Q1 2021 Cirrus Logic Inc Earnings Call

[music].

Ladies and gentlemen, thank you were standing by and welcome to the Cirrus logic first quarter fiscal year 2021 financial results Q in a fashion.

At this time all participants are in a listen only mode.

Three restatement, we will open up the call for questions from analysts instructions for queuing got will be provided at that time.

As a reminder, this conference call has been recorded for replay purposes.

No I could turn the conference call over to Mr. Berman case, Chief financial adviser. Mr. Case, you may begin.

Thank you and good afternoon, joining me on today's call is Jason, Rhode Cirrus Logics, Chief Executive Officer.

John Foresight, the company's President and Chelsea Heffernan, our director of Investor Relations.

Today, we announced our financial result for the first quarter fiscal year 2021 at approximately four for you the shareholder letter discussing our financial results. The earnings press release, including a reconciliation of non-GAAP financial information to the most directly comparable GAAP information.

Along with the webcast of this Q in a session are all available at the Companys Investor Relations website at Investor Dot Cirrus Dotcom.

This call will feature questions from the analysts covering our company as well as questions submitted via email at Investor Dot relations at Sirius Dot com.

Please note the during this session, we may make projections and other forward looking statements that are subject subject to risk and uncertainties that may cause actual results to differ materially from projections.

Providing this information the company expressly disclaims any obligation to update or ruminant, whether as a result of new developments or otherwise.

Please refer to the press release and shareholder letter issued today, which are available on Cirrus logic website, and the latest form 10-K, and 10-Q as well as other corporate filings made with the security and Exchange Commission for additional discussion of risk factors that could cause actual results to differ material materially from current expectation.

Now turning it over to Jason.

Thank you gentlemen.

Before we begin taking questions I'll provide a brief update on cobot 19, and then I will turn the call over to John for comments on the quarter.

I'm doing this call remotely and not with the rest of the team currently well I don't expect to have any technical technical issues should there be any you'll be in good hands with John on the rest of the team.

For a detailed account of our financial results. Please read the shareholder letter posted on our Investor Relations website.

The study of our employees working remotely due to the cold with 19.

I continue to be impressed with how well our employees have adapted to this new environment.

That's the organization, they're doing a great job remaining highly productive and ensuring we continue to operate efficiently.

During the efforts and our supply chain continued to meet production schedules.

We have established enhance protocols to ensure the safety and well being of our employees, while maintaining business continuity and continuing to provide outstanding support to our customers.

I'll now turn the call over to John for comments on our results.

Thank you Jason.

Cirrus logic delivered Q1 F by 21 revenue of $242.6 million as we experienced robust demand for certain products shipping and tablets and smartphones.

During the quarter customer engagements and design activity were encouraging across new and existing product categories.

As we've noted previously our expectation is that in addition to building on our strong position in smartphones over the next year, we will continue to gain momentum in non mobile phone applications, particularly in those devices that require compact component to deliver a premium user experience, while minimizing power consumption.

The company has a number of innovative products expected to tape out this quarter and sample with our customers over the next year when combined with a robust roadmaps that we'll continue to strengthen our portfolio of products in audio voice and other mixed signal domains, we remain optimistic about the company's future.

Before we begin the Q and I I would also like to note that while we understand there is intense interest related to our largest customer in accordance with our policy, we do not discuss discuss specifics about our business relationship.

Operator, we're now ready to take questions.

And at this time to buy back for questions that star followed by the number one on your telephone keypad.

Start falling <unk> number one.

And our first question comes from Matt Ramsay with Cowen.

Yes. Thank you good afternoon.

I don't know if this is for Jason our John how much of our I saw in the shareholder letter. Some some comments that you guys.

Hinted at or Doug, putting their about and new power conversion or power management I see that that you're working on him and our thinking about taping out here in the in pretty near term I Wonder if you might step back and talk about that is I mean, you've hinted plenty of times and add new applications outside of the audio domain and.

Imagine this is one of those examples of does any details you could give there or I know Chelsea and the team have also update at some of the Tam slides in the last couple of quarters. If if theres any comments about how that Tam for that type of product might be that'd be really helpful. Thank you.

Yes, Matt. Thank you I'll I'll take that yeah, Yeah, we've talked about a this opportunity in particular as being towards the back end of next calendar year. So there's a lot lot of time to go between now and then and obviously, we don't want to get too far over our skis regarding the opportunity.

So durable IP related.

To power and battery.

[noise] stuff through August and we believe there are ways of leverage.

During some of that IP and some of the innovations that we've developed in that space.

Into.

Non traditional segments for AWS relating to to power.

We don't want to say too much more about that right now, but we certainly believe that this is a very exciting opportunity for us in keeping with a lot of the the opportunities that we we discussed we regard the the first market entry of this is being very much a first step of erode, where we will seek to continue to grow the value of the product in the segment over time.

Yes.

And the the long term outlook for that is is reflected in the.

Other adjacent opportunities that we've highlighted 10 materials in the uptick.

Okay to investor deck.

Got it thanks, John I.

Appreciate the sensitivity on the road map stuff I guess as my follow up question more in the immediate term, there's obviously challenges with walk away and shipping to them and I'm, what's going on with their smartphone business, but.

At least in the first two wag of putting together the model the Android business.

In that in the June quarter was down pretty materially.

Are there things to read into that other than walk away and maybe you could just.

Let's talk about the the forward outlook for them for the non Apple smartphone business and how you think that might trend in the next few quarters. Thank you.

Ah Yes, that's a good question I think I think there were layers of complexity and concerning factors that frankly make it pretty difficult to tell what signal in watts noise for sure.

Yes, it as you know from previous discussions we.

Fell away we're obviously.

Still able to to execute on some of that where we where we had a licensing where we were shipping stuff already but it does it does create a headwind.

More broadly I think.

What we've seen over the past few months is that a is that large chunks of the Android space of have suffered the turbulence.

In the public 19.

Environment and in part that's a reflection of just the progressive locked down around different buckets, I think that some of the Android vendors have all.

Okay.

Distribution channels that they don't they don't control has made them, maybe a little bit more susceptible. So there's there's been a fair amount of buffeting, though.

But on the back of that.

I think a fair amount of that stuff will hopefully hopefully be behind us.

As we go into the next few quarters.

We continue to to feel upbeat and very positive about the story and the momentum that that we have rob off boosted amplifiers in particular and haptics drivers within the Android community.

And I would yeah I would just chime in the add to what John said, the you know, there's there's definitely a plus and minus to that because while the Android.

Well the Android side of the customer base is clearly had some challenges I think a fair amount of that likely resulted in some of the strength that are.

Building on Android handset business enjoyed as well, which.

Overall is then that positive for school, it's obviously significantly larger not a contract for us there.

Thanks, guys appreciate it.

In our next question comes from Rod you Gill with Needham and company to get for taking my questions.

A question on the traction in haptics the demand for haptics has been kind of driven by increased demand for waterproof devices increased screen space [laughter], replacing these mechanical button I'm wondering I'm kind of what you think is the kind of the next generation.

Kind of products related to haptics.

And how do we think haptics as a percentage of revenue or in terms of a a have a major.

Well in terms of the next generation products, you kind of hits on a theme that has yet to to run its course in Android I think we've seen.

Our in smartphones I should say in general.

I think we've seen a lot of interest from Oems in button replacement to the point is reducing the phone to a kind of fully sealed playing a plus.

Just a lot of problems to be solved too to get to get to that and to build a really good user experience around it.

As the technologies to haptics and virtual buttons are being incorporated into more handsets were also seeing or drivers.

For the user experience such as gaming.

The kind of dynamic controls, which can which can enrich the gaming experience and so I think beyond smartphones, we certainly see a plenty of opportunity and in other segments, where we were traditionally or not.

Maybe not so well penetrated in but we have we have talked about without Oh haptics technology, we've seen growth in haptics opportunities and haptics.

Drivers for virtual buttons in the automotive space and the PC space and ER and possibly in the longer term in the in the VR and they all space as well there was a clearly very speculative when it when it comes to.

You know what the what the market size can be.

So regarding regarding our view on the haptics damn again I'd refer you to the Investor presentation, where we we break that out.

Thank you for that and just switching gears to the opportunity in the headset space, you've made significant inroads into wired and wireless digital head space headset space.

There's a pretty good dominant technology there.

I'm wondering how you look at that market as you kind of move forward to calendar 21, when do we expect kind of layering in and see technology as a way to increase dollar content and as well as a way to kind of bolster the competitive differentiation in the digital headset space.

Yeah. That's a great question is is the segment we've been a really excited by it I think I think all the all the key products launched in that space have tended to outstripped, our customers' expectations for demand and it's just even though the numbers initially being fairly small the the direction of travel is is really compelling.

So in some of the products that we'd be then there was it a we'd be where.

They were maybe not even initially designed for that category of truly wireless headset device, obviously, we are investing and developing technologies vice.

No.

The back end of last year, obviously, we we had to amplify launch and truly wireless device.

And mentioned in the shareholder letter.

But this quarter, we have begun to sampling.

Our new next generation Kodak for truly wireless ear buds, which incorporates.

Hybrid AMC technologies.

So that puts us on a timeline, where you would expect you've got some customers hands now.

Over the next calendar year, you're going to see products come to market.

[noise] touchwood, incorporating a and C technology into that category device.

And just last question Thurman on the gross margin, it's kind of dipping down about 60 basis points sequentially or the guide is just wondering what the with the reasons for that thank you.

[noise] well, we see a lot of puts and takes with gross margins. So.

For any given quarter or we can see.

Certain products at Macy's normal ASP erosion, so and you have certain levels of absorption based on.

ARX, our levels of expanse and our levels of profit and we we give our range of 51 to 53, but.

We would expect that generally to be closer to 52 on most quarters are in that range, although we've been outperform.

This level, but there was nothing anything Verizon that made that had that there.

And our next question comes from tore Svanberg Stifel.

Yes. Thank you first question, perhaps on seasonality seasonality or even linear already so your your largest customer had open they talked about.

There were delays this year.

How does that really impact serious from that from a timing of shipments perspective.

Well, Thanks, I would say, obviously, we don't want to get into.

Details related to our customers launches that's factored into our guidance.

The September to December quarter transition is obviously always really tricky to call and.

Our job is just make sure we put parts on our our customers doctors or their contract manufacturers docs when they need them.

So we don't always know fact, we never know exactly what the launch date or the availability date will be until the rest of the world. Those so that's that's really something that the customer base takes care of Boston and we just try to make sure to execute on what exactly they're doing.

That said nothing pretty reasonably strong guide relative to expectations so things.

I think largely appear to be consistent with what else has been said publicly by my folks that are a little closer to their own launches.

Very good and they did this is just my perception been reading your shareholder letter or your.

Really emphasizing more tablets and notebooks that what you have historically has had to work from home environment.

Sort of reawaken those opportunities are and are you starting to see more content opportunities there than perhaps historically.

To a degree I would say that.

What we are discussing there was whereas for sure part of a part of our strategy prior to the transition of large parts of humanity to working from home.

But you know amongst our customer base, there's certainly been renewed interest in those segments as well.

But but for sure I mean, there there is spaces, where if you look at our.

Boosted amplifier.

Share on progress in Android you can see that we're in a great deal a great and number of the sockets that matter at this point and enhance when we look at how we continue to grow and drive growth, it's probably about enhancing those products and continuing to win the sockets account in the smartphone space.

But also is very much being about how we broaden leverage those those IP investments and broaden our.

Our range of targets to other markets. So tablets were official part of that we've mentioned notebooks as well and then of course wearables in here Bulls or the other kind of primary categories, which which we believe our IP investments are highly relevant to.

Great. Thank you.

Thank you sorry.

Your next question comes from Charlie Anderson with Colliers security.

Yes, thanks for taking my questions I want to start just to go back to the new product the power control.

I Wonder if you first speak if it's that the merchant product or a more of a custom product and then secondarily.

Can you expand into some new.

Capability here I Wonder if you could maybe just give us some framework for thinking about as you continue to move into that.

Larger portion the mixed signal market.

What are the some of the areas where you bring something that's unique that's not served by the larger portion by that you're not serving today I'll follow up.

All right, Yeah, I'll take the first bit of that and John can chime in if you.

Thanks anything I missed.

We've got a good track record of migrating our technology, taking core bits of what we've done that that's field added Joe you want to go after a new market with existing technology or an existing market with new technology, but try to stay out of the new new and.

The last handful years, you've seen us take existing technology or things that are related to it migrated into new areas and a this is another one of those.

This is another one of those so it is a custom device. So for obvious reasons, you don't want to get into a whole lot of detail about exactly what and on why but we we think it's actually are really critical new capability that you.

You know how broadly, it's it's necessary or desired.

Remains to be seen but the the current target for it. We think is is really substantial and it's a significant a significant opportunity. It's a lot of lot of folks that we've got working on it. It was very fortunate that we were able to redirect a lot of the Mems resources to go tackle. This because this is significantly bigger and sooner than the Mems with a likelihood Ben.

So it's you know among the bigger opportunities that we've ever targeted that Weve. You know that are kind of standalone type make new things squarely in our wheel house.

It really existing investments that we've had historically and amps and haptics and other areas, which have quite a lot of power.

Capabilities from us kind of in a standalone sensor, we positioned us well to should be the right right folks to bring our signal processing expertise into this more.

More power oriented opportunities. So what we can say about that but it is it is right that John and Carl the team has that.

Good to hone in on of.

There are in handsets assets.

So we would we would love to have a bunch of markets that are bigger handsets up there, but that's the only thing I'm aware of that everybody bye.

How many units of every year. So let's go look at other areas that mixed signal that are mixed signal and signal processing capabilities can it can really bring to bear on the handset market in other areas that are that are outside body or voice, well, obviously not letting our traditional areas of strength.

So we're really excited about we'd love to give you a whole lot more detail, but that'll have to be all good time.

Okay, great. Thank you for all the color then Thurman I follow up question for you I think inventory was pretty decent spike year over year in sequentially and then you measured in days as well. So wonder if you can provide any color. There was there anything that was sort of cobot related or probably transition related just just.

Oh I'm trying to understand why why we're so.

Inventory balance.

Yeah. The last couple of years, a we saw inventory decrease from.

Our Q4 Q1's previous years. It was really is affected by Oh, we take we work with all of our CRE customers across the border and it's really based on what their needs and demands are.

So particular border.

We work with them on our supply chain partners to built a and b the demand schedules that we have in this case it happens to drive a significant spike, but we don't think that and from our standpoint and from our visibility we think leaving the quarter 200.

It's appropriate.

Perfect. Thanks.

Our next.

And our next question comes from Adam God Gonzales with Bank of America Security.

Hi, Thanks for taking my question. So there is some rumors out there that some of the content that you supply of your largest customer could be coming out or accessorized for lack of better term.

Can you couldn't you can comment if this were to play out do you think you'd still be in a position to sort of game content, our net content year on year with this customer.

With getting something you do opportunities you cited before thanks.

Yes, sure I'd been we're not going comp comment on our customers launch.

[noise] plans.

We we know what the scenario is there it's baked into our guidance, we'll give you guidance for the quarter.

And that's really what we're going to get into saying about that.

Got it Okay no problem and then just a second question I was just a.

Question on the Investor deck, I think you cited that your supplier to the top seven I think you had said top eight is.

Is it just a function of that Youve ship.

Good thing at the top.

Our smartphone Oems thank you.

Yeah added much into that it's.

The nature of the small Paul Mccartney Android chair of the smartphone market.

His point is that once you get passed the top five the total volumes are pretty small adding that in the context of.

The economic environment, we've seen over the past past couple of quarters that has led to.

More more designs or.

Models being pulled all canceled in those smaller players or.

Roadmaps moving around and so.

That list.

In fact I think.

Okay, the but at the bottom of the list for US one dropped off either.

This did not really anything significant that from a revenue perspective for us.

Okay, great. Thank you.

And our next question comes from Ruben Roy make smart.

Hi, Thanks for taking my question, Jason where John just following up on some of the discussion around the new products and Jason you mentioned that.

At least this this new product that you mentioned in the shareholder letter is custom in nature I'm wondering if that means that.

As we think about you know these new products, that's that you're working on.

I would assume that means that you're working with your customers on the actual functionality and if that's right is that something investors should think about as we think about competitive differentiation is the first question. Thanks.

Oh, well I guess, maybe I didn't understand exactly right, but I would say that we'd be difficult to do a custom device for a customer without having a lot of really detailed conversations with them.

And I, just we only point out the customer that is just to highlight our track record of developing and then ultimately shipping anything that is custom and specific to a customer is really or the high that's largely due to the the fact that it's a large investment by any customer in us whenever we've done a custom device. It customers I think most of our customers are pretty good about trying not to waste.

Time, but there, especially good about trying to optimize their on time. It is quite large investment. So we just highlight that it's a custom purely to to.

It's not a a satisfactory and type of product I mean, there's obviously all the risk factors and stuff that the people need to consider you know anywhere where it make it easier things do go wrong from time to time, but Ah, but at least the town the opportunity or are very real and a tightening and so forth. We've already talked about so somewhere real excited about.

Yeah. That's helpful. Jayson I I guess, that's where I was going you know I did it sounds like there is a socket available for the product. So I think that's that's something that a is important.

Just as a follow on to that as we think about the product roadmap and.

Audio versus non audio.

You know you guys have even in the shareholder talked about enhanced functionality to the boosted amps and things like that how should investors think about.

Investments.

On focused focus of investments as we think about audio versus non audio as we look ahead over the next couple of years.

Well for sure our R&D has been distributed.

More evenly between audio not Oreo as we've gone from shipping almost exclusively audio products to having a investment and and business around the haptics drivers and so on and then.

Beyond that.

Of course, we have been in development of what we referred to as a close loop controller technology.

Again in the non audio domain and and then.

For the beyond that this this opportunity that we're discussing here.

Landing in Gan being a non audio domain so.

So at this point, although we don't break out exactly what what the percentages at all but.

It's fair to say that a substantial amount of our R&D is focused on how we can.

Leverage key areas of IP and key insights we've we've had.

From existing customers existing customer engagements and product categories, and a and use them too to build a share in adjacent spaces.

Yeah, we continue to be committed to growing and a building our leadership in the in the audio space, but it's a it's become very obvious first do haptics and then through the closely controller.

So we're solving and those spaces are ones.

You are highly relevant to to our customers in.

In other parts of the system. So a with we're seeking to leverage that as best we can.

Great Thanks for that detail John.

Your next question comes from Christopher Rolland with Susquehanna International Group.

For both Jason and third.

Herman on this is the time of year when we start a tour for you know flag.

Ship phones and flagship phone launches, but you know we forget about the long term revenue story at Sirius and I was looking at one of your slides your tenure CAGR is 19% topline and over that time.

Thank you guys have actually increased customer concentration at your top customer.

So I guess my question is and this is for Jason and then Thurmond. If you have anymore specificity on top of it but what do you think for the next 10 years a CAGR could.

Be a topline CAGR odd given your relationship what you know about your roadmap.

With your your primary customer what how should we assume opportunity. Thanks.

Yeah, well I mean, you know I my Crystal ball doesn't go 10 years, and I don't know, but anyone in the semiconductor does <unk> industry does have one that does that far out I do know that.

As far as I see it we've got as good opportunities in front of front of us as we ever have.

We've executed on quite a lot of what we've said we've done in the past it's not always the case that we can predict which customers are going to win or lose but thankfully we're aligned with.

Very large array of the very best ones in the industry and so I'm pretty confident that one or more of those will continue to do extremely well.

We're excited about the opportunities over the next couple of years, there's clearly a really rich field for our technology and our IP as we migrate that out beyond audio and voice I think as soon as John answered on one of the previous questions. You know as much as work still excited about audio and voice going forward from these other areas are clearly bigger.

And more Ah well at less well served perhaps so for us. So you know I don't know how to compare.

The to the 19% CAGR over the last.

Handful years, or however, many but.

We do see great opportunities going forward and should should lead one thing after.

The other you know it's always interesting you target four or five big things and you know three of 'em turned out better get back in two of them don't turn out as well and that's kind of the nature of the based where where we are going up pretty highly competitive and technically differentiated field. So we just.

So we need to keep making sure that were eminent big game and we're going to you won't go after we won't when every single thing. We go after but we'll we'll win more than a at least Virginia to win more of them more than when we lose would be able to build the business.

Continued higher great people.

But one put brown the other and exactly what that results in in terms of CAGR often depends as much on the economy or customer success or failure than it does on on our own our own offered so anyway I think that's probably.

Probably about as much colors are you put on that with or without getting into crystal ball territory. Okay sounds good yeah, I mean to remittances to that last question Thurman I don't know if you have that for for growth from that larger cost.

We're in a in the intermediate term. The second question if you could talk about.

The just some.

Clarification on the power conversion side and control I see a you know we have Anthony traditional charging market for example, power conversions, a big market their traditional AC to DC conversion.

A you know too.

You see the AC or or or even DC to DC is that the kind of vacations chip that controls.

Power conversion.

Typical with but charging is that a is that the ballpark of what we're talking about.

Oh, well just the just to touch on I think you asked two questions in there. The first one we're not we're not going to get into speculating about or what are what kind of growth, we're going to get from our largest customer as far as power conversion I would say, there's a new application that does it not a charger, it's not not something that exists today, it's kind of a new new thing that that.

A customer thinks they're going to drives value from and Ah. It just happened to dovetail really nicely into <unk> capabilities technology IP that we already have a so it's it's.

It would be really hard to something hard to give you an appropriate clue about and get even in the universe up because it kind of doesn't exist doing that would would definitely not be.

From a customer relations chip respect.

So what kind of read out there.

Understood. Thanks, guys.

And our next question comes from Blayne Curtis.

From Barclays.

Hey, guys. Thanks, taking my question.

So it I think a record level and particularly for June so is there any one I guess.

That some of the customer assay to do and I guess as we look out throughout the year I'm just kind of curious you do have a new product night answer if it goes on the border and a modules is there anything to that we should contemplate in terms of seasonality. Obviously people are expecting later launch in your building inventory in Jan if you can walk us through that and sometimes you do comment on December I'll throw that out there.

Well.

Well, we I mean, you know as far as when things actually launch or they're available we need to be we in the in the right toward that would have been on the books by the end of June.

We don't.

Necessarily know all the details of that we need to be.

Prepared for it whether it's early or late or anything to get track record of not eat my China.

Not eating a ton of things over time, so were generally pretty comfortable especially in the face of a big ramp for an on product I'm just trying to get ahead of it you know a lot of this stuff is devices, where you really are the peak you you just flat can't do it.

Well enough capacity in the world to to do that.

That in <unk> and it really short lead time fashion. So those are things we have good detailed conversations.

The customer about so there's a lot of moving parts on inventory you know things things that are a little slower than than what they were expected things that we're just trying to get ahead of a major ramp on that.

Our little bit unpredictable whenever it's a brand new thing exactly how many they're going to sell when our customer does when I when any of our customers have a hit on their hands. It's a lot in times of case that that we can't run faster than the bear, but we want to make sure that we can at least front run faster than grandpa.

And were enough that's likely a really strong position to be able to do that with our financial strength.

So anyway I would I don't think there's anything, particularly big to see here on the inventory side of things I guess, it's for short summary.

Thanks.

Then I get a wanted to ask on Android side things well. The earlier question. The I think it's an all time low so I know there's been a lot of yeah I think so in a highlighted walk away.

But I think your your number two customer historically, you must be a fairly low levels as well. So I'm just trying to put that there's been a.

A story of adoption.

You know things like your boosted answer, but I guess I'm looking at the very de Minimis levels I'm, just trying to rectify the too.

I would I would just say on the Android Saturn II to your point, our number two customer I think is pretty well well them a that that that was not the most spectacular launch industry I think we're very well positioned for them should they.

Returned it to a preeminence and they're in their particular segment of the market, but that that was definitely not a stellar spread for.

Thanks Jay.

Yes.

And our next question operator, Rick Schafer with Oppenheimer.

Hey, this is Andrew I'm on for Rick. Thanks for taking my question I, just wanted to get an update like that on the progress to the voice biometric business.

I wanted to see if there's any thoughts on our rather game revenue timing perspective, or just just on the broader market opportunity over time for that product. Thanks.

Yes sure. So we've we've talked previously about.

The fact that.

We've used the the label voice biometrics. It it encompasses a whole suite of technologies relating to voice authentication anti spoofing and so on.

We're in wherein in dialogue with customers about a adoption of of certain of those technologies and.

We're feeling pretty good about that and optimistic about the long term outcome.

That said the the entire market around.

Clients say the voice authentication has been.

Something that's the when did we do believe.

If the fido standardization around.

Around voice authentication was a meaningful step forward that that took place last year and we have the technology. The only technology currently the specified for that but it's still being markedly slower in adoptions and we would have hoped so.

We're not we're not.

Talking about timeframe for specific revenue relating to that right now they it the likelihood is that.

We will you know in due course be able to talk about about seven of those technologies being incorporated within.

Within products, which which drive important business for us.

Great. Thanks.

And again as a reminder to ask a question what are your telephone keypad and that.

Star one.

And our next question comes from tour.

Well I'm, sorry with Stifel.

Yes. Thank you just just a follow up you did disclose that you are going to be ramping production up close of controller or in the September quarter, but you've also.

And in the past a different kind of the beginning or perhaps a more opportunities down the road.

Any any updates you could share with us there.

No not along the way of updates Oh, sorry, but I'd certainly reiterate.

But that sentiment we yeah. We are both both in the general sense that what we do when we're serving.

Our key customers is is a land something in a socket and <unk> and then do everything we can to figure out how to how to add more value to that and solve more of our customers challenges in that particular part of the system.

And in the specific case of this at close loop controller product, where we have.

Really active meaningful dialogue about where that technology or set of technologies may go in the future for us.

We continue to believe that that that is where the beginning of a meaningful long term opportunity where we'll see.

The ability to add more.

And add more features that more content in that space and probably produce variance to spend the full spectrum of price points and tiers. As you would expect so we continue to to look.

Optimistically it at that potential market for us.

Very good and on that I would tell conversion Yeah go ahead Jason.

Oh, I would just throw that in there.

On what John said I, just would throw in there that that same the exact same sentiment for this new power type of application that we were talking about earlier.

Yeah that was going to be my follow up because the power conversion opportunity.

Do you have do you have that all staffed up now or is this again sort of a long term opportunity that you will continue to to hire people to go after that opportunity.

A bit of both in the sense that are we.

We have really sizable team.

Pulling absolutely extraordinary efforts actually in the in the current circumstances to to hit the target with our customer there.

But by by our reckoning and and from our dialogue with our customers. The the there are many ways in which that that feature set and that product can be enhanced and built out over time.

So yes, we will will grow R&D continue to grow R&D around that area and and hopefully that that leads to more skews more opportunities and and.

Or.

More broader applicability over time.

Great Congrats on those two new opportunities. Thank you.

Thank you Terry.

And as a reminder to ask a question that star White on your telephone Keypad Star I wanted to ask a question.

And there are no further questions at this time.

I'd now turn the conference back over to maintenance Chelsea Heffernan.

Thank you operator, we received one question today regarding the opportunity for closed controller.

Hi, good color John.

Again, yeah, I think the less certainly hits on part of it with product area for US is one where we will.

Well, we'll execute the normal game plan of feature up.

Various price points and try to try to grow the.

Oh, you talked customers over time.

I would also refer a.

Listeners to our Investor presentation, which is available on our investor website, which talks.

On slide nine about the opportunity ran very closely controlled as a segment in there which talks about a billion dollar opportunity for haptics and closely control is combined we could probably break that was apart but for simplicity sake. It's a broadly 50 50 between those two things.

And in all reckoning now obviously a billion dollars, there's not a super precise number.

But but that's reflective of the kind of general order of opportunity that we see around those segments ahead of us.

Thanks Mark.

[noise] go out [laughter].

Alright, Thank you Chelsea.

In summary, we're pleased with our progress in Q1 F. why 21 is teams across the company continue to actively engaged with our key customers and to execute on product development, while maintaining an extraordinarily high level of performance throughout the organization.

With robust design activity and a pipeline of differentiated products coming to market over the next year. We believe we're well positioned to maintain our strong customer relationships and expand our share in the markets that we target.

I'd also like to note that we will be participating in conferences hosted by Keybanc and by Oppenheimer. This quarter. Please check our investor website for the details.

If you have any questions that would not address you can submit them twoz buyer. They ask the CEO section of our Investor website.

I'd like to thank everyone for participating today goodbye.

And that does conclude today's conference call. Thank you for your participation you may now disconnect.