Q2 2019 Earnings Call
Greetings and welcome to the Maxlinear second quarter 2019 conference call at this time, all participants are in listen only mode.
Question answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press Star Zero Wonder telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Brian Nugent. Please go ahead Sir.
Thank you operator, good afternoon, everyone and thank you for joining us on todays conference call to discuss Maxlinears second quarter 2019 financial results.
Today's call is being hosted by Dr. Kishore Seendripu C.L. King, Steve what field, Chief Financial Officer, and Chief Corporate strategy Officer. After our prepared comments, we will take questions.
Our comments today include forward looking statements within the meaning of applicable securities laws.
Including statements relating to our third quarter 2019 revenue gross margin operating expense tax expense tax rate and interest and other expense guidance as well as statements relating to trends opportunities and uncertainties and various product and geographic markets, including without limitation.
Statements concerning growth opportunities for our wireless infrastructure and kinda could be markets and for improved revenues in our broadband markets.
These forward looking statements involve substantial risks and uncertainties, including risks arising from competition, the global or the outcome of global trade negotiations export restrictions potential supply constraints, our dependence on a limited number of customers average selling price trends risks that our market and growth opportunities may not develop as we currently expect and that our assumptions concerning these opportunities may prove incorrect.
And numerous other risks outlined in the risk factor section of our SEC filings, including our previously filed Form 10-K for the year ended December 31st 2018.
Our Form 10-Q for the quarter ended March 31st 2019, and our Form 10-Q for the quarter ended June Thirtyth 2019, which was filed today.
Any forward looking statements are made as of today and Maxlinear has no obligation to update or revise any forward looking statements. The second quarter 2019 earnings release is available in the Investor Relations section of our website at Max linear Dot com.
In addition, we report certain historical financial metrics, including net revenues gross margins operating expenses income or loss from operations income taxes, net income or loss and net income or loss per share on both GAAP and non-GAAP basis, we encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in the press release available on our website.
We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock based compensation and its associated tax effects.
non-GAAP financial measures discussed today do not replace the presentation of Maxlinear GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management's analysis of our business.
Lastly, this call is being webcast and a replay will be available on our website for two weeks.
And now let me turn the call over to Kishore Seendripu CEO of Maxlinear.
Thank you, Brian and good afternoon, everyone. Thank you all for joining us today.
Our Q2 2019 revenue was $82.5 million consistent with that update updated guidance.
Despite me quarter headwinds when they've always ship and distractions, our infrastructure business was up slightly.
In the connected home market, we continue to navigate soft cable data and satellite end market demand customer specific challenges related to technology transitions and trade tariffs and be open to spend.
In the second quarter, our Fiveg wireless customer designing activities already industry, leading 40 nanometer Cmos for bipolar massive mimo, Claude RF transceiver I suppose you solution have accelerated.
And are generating strong customer traction as a reminder, our industry, leading fiveg RF transceiver delivers the highest performance invitaes bandwidth along with superior system level integration inflexibility add up to 50% lower power consumption than competitive solutions.
As a result based issue of engineers will be able to accelerate the development of Fiveg massive mimo radios.
At the same time, we are also growing our content on a bus system basis enabled by an expanding product offering and do you have on strategic customer engagement.
Our wireless back then it was up double digit sequentially Q2, despite the suspension of always shipment.
Adoption of our wireless backhaul RF transceiver is accelerating because highlighted by an important design win in India, maybe one off or do you look at the mine.
And slated for shipping in Q3.
Are those the only solution to support channel aggregation doubles data capacity to existing available spectrum for current and future Fiveg transport networks.
As a result strong opening to engagements are leading to a proliferation of our OEM engagements, which we believe supports our expectation of stronger revenue stream in the second half of 2019.
Moving on to data center infrastructure products are 400 gigabit them for DSB associate with the integrated laser drivers and companion Lucky I system solution has made significant progress with our lead optical module and leap Diovan Hyperscale data center customer in terms of interoperability testing.
This has strengthened our current expectations with respect to revenue growth market share and the pace of the upgrade cycle.
Oh high performance analog business, primarily in industrial and multi market revenue is also gathering momentum.
Our universal PMIC or Paul management IC MX at 770, Paul was selected to power the world's most popular single board computer, namely the Raspberry Pi for.
It was a primary driver of our double digit sequential growth in the industrial multi market revenues in Q2.
The mix of 74 is a highly versatile PMIC that enables the reprogramming of the all the recombinant neucardin settings and limits follow sequencing power monitoring detriment to the additional flexibility that are integrated into the raspberry Pi for computer.
We're also continuing to expand our data to the ball management presence with the recent design win that Ali Baba given Chinese hyper scale.
Oh provider.
Going forward, we are pleased that our deepening customer relationships and products in Fiveg wireless and optical units and infrastructure are opening up new ball management open to be as a bundled offering.
In the connected home market, our book of business was up significantly quarter over quarter due to the ongoing ramp up or Moca two point solution at Verizon.
Additionally, we announced that Cambridge industries group has deployed or Moca two point bias, we'll see in the next generation data you conveyed pawn buoyancy device.
And his application the mugabe's van backbone delivered up to three Gigabits per second high speed broadband.
From the oil and GE, we enable gigabit whole home Wi Fi coverage for reliable robust Fourk video and data services for IP.
With that let me turn the call over to Mr., Steve each field, our Chief Financial Officer, and Chief Corporate strategy Officer, but a review of the Q2 business results and all forward guidance.
Thank you Kishore.
I will first review our Q2 2019 results and then further discuss our outlook for Q3 2019.
Our revenue of 82.5 million, we saw an infrastructure business up 2% sequentially due to increasing demand for our wireless backhaul RF portfolio, which offset some weakness in our H.P.A. business within this category.
Our connected home business decreased 11% with strong early stage deployments of our Moca 2.0, and 2.5 solutions offset by continued softness in cable and satellite markets. Our industrial Multimarket business was strong up by 12% sequentially with broad band with broad based demand improvements, particularly in China, which were aided by focus share gain initiatives.
GAAP and non-GAAP gross margins for the second quarter were approximately 53.4% and 63.9% of revenue respectively.
Our non-GAAP gross margin improved 40 basis points sequentially due to improved mix within our reported product categories and operational improvements.
This compares.
GAAP gross margin guidance of 53% to 54% non-GAAP gross margin guidance of 63.5% to 64.5%.
The delta between GAAP and non-GAAP gross margin in the second quarter reflects the amortization of $8.5 million of purchase intangible assets from previous acquisitions and point $1 million of stock based compensation.
Second quarter GAAP operating expenses were approximately 47 million, which was below our GAAP guidance of 49 to 49.5 million due mainly to lower than expected stock based bonus accruals.
GAAP operating expenses included stock based compensation of $8 million amortization of purchase intangible assets of $5.8 million and point Fourmillion in restructuring.
non-GAAP operating expenses were 32.8 million, which was down 2.9 million sequentially and below our non-GAAP guidance of 33 to 33.5 million due to disciplined expense management.
We continue to diligently work to moderate the spend during this transitional period with good success.
After a sequential reductions in three of the last four quarters, our quarterly non-GAAP Opex run rate was down 12% year over year.
Moving to the balance sheet and cash flow statement, our cash flow generated from operating activities in the second quarter of 2019 was approximately 12.4 million versus 16 million generated in the first quarter of 2019.
We made 15 million in debt prepayments during the quarter towards our term loan as we continue to focus on debt pay down with our cash generation.
In addition, we recently made another 5 million dollar debt prepayment during Q3.
This brings the total debt prepayment to $198 million and our loan balance down to $227 million.
Our day sales outstanding for the second quarter was approximately 63 days, which was slightly below the prior quarter day sales outstanding of 64 days.
Our inventory turns decreased slightly to 3.6 compared to 3.7 in the first quarter.
That leads me to our guidance.
We currently expect revenue in the third quarter of 2019 to be a prop approximately 77 to 83 million down 30 down 3% sequentially at the midpoint of the guidance range.
As you recall from our June 4th press release, we ceased shipments to walk away in accordance with the bureau of industry insecurity action.
We continue to evaluate potential scenarios that would result in legal resumption of shipments to walk away, including license request. However, our guidance excludes any potential revenue from la and affiliates, which a sizable impact sequentially.
Max linear will continue to comply with all government and legal requirements across our global operations cannot predict whether additional government actions may further impact our ability to shift away as the situation remains dynamic.
We hope a resolution of these issues around trade actions as reached as quickly as possible. So the market driven trade can resume.
Additionally, one of our test houses and in Indonesia units some bottom.
It's going through an abrupt shutdown.
As a result of the shutdown and suing employees strike, we are facing potential supply constraints for roughly 80 products in Q3.
We expect connected home revenues to be down 5% to 10% sequentially driven primarily by reductions in satellite demand and subdued recovery on our connected home categories. Due to continued macro headwinds in the cable and satellite markets. We expect a mid single digit infrastructure revenue decline owing to the wawa shipment ban and softness in our HPC business within this category.
Which also tends to be a little lumpy.
Within industrial and multi market, we have seen follow through on our improved.
Distributor sell through patterns, which coupled with a sequential improvement from a couple of key accounts as expected the real high single digit revenue growth.
We expect third quarter GAAP gross profit margin to be approximately 52% to 52.5% of revenue and non-GAAP gross profit margins to be approximately 63% to 63.5% of revenue down sequentially due to a weaker mix, owing mainly to the shift between infrastructure and industrial and multi market revenue.
As a reminder, our gross profit margin forecast can vary plus or minus 2%, depending on product mix and other factors.
Even as we are focused on reducing our run rate spend levels. We continue to fund strategic development programs targeted at delivering strong topline growth in 2019 and beyond.
With particular focus on infrastructure initiatives and our stated goal of increasing the operating leverage in the business.
As such.
We expect Q3 2019, GAAP operating expenses to remain approximately flat quarter on quarter within a range of 46.5 to 47.5 million.
Driven mainly by the expected increase in our stock based bonus accrual and mask expenses, partly offset by reductions in professional fees and payroll.
We expect Q3 2019, non-GAAP operating expenses to be downtick product, approximately 1.5 million sequentially to a range of $31 million to $32 million.
We expect GAAP tax expense to be approximately zero and non-GAAP tax rate of 5%.
We expect interest and other expenses in the quarter to be 2.8 million to 2.9 million.
In closing.
We are pleased to report progress on our infrastructure initiatives highlighted by our expanding design engagements and 400 gig datacenter market.
Engineering milestones on our Fiveg massive mimo transceiver platform and expansion of our infrastructure power management portfolio.
As we continue to navigate through a turbulent connected home environment in the near term, we will continue to maintain strong profitability and cash flow generation as well as continue our pace of strategic investments.
These infrastructure investments and strong execution combined with upcoming upgrade cycles in the datacenter and wireless markets position us well to deliver strong leverage in our business as many of our new product initiatives start to generate revenue in the second half of 2019 and into 2020.
With that I'd like to open up the call for questions.
Operator.
Thank you well now be conducting a question and answer session.
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Our first question today is coming from Ross Seymore from Deutsche Bank. Your line is now live.
Hi, This is ji for Ross Seymore. Thank you for letting me ask a question.
I guess, if you could just talk a little bit about the test the impact of the test house.
Strike that you mentioned.
What category are those 80 products that are impacted by that.
Hi, constraint coming from and.
Is that.
Demand going to be pushed out into the fourth quarter.
So thanks again for joining us so that particular product most of the product is from our HP, a portfolio, which falls into the industrial multi market, but there is recall that there is some of that business that rolls up under infrastructure, So probably those two categories.
We are working diligently and hopeful that things can get resolved sooner rather than later.
But but we're also looking at all avenues as this is a short term risk and they definitely shorten that timeframe more than we would typically expect in this circumstance.
Thank you and then as a follow up I guess.
Regarding to walk away.
How much.
Revenue.
From the third quarter I guess is.
Being.
Taken out because of the restrictions that still in place.
And has the company already applied for exemptions to that restriction.
So with regard to walk away so.
Looking at our pre announce.
Earnings report, we talked about the impact of all way, we kind of took the midpoint down about $3 million. So while it is not big enough customer for us to break out specifically.
But as far as the impact in Q2, I mean, you could expect that to be on that order.
Thank you.
Thank you. Our next question today is coming from Gary Mobley from Wells Fargo Securities. Your line is now aligned.
Hey, guys. Thanks for taking my question.
Wanted to ask a question about the connected home business. According to your guidance for the third quarter that businesses.
Probably about half of where it was two years ago.
And.
Yes, there's numerous reasons for that I am sure, but maybe can you just walk us through the different components of that connected home business, what the moving parts are.
With the intention to maybe give us a sense of where the bottom might be for that business.
Sure Gary.
Yeah. So as you know we don't break out all the different pieces of it but in general I mean, theres the cable piece and connectivity piece, you talked a little bit about some of the improvements that are going on the connectivity side I mean horizons filing ramping this platform. So we're encouraged by the moca developments there.
But the rest of the business cable data specifically.
As everyone is aware has continued to drag.
Service providers are spending not putting the investment there we've kind of gotten through the tariffs and yet spending seems to continue to push out. So we we do see weakness there I mean I'd I'd like to tell you. We're at the bottom I've said this before I feel like cable, we're kind of bouncing along the bottom in a little deeper than I think what we had originally anticipated.
But we do see light in the tunnel on the cable side I think the satellites probably the one that's been worse than expected satellites been tough.
Just subscribers have been down considerably and but I would say at this point in time I mean, the risk is definitely come out I won't say and you know, 100%, but we've definitely got a lot of risk out of that business. So as I look out into 2020 that particular piece.
Feels a little bit better just because we're down at much lower levels.
Okay.
And as you've been trying to find different growth path in the infrastructure side of the business I think there's roughly five five to seven of those and you've had a multiyear investment then effort are there any.
Of those different prongs that you feel less optimistic about today than say three to six months ago.
So Gary.
So obviously you know.
Based on our common destiny for your questions.
We are very excited what infrastructure initiatives and then in the prepared remarks as Steve refers to a confident that increasing share prospects that means that our designs and doing well we've talked about content increases that is going to result from expanded portfolio already ready to offer bundling on that process and as a result, the reinvestment in Paul management. So generally they're quite excited about their our investments are going and the prospects for the growth are.
On the other cost 30 side the timing is the bigger risk in terms of quarterly kind of estimations. You know we've talked about our 400 gig pamfour designing process and improve and the interboro in thrall, but isn't the really the positive outcomes. So you know.
Our expectation for growth this year from a fiber optic because very very modest and we are in the ballpark. So really nothing to subdue are.
Our optimism still you know these are infrastructure market, they take time and be very nice ramp phase.
And while we are always was the because part of the calculus.
And so there is some level of a disappointment about the law, we situation, but outside of that we feel very positive.
Okay, Thanks, Kishore and thanks, Steve.
Thank you. Our next question today is coming from Bill Peterson from JP Morgan. Your line is now live.
Yes, hi, thanks for taking the question it sounds like.
Pam four side things are progressing.
I understand that some of the 400 gig ramps or really I guess coming on fairly strong in the second half of the year I'm wondering based off of I guess your design and interrupt for interoperability testing going well should we think of upside to your prior view of single digit millions.
So bill or you know I think we will constantly we reiterated that you don't expect a strong ramp a 400 gig in this year and our expectations have been modest we stick to it I think the the proof remains the based on the milestone activity that we are more we are more correct than a than otherwise so I will not change any expectation. They in fact I think at this point.
The base is not any faster on the on the way the sold out in the field trials are going on because big Hyperscale data Center. So you know I would not change my view on it in fact I would caution you against anything that is a big ramp up.
Offsetting right non 400 gig if anything it will be towards the end of the year not at this stage of the year.
Okay. Thanks for that.
I know that we'll always I guess, you know, it's not broken out as you can sort of had a 10% 10% customer.
But I guess my understanding is that you're not only you're not shipping but are you able to engage or for example, or some of your projects going to be postponed as a result of lack of engagements and and when I guess when should we think about that is just going to be when the ban is lifted entirely or how should we think about that going forward.
So bill is very you know this is a very very you know difficult question to answer on these matters, especially given the various legal counsel, we are taking and do you want to make sure. We abide by the laws of the country and we have typically following GAAP guidance for multiple advisory easier, so, but I would not conclude anything about on a daily ability eat well be that brought me to do so to me really actively engage because the products that listening to our very unique you could attribute there's no other provider for it.
The risky some substandard he knows that but because of the platforms being really she didn't but I you know I think that our offerings are so compelling and cost savings and perform is that Oh I think one thing is clear we should be able to be readily ramp because the designs are done.
Okay, that's what I understood. Thank you.
Thank you. Our next question today is coming from Alex Vecchio from William Blair. Your line is now live.
Hi, guys, just a quick question or follow up.
On the unison impact can you quantify how much of an impact that was if I'm correct 80 products.
On your industrial marketing market is kind of it's like 10% of total products is that about right.
Yes, so I mean look we're not going to break out exactly the number 80 product sounds like a lot of products, but these are HIV products. So there's less revenue per per line item. So.
So I wouldn't say, it's a huge number I mean, very low single digits, so pretty pretty comfortable but but it is the risk that we have in the quarter, though we did highlight and you want to know that if you're not the only ones I think there's been press releases in the preceding weeks from units and as the Tom There are a number of big suppliers are actually a big for cheeses are all there's assembly and test services already backed it and be at a mine or.
Larry that's right in the end the government they are working to resolve the employee strike and so there's a little bit abrupt announcement. So we are really hopeful that that will not be impactful on but we have to put the cautionary note in the script.
No no I understand I guess, we're just I was just trying to back into the different sort of between guidance expectations. Given that you had already removed at walk away out when you preannounced.
I think you have a good.
You have a good metric 80 barge sort of 1000 birds you know.
Not a bad metric I think about it.
And then lastly, you guys have been very very diligent on the operating expense line I mean, how much is left there I do we do we think about Q4 operating expenses starting to re increases this sort of the new baseline level until the infrastructure Ram start to contribute.
So let's feed give a little bit more color off after my comments here that look I mean that is very very difficult to say, there's more or less there right. Its a as a decent though it is a part of the tactical approach and then part of it is longer term strategic decision, making process and that's always blending in at this point I would not to see that there's more left to come on the other hand I do know that next year. How do you get two years, we have road map items or infrastructure for the continued in rats, and we want to invest it's already but because we have the leading to much opportunity on the table. There. So so I do expect your opex to increase but Steve maybe able to give you a little bit more color here.
I mean, I think we've been pretty clear that the opex trends down throughout the year and then starts to grow again in 2020, So I don't want to get into specifics on what Q4 guidance is at this point, but but as we've I mean, we've consistently said that it kind of trends down throughout the year and then starts to grow again kind of in Q1 of 2020.
Got it thank you.
Thank you. Our next question is coming from Quinn Bolton from Needham and company. Your line is now live.
Hey, guys. Just had two quick questions first you guys seem to be a pretty enthusiastic about the design traction you're getting for the fiveg cellular product, but I couldn't quite tell if you were saying that you actually now have design wins for that product or just sort of design ins or design engagements. So wondering if you could clarify do you have kind of confirmed design wins to date or are you still working towards those and then the second question on the industrial multi market sounds like a lot of that strains recently has come from China.
I think most of your analog peers are talking about sort of uncertainty in China, given the trade tensions and so with Twoq Q2, Q3, Q up nicely in that business.
Are you worried about sustainability of that demand do you think there could be some inventory ordering going on in that business given trade tensions. Thanks.
So firstly I wanted to justify the question that you raised a you know so you have to keep the the perspective of our Ah you know up our product investment in shape, we always work with the product where we have a teaching joint development agreement with a major OEM, we do not kick off the product.
Even though we have such agreements in place Oh, we have to put a little bit of product that works very well, which we have done now in the process of evaluating you didnt designing supporting activities ongoing.
Our design win he's ran the platform we selected into the timeline set for when that will start ramping so yes from that perspective, we have a target timeline, but the black bombs, we have timelines, but evaluated the designing process and then the other part goes to production comes along but how well what I would normally be need to be a design win in the in the sense. There that's something could go wrong in between nimble I, you know I wouldn't order quantities and and run there having said that right. We got more than one OEM or in the same or in the same timelines. So we feel that what we have guided you in terms of expectations about when do you expect to Fiveg revenues to start next year. These all these intermonte fight that eat at all in terms of you know delays or side. So yes.
Technically no mid teen really yes, and it's more than one OEM right now it's to Williams that already that seem a time. My second question is you asked about the our high performance analog market, primarily you could call. It a industrial multimarket ended abortion off in infrastructure revenues.
You know, we also Peter that the V. isn't demand on these kinds of products that said the distribution channel and that they need to actually US off. This is the demand and actually there is a little or there are some products that are very specific to actually get that were in the process I'm sort of a boards product cycle revenue ramp and they are all work I mean, there is weakness.
Our softness at our other iOS expediency.
Our vizient, though for the most parts I stepped it. However, we are seeing weakness in various other parts are those at the totality level, we are not seeing that.
And next Mark Downs in the future. We can talk about it right I mean, that's very hard into sort of a channel sales and non direct sales and good access is already now so hello, where we've got a whole bunch of new breed them in launch by the end of the year. So whatever it is it should be oh, the big thrust over the last two years since our acquisition of XR has been really do or all the product road map to being the worlds best products and ball management and subsequent to based on a whole bunch of our management board, it's going to be an didn't really use it at a very strong the clip.
So we feel that the goal. So so at this point I think that we are cautiously optimistic on their interest in London market revenues, it's always be nobody infrastructure infrastructure investment and the products are now sampling and into some of the things. We are not the gates to put us to go to production is our customers are going to the gates to the time lines on this so I hope that answers your question.
Yes. It does thank you very much for the color Kishore.
Thanks Quinn.
Thank you. Our next question is coming from tore Svanberg from Stifel. Nicolas Your line is.
Yes, Hi, guys. This is Jeremy calling for two or three.
I just wanted to touch again on the connected home business. It sounds like I mean, you talked in the past about you know there's been some well known supply change challenges and in terms of migrating production facilities out of China have those been largely resolved and is that impacting anything at this point in that business and secondly.
You've talked in the past about DOCSIS 3.1 market share balancing out over time, that's the thing that you're still seeing anticipating this business.
So the first question was about the impact of supply chain transitions at our OEM customers and the second question was about actually macro demand at the operating level and then how our share is being impacted by those decisions I think firstly I just want to say that there's been a sharp impact on the satellite side that does Steve talked about and that's really because of this the whatever they want that we want to keep in perspective. It is a good business is a very profitable business for us is very very low investments to support the business or the macro demand situation in the satellite market.
Really we couldn't quite a bit and they've forecasted demand. They are they feel they have they're sitting on quite a bit of inventory and supply rod lift to get onboard. Their game plans are so we are really suffering the video business called <unk> impact.
Having said that on the cable decides the cord cutting should work in our favor Oh, where the cable operators themselves are not spending as much to deploy a dollar to the new platform. So they don't spend levels are down in fact, we suspect the time is down as much as 20% to 30% you know right now in the <unk> on a run rate basis right now it seems that we had the supply chain related transition issues and a major OEM up ours, we've got acquired by Comscore, and that's more or less getting resolved, but the bigger impact right. Now is the macro demand softness that we are facing and I think at the beginning of the year. We talk about maybe this year threenineteen, we'd be down about to maybe 15% or days of the last year, but it looks like they're quite deeper than that maybe 25% to 30% range and really from a share perspective I would just give you one color is that the share the share loss as really happened where are they.
New product platform qualifications going on AG going on and so on the shipments would happy not from our OEM, but for the other companies or OEM, who won't be don't ship, but just the other platform and I think that's where the share losses happen, but you do know that you always talked about market shares in speeds being.
50%, plus minus 5% or so and I think that in the minus side right now and that will get corrected itself and of course of time or as we enter the first half of next year.
Great. Thank you Thats very helpful and Steve just a quick question in terms of the the Capex. This quarter was was very low is that something that should we think about.
Being a longer term shift or is this just a one quarter type thing. Thank you yeah, I think it's a little more one quarter I mean weve.
I don't see anything changing dramatically on on that front I mean, we've said that it's typically about about $10 million a year and I don't see it changing dramatically from that.
Great. Thank you very much.
Thank you. Our next question is coming from Christopher Rolland from Susquehanna. Your line is now live.
Hi, Thanks for taking my question. This is David I rely on behalf of Chris.
Just a follow up on the massive mimo opportunity in the past you guys have talked about that opportunity really being between you and the two big analog players and that if the revenue for that opportunity is but three ways. That's really significant revenue for you guys.
When you look at across the competitive landscape there and what gives you confidence in your product that you can come in and take significant share and maybe take a third of that share in 2020 or 2021.
So.
I mean are you are absolutely right, we have not been come back with a new entrant into this market space and our competitive position comes from our product and that'd be a bill to BARDA not yes.
You know without any feedback of OEM like we talked about with the tier one teaching OEM customer had been brought into the bonds that they can use and that there's real next generation product when the arc those customers move from SPG. These back in black bombs easy these deployments and that's when they want a more integrated call don't solution you have to keep in mind that there probably been nonprime, we thought a massive cost on process. Because if you look at the proliferation of radio Transceivers inside the remote radio unit cost is incredibly important part and what do you do you can do for that the integrated a four by four configuration in the 14 nanometer Cmos not per customer the computers that they need and that's kind of solution. They have dramatically then use up Arkansas led by more than half by almost half and so what our competitors react that we'll take them out of 18 to 24 month at the minimum that's like a world class execution, we couldn't give them credit for but right now we have the product we are the ones that are.
Back and show the performance and the level of a integration and that's what matters. So we feel very very good that this is going to be a a sort of a cyclical process right you're getting you've got this okay. The other guys have to catch up then shares been shipped over time, but all in all on an average the enormous value is up though to the market.
A a best case scenario should be substantially more than that so right now let's go with a third of the market share.
Understanding great and then just following up there I guess on massive mimo.
When we think about massive mimo, there's also a push to in new where fourg base stations to add massive mimo capability do you guys benefit from that at all or is your solution specific to fiveg.
You know.
Personally you know if I need to catch all right anything that all forward. He doesn't always called Fiveg. So I don't want to go to the semantics of all these five g.'s right now, but what do you just think of afford you that enhanced speed more math more massive mimo transceivers, it's really fourg, plus and that's where the initial deployment it looks like youre really not by GE, their fourg, plus and ER and and that means more mimo configuration is I'm going to buy two or three by three either going to 16 by 16 or 30 grew by 32 in in those platforms sort of a refurbishment of those backbone and we should benefit from that when that happening, but right now we are not in those platforms.
The board has just started sampling about three four months ago, and it's doing well, but as that picks up momentum or we wouldnt be in a place to participate in that so it should benefit does but honestly be talking to add ons and advisory space that part is already included in that not mathematics. So I don't think it's sort of a zero some game to fourg and fiveg at that level.
Makes sense. Thank you.
Thank you Weve reached end of our question and answer session I'd like to turn the floor back over to management for any further or closing comments.
Okay. Thank you operator, we would like or the it's an easier to know that it will be participating in the Jefferies semis in communications infrastructure corn business Chicago on the August 27, and the Deutsche Bank Technology Conference on September 10 in Las Vegas.
I hope to see many of you that that'd be said, we thank you all for joining us today, and we look forward to reporting going up wrong as to you in the next quarter.
Thank you.
Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.
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