Q2 2020 National Instruments Corp Earnings Call
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Ladies and gentlemen, P sand buyer conference calls scheduled to begin momentarily. Thank you for your patience. Please continue to standby.
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Please be advised today's conference is being recorded if you require any further assistance. Please press star zero on your telephone I would now like to hand, the conference over to your Speaker Mercer <unk> head of Investor Relations. Please go ahead.
Good afternoon. Thank you for joining our team 2020, earning call I'm joined today by Eric Starkloff, President and Chief Executive Officer inherent wrapped Chief Financial Officer, We will start with it I think our performance in the second quarter and share outlets for Q3 before opening up for your question.
Our discussion today will include forward looking statements, including statements regarding future growth and profitability, our focus land objective position capital allocation plan dividend.
Management plan model revenue earnings guidance and target and our outlet.
Wishes to caution you that such statements are just predictions actual events or results may differ materially and he'd be negatively impacted by the worst factors, including any uncertainties related because they make indefinitely and brother economic and market disruption, resulting from public 19, any further weakness in the global economy and changes in the current glow.
Will trade regulatory environment.
Are you said the documents the company filed regularly with the Securities Exchange Commission, including Company Annual report on form 10-K filed on February 20 in 2020 and companies quarterly report on form 10-Q filed on May four 2020.
These documents contain and identify important factors that could cause our actual results could differ materially presented contained in our forward looking statements. We do have duty to update any forward looking statement to conform to statements actual results or changes in our expectation a reconciliation of our non-GAAP financial measures disclosed in this call to the mystery.
Directly comparable GAAP financial measure a related disclosures are contained in our press release and on and I Dotcom last night.
As a reminder, on July six we announced the close of the outflows like acquisition to enable more relevant compared who will use the term organic to refer to certain non-GAAP measure big living in passive acquisitions and divestitures completed within the last 12 months, which now includes that I got to trim, a W.R. and beginning in Q3.
Acquisition that often look like.
We look forward to sharing more information about our long term strategy for growth at our virtual Investor Conference. The Lightstream on August four participant we'll hear more about the value our software connected system, our market opportunities by industry and our long term financial model to registered leave that that and I got palm flashing out.
With that I'll now turn call over to Chief Executive Officer, Eric Starkloff.
Like humorous and good afternoon, I really appreciate everyone joining us today and hope you in your families are safe and well.
First I'll provide context for a long term strategy as well as commentary on second quarter results before handing it over to care and for the financial update.
As a cobot 19 pandemic and its economic effects continue globally, our priorities remain consistent the safety of our employees supporting our customers and executing to our long term strategy.
So we will remain diligent in managing expenses through the second half of 2020, we will also continue executing on strategic investments to enable our growth ambitions I.
I continue to be impressed that the ability of our employees to adapt together, we have exceeded our expectations for the level of productivity achievable in this tough environment. Our operational continuity ensured we were able to meet customer demand in the quarter and we continue to ensure direct communication and interactions with customers and employees to stay can.
Acted and engaged even though most of us are physically apart.
In a time of economic uncertainty the core strengths of and I are clear our highly differentiated sulfur position the diversity of our business and the innovation and commitment of our people.
We have navigated tough times before and today I believe we're in an even stronger position structurally I also believe we were at a stronger position strategically with a focus on the parts of the market, where our customers continue to invest.
And my first few months the CEO I've spoken often about Annise leadership position in software and how we plan to build on our position in the market by creating new kinds of software that are needed by today's engineers and enterprises, we intend to grow our software capability alongside our customers changing needs by bringing together comp.
Sep subsystems and data management connectivity to design artificial intelligence and machine learning to ultimately enhance the way our customers design and test their products.
Our growth strategy is built on for strategic pillars software systems services and streamlining customer interactions. This means broadening our software to meet enterprise level needs.
Assisting to accelerate customer time to market through more system level capabilities.
Providing our customers with differentiated services.
And making it easier and more efficient to do business with an eye by streamlining our processes I'll share more detail on each of these next week at our virtual Investor Conference.
In Q2, there have been a few developments in pursuit of our growth strategy I'd like to share.
First we launched a new corporate identity.
This is much more than a logo chains or fresh new color. It is about standing out in a market and stronger positioning of our software differentiation in areas of data analytics cloud and AI to modernize our category.
We are again focused on disrupting our market elevating the need for test and the critical role of engineers. This is captured in our refined purpose to engineer ambitiously.
Second we acquired optimal plus we believe the addition of data analytics capabilities from optimal plus will enable us to accelerate our growth strategy by increasing enterprise level value for our customers through software.
Combined with our organic investments in product such as system link, we're doubling down on enterprise level capabilities with the goal of increasing our served available market and opportunity for future recurring revenue.
And third I made a change to my leadership team.
I have asked Carla Panera sublet to lead the portfolio business. In addition to our current role as CMO.
Carlos extensive marketing and sales experience from organizations, including Rackspace and Dell provide the right expertise and outside in perspective to assess and support the needs of this critical part of our business.
We'll hear from Carla and our other general managers about their strategies for growth at the virtual Investor Conference.
Now turning to our results in Q2.
We have learned a lot and this time of Kobin 19, the business impact we're experiencing at this point is less about the remote working environment and more about managing in a weakened economic environment.
In Q2, there was a level of caution in spending across our broad based business with a year over year decline in orders under $20000.
Orders over $20000, which we believe tend to correlate to more business critical investments of our customers continued to grow.
For the first half of 2020, both organic revenue and organic orders were down 3% year over year, which we believe demonstrates the resiliency and strength of our business in a tough economic environment.
Software also followed the trend of our overall business in Q2.
While total active software seats were down we saw growth and the number of enterprise agreements up 6% year over year. This is indicative of our continued focus to provide enterprise level value and to increase software adoption at our largest customers.
Turning to industry result.
On an organic basis semiconductor orders were up high single digits year over year in Q2 and up double digits for the first half.
We have seen continued success from the deployment of Eni Fiveg testing systems, driven by infrastructure build outs around the world.
We're also seeing strengthen our automated validation systems as customers, providing chips for handsets are preparing for additional fiveg rollouts.
For Aerospace defense and government orders were up double digits year over year. In Q2 ended the first half and what has continued to be a relatively steady spending environment, particularly in the us in Q2 orders for transportation weaken further down double digits year over year as the headwind in automobile.
Production continues though we did continue to see growth in our business in areas of focus such as active safety systems.
In Q2, we also released the easy you test system, which is an iceberg system level offering targeting production test and transportation.
Orders in our portfolio business were also down double digits year over year in Q2 due to macro impact from Kobin 19, and the week in global economy as reflected in the continued weakness of the global purchasing managers index in Q2.
Overall I'm pleased with how we're navigating through the current economic environment in both Q2 and through the first half of 2020.
Now I'll turn the call over to Chief Financial Officer, Karen wrap before closing with a few comments thanks Eric.
We closed the second quarter with revenue of $301 million down 10% year over year and within our expected range shared on June nine.
Organically revenue was down 8% year over year.
In Q2 organic orders were down 6% year over year.
Our orders under $20000 were down 21% year over year economic weakness reflected in these orders was partially offset by strength in organic orders over $20000, which were up 4% year over year.
We believe this is indicative of success and our strategy as customers continue to invest in critical projects aligned to our industry focus.
In the Americas organic orders were up 1% year over year.
EMEA was down 23% year over year, and Asia Pac was flat year over year.
We previously included net sales attributable to our operations in India within the EMEA region and the second quarter of 2020, we began including these amounts within APAC geographic region Cariflex recent changes within our organizational structure.
This change has been reflected in the year over year comparisons and historical revenue data in the new reporting structure is available on our website.
India currently represent approximately 2% of our total orders.
Non-GAAP gross margin in Q2 was 74% down approximately 300 basis points year over year.
Approximately 50 basis points of this decline was related to the divestiture of our ADW our software business.
Approximately 100 basis points is due to an operational change in our services costs that has no impact on operating margin.
Services has been an accretive growth area for us and we will continue to focus on monetizing the services, we provide and leveraging our services expertise to drive high value system sales.
The remaining year over year change and non-GAAP gross margin is due to temporary fluctuations in the quarter, which include approximately 80 basis points or $2.5 million of additional costs due to covert 19.
Non-GAAP operating margin in Q2 was 14%.
The company reported Q2, GAAP net income of $11 million and diluted earnings per share of eight cents per share Q2, non-GAAP net income was $34 million and non-GAAP diluted earnings per share was 26 cents per share which is at the midpoint of our guidance.
Our balance sheet remains strong we ended the quarter with $678 million in cash restricted cash and investments, which included $90 million received under our borrowing arrangements that were used to partially fund our acquisition of optimal plus as announced on July six.
In Q2, our cash flow from operations was $58 million, representing 19% of revenue.
Our capital allocation priorities remain clear and unchanged we plan to continue to invest in innovation and technology in order to stay ahead of the needs of our customers and deliver a world class customer experience.
Dividends remain a priority in Q2, we paid $34 million in dividends, the and I Board of directors approved the dividend of 26 cents per share payable on September eight 2020 to stockholders of record on August 17th 21.
We will continue to be opportunistic share repurchase this quarter, we returned $17 million to shareholders through repurchases of 503000 shares of our common stock at an average price of $34, an eight cents per share.
We view, our strong cash position as a way to not only provide returns to our shareholders through dividends and opportunistic share repurchase, but also for strategic investments in our future for long term growth and stability over.
Over the last few years, our M&A funnel has been focused on identifying expertise and technology as strategic accelerators to achieve our growth targets faster the acquisition of optimal plus is now complete and consistent with our M&A methodology and our commitment to shareholder value.
For the third quarter 2020, we remain cautious and expanded our revenue guidance range slightly we currently expect GAAP revenue to be in the range of $283 million to $323 million, which includes approximately $2 million for optimal plus.
We expect total non-GAAP revenue to be in the range of $285 million to $325 million, which includes approximately $4 million for optimal plus.
We expect GAAP fully diluted earning per share to the in the range of minus nine cents to five cents for Q3 with non-GAAP fully diluted earnings per share expected to be in the range of 14 cents 28 cents.
Sequentially at the midpoint of our guidance, we estimate our non-GAAP earnings per share to be relatively flat from an organic standpoint with approximately four to five cents of dilution from optimal plus and integration costs.
Our outlook for the second half performance for optimal plus is in line with our original expectations. However, it is our intent to standardize our enterprise software contract terms as we integrate optimal plus into Eni, which will have an impact on the timing of revenue recognition.
We're estimating optimal plus.
GAAP revenue in Q4 to be in the range of $9 million to $12 million.
We remain dedicated to serving our customers in China, a region to focus for Eni also complying with relevant export regulations.
Looking at the combined trade regulations and current geopolitical landscape, we anticipate a negative revenue impact of about 3% in the second half of 2020, which is built into our Q3 guidance.
Our goal is to focus on our profitability, while maintaining our capacity to accelerate our growth in the future.
In the second quarter, our non-GAAP operating expenses were down $22 million as compared to the same quarter last year.
The sale of our HIV, our business reduced non-GAAP expenses by $6 million year over year, and the operational change related to services reduced operating expenses $2.5 million.
For Q3, we are currently estimating the sequential increase of approximately 6% to 7% in total non-GAAP operating expenses driven primarily by the acquisition of optimal plus.
To proactively manage expenses and profitability for the second half we have created a model that assumes a scenario of minus 5% non-GAAP revenue for 2020, we believe we have a path to 15% non-GAAP operating income at from minus 5% revenue, which includes optimal plus.
In summary, we delivered results in line with guidance shared on June nine despite the current economic uncertainty. This is a testament to the hard work and adaptability of all our employees globally I.
I believe this is also indicative of the stability provided by our broad customer base and industry diversity the value customers see in our innovative platform and the strength of our operational efficiency.
In 2020, we plan to preserve strategic investments for our long term growth ambitions, well also executing strong expense management across our business in the short term.
I believe we're well positioned for opportunity and our strong balance sheet puts us in a position of strength.
Now I'd like to turn the call back over to Eric for some closing comments.
Thank you Karen.
Economic uncertainty remains I am confident in our strategy I'm proud of the resiliency and adaptability of our employees in a challenging economic environment, our proven ability to navigate tough times gives me confidence that we can maintain stability in the short term, while staying focused on the critical investments for our future we in our new decade of business what they renew.
Our focus on innovation sustainable growth and profitability and the leadership team aligned to our growth strategy. We believe we have the opportunity to once again modernized and disrupt our industry as we did decades ago building on our unique software position.
We're focused on the combination of long term growth and our ability to drive scale and leverage to deliver sustainable returns to our shareholders.
With that we will now take your questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound.
Our first question comes from Richard Eastman with Baird. Your line is open.
Yes.
Couple of questions. Thank you thanks for the questions.
Could you just walk through the.
There's quite a dispersion here between the second quarter organic order growth rate decline here.
Maybe just kind of walk through the puts and takes around orders Americas.
EMEA Im Im assuming EMEA has the adjustment for Indiana.
But maybe you could just kind of walk through this some and we go from plus one the flat to.
Down 23, just kind of looking for some color there.
Yes, I can take that Rick good to hear from you. Yes. So first of all the as Karen mentioned to prevailed remarks, the comparisons year over year apples to apples in other words were.
Factoring out the India change in the history as well we closed these numbers certainly.
As you mentioned the weakness is most pronounced in may ask so that was.
Persistently.
We kind of aligned with both general economic indicators that you would sort of expect right now you're seeing out of out of Europe as well as the industry exposure.
Being a disproportionate amount of our transportation business in that space. So that was the area that that had the weakest performance in the quarter and I think thats consistent with what we what we've seen in the markets regionally and by industry.
And is that did they also have a.
Exposure more to the portfolio products PC your business I mean, that's just transportation, but portfolio products, yes. They have.
Exposure to transportation and portfolio at a disproportionate rate. If you think it a broad set of our business 80, GE has the largest percentage in Americas and semiconductor correlates a bit more with Asia. So yes that statement is correct Rick Okay. And then just a quick question, maybe maybe some clarification ones from current just when you gave.
Your with your third quarter revenue guidance here, so youre, including optimal plus revenue of just a couple million bucks in the second quarter, even though that acquisition will have closed.
Sorry, no thats, the third quarter right, So I'm, sorry, I'm, sorry third yes.
Correct.
Okay and why is there why why the deferral upfront like that if you're if you're if you're talking about.
Fourth quarter, I think you mentioned 10 to 12 million, which would be more of kind of run rate.
I would think for Rev Rec, an optimal plush, but why yes, okay.
Yes, it's nine to 12 is the range, we provided for fourth quarter for optimal plus where we're still going through the contract assessment as we do the integration work here in our intent is to align optimal plus with the standard terms and conditions that national instruments has used historically for our enterprise agreements.
And subscription based software and as we do that there's some purchase price accounting implications that drive that GAAP to non-GAAP difference.
But also theres a lumpiness that comes with the with the optimal plus business.
That we believe as we align the contract terms more consistently with and I will help smooth that out going forward and that's that's a piece of what you're seeing there traditionally Q4 would have been.
Strong quarter for optimal plus and we believe that with some of this moving we may do.
That that may push into a little bit of next year as well.
So so if I were to get at a core non optimal plus revenue guide for Q3.
Are we looking at like to 83.
Two 323.
So the midpoint of our guidance is three or five for Q3 that includes the optimal plus numbers. So if you pull out optimal plus it'd be relatively consistent with Q2.
Which is in line with our our previous organic.
Seasonality with Q2 in Q3, both being relatively flat.
Okay.
Okay.
Alright, let me and just one more question around the head count what was that was the head count at the end of the second quarter.
Yes. It was flat to Q1, we're seeing that we're seeing our ability to retain our employees at this point. Okay. So just a lower so 7000, okay. Yes, just over seven does exactly I got you okay.
Okay, I'll I'll hop back in the queue, if any to thank you.
Hey trigger.
Thank you and our next question comes from the line of John.
Stifel. Your line is open.
Hi, Thanks, very much can I just wanted to go back to the comments that you made about the expected 3% hit to revenue in the second half for China was wondering if you could just give us some sense of how much China is either within APAC or overall as a percent of total revenue and just a little bit more color. There is it a situation where.
There will be comes in some of the restriction thats being placed on customers are actually unable to ship to certain customers is that more of a demand outlook because customers aren't able to get your other pieces of business that they need I'm just curious if theres, a particular vertical or something in particular that we should be looking out for here with you in relation to that.
End of business.
Sure Yeah.
Nice to hear from China represents about half of our Asia business still pretty consistently around that level.
The impact that we're seeing related to the changes that are coming with the regulations tend to impact our semiconductor business, an aerospace defense in government, most heavily and as I said it'll be about 3% of our revenue for the second half in that split pretty evenly across both Q3 and Q4.
It's a it's a more of a factor of.
The customers were able to sell to.
Going forward and that's what's limiting the opportunities there.
Do you want to add yet John is happening you. Let me just had a little bit color. John you can ask another but as we think a little bit longer term. So yeah thats. We've quantified what we think the impact is by those couple of different changes and trade regulation at clearly as we think longer term. There are steps that we're taking to mitigate that in terms of where we're focusing our sales teams to make sure that.
We're aligned obviously to the places where we can have the most opportunity within that regulation and and it also aligned to the companies that might actually be on the beneficial side some of that regulation. So we do view that sort of.
Moderating overtime as we reprioritize, but in the short term.
We believe it has that that level of impact.
Just following up on that point there Eric if you think out longer term do you think.
This would potentially impact the ability to.
Have a big presence in short of China's goal of becoming somewhat more in depended on the semiconductor side of me.
Again, given everything you administration is clearly laid out in terms of limiting some of that ability in China stated goals are becoming more independent obviously test is a big part of that just curious how you think about that opportunity over the longer term.
Yes, yes sure that's the Big question, John I mean look it's been a real dynamic environment, certainly from sort of trade regulation everything else, but I will say that.
There are challenges and opportunities to get presented from that if you think about semiconductor for example, there certainly.
Things that are being put in that are more restrictive theres also significant investments locally in semiconductor technology of which that creates opportunity for us with startups more startups doing semiconductor.
Let me testing solutions for that so that's still a significant market for us. It's an area of focus obviously will will.
Work within the trade regime and.
The loss that we have but but these these opportunities exist as well from some of the local investments that are happening in areas like semiconductor.
Got it and then I can just as one last question there relative to where you will with customers maybe three months ago. You do you get a sense as you're talking to allow them that there is more on certain now than maybe they even were three months ago, mainly I guess from an economic standpoint, as we've seen the.
The impact of this now a little bit more globally, you've gotten a full quarter of the sort of full pandemic impact on the business for your customers.
When you're talking with those customers are they more cautious now than they were three months ago I'm just curious to get your view of how your customers are behaving right now.
Yes, sure I'll give you two perspectives on at one and I mentioned, it's a little bit into remarks, but certainly the uncertainty related to the working environment and then work from home and all of that kind of stuff I think people have gotten a little more settled in on that.
And realize that we could actually be quite effective when I look at things like we measure customer interactions through virtual visits and all of that and those have stayed really stable and we feel really good about our ability to connect to customers and so I think that part has become sort of much lower it on certainly as we realize pay the technology works.
Well to sustain our businesses and work with each other and everything else.
I think on the economic side.
David.
If I compare uncertainty I think uncertainty is probably higher a few months ago. When this thing was still happening and we didnt know, but it's certainly become clearer that theres, an economic headwind that there is a global industrial recession.
And I think thats.
Certainly reflected in our experience is the commentary we gave another 20, K orders and our and our guidance and so.
That's that's how we're seeing it right now.
Got it thank you.
Thank you.
Thank you.
Comes from.
Line.
Hi.
Your line is open.
Hi, guys. This is actually Joe credence on first on that.
Just for my first question I, just wanted to see if we could double click on the order trends towards the ended the quarter because any particular, if we kind of bifurcated by end market. How did the order trends kind of compare like in transportation are you guys starting to see that end market recovery.
And as well as the other ones. Thank you.
Hi, Joe its its Karen.
Maybe just a high level picture on this we gave a we gave guidance on on June 9th and and.
So that the toward the end of June came in a little weaker than we were expecting and part of that switch leading to some of the caution that we're seeing for Q3.
So.
Hey.
You know across the board really is is how that came in there wasn't any one thing to point to specifically from that standpoint other than maybe kind of just this broad base weakness that we tried to point to in call out with the under 20 K orders that we saw.
Seems to be where where that was that hit the heaviest.
Got it and then kind of just changing gears here, our last quarter, you kind of commented around your expectations around.
The five gig grant.
Or the Fiveg ramp and you kind of bifurcated your expectations around sub six and millimeter wave and kind of called out the potential there being a delay with millimeter wave can you just get an update on your thoughts.
Where do you guys I can take yeah sure drug take that and I gave a little bit of commentary on another another sort of drill down on that which is sort of the infrastructure versus the handset. So we've seen as we've commented in the last few quarters a lot of a lot of strengthen our semiconductor business from Fiveg infrastructure roll out both in validation and production.
We we sort of expect us to moderate a little bit and then I commented on some of the early validation wins that are related more to chipsets that are going into handsets. So we see that as a advantageous cycle.
Coming up because of course validation to the proceeds production in those kind of.
And the flow of a design.
The commentary that I made last quarter on millimeter wave would still be the same position that we have which is that thats sort of shifted out over the last few quarters and we now view that as an opportunity that exists probably in more substantive.
Magnitude in the early part of next year.
And so yes, so thats kind of how we view that timing now I will say also that.
Semiconductor overall I mentioned fiveg through the first half has been the growth driver has been one of the things that contributed to that double digit order growth that I mentioned.
And and it's offset a places whether theres. Some weakness you certainly look at some of the bellwethers in semiconductor and you see some some strength that you see a lot of the.
Sort of mixed signal players with negative result, so we've been able to.
Overcome some of that headwind with some of the strength in these fiveg deployments are chips relates to those.
Got it. Thank you that was really helpful. Thanks, guys. Thanks for your questions.
Okay.
Our next question comes.
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Thank you. So thanks for taking my question one follow up regarding China.
I just look at the impact 3% to the top line for this.
That's it.
Offsetting incremental.
Sure.
And in that context is a watch.
So the optimal close.
Okay.
Okay.
Yes, Matt a sorry you.
You broke up and I don't know if we could I didn't quite get your whole your hold question.
Okay, Let me.
Yes, hi, guys quickly repeat if I want to take your commentary regarding China.
8% hair cut to the topline for the second half that could be almost offset by incremental contribution from optimal plus.
Is it fair statement.
Yes, that's it's pretty close that that's pretty fair, yes, Okay. And then if your opex is going up by 6% to 7% because with the acquisition.
How does it trend for into Q4.
Go flat or.
How should I think but.
Yes, it stays relatively flat, it's a it's a pretty consistent spend it fluctuates.
With with feature demand.
Okay, Alright, and then just a one funny regarding the order trend.
North America was relatively a stronger than.
Hey pack.
But I'm just.
Surprise because.
Hey, APAC actually.
Turn on before North America. So is it is there like a catch up.
With.
More than $20000 orders associated with.
We depend topic apolitical is it just.
It's just that's just the with customers on a placing orders for these large orders.
Yes, do you mean, you mean because of the timing of the effect from the virus is that what you're referring to me, yes, yes, yes.
Yes, I think there's multiple factors at play I mean, certainly.
Yes, I think thats true in terms of the timing of the impact of the virus as I said before though I think the bigger impact at this point is really the economic effects of the sort of more interconnected global economy I.
I think if you look at the Americas.
Certainly there's things that create economic headwinds the strength in 80 GE as I mentioned in one of the earlier question sort of helps the business there and in the Americas, because it sort of disproportionate.
Disproportionately represented in our Americas region, so that contributed some strength that offset some of the other other.
Headwinds I think the order trends from the over and under 20, K, that's actually been fairly consistent regionally and it's been consistent for several quarters now in fact, I think thats been really an area of strength of the strategy is that weve of course been deliberately shifting.
Our portfolio of capability at our customer interactions to these more these higher dollar systems and it's been our experience that those tend to correlate to more critical investments that they're making in their companies and they preserve those critical investments more so when they are under pressure than some of the lower dollar.
The things, which might be a bit more discretionary so the fact that thats held up multiple quarters.
Multiple regions has been an area of strength.
Sure.
If I may just one quick follow up.
You you referenced validation as it relates to millimeters mitigated a wave smartphone some of your peers have also discussed validation in terms of.
Justin level a system level validation are they.
Characterization. The same are we just.
Begin.
Finalizing this was its outages for smartphone and for minimum innovate application before particularly into high volume manufacturing.
Sure, Yes, maybe my comments were actually broader than that but I was talking about validation on chipsets for handsets was it still primarily sub six gig still a fairly small amount of millimeter wave. So I just think broadly speaking what I'm, referring to is is the natural timing that happens in waves of infrastructure then wave.
As of handsets, and then a wave of millimeter wave infrastructure and handsets, which we view being in next in next year.
Thank you so much sure thanks Buddy.
Thank you. Our next question comes from the line of Michael Murray with RBC capital markets. Your line is open.
Hi, This is Michael Murray on for Robert Moeller I wanted to see if you could give us a little bit more infill on your transportation segment of the aid us in electrification segments hold up as well as you previously home.
Compared to the overall auto market.
Yes, Michael Varick, so the combination of those two it's still grown I mentioned in the prepared remarks, the biggest strength we saw was actually in the.
Active safety will aid asked an active safety or synonymous in this case and so those are the areas we're focused on.
And that active safety area in particular has been the fastest growing when you just look at.
Narrow into that to the quarter, when I think a little bit longer term, both those areas or areas of strength and as we said in the past its really.
Our strategy. There is is really getting more focus on these areas that remain critical investments to our customer in light of the fact that other parts of that business are tending to follow more of the general.
Transportation industry, which is under headwinds at least has been for the last few quarters.
Okay, and just a follow up question and I'm, sorry, if you touched on this earlier, but.
Do you have any feedback on how your rebranding has been received.
Any increase site traffic or feedback from portfolio customers.
Thank you.
Yeah sure. Thanks, Michael Yes, early obviously I mean, we do see.
Actually some pretty significant increases and things like site traffic and response to some of the.
Actual assets an advertising that we've been doing so I'd say that early response is positive anecdotally and of course through data because as a measurement company, we measure the heck out all this stuff.
So yes, it's early but the results so far have been have been quite positive.
Alright, thank you.
Sure.
Thank you and I'm not showing any further questions at this time I'd now like to turn the call back.
For any further remarks.
Okay. Thank you everyone for joining today, we hope to see you next week at our virtual Investor Conference have a good day.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a great.
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