Earnings call transcript Q1 2023

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Operator

Hello. My name is Jean-Louis. Welcome to the DZS Q1 2023 Earnings Conference Call. [Operator Instructions]

I will now turn the conference over to Mr. Investor of Head Moreau, Relations. Ted Please go ahead.

Ted Moreau

Jean-Louis, XXXX earnings you, and welcome quarter first DZS the conference to Thank call.

Misty Officer, Joining me the CEO, CFO, and are call DZS Chief today to the discuss Charlie our to participate Vogt; Q&A also Alonso is Miguel results in President Kawecki. on Product session. and

along investor Misty’s call today, be referenced will we closed earnings and market which can first quarter and release today’s presentation earnings with along After published with commentary. you follow an Charlie updated throughout

today financial discussion SEC, statements well including statements on reports website. the Our and contain will most and materially. based XX-K being of Relations XX-Q as results events These its or risks differ refer our that Please the forward-looking the future regarding uncertainties or may current recent as events and are company. on documents performance our expectations subject section to the to the actual available future Investor of company with files

otherwise unless with corresponding metrics determined reconciliation basis. earning together items that press this in being These contained on numbers a release. note and are are on you indicated, to GAAP the call Please today’s to non-GAAP provided financial GAAP the

hosted During Stifel. will attending the by Cowen be second Craig-Hallum, Needham, investor quarter, Riley, conferences B. we and

look Additionally, our at headquarters analysts will Wednesday, Investor this May investors we XXth, have planned in forward and Day hosting to we at that an exciting Dallas.

I will Charlie. the to turn now over call

Charles Vogt

quarter first call. our to welcome earnings and Ted Thanks

guidance. ability to cash be headline solutions, combined benefit measured revenue the growth by and improved revenue referring encouraging for customer flow. customer quarter the the certain margin to first earnings favorable to continue secure what secular deployments gross our long-term in and results our financial will trend. broadband numbers, our growth will end favorable despite of at progress levels make we I'm robust reflected operating certain hindered maximize inventory deliver revenue high expansion, smart, As results Beneath company a which both positioning to in and a from and high-speed XXXX backdrop --

relentless focus focus. growth from our margin Aside customers' of areas two on and revenue been our have primary

we deliver As XXXX and Furthermore, to margin aligned the anticipate throughout earnings that it XXXX margin. low gross and balance conversion. we improvement to for our point mark gross expect gross with in-year anticipated of relates will margins, backlog revenue XQ the

remains as segments of environment, drivers current by challenges, slower demand impacted disbursements market unchanged. expected inventory secular everywhere management and broadband been approvals funds, and have macroeconomic While well the the than robust of government the as broadband for stimulus

trends outlook reach, our are to marquee order revenue favorably market to with flow. improvement the our margin improve growth IT cash technology, in and expand revenue service our our our expect benefit and long-term, margins infrastructure, and growth designed meaningful earnings to investments providers we making While and over deliver we're the in expand

world recent with Our vision, product category around defining deploy. providers launches and the are service aligned wins are what to are with design Tier that and numerous playbook X strategy are providers validation seeking service

we revenue, these While broadband to will into revenue and translate mobile ultimately meaningful it fiber-to-the-premises position design the competitive growth, time markets. and our deployments our believe will wins for across take momentum and into translates validate

differentiating markets. within improving two competitive are these and products our new Our position

and being with mile Sabre access our aligned With the transport, fiber category creating mile edge last introduction XG mid fueled of XXXX, deployments. by broadband are a is new optical we which

of the in second favorable savings cash half accelerating share more detail 'XX flow during on XXXX. deliver in-year impacts will we into and earnings As and cost we're to

earnings During $X.XX. share per quarter, the million and $XX margin a of we gross of first delivered non-GAAP XX% non-GAAP loss revenue,

includes America's a our currency Pan-Asian year-over-year, regional end low basis. XXX% and the Asia flat On increase region, X%, revenue revenue million performance, quarter a regional represented XX%. $XXX which revenue for guidance, the revenue at our XX% an increased Asia constant to was $XX increased our was the sub Within EMEA our of While increased our of XX% basis, India, and region million over relatively on year.

segment revenue elevated contributed increase representing component year-over-year. or as time a service impact approximately first our sourcing significantly for cost chain, in two an results. software chain did well On XX% basis, and our surprise revenue nearly supply product years, the Notably, XXX% of not availability of as and supply

was Along supply chain wins. support year forthcoming our guidance range, improve higher increasingly XX% and of design our negative continue the throughout was to throughout While industry, were companies deliver and due required gross we recent levels XXXX. margin EBITDA are on to a into million $X our non-GAAP will our with timing numerous other investment that within adjusted and to confident the that

Strategically ultimately laser market, broadband on to focused the company we the positioning fiber-to-the-premise improving market share earnings remain in on and mobile and cash sustainability. capture flow long-term

expect leverage we our impact earnings. improvement operating favorable expected an With to and gross margins, to

expect we improvements in earlier, mentioned year. quarter margin As throughout gross every the sequential

Several factors higher long-term: with contract to margins and partners. associated new introductions, and with product growth North over with improved efficiencies earnings in higher Sales confidence manufacturing EMEA, the aligned gross operational margins underpin America growth third-party our deliver and recurring software,

ahead than remain While the several next of have the us to many disbursements the subsidy convert, expected government slower broadband of disbursements over years. been bulk

deployment visibility challenges project And Our believe timing remain in schedule we management transitory and are the current activity inventory current trial and nature. pipeline, related robust.

supply design challenges with markets and COVID environments, chain meaningful to to the will differentiated As position competitive enable secure spanning our our infrastructure broadband new mobile and wins globe. software solutions we post adjust the believe improve, us fixed and

Investor which and cell platform. Metro include new Access Velocity VX, our in Our more automation Edge, during cover we roadmap new Optical our and products and our will our Day Xtreme XXXX, Wednesday, Sabre MXXXX, new announced site network our recently service detail router orchestration and Edge, new mobile

over We expect margins have aggregate to to products our time. also these on impact favorable gross in -- a

the X and exchange mobile investors of company unprecedented fluctuations positioning market cycle, a we being investment the foreign from on focused cost challenges ERP to past remain inclusive increases, a our industry-wide what fiber-to-the-premise an and to to and should represented two appreciate manufacturing share set we XX-year capture global broadband transition that While robust and conversion. component years to of availability anticipate

As such, been challenging. and has guidance margins earnings revenue providing

broader visibility forward, market and the dynamics as stabilize Looking have we predictability. manufacturing better IT forecast with and the transition and time with complete, is integration real now systems scale to

$XX at shortfall result $X the was was with expenses. the due and balance revenue slightly Sequentially, our cash in cash first Our a quarter with March investments. million million end at of ended lower inventory $XX our and collections operating and lower guidance and margins with of inventory gross earnings by converting higher range of to We required million. lower timing

million end of favorable to at for improve $XXX accounts Our coming opportunity receivable quarters. March cash balance our the a in the provides capital and of working

of region and balanced lead and backlog, XX%, Americas EMEA between an deployment customer alignment XX% reflects First with and million quarter was times, existing Asia our and bookings at at seasonality schedules. improve $XX expected rebalancing

to pipeline, delivery trial activity and three project remains expectations months months. our to lead are six to While visibility XX time XX customers expected robust, from an our shifting

orders India XX grow design in While position South grow States trials Asia We margin gigabit revenue and at wins, the are led leadership market well and and broadband, United deliver to favorable expected to we Vietnam rates. to growth by ultimately, PON to further above to in growth expect as underway and convert XG expansion. continue expect and and product evaluations Europe and currently gross as Korea's

convert year. million Of we our to revenue that $XXX this will million of $XXX RPOs, we anticipate

to approximately in the converted our historically during have we in-year expected from us is XX% reminder, aligned significantly XX a than previous higher, providing revenue years. years, booked orders As period. of visibility previous same backlog more Compared with our with revenue the

year XXXX $XXX are levels the revenue with assess of recessionary customers and we disbursements, certain today's the our inventory stimulus timing outlook remainder to approximately revising we of considering million. As and government concerns, full

result the we successful this streams, manufacturing cost that to numerous $XX of million work and IT we a of approximately million savings completion expect of accelerating year. As to $XX are realize products,

resulting an to the EBITDA Our $XX are of most to and $XX of adjusted range between revenue, million. in cost anticipated million savings adjustments offset

operating ending of And of asset to expect of our only growth approximately ASSIA $XX our million cash significant during EBITDA second associated We term year software anticipate with with acquisition. our and XXXX. X debt consisting positive year half and flow deliver the with we cash adjusted the note,

will and that from to outlook. Upside enhance to a government well-positioned anticipated, our come from feedback returned adoption the would of launches. visiting recently stabilizing of executives and secure the that Europe weeks provider the underway States and timing EBITDA remains I service our across revenue markets, with sooner on-track numerous long-term occurring our product and guidance travel, Reinforcing design of of new product pace currently and stimulus trials new received wins resounding United than financial of completing the DZS growth optimism, our disbursements further

is heightened regarding coming investment and there mobile be the providers tools investments broadband self-funding years, convinced by more defined fixed providers of broadband expect and countries XG While and buildouts. enthusiasm world private a and that equity to the we commitment unwavering managed service the amount over will architected networking service more making around and platforms. deploy of similar am I software services, and broadband have automation fiber-to-the-home the

and deliver India a technology providers to Germany, are their phases emerging to United platforms to the differentiated XX% providers and responsiveness maximize several and at network in and DZS need invest deployed subscriber less their Service Appreciate at demands embracing edge, applications, need fiber-to-the-home, personalization. understand years that accelerating and fueled the the broadband advance competitive The their expected. network Italy the that for the they Kingdom, high performance, moving investment to creating share such retain shift next grow the to are are various by as countries than to implementing stakes is edge the experiences. new are open and and Thus, Service with buildout. solutions significant they are subscriber are and closer networks. and features have the XG opportunities over and enhanced market of

the are broadband hyper-fast, providers acquisitions are with aligned Our by the world past investments, and validated service evolution years the executed low-latency and towards around global innovation over few market being networks.

and market Our become improving satisfaction. a on churn, focus security agility, DZS investments with customer ultimately, in gains, on differentiate experienced efficiency, reduced resulting to itself providers enable automation, providers operational and enabling customer service are to share and

subscribers including into prospective approximately our trials XXX are our expect which service represents mobile active We our the are underway during to provider Not production connected software service providers of to half access, aggregate. deployments in currently XXXX. second technology evolve including with cloud optical and million current customers trials that operators, fixed wireline with in and solutions, with alignment XXXX we many new

to growth years grow the XX% If XX%. Over the growth an to and next fiber-to-the-home connected by cloud business blended at markets expect several assuming the and are XXXX. grow these address, XX% years market in market assumptions to a rate CAGR, grow at to data suggest we million the that firms several market XX% across our at can the $XXX grow the research correct, edge over to software revenue optical the market approximately next core XX%

Assuming adjusted achieved we deliver with stated can and by between $XX we with execute pillars. growth expenses, share and upside gross we five million moderate and our margins, XXXX, our aligned to our million in and $XX $XX expand EBITDA in operating million XXXX of $XX gaining we million anticipate

with and two been innovation journey the years business alignment. our the half Our a an and over focus being has transformation customer all-encompassing past of

As our during well and additional of access, validate, positioned this customer software cloud year to into innovation service our are connected second marquee recently solutions and wins secure differentiated the half optical provider and XXXX. announced wins

with the making to we're like In would closing, growth summarize our I pillars. progress five

cycle the first The XGSPON evolution and driven fiber GPON underway. broadband is that currently the to being upgrade now by

next this We of and and with service country X at to for scale upgrade years, XX and cycle the vary of pace continue the provider. size the deployment investment the by least expect to

The second and growth pillar share is our EMEA. America market in North ability to gain

experienced a XX% XX% annual in the and have North rate past America in years, EMEA. two growth we compounded Over

experience to with we super XXXX. regions growth are providers We these Due to XXXX the regions. making and expect two two across progress traction multinational and and in favorable these service regionals many

resulting concerns, third of security technology certain a suppliers. The growth to deemphasizing pillar relates the in

to active design months. providers very expect and wins the are XX over world numerous awarded We incremental with around the next be service

is pillar existing install to our the to cross customers fourth leverage valuable of Our sell. base opportunity

service enables deliver based defining and portfolio providers fixed differentiated broadband base Our solutions. design and and services open category product on to standard mobile

investors RAN. Our call fifth as growth maybe Open pillar best and described option a for is

the over in very several is past technology instrumental of at evolution early been the have we While and the years, ORAN phase. open a RAN

RAN opening Symphony implement Mobile, due such to Multinational leaders. as network been Open and other broad Rakuten of mobile choices, Open up operators, benefits costs. to There are RAN, transition Rakuten government increased operators network mobile keen underlying scale are scale We the and pioneers exposure technology Open to certainly, technology sectors benefits reducing and private large to lock-in, RAN and with have their strategically for adopt to aligned lower the vendor numerous standards to interoperability. mobile and including to

We remain our bullish and outlook. confident and growth long-term in financial

continue will optimize near-term while timing our market objectives with growth that balance can to We achieving our investments long-term profitability our we such objectives.

on we are the continue the in network As believe to capitalize us. to opportunity invest in of edge, positioned providers service front we well

various a provide status the and fulsome stimulus our activity, gross programs product and the real market, trial will portfolio, insights Investor around and our broadband the a During more we Wednesday, regarding targets. upcoming update margin mobile profitability with regarding time fixed government update Day world, backlog, on

of in person, facility you are who Wednesday those in headquarters seeing For I Plano, you Texas. forward our attending look at to

With turn that, the you, Misty. over to I'll call

Misty Kawecki

afternoon and Charlie, good you, everyone. Thank

times providers, along following spending in a recognized X.X XX% was region, finalized reported correcting I service QX deck, on will as revenue We and start low quarter, are down XXs. particularly portfolio. contribution $XX the in lead Asia are you from services grew capital their XX from the was ratio the book-to-bill year start a seasonal investor currently quarter our orders more weeks anticipated and XX. Slide the resulting to of in If million, year-over-year an increased software order which than budget. the We first into of as for

also Ordered delivery traditional in influenced by QX. and broader Asia being patterns macroeconomic seasonal are for dates concerns ordering

we prepared savings and are for making uncertain touch remarks, position uncertainty, in economic prudent an to XXXX I capture a macro this through strive are while we to cost operational long-term value. is against in market on that to focus shareholder maximizing ensure flow later toward on my cash decision broader While and an continuing will more it to backdrop efficiencies, navigate share optimal

with increase of prove RPOs, To $XXX cycle. will as security the million upgrade in transitory indicated, Charlie access We ended believe potential we of the broadband the a be any fiber clear, cycle, disruptions disbursements year given and replacement geopolitical subsidy stage million government vendor early from QX $XXX ago. and an XX%

order consistent RPOs As backlog software supply a and the deferred by services the a revenue chain. with and driven plus reminder, growth combination trends of tight strong

the quarter gained growth increase region regions first million. We the our was with we XXXX on million, quarter. basis. in growth Asia the for increased selling Asia just year-over-year, customer marketing Revenue revenue over revenue the sales from $XX $XX Revenue Revenue revenue the by from One total growth the drove from all year X% constant for year-over-year to in $XX investment led market. year year-over-year Asia a the have million and Driving geographic our currency XX% of region XX% $XX of Americas geographic efforts reflecting region. in EMEA million. in X% to of Asia an over represented to into successfully XX% XX% Pan or region increased traction

Turning to technology. product revenue by

from XXX% networking of services Our million of May $XX XX% of year-over-year revenue acquisition increased the and Primarily XX% revenue ASSIA to revenue. the total million infrastructure or $XX increased results revenue. total year-over-year access or software XX% a XXXX, to

we to margin are from of QX in profitability, While our points to we expect gross drive XXXX, in several enhance level and we which in highly improvement on confident in are XXXX. our its further the impact throughout the structure balance disappointed margin QX of ability short-term

by the and revenue start dollars. the from strongholds quarter. near-term XX.X% QX past resulted over U.S. in Adverse recurring foreign challenges. compared in a of and into currency our margin will gross product mix moves Korea from converting addressing I year primarily in has the been FX in adjusted XX.X% issue year Japan ago with

currency mitigate implemented stemming risk a forward. material from policy have hedging to rates changing We any going foreign

we favorable adverse revenue moved during gross level. mix QX to the QX certain While a timing expected the More on margin our first projects to from over initially Simultaneously, of we and of higher out course throughout impacted quarter, trend margin, the we had of of recognized now ship that are margin the the projects lower margin product balance QX. certain QX ship to expected XXXX. drive product during improvement gross expect XXXX an specifically, mix

costs prior during As our of we a year. currency foreign freight XXXX. XXXX, to moves contributing QX, continue improve our meaningful year. ability adverse to logistics while these half supply chain on point an seeing margin our year we expectation, the improved the clear, we low fees in gross gross fact our Further drive result, with that the improvement from the and are this backlog be believe QX the delivered of To from incurred will second consistent existing including our further we margin based and for in expect to confidence expedite the and to is have this costs, margins backlog, of and gross mark the throughout to throughout reduction balance margin low elevated in cost meaningful contributing some now majority profile costs impact

optical XXXX partnership, margin number America a further second improved include ability our These additional and geographic OLT, new edge shift defining Access category confidence and EMEA, North mix of the shift margins. A and benefits VX, higher of our manufacturing including the factors in platform. and towards software half products, towards mix enhance drive our to Sabre Fabrinet product Edge,

QX sales addition year-over-year increase and reflects past the $XX over incurred million $XX operating with the First from acquired marketing ASSIA million quarter of expenses to The investments assets in in compared XXXX. adjusted year. were

EBITDA of margin of a the a was of of result adjusted of combined during QX $X Our loss $X.XX sales gross loss XXXX our XXXX. $X.XX of EPS and non-GAAP The a $XXX,XXX a decline with in to was expense. lower year-over-year million was loss loss and to XXXX QX in compared QX compared higher marketing

ASSIA to million the on as revolving cash. sheet. the with $XX ended facility year million the We $XX the acquisition. with We credit million part of loan $XX balance five to had fund debt drawn quarter the Turning of in along term our

than the Morgan received As a be which in lower this QX, result of our week. waiver facility, XX-Q will credit profitability disclosed we for JP in a expected levels our filing

in outstanding sales days in with period. days was XXX Day year QX the compared XX ago

well a our have to customer throughout above the to DSOs by While year-end. XXX year the by DSOs timing target we are been in decline more to below large of that months. payments milestone the our levels, expect normal confidence, level skewed reversion with current significantly coming accelerate days Underlying scheduled

year-over-year $XX declined first peaking turns with Fabrinet. million transition now efficiencies Inventory After from the a Florida year quarter million. Annualized associated due similar QX X.Xx to our by were $XX to increased with of manufacturing recent $X by XXXX, inventory during has million inventory level. the in to ago

-- to contributing Over me, single $XX such million and down the completed and to savings cost from been million transition year-end that to profile. the certain in-year is $XX Charlie Further systems operational cost excuse the an our the have manufacturing improvements will Fabrinet, of to improved past cost of system come a actions, now consolidation efficiency of quarters, referenced. as several undertaken we which has Florida operational ERP

existing the Revenue dates be low XX% range we of range margin with QX on backlog, Gross for of existing guidance QX XX%, will million. consistent backlog. $XX the year. margin believe in to to revenue the to is remainder Our of improving sequentially a our in as $XX Based of projected of profile point the ship the million follows.

gross During and aligned operating EBITDA and software adjusted half further contribution million between million. million of of million our the a introductions second Adjusted $XX $XX expenses higher XXXX, margin revenue. $X and new positive and with $X anticipate we a loss improvement between product of

XX% between between to and $XXX improvement of year $XXX million; XX% Our $XXX range. gross XX%, outlook expense the margin XX% year full exiting updated year. Operating million and expecting million includes the quarterly revenue approximately sequential in throughout and the

million. EBITDA adjusted $XX and $XX between million Finally,

expected aforementioned at liquidity zero to improving With actions, balance and the our of cost end during performance the expect of our our approximately balances drawn we combination improve with year, cash $XX revolver business the the to on million saving year. our

to session. hand the I'd operator to the Q&A facilitate to call now like over the

Operator

from Stifel. comes you. Thank Tore of [Operator question Svanberg Instructions] the Your first line of

Tore Svanberg

geographies? Stifel from the Could here. little the information outlook Tore to -- previously than us had lower coming which roughly bit maybe granular perhaps roughly the a segments you million, give XX% where various was we from XX XXXX so XX% expected. Charlie, close exactly more different or on by even

Charles Vogt

stemming timing from announced of we Yes, in earlier products year. new it's the and the some launched really the that of

the So perspective, full I a timing it's of available Sabre availability mean, so from there will just into its VX. there's fully based products be when market. well some as launch the the waiting the on specifically and product XXXX as the

the side, it the regional is say other that. trials as we're important timing just at, with and pretty we the started that relates element year, exit think on timing of trials is I'd control. is conversion to our that appreciate and not investors rate on we're always some in earlier say some the along going when -- within the based where of that that should analysts the the And we exit And trials which to that's I'd

Tore Svanberg

And ahead, going -- Charlie. yes, you from time mentioned lead above go

Charles Vogt

no, No, go ahead.

Tore Svanberg

even lower? to you wanted point? sense new just low product mix, I could what's about to get time above lead at stabilize Is XXs. ask XXs, to low lead going go normalized Just a times was this going think lead your where you given or weeks things the times XX will for from just

Charles Vogt

still expecting chain a I and mean, still there's customers with what I slight lingering there's are Yes, some disconnect the what challenges. is. think supply reality

way that to access there’s be level, be subcomponents to material chip feel going There's raw we and ability challenges at you're our always I down. going to the -- lot and has certainly some at better But navigate. always some with I many what I impeding to ever. year of overall lead and -- over seen and mean, time. do customers think have of to was companies try a think something that one with was XX to don't again, last going comply it think were XX overall, to come customers that think have challenging I yes, we're that level, the the various that a week ever to any us I

I us don't think we're are into service to so from month, get delivery. And providers to three challenging this three that to going to down get get order think months I year. to

vary and of of six right month month some we think six that BOM range between things sort range. But structure, three other it to I products, we're because mean, challenges still depending that get now. that of on somewhere does sort we three I really the some months. that there's into elongate And in product. the products, three have

has consistent consistent in I we've XX to deliver a being with eight window. year, been able do I relatively long, time. as in long this the to XXXX, last as products been to to three we're again, month go we into where weeks in that's we for over of But kind a expect be pretty mean, still decade. four exit And that the going industry

got deal to I at some that there's with. point anomaly next year, there some think that get we we'll unless new

Operator

Christian comes of question line Capital next Group. Schwab Craig-Hallum from of Your

Christian Schwab

and to outlook. and guys, afternoon, then revised -- revenue EBITDA Charlie Good

we as lean type EBITDA and kind the and expectations can 'XX should to we we a it maybe going at you How 'XX, run run to million business, look running attain 'XX. mean OpEx? 'XX rate we call where to $XXX operating are very in about level? you I and at like move thinking of $XXX are it, here to As million this back are we of maintain be expenses the

Charles Vogt

Metro I of XX products, out think to transition expect Optical in maybe resources door, significant have I Fabrinet, sales pretty at has did the portfolio with haven't contributor software are articulated we're last new us been And We that fully some us associated structure Edge complete North door. over months -- Yes. okay? maintain market with And structure a a the supply heavily then side, to is cost had mean, I portfolio in the we a I opportunities we be accelerate we a continue mean, people the and lot significant to and going last chain, years get aggressively an the added marketing the standpoint, But and try some year. to by EMEA. more to it, we XX, marketing, out where capture the will and we of operations savings, and the the pretty where to from cost You associated purposely X.X on and for ability to new we timing it think invested those America that well. which extremely the some market Velocity new from OpEx some for to the certainly call mid-year. of let's had entire savings over sales this capture

take just ourselves if the I what revenue in context that to, if we call referred to, at into think and can XXXX pace million $XXX of you We we can it, million higher slightly in cost that quarter are a a operational with maintain $XX structure you profiling, range. we to million that EBITDA you that $XX have see can margins been easily

of itself that, lends got it's sort we to are have profiling what but ourselves, to that visibility on modeling. we the certainly and execute certainly the projects, Now

Christian Schwab

gross is, last it as my to just relates then And question margins.

still have do it through business? that can been may gross way market, Fabrinet and harvest you sustainable lot Given point to, heavy efficient return should done get hopeful like plus what XX% in new a think lifting of the -- a are past. than hopefully it margin seems has I coming Are in we the you been to say, or at a done products and the more

Charles Vogt

EMEA, Well, the you look to months. America profile if the I of talking our for with I mean, gross and at it's clearly tied it's margin XX% XX we margin. well north been today last have mean, margin drivers about North

business America, and a higher more can in secure we the will can EMEA, So we meaningful if contributor. in margin certainly North certainly be business secure that that

Phase have our contract strategy. We third-party manufacturing X only of implemented

So our we certainly as able to as year, the are on half frankly software if the second to say, we implement increase that of be contributor. of additive quickly prices second And we the on thought that, side. not have phase executed will this an ability let's

bundle increase priced If we was the the having some competitive of where with of to ago, Xtreme making that a orchestration goals CPE year ASSIA you can Expresse do our and products and It's we're optical side. and automation previously a are where success, software begin software. prices we our remember, I can solutions CloudCheck same mean, with and one to the is into market, progress. on our had OLT the market we for some the where some we

cross And haven't, capabilities come frankly to portfolio, selling anywhere then, in we are we software. the where think close leveraging the the across including

there. XX% any higher pillars, there's that's factor And third-party reason mix, services assuming which So, a regional when and margin profile more new content, maintain why you how model. to the all to them, a get have can't in the manufacturing we with we of margin and those don't break product no introductions, you the that transition gross software

you but... I if want that on comment Misty, don’t know to

Misty Kawecki

continue that there's we think execute and factors to on. can contributing I and several No, drive several actions

expansion, new Fabrinet between the expanding just our of the products across transition as of and well the several as You software product margins mentioned that pricing, globe, them introduction.

Operator

the from of next Tore Stifel. Your Svanberg comes question of line

Tore Svanberg

follow-ups. just a couple I had of

presentation. us, in you DSOs? margin us us XX was a increase end XXX helpful was first details the to one hoping more But a -- sort for you could expect gross sort year? below I give the that Any your giving is and the and thanks could similar you on that bridge Page of steep of chart maybe The by share with dip bridge, how given again, it the for really of

Misty Kawecki

to of that plan I of don't describe making the have Sure, I collections. front in exact improvements some the conceptually we bridge be to our me can

And were we those payments. certain mentioned months to lost think prior to I that had that with calls have Vietnam visibility, over in we've about milestone case be contracts $XX to XX in milestones paid we've million We contracts. XX still sitting on have that associated

QX So collected the of beginning we to QX between fully XXXX. and expect ranging XXXX. those of And QX by entered be into those

initially had specific cash the and of progress integration. ASSIA those down natural has getting of we one to good on seen quarters. to acquisition and ASSIA DSOs. where due the things improvements just is We've cleaned that seen also seen the We've the conversion between that sluggishness dragging our with been some over that So last collections up couple some contracts. We've billings

end some Last happened the the but not had our and timing implementation, billings Due quarter of we had later much we of billings that we least, in have. QX. to ERP typically than

more the variation from was end to working and so recover quarter two the of we the collections that quarter. And the extreme within next a capital the one in bit at quarters. expect And to

Tore Svanberg

one Charlie more for you. And

transport software. Xtreme You introduced the

selling. could be perspective? you cross is perspective, something the timing color of mean, talk boost to XXXX, I a this us bit that is back with wins really how was from I especially from the helps can a any more the a share topic would just you hoping of helpful. timing that expected if Sabre sort to about And design

Charles Vogt

directly Edge component spent especially tools after portfolio. there's knowing network was implement slicing which well I that mean, the Metro Xtreme portfolio they're and service much applications. with RIFT. on, lot the automation us. to we're certainly we fiber to there's that and Xtreme same as the take software deploying orchestration as a a deployment last to for of emphasis and be going the across launched with to XG the the that was not much, year acquired able today delivery Optical network larger was something network fiber The have with across that with core, But have soon it implementing deployments synergy we concept where be a were connected. mobile we What XG That was OLT we on

timeframe. as it And Sabre months. but with managed, well customers We're strategic they're linkage the relates with will call, in trials another. products XXXX portfolio how with January, as be announced as that the so OLT that's what going we the clearly there dependent with to the one not February to And in those several is coming on

Misty Kawecki

the exactly back that sure to reductions. segue, on I cost Not comments million that make smooth very million circle quickly wanted my I to on clear really our year. in a $XX want but to I just consistent, $XX So was was I reductions cost are

that everyone just I missed that. that got So case in to make I want sure

Operator

line Koontz from comes Ryan next Needham. Your of question of

Ryan Koontz

what these Let RFP how the Europe like there, what seeing think And like a are you're you specifically in you where me activity stages 'XX? do progressing various in about of European of And high days? you. about ask and what's -- market opportunity of in Thank the at and level, kind terms RFPs? the activity,

Charles Vogt

focused exit But out initiatives on more and of negotiation the the globe, phase, and aligned or contract phase we feature dose for across RFP question, and XX I the There pivot. the kind we've Thanks, us. and providers be trial product to that a this compliance entering a activity because I proposal testing service it's testing enter XX once into XX RFP the that sort ago, months of with actually will phases. think at to actually seen we we'll RFP over obviously, great Ryan, the where of of was we're mean, least RFPs and more started a RFIs product. we're tactical at actually trialing the say, some heavy that months, from We've process. of there's selection that XX sort they're and -- I phase RFI, expectation formal point of last transitioned more our we'll and phase those

Operator

concludes at There are no time. call. questions further today's conference this This

disconnect. You may now

DZS (DZSI) 8 May 232023 Q1 Earnings call transcript