Earnings Call: Q3 2018

Oct 30, 2018

Greetings, and welcome to the MaxLinear Third Quarter 2018 Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Nugent. 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 third quarter 2018 financial results. Today's call is being hosted by Doctor Kishore Sindripu, CEO and Steve Litchfield, Chief Financial Officer and Chief Corporate Start Strategy Officer, After our prepared remarks, we will take questions. Our comments today include forward looking statements within the meaning of applicable securities laws including statements relating to our fourth quarter 2018 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 improved revenues in our broadband markets. These forward looking statements involve substantial risks and uncertainties including risks arising from competition, our dependence on a limited number of customers, average selling price trends Risks that our markets and growth opportunities may not develop as we currently expect and that our assumptions concerning these opportunities may prove incorrect and numerous other risks outlined in the Risk Factors section of our recent SEC filings, including our previously filed Form 10 K for the year ended December 31, 2017, our Form 10 Q for the quarter ended June 30, 2018, and our Form 10 Q for the quarter ended September 30, 2018, 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 third quarter 2018 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 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 of 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's analysis of our business. Lastly, this call is also being webcast and a replay will be available on our website for 2 weeks. And now, let me turn the call over to Keeshore Seemed Repo, CEO of MaxLinear. Thank you, Brian, and good afternoon, everyone. Thank you all for joining us today. Our Q3 2018 revenue was $85,000,000, comprised of Connected Home at 49%, infrastructure at 23% and industrial and multi market at 27% of overall revenue. Overall revenue was down 16% sequentially, specifically Connected Home was down 46%. Infrastructure was up 1% and industrial and multi market was down 9%. In Q3 twenty eighteen, we delivered solid profitability with earnings modestly above target along with strong operating cash point one transition has proved challenging OE to customers drawing down inventories in conjunction with unanticipated new product ramp patient delays at their customers, we are now witnessing improvement in customer order patterns. As a result, starting in Q4, we a gradual improvement in cable revenues in line with our previous outlook. We intend to manage our expenses prudently while preserving operating leverage even as we navigate through product transitions in our cable business and the timing and certainty of new design win ramps in the infrastructure markets. Through Q3 twenty eighteen, we continue to execute well on our ongoing multiyear revenue diversification investment strategy specifically driving strong revenue growth in infrastructure and medium growth in industrial and multi market, while sustaining our highly profitable albeit slow growth revenues in Connected Home. We are gaining confidence in both the intermediate term prospects of our wireless backhaul and data center interconnect initiatives, and the longer term prospects of our broader wireless access and higher performance analog infrastructure initiatives. With the developing strength of our infrastructure business and the stabilization of our Connected Home business in Q4, we not only expect overall revenue to grow in Q4, but are also confident of driving more meaningful scale longer term. Moving on to some of the more exciting product and technology highlights in the large and attractive networking infrastructure markets. Based on our year to date results and our Q4 outlook, our wireless business is expected to post well over 20 share gains along with the initial ramp up of our backhaul auto transceiver product. 2 of the top 3 wireless backhaul OEMs are entering per action with our wireless backhaul RF solution this year. Our RF solution is the only one to support channel aggregation, which is quickly becoming a critical operator requirement to double data capacity in existing 4G and future 5G transport networks. We will be able to drive more modem share gains in 2019 with 5th generation microwave modem, which we just started a sample. On the 5G wireless access infrastructure side, we are on track to sample our 14 nanometer CMOS wireless access transceiver solution in early 2019. We expect to be in a strong position to intercept the wireless market transition to the large massive MIMO 5G wireless access infrastructures slated for 2020. Q3 2018 brought us closer to securing the 2nd leg of our multiyear infrastructure initiative. We taped out our first 16 nanometer fiberoptic 400 gig PAM4 production silicon, addressing inside the data center applications. As a result, we are in a strong position to parse paid in the initial 400 gig PAM4 deployments, supporting a large Tier 1 hyperscale data center build out with mass productions later for the end of 2019. In the meantime, our solution continues to draw strong engagement from the world's largest optical system suppliers, gearing for subsequent next generation data center deployments. At the European Conference And Optical Communications late September, we successfully demonstrated a key 400 gigabits per second breakout mode clocking requirement for 400 gigabit PAM4 data center applications. In the breakout mode, a 400 gigabits per second PAM4 DR4 module incorporating our Terride system on chip platform process the 4 incoming 100 gigabits per second fiber lanes as independent 100 gigabits per second ports and connected them interchangeably to 4 independent 100 gigabit DR fund 1 or FR1 modules on the other side. We expect the initial 400 gigabit data center deployments to be dominated by Doctor4 modules used in a breakout application. As the 1st and only solution to market with proven breakout mode talking along with superior power and cost benefits derived from being the 1st want to integrate the CMOS EAML laser drivers and PAM4 DSP in a single chip. We are well positioned to be a key enabler of the upcoming data center upgrade cycle. We also recently announced several important design wins for our connectivity solutions, TriAX has selected MaxLinear 0 to 10 power line wave to connectivity chipsets to enable an innovative new family of enterprise grade Wi Fi multi gigabit network products, targeting hotels, housing associations, and small businesses leveraging existing coaxial cable infrastructure. Additionally, in coax networks has developed the world's 1st multi gigabit coaxial cable based access solution using our MoCA access 2.5 networking chip. The IncoAC solution enables telcos and MSOs to quickly deliver data services to multi dwelling units in a cost efficient manner using its powerful multi point networking capability. We are also witnessing encouraging early stage multi gigabit MoCA in home connectivity deployments at the major Tier 1 North American telco provider, which we referred to in earlier calls. We're increasingly optimistic about our near and intermediate term for the connectivity business. With that, let me turn the call over to Mr. Steve Litchfield, our Chief Financial and Chief Corporate Strategy Officer for a review of our Q3 business results and our forward guidance. Thank you. Sure. I will first review our Q3 2018 results and then further discuss our outlook for Q4 2018. On revenue of $85,000,000, we saw Connected Home decreased 26% driven entirely by the step down in DOCSIS 3.0 shipment affecting both MOCA and cable products combined with the lack of meaningful ramp on the DOCSIS 3.1 side. Outside of cable and MOCA, each of our other connected home product categories were up quarter over quarter. Our infrastructure business was up 1% sequentially, led by double digit sequential growth in our HPA business owing to a recovery at CTE and improving demand across server and enterprise markets. On the industrial multi market side, sales were down 9% sequentially due to push outs of a few smaller programs, along with declines resulting from the end of life actions taken in previous quarters to clean up the portfolio. Gas and non GAAP gross margins for the third quarter were approximately 51.6% and 62.5% of revenue, respectively. This compares to GAAP gross margin guidance of 51.5 percent and non GAAP gross margin guidance of 62.5 percent. The gross margin decline from the prior and non GAAP gross margins in the 3rd quarter reflects the amortization of $9,000,000 of purchased intangible assets from previous acquisitions and $200,000 of stock based compensation and stock based bonus. 3rd quarter GAAP operating expenses were approximately 56,400,000, structuring charges and $2,200,000 of impairment losses related to 2 product categories from our XR acquisition. Rather than deploy additional resources to support these noncore products, we have chosen to focus the efforts of our sales and R and D organizations on more sustainable, differentiated and larger addressable markets. GAAP operating expenses, including amortization of purchased intangible assets of $8,000,000, stock based compensation and accruals related to stock based bonus plan of 7,800,000 and $2,300,000, respectively, $2,200,000 in intangible asset impairment charges $200,000 in restructuring and $300,000 in depreciation related to a step up in acquired fixed assets. Non GAAP operating expenses were $35,600,000, which was down $1,600,000 sequentially, and $400,000 below our guidance of $36,000,000 due to disciplined expense management. Rounding out our commentary on operating expenses with the new revenue levels we are working diligently to moderate the spend during this transitional period. We expect the core operating expense run rate come down in coming quarters as we tightened the spend and larger development efforts wind down. Although seasonality and mask related spending will cause quarter to quarter fluctuations within our total spend. Moving to the balance sheet and cash flow statement. Our cash flow generated from operating activities in the third quarter of 2018 was approximately versus $35,800,000 generated in the second quarter of 2018. We made $35,000,000 in debt prepayments during the quarter, towards our term loan. In addition, we recently made another $7,000,000 debt pre payment during Q4. This brings the total pre payments to 155,000,000 and our loan balance down to approximately 270,000,000 Our day sales outstanding for the quarter was day sales outstanding of 75 days. Our inventory turns decreased slightly to 3.8 compared to 4.0 in the 2nd quarter. That leads me to our guidance. We currently expect revenue in the fourth quarter of 2018 to be approximately $85,000,000 to $89,000,000. We expect connected home revenues to be approximately flat and account for roughly 48% of overall revenue with improvements in cable data and MOCA, offset by declines in satellite after a strong Q3. We expect infrastructure and industrial multi markets to each represent approximately 26% of overall revenues. Infrastructure continues to perform and we believe is on track to deliver strong double digit growth for the year. Within industrial and multi market, we expect revenue of revenue and non GAAP gross profit margin to be approximately 63% of revenue, up sequentially due to improved mix. As a reminder, our gross profit margin percentage We continue to fund strategic development programs targeted at delivering strong top line growth as we look forward into the first half of twenty nineteen and beyond. With particular focus on infrastructure initiatives and our goal of increasing the operating leverage in the business. As such, We expect Q4 twenty eighteen GAAP operating expenses to decrease approximately 400,000 quarter on quarter to approximately 56,000,000 with the largest decrease coming from the removal of IPR and D impairment charges incurred in Q3. We expect Q4 2018 non GAAP operating expenses to be up $1,700,000 sequentially, to $37,250,000, driven primarily by production tape out expenses related to our data center initiative previously highlighted. We expect GAAP tax expense to be approximately We expect interest and other expenses in the quarter to be $3,300,000. In closing, we navigated through a transitional environment in Q3, maintaining strong gross margins and earnings above plan, while generating $31,000,000 in operating cash flow. Our near term revenues have been impacted by Our focus remains on accelerating our evolution to a multi product cycle based growth company focused on large networking infrastructure market, Our 3 verticals of multiyear investments spanning wireless, wireline and access infrastructure remain on track for growth. With that, I'd like to open up the call for questions. You may press star 2 if you'd like to remove your question from the queue. You. Our first question today is coming from Quinn Bolton from Needham And Company. Your line is now live. Hey guys, congratulations on the 3rd quarter results. And alloy for the fourth quarter. I wanted to start on the cable side of the business. Your biggest customer there obviously going through a transition from DOCSIS 30, to 31. It sounds like DOCSIS 301 shipments are starting to ramp, but was hoping you could provide some more color on that DOCSIS 3.1 ramp And then also that customer does seem to have, a portion of its manufacturing in China. And I think it's publicly stated their intent to try and move away from the China production location, wondering what potential, yeah, whether that creates slumpiness in the orders is they ramp down one location and try and ramp up manufacturing in another geography? Thanks. Hey, Quinn, this is Steve. Yeah. We're definitely, cognizant of this transition that's taken place. I think we're making some really nice progress. When we spoke last quarter, there was a lot of unknowns out there with regard to the transition. But the customer's clearly gotten the qualifications and we're starting see some improvements in our shipment levels. The 3.1 transition is definitely improving from a maxillinear perspective, for sure. The, I think that's evidenced in the guidance. And I we spoke about this previously that we weren't expecting a snapback. We thought it would go over, you know, multiple quarters and we continue to believe that's true today. The tariffs situation that you've raised And, and as far as the shutdown with the, you know, ARRIS Manufacturing in China, we are aware of that and we're watching as we're watching all of, you know, the tariff situation in general with regard to China, we see a lot of customers that are moving manufacturing, And so that's, you know, while we haven't seen huge impacts to date, we do anticipate that in Q1 and so we're watching closely. And that also guides some level of caution and, guarded, you know, forecast on our side So we are all in the same boat. We are not impacted on the products we purchase because most of our material is really chips and packages, and we don't import none of our customers for the most part import any chips of ours into the U. S. Territory However, our customers do, do their manufacturing and their significant supply chains, travels in the gold and the world. We don't know how much proportion goes China versus non China. So I think we just have to wait and watch how it plays out. Okay. And then maybe sure second question just on the PAM4 ramp, you mentioned a large hyperscale customer looking to ramp at sort of the end of 2019. I know it's sort of further out, but it sounds like that could be some meaningful volume for you in 2020. I'm just wondering if you might be able size, how large of an opportunity do you think that could be in 2020 as that customer starts to ramp? I mean, is that 100 of 1000 of module could that be a 1,000,000 plus modules in the 2020 timeframe? So, Quinn, that's, first, let's just address, you know, what is the status and position in terms of when the ramp happens, right? So really like I told before, we have one is one hyperscale data center player who is currently committed to start ramping 400 gigabit PAM4. They were the first ones who are committed in the path to some field trials, which is basically a pilot plant where they test out all the 4 gigabit PAM4 interconnections. And, we're all in competition for that socket. Right? And once you're selected, there's a so period, and we expect the ramp to start at the end of the year. So we even in sample quantities, there is some expectation of some, modest revenue in the 1st couple of quarters and maybe a snap up in revenue towards the end of 2019 heading into 2020. Regarding the volumes anticipated, in 2020 for the hyperscale data center and the number of, number of millions of units you're asking about. I think that's harder. You cannot bank that on only on 1 data center, right? So if you assume that there are about 500,000 ports per hyperscale data center, just to be in the middle of the field here, that's quite substantial quantities. We are expecting and hoping that there'll be more than one data center that's coming up. So I think when we showed our TAM slides, in the investor decks in the not and it's on our website. I think we show about maybe 2,000,000,000 ports of PAM4. And of that, you know, even if you have not 2,000,000 ports, hopefully, the 1,000,000 plus in the range. And given our prime position in having the most mature and advanced product, in terms of production readiness, we hope to gain a significant share. We do believe there's one other competitor and how are the market is quite potential for Mark. Your line is now live. Hi, guys. I had a question about the OpEx outlook for 2019. First I'm wondering if you've had a chance to sit down and sort of outline what you're thinking in terms of OpEx spend throughout the year. I think you mentioned about a 1,700,000 quarter over quarter increase in Q4 per your guidance, but most of that related to some tape out expenses. Would you expect some moderation from that in to start 2019 and how were you thinking about the overall trend in OpEx, throughout all of 2019 relative to 'eighteen? Yes, Gary. So we spoke about this previously. I mean, we do expect, we've got an increase spend going into Q4. But I would emphasize, and I know we said it in our prepared remarks, but I'd emphasize that we've done a lot of work just on the OpEx side. And we do expect a lot of our costs to come down in Q4 with the exception of this mask spent. So, we do have an uptick there. I do expect 2019 to come down as a whole. We see overall spending moderating a bit, but I would say that we've really been disciplined on just overall OpEx spend. So I think it could be down 3% to 4% next year. Not a huge number, but I think a very meaningful number. Now there's going to be some fluctuations from quarter to quarter. The only other thing I don't wanna guide, you know, what OpEx is expected to be in Q1, but I would highlight, you know, you do have increased taxes coming in in Q1. And and we do still have some some mask that'll that'll be in that quarter, but for the year, I do expect it to come down. Okay. Gary, one way to look at the number is if you were to reverse out the, a typical 16 nanometer tape or cost and you would get a sense of, that the run rate OpEx minus the mask is actually trending downwards. Okay. Normally, your connected home business sees some seasonality, I think, in this 1st part of the year, just given the situation with your largest connected home customer and and potentially this transition, the flip side of the transition from to DOCS-three zero one. How would you call the direction of the connected home in Q1 considering those 2 issues? Firstly, we're not providing guidance for Q1, but you called it right. We do have seasonality in Q4 and Q1. And it's very it's always been very hard for us to how to measure Q4 in Q1. And then top of that, you add this transition to 3.03.1 and how our major customer and 1 major operators ramp has played out Obviously, the seasonal patterns are getting a little muddied up here. However, it is not advised to think that there will be seasonality And then, and then at the same time, you know, you have to be cautionary about the impact of tariffs. And I think you want to take, consideration all those factors. Having said that, I mean, we are actually internally quite excited because Finally, we are back on revenue growth. And I think it's incredibly meaningful, meaningful, you know, events for us because every time you can guide as much as you want, but finally, you have to see that the corner turn, and we are turning the corner of the revenue, and we are very happy about that. I think, moving onwards, we should be growing. And, so I think Q1, well, it flat or slightly down or not, I I've not been particularly bothered by it right now. Okay. Steve, just a quick question on the tax rate. You're still expecting that 7% non GAAP tax rate in 2019? So I don't think, that we provided that guidance before. I think we were still a little bit on the fence, but we are, feeling much more comfortable that 2019 does look like 7%. That's correct. All right. Thank you guys. Thank you. Our next question is coming from Ross Seymore from Deutsche Bank. Your line is now live. Hi guys. Congrats on the stabilization here. A quick question, kind of macro, but specific to one of your segments on the industrial and multi markets. You talked about some one offs that weighed on the third quarter, but then you're guiding it flat for the fourth quarter, given what's going on with some of the other kind of broad based analog guys. Can you talk about anything you're seeing with any weakness in that market? Yes, I mean, look, Ross, you're right. I mean, we're definitely cognizant of what's going on in the rest of the world. There were some kind of one time, I guess, unique aspects of last quarter and that was a big sequential decline, flatness this quarter. I mean, we're optimistic. I think we've got a small enough business and we've got some unique product offerings with some bigger customers that are expected to ramp in 2019. So I feel really good about our multi market segment. But you know, your your point that what others are seeing, look, we're aware of it and we're watching it closely. But right now, we feel pretty good in the first half that we start to see more of that pickup due to that unique product offering. Thanks for that, Steve. And then I guess in general in your infrastructure business, When you talk about the moving parts, the HPA being up double digits sequentially, etcetera, can you just talk about some of the drivers seeing right now between the sub segments? And I guess even more of a general question as we're seeing some of the wireless comms guys out side of MaxLinear seeing some early 5G ramps. Just how are you feeling about the trajectory of that business as we exit this year heading into next year? So Ross, let me give you some qualitative color and number specific. I will see if Steve can chime in to the extent that we have the numbers. So the 1st and foremost, really, our growth on infrastructure is being driven by strong growth in wireless backhaul. I mean, takes a while and when it ramps, it's ramping and we're gaining more and more market share. So our really, our growth in wireless is really, dependent upon how well our microwave backhaul, and millimeter wave backhaul is growing. It is growing strongly. And we're adding more design wins into the ramp cycle. So and the good news is that we're the only full end to end system and we're adding more, additional offerings on capabilities for 5G networks. So we hope to have more share. And really, I think we may be one of the one or one, if not the only one with such an offering, right, outside of an internal solution. So that's what is driving our infrastructure growth. Regarding the 5G wireless access, like we have said, we hope we are going to be sampling in Q1, early Q1, our our 5G massive manual radio transceiver in, in 14 nanometer CMOS. So we are not sampling a solution yet. So clearly, we cannot expect to have revenue ramps that are, that may be happening for some other players. But I want to assure you that any revenues people are seeing in 5G are really, really related to somewhat very discreet component type, implementation using older generation products. So they're really not cost effective or competitive. The market from our understanding, working with the top OEMs that we actually worked with and have joined development agreements with, they're pointing to that. You need much more, integration configurations of 4x4 or 8x8 to really make this a very cost effective solution offering to really drive the market to larger volume. And we'll be very well positioned for that in 2020. Yes. I mean, with maybe with regard to any numbers, it has been growing nicely. I do debate us to see that continue in 2019. So we can see north of 20% in 2019, which we're really excited about. I mean, the 2 big drivers of this in the current quarters as well as in our guided quarter is the HPA side, which we highlighted in the prepared remarks. And the backhaul. And backhaul continues to be probably the biggest growth driver within infrastructure for 2019. And just one final clarification. The 20 percent plus you guys talked about for growth, is that the entirety of that infrastructure segment or are you specifically just talking about the wireless back haul side? So for 2019, it is for the entirety of the box. Yes. Great. Thank you. Our next question is coming from Tore Svanberg from Stifel. Your line is now live. Yes, thank you. A few questions. Let me start with Connected Home. Do you have a sense already now where you stand on the Docs is 3 LOLO-two 31 transition. You know, just trying to sort of, on, you know, to get a feel for where the inventories, or how far the inventories have come down on 3.0? And if you're actually starting to see some revenue contribution from 31? So, sorry, this is Kishore. It's a very good question. And I think I would like to answer it, in, in two steps. Firstly, today, on a run rate basis, you could say that our, our 3.03.1 revenues, we are about 75% 3.0 and 25% 3.1. We have been shipping pretty strongly 3.1 for non you know, Comcast and customers. So actually things are going very strongly at another big operator. So we are doing very well there. It's really, it's really the ramp at end customer in Comcast for the MaxLinear's platform has been slow to transition and it really has faced multiple qualification delays that are nothing related to our performance. We've been waiting for 3 years for this to happen. However, now, it's beginning to happen. We have some backlog that is showing some modest growth And, I think the registrants or the shyness to forecast how the ramp plays out is really because, as of you pointed out, our major customer is doing some factory transitions, potentially due to tariff reasons. And so we just careful about it. However, we are seeing some orders in growth in DOCSIS 3.1. So how does 2019 play out? I think that by the end of the first half of next year, which should be a normal patterns where the world is sort of in some level of equilibrium where even in the new standard, we are 50%, less minus 5% with the max linear Intel platform percent. So we don't see a longer term impact, after first half of next year. But short term, I think this is going to be a slower recovery into the market share at this particular operator and nowhere else. Having said that, outside of these 2 operators, one where we're doing where things are going strongly and the other one where we are sub from a transition related to our particular platform of those transitions, we are very, very well positioned. And even though those ramps are going slower because their ramps are much more delayed. And there, we do not have the qualification issues that this particular platform suffered from. That's that's very helpful, Kishore. And, I think you mentioned you expect Molka to actually grow in Q4. Should we conclude from that? You've already seen some secular declines there and now you're actually starting to grow again in MOCA or is this more of a sort of a 1 quarter specific thing? So I think the answer, it's actually, yes, we've kind of gotten it down to a level that will start to see us grow from. Q4 is in particular, it's pretty strong. I don't think that that specific level is sustainable forever, but we're seeing a nice uptick and optimistic about 2019 as a couple of these guys start to see a ramp. Yes, I think that as these particular North America Health cooperator ramps up, ramps up, we hope for more upside than what we're currently expecting. So let's cross our fingers and see the ramp. Settling properly. And then hopefully, we can do better. Great. Good. And last question, just to clarify, so you said that infrastructure is on track to grow more than 20% this year, but you're also expecting infrastructure to grow at least 20% in 'nineteen. Did I hear that correctly? So the correction, Torey is that in 2018, wireless grew more than, wireless and cassette grew well north of 20%. However, Steve added color, that in 2019, we'll grow about 20% with infrastructure as a whole category. So Hopefully, if you do better than much better than that, but, yes, infrastructure is a full category. It should grow more than 20% in 2019. And we feel really good about it. Now, if you get some luck on the 400 gig PAM4 fiber optic stuff, that'd be very nice if the Subram happened earlier. So, but we like our position where we are and we're quite excited that the big investments are behind us on the infrastructure side. Sounds good. Thank you very much. Thank you. Our next question is coming from Christopher Rolland from Susquehanna. Your line is now live. Hey, guys. There was a story out from Bloomberg. I think it was last week, talking about your largest competitor out there in cable and satellite and, and them being, examined for, call it aggressive business practices by the EU. Have you guys seen any of these tactics, you know, stuff like bundling or or like aggressive tactics from their side? And do you think this is weighing on your business at all? So obviously non GAAP investigation in the EU, we would not know what's going on inside the EU, right. However, partition, I think we don't rely on governments to make us competitive. We have always come this far at this size by being best at what we do and we differentiate with the technology platform. And I think nobody can tell that Max Vineyards has not won its battles purely on a competition basis in the market we have chosen. So yes, if there are competitive dynamics that are related to bad behavior from competitors, we hope the governments look into it and hopefully hopefully it's a net positive for us. I cannot comment on speculative tactics on any competitors. So we, Chris, I mean, just to be clear though, I mean, we've, we competed here for years and years amidst this environment. So I don't, if anything, this ends up being a net positive, but, but, but there's really no no concern about competing in these markets where we are today. Yes. I was just wondering if you had seen an increase in intensity in terms of their aggressive practices, but it sounds like you haven't seen much. We cannot comment much for sure. Okay. And then, I guess one for you, Kishore. So, on the new product front here, how would you describe what you have coming, call it, 2019 or 2020? Is it just really to kind of focus on stabilizing home right now and growing infrastructure? Or do you guys have some new product launches that you guys are working on and maybe we could expect something next year? Absolutely. Civilizing our connected home revenues, of course, is fussed and foremost even a focus on and we feel we're back on a path of growth and to a large part, we attribute to that to a stable base from which we can start growing or connected home revenues, right? Things reverting back. But our focus for the last 2 years and maybe earlier and looking forward is absolutely in the infrastructure space. And we have, new products that are at the brink of into production of RAM. 1 is the 400 gigabit PAM4 fiber optic product. We are, we are in the process of early 2019 sampling of our 5G wireless access, RF transceivers. And then, you know, we are also on track to sampling our new generation of microwave backhaul modem as well. So I think those are the new products. But if you look beyond that, our, our focus would be expanding our footprint in those markets in the infrastructure. We have a strong foothold as a result of these path breaking technology products that we are launching. And I think that's where you should expect some focus on. And regarding the Connected Home, obviously, as a cable will go through its transitions from DOCSIS 3.1 to full duplex DOCSIS 3.1 for for, 10 gigabit services to home. And once again, there, we are again leading the charge in the front. And I generally refraining from talking about it until we get through the 3.03.1 transition and, getting some sense of credibility and how we are predicting the future to play out. So yes, There will be investments in the full Duplex DOCSIS market as well. Thank you. We've reached 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. Thank you all for attending this call. I just want to give you a reminder here that we'd be participating to need him, networking, and security conference. On November 13th in New York. The benchmark discovery 1 on 1 conference on November 29th in Chicago, Illinois. The BMO Boston Growth Conference in December 4th in Boston and the Wells Fargo Technology Summit on December 5th in Park City, Utah. And we hope to see many of you there. With that being said, we look forward to reporting on our progress to you next quarter. Thanks a lot. You. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.