Baylin Technologies Inc

TSX:BYL

Earnings Call Transcript 2022-Q2

[Operator]

Good morning, ladies and gentlemen, and welcome to the Baylin Technologies Inc., Second Quarter 2022 Financial Results Conference Call. [Operator Instructions] This call is being recorded today, Thursday, August 11, 2022.

I would now like to turn the call over to Mr. Daniel Kim, Executive Vice President of Corporate Development at Baylin Technologies. Please go ahead, sir.

[Daniel Kim, executive]

Hello, and welcome, everyone. Thank you for joining us this morning for the second quarter 2022 earnings conference call for Baylin Technologies. On the call with us today from Baylin are Leighton Carroll, CEO; Dan Nohdomi, CFO; and Cliff Gary, VP, Finance. We will all be available for questions at the end of the presentation.

Before we begin, let me make it clear that our comments today may include forward-looking statements and information and answers to questions that could imply future expectations about the prospects and financial performance of the business for 2022 and could include the use of non-IFRS measures. These statements are subjects to risks, uncertainties and assumptions. Accordingly, actual performance could differ materially from statements made or information provided today. So you should not place undue reliance on them. We also do not intend to update forward-looking statements or information except as required by law. I ask that you read our legal disclaimers and explanation for the use of non-IFRS measures and refer you to the risks and assumptions outlined in our public disclosures, in particular, the section entitled Forward-Looking Statements and Risk Factors in our annual information form for the year-end of December 31, 2021, and our filings, which are available on SEDAR.

Our Q2 2022 results were released yesterday after market close. The press release financial statements as well as the MD&A are available on SEDAR and on our website at baylintech.com. I would now like to turn the call over to Leighton.

[Leighton Carroll, executive]

Thank you, Daniel. The second quarter continued to -- continued the improvements in our business despite the challenges with global supply chains and COVID lockdowns in China. We'll provide additional detail about each of our business lines later in the presentation, but I'd like to highlight the following.

Adjusted EBITDA for the quarter was positive $0.3 million, the third consecutive quarter of positive adjusted EBITDA since the third quarter of 2020. This accomplishment was despite dealing with significant challenges. Our embedded and infrastructure teams managed through continued COVID lockdowns in China this past quarter. Our mobile business dealt with our primary customer's reduction in volumes that have impacted everyone in the mobile ecosystem. Despite these challenges, adjusted EBITDA for the second quarter of 2022 was an increase of $13 million compared to the second quarter of 2021. The increase in adjusted EBITDA was primarily due to an overall increase in revenue and gross profit and a decrease in operating expenses that Dan will discuss further.

With regards to operating expenses, in Q2 of 2021, approximately $1 million of government COVID incentives were received. These were recorded as a reduction to sales and OpEx in Q2 of '21. And obviously, we received no COVID assistance this year. Taking into -- this into account, this is a positive swing of $14 million in adjusted EBITDA year-over-year, $13 million plus the $1 million in government incentives that were no longer available. In other words, despite dealing with external challenges this quarter, the business demonstrated a level of resiliency in overcoming these to continue to deliver a positive result. I'll also say just briefly that as positive as that is, we need to do better. And we are trying to do better. We want to do better. We need to get the business back to full health and full profitability. But as I've mentioned previously, this is a journey. This is not a flip the switch and it happens overnight, and we've made good progress.

To that end, our backlog at July 31, 2022, and June 30 of this year, end of quarter, continued to be at historical highs, $38.9 million and $37.7 million, respectively. The backlog in our satellite division, in particular, remains elevated. Satcom, to be sure, is seeing our business capitalize on multiple tailwinds successfully. The embedded line also continued to have a strong order book, coupled with very consistent solid performance. Overall, this translates into our backlog increasing by $12.7 million or 51% year-over-year Q2 to Q2. The improvements in our go-to-market strategy, business development and sales activity, coupled by the great work and commitment of our employees has led to this accomplishment.

In July of '22, we announced that our Galtronics subsidiary has been selected to provide embedded antenna solutions for an innovative U.S. computer networking company to provide a wireless solution to a major U.S. telecommunication service provider. Galtronics was awarded a multiyear contract that had shipped over 0.5 million in product by the end of Q2. The Galtronics antennas in question are for a 5G mobile hotspot that will allow the in-service providers users to utilize 5G Internet connections with multi-gig speeds at home and on the move.

Additionally, in June of '22, we announced that our Satcom business line received a purchase order for more than $1.5 million in solid-state power amplifiers from a major maritime satellite service provider. The amplifiers will be installed on cruise ships and connected to allow connectivity for passengers and crew. Maritime applications can be particularly challenging, requiring the products to be extremely resilient to ensure they perform reliably. Also understanding that the temperature swings and the movement is unique, and you don't have that obviously when in a fixed location. Power systems on ships can be unstable and voltage spikes happen. Advantech's products are equipped with field replaceable power supplies, can be serviced quickly and are resilient and are perfect for these applications.

Moreover, what's interesting about this is not only has the SSPAs or solid-state power amplifiers, from Advantech been used in maritime for decades, seeing maritime start to come back, it's heartening and speaks to the slow process, and look, we all wish it was quicker, that the world is starting out of -- is coming out of COVID, despite all of these major headwinds we're currently dealing with supply chain and inflation.

Dan Nohdomi, our CFO, will now comment on our second quarter results.

[Dan Nohdomi, executive]

Thank you, Leighton. I'll begin with a summary of our second quarter results. Revenue was $30.1 million in Q2 of '22, an increase of $8.5 million or 39.4% compared to the same quarter last year. The increase was primarily due to stronger sales across all business lines despite continuing supply chain disruptions, chipset shortages and the pandemic, which also negatively impacted revenue in the prior year period.

Gross profit was $9 million in Q2 of '22, an increase of $12.5 million compared to a gross loss of $3.5 million in Q2 of '21. Gross margin was 29.9% in the second quarter of '22 compared to negative 16.4% in the same quarter last year. Gross margin was mainly impacted by improved product mix attributable to both changes in pricing strategy and the focus on decisions made based on -- which is data-driven and focused on contribution at the business line level. The improved gross margin in Q2 of '22 was primarily generated by stronger gross margin in the wireless infrastructure business line compared to the prior year period, consistent growth in the embedded antenna and satellite division and lastly, improvements to the gross margin earned by the Asia Pacific business line through operating and financial efficiencies.

Adjusted EBITDA of $0.3 million, as Leighton mentioned earlier, in Q2 of '22. Again, third consecutive quarter of positive adjusted EBITDA. Adjusted EBITDA in the quarter was an increase of $13 million compared to negative $12.7 million in the same quarter of last year. And the increase in adjusted EBITDA was primarily due to increase in revenue and gross profit discussed earlier and a decrease in operating expenses compared to the prior year period.

Net loss was $4.3 million in Q2 of '22 compared to a net loss of $33.9 million in the second quarter of '21. The net loss in Q2 of '22 was primarily due to an operating loss of $3.2 million, interest expenses as well as withholding taxes. The net loss in the second quarter '21 included a goodwill impairment charge of $15.9 million. And on a per share basis, this translated to a net loss of $0.05 per share in the second quarter of '22 compared to a net loss of $0.64 per share in Q2 of '21.

Net debt was $21.4 million at the end of the quarter, which was an increase of $9.1 million from the beginning of the year, mainly due to an increase in noncash working capital, capital expenditures and interest payments.

With regards to our credit facilities we have with Royal Bank of Canada and HSBC, in July, the credit facilities were amended to reduce the minimum liquidity required to maintain from $10 million to $7.5 million. We believe that this will provide additional flexibility to invest in working capital and inventory, in particular, in order to actively manage supply chain challenges and long lead times and in order to support ultimately deliveries against historically high backlog levels. Additionally, as disclosed previously, the credit facilities were extended and mature September 30 of '22. We are very grateful for our lenders continued support of our business and the extension will provide us with additional time either to renew the existing credit facilities when they mature or to find alternative credit facilities. We continue our discussions with several prospective lenders and advisers for that purpose.

I'll now turn the call back over to you, Leighton.

[Leighton Carroll, executive]

Okay. Thank you, Dan. So as mentioned during the opening remarks, we continue to see several promising developments in the second quarter. And look, as good as achieving positive adjusted EBITDA in the quarter is and as good as the third consecutive positive adjusted EBITDA quarter since 2020 is, I'm going to point to a few things that I think are maybe more important and then make a comment overall.

So revenue was up $8.5 million year-over-year. COVID impacts affected us last year. COVID has affected us this year. We had a situation with one of our factories where for 2 weeks, we could only have 40% of the people. And we had people who stayed in the factory and had that level of commitment to our business. That is a huge headwind. We had to flex. We had to get stuff out to third parties, contract manufacturers and still try to deliver numbers. So revenue up $8.5 million year-over-year. Gross profit up $12.5 million year-over-year. Yes, there was a product last year in our mobile division that was very much hurting the overall picture, but that wasn't the entire story, not even close as to why those margin levels look that way. There's been a very concerted effort within the business to address the profitability and the operational discipline that, in part, drives profitability and efficiency to get to higher gross profits.

And then finally, you can talk about supply chain. In some cases, we've had to have customer -- conversations with customers where we have to talk about pricing. We have to talk about where we are. We can't do that everywhere, but in the opportunities we have, we've been able to do so. And by the way, that has clearly not impacted backlog. Backlog up 51% or up $12.7 million year-over-year. And being someone who comes from the industry, I can tell you that in telecom, '19 and '20 were pretty decent years. So this, to me, is a reflection that the business is starting to get to where we need to be. And all of that is predicated on the work and commitment of the employees at Baylin. The level of buy-in, commitment and engagement of all of our people across the world has been exceptional, and it's a large part of why we've been able to drive the change in culture, the change to focus on data-driven, transparent management with a big commercial and strong customer focus that is allowing us to achieve these results.

And by the way, I'm just going to be very straight up about this, it's still not good enough. We still have a long way to go. We've made significant improvements. I've been at the company for a little over a year now, and I am proud of the work people in our business have done. They have done a tremendous job helping us ride the ship and get us back on our feet and on a path to better things, but we have a lot more work to do. The nice part is since we have strong quality people, strong engineering and manufacturing and we really do have some interesting innovative products, both that we currently sell and in our product pipeline, I'm very excited about our future. That said, there are chipset shortages, supply chain disruptions are real. And by the way, COVID lockdowns in China are still continuing. I didn't think we'd be talking about this in Q2, and they happened and they were significant.

Despite these continuing challenges, we expect the second half of this year will be similar both in terms of revenue and adjusted EBITDA to the first half of this year, and we're working to do better for our long-term.

Now I'd like to speak about each of our businesses and the work that is going on within each. The embedded antenna business line continued to show considerable strength in the second quarter with growth both in terms of revenue and profitability in part due to demand from new customers for home networking products as well as stronger adjusted EBITDA to improve gross margins. This continues the improvement in financial performance of this business over the last 12 months despite all of the problems with lockdowns in China and global chipset shortages that have impacted not only our operations, but the operations of some of our customers. We do, however, expect the second half of 2022 to be modestly lower in volumes, albeit with continuing solid profitability.

The wireless infrastructure business line had a strong second quarter with growth in both revenue and gross margins. In fact, I would argue this speaks finally to the potential of what our business has in our infrastructure division and being able to exploit it correctly drives real value to the company. We expect that DAS deployments will continue to strengthen, particularly in stadiums and building throughout 2022. And importantly, new multi-beam base station antennas and new innovative small cell antennas from our Galtronics division are coming to market in the second half of this year, opening additional opportunities to drive sales with wireless carriers. Given the sales cycle and seasonality of our business, we expect the third quarter to be lower in revenue than second quarter, with the fourth quarter returning to normal levels and continued healthy profitability.

The Satcom business, the commercial side of the business has continued to demonstrate consistent demand with capital spending by our customers continuing to see momentum as seen in the first quarter of this year. Given the build cycles for satellite operators and others in the Satcom ecosystem, we expect this benefit for the business line for the remainder of the year and into '23. Sales for our military and government-related uses, which represent the balance of the business, will continue and potentially increase in late '22 as many Western countries have dramatically increased their defense spending. Moreover, we expect to launch multiple technology upgrades within our product portfolio by the fourth quarter that will drive further opportunity and importantly, efficiencies into our Satcom business for the long haul.

Overall, we expect the revenue and adjusted EBITDA of Satcom to be consistent in the second half of this year with the first half. And the Satcom business, on top of that, continues to demonstrate a very strong order book.

Now the folks in Montreal who produce our gear, they have been facing supply chain constraints, chipset shortages, component delays. I would like to thank the team in Montreal for the incredible hard work and dedication that they have shown and continue to show to help us meet our targets. We have been and will continue to seek to improve production and efficiency in Montreal in order to address the backlog and improve overall attainment, but there is still yet a lot of work to do.

In our Asia Pacific business line, also sometimes what we call our mobile business line, revenue in the second quarter was adversely affected by an across-the-board production volume reduction at our mobile business's largest customer. This was due in part due to worsening economic conditions and softening in consumer spending seen by our end customer.

We saw this coming in May, and it impacted us most directly in June. To that end, management of our mobile business -- they reacted quickly, for a better way to put it. When they saw the changes in the forecast, costs were arrested, we made changes quickly. And it was in part an effort in minimizing the impact and ensuring that the business was set up for the future.

We expect -- now with that being said, conversations that we are having with our end customer, we expect this phenomenon to continue briefly through Q3 and the customer to start to return back to normalcy later this year. We expect revenue and adjusted EBITDA for the second half of '22 to be generally comparable to the first half of the year, particularly as we get through the second half -- excuse me, through the second half of the half or effectively the last quarter.

The MMU facility in May of '22, the company announced it would be liquidating the equipment for its massive MIMO or MMU facility in Vietnam and applying the proceeds and repayment to the loan. The company then retained a firm specializing in asset liquidation to assist in the process. During the past several weeks, the company and the firm have been conducting a sales process for the equipment, which is currently ongoing. We are working through it. We have made good progress, and we continue to address the loan in Vietnam, partnering with the bank to do so.

Reflecting on this quarter, I want to reiterate that the resilience of our business was a key factor in delivering the results we did. To be sure, there will be further challenges in the coming quarters, but our business is substantially better than it was a year ago. We have better operational controls, better reporting, better visibility, better internal communication, better external communication, and most importantly, we have the buy-in and engagement of our people. We are investing and innovating. We are on the cusp of launching several new products, both in infrastructure and Satcom that will help drive our business forward. And our backlog has remained at record highs even in the face of supply chain disruptions and in some cases, changing of prices, raising of prices on certain key products. None of this would be possible without the commitment of our people, and I'm grateful for their commitment and engagement, the sense of urgency and their work ethic. Together, we've been driving a cultural change while driving improvements in our business. As mentioned earlier, the results are relatively good from a year-over-year perspective, but they're not where we want to be. There remains a lot to be accomplished, and there will be more challenges to overcome, I'm sure. But I am proud of the progress and our people as we continue to make improvements to the business month over month.

This concludes our formal remarks. Operator, we'd be pleased to take questions.

[Operator]

[Operator Instructions] Your first question will come from Daniel Rosenberg of Paradigm Capital.

[Daniel Rosenberg, analyst]

I just wanted to start on the balance sheet. Last quarter, you guys had been focusing on figuring out a strategy around renewing the debt or securing a new debt partner, and we had thought that would have been resolved at this stage. So just wanted an update on why that didn't come to fruition. And what you're thinking or what we may see in the coming weeks or months around securing financing?

[Leighton Carroll, executive]

Sure. Dan, let me take a first swing at this and then I'll let you hop in or keep me on the straight and narrow. So we have been actively working this process. We have retained support from multiple sources and have been in discussions with multiple third-party lenders about coming into the position that we're in as well as we have been in discussions with our existing lenders about a path forward. To that end, as we speak today, there is not clarity that X option is better than Y option is better than Z option. There is clarity that there are options being discussed and those are being evaluated by the company, and we are working towards having the best possible approach for the debt financing for the company going forward. We would have loved to have been at this point by the end of Q2.

Unfortunately, with where we are on our journey, we're not there yet. Management remains confident that the business will see us continue down the path we are on and have suitable financial backing for the long-term. But we would be imprudent to suggest that we have that wrapped up at this time or that it's a done deal, is coming like in the next week, next day. It's a process, and we continue to work through it for the long-term of the company.

[Daniel Rosenberg, analyst]

And in terms of the covenants, you mentioned the recent liquidity amendment. Just where do you stand on your covenants as of today? I understand they were kind of waived for Q2, some of them. But just could you provide an update on what you're expecting for Q3 and Q4?

[Leighton Carroll, executive]

So with respect to through Q2, it's not to say that they were not covenants. There absolutely were. And those covenants, we are fully in compliance with as we get to Q3 because of the timing of the extension, the one we've stated, with respect to the North American loans through Q2, or actually all the ones, through Q3, we expect to be fully covenant compliant. Beyond Q3, I would be speculating because I can't tell you if we would be graced with an extension from the current North American lenders, if we will have closed on a facility, if there is a timing gap, so there's a small extension followed by a quick turn to going to a new lender at that point. Longer-term, it would be inappropriate to say that we would be X or Y or Z relative to covenants because those covenant structures have not been discussed and will need to be discussed with the various parties.

[Daniel Rosenberg, analyst]

Okay. And then in terms of working capital flows and kind of cash burn, things can be lumpy just kind of on the timing of things and delays and there's a lot of moving parts here. Just can you provide a general sense of how working capital will flow in the next -- in the near-term, let's say?

[Leighton Carroll, executive]

Dan, do you want to take a stake at that one?

[Dan Nohdomi, executive]

Yes, certainly. So in the quarter, as we mentioned, we did invest in working capital and inventory, in particular in North America, to support the backlog. And really, just given supply chain constraints that we mentioned, long lead times for inventory, we needed to actively manage that. And to support our businesses, we -- and in part, that would have been one of the main reasons why we requested that the minimum liquidity be reduced from $10 million to $7.5 million to give us that additional flexibility. But then we did see -- we invested in working capital in the quarter to support the business. I would suggest that as we execute against the backlog and as we deliver against the backlog, produce and ship, that we should see a return of that investment. But at this point, we can't -- we're not able to provide guidance whether it's a Q3 or a Q4 event, if that makes sense.

[Daniel Rosenberg, analyst]

Okay. So turning on to some of the operational aspects. I wanted to ask a question around the new products that you mentioned, Leighton. What's the opportunity, the market here that you're going after? And just some context in terms of how you see them in terms of profitability margin. Is it similar to some of the higher-margin products you have? Is it a broader volume type play? Just some context there, please.

[Leighton Carroll, executive]

Yes, yes, for sure. So it's going to be a 2-part answer because it's a little different between Satcom and infrastructure. The interesting thing about some of our other business clients is that they are engineered solution for customers and then production around it. And for example, in the embedded division, our teams do an excellent job and in part because of that, our customers see volumes, which drives volumes for us. So it's not -- you're never going to hear me talk about a product launch in embedded because it's not that kind of business. Now in infrastructure, as an example, we compete against guys like, I don't know, CommScope, Ericsson, Nokia, big companies. You can do the -- at the risk of being pejorative to the U.S. Marine Corps, you can do the U.S. Marine strategy of frontal assault, frontal assault, frontal assault and probably not be very successful. You can, however, if you have really good engineering and good product and product I'm talking about is patented, so it's unique to us.

There are places where there are clear use cases that wireless carriers have problems that we can excel at. And so I will give you an example of a current product without talking about a future product. One of those is our HyperFlat. We have a HyperFlat antenna that is 3.7 millimeters thick. A major third-party operator put them all over Hudson Yards in Manhattan. Why? Class A office space in one of the most expensive places in the world can't see them in the ceiling. They're -- 3.7 millimeters -- people don't -- they don't get noticed, and they performed tremendous. Now some of the new product coming out, to fully answer your question on the infrastructure side, are, without saying what we're coming up with, they are akin to an antenna we have out now that provides a unique competitive advantage for high-traffic use cases.

And as an example of the current product, which this does not replace this, the new products coming out, expand the number of use cases go on places like JFK Airport in New York City, again, have been deployed at football stadiums. There is a -- we have a competitor in the United States where it's a great technology, but when an antenna costs north of $100,000 and our antenna cost substantially less than that and performs extremely well. So there is an old conversation, "I need a Buick, and I'm not going to buy a Bentley if I can get a Buick." You can -- a lot of these carriers are looking at this going, "Wow, I can have 5 Buick's for that Bentley, and I've got what I need. That is brilliant. Let's go." So effectively, what these new products are doing are expanding our opportunities, expanding the number of use cases.

And importantly, as we have sold the original product there I was speaking to principally to 1 carrier, the other 2 major U.S. carriers have indicated keen interest in this product because it covers frequency bands and use cases that they have a need for as well. So effectively, it is both market expansion and use case expansion for the products being launched in infrastructure and yes, at strong margins.

Let me go to Satcom real quick, and I appreciate this is probably a longer answer than you wanted. Satcom a lot of the legacy architecture of the products that we are dealing with today were not built for manufacturability. The performance of our products were really good, right? There's a reason why the products that our Satcom group sells sell as well as they do. You know what, they perform really well. The technical specifications in the delivery of what they were engineered for is very solid. The next generation of these that are being built, and we're starting with a very specific frequency in a very specific power range, not only will perform as well, if not better, but add improvements in operational controls that are important to satellite and service operators and are based on a modular architecture.

Why is that important? It changes the supply chain dynamic because you're not ordering 1,700 different parts to try to make each different power band of each different amplifier. You are ordering common component architecture in minimizing your variances, which improves your manufacturability, which in turn improves your efficiency overall, which in turn improves your margin profile.

[Daniel Rosenberg, analyst]

All right. Really provides a lot of insight. Lastly, longer-term, as you think about the strategy for the company, do you see a level of scale that you need to kind of turn the corner on profitability? Or is it continued execution with what you currently have? What are the levers that you're thinking of prioritizing as you think about the company at a high level?

[Leighton Carroll, executive]

Yes. Yes. So a completely fair question. And I kind of spoke to it at a high level that as proud as I am with the work the team has done, we've got a lot longer way to go. The -- part of this is scale, right? So you look at the embedded business or you look at the infrastructure business, part of this is we -- product road map and go-to-market, all those good things. But as those pay off, you take those 2 businesses, right, the Galtronics North America businesses, you reach a certain level of scale within each of those and infrastructure had a great June, terrific June. And because the fixed cost structures within each of each sets of these businesses is relatively fixed, as the volumes come in, you generate the revenue, given the gross profit profile of those businesses, you see substantial improvement in the amount of money that will drop to the bottom line, right? So it is in part a scale exercise. But in part, it is -- well, maybe in large parts, it is a scale exercise as we have made some of the changes.

One of the things I'll talk about maybe for a second is, if you look at where we were last year to this year, right, and this is probably as apple and apple as I'm going to be able to give you, right? The adjusted EBITDA, we'll have some stuff in it. And look, when I got here, we started ripping band-aids off, calling spades, spades and just dealing with some of the issues. Revenue up $8.5 million. You can see that for a whole host of reasons. But gross profit up $12.5 million on a swing of only $8.5 million in revenue, that's because the underlying cost structures and operational controls are being fixed. And by the way, I'm not saying they're done. I'm not saying that we're finished with that. I don't want to represent like, oh, we're great.

Now we just got to grow. It's -- we have to continue on that path. But as these businesses, infrastructure, Satcom, the mobile business in Asia, which, by the way, I guess what, when the volumes aren't there, you have a certain level of fixed cost structure and you can be aggressive on cost cutting, it's not going to generate profit. So there is a scale component to this, where we do get back to profitability and solid profitability. And if you look at these businesses, I can't tell you what the breakeven point is going to be. But I can tell you, it's our expectation that we're probably going to be growing a good bit this year over last year. And that's not the end of this journey. Likely by sometime in '23 to '24, depending on supply chain and inflation and everything that is going on in the world that we have to deal with, we should be in a place where we're crossing over some of the thresholds of financial measures that truly matter for the long-term. And that's the goal, get the business back to what its potential is and do so the right way.

[Operator]

[Operator Instructions] Your next question comes from Steven Li at Raymond James.

[Steven Li, analyst]

I want to go back to your backlog comments. So your July backlog was flat from April. If there were supply disruptions and manufacturing lockdowns, should your backlog not be increasing sequentially in the sense you're getting the POs, but you're not able to ship? Or does this indicate some slowdown in POs as well?

[Leighton Carroll, executive]

No, completely fair question. I think at a global Baylin level, month-to-month, there are always going to be some ebbs and flows. I would tell you without revealing numbers that after July, it's gone back the other way. It's gotten higher, right? So customers and sales, by definition, can be a bit lumpy. I will tell you each business generally has its own unique seasonality to it. And it's part of our job is to minimize the impacts of the seasonality and maximize the sales velocity. I would say that, personally, I don't want our backlog growing. Backlog, you don't just take as a single number, it's backlog and revenue production, right? And seeing the revenue production that we have in Q2, understanding that Asia Pac was off substantially, particularly -- well, it was off in the majority of its miss on top line was due to June alone because of what happened with our customer, right and yet the backlog has remained relatively firm.

I don't see a slowdown in backlog. If anything, I like our backlog where it is. I can even stand to have it lower if that was predicated on driving even higher revenue numbers. But right now, it's holding at this level is a pretty good thing, and it's up to us to deliver against this and drive it. So that in the long-term, look, if it came down to 24, but revenue was up 40%, and that became a consistent metric, I'd be very satisfied with that, right? So with where we are, what we're seeing in PO velocity, what we're seeing in customer interest, the customer conversations we've had, we won -- and maybe we need to do a better size. We won multiple new customers in infrastructure as an example, in Q2, and they turned and ordered. They've already ordered product from us, which is great. That's what you want. That hasn't stopped. Satcom, it's like clockwork every month. The embedded team is super solid.

The only place where we had a hiccup really in Q2 with respect to the backlog and the impact it had in terms of its immediacy was in Asia Pac, and we saw that as a headwind, handled it and still delivered. And dang it, I would have liked to have delivered better. But you have issues in your business, you work on them, you keep growing and you have to make your numbers. And the nice part is we're now doing that.

[Operator]

There are no other questions. I'll turn the conference back to Mr. Carroll for closing remarks.

[Leighton Carroll, executive]

So guys, Q2 was an interesting quarter for us. I do want to call out as much as there is geopolitical tension, our team in China, what they had to endure with supply chain challenges in Q2 and overcome it, and I also think the VP of Manufacturing, who is here in North America as well, being able to do that and withstand that and still produce for the embedded and infrastructure teams was huge. The commitment of our mobile team, despite what has happened with their largest customer, which, by the way, is impacting everyone in that mobile ecosystem, it's not peculiar to us, they have handled it as well as, I think, could be expected and have continued to show a level of dedication and commitment to the company that's greatly appreciated. And then finally, the Satcom people have done an amazing job in production, dealing with a lot of challenges in the Satcom ecosystem. The good news is we have some good tailwinds there. The challenge is not going away, though. And yet we still produce.

Q3 is going to be interesting. I expect it's going to continue to have some choppiness in it. We have to overcome that and continue to deliver. And look, at the end of the day, I'm super interested in our long-term as we get this business where it can be. With that, I'll thank everyone for the time today, and this will conclude our remarks.

[Operator]

Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank you all for participating and ask you to please disconnect your lines.