To everyone in the room. If you have a question, you can scan that barcode in front of you, type in the question, and it will come to me on the iPad, and I'll ask it on your behalf. Thank you to everyone, you know, listening remotely. You know, super excited for today's conversation. Michael Carlet, CFO Snap One. I guess, Mike, can you provide a little bit of background on yourself, and then also, you know, just talk a little bit about Snap One, what the company does, the value it provides for clients, just for the investors that are new to the name and still learning about the company. Sure. Michael Carlet, knowing about me is the least important thing about the company. We've got a team of 1,300 people that do all the real work. I started in public accounting, spent the bulk of my career in automotive. Was with a company Driven Brands for about 12 years, and ended up at Snap One. Was formerly SnapAV prior to the merger with Control4 about 8 years ago. Spent the last 8 years partnering with John Heyman, our CEO, and the rest of the leadership team to really think about how do we build, you know, Snap One into what it is today. Which leads into the second part of the question of Snap One is really the amalgamation of three different businesses, SnapAV, Control4, and a number of local distribution businesses. All those businesses started and existed for the same reason, to serve these integrators that originally came out of the home electronics and audio-video space, and have really emerged to be the home technologists for a higher end, more discerning customer that's looking to create a certain experience in their home or their small office around the technology they need to support that business. Our vision statement is that we exist to provide joy, connectivity, and security to our partners and their customers in their everyday lives. What that means is we're there to provide products and services to this group of integrators, and these integrators are all very small businesses. Typical integrator that we're selling to has less than 10 employees, and they're out there trying to install technology in people's homes to enable all those things. We're there providing both our own proprietary products. About 70% of what we sell is our own proprietary products. About 30% is third-party products that we distribute that allow them to go create these great experiences in people's homes. Yeah, appreciate that. When I was learning about the business, I guess a bit over a year now, the thing that always and still does stand out to me is the relationship that the company forges with the professional integrator. You know, I still feel from like, from my conversations, that's generally, you know, maybe not fully appreciated. Can you just talk about, you know, that relationship? You know, how important the integrator is in the smart remodel process, and, you know, and what the company does to really own that wallet or grow wallet share with these integrators? Yeah. Absolutely. If you think about a real smart home experience, which is not just putting a Ring doorbell on or not just putting, you know, a smart light bulb in, it's really creating a technology infrastructure of the home, a robust network, surveillance, the right AV system, a whole house audio, all those things that make a home a really smart living experience. It requires a professional to do that. Just like professionals install, you know, the electricity in a home and the plumbing in a home, you need a professional to do that the right way to make sure all these parts and pieces work together, they're installed professionally, they look good. All those things, this integrator is what drives the business. These integrators are typically very small businesses, and they need a partner from a supply standpoint that does a couple things for them. One, they need a partner that's providing the products they need. We have the best products in the industry, our own proprietary products. When we've talked to our integrators, when we think about the brand studies that the industry does, over half of the best products in the industry are our own private label brands, and you can only buy those brands from us. We're innovating all those products. We're designing those products. We're talking to the integrators about what do you need to make the experience of the homeowner great, to make your job of installing that product in that space awesome. We're developing those products. We're trying to partner with the right third parties where we don't have the product that the integrator needs to deliver that product where someone else might have that product. These integrators don't carry inventory. Many of them don't have any real estate. They're working out of their home or a small warehouse space. We're the just-in-time inventory provider to a lot of these integrators. They order from us today. Because of our e-commerce nature that we started with, we deliver that product. We ship it today, same day as ordered. They'll get it in the next day or 2. We have warehouses throughout the country that ship it. They can order from us, we maintain high levels of inventory availability, so they know that it'll ship, and it'll be delivered, and they'll receive it, and they can go install it in the home where they need it. Then we're developing the right software platforms that provide the technology tools that the integrator needs to install and support that business, with our own software tools that we have that allow that job to be done the way it needs to be done to provide that great experience. I could tell you 50 different things that we do to make an experience, but those are the big ones. I would say this, when SnapAV started, and you will still feel this across the company, we believe that we are there to serve the integrator, and everything we do is incredibly customer-focused on making that dealer's life easier. We don't always succeed, but we're always trying to succeed. We're always trying to make sure that is what we're doing providing value to the integrator so they can be more profitable, they can be more effective, they can be more efficient, they can deliver a better experience to the homeowner. You know, when the integrator, I guess maybe generally speaking, goes to the homeowner, you know, I guess who is the integrator making the decision? Generally, is he the one that decides, "Okay, these are the products we buy"? I'm assuming all the you know the stuff we don't see, the racks, the mounts, you know, they have that decision-making. What about you know I guess just in general, are they the decision-maker usually? For the vast majority of products, the integrator is the decision-maker that's on it. People call, and they're looking for a certain experience. They might describe that experience with a brand. They might say, "I want Sonos speakers or a Sonos system." They might say, "I want a Ring doorbell." They might say, "I want a SunBrite TV outside." SunBrite's our brand. They might be familiar with a product that resonates with them that they'll ask for. What the integrator continually does, don't tell me about the product, tell me the experience you're trying to deliver, and then let me tell you how I'm gonna design a system with the right products to deliver what you need. If Sonos is the right answer, great, we'll use Sonos. If some other product is the right answer, we'll use that other product, and I'll tell you why we're gonna use that other product to deliver. The vast majority of the product decisions are made by the integrator. Obviously, to the extent the consumer has some awareness, typically around the TV, maybe the AVR, maybe some of the speakers, you'll get a little bit of input, but the vast majority, you know, again, it's what the integrator is using to deliver that experience. The homeowner very much is deferring to that integrator to perform the way that they say they're going to. Yeah. I think the strength in the business model, like, really clicked for me when, you know, I started thinking, okay, wait, the customer is the integrator. That's right. As the company builds itself, it's focused on how can I make him or her as profitable as possible. You know, it really clicked when I started, you know, seeing it through that lens and then, you know, obviously all the proprietary products feed into that. Absolutely. I guess, you know, maybe we'll talk more about that in a bit, but maybe starting with demand, you know, a lot of, concern around demand, for really everything. Yep. Globally. I think, you know, within residential construction or renovation, you know, there's more concern because it's a, you know, a period of strength. People are worried about consumers. You know, obviously there's a lot of secular trends that send your business forward irregardless of the cycle. You know, can you just talk a little bit about, you know, what you guys are seeing in demand trends? You know, what gives you confidence in the outlook? Sure. First of all, I think anybody looking out there in the future is gonna acknowledge it's uncertain, right? You know, what we're seeing in the short term is no lightening of demand at all. Our integrators are still booked out months in advance. As I said, they're small businesses. Typically, if they get more than 3 months booked out, they just stop answering the phone. The sentiment of our integrators as we talk to them is still very, very high. Our demand sensitivities as we look at our order volumes, everything else, still incredibly high. We're not seeing any slowdown on that. We know that as an industry, we have been under capacity to deliver for the demand that's out there you know, one of the questions we have is. How much does the demand have to fall before we even feel it, knowing that, you know, there just hasn't been enough capacity to meet the demand for a long time now. That's even pre-pandemic. You know, there was more demand out there. As far as leading indicators go, you know, certainly we're looking at the same thing everyone else is looking at, between housing starts, the remodel activity, light commercial. About a third of what we do goes into some type of light commercial establishment. We're not doing this hotel. Like, that's not where our integrators go, but they'll go into the doctor's office, they'll go into the sports bar, they'll go into a small hedge fund's office and do those type of things to deliver those type of things. We're looking at all those, to say, are there any leading indicators that show we're gonna come down? On the new build construction side, typically, our integrators are the last people in the house before it closes. Okay. They'll come in, you know, when drywall's going up and run some wire. Yeah. A lot of what we do is at the very end to install the TVs and put the speakers in the ceiling and then program the system. Actually, housing completions is actually more important than housing starts. Yeah. That's not gonna slow down for a while given the backlog and the supply chain issues that are there. We're monitoring that. Even if all that slows down, the one thing that we as an industry are horrendous at is going back into our existing install base and going through that refresh cycle and that upgrade cycle. There's plays that we can run that we haven't run about going back into the existing base that we think can also help augment demand if we see all of those other things slowing down. As of now, literally as of Friday, you know, last time I checked, like, our demand sensors remain very, very strong. Like everyone, we're looking out there and saying, "What might happen?" If all those things slow down at the same time, we know we have that extra capacity to eat through. We know we have the existing install base to go back through. We know that just from a secular standpoint, as you said, there is more technology going into more places and more professionals need to serve it, and we still think we're the early innings of that. We still have a very high level of confidence it's gonna happen. Like everyone, we're paying close attention to all those sort of indicators of what might happen and does it indicate a demand slowdown, but we still feel great about it. Yeah. You know, kinda your commentary on the backlog, you know, very much matches the channel checks I've had. You know, if integrators tell me, "You know, I can only do a job a week. If I get five requests for a job, I can only do one." It kind of, you know, like, I think you kinda mentioned, like, maybe it caps where. It's keeping maybe your revenue or your. Below where demand is. That's right. On the flip side, you know, if we get into a period of a downturn, then that backlog, that actually kinda becomes your friend a little bit. I guess I have two questions on that. One, like, do the integrators' projects get canceled on them? Do they think, "Oh, yeah, I have all this backlog," and the guy's like, "Oh, well, my stock portfolio is down 20%, not anymore," question A. Question B, can you talk about some of the products, whether it's, you know, either, you know, software or just, you know, kind of the more traditional products that actually are allowing the integrator to increase their capacity, thereby, again, making them more money and in turn benefiting Snap One? Yeah, absolutely. I've been around the company in the last 8 years since time when people's stock portfolios have dropped 20% which is great, I guess, other than COVID's little noise. Generally, projects don't get canceled. Generally, these are projects that, you know, they sell the project 1 week and they're out installing it the next week. This is not long-term type of thing where the backlog is, you know, we're 3-4 months out, other than the integrator being that backlogged, but that's when they can get to it. Could some things be canceled? Yeah, possibly. If you're building a house, you know, you gonna back out of the house when it's framed out? Probably not. It's not a big concern we have that's out there, but it's something we obviously pay attention. Very rarely does it happen, at least in normal times. Now again, I think we all know we're not in normal times, so. Then back to your other question, which is a great one, is we talk a lot in the company about, you know, if we think about that capacity constraint we have, and one way to solve it is to just train more people and try to help them, our integrators bring more people in to help fill that capacity need. The other thing is. How do we make it more efficient? How do we make it easier to install? How do we make our products easier to install? How do we make them easier to program? How do we provide more capacity to what's already there, so it doesn't take a week to do a job? Can they do it in 3 days? There's some things around, you know, hanging a TV and putting holes in ceilings and running wire out to a low-voltage speaker system. You gotta dig the trench, right? You have to do some of that. Whether it's wireless, whether it's some industry standards that are out there and being talked about, the things that make it easier for products to work together, the things that make products easier to install are all things that we think drive effectiveness and efficiency, and we wanna be there. That includes things like ordering tools and proposal tools, not just the actual install, but the things around the whole general business management. Give you one example. There's some ceiling speakers here in the room, right? We have ceiling speakers. When we designed ours, you know, we asked our integrators, like, "What is the problem when you install a speaker?" And the guy's, "Well, I'm up on a ladder, and I'm trying to hold the speaker with one hand, and I'm trying to turn this and screw the other one." We said, "Okay." We literally came out with a speaker design that you can hold one hand, use your thumb, flip a switch, and these dog ears pop out, and it locks into place. It took a speaker from taking, you know, 10 minutes to install to 10 seconds to install. Doesn't feel like a lot, but those type of things. Yeah. If you think about a home with, you know, 30 speakers going into it, obviously that takes a lot of time out. It's not just the ease. It just makes the integrator's life easier when it's that easy to install. Those are kind of things we're always talking about. Yeah, no. You know, so, like, it's a great example of, you know, the company, you know, has a willingness to invest in the relationship but also has an ability. That's right. You know, you guys are over $1 billion of revenue, you know, generate pretty healthy margins. I guess, is anybody else investing in this relationship? You know, I know that the Sonos of the world, you know, I think their focus is different. A lot of your other distributors are very third party, so it's like, okay, where does the margin come from? Is anyone else, you know, doing this and trying to go after this, the market like you guys are? No one is going after it nearly to the extent we are and the way we are. If you think about, we sell our proprietary products in 24 different categories. From a product standpoint, all of our competition is gonna be in one or a few categories. No one is anywhere close to the number of categories that we have our own products in. Within our proprietary products, we sell the vast majority of what an integrator needs to complete that job. Now, we don't have our own proprietary indoor TV. We don't have an audio-video receiver. You know, the third-party products there are great, and we'll rely on them to continue to have those products. We'll work closely with the Sonys and Samsungs and Denons and Marantzs of the world to, you know, integrate with their products, but no one else has a complete suite. To your point, on the distributor side, they might have all the products that you need from a number of different suppliers, but they can't make the investments in training and support or the inventory needs that they have because they just don't have the margin to do that. We think we are uniquely positioned to provide that value proposition to the integrator, with the right products, with the right investments, and with the right inventory levels to support everything that they need. Yeah, appreciate that. You know, can you talk about, like, the target homeowner? You know, I think you guys have said, average project size, maybe in that $10,000-$15,000 dollar range, but, you know, I've talked to people who said, "Hey, jobs can be as low as $500,000." Sorry, not as low. As high as $500,000. As low as $5,000. That's right. You know, kind of obviously massive range there. I guess the question is like, who does Snap One think is the target homeowner? Question two: Is that changing? You know, if it used to say, "Oh, I need a $700,000 house to be." Now, given the higher focus on that, is that actually coming down and having any impact on the TAM here? I think today 'cause you just pointed out, as the company has evolved, it's very much a discerning affluent customer that we serve today, the end customer that we and our integrators serve. That home's, you know, certainly north of $500,000, probably north of a $1 million-dollar type of home. It's certainly someone that's, you know, in a higher tax bracket as you think about how they're using their wealth to invest in their home. The average job is $15,000-$20,000, usually tied to new construction or to a remodel, and it goes up from there. It hasn't changed yet, but we talk a lot about how do we change in the future? How do we take these great experiences that the more affluent homeowner can use, and how do we bring them down to the masses? If you think about where a lot of the security industry is, where they'll come in and put three or four smart devices in to make it work, you know, that's one end of it, and then you've got the Snap One integrator at sort of the other end, and it's really that massive market in the middle. How do you take that person that's got three or four devices and get them to 30 or 40 devices? How do we make it so that, you know, putting two smart light switches in, you want 30 light switches? How do we make that more affordable, more effective, more efficient, and be able to bring that experience down to more folks? We don't have enough demand to meet what we're doing today at the higher end, but we think for the long term, that's a huge opportunity. It's where we're gonna move as a society. It's where, you know, listen, 10 years from now, every home's gonna be smart to some extent, and we need to be there, and our integrators need to be there, and we need to build the installer base to support the demand that's out there to make that happen. I appreciate that. When we, you know, when I was launching on the company, you know, the comps that we thought were the closest were SiteOne and Pool Corporation. You know, they're specialty distributors. They have good market share. They're obviously, you know, largely focused on residential. You know, you guys versus them, you know, Gross margin's 10 percentage points higher, 40% versus 30%. You guys have better growth. The pushback is around the follow-on opportunity. The question I get from investors is, "Okay, great. They installed a smart home in someone's house. What's next?" You know, with those businesses, there's a more clear, you know, kind of established OpEx or aftermarket. Can you kind of talk about, you know, that follow-on opportunity for you guys? You mentioned, I think the industry has done a bad job going after renovation. Maybe it's just because new construction is so strong. You know, either just kinda like the opportunity to go after that installed base, and then also, or just any sort of like how do you guys think about that? Yeah, absolutely. A couple different things. One, you know, we as a company and the industry has done a bad job of monetizing some things we already do. Our integrator goes in, they do a project, they do that $20,000 project, and they move on to the next one. That project calls them back and says, "Hey, something's not working. You need to fix it." Typically, that's not charged for. Meanwhile, we even put a lot of our software in that home that we need to maintain, and make sure it's working. If our control system's in your home and Samsung comes out with a new TV or Sony or LG, we need to make sure our system is working with that, but we're not charging the person that's already had it installed. We're one of the few software companies in the world that don't charge an on-ongoing fee. We need to change that. Just for what we're already doing, changing the economic model to ourselves, the integrator and the homeowner, which provide them a better experience by allowing us to monetize that and provide a different experience from an ongoing support standpoint, which then provides that opportunity. Once you're in that home supporting it, once you're getting paid to do that, you're gonna have that opportunity to go in and talk to people and say, "Well, you know, we can provide you a better experience by doing X or Y," whatever that's gonna be. That's one thing. Two, just beyond that, to your point, is just the marketing aspects of it. While we're working on changing how we monetize our software offerings, at the same time thinking about what is the maintenance that a smart home requires. Again, this is a very early stage, but I view this almost like a car or your HVAC, where, you know, every 6 months, your HVAC guy comes out to your house, and you pay him $100, and he comes and tells you what's wrong, and then he charges you $1,000 to fix what he told you was wrong. You need that same thing here. As the network becomes more robust and more dynamic, you think about the IT department of your office that's there supporting what you're there. These things need to be refreshed, they need to be upgraded to deliver the great experiences that homeowners are looking for. To the extent we haven't built as an industry, a business model around that prevents us from delivering the experience the customer wants. I think it's something people are willing to pay for as long as we can deliver that experience. We would agree that as an industry, we've been bad. We don't have that recurring nature. We're gonna try to monetize what we're already doing, but also look to new and interesting ways to provide more opportunities for us to get back into that home, educate the consumer, the end user, on what the opportunity is, what the efficiency could be to upgrade, and then create that marketing opportunity for our partners. Appreciate that. We'll talk about the, I guess, maybe like the software business directly in a bit. You know, does the software, just the fact that you guys have these connected systems in people's homes, presumably there's a lot of data being absorbed. You know, is the company have opportunity to, you know, maybe start almost sensing when things need to be upgraded? Okay, hey, such and such has been acting funny or just such and such is X years old. You know, again, you can then, you know, maybe that almost kinda changes a little bit the relationship the company has or just, again, makes yourself more important to the integrator. It used to be they always have to go out and find the work. Yeah. Now you guys are actually getting probably pretty smart on some of this stuff. Absolutely. We've got great data coming in. We've got a team. We've got basically two data teams in the company, but we have one very focused on our products, how our products are being used, what else is connected to our products, how they are being integrated and operated, how they are aging, what are the defaults and fault issues that we're getting. We think leveraging that data to create those opportunities where we can do that marketing upfront and say, "Hey, here's the issue you're having," or, "Here's an upgrade opportunity. Here's what the benefits of 8K versus 4K are." All those things that are there. We think that creates a huge runway for us to go and execute against it. Yeah. I mean, so, you know, obviously the company is new to the public markets, but has been around for a long time. Could you talk a little bit about, you know, how the company has done historically in periods of softening residential new construction? Because there's certainly an expectation, you know, in the market that that's gonna soften. Just any, you know, kind of thoughts or drivers, you know, that we've seen in the past. Absolutely. I'll give you some data which is not totally relevant. In 2008 when we saw the last big softening, you know, SnapAV and Control4 both grew through that period. Neither are products that we sell, and while they're very high-end products sold to an affluent customer, they're not the highest end product. If we think about what an integrator is doing, when you want these experiences, you know, you can put in $30,000 speakers or you can put in $5,000 speakers. There's a difference. Is it a $25,000 difference? I'm not always positive about that. To some people, there is. You know, to the extent we are sort of the midline of the industry of what's out there, people will trade down into our products where they might be installing some higher-end products. Where there is some price pressure, they'll come down. Again, both SnapAV and Control4 grew through 2000. They were much smaller companies. They were $20 million, $30 million, $40 million. I don't wanna put too much. Yeah. When I think about it, I tend to discount that as I think about what might happen, but it's certainly a data point that says, "Well, we know it's possible. Yeah. To have the right products, have the right solutions for the integrators, the demand will be out there and be able to support it. I think too, like, I mean, these are small businesses. Very small. These guys are focused on, okay, how do I have to, you know, feed my family. Feed my family. Exactly. Yep. Do you see, you know, obviously, you know, commercial is on a bit of a different cycle than residential. I think you know, you talked about, you know, renovation maybe hasn't been a priority because, like, I would assume those jobs are smaller. You know, they want the new construction work. You know, do you see them pivot what they're going after in a downturn? All the time. You know, I said a third of our product generally goes into light commercial. That was in single digits. Wow. For the first year of the pandemic, right? Yeah. Our business grew tremendously. What happened, we saw a big shift into residential remodel, where people were working from home, playing from home. I need a more robust network. I wanna be able to monitor my kids' activity on the internet, so how do we do that? We saw a big shift there. Clearly, the integrators go where the work is, and they've shown an incredible ability to do that. I've served small businesses most of my career. Even automotive, I was in franchising, working with a lot of small businesses, and it's wonderful. Yeah. I think working with these small entrepreneurs who are out there figuring out, "How do I make my business successful?" is great. I think it's a great benefit of our business model in our industry that allows folks to go do that. They clearly identify the work and go where the work is because that's what they do. As you said, they've got to put food on the table. Yeah. I wanna talk a little bit about pricing. You know, a lot of what you've said, you know, that 70% of your products are proprietary and, you know, should be good for ability to price. Obviously, the demand is good. Integrators are, I would assume, you know, as profitable and have done as well the last 12 months probably as they've ever had. You know, can you talk about the company's ability to price or willingness to price? 'Cause you know, I don't need to tell everyone listening in, you know, the cost pressure. Absolutely. The whole world is facing. I think there's a couple different questions there. I think there's price to put profit in our pockets and price to make sure we're covering our costs. Yeah. You have the price opportunity, which clearly we have, and we'll talk about that. I think our philosophy is we're there to make sure our partners, our integrators and ourselves are getting a fair price as we go around this. You can argue with all the demand that's out there. You know, there's pricing opportunity through the entire chain, and we would agree with that. Typically, we looked at price on an annual basis and made some adjustments and passed that through, to sort of preserve our margins. We're not necessarily looking to expand our margins unless we're providing our integrators the opportunity to also expand their margin. We don't wanna take it out of our integrator's pocket. To the extent that the consumer is willing to pay more for these experiences, happy to make sure we're charging the appropriate amount to the end consumer and that us and our integrator are both sharing in that profitability. That's out there. Now, clearly, in the last 12 months, there's been tremendous cost pressure out there. We've done a number of off-cycle price increases. In fact, the last one just went into effect this last weekend, and have gotten almost zero pushback. I think our dealers and integrators have been able to pass that cost through to their customer. Again, that customer's waiting 3 months or knows the demand that's out there and saying, "Well, if you want this is what we're gonna have to charge you." We did a 6% price increase earlier this year. We just did 8% now. Again, literally almost zero pushback. Now, we'll continue to pay close attention to see if people are making switching decisions after that, but we think the elasticity is very low on this, that we're gonna continue to retain what's there, that the integrators can pass that along, and we'll monitor what's there. I think that shows us that there's at least some opportunity to think about price in conjunction with our integrators and continue to pass that on. If the consumer is willing to pay it, then we should be thinking about how do we do that and create more profitability to everyone that's in the stream. Yeah. No, I really appreciate that. You know, the company has talked to, you know, low teens type normalized growth. I believe historical growth has probably even come in above that. You know, obviously, I mean, to the extent we can set aside the macro, you know, residential new construction, you know, how much runway, you know, do you think there is to kind of maintain that level of growth, you know, for the years to come? Yeah. We are very bullish on the long-term growth algorithm of the company. If you just think about secularly, even within the market we serve today, what is that growing? How much more technology product is being installed in people's homes, and who's doing it? We think that growth rate just by itself is in the mid- to high-single digits%, and Frost & Sullivan supports that and do all the industry analysis. That's a long-term secular trend that. Look, it's you don't get it without working hard, but you know, we've got a lot of people working hard every day that if we do our jobs and we just keep up with everyone else, we should get that growth rate, right? That's sort of the underneath growth rate. We're opening some new stores. Every time we open a new store, it creates another platform in a market. If we don't have a local facility for people, it's another way for them to transact with us. We have 30 of them today, 31. We think we'll have at least mid-60s to mid-80s. Every time we create that buying opportunity for people, that provides more wallet share, more opportunity for us to grow. We then look at the business was built on the backs of these home AV, residential integrators. 60% of our business still comes from that channel. There's tons of other people out there. As we talk about expanding the market beyond just that higher-end discerning customer, that long, long runway, that's where we have to really show that we can execute. That actually provides us higher than low double-digit growth rates. If when we are successful in pursuing those opportunities, we think the growth algorithm can be higher than what we're talking about. Yeah, and I mean, you know, obviously, high single-digit market growth. You know, it's pretty clear pretty quickly why you guys, you know, should outgrow that, take share within that. Absolutely. One thing that's come up in, you know, every conversation today is inventory levels. You know, I think the concern, you know, broadly speaking, it does extend to Snap One, is that, you know, people have backlogs of work. They see price increases coming. They're worried about supply chains. You know, there's a lot of incentive to maybe build up your inventory ahead of these jobs. You know, you kinda touched on this a little bit before, you know, talking about the size. Yep. I mean, can you just kinda talk about, you know, I guess, what are your thoughts on, you know, the inventory levels at the integrator level, and maybe just kinda rehash some of those comments before about, you know, maybe why? Yeah. You know, these aren't, you know, big industrial businesses. That's right. We see a little bit, right? Our price increase came in this week. If our average daily sales volume is $4 million, plus or minus, right? The last few days of last week, it was $5 million-$6 million. Clearly, that's buy ahead as we think about people preparing for it. Do we get $4 million, $5 million, $7 million, $8 million of buy-ahead right before the price increase? Yes. There'll be a couple next weeks where we'll be down, you know, $4 million, $5 million bucks. Yeah. Until we catch back up. That's the trough we go through. If people aren't inventorying before the price goes up 8%, they're certainly not inventorying significant amounts. Yeah. Now, are there some key SKUs that people are inventorying? Absolutely. We've seen more people put in some safety stock at the local integrator for the most critical SKUs that are out there. Like, if you don't have a controller, like, it's really hard to finish a job. As opposed to if you don't have the in-ceiling speakers, you can put in a different brand of speakers. Yeah. or somebody else's. We do see a little bit, but the vast majority of our integrators have neither the space nor the working capital. Again, they get paid for that job. They collect money for that job or the other job. It's typically a week-long project. They get paid for it up front. They buy the product. They install the product. They take the profits. They go live. They don't have the working capital or the space. Yes, has there been some inventory build? Is it 5%, 10% type of numbers? That wouldn't surprise me at all across the industry. Are the best integrators thinking about the biggest ones that can afford to do it, putting some inventory? Yes, but it's a very, very small number. Yeah. Appreciate that. I mean, thinking about the integrator, you know, what's, like, the outlook for that profession? You know, you guys, I don't know if I wanna say you need it, but it's very helpful to the company when the integrator count is growing. I mean, those are your customers, and they're growing. Absolutely. You know, maybe this is a unique labor market 'cause it's so tight. You know, I guess, you know, any sort of like kinda outlook or trends just for the, you know, people going into this business and helping raise that, you know, the capacity of where demand can go. Yeah. Listen, I love the integrator business model. Let's say that. You have an industry that's growing, that has more demand than you can handle, that has very, very low cost of entry. You don't have to buy a lot of inventory. You don't have to buy a lot of equipment. You don't really need real estate. Now, the problem, there's no recurring revenue in the industry. Mm-hmm. The one thing I don't like about that we're helping to try to change is it's project-based work today. As an integrator, you can go in, you can do very, very well for yourself. You can make a lot of money. Relatively low risk. If it fail, if you don't have any work to do, you know, you have a couple employees, you probably have to lay them off, which isn't great. You know, there's not a lot of downside. When you go to exit that business, you know, what do you have to sell? Because it's been a project-based business. Yeah. We think to the extent we can help shift the industry to have more of a recurring model that creates more value, we think that actually is really great for our integrators, and they'll do it as well. You know, I think the integrator business model is wonderful. Yeah. No, it's really interesting. Wanna talk a little bit about supply chains. You know. By the way, they're working really, really hard for the last couple years. I mean. Yeah. While it's wonderful, it's really hard work. One thing, I mean, maybe I'll bypass the question I was gonna ask in supply chain. One thing, I mean, I've found from my conversations, I think people maybe underappreciate the level of work and manual labor. You know, 'cause the big question is, okay, well, isn't the do it yourself market encroaching on the do it for me market? You know, obviously, there's been a big, you know, just technology in general. Yep. facilitates that. I do feel like people kind of forget the work. It's not just, you know, syncing an app. I guess can you talk about, you know, why you have confidence, you know, in the outlook for the do it for me market, and any sort of like moats or barriers versus that do it yourself encroachment? I think there's two huge moats and barriers to do it yourself. One is the installation of the product the first time. so much of this product is installed, and if you wanna have a speaker sitting on a table or, you know, eero makes a great wireless networking product, and you can plug it in, but now you've got a box, you know, sitting in your room or on a table. It doesn't look great. I mean, if you're in, again, particularly the more discerning level of consumer. Yeah. Like, that's not what they want. They want this to look great. They want it to fit in with the decor of the house. They want everything to look great. There's a massive amount of the original work that's all about the installation, making sure you're trimming it right, making sure the TV's level, it's on an articulating mount that can bend the right way, so it reaches into the pool when you put it in. I can change some light switches, so I went and changed a couple light switches when I wanted to go make my house smart. Mm-hmm. I put in about five, and then I started looking at those double gang and quad gang boxes and by the way, there's 80 light switches I wanna change. Call electrician, let them come do it, or one of our integrators, you know, both of them do that work and have them put in those smart light switches. There's just a huge piece of installation. Once everything's installed, just like any other piece of technology, someone's gotta maintain it to make sure it works. Whether that's your car or your HVAC system or anything that you have that depends upon technology, just think about your network in the office. Somebody's resetting that network. Someone's making sure it's working. Think about the access control in your office and all the things that get tied in. That's what the integrator needs to do. Sure, is DIY there? Is some things easy to do? Are there a couple pieces and parts? We love that stuff. Make it more interoperable, and we're happy to integrate with those products where it makes sense. You know, Sonos is something that a lot of our integrators install. We think Sonos is a great product, but it's not gonna be, you know, it's only a small part of what the overall experience that an integrator provides is. Yeah, no. Very much appreciate that. Maybe hopping to supply chain. You know, how have you guys seen that, I guess, trend over the last couple, you know, months or quarters? Yeah. You know, generally speaking, the feedback, not from you guys, like say at the conference, is that domestically things are easing up. It seems like when you kind of extend that supply chain all the way to China, maybe that conversation, it's not easing up so much. Obviously, there's shutdowns. Yep. reopenings. You know, I guess kind of what are you guys seeing out of that? I think the three aspects of supply chain, one is raw material procurement. There not even raw materials, but, you know, there's not a week that goes by when we don't get a call that someone's decommitting on some product, and our supply chain team then has to run around and scramble and try to figure how they're gonna accommodate that. 9x/10 they're successful, and every once in a while we've got to think about how are we gonna handle this where we have a component that we can't get. That's the biggest supply chain issue we're having today. We sometimes have to re-engineer some products. We have to think about going out and finding those products elsewhere. That is more painful today even than it was late last year. That's the supply chain challenge we're having today. It's not huge. It's costing us a couple points. There's a couple dozen SKUs would at any point in time, we solve one and another one pops up. Mm-hmm. That's big. Logistics has eased a lot. Even China where you know, about 35%-40% of our product is sourced, proprietary product sourced out of China, which is down significantly, we've been able to negotiate around and plan around the shutdowns that they've had. That hasn't really impacted us. Today, all we're really feeling is that componentry issue that we're spending a lot of time managing. We've got a team that's doing a great job of staying on top of this. It's not, it doesn't happen by accident. No. Yeah. No. I know it's been. The supply chain and procurement p rofessionals have certainly proven their worth. Chris, the UBS is great. I love reading your weekly updates. Oh, the port track. Yeah. The port track is awesome 'cause it gives me some information that, you know, obviously that port out there in Long Beach is something we pay a lot of attention to. Yeah. I mean, I think the concern when we were talking yesterday to somebody, they were concerned that the Walmarts of the world are gonna start their you know holiday purchasing earlier. Yeah. In June or July this year. Their concern was, you know, around the labor negotiations on the West Coast and how does that, you know. Yeah, it's not clear to me that it's getting a ton better. You know, stops and starts are very hard to manage. Well, every week I get that report, I send it out to about 10 people in my company. Oh, hey, look at that. So if I could, maybe we'll end, we only have a minute left here. If I could end on, you know, kind of can you just talk about, you know, when I talk to integrators, I mean, they like a lot about the company, but I feel like the biggest differentiation is around the software. You know, they refer to it as like a game changer. Yep. Could you just maybe talk for people maybe listening who aren't aware, you know, what the software, you know, kind of a system does, what it provides, and maybe the outlook for it? Sure. We have two big software platforms. One software platform is our control system. That's what the integrator programs to allow the homeowner then control the house, and then we give the control, the homeowner apps and touch screens and remote controls that allow them to control the technology in the home. There's a big piece of proprietary software there that the integrator uses to program. The consumer doesn't use the software. They just use the outputs to control it. We have a piece of software called OvrC that allows the integrator to remotely support and manage the home. When you have a problem, the integrator can use that software to look into your system and say, "What's wrong? Is it your ISP is not delivering to your house? Is your network have an issue? Is it connectivity within the rack? You know, what's happening? Those two pieces of software combined create a powerful platform. Our best customers, so if you think about our top 10%, we service 20,000 integrators. The top 10% or so, we have above 50% wallet share. Those integrators we have above 50% wallet share with, they are Control4 partners. They use our control system. They use our OvrC platform. The third platform we have is that local capability to buy products today and go out and use our local platforms. Where we have all three of those, we see our best partners, our best integrators. We have over 50% wallet share. Then we've got a very long tail down the end where people are buying pieces and parts. Our opportunity is to take those integrators that are buying pieces and parts, have them adopt those three platforms, and continue to move up the value chain so that they, we do get that wallet share from them. No, appreciate that. We're up on the hour. First, you know, to everyone, you know, in the room or listening, you know, thank you for tuning in. I really would recommend everyone to dig in harder. I know it's a new company, but there's a lot of, you know, really positive things. I think anyone that understands and appreciates distribution, you know, would really find some attractive stuff here. Just with that, thank you, Mike. Of course. You know, I really appreciate the time. No, thank you, man. Thank you so much. All right. Thank you.