Q4 2020 QuickLogic Corp Earnings Call
As a reminder, today's call is being recorded for replay purposes through February 24th 'twenty 'twenty, one I would now like to turn the conference over to Mr. Jim Fanucchi of Darrow associates Mr for them. He please go ahead.
Thank you Sherry and thanks to all of you for joining us our speakers today are Brian Faith, President and Chief Executive Officer, and Dr. Sue Cheung Chief Financial Officer for.
Following current social distancing practices management is doing this call from different locations today as a reminder of some of the comments click logic makes today are forward looking statements that involve risks and uncertainties, including but not limited to stated expectations relating to revenue from new and mature products statements pertaining to quick logics future stock.
<unk> design activity and its ability to convert new design opportunities into production shipments timing and market acceptance of its customers' products schedule changes and projected but projected production start dates that could impact the timing of shipments the company's future of evaluation systems broadening the number of our ecosystem partners.
And expected results and financial expectations for revenue gross margin operating expenses profitability and cash.
Actual results or trends may differ materially from those discussed today for more detailed discussions of the risks uncertainties and assumptions that could result in those differences. Please refer to the risk factors discussed in quick logics. Most recent filed periodic reports with the SEC quick logic assumes no obligation to update any forward looking statements or information.
Which speak of as of their respective dates of any new information or future events in today's call. We will be reporting non-GAAP financial measures you may refer to the earnings release, we issued today for a detailed reconciliation of our GAAP to non-GAAP results and other financial statements. We have also posted an updated financial table on our IR webpage that provides.
Current and historical non-GAAP data. Please note quick logic uses its website the company blog of corporate Twitter account Facebook page and Linkedin page as channels of distribution of information about its business such information may be deemed material information and quick logic may use these channels to comply with its disclosure obligation.
Under regulation FD, a copy of the prepared remarks made on today's call will be posted at quick logics IR webpage. Shortly after the conclusion of today's earnings call I would now like to turn the call over to Brian.
Thank you Jim.
Good afternoon, everyone and thank you all for joining our fourth quarter and fiscal 2020 of financial results Conference call.
Before I discuss our quarterly results and review the status of our strategic initiatives I'd like to take a moment to reflect on the past year.
2020 was full of challenges for all of US both personally and professionally.
I want to personally thank the quick logic team for their tireless efforts as we work through the COVID-19 challenges.
With the recent introduction of multiple COVID-19 vaccines and the improvements in COVID-19 related treatments. There is finally, a clearer path to getting past the pandemic.
'twenty 'twenty was a transformational year for quick logic as we accelerated our move from being primarily a product company.
Two of platform company, leveraging artificial intelligence and open source software, especially for programmable logic technology and the multitude of devices that include it.
This move will significantly broaden our addressable markets and is expected to deliver improved financial results and fiscal 'twenty 'twenty, one and beyond.
I'm often asked the share more perspective on the evolution of our strategy.
One way I would describe the transformation that we are pivoting away from high risk high reward opportunities in the high volume consumer market and instead, focusing on delivering a more scalable platform that is tailored for the masses.
Implementing this change took and the incredible shift in mindset here of quick logic and I am proud of our team for being open minded resilient and committed during this process.
We persevered through the difficulties of that came with 2020 and I believe we are now about to enter a period of sustained growth for the company.
With that as the backdrop I want to spend some time discussing the pillars of our expected financial improvement in fiscal 'twenty and 'twenty one.
There are three key areas that will drive our growth the.
The first an overarching one is artificial intelligence and machine learning or AI ml for short.
Second is our previously announced open source of programmable logic collaboration with Google in the micro initially and now expanding rapidly to include several of additional partners.
And third are the initiatives behind our growing SaaS and IP licensing model.
Let me start with an overview of our AI ml initiative.
The understand the size of this market I would like to note that based on research, Brian The international consulting firm edge AI alone will enable tens to hundreds of billions of units in the coming years and potentially drive of semiconductor Tam north of $4 billion by 2025, just for edge inferencing.
This opportunity is easy to see for example think of the devices inside the home.
There are likely dozens of sensors already in placed in devices, such as Internet connected speakers doorbell cameras thermostats Tvs streaming media devices, numerous tablets and appliances to name just a few.
The patent the technology and deep domain expertise, the quick logic and sensible possess.
Including FPGA technology, AI software and low power of Mcu's all fit within this market.
We are addressing these opportunities using our end to end hardware and software solutions quite literally we are structuring our product at all of them and there's all of these initiatives to make the products more accessible for large high growth markets, such as Wearables <unk> smartphones consumer electronics industrial military and Iot.
Second is our programmable logic collaboration with Google in that micro called the quick logic open source Reconfigurable computing, our core initiatives.
We began work on this program in 2019 and publicly announced it in 2020.
What we are doing with our core initiative is groundbreaking.
This open source tool chain, which sits on top of our hardware makes the technology more accessible to the masses and easier to use for software engineers.
We are also providing support for our E. S. S III MCU and future support for new S. Ocs F. P. G. H E. S. P. G. A I P, which will be an important part of our revenue story, starting in late 'twenty or 'twenty, one or early 2022.
The third pillar is around our sensible SaaS and E. S. P. G a IP business.
The sensible model is subscription based while the customer is using the tool during development with per unit royalties upon production shipments.
Our FPGA IP business model as an upfront license and back end royalties on units shipped.
What that means is we have stickier revenue as customers start subscribing or using the IP and then as they ship in volume, we get the benefit of having the royalty coming in from the units shipped on the different products.
This also has a positive impact on gross margins.
Yeah.
We expect the SaaS part of our business will show significant growth in 'twenty and 'twenty one.
We continue to ramp of our ecosystem partners, which includes S. T microelectronics NXP Nordic semiconductor arm and our authorized design partner Optimus logic.
Moreover, we have a deep engineering and business engagements with two additional large semiconductor companies in the recent two quarters.
Both of which we expect to announce the ecosystem partnerships with sensible in the coming months.
In December we launched the sensor more community addition, expressly for the needs of experimenters innovators and product R&D teams.
The community addition provides the means to build fully functional edge Iot inference models using one's own existing label are unable datasets newly.
Newly captured sensor datasets using sensible data capture lab or models built leveraging sensible as growing data depot libraries of example, and community datasets.
Okay.
Since the start of the year, we have added more than 100 community addition, users and you expect for the number to increase throughout the year in.
In addition, we are seeing a surge of new large enterprise pipeline activity.
While the cycle the attorneys enterprise opportunities can take several months the size of these potential deals means even a few wins can contribute meaningful revenue.
With that overview I wanted to shift to a discussion of some key events in Q4 and the beginning of this year.
Yeah.
Within our voice activated products program. We finally completed certification testing of our voice activated durable reference design with Amazon's Avs team.
This has been a long and difficult process, taking much longer than we ever thought.
The delay of it was brought on by challenges working with the communication chip that was not ours.
We also had to overcome COVID-19 related work restrictions that prevented our engineering team from working on site to solve the issues.
In spite of these challenges we persevered.
In addition, another voice related project was completed towards the end of Q4.
When combined we are now confident that these voice enabled solutions, which are scheduled to come to market. Later this year will materialize into revenue for us in the second half of the fiscal 'twenty 'twenty one.
During the quarter, we shipped a few hundred more quick further development kits, leading to approximately 700 by the end of the year.
The pace of accelerated with the hamster non I O of climate change challenge and has steadily continued during the first quarter.
Our goal for 'twenty 'twenty, one is to ship more than 2000 Dev kits, continuing the proliferation of our devices and software into the masses.
Toward that desk could go we are in the process of launching three new desk kits. The first is launching this week in conjunction with our Amazon Avs certification called the quick feather a b S reference design, which can be ordered from the quick logic website.
Shortly we will be launching the next generation of quick feather called Spark fun thing plus quick logic he owes the three.
As the name would indicate this dev kit as being manufactured and sold by spark fun, a very popular online retailer of electronic Dev kits and components.
This new desk it will launch exclusively I'm proud of supply after which quick logic as well as Sparkman will also distribute it through our collective worldwide distribution channels.
Spark fund has a diverse set of sensor boards that can connect seamlessly with the thing plus Dev kit, making it easier for our customers to build proofs of concept for AI ml enabled systems using E. S S III and sensible.
And last but certainly certainly not least we announced our smallest dev kit ever last week called the chrome.
One of them is a tiny form factor Dev kit the brings the power and capability of our E. S. S. Three S O C into of USB type a port.
It launched exclusively on crowd supply and will become available on a quick logics website. After the crowd supply of campaign ends in about a month.
All of these Dev kits are enabled by an optimized for our core initiative.
The kids are supported by a wide variety of the vendor supported open source development tools, including Zephyr free our TASS simba flow and renewed which broadens access and the enables designers to develop applications virtually anywhere.
In addition, these development kits should drive E. S. S. Three S O C and the sensible revenue in 'twenty and 'twenty, one as customers engage and turn them into the actual products with real volume behind them.
The momentum in our smartphone business continues with the addition of of another two five G enabled smartphones.
2020 was the very good year for our smartphone business as we exited 2020 with a total of 10 up from three at the start of the year the.
These new phone launches should lead to much stronger revenue in 'twenty 'twenty, one and beyond for the smartphone segment for us.
In our E. S. P. G of IP business, one of our early engagements as recently taped out their test chip.
Barring any geopolitical related risks, we could see a full E. S. P. G. A IP license in the first half of this year from this customer.
The chips are back now in the customer's testing is progressing.
During the past few conference calls, we have not gone into detail on our IP strategy and I'll share a little more today.
Quick logic, and the University of Utah, where you have you.
Initiated discussions of approximately 18 months ago true research, how we could integrate advanced semi conductor layout of automation techniques into quick logics S. P. G. A IP compiler tool called Borealis.
This endeavor sought to leverage you of use research and open source automation techniques, which is DARPA funded research as part of the electronics resurgence initiative.
And quick logics deep domain expertise in commercializing FPGA technology across numerous foundries in the process nodes with high reliability quality and manufacturing in volume.
The results are game changing.
What previously took 18 months and millions of dollars now has been reduced to approximately three months and the fraction of the cost.
With the significant overhaul of the Borealis complete.
Logic was able to go from customer engagement to new IP delivery in record time and close a new production IP license in this quarter.
There will be more we can share on this in the future.
Lastly, in our mature segment. The COVID-19 related issues remain a challenge primarily for the civilian of aerospace sector. While we did see a seasonal uptick in Q4 revenue. There has been no change to our outlook for mature product revenue and continue to expect it will be flattish with 2020.
I know I've covered several items, but the antennas the offer context around the many pieces of quick logic that I believe will lead to better financial performance starting this year.
As I've said before if you believe that AI and machine learning is here to stay if you agree with the research that programmable logic brings value in these use cases, where algorithms are evolving faster than the use of technology can keep pace. Then I think you will believe the quick logic, because the very strong opportunity to take advantage of this evolving market.
I believe the windows that are back and I'm personally very excited about where we are and what 'twenty 'twenty. One is going to bring on all of these different fronts.
Before we review the financial results as many of you know today as soon as the last day of with the company.
One of thank sue for her important contributions since joining the company in 2007 and for her guidance as our Chief Financial Officer since 2016.
She was a partner to me as we started the transition of our business and was an asset to the company during the challenges of COVID-19, Brian.
Sue leaves us in a sound financial position.
All of us of the company. Thank Sue for her leadership partnership and friendship and wish her the best going forward.
Starting tomorrow, Anthony Concho has assumed the position of Chief Accounting Officer.
Over the span of his 30 year career, Anthony has held many senior level of accounting and finance related positions.
I've been impressed with his efforts to date and I'm confident he will build on the foundation Sue has created.
With that I will turn the call over to Sue.
Thank you Brian.
This is my last earnings call with the company.
And the ask of almost one of the Harrison with the project.
Glad to have happened as of two maybe let everyone know how proud I am of what we have achieved.
Especially the dealer in the translation of more software of open source and the IP.
He spoke of the company.
And managing the business.
The challenges brought on by the Covid Index.
Click logic is well positioned to improve the in 'twenty and 'twenty one.
And I'm confident.
That's the day are yet to come.
Anthony and I have been working together since I thought.
Arrival last month.
On the content than the upgrade.
Afraid of resource for the company assets.
He has sales.
Leadership all of quick logics of finance.
Now moving onto the fourth quarter of ourselves.
For the fourth quarter of fiscal 2020 revenue was $2 5 million as compared with the Romney off of 1.8 in the already in the Q3 of 2020 and at some 0.9 of them in the <unk>.
Fourth quarter of for 2019.
Within Q4 guidance late in Q4 revenue.
Sales of new products for 837000 net compares with 639000 in Q3 and 710000 in the fourth quarter were 29.
Our mature product revenue was one 7 million compared with the one one last quarter and $2 2 million in Q4, yes.
In the fourth quarter, we have of two customers, we checks accounted for 10% of our greater all of our sales.
Non-GAAP gross margin in Q4 was 61.5 per cent compared with the 53.9 percentage in the prior quarter and 65 six Chris any of the same quarter of 2019.
Our Q4 gross margin, what's the payroll all of our guidance range you would see an additional E. L. E N O inventory reserve for legacy display bridge product.
That's the impact the gross margin by about six percentage points.
Also in Q4 last year, the usually strong gross margin was.
Notably due to the higher mix of mature product revenue.
And additional IP license revenue.
Non-GAAP operating expenses for Q4 were approximately $2 9 billion net.
Compared with $2 6 million in Q3 and for point to me around in the fourth quarter of our philosophy here.
Cause I haven't noticed any reason the call. We believe operating expenses will remain in the low free range for the past.
The bulk of your chair.
Within our Q4 operating expenses.
R&D was $1 6 million and SG&A was one point suite.
This compares with the R&D and SG&A, both for and the one point of 3 million in Q3, and 2.2, Marion and the one 9 million respectively in Q4 last year.
And net total other income expenses in the taxes in Q4 was a charge of 76000.
Paired with a charge off of 19000 in Q3 and the charge of 100 of 35000 in the fourth quarter of last year.
Non-GAAP net loss was one 7 million or a loss of 15 cents per share.
It's more of the same amount in Q3 and the compare with a net loss of two point well garen.
Alright.
Non cents per share in the fourth quarter for all year.
The per share of calculation for both periods, the smarts that reverse stock split.
One of the fact that of December 2019.
The total of cash at the end of Q4 'twenty.
$22 7 million.
Compared with the 24 7 million at the end of last quarter.
The cash balance is also true that picked him.
All of the revolving line of credit.
One other update for later.
That sort of cash.
You remember that in Q2, 'twenty and 'twenty one.
We received a 1.2 Neil N P T P alone.
Yes, the reasonably well notify the by the bank debt or P. P. P alone forget most of the applications have been approved by the SBA.
We are re class of one point to me I am no imbalance from a liability on the balance sheet to other yeah.
On the P&L and their first of quarter for 'twenty and 'twenty one.
Now turning to the full year, that's about 'twenty and 'twenty of adults.
Total revenue was $8 6 million.
Paired with the 10 point swing.
In fiscal 2019.
New product revenue was $2 8 million compared with 3.1.
Prior year.
Mature product revenue was $5 9 million compared with $7 2 million in fiscal 2019.
For 2020, we had three customers that each accounted for greater than 10 per cent of our total sales.
Gross margin for 2020 watts of 51, one per cent.
Compared with 58 per se ending 2019.
No where total revenue in the changing product mix for the main reasons for the decline in gross margin.
You did a call for reduction measures, we check prior to COVID-19 pandemic of.
Operating expenses for the ear for.
Well point email.
Down significantly from a pinpoint to nil in 2019.
The lower operating expenses.
Our net loss for 2020 declined to $8 7 million or 88 cents per share compared with 12 point of 3 million or $1 68 per share for 2019.
The weighted average share count used to calculate the EPS.
Line in there.
Your line for 'twenty, and 'twenty and 7.7 million range for 2019.
Now moving to our forecast for the first quarter of fiscal 2021.
Well and all of March 'twenty, eight 'twenty 'twenty one.
The revenue guidance for Q1 two.
To find the.
Plus or minus 15%.
We believe total revenue will be comprised of the up 1.2 million and one 3 million for new product and the mature product revenue.
Brian well have some additional comments.
Potential upside to our guidance and outlook for a moment.
Based on the expected that revenue mix.
Non-GAAP of gross margin in the quarter, while the approximately 66%.
Plus or minus 5%.
Our non-GAAP operating expenses will be approximately $3 3 million plus or minus the 300000.
The higher Opex number he seemed to account of normal payroll tax reset at the beginning of each year.
At the midpoint of the kilowatt range R&D should be 1.8 million and SG&A one fine now.
After the interest expense other income and taxes.
And with that one time, the reclassification of the $1 2 million gain from the PPP loans for cabinets.
At the midpoint, we currently forecast our non-GAAP net loss improved to approximately 800000 alright.
Or a net loss of <unk>.
Seven cents per share based off of roughly 11 five.
Shares outstanding.
Most of the difference it's more of GAAP and non-GAAP of it's all it's our stock based compensation expense.
Expect the stock based comp to be in the range of 800000 for the next few quarters.
Yeah.
For the balance sheet.
Q1, we expect the cash usage the decline from Q4 and beyond.
In the range of one year end of 215 million cash.
Cash usage share the decline further over the course of the 'twenty 'twenty one due to expected the improvement at the revenue and gross margin.
With that let me now turn the call back over to Brian Kearney for closing remarks.
Thank you Sue.
Related to the guidance and outlook Sue provided we are currently in the process of formalizing a strategic initiative with multiple partners.
Depending on our final determination of how this is treated there could be an upside to the first quarter revenue by up to 25% above the midpoint of the guidance range.
Alternatively, we could recognize the initiative as an offset to R&D.
If this is the determination we would instead see savings come in the operating expense line of up to 20% from the $3 $3 million midpoint.
This initiative would also decrease cash usage by the entire amount.
We chose not to make any assumptions in the Q1 guidance and instead took a conservative approach.
As of today, we currently expect the determination no later than when we report our first quarter results in early May and we'll update investors as soon as of the determination is final.
Furthermore, we believe there will be additional opportunities around the strategic initiatives throughout 2021, and we'll provide updates once feature events are finalized.
In summary.
As we look back on what we have accomplished to transition quick logic, particularly in the context of the COVID-19 pandemic I could not be prouder of what our team has achieved we have realigned the company not just in terms of having the right resources to execute on the open source initiative, but also significantly reducing our cost structure.
Profitability before the end of 2021 much more attainable.
With what we have in place and the opportunities that are opening up for new business. It is clear we have made tremendous progress on the continued evolution of quick logic I fully expect of the efforts. We've put in during 2020 will deliver the financial goals I have outlined and should put us on a path to sustained profitability starting at the end of this.
This year.
I would again like to thank our many stakeholders, including our customers partners and quick logic team members for their continued support during these extraordinary and challenging times.
That completes our prepared remarks, operator, I would now like to open the call for questions.
Okay.
Okay.
Yes.
Yeah.
Sharon we're ready for the Q&A session now.
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Okay.
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Hello, Sherri are you there.
Okay.
Yeah.
Yeah.
Okay.
Yeah.
But for all of our participants I just heard from our operator there of bridge broke so standby theyre trying to reconnect so they can get somebody to manage the Q&A. So please standby.
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Just a reminder for everyone to stand by the.
Bridge is down for our conference call vendor and they're working on the solution right now so please standby.
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Yeah.
Yeah.
We again apologize for this delay this is out of the quick logics hands. The vendor we are using as having bridge problems and they are trying to bring in another group.
From outside the area. So please standby.
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Once again, everyone. Please standby.
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Or do you mean folks of the operator, please standby.
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Operator, we can hear you. Please go ahead and take the first person if you can.
Certainly Sir the first question comes from Tsuji, the Silva from Roth Capital. Please go ahead.
Hi, Brian Hi, Sue and suit.
Who are the best of luck on your next endeavor and congratulate the of time here.
Thank you. Thank you.
So it'll.
It'll be mezz debt.
Yes so.
Your line is a lot the asking but maybe you know the the last thing you mentioned the strategic initiatives, which could show revenue R&D upside is this the is this the first time you're mentioning this or is this something you've talked about in the past just wanted to try to put it in context of the multiple things you've talked about over the last few quarters.
It's something we've been working on for several quarters, but I have not mentioned is the one piece of it until today.
Oh, okay.
Helpful color, there and then as we look at sort of the the 'twenty one revenue and.
And margins what are what are the reasonable expectations of typically it'll give us the kind of year over year or an exit rate run rate for the potential for 'twenty. One is that something you'd be willing to give at this point for margin and revenue.
Yes for them and I would like point of view and I'll take this since this is his last call.
We're still looking in the mid teens for this year load of mid teens on the revenue line, which would be a very healthily over the last year in terms of the revenue and gross margins.
We are looking in the in.
In the sixties for.
For the year.
This is gonna be increasing quarter over quarter as we started to book in more revenue from sense of more and more IP deals.
One of the revenue profile, which has gross margin uplift.
Okay. That's helpful and guidance new product revenue of 1.2 million it hasn't seen that level since 2018, but I know, there's possibly the composition shift in the revenue. So if you can kind of walk us through kind of other than to know and you know.
Is this the mostly the the Japan smartphone or what are the other elements of new new revenue there of getting you back to $1.2 million.
So from a single customer point of view, the Japan smartphone is definitely the largest driver really sort of clicking on all cylinders with that customer now.
From the prepared remarks, I also talked about an IP deal that we've been able to close it in the quarter that shows up as new revenue, which we didn't have a big IP deal in the fourth quarter. So you see that uplift there we do see some increase in sensible.
From last quarter as well and then there's some other net.
Gabe it's products that fall into that same new product category for us that would be contributing in Q1 also so yeah big noticeable increase from last quarter and I think it's really just the firing on all cylinders on all of these different product initiatives finally, starting to take hold.
Okay, and lastly can you talk about the IP deals and maybe help size one of the typical customer deal would be and is it all upfront versus recurring just to understand how they how they the revenue model there.
Yes, so the revenue model for the IP is an upfront license and vacuum the royalties.
Typically our upfront fees in the few hundred thousand dollars range could go higher depending on the process node.
And then there's the royalties on unit shifts once they've actually started shipping die or products that have the IP in that.
<unk>.
And those are basically two knobs that we have to turn on any deal so somebody need something lower on the front end, we can do more royalty if any lower cost of goods do we can dial down the royalty in more upfront. So we didn't have two levers that we can play with her of it fundamentally there's both of those components. In addition, there's also support maintenance.
And that really sort of sort of offsets our upfront costs and supporting our customer with the IP and getting it integrated correctly and everything works and they're shipped before the tape out.
Okay I'll jump back in the queue, Brian the best of luck.
Thanks Amy.
Thank you.
The next question comes from Richard Shannon from Craig Hallum. Please go ahead.
Oh, great, Thanks, Brian and Sue and Sue I'll extend my congratulations on your new role and the we'll Miss you here as well thanks a lot.
Thank you Eric.
I want to follow up on the <unk> first question and Brian also one of your last comments and try the tied to what I think I heard earlier is the.
There's potential upside from the strategic initiative is this related to the if I got my notes right, you're a deep engagement with a couple of large damage of players in the last two quarters of that specifically what's your friendship.
No those are different so the the two different large semiconductor players I was talking about are very specific to sensible and their expansion was more.
The large microcontroller partners for many because of some go to market point of view my comments were related to parties independent of that.
Okay.
Okay Fair enough I'll I guess, we'll probably hear more about that I'm, probably not going to talk about it so I'll move on here.
Brian you made some interesting comments regarding I think you'd titled the section in your comments about the kind of business model details of embedded FPGA and you've talked about some tool chain benefits here.
You kind of give us give us a sense of the significance of this and how does it play into this this larger IP deal that you're seeing seeing or getting recognized this quarter, what does that mean for your pipeline going forward.
Well it is it's huge actually anytime you can get of tax improvement on something it's pretty big.
It really allows us a lot more flexibility and customers that we engage them because we can do so with the with less resources in less time, which really means you can talk of more opportunities at the same time. It also changes the economics for the customer such that we can still get our our target gross margins are better.
And again, we can be engaging more customers of once it was a new business model. So.
As I said in the in the the.
In the prepared remarks, I'll be sharing more details about this and I think it will become more apparent in the future for now because of competitive reasons I'm not going to go into details because I like the the.
The competitive moat, we have ourselves in its moment.
But it did.
It is a groundbreaking with what we've been able to do.
Through that research in the and through that project over the last year and a half.
If you think of.
Elaborate a little bit more.
If you think about in the past and you've seen us talk about different IP knows.
The reported two they typically have like of 12 to 18 months cadence for.
The new process node that we bring on and.
So that's that's an engineering team over the course of a year year, and a half and all of their salaries and tools of expenses in and test chips and all of those things wrapped up.
So it really changes the economics, if we can do that with such speed and agility.
And that's what we're going to be able to do so I think youre going to start to see a lot more from us on this IP initiative because of the results of this of this whole thing.
Okay interesting well look forward to hear more about that one.
Brian maybe if you could.
We've been the you're probably correct me on my Timeframes here, but related to a quick for other here you've been.
And of course, you've been in the market for I think a couple of little over a couple of quarters now.
Obviously early stage here it sounds like you're very excited shipped a lot of depth kit, so far and have goals for.
A big goals here for this year anyway, you can.
To share some early success stories for even if the interim level.
Where that leads you to excitement any applications or any ways to think about.
We're really seeing some of both interesting applications as well as ones that can drive some volume for the overtime.
Yes, so I'll make some broadbrush statements and then I'll sort of narrow in on one specific example.
So just broad brush there are a lot of folks that are that are buying the stuff kits that are doing things around.
Wearable computing.
For around.
The industrial Iot applications, because there are sensors on the board already because we have the integration of sensible.
And they really do span all of the segments I was referring to earlier, so smartphones wearables wearables and Iot applications.
But I think of real a true Testament to what we're doing and why this is a very different quick logic in a different time and quick logic.
Theres of this design partner of ours Optimus logic.
It gives them some of maritime from your question here. So there are first the authorized design partner they were a key partner in getting all of the software drivers of the middleware are done for the Japanese smartphone customer. So they got to know the E. S. S. Three and some level of detail and they've actually intersected now on top of of all of those are open.
For software development, we have the.
They have taken that and they have run with it so.
You can stay tuned for some announcements along this area, but they basically outlined in the entire set of of modules that you can integrate into other systems that have the U S. S. Three on it.
And in some cases sensors in some cases not to have wearable computing reference designs that are form factor and ready for their end customers to bring to market.
And not only that but the need to have a lot of ties into different entities across Asia.
And one of which is just the fact that theyre going to be able to get these debt gets into a lot of the universities and across India.
And a lot of people salary of universities you buy you know of 100 year under their belt.
All of the work of those universities do actually makes the product and the software better for the other customers in the market. The professional customers that are going to take volume out of that and as an example through a collaboration between optimists and IAC Hydro pad. The basically it took these open source tools and they got it running on an Android smartphone and of Raspberry Pi So think of.
About that for a second how many people in the world have an Android smartphone.
A lot billions right.
It's incredible to think about how many phones are out there now with people that can actually do design with our products that couldnt have done that before that and.
And so you know that's just the I think a testament to the open source actually.
You can tap into that collective intellect of the community and the desire to make these products more for the masses, and they're doing that and I think.
Again stay tuned for actual announcements with optimism and real products that are going to be shipping in volume its going to be imminent.
But that I think is a perfect example of a success story starting from quick further.
Okay excellent.
I guess my last question I'll jump out of line here on sensible I. Thank you.
Just going through my notes here, you mentioned stuff about some engagement with the large enterprises.
Cycle the cycle time to turn the the license has taken a few times of it it sounds like you're approaching some meaningful wins here, maybe you can discuss how thats going.
Yes.
I would acknowledge is definitely it's still a slower ramp than what we anticipated a year ago, but I think now of some of the fundamental changes that sent some of it has gone through as far as the go to market strategy goes we're starting to see some improvements there. So one is the sort of simplifying the the offering if you will for the community edition the other on the enterprise side.
If I look at the listener and have it in front of me. Its just theres a lot of things around wearable computing like E. R V R.
The watches that you are wanting to do more gestures based on AI and ml.
And we're also starting to see an uptick in the.
I would say, both consumer Iot and industrial Iot, where youre using just the a lot of different sensors, so vibration sensors microphones.
<unk>.
Weight sensors strain gauges of all of these different sensors that people would need to build algorithms around but they just don't want to do that from scratch and so a lot of these enterprises. The they're very large the fortune 500 type companies that are now deeply engaged with since the moment.
One thing I will say in the past what might limit the progress or the rate of which we can close an enterprise deal is sort of limited by how soon can the enterprise customer actually get hardware that they can build the model for them and so that's why doing these different <unk>.
References designs with these microcontroller companies as well as what Optimus logic is doing on the wearable side with our form factor wearable you can sort of compress time, now and get customers to start collecting data and building our models before their target hardware is actually done and I think that.
That change in go to market strategy was in the second half of last year and I think of immediately and now we're starting to see some some improvements in the hit rate on that.
Just in terms of the community edition I mean.
I said it in the call of more than 100 folks out of two that I was through the first six weeks of the quarter.
So we're at a pretty good clip of multiple per day coming onto the platform not all of which will become large enterprise deals, but I have definitely seen an uptick in the rate of large enterprise companies approaching us and saying Hey, how can I, how can I evaluate that.
And I think that's a market change from from where we were last year.
Okay, well thanks for the all of the detail Brian. Thanks, That's all of the question for me.
Thanks Richard.
Once again, if you have a question. Please press Star then one.
The next question comes from Martin Yang from Oppenheimer. Please go ahead.
Okay.
Thank you for taking my questions and best of luck on your next acquisition.
Brian I wanted to ask about.
Your the <unk>.
Community engagement effort I think you have been pretty active.
Thank you for the conferences as well as interviews.
Ken.
Are those.
The public appearances helped.
Helpful and you're promoting.
A quick rather development force as well as your over.
For the source.
The initiatives and harsh how are the community response, so far.
Okay.
Yes, that's of Great question.
So one of our one of our company goals. This year is to ensure that.
We're seen as a thought leader in this space because we are the first program of a company to really jump in and embrace the total open source initiative and so part of that is making sure that were out there.
<unk> doing interviews podcast all of those things.
Before we'd have to pay to do those right we'd have to pair way into those pay to play events. All of these of we've been doing are basically were invited because they see that we are doing something different.
Invited for free participated in the things that we've seen a huge increase I mean, just if you look at my Lincoln alone. How many people are viewing these posts on these different events and coming to the company blog.
Watching or reading these different things, it's a huge increase from last year and thats actually translated into direct opportunities now where people are approaching me about hey, how can we use quick feather in since the more hey. This open source of FPGA thing is of great can we use it in this type of wearable or Iot example, the product.
And I know that we can to directly correlate linkedin stuff to revenue, but I can tell you is the funnel, it's a numbers game and so the more the come in the top of the funnel of the more of the coming off the bottom and these are very highly qualified opportunities coming in now because they are attending these events on their own accord and theyre seeing us there and were following up afterwards.
So I think of us.
Again, it's a huge change a lot of my time now of spent doing those things, which I love doing because you get to meet a lot of the has great potential customers that we can convert to revenue so.
Youre going to continue to see more of that from us.
Probably on a monthly cadence youre going to see us out there.
Evangelize, what we're doing is just so that everybody understands of redoing.
Sure.
Oh, that's great.
Look as I look forward to of the ghost events upcoming.
Can you also talk about what are you seeing in here of the space.
The overall.
Audio related applications of hardware still vary.
Hum.
Have a very strong growth momentum.
We are you see your opportunity lies specific to for this year and where are the design of newer design.
First of all kinds of cuts.
Some of our engagement.
Regarding the designs the leverage your products.
Yes, so historically, we've talked about here of of <unk> being Bluetooth accessories that you wear on your head that have always on voice and I think of now that we're finally able to say the where Amazon certified and we're going to launch that tomorrow.
That's going to continue moving along some of these the serve opportunities that we've already been cultivating for some time and I think there will be some revenue from that in second half. Another durables application voice activated is related to remote controls.
We didn't give a lot of airtime to today, but that was the second always listening application that I was alluding to and I do see that going to production this year as well.
And then interestingly enough.
Now that we have a microphone on quick feather and we have a couple of voice partners on the software side, we are seeing folks now coming to us and actually asking for what we had said would happen like two years ago took us a while to get here, but integrating.
Motion AI for Wearables and I'm talking about risks worn wearables are had worn wearables with the ability to do voice commands.
And Moreover, there is also opportunities now in line powered consumer Iot for the same type of thing where you're integrating voice commands into something that has to be always on are always the same but maybe not necessarily battery of hard.
And I think of lot of that now as we're getting a lot more traction here because people are starting to recognize what we're doing in the voice partners are having an easier time. According to the platform because of the open sort of suffered nature of our offering so.
There isn't going to be one big application area of this year that stands out from the rest of in terms of voice I think it is going to be fairly split across the the heroes that we had talked about in the last couple of years.
Wearable computing, where they're using voice for for control and then some Iot type applications for for.
For the consumer Iot and by the way on the Wearables side, we are seeing more interest now in sort of these wearables around the elder care.
Our children.
Especially I think this is sort of brought on by the pandemic if any of us have el do the relatives that we need. The we're wondering about are the active or are they moving of the fallen down a lot of that can be done with over the off the shelf motion sensors and AI software and so we have a couple of wins already with Wearables in that area that are also leveraging the sense of more capability for.
As well as integrating voice at the same time to get back to your question. So yeah, it's pretty diverse which I think is a good thing.
And several of the should hit in the production this year.
Excellent. Thank you.
Youre welcome.
Thank you the.
Our next question comes from Rick Nathan River Shore. Please go ahead.
Thank you.
Thank you, Brian and Sue Thank you for your assistance over the past for and a half years and good luck.
On your new position.
Inland and.
And I hope you're successful there as you were quick.
A couple of questions since <unk>.
Amongst of been asked already.
When Brian when you spoke about the.
The total addressable market.
You are trying to serve.
In your prepared remarks.
Or the total addressable market what portion of that is quick logic.
Trying to serve the nationally.
It's the new strategy.
Well I'd say all of the edge of inferencing as part of our served available market.
Be it through the IP line, where the.
For the chip sales.
Okay.
When you spoke about the ecosystem partnership.
That was in relation to the central mall and.
Some partners I believe.
Is.
That of system.
Are those partnerships going too.
Yeah.
Just carry of the software or the.
We're going to generate revenue through central mall.
Through making sense of all of the default.
Software that runs on a particular item.
In the case of all of the semiconductor partners.
The the typical business model is that they have the software running on their desk kits the.
They arm their sales force with those Dev kits to show customers and so we get inbound leads from that from qualified customers that it isn't.
It is incumbent on us to close that deal and we get the revenue from that so there is no.
There is no like prepayment of revenue from the microcontroller guys.
Typically they they show the they show of the kits. They show the solution the showcase at the conferences, we get inbound leads and the and then we close.
Were any of your prepared remarks today addressing the.
The COVID-19.
The initiative that you had talked about.
Couple of previous conference calls.
No they werent, but I'd be happy to elaborate now that we're in the Q&A section so.
That initiative, we have built models, where the the COVID-19 cost detector, they're pretty accurate.
The the model with the temperature sensing, which is the very first part of it that we had discussed in different webinars with the consortium of companies that's actually at a specific University right now in the U S are wrapping up the research on that and then at some point that it needs to go for IRB approval. There is an action.
The end customer lined up for this.
Through one of the consortium partners.
But I think that they need to see that that approval process before they would go to production.
Interestingly enough that that work is actually.
Opened up a lot of other opportunities with customers that are looking at sound classification.
With microphone data and using AI ml techniques like sensible to build models around that so.
I'm still confident that we will see some revenue from that first opportunity, but it's also really blossomed into much more than that.
As a result of all of the airtime that that.
That initiative.
Okay. Thanks, very much I appreciate your time thank.
Thank you Rick.
Okay. So I think the the.
The operator is not able to close the sat here, so I'm going to do that for us.
Thank you for participating in today's call and continued support we look forward to speaking with you again, when we report our first quarter results in May and I. Appreciate your patience as we went through the technical difficulties today. Thank you have a great day.
Okay.
Thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant evening.
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