CalAmp (CAMP) 22 Dec 212022 Q3 Earnings call transcript

Welcome to CalAmp’s Third Quarter 2022 Financial Results Conference Call.

As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference call, Joel Achramowicz, Managing Director of Shelton Group, CalAmp’s Investor Relations Firm. Joel, you may begin.

Good afternoon, and welcome to CalAmp’s fiscal third quarter 2022 financial results conference call. Managing Shelton Achramowicz, Relations CalAmp’s Joel firm. am Director Group, of Investor I are Chief Supply President Gardner; us CalAmp’s With today and Lowstuter. Officer, Binder; Nathan Chief Kurt Executive and Officer, Chief Chain Financial Jeff Officer,

Before we you call contain may to statements. that this forward-looking I’d begin, like remind

periodic are are implied These on cause While undertake our to actual statements update they are to differ best by earnings reflect and projections. and risks discussed materially current CalAmp’s forward-looking to release issued factors the uncertainties in to or SEC in our future filings those these today, revise circumstances. results events risk any statements which no forward-looking these available forward-looking judgment, from reflect We subject or that could website. obligation

begin will call company’s more session. briefly by the review Gardner. of will during Nathan Jeff, supply detailed review over Jeff Jeff global provide President CEO, of Kurt ahead. question-and-answer the a today’s the and chain, turn pleasure will the to the which it’s followed with then CalAmp’s call please financial a a state discuss highlights, great to my operational With Now results, go of that,

months. press for everyone shortages that over reduced we today. of become us several $XX last the more the global globally are have component Thank shipments The of announcement ongoing plaguing update and month. challenges thank that pronounced million as the outlined third you, Joel, our you on call reflected for supply the joining businesses Revenue quarter a past chain business result in

of insights. strong some telematics we levels supply I'd two order Chief chain our add more efforts, ask quarters provide solutions. reflecting to our and our CalAmp's are the seeing and a Nathan? As the Nathan remained has past Lowstuter additional assessment our regarding over at information backlog Chain In context investors the Supply to mitigation for Officer, result, record demand continued our

Jeff. you, Thank

global key you over management, of can I experience June year have past in and anticipated were we with supply many over faced components chain I've second in previously like shown year, several a fiscal marked you decrements control, impacted the tell delays As project wafer quarters. I had in quality last of to shortages our in manufacturing to of not delivery half signs although we with early and companies improvement industries, the ship our chain driven the improvement years never the quarter global had across by was the And challenges, one impact know, the some allocation XX disruption electronics semiconductor late global several suppliers the and to upstream CalAmp that that in deliveries. against and gain multiple such joined in many from Like our continue seen a demand. component management. to today. access our ability order ability we supply This of

only of a suppliers windows project result, below to It's near remained as fill many our to months levels. overall difficult been three out. limited delivery one term well order inventory have As rates material levels commitment

have plans build further very deep our tactically bill our involved of my to added couple material, the customers. CalAmp our which components, To situation, within for addressing in situation? how the over overall we for layers tailoring challenges. supply notices of has last the seen life certain rate the and First, Additionally, team of maximize increased end output has quarters, supply of and chain working several an been is operations is

to to find redesign work readily Second, additional are available. of we where our that partnering are qualify products components or and our engineering components and product more with teams include to arounds possible

and lifespan critical our that with aligning roadmaps new longest We products our suppliers’ investment ensure expected in to the material to also have access supply future. products are the

joint efforts adequate in possible component Our to source optionality focused creating inventory. most order the on are

distribution and process active for verification in components and and are we broker Third, have market the identification place. a in robust quality

certain still will foundry at is into With for material a come will for year channels. be the found that quarter. situation these a that well take hope time every there in way online, expectation wind incrementally new components is can't However, through expected long working a are be that environment our we calendar production improve to XXXX, to constrained

the carefully way and can. in we We navigate the will continue best to address situation

will for Our will who available focus may we questions over turn reengineering work maximize during answer have flexibility customers. Jeff, to the the escalation, I Q&A. now call continue as back be any on that our output expediting to to material and you and our will

Great, this and team fortunate to Nathan. difficult through helping your have navigate us thanks for We're assessment, this time. you

expected trailer me major and quarter in down $XX the with due our X% of completion an Services let turn large customer Now, up to on was our which as last retrofit update package year-over-year, but Software a Revenue to business. Subscription was delivery program sequentially million, quarter.

second revenues have which XX% Software of revenue, exceeded in consolidated XX%. total quarter represented the they

are three of positive and to $XX applications to of million. have subscription device SaaS progress both them, team reaction configuration transitioned for backlog And year our and evaluating transitioning several We total approximately them management, customers, with and technically. make TCDs over-the-air from The contractually continues receiving feedback from our models updating. new we

of the We customers are with that expect finalizing also terms current to quarter. in we complete a other number

expect and to applications, of our access recognize the these services and customers as value platform, momentum. management of functionality having device As features enhanced to CTC pick-up and well the transitions value-added as the we our

the APIs available with sensor that a intelligence of insights access in and and and the services services, organization. tractors strategy feature and internally go-to-market and trailers. adjacent leverage, To will we release continued our within in cross-functional asset information We've also advancement intelligence to all as will professionals engineering the sales connected customers gain and help highly cargo continually to to areas our qualified best group, transportation CTC are to development they the SaaS towards expand to portfolio. of team our experienced express while further these software improving SaaS augment and logistics, through enhancements model, model, new group. tracking SaaS of real-time a the sales from to part talent the our the charter access established able telematics also we office seamlessly that of with transformation real-time alignment hiring transition They're As with our product they progress

year, in efforts our remain these from we up transition together, impact software subscribers, critical have quarter million core as to SaaS review logistics last to and that, the With This transportation Kurt? I'll in becoming will the is then past pass the a a telematics SaaS Taken and X initiative. industry. open on we've which call call exceeded questions. made on financials, XXX,XXX focused we the leader Kurt to

supply income, Thank include with margin. non-GAAP basis you, in for of as quarter million the total is press net adjusted will Jeff non-GAAP totaled is global constraints and which measures full XX% in the revenue the the Total GAAP quarter or XX% issued this fiscal A was attributable the EBITDA my The third revenue basis afternoon. third measures discussed our closest release component down sequentially. Nathan. $XX.X decline to was by revenues reference financial and reconciliation quarter. chain year-over-year was earnings EBITDA Jeff. that of million, the adjusted Today, measures corresponding included International XX% adjusted and commentary XXXX these $XX.X to in of announcing ongoing revenue

basis, project. retrofit in a certain contracts. of the Software and the device year-over-year sequential trailer large quarter, The or revenue. Services business telematics completion up to million X% Services recurring XX% revenue customers in our benefited transitioning Software and consolidated Subscription But Subscription a was of continuing $XX.X from growth year-over-year it to from on million software last $XX.X to declined success due existing

million, In slightly, million trailing for Software annual and prior recurring terms XX was third $XX.X of year in of revenue million the quarter. both performance the metrics from months $XX.X last Subscription business $XX.X the Services from our and quarter up for

a revenue customer Remaining arrangement recurring at to is revenue, quarter hardware reminder, $XXX.X metric As in ARR bundled represents and the excludes to third the with quarter. obligations in subscriptions a from and million and a bundled all million customers. services, the the installation. upon year that or revenue devices in from contracts which time million in performance $XXX.X compared point with application including This deferred prior revenue $XXX.X contracted related and but revenue were quarter in represents the prior unbilled as contracted recorded

of end number in growth quarter third as sequentially million. of and success We to total was of contracts third the of generation. X and program performance existing quarter at active year-over-year Products Telematics reflects subscription The growth continue was active XX% our to subscribers our the and obligations well in recurring our to our subscribers customers revenue the increasing see to new logo in down remaining million. base subscribers $XX.X XX% as transition the

demand remains across critical devices. customer ongoing our continue supply global components regions, to chain Although strong to our meet the telematics necessary source demand to limit ability constraints for all all

products year-over-year Products to sequentially XX% OEM Telematics $XX.X segment the decreased Within reporting X% increased revenue million. and

continuing from their third cycle. million in segments. gross million is our quarter across represented down ago. across which Demand increase quarter of customer in down $XX.X XG in year cost the quarter, from ago, but at gross in was largest of million revenue up absorption a was both the the Our due sequentially Consolidated a to in year strong revenue this sequential from and same quarter combined primarily upgrade to XX.X%, X% in from decline quarter, margin margin The constraints. base quarter resulted $XX.X operations component with last XX.X% last support same XX.X% customer an remains fixed higher up reportable $XX supply from quarter, for in lower the costs the the from in XG

sales non-GAAP our our were with continued dollar marketing even our an Our investment expanding expenses in expenses sales slightly team on transition support to efforts. to consistent and due operating software absolute sequentially, basis increasing

We the to will current the customer past demand we've SaaS continue over to of of level the maintain given our in efforts, investment quarters. core business level seen backlog our transformation record few and further this

the increase services we to an in customers multi-year adjusted opportunities XX% to with third attributable free quarters EBITDA remain freight where continue That an are decline prior revenue quarter. demand to customers the Although positioned our impacting of in in with meet than flows of prudent by the important believe to roadmap the subscription X%, occur spin an value telematics compounded contract any quarter adjusted declined and cash This and our costs is be time. will we EBITDA over to the quarter to solutions in The future supply and said, to have margin is to the component decrease Similarly, overall flow carefully We and to $X.X remain properly short-term, EBITDA being further software mainly relevant expenses million the lower EBITDA period timing right was shipment. reductions adjusted device our cash of contracts, during we the transition monitor margin which it that solutions. make contracts. million over and in sales, the well-staffed. changes $X efforts of our in of charges. believe the select particularly adjusted rather EBITDA today due will as challenges the our in and in high revenue situation Adjusted for compared recurring to billings larger transition upon coupled

the liquidity position, equivalents quarter. third and $XXX overall at $XX the compared of our quarter, million to of as we approximately cash cash had end last million terms of total In

of is Additionally, X% senior $XXX notes due debt outstanding our we the $XX credit including have Meanwhile, XXXX. in convertible revolving August million an approximately $XXX million, million facility. aggregate unused

Jeff a XXXX, We final of significant fourth fourth policy and remains reference to in going we Year for I'll maintaining with With providing the comments to balance our call forward. the strong expect capital global to to outlook provide Visibility product for maintain in our are financial into with sheet of component open position not back the for we New timing that, up the quarter uncertain working In shipments cash guidance. call the quarterly February. of coupled some Chinese the turn due supply shortages, questions. to before over quarter

and In solutions remains CalAmp chain Thank is SaaS while this challenges, challenging enhancing the the our resilient focusing time a to supply software addressing on Kurt. stack subscription all edge in cloud of full but a you, summary, team current us, resolute for model. through

continue as developed know customers and in remain the us a and to solving reliable we have we and trusted Our business their telematics innovations needs diligent partner, develop. through will

of providing B. that strategy to We point point connected with across our from are customers insights assets AI about all excited intelligence A oriented actionable move

ever than and to more the shareholders. today, to are focus like we So that, benefit will call With our that customers open new questions. in and our our shift strategy I'd ultimately our up Operator? your confident

from Your Walkley Instructions] question with the first Canaccord. [Operator line is Mike of

line Your open. is

I just -- for the team, Nathan. including

up on like QX? Or even for sounds I then With and month know New in how even things giving supply in you than chain challenging tougher supply more it's color and side? guidance, supply Chinese maybe QX do your was think the but QX on more holidays coming stable? Christmas versus of you’re any it the is what November, into QX not are Year of kind the

This is Nathan.

current there the may very we conditions suppliers. not with allocations working general, additional diligently anticipate We snapback are But monitoring not the risk And But fourth improve. in and downside quick our a are providing should quarter. we be and this closely not do guidance. in

Mike, in, in out convinced which devices. all troubling getting And that our make heads three categories environment we're it But across not four stay in -- it Yes. team's doing up made made much everything top like think like it's months two close our vendors to has estimates those a a just the can three us something or I shorter anymore. or for we duration, with particularly operating our It's of I'm connection front months. to we're

question. maybe follow-up then, an And term intermediate

if components, XX do how take plans, long Just redesigns, And you on supply implement? some to some period? those over of to qualifying see month those X successful, the do improving maybe of new a how

probably definitely some within out. few chain. like to initiate time is more working months those of Yes, We're a more take our supply today. on those It

our So our many going did position us ago, that Probably But into simplify quarter? to better for we have to fact is and forward. fewer key it these next products SKUs very we a that to our by today done going of all us put than intentional in has it'll a thorough business, year, the help of way, was BOMs a forecast the not. year the the going products team fourth analysis in --

problem you while company comment. not in quarter, it's fourth better immediate to going want like feel supply in to I our So go in our the forward. planning result it an some solution for Nathan, might long-term is chain

we've we're making as has sure of teams, material And just sure Yes. investment roadmaps, make we puck our This to is that to allocation this actively product That’s and bills right for sure. to been that and possible. been be skating going the starting to look with working maximize coupled now. something our that we're something that engineering with is suppliers, the reflect their where our

pass question the Last I'll me Okay. for line. and

remain at Just levels. it backlogs your sounds or like record near

to and So [difficult] but the looking it tightness your your appears sticking the here suppliers, just ability given you, in for customers market customers their meet are with supplier, are any sense needs. new

this Mike. Jeff, -- mean I No, is

the think we finding on definitely broad-based broadly of this affecting us. fail be today, that in chain there's some know out different think including but is out marketplace that customers are what suppliers a that's supply that to without shortage I I a going number of true

whole to thing easy your of months this and those when answers. easy give So were perspective, have started. there's answers, would it months please. view ago me, If is, no been Nathan, solved my there

meet that reflecting world. have book they we've able from the needs that we'd to all at see a the customers understand seen and on not their similar and support ability to our across Yes, Certainly work they order atmosphere I we're our today think, rate But related are like. constraints. of through we the them good feedback semiconductor and heard to

So, may the like not are well they this. with us all it they at working but it and times, understand through

on an And is possible. to mentioned all you -- remains it'd almost which of another the our that what seen that kind -- coincidence few company need transformation customers Michael we're strong it's thing very where, at making level. with products look products. cancellations, our this them this and I we're that quickly really is progress focused of started Key them be odd better to at on When great top-line product getting period, that as is same those migration. yes, on backlog as substantial sure the to making indication perform and time as getting But time, the ship chain taking this much the supply Remember our we're we've issues.

feel I that and both working been making on good the we've progress transformation. team the really So is

next line Jefferies, Your with is the Notter is from your line of George open. question

much ask, revenue supply constraints? to any in wanted for held quarter sense the to chain I was due how the guess I up

George, Kurt. Hi, we're giving to -- it's right We here course difficult it's and quantify. very of now. forecast really No, any don't not

stage, think this backlog, it's what $XX from we've just we're the at and $XX is. X.Xx look know backlog I that right to that. at So we historical say we now When million, million ranged anywhere our

in terms aligned So of to the or strong. supply, demand predict. demand be But difficult when that materialized is can it's with

lot quarter-to-quarter. from there's week-to-week, movement a from of So

so can't exact out. here and I pushed quantify that sit And the got amount

like? what how range give customers you you're kind PULS transition I'm also ask about like talking I guess Got and certain but then the Thanks. customer a feedback from of for this? that I you've what And got receptivity there over are a It sounds with And not to forward to viewing you it. here, the are are CDM] and about guys, [CT look guess outcomes I the few customers are getting customers? customers wanted of process does transition. goal line moving us seeing

in like. most and each response in out our the of understand all and since That's here thanks terms got along to capabilities for some that making software. the in progress good that to handle next We've I chain feeling They XG, about ability so or our our there, the XG months middle direct way. the this feel complexity understanding are of we're customer Keep today new in pretty we're always like of converted got one but customers question. visits, do what been a that so months it's today. is dialogue there some a of the to the trying situation. four mind gets with supply I these Yes, customers. we some excited. executives five they're the We're went positive from The seeing journey scale on had And our operation the We've what few feel really good

George. just capabilities them expanded it business. emphasize, on affords the a to I’d Hey, that does platform technology the little take new the and time educate their

all, mentioned, of help time working extremely we're customers, Jeff entire continuing significant a are the we're customer to but it our couple invest understand As that is will win-win transition and at we here hard for customers time little a and have a to converted take really important base how it.

of out point. scratching transition? at we're a customer just what has made surface your the this just percent of then I curiosity, base do think And you assume

can us? Sort percentage of give any you

I percentage. think we don't should No, our -- I away from we stay think

We on too little report clarity have bit position percentages early. customers, and we'll be over going have going customers. in focused Maybe a it's little to then, a be next this but five uneven. varies too. and some now top be more bit our of converted one some a though, really it it's really months the big few to to But We're

Your from line Northland. Mike Latimore of the next with question

Your line is open.

Thank you.

get quarter. sense trying little that? results a had an software Were supply expectations, the your with chain the in in whether they line of to below? a on Just hindrance the effect On

quarter. real supply were the with we chain sales pleased the Yes, in

software car with our And equipment As transportation We coming record connected Kurt and quarter that, were in sale with saw knowing we K-XX, pleased. had really his off the that strength customer. big packaged were logistics. a large we mentioned of remarks, we in in

we believe up delivered through where sales is our I a as in of XX% this a total. across expect of a we in, So terms team really our conversion. board continue revenue new for And to steady manage it was as that software high quarter go us, to percent the

So should bit or about we as in a business software little quarter? the stable the think growing fourth

The that now information going Yes. quote forecast We're we're based. pretty broad and to constraints QX. any dealing are for spiking with right not

customers that's give think not is business the QX completely sense from makes But software software which the business. at on and point of of at way guidance Our actually which occurring the is this helps in We of so. to like don't that immune we it. business, our pace conversion time regarding occurring, our part our that kind

made Can up normal. the first comment about backlog, when And think saw just then the being you step I normal? big just remind you from me X.Xx you

pick-up fourth actually -- seen think we pretty communicated it backlog. grow. our think we quarterly point last continued when filing say I Q, in that And $XX the I in had in year, annual something to where quarter time, fiscal I’d quoted million has of north in we sizeable of a from

we're it's to we're some $XX up device today million our we is million that, look, million so shipped maybe you and this anywhere, or backlog million pretty when And from think right levels $XX historical on $XX I that. of at at And not to range $XX the but have record X.Xx side levels now. it's because is high on

from question line next is Your Craig Stoss Hallum. the of with Anthony

open. is line Your

your Hey you on components Jeff, a comment of rely products within supply you many source from? do can single how

perspective you few on There's not that, rely we source. on a very but that some give significant. single can him Nathan, it's supply

I et using industry that all basket. for no cetera. players radio we're Yes. GPS, There's wildcards mean, real in major the the modules, in

we but best with are well-diversified players. the are industry working we So,

particular But across you're the you level, your to levels, have the So, wafer approving get the vendors about component. board. when to players upstream about talking you may if that really extent, think upstream multiple we for same

capacity of on and is wafer dictating players there's it the global about. you're pace very that production But what at few the talking at the depends output So, level and really they're industry. level, ones the

pick actually to remarks trying some get more to am about redesign to the your products going it’s to suppliers. get of that's as products the prepared I'm I wondering just talked time clarity discontinuation the you confused. led from I'm customers? what's if in to on Maybe take

I question. understand your

So electronics, if there the and components portfolio, there's product phase. our and world broad that a think some about base that a products we life maturity is natural general end for reach have of the you of in of cycle life

the industry to maximize an have As notices acceleration is or output, enable working redesign ranges, that which of and us of continue life to working life portfolio we some we a phase to of we components, of or within we to to have products serve are product cycle end needs. fact alternatives include seen advanced match to can to that mix customers source. The their certain for qualify

Yes. team we've we this chain do think you'll That's quite Lessons is just much kind the your any in is to seen supply not And of make we're BOMs of notifications out situation only -- these a a others but industry. stuff of them ahead BOMs like a well. it one me, got us put the we've this of that all in some are the difficult have list of of navigating aspect a I and as is of to learned sure see CalAmp, to long across they'll anything take life as EOL And that in, situation. that never always long the view but crisis. in can think come space I Thanks, Nathan. of front in believe

ROTH your from Your line is of Scott open. the with Capital, Searle is line next question

for gross happy it related Good any wondering as Thanks I'm my quickly. otherwise? but things overall, this is that longer actually could or afternoon. I'm component Real gross reprieve you are front to also would freight not the sure like customers in and get cycles? any were but little sort an for a there taking starting bit holidays, upgrade for okay out Jeff your of guys. margins XG life in to it, point questions if from if on impact And you pushed terms issues seem heard pricing, of to quantify time, at I that their end Kurt, of timeline, hear margin they

Scott. Yes,

overall quarter recognizing on pleased second we gross had gross So margin, XX%. generally we're the exceeded consolidated in with margin, it the the that

So an are in in slightly. is sequentially there increasing out it there's short-term supply In And cost our of we're of some that the was uncertain project it that our about dealing conditions components with. I maintenance because Subscription there team we're the all margin difficult some working of as gross down you chain But our remarks, overall talked model continued revenue. around generally making target But through. is of and over And by percentage increase know long-term also our know a we're Software it. XX%. our in progress, supported that that's margin Services

are target, revenue the as So uncertainties and through those there with improve, that be long dealing Software we Services Subscription margins to will higher our drive hit now quarters. as but others higher keep in executing XX% next of to I I the think near we're percentage over the some and and think to that, well term, we'll probably working closer our more few

February. the the AT&T question scheduled XG of on on Yes. XG And conversion end for is still the conversion,

the be latest to out But heard from will America. other like today. to talk these about we seeing some -- as as they’d give to-date February more And about the North we're work no a the as be reprieve rest other to to carrier XXth, as as XG, from world The they're different out AT&T set the Nathan, going we're case remember chain be, U.S., in of can us of helpful got crisis. then life. of that us whole time day. and and sure continue there's the some of we've when I talking of end talk But time think big in is we for I'm to. standards believe because which we XG that, of getting supply that there's far to similar one one conversion players far No supply in giving a I the I While that AT&T, along reason field, any is from know, challenges discussions on as really chain

understand They they've far date. situation thus but their with in firm held the industry, the

that. asked as carriers? there and/or maybe to Nathan installed what -- CalAmp follow think XG I start it, I with will modules devices Jeff, other long cycle I in got but and answer, And on you from the timeline? terms terms number of other estimate maybe or up sure for through out And I'm your that the not the latest missed your in components do What's be process process in is into you in bring just, upgraded to how the the requalification recertification products, that of -- to if a you go need

it depend changes on a the the Well, type of what bit and about BOM level talking of does components. we're what

then for simple can if be just to between of take type time not a and they simple qualification they and the be So may required test and fairly X all testing process, X depending validation validation months recertification. the level there's but much on components, at and there components higher due the

we a across customer base, -- it as with bit customers it's when AT&T. look of a And complicated relates have little because our Yes. you to problem,

because this of funds this What longer quickly tended We that February are more I'm move conversion. to time the a on didn't smaller there as concerned timeframe about to behind some have -- the term customers large capital have customers XG very bit is out it either XG. in that at have relates the available they

and our exactly that equal an shutdown get date because front on customers. it's of close very stay have of partner that a help then avert to we probably is, some what's I we what's different number and in mean, how we I can of has And But entirely. of to are and what right, is sales CEOs with crisis us important companies, customers with horizon, resourceful understanding February executives it team a help the our So as know any kind we can them. talking XXth. How of them, their them difficult, on

of head-to-head competitively where past gotten or competitive how the see Samsara wondering lot otherwise? attention Okay. fit terms if you And into address week you're of so. it kind Thanks. the landscape, I if a lastly, the equation Jeff, in seeing them from or could of overall has could was you of what kind in they I and in

Yes. I when valuation. But ways a a a think I get $XX didn't with similarities. a in at lot there CalAmp, you they mean, are that recognized great like look Samsara I company as a thing and company many it's think is great billion of such very

You But incumbent legacy heard an company easier you Kurt talk a so I as to statistics. we're about the our that's It's ARR always and conversion. nonetheless, unicorn. making mean, do of when doing business, insights providing customers CalAmp’s them what not many you at quite problems We're Samsara. it's and unlike well. at in today, head-to-head complex solving cases and with see competing look RPO

biggest of that for have is brands that So, all I’m significant I I'm large, which that because better a us today software the at mean, has of discrepancy no to taking absolutely a the companies in complex lose me. out of some the proud incredible made what one that from marketing solving founders and away very of that of those very built, here, it. fact don't built, two scale But makes machine the nothing they sense valuation there's they've sight CalAmp problems industry, some business that’s

Instructions] Goldman Jerry is Sachs. line with [Operator Revich the from of question next Your

open. is line Your

Hi, this magnitude the see increased your price churn you costs, customer Revich that on across was put did during in elevated Jerry levels how is is? extensive I Was a wondering, Adam And of any given result? as today. component you of base the quarter? for increase

that last We jump announced And increase the that very a Yes, of feedback. we little in. received the some pretty those I'll increases saw. did of start accommodate price CEO, we speaking base and across let we to extensive Nathan quarter

problem were of from customers not solve can time pushback we most in the how the us lot be will XG our questions consumers, had in we more mindset on of but the and course, getting for of Of fine that a prices. equipment

we've as that increases we're needed that of of the in but topic. logistics. price better quarters some that true over on as the how well seeing, little think to I seen we is on it ongoing customers terms we've in last an partner rapid inflation early more the the price it's the and in discussion board at buys And year, we pass gotten broker pass learning participate those bit Yes, a with through lack material on, maybe to and just to still couple across how as side of

is we on. I those work or little are X% perform to a we X% that now to in them directly as the continued increase in was quarter and process took there increases need that orders. bit in our And cost we base, request broad there. the event their Yes, them our first to accept to more think what specific to first customers. demand becoming from all passed we of back product prices move be we're We say before allocations applied with we're a increase across have have that doing Since increases incremental cost then, customers

than take more broad So, a rather customer-specific. base, it's

approach things chain, evolve re-evaluating supply continue in to quarter-to-quarter. However, be the our we'll as

of impact. That's segment component margins this normalized margins in you choppier ease? think Can been recently once in clear. then have result chain supply to telematics as revisit shortages And a how just start we about

our on is think to That is the gross been accomplish them and dependent subscription ability -- here into our term again which really customers on I a what moving we've convert is progress One, and heavily real last taking we've working the base, some diligently, Well, quarters. model. good quarters over few made, we existing essentially things. our on margin use the two outlook

like logos municipalities. the select really K-X, instance, we market drive is verticals we of generate be The government have know in and gross to logos where solutions for second XX% new full thing those our margins new ability stack in can north

that generating of margin We’re already profile. type

Software arrangements device concentration for Subscription and from around out business. Service revenue So it's more us, versus the of the coming

to is in bundled -- margin could medium a and that service XX%, solution a have of of the reiterate upon Software with And margins up or the provide, depending that Subscription in But we our now have want profile element we'll mix long-term gross arrangement. So to magnitude all revenue gross that we our upwards the XX%, Services. given just overall in increase device a the solution. customers, again on is again, to from target in the on that margin based we reiterate XX% overall that target to depending XX% the will to our scenarios right range, XX% target

[Operator Jeff Instructions]. at time, I remarks. to this don't questions Because additional I'll over see for now Gardner hand Mr. conference the back closing

you the and final participating in I Thank Growth today on will Paula. Conference interest us continued the on for you, One XXth. your in note, and Thank CalAmp. January Needham's Kurt be call for joining

like you'd The contact our or If Shelton to Group. Needham meeting, request representative please a firm your IR

holiday you. April results Until releasing will We year. wish our you of of at CalAmp that us be fourth Thank year time, happy in next full quarter all and season. operating a

Ladies and joining. gentlemen, Thank call. today's this for conference you concludes

now holidays. may You Happy disconnect.