All right, we're gonna go ahead and get started. Good morning, and welcome everyone. It's great to see familiar faces out here in the audience in person. My name is Eric Steele, and I lead Investor Relations here at Snap One. On behalf of the entire Snap One team, I'm thrilled to welcome you to our first Analyst and Investor Day. We are live here in New York City and are also webcasting today's presentation for our virtual audience. You can find both the webcast link as well as the presentation materials on our investor relations website at investors.snapone.com. Thank you so much for joining us today, both in person as well as virtually, to learn more about our exciting story. Before we jump in, we gotta quickly start with the legal disclaimer, so let's get that out of the way. We'd ask that you please note the disclaimer and safe harbor language in today's presentation materials as it relates to any forward-looking statements made in today's discussion. In terms of our objectives for today, we'd like to provide you first with a deeper understanding of our business. Second, we'd like to establish our positioning as a category leading specialty distributor in the smart living space. Third, we wanna articulate our long-term vision and our operating model framework. Fourth, we'll allow our in-person attendees to interact with some of the industry-leading products and software that our teams build to enable smart living experiences. To that end, we believe we have an exciting agenda planned for you today. First, we'll start with presentations from several of our executive leaders who will take you through various aspects of our business. They will speak for about 30-35 minutes per section. We'll leave the remaining 10-15 minutes for Q&A at the end of each section. Couple of notes on the Q&A. Q&A will be limited to our in-person audience today. If you do have a question during the Q&A period, we'd ask that you please raise your hand. We'll pass the mic over to you, and we'd ask that you please state your name and your firm before you ask your question. Once the Q&A period is over, we will have roughly a 15-minute break before the next section begins. We've built in breaks throughout the day to give you a little bit of flexibility as we move through it. Over lunch, we will have several Snap One integrator partners join us for a panel discussion to share their perspectives directly with you, and that'll be moderated by members of the Snap One team. Do note that the webcast will wrap up at 2:15 Eastern or thereabouts at the conclusion of the last presentation section. For our in-person attendees, we will then move to the final piece of the day, which is visiting one of our local integrator partners for a showroom experience that we think will really bring to life the smart living solutions that we're talking about here today. That's our plan for today. We hope it'll be fun and interactive for this group. Thank you so much for your continued support of Snap One, and we look forward to a great day together. With that, I would now like to introduce our CEO, John Heyman, to get us started. Thank you, Eric. I was in line to check in last night, and there were three really tall people in front of me, and you guys may not know it, but it's Fashion Week in New York City. I was listening to the question that the woman at the front desk was asking everybody in front of me, "Hello, miss. Hello, mister. Are you here for Fashion Week?" I was, like, so excited, like I was gonna record it and send it to my wife at home. I got up to my part in line, and she said, "Hello, sir. Are you here for the Snap One Investor Day?" I had my shot at fame. We have a great day for y'all. We're gonna talk a little bit about kind of how we got here today, what makes Snap so special in the eyes of our integrators. Jeff Hindman, who is our Chief Revenue Officer, and this is the second company I've worked with Jeff at. He's gonna take you through a lot of kind of the go-to-market mechanisms of Snap One. G. Paul Hess, who took me on my first tour of duty in Portland, Oregon, when we'd go visit integrators and meet their technicians at 7:00 A.M., is gonna walk through kind of the things we're doing from a product standpoint to kind of revolutionize the industry that we're in. Then Mike Carlet is going to bring home for us why this all makes sense financially for our company and for our investors. All right. You were an integrator 20 years ago. When I say an integrator, you were somebody that a homeowner or a business person called because you had a certain experience you wanted to happen inside your home or business. You would get a call from Erik Woodring, okay? Erik would say, "I want a home theater in my basement." Jim Shapiro, one of our integrators, would take that call, and he'd come out to Erik Woodring's house, and he would scope out his budget. He'd look him up and down. He'd say, "Wow, this guy is in the investment banking industry. He's got a tremendous amount of money to spend." Jim would then leave Erik's home and say, "I'll get back to you." By the way, all of the Jims in the world were small businesses, and generally speaking, they still are. They have 20 employees at most. Some of the really successful big ones have 30. Jim would come back to his house after working all day, and he'd say, "I gotta get a proposal to Eric." He'd call his friends at this wholesale distributor or that wholesale distributor, and it was always multiple wholesale distributors 'cause nobody had all the products he needed for the job. He'd call the person. It was generally after hours. The salesperson, guess what they would do? Not answer their phone. It would go to voicemail. They'd call Jim back the next morning. Jim was on a ladder with his techs, couldn't take the call, had to call him back later. The voicemail would go back and forth. He'd finally get in touch with the distributor, find out if this product was in stock or out of stock. What was the price? Did it work with this other product or not? Jim would make a decision then to create a proposal. He'd visit Eric and show him the proposal. Eric would get on this site 20 years ago called amazon.com, and he'd start checking Jim's price list. He'd call Jim and say, "Why are you charging me this for that when I can buy it on Amazon for $100 cheaper or $200 cheaper?" Because all the manufacturers were trying to figure out how to go direct, and this integrator market was kind of a niche market for them. Eventually, Jim would get the job. Eric knew he wasn't going to do it himself and buy from Amazon, so he was going to use Jim. Jim would accept less profits because the manufacturers were trying to go direct. Jim would get to the site or send somebody in his office to the site that he just hired. Something wasn't working when he was trying to connect it all. He would call the distributor for support. What happened, Jim, when you'd call for support? Can't help you. You get put on hold. They don't take the phone call. The manufacturer didn't care at all about Jim, and that was Jim's life. Two integrators in Charlotte said, "Enough. We're not gonna do this anymore. We're gonna fix this industry. We're gonna change this industry." They decided to start a company called SnapAV at the time. They said, "We're gonna build a company for professional integrators by professional integrators. The integrator's gonna be at the heart of everything we do. We're gonna build brands for this company that are only available to the professional. We're gonna go to Asia, and we're gonna have relationships with companies who are already in the business of making these products. We're gonna create a new brand. We're gonna have the integrator use their brand in the local community, not our brand, where we're gonna spend a lot of marketing dollars. We're gonna stand up a website. There was not a website in the industry at that time. We're gonna stand up a website so when the integrator comes home to plan their business at night, that they can access product availability, pricing, understand their profitability. We're not going to go direct to the consumer. By the way, there was an inherent profitability in this e-commerce model that basically required less feet on the street that let them pour significant dollars in tech support into tech support. Jim, what happens now when you call Snap One? Somebody answers the phone in minutes and solves your problems 90% of the time in the first time. That was the birth of SnapAV at the time, 20 years ago. Fast-forward to today, we've got roughly 20,000 integrators who are partners of ours, buying close to 3,000 of our own products alongside tens of thousands of other manufacturers' products. We've evolved from an e-commerce disruptor to over the past 4 or 5 years, we've recognized we needed to do three things for the integrator. Number one, we needed to evolve from just being a pure e-commerce business to a multi-channel, omni-channel, brick-and-mortar business. We've opened over 30 locations and are continuing to do that. We're there for the integrator in their community where they need us. We have opened our doors to third-party products. Today, we're selling over 400, soon it'll be over $500 million of other manufacturers' products who come to us because of the access we provide them to the integrator community as well as our technology. We said, we have to get into the software business. We have to build software platforms for this industry to make their jobs easier, to make their businesses more profitable, and to delight the end customer. That has been our journey over the past 3 to 4 years, and we're still in the mid-innings of that journey. Over the past couple of years, kind of compounding all of that is we have faced kind of COVID in the supply chain like the rest of the world, and the disruptions that has caused. We have done so, I'd say, quite admirably relative to our competition and other companies we track out there. We've rebranded the company as Snap One with the notion that one stands for leadership, one stands for one place to shop, one stands for a unified product line. We launched our public offering a year ago, and we are really excited to be here with you guys today as we look forward to connecting the world in a faster, more secure manner, making homes and businesses more secure and safe, and then just doing all the fun things that this industry does. I can't wait to show them all to you at a showroom later this afternoon. What is our business model? The way this industry works, and I get a lot of questions around companies like Sonos and so forth. Our customers, they do not look to go out and buy products. They have seen something working at somebody else's home or business, or they have a builder or an architect, and they want that experience that they see or has been described to them. They call a professional. Maybe they go on Nextdoor, maybe they go on Facebook, maybe they ask three of their friends, and they call somebody up and say, "Hey, here's what I'm looking to do in my home or business. Can you help me?" First of all, you got to get the integrator to return your call because they're like so damn busy right now. They've got to find time in their day to come visit you. When they come out there, they're gonna, again, assess your budget, your needs, et cetera. They're going to hear you because Eric's theater, 'cause he's in investment banking, he's gonna spend $400,000 on his basement theater. But the rest of us schleps will only wanna spend $20,000 on our basement theater. The integrator's got to navigate that budget and what products they're gonna bring to bear. They'll go out, they'll scope out the needs, they will listen to the experience you want, they'll create a proposal, they'll come back to you'll haggle about the proposal, then they'll go out and acquire the products, which today is tougher in this supply chain environment. They'll come install them, and then afterwards, unlike 20 years ago when everything was solid state, today everything's open. When they do that install, there's gonna be tens, if not oftentimes hundreds of connected devices in a home that require support. What are these experiences that they're installing? They can vary. I'm building a house right now. We're doing networking. We're doing lighting. We're putting surveillance cameras on the rooftops. We're gonna have 10 rooms that have audio and visual in it, including a movie theater. There's infrastructure required to make that happen. There's screens that come out of the ceilings. There's speakers that get installed in the ceilings. There's, in the outdoors for the outdoor video and audio, there's ditches being dug, subwoofers being buried in the backyard. I'm not doing that myself. This is not a two-bedroom apartment in Manhattan where I can put a Sonos soundbar underneath my television set and be content. Those are the experiences that our integrators are coming to life. They could be singular. They're just doing a lighting job, or somebody wants a more powerful network because of work at home, or they can be a whole house, whole business project. Think even just a simple conference room if you're a lawyer. You got to mount a TV, you got to buy a conference room system, you need audio inside there, you need microphones, et cetera. These things, these experiences are enabled by our integrators. By the way, we have 4 integrators here with us today. These experiences are enabled by our integrators. Let me kind of describe what an integrator's business looks like. The vast majority of the integrators out there in our industry have less than 10 employees. They're small to mid-sized businesses. The owner is oftentimes the lead salesperson, the lead installer, or both. They are working all day. They are on ladders. They're doing proposals. They're planning at night. It's a really big decision for them when they decide to hire a manager underneath them and separate themselves from the business. When they get to the project, they've got all these different devices and so forth that they've got to make work together. Every homeowner wants things to work a little bit differently in their home. They use software products to implement that, and they use software products to monitor the health of the home afterwards. When do people need help? It's when they're at home at night or on the weekends. The time the integrator's supposed to be off and their techs are supposed to be off, that's when people are using their systems. What they have never had before, and the two integrators that started Snap One understand this, what they've never had before is a partner with the breadth and the depth and the scale to get behind their business with products and policies, and get behind their business with software investment, and get behind their business with relationships with third parties. When they get to the job site, everything works much better for them. We're not finished, by the way. We got still plenty of work to do ourselves. Snap One, from our very beginnings, has aspired to be that partner. Couple of things that kind of external evidence that we're having great success out there. First, on the product side of the equation, the CE Pro Brand Award kind of measures brand affinity amongst the integration community for the 50-some-odd product lines that our industry sells. Some of these product lines are things like theater furniture, which we don't sell. In many of the very important categories like networking, whole house automation, remote management systems, so you can monitor the health of the home after you've left it, and you don't have to roll a truck, we are number one. Sometimes we're number one and number two 'cause we have multiple brands, and we have six times the amount of brand affinity through these awards as voted by integrators than our closest competitor. That speaks not just to the depth and quality of our product line, but also to the breadth of our product line. The people we compete with as a company are typically narrow product companies or kind of what I'll call other distributors who don't have their own product lines. That's the product side, which if you speak to these guys during a break or at Gilmore's, they're product guys. They love products. The other side is the Quest for Quality Awards, which really measures the service we're providing. If we're competing mostly with product companies on the product side, on the service side, we're competing with, generally speaking, other distributors. We're being measured here around things like warranty policies, loyalty programs, shipping policies, again, remote management services, things that are critical to the workflows of today's integrator. Here we've got three times the recognition than any other distributor has. We weren't even really considered a distributor to this industry until about 3 or 4 years ago. We've done an exceptional job here, and if you went inside our Monday morning management meetings, you'd find a team that is not at all satisfied with where we are today. We're zealots about the Net Promoter Score. We believe that the best way to grow our business is to take great care of our integration partners. Our Net Promoter Score is at 55. That's world-class in the B2B technology space. The Net Promoter Score for our technical services group is over 90 consistently. We're the finest technical support organization in the world. Kind of the sales metrics speak to our success. Over 75% of our revenues come from integration partners that have been with us for over five years. Not done yet, but we've made a lot of great progress with the community. That's our flywheel. We at our heart are still a company that was built by integrators for integrators. We wanna be every integrator's partner of choice. If we do that, then we build a level of trust with them. They give us the feedback we need to decide what products and services we should offer at what price points. We've got a scale to do that like no other company in the industry. That's what drives our product development organization. That's what drives our service choices. We make those investments. The integrator can do a better job and make more money. When they do that, they're delighting their customer. When they do that, the industry grows, and nobody benefits from that growth more than Snap One because we're the largest player in the industry. That is kind of underlies our vertically integrated strategy. All that's great, but you better be in a healthy market if you're trying to grow your business, and we think we're in a incredibly healthy market. First of all, there's very few things that are inarguable in life, but the fact that there's gonna be more technology in a home, any home or any business, is inarguable over the next decade. We've got a tailwind behind us in terms of technology adoption for products that exist today and for products we don't even know about yet but will exist in the future. That's number one. Number two, notwithstanding the mortgage demand metrics that I saw on CNBC this morning, the industry, the United States is under-housed. This is not 2007 and 2008 where there's a lot of homes that have been built and nobody's living in them. The country is actually under-housed. There's not enough homes and apartments to go around. We may be seeing a slight pullback right now or maybe even more than slight in housing, but there's this huge backlog of construction projects that are already going on, and we think we're in a 10-year cycle of home building that will be very prosperous for our company and our integrators. Notwithstanding that, in 2007 and 2008, when the housing market was in crisis, our integration community recognized that, and many of them pivoted their businesses to focus on what we call commercial or resimmercial projects. If we do a survey of our integrators today, typically a third of their business comes from commercial projects. There's a tremendous amount of permitting going on right now with small businesses, et cetera. Guess what happens when people are coming back to work or somebody's starting a small business? They need a conference room. They need surveillance systems if they're a retailer. They need a networking system. That needs to be built upon things like great cabling, great power management. We feel like the commercial sector, which has really been tough for us over the past couple years and tough for the industry, is rebounding. John Burns Real Estate Consulting has pointed out the still ongoing remodeling trend. If people aren't gonna move because they can't find a new home because of supply and demand, and they're just gonna make do in their existing home, there's still tremendously a high number of outdoor projects, basement refinishes, and otherwise, you know, big refreshes happening in housing. Finally, I referred earlier to the notion that our industry was largely solid state 20 years ago. Today, things have become more open, and the technology refresh cycles are at play. We're now seeing where people put in a Wi-Fi network, and they're upgrading it. By the way, earlier this week, we introduced our first Wi-Fi 6 product. Networking's an area that you'll see upgrade. 8K will displace 4K, not en masse yet, but it's coming. There's a lot of things that will drive upgrades in our existing installed bases. We feel like we're in a great market for many years to come. One of the things we've done, I've spoken a lot about kind of the workflow tools and the product investments we've been making in the business. By the way, from a product standpoint, kind of, and G. Paul Hess will talk to this a little bit, but the innovation coming out of our business here recently and over the next year is unprecedented in this industry. I've talked a lot about what we do for our integrators. I've talked a lot about what has made Snap One special in terms of our own kind of business. One of the things we decided about 4 years ago was to open our doors from a distribution standpoint to other manufacturers. These manufacturers have had a hard time reaching this market. Any one integrator is fairly small. It's hard to justify a sales resource. They don't have their own e-commerce sites to sell direct to these integrators. They've had to go through conventional distribution. They need integration with our Control4 operating system, which is our smart platform, living platform. They need integration with our OvrC system. They want access to data so they can grow their business. They need access to our brick-and-mortar capabilities and our logistics capabilities. Today, we have relationships with many of the leading manufacturers in the industry, where they come to us for distribution. In some cases, we earn 10% margins on a TV, for instance. In other cases, we can earn margins in, you know, north of 30%, because of our position in the world. This is how we view ourselves in terms of our own capabilities, our place in the world with integrators, and our place in the world with manufacturers. That's why we feel like kinda what we've done is, you know, we've started to benchmark ourselves against the Pool Corp's, the SiteOne's, the Watsco's. We look at kinda how they've built their business. We are singularly focused. We are here to serve technology integrators. We have become the category leader in the industry, unquestioned, with the breadth and depth of our products. Not just our products, but other people's products. We've kinda done it in reverse. A lot of the brick-and-mortar companies have tried to build an e-commerce presence. We started with e-commerce, and now we're building out kinda our own brick-and-mortar on our march to what we would call true omni-channel capabilities. We've got a product portfolio. When I look at other distributors and they talk about, "Hey, we're building out our own OEM, our own private label brand, because we're trying to improve our margins." 70% of our revenues come from our own products. That's where we got our start. These products are highly differentiated, oftentimes because of the software content that we've built and that we invest $40-$50 million a year in. We've got an eye, as you hear about today, to building out services framework on top of kind of the product line. When we do surveys of the end customer, we know that one of the frustrations of the end customer with our industry is service, because a lot of the service happens in the after-hours. We have launched and are continuing to build a platform to help our integrators provide the service that their customers expect. We feel like we've got a really resilient business model. That may not be apparent to investors if you look at our stock price today. In 2007 and 2008, when Snap was coming into existence, integrators were looking for ways to help their customers with budgets. Other manufacturers didn't have e-commerce capabilities and were cutting back on their sales force and their support. We had enabled our business to be digitally equipped to provide service, training, sales, et cetera. We actually thrived and saw a lot of market share shift during that time. You'll see some products later on today that are ultra-premium. You'll see these speakers today that look like a Tesla, okay? Only they're more expensive than a Tesla. We've intentionally stayed away from those types of products in our business. What we saw in 2007 and 2008, and what we've seen in other down economic cycles, is customers picking our products, but also, we have a product line philosophy of good, better, best. We've stayed away from ultra-premium, so we've missed out on some of those sales over the past three or four years in a really robust economic cycle. If we have a bit of a downturn, we would expect to drive market share as we start to see potentially some trade down. We've got a proven M&A playbook. We've executed a number of transactions, Mike and I both here at Snap One, but at other businesses as well. We've got great experience integrating businesses. We're disciplined buyers, and we've been able to see great extraction of synergies on both the cost and the revenue side. As I look at our financial model and get frustrated by our stock price, we trade at a significant discount, 30% or around probably after yesterday, to the market when you look at the Pool Corporations and the Watsco's and the SiteOne's. You know, from my perspective, if I look at our economic model, you know, I'll first talk about our profitability 'cause we have operated the business before at higher than mid-teen EBITDA. But we've also been making big investments in growth. We've been making big investments in R&D. We've been making big investments in our brick-and-mortar strategy. We've been making investments in the commercial and security and global distribution channels. And so that has fueled our growth, which is world-class when you measure us against some of these other companies, but it's taxed our EBITDA in the short term. You know, there's been a bit of a trade-off there, and we're very conscious of it, and Mike will talk about our march to an operating model that we were used to, more like three years ago or so. We feel like we've built a really attractive business with a lot of tailwinds for growth. We have built a business that has a very attractive gross margin profile that we're going to continue to enhance with our software investments. We're going to amortize the investments that we've been making on the operating expense line as we drive to higher profitability. Obviously, in today's climate, we're getting more focused on profitability, and we still expect growth, but we know that there's a balance there in this environment. I'll stop there and take questions. Hi. Thank you so much for your great presentation. Just a quick question about your comments on EBITDA multiples. You had mentioned that a lot of the EBITDA spending has been growth-related. Are you able to quantify for us around how much that could be? Well, can I take a quick shot at it, Mike? Well, let me say what we said in the springtime, which was kind of I'd say the single biggest investment we made this year that we sponsored as a board was the investment in our product lines. I think to quantify that, I would say it would be mid-single digit millions up to eight-figure millions. You know, those are, you know, we're always investing in our products and trying to prioritize that. The vast majority of our R&D spending over the past 2 to 3 years has been on integrating the products we bought with Control4, rebuilding, re-architecting our OvrC platform to converge the three different back office platforms we had from an acquisition. Today, now what you'll see is kind of that increase in R&D is much more focused on things like new networking pro-products, new audio products, new surveillance products, et cetera. You know, that's what we're really excited about. That's on the marketing, that's on the product side. Sales and marketing, I would equate it to another, I would say similarly, kind of in that $5 million-$10 million range around primarily kind of new channels. One of the things that we see as a company is, we see the demand that's coming at the industry, both from a residential and commercial side, outstripping the industry's ability to serve that. We're very conscious of how we can invest in a healthy way with our partners to increase their capacity to serve that demand. Derek? I figured you'd use me as an example, so I'll ask a question. You know what? I think you made a compelling argument for how Snap One is differentiated, market-leading and whatnot. I guess, where do you think your kind of most important or strongest differentiators are? Meaning, where do you have the barriers to entry where perhaps new entrants that say, "Hey, you know, these guys are doing it right, I get it. I wanna copy their model." Where do those new entrants ultimately fail because they can't do what you do? Where do you think you are most defensible in that sense? Well, I think the place we're most defensible. Do we need to repeat the question, Eric? No. Matthew? Yeah. Okay. I think where we're clearly most defensible is our base of integration partners. Like, we've equipped them with tools to run their businesses and serve their customers that they have now installed in, we don't always know when the install is a new install versus an existing install, but I would estimate that our integrators have our products now in, you know, somewhere close to a million homes. Their techs are trained on our systems. Their install base is using our systems. They need to be positioned to continue to serve that install base. What we have done with our R&D investments, what we have done with the integration of those products that we have with other people's products, the trained install base that our partners have. It doesn't mean anyone can't switch from us to somebody else. First of all, I would just point out that they're already telling us we're doing it the best. We know we can do it better. We feel like we've got this very strong competitive moat that for existing partners, generally speaking, we see them buying more each year, not buying less. That's the same thing that as we articulate that to new partners, that they buy more and more or come on board, and then kind of that flywheel with that partner starts. You know, that's a pretty simple competitive moat I just articulated. The investments that happen behind that, I mean, somebody would have to build a software platform that we've now spent. I mean, at this point, we've got $ hundreds of millions invested in our software platform, that's infused by a lot of data by what consumers want and what techs need. We are continuing to advance that, and we've now built out integrations with over 700 manufacturers across thousands of products of theirs, so they work better when the integrator gets to the home. Then, you know, I'll say the one soft thing was just our culture. Jim, I was sitting with you last night, and you, like, looked down at the table of 20 people, and you said, like, "What a group of people." Like, you know, the culture we have around taking care of the integrator is unlike anything I've ever seen in my career, and I'm getting old now, so. Nate? You know, I guess if I would just look for some color or commentary on if the integrator isn't spending with Snap One, you know, where are those dollars going? You know, any just color or commentary on wallet share of, you know, that goes through distribution or that goes, you know, direct to the manufacturer, how that's trended. I guess, you know, there's a bigger focus maybe on the infrastructure and connected products, maybe more so than the entertainment side. Thank you. Thank you. I'd say, well, I'll try to address the entire question. If they're not spending with us, they're either spending with another distributor, and so there's a lot. Remember, we have 32 or 33 locations open now. ADI has 200 locations. So if you need something today or you need something tomorrow, and sometimes if you need something two days out, we can't get it to you in time for the job. So regardless of wanting to have the best products, which is ours, you may pick another product that doesn't have the kind of switching costs that, say, our Control4 product. You're not gonna. You'll wait two days for our Control4 product. You might not wait two days if you call somebody, and you've given them a big project, and your kid's birthday is tomorrow, and you're gonna have a TV hanging in their room for them. They're gonna go to some other distributor and buy that TV and buy the rack and buy the power equipment, et cetera, to do that install. I would say the number one reason we miss out is other distribution businesses, and we're building out our distribution footprint. The second reason is that the integrator has gotten big enough on some of these third-party products to buy direct, and they don't need to come through us to buy Sony or Sonos or XYZ other third-party product. The third reason is because they perceive there to be a product difference or switching costs with products they have. In the control space, you know, Savant and Crestron are two admirable competitors on the control system front. They may be just like we've got a competitive moat, we feel like with our partners, it's hard to switch, especially the past two years. I mean, these guys are busy. I mean, they're working Monday through Saturday overtime, and it's hard to get them to switch in a climate like that. If they're with Crestron or Savant or a specialty speakers company that they've got relationships with, it's gonna be hard to get them to make that switch. Those are the biggest reasons. On the commercial front, by the way, we haven't built out the product platform that we've built out on the residential front. There's a whole nother lineup of competitors there that our product teams eye as we're building out technology there. Thanks, John. Adam Tindle, Raymond James. I just wanted to ask a question on business cyclicality because you touched on this a little bit in your presentation, and it probably goes into some of the differences in valuation multiples that we're seeing, you know, 'cause it's a big question that we get from investors, right? So you outlined how in the last downturn, you gained share and you thrived through 2007 and 2008. If we fast-forward today, the market is more mature. You're now running a billion-dollar business, right? So I'd love to just hear how you think about how the board thinks about maybe comparing and contrasting that 2007, 2008 time and what you would do similar or differently this time to protect from a material downturn in the business if we do decelerate. It's a great question. We oftentimes cite both our business and Control4's business, and we didn't own Control4 in 2007 and 2008. We actually both thrived during that time. The dynamics were, we were both smaller companies, and the price points of the products were such that we saw a lot of share of wallet. Even though overall demand shrunk quite a bit out there, those companies thrived because of the product lines and the price points. I think, you know, what we look at today are kind of our integrators' businesses and the businesses they have around commercial and around residential. Our best estimate is about 1/3 of our business goes into commercial settings, which by the way, has only recently come back. I said that earlier, and that was really impacted by COVID because obviously people weren't going into their offices. That's one. The second thing I'll say is we still have that breadth of products from a price point perspective. We've spoken a lot about, okay, if what happened in 2007 or 2008, for the business that was out there, we were the most attractive place to do business. How do we become that again for the industry if that's what the industry needs? I'm not prepared to share that today, but we've thought about that a lot because what we saw was market share shift during that time. You know, I'm actually a believer that if there is a slowdown, the opportunity for us to be even more valuable to our integration partners is right in front of us. We think about that a lot. You know, then I would say you're talking to a management team that a big part of our value creation thesis over time is growth. But we feel like we've got a really big leadership, so if we need to manage our appetite differently around investment in the short term, we feel like the moat we've built and all the products that we're about to come out with gives us some leeway there. That's, I would say, overall kind of our perspective. We have a follow on Keith, but try to keep it to about 5 minutes or so. Yeah. Thanks for taking the question. Just on your core kind of resi integrator base, are you starting to see more crossover into commercial from that base, or how are you adding more kind of commercial integrators to your platform? I mean, again, we've definitely seen. You can talk to other players in the industry. Many of our integrators, more than half, are doing business in some sort of commercial setting as well. I would say the majority of what they do is still residential. Residential's been so strong for the past few years, and especially the past couple years, commercial's been pretty weak. As I talk to integrators, you know, they're smart. They read the news. In some areas of the country, housing's incredibly robust. I spoke with all our integrators that are here last night. I think everybody's business right now is super strong from a residential standpoint. I think people have their eyes open and, you know, they, if maybe they weren't going down to and looking up for new business permits, but the smart ones, you know, they see their backlog ahead of them for months right now. If they start to see proposals delaying or going away, they're all smart enough. Like, this is a wonderful community of people that their businesses are there to feed their families and feed their employees. They will go find the business. That's what they did in 2007 and 2008, and that's what we have great conviction in they'll do in the future. I will say to the other. I know we've got to keep it short. One of the things for us is, one, a kind of a ceiling on our growth has been integration capacity. The market, the integrators can withstand a little bit of a pullback and sales stay the same because I mean, try to call an integrator in your local community and see how long it takes for them to call you back and then when they can come visit you. Keith? Yeah, you had talked earlier about the investment in research and development limiting the EBITDA margins, and of course you've been adding some nonproprietary products that are doing as well. I guess the question is that something we're just gonna see for the foreseeable future, or is there a point where that stops and it's gonna be good business, the margin starts to lift? I'm gonna repeat the question just so everybody heard it, which is, I think you're basically saying R&D has taxed EBITDA. Is there a point in time where we get more leverage out of that R&D? That's the question, right? Okay. I think there's two things there. One is we've had a large appetite for investment in R&D. We feel like the investment around that is starting to moderate. There's always good new ideas about products we can build, but we feel like that's starting to moderate, number one. Number two, I think if you look at these models here that are in front of us, when I look at kind of best in class, when I look at how our operating model has changed over time, it's changed both on the R&D line and it's changed on the sales and marketing line. As an e-commerce company, we didn't have a large sales force. Now with brick-and-mortar presence, we actually are making the kind of investments in sales and marketing that you see of some of these other specialty distributors. Then you go to the next line and you say, okay, where the company's outpacing investment against some of these companies is R&D. Now I think our gross margin profile is better, which speaks to the R&D. This has been an industry that again, was a solid-state industry for a very long time, and it is now becoming much more software-driven. Neither our integrators nor our company have a software model to monetize and support that R&D on an ongoing basis. You'll hear some about that today. From my standpoint, that software over time for the industry should be a profit center, not a cost center. That is the other component of the model. We've got to cut it short? Yep. We're good. All right. Hey, thanks everybody real quick for being here today. I know in this crazy market, there's all kinds of places you guys can spend your time. You're taking the day, and some of you have traveled to be here with us, so we're greatly appreciative of it. Thank you. We'll have Jeffrey Hindman start at 10:00 A.M. Good morning, everybody. Thank you so much for joining us today. As we turn to the go-to-market section, I wanna talk a little bit about the market we serve, kinda who that integrator is that we work with on a day-to-day basis, how that translates the addressable market we're trying to grow in, and why we're so excited about the growth potential we have ahead of us, and then how we've aligned our go-to-market across the business to best serve that market and that core integrator that we serve. As a starting point, John, the core of our business is that professional installer that John described so well during his opening. These are typically smaller businesses where the owners are working in the business, not on the business. That do it for me integrator segment has been one of our key growth advantages because as a company, we have understood the challenges of their business so well for so long that so much of the business we've built, whether that's on the product side and the products we launch or the services side to support those products in the field or the go-to-market efforts we have to bring integrators on, have been built around the challenges they face through that job life cycle. To your question earlier around kind of the components of the market and kind of what segments are we serving, there are three core segments in that domestic market which we serve today. The first is around home technology. We also do a significant amount in commercial and security. The question that came up earlier is one we often get, which is: how do integrators think about their own business? What you're gonna find is there aren't hard and fast lines between those segments. The products we and solutions we build often serve equally well across all three segments, that a surveillance camera that can go into your home will work equally well for a small law firm or a restaurant or bar or other commercial establishment. Integrators have built their businesses over time to serve different combinations of segments in different ways. What you'll see from our integrator panel today is all of them have a unique mixture in their own business, depending on how they've built up their expertise, whether that's even within the residential space, building up expertise around things like MDUs. We internally often categorize our integrators by the cocktail party question, which is, if you were at a cocktail party, you know, and you said, "What kind of business are you in?" How would they answer to you? That's largely how we categorize those partners, even though the business that they do might span all three categories. 82% of our business last year came from those core domestic integrators within our domestic market. As I'll touch on later, we believe we've still got significant runway for growth. Despite our large partner penetration in the market, we still believe we've got a lot of run room. For the bulk of the go-to-market presentation today, I'm gonna focus on that core integrator market, domestically, but two other segments around our revenue profile, one is 6% of our revenue comes from other business, domestically within the United States. That might be a large national account. Our products fit projects beyond what our integrators do. Often, installers will find us for large projects, and we wanna be able to support those opportunistically where the products are fit and our customer can be successful. That's not a growth vector we're pursuing and investing in. Similarly, internationally, we have a very similar do-it-for-me integrator approach that is a very similar partner to what we see domestically. Some of those we support directly in markets where we have critical mass and are able to provide a lot of the capabilities around the product set that we do domestically. We also have lots of partnerships with large international distributors in places where there's product market fit, but we don't have all the go-to-market capabilities yet. As you double-click into that domestic market, we've got 20,000 partners who did business with us last year. 13,000 of those are in that core home technology market where we got our start, as John described it. We believe we have something like 75% of partners in the market doing some kind of business with us every year with, in large part because of our history in the market and our high degree of product fit. I think to your question earlier around share of wallet, we still believe there's really significant run room here because within that $50,000 of average spend for one of our domestic partners, we see a really broad spectrum of spend from. While the average is 50, we still continue to attract new partners, as John described. We're very successful. Once a partner joins us, they might spend only a few thousand dollars or sample a product in the first year, but we've got a very successful track record of those partners staying with us for long periods of time and consistently growing spend for 5-10 years after that. At the top end of the spectrum, we found that those that have really engaged with Snap One and bought into our platforms, our platforms being our control system, that they align their business around typically one major control system, our omni-channel presence and all our supply chain capabilities, as well as overseeing some of our support and software services, those partners are spending disproportionately more, and we can see, you know, on average, $250,000 or $260,000 of spend for those highly engaged partners, and I think we believe there's still significant run room and wallet share to grow that average spend per partner. We're newer in the commercial and security markets, and so I think we're just not as far along on the maturity curve. We've got about 7,000 partners, which is we continue to put significant efforts into partner acquisition along the way, and every year, we make headway into adding more partners to the store, as well as R&D efforts and third-party product additions that help improve our product fit, and we're seeing growing share of wallet as we're able to be more and more relevant to those partners as a one-stop shop. I think as you look at those markets, I think the difference between the three is our experience and maturity across those three segments. What's not different is in terms of how we think about our go-to-market playbook and presence. You know, I think if you look at security and commercial and our efforts there over the past five years or so, it's very similar and consistent with how we built that home technology playbook over the past decade plus time. You know, it starts with things like very specialized R&D that we believe is relevant across all the markets. Our OvrC software platform for integrators to provide service to their job sites, we've built in feature functionality that makes it relevant to all three segments, not just that home technology integrator. Similarly, our latest release of the Control4... Our latest release of Control4 has very specific commercial functionality that allows you to scale the video capabilities to something that would be required at a sports bar or a restaurant that's gonna have really complex video needs far beyond what our traditional residential integrator would need. As we've invested R&D to become more relevant to those players, we've also supplemented it with third-party products and acquisitions like Clare, where we can accelerate our product market fit to provide more of what they need on every job for those vertical specific applications. Similarly, we've been investing in leadership along the way, and team members that have specific market expertise, especially in those partner-facing teams who have commercial and security chops, from time and industry that only time and industry can give you, and the Rolodex to go call on some of those partners who we wanna bring into the ecosystem. As well as we have invested in platforms like Local that we believe raises all ships. You know, local availability, local expertise in the branch is a capability we bring to market that we believe is unique as a large manufacturer that allows us to create better relationships across all of our integrator partners, not just those in the home technology space. We're excited about the growth trajectory ahead because despite our 20,000 domestic partners that we served last year, we still believe there's significant running room in that domestic market. We size our market a couple of different ways, let me talk to you about two today. One from the integrator perspective, the other from the projects perspective, which both we believe show a roughly $40 billion opportunity in the domestic market. The 20,000 integrators we serve, we believe there are about 70,000 total integrators that are great prospects for our products and services in market. At an average spend of over $600,000 per partner on the products they procure for their jobs on an annual basis, that puts it over a $40 billion market. I think, as I stated earlier, as we add those commercial partners who and security partners who have jobs where our products are relevant today, we can capture more of that share. You know, as we launch more products that fill in categories where we don't participate today, or we might be able to add to our merchant profile by switching from a third-party only approach to first proprietary products as well, we can continue to grow share. We've got a special focus around the three ecosystems I talked about earlier. You know, for the roughly less than 10% of our partners who have adopted our three major ecosystems around control, oversee, and our omni-channel presence, we're getting more like $250,000 of spend, which is how we think about our aspiration for growing newer partners or lower engagement partners along the way. Let me quickly touch on just from a projects view. We believe there's a similar view in terms of what the potential is from a domestic standpoint. With 130 million households and 30 million small businesses in the U.S., we think about those upper income households and smaller businesses, so think, you know, 20 or fewer employees along the way, provide something like 30 million addressable sites in the U.S. If those sites are gonna do some kind of project, that may not be everything that they need to do, but as John spoke earlier, that might be a component of their long-term solution. If they install one project every five years, we've got something like 6 million jobs that the integration community in the U.S. is handling every year. Our projects average about $15,000 in spend as you talk to partners. Because of the customized nature of their business, some of those are $5,000 for somebody who might be doing a very limited component or a starter project. Some of those can be well into the six figures as you get to more whole home solutions or whole business solutions. At a $15,000 average spend, there's roughly $90 billion of spend in the US by end customers. That translates to roughly $40 billion in product spend once you consider what components of those jobs are product-based and what the manufacturer retail is for those as opposed to the partner's sale price on those products. I think one of the things that John did so well was describe, you know, how difficult the life of an installer is, an integrator is to deliver that customized solution. If you think about the 70,000 installers trying to do 6 million projects on an annual basis with an average of 8 employees where you're working in the business, this is an incredibly difficult project life cycle to manage along the way. One of the reasons I'm really excited for you guys to get to see the showroom is, you know, I think when you see it is very. It's abundantly clear these are not DIY solutions. These are complex solutions that require expertise, experience, significant training, a very capable workforce to install successfully and successfully deliver the solution. As I step through the project life cycle a bit, like I think the thing I want you to be aware of is, we have built our business over the span of more than a decade to help integrators in places where we felt we could provide a differentiated solution to help them through the product life cycle. As we go through the go-to-market, you'll see a lot of these components where we've been able to invest in our business to make it a little easier for that integrator and their business to get through that life cycle. That starts with things like just the research and learning capabilities. Even our most expert partners will have to do significant work on the front end to make sure they have the right products to put into a job that are gonna work for the solution they're developing. Often on complex solutions or something they haven't done before, that's gonna require engagement with the manufacturer and technical resources to make sure that they're designing a job on the front end the right way. I would also say there's general education in the industry. There isn't a trade school that produces technicians for our industry. In large part, an integrator will hire a technician, and it will be on them to make sure that they've got the right training along the way to be capable in the field, and we've built our business around that in large part. System design and quote is really a significant part of it. As you launch a quote, there's speccing the right products and making sure you have the right labor components is important 'cause every job delay on site begins to erode your margin along the way. Order fulfillment, these are typically small businesses that don't want a big warehouse. They don't have warehouse space or wanna put the invested capital in carrying the inventory. Even before the supply chain challenging times, you know, being able to confidently get delivery of product is really important to hit the project life cycle. We've built our go-to-market as an e-commerce-led, omni-channel go-to-market strategy with four big components. The first, as John mentioned, is we have a digital experience that's both our e-commerce platform and our marketing presence that allows partners to interact with us where they want and how they want. We've enabled significant self-service in terms of not just being able to buy from us, but key functionality and tools that we've built for them as part of our business. We've built our local branch network that have extended our capabilities into the field and brought the Snap One value proposition locally to partners in 33 markets. We've added a sales force. In the early versions of SnapAV, we did not have that. We've added a very specialized sales force to be able to interact with partners in the ways that are most important for them, especially around some of those ecosystem decisions we've been talking about and things that are important for the business. I can't emphasize enough the support foundation we provide. The software, as you buy products in the industry, the software we embed in that, the services we surround it with, and the support we have after market, is second to none and really important to give an integrator confidence in the product that they're putting in, into a job site. Let me touch on each of them briefly. I think our e-commerce platform, as John mentioned, CE Pro does annual awards. Our e-commerce platform has been the No. 1 industry platform, 11 years running. Our Net Promoter Score, as we survey our partners, is 62, which is world-class. I believe the reason for that is, in most cases, partners or integrators look at our e-commerce platform as not a transaction engine, but a core part of their ERP system. This is core software functionality that they use in their business and might be the most used piece of software in the industry. As you go through that job life cycle, we have built so many components of how we can help a partner into our e-commerce platform, whether that's product information and availability. We have extensive product information online. By the way, our support team uses that same product information to provide support to our partners because if it's not good enough, if we don't have sufficient documentation, we wanna hear that from our support team before we hear that from integrators who are trying to install a product. We've invested significant energy and time into building training capabilities for the industry. If you're a new technician, we have a whole certification series on how to successfully set up a network. If you're a more advanced technician, we have other training on more complicated networking jobs and setup that as a partner, you don't have outlets to go train your partners. We'll help make them successful on that job independent of the products we're selling and the solutions they need to understand. We certainly have built tools like Rack Builder, whereas you're designing a job and you need to figure out what kind of rack to put there and what components you have in there are custom design tools so that as you build that, you can figure out exactly what you need and order it from us and you know it's gonna work. As well as all the transaction support you need, whether that's inventory availability, pricing, margin information, or even how you're trending on our rewards program for your own economics, and profitability as a business. We look at our marketing programs as part of that e-commerce experience and that digital experience. Our rewards program, similar to our e-commerce engine, has been a long-time award winner and industry leader in terms of just integrator feedback. We relaunched the program earlier this year to encompass our broader, more complicated business, where partners can buy, get points from us for anything they buy, whether that's a proprietary product or a third party product, through any channel they buy it. We've designed the program so that whether you're a new partner who's new to the system and trying to get benefits like free shipping at certain rewards level, or if you're a gold or platinum partner stretching to higher levels of the program, what we've set up is a system where as you buy more from us, that helps us as we grow your share of wallet. It also helps the integrator to drive further profitability by doing more business with us, simplifying their procurement along the way. Our rewards program is certainly our showcase program and foundation to our share of wallet programs along the way, but we run short-term programs around product introduction and long-term programs that can last a year or more around category adoption that allow us to get significant growth within our partner base without ever deploying a sales resource or kind of other parts of our go-to-market system. Our branches have been a major innovation to bring Snap One to a local market. As you can see from the pictures in the bottom right, it is a shopping experience where you can browse the aisles as a one-stop shop. We're the only distributor. Only here can you get all the Snap product you need, but we've added third-party products to complement that, so it can be a one-stop shop. We'll have integrators bring their technicians to the office in the morning. They'll pick up their vans. They will all go to a Snap One facility, pick up everything they need for the day, and then go to the job sites. It has allowed us to be a core part of their operations in a way that makes their lives simpler to get the best products in the industry and do it in a way that's efficient for their business to manage their projects. Our local branches, though, are a lot more about inventory availability. As you can see, we've staffed the man in the aisle. The person behind the counter is typically an industry expert or an industry veteran who's expert on the products and will often be involved in either troubleshooting a situation or value engineering a project or finding the right component to put in. These branch members are often trusted extensions of the team who are often consulted as you think about kind of how to manage a project along the way. COVID has disrupted our ability to use our branches a bit as a home base for a while, but one of the things as conditions have improved is we like to use these for events to bring in integrators, and we make them homes for training and kind of education. The same way we think about our e-commerce presence as being a tool for the industry, our branches are a tool to bring in technicians who may not be able to attend ongoing training in other ways, and provide a venue for them to better get to know our products as well as the capabilities they need to do their job. As John mentioned, we're up to 33 branches. That has significantly added to our kind of same-day presence for our installers in the market, and our unit economics on those are really attractive. You know, as a branch matures, we can do north of $10 million per branch in terms of ongoing revenue, with a very high IRR and roughly a 1-year payback in terms of the or cash flow breakeven in terms of our investment in that branch. We are at 33 today, and over the next couple of years, wanna continue to add, call it a half dozen to the market a year to continue to expand our presence throughout the U.S. As I mentioned before, that digital experience and local branch allows partners to interact with us on an as-needed basis when they need us. Our sales team allows us to interact with them in a highly customized way around things that the e-commerce experience or the branch experience may not be optimized for around the relationship. Especially around things like our control platform, our OvrC support, or we have a group of technical resources and sales engineers where Jim's getting a lot of airtime today, but you know called me earlier this year around a project that was just unlike he had ever seen. We deployed our sales engineering team to help make sure we could deliver with high confidence and high success around a completely automated solution for his customer. Those are the types of resources that are critical for the success, especially around the more complicated projects. These help create really strong relationships with the team in places where we can help their business be more successful. John touched on it. I will as well. I think the final foundation for us is around the software support and services. We have had a reputation forever that when you call us and you need us, we're gonna pick up the phone, we're gonna pick it up fast, we're gonna have a very capable support person online with integrator-friendly policies to help you, whether if you had a product die in the field and you need a swap out before we figure out what happened, we're gonna get you that product so that you can close the job, make sure you get paid for completing the job, and we can help you be successful through that project life cycle. I think, you know, as you see it in terms of our Net Promoter Scores, we survey every partner who calls our partner and technical support lines, manage those numbers on a weekly basis. We look at our partner success metrics on a monthly basis as an entire leadership team to make sure we continue to trend around the partner support expectations that we have for ourselves, not just that they have for us. You see, as John said, we're in the 80s and 90s in terms of our typical Net Promoter Score after those call resolutions. If you're a partner in the industry and you buy a product, and you know out of as many jobs as you do in a given year that some portion will have some problem after the install, after it's all complete, a big part of our value proposition that our sales force brings out every day is the fact that if one of those products is ours, we'll be with you there every step of the way to make sure it gets resolved. I'm gonna touch on it very lightly here because it'll be part of the product section, but I can't overstate around services like Parasol, which, as John said, our integrators wanna go home at night and have dinner with their families, not take the support calls when their end customers have problems. Parasol allows them to provide 24/7 support, with a highly professional white-labeled solution that they wouldn't be able to provide themselves. Right? OvrC allows them feature functionality to monitor, manage, and troubleshoot a site without ever rolling a truck, which is better for the integrator, and it's better for the end customer who just wants the problem solved. They don't want a technician in their home. Our system design services, as we talk about complex solutions or just making sure a networking setup will support the level of connected devices in a home, has been critical along the way. I think for us, the industry is full of companies trying to create great products, and I think our product team has put the best products out in the market for our integrators to use. I think we've always taken the approach that if you don't support those products after the fact, if your go-to-market doesn't support the partner through the job life cycle in a way that makes them more successful for working with you rather than less, it's an incomplete solution no matter how good your products are. I think as you've seen with our e-commerce capabilities, our local branches and our sales team, we're there to support the partner. We're really excited about the future, and I think we've got a lot of runway for growth along the way. Let me pause there and see what questions we have from the audience. If everyone could state their name and firm too before asking, that'd be great. Kevin Tracy from Opal Asset Management. Just really following up on an earlier question on the wallet share. You've made a good case why Snap One can kinda be a one-stop shop. Against that, the 13% wallet share of your home technology customer seems pretty low. Can you dive into that a bit more? I'm specifically on the distribution centers. You mentioned earlier that a reason people don't buy from you is because you don't have that same-day capability. In those markets, you have the distribution centers. What have you seen your wallet share there be? You talked about some integrators buy direct from OEMs. As you survey your customers, what percentage of that wallet is direct to OEMs? I guess if there's another missing piece on that wallet share that you think you can go after, can you talk about that? Yeah. Great question. That's a big question. Let me see if I can tackle all the pieces of it and you keep me honest where I might have missed. I think the wallet share component has a lot of pieces of it. I think first is one of the major ways we've grown wallet share over the years is to build products in more of the categories that where integrators do business. John talked about there are 50 categories where an integrator needs to buy. You know, we started with 3 of those in the early days of the business, and over time, we've added categories that have allowed us to tap into more of their addressable market. As you hear about the R&D spend we have, a lot of that is not all. Just like not all of our partners are in the same life cycle of their business with us, not all of our categories are in the same life cycle of where we are in terms of maturity. As we launch a new category, that's a consistent growth driver for us, where there's nothing better as a salesperson to go sell than a new category to somebody who's really happy with all the other stuff they buy from you. Category adoption is a big piece of that. There are still significant places where we don't play across the entire U.S. We have some products, like indoor TVs would be one example, are needed on every job. They're only available for us at our local distribution sites right now. If you're a partner in a non-local market, there's a meaningful component of their spend that's not available for us to get today, right? John touched on the third, and you touched on it, which is same-day availability. You put up the TV, and the customer says, "Man, you were right. I really wanted the bigger one." Right? That's not a shipping moment in terms of finishing the job. I think those same-day availability moments are one of the key focuses of our local efforts. I think the industry has just grown up around being highly fragmented. As you hear the Snap value proposition, the Snap One value proposition around being able to buy everything from us, the roots of the industry were around having a different provider in every different category. As we work with partners around how they develop their business, you know, we have to win in many cases every. They don't make a decision just to jump on board with Snap One across all of those. You know, we have to talk to them about our control platform, and we have to talk to them about our speaker lineup. You know, there's a category adoption plan that I think we've done a tremendous job of accelerating through programs like our loyalty and rewards. But if you're a salesperson out in the field, you might have a very loyal partner who buys almost everything from us, and you've never been able to get their speaker business, right? Because one of ten reasons they haven't moved it. Share of wallet is a really complicated thing in our business. We do a tremendous amount along the life cycle. If you experience the life cycle as a partner, like when your application is approved as a professional installer, we have somebody call you multiple times just to walk you through all the things we do as an introduction to Snap One as an example. We spend the lifetime of that account trying to get them to try different things and adopt along the way. I don't have statistics on the specific question around kind of what percentage of the market is direct. I just don't know that offhand. Did I capture your question? Wallet share, when you have It is. I think when you stack the three components, there'll be a slide later that I'll let Mike speak to. If you think about control, OvrC, and local as the three components, any one of those adds significantly to how much you spend with us, you know, full stop. Then as you stack those, what we see is that accelerated growth because those are partners who are seeing the benefits of scale, of saying, "Now I've got one throat to choke, you know, I've got one partner around my procurement, my, you know, my R&D, my support calls," everything can be done in one place, and we see disproportionate spend as you stack the three on top of each other. You'll see some very specific stats around that in a bit. Ryan Merkel. Yeah. Hey, John Heyman, it's Ryan Merkel from William Blair. I had a question on page 21 where you're profiling your best integrators. If I'm reading this right, is it less than 10% have Control4 certification, are using OvrC, and are using omni-channel? I'd be surprised if that's the case, but if that's true, if that is true, how are you gonna increase that number and where should it be? Hey, John, just real quick. If anybody wants to see a page, I think it's 46. Forty-five, I'm sorry. We'll get to it later, but I think this question's coming up a lot, so I'll flip to that and take a look and we'll look at that one later. Yeah. I think we'll support the number with data later, so let me defer that part. I think part of your question is, like, is that really right? It is, because I think we'll have very good partners adopt components of our solution but not adopt all three. That's our goal, especially that last tail of the go-to-market presence around sales is around. Like, if you naturally as a partner, you might be naturally service-oriented and see OvrC as the perfect solution, or you might have been a long-time Control4 partner, because of the way you've oriented your business. I think where we... Our differentiated sales is around how we can go find kind of what's the objective around the entire product ecosystem, that will allow kind of disproportionate our ability to affect that job site in a disproportionate way by adopting all the things we do. It's amazing to us. As much as we feel like we're a veteran in the home technology space, though, like very specifically to answer your question, when we go open up a local site, we still find new integrators that have never done business with us. They have been 100% distribution-focused for the life of the business. These aren't new integrators. They might have been buying from distributors for 10 years. Our ability to continue to attract new integrators to the business, despite our market share now, is pretty significant as we roll out those new branches. Chris Snyder, UBS. I wanted to talk about new integrators. You know, so say, like, I open up a Chris Snyder Integration or a professional integrator in New Jersey. Mm-hmm. How does the company know that? Is there, like, an education process that's needed, or is it that no, you know, we're so big in the market that they know and they come to us? Then the second part of the new integrator question is, you know, does the company think it. Do you have some responsibility of investing or do you deem this a worthwhile investment to drive the integrator count higher? Do you think that's a worthwhile use of capital? Or is it the answer is, "Hey, we're not always gonna be at 2% unemployment, you know, eventually, you know, people. There's gonna be labor slack, and this is a growth market, so, bodies or headcount will go there." Thank you. Yeah. I think the first question is what's the level of awareness if I'm a new integrator in the market? I think in that home technology space, our awareness is very high, because we've been an established veteran. In places like commercial and security, we're doing a lot to gain brand recognition, and that's the traditional, you know, meeting partners at trade shows. We do a lot of direct marketing to get you to try especially our connected products like OvrC and put it in a job site. You know, it's in the local branches when we launch a new product, we'll just put it on the counter for somebody to try in a job site, and we get a lot of adoption because people find our products are just better for a lot of use cases. I think it depends a bit on our market, and a lot of our marketing engine is around driving awareness and new partners into the funnel to get them to try us for the first time. I think the second component is around education. You specifically meant education around our capabilities? Yeah. You know, our capabilities. The other, second part of my question ties into using this. You know, looking around, you know, do you think there's some responsibility or worthwhile investment to bring new integrators and just make sure that, you know, hey, buyers know there's more integrators in the U.S. than there is today? Yeah. I think on the awareness there is. Like, even if somebody, as I said earlier, even if somebody is buying from you consistently in a category, we find there's a lot of conversation, marketing efforts, training videos. There is a whole go-to-market effort around each category that they might do business with us because each one is an important business decision in terms of what lineup they have. I think that sales process for us, to speak about it that way, never ends, even with a fairly large installer for us. I think in terms of our approach, we've believed in our core market, where, as John said, I don't think that core market is growing. We have invested a lot of R&D around things like OvrC that have enabled that installer to be far more productive than they were 10 years ago, right? They can do more jobs, spend a higher percentage of their time on being able to work on the next job rather than provide services to the last job, right? I think we've supplemented that with significant education to make technicians in the field more productive. I cited our certified network education program earlier. If you think about the upgrade cycle in the home. In 2020, people were using home networks in a way that they had never used them before. Our installers business, if you weren't really tech-savvy around networking, you needed to get tech-savvy really quickly. We had education that helped your technicians do that very, very quickly. You might have one or two technicians on staff who were deploying networks before, now everybody is. How do you get everybody up to speed? We've worked a lot on productivity. I think in terms of bringing technicians into the industry, part of what we're seeing is, I had the wrong slide up, is around commercial and security. Those are technologists going into homes and small businesses from a slightly different angle, but that's all capacity where the product convergence is happening. You know, people are looking for smart home solutions, and whether that's a traditional AV guy or a security guy, like however you define yourself, those experiences are converging. I think as we find others going into the same, addressable market, that's our fastest path to go there. Ketan Mamtora, BMO. John Heyman, can you give us some sense of how the spend per integrator number on the home tech side has grown, let's say, over the last three years or last five years, just to give us some sense of kind of the trajectory there? Yeah. I don't know what I'm okay saying or not saying as part of this. Any guidance from my team in terms of. Yeah. We've disclosed in aggregate across our domestic integrators on an annual basis how that has trended. We introduced that earlier this year. That's not something that we are breaking out specifically for today's conversation. I think what you see is as we add products and as we add go-to-market capabilities, our more established partners continue to grow over time. Every year, if you think about a cohort of partners who start with us and spend their first dollar in a year, we have a very consistent trend over time where that cohort as a whole will grow, you know, over a decade, right? That is offset in terms of spend as we bring in new cohorts who are trying us out for the first time and might spend a few thousand dollars with us in a year, or might make their first purchase in December, and that dilutes it a bit along the way. Let me just make one comment on this profile of our best integrators, okay? 'Cause there have been a number of questions about that. I think John's done a great job of articulating kind of the addressable market and how we triangulate around that. We're a billion-dollar company in a $40 billion market, okay? What guided the vision that has, on this journey we've been on, has been we knew we had to be local. We knew if we didn't have a brick-and-mortar capability that we were missing out on significant spend. We've gone from 0 stores to over 30, and we're marching towards continuing to add to that infrastructure. There are competitors out there that have hundreds of sites. That's a big part of it. The second big part of it that we addressed was when we bought Control4, and we said the industry is too complex. We've got to make their job simpler, so the products are more lovable, the experiences are more lovable. We started internally with OvrC. Six years ago, we had about zero integrators on OvrC. Today, 11,000 or so of our 20,000 integrators use OvrC. So we're about 50% or so penetrated in that market. We think it is the best, and the integrators would say back to us, the best system to monitor the home or the business remotely. Kenny Kim will give a great demonstration of that this afternoon, and you'll get a sense of that product. What I'll say about that product is there were other competing products, including products Control4 had, that we had to, over the past three years, take that functionality and converge it into OvrC so it was usable by all the integrators. Our intent there is to build a standard for the industry, and going from zero to 11,000, there's still integrators left to go, but we're building on that. By the way, when they get on OvrC, they buy our power products, they buy our networking products and other connected products, whether they're from us or others, even third-party products. The third element here has been Control4. When we bought them three years ago, they were in a massive transformation around a product called OS3. When we bought them, it actually wasn't out yet. It's out. We've done a lot of integration work. G. Paul Hess, one of your themes will be evolving from integration to innovation. We've done a lot of integration work, but we're still at about 4,500 or so Control4 dealers across the globe. Our intent is to continuing to merge these products and make them simpler, so these guys over here can do a lot more jobs a lot more profitably. That will attract other integrators. We talk about integrators, but what we really want is more techs. That's what we really need in the field is demand outstrips supply, and we need more techs, and we need to make all the techs more efficient, make it more attractive to people to wanna get into this industry. That's the vision. That's the vision of what we're trying to build against this $40 billion market. I think that means we need a break. Thank you. Well, G. Paul and Graham at 11 A.M. Hello everybody. My name is G. Paul Hess. I'm Snap One's Chief Product Officer, and I'm super excited to be here today. I get the fun part. I get to talk about product. Even more fun than that, later today, I'm hoping you will all join us. We get to show off that product in the showroom. I'm super excited, looking forward to that. Let me give you just a very quick brief, pardon me, background that'll make sense why I do. I've been in this industry my entire career. I love this industry. I started as an integrator, much like our four partners that have joined us today, and I did that for about 10 years. Believe me, I know they have an incredibly tough job, and we'll talk about that. I had an opportunity to move into the manufacturing side, and I worked in a sales role for another 10 years, and I covered all North America, and I got to meet thousands of integrators and many of which are our partners today over that period. Almost 12 years ago, I had the very fortunate opportunity to move from sales at a competitive, less than competitive company today and now joined SnapAV at the time, Snap One, and lead the product. It's been a great time here at Snap One with the product side. What I wanna talk about today is expanding on, for a smart living experience, that technology becomes seamless. Everything now works together. It's integrated and becomes an ecosystem. That's the path that we are on. With that, there's many trends that are fueling the smart living industry today, and I wanna talk about four of those, and I'm gonna give you quite a few examples to follow on how we separate DIY from DIFM and why this is important. The first trend that we track quite often is the fact. You know, technology continues to evolve. It iterates. It's moving faster and faster. Many times, DIY products, it validates what we do. In fact, our industry's been doing that long before DIY was doing that. DIY is the fact that the Googles, the Amazons, the big tech of the world are out there promoting, talking about technology, helps drive awareness, and you'll hear our partners talk about that today because a lot of end customers will come with questions, and they're seeking these experiences in their home. What we also know is that many of these end customers are seeking even higher level elevated experiences. We have very common to have affluent and discerning customers who wanna bring these technologies together and do something more than what DIY can provide. I'll share some examples here in a following slide. The second trend that I wanted to chat about today is the fact that DIY, as I said, drives not only awareness what's possible, but validates what we do. The third trend, I'm sorry, I want to jump to, was the expectation that all these technologies work well together, and there's a ton of confusion. If you think about all the devices that are out there, we think about the standards and the protocols that are out there, which platforms to use, it creates tons of confusion. With that confusion becomes opportunity. I think John and Jeff both mentioned upgrade path opportunities, 4K to 8K, Wi-Fi 5 to now Wi-Fi 6, and we're even internally talking about future versions of Wi-Fi and how we'll deliver on those. The 3G sunset has been impacting the security channel, as the cellular radios all trade over as well. With all that confusion comes opportunity. Inside of that confusion, you've probably heard about a standard called Matter, and Matter really does matter. Not to have a pun on the words, but Matter does matter. We're a part of the Connectivity Standards Alliance, and we are a part of making that happen, and we're gonna embrace that. What you have to understand is Matter is a communication protocol. It's just a language for devices to talk. It's not a platform, and that's what we are. That's where we deliver that difference. Just because products can now communicate doesn't mean that they create that smart living full experience. We monitor that very closely. The fourth trend that's fueling the smart living evolution today is just the expectation of security and privacy. How many of you have had that experience where maybe you have smartphones in your home or you have smart speakers, and you're having a very random conversation, and not too long after that conversation, in the next couple days, something pops up in one of your streams? Well, that's something that we take very seriously, and we protect the security and privacy of the data. We don't sell that data to third parties, and we partner with a company for a voice experience that also takes that privacy and security very seriously. You'll see it today, Josh.ai. Those are four trends that we see coming together, all driving the smart living evolution, but we're still in the very early days of smart living. There, trust me, there's plenty more technology that we can't even fathom today that's coming on the horizon, and that's what creates super excitement for me and for my team. I mentioned these expectations of elevated experiences, and the difference that we provide is that we are offering professional-grade products, and we're offering those products through professional integrators to deliver those better experiences. I'm gonna give you many examples because it's really important to understand DIY and how that compares to do it for me and to the pro-grade products that we offer. One example is audio. Just think about audio today in the home. In many homes, they're powered by a small, tiny, little smart speaker. It's limited to where you can connect it. It has to have a cord going to an outlet, so it might be on a countertop. It's a 1-inch, 2-inch driver at best. What we deliver in our industry with our partners are speakers that are integrated into the home. They're architectural flush-mounted speakers that are installed in the walls, in the ceilings. They can be 4-, 6-, 8-inch, and they drive a much higher level of sonic fidelity than anything DIY can drive, so a much better experience. That same experience carries outdoors. Outdoor living and outdoor spaces, both residentially and commercial, have become very, very popular, and we deliver very powerful systems where you can hide those speakers into the landscape, incorporate it into the landscape, and bury the subwoofers for immersive sound systems. Let's transition to media spaces. Rather than just a TV, I think John even mentioned the example, a TV mounted to the wall. How about an immersive surround sound system that lets you watch first-run movies in the comfort, convenience, safety, security, privacy of your own home? Many times, the experience is much better even than the local theater. That media experience transitions also over into the commercial world. We talk lots about how our partners will operate in restaurants, sports bars, many types of light commercial small businesses. When's the last time you went to a restaurant or a sports bar and you noticed a TV precariously hanging from the wall? There's wires hanging down behind that TV. There's a cable box crammed in behind that TV. That's DIY. What our products and what our partners deliver, the DIFM, is a system that has a remote equipment rack with all that equipment tucked away nice and neat and delivering a much higher quality experience than what DIY typically delivers. I'm gonna give you two more examples 'cause it's really important. Surveillance is another area that's very popular with DIY. Quite often, we embrace DIY. As I said earlier, we recognize the popularity of DIY. In surveillance, there's an expectation of security and surveillance that our pro-grade products deliver. When you think about DIY, it's often struggles with connectivity. It's usually dependent on Wi-Fi, and that's pretty hard to deliver outside for DIY-based network systems. DIY surveillance is many times fraught with connectivity, bandwidth issues, latency issues. I see my neighbor once a month put out a ladder, climb up the ladder to swap out the battery in his cameras for his home. I've seen other homes with wires dangling that exposes that camera. We deliver cameras that are much higher resolution, have the capability to see in low light, if not only no light, complete darkness. We can deliver color images in those situations, and we can do that with vandal-resistant cameras that are neatly installed in the home without all this exposed wiring. Big difference from what DIY and we offer. The last example I'll leave you with is the ability for what we put together, systems to deliver what we call scenes or routines. You could also call them a mood. DIY typically struggles with delivering on this because we offer interoperability, which I'll speak more to in a moment, that surpasses what DIY offers today, the ability to connect all these systems together. DIY will struggle to deliver these scenes because of interoperability, and it'll also struggle because. Let me back up and tell you what a scene is. A scene is a series of events that's executed either by a voice command, it can be executed by a button press, it can be executed by time of day. In my own home, I'll give you a couple quick examples of how we use these scenes. My family has a button on our touchscreen that's called Entertain, and one button press will preset the entire home for a swim party the kids are having. It'll preset the music. It'll queue up the favorite Pandora playlist. It'll preset the lighting. That lighting varies depending on time of day, if it's night or daytime outside. And it can set back the HVAC, turn on the pool, turn on the hot tub. Next example. We get home, we walk into the home, we enter in our security disarm code into the security system. That triggers a series of events. There's now a pathway into our home, pre-lit, predefined. And again, that's gonna vary depending on time of day. The HVAC's set back, the blinds raise. It might even queue up another favorite playlist from Spotify. And my personal favorite is the good night scene. With one voice command at night, I issue one voice command, and it goes where it locks every single door in my home. My kids typically leave the garage doors open. It closes those garage doors. It closes all the shades. It sets back the HVAC. It turns off all the left-on lights the kids left on upstairs, hidden on the second floor that I don't see. It turns off all the random audio-video pieces. These are things that we can bring together because we deliver that interoperability that typically DIY will struggle with delivering on. In summary, our platforms deliver all these experiences, but that's only half of it. The other half, of course, are our professional integrators, the partners who make all this happen in the home. There's ever more a need for professional integrators in this industry. Just the sheer number of these devices and of these subsystems in the home and all these protocols, it's very confusing, even for the most tech enthusiast and customer for residential and commercial applications. It becomes very overwhelming. There's a tipping point where even that tech enthusiast cannot support the sheer number of devices in the home, and that's where our professional integrators come in, and they're more important than ever and will continue to be so as more and more technology becomes available. Let me focus a little bit more on our product suite and our product portfolio. As you can see from this chart here, this is our ecosystem of all of our products and our platforms, and this also represents kind of the history of the company, how we built the company, and it works outward in, and I'll comment more on that in a moment and why that's important. We first launched infrastructure products, and infrastructure are critical to every single job, residential, commercial projects. Those are the TV mounts. Those are the equipment racks. It's the bulk wire that powers all the connectivity. It's the cables that goes behind them. They aren't the most sexy products, but every project requires them, and that's where we started. With SnapAV, we drove a lot of value, and our integrators asked for more. We stepped in from infrastructure, and we went to the next ring on the inner circle, and we stepped into entertainment. With entertainment products, we delivered speakers. First of all, we focused on passive products with the speaker technology. Again, our model continued to resonate. Our partners asked for more products. With that, we've moved our first step into active products or to amplifiers and video distribution devices as well. The next part of the circle is where things really started to get interesting when we delivered connected products. We brought to market WattBox, which is smart power, intelligent power, a very powerful connected product that fuels OvrC. We'll speak to in a moment. We brought forth Luma surveillance products, and we brought forth Araknis. We had all these things that support the home and the business. What we are missing was right there in the very center was one of the most important pieces, and that's when in 2019 we worked closely with and merged with Control4. Control4 now brought control to bring all this together. When I say control, what I mean by control is that's the smart brains of the home, but it's also the touchscreens, the remote controls. It includes the lighting controls and lighting devices throughout the home as well. That was the glue that brings all this together. Now what's interesting is we built the company from the outside in. Our integrators, and John Heyman mentioned this a moment ago, they actually will align their businesses from the inside out, meaning they will identify themselves very typically with the control platforms that they work with and quite possibly the audio-video platforms they work with. It's very important for us to have that control as the center and be able to bring all this together. End customers do the same. Customers also think of a control system because that's typically what they're interfacing with. It's usually not the TV mounts and the wires that's in the wall. We work on this product portfolio, but we also then expand it from our proprietary products. We call them internally our 1P products. We work to expand that portfolio and complement our products with third-party products. We call those 3P. In any given category, we'll look at a product screen, and we'll bring in products that will complement that portfolio. In some cases, we'll bring in products where we've just decided not to invest R&D dollars. Two quick examples come to mind, AVRs and indoor TVs. Those are areas that, up to today, we've chosen not to invest in R&D development, and that's why we partner with some of the best brands, the biggest names in the industry for those. In summary, with this product portfolio and all these parts and pieces, we can cover virtually any application spanning multiple markets, any budget size, any customer type from our 1P and 3P portfolio. That's one of those things that really makes us unique, and it's a big differentiator from us compared to our competition with this breadth and depth that John mentioned earlier, this product line. Now, let's talk about how all these parts and pieces come together. Our Snap One product platform is a combination of our product suite that I just mentioned, 1P and 3P, proprietary and third-party products, but also includes our remote management tool OvrC, and it includes Control4, our operating system. I'm gonna share a little bit more on each one of those, but it's super critical. This platform is what makes us unique and drives the value that we offer. It not only makes our installers, our integrators, partners' lives much easier because we deliver simpler, easier products to install, but it also brings together all the products for that smart living experience for the end customer. The Control4 operating system piece, that's that core in the center we talked about. Again, it brings all the disparate subsystems in a home or business together. All those different technologies can now be controlled in one app and in one place. We truly deliver on interoperability and integration. That's really important to understand. We have today over 19,000 products that we work with right now today, and those products come from some of the biggest brand names in the world, Sony, Samsung, Yamaha, Denon, Marantz. They also include services, Pandora, Spotify, TIDAL. We have that capability right now today because Control4 knew from the beginning, integration, and as John said, leads to innovation. Integration is what brings all these parts and pieces together. In fact, we have a proprietary protocol. It's a really lightweight protocol that we call SDDP internally, Simple Device Discovery Protocol. That protocol is embedded in 10,000 of those products that I just mentioned. Companies like Sony and Samsung and Denon, they have our protocol built in that drives that interconnectivity with our system and delivers on those combined interoperable experiences. Control is obviously very critical to what we offer. The second piece on there, OvrC, is that remote management tool that allows our integrators, our partners, to have access to all of their customers. In fact, they have access and can see into their entire system and their entire project. With that access, they now have the ability to deliver new firmware and software upgrades. We give that choice to our partners of when they wanna deliver those upgrades. They can go in and do slight modifications or configuration tweaks to deliver a different or better experience. They quite often use it as a support mechanism. The typical, if you've ever watched streaming video and you get that spinning wheel from your Roku device or whatever the device might be, our integrators have the ability to press a single button and reboot that system. We actually give that application out through the integrators to the end customer as well to make that control. The OvrC remote management tool is a place that they have full control over all the products we deliver, but they also have visibility into many of these third-party products and other devices that are connected to the network. That's the third element to our product platform. The last piece is the one that I mentioned earlier, which is that product suite that we talked about. With that product suite comes the 1P, 3P products we talked about. It's super important that not only to focus on the installability and the serviceability, the simplicity of how the products install and configure, but again, how they are experienced by the end customer as we build out that product suite. All right. Okay, let me share some more about our product development team that we have. We have built a world-class product development team. This team, there's a secret sauce that we've delivered, and that I'd say we are the best at. That is the combination of our internal R&D teams combined with joint development manufacturing, combined with contract manufacturing. With that, it makes us very efficient with product development and new product releases. It reduces our R&D risk and sets us up to be asset light as we think about how we manufacture and deliver products. With this product development team, we have $65 million we invest year to date. This year is what we're investing. With that $65 million, that covers three centers of excellence. We've got a couple additional satellite offices, but those centers of excellence are located in Salt Lake City. They're also located in Charlotte and then in Serbia, where we have a large software team. Of the products we offer, we're almost getting close to 4000 proprietary products. We're just over 3800 proprietary products today. That covers 20 different categories of products, and that also covers 17 different brand names. Those are brands that are our brand names that we own for all of those products. On average, we deliver about 300 new products a year through that model that I talked about. We do that through the 80+ different joint development and contract manufacturers that we work closely with. Our breadth and depth of products, I'll say it again, makes us very unique as we look to our competition and creates that moat for us. Thinking of our product team, we have over 335 product development employees. They come from an incredible background. Some of them, like me, have been in the industry for much of their career. Others come from some of the biggest technology names in the world that, many of you would recognize. 150 of those are dedicated software engineers. John mentioned this earlier, the industry talks and gives us accolades for the products we deliver as well. As we think about the CE Pro brand analysis, as John mentioned, there's 36 categories we have an opportunity to participate in. They track many more, including the type of vehicles the integrators drive. There's 36 categories we have an opportunity. We placed in 35 of those 36. As John also pointed out, many times that was not only first, second and third, but even third and fourth place positions as well, with 48 total mentions. That's more than 5 times the nearest competitor. This is direct from the industry's leading top integrators. In categories like remote managed services, we offer OvrC, Access Networks, Pakedge, Parasol. We swept the entire category. Networking as well, Araknis, Pakedge, Access Networks, and then Control4 continues to be the leader in the control space. We worked hard to bring together the two best companies in the industry when we merged with Control4 in 2019, and our vision is very clear. As John mentioned, since our merger, we've delivered over 12 updates to our Control4 OS, our Control4 operating system. Those 12 updates have launched some powerful new features and capabilities, not only for our integrators to make their lives easier on the install, but of course for the end customers to experience. Since that merger, we've also brought together legacy platforms in OvrC and invested in OvrC to have a even more reliable, more capable remote management platform system that is built to scale as we continue to add on projects. Just the years since our merger, hundreds of new products we've brought to market. In just the last 3, 4 months, incredible new product lines. We'll call them transformational new product lines. The CORE Series, which are our new flagship CORE controllers we released just in the last couple of months. We've also released new updates to Control4 OS 3, which enables first time ever for us to be able to control tunable white lighting and RGB LED lighting. We launched our very first smart TV in the outdoor space, so SunBrite Veranda 3. Inside of our Triad brand, which is our flagship, premier distinguished audio brand, we launched an entire new level of architectural speakers, those very speakers I mentioned earlier today, and we named those PDX for the local airport code where Triad was founded. We have a very consistent path of bringing together new products, and I think it speaks to one of the questions that was asked earlier is how we acquire more customers who share a wallet in a category. There's categories where we've had to bring forward, improvements on our technologies and all of these just demonstrate that as well. In addition to new products, M&A has been a big, area for our growth as well. Last year, we acquired Access Networks. It is the premier networking platform, networking products, especially for either projects that are in high, density areas like Manhattan, where there's lots of radio signals flying around, and also larger scale products. In addition to the product, we also have the ability to then offer support to the integrator. It's a managed service that allows us to offer, continued support for that project and help design and deploy and then monitor and support that project out to effect. ClareOne, we just recently completed the acquisition of ClareOne, so that's another entry point for us into that smart living home. It comes by the way of the intrusion panel at a lower price point than what Control4 is, but something we are super excited about. We're only two weeks away from the big show that's coming up for our industry. It's called CEDIA, and I'm gonna go ahead and spoil some of the surprises for anybody who's remoting in, listening to the video. We are launching for the first time ever our most powerful Access Networks Wi-Fi 6 access points. In fact, those go live on our portal today, and so we will be debuting those products at the CEDIA show. We've made huge investments in our surveillance products. We're gonna be debuting a complete new lineup. It's our next generation of surveillance products we call the x20 products, and these products will allow us to deliver on what I said earlier. Being able to see in low light and no light experiences, being able to have vandal resistance, simpler, easier applications. These products include intelligence at the edge. As we talk about AI and ML, we have that capability with those cameras, and we'll be doing more with that in the future. A whole new subcategory of products, yet another way to grow share of wallet. We'll be launching the industry's first and only combination outdoor landscape lighting system and outdoor landscape audio system. I'm super excited about this product. It's really cool stuff. The Episode Radiance is the name that it will go by. In a single wire will now deliver both LED lighting capability for landscape lighting and the audio capability. Like I said, it's revolutionary, something the industry hasn't seen, and we will be the first to deliver. We'll also be expanding in lighting fixtures. For the first time ever, we'll have Control4 branded under the Vibrant brand name lighting fixtures. LED lighting, tunable white lighting and RGB lighting that will be available and will be debuting at the show. One I'm super excited about, we'll have early samples. We're just now wrapping up the deliverables for production, but the Halo remote controls. All right, now we're gonna talk about services, and let me hand it over. Thank you, G. Paul Hess. As a quick introduction, I'm Graham Janicki, VP New Ventures Recurring Revenue. Just as a bit of a side comment, you know, John, it's interesting, when I checked in last night, they actually asked me if I was going to the Fashion Week show. I don't know what that says. Anyway, I'm really excited to talk to you all today about recurring revenue. Before we look forward and talk about why we think we're in this great position. Today, let's take a moment and look at why we are where we are. You've heard various themes of this today, but it's something that I just wanna highlight upfront, which is Snap One is anchored on thinking about delivering for two key stakeholders, our customers and our integrators. We have to make sure that our end customers love the solutions that they are getting, and we also have to make sure that our partners are successful in delivering those solutions. As we stand here today, and we look forward, and we think about software and services, as we think about recurring revenue, we recognize that it's an opportunity to continue to build on that story as the next horizon, as the next transformation, as the next revolution of where we can go. We know that today our end customers want better experiences out of what is being delivered to their homes. We know that they want more visibility. They want more control. We know that our partners wanna be more profitable. We know that recurring revenue is really exciting for them. We know that they have to have better lifestyles to be able to recruit the right talent to support their businesses. We believe software and services are something that can deliver on these, in the same way that Snap One has historically delivered on these with our product offerings and solutions, in the past. Why are we here today? Eric, you asked a question about differentiation. You asked a question about the moat, and I think that we are very uniquely positioned because of our product foundation, our leadership and our scale to be able to pursue this. You've heard about all of these today in some degree and another, but just to reiterate, when we think about our product foundation, we look at how our operating system enables interaction with the customer and what we can do there. We look at OvrC and how remote management enables our partners and their businesses. We look at 4Sight, which has tested and shown that customers are willing to pay for features on a recurring basis. We look at our investment in Parasol as something that has given us confidence in how we are able to support those customers and support our integrators in that process, our product foundation. Our leadership position has been built over time. We are a known brand. We are a known entity, and with that, we see that in our brand recognition, in the scores. We talked about it both from the product and the service side today. That leadership position didn't occur overnight, but by time and investment as we have built that. We are seen as a thought leader as well. We prove it every year with the integrators, the tens of thousands of integrators who come back and reward us with their business because we have earned that trust, and we continue to earn it year after year after year. That's our leadership position. Then when we think about scale and what we can do in this space, our integrator partners, you saw the statistics earlier, a lot of them are smaller businesses. For them to individually provide these, it wouldn't necessarily make sense. Being backed by a billion-dollar manufacturer, we can do things that they can't, that can make their business better, that can make their customer experiences better, and that's why we stand here today, so excited about why are we here? Why are we thinking about this? Why are we positioned to be able to go after software and services, and why are we so excited about this? As I've noted, this is a journey that has taken 15 years, and it's piece by piece that we have built it, we have launched it, we have acquired it, and we have brought that together. G. Paul Hess talked a lot about integration over the last few years. It is also about innovation going forward and how we can leverage those assets. We think about the elements that enable that. We think about interoperability, the operating system, cloud management, our backend integration. All of these different assets position us, which is why we are so excited about what we have in our sights, what we are thinking about in the future, and what we aim to bring to market in 2023, 2024, 2025, and beyond that as well. We think that we are positioned and at the precipice at really transforming and revolutionizing this industry, and we believe that we are in a position that only we could really be able to do that because of the journey that we have been on. With that being said, I'm gonna ask G. Paul Hess to come back on stage, and I think we've got an opportunity to do some Q&A. All right. Thanks for taking the question. Can you just talk about the path towards kinda monetization of some of these app services that you're providing? They're very compelling. Are you still kind of in adoption mode, expand, or is there a path towards monetization soon? Yeah. I would say, like, similar with any other product launch, we have been on a journey where we have both been identifying where we wanna go first and why. Let's understand the value proposition that we can go to market with in the most logical way to be successful. We've spent a lot of time framing that up. We're in a stage right now where we're working with partners. We're compiling a partner advisory board to test and refine so that we're co-creating this, so that when we go to market, we recognize that our partner integrators are doing this hand in hand with us. As we build confidence with that, as we go through beta, we will look to bring that to market at the appropriate time and milestones as well. We're going through that process and have conviction in the path that lays ahead of us. Yeah, Keith Hughes from Truist. Kind of building on that question. As we move forward, looking to monetize this, which of the programs or maybe just general services, where is the biggest opportunity to, you know, move this up as a percentage of company revenue? I don't know if we are in a position to specify that answer right now other than to say we believe that products for end customers are a large opportunity for us. We could add, this industry has been seeking a way for partners. Integrators have been looking for ways for many, many years to monetize what they do, and we're gonna help the industry deliver on that. The inhibiting factor, I think you said this before, is the inhibiting factor just making sure that you have the right technology to go charge for? Is that? Or is it a cultural issue in the industry that you have to overcome? I think that as we think about the opportunity and how our channel partners are established, building the recurring revenue business is a new frontier in working with them to deliver on that. So that's one component of it. The other component is making sure that we have the right integration and the right offering that we are bringing to market that is seen as having the right value proposition. I think that we see it with things with our services and our support and what we have done for our partners, also recognizing that there's value in extending that to the end customer as well. I think that it's recognizing the unique position that we're in and the combination of all the assets that we've built over time that we think we're poised to be able to deliver on that in the future. Okay. If we were to think about, like, the ecosystem as being, you know, the software piece but also the control piece, and obviously there's a, you know, some intersection between the two, can you talk about competition within that ecosystem, whether it's, you know, existing players, are they providing this full suite of offerings? Are they just kind of competing, you know, more on the control side? And then also, you know, any thoughts or risk around new entrants coming in, again, more focused on the, you know, on the software control side of the business. And is this an area where big tech could potentially target? Any thoughts on that? Because I think it's pretty clear the value being provided and the opportunity, which then, you know, I feel like then makes me think, okay, the next step, well, where's the competition? Like, why are we confident that Snap One will realize this opportunity? Thank you. I'm Chris Snyder, UBS. Sorry, I keep forgetting. Thanks, Chris. This takes me back to the slide that we talked about interoperability and, you know, I go back to the many years ago when Control4 was founded prior to even our merger. Control4 saw the very clear opportunity that there was a challenging industry when our integrators go into a home or a business and getting all these devices. Control4 really leaned into that space, and they were the first to put together not only an open software platform, the Control4 operating system is generally, we generally consider that a fairly open, because with that platform, we deliver APIs and SDKs that allow partners to write drivers to be able to connect to our platform. That's something that's really unique. Most of our competitors in the traditional space, in the traditional DIY, DIFM space, don't make that open, and they don't have near the number of integrations or drivers that we talked about when I mentioned the 19,000 we have today and 10,000 embedded with our SDDP. That is the differentiator. There's been many, many years and many, many dollars invested over time to get to that point. That's not something you can just easily go out and create tomorrow. As we talked about, I mentioned Matter. Of course, Matter is something that I mentioned we are a part of. We're part of the group that is setting the standards for Matter. It's been delayed a couple times. We're anxious to see it. There are things about Matter that will make our life easier, but the most important part is, as I said, that's just a communication language. That's all that is. It's devices kinda being able to communicate to one another. It's up to us to deliver that platform to what to do with those devices, and that's really the big differentiator. Even with big tech delivering on Matter and those devices in a small, John used the example, two-bedroom Manhattan space where I might have a single thermostat and some Sonos devices, that's gonna work really well. For the type of homes that our partners are invested in, the type of businesses they're working in, that scale, that tipping point really happens pretty quickly when all those devices start to stack up. It's gonna be many years. We can speak to it from experience with Control4 for Matter to evolve and even begin to deliver on what its full potential is. I'm sorry, I don't think I got your second question, if you wanna restate the second. I think I already. You think? Okay. Yeah, yeah. Great. Thank you. Perfect. Hey, Erik Woodring, Morgan Stanley. I realize this might not necessarily be a fair question to ask the product guys, but I'm gonna ask you anyway, and that is, do you think you need or Snap One needs to kind of build a better brand name with customers? Not integrators, but customers. You know, I guess my question is, do they know what is tied to Snap One, what might not be? Again, might be an unfair question, but just curious how you'd answer that. Yeah, no, I think we can touch on it. We recognize the Snap One brand name is not a brand name that the average end customer would recognize. They don't shop for that brand. But within our portfolio, those brands that I mentioned, the ones that are infinity brands for our integrators, our partners, like Control4 and some of the audio brands we have like Triad, those start to have some customer recognition, particularly Control4 because of the builder industry and the upscale home market. But clearly, there's an opportunity for us to invest. We've had many discussions internally about how we think about marketing in the future. I don't wanna speak for John Heyman and his team, but there's definitely opportunities for us. We're also focused on making sure we deliver on the experience from a product standpoint and delivering for our partners before we go drive even more resourcing into the industry. Eric, I've always believed that creating a brand when you can't execute against that brand you're trying to create becomes hollow at some point. All our focus has been on actually executing against the experience that then would deserve investment in a brand. Like, this industry needs that. We're not there yet because we're still on the product journey, but I don't think it's a decade away. I think it's closer than that, where we will be creating more of a brand out there. Adam Tindle, Raymond James. I would just be curious. This slide right here is five-year increments, right? We're up to today, but if I was to maybe extend this out to the next five years, right? We're looking at this slide five years from now, could you maybe walk us through the key aspects to the journey? I skipped ahead in the deck, so I know some of the financial aspects from recurring revenue that you're ultimately gonna be targeting. I'd be curious to hear from a product perspective, if you were to kinda outline the next five years on this slide for investors, what would it look like? From a recurring revenue perspective, I think that that's something that we are working on and not yet prepared to kind of lay out that specific roadmap. We are very excited in the future to be able to share that as we are ready to be closer to it. I'll add in from a hardware and software behind all that, beyond five years is really tough to see in the technology industry. Really tough. 'Cause again, I mentioned earlier, but the constant change in iteration and acceleration of products. Our roadmaps are typically three year-ish and sometimes a little bit more than that. We're already today inside of our company talking about the next new technology standards that are coming to market in the future and how we will deliver on those. Beyond five years from a technology standpoint, gets really tough to address on a hardware software side. To just say, there is a litany of things that are on the list, and we wanna be very mindful and thoughtful about how we sequence and go after them in the most effective and efficient manners. All right. I'm used to answering investor questions, and I think our team is being a bit overly guarded. You guys have elected to spend your day with us, so I'm gonna get a little bit more specific, and then all of you guys can get up and be ready to tackle me and take the microphone away. Very few consumers pay for the software and service that these guys in connection with us deliver on a daily basis. The industry is becoming more software intensive, not less. That's one point. Number two, our partners, very few of them have the scale inside their own business to provide the service that our customers need after hours. That's why we invested in Parasol a couple of years ago. That's a service today that we provide to the integrators to sell to the homeowner directly. We have thousands of homeowners paying for that service today. We know what it takes to support a homeowner. It's good for the integrator 'cause they don't have to have their own techs manning a phone 24 hours a day, seven days a week. That's very hard when you have five people in your business. Where the world is gonna migrate to over the next five years is consumers will pay a very moderate fee for the software that we provide in the system. I would point to 4Sight, where today we have, you know, 20%-25% of the Control4 installs, which is around 100,000 homeowners that pay on an annual basis for software capabilities in the system. That has been elective by the end customer, and it's been elective by the integration partner to sell it to the customer. They don't have to do it. What we're trying to build is a software model that's a very moderate fee to the homeowner that the integrator participates in for their own health. On top of that, an elective service model that the integrator can also make money on without having to hire people, but also provide the service that the discerning customer that we serve wants. If you look at our business and you say we have somewhere between 400,000-500,000 installs of homes with OvrC and another 400,000-500,000 installs with Control4, and that's growing every year. Adam, to your point, you can extrapolate out what that looks like 5 years out or 10 years out at some sort of moderate fee. Today, we charge $129 a year for 4Sight. Is that correct? $125. I always increase the number by a little bit. But we charge that, and again, that's elective. That to me, that's a moderate fee. What Graham is doing an amazing job of is working with about 30 of our partners right now on what this model looks like and how we can launch it. I would ask all of you to think out 5 years about what the model can look like versus what it looks like next quarter or next year. Hopefully, that gives you some more specifics. I'll say one other thing since I've had a history of introducing SaaS models. These models are very dependent on customer acquisition cost. Our customer acquisition cost is 0 because we already have the customer. The integrators acquisition cost is 0 because they already have the customer. If you look at kind of the ASP and so forth we can charge, it would be very profitable to us, which is why we can create a very profitable stream for our integrator partners over a 5-year span. The other thing is, when you look at SaaS models, you look at churn. This is the system somebody uses to manage their home or business. We're not gonna have a lot of churn with this product. That was great. Thanks. It's Keith Hughes from Truist. The few customers you have now, I know it's small, paying that fee. What service do they get? Why do they buy it? What is the- Yeah. Today, the 4Sight service is something that we are talking about how that would look in the future with what Graham's mentioning. Very specifically, 4Sight is for the Control4 end customer who wants to be able to access their entire system once they're away from their home or their business. That's one. There are many other features that we enable and we turn on with 4Sight, but being off the network that system is on is one of the driving factors. There are additional things like the ability to create your own scenes with when then. We have integration. Profile backups. I'm sorry? Profile backups, When Then, remote access Chime capabilities, which is our doorbell, video storage. Voice activation. Is there a service aspect when they have a problem? There is not. No. There's not a service or monitoring, right? No, no monitoring. That's correct. You can speak to Parasol. 4Sight is the connection to the system. Okay. We have the Parasol model, which is for the partner to get support with the end customer. Our investment in Parasol is about focusing on the support aspect of the equation. That's correct. Okay. Thank you. That stuff on customer cost to get the customer in is a big deal. That's ADT's problem. Anyway, thank you. All right. I think we have box lunches available, and we'll be back at 12:15 P.M. for the integrator panel. All right. Good afternoon, everyone. For those of you in the room, obviously continue to eat, and whatnot, but we figured this would be a great opportunity for us to host a panel of integrators. My name is Ryan Marsh. I lead our global sales efforts at Snap One. I've had an opportunity over the past several years here to get under the hood in our organization and learn. My background was primarily in driving accelerating growth in private equity-backed companies across a bunch of different industries. One of the things that I reflect on a lot is, what's our special sauce? What's making things different here at Snap One and providing outsized returns? I think that unequivocally, there's several, but the number one is what you see in front of you right now, which is our commitment to put our partners at the center of everything we do. Obviously, we're putting them on stage in the middle of our Analyst Day for a reason, because they are an integral part of every decision that's made. This notion that John started the morning with us being for integrators, by integrators, it's absolutely true. We figured this would be a great opportunity for us to ask them some questions in front of you, and you'd get to learn a lot more about what it's like to be an integrator. With that, I'll throw it to G. Paul, and we'll Yeah, we're gonna start with a easy question for you guys. Let's just do very short, brief. We've got the business kinda highlights here on the graphic behind us. Quick introduction, how you got in the business. Sure. Jim Shapiro, Audio Video Intelligence. I handle basically Massachusetts, but we're based right out south of Boston. We've been in the business. I know, right, I'm looking at this, I'm old, 27 years, and we've been with a relationship with Snap 16 years. So we've been doing this for a long time. I actually got started back, you know. I mean, home theater was always a love for me. Technology was always a love for me. We started in car audio, and we started working for, you know, athletes and people buying those, you know, really fancy cars back in the very beginning. Our vendors and our manufacturers wanted us to get into the home theater space. Luckily, you know, they always say that, you know, timing is everything. I got ahead of the curve on the flat-screen television. I went from it was a big, big television to that flat screen. The minute that flat screen came out, I mean, those panels at the time were $15,000 each. If I knew how much the profit margin was then, I would have buried my money. Yeah. We started doing all of these high-end financial firms, Bloomberg terminals and trading floors with all of these flat-screen TVs. We started from that, you know, the people, the CEOs and people that handle these high-end financial firms wanted this technology and this product in their homes. It was just an easy migration right into custom technology, custom home theater. Okay. Good afternoon, everybody. My name is Robert Eng, Tech Life Media Systems. We're based out in Long Island. We do a lot of work in the North Shore of Long Island area, Hamptons area, New York City, Metro New York. I've been in the business for about 20 years. Came from an IT background. Was developing software. I worked for a company where we worked with vehicle manufacturers and as part of their vehicle ordering system. That company moved to New Jersey. Sorry for all you New Jerseyans, but I had no interest in moving to New Jersey. I opted to start my own business. Looked around for what I was truly interested in. Leafing through Entrepreneur Magazine, found top ten businesses starting. This is going back in the late 1990s, early 2000s. One of the top ten businesses was audio/video custom installation. I said, "Well, you know, I do that already. I do that for my friends, I do it for my family and everything like that, so let me start looking into this." Made some contacts, got into the business. Was a one-man show. I was out there doing it, you know, pulling wire, installing, programming, doing the whole nine yards. Then, you know, obviously fast-forward 20 years later, we've grown the business. We're about $1.4-$1.5 million a year and about six employees. A showroom out in Huntington, Long Island, for those of you that know that area, and happy to be here. Thanks for being here. David. I'm David Mills with Krause HiTech Home Automation. We're based in New York City. We cover New York Metro, the Hamptons, and about two years ago, we opened up a branch in South Florida, where many of our customers moved to during COVID. It's interesting. I started in a way I thought most people in this industry did. I was working in a stereo store in the 1980s, and people were walking out with these brown boxes, and they really didn't know what to do with it, and it was such a need, a niche need. I was fortunate to work in a store that had a lot of celebrities and very affluent people, so I developed a really advanced business at night. I would sell during the day, and every night I had an appointment to go to, and this was going on for quite a while. I just saw that as equipment got more and more complicated, people could bring it home, but they were using 10% of its capabilities. I left the store, and we started a small business in 1987 and you know, this was when it was volume controls in the wall and a couple of speakers and cassette decks and turntables, it was all arcane. You know, our task at that time was to find the technology that could serve the clients 'cause there was no ecosystem. There was no understanding of what in-home entertainment or control was. We always found problems, whether it was, you know, controlling a projector and sequencing the way equipment would come on and operate, or just as simple as controlling lighting. We started that business. That business had its life. I left my partner for other reasons, got involved with a few other industries. I came back to this industry in 2005, 2006, just about when Control4 was starting, and that search for these devices and these solutions was now much better. There were a lot of people playing to that. We got involved in the product. At that point, Control4 was very new, didn't really work very well, but conceptually we were believers and we were all in. We built our business in New York, having the affluent clientele, is that we took a product that at that time was being marketed as everyday automation 'cause they were trying to get it into every home, and we built a luxury business out of that, where we used the same components to get the same end purpose, but we were working in very fine homes for affluent people, and we kinda elevated the product. Because of that, our service had to be elevated as well because these people have really high expectations. What's interesting is we were always looking for power controllers or network eyeballs, and there were a couple of products that came out before OvrC, and I remember the light bulb moment when I met with Kenny Kim at the first show where they unveiled OvrC, and they were like, "This is it." We're proud to be one of the largest adopters in the platform. We have thousands of their products. Every single one of our customer has them. My argument always is, I don't sell that for the customer, I sell that for me because it makes my business so much easier. You know, we have clients, we'll call them and tell them something is not operating before they understand it's not operating. They're like, "What do you mean my music isn't working or half my house's network is down?" You know, we're very happy with seeing the growth of Snap and bringing Control4 in, and just giving us the tools we need to make happy customers. David, thanks for your partnership. Kevin. Kevin Valerie from Untangled in Wilton, Connecticut. I came from corporate IT infrastructure of support services and background. I actually was in private equity up until 2010. I was the IT director for a firm based out of New York, and I would travel to each of the global offices, and it was inevitably the same story everywhere I went. I would have one of the IPs come to me and say, "Can you come by my house and help me with whatever," whether it was network or audio or video. What I found was that it was the same story globally. It didn't matter where I was. It was everybody had an IT person, everybody had an AV person, everybody had an electrician. They had a contractor, but there was never proper communications between the trades when it came down to the technology aspect of things. The name Untangled actually came from the idea of communication among the trades and understanding the different languages that needed to be spoken. I brought that concept back, and in 2010, had the opportunity to kinda jump ship from where I was instead of picking up and moving to London. Apologies, not Jersey, but London. Definitely wasn't interested in moving to London at that stage. I took the opportunity to start my business up, and it was originally more about working with people on understanding what they were investing in in their homes. Whether it was their ISP and whether or not they're paying too much for internet services, or do I need to have all of these bundled services that are coming into the house? Is my contractor gonna speak the same language as the guy that's gonna come in and hang the TV on the wall, or is the network going to be able to support all of the next level things that were happening within, especially from, audio and video streaming at that point in time? That evolved into kind of building the services within the house because at that stage I was still outsourcing those services to other companies. I said, "You know what? Let me take care of this on my own." I started to bring in the AV side of things, and then I started to bring in the infrastructure support service side of things, and then the lighting and the electrical. What it turned into was an evolved model where I could actually support all of the individual needs of each of the clients, but I could also work with whatever trades they already had. We have in-house IT support services. We have an in-house AV operations manager, and we have all of the services associated with high and low voltage electrical. We got to a point where anytime somebody called us and said, "I just need," whether it was a TV hung on the wall or a new network, we could get into that house and get to meet those people and get to understand about what it was that they were trying to accomplish. Especially now with the building market the way it is in Connecticut, people don't know what they don't know. When you hear about a lot of the DIY technologies and what these guys have been talking about today, that level of technology that you buy it off the shelf at Best Buy or Walmart or Home Depot, bring it home, plug it in, and then figure out what it doesn't do or what is it missing or what more capability am I not seeing from these pieces of equipment I'm bringing into my house, it gives us a lot more to talk about when we get to sit down with people. It really is a customized business, and it's a different type of business model from anything that you're going to walk into a Best Buy and pick up and be able to bring home and do. It's become every single household we walk into one form or another that we've automated. It's an exciting time, and we get to play with new toys every day, so. Awesome. I'm no longer worried about you guys not opening up in front of this crowd. Sorry. Let's peel back and we'll. I think there's a couple themes that we've heard this morning. I mean, one of them, and you guys are best positioned to opine on them. One of them is around this notion that integrators, partners of ours are in very high demand right now. The complexity of your business continues to increase. Perhaps you guys could articulate, you know, what a day in the life. Jim Shapiro, we'll start with you a little bit. Like, what's a day in the life? Like, you wake up in the morning. Take us through a little bit about not necessarily the play-by-play, but like thematically, what are some of the things that you're challenged with and that your team's challenged with and how you think about that over the course of time? Sure. How much time do we have? I'm worried about giving you a day in the life question, Jim. It is Fashion Week. All right. No, you know, I started thinking about this earlier because we were kind of discussing this topic. You know, now, you know, for the amount of people I have, it's very different from when we started. You can hear from all of the introductions, all of us, that we love what we do. We're only in this because of the fact that we love what we do. You know, we like seeing, you know, magic happens and you know, making things, you know, work for our clients. It's pretty incredible the things that we can actually make happen for our clients in their homes and businesses. On a daily basis, you know, with my staff, you know, we're actually probably touching 10-15 jobs a day. We're going out, and, you know, we, you know, my staff is starting, you know, trucks are rolling by 7:00 A.M. on the road. They pack the trucks the night before from our warehouse. We're going out. We have six different teams that go out to start installing. Some of them are, you know, pre-wiring a new project. Some of them are doing, you know, the mid-installation. Some of them are doing, you know, final programming and commissioning. Depending upon which teams we have, towards the end of that day, there's always, you know, calls that come in from customers either getting new cable services or, you know, might have some service things. Those trucks that are out until 3:00 P.M. now return to our main, you know, corporate offices and are actually doing all remote management. That day, you know, even before that, we'll know if we have to make an on-site visit. We have something within our, you know, our services that we get back to our clients within 24 hours if they have any questions or if there's something that needs service. The biggest thing is that we have a remote terminal with other employees that are inside the office that are just monitoring all of our clients with OvrC and Parasol. We you know now with these products like our truck rolls have decreased by almost 80%. You know we're able to log in and see what's wrong and reset systems. Now if we even have to go on-site we know exactly what to bring and we know exactly what we have to do rather than just having to go there and diagnose the situation. If you could think about it you know it's a very fast-paced you know we're installing we're problem-solving. Then, you know, to keep our employees and our teams up to date, we also have to find time for education. This technology that we're working with is ever-changing. It's so fast, and we have to find time for, you know, for training on new product and if it's remote training or if it's, you know, or if it's a representative from staff coming in and communicating with our team. So that has to be. Then, you know, we'll have that separately with sales and then separately with the installers and then, you know, continue with the calls coming in. I was just explaining to all these guys that, you know, we have a different couple of facets of the way that, you know, our requests come in. We use different types of software that turns our regular phone line into a digitized line where customers can send texts or service, and then we can assign to different people. You know, we're even looking at a big geomap. We're looking at where all of our teams are around the state on this massive screen where everybody is geographically located for in case somebody does need service, who's gonna be the quickest and where all of our teams are. Our day-to-day is a fast-paced, moving environment. It's challenging, but we love it. It's a lot of fun. I'm gonna shift gears a little bit to expand on the complex businesses that you guys manage. I spoke quite a bit about the DIY versus DIFM, Do It For Me. Kevin, you mentioned it as well when you were doing kind of an opening on the expectations of the customer. Maybe David, if you could talk about the benefits of pro DIFM that you might speak with your end customers about. Sure. When they're looking for technology. The biggest difference between app-based and what I call platform-based or the Control4 platform is, you know, you can have seven different features in your home, and you're swiping between apps to change a volume level, to change a lighting level, to look at a camera, but none of those apps know what the other one is doing. What we always like to say is the home always knows whether it's occupied or not, and it knows the astronomical time of day. A lot of implementation that we can do can be based on that. You know, if you like to raise your shades at 3:00 P.M. because the sun catches it right or, more accurately, 1 hour and 20 minutes before sundown because that time will change. Well, if you're not home, there's no reason to raise the shade. It's just a simple checkbox that- Certain events should only happen when other conditions are met. Something we like to do is really simple, when you walk in the bathroom during the day and you hit the light switch or the motion sensor triggers the light switch, it'll go on to a comfortable day brightness. If you go in at two in the morning and the same event happens, either you press a button or a motion sensor sees you, it goes on to a comfortable level at night, 10%, 15%, and maybe a little color. However, what if I'm entertaining, and what if my house is rocking at 2 A.M.? I not just look at the time, I look at the house and see how many lights are on. Is there any entertainment playing? Maybe this is not one of those times to lower that lighting scene for a nighttime scene. Once everything's connected and you have this platform that can talk, then it's really just up to the imagination of the integrator. We send all of our technicians. Our project managers have small systems at home because that's when it gets invented. Most of my clients when they first get a system, they don't really have a vocabulary of what to ask for. We put some stuff in there, and they're like, "Wow, that's great when that happens. Could we do it this way too?" We develop their vocabulary, and we do something for the first year of ownership of an automation system. We do unlimited programming changes for the first year at no cost. It's very little investment on our part because our clients are not calling us and saying, "Now make it 20%. Now make it 30%." They're calling us if it's something that either bothers them or their imagination thinks that they could do more with that, and it makes a strong connection with our clients. Robert, I wanna draw you in as well. I've actually got two questions for you, but let's start with just a quick follow-up on how you might frame that same question on DIY front. Sure. You know, it kinda echoes a little bit about what David mentions for DIY versus, you know, us doing it for them. You know, I'll add that, you know, I always, when a client has that type of situation, I'll throw a scenario out there for them. I'll say, "Well, you're leaving your house for the day to go to work in the morning. You know, what do you wanna do when you leave your house? You wanna make sure that the lights are off, make sure that my doors are locked, make sure that my thermostats are set appropriately. We wanna make sure all the AV is turned off. You know, we wanna make sure our security alarm system is armed." If you have systems that are do it yourself, like Nest or any of these other manufacturers, you have to go into those apps separately to you know, adjust your thermostats or lock your doors or close your garage or whatever it is. Whereas with the Control4 platform, one simple button press, an away button, a simple button press, away, or even a voice control saying, you know, we mentioned Josh.ai earlier. You know, I could say, "Okay, Josh, I'm leaving." Something as simple as that can trigger a whole series of events to do all those things for you. That's really where the benefit and the convenience and the simplicity of Control4 and Snap One, you know, that type of solution offers to our clients. Robert, while you have the microphone, we're gonna zoom out and go a little bit different direction. Sure. On the next question. What are the top three challenges you face as a small business owner in this industry? Sure. Well, I have a lot more than three, but we all do. I would say that the number one issue for me is skilled workers, right? Skilled installers, finding them, is very difficult. We were having a conversation last night over some dinner, and it seems to be a common theme amongst integration companies. There's not a lot of talent out there, unfortunately. What we have done in the past is we've found people that seem to fit the bill and then let them, you know, introduce them to webinars and online trainings and, you know, local training centers at like, you know, MRI or any of the other partner stores that, you know, offer the training. Sometimes they get it, and sometimes they don't, unfortunately. You know, it's hard to keep them. Another challenge that I have is I have no time. Like, I'm so busy. I may be a little bit different than the rest of the panel up here today. I wear a lot of hats during the day where, you know, I'm doing project management, I'm doing operations, I'm doing customer support, I'm doing sales, I'm doing system design. At nighttime typically is when I can try and, you know, focus on that when it's quiet. It's difficult. It's difficult to manage all of those different hats, right? That is a big challenge for me. You know, my third challenge I would say is staying on top of the technology, right? We've tried to invest in education. In fact, it's part of our mission statement is that, you know, we wanna stay on top of education and maintain our knowledge of products. In our day-to-day basis, it seems that we are so involved in what we're doing at any particular time that education kinda just like gets, you know, put to the side. Like, "Okay, we'll get to that later." Later never comes, unfortunately, sometimes, right? You know, we're lucky enough this year that we're going to CEDIA, which is the trade show. Our industry and that gives us a great opportunity for education and so you know. That's again taking us away from our day-to-day work and focusing on that. Jim, what one thing would you add to that list? I think we all do it a little bit different and you know, you know, I know you've been doing this, you know, 9 years, and then I've kind of gone through that welcome to AV, right? You know, employees, I mean, once again, having team members that are qualified is always been a challenge, and it's gonna be a even more of a challenge as you grow, right? Because you're so busy right now that you're gonna grow. You know, all of us in this category that are putting that much time into what you're putting in are just gonna grow. We are gonna grow. What we do is we actually, you know, we do like a grassroots campaign. We bring in people that are not from our industry, but have you know a nice core ability to work and wanna learn. Then we separate our teams into groups, and we actually train from within. The only thing is that employee isn't ready to be a lead technician for about two years. We're constantly creating the team, and I think that's how we got up to you know over 25 employees, right? We're always kind of doing that. Employment's one. The other thing I would say is a challenge and you know it's a challenge, it's not a problem, is that I want to expand my reach. We're so busy right now, and we have so many calls that come in, and a lot of them are from, you know, the far ends of the state or even in other states. We're in Massachusetts, so we're getting calls from, you know, New Hampshire and Rhode Island and, you know, far parts of the Cape and Nantucket that people want us to do that. Now we have to. You know, originally, back 10 years ago, you know, I'm like, "Oh, I only wanna stay in a geographic area of an hour's drive." Now we're up to 2.5 hours, and we're, you know. Customers wanna spend. There's a stipend of a basic stay over plus travel. Our customers are like, "Absolutely, I'll pay it. Just send us your qualified techs. We know who you are in the area, and we just need you to come up and help us with our home that we built in Franconia Notch in the mountains or on Governor's Island in Lake Winnipesaukee. Now we have to go ahead and figure out our reach. I think one of our challenges is really expandability. Great. Before I change topics, I wanna just throw it to Kevin real quick to, technician capacity's obviously been spoken of. Is there anything else you would add to the list of challenges you face in your business? Very similar when it comes down to what Jim was just saying about the expandability of reach and the scalability of what you can and can't do for a client that, you know, is building a new home, whether or not they have a second home in Miami or in Vermont or wherever it is. The ability to provide them the same level of service because they know my home here works this way, I want you to do it there so it works exactly the same way, and I want that familiarity. To be able to provide that to them and to have boots on the ground in the remote locations, I mean, that's obviously the biggest advantage of the OvrC platform is it gives us a lot of flexibility in being able to communicate with the systems remotely for clients that are outside of our area of reach. It becomes how do we maintain that scale? As new technologies come out, as we try and stay on the bleeding edge of the technology that's there, how do we keep them up to date in both places? Is that something that we can build upon? That I would say is kind of blending the aspect of staying on top of cutting-edge technology and being able to provide that remote support service. Makes sense. Let me shift gears a little bit. We're gonna introduce a slightly different part of this topic. Many of you were around, as evidenced by your years in the business, through several significant economic challenges we faced in the industry. I'm curious as to how you think about diversification in your business and think, you know, commercial, we've talked about it earlier today as well. Are there some areas or strategies you've deployed in the past or that you've looked to to say, you know, here's how I think about the diversity within my business and making sure that you're always positioned to capture the opportunity in front of you? David, we'll start with you on that. Yeah. I mean, we're naturally diversified. We have two tracks in our company. We do the single-family luxury home, and we also get involved with high-rise development at the planning stage. We work with developers to build in these automation features into each unit in the home, into the amenity spaces and so on. Those jobs are. They typically take two years to sell and about four years to execute, but they're good fodder for bad times. Mm-hmm. You know, we look at this business. You know, there's the technology side, but we also consider ourselves a building trade because we're always working with construction teams. Just like, you know, the project manager will call the Sheetrock guy to start hanging Sheetrock, we fit into that construction schedule as well. Half my office might look like an architect's office. I have guys doing CAD design. We have guys doing engineering. We like to test everything before we roll it out, so we have equipment running in the back. That has helped us. Also, you know, we're in New York. I know it's kinda special. It's different than most of the country. Because our clientele was the affluent section, we didn't see a huge downturn in 2008. I mean, we saw all the cranes go away. Our sales cycle on some of our MDU projects did go quiet for a while. Mm-hmm. In fact, a bad market. propels the MDU business because developers need a reason to make their homes, you know, more valuable or, more desirable for people to buy. We try to take advantage of that on both ends. Great. Robert, do you have anything you'd add to that? You know, for us, we really didn't have to diversify too much. I would say prior to 2020, we were probably in commercial spaces a little bit more than we are now. I will say that the market kinda shifted a little bit for us because of COVID and things like that, where a lot of people were working from home. They weren't going into the office any longer. You know, we focused on networks, putting in more robust, more powerful networks in their homes, upgrading what they had to the newer technology, expanding upon that. The other thing too, for us was a lot of people were spending more time at home, so you know, they didn't wanna have to go out, so you know, they brought the entertainment into their home, right? They were doing all these improvements on their home. They were investing on outdoor spaces for outdoor TVs and music and something that would keep their family there, safe, secure. That kind of you know, shift adjusted you know, our diversification, if you will, to focus a lot more on that. You know, today, truthfully, you know, it hasn't really changed much more, you know, back to commercial at all. You know, we're probably 85% residential, 15% commercial right now. Yeah. That's you know, that's it. It sounds like you're prepared to take on the commercial opportunities. Right Should they present themselves. Yeah. We've talked about this in various chapters. I think the second thematic that we heard this morning, and in particular in John Heyman's presentation, we started to talk about really Snap One. By the way, don't let our hubris get ahead of us here, right? Be honest with us here. We like to think that we make your lives easier by providing you know, a suite of tools, products, services throughout the lifecycle of the job. I'd love for you to be able to articulate the accuracy of that belief, but also examples that you find particularly useful. You know, we just asked you for the challenges in your business, and I heard a lot of end customers, and we're trying to support you there. Operationally, are there things that we're doing or could be doing, that are very helpful for you as you think about running a complex business? Kevin, let's start with you. Yeah. I've personally, when it came down to investing money in Snap One or SnapAV back when I first started working with you guys, it was a little bit intimidating just because it was a line of products that weren't necessarily familiar to customers at the end user level. Mm-hmm. To step away from, and I'm sorry if I'm name-dropping where I shouldn't, but to step away from the Sony, Sonos, Sonance type install and say, "Okay, we're gonna start introducing some of these new products." Getting involved at that initial level and saying, "Okay, here's a company that has all of the different types of products that we need in one place," but is that really what people wanna see? Do you really wanna have your all eggs in one basket type solution? That's what I found over the years in working with Snap, is that it really isn't all your eggs in one basket. You do have professionals, especially on the support side of things, that understand the networking side at a totally different level than the people who are working on the Control4 side and support. We have a list of people that we can get in touch with that, you know, one guy might not know anything about the lighting side of things, so I'm gonna get transferred to the right department for that. Vice versa, if I'm dealing with an installation, and we're doing an elaborate network, and we're getting too much crossover, too much interference, we get an entirely different team of people. I think the variety and the flexibility and the different product lines that we've dealt with over the years, and then to have the software as a service on the back end of that, have something like OvrC where I can quite literally use my phone to support a client right there on the spot, and did it last night at dinner, actually, to just be able to simply reboot any device that's inside their house or to be able to monitor the status of a problem that we've been having. It's for me, it's been that flexibility. It's been the diversity of product and the integration of bringing it all together. All that value or perception of value, which we appreciate obviously, has that come at the expense of margin for you? Have you actually been able to grow your margins as well? No, just the opposite because now I'm spending less time with different companies and different support factors and it's, you know, I think somebody said it earlier, one neck to strangle. It's, you know, it's. I can reach out- One hand to shake is how I prefer to put it. Okay. We'll go that. That's fine. No, it's one phone number to call. Yes. I get directed to where I need to go. That, from that perspective alone, just the time it saves me, it saves my team when they're in the field. It's definitely improved the bottom line for us. That's great. I appreciate that. Jim. Yeah. Thoughts on this. I would say I'm an early adopter. I'm an early adopter with everything I do. If it's cars I drive or phones or computers I buy, I just, I think it's just kind of, you know, our world, you know, geek world that we're in. Back in the very beginning, I was probably one of the first Control4 dealers, in the very beginning, probably with David Ray. That was you? Yep. You know, early adopter there and stuck with the product. Then, you know, we carried that through, and then all of a sudden, you know, when OvrC came up, you know, there's a lot of different platforms. I'm looking at OvrC and I'm like, "This looks good. This looks like what I'm looking for." We adopted OvrC, started getting every single one of our clients on the OvrC and the same thing with 4Sight, started putting all of our clients on 4Sight. All of a sudden Snap By Control4, I'm like, "Yes, like, we made all the right decisions." Like, we got all of the right facets together. For us, we're on one platform, and we're on a platform that Snap One is investing so much money in on, and we've seen it change, and we've seen it get better. It's so much better. It's a world different than it was. It makes our lives so much easier. I made the decision, you know, I always say, you know, I even told some of the guys about it. I read the book, The ONE Thing. If anybody's ever read The ONE Thing, it's about doing one thing and doing it really, really well. There's a lot of different control products out there, but we're like, you know, our clients, we carried other products. After our clients were putting in certain control systems, they were like in a secondary home, they're like, "Oh, I don't want that again." With Control4, they were like, "I want it in my Florida house. I want it in my Cape Cod house." They were upgrading within two years to finish off other rooms. I'm like, "Wow." I'm like, "They're, you know, adding on to their systems, and they're putting them in other homes, and they're telling their friends about it." Now our referral source is being, you know, it's just we don't even have to search for business. The calls are just coming in, and they're all referrals from happy clients. I'm like, "That's what we're looking for." At that point, we went to one platform, and we said, we're gonna do all Control4. Then we're purchasing, you know, everything from Snap, which makes it so much easier on every facet of purchase orders and shipping and receiving and training. You only have to train your staff on one platform. You know, your guys are really good at it because that's all they're doing is the same thing all the time. You know, then with the remote software and being able to help our clients with Parasol for off hours and OvrC, being able to get notifications before they know about it just makes your system run, you know, so much smoother. That's why we can handle 15 different projects a day. We couldn't have done that if we didn't have all of these different facets assisting us. Can I just add one thing, too? Absolutely. Go ahead. The Snap One website for us is our go-to. If we need training, we need product information, we need product photos for our project proposals, we need to know specifications, we need to know inventory status, you know, it's just a very simple to use website. They've made it very, very easy to find things with filters and search bars and categories. I just find that having all of those platforms together on one place makes our lives a lot easier, especially at 11:00 P.M. when we're doing proposals. That's great. That's great to hear. Well, I think OvrC was just an industry changer. It's such a pleasure. You know, we're a culture-based company. We have an esprit de corps. All our guys look a certain way. Our trucks are all clean. It's always nice to work with a company that has a similar concept. My sense is that Snap One is serious about the business, and they understand that developing us and our businesses is what will help their business. We spoke about COVID. We have access to legal, but when COVID hit in March, we all had that decision, do we stop production? What do we do? We are right on the fence of being considered an essential worker. Before I even had time to call my lawyer, Snap One produced a letter for us to use to customize and use within our municipality to make it legal for us to work. That was not necessarily from. I don't know if it was from feedback from integrators or something, but that showed a seriousness and a foresight and insight into what we would need next in a crap moment, right? Like, everybody can project stuff over years, and we look at this and trends and all that. I think character really exposes itself in a moment of terror. It was comforting to see that they were there. Just overall, the seriousness of the seriousness, but yet friendly. You know, it's, you know, have a nice day. They have a great presence, and always good experiences interacting with them. You guys have done. Before I throw it over to G. Paul, I just wanna expound on that because I think you've hit on something, David, that's really interesting. Like, we don't take this notion of partnership lightly, right? Like, I think a lot of companies pay lip service to our customers are not our customers, they're partners, they're whatever they might be. Our definition of partnership is really looking around corners on your behalf and looking upstream and building the products you would build if you had more time in your day, Robert, right? Like, doing the things that we can take off of your plate, so you can go serve end customers. Like, that is the definition of partnership for us. Just one more thing I have to add that, you guys stand behind your product. Love to do it. That, you know, when there's a goof in supply chain or bad component gets in something, there was something happened a couple of years ago, you sat down at a table, you called in the bigger dealers, you talked, how are we gonna fix this? You immediately replaced the stock, and you actually paid us to replace the part. You paid us for truck rolls, which in this industry, I've been in this business 40 years, it's unheard of. There are some companies, you know, I think in the 2018, 2017 area, there was a particular chip that went into every single receiver on the HDMI board that failed every time. Major manufacturers were like, "Sorry, it's 12 months and one day, you're out of warranty. Where Snap just dropped it. He He said, "No, we made a mistake here. We're gonna make good on it." You know, I still may have a random outlier out there that still has one of those products, and I know you guys are gonna replace it and pay me to replace it also. I put him on the spot. Good one. Yeah. Best RMA, best RMA protocol in the business. Yeah. Without a doubt. Yeah, I'm gonna take us back. There was a slide that John Heyman shared that showed the different platforms. You guys have done a great job talking about Control4 and the OvrC platform. I'm gonna make this a jump ball by raise of hand, though. Talk about our local. How has our local initiatives by having a local store helped your business? Who wants to go first? I'll take that one. Kevin, please. Especially just being right down the road. I mean, I just actually invested in a new building in Wilton and built out a big stockroom and got prepared for everything that I needed to have a successful showroom/stockroom area that I could populate the way that I needed it to, and then they opened MRI. I completely redesigned my stockroom because half of what I need is right down the road from me. Having a store, having a resource right down the road, having local professionals that understand the products as well, and especially the resources that we have in our Norwalk store, bar none. I mean, there's no. There are other distributors that have stores in my area, and it's a completely different experience. You're walking in the door, and it's kinda like that, "Okay, here comes another customer." As opposed to you walk into MRI, and it's, you're welcomed by the people that are there. You can go in for trainings. You can go and just kind of browse products if you actually have the time to do that. It's definitely made a huge difference just in the experience of what I need to keep in stock and on hand at all times, but just the flexibility that my guys have when they walk into that building. Very good. Well, being the product guy, I'm gonna ask the next question, but it doesn't have to be a product-related answer because you guys have really covered very well our platforms. Kevin, you had the mic. I'll go ahead and ask you first as well on this one. What's the most innovative product or service? And it doesn't have to be a product, meaning it could be something like Rack Builder, as for example, that Snap One has delivered for you and your business. I think it's me. Kevin, go ahead. Oh, you want me now? I'm sorry. Yes. I thought you were putting David on the spot. I apologize. 'Cause I got nothing. No, I mean, you know, we've beaten the OvrC horse to death, but it's that hands down as a service has been a game changer completely. From an innovative product perspective, I think what I see coming down the pipeline with what Control4 has to offer in the level of integration and the level of detail that we can get into with the various product lines and not have to worry about what we deal with, what David was talking about earlier, where you've got seven different apps, you've got seven different devices that are all communicating out over the internet, as opposed to one core processor that's doing all of that communication for you, talking to all of the devices in the house. You're streamlining the network capability within the home. You're focusing on what it is that I need to be able to accommodate the communication with my house remotely without actually having to just completely drown out the bandwidth of my network while I'm trying to talk to cameras and doorbells and door locks and shades and everything else. The Zigbee versus Wi-Fi and without getting deep into the technology of it, I think just everything that I see coming down the pipeline and hopefully with these new remotes as well, I think that's probably the biggest thing for me. Robert, before we close this section out, anything you would add to most innovative product or service? Look, my answer was gonna be the same as the rest. You know, we've beat it up, but it's OvrC. I mean, it truly is, like Kevin said, the game changer. You know, when it comes to support for clients when they're having guests over at their house and they can't get their music to turn on, you know, we can log into OvrC and we can check the status, we can reboot things. We can even, with remote support or remote management for Control4 platforms, go in there and access those devices to try and figure out what's going on. You know, it's innovative for us because it gives us a level of customer satisfaction, and a level of satisfaction, and what's the word? I guess, confidence, by the clients that we can handle, you know, these issues almost at a moment's notice. Can I bring up one product? Yes, please. We use it on every project, and it's a game changer. It's called Media over IP. It's a video distribution product platform that allows you to basically takes a signal from, you know, a cable box from HDMI and converts it into an IP signal, and then we can broadcast it anywhere. It's completely increased our commercial division. It's allowed us to do large scale video walls in venues. It's allowed us to do sports clubs and fitness facilities with multiple TVs and actually convert multiple TVs into large scale video walls. We actually bring it down on a house level. If a customer has, you know, some of our customers in their homes have 18, 20 TVs in their homes. We just finished one that had 32 zones of video. In order to send that video around the house, you know, instead of having 32 cable boxes, you know, there's only, you know, 6 people living in that home, we can just send whatever cable box and label it, you know, mom's cable box and dad's cable box, and just send it to anywhere around the house, and then create that sports room for them. This has been a product- This is no do-it-yourself product. Like, we need to install this, and this is something that we do. The customers that have 32 zones of video in their house, nothing in their home is a DIY. So we're installing these products, and customers can, you know, if they wanna add a TV at the pool, they can just send any signal they want anywhere. That's totally increased revenue between our commercial division and our residential division and given us a product that is a huge profitable marker in what we do. Jim, thanks for bringing up the MOIP product. I think everybody heard my pet peeve earlier as I walk into commercial environments and see the messy walls, and that product is designed to solve that. Brian, you wanna take us to the next one? There's no doubt you guys could talk product all day long, right? It speaks to the complexity of the business and the work that you guys do every day to provide experiences for people who don't wanna get into the weeds of trying to figure out the interconnectivity, which is awesome. I had the good fortune of knowing a little bit more about all of you guys and, you know, being, you know, folks who are looking to have more of an imprint on the business longer term beyond your own career. You know, it's pretty clear that our thesis here is smart living is here to stay. It's gonna continue to enjoy growth, right? We believe we're a part of that growth, and we're helping to lead the way there. I'm just, I would throw it out to all of you to opine a little bit on as you reflect on the, you know, how indelible your businesses are and recruiting people into the business. Like, what are some of the things that you get, like, really excited about when you think about the long-term prospects of our industry and where we're heading? I want somebody to come out of high school saying, you know, "I wanna be a cop. I wanna be a fireman. I wanna be a smart home technician." I want there to be. You know, this is an industry that is only going to expand, and the expertise, the personnel is what makes it special. There seems to be knowledge and at the end user and at the buyer level, but I really think we need to get some information down to younger people that this is a real career path. I mean, I'm in New York City. Some of the salaries my technicians make is they're like phone numbers, and these guys were kids. They were tinkerers. You know, they were, you know, building things in their basement, and now they're, you know, they're making people very happy. You know, that's the personal level also. We do this all day. We work with machines. The joy is in the people. You know, when they push a button, and what they imagined is actually now happening in their home, that's really a poignant moment. Definitely. Kevin, I wanna pull you in on this one. As we continue to expand on opportunities, what are things that you're doing to invest in your business for your long-term growth? Well, as I mentioned, we just invested in a new building for the business, which has been, you know, a major aspect of focus lately for us in building out a showroom. I've invested more in my employees, setting up, you know, full healthcare plans, 401 plans, trying to make it a career path, like David's saying. It's something that we need to build the industry out to be recognized as more than just the industry name is called a trunk slammer, the guy that shows up in a hatchback with an 85-inch TV hanging out of the back with a Sonos soundbar, and they pop it up on the wall, collect their money, and leave. This is an industry that is growing rapidly, and I think we talk about all the complexities of it and how advanced and involved things like MOIP and all of the technologies that we're dealing with are. The reality is the simplicity of it and making it easier for people to utilize the technologies and simplifying not only their understanding of it but their ability to manipulate it, and having services like When Then, when somebody can go in and just simply say, "I'm gonna program it so that when I come home, when I press this button, then these things are gonna happen." I've tried to invest in where I see the technology evolving the most and bringing that to my team. I'll have you know a meeting with them usually once a quarter where I say, "What new toy do you want for your house? What do we need to implement in your home?" I'm buying them product so that they're taking it home, they're getting excited about it, and then they're talking about it, and they're bringing it out to the clients. I've got a staff of 12 salespeople in the field that I'm not paying sales investment for, but they're actually understanding and getting a better feeling for the products. I'm gonna take us to our last question for the session here, and I'm gonna first ask Jim to answer it, and then we'll close it out. Robert, you get a chance to answer it as well. How is Snap One helping to power the growth and long-term success of the industry and your business? What's working for you? There's a lot of facets. I mean, there's education and training for our staff. You know, the availability of everybody to be able to assist us if anything does come around. As I said before, product you know if there's a product problem, you're the best in the business. As far as the efficiency of the way that we work, the platforms that you guys give us, it really is still the best. It is the best in the business. You know, I noticed that when John was speaking earlier, he kept on talking about us as being a partner. I really feel that we are a true partner to Snap. You know, as their business gets stronger, our business gets stronger. It's about, you know, it's about holding on to the ride to make sure that we have employees, and we have showroom, and we have things in place because of the fact that they're just gonna keep on growing this industry. It is a true partnership. There, you know, to give a small example, you know, we were working with a luxury builder on a home subdivision of about, you know, 100 homes that we were doing, and we wanted to sell Wi-Fi networks and make them a standard option within the home, to be able to not just, you know, to make sure because these homes were over 3,000 sq ft, and we wanted to make sure there's Wi-Fi everywhere. We just submitted the plans to the team over at Snap, and they built a heat sink diagram to show where each one of the access points would be placed in each one of the model homes. There was like 18 models, and then we were able to submit this to the builder, and it's a no-brainer. It was a slam dunk. That support, like to what you said about COVID and when you had to get that paper, if there's even plans that we're doing for RMR and recurring monthly revenue, they have everything set up for us. That's a big thing. You know, people knew about RMR when, if they're on a security. Now for us, you know, we've never had between Parasol and what we're doing with our own base, to be able to have that revenue coming in, and it makes a big difference on the growth of the company. Awesome. Last opportunity, Robert. Yeah, sure. You know, as far as what Snap One has been doing for us to help us through, you know, through the long term, right? You know, customer support from them is just second to none. You know, when we have issues, when we have problems, they're there to help us out, you know. Many times, you know, some manufacturers, you'll call up for tech support, and you'll be on hold for, you know, an hour and a half. You know, you got techs in the field where they're on the phone waiting to get picked up. With Snap One, the response times are great. I think that Snap One has invested in us to help us be successful. If we are successful, then they're gonna be successful as well. Great. Well, we'll bring it home by saying this. You know, for the folks that are watching this, I think it's important to know, I mean, we have four folks here that are representative of the 20,000 plus partners that we have. I think the one thing I've learned in this business is everyone has kind of different viewpoints on different things that drive the business. But hopefully, you've heard thematically across four different people here on ways that we hope to partner with you and continue to partner with you to drive value for your businesses. To you guys, I would say, you know, there's a ton of other things you can be doing today other than spending this time with us. It means a great deal to us that you took time out of your busy schedules to participate in this with us, and we're greatly appreciative, and we appreciate the partnership. Thank you. Thank you. Thank you. Thank you very much. Thank you. Thank you. What's that? Yeah, yeah. Okay. We live? Cool. Let's get started again. I was talking to Andy from one of our lead investors earlier today, and he asked how things were going, and I said, "I love my job." I love my job because we're in an awesome industry, delivering just great experiences to homeowners and businesses everywhere. We've got 20,000 partners out there that are delivering these experiences, and we get to work with them, to provide even better products and services. We've got a great product development team thinking of all the great things that are coming in the future. Adam, you were talking earlier, you know, when is that chip gonna be implanted in your arm and you're gonna walk in your house, you know, the phone's gonna go inside. Like, that's all coming, right? We're thinking about all that stuff. We got a sales and marketing, our local teams out there working with our partners every single day. We've got an awesome infrastructure team. Supply chain has been absolutely miserable for the last couple years. Managing through that, our accounting, finance, HR, IT, legal, all those teams. My awesome FP&A team who's done all the real work here to make this all look good. I get to stand up here and talk about it and the great financial results and, it's just an awesome job. I love my job. I love what we're doing. I love this company. Because we get to deliver results that look like this. You know, over the last four years, three and a half years, just great revenue growth, contribution margin growth, EBITDA growth. Obviously, there's some pro forma in here. You know, I'm not gonna take credit for the fact we bought Control4 halfway through 2019. Even on a pro forma basis, you know, our pro forma growth numbers are right around the mid-teens, right around 15%, a little bit higher than we talked about as our long-term basic growth algorithm, even on a pro forma basis. You can see very consistent contribution margin despite the fact we've had third-party mix moving around, despite the fact that we've seen our 3P mix move around, as we've added more local stores, despite all the supply chain challenges that have been out there. EBITDA margin just slightly compressed, but we'll talk more about that. We have a lot of confidence in our ability to continue to drive that going forward. All the great things that you talked about earlier provide a really, really strong financial model and strong financial profile for the business. How do we think about continuing to grow? Growth is a key part of our value proposition. Obviously, we're worried about our profitability. We're gonna continue to manage this business for profitability. Over the long term, we think there's unlimited growth opportunity here, and we're gonna continue to drive that growth. That growth comes from four main pillars. One is our spend per integrator. We'll dive into this more. We've had a lot of questions about wallet share and how do we think about it, and we'll get to that in just a page or two. How do we drive more spend for the integrators that we have? How do we get them to adopt more of the ecosystems that we have? How do we turn more and more of our partners into folks like Jim and David as we go forward? It's things about introducing new products and services. It's partnering with leading third-party suppliers. It's opening more local stores. It's thinking about the disciplined pricing approach that we have to make sure we're protecting our margins and our integrators' margins. We think about adding more integrators into our ecosystem. How do we think about more and more folks learning about Snap One, thinking about all the solutions that we offer, and becoming the supplier and solution provider and partner of choice to all the integrators out there delivering smart living experiences? We're changing our business model as we go forward. Not drastic change, not transformational change, but we are adding a layer of software and services and RMR into this business. You heard Graham, G. Paul, John talk about how we're gonna build that, and that's gonna drive incremental revenues, incremental product offerings, incremental revenue on an ongoing basis for the business. Finally, M&A is, has been and will continue to be a part of the solution. We think that we are a great platform for growth. We think that we are well-positioned. We have the right balance sheet to allow us to continue to grow. We think there's a ton of M&A opportunity out there. We'll talk more about that as we go forward. These four pillars, and we'll dive into each one a little bit more, are what's gonna continue to drive our long-term growth algorithm of, you know, low- to mid-teens% type of growth, on an organic basis with another piece for M&A on top of it. This is an exciting slide that I think we've talked about three different times already today, but I'll try to dive into it a little bit more here. We acknowledge, and we know we have a huge opportunity to grow our wallet share with our existing integrator base. As we talked about the history of the company, I think John started the day today talking about the history of SnapAV and similarly, the history of Control4 before we brought the two companies together. We were both single ecosystem companies. In fact, if you think about the way we define our three ecosystems today as local, OvrC, and Control4, SnapAV, four years ago, had none of them. Six years ago, had none of them. Four years. 6 years ago, we launched OvrC, and 4 years ago, we started adding local, and then we merged with Control4. If we showed this slide 6 years ago, everybody basically would be in this trial category. Trial doesn't mean you're a new partner. It does not mean you're a new customer. It means you're someone that you might have one of the other control systems as your platform that you've built your business on over 6, 8, 15 years. You might have built your business on another networking company over the long term. You might have a local store from another supplier in your market where we haven't put a local store yet. If you're all those things, you're gonna be trial, and you can be in trial for a long time. You might like our speakers and our wire and our cables and our racks and our mounts, all things that are really important to the business, but you're not adopting our platforms either because it's change and you heard about how busy our integrator partners are and how hard it is to get to change. Maybe you just don't have that opportunity yet 'cause we don't have a local store in your market. As we think about this movement that we think about our partners, 52% trial. Again, the trial doesn't mean new, it just means that you haven't really adopted these other platforms. Then you move through, and as you adopt these ecosystems that we've developed, as you think about having that local availability of products right down the street from your store, if you think about standardizing on OvrC as your remote management platform, as you think about becoming a Control4 partner and standardizing on that as your control system of choice, you can see that average spend go from $5,000, not very much, all the way up to $261,000. That's where we're trying to take all of our partners or a lot of our partners. We'll never get all of them there, right? But this is only 6% of our partners today. 52% are still down here. As we open more stores, we continue to have our sales force out there educating partners, we continue to improve our products and deliver better experiences for the end consumer, we expect to see a lot of movement down this chart and see more and more folks move from the left to the right. In our core home technology ecosystem or segment of customers, you really can move through all three. If you think about the security and commercial partners, and you heard G. Paul Hess talking about this, we are continuing to make more investments in products there to make sure we have the right ecosystems for them to move through. In home technology, we've got all the products that you need, whether they're our products or third-party products. We don't have the same robust product platform across the entire ecosystem in security and commercial. We need to continue to build that. The other piece of wallet share spend per integrator is pricing. Last year, 18 months, 24 months have really been very dynamic from a pricing situation. Typically, we used to think about pricing as once a year, we'll go out there, we'll take a disciplined approach for pricing. We'll think about it, the changes in the cost structure of the company, in our products. We'll think about driving our margin and our integrators' margin and making small adjustments on an annual basis, typically in February or March. That's what we did in 2020, 2021, small 1.5% price increase in our proprietary products. As commodity prices started going up, inflation started hitting, we started recovering from COVID, we realized that we were getting a lot of pressure in our business from a cost standpoint, and we had to make some pricing adjustments to protect our margin and our integrators' margin as well. We raised price 6%. Okay? When I say raised price, as John said earlier, we raised both our price to the integrators, and we raised our MSRP so that our integrators can continue to protect their margin and charge the right price to the end customer for this. In February, we came across our normal annual price increase. Instead of being, you know, normal 2 or 3%, which you would expect in a normal inflationary environment, because of the pressure that we were feeling, we raised our prices 6% again at that point. I think when we did that, we felt pretty good about that. We felt like we were reaching the top end of where we thought the supply chain challenges were, and we basically decided on the 6%, Eric, about November, I think it was, when we sort of locked in that because we'd like to give the integrators notice, our partners notice. We don't wanna change price on them tomorrow. They've got quotes out there, they've got jobs. We want them the ability to react and adjust their pricing. November, we felt really good. By the time we got to February and actually launched the 6% price increase, we said, "That's not nearly enough." There's been tons of additional supply chain challenges. Ocean freight continues to go up. We're continuing to fight the commodity battle. Everybody knows the chips issues. We're having to do lots of things to continue to drive product availability because if we don't have product availability, then our partners can't buy from us, and then they can't go do the jobs that they're trying to get done. We think it's really important to use our balance sheet to continue to provide that availability. We decided almost simultaneously with launching this price increase that we needed to do another one. In June of this year, we did another 9% price increase. As we sit here today, I think we feel really good about the supply chain. We feel like costs are sort of normalized. They're certainly not increasing at the rate they were 6-12 months ago, we don't feel like. We feel like that we're on top of this right now. Of course, we felt like that back in November, and we had to, you know, make another change. As we sit here today, I wouldn't anticipate another significant price increase this year. I would anticipate us doing normal pricing adjustments on the normal schedule. We'll obviously evaluate that based upon market conditions at the time as we think about next year. We feel good about where we're at right now and feel like we've got our margins back to where they need to be and where our integrators' margins are where they need to be. That's our share of wallet with our existing integrator base. The next big thing, as you heard John Heyman talking about earlier, is we want to bring more integrators into our ecosystem. We think about that integrator growth across a few different platforms. In our home technology space, as you saw, we're doing business with 13,000 partners. We think there's about 17,500 integrators in that space, and we're doing business with over 70% of the integrators in that piece of our traditional market where we grew up. We then talk about security and commercial. Again, these are classifications. I love John Heyman's terminology. It's the cocktail party analysis. You know, "What do you do for a living?" "I'm a commercial integrator." "Well, you do some homes?" "Oh, sure, I do a bunch of homes, but I primarily do commercial." Or, "I'm a security guy." "Well, do you do AV?" "Oh yeah, I do AV, but I'm primarily security." We classify our integrators based upon how they define themselves. There's blurred lines between all of this and a little secret. This isn't everybody. You think about other folks going into the home, delivering smart living experiences. The electricians touching the lighting, the HVAC guys touching the climate control. The pool guy has a role to play in this to control the pool. There might be a separate landscape lighting. We'd love for our partners to get into landscape lighting, but there might be a separate landscaper who's doing the outside lighting. All those folks are touching this, and we're trying to work with all of them as we think about the products we're delivering. We'd love our partners to be the ones working with them, and we work through our partners. All those folks are touching this ecosystem, and so we wanna be thinking about how do we deliver products and solutions that serve all aspects of smart living that all ties together to deliver great experiences to the homeowner or small business. RMR and services offering. I thought Graham did an awesome job. John, I thought your explanation at the end was great. You know, we've got a lot of things that are in process right now. Another little secret, it's not the billing platform that's gonna hold it up. Billing platforms are relatively easy. What's complicated is taking a billing platform where you're billing an end customer and then say, "Well, that end customer is, you know, Eric. We know we're charging Eric." I'll use John's old example. "We're charging Eric for a service that we're providing." We now need to know that Eric is Jim's customer. Well, how do we know that? Well, we sold Jim some product. He installed it in Eric's house. We know who it is, but we don't have any direct linkage between that customer and that partner today in our systems. Building that linkage while we can bill Eric, and we'll get some money from Eric, I need to give Jim his proportionate share of that, and we need to build that. That's complicated. That's complicated to make all that work together. On top of that, you know, the great work that Graham's doing, the research that he's doing, the conversations he's having with our steering committee of partners to drive what exactly is it we're offering, what is the stairstep of this product offering that we're building is things we're continuing to iterate on. I feel very confident that next year you will see some real products, some real revenue coming in. I don't know what the growth is gonna be over the next quarter or the next year, but I think over 5 years, we think about 2025, 2026, we think about roughly 5% of our revenue coming from RMR as we think about building the models around this. There's still some accounting to figure out. If we think about charging $1, right, we might recognize that $1 as gross revenue. The revenue share might be COGS. It might be OpEx. It might be a net of revenue. We haven't figured all that out yet because we actually don't know what it is exactly we're billing for or how we're gonna do it. We got to be a little bit careful as we build our models going forward about what exactly is on the top line. Feel very confident on the bottom line. I'm not sure how it's gonna flow through the entire P&L to get there, and we'll continue to work on that. We'll keep you all informed as we think about it, and as we continue to build this model. We feel really good about the things that we're building and our ability to deliver some industry-changing products and services to allow for both ourselves and our partners to generate recurring revenue on an ongoing basis. M&A is a key part of the platform that we've built. When we decided to get into local in 2018, we said, "You know what? We don't need to go recreate the wheel. There are great distributors out there that are doing this already. Let's go partner with a few of them. Let's talk to the Wally Whinna of the world, who was the entrepreneur at Allnet who had started that business." We said, "Wally, how'd you like to join our family?" He said, "I'd love to. You've got the best products. Can't get those products. How do we bring this together?" We started that with Allnet, Volutone, MRI, CPD as the platform that we built our local business on. Now we've opened about 10 or 15 additional stores on top of what we bought from those original acquisitions. We buy a number of product companies. If you think about Clare, Access, going back, Control4 bought Neeo, Triad, Pakedge. SunBrite was our original M&A deal that John Heyman and I did soon after we got to the company. All of which are product add-ons where we can take new products that we don't offer today or products that are third party today that we do offer and offer them to our 20,000 partners. Where we're already distributing the partner, get the incremental margin that we would get as being a proprietary product as opposed to a third-party product. That's all things that we think about. We have over $750 million that we've invested across 10 acquisitions. Control4 obviously being the biggest one, the platform acquisition we did in 2019 when we brought SnapAV and Control4 together to really create the bones of Snap One. As we think about future M&A, we have over 300 acquisition targets. Eric, in addition to leading our investor relations, does a great job leading our corp dev team of one besides him. We also have third-party resources that we use to help augment us. We're looking at over 300 targets as we think about it. We go through a funnel of our opportunities. How do we qualify them? Where do they fit into our key investment focus areas? How do we make sure we're investing in the right things, for our growth platform? It's really highly fragmented still. There's so many $20- to $30- to $50-million-dollar product companies out there, that sort of a ceiling around the core home technology space. When you get to that size, you sort of get your market share, and you sort of hang out there, and you know, the company gets comfortable, and they just sort of hover there. We think there's a lot of opportunity there, but there's also other opportunities besides that and new product categories. If you think about commercial and security, expanding there, what are the product companies there? What are the distributor companies in those areas that we can think about partnering with that expand our reach, expand our integrated reach, allow us to bring our products to more and more integrators as we go forward? These M&A opportunities expand as cover a spectrum of size, value, profitability. There's companies in our target list that are $hundreds of millions and $tens of millions EBITDA. There's companies in there that are $tens of millions of revenue and no EBITDA. As we think about their strategic fit with us, how do we think about the platforms that we're building? How important are they from a product or distribution standpoint? How important are they to our growth pillars? How important are they to where we're going? Those are all the evaluations that we make as we go forward. We're primarily focused on the bolt-on acquisitions. That's where our bread and butter. That's where Eric's day job of looking at M&A is. Find 2 to 3 to 4, you know, $20 million-$30 million revenue companies every single year that are making, you know, 10%, 5% EBITDA margins that we can add into our family. That's the core piece of what we do, but obviously, there's lots of other things out there that we consider as we think about the entire product and distribution platform of smart living and what do we wanna add into our portfolio as we go forward. We talked earlier, and it was great hearing the partners up here talking about their business and how resilient their business is to support our business. We have a very resilient integrator base. You know, 20,000 integrators. John, I think you said earlier, over 75% of our revenue comes from integrators who have been with us 5 years or more. Like, when someone starts buying from us, very few of these integrators go out of business on an annual basis. What's great about the integrator model, it's a very low fixed cost model. You heard, I think, most of these folks don't have big warehouses. They don't have a lot of inventory. They buy for the job. They might have, I think, about a third to 50% have some type of showroom, but it's typically a low rent. It's not gonna be Main and Main from a, from a cost standpoint. The business model of the integrator is pretty flexible and pretty dynamic. That allows them to be pretty resilient, which means even if their business drops, they're still gonna be there. They're still gonna be buying from us, and we think that resiliency helps prop up our business as well. We support them during complicated times. You think of all the support things that we do. One of the things about our industry that I think drives both our integrators and us a little bit crazy is there's not a huge focus on upgrades. Folks are so busy with the next remodel or the next new build that we don't go back into our existing customer base and talk about the upgrade cycle. We've got a couple of playbooks in the drawers that say, "Hey, if things do slow down, how do we enable our partners and partner with them to help drive the upgrade cycle that's out there that we know is underperformed across the entire installed base of our partners?" There's other things we'll do as well to help drive and support the integrators in troubled times. Our business is really diversified. We're omni-channel. We're not single-threaded. We're not regionally focused. We have a very diversified partner base. There is no single partner in our 20,000 domestic partners that's more than 0.5% of our revenue. Very, very diversified customer base with a very long tail with 20,000 partners out there. We have over 25 product categories. If one particular product category gets disrupted, you know, we really aren't at risk across the business. Our biggest categories are, you know, low double digits, 10, 11, 12% of our business. With 26 product categories, it spans a very, very broad base. Very, very diversified with diversified end markets as well. If residential goes down, go to commercial. Commercial goes down, go to MDU, and think about continuing to move across the platform, which drives our great financial profile. How do we think about that financial profile? Here's sort of the last three years. You've seen net sales. We'll talk about our guidance in a second, which we're not changing at this point. Contribution margin has come down from 42% in 2020 to 39% through the first half of this year. As you think about the pricing adjustment that we did in June, that's really gonna correct some of that decrease that we've seen out there. A lot of that price decrease, if you think about what's out there, our product mix has gone from 71% proprietary to 69%. We expect that. We know it's gonna continue to go down. We know as we continue to offer more and more third-party products because we open more local stores, more TVs available, we'll drive more revenue, we'll drive more stickiness, more loyalty, but it's gonna have some small impacts on our contribution margin, which we will offset with other activity we'll talk about. Over the last few years, you know, definitely has gone down. Air freight has increased as we try to maintain that supply chain, making sure we have product available. Air freight's expensive. It was even more expensive over the last 12 months as everybody was trying to struggle with the same thing. It went from almost nonexistent in our business to almost 1% of our revenue. Then PPV, which is purchase price variance, which is where we have a contract to buy a product from a supplier for $1, and the supplier calls up and says, "You know what? I can't get it for $1 because the commodity price has gone up," or, "I can't afford to produce it at that price." So we're going out, and we're paying PPV right now during supply chain challenges. In good times, you know, that doesn't happen. If it does, you go find another supplier. During a supply chain challenge environment, you have to sort of work with your suppliers a lot more closely and think about how do we ensure that we can keep delivering products to our industry, so they can keep doing the work and installing the jobs that they've got sold. It has become a pretty significant part of the business, all of which have impacted that contribution margin. I think what you're gonna see is that normalize and correct in the next 6-12 months to get us back to where we were, you know, over the last couple of years. We think about SG&A as a percentage of revenue, which actually has dropped from 33%-32%. There's really two components of SG&A. One is a straight variable cost. Our straight variable cost is things like bad debt expense. It's the thing, which is almost zero, because our integrators are so resilient. It is warranty expense, it is outbound shipping, it's credit card fees. All that goes into 5%-6% of the revenue. Then we have all the other fixed costs of the business. R&D, sales and marketing, infrastructure costs, rent on all our local facilities. We're holding that pretty constant. Despite the fact that we're investing, we're trying to make that investment that John talked about, sort of grow in line with our top line revenue growth. Now underneath it, because our 3P product is going a little bit higher than our 1P, there's a little bit of deleveraging there because of that margin differentiation. We're trying to again think about the leverage in the business and continuing to drive incremental operating profit on the bottom line. We've seen a little bit of degradation on the bottom, mostly driven by those supply chain issues, which have been offset by the pricing change that we just made recently. We'll talk about the long-term model here in a second. First back to guidance. Just as a reminder of where we are on guidance. Our guidance prior to, or post Q1 was, you know, $160-$180 on the top line and we reaffirmed that guidance at the end of Q2. Similarly on EBITDA $16-$21, we reaffirm that guidance as well. As we talked about, the market environment continues to be pretty dynamic. We are doing lots of things in the company right now to ensure we can deliver on the EBITDA guidance that we have out there. We're managing hiring as everyone is these days. We're managing our cost base really, really well. You know, I think the EBITDA guidance we have out there we feel really good about. I think you heard everybody here, our partners still feel great about demand. Excuse me. We've seen little demand weakening at this point. We still feel good about demand, but we know the market is still uncertain out there. There's still a lot of uncertainty. Every time the inflation numbers come out, every time the market drops 700 points, whatever it was the other day, you know, we just are we sure? There's a lot of uncertainty out there. While we're not going to change our guidance, we feel great about our ability to deliver EBITDA within that. We're not gonna, you know, not acknowledge the volatility that might exist around the top line as we think about the rest of this year. Really, this is the crux of I think this whole presentation to me, at least my piece of it is, what's our long-term financial targets? What's our long-term financial model? How do we think about building this business? First, as we talk about those building blocks of growth and organic net sales growth, we still think that we are going to grow in the low double digits on an annual basis on a CAGR basis. It's really those two components. One is share of wallet and think about share of wallet as those two things. How do we continue to bring more products? How do we move people through the ecosystem? We'll have some normal pricing every year. I do not expect pricing to be 6, 7, 8, 9% every year. I expect it to be 1, 2, 3% in a normal inflationary environment. Share of wallet will continue to drive those two things. We'll continue to add integrators both in our home technology space, our commercial space, our security space, our international space. We'll be thinking about more and more partners coming in, experiencing the great benefits of buying from Snap One and driving our business forward. We'll be adding accretive M&A on top of that as well. Contribution margin we think will remain relatively consistent. There's two different pressures in there. One is the pressure, the downward pressure of the mix from 1P and 3P, and we think 3P will continue to grow. Every time we open a local store, we add more TVs into our mix. John talked about the low margins that TVs have. It's consumer products. It's got relatively low margins. If we open a new store, we bring more TVs to that market. It does create more stickiness with the partner, but our margins are really, really low. That's going to drive down some of the contribution margin. Offsetting that as we continue to think about the software solutions that we're bringing will have higher margins obviously than hardware solutions do. We think we have some opportunities still with our third-party providers. I think up till now our view with third parties has been, you know what? We're getting into this business. We're not going to negotiate a lot. Let's make sure that we are great partners and we're great partners to them. We think going forward we have some ability to curate the third party products set a little bit, to negotiate a little bit, and really make sure that we're getting paid for the value that we deliver to the third parties from a margin standpoint. Those two things we believe in our modeling basically offset and we don't expect to see dramatic changes in our contribution margin over the coming years. Adjusted EBITDA we think will be a growing percentage of net sales. If today it's 10%, you know, we think we have line of sight pretty soon to see that get back to the 11% and 12% that we saw in the last couple of years as the contribution margin corrects as we get on top of the PPV, as the last price increase we did takes hold and we get our contribution margin back to where it should be. Then we think we can continue to drive, you know, 50-75 basis points of EBITDA margin improvement every year through leveraging the fixed costs of the business, through continuing to integrate our systems as we've done all this M&A. We have a lot of systems out there that they talk to each other through a very manual process of people taking spreadsheets and putting them together. We did that very consciously. We thought it was very important to do a land grab and get the distribution footprint built out. But those systems don't talk to each other yet. The benefits of bringing them together will be there. The benefits of leveraging the R&D investments that we're making, you know, they shouldn't grow at the same rate as revenue is growing. We've built a great sales and marketing team. Again, how do we get leverage out of that? Those are all the things we're considering to get to 50-75 basis points of EBITDA margin improvement every single year. Continuing to drive significant cash flow conversion. We remain a very CapEx light model. Approximately 10% of EBITDA we use for CapEx, mostly tooling over in our joint manufacturing facilities, IT investments, infrastructure around consolidating our systems, all those kind of things. Working capital continuing to grow basically as a proportion of what our revenue growth is. You think about AR and inventory offset by AP, all sort of growing in line as we think about our revenue growth. As a rough modeling exercise, we think that's very reasonable. Couple other considerations on cash flow. Never forget this TRA. I think we are a relatively low-cash taxpayer to the IRS, but because of the TRA that's out there, just don't want to miss that in our modeling to make sure we understand the implications of that TRA. There is some seasonality to the business, as you've all seen. First quarter is always gonna be our lowest quarter. It's always gonna be our lowest cash flow quarter, because of a number of issues, including Chinese New Year, which we have to plan for and bring more inventory in, as we think about payments of some one-time annual expenses that occur in the first quarter. Q1's always gonna be the least cash flow generating portion of the business. We'll think of our capital allocation strategy, which we'll talk about in a second. Within that capital allocation strategy, our target leverage is still 3x. Now we're operating at 4x. Very comfortable operating at 4x. Basically, what we say is if we just stopped doing any M&A right now, if we stop thinking about other capital allocation, we can get to 3x within 12-18 months. It's always the vision that as Eric and I talk to John and plan out the business and think about our capital allocation, we always wanna have line of sight to get to 3 if we wanted to, and then we'll operate at 4 as long as we know we can get to 3 if needed. This year, obviously, we've had a huge use of cash around network and capital. Adjusted EBITDA turning into cash. You can see CapEx, PP&E, basically in line with that sort of normal 10% number, just slightly higher this year. We're actually moving our office in Salt Lake City down the road. Gives me a little bit extra CapEx to do that this year. pains me to be moving an office that big in the middle of people working remotely, but we need to have a place for people to come in and work, so we're doing that. You can see the very significant investment we made in inventory over the last year and a half. That's to protect our integrators, protect us, make sure that we all have the products that are needed. It took a lot of the cash off the balance sheet to do that. We feel like we're in a really good position with inventory right now. We got it back to where it needs to be, and we feel like we continue to manage it at the levels it's at today. Going forward, we expect, again, cash flow to be very much in line with that EBITDA, less CapEx, less normal working capital changes in the future. Leads us to our disciplined and balanced capital allocation policy. We really think about our capital allocation in four buckets. First, most importantly, always thinking about what's the liquidity of the business. Make sure we have a healthy balance sheet. Never put us in a situation, particularly in times like these when you look out and there's more uncertainty, make sure we have the right liquidity that allows us to manage the uncertainty that's out there. It's always first in our minds as we think about the business. The second is what's the organic growth opportunities that we have? Every day, G. Paul Hess's team, Jeff's team, like, "Hey, we've got a great idea that will drive more revenue." You know, evaluating those ideas, thinking about where we're gonna invest, what new products are we gonna launch, where are we gonna hire an additional salesperson, where are we gonna build a new store, all that goes into organic growth, and we have to think a lot about that organic growth and how do we invest in it, but that's the next biggest priority. Third, we talk about M&A as the consolidator of choice for our industry. We're gonna continue to look at M&A, continue to deliver against our M&A story, and continue to build out our platform of products and locations through a disciplined M&A approach. Then finally, you know, we think about the capital markets. Whether that's debt paydown, whether it's a small share buyback program, I haven't heard anybody talk about dividends, so I'm not gonna mention that word because I don't think that's in our future in the near term. We think about, you know, what is the right capital allocation strategy for the company, as we go through and build the right balance sheet, and make sure we maintain our ability to invest across those other three pillars that are out there. Really good thought process. I think that, you know, we're very comfortable with the balance sheet where it's at right now. We'll continue to make sure that we have the right cash to run the business and do the things that we wanna do. That is the end of the financial presentation. Have some Q&A, and then I'll bring John back up for some closing remarks at the end of it. Keith, you're not allowed to ask any questions. Adam, you can, but Keith can't. Be careful what you wish for. I'm going to capital allocation since you ended there. Yep. Adam Tindle, Raymond James. You know, bringing back to Jeff's presentation, he showed a slide talking about basically unit economics of a branch in Local, and here in your slide you talk about, you know, how Local has expanded integrators and is so good here. If I think about this, you know, you have a 1-year payback, you have an IRR over 25% on opening branches, but you're only opening 6, which is like $3 million of spend, single-digit% of your normalized cash flow on this. Just curious from a capital allocation perspective, why not over-index significantly here? Because all else equal, I can't imagine there's many 25%+ IRR opportunities with a 1-year payback. Maybe just- Yeah. Talk about that. I think there's two answers to that. One is a resource question. Opening a store is not easy. You heard about the great experiences that our team has when they walk into one of our local stores. There's not a lot of people out there that can go run that store the right way to deliver the great experience. You know, I mentioned Wally earlier. He's got a team of a few people. When we go to open a store, we identify a market, we find the location, then the next thing we do is we go start recruiting the team for that market. Making sure we have the right team of people in place. This is not hiring, you know, a clerk to be behind the counter. You really want the right professional in that store to create the great experience. There's a limited resource we have to go recruit those people, and then there's a limited resource of people out there to go do it, and so it's relatively slow to go get that done. We wanna make sure we're not just gonna open stores. We're gonna open them right to deliver that great experience. The second piece is we talked about our disparate systems that we have. We're in the process right now of bringing those systems together. Right now we're prioritizing bringing the systems together and getting that done versus opening new stores. We think that's another 12-18 months journey to continue to get all of local consolidated together. Right now each one of our local businesses that we bought is a separate ERP system. We're bringing them all together. Once that's done, we'll at least have a better opportunity to accelerate if we choose to. We're still gonna have that resource constraint, but right now we think it's more important to make sure we get the system set up the right way to go forward. Andy, you got a follow-up for that? Hi. Andy Raab from FPR Partners. Another question on capital allocation. At least it seems to me your stock is pretty clearly dramatically undervalued. It's got a lot of growth, extremely well-positioned business, trades at a very low multiple, discount to its comps, certainly, massive discount to its growth. Yet there's a tension, and the tension is you have a very large shareholder, and you have a couple large public shareholders, very large private shareholder. There's some complaints on the public side about liquidity. There's not a lot of liquidity. Some folks just literally can't own it, yet you're doing a buyback, taking advantage of that very low share price and very attractive valuation. Can you talk to us about some of the tensions there and the trade-offs and how you think about allocating capital in such a tricky situation? Yep. There are definitely tensions and trade-offs. That's a good way of putting it. I think we share your view that the stock is. I think, John, you used the wording on the last call. I'll just repeat your wording, ridiculously valued, right? We think in that scenario, it's almost delinquent, derelict, not to buy back some of it. Like, it's just like, we have to. Like, given the price of where it's at, if we're not signaling the world, if we're not telling the world that we have the view that it's very, very low, then we're just being derelict as a steward of capital for everyone out there. We also have, you know, stock-based comp that we put out every year. We're trying to make sure that we're not being too dilutive by putting a buyback program in place. It's sort of. It's not directly correlated, but we at least think about that as we think about the amount of capital we're deploying against it and putting those two things together. If we had great opportunities on any one of these things, you know, we'd probably slow down the buyback program pretty quickly to go execute against the others. We're comfortable where it's at today. It's a conversation we have monthly as we think about the levels we'll be deploying. You know, we're gonna continue to have those tensions in the business. I think there's four different buckets up here, and I think you have four different opinions when you talk to various people, and we're trying to balance all that as we think about it. Keith. Sorry, Keith Hughes, Truist. On the capital allocation, I assume in the second half of the year, a lot of this investment in working capital is gonna come out in the normal cash cycle. Is that correct? Yes. I think your inventory levels. Yes. are gonna come down. Yes. You don't have to carry the safety stock. We're getting on top of it, so I don't think it's gonna continue to grow. I would not commit to it coming down, but I don't expect it to continue to grow anywhere close to the rate it's been growing at. Okay. I guess to kind of the capital allocation on debt, you know, this is a negative marker for you, for a lot of investors coming in and perceive cyclicality. What would be the debt level you would like to be at when we, you know, maybe there's not these questions on the future? You know, we've got a great recurring business model. We have a lot of predictability in our business. Outside, you know, what we're looking at right now with uncertainty in the overall general macroeconomic market, what's out there, my background, I came out of franchising, right? I don't know if you're familiar with Driven Brands. They just went public. I spent a lot of my career there. We had, you know, debt levels of 8-9 times because the business was so predictable. I think leverage is really directed at what are your opportunities here, making sure you have dry powder to go deploy against the opportunities you have, and making sure that you have a predictable business that makes you comfortable with the debt levels. What we'd like it to be at, we are very comfortable with 3-4 times leverage on the business. John and I have operated it. When we were a private company up till a year ago, we had debt levels, you know, 2-3 times turns, not times, turns higher than that, and we were very comfortable managing in that environment in the private company world. Now the market, I think, would like to see us down at 2-3. If I had my druthers, we get down to something closer to 2, but not because that's an operating issue around the business, because that's what I think the market views as the appropriate debt levels for us. I think it's one of the things that does impact our ridiculously valued stock price. Yeah. All right. Thank you. Oh, one other thing. On the revenue projection of double digits, well, do you think the majority of that will be organic? That is all organic. When I talk about, you know, 12 to- The double digits is all organic. That's all organic. And, um, and the- There's another 8-10 on top of that from M&A. Yeah. Paul Chung, J.P. Morgan. Just on the different kind of, you know, commercial security home, what are kind of different margin profiles between those businesses? You mentioned contribution margins can be relatively in that low 40s%, but if one kind of vertical were to kind of grow at a faster pace, does that change your view? It does not today. I would say the product mix across all those verticals today is actually very similar. If we did something to change the product mix, if we decided that, I'll make something up. Like, we have ClareOne that we just bought, a security panel. Obviously, Clare is a very small piece of the security industry. If we said that we wanna go partner with one of the big security panel providers out there and deliver that on a third-party basis, and all of a sudden it boosted the security business tremendously, and we brought a whole bunch of partners in, like, that's not in our model. It's not in our 12% growth model. It'd be incremental growth, but probably at the cost of some margin compression. We'll think about that as we bring it. The big thing, it's not the different channels that we have, it's not different segments. The margin rates across the different segments are almost identical. Just on your inventory balances, you know, are you starting to see more of a harvest accelerate? I know you have growth in there, so you have to kind of. Are we kind of in a new normal of some sort of sense of safety inventory levels moving forward? Thank you. Generally, yes. Good question. Generally, yes. I think as we think about next year, you know, our dilemma right now is what we're building is a cost structure in our business that assumes that growth is gonna continue to be relatively compressed for the next 12 to 18 months given the general macroeconomic that's out there. We're looking out and trying to predict what it's gonna be like. If we only buy inventory to that level, our inventory is right now for what we're selling. We think we have the right amount of inventory. If we think about growing at, you know, 10% next year, I mean, I'm not whatever our numbers we're gonna guide, we'll guide. Just to say that growth next year will be slightly below our algorithm because we think the general macroeconomics can be depressed. Well, if we only buy inventory to that level, if the market doesn't come down, and we have the opportunity to go, but we don't have the inventory, we're gonna have a dilemma. We don't want inventory to be a constraint. As we think about deploying capital, we think about organic growth, it's one of the things we're going through for our planning for the next 12-18 months to think about, are we willing to take another, you know, X amount of cash and put it into incremental inventory, even though it's above our normal safety levels? To fuel growth in an uncertain environment so that we're there when our partners are looking for us, and we're not out of stock. Big debate in the company. We don't know where we're gonna come out, but it's something that we're gonna have to continue to look at in again, what's an unusually uncertain environment. Hey, Mike. Over here. Erik Woodring, Morgan Stanley. You know, we've obviously gone through a fairly unprecedented period of kind of both demand and supply changes. Obviously you showed the pricing slide before, you know, but you also talked about kinda supporting your integrators during rough times, and obviously none of us necessarily know exactly what's gonna happen. Can you just talk about kind of what gives you confidence? You've obviously raised prices a lot, but in excess of what you normally do annually. What just gives you confidence that you can kind of hold those prices if we got into a more deflationary environment at some point? What would allow you to kind of hold these prices that are already in excess of what they would've been normally? Yep. I think the biggest thing that gives us comfort is that our integrators have been able to pass them along to their end users. I think it goes back to the demand factors that are out there. It's, you know, if you wanna get a job done, you call five integrators and three call you back and two show up for the appointment and give you a quote, and you wanna get it done. We've been able to pass that through. If there's a deflationary environment that's really deflationary, we might not hold, you know, we might bring price back down if that's the right thing to do for our integrators, for our business to protect our margins. I had an old colleague that used to tell me, "Pigs get fat, and hogs get slaughtered." You know, you never want to be the person that's trying to drive more than your fair share of the margin that's out there, and so we're always gonna evaluate that. Right now, I don't think we're gonna be in a deflationary environment around our product, and so I think we'll hold price. Our integrators will hold price. The market has shown that they can hold price. If the world changes, if the competitive environment changes, we'll obviously monitor that and be ready to react to it. I think where we'd be more susceptible is third-party products. If those manufacturers reduce price, then we would obviously have to follow. The second place where we'd be much less susceptible is our pricing philosophy has generally been to be below the market for comparable products. If you look at our control products, for instance, significantly below the prices of, like, a Savant or a Crestron. Those products like that or our networking or our power where there's a lot of software embedded in them, and we feel like we're the competitors would be less prone to price reductions because they're more value pricing versus componentry pricing. I think we're much more protected. You know, you guys are all honing in on the same questions we're asking ourselves, so. If copper comes down and the componentry of copper in a certain product and competitors start to reduce, we'll follow suit. Ketan Mamtora, BMO. Mike, I want to come back to slide 45. When I look at this table, you know, over 80% of the total integrators have a spend which is less than the average. Given, you know, the breadth of your products and, you know, the service component, one, I'm a little surprised that it is less than the average for sort of 80% of the integrators. I'm curious kind of why that is the case. Then as we think about, you know, taking that number higher over time, do you think you've got all the ingredients in place in terms of, you know, product availability, you know, or the service component of it to really drive that higher over the next few years? Thank you. Yep. John, feel free to jump in here if you want at any point in time. The answer to the last part of your question is yes, for the vast majority of our business. If you think about the home technology piece of the business, as G. Paul Hess said earlier, we have all the products you need to do a job. We don't have all the products you need to do a job in the security or commercial space. One of the things, if you segregated this out between those three different segments, you would see that the average spend on the home technology is significantly higher. In fact, I think, John, you showed a slide. Home technology is $50,000 average. Security, commercial, one of them was $19,000 average. Separating it out, you'd see some different dynamics. Within the home technology space, we've got everything you need, if we have a local store in your market. We have 32 local stores. We think we will have between 60 and 100. I mean, I don't pick a number, and we've got different models and depending upon where you go. At least half the market, we don't have coverage yet. If we're not in your market, you can't buy a TV from us. We don't sell TVs through our e-commerce platform. We have a much broader selection of third-party products available at our local partner stores. There's a huge slug of this that if we don't have a store in your market, we just can't get that share. We just don't carry the products within our core e-commerce ecosystem to provide that. The second piece, as I was explaining earlier, you know, there are three leading control platforms out there, and then a number of other ancillary ones. John mentioned Savant and Crestron. You've got ELAN and RTI and some other ones out there. Typically, partners, like, have one control system. Control4, I know, is the market leader based on number of installs. Based upon revenue, it's actually not, as John talked about. Some of those other systems are actually more expensive. You know, if you're a Control4 partner or you're a Crestron partner, you're a Savant partner, you know, we're not gonna get every Savant partner to switch to Control4 tomorrow, nor do we want them to, right? We wanna make sure we have the right healthy mix of partners out there. If you're not on our control system, that's a big chunk of your revenue. It's a big chunk of your revenue that we can't get unless you're a Control4 partner, decided that's your control system of choice to standardize on. Really you're talking about OvrC. Now we think everybody in the industry should be on OvrC. Like, that's a no-brainer. I laugh a little bit 'cause we talk about different numbers in the company, and there's different metrics that we have. John mentioned there's 11,000 OvrC users. There are. I think the way Eric would measure it is say there's about 4,000-5,000 that have adopted the platform. While there's 11,000 integrators out there that have bought OvrC, a couple of them bought, like, two products and haven't standardized on it yet because, again, they've got something else that's out there. They're busy. They don't wanna shift their business. It's really hard to get integrators to change something they've been doing for 6, 8, 10 years. You heard Jim talk about, you know, he adopted Control4 15 years ago, and he hasn't changed. Like, that's not 'cause other people haven't knocked on his door and tried to get him to change. We've got that same issue as we go and try to capture that share from everybody else. It's every other business. There's people that are out there, and we're trying to compete against them the best we can, and we'll win some, we'll lose some. I'm sure John will expound upon this. I feel compelled to. I think that I'm gonna come back to when John was talking, and we had a similar slide around OvrC, Control4, local adoption. We're in the middle innings. Sorry, I'm a baseball fan. We're in the middle innings. We're like in the third or fourth inning. We've been putting these things together. We've been putting Control4 together with OvrC. We've been putting brick-and-mortar together with omni-channel. We're just now converging the Control4 website with the Snap website. The local websites operate separately from that. We've got the components, and what I would point to is the 17% that are spending $121,000 or $261,000 on average. What I would say is the rest of the integrator base, that's our funnel to work with and move them down in terms of product adoption, target them with rewards programs, target them with sales, and it's been a hard. Even if the products were all ready, which they just now are, it would have been hard to do this because of the supply chain. We've worked through the supply chain to deliver what our commitments have been, but it still held us back in terms of what might be possible if we were really to step on the gas from a product adoption and sales and marketing standpoint. Because the supply chain couldn't keep up with that. That loosening, the products coming together, the websites coming together, those are the things that are gonna help us drive share of wallet. John, you wanna close us out? Sure. Thank you everyone for all your time and your attention. This has been great. This is our first investor day. Hopefully, we'll have a lot more. Would love anybody's feedback directly to Eric and Matthew, and their team. I think that would be really helpful for us to make it more productive. I definitely sensed a hunger to talk more with these guys in the room. Hopefully, the breakout session gave you a little bit of that opportunity. Maybe we can work to do more of that in the future. I hope you leave here today with just a few things. One is we're in a big market. It's a healthy market. It's durable over the long term, number one. Number two, we're really unique in what we do. There's nobody else like us. We've used the tagline inside our company and externally, like what we do is only available here, only here at Snap One. You can only get Only here can you get the best products, the best software platforms, the best service. You can get it the way you wanna drink it, whether it's brick-and-mortar or e-commerce. We are in the early innings, and since I just mentioned all the elements of being in the early innings, I won't repeat myself, but we're still putting this together. We've had great success. It's resonating with our partners. It's resonating in people's homes and businesses, but we're still early. Something really struck me today about the integrator panel, and it's never struck me before about an hour or so ago, and it's when you guys were collectively talking about your. We talk about you as partners. We talk about the people you serve as customers. I heard you guys mention the word client frequently. Well, clients are different than customers. That is like when you guys all ask questions about kind of how does DIY compare to what you do, the discerning customer that we serve, these are clients. They're expecting certain experiences. They're expecting certain services. Our integrators are small businesses. Our reason for being is to equip them to be of great service to their clients, and that's a different market segment than a customer. Then, look, you guys are asking a lot of questions around the economy. Of course, we're asking those questions ourselves. We are looking at that in terms of how we invest. We have a commitment to continue to grow the profitability of this business in any reasonably forecasted scenario. We're doing that. We're benefiting from the investments we've already been making 'cause they've been pretty significant over the past. We're very cognizant, but we are. We recognize the environment we are in, and we really feel like we've built a very resilient business model as we go forward. That's it. Thank you again. Feedback welcome. Thanks for your support. If you're an owner of the stock, thank you. If you're thinking about investing in the stock, then we're just grateful that you're spending the time with us and interested today. Thanks to my team. You guys did a great job. Ashley, you always put everything together so elegantly for all of us, so thank you. Come to the showroom. Here's what you're gonna see at the showroom. We have an integrator who recently switched from another control systems company to Control4. Oh, I have to control the slides. Okay. At Gilmore's, you're gonna see. I was over there yesterday afternoon, so you'll get to meet some additional integrators, number one. Number two, you're gonna see a set of experiences that I think will stop you from asking the DIY question, at least for this market segment that we talk about that I'm gonna call clients, not customers. So that's number one. That will be a real highlight. You'll get to sit in a movie theater, that these are the types of things that our partners install for their clients that is really well done. You're gonna get to see OvrC, which is a really important You guys all heard about OvrC today. You'll start to see why it's so important in terms of the integrators business. Kenny Kim will be setting that up. We'll have some food. We'll have some cocktails. Look forward to a more informal conversation with all of you. Thanks again. We'll see you over at Gilmore's.