Welcome, for those who didn't hear me the first time. As always, it's been me, Pål, our CFO, and Thomas, that present both financials and business outlook. Summary of Q2: Nordic did $58.7 million, a growth of 11.3% year-on-year, close to 24% quarter-on-quarter. Bluetooth revenue, 48% up quarter-on-quarter, and at $36 million, is at 32.3% growth year-on-year. Proprietary was down 4.2% quarter-to-quarter, that's $20.7 million, and we had a strong first half of proprietary. We expect it to be more in line with Q2. Gross margin was stable from Q1 and down 0.5% from last year, same quarter. It all ended up in a EBIT of $4.8 million this quarter.
It's a 2.5% growth from last year. If you look at the whole first half, $106 million, total revenue, 14.2% growth, is 1% above Q or second half 2016, which is basically a strong half for Nordic. Bluetooth were, for the whole first half, $60.4 million, is 32.9% up. Proprietary was $42.3 million, is down 1.6% year-on-year, but it's up if you compare to second half of 2016. Gross margin for the first half is 0.5%, half-on-half up. Totally, we end up at $4.7 million year-on-year. New record quarter for Bluetooth. As you see here, Bluetooth is 62% of our total revenue now. Growing, as I say, 32.3% year-on-year.
ASIC is getting less, but still contribute with 3%. Proprietary is 20.7%, is sort of, as we guided earlier, is going to be flat to a little bit down over the year. I think this is where we got the technical problems. We work on diversifying and obviously growing customer base. If you look at growing, we had 17% more customers in Q2 2017 than we had in Q2 2016. We try to spread the revenue more. As we're getting some more significant and larger customers, we will see that top 10 customer will constitute more of our revenue. We have steady progress with leading players. We have signed multiple agreements. This is based upon our fantastic product lineup and our roadmap. We continue to develop the world-leading Bluetooth solutions.
As we are guiding today, there is no game-changing products, projects in there today. This is our mainland business as of today. We have multiple project with large potential growth. We've never been in a better position to compete for new projects. It really pays off to invest in development, both in hardware and in software, and we've been giving quite some smart software solutions that fits into multiple segments over the past half year. By market, if you break down the revenue, consumer electronics, 23.6, wearables, 8.7. It shows that we are growing again in wearables. Building and retail, 16.7, is a 95% growth quarter-on-quarter, 173 year-on-year.
Healthcare is back to growth, as we indicated the last presentation, and there is continuous new and other projects that is growing, and we had a 31.4% growth quarter-on-quarter. This leads us to segments. We see now that the emergence of non-consumer segments. Consumer used to be the driver of Nordic revenue. Now we see we get other segments in there, and we are not that dependent on consumer products anymore. We expect that B2B projects are going to grow more in the quarters, years to come than consumer. Every time I do some new products that are powered by Nordic, and these are all products that we have had press release on. We are not able to do customers that we have NDAs with, but still there is some very exciting applications here.
Smart lock for smart home using nRF52, is a company called Friday Labs. I mmerse is a very leading company within virtual reality. Remember, Nordic has won quite a bit of virtual reality applications previously. We do it because we are technical superior. The latency on Nordic chip is outstanding. We won a IoT company in China. It's called Mobike. They are building share bikes that are connected to the cloud. I don't like to call them a bike company. It is one of the largest IoT companies in the world. We are now seeing the first application when it come to lighting, getting into production. This is a segment we expect going to grow in the quarters to come. We have an application here, which we announced just a couple of weeks ago with a Norwegian customer. I think it's fun to bring it up.
They call it BlueSIM2. It's a SIM card you can put into any POS terminal, and you can pay with your phone as long as you have Bluetooth Low Energy. There is quite a few million units of point-of-sales terminals out there. Again, thanks to one of the analysts here, we have a chart. We're showing Nordic's development within certification of Bluetooth Low Energy parts. In Q2, we got 96 new qualification on Bluetooth SIG. It's a growth of 16% year-on-year. It's basically only 1% quart er-on-quarter, but this goes a little bit in cycle. If you go back here and look, it seems like Q3 is a good quarter for certifications. We maintain the lead, and we are determined to extend the lead in the quarters ahead of us. Now, I hand over to Pål, and he goes into the numbers.
I think this looks-.
Mm-hmm.
Thank you, Svenn-Tore . I will now go to the Q2 financials. we've put the summary up on a new sort of matrix this quarter, mainly to show the main operational performance KPIs that we value the company after. The reason we do this is because then you can see compare this quarter over quarter. You can also compare it to our peers and other companies. These numbers are sort of completely unadjusted, so the OpEx includes capitalization and share-based compensation, et cetera. I have another slide on cash OpEx, taking out those. In relation to revenue, revenue is up 11.3%, as Svenn-Tore said. Good thing is we're back to growth. last year in Q2, we had only 0.2% growth.
We are definitely back to growth for the company, driven by the Bluetooth growth. Gross margins at 46.7% compared to 47.2% last year. This reduction is partly the yield issues on the nRF52, but also write-offs of certain older versions that I'll come back to later. I'm gonna talk about OpEx. OpEx in percentage of revenue this quarter is 33.1%. That's exactly the same number as we had last year. As revenue is up 11%, that means that the underlying OpEx is also up 11%. If you go to R&D, R&D, total R&D is 19.9%, which is down 0.8 percent point compared to last year.
Last year, we, we were hovering at around 24% for the year as a whole. The reason it's a little bit low in Q2 is the, the vacation pay accrual that you do in, in, in Q2. Normally, you have a lower level in Q2. The R&D, cellular IoT, which is mainly the Finland operations, has around 8% of, of revenue. That means calculated to $4.5 million in, in cost. Last year, that was around $4 million. Slightly below the $5 million we, we set as, as a long-term target for this, this business. SG&A at, at 13.2, compared to 12.4 last year, we are growing in this business. As a sum, our EBITDA margin is 13.6%, compared to 14.1% last year.
If you take out the, the, the cellular business, the underlying EBITDA is 21.3%. Gross margins came in at 46.7% this quarter, which was down 0.5% compared to last year, but the same number as last quarter. As mentioned during last quarter's presentation, we do still see cost improvements on the nRF52. In Q2, we did certain write-offs of some older products, the nRF24L2, that we talked about last year. Now we've gone completely over to the nRF24L3, so this is sort of the write-offs that's done in this quarter. Adjusted for this, this write-off, the underlying gross margin would have been around 47.5%, so 0.8 percentage points up compared to last year.
We are doing continuing efforts on cost reductions, mainly on the nRF52, which is becoming more and more a volume driver for Nordic. We are reducing yield, improving yield, we are reducing test times, and we are also getting better visibility, so we can run larger production runs. All this will help to improve the cost on the nRF52. In addition, we are going to sell more of the nRF52840 that we released in December, and that product also has a better margin than the other products. Continuing the specification of customer base and volume ramp will drive margins slightly upwards. We still maintain our 50% target for 2018. Operating expenses. Operating expenses went up 9.3% quarter-over-quarter.
This is now the operating expense in excluding capitalization and share-based compensation. Capitalization was $2 million, this quarter, up from $1.6 million, the same quarter last year. Share-based compensation is $300,000. The increase in, in cost is, is driven by headcount growth of 13.7%, so up from 496 people last year to 564, this year. It's, it's mainly in R&D, short range and, and in sales and administration. Compared to Q1, cash OpEx is, is more or less unchanged. Although we have grown in, in number of employees, you have the effect of the, the holidays in that number.
OpEx is following revenue, so although it's, it's at 35.9% this quarter of our revenue, we are tracking the revenue growth. That means automatically that cost, cash cost will go up in the second half of the year compared to the first half of the year. Now turn to operating profits. Compared to Q1, we see that operating profits do grow with higher revenue. You remember, in Q1, we had zero in EBIT, and in this quarter, we show $4.8 million, which is an increase of 2.7% year-over-year. This is driven by higher operational leverage, which I talked about. We also want to show the EBIT excluding the cellular business, so I've excluded $5 million.
$5 million is, is more than the $4.5 million I talked to you on the last slide. That's because I then include depreciation of the equipment in Finland. So the total cost in Finland, including depreciation, is $5 million. The growth in EBIT, excluding the cellular business, is 7.7%. That means that our revenue is growing faster than OpEx R&D in the cellular business. Finally, on, on cash flow, normally, Q2 is seasonally weak, since accounts receivables will grow as a result of strong increase in the revenue in the quarter compared to, to last quarter. That has also happened this year, so accounts receivable has increased by $6.3 million.
If you compare this to, to last year, the working capital, mainly, accounts receivable, actually increased by $15 million compared to the $6 million increase we had this year. The reason we're able to have, sort of lower growth in net working capital is that we have been working hardly on improving our cash collection, the DSO is significantly improved year-over-year. If you look at the AR balance at, in Q2 last year, it was more than the quarter's revenue. This year, it's, it's much lower than the quarter's revenue, there is a good improvement in those numbers. We are doing a tight cash management, we're optimizing cash-generating ability, mainly focusing on, on the accounts and net working capital items.
We have a financial headroom of $53.3 million, including undrawn facilities of $30 million that we introduced last quarter. That's all I'm gonna talk about. I'm gonna hand over to Thomas.
All right. Talk about outlook and start with the guidance. Based on the current visibility we have, we anticipate second half revenue to be in the range of $120 million-$130 million. We do expect Bluetooth to be the growth driver also for the second half, and this revenue guidance is based on 30%-40% year-on-year growth in Bluetooth for the half, for the total half. We expect gross margins to be in the range of 46%-48%. That's broadly in line with the previous half, with a midpoint up 0.5 percentage point compared to the H1 guidance, but still, as Pål commented, below our target of 50%.
To give you a little bit of, of color on this guidance and the outlook, we see for second half, accelerating volume growth on the mainstream nRF52. At the same time, we also see continued strong growth in our baseline and nRF51 Series offering. Just also say that still overall Bluetooth volume is still dominated by nRF51. We have not seen the full potential of nRF52 yet, and that's to be expected because of design-in cycles, and so on. On the customer and market side, we expect to see continued growth contribution from a handful of non-consumer customers. These are the customers that's driving some of the growth in the building, retail, and other categories.
We expect to see continued quarter-over-quarter growth in wearables and healthcare, and we expect proprietary to remain soft due to shift to nRF51s and nRF52s series type of components. On the guidance, specifically, we have excluded sort of binary ops opportunity out of the guidance. We expect to be back to more normal Q3, Q4 seasonality. Keep in mind that last year we had $4 million slipping from Q3 to Q4, which meant that those quarters were pretty flat. We have, we have sort of maintained the lower end of the gross margin range in the guidance, and this is to account for potential fluctuation in customer and product mix.
When we look back forth four quarters, we see that sort of product and customer mix is sort of shifting margin and ASP up and down, and we want to have a little bit of headroom on our margin guidance to account for that. With this total revenues, if you look at the full year with this guidance, we are talking about $226 million-$236 million, and that is +14% or +19% for 2017 as a whole. Backlog is at $65.3 million, which is 172% up year-on-year, and 42% up quarter-on-quarter. It's as with first half, very Bluetooth dominated, and we have a healthy balance between Q3 and Q4 when we're looking at this backlog.
If you take one step back and sort of look at medium-term market outlook, looking into 2022, obviously, proprietary 2.4 GHz was represented sort of the first growth curve for Nordic. This is a significant market now. In 2020, we expect the total market to be around 300 million units. That means that somewhere between 0 to -10% in terms of CAGR over the next three years. We have a number one position, and part of the decline in proprietary, we do expect, is due to migration from proprietary to Bluetooth, especially in PC peripherals. Bluetooth Low Energy is the one that's driving growth for us today.
We believe and a lot of industry reports believe also that this is gonna be around 1 billion units in 2022. That means that the CAGR over the next three years is between 30%-45%. Then Cellular IoT, which is gonna be, and we are aiming to be our next growth vehicle, supporting and coming on top of the Bluetooth Low Energy growth. This is now expected to be around 100 million units with a CAGR of more than 100%. Keep in mind that from an ASP perspective, this is significantly higher ASP than Bluetooth. Bluetooth again, is then again higher than the proprietary. What is good for Nordic, I think, is that both Bluetooth and low power Cellular IoT, our growth vehicles, are both very diversified markets.
So, so the, the sort of opportunity spreads over consumer, industrial, enterprise, automotive, healthcare, smart city, agriculture, and utilities. I think we have really shown now that there are really growth opportunities in non-consumer applications. We are seeing that in our numbers now, like what we said a year ago. To be successful in 2022, we need to have a strong product lineup for 2017 and 2018, and I'm proud that in this quarter we launched the nRF52810. This is really an optimized subset of the nRF52832, and it's a single chip, system on chip for less complex application. It also a very, very competitive Network Co-Processor. When applications are so complex that our customer wants to use a third-party microcontroller, this is an ideal chip to pair along with such third-party microcontrollers. This one is sampling to customers now.
We already have secured multiple design wins, and we are preparing for production ramp now in second half. nRF52810 is lower cost. We said it's Bluetooth 5 for everyone. It's smaller. It's up to 30% smaller than the nRF52832, and we've also have been able to bring in additional power consumption improvements, so it's up to 20% lower power than the nRF52832. With this new nRF52810 and the nRF52840 that we launched in December, we really have the industry broadest Bluetooth 5 lineup. In the middle, sort of supporting the mainstream categories, we have the nRF52832. Now we have the nRF52810 for the simpler application, and we have the nRF52840 for the more complex application.
When applications are so complex that even the nRF52840 is not big enough, then each of these three chips can be used as a Network Co-Processor solution, either supporting only the connectivity. In many cases, customers are also taking advantage of the compute power and using it as a co-processor, doing, for example, sensor fusion, power management of the whole system, and so on. Really we are covering now from the simplest application to the most complex application, and obviously, there is an ASP difference when you go from the simplest one to the highest one here. Just to talk a little bit about the nRF52840, we now have six months.
We have been working on the design wins. I'm pleased to sort of report that we have a very diversified design win base already with the nRF52840. We have design wins in consumer on virtual reality. We have design wins in industrial, on power tools. We have medical design wins with the nRF52840. We have smart home type of design wins in heating, ventilation, and air conditioning. We even have design wins within the agricultural field for the nRF52840. This shows that this new chip is really hitting a broad line of applications and verticals. You may have missed this one. We launched something called the Thingy. The Thingy is all about driving innovation.
We want to sort of give things to this market to continue to enable new type of application. What we call this is that it's an IoT development kit from everyone. With this kit, you can develop and prototype applications without doing any firmware development. There is a mobile app, there is even a better cloud service that we are providing to developers. It has something called IFTTT web service support, so it's very easy for a cloud developer to set up functionality, and it's affordable, typically around $40 from our catalog distributors. This thing is just packed with sensors, so it has motion sensors, sound sensors, environmental sensors, it has speakers, and multicolor LEDs. Of course, powered by the nRF52, providing Bluetooth 5 connectivity with the processor and memory in this chip.
We still have the world's most popular Bluetooth solution. In first half of 2017, we shipped 18,866 development kits. We think this is way more than everyone else. We shipped 2,000 Thingies in June only, for the first time, one of these gadget popular gadget blogs actually did a review on one of our products. They basically say that if you're a gadget fanatic, the Thingy:52 is a great way to get into IoT and try out your new ideas. If you're a professional developer, then the Thingy:52 is an absolute gem.
You know, some people think, okay, this is just to play around with, but we've had some of our biggest customers sort of coming in with engineers, and they all say: You know, we wanna get this kit, because this allows us to quickly prototype a lot of great ideas. I'm also pleased to announce that there is now full LTE-M coverage in the US. According to AT&T and Verizon, they're ahead of schedule with their with their LTE-M deployments, and they have, during the quarter, announced full suite of new rate plans and even bundles with modules. They say they have plans for Mexico later than 2017. This is a significant and important milestone for the cellular IoT market, as the U.S. is one of the largest markets when we look three to five years ahead.
This is really driving awareness and interest in LTE-M, and it's obviously driving a lot of interest and demand for our upcoming nRF91 Series solution. I think we have good timing. We are entering the market now in second half 2017. We're on track with the sampling, and we are executing on our strategy with U.S. and LTE-M first, like I said, on the Capital Markets Day on cellular. We continue to receive strong interest and very positive feedback on our solution, especially on the size, the level of integration, the power consumption, and the ease of use, and the flexibility of our solution. We are, of course, then running certification testing in parallel with development and lead customer sampling later this year. If you look first half at a glance, we're back to growth.
We met our guidance that we gave at Q4 2016. We're back to growth in Bluetooth, 32.9% year-over-year. We now see, for this half, growth contribution from the first new 10 million unit plus, 10 million unit plus per year, non-consumer customer. We talked about these opportunities on Q3. It's contributing significantly to our revenue this year. Gross margin and Bluetooth growth is still below our ambition. We think we can do better than this. We are delivering on our roadmap, we delivered, like I said, on Q3, we have a roadmap on nRF52 to plug the lower-end hole and the higher-end hole. We've done that actually ahead of schedule, now we have a full lineup of nRF52 Series component.
We did the first production release of Bluetooth 5 on Bluetooth 5 software for nRF52. We have customers today starting to certify, and they will manufacture Bluetooth 5 designs using our chips in second half. We remain on track with nRF91 Series cellular IoT testing and development. Summary on the outlook, we expect continued strong Bluetooth market. Revenue growth, as I said, as a 2017 as a whole, based on the current guidance, we are seeing +14% to +19%. Soft proprietary due to shift to nRF51 and nRF52, and we are really excited about entering the cellular IoT market.
Medium term, longer term outlook, we are a key player in high growth markets, Bluetooth Low Energy, with a CAGR of 30%-45%, and then low-power cellular IoT with a CAGR of more than 100% and significantly higher ASP potential. We have a leading position in Bluetooth Low Energy and proprietary 2.4 GHz. We have a large and diversified customer base and a fine-tuned broad market engagement model, which we believe is going to help us a lot in cellular IoT, and we have a very strong product road map that we are going to continue to deliver on. There will be some changes in reporting moving forward.
We're going to stop doing the mid-quarter update, aligning with the rest of the semiconductor industry, and we will stop breaking down and showing you the cake diagram on the top 10 customers, and this is simply to protect customer confidentiality moving forward. You will only see the rest, and you will see the top 10 share. That's it, and I think we'll go over to Q&A.
Thank you.
Hi, Håkon Løseth for Carnegie. Could you give some more color on the building and retail design win, which seems to grow almost $8 million in the quarter? Was that one client, and is that a sort of the binary opportunities which should be excluded from the second half guidance?
I think we have one particular segment, with more among customers, but maybe you can give, give some more flavor, Thomas.
So the question is whether it's, it's sort of a, a, what would you see driving The question whether the, the growth contribution in Q3, Q2 is like a binary thing? Is that the question?
The building and retail design win-
Yeah.
The growth, was that one design win?
No. As I said, in the outlook, there is a handful of non-consumer customers driving the growth this quarter, and we expect them to continue to drive grow, growth for the second half.
Okay.
They're not sort of classified as binaries. We see continuous good momentum and volume potential and growth potential on these customers.
Okay, and a question on the backlog. Is that entirely for this year? When you say balanced distribution between Q3, Q4, is that based on the same sort of seasonality between the two?
Yeah. Obviously, when I say, okay, seasonality is going to be back to more normal, that means that it's more heavy on, on, on Q3 than, than, than Q4. I can't sort of comment how, exactly how long it is, but it's a, it's a good balance.
It's mainly, 2017. We can say that.
Very easy.
Yeah. Yeah.
Axel, ABG. First of all, congrats on a good quarter. I have a couple of questions. Firstly, on the gross margin. The gross margin guidance, 46%-48%, you say that it's set, so you account for fluctuation in customer and product mix. Is that fluctuations on the downside or fluctuations on the upside, downside, so the base rate is 47%, and you have some room on the upside and downside?
Go-
We made it into, sort of a larger step. It's a 2% point, and it reflects basically it will be more clear.
Yeah. Okay. You say that you remain on your target for 50% for 2018, and that's basically driven by some cost reductions and some volume ramp-up on the nRF52. You also say that you have growth in the nRF51 chip. The bridge there seems sort of aggressive towards the 2018 goal of 50%. Is that a goal for the whole year, or is that a target to be reached sometime in 2018?
We have a main target for margin to be around 50%. If you look at the things that determine whether we are getting 50 or 48, is basically the mix of the component. What we said is that the backlog now is filled up with a lot of 52 designs.
Okay.
Still, we have a healthy backlog on nRF51 and continue to win designs on the nRF51. It's actually the volume of each of these applications are going to determine the final margin.
Okay, the target for 2018 as a whole is 50%?
The target is to reach 50%.
Okay. Okay.
Yeah.
One question on the Bluetooth Low Energy growth, because you say that it is impacted by the shift from proprietary to Bluetooth, can you quantify how much of impact that had in, in, in this quarter? The Bluetooth growth, if you, if you strip out the shift from proprietary to Bluetooth.
We haven't done an exact calculation, you see, we went down a bit on proprietary this quarter compared to last quarter. It's also seasonality within the customers. It's not only that it changes to Bluetooth Low Energy.
Uh.
It's very difficult to have an exact number on this.
Mm.
What Thomas described is this general trend that we're going to see more Bluetooth Low Energy in the same segment.
Okay, thank you.
Thanks, Christoffer from DNB Markets. Just a few quick questions. You mentioned growth contribution from your first new 10 million plus a year customer. Could you give us some more details on that, please?
No, I can't give you any more color than that, some of the growth contribution is coming from a customer that is today close to, or has the potential to be 10 million units per year, like we talked about on Q3.
No indication in terms of application area or anything like that?
Well, I think it's a good guess, and, and I sai d specifically, it's non-consumer.
Okay, excellent. Thank you. Then also following up on Axel's question on gross margins, if we look at the Q2 margin and adjust for that nRF51 write down, you'd be at about 47.5%. Now you're saying second half should be 46%-48%. You sort of specify that that's due to product and customer mixes. Could you just give us a sort of a quick breakdown of where gross margins should be expected for the relative chip series and, and, and sort of what kind of volumes we should sort of see before customers gain, specifically, call it lower gross margin than the mean?
No, we are not giving out our strategy towards pricing, unfortunately. What we try to do, and what's normal in semiconductor industry, that volume drives cost down. As we get higher volume customers, that will impact the gross margin. The important thing is to fill up with all these medium-sized customer in the same time as the large one is growing, and we feel that's pretty safe, that we can keep our goal of 50%. That's my comment.
On the nRF52810 chip, you mentioned that specifically, applicable to, to co-processing scenarios, but it's still a Cortex-M4. Could you sort of specify what kind of processes those applications, that would go into would typically use?
What would be on the other end when A10 is being used as a co-processor? I think we see two categories. We see A-class type of processors being used in more mobile phone class application processors. The other category is sort of higher-end M-class processors with more memory or potentially, specialized peripherals. Let's say in an industrial application, we don't have Ethernet or CAN bus on our nRF52840, right? Even though we meet the memory requirement, they may wanna put down a third-party component with more specialized, peripherals.
Our chip would either run only connectivity. The normal case we see now is that they put more functionality on our chip, typically taking advantage of low power consumption to power manage the whole system. We, we, we, we provide more value than simply connectivity for most cases.
Sorry. In terms of the LT rollout in the U.S., should we expect that you, you're speaking to both the operators that now have nationwide coverage?
I think you should expect that, because if don't, I would not be doing my job. Yes.
Sorry, and, and, and, and my last question would, would go to the mix within proprietary. I mean, Disney's MagicBand, the new version has, has ramped quite, quite nicely. It's probably running at about 10 million units a year. Are you sort of seeing growth in any other pockets within your proprietary business? How... Could you give us any flavor on that, please?
I don't have a good flavor on that for the moment. We'll think about-
I think basically, proprietary solution from Nordic is very attractive.
Mm.
if the customer want to go for a proprietary solution. What we see is that Bluetooth is gaining more and more attention, even as diversified applications. We don't spend as much time on proprietary as we done before.
That said, keep in mind that sometimes our nRF51 and nRF52 Series components are being used in proprietary applications. Due to how we report that, that, that will be Bluetooth revenue, right? It's impossible for us to track whether a nRF51 or nRF52 is used in proprietary. Like I said, proprietary has been robust, and it's partly thanks to some of the diversification. We think it's gonna soften up because of the PC peripheral space, which is significant on proprietary. We have a few things, other things that helps and, and where proprietary is good enough and are actually attractive and ideal for the applications.
Again, going back t o LTE-M, you're going to market second half of this year. We still don't have any sort of product specifications in terms of what you're going to market with. When should we expect to have any more details with respect to, to what your actual offering is going to be?
I think full breakdown, full specifications, all the details will be aligned with general launch and, and, and not with the lead customer sampling. We would potentially do lead customer sampling without providing all the details to everyone. I think, you know, some more view on what we have is gonna come out when we actually do the lead customer sampling. You'll get a taste of, of something in this year.
Thank you.
André Elsen, Swedbank. Just one question for me. I think I appreciate that you are excluding the binary potential from the guidance, but I would just like to hear some color on what type of industry, what type of customers you are looking at when you are excluding the binary opportunities.
I mean, we have binary opportunities is on our table every day. This is the nature of this market. Obviously, there are binary opportunities in consumer. Consumer, you know, if you look at toys but even in on the mobile phone side and these sort of things, we talked about chargers in the past, these things are definitely sort of things that we exclude. You know, it could happen, but something we have included could also fall out, right? That's, that's why we sort of keep it out there. But we also have some, some nice binary opportunities where we are working on, which is non-consumer.