Zebra Technologies Corporation (ZBRA) Earnings Call Transcript & Summary

Hi. My name is Paul Chung, and I cover applied and emerging tech here at JPMorgan. And thanks for joining our All Stars Conference here. And I'm pleased to have today Zebra's CEO, Anders Gustafsson; and CFO, Nathan Winters here today. Thanks, gentlemen, for joining.

Thank you.

Thanks for having us.

Yes, so for those that don't know this story that well, can you kind of provide a brief history of how you got to the Zebra [indiscernible]?

So we have a long history of innovations that -- we've been in business for over 50 years. But we, I guess, early on became known as a leader in specialty barcode printing, so different type of track-and-trace type of applications. I joined as CEO 14 years ago now. And after a couple of years, we started to think about how do we -- I felt that the specialty printing as a vision were maybe a little limiting for our growth and where we could go. So we started to think more about what is it we actually do for our customers. And we felt that what we will do is we help them connect to the physical world to the digital world. You scan a barcode and you're now provided some information through an application. And that kind of led to more of an Internet of Things type of vison for us. And as part of that, we -- I felt that the best way for us to position us to really compete in that space will be to combine with Motorola's Enterprise business. So, after some courtship, we were able to, in 2014, acquire Motorola's Enterprise business. And we then developed the Enterprise Asset Intelligence vision that we kind of have today where we talk -- we have a framework. We talk about how we sense what's happening in the physical world. And we analyze that information and enable our customers to act on that in close to real time. So that was a very transformative acquisition for us, and it's worked out very nicely for us. But we now have a broad portfolio of solutions that address retail, manufacturing, transportation, logistics and health care. After the acquisition, we spent probably 3 years, you can say, 2.5, 3 years to really integrate the acquisition to implement the brand new ERP system that spanned across the entire business and a lot of other software applications, getting the supply chain down, paying down our debt that we had taken off. And since 2017, we've been almost solely focused on executing -- and developing and executing on our Enterprise Asset Intelligence vision, which you can say so and when every asset and front line worker is visible, connected and optimally utilized. And I think we feel very good about where we are, and we have lots of opportunities in front of us to drive growth.

Okay. Great. So you mentioned the Enterprise business in 2014. Has it kind of been playing out as you hoped? It's been quite strong as of late. What are the kind of synergies you've come to realize as you've navigated with this asset [ over time ]?

Yes, I'd say this worked out better than we dared hoped for, I would say. It's been -- we think -- we feel it's been a great success for us, and it truly enabled us to reposition the company and transform the company. When we looked at doing that transaction, there were kind of the traditional industrial logic here and our logic for that, but also the more -- the longer-term vision part of it. So, the here and now, industrial logic was focused on the portfolio was very complementary. We had -- on the Zebra side, our barcode printing side, and Motorola had -- or the Enterprise business had mobile computers and scanners. These devices really worked together to create more complete solutions. So we had -- we largely had the same customers, the same resellers, so channel partners. So we're very synergistic. And our partners and our customers very much liked to -- the combination they felt that having fewer but more relevant partners or vendors was a step in the right direction. So we were able to build much greater scale and other things to drive that part of the business. But I think the big -- the more exciting part of the transaction was really around the vision and how the combination enabled us to accelerate this EAI or IoT vision that we had. One of the kind of great surprises, to some degree, but it's something we weren't aware of was that when we were able to meet the Enterprise team directly, they had a very similar vision to what we had at Zebra. But we -- either one of us independently weren't as well positioned to be able to execute on that vision as we worked together. The Enterprise business is part of Motorola, which was more of a land mobile radio vision. And Zebra, we were -- we didn't -- we weren't really in the markets that really positioned us for that. So together, we were able to create a much stronger vision that resonated very well with our customers, and they thought of us as much more of a strategic partner that could help them solve not just the problems of today, but longer-term issues for them.

Okay. Great. And then can you just talk about how the firm is kind of competitively positioned in this part of the business and barriers to entry? I know it's kind of a 2-headed monster of an industry for now. But how do you kind of develop that barrier to entry there?

And so we are the market leader, the clear market leader in our core markets that we participated. We are #1 in enterprise mobile computing with more than 50% market share. Our second -- the closest competitor has mid-to low teens market share. Data capture or scanning, we have about 30% market share, and the closest competitor has the low to mid-20%. And in printing, we have also about 50% or approaching 50% market share, and the nearest competitor has low double digits. So we have a strong leadership position, which is great. And this also -- that scale in -- that we have and the breadth of portfolio and our ability to work with our customers to solve new problems is great because the breadth of our portfolio enables us to be much more strategic, and it is a real barrier for others to enter. So if you're a reseller and you're trying to compete against -- or looking at -- you're working with Zebra and you're looking at bringing on a second source or something, we can solve so many more of resellers' opportunities. We can address those opportunities much better than any of our competitors, where they would have to work with a number of different competitors to be able to kind of offer the same solutions. And from a reseller perspective, they have to invest money in each vendor relationship they have. So we see that as a great differentiator and benefit. Equally, with end-user customers that we have a breadth of solutions that make us much more strategic to them. Our customers want to have fewer, but more relevant partners. And the vision we have where we can really show how we can help them solve long-term problems is also something that truly differentiates us. So I see a lot of areas where we are able to leverage our scale and strength to be much more of a trusted partner and develop relationships with key decision makers, where smaller companies and niche players have a hard time doing it. And the -- so the -- you can say it's just kind of a self-reinforcing positive circle where the breadth of our portfolio enables us to recruit more channel partners. We can then drive more revenue and gain market share, which enables us to invest more in product development or our go-to-market capabilities, which enables us to expand our portfolio and recruit more partners, drive more revenue growth and invest more in the business. So it's been a good recipe for how we drive the business and drive differentiation and build up a stronger moat around the business.

Okay. Great. So let's dig deeper into the mobile computing business, which is kind of the vast majority of the Enterprise business you acquired. But can you talk about kind of the market share, the replacement cycles, the installed base? There's the whole dynamic between Microsoft Windows and Android. And then, I guess, the overall industry kind of CAGRs that are out there and just to how to frame this business and how that moves forward?

Yes, mobile computing is -- it's our largest -- the largest part of our business. We have grown market share from about 37% to a bit over 50% now since we acquired Enterprise business. A big part of the transformation that's happened in this industry with this product category has been around the migration from traditional Microsoft operating systems to Android. We were the pioneer for that. We introduced Android into the Enterprise. We have a strategic relationship with Google in this area. There's only, I think, 6 companies that do, and we are the only one that's not a consumer brand. So we were able to leverage that to develop new solutions that could address a much broader set of use cases for our customers. So if you go back to 2014 when we did the Enterprise deal, we would see maybe 7 or 8 mobile computers in a large supercenter type of retail store, and they would run maybe 2 or 3 applications on those devices. Today, we will routinely see 70 to 80 devices in a store like that and running over 50 applications. So mobile computing has become now really an essential part of how our customers run their operations, if that is in retail or health care, transportation and logistics. Our customers now have a hard time running their operations without our type of solutions and how -- that makes us much more strategic to them also. And we're now looking -- we've been able to establish Zebra as kind of the platform of choice in many of these industries, and we're now looking to see how can we expand on that to put other things like payment or what was I mentioning and other capabilities on our platform to drive that further.

Great. And then you've talked about -- you touched on the different verticals you're touching for the mobile computing business. But what are the relative growth rates behind those different industry verticals? And are you just looking to expand within these verticals or move to different types?

Yes. So we talked generally about 4 main verticals, retail, manufacturing, transportation and logistics and health care. We've introduced government as kind of a newer, smaller vertical that we're trying to build a stronger presence in also. In the first half of this year, each of those vertical grew double digits, so there was very strong growth rate for -- in each. And we have a strong position. Health care, I would say, has historically had the fastest growth rate, and I would expect that to also continue in the future, but it's off a smaller base. And you asked about are we looking to expand into other new verticals. I think for us here, we will probably more look at subsegmenting some of the current verticals to be more precise about how we grow. So if you take manufacturing as an example, that would include anything from process industries of manufacturing beer to pharmaceuticals to automotive. And we're looking at each of those subsegments and how we can have a stronger press and grow our share in each of those subsegments or pieces -- some of those, sorry, the ones that we think are the most attractive.

Got you. And then, Nathan, can you kind of remind us kind of the splits between the different verticals you guys play in, in terms of kind of mobile computing as well and how that is expected to kind of trend as well?

The split of each of the verticals within mobile computing, yes. So if you look -- I mean, retail is still the predominant from a share of wallet or from a percentage of revenue for the mobile computing. But I think if you look where we expect to grow and expand, we'd expect it across each one of the verticals, and there's opportunities to grow within each of the verticals. In the short-term, retail has been the key driver, particularly with the omnichannel evolution, but you see that playing out in transportation and logistics and, as Anders mentioned, health care as well. So while retail is the dominant within mobile computing, we expect growth across each of the verticals for mobile computing.

Okay. And apologies, but I forgot to mention that if you've got -- if those joined have questions, please submit them online, and I'll kind of integrate them within the discussion. But I do have a question that came in. Essentially, when the management team is speaking together, what are the biggest debates that you're discussing on the future growth of the business?

Yes. When we meet the management team and when we talk to our Board, the -- most -- we dedicate most time to kind of our vision and the strategy and how do we continue to develop it, how do we continue to drive it. The biggest challenge that I spend most of my time on is clearly on how do we continue to develop the company to drive attractive long-term profitable growth. If you look at then how -- as evidence of this over the last several years, like look at the last 3, 4 years and how we've kind of filled out our sense, analyze, act framework, the sense side being our core strengths around reading barcodes or RFID tags, we strengthen that with machine vision, but really stepped up our capabilities around how we can help our customers analyze and act -- analyze that data and act on it. So that's been much more on the softer side, a lot of the Software as a Service offerings that we have, but making sure that these all hang together as an ecosystem.

Got you. So as we think about the core business, it's typically mostly book and ship. These contracts can be varied and the time lines can vary as well. But can you just talk about kind of the recurring piece of the business and opportunities to kind of grow that base overall?

Yes. So I'd start with saying that overall, I mean, our -- we have extremely sticky strategic relationships across our customers for all different aspects of the business. From a transactional perspective, about 1/4 of our sales are recurring in nature. That includes our support contracts -- repair and support service contracts as well as our consumable supplies, which tend to be designed in or part of an ongoing process along with the SaaS offerings. If you break that down and you look at our service and software, it's about mid-teens percent of the business, and we report that externally. So a little less than $400 million of revenue in the first half. So I think -- again, it includes both the service contracts as well as our stand-alone SaaS or software offerings. And that's been growing double digits over the last 2 years as well as really nice margin expansion, particularly in our core service business. And then the SaaS aspects of that is low to single double digits of the total portfolio. And Reflexis is the biggest piece of that post the acquisition. So again, I think one of the things I'd add, though, is if you look at not only the stand-alone -- and we've talked about this in the past, software is really integral to everything we do. About 2/3 of our engineers are software engineers across the portfolio, including the core business. And that really gives us -- allows us to get the margins we do, the pricing power as well as the stickiness with our customers across the portfolio.

So that's a good kind of segue. So after the Enterprise asset, kind of the deleveraging, your balance sheet is in a great place. M&A has picked up, at least. But you've kind of gone through multiple different acquisitions here. Can you talk about Reflexis, Adaptive Vision, Fetch, Antuit and how they integrate well with the product portfolio? I know there's a lot of companies to go over there, but...

Yes. Maybe Nate, if you start with kind of the capital allocation priorities we have, and then I can follow-up with the specifics around the acquisitions and how we're integrating them.

Yes, I think if you take a step back, that's important from a capital -- what's the capital allocation strategy. And that's largely remained consistent over the last several years. Our debt levels are below the range we had given of 1.5 to 2.5x, and we're comfortable there. So we're not going to do anything to manipulate where those debt levels are at. But the priority really remains around organic and inorganic investment. That includes acquisitions as well as leveraging our venture fund as a way to learn and understand new markets and our entry into automation, and Fetch is a great example of that. As well as looking at share repurchases as an opportunistic way to give money as well as a flexible way to return capital to shareholders. So again, that -- those priorities remain consistent. And with the free cash flow we generate, it will allow us to do a kind of a blend and balanced view of each of those over time. And Anders, do you want to start on, I guess, on the -- some of the recent acquisitions.

Yes. So first I'll say, we were very excited about each of these acquisitions. They're very attractive, fast growing markets. They have an attractive margin profile. And we expect them to perform very nicely financially as we scale those businesses. We started discussion around ZPA, Zebra Prescriptive Analytics, or Profitect as the company was called when we first acquired them. That was our really first pure Software as a Service company focused on retail. There was using AI and machine learning to be able to look at vast amounts of data to clean insights around things like stock-outs or how well stores were executing on promotions or any kind of operational performance like that. Very much fit our sense, analyze, act framework. This was very much around the analyze and act side of it. And then a year ago, we acquired Reflexis, which is -- was a lot larger Software as a Service company that had 2 main solutions around workforce management and task management. And you can see how the ZPA solution and the Reflexis solutions worked very nicely together because the task management becomes basically the execution part of how to affect the actions that ZPA could analyze. So if ZPA identified that there was likely stock out of some merchandise, they would send -- basically, this generates an action in the Reflexis system that sends that to a store associate to go and execute on that. And then Antuit now as the latest retail Software as a Service acquisition, similar to CPA users, machine learning and AI to look at a number of data streams to be able to do primarily what's called demand sensing, but it's looking at kind of forecasting, but forecasting it, not just I think, say, macro, but looking at specifically on what's happening and what you expect to -- what inventory do you need to have or move from your distribution center to a warehouse to a store, from the back of store to the front of store to make sure you have the right inventory at the right place at the right time, looks at pricing at these points also. And you can do this very granularly. So, you can look at kind of larger macro data, but also it looks at, say, school starts in the South a week earlier than it does in the North in the U.S. and what does that mean for back-to-school promotions and other things, how do you roll them out, how do you move inventory for different parts of the country. And we could see with COVID how their solutions were much more agile in identifying demand -- changes in demand trends than the traditional ways of planning for retailers. So it also fits very well into the analyze and act side of our portfolio. And we tie all these software acquisitions together, we can offer a quite a comprehensive and compelling portfolio of solutions that help retailers execute on their vision around omnichannel and e-commerce.

Can we dig deeper to Adaptive Vision and on the machine vision side, how is it competing with Cognex? Does it compete directly? Or I know you've mentioned it kind of tackles a different part of the market. But if you could talk about Adaptive Vision and how you can expand further machine vision overall?

Yes. So fixed industrial scanning and machine vision is a very attractive near adjacency to our core business. If you look at our scanning business, scanning a barcode is very similar to the fixed industrial scanning portfolio, right? There you also tend to look at reading barcodes, but in different environment. So it can be more high speed over the belt conveyance systems or -- where you have a broader field of view to be able to see somebody walking through a portal, say, or doorway with a package with a barcode on it if you could automatically sense that versus having to scan it with a traditional barcode reader. And here, we -- this is the -- so fixed industrial scanning is the nearest adjacency to our core. That's where we entered this space. So we have a couple of differentiations or innovations that differentiate us in the market here. One is around the ease of use, and this is where Adaptive Vision comes in. We made an acquisition of a small Polish software company, but they have a library of applications or algorithms that helps to design machine vision solutions or workflows, make it easier to incorporate machine vision technology into those workflows. Historically, I'd say companies have -- or customers have to be -- have an advanced engineering degree to be able to design those workflows. So we make it much, much easier and quicker for them to do so. The other area where we are innovating is around the flexibility of our cameras. So we can -- the download over the air, say, a software update to make a fixed industrial camera become a machine vision camera, where our competitors tend to have a very broad portfolio of SKUs, which are very narrow in how they can be deployed. So we provide much more investment protection to where our customers can kind of -- we can migrate with our customer up the value chains there from fixed industrial scanning to machine vision. Machine vision use cases tend to be a little bit more, say, quality control in a manufacturing process. So you can look at a brake assembly on a car and see if all the rivets, bolts and nuts are put in the right position or look at the fill level on a Coca-Cola bottling in the similar line or if the cap has been put on right. So we had machine vision capabilities before in some of our solutions like SmartSight and our SmartPack solutions. But this augments our capabilities. And we also have made other acquisitions some -- a couple of years back in Cortexica, which also was focused on extracting information from digital images and videos, which we can leverage into this area.

Got you. That's great. So let's switch gears and walk through the P&L a little bit. So very strong rebound after kind of very difficult during the pandemic. But as we look past some of the recent strength that you've done, how do you think about longer-term sustainable growth of the business? Is it kind of a GDP-type story? Is it GDP plus high or -- a couple of points? Or just what are the kind of #1 recent drivers of recent strength and kind of how do you see that over time and the sustainability of it?

Yes. So if you look at the recent strength, I go back to the secular trends we've talked about and this need for customers to digitize and automate their operations to adjust to the new normal, whether that's the growth in omnichannel or the different modes in which consumers want to consume pickup goods from the retailers or grocery stores. And our competitive advantage going into that has really enabled us to respond quickly and capitalize on the opportunity here over the last few years. Regarding the long-term growth, if you go back, we've targeted 4% to 5% over the cycle since the Enterprise acquisition, and we've outperformed that over that period of time. So we're always challenging ourselves to maximize profitable growth and ensure we're capitalizing on the opportunities that are out there. And again, we believe that with our competitive advantage, the diversified business and the new avenues of growth in both the core and adjacencies, we can continue to demonstrate strong growth. So again, we're planning for growth in '22, and we're also planning to update our long-term growth profile early next year, as -- particularly as we come out of COVID and really reassess both our core markets as well as the opportunity in the new markets we've entered over the last year to 2.

Okay. And then very top of mind is always talking about supply chain and what's going on there, kind of component costs, freight costs, all that, everybody is talking about it. How are you guys navigating through it? What kind of impacts is it doing on both the margin and the top line as well? Just your thoughts on how that's evolving and where you see that kind of ending over time.

Yes. So like everyone else, we're experiencing the same supply chain challenges. We categorize in 2 spots, the logistical bottlenecks as well as the semiconductor shortages that are impacting the industry. So if you look at the logistical bottlenecks, due to a variety of factors from reduced commercial air travel, the container shortages, port congestions, labor challenges. But that's impacted us from our air and ocean rates just to face value pound for pound of increased 2 to 3x, sometimes higher since the start -- pre-pandemic. We also have had to expedite component parts to keep up with the growing demand between Tier 1 and Tier 2 manufacturing partners as well as ship a higher percentage, particularly in print, over air versus ocean to kind of bypass the congestion. But obviously, that comes at a much steeper price. And so again, we're -- I think the team has done a phenomenal job managing that, communicating lead times, finding alternative paths, moving product from China to Europe via rail through Siberia, to shipping more direct, again, in order to decrease the lead times to whatever extent we can possible. And then on the industry-wide semi shortages, again, that's impacting most availability as well as pricing of our component prices. Again, the team is spending a ton of time looking at alternative angles, new alternative source of products, working with our suppliers around, making sure we're getting our fair share of allocation. And that's -- we have seen an increase in price there, which we did take a price increase in September to offset that. That we don't believe goes away in the near term, as we've set some of those prices out for the next 12 months to lock in volume as well as support the capacity that the industry is adding. So again, quite a few headwinds when it comes from margin. I think that, again, from a P&L perspective, we've done a nice job of managing that with controlling how we discount to our end users as well as driving efficiency in our operations to offset the impact of some of these transitory cost increases.

Got you. And then expanding on the gross margins. You might see some pressure from some of these supply chain issues. But as we kind of look further out, these acquisitions that you've done are quite high margin that they generate. So how do we think about kind of your -- where your gross margins have stood and then how they kind of evolve over time as you integrate more of these acquisitions?

Yes, I'd say we have a long track record of driving profitable growth, and that ebbs and flows by quarters, whether it changes the mix or what's going on in the broader economy. But we haven't set a ceiling of where we think margins can go. And as you noted, some of our newer solutions, the new acquisitions are in higher margin, higher growth markets. So we believe over time, those will be margin accretive to the business as they grow and expand and become a larger part of the business as well as continuing to invest in our core business, whether that's better analytics around pricing, improving our efficiency around all cost of goods sold. So again, I think there's many dimensions we can drive to improve margins, while we manage the transitory freight headwinds here over the next few quarters.

Got you. And then on the OpEx front, it's pretty much stayed in that kind of mid- 20s percent for the most part on sales. And is that kind of right way to think about it moving forward? Where are you investing at a bulk of R&D spend as well?

Yes, I think that's a reasonable way to think about it. While we do expect to drive some OpEx scaling and leverage over time, I think it's a fair framework. And about 10% of that is in R&D spends. And if you break that down, 2/3 of that is directed at the core business in terms of investing in the portfolio, making sure we stay competitive and ahead of the competition. And then another 1/3 is around more longer-term, horizon-focused investments. And you think that's us launching machine vision or the fixed industrial scanning portfolio, the SOHO launch we did in the second quarter. That's coming out, that's 1/3 of the portfolio that's looking at longer-term new opportunities to grow and expand our markets.

Okay. Great. And then can you kind of remind us of your manufacturing footprint? And are you satisfied of how it sits today globally just on that supply chain -- going back to that supply chain theme?

And so if you looked back, I guess, 3 years ago now, the vast majority of our manufacturing was in China, a small bit in Mexico. And due to the increase in tariffs, we made the decision to move or replicate manufacturing across Taiwan, Vietnam and Malaysia for each one of our main core products, particularly for the volume going into North America. And that -- while we did that from a tariff mitigation, it's really given us the resilience we needed here over the last 1.5 years as COVID cases spiked and changes from a geographic footprint, we've been able to flex and scale back across that new capacity to help mitigate some of the impacts from COVID. So I wouldn't say we're ever satisfied or done with teams continuously looking at how we can continue to build resiliency, where -- do we need to be more local. But that's -- that big shift is something we're still driving in terms of building local capabilities across Vietnam and Malaysia. But again, something the team is continuously looking at, particularly here with -- as we sit here today with some of the challenges we're seeing, it's not only how do react in the short term, but again build our portfolio and supply chain to be resilient for whatever comes next down the line.

And then as we kind of bring it all together from the top line down to gross margins and R&D, you mentioned, what's the kind of opportunity for a longer-term EBITDA margin targets? You do have this upward movement or benefit from some of these acquisitions you're doing over time. So how do we think about kind of the longer-term EBITDA profile?

I'd say we haven't set a ceiling or a specific target other than we expect to continue to drive margin and OpEx leverage. And if we do those 2 things right, EBITDA will continue to increase. Again, particularly with the new solutions and new markets that we've entered that have historically higher EBITDA rates, that's an opportunity to continue to grow over time.

Okay. And then as we think about your free cash flow, it's approaching that $1 billion mark probably consistently, will be north of that in the future. Your CapEx is pretty steady. Any other further efficiencies you see in working cap or your thoughts on free cash?

Yes, so I think we have a fairly light business model with low CapEx, as you mentioned, particularly with the manufacturing footprint we have and the partnerships we have with our JDM manufacturers. So right now, we're operating at quite efficient top quartile when you look at working capital in our peer group. And what we really look at is how we target 100% free cash flow to net income conversion over time, right? Some years will be better, some years will be a little bit worse. But that's the target we've had, and that's going to remain the same as we move forward.

Got you. You're pretty much there pretty consistently. So that's great. Okay. And I guess let me just kind of go through the question was -- and then as I go through that, if you could kind of comment on any of the ESG priorities that the firm is -- we should be mindful about?

Yes. So I'll take that one since -- one, I think we're obviously committed with the Board on driving a sustainable business. And we've had a series of actions over the last -- this isn't new, but putting it together around human capital management, climate and resource conservation, again, with activities and actions that align with the overall strategy of the company. And I think we made tremendous progress over the last couple of years. We have a cross-functional Sustainability Council. We report out regularly to our Board around the progress we're making. This year's big focus was around improving our disclosures and reporting. So, in July, from a CDP, we reported our Scope 1, 2 and 3 emissions. And then later in the year, we'll do the full SASB report. So again, a lot of focus this year around getting our reporting up to what we have been doing and what we're doing. And then a lot of activities, we have a Green Product Council that looks at how we build sustainability and eco-friendly component parts into every new product. Our Circular Economy Program we launched a couple of years ago, so how do we take older devices off the street and either refurbish them and resell or break those down and use the parts as part of our service operations. And that's been a really successful program, both for -- from a financial perspective as well as a good thing for the environment.

Got you. So I have a couple of questions coming in. But -- so can you kind of provide an update on the USPS deal? Where are we there, upgrade cycles, et cetera? And then I believe you mentioned another type of mail carrier deal as well, if you just elaborate on that one too.

So I can -- I'll start with this one, and we'll see here if Nate can help if there is anything I forget. But first, postal services across the globe has been a big market for Zebra. We are -- we have high market share with them. And we continue to win new business. USPS is obviously a very large postal service and a great award that we got a few years ago. The original award we have largely fulfilled now in Q3. But we now have a frame contract that we can continue to hunt under. So we can find other opportunities that doesn't have to go to RFP. And we're working with the USPS on a number of other opportunities where we can expand our business and continue to find new areas to help them. Also, though, as we go forward, the existing installed base that now have needs to be replenished, and they have support contracts, software and other things that continues to deliver a continuous revenue stream for us in that area. So -- and already now we have identified and fulfilled some new opportunities that were not envisioned in the original contract that USPS has brought to us.

Okay. So we have a couple of minutes here left. And maybe a good way to end it, Anders, is what would be kind of your quick pitch to -- and it's a question from VIs that can quick pitch to new investors about why they should invest in the company and what the firm is benefiting from, et cetera?

Yes. I think we're very excited about where we are and the opportunities we have. If you look at the trends around digitization and automation of workflows across industries, and it pretty much doesn't matter which industry, I'd say it's -- from our perspective, it's retail all the way through to health care. That is a big focus for companies. And there's -- I would say, these are long-term secular trends, and we are very well positioned, I believe, to help our customers to continue to digitize, automate their businesses, their workflows. And we have good opportunities to also continue to expand our portfolio with new solutions, organic or inorganically. So we have been able to position ourselves as being much more of a strategic partner to our larger customers. And we are having discussions with them about where -- what are their top operational priorities where technology can help and trying to align our R&D investments to make sure that we can address our customers' biggest opportunities. So yes, so we're very excited about it, and we look forward to 2022 here.

Okay. Great. Well, thanks again for joining the conference, and we appreciate your time. We know you're super busy. I know you're about to catch a flight here pretty soon. But thank you for your time. Appreciate it.

Absolutely. Thank you.