Q1 2020 Earnings Call

Thursday

Yep.

Thursday Thursday

Ladies and gentlemen, thank you for standing by and welcome to the Monolithic Power Systems Incorporated first quarter 2020 earnings call at this time. All participants are in a listen-only mode after the speaker's presentation. There will be a question-and-answer session. Please be advised that today's conference is being recorded now, it's my pleasure to turn the call to Bernie black and Chief Financial Officer.

Thank you. Good afternoon. And welcome to the first quarter twenty-twenty Monolithic Power Systems conference call CEO and founder of with me on today's wage in the courts of today's conference call. We will make forward-looking statements and projections that involve risk and uncertainty which could cause results to differ materially from Management's current views and educations. Please refer to the safe harbor statement contained in earnings release published today risks and uncertainties and other factors that could cause actual results to differ are identified in the safe harbor statement contained in the queue one earnings release and in our SEC filings, including our form 10-K filed on February 28th, 2020, which is accessible through our web site w w w.

MPS is Cinderella.

Obligation to update the information provided on today's call will be discussing gross margin operating expense sg&a expense operating income interest and other income net income and earnings on both the Gap any non-gaap basis. These non-gaap Financial measures are not prepared in accordance with gaap and should not be considered as a substitute for or Superior to financial measures of financial performance prepared in accordance with gaap a table that out loud reconciliation between the non-gaap financial measures to gaap financial measures is included in our earnings release, which we have filed with the SEC. I would refer investors to the black one 2019 Q4 2019 and two 12020 releases as well as to the reconciling tables that are posted on our website ma'am.

I also like to remind you that today's conference call is being webcast live over the internet and will be available to replay on our website for one year along with earnings leads filed with the SEC earlier today before going through our financial results. I would like to acknowledge the difficult circumstances. We are all offering a number an MTX we take all necessary precautions to ensure the safety of our employees are suppliers and our customers at the same time. We have remained focused on the need to execute to the highest level possible. A worldwide efforts are reflected in our continuing level of innovation and customer support in response to the news of extreme shortages of medical equipment MPS Rose to the occasion to fight the global pandemic has described in our recent press release MPS develop and assembled an emergency ventilator prototype in a matter of fact

Leveraging a MIT open source design concept we demonstrated our technological superiority and deep system application knowledge to Showcase wage capability to advance from a component provider to solution provider in a short period of time. We believe we can help our customers to do the same by taking advantage of MPS is bass and diversified product portfolio, which is highly programmable flexible and feature-rich. We are also encouraged by the time you received from our existing and potential customers that will lead to many promising opportunities in the medical device industry.

Turning down to our financial results posted record first-quarter revenue of 165.8 million dollars 17.3% higher than the, Double Quarter in 2019 MTS continues to benefit from our technology technology leadership and diversified multi-market strategy. I'm looking at our Revenue by market in our Computing and storage Market first quarter 2020 revenue of 52.0 million dollars increased 12.8 million dollars or 32.6% year-over-year first quarter twenty-twenty Computing and storage Revenue represented 31.3% of em, first quarter 2020 Revenue compared with 27.7% in the first quarter of 2019, the year-over-year revenue increased primarily reflects off.

sales growth for cloud

They servers and Storage.

First quarter 2020 Communications revenue of 27.9 million dollars roads, 5.7 million dollars or 25.6% off the first quarter of 2019 the year-over-year revenue increase primarily reflected higher 5G networking sales.

Communications Revenue represented 15.8% of mts's first quarter 2020 Revenue compared with 15.7% in the first quarter of 2019 first quarter 2020 industrial revenue of 25.2 million dollars increased 18.3% from the first quarter of 2019 and it came down to 15.2% of our total first-quarter revenue the increase over the first quarter of 2019 primarily reflected games and smart meters and Security application a first-quarter 2020 Automotive revenue of 23.3 million dollars and 13.6% over the same period of 2019 representing 14.1% of MPS his first quarter 2020 Revenue, it's gross primarily represented increase sales of infotainment safety and connectivity application products.

First quarter of 2020 revenue from consumer markets of thirty seven point four million dollars decrease $700,000 or 1.9% from the same period of 2019 the year-over-year revenue decreased reflected continuing reduction in demand for set-top boxes and flat panel TVs consumer Revenue, representing 22.6% of our q1 Revenue compared with 27.03% contribution in the first quarter of 2019. The app gross margin was 55.2% 10 basis points higher than the fourth quarter of 2019 and flattens first quarter of 2019.

Our Gap operating income was 31.0 compared with Thirty point seven million dollars reported in fourth quarter of 2019 for the the first quarter of 2029 Gap gross. Margin is 55.5% matching the fourth quarter of 2019. The ten basis points lower than the first quarter of 2019. Our non-gaap operating income was 45.9 million dollars compared to fifty point eight million reported in the the fourth quarter 2019.

Our gaap operating expenses was sixty point five million dollars in the first quarter of 2020 compared to sixty one point two million dollars in the fourth quarter of 2019 are not Gap first month's twenty20 operating expenses with forty six point 1 million dollars up from the Forty one point eight million dollars recorded in the fourth quarter of 2019 is increased primarily reflected higher q1 payroll taxes and increased investment in new products the difference between non-gaap operating expenses and GAP operating expenses are the quarters discussed here are stock compensation expense and income or loss on an unfunded Deferred Compensation Plan for the first quarter of 2020 total stock compensation expense including approximately $600,000 charged cost of goods sold Was Eighteen point six million dollars compared with eighteen point seven million dollars recorded in the fourth quarter of 2019.

So what you mean the bottom one?

First quarter 2020 gaap net income was 35.8 million dollars or $0.77 per fully diluted share compared with thirty two point four million dollars or seventy cents per share in the fourth quarter of 2019 or q1 2012 tax provision of minus 22% off is due to a one-time discrete tax benefit resulting from stock compensation. First quarter 2029 cap net income was 44.3 Million month for $0.95 per fully diluted share compared with forty eight point four million dollars for $1.04 per fully diluted share in the fourth quarter of 2019 Panini that standing at the end of q1 twenty twenty or forty six point seven million. Now, let's look at the balance sheet Cash Cash equivalents and Investments with 400 off.

2.3 million dollars at the end of the first quarter of 2020 compared with four hundred fifty eight point five million dollars at the end of the fourth quarter of 2019 month for the quarter MPS generate the operating cash flow of about 61.4 million dollars compared with operating cash flow of 61.0 million dollars in the fourth quarter of 2019. First quarter Capital first quarter 2020 Capital spending total ten billion dollars.

Accounts receivable end of the first quarter of $20 and fifty four point three million dollars for Thirty Days of sales outstanding up one day from 29 days off the end of the fourth quarter of 2019. Our internal inventory is at the end of the first quarter of 2020 were one hundred and thirty one point five million dollars up from the hundred and twenty seven point five million dollars at the end of the fourth quarter of 2019 days of inventory increased to 161 days at the end of q1 2020 compared to 655 days at the end of the fourth quarter of 2019. I would now like to turn to our outlook for the second quarter of 2025. We are forecasting huge Revenue in the range of 167 to $173 million dollars. We also expect the following

Gap gross margin in the range of 55.0 to 55.6%

Non-gaap, gross margin in the range of 55.3 to 55.9% Gap R&D and sg&a expenses between 60.5 million dollars and sixty four point nine million dollars.

R&D and sg&a expenses to be in the range of 43.4 million dollars to forty five point four million dollars. This estimate excludes stock compensation and litigation expenses.

Total stock-based compensation extent of 18.1 million dollars to twenty Point 1 million dollars including approximately $600,000 that will be charged cost of litigation expenses are expected to range between 1.7 to 2.1 million dollars.

Interest in other income is expected range from 1.7 to 1.9 million dollars before points change gains or losses fully diluted shares to be in the range of 45.8 to 47.8 million chairs.

In conclusion, we are not immune to the macroeconomic reality, but our long-term growth prospects remain intact. We will continue to talk to our plan and are prepared to manage volatility of future customer demand. I will now open the phone lines for questions.

Thank you and ladies and gentlemen, as a reminder to ask a question. You will need to press star one on your telephone to withdraw your question. Press the pound or haschke.

Again, if you have a question just with star then one on your telephone keypad. And our first question is from Taurus V6 diesel, please go ahead. Yes, ma'am. Thank you, Michael and Bernie and congratulations on on these results and in a very challenging environment first question. And you know, maybe this is a bit philosophical but I am Innovative companies tend to gain a lot of sharing a downturn. We're obviously in the downturn. I was just wondering Michael if they are certain things that you're looking at, you know, you know to to obviously come out of this, you know, even stronger than than going into this.

Michael you're breaking up.

Like when you're breaking up, unfortunately.

You might go to the handset instead of the speaker.

There you go. You're fine.

Can you hear me now?

Yes, we can. Yes much better in earlier about this is a history because you you cover those things. They want of a of a m p s become a public company and somehow we tend to do that off and in the long term and in a in a down terms and we tend to do well and I put Relish in in a normal times and we we are just as good as they say everybody else is but the percentage of a growth tend to be slightly slower of somebody in Lord and

how we

Keep that. I think these the we don't really our Target is many years out in regardless of its own terms or or Optics. We are very consistent. So it's it's not like like the the company because they have all the job market shares and they tend to react as to to a shorter-term. So if you if you can think about it and philosophically and we will tend to do well in the during a stereo don't

That's that's very helpful. And on a similar topic the more specific your e-commerce business. I do appreciate it's taking a while to get that up and running. But in this sort of virtual environment, we live in I would think that uh a business like that, you know would would be very very welcome. So maybe you could elaborate a little bit of what what's been going on with the truck. Well, as I said, okay the last as I said in the last quarter, we say the e-commerce like a we we kind of a drop a drop of hook in a in a Pacific Ocean that a lot of fish there, but we didn't hooked up too many things. They have all of that. So with you in the early stage and off however in the last couple of months and we launched a ventilators that attracts us so many

You new customers on your potential customers, and it's overwhelming and it's kind of a surprise to us. I think they need more company, and we're we're relatively new accompanied and and the people don't don't don't know us just we need a time. And anyway, we can we need to learn how to do it. Okay, that's great. One last question for Bernie Bernie. You talked about the Computing and storage business being off, you know took quite dramatically year of a year, you know, some some other players in the space obviously are talking about similar strength. Did you get a sense that, you know, there's some some pull an activity going on with, you know until from students, you know, they they talk about obviously the second half being recalled the first half any any color you can add on that would be great. Thank you.

Sure. I think we're seeing a very a pattern that's probably consistent with other companies who have exposure to either 5G or data center or the notebooks long as there's continuing, uh, uh investment in order to service the work from home aspect of the economy right now. So there has been a lot of activity particularly in storage particularly in Data Center and we're seeing a continuing level of investment also inside G again as with any ugh expectation of what the second half would look like we're you know, obviously, this is a challenging environment and we normally only four cats one The Order ahead very good. Congratulations. Thank you.

Thank you. Okay.

Thank you Auto. Next question comes from Atlanta with calling his go ahead ma'am.

Hey, this is Josh Buckhalter on behalf of my thanks for taking my question. Hope everyone's hanging in there. Okay? I know you guys love questions on inventory, but given all the money supply and demand side. Did you update us at how you feel and your comfort level after last forty? Sort of lamented bringing levels down to be helpful to hear an update on your visibility in both your on books and in the channel. Thanks.

well, okay and we in the

In the last couple of quarters, we said that I can we our our cooking is a very good and very often and in the in the studious and in the week, we have a inventory problem. That's the problem the relate to and walk in the delivered to our our customers up and above and this this issue's okay and this growth of this year the birth of a of this year. We didn't say it's from a from a last couple of quarters. We said a lot earlier and off and the macro Market is in some certainty and we works so criticized. We have we have a more of a more Evil Dead.

So last December we took a step and and reduce our inventory and announced in the week. We barely we can do a walk in the in the beyond our forecast.

So and the conditions be more more more murky or now and we have to just react accordingly.

If I could add to Michael to a point there is that through the challenges that were facing in the in the economy right now that as you can see that we continue to operate that nearly 100% capacity both in terms of our supply chain as well as our internal operations team now, I don't want to minimize those challenges and there anyway take away from a lot of very difficult and hard effort on the part of a lot of employees it made that all happen. But so far we've had minimal disruption in supply chain.

Thank you. I appreciate all the caller and then if my follow-up, are you able to provide any color on your expectations by segments for the second quarter? Thanks and congratulations on a stellar results.

Sure, I can take this one quickly and on the numbers numbers front is is responded to the earlier question is that I believe that much of the growth that we expect to enjoy should come from the Computing and storage as well as in the 5G home. There is a weakening and demand and traditional consumer and also an automotive here is okay. I might as well as the edit. Okay, we try to walk have a try to have a very diverse groups and my job is

If I did if I do the best you guys not to know which segment is is the gross and we want to so Diversified in life. You don't know which side which one and every week. We occupy the very small percentage of of of of each market and look at the consumers and actually within the consumer. There's a lot of fundamental shift. We shipped too far more traditional TV set-top box and I do have some some some percentage and that within that

We we have a huge change. We choose it to a much higher high end of of of of a consumer products and as as well off the Internet of Things.

Thank you. Next question with me. Go ahead with you guys had to let me out for my congratulations on the nice results and Outlook, you know, you guys are significantly outperforming a number of the the analog tears sequentially and certainly your own New Year. And I think that that you know, we we've seen a number of the analog peers talk about you know, in their forecasts. I think they refer to seeing some customers buying ahead or building inventory and judge. Just wondering if you might be able to address that specifically on the computer and 5G side. I know you mentioned it's Auto and consumer softening. And so maybe maybe just kind of go through just just whether you think there's there is any by ahead activity that may be influencing second quarter guidance, and then I've got a follow-up.

Yeah, and of course we're concerned and then it's like a toilet paper. In fact, like in whether the month and you'll just a few months that goes all the shelf and toilet paper. Drunks and I came in and the winter weather. We have see the same Hyundai effect or Not Dead. We really don't know and some in some of the areas in in like in the PCS and and in the in a data center. Yeah, I have a search and so we kind of expected of that and otherwise they'd be in a in a consumer area and there's obviously, it's actually off lower than than than our than our expectations, but we have to be an hour click on the feet and then we had to react quickly. And in the meantime we yep.

As much as the weekend.

Just you know looking and in that data Centre business, you know, I think Intel is recently sort of cancel that the Cooper Lake processor generation to focus on a meter ice Lake for lunch, you know late this year. Just wondering if if that's had any impact on the Whitley ramp is as you see it, or are you seeing pretty good design activity either for existing pearly systems or or the initial ramp of Whitley just over the balance of the Year. Thank you.

Good question. So our experience has been showing that we were receiving the same level of customer engagements off. And that going back to Michael's point about you to that. The level of order momentum has continued unabated regardless of the product change the changing the product cycle. So at this point we may not have the full benefit of how in-demand will be shaped by this change, but I don't see any early indicators that give me five and one other thing that to make specific is going back to Michael's point. I'm being Diversified the business model is not wage and then on any individual product launch of the timing so is it said that that's the advantage of our Diversified portfolio?

Congratulations again. Yes.

Thank you. Thank you.

Thank you. All right. Next question comes from Chris Castle with Raymond James, please. Go ahead Chris. Yes. Thank you. First question is just regarding product cycles for the year. And and I'd imagine they get a much like last year. There's a certain part of the business a large part of the business, which is just driven by product Cycles getting you know customer designs out the door and another portion of it, which is related to run rate business. So so perhaps that might be affected by by down taking demand. Could you characterize business, you know kind of what what what parts would be more driven by product Cycles. What parts would be driven for more by demand and uh home, you know, take a look and and give us some some sense of of how that plays out to the second half.

The second half bucket mean it's not it's not very clear and but our customers demand wage as a as a hard as ever.

And but it's we we divided into we engage our our our customer in there in the variety of assignments. And uh, so when when they and and it's kind of very short notice a few months and how long did they test the market in the mud? The Mark is reacting. Well, so they and and they have a huge win. And so that's why we need enough inventory to support the New Jersey new product with and to answer your questions, which particular Market segment is in the last couple of months is a total ship of the engagement with the customer's total shift in the medical field now.

and a lot of parts and a lot of

Worries and in the all these things are particularly helpful / by the ventilator. It's a total to our surprise and off the same times. We we didn't expect the the the Computing ramp has has this much money and it's just particularly in the in the in a in a memory site. And in a memory power. What is the fact that when you want to say, yes.

Got it.

So that's a that's our scenario. So now and going forward. We're not very clear and I know that it's the new new trend is that

You you can work from home and you can work remotely and the cloud computing the crowd the the data center. The communication will pass along and will accelerate.

Thank you. I have I'm sorry. I'm sorry. I had just a small things to add to that is that on the notebooks seasonally, those are or where you have a high IQ 3 and to 4 and then it tails off that we've seen nothing in the uh, sort of the outside from cyclical changes there and then obviously we may have a gaming Council that will start to ramp here in the end of Q2.

That's helpful. Thank you as a follow-up. You talked about qualifying some some new capacity on three hundred millimetre into the office. Could you give us an update on that? And you know in in the current environment has has there been any change to your plans or or or you you need for the capacity of that capacity either either way, you know grades were relaxed.

Yeah, because if we see some of push up above and beyond and they if they don't have those push-ups even walk in deep trouble and in terms of a customer relationship not in terms of delivering the members and we're working very hard with Iraq which had to try very hard to bring up another fax. And and as you know that this is It's not like an overnight and they at least to take a half years and years. I think it's a real war we can meet our demand and and qualify some of the highwomen.

Yeah, we should be.

I qualify the runners before the end of this year and actually be you know shipping from from that Pap.

Thank you. Thank you. Next question comes from William Stein with SunTrust. Just go ahead. I'm great. Thanks for taking my questions Michael burning congrats on the good result in Outlook Michael. You mentioned at the start of the call Action from a component to a solution company and you highlighted the ventilator as an example. But at the end of this day, you also showed several things that that looked like a precursor to this in a way not only emotion but these programmable modules and I wonder if there's anything more sort of quantitative that you could disclose to us in terms of the revenue or growth or designs or orders as it relates to that what we might describe as a transition or a new Lego bath.

to the business

Yeah, it's we don't we haven't really prepared holiday and members to you and and the the business that type of thing in the paper, but we had to think about how we how we disclose a very accurate accurately to to our investors making and it is clearly that that trains and I came in a we want to make our Solutions. Our product tip based Solutions is it it's really dead ease of use. That's the Trent and and the two lot of like a power supply lot of motor controls and the emotion control and even in even for the power supply for the data center. These are a lot of Technology on maturing like a is what is on top of it. It's real dead.

Plugging Place Solutions and and you want to take away all the design effort from from our our customers and in terms of life. You can't say what is our modules doing really? Well, right our modules in a in a if we're talking about only power module. So we're doing we from a two three thousand years ago, like in a single load digit million dollars of a sales. We now at least $35 a month and last year.

And that number is the this is the fastest growth in the in the in the percentage wise Revenue Street Pub.

Add to that if I can exactly right that we haven't really articulated the financial model where we can buy it in a way that would be meaningful to I agree with Michael to assessment of how we're doing the power modules. The thing that I would add though is whether you're looking at programs bility, you're looking at e-commerce solution, you're looking at emotion or the power module Integrated Solutions that we were just talking about. It's all about the overarching strategies and far as how to differentiate and leverage all of our multiple Technologies differentiate ourselves in the market.

Well, that's helpful. If I can have a follow-up, please I think last quarter you talked a little bit about a new area that the business was investing in and it was high performance converters. Um wondering if you can provide an update on design wins Revenue any any sort of traction, we could that we could think about their thank you. Yeah, okay that group to be joining and they they brought in Opportunity. We we have a 6:17 a.m. During the company and they brought into opportunities. So it's a and a they we have the customer's. Okay. Now, they engage with the way the customer for the medical company for for a whiles. And uh, so it's actually it's a dog

Don't have any any any significant inputs like a change and and I think that we were these kind of things that takes the bus to this is Faith.

Unusual sound like they said take a lesson a year. We can see some of some results usually our product even internal developments like ground-up development will take about two or three years to to see any things and this one's okay with so far is looking good.

Great. Thank you.

Thank you so much. Our next question is from Rick Shafer with Oppenheimer. Just go ahead thank you and congratulations you guys and it's tough time off you execute. I guess my first question they talking about tough time. So everybody seen my HS is forecast Auto. Sorry, I take down over 20% this year you guys obviously have a content and it's a pretty significant share games in that vertical. I mean, do you look at that this year and and say that that's enough to offset around. Let's say 20% off. Sorry. I mean, could you Auto revenues be flat for your cuz they grow and and in this kind of environment

I think

So we we look at our kids Street and like a and we can't tag on. What is your your macroeconomy again segment gross income or our second and we can we are confident enough we can say that we can beat by 10% off when there was a complete fall off option is in China and a a soft demand in North America and Europe in particular. Um, so I I think if you use that as a guide you can say with the car was down but we were a young girl with about thirteen fourteen percent. Last year go to Michael's point is that you can apply whatever you think the the markets going to do and we're going to outperform by minimum of ten percentage off.

Last year, it's closer to 20.

Great, and then just pick it into 5G and if you could provide an update on your 5 g r an opportunity, maybe maybe give us a sense of of the opportunity wage in a macro base station and and part of my question. I just curious. I mean, it seems like such a massive opportunity for you guys. You can 5G be as big as server for you know, and and if we fast-forwarded two or three years.

Yeah, okay. That's that's a good question. And I only can't tell you this and we know for G out the dog we had didn't have any chance and this is the first time we engaged with a variety of customers and they're off the odm and audience and and even their their supplies and off.

so we we engage both sides making me and and the the the real telecom companies and also their their supplies off the always see the opportunity is we never seen it before how big the market is like and I can't we cannot quantify and I'm not trying to tell we're going to talk here and we are new where when you come out and all I know the opportunities a huge and we want we don't even try to quantify what what's an opportunity and we all notice as long as you're very big

Yeah, and I think you were asking for guidance on the dollar content or the basement and Michael is correct that you don't have a number of the month. We yeah, I can tell you why why we don't particularly. Okay, and which segment of of a 5G our product is in the beauty bulb all the of a qualified you said if you think about it as a as a brick for for the building and our product, is there a new product in in a company and the Victory use the every everywhere?

Got it. Thank you Marcus.

Thank you. Next question is from Camille with William Blair. Go ahead, Congratulations on a strong results in this uncertain environment. Can you tell me how design win activity has been trending during the pandemic versus your expectations? And how do you balance growth and margin environment? Well ever do you have to maintain or potentially expand across Garden like you

Yeah, the gross margin obviously isn't in the window a little bit on the side ways and in the second half of the last year and and I'm not happy about it. But but we we we try to be very consistent and given the given the the macro conditions. It kind of makes sense for us and they gave me an end, but the new product particularly the new product slower slower month is a ramp as a pretty pretty good rate and but in the summer the higher value for high-value product we can within the Pod was slower. So that's why the margins go in the butt in a given the long-terms and the margin was the delete.

And first part of the question was design activity. Oh, yes. Okay. Sorry. I forgot about that was a very good question. So like an obviously normal activity just been kind of slow it down and they and which it doesn't affect us. Okay. We we meet we can we're very much used to it in a a work from home from outside office and we exclude very much engaged with with our customers but in very different way, okay, very different market segments happens in the end up in a relate to a medical equipment and was the you know, we will shift our head in the wheel in the back end up in a in a password is a pretty was always a pretty fast on the feet. And so we shipped the all all our our interests and we support our

Those those customers but it's not like a normal normal normal business now.

What one thing I can add to that is that interestingly our operation and our customers operations in China. And in Asia. I came back online about a month ago and so not going to trying to say that we're business as usual but in the area of the world where we have up to about 90% of our employees including a large share of our design professional as well, as you know, a majority of our end customer engagement. We're actually seeing a a good good Cadence good momentum and it's Michael said on the US front when you're still in the shelter-in-place wage in Washington and in San Jose offices, we have developed over the last several years the ability to both New Field application engineers.

and customer

Resume and we're fairly confident with that. So it's ready. It's not like a 90% It's like a choice in. Okay. Yes. We do have a we do have a testing in the reliability Center that's in China. But in terms of never peoples are Asia across the Asia including Japan and this is the US and Europe we probably and in including Japan so that probably has above seventy some percent off account.

So well what more diverse just across the work?

All right, ladies and gentlemen, if you have a question at this time, just to start the one on your telephone keypad to withdraw your question. Just press the pound key.

And our next question is from hands moltmann with rosenblatt security.

Hi guys, this is Kevin Gary in on for a Honda. Thanks for taking my question and congrats on the results. Just one quick one for me. And my apologies. If you had to lead to this already, you had mentioned that you're you're dead animal supply disruptions in that you're having good momentum with your Chinese customers. Can you give us any color and turns on if you're seeing any demand destruction?

I don't know. It's a Chinese customer there. We didn't did it. Did we said maybe? Okay, that's a misunderstanding. We look at it and you want to say that God. Yeah as far as any demand destruction occurring we haven't seen any cancellation of project or push-ups and orders in a material. Obviously, the duration of the macro environment is not understood right now. So we're very sensitive to uh-uh seem really warning signs that we need to react to in this volatile environment. But as of this point in time, we have not seen a a step down in demand on a broad basis, you know, you mentioned earlier answer

Okay. Got it. Thank you. Thank you, Kevin.

Thank you. And our next question comes from David Williams with Luke Capitol, please go ahead David.

Hey, good afternoon, and congrats on the quarter. Thanks for taking the question as well. Just wanted to see if you had any color on the console launches that are expected. You said in the second half. How do you think that Ram do you have a sense of of what that what the demand is going to look like or what those volumes could potentially be.

Yes.

Yeah week. We have a pretty good. We have a pretty good knowledge, but I cannot fit okay, but in fact the very cyclical tonight and that's a very in the o m p s is a good money but. Value to make a choice very contrary to what we do the very cycle and it represents advise Wednesday years and in in in the month for the for most of the year, they don't do anything. So I'm okay and we have after that way. We have to fill up the the the Gap we have done. In fact, we have done pretty good in the last two or three years, but the other as the revenue keep growing, that would be a small part of a m p s business.

Great. Thank you. And then just kind of thinking about the the calm segment and the design wins and maybe design activity there. Are you seeing a broader base of designed outside of my life away or some of the the other larger companies just kind of you talk about where you're you're seeing the most potential or the most opportunity opportunities there.

Sure, and if you look worldwide as far as where a lot of the employment is because in both China and South Korea right now Europe and North America is a little slower. So I'm signing gauge meant for now has been in the lab as opposed to actually being commercially rolled out.

Okay, yeah.

I just wanted to clarify this but we don't we don't inquire any any customers and and in our office and we disclose that we have a large customers and and and and by rules. I gave me in that and so in fact in the 5G, as I said earlier if we engage not only once and I can handle many different types of a kind of a different office telephone company.

Okay, very good. And then I guess last name for me is if you're kind of thinking about the rest of the year and even the second quarter perhaps what is your largest unknowns or potential that you kind of think about areas of weakness could be seeing or or what are the areas? I guess that you're most either troubled or concerned with or I guess paying most attention to to the back of the Year here.

Michael you're breaking up again. I'm sorry, you're breaking up. I'll give you a call because we really worried about toilet. And it's it's actually we don't know in the demands of very good.

And the phone and windows and and when when when everything's good potential an over order and and we won't see it out. Of course. We try to try very hard and if you find out what is the what is the real reason so that and uh, we so far we have a very good we have a witch. That's what we try to log in. I can't wait until our customers started screaming and then they were shipping a product.

Yeah, so is opposed to a concern of a rapid fall-off right? Now with the managing is the toilet paper affect whether there's so much exaggerated demand. We want to make sure that we're not building inventory off in the channel or and Distributors warehouses. And the way we do that is we don't ship to the level that they requested and then if they really ought to have a stock outage we're going to go lines down will hear about it quickly and respond to that so that that's the issue that for managing now as far as looking beyond that maybe we'll have better off for Outlook next corner.

Well, thanks so much. Appreciate it in the best of luck.

Thank you. Thank you. Thank you ladies and gentlemen, this concludes our Q&A session for today. I will turn the call back to Bernie blacking for his final remarks. All right. Thank you very much. I'd like to thank you all for joining us and conference call. I look forward to talking to you again during the second quarter conference call, which will likely be at the end of July. Thank you and have a nice day.

And with that ladies and gentlemen, we thank you for participating in today's program. You may now disconnect.

Yes.

Dead dead dead dead dead.

Thursday