MACOM Technology Solutions Holdings Inc (MTSI) 2011 Q1 法說會逐字稿

Welcome, and thank you for joining the Mindspeed Technologies first quarter fiscal year 2011 conference call. All parties have been placed on a listen only mode until the question and answer portion. Today's conference is also being recorded. If you have any objections, you may disconnect now. I will like to introduce Andrea Williams, Mindspeed's Vice President of Corporate Communications, who will chair this afternoon's conference call. You may begin.

Thank you, and good afternoon to all of you who have joined us for today's call to discuss Mindspeed's fiscal first quarter of 2011 financial results. Our press release issued this afternoon detailing these results may be accessed in the investors section of the website at www.mindspeed.com. Today, our CFO, Bret Johnsen, will begin the call with a review of the first quarter and our financial results. Our CEO, Raouf Halim will follow Bret with some perspectives on the quarter and will end by providing second quarter 2011 financial guidance.

Before we begin, I want to remind you that our comments today will include forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934. Forward-looking statements include, among others, statements regarding our expectations and financial guidance for our fiscal second quarter of 2011 and the remainder of fiscal year 2011, the future of our business, product features, industry, business and product trends and cycles.

New products and markets and potential growth opportunities, domestic and foreign economies and markets for our products, our financial performance and liquidity position, business drivers, design wins, customers and competition, backlog, market share, inventory absorption, deployments, expected patent sales, diluted share count, customer demand and other anticipated future events and results.

Forward-looking statements made during this call are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events other otherwise. Actual results may differ materially from those projected in any forward-looking statement, as a result of certain risks and uncertainties including, but not limited to, those noted in our earnings release and our annual report on Form 10K for the fiscal year-ended October 1, 2010 and our other filings with the SEC.

Today, during our call, we will be making reference to non-GAAP financial measures, which exclude patent sales, stock based compensation expense and related payroll taxes, employee option exchange costs, special charges and non-cash interest expense on convertible senior notes. For a reconciliation of non-GAAP to GAAP financial measures, please refer to the investors section of our website at www.mindspeed.com and our earnings press release and our Form 8-K furnished to the SEC today. We do not provide a reconciliation of the forward-looking non-GAAP measures to GAAP because of our inability to project special charges, employee separation costs and stock based compensation related expenses. With that, I would now like to turn the call over to Mr. Bret Johnsen, our CFO.

Thank you, Andrea. The fiscal first quarter of 2011 was a challenging quarter for Mindspeed, as we encountered a weaker demand environment, primarily impacting our legacy wide area networking business. However, despite the 15% sequential decline in product revenues we experienced in the first fiscal quarter, we still maintained non-GAAP profitability for the quarter and product revenue still grew 3% from the same period a year ago.

Now, turning to a more detailed review of the financial results for our fiscal first quarter of 2011. Total net revenues for the first quarter were $40.5 million, including $2.5 million from patent sales. Excluding patent sales, we delivered product revenue of $38 million, consistent with our preliminary results released on January 5.

Product revenue for the first quarter of 2011 declined 15% sequentially, but grew 3% year-over-year. Product revenue from our communications convergence processing business, or CCP, contributed 44% of total first quarter product revenue and decreased 12% sequentially, but grew 19% year-over-year. The decline in CCP in Q1 was due to some seasonality in the optical FTTx markets, specifically in China, as well as some inventory absorption at a key CPE customer in Asia, which we believe is now largely complete. Product revenue from our high performance analog business, or HPA, represented 37% of total first quarter product revenue and declined by 5% sequentially, but grew by 22% year-over-year.

The sequential decline in HPA was mainly attributed to some inventory absorption at a few carrier OTN customers, while enterprise solutions and optical PMD solutions continued to grow sequentially in Q1. Lastly, our wide area networking business, or WAN, contributed the remaining 19% of first quarter product revenue and declined by 33% sequentially and declined by 36% year-over-year.

As we have mentioned previously, WAN represents a legacy business for Mindspeed, as we have shifted all of our R&D investment into our two growth businesses of CCP and HPA. This quarterly decline in WAN was primarily attributable to inventory absorption at several large customers, primarily in ATM-based systems for wireless backhaul. At less than 20% of total product revenue, WAN now represents the lowest percentage of product revenue in the Company's history, which is important to note as the Company continues to successfully transition to its key growth markets going forward.

Product revenue for the first quarter was split by geographic region as follows, Asia Pacific at 66%, Americas at 25% and Europe at 9%. China represented 32% of total first quarter product revenue, up slightly from 31% of product revenue in the fiscal fourth quarter of 2010. There was no end customer in the quarter that represented product revenues of 10% or greater.

Now, turning to gross margins. Non-GAAP gross margin was $26.3 million, including $2.5 million from patent sales. Excluding margin benefit from patent sales, non-GAAP gross margin was $23.8 million, or 62.6% of product revenue, which was above the high end of our original guidance range of 62% to 62.5% and down sequentially, compared to 64% of product revenue in the prior fiscal quarter. The sequential decline in non-GAAP gross margin was primarily due to overhaul lower overhead absorption in the quarter as we reduced our inventory build levels to adjust for the changing demand trends.

We still expect non-GAAP gross margin percentage to trend back to the middle of our corporate target range of 62% to 65% in the coming quarters. Total non-GAAP operating expenses were $23 million, consistent with our guidance. Fiscal first quarter non-GAAP operating expenses were comprised of research and development expenses of $13.6 million, and selling, general and administrative expenses of $9.4 million.

Non-GAAP operating expenses, excluding the effect of patent sales, increased by approximately 6% sequentially. This is based primarily on the increasing support requirements for our growing design win pipeline and the market opportunities before us in both the wireless and enterprise markets. While we still expect some further increases in operating expenses during the fiscal year, we believe that the sequential increase we just reported will be the most significant for the entire fiscal year. The resulting non-GAAP operating income for the first quarter was $3.3 million, including $2.5 million from patent sales. The resulting non-GAAP operating income excluding patent sales was $800,000, or a 2% non-GAAP operating margin.

Now, finishing the income statement for the first quarter. Non-GAAP other income and expenses and the provision for income taxes, in the aggregate, totaled a net expense of approximately $350,000, consisting of approximately $300,000 for direct interest expense and $50,000 for the provision for income taxes. Non-GAAP net income for the first quarter was approximately $3 million and resulted in diluted non-GAAP earnings per share of approximately $0.09. Based on approximately 32.9 million weighted average shares outstanding for the quarter, excluding the effect of patent sales, non-GAAP net income was approximately $500,000 and resulted in diluted non-GAAP EPS of $0.01.

Looking forward to next quarter, while Raouf will detail our formal guidance in a few minutes, there are a couple of additional items I wanted to point out. First, we expect our non-GAAP other income and expense to be approximately $500,000, including our tax provision. Second, in terms of weighted average shares outstanding for the second quarter, we expect our diluted shares to be between 33 million and 33.4 million shares.

Turning now to the balance sheet for the first quarter. During the fiscal first quarter of 2011, the Company generated approximately $1.9 million of cash. Cash and cash equivalents totaled $45.6 million at the end of the first fiscal quarter. Our accounts receivable balance at the end of the quarter was $17 million, resulting in net days sales outstanding, excluding the effect of patent sales, of 41 days, consistent with the prior quarter.

Inventories decreased by the -- from the prior quarter by approximately $1 million to $9.2 million, resulting in inventory turns of 6.2, down slightly from 6.3 turns in the prior quarter. I would now like to turn the call over to Raouf for some perspectives on the first quarter and our outlook.

Thank you, Bret. As Bret mentioned, the fiscal first quarter was a challenging quarter for Mindspeed as we experienced near term demand headwinds, largely driven by an over build of customer systems during the prior supply limited period. We believe the worst of these headwinds is over. Our current overall backlog and customer forecasts indicate that our customers are making excellent progress in depleting their inventory. Currently, our overall backlog is stronger than at the same point in the last quarter, and order trends are already improving.

Importantly, we believe that our fundamental strategic business drivers fiber optic access, high performance analog solutions for enterprise and OTM, as well as 4G wireless, remains strong. This perspective is bolstered by a strong design win pipelines in both of our CCP and HPA businesses. These design wins are the result of introducing the broadest portfolio products in the Company's history during fiscal 2010, while expanding Mindspeed's total address market to nearly $3 billion by 2015. Finally, where our legacy WAN business now a materially smaller percentage of our revenue moving forward, we believe Mindspeed is well positioned to achieve revenue growth and drive significant operating leverage going forward.

With that, let's talk briefly about each of our three businesses, starting with communications converging processing, or CCP. CCP declined 12% sequentially in fiscal Q1 but grew 19% year-over-year. Year-over-year growth in CCP was primarily driven by the continued ramp of our Comcerto processors for fiber optic process and broadband home gateway, TPE Solutions. The Q1 sequential decline was primarily driven by some seasonality in FTTx deployments, as well as the effects of one quarter of inventory absorption at one of our key CPE customers in Asia. During Q1, we experienced significant strength in enterprise applications, as demand for the former Nortel voice over IP platforms returned through Avaya.

Looking forward in fiber optic access, or FTTx, indications are that the pick up in demand from all three OEMs shipping to carriers in China, mainly ZTE, Huawei and FiberHome should occur on schedule after the Chinese New Year. We remain encouraged that estimates for port growth for FTTB in China for calendar 2011 are for approximately 20% to 40% growth over 2010, signaling a continued healthy trajectory for our fiber optic access business for fiscal year 2011.

In terms of CCP design wins in Q1, we had another record quarter of design wins with our latest generation of Comcerto 300 voice over IP processors for the optical FTTx access space. In addition, we won several very significant designs for the Comcerto 1000 CPE processor and the broadband home gateway market. These included a significant design win with a tier one OEM in Japan for broadband home gateways that we believe will make Mindspeed the market share leader and the largest and most advanced fiber to the home network in the world, namely NTT. Also, we scored a significant design win with a tier one OEM that takes us into the US broadband home router market. Both of these design wins are expected to ramp in fiscal 2012.

Finally, Transcede, which is our award-winning processor family for the next generation of 3G/4G wireless based stations has continued to be very well received in the wireless market, and we are actively engaged in design cycles with significant tier one OEMs worldwide. We are especially looking forward to the Mobile World Congress, or NWC trade show, in Barcelona next month, where we will be unveiling our latest customer initiatives in 4G marketplace, including demonstrations of our technology, powering multiple partner and customer 4G base stations.

Now, moving onto high performance analog, or HPA. HPA revenue declined 5% sequentially in Q1, but grew 22% year-over-year, making HPA, once again, the fastest growing business at Mindspeed. Year-over-year growth in HPA was driven by the ramp of a multiplicity of the design wins across a multiplicity of end markets, including enterprise video server and storage as well as OTN. The sequential decline for HPA in Q1 was driven primarily by inventory absorption at one of our key carrier customers for OTN in China.

Outside of this shallow decline in Q1, we saw strong demand for our optical module, or PMD portfolio, for both GEPON and GPON deployments worldwide. We now believe we have a dominant share in GPON, as well as GEPON, FTTx optical modules worldwide. In addition, Q1 also saw the third record quarter in a row for our video infrastructure products and the production release of the world's largest high density crosspoint switch, the 288x288, which furthers our leadership in both carrier and enterprise markets.

Due to the competitive strength and breadth of our analog portfolio, design win activity was again compelling in Q1. The most significant win of the quarter was a high value design win for our amplified solutions into a tier one US storage vendor, expected to start shipping in fiscal 2012. We continue to feel bullish regarding the opportunities for the enterprise segment at Mindspeed as we capture key design wins with a new class of signal integrity silicone serving the explosion of data traffic and data rates across the back plains of high end server and storage systems.

Now, turning to WAN. Our WAN business declined by 33% in Q1, declined by 36% year-over-year and is now less than 20% of product revenue. As we have announced, our legacy WAN business declined in Q1, due to the slow down in demand at customers, particularly in North America and EMEA, primarily for ATM-based solutions in wireless infrastructure.

We have shifted our resources over the last two years to our strongest growth drivers of CCP and HPA, and we expect WAN to comprise a much smaller percentage of revenue this fiscal year than last. While we received a secular shift from ATM to IP-based networks taking hold, we do believe that our WAN T1/E1, T3/E3, SONET and carrier ethernet solutions will continue to ship into many tier one solutions, such as Alcatel-Lucent, Nokia Siemens, Cisco, Ericsson and many others for many years to come.

And, now, turning to our guidance for the fiscal second quarter of 2011. Currently, we believe that the demand environment for our products has stabilized, and customers appear to be making excellent progress absorbing systems inventory built up during the supply constrained environment of last year. Our overall backlog is stronger than at the same point last quarter. Our current book-to-bill ratio is comfortably above one, and recent booking trends suggest an improving demand outlook. However, we are mindful of the seasonal telecom softness in the March quarter, coupled with the February slowdown, due to Chinese New Year.

Based on these and other factors, we expect fiscal second quarter total net revenues to be roughly flat from the fiscal first quarter of 2011 within a range of approximately $36.9 million to $39.1 million, excluding any potential patent sales. We expect fiscal Q2 non-GAAP gross margin to be in the range of 63% to 64%, returning to the mid point of our stated corporate target range of 62% to 65%. We expect non-GAAP operating expenses to be approximately $23.5 million, up 2% from the previous period.

As mentioned previously, based on the support requirement for our design win pipeline and market opportunities ahead of us, in both wireless and enterprise, we'll continue making prudent investments for future growth. While we still expect some further increases in operating expenses during this fiscal year, we believe that the sequential increase we just reported in Q1 will be the most significant of this fiscal year.

In closing, I'd like to say that while we are experiencing what appears to be a short inventory driven pause during the first half of our fiscal 2011, we continue to feel very encouraged about the long-term prospects for Mindspeed. We believe that growth will be based on our current strong design win pipeline for market leading solutions in key global networking infrastructure initiatives, such as fiber optic access, high performance analog solutions for enterprise and OTN, and, most significantly, 4G wireless. I want to thank our employees, our customers and our stockholders for their continued support. Operator, we are ready to open the lines for questions.

Thank you. (Operator Instructions)First question comes from Kevin Cassidy, your line is open.

Thank you for taking my question. I wonder, on your guidance, how much of that is on backlog right now?

So Kevin, we don't actually break out specific numbers, but what we can say is the book to bill is comfortably above one and that our backlog at this point this quarter is stronger than it was at this point a quarter ago.

Okay. Fair enough. How about on the 4G market, can you tell us -- how busy is the design activity and I know there's deployments happening now, but what about a second generation? Can you describe what the dynamics are there of design wins to ramping into production?

Yes, certainly Kevin, this is Raouf. Well, first of all, I would say we believe we're at the right place at the right time with LT now being adopted worldwide as the global standard for 4G wireless and our Transcede a world class system on a chip solution. We feel that we have the most compelling product for probably one of the most compelling communications infrastructure markets ever.

The number of carriers that are committed to deploying LTE for 4G wireless is now well over 100, as you may know. And the base station marketplace, literately all vendors that I know of are moving from first generation systems that are comprised of discrete DSPs, FPGAs many multiple memory components and processors and so forth, to second and third generations that are all moving toward systems on a chip, or SoCs for short. We believe Transcede is the most advanced SoC solution in the market place today.

We're very engaged in a number of critical design cycle with tier one OEMs worldwide, so we're pretty excited about the activity level. It's really very high. We have a number, as I said, of very active engagements with some very large tier ones, really the movers and shakers in the wireless industry.

We're very pleased, in fact, we're, I guess I would say, very well complemented by our customer base on the products and the road map for the products set going forward. And we have indicated we have already won multiple tier one design trends with Transcede. You're going to be hearing more about that at the Mobile World Congress next month, MWC, and we're going to be demonstrating, I believe the industry's most advanced broadband communications over LTE demo at MWC. We would welcome you to come see it for yourself and also see for yourself customers systems that are being developed and are already being prototyped around Transcede.

Okay, great. And just to maybe clarify on the supporting the new designs, is that heavily weighted towards this product, or is it spread across all the new products?

So, it's spread across, what we belief is the broadest raft of new products we've ever introduced in the history of Mindspeed. That includes the Amplify enterprise product lines. Latest generation, very high density crosspoint switches and other analog products, as well as, of course, Transcede, and the new Comcerto access processors. So, I would say it's spread across the board, it's not concentrated purely in wireless. As you can imagine that wireless -- the wireless initiative is clearly a very significant thrust for us. So, it is absorbing more than its fair share of the support resources at this point in time.

Okay. Thank you

Our next question comes from Scott Searle. You may ask your question and state your company name.

Hello, good afternoon. A couple of quick housekeeping questions. Bret, what was China's percentage of revenue in December? And can you just give us some idea of what the linearity looked like over the course of the December quarter?

So, hold on one second here Scott, and I'll get that for you. China represented 32% of our revenue in the December quarter, and as far as linearity, we don't break out linearity specifically month to month, so.

Okay, and just to follow up on the -- on some of the commentary, Raouf, you made related to the fiber deployment in China inventory. How far are we through some of the inventory build? Or I guess it was an Asia customer you were talking about. Are you feeling pretty comfortable that you're at the end of the cycle and start to see some reordering on that front? And then as it relates to CPE deployments, what's your visibility to revenue coming from some other regions, specifically EMEA? And you mentioned reference to a router win in North America. When will we see first revenue from that?

Certainly, so let me take them one at a time. I hope I remember all of them, Scott.

So, first of all, regarding FTTx in China, as you know, our business in China right now is concentrated in fiber to the building, or FTTB specifically. We actually have very little inventory of FTTB product in China. We don't believe our customers, namely GTE, Huawei and FiberHome being the key ones, have necessarily any material level of inventory. That is right now largely a supply limited environment. We don't really see any inventory build up. In fact, one of those customers is already on VMI, and so we know that there is absolutely no inventory there whatsoever. Demand trends are very good for fiber to the building in China, and we expect it to remain very strong next year. As I mentioned in our prepared comments, 20% to 40% port growth is expected in calendar 2011 specifically.

Now, your other question related to CPE. We did have some inventory build up with a key customer in Asia. I will tell you that was in Japan, in our fiscal Q1. That inventory is almost completely burned off at this point in the game, and it is the primarily component of the decline in our CCP revenues in fiscal Q1. We're happy to see us it behind us at this point in the game.

Now, in terms of CPE design wins, or customer trend fiber to the home design wins with the C1000 and its predecessor, the C100, we're very pleased with the progress there. Our design win pipeline in this segment has never been stronger. I mentioned a couple of key wins in our prepared comments. The primary one of those is clearly in Japan specifically. We believe it's going to propel us to the number one market share and the number one fiber to the home network in the world, namely at NTTE, we expect that to be ramping this calendar year, actually 2011 and certainly into 2012.

The other one is also very significant. It's a North America centric deployment and we expect that we're going to quickly establish a strong revenue stream within very likely carriers like AT&T and Verizon over the course of the next couple of years as that design win gets baked and starts deployment.

And just to follow up, in terms of the inventory in Japan single handedly being responsible for the decline in CPE, if we've worked through that, why wouldn't we see, as we get into June, a nice snap back in CPE up till the $18 million to $19 million range in short order?

So Scott, let me first correct something you said. The Japan inventory was not single handedly responsible for all of decline. As I said in our prepared comments, there was some softness, some seasonal softness which we always have in December quarter in fiber to the building in China specifically.

We mentioned before that we expected that the decline will be a little muted. In other words, we would not see the revenue go down as much this past December quarter as it has in prior years in China, and that indeed played out exactly as we thought. But there was still some decline out of FTTB in China, coupled with this inventory -- one quarter inventory absorption by CPE customer in Japan.

Now, is that business going to come back in the June quarter and beyond? Yes, we would expect that the second half of this fiscal year our business will be growing for sure. It's going to driven by both CCPE and high perform analog as far as we can tell. At this point, of course, we're not giving guidance yet, but -- for our third quarter, or fourth quarter, but we do feel the back half of this fiscal year we're going to experience growth from both of those businesses. And as we mentioned, our visibility is improving.

And lastly on Transcede, Raouf, it sounds like there's a tremendous amount of design traction there. Early on, it was mostly focused, I think on the Pico side of the equation. But have you been able to expand broader across the product platforms in portfolios within some of the OEM accounts, if you can give us an update there? And then also, migrating from LG to cost down versions of 3G or wideband CDMA platforms, what the update is up on that front, thanks.

Yes. Certainly, Scott. So, the Transcede family, as you may be aware, is really a fairly broad family that is highly scalable across the entire range of infrastructure. So, there are product implementations that address directly the macrocell development, but also Pico enterprise Femto and even residential Femto. We're going to have some pretty exciting new over the course of the next few months about our engagement in this the marketplace. And I think it's somewhat premature for us to lay out our strategy at this point in the game, but we have design wins in many very important, very critical parts of the spectrum where we believe LTE will rollout the soonest.

And then to answer your second question regarding 3G or wideband CDMA, our implementations are both -- are dual mode. So, they're both wideband CDMA as well as LTE. And we're seeing an increased acceptance, in fact, importance placed by the marketplace on dual mode implementations that support both 3G and 4G. You notice that from the onset, our product offering has been multi-radio access technology, or multi-RAT as it is referred to sometimes. We certainly support 4G/3G and even all the way down to 2G for some of our customers.

Great. Thank you.

Our next question comes from Quinn Bolton, your line is open, please state your company name.

Hi, Quinn Bolton with Needham & Company. Raouf, you talked about the success and design win momentum you have for Transcede. Any better visibility when you think the first systems will go to production? I know that there's a lot that has to happen to -- carrier testing and whatnot, but now, with another quarter under your belt, how do you see the revenue ramp of Transcede starting?

So, Quinn, really not much has changed in that regard. The development cycle for next generation base stations is approximately 18 to 24 months. Now, remember, we've been in the marketplace for almost a year, not quite a year, almost a year, with this product set, so we are winning designs, we're continuing to win designs. But remember that even after those base stations are developed, there's a carrier qualification cycle added to that, which can be as short as a year and sometimes, frankly, even a little longer. So, our perspective has been and continues to be that late 2012 is when we'd start to see our revenues from Transcede to start to ramp. And then 2013 will be the full production annual revenue for the first time with Transcede, and it should be growing in 2013 and beyond quite materially.

Okay, great. And then just the switching over to Amplify, I think back at the analyst day last year you guys had talked about possibly being able to do as much as $10 million in that product line in fiscal 2011 or calendar 2011. Is that still sort of -- I know we've had a little bit of a pause with some inventory, but is that product line still sort of ramping to your expectations?

Yes, Quinn, it certainly is. In calendar 2011, we expect to be generally consistent with that number, give or take. As we mentioned, we have design wins now with Hitachi, with Dell, Western Digital, Quanta, Oracle, Super Micro, et cetera, a large number of key customers. So, we're in mode, really, of building a very strong foundation with Amplify, and we think that our focus has to remain on winning some of those key designs as quickly and as broadly as we can. So, we're comfortably addressing the data rate requirements and being positioned for significant revenue ramp. Certainly, some of that will appear in our top line this calendar year of 2011 and much more in 2012, in 2012 that is. And we're, I think very encouraged by the continued design wins there, including the very significant tier one storage vendor design win I mentioned in our prepared comments.

Great. And then just looking at the mix, I know you're guiding for revenue to be approximately flat in the March quarter, but any significant change in mix, or do you think each of the businesses perform sort of roughly flat quarter on quarter? Just not sure WAN communications continues to decline given some of the inventories issues that you've talked about and just the shift away from ATM and mobile backhaul?

Hello Quinn, this is Bret. I think looking into this March quarter, there's probably no significant things to call out related to the mix of the revenue at this point.

Okay, great. And then just lastly, I know that there seemed to be some confusion coming out the Broadcom analyst day where they talked about their REPON efforts and ethernet coming into a lot of multi-dwelling unit business, sorry, residences in China. Can you sort of talk about the competitive landscape in optical access in China and whether you're seeing any threat from EPON with ethernet to the apartments becoming more competitive or status quo?

Really status quo Quinn, this is Raouf. These boxes have for a long time had ethernet connectivity to the actual dwellings. So, the fact that ethernet is growing within multi-dwelling unit installations is really no big surprise. There is some level of integration going on there between ethernet fi-switch and some cases, also the controller in the system. And that's fine, that's immediately adjacent and continues to drive the build of materials down for our customers and their customers. We, in the meanwhile, are certainly reducing costs, adding features to the VoiP and continuing to grow our market share. So, we're very comfortable with that. It's consistent with our growth strategy.

Great. Thank you.

Blake Harper, you may ask your question, and please state your company name.

Signal Hill. Just a quick question for Bret. When you mentioned the OpEx sequential increase will be the largest this quarter, is that on an absolute dollar basis or percentage increase?

Sure, that's on an absolute dollar basis, but also on a percentage basis, to be honest with you.

Okay, thanks. And Raouf, you had talked previously about some of the revenue potential from Transcede. You had laid out a pretty wide full year range, but I believe the midpoint that you said was kind of a $30 million to $40 million on a full year run rate, based on the design activity that you've talked a good bit about here in the remarks and the Q&A as well, how did you feel about that? Or what do you have any indication whether that would be about accurate where you would see that tracking, or would that be higher or lower? Or just how would you feel about that rate right now?

Yes Blake, it really hasn't changed whatsoever since our last earnings call where I gave, to your point, a fairly wide range. I think I said that the range was between $10 million and $75 million per opportunity, with the midpoint being sort of $30 million, $35 million, $40 million right in there. And that remains entirely consistent with the continued design opportunity pipeline that we're seeing and competing for.

Okay, thanks.

Mr. Halim, that will end the Q&A segment.

Thank you again for joining us for our call, and we look forward to speaking with you again soon. Thank you.

This does conclude today's conference.