Welcome, everyone, to the MPS second quarter 2021 earnings webinar. Please note that this webinar is being recorded and will be archived for one year on our Investor Relations page at www.monolithicpower.com. My name is Genevieve Cunningham, and I will be the moderator for this webinar. Joining me today are Michael Hsing, CEO and Founder of MPS, and Bernie Blegen, VP and CFO. During this webinar, we will discuss our Q2 2021 financial results and guidance for Q3 2021, followed by a Q&A session. Analysts, you are currently muted. If you wish to ask a question during the Q&A session, please click on the participants icon on the menu bar, and then click the raise hand button. In the course of today's webinar, 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 Q2 earnings release, and in our SEC filings, including our Form 10-K filed on March 1st, 2021, and our Form 10-Q, filed on May 10th, 2021, which are accessible through our website www.monolithicpower.com. MPS assumes no obligation to update the information provided on today's call. We will be discussing gross margin, operating expense, R&D, and SG&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 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 Q2 2020, Q1 2021, and Q2 2021 releases, as well as to the reconciling tables that are posted on our website. Now, I would like to turn the call over to Bernie Blegen.
Thanks, Gen. MPS achieved record second quarter revenue of $293.3 million, 15.3% higher than the first quarter of 2021, and 57.5% higher than the second quarter of 2020. This broad-based year-over-year revenue growth was the result of our diversified growth strategy, technological innovation, and investment in production capacity. Turning now to our second quarter 2021 revenue by market. Computing and storage revenue of $87.7 million increased 30.0% from the first quarter of 2021. The sequential revenue improvement reflected increased demand and market share gains for servers and data centers and notebooks. Computing and storage revenue represented 29.9% of MPS' second quarter 2021 revenue, compared with 34.4% in the second quarter of 2020. Second quarter consumer revenue of $76.1 million increased 14.9% from the first quarter of 2021. The sequential quarterly revenue increase reflected earlier than normal sales of gaming console products.
Consumer revenue represented 25.9% of MPS' second quarter 2021 revenue, compared with 25.6% in the second quarter of 2020. Second quarter automotive revenue of $48.7 million increased 8.5% from the first quarter of 2021, primarily due to increased sales of infotainment products. Second quarter 2021 revenue was up 173.9% year-over-year. Automotive revenue represented 16.6% of MPS' second quarter 2021 revenue, compared with 9.5% in the second quarter of 2020. Second quarter 2021 industrial revenue of $43.3 million increased 8.9% from the first quarter of 2021, reflecting increased sales of products for power source applications. Industrial revenue represented 14.8% of our total second quarter 2021 revenue, compared with 14.3% in the second quarter of 2020. Second quarter 2021 communications revenue of $37.5 million was up 3.9% from the first quarter of 2021. Most of the sequential revenue increase was due to higher product sales for networking and wireless applications.
Communication sales represented 12.8% of our total second quarter 2021 revenue, compared with 16.2% in the second quarter of 2020. Our sustainable above-market growth is based on the following. We have and are continuously investing in the expansion and diversification of our supply chain. We accelerated the release of advanced products and solutions based on our new technologies. Three, we have gained increased acceptance of our solutions with first-tier customers globally. Four, we continue to diversify and support a wider number of end product applications. With our planned capacity expansion in place, and as we release more parts into production, we are well-positioned to accelerate our future revenue growth. Moving now to a few comments on gross margin. GAAP gross margin was 56.0%, 60 basis points higher than the first quarter of 2021, and 90 basis points higher than the second quarter of 2020.
Our GAAP operating income was $60.6 million, compared to $46.1 million reported in the first quarter of 2021, and $28.0 million reported in the second quarter of 2020. Non-GAAP gross margin for the second quarter of 2021 was 56.3%, up 50 basis points from the gross margin reported for the first quarter of 2021, and 60 basis points higher than the second quarter from a year ago. The increase in non-GAAP gross margin as a percent of revenue reflected lower proportional overhead costs. Our non-GAAP operating income was $94.9 million, compared to $75.8 million reported in the prior quarter, and $53.0 million reported in the second quarter of 2020, representing a 79% year-over-year increase in operating income. Let's review our operating expenses.
Our GAAP operating expenses were $103.6 million in the second quarter of 2021, compared with $95.0 million in the first quarter of 2021, and $74.6 million in the second quarter of 2020. Our non-GAAP second quarter 2021 operating expenses were $70.3 million, up from the $66.2 million we spent in the first quarter of 2021, and up from the $50.7 million reported in the second quarter of 2020. The difference between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock compensation expense and income or loss on an unfunded deferred compensation plan. For the second quarter of 2021, total stock compensation expense, including approximately $885,000 charged to cost of goods sold, was $32.1 million, compared with $28.6 million recorded in the first quarter of 2021. Switching to the bottom line.
Second quarter 2021 GAAP net income was $55.2 million, or $1.16 per fully diluted share, compared with $45.4 million or $0.95 per share in the first quarter of 2021, and $30.2 million or $0.64 per share in the second quarter of 2020. Q2 non-GAAP net income was $86.5 million or $1.81 per fully diluted share, compared with $69.5 million or $1.46 per share in the first quarter of 2021, and $50.6 million or $1.08 per share in the second quarter of 2020. Fully diluted shares outstanding at the end of Q2 2021 were 47.8 million. Let's look at the balance sheet. Cash, cash equivalents, and investments were $672.9 million at the end of the second quarter of 2021, compared to $641.6 million at the end of the first quarter of 2021.
For the quarter, MPS generated operating cash flow of about $96.9 million, compared with Q1 2021 operating cash flow of $77.1 million. Second quarter 2021 capital spending totaled $39.3 million. Accounts receivable ended the second quarter of 2021 at $77.6 million, representing 24 days of sales outstanding, which was six days lower than the 30 days reported at the end of the first quarter of 2021, and three days lower than the 27 days reported in the second quarter of 2020. Our internal inventories at the end of the second quarter of 2021 were $177.3 million, up from the $175.2 million at the end of the first quarter of 2021. Days of inventory of 125 days at the end of the second quarter of 2021, were 16 days lower than at the end of the first quarter of 2021.
Historically, we have calculated days of inventory on hand as a function of the current quarter revenue. We believe comparing current inventory levels with following quarters' revenue provides a better economic match. On this basis, you can see days of inventory of 117 days at the end of the second quarter of 2021, were seven days lower than the 124 days at the end of the first quarter of 2021, and two days lower than the 119 days at the end of the second quarter of 2020. I would now like to turn to our outlook for the third quarter of 2021. We are forecasting Q3 revenue in the range of $309 million-$321 million. Gross margin on both a GAAP and non-GAAP basis is expected to include a one-time benefit from a $4 million litigation settlement.
Including this benefit, GAAP gross margin will be in the range of 57.3%-57.9%, and non-GAAP gross margin will be in the range of 57.6%-58.2%. Excluding this one-time event, non-GAAP gross margin will be in the range of 56.3%-56.9%. Total stock-based compensation expense should be in the range of $31.2 million-$33.2 million, including approximately $950,000 that would be charged to cost of goods sold. GAAP R&D and SG&A expenses should be between $104.1 million and $108.1 million. Non-GAAP R&D and SG&A expenses will be in the range of $73.9 million-$75.9 million. Litigation expense should range between $2.3 million and $2.7 million. Interest income is expected to range from $1.0 million-$1.4 million. Fully diluted shares to be in the range of 47.4 million-48.4 million shares.
In conclusion, with our planned capacity expansion in place and as we release more parts into production, we are well-positioned to accelerate our future revenue growth. I will now open up the webinar for questions.
Thank you, Bernie. Analysts, I would now like to begin our Q&A session. As a reminder, if you would like to ask a question, please click on the participants icon on the menu bar and then click the raise hand button. Our first question comes from Tore Svanberg of Stifel. Tore, your line is now open.
Yes. Thank you, Michael, Bernie. Congrats again on another strong and record quarter. I was hoping you could update us on your capacity plans. I know you've done a pretty good job here the last 18 months. Your inventory seems to be in good shape, perhaps a bit at the lower end. Yeah, maybe you could help us understand a bit more what you specifically are doing on the capacity side.
Thanks, Tore. Our capacity is, as always, in the past three or four years, and we keep expanding. Now, we continue that. However, we do have capacities of over $2 billion before the middle of next year. We have enough capacity for us to grow. Now we have just qualified more product and released to our productions and ultimately in our customers' hands.
At the expense of repeating ourselves, Tore, you recall that last year we brought up a 12-in fab, and this year we've brought up an eight-inch fab, which is already contributing to inventory. In both cases, what we're continuing to do is expand out by qualifying more parts, so that we will be able to meet the $2 billion level by the middle of next year.
Very good. Thank you for that. Your cash balance has doubled here the last couple of years, and it's now at $670 million. Obviously, it's a luxury issue to have. What do you intend to do with that cash? Obviously, you don't need that much. Do you plan to return it more back to shareholders, or are you potentially looking at M&A? The reason I'm asking this is because it's so high now, right? I know historically you've grown your business organically, but it's so high now that I just have to ask the question what you intend to do with it.
That's a good question. As a company, I keep saying that we're transforming the company from a semiconductor to more solution providers. We can utilize the cash much better than we can in the past. The strategy is still that, again, we will buy in technology companies which are comparable to MPS revenues. MPS as a general market coverage. On the other hand, we are also consistently raising dividend, and that's our strategy, but we are not excluding buyback shares.
Great. Thank you very much. I'll be disciplined and jump back in line. Thank you.
Yeah. Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.
Hey, guys, hope you can hear me, but let me echo my congratulations on the strong revenue and the very nice gross and operating margins. Bernie, I guess you teased us there at the end of your script, saying that you've got the capacity now to support an acceleration in revenue growth. If I look at revenue last year, you did about 35% growth. Looks like this year you might do better than that. I'm just trying to interpret when you talk about an acceleration in revenue growth, what should we read into that?
Yeah. I think that you're familiar with our model, which is to outperform the industry by 10- 15 percentage points. Obviously, that's a model, that's a guideline. There are certain periods where we have the right factors, both strategically as well as from a market perspective, that have allowed us to do better, and sometimes not as well as that model. For example, if you look at last year's results, you could argue that at 34.5% growth, that we exceeded the market, which was right about 5%-8%, depending on what you're looking at, by somewhere in the neighborhood of 15- 17 percentage points. We look at that as well above our model.
In the current year, obviously, we only guide to Q3, but it's not unrealistic to expect that within the range of possibilities, that we could match that performance, or in fact, do just a little bit better. What we're trying to observe here is that in this two to three-year period, we're actually benefiting from a lot of factors that have us exceeding what our normal model is.
Great. Thanks for that additional color. Bernie, I also wanted to ask on the compute and storage business up 30% sequentially, I think you mentioned that it was share gains in both servers as well as notebooks. On the notebook side, I thought you already had pretty high share at the high end of the notebook market. I'm wondering if you could comment, are you starting to see share gains in maybe more mainstream or even low-end or Chromebooks on the notebook side? Is there any notable areas of share gains on servers? Thank you.
Yes. We do have some share gain in across the board in the notebook market segment. As our technologies advance, and which the lower the cost, our die size become much smaller. The lower cost allow MPS to enter the lower notebooks segment.
As far as server, we've been fairly consistent in articulating our strategy as far as being able to grow our market position with each succeeding next generation, particularly Intel and AMD products. Not limited to that, though, but also on 48-V and with GPUs. It really expresses the point that we're branching up in share gains within the Intel family, but also branching out into these other opportunities.
Great. Thank you, and congrats again.
Thank you.
Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.
Thank you. I'll add my congratulations. You just keep amazing everybody, I think. I'll ask one more capacity question, if that's okay, and it's coming from a spending standpoint. Can you, Bernie, maybe remind us what the outlook for spending, just as a general rule, as a percent of revenue, maybe starting next year once all the new capacity is installed. I think you get so many questions because everybody sees the kind of growth you guys are putting up, and it's awesome that you have $2 billion in capacity on board by this time next year. At this rate, it's only in a couple of years, right? Where you're going to be bumping your head on five. I'm curious because how soon would you have to look to begin ramping incremental capacity again, and what might that impact be on spending?
I'm curious what, just hypothetically, in two years, three years' time, if you're at $2 billion top line, what would gross margin look like, for instance?
Rick, thank you, and a good question. Something that's very important to comment on here is that a lot of companies and a lot of analysts and a lot of investors are focused on capacity, as if this is a new aspect of the semiconductor business. In fact, capacity is something that we have been managing for the 10 years that I've been here and before that. It's an integral component to our growth strategy. The way that we've been doing it is sequentially adding new fabs and also assembly houses and testing capacity alongside of that, to accommodate, to be in front of what our expected revenue growth.
While we have made a public comment on the fabs that we've invested in to date, we're still continuing on with ongoing relationships in order to secure more fab capacity for the future in order to accommodate that growth beyond $2 billion.
Yeah. As I said earlier, we keep expanding, so we will never stop. Sometimes faster, other times slower. Other than the capacities, physical capacity itself, we have to increase a lot of headcounts. The MPS is very linked. We will hire now. We are hiring a lot of people.
Thanks. Sorry, I was having some trouble on my end. Thanks, Michael, and thanks, Bernie. A quick question on auto, if I could. By my math, it's on track to maybe grow sort of in the 80% or better range this year, for you guys. I'm curious how much of that is being either directly or indirectly limited by supply, and if you could give a sense of what growth could be or talk about maybe demand that's pushed and how that ultimately would show up in the model, say, next year. I don't know if you could maybe quantify or talk about your auto backlog and maybe where it is today.
Maybe Bernie can. This year, you mentioned whether the automotive product is limited by the capacities. The answer is, it's not as much as other segment because automotive is a company to give us long lead times. We prepared last year. Last year, our customer didn't consume that many of our products. It all translated to this year. We'll be able to ship them now.
One of the aspects of automotive that's getting a lot of attention in the press has to do with the fact of electronic component shortages that are shutting down plants or limiting their ability in order to kit a car and assemble it. As Michael just said, we're actually not capacity constrained there. We are meeting all demand from them. What's been interesting is one of the reasons that automotive got into this bind is because they were working with a just-in-time inventory model. I think that they've learned from that when the electronic components are available, that they will stock them even though they don't have a complete kit to build the car.
In our conversations and feedback that we're getting, is they're actually only trying to satisfy real demand, but that is the timing of when the build plan, when they'll have the complete kit that they can then build the cars. It's something that we want to monitor because there's been no change in the ordering pattern or our shipment schedule versus expectations because of the other limitations in automotive.
Yeah, I might as well add it. About a year and a half ago, our inventory was at all-time high. That was one of the reasons why we do that, because we're a newcomer in automotive industries. Even though with this type of current revenue, we are still very little on the market percentage of a market. It's clear as a newcomer, and you don't want to upset the customers, and you don't have a product. As all these, like what we do to all these key customers, we have inventory, even though we don't have a clear forecast. Now it's really benefited us, and we gain a lot more design win activities. Because our competitor cannot ship a product.
Got it. Thanks for the color.
Okay. All right.
Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open. Our next question is from William Stein of Truist. William, your line is now open.
Great. Thanks for taking my question. I hope you can hear me. First, sort of a maintenance question. With regard to your capacity and inventory, which you've already explained quite a bit about on this call, are you supply constrained at this time? Are you able to meet all the demand, whether it's upside or maybe customers stretching and trying to build a bit of inventory, or are you, in fact, capacity constrained and are lead times extended as you're communicating them to customers? I have a bigger question, a more sort of strategic question after that.
Yeah. Let me explain it that way. We have a less capacity constraint compared like half a year ago also. However, as a customer, after you qualify all these new fabs, and we have a couple of months delayed of qualifying these products. And to qualifying the fab, it's not exactly science. Okay. You use different supply, different equipments, and different materials, and all these issue have a effect on how you qualify products in the end. At this times, okay, we just have to release a lot of existing product from different fabs. It's kind of to answer your question, yeah, it's that kind of a constraint. We have a lot more orders, and we couldn't fulfill, but, just only a couple of months late.
Again, what we're trying to do here is make sure that we're servicing real demand and not building up inventory either in the channel or on our customer shelves. What we've done is we've actually have very transparent relationships with our customers so that we make sure that we're in touch with their business, sufficient to be able to make those trade-offs.
Great. Thanks. The follow-up, if I can, or the more strategic question. Michael, you referred to this transition from a semi company to a technology solutions company, and it's something I've written about specifically the transition from semi devices to modules. Any quantification around this? Perhaps it relates to the e-commerce strategy as well. Any update in that area would be very helpful. Thank you.
Yeah, thanks for asking for that question. Now is overwhelming by the revenue growth and the company. Not only from analysts, from outside, and the inside company's overwhelming by the revenue growth, the allocations, and the product allocations and a lot of strategic things. Again, is less pronounced now. The module, you are absolutely right. Module business is for a solution, as a solution, transforming to a module company as we're transitioning from a semiconductor to a solution company. E-commerce, we have teams. Finally, we have organized a product line. I know the activities. In the last quarter or so, it's quadrupled. The revenue is still small, but is in the millions of dollars. Okay. It's more than $1 million. Somewhere $30 million-$40 million.
With the modules and-
Yes. Yeah. With the module and the service. Yeah. It's growing. As you recall, in about five years ago, three years ago, it's almost zero. Yeah. Four years ago, almost zero, again, we started that. We will continue to focus on that. I truly believe that's our future.
Thanks and congrats.
Sure. Thank you.
Our next question is from Joshua Buchalter of Cowen. Joshua, your line is now open.
Hey, guys. Congrats on the results. Thanks for taking my question. Gross margins in both the print and the guide were meaningfully higher than your usual 10 - 20 basis point trajectory. Can you elaborate on the key drivers of the leverage there and I guess speak to the sustainability? Was it driven by mix or something on the cost side, getting wafers through your recently ramped fabs? Thanks.
Sure. I think that we've discussed in the past that, again, our model is that we want to be able to grow gross margin at 10-20 basis points sequentially over the long haul. We've demonstrated very good consistency in being able to do that. Much like I was describing before, this is an unusual period of growth for the company, both in terms of how fast the revenue is growing, and then obviously, as we described in the narrative, it was that the overheads, which would be like direct spending or inventory provisions or anything like that, is not growing at the same rate as the revenue growth. That's where we're getting the near-term leverage. As we look out, obviously, we don't want to create an expectation that we're going to be able to grow at the same rate.
By the same token, we have established another floor level for what we expect sustainable gross margin to be.
That's helpful. Thank you. Also on the model, I guess, you mentioned that consumer in consoles was a bit accelerated versus your normal seasonality. Can you remind us what you would expect the shape of the console business to look like in the second half? Maybe just give us some clues on revenue growth by segment. Thank you.
Sure. Oh, go ahead.
I don't know if we call normal. I can't think of a normal anymore. Regarding to our console business, yes, we won a lot of design and won the next design. I think the business continues. I think that you have a better judgment than us what's the seasonality now for a console.
I think that Michael makes a very strong point there, is that we've had so many puts and takes and different lines of businesses that have been added, that the rule of thumb is not as applicable as it might have been back in 2018 or 2019. What I would comment on, is that we believe that we are optimizing across all of our different end markets. Again, it's really the strength of the model is in the diversification. Whereas, a lot of the traditional seasonality would've been tied to consumer, for example. Now we have a much higher percentage of our business that is tied to computing, automotive, and industrial, and they don't necessarily recognize the same level of seasonality.
To sort of complete the question, I think if you look at the near term growth, obviously the current year has benefited significantly from automotive and compute and storage in particular, and we believe that going forward, automotive along with communications, should be our longer term drivers.
Understood. Thanks, guys.
Our next question is from Tore Svanberg of Stifel. Tore, your line is now open.
Yeah, thank you. I just have a few follow-up questions. First of all, I have a question on your ASPs, which is obviously tied to your revenue growth. Now that you are sort of growing in the 50% range, how much of that is units versus ASPs?
Yeah. I would say if you look at last year, and last year is representative of what we're doing in 2021. Is of the 34.5% growth, 25% of that was tied to volume, 10% was tied to price. I think when Michael talks about the solutions business, you're looking at previously selling an individual piece of silicon for $0.20-$0.25, and now depending on the module, we can get between $1-$3. What we're looking to be able to do is design complete integrated solutions, for different end applications, where those will be able to achieve the total cost for that solution can be somewhere between $60-$100. There's the ASP on the individual component, but it's more importantly, it's having that attach rate with the total solution.
Very good. Talking about systems, how's your motor business doing? I know that's probably the highest ASP products you have. How's that business going?
It's doing well. The rest of the company is growing much faster, so it's still small. You can't break out a percentage yet. I think that we will give more category of our product rows as we divide it into a more finer product line.
Very good.
Yeah, we'll give that number later.
Sounds good, Michael. Last one, about one year ago, you talked about getting into the medical end market. Any updates there? I know it's still probably very smallest percentage of revenue, but just trying to understand how fast your traction is in the medical end market.
Yeah, okay. We have our product now and well, several things. We have ultrasounds. The ultrasounds, we do generate revenue. We see the revenue now. The other one is the X-ray machines. X-rays. We're evaluating the first silicons and from our design side is flawless, but we have some issue with the fab. That's a very minor issues. We'll be able to solve that problems. It is outstanding. Thank you for bringing it up. The performance is like a five, 6x better than the existing solutions. The image is a lot more cleaner now. We could deliver. I think the customers are waiting. We're very excited.
One other comment to add here is the technology that we're referring to here is related to our high-performance or precision analog.
Data converters.
Data converters.
Yeah.
Right. This has been something that we've been working on for, I think, about two and a half, three years now.
Two and a half years?
Two and a half years.
Yeah.
I think what is really exciting is that this is an incredible opportunity, and we're very close to being able to declare that it's commercially viable in the market. It's not just the medical, which is the first end market that we're going after with this technology, but the other opportunities this opens up for us.
Yeah. That's the same technologies that are similar technologies that we'll be able to use in the telecommunication side.
Sounds good. Congrats again on the star results. Thank you so much.
Thank you. Yeah.
Our next question is from Kevin Garrigan of Rosenblatt. Kevin, your line is now open.
Hi, guys. Congrats on the quarter. Thanks for taking my question. Just a quick one for me. I was wondering if you could tell us what percentage of your business or percentage of backlog is based on three-year or newer products. I think last quarter, Bernie, you had said new products introduced in the last three years were about 37% of sales. Just kind of wondering if this was in the same range this quarter.
Yeah. The reason that we use that stat on sort of a one-time basis was to really give an order of magnitude to just how dynamic this new product introduction is as a component to our growth. Right now, obviously, in such a short one-quarter term, it hasn't changed a whole lot up or down. It's really not something that we want to be reporting on an ongoing basis.
Yeah. I think the last time we reported, is that 37%?
Yeah.
I actually went back to look at it, and we actually cannibalized ourself. I think that's a better way, okay, rather than other big guys eat us alive. Okay. I think that we cannibalized quite a bit, and okay, I think it's somewhere is 10% range, okay, all these new product, we cannibalize it. That's why the number's so high.
Yeah. I would say that when there's cannibalization involved, you can bet that for market share gains against our peer companies, that that's really the leverageable part of this story.
Got it. That's helpful. Thanks, guys.
Thank you.
Yeah.
Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.
Hey, guys. Just wanted to follow up on Josh's question on gross margins. I know in the near term, better overhead absorption is driving the better margins. If you guys have access to capacity and most of your competitors are getting strained, I'm wondering, is there any room for you to get a little bit more to raise pricing in certain segments to take advantage of that capacity support? Will you just continue to kind of put your foot on the pedal and try to drive as much revenue through that additional capacity support rather than trying to do it through pricing?
Well, yeah, MPS is still a smaller, is the smallest analog semiconductor business. At the same times, we want to deliver a consistent result. Now you see the margin, even in this period, we don't fluctuate a lot. Because we just pass on our cost to our customers. We don't randomly just raise because now the shortage, we can gouging a price, okay. That will affect the long-term relationship with our customers. We just maintain that and maintain the margins, okay. I think this strategy fits everything, fits for us. Yeah.
Got it. Thank you.
If there are any follow-up questions, please click the Raise Hand button. As there are no further questions, I would now like to turn the webinar back over to Bernie.
I'd like to thank you all for joining us for this webinar and look forward to talking with you again during our third quarter webinar, which will likely be at the end of October. Thank you, and have a nice day.
Have a nice day. Okay.