Q2 2021 Monolithic Power Systems Inc Earnings Call
$76.1 million increased 14, 9% from the first quarter of 2021 and.
The sequential quarterly revenue increase reflected earlier than normal sales of gaming console products.
Consumer revenue represented 25, 9% of Mps's second quarter.
2021 revenue compared with 25, 6%.
And the second quarter of 2020.
Second quarter automotive revenue of $48.7 million increased 8.5% from the first quarter of 2021, primarily due to increased sales of infotainment.
And the products.
Second quarter 2021 revenue was up 173, 9% year over year.
Automotive revenue represented 16, 6% of Mps's second quarter, 2021 revenue compared with 9.5% and the second quarter.
Quarter of 2020.
Second quarter 2021, industrial revenue of $43.3 million increased 8.9% from the first quarter of 2021, reflecting increased sales of products for power source of application.
Industrial revenue represented 14.
14, 8% of our total second quarter 2021 revenue compared with 14, 3% and the second quarter of 2020.
Second quarter 2021 communications revenue of $37.5 million was up 3.9% from the first quarter of 2000.
And 1.
Most of the sequential revenue increase was due to higher product sales for networking and wireless applications.
Indications sales represented 12, 8% of our total second quarter 2021 revenue compared with 16, 2% and the second quarter of 2020.
Our sustainable above market growth is based on the following we have and are continuously investing in the expansion and diversification of our supply chain.
And we accelerated the release of advanced products and solution based on our new technologies 3.
And 3 we have gained increased acceptance.
And of our solutions with first tier customers globally and.
For we continue to diversify and support of wider number of and product applications.
With our planned capacity expansion and place and as we release more parts into production, we are well positioned to accelerate.
True revenue growth.
Moving now to a few comments on gross margin.
GAAP gross margin was $56, 8% 60 basis points higher than the first quarter of 2021, and 90 basis points higher than the second quarter of 2000.
20.
Our GAAP operating income was $60.6 million compared to $46.1 million reported and the first quarter of 2021, and $28.1 million reported and the second quarter of 2020.
Non-GAAP gross margins and the second quarter of 2021.
<unk> was 56, 3% up 50 basis points on the gross margin reported for the first quarter of 2021, and 60 basis points higher and the second quarter from a year ago.
The increase and non-GAAP gross margin as a percent of revenue reflected lower proportional overhead.
Costs are.
Our non-GAAP operating income was $94.9 million.
Compared to $75.8 million.
The reported and the prior quarter.
And $53.1 million reported and the second quarter of 2020.
Representing a 79% year over year.
The increase in operating income.
Let's review of our operating expenses.
Our GAAP operating expenses were $103.6 million and the second quarter of 2021, compared with $95 million and the first quarter of 2021 and 74.
$6 million and the second quarter of 2020.
Our non-GAAP second quarter 2021, operating expenses were $70.3 million.
Up from the $66.2 million, we spent and the first quarter of 2021 and up from the 50.
$3.7 million reported and the second quarter of 2020.
The difference between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock compensation expense and income or loss on an unfunded deferred compensation plan.
For the second quarter of 2000.
And 21 total stock compensation expense, including approximately $885000 charged to cost of goods sold was $32.1 million compared with $28.6 million recorded and the first quarter of.
<unk> 2021 switching to the bottom line.
Second.
For 'twenty to 'twenty, 1 GAAP net income was $55.2 million or $1.16 per fully diluted share.
Paired with $45.4 million or 95.
Per share and the first quarter of 2021 and $32 million.
Or <unk> 64 per share in the second quarter.
Quarter 2020.
Q2, non-GAAP net income was $86.5 billion.
Or $1.81 per fully diluted share compared with $69.5 million or $1.46 per share and the first quarter of 2021 and 50.
<unk> million dollars or $1.8 per share and the second quarter of 2020.
Fully diluted shares outstanding at the end of Q2, 2021 were $47.8 million.
Now, let's look of the balance sheet cash cash equivalents and investments.
$672.9 million at the end of the second quarter of 2021 compared to $641.6 million at the end of the first quarter of 2021.
For the quarter MPS generated operating cash flow of about $96.9.
Millions of dollars.
Compared with Q1, 2021 operating cash flow of $77.1 million.
Second quarter 2021 capital spending totaled $39.3 million.
The accounts receivable and ended the second quarter of 2021.
At $77.6 million, representing 24 days sales outstanding which was 6 days lower than the 30 days reported at the end of the first quarter of 2021, and 3 days lower than the 27 days reported in the second quarter of 2020.
Our.
The internal inventories at the end of the second quarter of 2021 were $177.3 million.
Up from the $175.2 million at the end of the first quarter of 2021.
Days of inventory of 125 days at the end of the second quarter of 2021for.
For 16 days lower than at the end of the first quarter of 2021.
Historically, we have calculated days of inventory on hand, as the function of the current.
<unk> revenue, we believe comparing current inventory levels with the following quarters revenue provides the better economic match on this basis you can.
See days of inventory of 117 days at the end of the second quarter of 2021 for 7 days lower than the 124 days at the end of the first quarter of 2021 and 2 days lower.
And the 119 days at the end of the second quarter.
<unk> of 2020.
I would now like to turn to our outlook for the third quarter of 2021.
We are forecasting Q3 revenue in the range of $309 million to $321 million.
Gross margin on both a GAAP and non-GAAP.
GAAP basis is expected to include a 1 time benefit from a $4 million litigation settlement and.
Including the benefit.
GAAP gross margin will be in the range of $57.3 to 57, 9% and non-GAAP gross margin will be in the range.
And <unk> 57, 6 to 58, 2% ex.
Excluding this 1 time event non-GAAP gross margin will be in the range of $56.3 to 56, 9%.
Total stock based compensation expense should be and the range of.
<unk> of $1.2 million to $33.2 million, including approximately $950000 that would be charged to cost of goods sold.
GAAP R&D and SG&A expenses should be between $104.1 million and $108.1.
Of $30 non.
Non-GAAP R&D and SG&A expenses will be and the range of $73.9 million to $75.9 million.
Litigation expense should range between 2.3 and $2.7 million.
Interest income and as expected range from 1 <unk> to 1.
1 million $4 million.
Fully diluted shares to be in the range of 47 for.
And to $48.4 million shares.
And conclusions.
With our planned capacity expansion and place and as we release more parts and the production we are well positioned to accelerate.
And our future revenue growth I will now open up the webinar for questions.
Thank you Bernie analysts I would now like to begin our Q&A session. As a reminder, if you would like to ask a question. Please click on the participants icon on the menu bar and then click the range 10.
The rate.
Our first question comes from tourists Van Berg of Stifel. Tory. Your line is now open.
Yes, Thank you Michael and Bernie Congrats again on another strong and record quarter.
And I was hoping you could update us on your capacity plans.
But I know you've done a pretty good job here at the last 18 months your inventories seem to be in good shape, perhaps a bit at the lower end, but.
And maybe you could help us understand a bit more of what you specifically are doing on the on the capacity side.
On the.
Thanks Corey.
Our capacities.
Of always in the past 3 of 4 years, and and we keep expanding and now.
We continue that.
However.
We do have of capacities and over $2 billion and.
And.
And before the middle of the next year.
So we have enough capacity for us to grow and then now and we Havent just quantify.
Quantify of more product and released to a 2.2 of production for <unk> and.
And ultimately and the.
And our and our customers' hands.
And at the expense of repeating ourselves story.
You'll recall that last year, we brought up the 12 inch fab and this year, we've brought up 8 inch fab, which is already contributing to inventory. So in both cases, what we're continuing to do the expand out by qualifying more parts.
But we.
And we'll be able to meet the $2 billion level by the middle of next year.
Very good thank you for that.
And your cash balance has doubled here the last couple of years.
And it's now at $670 million obviously.
And so.
3 issued to have but.
What what do you intend to do with that cash.
Because obviously you don't need that much.
So do.
Do you plan to return net more back to shareholders are you potentially looking at M&A.
And the reason I'm asking this is because it's so high now.
And luck and I know historically, you've grown your business organically, but its so high now that I just have to ask the question of what you intend to do with it.
Yes.
And so that's a good question Michael.
Yeah.
As the company.
And I keep saying and we transformed the company from the semiconductor tool more.
Right.
Solution providers.
And the.
And so we can utilize the cash much better than than the weekend in the.
In the past and.
The strategy of students.
We will buy.
Tucking.
For our protect.
Technology companies, which.
Comparable tool.
To the NPS revenues.
NPS.
General market coverage.
So.
On.
<unk> and <unk>.
We are also.
Consistently raising dividend.
And that's our strategy, but the we're not excluding.
Bye.
Of buyback shares.
Great. Thank you very much on albeit disciplined and and jump back in line and thank you.
On the other half.
Our next question is from Quinn Bolton of Needham and Cowen. Your line is now open.
Hey, guys Hope you can hear me, but let me.
Echo my congratulations on the strong revenue and the very nice.
Gross and operating margins Bernie I guess, Keith just there at the end of your script.
Saying that you've got the capacity now to support and acceleration and revenue growth.
And when I look at revenue last year, you did about 35% growth it looks like this year.
Might do better than that I'm, just trying to interpret when.
And you talked about and acceleration and revenue growth.
What should we read into that.
Yes, I think that.
You are familiar with our model, which is to outperform the.
Industry by 10 to 15 percentage points and.
And obviously, that's a model that's the guideline and there are certain periods, where we have the.
Right.
And the factors both.
Strategically as well as.
From a market perspective.
Net of allowed us to do better.
And sometimes not as well as that model. So for example, if you look at last year's results.
You could argue that.
The 34 and 5% gross debt.
We exceeded the market, which was right about.
5% to 8% depending on what you are looking at somewhere in the neighborhood of.
The 15 to 17 percentage points.
And so we look at that as well.
And well above our model in the current year.
Obviously, we only guide the Q3.
But it's not unrealistic to expect that within the range of possibilities that we could match that performance.
And in fact, do just a little bit better.
So.
What we're trying to observe here is debt in this 2.3 year period.
And we're actually benefiting from a lot of factors, how it's exceeding what our normal model is.
Great. Thanks for that additional color Bruce and I also wanted to ask.
On.
The compute and storage business up 30% sequentially I think you mentioned and it was share gains and both servers as well as notebooks on.
And the notebook side I thought you already had pretty high share at the high end of the notebook market. So I'm wondering if you could comment are you starting to see share gains and maybe more mainstream or even.
And the low end or chrome books on the notebook side and is there any notable areas of share gains on servers. Thank you.
Yes, so we do have some share gain and the across the board and the.
Nope mobile market segment as our technologies.
Advanced.
And of which the more the low the cost our buy side of the become much smaller so the.
The cost.
The lower costs allow NPS and the enters.
The.
And more.
Lola notebooks segment.
And then as far as server.
We've been fairly consistent and articulating our strategy.
As far as being able to.
Grow our market position with each succeeding.
Next generation, particularly Intel and.
<unk> products.
Let me add to that though but also on 48 volt and with Gpus.
So it really expressed as the point that we.
We're branching up and share gains within the Intel family, but also branching out into these other opportunities.
Great. Thank you and congrats again.
Thank you.
Our next question is from Rick Schafer of Oppenheimer. Rick Your line is now open.
Thank you and I'll add my congratulations.
And just kind of keeping the ease and everybody and I think.
Yes.
All.
1 of more capacity.
Okay, and it's coming from a spending kind of standpoint.
Bernie maybe remind us what the outlook for per kind of spending just as a general rule, it's a percent of revenue maybe.
Maybe starting next year once all of the new capacity is installed and I mean, I think you would get so many questions and everybody.
So he's the kind of gross you guys are putting up and it's awesome. This year of 2 billion of capacity on.
And on board by this time next year, but.
At this rate of filling a couple of years, right, where you're going to be bumping your head on and so.
I'm curious because of how soon would you have to look to begin ramping incremental capacity.
I'll ask the again.
And what might what might impact E on on.
On spending.
And I'm curious, what's like just hypothetically and 2 years 3 years' time, if youre at 2 billion and topline and like what would gross margins look like for instance.
Greg Thank you and good question.
On the <unk>.
Something that's very important.
Pass to comment on here is that a lot of companies and a lot of analysts and a lot of investors are focused on capacity.
And as if this is a.
A new aspect of the semiconductor business.
In fact capacity and is something that.
And.
We have and managing for the 10 years that I've been hearing before that it's an integral component.
2 of our growth strategy.
And so.
The way that we've been doing it is for.
<unk>, adding.
New Fabs and also assembly.
Houses and testing capacity alongside of that.
To accommodate to be in front of what our expected revenue growth. So while we have made public comment on the fab that we've invested in.
To date.
We're still continuing on with.
Having relationships and.
And to secure more fab capacity for the future and order to accommodate that growth beyond $2 billion.
Yes.
As I said earlier, we're on.
Keep expanding and go and never stopped.
But sometimes the faster.
And <unk>.
And the slower.
The other than the capacities.
Physical capacity itself, we have to increase a lot of head count and the Inc, and <unk>.
And the NPS is the very very lean and the.
So.
And we will hide.
Now we are hiring a lot of people.
Oh, Thanks, sorry, I was having some trouble on my end of thanks, Michael and thanks for any quick question on auto if I could.
And by my math, it's on track to maybe grow sort of and the 80% of better range. This year.
For you guys I mean, I'm curious how much of that is being <unk>.
The directly or indirectly limited by supply.
And if you could give a sense of what growth could be or are you.
Talk about.
And then maybe demand and thats pushed and how that ultimately would show up and the model say next year I don't.
Or maybe quantify or talk about your auto backlog and maybe where it is today.
And maybe Bonnie can.
The.
This this year you said of the.
You mentioned that of whether the auto.
Aldo.
Product of the limb.
If you could buy the capacity some of it.
And the answer is the.
It's not as much of the.
The other segment because of that.
Automotive.
Company to give us a long lead times.
So we're preparing for the last year.
Limit of share gain.
Our customer and didn't consume that many of our products market and so we all transferred it to this year and so.
So we'll be able to ship them now.
But 1 of the aspects of automotive that's getting a lot of attention and the press has to do with the fact.
Fact of electronic component shortages that are shutting down plants of limiting their ability in order to kit of car and put assembler and as Michael just said.
We're actually.
Not capacity constrained there we're meeting.
All of demand.
And for.
Net and what's been interesting is 1 of the reasons that automotive got into this bind is because they were working with the just in time inventory model and.
And I think that they've learned from that debt when the parts of the electronic components our available debt.
And they.
The stock them.
Even though they don't have a complete kit to build the car now and our conversations and feedback that we're getting is they're actually only trying to satisfy real demand, but that is the timing of when the build plan when they'll have the complete kit that they can then build.
<unk>.
It's something that we want to monitor because theres been no change in the ordering pattern on our shipment schedule versus expectations because of the other limitations and automotive.
Most of the world.
And as well of added about a year and the yen of half of Gulf our inventory on.
The aura.
Hi.
And.
On the 1 of the reason that and while we do that because the.
We were on newcomer in automotive industries.
Even though with this type of the current revenue, where skus and the very very.
Liberals.
And the market.
And of market percentage of of market.
And the.
So it's a clear.
The newcomer and you don't want of upset of customers and that gave.
And you don't have of product.
No.
As all of these.
And the lack of of what we do to all.
These are the key key customers.
And how the inventory, even though the <unk> don't have a clear clear of forecast.
And the.
So now is up and really benefited us and the we gain a lot more design win activities and because of competitive for them.
Sure.
On product.
Got it thanks for the color.
All right.
Yes.
Our next question is from Ross Seymore of Deutsche Bank Ross. Your line is now open.
Our next question is from William Stein of choice. William Your line is now open.
Thanks for taking my question I Hope you can hear me.
With regard to for sort of a maintenance question with regard to your capacity and inventory, which you've already.
And quite a bit about on this call.
Paul are you supply constrained at this time are you able to meet.
All of the demand, whether it's upside or.
Maybe customers stretching and trying to build a bit of inventory or are you in fact capacity constrained and our lead times extended as euro of communicating them to customers of <unk>.
Have a bigger question.
More sort of strategic question after that.
Yes, but let me explain that way and again.
We have less capacity constrained and the compare.
And compare.
Like a half year ago also.
And the.
Paul.
However.
And the customers.
When you call of after you qualify all of the of the new facts and we have the amongst a couple of months delay of a qualifying these product and.
For quantifying the fab.
Not exactly a science.
And you use that.
Different supply different equipment.
And different materials and.
All of the problem all of the these the.
Issue comes to AR.
However.
Correct.
And how you quantify product.
And in India.
And so and of this times, Okay. We just have to release a lot of new product of non.
Existing product from a different fabs and.
So it's kind of a.
To answer your question, yet as the kind of of constraints, we have a lot more orders and we couldnt fulfill.
Okay.
But.
Just the only couple of months of <unk>.
And again, what we're trying to do here is make sure that we're servicing real demand and not building up inventory, either and the channel or on our customer shelves.
So what we've done is we've actually.
<unk> and Maria.
And very transparent relationships.
With our customers so that we make sure that we are in touch with their business sufficient and be able to make those trade offs.
Great. Thanks, and then the follow up if I can or the more strategic question Michael.
Ah referred to this transition.
Actually from US any company 2 of technology.
Hi.
Solutions company, and it's something I've written about about the specifically the transition from semi devices to modules and <unk>.
Quantification around this and perhaps it relates to.
The.
The e-commerce.
<unk>.
The strategy as well any update in that area would be very helpful. Thank you.
Yes, thanks for asking for that that pressure now of the overwhelming by the revenue growth and.
The company and not only if I'm the analyst for a mile.
Hi.
The company inside of companies all of the welding by the revenue growth that the allocation.
And the product allocations and the and the.
A lot of strategic things the market is.
As of less pronounced and analysis and I guess, but.
On the module.
So youre absolutely right module business, it's the.
For our solutions.
<unk> of transforming to a module company.
As we transforming.
Transitioning pharma.
From semiconductors to a solution company and the.
The E Commerce, and we have a team.
<unk> and <unk>.
And we finally, we have organized.
And.
Like our product line.
And the.
The and.
And I know the activities.
And in the last quarter also.
It's quadrupled.
And the.
So.
The revenue is still small but.
And the millions of dollars okay.
The more than $1 million.
Some of the 30 or $40 million worth of modules.
With the module.
And it's growing other the other recall on <unk>.
About.
5 years ago.
3 years ago, it's almost zero, yes.
And the full.
For years ago, almost they are all kind of came in and we started that and.
So.
We will continue to focus on that and the.
And so I truly believe if thats all of the future.
Thanks and congrats.
Thank you.
Our next question is from Joshua for culture of Cowen and Joshua Your line is now open hey, guys.
Congrats on the results and thanks for taking my question.
Gross margins and both the print on the guide were meaningfully higher than usual.
The 20 basis point trajectory can you elaborate on the key drivers of the leverage there.
Speaking of the sustainability was it driven by mix or something of on the cost side getting wafers through.
The recently around the apps.
Sure.
I think that we do.
Discussed in the past.
And it's.
Our model is that we want to be able to.
Grow gross margin at 10% to 20 basis points sequentially.
Over the long haul and we've demonstrated.
Very good consistency and.
And being able to do that.
But again, but much like.
I was describing before.
This is an unusual period of growth for the company both in terms of how fast the revenue is growing.
And then obviously as we described and the narrative it was that the overheads.
And is not what you'd be like direct spending or the inventory provisions or anything like that is not growing at the same rate as the revenue growth and that's where we're getting the near term leverage.
As we look out obviously, we don't want to create the expectation that we're going to be able to grow at the same rate.
But by the same token.
We have established and other.
Floor level for what we expect a sustainable gross margin to be.
That's helpful. Thank you and then.
Also on the model I guess you mentioned the consumer.
In the council was a bit accelerated.
And the rest of normal seasonality can you remind us what you would expect gross.
Shape of the console business will look like and the second half and maybe just give us some clues on.
Revenue growth.
Segment. Thank you.
Sure go ahead.
And I don't know if you call normal.
I don't I can't think of a novel and Cmos and okay.
Regarding to our console business. The yes, we will know a lot of us.
1 of the lot of it.
The design and are willing to next year and that came in.
I think the business continues and that came in.
And.
Think of you have a better judgment.
And then us of what's the seasonality of mouth kind of for full of counsel.
I think that.
On.
Michael makes it very strong and point there is that we've had so many puts and takes and different lines of businesses.
Have been added.
And that the rule of thumb and is not as applicable as it might have been back in 2018 of 2019.
What I would comment on.
Is that we believe debt.
We are optimizing across all of our different and.
And markets.
And again, it's really the strength of the model is and the diversification.
And whereas a lot of the traditional seasonality of would've been tied to consumer for example.
Now we have a much higher percentage of our business that.
To computing automotive and industrial and they don't necessarily recognize.
Recognize the same level of seasonality.
But then to sort of complete the question.
If you look at the near term growth obviously, the current year has benefited significantly from.
<unk> and.
This type of compute and storage and particular, and we believe that going forward automotive along with communications.
Should be our longer term drivers.
Understood. Thanks, guys.
Our next question is from Torrey Swanberg of Stifel. Your line is now open.
Yes. Thank you I just have a few follow up questions.
And.
First of all I have a question on on your ASP.
So is it tied to your revenue growth.
So.
Now that you are sort of growing and the 50% range how much of that.
And it's versus the <unk> piece.
Yes, I would say if you look at the last year and last year is representative of what we're doing in 2021.
As of the 34, and 5% growth, 25% of that was tied to volume, 10% with tied to price.
And.
As you think when Michael talks about the solutions business.
And we're looking at previously selling and individual piece of Silicon for 2025.
And now depending on the module, we can get between 1% to $3 and what we're looking to be able to do is design.
On a complete integrated solutions.
Solutions.
For different and applications.
Those will be able to achieve for.
The total.
On the cost of that solution can be somewhere between 60 to $100. So.
The.
If there is the ESP on the individual component, but it's more importantly, it's having that attach rate with the total solution.
Very good and talking of our systems How's your motor business doing I know.
And it's growing.
It's doing well.
And the rest of our company the go much faster.
Small.
And you can't.
You can't breakout a percentage yet and then there.
But I think though of the.
We will more of.
Is that the gave a mall category of our our product gross okay. As we divide it into a more finer.
Very good EBITDA, yes, we'll give it the member later okay.
Sounds good Michael and last 1 and about a year ago, you talked about the.
Getting into.
How about nickel and market any any updates there I mean, I know, it's still probably very very small as a percentage of revenue but.
Just trying to understand how fast your traction is and the medical end market.
Yeah Okay.
Well, we have our.
We have our products now and that's the well.
The net 1 of several things and we have ultrasound and the ultrasound and we do January revenue, we see the revenue now and that kind of man.
<unk>.
The other 1 of the X Ray machines, Okay X rays.
And the.
And we put the.
We have and we're evaluating the the first silicon.
1 of them.
And.
Okay.
From some of our.
Our design side of the Floris, but we have some issue with the facts and.
But that's the that's a very minor issues and that came in and that will be able to solve the problems on it.
And is it.
Outstanding Thank for you.
And therefore for for bringing it up.
And.
The performers.
And 5.6.
Ex better.
And then the existing solutions so the image of the lot more cleaner now and.
We could deliver and.
And so.
Thank you I think the customer the waiting and the.
Very excited.
1 other comment to add here is the technology that we're referring to here is related to our high performance of our precision analog.
How much of the converter alright and.
And this has been something that we've.
On for I think about 2 and 5.3 years now true.
And a half year, 2 and a half year and I think what is really exciting is that this is a.
The incredible opportunity and we're very close to being able to declare that it's commercially viable and the market. So.
It's not just.
<unk> been working medical.
Which is the first and.
And market, we're going after with the technology, but the other opportunities of this opens up for US yes. It's the same of the same technologies and a similar technologies that will be able will be able to use and the.
And the telecommunications site.
Sounds good.
And congrats again on the stellar results. Thank you so much thank you.
Our.
Question is from Kevin Garrigan of Rosenblatt, Kevin Your line is now open.
Hi, guys congrats on the quarter and thanks for taking my question just a quick 1 for me I was wondering if you could tell us.
What percentage of your business or percentage of backlog is based on 3 year and newer products I think last quarter. Bernie you had set of new products introduced in the last 3 years for about 37% of sales. So just kind of wondering if this was and the same range this quarter.
Yes, the reason that we use that staff on.
Sort of a 1 time basis.
It was to really give a order of magnitude 2 just how dynamic. The this new product introduction is as a component to our growth.
So right now obviously in such a short 1 quarter term and Hasnt changed a whole lot of.
For down.
But it's really not something that we want to be reporting on and on ongoing basis.
Yes.
Think of the last time, we reported.
The 37%.
And I actually went back and looked at and what's.
What's the we actually cannibalize our ourself.
And I think thats, a better way to market rather than the other.
And the big guys of the ETA.
Okay.
And I think but we cannibalize on quite a bit and that came I think is somewhere on the 10.
10% of range, Okay. All of these and you new product we cannibalize it.
And.
That's why the numbers.
So height.
Yes.
I'd say that when there is cannibalization involved you can bet debt for market share gains against our peer companies.
Thats really the leverage of the part of the story.
Got it that's helpful. Thanks, guys.
Thank you.
Our next question is.
Quinn Bolton of Needham and Cowen Your line is now open.
Hey, guys just wanted to follow up on Josh asked the question on gross margins I know and the near term better overhead absorption just driving the better margins, but if you guys have access to capacity and most of your competitors and strained I'm wondering is there any room for you to get a little bit more.
And tend to raise pricing in certain segments.
<unk> advantage of that capacity support or will you just continue to kind of put your foot on the pedal and try to drive as much revenue through that additional capacity to support rather than trying to do it through pricing.
Well, yes, mps's still a smaller of the.
Smaller and analog.
And the conduct of business and the.
Okay and the.
At the same times, we want to have.
Delivered a consistent result.
And.
So now you see.
The margin even in the in a.
In this period, we don't fluctuate a lot and.
Because of we don't we just pass on the pass on our cost to our our.
Our customers.
And the.
We don't win.
Randomly just the raised because of the we can now the.
Shortage, we can't gouging of price, Okay and then.
The effective of long term relationship with the with our with our customers and so wait just the maintained that.
And maintain the maintain our margins I think of the.
And this isn't this strategy fifth and Macy's.
For.
For Us GAAP.
Got it thank you.
Yes.
If there any follow up questions. Please click the race and button.
As there are no for.
For the questions I would now like to turn the webinar back over to Bernie.
I'd like to thank you all for joining us for this webinar and look forward to talking with you again during our third quarter webinar, which will likely be at the end of October. Thank you and have a nice day.
And the nice day.