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

Good evening. Welcome to Plover Bay's Annual Results Call for financial year 2025. I'm Christopher Tse, CFO of Plover Bay, and I will be hosting this call. Alex Chan, Founder of the company, is also with us today. We have announced our latest annual results. The announcement can be found on HKEX's website and our own website at ploverbay.com. The PowerPoint presentation that I'm currently sharing on the screen can also be found on our website. As usual, I shall begin with the financial highlights, and then Alex will go through our recent business updates, and then we can go into Q&A. Let us begin. Our sales in 2025 reached USD 130 million, increasing by 11% year-on-year. Our gross profit was USD 74 billion, a year-on-year growth of about 15.5% and our gross margin was 57%, an increase of 2.1 percentage points. Our overall operating expenses and finance costs increased 5.1% year-on-year. As we continue to benefit from operating leverage, our net profit reached USD 45.5 million, a year-on-year increase of 19.5%. Net profit margin improved to 34.9%, an increase of 2.3 percentage points. Finally, our diluted EPS came to be USD 4.11 per share, which increased 19.1% year-on-year. Let's drill down to our segments. In 2025, our Fixed First Connectivity segment revenue increased mildly by 3.5% year-on-year to about USD 18 million. Mobile First Connectivity segment increased 10.4% year-on-year to USD 73 million. Overall, we are seeing strong growth in high-end mobile first routers and new supporting products. Sales of Starlink equipment is included in the Mobile First segment. And this year, we are seeing quite strong volume growth. And because most of our channel partners pair our products with Starlink into a solution, this strong volume growth has also directly benefited the sales of our own products. Driven by our continued growth in subscriptions, our Warranty and Support Services segment reached USD 28 million, up 12.3% year-on-year. And Software Licenses segment reached about USD 11 million, up 34% year-on-year. Together, the recurring revenues in these 2 segments add up to about USD 38 million, an increase of 17% year-on-year. Recurring revenue now accounts for close to 29% of our total sales. Our take-up rate has increased up to 38.6% from 34.2% a year ago, and the number of devices with a subscription increased 25% year-on-year. These numbers continue to show that our recurring revenues are healthily growing. Next, in terms of geographic segmentation, North America increased 2.1% year-on-year to USD 76 million, accounting for about 59% of our sales. The mild growth of North America market is largely due to tariff uncertainties back in April, where we had to hold product shipments to the U.S. for about 2 months in the first half. Shipments have since resumed normal in the second half. Sales to EMEA increased about 28% year-on-year to USD 37 million as our partners continue to deliver their multiyear large projects and now account for about 29% of our total sales. Sales to Asia increased to USD 12 million, growing 36% year-on-year. Again, our growth here is because of some large multiyear projects delivered by our partners, plus some remarkable growth in new markets such as Japan. In others, mostly Australia, our sales increased 14% year-on-year, making up about 4% of our total sales. Moving on to gross margin. Our gross profit margin increased to 57% from 54.9% last year. Our gross margin improvement is attributed to a favorable product mix towards high-end mobile routers and economies of scale among our high-volume products. Overall, our hardware gross margin is now 41%, while recurring revenue margin is over 90%, both contributing roughly half of our gross profit. Next, our operating expenses. Total operating expenses as a percentage of revenue was 17% of sales during the year, which is 0.6 percentage points lower than last year. Due to our strong operating leverage, our sales continue to grow faster than expenses, which contributed to our net profit growth this year. Finally, our financial positions continue to be very strong with no debt and strong operating cash flows. Trade receivables, turnover days remained at 67 days. Inventory turnover days slightly decreased to 112 days, while trade payable days increased to 50 days. This wraps up the financial highlights. Next, I will let Alex present the business update.

Thank you, Chris. So to begin with, I want to have -- I want to give everybody a quick recap. So basically, we are in the connectivity market, and we serve a very long tail market. So we have thousands of customers in multiple verticals from maritime, transportation, public safety, construction and so on. So there is no single customer or vertical dominates our business. And we have also gone through multiple technology cycles from fixed to wireless, from 3G to 4G to 5G. And now we are seeing is satellite communications as a very promising way of connectivity. And we were in this market for 20 years. And every time when there is a new technology coming up, a new technology application coming up, usually, we are ready for that market. For example, recently, we have seen the autonomous systems, the teleoperation. And all these applications are having more and more sizable deployments. So in the past, a couple of years back, we were seeing autonomous driving companies were using our products for their product development. But now we are seeing is a teleoperate -- we are seeing is a remote operations, teleoperated cabs, they are massively deploying our products with their vehicles. So I would say is the importance of connectivity is actually way beyond a lot of people's imagination. And we are in the business of making this connectivity reliable. So -- and also you probably will ask one question is about the increased memory cost and the components cost. Just like every other hardware company, we are not immune to this. So we are also facing is the increased cost of -- in building the hardware. However, our business model is actually helping us to mitigate this because every time when a customer is buying and packing devices, it has -- we have the opportunity of selling multiple year's subscription services. And then also with this blended model, we are able to absorb some of the hardware costs. But at the same time is our customers are buying our products not because of the cost of the components or the cost of the product. They basically is buying our product because of the value, because of the value creation they can have with our product or they can use or because the reliability of our product is helping them to minimize the downtime. So this is the foundation of our business. And I guess today is probably many of us will have a question about why do we announce our plan to spin-off our North America business through a distribution in species. So we are seeing that the U.S. market and other parts of the world, the market has very different requirements. So for example, now we need to meet the TAA approval, NDAA approval and all the kind of compliance thing, then we are limited to certain supply chain, we are limited to produce the product in certain locations. And then we are also restricted to use certain technologies. So it will be difficult for us -- okay, we are seeing that -- so our business in the whole world is growing. But then it's difficult to run that in under one platform. So we are seeing that if we are able to separate the 2 operations, one to be really focused in the North American market and the other market, which is the global market, then we are able to produce more competitive products. And at the same time, we are able to expand our supply chain, including our contract manufacturers and the choice of components. So this is actually the foundation -- fundamental reason why we are doing this. So -- and then -- so moving forward, so maybe our investors may have a concern that -- so are we able to remain our lean operation just like the last 10, 20 years. And I think we should be able to do so because now we have a lot of AI tools you do not need a lot of people to do many things. And then so we are seeing is that this is a great opportunity for us to grow further and to keep our lean operation models. So I think that this is the current update. And I'm sure that today, we will have a lot of questions. So maybe we'll just reserve the time for the Q&A.

Sure. So we already have a few questions from the chat. So first question comes from Lucas Lu, question on marine certifications for cybersecurity compliance. So why not apply for these kind of certifications? And what are the main difficulties?

Okay. So Lucas, I guess you probably are referring to the discussion at the forum. Yes, we are aware of that, too. So I would say is when people bring that up, yes, this is a legitimate concern. But at the same time, we are very clear about our position because our business is to make connectivity reliable. So all these cybersecurity concerns, cybersecurity requirements can be addressed by putting UTM or cybersecurity products there. And there are plenty of cybersecurity products available in the market. So some people choose to integrate that into one box. But we feel like the cybersecurity product is more like a preference. Some people might prefer cybersecurity vendor A and some people might prefer cybersecurity vendor B. And that is -- so we feel like we are still in that market by offering unbreakable connectivity by putting multiple Starlink, multiple satellite connections, multiple 5G connections together and make it super reliable. And then so for the cybersecurity requirements of compliance, people can easily apply or people can easily put a third-party cybersecurity product there and to meet the requirements. So that's why I would say is do we really need to integrate that into our products? Yes, it's a nice to have, but it's not a must. So that is our view on that. But again, we are very practical on all these kind of things. So you will see is, we will be also partnering with some of the leading cloud provider to provide certain cybersecurity features. But again, those -- yes, in the coming months, you will see we have a products like that. So the short answer is, we are not taking the approach where people expect us to be -- to solve that concern. But there are multiple ways meeting the same requirements.

Another question from Lucas. It's about WireGuard support. So the company has many distributors and clients who need the support. Why not provide it? What are the main difficulties?

Okay. Many people can provide WireGuard support. I don't think this is a deal breaker. Yes, of course, we hear the feedback, and we will provide that. But again, our fundamental business is not to become a me-too company. Our fundamental is not just to catch every single Wi-Fi standard being the latest one or we are not here to be the most feature-rich product. But our business is just to make connectivity reliable and be the best company in doing reliable connectivity. So yes, WireGuard support, we will support that. But is that our first priority? I don't think so.

The last question from Lucas. The number of companies retail -- the number of the companies, retailers and distributors has dropped a little bit since last year. As a result, this is why our revenue growth rate also slowed down. So let me answer this. I think the number of distributors or retailers that I don't know where you found the number from, but then it's way more than 300. So I think our revenue growth this year, as I said, there were a few reasons that they were 11%. So the U.S. tariffs was one of the major factors. It caused us to stop our -- halt our shipments for 1.5 months. So that did affect our sales quite a bit.

So Lucas, let me remind one thing is we are in a very long-tail market. So I guess your focus is more on the retail or the consumer market. Yes, that is one of the long-tail market that we address, but that is not the only one.

Okay. Next is from Jonathan Tan. On this proposed separation, should we think about this as a valuation unlock or recognition that North America and the rest of the group now have fundamentally different capital allocation, growth investment and operating models. And as a long-term shareholders, what specific metrics would you point to in 3 years' time to judge whether the separation has truly created value?

I guess we are looking into all these things is not really coming from a financial angle. Most of the time we are looking into how can we be the predominantly market leader or the de facto standard in that segment. So for example is in tele operations, we want to be the market leader and the de facto stand there. And in the maritime we want to be the most welcomed product in all these -- from superyachts to container boats, yes. So we want to be the market leader in all these areas. And then so when we look into that, I would say, we would love to -- in the next couple of years, we would love to see is, we have more and more vertical markets that people are using our products being the de facto devices for reliable connectivity. I think that is our primary goal. And again, the concern is mostly related to North America, they have different expectations and requirements. Just like what I mentioned earlier on is -- so we need to -- let's say, if this is a cellular product, it needs to be AT&T, Verizon and T-Mobile certified. But then if we are going to a different market in Europe or in a different market in Africa, we might not need those certifications. And then by separating these 2 markets, we are able to expand our choice of contract manufacturers, technology providers, components, semiconductor choices, we will have a wide more choices for addressing different markets.

Next is from Brian Chung. So what is the number of in control to registered users in the year-end? If I recall, the number has exceeded 800,000 by year-end. What is the likely impact on the gross margin given current shortage of RAM and storage? Or will the cost be passed down to customers?

Okay. So some of our high-end models, we do not have any intention in adjusting the price yet. But at the same time is if we need to increase the price, I think the market will have no problem in accepting that for the higher-end models. And that is so for the entry-level products or for the higher volume products. We also do not want to or intend to increase the price at this point yet because, again, it's just like we explained earlier, is our business model is there is usually a subscription goes along with the devices. We would love to see the pickup rate. We would love to see the expansion of those subscription business. And then also the hardware devices is just an entry point. So I think it's we -- okay, again, the memory price, we just don't know how crazy it can become, but then we have a lot of flexibilities in dealing with that. But in the meantime, for the time being, we are not increasing any price yet.

The next is regarding to recent AI development is happening currently or will soon be using AI on traffic decision and/or identify cybersecurity risk. What are the threats and opportunities of AI?

We are using -- we are already using a lot of AI internally. And we are very excited about all these applications. And at the same time, yes, we are definitely working on something which is AI-based and that is -- we believe that kind of product will be able to help us to visualize the value that we bring in with our bonding technology and together with our existing product services. Yes, we are working on that, and we are very excited about what we have seen.

Next, regarding the spin-off, which company will own the intellectual properties?

This is Terry. I am a member of the Board as well. And in regard to this question, it's unfortunate that there's little of the specifics that we can disclose at this point. But then I think it's safe to say that like in our plan, we are definitely making plans to ensure that both groups will have the necessary resources, including the IP they need to continue to thrive. And then when the times come to a stage where we are in a position to discuss more, we believe we will be sharing the details with you like in our later announcement.

So will the SpinCo become a pure U.S. company so that it can avoid all the consequences of the geopolitical frictions?

Okay. So the SpinCo is -- the ultimate goal is to address all these concerns. So I would say that is definitely the direction.

And do we see more growth in 2026 in the U.S. market?

Absolutely. Yes, U.S. is very -- I would say is U.S. and Europe are 2 very interesting major growth market for us.

Another question on spin-off. With regards to the proposed spin-off, how can shareholders expect future dividend payouts to be in terms of the SpinCo and RemainCo. Can you provide some color on the different growth trajectories for SpinCo and RemainCo in the mid to long-term?

Okay. I would say is if you look into our operations from day 1. So we always distribute the excessive cash back to the shareholders. And yes, we are not going to change this approach, and we plan to -- we still plan to do the same thing. But at the same time, is just like we mentioned some years back is when there are opportunities where we can grow the company faster or to dominate a market better, we are very willing to look into the M&A and then -- so we are very willing to look into opportunities to expand the company. So dividend is not the primary thing. But our approach, which is by distributing the excessive cash back to the shareholders, that's always the case. But again, it really depends on the market opportunity. And our goal is always to look into sustainable growth and being a major player in the areas that we are -- in the area that we are in.

Next is from Marvin Young. Could you please provide an update on progress of Starlink business?

The Starlink business is actually doing pretty well. And then -- so first of all, we are covering the entire Starlink product line. And then we are also working on something more interesting that is related to the Starlink APIs. And then is also -- at the same time, as you probably have seen is we have some products like Antenna MAX, which is a product that we can integrate the Starlink antenna, which is the Starlink Mini together with our 5G routers into one integrated box. So moving forward, you will probably see is that we will have a series of Starlink companion products, which is to make the Starlink deployments better. And eventually, this will be benefit for multi-constellation deployment. So we are seeing that now -- we are seeing that just like the 5G connections, people eventually might want to have more than one Starlink connections. People might even want to have multiple Starlink or multiple satellite connections in order to fill over the fiber network or in order to provide better connectivity for their boats -- for the container boats for the cruise boats or even for logistics centers or data centers. So we are very excited and optimistic about the Starlink centric ecosystems.

Okay. Next is back to Gerard. MNCs have operations in many countries, and they usually don't spin off their businesses. Why cannot we manage different geographies?

Because we are taking a different approach. Yes, we never think about MNC. But instead we think of we are still a small fish in the pond, but then everything when we look into this is entirely coming from the efficiency point of view. And don't forget that we have a large network of channel partners. And our channel partners usually are way bigger than us. And then is so they are -- most of our channel partners are taking the traditional approach. And that is so, I would say, is with this approach, we should be able to expand the supply chain. We should be able to expand the choice of semiconductor chips. We are able to expand the choice of contract manufacturers, cellular modules manufacturers, SoC suppliers and even AI models. So that's why we are seeing this is way more important than the traditional way in doing business.

Next question from [ Mufasa Capital. ] Could you update us on the development in drones and robot taxi?

Yes. As I mentioned earlier on is we have one deployment in Las Vegas. And then so this is not entirely robotic taxi, but it's a teleoperated taxi service. And the entire fleet is using our products and then we are very glad to partner with our customers to do this. And at the same time is we are seeing -- this is one major deployment. But at the same time, we also have another customer in Europe. So they're using -- okay, they apply teleoperation for the mining trucks, for the mining equipments. And then so these autonomous vehicles, these autonomous trucks, these autonomous equipments are actually very exciting because they all demand reliable connectivity. And at the same time, with the drones and then these kind of markets, we believe this is going to be multiyear opportunities for us.

Next question from Gilbert Lowe. Can you share the plan and performance of the SpeedFusion Connect app? Any business plans with SpaceX direct to cell technology?

So the direct to cell technology is more related to the cell phone. And I would say is the application of the direct to cell at this stage is more related to messaging. And of course, as the technology evolves, we won't be surprised later on then the DTC technology will become faster. And then the idea of the SpeedFusion Connect on the phone is, again, is to expand to a new market. I guess if you look into the forum, some people are asking us why do we -- why don't we build a travel router? And I feel like our view in looking into the travel router market is probably the best travel router is your phone or maybe we all have the last generation phone together with us. And then -- so maybe we are running a SpeedFusion Connect app with these phones, then this is actually the best travel router. You do not need to carry extra charging batteries and this and that. And at the same time is the SpeedFusion Connect can go into the Android market, which is being used in a lot of kiosks or embedded systems. So I would say is the pace of the SpeedFusion Connect is encouraging. But at the same time, we are still learning about the possibilities of that. And we're still working on that. And I would say you can see this is not contributing to any meaningful revenue yet, but it's the future of SpeedFusion Connect is pretty broad. And we believe that is going to be an important piece of element, which can help us to go into and expand into some new exciting consumer markets.

The second question from Gilbert is, I assume shipments would have resumed in Q3 and Q4, any particular reason for the slowing down in the revenue growth in the U.S. So as I said, in the U.S., when tariffs -- there was some kind of tariff uncertainty in April, in the second quarter of the year, right? So we -- due to this uncertainty, we stopped shipment to the U.S. for basically the entire second quarter. And that is why that this year's U.S. sales has been affected. Next is from Jonathan Tan again. So a follow-up question on the spin-off. Will 110 entity sell to Frontier going forward or will both?

It depends on the country. It depends on the region.

Essentially, our split will be one based on the geographical split. And so like for one transaction, obviously, they can only go to one of the locations. But then it might well be the case that any one customer, they can be having different locations. So if that's the case, then yes, it's a possibility that both can be selling to the same customer, but it would definitely be for different transactions.

Will SpinCo consider retaining dividend and excess cash completely due to the inefficient dividend tax scheme in the U.S. growth project...

We will definitely look into the possibilities on how to optimize this. But the fundamental is the same, yes, the idea is any excessive cash that we don't need will be distributed back to the shareholders.

Next, Steven Wong. Will you still be the Chairman of both companies? Will there be any change in HQ and the makeup of senior management?

Alex will stay the Chairperson of both company, but then his role in Plover Bay will transit to a nonexecutive role. And also Kit, our current CEO, he will also become the CEO of the SpinCo rather than Plover Bay. But other than that, all other Executive Director will remain with Plover Bay.

Liam or Brian, when will we get details of the U.S. company? Where will those details be? And will we need to be able to invest?

For the U.S. company, essentially, we assume there will be more information coming as we make the announcement for the EGM. Those information will be disclosed alongside. But obviously, for us to disclose those details, we will also need to get our U.S. authority get things ready with them. So as far as the investment speaking, let's say, for the current shareholders as we are doing a distribution in species unless there are like restrictions coming maybe from your holding or your funding itself. Otherwise, we see that like all current shareholders will be able to get their same shareholding in the same proportion for the new SpinCo.

Next is from Jeff Peng. How do you plan to split your time between SpinCo and RemainCo. The U.S. business is the largest, but there are also new initiatives for the RemainCo.

Okay. So I think I'm a long-term guy. And then I'm also a product guy. So what I look into that is what kind of product, what kind of services that could be impactful for the future. And then I'm not the guy who is to really build and make that happen. So we have teams on both companies on both sides to execute that. So I think the role itself does not change really that much, but it's on the execution side, we will have some -- we have a dedicated team focusing on the products and services that could be most competitive for that market.

We have another question from Mr. Leung. Regarding the spin-off, is circumventing U.S. regulatory and policy risk one of the considerations?

Well, let's say we are not looking at this as a circumventing perspective, but definitely, complying with the U.S. regulatory and policy issue will always be an issue. It's not just about we are going to list, we are planning to list in the U.S., but in our day-to-day business, obviously, those are also regulations and policy that we always have to observe.

U.S. business accounts for a significant portion of revenue. Following the spin-off, will this weaken the interest of Plover Bay shareholders?

No, not really. As I mentioned earlier, Europe is going very well. Yes, Europe is going very well. And in fact, Asia is going pretty well, too.

Will U.S. companies bring in strategic investors before going public? This will be a distribution and species. So basically, we will distribute the U.S. company according to the ownership that you have in Plover Bay. So at this stage, there are no strategic investors. Next, will the total fixed cost increase substantially because now we need 2 separate management teams.

I think we have a very good track record in making things very efficient, super-efficient. And again, it's -- we are still the same day 1 guy and then -- for those people who knows us, yes, we're still pretty cheap and still pretty efficient. So again, with the AI tools, I think there's a lot of automation that we can do with it. So maybe initially, there are more compliance costs and this and that. But I would say is the operational cost, probably it won't change materially.

Okay. Next from Graham Rhodes. What makes the spin-off a better solution than relisting the whole company or keeping everything in one company, but creating a new subsidiary or brand? Is there a geopolitical consideration?

As I mentioned earlier, so what we do is we just want to be the de facto standard to be the most preferable partner in certain markets. So that is our goal. And then we feel like with this approach, this is probably the most efficient way to accomplish the goal.

Second question from Graham. One customer is a very large share of revenue. What is the economic relationship? And what are the downsides if volumes, pricing or scope change? So one -- this customer is from the U.S., and we have been basically working with them since the very beginning of our company, and...

They are a distributor. They are just a distributor. And the distributor sales to many resellers and many resellers are selling to many, many customers.

Next question from Graham again. Second half margins jumped. How much was mix versus pricing? And how sustainable is the uplift? So second half is -- there are 2 reasons that margins increased. First is mix in high-end routers. And then second is because of our economies of scale in the high-volume routers. So both were causing the second half margins to increase. Where are you winning or losing versus Cradlepoint and other competitors? And what are you seeing on discounting and deal cycles?

I think we don't see much competition from Cradlepoint. Again, this is a very long tail market. The market is pretty big. Yes. So we actually don't encounter with Cradlepoint that often. So that's why we even can't recall the last time we encounter a competition with Cradlepoint, that was probably early in the year in Australia, and we won that. And I wasn't aware of any opportunity that we have lost to them. No. Recently, I just -- okay, this was not last year. But recently, we won a major -- pretty major deal in Europe. Yes. So yes, we won over Cradlepoint recently. It's a pretty major European infrastructure project.

Subscription take-up rate rose to 38.6%. What are the renewal and churn rates? And what is the next lever to push attachment higher? So we do not provide renewal and churn rates right now. So next lever to push the take-up rate higher, I suppose we keep adding new features into our software to increase the value proposition of our subscriptions, and that's how we increase our take-up rate.

Yes, that is our goal to increase the take-up rate and at the same time to increase the content of the subscription. Yes, again, we see that there are a lot of tremendous opportunity for us to tap into the subscription products.

Last question from Graham is receivables and inventories increased. Is the timing loser term or slower collections? And what is inventory obsolescence risk? I think receivables and inventories rose in line of our revenue. So I do not see like a sudden jump in inventory. And also in this kind of semiconductor shortage environment, I think inventory obsolescence risk is -- it should be pretty low. Next question is from [indiscernible]. Right now, the same products are sold in U.S. and other markets. Going forward, will product development in 2 companies become independent and diverge?

Absolutely, yes. Both companies will become independent.

Next question, Kate. How will Alex and CEO split time between SpinCo and RemainCo? As Alex becomes a Nonexecutive Director of Plover Bay, does it mean he will be hands off for decision-making of North America business?

I'm still a 68% shareholder. I will watch it out very carefully. And that is also we have a 2 CEOs running on separate teams. And these CEOs who have been working together for more than 16, 17 or even 18 years or maybe even 20 years. Yes, it has been too long. I don't -- I can't remember how long we worked together.

A follow-up from Mr. Leung. The previous earnings announcement, we mentioned a collaboration with Iridium. Are there any upgrades on that?

The Iridium thing is definitely one of that. And then we are seeing that they are much more -- not much -- okay, they are starting to have more satellite providers coming to the market. We really like that. We really love to see that because the multi-constellation thing, we are ready for that, and we have products ready for that already.

Okay. Next question from Gerard Aho. Will all the shareholders be able to vote for or against the spin-off during the EGM? Or is it only for minority shareholders to vote?

It's not strictly the rules for us to do so. But yes, this is our current plan to put forward the plan for holding during the EGM. This is the current plan.

So it seems to be all the questions from the chat, and I see some raised hands. So maybe we can answer.

Congratulations for the great result. Yes. So I have a couple of questions. Maybe it's easier to ask my voice. My first question is on -- so just now someone asked about the dividend, the tax issue. But I was thinking that because right now, we are actually just only segregating 2 companies. One is the sales to U.S., the other is the sales to others. So most of the profit is actually still booked in Hong Kong, if I'm not mistaken. It's only that the sales happen to be selling to U.S. but then the company that sells to U.S. is still based in Hong Kong. So in that case, the dividend tax and all that should still be like following the Hong Kong tax rules. Is this understanding correct?

Yes, I believe so. I mean if you are in Hong Kong, and when you buy U.S. stocks now, you're not on the hook for U.S. tax, right? So I think this will be the same for our U.S. company.

Okay. Yes. And then just going back to the business. So I want to know like -- so with everyone talking about like adoption of AI. And just now Alex just briefly mentioned AI can help a lot. Can you give us a little bit more details like how AI is changing the way Plover Bay works or how it is adding value to your products and what new functions that you can foresee that would bring enormous value to our customers by adopting AI to our products.

Sure. So when we look into this, we can look into that from 2 perspective. One is internally, how do we use AI to help product development? How do we use AI to make our operations even more efficient? Or how can we use AI to support our customers better. So on the internal side, we are doing all these things in various fronts. And then on the product side, we are seeing the opportunity to apply AI to predict the WAN connectivity in various locations. So for example, maybe when your boat is cruising in a certain area, so is that area is the best to use a satellite or 5G or things like that. So we will have some capability in doing that. And at the same time is when somebody is going to deploy like 1,000 Peplink products -- our products to the branches. So okay, this can be in Malaysia or this can be in U.S.A. And then when people start to deploy these 1,000 devices into these different remote locations. So do they really need to use -- do they really need to do a site survey? Hopefully not because then we could apply the AI to predict the connectivity and how it looks like. So that is the thing that we are working on.

Okay. And then next question is on verticals. So I just wonder like -- so we have been growing around 10% to 15% consistently. I just wonder do we foresee there's any new potential verticals that could potentially become a very meaningful market to us like I don't know whether there's any new market that you're aware of or you already...

I think it's because we operate in a very long tail market. But I can say -- so if we look into putting multiple Starlink or multiple satellite connections together with multiple 5G connections. Then this is creating definitely a new market because this can become with the new fiber backup for logistics companies. This can be come with rapid deployment for many different applications. So I would say that is the most exciting market that we are looking into. But then so you can say is who are the customers of this technology. It can be a logistics company. It can be a cruise boat company or it can be a data center or it can be a hospital. It can be a government entity. So yes, I would say the demand, the need for reliable connectivity is just very robust and strong.

Yes, I totally agree. And I believe that like in every vertical you are seeing, they must be all growing. But I just wonder like in the past 6 to 12 months, are you aware of any new verticals that could potentially be a very meaningful verticals?

We don't judge. We just focus on the product and let the market tells us who are using it.

Okay. And then the next question is on the Peplink conference in the U.S. I think it's in November or last November. I just wonder like whether that you have any key takeaways from that conference? Like any changes in your mindset in your business in the way you look at the business after you attend that conference?

Sure, sure. Now it's just way more people than -- there are way more people than the past. And at the same time, people really spend a couple of days there for exchanging ideas and having trainings because we have built a pretty interesting community. And the community is the customers are very willing to share their deployments and share how they use the products with others. So the interaction is very good in these events.

Okay. And sorry, my last question is back to the spin-off issue. So can I -- I mean, I know everything has not been decided yet. But can I say like the biggest changes that the company would see as a whole? I mean, let's assume I still continue to own the 2 companies. Is it only that there will be like 2 teams that one would be very specialized in taping the U.S. market in like selling to the U.S. market and the other team is more on like the remaining market. But then in the R&D side, in the production side, can I say that like there won't be like a material changes or even your headquarter, I would assume that like it will still be in Lai Chi Kok it like that? Or like what would -- I mean, besides sales, what will be the major differences after the spin-off?

Okay. Our goal is to dominate the market where we see we should be the de facto standard. So that is the goal. And then the rest are just tactical execution details. So yes, and we never want to chase for shiny offers because that might be able to attract talent. We never believe things like that. So -- and I think the team is not going to change substantially because of anything like this.

Thank you, Steven. Let's take the last question for tonight. So a follow-up from Jonathan Tan. He said with regards to margins for each entity, will it resemble current existing segment margins? And the answer should be, yes. Okay. So that's all of the questions for tonight. And thank you very much for jumping into the call tonight, and we'll see you soon in the -- hopefully, in the EGM.

Thank you, everyone.