Q2 2024 Transphorm Inc Earnings Call
Yeah.
Thank you for standing by and welcome to transform second quarter fiscal 2024 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone to remove yourself from the queue simple.
Press Star one again.
As a reminder, today's program is being recorded and now I'd like to introduce your host for today's program Mr. David Handover of Investor Relations. Please go ahead Sir.
Good afternoon, and welcome to transform second quarter fiscal 2024 earnings conference call.
Joining us today from transform our Crinet Perique, CEO, President and co founder and Cameron Nicola Chief Financial Officer.
Before we begin I'd like to point out that there is a slide presentation associated with some prepared remarks, which management will be referencing during the conference call.
These slides can be accessed through the live webcast link in the investors section of transforms website, where they will also be posted and available as a link to a PDF subsequent to today's conference call.
Additionally, during the course of this call company May make forward looking statements regarding the company's financial position strategy and plans future operations specific end markets in other areas of discussion it's.
It's not possible for the company, where management to predict all risks nor can the company assess the potential impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward looking statements.
In light of these risks uncertainties and assumptions our forward looking statements discussed during this call may or may not occur and actual results could differ materially and adversely from those anticipated or implied.
Any projections as to the company's future performance represent managements estimates as of today November nine 2023.
Neither company, nor any person assumes responsibility for the accuracy or completeness of the forward looking statements.
The company also undertakes no obligation to publicly update forward looking statements for any reason after the date of this call to conform such statements to actual results or to the changes in the companys expectations.
For more detailed information on risks associated with the company's business. We refer you to the risk factors described and transform its most recent annual report on Form 10-K, and other subsequent filings with the SEC.
With that said it is now my pleasure to turn the call over to transform CEO permit Parikh crinet.
Thank you and good afternoon to everyone on the call. We are pleased to report a strong second quarter of fiscal 2024 year over year revenue grew 36% to $5 million and product revenue increased 18% over the prior quarter to $3 6 million exceeding.
Our expectations.
We also delivered higher gross margin and reduced cash burn each exceeding our expectations.
Designing momentum continues to be very strong having grown our pipeline further by over 5% since our last investor call.
Our product pipeline today is over $475 million dominated by high powered products that transform.
Our advantage in quality and reliability performance and IP differentiation.
Q2 revenue was comprised of about 70% in product revenue with government revenue just under $1 $5 million. The government portion at the lower end of our targeted range due to the timing of a key government contract negotiations overall.
Overall more than 70% of the product revenue mix.
I'm from high power, yes that transform continues to be the worlds number one game company with superior high performance and reliability over every other game competition.
Notably email again.
Our white paper was recently published that outlines the superiority of transform scan technology.
We continue to make new advances unlocking more capability of the game to address larger market segments.
Evidenced by strong product offerings that now include high powered surface Mount packages like the T O L L and the T O L. P. The top site called package. Another first by transform in gallium nitride.
Now have also started sampling as well as other high performing high power products that are dropping replacement to silicon carbide MOSFET.
We continue to have additional wins in the lower power area, especially our recent system in package Sip strategy, enabling multiple customer wins.
Now going to slide three I will first start with a high level corporate update.
Our leadership in high power again remained strong as we grew our pipeline to over $475 million and our products surpassed more than 200 billion hours in the field further demonstrating our superior reliability.
Our expanding leadership in three key high power verticals.
Power for data centers, AI machines and blockchain.
Energy and industrials, including micro Inverters, UBS and several motors and electric vehicles initially with two and three users followed by four wheelers.
We continue to increase our penetration in the low power side as well with our system in package partnership as well as growth in notebook Chargers that benefit from the superior reliability delivered by the physics based benefits of our again versus email again.
Having delivered strong product revenue growth over the previous quarter, coupled with our robust pipeline. We expect to see continued sequential product revenue growth in the current third quarter.
Second we recently engaged Banc of America Securities to Act as a financial advisor in connection with our previously announced and ongoing strategic review to enhance stockholder value.
Given both inbound interest we have received from third parties, coupled with continuing strong macro interest in Gan power with the help of bank of America. We have systematically pursuing multiple options that may include the merger or sale of the company.
As we previously discussed we are working on securing non dilutive debt financing as well as having in depth discussions on certain licensing possibilities as we work to secure our financial runway well into fiscal 2025.
Now moving on to slide four I will next review, our key vectors and execution metrics for the quarter.
We reported 5 million revenue in Q2, 70% of which was from product sales that exceeded our expectations with the majority coming from high power, which is more than 300 watts for us it.
It is worth noting that competing email again has not realized yet and product customer ramps due to unclear footwear voltage reliability of email again at least from offerings from the leading foundry.
For fast Chargers in the low power space, we secured 15, new design and taking the total to more than 115 with over 30 now in production.
Notable is our multiple wins at two of the top three worldwide laptop Oems due to the performance and reliability of B mall normally off that delivers higher efficiency from effectively smaller die due to its superior dynamic characteristics.
We are gaining rapid traction with our sip or system in package strategy with more and more integrated controller and driver companies and a strong ecosystem partners now who are increasingly preferring to design in transforms pure play Gan chips.
With more than five products now in designing and to Sip products released.
To the best of our knowledge.
From Chile is the only company with broad based customers into high powered across segments from 300 watts to four kilowatts, who have ramped in the market and now we are addressing seven five kilowatt power levels from a single chip.
Since our last update we had a record of 33% sequential increase in design ins for high power that stand today at over 100 of which over 35, adding production.
Adding to our already diversified packaged portfolio, we introduced several new products, notably the high power surface, Mount <unk> and T O L. T top site called packages first forget.
We are working with leading customers in the server and <unk> micro and what their space for this high velocity high performance parts.
We are also sampling a fault in tier 247 high power again.
E Mail again cannot do due to the inherent data weakness and these four being tier 247 pin to pin compatible with silicon carbide MOSFET, while exhibiting 25% lower losses at five kilowatts whats just the latest silicon carbide MOSFET from global top three supplier.
Recent high temperature full voltage stress testing on the Super Gan products revealed.
Reliability and a dynamic performance over E mail again from the leading foundry.
That exhibit at 400% increase in resistance I E losses for the email guarantees after just $500 of reliability testing.
That is just may be acceptable for low power adapters. It's certainly is not for high power silver industrial and automotive and this is Rex transform game, especially access.
This coupled with the ecosystem partnerships with IC companies for transfer again that can be used with tenured controllers and drivers will also contribute to our anticipated sequential product revenue growth.
Our 200 volt Gan has progressed well with models and data sheets that are drawing significant interests from EBIT customers some of whom are even starting to build again as a possible future replacement for silicon carbide with automotive qualified products today at 650 volts and then.
<unk> hundred malls in the future.
With the promise of a simpler supply chain and attractive cost structure with gallium nitride.
Our efforts to improve operational capacity and cost led to continued higher productivity from our Japan reactors.
While further capacity from qualification at our global wafer reactors is expected by the start of fiscal year 2025.
We added high volume packaging subcontractors for both our high power and low power products of move aimed towards employing margins as well as capacity as we target an aggressive growth over the next few quarters.
Moving on to slide five now, let me turn to our partnerships in key manufacturing and customer initiatives.
Our manufacturing scale expansion efforts remain ongoing with global Naval reactors now in qualification and expect it to be done by the end of fiscal year 2024 to ramp in fiscal 2025.
Now have six out of eight of our more CVD reactors installed and running at various levels of production or development and consistent with previous updates about $50 million of annual annualized product revenue comprising both wafer and package products can be supported.
Our <unk> fab continues to operate on target and has sufficient capacity plans in place for fiscal year, 'twenty four and 'twenty five.
Yeah.
With incoming interest of third parties in the air system to wafer fab joint venture. We had also potentially looking to add a third partner that could reduce our ownership to roughly half of the current levels in fiscal 2025, while maintaining IP ownership for our technology in the fab.
Transform is the only began offering with three and five microseconds short circuit training developed under a funded effort from you have to cover a worldwide leader in motion control and robotics.
We also achieved 12 kilowatts from a single device and a half bridge topology without any paralleling which promises or 30 to 60 kilowatt scale in workers when used in three phase single and parallel marks an important step towards enabling EV in water service.
Right right.
We also came one more step closer to achieving our targeted growth in the EV two Wheeler three Wheeler charging space with the release of 300 Watts and 600 Watt joined three without any charterer power supply design.
We have successful ongoing design ins at two of the top five India based Oems that we expect to ramp next calendar year.
As stated before with the automotive exclusivity behind US now we progressed on worldwide customer engagements with EV four Wheeler customers for charger and converting applications with 650 volt automotive AUC cue 101 quantified products.
And we are in early discussions regarding our 201 technology.
Some manufacturers, including a leading U S. OEM have engaged in efforts to develop gallium nitride as a potential future replacement of silicon carbide.
Okay.
PDC payments.
A little bit more than $1 4 million.
In Q2 on our NXT Excel at BBVA first government program that was awarded to transform in the fiscal first quarter of FY 'twenty four and thus far we have received about $4 4 million of payments from performance under this award.
We had also in meaningful discussions for licensing with various parties some of whom are planning for gang fab manufacturing under the U S chipsets.
This would result in significant non dilutive capital that could be in place.
In fiscal 2024.
Last but not least transform is also part of the micro electronics comments chipset trust through our participation in the correlation led by University of Southern California to enhance production of <unk> and <unk> semiconductor manufacturing, where we expect to secure support for funding.
This program for enhancing some of our RF again antitrust.
Now on to slide five.
Our core capabilities again from low power high power wafers and packaged products.
Captured in our large and growing pipeline.
In line with our strategic emphasis and revenue profile about 70% of our power products pipeline applications are for high power defined as what 300 walks.
Across the full spectrum transforms gallium nitride is fundamentally superior to other again like E Mail again and typical foundry offerings.
Impact of high reliability, and robustness getting even more evident in the higher public areas.
This coupled with growing ecosystem partnerships with IC companies, both in the low power and high power space, we expect to convert larger portions of this pipeline into production wins supporting our targeted product revenue growth, both near term and long term.
In closing our priorities will be on the following areas.
First progressing through the strategic review process now with the assistance of Bank of America, both our securities to systematically identify the best options to enhance shareholder value, including the potential merger or sale of the company and to secure non dilutive debt and other capital such as licensing meaningfully extending our cash.
Turning to fiscal year 2025.
Second continuing sequential product revenue growth in the current fiscal Q3, and growing number of worldwide sales and application footprint to enable faster conversion of our growing design wins into revenue.
All are based on our superior performance high reliability and cost effectiveness of Super Gan products as well as our ecosystem of strong solution partners in the IC space Phipps, notably for lower power and system level solutions for high power.
Third continue to improve margins through achieving higher volumes transitioning to lower cost packaging subcontractors and following our technology roadmap to improve performance, while reducing costs.
Port accessing new markets like 800 volt battery EV systems, and adding new offerings like the <unk> hundred will again.
And motor drive products with short circuit capable again as well as other novel technologies like the four quadrant bidirectional switch all forests enabled by transform gap.
Overall as one of the only pure play Gan power semiconductor companies in the world with volume production in.
In both low power and high power segments, we are well positioned.
<unk> to progress towards our long term model in fiscal year 2024 and beyond.
I will hand, it over to Kevin to walk you through the financials. Thank you.
Thank you Brendan and look to everyone joining us today.
I'll start my remarks, with a brief recap of our financial results for our most recently completed quarter.
For my remarks, I will refer both to GAAP and non-GAAP results, which are reconciled to GAAP in our press release table.
non-GAAP results exclude stock based compensation depreciation amortization and other income and expenditure.
Starting with the income statement total GAAP and non-GAAP revenue comprising product and government.
$5 million in the quarter. This represents a decrease of 15% to the prior quarter and an increase of 36% over the same quarter last year.
Product sales were $3 $5 million in the quarter and excited about expectations and an increase of 18% from the prior quarter and 12% from the same quarter last year.
Our product revenue is being driven across a broad range of power conversion applications, including cost challenges in the Gulf Coast gaming and data centers.
As noted by Kevin we continue to see positive momentum with our customers in production looking into the immediate future. The company anticipates, a continuation of our sequential product revenue growth in the coming quarters.
Government revenue was $1 $45 million in the quarter, a decrease of $1 $45 million in the prior quarter.
A $1 million from the same quarter of last year.
Year on year increase has been driven by the successful awards and execution of our new $50 million of government program. We will continue to see solid revenue from this program over the year with flattish revenue anticipated in the current quarter.
The reduction from the prior quarter is attributable to pre work done at the inception of the contract that increased revenue particular to Q1.
The gross margin in the quarter was 23% down from 35% delivered in the prior quarter and higher by 11% when compared to the same quarter last year.
The claim driver here from the prior quarter was the reduced overall revenue from our higher margin government business direct margins for our product business remained largely stable in the quarter.
We anticipate company gross margins will remain largely stable in the coming quarter for our product and government businesses.
We continue to progress towards our long term model of gross margins in excess of 40%.
Number of actions, including new product introductions ongoing cost efficiency activities and benefits that we will receive as we continued to grow and scale I'd expect it to contribute to this increase.
Operating expenses on a non-GAAP basis were $6 $4 million in the current quarter down 6% from the prior quarter spend for the current quarter is anticipated to remain largely flat.
Coming to EPS I will focus my remarks here on the non-GAAP results and non-GAAP EPS loss in the quarter was 8% flat when compared to the prior quarter.
From an operational perspective, we continue to see solid traction in our targeted markets as evidenced by our improvement in both customers in production and design activity.
Mentioned earlier the company anticipates sequential product revenue growth in the current quarter. Our short term focus is on product execution, and enabling capacity expansion to support medium to long term growth we.
We also continue to invest in the long term growth engine of the company.
Coming now to the balance sheet, our shareholders' equity was $23 $7 million at the end of the quarter, an increase of $19 6 million.
<unk> studied at $22 $8 million in June.
Operational cash burn excluding capital investment decreased significantly in the quarter from $6 8 million to $5 $1 million. This was driven primarily by improved collections, including receipts from our government business and ongoing spend management procedures.
Noted in the prior quarter the company has no debt on its balance sheet.
Cash and cash equivalents were $6 $2 million at quarter end.
And it would largely through the $8 million received from a rights issue.
We continue to progress towards completion on debt facilities and expect to conclude these facilities in the near term.
Looking ahead, we continue to remain open to opportunities to further strengthen our balance sheet in order to ensure that we're able to continue to invest in our growth.
Made possible through our continued progress with design wins and production customers.
Concluding note with a few key highlights.
Transform publicly listed on the NASDAQ exchange is a global leader in robust Gan the future of next generation power systems are disruptive best in class technology is addressing a large and growing market opportunity.
We are commercially ramping with a strong pipeline in place we have established a strong network of Blue Chip partners have a comprehensive product offering.
That meets our customers needs across a wide range of power levels segments.
All of this is underpinned by the industry's strongest IP position, a vertically integrated supply chain and a deep and talented team.
That concludes our prepared remarks and materials and we would now like to open the call for any questions. Operator. Please proceed with the Q&A portion of the call.
Thirdly, and as a reminder, ladies and gentlemen, if you have a question at this time. Please press star one on your telephone one moment for our first question.
And our first question comes from the line of David Williams from the Benchmark Company. Your question. Please.
Hey, good afternoon, everyone.
Certainly good to speak with you again and congrats on just the continued progress here.
I guess first.
Wanted to ask a little bit about the <unk>.
But youre going through on the strategic side, you talked about having a lot of interest there is there any any further maybe color you can provide there in terms of the types of interest in and really where things are linked to today is there any one that has shown some some interest that gets you more optimistic or just anything I guess to help us understand how you're how you're thinking about this.
This ongoing.
Strategic review thank you.
Thank you. Thank you David I think the.
Most important thing that end.
As we talk to the Hyatt both our Securities Bank of America to help US channel systematically this interest that we talked about the inbound interest. So we can do the due process for all of these opportunities that are in the way.
That is what we can share publicly we can definitely we will continue to update on that as soon as updates become due but thats a key key message that to be bid. This.
For that reason getting both our securities onboard so we can systematically channel through this these are these opportunities.
Yes, thanks for that.
I thought it was interesting your commentary just about about silicon carbide or Gan being a competitive there and we've talked about this quite a bit in the past, but we heard one of your peers earlier. This week that also it was probably the most glowing review that I've heard before publicly in terms of just that opportunity can you talk to us about how you think about Gan in terms of <unk>.
Placing silicon carbide and as expected as it matures and where we are today, but it feels like just from an efficiency standpoint, and a cost perspective that there would be a large opportunity at least from that 1200 volt kind of range that began could really feel and become.
Tobacco kind of standard.
How do you feel and maybe just any color there would be helpful. Thank you very much.
Thanks, David.
We strongly believe in that rates are today, if you look at kind of the low power and intermediate power under high power type space that is not too much silicon carbide of course silicon carbide has done very well on the automotive citrate with many strong companies into fray, but according to physics. This is just physics that guidance should have 70% lower losses than silicon carbide.
And I think we've announced publicly before the insurance result that transform again other again I don't know about per transform Guyana is hardest about half of that 25% to 35% lower losses than silicon carbide.
The affordable cost structure of Gan on Silicon for 650, <unk> also in for our <unk> hundred mall platform Gan on Sapphire. So thats. The reason we believe this.
And quite it's now for even for automotive there is no question on the other areas. We are into micro Inverters for example seller.
All of those areas, but now for automotive site.
Interest inbound interest coming in has been.
So I think for us are both part of <unk>.
<unk> hundred 50 awards for the 400 volt battery node and then with our Gan on Sapphire 1200 volt node for the 800 volt bus.
The application so exciting definitely.
Got it.
Great well congrats again on the progress and looking forward to hearing hearing how the rest of the year turns out in and further downtick ops. Thank you Sir.
Thank you.
Thank you one moment for our next question.
Okay.
And our next question comes from the line of Craig Ellis from B Riley Your question. Please.
Hi, This is Nathan wide all calling in for Craig Ellis. Thanks for taking my questions to start it sounds like you have some nice design in activity, especially in high power I guess between high and low power or what are you seeing more engagement activity and value and.
What is your confidence level and your ability to fulfill demand. Thank you.
Yes, so on that.
As we have said before AG high power is very transform.
The undisputed leaders in high power Gander does and will continue to want to establish.
Our leadership and extend our leadership in high power and about 70% of our Senate of our revenues come from high power that said, we do like the low power segment of course, because we offer a better performance.
With reliability and it's a good good ramping ABF for us, especially with the system in package Sip partnerships that we've talked about with multiple very strong IC partners enabled again by the so called open architecture or easy easy Drivable architecture of transform scan. So clearly our focus leadership in high power <unk> 70.
Percent revenues, they're low power is a good segment, we want to win our fair share in that market.
In terms of fulfilling the demand we continue to do two things. There one is focused on our sales and <unk> sales and field application footprint.
Worldwide, that's an important part to continue to fulfill that demand and support customers and second that you heard in the call on capacity our MPV for capacity is coming up nicely and our wafer fab has been stable with plans in place for capacity increases there so for the near and midterm.
Reasonably well set to fulfilling the demand with those those two key key areas I talked about.
Thank you.
And then could you speak to your expected cash burn over the next few quarters.
Whether equipment based financing is still an option that you're considering.
Sure. Thank you commented here so.
So as we brought our cash burn down.
<unk> from $6 80 to $5 one in the current quarter and I think that.
It will likely hover around that level for the near future I think the key thing for us as Trevor mentioned in his prepared remarks is that we're actively pursuing.
Primarily debt facilities, but also looking at licensing opportunities.
The combination of that would bring.
Financial.
Stability comfortably in to fiscal 2025, and we're hoping to conclude that in the near term.
Understood I appreciate it.
Okay sorry.
Yes.
Finishing the thought on equipment leasing get yet.
That is an avenue that will remain open to.
And we will continue to pursue that along with our other avenues of potential funding.
Yes, thank you for that.
Thank you one moment for our next question.
And as a reminder, if you do have a question at this time. Please press star one one our next question comes from the line of Ananda Baruah from loop capital. Your question. Please.
Hey, Yeah. Thanks, guys. Good afternoon, thanks for taking the question.
Yes, yes.
If I could.
Just going back to the strategic review.
Is there any timeframe.
Or any any sort of.
Hi related signposts that you guys there.
I'm looking at that would be useful for us to be aware of.
I think the key thing I'll reiterate there and then that is with both our securities on we are working hand in hand with them to very systematically now drive this process will.
It will be definitely be updating.
As and when the key updates do public update you, but we are progressing very systematically but.
Profile here.
Okay got it thanks. Thanks.
Thanks for that permit.
Just going to the like the product road map the ramp that you guys are seeing.
And in product revenue lots of learning.
The high powered which seem like they really amplify.
Last 90 days.
What is the useful way for us to think about.
Given the design in activity given the momentum that you've seen and you're in your car.
Colleagues to continue to see sequentially and try to correct what they use for us to think about.
The impact.
What then good design activity.
Yes, there are those high power and low power manifesting.
<unk> revenue dynamics across the product portfolio.
Over the next.
12 to 24 months.
And any context, you underpins that would be likely to be useful to you.
No. Good question, maybe think about those in just based on our historical experience and where we are today.
Customer first of all we were very pleased with the growth in.
Especially we grew the low power design ins by 15% versus last quarter and a high powered like like we said, 33% from $75 to 100, plus just in one quarter and this was the result of again our products our reputation in the field of performance and just adding a few sales heads.
In Asia, which have helped us expand so much and long term the way we think about it the conversion is on the high power side. The design cycles are slightly higher it could be from 12 months to 18 months.
For a brand new design from scratch it could be 18 to 24 months on the low power they tend to be faster from say nine months, if it's a derivative.
Product it could even be as fast at six months, but usually nine months and a brand new product with a large ODM large OEM could be 12 12 months plus.
Historically on the high power side, our conversion rate has been.
Very strong around more than 75% conversion rate that doesn't mean, they're 25 percentage losses, maybe still ongoing.
But <unk> had very good success rate on the high power on the low power it tends to be a bit more fragmented, but yes.
We are adding more than 101 hundred plus 115, plus wins now ongoing and on that side that steps, we have taken with our Sip system and chip partners is something we expect of next two to three quarters to start adding revenue nicely because it actually magnifies our own.
<unk> channels and.
Application channels with these partners that we have.
And.
Just to follow up on I guess the high power.
Both are interesting, but the highest because that's a bigger impact.
35 products you have in production right now.
Of the 35 products in which you are in production right now is that to say given the time sort of the time. The time line that you actually get the chip is that to say.
Well actually let me just I guess, what I'm wondering is.
The 35, you have in the field today.
How does those layers.
Last 36 months.
And is it useful to say that.
Of the Hunter you have that in the next 36 months.
Given the timeframe you gave you could double the amount of products in production.
Is there any yes, you can assume that.
Good good question again into next.
I think we can look back very rare in terms of the 35 I believe a couple of months ago. A couple of quarters ago. Sorry, we were about I would say 20, plus say if I remember correctly.
And we expect so out of the <unk>.
100, plus design ins, we have 35, plus adding production. So you can say of around 70% $65 70 is still design ins right. So over the next 18 to 24 months I would say.
Our estimates are good around 80% of that so you can you can say out of the 70 to 80 about 80%. So there'll be that $55 60 of them more would get into production. So we should more than double from where we are today. That's a good way to look at it.
Call.
Yes.
Mentioned the.
The new sales force.
Was this sort of the.
The messaging to be that.
The 30% sequential increase in high end design.
Primarily driven by the incremental sales force.
So it helps it helps the coverage, but it's actually primarily driven by the products, we have benefits benefits versus.
Email again and performance benefits, which is silicon carbide. The 200 lots at the end of 200 billion hours in the field, but the coverage covenant is definitely helps thats why I alluded to it just like a headcount or too you can suddenly get coverage of 15 more accounts right. So that.
That definitely helps.
Got it.
So if it's worse.
Really what I guess I'm trying to tease out is.
These kind of sequential increase in these kinds of wins is there something that's structurally sustainable to it.
As designed and you sort of hit our stride speak such debt.
I don't know if its 30% Q over Q, but like 25 new ones.
Yeah.
Sequentially, if you hit something that there's a bit of a sweet spot now.
Sure.
I guess, maybe is it just maybe not sustainable.
I think we were very pleased with where we were this quarter right. So I think if you look at past have you been adding healthily on the high power side right I believe two quarters ago, we buy <unk> and then we went to 75. So we ended 2014.
Dave maybe be added more is a very good quarter, we had in terms of new design ins at it so yes, we should.
We cannot get a 33% increase I think every quarter over quarter, but we should look to and the increases that because the product set there the performance is there.
Manufacturing capacity is there and with promotions and what we are gaining in the worldwide footprint now we should look forward to these increases, but I cannot statement into each each quarter will be at 30% increase steadily.
The biggest single increase in AR.
Operating spend.
Look back 12 months to today has been in sales and marketing sales and marketing.
We've invested significantly and I think you can start to see the momentum coming from that additional head count.
That's helpful. Thanks, guys I appreciate it.
Thank you one moment for our next question.
Okay.
And our next question comes from the line of Aaron Martin from <unk> investment Partners. Your question. Please.
Sure.
Congratulations on the I think it's the first.
Two three Wheeler design ins can you talk a little bit more about that in kind of the.
Your expectations, there you're talking with multiples.
I think you said two two design ins looking for design win but ended the year in 2024.
How should we think about the EV.
EV two Wheeler markets. We're obviously much much further along than the four Wheeler from in terms of sizing and what kind of ramp are those.
How do those design compare from a size perspective relative to some of the other designs. We currently have.
No. Thank you for that so yes, it is definitely exciting.
The first two design ins we are.
We won and this is a very reputable customers two out of the top five as we speak and we are targeting we expect to get initial production orders by end of the year towards that and then ramp in calendar year 2024, like we have said before we still expect.
These design ins to be around.
Level from the even not not each design win dollars level, but hit a million.
Dollar plus level in calendar 2024, and get engaged actually beyond the two out of five we are engaged with 10 plus customers actually in India in Asia on this to be the charger opportunities that the onboard charger or a portable charger.
On a full charge offs in the tubular space. So on the question of the size ultimately versus say if you look at the.
Four Wheeler opportunity on the onboard charger order and what are those will be much larger size, but on the EBIT behind in time, but coming right now where it stands with the two and three we learn if you compare it to say, our our design ins either designing such as cellular power blockchain or.
He worked at <unk>, we have we believe it can be.
As much on even more growing in this 82 Wheeler segment in the next in 2024 and 2025.
Okay, and then for the ramp in 2024, you're expecting more than these two design wins design ins or Thats really these two design wins are enough for that.
So we do hope to get more design ins also for 2024, which we which we are we are working on.
Okay. Congratulations on the progress.
Thank you.
Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to permit parikh for any further remarks.
Thank you and thank you for the attention today and.
We expect to continue on this momentum that we have.
Secured debt.
Moving along with the strategic review and extending our cash runway well into fiscal 2025 executing on our product priorities and product revenue growth backed by costs down and margin improvement and then executing on our new products to keep continuing growing the design ins and stay ahead of competition. Thank you very much.
And till next time.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Okay.
Okay.
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