Omnicell (OMCL) 2 May 232023 Q1 Earnings call transcript

Good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Omnicell First Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be question and answer session. Instructions] [Operator

Kathleen your President conference. Ms. you Investor Senior begin may Nemeth, you. of Vice Relations, Thank

Good first results quarter and XXXX afternoon, welcome financial conference to call. the Omnicell

President, are On President Vice and Commercial Kuipers, Lipps, the Chief me Peter Chief Founder; today and Vice call Omnicell Seidelmann, with and Chairman, Executive CEO Officer; Executive Financial and Scott Randall President Officer.

regarding that savings forward-looking to uncertainties factors financial those subject other differ statements This actions risks, related projections cost materially implied. expectations, outlook statements call Omnicell's statements, will and objectives, including that are actual contain to could from or plans, results or or other expressed cause to

release more please X, the reports SEC. Omnicell issued these description detailed XX-K filed risks the annual forward-looking report a on the refer that with March information statements, the more on Form the SEC impact other recent with press today For to filed XXXX, in of our in and in

on place otherwise date specified to Please be as revisions not law, the do date or aware call. reliance speak hereof statements our All or any of obligation that statements not assume statements. we the only on update you undue today. forward-looking any release made as any publicly by required Except should to the forward-looking forward-looking

results released are ir.omnicell.com. Our of at this posted and in afternoon section were website the Investor our Relations

on of are comparable forward-looking we as do measures, the provide and Reconciliations a predicted effort. that non-GAAP you financial today. remind some measures to measures non-GAAP call, these measures. unreasonable our inherently difficult included this financial and uncertain forward-looking to to to financial measures comparable items estimate release in cannot basis results like without during forward-looking reconciliation the a we these would issued GAAP to we of are non-GAAP GAAP Additionally, be respect With non-GAAP measures press discuss most will not

With will to Randall. Randall? over I that, call turn the

joining thank us you afternoon, today. for and Good

mission-critical year, the our advance solid transform solutions Our care strategy start to pharmacy team and and to the our deliver to for we had a medication and management continue model customers. delivery

begin high-level are the an and our space, to walk highlights overall then from results through industry first key like and and with quarter. medication on I'd seeing financial currently management what health in the update care we

the with Starting market environment.

Our are constraints, budgets. due face continuing they mindful to customers of challenges and capital to remain their labor

in In modernize Omnicell is need this seeing solution. some throughout are we throughout as cost the expect challenges, industry, and salary part we and continues these While saw the management to the navigate our automate XXXX medication industry process. the we underscore continue of year. stabilization pressures important that trends these And believe labor view, to hospitals to the an the

discussed cautious order business to we to announced quarter, have of in many decisive last the workforce in on lower with action line to across we structure. taking taken a managing cost is plans As reduce approach our think what remain our approach. we focused functions this and In February, our

to effort hybrid footprint We have strategy reduce to further our with in align our an also and broader reduced estate costs. real work

$X operating We our million $X incurred charges, first impairment And containment to $XX brought in and abandonment down continue XXXX approximately originally of cost is footage assets the of efforts. and of plan, tracking announced space our plan containment our XXXX, million square by February related including restructuring execute November and headcount employee was Since restructuring. the we expense to charges which XX%, November in reduction and on and our office updated in in XXXX. and our right-of-use nonrecurring quarter, million of assets other of we inception of lease

our not include cost that will of around XXXX, reductions within be expenses annualized $XX which operating expected anticipate million to for the continue sales. from does also volume-based We savings the

quarter another Now for our discipline high-level macroeconomic We operational results we reflect execution and turning navigated results think EBITDA non-GAAP non-GAAP total earnings financial $XXX of and our generated EBITDA as We for $X.XX. team's non-GAAP service our first $XX non-GAAP of and guidance to first We quarter. product share of revenues revenues, quarter and EPS. the our ranges financial XXXX uncertainty. exceeded million million, total of per

Our continue XXXX. we performance key and drivers expect will the of of within executing speak driven Peter macroeconomic performance. primarily his to financial year, quarter our quarter and through on details the as impact solid provide further first the and to remarks by progress was expense through cost we timing uncertain the the in revenue, environment

to to it landscape. to on challenging despite Omnicell. continue a choose customer environment, the us Quarter-to-quarter, Moving clear current becomes macroeconomic that customers increasingly

new a XRX which note to operations. pleased are of includes pharmacy support central win, central dispensing to University robot pharmacy Iowa service with We the the

XT dispensing system Additionally, a A convert robot. enterprise upgrading system, pharmacy system central dispensing hospital the pharmacy health across health Omnicell medical chose XRX state the services partner New And with Texas-based care systems a Southern to CPDS, Illinois California-based Omnicell major to also cabinets, including service. center, with up a establish automated plans program. to while non-for-profit care a signed specialty footprint to to for along four health new their York

our we portfolio shortly, integrating also speak is about well Services and Omnicell meaningful positioned confident future. growth have our strong. are We acquisitions, made will for remains progress for in and recent Advanced pipeline Scott the integrations these on the

Now I'd the the Island or Center recently. Management, strategic with discuss Medication briefly University that opening we Long like to CIMM, of announced alliance and Innovation for our

nurses handle and standardize in order strategic This and we continuously work. of systems to start intended bulk automation is a embrace discussed, efficient pharmacy. foster and a administrative the is to As safer find modernize to alliance put pharmacy there health education as we to more the burden significant pharmacists upon

LIU laboratory the to analytics workforce CIMM, and a pharmacy and hands-on the technology. early a devices pharmacy an designed pharmacy working is should with as have LIU and students. The Omnicell competitive enter students with as CIMM experience to a with immersive edge of technology fleet devices is well Through access experience state-of-the-art it Omnicell's provide Omnicell and innovative for exposure

customers and in host training for devices. implement sites. demonstrations and LIU, services product awareness believe facility as will at Omnicell also CIMM The to the it important our teams, this We're will for to excited to advanced go of future diligence invest technology and with then initiative operational serve through customer a will who will Omnicell increased this Omnicell's bring we

XXXX to to want ESG see. we in published you also which the I hopefully report, chance that had our have of many highlight April,

look to If you have not a take at full report on yet I encourage website. you the it, read our

steps report, order in to bolster patient to a and to identity our internal of critical taken further inclusivity, human efforts and to initiatives foster our data, the environments As implement noted in capital systems various well-being computing belonging. protect we execute culture have harden

As journey we ESG strive through build furthering to our action. world, a healthier are dedicated purposeful we to

want Before Scott, I touch search Omnicell's turn to it our over I for CFO. to next on

As additional as a of thanks significant national mentioned for his at appropriate. Omnicell the well and the making provide commitment CFO search our updates as will to to a down beginning contribution has to is on last quarter's be call, Peter underway. process. well next this July, Peter We'll my reiterate as made seamless transition for he to want stepping I

it Now I'll with turn to Scott. that, over

Randall. you, Thank

the of pipeline our intended Advanced strong. As problems management intelligent part medication for home. automated and solutions services care setting processes from acute and to Randall is a modernized inpatient noted, medication infrastructure, help the in customers with persisting, shortages key which health are address their to our our care labor bed is management

services to pleased that needs. are our is advanced made progress report well acquisitions We recent integrating Omnicell notable we to meet positioned and to solutions our ensure and pharmacy expanding have hospital

advanced ReCept, FDS enhance specialty a services of From a provider; and few past intended pharmacy we offerings: are go-to-market management Amplicare, the complete, solutions key all years, we provider. technology perspective, acquisitions MarkeTouch pharmacy services administrative three actively made is and leading a Over solutions now three our an largely commercial provider; have strategy. integration acquisitions SaaS Media, pharmacy executing to the our

In Amplicare currently three now to are focus we platforms companies technology in ReCept pharmacy and functionalized MarkeTouch XXXX, on working our as are we within has merging introduced broader FDS and to EnlivenHealth, into to plan fully on integrating of success rebranded specialty been structure. was the market late Omnicell all functions the experience. and XXXX. Media one organizational services customer connected

XXXB Omnicell's service. inventory is optimization now part of

positioned the integrate further an to enterprise continuum. we is to customers that better pharmacy entire across ordering, support procurement have to the believe continue provide portfolio into visibility care uniquely analytics medication solution now a robust We care our level. at and We

our Now the we offerings. of walk wins of through recent few believe our highlight let's power that a

while footprint is hospital service system. effort drive offerings also health anticipated York efficiency its dispensing across First, pharmacy convert the enhanced medications systems central and Omnicell four XT the to accuracy. support cabinets, dispensing four system its and in system patient a these automated for visibility Combining hospitals with across plans New safety health upgrading an to to dispensing to dispensing

as well health robotics reduce tools distribution pharmacists help pharmacy We operations California-based a academic health time through and intended support drug health system. a variety as pharmacy system the for in and This systems Southern Iowa health are technology support tasks. optimization dispensing designed that service a of pharmacy evidenced are central being is as chosen settings, of system to central labor to workflows comprehensive not-for-profit to by choosing optimize find spend to pharmacy that amount on

programs, Our the drivers entity-owned center service clinical of continues to an health goals delivering medical as as Texas-based a revenue a also health infrastructure their be seem citing decisions. for market and and Omnicell system launching systems pharmacy pharmacy recognizing operation. strong to and specialty specialty pharmacy key first new quarter, traction market the gain establish and our Illinois major specialty to value to engaged expertise In for speed

to are national solutions medication has to implement large signed adherence. pharmacy a to build in EnlivenHealth technology relationships X-year advanced chain market, order continue to we patient strong announce increase we the also agreement in retail that a As excited

and College Randall established Sciences we the of experience for the and grand were is Island earlier, As to and of Pharmacy Medication to Center generation pharmacy Management. Innovative mentioned Omnicell should of Long with early April technology. the aspects that LIU University of for join pleased evolving next on access proud an technology alliance the immersive pharmacy we opening to exposure Health XX, provide of analytics launch strategic have leaders pharmacy the

To confident we strides have conclude, are significant the for made we this quarter, and positioned past are we well believe future. we

turn to Peter? Peter. now will over I it

Scott. you, Thank

results As first ongoing pleased challenges, we that which XXXX, I'm ranges. the the for the guidance our macroeconomic delivered exceeded we navigate of with through quarter

performance X,XXX particularly customers, our and strong in revenue by members execution, timing, quarter approximately environment. driven part team deliver challenging in was this first cost Omnicell for of to that Our disciplined our management continue macroeconomic

results. Turning now financial our to

$X result of of decrease Our or over or revenues quarter a and the million first decrease total $XXX GAAP down a revenues were budget lower quarter $XX The of constraints. decrease point-of-care year-over-year of as prior down a first XXXX quarter health million reflects and ongoing systems capital over X% million, the XXXX. X%

Services our our revenues timing XX% underscoring revenues XXXX, disclosed quarter to due for $X mostly the of quarter an end million of first the services working. primarily strategy [indiscernible] XXXX above first previously increase quarter. the first quarter transformation million, in is lines certain over in Total within were of other of top the phase were revenue, $XXX and guidance range, quarter the that digital

lower margin revenue of the was XX.X%, XX gross quarter from Non-GAAP basis a prior to points the decrease XXXX of primarily quarter, volume leverage. for due first

as our on projected benefit the by expect we to earnings see begins to February return of as year. second leverage the of volume throughout the noted XXXX we call, into quarter As revenue cost quarter full the fourth actions move recent and XXXX XXXX is to of grow we

included first reconciliation Relations and of A full Investor is earnings results to in press is on non-GAAP posted our XXXX quarter our GAAP release our website.

earnings per a of per XXXX. a the quarter of with share per in share quarter were income per of share GAAP XXXX accordance $X.XX of $X.XX quarter loss to in compared in first prior first share $X.XX and Our loss the

part use broader of and other $X as impairment million of and per further Our reduce to space charges costs. that efforts XXXX for severance-related earnings the we of the the our expenses GAAP out of assets continue the and for align with to million rationalize impact and to work first our includes benefit of strategy operating hybrid our office $X lease share impact quarter

$X.XX to first the $X.XX XXXX year. per share per Our compared share non-GAAP $X.XX and were in same share, quarter per the earnings period prior in share last per quarter

to First decrease quarter million, same the the non-GAAP and when EBITDA increase compared $X a quarter of was million $XX previous compared an $XX year. period to of million last

the quarter and to XX, product million, of earnings the due services solid December XXXX non-GAAP of capable million mix, non-GAAP XXXX, $XXX timing and and $XXX balance from of resin exceeded execution. timing, At First cash our expense share expectations was EBITDA quarter XXXX. per our first as end up

As facility. dependent is The $XXX revolving XXXX, leverage net we amount million on certain have of financial of secured March credit leverage credit as our XX, covenants, such under availability and availability ratio ratio. of total

quarter $X Free use cash was compensation first of a cash timing the and as XXXX of of employee collections cash during flow of restructuring-related a million payments. result

as cash year. flow we free expect the positive progress We through to levels return

XXXX, the a the make of strong strong the XXX quarter, increase million they inventory quarter. $XXX decrease X of from XXXX quarter, terms chain part execute as primarily This outstanding for the first inventory of supply were over to due March timing accounts $X receivables, Inventories XX, days, the our to global was efforts due our the an continue management. and of initiatives. process within In progress reflecting in of on prior prior days sales and quarter management as of improvements invoicing million, to of days team is

and Now quarter our guidance. XXXX second full moving on year to

we Randall believe earlier, remain As what business. focused we mentioned managing to a approach taking cautious on the is

revenues, reaffirm of healthy reflecting to for backlog non-GAAP and from second year crude the the sequential guidance cost bookings, year the of pleased revenue for management. to our and half growth expectations are EPS, our non-GAAP We half our of and XXXX first full view a EBITDA

intern noted environment we as timing continue to expense the the we performance the the call, progress the driven in our year. first solid by impact we within and of was quarter revenue and earlier As and primarily through year, executing macroeconomic expect to

is invest we managing believe a to Given in expenses while continuing we economic manner are market the ongoing that in uncertainty, prudent, innovation.

be the February XXXX recent in call, development. and the force the expected increases annual and the expense XXXX salaries in payment compensation, inflation reductions investments As majority expected is earnings derived cost impact $XX operating functions The on offset efforts year-over-year and the savings of noted savings to SG&A. annual of million from approximately anticipated expense other by in expected in operating and in be performance-based employee included expense trended largely will of increases from research

cost year-over-year, SG&A offset R&D, agenda. with total in slight down, to our non-GAAP to on increase invest We in growth a reflects savings, be expect to flat operating expenses non-GAAP down which while modestly non-GAAP by our continuing in focus

tax For the full of earnings non-GAAP in year guidance. of XXXX, share we are assuming approximately an per effective rate blended our X%

revenues product the of For XXXX are and the to revenues $XXX between million we million, $XXX quarter providing million and $XX the between quarter and expect be between $XXX total second and second We million. revenues million, be $XXX be guidance: service to XXXX, $XXX following million

which performance first nonrecurring due the items, benefited guidance revenue into decrease and first The timing revenues quarter quarter of of XXXX. shift second the quarter reflects a to the quarter from modest the first

of second expect from year. revenue growth the the to sequential the half half first We

non-GAAP We and share EBITDA million share. and XXXX second and we be $X.XX million, $XX between be earnings second expect between XXXX $X.XX to share quarter to per quarter per expect per non-GAAP $XX

the to summary, In see and the are quarters. macroeconomic environment. it be progress remain updating deliver quarter our to we we're value confident you our our for We a in pleased with the forward opportunities of for all look We results to and believe as coming we in on ahead executing continues challenging first well stakeholders. XXXX of aim we long-term

for that, to would call like we With the questions. open

of from Wells first Stan the [Operator Instructions] Your comes Berenshteyn from line Fargo. question

open. Your is line

point-of-care line. same in your still of like product XT you're the cycle I'd start seems like kind to It life products. First, of replacement kind maybe with

years just just thinking demand create couple cohort upgrades I'm Do could expect that these slowdowns or of the wondering next the you over that about if over end-of-life. from next we're from in about any we couple maybe end-of-life demand years, of upgrades? that demand demand of just surges think choppiness

is this Peter. Stan,

XT So cycle. for in series, second for the of upgrade upgrade cycle half the the the are we

for during some continuation the We forward, and the a pandemic stable but cycle. choppiness upgrade expect, we have of relatively demand bookings, going

quick And a then follow-up maybe here.

It to Any doing your So forward, give like you're on adding any type still insight seems us as planning headcount going XX there you've in there? how that. change in philosophy implemented be cost terms more you you Are to of time? But you're can is cuts. full rely of going going up to forward? opposed to workforce

I we But Well, think of for demand, used to workforces about where permanent on we want the we best. particularly I be area. forward. those as have as continue we, We cautious adding implementation that. add fit they some think are use course, flexible about We'll to in headcount careful move

the we're increase I for seeing a most workforce part, year. But our in big not think this for

Your next from question Schoenhaus comes of Scott line from KeyBanc. the

Your line is open.

growth services the it Can biggest had you about in was? quarter. robot? So revenue contribution you from talk the XRX what really mostly Was this nice

home really the specifically Peter. variety it's now. market necessarily XRX robots it plant Scott, Well, drivers the the services, not or CPDS a of as both services, only in we

is -- as I mentioned think I this Scott.

service. very systems in nice we're As demand growth that's from pharmacy. some my our And health regarding for setting and mentioned been operating seeing driving I've specialty in-house script, up specialty nice pharmacy

prior then follow-up, you Are of your areas as expectations? last you just versus any And or weaknesses are or strength a seeing seeing what platform? in EnlivenHealth quarter

again. It's Sure. Scott

digital they're around And medical managing to going care, And cost about EnlivenHealth shifts of to outside of as general much need to the the hospital engaged. home, the think and billing. in to there. get test demand care The we of the importance going tools I very that We're regarding tools they're more health total engagement. are. pharmacist enthusiastic is thesis need the

very platform complement to really in tools positioned EnlivenHealth of care pharmacists to that enable a with the is And of full type deliver uniquely those setting.

the we're excited demand So about there. really

from Matt from of Craig-Hallum. Hewitt line question next comes Your the

Your is line open.

Maybe you opportunity? the side. first update Pharma of up with on the Could sit the where XXXB and kind pipeline Services for Specialty us on Specialty the things

Sure. Matt, it's Scott Yes. Seidelmann.

we end really product We Service. XXXX XXXX as acquisition. acquisition rebranded Specialty platform Omnicell the focused So ReCept of on the and very that closed the integrating at or the spent

the real channel the to go-to-market systems addition in around it some demand manufacturers of in types And put of pharmacies. use health because place pharmacies, tailwind to changes that, things have function regarding integration, the stand of hospitals there a created that back was health hospitals to and coming given of into is key the systems from integrating and operate office contract want our specialty up and nice real demand that's and for

doing them and a to different difficult do. The is very challenge for is it's so skill set

it's a the sort So fit provide comprehensive of nature management us medication for as we service. offer infrastructure given natural of to that a that the

in really And got a so demand. we top now in pipeline of healthy really of 'XX. that seeing growth funnel integrated we're And the

we're So there. really excited

follow-up. then a And maybe

the win, on congratulations that. retail large Regarding

a is X-year platform? be it's agreement. you the us more this to process, will, is Or this adopting with through And the hunting the that if entire customer? chain Maybe So going courting, license? walk of a

a licenses. the as generally and speaking, SaaS that is, to modules, x not those modules. has generally month Yes. I'll model for like EnlivenHealth a relationships traditional very SaaS. dollars In EnlivenHealth with a EnlivenHealth, free various per hunting And store general, and per that -- talk platform These business the are are

it And particular And so of deploy a is the some modules they're into stores. across the of x number enters breadth utilization customer committing stores. a the that contract, their to case, platform level for of this commitment of in across when of

Sandler. line Your of next question the comes Tassan Piper from Jessica from

Your line is open.

help sequential implied driving what's margin. degradation? XX you off, of just think were decline EBITDA -- basis the adjusted so conservatism? in if we I first points that Is interested So sequential us understand could Or that or margin

year. revenue the and we timing it's said like expense remarks, within So the in mostly on prepared

revenue, the combined the of from So mostly quarter is looking that total at timing. second and the first revenue quarter

big also time EBITDA, On part of year, -- XXX% profitability two-thirds timing came lease the that from through EBITDA. favorable flows to about at buyout, revenue a XX% within two-thirds revenue favorable basis, the a margin of which and about to a

or point-of-care, revenue. the the to lease we know, we higher have government. defense technical renewals we a leases. and you with And in As services remaining in And time, buyout see portfolio services mostly from of capability time think these was

So perspective, of the revenue the from is second is there guide. to from timing. yes, majority a revenue decline first quarter total the a But quarter vast vast, that

quick slightly relative to implement macro confidence just trying new of and to is follow-up product in the the understand ability get your just guidance we're XXXX. the the coverage to be XXXX short-term And book sales year? ratio just with in within then backdrop, a comfortable forward would what's light how versus products revenue What of in products backlog to lower

Yes. Yes.

our I health we've is think nursing nursing. health full-time the one customer a steep base of to that seen to contract the permanent moving in So or back things of temporary and profile nursing reduction more

come off. of less activity, mostly we've So seen utilization utilization. in and pressures labor seen elective the in a increase slight in We've COVID-related some

So improved we it's pre-pandemic the be a meet with customers that has customers have sense can ability closer and profile, backlog to slots dates. of better has can and us the and that those getting given think scheduled that, a like schedule secure that. because those much to And more and compete timing we

receive And equipment be And last to part. doing and the have customers the customers as that, even site height their seen didn't I well agreeing of the part, installation we've our that on just as their plans. year, most the assist when commitments dissipate think firm and at making to the in on people for in

from Stephanie of line SVB. comes Davis Your next question from the

open. Your line is

give field. some the from updates I can you was hoping us

quarters to we've earnings their seeing spend. labor Are frozen data I hospitals begin away been some Or to we all points getting as start saw priorities? budgets this mixed headwinds still around just it many think sees these given ease? is

slow, incrementally it's I Well, improving. think

maybe really providers, But particularly little of there's improvements. incremental public game. the that the small You a feel we see some people, ahead

The uncertainties. there's stabilized. still But market has

and at to of see But every indicators we of the helps, of some pretty with small say capital. end think some major increments for or year, And month. the research no it's we're everything looking slow a more but would the the spending I changes. at, I shifts stronger process, commitments

that there -- outside pharmacies foot is are more for of to becoming in much retail now outpatient for given mind, an in just With the important opportunity much EnlivenHealth bigger, hospitals? become traffic just understood. I that engagement

This think the care is you're in health seeing, think there's general, and some care I a Seidelmann. and I significant a Scott in And that. health engaging Look, systems to shift that of and from acuity are constituents patient -- and lot settings folks of home. lower are the around of hospitals

And managing given right importance management health et meds, taking care, managing correctly, medication of the them the the but more more taking importantly, and impact spend. of importantly, on cetera, I think downstream

recently seen care, this I evolution larger why the the of of to public health in pharmacies. which increasingly you've think of seen you've the pharmacist is important sort get is next with some acquisitions going retail

to conveyors, the et and is different of retail And positioned there be start cetera. incredibly Enliven so be provide hospitals, and to types can well to transform pharmacies, pharmacists it care, enable could participants that an --

So but about the days, we where positioned. again, business early excited feel is

America. Lutz Bank line Your of next from of question from the Allen comes

is line Your open.

was contribution much timing? for from buyouts in Peter. at midpoint. million then more the I by how EBITDA And much from was XQ? EBITDA the guide the lease of than guess One $XX how exceeded

Yes.

the revenue to in the be exceed of vast we majority consider the So timing year.

do we time, have to lease time from buyout. So

full So in contemplating year. we're that the

on that expense the remaining So by is timing is and driven driven exceed XX% well. is XX% would revenue I by side, EBITDA of the say, mostly as the about timing. timing EBITDA

talked part resonating for door? a the in retail is you versus Can with And you are foot specific about most that where to with your with the is pharmacies? services Scott. of solution guide And the talk pharmacies. about leading was. Scott, there what Enliven sequential had the building relationships you good get business guys Basically, especially quarter, one really then retail a

Sure. Sure. Sure.

So in chronic they're patient the really patients of polymed. And these sort on retail engagement engage how pharmacies focused of the general, patients, sort do outside.

efficient a And telephone particularly them pharmacist simply it, most sure you break, et experience given, using to pharmacy two-hour the now any lunch go the so cetera. not way, and to and has you is I'm retail contact a

So they're sure to start to a sure right through to anything med they're leverage on provide its they're more meds, actually that on meds, and -- to engage they're ultimately the make cetera. they're regimens et making that right make up, the following do to following getting pharmacy patients, to can adherence pharmacists sure

So resonates. that really

many that, would about And is types say doing I is billing. that you're provide now now increasingly, to also in And you're talking pharmacists states what care. starting medical different of really

rev and today, that's pharmacy. And cycle that's a because really for greenfield so pharmacies they're opportunity, exciting really solutions -- the retail don't for great have

Larsen David question next the BTIG. from line comes from of Your

open. is line Your

a $XX in at of headwind And I think then how in I think you million of that? your had sort you What get trends for $XX Can you about semiconductors year? 'XX. through Is And there expectation bit you 'XX? thinking impact a XX/XX. the million like there that in might enough inventory be about little to was XXXX? are talk inflation inflation and

Yes. question. Thank you, the Dave, for

So two cover the there, of parts right? most 'XX. previously will million $XX for of the year inventory pre-buy The semiconductor

have So on confident the for we in motion semiconductors to connected hand ability feel very devices.

exceed inflation. a in slightly from basis. perspective, earnings to we we're pricing financial impact inflation -- on tracked the earlier quarter favorable the what net that perspective as do a said the well, an is calls on And tracking expect we year we that the From in

did there a revenue like mentioned buyout impact to much was call, And trending then guess, how in that, into on we times I pull basis year? And your is of I couple backlog of your head activity? timing. then lease we you've How the this XQ as revenue timing related Or sequential from, on as Is you significant and increase continuing bookings progress revenue out a through midyear? your -- is I'm guess almost the asking of backlog? amount a backlog your to what the is

the million. So look guide we of at is by we the exceeded revenue for end that revenue of is -- timing quarter, first, if half and revenue $X the it, the first the buyout, you half other lease the see top other revenue capability. Roughly

services also buyout and of So timing, does backlog. not most the out of technical come services of lease that and not come does out revenue defense backlog,

quality actually So line of the was the you top to high.

Okay. it mean to would unusual 'XX decline to OpEx me. your remain reduction your to mean helpful. from pretty any a by be there would OpEx my 'XX. seems more just but color expect amount. just X% I are of in last to I And bit question. sort significant very a force, expected I flat little

-- you in underlying the to the will, as first cost second quarter The impact, the impact Yes. comes from the we second the quarter if see quarter. that risk as -- off,

February quarter. coming The the second in roughly off of middle is in second that smaller we that quarter. the announced last Also cost is

innovating An discussed for investing So then we're is R&D inflation quarter our costs in first prior third we employee that we in quarter in the definitely going ourselves to the have see the from quarter as for operating down modestly the and we quarter. own the we support expenses as our well have And that. payroll. offset, second step second through though, see from going the to

Your final of JPMorgan. question comes from Anne line from the Samuel

is open. Your line

I had prior question. maybe the inflation one follow-up on

spoken offset. had as pricing to inflation You a previously key

performance pricing to the much in hoping just how could margin to contributed it's I quarter you speak was or offsetting? So maybe how much

Yes.

They're second the quarter the is the that for right impact slightly exceed impact lower than now. point pricing quarter. impact crossover pricing And inflationary the will the on inflationary impact in the see. we quarter, So first

was maybe you increase. versus compares spoke just is embedding guide maybe And a sequential demand half an for you touch how on underlying I much just hoping that assumption of easier the second improvement? could then to

Yes, as in quarter prepared we far and have quarter that have quarter, the demand the stable first second in in the we fourth and the talked seen relatively environment. about we so assumed remarks,

already revenue first growth we the at we backlog. the majority that to that the the is as vast So half, look half second of in from see

in as sale the as pipeline course, and stages. And then we also, plus on bookings and of in see what further the far

steady So said fairly as well. that make it's to as

back further Lipps, There are call I turn Randall you. questions Mr. time. to this no over the at

joining thank new times two and for Thank as we employees new for years. through getting to I continuing working a it's and really forward. year you work call move looking been for the last forward, you and to arriving go all really us And want to today. interesting a our of us these an with hard forward to

us from Kuipers, value great kind But service X-horsepower to remiss company of an I'd not he years company of powerhouse. the tenure has this to to and enterprise go-to-market Peter for a many done his over thank make add for be

Peter, you, adventure. best and luck thank of So in next Cheers. your

you. Thank

Thank you.

This concludes today's conference call.

may disconnect. You now