Earnings Call: Q1 2019

Apr 30, 2019

Ladies and gentlemen, welcome to the AMS First Quarter 2019 Results Conference Call. I'm Irul, the Chorus Call operator. I'd like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by Q and A session. Conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Alexander Everker, CEO Mr. Michael Wachsar Markovich, CFO and Mr. Moritz Kainer, Head of Investor Relations. Please go ahead, gentlemen. Good morning, ladies and gentlemen. This is Moritz Gmeiner. I'm very happy to welcome you to this morning's conference call on our Q1 2019 results. As usual, Alex will lead you through the key developments in our business, and Michael will give you an overview of our financial performance. Alex? Thank you, Moritz. Good morning, ladies and gentlemen. I'm very happy to welcome you to our Q1 2019 conference call this morning. I will now discuss our business starting with some key financial figures. Michael will later take you through the financials in detail. Our first quarter revenues came in at $390,000,000 at the top end of our expectations despite a sequential decrease of 20%. Our adjusted EBIT for the Q1 was $24,000,000 or 6% of revenues, so above our expectations. As you can see, our business performed very well in the Q1 of 2019, Driven largely by our consumer business as the biggest contributor, we recorded these positive results despite a generally more subdued end market environment and in addition to the typical strong seasonality in the consumer market. As a leader in optical sensing, our portfolio spends high performance solutions for 3 d sensing, including VCSEL based illumination, high quality display management, including behind OLED, TrueColor and micro scale proximity sensing, bio and spectral sensing and other optical applications. We are a leading provider for 3 d sensing technology, shipping in high volume to consumer OEMs. Our extensive three d portfolio and system know how, including 3 d hard and software, covers all three approaches: structured light, time of flight and active stereo vision. We support both front facing and world facing 3 d systems with the current focus on 3 d illumination. As previously indicated, the market is moving along a multiyear adoption timeline for front facing as well as world facing 3 d sensing. The adoption of front facing 3 d is expanding at a good pace while world facing 3 d sensing as anticipated is seeing instances of early adoption. As a result, we are experiencing the expected positive momentum for wider adoption of 3 d sensing this year. In line with our previous comments, expected Android smartphone launches that include AMS 3 gs technology started in the Q1. The previously mentioned illumination solution for a world facing 3 d sensing system at a major Android OEM has started volume shipments in the quarter. As anticipated, we expect additional 3 d sensing enabled Android devices with 3 d with AMS 3 d illumination to be launched over the course of 2019. There's a range of AMS 3 d solutions across Android devices, which have already been launched or are expected to be launched this year. These shipping and expected solutions include several front facing 3 d illumination solutions, including iToF, the first world facing illumination solution mentioned before and the first use of active stereo vision. The successes I just mentioned are expanding our customer base for 3 d sensing that includes the world's leading smartphone OEMs. At the same time, the wins underline our position as a leading provider of 3 d sensing across technologies. Our advanced high power VCSEL portfolio is a core driver of our market success in 3 d sensing because our VCSEL technology offers advantages for 3 d illumination in all three technologies. Moreover, and in contrast to VCSEL focused vendors, we are able to offer OEMs full solutions for 3 d illumination. These can incorporate VCSEL, VCSEL arrays, VCSEL drivers, optics, model design and or manufacturing. As these solutions offer high differentiation and fully optimized design for performance, our capabilities create a meaningful competitive advantage. We therefore see ongoing customer traction in 3 d sensing, where our portfolio supports dots and pattern projection, different types of flood illumination and time of flight proximity sensing. Based on this portfolio, we are establishing a strong market position in 3 d sensing illumination. We recently launched an industry leading long distance 1D time of flight solution, which provides accurate distance measurements up to around 2.5 meters. Interest from consumer OEMs is already significant for applications such as laser detect autofocus for smartphone backside cameras. In addition, we are seeing increasing interest from other markets such as IoT. I also expect that this solution can support very interesting use cases in areas such as consumer robotics. In digital management, I'm excited about our innovative solution for proximity and light sensing behind OLED displays. Shortly after launch, this technology has already become a resounding market success. We allow OEMs to place light and proximity sensing invisibly behind the OLED display. We thus have to maximize screen to body ratio and enable bezel less phone designs. Several major smartphone platforms that were launched by different Asian OEMs in the Q1 already use our behind OLED sensors and shipment volumes are expanding. Removing bezel placed elements on the front side has become a trend in smartphones. Customer traction for behind OLED continues to be strong and expect adoption to broaden from this into next year. At the same time, we are shipping significant volumes of customized true color sensing for advanced display management. Another new area showing momentum in customer adoption is flicker detection for smartphone cameras. We have started high volume shipment of these sensing solutions to Asian OEMs this year. Positioned next to world facing picture cameras, the sensor detects figure from artificial lighting, which then can which can then be eliminated from the picture. With this technology, we enable even higher picture quality in all lighting conditions. We continue focused development efforts for new optical centric technologies and see increasing customer traction for our highly differentiated biosensing solutions. Here we offer fast, high quality measurement of blood pressure, which is a very valuable health indicator and which we complement by heart rate and the range of additional personal health parameters. Our solution provides a comprehensive set of personal health data and is able to support next generation wearables and other mobile devices. As a result, we are pursuing several OEM engagement in this area for the coming years. We also pursue regulatory certification for medical grade blood pressure measurement in the United States and expect to complete it this year. Despite this positive development in multiple areas, I also want to comment on the less favorable development. In the customer project for consumer spectral sensing solution, we have unfortunately encountered difficulties at an advanced stage. These are related to matching a highly complex emerging technology to evolving use cases envisaged by the customer and their volume implementation in a mobile application. Efforts to take these customer and technical requirements into account have resulted in unplanned days. As a consequence, we and the customer have moved beyond a desired time window for implementing the current project. We would have expected a revenue contribution from this project for this year, but given the very strong time wins we gained over the last few quarters, we do not expect a negative impact from this on the total revenue for this year. We continue to pursue the mass market readiness and implementation of spectral sensing for consumer use cases, given its application potential and attractive capabilities. In this context, we continue discussions with OEMs and are currently discussing another consumer spectral sensing opportunity at an earlier stage. Next to our optical sensing business, audio sensing showed a good performance in the Q1. We have presented our latest innovation in active noise cancellation, which enables high quality noise canceling for smaller size wireless earbuds. This is difficult to achieve due to the relatively open nature of these earbuds and their significant space and power constraints. I'm happy to share that we are already seeing strong OEM interest and volume opportunities for this solution. Let me now look at the other non consumer areas of AMS. Our automotive, industrial and medical business performed in line with expectations in the quarter. In Automotive, we are seeing a less favorable market environment as demand trends continue to be mixed across world regions. However, given our focus on safety, driver systems, autonomous driving, position sensing and chassis control, we cover a range of applications, Tier 1 suppliers, OEMs and market segments. Significant R and D investment for the reported major 3 d LiDAR program continued this year, supporting advanced solid state LiDAR architectures. Here, we provide a high power VCSEL illumination system for a large scale deployment. Our VCSEL illumination capabilities for LIDAR applications are attracting strong interest from a number of major automotive players. As a result, we are actively pursued several LIDAR engagements in different geographies. We also note increased traction for our VCSEL technology for alternative LIDAR architectures, such as macro mechanical staining solutions and MEMS micro mirrors. For these architectures, our VCSEL can help solve systematic challenges, giving them technology advantages. New optical 2 d and 3 d sensing applications inside the vehicle are gaining momentum in the market. We are engaged in multiple design activities in this field, which we believe can offer leverage opportunities for our portfolio. In addition, we see potential to create global shutter image sensors in upcoming automotive optical sensing. I'm also glad to point out the attractive growth market for automotive projecting lighting. In this new area, we are expanding our market position in safety and comfort applications such as light carpets outside the vehicle. Here, we offer advanced illumination models, which leverage our VCSEL optics and manufacturing expertise. Our industrial business showed an attractive performance in the quarter, reflecting a limited impact from a less favorable demand situation in the industrial market. As a leader in industrial sensing, we serve a wide range of applications in industrial and factory automation, HABA, industrial imaging and related areas. This extensive portfolio and application base is providing supportive to our business in the current environment. We hold a leading position in high performance global shutter solutions for industrial imaging. This is an expanding market and offers attractive growth opportunities for us going forward. Our medical business recorded another solid quarter focused on medical imaging for computed tomography and digital x-ray as well as micro camera endoscopy. Our market penetration in Asia is expanding further as we added another program win at the medical imaging OEM in Asia. We are the leader in micro cameras for our next generation medical endoscopy, and we see continued growth in the market for disposable endoscopes. Implementing last year's strategic decision to deemphasize our environmental sensing activities, we recently announced the creation of a joint venture with Wise Road Capital for our environmental, flow and pressure sensing. We will transfer IP, sensor products, relevant customers and employees to the joint venture and expect the transaction to conclude in early fall. Looking at our operations, we have implemented a range of cost improvement measures in our Singapore operations since the beginning of this year. We have started to recognize positive effects from these efforts and see ongoing benefits from better cost efficiency in our Singapore manufacturing. These include slower staffing levels together with overall improvement in the utilization. Regarding our VCSEL needs, the attractive volumes we anticipate for this year will be fully supported by our outsource supply chain as expected. Our internal VCSEL production line for new differentiated designs is on track for completion and its planned ramp for around year end. We combine scalable, outsourced and internal VCSEL capacity, which puts us into a very nice position for expected volume growth in the future. Our capital expenditures are developing fully in line with expectations, and we are on course for a significantly lower CapEx, which we expect for full year 2019 compared to 2018. Let me now come to the outlook for our business. For the Q2 2019, we expect a positive development of our business as the consumer market environment appears to have stabilized and the smartphone demand is expected to show lower seasonal impacts. In addition, we have started to ramp design wins of the recent months and quarters, which drive broadening engagement across our Android customer base. Our other end markets generally reflects a less favorable macroeconomic environment and a higher level of cautionness, but we expect them to continue their positive contribution. Based on available information, we expect 2nd quarter revenues of $390,000,000 to $430,000,000 which translates into a sequential growth at the midpoint and a very strong year on year increase of 62%. The adjusted operating margin for the Q2 is anticipated to increase strongly to around 10%, benefiting from further improvements we expect in our manufacturing operations. Let me now hand over to Michael for a detailed look at our financial results. Thank you, Alex. Good morning, ladies and gentlemen. As usual, it's my pleasure to give you an overview of our IFRS and adjusted numbers for the Q1 2019. Let me start with our P and L and top line development. As Alex already mentioned, our Q1 group revenues were 390 point $2,000,000 just above the top end of our previous guidance. We're happy about this performance, which we achieved despite a more subdued market environment and characteristic Q1 consumer seasonality. Q1 revenues decreased 7% compared to last year and 20% sequentially from the Q4 2018. Our adjusted gross margin, excluding acquisition related and share based compensation costs, was at 32% compared to 36% in Q1 last year. This gross margin development reflects certain product mix effects and relative revenue contributions given the more difficult environment across a number of end markets. Our IFRS reported gross margin was 29% compared to 33% in Q1 last year. Our R and D spending was $79,000,000 in the Q1 2019, in line with our plans for the significant increase from $56,800,000 in Q1 last year. In relative terms, we spent 20 percent of revenues on R and D in the quarter. Our continued strong R and D spending supports a range of platform development and large product opportunities, including our automotive, lidar and consumer optical sensing activities. While there are always quarter to quarter movements in R and D spending, we expect lower levels of spending relative to revenues going forward as we want to get back to a level of below 15% of revenues for R and D. Further down in our P and L, SG and A costs were $44,300,000 compared to $40,400,000 in the Q1 last year. In relative terms, we spent 11% of revenues on SG and A in the quarter. Here, we also expect an improvement relative to revenues going forward. As you know of our SG and A spending, we work towards a level of well below 10% of revenues on a full year basis. Our other operating income of $4,100,000 for the quarter compared to $3,700,000 in Q1 last year resulted for the most part from R and D support grounds from Austrian and European R and D programs, which are tied to dedicated R and D spending for these programs. Given these developments, our adjusted operating result or EBIT, excluding acquisition related and share based compensation costs for the Q1 was $23,500,000 or 6% of revenues, which was nicely above our previous guidance. It could decrease though from $71,400,000 or 17% of revenues in Q1 last year. IFRS reported results from operations or EBIT for the Q1 was negative $4,500,000 or minus 1 percent of revenues, down from positive $450,000,000 in the same period 2018. Our financial results came in at negative $2,800,000 compared to positive $29,700,000 in Q1 'eighteen, which was heavily impacted by a positive accounting effect from last year's revised earn out structure in conjunction with the Heptagon acquisition. The financial result also reflects non cash valuation adjustments for foreign currency balance sheet items and interest expenses. Consequently, adjusted net results for the quarter came in at minus $9,500,000 compared to plus $92,300,000 in the same period in 2018. Last year's result was very positively impacted by accounting adjustments due to valuation effects of the issued U. S. Dollar convertible bond. Adjusted basic and diluted earnings per share were CHF minus CHF0.12 and minus CHF0.12 compared to CHF1.20 and CHF1.12 in Q1 2018 or US dollar minus 12 0.12 dollars sorry, compared to US1.15 dollars and US1.08 dollars respectively for the Q1 'eighteen. Our total backlog on March 31, 2019, stood at $288,400,000 compared to $331,400,000 we showed at the end of last year and $319,600,000 on March 31, 2018. In this context, intra quarter business has come to play a more meaningful role for our total business, especially on the consumer side. Now I would like to give you some additional figures from the balance sheet and the cash flow statement to complete the picture. Our cash and cash equivalents stood at comfortable $647,000,000 at the end of the quarter compared to $710,000,000 at the end of the Q4 last year. This change mainly results from the planned repayment of certain debt facilities and the acquisition of treasury shares. Our trade receivables stood at $126,000,000 down from $137,000,000 at the end of the 4th quarter. Our VSO ratio was favorable 55 days, down from 44 days in the last quarter and significantly down from 55 days in Q1 last year. I'm very happy about this positive development where, as previously anticipated, we are seeing a solid decrease in our diesel. Inventories were also lower at $325,000,000 compared to $352,000,000 at the end of the 4th quarter, while the finished goods portion of our inventory remained at around 25 percent of total inventory. On the liability side, we have a current debt position of $250,000,000 while our long term debt stood at $1801,000,000 at the end of March. Our net debt position was $1404,000,000 at the end of Q1. Our long term debt was generally taken on to bolster liquidity, support the major CapEx cycle, which has now been completed and to create flexibility. Apart from the 2 issued convertible bonds, the debt mainly consists of promissory notes and unsecured bank loans of a long term nature. As announced, we have initiated a buyback program for a portion of our outstanding convertible bonds in March. As of now, we have successfully repurchased $19,000,000 in nominal value at market prices, predominantly of the U. S. Dollar 2022 maturity bond. Based on this, we continue to be open for further repurchase of our convertible bonds. In case we should have funds remaining from the total amount earmarked for the convertible bond buyback, we plan to use this for other forms of debt reduction this year. Our operating cash flow in the Q1 showed a very healthy increase to $96,100,000 which was well above expectations, up from $52,000,000 in the same quarter last year. This positive development was mainly driven by working capital management and changes in inventories as well as higher depreciation from CapEx spending and mandatory IFRS rule changes. We expect to continue to see strong cash flow generation over the course of 2019, driving a good positive free cash flow for us this year. Against this anticipated backdrop and based on current expectations, I expect a strong improvement of our net debt to EBITDA ratio by year end 2019 to a level I can feel highly comfortable with. Our CapEx in the Q1 was $88,000,000 45% lower than last year's spending in Q1 of $161,000,000 As mentioned before, we expect full year CapEx for 2019 to be significantly lower than in 2018, but the spending is somewhat front loaded this year. With this in mind, I expect a quarter to quarter decrease in CapEx for the remainder of the year. And with that, I would like to thank you for your attention and would like to open the floor for questions. The first question from the phone comes from Andrew Gardiner from Barclays. Please go ahead. Good morning, gentlemen. Thanks for taking the question. I just have a couple on the second quarter outlook, if I could. Firstly, on the top line, you're clearly a bit more optimistic than we had anticipated and I didn't post your anticipating earlier in the year, talking about sales up sequentially now back in normal seasonality. And you've highlighted that some of that is due to sort of the stabilization, sort of improvement in the core of the business as well as the new customer ramps. Can you give us a sense as to sort of the magnitudes of those? How much is stronger business in sort of the existing sort of core consumer business versus the new Android ramps? And then have a big one on the margin front afterwards? Yes. Andrew, Alex here. Thank you for the question. Yes, as mentioned in the call, it's a combination of we see a more stabilized consumer demand and smartphone demand. But there is a strong or meaningful indication of all the design wins we indicated last quarters to you and which are materializing in revenue in the Q1 and then certainly increasingly in the Q2 and to the rest of the year. So we feel very comfortable with our penetration in the Android market with our light solutions. Okay. I mean and it sort of it feels like tens of millions multiple tens of millions a quarter from those Android brands. Is that a reasonable starting point? It's a meaningful contribution. Okay. And then perhaps one for Michael. Just on the margin guidance for 2Q. You've highlighted the step up there from 6% in the Q1 to 10%. Given what you're describing around OpEx trends on an absolute basis, is more of that sequential growth driven by gross margin? Yes. Hi, Andrew, it's Michael. Yes, clearly, we have our OpEx well under control, I can say. And clearly, we expect further improvement in our operations. Our next question from the phone comes from Sebastian Stavovic, Kepler Cheuvreux. Please go ahead. Yes, hello. Thanks for taking my question. You mentioned in the prepared remarks that your integration rates has improved in Singapore in Q1. Q1, please provide a little bit more color on the pace of improvement from, let's say, Q4 to Q1? Or tell us a little bit where was the type of building in the Q1 in Singapore? And also looking at the competitive landscape in the wholesale market because we had couple of big M and A effect that's been involving momentum and 2.6. Have you seen any change in the market dynamics in the VCSEL market over the last few weeks or months? Thank you. Yes. This is Michael. Happy to take your first question. Yes, clearly, we saw a productivity improvement mainly in our Singapore operations. Some cost down measurements obviously were taken. We had strong yields. So overall, very solid performance, I can say. And we'll take it from there and we'll improve it further. Yes. And to the question related to VCSEL, yes, we certainly see changes in the market, but clearly to our favor. When you look at the wins we do in the Android space, when you look at wins we announced in the automotive space, it's across all market segments. We are winning with all this business, which is a proof point of investing in the right technology. The next question from the phone comes from Robert Sanders, Deutsche Bank. My first question was just to get an update on how you're thinking about your content in for the upcoming product cycle at your largest customer in smartphone. I remember last year, 12 months ago, you weren't able to prebuild Singapore owing to the spec release not happening until July. So is that less of an issue in Q2? So are you able to start loading up your facility earlier? And I have a follow-up. Yes, Rob, Alex here. Thank you for the question. So as you know, we cannot comment on specific customers. It's not possible. But what I can see is that we feel very comfortable with the view of a strong second half of this year for all customers, yes. Got it. And VCSEL, coming following on VCSEL, how do you think about your design win share in VCSEL at the moment, both in smartphone and in automotive? And could you just talk a bit about the key attributes that you think are driving that success, whether it's small footprint, lowest power or something else? Yes, absolutely. So I can tell you, we are very excited about the design win rate we have in the Android space. We announced a few design wins there. We are even more impressed about the automotive business, which is a new business for VCSEL for us. And the reason is exactly as we said, why we're winning is in the Android space, not only because of technology that we have, the high power, high efficiency, but also the knowledge of the system architecture of all these devices, of all the solutions, which a VCSEL only vendor cannot have. That's why this is the strength we have with the complete value chain from the optics, from the packaging, from mixer, wafer level optics. We have the complete solution. That's why we are very successful in end of space. And then in automotive, on top of that, this high power capability we have with the acquisition of Princeton in the U. S, help us tremendously for long range lidar business. And then, of course, the automotive experience and automotive quantification of our manufacturing sites brings us to a very, very strong supplier for automotive customers. So we are very excited about this. Thank you. We will take our next question, which comes from the line of Sandeep Deshpande with JPMorgan. Please go ahead. Yes, hi. Thanks for letting me on. I was just wondering whether you've talked about various wins. I mean, do you have any have you got any road map from your customers in terms of the ramp up of those wins in Android in particular? And would you say that given that you're seeing a big improvement into the second quarter, that this sequential improvement from the Android app continues into the 3rd and the 4th quarters of the year based on the pipeline that you see at the moment? I have one follow-up. Yes. Thanks for the question. Yes, absolutely, we have a roadmap from our customers. We work with our customer base together to create these roadmaps. We have visibility on them. Of course, when we run the process together, there is exchange of information. And we do see increasing business and more design wins in the course of the year and in the course of quarter to quarter. So we are very positive about this. And we are consequently executing our strategy to expand our 3 d sensing and flight solutions in all mobile phone OEMs. I mean, one question which comes up on the 3 d sensing is that you have a bunch of design wins in the Android camp, but not all the phones will be successful. I mean, when you're talking about this ramping in the Q2, are these on the back of new phones or those phones that you're already seeing having been successful? I think you gave the answer to the question because we cannot anticipate every form will be successful, but this is a matter of, especially with our customer base. We our strategy is to be as broad as possible that if one platform is less successful, someone else will pick up the market share. And as long as we have similar market shares across the customer base, well, one platform will lose a bit and the other wins. The next question from the phone comes from David O'Connor with Exane BNP Paribas. Please go ahead. Great. Good morning. Thanks for taking my question. 1 or 2 from my side. Maybe firstly, Alex, the world facing 3 d sensing system win that you talked about in the release, Can you just talk a bit about this win and the primary application? Is this for help us understand, is this for camera assist or is this to actually capture images in 3 d? And that's my first question. And also related to that maybe, how should we think about the content of these 3 d sensing wins relative to, for instance, what you shipped today in structured light, for instance, just to give us to make sure we have the baseline there correct? And then lastly, one last question on the on structured light. How should we think about the ASPs as we go into the back half of this year? Can we expect the reset or more classic ASP erosion? David, thanks for the question. For world facing, one application is certainly, as you mentioned, camera assistant. But there might be more in the future, but it's certainly one of the leading ones. About the content, it depends a little bit on the project, but it can be very similar content wise. And the third one, on pricing, we cannot comment on that specifically. The next question from the phone comes from Jason Mulholland with UBS. Please go ahead. Hi. Thanks very much. Just following on a little bit from the last question, but it's something you've been investing in quite a lot for the last year. It's been on the software side and helping to make sure the ecosystem is there to really help make use of 3 d sensing. So I wonder if you could just give us an update on how you feel about the ecosystem readiness, I guess, particularly in the Android camp at this stage for really being able to use 3 d sensing and deploy applications? And then secondly, I know you're kind of trying not to comment too much on this, but it would be really helpful if you could just give us some steer on how you feel about the kind of half on half increase this year. And given all of the commentary you're giving on ramps versus what will be going on at your largest customer, some color there would be really helpful. And then just finally one clarification for Michael. I think on the last call, you had pointed to a run rate of somewhere around €380,000,000 or at least that was my impression for R and D this year. Is that now running a little higher? And similar question on a CapEx basis, obviously, coming down each quarter through the rest year. But if you can just help us understand what you think that might be for the full year, it would be really helpful just to keep us on the right line. David, thank you for the question. I will take the first two. The question about software, I can tell you that's increasingly more important. This was also helpful for multiple design wins we did within Asia. And this is a combination of our own software activities, our initiation of 7 Sensing Software company and also with partnership. We have multiple partnerships in the industry. For example, the partnership we have with Face plus plus and Qualcomm to drive the Android business further. So the software is increasingly important, but I can tell you not only for the Android, it's even more important for the nonconsumer business. And automotive is a key area for us for future growth. And there, the software capabilities for new technology, which are totally new for the automotive industry, is extremely important and very, very helpful. On your question on the second half, as I mentioned in the call, we see a very strong increase in the second half compared to first half of this year. We feel very comfortable there, and that's why we're seeing it very, very positively. On a similar order, if I mentioned to last year or We see it very positively. Yes. And David, it's Michael. Hey, good morning. Thank you for R and D and CapEx question. As I mentioned and as you have obviously seen, there is some lumpiness in our R and D numbers based on where we are in the project phase. But clearly, we see that obviously with the revenue increase quarter to quarter, relatively lower R and D spending. In absolute terms, as I mentioned it earlier, roughly $280,000,000 maybe $300,000,000 is what we expect for the year. And in CapEx, I also mentioned it, we had a we have kind of a front loaded year this year, which is the outcome of what we have invested in the last 2 years. So there's kind of a lagging cash out for it. But clearly, with this in mind, we expect a quarter to quarter decrease in CapEx for the remainder of the year into that range that we indicated before. Okay. Thanks very much. Our next question from the phone comes from Jonathan Mannen with Liberum. Please go ahead, sir. Yes. Hi. Good morning. Just going back to the Android sort of momentum that you're seeing in the second half. Can you give us a feel for in terms of just the number of models? And I completely understand that the number of models will not equate volume because of different models in volume. But is it like you have around 5 models launching in the first half and that can rise to say 10 models in the second half? Is that the sort of magnitude of acceleration within the Android space that you're seeing or is it less that? And then just going back to your point about spectral sensing sort of being pushed out right now. I was just wondering in terms of new revenue opportunities outside of your existing area, you have biosensing, automotive and still spectral sensing. Can you give us a time scale for when you would see the first revenues now on each of these? Is that all three of them, is it a 2020 timescale or will it be into 2021? Yes. Thanks for the question. So on the Android topic, as we indicated, we have several OEMs and several modules and design wins. And you can expect that in the second half, you will see additional models contributing to our growth in the second half. So that's very positive development we are seeing there. On the spectral sensing, we mentioned the one design win, which didn't work out because of complexity. But we see we have discussions with multiple other OEMs, we will see opportunities. I would say this is more a topic of 2021 for revenue. The biosensor, I would consider as a topic on 'twenty, 'twenty one as well. And automotive, of course, is more a topic of 'twenty one and 'twenty two. But for us, it's important that we generate new revenue growth engine for the company for the years to come. And this segment is certainly one of them. The next question from the phone comes from Jurgen Wagner with MainFirst Bank. Please go ahead, sir. Yes, good morning. Thank you for letting me on. I have a follow-up on R and D. You gave us the number for the full year. What would be a number post your exit of the environmental business? And would that be enough to meet 15% as you mentioned at the beginning? And you discussed the spectral sensing delay. Happened. Also in the past mentioned this power system ramp in the second half, is still is that still on track? And what magnitude will you be looking at for the second half? Yes. The 15% of revenue is a target. And obviously, as I said, there's some lumpiness in the business. And depending on revenue, obviously, it's a target for full year. That's where we want to end up with. And on the power question, yes, the power business, we indicated, is on track and it's ramping. And it's continuing to ramp into the second half. And maybe a third question, you postponed the listing in Hong Kong. At what point would you reconsider that option? Thanks for the question. It's Moritz. I think we will look at that as we go through the second half of the year from today's point of view. The next question from the phone comes from Achal Sultania with Credit Suisse. Please go ahead. Hi, good morning everyone. Just trying to understand the wins that you're having in the Android camp. I guess, we've seen a number of phones, which have come which have been launched, which have the front end solution. So can you help us understand what exactly are you winning in these Android projects? The VCSEL? Is it the whole flood illuminated solution? Is it the TOF solution integrated along with that? Just trying to understand what exactly are you winning and how that thing evolves going into the second half? Does it change in terms of your content win? Does it go up as we go into second half? Thanks for the question. Yes, the majority of the wins is the elimination system within the top solution. This is where we focus on and this certainly includes the VCSEL. That's why it's so crucial for us to have the VCSEL capabilities. And as I mentioned before, we expect more models to be launched within this year with our solutions insights. And it's certainly interesting to look at those phones. Alex, just a clarification. So I guess you're doing most of the illumination work. So clearly, ToF sensor is coming from other suppliers. So are you indifferent to who the ToF supplier is? Like your solution can actually work or integrate well with any of the ToF solutions out there in the market? Yes, that's right. That's correct. Okay. And maybe a follow-up on the cost side, just for Michael. Can you help us understand obviously, I think the headcount in your Singapore fab has actually gone down significantly, I think, in the last 6 months. You already mentioned that cost has been ticking down. Can you help us understand the magnitude of cost cutting that has happened, either in terms of like, say, your fixed cost that has come down or the number of employees that have actually come down over the last 6 months, 12 months? Any color on that would be helpful. Yes. Unfortunately, we cannot break it out, but I guess you see it in our margin trend. And with the guidance for the Q2, it gives us somehow a hint to that. So can we expect the headcount to come down further? Or are you feel that you are already at a reasonable level going forward? You've already done enough on that side. Yes. Unfortunately, we cannot comment. But you can imagine that with, as Alex indicated, with a significantly stronger second half of the year over first half, obviously, there was also an increase production volume. Thank you very much, everybody. This concludes our question and answer session for today. We thank you very much for joining us this morning, and we look forward to speaking to you again with our Q2 results end of July. Thank you very much, and have a good day. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines.