Peraso Inc (PRSO) 2015 Q1 法說會逐字稿

Welcome to the MoSys' first-quarter 2015 financial results conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded today, May 1, 2015. I would now like to turn the call over to Beverly Twing of Shelton Group Investor Relations. Beverly, please go ahead.

Thank you, Nicole. Joining me on today's call are Len Perham, MoSys' President and Chief Executive Officer and Jim Sullivan, Chief Financial Officer. Before we begin today's discussion, I would like to remind everyone this conference call will contain forward-looking statements based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Such statements are made in reliance upon the Safe Harbor Provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which includes but are not limited to benefits in performance expected from use of the Company's ICs and imbedded memory and interface technology; expectations concerning the Company's execution and results; product development; achievement of IC design wins; timing of shipments of the Company's ICs; predictions concerning the growth of the Company's business and future markets; and business prospects, strategies, objectives, expectations or beliefs.

Forward-looking statements made during this call are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Additional information concerning factors that could cause actual results to differ materially from any forward-looking statements made during this call are contained in the Company's most recent report on Form 10-K filed with the Securities and Exchange Commission, in particular in the section titled, Risk Factors, and in other reports that the Company files from time to time with the Securities and Exchange Commission.

MoSys undertakes no obligation to publicly update any forward-looking statement for any reason except as required by law, even as new information becomes available or other events occur in the future. Thank you for your attention. I will now turn the call over to Len Perham, Chief Executive Officer of MoSys. Go ahead, Len.

Thank you, Bev. Good morning, everyone. Thank you for joining us today. On today's call, I'll review our first-quarter 2015 activities, including the status of new design wins, our sales funnel and product development. Then I'll turn the call over to Jim to discuss our financial results. Following our remarks, we will open the call up for your questions.

On the subject of design wins, I'm pleased to report that we recorded our second consecutive quarter of double-digit design wins. We're looking very strong in sales funnel activity again this quarter. Once I see the third quarter in a row of this kind of activity and design win success, I'll call it, I think we have gone around the corner and something is changing now in a favorable direction.

Last quarter, we recorded the highest number of design wins in any quarter since we began our transition back to being a fabless IC Company in 2010. We nearly repeated that accomplishment in this, the first quarter of 2015. I'm pleased to report that we are currently on track to double our design wins again in 2015, indeed off to a very, very strong start. It's very gratifying to see the activity in the sales funnel on a day-to-day as we go through this quarter.

Again, this quarter, the design wins were substantially all for our Bandwidth Engine products and in some cases reflected additional market penetration with existing customers. These new Bandwidth Engine wins include multiple new designs for Bandwidth Engine 1, with an existing customer replacing BE1 into access line cards ranging from 1-GIG or 10-GIG to 100-GIG. These are our first wins in access line cards and are a direct result of the growing need for increased bandwidth, lower latency and higher speed on the periphery of the network.

In addition, these BE1 wins are another example of a customer cutting and pasting and reusing the BE1 architecture in a new design based on a successful past experience and having already made the necessary investments. The advantage of these cut and paste design wins is that the timeline to first production orders is often not as long as the initial design wins. Due to the reuse of a familiar architecture, less new ground roots of development and no requirement for a recertification of the product to carrier class standards.

Case in point, for these new BE1 wins, the customer's equipment is expected to go into service with a carrier in the first half of 2016. Design wins like this represent new sales generating opportunities and should increase the total revenue potential of BE1 while extending its product lifecycle.

Additionally, we secured multiple new Bandwidth Engine 2 line card wins with our existing Tier-One customer. These new Tier-One wins represents more cut and paste redeployments and further demonstrates the customer's willingness to reuse the Bandwidth Engine family of products. Once they understand the range of system-level problems it solves and are comfortable that they can quickly and freely redeploy it.

Much like the BE1 access wins I just mentioned, we also continue to see existing customers redeploy our Bandwidth Engine 2 product family into new applications including for media transport and access both requiring higher aggregate rates. Although some design wins are delayed getting into production, I am pleased to say that our customers remain fully committed to this market and our Bandwidth Engine solutions. We expect to see some, if not all of these programs ramp later this year, as customers get back to deploying these new system into the various markets they serve.

Turning to design win activity for our LineSpeed physical interface IC products. We continue to see strong customer interest for both existing and new products.

In quarter one, we secured another new win for our first generation 100-GIG Multi-Mode Gearbox, the MSH310. Additionally, we have multiple engagements in first design ins in progress for our new LineSpeed products, led by our 100-GIG Low Power Retimer, the MSH110, which we have already shipped to numerous optical module manufacturers.

In fact, internally we've already declared another of these engagement as design wins. We're optimistic some of them will convert into full-up design wins by the end of this quarter.

Now turning to sales activities. Sales activity in quarter one for both our Bandwidth Engine and LineSpeed products continue to be robust. We have good success maintaining and growing the sales funnel even as we continue to convert opportunities and to confirm design wins.

LineSpeed design win candidates have increased as a percentage of total opportunities and currently represent a significant portion of the funnel. We are engaged with multiple customers for our QSFP28 100-GIG optical module designs that will utilize our newest LineSpeed product, the MSH110 100-GIG Low Power Retimer.

Coupled with a very active sales funnel -- our confirmed design wins over the last two quarters coupled with a very active sales funnel clearly demonstrates ongoing and perhaps even building momentum. This together with our expanding product portfolio further positions MoSys to take full advantage of the accelerating market trends that are pointing to our favor.

Serial memory is gaining wider acceptance as a viable and efficient way to address bandwidth bottlenecks, solving speed, latency, access rate and power issues in a multitude of applications. The trend to 25-GIG and 100-GIG interfaces and the resulting higher data flows increase the need for our solutions.

Prior to this quarter, our design wins have primarily been in the Metro Ethernet edge and higher performance systems or residing in the core or used for optical transport networks where the highest speed and performance are essential. We are now seeing need for higher data rates beyond the edge of the network and in the data center. Much like our data center wins last quarter, our Q1 design wins in the media transport and access space further out in the networks support our belief that more and more applications will be requiring higher and higher data rates.

In addition, in the data center, the cloud is driving increased design requirements for applications with more intelligence and higher performance, in particular requiring more efficient ways to handle statistics and acceleration. It's taken a while for these trends to manifest themselves, but now they are becoming more prevalent in our devices.

The range of system problems they solve are becoming increasingly more evident across a broader range of applications and market segments. I am confident that we have been and will be bringing to market the right products to address some of the critical challenges confronting the designers of the next generation network and communication systems.

I recently visited Asia and met with our key design win customers in Japan. I wanted to check on the status of our current design win programs as well as assess new market opportunities. It was a gratifying trip.

I returned from the trip confident there is still significant upside for us in Japan. We haven't lost opportunities; these opportunities just got pushed out and in some cases reconfigured for power and size and in a few cases will transition to BE2 in place BE1. In short, the trip was very worthwhile because it clearly demonstrated our design win partners there are very committed to the Bandwidth Engine architecture and are pleased with its abilities to solve several different design channel challenges they faced with their new and upgraded systems.

BE2 opportunities. Net net, the BE1 opportunity will be smaller than we originally anticipated, but the BE2 opportunity, if anything, has expanded. Led by our expanding list of top tier customers, BE2 will be the primary driver of the revenue over the next four to six quarters.

That said, the timing for production volumes commenced remains difficult to predict and for the most part is out of our hands. However, several key indicators including our increased backlog continues to point toward the second half of this year.

As I had mentioned earlier, we're very gratified by the activity in our sales funnel. Currently, it's quite -- it's very good. We will provide further updates as we gain improved visibility into our various customer's system release schedules and forecasts.

Turning now to a few updates on each of our product families. Let's start with Bandwidth Engine -- Bandwidth Engine 3 to be precise. During the first quarter, we continued to make good progress against our product development timeline. We expect to tape-out BE3 later in this current second quarter and remain on schedule to release BE3 and a number of its derivatives in the second half of this year. This timing aligns with our early alpha customers and with our NPU partner, EZchip, with whom we continue to work very closely, as well as with our FPGA partners, both Altera and Xilinx.

As evidenced by our strong design win activity, customer interest in Bandwidth Engine solutions continues to expand. We expect the addition of the BE3 product family to our product catalog later this year to expand our opportunity pipeline. The overlap between BE2 and BE3 in the market will be nominal or perhaps minimal, as BE3 is targeted towards different performance levels and price points and will incrementally generate more opportunities thus significantly increasing our served available market.

About LineSpeed. We have a well-defined LineSpeed product roadmap with plans in place to expand this family of products beyond our currently available first generation gearbox and retimer product family. Our LineSpeed products are synergistic with our Bandwidth Engine families and solve system design challenges in the module, on the line card and across the backplane.

In late 2014, we taped-out a new production version of 100-GIG Low Power Retimer, the MSH110, which includes additional customer requested features. This new version is being evaluated by many customers, more specifically, we are engaged with multiple designs for the QSFP28 100-GIG module.

As I mentioned earlier, we are cautiously optimistic about securing our first design win for this exciting new product family in this our current second quarter. In addition, we expect to introduce an additional 25-GIG and 100-GIG devices over the course of this year, which should significantly increase not only our catalog of product offerings but also our served available market.

Strategic partnerships. We continually leverage our primary relationships with EZchip, Altera, Xilinx and others in an effort to generate even more opportunities. Recently, we have successfully demonstrated the interoperability of our solutions to our partner's advanced products at leading industry events such as DESIGNCON, the Linley Data Center Conference, the Optical Fiber Conference and most recently at the Ethernet Technology Summit.

In summary, the first quarter of 2015 saw continuing strong design win momentum with double-digit design wins for the Bandwidth Engine and numerous design engagements as well as first design ins for our newest family of LineSpeed products. We are seeing BE prototype shipments increase. Both product families continue to gain addition traction with existing and new customers.

We have a strong technology base and a robust product roadmap. Starting with the Low Power Retimer, we expect to release a wide range of new products during the remainder of 2015 and likely into 2016.

We remain focused on doubling design wins again this year, bringing additional products to market, expanding both our served available market and customer base and be in position to support our customers production ramps. We are making progress across a wide front and want to thank for your patience and your belief in what it is we're doing.

This concludes my prepared remarks, I'm going to hand it over to Jim for his financial review. Thank you very, very much for your attention. I'm sorry if I'm a little off this morning, I think I might have the plague. I'll try not to give it to Jim. Jim, the ball is in your court.

Thank you, Len. Good morning, everyone. During the course of my comments, I'll make several references to non-GAAP numbers. Unless otherwise indicated, each reference will be to an amount that excludes stock-based compensation expense and intangible asset amortization. These non-GAAP financial measures and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related current report on Form 8-K, which was filed with the Securities and Exchange Commission today and can be found at the Investor Relations section of our website.

Prior to discussing our financial results, I would like to first briefly address our IP business. We continue to record licensing and royalty revenue from ongoing SerDes and 1T-SRAM IP projects; however, our IP licensing and royalty revenue has declined as we have not been actively pursuing new license agreements. That said, royalty still comprises a majority of our revenue this quarter.

Now, let's review our first-quarter financial results. Today, total revenue was $0.8 million compared with $1.1 million in the fourth quarter of 2014 and $1.3 million in the first quarter of 2014. Product revenue from the sale of our integrated circuits was $0.2 million in the first quarter of 2015 compared with $0.3 million in the previous quarter and $0.6 million in the year-ago period.

Royalty and other revenue for the first quarter of 2015 was $0.6 million compared with $0.8 million in the previous quarter and $0.8 million in the year-ago period. Royalty and other revenue is primarily comprised of royalties received from semiconductor customers whose products include our IP, as well as small amounts of revenue generated from maintenance and support services related to legacy IP license agreements.

GAAP gross margin decreased to 69% from 76% in the fourth quarter of 2014 and compared with 57% in the year-ago quarter. In terms of our operating expenses for the first quarter. Total operating expenses on a GAAP basis were $8.5 million compared with $9.8 million in the previous quarter and $8.9 million in the first quarter of 2014.

Total operating expenses included $0.2 million for amortization of intangible assets and $1.2 million in stocked-based compensation expense. Research and development expenses were $6.9 million compared with $8.3 million in the previous quarter and $7.1 million in the first quarter of 2014. First quarter R&D expenses, decreased sequentially as we incurred tape-out expenses in the previous quarter for our next generation LineSpeed products.

Selling, general and administrative expenses were $1.6 million compared to $1.5 million in the previous quarter and $1.8 million in the year-ago period. On a non-GAAP basis, total operating expenses for the first quarter of 2015 was $7 million compared with $8.6 million in the previous quarter and $7.1 million in the year-ago period. On a GAAP basis, the net loss for the first quarter of 2015 was $8 million or $0.15 per share compared with a net loss of $9 million or $0.18 per share in the prior quarter and a net loss of $8.1 million or $0.16 per share for the first quarter of 2014.

On a non-GAAP basis, the net loss for the first quarter of 2015 was $6.5 million or $0.12 per share which excluded an intangible asset amortization and stocked-based compensation expenses totaling $1.4 million compared with a non-GAAP net loss of $7.7 million or $0.15 per share in the previous quarter and a loss of $6.3 million or $0.13 per share in the year-ago period. Net loss per share for the first quarter of 2015 on a GAAP and non-GAAP basis was computed using approximately 54.3 million weighted average shares outstanding.

Now, turning to the balance sheet, during first quarter, we strengthened our balance sheet by completing public offering and selling approximately 14.4 million shares of common stock at $1.60 per share. Net of customer underwriting discounts and commissions and operating expenses, we received cash proceeds of approximately $21.4 million. Subsequent to this offering as of March 31, 2015, we had 64.6 million total shares outstanding.

We are pleased to have completed this capital raise and believe it reflects continued investor confidence from existing as well as new shareholders. We intend to use these proceeds for working capital and general corporate purposes including research and development for current and future products as well as sales and marketing efforts.

As of March 31, 2015, our cash and investments balance was $40.7 million compared with $25.8 million at December 31, 2014. Excluding the proceeds from the public offering, our cash burn in the first quarter was approximately $6.6 million.

Total head count was 114 employees at March 31, 2015 compared with 116 in the previous quarter. Of our total employee count, more than 80% are in applications, engineering and research and development including 25 located in India consistent with the previous quarter.

This concludes my prepared remarks. At this time, we would like to open the call for a question-and-answer session. Operator?

(Operator Instructions)

Gary Mobley, Benchmark.

Len, you're going to have to quit traveling. It seems like you get sick every time. I noticed that your inventory was up sequentially off of a pretty small base but up substantially nevertheless. I'm hopeful that is indicative of a Bandwidth Engine revenue ramp, perhaps in the second quarter, perhaps in the third quarter. But related to that, I was hoping that maybe you could quantify or give us some sort of metric on how your backlog is shaping up? Then as well, sales funnel related to that?

I'll start it off and then I'll let Jim chime in. He may have some better perspective than I do on some of that question. First off, inventory did build a bit. We have to remember that we shipped something like 10,000 plus units into our second half of 2012 design wins mostly in Japan. For some reason, those field deployments didn't meet with success, so our customers stopped. They have been back taking a look at what's going on. That was the reason for my trip over there, to see if that business was going to come back, if it was going to be salvaged, et cetera, et cetera. But it did result in building up a bit of BE1, Bandwidth Engine 1, inventory. It's my personal opinion from an operations point of view, that it's likely that we're going to sell all that BE1 stuff. I'll let Jim comment on that as well.

The other thing I'll comment on, Gary, you said something about backlog. We saw a nice change in backlog from ending on hand fourth quarter to ending on hand first quarter. But the fact of the matter is, it didn't meet my requirements for me to say we have gone through a transition point. I could be talking about a multiple of change in backlog in a favorable direction, but I'm not going to do that because I'm not satisfied with it yet. But the fact is backlog did move up a bit. I have to say unfortunately some of the inventory build you're seeing is because of some of our customers didn't do well in their field trials and so we were caught out with a few units. The good news is, I don't think we're going to end up scrapping them. I think they're going to do fine. You might note that we actually quoted a few BE1 wins this quarter. Jim, you want to comment?

I think you covered it well, Len. I would just say that the increase in revenue is certainly indicative of the higher shipments and higher revenue we're expecting in the second quarter. I mean, obviously recognizing how low the first quarter was there's, frankly, nowhere for us to go up but up after that -- after those inventory revenues. But we do expect much higher revenues relative to that Q1 revenue number. I think we may have also ordered an additional lot or two related to some of our cost-downs, as the guys do different testing to reduce our burn-in times, et cetera, to bring down the standard cost.

Yes. Let me add one thing to what Jim just said. Unfortunately, a start-up Company like ourselves, you -- it's very, very critical that you pass, what I call a carrier grade certification, which I've mentioned a few times is a three different date-coded lots-three wafer factory that get tested for 1,000 hours under some stressful conditions and you can't have any failures. However, the minute you get that flow in and you can make product, if you are a new start-up, chances are you're costing down every single step in that back end process. That is what is going on.

When you start costing it down, after a while, you make a significant enough change that whether you like it or not, you're going to have to do another carrier grade qualification because you have changed your back end to flow in a direction of probably less testing and less this and less that so it makes your customer nervous. So you have to go out of your way to convince them that you know what you're doing and your reliability and quality won't be affected. But it's not a free process. Jim is probably right that we may have brought in a couple of lots so that we could do some incremental group C like QA&R testing. Anyway, that's just an -- Go ahead, Gary.

All right. So, with Engine 3 taping out in the second quarter, I'm assuming that you're going to see a spike in OpEx. Could you quantify that? Then, as well, I guess on the other side of that tape-out, what OpEx may look like in Q3?

Yes. With the assumption that Bandwidth Engine 3 tapes-out in the June 30 quarter, you're spot on. I believe I have said in -- on these calls in the past that tape-out would be $2 million plus and then a function of -- also after that following in Q3, buying various burn-in sockets, those types of things. So we'd expect a spike in Q2. In addition, in the first quarter and as well in the second quarter around these new LineSpeed products, we have been incurring more back end costs which at this stage all go to R&D.

But net net, subject to any additional tape-out activity on LineSpeed, particularly a production tape-out -- another production tape-out related to LineSpeed in the third quarter, I would expect the third quarter to be down versus the second quarter. It's just the function of how much and whether we do a full production tape-out on some of the additional LineSpeed parts. But net net, I see the second quarter being -- with that tape-out of Bandwidth Engine 3 in there, up well over $2 million when that happens.

Okay. Last question for me relates to -- what I believe to be one of your prospective customers over in Europe. There seems to be some consolidation with that customer taking place. Do you have any thoughts or opinions in how that may affect your sales funnel?

Actually, if we're talking about the same guy, there's a big M&A activity going on. Is that what you are referring to, Gary?

Yes.

Okay. So it's true, we have a close relationship with those guys. We have never said much about it. We won't make any formal commitments here. But my observation is that the strongest part of the acquired company is their networking and switching and routing business. It's really very, very strong. The team is very, very aggressive and very, very good. I can't imagine any -- I believe their margins are better than anything else in their company. I can't see anything happening to change that.

Now, it's for sure -- we have all been around a long time. These M&A things can lead to confusion and bumbling around and loss of traction and so forth. To date, we haven't seen any change; things are just rolling. We have an excellent relationship with those guys. We haven't seen any change. I would think there would be no change for the first few years. Maybe a couple of years out from now, it's such a monstrous thing -- a couple of years, three years out as they try to figure out how to consolidate something. They might be something that is different than what we would forecast now, but we can't see anything within the next 12 to 18 months. I don't think, Gary.

Okay. Fair enough. All right. Thanks, guys.

Thank you, Gary.

Krishna Shankar, ROTH Capital.

Len and Jim, congratulations on the design win momentum. A couple of questions, in terms of the revenue ramp in the second half of this year, will it mainly be BE1? Or do you expect some BE2 revenues also late this year?

Actually, I think on the call, we said that the wins last quarter, I think we may have even gone so far as to say were 80% BE1 -- no, BE2, I'm sorry, excuse me. Then on today's call, when we were talking, we mentioned that BE2 wins are very strong again this quarter. All of the design wins or the vast majority of the design wins through the 12-months of 2013 were BE2. So we would expect to see BE2 start ramping fairly strongly. BE1, we were very gratified by these new wins. I was very gratified by some of the stuff I heard and was told on my recent trip to Asia. However, I think we commented that the next four to six quarters are going to be driven very hard by BE2.

Okay. Then on LineSpeed, you had some good traction at the OFC Show. It sounds like the Retimer product is getting some good reception. Will that product be a production method? Will you actually derive revenues from that LineSpeed product? Or will we have to wait for this new tape-out that you're talking about for LineSpeed?

No. Actually, we have a production -- that's a production asset right now. Actually -- we don't -- we try not to overstate where we are with LineSpeed. But we're very, very -- I think we probably have said or Jim may have said that we had a production mask set tape-out last quarter. We are sampling this Low Power Retimer across a very wide number of customers, primarily, into optical modules. We would expect that we would generate revenue from that this year. There's no question of that. The answer is, yes, we are going to generate revenue. You can count on it. So, Jim, do you want to add anything to that?

Yes. Let me just clarify. I think the response I gave Gary. We had a production tape-out for that - for the Low Power Retimer targeted towards the modules in the Q4. We have some additional next generation LineSpeed products which, frankly, we're not in a position to say much about on this call. Because that's -- announcing new products is the domain of sales and marketing and not finance and not done on these calls. So we have some new products there which I anticipate we could potentially have a production tape-out for, say, Q3, Q4 which would solely be driven by customer demand and interest. We wouldn't do it if the demand and the design ins that have high potential flipping to wins are there with us. But that Low Power Retimer, which we publicly announced, I think, back in the fall and we are aggressively pursuing now is fully taped out.

Great. Then my final question. In terms of your design win for the security and cloud market -- cloud switching market that you've talked about over the last couple of quarters, is the outlook for revenues in that market to still ramp relatively quickly going forward?

I don't have the exact ramp on that stuff right in front of me this morning, Krishna. But I think, if we had marketing and sales in here, they would say that the data center and the security appliance wins are going to ramp sooner than stuff in the core and on the edges. I would say that we would like to see some orders maybe on both of those the last four months of this year. It would be an early ramp. Additionally, we have got a reasonable amount of traction in this space, where there's a need for next generation security appliances. So in our addition to our win, there's a fair bit of activity in the sales funnel as well. It's an area that needs very, very deep packet inspection. So it needs a little latency and very, very high access speeds. So it's -- there's some opportunities in there -- for that product's feature set very well. You should expect to hear her say more about it along the way.

I would just add, Len, that both of those customers took orders in the first quarter. So have product in hand that they're working with.

Great. Okay, thank you.

Thank you, Krishna.

Quinn Bolton, Needham.

Just wanted to follow-up on the LineSpeed products. I know Bandwidth Engine is a just sort of a nearer-term revenue ramp opportunity. But just from conversations with some of your competitors in that space, they'll talk about needing tight integration or coupling between the Clock/Data Recovery or Retimer units and the, either laser drivers or TIAs. So wondering what your thoughts are on that? Does it need to be a fully integrated solution, CD-R plus either a driver or a TIA? If it doesn't, I think you have got some folks in that area that you have partnered with, that you kind of take a strategy where you are doing joint marketing to some of the optical module companies? Thanks.

So, see if I understand the question, Quinn? Basically, I don't see that -- I don't see, if I understood what you said, the TIA in our solution, getting integrated into a single chip. I just don't see that happening in the real near-term. Okay. Having said that, I think it's the last -- for the last, say, probably the last four to six quarters, whenever we are at optical fiber conferences or -- probably not the Linley meetings, but the OFC meetings, we usually have been demonstrating interoperability with one group of people or another.

It's true that we have entered into a, I'll call it, a partnership, where we're co-selling and allowing one of the suppliers of TIAs and so forth into that market to reference-sell us. We have some reference cards out that make things -- the things run very, very well. Then some new products coming on both side, if you're going to step it up probably to the next generation's requirements.

So one, I don't see it getting integrated into a single chip, not in this generation of products. I'm going to guess probably -- maybe not next either. They are just different kinds of design challenges, if you will. We are doing some partnering in allowing some of the guys that are serving that market -- that segment more than we are, to effectively reference-sell our products. I think from what I hear from sales and marketing, it's going along fine.

Great. Then just the second question, you sort of mentioned hoping to have first design wins for that family of products, for the Low Power Retimer here in the June quarter. Can we assume that's the likely application for that would be a QSFP28 module for datacomm applications?

Quinn, when we are out on the road giving a presentation and we talk about the LineSpeed family, we talked about form factor a lot. I think the die size -- our die size is such that John can get it into any one of the form factors that are currently popular for our customers, if you will. So the answer is yes. The Retimer has some unique features sitting on the I/O that perhaps other suppliers of that element didn't think about. Additionally it's very, very low power. It fits into all the form factors. It's generating probably the most excitement in most form factors where there are no other players at the current time or very, very few.

Sorry, Len, maybe just to ask from a power and form factor, you can go either into a CFP4 or a QSFP28. I guess, I'm just wondering, are you seeing much stronger demand for a particular form factor of module for the 100-GIG data center module that -- I have heard a lot of talk about the QSFP28. I think you mentioned that form factor in the prepared script. Was just wondering if that is where you are seeing the majority of customer interest? Is it coalescing around that QSFP28? Or do you see a fairly broad range of different module form factors? Or maybe even onboard optics as some of the potential opportunities for the Retimer?

Actually, let's see if I can -- so basically, Quinn, I mentioned on the call today, in the transcript, that we're seeing a lot of activity on the QSFP28. So that form factor is indeed very popular. On the other hand, I would not say that is becoming a standard as the other form factors are going to drop by the wayside. I don't think that's the case at all. We're seeing -- I don't have the exact numbers. But John's scrambling on getting some of the other -- John, the marketing and sales guy, and as well applications to LineSpeed. He's scrambling to get some other form factors out there. We have some very active customers looking at it. So it would be true that QSPF28 is generating a fair bit of interest. But I would not declare it the de facto winner and that the other form factors are going to go away. If some people went to other form factors, then we're in a position to take care of them as well.

Perfect, great. Thanks, Len.

Thank you, Quinn.

Thank you. I'm showing no further questions at this time. I would like to hand the call back over to management for closing remarks.

Okay. Thank you very, very much. So on January 30 of 2015, we had our last analyst call and we mentioned a few things that we would be focusing on this year. One, that we would make an attempt to double our design wins again. We have made a -- quite a bit of that today that we are off to a very good start. We even mentioned here in the question-and-answer session that we have seen some movement in our backlog -- not enough for me to say that we have gone by the inflection point. But in my early days, some of my bosses told me if something happens once, it's a freak. If it happens twice, it's a coincidence. If it happens three times, it's a trend.

Today, I would say that we're on our way to one of our perhaps best three quarters since we started taking MoSys back to a fabless semiconductor Company. So we're moving on that. We have talked about that objective a bit today. We talked about design wins and some initial orders for our new LineSpeed family. Today, we mentioned we're hopeful that we might even win our first designs in this current quarter. I believe this product family and then the stuff for the line card in the back plane is attracting a fair bit of interest from a variety of Tier-One users as well. We chose not to make any announcements on that today, but there is certainly some gratifying activity going on in the sales funnel.

We talked -- that's sales point three. We talked about BE3 getting released and getting some critical design wins. I think we're on schedule to show that to somebody perhaps in reference boards with Altera or Xilinx or both. I don't know that with all the characterization we'll need to do on this part and all the characterization that EZchip will have to do to NPS, whether we'll have any reference cards out by the end of the year with NPS. But certainly, we'll be collaborating with those guys to make sure our parts are talking to each other in an absolutely optimal fashion.

We said that we were going to win some additional Tier-One's this year. I can see that happening. We didn't say much about it today. But you shouldn't think it's not happening. If I were to say the good news is, I see it happening. The bad news is, I would like to have it happened sooner because some of those guys place larger volume orders. The sooner we get them into our portfolio of design wins and existing customer partners, the better we'll be. I think we'll see the revenue ramp. Jim commented and I did too, that perhaps the second half of this year, we should start to see something. I can't tell what the slope of it will be. It won't satisfy me, whatever it is. But the fact is, you can't have this many design wins and not start to see revenue tilt up. There will be a substantial increase in product offerings. In nearly every quarter now, we'll either have some new products of the line card or the back plane.

We'll have a new product for the optical module, they're a new form factor, a new product and a different feature set. That will dramatically increase the served available market and should be reflected in design wins and certainly should be reflected again when we start ramping up in the slope of revenue increase period-to-period. Finally, we haven't made any headway on it yet, whatever's happened, I count as nothing yet. We need to drive some shareholder value. We haven't earned that yet. But I can tell you with all these other things I just talked about, we'll drive that. So, I just wanted to let you know that we haven't taken our eye off the 7 points we talked about back in January. We really appreciate the time today. We look forward to talking to you all again soon. Thank you very, very much.

Ladies and gentlemen, thank you for participating in today's conference. That does conclude today's program. You may all disconnect. Have a great day, everyone.