Q3 2020 Monolithic Power Systems Inc Earnings Call
1.8% from the second quarter of 2020, primarily due to a pull in of customers requested ship dates.
Communication sales represented 21.1% of our total third quarter 2020 revenue.
In our consumer markets third quarter 2020 revenue of $70.2 million increased 47.4% from revenue reported for the prior quarter of 2020.
This extraordinary growth in consumer reflects a combination of market share gains in gaming Wearables and Iot key applications, along with normal seasonality.
Consumer revenue represented 27.1% of our third quarter 2020 revenue.
In our computing and storage in our computing and storage market third quarter revenue of $75.3 million increased $11.2 million or 17.5% from the second quarter of 2020.
The sequential quarterly revenue growth was broad based with sales gains recorded in high end notebooks servers and storage.
Computing and storage revenue represented 29.0% of MTS is third quarter 2020 revenue third.
Third quarter automotive revenue of $28.5 million grew $10.7 million or 60.4% over the second quarter of 2020.
This improvement reflects a more normal ordering level. Following the Q2 2020 industry wide slowdown, resulting from the pandemic.
We believe MTS is market share will continue to expand in the coming years as we have been awarded multiple design wins in infotainment smart lighting, Adas and autonomous driving automotive revenue was 11.0% of MPS is total third quarter 2020 revenue.
Third quarter 2020, industrial revenue of $30.7 million increased 15.3% from the second quarter of 2020.
We spent in the second quarter of 2020 and up from the $42.5 million reported in the third quarter of 2019.
The sequential increase in Q3, non-GAAP operating expenses primarily reflected.
Higher variable costs associated with the increase in revenue and an increased level of investment in securing foundry capacity.
The differences between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock compensation expense and income or a loss on an.
Unfunded deferred compensation plan.
So the third quarter of 2020 total total stock compensation expense, including approximately $707000 charged cost of goods sold was $23.1 million compared with 21.1 million.
Recorded in the second quarter of 2020.
Switching to the bottom line.
Third quarter of 2020, GAAP net income was 55 $6 million.
Or one dollar and 18 cents per fully diluted share compared with $32 million or 64 cents per share in the second quarter of 2020.
In 29 $5 million or 64 cents per share in the third quarter of 2019.
Q screen non-GAAP net income was $79 $4 million or one dollar and 69 cents per fully diluted share compared with $56 million or one dollar an eight cents per share in the second quarter of 2020, and 49 $5 million or one.
Dollar and eight cents per share in the third quarter of 2019.
Fully diluted shares.
At the end of Q3, 2020, or 47 Oh million.
Now, let's look at the balance sheet cash.
Cash cash equivalents in investments were 554 $5 million at the end of the third quarter of 2020 compared to $515.4 million at the end of the second quarter of 2020.
For the quarter MTS generated operating cash flow of about 77 $4 million compared with Q2 2020 operating cash flow of 59 $3 million.
Third quarter of 2020 capital spending total $19 $6 million.
Accounts receivable ended the third quarter of 2020 at 93 $5 million, representing 33 days, a sales outstanding which was six days higher than the 2007 days reported at the end of the second quarter of 2020, and two days higher than the 31 days at the end of the third quarter of two.
19.
Our internal inventories at the end of the third quarter of 2020, $148 $1 million down from the $152 $1 million at the end of the second quarter of 2020.
Days of inventory of 116 days at the end of the third quarter of 2020 or 50 days lower than at the end of the second quarter of 2020.
The sequential drop in days inventory on hand represented an anomaly do.
Due to a decrease in the dollar value of inventory and a 39% increase in quarterly revenue.
Currently our inventory levels are lane.
We are working very hard to return inventory to the 180 to 200 day level necessary to support our future growth.
I would now like to turn to the outlook for the fourth quarter of 2020.
We are forecasting cute for revenue in the range of $218 million to $230 million.
We also expect the following gap gross margin in the range of 50, 512, 50 755, 7%.
Non-GAAP gross margin in the range of 50 542, 56.0%.
Total stock based compensation expense of $21.8 million to $23.8 million, including approximately $700000 that would be charged cost of goods sold.
Gap R&D and SG&A expenses between $81.3 million, and 85 $3 million non-GAAP, R&D and SG&A expenses to be in the range of $62 million to $62 $2 million.
Litigation expense should range between $1.8 million to $2.2 million.
Interest income is expected range from $1.1 million to $1.4 million.
Fully diluted shares to be in the range of 47, one to 48.1 million shares.
In conclusion.
We will monitor market conditions closely and continue to execute.
I will now open the webinar up for questions.
Thank you Bernie analysts I would now like to begin our Q&A session. As a reminder, if you would like to ask a question. Please click on the participants icon on the menu bar and then click the right 10 seconds.
Our first question comes from Tori Sandburg from Stifel. Tori Your line is now open.
Yes, Thank you and congratulations on the billion dollar run right.
First question is Q for guidance could you talk a little about which is some of the end markets that's going to be performing in queue for obviously I know communications is going to be down, but what about some of the other markets for the December quarter.
Hi, Tori Thanks for your comment any on the $1 billion run right [laughter].
Yeah. If you if you compare ourselves against Q3, obviously that was a high watermark.
So probably more relevant comparison is.
Against Q4 of 2019 and on that basis, we're expecting all of our major markets to be up.
Significantly from the prior year and then when you do the comparison against Q3.
You will see that the probably be declines in communications.
And computing.
And also in consumer the consumers seasonally adjusted but would still expect to see improvements in industrial automotive.
Very good and is my follow up you mentioned inventories are pretty lean.
So can you just elaborate a little bit on what you're doing to try and get the inventories back up.
Said, you had some opex to make a secure some foundry capacity, but anything else you can add sort of how you're going to get back to that 180 days of inventory.
Sure I think as we acknowledged in Q3.
That we were able to catch up as far as having adequate capacity in order to service near term demand.
And I'm, giving guidance for two for that.
That expectation follows along.
When we look ahead over the course of the next 24 months.
We've previously mentioned that we're entering into new relationships with other fabs.
And expect to grow our overall capacity. So this will be an ongoing investment that we would project.
For at least about the next six quarters.
Great. Thank you and congratulations again.
Thanks story.
The next question comes from David Williams from New capital David Your line is now open.
Hi can you hear me.
Yes, David I can.
I think there's a mistake it's will Stein from trust how are you I guess I'll just go [laughter] Ernie.
Ernie first clarification.
The the inventory the inventory target that you called out in your script. I think you said 180, 200, I think Thats 20 days higher than what you said on the last conference call is that correct and if so.
Can you help us understand what's changed.
The.
Previous metrics that we have been using we're about 20 days lower that we've really made this change as far as what we've been trying to explain to.
The analysts them to investors over the course of about the last two.
Two to three quarters.
But nonetheless, what I do want to address your question, which is in order for us to sustain the level of growth that we have in excess of our market.
The industry that we have to have a higher level of inventory. So in other words, there's a mismatch in other words, we are building inventory today, but we're not going to.
For the sales that will occur one or two quarters out.
And so it's not a perfect reflection for for other companies.
Where they're not growing as fast they can maintain lower levels in terms of days.
But here again, we have to make an incremental investment in order to allow us to support our growth.
Remember it uhm and the last year.
And we're at.
Around 200 days of.
Of inventory, if you use that model and to meet that this year gross.
Now probably that's about the ride numbers, that's well that's the basis.
We.
That's the way the way.
Uhm plenty more days.
Ah compound and uhm. So if you go to a little more a little more details.
And.
M P S.
It's a fabless company and yet we have one on technology is a very unique.
I can't think of any any of our competitive.
They have a very in the same same same way of Ah Manufactories M. I'll do the to fulfill that they're manufacturing most of them to have <unk>.
And so given the volatility and I'll also give them the <unk>.
<unk> the way that we have and also a member of a product and the address the all new occurring Greenfield Greenfield.
Greenfield market assignment, we need are probably a more than 200 days inventoried.
Okay that that helps a lot if I can have one quick follow up the guidance Wow, great overall on revenue EPS the margins are a little bit.
Different from what maybe some would have expected and Burny I'm just wondering if you can tell.
Tell us yes.
The model, we should be thinking about which historically was that gross would grow at 10 to 25th quarter and margin.
There was a I guess a change in that view that perhaps we wouldn't get any operating margin leverage for the next year or two maybe you could just update us on that on that model for both of those lines.
Sure and I think that you capture it very well is that.
Obviously, our model has been to improve gross margin 10 to 20 basis points sequentially.
You know a lot of factors way into being able to deliver against those results, including both are mix of business as well as what the market looks like.
So again you have to use these as guidelines.
Not as an absolute.
Guarantee of what our performance will look like.
And then on the operating expenses.
Right now we are going to be continuing to invest in capacity.
As I said in each of the next six quarters, so that that'll be an additional layer of investment so what we've seen and so as a result, we're not projecting.
Are operating margins to improve significantly over the course of the next two years.
Or or up up X I think is that right in other words op margin would just expand with gross which is 10 to 20, guys a quarter or yeah. Okay great.
Great. Thanks for any I'll get the.
Get back in cute [laughter]. Thank you again.
Our next question comes from David Williams from New capital David Your line is now open.
Our next question comes from Quinn Bolton from Needham Quentin Your line is now open.
Hey, guys.
Offer my congratulations on a very.
Very strong September and December outlook urging Michael.
These are sort of unprecedented times in the business and I know you don't typically look out more than a quarter, but I guess one of the questions I'm hearing from investors is whether there is any sort of.
Inflated demand still impacting the business in December quarter.
And wondering.
To the extent you can give us any sort of thoughts on March would March show a typical seasonal decline from the December quarter of say, 3% to 5% what you would see in a typical year or do you think it could show a greater seasonal factor I know you don't typically go out two quarters, but again this is.
Really strong results here in the near term.
Let me answer that question, so like a if.
If you're talking about Bob normal seasonality than the outlook is great and how we were.
We have so many design.
In activities and we said, there's so many of all the projects Mckimmey and.
<unk>, but and.
And.
As well as you know as well as I know some okay. This the wet.
[laughter] Iraq, Okay ma'am.
Pandemics geopolitical issues and I can't predict and frankly I tell us.
If I could just add to that is that.
I I really think that there are certain aspects of our business that we have.
And good control is Michael hit on as far as the design wind activity.
Right now we do not have control over what the end customer demand is ultimately going to be be about so I think that as far as executing against our strategy and seen it.
Show up in a result.
I think we're going to continue along that path, but they're just too many factors for us it would be pure speculation at this point.
Okay, maybe maybe I should ask uhm in past calls you you've you've oftentimes given us some idea of your search starting backlog coverage and I know that typically runs a very high percentage of of the revenue guidance. My guess is with some of that was linked with <unk> you had in the past quarter. You you had very strong backlog, but as you head into the.
December quarter.
Backlog sort of back to more normal levels that it would.
Typically run in the last couple of years is it still an elevated could you give us any thoughts on on China backlog coverage.
Other December call in so I'll go into a December coordinate we're still Tracy.
Tracing tracing delinquencies.
So the capacity of student limited.
And I think what we're seeing here is that.
They said in the guidance that we offered is it anticipates, both the demand, including the backlog that we had coming into the quarter.
And it's matched with what our supply chain and capacity limits are so I guess that I would probably offer that we have some ability for upside, but it's gonna be a little bit limited by the supply chain.
Okay, great. Thank you.
Our next question comes from Alex Becky from William Blair, Alex Pier nine is now open.
Hey, Michael and Burny, Congratulations again in a very volatile environment. If we can just touch base a little more on the automotive segment. Uhm is appears to be the highest revenue corner you guys have posted it's really starting to gain traction segment I realize the environment just.
Starting now to get a little bit better, but can you maybe update us on on how we should think about the long term growth targets. There in the past you said, 40% to 60% growth, obviously that may be a little premature at this point, but but perhaps an update us on how you're feeling on that side.
Yeah, I would probably say that automotive is one of the more exciting and markets for us for the next several years.
Now if you look at our track record in 2019 and 2020.
2019 was affected by the recession.
2020 by factory closings related to the COVID-19 pandemic.
So you know again those are circumstances that were largely outside of our control, but what we're seeing is is that we're expanding now we're from our traditional infotainment base into some of these more exciting technologies.
Including the lighting systems. The eight asked me autonomous driving so we we think that this is a sustainable revenue growth should be well ahead of what our corporate average is going to be.
At one time, we were promoting the concept of being being able to grow consistently at the 20% to 60% per year that would probably back off a back down to a more reasonable between 30, and 40%, but still very exciting and market for us.
Plenty of being tunnel.
Okay.
[laughter] okay.
Alright, great.
We don't have I don't have it clear pictures and what's the grass.
Of frankly, I've never put a nps's.
Oh, we have to grow sudden percentage, okay, and while I'm looking at it as a.
Which what kind of products, which project and.
And how.
How well we positioned and.
Which.
Which customers of which projects that way, along designing and and more importantly, okay, what kind of products.
In the pipeline.
That really drives the pop lines and.
So Hollywood power Highway predicted the what's the next lowest of gross percentage like I can't tell Ya.
No no that's fair, but it's good to hear that the trajectory seems to be sort of back on track.
And then similarly, I don't I don't think and I'm thinking that in the prepared comments you guys commented on.
The extent of the polling into Keith Murray is it fair to say that the vast majority of the sequential decline and Keith or is related to the polling activities or is there also a little bit of normalization of demand in there as well.
Well, we had a lot of putting from a shoe three and a partial partially.
Being.
Q fall and.
While still.
As I said earlier was due facing delinquencies stomach and so I think that's a combination of the growth and and also.
And.
In a capacity shoulders.
So if I'm a former past okay for that path okay.
And then lastly, if I can just on the days inventory the hundred to 200 days.
How long will it take you to get back to that level is that something you can achieving cute.
Lucky into more of the first half of 2021.
Well, if the market slows all we're gonna get that quickly [laughter].
I think she okay, we again and.
Uncomfortable levels.
So we want to increase as much.
Much of that we can and now our engineers and are working a five okay working in a different fabs and and to get the.
To qualify the the the process.
Of technologies and.
So we hope is okay.
In the next six months, so what can what can catch up.
Okay.
I'll go back into <unk>. Thank you so much.
Okay.
Our next question comes from Joshua Blue Culture through Cohen Joshua Your nine is now open.
Guys. Thanks for taking my questions and let me Echo my congrats.
My first question earlier this year, you've mentioned, bringing an additional 12 inch fab online and the second half <unk> I was wondering was this a primary driver of the additional capacity were able to secure in the third quarter and then looking ahead, yeah, how much more capacity do you feel you need <unk> both serve your customers and.
Get the inventory levels up to that that he raised 180 to 200 days.
Yes, Okay. The first question was a yes, absolutely. Okay. We said in the early earlier this year's we expanded another 12, each five but we had the walls in our plant.
All right away.
And let's get that for you know, even okay, and we start shipping product E. Q sweet Okay. That's a that's a very very.
Mm unprecedented thanks to our our peoples and they really wanted a day and a night night to to to manage that from a manager and a qualified.
These these products.
Going forward.
So.
We.
We just want to expand the capacity to reach the.
182, 200 days inventory and.
Going for agreeing with furniture, if you have a very linear world about getting with them very easy to calculate okay.
Think we're living in a very non linear.
Environmental Makemie and.
200, and inventories on occasion, the best first of all we want to do.
Got it. Thank you you're very helpful. It's under my follow up.
Bit of a bigger picture question. I mean, you guys are now a billion dollar reached a billion dollar run right. This quarter are you seeing any increase or changes in the competitive responses from your peers.
As you grew higher on both of <unk> unit basis, and as well as in the socket value. Thank you.
Our asp's, increasing and a <unk>.
When we bought a high end market segments and.
So that's our competitions always pretty similar some okay ma'am.
Our customer doesn't even know mps's billing dollars, okay. They all know M. P S.
And because we are very small copay those against all these a giant.
But I think you would go back to what are competitive basis is it really is is that we're winning with superior technology and a higher level of customer service and I think that's what our customers are recognizing this for.
Right Yep.
Alright, Thanks, guys. Congrats again, thank you.
Our next question comes from a rich Schaffer from Oppenheimer make your line is now open.
Hi, Thanks, you guys and I'll add my congratulations as well maybe just a quick follow up follow on if I can production question I I know you guys have been pulling in the production and foundry partners pretty Crescive Lee.
I mean I know you.
You've spoken I think in the past about sort of once it's done the goal is to kind of be at that 1.2 billion or so and kind of annual revenues and that's not a lot of headroom for you guys at your current run rate Judy current growth rates. So.
I'm curious.
At 1.2 still right number we should be thinking else in terms of your capacity went all said and done.
Maybe what does the timeline look like for that now since you're since you're calling stuff in.
Yeah, Okay, the obvious sort of 1.2.
No it's not enough.
And if you want a bidding a fast in on the 200 290 minutes or get some over even more than doubled okay now.
That's what we tried to do and and and.
And it's not easy and that's what we in any for just doubled.
And I think that the in the past you know.
<unk> security and fab capacity and being able to introduce new products at the rate that we are is really nothing new to M. P. S. But the scale has been getting bigger.
And so that that's why the investments that time that we have to plan ahead.
It makes a difference and so all we're doing is preparing both for the capacity, but also recognizing acknowledging the investment that goes with it.
So if we have four and 18 months 24 months I mean is there a bogey for what to use for you. Thank your capacity will be I mean, if it's not one to is it is it.
Whom higher than that but I just was curious if there was a number you can share her she just you know at this point.
All we were doing.
I'm, sorry, I wasn't that clear we're shooting for two two billing box, okay, I'm, sorry, I misunderstood guidance sorry, Thanks, Michael and then just a maybe a question if I could on <unk> and you know maybe I was hoping you could talk a little bit about your exposure to the tier one five G ran OEM. So the one that you're allowed to sell to you of course.
Where you are in terms of of.
Of revenue ramp or or design went activity. I mean are are any of these guys.
<unk> smiled, yet or are you sort of initially seeing more.
<unk> issues kind of similar to what you saw in the early stages of your your cloud circle around.
I think it was a five jeez that the overall.
Only stage and and all I can say now to make and now the way engage with all all the fire station makers and we do have a designing activity.
And we do have award projects and end up but it's not significant revenue yet.
Thanks, Michael.
Our next question comes from <unk> from Deutsche Bank Rasia line is now and.
Hi, guys I.
I'm going to get the same congrats that everybody else did a stupendous work here a couple of quick questions first when do you expect to delinquencies to be gone.
It was a market slows down so we're going to do the next quarter's [laughter].
If the demands do that draw we continue to face that in we see summers are not as bad as the last quarter's Alaska two quarters.
And then on the supply side of the equation somewhat but maybe even more of a regulatory issue.
What's the exposure and how are you dealing with the Huawei ban and does the SMIC ban have any impact on you whether it's on the supply side or otherwise.
Oh, Whoa, Oh always not our customer I was I was not our suppliers from okay, but.
Smith, Okay. It is our our supplier so that gave me and so far is not not effecting that's K me and we don't know we can't speculating Okay. What does.
What does all the the policy means that came in but on the other hand and we.
<unk> diversified our.
Our foundry sources, Okay, we're starting from beginning of of Ah.
Of this year.
Speed it up.
So on the wall way, so I'd just be clear.
You had them as a customer I believe in the first half of the year, one way or the other and I assume you are no longer shipping to them and I just wondered if that's.
Part of your Fourthquarter guidance has been going to zero.
Well, we can't say is zero all all awesome.
Non zero, so much <unk> and it's so far so much and we cannot ship and.
But.
There is a.
Although.
Rules and the regulations coming out and I know all the the permits I came in we can okay, speculating or what what kind of things that we can do.
And is all depend on our government.
I guess the last question then away from government type of questions is.
Bernie of you and Michael have had a framework in for many many years about the percentage superior growth versus the analog markets that you guys have delivered I think it's been kind of a 10% to 15% positive delta in your favor.
Is that rule just thrown out the window now this year is 25 30 points above that peer group and I know one year doesn't make a trend but.
As you look at it is there something that's creating some semblance of escape velocity, where that delta expands meaningfully just due to the breadth of your design with the market you're targeting or do we expect a little bit of reversion to the mean in 2021 after such a great 2020.
Well you know.
I can and.
As I said the word is not linear so not get me and and I remember and I was facing a lot of hours of space I was facing a lot of questions about that when our model will be our model is it like a 20% to 25% growth rate.
<unk>.
<unk> 2016, 17, so asylum 15, 16, and we will criticize the yoga would never get that all the web somewhere around 17, 18%, okay and and so.
And.
You asked this so many times you are forced me stay at home at the time that I think.
Figure out Rama 2016, I've said, a bucket by 2018 19, so we're going to get it over and over and over 20%, Okay and.
And.
Pulling.
Commented pulling off on my phone.
For my here.
I don't have it doesn't off I suck at me in a in a non linear where does okay, miss very difficult to predict and uhm. So I said.
<unk>, we only anticipating us in that game and by staffing the inventory and ducking M. A buy stock inventory and and just get ready to make them and.
Of course.
In the world crashes, Okay of course through or not.
Or just lots of deep breathing even tolerate some okay, we mop duty.
<unk> okay.
As much okay and.
So we can modulated <unk>, a little bit okay for the growth rate <unk> I see so like all these designing activities and that all the the projects.
I will set the last couple of years is better than two or three years before.
And the award there's a lot more high value products high.
Hi value sockets.
That's great. Thank you very much. Thank you yeah. Thank you.
Our next question comes from Tori Sandburg and stiffer sorry, you're nine is now open.
Thank you I just had a follow up I might go on an E. Commerce. That's obviously a business model that can help you manage capacity and then transfer and so forth.
Have you been able to keep up with investments there in this environment, maybe you could just update us on where E commerce business fence today.
I, we didn't prepare the members in a Catholic the we're doing really good.
[laughter] and [laughter] I thought leather and nobody going to ask a question [laughter], we have much other news.
It is I think the way uhm.
I feel I can set with figure out a way to do it.
<unk>.
Until would prove alfalfa wrong again.
The.
The.
New websites I think of that you'll see it <unk>, it's a very different and we increase.
<unk> and the customer stay on the pages for a lot longer.
And also we creating a few creating a virtual at the end.
Part of our also helps the Hulk.
Also help the ecommerce so we don't have the pull out.
Isn't it and have them, a palm pounding the pavement and that to generate and.
To generate.
Uhm.
Opportunities and we using the website and the band members and the increase.
Five increase a week late.
And Ah.
I'm very pleased today and that and.
So let's talk about few hundred percentage increase that came from a small numbers doesn't mean a lot but.
For us and when moment, that's the trick that's the Airways are we going to do okay, we're going to enhance that.
I'd, even go that there's a an even higher arching strategy here work E commerce as a significant part of and it's really how do you go after underserved customers and Uhm what was surprising to me is we did a look at the last.
Three years as far as how many customers did we have that we're under $100000 and how is that base growing.
Because if you can use the the linear model.
Where what they used to do is get get in there early the linear technology.
Technology get in there early and then develop these long term relationships and then you grow with their growth and so as a part of that strategy.
I think I think we're the numbers I looked at we're doing a very good job.
They're starting to make their dividends. We increase then these and then go about.
Three or four times.
And <unk>.
And.
Pharmacy from a small base.
And.
That is a significant.
Happening in the last few years and that now clearly we can.
We can put our metrics and.
So I'll say it is what you measure would you get lucky and we know how spot so.
Know how to what to measure it.
And that's to me is a very important.
But the look at the revenue wise okay.
It's become meaningful but I don't have a clear details so I can't I don't want to have a tough.
Ah pull out my hair numbers [laughter].
That's great. Thank you very much Michael and already.
Our next question comes from Rick Shafer from Oppenheimer. Rick Your line is now open.
Yes, Thanks, My companion and speaking of things that you haven't been talked about as much maybe the last couple of quarters I'm I'm curious if you could give us an update on the design when pipeline or revenue color for for your converter business.
Just curious is Adi Maxim open.
Opened any doors for you guys and have you seen the level of engagement with customers increase you know maybe as a side note are you are you seeing more.
More analogue.
Design by an engineer resumes.
Is it easier to find guys. So I'm I'm just curious you could give us any update there. Thanks.
And finding a good people's always cause all these a good company to keep the people.
And that's all [laughter], that's always a challenge is okay and.
So we know that we need a diversified some that came in.
A lot of times, Okay last.
10, 50 years or more.
Multiple are more likely like the last 20 years, we have a lot of People's from China, <unk> and now okay.
204, or five years ago, where migrated to Europe and I am.
<unk> outside of the <unk> the.
The mainland China, Okay now in the last couple of years that will come back to us and we do.
C K.
<unk> necessary in the in the.
In the Bay area, but other parts of the country. So okay. We do have find some pilots there.
And Michael any update on what's happening with converters for you guys.
The converters.
What which the.
The signal changed up the team you brought in.
It's been a couple of quarters since we talked about it.
<unk>.
Oh, hi performance and longer yeah, all yeah.
The data converting okay, yes, okay.
I think a way.
We received the first.
Chip, Okay, and then this prototyping, yeah, and I think of the word building a solutions and.
So.
The most of the time, but.
The first ship or have some box okay.
But as a wiggly and and.
Building a polo types. Okay. We're still can put it in our system now.
Got it thanks chest.
Our next question comes from Williams Stang, a chest William your line is now open.
Pull up from before.
We're just <unk> someone else after that E commerce, but.
Hoping you might give us an update on the emotion and module business and maybe the program Bull crap.
Traction generally I think about the the sort of separate from ecommerce, maybe they're not as separate but an update on this part of it would be really helpful. Thank you.
Yeah, I think that we use that E commerce platform to promote those products.
And.
That.
E Motioning side.
Things that revenues.
I hate to say some number now otherwise I don't know what you guys think of what I do have my members I want to have a permanent bucket. So how does that is the increase the almost doubled the the modem.
The motion site emotion is right in that sort of transition phase because we have a lot of design windows are going in so last year. The revenue run rate was somewhere in the 10 to 12 million, but now the doubling and he was gonna start, particularly as we go into those automotive and industrial application, yes, yes.
So so I was.
I am correct.
It was about double it [laughter].
I think also when we look at the modules business that is taking on very nicely.
Even Mario started with a smaller base like a few hundred percent increase okay and that was the 40 30 40 minute yep.
Okay and was that is the strength that you're seeing there at all related to the pullins and delivering against delinquencies you had previously or is this.
Part of the the rest of the business, what I want to think of as core that might not have.
No.
Notice a small part of as a due to a delinquency some that came and visited the new market assignment and.
People from all of them online and we never win them seagulls, Okay ma'am.
And.
Our <unk>.
Our only internet and that gave me on websites and look at it from our distributors limit and these are very small customers. They never all of those pulse before and that's although the numbers are small.
Oh.
Revenues too small for the large number of our customers and.
<unk> they use of all.
These are putting play modules and.
So oh, well, we and they can just a plugging and and they don't have to do any designs and things that you mentioned about programming pushing it that's part of what we learn that the outcome.
I'll custom doesn't even want to build programs are getting what they want us to do it okay.
And so.
We created a virtual a laugh then we customer tell us what what they want some okay and.
We shull, Okay wait in our labs, Okay. We program everything I know then we ship. Okay. So now you can talking about it.
It's a really a custom designed for each customer.
And and that is taking off and I'm very glad to see it.
And just said persuaded final comment there is on the modules, they're not necessarily tied to anyone and market <unk>, they're actually very broad base. Initially we thought that they would be plug and play solutions, particularly for prototyping or small volumes, but it turns out that they're actually going to means means.
[laughter] mainstream production, yes, yes.
Yes and.
So that's something we learned in okay, and the home of engineering, Okay, I'm, a I'm a student engineers in Macau of people.
And we see created these are great products that we see us I came in with playing like a slowly parameters 70 parameters on the website. They can program and they can see what the result of that on the.
Bummer simulations can't seem to have and it turned out to be his okay and would put all on there and nobody looking at it and the way wondering why.
And so whenever we reduced to have when when you had another half the reduced to 567.
I still don't want to see it and then they want a car they want us.
They want to.
Take the numbers.
And Ah talk to you you do that for me, Okay and that that's great. We can do the work stomach ache they pay for it.
Oh, that's fine okay.
That's great detailed progress thanks very much.
Our next question comes from Quinn Bolton from Needham Quenya line is now open.
I just wanted to see if you might be able to give us an update on your efforts in the G. P U space for for either desktop uhm or datacenter G. P U G.
Just looking at the power consumption of those devices I think you're seeing desktop Gpus now consuming up to 300 Watts I think data center, maybe up to 400 watched you guys think you can talk to about that back an analyst days a potential opportunity just wondering if you're starting to see any real traction or if you're starting to add needing a curve on either the.
The gaming or the datacenter sided gpus.
Yes, we're seeing substantial movement on both we probably started out earlier on the desktop.
When we started generating revenues with this about 18 months to two years ago and now we're moving into the data center, where we actually are starting to ramp.
And in particular 48 volts for artificial intelligence so.
The opportunities are significant.
But we're still at the very early stages of <unk>. This market. So fundamentally we're very well positioned but it's still gonna be you know another year or two before we still move the dial with revenue ramp.
Bunnies talking about these are over a thousand watts.
And and.
It's about two or three or 400, what level. Some okay. If you get that high level you won't be talking about only a few company. They can supply the those type of product and I think we are in a good positions and but always can be better.
Great. Thank you.
Is there any follow up questions. Please click the rain 10 by 10.
Okay.
There appear to be no further questions I would now like to turn the webinar back over to Bernie.
Great. Thanks, Jen I'd like to thank you all for joining US This conference and look forward to talking to you again about our fourthquarter results would sure I would like to be in early February. Thank you and have a nice day.