Q1 2025 Pixelworks Inc Earnings Call
Speaker Change: Good day ladies and gentlemen and welcome to the Pixelworks Inc's first quarter 2025 earnings conference call. I will be your operator for today's call.
Speaker Change: At this time, all participants are on a listen only mode. After the speaker's presentation there'll be a question and answer session.
Speaker Change: to ask a question during the session need to press star 1-1 on your telephone. You will then hear an automated message devising your hand is raised.
Speaker Change: To withdraw your question, please press star one one again. As a reminder, this conference call is being recorded for replay purposes. I would like to turn the call over to Brett Perry with Shelton Group Investor Relations. Please go ahead.
Speaker Change: Thank you, Kevin. Good afternoon, and thank you for joining today's call.
Speaker Change: with me on the call or Pixelworks President and CEO Todd DeBonis and Chief Financial Officer Haley Aman.
Speaker Change: The purpose of today's conference call is to supplement the information provided and Pixelworks press release issued earlier today announcing the company's financial results for the first quarter of 2025.
Speaker Change: Before we begin, I'd like to remind you that various remarks we make on this call including those about projected future financial results
Speaker Change: 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 that may cause actual results to differ materially.
Speaker Change: All Ford-looking statements are based on the company's beliefs as of today, Tuesday, May 13, 2025.
Speaker Change: The company undertakes no obligation to update any such statements to reflect events or circumstances occurring after today.
Speaker Change: Additionally, the company's press release and management statements during this conference call will include discussions of certain measures in financial information and gap and non-GAAP terms.
Speaker Change: including Gross Margin operating expense, net loss, and net loss per share. Non-gotten measures include restructuring costs and stock-based compensation expense.
Speaker Change: The company uses these non-get measures internally to assess its operating performance.
We believe the non-get measures.
provide a meaningful perspective.
Speaker Change: on core operating results and underlying cash flow dynamics. We cost investors to consider these measures in addition to, and not as a substitute for, nor superior to, the company's consolidated financial results presented in accordance with U.S. gap.
Speaker Change: Also note throughout the company's press release and management statements during this conference, we'll refer to net loss attributable to Pixelworks Inc as simply net loss. For additional details on a reconciliation of Gapton non-GAAP net loss,
Speaker Change: And GapNet lost to adjust the EBITDA. Please refer to the company's press release issued earlier today. With that, it's now my pleasure to serve the call over to Pixelworks CEO , Todd. Please go ahead.
Todd DeBonis: Thank you, Brett. Good afternoon and welcome to everyone on the phone and webcast.
We appreciate you joining us for today's conference call.
[inaudible]
Todd DeBonis: As reported in our press release earlier today, first quarter results were consistent with our expectations.
Todd DeBonis: Revenue Reflected, anticipated first quarter seasonality in the home and enterprise market which was partially offset by sequential growth in our mobile business.
Todd DeBonis: We also realize significant benefits from our previous and continued actions to streamline our cost structure.
Todd DeBonis: With first quarter operating expenses down more than $2 million, year over year.
Todd DeBonis: Similar to the format and flow of remarks last quarter, I'll begin with comments on our true cut motion business in the US and then review the development specific to our majority-owned Pixelworks Shanghai subsidiary, including an update on the strategic review process.
Starting with our TrueCut motion platform.
Todd DeBonis: As discussed last quarter, achieving a tipping point for broader adoption and commercialization requires creating momentum across an ecosystem comprised of filmmakers, studios, content distributors, and exhibitors, and device manufacturers.
Todd DeBonis: We continue to make tangible progress on all these strategic fronts over the last quarter.
First with respect to the broader film industry.
Todd DeBonis: For the first time since the pandemic, there are indications of an uptick in activity from filmmakers and studios.
Todd DeBonis: This includes a positive trajectory for both the planned number and quality of new release theatrical titles.
Todd DeBonis: representing a positive shift in the overall industry landscape from prolonged headwinds
To a tailwind
Todd DeBonis: Specific to True Cut motion content, we are still targeting to double the number of titles year-over-year from 5 in 2024 to 10 in 2025.
Todd DeBonis: Inline with this growth in titles, we are seeing announcements of major capital investments from both, or by, exhibitors in both the standard and large format premium laser theaters.
that benefit the most from the True Cut Motion format.
Todd DeBonis: As of today, our exhibition ecosystem includes over 1,500 of the world's highest grossing premium theaters.
Todd DeBonis: Additionally, we have maintained our focused efforts to expand the true-cut ecosystem in supportive accelerating future content growth and scaling access to motion-grading capabilities.
as evidence.
Todd DeBonis: of our most recent progress in traction. During the corner we formalized a strategic partnership with a market leading post-production company.
Todd DeBonis: Notably, this partnership serves to bring true-cut motion further upstream in the larger post-production process.
Todd DeBonis: Streamlining the accessibility of true-cut motion grading tools to more filmmakers.
is this and other partners come on board.
Todd DeBonis: We will scale our ability to bring filmmaker awareness of true cut, leading to further growth in title releases.
with our collective theatrical ecosystem efforts approaching critical mass.
Todd DeBonis: We've begun engaging deeper discussions with targeted leading device companies to incorporate true-cut motion capability and certification in future devices.
Todd DeBonis: On our previous conference call, I referred to active dialogue with three major device brands.
Todd DeBonis: What I can share today is we have recently completed rigorous certification testing with one of these brands, allowing us to start jointly engaging with streaming service providers.
Todd DeBonis: This robust demonstration of a major improvement in the user experience for film in the home validates our progress towards the end goal of bringing true cut motion to the mass market via home entertainment devices.
Todd DeBonis: Turning to our Pixelworks Shanghai subsidiary, which as a reminder comprises all of our semiconductor business, including open market and co-developed visual display processing chips for the mobile as well as home enterprise markets.
[inaudible]
Starting with an update on the mobile business
Todd DeBonis: As expected, mobile revenue increased sequentially in the first quarter, primarily reflecting shipments of visual processors in support of customers, previously launched smartphone models.
Todd DeBonis: Driving renewed and sustained growth in mobile remains among our top priorities.
Todd DeBonis: We are making steady progress on the product transition to our latest visual processing solutions.
Todd DeBonis: This includes expanding our serve target market with our new low-cost mobile graphics accelerator.
Solution for the Mid and Entry Level Smartphones [inaudible]
Todd DeBonis: Our current focus continues to be on a co-development of capabilities with a lead mobile OEM customer on multiple programs targeted for launch later this year.
Todd DeBonis: Separately, we also have multiple active program engagements with additional mobile OEMs for both our X7 Prime solution as well as our latest flagship mobile visual processor.
Todd DeBonis: Alongside, our focused efforts to secure new design ends for our latest visual processor solutions, we are continuing to drive innovation and get expanding the mobile gaming ecosystem.
Todd DeBonis: In April , we announced our strategic collaboration with Tencent's Perf Dog, a well-established platform for performing mobile gaming testing.
Todd DeBonis: The motivation behind this collaborative project was to help the gaming ecosystem overcome the specific technical challenges associated with objectively and reliably testing visual display performance across mobile devices that incorporate a dedicated visual processor.
Todd DeBonis: As a result, we jointly introduced the perf-dog, the frame generation index.
with Perk Dogg, the French Generation Index.
Todd DeBonis: which is a multi-dimensional framework for quantifying and evaluating mobile gaming performance.
Todd DeBonis: This innovative index for performance testing provides gaming and smartphone developers with precise real-time data for benchmarking, enabling, enhanced optimization, and ultimately superior visual display performance for mobile gaming.
[inaudible]
Shifting to our home and enterprise business
Todd DeBonis: which following our completed end-of-life shipments of transcoding products in the fourth quarter is now exclusively comprised of our visual process or system on a chips for 3 LCD digital projector market.
Todd DeBonis: Revenue was down sequentially, consisting with the typical first-quarter seasonality, as Japanese OEM customers managed down internal inventories in advance of their fiscal year-end.
Projector-only revenue for the quarter was effectively flat year-over-year.
Acknowledging the recently dynamic global macro and trade environment.
Todd DeBonis: We haven't seen any significant impacts on the projector market, nor any change in order patterns from our large co-development customer.
Todd DeBonis: Barring any larger global economic shifts, we continue to anticipate total projector business in 25.
to look similar to 2024.
Todd DeBonis: Apart from our primary mobile and home enterprise businesses, I previously outlined several new adjacent revenue opportunities that our team is pursuing.
Todd DeBonis: Today, all of these engagements remain in play with the potential to contribute meaningful upside revenue in support of our focus on driving renewed growth and paving a path to profitability.
Briefly recapping these opportunities and their current status.
Todd DeBonis: First, we established a framework to provide ASIC design services and we are engaged with a large international OEM to become the first customer for turnkey services as well as a potential licensing of our display IP.
Todd DeBonis: We are currently in advanced discussions, including review and negotiation of technical details with this anticipated lead customer and we believe this initial design services engagement could contribute meaningful revenue as soon as the third quarter.
Todd DeBonis: Separately, we're continuing to advance discussions with several unrelated parties to license specific intellectual property for their products.
Todd DeBonis: These respective license opportunities span multiple different end markets and include the potential to accelerate our efforts towards expanding the mobile gaming ecosystem.
Finally, we now have two different prior transcoding customers.
Todd DeBonis: that have indicated interest in ordering a recently end of life transcoding ships that are no longer in production.
Todd DeBonis: Our team has recently confirmed that a limited production round of these legacy chips is technically feasible if initiated within a prescribed period.
Todd DeBonis: As such, we prepare to accommodate one or both customers should they choose to move forward.
Bringing everything together and looking at the big picture
Todd DeBonis: We expected the first half to be challenging from a total revenue perspective
Todd DeBonis: We proactively took a series of actions to significantly reduce our cost structure and streamline the entire organization.
Todd DeBonis: Today, we have engagements across a diverse set of primary and secondary opportunities to drive renewed top-line growth.
Todd DeBonis: Taken together, we are well-positioned to meaningfully benefit from the upside revenue.
Todd DeBonis: and we continue to believe that our Pixelworks Shanghai subsidiary is poised to reach profitability in the second half of 2025.
Todd DeBonis: As most on this call are aware, we engaged Morgan Stanley and initiated a formal review process in the later part of 2024 after receiving inbound strategic interest in our Pixelworks Shanghai subsidiary.
Todd DeBonis: Together with our financial advisor, we have since been engaged in due diligence with several qualified parties
Todd DeBonis: We'll also continue to evaluate potential ownership and collaboration structures to determine a more optimal scenario for enhancing pixelworks Shanghai's long-term growth potential as well as maximizing value for existing shareholders.
Todd DeBonis: Although the outcome is yet to be determined, we believe the process itself is near enclosure and likely to result in a clear strategic direction for our Pixelworks Shanghai subsidiary within
In summary,
Todd DeBonis: We're focused on executing our strategic and operational objectives in a dynamic global macro environment.
Todd DeBonis: We significantly reduced our overall cost structure and expect to realize continued benefits from a more streamlined organization.
Todd DeBonis: With respect to our Pixelworks Shanghai subsidiary, we're encouraged by the depth of customer engagements on smartphone programs, particularly for our new mobile graphics accelerator solution.
Todd DeBonis: We are also continuing to advance and expect to capitalize on multiple near-term adjacent revenue opportunities over the next several quarters.
Todd DeBonis: Additionally, remain committed to the path for our Pixelworks Shanghai subsidiary to reach profitability in the second half of 2025.
Todd DeBonis: With our TrueCut business, we are continuing to make inroids towards an expanded ecosystem and achieving critical mass required to bring Pixelworks TrueCut motion platform to more consumers, both in premium large format theaters and ultimately to home entertainment devices.
Todd DeBonis: With that, I'll turn the call to Haley Review Financials and provide guidance for the second corner.
Thank you, Todd.
Todd DeBonis: Revenue for the first quarter of 2025 was $7.1 million, compared to $9.1 million in the fourth quarter and $16.1 million in the first quarter of 2024.
Todd DeBonis: The sequential decrease in revenue reflected a combination of anticipated first-quarter seasonality and the home and enterprise market, as well as the fourth quarter, including higher sales of end-of-life transcoding products.
Todd DeBonis: These were partially offset by sequential revenue growth in mobile in the first quarter.
Todd DeBonis: The breakdown of revenue in the first quarter was as follows. Homeland Enterprise Revenue was approximately $5.8 million. Revenue from Mobile was approximately $1.3 million.
Todd DeBonis: First quarter non-GAAP gross profit margin was 49.9% compared to 54.8% in the fourth quarter of 2024 and 50.7% in the first quarter of 2024.
Todd DeBonis: The sequential decrease in first quarter-grossed margin was primarily a result of the shift in product mix between our moment enterprise and mobile businesses as well as less overhead
Todd DeBonis: Non-GAF operating expenses of 10.4 million in the first quarter were flat with the prior quarter. However, decreased approximately 2.2 million from 12.6 million in the first quarter of 2024.
Todd DeBonis: This year over your decrease in first quarter operating expenses reflects our previously implemented cost reduction actions through the end of 2024.
Todd DeBonis: We've also taken additional cost reduction measures since the beginning of 2025 which we expect to result in further reductions in operating expenses beginning in the second quarter.
Thank you. Thank you. Thank you.
Todd DeBonis: Collectively, the cost reductions we have implemented over the past 12 months are expected to contribute to a total year-over-year decrease in operating expenses of approximately 10 million for the full year of 2025.
Todd DeBonis: On an on-gap basis, first quarter 2025 net loss was 6.5 million or a loss of 11 cents per share, compared to a net loss of 4.3 million or a loss of 7 cents per share in the prior quarter, and a net loss of 4 million or a loss of 7 cents per share in the first quarter of 2024.
and Haley Aman.
Todd DeBonis: Adjusted EBITDA for the first quarter of 2025 was a negative 5.8 million compared to a negative 3.6 million in the prior quarter and a negative 3.2 million in the first quarter of 2024.
Todd DeBonis: Turning to the balance sheet, we ended the first quarter with cash and cash equivalence of 18.5 million compared to 23.6 million at the end of the fourth quarter.
Todd DeBonis: As previously discussed, we have and continue to take action to reduce overall costs and preserve our existing cash balance.
Todd DeBonis: shifting to our current expectations and guidance for the second quarter of 2025.
Todd DeBonis: For the second quarter, we expect non-GAAP gross profit margin to be between 41% and 43%.
Todd DeBonis: This range primarily reflects a unique product mix that includes a newly ramping product with lower initial yields and margins that will meaningfully improve in the third and fourth quarters.
Todd DeBonis: With respect to our operating expenses, we expect second quarter operating expenses to be in a range of between 9 million and 10 million on a non-GAAP basis.
Todd DeBonis: Note that this range reflects the initial expected benefit to associated with our cost reduction actions in March and anticipates only partial realized benefits from our most recent cost actions taken in early May.
Todd DeBonis: Lastly, we expect 2nd quarter non-GAAP EPS to range between a loss of 11 cents per share and a loss of 8 cents per share.
Todd DeBonis: That completes our prepared remarks, and we look forward to taking your questions. Operator, please proceed with the Q&A session. Thank you.
Speaker Change: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star one and one on your telephone. If your question has been answered, you were to move yourself from the queue. Please press star one and one again. We'll pause for a moment while we compile our queue in a roster.
Speaker Change: Our first question comes from Suji DeSilva with Roth Capital, your line is open.
Suji DaSilva: Hi, Todd. Hi, Haley. Todd, you talked about Pixelworks Shanghai Reaching Profitability. Can you give us some help with what the revenue levels that might be achieved at and maybe what portion of the object is attributable to Shanghai so we can understand that operating model?
So, our back is-
Suji DaSilva: is approximately, I think, going into the back half of the year, will be down at 7 million a quarter, something like this, seven to seven and a half, right, for Pixelworks Shanghai. As far as revenue, it's a mix of home and entertainment coming back.
Projector, Mobile
IT licensing
and Design Services.
Suji DaSilva: And to reach profitability, you don't need all of it to happen. You need a chunk of it to happen. And so the mix depends on how it falls in. If all of it happens, the way we anticipate then...
You'll be profitable, but the unit will be profitable for both Q3 and Q4 [inaudible]
But it's it's still learning to say
Right. Understood, Todd.
The Opix for Shanghai Seven Line Aquargue.
Speaker Change: And then switching over to TrueCut, I'm just curious, your device discussions are those Chinese brands given TrueCut's early kind of traction there or those global non-Chinese smartphone OEMs?
Speaker Change: So you asked me about True Cut, and you're asking me about Marvel OEMs.
Speaker Change: They could be, but I wouldn't conclude that, you know. And they are the ones that I talked about certification testing is not a Chinese. Oh yeah.
Okay.
Speaker Change: and to be clear, I just give a little bit further clarity there. Our focus is the true cut.
Speaker Change: has about, you know, we do want to bring it on a global basis to premium home entertainment devices.
But I would say that...
Speaker Change: We've been focused on content generation here in Hollywood for the most part.
Speaker Change: and we've been focused on home entertainment devices that would be marketed.
to North America and Europe .
Speaker Change: Eventually globally, but we're very focused in North America and Europe for the home entertainment ecosystem for True Cut.
Speaker Change: that's helpful, Todd. And then my last questions on the ASIC Design Services engagements which are relatively new here. What's the, how would you give a framework for sizing those opportunities and the revenue models associated?
Well, so...
Um,
You talk about design services?
Speaker Change: Yeah, I guess there's IP layered in there, so I'm not sure how to... Well, it's a new offer design services. Other companies offer design services. We're not the first company to do it.
in this, right?
There are-
There are large...
System OEMs that want custom semiconductor content, but don't have...
an SOC design team that is proficient.
Speaker Change: and it started to finish tape out of a 12 nanometer SOC.
so they can hire an outsource to other firms.
Speaker Change: We have done this as co-development in the past, or taken NRE for an ASIC. The difference between design services are you can open yourself up to an inner mix, a model where you can just do a portion of the design as a design service. You can do all of the turnkey for the design service.
Speaker Change: You may buy the mask set yourself, the customer may buy the mask set, the customer may do assembly and test.
Speaker Change: So what you've done is you've opened yourself up to anywhere in the process of design on how you can help this large system OEM get the custom silicon that they're looking for.
Speaker Change: So, to get to your question, revenue size really would depend on how much you do for the customer.
to give you, if you did a full turnkey?
Speaker Change: and didn't do production, the customer went and did the production themselves.
Speaker Change: Depending on one intellectual property is involved in large SOCs in 12 nanometer, I mean they can range anywhere from probably a low of $10 million in costs to a high of $20 million
[inaudible]
Speaker Change: Now that doesn't mean you'll do all of it on a turnkey basis, you may do part of it.
Speaker Change: So I'm not giving you clarity on the design project we're doing on because we haven't closed it yet, but I'm trying to give you a range on what design services at 12 nanometer
would look like.
Okay, helpful parameters. Thanks, uh, next time.
One moment for our next question.
Speaker Change: Our next question comes from Richard Shannon with Craig Allen. Your line is open.
Richard Shannon: Well, great things Todd and Haley for taking my questions. I guess the first one I'll ask here is on mobile. Todd, I think in the last call you talked about.
Speaker Change: kind of a range of outcomes here, one of which would be, you know, maybe on lower side, be kind of flat or slightly up this year and then maybe on the high side, be more like 2023 maybe to selfless understand how the engagements are lining up to anywhere of that range.
Speaker Change: Well, I would say, you know, given the guidance we just gave for Q2, it'd probably be hard to replicate 2023 revenue.
Speaker Change: Mobile, which for everybody on the call was approximately $30 million.
Speaker Change: Alright, so we definitely expect an uptick in the second half of the year, but I would say we're probably closer to looking at a 2024 year over year or slightly above.
Speaker Change: Okay. And then how do we think about the profile of this, you know, because you've talked about some lower and mid-range, you know, kind of ASP's here. How do we, how do we think about this profile over this year?
Speaker Change: It'll be predominantly on the low end at those revenue levels.
ASPs are sub two dollars.
Good night.
Okay, let's jump over to a true cut. You talked about a...
Collaboration with the post-production house here.
Speaker Change: I guess, is this collaboration mean it's a done deal or something to be worked out here? And then how do we think about the, you know, this partner here, this collaborator, in terms of how they're, how informed they're about how the ecosystem is building? It's just more of a, build it and they will come thing, or is it highly informed and they know something is, is, is about to happen something.
Speaker Change: So let's be clear, we haven't announced the name because...
We would prefer to announce the name with-
Speaker Change: projects that the two of us have engaged in with a film.
Speaker Change: And so until that's done, we probably won't announce who it is, but it is a signed agreement.
The nature of the company is, the company is a...
Amateur
Large
Speaker Change: Post-production house that does color grading in other forms of post-production processing for.
Theatrical Titles
Speaker Change: They get to see a lot of, you know, we're targeted. If you go look at what we're targeting, you know, we did five films last year. We're trying to double it this year. But these are all
Speaker Change: You know, meant to be top 50 type budgeted films for the year, right?
This post-production house deals with many of these films.
Speaker Change: They get access to some of these filmmakers through the studios that we have relationships with. They have access to the filmmakers through other memes.
Speaker Change: So we believe that and what they see as a benefit for it I think which is the most important thing I mean clearly we're small anyway for us to expand our reach is good for us but why would they do it if they're a large mature post production company why would they want to do it?
And the reason is is, um,
They clearly see the benefits [inaudible]
of what motion grading does to the content.
Speaker Change: and what it brings to Premium Large Format experience. That's one. But two, they want to expand
Their stickiness, their capabilities to their filmmaker customers.
Speaker Change: I appreciate all the detail. I will jump in on that, guys. Thank you.
Thank you, one moment for our next question.
Speaker Change: Our next question comes from Nick Doyle, when he didn't company, your light is open.
Thanks for taking my questions.
Speaker Change: Could you just expand on the two comments you made in mobile?
Speaker Change: You talked about multiple programs with your lead customer and then additional engagements. I guess the question is, do you mean you're in multiple phones now with that lead customer and those unit shipments are getting us to the revenue levels you just talked about?
and then, with any additional engagements.
Speaker Change: that you're working on now. Would they come in 2025? Would we see revenue in 2025? Thank you.
Speaker Change: So the additional engagements are booked to design wins with actually the X7P right the code development or co [inaudible]
Speaker Change: Collaboration with this lead customer. This is for a new solution that we haven't offered to the market yet, right?
and it's it.
Speaker Change: It's a complete rework of the software for our visual processor. And it is focused not just on enhancing the gaming experience but enhancing all graphic experience. So, what's happening here is...
There's no adder anymore to 120 frame per second.
LCD display.
video mode display, it is it is
Speaker Change: Almost Met parody, if not met parody, with 60 and 90 frame per second displays. So what you're seeing is it moved down to, and I talk in R&B because we're talking to Chinese OEMs that target certain market segments. So this is 1,000 R&B or 1,500 R&B type market segment.
Speaker Change: As you put high-frame rate displays in these lower end
Phones
The APs were not designed.
two
Take advantage of a high-frame rate display.
So if you add our graphics accelerator
Speaker Change: It can look like a flagship experience, and this is not just from a gaming experience standpoint. This is from...
Speaker Change: Like anybody that has a phone in front of them right now listening to this call, if you have a promotion display from Apple, this thing is a variable display up to 120 frames per second. If you scroll up and down on it.
Speaker Change: The faster you scroll up and down on it, it will adjust to what you're doing. It'll do high speed or low speed.
Speaker Change: If you try to do this on these low end phones, you'll see lots of...
Speaker Change: Visual Artifacts. The GPU doesn't keep up with the pixel rendering or the frame generation. And so what we're doing is bringing an accelerator to this low end market.
Speaker Change: What we've done with this co-development customer is worked with their engineering team, their system engineering team and software team, to vet out all the little issues. There's lots of little issues between us and the AP that's involved in Android.
Speaker Change: We've reached a point where System Engineering has approved the solution.
Speaker Change: to be marketed internally to all the program managers and product planners that we're targeting. We're at that stage in the process.
Speaker Change: We anticipate it will generate multiple designs, not only with that customer, but eventually with multiple customers.
There are no designs in the bag as of yet.
There are designs that are available to us this year.
Speaker Change: at it. And second, could you help pull out the gross margin impact regarding the yield issues, where are the meaningful yield improvements coming from, and can that get you back to, you know, mobile gross margin levels in the mid 30s? Thanks.
So, the product issues are not with mobile.
Speaker Change: The product issues are with a new projector chip we have.
Speaker Change: that it's not a big thing. When you ramp a chip, sometimes you need to get your yield up and until you run volume, it's hard to do that. And so the first quarter or so of high volume, you can experience lower than expected yields. And sometimes you'll recapture these devices, you don't always throw them away. Sometimes it's just...
Enhancing your test program.
Speaker Change: But if it's within a quarter, then it'll look like lower margin product. So I think what we're trying to articulate to you this is not a pricing low margin mix issue. This is us ramping a product that we expect. We're already making yield advancements.
Speaker Change: Advancement. So I expect it to be back on that side, back to where our target yields were.
Speaker Change: But with that said, as we ramp mobile, mobile margins will be lower than projector.
Speaker Change: So the mix will become more important as we revamp mobile again.
All right. All right. Thank you.
Thanks, Richard.
Speaker Change: And I'm not showing any further questions at this time and as such this does conclude today's presentation, you may now disconnect and have a wonderful day.