DZS Inc.'s (DZSI) CEO Charlie Vogt on Q3 2021 Results - Earnings Call Transcript

DZS Inc. (NASDAQ:DZSI) Q3 2021 Earnings Conference Call November 2, 2021 10:00 AM ET

Company Participants

Ted Moreau - Vice President of Investor Relations

Charlie Vogt - President and Chief Executive Officer

Misty Kawecki - Chief Financial Officer

Conference Call Participants

Ryan Koontz - Needham & Company

Dave King - B. Riley

Tim Savageaux - Northland Capital

Christian Schwab - Craig-Hallum

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the DZS Quarter Three 2021 Earnings Conference Call. [Technical Difficulty] mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] [Technical Difficulty] conference is being recorded. [Operator Instructions]

I would now like to turn the call over to [Technical Difficulty] Vice President of Investor Relations. You may begin.

Ted Moreau

Thank you, Margery. And welcome to the DZS third quarter 2021 earnings [Technical Difficulty] CEO, Charlie Vogt; and CFO, Misty Kawecki. Yesterday after market close, we published to the Investor Relations section of the DZS [Technical Difficulty] to provide shareholders -- perspective shareholders and analysts with market insights, product, business and financial updates, as well as forward-looking information.

[Technical Difficulty] and other forward-looking statements regarding future events or the future financial performance of the company. The company cautions you that such statements are [Technical Difficulty] results may differ materially.

Please refer to documents that the company files with the SEC, including its most recent 10-Q [Technical Difficulty] Statements section of the shareholder report that was filed on a Form 8-K, as well as being available on the Investor Relations section of our website. These documents [Technical Difficulty] results to differ materially from those contained in the company’s projections or forward-looking statements.

Please note that unless otherwise indicated, the financial [Technical Difficulty] non-GAAP basis. These items, together with corresponding GAAP numbers and the reconciliation to GAAP, are contained in the [Technical Difficulty] During the fourth quarter we will plan to participate in investor conferences hosted by Stifel, Needham, Craig-Hallum and [Technical Difficulty]

Charlie Vogt

Thank you, Ted. Welcome investors, analysts and guests. I’m pleased to share that for the fifth consecutive quarter we delivered strong sales momentum with quarterly revenue above the midpoint of our guidance, and gross margin and adjusted EBITDA exceeded the high end of our guidance.

Q3 2021 marked our third consecutive quarter with orders exceeding $100 million, resulting in backlog of approximately $200 million, nearly 3 times higher than a year ago. Even though we were challenged by supply chain availability, price increases and foreign exchange variations, we delivered revenue of $88.4 million, which was above the midpoint of our guidance and our 36.8% adjusted gross margin and $5.1 million of adjusted EBITDA were well above the high end of our guidance.

With the current supply chain challenges during the third quarter, without -- I’m sorry, without the third -- without the current supply chain challenges during the third quarter, we estimate our gross margin performance would have been approximately 39%, illustrating the effectiveness of our product rationalization, alignment with component and contract manufacturing partners, and a more balanced North America, EMEA and Asia geographic mix.

During the first half of 2021, we outlined to industry and financial analysts and shareholders the market opportunity and company-related transformational themes that we anticipated would lead to long-term sustainable growth and profitability.

As we expand, we have been laser focused on the following four themes. First, market share gains and growth within North America and European regions, while we’re in the early stages of an aggressive playbook, early results have led to a North America ordering increase of 125% year to date, compared to the same period in 2020.

Second is the technology shifts and investment cycle that is underway evolving from legacy copper and sub 1-gigabit technology to next-generation multi-gigabit broadband connectivity solutions, which are delivering growth across North America and EMEA, and with higher margins. This shift to multi-gigabit architecture is also enabled DZS to introduce high value network and subscriber based software platforms.

Third is a transformational wireless technology shifts and industry momentum towards a next-generation 5G architecture fueled by emerging service providers such as our leading Open RAN customer Rakuten, who surpassed 5 million subscribers during the third quarter.

Rakuten has successfully launched Rakuten Symphony, which is designed to accelerate the deployment of Open RAN networks around the world and with our Mobile xHaul solutions playing a key part of the reference design.

And finally, our strategic pursued the cap and eventually replace Chinese equipment suppliers that are being deemphasized in the United States and many European and Pan Asian countries, including India.

Our sales pipeline RFP and trial activity during the first nine months of 2021 has been encouraging and during the third quarter, we secured a large scale broadband connectivity project with a Tier 1 service provider in India.

Our product rationalization next-generation 10-gigabit class PON technology and strategic investments in software orchestration, automation, service assurance and subscriber experience solutions are designed to differentiate and enhance are more than 20 million platforms deployed around the world.

Our multi-gigabit PON and subscriber influence software strategy is on display in our newly launched XCelerate and DZS Experience solutions. Both of which are complemented by DZS Cloud, which was launched in March of this year with Telus as an anchor customer.

Our cloud native network and subscriber software portfolio will provide communication service providers with the applications, automation and intelligence to more effectively manage the residential and business subscribers creating new revenue opportunities and operational savings.

Our product rationalization work streams have yielded reductions in skews by nearly 60%. While there are many valuable sales service and resource alignment benefits, the reduction in skews is also reducing supply chain risk.

Furthermore, we improve our manufacturing and supply chain efficiency across our global infrastructure as we consolidated our manufacturing operations and enhanced our supply chain partnerships to continue to successfully navigate through a difficult supply chain environment.

Looking ahead, we anticipate the trends experienced throughout 2021 will continue in Q4 and into Q -- and into 2022. Specifically, demand for next-generation fiber-based broadband connectivity solutions fueled by consumer demand and accelerated an estimated $100 billion in government stimulus.

Demand for network and subscriber influence software solutions that will provide operators with differentiated service offerings. The emergence and adoption of Open RAN 5G networks, Chinese equipment supplier capital, replacement opportunities and persistent supply chain challenges.

As it relates to the fourth quarter, we are guiding to a wider than usual revenue range of $80 million to $100 million through the current supply chain environment. We have the backlog to deliver to the high-end of the range assuming our component and contract manufacturing partners are not hindered during the quarter.

We anticipate a gross margin range of 30% to 34%, reflecting near-term supply chain cost increases, expedite fees and foreign exchange variations specifically with the Japanese yen. As we overcome the current supply chain headwinds, we believe the operational efficiencies underway and our new commercial strategies will deliver the long-term growth and margin expansion outlined in our Q2 shareholder report.

I would now like to turn the call back over to the Operator to begin our Q&A session. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Ryan Koontz from Needham & Company.

Ryan Koontz

Good morning, Charlie. One of you could walk us through the price increase opportunity here and kind of is there a shot clock here that you have to give them time to place orders to the old price? Is a temporary change related to freight or are you implementing it on a permanent basis? Any little clarity like that’d be helpful? Thank you.

Charlie Vogt

Well, the price increases that we’ve received from many of our components supplier ecosystem group has not been something that has been deemed to be permanent, although, I think, we are assuming that the price increases that our entire industry is seeing is likely to be long dated.

That -- those price increases really began in the May, June, July timeframe. Some of them came as late as, September, some of which we’re already experiencing price increases, some of which, we won’t see the price increase until the first part of next year.

I think what’s important for everybody to appreciate and I think it’s, frankly, consistent across everyone in the entire sector is some of the price increases affect current backlog depending on when raw materials were pulled in either to one of our contract manufacturers or in our case to our Florida manufacturing facility and other components and raw material are scheduled to be delivered in 2022.

But we decided to do and we put a lot of time and energy into this, we spent a lot of time with a lot of our Tier 1 customers and channel partners was we began increasing prices October 1st. And we’re using this term commercial strategies, because that’s really what it is.

I mean, we’re being very thoughtful about the various price increases across the various portfolios. But we believe that the price increases that we’ve implemented will more than offset the price increases that we’ve been navigating and will navigate over the course of next year.

Ryan Koontz

So it sounds like it’s a multi-quarter implementation to how we think about it, I mean…

Charlie Vogt

No. I mean, if you look at the margins that we were able to deliver in Q3, I think, that’s indic -- I think, from our perspective, if you pull out some of the expedite fees and that’s a new term for our industry. I mean, we are -- we’ve really never seen this category that we’re referring to as expedite fees.

But normal lead times are, depending on the component, the supplier could be as long as a few weeks. We got ahead of things, I think, better than most and I talked about this over the last two quarters, late last year in the September, October timeframe. We -- just because we had a lot of visibility with a lot of our Tier 1s, we were able to get ahead of a lot of the forecasting requirements at the raw and systems level and I think that is really helped us, especially with our Q3 margins.

But I think that, what we’re expecting to see in the very near-term and I’m saying Q4, maybe Q1 is, some expedite fees that will have some margin impact. But I think that investors and shareholders, excuse me, should think about the longer term aspects of new orders that we’re booking at the margin profile that I think aligns with our long-term margin expansion profile. That and we certainly expect our DZS Cloud and our DZS Experience software portfolio to begin to deliver higher margin in the second half of next year.

Ryan Koontz

Okay. And on the -- timing on the mobile side, so like mobile was a little weak in the quarter. So like, timing of some of the deployments, is that mix change is going to shift in Q4 but there and that’s another headwind in Q4 on margins, I assume?

Charlie Vogt

Look, I mean, on the wireless side and I think we’re not the only ones. But I certainly think that the catalyst for DZS and others in our ecosystem is really the adoption and the acceleration of Open RAN, which in the activity in, specifically in what’s going on from an RFP and from a trial perspective, launching Rakuten Symphony, which is leveraging a lot of their own intellectual property that they’ve garnered and DZS, as they have success with their own Open RAN network architecture, we aim to be able to participate option to Open RAN and we certainly see that accelerating in 2022.

Ryan Koontz

Okay. Great. And just one last one, if I could, on the Huawei replacement opportunity timing, are you -- you are starting to see some decisions now there and when should we think about that starting to impact revenues for you?

Charlie Vogt

Well, the large scale project that I just refer to, during my opening remarks, was a Huawei replacement project in India. I mean, and I know, the general market gets nervous about large scale projects in India from a margin perspective, but I do think that, India as a country and at least the for large scale service providers there realize that in order for them to adopt technology from North America and European based companies, the pricing and margins kind of change.

So, that’s an exciting win for us. There are several large Tier 1s that we are aggressively pursuing in Western Europe and a lot of those decisions we expect to be made between now and the end of the year. And I think there’s certainly a great opportunity for DZS, especially with most of those companies already having Nokia in their network and they’re looking to replace Huawei with at least one or maybe even two additional technology suppliers.

Ryan Koontz

Great. Super helpful, Charlie. Thank you.

Charlie Vogt

Thank you.

Operator

Our next question comes from the line of Dave King from B. Riley.

Dave King

Yeah. Good morning. My first question is, maybe if I could get a mix between broadband and mobile for your backlog of $200 million?

Charlie Vogt

I don’t have that off top my head, Dave. I can research that before the end of the call to make sure I give you an accurate mix. I don’t know that we’ve ever given that number. So I don’t know that we want to start issuing a percentage of our backlog as the mix of both.

Dave King

Got it. And then we got…

Charlie Vogt

And I think we could assume that it’s what you’ve seen throughout this year from a percentage of fixed in mobile. I mean there is…

Dave King

Sure.

Charlie Vogt

…bank that curious.

Dave King

Got it. And then regarding that major Tier 1 Indian contract that you [Technical Difficulty] I mean, India was fairly big a few years ago, can you get back to that level and how long, I mean -- and can you talk about sustainability?

Charlie Vogt

Yeah. We’re certainly encouraged. I mean, it’s not just with the operator that we’re participating in here initially. I mean, all four of the operators have pretty significant work streams underway. Look, I mean, I’ve always been cautious about India, but I would tell you that we’re more positive on India today, I think, than I’ve ever been, just because of the dynamics, you don’t have the Chinese suppliers, that are putting a lot of margin pressure and pricing pressure on the competitive nature of it.

And, frankly, we’re able to pick and choose. I mean, I think, we’ve tried to make it very clear to analysts and shareholders that, where things are strategic, we may be a little bit more aggressive from a pricing and margin perspective, but we’re committed to getting to that 40% gross margin level and I think that we’re going to make sure that all the projects that we participate in, including the large Tier 1s will enable us to get to the margin profile that we’ve laid out for ourselves and shareholders.

So we’re encouraged, frankly, with the opportunity in India. We’re very encouraged with the opportunities we’re seeing in Western Europe. And look, I mean, North America has been just, I mean, it’s exceeded all of our expectations this year. I mean, we were obviously very focused on North America. We’ve got a lot of great relationships that go back 20 years. But the fact of the matter is, year-to-date, orders are up 125%, compared to the same period last year and the momentum that we’re seeing in North America, which obviously, garners the highest margins is pretty exciting and encouraging for us.

Dave King

Got it. And speaking of Americas, it was 31% coming up nicely. At this rate, I mean, can we expect maybe 40% by maybe second half next year? Is that realistic goal?

Charlie Vogt

I won’t comment on it. It certainly is in line with a lot of our expectations.

Dave King

Got it. And my last question is just wanted to get clarification on the gross margin. So it’s going to be approximately what 33% fourth quarter. I assume it sounds like, this is going to be the bottom maybe first quarter kind of maybe flat to up a little bit, but then going back to your target of 40%, and like, I mean, with 33% as the starting point. I mean, is 40% maybe by late next year, is it still achievable, and if so, can you kind of walk us through the steps of how you’re going to get there?

Charlie Vogt

Again, I think, what shareholders and analysts ought to be looking at across our entire sector, especially where there’s a lot of systems and hardware content. Even with some of the software elements, everyone’s backlog is being impacted by the price increases.

The way most of the price increases have been implemented by the broader ecosystem is such that, regardless of whether or not there were orders in the system or not, when they began shipping to you based on whatever activate it is, that was the effective price increase.

So that’s why I think we’re going to see a slightly lower margin profile Q4 and probably Q1, as we flush out the backlog, all the new orders that we’re bringing in, that began in Q1 will be at the new margin profile, which aligns with our target margin for 2022.

And I think we had sort of outlined in our Q2 Shareholder Letter that we thought we could get to a margin profile in that 37% range next year and 40% in 2023 and that still holds true for the model that we have internally.

Dave King

Has -- I guess, expedite fees and I guess there’s a big component of elevated supply chain costs, has that kind of stabilized and is that why we’re thinking right now we’re kind of bottoming here?

Charlie Vogt

I know a lot of people keep saying we’re bottoming. I think that the expedite fees, like, I said, it’s sort of a new phenomena. I don’t -- from our perspective, we’re not modeling in a lot of expedite fees in 2022.

There certainly has been expedite fees that we’ve navigated in Q2, Q3, and we will see some in Q4, with a couple of large projects that we need to deliver on and I think that’s really the way everyone should look at it. I mean, if in a perfect world, you’re forecasting perfectly and you’re receiving orders aligned with that forecast, there’s no expedite fee.

It’s when you have an unexpected project or you’re pulling in a project that you need for a customer that you’re trying to pull forward the delivery dates from some of the component suppliers, that’s when they’re charging you a quote-unquote expedite fee.

We -- as I said, we saw some in Q2 and Q3. I think we did a great job navigating the expedite fees in Q3. We haven’t really talked about the foreign exchange impacts that we saw this year, especially with the large amount of business we do in Japan. But when you look the dollar against the yen, it’s certainly been something that surprised us this year. I think we’ll do a much better job managing that next year.

But I think the to your question, Dave, we don’t expect to see the same amount of expedite fees next year, just based on the alignment of our backlog and the alignment with the forecast plan that we have next year.

So I think the price increases that and the commercial strategies that we’ll be implementing will certainly offset the price increases that we’re seeing, at least, in the near-term from our ecosystem.

Dave King

Got it. Thank you.

Operator

[Operator Instructions] Our next question comes from the line of Tim Savageaux.

Tim Savageaux

Hi. Good morning. A question more around the kind of topline outlook and I know you’ve been targeting kind of an 8% to 10% sort of growth range. And I’m not sure whether you’ve quantified the impact on revenue from supply issues this year, but obviously, you’re building backlog? Significantly, you’ve mentioned this order in India, which I guess is looking to ramp sometime in calendar 2022. I mean, given the combination of maybe backlog increase and supply issues pushed into 2022, overall kind of market growth in the U.S. and some of these new projects, is it fair to expect above trend growth in calendar 2022 driven by all those factors? Thanks.

Charlie Vogt

Yeah. Thanks, Tim. Look, we haven’t -- we’ve spent -- as most companies do this time of the year, we spent a lot of time analyzing 2022 already. I -- we’re not prepared to talk about 2022 on this call. But I would say that the 8% to 10% that we had profiled last quarter, we still feel very confident that that’s achievable.

As with almost every year, I’ve participated in over the last 25 years, 30 years, there’s the known and the unknown. And when we enter 2022 we’re excited about the known, but there’s always upside and there’s also risks that you got to balance.

But if I look at the amount of RFP and trial activity that at least we’re involved with today, we certainly are entering 2022 with a lot more enthusiasm and a lot more excitement than I think we did in 2021 and we enter 2021 not seeing the supply chain challenges hitting this entire segment as it has.

And I think we’ve actually done an extremely good job navigating the supply chain challenges. I mean, we’ve had a very unique sales and sales finance and supply chain interlock process that we have implemented when I got here. I think that is really helped us.

But to answer your question, I think, we feel very optimistic about 2022, despite the supply chain headwinds. And I think, as you think about revenue, if we’re successful with our commercial strategies and price increases, that certainly is going to have a positive impact on topline revenue.

Tim Savageaux

Great. Thanks very much.

Operator

Our next question comes from the line of Christian Schwab from Craig-Hallum.

Christian Schwab

Great. Thanks, guys, for taking my question. I just have a quick question and clarity on backlog. With the price increases taking effect on October 1st and the significant backlog increase in September, was that telegraphed and it was some of that business pulled in or should we think about that is true backlog strength that was going to occur, just due to end market demand and the four big growth drivers that you hit -- that you outlined earlier in the call, I’m just wondering if you could clarify that for me, please?

Charlie Vogt

No. It’s a great question and I’ll give you a straight answer. We haven’t pulled forward anything. I mean, everything I’d like to think that we can pull forward more than what we have, we’re certainly rolling up our sleeves with our large Tier 1 customers to make sure that they’re well educated about the supply chain environment and making sure that we’re not injuring their deployment strategy.

But the backlog that we’ve created in 2021 has really been all demand related. In fact, for the most part, I would say, 75% to 80% of our $200 million backlog, if we have all of the components, we can ship it tomorrow.

So we don’t have any backlog that’s sort of -- we’re not piling up backlog for 2023. We’re facilitating a backlog for immediate projects today and that’s why we’ve got a wide range for Q4 revenue. I mean, if we’re successful in aligning the components to the requested ship dates, we’ve had an opportunity to have a really strong Q4. But I think we’re still in this sort of period, Christian, where all it takes is one component, that the cause us to not build a lot of systems.

And so, we’re being, I think, fairly conservative and relatively cautious just because we don’t want to mislead and misguide. But the backlog that we have today is backlog that we can ship as soon as we have the parts, which by the way, we’re trying to balance.

I mean, if we pull everything forward from an expedite fee, you’re going to have a margin impact and so we’re trying to balance that the best we possibly can. And I think, for the most part, you should look at the $200 million for the backlog as backlog that will likely flush out in Q4 and mostly in Q1.

Christian Schwab

Great. Thanks for that clarity. That was my only question. Thank you.

Operator

Our next question comes from the line of Paul SC [ph].

Unidentified Analyst

Thanks for taking my question. I want to do get a little bit more color on this Plume partnership? How does it work? What are the service providers? What are their benefits from this? What do you guys benefit? And how quickly can you expect you to penetrate the $20 million subscribers you got out there that are in place?

Charlie Vogt

No. I appreciate the question. Yes. As I think most people know, we announced a strategic partnership with Plume during the quarter. It’s a relationship that we’ve been fostering throughout 2021. And I think as we successfully rolled out DZS Cloud, which is really a network-as-a-service software platform.

So DZS Cloud is really designed to deliver orchestration, automation, service assurance, application management type services that will come in the form of either enterprise licenses or subscriber based licenses, or I’m sorry, application license.

What Plume does is it really complements what we’re doing with DZS Cloud and it allows us to participate inside the home. It allows us to differentiate our next-generation WiFi6 CPE portfolio with embedded on sync software from Plume that allows service providers to have a much different experience as it relates to WiFi performance enhancement capabilities, more data analytics capabilities that ultimately are going to allow service providers to think about new revenue opportunities, it’s going to allow them to reduce the amount of truck rolls.

And when you combine DZS Cloud and Plume, I think, we’re the only company in the broadband industry that has a complete end-to-end software portfolio from what’s going on at the core all the way inside the home or small business.

Unidentified Analyst

Okay. How quickly do you’re going to roll that out in the first quarter, is what I am reading…

Charlie Vogt

Yeah. We will -- I mean, we’ve been forecasting. I mean, we were very thoughtful about this, because what we’re doing at Plume really aligns with WiFi6. And our WiFi6 portfolio is launching from a product availability perspective in Q1. And so we wanted to make sure that, we didn’t launch something that customers didn’t have access to.

And so we’ll have products available for shipment towards the end of Q1 and into Q2. And so right now we’re focusing on booking orders for our cloud-based portfolio that we expect that the bundle of the software solution with our CPE products will ship towards the end of Q1 and into Q2. So, we certainly got a pretty ambitious appetite for the second half of 2022.

Unidentified Analyst

Okay. And…

Charlie Vogt

And by the way, we’ve got a whole series of what we call, DZS Experience webinars that launch this month, in the month of November.

Unidentified Analyst

Okay. A couple of questions on our -- some of the subsidies, the U.S. Government’s putting through like, RDOF, we’re hearing -- it’s just been kind of trickling in. What’s your assessment of that and also in Europe, you said a lot of the money is poised to be let go soon. Can you update us on both of those situations?

Charlie Vogt

Yeah. So, I mean, if you go back 18 months, everyone’s been talking about the infamous $20 billion of RDOF funds, which is a -- as I know everyone knows, is a multiyear deployment. Up until really Q3, there was only about $300 million of that -- of the initial Phase 1 $9 billion that got deployed. As of right now, there’s $1 billion that’s been released. So that’s good.

So we’re starting to finally see a lot of the RDOF dollars that are impacting some of our large customers like Consolidated Communications and others that are beginning to see some of those dollars go to work.

We don’t talk enough about what’s going on in Europe. But there’s a number of countries that have significant multibillion dollar stimulus funds that are coming out of their government institutions that are also fueling a lot of broadband initiatives across many countries around the world.

And then, assuming that the Infrastructure Bill gets passed and we’re still assuming that, the broadband element of that is still about $42 billion, that certainly is going to have an impact, I think, more in the 2023 timeframe, just because, by the time it gets implemented in Q1 of this year, it’ll be something that begins to roll out of course the very far end of 2022 and into 2023. But U.K. has got their freedom fiber. Germany’s got their utility -- utilities in Bavaria and so I think that between just the U.K. and Germany, there’s close to $20 million of funding.

Unidentified Analyst

Okay. One last question, you mentioned in your letter that there’s a lot of Open RAN or more Open RAN opportunities in Asia, can you discuss them outside of Rakuten, who else you’re talking to, if you can or what types of projects you’re running into there?

Charlie Vogt

Yeah. I mean, just from a competitive standpoint, I’m not going to share the projects and the companies that we are engaged with. But I would tell you that there’s a tremendous amount of momentum across the Europe, Middle East. There’s a lot of activity across the Pan Asian markets for O-RAN.

And I think even here in the U.S. and Canada, there’s a significant amount of activity that’s underway for O-RAN. So I think O-RAN is here to stay. I think it’s something that, carriers that had already begun to roll out their 5G networks are sticking with that initial deployment. But I think Phase 2 of their 5G deployment will lean in towards more Open RAN architectures and I think that certainly opens the opportunity for companies like us to participate in a more meaningful way.

Unidentified Analyst

Okay. Do you have a sense of timing, when that could be?

Charlie Vogt

We keep -- we are -- I mean what we’re seeing on our -- I mean we’ve got -- I mean, if you just look at Rakuten alone, which I think what they’ve done is pretty unique. I mean, they’ve gone to market themselves, going from zero million to 5 million subscribers in Japan. We’re -- today we’re exclusively providing their front-haul gateway solution for their growth.

They have, I think, 16 trials underway with customers that are leveraging their architecture. Many of those will have a need to leverage their platform a reference design, which we are a big part of. There is some meaningful business there that we’re not unfortunately in a position to disclose right now, that we think closes in Q4 and begins to roll out in the first half of next year, which could be very exciting for us. And separate and apart from that, I mean, we continue to be very pursuant with the Tier 1s both on the fixed wireline side, as well as on the mobile side.

Unidentified Analyst

Okay. Thank you very much.

Charlie Vogt

Yeah. Thanks for the questions.

Operator

There are no further questions at this time. Ladies and gentlemen, this concludes today’s conference call. Thank you everyone for participating. You may now disconnect.