Hello, my name is Jean- Louis. Welcome to the DZS Q1 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question again, please press star one. I will now turn the conference over to Mr. Ted Moreau, Head of Investor Relations. Please go ahead. Thank you, Jean-Louis, and welcome to the DZS first quarter 2023 earnings conference call. Joining me today to discuss our results are DZS President and CEO, Charlie Vogt, and CFO, Misty Kawecki. Chief Product Officer Miguel Alonso is also on the call to participate in the Q&A session. After market close today, we published our first quarter earnings release along with an updated investor presentation, which will be referenced throughout today's earnings call, and you can follow along with Charlie and Misty's commentary. Our discussion today will contain forward-looking statements based on our current expectations regarding future events or the future financial performance of the company. These statements are subject to risks and uncertainties, 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, as well as being available on the investor relations section of our website. Please note that unless otherwise indicated, the financial metrics being provided to you on this call are determined on a non-GAAP basis. These items, together with corresponding GAAP numbers and the reconciliation to GAAP, are contained in today's earnings press release. During the second quarter, we will be attending investor conferences hosted by Needham, B. Riley, Craig-Hallum, Cowen, and Stifel. Additionally, this Wednesday, May 10th, we look forward to hosting investors and analysts at an exciting investor day that we have planned at our headquarters in Dallas. I will now turn the call over to Charlie. Ted, welcome to our first quarter earnings call. As reflected in our first quarter 2023 operating results, and despite a robust backdrop for smart, secure, and high-speed broadband solutions, certain customer deployments and certain customer inventory levels hindered our ability to maximize revenue at the high end of our revenue guidance. Beneath the headline numbers, we continue to make encouraging progress in positioning the company to benefit from what will be a favorable long-term secular growth trend. I'm referring to both revenue growth and improved gross margin expansion, which combined will deliver favorable financial results measured by earnings and cash flow. Aside from our relentless focus on customers, revenue and margin growth have been our two primary areas of focus. As it relates to gross margins, we anticipate that 1Q 2023 will mark the low point for gross margin. We expect to deliver gross margin and earnings improvement throughout the balance of 2023, aligned with our backlog and anticipated in-year revenue conversion. Segments of the broadband market have been impacted by the current macroeconomic environment, slower than expected approvals and disbursements of government stimulus funds, as well as inventory management challenges, the secular demand drivers for broadband everywhere remain robust and unchanged. We expect market trends to favorably benefit our revenue and margin growth outlook over the long term, the investments we are making in technology, our IT infrastructure, and with marquee service providers, are designed to expand our reach, improve our revenue growth, and expand our margins in order to deliver meaningful improvement to earnings and cash flow. Our recent design wins with tier- one service providers and numerous category-defining product launches are validation that our vision, strategy, and playbook are aligned with what service providers around the world are seeking to deploy. While it will take time for these design wins to translate into deployments and revenue, we believe our momentum ultimately will translates into meaningful revenue growth and will validate our competitive position across the fiber to the premises and mobile broadband markets. Our new products are differentiating and improving our competitive position within these two markets. With the introduction of our Saber 4400, we are creating a new access optical edge category aligned with mid-mile transport, which is being fueled by last- mile fiber and 5G broadband deployments. As we will share in more detail, we are accelerating in-year cost savings to deliver favorable impacts on earnings and cash flow during the second half of 2023 and into 2024. During the first quarter, we delivered $91 million of revenue, 33% non-GAAP gross margin, and a non-GAAP earnings per share loss of $0.06. While our revenue was at the low end of our $90 million-$100 million revenue guidance, revenue for the quarter represented an increase of 18% year-over-year and 23% on a constant currency basis. On a regional basis, America's revenue increased 9%. EMEA was relatively flat, and our Asia region increased 32%. Within our Asia region for regional performance, our Pan- Asian sub-region, which includes India, increased 260% over the year. On a product segment basis, our software and service revenue contributed approximately 13% of revenue, representing an increase of 148% year-over-year. Notably, for the first time in nearly two years, supply chain sourcing and component availability, as well as elevated supply chain costs, did not significantly surprise or impact our results. While our 33% non-GAAP gross margin was within our guidance range, our adjusted EBITDA was a negative $4 million. Due to the timing of higher investment levels that were required to support and deliver on recent and forthcoming design wins. Along with numerous other companies throughout our industry, we are increasingly confident that the supply chain will continue to improve throughout the year and into 2024. Strategically, we remain laser-focused on positioning the company to capture market share in the fiber- to- the- premises and mobile broadband market, ultimately improving on long-term earnings and cash flow sustainability. With an expected improvement to gross margins, we expect a favorable impact to our operating leverage and earnings. As mentioned earlier, we expect sequential improvements in gross margin every quarter throughout the year. Several factors underpin our confidence to deliver higher gross margins and improved earnings over the long term. Sales growth in North America and EMEA, growth with recurring software, higher margins associated with new product introductions, and operational efficiencies aligned with third-party contract manufacturing partners. While many government broadband subsidy disbursements have been slower than expected to convert, the bulk of the disbursements remain ahead of us over the next several years. Our current pipeline, trial activity, and project visibility remain robust, and we believe the current deployment schedule timing and inventory management related challenges are transitory in nature. As the fixed and mobile broadband markets adjust to post-COVID environments and supply chain challenges improve, we believe our competitive position with our differentiated infrastructure and software solutions will enable us to secure meaningful new design wins spanning the globe. Our new products and roadmap, which we will cover in more detail Wednesday during our Investor Day, include our recently announced Access Edge Velocity V6, our new Metro Optical Edge Saber 4400, our new mobile cell site router, M4000, and our new Xtreme Network and Service Automation and Orchestration platform. We also expect these products in aggregate to have a favorable impact on our gross margins over time. While we remain focused on positioning the company to capture market share in what we anticipate being a robust 5-10-year fiber to the premises and mobile broadband investment cycle, investors should appreciate that the past two years represented an unprecedented industry-wide set of challenges, from component availability to cost increases to foreign exchange fluctuations and inclusive of our manufacturing transition and a global ERP conversion. Providing revenue margins and earnings guidance has been challenging. Looking forward, as the broader market dynamics stabilize and with manufacturing transition and IT systems integrations complete, we now have the scale and real-time visibility to forecast with better predictability. Our first q uarter earnings shortfall was a result of revenue and gross margins converting at the lower end of our guidance range and slightly higher operating expenses. We ended March with $31 million in cash and with inventory lower at $70 million. Sequentially, our cash balance was lower by $7 million due to the timing of collections and inventory required with investments. Our accounts receivable of $141 million at the end of March provides for a favorable opportunity to improve our cash balance and working capital in the coming quarters. First quarter bookings of $80 million were balanced between our Americas and EMEA region at 51% and Asia at 49% and reflects an expected rebalancing alignment with existing backlog, improved lead times, seasonality, and customer deployment schedules. While our pipeline, trial activity, and project visibility remains robust, our customers are shifting lead time delivery expectations from 12-15 months to an expected 3-6 months. We expect Asia to continue to grow and led by South Korea's leadership position in 10-gigabit PON and 5G broadband, Vietnam and India are expected to grow at above-market growth rates. We further expect product evaluations and trials currently underway in the United States and Europe to convert to design wins and ultimately deliver favorable orders and revenue growth as well as gross margin expansion. Of our $304 million of RPOs, we anticipate that we will convert $190 million to revenue this year. As a reminder, we have historically converted approximately 70% of our in-year revenue from orders booked during the same period. Compared to the previous 10 years, our backlog aligned with expected revenue is significantly higher, providing us with more visibility than in previous years. As we assess the remainder of 2023 and considering today's recessionary concerns, inventory levels with certain customers, and the timing of government stimulus disbursements, we are revising our full-year revenue outlook to approximately $400 million. As a result of the successful completion of numerous product, IT, and manufacturing work streams, we are accelerating approximately $12 million-$13 million of cost savings that we expect to realize this year. Our cost savings are anticipated to offset most of the adjustments to revenue, resulting in an adjusted EBITDA range of between $22 million and $27 million. We expect to deliver significant adjusted EBITDA growth and positive operating cash flow during the second half of 2023. We anticipate ending the year with approximately $40 million of cash and with our only debt consisting of our five-year term note associated with our ASSIA software asset acquisition. Upside to our revenue and EBITDA guidance would come from government stimulus disbursements occurring sooner than anticipated, a stabilizing of the financial markets, the timing of completing product trials currently underway, and the pace of adoption of our new product launches. Reinforcing our optimism, I recently returned from weeks of travel visiting with numerous service provider executives across the United States and Europe. We received resounding feedback that DZS remains well-positioned and on track to secure new design wins that will further enhance our long-term growth outlook. While there is heightened enthusiasm regarding the fixed and mobile broadband investments countries around the world will be making over the coming years, we expect a similar amount of private equity investment and service providers self-funding of broadband build-outs. I am more and more convinced that service providers have the unwavering commitment to deploy fiber- to- the- home and 5G broadband services, architected and managed by software-defined networking tools and automation platforms. Service providers are embracing open platforms and implementing solutions at the network edge, and they are moving differentiated features closer to the subscriber to maximize performance, responsiveness, and personalization. The technology shifts to the network edge are creating new opportunities for DZS and are fueled by the accelerating demands of emerging applications and the competitive need to deliver enhanced subscriber experiences. Service providers understand the stakes are high and that to retain and grow their market share, they need to invest and advance in their networks. Appreciate that countries such as the United Kingdom, Germany, Italy, and India have deployed less than 15% fiber- to- the- home and are at various phases with their 5G broadband build-out. Thus, a significant investment over the next several years is expected. Our investments, acquisitions, and innovation executed over the past few years are being validated by service providers around the world and are aligned with the global market evolution towards hyper- fast, low latency broadband networks. Our investments are enabling DZS to differentiate itself and enable service providers to become experienced providers with a focus on agility, automation, security, and operational efficiency, resulting in market share gains, reduced customer churn, and ultimately improving customer satisfaction. We are currently active in many service provider trials with our access optical and cloud-connected software solutions, which we expect to evolve to production deployments during the second half of 2023 and into 2024. Not including our technology alignment with mobile operators, our current fixed wireline customers, including trials that are underway with new prospective service providers, represents approximately 300 million subscribers in aggregate. Over the next several years, market research firms expect the cloud-connected software market over the next several years to grow at an 18% CAGR, the optical edge market to grow at 10%, and the fiber- to- the- home market to grow at 19%. Assuming a 10%-12% blended growth rate across the markets we address, the data suggests that our core business can grow to approximately $500 million in revenue by 2025. Assuming we execute and expand our gross margins and we moderate our operating expenses, we anticipate we can deliver adjusted EBITDA of between $40 million and $50 million in 2024 and $60 million-$70 million in 2025, with upside achieved by gaining share aligned with our five stated growth pillars. Our journey over the past two and a half years has been an all-encompassing transformation of the business, with our focus being innovation and customer alignment. As our recently announced customer wins validate, our innovation and differentiated access optical and cloud-connected software solutions are well-positioned to secure additional marquee service provider wins during the second half of this year and into 2024. In closing, I would like to summarize the progress we are making with our five growth pillars. The first being the fiber broadband upgrade cycle, driven by the evolution to GPON and now XGS-PON that is currently underway. We expect this upgrade cycle to continue for at least the next 5 - 10 years, with the investment and pace of deployment varying by country and the size and scale of the service provider. The second growth pillar is our ability to gain market share in North America and EMEA. Over the past two years, we have experienced a 44% compounded annual growth rate in North America and 10% in EMEA. We expect these two regions to experience favorable growth in 2024 and 2025 due to the traction and progress we are making with many super regionals and multinational service providers across these two regions. The third growth pillar relates to the security concerns resulting in a de-emphasizing of certain technology suppliers. We are very active with numerous service providers around the world and expect incremental design wins to be awarded over the next 12 months. Our fourth pillar is the opportunity to leverage our existing install base of valuable customers to cross-sell. Our differentiated product portfolio enables service providers to design and deliver fixed and mobile broadband services based on category-defining, open and standard-based solutions. Our fifth growth pillar, and maybe best described as a call option for investors, is Open RAN. While we have been instrumental in the technology and the evolution of O-RAN over the past several years, Open RAN is at a very early phase. We have been strategically aligned with Open RAN pioneers such as Rakuten Mobile, Rakuten Symphony, and other large-scale technology leaders. Multinational mobile operators, private and government sectors are keen to adopt and implement Open RAN due to the underlying benefits of opening the mobile network up to standards and broad-scale interoperability. There are numerous benefits for mobile operators to transition to Open RAN, including increased technology choices, reducing their exposure to vendor lock-in, and certainly lower network costs. We remain bullish and confident in our long-term growth and financial outlook. We will continue to balance our investments with market timing such that we can optimize our long-term growth objectives while achieving our near-term profitability objectives. As service providers continue to invest in the network edge, we believe we are well-positioned to capitalize on the opportunity in front of us. During our upcoming Investor Day on Wednesday, we will provide insights regarding the fixed and mobile broadband market, a real-time status update with the various government stimulus programs around the world, and a more fulsome update regarding our product portfolio, trial activity, backlog, gross margin, and profitability targets. For those of you who are attending in person, I look forward to seeing you Wednesday at our headquarters facility in Plano, Texas. With that, I'll turn the call over to you, Misty. Thank you, Charlie. Good afternoon, everyone. If you are following along in the investor deck, I will start on slide 35. Q1 was a seasonal start to the year as service providers, particularly in the Asia region, finalized their capital spending budgets. We grew revenue 18% year-over-year and recognized an increased contribution from our software and services portfolio. We reported first quarter orders of $80 million, resulting in a book-to-bill ratio of 0.9 for the quarter, which was anticipated as order lead times are currently correcting from more than 52 weeks down into the low 20s. Order delivery dates are also being influenced by broader macroeconomic concerns and traditional seasonal ordering patterns in Asia for Q1. While I will touch on this more later in my prepared remarks, it is against an uncertain macro backdrop that we are making the prudent decision to focus on operational efficiencies, cost savings, and cash flow for 2023 to ensure we are in an optimal position to navigate through broader economic uncertainty while continuing to strive toward market share capture and maximizing long-term shareholder value. To be clear, as Charlie indicated, we believe any potential disruptions will prove transitory given the early stage of the fiber access upgrade cycle, government broadband subsidy disbursements, and the geopolitical and vendor security replacement cycle. We ended Q1 with $304 million in RPOs, an increase of 21% from $252 million a year ago. As a reminder, RPOs consist of backlog plus deferred software and services revenue, with the growth driven by a combination of strong order trends and a tight supply chain. Revenue for the first quarter of 2023 was $91 million, an increase of 18% year-over-year or 23% on a constant currency basis. We drove year-over-year revenue growth in all geographic regions, led by the Asia region, with 32% revenue growth to $47 million. Driving our growth in Asia, we have successfully gained traction selling into the Pan- Asia market. One customer from the Asia geographic region represented just over 10% of total revenue for the quarter. Revenue from the Americas region increased 9% year-over-year to $25 million, reflecting our investment in sales and marketing efforts in the region. Revenue from EMEA increased 2% year-over-year to $19 million. Turning to revenue by product technology, our access networking infrastructure revenue increased 10% year-over-year to $79 million or 87% of total revenue. Primarily the result of the ASSIA acquisition from May 2022, software and services revenue increased 148% year-over-year to $11 million, or 13% of total revenue. We are disappointed in our Q1 margin structure and its impact on short-term profitability, but we are highly confident in our ability to drive several points of improvement in gross margin from the Q1 level throughout the balance of 2023, which we expect to further enhance in 2024. I will start by addressing the near-term challenges. Adverse moves in foreign currency and product mix resulted in Q1 adjusted gross margin of 33.3%, compared with 35.2% in the year ago quarter. FX has been a recurring issue over the past year, primarily from converting revenue from our strongholds in Korea and Japan into U.S. dollars. We have implemented a hedging policy to mitigate any material risk stemming from changing foreign currency rates going forward. While an adverse product mix impacted our Q1 gross margin, we expect a favorable product mix trend throughout the balance of 2023 to drive gross margin improvement from the Q1 level. More specifically, during the first quarter, we recognized revenue on certain lower-margin projects that we had initially expected to ship during Q2. Simultaneously, the timing of certain higher- margin projects moved out of Q1 and are now expected to ship over the course of 2023. As a result, and based on our existing backlog, we have now delivered the majority of our low margin backlog and believe Q1 gross margins will mark the low point for the year. Further contributing to our confidence in our ability to drive meaningful gross margin improvement throughout the balance of this year is the fact that while we incurred some logistics costs during Q1, we are seeing meaningful reduction in the adverse cost impact from foreign currency moves and elevated freight and supply chain costs, including expedite fees from 2022. To be clear, consistent with our prior expectation, we continue to expect these costs to further improve throughout 2023, contributing to an improved gross margin profile in the second half of this year. A number of additional factors further enhance our confidence in our ability to drive improved second half margins. These include the benefits of the new Fabrinet manufacturing partnership, geographic mix shift towards North America and EMEA, and a product mix shift towards software and higher- margin products, including our category-defining Velocity V6 Access Edge OLT and Saber 4400 optical edge platform. First quarter adjusted operating expenses were $34 million compared with $27 million in Q1 of 2022. The year-over-year increase reflects the acquired assets from ASSIA in addition to sales and marketing investments incurred over the past year. Our adjusted EBITDA was a loss of $4 million during Q1 2023 compared to a loss of $200,000 in Q1 2022, and our non-GAAP EPS was a loss of $0.06 compared to a loss of $0.01 in Q1 2022. The year-over-year decline was the result of lower gross margin combined with higher sales and marketing expense. Turning to the balance sheet, we ended the quarter with $31 million in cash. We had $12 million drawn on our revolving credit facility along with the $24 million of debt as part of the five-year term loan to fund the ASSIA acquisition. As a result of the lower than expected profitability levels in Q1, we received a waiver for our JPMorgan credit facility, which will be disclosed in our 10-Q filing this week. Days Sales Outstanding was 140 days in Q1 compared with 98 days in the year-ago period. While well above our target levels, we expect DSOs to significantly decline throughout the year with reversion to a more normal level below 100 days by year-end. Underlying our confidence, current DSOs have been skewed by the timing of large customer milestone payments that are scheduled to accelerate in the coming months. Inventory increased by $3 million year-over-year to $70 million. After peaking in Q3 of 2022, inventory has now declined by $15 million due to the efficiencies associated with our recent manufacturing transition from Florida to Fabrinet. Annualized inventory turns were 3.2x during the first quarter, similar with year-ago levels. Over the past several quarters, we have undertaken certain operational efficiency actions, such as the consolidation of ERP systems down to a single system and the transition of our Florida manufacturing to Fabrinet, which has now been completed and is contributing to an improved cost profile. Further operational cost improvements will come from the $12 million-$15 million of year-end, in-year cost savings that Charlie referenced. Our Q2 guidance is as follows. Revenue in the range of $90 million-$95 million. Based on projected ship dates of existing backlog, we believe Q2 revenue will be in the low point for the remainder of the year. Gross margin improving sequentially to a range of 33%-35%, consistent with the margin profile of our existing backlog. During the second half of 2023, we anticipate further gross margin improvement aligned with our new product introductions and higher contribution of software revenue. Adjusted operating expenses between $29 million-$31 million and adjusted EBITDA between a loss of $1 million and a positive $4 million. Our updated full year outlook includes revenue of approximately $400 million, gross margin between 35%-37%, exiting the year in the 38%-39% range. Operating expense between $115 million-$120 million and expecting sequential quarterly improvement throughout the year. Finally, adjusted EBITDA between $22 million-$27 million. With the combination of our expected business performance and aforementioned cost saving actions, we expect our cash balances to improve to approximately $40 million with a zero balance drawn on our revolver at the end of the year, improving our liquidity during the year. I'd now like to hand the call over to the operator to facilitate the Q&A session. Thank you. We'll now begin the Q&A session. If you have a question, please press star one on your telephone keypad. One moment for your first question. Your first question comes from the line of Tore Svanberg of Stifel. Please go ahead. Yes. Thank you. Tore from Stifel here. Charlie, the 2023 outlook roughly $400 million. It's, you know, close to 10% lower than we had previously expected. Could you give us, maybe perhaps a little bit more granular Information on which, you know, exactly the roughly 10% is coming from by the various different segments or even geographies. Yeah. It's really stemming from the timing of some of the new products that we announced and launched earlier in the year. It's specifically the timing of the Saber 4400 and its full launch availability, as well as, you know, the V6. I mean, from a product perspective, there's some waiting there just based on when the products will be fully available into the market. As it relates to, you know, the regional side, I'd say that the other element that's pretty important is just where we're at, which, you know, investors and analysts should appreciate that, you know, trials, the exit timing along with trials is not always within our control. I'd say that some of the timing is based on when we think we're gonna exit some of the trials that we started earlier in the year and the conversion rate on that. Very good. You mentioned lead times have gone from about- I mean, there's- Yeah, go ahead, Charlie. No, no. Go ahead. No, I was just gonna ask about the lead times going from about 52 weeks to low 20s. Is low twenties where you think things will stabilize or, you know, could lead times, you know, go even lower? Just given your new product mix, just want to get a sense for what's normalized lead time at this point. I think there's still a slight disconnect with what customers are expecting and what the reality is. I mean, there's still some lingering supply chain challenges. I think that overall we feel a lot better with our ability to access subcomponents, you know, at the chip level and, you know, at the various raw material level, and it certainly has come, you know, way down. You know, there's always gonna be some challenges that you're gonna have to navigate. I do think that customers overall, and again, we're one of many companies that I think were impeding, you know, and challenging customers over the last year to try to comply with what was a 52-70-week lead time. I mean, that was something that I don't think any of us have ever seen ever. I think service providers are challenging us to get, to get down into that three-month, you know, from order to delivery. I don't think we're gonna get to three- month this year. I think we get somewhere between three and six months. It really does vary depending on the product. I mean, some products we're in that three-month range right now. There's other products, because of, you know, the BOM structure, we still have some challenges that, you know, sort of elongate things into that, you know, sort of three- to six-month range. You know, I do expect that as we exit this year, you know, as we go into 2024, you know, we're gonna be, you know, we're gonna be in a three- to four-month kind of window. Again, that's still, you know, relatively consistent with where the industry's been over the last decade. I mean, we've been pretty consistent in being able to deliver products in eight to 12 weeks for a long, long time. I think that we'll get there at some point next year unless, you know, there's some new anomaly that we gotta deal with. Thank you. Your next question comes from the line of Christian Schwab of Craig-Hallum Capital Group. Please go ahead. Hey, good afternoon, guys. Charlie, on the new revised, you know, revenue and EBITDA outlook, as you look to 2024 and 2025, can you maintain, you know, operating expenses at this type of level? I mean, we're kind of back to where we were running the business, you know, call it like maybe a $370 million run rate, and we're gonna run it very lean here at $400 million as we, you know, move to attain the EBITDA expectations in 2024 and 2025. How should we be thinking about OpEx? Yeah. I mean, OpEx for us, and maybe we haven't articulated it extremely well, but I mean, we certainly did purposely accelerate sales and marketing over the last 18 to 24 months to aggressively try to capture new market opportunities for us in North America and EMEA. You know, I expect that we're gonna continue to maintain a pretty significant cost structure associated with, you know, sales and marketing. Where I think we've had some ability to capture some savings has been the transition to Fabrinet. Okay. You know, we, you know, you had the entire cost structure associated with that from an operations and supply chain, which it will be fully, you know, complete, you know, from a people standpoint, let's call it by mid-year. Then, you know, we invested heavily over the last two and a half years to get, you know, a lot of the new Velocity portfolio out the door, the new metro optical edge portfolio out the door. We added more resources on the software side. Where we're at in the timing of some of those products, we think is a pretty significant contributor to some of the savings this year. You know, if you just take into the context of what I referred to, if we can pace ourselves to, you know, call it that $110 million revenue in 2024, and we can maintain a slightly higher operational cost structure with margins that we've been profiling. You can see that, you know, you're easily in that, you know, $10 million-$15 million a quarter EBITA range. You know, we've got to execute on that, but it's certainly the projects, the visibility, and what we're profiling ourselves for lends itself to that sort of modeling. Okay, that's fabulous. Thank you. Just my last question is, as it relates to gross margins, you know, given, you know, it seems like, a lot of the heavy lifting has been done and the new products are coming to market and hopefully, you know, harvested in a more efficient way, you know, through Fabrinet than may have been done in the past. Are you still hopeful that this, that, you know... At what point do you think we return or can get to, I should say, a sustainable 40%+ gross margin business? Well, I mean, it's clearly tied to, you know, the margin drivers we've been talking about for the last 18 months. You know, I mean, if you look at our margin profile today, with North America and EMEA, it's well north of 40% gross margin. You know, the more business that we can secure in North America, and certainly if we can secure higher margin meaningful business in EMEA, that will certainly be a contributor. We've only implemented phase one of our third-party contract manufacturing strategy. If we're able to implement the second phase of that, let's say the second half of this year, that will certainly be an additive contributor. you know, we frankly have not executed as quickly as we thought on our ability to increase prices on the software side. If you remember, one of the goals that we had a year ago was to begin to increase prices into the market for some of the previously priced ASSIA software. I mean, we are making some progress. It's a competitive market. Where we're having some success is where we can bundle our OLT and optical solutions with our Xtreme software orchestration and automation and where we can do the same with our CPE products on the Expresse and CloudCheck side. You know, we haven't, you know, frankly, you know, come anywhere close to where we think the cross-selling capabilities are, across, you know, the portfolio, including leveraging, you know, the software. When you factor in the regional mix with the new product introductions, which all have a higher margin profile to them, the transition to third-party manufacturing and more software and services content, you know, that's how you get there. Assuming that, you know, we don't break any of those pillars, there's no reason why we can't maintain a 40% gross margin model. I don't know, Misty, if you wanna, you wanna comment on that, but... No, I think there's several contributing factors and several actions that we can continue to drive and execute on. You mentioned several of them between pricing, software expansion, the Fabrinet transition and expanding that across the globe, as well as just the product margins of our new product introductions. Thank you. Your next question comes from the line of Tore Svanberg of Stifel. Please go ahead. Well, thanks. Yeah, I just had a couple of follow-ups. The first one is thanks for giving us sort of that gross margin bridge chart. That was really helpful on page 38 in the presentation. I was hoping maybe you could give us a similar bridge for your DSOs. You know, any sort of more details you could share with us given the steep increase and how you expect it to dip below 100 again by the end of the year? Sure. I don't have the exact bridge in front of me, but I can conceptually describe some of the improvements we plan to be making to our collections. We have about $22 million still sitting with certain contracts in Vietnam that have milestone payments. I think we'd mentioned on prior calls, but in case we've lost visibility, we had milestones that were to be paid over 12 to 18 months associated to those contracts. We entered into those ranging between Q2 and Q3 of 2022, and expect those to be fully collected by the beginning of Q4 2023. That is one of the things that has been dragging down our DSOs. We've seen that over the last couple of quarters. We've also seen some improvements with the ASSIA acquisition, where we initially had some sluggishness between billings and collections, just due to natural integration. We've seen good progress on getting those cleaned up and cash conversion specific to the ASSIA contracts. Last but not least, we had some timing of billings in Q1 due to our ERP implementation. We had billings that happened much later in the end of the quarter than we typically have. Collections and the working capital variation within the quarter was a bit more extreme at the end of the quarter, and we expect to recover from that in the next one to two quarters. Yeah, no, that's great detail. Thank you. Charlie, one more for you. You introduced the Xtreme transport software. And sort of back to the topic of cross-selling, I was just hoping if you could talk a little bit more about how that helps the Saber 4400, especially from a timing perspective. I mean, is this something that is expected to really boost the design wins from a timing perspective? Any color you can share with us would be helpful. Thanks. I mean, they're certainly not directly connected, but there's synergy across the OLT and metro optical edge portfolio with the Xtreme software portfolio. You know, the concept that we have with Xtreme, which there's a mobile component that we're deploying today with 5G core as well as network slicing applications, that was something that was launched soon after we acquired RIFT. What we have spent the last year on, especially knowing where the emphasis was gonna be with a lot of fiber deployments, was to take the same orchestration and automation and service delivery tools that we were implementing on the 5G network to be able to implement it across a much larger fiber deployment network for us. That's what we announced in, call it the January, February timeframe. We're going to trials with that with several customers in the coming months. There is strategic linkage clearly with the OLT portfolio as well as with the Saber 4400 as it relates to how those products will be managed, but they're not dependent on one another. I wanna circle back really quickly on the cost reductions, not exactly a smooth segue, but I just wanted to make sure I was very clear on my comments that I was consistent, that our cost reductions are $12 million-$13 million in year. I just wanna make sure that everyone got that in case I misspoke. Thank you. Your next question comes from the line of Ryan Koontz of Needham. Please go ahead. Hi, thanks for the question. Wanted to ask about RFP activity, specifically in Europe and what you're seeing there, and at a high level, like where are you kind of progressing in terms of the various stages of RFPs and what's the activity like these days, and how do you think about the European market opportunity in 2024? Thank you. I actually think it's a great question because we've actually seen the RFP activity kind of pivot. you know, there was a heavy dose of RFPs and RFIs, you know, over the last 12 to 18 months, for at least us. you know, we've sort of transitioned from the RFI, RFP phase to, you know, those service providers where they're actually testing and trialing our product. I mean, obviously at some point there's a formal selection process. I will say, Ryan, that, you know, across the globe, we're more aligned and focused on the initiatives that we started 12 or 18 months ago, and sort of out of this tactical proposal and RFP phase and into more of the product testing trial and feature compliance phase, with the expectation that, you know, once we exit that phase, we'll be entering contract negotiation phases. That makes sense, Charlie. Thanks so much.