Q4 2020 Data I/O Corp Earnings Call
[music].
Good afternoon, and welcome to the data I O Corporation fourth quarter 2020 financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.
Please note. This event is being recorded I would now turn the conference over to Jordan Darrow. Please go ahead.
Thank you and welcome to the data Io Corporation fourth quarter and year end 2020 financial results Conference call.
With me today are Anthony Ambrose, President and Chief Executive Officer of data Io Corporation, and Joel Hotline, and Chief operating Officer, Chief Financial Officer and Io.
Before we begin I'd like to remind you that statements made on this conference calls and certainly COVID-19, future revenues and results from operations financial position markets economic conditions estimated impact of tax reform product releases, new industry partnerships and any other statements that may be construed as a prediction of future.
<unk> or events on our forward looking statements, which involve known and unknown risks uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements.
These factors include uncertainties us and the impact from the COVID-19 pandemic, along with continued reopening and recovery efforts within the supply chain and among our customer base.
Levels of orders for the company and the activity level on the automotive and semiconductor industry overall.
Billy to record revenues based upon the timing of product deliveries and installations market acceptance of new products changes in economic conditions and market demand pricing and other activities by competitors and other risks risks, including those described from time to time and the company's filings on forms 10-K, and 10-Q with the Securities and Exchange Commission.
Press releases and other communications the accuracy and completeness of forward looking statements should not be unduly relied upon data Io is under no duty to update any of these forward looking statements.
And I would like to touch all over to Anthony Ambrose President and CEO of data Io.
Well, thank you very much Jordan.
I'll begin my formal remarks by addressing our fourth quarter 2020, and full year financial and operational performance talk a little bit about the market and recent developments and then I'll turn it over to Joel Heartland and our CFO for details on the numbers.
We step back a bit.
And 'twenty was a year dominated by Covid.
And we're very pleased with the progress that's been made amid the fallout from the COVID-19 pandemic.
I'd like to thank again and our <unk>.
<unk> for the health of our staff and our customers our partners and their families and are grateful for the sacrifices made by health care professionals and first responders around the world.
And 2020, we had to react to global 19 pandemic COVID-19 has impacted all aspects of our business from customer demand and supply chain integrity employee safety business processes and financial management.
As a global company, we had to manage each of these were working within the guidelines of local and national policies within the United States, China, and Germany, among other George restrictions.
Our philosophy at the start of the outbreak and the pandemic was very simple number one keep our people and their families safe.
Number two keep our facilities safe and operational while we serve our customers as an essential business and number three preserve our capital and cash.
We managed all of these successfully to date with no known employee transmissions at work and preservation of our working capital throughout the year.
A resilient supply chain model kept our facilities open and serving customers globally we.
We supported customers rapidly transitioning to medical device support during the year.
We did all of this one face and unique international travel restrictions shipping delays and inability to meet with customers and person.
All the while we persevered and slightly grew and our cash balances, while moving more cash into the United States.
We also discovered we have several interesting opportunities to reengineer many of our business practices to become even more effective and efficient in the years to come.
Bookings continue to recover from the Q2 bottom to $6 million and Q4, they were backend loaded and more than usual the bookings carried over into Q1 as backlog and deferred revenue.
Consumables were particularly strong in Q4, as we saw factories recovering and running at higher utilization.
Keeping an eye on to short term factors the chip shortages and automotive that have garnered a lot of press as well as continued lockdowns in EMEA and southeast Asia.
The so called chip again, where a number of automotive assembly plants have closed for lack of semiconductors is big news all over the world.
Obviously anything that closes automotive plants, just not good news for the automotive supply chain, but so far we've not seen this impact our consumables business and our funnel for automotive Capex remains solid.
On the R&D front. Most notable is the continued advancement of our PSV family of products that is the global leader in the automotive electronics programming industry.
And also the progress made and our centric platform.
On Centrex, you've heard me talk throughout the year about simplify and scale and.
The third quarter, we released our next generation centric systems and tools with this release, we've now developed and control the critical intellectual property for security provisioning within the Centrex framework.
This next generation centric system simplifies and to end the provisioning and deployment of robust internet of things and automotive security and enables and outsourced as a service business model with our partners.
Centric product creator is a powerful software suite that enables Oems to securely quickly and easily define the security deployment for their products and to securely deliver these product security definitions and secrets to a centrex enabled production facility remotely.
The new centric product trader tools supports two deployment models and cooperation with leading embedded silicon vendors. The first centric skull and the second is centrex customer.
Centric scope streamlines, and Iot security deployment and provisioning using pre configured use cases, and a simplified developer experience.
<unk> supports the most common use cases for creating and managing device identities secure boot cloud on boarding device authentication and other use cases.
And <unk> custom supports fully custom provisioning definitions.
Both models enabled product security definition collaboration between Oems and silicon vendors and programming partners to easily defined provision and deploy robust Iot device security.
During Q4, we announced support for two new device families. The NXP <unk> zero five zero secure element and the Infineon Arteaga TPM family.
We'll be presenting the tools and centrex go and the whole product creator family at the upcoming virtual embedded World event next week. We are once again nominated for the Best of show Award and one of three finalists from amongst the entire exhibitor base.
Yeah.
And the fourth quarter, we took a substantial noncash charge.
And our investments and strategic technology around second generation Centrex made the first generation obsolete and we.
We therefore wrote off these obsolete systems and prepaid royalties associated with them.
We also completed the end of the service life of legacy handlers at the end of 2020. This includes the <unk> family the old F. L X 500 family among others.
We and we impaired the spare parts, we kept to support these customers for many years.
These actions significantly impacted the operating results and Q4, but again were non cash charges and will result in about 100, K less and annual depreciation going forward.
It will also allow us to focus more on our modern platforms for some of the process improvements I mentioned earlier.
Looking towards 2021 were well positioned to benefit as the market momentum cycles upward the.
And the secular growth rates for automotive electronics are estimated by market participants and analysts alike, and a compounded annual growth rate of 10% to 15% for the next decade.
The recent short term disruption of semiconductor supply only highlights the growth of semiconductors within the automotive industry.
This is our market opportunity and why we continue to invest in R&D to extend our lead in automotive.
During the year, we won orders for U S. S Microcontrollers and other automotive programming requirements, which drove our installed base to over 330 PSV systems in the field at the end of the year.
With each unit sold with ongoing consumable and other related recurring revenue.
In conclusion I'd like to address our outlook for 2021 based on our encouraging trends and the second half of 2020.
For 2021 were planning to grow in line with the automotive semiconductor market, which as we've talked about is estimated to have a CAGR of 10% to 15% for the next decade, we continue to control our production costs. So our gross margins are expected to be maintained and the mid to high 50% range with efficiencies gained depending on output and benefits from revenue.
Mix, including expanding recurring revenues.
From lower levels of spending on in 2020, we expect operating expenses to increase modestly by about 2% and 2021 with a continued emphasis on R&D.
In terms of the bottom line and flow through to our balance sheet. We believe meeting these targets will deliver disproportionate improvements and profitability and cash flow.
With that I'll turn it over to Joel Heartland, and our Chief operating officer and CFO Joel.
Thank you Anthony good day to everyone.
And to provide some upfront simplification.
Want to summarize the impairment charge discussions that can be a bit confusing very simply we did three impairment items and they were reported in two places.
The two places our cost of goods sold for inventory items.
And operating expenses for the other items.
The three things were first Citrix first generation items that were impaired by the second generation launch.
Two ending support for some legacy automated handlers impairing the remaining service inventory and three some externally developed software tool cost.
With that said.
Net sales in the fourth quarter of 2020 were $4 9 million as compared with $5 $9 million and both the prior quarter and the fourth quarter of 2019.
Fourth quarter bookings were $6 million up from $5 6 million and the prior quarter.
And as compared with $6 9 million and the fourth quarter of 2020.
With first quarter bookings of $4 3 million and second quarter bookings of $5 million, we have seen sequential growth throughout the year.
Total bookings for 2020 were $20 8 million down from $22 $5 million and 2019.
Total revenues for 2020 were $20 3 million down from $21 6 million for 2019.
Hi geographic basis International sales represented approximately 90% of total net sales for the fourth quarter of 2020, compared with 94% in the 2019 period.
Total capital equipment sales were 52% of revenues adapters, and 33% and software services.
<unk> percentage of revenues for the fourth quarter of 2020, compared with 64%, 22% and 14% respectively for the fourth quarter of 2019.
And for the year 2020 capital equipment sales were 56% of revenues with adapters at 28% and software services at 16%, which compares with 2019 capital equipment sales of 58% of revenue adapters at 26%.
Net and software services at 16%.
Gross margin as a percentage of sales and the fourth quarter of 2020 was 47% and.
As compared with 55, 1% and the third quarter of 2020.
At 55, 9% in the fourth quarter of 2019.
Gross margin as a percentage of sales for 2020 was 53, 2% compared with 58, 2% in 2019.
As Anthony mentioned in the fourth quarter of 2020, the second generation of Centrex was introduced and we accelerated the transition to it by upgrading systems immediately at customers as.
As a result, we impaired the existing first generation equipment and obsolete it related inventory. Similarly, we entered the service life of some legacy automated handling systems as no longer being supported and and paired the remaining service parts as obsolete combined the two non.
Cash one time impairment charges to cost of goods sold was 291000 of obsolete inventory adjusted.
Adjusted gross margin as a percentage of sales that is excluding the impairment related to obsolete inventory charges.
52, 9% for the fourth quarter and 54, 7% for the full year.
Operating expenses were 191000 higher in the fourth quarter of 2020 than in the fourth quarter of 2019.
And the fourth quarter of 2020 operating expenses included non cash one time impairment charge of $652000.
56500, 61000 and.
Of the impairment charge was for prepaid royalties and equipment related to first generation Citrix and.
And 91000 was associated with external costs paid to develop software tools.
Excluding the one time impairment operating expenses in the fourth quarter of 2020 would have been <unk>.
$3 2 million a reduction of approximately 13% as compared to the fourth quarter of 2019.
R&D was flat year over year for the fourth quarter as we continued to.
Advance our technology solutions.
For the full year total operating expenses were $13 9 million or $13 2 million. Excluding the one time impairment charge in 2020, compared with $13 8 million for 2019.
In accordance with generally accepted accounting principles GAAP net loss in the fourth quarter of 2020 was $1 6 million or <unk> <unk> per share compared with a net loss of 496000 or <unk> <unk> per share for the fourth quarter of 2019.
Included in the fourth quarter of 'twenty 'twenty net loss is a one time impairment charge totaling $943000.
For the year net loss in 2020 was <unk> 4 million or <unk> 48 per share as.
As compared with net loss in 2019 of $1 2 million or <unk> 14 per share.
Included in annual net losses are foreign currency transaction losses, and 513000 in 2020 as compared with a gain of 5000 for 2019.
Fiscal 2020 net loss also included the aforementioned fourth quarter impairment charges and earlier in the year dividend withholding taxes of approximately 257000 and connection with cash repatriated from foreign subsidiaries.
States.
Backlog at December 31, 2020 was $3 9 million up from September 30 of 2020 backlog of $2 8 million and $2 9 million at December 31 202019.
Data Io had $1 1 million and deferred revenue at December 31 of 2020, which was down from $1 2 million at September 30 of 2020.
Our days sales outstanding or DSO and receivables collection measure at December 30, <unk> was below our target measure at 44 days as receivables decreased from the end of the third quarter.
Net working capital at December 31 of 2020 was $18 1 million as compared with $18 3 million at September 30 of 2020, and $18 5 million at December 31 of 2019.
Inventory of $5 3 million at December 31 of 2020 was approximately 210000 higher than at September 30 of 2020.
<unk> financial condition remains strong with cash of $14 2 million at December 31 of 2020, which is up from $13 million at September 30 of 2020, and $13 9 million at the beginning of the year.
From a financial perspective, we entered into the crisis in a position of strength and remain healthy we.
We believe that we continue to benefit from data Io being the largest company and our industry sector and with a highly resilient business model supported by the strongest financial position, including the large cash balance and no debt and the ongoing investments in R&D to maintain our competitive edge.
And finally, we had shares outstanding of $8 million 416335 as of December 31, 2020.
That concludes my remarks, I will turn the call back to the operator to begin the question and answer session. Operator would you. Please start the Q&A process.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad. If you were using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Our first question is from Jason Schmidt with Lake Street. Please go ahead.
Hey, guys. Thanks for taking my questions just wanted to start with sorry, but.
The second generation centric product and Tim can you just provide some more color on why and what kind of made you guys make this move was this something your customers were really requesting or was this something that you kind of foresee the market moving to any additional details would be helpful. Yes short and.
Jason is a little bit of both so.
So if we look at the second generation.
We made a number of improvements and again I go back to what we've talked about around centric simplify and scale.
As we mentioned and these calls pretty regularly.
The number one issue we have seen with customer engagements is the complexity of taking a customer that wants to do business with us and getting them into production and that was the that was the big challenge on the first generation product.
Without going into too much technical detail. It was just very complicated to get all of the necessary security credentials requirements things like that for multiple different sources exchanged and collated and wrapped in a in a way that everyone felt comfortable with.
So the second generation number one has a vastly improved tool that allows for much easier.
Ability to assimilate all that information together.
It also has a $51 40 compliant HSM, which is important to many customers, especially on the automotive space.
And the.
The concept also has been extended by our ability to use these pre configured use cases.
Which means we can further simplify the process for.
For example, if you go into a restaurant and you want.
On.
A cheese omelette.
You really don't want to have to be escorted to a farm and be introduced to our hand and sit by the hand, while she lays and AG and then go take the AG back and then go over and get a cow and watch it being milk and then go watch the cheese being fermented and made you want to cheese omelet and so the concept is that with the tool flow we have with.
And predefined use cases, you come in and say I want a cheese omelet and you get a cheese omelette pretty quickly.
That's obviously, a very oversimplified case, but I'm trying to draw an analogy here. It really is a much much simpler tool flow number one and number two it's also a case now we own all the intellectual properly within.
And within the centric system and other critical IP and the this allows US also from a scale perspective to hit our cost structure that allows us to much more aggressively.
Aggressively target to 330 systems installed base.
And that we have and the industry on PSP systems, which as I mentioned on earlier calls our PSV system can become a centric system with a relatively straightforward field upgrades.
So the short answer is it's both the customer requirement to simplify to make it easier to make the engagement happened much more quickly and also the scale element to allow us to profitably grow this business.
Okay. That's really helpful. I appreciate that color and then a backlog jumped nicely in Q4 can you remind us how the timetable for how and when that flows to the P&L.
Sure as I mentioned earlier and the backlog jumped and was primarily back end loaded so.
I'm sorry, the bookings jumped and were backend loaded so that generated backlog and some deferred revenue.
As opposed to revenue and the quarter. So the vast majority of that will ship in Q1.
Okay. Okay, and then last one from me and I'll jump back into queue. How should we think about cash going forward and you guys and nice job kind of maintaining and actually growing your cash balance and Q4.
And what should our expectations be here in Q1.
Yeah, we're primarily focused on working capital going forward as we will see the economy ramped back up after some of these COVID-19 things.
And that we want to make sure that we have the cash to finance receivables and I think we have pretty much the inventory we need but.
The whole process of getting deferred revenue and receivables are financed.
Something that takes some cash and we have the cash on hand to do that.
Okay. Thanks, a lot guys.
Thanks, Jason.
The next question is from Ted Cage with engaged capital. Please go ahead.
Hey, Thank you.
Just kind of wondering on a big picture.
And approach.
On the electronic vehicle Revolution play and you have growth plans for autumn and automotive electronics and even.
With the Mustang getting on.
For the year in several places and so forth.
Just curious how you see that going forward.
Well. Thank you for the question on tenants are very important question.
Electrification I think is one of the most exciting areas within the automotive space and certainly.
Likely to be at the high and or maybe it's over the top of the average growth rate of 10% to 15% and automotive for the next decade that we've heard from customers and analysts and people who follow the market.
You've seen I think.
With policy choices and governmental levels around the world.
They want more electric cars.
And theyre going to get them.
So there will be a big increase and electrification of cars and that has opportunities for us it as a.
Someone that gets the program the semiconductor content that supports that electrification.
And remember that electrification includes a broad range of.
<unk> solutions, it's not just a 100% electric.
But as I mentioned before it's hybrids.
It's 48 volt systems to allow standard ice internal combustion engines too.
Not idle.
It's not just cars and light trucks, but it will be potentially heavy trucks as well.
I saw and art.
And article that mentioned commercial trucking.
Has upwards of 30% idle time and could really benefit from something like electrification.
So short answer is we think it's a very very positive growth catalyst.
Good for us it's good for our customers and we're excited about it.
Yes.
And let me ask you what what's your share of non automotive electronics market and.
Dollar amount and.
And kind of what do you see where the overall market opportunity.
And size and share.
Sure. So if you look at it we said on the release that we did about 53% of our business was automotive last year. So that's.
That's north of $10 million just there.
And that by itself might be the second largest programming company, it's hard to tell but certainly in the range.
So we see growth opportunities and automotive to continue to extend.
Hi.
Our systems to not only the customers that have them and selling them the fourth fifth or six system and a plant.
But we had a number of cases, where we still have plants that have and purchase data io yet from customers that have.
18, or 19 systems globally and.
So we had one of those and the fourth quarter.
So theres still plants out there and are adding electronic content there still.
Contract manufacturers that are increasing their automotive footprint and they preferred data Io because thats, where most of the automotive companies do.
And there also opportunities and China.
A lot of names there.
Frankly, very many people on the call have never heard of.
But data Io sort of them and there are customers and.
And in other areas as well so.
That's just in the pre programming space.
As code size increases.
And you May have heard me mentioned this on prior calls you can program devices and a couple of different places besides where we do it and the production process you can program devices at the semiconductor Assembly test area.
And you can program them at the end of line using either a tester or dedicated piece of and system equipment.
So what we see happening is as the code gets larger and the demand for rapid revision of the code continues to increase.
That favors our technologies over substitute technologies as the code size gets bigger it makes it more difficult and less economic to program parts at the end of the line.
And so we continually get especially on the microcontroller business more and more examples where customers are saying, hey, let's just program and using data Io technology, we already have it and the factory CZ to us and we go forward from there. So our opportunity is really built around the overall market growth and automotive.
<unk> and the ability to get increased business from substitution.
As Covid sizes grow and then the third opportunity is security.
Where our centric platform can provide.
Many of the essential security functions that are that are absolutely required and automotive.
Okay.
Okay, great and.
And just one last thing.
On a margin opportunity do you see in index.
Well I think with margins.
We don't break it out by market segment, but.
And the margin opportunity is at least as good as the corporate average margins and we've been talking about.
Okay fair enough. Thank you.
Thank you.
Again, if you have a question. Please press Star then one.
Our next question is from Avi Fisher with long cast advisors. Please go ahead.
Hey, Anthony and I have a few quick questions and.
And with I Wonder if you and help me understand something.
As I'm looking at and environment and you have over 330 EPS vs out you guys program about 1 billion units per year. The industry produces about 25 billion units per year, so small market share a lot of opportunity to grow but the units your program and generally come from these 200 millimeter wafers thats whats I understand that.
The source of this.
The sensors that you tend to program and.
And historically.
And these are 200 millimeter waivers have been have been built that the fabs from like long ago depreciated units, because it's kind of trailing edge technology, but the foundries are suddenly building, new 200 millimeter wafers and.
And I'm, just looking out and it seems like a profound opportunity and there's going to be more units coming out of step growth function of more chips and it seems like an incredibly bullish opportunity for you. So what I'm trying to understand and then when my understanding something wrong because your guidance seems very conservative in light of the fact, the foundries are spending money on that.
And biggest input for your product.
No I understand and.
The we don't have a internal view on the.
The wafer size profile.
Our mix and automotive.
I wouldn't say that 200 millimeter is the largest part of our.
Our automotive programming demand and.
And I'm just thinking through it here remember, we do a lot of programming of the latest U S and E MMC memory technology.
Which I doubt the memories would be on 200 millimeter, they're usually the first to jump to whatever.
Process and wafer size gets on the lowest cost.
But your point's a very valid one in the sense of long term growth.
Maybe we are conservative.
Tim will tell.
But what I'm trying to emphasize is not what happens with chip again or what happens this quarter.
And when 200 millimeter comes back.
And have access to at least the same information that we have there.
But the the profound growth rate for the next decade that people are talking about driven by the question and Ted had earlier around electrification infotainment advanced driver assist.
I don't know who went public today and the Lidar business, but it was probably somebody.
And those are the types of things that again are and a very not only the cyclical recovery that we've talked about with the secular long term growth, which gets us very excited about automotive so.
Sure.
You might be right.
We'll see.
The two.
And two other quick questions and then regarding that is I mean, if your installed base.
And program call. It 1 billion units per year, which you've said and the industry produces 25, maybe going up to 30 billion, obviously youre not aiming the whole industry of uranium for automotive and medical devices.
But it seems like an incredibly fragmented market can you talk about efforts our opportunity is to grow market share consolidate market share.
Particularly if you think about if you read the papers and it sounds like some of the Korean chipmakers Theyre looking to acquire some of the sensor and sensor producers.
Yes, I think from our side.
The we've talked about it.
We will talk to anybody at any time about anything that makes sense.
Until now we haven't been able to find anything that does make sense from a valuation perspective.
Think we'd be.
Open to talk to anybody.
On the programming side or end of line and things like that.
The semiconductor companies.
They've clearly been in a very acquisitive frame of mind over the last couple of years, but they're frankly, just so much larger than data Io I'm not sure that we'd be a primary target for somebody that's a $50 billion company.
Yes, I guess last question and Anthony which is.
Something I've long been curious about plate and.
Your installed base of PSV units grow how can we how can how come the.
Consumables revenues tends to fall in line with the sale of these devices shouldn't shouldn't consumables grow exponentially with each new installed base.
And if I understood that.
Yeah, I don't know that I'd use the word exponentially avi, but we believe that they grow and that's why we talk about the installed base.
We had a sort of a one time hit and the second quarter. This year when the auto lines shut down but it is a function of not only the installed base, but the utilization of that installed base, Okay and what we mentioned in Q4 was we saw that utilization pick up pretty substantially.
And.
One of the strategies is as we deploy the installed base that recurring revenue stream increases not only consumables, but software and services as well.
Okay. Thank you will catch up later.
Okay. Thank you.
The next question is from Robert Anderson with <unk>. Please go ahead.
Good afternoon and Anthony.
How are you.
Well, Bob how are you.
Good.
And I was just wondering whether you have decided to.
Revisit your business model associated with centric.
And given the fact that you move from the first generation model to the second generation model.
And the sense that maybe.
And instead of having a so called rental rather than outright sale model.
With the second generation Centrex and.
May allow you to.
<unk> for those services upfront and realize revenues sooner.
So the short answer is well, we always look at and are on our tweaking.
The product offers and we learn more about what the market really wants.
There hasn't been a fundamental shift in the centric model with the move towards Gen. Two what.
But I think it does again the.
The deal flow.
Will increase and has increased because it's easier to engage especially with the pre defined use cases.
And.
The.
The pay per use model encompasses a broad range of of how we might charge and I'm going to be keep it at a high level here because I know my competitor is always likes to listen in on these calls.
But it also allows us to upgrade systems and the field as opposed to having to place.
Brand New systems, which is obviously a much more economic proposition.
We're always looking for ways to get smarter on things like pricing and how we offer the product and making it simpler.
But right now, we havent abandoned or change the fundamental.
Premise of how we wanted to go to market with centrex.
Okay. Thank you.
The next question is a follow up from Jason Smith with Lake Street. Please go ahead.
Yeah, just curious on how we should think about operating expenses this year and I mean, obviously with potential return to travel trade shows, but also related to maybe some increased marketing around the centric platform.
Yes, so Jason.
I'll make a few comments I will turn it over to Joel on <unk>.
Some specifics, but in general what.
We modeled our 'twenty one budget.
Assuming that Covid is still around.
Certainly the first half of the year maybe longer.
But we.
We don't want to give up.
You know some of the key learnings we've had on on and certainly how to cut travel expenses.
And I certainly don't think travel expenses will go back to what they were let's say in 2019.
Anytime soon.
That will certainly be doing more for example next week, we're doing a virtual event with embedded world and <unk>.
<unk> World has been a premier event for over 20 years and.
They sort of got <unk>.
Just as Covid was hitting last year embedded world got hit.
And so they had time this year to go to 100% virtual model and we'll see how that works out I think they have a very ambitious agenda.
Yes, if you can do 100% virtual trade show.
When I talk to people and I've talked to some of my.
Other people and ecosystem partners.
The business development people really Miss things like just walking around on a trade show and bumping into people you might know and having a five minute coffee or a beer or whatever and and.
Exchanging information I think that.
Sort of ad hoc or impromptu interaction.
And is definitely down we want to capture as much of that is we can get realizing that travel will never be back.
And that way, we have changed how we think about where we're going to put some of our marketing dollars.
We've got some new programs, new exciting things going on there, perhaps you've seen the new website.
Perhaps you've seen some of our activity on the social media platforms I'd encourage you to look at both of those but we definitely want to again accelerate.
Some of the things that will continue to pay dividends, whether we're traveling a lot for sales or not.
But certainly in the future I think there'll be more mix to those those digital programs and less travel and.
Joe is there anything else you wanted to add on spending for next year.
I think that a lot of the I'll say impairment related things just set us up to focus and be more efficient on serving the new technologies, and the new products and customers and not being diverted by some of these older legacy pieces. So that's one I think that day there'll be some.
Depreciation and savings from tax savings.
Additional margin enhancements. So just each of those things are something that help us going forward.
Okay. Thanks, a lot guys.
Thank you. This concludes our question and answer session I would like to turn the conference back over to Anthony Ambrose for any closing remarks.
Thank you very much operator, I want to thank everyone for joining us on the call today, and just remind everyone that we'll be attending the embedded world.
Virtually.
And if you'd like a ticket or like to find out how to attend one of our sessions.
Please send us and email.
Leave it should note on the website.
We'll also be virtually attending the apex trade show and North America and San Diego.
Couple of weeks from now.
Again with virtual content.
So thanks, everyone again for attending at this point, we're close the call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yes.
Okay.
Yes.
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Right.
And Hong Kong.
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