Q1 2024 Pixelworks Inc Earnings Call
Good day, ladies and gentlemen, and welcome to Pixel works, Inc. First quarter 2024 earnings conference call I'll be your operator today for it I'll be operator for today's call.
Speaker Change: As a reminder, this conference call is being recorded for replay purposes, I would now like to turn the call over to Brett Perry with Shelton Group Investor Relations. Please go ahead.
Speaker Change: Good afternoon, and thank you for joining us on today's call with me on the call are picks works, president and CEO tied to bonus and Chief Financial Officer Haywood demand. The purpose of today's conference call is to supplement the information provided in <unk> press release issued earlier today announcing the company's financial results for the first quarter of 2024.
Speaker Change: Before we begin I'd like to remind you that various remarks, we make on this call, including those about our projected future financial results economic and market trends and our competitive position constitute forward looking statements. These forward looking statements and all other statements made on this call that are not historical facts are subject to a number of risks and uncertainties.
company: That may cause actual results to differ materially all forward looking statements are based on the company's beliefs as of today Tuesday May 14, 2024. The company undertakes no obligation to update any such statements to reflect events or circumstances occurring after today.
company: Please refer to today's press release, the Companys annual report on Form 10-K for the year ended December 31, 2023, and subsequent SEC filings for a description of factors that could cause forward looking statements to differ materially from actual results.
company: The company's press release and management statements. During this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms, including gross margin operating expenses net loss and net loss per share.
Company Representative: non-GAAP measures exclude stock based compensation expense. The company uses these non-GAAP measures internally to assess operating performance. We believe the non-GAAP measures provide a meaningful perspective.
Speaker Change: Our core operating results and underlying cash flow dynamics, we caution investors to consider these measures. In addition to not as a substitute for nor superior to the company's consolidated financial results as presented in accordance with U S. GAAP.
company: Also note throughout the company's press release and management statements. During this conference we refer to net loss attributable picks works, Inc. Simply net loss.
company: For additional details and reconciliation reconciliation of GAAP to non-GAAP net loss.
Speaker Change: And GAAP net loss to adjusted EBITDA. Please refer to the company's press release issued earlier today with that I'd now like to turn the call over to <unk> CEO tied to bonus for his opening remarks. Please go ahead.
Brad: Thank you Brad.
Speaker Change: Good afternoon, and welcome to everyone joining us on today's call.
Speaker Change: In terms of our overall results, we had a solid first quarter.
Speaker Change: As outlined in today's press release total revenue was just above the midpoint of guidance.
Speaker Change: We anticipated March quarter seasonality coming off record mobile revenue in the fourth quarter.
Speaker Change: Gross margin expanded nearly 600 basis points sequentially to over 50% due to a favorable shift in revenue mix towards our newer X seven Gen. Two visual processor.
Bob Hopkins: I'm Bob Hopkins.
Bob Hopkins: Efficiencies and an increase in true cut revenue.
Bob Hopkins: Together with well managed operating expenses, we utilize minimal cash from operations during the first quarter.
Bob Hopkins: For a review of end markets, starting with our mobile business as.
Bob Hopkins: As previously mentioned mobile revenue for the quarter.
Bob Hopkins: As reflected in reality associated with customers launch cycles for new smartphone models.
Bob Hopkins: Year over year mobile revenue was up nearly 200% and represented a record 61% of total revenue for the first quarter.
Bob Hopkins: This growth was driven by increased unit shipments of our X series visual processors.
Speaker Change: Gen two mobile visual processor and an increase in true cut motion licensing and motion grading services.
Speaker Change: We have continued to expand and gain momentum with our <unk> branded gaming experience and ecosystem with.
Bob Hopkins: Which serves to further differentiate inherent performance.
Bob Hopkins: Granted premium visual gaming experience that our mobile processors bring customers smartphones.
Bob Hopkins: Introduced in the second half of last year.
Speaker Change: Our ex which is short for image rendering accelerator.
Speaker Change: Is an end to end ecosystem solution that we established specifically for mobile gaming.
Speaker Change: The overall response, and our resulting collaborations across industry, leading game engines and gaming studios have been encouraging.
Speaker Change: Since the introduction of <unk>, our work with several leading gaming studios has resulted in a total of nine IRS certified mobile games, and we tuned our solution to optimize visual performance on over 100 ire ex qualified mobile games.
Speaker Change: When played on an IRS enabled smartphone incorporating our X series visual processor.
Speaker Change: Iraq certified games deliver a superior higher high visual quality.
IRS: These provide.
Speaker Change: Perfect.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: In April we announced the Diablo immortal a more mobile game co developed by Blizzard Entertainment and netting studios was the latest game to incorporate our our IRS random.
Speaker Change: This mix evolution.
Speaker Change: Based on our current pipeline of engagements with studios on New games, we are aiming to double the current number of Iraq certified games by the end of this year.
Speaker Change: And among these we expect some of the highest global ranking mobile games to assume the IRS certified.
Speaker Change: In terms of year to date, we've announced a series of newly launched smartphones, incorporating our mobile visual processors.
Speaker Change: First as highlighted on our last call in early January the Oneplus eight three smartphone was the first is device launched incorporating our new X seven Gen. Two.
Speaker Change: Also as a reminder.
Speaker Change: <unk> focused on expansion beyond premium domestic models in China.
Oneplus: Our two pronged strategy includes increasing penetration of the mid to lower tier market as well as expanded adoption in models targeting for global markets.
Oneplus: As evidence of our initial traction in January one plus launched a global version of its one plus 12, representing the first flagship international model to incorporate both our X seven visual processor and Iraq certification.
Oneplus: Then in April we announced the X five turbo visual processor was incorporated in vivo is new.
Oneplus: Nine turbo smartphone targeted at the mid tier market segment.
Oneplus: Leveraging our X five series processor. The <unk> turbo features differentiated frame rate optimization as well as diverse gaming display enhancement loans.
Oneplus: Most recently, we achieved a meaningful step toward international expansion with <unk> announced the launch of its in Phoenix GT 20 pro smartphone.
Oneplus: With the incorporation of our X five series processor transient became our fifth tier one mobile customer.
Oneplus: More importantly, the Infiniti <unk> 'twenty pro represents the first integration of pixel works visual processing technology in a sub $350 smartphone that is primarily targeted for emerging markets outside of China.
Oneplus: We are encouraged by these recently launched models in support of expanding our.
Oneplus: Sure as we succeed in securing additional international models and penetration of the sub premium market segments. It will further further complement our core strategy.
Oneplus: Which remains focused on delivering highly differentiated market, leading visual display performance for the mobile market.
Oneplus: With expansion of our served available market, we have the opportunity to drive higher unit volumes accelerated ecosystem development and more robust future growth.
Oneplus: Next I want to cover updates on our other businesses and then I'll circle back with some additional comments about our near term expectations for mobile as part of our closing remarks.
Oneplus: Turning to true cut motion.
Oneplus: As highlighted on our previous conference call in late January we announced a multiyear agreement with Walt Disney Studios to bring a collection of true cut motion greatest titles to select home entertainment devices.
Oneplus: The first Apple vision CRO.
Oneplus: Securing gives me as our first home entertainment ecosystem partner was a significant milestone for Truecar motion.
Oneplus: Today, Apple vision pro users.
Oneplus: You can watch motion graded versions of Avatar and avatar the way of the water on both.
Oneplus: Yes.
Oneplus: In the three months since our announcement with Walt Disney Studios three additional new titles have been released to the premium format theaters and true cut motions cinematic high frame rate format.
Oneplus: In February Matthew bonds, Argyle, which was.
Oneplus: Songs in association with more.
Speaker Change: Was distributed globally by Universal Pictures.
Dreamworks animations: Then in March Dreamworks animations, Kung Fu Panda four.
Dreamworks animations: Was released by Universal Pictures, and true cut motion format and select premium theaters.
Speaker Change: Most recently legendary pictures Godzilla X Com, New Empire was released globally by Warner brothers to select premium theaters.
Speaker Change: In collaboration with our industry partner Christie in April we demonstrated these titles in Truecar motion format at cinema Con in Las Vegas.
Christie: Utilizing a mock theater equipped with World class entity cinema system. These demos received very positive response from exhibitors and also served as further industry validation that <unk> got motion is the leading premium format.
Christie: Our near term focus remains on bringing more high value titles to theaters.
Christie: And in true cut motion format over the coming months and quarters, while also continuing to engage in perspective content distribution and consumer device ecosystem partnerships.
Speaker Change: Shifting to our home and enterprise business.
Speaker Change: Which is predominantly comprised of our visual processor sse's for three LCD digital projector market.
Speaker Change: Revenue was in line with our expectations and consistent with typical first quarter seasonality.
Speaker Change: Reflecting the standard practice of managing down internal inventories by Japanese OEM customers in advance of their fiscal year end.
Speaker Change: Compared to the FERC.
Speaker Change: Second quarter home and enterprise revenue was down slightly due to lower contribution from our legacy video delivery solutions with sales in the projector market effectively flat year over year.
Speaker Change: As indicated by home enterprise revenue and market demand for digital projector.
Speaker Change: The stabilized in recent quarters.
Speaker Change: However, several quarters have represented a challenging environment with pivotal personal protective market, resulting in a steady consolidation.
Speaker Change: LCD market share by the industry's leading manufacturer and also our largest project your customer.
Speaker Change: At the end of the same projected customer completed final testing and evaluation on production samples of our co developed next generation projector SFC.
Speaker Change: I am pleased to report that we received acceptance on the new SSE and it will go into volume production in support of our customers first two models during the second half of this year.
Speaker Change: I want to briefly emphasize the significance of this new product milestone.
Speaker Change: While also recognizing our talented and dedicated team that made this multiyear development project a success.
Speaker Change: Our customers transition to the new SSE from prior generation will be gradual as the new projector models are introduced to the market.
Speaker Change: As a result, this SFC will drive revenue over the course of several years and effectively extends the runway for our profitable projector business through the latter part of this decade.
Speaker Change: Before handing the call to Hayley I want to make sure I want to take a minute to discuss our current outlook based upon two recent developments impacting our near term mobile business.
Haley F. Aman: First our largest mobile customer over the past two quarters recently informed us of a near term reduction in their demand compared to our previous expectations in.
Speaker Change: In short.
Speaker Change: As customers counted some unique sales challenges on recently launched models that are completely unrelated to <unk>.
Speaker Change: Due to the slower than anticipated sell through they are pausing orders until their current and soon to be released production models consume existing inventory.
Speaker Change: We expect this pause to extend into calendar.
Speaker Change: Q3.
Speaker Change: Separately, we are experiencing a delay on the market introduction of our next generation mobile visual processor.
Speaker Change: As alluded to in the past we have been aggressively working on this yet to be announced new products for the last two years.
Speaker Change: It will be by far the most.
Pixel Works: Nancy market disruptive visual processor that pixel works is introduced.
Speaker Change: In addition to being our first ever processor designed and Tsmc's 12 nanometer LLP process.
Nancy: It integrates a highly advanced feature set yet with the collaboration of our IRS.
Speaker Change: The system will bring.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Our targeted timeline for releasing this next generation processor was the end of the current quarter.
Speaker Change: However.
Speaker Change: A few technical hurdles have required pushing out its production release two later in the year.
Speaker Change: As a result, we are unfortunately going to Miss a couple of the customers design and windows for new premium models in the back half of 2024.
Speaker Change: We had previously anticipated securing.
Speaker Change: Despite this delay we still have multiple customers that are excited about our next gen. Soon.
Speaker Change: They remain engaged for incorporating it in subsequently plan models.
Speaker Change: While these two developments are obviously very disappointing I want to emphasize that IRS ecosystem engagement is an all time high.
Speaker Change: I would also add that these expected headwinds primarily impact the timing of our previous expectations, including near term revenue and they do not change our strategy, nor our longer term out growth potential.
Speaker Change: With that said given the anticipated short term drawdown in revenue, we are reviewing our near term opex and areas to maximize operational efficiencies.
Speaker Change: Apart from the current headwinds we are very pleased with the previously discussed expansion of our two pronged mobile strategy and we also remain very confident in the ability of our growing the IRS ecosystem to drive increased adoption of our current and future mobile visual processors.
Speaker Change: With that I'll pass the call to Hayley to review final.
Speaker Change: Okay.
Haley F. Aman: For the second quarter.
Haley F. Aman: Thank you Todd.
Haley F. Aman: Revenue for the first quarter of 2024 was $16 1 million, which was just above the midpoint of our guidance.
Speaker Change: Year over year total revenue for the first quarter increased 61% driven by its Ralph.
Speaker Change: Growth.
Speaker Change: Breakdown of revenue in the first quarter or was that comment.
Speaker Change: Revenue from mobile was approximately $9 8 million or 61% of total revenue and was comprised primarily of our.
Speaker Change: Right.
Speaker Change: Seven series of visual processor as well as revenue.
Speaker Change: Gary.
Speaker Change: Great.
Speaker Change: Okay.
Speaker Change: Enterprise revenue was approximately $6 2 million.
Speaker Change: First quarter non-GAAP gross profit margin expanded almost 600 basis points sequentially to 57%.
Speaker Change: In the fourth quarter of 2023, and compared to 44, 1% in the first quarter of 2023.
Speaker Change: The sequential and year over year improvement in gross margin, primarily reflects a higher mix of revenue from newer generation.
Speaker Change: Mobile video process.
Speaker Change: Licensing revenue as well as the benefit of manufacturing cost efficiencies with our supplier.
Speaker Change: non-GAAP operating expenses were $12 6 million in the first quarter compared to $12 million in the prior quarter.
Speaker Change: $13 6 million in the first quarter of 2001.
Speaker Change: Comparing sequential quarter fourth quarter operating expenses reflected the final credits R&D related to the co development agreement with our largest project.
Speaker Change: On a non-GAAP basis.
Speaker Change: First quarter 2024 net loss.
Alright.
Sure.
Care to a net loss of $2 6 million or a loss of five.
Per share in the prior quarter.
And a net loss of $8 2 million or a loss of <unk> 15 per share.
Speaker Change: The first quarter of 2023.
Speaker Change: Adjusted EBITDA for the first quarter of 2024.
Speaker Change: Okay.
Speaker Change: Good morning.
Speaker Change: Anthony.
Okay.
Speaker Change: Okay.
Turning to the balance sheet, we ended the first quarter webcast and consequent one of $46 2 million compared to $47 5 million.
Good morning.
Speaker Change: While the company has a small sequential decrease in cash balance.
Speaker Change: To highlight a word to say.
Hi subsidiary achieved positive positive cash flow from operations for the first quarter of 2024.
Speaker Change: Shifting to our current expectations and guidance for the second quarter of 2024.
As Todd discussed total revenue for the second quarter will be lower than previously anticipated.
Speaker Change: Merrill Lynch resolved in the near term headwinds in our mobile business.
Considering these factors and based on our existing backlog. We currently expect total revenue for the segment.
Speaker Change: Range of between $8 million.
Yeah.
Todd: I also want to emphasize that we believe the headwinds impacting second quarter mobile revenue or near term and we expect to return to sequential growth in the second half of the year.
Speaker Change: In terms of gross profit margin for the second quarter.
Gross profit margin to be between 50% and 62%.
Speaker Change: We expect operating expenses in the second quarter to range between $12 5 million.
Speaker Change: On a non-GAAP basis.
And lastly, we expect second quarter non-GAAP.
For sure.
<unk> per share.
That completes our prepared remarks, and we look forward to taking your questions. Operator. Please proceed with the Q&A session.
Speaker Change: Thank you and at this time, we will conduct a question answer session.
Ask the question that you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Once again Thats star one for questions. Please standby with compile the Q&A roster.
One moment for our first question.
And your first question will come from the line of <unk> Silva from Roth. Your line is open.
Hi, Todd Hi, Haley couple of questions on the mobile first of all on the mobile customers.
Todd: Just curious how much concentration there isn't the 20 million the last two quarters the customer that's having I guess model challenges now and are there other large customers in mobile just to understand the concentration there.
Todd: So.
<unk>.
Todd: Of the $20 million in the last two quarters.
A significant portion was with one large customer.
Speaker Change: We don't break out each customer because.
Speaker Change: We don't want to break out too much information about the models, we're still on a handful of models on a per customer basis.
Speaker Change: But we were overweight one particular customer and that is the customer that is pulling back.
Okay. Okay. That's helpful color.
Then on the new chip.
Speaker Change: The push out in the launch.
Speaker Change: Is that a chip architecture issue is it a design issue.
Speaker Change: Or software firmware or is it a issue with the manufacturing process any color there on the challenge would be helpful.
Speaker Change: So it's not an architecture issue I mean, this is an entirely new architecture, we put.
Speaker Change: Several.
New features and functionality in the device.
As we were progressing to our first chip in 12 nanometer.
Speaker Change: When you move to a new process node like this one of the things. We have is we have mixed signal analog interfaces.
Speaker Change: This quarter.
Speaker Change: Courting those to a new process technology is always challenging.
Speaker Change:
Speaker Change: Some of the new features are taken us longer to bring up.
But it is not.
It's not it's certainly not anything to do with the process technology or our manufacturing.
Got it.
Speaker Change: It is.
Speaker Change: Design related.
Speaker Change: We have we got devices back.
Speaker Change: I think in late April.
Speaker Change: They were in good enough shape that we actually sample devices to customers.
Speaker Change: Okay.
So we wouldn't have done that if there was something architectural are fundamentally wrong with them.
But needless to say, we were already running on a tight schedule with.
The customers that were <unk>.
<unk> committed to use it in the near term.
Speaker Change: So it was already a bit of a risk and I would say some of the challenges that we have it was just too much of a risk to engage on those models. So it's just these are companies that put out new models every six months.
And so from there.
Perfect risk became too high to go on the near term.
And we have.
Ample time now to bring it up for the subsequent models.
Okay I appreciate the color. Thanks.
Thank you one moment for our next question.
And our next question comes from the line of Nicholas Doyle from Needham Your line is open.
Nicolas Emilio Doyle: Hey, guys a couple of follow ups. There on <unk> question I guess, what gives you confidence that the large customer pausing through the third quarter.
What gives you a comment that he'll come back in the fourth quarter and then also how big is the.
Nicolas Emilio Doyle: Impact that you all missed the design window for these new premium models, how are you thinking about that thanks.
So Nick so first of all.
Hi.
Nicolas Emilio Doyle: Okay.
Speaker Change: By saying that we're inferring.
Their order coverage will start to come back and partial third quarter.
I do not anticipate we will be overweight one customer on a go forward basis.
We've had.
A lot of design activity.
Over the last six months outside this large customer.
That continues with.
Our newest partner traction.
And it also continues outside of China, which is good for us.
Speaker Change: And so even though this customer will be coming back.
Okay.
Overall bundle.
Okay.
Thanks.
Perfect.
Sorry.
Speaker Change: Okay.
Okay.
Yes.
Speaker Change: And the second question Nick was.
Can you repeat it.
How big of an impact is it that you'll miss the design window for these new premium models.
Well, it's where the new device, which was a very high ASP it's significant.
It will.
It will impact our mobile growth for this year. So we will probably not see mobile growth this year because of that impact.
Okay, and then on the international expansion.
I mean did you see any trends in the first quarter was the one plus ace and then kind of moving over to transition their global OEM with Thailand, China, but focused in these emerging markets, including Africa, and the Middle East and I think Europe.
Speaker Change: Where are you focused on.
Speaker Change: Spanning internationally and what are the biggest challenges you see there.
Okay. So the one plus eight.
Phase III was not an international versus domestic only from one plus the one phone that they did put in the international markets. So they put both the domestic version in international was their flagship tier one plus.
13.
Speaker Change:
Or 12, I think it was the one plus 12 excuse me.
Transient.
And by the way you want to go back to one plus.
They still probably sell more domestically than they do internationally with that Felicia.
Transient does not sell domestically.
They are a a share publicly traded company.
Speaker Change: Wonderful.
Speaker Change: Our first model they sell.
Throughout emerging markets throughout the world.
And so they're and they were the fastest growing.
Mobile phone customer by unit growth.
In Q1.
Speaker Change: I think they grew over 80% year over year.
Speaker Change: And all of that growth is by selling phones.
Speaker Change: In what I would call low to mid tier price ranges throughout the emerging markets.
So engaging with.
Yes.
Speaker Change: On this design traction.
It has been a very good thing for our international expansion.
Speaker Change: When we started with them.
We had modest expectations for this first model, we believe there will be more.
Speaker Change: By the time.
We launched the model, we've been working with them probably eight months on this model.
By the time, we launched the model Theyre forecast had tripled.
Meaning the emerging markets they serve.
Speaker Change: There is pent up demand.
Four.
Gaming centric mobile phones are not a lot of companies have been targeting.
Those emerging markets with these capabilities at this price point.
And what we've seen is there is a strong demand for that so let's hope that continues.
Speaker Change: Thanks.
Thank you.
Enrollment for our next question.
Our next question comes from the line of Richard Shannon from Craig Hallum.
Open.
Speaker Change: Okay.
Hi, John Haley Thanks for taking my questions here, maybe I'll hit on <unk>.
Gaming and Iraq.
I think you've talked about and it was a 100 or 200% increase in the number of games announced by the MBA apologies I may have missed the line garbled at times.
Is that the same numerical goal is what you talked about a couple of quarters ago, when youre talking about a 400% increase I don't have the numbers in front of me that you do the math, but is that the same goal.
It's consistent with what I think I've talked about in the past.
Speaker Change: Said in the prepared remarks is we have nine IRS certified games as of today and our current goal is to double them by the end of the year.
Got it got it okay.
We also see I also say one other thing Richard I also said for the first time I brought up something besides certified games and brought them what we call qualified gains.
And we have over 100 IRS qualified.
Speaker Change: The difference between certified and qualified as.
A certified games, we work directly with the studio and they incorporate our <unk>.
Speaker Change: <unk> engine SDK.
To support.
Their game playing on.
And <unk> enabled phone.
Speaker Change: And IRS qualified gain is where we work with the phone manufacturer to make sure that game works well with our visual processor, it's more one sided but we do.
Yes.
Optimize the hardware to play with that game.
And we qualify it and then the OEM White list those games.
Speaker Change: Today, we.
We don't have any phone manufacturer that just turns on our visual processor to play with any game.
Speaker Change: Somebody can download it's a controlled environment. So it's either a white listed qualified RF skin.
Speaker Change: Or one of our <unk> certified games that we've engaged directly with the studio and collaborating.
Okay. That's helpful and thanks for that prescription there Todd.
You did touch on an IRS here.
We introduced this last summer here and this is to a good degree a branding exercise and obviously theres a little bit of a chicken and egg dynamic curious establishing our brand.
It's clearly isn't very easy to do and maybe wanted to get your kind of qualitative.
Scorecard on how well that has taken hold so far and what are the things we look forward to show further.
Entrenchment and success there.
With that Truecar, you were asking about pirate now with Iraq.
Because we're trying to establish two brands.
Speaker Change: Hi, Eric.
I just want to make sure.
Speaker Change: So.
Yes.
Speaker Change: Establishing brands how do you do it you go out and you spend marketing dollars in making sure that that brand is recognized with the businesses that you are targeting.
Speaker Change: They can do that and we don't have a huge budget I think we've done a pretty good job of people talking about Iraq, given the budgets that we have.
Secondly thing we do is we leverage our customers so when they talk about.
Either sometimes they call it a dual processor architecture or the coal.
The <unk> that they actually talk about it being in Iraq certified processor and supporting the IRS ecosystem most of the customer support us in that activity.
Speaker Change: And for evidence I suggest you go see how.
The <unk> 20 from <unk>.
Speaker Change: At the house advertise that phone.
Speaker Change: They talk about pixel works they talk about.
<unk> certification.
Speaker Change: <unk>.
Speaker Change: The last thing we did is if you go look at these nine games that are <unk> certified.
We've actually worked with the game manufacturer itself. So there is a setting.
Speaker Change: In the user.
Speaker Change: Setting section.
Speaker Change: If you want to increase the performance.
Speaker Change: Of the output of the game.
They haven't IRS button.
In the menu of the game itself.
Speaker Change: And so that is another way for us to promote the <unk> brand.
Speaker Change: So when you have tencent or needs.
Our perfect World actually incorporate your.
<unk> logo.
An explanation of what <unk> is in their game that gives us a lot of exposure.
Speaker Change: Okay.
Todd: Thanks for that Todd My My last question then.
Speaker Change: I can't remember, who mentioned this but just kind of thinking past the second quarter here.
Speaker Change: Again, the comments are a bit garbled here about how to think about second half I think there was some expectation of sequential growth and I wasn't sure if that was.
Thought was there that would happen in the third quarter fourth quarter I'm not sure, but if you could clarify what your thoughts are what you see right now.
Speaker Change: So what we said I hope my answers arent Carnival, you sound perfectly clear so I don't know whats going on but.
Speaker Change: <unk> clear.
Speaker Change: <unk>.
Speaker Change: What we said was in the second half of the year. The Q3 would be sequential growth over Q2, and Q4 will be sequential growth over Q3.
Speaker Change: Okay perfect that certainly are that one we don't give guidance out that far but that's what we anticipate.
Okay.
Speaker Change: Thanks for repeating that again I didn't I didn't hear very well before so I think thats all the questions from me guys. Thank you.
Lee: Thank you Lee.
Sure.
Thank you.
Speaker Change: And I'm not showing any further questions in the queue I'd like to turn it back over to management for any closing remarks.
Alright, well. Thank you. Thank you for joining <unk> Q1, 2024 earnings call.
Even though the management team is disappointed in our near term guidance, we remain extremely confident in our long term strategy as demonstrated by expanding.
Speaker Change: Our mobile stem and <unk> progress in the recent quarter.
Speaker Change: Additionally, our expanded corporate gross margins demonstrate the value that our visual processing solutions bring to customers as well as our execution on cost efficiency initiatives.
Speaker Change: The team is very focused on the elements of the business, we can control and we look on the forward progress over the next couple coming months.
Thank you.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program and you may now disconnect everyone have a great day.
Speaker Change: Okay.
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Yes.
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Okay.
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