Q3 2024 SiTime Corp Earnings Call
Yes.
Speaker Change: Good afternoon, and welcome to side times third quarter 'twenty 'twenty four financial results conference call.
Speaker Change: 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 the session you will need to press star one one on your telephone you will then hear an automated message advising that your hand is raised to withdraw your question. Please press star one.
Speaker Change: One again.
Speaker Change: As a reminder, this conference call is being recorded today Wednesday November six 2024.
Speaker Change: I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations Brett. Please go ahead.
Brett Perry: Thank you Andrew Good afternoon, and welcome to <unk> third quarter 2024 financial results Conference call.
Brett Perry: Joining us on today's call from sorry time a rejection.
Brett Perry: The Chief Executive Officer, and Beth Howe, Chief Financial Officer.
Speaker Change: Before we begin I'd like to point out that during the course of this call. The company may make forward looking statements regarding expected future results, including financial position strategy and plans future operations, the timing market and other areas of discussion. It is not possible for the company's management to predict all risks nor can the company assess the impact of all factors.
Speaker Change: 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.
Speaker Change: In light of these risks uncertainties and assumptions to forward looking events discussed during this call may not occur and actual results could differ materially and adversely from those anticipated or implied neither the company nor any person assumes responsibility for the accuracy and completeness of forward looking statements.
Speaker Change: Undertakes no obligation to publicly update forward looking statements for any reason.
Speaker Change: The date of this conference call to conform statements to actual results or to changes in the companys expectations.
Speaker Change: For more detailed information on risks associated with the business. We refer you to the risk factors described in the 10-K filed on February 26, 2024, as well as the company's subsequent filings with the SEC.
Speaker Change: During the call we refer to certain non-GAAP measures, which are considered to be an important measure of the company's performance. These non-GAAP measures.
Speaker Change: The financial measures are provided in addition to and not as a substitute for or superior to measures of financial performance prepared in accordance with U S. GAAP.
Speaker Change: This GAAP to non-GAAP reconciliation included stock based compensation expense amortization of.
Speaker Change: Acquired intangibles and acquisition related expenses, which include transaction and certain other cash costs associated with business acquisition as well as changes in estimated fair value of contingent consideration and earn an earn out liabilities. Please refer to the company's press release issued earlier today for a detailed work.
Brett Perry: Conciliation between GAAP and non-GAAP financial results with that it's now my pleasure to turn the call over to <unk> CEO Josh. Please go ahead.
Speaker Change: Thank you Brad good afternoon.
Brett Perry: Like to welcome you as well as existing investors to site times Q3, 2024 earnings call.
Brett Perry: <unk> is the leader in a dynamic new semiconductor category that we call precision timing, which is the heartbeat of modern electronics.
Brett Perry: Whether it is an AI data centers networking infrastructure automated vehicles personal mobility or Iot, sometimes precision timing delivers better performance and reliability.
Brett Perry: This precision timing uses semiconductor technology to re imagine time.
Brett Perry: And transform the $10 billion time in market.
Brett Perry: Yeah.
Speaker Change: Our third quarter results demonstrated broad strength across financial metrics customer segments and regions.
Speaker Change: Revenue for the quarter grew by 62% to $57 7 million and net income increased to 17% of revenue.
Speaker Change: Each of our customer segments and regions continued at least double digit growth with C E D or communications enterprise and data center, greater China and EMEA.
Speaker Change: All growing at triple digits.
Speaker Change: Bookings for the fourth quarter are strong and we expect Q4 to grow sequentially as previously forecasted.
Speaker Change: Looking back in November 2020, full marks our fifth year as a public company.
Speaker Change: At the time of our IPO side time made a commitment to building high value timing products for high growth applications in markets and we have significantly delivered.
Speaker Change: We have built high growth high margin businesses with a diversity of revenue customers and applications.
Speaker Change: Since markets grow at different rates and different timelines, we believe that this diversity benefits side time and makes us a unique semiconductor company.
Speaker Change: Our comms enterprise data center or C E business demonstrates the value of our products.
Speaker Change: In both Q2 and Q3 'twenty 'twenty four C. D has been a major driver of our growth driven by cloud service provider investments in AI infrastructure.
Speaker Change: <unk> revenue grew over 200% year over year in Q3 and for FY 'twenty four it would more than double.
Speaker Change: Looking forward into 2025, we believe that the AI market will continue to grow as newer generations of AI servers and networking equipment are rolled out.
Speaker Change: We expect C D to continue to lead <unk> growth next year.
Speaker Change: And AI data center infrastructure side times products are solving difficult timing problems in applications, such as drop off the rack switches and optical modules.
Speaker Change: Additionally, csp's or cloud service providers are investing in improving bandwidth and GPU utilization in the data center.
Speaker Change: Which we believe results in more use a precision timing solutions with higher dollar content per application.
Speaker Change: So at times precision timing plays in high speed connectivity applications, such as active electrical cables, we provide high performance that is virtually immune to noise.
Speaker Change: In a very small form factor, which is quite valuable in these cases.
Speaker Change: Another application is the direct connectivity between Gpus to a very fast the dedicated switch, which improves GPU utilization rates with faster parallel processing of the AI workloads.
Speaker Change: Our clock generators acquired from Ora play a key role here as well delivering multiple high performance clocks from a single integrated device.
Speaker Change: In sum we are in a leadership position in AI with precision timing and expect to grow our dollar content as this market grows.
Speaker Change: Another macro trend is in building a more precise global navigation satellite system or G NSS, which is resilient to jamming and spoofing.
Speaker Change: Such a system has use cases in defense and aerospace and extends to industrial automotive and mobile Iot consumer.
Speaker Change: In automotive Adas level, two level, three and four as well as robo taxis.
Speaker Change: Such an enhanced genesis to operate optimally.
Speaker Change: Such a G NSS will depend upon precision timing and we are engaged with key players in multiple markets.
Speaker Change: In autonomy and Adas vehicles, we're now also offering.
Speaker Change: I'll say it's technology.
Speaker Change: We had a single device integrates resonators oscillators, clocking and advanced safety mechanisms for timing.
Speaker Change: This integration accelerates functional safety development and simplify system architecture.
Speaker Change: We have multiple design wins with key electric vehicle companies and expect to begin shipments in volume quantities in 2025.
Speaker Change: In summary, our strategy is working as intended and delivering results I'm confident our success now and in the future.
Speaker Change: I now want to turn the call over to Beth <unk>, our CFO to discuss our financial results in more detail.
Beth Howe: Thanks, Josh and good afternoon, everyone today I'll discuss the details of our third quarter results and provide our outlook for the fourth quarter.
Beth Howe: As a reminder, I'll focus my discussion on the non-GAAP financial results, which are reconciled to GAAP in our press release.
Beth Howe: We are pleased with our third quarter financial results as we continue to execute our financial model, we drove strong sequential and year over year revenue growth expanding non-GAAP operating profit and earnings per share over twice as fast as revenue.
Beth Howe: Tim you want to invest in our leading product roadmap.
Beth Howe: Our financial performance this quarter demonstrates our ability to successfully invest in our business, while delivering strong financial results.
Beth Howe: Third quarter revenue was $57 $7 million up 62% year on year, driven by increased volumes and favorable product mix.
Beth Howe: Looking at growth by market sales into our communications enterprise and data center market or $19 $7 million or 34% of sales up 233% year on year sales into the automotive industrial and aerospace market were $17 $7 million or 31% of sales.
Beth Howe: Increasing 51% year on year.
Beth Howe: And sales into the mobile Iot and consumer market were $23 million or 35% of sales up 14% year on year with sales to our largest customer totaling $13 $1 million or 23% of sales.
Beth Howe: non-GAAP gross margins were 58, 1% up 40 basis points sequentially, driven primarily by improved manufacturing absorption from higher volumes.
Beth Howe: Total non-GAAP operating expenses for the quarter were $29 $5 million with R&D expense of $17 $1 million and SG&A expense of $12 $4 million operating expenses were lower than expected primarily related to the shift of R&D expense from Q3 to Q4.
Beth Howe: Q3 marked the return to operating profitability with non-GAAP operating profit of $4 million, a significant improvement of $9 $7 million versus the prior year and representing 75% flow through of gross profit dollars.
Beth Howe: Third quarter non-GAAP net income was $9 $6 million, representing 17% of revenue or 40 cents per share.
Beth Howe: Turning to the balance sheet accounts receivable was $32 million with Dsos of 47 days inventory at the end of the quarter was $71 $9 million and accounts payable was $17 9 million sorry inventory at the end of quarter was $71 $9 million and accounts payable.
Beth Howe: $17 $9 million.
Beth Howe: During the quarter, we generated $8 $2 million in cash from operations invested $15 million in capital purchases and paid $12 $9 million to Ora as part of the transaction, we announced last year.
Beth Howe: We ended the quarter with $435 million in cash cash equivalents and short term investments.
Beth Howe: Let me now review our outlook for the December quarter.
Beth Howe: In Q4, we expect revenue of $63 million to $65 million non-GAAP gross margins to be in the range of 58% to 58.5%.
Beth Howe: non-GAAP operating expenses of 31 to 31 and a half million dollars.
Beth Howe: Interest income of approximately $4 5 million and diluted outstanding shares of approximately $24 4 million shares.
Beth Howe: As a result, we expect non-GAAP EPS to be in the range of 39 to 45 cents per share.
Beth Howe: In closing we are pleased with our strong results and remain focused on driving revenue and profit growth our product portfolio continues to expand with differentiated products that address large and growing markets and our customers are clearly recognizing our value proposition.
Beth Howe: No we are executing our strategy and our strategy is working.
Beth Howe: With that I'd like to hand, the call back to the operator for questions and answers.
Speaker Change: Thank you we will now conduct the question and answer session. As a reminder to ask a question during.
Speaker Change: Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.
Beth Howe: Our first question comes from C. J Jill silver at Roth Capital. Please go ahead.
Speaker Change: Hi, Josh Hi, Beth Congrats on the progress here.
Beth Howe: Maybe you can talk about the data center market projection the content here I'm curious you know optical top of rack switch versus just expanding into he sees it sounds like you have some cotton the AI server or somewhere in the rack or other.
Beth Howe: Other places that you can elaborate on that maybe what's the mix of those today and what's the mix of those content positions, maybe one to two years out maybe some of the other growth opportunities.
Speaker Change: Yeah. Thank you for that we see.
Speaker Change: That all of these will continue to grow overtime.
Speaker Change: The tricky part is forecasting what how theyre configured but in general we're talking about in the next few years seeing that server content grows quite substantially.
Speaker Change: Where we see particularly large content growth.
Beth Howe: He is in.
Beth Howe: And the switches.
Beth Howe: And and some of the CPU servers as well as.
Beth Howe: The plug it both as well so.
Speaker Change: I think we see growth all across the market.
Speaker Change: Depending upon the configuration of the systems.
Speaker Change: Okay, and maybe just to follow up there I know you've started off with strong traction in the optical plug a bulls and I'm wondering is there a multiplier of content to think about for server switch or CPU server versus a plug a bull or are they similar content wise for your opportunity to plug a boat is probably the.
Speaker Change: At least in dollar amount.
Speaker Change: But the switches servers, the Gpus of course, they all go up quite a bit.
Speaker Change: We do have Super Nic cards, which are used for compute those that are used for storage. So depending upon again, it's a pretty complicated architecture, but those are all important places plus items.
Speaker Change: Sales and revenue.
Speaker Change: Great sounds like great opportunity I'll pass it along thanks.
Speaker Change: Yeah. Thank you.
Speaker Change: One moment please.
Speaker Change: Okay.
Speaker Change: Our next question comes from Quinn Bolton of Needham <unk> Company Colin Your line is now open.
Quinn Bolton: Hey, guys. Congratulations on the nice results and outlook I wanted to follow up on <unk> question Rich asked you.
Quinn Bolton: Perhaps mentioned GPU, the GPU networks or others may know them as the scale up networks in AIB, particularly content rich for your <unk> I was wondering if you could just.
Quinn Bolton: Dive a little deeper into.
Speaker Change: What's the what's the content could be in those scale up networks. If you look at Nvidia is latest generation NBL.
Speaker Change: 72 rack nine of the 27.
Speaker Change: Trade in that rack are dedicated to switching and there's a lot of content to be had there and it sounds like those switch trade could potentially use multiple <unk> from the company. So just wondering if you could you could kind of expand on the use cases are the scale networks.
Speaker Change: Specifically with Nvidia are you seeing scale up opportunities with some of the hyperscale errors that are developing their own ACX.
Speaker Change: Yeah, so without naming customers names.
Speaker Change: We have not.
Speaker Change: Made as many inroads into the Hyperscale orders, we have in some but not in all so I think we are mostly seeing this and the people who are in the business of Cpus and Gpus.
Speaker Change: But.
Speaker Change: I basically believe that we are now talking we started with sub $100 here a couple of years ago.
Speaker Change: And now for Iraq.
Speaker Change: But now fully populated racks are hundreds of dollars quite high.
Speaker Change: Slightly less populated racks are still hundreds of dollars. So it's whether we're talking about a high hundreds of hundreds of dollars a little bit more middle of the road.
Speaker Change: Whether we're talking about GPU trays, or our Nic cards of course storage compute or switches or top of rack switches <unk> plays in all of them. Additionally of course, we continue to play across a large number of Oems in the plug able models modules as well as in the <unk>.
Speaker Change: That are connecting and you know some of the companies are doing quite well I know you cover them. So I think it's all part of our whole program and Thats why we could have the kind of growth to 100%.
Speaker Change: That'd be saw.
Speaker Change: Year on year.
Speaker Change: I mean and just that.
Speaker Change: And Richard just chicken permit that high hundreds of dollars per rack that's across all applications that would include AUC plausible top of rack switches scale ups, which is cheaper than Nic cards like everything you do okay got it okay. Thanks, Brad I'm aggregate them all of that because yeah, it's a little bit tricky.
Speaker Change: And you know I don't think it should be that specific.
Speaker Change: Yes.
Speaker Change: I understand the customer sensitivity, Sir I guess the next question.
Speaker Change: CEB was up over 200% in the quarter it'll double in 24 versus <unk> 23.
Speaker Change: I know youre, not giving guidance for 'twenty, five yet, but what kind of growth rate.
Speaker Change: Do you expect in 2025 out of <unk> I think you've said in the prepared comments that CEB would again lead to growth. So I assume if youre targeting 30% overall for the company.
Speaker Change: It's probably going to be well in excess of 30% next year or is that kind of the right framework to be thinking about for 2025 yeah.
Speaker Change: Yeah, So as you recall Quinn.
Speaker Change: Several quarters ago, we took the unusual step of forecasting that we would grow by give or take 30% and looks like we are.
Speaker Change: And target to do that for this year. We also took the sort of unusual step a quarter ago of saying that.
Speaker Change: This growth of approximately 30% would carry on into the coming year and the year beyond we still maintain that.
Speaker Change: I think it's fair to say that given the diversity of our revenue, which is the strength of the company. There is always something thats growing at more than corporate growth rate and I think in this case ped qualifies for that.
Speaker Change: Because it is also something on the other side, which is not growing at the corporate growth rate. So I think it balances itself out nicely. So that we can deliver the promised.
Speaker Change: 3%.
Speaker Change: Perfect. Thank you I'll get back in queue.
Speaker Change: Yes.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Melissa Fairbanks at Raymond James and Associates. Your line is now open.
Melissa Fairbanks: Hi, guys, Yeah ill add my congratulations.
Melissa Fairbanks: I have a couple of questions for best actually to start I'm surprised normally this is the first question that gets asked.
Melissa Fairbanks: Are you able to give us any sort of specificity on segment guidance for the fourth quarter. Obviously, your CET is going to lead the growth but.
Melissa Fairbanks: Any kind of color that you can give us on the other segments.
Speaker Change: Sure So as I look at the segments again, we expect.
Speaker Change: Growth in C D to lead the way I think if you look at our consumer Iot mobile segment that as well right. We've got holiday season that should show good growth as well and then you know as we look at the auto industrial Aerospace, we expect back to continuous.
Melissa Fairbanks: Grow as well.
Speaker Change: Some strong performance this year, but I'd say again growing across the board, but CD definitely leading the way.
Speaker Change: Okay, Great and then as a follow up maybe I know this is like way less boring way more boring them talking about <unk>, but on the Opex line.
Speaker Change: Understand that some of the R&D R&D got pushed to the December quarter.
Speaker Change: I think in our prior conversations maybe we talked about.
Speaker Change: Going forward, maybe a couple of million dollars a year in Opex growth and then that drives a lot of leverage in the model. What are you thinking now that you've got all of these new opportunities should we expect a greater increase in opex or how should we be modeling opex going forward.
Speaker Change: So we look at Q4 unexpected opex to be kind of 31 to 30% to 31% to $31 $5 million for the quarter.
Speaker Change: So that's for Q4, and then I mean, I think what Youre asking is looking forward into 2025 and how to think about that so if you. If you annualize that number you get to.
Speaker Change: 120 425 ish.
Speaker Change: Kind of a baseline and then I think you know again, we'll grow a bit from there as we've been talking about I expect that revenue to grow much much faster than opex, but we do want to be investing in the business is going to be investing in R&D, we won't be investing in go to market. So for those key growth areas and we see a good ROI on investment whether it's people or pro.
Speaker Change: Grams, we're going to make those investments.
Speaker Change: And as I said, I expect revenue to grow much faster than opex.
Speaker Change: Okay, great. Thanks, so much guys. Thanks.
Speaker Change: Yep.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby as I can pile the Q&A roster.
Speaker Change: Yeah.
Speaker Change: Our next question comes from tore Svanberg of Stifel. Your line is now open Tori.
Speaker Change: Yes. Good afternoon. This is Jeremy on for Tori and let me add my congratulations to a very strong.
Speaker Change: Quarter on outlook.
Speaker Change: I wanted to dig a little bit more deeply into the automotive segment.
Speaker Change: Software defined vehicles is something that's kind of.
Speaker Change: You've been coming on pretty strongly in the industry. I was wondering if you could give us more insight into your time with Sunshine and how it plays into the opportunity there.
Speaker Change: And how does how does that compare to legacy or more traditional vehicles.
Speaker Change: And in terms of your potential contact potential Tam.
Speaker Change: That would be great. Thank you.
Speaker Change: Yeah, so starting with the Sam we probably have something like about $400 million to $500 million Sam in the automotive market, which is up substantially from the time when we went public.
Speaker Change: When it was almost negligible most of the business that we have.
Speaker Change: Comes from the more innovative power companies, which tend to be electric vehicles. Although it is not limited to that we're not connected to that but many of them are ours are significantly evs, so with that in mind, we do rather well and in China, where as you know there's a lot of.
Speaker Change: Automated driving.
Speaker Change: And new car companies that have really ramped up volumes.
Speaker Change: We have done well in the United States with those electric car companies that have done well.
Speaker Change: And.
Speaker Change: In terms of use case the use case is mostly centered around automated driving whether it is the full eight as at level two or level, two five or design wins at level three and level four.
Speaker Change: Also in the cameras or the sensors are the radar lidar.
Speaker Change: The GPS that connect some of these two positioning so it's really mostly in that ecosystem. Although I will say that we are also in infotainment. We are also in some of the Ethernet cabling and so on so it's a pretty diverse use case.
Speaker Change: But it's mostly centered around.
Speaker Change: Automated driving and as I mentioned with our new Failsafe technology, which is getting rolled out right. Now we are likely to be used in other cars that want to increase the safety of their operation.
Speaker Change: Yeah.
Speaker Change: Great. Thank you for that.
Speaker Change: Color.
Speaker Change: I was wondering if you could also step back a little bit and look at it.
Speaker Change: There are some timing market versus courts as he can.
Speaker Change: Give us an update there whether it's.
Speaker Change: Can you talk about the penetration rate maybe.
Speaker Change: For new applications are emerging applications or even if you can segment take versus like high performance versus.
Speaker Change: Areas that youre not targeting how are you.
Speaker Change: Seeing your uptake in precision timing versus courts.
Speaker Change: Things like how programmability impacts that that decision for customers. Thank you.
Speaker Change: Right so.
Speaker Change: Our total market Tam is $10 billion.
Speaker Change: And that is divided into oscillators, which is $4 billion.
Speaker Change: Blocks, which is a couple of billion so that six plus the remaining is the resonators, even though we don't have any resonator product shipping, but we do have products in the other two categories.
Speaker Change: Sam.
Speaker Change: Or our market that we serve is a little bit less than $3 billion, but let's say, it's $3 billion.
Speaker Change: And our revenue as you know is in the range of little bit lower than $200 million.
Speaker Change: As as forecast by many of you so really our penetration our precision timing market is in that $3 billion category and <unk> penetration and that is significantly.
Speaker Change: <unk> has a lot of room for growth.
Speaker Change: From 200, all the way out.
Speaker Change: The real the real issue here in terms of what makes up that $3 billion is as we've said before right now data centers are doing very well.
Speaker Change: Enterprise technologies and communications are very important I think they probably take over about $1 billion of that.
Speaker Change: We also have a significantly large consumer mobile Iot business.
Speaker Change: And that is a very large portion of that as well whatever consumer devices. You can think of that we can that we can go into the rest of it is around military aerospace defense.
Speaker Change: <unk>.
Speaker Change: Medical and so on so.
Speaker Change: And as mentioned, we are probably around the $5 billion for automotive. So I think it all adds up to about $3 billion and we.
Speaker Change: We have about 300 different applications in.
Speaker Change: Inside that $3 billion.
Speaker Change: Sam our served market. So it's a very diverse business, which is by design because we think that that adds significant strength of the company at the same time, while we get a growth of 30% annually.
Speaker Change: Great. Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Quinn Bolton of Needham <unk> Company Cowen. Your line is now open.
Quinn Bolton: A quick follow up for Beth Beth I think last quarter. You had mentioned the gross margin was sort of weighed down by some new investments in tooling.
Quinn Bolton: Obviously, you guys have done a really nice job here in the near term.
Quinn Bolton: Delivering higher than expected revenue.
Quinn Bolton: Just kind of wondering if you might be able to give us your latest thoughts on gross margin.
Quinn Bolton: What the trajectory might look.
Quinn Bolton: Like beyond the December quarter into March would you see a seasonal downtick as revenue.
Quinn Bolton: <unk> declined seasonally and then any thoughts on when you can get back to that 60% or higher gross margin target. Thank you.
Speaker Change: Sure Glenn let me talk a little bit about our gross margin as you said.
Speaker Change: We did see some good improvements sequentially 40 basis points and I'd say, we're on track with where we expect it to be as we ramp these new products and bring them on production long term, we still expect to be north of 60% and in fact.
Speaker Change: We continue on the on track as we expect we would be getting back to kind of that 60% Mark probably probably the second half of 2025 as we get these products into production and really ramping there. So again I think we're on track with where we expect it to be we've seen nice improvement here sequentially here point, we typically see.
Speaker Change: Seasonal decline Q4 to Q1 I think the average is roughly 20% seasonal decline in revenue and so that's a little bit of a headwind there just for the March quarter, but long term even into 2025 I think we're on track with where we wanted to be.
Speaker Change: Perfect. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Chris Caso of Wolfe Research. Your line is now open.
Chris Caso: Yes. Thank you good evening I Wonder if you could talk a little about.
Chris Caso: Your penetration or your <unk>.
Chris Caso: Temps to penetrate the clock market in terms of.
Speaker Change: The timing of that and.
Speaker Change: What sort of magnitude of benefit do you expect.
Speaker Change: As you start to penetrate that and is it really a function of just the.
Speaker Change: The pace of product development there.
Speaker Change: How quickly can you get products out into the market for that segment.
Speaker Change: Yeah. Thanks, Chris.
Speaker Change: Yeah.
Quinn Bolton: Julie.
Julie: Is the pace of this is predicated by that design win and the deployment of the products so because of the.
Julie: Our Ah <unk>.
Julie: Acquisition.
Julie: We now have significant number of the products that we want there is still some in the pipeline.
Julie: That are getting rolled out but most of the products are already out and getting design wins. So what is predicating that rollout is the design win which takes anywhere from nine months because a lot of these go into CBD market industrial markets automotive markets, which have about <unk>.
Quinn Bolton: Nine months to 12 months design win and then another equal number.
Quinn Bolton: Off months.
Quinn Bolton: So for the rollout of the product in volume so call. It two years. So because of that we think we are very much on target with both our organic growth products and blocking like the chorus product that we launched recently, but also with the Ara based products such that our revenue.
Quinn Bolton: Over the coming years coming few years, not a long time, we expect to be from trucking to reach about $100 million.
Quinn Bolton: And.
Quinn Bolton: And we are well on that trajectory.
Quinn Bolton: Even though the revenue from clocking is still relatively small.
Quinn Bolton: This year.
Quinn Bolton: And in fact next year as well.
Speaker Change: That's helpful. Thank you as a follow up one for you Beth.
Speaker Change: I guess, you've been there a bit of a while now luckily it appears that the market has now stabilized. So we have a better idea of what we're what we're dealing with here.
Brett Perry: What's your view of the margin structure for the company and kind of where you'd like to see it.
Speaker Change: And how should we think of not just for the next few quarters, but a little longer out.
Speaker Change: Or we should think about opex growth relative to revenue growth and what sort of operating leverage we should see as as the revenue grows.
Speaker Change: Thanks, Chris.
Speaker Change: As I talk a little bit about we haven't really again given guidance for 25, but as I think about some thoughts on the operating model and how we're thinking about it.
Speaker Change: <unk> been saying.
Speaker Change: We are growing revenue and given kind of our recent trajectory and the opex that we had coming into 2024, I think I still think that we can grow revenue much faster than opex and so we've got a good or great operating leverage in the model. This quarter you saw that with a 75% flow through of gross profit to the bottom.
Speaker Change: And so while we do want to invest in Opex as I was telling Melissa we do want to make those strategic investments, where we see good ROI.
Speaker Change: Do expect us to continue to grow revenue much quicker than Opex at least 25, and we will see again at some point, we will make more investments, but right now I expect to see a lot of flow through in operating leverage in the model.
Speaker Change: That's great. Thank you.
Speaker Change: I am showing no further questions at this time I would now like to turn the conference back to management for closing remarks.
Speaker Change: Well. Thank you very much we are very glad that we've returned to a growth rate and.
Speaker Change: It's good to be here and we look forward to talking to you.
Speaker Change: Further detail as the quarters rollout. Thank you very much.
Speaker Change: Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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