Hi, good morning. I'm Samik Chatterjee, I cover technology hardware at JPMorgan. For the next session of the fireside chat, I have the pleasure of hosting Fabrinet. With us is Seamus Grady, CEO, and Csaba, CFO of the company. Thank you both for being here. Garo, thank you for being here as well.
Thank you.
Starting off, I mean, just talking a bit more about the revenue growth that you've seen in recent years. You've seen double-digit revenue growth for the last couple of years, and many of your customers express the outlook that they see double-digit growth for their businesses as well. When you sort of think about the current headwinds that you're facing, does that call into question sort of a double-digit growth rate for your business? Should investors really just think of this as temporary in terms of some of the headwinds, or does it have any structural sort of implications in terms of the growth rate?
Yeah. I think, the growth we've seen the last five years, we've grown at compound annual growth rate of about 14%. That's been a little bit more the last couple of years, 18%-20% the last couple of years. A lot of that growth has been fueled by increases in our automotive business, increasing market share in our optical business, but also some significant wins in the complete network system space that we've been able to secure. You know, will we maintain that level of growth? I'm not sure.
I think we generally guide one quarter at a time. The goals we set for ourselves internally are we like to grow at 2x the rate of growth of the industries we serve, and about 3x the rate of growth of the contract manufacturing industry, because we're a contract manufacturer. That would put us at, you know, if the optical industry grows at kind of mid-to-high single-digit growth rates and the contract manufacturing industry grows at low-to-mid single-digit growth rates. You know, we think, you know, certainly growing at more than the contract manufacturing industry is achievable and growing at a little bit more than the optical industry we think is achievable.
We'd be reluctant to put a specific number on it, but we're just working hard to continue to win market share and win new business. All that growth in the last five years has been organic. We haven't grown through acquisition. It's all been organic growth. We, you know, we work hard at that and making sure we have a strong pipeline of new customers and new business.
Yeah. Maybe just to sort of ask that question another way is, when... as you said, you've seen 18% growth, 20% growth recently. One of the concerns investors have is it more that those growth rates have been elevated just because of pull forward of demand from your customers? As we sort of look at the next maybe 12 to 18 months or even 12 to 2 years, as a period, is there going to be sort of a underperform or below that sort of run rate, below the, below run rate performance or in terms of growth for the next couple of years as you, as customers digest, the pull forward that they had over the last couple of years?
Yeah. I think the majority of the growth that we've been able to achieve has been from new wins that we've had. We won a significant piece of business from Infinera a few years ago, I think they're presenting here, where they acquired Coriant and we transferred all of the Coriant business from Berlin to Bangkok. We then won a complete network system piece of business from Cisco, which we took away from one of our competitors a couple of years ago. More recently, we won complete network system business from DZS. The majority of the growth has come from new business wins. That said, you know, we are hearing about some inventory correction that's going on, which of course would imply there was inventory build going on in the last while.
You know, how long will the inventory correction last? We're not sure. We believe based on what we're hearing from our customers that it's probably two quarters and we'd be, you know, this would be the first of those two quarters. At which point that inventory digestion period should be behind us. You know, the other question is, okay, is it inventory correction or is there actually softening in demand? You know, the honest answer is we don't know. We get 13 weeks visibility typically from our customers. They don't give us great visibility beyond that. Certainly the, we call it the mood music we're hearing from the customers is that it's an inventory correction as opposed to a, you know, some large scale reduction in demand.
Demand, underlying demand seems to be quite strong.
Staying on the topic of growth, and maybe you talked about sort of what your aspirations are in terms of growth, but how do you generally tie that into long-term planning for even capacity? Particularly now that you're going after a lot more systems business, does that change sort of the nature of opportunities that you're going after just as a function of trying to prioritize that systems opportunity a lot more? What does that addressable market look like at your customers that you can go after?
Yeah. We think it expands the addressable market. You know, historically, we have not been that strong in the system space. We have been in the last two years, but prior to that we were more of an optical component-focused contract manufacturer. We think it presents a number of opportunities for us. You know, we're typically, at any point in time, we're pursuing, I would say right now, you know, believe it or not, 15 to 20 companies for system, complete network system business. You know, in our, in our business, the sales cycles are quite long. It's mostly about relationships and convincing the customer, you know, that they should have us manufacture their systems. It takes time, we have to have several of these opportunities that we're working on at any point in time.
The cadence we've been on, we've managed to win one of these about every 18 months. That's probably not a good predictor of what would happen in the future, but that's kind of the cadence. That's probably as fast as we could absorb. Maybe once a year, we could absorb one of these big wins, but once every 12 to 18 months seems to be the cadence we're on. In terms of capacity, you know, most of our manufacturing is in Thailand. We have a number of new product introduction facilities or on-ramp facilities, as we call them, in high technology locations. We have one in Silicon Valley. We call it Fabrinet West.
We have another one in Israel, Fabrinet Israel, where we try to win new products from customers, ramp them until the yield is stable and the volume is about to take off, and then we transfer the manufacturing to Thailand. That has worked very well for us. Most of our capacity is in Thailand, and we have a lot of capacity there. We just recently opened in October, the newest building. It's a 1 million sq ft facility with capacity for about $1 billion of revenue. We think we'll be a few years getting to the point where that's, where that's full.
The approach we take, because we own a lot of land up there, once we get to 70% utilization in that building, we'll then pull the trigger on the next building, which will also be another 1 million sq ft facility. That takes about 18 months to build, and it's about $50 million of CapEx. That's the approach we take. You know, we don't have to worry about having hundreds of factories all over the world. We have very compact manufacturing footprint, which makes it easier to manage and easier to kind of predict what we'll be doing in the future. Like I say, once we get to 70% utilization in a few years from now in building 9, we'll pull the trigger on the next building.
Okay, got it. Going back to inventory digestion.
Mm-hmm.
I'm sure you're getting these questions the most today as well in the meetings. You said you have visibility from your customers of a 13-week window right now. For your internal planning purposes, how are you sort of putting the guardrails around it of, like, how do you manage your business step going or already, like, stepping into the next quarter or thinking about the next quarter? How are you really putting guardrails about how sort of what the magnitude of that change can be on the revenue side, and how do you manage your cost structure then?
Yes, a good question. Our cost structure is very lean. We generally operate at just the financial model we have, our gross margin is usually between kinda 12.5%-13%. Our OpEx is about 2%, a little bit less. Our operating margin's about 11%. We run at about 7% fixed cost, 7% of revenues. Our fixed cost base is extremely low. What that means in practice is, you know, because we're, we have a very strong balance sheet, you know, we're able to really, you know, plan for any project that comes our way. We can fund it and we can grow. We can really capitalize on the upside when there's either a gradual upside or even a sudden upside.
If there's some big, you know, explosion in a particular part of the market, we're generally very good at capturing that revenue. We're able to capitalize on the upside, but because our fixed costs, we maintain very low fixed cost, we're able to respond very quickly if there's a downturn. You know, whether the current situation is a temporary inventory digestion or maybe the start of something bigger, we're ready to respond. We, you know, we're very good at moving quickly to preserve the margin effectively and to reduce our costs. The guardrails, if you like, are kind of already built into our business model because of the strong balance sheet to make sure we capture the upside, but also the low fixed cost base to make sure we guard against any downside that comes along.
Okay. Moving to just telecom, that's when, that's an area of the business where we've heard more, from some of your customers about the inventory digestion. When you sort of look at the headwinds in that business, is it focused on certain technologies or components in particular? Is it more focused on the inventory headwind on the legacy products versus the newer products? How would you characterize where the pockets of weakness are the greatest?
Well, I think first of all, I think you're right. I think it's in telecom more so than datacom. We've certainly seen, you know, continued strength in datacom. We have seen some inventory correction on the telecom side. You know, some of our customers have talked about that, our direct customers and also our indirect customers, and we're not immune from that. I mean, you know, some of our customers who've already announced, maybe they've talked about the revenue headwind to them because of inventory corrections. Again, we're their supplier, so we're not immune from that. We haven't actually specifically called out the amount of the headwind due to these inventory corrections, but we're not immune.
We've been able to largely offset those inventory correction headwinds with growth in other parts of the business. You know, I think it's, it's on the telecom side, it's on the network system side, and then that flows through again to our customers and through to our business. I think the specific products in question, I'd probably leave it to others to, you know, to talk about which particular products are causing the headwinds.
Okay. I know your customers are really sort of driving your 13-week window and what you've sort of really built capacity towards or planned for growth in the telecom business. As you outlined, you have a certain view of what the optical industry has historically done. When you look at the drivers for the optical industry, particularly related to the telecom products.
Mm-hmm.
Do you see some of those drivers continuing? Like, when you evaluate what the optical industry probably looks in terms of growth rate for the next three to five years, what are those essential drivers why telecom for the optical industry remains a big growth driver?
I think we really look to the industry kind of analysts and the industry experts, and we look to their reports and data that's out there. That's typically what we base our plans on. You know, the growth drivers, of course, everyone knows, you know, there's never enough speed, there's never enough bandwidth. I think the underlying growth drivers for our customers' business and hence for our business, they remain intact even if they're short-term headwinds. They remain intact, so I think those drivers are very strong. We look to, again, the kind of industry reports that everyone looks at the same reports, I think, as we look at.
Right
to shape our thought process.
Okay. Got it. Let's move to Datacom. Your revenue trend there, which has been sort of moving up sequentially in the last few quarters, that's been counter to the inventory digestion that we've heard more broadly from cloud customers in recent quarters. Maybe just help us think through what's driving the sort of almost like contrary trend to what other suppliers are seeing on the Datacom side.
I think there's a couple of things. I mean, I would, I would put it under the general banner of new products is probably the short answer. The longer version is, you know, the hyperscale companies who are the, if you like, the customers of our customers, Some of them have talked about inventory digestion and whatnot, but they don't really move in unison. I think in general, the trend is from, you know, more bandwidth, more speed, and we're the beneficiary of that. As they move from, let's say, inside the data center from 100G transceivers to 400G transceivers inside the data center, that's certainly a driver of growth for us. Maybe the more significant one in recent times has been artificial intelligence data center growth.
You know, for a while I suppose we were wondering how... what would artificial intelligence mean for us? I think it's becoming maybe clearer now that, you know, what it means for us is more significant growth in very short-range, very high speed, low latency, low power interconnects, both rack to rack but also inside the rack. We've, we've seen some nice growth on a particular product with a customer of ours. It's an 800G non-silicon photonics transceiver that's being used in data center AI data center applications by one of our customers who's installing it as we speak.
That has been a really good growth driver for us and has really, if you like, offset maybe some of the softness we've seen in the rest of the business.
Okay. Got it. Let's talk about 800G then. How big of an opportunity do you think it can be? Who are your primary customers right now? Do you see that customer list expanding beyond sort of one or two really more sort of concentrated customers? Do you see this more being, okay, this is going to be sort of the group of four or five that are going to be really the customers and we scale with them. How do you see that evolving?
Yeah. I think it will expand and evolve over time. I mean, right now we're fortunate to have one particular customer who's, you know, who's doing very well in that space. You know, we haven't named them as a customer. They haven't named us, so we're quite cautious about naming our customers unless they name us first or unless, of course, if they become a 10% customer, we'll name them. But that, you know, that business, it's almost like a new category for us because it's a new application. This interconnect, this very short-range interconnect inside the data centers, it's a completely new application. I think it has a lot of... It's only in its infancy actually.
This is a product that didn't exist a year ago. We won the product initially in our Israel, NPI center, so it's a kind of a testament to our strategy of having, you know, on-ramp NPI centers close to customers. Then we transferred it couple of quarters ago to Bangkok. Initially, when we introduced the product, you know, 'cause again, customers are quite secretive, we weren't even clear what the application was when we initially introduced the product. It only became clear as we ramped it. I think that category, if you like, of AI-specific, data center interconnect products, I think it's only in its infancy. It's only starting.
We think there are other, certainly other companies we're talking with and working with to introduce other products that do a similar job inside the data centers.
I'm just curious on that front because we've seen different companies talk about sort of the AI products that they're doing. How do you get to the sort of endpoint of realizing it's a AI use case? Is it based on the speed? Is it based on some other requirements that these products have? Like, because different companies seem to be using different classifications of what they end up calling as AI sort of use case, and some might be just doing it based on speed, et cetera. How are you doing that? When you're sort of doing that with this particular customer, are you seeing then more customers come in with similar requirements?
We are. This particular product, the... We realized it was an AI application when the customer told us. I mean, we had an inkling, I suppose, at the start. Then when the customer told us what the application was, you know, it became clear to us. You know, yeah, we are seeing other customers looking to introduce products to, if you like, compete with that particular product. And we think, you know, because of our reputation, thankfully most of those companies will come to us for these complex products, to make these complex products for them. And we're, you know, happy to produce for everybody. Yeah, it's... It...
There are differences in how the product goes together and what the product does that, you know, make it, if you like, unique to AI applications, especially the very short reach, short range, again, low latency, low power, high speed application. An 800G seems to be the order of the day for these data center applications.
Okay. I mean, we've asked the other companies this, as part of more of the upfront questions, but maybe this is the right time to ask you just in terms of AI broadly. When you think about the implications for your business, you outlined sort of the new products that you're doing on that front. How do you characterize the opportunity? Is it more of a strong investment cycle and a volume opportunity for you? Or as you sort of see these products being very early stage at this point, you're probably one of the few contract manufacturers in the world that can do them.
Yeah.
Is it more of a content opportunity, a margin opportunity for you to start with, and then the volume sort of takes over later? How should we think about that?
I think we're trying to figure that out, I suppose, as we go along. Again, if you go back a year ago, we weren't even clear what the implications of AI would be for us. Now that's becoming more clear. Again, I think these unique interconnect products, they are quite specific and unique to AI. I think it's a, if you like, it's a new category of interconnect products that we'd be looking to make sure we're the leader on in terms of manufacturing those products for our customers. You know there's no. In terms of how the product goes together, it's not particularly different from a regular transceiver-type product.
You know, optics, the optics content is quite similar, and we're, again, we're very well-positioned to bring these products to volume and to a high yield quickly. I think we're a good choice. I think we are uniquely positioned as a contract manufacturer to kind of capitalize on those new applications that come along. You know, we'll be looking to make sure we capture as much as we can.
Maybe just sort of going back to some of the legacy products, what's happening on pricing related to 400G and 100G as 800G already is sort of in the market. At least a customer is using it, more customers sort of start to look at 800G as an option. What are you seeing on the pricing dynamics on 400G and 100G? Maybe a second part to that is, when you think about now going from 400G to 800G in sort of with a few of your customers, does that cycle look different from when you went from 100G to 400G?
I think so far, the 800G application for us is, if you like, a different application to the traditional transition that we see going from, let's say historically, we went from 25G to 100G. Now we're in the middle of transitioning from 100G to 400G. The 800G is, as we said, a different application. The, you know, right now we're, if you like, ramping 400G. 100G will begin to taper off. The volume will begin to decline on 100G, you know, which is normal. That's normally what happens, is the new product comes along.
Yeah.
As it ramps, you know, there's a kind of a race between price and volume. You know, as the 400G volume goes up, the price will need to come down to justify the higher volumes. You'll get that ramp of 400G. The volume will go up, the price will come down, and then the 100G, the volume will begin to taper off as time goes along. We've participated in these changeover cycles many times before, and we've, you know, we've tended to do well when they occur. I would say we're just in the early stages right now of ramping 400G.
Okay. related to 400G as the price, as the volume scale and pricing comes down, how much of an impact is that to other contract manufacturer like Fabrinet versus something that's absorbed by the OEMs themselves?
Generally, it's, you know, if, on a per unit basis, the unit price comes down. In aggregate, if you look at the overall contribution, for us, the revenue increases and the margin percentage stays about the same. Therefore, the margin contribution dollars increases as the revenue grows. You know, The product is designed by the customer. The components are specified by the customer. The kind of the levers to pull, if you like, are yield, you know, manufacturing cost, and then material cost is a big one. The material cost is typically 80% of the total cost is material. We typically work closely with the customers to make sure we're getting the best possible material cost. We usually drive the price down by driving the cost down.
It doesn't come out of our margins, it comes out of the cost.
Okay. Okay. Okay. Let me just pause and see if there are any questions from the audience. Yeah, just wait for the mic, please.
The question's about LIDAR, and I know you've been very careful to hedge your bets and, it's taking time to ramp. You're smart 'cause you're not gonna take any big inventory bets or do anything, so you've managed that really well. Are you seeing any green shoots in LIDAR area, sort of as we're starting to see some more cars that are kind of adopting this?
Yeah. The questions are on LIDAR. Yeah, we have been quite cautious because we think LIDAR presents a great opportunity for us in terms of, you know, the technology's a really good fit for our capabilities. We've taken the approach of trying to capture and win as customers of Fabrinet most of the LIDAR, the LIDAR companies, on the basis that we really, if you go back to the start of the LIDAR cycle, you know, we had no idea which companies would be the winners and losers. There are, there is some volume shipping. I think it's beginning to ship in a little bit more volume, but certainly not to the level that we would've hoped for at this stage. You're right.
We've taken a very cautious approach because again, a lot of the companies we're dealing with, you know, they're great companies, they have great products, but they're startup companies. We always contract manufacturer always has to be very careful not to overstretch yourself in terms of balance sheet exposure with startup companies. We're quite cautious about taking on, you know, inventory and the like. We're still quite excited about LIDAR though, because again, we think it's a really good fit for us. you know, we're very capable of manufacturing these products in high volume with low cost and high yields. The rate of adoption has been slower than I think anybody would've liked. For us, it's a kind of a growth opportunity.
Um-
Like maybe it's turning the corner on the slowdown.
I think it depends on the customers. You know, each customer is a little bit unique, a little bit different. Some customers, like every, just like every industry we serve, you know, we get a good feel for which customers are maybe moving a little bit faster, which customers are maybe a little bit behind. So it's... I don't think they move in unison. I think they're moving at different rates, and certainly, you know, one or two are probably pulling away a little bit from the pack.
Let me take this question that came in. I promise you this isn't my question. Coherent said on the last call they're accelerating their facility rationalization. Is there any outsourcing opportunity there?
What's the question again? Sorry.
Coherent said on the last call that they're accelerating their facility rationalization.
I see.
Is there any outsourcing opportunity there?
There's certainly outsourcing opportunities. That's for sure. I mean, you know, Coherent, you know, Coherent's a big company. II-VI, Finisar, and now Coherent. There's a lot of footprint. Certainly we would love to participate if and when Coherent start to rationalize their manufacturing footprint. You know, I don't want to speak for Chuck or the Coherent team, but, you know, I would assume that means reducing capacity in higher cost locations and transferring more production to lower cost locations. Certainly Fabrinet has a lot of capacity in low cost locations. So does Coherent themselves, and I know Coherent manufacture a lot of what they do they manufacture in-house.
I think it certainly represents an opportunity, but whether we'll be successful at turning that opportunity into reality remains to be seen.
Okay. No, fair. Moving back to the discussion on sort of the demand drivers that you've seen recently, silicon photonics demand has been a recent bright spot. How should we think about the use cases that are driving adoption of silicon photonics products? What could the run rate of revenues be when it comes to silicon photonics? I think that's the only area you've sort of highlighted supply constraints on, so what's the sort of run rate, normalized run rate you're running at?
Yeah. silicon photonics-based products represents about 25% of our revenue, there or thereabouts. 25% of our total or of our.
25% of total. Yeah.
Of total. It's a significant part of our revenue, and it's across. It's both in data center products, transceivers inside the data center and also in DCI 400ZR. Some of the 400ZR products that we're producing for our customers are silicon photonics based. Yeah, the component constraints that have been plaguing the industry, we think we're probably one or two quarters away from no longer calling out the headwinds due to component constraints. You know, last quarter we, I think we said we had about $30 million of revenue headwind caused by component constraints. This quarter, in our guidance, we said about $15 million, so half that number, and I think another one or two quarters we'll be. We should see that behind us.
I think silicon photonics, we should see some growth in that again, both inside the data center for 400G and also 400ZR products. They're the two most kind of prevalent use cases for silicon photonics right now.
Okay. Okay, cool. DZS, that's one of your newest customers. Can you give us the update on the transition of their, I think Florida manufacturing facility that they have, and then any potential sort of expansion of that partnership?
Yeah. We've, we've completed the transfer of the capability, if you like, from their Florida facility to Fabrinet. That's completed now. Really what we're doing right now is beginning to ramp as they begin to burn off the. In order to facilitate a transfer, you always have to build up a buffer inventory. DZS would have built up a buffer inventory to facilitate the transfer. This quarter they'll be burning off that buffer inventory as we ramp. We're probably another quarter away from full volume production with DZS. Again, as you say, that's just the Florida, the Seminole, Florida, facility. You know, a great customer, great opportunity for us.
I think the other area we'll be focusing on with DZS is they have a lot of other contract manufacturers that they use around the world. Outside of their Florida operation, they have a lot of other contract manufacturers that they use, that we'll be trying to convince them to move more of that business to us, because we can certainly grow that relationship with DZS in Bangkok.
Yeah. I know we often like to ask you this about every new customer, do you expect DZSI to be a 10% customer once they're fully ramped?
Hard to say. I think mathematically, I think even if we won everything, I think it would be difficult for them to be a 10% customer, just mathematically. If you take their revenue and you take out, let's say, software and service revenue, and then you apply the gross margin to get the COGS-
Mm-hmm.
If you assume we won everything, I think.
Okay.
I think mathematically, given our growth rate, it would be very challenging...
Yep.
-to reach, yeah-
Yeah.
Okay.
a 10% rate.
Maybe a similar question, but on Infinera and Cisco that are already your customers, like, do you see more opportunities to expand your business with them given the sort of engagement you already have with them, the reliability that you've offered? Do you see more opportunities there?
We do, I'm sorry, with Infinera and Cisco. You know, Infinera, that's been a long-standing relationship as has Cisco, actually. Actually it explains. It's a good illustration of how long it takes in our business to build up a relationship to the point where, you know, it becomes a very significant and meaningful relationship. You know, Infinera was a 10% customer last year. You know, I believe we're their largest contract manufacturer, but there's still more business to be won, and we'll be working hard to convince them to give us more business. The relationship's excellent. You know, I think we do a very good job for Infinera. They're an excellent customer.
you know, and we've been, we've been happy to participate in their growth and their success over the last several years. Cisco. Cisco's been a customer for a long time, but was a smaller customer. It wasn't really until we won that piece of business from Cisco, the optical transport business a couple of years ago, that they became a 10% customer. Again, we've done an excellent job. I think our reputation within Cisco is excellent. They speak very highly of us. They've given us their Contract Manufacturer of the Year award for the last couple of years running. I think, you know, we're certainly working hard to expand that relationship with Cisco and to, and to grow the business with Cisco.
We think they can be an even more significant customer for us.
On that front, though, I mean, your success with Cisco has also sort of been around the systems business. Is there a more proactive sort of positioning that you're doing when you're quoting now for new business and trying to guide your customers to give you a systems business rather than something that's sort of either sub-assembly or a module? Like, is there more proactively trying to coach the customer to say that it's probably better value for them to give you the complete system?
Yeah. Certainly, you know, it's better value for them to give us the complete network system because once we're able to produce the content or a large portion of the content that goes into that system, you know, we're able to give the customer a significant economic advantage in moving the business to us. The more content we have, the better deal, if you like, we can give the customer, and the more money they save. Sometimes you have to take what you can get and, winning component business or module business or sub-assembly business, it's if you like, an easier decision sometimes for the customer to award us that business. We're happy to go after, yes, systems business, but also kind of module business, sub-assembly business, and component business.
We're happy to go after all of the above.
Okay. Got it. Maybe last 1 or 2 here. Really just maybe switching gears here to margins. Complexity is increasing. You're going from 400G to now 800G. You're doing silicon photonics. You're doing systems. Like, does that overall change the margin outlook for the company relative to where you are today? How do you think about where long-term margins should be? Is it more really a change in the gross margin sort of structurally or operating margin? How should we think about that?
Structurally, our gross margins have been at a 12.5%-13%. Our business model haven't changed fundamentally. It's the fact that we have a 12%-13% gross margin. It's not that we are pricing all of our products at 12%-13%. Our focus is really to reduce cost and maintain this gross margin range that we have been able to achieve over the last several years. What we are really excited about is really growing the company and growing the top line without adding operating expenses and generating operating leverage, which we have been very successful over the last two, three years. We have grown the top line 20% last year and the bottom line by 30%.
Our operating margins are at a 10 plus, close to 11% range right now. Other than the structural factors, we did have some FX tailwinds in the last year, helping our gross margins to be at 13.1% last quarter. It was a new record for us. Again, that has been aided by a tailwind from exchange rates. We are hedging our Thai Baht expenses, that has been a nice tailwind over the last couple of quarters. In the next quarter, we are seeing that tailwinds to turn to a so milder headwind. We are back to our 12.8%, 12.5%-13% margin range as we look at right now.
Again, overall and in general, newer products for us are more profitable. Again, our gross margin is a mixture of obviously from single-digit to higher double-digit margins as well. We are maintaining this range without changing the business model and providing more value for the customers.
Sure. We're almost up on time, so I'll wrap it up there. Thank you. Thank you for coming to the conference.
Thank you.
Thank you very much. Thank you.