NXP Settlement and Licensing Opportunities
Q: What's the industry's feedback post-settlement with NXP, and are there more licensing opportunities?
A: There are additional licensing opportunities on our IP front and cloud services, which can generate recurring revenue. " Licensing is core to our strategy. " The industry was relieved by our settlement with NXP, as it removes uncertainty and potential impediments, helping the industry move forward. "

Gross Margin Outlook
Q: How should we think about gross margin trends with M800 ramping and systems mix?
A: Next quarter's gross margins will increase due to the license revenue. " Excluding that, product-level gross margins are modeled flat quarter-over-quarter. " Currently, we're below our targeted 53%-54% range due to being slightly below scale and the systems business recovery lagging endpoint ICs. " Lower-margin 200mm SKUs are higher as a percent of revenue in Q2 and likely Q3, but as M800 ramps, we'll see benefits. " Overall, we remain confident in our gross margin targets. "

M800 Ramp and Gross Margin Impact
Q: Has your thinking on M800's impact on gross margins changed as it scales?
A: M800 benefits from a lower cost basis, translating into approximately 300 basis points of gross margin accretion as it ramps. " An endpoint IC ramp takes multiple years to reach volume status. " M800 is ramping into Q2, but volumes are still small, so the impact on gross margin isn't visible yet. " It's too early to project precise timing, but we're encouraged and will keep you updated. "

OpEx and License Payment Guidance
Q: What should be the expected OpEx going forward, and how should we model next year's license payment?
A: Our Q2 OpEx is clean, with immaterial litigation spend, and the business is normalizing after Q1 reorganization. " For the second half, assume modest growth as we continue investing. " Regarding the expected license payment next year, while NXP has the ability to design out, it's not easily done. " We don't expect a huge increase in the payment, but it's fair to model it at this point, and we'll keep you updated. "

M&A and Growth Opportunities
Q: Are you looking at M&A to accelerate growth in newer markets?
A: While we can't discuss specific opportunities, we're always open to areas that strengthen our platform. " The Viant acquisition was a natural addition, aligning well with our platform. " Additional cash doesn't significantly change our approach; it's about identifying opportunities that make sense. " If we see a beneficial opportunity, we'll pursue it. "

Retail Apparel Market Recovery
Q: Is the retail apparel market normalized, or are we still recovering inventory?
A: We are seeing restocking in apparel, footwear, and general merchandise to match an uptick in consumer demand. " Whether this trend continues is too early to call. " Partners signal strength into Q2 and cautious optimism for the second half but await confirmation of demand sustainability. " We see multiple drivers, including embedded tagging and our solutions efforts, which are contributing to our results. "

Large North American Retailer Adoption
Q: How is the implementation with the large North American retailer going, and what are its industry implications?
A: Tagging partners report steady gains in tagging more general merchandise categories and a modest uptick in overall consumer demand. " Some categories progress faster than others, but we're optimistic about continued progress this year. " Historically, this customer leads the industry, and others follow their moves; despite past setbacks from 2013-2019, we expect their actions to set benchmarks for others. "

Logistics Customer Ramp
Q: Will the second logistics customer grow with you steadily this year, and when will you reach full penetration?
A: It's difficult to predict consistent quarterly growth due to initial challenges. " However, we see strong commitment from the customer to digitize their entire operations and fundamentally change their business. " We have multiple opportunities with this customer, and their adoption could influence others in the logistics industry. "

Food Applications Growth
Q: How should we think about food applications moving faster than expected?
A: Though I previously thought the food opportunity would move slowly due to its size, it's advancing quicker than expected. " The successful adoption of RAIN technology in retail has proven the case and is paving the way in food. " We're excited about the current opportunities and will share more insights as we learn. "

Digital Product Passport and Mobile Integration
Q: Tell us more about Digital Product Passport in textiles, applications, economics, and potential size.
A: Regulations requiring textile traceability from manufacturing to recycling begin in 2027. " DPP aims to give consumers information on item sustainability, enabling informed choices. " We believe DPP will drive significant consumer engagement opportunities. " Our goal is to make existing tags on apparel the data carrier for DPP, but we need consumers to be able to read them, necessitating readers in mobile phones. " I'm hopeful that increased pressure will lead to RAIN reading in phones, opening new opportunities beyond DPP. "

DPP Implementation Milestones
Q: What are the DPP milestones ahead, and has the focus shifted from batteries to textiles?
A: Batteries are going first with DPP, using QR codes as the data carrier. " Textiles are next, a much bigger category, but the data carrier hasn't been decided yet—it could be multiple options including RFID. " Committees are working to determine this. " RAIN RFID has benefits like visibility and is already on apparel items, but not integrated into mobile phones yet. " Large enterprises in Europe are pushing for RAIN readers in phones. " Over the next 1-2 years, we'll see if RAIN is classified as a data carrier for DPP. "

Mobile Integration and Licensing Payments
Q: Will you sell ICs into mobiles for DPP, and are future license payments volume-dependent?
A: Regarding licensing, the payments are a fixed amount increasing modestly each year. " On mobile ICs, it's too early to say if there's an opportunity for our silicon in phones. " Regardless, we're focusing on leveraging our platform and have enterprise-level engagements. " We'll aim to get our silicon in phones, but even if not, we'll work with retailers, phone providers, and manufacturers to be part of the overall solution. "

Logistics Customer Stage 2 Deployment
Q: What is the significance of the logistics customer deploying RFID readers in vehicles?
A: While we prefer customers to discuss their own deployments " , we see platform opportunities with this customer and multiple silicon touchpoints. "