Q1 2023 Intevac Inc. Earnings Call
Speaker 1: And around that time, we significantly moderated our growth expectations for 2023.
Speaker 1: Since that time, we have also discussed the reprioritization of customer demand, which effectively delayed plans for capacity additions in favor of a rapid deployment of technology upgrades.
Speaker 1: Our guidance for HCD revenues in 2023 has been consistent at around $40 million, roughly split between the first half and second half.
Speaker 1: Given the widespread weakening of customer demand across the electronics industry, the overall business environment has become increasingly challenging, especially related to forecasted growth rates for mass capacity drive demand.
Speaker 1: These recent industry announcements indicating further weakening of the HCD market are now putting a portion of the 2023 forecast at risk of pushing out.
Speaker 1: The fact that we've been able to largely maintain our 2023 HDD revenue forecast over the last three quarters, in spite of the continued deterioration in market conditions, is testament to our critical role as a technology provider and enabler for our hard drive customers.
Speaker 1: And our forecast for 2023 is primarily driven by technology upgrades that enable the migration to hammer drives.
Speaker 1: There is no doubt that capacity additions have been pushed out, and that the industry is utilizing significantly less than the currently installed media capacity.
Speaker 1: So even though our customers have altered their outlook regarding the timing of past capacity investments
Speaker 1: They remain excited about the long-term opportunities presented by the secular growth of data and the relevance of mass capacity storage as new data-centric applications emerge and more workloads migrate to the cloud.
Speaker 1: Our view on the latest industry feedback, however, is that the slowdown in the growth rate of data center investments will continue for some time.
Speaker 1: I will continue to meet with our leading customers each quarter in order to ensure we are sharing the latest data and outlook on each earnings call.
Speaker 1: In response to the current industry conditions, we are prudently managing costs and expenses as we weather through this drought in system shipments.
Speaker 1: And we are closely watching in between dynamics to determine the timing and magnitude of any changes to our longer term forecast.
Speaker 1: Finally, in what is now highly regarded as a game-changing development for InterVac, in late 2022 we delivered on our commitment to develop a meaningful partnership relating to a new product category.
Speaker 1: InterVac's development of the TRiO platform, a new product that supports consumer electronics and other applications, has the potential to provide a runway of compelling and sustainable long-term growth opportunities and revenue for InterVac far into the future.
Speaker 1: It is by far and away the most important development achieved by the company since the launch of the 200 Lean product 20 years ago.
Speaker 1: The recently announced development agreement was a key milestone in our growth strategy and it has the potential to broaden our product line and increase the total addressable market we can reach.
Speaker 1: These have been an extremely busy and productive first three months of 2023.
Speaker 1: On the last call, I highlighted that the process of transferring the technology from a testbed to a production tool and then into qualification would take a couple of quarters.
Speaker 1: I therefore am very pleased to confirm that at the end of Q1, we successfully completed the build of our first trio system, which is a significant and key milestone.
Speaker 1: The TRIO system is currently running samples and testing multiple configurations and chemistries to optimize the tool.
Speaker 1: Our partner continues to express their excitement about the Tree of Technology and Development program and our next milestones are to move the tool to qualification at the end of this quarter and complete qualification ahead of market demand returning in 2024.
Speaker 1: Because of this progress with RIA, we will continue prioritizing resources towards these new opportunities.
Speaker 1: As a result, during the quarter we also made further investments in the TRIO Development Program.
Speaker 1: which we are able to make given our strong balance sheets and these underscore our confidence in the platform's future success.
Speaker 1: One key investment was to capitalize the Trio Tool for wider development activities and ensure we retain a capability for in-house coating for all our potential customers.
Speaker 1: A key driver of this decision was positive feedback from meetings held in USA, Japan, South Korea, Vietnam and Singapore during the quarter.
Speaker 1: However, in the electronics ecosystem, we have seen forecasts being significantly reduced.
Speaker 1: levels of consumer weakness that are just beginning to be understood, and development timelines elongating.
Speaker 1: Many OEMs have signaled that the industry's sharpest slowdown in more than a decade is lasting longer than expected.
Speaker 1: As such, we are responding to the evolving market conditions and customer qualification timelines and are still forecasting that initial tree orders will be placed around year-end 2023, with first revenues now in 2024.
Speaker 1: As we sit today, we have an incredibly strong team that can execute and deliver world-class products to the forefront of the markets we are operating in and pursuing and with great partners90
Speaker 1: Our objective on this call today is to ensure that our investors, analysts, employees, suppliers, customers and all stakeholders recognize the important achievements over the last 15 months and our confidence and commitment in our strategy to deliver strong growth and financial performance for years to come.
Speaker 1: Underscoring our competence and commitment to delivering this strong performance are the unique attributes of the trio and before turning over the call to Jim today, I will highlight some key features about the technology and platform we are developing with our strategic partner. The new technology leverages the 200 leans flexible and modular design.
Speaker 1: all form factors including 2D and 3D shapes.
Speaker 1: And, TRIO's unique operating concept enables a compact footprint.
Speaker 1: We continue to believe that over time the TRIO platform will be developed for multiple applications and make a significant contribution to our growth plans.
Speaker 1: Despite the uncertain operating environment, our significant technology expertise...
Speaker 1: Deep customer relationships and strong fundamentals provide a solid foundation for us to execute on our business strategy.
Speaker 1: This includes expanding our serve markets, diversifying our customer base.
Speaker 1: expanding market research, establishing a leaner and more diverse team of operational leaders, and continuing to deliver differentiated technology and manufacturing solutions to our partners and customers.
Speaker 1: In summary, we have launched into 2023 with continued progress following the transformative 2022 for InterVac.
Speaker 1: We are very excited about the future and our new partnership and development agreement for the TRIO platform.
Speaker 1: I will take this moment to emphasize just how committed we are as a company to increasing stockholder value and protecting the strength of the balance sheet.
Speaker 1: We made a decision to utilize our strong cash balance to make strategic investments in our future, and these investments will absolutely convert back to cash as we revenue multiple tool deployments in the coming years.
Speaker 1: as we grow the business and transform InterVac into a consistently growing and profitable cash generating company with a leading position in each of its key markets.
Speaker 1: Our goal is to immerse in these challenging market conditions as a stronger, more agile company with a return to profitable growth and leveraging our technology leadership.
Speaker 1: That completes my prepared remarks and with that I will now turn the call over to Jim.
Speaker 2: Thank you, Nigel.
Speaker 3: First quarter revenues totaled $11.5 million and consisted of HDD upgrades, spares and service.
Speaker 3: Revenues were at the high end of our guidance range of $10.5 to $11.5 million dollars due to the acceleration and pooling of technology upgrades in the first quarter.
Speaker 3: PEW1 gross margin was 40.9%, roughly at the midpoint of our guidance of 40 to 42%.
Speaker 3: Q1 R&D and SG&A expenses were $9.2 million, just below the midpoint of our guidance of $9 to $9.5 million. The Q1 net loss was $3.9 million, or $0.15 per diluted share.
Speaker 3: The non-GAAP net loss was $4.2 million, or $0.16 per diluted share, which is equal to our net loss from continuing operations and excludes the impact of discontinued operations from the photonics division.
Speaker 3: Our backlog was $120.7 million at quarter end.
Speaker 3: reflecting the $10.5 million of new orders booked in the quarter.
Speaker 3: We ended the quarter with cash and investments, including restricted cash of $85 million.
Speaker 3: equivalent to $3.27 per share based on 25.9 million shares at quarter end. This equated to a net use of cash of $28 million in the first quarter. The most significant change in the composition of our working capital during the quarter end of the quarter end of the quarter end of the quarter end.
Speaker 3: was the roughly $14 million increase in inventory.
Speaker 3: As we discussed in our last earnings call, we have been making targeted strategic investments in trio-related inventory in support of the growth ahead.
Speaker 3: These investments, which begin in earnest in Q4 and which drove the majority of the increase in inventory during Q1, support the build of multiple TRIO systems over the next several quarters.
Speaker 3: To a lesser extent, a portion of the increase in inventory was in our hard drive business.
Speaker 3: and reflects a number of long lead time components that we had ordered over a year ago, when our customers were on an aggressive delivery schedule and the supply chain was highly constrained.
Speaker 3: However, it's important to note that this inventory was already funded by advanced customer deposits received late last year.
Speaker 3: On our last call, we showed our outlook that we expect inventory to continue to go up as we go through the year. And that when you see a decline in cash, there will normally be a corresponding increase in inventory to support customer requirements.
Speaker 3: That being said, our cash declined more than we expected in Q1, and that is largely attributable to the $6 million increase in receivables year-to-date. This increase is directly related to the current very challenging business environment in the hard drive industry.
Speaker 3: and the extended payment terms we currently have in place with our largest customer.
Speaker 3: The cash portion of the P&L loss was about $2 million after adjusting $1.6 million of stock compensation and about $400,000 of depreciation and amortization.
Speaker 3: Total cash flow used by operations was $24 million during the quarter.
Speaker 3: And the remaining use of cash in Q1 was from capital expenditures of $4 million.
Speaker 3: driven primarily from the TRIO tool being capitalized.
Speaker 3: We absolutely acknowledge and appreciate that the use of cash exceeded our expectations going into the quarter.
Speaker 3: We expect the increase in receivables will convert the cash within 2023, and the increase in inventory will take a bit longer to convert, but it absolutely will.
Speaker 3: Further, the additional HDD inventory is more than funded by advanced customer deposits.
Speaker 3: When these HDD systems orders were placed, we were on very aggressive shipment schedules with a highly constrained supply environment, and as such, we made certain commitments to purchase critical components.
Speaker 3: And delivery of these non-cancellable orders will continue throughout 2023.
Speaker 3: Now let me move to the current quarter Q2 2023 guidance. We are projecting revenue to be in the range of $8 to $9 million.
Speaker 3: This would bring first half revenues to $19 to $20 million, which is about 40% higher than the first half of 2022.
Speaker 3: We expect second quarter gross margin to be in the mid 30%.
Speaker 3: due to the increased under-absorption and a somewhat less favorable mix of higher margin upgrades.
Speaker 3: New to operating expenses are expected to be around $8.5 million.
Speaker 3: We expect interest income of about $400,000 in GAAP tax expense.
Speaker 3: also of about $400,000 in the quarter. Most of the tax expense will be non-cash.
Speaker 3: We are projecting a net loss in the range of $0.21 to $0.23 per share based on 26 million shares outstanding.
Speaker 3: For the full year, as Nigel mentioned,
Speaker 3: For the last few quarters, we have been consistent with our expectation that hard drive revenues will be around $40 million this year.
Speaker 3: But with our visibility today, we believe as much as 10% of that forecast is at risk of pushing out to next year.
Speaker 3: This forecast continues to include one 200-gene system and a similar level of upgrades to 2022.
Speaker 3: And at this time, our full year revenue forecast does not include revenue from TRiO.
Speaker 3: Given this revenue profile and expected mix, we now anticipate gross margins for the year will be in the 35% to 38% range. We expect ongoing operating expenses will be below the $8.5 million forecasted for Q2.
Speaker 3: And as a result, full year OpEx is now expected to be approximately $34 million.
Speaker 3: We expect both interest income and taxes to be in the range of $1 to $2 million in 2023.
Speaker 3: Finally, our current expectation is that our use of cash for the remainder of 2023 will be in the range of $5 to $10 million, which is largely comprised of planned material receipts in support of future growth. This completes the formal part of our presentation. Operator, we are ready for questions.
Speaker 4: Thank you. We will now be conducting a question and answer session.
Speaker 4: If you would like to ask a question, please press star then 1 on your telephone keypad.
Speaker 4: A confirmation tone will indicate your line is in the question queue.
Speaker 4: You might press star and then two if you would like to remove your question from the queue.
Speaker 4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Speaker 4: One moment please while we poll for questions.
Speaker 4: The first question is from Henrique Susanto of the Burley Fund. Please go ahead. Thank you.
Speaker 5: Good afternoon Nigel and Jim.
Speaker 5: Hi, Andy. Nigel, I'm interested in learning more about the probability that $4 million of sales to the heart-dish-right market may get pushed out to 2024. I'm wondering whether you can share more colors in terms of how much visibility into that or in other words, the
Speaker 5: when you will know whether the push out may take place or not and to what magnitude.
Speaker 5: Secondly, with regard to the push out, is the push out primarily related to upgrades?
Speaker 1: Okay, thank you for the question. As I said in the prepared remarks, we have a very close relationship with all of our customers in the HCD sector and I meet with them every quarter and we look at demand and we look at what they require.
Speaker 1: for each quarter and then through the balance of the year. So we have a very good relationship and sharing of data and good visibility of what we're thinking as well. As part of that, and you've seen, you've heard the sort of push outs both of data centres and some of that slow down and some of that underutilisation, which again,
Speaker 1: It's all pretty public data.
Speaker 1: is all pretty public data. On the back of that...
Speaker 1: We are working with them to confirm a clear plan for this quarter which we've put into the announcement there for the revenues.
Speaker 1: And then we'll work through them through the rest of the year. So every time we meet them each quarter we'll go through each of those detailed demand plans and I think to being prudent to the moment it's sensible to take out a percentage of the demand from this year. And I think some of that demand will be more towards the planned demand.
Speaker 1: sort of schedule upgrades and some other systems going out this year. As you know, we have one system in this year but I think that will stay within this year and the rest will be some other upgrades moving out and really phasing at that from our customers.
Speaker 5: Does that help answer the question? Yes, I think that is helpful. And then the second question is for Jim. So Jim, you mentioned that the use of cash for the remainder of 2023 is $5 to $10 million. You indicated that inventories will...
Speaker 5: will grow higher. So is there some insight into how much more increase in inventory we should expect throughout the remainder of the year?
Speaker 3: Yeah, I think the increase in inventory, as Nigel alluded to, some of that will be conditioned upon the shipments from Backlog that our largest customer in the hard drive wants the rest of this year. And the other portion will be we are continuing to invest in the
Speaker 3: the manufacturability in the TRIO inventory to be able to support multiple tools in the field in 2024. And we still have some supply chain constraints, so we're bringing some of that inventory. And most of that growth, as I said in my prepared remarks, the $5 to $10 million of potential additional use of cash will be really growth in inventory.
Speaker 5: And Nigel, do you have any updates on Hammer and the timing of Hammer?
Speaker 5: adoption by customers may get delayed or everything is still on track.
Speaker 1: I didn't give you a listen to some of the key earnest calls of some of the hard disk drive indices.
Speaker 1: It's been announced that...
Speaker 1: It's been announced that the hammer...
Speaker 1: drives are have been manufactured are in the market for evaluation that the ramp is in starting in 2024.
Speaker 1: the schedule for Hammer, as far as I can tell from our customer feedback, is absolutely on track.
Speaker 1: with evaluations this year and then into start of some volumes in 2024. I think that's the message I'm getting from our customers. I think everything around Hamr has been good and you've seen us over the last three quarters build that capability and support them.
Speaker 1: And in fact, we played a critical part in enabling their technology. So we're pretty confident that's coming through. I see. And Nigel, would you remind us again what kind of milestone... What kind of technical milestone...
Speaker 5: Do you need, in order to be able to recognize the first three of system revenue that is currently running sample production of your customer?
Speaker 1: So as we said in the last call...
Speaker 1: The system goes through
Speaker 1: completing builds the first month we've done. We then go through actually having achieved that build through running the process and running all the modules together. So we added into the presentations that's on the website a sort of schematic of the tool that shows us...
Speaker 1: the various stages of the processing chambers of that tool. So we're now going through running that tool in an internal qualification around getting that process up and running. That's the critical next milestone which we said we'll do this quarter. We then hand that over and we go through further customer qualifications on that tool.
Speaker 1: which will take us, let's say, another quarter plus. And then that I'll move to a fully qualified and adopted tool. And we're looking at revenues once we're through that qualification in 2024. So, I mean, for me, as we said in the last call, this will take a couple of quarters. We still believe we are going to deliver an exceptional product into the market.
Speaker 1: Our partner is excited about the technology. We're working on executing on that. And we'll keep everyone updated on each further call. So we'll keep.
Speaker 1: explaining where we are in each step of that timeline as we move to revenues in 2024. And the key achievement is to pass the qualification.
Speaker 5: And then Jim, for the increase in working capital, I assume that the majority will be preparing the next to your systems.
Speaker 5: What I'm wondering is, put it next to your systems, will it be for production?
Speaker 3: Yes, the inventory that we are putting into place for TRIO will be for a saleable inventory, inventory that, once qualified, is available to sell to the customer through our, initially, potentially through our JDA agreement.
Speaker 3: But yeah, those inventory that we will purchase will be for sale, absolutely. And the majority of the inventory growth will be trio from here to the end of the year.
I see. Yeah.
Thank you Nigel, thank you Jim.
Thank you. The next question is from Mark Miller of the Benchmark company. Please go ahead.
Good afternoon. I was just wondering, do you have an estimate for what the capacity utilization is that's your hard drive customers?
I think we've said, I think we believe that utilization in the market now is in the 40-50% level.
Okay, you mentioned you're doing some long leave items. Has there been any improvements in pricing or in the component supply chain? Do you know this recently?
There's always interesting challenges in the supply chain. I think overall we're starting to see some improvements. I mean, there's certain specific items. Some companies had some specific issues in the last couple of quarters, which impacted their ability to supply. But I think overall, the level of supply is starting to improve, would be my observation.
What about pricing? Is pricing starting to stabilize? I think overall one of the things we're looking at is
always around pricing around long-term agreements. I'd say pricing is relatively stable. You remember last year we saw some spikes and so some of those prices have stayed higher, but I think overall the pricing is stable.
Okay. Your tax situation, you're getting hit for about $400,000 per quarter. Does that change in 2024?
when you start revenueing some of these tools.
The majority of the tax that we see now is really from the hard drive business, which income runs through Asia.
So it's really the tax that we make on the hard drive business that could change depending on how much of the trio revenue we take with profit in 2024. But keep in mind we have
fairly large net operating losses.
in the US, so we'll be able to shelter that income for a couple of years.
Thank you.
The next question is from Peter Wright of PortnetApp Securities. Please go ahead.
Great, good evening guys and thank you for taking my questions.
Hello. Nigel, I've actually got three questions for each of you. Nigel, my question is, what is the best way to get a job?
three questions for you are really around TRIO. And the first one is around trying to understand the capacity potential of this marketplace. If I look at kind of your install base for hard disk drive at about 180 units, it's a roughly billion dollar market with a 50 million annual kind of service opportunity. When you look at kind of the ballistic coding market, just specific to CE.
and process diagnostic tools have higher gross margins because they're a much bigger piece of process and design technology. Hard disk drive is maybe at the lower end, gross margins at 40. Where do you think, because this is a technology you brought to market as opposed to you servicing an existing market.
or from a time perspective, when do you think that's gonna happen? Okay, I might answer these in reverse order.
spice it up a bit.
spice it up a bit.
incredible amount of interest in this technology. So the meetings we've had in the last quarter
of being not just with the current partner but with other partners other potentials and if you think about the size of the market opportunity.
And you look at the trends that's going on in the world at the moment. If you take the auto sector in particular, with hyperscreens and screens which are the width of a car, all glass, all curved, all now moving into that spectrum of having to be coated, and as people moving into...
coated glass, thin glass for car dashboards and thinking about how you make them user-friendly and you've got passengers having one section they're using and the driver a different section and it's all touchscreen and those touches are creating scratches and sponges and marks and you've got to have AR.
So our technology absolutely fits the market requirements into the auto sector and that's clearly an area where we've had some good discussion so far and potential opportunities in the future. That business, I've worked in that business and worked with the auto sector for many years, often takes from a discussion and a concept to a new car that I can take multiple years. So I think there's a huge opportunity.
into that sector it may take time but the initial discussions were having an initial opportunity initial thoughts say to me there's a great opportunity there so we're not just sitting back and going it's all about consumer devices and stuff because we know that's a huge market opportunity
and therefore that's why we've got the exclusivity and we've got a strong partner to help us develop that market.
Beyond that as well, we're talking to other glass suppliers and coating suppliers, looking at both life sciences, some small optical equipment, and to other areas of other exciting new technologies which might come through the next five to ten year horizon. So we're not sitting back and saying we're going to put it all into one.
opportunity and certainly the meetings I've had over the last quarter and would continue to have with my team that's why we strengthened the team with Eva Valencia and Mark Popovich to come on board. It's showing we've got opportunities you know but it is it's probably three years out but there are timing and opportunities out there way beyond the consumer devices so for me I'm pretty excited.
we've got the right technology for a much broader play. I think I sort of covered that in my sector.
What does that mean around technology? I think the technology we're moving into is a very competitive environment. Yes, we've got unique technology. We've got technology that enhances throughput. We have a technology that enables through the unique chart-chart mechanism, which is where we actually take in the power of the technology.
the key parts in and out of one processing chamber, enables it to be probably one of the smallest footprints. But it's a very competitive market. So as we said on the last call, I think for the moment around modeling we should keep the sort of gross margins similar to 200 lean. But it clearly for us is about how do we maximize that value. And also as I look out three, five years there's opportunity potentially to even look at coding in a different business model. So for me...
sort of smartphone sector.
into tablets and sort of the broader consumer devices and then you think about the AR and you know opportunities for augmented reality and then you look at the automotive and you look at life sciences and so on. I just think this opportunity is significantly larger than HDD.
Does that help answer those questions? Maybe in reverse order, but hopefully gives you a bit of an answer on each of those three questions. That's wonderful. I appreciate that. And Jim, I have three for you too, unfortunately not as...
consistent there, but all over. So my first question there is the trio build number. Can you share with us how many trios you expect to build in 2023? The second question is, there was a little pickup in PPE as well. Can you share with us?
what the invested capital has been in TRiO to date.
and kind of how you think of, you know, really the return on investment in that business versus your legacy hard disk drive if we can think back 20 years ago.
And then my third question is a follow-up to one of the earlier questions. He was asking if the tools were going to be production tools next year. For you guys, I understand you're going to revenue them, but are they actually going to be production worthy for the client, or are they going to be R&D tools next year?
I'll try to answer them in the order that you did. So the trio quantity of build, I don't think we're prepared to give you the absolute number at this point in time, other than to be consistent, it's going to be multiple tools that we will build.
The PP&E or the capital, one of the things that you saw and you'll see tomorrow when we file the queue, and you can see it on the balance sheet from the press release or the earnings release, is we added about $4 million in capital in Q1. And the majority of that is moreiat that it's today or not.
was a tool, a trio tool that we are capitalizing to have the capability.
to own that and to do multiple coatings for multiple potential customers beyond just the customer who we have a JDA agreement with. And as Nigel said, that could be automotive. It could be virtual reality. It could be a number of areas where we think there's tremendous value in using some of our balance sheet to own a tool.
where we have control over who we talk to in the codings and be able to do some improvements in our coding capabilities. So it's going to be multiple. Certainly, it's going to be more than two. Could be two or four, but I'm not going to give you a specific number. But that's the number for the trio builds this year.
And you can see when we talked about inventory going up 14 million, then the majority of that was TRiO. That's a portion of those inventories that we're building.
As far as the, and that's kind of the number of tools, the invested capital, I don't have a good number for you on the 200 lien. I can tell you that we spent, you can look in our R&D last year, a majority of the R&D that was spent on TRIO and the majority of the R&D that will spend it.
about whether those tools go into valuation or to making real products or whatever. One of the reasons we're spectating it and clearly we've talked about some of that markets push our market decline and one of the reasons we actually have gone through a process of getting qualification and customer qualification here is to actually make sure
So we actually put the time and use this opportunity, but the market's sort of slowing down a bit, to really make sure that tool is fully evaluation, fully qualified by our partner. One of the key benefits of doing that is then you get that tool into the field, and once it's in the field you can go from...
delivery, installation, and into revenue for the customer faster. So the tool we're doing with the joint venture partner in particular is going to extensive, and we'll probably use this opportunity to make that slightly longer, evaluation, testing, and sign off here before that is deployed in the field.
No one wants to have capital in a field that's not actually making revenue for customers. So I think it'll be those things, once tools hit the field, will start to produce parts as fast as they possibly can.
No one wants to have capital in a field that's not actually making revenue for customers. So I think it'll be those that once tools hit the field will start to produce parts as fast as they possibly can. Agreed.
That is helpful. One follow-up, Jim, very last question is on invested capital. Is there a number that you have to help me think about how much has been invested in the TRIO? The question is not what they do, but where you're gonna go for goals.
I would say now you have a combination of R and D.
And keep in mind, the R&D and the TRIO benefit was...
All of the tens and hundreds of millions we've invested in the hard drive business, we've been able to capitalize on that capability as well as some of the prior tools to TRIO. I think in the last couple of years the R&D is going to be somewhere between $15 and $20 million invested in R&D.
And then part of the other investment is going to be the inventory that we've invested to date, as well as we'll continue to invest the rest of this year.
And that investment won't stop at the end of 2023 because there are going to be applications and there are going to be additional applications.
investment won't stop at the end of 2023 because there are going to be applications and there are going to be additional trio platforms.
that could be used for automotive, which may take different sizes than the current one. I don't know if you want to add onto that, Liza? That's a good point. As we deliver success here and actually look at...
sort of broader applications, then I think there will be iterations as well. So we will continue to invest for growth but we will be investing for long-term profitable growth. Correct and the majority of our R&D investments will really be in the trio because that's the platform that gives us that, as Nigel said, that growth in the future.
It is exciting and clearly a much better use of capital than acquiring something. So that is tremendous. So thank you for sharing that. Thank you Peter.
There are no further questions at this time. I will now turn the call back over to Nigel Hunton for his closing remarks. Please go ahead.
Thank you. First I want to thank all of our employees as well as their counterparts with our industry partners for their hard work and dedication as we progress with our partnerships for the new Freo platform as well as the partnerships for the HDDs industry transition to Hammer.
I think it's been an incredible performance from everyone. I also wish to thank our investors for their ongoing support. Clearly we need their support while these near-term macroeconomic challenges are adversely affecting demand in each of our markets. So I'd like to thank the investors for their support in that remit. And also I'd like to say that if you want to reach out to Claire directly, if you want to follow up with us.
And we look forward to updating you on our Q2 call early in August . And with that, I will conclude today's call. Thank you.