QuickLogic Corporation (NASDAQ:QUIK) Q1 2024 Earnings Call Transcript

QuickLogic Corporation (NASDAQ:QUIK) Q1 2024 Earnings Call Transcript May 13, 2024

Operator: Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to QuickLogic Corporation’s First Quarter Fiscal 2024 Earnings Results Conference Call. As a reminder, today’s call is being recorded for replay purposes through May 20th, 2024. I would now like to turn the conference over to Ms. Alison Ziegler of Dallas associates, Michigan. Please go ahead.

Alison Ziegler: Thank you, operator, and thanks to all of you for joining us. Our speakers today are Brian Faith, President and Chief Executive Officer, and Elias Nader, Senior Vice President and Chief Financial Officer. As a reminder, 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 performance design activity and its ability to convert new design opportunities into production shipments, timing and market acceptance of its customer products, schedule changes and production start dates that could impact the timing of shipments, company’s future evaluation systems, broadening the number of our ecosystem partners and expected results and financial expectations for revenue, gross margin, operating expenses, profitability and cash.

Actual events, results or trends may differ materially from those discussed today. For more detailed discussions of the risks, uncertainties and assumptions that could result in those differences please refer to the risk factors discussed in QuickLogic’s most recently filed periodic reports with the SEC. Quicklogic assumes no obligation to update any forward-looking statements or information which speak as of the respective dates of any new information or future events. In today’s call, we will be reporting non-GAAP financial measures. You may refer to the earnings release we issued today for a detailed reconciliation of our GAAP to non-GAAP results and other financial statements. We have also posted an updated financial table on our IR web page that provides current and historical non-GAAP data Please note, QuickLogic uses its website, the company blog, corporate Twitter account, Facebook page and LinkedIn page as channels of distribution of information about its business.

Such information may be deemed material information and QuickLogic may use these channels to comply with its disclosure obligations under Regulation FD. A copy of the prepared remarks made on today’s call will be posted on QuickLogic’s IR page shortly after the conclusion of today’s earnings call. I would now like to turn the call over to Bryan. Go ahead, Brian.

Brian Faith: Thank you, Allison, and good afternoon, everyone, and thank you all for joining our first quarter 2024 conference call. Q1 revenue increased more than 45% year over year. This growth was driven by a nearly 60% increase in new product revenue, which was mostly from EFPGAIP. contracts. With continued strong bookings, our record $179 million funnel and some very significant EFPGA. contract proposals pending, we remain confident that we’ll deliver greater than 30% year-over-year revenue growth in 2024. Let’s take a few minutes now to update the status for some of our major contracts and accomplishments. First, our strategic radiation hardened FPGA government contract that has a total potential of $72 million last August we announced the second tranche, which added Honeywell Aerospace as a foundry partner and increase the funding rate from Tranche one levels to bring the Honeywell base development up to speed quickly Tranche two also funded our continued activity with SkyWater technologies.

We are anticipating Tranche three will be awarded later in Q2. And as we stated in our last conference call, we are modeling, the funding rate for Tranche three will likely decrease from Toronto to be more similar to Tranche one due to this. And this strategic shift in how we are now dividing revenue between engineering services and IP license. While we are projecting Q2 revenue will be up significantly year over year, we are currently forecasting a sequential decrease from Q1. We believe Q2 will mark the low point for the year since it is important, I’ll take a moment to review how the change in revenue split impacts when we recognized IP contract revenue on our income statement. At the start of the year, we shifted the majority of the IP contract values from engineering services, which are recognized over the course of the contract to IP license, which is recognized at the completion of our deliverables.

This suggest better aligns revenue with our deliverables and improves our ability to effectively negotiate and win future contracts. While this change will push quite a bit of revenue recognition into the second half of 2024. It has absolutely no impact on our cash flow. We continue to believe we will be cash-flow positive and solidly profitable for full year 2024. Beyond building on the success of our large government contract, we are very well positioned to significantly expand our IP business across many new customers and market sectors, as well as the number of fabrication node supported by our IP. in 2024. During our last conference call, I announced that we booked the first of two IP contracts that will be fabricated using the 12 nanometer processes and that the second contract was pending.

We announced finalizing the second contract in a March press release. Both of these contracts will contribute to cash flow during the first half of 2024, but revenue will not be recognized on our income statements until completion of our deliverables in the second half of this year. The first contract is with a defense industrial base customer and will be fabricated on GlobalFoundries 12 nanometer process known as 12 LP. I cannot go into any details beyond the fact this contract is not related to the large ongoing radiation-hardened FPGA contract I just discussed. Second contract is with a large international company that I’m sure you would recognize this design is for a new ultra-low power SOC that is targeting a variety of commercial and industrial IoT applications.

This design will be fabricated by TSMC on its 12 nanometer process within the SOCRESPGA. technology is used for AI acceleration, which is a necessary function in most AI applications. We believe this will prove to be a rapidly growing application that is often better served by EFPGA. technology than a processor running the acceleration algorithms and software in short and EFPGAIP. can be reprogrammed to adapt to changes and acceleration algorithms and perform acceleration more quickly and using much less power than a processor based solution in November 2022, I share that we taped out a new device for a customer that incorporates our EFPGAIP. due to strict confidentiality requirements. I can’t share more details on the specific design win beyond a brief update in line with what I covered during our last conference call.

The customers continuing to work through certain aspects of the design. This work is progressing, and we anticipate resuming our efforts during the second half of 2024. This customer could represent tens of millions of dollars in potential device revenue starting in a couple of years. Last September, we announced a leading technology company, chose our EFPGAIP. for a design that will be fabricated using Global Foundries, 22 FDX platform, again, due to strict confidentiality requirements that cannot go into more detail on the design, but I can share that we have delivered our IP to the customer and expect tape-out to initiate this quarter. Last November, we announced the global semiconductor leader, chose our EFPGAIP. for a design that will be fabricated on UMC’s 22 nanometer platform.

We have completed the delivery of our IP and expect takeout to initiate this quarter. In total, we are on contract to deliver our IP on six different foundry process technology combinations, including two that will be fabricated using 12 nanometer technology. This is up three times from a year ago with minimal growth in the associated R&D costs. This demonstrates the market demand for EFPGAIP. is accelerating and that the automation from our proprietary Australia site generator enables us to address this demand in a scalable way. We have several chiplet opportunities in our funnel, including deals with our partner, your chip. As a matter of fact, we recently submitted two substantial proposals this year with a combined value of over $40 million, one in conjunction with your chip.

As I mentioned in our last conference call, our lead smartphone customer worked through its excess inventory of ESS. three that limited our shipments during 2023, and we have resumed shipping to support production. We hosted a meeting with this customer at our San Jose headquarters earlier in Q2. Based on the customer’s outlook, we expect volume will increase in 2024 as our ESS. three solution was selected for new designs that will ship well into 2025. Consistent with the outlook we shared last quarter, we are forecasting a modest increase in display shipments. This year and expect mature product revenue will be similar to what it was in 2023. A couple of weeks ago, we announced the release of Aurora to dot six, our comprehensive EFPGA. development tool suites.

This release of Aurora includes a number of significant improvements that will expand our market opportunities and help us win new designs in ORIC. dot six. We expanded operating system support to include multiple versions of Linux, including Central U.S. Red Hat and above two and included support for Windows 10 and 11. Furthermore, through the incorporation of new architectural improvements, variety dot six can also deliver up to a 15% improvement in speed and some FPGA designs. Critical Path timing can be even more important than raw speed to address this need for royalty dot six incorporates interactive path analysis and a new graphical user interface for our customers. This means easier to use better performance, shorter development cycles and lower development costs.

With our planned investments in R & D, we have a cadence of Australia and award releases scheduled throughout this year. It will provide further improvements to flow automation, increased IP core speed by up to 50% and reduced die size for our EFPGA. hard IP implementations. Turning to SensiML I’m very excited about the progress made during the last three months. In short, there has been a notable notable shift in strategy that has accelerated near-term revenue and we believe will substantially accelerate end user adoption. The first step was to sign a six figure contract with a major MCU company, which quite sensible on track to deliver the material 2024 revenue growth I forecasted last quarter. Sensiml is discussing a similar agreement with other MCU companies.

The second step will be revealed in more detail tomorrow morning, leveraging the four years of experience and success monetizing an open source business model. At QuickLogic sensor mobile announced its own Open Source strategy in a press release issued before the market opens the short story here is Open Source provides customers the transparency and security they need to incorporate high value IP in their designs and in many cases, also adopt proprietary processes and professional services. You have seen how this strategy has enabled QuickLogic to more fully leverage and monetize its proprietary IP and expand its reach into a variety of end markets. I believe we will see the same from SensiML. And with the market’s Raven U.S. appetite to adopt AI and ML, we anticipate a much faster ramp and a much broader market reach for SensiML.

With that, let me now turn the call over to Elias, who will review the financial results, and I will rejoin for our closing remarks. Last, please go ahead.

Elias Nader: Thank you, Brian, and good afternoon, everyone. I am happy to report that our first quarter revenue aligned with our forecast and drove our third consecutive quarter of profitability on a non-GAAP basis. Revenue for the first quarter was $6 million, a solid 45% increase from the first quarter of 2023 compared to the fourth quarter of 2023. Q1 revenue was off approximately 20%, reflecting the previously communicated strategic shift in the script of FPGA IP contracts, revenue between professional services and IP license that will push most of the revenue recognitions in the second half of the year. Please note the shift does not affect cash flow within our Q1 revenue sales of new products and approximately $4.9 million.

This compares to $3.1 million in the first quarter last year of nearly 60% and $6.6 million in the fourth quarter of 2023, down 29%. Mature product revenue was approximately $1.1 million. This compares to $1.1 million in the first quarter of last year and $0.7 million in the fourth quarter. Our results continue to reflect higher EFPGIP. license and professional services revenue. Non-gaap gross margin in Q1 was 70.3% compared with 59.7% in the first quarter of 2023 and 78.3% in the fourth quarter. The strong gross margins in the last few quarters resulted from the higher revenue level and a higher concentration of revenue related to IP contracts. Our non-GAAP operating expenses in Q1 24 were approximately $2.5 million of this compares with non-GAAP operating expenses of $2.9 million in the first quarter last year at $3.1 million in the fourth quarter.

Reduced non-GAAP operating expenses in Q1 24, while below our outlook, primarily due to allocation from R&D to COGS due to the professional services contracts and reductions in outside services and SG&A. Please note the larger difference between GAAP and non-GAAP operating expenses is attributable to the timing of stock-based compensation for deferred incentives for executives and managers from prior years. This this deferred incentive compensation accounted for approximately half of the stock-based compensation we called it for Q1. Non-gaap net income was $1.7 million, or $0.11 per diluted share. This compares to a non-GAAP net loss of $0.5 million or $0.04 per share in last year’s first quarter and non-GAAP net income of $2.6 million or $0.18 per diluted share in the fourth quarter of fiscal 2023.

For the first quarter, one customer accounted for 10% or more of our revenue at the close of Q1. Total cash was $27.4 million compared to $24.6 billion at the year-end 2023. This is inclusive of $3.5 million of net proceeds raised that a registered direct offering with certain institutional investors in March of this year. It is also inclusive of our $20 million credit facility. Now moving to our guidance for the second quarter of fiscal 2024, which will end on June 30th, 2024. Revenue guidance for Q2 2024 is approximately $4.5 billion, plus or minus 10%, which represents an increase of 55% over Q2 2023. Second quarter revenues expected to be comprised of approximately $3.6 billion of new products, which is a year-over-year increase of 64% and $0.9 million net of mature products, which is a year-over-year increase of 29%.

The projected total revenue decline from Q1 2024 is primarily due to the timing and cadence of large IP contracts and the strategic shift that splits a higher percentage of contract revenue to IP versus engineering services to better align with our deliverables. This will continue to result in shifting certain revenue recognition to the second half of the year, but it is not expected to impact the timing of cash flow from these contracts. For the full year 2024, we are still anticipating more than 30% growth in revenue and a positive cash flow generation based on the anticipated Q2 revenue mix. Non-gaap gross margin for the quarter is expected to be approximately 70% plus or minus five percentage points. Our non-GAAP operating expenses will be approximately $3.2 million plus or minus 10%.

We believe quarterly non-GAAP OpEx will remain in the $3.2 million range for the balance of 2024 with occasional increases to support new programs. Please note that given the nature of the industry, we may occasionally need to reclassify certain expenses to COGS or capitalize certain costs because that is the reclassifications are primarily related to labor and tooling for our revenue contracts with customers such capitalization, reduce OpEx and alter the timing for recognizing the corresponding expenses and COGS. This may cause variability in our gross margins and operating results. Bearing these factors in mind, we believe our full year 2024 non-GAAP gross profit margin will be in the upper 60% range. We believe we are well positioned to deliver robust profitability for the full year 2024.

After interest, other income and taxes, we currently forecast that our Q2 non-GAAP net income will be approximately $0 to $0.4 million or $0 to $0.03 per share based on roughly $14.7 million fully diluted shares. The difference between our GAAP and non-GAAP results is related to non-cash stock-based compensation expenses. In Q2, we expect this compensation will be approximately $0.8 million. As a reminder, though, the movements in our stock-based compensation during the year vary each quarter based on the timing of costs and endpoints investments this quarter to support the new design wins that we have discussed including hiring critical engineering and sales roles on the timing of certain payments. At this point, we expect cash receipts to be less than $1 million, again in due to these investments and the anticipation of continued strong growth in 2024 and timing of the signing of new contracts on design wins.

As previously mentioned, we are on track to achieve cash flow positivity in the third quarter and for the full year 2024. Thank you for your time. With that, let me now turn the call back over to Brian for his closing remarks. Thank you.

Brian Faith: Elias is becoming increasingly evident that our unique position and more than three decades of experience as a manufacturer of FPGA centric devices sets us apart from other EFPGAIP. companies. With this, we have the experience operational structure and established relationships that are required to manage final design, device fabrication package test and finished device delivery for the many customers that don’t have these resources in-house. These capabilities expand our served available market for IP to include customers that do not have these capabilities in-house and want us to storefront their designs. This opens markets for us that could be orders of magnitude larger than our core IP license business. Some of these opportunities are well defined and near enough that they are included in our rolling two-year funnel, which is currently at the all-time record of $179 million.

The experiences we gained through more than 30 years of designing and delivering semiconductor devices is also at the foundation of the proprietary tools we’ve developed. These tools help our IP customers that prefer to manage the manufacturing flow, shorten design cycles and lower development costs. This provides them with a much more efficient path to target the foundry and fabrication process have their choosing. As I noted in our last call, I think three years of greater than 30% top-line growth proves our IP business model built upon open source components as traction in the market. And with that traction established, we are building momentum. That momentum is supported by the fact we are seeing more opportunities in a wide variety of end markets, including the defense market where some of the most noteworthy prime contractors have recently approached us to discuss strategic partnerships to pursue major contracts, while 2024 will be another year of building our IP foundation and we believe will drive another year of 30% plus growth.

We also think there is a very good chance that our growth will accelerate in the near future as storefront royalty and other finished device strategies begin to kick in. With that, I would like to open the call for question.

Q&A Session

Operator: [Operator Instructions]. The first question comes from the line of Richard Shannon with Craig-Hallum.

Richard Shannon: Well, I’d say a couple of questions. I guess I just wanted to make sure I understand the guidance for the quarter and for the year here, you’re talking about the specific a large project with Rad Hard being the third tranche being awarded here sometime during the quarter. Is the guidance for the second quarter that is there? Are you including anything from that expectation in there or was it all in the back half of the year.

Brian Faith: We are factoring in our estimates for that in Q2 in the guidance that we provided.

Richard Shannon: Okay. That’s fair enough. And then did I hear correctly related to the rad-hard deal that you’re expecting a cadence of revenues and the third transits closer to the that of the first tranche of it? And if so, can you maybe elaborate on that?

Brian Faith: Yes. If you remember, the first tranche was and awarded in August of 2022, and the total value of that contract was effectively spread across approximately 10 months. And so we’re expecting a similar monthly rate for this third tranche. And when I say as expected, I should say we’re estimating because we’re still going through this process with our sponsored content, but that’s the modeling that we’re using as we’re providing our Q2 guidance and our full year revenue outlook for 2024.

Richard Shannon: Okay. Fair enough. But that’s good. No, let’s see a couple of more questions. Very intriguing here about SensiML. You got a $100,000 plus contract here with a with a major MCU company here maybe if you can, I don’t know if you want to front run what we may hear about tomorrow morning or not, but just kind of want to get a sense of and what this is all about just a company that has no capability and kind of edge AI work as kind of a complement to what they already have. And maybe you can kind of characterize what you mean by major?

Brian Faith: Yes, it’s a major for us than the microcontroller space would be, let’s say, top 10 microcontroller vendors. We’re not going to go into details on the nature of the contract itself from this call. But maybe what I’ll do is tease out a little bit more of the detail that’s going to go out in the press release tomorrow from SensiML because I think it’s related to this so that the open sourcing of sensible. If you think about firstly, what QuickLogic has done, we’re leveraging a lot of open source components because you get a lot of sort of industry collaborating and contributing to features and enhancements that smaller companies can’t do in time or money by themselves. And so the acceleration and bringing in new capabilities to an already, I would say, very well well-established tool kit, that something will happen.

And then by virtue of that, you know people that are looking at machine learning, AI, software workflows like some small. I think they can take some confidence in the fact that what they see today, there’s probably only a fraction of what the capabilities in the future come. And it will be an open source path for some of the core elements of that provided that those companies want to abide by what’s called a copy left open source licensing scheme. And I’m as opposed to the more permissive Apache brand, mighty Open Source licenses. So I think the combination of having these options out there for people to license will give them comfort and expect stability and security and future growth in the features and functions and make it even more. I can speak for them to actually do further licensing deals with sensible price in the future, especially when you take that sensible, having established this for so long and understanding how you manage cloud service components and how you how you set up the customer derivatives, the private labels, the identification aspects, all the things you would expect from doing business with a national company and software.

So I think it’s exciting. They’re going to have learned a lot from what QuickLogic has learned in terms of how to how to effectively monetize and leverage and collaborations with the open source community. And I think we’ll see that happening or sense. One, of course, will be a lot more details in the press release tomorrow.

Richard Shannon: Okay. Fair enough. Great. Detail there. I’ll probably follow up on that topic. Sounds very interesting. My last question here and I’ll jump on the line and hopefully I caught the right language that you provided here, but you talked about a couple of different contracts in chiplets, so we submitted proposals for over $40 million. Wondering with your announced partner of your chip, $40 million, it’s a pretty sizable free. I’m assuming that these include some elements of storefront in there, but maybe you could kind of give any more clarity on when you when you expect those to be awarded and maybe other details you can offer. Thanks.

Brian Faith: Yes, I can elaborate a little bit more on that, Richard on. So firstly, remember anything that’s outside of roughly two years horizon does not fall into our sales funnel. Italy falls into that funnel in terms of the dollar values like the $179 million that we just talked about today, one sits within approximately two year horizon. So some deals, Chip, but specific ones that we are talking about in the $40 million, do you have the potential to become surplus and we would like that. But I think two factors to remember here. One is the chiplet revenue is not part of that $40 million and two in each of the revenue that would be part of that would be outside of the sales funnel at this point in time just because of the window, Greg, but I think that you bring up an interesting question area.

And I think part of that relates to, you know, our optimism and confidence in hitting this 30% revenue growth number for 2024 because obviously that would require a fairly significant increase in severance, second half revenue over the first half. So I’ll be as specific as I can without getting into details, Gamba NDAs and bound by the specifics of these proposals I’m talking about, but we definitely review the continuation of the strategic Radar contract, which you covered already from. And then some of these other larger contracts like this $40 million total dollar one, and those can be hitting and contributing to revenue later this year. And then even another one that I didn’t name specifically, but a mid seven digit proposal that we’ve been working on since last year.

In fact, not part of that $40 million chiplet proposals, a number that I gave earlier, and we recently crossed a pretty important threshold in that whole process from the proposal process with that customer. So when you start to see that things clicking out across multiple segments, multiple approved proposals and hitting these that would all call important internal milestones on those are the things that give us the confidence that that we are in fact going to recognize enough revenue this year from these contracts within 2024 to achieve greater than 30% revenue growth. I think more than he directly asked for Richard, but I think it was good timing to have that little color to us.

Operator: The next question comes from the line of Rick Neaton with Rivershore Investment Research.

Rick Neaton: And thank you. Good afternoon, Brian and Elias on Good afternoon. I was I was interested in some of your comments about Central Mall on the six-figure contract mentioned in the press release and you mentioned it again in the prepared remarks, is that with a different MCU companies and the white label agreement that SensiML has right now.

Brian Faith: We’ve not seen that detailed work and really due to NDAs, we’re not going to be able to directly answer it because I think when we start talking about the number of companies we’re targeting, again, wake success within one or two or more. Those, I think starts to paint a clear picture about which entities we are talking about in these contracts and they don’t want that detail chaired by me, Tom. And so we really just have to sort of keep it at a high level when we talk about these.

Rick Neaton: Sorry, that’s all right on though. My next question is you talked about AIAI. accelerators and using FPGAs instead of some other types of chips to accelerate the AI functions on your funnel. Are there more than one of these AI opportunities in your funnel? And are there more that are outside of the funnel more than years out?

Brian Faith: Yes. And yes, on some of the recent proposals that I was just talking about have a I as part of them, I would say a key element of it and the FPGA that we have today, the FPGA that we have today, I think can bring value to AI. an acceleration, which is evident in that 12 nanometer when we’ve already talked about previously. But I think more importantly, the further we get into this and the more research that’s done gives us clues about how we can even adapt further party FPGA architecture to even better accelerate for performance or lower power reasons on other chip designs that we have in the future. And so some of the proposals we have mentioned on this call already about that more more acceleration and lower power through other variations of our FPGA architecture.

So yes, there’s definitely some in the funnel dollar value, the funnel opportunities we talked about and there are some things that would be storefront that’s outside the sales funnel number up and not opportunities. Generally, the opportunities we’re tracking and prioritizing are ones that would contribute to revenue within the next few years. If it’s outside of that, we tend to push that down the priorities that quick.

Rick Neaton: Yes, thank you for the detail on in terms of AI aren’t FPGAs better suited for AI at the edge? Or are you seeing across the board AI use cases on seeking to investigate the benefits? Is that DGA everywhere in the network.

Brian Faith: I think historically, FPGAs have been used more essential the data center for AI and not so much at the edge because typical FPGAs tend to be much higher power because they’re designed for flat out performance at any cost. And one of those cost tends to be powered. And as you’ve been following QuickLogic for a long time, you know, that a lot of our FPGA wins impact on the other end of the spectrum, which tend to be funding cost and power side of the equation where we optimized for power first. And so the I think that’s one of the reasons why we were able to win this 12 nanometer design we talked earlier because that one’s AI at the edge where power really really does matter and where we already have success from our prior at Puget and history as a company.

Think about all the smartphone stuff in cancer, obviously, power is really important in those applications. Now, as you think to the future, though, I think there are more customers looking at how do they design for power at the edge and performance at the edge. And this is we’re adding a modest amount of programmable logic to their asset, can actually help them optimize for those lighter workloads for AI at the edge without killing their power budget and their die size budget. So we see a lot of opportunity there, but I think it would be hard to overcome the crests and the of the excitement around data center AI because that’s dominating everything that we hear in the news today.

Rick Neaton: Right, right. And one final question. As it relates to some of your own defense contract opportunities and the rad hard contract that we’ve talked about for several quarters now on do the young US federal government budget uncertainties come up to affect sometimes how these tranches are awarded and when they’re awarded?

Brian Faith: I’m sure there is some impact from the budgeting process on these projects because at the end of the day, the budget has to come from somewhere but I think usually if you look at the first of the program that we have some, I think there’s a need for it. We’re executing well. And so I think those are the types of programs that are going to continue to get priority from the budgeting process. I think the other thing I would note is that our the awards that we’re getting the traction we’re getting are generally not like multi-year tranches. And so I think they’re my belief anyway, that they’re already allocated for within the budget that year. And so that doesn’t become such an issue if we were getting for seeking, you know, multi-year awards.

And I think that probably was maybe become more at risk to the government budgeting cycle. But for the ones that we have. I don’t foresee that churn issue. And really if you think about the magnitude of the awards we’re talking about it. So it’s sort of de minimus in the grand scheme of things from a defense spending overall anyway.

Operator: The next question comes from the line of Richard Shannon with Craig-Hallum.

Richard Shannon: Hi, guys. I’m running it’s just have one follow-up. One question kind of big picture, and that’s really looking at the competitive environment of the embedded FPGA IP space. How would you kind of compare the environment versus one or two years ago?

Brian Faith: Hey, Richard and Brian, can you hear me Yes, Ryan, your audio because I can hear you now, but the audio cut out when you started to ask a question about the competitive landscape over the last couple of years, could you repeat the question, please?

Richard Shannon: Certainly, can you hear me now? So my general question here is on the competitive environment versus the one or two years ago. How if any, has it changed better or worse? You’re seeing more or less competitors out there? Any kind of changes in the competitive dynamics here that are been favorable or unfavorable to you in that timeframe?

Brian Faith: Yes, I guess on the competitive landscape, if you go back a couple of years I’d say the competitive landscape that we see is pretty unchanged. We see flex objects. We see Mentor. We don’t really see a chronics because our understanding is they’re really just on one node. But the other two, we those are the two that we would come across in any type of engagement that the pure IP-based engagement. If you double-click on that a little further, I think Mentor’s pretty open that they’re soft IP and flex projects and QuickLogic are pretty open that we’re hard at it. And we think there’s good reasons for doing hard IP and taking on that workload for the customer. So it makes our customers’ lives easier as you double-click a little further on the differences between the companies, I think this is one of the things I was trying to bring out in the closing remarks that I had.

But so many of our customers appreciate the fact that we eat our own dog food. And we’ve been doing devices both design and support and selling for three decades. And so we know not just how to build the core, but how to build a core for making it easier for people to use, including manufacturing and test and performance and then making the software represent that silicon really well. And it’s not just about making the core work well, but it’s also about that option for gaming device development. And you could see a lot of the larger contract values that we’re talking about actually include development of the device with CPAM., a long-term vision of standing up the storefront for those devices. And I think that’s important, not just from a quick logic business and investor perspective, but it’s important for our customers also because FPGA technology is relatively new as a core, as you alluded to in your question, and I think people get more comfortable in working with established companies that have been basically using and supporting those that type of technology for decades.

And that’s one of the attraction points that we’re seeing in these different proposals. Even I have examples where somebody started out by talking to us as an FPGA vendor and then pivoting that into doing the device for them because it builds more FPGA content and not. So why not seeing the mix that makes logical sense for the customer. So those are the kinds of dynamics we’re seeing. I think you’re starting to see more and more people interested in not just the leading edge technologies, but also some of what we would call mainstream technologies as evidenced by our wins that we’re talking about going across different foundries now on some of the more mainstream node. So it feels like we’re starting to get people that are more comfortable with technology now and they don’t need to be Todd what an FPGA is.

So it’s more like how can they make it useful for them. And so it’s I think it’s good that those conversations are happening because it means that the technology itself is not a nascent anymore. We started that of helping answer questions if you have balances.

Richard Shannon: Yes, yes, that all makes sense. Just want to make sure I’m kind of keeping a pulse on the latest and I appreciate your perspective. That’s all for me. Right. Thank you.

Brian Faith: Thanks, Richard.

Operator: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I’d like to turn the call back to Brian fate for closing remarks.

Brian Faith: I will I wanted to thank everybody for your continued support, and we look forward to sharing our progress with you next quarter and have a great day. Thank you.

Operator: This concludes today’s conference. You may now disconnect your lines at this time. Thank you for your participation.