Q3 2020 Silicom Ltd Earnings Call
Ladies and gentlemen, thank you for standing by welcome.
Welcome to the Silicoms third quarter 2020, <unk> results conference call.
All participants are present in listen only mode.
Following management's formal presentation instructions will be given for the question answer session. As a reminder, this conference is being recorded.
All received by now the company's press release, if you have not received it please contact Silicoms Investor relations team at GK, Investor and public relations at 1646683559 or do it in the news section of the company's website at Www dot so.
Tom Daschle U.S.A. Dot com.
I would now like to hand over the call to Mr., Kenny Green of GK Investor Relations Mr. Green would you like to begin please thank you.
Welcome all of you to cynical said.
120 results conference call.
I would like to draw your attention to the following all the state.
This conference call contains projections.
These statements regarding future events.
Performance of the company.
These statements are any actions that may change as time passes.
Does not assume any obligation.
No Thats all results may differ materially from those projected.
As a result of our increasing dependence a substantial revenue.
Constantly evolving cloud based.
NFC.
The speed and extent switch solutions jumped by these markets the likelihood that we will increasingly on customers which provides solutions.
Okay, resulting in an increasing dependence on a small number of larger customers difficulty in commercializing and maxing silicoms products revenues.
A key brand recognition.
Intellectual property competition structures to all my questions.
Along with general disruption for the entire world economy relating to the spread of the novel virus cousin machine.
Factors identified in the documents filed by the company with the FCC.
In addition, following the company's disposal such non-GAAP financial measures in today's earnings press release, such non-GAAP financial measures will be discussed during this conference call.
Such non-GAAP financial measures are used by management to make strategic decisions forecast future results and evaluate the company's car.
Management believes that the presentation of these non-GAAP financial measures are useful to investors understanding and assessment of the Companys ongoing corporation and prospects for the future.
I stated it should be assumed the financials discussed in this conference call will be.
Yeah.
Non-GAAP financial measures disclosed by management are provided additional information to investors in order to survive.
She's method for assessing our financial condition and operating results.
So.
She is not in accordance with swaps cheeseburger.
Conciliation of non-GAAP financial measures are included in todays earnings press release, which has been sort of comes with website.
With us on the line today Mr. cycle.
Angie lot CFO cycle will begin with an overview of the results followed by Ron who will provide the analysis of the financials.
We will then turn the call over to the question and answer session.
I would like to hand, the call over to Chicago Chicago. Please go ahead.
Thank you okay.
I would like to welcome all conference call to discuss.
Third quarter 2020 results.
We are very pleased with it.
Sorry.
In both the top and bottom line.
We reported revenue of $28.4 million.
8%.
Water over the past year and also a strong 23.
Improvement over the prior quarter.
Furthermore, we have reported dollar $60 oil profitability with net income of $2.9 million the highest level this year.
Yes.
Yes.
Increase over Q3 last year and 50.
<unk> percent increase versus the prior quarter.
We also ended the quarter with over $86 million net cash.
Water.
Our cash position to further progress our.
Our share buyback with the goal Brendan.
Shareholders.
We achieved all this despite ongoing impact from the Corona pandemic.
Like everyone. We continued to experience the unusual.
Just to kind of challenges at various levels of economic shutdown and social distancing in countries in which we operate.
Our results demonstrate that not only have we may generate business continuity, but also and return to growth.
This demonstrates.
Especially during the quarter.
From home environment, we're seeing growth global demand for capacity, which in turn increases the demand for our SD Wan related products.
As I mentioned earlier it keep principal underlying that'd be one market is the decoupling of software from underlying hardware.
This trend is driving other market forward as well, which in turn are becoming silicones future growth drivers.
The market segment, where this approach is most evident in the infrastructure part of the mobile market specifically among the various global telco that mobile operators.
Traditionally this bucket was relatively centralized led by two major players Nokia and Ericsson, providing their proprietary equipment.
In an effort to reduce costs and to be able to choose from the best in class as well as increase efficiencies Delco started to look to disaggregate using xeighty six platforms with additional specific add on cards and accelerators decoupled from the software.
This trend is demonstrated by the open radio access networks or overrun initiative, which has been embraced by all telcos.
The new era of open solutions brings to Silicom significant the new potential opportunities at the as telcos can now look at X 86 based hardware for a variety of nodes within their infrastructure and then they enhance the capabilities of such platforms by adding specific functionality.
It is an acceleration.
We are very much positioned at the epicenter of these latest technologies.
Our new developments are focused around this concept in trend the dis aggregation and decoupling of the software and hardware within mobile infrastructure and cloud equally including telco cloud workloads.
Furthermore, unlike other traditional white boxes manufacturers, our integrated solutions provide additional value added components and functionality.
An example is our acceleration cost based on either end entailed eightsix solution or an SPJ solution, which is more comprehensive acceleration.
Both these cars were developed in collaboration with Intel and as we speak this joint development effort is being followed by joint go to market and sales activities by both Intel and typical at.
Further example is our upgraded time synchronization product, which enable unique solutions for Fourg and Fiveg networks, either as a fully integrated solution or as a standalone Ed on costs.
Our SPJ based solutions that are used for acceleration within overrun are are also including substantially growing mutation mechanisms and our older used as a platform to accelerate user planned functionality or other cloud and telco cloud functionalities.
Indeed, both our potential customers and pump partners understand the unique advantages that we provide which combined expertise in xeighty six times. According mutation acceleration and SPG acceleration into a single set of specifications.
This is why many of the world's major telcos independent global software vendors as well as some of the world's largest server manufacturers are in discussions with us we can demonstrate the differentiating advantages of our integrated solution at drew wholly is greater than the sum of its parts offering that.
Combined with the strength of.
Our best of breed technologies.
Given the current level of interest we are seeing the evaluation Reos dreiling reach we are involved with and the current breadth of our pipeline.
He said the telco market segment, whether it's via Oems integrators, or even directly with the telcos will become a significant new growth driver for silicone over the coming years.
Why the sales process in the telco worthy the Longwood. Each design win is typically at a larger scale than what we have traditionally experience. We feel confident that we will see the fruits of our significant investments in the coming years.
Our recent announcements demonstrate our increasing traction, resulting from the disaggregation and decoupling Trent.
We recently achieved through new CP device wins with top tier telcos. This represent a combined revenue potential of approximately $10 billion per year at a steady state delivery levels.
This is the result of ongoing fruitful corporation over the past two years between Silicom and the leading everyone software vendor combining our latest generation hardware is GPS with the partners software based this aggregated growers.
These wins demonstrate the demand that the desegregation concept, which I discussed earlier is creating for our future rich feature rich Eusebio devices.
Our announcement last week is a demonstration as to how this aggregation concept has the potential to become a huge future growth engine for us as we announced a tier one mobile operator selected our over and ready architecture for next generation distribution unit for its field trials.
This architecture was selected because it fits the disaggregation model, while the same time. It provides an integrated solution encompassing all the requirements of the Fourg Fiveg distribution unit.
Furthermore, the arbiter architecture selected is based on our Xeighty six AD units designed originally for use in this aggregated SD Wan energy applications.
Should this solution be selected for mass production the revenue potential could be tens of billions of dollars from this customer alone.
And beyond that even as we plan the field trials with this solution. We are already engaging further discussions with the customer about next generation acceleration solution based on our SPJ technology, which may even increase this potential.
Our unique ability to offer solutions for huge fourg slashed fiveg infrastructure projects together with a full range of synergistic and complementary product line positions us well to address these emerging opportunities.
As such we believe the Fourg slash fiveg marketplace and telco demand.
Including many aspects of the plan deployment from the edge towards the core and the telco cloud represents a very large future growth driver for Silicom.
I would like to spend a few moments to discuss it and discussing our guidance.
We project sequential growth in revenues for the fourth quarter of 2020 with revenues expected at between $30 million and $31 million.
Given our long and growing list of design wins generating order, our solid baseline activities and strong market fundamentals.
And our focus in growing markets, we are well positioned around we're optimistic that as market to return to normal we will achieve ongoing revenue growth at a double digit compound annual growth rate for several years ahead.
In summary, the disaggregation, Andy toppling trend has the impact of significantly increasing silicones potential within the SD Wan market as well as the market of mobile operators infrastructure, both at the edge and at the Telco cloud. These are all markets in which.
Telecom is very well positioned this positioning is already demonstrated but our SD Wan wins, and we believe that success in the mobile operators market will follow.
Our relative optimism continues to grow and I reiterate that our end markets risk that as our end markets return to normal we expect that coming new use political will be much greater than what we have achieved over the past few years.
With that I will now handover the call to a run for a detailed review of the quarter's results. Ron. Please go ahead.
Thank you cited in the low everyone.
Revenues for the third quarter.
Btwenty were $28.4 million this.
This is year over year increase of 15%.
Good with revenue of $24.1 million.
Quarters in the third quarter last year.
On a sequential increase of 23% over the $23 million reported in the prior quarter.
Our geographical revenue breakdown over the last 12 months.
Were as follows North America, 68%, Europe, and Israel, 25% far east and the rest of the world 7%.
During the last 12 months, our top 310% customers together accounted for about 35% of our revenues.
I will be presenting the rest of the financial results on a note on a non-GAAP basis, which excludes the noncash compensation expenses in respect of options in the future.
Granted to directors officers element to it.
As well as acquisition related adjustments.
For the full reconciliation from GAAP.
Two non-GAAP numbers, please refer to the press release, we issued earlier today.
Gross profit for the third quarter, Twentytwenty was $9.4 million, representing the gross margin 33.3%.
Through to gross profit of $8.5 million for gross margin.
5.2% in the third quarter 2019.
The variance in the gross margin is a function of the specific product mix sold during in the quarter.
Operating expenses in the third quarter of Twentytwenty were $6.23 million compared with $6 million in the third quarter.
29 team.
Operating income for the third quarter of Twentytwenty was $3.2 million, an increase of 26% compared to operating income of $2.5 million as reported in the third quarter of 2019.
Net income for the quarter was $2.9 million, an increase of 15% compared to $2.5 million in the third quarter.
29 team.
Earnings per diluted share in the quarter were 41 cents. This is the year over year increase of 31% confirmed with EPS of 34 cents as reported in the third quarter of last year and a sequential increase.
58% over the 26 cents reported in the fourth quarter.
Now turning to the balance sheet as of September 30th Twentytwenty, The company's cash cash equivalents bank deposits and marketable securities totaled $86.6 million with no debt or $12 and 36.
Since per outstanding share.
During the quarter, we executed on our new 15 million.
The allowance share buyback plan, which we started on may 4th Twentytwenty.
During the third quarter, we purchased approximately 100000 shares.
The total cost of $3.6 million.
This means that we are on track to execute the full buyback plan on time.
That ends my summary, and we would only be happy to take any questions operator.
Thank you ladies and gentlemen, this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star two okay using speaker equipment. It can be lift the handset before pressing the numbers.
Your question fully pulled in order. They are received please stand by what we call for your questions.
The first question is from.
Alex Henderson from Needham and company. Please.
Please go ahead.
Thank you very much.
So I just wanted to start off with a little bit of granularity around the.
Contract conversations here, you said I think three wins.
That you've announced a $10 million and then you talked about the tier one over in project I'm, assuming that that is not included in that 10 million is that who ran project is still in testing and.
It has to go through the rest of the process. So that's the upside to the 10 million correct.
Well, obviously I mean, the awards, we announced about the tier one is just that we were selected for field trials. It definitely is not included in the in the tell me now and not only that I mean, the 10 million our SD one wins.
And and they're not the overrun at.
Wins at.
The tier one that we announced now just last week was about over and rather than SD Wan.
Yeah, I understand I, just want to make clear no. We had also talked about too.
Two tier ones in the U.S. that were expected to ramp fairly large projects with you I think one is progressed. The other one seems to have stalled a little bit can you give us an update on those two yeah. This has not changed from last quarter and the your description is bria accuray.
One of them has ramped up and is contributing again quite significantly to our revenues or even hoping that in the future it would be more.
And the other one yes, the other one actually didnt ramp up and they're still in the mode of the changing their decision as to where to take a their strategy in a torch and Didnt drive back for us yet, we're still hoping but nothing is happening right now.
There's been some consolidation of some of the players in the US the wind space is that several acquisitions and that changed or altered the year trajectory with any of those Oems.
Well, let me put it this way I mean typically.
And when a.
Customers Okay.
Well when I say, let's say partners of ours are a customer of ours are acquired.
By and bigger companies.
That has and in most cases this short term impact is positive because they are getting prepared for more and they're buying more.
Sometimes over time, it seems that they prepared for too much.
What happened to us in the past as well.
And for a longer term it is not clear we can see different types of the impacts because on the one side, sometimes when something like that happens sometimes they buying company organization, which is a big one yeah, we'd like to use its own hardware, but on the other side if it decides.
Not to do that and rather continue in use how our hard work with that higher or bigger footprint that it has in the buckets. It may end up positively for us. So it's all in all it's difficult to say what would be the impact.
Let me say that in general as we were talking to these companies.
Lean to say that it would have a positive impact, but I cannot guarantee that of course, because it could turn out to.
To be a not impact at all or even to certain extent negative in the longer term.
I don't see any short term negative impact for sure.
I see and so.
Just to round that out a if you look at the rest of the appliance so legacy product lines.
The more traditional business.
Have you seen any change in the rate of decline in that business as a result of covin shifting spending within the enterprise.
Alternatively is it's still a relatively stable to declining slightly.
Well I would say that in server adapters, which is the most significant part of our legacy products I wouldn't say accelerating decline.
Accelerating maybe to a I would say powerful or stronger words to say on that but if you look over time.
And it is not also exactly a steady decline in demand.
So it's that the decline.
You know I mean I'm.
I'm not sure I have not done a.
Accurate statistics model, specifically for this quarter. So I cannot tell you for sure if the decline in demand is accelerating or not there is definitely a decline in demand. This is for sure.
I see and as you're looking forward are you anticipating any change in the trajectory of that I assume that premier answered that that's.
Kind of a study study now I mean, <unk> server adapters and truly appliance customers that you used to have would definitely I mean, the demand would continue to do.
To to get lower due to become to reduce to get reduced.
Sure.
And then one other question you mentioned going to market the changing.
Changing.
I noticed the the.
The Intel announcements.
Visibly talking about interchangeable worthy of their products with your product. So it seems like you've gotten significantly more important and so.
Can you talk about how that relationship is blossoming because it is.
This press releases, it's blown you mean and very probable you were caught in the middle of or for some reason can you. Please repeat that.
Sure I'm sorry.
Yeah, I had said, sometimes don't a broadcast very well.
The Intel announcement that you you guys jointly put out the Intel are glowing.
Intel they they they're glowing I mean its.
Your prominence in the news releases and the way they talk about their product with your product is.
That's pretty unusual and so could you talk a little bit more about.
How big an impact this is going to have how the go to market with Intel is changing your presence in some of the larger cloud companies and how long it takes for this metastasized to think.
Yeah, Okay. So indeed, I mean, a a I think that the cooperation that we're having with Intel.
It is growing in scope and I do think that this is indeed, something which is extremely important for us. This cooperation I would say is no.
Comedy in my head I would I would say that it is now around it is happening around three.
Major areas. It were engine, where we have developed thinks a in cooperation with Intel and were Intel is supporting us and recommending us even providing leads for us and introducing us to customers in many of these cases.
And the three areas are and the first one is the area of actually the platforms, which we're building with them.
And that's.
This a tier one announcement that Weve made made last week include chips, such a platform and such a recommendation from India and about the platform, even though it was not only the platform I would come to the other aspect of that so platform wise is one thing. The other thing is and I think we have a I have been.
Talking about that is that development the mutual development of the E 86 car, it's not like I'm not sure. If everyone is familiar but I would say that easy to use that technology, which allows you to produce an AC leak in a relatively quick time.
Intel has developed and E six such as this which means an AC but developed in a quick technology.
To offload some sort of a fiveg technology technology, and we developed the card which includes this 86 a. for them. This card is currently to the best of mine all its the only one in the market, which is doing such kind of an offload on an e. on in Asia.
No that would be competition to that card in the future, but right now there isn't so we have a.
[music].
We have an advantage right now and which is why Intel is helping us pushing us promoting us introducing gust in order to be able to sell the Scott.
Now in parallel to this effort. We are also cooperating with Intel on development of LPG a cart so.
There was an announcement about the AFG cards that we develop together as well in this case it would probably be just discard which would I mean, not formally but would be presented as if it's an Intel card because we're doing that together with them and as such during D. taken us too.
Customers and providing leads to us and they support us in moving forward with this the MPG card. So in all these fronts.
Which are.
Now on top of that a a I mean these fronts that I described right now are relatively new obviously, when we were developing our E hour time synchronization color, which is a net plus time synchronization. This is based on what I would say the standard model of Intel is helping us and supporting us because if you will.
Using Intel Silicom, but the other three areas that I mentioned, a relatively new at with that with the EHR platforms.
[noise] happening I would say during the last two years or something else something or maybe even three years, but are you seeing any SPG A's are new in the last two years last year, maybe even 18 months or so.
Coming to the market right now so they are we indeed consider that to be extremely important.
So if I look at the press release, the they put out it talks about penetration and do a variety of different major players, including US Okay, Telkom Twitter might pick labs in some other stuff.
And it's tied into the barefoot networks acquisition that they did so there it sounds like the putting a lot of emphasis on that so how do we see this program and projects are ramping beyond what we've already heard.
Well actually this is a part of what I said, because we mentioned and telco and telco cloud and cloud and for many of these were indeed using again in cooperation with Intel and IP that was developed by Intel and its now being integrated with our cards you noted.
To be presented to all these customers. So this is a reason for our optimism. However, as we cautioned in the in what I've said earlier the processes the decision and the decision devaluation and all these parts of the equation with telcos and telco cloud although.
Long, so and that's why.
Unlike the SD Wan, where we're seeing the fruit even of this cooperation.
In even in this year, because I've been saying for the decline.
Decline in demand of the server adapters and definitely in next year and all these things I believe they would have an impact on revenues in 2021, as well, but that really I think a more significant contribution to revenues would happen later.
Ron.
Great 22, or later, so some impacting 2021, but not that significant and then and the most by the significant part of that later on.
So one last question on this front.
Is the margin gross margin you're expecting from these cards Sim.
Similar to your current gross margins around 33% higher lower what are your thoughts that means for me sorry, this pay down that more or less it would be on the same kind of gross margin.
Yes, I I would like to what I'm, telling you is about the average in this case, because I think that the pricing of these components would be very much dependent on the quantities I think that therefore, the low point it is opportunities the prices that they margins maybe.
Somewhat higher but all of that on the other side going to they are really very significant quantities of these the margins may even be lower but still I mean in terms of overall profitability for the company. It would be justified because if we do win one of these huge opportunities that are in the pie.
Lying right now I'm, assuming that our manufacturing and all that would be very effective as well as the relation between the level of R&D and the quantities. So overall, even if margins are somewhat lower with these opportunities overall, it's going to have a quite a significant.
Introducing at a bottom line.
So.
If I look at it from that perspective no.
Your your margin to come down a little bit overtime or go back to the.
18, 17, 18% in the 18 timeframe than in prior to that actually it was above 20%.
Can you talk to us a little bit about what do you think you can bring those margins back up into that 15% plus range over the next two or three years is that a viable expectation.
I think that at the bottom line that could happen.
I'm not sure yet I mean, there are some unknowns.
Because we're moving into an entirely different era with quantities per brought up which might be.
Much bigger on the one side and if you take any of these deals on a parallel bad BNL basic by itself.
It may definitely demonstrate higher margins at the bottom line, but on the other side I mean on the operate it. If you just are is calculating gross margins it maybe even lower but.
But what it is may become much bigger.
All right and then just one last question I'm, a little bit more minor Uh huh.
Any change in the tax rate picking up.
As we go forward here.
No there is no change.
During.
Quarter, one to quarter three heritage tax rate effective tax rate.
As can be seen is around 16%.
Currently we believe that this is a range that we should expect in the.
Sure.
You too.
Perfect I'll say, the let me say, the Florida anybody else Who's got questions. Thanks.
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Please stand by while we poll for more questions.
I do not think that the comparison of.
Gross margins it could be two meaningful.
And the other one is definitely a significant and important company. However, I mean I would like to say that most of the sales that you see indeed in the LPG market is in the capture market.
We are selling some calls into capture market.
And in this market our margins are very similar to these companies, but this is not our strategic markets. Our strategic markets are as we mentioned before the day, the cloud and the telco cloud and the telco in general and SD Wan. These are entirely different markets, where we are trying to.
Gee much higher level of revenues and that's why the business model is different we're not we're not approaching the same markets. If we were to approach just these markets, we would've been able to maintain the same level level of gross margin. The these companies do.
But this is not our strategy our strategy is to go big and.
As you can tell obviously, we're our revenues per quarter are much higher than these companies each of them and this is an indication to the fact that you're addressing different markets with also different products and yes. The margins in the markets that we're targeting a lower but the potential for revenues is much higher and Thats what were trying.
To achieve it.
In our lower in terms of gross margins.
Yes, perfect. Thank you.
So can you speak about SP here, you on where we are.
I think that we have in the past.
The design wins for Hawaiian and these other competition said growing 20% plus so kind to explain us where we are in SPJ them.
Yes, Okay I can explain where we are in the PPA and this is in a way. This is related to my previous answer I mean, if we have not announced.
And.
Hi, PJ wins I mean, obviously there is one reason to that doesn't mean that we didnt have any MPG wind, but we are not announcing every win that we have but youre right in one thing.
We have not not announced anything which is really significant win with APG and the reason is exactly the reason that I explained before because we have taken our ESG.
A strategy to a different direction I mean, we have taken it into a development of new cards, which are addressing the other markets that we are targeting which are mostly day as I mentioned before that telco overrun infrastructure. This is.
Where we have taken this development and we've done that together with Intel as as has been announced and this is a process, which takes time. So while we still have design win here and there in our traditional markets, which were mostly the capturing cards as well as the.
High frequency trading a market, we have decided to focus on a market, which is synergetic to any other to all our other activities, which is the overrun area as I've described and desk is taking time you could see with the announcements that we had with Intel.
That's okay.
Making progress in this direction and we expect.
That is the PGS will be a significant part in what I have described before as the emerging market for us within the mobile infrastructure. This is where we expect our big wins to be.
Okay I see.
So 128 technology wise, both by Juniper earlier this month.
Okay Onetwenty eight yet.
Go ahead, please look at the.
Now the top but an impact since you have 500 times you reported some design wins in collaboration with that company.
Can you run the question again, what you asked.
Yes, well funded 28 technology the software partners.
What both by Juniper earlier this month.
Yes, Mike any does it have an impact and you send to you our parliament I knew we partied some design wins in collaboration with that company.
Well first of all I think I'm not 100% sure that while the fact that we are partners with that went with the eight a.
Is public information, but specifically about design wins im not sure that there is any information so I cannot refer specifically to any design wins. However, I can repeat the general answer that I provided before about impact of consolidation within the as the one industry.
Were.
We definitely do not see any negative impact short term, probably a positive impact on the short term and as for the longer term cannot tell yet it may be positive may also be negative in some cases.
We hope based on discussions that we had with one to 88.
That it's going to be positive, but we cannot be sure about that.
Okay do we know anything about the cynic of Telefonica on Flexi wind project positive bite into any progress on that that you can share with us.
I cannot share I mean, we have okay.
In the conversation.
That's a.
We are involved in discussions with many of the world's leading telcos and unfortunately I cannot provide any specific information more than that right now.
Yeah in the second.
Do you currently have any visibility into the next year Twentytwenty one.
Well I believe that Twentytwenty, one will be a growth year.
And there are still many unknowns.
Including the impact of Koby 19 or on the business.
Which is good.
Which could havent still an impact from a variety of perspectives not only in.
Disruptions of the supply chain, but rather on day rate at which events are being performed or even deployments are being performed in certain places. So we cannot be sure of that as of now there is unclarity, but we consider it to be a year of growth.
Okay great.
The third reason is extending that interest rates are going to stay at zero percent level for a long time for some yes.
You will have a net cash position of one third of your market capitalization. In my opinion, you are not going to need around 30 million of these cash for working capital needs video.
Did you have any plans with this extra guys hi.
I think it would be really nice opportunity for you to do a tender offer increase or accelerate the share buyback program.
Okay.
During the call.
Where we are.
Camilo.
Second buyback plan.
Our growth plan.
To me.
The target.
Okay.
$60 million.
This is currently our plan.
Okay and anything from M&A.
Well just like we always say M&A there is nothing specific on the table right now, but we are always looking.
We our strategy is not to go for an enema M&A just because we have the cash.
But definitely having this cash encourages us and makes us look around look for synergies and if we find something we would go for it.
Yeah in the pen and now about the Cobi and any did you have any goalie Casey said Silicon holdings.
How do you deal with them.
Yes first of all we did I mean, we had I think two employees.
And that were hit by COVID-19.
But I mean, we're taking what measures, which allow us to add to operate properly by splitting the company's into capsules in a way.
As a part of that it may even be that you're not hearing we as as good as you would have heard me or as you might have heard me in previous calls because when the meeting room that we typically use for for the conference call is now a lab because we decide.
Two divided labs into.
Several capsule so that if someone is indeed being infected by by Cove. It. It does not mean that everyone else needs to go on because we do have lapse and as a hardware company. We cannot allow everyone to work from home. So we're taking the right measures and I think that the result is some sort of.
Translation to that I mean, even though.
Yes to all of our employees separately a were.
Infected by Cove it.
The number of employees, which had to be quarantined due to that with minimal maybe two three in each case and the company could continue as usual.
Hey, perfect.
My final question would you expect the lump them in Europe have an impact thank you.
Lockdowns may cause an impact I don't think that.
The locked out in Europe, specifically.
It would have a dramatic impact, but they may cause an impact I mean, we have a.
We have a as you know its subsidiary at.
Company in Denmark, I mean, right now, they're not impacted of course, but we have customers in other territories.
Which.
Could be significant for us. So it may have an impact that's a part of what I said.
Said before that.
2021, but there are still definitely some.
Some areas, which are not clear as to how and what would develop and thats definitely a part of that.
Okay. Thank you perfect Thats all thank you for your time.
Thank you.
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There are no further questions at this time before I ask Mr. Orbach to go ahead with his closing statement.
I would like to remind participants that a replay of this call will be available tomorrow on Silicoms website.
We definitely W. Silicon Daschle, USA Dotcom Mr. Barba would you like to make you concluding statement.
Yes. Thank you operator, thank you everybody for joining the call. We wish you all health and we look forward to hosting you on our next call in three months time good day.
Thank you. This concludes Silicoms third quarter 2020 result conference call. Thank you for your participation you May go ahead.
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