Q2 2020 NETGEAR Inc Earnings Call
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Later, we will conduct a question and answer session.
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So I would now like to turn the conference over to ever silent. Please go ahead Sir.
Thank you Josh good afternoon, and welcome to conduct years second quarter of.
2020 fiscal results conference call joining us from the company Mr., Patrick low chairman and CEO Mr., Brian Murray CFO.
The format of the call, we'll start with a review the financials for the second quarter provided by Brian.
I would buy details and commentary the business provided by Patrick will then have time for any questions.
If you've not received a copy of today's press release. Please visit next year's Investor Relations website at Www Dot back your dotcom.
Before we begin the February March we advise you that today's conference call contains forward looking statements.
Looking statements include statements regarding expected revenue.
Operating margins tax rates expenses and future business outlook.
Actual results or trends could differ materially from those contemplated by these forward looking statements.
For more information please refer to the risk factors discussed in next year's periodic filings with the FCC, including the most recent form 10-Q.
Any forward looking statements that we make on this call or based on assumptions as of today.
Nick Your undertakes no obligation to update these statements as a result of new information or future events.
Any in addition, several non-GAAP financial measures will be much in on this call.
Reconciliation of the non-GAAP to GAAP measures can be found in today's press release on our Investor Relations website.
At this time I would now like to turn the call over to Mr., Brian Murray.
Thank God.
Thank you Eric.
Thank you everyone for joining todays call.
I'm pleased to share with you for second quarter 2020 results today.
Once again.
Our team overcame the challenges presented by rapidly changing market due to the ongoing pandemic.
Despite continued headwinds in certain areas of our business.
Overall, we were able to deliver strong top line and profitability growth.
Net revenue for the second quarter ended June 28 2021.
It was $218.1 billion.
21.3% year over year.
And up 21.8% on a sequential basis.
The increase in revenue almost a year over year and sequential basis.
It's primarily due to exceptionally strong demand for CHP products in response to the work from home transition taking place around the globe and.
As individuals look to upgrade their network connections.
We continue to win in the market with our leading edge wife, I'd say offerings.
And strong online presence.
Non-GAAP operating margin for the second quarter came in at 7.5%.
Ribbon largely by the leverage created by our revenue growth.
The second quarter of 2020.
Net revenue for the Americas was $202.2 million.
Which is up 28.7% year over year.
And up 27.8% on a sequential basis.
The Americas continued to benefit from increased demand for CHP products.
The retail answers for butter channels.
Generated by the shift to work from home environment.
EMEA net revenue was $48.4 million.
Which was up 12.2% year over year.
It up 14.7% quarter over quarter.
This was also driven by the demand for see a tree products and just want to work from home.
And seen in both the retail interpreter channels.
Or you pack net revenue was $29.4 million, which is down 3.7% can acquire your comparable quarter.
The down 6% sequentially.
The decline in relation to both periods was driven by lower net revenue from sales to service providers.
The second quarter 2020.
We should total approximately 3.7 million units.
Adding 2.7 million nodes of wireless products.
Shipments of all wired and wireless routers and gateways combined were about 1.5 million units for the second quarter 2020.
The net revenue split between home in business products was about 82% and 18% respectively.
Net revenue split between wireless and wired products was about 74% and 26% respectively.
Our next introduced into last 15 months constituted about 30% where second quarter shipments.
Well products introduced in the last 12 months contributed about 23% upper second quarter ship.
At this point on my discussion points will focus on non-GAAP numbers.
The reconciliation from GAAP to non-GAAP detailed in our earnings release distributed earlier today.
The non-GAAP gross margin in the second quarter 2020 was 29.6%.
Which is up 80 basis points, that's compared to 28.8% in the prior comparable quarter.
In a 40 basis points compared to 29.2% into first quarter from 2020.
Well the mix of our SMB business.
Which carries relatively higher gross margins declined year over year.
Your mordant able to costs at the gross margin impact due primarily to more accurately marketing spending in our CHP business.
Total Q2, non-GAAP operating expenses came in at $62 million.
Which is up 10.1% year over year.
5.2% sequentially.
The sequential increase was primarily due to higher sales and marketing spend associated with the increase topline.
As always we continue to manage our expenses prudently well also ensuring that we are investing sufficiently into growth portions of our business for future success.
Our headcount was 788 as of the ended the quarter.
I'm by nine from the prior quarter.
We continue to monitor head count very tightly, especially in times of economic uncertainty.
Our non-GAAP R&D expense for the quarter, what 6.9% net revenue.
As compared to 7.6% of <unk> revenue in the prior year comparable period.
At 8.1% of net revenue in the first quarter 2020.
To continue our technology and subscription service leadership.
We're committed to continued investments in R&D.
Our non-GAAP tax rate was 23.5% in the second quarter of 2020.
Looking at the bottom line for Q2.
We reported non-GAAP net income of $16.3 million.
Non-GAAP diluted EPS.
54 cents.
Turning to the balance sheet.
We ended the second quarter 2020.
$258.6 million in cash and short term investments.
$48.8 million from the prior quarter.
Additionally, our inventory decreased by $30 million in the quarter as we continued to deliver on strong demand in the Americas and to me.
And continued to successfully reduced a mix of inventory and wonder why technologies.
In Q2.
We generated $63.2 million in cash flow from operations.
Which brings our total cash provided from operations over the trailing 12 months to $115.6 million.
We used $2.4 million and purchases of property and equipment during the quarter.
Which brings our total cash used for capital expenditures over the trailing 12 months to $8.4 million.
We remain confident in our ability to continue to generate cash.
And expect and we'll be able to further increase our cash position in the second half the 2020.
In Q2, we spent $7.5 million to repurchase approximately 315000 shares of Nick your common stock.
And average price of 23 dogs and 70 cents per share.
Since the start of the repurchase activity in Q4 2013.
We have spent $551.2 million to repurchase 15.7 million shares.
Only do with the trucking is approximately 30.1 million shares as of the ended the second quarter.
Especially in times of uncertainty like these we continue to recognize the importance of maintaining a strong cash position.
We will bounce or practice of repurchasing shares what their desire to maintain strong balance sheet.
Now turning to the results of reporting segments.
The connected home segment, which includes the industry leading nighthawk.
Orbi.
Nighthawk from gaming and build brands.
Generated net revenue of $230 million during the quarter.
Which is up 37.3% on a year over year basis.
In up 39.7% sequentially.
The year over year and sequential increase was attributable to increased demand in both service provider in retail channels.
And the second quarter of 2020.
Service provider revenue was the highest it had been since the second quarter 2018.
Well lawn service provider revenue achieved its best result, since the fourth quarter 2018.
And it's heights fiscal Q2 on record.
The second quarter, we didn't held a strong leadership position in U.S. market share in consumer wildfire.
Coming in at 49%.
Yes, and be segment generated net revenue $50 million for the second quarter of 2020.
Which is down 21% on a year over year basis down 23.4% sequentially.
As we expected.
Our SMB business experienced decline.
The onset of dependent in corresponding business closures.
On the product front appeal, we plus and probably be switching lines continued to perform well in the market.
Our market share in switches sold through you with retail channel came in at 49% in Q2.
I'll now turn call over to Patrick for his commentary.
Thank you Brian.
First.
I wanted to thank the net geared team for executing well and delivering a great qual.
We continue to meet the challenge is working from home.
Even if it last longer than originally anticipated.
While we hope for the Swift as possible and to depend dynamic.
This new reality of working and learning from home has you served in a new era.
Where everyone needs not just an internet connection.
But one that is always on.
Secure.
And delivers high connection speeds.
<unk> every corner of the homes, but this new well where every aspect of our daily lives is conducted on mine.
For more entertainment.
Some schooling just socializing.
Shopping ordering food and from working out getting medical advice.
With president of demand across a multitude of connected devices.
Battling for bandwidth my multiple members about household all at the same time.
Well that's built on why five six technology.
With unmatched speed and connectivity I'll be ideal solution.
Not only will we continued to benefit from our leadership in wife Isix products.
Also hold <unk> added technology advantage Tri band.
Which provides unprecedented speed and coverage.
It's both the new market dynamics as well as old technology advantage that leads us to believe that CHP revenues.
Steve you didn't see used to service providers in the second half of the year.
Can mirror the year over year growth rates that we experienced in the second quarter.
Well families unable to secure wireless internet to their homes.
Well those looking to work from anywhere.
We had been working diligently to meet the unprecedented demand for our mobile hotspot.
We just saw hundred and 10% sequential growth in shipments in the second quarter.
Notably we gained strong traction with all five GE hot spots in EMEA, where we shipped in Bonnie.
Domestically, we are excited for the Fiveg versions to ramp in the second half of the year.
As we currently stand we expect this channel grew 50% in revenue in the second half of the year as compared to the first half.
I am pleased to share that we mode work has not impeded our ability to enemy.
It's a leader in mesh and why.
We recently released our newest for beat mashed system.
The wife I, six it's 4200 Tri band Mashed system.
Offered at an attractive price point.
Just under $500 for suite Pat.
This is a very attractive likewise mashed system for large home.
With lots of devices, but not quite at the scale all our top of the line 86005, Fysixteen high band Mashed system.
Continued its strong public domain allowed us to gain traction with new subscribers and deliver record progress in growing our recurring revenue stream.
Beginning to quarter with 220000 paid subscribers.
Increase our new paid subscribers by 28%.
Adding 65000 into core to end with 293000 paid subscribers.
It is clear that we're on a tragedy worried to surpass our goal of more than doubling our subscriber count.
On the end of last year by the end Twentytwenty.
Oh, SMB team performed well during the quarter and delivered to our initial expectations.
We shared last quarter to offset the dramatic drop in corporate sales to the var channel.
We are focusing on sales all sophisticated home office solutions.
Yeah I'll traditional channels.
Well my all transactional channels as well as pushing hard on closing <unk> AB projects.
As economy slowly recover around the world.
We are expecting corporate sales to improve in the second half.
Thereby slightly lessening the year over year decline about SMB business.
So now we expect a home office not looking sales and pro AB projects wins to continue to grow compared to the first half.
Oh, most popular home office networking solutions.
Based on our industry, leading unmanaged and plus switches driving out all the pro unmanaged access point Oh, It has been mash access points.
Together, you can provide multiple essence I'd be lands and reduce wiring biomass for E sophisticated home network consisting of multiple access points.
I will probably be solutions as few ankles, you know preconfigured fully managed switches.
We will continue to roll out new products in these two areas in the second half.
We believe that the new normal of home networks.
Serving and increasingly critical part of People's lives.
From videoconferencing to virtual happy hours.
I'm remote learning to online fitness classes.
From ordering flows to ordering food.
From streaming TV movies at Broadway shows to playing online games.
And from going to them is he going to your doctor.
Just on the last beyond the current pandemic.
For next year this resets the value of <unk> addressable market to a higher level.
Enables us to continue to grow our overall top line for the rest of the E.
And then how was asked a celebrate a growth of the stable paid service subscriber base.
And with that I'll turn it over the brine merida commenced to comment on opportunities and obstacles in the upcoming quarters.
Thank you Patrick.
Well, we're confident in the ongoing strength of end market demand for home networks. There is still considerable uncertainty around the slowing called reversals of we openings.
New wave to cope with 19.
And by extension the speed of the economic recovery worldwide in the second half 2020.
This makes our most profitable business, that's can be difficult to forecast.
Furthermore, our supply chain and supporting our CHP business has been and May continue to be disrupted by outbreaks of cope with my team and our suppliers factories warehouses.
Especially disruptions become widespread.
We are greater in scope.
He could significantly hamper our ability to fill the heightened demand for our CHP products.
As such we're not in a comfortable enough position to provide financial guidance for the third quarter and the second half of the year.
We would now like to answer any questions from the audience.
At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
Your first question comes from and Adam Tindle with Raymond James. Please go ahead.
Okay. Thanks, good afternoon, and congrats on the strong results I'm, Patrick I wanted to start with a comment that you made on CHP I know you talked about it expecting to continue to fuel growth I think you said it you're expecting it to mirror QQ growth rate was that comment on CHP X service provider, which I think that's up just over 30% in Q.
Two and should be up this level in Q3 in Q4, and if so I guess why why do you have the confidence that there's a longer tail to the first that you're seeing there you know how how would you can talk about that subsiding versus having this kind of longer tail on what's giving you the confidence to go out and talk about that.
Yes, Oh, we just seeing the trends continue on into the early part of Q3 and when we look at.
He asked piece that people are buying.
Is clearly higher than what it was before.
So you know as I mentioned, because people now doing a lot of things virtually online at home they need to have uniform high speed coverage around every corners on the houses so the various members could perform their own things online without interfering with each other.
So as such he does set up off the wildfire network today at home or will be significantly you know more sophisticated and hi, Dan so meaning the E.S.P. up on home Wi Fi network. He is actually higher.
So no we said <unk> addressable market into a higher level. So as long as we continue to maintain our market share than we should be able to enjoy you know be higher level revenue going forward.
And then of course I mean, once we get into Q2 next year. [laughter]. Then then it would be a different comp.
So that's so that's why would you confident that's for the rest of the year that be known service provider growth.
Roughly about 30%.
We continue when recipe and on the service provider side.
We're confident off the 50% both in the second half versus the first.
Just because all these orders or we see a.
We just delivering I mean, that's generally a longer lead time awful suits provided business and Ah and that's why we meet those comments.
Okay are there any major differences in the growth rates in Q3 in Q4 stuff for us to think about where you know there's kind of you know a bigger waiting towards Q3 or Q4 is a pretty similar in terms of the growth rates expected.
With the within on some service provided piece I would believe this season the normal seasonality will continue which is back to school and then Christmas Black Friday. So overall you could you could say.
With that Danny should mimic the same growth rate in Q2 for each well the water in the second half well known service provider.
On the service provider side, I mean overall second half would be 50% bigger than first.
I went out you know what's the split between Q3 in Q4, it really depends on on how much we could shift.
Okay, and then quickly on a SMB I think you've mentioned, they're expecting that the decline year over year declines would be slightly lessening as the year progresses, if I heard that correctly I just want to confirm that and if so I guess why wouldn't that be the case. If you had an initial tailwind from the work from home.
Help help the impact that segment.
You know, what where are you expecting the decline to less than a a senior goes.
Yeah, I mean, so our SMB business declined year over year about 21%.
In Q2, so as we see more and more business. We open so the normal corporate sales whoa Whoa whoa actually grow from Q2 bases. So based on that particular observation and projection. We believe the Q3 declined versus last year would be less than.
21% the weight of decline of Q2, and then Q4 hopefully this move we opening all self economy is getting better same thing on a second front as we said Oh, we'll continue to push into the new areas.
Then we started back in the early Q2 actually probably be has been around for a little while but it would just getting some momentum a the sophisticated home offices wireless Lan network using our commercial grade Wi Fi access points and Pune switches, we starting to pushing really hard in Q2 week.
Well continue to make progress in Q3 to four so when you have all those together we believe that you have a year decline on the SMB business would be less in Q3 that less than Q4.
Your next question comes from Jeffrey Van Deutsche Bank. Please go ahead.
Hi, congratulations on the nice quarter, where you guys able to meet all the demand in the quarter and are there any cut some supply constrained so you're still seeing.
No I don't think [laughter], we could claim that we can meet 100% Oh the demand I mean as you can see.
Our channel inventory.
We'd quite a bad.
So so our channel is helping us to offer that defines a it is very difficult you know when when you try to between two to up the demand immediately and usually out chip <unk> lead time is anywhere between 15 to 20 weeks, so I mean I've been components.
Ops team have done a fantastic job to do the best they can but I wouldn't say that we are doing 100% how much more can be do we don't know all right because we pretty much so without whenever we could put views.
Great. Thank you and there's just a follow up how are you thinking about gross margins going forward are there still increased cost so you're seeing related to kogan and how do you think about mix related to gross margin too.
Yeah, I think as we look forward I think there's there's two challenges that we see on the gross margin side. One is you can kind of model not with the due to business is that we have the positive trends, we see on the T.H.P. side.
And then the headwinds we still face on the SMB side I think the mix of SMB will lessen even further than it was in Q2, which which certainly put some pressure on the gross margins and I think as Patrick just touched on we are chasing supply we're trying to maximize.
Every bit that we can get which comes with some cost related to airfreight and.
No we aren't seeing the late relent they'd all capacity still is a challenge. So those two things will put some compression on the gross margin that said with the topline lift.
But we can see yeah, we'll get some additional leverage I think the net of those two things probably gives us an additional 50 basis points to operating margin pocket. The Q2 levels that we sell.
Great. Thank you.
Next question comes from Paul Silverstein with Cowen. Please go ahead.
That's correct, Brian first of all correct me, but what's your hot spots restricting 50% growth and if so that's all for what fifth Robin.
The 50% growth in across all observers writer that would include Oki hot spots.
That's 50% off of what we saw in total for the first half coming in the back half.
I would say Fiveg mobile hot spots in Europe, we started to ship in material volumes in the quarter, but we do not kind of breakout the specific revenues at that level.
Got it as far as more generically.
If I did the math right it sounds like wife, plus six enabled products.
So well less than a million units.
Correct.
What do you sold in the quarter.
The wide five six products is actually pretty well received in the corner and as you know as we see it in the end market is probably rent presenting a little bit north of 25%.
Aftermarket demand, but then you know as we said that we haven't really check it out because there's a limit on supply.
What would pass your bear with me I'm asking your specific question I. Appreciate your quality. Good response, but my simple question is what far as the quantitative units wife, I suppose you shifted your ships, where the numbers right 3.6 million 2.7 million, a which we're probably from less four months I assume why six most of that's from cholesterol.
So I assume.
<unk> I think just a 25 excuse me 23% of units were new products more possible bonds that would suggest the workforce six.
Quantitatively and units as well it's in a moment.
You know something you'll see we're going with this I.
I just want to confirms that that's in the ballpark that is less than a million euros.
Well actually as a matter of fact, I think yeah, you could be you know, but down it's not really a lot meaningful.
Hi, guys. This work from home.
Basically drives a lot of people to upgrade.
They've been homes, why five each and not everybody could or lifesize, six and that the clean the cheapest and fastest way well a lot of people is that by one or two lemon AC expanders today, you can still buying 11, easy extenders and about $50 and.
You could buy to evolve.
It's been a $100 and those units are going very very hot. So if you just fuel you look at a unit basis on very meaningful or eat in this Q2, because there's so many people buying but 50 dollar exciting.
And of course, those bonds is 80 over when everything else.
Patrick what could actually puts your argument not only to not me you can many people not afford workforce.
Correct me, if I'm wrong, unless you bought a new iPhone or new droid or new computer.
You would not to even if your boardwalk for six you won't get the benefit of what five six from what you've got what for six chipsets in your and your end points and so not only can boast Piedmont affordable for instance, today, but they won't get the benefit award plus if you ever they bought workforce.
And then I'll give you my real question.
I want to mixture is that correct.
Well I mean, so generally speaking, yes, but there's quite a bit about people already upgraded the iPhone.
11, and Galaxy S can as 20 Galaxy, Oh, and a lot of the new laptops. So there.
I personally think them more Ah you know wife, Isix climb devices out there than the number of our wildfire homes network. So we we haven't seen everybody going there yet.
I think we'd habit, we have a difficult.
Equally just digging for why he told Metwox all those people well I mean, I from 11 Galaxy S can as 20 and Galaxy Pope.
Alright, President role to give you my real question, what's really driving towards.
The basic question or how much the man has been pulled forward.
In a sense the stolen from future quarters, and how much of this and so yeah I Trust. The answer is very little because the girl hundred 29 million homes in the United States.
And I assume most but not all.
From an original wildfire.
Whether it G and H C.
And if you're shipping well less than a million units or walk by 60 wrestles with small percent.
Oh that Synsil full end market.
After the workforce are today, which would suggest that there's not.
The first points, it's still too hard for most are permitted.
But in terms of what the ultimate opportunity is hey.
It sounds like you still have 90% of the more jobs is 95 or so the market opportunity in terms what physical goods ahead, we're going to be pacing of that one of the price points. Good before where there's true mass market adoption. That's real question to drive yet how much of the market.
So ahead versus instances talked out of.
Next year and futures.
Well I mean I've just you use your logic, maybe to do a little bit a map I mean, I think we said that combined we shipped about 1.5 million routers gateways salons, so for us and I said that I see about 25% you know on a dollar.
Bases is life I think all right. So that's really why classics more expensive. So you take a rough cut okay, only 20% of that off 1.5 million his wife I'd say.
That's only about 300000 or 300000 into 115 million homes in the U.S. you're right.
Use long runway [laughter] to die and you could argue my number is pretty good because we do only wife Isaacs game in town. So there's no competition anyway. So the upgrade cycles do a long way off and as I said I mean in Q2, we eliminate my supply as well as a lot of people are limited by affordability.
Because you know life Isix today that is lowest entry point is still about $200, but you could buy you why I mean, why five expand as for less than on the box. So not everybody could afford $200. So some people will go for the cheapest Susan I like that because in the future.
When the wife Isix problems finally come to 100 Bucks those people, who bought that hundred dot expanded.
Great life I see I think that's a long way to go.
Your next question comes illusion, hopefully Bloomberg intelligence. Please go ahead.
Good for taking my question.
So so Patrick and Brian I think a there was an 8-K talking about David Henry taking flights out.
Air freight on your.
Phil.
Okay.
Oh, the timing of those are the airfreight should this incident in the second quarter and how and when do you think Oh shipping and logistics should normalize to third quarter.
No I mean, the Q2 airfreight spend was pretty pretty much consistent throughout the quarter sixtym team into the quarter, probably a little better positioned as well as the channel given where they exited Q1 from the channel inventory levels, So maybe a little bit back end loaded.
And I said earlier, it's certainly going to be a her investment for us and in Q3, I think we're hopeful that as we tend to get to be earlier part of the holiday season that we can get caught up and had where supply pipeline matching what we see demand.
Okay, and then in terms or the second half on you mentioned in the second quarter. It didn't seem that there was much discounting going.
Going on but does it as we look at the second half their prime day, Black Friday, and some of the harvest using I do do you think on some of the promotional activity is going to.
Increase a little bit.
I think we'll see normal promotional activity as we entered the holiday season, I think there's still.
A question out there as to what Amazon doesn't if they kind of reinstitute some form of prime day and when that occurs.
But I think aside from that we would expect the normal promotional activities to occur around the holiday season.
We're certainly get Ireland's managing and growing top line, but the bottom line.
Got it and one more question if I may well in terms of competition. So Patrick one of your bigger brick and motor retailers with you know it seems as if you're doing a fair amount of business what.
It looks like they brought in a smaller competitors are on their online channel as well.
That a housewife by six and.
Has a attractive pricing I mean do do you view them as a threat and then I'm not talking about Google or Amazon Europe, you know all their potential sweat given that they are going into this one particular brick and mortar channel.
No. We don't believe so I mean, the thing is on wife I six right. We basically have to Florida's portfolio, you know our unique Tri band technology, but also have dual Dan as well as I said right.
Pretty much the only game in town as far as my five six is concerned it doesn't matter with his routers, obviously cable gateways only Saddam expanders what he did not match I think you know we're not concerned about you know small competitors out there I do it as we continued to two men.
Okay, and I mean in the U.S. Marcon real competition is <unk>, Amazon Euro and Google nest and Oh, neither of them have my Fysixteen.
Understood. Thank you.
Yeah.
Your next question comes from hardcore centric beat up U.S. financial Please go ahead.
Hi, I'm sort of first off I just wanted to ask.
The reduction channel inventory is because of inventory spending changes with your partners and how much of his actual sell through.
Well I mean, clearly is Sellthrough alright, and then also our channel partners mode of office sales is changing as well more mostly hasn't been done online.
For example, that's fine is you know limiting the traffic into the stores.
Some point of time to actually closed stores in due course I picked up so in that case, they don't need that much inventory inside the stores and more and more of that business is shifting online. It's not just best buy Walmart Costco and the online sites.
Really successful so so and when you ship it seems to want month, certainly need less inventory or overall in the channel that's what we'll see.
So you know and of course, yes, I said right. We we have not being able to ship as much as we would have liked because is ramping up so fast. So some of the install inventory has been helping to offset the demand so deplete the in store inventory as well.
The amount of supply the you're able to ship and and you're not able to meet demand in entirety is that purely from a shipping capacity standpoint or is that a supply chain issue components.
Oh, Yes, certainly I mean as I mentioned, just now the component supply lead time is anywhere from 13 to 26 weeks. So you go talk to the chip suppliers with its Qualcomm Broadcom off now we all tell you the encoding anywhere between 15 to 26 weeks of lead time.
Like chips and we all saw this coming towards the end of March and when we pressed the button to order more chips in early April I need to see then to chips Wong arrive until right about end of June and go into production.
Okay and then.
My last question is just on the ARPU that you.
Cheaper than Q2 was up for something like 12% from Q1 is that purely because locker supplies, forcing people buy wife, I six routers or is just the you're not doing as much promos.
Well as I just mentioned you just more people, having iPhone 11.
Galaxy S. Tan Galaxy is 20, <unk> and more and more all those people cooped up at homes, absolutely won the best and that's why they offer life five six products and <unk> and <unk> and also you know you have some more advanced retailers like Costco basically come please.
You get rid of 11 AC and moved entirely over the life I see.
So that helps to increase.
Quarter over quarter ARPU as well.
Do you have capacity to grow revenue from here.
Oh I don't want.
Yeah definitely no doubt about as I just mentioned the chip study at all [laughter].
Okay I appreciate thank you.
Sure.
There were no further questions at this time I'll turn the call back to Patrick for closing remarks.
Thank you so much Josh I like to once again, thank our employees and partners for the hard work and flexibility. During this time and with a strong half of 2020 behind US we look forward to delivering growth in coming quarters, and we remain confident the components of our strategy will be strong country.
But as to how success this year and beyond and I look forward to sharing more with you and our next earnings call in October. Thank you.
This concludes today's conference call. Thank you for joining you may now disconnect.
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