Q1 2021 QuickLogic Corp Earnings Call
[music].
Ladies and gentlemen, good afternoon at this time I'd like to welcome everyone to quick Logic Corporation first quarter fiscal year 2021 earnings results conference call.
As a reminder, today's call is being recorded for replay purposes through May 25th 2021, I would now like to turn the conference other veteran Mr. Jensen Yoki of Darrow Associates Mr. For Nicky. Please go ahead.
Thank you Hillary on thanks to all of you for joining us our speakers today are Brian Faith, President and Chief Executive Officer, and Anthony contests interim Chief Accounting Officer. The company continues to follow social distancing practices and management is again hosting this call from different locations today as a reminder, some of the comments quick 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 performance 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 production start dates that could impact the timing of shipments the company's future 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 quake logics. Most recently filed periodic reports with the SEC quick logic assumes no obligation to update any forward looking statements or information.
Asian, which speak 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 quake.
<unk> uses its website the company blog on corporate Twitter accounts, 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 the disclosure obligations under regulation FD.
For the prepared remarks made on today's call will be posted at quick logics IR page. Shortly after the conclusion of today's earnings call and with that I would now like to turn the call over to Brian.
Thank you Tim Good afternoon, everyone and thank you all for joining our first quarter of fiscal 2021 financial results conference call.
In the first quarter, we made continued progress on our transformation into a platform company.
Leverages artificial intelligence and open source software and hardware.
I continue to believe this move to open source as a once in a multi decade opportunity to disrupt the maturing FPGA market and I will be articulating during this call. The various strategies, we are executing to capture that opportunity.
In Q1, we introduced new products added strategic partnerships and were invited to become a founding member of a new industry organization that will shape and define the FPGA industry based on open source technologies for years to come.
The first quarter revenue well within the guidance range. We gave in February we're still held back due to ongoing COVID-19 related issues with certain customers and the broader capacity on supply chain issues in the semiconductor industry that have been echoed by many companies recently.
Although we have seen lead times nearly triple they are not to the extent as certain markets like automotive where the supply chain is most constricted with some lead times exceeding our year.
There was also one six figure IP licensing deal that we thought we would recognize in Q1.
This revenue will be recognized in Q2.
Through a combination of aggressive marketing efforts, increasing open sourced penetration in differentiated products. We have seen an order of magnitude increase in our pipeline of new business opportunities many of which would start contributing revenue in 2021.
This new activity reinforces my confidence that we will achieve our financial goals this year.
Anthony will summarize our quarterly results in a few minutes.
Before I get into my overview of the quarter I want to provide an update on where we are with formalizing a strategic initiative with multiple partners.
At the time of our February call all signs point to it for one such initiative being funded by the end of February.
Net funding in place, we would have been well on our waits for an initial tape out later this quarter.
Through a series of unforeseen changes the funding of that initiative has not yet closed.
So while we have a signed a memorandum of understanding or Mou, we await the funding piece, which we currently believe could happen before the end of summer.
One of the positive outcomes of this initiative is that we have clearly established quick logic as the leader in open source FPGA technology.
That recognition has resulted in multiple rfps and RF skews totaling tens of millions of dollars in the last six weeks alone.
Many of which are with well known entities.
If we are successful with these opportunities it could lead to accelerated financial performance in the second half of this year.
While we can't predict how many of these proposals will be accepted I wanted to share the information as another proof point to our growing pipeline of business from our transformed business model.
Turning now to the first quarter, we made several announcements that I wanted to expand upon and.
In February we announced the availability of an Amazon qualified reference design that empowers Oems, an ODM to evaluate and develop their own smart curable products quickly and easily.
This kit integrates the Alexa voice initiated close talk experience, enabling a broad set of battery powered applications to communicate directly with Alexa for a multitude of use cases.
For those who have followed quick logic for some time you know this was a voice activated project, we had been working on for over a year.
The process took longer than we had initially expected mainly due to COVID-19 related issues with which affected engineering integration schedules.
Related to our open source initiatives in March we launched a new development kit manufactured and sold by Sparks on a popular online retailer of electronic kits and components.
The launch was done exclusively on crowd supply a well known online distribution platform and we have seen orders for more than 100 kits, which we expect to start shipping in early June.
Expanding our addressable markets and presence in the marketplace has been a primary focus of our team since the start of our transformation.
As the first programmable logic company to actively contribute to a fully open source FPGA platform, we have undertaken multiple strategic initiatives to broaden our served available market for our technology and a vastly more scalable way.
In our February.
Blurry call I mentioned, how we were working with the University of Utah on ideas regarding how to integrate advanced semiconductor layout automation techniques into our S. P. G. A I P generator tool called Borealis.
The initial results from this DARPA funded research have exceeded our expectations not only has it led to a dramatic reduction in the time it takes us to target a new process node with our E. S. P. G. A technology, but it also brought us an invitation to join the DARPA toolbox initiatives.
This invitation represents a significant milestone as now our technology becomes broadly available to developers working on DARPA related research projects.
A large pool of potential customers as you might imagine.
We have significantly expanded our partner ecosystem since the beginning of the year.
We now have working relationships with several leading companies and distributors in the AI and Iot space, including Silicon Labs, and Google's Tensorflow group.
And have a handful of other unannounced partnership activities with several worldwide semiconductor leaders. In addition, we signed a global distribution agreement with Mouser electronics.
With their global footprint and large sockets parts working with mouser makes it easier for people to buy and use our products.
Due to confidentiality I cant say, what we are doing with each partner. However, I can share that many are working with quick logic and sensible on AI related activities with the goal of bringing solutions to market. This year.
Partnering with these third parties is about getting more sensible seats into the market.
And through the launch of our sensor more community edition, which we are targeting we are targeting to end Q2 with around 500, new users of the tool kit.
These multiple partnerships are beginning to blossom and will be vital to our future growth.
While our history remains as a semiconductor company as I have noted in recent calls our open source initiatives, which will build our IP licensing revenue will be the pathway to faster and more profitable growth.
The software subscription revenue with IP licensing is very high margin business with a long tail and while the revenue ramp is starting slowly I expect it to pick up in the second half of our fiscal year.
The S T G. A platform combined with the open source initiative is increasingly viewed as a critical technology given both the scarcity value of the technology and continued geopolitical uncertainty.
When combined with the talk from Washington on the need to onshore more semiconductor development. We believe the future trends are all favorable for quick logic.
On the open source from last week, we launched a new sensor mall open source initiative, which integrates with Google's Tensorflow Lite for Microcontrollers and expands the sensible toolkit to the universe of AI developers through the tensor flow neural networks.
The growth of intelligent Iot endpoints is almost limitless edge.
Edge AI alone will enable tens to hundreds of billions of units in the coming years.
Implementation of edge inference applications in these resource constrained devices is commonly referred to as tiny machine learning or tiny ml for short.
Sensible is uniquely positioned to support this tiny ml approach.
Through this sensible open source initiative, we are addressing the key bottlenecks to AI to deployment by streamlining the process of collecting sensor training data and making AI code understandable and supportable.
Our quick further initiative is taking flights.
Since the start of 2021 we have received orders for close to 800 quick further development kits and have sold close to 1100 boards in the last year, a factor of likely tenex over the previous 10 years.
The great start we have for the first part of the year and anticipation for an accelerated pace of Dev kit sales over the remainder of the year makes me confident we will achieve our goal for 2021 to ship more than 2000 Dev kits, continuing the proliferation of our devices and software into the masses, leading to future device revenue.
Yeah.
Recently, we announced quick logic was invited to become a founding member of the open source FPGA Foundation.
This invitation is yet another endorsement of quick logics leadership and being the first S. P. G. A company to actively drive an open source initiative the.
The group includes semiconductor industry veterans widely recognized academics in their field of study as well as DARPA.
This organization expands our market opportunities and is helping people make buying making a buying decision quicker and easier in.
In fact, we are finding several new leads that are very well qualified.
And looking at the other parts of our business. Our smartphone revenue remained strong while we did not add any new phone wins in Q1, our smartphone customer has placed purchase orders through September, giving us nice backlog visibility into Q3.
We are working on a few new programs with this customer and I am confident we will see anywhere from two to four more models with our technology come to market over the course of this year.
This would be in addition to the 10 devices currently using our technology.
Lastly, in our mature segment, the covenant COVID-19 related issues remain a challenge, especially for our largest mature product customer.
Revenue from this segment was down sequentially as expected and there is no change to our outlook for mature product revenue as we continue to expect it will be roughly flat with 2020.
As you can tell we're very busy with activities around our transformation, while each quarter will have its challenges. There are many positives coming through that are not yet showing up in our financial performance I am confident this will change beginning in the second quarter.
Before turning the call to Anthony I want to personally. Thank the quick logic team for their tireless efforts as we work through the COVID-19 challenges.
The conditions in our home county have changed dramatically for the better and I am finally sensing we may be getting closer to the time when our team can return to the office on a more regular basis with that I will turn the call over to Anthony.
Thank you Brian.
With this being my first earnings call as a way of introduction I joined the company in early January and was appointed interim Chief Accounting Officer on January 28, as part of the CFO transition announced.
Over the span on my 30 year career I have worked on many senior and executive level accounting and finance roles, mostly in the technology industry.
And my time at quick logic, I've been pleased with the depth and knowledge of the finance team and I've appreciated the support Brian and the executive team have provided during this transition period.
The company has a bright future and I look forward to being part of this exciting opportunity with that I will now turn to our results.
For the first quarter of fiscal 2021 revenue was $2 2 million. This compares with revenue of $2 5 million in the fourth quarter of 2020, and approximately $2 2 million in the first quarter of 2020.
Within our Q1 revenue sales of new products for approximately $1 1 million.
Shares for 837000 in Q4 and 486000 in the first quarter of 2020.
On mature product revenue was approximately $1 2 million compared with $1 7 million last quarter and $1 7 million in Q1 last year.
In the first quarter, we had three customers, who each accounted for 10% or more of our revenue.
Non-GAAP gross margin in Q1 increased to $52 $7 million seven per cent.
Compared with 51 five per cent and the prior quarter and 52 two per cent and the same quarter of 2020. We continue to believe gross margin will get into the mid 60 per cent range by the end of the year.
Non-GAAP operating expenses for Q1 were approximately $3 5 million income.
Parents with $2 9 million in Q4 of 2020 and for $1 million in the first quarter of last year.
As we noted in our February earnings call for higher Opex numbers take into account the normal payroll tax reset.
The beginning of the year.
As well as other customary fences.
Within our Q1 operating expenses R&D was $1 7 million and SG&A was $1 8 million. This compares with R&D and SG&A of one six and $1 3 million, respectively last quarter, and $2 3 million and $1 8 million respectively. In Q1 last year.
The net total of for other income expenses and taxes in Q1 was a credit of $1 million compared with a charge of 76000 in Q4 and a charge of 103000 in the first quarter of last year.
As you May remember in the last call. We got them just for seeking approval from the small business administration for our PPP loan forgiveness application as a result, we reclassified the $1 $2 million on loan balance from a liability on the balance sheet to other gains on the P&L in the first quarter.
Non-GAAP net loss was $1 3 million for a loss of 12 cents per share based on 11 3 million shares. This compares with a net loss of $1 7 million and 15 cents per share in the last quarter and a net loss of $3 1 million on 37 per share in the first quarter of last year.
Total cash at the end of Q1 was $20 9 million compared with $22 7 million.
At the end of last quarter. The cash balance also includes the $15 million draw on our revolving line of credit.
Now moving to our forecast for the second quarter of fiscal 2020, one which will end on June 27th 2021.
Our revenue guidance for Q2 is $2 8 million plus or minus 15%. We believe total revenue will be comprised of approximately $1 3 million in new product revenues and $1 5 million of future of mature product revenue.
Based on the expected revenue mix non-GAAP gross margin for the quarter will be approximately 56% plus or minus five per cent.
Our non-GAAP operating expenses will be approximately $3 3 million plus or minus 300000 at the midpoint of the Q2 range R&D expenses should be approximately $1 seven and SG&A expenses.
Of approximately $1 6 million.
We continue to believe operating expenses will remain in this range for the remainder of the year.
After interest expense other income and taxes, we currently forecast our non-GAAP net loss will be approximately $1 8 million or a net loss of <unk> 15 per share based on roughly 11 5 million shares outstanding.
Most of the difference between our non-GAAP, our GAAP and our non-GAAP results is on stock based compensation expense, we expect stock based comp to be in the range of 800000 for the next few quarters for the balance sheet from Q2, we expect cash usage will be in the range of $1 8 million.
$2 2 million.
After the second quarter cash usage should decline over the course of 2021 due to expected improvements in both revenue and gross margin.
With that let me now turn the call back over to Brian for his closing remarks.
Thank you Anthony in February of last Kindran director of the free and open source silicon or a fuzzy foundation and a well known advocate of open source tool flows publishes twenty-twenty year in review.
In that piece he highlighted our proactive open source efforts, noting that we are the U S. P. G. A company that will go down on the Annals of history for being the first did you open source. This kind of recognition from an industry leader is helping expand quick logics brand in the fast growing open source ecosystem.
I could not be more excited about the prospects for a quick logic the number of opportunities in new and growing markets is better than we had anticipated.
We believe there is a clear path to achieve many of the business and financial objectives, I have talked about and now feel stronger than ever that we control our own destiny.
I would not have been able to say that a year ago.
After a slower than expected start in the first half of fiscal 'twenty 'twenty. One we believe the back half of the year will be strong and should lead us to meeting our financial objectives for the year.
In closing I would again like to thank our many stakeholders, including our customers partners and quick logic team members for their continued support.
That completes our prepared remarks, operator, I would now like to open the call for questions.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is on the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the stacking.
One moment, please while we poll for questions.
Our first question is from Sujit de Silva of Roth.
<unk> capital market.
Hi, Brian Hi, Brian and Anthony welcome to the call are best of luck on the new role. So I'm just a quick housekeeping question first I know you guided the cash burn, but what was the cash burn in one Q and it's a line of credit fully drawn just to understand your funding position.
Yeah.
Yeah Yeah.
Yes, so the <unk>.
$50 million was fully drawn at the end of the quarter.
And our overall cash position than it was about $5.9 million.
And without debt free.
Does that answer your Panther, Yeah, Anthony the burn in the first quarter versus the guidance on 'twenty.
Excess burn related to the guidance was really primarily related to <unk>.
Employer employee taxes.
Related to our issues.
That was that was not forecasted properly on basically the company has always use a withhold to pay as opposed to a sell to cover. So we have actually moved to it sounds cover going forward so to make our forecasted yourself on a lot more predictable.
Okay, and then maybe Brian I know there was a push out of one of the I P. Deals can you talk about the size of the IP revenue opportunity in 'twenty, one because it sounds like it could come on fast and I just want to get a sense of how much it could contribute to it by 'twenty one revenue forecast.
Yeah. It's a good question C. J. So the one that we talked about moving from Q1 to two was a low six figure IP license a little fully get recognized this quarter, but for the balance of the year with these big deals that we're talking about in play right now this could be well over a million dollars and IP deals for the balance of this year.
I think again, it's just sort of underscores that there's scarcity value to programmable logic, it's very interesting for people.
To integrate and we're seeing the value of that increase now that we've moved to this new way of doing things. So I think it could be quite large for the balance of the year.
Okay, and a couple of questions I'll try to make these click on the open source in the niche for it but theyre all interesting to me I think first of all when you said F P J and making it more competitive in the U S. All the U S. All the FPGA companies are domiciled in the U S. But did you mean actually manufactured in the U S was that for you were talking about Brian.
Well it wasn't specific to FPGA technology, but it was more a general thought debt semiconductors themselves are sort of have this bright light shining on them now because of the you see all these companies other manufacturing lines are going down because of the lack of capacity. So there is more of a movement from Washington to invest in onshore semiconductor development.
That's one and we're talking about tens of billions of dollars for that the second is that there's a lot of additional research that is being funded through DARPA for a blend of semiconductor technology, that's either onshore or with the open source to make that a more scalable technology for people to adopt in the U S. So you couple those two.
Together and the fact that we have all of this the deep domain expertise in programmable logic that dates back three decades.
Where I was trying to particularly I think there's a really good opportunity in front of us here to capitalize on all of those things.
A confluence of events if you will.
Okay, and the DARPA toolbox, specifically are you aware of that are you. The only FPGA technology. They are looking at now or are there multiple FPGA technologies being evaluated just understand your exclusivity there.
Well, so there's I don't think DARPA wants anything of the exclusive because they want choice and option for there for all of the DARPA performers for people to do DARPA based projects. So.
If you go to the DARPA toolbox page, you'll see quick logic from E. F. P. G E and F. P. J point of view, you'll see one of our IP competitors from an E. S. P. J only point of view and then you'll see one of the other midsized discrete FPGA companies there for F. T G. A a.
User IP or references on IP I think what makes us unique and stands out amongst those other two a day, we have both options under one roof. So we can go device, we can pivot people to IP when they want to integrate into their ASIC and so as far as I know, we're the only one of those three the offers those choices in how people can actually buy in.
Integrate and use the technology. The second thing I'll say is that of all of those companies were the only ones that are still actively embracing and contributing to the open source initiatives around FPGA technology. Those other ones are really closed proprietary systems and so anything that's in the open source for many that supports them is largely from the community reverse.
Engineering and are putting support into the zone, but as you know generally companies are not going to commit products for things that are reverse engineered and sitting on github theyre going to be growing with people that have a staying power and actually support their tools like us. So that's how we're different but still excited to be part of the initiative and if there are a couple of other people there.
And then last question and I'll step on our lineup is the open source initiative has a lot to talk about the next few quarters I'm sure, but the notion I know you can talk about your partners, what you're doing but someone like mouse or for example, and a Disney in general as a distribution channel.
I don't think they are just selling your products I think they're trying to probably evangelize it with kits and so forth. Maybe you can help us see how a distributor with that kind of reach like mouth. There can help Europe and sourcing the ship just to give us some flavor of how this is going to play out.
Yes.
With mouths, whether it's about worldwide reach and making it very easy for people to start getting the technology kidding things together with different boards to emulate proofs of concept for our customer and then getting a I suffer on it and running with it. So mouser I think is great in that sense, we do have other large distributors around the world like future.
On future electronics actually is running all these AI seminars for their customers and including US as part of that so youre right theyre doing more than just stocking parts, they're actually proactively setting up sessions with engineers that they have relationships with to promote the technology to them.
And the same is true with some of the regional distributors in Asia also so your other they're definitely much more than just the fulfillment side on distribution that people classically associated with semiconductors distribution and they're much more supporting on the design side on the promotion side.
Thanks, that's it for me Thanks, Anthony Thanks, Brian Thanks.
Thanks, a J thank you.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is on the question queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star one.
And on them. Please while we poll for additional questions.
Our next question is from Martin Yang of Oppenheimer. Please state your question.
Hi, Brent a welcome Anthony My question is on the developer kits are it seems like the traction is pretty good is true wait for you to followup with those individual developers and then.
For direct relationship with them to see where they are in your with either quick feather off from the newer development boards.
Yeah, Hey, Martin Ah I can take that question, absolutely, it's not a black box when the device when our board actually sells through to a developer and engineer.
We are a shared information that's all about board of course with her from our distributors.
With that context for information.
Named company all that stuff. So we can then do follow up.
And we try to prioritize who we follow up on obviously some of those more than thousand are gonna be people kicking the tires or students send we don't prioritize those but we do especially prioritize a large fortune 500 companies of which some of these are for.
And so we are we are following up in that sense by the way. There's also not just distributors, we are still selling on our website.
In some cases people just prefer to buy direct from the OEM and so that makes it pretty easy to follow up as well.
Got it and can you as a follow on debt can you.
Maybe tell if there's more traffic directed to your direct channels versus from the distributors.
For the debt gets specifically yeah is there any trend where you know more developers attracted directly to your website as opposed to getting divorced from third party sources.
I would actually say that once we had these multiple launches of different distributors, we are getting more sell through through the distributors to customers now and I think generally speaking they already have accounts with these distributors. So it's pretty easy for them to just tack on another board to the in existing accounts. So we have seen quite a bit more.
Say, maybe 90% of board sales now go through distributors than than direct to quit classic, but again, it doesn't really matter to us because as long as we can find out who's bought them and we have the opportunity to follow up that's that's fine for us.
Got it.
My final question is on your other strategic initiatives.
Of which you have signed an Mou with.
Is there any milestones you have to achieve before debt funding finally falling to place.
That's a great question and the short answer is no. We don't have any milestones they have to have other.
The pulling together of that to get the funding to us. So I think from our standpoint, we've tightened everything up and like I said on the script.
The last six weeks have been pretty crazy in terms of Rfps and rescues and getting all these proposals back out. So at this point I think everything that we're obligated to do for those has been done and now we're in the wait and see mode to see when these things are actually going to close.
Yeah.
Got it thank you.
You're welcome.
Uh huh.
Our next question is from Richard Shannon of Craig Hallum. Please state your question.
Yeah.
Oh, Hi, Brandon welcome Anthony I look forward to working with you I'm not sure I'm going to follow up.
Thanks, Brian I'm going to follow up on the last question or topic. Your last question on the strategic initiatives. Brian you made some interesting statements for which are I guess I had looked at probe and if and I'm, probably not going to ask a very detailed question here, but when you're talking about multiple rfps are accused totaling tens of millions of dollars coming through in the last five we.
I guess I'd love to learn a little bit more about this you know what are these related to can you characterize the companies from which you are receiving these and what's kind of process going forward assuming the funding gets gets closed here what would happen after that.
So at the highest level I would characterize nearly all of these are very well known entities. If I were to say their name.
About half for semiconductor companies have for them.
System companies Oem's large Oems.
And if you double click further there's a mix of debt.
Device opportunity and a high degree of IP license and service revenue as part of that.
So the nice thing is it's really blended them.
Almost all of it is based on our open source initiatives and I think that gives us a very good competitive edge in terms of how we've responded to these different quotes and I also mentioned in the script, but anyway. It was six weeks snapshot.
The timeframe for revenue on some of these as actually 2021 so not 2022.
And the last thing I'll add is that several of these have upfront cash.
Obligations as well so I think from a financial point of view. That's also comforting to know that there should be some upfront cash for these as well.
Yeah.
That's very interesting and I look forward to hearing more about that in future weeks and quarters here.
Let's see here moving on just a quick question on the guidance here for the current quarter just based on the little bit higher gross margin I'm, assuming there's a little bit higher component of licensing in there I guess I wanted understand where that's coming from is that the one you're expecting to sign on for sure. This moved over to the second and I guess part of that question is that I think in the last call you talked about potential.
Getting a a full license for embedded FPGA signed in the first half of this year and it seems like Youre getting one push from the first and second quarter that would definitely happens you just want to make sure I know, what's what's being included in there.
Yeah for so for Q2, I'm definitely that IP license as part of that gross margin uplift. There was also some nice gross margin a mature product in this quarter that.
That are contributing to that and then some sensible as well, but obviously has high gross margin.
The first license for the first half is definitely the one that we're talking about there's several other ones now and flights I would say based on these different rfps and are accused that we've responded to.
Okay. That's helpful. Maybe just a couple of other quick questions for me.
Obviously, your phone customers and pretty important contributor here.
And you're talking about some more wins, maybe two to four ramping rest of the year, whether it would be fair to say, Brian that debt. If you. If we were to think about seasonality NAV you see where I think there's certainly less than two years into this customer is it fair to say that the that you were expecting the second half of the year to be better than the first half just based on their cadence of wins.
And that ramp so for.
Yeah, I think that's a good way to look at it Richard.
This particular customer, especially with so many of these handsets shipping into Japan market itself.
Typically have two times per year that they do major launches spring and fall.
So a lot of the uplift you're seeing right now is and actually in Q1 was because of the spring launch preparation. So yeah I expect if we do get into these two to four models like what I was saying on the in the prepared remarks that we would also see a similar effect in the second half.
Which by the way I think that's one of the reasons why you are seeing like I said on the call. There will be we've already got backlog through September and they're really working with us in partnership with our longer lead times that we have to accommodate right now from the supply chain side.
Because they really wanted to make sure that they have product our inventory of our devices on hand to support their launch in their ramps.
Okay. That's helpful. Last question for me just on the the financial outlook for this year last quarter.
You talked about are you kind of goals here in terms of sales being mid teens.
But on a Anthony reiterated your gross margin in the 60, but just wanted to make sure. The mid teen sales are still a number that you still believe is achievable.
Yes, that's correct.
Okay perfect just want to hear that day that is all from me Brian. Thank you. Thanks.
Thanks Richard.
Our next question is from Rick beaten I've ever share investment.
The research please state your question.
Hi, Thank you Hi, Brian Hi, Anthony.
I wanted to clarify something that.
Maybe I didn't correctly understand the strategic initiative that you talked about debt will.
Hopefully close by the end of summer now.
That is that related to all the Rfps and RF queues that you mentioned you've had to deal with over the last several weeks.
No that originally when we talked about in February is separate from the new wave that we got from a lot of other entities besides that one.
We responded to that or the tens of millions of dollars of magnitude. So that's why I was trying to convey my optimism and excitement around just this whole recognition now that we are we're a big player in this open source programmable logic area, because that's really one of the driving factors behind all these incoming rfps and are accused again. They were in addition to other.
The one that we were talking about on the February call.
Okay. Thanks are the or the distributors driving these rfps and RF skus or are these coming directly no no. No. These are direct okay.
Generally speaking semiconductor distributors are are very solid there swim lane, it's sort of.
Sub $1 million per year type of opportunity if it creeps up into the several hundred thousand and $2 million, we make sure we get our direct folks involved but I can assure you that all of these ones that are a part of this group of Rfps and are accused that I was articulating are being handled by a quick classic personnel directly of course, we will probably have to fulfill some of these through distributors, but.
At that point it will be a fulfillment there won't be a design win because we will take care of the partner stuff.
Okay. Thanks.
Thanks, a lot Brian I appreciate it.
Thanks, Rick.
Yeah.
We have reached the end of the question and answer session I will now turn the call back over to Brian faith for closing remarks.
Well. Thank you everybody for participating on today's call and continued support we look forward to speaking with you again, when we participate in upcoming investor events and again when we report our second quarter results in August have a good day. Thank you.
This concludes today's conference you may do.
Connect your lines at this time, thank you for your participation and have a great day.
Okay.
Yes.
Yeah.