QuickLogic - Earnings Call - Q3 2016

Transcript

Speaker 0

Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to the QuickLogic Corporation's Third Quarter twenty sixteen Earnings Results Conference Call. During the presentation, all participants will be in listen only mode. A question and answer session will follow the company's formal remarks. Today's conference call is being recorded.

With us today from the company are Brian Faith, President and Chief Executive Officer Sue Chung, VP of Finance and CAO and Bob Schoenfield, VP of Worldwide Sales and Marketing. Before we begin our call with QuickLogic's executives, I will read a short safe harbor statement. Some of the comments QuickLogic makes today are forward looking statements that involve risks and uncertainties including but not limited to stated expectations relating to revenue from new and mature products, statements pertaining to QuickLogic's future stock performance, design activity and its ability to convert new design opportunities into production shipments, timing and market acceptance of its customers' products, our future evaluation systems, broadening our ecosystem partners, expected results and financial expectations from revenue, gross margin, operating expenses, profitability and cash. I'd like to remind you that these statements must be considered in conjunction with the cautionary warnings that appear in QuickLogic's SEC filings. Investors are cautioned that all forward looking statements in this call involve risks and uncertainty and that future events may differ materially from those statements made.

For additional information, please refer to the company's Securities and Exchange Commission filings, which are posted on its website or available from the company without charge. This conference call is open to all and is being webcast live. We will start today's call with the company's strategic update from QuickLogic's CEO, Brian Faith then Sue Cheung, VP of Finance and CAO will review third quarter financial results and provide financial guidance for the fourth quarter before Brian's closing remarks. At this time, I'd like to turn the call over to Brian Faith, President and CEO. Please go ahead, sir.

Speaker 1

Thank you, Andrew, and thank you all for joining our quarterly conference call. Our prepared remarks will be presented in a slightly different format today. I will start with a strategic update. Following that, Sue will provide an analysis of the financial data for Q3 and our forecast for Q4. I will close our prepared remarks with a brief summation of our strategic outlook and then open the call for your questions.

At the close of the Q and A session, I'll provide a rundown of upcoming events, trade shows and conferences. At the bottom line, I'm very pleased with the strategic and tactical progress we made on all fronts during the last quarter. And with that, my confidence in the revenue ramp we forecasted for next year has been bolstered. However, before I get into our strategic update, I will take a moment to share some unfortunate news. Due to a personal family matter, Bob Schoenfeld will resign his position as VP of Worldwide Sales and Marketing at the end of this month.

Bob intends to maintain a vested interest in QuickLogic stock and continue to work with us as a consultant. Bob has been a tremendous asset for us and is committed to driving certain strategic initiatives that he will manage for us on an ongoing basis. However, since he will not be able to dedicate the time needed to fully manage the scope of his current position, we will initiate the process to hire a new VP of Worldwide Sales and Marketing during the coming months. Bob will be available for your questions following our prepared remarks. Last quarter, Sue and I provided the outline for our strategic realignment.

As we described it, this initiative was designed to lower operating costs, reduce cash consumption and better align our assets with the needs of our targeted markets. I'm proud to say our progress and the results have exceeded our forecast. As you can see from today's press release, non GAAP operating expenses and cash consumption for Q3 were better than our forecast. However, much more important than the operational improvements is the significant progress we've made in our strategic market initiatives. Let's take a minute for a very high level recap of some of our major milestones.

We released our qualified EOS S3 System on a Chip or SoC at the end of Q2. Following that in Q3, we shipped units to a Tier one smartphone customer to support preproduction for a new wearable design that we expect to enter mass production in the coming months. We have presented our EOS s three sensor processing solution to 14 of the top 15 smartphone OEMs in the world. All 14 have expressed a sincere interest in using the EOS s three SOC in new designs and tell us it is the right solution at the right time and at the right price. We have active design engagements with over half of those OEMs.

We expect a number of those engagements to move into mass production during the coming year. Through these engagements, our increased investment in software development and our very close collaboration with our tier one smartphone customer and ecosystem partners, we have enhanced our evaluation systems and design tools with new software and capabilities. The first of these was released last month, and we will have all of the new systems and tools in the field by the '4. With these new systems and tools, we can manage more simultaneous customer engagements and drive engagements to design wins much more efficiently. With this increased efficiency, we expect to expand our engagement activity with major OEMs this quarter.

Later this quarter, we will introduce a new and very unique evaluation system that illustrates our ability to enable the immersive voice activated sensor fusion use cases that top tier smartphone OEMs are targeting for next generation platforms. With these new systems, I believe we will be able to move much more quickly from initial engagement to design win. There are three very distinct trends we are seeing in the next generation smartphone designs. We believe these trends play directly into the hand of our competitive advantages. The first trend is new designs are targeting immersive use cases.

These new use cases are driven by sophisticated sensor fusion algorithms that require sensor processing systems to run at a substantially higher duty cycle. Higher duty cycle requirements increase our power consumption advantage over traditional microcontroller based design approaches. The second trend is the implementation of new use cases that can only be delivered with always on, always listening voice activation and control. Our unique hardware integrated solution for sensory voice technology enables this use case with significantly lower power consumption than the software implementations of Sensory's technology that is used in over a billion smartphones today. The third trend is an extreme focus on minimizing power consumption.

While power consumption has always been an issue, the importance of lowering power consumption in new designs has increased during the last quarter. Given the fact OEMs want to support immersive voice activated use cases in new designs, smartphone designers are facing a challenge that we can uniquely address. In addition to these trends, we are seeing an increased interest in the use of programmable logic. Obviously, since we have the only sensor processing solution that includes integrated programmable logic, this trend provides us with a unique competitive advantage. Later this week, we will issue a press release to formally announce our partnership with SciWi Motion and the introduction of our SiWi Motion Sensor Fusion Evaluation System.

SiWi Motion is by far the leading provider of sensor fusion algorithms used by Chinese smartphone companies. With this new evaluation system, smartphone OEMs can quickly and efficiently evaluate the performance of SiWi's Android CTS compliant sensor fusion algorithms running on our EOS S3 sensor processing SoC. The system also provides power consumption data that will show the significant advantages of our EOS S3 sensor processing solution. Given the fact that 11 of the top 15 smartphone companies in the world today are based in China and the majority of those 11 companies use SciWay motion algorithms, this is a very big deal. We are already seeing early evidence that this partnership with our new evaluation system will shorten the evaluation cycle and lower the development risk for the major Chinese smartphone OEMs that use SiWeMotion algorithms.

Due to the improved efficiencies, we expect to broaden our engagement base in China this quarter and deliver an impressive flow of design wins with major Chinese OEMs during 2017. Later this month, we will introduce a more advanced evaluation system that integrates sensory voice technology and SiWeMotion algorithms in a single platform. This integrated evaluation system will enable OEMs to efficiently evaluate immersive voice activated sensor fusion use cases and clearly illustrates the substantial power savings delivered by our EOS S3 sensor processing solution. To extend this leverage, we are in the process of broadening the scope of our ecosystem partnership strategy to include leading smartphone application providers that have already established installed bases in excess of 100,000,000 smartphones. We are currently in discussions with multiple software companies that could benefit from incorporating our unique ultra low power always on, always listening voice interface.

We expect to display a joint reference design that we developed with one of these partners at the Consumer Electronics Show in Las Vegas this coming January. We will announce additional partnerships and reference designs as we move through 2017. We think this strategy has very significant potential. An exciting leverage point of this strategy is the fact our current and potential ecosystem partners are extending the technologies they have developed for the smartphone market into the rapidly growing IoT markets where always on voice activation and control is often a requirement. Going forward, Bob, Sean, and Phil will work closely with these and other companies to help us develop a scalable strategy that leverages our core competencies into the IoT market.

The bottom line here is we are making investments that provide us with operational and competitive leverage, shorten our engagement cycle, improve our design win conversion ratio and are extensible across our targeted markets. During the last quarter, we continued to work closely with the Tier one smartphone company that has designed our EOS S3 SoC into a new wearable device. We continue to believe this will be a very high volume product. I'm very proud to say that through this work, we were able to achieve an even lower power consumption goal than the customer originally asked us to target during the quarter. While we still don't have a firm schedule from the customer, we continue to anticipate the wearable device will enter mass production between December and Mobile World Congress, which is scheduled for the February 2017.

The short story here is the customer is very happy with our EOS S3 sensor processing solution and the support we have provided throughout the development cycle and we are thrilled with what we believe will be a very high profile and high volume design win. Please note that while we will increase our EOS S3 inventory during Q4 in preparation for this and other new product launches by our customers, we are not including any meaningful revenue from this design win in our Q4 guidance. Last quarter, I mentioned we were working with a top tier OEM on a press release to announce the use of our sensor processing solution in a highly sophisticated VR camera. While we have made additional production shipments to support this design, we are waiting for the customer to approve our press release. I expect we'll get that approval later this quarter.

As I noted last quarter, we do not anticipate this being a high volume product. However, given the high brand recognition of the customer and the fact that the end product is designed to set new standards for VR video recording, we view it as a great showpiece for the capabilities of our unique sensor processing solution. In addition to the significant progress we've made in our sensor processing solution engagements, we are also winning new display bridge designs. We issued a press release last quarter for a new display bridge design at Motorola and we more recently won a display bridge design in a new tablet from Sanyo. We believe that display bridge activity will continue through at least 2017 and possibly well beyond that.

I'll now turn the call over to Sue and I'll rejoin you after her presentation with my closing remarks.

Speaker 2

Thank you, Brian. Good afternoon, and thanks to everyone for joining us today. For the 2016, total revenue was $2,800,000 which was at the midpoint of our guidance range. Our new product revenue was approximately $1,300,000 and mature product revenue was approximately $1,500,000 Samsung accounted for 39% of total revenue during the third quarter compared to 31% during the previous quarter. Our Q3 non GAAP gross margin was 34%, which was slightly below our guidance range.

This is primarily due to the product mix shifted during the quarter. Non GAAP operating expenses for Q3 totaled $5,000,000 which was favorable to our guidance. The total for other income expense and taxes was a charge of $55,000 This resulted in non GAAP loss of approximately $4,100,000 or $06 per share, which was right at the midpoint of our guidance. Please note, our non GAAP results included a $170,000 severance charge associated with our strategic realignment initiated last quarter. Our Q3 GAAP net loss was approximately $4,600,000 or $07 per share.

Our GAAP results included stock based compensation charges of $457,000 and a non cash fixed asset write off of $39,000 For detailed reconciliation of our GAAP to non GAAP results and other financial statements, please see the press release we issued today. We have also posted an updated financial table on our IR webpage that provides current and historical non GAAP data. We ended third quarter with approximately 17,800,000 in cash, which exceeded our guidance. The cash usage during the third quarter was $1,200,000 This reflects the cost savings from our strategic realignment efforts and the timing of working capital requirements. The cash usage was partially offset by borrowing $1,000,000 against our existing line of credit.

For the 2016, we expect the net cash usage to be approximately $3,800,000 to $4,200,000 This includes the favorable impact of an additional $1,000,000 of borrowing from our lines of credit. The forecasted increase in cash usage will be driven mostly by increasing working capital as we plan to build our EOS S3 inventory. While we are not forecasting significant shipments for EOS S3 until 2017, we are taking steps to ensure we have adequate inventory to support any upside to our forecast. For the 2016, we anticipate net cash usage of 5,000,000 to $5,400,000 This will result in a greater than 40% reduction in cash usage from the first half of the year. Our revenue guidance for Q4 is approximately $2,900,000 plus or minus 10%.

The $2,900,000 in total revenue is expected to be comprised of approximately $1,500,000 of new product revenue and $1,400,000 of mature product revenue. As in prior quarters, our actual results may vary significantly due to things that are beyond our control, such as the scheduled variations from our customers, scheduled changes and projected production start date could push or pull shipments between Q4 twenty sixteen and the Q1 twenty seventeen and impact our actual results significantly. On a non GAAP basis, we expect the gross margin for Q4 to be approximately 32% plus or minus 3%. Gross margin is driven primarily by the mix of customers and the product shipped during the quarter and the continued unfavorable absorption of operational overhead. We're currently forecasting non GAAP operating expenses at $4,800,000 plus or minus $300,000 The expected decrease in OpEx is a result of continuing cost savings we implemented last quarter.

Non GAAP R and D expenses are forecasted to be approximately $2,600,000 and our non GAAP SG and A expenses are forecasted to be approximately $2,200,000 We expect our other income expense and taxes will be a charge of up to $60,000 At the midpoint of our guidance, our non GAAP loss is expected to be approximately $3,800,000 or $06 per share. Our stock based compensation expense for the fourth quarter is expected to be approximately $450,000 As was the case in prior quarters, our non GAAP results will not respect the charges associated with stock based compensation. Before I turn the call back to Brian, I'd like to report one last housekeeping item. Our previous shelf registration statement on Form S-three expired on August 3036. As a matter of good practice policy, we plan to file a similar or smaller shelf registration in the coming weeks.

With that, let me now turn the call back over to Brian for his closing remarks.

Speaker 1

Thank you, Sue. We have released a new evaluation system that enables our customers to accomplish in weeks what has been taking months, and with that move much more quickly and efficiently into the final design process. We will introduce a new evaluation system this month that combines the SaiWee and Sensory evaluation systems into a single platform. This new evaluation system will enable Smartphone OEMs to efficiently evaluate and verify our ability to enable new immersive voice enabled sensor fusion and clearly illustrate the substantial power consumption advantage we have over traditional design approaches. 14 out of the top 15 smartphone OEMs in the world have expressed sincere interest in our sensor processing solutions.

We are currently engaged with more than half of these OEMs. With our new evaluation systems in place, we expect to increase the number of engagements this quarter and shorten the cycle from evaluation to design win. With these accomplishments and the progress we've made with our strategic engagements, we are rapidly nearing the time when our conference call presentations will focus mostly on design win activity versus what we are doing to win new designs. Please believe me when I say no one is looking forward to that and the revenue ramp we anticipate for 2017 more than me. Operator, I will now turn the call over for questions.

Speaker 0

And our first question or comment comes from the line of Suji Desilva with ROTH Capital. Your line is now open.

Speaker 3

Hi, Brian. Hi, Su. Nice job on the progress here. The guidance for new product revenue to increase sequentially, can you talk about the factors driving that? Is that seasonality, some of the new display bridge customers ramping or what's driving that sequential growth there?

Speaker 1

C. J, I think you hit it right on the head. This is the time of year that these consumer electronics companies are building ahead of the holiday season and that's driving the mix shift from the previous quarter.

Speaker 3

Okay, good. And then on the Zaiwi partnership here, what's the timeframe for some China smartphone customers to adopt your solution with the software? If they wanted to, would they have to wait for their new product launches? Or can they fit them into the existing ones? Just to understand the way in which a smartphone customer would adopt your solution.

Speaker 4

So this is Bob Chumfield. It's a great question as well. Hi. I think there's two ways to look at it. Certainly it's not going to go into devices or smartphones that are already launched in the market.

But we're looking at two things with our readiness now. We certainly will be able to secure new designs, But we're also looking to intercept existing designs that are not fully developed and provide them an increased performance and feature and functionality than what they currently have. As Brian said, this is trending in the smartphone business. So this is something we've seen in the past both for new designs and also intercepting designs and process.

Speaker 3

Okay, good. That color helps. And then on the OpEx, the fourth quarter is benefiting from the restructuring as well. Is that the run rate we should think about going forward into 2017, Sue?

Speaker 2

Yes, Suji. We expect our core OpEx will stay flat as Q4 twenty sixteen. But going forward in 2017, we anticipate the development or new product, new next generation silicon platform. So but we haven't determined the timing of that yet.

Speaker 3

Okay. Got it. And then last question maybe. As you start to ramp up inventory for the customers, what are the lead times you get from the foundry to understand how far ahead you have to build product?

Speaker 1

Our lead times from our suppliers' stuff is typically around sixteen weeks give or take, which is why we build up inventory in anticipation of the customer demand. Got it. All right.

Speaker 3

Thanks guys. I'll get back in the queue.

Speaker 1

Thank you Suji.

Speaker 0

And our next question or comment comes from the line of Gary Mobley with Benchmark. Your line is now open.

Speaker 5

Hey guys. Brian, want to start with some strategy questions for you. You mentioned in your prepared remarks a relationship and a soon to be announced reference design relationship with the smartphone application oriented company but I think you stopped short of saying whether it was a silicon or a software oriented partner. And should we think about the relationship perhaps being more of a companion piece of silicon or supplement an application processor for always on type

Speaker 1

processing needs? So Gary, the way to think about it is that the more value added software running on our low power platform, the better it is for these smartphone OEMs to deploy these immersive use cases, ones that are operating concurrently. And so moving forward, most of our ecosystem partner strategy will be around enabling software companies that have very unique or compliant algorithms or different use cases like in the case of the voice running concurrently in our platform. That's a lot of the work that Bob is going to be driving for us moving forward. I think there's a lot of leverage there for us and not necessarily working with other chip companies per se.

Speaker 5

Okay. You mentioned on previous calls an attempt to focus on maybe just a handful of smartphone opportunities is I

Speaker 1

think

Speaker 5

it was just maybe cost prohibitive to support sort of a shotgun approach to the smartphone market. But you mentioned here today engagements with maybe six or seven different smartphone OEMs and discussions and presentations to 14 smartphone OEMs. You talk as well about new evaluation tools to help streamline the design in process. And so I'm wondering if you're sort of straying away from that more targeted approach to the smartphone market or anything you can add there would be helpful.

Speaker 1

Sure. So on the last call we talked about optimizing the funnel and focusing on OEMs that can drive volume and are strategic in nature for us. So that work is continuing. The funnel as it is today is actually larger than it was on a net basis from the last call. It's still focused on guys that can drive significant volume for us.

And we're talking about at least 500,000 units per project and targeting more than about a million units per project. So we're still gonna call on all the smartphone guys that we just talked about. And I think a lot of the work that's gone on since the last call has been to come up with these standard reference designs and evaluation systems that these OEMs can actually take and evaluate by themselves without a lot of hand holding from us. That's what's going to give us that leverage to engage with more of these at the same time.

Speaker 5

Okay. So I had a follow-up question for you. I did notice the drawn down amount for the line of credit moved from long term liabilities to current liabilities. Is that indicative of some principal repayment in the next year? And has the sort of covenants or different variables involved in that line of credit changed at all in the last quarter?

Speaker 2

Gary. No, there been any changes with our covenant compliance or we have a total of $6,000,000 line of credit with plan to draw full by end of this year. We're in full compliance or financial covenant.

Speaker 5

Okay. All right. That's it for me. Thanks guys.

Speaker 1

Thanks, Greg.

Speaker 0

And our next question or comment comes from the line of Rick Neaton with Rivershore Investments. Your line is now open.

Speaker 6

Thank you. Hi, Brian. Hi, Sue. Phone cut out you were giving the expected launch window for the Tier one smartphone OEM wearable. Is that still December to March around Mobile World Congress?

Speaker 1

Yes, what I said Rick in the prepared remarks were sometime between December and the February 2017 when Mobile World Congress occurs.

Speaker 6

Okay, thanks. Sue, can you provide some sort of reference or guidance for the size of the inventory build in fourth quarter that we should expect?

Speaker 2

So we plan on building up our inventory in Q4. This is because several factors. One is that because we want to ramp up the inventory ahead of our customer commitment for EOS S3. That is because the EOS S3 SoC is a unique and proprietary device. We're the sole provider of this device.

So we want to build a buffer at least a quarter ahead of time. And the other is, we also need to increase the inventory to support the revenue ramp in the second half of next year.

Speaker 6

Okay. But you're not able at this time to give a general estimate of what the size will be in the fourth quarter?

Speaker 2

Yes. So what I provide a guidance on cash usage for Q4, you can see the majority of that cash usage will be used for inventory buildup.

Speaker 6

Okay. Thanks, Sue. I have a question for Bob. Since you'll be leaving your position as Vice President of Sales as of November 30, what sort of level of involvement and commitment to QuickLogic will you have going forward?

Speaker 4

Yeah. Well, first of all, it was a very, very difficult decision for me and my family, but ultimately the right decision for me and my family. Having said that, you know, it's on the professional side, one of the challenges for making this decision is all the work that's gone into the product development and then preparing our teams around the world to execute on our growth strategy. I'll be handing that off for others to execute. But there are a whole host of other strategic initiatives that relate to next areas of growth, as Brian referred to IoT and some other adjunct markets for us.

And this is something that I've done quite a bit in the past. I worked in IoT and M to M for about ten years, building businesses around that. And it's something that I can help the company in a more time manageable situation given my personal situation to allow me to help develop and drive strategy in conjunction with Brian and the management team.

Speaker 6

So you're still strongly committed and have a strong belief in the future of the company. Is that

Speaker 4

Very much so, both as a shareholder and as a current executive and as one that expects to have a professional relationship with the firm going forward, continuing to add value because I am a strong believer in this part and the company going forward.

Speaker 6

Okay. Thank you, Bob. Brian, in the past, the company has used a 50% gross margin in its breakeven calculations or breakeven general forecast to analysts and the public. How realistic is it to assume a 50% gross margin on large volume orders of the S2 and S3 going forward 17?

Speaker 1

It's a good question. At the targeted breakeven revenue, we do think that 50% is realistic and it's based on several factors. One of those factors of course is that the customers themselves are responding well to the pricing that we're putting in front of them for the S3. So it gives us belief that the pricing is right, makes us believe our costs are right. Secondly, as the revenue grows, and I think Sue alluded to this, as our revenue grows, we're going to be able to absorb certain fixed costs much more favorably now and in the future than we have in the past, and that's going to help the gross margin line.

And those are the main drivers. As I said earlier, we're still anticipating some display bridge business in 2017, and I think we all know that the largest customer for that has driven some of the gross margin percentages down. But I think that with some of the new display bridge designs that we're seeing now with higher ASPs and this higher gross margin from sensor processing, we're going to see gross margins at that revenue level back up towards 50% by the end of next year.

Speaker 6

Okay. With you filing a new shelf registration,

Speaker 1

are you

Speaker 6

saying that you're going to have to raise more capital in the near future?

Speaker 1

No. In fact, we don't have any plans for the shelf registration. As Sue mentioned, it's just good business practice. We've always had one the So foreseeable we're going to continue to have that in the future. I was asked this question on the last call, so let me just reiterate this again, that it is not a foregone conclusion that we need to raise money.

I've been asked that a lot by investors and we have several models into 2017 that show that's definitely not not needed. We have the revenue ramp towards the first couple of quarters blending into the second half of next year, getting us to that breakeven level. So, yes, it's not a foregone conclusion that we need to go raise money. And I'll go so far

Speaker 4

as to say that there's

Speaker 1

other options that we're looking at to boost the balance sheet without being a dilutive event for shareholders.

Speaker 6

Okay. Thank you. One last question. Can you give you used the term immersive user experience in talking about trends in smartphones and other Internet of things, wearables and things. What's an example of what you mean by that term?

Speaker 1

I'll tell you a specific example and this is related to me personally. So when I leave the office and I'm talking on the phone, it should know that I've left the office and immediately switch off WiFi, turn on Bluetooth, turn on GPS. I can speak to my phone and say to open Waze until it's navigating me to my house with the appropriate traffic alerts. When I get home, I can sit down in the living room and put my phone on the couch, and it should know that it's not on me anymore and start powering things down that are consuming extra power. I should be able to speak to my phone and ask them to tune the channel to the warriors game.

The more immersive experiences where you're not having to muck around with your fingers to communicate with your device, but you're able to speak and think naturally, and the device is able to respond not only to you but also your context in that given situation. We're seeing a big desire now for more software applications that are getting installed on smartphones to be used in a more immersive way. And I think that we're going to see that come to fruition next year. That can only happen, by the way, if the processing that's done for that, the contextual awareness and that immersive experience is done in low power hardware and in an always on fashion so that you're not having to push buttons to activate things. And we think that we're very uniquely positioned with S3 to enable that.

Speaker 6

Okay, thanks Brian. Appreciate it.

Speaker 1

You're welcome.

Speaker 0

And at this time I'm showing no further questions or comments. So with that said, I'd like to turn the conference back over to President and CEO, Mr. Brian Fait.

Speaker 1

Thank you, Andrew. We will be participating in a number of industry events during the next three months. First, Sue and I will be at the second annual ROTH Technology Corporate Access Day in New York City on November 16. We will also be attending the Benchmark MicroCap Discovery one hundred one Conference on December 1 in Chicago. We will have two QuickLogic meeting suites at the Consumer Electronics Show in Las Vegas from January 2017.

I will be participating in a panel discussion titled Where Are Consumer Electronics Taking the Sensor Industry on 01/05/2017 at the MEMS and Sensors track at CES. And lastly, Sue and I will be at the nineteenth Annual Needham Growth Conference from January 1237 in New York City. Details will be included in our upcoming media alerts. I want to thank you for your participation in today's call. I also want to thank my QuickLogic colleagues for their hard work and commitment to our customers and business.

We look forward to reporting our strategic progress on the next earnings call which is scheduled for Wednesday, February 1537. Thank you.

Speaker 0

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.