Data I/O Corp (DAIO) 2023 Q3 法說會逐字稿

Good afternoon, everyone, and welcome to the Data I/O third quarter 2023 financial results conference call. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Jordan Darrow, Investor Relations. Please go ahead.

大家下午好，歡迎參加 Data I/O 2023 年第三季財務業績電話會議。 （操作員說明）今天的演示結束後，將有機會提問。另請注意，今天的活動正在錄製中。現在，我想請投資者關係部的喬丹·達羅 (Jordan Darrow) 發言。請繼續。

Thank you, operator, and welcome to the Data I/O Corporation third quarter 2023 financial results conference call. With me today are the company's President and CEO, Anthony Ambrose, and Chief Financial Officer, Gerry Ng.

謝謝營運商，歡迎參加 Data I/O Corporation 2023 年第三季財務業績電話會議。今天與我在一起的有公司總裁兼執行長 Anthony Ambrose 和財務長 Gerry Ng。

Before we begin, I'd like to remind you that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, supply chain expectations, estimated impact of tax and other regulatory reform, product releases, new industry partnerships, and any other statements that may be construed as a prediction of future performance or events are forward-looking statements which involve known and unknown risks, uncertainties, and other factors which may cause actual results to differ materially from those expressed or implied by such statements.

在我們開始之前，我想提醒您，本次電話會議中所做的聲明涉及未來收入、營運業績、財務狀況、市場、經濟狀況、供應鏈預期、稅收和其他監管改革的估計影響、產品發布、新的產業夥伴關係以及任何其他可能被解釋為對未來業績或事件的預測的陳述均為前瞻性陳述，其中涉及已知和未知的風險、不確定性和其他因素，這些因素可能導致實際結果與明示或暗示的結果存在重大差異通過這樣的陳述。

These factors include uncertainties as to the impact from global and geopolitical events, international trade regulations, order levels for the company, and the activity level of the automotive and semiconductor industry overall, ability to record revenues based on the timing of product deliveries and installations, market acceptance of new products, changes in economic conditions and market demand, parts shortages, pricing, and other activities by competitors. And other risks, including those described from time to time in the company's filings on Forms 10K and 10Q with the Securities and Exchange Commission, press releases, and other communications.

這些因素包括全球和地緣政治事件影響的不確定性、國際貿易法規、公司訂單水平以及汽車和半導體行業的整體活動水平、根據產品交付和安裝時間記錄收入的能力、新產品的市場接受度、經濟狀況和市場需求的變化、零件短缺、定價以及競爭對手的其他活動。以及其他風險，包括公司不時向美國證券交易委員會提交的 10K 和 10Q 表格文件、新聞稿和其他通訊中所述的風險。

The accuracy and completeness of forward-looking statements should not be unduly relied upon. Data I/O is under no duty to update any of these forward-looking statements.

不應過度依賴前瞻性陳述的準確性和完整性。 Data I/O 沒有義務更新任何這些前瞻性陳述。

And now I would like to turn over the call to Anthony Ambrose, President and CEO of Data I/O.

現在我想將電話轉給 Data I/O 總裁兼執行長 Anthony Ambrose。

Thank you very much, Jordan. I'd like to begin my formal remarks by addressing our 2023 third quarter financial and operational performance, and then I'll turn it over to Gerry Ng for more detailed look at the numbers.

非常感謝你，喬丹。我想先談談我們 2023 年第三季的財務和營運業績，然後我將把它交給 Gerry Ng，以更詳細地了解這些數字。

We have a strong year-over-year revenue growth at 25% through the first three quarters of the year and more recent challenging business conditions in Q3. As I mentioned in the release, the third quarter was mixed. We won some very exciting deals and saw strength in adapter bookings, but system bookings were soft as customers deferred capital purchasing decisions into the fourth quarter.

今年前三個季度，我們的營收年增 25%，而第三季的業務狀況則更加充滿挑戰。正如我在新聞稿中提到的，第三季的情況好壞參半。我們贏得了一些非常令人興奮的交易，並看到了適配器預訂的強勁勢頭，但由於客戶將資本購買決策推遲到第四季度，系統預訂疲軟。

We also saw customers move delivery dates from Q3 to early Q4, which we do not normally see. For whatever reason, whether it be the strike in North America, interest rates, people coming back from vacation, it appeared that customers wanted to take another look at their capital purchase decisions and did so by pushing from September into Q4.

我們還看到客戶將交貨日期從第三季推遲到第四季度初，這是我們通常不會看到的。無論出於何種原因，無論是北美的罷工、利率、人們度假回來，客戶似乎都希望重新審視他們的資本購買決定，並透過從 9 月推遲到第四季度來做到這一點。

Now what's interesting is Q4 is starting out extremely well as we booked five systems already in October. Several of these systems originally were planned for Q3 bookings, actually had the bookings occur in October. I was also happy this morning to see the news that Ford, and the UAW have reached a tentative agreement will likely ending their strike. This will remove some uncertainty in North American market.

現在有趣的是，第四季的開局非常好，我們在 10 月就已經預訂了五個系統。其中一些系統最初計劃在第三季預訂，但實際上是在 10 月預訂。今天早上我也很高興看到福特和美國汽車工人聯合會達成初步協議的消息，這可能會結束他們的罷工。這將消除北美市場的一些不確定性。

When we look at Q4, given all the puts and takes, we have a strong sales funnel that supports a much stronger bookings than we saw in Q3, and operations that support stronger revenue than we saw in Q3, provided we get the orders in time to ship this year.

當我們看第四季度時，考慮到所有的看跌期權，我們擁有強大的銷售渠道，可以支持比第三季度強勁得多的預訂，並且只要我們及時收到訂單，運營就可以支持比第三季更強勁的營收今年出貨。

Despite the short-term gyrations, the driving forces and long-term growth thesis for Data I/O remain intact. Advanced semiconductors and microcontrollers are finding their way into more products and impacting virtually every business in a measurable ways. Programming is becoming more complex, and the amount of code is continuously increasing.

儘管有短期波動，但數據 I/O 的驅動力和長期成長主題仍然完好無損。先進的半導體和微控制器正在進入更多產品，並以可衡量的方式影響幾乎所有企業。程式設計變得越來越複雜，程式碼量不斷增加。

Our plan is to grow revenues in growing markets including automotive and industrial, continue to drive more revenue from consumables software and service, and deliver 40% operating leverage on that revenue growth.

我們的計劃是在汽車和工業等不斷增長的市場中增加收入，繼續從消耗品軟體和服務中增加收入，並在收入成長的基礎上實現 40% 的營運槓桿。

Automotive represented about 63% of the bookings in the third quarter, consistent with our year-to-date numbers. Within automotive, we continue to see strength in EVs globally. And we like EVs not just because their electric vehicles, but because the platforms are newer and they tend to have more electronics for cars, they have comprehensive IVI, ADAS, and other features. With this, content in EVs is estimated to be about two to three times that a semiconductor content and other vehicles, and the programming requirements continue to require -- continue to grow in these EVs.

第三季汽車預訂量約佔 63%，與我們今年迄今的數據一致。在汽車領域，我們繼續看到全球電動車的優勢。我們喜歡電動車不僅是因為它們的電動車，還因為它們的平台更新，而且它們往往有更多的汽車電子設備，它們具有全面的 IVI、ADAS 和其他功能。據此，電動車中的內容估計約為半導體內容和其他車輛的兩到三倍，而這些電動車中的程式要求將繼續增長。

Regionally, we continue to see strength in North America. We have seen softness in AMEA. China is recovering from a soft first half, recovering slowly and steadily, which we believe will continue based on our channel checks.

從地區來看，我們繼續看到北美的實力。我們看到 AMEA 表現疲軟。中國正在從上半年的疲軟中復甦，緩慢而穩定地復甦，根據我們的管道檢查，我們相信這種復甦將持續下去。

In the third quarter, we added four new customers, which now brings us to 19 for the first nine months of the year, compared to the 20 of all last year and the prior year. Within those four new wins, we had two new EV factories internationally, and one of the new customers in the third quarter represents a major win for us on SentriX. We're excited to move further into expanding the SentriX market by winning our first major solar energy customer on our SentriX security deployment platform.

第三季度，我們增加了 4 家新客戶，今年前 9 個月我們的客戶數量達到 19 家，而去年和前一年的客戶總數為 20 家。在這四項新勝利中，我們在國際上擁有兩家新的電動車工廠，第三季的新客戶之一代表了我們在 SentriX 上的重大勝利。我們很高興能夠在 SentriX 安全部署平台上贏得第一個主要太陽能客戶，進一步擴大 SentriX 市場。

This continues to make progress for SentriX as a leading technology platform now including AI, EV, data center utilities, industrial and now, solar markets. That's a nice bridge here we go from solar to sustainability and ESG.

SentriX 作為領先的技術平台不斷取得進展，目前涵蓋人工智慧、電動車、資料中心公用事業、工業以及現在的太陽能市場。這是一座很好的橋樑，我們從太陽能走向永續發展和 ESG。

Greenpower, ESG, and climate disclosures are becoming an increasingly important for public companies like Data I/O. For us, we see three basic requirements for our environmental strategies. First, as a leading supplier to the automotive industry, we must comply with purchasing requirements set forth by our largest customers. Many of our large AMEA-based tier one automotive customers and many industrial customers have put forth their own ESG plans, calling for a significant reduction in greenhouse gas emissions from their suppliers.

Greenpower、ESG 和氣候揭露對於 Data I/O 等上市公司來說變得越來越重要。對我們來說，我們的環境策略有三個基本要求。首先，作為汽車行業的領先供應商，我們必須遵守最大客戶提出的採購要求。我們許多位於 AMEA 的大型一級汽車客戶和許多工業客戶都提出了自己的 ESG 計劃，呼籲大幅減少供應商的溫室氣體排放。

Second, as a public reporting company, we must comply with appropriate rules and regulations set forth by the SEC and Nasdaq. There are new disclosures required for companies starting next year. As a smaller reporting company, these will become effective for us starting next year and continue to increase in disclosure requirements over the next several years. And finally, as a good corporate citizen, we need to look at smart ways to be more environmentally friendly, consistent with a good use of cash.

其次，作為一家公開報告的公司，我們必須遵守美國證券交易委員會和納斯達克製定的適當規則和規定。從明年開始，公司需要進行新的揭露。作為一家規模較小的報告公司，這些規定將從明年開始對我們生效，並在未來幾年繼續提高揭露要求。最後，身為優秀的企業公民，我們需要尋找更環保、與良好使用現金一致的明智方法。

The importance of ESG and how it impacts our business operations will be the first subject in our next fireside chat series. The session will be entitled, Sustainability Strategies for the Auto Industry, and will be released and available for viewing later this month. In that session earlier, how we've made outstanding progress in our Scope 1 and Scope 2 emissions, well ahead of regulatory and supply chain requirements and are in the programming industry and sustainability.

ESG 的重要性及其如何影響我們的業務運作將是我們下一個爐邊談話系列的第一個主題。該會議的標題是“汽車行業的可持續發展策略”，將於本月晚些時候發布並可供觀看。在先前的會議中，我們介紹了我們如何在範圍 1 和範圍 2 排放方面取得了顯著進展，遠遠領先於監管和供應鏈要求，並且在規劃行業和永續發展方面處於領先地位。

In the months that follow, we plan to release five additional fireside chat sessions covering global perspectives on critical topics and emerging market trends from automotive to semiconductor growth opportunities. In addition to the fireside chats, we've expanded our investor communications content and channels with new technology discussions on LinkedIn. And we also recently joined the Webull Corporate Connect Service platform to enhance our communications with tech savvy retail investors. Webull will provide us direct exposure to the second largest app-based investment and trading platform.

在接下來的幾個月中，我們計劃再發布五場爐邊談話，涵蓋從汽車到半導體成長機會等關鍵主題和新興市場趨勢的全球視角。除了爐邊談話之外，我們還透過 LinkedIn 上的新技術討論擴展了投資者溝通內容和管道。我們最近也加入了微牛企業通服務平台，以加強我們與精通科技的散戶投資者的溝通。微牛將為我們提供直接接觸第二大基於應用程式的投資和交易平台的機會。

As you can tell we're excited for the future growth of Data I/O, and look forward to sharing our progress and perspective with you and also with these new channels. This will include some fresh ideas from Gerry that goes well beyond our operational spending discipline that he demonstrated in the third quarter. He is focused on our ability to drive margins, improve cash flow, and invest in future growth.

如您所見，我們對數據 I/O 的未來成長感到興奮，並期待與您以及這些新管道分享我們的進展和觀點。這將包括格里的一些新想法，這些想法遠遠超出了他在第三季度展示的我們的營運支出紀律。他重點關注我們提高利潤、改善現金流和投資未來成長的能力。

With that, I'll turn the call over to Gerry, for a little bit more detail on the numbers. Gerry

這樣，我會將電話轉給格里，以了解有關數字的更多詳細資訊。格里

Thank you, Anthony, and good day to everyone. I look forward to my first and future earnings update having taken over as CFO on August 16. I will start with the balance sheet and then move to the income statement. My commentary today will focus on specific points of interest and allow you to review the earnings to release for a more detailed understanding of our Q3 financials.

謝謝你，安東尼，祝大家有美好的一天。我期待著 8 月 16 日接任財務長後的第一次和未來的收益更新。我將從資產負債表開始，然後轉向損益表。我今天的評論將重點放在特定的興趣點，並讓您查看要發布的收益，以更詳細地了解我們第三季的財務狀況。

Data I/O's financial condition remains strong at the end of Q3. Well $11.9 million in cash, up $357,000 from $11.5 million at the beginning of the year. Cash and working capital at $18 million, had a comparable increase of $520,000 from $17.6 million at the beginning of the year. Receivables at $4.9 million increased $175,000 from the previous quarter.

Data I/O 的財務狀況在第三季末依然強勁。現金為 1,190 萬美元，比年初的 1,150 萬美元增加了 357,000 美元。現金和營運資本為 1,800 萬美元，較年初的 1,760 萬美元增加了 52 萬美元。應收帳款為 490 萬美元，較上一季增加 17.5 萬美元。

Day sales outstanding or DSO was at 59 days at the end of Q3. Past due receivable balances greater than 30 days remain very low at less than $30,000 on September 30. Payables at $1.1 million decreased by $468,000 from the previous quarter.

截至第三季末，應收日銷售額或 DSO 為 59 天。截至 9 月 30 日，超過 30 天的逾期應收帳款餘額仍然非常低，不到 30,000 美元。應付帳款為 110 萬美元，比上一季減少了 468,000 美元。

Moving on to inventory, we finished at $6.4 million, a decline of $476,000 from the previous quarter. Inventory had been intentionally elevated in 2020 to address potential shortage risk. Earlier this year, we went to a more neutral supply chain strategy, improving supply chain conditions, this position and material for end-of-life products and our lean operational initiatives contributed to our overall reduction. Optimizing inventory levels remain a top priority while balancing anticipated customer demand going forward.

繼續看庫存，我們的庫存為 640 萬美元，比上一季減少了 476,000 美元。 2020 年有意增加庫存，以應對潛在短缺的風險。今年早些時候，我們採取了更中立的供應鏈策略，改善了供應鏈條件，這種立場和報廢產品的材料以及我們的精益營運舉措促成了我們的整體減少。優化庫存水準仍然是首要任務，同時平衡未來的預期客戶需求。

Moving to the income statement. Revenue at $6.6 million declined to [$651,000] from the prior year on lower bookings performance in the current quarter and strong shipping recovery in Q3 of the prior year, due to the supply chain disruption that occurred in the first half of the prior year.

轉到損益表。由於上年上半年發生的供應鏈中斷，本季的預訂表現較低，而上年第三季的運輸強勁復甦，營收從上年的 660 萬美元下降至 [651,000 美元]。

Revenue through the first nine months of this year was $21.2 million, up $4.2 million or a 25% increase from the prior periods. Our Q3 ending backlog was $2.5 million, down from $3.8 million from the previous quarter. As Anthony indicated, automotive electronics continues to be our primary addressable market at 63% of year-to-date bookings.

今年前 9 個月的營收為 2,120 萬美元，比上一季增加 420 萬美元，增幅為 25%。我們第三季末的積壓訂單為 250 萬美元，低於上一季的 380 萬美元。正如 Anthony 指出的那樣，汽車電子產品仍然是我們的主要目標市場，佔今年迄今預訂量的 63%。

Gross Margin at 54% in Q3 was down from 59% in Q2 due primarily to lower sales volume, lower inventory levels, and related absorption a relatively fixed cost for our manufacturing and service operations. Good news is direct material and other variable costs declined in line with revenue change. Operational expenses at $3.6 million increased 5% from the prior year, who have R&D representing the majority of the increase, while G&A remained relatively flat.

第三季的毛利率為 54%，低於第二季的 59%，這主要是由於銷量下降、庫存水準降低以及製造和服務業務的相關吸收相對固定的成本。好消息是直接材料和其他可變成本隨著收入變化而下降。營運費用為 360 萬美元，較上年增長 5%，其中研發支出佔成長的大部分，而一般管理費用則相對持平。

Great strides were made in reducing our Q3 costs with a decline of $626,000 from the prior quarter, a critical review of spending was performed, non-critical cost reduced or eliminated, and of course, operational efficiencies increase. Excluding costs related to sales volume changes, we expect to maintain this strong operational discipline in Q4 and 2024.

我們在第三季成本降低方面取得了長足進步，比上一季減少了 626,000 美元，對支出進行了嚴格審查，減少或消除了非關鍵成本，當然，營運效率也有所提高。排除與銷售變化相關的成本，我們預計在第四季度和 2024 年將保持這種強有力的營運紀律。

Currency transaction remit impact was minimal in Q3 were $15,000 loss compared to a $307,000 gain in the prior year, from, of course, a strengthening dollar. Net loss of $53,000 in Q3 compared to a net income of $847,000 for Q3 of 2022 was due largely to the change in revenue and lower FX gain from the prior year.

第三季的貨幣交易匯兌影響很小，損失了 15,000 美元，而去年則獲得了 307,000 美元的收益，這當然是因為美元走強。第三季淨虧損 53,000 美元，而 2022 年第三季淨利為 847,000 美元，這主要是由於收入變化和上一年外匯收益下降。

Net income remains positive. However, at $342,000 through nine months compared to a net loss of $1.6 million for the similar period in 2022. Adjusted EBITDA was $400,000 in Q3, an increase to $1.8 million through nine months of this year. This represents a year-over-year improvement of $1.3 million.

淨利潤仍然為正。然而，前九個月的淨虧損為 342,000 美元，而 2022 年同期淨虧損為 160 萬美元。第三季調整後 EBITDA 為 40 萬美元，今年前九個月增加至 180 萬美元。這意味著同比增加了 130 萬美元。

Overall, we remain very strong financially with no debt and in good position to navigate market dynamics. We have returned to profitability on a consolidated basis. We will be able to take advantage of our NOLs, which stood at $15 million on September 30. I am excited to be part of the Data I/O team, and look forward to working and partnering with Anthony and our global team to continue and improving our operational and financial performance.

總體而言，我們的財務狀況仍然非常強勁，沒有債務，並且處於適應市場動態的良好位置。我們已在綜合基礎上恢復盈利。我們將能夠利用我們的 NOL，該 NOL 在 9 月 30 日達到 1500 萬美元。我很高興成為 Data I/O 團隊的一員，並期待與 Anthony 和我們的全球團隊合作並繼續合作改善我們的運營和財務績效。

This concludes my remarks for the third quarter of 2023. Operator, would you please start the Q&A process?

我對 2023 年第三季的演講就到此結束。營運商，您可以開始問答流程嗎？

(Operator Instructions) Kevin Garrigan, West Park Capital.

（操作員說明）Kevin Garrigan，West Park Capital。

Hey, good afternoon, everybody, and thanks for letting me ask a question. On the EV front -- and congrats on the new EV factory customers. You're not saying that you'll supply every EV factory out there but is it a safe assumption that you'd supply kind of a one system per factory? or is there a possibility that multiple factories would use one system such as like a programming center or something like that?

嘿，大家下午好，謝謝你讓我提問。在電動車方面－祝賀新的電動車工廠客戶。您並不是說您將為每個電動車工廠提供服務，但您是否可以安全地假設您將為每個工廠提供一個系統？或者多個工廠是否有可能使用一個系統，例如程式設計中心或類似的系統？

Yeah. So Kevin, good to hear from you. In general, I would say, on average, we supply more than one system per factory in the automotive space. And that's just based on an analysis. I mean, it ranges from we have a number of customers, one factory or one system per factory. I've been in places that have 10 systems in a factory. So the average is certainly going to be more than one. For us, we see the growth in automotive coming from, again, the focus on new factory acquisition.

是的。凱文，很高興收到你的來信。總的來說，我想說的是，我們在汽車領域的每個工廠平均供應不只一套系統。這只是基於分析。我的意思是，它的範圍從我們有許多客戶、一家工廠或每個工廠都有一個系統。我去過工廠裡有 10 個系統的地方。所以平均值一定會大於一。對我們來說，我們看到汽車產業的成長再次來自對新工廠收購的關注。

As customers expand in certain areas of the world, we want to be their choice as they put programming capacity in place in those new factories. We think that's a good predictor of what their future demand will be in that factory. And then, of course, people that have been with us for years are placing additional capacity orders as, again, they have more and more electronics going into their cars, and they need to add capacity. So it's purely a combination of both.

隨著客戶在世界某些地區的擴張，我們希望成為他們的選擇，因為他們在這些新工廠中配備了程式設計能力。我們認為這可以很好地預測該工廠未來的需求。當然，多年來與我們合作的人們正在下額外的產能訂單，因為他們的汽車安裝了越來越多的電子設備，他們需要增加產能。所以它純粹是兩者的結合。

Okay. Got it, that makes sense. And then are you getting a lot of prior customers that already have a PSV system that are asking to add SentriX capabilities?

好的。明白了，這很有道理。那麼，您是否有許多已經擁有 PSV 系統的舊客戶要求添加 SentriX 功能？

The customers -- the short answer there is most of our SentriX demand today continues to come from people that have the system already. That includes our programming center partners and a handful of non-programming center customers.

客戶—簡單來說，我們今天的 SentriX 需求大部分仍然來自已經擁有該系統的人。這包括我們的程式設計中心合作夥伴和少數非程式設計中心客戶。

Okay, perfect. And then just one last quick question. So you're looking at your customer additions, you had started out the year adding 10 customers in Q1 and then the number is kind of come down as it gone through the year, but you're still on page to surpass your 2022 customer additions. What is kind of keeping some potential customers on the sideline?

好的，完美。最後一個簡單的問題。因此，您正在查看新增客戶數量，年初時您在第一季度添加了 10 個客戶，然後隨著這一年的推移，這個數字有所下降，但您仍然有望超過 2022 年的新增客戶數量。怎麼樣才能讓一些潛在客戶保持觀望狀態呢？

I think the numbers in any quarter going to have some lumpiness to it, than is just the nature of our business. That's why we gave you the date on the quarter, and then also trying to provide some context for the year-to-date numbers as well.

我認為任何季度的數字都會有一些波動，這不僅僅是我們業務的性質。這就是為什麼我們為您提供了本季度的日期，然後也嘗試為年初至今的數字提供一些背景資訊。

For us in Q3, we probably would have had more new customers if people have bought more systems. As I mentioned, it seemed like people just didn't want to place any orders towards the end of the quarter. And then once the quarter flipped over, it's like the spigot turned back on. I don't know why they didn't want to have it on their books. I don't know whether it was the uncertainty created by the factors I described earlier strikes, other stuff as well, interest rates. But at the end of the day, we believe that they'll be more capacity demand because there's more of silicon going into cars, and it needs to get programmed. It's not really any more complicated than that.

對於第三季的我們來說，如果人們購買更多的系統，我們可能會有更多的新客戶。正如我所提到的，人們似乎只是不想在本季結束時下任何訂單。然後，一旦硬幣翻轉，就像水龍頭重新打開一樣。我不知道為什麼他們不想把它記在書上。我不知道這是否是由我之前描述的罷工因素以及其他因素（利率）造成的不確定性。但歸根結底，我們相信它們會產生更多的產能需求，因為汽車中使用了更多的矽，並且需要對其進行程式設計。實際上並沒有比這更複雜的了。

Okay, perfect. Thank you very much.

好的，完美。非常感謝。

Thanks, Kevin.

謝謝，凱文。

David Marsh, Singular Research.

大衛馬什，奇異研究。

Hey guys, thanks for taking my questions. I guess I'm just trying to -- Anthony, I am just trying to read the tea leaves here a little bit on comments on China. It sounds like there is some sort of recovering taking place, but it doesn't sound like it's a robust and fast paced recovery. I was just hoping that you could provide us a little bit more granularity there and just help us understand.

嘿夥計們，謝謝你回答我的問題。我想我只是想——安東尼，我只是想讀這裡關於中國的評論。聽起來好像正在發生某種復甦，但聽起來並不是一次強勁且快節奏的復甦。我只是希望您能為我們提供更多的細節，幫助我們理解。

David, I think tea leaves is probably an appropriate metaphor for the future forecasting there. I think you nailed it, that's exactly what I'm trying to say. We've had continuous improvement throughout the year, but it's at a level of business that's lower than last year. We still haven't gotten to that level. I think it will -- you're going to continue to see more recovery there, and consistent with the fact that China produces and consumes an awful lot of cars, and 30% of them are EVs.

大衛，我認為茶葉可能是對未來預測的恰當比喻。我認為你說得對，這正是我想說的。我們這一年持續進步，但業務水準低於去年。我們還沒有達到那個水平。我認為，你將繼續看到那裡的更多復甦，這與中國生產和消費大量汽車（其中 30% 是電動車）的事實相符。

Right, right. That's -- yeah, that's helpful. I guess it's just -- it'd be really helpful that you have a better sense of what that pace is going to look like going forward. I guess it's really very difficult to predict.

是的是的。那是——是的，這很有幫助。我想這只是——如果你能更了解未來的發展速度，那真的很有幫助。我想這真的很難預測。

Yes, I think there's a lot of third-party information there. I mean, you can sort of picked the forecast you want. A lot of people are nervous about the property market in China. A lot of people are nervous about, are people continuing to still build there. We just had a trade show there, very well attended, probably the best attendance in three or four years. And as I said, I would expect continuous steady improvement. I don't think you're going to get a massive sudden uptick, but I think it will be better as we go forward.

是的，我認為那裡有很多第三方資訊。我的意思是，你可以選擇你想要的預測。很多人對中國的房地產市場感到緊張。很多人都擔心人們是否仍在繼續在那裡建造。我們剛剛在那裡舉辦了一場貿易展，出席人數非常多，可能是三、四年來出席人數最多的一次。正如我所說，我期望持續穩定的改進。我不認為你會突然大幅上升，但我認為隨著我們的前進，情況會更好。

Got it, that's really helpful. And then just as my follow-up, I guess one of the things that could be be a bit by surprise, and I think you addressed it a little bit, but I would just kind of wanted to pull the thread on it. Backlog is down from 3.8 at the end of Q2, 2.5 at the end of the Q3. But based on your commentary, it actually sounds like bookings have picked up as we've entered the new quarter.

明白了，這真的很有幫助。然後，正如我的後續行動一樣，我猜想其中一件事可能會有點令人驚訝，我認為你稍微解決了這個問題，但我只是想把它拉出來。待辦事項數量較第二季末的 3.8 和第三季末的 2.5 下降。但根據您的評論，隨著我們進入新季度，預訂量實際上有所增加。

So just with all of that information, I'm reading into your commentary that Q4 could be sequencially better, but I was just wondering if you might just help us with the information that you have today, just kind of get better understanding around that.

因此，有了所有這些信息，我正在閱讀您的評論，即第四季度可能會更好，但我只是想知道您是否可以幫助我們利用今天掌握的信息，以便更好地理解這一點。

Yes. I think the tough thing for us as we don't give quarterly guidance, but as I indicated in my remarks, I certainly think the bookings will be better in Q4 and Q3. And the revenue, given our sales funnel, we still have in the funnel that have not yet booked. We have an opportunity to have strong revenue quarter as well, provided the timing is such that we can book and ship some of those systems. So the funnel looks good. We just have to deliver on it, and we're off to a good start.

是的。我認為這對我們來說很困難，因為我們不提供季度指導，但正如我在演講中指出的那樣，我當然認為第四季度和第三季度的預訂會更好。考慮到我們的銷售管道，我們的收入仍然在管道中尚未預訂。只要我們能夠預訂和運送其中一些系統，我們就有機會獲得強勁的季度收入。所以漏斗看起來不錯。我們只需要兌現承諾，我們就有了一個好的開始。

Great. That's helpful. Thanks. I will jump back in the queue.

偉大的。這很有幫助。謝謝。我會跳回到隊列中。

Thanks a lot, Dave.

非常感謝，戴夫。

David Kanen, Kanen Wealth Management.

大衛卡南，卡南財富管理公司。

Hi, thanks for taking my questions. I've got a few. So if it's okay to bend the rules a little bit, I appreciate that. The first one is in regard to you said five system orders so far in the quarter, what are ASPs on systems?

您好，感謝您回答我的問題。我有幾個。因此，如果可以稍微改變一下規則，我很感激。第一個是關於您所說的本季度到目前為止的五個系統訂單，系統上的 ASP 是什麼？

I'm not going to get into that, Dave. They're consistent and typical with prior quarters, nothing strange either way.

我不打算討論這個，戴夫。它們與前幾季保持一致且典型，沒有什麼奇怪的。

Okay. And for the quarter, what were adapter sales?

好的。該季度的適配器銷售額是多少？

The exact number will put in the queue, but I know that things were up pretty well quarter-on-quarter. Gerry, do you have the exact adapter numbers? Gerry will take a look at that, and we'll let you know. What's the next question?

確切的數字將放入隊列中，但我知道季度環比情況進展得相當好。 Gerry，你有確切的轉接器編號嗎？格里會查看這一點，我們會通知您。下一個問題是什麼？

Okay. On operating expenses, we're up year-over-year, revenues are down year-over-year, gross margins are down. It seems like an unsustainable posture going forward. Can you talk about opportunities to trim costs and to be more efficient, so that when we do report good revenues, we can get some leverage to the bottom line and if possible, quantify that? I'm assuming this is the works, but if not, I would be quite disappointed.

好的。在營運費用方面，我們年增，營收年減，毛利率下降。這似乎是一種不可持續的前進姿態。您能否談談削減成本和提高效率的機會，以便當我們確實報告良好的收入時，我們可以對利潤產生一些影響，如果可能的話，對其進行量化？我假設這是作品，但如果不是，我會非常失望。

I think Gerry has clearly got some ideas on spending, and he started implementing those in Q3. I'll let him talk about that in a moment.

我認為格里顯然對支出有了一些想法，他在第三季開始實施這些想法。一會兒我會讓他談談這件事。

But I just wanted to clarify some things. The revenue is actually up 25% a year-over-year through the first nine months. So yeah, spending is up. Frankly, spending is up more than we would like it to be up. And the focus on spending control is something that Gerry is clearly digging into, and he has already got that started in Q3. But the whole concept is we want to -- we're delivering on our operating leverage of about 40%, pretty close to that. But we clearly want to do better. And I think your comments are how can we continue to get more efficient and deliver even better operating leverage to the bottom line, that will be better. So I think, Gerry, what was our revenue on the adapters in Q3?

但我只是想澄清一些事情。前 9 個月的收入實際上比去年同期增長了 25%。所以是的，支出增加了。坦白說，支出的成長超出了我們的預期。格里顯然正在深入研究支出控制的重點，他已經在第三季開始了這項工作。但整個概念是我們希望——我們的營運槓桿率達到 40% 左右，非常接近這個數字。但我們顯然希望做得更好。我認為您的意見是我們如何繼續提高效率並為利潤提供更好的營運槓桿，這會更好。所以我想，Gerry，我們第三季適配器的收入是多少？

$1.8 million.

180萬美元。

$1.8 million.

180萬美元。

Okay. And then last question, this seems like an inconsequential item, but it makes me question the seriousness and stewardship, how you're approaching the business at the current time. Interest income for the quarter was $41,000. Now this may seem trivial, but what it tells me, if I annualize that, on average, you're getting about 1.4%, a three-month T-bill is at 5.3, a six-months bills at almost 5.6.

好的。最後一個問題，這似乎是一個無關緊要的問題，但它讓我質疑你目前處理業務的嚴肅性和管理能力。該季度的利息收入為 41,000 美元。現在這似乎微不足道，但它告訴我，如果我按年計算，平均而言，您將獲得約 1.4%，三個月期國庫券的利率為 5.3，六個月期國庫券的利率接近 5.6。

You can get a multitude of money markets paying 5.25%. Why is that? And going forward, is that something you're going to pay attention to? Because on an annualized basis, we're talking about giving away, according to my math, like $400,000. Am I wrong? If so, please correct me, but if you can give an explanation and what we're doing going forward?

您可以在多個貨幣市場上支付 5.25% 的利率。這是為什麼？展望未來，這是您要關注的事情嗎？因為根據我的計算，按年計算，我們談論的是捐贈 40 萬美元。我錯了嗎？如果是這樣，請糾正我，但您是否可以給出解釋以及我們接下來要做什麼？

Yes, David, I can highlight that. As you know, we do have a fairly strong cash position. However, we do have operational needs both in the US, in our Shanghai manufacturing facility, and in Germany. We do have a very active method of deploying unneeded cash to maximize the interest earnings, but it's not the case where we deploy everything 100%. We are obviously looking at that and balancing operational needs as well as the earnings opportunity.

是的，大衛，我可以強調這一點。如您所知，我們確實擁有相當充裕的現金狀況。然而，我們在美國、上海製造工廠和德國確實有營運需求。我們確實有一種非常積極的方法來部署不需要的現金以最大化利息收入，但並不是我們100%部署一切。顯然，我們正在考慮這一點並平衡營運需求和獲利機會。

So Gerry, we're clearly looking at that, but also my understanding is that if you look outside the US, the interest rates available on cash deposits may not be the same as the current high rates that we enjoy in the US.

格里，我們顯然正在考慮這一點，但我的理解是，如果你看看美國以外的地區，現金存款的利率可能與我們目前在美國享受的高利率不同。

Right, correct.

對，對。

So on a blended basis, we probably can't get 5%. But I think to Dave's point, we're certainly looking at it.

因此，在混合基礎上，我們可能無法獲得 5%。但我認為，就戴夫的觀點而言，我們確實正在考慮這個問題。

Yeah. And we are currently using nightly suites. We are also deploying some of our money into short term investments. So we are obviously looking at it and continuing to maximize the opportunity where we can.

是的。我們目前使用的是每晚套房。我們也將部分資金用於短期投資。因此，我們顯然正在關注這個問題，並繼續盡可能地最大限度地利用機會。

How much of the $11.9 million in the US?

1190萬美元中有多少在美國？

Approximately half.

大約一半。

Yeah. So even on that, we're not maximizing it. I mean you can put your money in money market and get 5.25%. I'm sure it's better than 1.4% in Europe and in China, I mean it across the globe, there have been numerous interest rate hikes. So just pointing it out, it would make me feel better if you guys were maximizing that and also, taking a look at every line item on the expense sheet.

是的。所以即使如此，我們也沒有最大化它。我的意思是你可以把錢投入貨幣市場並獲得 5.25% 的利率。我確信這比歐洲和中國的1.4%要好，我的意思是在全球範圍內，已經有多次升息。因此，只要指出這一點，如果你們能最大限度地利用這一點，並且查看費用表上的每個項目，我就會感覺更好。

Understood, Dave. Thanks.

明白了，戴夫。謝謝。

Thank you.

謝謝。

Chris Kotowski -- actually, our next question comes from Michael Cooper.

克里斯·科托夫斯基——實際上，我們的下一個問題來自邁克爾·庫珀。

Good afternoon. Anthony, can you talk a little bit more about the SentriX funnel? I've been watching the sales progression of SentriX over the past few years as you improve the product and then learn about the market a little bit more. And I think you've changed where you're going into the market, may be more on the design side of things.

午安. Anthony，可以多談談 SentriX 漏斗嗎？過去幾年我一直在關注 SentriX 的銷售進展，隨著產品的改進，然後多了解市場。我認為你已經改變了進入市場的方向，可能更多是在設計方面。

But I'm still -- each quarter comes and goes and I'm waiting for a nice big uptick in revenue from SentriX, and I'm not exactly seeing it. But what I'm hoping is that in the background, you guys are very active may be and have been over the last three or four quarters on the design side, and maybe that is progressing through the funnel. I know that takes some time. But can you give us some metrics around that kind of dynamic, so that we can understand how the market opportunity on SentriX is performing?

但我仍然——每個季度來來去去，我都在等待 SentriX 收入的大幅增長，但我並沒有完全看到它。但我希望的是，在幕後，你們在過去三、四個季度的設計方面可能非常活躍，也許這正在透過漏斗取得進展。我知道這需要一些時間。但您能否為我們提供一些有關這種動態的指標，以便我們了解 SentriX 的市場機會表現如何？

Sure. I'll start, Michael by saying, we don't breakout SentriX separately. But in my comments, our pay per use revenue this year from units running through machines that are under that type of contract is up pretty close to 100% year-over-year. So that's a good indicator on the revenue side. On the designing side, I didn't give you the size estimate of the of win here in the solar market, but it's a pretty hefty win. Channel partner believes it's mid-six digits, okay, which would be a very, very nice volume run rate for us on the SentriX platform.

當然。 Michael 首先我要說的是，我們不會單獨突破 SentriX。但在我看來，我們今年從運行此類合約的機器上獲得的按使用付費收入同比增長了接近 100%。所以這是收入方面的一個很好的指標。在設計方面，我沒有給你在太陽能市場上獲勝的規模估計，但這是一個相當巨大的勝利。通路合作夥伴認為這是六位數左右，好吧，這對我們在 SentriX 平台上的銷售運行率來說是非常非常好的。

Having said that, we continue to refine our marketing to better tailor our message and focus, and we have customers that we're engaged with now on SentriX opportunities in automotive, industrial, and other markets. The key thing for us is to find the right person in the company to talk to about SentriX. And we've learned over the years that person is not a person we usually talk to for data programming. So part of the problem in the strategy is, okay, we have these relationships, how do we use them to find the right people in the company and talk about SentriX. And that's what we're doing on the marketing side.

話雖如此，我們仍在繼續完善我們的行銷，以更好地調整我們的訊息和重點，我們現在正在與客戶合作，了解汽車、工業和其他市場的 SentriX 機會。對我們來說，關鍵是在公司中找到合適的人來談論 SentriX。多年來我們已經了解到，這個人並不是我們通常談論數據程式設計的人。因此，策略中的部分問題是，好吧，我們有這些關係，我們如何利用它們在公司中找到合適的人並談論 SentriX。這就是我們在行銷方面所做的事情。

Okay, excellent. Thank you.

好的，非常好。謝謝。

And that half million potential number on your solar contract is very encouraging.

您的太陽能合約上的 50 萬潛在數字非常令人鼓舞。

Yeah, like I said, mid six digits.

是的，就像我說的，中間六位數。

Sure, understood.

當然，明白了。

And ladies and gentlemen, at this time, and showing no additional questions, that will conclude today's question-and-answer session. I'd like to turn the floor back over to the management team for any closing remarks.

女士們先生們，此時此刻，我們沒有提出任何其他問題，今天的問答環節就到此結束。我想將發言權交還給管理團隊，讓他們發表結束語。

Well, operator, thank you very much. And I'd like to thank everyone who joined the call and asked questions today. We look forward to sharing the developments with you as we go through Q4 and will be at the Productronica trade show in Germany in November, in Munich. We also have an Investor Summit groups' Virtual Conference, and the Singular Research, Best of the Uncovered Conference in San Francisco in December, and we'd love to see you there. If you have any questions on that, please send a note to Jordan Darrow.

嗯，接線員，非常感謝你。我要感謝今天參加電話會議並提出問題的所有人。我們期待與您分享第四季度的進展，並將參加 11 月在慕尼黑舉行的德國 Productronica 貿易展。我們也將於 12 月在舊金山舉辦投資者高峰會團體虛擬會議和 Singular Research、Best of the Uncovered 會議，我們很高興在那裡見到您。如果您對此有任何疑問，請發送訊息給 Jordan Darrow。

With that, I'd like to conclude today's call. Thank you very much.

我想結束今天的電話會議。非常感謝。

Ladies and gentlemen, with that will conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

女士們先生們，今天的電話會議和演講到此結束。我們感謝您的加入。現在您可以斷開線路。