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Good day, everyone, and welcome to the Tantalus Systems First Quarter 2023 Financial Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Deborah Honig Investor Relations. Please go ahead.
Thank you, Operator. Thank you for joining us to discuss Tantalus Systems' financial results and operating performance for the 3 months ended March 31, 2023. Tantalus issued these results in a press release yesterday, which is posted on the company's website. Joining me today on the call from Tantalus Systems here and referred to as Tantalus or the Company is Peter Landa, President and Chief Executive Officer; and George Reznik, Chief Financial Officer. During the call, we will make forward-looking statements about Tantalus' business. These statements are subject to certain risks and uncertainties, which could cause actual results to differ materially. Tantalus refers conference call participants either today or in the future to the company's forward-looking statements contained in the presentation and also available on our website at www.tantalus.com. Statements made on this call reflect management's analysis as of today, May 10, 2023. Management does not assume any responsibility or obligation to update forward-looking statements made during this conference call unless required by law. Please note that the financial information referenced on today's call is stated in United States dollars and in accordance with IFRS, unless otherwise stated. The company is also presenting selected non-IFRS financial measures, including gross profit margin, core business expense, adjusted EBITDA, recurring revenue, annual recurring revenue referred to as ARR and adjusted working capital. Tantalus believes that these non-IFRS measures provide meaningful information to investors. However, they do not have a standardized meaning and are not likely comparable to similar measures presented by other issuers. I will now turn the call over to Peter Longo, President and CEO. Please go ahead, Pete.
Deborah. Good morning, everybody. Thank you for attending our earnings call to outline our Q1 results in 2023. On behalf of our Board of Directors, George Reznik, myself and the rest of the executive team I'm pleased to provide an update and share the good results that we've issued as of last night. Calling your attention to Slide 3, we witnessed a number of milestones unfold for the company in Q1. Particularly, we delivered $10.4 million of revenue in the first quarter, which marks the highest level of revenue that our companies has ever generated in the first quarter of a calendar year. This result is on the heels of delivering the highest amount of revenue in a quarter last year Q4 at over $12 million and is a good reflection of the trajectory and the visibility into our revenue plan that the company currently has. In addition to having a solid start to the year from a revenue perspective, we also converted $17.7 million of opportunity out of our sales pipeline through our sales organization. And we highlight this number because it is a new milestone for our company in terms of orders converted in any quarter throughout our company's history. The $17.7 million surpasses our previous high watermark of $16 million set last year. So great growth and effort from the sales organization and I think a good data point for the level of urgency that we're seeing across the utility industry to truly modernize the grid. As part of that $17.7 million, we welcomed an additional 7 new utilities to our user community, which now stands at 278 utilities, and we continue to gain market share as a result of the value we deliver, the support we provide to the utilities around the country, Canada and the Caribbean and I think is a good testament to the direction of our capabilities. A few other highlights our metrics to point out. We did revert back to negative EBITDA in Q1 as we sort of expected in alignment with our plan. As previously communicated, our view is that Tantalus will be EBITDA positive or adjusted EBITDA positive for the full calendar year of 2023, but not necessarily EBITDA positive for each quarter of the year. Part of that ties to the ramp in revenue throughout the course of the year. And also some of that ties to the ongoing investments that we're making in strategic R&D initiatives to bring our Tantalus gateway into the market as well as to deploy our AI-enabled transformer analytics capabilities. Incrementally, in Q1, we saw some incremental expense from sales and marketing or in sales and marketing that tied to both in-person participations at 2 of the largest industry trade shows, which always unfold in Q1 as well as incurring some incremental expense tied to the planning of our in-person users conference, which unfolded for the first time since 2019 during the first few days of April. From a balance sheet perspective, I'm pleased to report that our cash has increased. And as of March 31, we had $8.2 million in the bank. This is exclusive of approximately $700,000 of cash that continues to sit in an account tied to a bit a bond for deployment into the next few quarters. With that, I'm going to turn it over to George and have him walk through our financial results. Go ahead, George.
Thank you, Pete, and good morning, everyone. As reflected on Slide 4, we delivered $10.4 million in revenue for the quarter, representing 12% growth over the prior year period. Revenue contributions from our Software and Services segment was 32% in Q1 2023 and remained in alignment with previous reporting periods. Within our Software and Services revenue segment, we include recurring revenue. As a reminder, a recurring revenue is comprised of Software as a Service or SaaS subscriptions, software maintenance, technical support and hosting services. Recurring revenue recognized during the first quarter of 2023 increased to approximately $2.4 million from $2.1 million in the prior year and represented 23% of total revenue for the quarter. As we continue to deploy more connected devices, we are focused on increasing the recurring revenue contribution to our overall revenue profile. To that end, as of the end of Q1 2023, our annualized recurring revenue, or ARR, meaning the total recurring revenue expected to be recognized over the next 12 months increased to $10 million, reflecting 22% growth from the end of Q1 2022. With respect to our gross profit, we continue to generate strong contributions despite ongoing inflationary pressures on our supply chain and overall costs. As reflected on Slide 5, we delivered gross profit margin of 47% for the quarter, which is fairly consistent with the prior year period. Disaggregating the gross profit margin further, the percent contribution for our connected devices increased to 34% in Q1 2023 due to the product mix, supply chain management and the previously implemented price increase. Gross profit margin from our Software and Services segment remained strong at 74% in the quarter. We believe the continued strong gross profit margin validates our team's ability to navigate through a challenging business environment and demonstrates the value and differentiation of our solutions. Moving down the income statement as outlined on Slide 6. Our operating expenses consist of sales and marketing, R&D and general and administrative items and is exclusive to share-based compensation and depreciation, amortization, noncash expenses. Our operating expenses for the quarter increased to $5.6 million from $5.1 million a year ago. Please note that our Q1 results in 2022 only reflected 2 operating months of Congruitive whereas this year's Q1 results reflect the full quarter. As reflected in our MD&A when comparing OpEx on a quarter-over sequential basis, OpEx in Q1 increased slightly from Q4 over this past year. The increases quarter-over-quarter tied to our continued R&D investment efforts and an increase in our sales and marketing expenses. We generated adjusted EBITDA of negative $692,000 in this quarter, which is similar to the prior year period. While the headline numbers look similar on a year-on-year comparison, we believe the adjusted performance in Q1 of this year reflects an improvement over the last year by approximately $225,000 on a pro forma basis. Given my aforementioned reference of Q1 of '22, only reflecting 2 full operating months with Congruitive. Management is prudently managing our operating expenses while balancing the investments in R&D and increased sales and marketing efforts relative to the growth of our revenue and continued strong gross profit margin contributions. We expect -- we remain committed to reverting back to our history of delivering positive adjusted EBITDA and expect to do so for the full calendar year of 2023. Please note that our net loss has expressed net of significant noncash expenses, inclusive of depreciation and amortization and stock-based compensation. Noncash items impacted the net loss by approximately $600,000 during Q1 of 2023. As reflected on Slide 7, the company ended the first quarter of '23 with $8.2 million in cash, exclusive of $673,000 restricted cash pertaining to a customer bond, which is anticipated to be released in mid-2023. This compares to $5.9 million of cash as of December 31, 2022. As a reminder, we historically witnessed a slingshot impact of cash at the beginning of each calendar year in conjunction with the annual invoicing and collection of our ARR. This link shot of cash helps our team plan and manage our working capital throughout the year and bolsters our ability to execute our operating plan. In addition to the increase in cash, we continue to generate positive adjusted working capital to support the business. The company had total assets of approximately $39 million as of March 31, 2023. The company had total debt of $10.1 million as of March 31, 2023. We renewed our debt facility with Comerica on February 27, 2023, and remain in good standing. The decrease in the total debt balance from the prior quarter is due to the ongoing repayment of the term loan associated with the Congrutive acquisition. As a reminder, we assume $3.3 million of debt through a term loan with Comerica that is being amortized over a 3-year period. We do not plan to use the existing shelf registration prior to its expiration later this summer to raise any additional equity and therefore, have not conducted a review of this quarter's financials with our auditor. Now I turn over the call to Pete to provide an update on the business and the commercialization of our RUSense gateway.
Thanks, George. Given the impact of our additional R&D investments, associated with the TRUSense Gateway and our effort to commercialize the product and that investment's corresponding impact on EBITDA quarterly. We wanted to provide everybody with a status update on where things stand and provide a little bit more context on what we're working towards. As you'll see on Slide 8, we are working towards the delivery of 3 versions of the TRUSense Gateway. The first 2 referred to as the TRUSense Fiber gateway or TFG and the TRUSense Ethernet Gateway or TEG, are geared towards utilities who have already or are in the process of deploying fiber networks all the way down to the premise. Those fiber networks are intended to not only bolster the performance of the distribution grid, but also enable those utilities to help solve the broadband divide, particularly here in the United States, which surfaced during the COVID-19 pandemic. It's those utilities that formed our advisory committee and helped us both design and now are testing both the TRUSense fiber and the TRUSense Ethernet gateway. To provide some order of magnitude, we have a line of sight to over 200 utilities across the U.S. that have already or are in the process of deploying fiber all the way to the premise, and we believe both the fiber gateway and the Ethernet gateway will provide us with a target-rich opportunity to quickly expand our user community and obviously scale the business moving forward. In terms of where we are, we shared in Q1 the completion of alpha testing of the TRUSense fiber gateway and the commencement of UL certification, UL stands for Underwriters, aboratories, which is a certification process that really any electronic device needs to run through. We continue to monitor our progress with the UL certification team, and that's our current estimate that we should be able to complete UL certification on the fiber gateway and commence field trials towards the latter portion of the summer and into the early fall. Our goal with the fiber gateway is to be available for sale towards the end of this calendar year. And while we do not expect to generate revenue from the fiber gateway, we do expect to convert orders out of our pipeline and from our advisory committee leading to the end of this calendar year. This second version that also ties to utilities deploying fiber is the Ethernet gateway. Similar to the fiber gateway, this not only will help utilities enhance their smart rig capabilities, access much more granular power quality data that really is landmark for this industry. It will also help utilities get behind the meter, which we talk a lot about in terms of accessing command and control of EV chargers and other distributed energy resources such as inverters for rooftop solar panels or storage devices. But in addition to all those good things, the Ethernet similar to the fiber gateway will also enable utilities to deliver broadband services to their customers. And to that end, the Ethernet gateway will need to go through an incremental UL certification. That will then lead to dedicated field trials with members of our advisory committee. And the aim is to have the Ethernet Gateway follow quickly on the heels of the fiber gateway in terms of when it is available for sale. Again, we do not anticipate generating revenue from the Ethernet Gateway in 2023, but do expect to begin converting orders before year-end. Those orders will help drive visibility into 2024 and beyond and certainly serve as further validation of what we're working on. In addition to the fiber and Ethernet Gateway, we also wanted to call out the progress that we're making on the cellular gateway. The cellular gateway is geared for utilities that are not deploying fiber all the way to the premise. And it is from an increasing number of utilities around the country based on their objectives of getting behind the meter to control EV chargers and inverters that we are beginning to accelerate this effort. One benefit that we'll have with the cellular gateway from a timing perspective is that the platform is virtually similar to that of the fiber gateway and will not require an additional UL certification process. It will, however, require FCC review because we'll be leveraging either private LTE and/or 5G cellular networks here in the United States. So as you could see, the time frame of the cellular gateway is a little further pushed into 2024, but we're working aggressively from an engineering perspective and from a product management perspective to bring the cellular gateway to market as quickly as possible. I highlight the cellular gateway today because it is Tantalus first true path to access a broader set of utilities in the U.S., particularly with respect to investor-owned utilities. While a TRUSense Gateway family of products will support public power and electric cooperative utilities, those that are either deploying fiber or those that are not. We believe the cellular gateway provides us with a path to access the largest utilities in the country who are all prioritizing the protection of transformers with improved power quality measurement, and the ability to get behind the meter to control EV chargers and distributed resources. In totality, we believe and continue to gain confidence that the TRUSense Gateway product portfolio, fiber, Ethernet and cellular represent $1 billion of addressable market opportunity for Tantalus to pursue. And as we look to execute on that, we'll continue to provide updates, and we'll continue to show progress to our shareholders. It's that order of magnitude of opportunity, both in terms of dollars and diversifying the types of utilities we can pursue that anchors management's decision with our Board's support to continue to accelerate the R&D effort and the corresponding sales and marketing that are impacting near-term adjusted EBITDA. With that said, a few closing comments. We're very mindful of the impact that EBITDA has in today's market environment, but we do believe management is being prudent in balancing the opportunity before our company the chance to become a first mover with this new product offering in the TRUSense Gateway and fortifying the balance sheet that we currently have. To that end, we continue to build favorable visibility to our revenue profile for 2023 and beyond and are gaining confidence in our ability to deliver another strong year of growth in 2023. We absolutely and continue to believe that Tantalus on a full calendar year basis will deliver positive adjusted EBITDA and enable us to revert back to the predictable quarterly adjusted EBITDA performance that we delivered, leading up to and initially going public. We believe those results are feasible based on the continued favorable trends across the utility industry as utilities work with urgency to modernize their grids. And in terms of being able to deliver product, both existing and the TRUSense gateway, we continue to monitor and manage our broader supply chain. And while we continue to see normalization of the lead times for our products, we are increasing our level of attention and detail with our metering partners to ensure that we have adequate access to capacity within their factories. Incremental to all of these things that are unfolding, we have increased our level of activity with utilities to submit applications towards the 8 identified programs that are providing stimulus funding to utilities. As a reminder, those 8 programs that we've identified amount to over $400 billion of available funds, where Tantalus's solutions, including the TRUSense Gateway are an allowable use of proceeds. And so as we continue to make progress from a financial perspective as we continue to get closer to the commercialization of the TRUSense Gateway. And as we make progress with utilities to open up the pathway for them to access funding, we continue to believe that Tantalus is in a very good position moving forward and on solid ground as we look to execute our plan for the next several years. With that, we'll turn it over, Operator, to see if we have any questions from today's call.
[Operator Instructions] Our first question comes from Daniel Rosenberg with Paradigm Capital.
I first want to start with the expense profile. You mentioned the goal of targeting annual positive adjusted EBITDA. I was just wondering the cadence of that? Is it going to be lumpy? Is it really a Q4 or back half of the year phenomenon? How would you characterize it?
Yes, Daniel, George can give you more specifics, but it's going to be a second half of the year initiative, especially as we're still trying to drive through the certification processes and the development work on both the fiber Ethernet and cellular gateways over the next several months. But George, you can provide more specificity there.
Yes, absolutely, Daniel. And so we look at this quarter, we have significant trade show activity and a lot of travel as we emerge out of COVID. We're now meeting with customers and operationalizing our teams as well. So there's an investment there. But as Pete alluded to, it's really front-end loaded this calendar year in the first several quarters of accelerated investment in the TRUSense Gateway, the certifications and commercialization, which also includes customer meetings. As we referred to in our formal remarks, we did have our Tantalus user conference or TUC event for the first time in -- since 2019. That happened this quarter in April, which was very well attended by over 300 people and 100 utilities and with positive feedback from our new products, particularly the TRUSense Gateway and analytics offerings. So that's a bit of an investment to really connect in person again with our user community, which is a real valueble asset of the company. We have a lot of opportunity with our user community with our new products and so investing there. And as we go towards the back half, the OpEx will be more cost efficient. So some of it is timing, some of it is playing a little off there for this market opportunity. And as revenues continue to scale, we see -- anticipate adjusted EBITDA to be positive for the year.
And my second question, I guess, revolves around TRUSense. Could you help us just better understand the customer targeting along the 3 product offerings that you're pursuing? And just are they kind of mutually exclusive customer buckets and then how early can you start to target those cellular kind of larger deployments?
Yes, Daniel, it's sightful. So thanks for that question, and sorry, we weren't more specific in our comments. So I would bucket, I'm just going to go backwards here for a moment and bring up the summary slide on where we stand. So I would bucket -- I'd segment customers into 2 broad categories, regardless of type. There's a bucket of utilities that are -- that have already completed or are in the process of deploying a fiber network that goes all the way to the premise, the premise being a home, a building a factory. There are for the most part, I'd say, for the most part, those utilities fall within the electric cooperative or public power market segment, but there are a few exceptions within the IOU space. But the vast majority of those utilities fall within our traditional market segment, electric co-op and public power. There's been a much larger bucket and order margin made a little over 200 utilities probably fall in that bucket that are deploying fiber. That number might be a little bit higher with utilities that have already completed fiber deployments. The much larger bucket of utilities are those that either will never get regulatory approval, don't have the means or don't have within their states of operation, the ability to deliver broadband services. And we see those utilities. They typically bring fiber to a substation or to a large point of collection for data and then rely on wireless communications down to their meters. Those utilities that don't have fiber all the way to the premise will fall into the category to be applicable for the cellular gateway. And within those utilities, right, that's where the bulk of the investor-owned utilities will sit. And what I'd say is within particularly the utilities that are not investing or able to deploy fiber for a variety of different reasons. We're seeing a few paradigms present themselves. One is that there is an increasing number of utilities that are relying on sort of a first generation of smart metering, most of which is tied to billing with some basic outage management capability. And that either don't have the means, don't have the regulatory approval or don't have the need to necessarily upgrade those physical meters. But in all circumstances, those utilities are looking to fortify their transformers with incremental power quality measurements and are absolutely looking to access and gain command and control of EV chargers and all the good things that are happening behind the meter. So we see a few different scenarios unfolding, particularly across the IOU space and then non-fiber utilities, where the TRUSense gateway is very applicable, particularly as we bring forward a 5G and private LTE version of the product offering. So that sort of segmentation. In terms of your question on timing, sorry to be a little long-winded there. In terms of timing, Daniel, the adviser committee of utilities are utilities that are all in the fiber bucket. And I think as we finalize the fiber version and then quickly finalize the Ethernet version we'll see orders from the advisory committee this year. We'll see those orders translate into some revenue in the first half of 2024. My gut instinct is we'll see ramping of revenue second half of 2024 forwards material. On the cellular side, and particularly with the larger IOUs, we are engaged today with a few IOUs in formulating their plans around a cellular gateway deployment, some tied to initiatives with the regulators, some just tied to initiatives within their smart grid teams. And our instinct is that we'll see on the IOU side piloting of the technology once it's available. If not, the formation of sort of a second advisory committee of IOUs that's just focused on the cellular gateway. For public power and electric cooperative utilities looking for the cellular gateway, I think they'll move faster. And some of those are our existing customers that really want to get behind the meter as quickly and aggressively as possible. So I hope that addresses your question.
No, that's perfect. Glad to hear you're already engaged with speaking to the potentials and look forward to hearing further milestones as you achieve them.
Thank you, Daniel.
[Operator Instructions] The next question comes from Gabriel Leung with Beacon Securities.
Just got a couple of follow-up questions on the TRUSense side of things and maybe just talking about the sales cycle part of things for a second here. So Pete, the -- as it relates to your advisory committee and some of the people that are working -- that already worked on TRUSense, have you spoken to them about what sort of commitments what sort of POs you might expect to see right off the bat once both the fiber and the Ethernet versions of the product are ready for commercial launch?
Yes. So it's a bit difficult to answer in public forum, Gabriel, but I do appreciate the question. Within the advisory committee, there are 2 lines of thinking, some utilities, some of those utilities that want to just directly connect a fiber node right into the bottom of the device that's currently on the screen where the TRUSense gateway is and of itself the point of termination of the fiber network. And then out of our device will come an Ethernet cable. So that's one scenario. A second scenario is some utilities are thinking to use an optical network terminal for broadband as the termination point for their fiber network with then an interconnecting Ethernet core between a third-party optical network terminal and our device where our device is actually delivering the power to that optical network third-party device. So it's really -- I don't think one is better than the other. I think it's really just preference of utility and how they want to try to manage their own workforce and their own processes. Within that, I think we'll see a bell curve of commercialization. I anticipate that some of the utilities will give us a blanket purchase order for the full scale of their deployment. And then from that blanket purchase order provide us with individual orders that are called off based on the terms and conditions. We do that a lot with utilities today with our existing capabilities, and that's what provides us with an awful lot of visibility each calendar year because we know exactly what to expect in terms of number of devices and deployment plans. I think there'll be other utilities that don't necessarily give us the blanket purchase order, but just start to give us orders with great visibility into what their trajectory is. Utilities are conservative by nature. So I can anticipate some of those utilities wanting to go from our field trial to their own sort of initial deployment units in the thousands, hundreds, really so that their team understands what the device does, how it gets deployed, what do they do with the data, how do they configure it inside their existing systems. And as they work through those processes with our project management and account management support, then going full scale and being very aggressive. So I think we'll -- I think as we get closer to commercialization and closer to orders, Gabriel, our intent is to provide some guardrails for investors. It's not realistic that all of a sudden, there is hundreds of millions of dollars of revenue in a quarter. That's not the way this will roll out. I think the $1 billion of opportunity is like over 5 to 7, if not 10-year horizon. And I could see a slow ramp in 2024 with a much more aggressive ramp in 2025 and beyond. So we'll try to model that out. And I think in conjunction with the order of magnitude of what this means for our organization and as we validate with orders, particularly from the advisory committee, we'll try to provide some of that forward-looking guidance or trajectory. I'd also highlight you may recall from our previous earnings call, order of magnitude, that advisory committee represents in and of itself, I'm going to round sort of largely here between $150 million and $200 million of incremental revenue opportunity for this company. And the feedback we have is those utilities will look to roll out their deployments over as quickly as a 3- to 4-year and as long as a 6- to 7-year horizon.
That's great. And maybe just to follow up on -- in terms of sales cycles. Beyond the advisory -- the group of advisory committee of members, as you look into either your existing utility community or new ones, do you expect that there's going to be a high degree of missionary selling for TRUSense? Or do you think that we're mature enough in the whole AMI/AMR stuff that utilities will quickly understand the ROI associated with TRUSense and maybe the sales cycle might be short versus previous sales endeavors?
Yes. So Gabriel, I'd answer that question based on the direct feedback we received from our own customer base in early April at our 2023 users conference I used these words carefully. But as CEO, I was overwhelmed by the favorable response from existing utilities, existing customers that several of them approached us, particularly on the cellular gateway to join the advisory committee or form a subcomponent to the advisory committee and have put their hands up to not only help us complete some of the design work, but the applications and the testing. I think that's indicative of what we're going to see because as we've attended to George's point on some incremental OpEx this quarter or in Q1 through attending Tech Advantage and Distributech to really start marketing this device. We've been somewhat overwhelmed by the inbound inquiries that we are receiving from an increasing number of utilities across all segments, co-op, public power, IOU. So my instinct is with existing customers, we can accelerate that sales cycle. For prospective customers, I think there's some creative things we can do to shorten the sales cycle. And I'll give you an example of that. Several years ago, we were the first to the market to deliver something called [indiscernible] a coated receiver transmitters or reading, meaning our AMI modules, our communications networking capabilities, our system was reverse compatible. It was able to read the legacy one-way paging electric water and gas devices, it unfolded in the 2015, 2016 time frame, if I recall, maybe a little bit earlier than that. It helped us shorten the cycle from a sales perspective because it wasn't deemed to be something new. It was deemed to be an expansion on the return on investment of existing infrastructure. I see that parallel unfolding here with the TRUSense Gateway based on insights that we're gathering. And so I think there are some ways that we can get creative with our sales organization and an expanding sales channel, particularly into the IOU space to try to circumvent what otherwise can be a lengthy process.
Got you. Maybe one last question for me. Just as we sort of go back to the, I guess, your traditional sort of AMI solutions, can you talk a little bit about the sort of the bottlenecks that you saw on supply chain or your own supply chains on your beating partner supply chain. Have those alleviated such that we can sort of expect to see, I think this quarter, you did about 90% year-over-year growth in connected devices, sort of maintain that sort of high teens sort of growth rates on the device side of things, this calendar year?
Yes. I think from our supply chain perspective, I can't complement the manufacturing and supply chain team enough inside our organization. They continue to work 7 days a week. That's not just lip service. That's really what's unfolding. And I'd say, Gabriel, it's -- we still see some -- I think we're just become adept at navigating through things. But I'd say we've seen in terms of our high-volume components, the lead times are longer than they were pre-COVID-19, but they're normalized at this point. And so that gives us the ability to plan accordingly. I think from a logistics perspective, we're seeing both time and cost on shipping come down. And that's been fairly consistent in terms of trending for the past several months. I think that's going to continue. Where we always have a little bit of exposure is what's happening on our meter manufacturing partners within their supply chain and their own factories. And I'd say we still -- across the board, we have 3 meter manufacturing partners. Two of them are still quoting lead times that approach a year. So it makes it a little bit harder to plan as we get orders with utilities that want those types of meters. The other partner is significantly below that and improving. But I think we're always very mindful of capacity allocations in the factories. And working as closely as possible with our metering partners to give them the same visibility that we have so they can plan accordingly. So I'd still say it's -- we might see some disruption, not material, but we could see some disruption, in my opinion, through 2023 and beyond. And I'd say we are working very quickly on thinking through how we do everything possible to diversify ourselves away from meter capacity risk. And as we get closer to crystallizing that, we'll have more to share.
That's great. Congrats on the progress.
I appreciate it, Gabriel. Thanks for the questions.
This concludes our question-and-answer session. I would like to turn the conference back over to Peter Londa for any closing remarks.
Yes. Thank you, Operator. Again, thank you all for dialing in at the progress we continue to make is a direct reflection of our entire team's dedication and hard work, which I am so appreciative of and privileged to be a part of a CEO. As I said, I think Tantalus remains in a very strong position relative to the opportunity in front of us, and we are doing everything we can to navigate through what otherwise is remains a challenging business environment, but doing so in a manner that's prudent, that's responsible and taking our shareholders' interest to the highest level of degree possible. With that, we'll look forward to providing updates through Q2 through press releases and look forward to seeing you all again on our next earnings call for Q2. Thank you all for your time.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.