Q1 2025 Magnachip Semiconductor Corp Earnings Call
Speaker Change: Good day, everyone and thank you for standing by well I'll go to Max the chips semiconductor first quarter 'twenty 25 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 the session you will need to brush.
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Speaker Change: Of Investor Relations. Please go ahead.
Speaker Change: Great Hello, everyone. Thank you for joining us to discuss Magna chips financial results for the first quarter ended March 31, 2025, the first quarter earnings release was issued today after the market close it can be found on the company's Investor Relations website.
Speaker Change: The webcast replay of today's call will be archived on our website. Shortly afterwards, joining me today are YJ, Kim Magna chips, Chief Executive Officer, and Shin Young Park, our Chief Financial Officer, YJ will discuss the company's recent operating performance and business overview and Shin Young will review financial results for the quarter and provide guidance for the second quarter there'll be a Q&A session will follow.
Speaker Change: During the prepared remarks during the course of this conference call. We may make forward looking statements about magna chips business outlook and expectations are forward looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the Safe Harbor statement found in our SEC filings.
Speaker Change: Eight months are based upon information available to the company as of the date hereof and are subject to change for future development.
Speaker Change: Except as required by law the company does not undertake any obligation to update these statements. During the call. We will also discuss non-GAAP financial measures.
Speaker Change: GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended as supplemental measures of magna chips operating performance that may be useful to investors a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our first quarter earnings release, and Investor Relations section of our website with that I'll now.
YJ Kim: I'll turn the call over to YJ Kim YJ.
YJ Kim: Hello, everyone and thank you for joining us today and welcome to manage its Q1 earnings call.
YJ Kim: A reminder, on April eight we announced that after a thorough review of our board of directors unanimously approved a plan to shut down the company's display business by the end of Q2. So we will continue to evaluate up which you need to monetize display assets. The company had previously announced.
YJ Kim: Is it your intention to explore all strategic options for the display business and to classify the display business.
YJ Kim: Many operations when you reported Q1 results in order to focus as a pure play power semiconductor company Shin Young will provide details in her section.
YJ Kim: As a result, the power analog solutions and power IC businesses, which accounted for 186 million in revenue in 2020 for Rapids in manganese chips going forward continuing operations, our strategic pivot to focus exclusively on power analog solutions and <unk>.
Speaker Change: Oh I see business is designed to drive a structural improvement in operational efficiency and position the company for a return to sustainable profitability.
Speaker Change: Navigating an unpredictable macroeconomic landscape will likely pose challenges for our industry. We have a very small amount less than $2 5 million in direct shipment to the U S. But we are monitoring the tariff situation closely however, our aim is still to it.
Speaker Change: Team a quarterly adjusted EBITDA breakeven from continuing operations by the end of this year. We also believe that reaching this goal will pave the way for achieving positive adjusted operating income in 2020 shakes and positive adjusted free cash flow in 2027.
Speaker Change: Each of these targets will act as milestones towards achieving your goals in three years to reach a 300 million annual revenue run rate with a 30% gross profit margin target we call. This our 333 strategy.
Speaker Change: Turning to Q1 results consolidated Q1 revenue from continuing operations, which includes power analytic solutions and power IC and excludes a former display business was $44 7 million.
Speaker Change: 12, 1% year over year and down eight 5% C Corp sequentially on an apples to apples basis consolidated Q1 revenue from continuing operations was in line with the midpoint of our guidance range of $42 million to $47 million.
Speaker Change: Consolidated Q1 gross profit margin from continuing operations of 29% was up 3.3 percentage points year over year, but down two three percentage points sequentially consolidated Q1 gross profit margin from continuing operations exceeded the high end.
Speaker Change: Our guidance range of 18, 5% to 25% senior who will provide more details in her section.
Speaker Change: Q1 was the fourth consecutive quarter of a year over year growth from continuing operations driven by power analog solutions growth in communications and automotive markets, that's what our strengths in power IC.
Speaker Change: We released 27, new generation power analog solutions products in Q1 that are fully qualified and ready for commercial sampling. These innovative product families open new high value market opportunity for Magna chip, such as automotive industrial and <unk>.
Speaker Change: Applications. We currently expect these three market opportunity to represent more than 60% of manages future product mix in 2028 up from 37% in 2024, we already had the ongoing engagement to penetrate other markets.
Speaker Change: Which we expect to reach over 10% of our revenue by 2028 from less than 5% in 2024.
Speaker Change: In Q1, we still power analog solution design wins across multiple end markets and regions, including Korea, China USA, Taiwan. Many of these design wins were from our new generation products as part of our pivot to a pure play on pilots, we will be sure Eddie.
Speaker Change: Shneur metrics each quarter, such as the number of design wins, we define a design wins.
Speaker Change: Receiving a purchase order for a new application.
Speaker Change: We achieved 15 design wins in Q1 of 13, 6% from 44, when we achieved in the ear Oh core yoga.
Speaker Change: Quarter.
Speaker Change: The industrial business had 25 design wins.
Speaker Change: Up from 22 in Q1, 2024, and representing 50% of the total.
Speaker Change: The notable design win activity included a computing business, which had 11 design wins in the March quarter nearly double the six achieved in Q1 2024, and the automotive business had five design winds up some two in the year ago period from an application perspective.
Speaker Change: Our new generation Gen six Super junction products had design wins in the China lighting market, our PC power and computing application in Taiwan, and a TV main motherboard application in Korea.
Speaker Change: Our new generation low voltage Gen eight while the spreads had a design win for a new flagship Foldable smartphone in Korea, and our prior generation medium voltage and Super Junction product design wins in the industrial market for each scooters and automotive power charge application.
Speaker Change: From Taiwanese suppliers, and then the automotive electrical income well vehicles targeted for the European market.
Speaker Change: In power.
Speaker Change: We secured design wins in Q1, with leading notebook manufacturer in China, and Korea, as well as additional wins for LCD TV and monitors in Korea.
Speaker Change: We currently plan to launch a total of more than 50, new products, including 40, new generation power analog solution products and $2 25, and more than 55 additional new generation products. In 2026, we expect these new generation power products to draw.
Speaker Change: The higher revenue and keeping the smaller die size and <unk>, 22% to 30% more die per wafer in alchemy fat.
Speaker Change: When fully ramped these new products are expected to drive higher gross margins compared to the previous generations.
Speaker Change: Now I will provide more details by business line.
The power solutions business revenue of $39 9 million was up nine 1% a year over year and down eight 3% quarter over quarter.
Speaker Change: Oh analytic solution represented nearly 90% of Q1 consolidated revenue from continuing operations.
Speaker Change: Quenching decline was mostly due to seasonality in each of our major segments, except in communications, where we enjoyed a quarter on quarter growth.
Speaker Change: Year over year increase was primarily driven by the communications market and more specifically E book penetration in smartphone and customer in Korea, while a smaller portion overall the automotive business showed strong growth and had new design wins in the European and American and customer automotive.
Speaker Change: Markets.
Speaker Change: By segment industrial revenue declined eight 7% year over year, representing approximately one third of power analog solutions revenue the decline stemmed from slower E bike and emotive revenue upset by strengths from lining finally, better manage systems power.
Speaker Change: <unk> solar as stated earlier, we are securing initial design wins for our new Super Junction six products for China lighting and E model applications.
Speaker Change: And consumer revenue increased four 6% year over year overall, the consumer market accounted for 36% of par and our solutions revenue in Q1.
Speaker Change: Communications revenue represented 23% of power analog solution revenue in Q1 and increased nearly 64% year over year fueled by design wins for battery FET in mainstream and flagship portable and AI enabled smartphones in Korea. In addition, we still expanded the adaption in wearables such as.
Speaker Change: Watches in your books.
Speaker Change: As we mentioned above before we believe we now have number one market share in battery FET at our major Korean smartphone end customer, including the major share of their flagship smartphone product line, which will send utilize our new generation Gen eight products overall our LOE.
Speaker Change: Low voltage MOSFET revenue grew more than 40% year on year in Q1.
Speaker Change: Representing 7% of analog power and RF solutions revenue the computing segment, so a 10% year over year decline in Q1, due to softer pricing and weaker demand from China for PC and laptop.
Speaker Change: Power adapters, we are leveraging our new Super junction <unk> six products to penetrate more PC power in Taiwan, and expect to benefit from new notebook adaptor design wins moving into mass production in Q2 25.
Speaker Change: While it's still less than 5% of Paolo analytic solutions revenue. The automotive segment saw strong year over year growth through my increased global expansion beyond Korea, and Japan with new design wins for vehicle target in Europe and the USA.
Speaker Change: Number of automotive applications continues to increase and now includes electrical pumps cooling fans power steering and car Chargers. We are also seeing strengths to for Igt's from China brands useful positive temperature coefficient or PTC heaters for <unk>.
Speaker Change: Electric vehicles.
Speaker Change: Turning to our power IC business revenue was $4 9 million, an increase of 44, 1% year over year and down 10.8% sequentially. The power IC business represented 11% of consolidated Q1 revenue from continuing operations.
Speaker Change: The year over year growth was strong for both <unk>.
Speaker Change: And OLED power.
Speaker Change: The introduction of 20, new mid to low end models by our customer for $2 25 also led to strong sequential growth in TV LCD in Q1.
Speaker Change: In summary, Q1 was manage its fourth consecutive quarter over year over year growth from continuing operations, which expect to continue for a fifth consecutive quarter. In Q2, we expect inventory levels in the channel to slightly decrease in Q2, the strong performance in power analog.
Speaker Change: <unk> solutions in Q1 was driven primarily by market share gains and new products in communications. The order when the market also performed well in Q1, given new design wins for vehicles targeted in Europe, and the USA and continually broadening applications now.
Speaker Change: Now I'll turn the call over to <unk> to give you more details in our financial performance in the first quarter and provide Q2 and full year 2025 guidance Shannon. Thank you Jay and welcome everyone on the call, let's start with key financial metrics for Q1 total Q1 consolidated revenue from continuing.
Speaker Change: <unk>, which includes power analog solutions P. A S. Empower I see <unk> was $44 $7 million, which was in line with the midpoint of our guidance range of $42 million to $47 million.
Speaker Change: Was up 12, 1% year over year and down eight 5% sequentially on an apples to Apple basis.
Speaker Change: As compared with equivalent revenue of $39 $9 million in Q1, 2024, and $48 $9 million in Q4 2024.
Speaker Change: Revenue from power analog solutions with $39 $9 million. This was up nine 1% year over year and down eight 3% sequentially, primarily reflecting seasonality.
Speaker Change: Revenue from power IC was $4 $9 million. This was up 44, 1% year over year and down 10% sequentially.
Speaker Change: In Q1 consolidated gross profit margin from continuing operations was 12, 29% exceeding the high end of our guidance range of 18, 5% to 25% up from 76% year over year and down from 23, 2% sequentially on an apples to Apple basis.
Speaker Change: First its guidance and year over year improvement was mostly due to the stronger than expected U S dollar against the Korean won.
Speaker Change: The sequential decline was mainly due to an unfavorable product mix.
Speaker Change: As we've disclosed previously the company announced its plan to shut down the display business by the end of the second quarter of 2025 shutting down the display business includes the liquidation of magnitude mixed signal limited MMS the company's wholly owned subsidiary that had upgraded.
Speaker Change: Continued display business.
Speaker Change: As a result of display business had been has been classified as discontinued operations from Q1, 2025 and has reported separately on the face of the company's P&L.
Speaker Change: Year periods program to the current period's presentation as it appears in our form 8-K and in our Form 10-Q in Q1.
Speaker Change: The following figures reflect research from continuing operations.
Speaker Change: Q1, SG&A was $9 $7 million as compared to equivalent SG&A of $9 $5 million in Q1, 2024, and $10 $4 million in Q4 2020 for.
Speaker Change: Q1, R&D was $5 $9 million as compared to equivalent R&D of $6 $2 million in Q1, 2024, and $6 $9 million in Q4 2024.
Speaker Change: Stock compensation charges, including operating expenses from continuing operations were <unk> $8 million in Q1 as compared to point $8 million in Q1, 2024, and $1 $6 million in Q4 last year.
Speaker Change: These charges fluctuate every quarter, depending on the timing and size of snuggle worst threats.
Speaker Change: In Q1, we have narrowed operating losses due to a combination of higher revenue and improved gross profit margin as compared with Q1 2024.
Speaker Change: Q1 operating loss was $6 $3 million. This compares to an equivalent operating loss of $9 $4 million in Q1, 2024, and an equivalent operating loss of $7 $8 million in Q4 2024.
Speaker Change: On a non-GAAP basis, our Q1, adjusted operating loss of $5 $4 million compared to an equivalent.
Speaker Change: Last up $8 $6 million in Q1, 2020, or an equivalent adjusted operating loss of $4 $5 million in Q4 last year.
Speaker Change: Loss in Q1 was $5 1 million as compared with an equivalent loss of $14 3 million in Q1, 2024, and an equivalent loss of $8 $7 million in Q4 last year.
Speaker Change: Q1, adjusted EBITDA was negative $2 $1 million. This compares to an equivalent adjusted EBITDA was negative $4 $8 million in Q1, 2024, and a negative <unk> $5 million in Q4 last year.
Speaker Change: Q1, GAAP diluted loss per share was <unk> 14 cents as compared with the equivalent loss diluted loss per share of <unk> 37 in Q1, 'twenty 'twenty four and equivalent diluted loss per share of 24 cents in Q4 last year.
Speaker Change: Q1, non-GAAP diluted loss per share was tennyson.
Compared to an equivalent non-GAAP diluted loss per share of 22% in Q1, 2024 and equivalent non-GAAP diluted earnings per share of <unk>, 12% in Q4 last year.
Speaker Change: Our weighted average non-GAAP diluted shares outstanding for the quarter were $36 9 million shares and 38.
Speaker Change: 5 million shares in Q1, 2024, and 37 7 million shares in Q4 last year.
Speaker Change: Under our $50 million stock buyback program authorized in July 2023, we repurchased in Q1 2025, approximately 23 million shares for an aggregate purchase price of $1 $1 million, leaving about 23, and a half million remaining authorization as of March 31 2021.
Speaker Change: Additionally, we spent $1 $9 million in April 2025, and repurchased approximately one 6 million shares.
Speaker Change: Moving to the balance sheet, we ended Q1 with cash of $132 $7 million and $138 $6 million at the end of Q4 2024.
Net accounts receivable at the end of the quarter quarter to $28 $3 million and $28 4 million at the end of Q4 2024.
Speaker Change: Our days sales outstanding for Q1 was 47 days and compares to 41 days in Q4 last year.
Speaker Change: Our average days of inventory. So Q1 was 70 days and compares to 60 days in Q4 last year inventories net at the end of the quarter quarters $30 million to $36 million and $35 million at the end of Q4 2024.
Speaker Change: Q1, Capex was $20 million for the full year 2025 reiterate our prior toward our Capex forecast range of $26 million to $28 million, which includes approximately $40 million to $50 million upgrade it could meet that.
Speaker Change: We expect the majority of this capex to occur in the second quarter.
Speaker Change: This 14th as he can million dollar it was part of the previously disclosed $65 million to $70 million investment over three years to upgrade it could make sense there.
Speaker Change: Depreciation costs from the new investment in the Permian facility will not begin to be reflected in our financial statements until 2027.
Speaker Change: At the time, we anticipate that a more robust portfolio of new generation power products will at least partially offsetting.
Speaker Change: Additionally, we announced previously that we secured a 22 can have million dollars equipment by and I think the partially support it's 55 to 70 million investment to upgrade it to meet that.
Speaker Change: Under the agreed terms and conditions with the lender bank, we expect to fund about a half of the $14 million to $15 million using that equipment financing.
The majority of which will occur in the second quarter 2025.
Speaker Change: And the remaining half is expected to be funded by the Companys cash.
Speaker Change: This new investment income is expected to drive development of the new generation power portfolio product portfolio, and upgrade and new tools to optimize product mix and improved gross profit margin.
Speaker Change: Lastly, as YJ mentioned above is at Richardson strategy changes, we are making we aim to obtain a quarterly adjusted EBITDA break even from continuing operations by the end of this year.
Speaker Change: The actions are being undertaken by the company in connection with the liquidation process are expected to result in a 30% to 35% reduction in annualized operating expenses, excluding equity compensation charges as compared with 2024.
Speaker Change: At Stitcher, all available cost reduction initiatives to align our spending level with our strategy to become a pure play power company, while enabling us to continue to make progress towards our three <unk> strategy.
Speaker Change: Now, let me provide finance related comments regarding the discontinued display business.
Speaker Change: The company is expected to provide limited support the remaining customer obligations, including the sale of end of life E. O L display product, which will be conducted by Magna just semi coastal limited the company's wholly owned subsidiary that operates the power business.
The sale of the U R display products and the potential monetization of intellectual property assets of the discontinued display business are currently expected to generate cash inflow of approximately $15 million to $20 million over a period of approximately two years. After the completion of the liquidation depending upon the demand of customers.
Speaker Change: And the outcome of the monetization efforts that display intellectual property assets.
Speaker Change: The quarter estimated cash cost of the liquidation is approximately $12 million to $15 million, which is expected to be offset by the cash inflow that we generate all January as described before.
Speaker Change: One time liquidation costs is expected to be consistent statutory severance and other employee related costs contract termination charges and other associated costs.
Speaker Change: This estimated toward our cash cost of approximately $4 $5 million represents a net statutory severance required by law, which had already been fully accrued in the companys prior period financial statements.
Speaker Change: The company expects to recognize substantially all of these charges, excluding the OLED fully accrued net recoveries of $4 $5 million in the quarter ending June 32021.
Speaker Change: Now moving to our second quarter and full year 2025 guidance, while actual results may vary or Q2 2025 megahertz. You currently expect consolidated revenue from continuing operations, which includes our analytics solutions and power IC businesses to be in the range of $45 million to $49 million or $5.
Speaker Change: 2% sequentially and up six 6% year over year at the midpoint on an equivalent basis. This compares with equivalent revenue of $44 $7 million in Q1, 2025, and $44 $1 million in Q2 2024.
Speaker Change: So their gross profit margin from continuing operations to be in the range of 19, 5% to 21 up 21, 5%.
Speaker Change: This compares with equivalent gross profit margin of 29% in Q1, 2025, and 22, 5% in Q2 2024.
Speaker Change: For the full year 2025, we currently reiterate consolidated revenue from continuing operations to grow mid to high single digit year over year as compared with the equivalent revenue of $185 $8 million in 2024.
Speaker Change: <unk> gross margin from continuing operations between 19, 5% to 21, 5%, reflecting the fact that we have completed the wind down of transitional foundry services and new generation power products will just begin production in the second half of 2025.
Speaker Change: The equivalent gross profit margin was 21, 5% in 2024.
Speaker Change: Thank you now I'll turn the call back.
YJ Kim: YJ for his final remarks, okay.
YJ Kim: We believe when we hit the revenue bottom in Q1 for power for this year looking to Q2, we currently forecast mid single digit sequential growth leading to another quarter of mid single digit year over year growth from continuing operations. We currently expect the.
YJ Kim: And computing markets to be relatively strong driven by lighting and battery management system applications and industrial as well as transform tissue power from Taiwan, who bidding market.
YJ Kim: The communications segment and will likely decline quarter on quarter due to exceptionally strong performance in the last two quarters, but he is currently expected to show strong year over year growth in excess of 30%.
YJ Kim: To wrap up the pure play power strategy, we announced last quarter focuses on shareholder value and prioritizing a return to profitability.
YJ Kim: Reported by clearly articulated transparent short term and midterm financial targets.
YJ Kim: As previously mentioned.
YJ Kim: So can he overall macroeconomic headwinds will likely pose challenges for our industry over the coming quarters, our strategic pivot to focus exclusively on power analog solutions and power IC.
Designed to drive both top line growth growing new product launches as.
YJ Kim: As well as long term structural improvement in operational.
YJ Kim: So efficiency, allowing us to achieve our target of three.
YJ Kim: 300 million revenue run rate, 30% gross margin three years now I will turn the call back to Steven Steven.
YJ Kim: Great.
YJ Kim: That concludes our prepared remarks, let's open the call for any questions that you may have operator. Please go ahead.
YJ Kim: Thank you.
Speaker Change: Question at this time, you will need to press star one on your telephone and wait for your name.
YJ Kim: Yeah.
YJ Kim: Please stand.
YJ Kim: Kenny roster.
YJ Kim: Our first question coming from the line of judicial.
Speaker Change: Roth Capital Your line is now open.
Speaker Change: Hi, YJ, Hi, Shin young.
Speaker Change: Maybe you can start at the high level and talk about the tariffs that are going on here and how <unk> is positioned for that from a manufacturing footprint.
Speaker Change: The market to sell to just understand.
Speaker Change: The opportunity here and back going forward.
Speaker Change: Great. Thank you, yes. So you know we haven't really seen negative impact on the first half of the year.
Speaker Change: As we disclosed at the annual.
Speaker Change: Analyst day that in 94% of our power revenue comes from Asia.
Speaker Change: And we have very material direct shipment to the U S.
Speaker Change: With less than $2 $5 million a year. So we are closely monitoring the situation and we think terrorists crude advantage will at the moment, but we are really looking at you know everyday.
Speaker Change: Okay, Alright, thanks, Roger and maybe on the financial Shin Young maybe you talk about the gross margin what are the drivers going forward for the power based business.
Speaker Change: Just understand that generally and then how much is the gumi utilization.
Speaker Change: Fit opportunity there, what's the timing of that but that tailwind.
Speaker Change: Thanks, Thanks to Jason for at least for 2025, because we wind down the transitional foundry services by the end of last year, We said about 20% of our committed capacity was for actually for the foundry services and the new investment 65 to 70 million investment over the next three years, that's Gonna Beach upgrades.
Speaker Change: Can we expect to convert the portion of the committed up to support the new generation power products. So that can position, we're going to go from like 10% to 70%. So 17.
Speaker Change: And that will then drive our gross margin in like two achieved a 333 strategy just not really because we are expanding our capacity simply we are actually converting and upgrading permits up to support that new generation power product, so youre going to see and we're going to see that the improvement coming through like over the next couple.
Speaker Change: <unk> when we kind of March towards that 333 strategy at least for 2025, because because of its idle capacity and our new generation product will that are coming in probably just to be just to begin to come in in the second half of 2025, and that's why you saw our can annual gross margin guidance already we gave out today.
Speaker Change: Market.
Speaker Change: Okay very helpful. And then lastly on the segments to understand the power IC segment versus the analog segment is there a concerted effort there YJ to grow that segment and the mix does that have favorable margins there some products.
Speaker Change: Our focus on that or is the power analog segment really the focus of the growth near term.
Speaker Change: Yes, that's a very good question. So I think we outlined 333 strategy that requires.
Speaker Change: Double digit growth for the next few years. So our goal is to grow both segments, whether it's power analog and power IC double digit over the next few years. So we do have focus in both areas for growth.
Roger: Okay. Thanks, Roger Thanks for now.
Speaker Change: Thank you. Thank you.
Roger: Thank you.
Roger: Our next question coming from the line of Nick.
Nick Doyle: Doyle from Needham <unk> Company. Your line is now open.
Nick Doyle: Hey, guys. Thanks for taking my questions as well.
Speaker Change: Also asked about the tariffs do you think any of the consumer or communications.
Speaker Change: You had in the first quarter represented a tariff related pull forward and how are your customers communicating order patterns around the tariffs and I understand that you have the high exposure to Asia. Thank you.
Yes, a very good question so.
Speaker Change: Interesting enough we.
Speaker Change: We only so one pull in in Q1 that was in power IC that's for the TV applications.
Speaker Change: But he was very small it's like <unk> 1 million.
Speaker Change: Other than that we do not see any pull ins at all and so Q2 are there also very material and will provide a detailed so we haven't seen a much poorer.
Speaker Change: Collins.
Speaker Change: Other than that I mentioned right now on the tariffs.
Speaker Change: Just to follow up on that I mean, how that is a really small number but I guess how would you how are you able to categorize that one specifically as a Poland.
Speaker Change: You know.
Speaker Change: If you could tell by customer telling us or you can look at change of backlogs from Q2 versus Q3, that's how we noticed and.
Speaker Change: We said that we shipped 94% to Asia and there are only $2 5 million or less its direction with the U S. We actually monitor the situation very carefully.
Speaker Change: Thank you and as my second question Opex.
Speaker Change: Opex the Opex came in kind of at the low end of the guide you know better than expectations should we expect that level to hold through the year around the $15 million level or are some of these kind of a onetime benefits.
Speaker Change: $14 8 million number thank you.
Speaker Change: So the need therefore to $15 million that you saw the actual Q1, the opex without stock based compensation, that's actually when we strip out the direct cost associated with the display business. So when we kind of shut down the display business that strip out the direct costs. We talk about 30 to 35, 35% cost reduction from there the last year's level.
Speaker Change: But because we are going to and that's our target to attain adjust EBITDA breakeven quarterly by the end of this year say for you kind of strip that out and multiply like annualized and you'll find that it's going to be a little short. So that's why we said we used to have a we still have the shared service function, which is supported both display and <unk>.
Speaker Change: Our businesses together.
Speaker Change: I do like all the right sizing.
Speaker Change: The actions in that two to attain the quarterly adjusted EBITDA breakeven in by the end of this year.
Speaker Change: Thank you.
Speaker Change: Thank you.
Steven: And there are no further questions in queue. At this time I will now turn the call back over to Steven for any closing comments.
Speaker Change: Great. Thank you before we conclude I just wanted to give everyone. A quick reminder of our upcoming investor conferences on June 25th in 2006, we will present at the 15th annual Roth London.
Speaker Change: Four seasons Park Lane in London attendance at the conference is by invitation only for interested investors. Please contact your respective sales representative to register and schedule one on one meetings with the management team.
Speaker Change: Please look forward details on our future events on magnitude of Investor Relations website. This concludes our Q1 earnings conference call. Thank you and take care.
Speaker Change: Yeah.
Speaker Change: Thank you for your participation in today's conference to transfer today's conference call and you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].