Earnings Call: Q1 2020

Apr 28, 2020

Ladies and gentlemen, thank you for standing by, and welcome to the Monolithic Power Systems, Incorporated First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call to Bernie Blegen, Chief Financial Officer. Thank you. Good afternoon, and welcome to the first quarter 2020 monolithic power systems conference call. Michael Singh, CEO and founder of MPS, is with me on today's call. In the course of today's conference call, we will make forward looking statements and projections that involve risk and uncertainty which could cause results to differ materially from management's current views and expectations. Please refer to the Safe Harbor statement contained in the earnings release published today. Risks, uncertainties and other factors that could cause actual results to differ are identified in the Safe Harbor statements contained in the Q1 earnings release and in our SEC filings, including our Form 10 K filed on February 28, 2020, which is accessible through our website, www.monolithicpower.com. MPS assumes no obligation to update the information provided on today's call. Expense, R and D and SG and A expense, operating income, interest and other income, net income and earnings on both a GAAP and a non GAAP basis. These non GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to financial measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non GAAP financial measures to GAAP financial measures is included in our earnings release which we have filed with the SEC. I would refer investors to the Q1 2019 Q4 2019 and Q1 twenty twenty releases, as well as to the reconciling tables that are posted on our website. I'd also like to remind you that today's conference call is being webcast live over the internet and will be available for replay on our website for 1 year. Along with earnings release filed with the SEC earlier today. Before going through our financial results, I would like to acknowledge the difficult circumstances we are all operating under. At MPS, we have taken all necessary precautions to ensure the safety of our employees, our suppliers and our customers. At the same time, we remain focused on the need to execute to the highest level possible. Our worldwide efforts are reflected in our continuing level of innovation In response to the news of extreme shortages of medical equipment, MTS rose to the occasion to fight the global pandemic That was described in our recent press release, MPS developed and assembled an emergency ventilator prototype in a matter of days leveraging a MIT open source design concept. We demonstrated our technological superiority, and deep system application knowledge to showcase our capability to advance from a component provider to a solution provider in a short period of time. We believe we can help our by taking advantage of NPS's vast and diversified product portfolio, which is highly programmable, flexible and feature rich We are also encouraged by the excitement we have received from our existing and potential customers that will lead to many promising opportunities in the medical device industry. Turning now to our financial results. MPS posted record 1st quarter revenue $165,800,000, 17.3 percent higher than the comparable quarter in 2019. MPS continues to benefit from our technology leadership and diversified multi market strategy. Looking at our revenue by market. In our computing and storage market, first quarter 2020 revenue of $52,000,000 increased $12,800,000 or 32.6 percent year over year. First quarter 2020 computing and storage revenue represented 31.3 percent of MPS's 1st quarter 2020 revenue, compared with 27.7 percent in the first quarter of 2019. The year over year revenue increase primarily reflected sales growth for cloud based servers and storage. First quarter 2020 communications revenue of $27,900,000 rose $5,700,000 or 25.6 percent from the first quarter of 2019. The year over year revenue increase primarily reflected higher 5g networking sale Communications revenue represented 16.8 percent of MPS's 1st quarter 2020 revenue, compared with 15.7% in the first quarter of 2019. First quarter 2020 industrial revenue of $25,200,000 increased 18.3 percent from the first quarter of 2019 and accounted for 15.2% of our total first quarter revenue. The increase over the first quarter of 2019 primarily reflected gains in smart meters and security applications. First quarter 2020 automotive revenue of $23,300,000 grew 13.6 percent over the same period of 2019, representing 14.1 percent of MPS's first quarter 2020 revenue. This growth primarily represented increased sales of infotainment, safety and connectivity application products. First quarter of 2020 revenue from consumer markets of $37,400,000 decreased $700,000 or 1.9% from the same period of 2019. The year over year revenue decrease reflected continuing reductions in demand, for set top boxes and flat panel TVs. Consumer revenue represented 22.6% of our Q1 revenue compared with 27.0 percent contribution in the first quarter of 2019. GAAP gross margin was 55.2 percent. 10 basis points higher than the fourth quarter of 2019 and flat with the first quarter of 2019. Our GAAP operating income was $31,000,000 compared with $30,700,000 reported in the fourth quarter of 2019. For the first quarter of 2020, non GAAP gross margin was 55.5%, matching the fourth quarter of 2019, but 10 basis points lower than the first quarter of 2019. Our non GAAP operating income was compared to $50.8 Our GAAP operating expenses were $60,500,000 in the first quarter of 2020 compared with $61,200,000 in the fourth quarter of 2019. Our non GAAP first quarter 2020 operating expenses were $46,100,000, up from the $41,800,000 reported in the fourth quarter of 2019. This increase primarily reflected higher Q1 payroll taxes and increased investment in new products. The difference between non GAAP operating expenses and GAAP operating expenses for the quarters discussed here our stock compensation expense and income or loss on an unfunded deferred compensation plan. For the first quarter of 2020, total stock compensation expense, including approximately $600,000 charged to cost of goods sold, was $18,600,000 compared with $18,700,000 recorded in the fourth quarter of 2019. Switching to the bottom line. First quarter 2020 GAAP non net income was $35,800,000 or $0.77 per fully diluted share compared with $32,400,000 or $0.70 per share in the fourth quarter of 2019. Our Q1 2020 tax provision of minus 22 percent was due to a one time discrete tax benefit resulting from stock compensation. First quarter 2020 non GAAP net income was $44,300,000 or $0.95 per fully diluted share, compared with $48,400,000 Fully diluted shares outstanding at the end of Q1, twenty twenty were $46,700,000. Now let's look at the balance sheet. Cash Cash equivalents and investments were $492,300,000 at the end of the first quarter of 2020 compared with $458,500,000 at For the quarter, MPS generated operating cash flow of about $61,400,000 compared with operating cash flow of $61,000,000 in the fourth quarter of 2019. 1st quarter capital 1st quarter 2020 capital spending totaled $10,000,000. Accounts receivable ended the first quarter of 2020 at $54,300,000 or 30 days of sales outstanding, up one day from 29 days at the end of fourth quarter of 2019. Our internal inventories at the end of the first quarter of 2020 were $131,500,000, up from the $127,500,000 at the end of fourth quarter of 2019. Days of inventory increased to 161 days at the end of Q1 2020 compared with 155 days at the end of the fourth quarter of 2019. I would now like to turn to our outlook for We are forecasting Q2 revenue in the range of $167,000,000 to $173,000,000. We also expect the following: GAAP gross margin in the range of 55.0to55.6percent Non GAAP gross margin in the range of 55.3 percent to 55.9 percent GAAP R and D and SG and A expenses between $60,900,000 $64,900,000 Non GAAP R and D and SG and A expenses to be in the range of $43,400,000 to $45,400,000. This estimate excludes stock compensation and litigation expenses. Total stock based compensation expense of $18,100,000 to $20,100,000, including approximately $600,000 that would be charged cost of goods sold. Litigation expenses are expected to range between $1,700,000 Interest and other income is expected to range from $1,700,000 to $1,900,000 before foreign exchange gains or losses. Fully diluted shares to be in the range of 45,800,000 In conclusion, we are not immune to the macroeconomic reality, but our long term growth prospects remain intact We will continue to execute I will now And our first question is from tory Bember with Stifel. Please go ahead, Tore. Yes. Thank you, Michael and Bernie and congratulations on these results in a very challenging environment. First question, and maybe this is a bit philosophical, but, innovative companies tend to gain a lot of share during a downturn were obviously in the downturn. I was just wondering, Michael, if there are certain things that you're looking at, to obviously come out of this even stronger than going into this. Oh, Tobi, as you remember in the history, we tend to About. Michael, you're breaking up. Michael, you're breaking up, unfortunately. Can you hear me? Yes, you might go to the handset instead of the speaker. There you go. You're fine. It's time to, can you hear me now? Yes, we can. Yes, much better. All right. Okay. In the, yes, as I said earlier, Maurice, the members, the NPS is a history because you covered those things day 1. Of MPS become a public company. And somehow we tend to do that. And, in the downturns and, in the downturns and we tend to do well. And Upperton, relatively, in a normal times and, We are just as good as just everybody else, but the percentage of a growth tend to be slightly slower, slightly lower. And how we can achieve that, I think is that we don't really our, target is many years out. In regardless of the downturns or upturns, we are very consistent So it's not like other other company may because they have all the large market shares and that they tend to react to the shorter terms. So if you can think about it, and philosophically and we will tend to do well in the during the downturn. That's very helpful. And On a similar topic, but more specific, your e commerce business, I do appreciate it's taken a while to get that up and running. But in this sort of virtual environment we live in, I would think that, a business like that would be very, very welcome. So maybe you could elaborate a little bit on what's been going on on that front? Well, as I said, it's okay. I said in the last as I said in the last quarter, we said that e commerce, like we kind of drop a hook in a Pacific Ocean, there's a lot of fish there, but we didn't hook that too many things out of that. So we're still in the early stage and However, in the last couple of months, and, we launched, ventilators That attracts so many new customers or new potential customers. And it's overwhelmed us. And, it's kind of a surprise to us. I think that we are a small company and we are relatively new company and the people don't know us. Just we need a time. And anyway, we we need to learn how to do it. Okay. That's great. One last question Bernie, Bernie, you talked about the computing and storage business being up, quite dramatically year over year. Some other players in the space obviously are talking about similar strength. Did you get a sense that there's some pull in activity going on there, you know, intel, for instance, they talk about obviously the second half being weaker in the first half. Any color you can add on that would be great. Thank you. Sure. I think we're seeing a very probably consistent with other companies who have exposure to, either 5G or data center or to notebooks. As there's continuing investment in order to service the work from home. Aspect of the economy right now. So there has been a lot of activity, particularly in storage particularly in data center, and we're seeing a continuing level of investment also in 5G. Again, as with any, expectation of what the second half would look like. We're obviously, this is a challenging environment and We normally only forecast 1 quarter ahead. Thank you. Our next question comes from Matt Ramsay with Cowen. Please go ahead, Matt. Hey, this is Josh Pokalter on behalf of Matt. For taking my question. Hope everyone's hanging in there. Okay. I know you guys love questions on inventories, but Given all the moving parts on both the supply and demand side, can you update us on how you feel and your comfort level after last quarter you sort of lamented bringing levels down. It'd be helpful to hear an update on your visibility into both your on books and in the channel. Thanks. Well, okay. And we in the In the last couple of quarters, we said that like we, our booking is very good and, was very good. And in, in the still years, And, in the week, we have inventory problems, that's the problems that relate to and above and deliver to our customers up and above. And this this issues, okay, and this growth of this year, the growth of this year, we didn't said is from, from the last couple of quarters. We said a lot earlier, and, but our, macro market is in a have some uncertainty and we will sole criticize we have a more inventory. So last December, we took a step and reduced our our inventory and announce, and we barely can do up and up in and beyond our forecast. So in the conditions, even more more murkier now. And we have just a area accordingly. And if I could add to Michael's good point there is that, through the challenges that, we're facing in the economy right now, that, as you can see, that, chain, as well as our internal operations. Now I don't want to minimize those challenge is. And, in any way, take away from a lot of, very difficult and hard effort on as part of a lot of employees that made that all happen, but so far, we've had minimal disruption to the supply chain Thank you. Appreciate all the color. And then as my follow-up, are you able to provide any color your expectations by segment for the second quarter? Thanks and congratulations on the stellar results. Sure. I can take this one quickly on the numbers front. Is, responded to the earlier question in is that, I believe that much of the growth, that we expect to enjoy should come from, the computing and storage, as well as in 5G, there is, what we can mean in demand and traditional consumer and also in automotive. Here is, look, I might as well, as I added, I can We try to, have a try to have a very diverse growth. And my job is that If I did, if I do the best job is you guys not to know which segment is the growth. And we want to so diversify and you don't know which site, which one. And every we, we occupy the very small percentage of each market. And look at the consumers, and as actually within the consumer, there's a lot of fundamental shift. We shift from a traditional TV set top box, which do have some percentage. And within that, we have huge change. We choose it to a much higher high end of of our consumer products and as well as the internet of things. Thanks guys. Thank you. Our next question comes from Quinn Bolton with Needham And Company. Go ahead, Quinn. Hey, guys. Let me offer my congratulations on the nice results and outlook. You guys are significantly outperforming a number of the analog peers sequentially and certainly year over year. And I think that that we've seen a number of the analog peers talk about, in their forecast, I think they referred to seeing some customers buying ahead or building inventory. And just wondering if you might be able to address that, specifically on the compute and 5G side. I know you mentioned that auto and consumer is softening. And so maybe just kind of go through just whether you think there is any buy ahead activity maybe influencing second quarter guidance? And then I've got a follow-up. Yes. And of course, we're concerned. And then it's like poiler paper effect, right? And whether the you have just a few months ago, all the shelf, then the toilet papers are gone. And like I mean, whether we see the same kind of effect or not, we really don't know. And some of the areas in the, in the PCs and in the data centers have a search And we kind of expected that. And other ones in a consumer area, And it's obviously kind of similar and it's actually slower than our expectations. But we have to be on a quick on the feet and then we had to react quickly. And in the meantime, we ship as much as we can. Got it. And then just looking in that data center business, I think Intel has recently sort of cancel the Cooper Lake processor generation to focus on the 10 nanometer ice lake for launch late this year. Just wondering if that's had any impact on the Whitley ramp as you see it or are you seeing pretty good design activity either for existing Pearly systems or the initial ramp of Whitley, just over the balance of the Thank you. Yes. Good question. So, our experience has been showing that receiving the same level of customer engagement and, that, going back to Michael's point about Q2, that the level of order momentum has continued unabated regardless of the product change the change in their product cycle. So at this point, we may not have the full benefit of how end demand will be shaped by this change. But I don't see any early indicators that give me pause. And one other thing to make specific is going back to Michael's point on being diversified. The business model is not dependent on any individual product launch or the timing. So, as I said, that's the advantage of our diversified portfolio. Great. Congratulations again guys. Thank you. Our next question comes from Chris Caso with Raymond James. Please go ahead, Chris. Yes, thank you. First question is just regarding, product cycles for the year. And I'd imagine much like last year there's a certain part of the business, a large part of the business, which is just driven by product cycles, getting customer designs out the door and another portion of it, which is related to run rate business. So perhaps that might be affected by downtick in demand. Could you characterize the business kind of what parts would be more driven by product cycles, what parts would be driven more by run rate demand and take a look and give us some sense of how that plays out into the second half. The second half can be, we, it's not, and just philosophically, it's not very clear Okay. And, but our customers demand, is it as a high as ever. And, but it's we designed it in the end of, we engaged our our customers in the variety of segments. And, so when they stamp up. And it's kind of very short notice a few months. And when did they test the mark if the market is reacting wells and they have a huge ramp. And so that's why we need enough inventory to all these new product wins. And to answer your questions, which particular market segments is In the last couple of months, it is a total shift. I'll get the engagement with the customer is a total shift. We're in a medical field now. And a lot of parts and a lot of inquiries and all these things are particularly helped by the by the ventilator is a total to our price. And But at the same time, we didn't expect that the, the computing ramp has has this much, and it's just particularly in the in a memory side? In a memory power, what is that the so that's our scenario announcement. Okay. And Going forward, we're not very clear. And I know that if the new trend is the you can work from home and you can work remotely. And the cloud computing, the cloud, the data center, the communication will keep going. And we'll accelerate Thank you. I'm sorry. I had just two small things to add to that, is that on the notebooks, seasonally, those driven where you'll have a high Q3 and Q4, and then it tails off. But we see nothing in the, sort of aside from cyclical changes there. Here in the end of Q2. That's helpful. Thank you. As a follow-up, you had talked about, qualifying some new capacity on 300 millimeter into the second Could you give us an update on that? And in the current environment, has there been any change to your plans or your need for the for that capacity, either greater or less? Yes. Look, I mean, if we see some of push out, these above and beyond. And I think they don't have those push up, we're even in the trouble. And in terms of a customer relationship, not in terms of delivering in the numbers. And, we're working very hard with, we try to try very hard to bring it up another fab. And as you noted, this is not like an overnight in the case, at least to take the half years. And I think that we will we can meet our demand and qualify some of the high runner 1. Yes, we should be able to qualify the high runners before the end of this year and actually be shipping from that fab. Our next question comes from William Stein with SunTrust. Please go ahead, William. Great. Thanks for taking my questions. Michael, Bernie, congrats on the good result and outlook. Michael, you mentioned at the start of the call, transition from a component to a solutions company and you highlighted the ventilator as an example. But at the Analyst Day, you also so showed several things that looked like a precursor to this in a way, not only emotion, but these programmable modules And I wonder if there's anything more sort of quantitative that you could disclose to us in terms of revenue or growth or designs or orders as it relates to that what we might describe as a transition or a new leg of growth to the business? Yes. As we don't we haven't really prepared a holiday and numbers to you, certainly. And, as a business, that type of a business but we had to think about how we, how we disclose a very accurate, accurately to our investors. And it is clearly that trend. And we want to make our solutions, our product. Chip based solutions is for really ease of use. That's the trend. And, to a lot of, like, a power supply, a lot of model controls, like, emotion controls, And even for the power supplier for the data center, these are a lot of technology maturing, okay, is the what is on top of it. It's really a plug in play solutions. And you want to take away all the design effort from from our customers. And in terms of, maybe Bernie, you can say, what is our modules are doing really well, right? Our modules are in a if you're talking about only power modules, so we're doing we found 2, 3 years ago, like in a single low digit $1,000,000 of our sales, we're now at least of 35,000,000 dollars, $40,000,000 Yes, and last year. And that number is the this is the fastest growth in the percentage wise in APS revenue stream? I think that I'd probably add to that if I can. That Michael is exactly right, that we haven't really articulated, the financial model where we can quantify it, in a way that would be meaningful to you. I agree with Michael's assessment of how we're doing with the power module. The thing that I would add though is whether you're looking at programmability, you're looking at the e commerce solution, you're looking at e motion or the power modules, integrated solutions that we were just talking about. It's all about an overarching strategy as far as how to differentiate and leverage all of our multiple technologies and differentiate ourselves in the market. Well, that's helpful. If I can have a follow-up, please. I think, last quarter, you talked a little bit about a new area that the business was investing in that was high performance converters. I'm wondering if you can provide an update on design wins, revenue, any sort of traction that we could think about there? Yes. Okay. That group will be joining and they brought in opportunity. We have 6, 7 guys joining the and they brought even opportunities. So it's a, they we have the customers, okay, now. And they engage with the customers for the medical companies for for a while. And, so it's actually, it's a we don't have any any significant inputs like a change. And I think we were these kind of things that takes the bus to This is actually very unusual. So I think it's a take less than a year, we can see some some result. Usually, our product even internal development, so the ground up development would take about 2 or 3 years to see any things. And this ones, okay, we, so far is looking good. Thank you so much. Our next question is from Rick Schafer with Oppenheimer. Please go ahead, Rick. Thank you and congratulations to you guys in a tough time. You continue to execute. I guess my first question talking about tough times, but I know everybody's seen IHS forecast auto start I think down over 20% this year. You guys obviously have a content and some pretty significant share gains in that vertical. I mean, do you look at that this year and say that that's enough to offset a down, let's say, 20% SAR? I mean, could your auto revenues be flat for the year? Could they grow in this kind of environment? I think that we look at our history. Okay. And, we can tag on what is your macroeconomic, again, segment growth in all dollars in our segment. And we can we are confident enough, we can say that we can beat it by 10%. Yes, I think that we got an education in 2019 when, there was a complete falloff in production in China and a soft demand in North America and Europe in particular. So I think if you use that as a guide, and you can say what the sell was down, but we were able to grow at about 13%, 14% last year. So to Michael's point is, you can apply whatever you think the market's going to do and we're going to outperform by a minimum of percentage points. And last year, it was closer to 20. Great. And then just pivot into 5G, and just maybe if you could provide an update on your 5G ran opportunity. Maybe give us a sense of the MPS dollar opportunity in a macro base station. And part of my question, I'm just curious. I mean, it just seems like such a massive opportunity for you guys. You could 5G be as biggest server for you. In, if we fast forward it 2 or 3 years? Yes. Okay. That's a questions, so now get me in, I only can't tell you this. And we know 4G, we were out the door. We have have any chance. And this is the first time we engaged with a variety of customers. And the OEMs and the OEMs, and even their supplies. And So we engaged both sides. And that gave me, and the real telecom companies and also their applied. And all we see, the opportunity is that we've never seen it before. How big the market is, okay, and I can't, we cannot quantify. And I'm not trying to tell Wiggin the dog here. And we are new. We're new commerce. And all I know, the opportunity is huge. And we want we don't even try to quantify what the, what's the opportunity and we all noticed as long as it's just very big. Yes. And I think you were asking for guidance on the dollar content for the base station and Michael is correct that we don't have a number. We're 2 new We, yes, I can tell you why we don't, okay, in a particularly, okay, in which segment of 5gs in the our product is in the building box of a 5G. So if you think about it as a brick for the building, And our product, there is a standard product in those companies, and they can use it everywhere. Got it. Thanks for Thank you. Our next question is from Camille Miltrack with William Blair. Go ahead, Camille. Hi. Congratulations on strong results in this uncertain environment. Can you tell me how design win activity has been trending during the pandemic versus your expectations? And how do you balance growth and margin in this environment? What levers do you have to maintain or potentially expand the gross margin? Thank you. Yes, the gross margin, obviously, is in the way it goes kind of a little bit on the sideways. And since the second half of the last year. And, and, we're not happy about it, but but we, we try to be very consistent. And given the the macro conditions and it kind of makes sense to us. And they gave me a, but the new product, particularly the new product is slower or is the ramp of the pretty pretty good rate. I mean, but the and some of the higher value sign up higher value product as it come in that was slower. So that's why the margins go in a, but in a given the long terms and the margin was the And the first part of the question was design activity? Oh, yes. Okay. Sorry, I forgot about that. That was a very good question. So, like, and obviously, normal activities and kind of slowdowns and they and, which it doesn't affect us, okay? We meet, we can, we're very much used to worked from outside office. And we are still very much engaged with our customers, but in very different way, okay, very different market segments. A lot of them in a relate to a medical equipment and was a and we will shift our head and we'll And NPSD in a past, it is a pretty as always a pretty fast enough on the feet. And So we shifted all our interests and we support our, those those customers. But it's not like a normal, normal business now. But one thing I can add to that is that interestingly, our operations and our customer's operation in China and in Asia, came back online about a month ago. And so not that I'm trying to say that we're business as usual, but in the area of the world where we have up to, 90% of our employees, including a large share of our design professionals, as well as a majority of our end customer engagement, we're actually seeing a good cadence good momentum. And as Michael said, on the U. S. Front, where we're still, in the shelter in place, both in our Washington and in our San Jose offices, we have, developed over the last several years the ability to both do field application engineering and customer engagement, via zoom, and we're fairly confident at that. So It's Bernie. Yes, Bernie, it's not like a 90%. It's a little more like a 60 some some%. Okay. Yes, we do have a testing and a reliability center that's in China. But in terms of number of peoples, Asia, across Asia, including Japan. And versus the U. S. And the Europe? Is that okay? We're probably in, including Japan, probably as far as some percent? Yes. Yes. So we're more, diverse. Across the world. All right. And our next question is from Hans Mossman with Rosenblatt Securities. Hi guys. This is Kevin Gary on for Hans. Thanks for taking my question and congrats on the results. Just one quick one for me. And my apologies if you had alluded to this already. You had mentioned that you're seeing minimal supply disruptions in that you're having good momentum with your Chinese customers. Can you give us any color in terms of if you're seeing any demand disruption? I don't know if it's a Chinese customer there. We didn't did we said, and is that maybe, okay, that's a understand the way, okay. And Bernie, you want to say that? Okay. Yes. As far as any demand destruction occurring, we haven't seen any cancellation of projects or push outs and orders on a material basis. Obviously, the duration of the macro environment is not understood right now. So we're very sensitive to, seeing any early warning signs that we need to react to in this volatile environment. But as of this point in time, we have not seen a step down in demand on a broad based. There are some pockets as we mentioned in an earlier answer. And our next question comes from David Williams with Loop Capital. Please go ahead, David. Hey, good afternoon and congrats on the quarter. Thanks for taking the question as well. Just wanted to see if you had any color on maybe the the console launches that are expected, you said, in the second half, how do you think that ramps? Do you have a sense of what that, what the demand is going to look like or those volumes could potentially be? Yes. We have a pretty good we have a pretty good knowledge, but I cannot say that. Care. But in that business, it's very cyclical, Sonaki, and that's a very other for NPS is a good money. And but for stop values. And it's very contrary to what we do. It's a very cycle and it ramp up and it buys once a year and And for the for most of the years, they don't do anything, okay? And we have after that wave, we had to fill up the fear of the gap. We have done pretty good in the last 2 or 3 years, but as the revenue keep growing, that will be a small part of our NPS business. Great. Thank you. And then just kind of thinking about the comp segment and the design wins and maybe design there. Are you seeing a broader base of designs outside of the Huawei or some of the other larger companies just kind of talk about where you're seeing the most potential or the most opportune opportunities there. Sure. And if you look worldwide far as where a lot of the deployment is within both China and South Korea right now, Europe and North America have been a little slower So most of our design engagement for now has been in the lab as opposed to actually being, commercially rolled out Okay, great. Oh, no. I think I just wanted to clarify, but we don't, and we don't imply any customers. And in our course. And we disclosed that we have a large customers. And by Russe, okay. And so in the 5G, as I said earlier, so we engage not only once and that came in many different types because, kind of a different, telecom companies. We also immediately, there was a many different Okay. Very good. And then I guess lastly for me is, if you're kind of thinking about the risk year and even the second quarter perhaps. What are your largest unknowns or potential hurdles that you kind of think about, areas of weakness that you could be seeing? Or what are the areas, I guess, that you're most either troubled or concerned with or I guess paying most attention to the back of the year here. Okay. Michael, you're breaking up again. I'm sorry, you're breaking up. I give you a philosophical joke because then I have joke. We really worry about toilet paper effect. And it's actually we don't know. And again, the demand is very good in the second half of the year. And, and, you know, as we do, in that case, and the winner when everything's good, they tend to, and the overall do it. And And we won't see it. Okay, of course, we try to try very hard. And, okay, you're planning on what is the real reasons, okay? And, we so far, we have a very good, we have a that's what we try to do. And okay, we until our summers start to screening it. And then we're shipping our products. Yes. So as opposed to a concern of the rapid fall off right now, we're managing is the toilet paper effect, where there's so much exaggerated demand. We want to make sure that we're not building inventory on in the channel or in our distributors' warehouses. And, the way we do that is we don't ship to the level that they requested. And then if they really do have a stock outage where they're going to go lines down, we'll hear about it quickly and respond to that. So that's the issue that we're managing now as far as looking beyond that. Maybe we'll have better guidance or outlook next quarter. Great. Well, thanks so much, certainly appreciate it and the best of luck. Thank you. Thank you, ladies and gentlemen. This concludes our Q and A session for today. I will turn the call back to Bernie Lagan for his final remarks. Great. Thank you very much. I'd like to thank you all for joining us in this conference call. I look forward to talking to you again during our second quarter conference call, which will likely be at the end of July. Thank you and have a nice day. And with that ladies and gentlemen, we thank you for participating in today's program. You may now disconnect.