Question-and-Answer Session
(Operator Instructions) Your first question comes from the line of Greg Mesniaeff - Needham & Company.
Greg Mesniaeff - Needham & Company, LLC
Nice job on the revenue line. I was wondering whether the guidance you had given for gross margins for the third quarter which I believe is up to 35% is kind of a sustainable number assuming the current revenue run rate and what contributed to the even stronger number in the second quarter, the 36.4%?
Kirk Misaka
Well, let me say that we hope to be able to sustain a higher gross margin level going forward. We did provide guidance of 32% to 35% to reflect what we anticipate the third quarter to come in at and Mory will talk a little bit more about the reasons for the margin improvements last quarter.
Mory Ejabat
Okay Greg, a couple of things under revenue growth. The 20% of our revenue was attributed to our new product introduction, the MXK with the associated CPEs. So that was a good win beyond our sell and that product has really taken off and people are really excited about the capabilities of that product and by far, has exceeded any competition in the industry. So, that has been a shining point in our revenue.
Greg Mesniaeff - Needham & Company, LLC
And if I can just ask a follow up question regarding the MXK product, without giving perhaps any kind of concrete backlog numbers, where are you seeing most of the activity, the backlog activity for that product? Is it in the US or what region of the world?
Mory Ejabat
It is really diversified, Greg. We see we have a good backlog on that in domestic as well as internationally. Well, internationally, it is the stronger backlog than domestically.
Operator
Your next question comes from the line of Donna Jaegers - D.A. Davidson.
Donna Jaegers - D.A. Davidson
I follow a number of your customers in the rural area and I was just curious given that the rules have finally been spelled out on the use of the subsidy money for rural broadband. Are you seeing any sort of pick up in testing or any other indications that would indicate that the rural companies are looking more at your product?
Mory Ejabat
Well, one thing that we have seen is the first roll has started providing funding for some of the contract that was signed before this summer. But they did not do that, now they opened up the gate and they are doing that. The other thing that we are seeing, we have seen lots of proposal ready to go with our customers willing to get a proposal to put in there for some other span. We have seen lots of activity in that respect. And also, we have seen lots of interest in our new MXK product for testing. However, there will be lower for other areas in the country.
- To read the full transcript on Seeking Alpha, click here »
