Quicklogic Corp (QUIK) 2015 Q4 法說會逐字稿

Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to the QuickLogic Corporation fourth-quarter and year 2015 earnings conference call. During the presentation, all participants will be in a listen-only mode. A question-answer session will follow the Company's formal remarks. (Operator Instructions) I will repeat these instructions after management completes their prepared remarks. Today's conference is being recorded.

With us today from the Company are Andy Pease, the President and Chief Executive Officer; Sue Cheung, Principal Accounting Officer; and Brian Faith, Vice President, Worldwide Marketing.

At this time, I would like to turn the call over to Sue Cheung, Principal Accounting Officer. Please go ahead, ma'am.

Thank you, operator, and thanks to all of you for joining us today. Before we begin with our prepared remarks, I will take a moment to read our Safe Harbor statement.

During this call, we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties, including but not limited to, stated expectations relating to revenue from our new and mature products; statements pertaining to our design activity and our ability to convert new design opportunities into production shipments; market acceptance of our customers' products or expected results, and our financial expectations for revenue, gross margins, operating expenses, profitability, and cash.

QuickLogic's future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed in our Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and the prior press releases for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements. This conference call is open to all and is being webcast live.

For the fourth quarter of 2015, total revenue was $3.6 million, which was at the low-end of our guidance range. Our new product revenue was approximately $2.1 million, reflecting increased shipments of sensor processing solutions, offset by a larger than expected decline in display bridge solutions. Our mature product revenue was approximately $1.6 million.

Please note that total does not exactly equal to the sum of the new and mature revenue due to rounding errors. Sensor accounted for 36% of total revenue during the fourth quarter compared to [57%] during the previous quarter. Our GAAP gross margin or non-GAAP gross margin for Q4 was 36%, which was below our guidance.

The reason for the lower-than-expected gross margin was a one-time inventory write-off, representing [6] percentage points of our gross margin in Q4. Excluding the inventory write-off, our non-GAAP gross margin was 42%, which was in line with our guidance. Non-GAAP operating expenses for Q4 totaled $5.4 million, which was favorable to our guidance.

The lower non-GAAP operating expense was primarily due to the timing of engineer-related expenses and the reversal of year-end executive bonuses for 2015. On a non-GAAP basis, the total for other income expense and taxes was a charge of $127,000. This resulted in a non-GAAP loss of approximately $4.2 million or $0.08 per share. Please note that the cost of the aforementioned inventory write-off is included in our non-GAAP numbers.

We ended the quarter with approximately $19.1 million in cash, which was within our guidance range. Cash usage during the quarter reflects the operating loss and the higher working capital requirements, specifically in the timing of payments which were partially offset by a $1 million loan from our Silicon Valley Bank line of credit.

Our Q4 GAAP net loss was $4.8 million or $0.09 per share. Our GAAP results include stock-based compensation charges of $582,000 and a restructuring charge of $49,000. Please see today's press release for a detailed reconciliation of our GAAP to non-GAAP results and other financial tables. In addition, you will find our financial tables published on our IR webpage that provide current and historical non-GAAP data.

With that, I'll turn the call over to Andy, who will update you on our strategic efforts.

Thank you, Sue. While Q4 revenue came in at the low-end of our guidance range, our progress towards realizing strategic goals was substantially above our expectations. I'm excited to outline this progress that I believe sets the stage for a very significant second-half revenue increase, but first, let's take a couple of minutes to review the quarter and our outlook for Q1.

During Q4, our display bridge and mature product revenue declined a little more than expected, and smart connectivity revenue increased a little less than expected. Revenue from our sensor processing solutions increased in line with our expectations, but did not fully offset the lower-than-expected revenue from the other product groups. This increase in sensor processing solution revenue was driven by a greater than 50% increase in the number of unique designs we supported with production shipments.

As I'll outline in a minute, we are building substantial depth and breadth in our sensor processing solutions customer base. For Q1, we expect display bridge revenue to be essentially flat. However, for the full-year of 2016, our outlook for display bridge revenue has improved since last conference call.

Last quarter, we forecasted the display bridge revenue would continue through 2016. Subsequent to that, our largest competitor announced it was seeking a buyer for its broadline semiconductor business, which includes its display bridge product line. Given this new information, we now think demand for our highly versatile display bridge solutions will continue well beyond 2016, and that the second half of 2016 display bridge revenue will be above our original expectations.

As a matter of fact, we are seeing evidence of this trend. We recently won a MIPI to RGB display bridge design in a new smartphone accessory from a top five smartphone company. This design is expected to move into production this summer.

We are anticipating a sequential decline in smart connectivity revenue this quarter. This is mostly due to the fact that some of our older smart connectivity designs are winding down, and the ramp of our new PolarPro 3 designs will not fully offset the decline in Q1. For the longer-term, we are very encouraged by the level of PolarPro 3 design activity.

We believe that this will lead to a rebound in smart connectivity revenue beginning in Q2. We think this trend will accelerate during the second half of the year and into 2017. These new design activities include engagements with Tier 1 and high brand name recognition OEMs.

We believe mature product revenue will decline slightly in Q1, and have adjusted our outlook for 2016 to $1.5 million, plus or minus $200,000 per quarter. This is a slight decrease from the $1.7 million quarterly average we forecasted last quarter. We expect that the forecasted decline in smart connectivity revenue will be offset by an increase in sensor processing revenue during Q1.

As Sue will describe when she provides our guidance, we believe this will lead us to report essentially flat total revenue for the seasonally soft first quarter. There could be an upside to this outlook if some of our new OEM customers pull in schedules that, in some cases, call for early Q2 shipments. However, I prefer to remain a conservative outlook that is in line with the schedules that we have today.

Last quarter, I stated that we had engagements and/or design wins with nine OEMs that have high brand name recognition and our top-tier players within their product sectors. This number has increased by nearly 80% during the last three months. We are proud of that accomplishment and think it will drive a very significant increase in our second-half new product revenue.

To help you better appreciate our understanding -- our standing with these top-tier OEM customers, I have assembled some data from this list of engagements and design wins. We believe half of annual volume potential in excess of 1 million units and most of those have multimillion annual volume potential. Over half are for our new EOS S3 sensor processing platform. Approximately two-thirds use our SenseMe software algorithm library along with one of our sensor processing platforms.

Over a third are for smartphone applications. And while this means nearly two-thirds of the engagements and design wins are in wearable devices, these designs are with large OEMs having significantly higher volume potential than the IDH designs we've won in the past. These include an EOS S3 design win with a Tier 1 smartphone customer for a new wearable device. We expect to begin shipping product to support initial production late in Q2.

In addition to this design win, we have other ongoing smart connectivity and sensor processing solution engagements with the same customer. In addition to this design win, we have an EOS S3 evaluation with a world leader in wearable fitness tracking solutions that has significant volume potential. This customer has already prepared an Evaluation Board for our new EOS S3 samples that we are scheduled to deliver later this month. With those samples, we expect the design win process to be completed in Q2.

We signed a SenseMe agreement with Casio last quarter, and we have four additional SenseMe pending agreements with very large, well-recognized OEMs. Out of this total of five, we believe three have the potential to become sensor processing platform customers this year. In addition to these OEM activities, we have also engaged with a large semiconductor company on a companion device for a smartphone application using our S2 sensor processing platform.

The majority of our design wins and engagements with large OEMs are leveraging the programmable logic that's embedded in our S2 and S3 sensor processing platforms. This is a very big deal. Since none of the competitors in the market today offer programmable logic in their sensor hub, this gives us a substantial and durable competitive advantage.

In addition to the significant increase in engagements and design wins, we have realized, with top-tier OEMs, we are seeing continued design activity with our targeted IDH and ODM customers. With this significant increase in engagement activity, we are very pleased that our customers, that are now involved in their second or third designs, are effectively leveraging the knowledge they gained during their first design efforts.

This lessens the investment in our engineering resources that we need to make with these customers to drive new design opportunities in production, and it demonstrates the leverage inherent to our business model. This is consistent with the strategic goals we covered in our last conference call.

I am pleased to announce that we received samples of our second EOS S3 spin ahead of schedule. This platform is in our engineering lab going through verification and characterization, and we expect to begin shipping it to our strategic customers by the end of this month. The early data shows the refinements we implemented in this version of EOS S3 are delivering even lower power consumption than the data we shared during our July 2015 conference call.

These refinements have also enabled us to introduce a new member to the EOS family, the EOS S3 LP. With its significantly lower power consumption, the LP platform further differentiates us in the wearables and IoT markets. We will provide you with more color on EOS S3 LP in an upcoming press release.

In conjunction with these new devices, we are releasing an upgrade to our integrated development environment and software framework. This will be particularly helpful for our large OEM customers, and further reduce the amount of QuickLogic engineering time it takes to win new designs and drive those designs into production.

Several of our customers have been waiting for our new EOS S3 samples and our updated integrated development environment tool to complete their designs. We believe that once we get these samples into our customers' hands, our design activity will accelerate and we'll get a much clearer picture of our customers' production schedules for 2016 and beyond.

With that, I'll turn the call back over to Sue for our Q1 guidance. Following that, I'll rejoin you for my closing comments.

Thank you, Andy. Our guidance for Q1 2016 is for total revenue of $3.6 million plus or minus 10%. The total revenue is expected to be comprised of approximately $2.1 million of new product revenue and $1.5 million of mature product revenue.

As in prior quarters, our actual results may vary significantly due to schedule variations from our customers, which are beyond our control. Schedule changes and the projected production start date could push or pull shipments between Q1 and Q2 2016 and impact our actual results significantly.

On a non-GAAP basis, we expect the gross margin to be approximately 42% plus or minus 3%. The anticipated increase in gross margin reflects absence of the inventory write-off we took in the fourth quarter. We are currently forecasting non-GAAP operating expenses at $6 million, plus or minus $300,000. The expected increase in OpEx is primarily driven by engineering expenses associated with the release of the EOS S3 platform, and ongoing development of our EOS hardware and software solutions.

Non-GAAP R&D expenses are forecasted to be approximately $3.6 million, and our non-GAAP SG&A expenses are forecasted to be approximately $2.4 million. Our other income expense and taxes will be a charge of up to $60,000.

At the midpoint of our guidance, our non-GAAP loss is expected to be approximately $4.6 million or $0.08 per share. Our stock-based compensation expense during Q1 is expected to be approximately $500,000. As was the case last quarter, our non-GAAP results will not reflect those charges. Including the favorable impact of an additional $1 million loan from our bank line of credit, we expect to use approximately $5 million to $5.5 million in cash. The increase in cash usage in Q1 is primarily driven by the anticipated increases in working capital requirements and expected payments of a [mass asset cost] associated with the EOS S3 production.

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

In conjunction with our earnings release, you will see that we have filed an 8-K on favorable amendments to the loan covenants with our Silicon Valley Bank line of credit. This follows the 50% increase in our credit line we announced last September. We are very pleased that Silicon Valley Bank has understood our business model and is acknowledging the progress we have made towards realizing our strategic goals.

I hope that you are as enthusiastic as I am about the progress of our sensor processing solutions with large namebrand OEMs. Particularly exciting is the win with the Tier 1 smartphone OEM for their wearable product that is scheduled to start production next quarter, and ongoing design activity that we have with this customer. In short, I think we are getting very near to a positive tipping point.

Another encouraging trend I can't emphasize enough is that the vast majority of our large customers are utilizing the programmable logic that is embedded in our sensor processing platforms. We believe this further differentiates our sensor processing solutions in ways that cannot be duplicated by other discrete or even integrated solutions in the market today.

While we will have much more scheduled clarity by the end of next quarter, given the design wins and traction we already have with large OEM customers, I believe we are well-positioned to deliver very significant revenue growth in the second-half of this year, and that that trend will accelerate as we move into 2017.

With that, we'll turn the call back over to the operator and open the floor for your questions.

(Operator Instructions) Krishna Shankar, ROTH.

Andy, congratulations from the design win progress for the top-tier OEM for the sensor hub solution. As you look at 2016 revenues, you indicated a pretty significant ramp in new product revenues in the second-half. Will that principally be from one or two of these top-tier OEMs that you are engaged with? Or do you see -- you mentioned nine engagements of design wins. So do you see kind of a broad set of customers ramping in the second-half of 2016 with new products?

Yes. No, that's a good question, Krishna. Actually we do see a much broader customer base ramp in the second-half than we've seen in the past when we've shown ramps before. So we do see a broad base of customers that plan on going into production, depending upon their schedule, sometime towards the second half of the year.

And then how would you -- it sounds like the display-based product line has a good long life ahead of it, especially with the competitor exiting the business. What kind of visibility do you have in terms of revenues for that business for this year? And how will it compare with 2015?

Yes. Right now I can probably just give you some anecdotal information on that. I was actually at the customer when I found out that we won that MIPI to RGB display bridge for the smartphone accessory. And when I was with my sales guy, I asked him about this going out of business from the competitor. And he said, in the past couple of weeks, he has seen a marked increase in inquiries about our display bridge products.

So, it's a little early to tell, but we certainly are getting a lot of inquiries. And the common theme seems to be a MIPI to RGB bridge, because there are no application processors today that actually do RGB out. And you'll find a lot of accessories that need some sort of display tend to be RGB more than anything else.

Okay. And then the re-spin of your EOS 3, you said the preliminary evaluation looks good and you expect to start something at the customers soon. Can you give us some sense on how that is looking? And you are on schedule to sample that this quarter with the customers, the new version of the EOS 3?

All I can say is that as we speak today, the guys are 24/7 -- as a matter of fact, we had people on Super Bowl Sunday in here working the parts. So, this is currently an all-hands-on-deck evolution here at QuickLogic. And so far, everything is going very well.

I can also say that probably more than any other product since I've been at QuickLogic, we did an exhaustive simulation before we actually released the product for tape-out. So we feel very comfortable. And mind you, this is also the second spin of the first S3 when they first came out in the summer. So we feel very good about its prospects.

Okay. And then my final question. Are customers interested in -- you have kind of an SoC approach with a lot of bells and whistles and blocks in it -- are customers interested in the full capabilities of EOS 3? Or are some of them settling for the S2, because the S3 has some additional things, such as the audio voice recognition and all that? Are your top-tier customers interested in all those capabilities also?

Krishna, this is Brian. I'll take that. I think that most of these customers we're talking about now are gearing towards S3 because it has much more capability, including the voice and the Cortex M4. Obviously, the FFDA is consistent between the two. And if it's just a sort of low-end activity band, I think they'll stick with the S2.

I think the other thing that we'll mention, going back to the prepared remarks, Andy mentioned working with a large semiconductor company on an S2-based product. So we definitely see legs for that for certain applications. But again, most of the funnel moving forward, we think, is going to be more S3-related.

Okay. Thank you.

Gary Mobley, Benchmark.

Thanks for taking my question. I wanted to -- my first question is a follow-up to Krishna's, and that relates to, I guess, the extent to which you can benefit from a competitor exiting the display market. I'm assuming that's Toshiba attempting to sell that business along with others. Do you have any sense of how much Toshiba was selling in the display bridge market, to try to gauge your potential revenue opportunity there?

You know, we are going to be digging into that more, Gary, but at this point, I would just be guessing. I can tell you that with our Samsung tablet business that we've now had five different tablet designs that we did displace Toshiba as the incumbent. So, clearly, Toshiba was the other display bridge qualified to do business with Samsung. So, any other MIPI to LDDS bridging that was required in tablets would be Toshiba's, that we don't have.

Okay. All right. That's helpful. All right. Sue, I had a question for you relating to the line of credit. I didn't get a chance to read the 8-K and the details regarding the amendments with Silicon Valley Bank. You were one of a couple of companies I'm reporting this afternoon. But if I'm not mistaken, the line of credit had a limit of $12 million previously. What is the new limit?

So, the new limit we have been able to have them reduced, but in Q2 2016, to $10 million, then $8 million, and $6 million then $4 million. Then going up in the second half of 2017 to the normal level.

Okay. So it becomes --

Yes, that's a total award.

That is for the total award. (multiple speakers)

So, Gary what she just told you about, the limit of our credit is still $12 million. So we still have a $6 million credit line with an accordion at $12 million. What she's talking about is they actually reduce the total network covenants that goes along with the borrowing of money. So what they did is they stepped the total net worth limit down throughout the year as they see how progress is markedly increasing.

Yes, Gary, that was -- yes, so our total line of credit still stayed the same. The amendment is on the covenant itself.

Got you, got you. How much was drawn on the $12 million line at the end of Q4?

End of Q4 we have a total of $3 million drawn on that line.

Okay. And that goes into that $19.1 million that was reported as of the end of the quarter, right?

Correct.

Okay. And so here we have total cash available to you of around $30 million in total, and you are expecting to burn about $5.5 million in cash in Q1. Obviously that's not sustainable for too many quarters. And I'm just wondering if, in addition to the expectation and fruition of the revenue ramp, that you might be looking for ways on the cost side to minimize that cash burn.

Yes, we are doing both ways. We are planning to continue to borrow from our line of credit from Silicon Valley Bank with favorable covenants terms. So, we also reduced expense as well.

Right. Okay.

Yes. So we are looking at all angles to make sure that we maintain a very positive and strong balance sheet.

Okay. Andy, if I read into your commentary correctly, you mentioned -- or implied a -- approximately 16 engagements, you know, from 9 to 16. I think you mentioned a [70% to 80%] increase off the [9]-based. So let's assume you are engaged with 16 different potential customers, 50% of whom have the potential to have revenue volumes in excess of $1 million annually.

And so at least half of those potential 16 customer engagements have the potential to generate somewhere between $8 million to $10 million in annual revenue? Am I reading that correctly?

That's right, yes. Your math is good.

Okay. And so, how should we think about the likelihood of those engagements -- conversion of those engagements into actual design wins?

You mean how to handicap the number of things that are in our pipe that will actually materialize? Is that the question?

Well, and so you walked through a couple of the potential opportunities, and I appreciate that. One, I think, in particular, you were talking about a Tier 1 smartphone wearable product design win that you are expecting to ramp in the second quarter. Is that the largest near-term opportunity? And any additional detail?

Actually -- yes, actually, that is not the largest near-term opportunity. And I think you know that the way I typically talk about things, I usually prefer talking about things in terms of production wins. And production wins really means that we have an order in-hand.

But I think that to make sure that our investors understand the potential, obviously there's not going to be any orders where they are still sampling silicon, but I need to give pretty good clarity about design wins. And that's really how most CEOs tend to report their sales pipeline.

And so what we're talking about with a design win is where we have been contacted by the economic buyer at the customer that they intend to use our product; that they have a board that's already laid out with our footprint; and that then it's just a matter of when they will complete the design, and when they actually intercept that with their marketing plans.

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

(Operator Instructions) Richard Neaton, River Shore Investment Research.

Two quarters ago, you talked about a breakeven potential in the fourth quarter of this year. I believe you said somewhere around $11 million to $12 million to $13 million of revenue at about a 50% gross margin. Is that still operative at this time?

Yes. So, as I said in my prepared remarks, we do have very large OEMs that are embracing our solution. And this is actually happening more quickly, both -- in both depth and breadth. And keep in mind that once we start sampling the S3 silicon, that we believe that that activity will increase. The variable that's hard to predict at this juncture is exactly when these customers will ramp production of designs and what the shape of that ramp will be.

But we believe that we will parse the significant second-half growth, and that we have a much better picture of that once we get our EOS S3 and S3 LP samples in the customer hands. And that's when we'll be able to state that more definitively. But for right now, it all depends on the ramp and how soon and how steep.

Okay. Thank you.

But we certainly have the sales funnel to support it. I will say that.

So it's fair to say that's a target but no predictions at this time?

So, you know -- yes, you also mentioned the breakeven between $11 million and $12 million. And I think it's fair to comment on that. And is that still a breakeven point? And frankly, that depends on how quickly we ramp our R&D investment strategy.

Given the sharper-than-expected increase in engagements with large OEMs, we are reevaluating our R&D and customer resource-facing budget strategy. So if we ramp R&D more quickly than we previously anticipate, then this could push the number up to the higher side of that range, maybe even a little above it. But I guess what I'm saying is, things are going very well, so I see raising that bar as a good thing and not a bad thing.

Okay. Appreciate that. You -- in your prepared remarks, you spoke about approximately half of your 2016 engagements having the potential of 1 million or multimillion unit volumes. Are any of those design wins right now?

As a matter of fact, yes. Both are design wins and we have one in each category.

Okay, meaning phones and wearables?

That's exactly right. That's exactly right. The two that we mentioned in the prepared remarks fall into those categories.

Okay. Following up on Gary's question about trying to assign -- quantify some value to these opportunities, when you talk about a multimillion unit opportunity, I assume that means 2 million or more. Do any of these have potential of, say, 10 million or more units?

I'll let Brian answer that.

Yes, we won't say specifically how many, but there are some that are in that category of multimillion that are over 10 million.

Okay. Okay. Thank you, guys. I appreciate your time, and it's good to hear some encouraging news. Thank you.

Thank you.

Robert West, Oak Grove Associates.

Congratulations on a very encouraging conference call. I wanted to begin with a couple of questions, if I could. On the EOS S3 second spin, which sounds like it is going very well up to now, are you expecting a mid-Q2 2016 production release date or somewhere in that category?

Yes. We fully expect that all of our internal quals will be done by certainly the Q2 timeframe, and I would expect it would be mid to early Q2 if everything keeps going as planned. In other words, the plan has always been to be able to ship a production-worthy S3 in Q2.

Very good. And this will intersect -- this type of a schedule, mid-quarter or before, will intersect with the wearable device from the smartphone customer?

Absolutely.

Great. Okay. Let me go back and ask a engagement question in another term. We've been tracking -- you've been tracking for investors your alpha program for quite a while. Is -- does this product readiness schedule support this alpha customer's production plan? And can you give us a little color on how that's going?

I'll take that question, Bob. So we are still engaged with the alpha customers. We've been supporting them quite a bit actually with our engineering team flying out and meeting with the customers regularly, giving them updates, enabling them with new tools that we have. So, the silicon schedule, the second spin, is in alignment with when they would actually need products.

Okay. Very good. And then a second question, again asked a different way. Last quarter, you talked about that you had scheduled to deliver samples and development platform to a top-tier OEM with high brand name recognition in November of last year. Can you give us some color on that engagement?

I think without going into too much detail with respect to a non-disclosure agreement, that we'll say that we did deliver awards to the customer. We did enable them with tools. And they were part of that engineering tour that I was just talking about, where we had engineers on-site to enable them. (technical difficulty) also fit within the time frames of those customers.

Okay, great. And would the alpha customer and this second customer, would they be expected to contribute to second-half 2016 revenue?

It's possible. It is possible. Like Andy said, we are still working out the exact details with these customers. And luckily, I think the funnel has grown large enough that we don't have to be solely dependent on any one of them in particular. But they are definitely a possibility to be in that bucket for second-half.

Great. No, great. That's good news. One final question, on algorithms. You have been underway and developing for quite some time your motion compensated heart rate monitor and/or navigation programs. These are categorized under your immersive algorithms. Will they be released with your EOS S3? And do some of these earlier customers have interest in these two algorithm capabilities?

Yes. So, if we look back at the big picture, Bob, the algorithms that we originally started with were more on the activity tracking and contextual awareness. And then we started moving into more of these sophisticated areas, like the heart rate monitoring, the biosensing algorithms. And then, of course, we have talked about indoor navigation or pedestrian dead reckoning.

So we are still putting resources in all of those categories as we move forward. We're trying to let the opportunities in the funnel kind of guide the priorities at this point. We do still have plans to have those types of capabilities running on S3, in particular, because the computational capability is much higher on S3.

How we go to market could be a combination of our own internally developed algorithms and also third parties. And I'll actually give a plug for the fact that we have this nice integrated development environment now that software people are accustomed to, they can actually enable third-party algorithm folks to deploy their algorithms on our platform. And we do see activities in this area.

So, a long way of saying that we are pushing in all those areas. The end product may be some combination of us and third parties to do that, particularly in some of these highly-specialized areas.

The last thing I'll say is that we see an increased awareness now on power consumption, even more so today than even the last year. The nice thing about having our contextual awareness algorithms is that people are viewing that as a way of actually saving power, even if they are using their own algorithms; kind of this blending of theirs and ours, if you will. So we find that actually to be very encouraging and have engagements in that area.

So I'd like to add one more thing to what Brian said. If you've noticed, our whole funnel composition has really migrated from IDH's and ODM's last year to more Tier 1 top namebrand recognizable customers. And what goes along with that is obviously the increased volume, which is wonderful. But also, many of these guys -- as a matter of fact, with few exceptions, all of these guys, to some extent, have their own software teams.

And that's why, as Brian put in a little plug, I'll put in a bigger plug, because our integrated development environment is absolutely paramount, because it really gives them the opportunity of not only just porting their code into our M4 code -- because that's the same no matter what sensor hub they use -- but they can also port their standard C code into our FFE, our proprietary, ultralow-power, always-on compute engine.

And that's how they get the super power savings. And this tool enables them to do either/or very seamlessly. So, getting this integrated development environment up to speed and upgraded has really been key in our engagement strategy with top-tier OEMs.

So it directly relates to time-to-market in a favorable way.

Exactly. Exactly.

I did have one more question. I wanted to ask you if you would spend a few minutes on sensors -- on QuickLogic's implementation of sensors -- low-power sounded detector technology, and how that's being received, and if some of these customers have an interest in that as well?

I'm glad you asked the question, Bob. So, actually a lot of these customers are actually very interested in the voice capability with sensory. I think the optimization that we've done with sensory and our silicon is fantastic. The power numbers are great, and that's really driving a lot of interest in wearables and smartphones both. And we are actually hopeful that this can lend itself to other applications that we haven't even talked about yet in IoT.

Very good, Brian. Hey, listen, thank you, guys. This is a very encouraging call, and will make us look forward to the end of Q1 call as well. Thank you.

Thank you, Bob.

I'm not showing any further questions. I would now like to turn the call back to Mr. Andy Pease for any further remarks.

Thank you. First, we will be participating in a number of industry events during the next three months. Dr. Timothy Saxe, our CTO, will be presenting at the Wearable Technology Show March 15th and 16th in London. Dr. Saxe will also be participating in a panel discussion titled Wearables at the Heart of the Smart Home on March 15th.

Sue, Brian, and I will be at the 28th Annual ROTH Conference at Dana Point on March 13th through the 16th. Details will be included in our upcoming media alerts. During the next few weeks, we will also be issuing several press releases, providing more color on our new EOS S3 LP; reference designs for the EOS S3; press release on our upgraded integrated development environment; and collaboration with certain ecosystem partners as well as multiple customer wins.

We want to thank you for your continued support, and I look forward to reporting our strategic progress on our next earnings call, which is scheduled for Wednesday, May 4, 2016.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may now all disconnect. Everyone have a great day.