Welcome to Comtech's Fiscal Q3 2023 Earnings Conference Call. As a reminder, this conference is being recorded today, Thursday, June 8, 2023. I would now like to turn the conference over to Mr. Robert Samuels of Comtech. Please go ahead, sir.

Good afternoon, everyone, and thanks for taking the time to dial in today. I'm Rob Samuels, Comtech's Head of Investor Relations. Welcome to the Comtech Telecommunications Corp's conference call for the third quarter of fiscal year 2023. Today, I'm here with Comtech's Chairman, President and Chief Executive Officer, Ken Peterman. We're also joined by Mike Bondi, our CFO. Before we get started today, I'll say that both myself and Ken are always available to answer questions our investors may have. So, please get in touch if you want to organize a meeting to talk about the company, our results, or our strategy. We also have a detailed discussion of the quarter in our shareholder letter available on our website. And we have also been working to communicate directly about our business and our market between quarters in our blog, Comtech Signals. Finally, let me remind you of the company's Safe-Harbor language. Certain information presented in this call will include but not be limited to information relating to the future performance and financial condition of the company, the company's plans, objectives and business outlook, and the plans, objectives, and business outlook of the company's management. The company's assumptions regarding such performance, business outlook and plans are forward-looking in nature and involve significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company's Securities and Exchange Commission filings. Now, I'm pleased to introduce the President and Chief Executive Officer of Comtech, Ken Peterman. Ken?

Thanks, Rob. Hello, everyone, and thanks for joining us. In less than two weeks from today, my senior leadership team will spend the day with me speaking in depth about our company and its future at our first ever Investor Day. We are holding this exciting event in our state-of-the-art facility in Chandler, Arizona and we invite you to confirm attendance as soon as possible if you haven't already. Since I took the role of CEO and President of Comtech just 10 months ago, our business has embarked on a transformational journey that has been both exciting and challenging, filled with notable achievements and valuable discoveries. We set forth on a comprehensive strategy to reshape the enterprise, enhance operational efficiency and usher in a new era of hybridized connectivity with Comtech's expertise and technology leading the way. Now, as we approach the end of year one of our journey, I'm proud to report that we are right where we want to be, if not slightly ahead of schedule. The first thing I'll call out, which Mike will speak to shortly, is that we have delivered three sequential quarters of revenue and adjusted EBITDA improvement. In fact, this marks our 6th consecutive quarter of topline revenue growth, which is to say, I am very pleased with the direction and credibility that we are establishing around our financial performance. As pleased as I am with Comtech's overall financial performance in the upward trajectory in our results, I want to highlight that since I became CEO and President, we have met or exceeded the guidance we have offered to our investors. That is important to me personally, because I believe this demonstrates that Comtech is intent on meeting several key commitments we made to our investors since day one of my tenure. Now…

Thanks, Ken. For Q3 fiscal 2023, we recorded $136.3 million of consolidated net sales, of which $82.2 million or approximately 60%, were reported in our Satellite and Space Communication segment and $54.1 million were reported in our Terrestrial and Wireless Network segment. Our third quarter net sales represented a 1.9% sequential increase over last quarter and as Ken mentioned, our sixth consecutive quarterly increase. Compared to Q3 fiscal 2022, our Q3 fiscal 2023 net sales increased $14.2 million or 11.6%. Primarily reflecting significantly higher net sales in our Satellite and Space Communication segment. Our consolidated gross profit percentage for Q3 fiscal 2023 was 31.7% and primarily reflects an increase in net sales and overall product mix changes, including significantly higher net sales of our troposcatter and SATCOM solutions to U.S. government customers within our Satellite and Space Communications segment, which as a reminder, historically achieved a lower gross profit percentage than the recurring type software-based sales included in our Terrestrial and Wireless Network segment. Also contributing to the change in margin, was that Q3 fiscal 2022 benefited from lower warranty expense in light of the reduced level of sales activity during that prior year period. As explained in more detail and reconciled in our Form 10-Q filed earlier today, we utilize a non-GAAP measure that we referred to as adjusted EBITDA. Q3 fiscal 2023 adjusted EBITDA was $12.5 million or 9.2% of consolidated net sales, as compared to $11.2 million or 9.2% of consolidated net sales in Q3 fiscal 2022. The increase in dollars primarily reflects the benefit of our One Comtech lean initiatives implemented through April 30, 2023, offset in part by a lower gross profit percentage. Bookings this past quarter totaled $102.8 million, representing a quarterly book-to-bill ratio of 0.75 times. Our current revenue visibility approximates $1.1 billion and is equal to the sum of our $668.4 million of funded backlog plus the total unfunded value of certain multi-year contracts that we have received and from which we expect future orders. Overall, our consolidated Q3 fiscal 2023 net sales and adjusted EBITDA were in line with our guidance provided last quarter. Now, I will turn it back over to Ken for some closing remarks. Ken?

Well, thanks, Mike. As excited as we are about how our culture of innovation, technology leadership and the power of collaboration, enabled by our transformation to One Comtech is creating a bright future, we are more deeply focused ever before toward meeting our daily commitments to our customers, our shareholders and ourselves. The foundation that we're building today is already delivering improved performance. As we launch our lean initiatives, continue to streamline our cost structure, further optimize performance, and instill a culture of discipline and commitment, we are creating a sustainable framework that we believe will create shareholder value for years to come. Now regarding new additions to our leadership team. As I mentioned earlier, we are attracting a lot of excitement across our markets. In this quarter, we continued to enhance our leadership team with several key appointments, designed to maximize our ability to compete and deliver across our global market segments. We appointed Don Walther as Comtech's new Chief Legal Officer and Nicole Robinson as Chief Strategy Officer. Don has significant technology and aerospace industry experience in both public and private companies in the commercial and defense sectors with his previous experiences at ITT and Boeing. He will focus on ensuring Comtech's competitive differentiation through contracts is preserved and protected. Nicole is well known across our industry. Prior to joining Comtech, she served as President of Ursa Space Systems, a leading satellite intelligence and data analytics provider. She will focus on creating and implementing priority space business pursuits, oversee the development and implementation of new technologies, orchestrate global growth initiatives, and lead other priorities related the geospatial imagery and data as well as space communications in both U.S. and international markets. Regarding our EVOKE partners. In the early days of my tenure as CEO, we envisioned and then…

Thanks, Ken. Operator we will now open the call for questions.

Yes, sir. [Operator Instructions] And our first question will come from Joe Gomes with NOBLE Capital. Your line is open.

Good evening. Congrats on the quarter. Thanks for taking my questions.

Good afternoon, Joe. Good to see you.

So wanted to start out on the terrestrial and wireless network segment. Revenues there have been pretty flat over the past five quarters. Bookings have been down for four straight quarters. Just trying to get a better idea of what is occurring in that segment? Maybe give it a little update on some of the 911 clients. You talked previously about getting some of these big states, you know Pennsylvania, South Carolina, et cetera out of the deployment phase. And just trying to get a little better understanding of where that business stands today and where we can see it going here in the near future?

Hey, Joe. This is Mike. I'll take that question. So certainly a good question and one that we do plan to address more in more detail during Investor Day. But broadly speaking, we are expecting growth to come in terms of some of our short-term and long-term initiatives through tracking several state awards. You did reference, some of that we have been tracking like the Ohio opportunity. There we believe that it's still moving through the House and Senate and going to the Governor for signature. So I think that's when we will have to just watch the news in the next couple of weeks. In terms of our Southwest customer, I think that one is moving around a little bit in terms of how that may come to us, but we believe that we have services and solutions that only we can provide for that opportunity set. And so we would expect at some point that to hit. But that's one to watch. We also had two state RFPs that we had submitted proposal responses for. One was back in December, the other was back in May timeframe. So there, we're just waiting for the down selection process to start. And then, I would say other initiatives that we're tracking, would be to sort of bring NG 911 type solutions to military bases. We spent some time trying to assess that market and we believe that, that is good ground for us to attack. Also looking at machine-to-machine and AI solutions, infusing that technology into 911 applications, sort of, taking it up the tier, if you will, to providing as-a-service to those clients. We also have thought about bringing some added insights to the PSAP, so they can do more, say smart dispatching with better analytics in front of them as they are trying to assess emergency situation. And we also have targeted taking our location-based services platform to international customers. We've had really good success here in the U.S. with the Tier 1 carriers enrolling out their 5G platforms. And as we progress with those opportunities, we think that the international market is the next step there. So in 2024, we definitely feel that’s an area we will attack. And generally speaking, I think we have a view of as-a-service, as a theme, as we are trying to transition this segment from being beyond just a 911 upgrade provider or call routing, I think there are other things that we can do for commercial entities and we'll talk more about that during Investor Day.

Okay, thanks. Thank you for that, Mike. And then looking at your SG&A for the quarter, obviously it was impacted by about $4 million restructuring cost. It's a little bit higher than in Q1 and Q2. If we are looking out here at Q4, should we expect a third quarter type of level or more along the first or second quarter levels in terms of any restructuring charges?

Another good question. Yes, I think in terms of our expectations for Q4, with two months to go, I think at this point, it would be reasonable to assume a level similar to what we experienced in Q3.

Okay. And one last one from me and back in queue. So, I know that you've talked about this in the past, but again if the effective interest rate is over 10% in the quarter, cash borrowing rate is almost at 9% in the quarter. Maybe you can give us a little bit better of an update of what you guys are trying to do to minimize that or bring that back down a little bit, understanding that rates have been going up overall. But you guys are paying some pretty high interest expenses here?

Yes, it's definitely something, Joe, that we are focusing on as we said in our last earnings call. We're not going to sit idle, we have a credit facility that comes current in October of 2023. And so we want to use time to our advantage and we certainly at this juncture don't have something specific to say about capital structure and alternatives, but we are evaluating them. We are looking at this from a holistic point of view. We want to do something that's durational in nature. So we're not renegotiating a facility say in one or two years from now. We definitely heard feedback from our investors and lenders. And we'll take that into our calculus as we navigate through the next steps there. On top of that, as part of our benchmarking processes and bringing process discipline to the table, we are looking at our investments in working capital and we did a test this quarter to see that we can get down to proper leverage ratios that we have to plan for July and we did that. So, I think that's a great achievement on the team's part here. No small task there. But certainly, as we go through -- we're trying to grow the company and making investments to grow, we want to be disciplined to bring down our AR and inventory levels and bring our payment cycle with our vendors more in line with industry standards. We do recognize interest costs are 3 times what they were about a year ago and certainly taking that into consideration for sure. So I can tell you we're focused on that.

Thank you again for answering the question. Much appreciated.

Thanks, Joe.

Thanks, Joe.

Our next question will come from George Notter with Jefferies. Your line is open.

Hi, guys. Thanks very much. I guess I wanted to ask about margins, obviously a softer quarter on gross margin here. And certainly, it's coming from the satellite and space business, I heard what you said regarding Tropo, but can you talk about kind of the puts and takes there? And what do you expect for the margin trajectory going forward?

Sure, I'll take that, George. So yes, in Q3, we did experience significantly higher net sales of our Tropo and Satcom solutions to the U.S. government and customers. I would want to point out in the details of it that there were three main items that we were delivering this quarter. One was the VSAT equipment to the U.S. Army there, that equipment is coming off a contract where it's cost reimbursable. So as we have said in the past, those types of contracts, while they're good and they're good cash flow payers, they come with low profit margin. So that's just a legacy type transaction, if you will, that we had come through this quarter. We also, as a second theme, we did ship out or started to perform on our U.S. Marine Corps project. So we're ramping up our activities there. And so that also -- as a reminder, a contract that was, I'll say, pre-COVID priced. We won that back in 2019, and it took a little while to get the order in the fall of 2022. And at this point in time, inventory is starting to show up, and we're working on our deliveries, but that had a significant influence, if you will, on the quarter, just given that it was pre-COVID pricing with long lead times. We also had in the quarter some additional COMETs that were in the nine months, if you will, that was in the first-half of the year. We did sell off some COMETs destined for Ukraine. And while those carry higher margins, I think when you take all three of those and mix them up for the quarter, we definitely had seen our sales percentage-wise for more in the satellite and space segment, and those have traditionally lower margins than terrestrial wireless, as we discussed in the past that have more software recurring type sales and margins. So I think it was just the confluence of those transactions that impacted the margins. Heading into Q4 and looking forward into FY ‘24, certainly with our One Comtech initiatives, and looking at where things are headed, we do expect margins in satellite and space to improve. And that's something that we are also heavily focused on in terms of getting uplift there. So I think as we burn off, I'll say, backlog that had suboptimal pricing and burn that off and replace it with newer items, we would expect to see a turn in the margin.

Got it. That's great. And then you mentioned the COMET project to Ukraine. Was that the case where those products had been written off from an inventory perspective, and therefore, you sold them and they came through a really good margin. And now we've got a non-repeat of that business this quarter. Is that the dynamic you're describing?

No, no, this was not a write-off -- a sale of written-off inventory. Back in 2022, we -- around February of 2022 to be precise, we were tracking a pretty large order with the Ukraine as the end customer or end user of the COMETs that got postponed when Russia invaded Ukraine. That opportunity, we thought, was never lost. It was just a matter of timing as they were transitioning to fight a ground war, and they finally came back to us in the August, September timeframe to place the order, given the urgent and compelling need of the equipment, we shipped it out expeditiously. And for the most part, that was in our Q1 and Q2. There was a little bit of additional units going out in Q3, but not to the scale that it was in Q1 and Q2.

But some extension and continuation of that initial order, George.

Got it. Okay. So it's a non-repeat of that business that hurt you by comparison relative to prior quarters, okay. Super, that’s all I had. Thanks very much.

Thanks, George.

Thank you. Our next question will come from Asiya Merchant with Citi. Your line is open.

Great. Thank you very much. Could you walk us through some of the margins -- the EBITDA margins also on the direct deal side of things, those were a little bit softer as well compared to last year. I know they increased sequentially, but maybe you can walk us through what's going on there why the margins? Is this like new contracts that are ramping up that just carry lower margins. And then as you look out into fiscal ‘24, are you expecting margins to kind of revert back to -- if you dial it back a couple of years ago, I think they were north of 20%. Is that reasonable to expect for fiscal ‘24 going forward? And then just if I think about it, I think your fiscal 4Q outlook up sequentially 2% to 4%. With the exception of perhaps 1 quarter where you guys had extraordinary sales back in 2018, that seems -- or the 2020 quarter, which is obviously an odd year. It seems to be a little underwhelming relative to -- I mean, I know it's generally north of 4%. So I don't know, 2% to 4%, midpoint of 3%. Is that just baking in some conservatism here? If you can just kind of walk us through some of that, that would be great.

Yes. We'll unpack. There are a few questions in there. In terms of the margins in terrestrial and wireless, this is another area we are definitely focused on as we move into FY ‘24. I think I speak for the team, we're all impatient as we're awaiting the award of several large opportunities to get us back to some economies of scale in the segment. But at the same time, while we're awaiting those awards, we are doing our benchmarking and as part of our -- bringing the companies together and One Comtech, we have identified some opportunities to improve our margins going forward. And I talked a little bit about some of those initiatives to grow revenues and different types of revenues at a more software-based and moving up the tier, if you will, on margin. But given the long-term nature of the backlog in terrestrial and wireless, it will take us some time to burn that off. They had lower margins in that NG911 business. Those were the initial awards. It was a land grab, trying to win the work with the customers. They are great contracts to have. They're very long-term in nature with renewals. So if we do a good job, we expect to see better margins as we continue to ramp up the recurring revenues and move into the renewal phases of those jobs. We're just not there yet. We're probably a year or two away from seeing that happening. But nonetheless, we are ramping up those revenues. At the same time, it's taking on more of a percentage of the overall segment and with the core routing business being sort of steady state, I think the margin percentages are getting influenced by the NG911 business. So -- but again, we're not going to just allow that to happen. We are addressing it. We're trying to come up with new revenue verticals and ways to get the margins up. We have taken out some costs in our March reduction in course. We have not seen the full benefit of that in Q3. And we do expect to see better margins as we go into ‘24. I won't give specific guidance yet on ‘24 EBITDA margins, but directionally, Asiya, that's sort of what we're thinking is to get back to those historical margins.

And do you think that's achievable in fiscal ‘24? And I guess I'm just trying to understand like, I see that you’re obviously -- hopefully increase your EBITDA margin relative to fiscal ‘23. But are we...

I do. I won't speak -- Ken might want to add something there. But from my perspective, I mean, we've initiated more than one or two initiatives in terms of contract and pricing, looking at our optimization of our supply chain going through layers of redundancy in our management layers. We've looked at making decisions. We've looked at new initiatives to grow revenue through Evoque and partnering up with our Evoque partners' technologies to create new revenue streams. So I do think with the culmination of all of those activities, we have line of sight to improving the margins substantially.

If you think of -- this is Ken, if you think of the timeline. Typically, a situation like this, I mean, we go through maybe 10 to 12 months of discovery, understanding how each of our silo business operates, what processes they use, how they do risk management and mitigation, how they do program management, supply chain, inventory management, it just touches every part of the organization. So it takes us some time to move across the organization, benchmark it and fully understand it. Then we're putting together the action plans to lean that out, apply best process across the board, across the entire enterprise. And so we're just moving into the phase where we're going to see the impact on return on investment on the action plans, lean action plans as well as the cost reduction plans that we're implementing holistically across the enterprise. So we will see that beginning now in the fourth quarter and then through FY '24. And that will have a, I must say, a rolling and increasing impact as those were implemented and as we see the results of those actions. So yes, I think that characterizes FY '24 probably as well as I can.

Okay. And then cash for the year, do you guys -- I mean, you had a good decent quarter in terms of cash generation this quarter. I'm assuming next quarter will also be a cash flow positive quarter for you guys. Is that fair?

Asiya, in terms of how I'm looking at Q4, I mean, we still have two months to go. We have some large receivables and payables that we're managing. So it definitely will come down to the timing of things. But at this point, I would say that any cash coming in, in Q4 would likely go to pay down AP and also debt, just making sure we stay within our covenants. So I would expect it to be more closer to breakeven if maybe slightly positive, not expecting a repeat of Q3 typically.

Okay. Alright, thank you.

Thank you. Our next question comes from Chris Sakai with Singular Research. Your line is open.

Yes, hi good afternoon. Can you talk about the decline in net bookings for the quarter? Was this just lumpiness in orders? And then also, where should we expect this? What would be a normalized rate for bookings in the future?

Chris, in terms of the bookings profile, we definitely started out the year very strong. We did have some very large items that -- some of which we just talked about with George, we had the COMETs come in. We also had some renewals with our Tier 1 carriers, their annual renewals. We also had received in Q2, a very large order from [Yahsat] (ph), a new customer. Those are the types of orders you wouldn't expect to repeat from quarter-to-quarter. So when you actually strip those out, and you look at our bookings performance in Q3, I think we actually did a pretty good job when you take out the one-time items. Going into Q4, I do think we see maybe a stronger bookings profile in Q4 than Q3. That's going to be also subject to timing. We always say that the timing of bookings is hard to predict and often lumpy. But I do think that you'll see an uptick in Q4.

Yes, I'll tell you that Q4 is, as I think, traditionally been -- our Q4 has traditionally been a good quarter for us. We see the U.S. government looking to sweep up and spend money and we can and our positioning to benefit from that. And I think that -- but other than that, I think it's just lumpiness. I don't think that there's a downward trend.

Okay. Sounds good. And then can you -- can we -- what would be a good sort of normalized rate for gross profit I know it was down to, what, about 32%. Should that be -- should we expect that maybe around the 34%, 35% range?

Yes. On gross profit, Chris, I'll talk in terms of consolidated. Our view is, right now, we are going through a transformation. We are making changes to our business and so while we do see improvements, we are also reinvesting and making some tough decisions to make us stronger as we go into 2024. So while we have an eye for margin improvement, I think Q4 might look similar to Q3. And as we move into next year, I would expect to see margin improvement, but I won't give a specific percentage right now. I think we'll give more wholesome guidance one quarter out when we get closer to the end of Q4.

I'll add, Chris, that the organization is going through significant transformation. Now there's a lot of changes going on across the organization. We're rolling out tools and processes. We're teaching people how to use those tools and processes. And those tools and processes will bear fruit in terms of streamlined, more efficient business operations. We're also going through a period where we're burning backlog. And to some degree, this backlog, some of it is pre-COVID pricing and that kind of thing. So we have to burn that off. So I think that I'm quite pleased with the consistent performance, the ability of us to meet our commitments in terms of hitting our forecast. And I think the upward trend that we're experiencing in both sales and profitability, is a positive sign that we can go through this difficult transformational period and still meet our commitments and still see an upward trajectory before we've actually seen the results and the impacts of the lean initiatives and cost reduction initiatives that we're implementing. So I think there's -- I'm real pleased by where we are right now, and I'm really pleased by what -- I'm encouraged and excited about what the next few quarters are going to hold as we start to see the benefits of that. I mean, I would repeat again that we are -- I would -- I'd just repeat again that we are on or ahead of the schedule that we put together 10 months ago.

Okay. Great. Now you've mentioned that you're burning through some lower margin backlog. Can you shed any light as to how much of that backlog of the current backlog is lower margin?

Yes, Chris, I'll take that one. I would say this is more prone to be within our terrestrial and wireless segment. There, we had booked a very large amount of contracts in the last couple of years and those are multiyear contracts. So sitting here today, you have a couple of hundred million dollars of backlog. And we think that that's going to burn off over like a 24-month period of time. And so therefore, we're going to be facing this headwind in the background for a little bit as we reset that backlog. But it's more in the terrestrial and wireless segment.

And that's one of the reasons. And of course, the cost reduction, the lean initiatives are working to offset or even more than offset any of that challenge.

Okay. Okay, great. Thanks for the answers.

Thank you. Our next question will come from Greg Burns with Sidoti. Your line is open.

So with these contracts on the terrestrial wireless side, do you have a history of pricing power? Are you able to increase prices typically on renewals? Or are these kind of first time around, so not really sure how it's going to go. Can you give us any insight into your thoughts on your ability to improve the margin.

Sure, I'll take that. These are contracts in the terrestrial wireless segment that were competitive in nature and they were definitely first of their kind. So this is the first go around. We felt that these were important contracts for us. We wanted to be in this space and we competed and we won the work. And so these are three to five year contracts that in terms of the base award, we had to put in some CapEx upfront. We have to depreciate that as we get closer to the renewal side of it, and we amortize off the CapEx and move into recurring revenues, we do expect to see the margin improvement. It is going to take some time. So I think we're, like I said, about maybe a year or two away from burning that off and we'll be approaching some of these renewals. But we're not there yet.

I would add -- this is Ken, I would add that these -- I refer to these sometimes is launch platforms, these incumbent contracts where we've done the land grab. We've successfully won the state or the geography. And now you might have seen that there's a $14.8 billion funding bill for Next-Gen 911 that passed the house unanimously. Now, I'm not saying that money is going to come to the states quickly, but it does signal that there is a recognized need to move beyond human-to-human 911 calls today and move to machine-to-machine, so that the Internet of connected things, Fitbit, a camera, and a doorbell camera overlooking a street intersection, these kinds of machines in a 5G connected world can trigger a 911 call when they see a problem. And that can't be handled by a human. That's going to have to be handled by a machine. It's going to drive the implementation of machine learning AI solutions, data processing, cybersecurity, all those kinds of technologies are going to come into play. And the number of transactions, the number of 911-like calls, the number of transaction is going to go up. So this is a market that is going to experience a technology inflection over the upcoming couple of years and the land grab that we successfully took initially is going to -- you can easily see where that will return, improve profitability and growth as the technology inflection point really bends.

Perfect. Thanks. That's good color. And I just wanted to ask about there was a -- you talked about the restructuring charges. This is also something you've called out strategic emerging technology costs. What is that? And is that going to be repeated?

Sure. The strategic emerging technology costs are related to a LEO customer of ours that we are taking our technology and upgrading it and enhancing it to meet the specs of their end-use applications. So this was something that we felt was important to show our real customer that we're ready to partner with them. And as we prepare for, hopefully, production orders to start being placed as their launch schedules are starting to approach that point in time where they need to start putting out some long lead orders. So these are investments that we will continue to make. I would expect these to occur in Q4 and also as we navigate through fiscal '24. But as we get closer to production, I would say that would be the time where they would start to ramp down.

Okay. So just -- so clearly this is the work you're doing at the behest of the customer? Or this isn't something you're doing in hopes of obtaining orders from this customer. These orders are coming and some kind of reasonable time frame?

Yes. This is work that we're doing on our nickel. We have contracts with the end customer to do certain development work in the anticipation of also getting production orders down the line. So we do have contracts in place with the customer. But what we've decided to do is to work collaboratively given that this is a new market, and this is a race, we felt that this is a great way to show our legal customer that we're there to stand by them and support their endeavors. So we took it upon ourselves to -- in this fiscal year, do some work at risk, if you will. But we think that this will pay dividends downstream as the constellation gets deployed. That's something that would be recurring.

Right. Okay. And then lastly, in terms of Evoque, could you give a time frame on when we might see some, I guess, you called them last quarter minimally viable products coming out of Evoque and maybe time frame to that and maybe a time frame to when maybe we might start to see some revenue coming from these partnerships.

Yes, sure. I'll say a couple of things. First of all, our Evoque partners have been very active with us. And if you are attending our Investor Day coming up in a couple of weeks, you will see their engagement. You will see the kind of collaborative things we're doing together. You will see how our technology blended with their technology creates more comprehensive customer values. And in fact, I can say also that we have, in fact, contracts in hand, subcontracts that we have let to some of those Evoque partners. We're not in a position -- look, it's very competitive as these growth initiatives take root. So we obviously have some sensitivity about that. But yes, we have some contracts in place. We're seeing these things get traction. Some of these are coming out of the workshops that we had with our prime customers, where they saw the value that Comtech could bring in our technology road maps, but they also saw the additional value that these partnerships bring. So we're moving forward to demonstrate that for those customers, show the value creation in the customers' currency, not in a technical parameter, but actually in customer parameter like additional subscribers on a network or additional revenue and profit creation additional speed, reduction of operating costs or whatever it might be. So yes, we're not prepared to talk specifically about that. But yes, we are seeing those good traction.

Perfect. Thank you.

Thank you. At this time, there are no further questions in the queue. So I would like to turn the call back over to Robert Samuels for any additional or closing remarks.

Thanks, operator. Thanks, Ken, Mike, and everyone for dialing in today. As Ken said, there are additional details about our strategy and performance available in our investor letter and SEC filings, and we'll provide ongoing insights and signals. And as a reminder, we intend to be as responsible as we can with investors going forward. So if anyone with questions, please reach out to me directly and let's connect. We look forward to seeing you on the 21st in Arizona. This concludes our third quarter call. We thank you for your continued support.

Thank you, ladies, and gentlemen. This concludes today's program, and we appreciate your participation. You may disconnect at any time.