Operator: Thank you. Our next question — please standby, comes from the line Vijay Rakesh of Mizuho. Please go ahead, Vijay.
Vijay Rakesh: Yeah. Hey, Bill and Dan. Just on the PPP, the Pluggable Patch Panel, is that included in your AEC and all your — all the three customers using it or is it — how do you see that ramping, I guess?
Bill Brennan: Yeah, so you broke up a little on the line, but I’ll answer the question by saying that this P3 was something that was developed in conjunction with a leading service provider. So they spoke about their challenges as they were connecting ZR optics to routers or switch ports. And so, this was really developed with them and their application in mind, also knowing that developing this solution, it would become a multi-tool in a sense, to be able to solve different networking problems associated with power and cooling and control plane access. And so the, our lead customer is a service provider, but we’re seeing that there’s also applications where this, really fits well. When we talk about the situation where switch and router port speeds are different from the optic speeds that a customer wants to use.
So a customer could connect 800-gig ZR optics with 400-gig switch ports, or vice versa they could move to the fastest switches, 800-gig ports, but still use 400-gig ZR. So in a sense, this P3 system can gearbox and really seamlessly connect different speed optics with different speed ports on routers and switches. Also, from a thermal distribution standpoint, this is a really useful tool in a sense, because some customers want to use lower-cost, smaller switches that lack the power and cooling envelope for advanced ZR optics. So you would have a lot of stranded ports. So in a sense, you can take that, that thermal management away from the switch. And so there’s multiple applications, we introduced this at OCP, and we realized putting out a multi-tool like this that basically enables optics to be connected directly with AECs as a different type of solution.
We were surprised at the ideas that some of the engineers that came by our booth at OCP were surprised at some of the great ideas that they came up with. So generally, when we think about this product, we think about it in terms of a combination of the P3 and AECs. So we developed the P3 to basically be a catalyst for more AEC demand.
Vijay Rakesh: Got it. And so in better utilizing the stranded ports, I guess, does the P3 with the AEC actually double your content on the server to the rack or —
Bill Brennan: It’s hard to say. I don’t think there’s a relative reference point on contact. These are new applications and with our lead customer, we think that the content can be significant. But the nice thing is, this is really an application as we prove out our lead customer, this is one that many service providers we think will pick up.
Vijay Rakesh: Got it. And then the last question on your 10% customers, how many were there in the quarter? And if you were to look out, let’s say, fiscal exiting calendar 2025, any thoughts on how many 10% customer you think you would be working on?
Dan Fleming: Yeah, so for Q2, we had, as you’ll see, when our Q is filed, we had three 10% end customers. Recall last quarter, we added an additional disclosure to show end customers. So you’ll see the largest one was 29%. Generally, we don’t disclose who our 10% customers are, but obviously the 29% one was Microsoft. Most importantly, we continue to expand our customer base throughout the year. One of the customers — one of those three end customers is a new end customer, as you’ll see in our disclosure. So it’s hard to answer the latter part of your question, how many we’ll add at the end of the year, but I would guess maybe four.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Suji Desilva of ROTH MKM.
Suji Desilva: Hi, Bill. Hi, Dan. My question is on the competitive landscape. I’m wondering what you’re seeing in the chip-based AEC efforts. Chip plus cable guys competing with you? Are you guys able to provide a faster time to market? Is that one of the reasons you’re in some of these demo racks, perhaps. And maybe you can talk about the share you might think you’d be having in the AEC market versus the size? Thanks.
Bill Brennan: I think we’ve been consistent in saying that we don’t expect to maintain 100% of the AEC market, and we do see competitors. As this product category becomes really more and more established, that is a de facto way of making short in-rack connections, we do see more competitors. The way that we’re organized, for sure we’re going to be able to deliver better time to market. And what we’re seeing is that for the high volume applications, customers are asking for special features, special functions, and fundamentally, we are responsible for working our company. Although we’re a chip company, I’ve built a system organization for AECs. And so we’re the ones that are working directly with the hyperscalers. We’re the ones having daily conversations when crunch time comes.
And so for sure, we’ve got a time-to-market advantage. And so I think the way that this will play out, I think that our market share will ultimately play out, and I hope that we maintain more than 50% long term. And I think that’s a function of being first, that’s a function of having a model that delivers just a better experience with hyperscale customers directly.
Suji Desilva: Okay. All right. Thanks, Bill. And then my other questions on the customer base and where they are in the racks. You talked about Amazon and Microsoft demoing the racks, and they seem like they’re a little bit ahead of the rest of the customer base, but perhaps you can clarify that? And if so, are the other folks really close behind them, or do those guys have maybe a substantial technical lead? Just trying to figure out how the customers may waterfall in for you?
Bill Brennan: Yeah, I think from a timing standpoint, I would expect the third customer would probably ramp in the upcoming two to three quarters. It takes time for these new platforms to be deployed and then the fourth customer would be following that by a number of quarters. So I think it’s one where the first two customers, of course, the architectures that they’ve decided to take to market, really each one of these customers is different, in a sense. So I wouldn’t say that they’re necessarily ahead from a technology standpoint or it’s just that, they’ve chosen to move forward more quickly than the others.
Operator: Thank you. Our next question comes from the line of Richard Shannon of Craig-Hallum. Richard, please make sure your line is unmuted and if you’re on a speaker phone, lift your handset.
