Earnings Call: Q2 2019

Jul 25, 2019

Greetings, and welcome to the MaxLinear Second Quarter 2019 Conference Call. At this time, all participants are in a listen only As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Nuggen. Please go ahead, sir. Thank you, operator. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss MaxLinear's second quarter 2019 financial results. Today's call is being hosted by Doctor. Kishore Singh Dripu, CEO and Steve Litchfield, Chief Financial Officer and Chief Corporate Strategy Officer. After our prepared comments, we will take questions. Our comments today include forward looking statements within the meaning of applicable securities laws, including statements relating to our third quarter 2019 revenue, gross margin, operating expense, tax expense, tax rate, and interest and other expense guidance, as well as statements relating to trends, opportunities and uncertainties in various product and geographic markets, including, without limitation, statements concerning growth opportunities for our wireless infrastructure and connectivity markets, and for improved revenues in our broadband markets. These forward looking statements involve substantial risks and uncertainties including risks arising from competition, the global the outcome of global trade negotiations, export restrictions, potential supply constraints are dependent on a limited number of customers, average selling price trends, risk that our markets and growth opportunities may and numerous other risks outlined in the Risk Factors section of our SEC filings, including our previously filed Form 10 K for the year ended December 31, 2018, our Form 10 Q for the quarter ended March 31, 2019, and our Form 10 Q for the quarter ended June 30, 2019, which was filed today. Any forward looking statements are made as of today, and MaxLinear has no obligation to update or revise any forward looking statements. The second quarter 2019 earnings release is available in the Investor Relations section of our website at maxlinear.com. In addition, we report certain historical financial metrics, including net revenues gross margins, operating expenses, income or loss from operations, income taxes, net income or loss, and net income or loss per share on both GAAP and non GAAP basis. We encourage investors to review the detailed reconciliation of our GAAP and non GAAP presentations in the press release available on our website. We do not provide a reconciliation of non GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock based compensation and its associated tax effects. Non GAAP financial measures discussed today do not replace the presentation to MaxLinear GAAP Financial Results. We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management 2 weeks. And now, let me turn the call over to Kishore Cyndri Boo, CEO of MaxLinear. Thank you, Brian, and good afternoon, everyone. You all for joining us today. Our Q2 2019 revenue was $82,500,000, consistent with our updated guidance. Despite mid quarter headwinds from the Huawei shipment restrictions, our infrastructure business was up slightly. Our Connected Home business stood at 47% in this and multi market at 26% and infrastructure at 27% of overall revenue. We continue to execute well on our ongoing designing and customer engagement activities in 5g Wireless and fiber optic data center interconnects, which boosts our confidence in our infrastructure revenue growth prospects in 2020. Encouragingly, our industrial mother market revenues improved across a broad set of distributors and end customers which we expect to continue into Q3. Customer specific challenges related to technology transitions and trade tariffs and weak operator spend. In the second quarter, our 5G wireless customer designing activities of our industry leading 14 nanometer CMOS 4 by 4 massive MIMO cord RF transceiver associate solution have accelerated and are generating strong customer traction. As a reminder, our industry leading 5G RF transceiver delivers the highest performance and widest bandwidth along with superior system level integration and flexibility at up to 50% lower power consumption than competitive solutions. As a result, base station engineers will be able to accelerate the development of 5G massive MIMO radios. At the same time, we are also growing our content on a first to basis enabled by an expanding product offering haul business was up double digit sequentially in Q2 despite the suspension of Huawei shipments. Adoption of our wireless backhaul auto transceiver is accelerating is highlighted by an important design win in India by one of our tier 1 customers and slated for shipping in Q3. Our RF SoC is the only solution to support channel aggregation with double data capacity in existing available spectrum for current and future 5G transport works. As a result, strong operator engagements are leading to a proliferation of our OEM engagements, which we believe supports our expectation of stronger revenue streams in the second core DSP SOC with integrated laser drivers and companion port TIS system solution has made significant progress with our lead optical module and lead tier 1 hyperscale datacenter end customer in terms of interoperability testing. This has strengthened our current expectations with respect to revenue growth, market share and the pace of the upgrade cycle. Our high performance analog business, primarily in Industrial And Multi Market Revenues, is also gathering momentum. Our universe still teaming or power management IC, MXL-seven thousand seven hundred and four was selected to power the world's most popular single board computer, namely the RAS 35 for It was a primary driver of our double digit sequential growth in industry and mark to market revenues in Q2. The MXS-seven zero four is a highly versatile Phoenix that enables reprogramality of to accommodate new current settings and limits power sequencing, power monitoring, telemetry and additional flexibility that are integral to the Raspberry Pi4 computer. We're also continuing to expand our data center power management presence with the recent design win at Alibaba, a Tier 1 Chinese hyperscale, provider. Going forward, we are pleased that our deepening customer relationships and products in 5G wireless and optical data center infrastructure are opening our new power management open to these as a bundled offering. In the connected home market, our MoCA business was up significantly quarter over quarter due to the ongoing ramp of our MOKA 2.2 solution at Verizon. Additionally, we announced that Cambridge Industries Group has deployed our MOKA 2.5SOC in the next generation, 10 gigabit PON ONT device. In this application, the MoCA based VAN backbone delivers a 3 gigabits per second high speed broadband from the ONT, which enables gigabit whole home, Wi Fi coverage for reliable, robust 4K video, and data services over IP. With that, let me turn the call over to Mr. Steve Richfield, our Chief Financial Officer and Chief Corporate Strategy Officer, for a review of the Q2 business results and our forward guidance. Thank you, Kishore. I will first review our Q2 2019 results and then further discuss our outlook 2% sequentially due to increasing demand for our wireless backhaul RF portfolio, which offset some weakness in our HPA business within this category. Our Connected Home business decreased 11% with strong early stage deployments of our MoCA 2.0 and 2.5 solutions, offset by continued softness in cable and satellite markets. Our industrial multi market business was strong, up by 12% sequentially with broadband with broad based demand improvements, particularly in China, which were aided by focused share gain initiatives. GAAP and non GAAP gross margins for the 2nd quarter were approximately 53.4% and 63.9 percent of revenue, respectively, Our non GAAP gross margin improved 40 basis points sequentially due to improved mix within our reported product categories and operational improvements. This compares to GAAP gross margin guidance of 53% to 54% and non GAAP gross margin guidance of 63.5 percent to 64.5 percent. The delta between GAAP and non GAAP gross margin in the 2nd quarter reflects the amortization of $8,500,000 2nd quarter GAAP operating expenses were approximately $47,000,000, which was below our GAAP guidance of $49,000,000 to $49,500,000 due mainly to lower than expected stock based bonus accruals. GAAP operating expenses included stock based compensation of $8,000,000, amortization of purchase intangible assets of $5,800,000 $400,000 in restructuring. Non GAAP operating expenses were $32,800,000, $33,000,000 to $33,500,000 transitional period with good success. After sequential reductions in 3 of the last four quarters, our quarterly non GAAP OpEx run rate was down 12% from operating activities in the second quarter of 2019 was approximately 12,400,000 versus 16,000,000 generated in the first quarter of 20 18. We made $15,000,000 in debt prepayments during the quarter towards our term loan as we continue to focus on debt paydown with our cash generation. In addition, we recently made to 198,000,000 and our loan balance down to 227,000,000 3 days, which was slightly below the prior quarter day sales outstanding of 64 days. Our inventory turns decreased slightly to 3.6 compared to 3.7 in the first quarter. That leads me to our guidance. We currently expect revenue in the third quarter of 2019 to be a approximately $77,000,000 to $83,000,000, down 30 down 3% sequentially at the midpoint of the guidance range. As you recall from our June 4th press release, we ceased shipments to Huawei in accordance with the Bureau of Industry And Security Action. We continue to evaluate potential scenarios that would result in legal resumption of shipments to Huawei, including license requests. However, our guidance excludes any potential revenue from Huawei Max Lanier will continue to comply with all government and legal requirements across our global operations. We cannot predict whether additional government actions may further impact our ability to ship to Huawei as the situation remains dynamic. Has reached as quickly as possible so the market driven trade can resume. Additionally, one of our test houses in Indonesia, Unisom, Adam, is going through an abrupt shutdown. As a result of the shutdown and ensuing employee strike, we are facing potential supply constraints for roughly 80 products and Q3. We expect connected home revenues to be down 5% to 10% sequentially, driven primarily by reductions in satellite demand, and subdued recovery on our connected home categories due to continued macro headwinds in the cable and satellite markets. We expect a mid single digit infrastructure revenue decline owing to the Huawei shipment ban and softness in our HPA business within this category. Which also tends to be a little lumpy. Distributor South route patterns, which coupled with a sequential improvement from a couple of key accounts, is expected to yield high single digit revenue growth. We expect 3rd quarter GAAP gross profit margin to be approximately 52% to 52.5% of revenue, and non GAAP gross profit margins to be approximately 63 percent to 63.5 percent of revenue, down sequentially due to a weaker mix owing mainly to the shift between infrastructure and industrial and multi market revenue. As a reminder, our gross profit margin forecast can vary plus or minus 2% depending on product mix and other factors. Even as we are focused on reducing our run rate spend levels, we continue to fund strategic development programs targeted at delivering strong top line growth in 2019 and beyond. With particular focus on infrastructure initiatives and our stated goal of increasing the operating leverage in the business. As such, We expect $6,500,000 to $47,500,000, driven mainly by the expected increase in our stock based bonus accrual and mask expenses, partly offset by reductions in professional fees and payroll. We expect Q3 2019 non GAAP operating expenses to be down approximately $1,500,000 sequentially, to a range of $31,000,000 to $32,000,000. We expect GAAP tax expense to be approximately 0 and non GAAP tax rate of 5%. We expect interest and other expenses in the quarter to be 2,800,000 We are pleased to report progress on our infrastructure initiatives highlighted by our expanding design engagements in 400 gig data center market, engineering milestones on our 5G massive MIMO transceiver platform and expansion of our infrastructure power management portfolio. As we continue to navigate through a turbulent connected home environment in the near term, we will continue to maintain strong profitability and cash flow generation as well as continue our pace of strategic investments. These infrastructure investments and strong execution, upcoming upgrade cycles in start to generate revenue in the second half of twenty nineteen and into twenty twenty. With that, I'd like to open up the call for questions. Operator? Questions. Our first question today is coming from Ross Seymore from Deutsche Bank. Hi, this is Gee for Ross Seymore. Thank you for letting me ask a question. I guess if you could just talk a little bit about the test the impact of the test house, strike that you mentioned. What category are those 80 products that are impacted by that, supply constraint coming from? And, is that demand going to be pushed out into the 4th quarter? Thanks, Jean, for joining us. So that particular product, most of the product is from our HPA portfolio, which falls structure. So probably those 2 categories. We are working diligently and hopeful that things can get resolved sooner rather than later. But we're also looking at all avenues, as this is a short term risk and they've definitely shortened the time frame more than we would typically expect in the circumstance. Okay. Thank you. And then as a follow-up, I guess, regarding to Huawei, how much revenue from the third quarter, I guess, is being taken out because of the restriction that's still in place. And, has the company already applied for exemptions to that restriction? So with regard to Huawei, so look, in our pre announced earnings report, we talked about the impact of Huawei. We kind of took the midpoint down about $3,000,000. So Huawei is not a big enough customer for us to break out specifically. But as far as the impact in Q2, I mean, you could expect that it'd be on that order. Thank you. Thank you. Our next question today is coming from Gary Mobley from Wells Fargo Securities. Hey guys, thanks for taking my question. I wanted to ask a question about the Connected Home business. According to your guidance for the third quarter, that business is probably about half of where it was 2 years ago. And, there's numerous reasons for that, I'm sure, but maybe if you can just walk us through the different components of that connected home business, what the moving parts are with the intention to maybe give us a sense of of where the bottom might be for that business? Pieces of it. But in general, I mean, there's the cable piece and connectivity piece. Talked a little bit about some of the improvements that are going on in the connectivity side. Mean, Verizon's finally ramping this platform. So we're encouraged by the MoCA developments there. But the rest of the business cable data specifically, as everyone's aware, has continued to drag, service providers aren't spending, not putting the investment there. We've kind of gotten through the tariffs and yet spending seems to continue to push out. So we do see weakness there. I mean, I'd like to tell you we're at the bottom. I've said this before. I feel like cable were kind of bouncing along the bottom and, it's a little deeper than I what we had originally anticipated. But we do see light up in the tunnel on the cable side. I think the satellite probably the one that's been worse than expected. I'd like it's been tough. Just some scribers have been down considerably. And, but I would say at this point in time, I mean, the risk has definitely come out. I won't say 100%, but we've definitely got a lot of risk out of that business. So as I look out into 2020, that particular piece feels a little bit better just because we're down at much lower levels. Okay. And as you've been trying to find different growth paths in the infrastructure side of the business. I think there's roughly 5 to 7 of those and you've had a multi year investment in an effort. Are there any of those different prongs that you feel less optimistic about today than say 3 to 6 months ago? So, Gary, obviously based on our comments just before your we are very excited about infrastructure initiatives. And in the prepared remarks, Steve refers to confidence in increasing in share prospects that means that our designs are doing well. We talked about content increases that is good to result from expanded portfolio or ability to offer bundling on that process and as a result of investments in power management. So in general, we're quite cited about where our investments are going and the prospects for the growth are. On the cautionary side, the timing is the bigger risk in terms of quarterly kind of estimations. We talked about our 4 100 gig PAM4 design in process and improve and the interoperability positive outcomes. So, our expectations for growth year from fiber optic was very, very modest and we are in the ballpark. So really nothing to subdue our optimism Still, these are infrastructure markets. They take time and we were in a nice ramp phase at Huawei, which was was part of the calculus. And so there is some level of disappointment about the Huawei situation, but outside of that, we feel very positive. Okay. Thanks Kishore and thanks Steve. Thank you. Our next question today is coming from Bill Peterson from JP Morgan. Your line is now live. Yeah, hi. Thanks for taking the question. It sounds like on the PAM4 side, things are progressing. It's our understanding that some of the 4 100 gig ramps are really, I guess, coming on pretty strong in the second half of the year. I'm wondering based off of, I guess, your design and interoperability testing going well. Should we think of upside to your prior view of single digit millions? Bill, you know, I think we have constantly reiterated that we don't expect a strong ramp of 400 giga year and our expectations have been modest. We stick to it. I think the proof remains based on the milestone activity that we are more we are more correct than otherwise. So I would not change any expectations. In fact, I think at this point, the pace is not any faster on the way the soak and the field trials are going on with this big hyperscale data center. So, I would not change my view on it. And in fact, I would caution you against thinking that there's a big ramp on setting right now on 400 gig. If any it will be towards the end of the year, not at this stage of the year. Okay. Thanks for that. I know that Huawei's, I guess, you know, it's not broken out as it's concerning out a 10% customer. But, you know, I guess, my understanding is that you're not only you're shipping, but are you able to engage or, for example, are some of your projects going to be postponed as a result of lack of engagements and And when, I guess, when should we think about that? Are you just going to be one of the bands lifted entirely or how should we think about that, going forward? So, Bill, it's very, this is a very, very difficult question to answer on these matters, especially given the various legal counsel we are taking and we want to make sure we abide by the laws of the country. And we are strictly following guidance for multiple advisories here. So, but I will not conclude anything about our own inability if we were permitted to do so to be really actively engaged because the products we're referring to are very unique in the attributes. There's no other provider for it. The risk is some substandard the primitive platforms being renegotiated, but I think that our offerings are so compelling in cost savings and performance that I think once things clear, we should be able to be readily ramped because the designs are done. Our next question today is coming from Alessandra Vecchi from William Blair. Your line is now live. Hi, guys. Just a quick question or follow-up, on the Unison impact. Can you quantify how much of an impact that was? If I'm correct, 80 products on your industrial marketing market is kind of is like 10% of total products. Is that about right? Yes. So, I mean, look, we're not going to break exactly the number. 80 products sounds like a lot of products, but these are HPA products. So there's less revenue per per line item. So, so I wouldn't say it's a huge number. I mean, it's very low single digits. So pretty comfortable, but it is a risk that we have in the quarter that we did highlight. And you want to note that you're not the only ones. I think there's been press releases in the preceding weeks from Unisend at the time where a number of big suppliers are actually big purchasers all there is assembly and test services are impacted. And we are a minor player in that, right. And the government's data are working to resolve the employee strike as a result of their abrupt announcement. So we are really hopeful that that will not be impactful on, but we had to put the cautionary note in the script. No, no, I understand. I guess we're just, I was just trying to back into the difference sort of between guidance and expectations given that you had already removed the Huawei when you pre announced. But I think you have a good you have a good metric, 80 parts, sort of a 1000 parts, you know, That's not a bad metric to think about it. And then lastly, you guys have been very, very diligent on the operating expense line I mean, how much is left there? Do we think about Q4 operating expenses starting to re increase? Is this sort of the new baseline level until the infrastructure, ramps start to contribute? So, Alex, I'll let Pete give a little bit more color after my comments here that look, I mean, that it's very, very difficult to say it is more or less there, right? It's a as a result of this is a part of the tactical approach and then a part of it is longer term strategic decision making process. And that's always blending in. At this point, I would not say that there's more left to come. On the other hand, I do know that next year, heading into years, we have roadmap items on infrastructure as it continues to invest. And we want to invest. It's not even because we were leaving too much opportunity on the table there. So I do expect the OpEx to increase, but may be able to give you a little bit more color here. I mean, I think we've been pretty clear that the OpEx trends down throughout the year and then start to grow again in 2020. So I don't want to get into specifics on what Q4 guidance is at this point. But as we've mean, we've consistently said that it kind of trends down throughout the year and then starts to grow again kind of in Q1 of 2020. Got it. Thank you. Thank you. Our next question is coming from Quinn Bolton from Needham And Company. Hey guys. Two quick questions. First, you guys seem to be pretty enthusiastic about the design traction you're getting for the 5G cellular. Product, but I couldn't quite tell if you were saying that you actually now have design wins for that product or just sort of design ins or design engagements. So wondering if you could clarify do you have kind of confirmed design wins to date or are you still working towards those? And then the second question on the industrial multi market, it sounds like a lot of that strength recently has come from China. I think most of your analog peers are talking about sort of uncertainty in China given the trade tensions So with 2Q, 2Q and 3Q up nicely in that business, are you worried about sustainability of that and do you think there could be some inventory hoarding going on in that business given trade tensions? Thanks. Queen, firstly, I want to address the 5G question that you raised. So you have to keep the perspective of our of our product investment initiatives. We always work with the product where we have a teaching, joint, development with a major OEM. We do not kick off the products. Even though we have such agreements in place, we have to 1st deliver a product that will very well, which we have done. Now we're in the process of evaluating it and designing support and activities ongoing. Design win is when the platform is selected and then the timeline set for when that will start ramping. So yes, from that perspective, we have a target timeline for the platform. We have timelines for the evaluation and the designing process and when the apart goes to production and so on. But, however, I would not deem it to be a design win in the sense where that something could go wrong in between, I would not want to take you and run there. Having said that, right? We got more than 1 OEM in the same timelines. So we feel that whatever we have guided you in terms of expectations about when we expect the 5G revenues to start next year there's no reason to modify that data at all in terms of delays or such. So yes, technically, no, materially, yes, and it's more than 1 OEM right now. It's 2 OEMs that are in the same timeline. Second, the question is you asked about the our high performance analog market, primarily you can call it industrial multi market and there's a portion of it infrastructure revenues. We also feared that the weakness in demand on these kinds of products that sell to distribution channel and that there is actually a soft piece of the demand. And actually there is, however, there are some products that are very specific to MaxLinear that's where in the process of sort of a product's product cycle revenue ramp and they're overcoming this weakness or softness that our other peers are experiencing. However, we seem to, for the most part, I stepped it However, we are seeing weakness in various other parts, those are at a totality level. We are not seeing that. And next what comes in the future, we cannot predict, right? I mean, that's very hard in the sort of a channel sales and not direct sales. And direct sales is hard enough. So, however, we've got a whole bunch of new products we launched by the end of the year. So whatever it is, it should be the big trust over the last 2 years since our acquisition of XR has been really to overall the product roadmap to bring the world's best ForEx and power management and subsequent to pace. A whole bunch of our management products will be announced and released at a very strong clip. So we feel that will grow. So So at this point, I think that we are cautiously optimistic on our industrial multi market revenues. It's always been our infrastructure infrastructure investments and the products are now sampling. And to some sense, we are not the gates to put us to go to production. It's our customers are going to be the gates to the timelines on this. So I hope that answers your question. Thank you. Our next question is coming from Tore Svanberg from Stifel Nicholas. Your line is now live. Yes. Hi, guys. This is Jeremy calling for Tori. I just wanted to touch again on the connected home business. It sounds like, I mean, you've talked in the past about, you know, there's been some well known supply change, challenges in terms of migrating production facilities out of China. Have those been largely resolved and is that impacting anything at this point in that business? And secondly, you've talked in the past about, you know, DOCSIS 3.1 market share bouncing out over time. Is that something that you're still seeing and anticipating in this business? So the first question was about the impact of supply chain transitions at our OEM customers. And the second question was about actually macro demand at the operator level and then how our share is being impacted by those decisions. I think firstly, I just want to say that there's been a sharp impact on the satellite side that Steve talked about. And that's really because of whatever, you know, that we want to keep in perspective is a good business. It's a very profitable business for us, very, very low investments to support the business. However, the macro demand situation in the satellite market has really weakened quite a bit. And for the forecast demand, they are they feel they are sitting on quite a bit of inventory and supply, while they figure out what their game plans are. So we are really suffering the video business court cutting impact. Having said that, on the cable data side, the cord setting should work in our favor. However, the cable operators themselves are not spending as much to deploy to roll out the new platform. So they don't spend levels are down. In fact, we suspect the TAM is down as much as 20% to 30%. Right now in the on a run rate basis right now. And between that, we had the supply chain related transition issues and a major OMRs who got acquired by Comcore. And that's more or less getting resolved. But I think the bigger impact right now macro demand softness that we are facing. And I think at the beginning of the year, we talked about maybe this year, 2019 will be down about maybe 15% relative to last year, but it looks like we're quite deeper than that, maybe 25% to 30% range. And really from a share per back to I would just give you one color is that the share loss has really happened where there's a new product platform qualification going on and going on. And so and the shipments will be happening not from our OEM, but from the other competitor OEM to whom we don't ship, which is the other platform. And I think that's where the share losses happen. But you do know that we always talked about market shares in this space being 50% plus minus 5% or so. And I think we're on the minus side right now. And that will get corrected itself in course of time as we enter the first half of next year. Great. Thank you. That's very helpful. And Steve, just a quick question in terms of the CapEx this quarter was very low. Is that something that should we think about, being a longer term shift, or is it just a 1 quarter type thing? Thank you. Yes, I think it's a little more 1 quarter. I mean, we, I don't see anything changing dramatically on that front. I mean, we've said that it's typically about about $10,000,000 a year and I don't see it changing dramatically from that. Great. Thank you very much. Thank you. Our next question is coming from Christopher Rolland from Susquehanna. Line is now live. Hey, thanks for taking our question. This is David Haber on behalf of Chris. Just a follow-up on the massive MIMO opportunity. In the past, you guys have talked about that opportunity really be in between you and the 2 big analog players, and that if the revenue for that opportunity is split three ways, that's really revenue for you guys. When you look at across the competitive landscape there, what gives you confidence in your product that you can come in and take significant share and maybe take a third of the share in 2020 or 2021? I mean, you're absolutely right. We are not the incumbent. We have a new entrant in this market space. And our competitive position comes from our product and that we have built the product, not just without any fee back to OEM like we talked about with a Tier 1, teaching OEM customer. They build a product that they want that they can use. And that's a real next generation product when those customers move from FPGs back end platforms to ASIC based deployments and that's when we want a more integrated cost down solution. You have to keep in mind that the 5G will not ramp without a massive cost down process because if you look at the proliferation of radio transceivers inside the remote radio unit cost is incredibly important part. And what did we do for that? We integrated a 4x4 configuration in 14 nanometer CMOS, none of our customer competitors have any of that kind of solution. We have dramatically reduced the power consumption by more than by almost half. And so for our competitors react, that will take another 18 to 24 months at the minimum. That's like a world class execution, which will give them credit call. But right now, we have the product We are the ones that that can show the performance and the level of integration and that's what matters. So we feel very, very good that This is going to be a sort of a cyclical process, right? You get in, you get the socket that the guys have to catch up, then shares will shift over time, but all in all, on an average, The normal scenario is a third of the market. Our best case scenario should be substantially more than that. So, right now, let's go with the 3rd of the market share. Understood and great. And then just following up there, again, on massive MIMO, when we think about, massive MIMO, there's also a push to a newer 4G base stations to add massive MIMO capability. You guys benefit from that at all or is your solution specific to 5G? Firstly, I think 5G is catch all, right? Anything that old 4G doesn't do is called 5G. So I don't want to go to the semantics of what its 5G is right now. But you just think of a 4G that enhanced with more massive MIMO transceivers is really 4G plus And that's where the initial deployments of 5GR, they're really not 5G, they're 4G plus. And that means more mimo configuration instead of doing 2 by 2 or 3 by 3, they're going to 16 by 16 or 32 by 32 in those platforms sort of a refurbishment of those platforms. And we should benefit from that when that were happening. But right now, we are not in those platforms because the part has just started sampling about 3, 4 months ago and doing well. But as that picks up momentum, we would be in a place to participate in that. So it should benefit us, but Honestly, we talk of Cal and San in the 5G space. That part is already included in that mathematics. So I don't think it's sort of a 0 sum game that you and 5G at that level. Makes sense. Thank you. Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments. Thank you, operator. We would like to the attendees here to know that we reported speeding the Jeffrey Semis And Communications Infrastructure Conference of Chicago on the August 27, at the Deutsche Bank's Technology Conference on September 10th in Las Vegas, we hope to see many of you there. With that being said, we thank you all for joining us today. And we look forward to reporting on our progress to you in the next quarter. Thank you. Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a