Plover Bay Technologies Limited (1523) Earnings Call Transcript & Summary

Welcome to the conference call for Plover Bay Technologies Financial Year 2024 Annual Results. My name is Christopher Tse, and I'm the CFO of the company. We also have Mr. Alex Chen, Founder of Plover Bay and the management team here. We will be hosting the call this evening. May I remind you that our results are now available on the Hong Kong Exchange website, and our PowerPoint is available on our own website at ploverbay.com. We would also like to remark that all currency amounts mentioned in this call will be in U.S. dollars, unless otherwise mentioned. I will now start with a short briefing on our numbers in financial year 2024, and then Alex will follow up with our business outlook. Afterwards, your questions are welcomed in the Q&A session. Our sales have surpassed the USD 100 million milestone for the first time. During the year, our sales was USD 116.8 million, an increase of 24%. Gross profit increased to USD 64.1 million, an increase of 26%. Gross margin reached 54.9%, an improvement of 0.9 percentage points compared to the previous year. Meanwhile, our total operating expenses, which includes other income and finance costs, have increased just 5%. This has led to our net profit increasing to USD 38 million, growing 35% year-on-year. Net profit -- net margin continued to improve to 32.6%, which is an improvement on 2.8 percentage points over the previous year. Our diluted EPS has reached USD 0.0345 per share. And finally, considering our strong results and that we have passed the USD 100 million revenue milestone, we declare a second different -- second interim and special dividend totaling HKD 0.1942 cents per share. Let's take a closer look at our revenue growth. In 2024 our revenue growth was strongly driven by the sales of the Fixed First Connectivity and Mobile First Connectivity segments. Fixed First increased 18% to $17.1 million, while Mobile First increased 34% to USD 66.2 million. In both segments we have seen strong growth -- strong demand of our entry level high volume products such as the BR1 Mini series and the B One series. In addition to that, as part of our collaboration with Starlink, we created a channel program dedicated to reselling Starlink products. And this program has also contributed to our growth. Next, Warranty and Support Services Segment has mildly increased, 6% year-on-year to $25.3 million, while Software Licenses segment increased 26% year-on-year to $8.2 million. Since these 2 segments are highly related to recurring revenue, we will jump directly to analyzing the recurring revenue. So our recurring revenue reached $32.2 million in 2024, up 12% year-on-year. Percentage wise, recurring revenue has decreased slightly to 27.6% of our total sales. As we have mentioned in the past, recurring revenue closely follows past growth trends. Our equipment sales growth in 2023 was 5% and our recurring revenue growth this year closely reflects that. However, I'm happy to report that the actual dollar amount of subscriptions that we sold in 2024 increased 35.8% year-on-year and the number of subscriptions at the end of December 2024 increased 33.7% year-on-year. Our take up rate at December 2024 also increased to 34.1% which is up from previous years 30.5%. These positive numbers all point to a strong trend for recurring revenue in 2025. Geographically, sales to North America increased 38% to USD 74.8 million. Sales to EMEA increased 6% year-on-year to $29.1 million. Sales to other regions, which mainly refers to Australia and New Zealand, jumped 78% year-on-year to $4.2 million, while sales to Asia decreased 12% to around $8.8 million. As mentioned previously, we have seen strong sales of our entry level devices and this was seen in both North America and EMEA. Our partner in Australia also began to -- began delivering large projects in their pipeline last year which has led to sharp growth in their region. Meanwhile, Starlink was a growth contributor in all these 3 regions. In Asia, the sales continue to be largely driven by government related contracts -- I mean government related projects, which can be lumpy from time to time. Next, our gross margin increased to 54.9% in 2024. The improvement can be attributed to continued cost optimization on our products. And we also have a more concentrated product portfolio. That is our -- which is our entry level high volume products and this allowed us to benefit from a stronger economies of scale. As a result, our overall hardware margin has improved to 39.4% from last year's 35.8%. Gross margin from recurring revenues remains at the high level, at 93.3%. Next, our operating expenses. Overall operating expenses increased by 8% year-on-year to $20.6 million. Percentage wise operating expenses continue to drop and now it's down to 17.6% of our sales. We continue to streamline our operations and automate workflows. Some key improvements this year include improvements in our shipping procedures, a review system for suppliers by our staff and eliminating some order workflows at our partner site. These improvements help us keep a clean, lean team even though our revenues grow. In terms of number of staff, we had 180 staff at the end of last year, which is just a slight increase over the previous year. And finally in 2024 we recorded strong operating cash flows of USD 55.2 million. This strong operating cash flow was driven by our operating profits and improvements to our balance sheet which mainly include our contract liability which increased to $32.3 million this year at the end of the balance sheet period as mentioned, coming from a strong subscription growth. Meanwhile, our inventory levels slightly decreased. Our inventory turnover is currently at 115 days, which is a massive improvement compared to 2023. Finally, these improvements have led to a strong improvement in our cash position to almost USD 66 million at the end of the year. This sums up the financial section. Now passing the floor to Alex.

Thank you, Chris. So for the last 15 years we have remained focused on one single goal, so that is to make connectivity more reliable, faster and more versatile across all use cases and locations. So 2024 was a milestone for us because this is the first time we're crossing the $100 million revenue mark. So -- And the growth is basically coming from our collaboration with Starlink. So this cooperation was began last year. So now we have a lot more new retailers joining the Peplink-Starlink channel program. And also throughout the year our channel partners hosted numerous marketing and training events. So this helps us to drive the awareness and expanding our reseller network to now we have over 400 plus partners. So this is significantly enhancing our brand presence. And at the same time as our partners are delivering much larger, much more complex projects and many of them are multiyear projects. So this includes the vehicles, trains and vessels. So basically so we are improving the connectivity and providing mobile connectivity in these areas. And then we also have a mining and construction sites. We provide robust, uninterrupted communications to these construction sites. As we have mentioned some years ago, the connectivity market is pretty long tailed. So we also have branch networks and advanced manufacturing facilities. So they all require automation and real time operations. And of course a big market of our product was deployed in emergency services including the remote health care, fire response, ambulances and where connectivity is a much critical thing. So maybe we'll see is $100 million mark is not -- is actually pretty general in our industry, but this is especially important to us, to our team because this is kind of like an endorsement proving our unique approach is working. So the Plover Bay approach is not a glamorous approach, but it is just built on deep expertise, passion and strong partnership. And so I guess over the last 8 years being listed in the stock exchange, so we have proven that this model is pretty sustainable and it simply works well for us. And another milestone for us that we reached this year is the recurring revenue. It keeps expanding. We are seeing is that the take up rate is increasing and so we're pretty comfortable with this number, will keep going up in the coming years. And at the same time we are expanding our ecosystem by having more new products coming up. And edge computing is another area of focus. So you will see in the next couple of months we'll be launching new products with edge computing capabilities. And at the same time we are depending our collaboration with Starlink. So you probably seen our -- seen from our newsletter. So now we are also covering the enterprise kit from Starlink. So other than the high-performance antennas, so now we are having a wider range of product offerings that would work with the Starlink ecosystem. And this is actually helping our channel partners to have access to very interesting WAN technologies. So in the next coming few months you will also see we will have some more products that can make all these LEO, the Low Earth Orbit satellite deployment easier and much more simpler. So beyond the Starlink we also strengthening our partnership across the industries to enhance connectivity solutions. So last year we launched a Better Together program with T-Mobile. So now we are able to bundle the T-Mobile 5G plans with Peplink routers and subscriptions. And then is -- So this program is actually pretty well received by our channel partners. And at the same time we are also working with our channel partners to organize thousands of -- dozens of regional events, technical summits and use case sharing sections in 2024. So this is actually helping our new partners and the customers to strengthen the Peplink ecosystem. In 2024 we also seeing is that the number of certified engineers -- Peplink certified engineers have increased for more than double compared to the previous years. So this is reflecting this we have a strong industry recognition and people are spending time, resources and energy to adopt our technology. So basically we are seeing is the fundamentals of the company are pretty much remaining the same. And of course now we are seeing is that the world has -- okay, the world is having -- is going through rapid changes. But to us, we see this is actually an advantage to us because over the last 18 years we have a track record of embracing changes and challenges. And I think our teams we have a very positive attitude that we can turn all these challenges into opportunities. And we have shared with this other -- the magic recipe is actually on the hiring side. We just -- We only hire people who love to -- who love -- who has a big passion in doing what they love. And our channel partners is that they might not be the biggest company, the biggest distributor in the country, but they carry a lot of passion and emotion in building the business. So this is -- and in this combination this allows us to rapidly address the opportunities and adopt the changes. So we are fortunate to have a passionate and knowledgeable and results-driven team and a strong ecosystem of partners. So basically our fundamentals are pretty much the same. But as you can see, this result is pretty repeatable and sustainable. So since our IPO back in 2016. So we have spent the past 8 years in building a resilient, innovative and fast growing companies. So investing in Plover Bay requires conviction, confidence, patience and courage. And we deeply appreciate the trust from our shareholders, from you guys, that have put on us. So as I mentioned a few months ago, our company is like a young professional. So now the company is just like a young -- it's just like youngsters. So it's full of energy, excitement and ambition. So despite all these rapid global changes, we are seeing exciting opportunities ahead and we remain committed to create long-term value to our shareholders. So again, it's to express our gratitude. So this year we are announcing a very special dividend to our shareholders and we hope this token of appreciation for your continued support and belief in our journey. So again, thank you for joining us in this incredible adventure.

Thank you, Alex. So now we can start the Q&A session. We'll start with live questions. So first we have MinRan Wang…

Congratulations again. Another good year. Very good year. I just have 3 questions, very quick. The first one is, I saw you have enterprise switches, high end switch and also some other product, antenna you already have. And do you think those kind of categories will take shape? I mean, is it already contributing meaningfully to the top line or it will be later?

Sure. So first of all, let me go to the antenna first. So we enter into this antenna business probably back in 2019. So we had a low start. But now we are seeing is that this antenna business is growing pretty well. As you can see, so we are expanding this product line as well. But of course compared to the big -- compared to the major product families, we are seeing the growth is there, but it's not substantial yet. But at the same time is this is a very meaningful business to us because this is helping our channel partners to have a peace of mind so they do not need to worry about the compatibility of the antennas and the systems and others. And at the same time we are seeing we have ways to innovate in the antenna technology. So that's one. And then back to the enterprise switches, as you may see on the forum, so yes, we launched these enterprise switches probably back in December. And then so I would say from a numbers perspective, it is not creating any meaningful business yet. And then also we hear from our channel partners that there are certain things that we need to enhance. For example, people do not want to have in control, manage only switch. They would love to have a local web UI. They would love to have a flexibility in managing the switch individually. So we are working on all these feedback, but we remain optimistic about switches to become a meaningful business in the future. And again, so the network switches, the POE switches. You may see there are many other alternatives in the market, but we do see it can create a really interesting value proposition in our ecosystem. So in the next couple of months, you will see we will be enhancing this network switches.

Great. And for the data plan, you have like a long duration, long expiration data plan, like 1 year. How is that going? I mean I think that's probably a starting point because -- I don't know of others, but it seems like special.

Yes. The data plan business is -- so we are seeing the capability of having the data plan embedded on the devices is a very powerful play in terms of the business model, in terms of the convenience, in terms of the peace of mind. So this is definitely a very interesting business. And I would say is now we are putting them together under the SpeedFusion Connect. And you can see the SpeedFusion Connect is generating pretty meaningful revenue. But at the same time, I think we -- this is just the beginning. There are still a lot of value propositions that we can create from the SpeedFusion Connect thing. And more importantly is this is going to make multi-radio connectivity affordable and accessible to the general market.

Okay. And for the 2025, this year, you already passed the 2 months, how are those 2 months going? Do you -- comparing to the last year, like how is this going for you?

It's doing great. Yes. If we just sample the last 6 weeks compared to the last -- yes, the last 7 weeks compared to the last year, we are seeing a growth. So in other words, we are not pushing the numbers to fill up the 2024. So I think we shared this with our early investors some years back is we embrace organic farming. So we do not put fertilizer on our numbers.

Okay. Great. One last question. So I think the last time I asked you whether you are the only partner for Starlink, you said yes. That was maybe 1 year ago or maybe 0.5 years ago.

Yes.

Is that still the case?

Yes, that's still the case. We are very happy about that.

Next, we have Mr. [indiscernible].

Yes. So I have 3 questions. First is, can you give us a color of how the current year -- I mean, obviously, you had a great year last year. How do you expect 2025 to be? The second is, this whole issue about Trump tariffs, how this may impact you and what, if any, is your strategy to deal with that? And last but not the least, you have a lot of cash. What do you plan to do with the cash? Is there share buyback or anything like that likely?

Sure. So first of all, 2025 is we remain optimistic, pretty optimistic about our business. And again, I think it's on 2024, we -- so we -- okay, our business, you can look at that is we do have projects. We do have one side of projects and the other side is the run rate business. Our run rate business is doing very well. But at the same time, yes, we do win projects from time to time. And these projects are now starting to become multiyear projects. So I would say on the projects, we see we have strong fundamentals in winning the multiyear projects. That's number one. And at the same time, is our run rate business is still doing very well too. So we are pretty optimistic about 2025. And then also regarding the tariff, I guess so in this dynamic world, every day, things happen. And also with all these tariffs, this is not specifically to a single company. So basically, our supply chain is in Taiwan. And then also if there are tariff on Taiwan or in other countries, I would say everybody are facing the same issue. If everybody are facing the same issue, we are not concerned about that. But we do have a pretty bulletproof business approach, which is we do not have a sales team. We, yes, Plover Bay Peplink, we do not have a sales team all the time. We always work with our channel partners, and that allows us to become super-efficient because we focus on products, we focus on R&D. And then is we focus on making competitive products for our channel partners to win projects. And then -- and at the same time is we have a pretty strong community. The run rate business is doing very well too. So the tariff is actually not much a concern to us. And in terms of the cash, I think we're not doing -- we are not making any changes just like previous years. So -- and this year, we are basically having a record-breaking special dividend to our shareholders. So I guess it's a share buyback or whatever, yes, we are very open to that. But again, our fundamental is the products. So we will focus on -- our primary concern is always focusing on making competitive products needed by the market.

Okay. Just on the growth, can you give a percentage at least, a range or anything? Do you expect 20% growth, 30% growth, 10% growth in 2025?

I would say so we never put a target to ourselves because this is a product-led company, its product focused. So we feel everything is a byproduct. The focus should be on the product. When we have a winning product, it could be 20%, it could be 25%, we don't know. But looking back is, I think we have not disappointed. I would say looking back is our growth is actually relatively consistent. But again, we don't manage this company by saying we need to grow 20%, 30%. No, that's not our thought process. We just keep thinking which product, what kind of products are needed in the market, what features are needed, what price points are needed. So everything else is by product, including the cash.

Next, we have [indiscernible].

First, congrats on the results. Following your previous answer, I also have a question on our products. You just mentioned about we will incorporate more edge computing to our products. Can you give us some color on this type innovation? And maybe is there a potential time line for our new products with this edge computing coming out?

Sure. So new products is -- okay, we have basically 2 areas. One is the product refresh. So the product refresh keeps going -- the product refresh keeps going all the time. And then -- so you will see in the next couple of months, we will have new generations of products. Yes, they will just basically keep coming. So all these new products are -- maybe they will be equipped with a better radio, higher performance. That's one side. And then is on the other side is we keep enhancing the software features, the software capabilities because we keep emphasizing that Plover Bay is not a hardware company. We are a software company, but we do make hardwares to differentiate our products. And we do make hardwares such that it becomes a very specific for certain industry. But at the fundamental, we are a software company. So we will keep having software features to make things more easy to use, and we are also building an ecosystem of services. And that's why you will see the subscription pickup rate is rising. The reason why it's very simple is because we put all these software features and turn them into a package of convenience features. So we do not enforce customers to pay for these subscriptions, but they will voluntarily pay for these convenience features. So this is actually a fundamental difference between us and some of the industry's network as a service players.

I just want to know more about the edge computing part. Do you think you have reached like a breakthrough point for this technology? And how do you know is our -- are our competitors also incorporating this new tech into their products?

Sure. The edge computing is a very interesting thing because now you can see many of those IoT deployments or network deployments. People might be putting a little device, like the Raspberry Pi or simply a PC to run their specific software. And then -- so that becomes a 2-box solution or sometimes even -- sometimes even that becomes a multiple box solutions. So now with the edge computing capability, people can run their software on our devices. So that means the deployment will be much more simple. And that means the whole system will be less complicated because now this is going to become a single box solution. And that is so with this edge computing capability and that -- is system integrators or managed service providers. They can use our products to become a building blocks of their solution. So we see this capability is quite useful for system integrators and MSPs. So I would say is the technology side, we are already there. But at the same time is we -- just like many of our products, we just make them simple. We just make them easy to manage. We just make them easy to deploy. And we have an ecosystem to help improving the user experience. So I would say now is this might be a bit early to predict how much revenue we can generate from this edge computing thing. But again, when we look into our business, we focus on what is needed by the market. And we think this edge computing thing is going to make people's life a lot easier. So eventually, it will be good for the business. And in terms of the cost structure or the cost increase on our side is actually not that huge. So if we look into other players in the industry, do they have edge computing capability? I would say yes and no because, yes, some of them -- yes, they do have edge computing capability, but it's just difficult to use. It's just complicated. And for the low-end players, they simply do not have this because they try very hard to save $1, $2 just to -- yes, because they entirely focus on cost. So they are not looking at this edge computing as a value. So we see we have a interesting position in the market.

Next, we have [ Stephen Wang ]. [ Stephen ], we can't hear you.

I'm sorry. Can you hear me now?

Yes, yes, yes. Now it's not bad.

Okay. Sorry, sorry. Yes. So I actually have 2 questions. Sorry, I was a little bit late, so I'm not sure whether that was being mentioned. The first one is about the recurring revenue. I mean, of course, we see very healthy growth in both the hardware sales and also the recurring revenues. But then I just wonder like is there any reason like why the recurring revenue actually grow and I -- like, like, I mean, it's a very big growth, but it's like around like 10%, 15%, but not like as much as the hardware sales. Is it like because it was more reflecting the previous subscriptions rather than the new one? So that's why we [indiscernible] for us to see the growth kicks in? So that's the first question. And part B of the first question is actually about, are we expecting any -- like how much of the recurring income will contribute to the total revenue in the future? Do we have any target for that? Or -- yes, or it's actually very dependent on the hardware sales, obviously it's very hard to predict? This is my first question. And then I can ask the next question later.

Let me answer the first part of your question. Yes, you are correct. Because if you look back at 2023, our equipment sales growth was pretty mild at like 4%, 5%, yes. So basically, recurring revenue is partly a deferred revenue, right? So it is closely linked to our sales from the sales growth -- hardware sales growth from the previous year. So what you're seeing in 2024 is basically, the recurring revenue growth is reflecting the previous year's equipment growth. So that's the first part of the question. And the second part, you asked about the target for, I guess, our take up rate. Is that correct?

Or like do we have any like over time, like in 5 years, 3 years, 5 years, do we expect like how much would recurring income we see as a proportion of our total revenue? Or it really depends on how fast our hardware sales are growing?

Again, we do not set a hard target for our recurring revenue percentage or something like that. But then I believe that we will continue to grow.

Okay. Let me share this with you. So, as we mentioned earlier, so we are not a hardware company, but hardware is a platform for us to put our devices into various application scenarios, from vessels, trains to branch networks. So hardware is just a delivery cues for that. And that is we are a software company. So we do put all these software features on the device and as a firmware. But at the same time, we are offering services like SpeedFusion Connect. And then as a result like the data plan and all this kind of things, we call that the convenience features. So we bundle that, we package that into a subscription. So that's why is even though we are not looking that from a numbers' perspective fundamentally, but we do believe that these numbers, subscriptions will keep growing because we are just making the whole ecosystem easy to use. We are just making the whole ecosystem helping to maintain a reliable connectivity for all scenarios. So with these fundamentals, we believe the subscription business will just keep going.

Yes. I agree with you. I mean the core value or the core edge of Plover Bay is actually our software, our technology that can bundle different kind of broadband, 5G and everything together. So that's actually our core competitive edge. So that's -- my second question is in relation to that. So we have been -- I mean, I'm so happy to see the company achieving the new milestone. But for us to go much -- I mean, to be a much larger company or to grow maybe 2x, 3x further, I just wonder, we have been very good in the 2B business. But then if you look at the chip industry before, I mean, many years -- many decades ago, the turning point for a lot of those chip companies getting much larger is because they turn from serving the military to serving consumers because like there are a lot of consumers like radios, anything that require chips and then they become a much larger company today, a much larger market as well. So I just wonder, are we having any plans to make use of our technology to make it more easily accessed by consumers or other different players or different kind of use? Because, for example, I think in mobile, there was like an app called [indiscernible], right, which they are already trying to do something similar. I mean they may not be as good as us, but then for consumer market, they are not requiring the latest -- the newest technology. So I just wonder like what's our plan for further growing the company? And do we have any plan to actually penetrate the consumer market with our technology because we have a very good product, but then we need to have -- be easily accessed by a lot of the consumers as well, right? So like what's your thought on this thing?

Absolutely. We love experiment. So we experiment a lot of new stuff, and we love to -- we love experiment, and we are pretty good at turning dreams into reality. So we would love to keep doing all these things, and we hope in the next couple of years, you guys will be impressed by us. Yes, we keep doing all these experiments. Stay tuned. Next is [ Gerard ].

First of all, congratulations for the good results and thanks for the dividend. I just have a few questions on our business with Starlink. You mentioned that it was our main growth driver for 2024, if I'm correct. Is it possible to have an idea of the contribution of the -- of these projects with Starlink in our revenues last year?

Okay. Great question. So number one thing is Starlink helped our brand awareness a lot. But it doesn't mean we are selling a lot of Starlink. It is -- Starlink is one of the application. Starlink is one of the network that we embrace. But I would say is because Starlink has a really powerful brand, so -- and that helps people to recognize Peplink. So I would say is the value of Starlink is really more on the brand awareness. But it doesn't mean we sell a lot of Starlink or we sold a lot of Starlink last year. No, that's not the case.

Okay. I see. And you mentioned in the slides that one of our big customers was Royal Caribbean.

Yes, true.

So just to have an idea of the deployment of our solution with this company, are we present in many of their vessels now?

So, We are in the entire fleet. Yes, I think in a nutshell, you can look into that as all these amazing cruise boat is just like a huge floating hotel. It's like floating city. And then -- so is -- they need connectivity when they are in the ocean. And then so, I would say that is one of the high-profile deployment that we win that together with Starlink. And then, so this is -- but this is not the only company that has that kind of needs. So there are other cruise boat companies. There are also other containerboard company. There are also superyachts and there are ferries and there are fishing boats. So I think is this more like an iconic deployment, telling people that we are capable to -- or people are trusting Peplink together with Starlink to put that as a primary connectivity for thousands of people in the cruise boat. So yes, it's an iconic deployment. But I think the meaning behind it is actually more important.

Okay. Are there some other submarkets other than these the boats or vessels where we can propose the Starlink solutions?

Absolutely. Absolutely. The boats are actually -- it's an amazing market. It's surprisingly big. Yes, we are actually not just -- again, we are not just only in the -- we are not just only in the superyachts and the cruise boat. There are a lot of containerboards too. And a good number of that with some really reputable names are using our products too.

Okay. But other than these segments, are we, let's say, on some of the markets with Starlink?

Sure, sure. Again, we mentioned some time ago that with -- connectivity has a really long tail market from the rural networks to fiber fill [ over ]. And that is so even in Southeast Asia, we are seeing some people are using multiple Starlinks for base station infrastructure. So there are a lot of other markets. Again, if you look into the connectivity market, it's very simple. Do you want to rely on one single connection? Or do you want to rely on multiple connections and become just one single pipe? So the answer is obvious. People would love to have multiple connection technologies and pop a single pipe for that. And that is the crown jewel of our business.

Okay. And just to -- coming back to my first question. So you say the contribution of these projects with Starlink, they are still -- in a way, they're not substantial compared to the total revenues of the company. But in terms of brand awareness, it's…

I would say it's meaningful, but not substantial. But the brand is substantial.

Right. So should we understand it's around, what, 10%, 15% of our revenues, just to have a ballpark figure?

We don't have any numbers on that part.

All right. Okay. Okay.

Next is [ Warren Yung ].

Congrats on the results. I have 2 questions. My first question is on the take up rate. So it's 34% in 2024. So my question is on the remaining 66%. When you speak to your channel partners, what are the biggest reasons why they don't choose to subscribe to your software services after [indiscernible]?

So I think there are quite a few reasons because our user base, some of them are actually not large users. For example, some users will only have one device and they really do not need the cloud management capability for that single device or maybe they are a consumer and in their -- from their perspective, they probably do not need a very high level of warranty. If the device breaks, they could buy a new one. So I think these are some of the reasons why our take up rate...

Okay. Let me elaborate this further. So I think is our branding is actually getting stronger and stronger, and especially with all these partnerships. And then is, so there are customers who probably don't know there is a subscription element too. So of course, our marketing team will be doing a much better job. And at the same time is we will be enhancing our software ecosystem, subscription ecosystem with new features. So we're working on those things. And this is actually going along with what Stephen just asked earlier about are we going to the consumer space or whatever. So I think so we have our way in expanding the market, but we won't just say, okay, this is a consumer product. It's not like that. So because we do not want to become just a me too product company. So we want to be innovative, and we experiment with new ideas. So I think in the future, you will see people -- you see the take up rate will be increasing. But now we are doing a couple of our testings. I mean all these testings is on the business approach. So we understand the fundamental is when we charge a small subscription fee to give people peace of mind, people will love this. And when people love this idea, so the overall business will be growing. So I would say is now this take up rate is do we need to do something to ramp it up or whatever? Yes, we do, but the solution for that is not looking at the numbers. The solution for that is what makes sense to the end customers.

Understood. That's very helpful. Just one more question. In your partnership with Starlink, you mentioned it has expanded to include their enterprise products. Does this partnership require you to take a minimum order of products from Starlink and therefore, require you or your channel partners to take inventory?

Absolutely. I mean Starlink does not work with everybody. So every direct engagement with Starlink would require some form of commitment. And that commitment is actually not a small commitment. But again is in the world, in our industry, there are many, many people who are cash rich, who are willing to spend money. But the thing is we actually have one pretty unique value is we help to make multiple connections reliable. And I think is that this is actually a very interesting value proposition for Starlink and other WAN technology providers because when we -- when customers require some form of unbreakable technology, we are the most mature one. We have been doing this for 18 years. Yes, now you might see a lot of people might think they can do bonding, they can do similar things like what we do. They can do that at a fraction of price. Yes, you will hear people saying things like that. But -- and when people are looking for a reliable connectivity, they want something proven. They just want a reliable connectivity. So for reliable connectivity, is very simple. You just can't rely on one single connection. So I think that is the fundamental reason why all the WAN technology providers would love to work with us, including Starlink. And again, I think this relationship is mutual. We love working with them too. We love working with Starlink too because they have an amazing technology that can connect almost anywhere in the world.

Next we have Jeff [ Ang ].

Yes. Congratulations to the amazing results. I've got 2 questions, if I may. So my first one is that I understand you have channel partners doing the business on the ground for you. But I just wanted to check if you have any sense of the percentage of public sector revenue in the United States? That's my first question. And then my second one is to do with the multiyear project. Just wanted to get a bit more color of it to see are these projects so big that they have to -- the deployment of hardware has to be divided into different phases that takes years to finish or you've got a lot of recurring revenue attached to these projects? And I know a couple of years ago you guys were doing more customized hardware for certain big clients. So I just wonder if you are still doing -- if you still customize hardware for these type of projects?

So the first question, how much is from public safety so -- or the public services sector. Okay. Let me explain this. So first of all is our definition for the public safety are mostly ambulances, fire services. So basically, it's -- just now on the PowerPoint we shared with everyone, like the recent Los Angeles, the forest fire, yes. So they are using our products to help fighting the fire, and that is a lot of all this public safety business. When people started to deploy, it is -- they cannot finish everything by 1 year because the thing is simply is that they won't be able to stop everything and just switch it or -- and just change the gears or equip the gears with our products. So that's the nature of this multiyear thing. And at the same time is a lot of all these channel partners are working with our distributors because our business model is very simple. We focus on the products, and we let the distributors being our extension and let them do the sales work and let them recruit the channel partners, but we work with them closely to understand what is needed by the market. So we do not have numbers about how many channel partners are doing things like this because sometimes these channel partners could be very small, but sometimes it could be a very large system integrators focusing in that space. And again, we do not want to involve too much on the sales part because if that's the case, it will be a distraction for us. Instead, what we need to do is we should just go back to make our products reliable, competitive and advanced. So that's why as we do it -- we don't have a numbers for that. And then, so for your second question about why these projects are multiyear projects is, so a lot about these projects, they -- okay, let's say, for example, this is a $20 million opportunity. So they may be just -- they won't be able to do all that thing within 1 year. So this could be spread into like 4 years, 3 years, something like that. So does that answer your question?

Yes. And do you do any customization for these type of projects? And are there any differences in terms of recurring revenue compared to your brand, [indiscernible] runway business?

It all depends. Generally, we do not like customization business. We do not do OEM business generally. But again, it depends on who are the customer. So our rules of engagement is very simple. If the customer is knowledgeable, if the customer knows what they are doing, if the customer understands what value we can bring to the table, so this is a good customer. Because so we do not want to have a high maintenance customer asking us to do this and do that. And eventually, they are not sure what they want to do. So we don't do that kind of business. But instead, if the customer is knowledgeable and that maybe is a new area or maybe that is a new vertical market that we have not done before, then we are very willing to work with them, and we're very open-minded and to work with them to have a customized product for that segment. But again, our approach is we are not in the business of OEM. So we are in the business of understanding that vertical and create a specific product for that vertical.

Understood.

Maybe we can take a few questions from the chat room. So probably a question from Ignacio Osborne. So are we considering any collaboration with other LEO satellite network providers?

Absolutely. Absolutely. So actually now -- so we are already working with Starlink, and we have also seen our products deployed with -- for OneWeb. And we definitely will work with other LEO providers as well. Again, our view on that is we love multi-WAN. So any wide area network technology is good. So we will embrace different wide area network technologies.

Next is from [ Haseeb ]. Some commercial airlines have started offering in-flights into that using Starlink. Is that one of the areas where heavy products are being used for Starlink? Can this be a significant growth opportunity?

I can share a bit with you that certain models that we have is already FAA approved, but I cannot mention who are the customers. But we do have products that have FAA approved.

Next is, who are the competitors that we see with our products? How can we compare with them?

Yes, we still have the traditional players like Cradlepoint, now it's called Ericsson Enterprise Wireless, and then Digi, and then is -- who else? Yes, basically is we don't see much competitors because we just focus on our products. But I think we are not compete -- okay, if we look back into -- if we look back into our fundamentals, we are a very focused company. We focus on connectivity. We focus on reliable connectivity. And that is -- so we make hardwares kind of like specifically for various verticals. So I think it's our -- to carry the same approach in our industry is very hard because you need all these products to be certified for various vertical markets. And you need carrier certifications. So -- and then -- so this is a very complicated business. And for the smaller players, they might be telling the customer that, oh, yes, on the data sheet, I fill up all the check boxes, but they probably don't have the certifications. Because if you need to put the product in the train, you need a lot of various certifications and various countries carries various certifications, and of course, operators, mobile network operator certifications. So all this and that. So for the smaller players, this is very hard to compete. And for the large players, they will say, this market is too small. So they might not be interested in doing this. So that's why we don't see much competitors in our space.

Next is a question from Brian John about autonomous and teleoperations. So given the current market trend on robotaxis, drones and humanoid robots, is there any material change on the demand? Do you think it will be a transition period that teleoperation and real-time data are needed for model training? And in the future, AI will be handled at the edge, that makes connectivity a less important factor?

Sure, Brian. You know what, actually, is we see -- we just call all these things mission-critical connectivity. And that is I would say is when people need mission-critical connectivity, it's very likely they're using our technologies and our products. So absolutely, we're absolutely in this space. But do we really specifically look into these areas? Then the answer is no. Because the thing is, I think we see a big picture here is reliable connectivity. So this reliable connectivity is extremely long tail and the market is pretty big, because from -- even from a home connection, if the person works from home or if the person, they need to have a lot of Zoom meetings at home, so that's a mission-critical connection. And at the same time is -- so all these delivery robots and all that kind of things, yes, including what you mentioned about the autonomous vehicles, teleoperations, yes, those are mission-critical connections. And that is our primary market, I would say. So yes, yes, we are in that market.

Brian's next question is, we mentioned that SpeedFusion will be integrated into a module. So can we talk about a little bit?

Sure. That is an ongoing thing. We tried it very hard. We failed it and we keep trying. So we have a product called SpeedFusion Engine some years back. It's kind of an arm size product with 2 cellular modules on top of it. And then is -- so it is a cool product. Engineers love it, but it's not generating a lot of revenue. But there are drones. People -- there are drones using our products for that. So we are still tapping this market by various approach. And I would say is later this year, hopefully 6 to 9 months later, we should be able to show something interesting to you guys, but we are now taking a slightly different approach.

So question from Henry. So Henry asked what's our vision 5 to 10 years forward? And are we going to just focus on SD-WAN and connectivity? And do we have any plans to expand into, say, cybersecurity or enterprise software, maybe consider M&A for future growth?

Sure. So we love to stay focused. And I think it's one key strength that we have is we are extremely focused. And we know what we are doing. So I would say is, yes, we are always looking at the new markets or what makes sense to our ecosystems. But now is the connectivity thing is still exciting us a lot. So I think we will stay -- we will maintain our primary focus all the time because this primary focus, we still see this is just the beginning. But at the same time is we are very open-minded in looking at M&A and other opportunities, too. But for now, again, we see this connectivity thing is super exciting.

Okay. I think the remaining questions are pretty much discussed in the -- or asked by someone else. So we'll probably stop here.

No, I think it's a very interesting question. Yes. So we see Asia's weight continuing to decline. Is there a specific reason why this is happening? Okay. I think is part of the reason is we are not price competitive for the Asian market yet. And probably this is due to the supply chain constraint because now is -- the U.S. is our largest market. So our supply chain is entirely from Taiwan. And we all know is the supply chain in Taiwan is not the lowest cost in the world. And when we -- and in Asia, I think is the problem is we probably don't have price competitively enough to address the Asian market. So that's the reason.

Right.

Okay. Good. So maybe so we will see -- Let me just go back and see if we have any other investors who might have other questions.

Yes. I think we don't have any more questions. So…

Okay. Great. So again, thank you, everybody. Yes. Investing on Plover Bay, again, requires a lot of conviction. And thank you so much for your patience and trust on us. Thanks.

Thank you.