Jack Vander Aarde

Jack Vander Aarde questioned the competitive environment within Alarm.com's core North America residential business, including any notable trends, and how the business performed against the initially forecasted 200 basis point headwind from ADT.

Answer

CEO Steve Trundle stated no dramatic changes in the competitive landscape, expressing confidence in Alarm.com's strong position with service providers. He noted that the 200 basis point headwind from ADT did not fully materialize as expected in 2025, referencing ADT's comments on their Q3 transition, but it remains modeled for 2026. Steve Trundle also explained that core business growth is primarily ARPU-driven, largely due to product-led feature adoption, especially video, with 20-25% of cameras consistently going into the installed base.

Jack Vander Aarde asked about competitive trends in the North America residential business, the impact of the forecasted 200-basis-point ADT headwind, and the performance of the install base.

Answer

CEO Steve Trundle stated no dramatic competitive changes, feeling confident due to strong service provider relationships. He noted the ADT headwind didn't fully manifest as expected in 2025 (ADT transitioned ~25% by Q3) but is still modeled for 2026. CFO Kevin Bradley added that core business growth is 70-75% ARPU expansion, driven by product-led feature adoption (especially video), with 20-25% of cameras sold going to the installed base, leading to package upgrades.

Jack Vander Aarde of Maxim Group asked about the outlook for new home sales, the prevalence of customers with multiple properties, potential SaaS price hikes, and the fastest-growing international regions.

Answer

CEO Steve Trundle noted a slightly more positive sentiment from service providers regarding home sales for the next 6-9 months and confirmed that a high percentage of commercial customers and a meaningful number of residential customers have multiple properties. He identified Latin America and the Middle East as fast-growing international regions. CFO Kevin Bradley clarified that there are no current plans for broad-based SaaS price increases, as the recent hardware price change was a pass-through of tariff costs.

Jack Vander Aarde asked for general commentary on subscriber growth trends in Alarm.com's North American residential and commercial installed bases. He also requested an update on the competitive landscape and how it factors into the company's financial outlook.

Answer

CEO Stephen Trundle confirmed that the total number of subscribers continues to grow in both residential and commercial segments, though the definition of a 'subscriber' has evolved. Regarding competition, he noted the primary threat remains the proliferation of low-cost, direct-to-consumer video products from Asia, but emphasized that Alarm.com's focus on professionally installed, comprehensive security systems for serious customers has allowed them to thrive despite this long-standing trend.

Jack Vander Aarde asked about the international growth strategy for 2025, specifically if the outlook includes adding new service providers or expanding into new countries, and what the growth assumptions are for existing international partners. He also requested a reiteration of the 2025 SaaS outlook range.

Answer

CEO Stephen Trundle explained that while the company continues to add smaller international service providers, the 2025 outlook does not assume the signing of new major logos or entry into new markets; these would represent potential upside. He noted there is a latency of one to two years before new partners meaningfully contribute to the P&L. CFO Steve Valenzuela then reiterated the preliminary 2025 SaaS and license revenue outlook of $668 million to $671 million.

Jack Vander Aarde asked for an update on NIP Group's esports hotel strategy, its current priorities, and how it fits into the overall business. He also inquired about other potential new frontiers or verticals, such as the predictions market, that might align with the company's growth initiatives, especially given the new HPC focus. Lastly, Mr. Vander Aarde sought an update on Bitcoin progress, including the fiat cash balance as of June, the amount of Bitcoin mined since September, and the strategy for managing mined Bitcoin (selling for working capital versus holding).

Answer

Mario Ho, Chairman and Co-CEO, expressed excitement for the esports hotel opening in January, with plans for aggressive expansion via management and licensing models, seeing it as a significant monetization priority. He also highlighted collaborations with the Hainan government for a sports entertainment complex and the growth of music festivals. Hicham Chahine, Co-Founder and Co-CEO, elaborated on a visionary approach, building a full-circle ecosystem from esports to wider gaming entertainment, high-performance computing, and future AI computing/applications, anchored in the brand's DNA. Mr. Chahine confirmed mining began in September, accumulating 50-60 Bitcoins per month, holding over 150 Bitcoins by end of November, with a strategy to hold long-term and sell opportunistically to cover operating expenses.

Jack Vander Aarde from Maxim Group asked for an update on NIP Group's esports hotel strategy, its current priority, and how it integrates into the overall business. He also inquired about other potential new growth frontiers or verticals beyond current initiatives, such as the predictions market. Lastly, Mr. Vander Aarde sought an update on Bitcoin mining progress, including the amount of Bitcoin mined since the first tranche acquisition in September, and the strategy for managing the mined Bitcoin (selling for working capital vs. holding).

Answer

Chairman and Co-CEO Mario Ho expressed excitement for the esports hotel opening in January, emphasizing its growth potential in China through management and licensing models, and its importance for monetization. Mr. Ho also mentioned new frontiers like the Hainan government collaboration for a sports entertainment complex and expanding music festivals. Co-Founder and Co-CEO Hicham Chahine elaborated on a visionary full-circle ecosystem spanning esports, gaming entertainment, high-performance computing, AI computing, and AI applications. For Bitcoin mining, Mr. Chahine confirmed mining 50-60 Bitcoins per month since September, accumulating over 150 Bitcoins by end of November, with a long-term holding strategy and selling only for operational expenses.

Jack Vander Aarde from Maxim Group sought an update on Datavault AI's balance sheet, particularly regarding the $150 million Bitcoin investment from Scilex, recent acquisitions, and the current state of cash and debt.

Answer

CFO Brett Moyer confirmed that $8 million of the $150 million Scilex investment (in Bitcoin) was received by the end of Q3, with the remainder contingent on a shareholder vote on November 24th, which is highly anticipated to pass. He stated that this investment would result in over $125 million in liquid assets by year-end, eliminate convertible debt, and leave only acquisition-related debt. Moyer clarified that the Bitcoin investment is treated as cash with no treasury restrictions, providing significant financial flexibility for multiple years.

Jack Vander Aarde asked about the decision to provide formal guidance, the likelihood of 2026 guidance, the status of a large Q1 2026 renewal, the impact of the recent U.S. government shutdown, other major renewals and expansion opportunities for 2026, an update on the Channel Alliance Program (CAP) focusing on partner quality and exclusivity, and the outlook for operating expenses and profitability.

Answer

Chairman and CEO Mike DePasquale explained that confidence for guidance comes from a solid pipeline and partner network results, noting that timing issues (like a $200,000-$250,000 Q3 order shifting to Q4) make formal guidance challenging but he hopes for more predictability. He confirmed the large Q1 2026 renewal is on track and stated the U.S. government shutdown had no impact. DePasquale anticipates numerous new deals, renewals, and expansions in 2026, emphasizing the 'force multiplier' effect of the growing, quality-focused CAP. He clarified that while some partners are exclusive, BIO-key's unique biometric differentiator often makes them the preferred security solution even among partners selling other vendors. CFO Ceci Welch stated they continuously analyze and manage operating expenses, having lowered rents, to keep costs tamed. DePasquale echoed this, expressing strong belief in achieving profitability and break-even due to the pipeline, renewals, and scalable CAP model, maintaining 70-80% blended margins.

Jack Vander Aarde asked about the decision to provide formal guidance, the likelihood of 2026 guidance, the status of a large Q1 2026 renewal, the impact of the recent U.S. government shutdown, other major renewals and expansion opportunities for 2026, an update on the Channel Alliance Program (CAP) and other partnerships, the exclusivity of channel partners, and the outlook for operating expenses and profitability.

Answer

Chairman and CEO Mike DePasquale explained that confidence for guidance stems from a solid pipeline and partner network investments, but timing variability makes formal guidance difficult, though he hopes for more predictability in early 2026. He confirmed the large Q1 2026 renewal is on track and stated the U.S. government shutdown had no impact. DePasquale anticipates many new deals and expansions in 2026, emphasizing the partner network as a 'force multiplier' focused on 'quality' over 'quantity.' He noted some CAP partners are exclusive to BIO-key, while most also sell other vendors' solutions, but BIO-key's biometrics offer a unique differentiator. CFO Ceci Welch stated the company continuously analyzes expenses and seeks cost savings. DePasquale echoed this, expressing strong confidence in achieving profitability and break-even through pipeline growth, renewals, and the scalable CAP model, maintaining 70-80% blended margins.

Jack Vander Aarde of Maxim Group inquired about the revenue details of a key financial services customer, the drivers behind Q1 revenue, the status of the Passkey:YOU solution, the scale of new defense opportunities, and the company's outlook on sequential growth, margins, and operating expenses.

Answer

CEO Michael DePasquale confirmed the large customer's renewal is expected at approximately $3 million for a 2-year term starting in Q1 2026. He detailed that other Q1 revenue was a mix of new clients, services, and upgrades. DePasquale highlighted the significant potential of new EMEA defense contracts and stated the company's goal is sequential quarterly growth. CFO Cecilia Welch added that Q1 operating expenses are a solid baseline, with only minor increases expected for upcoming events.

Asked for clarification on the 10-K filing and prior restatements, the reasons for the 2024 revenue miss compared to guidance, the status of the Swivel Secure transition, the outlook for 2025 growth and profitability, expectations for hardware and services revenue, and the revenue recognition timing for a large Q4 contract.

Answer

The 10-K is expected Monday with no new restatements. The 2024 revenue miss was due to exiting the low-margin Swivel Secure business, a transition which is now complete. The company is confident in returning to revenue growth and improved profitability in 2025. Growth is also expected in both the hardware and services segments. A significant portion of the large Q4 contract's revenue will be recognized in Q1 2025.

Jack Vander Aarde of Maxim Group inquired about the reasons for the 2024 revenue shortfall versus prior expectations, the completion status of the Swivel Secure business transition, the outlook for 2025 growth, and the revenue recognition timing for a key Q4 contract.

Answer

CEO Michael DePasquale attributed the 2024 revenue decline to the strategic exit from the lower-margin Swivel Secure business, a transition he confirmed is now complete. He expressed strong confidence in returning to revenue growth in 2025, driven by higher-margin core BIO-key solutions and an accelerated path to profitability. DePasquale also clarified that a significant portion of the $910,000 contract from Q4 would be recognized in Q1 2025, providing a strong start to the year.

Jack Vander Aarde inquired about the drivers of BIO-key's Q3 revenue strength, the revenue recognition timing for a $500,000 defense order and a subsequent $910,000 financial services order, the Q4 revenue mix, the operating expense run rate, and the potential for introducing formal guidance.

Answer

CEO Michael DePasquale confirmed that Q3 strength was driven by order slippage from Q2 and strong expansion from existing customers. He clarified the defense order was fully recognized in Q3, while the larger financial services order would be split between Q4 2024 and Q1 2025. DePasquale also affirmed Q4 would be license-heavy and that the company hopes to provide formal guidance in 2025. CFO Cecilia Welch added that Q3's operating expense level is a good forward-looking run rate.

Jack Vander Aarde asked about the drivers behind the record gross margin in Q3 2025, specifically inquiring about the impact of product mix, new software for websites, and the potential for further upside in gross margins. Vander Aarde also inquired about the impact of the recent U.S. government shutdown on the progress of mandatory standardization for SKYX's ceiling receptacle. He further clarified whether the target of 50,000 units by year-end includes orders from major projects like the Miami Smart City or hotel developments.

Answer

Rani Kohen, Founder and Executive Chairman, and Lenny Sokolow, CEO, explained that gross margin growth is driven by blending more of their own higher-margin products, the new software for websites, and different margin profiles from B2B and retail channels. They also highlighted future potential from licensing with 85%+ margin. Kohen explained that tariffs from the shutdown led to more manufacturing options in countries like Taiwan and Vietnam, and highlighted that SKYX's fully automated production for plugs, receptacles, and smart boards could enable U.S. manufacturing, aligning with government goals and potentially accelerating standardization. Kohen clarified that the 50,000 units do not yet include Miami Smart City or hotel projects, but some local projects and Austin are contributing, with significant contributions from builder, B2B, and hotel segments expected in 2026.

Jack Vander Aarde of Maxim Group questioned the dip in Q4 gross margin, asking about its cause and the outlook for the first half of the year. He also requested an update on the performance and 2025 expectations for the collaborations with Home Depot and Wayfair.

Answer

Executive Ran Kohen attributed the gross margin performance to the current product mix and stated that margins are expected to improve significantly as a full assortment of new, higher-margin 'blade' products from joint ventures are introduced, with a full rollout anticipated in Q2. Regarding retail partners, Kohen noted that as more plug-and-play products arrive, the assortments on both Home Depot and Wayfair are being enhanced, with in-store programs also in development.

Jack Vander Aarde of Maxim Group asked for an update on the homebuilder channel, including the ramp-up of orders following a previously announced deal in Florida, and inquired about the status of the manufacturing relationship with Ruee.

Answer

Co-CEO Ran Kohen reported that SKYX expects to begin supplying the Florida builder early in the next year and is in active discussions with other major builders and hotel owners, with progress contingent on the arrival of the full product line. He confirmed that the manufacturing partnership with Ruee is active, with production underway and products now shipping, and that the collaboration is expanding as planned.

Jack Vander Aarde of Maxim Group asked for an update on the company's manufacturing and tariff mitigation strategy, including any target for domestic production percentage and the timeline for achieving full automation with its U.S. partner, Profab. He also requested clarification on the safety code mandatory standardization process, its timeline, and whether the company expects an early indication or a ramp in orders ahead of a final decision.

Answer

Ran Kohen, Founder and Executive Chairman, responded that the company's manufacturing strategy remains flexible to adapt to the dynamic tariff situation, leveraging relationships in the U.S., Vietnam, Taiwan, and China. While U.S. production is a long-term goal, the immediate focus is on the best and fastest options. Regarding standardization, Kohen explained that SKYX is exploring multiple pathways with various government and non-profit safety organizations to potentially expedite a mandate. He stressed that the 'decision date' is more critical than the 'effective date,' as a positive decision would likely trigger orders 18-24 months ahead of implementation.

Inquired about the number of new orders under the LOIs, the key verticals for 5G ORAN solutions, the company's role in the autonomous vehicle ecosystem, how market opportunities have evolved, and the current inventory and manufacturing strategy.

Answer

The company has received over $5M in new orders for one LOI and $2.5M for the other. Key verticals are private 5G and commercial MNOs. Amplitech positions itself as a vertically integrated enabler, not a competitor, to all players in the autonomous space. Their recent success has proven their capabilities, opening doors to more MNOs. Inventory is managed on a build-to-forecast basis, and with improved customer forecasting, they expect gross margins to improve as one-time expedite costs are no longer necessary.

Jack Vander Aarde from Maxim Group inquired about the details of the recently announced Letters of Intent (LOIs), including the status of a related asset acquisition, the revenue timeline for the remaining contract value, traction with other global MNOs, and the strategic importance of the new FCC certification.

Answer

CEO Fawad Maqbool confirmed the related Canadian asset acquisition is closed, enhancing their IP and positioning them as a key ORAN supplier. Executive Jorge Flores clarified that of the $118M LOI pipeline, $12M in orders are booked for the current year, with a significant ramp expected in 2026. Maqbool added that the deal is attracting more MNO interest globally and that the FCC certification is a critical milestone for U.S. market credibility and sales.

Jack Vander Aarde asked for an update on new customer additions in the precision logistics segment and the ramp-up of customers acquired last year. He also inquired about the latest strategic plans for the inks business and sought management's current perspective on the company's opportunities compared to a few months prior, given market changes.

Answer

CEO Adam Stedham responded that new customer additions have slowed in Q1 and that a general softening in demand across the e-commerce-heavy customer base is impacting shipment volumes, with new customer growth not yet offsetting this trend. Regarding the inks business, he noted that while they are open to synergistic acquisitions, the potential for value creation is much higher in precision logistics. Overall, Adam Stedham expressed comfort with the company's strong balance sheet and optimism that current chaos in the logistics market is creating new opportunities by making potential customers more receptive to conversations.

Jack Vander Aarde of Maxim Group inquired about the specific components of the Authentication segment that will remain, the revenue expectations for that segment in 2025, the current revenue mix between proactive and premium services in Precision Logistics, and the gross margin outlook for Q4 and into the next year.

Answer

CEO Adam Stedham clarified that the ink component, along with related patents and distributor partnerships, will be the focus of the remaining Authentication business, though he does not expect its 2025 revenue to be material to the company. He stated the Precision Logistics revenue mix is approximately 80% proactive and 20% premium, noting this shifts seasonally in Q4. For 2025, Stedham anticipates a flattening of the gross margin profile as growth in lower-margin proactive services will be offset by technology and automation efficiencies.

Jack Vander Aarde from Maxim Group inquired about the onboarding process and growth trajectory for self-serve clients and asked about broader market sentiment from agencies and CMOs heading into the rest of 2025.

Answer

CEO Richard K. Howe described the self-serve onboarding process as 'frictionless,' as clients can build and execute campaigns in minutes through existing platforms without needing a direct contract with Inuvo. Regarding market sentiment, he reiterated that while there is general apprehension about tariffs, Inuvo has not yet seen it translate into changes in advertising budgets or behavior from its clients.

Jack Vander Aarde of Maxim Group, calling for Jack Codera, inquired about the scope and growth trajectory of initial self-serve deployments and asked for insights on broader market sentiment among agencies and CMOs regarding potential changes in 2025.

Answer

CEO Richard Howe highlighted that the self-serve platform's key advantage is its frictionless onboarding process, allowing clients to build and execute AI-driven campaigns in minutes through existing demand-side platforms. Regarding market sentiment, Howe noted that while there is apprehension and discussion around potential tariffs and trade strategy, Inuvo has not yet seen these concerns translate into changes in client advertising spend.

Jack Vander Aarde asked about the dynamics of the Self-Serve platform, including the scope of initial deployments and its relative growth trajectory. He also inquired about broader market sentiment from agencies and CMOs, particularly concerning economic factors like tariffs and their potential impact on advertising budgets in 2025.

Answer

CEO Richard Howe detailed that the Self-Serve platform offers frictionless onboarding, as the AI is embedded into existing demand-side platforms, allowing clients to launch campaigns in minutes without a direct contract. This ease of use is a key growth driver. Regarding market sentiment, he reiterated that while there is widespread discussion and apprehension about tariffs, Inuvo has not yet observed clients acting on these concerns by altering advertising spend.

Jack Vander Aarde inquired about the scope and growth trajectory of initial self-serve deployments compared to other campaigns and asked for insights on broader market sentiment from agencies and CMOs for the remainder of 2025.

Answer

CEO Richard Howe highlighted that the self-serve platform offers a much easier, low-friction onboarding process, as the AI is embedded into existing systems, which is a key driver of its growth potential. Regarding market sentiment, he noted that while there is apprehension and discussion around tariffs, it has not yet translated into changes in advertising spending.

Jack Vander Aarde asked about management's confidence entering 2025 compared to the prior year, the sales cycle for platform versus agency clients, and the long-term strategic goal for the revenue mix. He also sought clarification on whether the H2 2025 cash-generation forecast refers to free cash flow or EBITDA, the margin profile of the IntentKey self-serve platform, and the extent to which its success is factored into the 2025 outlook.

Answer

CEO Richard K. Howe expressed high optimism for 2025, noting the company's proven ability to generate cash above the $25 million quarterly revenue threshold. He explained that the strategic goal is a 50-50 revenue mix and detailed that the self-serve platform is a very high-margin product (over 90%) with only modest revenue expectations built into the 2025 budget. CFO Wally Ruiz clarified that the H2 2025 cash-generating forecast refers to both free cash flow and adjusted EBITDA.

Jack Vander Aarde of Maxim Group inquired about the status of previously announced pilot programs, asking if any were converting to formal contracts. He also asked about the company's capital structure following the termination of the AFG agreement, the timing of the 10-K filing, the current business model and deployment options, company headcount and sales strategy, key verticals for near-term and long-term revenue growth, and which KPIs the new CFO plans to track.

Answer

Executive Paul Chang explained that most pilot programs were paid engagements and that customers are now showing signs of moving toward full production deployment after initial caution. He confirmed all three deployment options (SaaS, private cloud, on-prem) remain active, with strong interest in on-prem. Chang also noted BEN's go-to-market strategy relies on a focused internal sales team amplified by scaling partners. CFO and COO Walid Khiari addressed financing, stating an S-1 filing is in process to meet capital needs, and confirmed the 10-K would be filed within days. Khiari highlighted media and advertising as a key growth vertical, bolstered by the pending Cantaneo acquisition. Regarding metrics, he emphasized an ROI-focused philosophy and expects to use a dynamic mix of SaaS and traditional software KPIs as the business evolves.

Asked for details on the pipeline of opportunities not included in guidance, specifically whether it includes M&A or potential new U.S. state legalizations, and inquired about the company's interest in entering new verticals via M&A.

Answer

The company clarified the pipeline consists of strictly organic opportunities and that they are actively involved in processes like RFPs. While new U.S. state openings are not explicitly in the pipeline, the company's strategy is to be positioned to capitalize on them. M&A is not a current core focus; the priority is on strong operational execution, leveraging their Tier 1 supplier status, and improving key metrics to add shareholder value.

Jack Vander Aarde inquired about the timeline for sales stabilization, the potential impact of U.S. tariffs following the election, and the growth strategy for the higher education and enterprise verticals.

Answer

Executive Dale Strang stated that sales trends in EMEA are already beginning to ease, with the U.S. expected to follow next year, noting the deviation from historical seasonality was particularly strong this year due to delayed large-scale funding. Regarding tariffs, both Dale Strang and CFO Gregory Wiggins explained that the company and its China-based suppliers have been proactively creating mitigation plans. For higher education and enterprise, Dale Strang highlighted that these are methodical growth areas, supported by a large addressable market and new products with enterprise-specific features, using their success in EMEA (20% of business) as a model.

Inquired about the timeline for sales stabilization and a return to growth, the potential impact of U.S. tariffs following the recent election, and the growth opportunities in the higher education and enterprise markets.

Answer

The company expects sales trends to stabilize and return to growth next year, particularly in the U.S., while EMEA is already showing signs of easing. Regarding potential tariffs, the company and its suppliers have been making contingency plans for months to mitigate any impact. Higher education and enterprise are seen as significant long-term growth opportunities, and the company is methodically building out its channels and product offerings for these verticals, aiming to replicate its success in EMEA where these segments constitute about 20% of the business.

Inquired about the potential for further operating expense reductions, the general tone of customer conversations, the initial market reception and expected contribution of new products, and the sequential revenue outlook for the third quarter.

Answer

Executives stated they are now more proactive in aligning OpEx with revenue and will adapt as needed, suggesting further cuts are possible. The tone of customer conversations varies: volume-based partners are concerned, while solution-focused partners are more optimistic. The new products were just launched, so it's too soon to forecast their impact, but positive contributions are expected this year. They declined to confirm a sequential Q3 uptick, citing market volatility and uncertainty as history has not been a reliable guide recently.

Jack Vander Aarde of Maxim Group inquired about the future of operating expenses, the tone of customer discussions, the near-term impact of new products like UNITY, and the potential for a sequential revenue increase in Q3.

Answer

CFO Gregory Wiggins stated that while Boxlight is on track for its quarterly OpEx target of $12-13 million, the company is now more focused on proactively aligning spending with revenue trends. CEO Dale Strang noted a disparity in customer sentiment, with solution-focused partners feeling more optimistic than volume-based resellers. He added that newly launched products are just beginning to take orders and are expected to contribute positively this year. However, Strang cautioned that market volatility makes it difficult to predict a sequential Q3 revenue uptick, as historical seasonality is currently an unreliable guide.

Jack Vander Aarde asked for an update on the full-year gross margin outlook, the factors behind the Q1 outperformance relative to guidance, and whether Q3 is expected to be the seasonal peak for revenue this year.

Answer

CEO Dale Strang confirmed that Boxlight is maintaining its conservative outlook for mild gross margin compression due to potential price pressure and product mix shifts. CFO Gregory Wiggins attributed the Q1 outperformance to refined internal forecasting processes, quicker execution on cost reductions, and disciplined spending. Regarding seasonality, Strang explained that while historical trends suggest Q3 would be the strongest quarter, the market does not yet provide a reliable signal to confirm this for the current year.

Inquired about the full-year gross margin outlook after a strong Q1, the confidence level in the Q2 guidance, and whether Q3 is expected to be the seasonal revenue peak for the year.

Answer

Management is maintaining a conservative gross margin outlook despite a strong Q1, citing price compression and product mix uncertainty. Confidence in Q2 guidance stems from improved internal processes and cost controls, though they remain cautious due to the broader market. They affirmed that it's too early to provide a reliable outlook for Q3 but noted that historical seasonality supports a stronger second half.

Inquired about the geographic breakdown of the flat revenue forecast, the company's long-term target for adjusted EBITDA margin after cost reductions, and the strategic rationale for opening a new, larger Clevertouch headquarters and warehouse.

Answer

Executives stated that revenue performance will vary by geography, with growth expected in markets like Germany and in specific sectors like the FrontRow business, offsetting softness in the U.S. panel market. The long-term goal is to achieve a sustained adjusted EBITDA margin of over 10%. The new warehouse is a strategic move to improve efficiency, consolidation, and logistics, positioning the company for anticipated future growth.

Jack Vander Aarde of Maxim Group inquired about the impact of the macroeconomic environment on campus attendance, the monetization strategy for the growing Media segment, and the key learnings from recently hosted unique events.

Answer

President and CEO Michael Crawford responded that despite macro pressures, he expects attendance to grow year-over-year, driven by the value proposition of a regional destination. For the Media segment, he outlined a multi-faceted monetization strategy including production partnerships, sponsorships, and content distribution, expecting the vertical to reach profitability soon. Regarding events, Crawford highlighted that the unique venue combination attracts top talent and drives both direct and indirect synergistic revenue, noting that guest feedback shows longer visit durations.

Jack Vander Aarde inquired about the significant Q1 reduction in operating expenses and the forward-looking expense strategy. He also asked for an updated timeline on the Gameday Bay Waterpark and on-site hotel, and sought details on the company's plans for preselling packages for these new assets.

Answer

President and CEO Michael Crawford explained that the expense reduction was due to disciplined process implementation, cost reviews, and operational learning, but cautioned that this learning curve will restart with new assets. Crawford projected a mid-2025 opening for the waterpark and Q3 2025 for the hotel, contingent on closing financing, and noted that preselling packages could begin 3-6 months prior to opening.

The analyst inquired about the specific drivers of the record Q3 revenue, trends in visitor data (repeat vs. new), the mobile sports betting roadmap for 2024, and the financial outlook for 2024.

Answer

Executives attributed Q3 revenue growth to strong hotel and event performance, driven by synergies. Visitor data shows an increase in repeat visitation, with a focus on converting new event-goers into multi-use visitors. The mobile sports betting partnership with Betr is expected to grow in value over time. While a detailed 2024 outlook is pending, the company anticipates continued revenue growth and improved profitability, boosted by the new waterpark and operational efficiencies.

Inquired about PDP's Q1 revenue contribution, whether the SKU rationalization strategy includes PDP's portfolio, and the current status of the share repurchase program.

Answer

PDP contributed $5.8 million in Q1. The SKU rationalization strategy encompasses both Turtle Beach and PDP products to leverage synergies. The company plans to be opportunistic with its increased share repurchase authorization throughout the remainder of the year.

Asked about the new business segmentation between console and non-console products after the acquisition, and for an update on retail channel inventory levels and any potential headwinds from retail store closures.

Answer

The business is now more balanced, with console headsets at ~55%, controllers at ~25-30%, and the rest in PC/SIM. Retail channel inventory is lean and in a good position, with normal replenishment cadences. The broader portfolio from the acquisition is seen as a positive for retail partners.

Jack Vander Aarde of Maxim Group inquired about the status of the go-private proposal, the health of China's new car market, the long-term business mix between offline auto shows and the virtual dealership segment, the recovery timeline for auto show events, and the company's strategy for operating expenses amid revenue recovery.

Answer

CEO Wei Wen stated that the go-private proposal is still under evaluation and expressed optimism for the Chinese auto market's recovery in 2021. He clarified that while the online segment is a key growth driver, offline auto shows will remain the core business for the next few years, with a focus on ROI. Deputy CFO Chenxi Yu added that while absolute operating expenses will rise with business activity, they are expected to decrease as a percentage of revenue in 2021 compared to 2019 and 2020 due to cost control measures.

Jack Vander Aarde of Maxim Group inquired about the recovery in consumer appetite for new cars, the financial health of auto partners, the impact of COVID-19 vaccines in China, preliminary Q4 auto sales trends, and the strategic rationale for reducing the number of cities with sales operations.

Answer

Investor Relations representative Cynthia Tan confirmed a strong rebound in consumer confidence for large purchases like autos and noted that partners like OEMs and dealers were seeing improving conditions. Tan explained that while the economy has largely reopened, vaccine distribution is a long-term process and localized COVID-19 outbreaks still pose a risk to offline events. She clarified that the reduction in operating cities was a strategic move to focus on higher-ROI locations and utilize more cost-effective online events to cover remote areas.