Akoustis Technologies Inc. Q4 2023 Earnings Call
Good day, ladies and gentlemen, and welcome to the acoustic technologies fiscal 2023 fourth quarter conference call.
As a reminder, this conference call is being recorded.
At the conclusion of the company's presentation of Christmas management will take questions.
I ask a question. Please press star one on your telephone keypad to be placed in the queue.
A replay of the call will be available on the Investor Relations section.
This website.
I would now like to turn the floor over to Tom dependency.
Thank you operator, and good morning to everyone on the call welcome to acoustic <unk> fourth quarter fiscal 2023 conference call. We are joined today by our founder and CEO , Jeff Shealy, CFO , Ken Bullock and EVP of business development, David likely.
Before we begin please note that today's presentation includes forward looking statements about our business outlook.
Statements other than statements of historical facts included in this conference call such as expectations regarding our strategies and operations, including the timing and prospects of product development and customer orders and design wins possible collaborative or partnering relationships litigation matters unexpected financial and all.
Operating results are forward looking statements such forward looking statements are predictions based on the company's expectations as of today and are subject to numerous risks and uncertainties the.
The company and our management team assume no obligation to update any forward looking statements made on today's call. Our SEC filings mentioned important factors that could cause actual results to differ materially. Please refer to our latest forms 10-K and Form 10-Q filed with the SEC to get a better understanding of those risks and.
Certainties.
In addition, our presentation today will also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlight release available in the investors section of acoustic stuck out.
I would now like to turn the call over to Jeff Shealy, founder and CEO of acoustics.
Thank you, Tom and welcome everyone to our fiscal fourth quarter Conference call.
During the quarter, we were able to deliver our seventh consecutive quarter of record sales.
As revenue growth in the June quarter was within our guided range of up 10% to 20% sequentially.
This was driven by a 41% sequential growth and filter product revenue with continuing Wi Fi six he ramps across the enterprise market increase activity and service provider and consumer markets as well as shipments to our tier one five G mobile RF component customer.
For broad sampling of its multiplex here for five G mobile devices.
Additionally.
We experienced a rebound in our soft filter automotive and timing control business during the June quarter and expect this business to show further gains moving forward as new products are introduced which I will describe in greater detail shortly.
During the June quarter, we had two customers that made up greater than 10% of our revenue ex BOL related sales accounted for the top five customers in six out of the top 10 customers.
Our top 10 customers made up 63% of our revenue our top 25 customers made up 77% of revenue in terms of regional sales three out of our top 10 customers where Asia based.
Finally, our top two customers in Q4 increase their sequential revenue with acoustics.
By 18% and 3% respectively.
We are experiencing the same challenging end market environment that has been noted by many of our customers and industry peers over the past several weeks as high component inventory levels weak consumer electronics demand, particularly in mobile handsets and a slower return to office implementation.
Have negatively impacted multiple segments of the consumer electronics industry.
This corresponds with a slower than expected rebound in the automotive five T mobile devices and network infrastructure and Wi Fi markets with focus weakness in both consumer and service provider markets.
As a result, we expect revenue for the September quarter to be down approximately 15%.
Despite these macro challenges we continue to receive new design wins and introduce new products that we expect will facilitate substantial revenue growth over the next 24 months.
I would now like to take a moment to discuss the recent developments involving the chips and Science Act of 2022.
Regarding chips Act funding the domestic manufacturing program is being implemented by the department of Commerce or D O C.
R&D investments in nanotechnology, and the creation of regional high Tech hubs are being driven by the department of defense or D O D.
Of course. This is current activity includes proposal activity with both the D O C and D O D related programs for domestic semiconductor manufacturing R&D and the commercialization of leading edge nano technologies as of today, we have submitted one D O D proposal.
With acoustics has the lead contractor or hub focused on electronic warfare or EW for defense applications.
The proposed five year contract. If awarded has an initial program budget of over $150 million. We currently expect the D O D to announce their award selections by the end of September .
Acoustics is seeking to expand its domestic manufacturing footprint, including both semiconductors and advanced packaging at our New York campus under the D. O C chips for America program.
We are currently awaiting feedback on our pre application from the D O C L.
And we expect to file a final application by the end of the calendar year and expect it a program award in calendar year 'twenty 'twenty four.
We continue to plan, our chips application around multiple semiconductor partners, which intend to manufacture semiconductor materials wafers <unk> packaging on our New York manufacturing campus.
Next I would like to discuss several compelling updates and our primary target markets beginning with Wi Fi.
One of our milestones during the June quarter was to deliver two additional Wi Fi design wins, and we received four new wins all of which are expected to ramp over the next 12 months.
These design wins include high frequency Wi Fi 60, and Wi Fi seven X ball filter solutions as well as 2.4 gigahertz ball filter solutions.
During the June quarter, we began sampling our new 5.6, and 6.6 gigahertz Wi Fi 60, and why five seven filter solutions to multiple customers.
These new parts of offer approximately four times size reduction compared to earlier generation parts and initial feedback has been positive.
We have received our first design win for these new filter solutions for our consumer focused Wi Fi six eight platform with a multi user multiple in multiple out or M. You Mimo architecture.
We now have multiple catalog and customer Y 560, and why five seven ex BOL filter solutions that are currently selling in the market.
While the overall Wi Fi market has been impacted over the past 12 months by excess inventory driven by component shortages in 2021 and 2022 and slowing Wi Fi a P demand post COVID-19, we do expect improvement in the next six months with normalized inventory levels.
Returning in calendar 'twenty 'twenty four.
With our continuing design win traction as evidenced by the four new design wins in the June quarter, we expect strong growth in our Wi Fi business to continue in calendar 'twenty 'twenty four and beyond this will be driven by our expanding portfolio of catalog Wi Fi products and the spectrum covering 2.4 gigahertz.
To 7.1 gigahertz combined with our ability to rapidly deliver customized solutions.
Looking ahead in the September quarter, we expect to receive a design win for next generation Wi Fi seven hardware with a consumer focused OEM.
Further we also expect to receive a design win for a next generation Wi Fi seven solution with a tier one U S based carrier and finally, we plan to secure design wins for our tier one enterprise class customers why five seven suite of routers and access points.
Next I would like to discuss our recent developments and the five G mobile market.
We continue to ship our initial five T mobile filter to our tier one customer in the June quarter.
The customer has been sampling its multiplex here that uses our filter and that's been waiting for its chipset reference design partner to launch its baseband into the China market. During the June quarter, our five T mobile customer brought a tier one smartphone tablet OEM to our candidate when New York Fab to perform its own.
Quality audit of our facility and manufacturing process.
We successfully passed the audit, including two offshore assembly and test locations further validating our technology and manufacturing capability.
This was our first started by a tier one handset OEM.
So this was a major milestone for our company.
We delivered two newly developed Wi Fi seven filter samples.
Two our tier two mobile customer during the June quarter.
And we continue to expect these filters to be qualified and ready for production in the first half of calendar 'twenty 'twenty four.
These two new filters are being developed using our foundry process with the customer creating its own designs using our advanced machine learning driven AI product development kit or P. D K.
Our customer has decided that we'd like to make minor changes to the first design and we expect to begin to redesign later this year.
Our anticipated milestones for the September quarter include.
We expect to receive an order for a 2.4 gigahertz Wi Fi filter for our tier two five G mobile RF front end module.
Making customer.
I will now discuss our progress in our network infrastructure business.
During the June quarter, we continued export filter shipments to our C. B R. S customers targeting the U S market.
We are seeing the five G open radio access network or O ran market slow along with the broader ran market as operators take inventory of existing developments we.
We do expect the small cell market to improve in calendar 'twenty 'twenty four as carriers throughout the U S. Europe .
The middle East and Africa begin to deploy sub five gigahertz networks do.
Due to increased data demands.
We expect carriers to deploy small cells and greater numbers in five G networks to expand capacity and improve service.
We had several major developments and our network infrastructure business during the June quarter.
First we successfully delivered samples of seven gigahertz ex BOL filters to a tier one European five G network infrastructure OEM.
We were also awarded a development order for our new high band massive Mimo filter design from the same tier one OEM aimed at the new seven gigahertz spectrum for five G base station applications.
For the September quarter, we expect to secure a fourth design win in five G from a new massive mimo customer.
Furthermore, we are currently working to engineer new improved samples of our five G band 41, and five G. U S 3.8 gigahertz network infrastructure filter solutions.
We expect to finalize the design and provide samples in the December quarter.
And now finally, I would like to provide an update on our defense and other businesses.
During the June quarter, we achieved several milestones in our defense and other market segment.
We successfully broadened the sampling of our new automotive C V to X X bar filter solution to multiple customers. While we have been involved in the automotive market delivering our F. M. I saw filter and crystal components. The introduction of our new export solution for C V to X should significantly expand our.
Tam for the automotive market.
Our new C V to X filter operates between 5.855 and $5 925 gigahertz and allows for device to device and device 10 network connections for multiple applications aimed at providing safe and effective communication within vehicles.
Our new patented filtered delivers low loss performance and enables high power handling capabilities that established long range connectivity for C V to X applications.
We also successfully delivered the second of two resonators for the timing control market. After our customers asked for wider bandwidth performance earlier in the year. We are now working on qualifying this resonator and our customer is finalizing the development of its low jitter oscillator product is aimed at multiple end markets.
During the quarter, we were also able to secure a development order for a new millimeter wave ex BOL filter for a tier one defense customer.
Our biggest success in the defense and other market segment was the introduction of our New X P. Three F technology, which incorporates a new revolutionary multi layered nano material that incorporates our patented single crystal P as electric material.
This new nano material was developed with funding from the defense Advanced research projects agency or DARPA to scale. The export technology, two frequencies up to 18 gigahertz.
The new P. A zoe electric material stack and the accompanying manufacturing process enables high Q micro acoustic wide bandwidth filter solutions that will provide improved coexistence compared to competing high frequency L. T. C. C. I P D and P C B solutions.
We believe the X P. Three F technology.
Could present acoustics with significant opportunities and X band radar Satcom, Ku band and upcoming five G 60 F. R. Three spectrum and we are receiving significant customer interest in both defense and commercial markets.
For the September quarter, and the defense and other market segments, we're expecting to secure a design win or at least one of the following crystal oscillator ball filter indoor saw filter used in automotive wireless battery management systems or W. B M S solutions.
Used it in a tier one I see reference design and we also expect to complete the qualification of the second ex BOL resonator for timing control customer.
And now I would like to hand, the call over to Ken to go through our financial highlights.
Thank you Jeff for the fourth quarter ended June 30th 2023, the company reported revenue of $8 3 million, which is an increase of more than 13% over the prior quarter ended March 31st 20th twenty-three and represents an increase of 60% year over year.
On a GAAP basis operating loss was $17 9 million for the June quarter, driven by revenue of $8 3 million offset by labor cost of $8 6 million depreciation and amortization of $3 3 million and other operational costs totaling $14 3 million.
As a result, GAAP net loss per share was 25 cents.
On a non-GAAP basis operating loss was $15 million and non-GAAP net loss per share was $15 2 million reconciliation of these amounts to the corresponding GAAP measures is available in the press release issued this morning available on the investors section of our corporate website.
Capex spending for Q4 was $1 2 million a decline from $2 1 million in the prior quarter as he placed into service the last of our ordered equipment of the company's New York's fab expansion.
Cash used in operating activities was $8 7 million, which represents the second quarter in a row of double digit improvement as operating cash spending is down another 12% from $9 9 million in the prior quarter.
The company exited the June quarter was $43 1 million of cash cash equivalents versus $52 7 million at the end of the previous quarter.
In the September quarter, we expect revenue to be down approximately 15% given the broader market weakness along with associated inventory correction.
These challenges we continue to receive design wins and introduce new products that we expect will help us grow our revenue substantially moving forward.
I'll now turn the call back over to Jeff for his closing comments.
Thank you Ken.
Before I wrap up the call I would like to provide a brief update on pending litigation matters.
With respect to the lawsuit Corvo filed against acoustics in Delaware in 2021.
Work on the case continues to.
The company continues to develop its defenses and mitigation strategies and intends to proceed and defending itself vigorously against claims asserted by corvo.
Turning to the patent infringement case filed by acoustic against Corvo, and the Eastern District of Texas.
Corvo has filed a motion to dismiss the case as well as our motion to strike acoustics is infringement contentions.
These motions are typical tactics used by defendants at this early stage of litigation for example, and its motion to strike Corvo argues that acoustic should be required to provide individual claim charts for each of the 1015 corvo products accused of infringement in the case.
One key takeaway from these updates is the complexity and evolving nature of acoustics is disputes with corvo.
Although we can provide no assurance as to the outcome of the disputes with corvo acoustic remains focused on advancing the interests of the company.
And its shareholders in both cases to obtain the best possible outcome.
And now I would like to finish by stating.
That notwithstanding a persistent challenging macro environment for the broader semiconductor industry. We are positioned to continue to deliver topline revenue and unit growth over the next 24 months and beyond driven by five G Mobile Wi Fi automotive defense and other markets.
During the June quarter, we sampled new products, including our 5.6 gigahertz and 6.6 gigahertz Wi Fi six and seven filters.
As well as our new C V to X filter and introduced a new resonator for the timing control market.
We successfully passed a major milestone with a successful audit at our New York Fab facility from one of the largest handset and tablet manufacturers in the world along with our OS that provider.
In conclusion, we believe the market opportunity for our patented high frequency ex BOL and X P. Three F filters is substantial.
As of August 25th 2023, we have 104 issued patents and 108 patents pending as we continue to build a substantial IP moat around our technology.
Operator: Good day, ladies and gentlemen, and welcome to the Akoustis Technologies' fiscal 2023-4th quarter conference call. As a reminder, this conference call is being recorded. At the conclusion of the company's presentation, Akoustis Management will take questions. To ask questions, please press the star one on your telephone keypad to replace the queue.
We continue to work diligently to achieve each of our stated objectives and we will continue to provide updates on our execution against these objectives going forward.
Finally, I would like to 11 again, thank our employees for their hard work passion and dedication, which account for multiple design wins across the Wi Fi five G network infrastructure automotive and defense markets.
Operator: The replay of the call will be available on the Investor Relations section of the Akoustis website.
Thomas Sepenzis: I would now like to turn the flow over to Tom Sepenzis. Thank you, operator, and good morning to everyone on the call. Welcome to Akoustis' fourth quarter fiscal 2023 conference call. We are joined today by our founder and CEO, Jeff Shealy, CFO Ken Boller, and EVP of business development, Dave Ickley. Before we begin, please note that today's presentation includes forward-looking statements about our business outlook. All statements other than statements of historical facts included in this conference call, such as expectations regarding our strategies and operations, including the timing and prospects of product development and customer orders and design wins, possible collaborative or partnering relationships, litigation matters, and expected financial and operating results are forward-looking statements.
We have also experienced exceptional momentum and the five G mobile market driven by our industry, leading X ball filters that operate above three gigahertz, and our new and expanding wafer level packaging capabilities.
I also wish to thank our shareholders, who continue to support the company and with that I would like to open the call for questions from the investment community.
Operator. Please go ahead with the first question.
As a reminder to ask a question you May press star one from your telephone keypad.
Our first question today is from the line of Anthony Stoss with Craig Hallum. Please proceed with your questions.
Hey, Jeff.
Congrats again on all the activity surrounding in the progress.
Three questions I wanted to hear from you today on Wi Fi seven side, just can you paint a picture when do you expect kind of volume revenues similar question on the smartphone and tablet customer that just passed.
Thomas Sepenzis: Such forward-looking statements are predictions based on the company's expectations. As of today, our subject to numerous risks and uncertainties. The company and our management team assume no obligation to update any forward-looking statements made on today's call. Our SEC filings mention important factors that could cause actual results to differ materially. Please refer to our latest form 10K and form 10Q filed with the SEC to get a better understanding of those risks and uncertainties. In addition, our presentation today will also refer to certain non-gap financial measures.
Audit of your facilities and I have a follow up.
Huh.
Hello, and good morning to you.
So.
Yeah.
We've seen.
The Wi Fi slowdown.
We're seeing in the carrier and enterprise.
<unk> seen a.
Significant pickup in Wi Fi seven activity, which is a real bright spot so.
Thomas Sepenzis: A reconciliation of these measures to the most directly comparable gap measure is presented in our earnings call highlight release available in the investor's section of Acoustus.com.
In terms of the specific customer activity, let me, let Dave kind of articulate what's going on there and also kind of what we got him.
What he sees on the.
In the mobile and the mobile space.
Jeffrey Shealy: I would now like to turn the call over to Jeff Shealey, founder, and CEO of Acoustus. Thank you, Tom, and welcome everyone to our fiscal fourth quarter conference call. During the quarter, we were able to deliver our seventh consecutive quarter of record sales as revenue growth in the June quarter was within our guided range of up 10 to 20 percent sequentially. This was driven by a 41 percent sequential growth in filter product revenue with continuing Wi-Fi 6E ramps across the enterprise market, increased activity in service provider and consumer markets as well as shipments to our tier 1 5G mobile RF component customer for broad sampling of its multiplexer for 5G mobile devices.
Morning, Tony on the wide bodies.
Where I see the activity in Q2 of next year.
We've got engagements both in the U.
Carrier sector and also in the enterprise sector.
Active designs that are starting their development runs and then they'll start working through qualifications later this year.
What was that in both of those sectors to start Q2 next year, there's other activities as well as other customers that May trail.
After that and these are two of our.
You talk to your customers every deal is right now.
Our phone tablet.
So we highlighted a successful a major milestone in passing the audit.
And we've had.
Jeffrey Shealy: Additionally, we experienced a rebound in our saw filter automotive and timing control business during the June quarter and expect this business to show further gains moving forward as new products are introduced, which I will describe in greater detail shortly. During the June quarter, we had two customers that made up greater than 10 percent of our revenue, Ex-Ball-related sales accounted for the top five customers and six out of the top 10 customers.
Multiple tier one audits from other market segments as the first one we have in the smartphone side. So huge accomplishment on the acoustic side and also throw sand provider. So that one I would say.
You know, it's an engagement that we're going to track and watch them, you will be able to give better guidance in later quarters.
Yeah, we see obviously traction with this customer.
Tony Let me answer that.
On the mobile front that is.
That's an area where.
Jeffrey Shealy: Our top 10 customers made up 63% of our revenue. Our top 25 customers made up 77% of revenue in terms of regional sales, three out of our top 10 customers were Asia-based. Finally, our top two customers in Q4 increased their sequential revenue with Akoustis by 18% and 3% respectively.
That's right.
Other segments, we actually engage directly with the Oems and this one is one where we engage with a third party. So as we've previously stated that.
Our part goes into.
A more complex module, which then has to be.
It is sold into a reference design, which we previously stated that that's targeting the China market China market.
Jeffrey Shealy: We are experiencing the same challenging in-market environment that has been noted by many of our customers and industry peers over the past several weeks as high component inventory levels, weak consumer electronics demand, particularly in mobile handsets, and a slower return to office implementation have negatively impacted multiple segments of the consumer electronics industry. This corresponds with a slower than expected rebound in the automotive 5G mobile devices and network infrastructure and Wi-Fi markets with focus weakness in both consumer and service provider markets. As a result, we expect revenue for the September quarter to be down approximately 15%.
Limited visibility and.
Also some pretty significant headwinds.
As outlined by others in the space.
Got it and then lastly, you know probably a bigger question gross margins remain negative even while revenues have grown can you give us a sense of where you expect gross margins to pass over to being positive what kind of metrics need to get them above 30% and maybe if you can update us on when you now expect kind of cash flow breakeven on a quarterly.
Mrs.
Good opportunity to bring 10, and so 11 you start.
Good morning, Jay.
So I'm pretty margins.
Undertaking a number of initiatives to improve our margins too which are as you said the positive.
Jeffrey Shealy: Despite these macro challenges, we continue to receive new design ones and introduce new products that we expect will facilitate substantial revenue growth over the next 24 months.
Those are predominantly.
And utilization of our New York that being one of them as well as.
Decrease in a lot of our back end costs, our initial products, where larger sizes, mostly three and a half on a three and a half.
Jeffrey Shealy: I would now like to take a moment to discuss the recent developments involving the Chips and Science Act of 2022. Regarding Chips Act funding, the domestic manufacturing program is being implemented by the Department of Commerce or DOC. R&D investments and nanotechnology in the creation of regional high tech hubs are being driven by the Department of Defense or DOD. Acoustic's current activity includes proposal activity with both the DOC and DOD related programs for domestic semiconductor manufacturing, R&D, and the commercialization of leading edge nanotechnologies.
Our laminates sizes are coming down in size, which dramatically reduces the cost.
As well as some cost savings with our providers.
And our new products.
Are also much smaller size much lesser backend costs associated with those products as they come online. So we expect as we improve our laminate reductions and other measures and bring on new projects that those margins will come down.
You'll start to see them become positive in next few quarters.
And then as you mentioned operating cash flow breakeven.
Jeffrey Shealy: As of today, we have submitted one DOD proposal with Acoustic as a lead contractor or hub focused on electronic warfare or EW for defense applications. The proposed five-year contract, if awarded, has an initial program budget of over $150 million. We currently expect the DOD to announce their award selections by the end of September. Acoustic is seeking to expand its domestic manufacturing footprint, including both semiconductors and advanced packaging at our New York campus under the DOC Chips for America program.
We expect that to occur in the October 2024.
Still with the same thing.
Thank God, he said before when we get to about $15 million to $18 million of revenue per quarter.
But also no I will say that we have.
<unk> operating cash flow declined 12% each quarter for the last two quarters.
And we have undertaken.
Number of prudent but necessary cost saving initiatives recently.
Which include expense controls and aligning our resources to our current customer to our current business model. So I expect that operating cash flow to continue to decline and we're taking measures to make sure that happens and then margins will improve as you see new products come online. It's Tony This is Jeff just to add.
Jeffrey Shealy: We are currently awaiting feedback on our pre-application from the DOC, and we expect to file a final application by the end of the calendar year and expect it a program award in calendar year 2024. We continue to plan our Chips application around multiple semiconductor partners, which intend to manufacture semiconductor materials, waifers, and or packaging on our New York manufacturing campus.
To that I think Kim as previously stated and just to kind of complete the picture.
As we transition those gross margins are with these cost savings plans.
At the time of <unk>.
Cash flow breakeven the gross margins will be in a.
Uh huh.
Roughly the 30% range is what we're projecting and how we're modeling it.
Jeffrey Shealy: Next, I would like to discuss several compelling updates in our primary target markets beginning with Wi-Fi. One of our milestones during the June quarter was to deliver two additional Wi-Fi design winds and we received four new winds, all of which are expected to ramp over the next 12 months. These design winds include high frequency Wi-Fi 6E and Wi-Fi 7x ball filter solutions, as well as 2.4 gigahertz ball filter solutions. During the June quarter, we began sampling our new 5.6 and 6.6 gigahertz Wi-Fi 6E.
Very good guys. Thank you.
Thank you.
My next question is from the line of Craig Ellis with B Riley Securities. Please proceed with your questions.
Yeah. Thanks for taking the question and Jeff and Ken Congratulations on.
All the customer progress in the most recent quarter I wanted to follow up on the color off for September revenues down 15%.
Quarter on quarter can you talk little bit about the Gibson takes by the different product groups for the September quarter, and then Jeff can you talk about your confidence that the September quarter would be the bottom and quarterly revenues or the potential for there to be a further decrease out in the fiscal second.
Jeffrey Shealy: Wi-Fi 7 filter solutions to multiple customers. These new parts offer approximately four times size reduction compared to earlier generation parts and initial feedback has been positive. We have received our first design wind for these new filter solutions for a consumer focused Wi-Fi 6E platform with a multi-user, multiple in, multiple out or MU-MIMO architecture. We now have multiple catalog and customer Wi-Fi 6E and Wi-Fi 7x ball filter solutions that are currently selling in the market.
Quarter timeframe ending in December .
Yeah.
Great. Good morning. Thank you for the comments so let me let me just outline just.
Provide some contrast over.
What we're seeing relative to Q4.
We expect the September quarter, our Q1.
To.
Experiences.
Jeffrey Shealy: While the overall Wi-Fi market has been impacted over the past 12 months by excess inventory driven by component shortages in 2021 and 2022 and slowing Wi-Fi AP demand post COVID, we do expect improvement in the next six months. With normalized inventory levels returning in calendar 2024. With our continuing design wind traction, as evidenced by the four new design winds in the June quarter, we expect strong growth in our Wi-Fi business to continue in calendar 2024 and beyond.
And we're seeing.
Some slowdown in mobile and why I mentioned.
The carrier and enterprise class offset by the Wi Fi seven activity pick up.
So we see that softness in Wi Fi for a period of one to two quarters.
We are seeing and experiencing a seasonal slowdown in some of the foundry services.
We have.
As part of our foundry services, we also connect and.
Some of the.
R&D and government contracts that we have right in the middle of transitioning from our first well.
Jeffrey Shealy: This will be driven by our expanding portfolio of catalog Wi-Fi products in the spectrum covering 2.4 gigahertz to 7.1 gigahertz combined with our ability to rapidly delivered customized solutions. Looking ahead in the September quarter, we expect to receive a design wind for next generation Wi-Fi 7 hardware with a consumer focused OEM. Further, we also expect to receive a design wind for a next generation Wi-Fi 7 solution with a Tier 1 US base carrier. And finally, we plan to secure design winds for our Tier 1 enterprise class customers Wi-Fi 7 suite of routers and access points.
Phase one program to a phase II program.
We're certainly seeing that.
In the September quarter.
We make that transition.
I will point to that.
<unk>.
That DARPA program that I'm, referring to.
We were extremely successful, but I think.
Oh seven participants we hit every milestone the customer put in front of us.
Related to that Peter Yes technology, we're developing so we're very bullish on that approach going forward and then finally also in the Q1 September quarter, we see some lead time and supply chain constraints, particularly in the in one of our particular H O SaaS.
Jeffrey Shealy: Next, I would like to discuss our recent developments in the 5G mobile market. We continue to ship our initial 5G mobile filter to our Tier 1 customer in the June quarter. The customer has been sampling its multiplexer that uses our filter and has been waiting for its chipset reference design partner to launch its baseband into the China market. During the June quarter, our 5G mobile customer brought a Tier 1 smartphone tablet OEM to our CanadaGuda New York Fab to perform its own quality audit of our facility and manufacturing process. We successfully passed the audit, including two offshore assembly and test locations, further validating our technology and manufacturing capability.
So those are that's really the.
That's kind of the puts and takes but that's really the macro environment. We're navigating now in terms of confidence to your second question in terms of the confidence.
That September would be a bottom what we're projecting is a one to two quarters, we're seeing I.
I think we mentioned in the script, particularly in Wi Fi there has been some.
Inventory buildup in the channel, which needs to clear and we're projecting one to two quarters. So.
I think internally if you look how we model it is.
I would say, we're going to see some softness certainly in the December quarter.
Jeffrey Shealy: This was our first audit by a Tier 1 handset OEM, so this was a major milestone for our company. We delivered two newly developed Wi-Fi 7 filter samples to our Tier 2 mobile customer during the June quarter and we continue to expect these filters to be qualified and ready for production in the first half of calendar 2024. These two new filters are being developed using our Foundry process with the customer creating its own designs using our advanced machine learning driven AI product development kit or PDK. Our customers decided it would like to make minor changes to the first design and we expect to begin redesign later this year.
That's probably comparable to what we're seeing in the September quarter, but then.
March quarter begin picking backup with the programs.
We're currently delivering.
Products to other central and Wi Fi space, and we see those picking up.
And see some nice design wins already coming together for us.
Those quarters so.
I think I've addressed your question any follow up please go ahead.
Yeah, Thanks for that.
Appreciate all the color just a follow up question, maybe for Dave and it's digging into mobile and the potential for some of the successful activity with thought with different customers to move into a production ramp and I'll just use the China market. As an example, so if we look out at it keep trying.
Jeffrey Shealy: Our anticipated milestones for the September quarter include, we expect to receive an order for a 2.4 GHz Wi-Fi filter for our Tier 2 5G mobile RF front-end module making customer.
Selling seasons, where the leading players would be developing new product. We've got Golden week early October Singles' day November lunar new year in there.
Jeffrey Shealy: I will now discuss our progress in our network infrastructure business. During the June quarter, we continued expral filter shipments to our CBRS customers targeting the US market. We are seeing the 5G open radio access network or O-RAN market slow along with the broader RAN market as operators take inventory of existing developments.
January February timeframe, and then May day for.
The route in image two Q is you're engaging with your module partners and other players when does it look like it would be reasonable for investors to expect more of a volume production ramp if we take those selling seasons as a proxy.
Jeffrey Shealy: We do expect the small cell market to improve in calendar 2024 as carriers throughout the US, Europe, the Middle East, and Africa begin to deploy sub 5 GHz networks due to increased data demands. We expect carriers to deploy small cells in greater numbers in 5G networks to expand capacity and improve service.
Yeah.
Yeah. Thanks for your question Gregg I think the.
And Jeff touched on this you are or aren't component customer engagement.
Engagement.
We had some shipments last quarter.
Into a multiplex without going into the China market on a reference designs.
Jeffrey Shealy: We had several major developments in our network infrastructure business during the June quarter. First, we successfully delivered samples of 7 GHz X-Ball filters to a Tier 1 European 5G network infrastructure OEM. We were also awarded a development order for a new high-band, massive MIMO filter design from the same Tier 1 OEM aimed at the new 7 GHz spectrum for 5G base station applications. For the September quarter, we expect to secure a fourth design win in 5G from a new massive MIMO customer. Furthermore, we are currently working to engineer new improved samples of our 5G band 41 and 5G US 3.8 GHz network infrastructure filter solutions. We expect to finalize the design and provide samples in the December quarter.
So we've seen you know.
Limited activity right now I think everybody's where obviously the.
The depression stages, even China mobile markets.
So we do not have a direct figure on the poll to the Oh use there.
It's something that we have to go through our customers obviously to get those disabilities.
So we're getting updates quarterly.
It's a great attraction. So we'll watch that closely it's hard to really give any strong guidance until we start seeing some positive trends in the mobile market in China.
The other part as you know the engagements we have with the RF front end module guys is mainly focused I think we've guided in the past you know focusing on later your models and you know that.
That is one that we've been validating the technology we've shipped.
Set in previous.
You know what we.
Jeffrey Shealy: And now finally, I would like to provide an update on our defense and other businesses. During the June quarter, we achieved several milestones in our defense and other market segment. We successfully brought in the sampling of our new automotive CV2X X-Ball filter solution to multiple customers while we had been involved in the automotive market delivering RFMI, soft filter and crystal components. The introduction of our new X-Ball solution for CV2X should significantly expand our potential tam for the automotive market.
Calls.
Yeah, we've shipped a solutions that have been done.
They just buy them and us.
As you know really navigating.
Our strategy of implementing our technology into those module so that's still underway.
So you know the.
Guidance right now it's been the outer years on when we would see that take raise obviously as we have better visibility to the platforms are integrated we can provide more concrete updates.
And Craig.
Just add to that.
From from the.
From the mobile segment I just want to emphasize.
Jeffrey Shealy: Our new CV2X filter operates between 5.855 and 5.925 GHz and allows for device-to-device and device-to-network connections for multiple applications aimed at providing safe and effective communication within vehicles. Our new patented filter delivers low loss performance and enables high-power handling capabilities that establish long-range connectivity for CV2X applications. We also successfully delivered the second of two resonators for the timing control market after our customers ask for wider bandwidth performance earlier in the year.
Besides the quality audit we passed.
He actually.
We didn't we didn't continue making shipments to that customer.
During the June quarter.
<unk>.
And also would add.
W. R E.
Well, it's part of the supply chain packaging critical packaging for that that was part of the audit that we passed and so we're prepared to.
Chip pieces.
There's been no delay on our end and then and that that supply chain is working really well. So I just wanted to emphasize how we are positioned at least to service that market as we've already demonstrated with shipments to last two quarters.
Jeffrey Shealy: We are now working on qualifying this resonator and our customer is finalizing the development of its low-jitter oscillator product that is aimed at multiple end markets. During the quarter, we were also able to secure a development order for a new millimeter wave X-ball filter for a Tier 1 defense customer. Our biggest success in the defense and other market segment was the introduction of our new XP3F technology, which incorporates a new revolutionary multi-layered nano-material that incorporates our patented single crystal PAZO electric material.
Yeah. So certainly it seems like you're executing well on the things you can control and it's been pretty well publicized but the Android market is unusually weak, especially in China, if I could sneak a last one in Jeff Nice update on your specific plans with both the chip Socs and D O D.
And you mentioned some milestones are there any.
Intermediate update points that investors could look to as it relates to potential punting poor either sourced thanks for taking all the questions guys.
Jeffrey Shealy: This new nano-material was developed with funding from the defense advanced research projects agency or DARPA to scale the X-ball technology to frequencies up to 18 gigahertz. The new PAZO electric material stack in the accompanying manufacturing process enables high-cube micro-acoustic wide-band with filter solutions that will provide improved coexistence compared to competing high-frequency LTCC, IPD, and PCB solutions. We believe the XP3F technology could present acoustic with significant opportunities in X-band radar, set-com, KU-band, and upcoming 5G 60 FR3 spectrum, and we are receiving significant customer interest in both defense and commercial markets.
Thank you Craig.
If you look historically when from the time that.
We've been notified of an award decision.
We have to negotiate a contract in the company's position is until we're under contract. We don't make we don't make any public announcements because those have to be negotiated in some of the terms of those I would have to be worked through.
I think the.
We certainly will have an update we'll provide another update just being the the.
The year end for us, it's kind of a short cycle until we're back on with investors.
After the September quarter. So certainly we think in the early October when we report again.
Excuse me and the early November timeframe. When we report again, we'll have we'll have an update.
Jeffrey Shealy: For the September quarter and the defense and other market segments, we're expecting to secure a design win of at least one of the following. Crystal oscillator, ball filter and or saw filter used in automotive wireless battery management systems or WBMS solutions, used in a Tier 1 IC reference design, and we also expect to complete the qualification of the second X-ball resonator for a timing control customer.
And I would not anticipate we'd be under contract before then.
Thanks, Jeff Thanks, Dave Thanks, Thank you.
Thanks.
Our next question is from the line of sutures de Silva with Roth I'm. Kim. Please proceed with your question, Yes, Hi, Dave Hi, Geoff Hey, I did again congrats on the progress here. So give can you give us a sense of the Wi Fi seven rapids, coming maybe how to size that opportunity to think about it relative to prior Wifi ramps.
Attach rate penetration metrics, our content practices point device or whatever way to think about it that would be helpful. Thanks.
Kenneth Boller: And now I would like to hand the call over to Ken to go through our financial highlights. Thank you, Jeff, for the fourth quarter and the June 30th 2020-23, the company reported revenue of 8.3 million, which is an increase of more than 13% over the prior quarter, and is March 31, 2020-23, and represents an increase of 60% year over year. On a gap basis, our particular loss was 17.9 million for the June quarter, during by revenue of 8.3 million, all set by labor costs of 8.6 million, the appreciation and memorization of 3.3 million, and other operational costs to a length 14.3 million, as a result, gap net loss per share was 25 cents.
So let me thanks for your comments as Susie and good morning to you.
So we did mentioned we delivered two newly developed a Wi Fi filter samples to a tier one mobile customer during the quarter, but in terms of the some of the market dynamics I'll, let Dave comment on that.
As for Wifi, Yeah. Good morning, <unk>. So I think a couple of comments there is as you.
Ken mentioned earlier that you know, we're releasing a new family of a Wi Fi six Wi Fi seven products that are better than previous generation and Oh in response, but also smaller form factors and.
So making it more attractive both from a size.
And also a performance standpoint, particularly for these higher mimo count architectures. So the.
Kenneth Boller: On a non-gap basis, operating loss was 15 million, and non-gap net loss per share was 15.2 million. Reconciliation of these amounts to the corresponding gap measures is available in the press release issue this morning, available on the best section of our corporate led flight. Cup X spending for Q4 was 1.2 million by the decline from 2.1 million in the prior quarter as you placed in the service the last of our order to equipment of the company's New York 5 expansion.
The dollar content per.
Per system is actually increasing in the Wifi service.
Both with the enterprise sector that we're seeing and also with the carrier side.
And I expect the demand to be as same or if not higher than our system unit sales. So overall the revenues should be increased for acoustic as you know in these these wifi seven platforms.
Kenneth Boller: Cash use and operating activities was 8.7 million which represents the second quarter in a row of double digit improvement as operating cash spending is down another 12% from 9.9 million in the prior quarter. The company exited the June core with 43.1 million of cash in cash equivalent versus 52.7 million at the end of the previous quarter.
Some examples as you filter count you know can go up to 50% almost a 100%.
Based on the architectures that we're seeing right now are and how they're developing so they are fairly complex previous ones. I think you guys are all aware the Wifi seven advantages.
Take away this a high band selectivity or what they call M. O multi link operation is requiring high performance filters to be able to enable that Wi Fi service. So there's definitely plays in our favor and we're keeping a lead as best as we can from a performance technology wise based on the X X ball technology. So we're very.
Kenneth Boller: In the September quarter we expect revenue to be down approximately 16% given the broader market weakness along with associated inventory correction. Despite these challenges, we continue to receive design wins and introduce new products that we expect will help us grow our revenue substantially moving forward.
Bullish about Wi Fi seven market.
Jeffrey Shealy: I will now turn the call back over to Jess, who is closing comments. Thank you, Ken.
And all the activity is moving.
Moving in the right direction as far as what we're seeing from customer deployments.
Jeffrey Shealy: Before I wrap up the call, I would like to provide a brief update on pending litigation matters with respect to the lawsuit core profile against Acoustis in Delaware in 2021. Work on the case continues. The company continues to develop its defenses in mitigation strategies and intends to proceed in defending itself vigorously against claims asserted by Corvo.
Alright, Thanks, Dave for the color and then my other question is on the auto market you mentioned it in the prepared remarks, I'm just trying to get a sense of the number of customers you may be engaged with the kind of order of magnitude is a handful or more than that and you know what what is the are they send me. These companies systems companies are module companies tier ones are at all.
Mmm directly and what's the timing of revenue ramp.
Jeffrey Shealy: Turning to the patent infringement case filed by Acoustis against Corvo in the eastern district of Texas. Corvo has filed a motion to dismiss the case as well as a motion to strike Acoustis's infringement contention. These motions are typical tactics used by defendants at this early stage of litigation. For example, in its motion to strike, Corvo argues that Acoustis should be required to provide individual claim charts for each of the 1,000 and 15 Corvo products accused of infringement in the case.
Haiti, there just to level set expectations for auto.
Yeah C. J I'll take the question so yeah I've been actually all on the road visiting with some of the automotive customers.
Yeah, Yeah pretty excited about the opportunity that is presenting to us it will take them.
You know several years before you see these platforms rolled out.
But we're actually so example is the wireless battery management system. We've got three components on a reference design with a tier one manufacturer.
So we've got good activity going on in Asia.
Yeah.
Jeffrey Shealy: One key takeaway from these updates is the complexity and evolving nature of Acoustis's disputes with Corvo. Although we can provide no assurance as to the outcome of the disputes with Corvo, Acoustis remains focused on advancing the interests of the company and its shareholders in both cases to obtain the best possible outcome.
It is starting to move into Europe , and expect some of that pick up in the North America. So we're pretty.
Sorry about the opportunities there and I think we said that we'd be announcing some design wins and then.
V to X you know, we've got a you know greater than five customers that we've been sampling to a and C. V tracks are starting to pick up activity wise, including in Asia, a D. G E.
Jeffrey Shealy: And now I would like to finish by stating that notwithstanding a persistent challenging macroenvironment for the broader semiconductor industry, we are positioned to continue to deliver top line revenue and unit growth over the next 24 months and beyond driven by 5G mobile, Wi-Fi automotive, defense, and other markets. During the June quarter, we sampled new products, including our 5.6 gigahertz and 6.6 gigahertz, Wi-Fi 60 and 7 filters, as well as our new CB2X filter and introduced a new resonator for the timing control market.
Collection.
So those are things that we're looking at closely and that we've been working with.
You know recently, some North America Oems on the automotive side that are more traditional.
Ways of going about building their systems not use of subcontractors doing it more in house and see a lot of activities discrete components. Both from the Rmi on oscillators and saw filters to our ball technology for GC use and other.
Other other spectrum ever going after so there's a lot of activity and we've got you know greater than five customers that we're selling too into production and obviously and tier wants to smaller.
Jeffrey Shealy: We successfully passed a major milestone with the FAP facility from one of the largest handset in tablet manufacturers in the world, along with our OSET provider. In conclusion, we believe that the market opportunity for our patented high frequency, X-Baw and XP 3F filters is substantial. As of August 25, 2023, we have 104 issued patents and 108 patents pending as we continue to build a substantial IP mode around our technology. We continue to work diligently to achieve each of our stated objectives and we will continue to provide updates on our execution against these objectives going forward.
Smaller companies, but are these new opportunities won't really be panning out for another couple of years.
Alright, thanks for that color, Dave Thanks team.
Thanks Ajay.
At this time I'll hand, the call back to Jeff Shealy for closing remarks.
Well I'll take the opportunity to thank everyone for your time today, we look forward to speaking with you on our next update call to discuss the current quarter execution against our milestones and future expectations and what was that I want to wish everybody a.
A very pleasant day, Thank you for your time.
This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Jeffrey Shealy: Finally, I would like to once again thank our employees for their hard work, passion and dedication which account for multiple design wins across the Wi-Fi 5G network infrastructure, automotive and defense markets. We have also experienced exceptional momentum in the 5G mobile market driven by our industry leading expo filters that operate above three gigahertz in our new and expanding way for level packaging capabilities.
Okay.
Operator: I also wish to thank our shareholders who continue to support the company and with that I would like to open the call for questions from the investment community. Operator, please go ahead with the first question. Thank you. As a reminder to ask the question, you may press star one from your telephone keypad.
Anthony Stoss: Our first question today is from the line of Anthony Stoss with Craig Allen. Please receive your question. Jeff, congrats against all the activity surrounding in the in the progress.
Jeffrey Shealy: Three questions I wanted to hear from you today on the Wi-Fi 7 side just can you paint a picture when you expect kind of volume revenues. Similar question on the smartphone tablet customer that just passed your audit of your facility that have a follow-up. So you can morning to you. So as we said, we've seen, you know, despite the Wi-Fi slowdown that we're seeing in the carrier and enterprise, we've seen significant picked up into Wi-Fi 7 activity, which is a real bright spot.
Jeffrey Shealy: So in terms of the specific customer activity, let me let Dave kind of articulate what's going on there. And also kind of what we got him what he sees on the in the mobile in the mobile space. Good morning Tony on the Wi-Fi 7 where it's the activity of that. It cannot be due to next year. We got engagements both in the carrier sector and also in the enterprise sector active designs that are starting their development runs and then those start working through qualifications later this year.
Jeffrey Shealy: So I expect what I said in both of those sectors to pick start and achieve to the next year. There's other activities as well with other customers that may trail, you know, quarter after that. And these are two of our, you know, talk to your customers that we deal with right now on the smartphone tablet. You know, as we highlighted successful major milestone in passing the audit and we had, you know, multiple tier 1 audits from other market segments.
Jeffrey Shealy: This is the person we had in the smartphone site. So huge accomplishment on the because design and also a process provider. So that one, you know, it's a, you know, it's an engagement that we're going to track and watch. You know, we'll be able to give better guidance and later quarters as, you know, we see how to track on this customer. And Tony, let me add to that. It's on the mobile fund that that is, that's an area where that's where in the other segments we actually engaged directly with the OEM.
Jeffrey Shealy: This one is one where we engage with a third party. So as we previously stated that our part goes into a more complex model, which then has to be is sold into a reference design, which we previously stated that that's targeting the China market. That China market has limited visibility and, and also some pretty significant headlets in it as outwearing by others in the space. And then lastly, you know, probably a bigger question. Gross margins remain negative even while revenues have grown. Can you give us a sense of where you expect gross margins to pass over and to be impositive?
Kenneth Boller: What kind of metrics need to get them about 30% and maybe if you can update us on one you now expect kind of a casual break even on a quarterly basis?
Kenneth Boller: Good opportunity to bring 10 in so we can once you start to get more into it. From where we margins we are undertaking a number of initiatives to improve our margins to which I realize you send the positives. Those are predominantly increasing utilization of our New York fat being one of them as well as decreasing a lot of our back end costs, our initial products were larger sizes mostly three and a half by three and a half.
Kenneth Boller: Our laminated sizes are coming down in size which dramatically reduces the cost as well as some cost savings with our with our providers, the OSATs and our new products are also much smaller size and much lesser back end costs associated with those products as they come online.
Kenneth Boller: So we expect as we improve our laminated reductions and other measures and bring on new projects that those margins will come down and you'll start to see them become positive and next you quarters and then as you mentioned operating cash over a given we expect that to occur in the October 20th 2024 quarter. Still with the same same guidance as before when we guess about 15 to 18 million dollars over revenue per quarter but also of no I will say that you know we've seen operating cash flow decline 12% each quarter for last two quarters and we have undertaken a number of prudent but necessary cost saving initiatives recently which include expensive controls and aligning our resources to our current customer to our current business model. So I expect that operating cash flow to continue to decline and we're taking measures and they sure that happens and then margins will improve as they see new products come online.
Jeffrey Shealy: Tony this Jeff just to add to that I think it can previously stated and just to kind of complete the picture as we transition those gross margins with these cost savings for you. We expect at the time of cash flow break even the gross margins will be in the roughly the 30% range is what we're projecting and how we're modeling it.
Anthony Stoss: Very good guys thank you. Thank you Tony.
Craig Ellis: Thanks questions from the line of Craig Ellis with Be Rally Securities. Please use your questions. Yeah thanks for taking the question and Jeff and Ken congratulations on all the customer progress in the most recent quarter. I found 15% quarter on quarter.
Jeffrey Shealy: Can you talk a little bit about the goods and takes by the different product groups for the September quarter and then Jeff can you talk about your confidence that the September quarter would be the bottom in quarterly revenues or the potential for there to be a further decrease out in the fiscal second quarter time frame ending in December. Craig, good morning. Thank you for the comments. So let me just outline, just provide some contrast over what we're seeing relative to Q4.
Jeffrey Shealy: So we expect the September quarter or a Q1 to experience the following. We're seeing some slowdown in Moldo and Wine. I mentioned the particular carrier and enterprise class offset by the Wi-Fi 7 activity pickup. So we see that softness in the Wi-Fi for a period of one to two corners. We are seeing an experiencing of a seasonal slowdown in some of the factory services. We have as some of our factory services.
Jeffrey Shealy: We also connect in some of the R&D government contracts that we have. We're right in the middle of transitioning from a first or a phase one program to a phase two program. So we're certainly seeing that hit in the September quarter as we make that transition. I will point to that, that DARPA program that I'm referring to. We were extremely successful and I think out of the seven participants, we hit every milestone in the customer put in front of us related to that P3F technology.
Jeffrey Shealy: We were developing so we're very bullish on that approach going forward. And then finally, also in the Q1 September quarter, we see some lead time and supply chain constraints, particularly in one of our particular HEO sets. So those are, that's really the kind of the puts and takes, but that's really the macro environment we're navigating now.
Jeffrey Shealy: In terms of confidence to your second question, terms of the confidence that September will be a bottom. What we're projecting is what the two quarters we're seeing. I think we mentioned in the script particularly in Wi-Fi. There has been some inventory filled up in the channel, which needs to clear and we're projecting one to two quarters. So I think internally, if you look how we model it is. I would say we're going to see some softness certainly in the December quarter.
Jeffrey Shealy: That's that's probably comparable to what we're seeing in the September quarter, but then March quarter, being picking back up with the programs that were currently delivering products too. There's several in in the Wi-Fi space, and that we see those picking up and facing nice design winds already coming together for for those quarters.
Craig Ellis: So I think I've addressed your question in any follow-up, please go ahead. Yeah, thanks for that and appreciate all the color.
Jeffrey Shealy: The follow-up question may be per day, if then it's digging into mobile and the potential for some of the successful activity with different customers to move into a production ramp. And I'll just use the China market as an example. So if we look out at key China selling seasons where the leading players would be developing new product. We've got golden weekly October, single stay November, lunar new year, in the January February timeframe, and then May day for the route in mid to queue.
Jeffrey Shealy: As you're engaging with your module partners and other players, when does it look like it would be reasonable for investors to expect more about volume production ramp. If we take those selling seasons as a proxy. Thanks for that. Yes, thanks for your question, Craig. I think the, and Jeff touched on this, you know, our component customer that we've engaged with that. You know, we made some ship in this last quarter, and it's into a, you know, multi-plex.
Jeffrey Shealy: So there's going into the China market on a reference design. So we've seen, you know, limited activity right now, I think there are ways where, obviously, the, you know, the person states that the China mobile market's in. So we do not have direct figure on the polls to the OEMs there. You know, it's something that we have to go through our, our customer. Obviously, to get those disabilities. And so we're getting updates quarterly on and then we can create the traction.
Jeffrey Shealy: So we'll, we'll watch that closely. It's hard to really give any, you know, strong guidance. And so we start seeing some positive trends in that mobile market China. The other part is, you know, the, I think, we have with the RF front end monster guys is mainly focused. I think we've died in the past, you know, focusing on later your models. And, you know, that is one that we've been validated in the technology.
Jeffrey Shealy: We've shipped, as we've said in previous, you know, probably, you know, calls. You know, we've shipped solutions that have been validated by them. And it's, you know, really navigating. A strategy of implementing our technology into those modules. So that's still underway. So, you know, the, you know, the guidance right now has been the hour years. When we would see that take rate. Obviously, as we have, there's ability to the platforms of the integrated. We can provide more concrete updates.
Jeffrey Shealy: Yeah, and, and Craig, let me just add to that. From, from the, from the mobile segment, I just want to emphasize. To emphasize the quality on it we passed. We actually, we did, we did continue making shipments to that customer during the June quarter. And, and also would add, you know, our, our WLP. Was part of supply chain that's the packaging, critical packaging for that. That was part of the audit that we passed.
Jeffrey Shealy: And so, we're prepared to ship the pieces from our in. There's been no delay on our in. And that, and that, that supply chain is working really well. So I just want to emphasize how we're positioned. At least this service that market. And as we've already demonstrated, we ship in the last two quarters.
Craig Ellis: Yeah, so certainly it seems like you're executing well on things you can control. And it's been very well publicized that the Android market is unusually weak, especially in China.
Craig Ellis: If I could sneak a last one in Jeff, nice update on your specific plans with both the chipsack and DOD. And you mentioned some milestones. Are there any intermediate update points that investors could look to. As it relates to potential funding for either source. Thanks for taking all the questions, guys. Thank you, Craig.
Jeffrey Shealy: So if you look historically when from the time that. We've been notified of an award decision. That's. We have to negotiate a contract and the company's position is until we're under contract. We don't make a we don't make any public announcements because those have to be negotiated. And some of the terms of those have to be worked through. So I think the.
Jeffrey Shealy: We certainly will have an update. We'll provide another update just being the the year in for us. It's kind of a short cycle until we're back on with investors. After the September quarter. So certainly would think in early October when we report again that. Excuse me and early November time frame when we report again. I will have. We'll have an update. And I would not anticipate. We'll be under contract before then.
Craig Ellis: Thanks for the call, Dave. Thanks, team. Thanks, Suji. Thank you.
Jeffrey Shealy: At this time, I'll hand the call back to Jeff Shealy for closing remarks.
Jeffrey Shealy: I want to thank the opportunity to thank everyone for your time today. I look forward to speaking with you on our next update called to discuss a current quarter execution against our milestones and future expectations.
Jeffrey Shealy: And with that, I want to wish everybody a very pleasant day. Thank you for your time.
Operator: This will conclude today's conference. May this connect your lines at this time. Thank you for your participation.