Hello, and thank you for standing by, and welcome to the DZS ASSIA Acquisition Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ted Moreau, Vice President of Investor Relations. Please go ahead. Thank you, Josh. Good afternoon, and welcome to the special analyst, investor, and stockholder briefing regarding the close of the DZS acquisition of core assets of ASSIA. Thank you for joining us. With me on today's call are Charlie Vogt, CEO, and Misty Kawecki, CFO. On this call, we will provide projections and other forward-looking statements regarding future events or the future financial performance of the company. The company cautions you that such statements are only current expectations and actual events or results may differ materially. Please refer to documents that the company files with the SEC, including its most recent 10-Q and 10-K reports. These documents identify important risk factors that could cause actual results to differ materially from those contained in the company's projections of forward-looking statements. Please note that unless otherwise indicated, the financial metrics being provided to you on this call are determined on a non-GAAP basis. We are hosting this call to give more information on the specifics behind the acquisition of core ASSIA assets and provide additional financial details associated with the deal. I now have the pleasure to turning the call over to Charlie. Thank you, Ted, and welcome everyone. Over the past nearly two years, our vision, strategy, and disruptive approach to innovation at the fixed mobile and optical edge, together with the acquired network orchestration and software automation platform from RIFT in Q1 of 2021, and now with the addition of the acquired service assurance and consumer experience software solutions from ASSIA, we have created what we believe is the industry's most comprehensive and complete end-to-end broadband connectivity, network aware, and consumer-focused software portfolio. We established DZS in early 2021, beginning the year with an oversubscribed $64 million follow-on equity raise designed to strengthen our balance sheet, enabling us to accelerate our strategic growth playbook. 2021 marked a year of extraordinary achievement for DZS, including the introduction of 29 new products, record-setting orders, revenue, and backlog. While Q1 2022 revenue results were limited by supply chain constraints, we booked our fifth consecutive $100 million+ quarter, secured 16 new customers, and ended Q1 with $243 million in backlog. DZS and our peers are benefiting from a once-in-a-generation fiber to the home, mobile, and optical edge infrastructure investment cycle. Never before has our industry experienced the global financial stimulus from government entities around the world. In addition, due to the geopolitical security concerns, DZS is actively pursuing numerous Chinese vendor capital replacement opportunities. As many countries, companies, and families navigate today's inflationary concerns, supply chain and economic impacts from the Russian-Ukraine war, fixed and mobile broadband services have never been more important, and in fact, have become an essential service that consumers and businesses around the world rely on for most every aspect of daily life. Today's broadband network, both fixed and mobile, connect billions of smart devices, home networks, automobiles, healthcare facilities, customer support centers, and e-commerce destinations, enabling real-time communications, social media, entertainment, business productivity, research and development, financial transactions, virtual education, medical care, and safety. Shared this morning, we are pleased to report that we have successfully completed the acquisition of the service assurance and consumer experience software portfolio, employees, and marquee customers from ASSIA. The acquired software solutions, which will become part of DZS Xperience, complements DZS Xtreme, our network orchestration, 5G slicing, and software automation portfolio. Together, DZS Xtreme and DZS Xperience create a robust and complete open cloud-based end-to-end network aware and consumer-focused communication software platform, uniquely operating across a multi-vendor service provider environment. As part of the transaction, DZS has gained an elite team of highly skilled cloud and artificial intelligence software engineers, architects, and business leaders, as well as the award-winning Expresse Service Assurance and CloudCheck Wi-Fi Experience Management software solutions deployed by marquee service providers, primarily in North America, Latin America, and EMEA. The acquired assets, including patents and patents pending related to the CloudCheck software portfolio, as well as a cross-license for the patents associated with the Expresse software portfolio. In addition to the market-leading service assurance and consumer management capabilities, Expresse and CloudCheck add a comprehensive set of data analytics and network intelligence capabilities to DZS Cloud, providing new revenue opportunities for DZS. As ultra-high bandwidth and experience-rich applications continue to emerge, there are very few access networking and communication software companies with the portfolio DZS now possesses. Historically, our industry has been served by closed and proprietary solutions. One of DZS's core technology and investment strategies has been to bring to market innovative and disruptive solutions that are based on open standards. By expanding DZS Cloud to include Expresse and CloudCheck, DZS Cloud will now offer communication service providers an open, standards-based, end-to-end cloud native software portfolio with interoperability that spans access and optical infrastructure and more than 150 unique residential gateways and Wi-Fi devices from a wide array of equipment suppliers. DZS will enable service providers with full control and visibility across the entire spectrum of services, from network orchestration and automation to consumer service assurance and in-home experience management. We are incredibly excited about the cross-selling and expansive growth possibilities resulting from the acquired software solutions and marquee customers. With the transaction now closed, DZS tier one customers represent 30 of the top 50 global service providers. For analysts and investors who would like to better understand the DZS portfolio and specifically DZS Cloud, we will be making available a series of interactive videos which will be produced from our newly launched experience studio. Before I hand the call over to Misty, who will provide the financial details of the transaction, including our updated three-year outlook, we anticipate our software and services portfolio will represent approximately 12% of our midpoint annual revenue guidance on a pro forma annualized basis in 2022. Our relentless mission will be to distinguish, differentiate, and disrupt the network-aware service assurance and consumer experience software market, leveraging our global install base of marquee customers and our estimated 150 million connected homes. We anticipate that we can grow our software and services revenue, which today is trending to approximately $50 million on an annualized basis to $100 million by 2025. By doing so, we will improve our strategic alignment and value with our customers and partners, increasing our blended gross margin to an estimated 45% and establish meaningful and predictable recurring revenue and service. I'm sorry, recurring software and revenue. While DZS is a new logo and stock symbol for many investors and prospective investors, we are convinced that the more you learn about and appreciate what we are doing, the more you will value our long-term investment thesis, mission, and strategy. While the near term continues to be challenged by supply chain, we are focused on delivering trend-setting technology differentiation and long-term sustainable returns to shareholders while creating the most rewarding place to work for our employees. With that said, I'll hand the call off to Misty to provide more specifics on the financials. Thank you, Charlie. We are really excited to add the ASSIA team and software assets comprised of Expresse and CloudCheck. We closed the acquisition this past Friday, paying $25 million in cash or approximately 1x their full year 2022 revenue outlook. To fund the acquisition, we entered into a term loan funded by JP Morgan, our global banking partner, and Texas Capital Bank, paying a low- to mid-single-digit interest rate. On an annualized basis, with the $25 million revenue run rate contribution, the pro forma revenue related to the Expresse and CloudCheck software assets, combined with our existing software and services business, is estimated to be approximately $50 million in 2022 on a pro forma annual basis. With an encouraging pipeline over the next three years, we expect our combined software and services business to grow at approximately 25% annually. Adjusted gross margins for the acquired Expresse and CloudCheck business are approximately 80%. Now that the deal has closed, we are pulling forward our 40% adjusted gross margin target by as much as 12 months to as early as the end of 2022, depending on supply chain dynamics. We are now targeting a blended 45% adjusted gross margin by year-end 2025 due to the combination of higher software contribution, higher revenue from North America and Europe as a percentage of total revenue, and our planned execution efficiencies derived from manufacturing consolidation and new product introductions. The acquisition is expected to add $14 million of R&D and SG&A costs annually to our adjusted operating expenses, resulting in DZS software and services Adjusted EBITDA margins of approximately 25%. As we look to the remainder of 2022, the acquisition is expected to contribute approximately $16 million-$18 million of high-margin revenue to DZS and approximately $9 million in adjusted operating expenses. Thus, the acquisition adds approximately $3 million-$6 million of EBITDA in 2022. As Charlie mentioned earlier, with the acquired software assets, we will be able to leverage our global marquee customers and approximately 150 million connected homes, unlocking a significant opportunity. Growing our software and services revenues improves our strategic alignment and value with our customers and partners, increasing our blended gross margins and contributes to the growth of our predictable recurring software and service revenue. With our cross-sell opportunity and expanded addressable market, we anticipate that our core access networking portfolio can grow 10%-12% over the next three years, coupled with 25% growth for our software and services portfolio, which puts DZS on a path to $600 million in annual revenue with blended gross margins of 45%, driving $100 million in Adjusted EBITDA in 2025. I would now like to hand the call back to the operator to facilitate the Q&A. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our first question comes from Tore Svanberg with Stifel. You may proceed with your question. Yes, thank you, and congratulations on closing this very exciting deal. First question and kinda longer term. So based on your numbers, sounds like you expect software and services to be roughly 20% of your revenues, as you exit 2025. As we move beyond 2025, are you still expecting that piece to grow at a 25% CAGR? Well, first of all, thanks, Tore. You know, look, I mean, we haven't. I mean, what we did talk about at Investor Day was sort of our own internal SAM, and we've talked a lot about the 150 million connected homes, which, you know, comprises of, you know, ASSIA plus DZS as sort of our internal investment thesis, and that's certainly an area that we feel like we have a great opportunity to upsell within. You know, we had talked about this billion-dollar SAM, and we had derived that number by just taking a look at what the average annual subscriber price is amongst our peer group, which we would argue has a subset of what we're gonna be able to offer, which is somewhere in the neighborhood of 10-20 times more expensive than what the ASSIA portfolio was being priced at. We think that there's a significant opportunity for us over time to offer the customer base more value, more software, and as a result, be able to attribute more recurring revenue as a result of that. We certainly think that the prospects are pretty significant. I personally think that, you know, the $100 million outlook that we have over the next three years is low. You know, if we execute and do our job, I think that, you know, the opportunity for us is significant. To your point about continuing to grow at 25% beyond 25, we certainly believe that that's within our own capabilities. That's, you know, frankly, without us even speaking about, you know, new customer acquisition. That's great. Thank you for that perspective. As my follow-up for Misty, you mentioned $16 million-$18 million contribution for the remainder of the year. Is there any seasonality to this revenue, or is it, you know, kind of just very linear for the remaining quarters of the year? Thank you. Thanks, Tori. Because the acquired business is very recurring in nature, for the most part, it is very linear. There are some small service elements that have some quarter-to-quarter adjustments, but for the most part, very linear. Great. Thank you. I'll go back in line. Thank you. Our next question comes from Christian Schwab with Craig-Hallum. You may proceed with your question. Great. Congrats on closing what looks to be a fabulous deal. Can you help us help investors maybe understand how you got such a broad customer base product with 80% gross margins and strong double-digit growth at 1x revenue? We were hoping nobody would ask that question. You know, it's probably something on a call like this, you know, that we're not gonna get into the details. I would tell you that at the core of it, you know, ASSIA is retaining some intellectual property obviously associated with Expresse, and I think they have a mission to continue as an IP licensing company. There was a very unique and timely opportunity for us to acquire the software and customers and employees along with the CloudCheck patents, while allowing them to continue to pursue their ongoing business with regards to the IP licensing with regards to Expresse. You know, I think it was a combination of that. I think John and the team were very focused on making sure that, you know, the long-tenured employees and long-tenured customers landed in the right place. It certainly was a competitive process. There were other companies involved to the best that we understand, but I think that they were looking at the culmination of, you know, where are our employees gonna find the best longevity, where are customers gonna be best served. When you looked at, you know, our portfolio with OLTs, ONTs and Wi-Fi in-home devices, coupled with what we were already doing with DZS Xtreme, you know, it became, you know, independent of price. It became a real natural place for the overall portfolio to land. Yeah, I mean, I think the company and our investors are very fortunate with the deal that we've struck. Great. You could kinda back into the pricing whether you know the customer pays you know on an annual basis or monthly basis. Can you give us you know any idea of you know historically you know how pricing has been when ASSIA ran it. Is there an opportunity? It seems to me that that there could be some opportunities for you know kind of unique opportunities for ASP potential increases depending on whether the customer wanted to be able to cancel any time or have you know sign up you know for multiple years at a time. Can you give us some idea of of pricing and then you know how sticky the customer base has been you know historically over the last three years? Obviously, there appears not to be a whole lot of churn, given the top-line growth expectations, but any color there would be great. Sure. Well, first of all, the customer base is very sticky. I personally spoke to the 10 largest customers as part of the due diligence process along with John. Not only is there a long history here, but if there was a theme on the call with my interactions, it was, you know, these large tier ones desire to make sure that DZS was committed for, you know, the long term. I think that, one, you know, there's been a long-term relationship here, but there's certainly a long tail that is expected. It's a very ingrained and embedded software, you know, solution within, you know, large tier ones. I mean, you don't get to 125 million subs dealing with small 10,000-line service providers. I think if you look at, you know, recent transactions from Airties, I think they talk about 20 million, you know, connected homes. You know, the opportunity that we have here to mine from is pretty significant. I think, look, they were a small company, you know, and small startups, especially at the time in which ASSIA was building these technologies over time. You know, the pricing schematics and the structure by which software was sold, you know, ten years ago, even five years ago, was much different than it is today. We look at DZS Xtreme, which is our orchestration and slicing application management automation as a software portfolio that'll be sold as an enterprise license, annualized enterprise license, because it's a network, it's more of a network software solution, whereas the subscriber base, the Expresse and CloudCheck are really more customer-facing and going forward, they'll be more subscriber or SaaS like, ASPs tied to it for our customers selling it to consumers, but also what we expect, you know, the portfolio to be sold as. As you kinda highlighted, I mean, if you just did simple math, you would say that, you know, they've been selling software at about $0.20 a subscriber, if you look at 125 million subs, and $25 million of annual revenue. That's somewhere between, let's call it 15-20 times less than what the average subscriber price is today. There's a significant opportunity for us to, we believe, enhance the value. You know, our goal is not to go back and try to increase prices without adding a lot of value. We think that the combined value that we have across the whole portfolio gives our customers an opportunity to see value that one they're not gonna get from other technology companies and two gives us an opportunity to significantly provide more value and be rewarded from a higher subscriber price. Great. Just one last question, if I may. Can you tell us or would you be willing to share with us some of the customers and the 10 largest customers that you talk to? I think, given any of the geographies that you gave, I think people could probably make some guesses. Would you be willing to share, you know, a handful? Christian, the only thing I'd be willing to share with you, I won't just 'cause those calls were confidential. What I will tell you is, you know, there were certain customers that were willing to allow us to mention them in the press release, in the initial press release, as well as the release from this morning. Both Lumen and TELUS gave a quote, so you could probably derive that there was some communication with those two service providers. You know, I would encourage you to assume that, you know, that the tier one operators are primarily from North America and Europe or Western Europe. I mean, there are a few large tier one operators in the Middle East. There's a few operators in Asia. But when we look at the cross-selling opportunity, for us, it's huge 'cause, you know, they were obviously not very active across Asia. When we look at the opportunity with our install base in Asia and talking to a lot of our tier ones in Asia, consumer-based experience software and service assurance and network orchestration platforms are in significant requests. We think there's a great opportunity there. We also think that in a lot of the Huawei capital replacement opportunities, there's certainly a great opportunity for us there to lean in, some of which are already using the now DZS experience portfolio, which gives us multiple paths to broaden our viability in those accounts. Great. Then just one quick question, financial, then I'll be done. I'm sorry. You know, it's paper here, unfortunately. I come up with earnings, and then the implied guidance at around $2.50 in 2025. Did I do that math correct, quick? Sounds correct. Perfect. No other questions. I'd have to defer to Misty, but if you're talking about the $100 million in projected EBITDA based on an outlook of growing our core business at 10%-12% and our software and services business at 25%, based on the 27 million outstanding shares today, I think that's a pretty close rough math. Perfect. Great. Congrats again. Thank you. Yep. Thank you. Thank you. Our next question comes from Tim Savageaux with Northland Capital Markets. You may proceed with your question. Hi, good afternoon, and congrats on the deal. Another question about the future here, not as far out as 2025, so let's pull it all the way back into 2023. I just kinda wanna run through some assumptions about how we should think about the year given you're gonna have a full year contribution of ASSIA. You know, I would imagine in your 10%-12% growth rate on the kinda core business, if you will, the access infrastructure business, sounds pretty solid. You know, I wonder if there isn't a case that that might be growing above trend as well, given the likelihood of, you know, supply loosening up a bit or that situation improving. As you look at that overall blended growth rate going forward, you know, would you expect to be 23%, could possibly be moderately to significantly above trend year relative to that baseline for those reasons? Yeah. First of all, thanks, Tim. You know, look, I mean, I think we're still in a very sort of a curious and nervous place with just where we're at with supply chain. I think, you know, I was sharing with some of you a few weeks ago that I don't know if we're in a recession or we're getting ready to enter a recession, but in a way that's probably not one that people wanna hear. I think as consumers tap the brakes and spend less on consumer electronics, people are buying less personal items. It certainly opens up an opportunity for more wafers and more chips to come in the direction of companies like us that are delivering technology to service providers that we are convinced are gonna continue to invest, you know, over the near long term. Your point is fair. I just don't think that, you know, at this particular stage, especially with us continuing to fight the supply chain battle, you know, quarter-over-quarter, that, you know, we're in a bullish position to say that we can grow more than 10%-12%, if all the stars align and supply chain, you know, gets behind us. I think, you know, we might have a different view on it, but right now I just don't feel comfortable providing any more bullish views than what we're seeing right now. Yep. That's fair enough. I guess I may have missed some commentary on the standalone growth for the acquired company. Did you talk about? We did. What we Yeah. Was that an expectation going forward or what kind of growth did the company see in, you know? I mean, you know, there's, let's say that there's today a very mature Express software portfolio, pretty large install base. Their sort of next gen are now our next gen, CloudCheck consumer-facing experience software is growing at a pretty fast clip. You can sort of assume that the goal, even before DZS got involved, was the ability to bundle CloudCheck with all of the Expresse customers where, you know, the company had originally established itself. We certainly see CloudCheck, which is certainly fueling the SaaS revenue, as something that's growing at a pretty fast pace. The pipeline that they shared with us is pretty encouraging. You know, DZS was on its own track of working our own pipeline in that area. We think that, you know, the 25% growth rate that, you know, Misty and I highlighted is very manageable over the next several years, and that includes our existing software and services. We bundled our existing software and services that's trending at around $25 million. ASSIA is coming in around $25 million, so the combined is around $50 million. We see that growing at a clip of at least $25 million. 25%, sorry. Got it. Last question from me is, of that, you know, kinda $100 million target out there, I mean, is there a per subscriber, you know, ARPU type number that sits underneath that? You know, to the extent you're talking about, you know, $0.20 currently. Does that assume because of, you know, a broader product offering or increased value that increases to a certain level. Is there some degree of, you know, customer expansion and customer count behind that? Or maybe some color on how those two interact to drive that target. Yeah, I mean, you know, there's a lot of people listening to these calls, and so we wanna be very thoughtful and careful about providing competitive information that's out there. What I can tell you is, you know, the pricing by which, and the structure by which ASSIA was previously selling into had a lot to do with just what software they had. I mean, you know, the Expresse software was saving and still is saving service providers, you know, a lot of money, as it relates to the way they monitor, manage, automate, and eliminate truck rolls. I mean, I think they mastered that more than anyone in the world, and that sort of was their claim to fame. You know, over the last several years, you know, they were really one of the early ones in innovating consumer-facing software management. You know, they're not a marketing company, you know, small company, had six salespeople, so they, you know, focused on selling those products into their. Excuse me. Sorry, Tim. You know, they were originally selling those into their existing install base. Got it. Thanks very much. Thank you. Our next question comes from Dave Kang with B. Riley. You may proceed with your question. Thank you. Good afternoon. Congrats on the acquisition. I missed the just clarifications on the numbers. I believe you said revenue of $16-$18 million. I didn't catch the OpEx. Did you say $8-$9 million? OpEx for the stub period. Osea. Right, just for Osea, correct. Right. Estimated at total is 14. Sorry, I think it's $9 million for the stub period. Yeah. Right. And then you said about $3 million-$6 million EBITDA? Yes, that's what she said. Yes. Yeah. Okay. Just wanted to make sure I got those numbers right. Then actually this is about more of a broader broadband industry. I guess recently NTIA releasing or is about to release $45 billion broadband funding. When will we see, you know, will we see any of this in maybe second half, or is it more of a next year? How much of this could be relevant for you guys? Sounds like a lot of this will be, you know, optical fiber-based. Well, the $42 billion is from everything, and we're pretty in tune. You know, what we understand is the mapping is supposed to be completed by the end of this year. This is the mapping of each one of the communities within each state. There then is sort of this gestation period where people can dispute the findings. You know, the forecast that we have, Dave, is that we think that the process by which each state will be able to go out and begin to issue their own state-by-state RFPs is probably in Q1 of next year. Awards probably happen by mid-year next year. We think the $42 billion begins to get unlocked on a broader scale in the second half of next year. By the way, the software and services that we're talking about do qualify for the broadband stimulus funds. You know, while you've got construction costs that probably eats into 30%-50% of it, depending on the state and the rural community, then the rest of it is electronics and software and support services. Certainly is an opportunity here. Regarding your, you know, 10%-12% CAGR, overall revenue CAGR, how much of that, you know, is really dependent on this, you know, government stimulus money? You know, we haven't really tied the success and the forecast outlook that we have to any of the RDOF or the broadband stimulus. As I think we've spoken in the past, most of our customers are moving forward on their broadband initiatives independent of the awards and the award timing. We do have some large customers, like Consolidated Communications, that has been very successful in receiving, you know, RDOF funds, but, you know, most of our tier one and tier two customers are serving, you know, urban markets. We do have a significant number of customers that do support rural America, but it certainly hasn't gone into our growth or our investment thesis to achieve our 10%-12%. Interesting. Thank you. Thank you. Our next question comes from Ryan Koontz with Needham & Company. You may proceed with your question. Great. Thanks for the question, guys. On SaaS here, can you give us any more color on kind of the mix of CloudCheck versus Expresse? Sounds like Expresse is a mature base and CloudCheck's a relatively new product. Any more color you can share there, Charlie, on the mix and how you see that changing over time? Thank you. Yeah, no, that's right. Expresse, and obviously that's where there's a lot of intellectual property that's been established, you know, over the last decade, and it is a very mature product. There is still a lot of feature development that's going into it as the industry moved from DSL to PON. Appreciate that Expresse was originally deployed in a copper-based DSL environment that over time has transitioned to PON and now GPON. There's new feature development that has gone into that. There's certainly a lot there for us to continue to mine. Yeah, I mean, the CloudCheck portfolio is really where we see a lot of hyper growth, just based on, I think, service providers trying to lean in on, you know, participating more inside the home. I think everyone is trying to eliminate unnecessary truck rolls, eliminate unnecessary customer support conversations, trying to isolate where the problems are in the network, be able to automate that whole process, and then give the tools to consumers to help them better isolate where the problems are. Is the problem I think the one thing we haven't done a great job articulating that is really the huge differentiator between us and everyone else, is that most of the companies who are, you know, sort of marketing a consumer management platform today is really focused on only what's going on inside the home. With both Xtreme, which is our orchestration platform, but with the ASSIA Expresse and coupled with the CloudCheck, service providers have a lens into the network from the core all the way into the home, so they can isolate 100% where the problem is. Where if you're just looking at an in-home consumer-based product platform, you're only appreciating what's going on inside the home and where your Wi-Fi experience and other, you know, features and new functionality elements and you know, things like parental controls and security and all the other things that are great convenience items. At the heart of the fundamentals, you know, what service providers are trying to do is to eliminate unnecessary truck rolls, unnecessary customer support calls and frustration, you know, with consumers. I mean, as a consumer, if you've got internet issues, what do you do? The first thing you do, you call your service provider. Well, the service provider is trying to eliminate that whole process. With Expresse and CloudCheck, we believe we're the only company that truly has the ability to give service providers the capabilities to monitor, manage, automate, and deliver the essential results to determine where the problem is and how to address it. CloudCheck is where a lot of the new growth is. The Expresse portfolio, at least in the customers that we're in right now, is pretty mature. Appreciate that, you know, we have a much larger install base than ASSIA did. Our goal will be to obviously continue to sell the Expresse portfolio bundled with CloudCheck as an experience bundled offering to all of our customers. Got it. CloudCheck's in a pretty small fraction of that. It's a pretty small as a percentage of the revenue today, growing at a pretty fast clip. Helpful. Thanks, Charlie. Thank you. Our next question comes from Paul Silverstein with TD Cowen. You may proceed with your question. Thanks for taking my question. Great acquisition. I wanted to drill down a little bit on the mechanics of how you're going to approach this ASSIA. From my understanding, you negotiate with the service provider, and then they go out and begin to sell to their subscribers to for this upgrade or to roll out this CloudCheck. It's a three-part question. First, do you guys get involved with the marketing, any marketing materials for them? Secondly, I think I've asked you this question before, Charlie. You have an opportunity when these other contracts roll off inside of the customers, you know, inside of the service provider. How quickly do these things roll off? Are they five-year contracts, four-year contracts? Then the third question would be, what would be your strategy to go in there and try to renegotiate, or the service provider go in there and renegotiate some of the contracts to get a better deal, so to speak, and package the two together? Can you give us some flavor on how that's gonna work? How quickly do you think you can get to, you know, the whole 125 million subscribers that would be in a position to make a change? Yes, on the marketing and the collaboration of any sort with ASSIA, you know, there's nothing planned there. I mean, ASSIA is, you know, a separate company that's gonna go, you know, focus on IP licensing and- Yeah, I'm sorry. I meant, are you gonna work with the service providers to help them market, or is that something separate? You know, what I would tell you is the really small companies need a lot of help. Our focus has always been with the Tier one and Tier two's, and even if you offer the help, they would tell you that they don't need your help. That said, you know, I don't see ourselves spending a whole lot of time. I mean, you know, I mean, I just go back and think about the last 20 years with all of the technologies that I've been involved with. I mean, most of the large Tier one or Tier two's. You know, it's hard to get marketing and sales attention there. I mean, they've got their own playbook, and they, you know, they're obviously taking advantage of what the capabilities are, but their ability to go to market and sell is something they tend to wanna do on their own. Our job is to make sure that we do a good job giving them, you know, the tools and the feature set to where they can define the new services and allow them to differentiate, you know, their overall service offering. Look, I would tell you right now, I've never in my entire professional career seen service providers so anxious with so much anxiety about how they participate inside the home and how they can eliminate unnecessary truck rolls, how they can improve the customer experience, how they can improve their ARPU. All that is, you know, a recipe that is perfectly aligned with the portfolio we have both from what we're doing in the core to what we're doing with our, you know, connected home in home devices to now, you know, the overall software portfolio. We will do everything we can to give them the tools to go out and market, but for us to actually market with them, I don't see the service providers, you know, utilizing us to do that. As it relates to the contracts, I mean, I'm not gonna talk about that. I mean, the contracts, you know, are all at various stages. You know, our goal, independent of the timing of when a certain contract would renew, is to make sure that the existing customers that we've acquired really appreciate and understand the overall software portfolio, where we're going, the roadmap that, you know, we plan to accelerate and what that means for them to differentiate, you know, their overall OpEx savings and ARPU increase opportunity. I think all of that lends itself to an opportunity for us to create a win-win scenario with the providers. I don't see myself going in and trying to renegotiate contracts. I think our goal is to show more value and be able to abstract more value as a result of it. Obviously, there are some things that we can do disruptively by bundling the various software attributes we have with Xtreme and now Xperience and our in-home Wi-Fi technology. That certainly gives us something that ASSIA previously didn't have. Okay. The contracts, are they five-year, three-year? I mean, what's the. I'm sure they're different for each provider, but give us a sense for how long the contracts are initially set up for, so we have a sense of, you know, how much of that roll over a few years. I'd have to tell you that, they range from one year to 10 years. Okay. All right. You've brought a lot of talent with ASSIA here, and I'm wondering, you know, how much of these people will be working with ASSIA and trying to go forward there, bringing more bells and whistles. How many of those people may get, you know, migrated into the RIFT end? Can you give us a little sense of what you wanna do with all that talent there? Yeah. We're merging the RIFT software developers with the new ASSIA software architects and engineers under the leader from ASSIA. The software executive who was running, you know, the R&D team at ASSIA will be reporting to Miguel, and he'll have all of our cloud software resources. We'll have, you know, approximately 150 cloud native software developers. You know, 15 months ago, we had zero. We've gone from zero to about 150. You know, we've got, you know, most of our. You know, if you look at the rest of the engineering organization that is supporting our core infrastructure, most of them are embedded software developers. As you probably can appreciate, there's a big difference between embedded software developers and cloud software developers. I mean, they're developing on, you know, very different sort of architectures. It's a great encouraging opportunity for our own employees right now because now we've got an opportunity for some of the longer term embedded software developers who want to migrate into the cloud native world, and they can do that now inside of DZS and not have to leave to go to, you know, a third party company to be able to get that kind of experience. There's a lot of great internal dynamics. Okay. Great. Last question from me. Commissions. I understand that you incentivize the sales force, paying a higher payout on software. Can you give me a sense of if I sell, you know, X amount of hardware, I get a 10% commission as a salesman. If I were to go out and sell X% of software, what would be my commission relative to 10%? I mean, how much of an incentive is it? Paul, do you really want me to answer that question on a call like this? Well, give me a sense of how much? I would never tell you guys. I would never tell any of our shareholders or analysts what our comp plan is or how we incentivize our sales force. Oh, no. I'm just talking on a relative basis. I mean, is it double, twice as the commission, twice as much, 50% more? Just a sense of how much more than You know, I don't know how most companies pay their salespeople. I mean, our salespeople are quota-based. They have a quota, they have a variable comp, and they get paid a percentage of, you know, their variable comp based on their achievement of quota. If you got a salesperson that has a $10 million quota and they've got a $100,000 commission, you know, their commission rate's one. They can get to that, in that example, a $100,000 commission by working their way from zero to $10 million in orders. We see, you know, the comp plan that I've actually had in place for 20 years is something that we will continue to adopt with the team that's coming over, and I think they're excited about it. Okay. Thank you. The other thing that I just wanted to make sure, Ryan, 'cause I think you were trying to get to a question about the Expresse and CloudCheck percentage, and I made it sound like it was small. I don't wanna make it sound like it's zero. I mean, it's not 50% of the total trending $25 million, but it's more in the 1/3, and growing at a much faster pace. Thank you. As a reminder to ask any. I don't know if Ryan was still on. Do you hear that? Our next question comes from Tore Svanberg with Stifel. You may proceed with your question. Yeah. Thank you. Just two quick follow-ups. I know this call is all about ASSIA, but Charlie, you talked a little bit about the challenging supply chain situation. Would you classify the situation as kind of being the same, getting better or getting worse? You know, I would say the same. You know, I think that, you know, every company probably has its own subcomponent supplier challenges, you know? You know, a year ago, I would tell you that our challenges that we had were with certain suppliers. Today, we feel like we're in a really good place with those. You know, we would say that we've got challenges with, you know, for us, it's most of the smaller subcomponent suppliers, which is the real challenge. I mean, you wanna have the most meaningful relationship is where you have the most dependency. I think, you know, with large-scale companies like Broadcom and others, we've done a fantastic job aligning both strategically as well as, you know, just making sure that we have access to, you know, the chips that we need. Where you have small relationships but you know have an ancillary element that is critical to a complete system, that's where it becomes a little challenging when you look at the total BOM and the total system. You know, I think I shared on the last call, you know, I think we ended Q1 with $70 million of inventory, which was painful, but it's one of these situations where you're having to do as much land grab as you can to align with the backlog that you have and the outlook forecast that you have to ensure that you have all the components you can of that BOM. But if you're missing a $10 filter or a $20 memory chip, that maybe you're not spending as much with those companies as you are with Broadcom, you know, you don't have as much leverage. I think that's what is at the real heart of the challenge that a lot of the technology companies have right now is just trying to get your fair share of the subsystem components that, you know, maybe you're not as meaningful. You know, you're having to go to alternative segments of the market to be able to achieve those things. Hopefully, those elements get alleviated here over the next two to three quarters, but it's still challenging. I mean, it's frustrating and challenging. That's fair. Last question for Misty. Misty, when I do the stub calculation, it does look like the second half is a little bit stronger than the first half. Should I read anything into that? Is it basically just CloudCheck accelerating as we move throughout the year or anything else going on? I think that's right. I think there's just a build naturally that is occurring from the first half to the second half, as we, you know, as they have laid the foundation for growth. I don't think there's anything more to it than just a generally strong pipeline. Perfect. Thank you again. Thank you. I'm not showing any further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.