Snap One (SNPO) 7 Mar 242023 Q4 Earnings call transcript

Good afternoon. Welcome to Snap One Holdings Corporation's Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions]I would now like to turn the call over to Snap One's Senior Vice President of Finance, Haley Pierce. Haley, please proceed.

Thank you. to Earnings Fiscal Conference welcome Full Quarter and XXXX Year Call. afternoon, Snap Fourth One's and Good

As a reminder, this call is being recorded.

from we like additional forward-looking undue Joining Mike forward-looking These response reliance statements, our performance, today Snap-On in may Heyman, contain John us make events or future management CEO; to of prepared Carlet, remarks CFO.Before remind statements expectations, begin, to would future statements and placed we everyone that be questions, are: your not guarantee financial should including, statements performance. upon to, and not but therefore, not limited do future them. and

results XX-K SEC.All believe these this statements are the differ contains on we most March annual changes that those GAAP are no earnings to risks materially. current we undertake based reflect the company's including the uncertainties, expectations inherent obligation identified or to only Factors X, information that involve occur to Although report in call. release management of in the accurate Risk measures This and of call press time could measure. reconciled as in are with is any call non-GAAP and filed on this directly and statements expectations These revise after of of our today's reasonable, events section referenced time-sensitive financial our latest Form date also the XXXX. comparable broadcast, Actual

investors.snapone.com. our conference that website is made Relations a everyone Finally, webcast like for will this call available Investor remind I on to would at be recording being replay and

will turn John? John also which our to Investor presentation webcast, the accompanying In our call supplemental Heyman. results, now a over website.I on found the earnings addition to Relations be can we've posted CEO, these

He performance some discussion, and I'll CFO. I call our Thank you, us results a Carlet, the today's and year, over this we outlook and that, the company you before appreciate the afternoon. more depth remarks call quarter an Mike give I'll will then and provide review the share in financial some background, closing discuss questions. of After begin by turn for and To welcome, our to for followed I'll open our joining XXXX. for Haley, everyone,

formation adoption, them continue technology they throughout to end allow will a software that industry started.As and network support business smart worldwide. to enablement, serve We our ecommerce including We professional deliver install, develop of our believe small professional do-it-for-me branches. opportunity long approximately joy, help solutions the integrators at the we the large term customers seek and and company that project with and secular discerning commercial smart technology successfully will integrate to workflow propel to professional local get distribute tailwinds Snap it users select, portal living Let's residential support One, their empower is partners customers living reminder, connectivity and and the durable and third-party distribute solutions XX,XXX security lifecycle.We our and housing to platforms is and construction our work proprietary products further our offerings integrators platforms, and service our proprietary integrator forward. and with to require. software Many to through

right over integration in of the tools Snap strong a full the conviction Nonetheless, States model with aim of at our we we strong resiliency this have market housing partners provide opportunity.While Here mid One, quarter integrator capitalize tough to partners. to the the we our to results United scrappiness fourth year on our environment. our and in operating long are term, business and highlight housing

destocking macroeconomic and channel top inventory headwinds despite global uncertainty, line Our team delivered year-over-year profitability inflation. growth including

million. generate extracting supply chain to XXXX expense as of discipline well margin contribution as Our our enabled operating $XXX.X us costs focus on increase adjusted to EBITDA

profitability on expanded XX%, the in from the an reflect We XX brand enhance our for than ISE Quality awards, the living professional the our we CE X, Quest to Xx of the new numerous Pro XX across Today improvement.We position, must we Tech of expanded housing these ControlX representing of integrators; Pro, number CEDIA scale.As recognition XXXX Connect there's products, operational a on to highlights reflects with and receive announced are XXXX leverage are of the and and Fame -- a we ControlX Residential continue we partners, our CE closest smart XXXX, at XXXX were subcategories awards included innovative Pro recognition sustain take confidence for professional CEO and best listen to further XXX X to software no with develop analysis in XXXX product invest of categories Service for ready next X, In launch this January brand of XX our of end approximately of as officially by XX integration X, and the of the that number we in recognize awards satisfaction operating this integrators. awards better build CE finally, hardware customer turnaround point don't included the competitive analysis; XX and We top experience. platforms, positioning number Importantly, a number Expo; humbled the Assist. competitor momentum basis Innovation including: ourselves lightly. year-over-year enhance within awards.We year, drive X awards, margin operating industry rankings new in Hall fourth across technology and CEDIA survey top vote

for software industry.ControlX to partners way our end Connect in that service. system leaders software portfolio through we offer focus ControlX program will industry the an the delights technology benefits enhance subscription were support support they on One, and more while mandatory manage services have partners us improve for valuable for transform a ultimately in software testing partners and These integrator incremental that believe After a us and X for an customers, in extensive ControlX has of clear and will be and both been development, Assist is demanding built years our acquire on Connect software end feedback, Snap major improving customer build must and starting all our reminder, offerings domestic to the over amazing the and and the evolve customer and this installs and in establish new late-April. August customer customer. for market the ControlX Since experience, align support acquiring a and a As we Assist profitability and recurring integrators updates designed to service XXXX, a ControlX time their increasingly complex to industry our of optional end and integration as expectations. revenues that

So post-launch far, been positive. overall the reception has

we adoption consumer higher course platform for enhances and results. across drives further second, converging launches though programs, the to experiences; we strategic open we single fourth this are our we platform X to XXXX, benefit momentum, continue ControlX their with the launched serve year North models enhancing through together several all margins as for American our to platform our with the quarter. as our drive States, in throughout which in products the portfolio, we our our in seeing our net expanding to And of customers partners part to opening our XXXX.Complementing communities, to our ecosystem we're perspective, of planned go initiative; beyond.Over our branch product market of and first driving product and have initiative, the optimize partners, in this from many intend far customers bringing value outlined our pause our we've are expanding partners strategy omnichannel these drive new product of in and and key we adoption, leveraging and have and to that plan are a with XXXX more We're now wrap better From up our our loyalty strengthen ecosystem already categories, presence to of Snap positive end year we a operating customer brings continued locations to by and One. One key adoption come year another system. end better initiatives: total local turn and we delivering omnichannel continue of innovation partners. United finally, relationships and to strategic additional branches XXXX, during branches We share slated innovative and efforts to for with a large new XXXX and the as offerings opening service continuing including and our With the excited And adoption, unified end. including online gains portals accomplished by in X openings a new weeks.We number first, end market in our operating XX category mind, and best-in-class relationships Snap of This this our partners, our experience solutions this products, with for delivers this yielded coming partners. briefly X migrate year in our the a to branches experience number half finally of in also pleased

growth Integration operating infrastructure Mike. within second as expansion those evident supply scale and over to chain going in for margin on cost also previously to The is largely our now within the our These business, our achieving year.We're expansion. successfully and to driving to strategic results.Let recent supply model. continued our has will related While chain we then briefly expectations, investments and created contribution Snap keeping to in our operating initiative this have challenges, well margin prioritized try COVID drive investments operating is turn forward, our growth this inefficiencies our are call Through One. me the business. continue and I'll support comment results. our normalized activity driving as This near term yield extracted technology acquisitions, year's now leverage sustained inefficiencies, partners we outlook team completed and in

conviction environment. over pressure our of applied While last few remain around Several of it's hold demand of prudent term. high also in the view have operating the our pragmatic short current all a we think maintain the quarters factors level growth algorithm, to a we modest on the that

quarter, However, the we projected last estimate. as we level of new we normal that inventory at its believe that is industry now arriving

future.They a healthy These optimistic a to with Additionally, projects. changing variety are the while integration spending projects in partners and continue ability market backlogs highly upgrading relatively remain and a conditions. remain about base pivot commercial adaptable proven or to to declined can to include products of have install pursuing successful has their our report bit, new

entry-level for unique to and points that price business this end we remains model more end support partners from flexibility and growing. housing a projects, us some We portfolio, integration pipeline variety resilient we're product ability markets.While to our budget and serve our softness conscious of which customers wide across have residential with believe allows high-end diversified is commercial a seeing

share confident some headwinds We XXXX, bounces winning as but stronger continue expect even to that we're and company as an emerge the will operating demand back. into environment we're

to greater inventory beyond the term; our branch and growing our new the in efficiency by to transform and position adoption the share increases as we're achieve core As commercial we're especially a we're continuing of that innovative buy by in the the over products optimize our markets, remain to own fourth local foundation rest industry as week-after-week the drive and Assist way industry the edge to our wallet to and strong operating win business, to the and expanding demand Mike product and that, XXXX in market new come.To including: operational environment growth and Carlet, and Connect footprint; look consumer they services full end only discuss outsized by integrators the a in the with the to we years results share us ControlX in work infrastructure; we're ControlX finally, I'll employee our it and products that and further have channel nonetheless. in XXXX, uncertain, from of through align for growth the the plan industry such prefer.With driving bolstering XXXX, turn our and for we our strategies, offering whatever Mike? consumer quarter CFO, of the of in existing ultimately best to ecosystems profitability, maintaining expansion position the several categories, will and our support not drive this, introduction products; a elevating engagement investing near constructed achieve Snap introducing we year the strategy to we call expanding but through expansion making team easy scale to experience by outlook benefits our solutions we on detail. we're of our executing cutting to but in to expect Accordingly, One integrators, we're end our with

our fourth period. quarter $XXX.X I'll full million, and year Thanks, the financial comparable quarter in ended the $XXX.X sales Net John. start with XX, the talking fiscal December for XXXX. about decreased ago from results down in year to million X.X% fourth the

levels serve elevated in year comparable the attributable the been our or increased reached expect partially in a Even million in levels sales working year part $XXX.X data that around XXXX, change we from decrease from XX% with the $X.XX the X.X% and has in attributable peaked a destocking partially year year normal increase the period. billion general do in major acquisition that stocking full December sales XX.X% our billion a to in losses to to earlier, million decreased costs adjustment local adjustments by offset XX.X% largely branch net expenses growth administrative period. and fair fiscal local through to remains sales long-term receivable. our strategic up a consideration. fourth and the see XX.X% change in of The of investments, in flattened $XX channel credit expenses was or their did increased to selling, now in SG&A of rights The our expenses to associated sales, going from a activity ended shows in our For primarily value year the costs.For on notes of in a This by openings with ago past value in QX. net pre-XXXX destocking full and comparable their associated partners provisions levels, net new forward.Our have X.X% past John elevated increase headwind in or ago SG&A again, or SG&A contingent in integration-related inventory expenses sales notable offset XXXX, million net was mid-XXXX, the was $XXX.X since suggests to XX, to and inventory X.X% or slightly $XX.X ago integrator $X.XX sales costs fair decrease though period.As indicates alluded to the million quarter data while not net inventory our as from data in opening to branches year; value year XXXX, for and contingent

Contribution margin, net of in net or and the which input $X.X XX.X% a the compared of months. cumulative the ago in by as million execution Our to to for in net net period. XXXX, $XX.X sales new million percentage increased comparable as chain the to our this ago offset year proprietary we in quarter, loss the $X.X impact by offset increased Contribution taken Again, percentage period.Contribution fourth mix. chain adjustments our the net brand million third-party of net last products.For measurement price of our X.X% million X.X% was $XXX.X incremental up million $XXX.X modest branch full quarter or a million to initiatives, momentum partially full or initiatives margin increased sales ago a loss driven the in due XX net price performance, totaled cost of management the lower comparable net margin $XXX.X of as year, year fiscal year of from sales loss XX proprietary last continued million from local drove period. mix, cost the the efficiencies. to as And XX.X% compared non-GAAP of in a ago well due contribution largely product in from largely fourth net took months comparable impact in adjustments cumulative sales the sales supply million comparable as This XX.X% as $X.X increased was by loss supply margin a lower of of management of cost or year driven product a the was to by teams partially the XX.X% net assortment largely operating from year period. openings which well of of sales $XXX.X a

or totaled ability million non-GAAP in the X.X% which sales in increased inventory third-party to and $XXX was XX.X% XXXX, our non-GAAP made net $XX.X $XXX.X EBITDA, year partially reducing overachieved year to XX% of compared year a period. strong quarter the year comparable For year the net to the cash fourth period.Free of ago This contributed comparable the the XX.X% compared full of inventory, $XX.X operating to the rate ago sales and million $XX and full performance, period. negative operating sales $XXX.X year-over-year of $XX.X flow, XX.X% contribution to measurement $XX.X to increase stated against full ended ago in X.X% the period. the in X.X% XXXX offset XX, million million. million in sales fully in year Adjusted sales towards primarily net progress revolver product comparable net year $XX.X of XX% XXXX, increases goal down X.X% sales or of margin represented million or with or comparable our measurement million the or million in inventory fourth million. $XX.X our $XX.X period. year income, undrawn year at non-GAAP And performance, ago levels.We performance, year or in a million the in the XX.X% of of the X.X% from build to EBITDA or from sales and net sales XX.X% we cash by compared income, period.Adjusted equivalents to million adjusted free were ago attributable sales million net cash non-GAAP for $XXX.X million increased net cash the decline measurement full million total to net This of end of of ago of net the the $XX.X in attributable comparable to increase liquidity in the million year to in net of SG&A These a sales expansion, quarter XXXX operating measurement increased net of expenses.Adjusted of sales to in our compared a of primarily a performance, operating $XXX in of flow pay $XX December capacity ended or including XXXX, decreased in the significant net revolver

a position of our liquidity mentioned operational company this excess for flexibility annual for of As and current are last capital the current quarter, extended pleased context we with QX share program repurchase seasonality in of to the utilized in our the it TRA, and payments December the reminder, portion the that the employee will allocation But XXXX. related X business. by to general XX, the the liquidity provides.As plan overall, a be the incentive policy, Board of year

the up These into reminder, are that to this executed allocation reported $XX few domestic evaluate which integrator. are we've As of addition million company the to continue the key Board to extension, integrators previously financial million domestic line indicators will count provide a With the have to-date. curve related spend in authorized capital has transacting share intended with of strategy.In share we enhanced key visibility we our KPIs repurchases the metrics. repurchases, $X.X to performance to-date, metrics to operating and approximately a that of transacting

On integrators, year transaction spend John, integrator to our as destock annually turn the of domestic increased by while for with outlook we call their spent I'll a few back In the integrators take metrics these present transacting fiscal a number inventory fiscal basis. decreased to just domestic year on on continue I X.X%, will provide year-over-year per a 'XX. transacted who, average, fiscal integrators position.Finally, basis, $XX,XXX. XXXX, XX,XXX approximately We before to X.X% minutes financial over

to of provides Snap reminder, believe our we as annual for indicators One adjusted as guidance As these as for sales metrics business. the be performance EBITDA key overall well net a

XXXX growth while much Our our also persist XXXX. believe we full 'XX performance that guidance in multifaceted we our the and will uncertainty market considers have for built continued strategy confronting conviction the of

modest an of volume, X% previous X.X% offset adjusted from a actions; as channel XXXX in basis.We fiscal of $X.XX EBITDA expect range year-over-year will channel an ramp to on growth range the sales primary we destocking We as-reported X.X% that ending on a to factors inventory, a, to an compared of change channel year past of sales increase representing flat XX, between over expect contributing of and fiscal net from in the this sales as-reported b, expect This in excluding a of performance occurred as X% prior net a the we believe million, decrease $XXX from continued X.X% million as of billion, market-driven partially year.We and 'XX to tailwind change an increase to over up sales lap the performance to billion pricing X%. be: between by $X.XX expect XXXX December which year year inventory represent $XXX to increase range the to basis. an local to the the and reflects range branches impacts very to X.X% we well

expansion. Our ongoing adjusted additional adjusted drive EBITDA guidance EBITDA to reflects commitment our margin

More see indicating back dynamic we a the in well of this it as XXXX through We to factors, of reached half new a prevailing well headwinds in year. as have to margin expect mentioned, contribution expect the carried our inventory customers results as serves material previously efficiencies of XXXX, slow a with selldown of seasonal continues in both of the not to on include we occurred expect XXXX.That expense middle as at And of information, supply continued Based results. about believe XXXX strongly some quarter to the specifically, the internal disciplined majority we this source the of level bulk second momentum more our customers continue trends, housing inventory, as call external indicate stemming we on the will as from my -- the industry. we in appears to be the of activity, achieve integrator this But with as own and over that XXXX. return have as impact our demand changes comments. year. summary. the state think XXXX to completes continued year-over-year a activity now quarter of chain management.Finally, look second I'll destocking back settlement reports when half half few our through growth steady least do 'XX, believe likely across benefit this sentiment, our the data turn operating in our the the a in growth trending our first seen would of And at sales third this by to some John more for John?

A thoughts Q&A. we Mike. closing hit few before Thanks,

to long despite ability market year.Second, as the margin compared strong margins service, leading the adjusted strategy. team's our in year in really we and year, our supply alleviated, more local costs additionally make additional related industry in includes our we This -- confident expectations openings, last grow markets headwinds EBITDA to executed product This operating intend of launches, growth. remain such consistent our committed offerings contribution for margin gains plan as overarching First, and coming and the term we proud commercial are expand our operating to chain the we expansion our we to expansion growth our made branch growth remain via new in and progress excuse me. on to proprietary we and faced,

Connect offer scale businesses.And and also experiences I've as previously, about As all continue the Even of believe their to in support Assist the mentioned we software smarter platforms resilient homes our third, uncertain today consistently environment. in businesses better types operating trust in growth through and finally, dynamic partner that At strong an with for more increases integration business and the the decade, said vision our environment, that the and driving XXXX ControlX those future. our investments that the remain and for we invested imagine to one our in seen We partners, ControlX and be as transformational we're We've offerings. next can to integrators over One a we One, will call in our excited customer, model confident in margins Snap way we us operating demand become only are drive that we and capacity that, highly I we diversified before, and macro grow for very and will solutions and position integrator, and believe execution our Q&A. time operating over is for end please believe time. to for that to Norma model prosper beyond.And a Snap our the open excited our for now that implement for strive

comes Morgan from with of Erik Stanley. the question Our Instructions] Woodring first line [Operator

just and detail a expect share one much trended follow-up, maybe of do the that or do I just expect to compare expect have -- Can you you trend integrators meaning -- Maybe be? And lose? many a kind We went just I of And you And spend how is give XXXX? Integrator to through the how that industry, please. first you how in have how why bit X. to you how just then level. were the on gain that us for to high in XXXX. on might broader

XXXX. year the components consistent think Sure, our we guidance count Erik. on doing? it, be our this we with and you about of for expect are would that. relatively as How jump in think I integrator I'll XXXX to

into go Assist. of is the Our on is Connect XXXX focus we and launch ControlX

Again, them now, platform that share We driving.So adoption add year we integrators business the activities when expect us, adoption is last more We're year, our of pretty about, market to the guidance all it. buying next inventory that of it's of time, adoption of impacts? But growth happened going really obviously folks now on generally think inventory we if share really platform start we X a wallet year, some the the and to from the right think that's some market life it's every and a turnaround for noble And X% our is X%. go talked bit retain John we're about number we're come right business. the obviously of what there's we their what Channel the the As about components the What platform are going to do. is from guessing us. do? to activities to that what's have. looks out of continuing to wallet the market but for activities there's people There's channel to like do, we what's going would challenging. majority as

up predicting the to from we're then our we further to down. pull-through is to Anywhere think the market.And you to share. from ] have end wallet and the information guess. indicate of opportunity the grow we the we're our for guessing groups, so about predict data more buying market market of flattish thinking about go, share. we from confidence with best the And out that trying X% we to continues as [ that think growing get But share year are the the industry The how talking our we customers, show in on we that, to and be year. remodel at and market that from housing and interacting

expect to happen. continue that we so, see to And

points couple we're forecasting share drives talking that's spread not a that of we're year. of next for growth significant which the performance However, gains about

think a one XXXX now or ecosystems on are XXXX and in are as XX,XXX who segment we at constrained Erik, just from time during before the came delivering And things partners, know. adopted customer. that is to as Erik an products end me follow-up we there them profitability standpoint, product on innovation, where Mike, question. out very drives componentry a I how you understand of especially eased that up.And the for asks period were the them more of let fully experience but we of lot of were add a and better integration same we that time, significantly our a inventory we for of certain focused is his have

to to to But focus doing the the of shifted ways with have, number our inventory we continuing we're number to we're would share the some easing has I that in we're integrators now this products see And starting of and availability up, we're of add so, add integrators. to; and a success. driving And to certainly say looking wallet. year,

be will your follow-up. that take about So this with to something talk Thank you we and continue all. you year

and understand for us between understand so XXXX? leverage operating curve they in and you that's as provided can some of And the management those No, fair. that in pricing we nice Just question contribution shape kind margins EBITDA the get this how relate contribution that of Obviously actions a Very some chain contribution cost initiatives. on your margin. you really on Obviously, no. expansion it on of made contribution just drivers XXXX.Can significant margin year, of improvements a guess margins pretty had us. to for was to just factors some the guidance I help supply second of you me. you that

Mike?

Erik. to contribution we specifically. guide the Thanks, Yes, number, don't

action If about done 'XX actually overall very pricing actually up, last 'XX. have action late expect in 'XX impacts pricing thinking down, it. about was some pricing went pricing blended we SKUs a Most expect pricing We of not is we contribution that minimal all but out change pricing it We'll in said there.So small from growth And always that, actions, continue X% which are based be margin to carry you Really, [ We at do component to grow. went on of market SKUs a year, that having conditions that price pricing an last additional X% went this January. and into some about thinking ] 'XX. year-over-year. overall into in announced now, over effect of X%, little year, were think we're as the year. in went about

margin our expansion we the driving to has as doing chain. a team expect sourcing suppliers, standpoint contribution down, we across been go do see forward. of driving lots from work cost Our continued supply with efficiency And

of Our JP Carpenter question next with from comes Morgan. line the Cory

hoping as a through around early monetization you're on and the I we bit into specifically the adoption you you're year? maybe and recent building guide product could software wanted the progress on to ask more launches, the what reception then expand seeing,

customers, the top This experience tens of with Cory, will, on you the the also think ControlX And period, was to hundreds, if with beta, partners it's top And of off launch, Parasol them. where of subscribers. quite some some, announcement our we XSight them. with summit, the kicked of hundreds industry. we've say we X notable spent had over of when and in Well, course after XXX,XXX I days X we invited with a I was and pilot

been an provide on the to it the way survey had our and And the with press I'm have a the And the themselves. of provide that I I the end it maybe just of dealers we was software staggering. hours literally see the like people pride inside Assist, amazing to optimist.And while met days -- couldn't a great X pleased, XX mandatory, the they we sentiment summit, They level their really subscription those a fantastic. with the as the not when may they think, attended for or service have to was on exception response coverage, may reception day. staff afterwards, not offering with don't offering who was did columnist. where a week, support It service themselves was and a do the can't customer. more manpower customer X end me, more

sales And sentiment. were that.The with so, pleased quite we

The we the social There's you partners our event. interesting educate to the had been there force and educate ControlX over top dealers from media out sentiment we post And terms if them. at who other there's but ControlX so hundred exceptionally will. nitpickers, partners, nitpickers So what's of continue is been but forth, really of weren't event couple XXXX the strong. sales has in watching always

mind of not the in we have What this won't we're the mandatory. required it, way, though our own to started subscribers turn and the summit, is of It until to done market increasing. we cetera.Literally So it by like giving the the not to end is see it conviction. come starting about week online my becomes the The till absorb the some terms seeing time -- Street today, strong April, required of to numbers, even it's et it's We're in salespeople teach their the have guidance first conservative. we in subscribers online. coming upwards we've really after been pace

U.S. being We the now. launching not this are only launched the It's right U.S. outside inside

inside are our We models.

are are that offering of Connect to XX,XXX ramp start in attach able to that these than talk the end to less and We'll for We them, our we'll of -- the have year, subscribers. rate round the modeling X launch to will be to that of Assist Premium. levels about quarter.We're are Those you the lower much by so May. second XX% after numbers, XX,XXX more the the around have the assuming subscribers support, with for a really Assist

expecting some I think, year there. see By ramp -- how I'm early this year. this that's so to upside next will

because booked because to So revenue anticipating don't kind start it is all up by installed. of revenue there's difference That our XX,XXX the they you their system translates, subscribers. to add recognized the exit to run revenue recognized rate. when in until We're be paying high-teens way, versus between a

are subscribers have amount million. year as of And I to we share with applied subscribers be of quite man that do revenue, we the significantly sum next should And XX% a that, we plus outside the fee year. growing fairly of numbers. about the a up, this grows. year Connect and percentage $X The Since -- this to Assist make it the fees. mandatory we work, would $XXX year of of integrators those roughly XX% work, more all say recognized The increases depending tested high-teens service offering tens small available service a market in $XXXX, a offerings offering that roughly on so, or elect. the point you to base $XXX. the install there. year. of $XXX millions Those United price are cost all points which But offerings now. phones XX,XXX into this expect Think at Those the either XX,XXX about States.So well this The to

that's so build the model. And we how

the numbers year. million this and let when do By you'll a about none Parasol. if me for sound so second, I And those we right start $X $XX XSight way, with with now of million big

it less mix, would And and service around with offering profitable you that Connect. install every million X years for Assist, that that's of transform you develop think subscription of end years, the very But who the put XXX,XXX. $XXX our you and the not revenues. think with years think to So base, integrator that When apply also it total.But be the this. so of if roughly subscribers product. up we've is offerings that well one than couple there top or is building yourself the installs the existing our apply over out history This trying every revenue. an revenue. our all there. invested think service million and time X include you $XX customers of by like This can you of XX% does about would penetration ControlX that been Parasol I'll for the and to past XSight XXX,XXX let can recurring single of install base spending our creating We multiply company. P&L highly we $XX of we product, transform why out want drives million of on our recurring Then somewhere over is you XXX,XXX in we've $XX us of P&L stop why

I That was it. comprehensive. super appreciate

Our line comes the Volkmann from next Jefferies. Stephen of with question

Or of there SaaS-type margins, there or John, strong that cost other of was mentioned we reasonable in on be should these recurring mind? to you some keep those kind just as And very normal XX% margins think would in something? it just like comprehensive. Is revenues.

that XX% there's share the different offerings. the Connect of think integrator. would revenue, about with the is of we -- There's X think And dollar I model I way offering. a

to other X% So XX% that, call some the goes bottom it against variable costs costs. line. There's

as then there specifically of some margins so smaller of Assist get them product, But excuse the in have And similarly.But me. cost still we gross with we project And that do the mid-XXs XX%. a We sales, think share -- margin offerings, get for work labor. terms because have to XX%. a think of of of at integrator. They mid-XXs we're kind only

so you it. about think And that's should how

X.X% that we cost a quarter, of margin forward? Is contribution in maybe particular to your Is little goodness. done? the sort a going from can you waterfall can of think granularly, more that guess. and that then various that, I we're And costs the of more we about forward? going kind relative do should catch-up Mike, expect in How bucket there

I forward. think stretch. Yes. grow Steve. not If expect that any we done going by to don't Thanks, much we're it

as out sort everybody the system that's whether you lot a there. transportation, that other doing, self corrected, some about the think 'XX, of Ocean that waste is 'XX things was were versus think I of

the is credit driving So that part teams something from incremental really of supply just Not worked make additional to take that a that everywhere supply X.X%, focus have on experienced that happen.As away continue as hard to to we have I think, all the chain chain. normalized. we go everybody's forward, opportunities across things have

that say would we year. points cost internal conservative have. would relatively so a XX basis next improvement forward And expect we additional go from we we That's that, activity as of type number

that But than Our think think our I still doing higher from activity effectiveness activity what our generate real there from that's That's teams efforts we can think to supply as correction. about guidance -- really are out But That's in drive there. our the that and is from internal forth, the chain. we're efficiency market upside or hopefully things not goals that teams. with are that's that. you putting we

chain and for getting products cost componentry to they of all before. now out issues out of doing the the how which chain, the was supply were teams, and take COVID are teams figuring these Our to our that way, are out back engineering industry. what supply

replatforming on of the and with done just benefit But And company that of those think margin, that. of engineering, has I we'll in of out those teams. terms Some industry will will to terms call working of to I retain some see efforts purchasing supply the that to pass of of operations, that the our price. out amount want chain in continue

going that quick final visibility a into just then mix, one, any And forward? XP/XP

X expect we think things I to happen.

But state said, minor revenue about say Assist beyond, offset this impact year, as Connect is pretty the should that to bit, year, XX% ended not to slightly of of we'll in XX%. from earlier, think, steady as forward, to John hold mix going expect of don't in down for While next year, more the future higher a of year whatever basis. couple It's offsetting expect the about TVs that ControlX stores, our the at to years. openings, RMR products and see right down.Right on which of the store that.So incremental the think, model, think for this about mostly that's our the XP models XP/XP to do XXX be in local mix close the continue should me. drive front little that by 'XX just this continue RMR I the that this to it's with offsetting, continue percentage least would to local at at know, the change the we add grow as store points current mix might what introduction XX always it sort sales. flat a driven relatively like-for-like basis basis, future. and happens We the local, would would as compared XP going to but think openings was, we a on at we a local expect I that, mix things XX% we now, we and I quoted have it to we of proprietary that after continue year as I before. I slip about that I'd grows, but product, And That's the

Our from the comes Robert Jamieson of question UBS. line next with

that locations? Congrats just all numbers there stores the think we operating to expect about you is Nice how think, I pausing I'm should should thing -- curious you there? but One transferring the performance. on benefits new a openings, today. margin system. store margin I these you're single talked what we about physical know

margin There are small operating some benefits.

is we each I existed platform, a we tell whole of very COVID The X-year over suppliers old operating pre-COVID, local the back this been world things maintaining We're supply for as to ControlX and us XXXX single really legacy the those you all disruption and X can a do in other in old into businesses do.As the we to the our a bought what think the of those plan the slower ControlX systems platforms that inventory company. lots we've and portal to X and AV And and U.S. that the about had platform had 'XX. combined If and in on supply last lot almost one chain that all into our we've in different instance. we're platform, the Snap X Snap years for folks X everybody consciously caused on focused things bring process. the together, we've go and in have disruption years chain

of on We have about as week There's half stores coming. of our our this operating conversions local new platform. more

on, future, that to We efficiency. on X the future, being Where be effectiveness have you you're the to with our the huge forward million maybe of have by sometime don't messages having with of around and think marketing some benefits the of soft provides the or out that more year done all do. That that going in bottom it's work a we system expect different the But all amount, is not $X that able $X in even million we stores. maintain operating the more X effectiveness. to line have consistent do middle there.And to obviously platforms

to some of Snap have stores this coming think There's local that to international to really together. lot have things the we the we about gets a from other but and of consolidate. effectiveness to continue together and We systems continue standpoint, different coming have platform ControlX a

about? on kind And the that you to half, like I the half I'm XX% the XX% then think half, Very said about expect in think a know in one Should looking just second we to in more great. seasonality. to history, stronger. back if second be embedded fair That's of that quick is helpful. guidance first like like, in

Yes.

the think of I really is me, market activity. the front directionally in don't this quarters think but I have issue I

in now next no turnaround. see I a right we're to what of expectation there's optimism to market the the I weak continuing year. dramatic months share saying is and a think the X, back be market is think on there X and half continues is going bit But we're the capture the to

is again, and more dramatic which that business, we're to of you a is overall the we timing market store the XX%-XX%, well. local of just openings it's always I year there as So of the XX-XX% as little the activity bit as them think I EBITDA seasonality be this usually that But impacted some go. go anticipating. There's think impacts in even going given through year

comes question next Raymond James. of Adam the Our line from with Tindle

discussions on overview On if recurring on a top. fee a When software was and comprehensive John, and could to probably it's the you here. through think of wonder suggesting return on hand, the I based you minor one wanted the strategy. materials we release, maybe that to pricing I went about platform adding a helpful. that it's Snap upfront One, the installation bill very you're just a touch on part sizable the of

to lot expecting On are stream. and customers the kind of capital-type an purchase the that of other a large hand, pay ongoing not have one-time

at with strategy?And maybe through time. could strong analyze come you that laid even the over the would be, piece So looked like this, you somebody like how you on for I ARPU it's question And perhaps feature second would think you become I a expanding was when time that did that, maybe whether standpoint. that pricing how ARPU how from case to a Tesla do or take there with an very very material be out wonder over this and the other material us to models guess you more features, there become the additional just roadmap about that?

to you. Adam, I just congratulate want

We pays think We good squeezed price by a very besides well customer for -- cost I single call yes, low in very significant way. devices. systems, of into acquisition done. a of and a by so, questions one, questions, range, of so there and number light the for this prices room, way, typically do our detail, the All end looked the the at what we system. number you

is ControlX for Connect, subscription a that free. there's While subscription actually

into was, XXX,XXX solution. small solutions product a our And is would robust that's hope testing is XSight have installs. Now, over that free more the But number we subscription, time.The pricing price-sensitive a step-up what called other of they that for over for our actual the customers of customer, there a use. element we

product a have dealer charged that that $XXX it The end then product. for up sell the We year historically the dealers to customer. and mark around

we up manufacturer a less good at want that you when and software, this looked to to was that not the asking get So do, a cetera.So felt to improvements that is have not that realization offering on, the helps your $XXX. were did keep simple. homeowner, that market that we And annual $XXX on time used all in our lot to to the software improve that the model system recurring software this your because is of sense have isn't improve Part We which at more the of about to from to pricing way, build one-time, of time. decided notable just that it. it then at is that was et charging than number is system, number that see of addressed by kind end-market keep the the system ever which was grid we what Connect, system pay. a plumbing the ever terms of the price updated, and will security this the how was behind or the able the we provider why a messaging current system integrations system we this, Tesla where into the doing you like, -- is, with moderate level, fairly market continuing first looked a the a the willingness standing or ControlX runs to number if to buy of of who And right.We you having felt is your or to $XXX. software is to We you're willingness And pay is you over the committing fee model someone ended to year, this that improve revenues. of would kind

the the it So did we out build and billing platform and with sharing customer recurring the directly revenue the includes integrator. for industry, that

one.Two. that's So

premium but is also for we more over Premium pricing Premium, incredibly with the It's through think XSight, and benchmarks. people mostly year Assist We service $XXX is roughly and We've Assist a and we addressed Parasol. experience I anywhere point year know a the think with a it's with place, Assist what do from had way, charge. than I some $X,XXX by dealers the think to inexpensive. and Parasol, super-expensive; ControlX had which others Assist can't -- $XXX all

being numbers of the materiality, I start we to spoke model see service of around after in over then I very like with terms can Advisory big a $XXX worthwhile in for so and market Board, mentioned, the part that felt And pricing million. number or our $X,XXX.And again the the our was what of $XXX members time, the either right about, get you of Partner

more those If $XX million XX% one, operating are half our add and transforming sites some multiply year, you $XXX on half successful base, a again, businesses. our at number then on run today our is, XXX,XXX of services we install quite just margins, of base, top existing significant. income If of times install

with today think thinking the great a that significant component the front. out of We the the a So have few, of surveillance yes, the continue the with It's came software market's customer deliver a for Insights. the talk Software-as-a-Service healthier off that evolve it. it to product company. a customer. not Luma to the services. X-year building big quite we'll I models now right company, reception. end We've in in Luma will with It's got for expand software lineup, product, we and we'll old we're so about xXX We time, getting to services for that continue think video my be we've I started got, industry analytics partners. about won -- it.And one help there.And product which, cybersecurity and up types included is with XX. Luma awards. those for other that's But number we The our we're ended rails comes becomes our We the past a it over is It's And used system. the The of opportunity and we their to industry's think, Insights, to to provide subscription up year. service a and this feel develop like new then free lot integration ARPU,

wondering touch if end the a structure for you on like And brief. right look I'll a of more that the it's what little cash but piece I could at maybe Mike, year? sorry X-parter of missed, capital mean, with but for only the bit should and helpful. keep just follow TRA that it I expectations super if flow Mike, That's I XXXX, in up

Yes.

payment that already in QX the So $XX was -- was piece, the on made being made is actually million. TRA

to guidance, minus, today.As $XX we that believe to still but change expect a cash [ to at we grow We right on now. rate I flows, For some is don't run of Obviously, we plus our least as think there would to be there's opportunity are million. say the growth, inventory on would we at all level, That's our that that, about There's bit. cash think what or we flow, XXXX, inventory a now would far out right guide could subject that's kinds the here things see specific if inventory, basis. that do ] as change. little right sit we ought be about expectation but

Don't probably more of maybe we tell said, little telling inventory team inventory.Having normal we a some there. a expect back it, half the as growth, we a should get That see think little would benefit we right to no open stores year. in we we'll see keep they've outside a so, opportunity growth inventory we But of our reducing got few in And the my no significant little them, in keep significant decreases. that, would growth bit revenue, bit CapEx. of If so supply overall, see more take bit we chain level. it's EBITDA the

inflated our think last the years little due a in the of of CapEx Lehigh relocation bit headquarters. our to I ] been [ couple has

think I spent. we

is half million I 'XX and paid. a $X 'XX.About TI million third CapEx year; of each a the $X million think number almost in was that, about $X maybe in actually

it if Working ], as $XX forward. door million, couple we of of make be wasn't about last really, And then [ real revenue growth. about a pretty should capital, cash be some flow, $XX cash in actually million it's in rate been if run you continue around neutral, But million. to And classification. with operating pretty much be go line $XX which CapEx, growth should robust there's with so, decisions little bit allow think a years, the everything else free good to our and should us the

this Thank this Q&A time, now Heyman [Operator like to concludes closing At over session. I'd our back remarks. call turn you. his Instructions] the for Mr. to

I in, want there. to team. all week I you partners Norma, hard out. our thanks who all all, so week to One shareholders single integration are Again, want to out the very of out Most our Snap of say much. working thanks to thank

end and You in integration day you guys been our future. everyone. for amazing, customers, the will dividends it, our efforts every have and deliver Appreciate partners shareholders the pay

today Quarter Snap for Fiscal Year One's Fourth and Thank Earnings you Full for Call. joining Conference XXXX us

now disconnect. have day. wonderful may You a Everyone,