Martin Yang

Martin Yang asked about the potential impact of the CV7 launch in the latter half of the year on Ambarella's seasonal patterns and sought insights into the overall ASP uplift expected for the year compared to fiscal year 2026.

Answer

President and CEO Fermi Wang expects the CV7 ramp-up in Q4 but no material revenue this year. He highlighted CV7 as Ambarella's first 4nm chip, offering 2.5x higher AI performance than CV5, with significant customer interest and design wins. Mr. Wang anticipates a premium ASP for CV7 compared to current CV5 ASPs, though negotiations are ongoing.

Martin Yang asked if the initial launch of the CV7 in the latter half of the year could alter Ambarella's seasonal patterns. He also sought insight into the expected overall ASP uplift for the year compared to fiscal year 2026.

Answer

President and CEO Fermi Wang expects the CV7 to ramp up in the fourth quarter but not generate material revenue this year. He highlighted the CV7 as Ambarella's first 4-nanometer chip with 2.5x higher AI performance than CV5, noting significant customer interest and design wins, which confirms demand for higher AI performance. He anticipates a premium ASP for CV7 compared to the current CV5 ASP, though negotiations are ongoing.

Martin Yang inquired about the growth of Ambarella's IoT customer, Arlo, and its relative contribution to the company's overall average selling price (ASP) and margins. He also asked whether next year's drone products would primarily utilize Ambarella's image processing capabilities or deploy AI functions related to autonomous flying.

Answer

CEO Fermi Wang confirmed that Arlo is Ambarella's largest customer in the top 10 list, with its revenue roughly doubling year-over-year, utilizing multiple chips across various ODMs. For drones, Fermi Wang stated that next year's products would incorporate both image processing capabilities and AI functions for autonomous flying, with some customers using video plus AI for simpler CNN-based functions, and others leveraging AI for complex tasks like object avoidance and path determination.

Martin Yang asked about the growth of Ambarella's IoT customer Arash, inquiring about its relative contribution to the company's overall average selling price (ASP) and margins. He followed up on drones, asking if next year's products would primarily use Ambarella's image processing capabilities or deploy AI functions for autonomous flying.

Answer

CEO Fermi Wang identified Arash as Ambarella's largest customer in the top 10 list, noting their revenue roughly doubled year-over-year. He explained that while exact revenue contribution is hard to track due to multiple chips and ODNs, Arash is undoubtedly the largest customer. He confirmed that future drone products would utilize both Ambarella's video plus AI for simpler CNN-based functions and advanced AI for autonomous flying capabilities like object avoidance and path determination.

Martin Yang from Oppenheimer & Co. Inc. inquired if the strength in portable video products is driven by a single key customer or a broader base. He also asked if the company's guidance accounts for any potential impact from the ongoing lawsuit involving its customer, Insta360.

Answer

CEO Fermi Wang stated that while Ambarella has multiple customers in the portable video space, Insta360 is the largest and a key driver of growth due to its transition to higher-ASP CV5-based solutions. VP Louis Gerhardy added that this customer uses Ambarella chips across seven different product lines. Regarding the lawsuit, Wang said Ambarella cannot comment on the outcome and that its forecast is based solely on purchase orders received from customers.

Martin Yang from Oppenheimer & Co. Inc. asked if the second Edge AI infrastructure chip was a new development reacting to market demand or part of the long-term roadmap, and questioned if the higher-than-normal accounts payable was related to this new chip.

Answer

CEO Fermi Wang confirmed the second chip is a new project initiated in reaction to customer feedback, noting it leverages existing architecture for faster development. CFO John Young clarified that the increase in accounts payable was not for the new chip but was a function of building inventory to support the strong overall demand outlook for Q2.

Martin Yang asked if challenges with European and U.S. customers would alter the margin outlook for automotive wins and what the key long-term drivers for company-wide margins are.

Answer

President and CEO Dr. Fermi Wang projected that future CV3 production revenue would likely fall at the low end of the company's 59-62% long-term gross margin model due to intense competition. He noted that while short-term margins are dictated by product mix, the long-term strategy is to sell value, which has been successful with the 5nm transition, giving him confidence in the current business's margin profile.

Martin Yang asked if the consumer IoT segment contributed to the strong Q3 revenue guidance.

Answer

CEO Fermi Wang stated clearly that the consumer IoT (or 'IoT home') segment did not contribute to the strong Q3 guidance, as that market remains weak. However, he noted a future opportunity could arise if consumer device makers adopt more advanced AI models like VLM or CLIP, which would require more powerful chips like Ambarella's CV75, creating a better product-market fit.

Martin Yang requested more context on the Q4 cumulative catch-up adjustment, asking if it related to specific product categories or customers, and if adjustments were both positive and negative across customers. He also inquired if the 2026 guidance incorporates Universal Display's own view on end-market trends or solely relies on average third-party growth projections.

Answer

Brian Millard, Chief Financial Officer and Treasurer, clarified that the cumulative catch-up was across all customers, with some positive and some negative adjustments netting out to the reported figure, and was not specific to any end market. He confirmed that adjustments can go both ways for different customers in any given quarter. Regarding guidance, he stated that the foundation is customer forecasts, reflecting OEM demand, and that the midpoint aligns closely with market research firm projections for mid-single-digit area growth in 2026. He also noted expectations for increased growth rates beyond 2026.

Martin Yang (Oppenheimer and Company) requested additional context on the Q4 cumulative catch-up figure, specifically if the adjustment was tied to particular product categories or customers. He later asked for confirmation if the catch-up involved both upward and downward adjustments across different customers and if the 2026 guidance solely relied on third-party average growth or incorporated Universal Display's own end-market views.

Answer

Brian Millard (CFO, Universal Display) clarified that the cumulative catch-up was a net figure across all customers, with some positive and some negative adjustments, and was not specific to any particular end market or application. He confirmed that typically, each quarter involves varying directional adjustments for different customers. Millard stated that the 2026 guidance foundation includes customer forecasts and their insights from OEMs, with the midpoint aligning closely with market research firm projections for mid-single-digit area growth.

Martin Yang asked for the reason behind the higher-than-normal contract research service revenue and requested a concrete example of how AI and ML have advanced material research.

Answer

CFO Brian Millard clarified that the increased revenue was from the Adesis business, which serves life sciences clients and is separate from the core OLED operations. CEO Steven Abramson explained that the company's AI/ML platform, developed over a decade with a large proprietary database, accelerates the discovery of successful development pathways for complex OLED materials.

Martin Yang from Oppenheimer & Company asked about future milestones to watch for before products ship with UDC's blue material, whether any technical hurdles remain for LG's announced product, and the company's communication strategy for future customer breakthroughs.

Answer

CFO Brian Millard explained that from this point forward, communication on product progress and timelines will primarily come from customers and OEMs. He stated that questions about remaining technical hurdles for a specific product are best directed to the customer (LG). He confirmed that future announcements would likely be led by the customers themselves.

Martin Yang asked if there were any R&D savings planned for 2025 beyond the OVJP restructuring. He also inquired how much of the 2025 revenue guidance is dependent on new OLED capacity coming online and sought final confirmation on the start date for the "months, not years" blue delay timeline.

Answer

CFO Brian Millard stated that the OVJP realignment is the only significant change driving R&D expense expectations for 2025. He clarified that revenue from new fabs is a relatively small component of the 2025 growth forecast. Millard reiterated that the "months, not years" delay for blue commercialization began after the end of 2024.

Martin Yang of Oppenheimer & Co. Inc. questioned the reasons behind the revised Q4 forecast and sought clarification on the quarter's material gross margin.

Answer

Brian Millard, VP and CFO, explained that the reduced Q4 forecasts were broad-based across multiple customers, driven by model-specific sales performance, macroeconomic concerns, and year-end inventory management. Regarding margins, he attributed the variance in material gross margin to customer and product mix, emphasizing that the total gross margin remains the most useful metric for evaluating profitability.

Martin Yang asked about the ranking of expanding supply sources among AppLovin's growth drivers and whether AXON for e-commerce creative format (end cards, interactive elements) is an area of differentiation.

Answer

Adam Foroughi stated that MAX supply is growing quickly, but acquiring a single large publisher wouldn't significantly move the needle due to the marketplace's scale. They are currently focused on demand generation and improving core models, as conversion rates have much more room to grow. He highlighted that AppLovin's full-screen, attention-forcing ads (30-60+ seconds of engagement) offer a unique experience unmatched by other platforms, making the ad quality a key differentiator.

Martin Yang asked about the ranking of expanding supply sources among AppLovin's growth drivers and whether the creative format and flow for AXON e-commerce serve as a differentiation.

Answer

Co-Founder, CEO, and Chairperson Adam Foroughi stated that supply is growing quickly via MAX, but AppLovin is currently focused on demand generation and improving core models, as conversion rates have significant room to grow. He emphasized that AppLovin's ads (full-screen lockup, 30-60+ seconds engagement) offer unique 'forced attention' and superior ad quality compared to other platforms, making the creative format a key differentiator.

Martin Yang asked for more context on the Performance Share Unit (PSU) issued in October for engineering employees, inquiring about its purpose and scope.

Answer

Matt Stumpf, CFO, AppLovin, stated that it's a pool for a group of engineers and a future tool for recruiting new hires into the engineering team.

Martin Yang asked about the performance of the current cohort in Q3, specifically if they are more actively spending due to improved tools and features. He also requested more context on the PSU issued in October for engineering employees.

Answer

Adam Foroughi, Co-Founder, CEO, and Chairperson, AppLovin, noted continuous product improvements over the last year, leading to better ROAS, tooling (Axon Ads Manager), and customer understanding, which compounds positive trends. Matt Stumpf, CFO, AppLovin, clarified that the PSU is a pool for a group of engineers and a future tool for recruiting new engineering hires.

Martin Yang from Oppenheimer & Co. Inc. asked for perspective on the relative size of the U.S. versus international markets for Applovin's target customers and questioned what the pace of international customer onboarding might look like.

Answer

CEO Adam Foroughi noted that current revenue is roughly half U.S. and half rest-of-world. He explained that opening up international inventory to the existing U.S. e-commerce advertisers will provide an immediate lift. He couldn't predict the exact pace of new international onboarding but expects a global mix of referrals, as existing gaming clients are global, which will help penetrate local markets worldwide.

Martin Yang asked for a comparison of the US versus international market opportunity for Applovin's target customers and inquired about the expected pace of onboarding for international advertisers.

Answer

Co-Founder, CEO & Chairperson Adam Foroughi clarified that Applovin's revenue is already roughly split 50/50 between the US and the rest of the world. He noted the immediate opportunity is to allow current advertisers to buy internationally, which will be enabled on October 1. The longer-term opportunity is onboarding local businesses in every market. He could not predict the exact pace but expects the referral process to be broad-reaching and unconstrained geographically.

Martin Yang from Oppenheimer asked who will get initial access to the new self-serve dashboard and whether the tool could provide a near-term boost to model performance by increasing data inputs.

Answer

Executive Adam Foroughi outlined a phased rollout for the self-serve dashboard, starting with current customers to gather feedback and automate internal workflows, followed by a gradual opening to new clients. He agreed that more advertisers and data diversity will inherently improve the recommendation model over time. However, he stressed that a full, open launch will be deliberately paced to ensure the product meets their high-performance standards for every customer.

Martin Yang asked about operational changes since the CEO took over HR and inquired about potential market share gains in mediation from the expansion into non-gaming advertising.

Answer

CEO Adam Foroughi stated his focus has been on streamlining the company to concentrate on key organic growth opportunities, citing the planned divestiture of the Apps business as a prime example. He explained that the biggest supply opportunity is not from taking share but from onboarding large game publishers who currently avoid ads, by offering them non-competitive, non-gaming ad demand.

Martin Yang from Oppenheimer & Co. Inc. asked if gaming customers respond consistently to AXON 2.0 performance step-ups or if some ramp spending faster than others. He also inquired about where the company is investing in its e-commerce initiative and if there are any bottlenecks to its ramp-up.

Answer

CEO Adam Foroughi explained that the system is fully automated and advertisers consistently have more budget available than the platform can currently deliver. Therefore, when a technology step-up occurs, spending increases across the board automatically. On e-commerce, he described it as the most exciting product ever launched at the company, stating there are no bottlenecks other than the human capital and automation needed to scale as fast as market demand, which is creating a 'line out the door' of interested advertisers.

Martin Yang asked how Unity benefits from the growth of mini apps in China, specifically on both the Create and Grow sides of the business.

Answer

Matthew Samuel Bromberg (CEO, Unity Software) highlighted Unity's strong position in China, the largest and fastest-growing game market, due to full compatibility with local platforms and deep developer relationships. This drives growth and expansion of customer revenue on the Create side, including non-gaming industries like automotive. The growth of Chinese-built games, whether for local or Western release, also creates opportunities for Unity's Vector product and integration of other tools and technologies.

Martin Yang asked how Unity can benefit from the growth of mini-apps in China, both on the Create and Grow sides of the business.

Answer

CEO Matthew Samuel Bromberg highlighted Unity's strong position in China, emphasizing its compatibility with local platforms and deep developer relationships, which drives growth in Create revenue, including non-gaming industries like automotive. He also noted that Chinese-built games released in the West present opportunities for Vector and the integration of other Unity tools.

Martin Yang from Oppenheimer & Co. Inc. asked about the intra-quarter trajectory of Vector's benefit to the Unity ad network in Q2 and whether that positive trend continued into Q3.

Answer

CFO Jarrod Yahes confirmed that the 15% sequential growth in Q2 saw strength build each month, as not all Vector components were fully rolled out at the start. He stated this strength continued into July and August, giving them confidence in their Q3 guidance. He emphasized the robust product roadmap ahead, including unique data assets expected to contribute in 2026.

Martin Yang from Oppenheimer & Co. Inc. inquired about the sequential growth trend for subscription revenue. He also asked for an overview of the key drivers for overall subscription revenue in 2025, from both a user growth and a revenue-per-user perspective.

Answer

CFO Jarrod Yahes reported that subscription revenue grew 13% year-over-year in Q1. He identified key drivers as new seat growth in the industries segment and the ongoing execution of price improvements, the impact of which will increase throughout the year. Yahes expressed confidence in achieving consistent double-digit growth in the Create segment, as subscriptions now represent 80% of its revenue.

Martin Yang inquired about how the Grand Theft Auto player base is engaging with the game, specifically whether it's primarily through GTA Online or if the full game still sees substantial playing hours or monthly active users.

Answer

CEO Strauss Zelnick confirmed that engagement comes from both the full game (Grand Theft Auto V, which sold many units in the quarter) and the online version, which saw a meaningful 27% year-over-year increase. He noted that Rockstar continues to bring new consumers into the 'tent' through both avenues.

Martin Yang asked about how the Grand Theft Auto player base is engaging with the game, specifically whether engagement is primarily with GTA Online or if the full game (GTA V) still sees substantial playing hours and monthly active users.

Answer

CEO Strauss Zelnick confirmed that engagement is strong across both the full game and GTA Online. He noted that Take-Two sold a significant number of GTA V units in the quarter, indicating new consumers are still entering the ecosystem, and GTA Online's engagement was up meaningfully year-over-year by 27%.

Martin Yang inquired about the premium SKU mix for NBA 2K26, specifically if it was higher than previous years, and the material impact of season passes embedded in premium SKUs on the game's recurrent consumer spending (RCS) growth.

Answer

Karl Slatoff, President, confirmed that the premium SKU mix was higher, contributing to a higher average selling price. He attributed this success partly to offering seven days of early access with premium SKUs, which is longer than before. He noted that RCS is embedded in these packages, having a significant overall impact and contributing to the successful strategy.

Martin Yang inquired about the premium SKU mix for NBA 2K26, specifically how much higher it is compared to previous years. He also asked about the material impact of embedding more season passes within premium SKUs on the recurrent consumer spending (RCS) growth for NBA 2K26.

Answer

Karl Slatoff, President, confirmed that a higher mix of premium SKUs contributed to a higher average selling price for NBA 2K26. He noted that the successful strategy of offering seven days of early access with premium editions, which is longer than before, significantly impacted both average selling price and embedded recurrent consumer spending.

Martin Yang of Oppenheimer & Co. asked about the trade-off between game quality and addressable audience size, and followed up with a question on the company's view of platforms like Roblox.

Answer

Chairman and CEO Strauss Zelnick stated that he does not see a trade-off between quality and reach, as the company aims to be on all viable platforms over time. Regarding Roblox, he explained that it is not a priority because its audience is primarily children, which is not the appropriate target for many of Take-Two's titles. He differentiated Roblox as a specific creative environment rather than an open distribution platform like Steam.

Martin Yang asked about the drivers behind the year-over-year and quarter-over-quarter increase in internal royalties, which are part of the cost of goods sold (COGS).

Answer

CFO Lainie Goldstein explained that the fluctuation in internal royalties is driven by the product mix of the business on the top line. Therefore, the amount changes from quarter to quarter and year to year depending on which titles are contributing most to revenue.

Martin Yang from Oppenheimer & Co. Inc. questioned the cause of the year-over-year decline in Bluetooth shipments this quarter, which had been growing consistently. He also asked if management expects Bluetooth units to achieve year-over-year growth for the full year.

Answer

CEO Amir Panush stated there was no specific issue behind the quarterly Bluetooth decline, attributing it to customer mix and noting that he expects good sequential growth in the second half. CFO Yaniv Arieli added that the decline was small in the context of over 1.1 billion units shipped last year. Panush later clarified that for the first half of 2025, Bluetooth shipment volumes were actually up compared to the first half of 2024, and the company expects to see a year-over-year increase for the full year.

Martin Yang from Oppenheimer & Co. Inc. requested more color on the drivers behind the strong Wi-Fi shipment quarter and asked about the sustainability of this high shipment level.

Answer

CEO Amir Panush positioned the Wi-Fi strength within a record quarter for overall IoT connectivity, stating that CEVA is still in the early stages of its Wi-Fi ramp with significant long-term growth expected as its 30+ licensees increase production. Executive Richard Kingston added that customer feedback and broader industry data from TSMC indicate an inventory restocking cycle in IoT, which supports the positive trend and future growth potential.

Martin Yang from Oppenheimer & Co. Inc. inquired about the timing and catalysts for the ESCO acquisition, whether ESCO's business includes rental or distribution components, and the relative performance of core distribution versus rentals. He also asked for the key factors underpinning management's confidence in a return to high single-digit organic growth.

Answer

President & CEO Lee Rudow explained the ESCO deal was finalized as the owner reached a career stage where he wanted to ensure the future of his company and employees, viewing Transcat as the ideal partner to perpetuate his legacy. CFO Thomas Barbato confirmed that ESCO's business is almost entirely core calibration services with very little rental or distribution. Barbato also noted that both core distribution and rentals saw growth in the quarter. Addressing organic growth confidence, Rudow cited several factors: expanded capabilities and geographic footprint from acquisitions like Martin and ESCO, continuous process improvements, high customer retention, and the unique value proposition which includes the Solutions business. He stated these elements work together to drive long-term growth.

Martin Yang from Oppenheimer & Co. Inc. inquired about the catalysts for finalizing the ESCO acquisition and whether ESCO's business includes rental or distribution components. He also asked for an update on the performance of core distribution versus rentals and sought details on the factors underpinning management's confidence in a return to high single-digit organic growth.

Answer

President and CEO Lee Rudow explained the ESCO deal was a matter of timing, as the owner felt Transcat was the best partner to perpetuate the business and care for his employees. CFO Thomas Barbato confirmed ESCO is almost entirely a core calibration services business. Barbato also noted both core distribution and rentals grew in the quarter. Rudow reiterated that confidence in returning to high single-digit organic growth is based on expanded capabilities, process improvements, and the stabilization of the Solutions business.

Martin Yang from Oppenheimer & Co. Inc. inquired about the timing and factors that finalized the ESCO acquisition. He also asked about ESCO's business mix, the relative growth of core distribution versus rentals, and the key factors building management's confidence in a return to high single-digit organic growth, particularly the role of Transcat Solutions.

Answer

President & CEO Lee Rudow explained the ESCO deal was finalized as the owner reached a career stage where he wanted to ensure the future of his company and people, viewing Transcat as the ideal partner. CFO Thomas Barbato confirmed ESCO is almost entirely core calibration services. Barbato also stated that both core distribution and rentals saw growth in the quarter. Rudow elaborated that confidence in future organic growth stems from expanded capabilities via acquisitions, process improvements, and customer retention, with the stabilization of Transcat Solutions being one of several contributing factors.

Martin Yang inquired about the timing and factors that finalized the ESCO acquisition. He also asked if ESCO's business includes any rental or distribution components, questioned the relative growth of core distribution versus rentals, and asked for the long-term strategic view on core distribution. Finally, he asked about the key factors building confidence in a return to high single-digit organic growth.

Answer

CEO Lee Rudow explained the ESCO deal was finalized as the owner reached a point in his career to pursue other interests and trusted Transcat to care for his employees and business legacy. CFO Thomas Barbato confirmed ESCO's business is almost entirely core calibration services with very little rental or distribution. Barbato also noted that both core distribution and rentals saw growth in the quarter. Rudow reiterated the long-term strategy is to grow services and rentals while maintaining core distribution as a strategic differentiator, not a primary area for capital investment. Confidence in returning to high single-digit growth stems from expanded capabilities via acquisitions, process improvements, and strong customer retention, with Transcat Solutions being just one of many contributing factors.

Martin Yang from Oppenheimer & Co. Inc. asked about the timing and motivation for the ESCO acquisition, its business mix, and the performance of core distribution versus rentals. He also inquired about the long-term strategy for core distribution and the factors supporting the company's confidence in returning to high single-digit organic growth.

Answer

President and CEO Lee Rudow explained the ESCO deal was a matter of timing, as the owner felt Transcat was the best partner to care for his employees and perpetuate the business he built. CFO Thomas Barbato confirmed ESCO is almost entirely core calibration services. Regarding distribution, Barbato noted both core and rental businesses performed well. Rudow reiterated the long-term strategy is to grow services and rentals while maintaining core distribution as a differentiator. He cited expanded capabilities from acquisitions, process improvements, and customer retention as key factors driving confidence in future organic growth.

Martin Yang from Oppenheimer & Co. Inc. inquired about the specific timing and catalysts for the ESCO acquisition. He also asked if ESCO's business includes any rental or distribution components, questioned the relative growth of core distribution versus rentals, and sought details on the factors underpinning management's confidence in returning to high single-digit organic growth.

Answer

CEO Lee Rudow explained the ESCO deal was finalized as the owner reached a point in his career where he wanted to ensure his company and employees would be cared for by a trusted partner. CFO Thomas Barbato confirmed ESCO is almost entirely core calibration services with minimal other components and that both core distribution and rentals grew in the quarter. Rudow reiterated that confidence in future organic growth is built on expanded capabilities from acquisitions, process improvements, high customer retention, and the unique value proposition, not just one factor like Transcat Solutions.

Martin Yang from Oppenheimer & Co. Inc. asked about the timing and motivation behind the ESCO acquisition, whether ESCO has a rental or distribution component, the relative performance of core distribution versus rentals, and the factors supporting the company's confidence in returning to high single-digit organic growth.

Answer

President & CEO Lee Rudow stated the ESCO deal was finalized as the owner sought a trusted partner to care for his people and perpetuate the business he built. CFO Thomas Barbato confirmed ESCO is almost entirely a core calibration services business and that both core distribution and rentals grew in the quarter. Rudow attributed confidence in future organic growth to expanded capabilities from acquisitions, process improvements, and a unique value proposition, with the stabilization of the Solutions business being one of several factors.

Martin Yang asked if the Distribution segment's weakness was caused by the same holiday-related factors as the Service segment, inquired about the respective growth rates of rental versus non-rental distribution, and questioned if other seasonal patterns could cause future surprises.

Answer

President and CEO Lee Rudow confirmed the Rental channel within Distribution was similarly impacted by extended customer shutdowns in December, which also negatively affected the segment's margin mix. CFO Thomas Barbato reiterated that the Rental business is expected to grow at a rate similar to Services, while core distribution is expected to decline slowly. Lee Rudow noted that while some seasonality exists, the midweek Christmas impact was unusual and it is uncertain if it represents a new pattern.

Martin Yang asked for the approximate size of NEXA's annual revenue contribution, whether other acquired businesses have been growing organically, and if the issues at NEXA would lead to increased scrutiny of other acquisitions' business processes.

Answer

President and CEO Lee Rudow and Executive Thomas Barbato estimated that NEXA contributes close to 10% of Service segment revenue. Barbato confirmed that other acquired businesses are contributing to the 9% organic growth (ex-NEXA). Rudow emphasized that the NEXA situation was an exception to their standard, successful integration playbook and that the lesson learned would prevent a recurrence, rather than change their proven process for other deals.

Martin Yang questioned the medium-to-long-term strategy for the existing casual games portfolio, apart from new launches, and asked if a turnaround was expected. He also inquired if the new Tetris Block Party game would feature a unique or enhanced direct-to-consumer (D2C) strategy at launch.

Answer

Andrew Pascal, Co-Founder, Chairman, & CEO, outlined a two-part casual strategy: first, focusing on margin contribution from the mature legacy portfolio while upgrading its tech, and second, driving growth through the new Tetris Block Party title. He does not expect meaningful growth from the legacy portfolio. For Tetris Block Party, he confirmed they will leverage D2C mechanics to improve margins and fund user acquisition, noting the game's monetization is already showing solid, encouraging results.

Martin Yang of Oppenheimer & Company asked about the expected timeline for implementing out-linking on iOS to take advantage of the Apple ruling. He also sought confirmation that the company's EBITDA guidance includes investments for new initiatives like sweepstakes and Tetris Block Party, and whether it accounts for associated user acquisition (UA) costs.

Answer

CEO Andrew Pascal stated that initial implementations for out-linking would occur in the 'relative near term,' with more comprehensive solutions to follow. Executive Jason Hahn confirmed the EBITDA guidance includes operating expenses for the new initiatives but excludes any potential revenue or user acquisition (UA) costs. Andrew Pascal added that UA spending will not ramp up until the company is confident in the product's performance and unit economics.

Martin Yang questioned if the company had considered using M&A for a faster entry into the sweepstakes category. He also asked for management's long-term perspective on whether the growth of sweepstakes games represents a structural and potentially detrimental shift for the traditional social casino market.

Answer

Executive Jason Hahn explained that while M&A was considered for sweepstakes entry, an internal analysis concluded that building the capability in-house offered a higher return on invested capital, given the company's existing technology and experience. CEO Andrew Pascal addressed the market shift, stating he views it less as a genre shift and more as the addition of a new value dimension to the free-to-play casino experience. He believes it is a structural shift that is capturing the same consumer base, which is why PLAYSTUDIOS is focused on integrating it.

Martin Yang requested more details on which games were being streamlined in the social casino versus casual portfolios and asked about the expected synergies from leveraging existing IP and audience for the new sweepstakes games.

Answer

CEO Andrew Pascal provided a detailed breakdown of the portfolio changes, noting that core social casino titles are being refactored, others are being moved to a sustain mode, and one is being canceled. In the casual portfolio, the Tetris World Tour initiative is suspended while Block Puzzle and Brainium titles are being advanced. He expressed strong belief that the company's existing audience, brands, and content provide significant synergy for the sweepstakes initiative, which is intended to reinvigorate the social casino offering.

Martin Yang of Oppenheimer & Co. Inc. asked about the go-to-market responsibilities within the Faraday partnership and the most applicable end markets for the chips developed through the collaboration.

Answer

CEO Brian C. Faith explained that Faraday will serve as the primary interface for its customers, with QuickLogic providing close support by enabling Faraday's sales force with technical documentation, training, and use cases. Faith identified the target end markets as low-power industrial and IoT applications, noting the development kit is well-suited for edge AI applications like human presence detection and can run a full operating system.

Martin Yang of Oppenheimer & Company asked about the potential for the new distributor network to drive a continued revenue ramp for the EOS S3 family in 2025, sought details on how a customer is using eFPGA for Edge AI inferencing, and inquired about the expected revenue phasing and puts and takes for the second half of the year.

Answer

CEO Brian C. Faith confirmed that the new distributors are expected to generate revenue for both IP licenses and the EOS S3 product line in 2025, which helps free up direct sales resources for more strategic accounts. He elaborated on the Edge AI customer, identifying them as the 'large well-known international company' using TSMC's 12-nanometer process. This customer is leveraging eFPGA to offload computationally intensive algorithms, aiming for significant power savings in battery-powered systems, a concept validated by prior research with ETH Zurich. For the second half of 2025, Faith stated that revenue will be driven by eFPGA IP contracts, ongoing government investment in the rad-hard program, and several more 7-figure deals in the pipeline for Q3 and Q4. He emphasized that these new contracts will have better margins and cash flow due to leveraging previously developed IP on established process nodes.

Martin Yang of Oppenheimer & Co. Inc. inquired about the competitive landscape following the acquisition of Flex Logix by Analog Devices and asked for clarification on the Q4 guidance change, specifically how much revenue was shifted from Q4 into 2025.

Answer

President and CEO Brian C. Faith explained that with Flex Logix no longer licensing its IP, QuickLogic has a tremendous opportunity to be the sole eFPGA Hard IP provider, which validates the technology's value. He noted an influx of inquiries from large companies. Regarding guidance, Mr. Faith stated that the Q4 forecast was revised from approximately $10 million to $6 million, indicating about $4 million in revenue, primarily from a large mid-7-figure IP contract, is now expected to be recognized in 2025.

Inquired about the go-to-market strategy for new high-value power markets, the types of potential partners for the display business divestiture, and the timing and rationale for the strategic shift.

Answer

The go-to-market strategy is driven by new, higher-performance, lower-cost products that enable penetration into high-value markets like AI servers and automotive. For the display business, all options are being explored, from a sale to a wind-down. The timing of the decision was driven by the high priority of returning to profitability, which is deemed more achievable and stable by focusing on the broader power business rather than the display business, which relies on a few customers.

Martin Yang of Oppenheimer & Co. Inc. asked about macro factors affecting China OLED customers and if market fundamentals were changing. He also questioned Magnachip's strategy for emerging displays like microOLED for AR/VR and requested more detail on the drivers behind the MSS gross margin improvement beyond just product mix.

Answer

Executive Young-Joon Kim responded that for Q4, Magnachip sees no significant change in its OLED business environment and that guidance reflects better-than-typical seasonality. He confirmed the company's involvement in microLED for TVs but did not comment on AR/VR applications. Executive Shin Young Park elaborated that the MSS gross margin improvement was driven by a richer mix of higher-margin automotive OLED and Power IC products.

Martin Yang of Oppenheimer questioned the potential for synergies between Synaptics' premium touch business and the new Android wireless opportunity, and asked if different PC product segments would recover at different paces during a market rebound.

Answer

Interim CEO Ken Rizvi and SVP Satish Ganesan both highlighted the strong synergy, noting that their existing presence and differentiated technology in premium Android touch provides a direct path to engage the same OEMs with their newly acquired differentiated wireless portfolio. Regarding the PC market, Rizvi stated that while they have seen steady improvement, a major enterprise refresh cycle has not yet begun. Ganesan added that near-term performance will follow seasonal trends.

Martin Yang from Oppenheimer & Co. Inc. questioned the strategy behind reintroducing the MAX 1 camera, its margin impact, the timeline for GP3-enabled products, and potential non-hardware drivers for subscription growth.

Answer

CEO Nicholas Woodman explained the MAX 1 is being relaunched as a refreshed, entry-level 360 camera to fill the product gap from the MAX 2 delay, supported by new software enhancements. CFO Brian McGee confirmed it is margin accretive in dollar terms. Woodman declined to comment on the GP3 SoC product timeline for competitive reasons. Regarding subscriptions, Woodman and McGee noted that while hardware sales are the primary driver, they are developing new software features and leveraging strong multi-year retention to drive ARPU and future growth.

Martin Yang asked for a ranking of the headwinds impacting the 2025 outlook and questioned how the growth in retail doors reconciles with reduced guidance. He also inquired about where GoPro is seeing the most significant competitive share erosion, whether in the 360-degree or traditional action camera categories.

Answer

CFO & COO Brian McGee ranked the primary headwinds for 2025 as macroeconomic pressures, the delayed 360-camera launch, and then competition. CEO Nicholas Woodman elaborated that the most significant share erosion is in the 360-camera market due to the product delay. Woodman also explained that the expanded retail footprint is currently underutilized but will serve as a strong foundation to drive growth in 2025 once the full product lineup, including the new 360 camera, is available.

Questioned the company's new product design philosophy and the impact of major game launches on demand for accessories.

Answer

The company highlighted its investment in both external design and internal platforming for innovation and efficiency, and confirmed that strong game launches like Call of Duty are providing a lift to accessory demand, supporting a positive holiday outlook.

Questioned the strategic rationale for the PDP deal in relation to the console market's future, the impact of mid-cycle console upgrades on sales, and the expected interest expense from the new debt facility.

Answer

The deal's rationale is primarily scale and diversification. The console market is viewed as strong. Mid-cycle console upgrades are seen as beneficial, helping to sustain demand and momentum. The expected cash interest expense for 2024 is about $7.5 million.

Martin Yang asked for the reasons behind the slight reduction in the full-year capital expenditure guidance.

Answer

CFO Ed Schlesinger explained that there was no single specific reason for the guidance reduction, but rather it reflects the current run rate of spending on smaller capital projects. He reiterated that the company is not adding significant capacity and has what it needs to support the Springboard sales growth plan.

Asked for background on the Klipsch and Onkyo product collaboration and its key strengths, and also requested context on the potential revenue contribution from the new partnership with INFINITI for the QX80.

Answer

The Klipsch-Onkyo collaboration was initiated to combine Klipsch's acoustic expertise with Onkyo's electronics technology to create a superior, integrated soundbar system (Flexus). Regarding the INFINITI partnership, executives could not provide specific revenue figures due to NDAs but framed it as a significant, multi-year program for a flagship vehicle that will be a meaningful contributor to the Automotive segment's revenue for years to come.

Martin Yang from Oppenheimer inquired about the impact of positive feedback on new tablet products on Sonim's long-term roadmap, the typical product lifecycle for rugged tablets, and the availability of training programs. He also asked about the potential for more large pre-orders for the upcoming feature phones and the execution timeline for the existing $10 million order.

Answer

CEO Tom Wilkinson explained that the feedback reinforces their existing strategy to expand rugged mobility products, which have a typical two-to-three-year lifecycle. He noted that while training materials exist for the new scanner products, future generations would have more robust programs. Regarding the $10 million pre-order, he stated it was motivated by a carrier's desire to secure supply and be first-to-market, and it is scheduled for delivery in Q3 and Q4 of 2021.

Martin Yang of Oppenheimer asked for a comparison of the operating savings from the ODM model versus the previous in-house model and its potential for addressing new verticals. He also inquired about the R&D cost structure with ODM partners and key milestones for the company's geographic expansion into Europe, including the competitive landscape.

Answer

CEO Tom Wilkinson and CFO Bob Tirva detailed the benefits of the ODM model. Wilkinson highlighted that it variabilizes production costs, provides access to larger supply chains for lower component costs, and enables efficient product expansion. Tirva added that R&D expenses also become more variable, avoiding the high fixed costs of a large internal team. Regarding European expansion, Wilkinson stated key milestones include adding regional distributors and resellers. He expressed confidence that Sonim's high-quality, rugged U.S. products will be viewed as premium and will differentiate them from smaller regional competitors.