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Krishna Vanka

Thank you, Kevin, and good afternoon, everyone. I am pleased to welcome you to today's first and second fiscal quarter 2025 financial conference call.
To begin, I'd like to take a moment to introduce myself and share my vision for Flux Power. Earlier this month, I was privileged to join Flux Power as CEO to help build on the great foundation built by Ron and the team. Prior to joining the company, I spent 18 years building, scaling, managing, and transforming technology companies in sectors such as renewable energy, transition, internet of things, fleet and asset management, and telematics.
Most recently, I was the CEO of Fluence Digital, which is part of the Fluence Energy and Nasdaq listed global market leader in storage as part of the diligence process, I evaluated the company's overall potential as well as the underlying ingredients including talent, technology, our customer base, and to make my decision.
I can confidently say that we have the right technology at the right time with the right people to scale and build power into your market. I believe in the months and years ahead I and the team will accelerate our mission of delivering industry leading lithium-ion energy storage solutions.
I will now turn the call over to discuss the first- and second-quarter highlights and then walk through our updates and financial.

Ronald Dutt

Thank you, Krishna, and again, welcome to Flux Power. I'm pleased to pass the baton to such a highly qualified leader who can grow and scale Flux into a very profitable business that will deliver on all the needs of our customers as the leader in advanced energy solutions.
Turning to the first half of fiscal year 2025, our first and second quarters were highlighted by sequential growth in revenue and gross margin compared with the quarter ending June 30, 2024. And driven by enhanced sales strategies, better market conditions, and growing demand for our innovative suite of suits, suite of products.
In the first quarter, revenue grew 9% year over year to $16.1 million, driven by an increase in shipments into the ground support equipment market at higher average selling prices. We are excited to see gross profit margins have steadily improved over the last several quarters.
First quarter gross profit increased 23% to $5.2 million and gross margin increased to 32% as compared to 29% in the fiscal quarter of 2024, which was driven by an increase in average selling prices, partially offset by increase in warranty costs. Adjusted EBITDA loss improved to $600,000 in the first quarter as compared to a loss of $1.2 million in the prior year quarter. Backlog as of September 30, 2024, stood at $21.2 million.
Moving on, second quarter 2025 results were affected by lumpiness in orders, with revenue for the first quarter decreasing 8% year over year to $16.8 million, but up 4% sequentially from the first quarter of 2025. We expect our momentum to strengthen as indications reflect potential increasing order flow for the coming quarters. Gross profit for the second quarter increased 2% to $5.5 million and gross margin increased to 33% in the quarter as compared to 30% in the second quarter of 2024.
Cost reductions and price increases have contributed to this gross margin growth, along with a focus on strategic supply chain and profitability improvement initiatives, lower costs and higher volume purchasing. Adjusted EBITDA loss was $1.0 million in the fiscal second quarter of 2025 as compared to a gain of $200,000 in the fiscal second quarter of 2024. But the difference being attributed to the aforementioned lumpiness in the quarter. Backlog was $17.5 million as of December 31, 2024, and $19.5 million as of February 28, 2025, supporting a positive long-term outlook.
The key themes from the last two quarters support our belief that we have built a strong foundation, have the right strategy in place to support revenue growth to fuel our path to sustain profitability. We improved our ability to execute in these areas during the first half of the year, and we expect this momentum to continue as we further monetize a $19.5 million customer backlog.
Key themes to highlight include the following. We have executed additional initiatives to support growth, which included expanding our product lines for multiple customer segments and adjacent markets and filling gaps in energy storage offerings. In the coming months, we also plan additional heavy-duty models to fill product line gaps.
We remain especially excited about our telemetry product which includes asset management features that offer leading technology and true value creation to our fleet customers. Our SkyBMS telemetry product is in the pilot stage for a Fortune 50 company's implementation nationwide. And we recently conducted live demonstrations of SkyBMS at ProMat 2025, one of the largest manufacturing supply-chain events for the year.
In addition to appointing Krishna as CEO, we also strengthen our sales and engineering teams with several very key appointments, including Kelly Frey as Chief Revenue Officer, and Mark Barmettler as our new Senior Head of Engineering.
Kelly brings over 20 years of experience as a sales and marketing leader, including a variety of roles ranging from startups to Fortune 100 companies. Kelly's focus on elevating our revenue generation, expanding relationship sales, expanding our market research, and improving customer retention playing a key leadership role in maximizing revenue potential and sustaining long-term growth.
Mark brings over 10 years' experience in engineering leadership roles, covering telecommunications and test equipment, incorporating firmware, software, and cloud solutions. Mark will be addressing new product innovation, cost reductions, and telemetry.
Finally, Fortune 500 companies and other large fleets are increasingly looking to electrify with lower costs and higher performance lithium energy solutions that also supports sustainability as this trend continues to advance. Plus is ideally positioned to meet their needs.
Turning to our first- and second-quarter operational and business updates. Our two highest priorities have remained driving revenue growth and achieving profitability. We continued to focus on expanding sales and marketing initiatives. To capitalize on the fleetwide replacement trend and support continued migration to lithium. Despite the strong demand we saw from our customers, we experienced delays in orders that were driven by revised timing of forklift deliveries of certain models that impacted the timing of our orders and shipments.
The new order delays were felt throughout our industry sector as a result of the higher interest rates and economic uncertainty during the 2024 calendar year. Well, we don't give specific guidance. We are seeing signs that these headwinds could abate later this 2025 calendar year. We have been laser focused on several initiatives to increase revenue growth, reduce costs, launch new eye demand products and ensure our pricing is appropriate for all our models.
Our strong reputation in the market, combined with our ability to service Fortune 100 customers provides evidence of our value proposition. Along with recently achieving over 25,000 Flux Power lithium-ion packs operating in North America.
Looking at our customer base. We have no known lost customers. And no lost orders to competition. Furthermore, we have not seen any pullback from interest and companies migrating to lithium-ion solutions to support our targeted sales trajectory, we are launching several new products, including heavy-duty models that directly address customer demand.
We are expanding our sales force and implementing marketing initiatives to expand awareness of both the value proposition to customers and capabilities of flux power to impact their fleet operations. Our solutions provide increased forklift performance, product life cycle return on investment, asset management improvements from our leading telemetry. And of course carbon dioxide reductions to the environment.
We also integrate most brands of charging equipment with our lithium-ion energy packs. We remain on target to offer a complete end to end energy storage solution to current and future customers. Recently we announced a strategic partnership with a second top forklift OEM to launch a new private label battery program. This collaboration marks a significant milestone for Flux Power S-Series line which now includes products with the coveted UL Type EE certification providing added safety and durability capability that many of our competitors do not have.
Our telemetry, which includes asset management features is in the pilot stage for a Fortune 50 company implementation nationwide. As I mentioned earlier, our telemetry includes features for customer asset management, including fleetwide installation. And our customer interface energy management solution set to launch in 2025 is designed to provide deeper insights and greater control over energy use.
We are also actively exploring and leveraging supply chain innovations and opportunities to further reduce our cost footprint. In addition, we are leveraging machine learning and AI features for product support of large fleets, and we'll be launching the automation of modularizing battery cells to this summer.
With that, I will turn it over to Kelly Frey, Chief Revenue Officer, who joined us this past January to provide his first impressions of Flux and the opportunities that lie ahead.

Kelly Frey

Thank you, Ron. I would like to share some quick updates and key activities I've been focused on that are designed to accelerate revenue growth, brand awareness, and the overall customer experience, all of which are key to driving long-term growth for Flux.
Since I started, I've met several key customers, OEMs and dealer partners who have helped us achieve a milestone of 25,000 battery packs deployed in almost all 50 states, Canada and Mexico. I can say definitively that our material handling and ground support customers greatly appreciate our product quality, support services, and innovative energy telematic solutions. We have the right foundation in place to build upon.
For many, we are their first experience with lithium or a replacement for underperforming batteries provided by our competition. Proving our superior product and service advantage presents significant revenue potential both within our existing customer base as well as prospective customers, as lithium adoption accelerates and batteries need replacement. With nearly 100% customer retention and increased OEM certifications, the future looks promising for Flux.
Since my arrival, we've also grown the sales team and introduced a solution selling framework. Our pipeline opportunities have increased and we've secured significant new accounts in various sectors, including the nation's largest medical supplier and the country's largest winery, as well as other food and beverage, retail and distribution customers.
Notably, we've partnered with a leading distributor in airport ground support equipment to secure two new airline customers. We have hit the ground running, and the reception to our offering has been very well received. In the coming months, my focus will be on closing out Q3 and Q4 with new account revenue growth, increasing the pipeline, and need more customers, prospects, and partners.
We will invest in more strategic OEM and partner relationships while continuing to professionalize our sales process, instill a growth in performance mindset, and invest in customer experience, excellence and marketing. I'm excited about this opportunity and look forward to helping the company grow. Thank you very much.
And with that, I'll now turn it over to Kevin Royal, our Chief Financial Officer, to review the financial results.

Kevin Royal

Thank you, Kelly. As Ron mentioned earlier, adjusted EBITDA losses of $600,000 during the fiscal first quarter and $1 million in the second quarter resulted primarily from sequential growth in revenues more than offset by costs associated with the restatement of previously issued financial statements. Gross margin initiatives have dramatically improved margins over the last two years. And we expect continued improvement.
Most recently, gross margins increased from 27% in Q4 of fiscal year 2024 to 32% in Q1 fiscal year 2025 and 33% in Q2 fiscal year 2025. Cost reductions and price increases have contributed to this gross margin expansion. Combined with a focus on strategic supply chain and profitability improvement initiatives, lower cost, and higher volume purchasing. All these initiatives are part of our plan to accelerate gross margins further.
As of February 28, 2025, our open order backlog was $19.5 million. Our backlog reflects longer lead times of incoming purchase orders from major OEMs to align with their schedule of new forklift deliveries and extend delivery times for certain model lines for new GSE equipment. Beyond our backlog of open orders, we continue to anticipate growth in current customer adoption and new customer potential acquisitions.
Now turning to review our financial results for the fiscal first quarter ended September 30, 2024. Revenue for the fiscal first quarter of 2025 was $16.1 million, an increase of 9% compared to $14.8 million in the fiscal first quarter of 2024, primarily driven by an increase in shipments into the ground support equipment market. At higher average selling prices compared to the same period in the prior year. This was partially offset by a reduction in shipments to the material handling market.
Revenue in the immediately preceding fiscal Q4 2024 was $13.4 million. Gross profit for the first fiscal quarter of 2025 increased 23% to $5.2 million compared to the gross profit of $4.2 million in the fiscal first quarter of 2024. Gross margin increased to 32% in the fiscal first quarter of 2025 as compared to 29% in the fiscal first quarter of 2024. Gross profit margin increased by 370 basis points, driven by an increase in average selling prices, partially offset by an increase in warranty costs.
Adjusted EBITDA loss was $600,000 in the first fiscal quarter of 2025 as compared to a loss of $1.2 million in the fiscal first quarter of 2024. Selling and administrative expenses increased to $5.1 million in the fiscal first quarter of 2025 as compared to $4.7 million in the fiscal first quarter of 2024, primarily attributable to stock-based compensation and professional services associated with the restatement of previously issued financial statements.
Research and development expenses were flat at $1.3 million in both fiscal first quarters 2025 and 2024. As we continue to place an emphasis on enhancing our technological advantage and driving innovation through our product lines. Net loss for the first fiscal quarter of 2025 was $1.7 million compared to a loss of $2.2 million in the fiscal first quarter of 2024, primarily attributable to increased gross profit, which was partially offset by increases in operating expenses and interest expense.
Turning now to our financial results for the second quarter end of December 31, 2024, revenue for the second fiscal quarter decreased 8% to $16.8 million compared to $18.2 million in the fiscal second quarter of 2024, driven by lower demand in the material handling market and lower average selling prices to the product mix.
Gross profit for the fiscal second quarter of 2025 increased 2% to $5.5 million compared to the gross profit of $5.4 million in the fiscal second quarter of 2024. Gross margin increased to 33% in the fiscal second quarter of 2025 as compared to 30% in the fiscal second quarter of 2024. Gross profit margin increased by 290 basis points as a result of a decrease in average costs partially offset by an increase in mortgage costs.
Adjusted EBITDA loss was $1 million in the fiscal second quarter of 2025 as compared to a gain of $200,000 in the fiscal second quarter of 2024. Selling and administrative expenses increased to $6 million in the fiscal second quarter of 2025 as compared to $4.6 million in the fiscal second quarter of 2024, primarily attributable to variable incentive compensation, severance, and professional fees associated with the multi-year restatement of previously filed financial statements.
Research and development expenses decreased to $1 million in the fiscal second quarter of 2025 compared to $1.2 million in the fiscal second quarter of 2024, mainly driven by lower salaries and stock-based compensation. Our net loss for the fiscal second quarter of 2025 was $1.9 million. Compared to a loss of $900,000 in the fiscal second quarter of 2024, primarily attributable to an increase in operating expenses.
Cash was $900,000 on December 31, 2024, as compared to $600,000 on June 30, 2024, reflecting changes in working capital management. Available working capital includes our line of credit as of December 31, 2024, under our $16 million credit facility from Gibraltar Business Capital with the remaining available balance of $6.3 million subject to borrowing-based limitations and satisfaction of certain financial covenants and $1 million available under the subordinated line of credit with Cleveland Capital.
Our credit lines with our strategic financing partner Gibraltar, subject to eligible accounts receivable and inventory borrowing base, provides for an expansion up to $20 million. We continue to be in good standing with Gibraltar and remain confident in their continued support of Flux and our long-term mission.
For those of you who are new to Flux, last year we announced we'd identified approximately 4.4 million of excess and obsolete inventory and related non-cash quarantine related items of approximately 500,000 primarily related to product innovation and design of our products during a period of rapid growth over the last several years.
To properly reflect the obsolete inventory, the company restated previously issued financial statements for fiscal year 2023 in the interim period of fiscal year 2024. We took all appropriate measures to rectify the inventory accounting issues related to our transition to more advanced energy cells, including implementing enhanced procedures and quality checks to mitigate the possibility of it reoccurring.
After filing the 10-K and subsequent 10-Qs, we are pleased to be caught up with our filings and do not expect any lingering issues going forward.
Looking ahead, we expect fiscal third-quarter 2025 revenues to be in line with the second-quarter revenue results with a stronger trajectory in the fourth quarter as macroeconomic conditions improve and additional selling strategies to support our historical sales trajectory to scale. Taken together, we believe our fourth-fiscal quarter revenues will increase over the third quarter in a range of 5% to 10%.
I now like to provide some closing remarks. The first and second quarters of fiscal 2025 have been challenging for the company as we work through the restatement of our previously issued financial statements. Even with these challenges, the company delivered strong revenue and gross margin growth driven by enhanced sales strategies, better market conditions, and growing demand for our innovative suite of products.
We also welcome several strong additions to the Flux team that will lead us into the next phase of growth. Krishna Vanka has already provided significant contributions in his short time as CEO. Chief Revenue Officer, Kelly Frey, is driving our revenue generation strategy, aligning sales, marketing, and pipeline management to ensure cohesive and effective growth, and Mark Barmettler, Senior Head of Engineering, is addressing new product innovation, cost reductions, and telemetry.
We look forward to providing our shareholders with further updates in the near term as we strengthen our leadership position and lithium-ion technology solutions with our growing list of new and diverse large customers.
I would like to thank you all for attending, and I will now hand the call over to the operator to begin our question-and-answer session. Operator.

Question and Answer Session

Operator

Thank you. And I'll be conducting your question-and-answer session. (Operator Instructions)
Rob Brown, Lake Street Capital.

Robert Brown

Good afternoon. Congratulations on all the progress. If you could talk a little bit more about sort of the order activity you're seeing, where you're seeing strength, and it was a pretty bullish kind of comment in into the back half of the year here. Just wanted to get a sense of where those orders are.

Kelly Frey

Thanks, Rob, for the question. What we're seeing is there's still a lot of demand with lithium. Many customers are wanting to explore the addition of lithium to their very often lead acid that they are replacing. So we're seeing it from both in the ground support equipment market as well as the material handling market. There's a lot of excitement about it.
There still are some questions folks have. So what we're seeing is they're trying it maybe in one operation before they decide for a nationwide role. Out, but everybody's excited by it. And then when you combine the lithium with the visibility that telemetry gives them into -- it's a much smarter battery and how that data fits into their larger, data infrastructure, we're seeing a lot of demand and excitement.

Robert Brown

Okay great and then on the on the heavy-duty model introduction when does that hit and start to generate revenue and what sort of the opportunity you see from that part.

Ronald Dutt

Rob, this is Ron. We've been working on this heavy-duty models for some time, and we're just now starting to roll the first ones of those really for each of our major product lines, particularly Class 2 and Class 3, introducing a heavy-duty line for those very aggressive. Operations that we've seen such as Subaru and others, so we feel it's filling the need and we're going to roll those out across those lines over the coming months of this year.

Robert Brown

Okay great thank you I'll turn it over.

Operator

Craig Irwin, ROTH Capital Partners.

Craig Irwin

Hi, good evening, and thanks for taking my questions. Lots of things we can call out from the last couple of quarters here is pretty strong progress. I guess the biggest surprise to me was the balance sheet. You had, I guess about a little over $5 million from inventory improvement over the last couple of quarters, receivables down $1.5 million, you got a little bit of extension on your deferred, but the debt was down quite materially.
Seems like, Kevin, you've been doing a lot of work on the balance sheet. What kind of room do we have for continued improvement over the next couple of quarters? Should we expect the positive cash flows and yeah, I did notice positive cash flows these last two quarters. Is that even feasible, as we look into the end of the year?

Kevin Royal

So I think you know if we go into Q3 we wouldn't expect that at those levels to be positive. We'll be close, but in Q4, we did give an indication of what we expect from revenue and at those levels we should be break even to positive cash flow.

Craig Irwin

Excellent. So then, you did give us sort of an adjusted discussion, but in your adjusted EBITDA, you did not break out the adjustments for severance and for the expenses related to the restatement that you guys have now completed and brought everything up to date for. I'm guessing it's probably somewhere between a million and $1.5 million the last couple of quarters. Is that something you might be able to give us a little bit of color on the impact in the fourth, first, and second quarters of '24 and '25?

Kevin Royal

Yeah, so for the first half of the year 2025, that's where we incurred the lion's share of the costs associated with the restatement, and those costs were $1.2 million almost spread evenly, across the two quarters, and then the severance charges were just under half a million dollars, probably a little bit close to $400,000 actually, and those were incurred in the second fiscal quarter of 2025.

Craig Irwin

Okay, excellent. And then last question if I may. The price increases, can you maybe put some boundaries around that? Are we talking, single digit, mid-single digit, double-digit price increases, and the timing there, were these put in all at once, and is it something that was put in sort of towards the end of the calendar year? And have all of those sort of roll through or is there, is a product and backlog, the 19 and change you mentioned, some of that maybe at the at the legacy pricing, that will roll through over the next couple of quarters as we as we deliver on those.

Kevin Royal

So the way I would think about our price increases is we wanted those to hit the priceless at the beginning of the fiscal year. They were really select increases that impacted about half our product line, and they were in the in the single digits of mid-single digits would be a way to think about it.
And while we have experienced some of those, we've realized rather some of those beginning in October, so the second fiscal quarter. A lot of those price increases will not hit us until the third-fiscal quarter, which we're currently in the fourth-fiscal quarter, because we had backlog or we had quotes out with customers that we of course honored.

Craig Irwin

Okay, and if I can squeeze another one in, your medical equipment customer, obviously, another nice addition to the fleet. Medical equipment packs have historically been very high margin in the battery market, and it seems like you're probably supplying one of the most technically demanding applications that they have. Serving in their warehouses. Can you talk about whether or not this adjacent market is potentially an opportunity with this new customer? Is this something that's been a part of the conversations as you've helped them bring down costs and operating the warehouses?

Kelly Frey

This is Kelly. And thanks for the question, Craig. Yeah, it certainly is. It's exciting that we've got a customer that really this is their very early stage of deployment of lithium, so that means that there's a lot more upside potential not only with this customer but in that industry at large for sure. It's also an industry that is looking forward to automation ultimately. And the nice part of our story with lithium is that for us it doesn't matter if there's a human operator on that lift truck or material handling or if it's automated guided vehicle. It still needs lithium.
As a matter of fact, as you move towards automation, there's probably more of a propensity to go with lithium because it requires a lot less automation. So I feel very bullish about the opportunity in that sector for sure, and I think you are accurate that that sector is willing to generally pay a little bit or invest a little bit more, let's put it that way.

Craig Irwin

Excellent. Well, congrats on the progress. I'll go ahead and hop back in the queue. Thank you.

Kevin Royal

Thank you.

Operator

Eric Stine, Craig-Hallum.

Eric Stine

Hi, everyone. Maybe quickly, so the line was kind of garbled there when you talked about the third quarter. I did hear the fourth-quarter commentary about being up 5% to 10%, but I guess first, could you just go through the third-quarter commentary again and then I'm curious, if we think about the price increases taking effect in the second half and then OpEx more normalized post the restatement expenses, etc.
Is EBITDA positive a possibility in the second half and if not, I mean, I would think that that's something that you are targeting in fiscal '26.

Kevin Royal

Yeah, so what we said about Q3 is that we would expect it or we are expecting it to be on par with, Q2Q1 right in the $16 million range, and then, you heard what I said about Q4. I think I also earlier commented on Q4 and at the levels that we're talking about from a revenue standpoint. We would expect to be profitable on an adjusted event basis, so even our stock-based compensation, which should put us at break even slightly positive from a cash flow basis as well.

Eric Stine

Okay, that is helpful. Thanks for clarifying that and then you know maybe this bigger picture, get a sense, on this call, but certainly in the past that you kind of feel like, you needed to focus more on sales you haven't had a full look at the market opportunities.
So maybe a question for Kelly, maybe when you as you've kind of come in, where do you think the company was? In terms of a look at that market opportunity and maybe, stick to materials handling or some of the other main end markets and where do you think that can go and how long do you think that that process can take?

Kelly Frey

Sure, thanks for the question. It's a nuanced question, and I'll give the director a response as I can. What I really have observed in the material handling market in particular is that Flux was taking a fairly what I would call a passive sales approach, meaning, waiting for the demand signal to come from the distributors, the resellers, and the OEMs, which is important. Those are important partners for us, but we haven't really been doing a lot of proactive demand generation.
We really have been underfunding a marketing and underfunding sales, and that means that we are not pulling as much through the market as the potential is there. So I think that's a key thing, refocusing the team on, it's easy to say solution selling, but really this lithium-ion technology, it's actually it's quite an advanced technology.
When you consider it to be a smart battery that needs a smart energy solution really that fits into the overall plant energy solution, so opportunities for things such as peak shaving to help a customer understand when should I be charging my equipment, understanding that when you have hundreds of pieces of equipment in a warehouse, well, that becomes a lot of distributed energy resources and you have to decide when and how to use them when and how do I charge them.
So really trying to change the orientation of the sales organization to a solution orientation and then creating more demand generation in the market because we do have a strong brand. You talk to virtually any customer, they know who we are because we are the innovator, but we need to create that demand in the market as opposed to what I say to be fairly passive in that in the market.

Eric Stine

Okay, thank you.

Operator

Matthew Galinko, Maxim Group.

Matthew Galinko

Hey, thanks for taking my questions. Can we start on the macro-outlook, I guess what gives you confidence at this point of the year in, I guess, the fourth-quarter uptick.

Kevin Royal

Yeah, well, our sales are fairly long lead time, so we get, we do struggle with visibility given our sales model selling through distributors, dealers, so on and so forth. But our confidence is really driven off of a strong backlog as we sit here today where we sit in our third quarter.
And the working with the sales force and understanding the forecast orders and their probabilities. So it's really just based on a combination of, backlog and then working with our sales force on the opportunities they expect to ship in our fiscal quarter.

Kelly Frey

And Kevin, could I add there's one other dimension to the business that's important to understand. As we mentioned, we've achieved 25,000 packs in the field. Many of those packs are now getting to that four-, five-, six-, even seven-year level where there's a replacement cycle. We have a very good track record of keeping our customers as they continue to adopt. New lithium within new distribution centers, new areas of their business. Not only are we getting the new growth, but we're getting that replacement cycle starting to kick in.
So that gives us very good forward visibility to demand. I've already mentioned telemetry or telematics a couple of times. Having that visibility to the battery, how it's being operated, how many cycles are available, what is its current state of health or degradation stage in its life cycle allows us to have very good visibility to when it needs to be replaced, and that's kind of a nice business model.

Matthew Galinko

All right, thank you. And if I could follow up on that point on the telemetry, is there a business model around the software or is it primarily just as a kind of a solution package that you're bringing to the table that that kind of induces demand more than anything.

Krishna Vanka

Hey, Matthew, this is Krishna. There is definitely a software revenue generating model here because as Kelly said, it is an intelligent device constantly generating data. And this data is powerful. It goes deep into the operational model on how they run the business literally, right? The truck not moving it's not going to work for our customers.
So with this powerful data connected to the ecosystem of charging on one end and you know the whole logistics on the other end, we are in a very good position to be able to eventually get software recurring revenue coming out of our EMS and other products we'll be announcing later next year. So very positive about the recurring model op opportunity that exists in front of us.

Matthew Galinko

Got it and if I could just slip a follow up to that one and as you look out longer term, do you see software being a, I guess material part of the revenue mix or stays as sort of a nice margin contributor but doesn't really reach too high in overall mix?

Krishna Vanka

Our aspirations are to make it material and Kevin, here, looking at him, he will decide when to make it material, but definitely our aspirations are there.

Matthew Galinko

Great, thank you.

Operator

Thank you. We reached out of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

Krishna Vanka

Thank you, operator. Krishna here.
Second week here very early, but I would like to thank each of you on this call for joining our financial results conference today, and I really look forward to continuing to update you on the ongoing process. The future is bright, and I want to thank you all again.

Operator

Thank you. That does conclude today's teleconference, and we just connect your line at this time and have a wonderful day. We thank you for your participation today.