and the of forecasted the a and commercial approachment timing result overall in expectations. earlier, stated In this

I'm the business. the and team and of Robert the of have the confident reiterate execute Kalebaugh issues, to strategy, these through products we that grow will work and I and successfully the addition with support team

to Now, questions. call like with your we'd that, Darryl? the open to

to Go [Operator Scott we'll Scott. from you. Searle And Instructions] MKM. ahead, ROTH go Thank first

Thanks I again to just the to in thanks quarter, afternoon. clarify. coming Hey, my all in quickly on the Hey, third color questions. taking for Mike, on monologue. opening for and for Board congrats good maybe dive the want

heard the disguise not third results. quarter I think that in I will be correctly

do there clarify you to push as And little sequentially, a recovery despite when Just a is And fourth then outs? there that. bit into the you're quarter, wanted looking of the come into half the in does that first the than of it P&L? $X little million slide it some to further $X million bit Is start expect to a to that? or

for thanks the question. Scott,

but principally There's that have from to on as some very see business, negligible. Disguise business. So that small we'll QX, in moved the trailing small bits we and

this of and in is feel fourth the year, and better we're risk working see As to I the modeling and the timing. there looks what Robert that delays that that get push to seeing Kalebaugh quarter that the of and we'll pipeline also. outs through the are from like now a our

on in the so coming to months. working expect we'll And that be

background, Got of defense your color in it. And interest other opportunity. and the of within given products there of I'm wondering provide Rigel Mike, for you what could Is level terms a the you the encouraged to by that and to amount embedded some what tremendous post looks And start like think of Are wins? you sales do to signs you're interest? try cycle the seeing? get

Scott, of to Yes. the try If miss know. questions me Yes. there address the of I kind one just I'll thanks. let those.

the by that and of line explore where of been to contractors, and number of leadership I the was joined. door over same months capability. the been the company that. have I've can meet opportunities top those it we've been customers some product by great to meetings existing months. that they're products the mentioned customers And provides So my response had in working my notes of scalability areas very going I've additional and bring as seen plus they bottom. and I've And not to been opportunities general in as while great Rolodex and two the prime scale But past opener And able I Rigel. through with before a turn programs two call, earnings Rigel worked after. able we some is I've the have just to we to in I that XX is past from contacts with able a over just through the excited encouraged in

price of slate productions we drawing in very those growing short-depth the it's for And the level, lowest lot as attention or of next in at large top-end we're the Rigel, our a nicely server a with mentioned, and SDS. I areas. Cernis entrance point Donati at As really

So really by where – across land breadth pipeline defense be full I'm air, and of those that could and the platforms. and market encouraged the by adopted sea

helpful. it's looking some I with hear new as about flush could, will that front. defense a military what potential from you opportunities more quarters bit you partnerships standpoint several talk along OSS? little we be for some behalf could should wondering if formal and an interesting And in announcements Very expect and we And to does the up of of AI there. relationships over and require that building I'm costs next it. opportunity, the Got terms that on that, on if infrastructure

Great. looking Scott, partnerships we've engaged in and it's at, intelligence we're build the something that develop starting Yes. here. artificial on so so to new

to thing. additional AI are They're there, integrated same their the go with than solution hardware additional As us for potentially companies an more We software opportunity of with end-to-end I we've things. targeted, solution hardware-only it that thing a worked customers, us. in provide for We understand actual through creates that a a the application generally the market there's bring to providers. integrated couple by AI offering trying do and and maybe solution. is partnering allows been more to fully services solution more does get places can doing find access to some spoke prime I've that themselves going direct or a to to lot The out a software-only, developed we no

and opportunity So to as to these efforts, not collaborate but obviously, explore we're partnerships, integrated starting potentially to develop we're on only more see going open programs products. to and

and some after so of a in the from near-term stated these provide growth span for we'll fully maybe as to opportunity, probably could see where be it'll positive will ourselves like product month concepts that partnerships others and of some solutions, that expect look we normal specific – a opportunities programs think with range then There'll and the or XX, and and capability. time I Those more you're XX, provide building of integrated services. line build going the there requests some to where develop more impact we'll company. near-term developing a XX proposal

So Jim start we'll say range. really more explore We'll coming as, and expand to the the that to over team the myself and those have Robert, on quarters. win and

Very helpful. Thanks.

Yes.

Scott. into operational just a production You moving Escondido. Actually had infrastructure, the a not from question aspect, we're but layout operation clear the even facility in facility have suited now, we here well standpoint, given on in only the

We things to like bring mobile to advantage take and and priced have well are in. space that those really opportunities have we opportunity of SCIFs

impact result negligible strategy. should be as So facility it or a capital the of

said excited Got it. if With Very you the could what to there on two And quarter. like, commercial I sounds helpful. Hey, and you the down, further of changes on the them in. equation. come were kind reprofiling the coming Board. Board some sneak I DNA is wondering of has very encouraging slowing I'm more to think side quickly, vehicle military-based autonomous the see some fourth It in new

Raun correctly. clarify, continues going heard And assumption with Just Dave be I from Board forward. involved the company my wanted that if to is level that a to

high the Thanks. on that level checking from perspective? Just thoughts

Scott. those. and two We're continues go continues stated. Yes. on and pleased reverse reprofiling those Board The plans Raun announce maybe look here Board to Thanks, the to order. some to Commitment QX, currently to they're is activities with changes actively Board for working more serve. Dave I'll Yes. has this on in to to reprofile QX. been being with the the made

there. good a So we're position in

what that looks commercial space. say, we're on production, scale that side, or in getting question the some some still in We're delays, would to large other like. autonomous I interested deployment Your move still big trucking the timing orders. inflection We're point seeing

that'll remain we're be when engaged and and that'll So customers. in with happen the still where interested we

really the Robert movement there's moving, we Europe, as a of building notes we some getting and I aerospace commercial infrastructure. in and Ancillary in kind just of number area, bit commercial. have to in doing months, coming time seen two here seen spent have a going of noticed while in are some you the stuff commercial we've some out commercial stuff maritime. We're defense lot months so that now here majority We've the to – that, move the a harbor in spend so or of composable the all of some where seen I've presented, the areas But time there. the little extra my more

where going added through Board with are first areas gotten Robert So we're I I say, still us kind gives on now kickoff big and seeing on I to number pipeline But that work a Robert's focus would interest as and are here really showing the mentioned, of definition some still we've defense. are promise. people of, and and that

so Thanks much. Great.

Scott. Thanks,

Thank Scott. you,

And ahead, question Brian. Alliance from comes Global Go Brian our from Kinstlinger next Partners.

Great. and/or I XQ. for much. buckets. from How welcome close revenue the how much on high seeing to couple in a XQ? a more are And And you in give wrong. in Maybe trucking much in maybe it's of third How if with can some I'm Disguise the the Thanks it's versus you decline was XQ? defense you in second then I'm level, help hoping can Classic obviously, detail zero quarter assume pressure zero revenues me on commercial? aboard. Mike, so specifically. revenue OSS, autonomous in XQ, assume was I much

would wouldn't that say for. the specific those right could I looking you on numbers those Yes. follow-up clearly Brian, breakouts and we you have with be buckets We now.

different have we've delays right have number the moved similar seen defense And actions to just mentioned across haven't in vendors. commercial if in specific side, to placement if we the opportunities call, Maybe of on of then, a time. The you something existing we as identified – moved in there's back As the order. just been customers the the actual had to that those similar side, very will, kind well, ask. as very of

way ask, different to quarters A defense in past already delays been there's some side. in

So meaningful quarter? revenue I'm a the contributor curious, second was defense in

defense move yes. in the next three XX-XX to we're two total So revenue answer the to still to the we're being company range of tracking that that XX% in more and mean, is there years. I looking into

Okay.

quarter, be defense, assuming and but to see stick going to it's Now we comments, knowing quarter listening to a third don't similar your hockey like gradual. XXXX, in sounds fourth recovery the it's probably

caller, the breakeven on you have sizing thinking the lot as the balance sound trying which terms on in other keeping you're your the what at least but investments current of at business? expenses How a in from to a CEO versus doesn't lower make you to do manage are new you of growth, side to Looking revenue? like previous investments right investing,

Yes.

that's what don't opportunity investments and I coming. are through give and we large now. through we good of in the working I a confident pipeline for think should growth. The had feel I gone there Robert as it. pipeline that's room us as number And in see mentioned, I've the

opportunity that we'll I on first and to grow the Board, have actually defense. in commercial think with The set, Robert pipeline both

to the able we'll build and And have so products be existing we leverage investments strategies to just that that growth.

the than And there's to first sorry, not that of not the Is question you're expenses are, with because where much of expenses. gathering? be SG&A significant they going be I'm be this cuts? half operating heart holding you've in clear, is, year be lower had the the and what revenues You'll rightsizing at the point to to thinking

That's question, part correct, Brian. yes. your if I of missed in first that I'm sorry

worries. No

those manage And prudently.

the then until in And fixed to lacks a last now a scale significant gross as there revenue recovery. that – last number will of line significant absorbed? And that is, it's on quarters. Okay. Are see in Classic that get so OSS you you'll significant question the need the see scale margin my cost had pressure several

fixed that declining will with revenue. risk The and facilities for Yes. we that have the with manufacturing the overhead be there

the are against actions prudently that to taking now in internal delays even We revenue. manage help cost

questions. all Thank Okay. you. my are Those

Brian. Thank you,

Joe And Noble Gomes up ahead, we Capital. Go Joe. from next have

my taking for Thanks afternoon. Good questions.

new are wins the I'm accounted going on from revenue think. revenue. about I revenues So of contribute that supposed calculating from to the If to But year XXXX, was reading with here half I’m of of million guys hit the in you up different got question you the Disguise XX of about angle. million outlook $X.X day the a about first releases, correctly for also $X.X here the

revenue the fourth again, So from the wrap projected head go around like I'm for sounds to caller the quarter. in that the quarter third how decline definitely sharp just we in trying previous And said also. my to

then hoped XX% years, product at. where in time can answer customer at it quarters. to we and – coming were right third we're the revenue for with our is The next the I would help going actually revenue is So we be had At quarter growing. the negligible some two here, number. prior OSS that rate Disguise they're of the there planned that zero that's off and that. It's same – growing tailing the had That's that's not core where is what we're just in

Okay.

customers And concern that slowing On truck exit the growth that you about customer inventory XX calls? that that was types would the write-off and exited, of there, is talked about be in your with slowing the autonomous top the – one necessary? that of there any past

one at XX no, market. for had the product the companies inventory write-off point, of top we that of this one was we're was And that So with that our the left. concerned not across

Okay. more And one me. for

You into moving work, secured of the kind think labor secure some And and need of side. facility. the you're talked on I some to getting classified the going about

will unicorns clearances And leg in demand – from these security employees arm because that I clearances security get security companies days there's some more ramp much to them. and have an a hiring costing of of clearances? other have need or market to a bring have up with people on How trying cover, current guys are on you that set so people that the terms labor to would defense them you for are

that thanks Joe, for question. Yes.

with a now. couple So people have clearances security we right

to process clearance, With start our to be the people. some of additional arrival facility we'll able

there difficult market think with to is I compartmentalized you're and special at in. tickets – are them correct, employees that especially those bring and a those find

to able initial I and going I opportunities in that secret be a be you're to able at and we're of and very employees we'll we'll that. think is find in of put that to classification, our the number mentioned we'll our where level journey to just do here, as do operation see level be what quickly of going able to –

pull that. we So I'm can confident

or about types couple higher time programs find opportunities. either needed types priced those it clearance find open the those have them. employees those find able to have to of tickets to up that'll the move us allow in to it, of tickets go we'll to we thing or that then security the we're doors that to had costs people those If And a programs. us we transition secure them higher if There's can find bring the to get and nice

be to we'll So able make happen. that

well to mission in the product be able in we'll the translate going likely still be need But especially a to classified initial lower we'll and most level level. and be But market able development, for unclassified people to we'll be we'll at going help at, operate operate the commercial the opportunities we'll our products, applications. the couple

in SCIF unclassified the the and use to allow space. requirements for able we'll be and and understanding directly us clearances develop communicate So of to our start, to the will more and customer implementation products

Great. Thank Okay. you.

Joe. Thanks,

Joe. Thanks,

Capital. comes Go question next from Max our ahead, from Lake And Michaelis Street Max.

for guys. Hey Thanks question. my taking

won't what another the that customers been well? hearing and gives other customers, you've me, from from just confidence things your some potentially exit your of as of one the you lose then you economist First autonomous trucking trucking one, one with

doing through in where and in to we place stand wins going area, that work Jim, I'm who's that Sure. some recent let, some been in market. you take some

Yes.

had type the and in going general So consolidation on the there. to Silicon of has in feel Valley that's the it market

we also exiting, that there's the robust, That's Torc we had design are while another are were keep that was products autonomous simple those and backed and large designing of win the there trucking of heard companies our in. truck many ones you and embark like towards some too are the in the are like like the by types keep bringing those There who market And Daimler that that still type are new customers have. that those ones that customer. So and were are player announced. Robotics, owns a a in that we those

guys. Thanks for me. Okay. it That's

Thank you.

Max. Thanks,

the questions more no time. like to have Mike this at conference we remarks. turn closing for I'd And back to

today. latest up free We've the everybody joining at November, always, thanks is future us progress you company the to and with is out speaking in feel time. to With let's ahead not Darryl, enjoyed or meantime, Darryl? and if to that, reach at call. the bright. today, sharing any as and go the forward for and wrap myself management OSS Jim, you, its In believe solid look with sooner. and again OSS Thank John, you strategy

Thank you.

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