QUIK - NASDAQ

Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to QuickLogic Corporation's First Quarter Fiscal 2024 Earnings Results Conference Call. As a reminder, today's call is being recorded for replay purposes through May 20, 2024. I would now like to turn the conference over to Ms. Alison

Thank you, Operator, and thanks to all of you for joining us. Our speakers today are Brian Faith, President and Chief Executive Officer; and Elias Nader, Senior Vice President and Chief Financial Officer. As a reminder, some of the comments QuickLogic makes today are forward-looking statements that involve risks and uncertainties, including, but not limited to, stated expectations relating to revenue from new and mature products, statements pertaining to QuickLogic's future performance, design activity and its ability to convert new design opportunities into production shipments, timing and market acceptance of its customers' products, schedule changes in production start dates that could impact the timing of shipments, the company's future evaluation systems, broadening the number of our ecosystem partners; and expected results and financial expectations for revenue, gross margin, operating expenses, profitability and cash. Actual results or trends may differ materially from those discussed today. For more detailed discussions of the risks, uncertainties and assumptions that could result in those differences, please refer to the risk factors discussed in QuickLogic's most recently filed periodic reports with the SEC. QuickLogic assumes no obligation to update any forward-looking statements or information, which speak as of the respective date of any new information or future events. In today's call, we will be reporting non-GAAP financial measures. You may refer to the earnings release we issued today for a detailed reconciliation of our GAAP to non-GAAP results and other financial statements. We have also posted an updated financial table on our IR web page that provides current and historical non-GAAP data. Please note, QuickLogic uses its website, the company blog, corporate Twitter account, Facebook page and LinkedIn page as channels of distribution of information about its business. Such information may be deemed material information and QuickLogic may use these channels to comply with its disclosure obligations under Regulation FD. A copy of the prepared remarks made on today's call will be posted on QuickLogic's IR web page shortly after the conclusion of today's earnings call. I would now like to turn the call over to Brian. Go ahead, Brian.

Thank you, Alison. Good afternoon, everyone, and thank you all for joining our first quarter 2024 conference call. Q1 revenue increased more than 45% year-over-year. This growth was driven by a nearly 60% increase in new product revenue, which was mostly from eFPGA IP contracts. With continued strong bookings, a record $179 million funnel and some very significant eFPGA contract proposals pending, we remain confident that we'll deliver greater than 30% year-over-year revenue growth in 2024. Let's take a few minutes now to update the status for some of our major contracts and accomplishments: First, our Strategic Radiation Hardened FPGA government contract that has a total potential of $72 million. Last August, we announced the second tranche which added Honeywell Aerospace as a foundry partner, and increased the funding rate from Tranche 1 levels to bring the Honeywell based development up to speed quickly. Tranche 2 also funded our continued activity with SkyWater Technologies. We are anticipating Tranche 3 will be awarded later in Q2, and as we stated in our last conference call, we are modeling the funding rate for Tranche 3 will likely decrease from Tranche 2 and be more similar to Tranche 1. Due to this, and the strategic shift in how we are now dividing revenue between engineering services and IP license, while we are projecting Q2 revenue will be up significantly year-over-year, we are currently forecasting a sequential decrease from Q1. We believe Q2 will mark the low point for the year. Since it is important, I'll take a moment to review how the change in revenue split impacts when we recognize IP contract revenue on our income statement. At the start of this year, we shifted the majority of the IP contract dollar values from engineering services, which are recognized over the course of the contract, to IP license, which is recognized at the completion of our deliverables. This shift better aligns revenue with our deliverables and improves our ability to effectively negotiate and win future contracts. While this change will push quite a bit of revenue recognition into the second half of 2024, it has absolutely no impact on our cash flow. We continue to believe we will be cash flow positive and solidly profitable for full year 2024. Beyond building on the success of our large government contract, we are very well positioned to significantly expand our IP business across many new customers and market sectors, as well as the number of fabrication nodes supported by our IP in 2024. During our last conference call, I announced that we booked the first of 2 IP contracts that will be fabricated using the 12-nanometer processes and that the second contract was pending. We announced finalizing the second contract in a March press release. Both of these contracts will contribute to cash flow during the first half of 2024, but revenue will not be recognized on our income statements until completion of our deliverables in the second half of this year. The first contract is with a Defense Industrial Base customer and will be fabricated on GlobalFoundries 12-nanometer process known as 12LP. I cannot go into any details beyond the fact this contract is not related to the large ongoing Radiation Hardened FPGA contract I just discussed. The second contract is with a large international company that I'm sure you would recognize. This design is for a new ultra-low-power SoC that is targeting a variety of commercial and industrial IoT applications. This design will be fabricated by TSMC on its 12-nanometer process. Within the SoC, our eFPGA technology is used for AI acceleration, which is a necessary function in most AI applications. We believe this will prove to be a rapidly growing application that is often better served by eFPGA technology than a processor running the acceleration algorithms in software. In short, an eFPGA IP can be reprogrammed to adapt to changes in acceleration algorithms and perform acceleration more quickly and using much less power than a processor based solution. In November 2022, I shared that we taped out a new device for a customer that incorporates our eFPGA IP. Due to strict confidentiality requirements, I can't share more details on the specific design win beyond a brief update. In line with what I covered during our last conference call, the customer is continuing to work through certain aspects of the design. This work is progressing, and we anticipate resuming our efforts during the second half of 2024. This customer could represent tens of millions of dollars in potential device revenue starting in a couple of years. Last September, we announced a leading technology company chose our eFPGA IP for a design that will be fabricated using GlobalFoundries 22FDX platform. Again, due to strict confidentiality requirements, I cannot go into more detail on the design, but I can share that we have delivered our IP to the customer and expect tape-out to initiate this quarter. Last November, we announced a global semiconductor leader chose our eFPGA IP for a design that will be fabricated on UMCs 22-nanometer platform. We have completed the delivery of our IP and expect tape-out to initiate this quarter. In total, we are on contract to deliver our IP on 5 different foundry/process technology combinations; including 2 that will be fabricated using 12-nanometer technology. This is up 3x from a year ago with minimal growth in the associated R&D costs. This demonstrates the market demand for eFPGA IP is accelerating and that the automation from our proprietary Australis IP Generator enables us to address this demand in a scalable way. We have several Chiplet opportunities in our funnel including deals with our partner, YorChip. As a matter of fact, we recently submitted 2 substantial proposals this year with a combined value of over $40 million; one in conjunction with YorChip. As I mentioned in our last conference call, our lead smartphone customer worked through its excess inventory of EOS S3 that limited our shipments during 2023, and we have resumed shipping to support production. We hosted a meeting with this customer at our San Jose headquarters earlier in Q2. Based on the customer's outlook, we expect volume will increase in 2024 as our EOS S3 solution was selected for new designs that will ship well into 2025. Consistent with the outlook we shared last quarter, we are forecasting a modest increase in display bridge shipments this year and expect mature product revenue will be similar to what it was in 2023. A couple weeks ago we announced the release of Aurora 2.6, our comprehensive eFPGA development tool suite. This release of Aurora includes a number of significant improvements that will expand our market opportunities and help us win new designs. In Aurora 2.6, we expanded operating system support to include multiple versions of Linux including Centos, RedHat and Ubuntu, and included support for Windows 10 and 11. Furthermore, through the incorporation of new architectural improvements, Aurora 2.6 can also deliver up to a 15% improvement in speed. In some eFPGA designs, critical path timing can be even more important than raw speed. To address this need, Aurora 2.6 incorporates Interactive Path Analysis and a new Graphical User Interface. For our customers, this means easier use, better performance, shorter development cycles and lower development costs. With our planned investments in R&D, we have a cadence of Australis and Aurora releases scheduled throughout this year that will provide further improvements to flow automation, increase IP core speed by up to 50% and reduced die size for our eFPGA hard IP implementations. Turning to SensiML, I'm very excited about the progress made during the last 3 months. In short, there has been a notable shift in strategy that has accelerated near-term revenue and we believe will substantially accelerate end user adoption. The first step was to sign a 6-figure contract with a major MCU company, which puts SensiML on track to deliver the material 2024 revenue growth I forecasted last quarter. SensiML is discussing a similar agreement with other MCU companies. The second step will be revealed in more detail tomorrow morning. Leveraging the 4-years of experience and success monetizing an Open-Source business model at QuickLogic, SensiML will announce its own Open-Source strategy in a press release issued before the market opens. The short story here is Open-Source provides customers the transparency and security they need to incorporate high-value IP in their designs, and in many cases also adopt proprietary processes and professional services. You have seen how this strategy has enabled QuickLogic to more fully leverage and monetize its proprietary IP, and expand its reach into a variety of end markets. I believe we will see the same from SensiML, and with the markets' ravenous appetite to adopt AI and ML, we anticipate a much faster ramp and a much broader market reach for SensiML. With that, let me now turn the call over to Elias for a review of the financial results, and I will rejoin for our closing remarks. Elias, please go ahead.

Thank you, Brian and good afternoon everyone. I am happy to report that our first quarter revenue aligned with our forecast and drove our third consecutive quarter of profitability on a non-GAAP basis. Revenue for the first quarter was $6 million, a solid 45% increase from the first quarter of 2023. Compared to the fourth quarter of 2023, Q1 revenue was off approximately 20% reflecting the previously communicated strategic shift in the split of FPGA IP contract revenue between professional services and IP license that will push most of the revenue recognition to the second half of the year. Please note, this shift does not affect cash flow. Within our Q1 revenue, sales of new products were approximately $4.9 million. This compares to $3.1 million in the first quarter last year, up nearly 60% and $6.8 million in the fourth quarter of 2023, down 29%. Mature product revenue was approximately $1.1 million. This compares to $1.1 million in the first quarter of last year and $0.7 million in Q4. Our results continue to reflect higher eFPGA IP license and professional services revenue. Non-GAAP gross margin in Q1 was 70.3% compared with 59.7% in the first quarter of 2023 and 78.3% in the fourth quarter. The strong gross margins in the last few quarters resulted from the higher revenue level and a higher concentration of revenue related to IP contracts. Our non-GAAP operating expenses in Q1 '24 were approximately $2.5 million. This compares with non-GAAP operating expenses of $2.9 million in the first quarter last year and $3.1 million in the fourth quarter. Reduced non-GAAP operating expenses in Q1 '24 were below our outlook primarily due to allocations from R&D to COGS due to the professional services contracts and reductions in outside services in SG&A. Please note, the larger difference between GAAP and non-GAAP operating expenses is attributable to the timing of stock-based compensation for deferred incentives for executives and managers from prior years. This deferred incentive compensation accounted for approximately half of the stock-based compensation recorded for Q1. Non-GAAP net income was $1.7 million, or $0.11 per diluted share. This compares to a non-GAAP net loss of $0.5 million, or $0.04 per share, in last year's first quarter, and non-GAAP net income of $2.6 million, or $0.18 per diluted share, in the fourth quarter of fiscal 2023. For the first quarter, one customer accounted for 10% or more of our revenue. At the close of Q1, total cash was $27.4 million compared with $24.6 million at year end 2023. This is inclusive of $3.5 million net proceeds raised in a registered direct offering with certain institutional investors in March of this year. It is also inclusive of our $20 million credit facility. Now moving to our guidance for the second quarter of fiscal 2024, which will end on June 30, 2024. Revenue guidance for Q2 2024 is approximately $4.5 million, plus or minus 10%, which represents an increase of 55% over Q2 2023. Second quarter revenue is expected to be comprised of approximately $3.6 million of new products, which is a year-over-year increase of 64%, and $0.9 million of mature products, which is a year-over-year increase of 29%. The projected total revenue decline from Q1 2024 is primarily due to the timing and cadence of large IP contracts and a strategic shift that splits a higher percentage of contract revenue to IP versus engineering services to better align with our deliverables. This will continue to result in shifting certain revenue recognition to the second half of the year, but is not expected to impact the timing of cash flow from these contracts. For the full year 2024, we are still anticipating more than 30% growth in revenue and positive cash flow generation. Based on the anticipated Q2 revenue mix, non-GAAP gross margin for the quarter is expected to be approximately 70%, plus or minus 5 percentage points. Our non-GAAP operating expenses will be approximately $3.2 million, plus or minus 10%. We believe quarterly non-GAAP OpEx will remain in the $3.2 million range for the balance of 2024 with occasional increases to support new programs. Please note that given the nature of our industry, we may occasionally need to reclassify certain expenses to COGS or capitalize certain costs. The reclassifications are primarily related to labor and tooling for our revenue contracts with customers. Such capitalization may reduce OpEx and alter the timing for recognizing the corresponding expenses in COGS. This may cause variability in our gross margins and operating results. Bearing these factors in mind, we believe our full year 2024 non-GAAP gross profit margin will be in the upper 60% range. We believe we are well positioned to deliver robust profitability for the full year 2024. After interest, other income and taxes, we currently forecast that our Q2 non-GAAP net income will be approximately $0 million to $0.4 million, or $0 to $0.03 per share, based on roughly 14.7 million fully diluted shares. The difference between our GAAP and non-GAAP results is related to non-cash, stock-based compensation expenses. In Q2, we expect this compensation will be approximately $0.8 million. As a reminder, there will be movement in our stock-based compensation during the year and it may vary each quarter based on the timing of grants to employees. With investments this quarter to support the new design wins that we have discussed, including hiring critical Engineering and Sales roles and the timing of certain payments, at the midpoint, we expect cash usage to be less than $1 million again in Q2. These investments are in anticipation of continued strong growth in 2024 and timed with the signing of new contracts for design wins. As previously mentioned, we are on track to achieve cash flow positivity in the third quarter and for the full year 2024. Thank you for your time. With that, let me now turn the call back over to Brian for his closing remarks.

Thank you, Elias. It has become increasingly evident that our unique position and more than 3 decades of experience as a manufacturer of FPGA-centric devices sets us apart from other eFPGA IP companies. With this, we have the experience, operational structure and established relationships that are required to manage final design, device fabrication, package, test and finished device delivery for the many customers that don't have these resources in house. These capabilities expand our Served Available Market for IP to include customers that do not have these capabilities in house and want us to Storefront their designs. This opens markets for us that could be orders of magnitude larger than our core IP license business. Some of these opportunities are well defined and near enough that they are included in our rolling 2-year funnel, which is currently at the all-time record of $179 million. The experiences we gained through more than 30 years of designing and delivering semiconductor devices is also at the foundation of the proprietary tools we've developed. These tools help our IP customers that prefer to manage the manufacturing flow, shorten design cycles, and lower development costs. This provides them with a much more efficient path to target the foundry and fabrication process of their choosing. As I noted in our last call, I think 3 years of greater than 30% top-line growth proves our IP business model, built upon Open-Source components, has traction in the market and with that traction established, we are building momentum. That momentum is supported by the fact we are seeing more opportunities in a wide variety of end markets, including the Defense market, where some of the most noteworthy prime contractors have recently approached us to discuss strategic partnerships to pursue major contracts. While 2024 will be another year of building our IP foundation and we believe will drive another year of 30%+ growth, we also think there is a very good chance that our growth will accelerate in the near-future as Storefront, royalty and other finished device strategies begin to kick in. With that, I would like to open the call for questions.

[Operator Instructions] And the first question comes from the line of Richard Shannon with Craig-Hallum.

Well, let's hear a couple of questions. I guess, I just wanted to make sure I understand the guidance for the quarter and for the year. Here, you're talking about the specific large project that's RedHat being the third tranche being awarded here sometime during the quarter. Is the guidance for the second quarter, is there -- are you including anything from that expectation in there? Or is it all in the back half of the year?

We are factoring in our estimate for that in Q2 in the guidance that we provided.

Okay. That's fair enough. And then did I hear correctly related to the RedHat deal that you're expecting a cadence of revenues in a third tranche that's closer to that of the first tranche of it? And if so, can you maybe elaborate on that?

Yes. If you remember, the first tranche was in, awarded in August of 2022. And the total value of that contract was effectively spread across for approximately 10 months. And so we're expecting a similar monthly rate for this third tranche. And when I say yes, expecting, I should say we're estimating because we're still going through this process with our sponsor. But that's the modeling that we're using as we're providing our Q2 guidance and our full year revenue outlook for 2024.

Okay. Fair enough, that's good to know. Let's do a couple more questions. Very intriguing here about SensiML, you got a $100,000 plus contract here with a major MCU company here. Maybe if you can, I don't know if you want to front run what we may hear about tomorrow morning or not, but just kind of want to get a sense of what this is all about. Just a company that has no capability and kind of Edge AI or kind of a compliment to what they already have. And maybe you can kind of characterize what you mean by a major?

Yes, I'd say major for us in the microcontroller space would be, let's say top 10 microcontroller vendors. We're not going to go into details on the nature of the contract itself on this call. But maybe what I'll do is tease out a little bit more of the detail that's going to go out in the press release tomorrow from SensiML, because I think it's related to this. So the open sourcing of SensiML, if you think about firstly what QuickLogic has done, we're leveraging a lot of Open-Source components because you get a lot of sort of industry collaborating and contributing to features and enhancements that smaller companies can't do in time or money by themselves. And so it's the acceleration and bringing in a new capabilities to an already, I would say very well established toolkit that SensiML has. And then by virtue of that, people that are looking at machine learning, AI software workflows like SensiML, I think they can take some confidence in the fact that what they see today is probably only a fraction of what the capability is in the future. And there'll be an Open-Source path for some of the core elements of that provided that those companies want to abide by what's called a copy left Open-Source licensing scheme as opposed to the more permissive Apache or MIT Open-Source licenses. So I think the combination of having these options out there for people to license will give them a comfort and expectability and security and future growth in features and functions, and make it even more interesting for them to actually do further licensing deals with SensiML in the future, especially when you think that SensiML having established this for so long and understanding how you manage cloud service components and how you set up the customer derivatives, the private labels, the identification aspects, all the things you would expect from doing business with an actual company on software. So I think it's exciting. They're going to have learned a lot from what QuickLogic has learned in terms of how to effectively monetize and leverage collaborations with the open-source community. And I think we'll see that happening here with SensiML. And of course, there'll be a lot more details in the press release tomorrow.

Okay. Fair enough. Great detail there. I'll probably follow-up on that topic. Sounds very interesting. My last question here, and I'll jump out of line, is hopefully I caught the right language that you provided here, but you talked about a couple of different contracts in Chiplets where you submitted proposals for over $40 million, one of with your announced partner of your chip. $40 million's pretty sizable for you. I'm assuming that these include some elements of Storefront in there, but maybe you could kind of give any more clarity on when you expect those to be awarded and maybe other details you can offer.

Yes, I can elaborate a little bit more on that, Richard. So firstly, remember, anything that's outside of roughly 2-years horizon does not fall into our sales funnel. It only falls into that funnel in terms of the dollar values, like the $179 million that we just talked about today, once it's within approximately 2-year horizon. So these Chiplets specific ones that we are talking about and the $40 million do have the potential to become Chiplets, and we would like that. But I think 2 factors to remember here, one is the Chiplet revenue is not part of that $40 million, and 2, any Chiplet revenue that would be part of that would be outside of the sales funnel at this point in time just because of the window, right? But I think that you bring up an interesting question there, and I think part of that relates to our optimism and confidence in hitting this 30% revenue growth number for 2024 because obviously that would require a fairly significant increase in second-half revenue over the first half. So I'll be as specific as I can without getting into details bound by NDAs and bound by the specifics of these proposals I'm talking about. But we definitely, we view the continuation of the Strategic RedHat Contract which you covered already, and then some of these other larger contracts like the $40 million total one, those could be hitting and contributing to revenue later this year, and there's even another one that I didn't name specifically, but a mid 7-digit proposal that we've been working on since last year, in fact, not part of that $40 million Chiplet proposals, number that I gave earlier, and we recently crossed a pretty important threshold in that whole process -- the proposal process with that customer. So when you start to see the things clicking across multiple segments, multiple proposals, and hitting these, what I'll call important internal milestones, those are the things that give us the confidence that we are, in fact, going to recognize enough revenue this year from these contracts within 2024 to achieve a greater than 30% revenue growth. I think more than you directly asked for, Richard, but I think it must be a timing to add that little color to it.

I appreciate all that detail.

And the next question comes from the line of Rick Neaton with Rivershore Investment Research.

I was interested in some of your comments about SensiML. The 5-figure contract mentioned in the press release, and then you mentioned it again in the prepared remarks. Is that with a different MCU company than the white-label agreement that SensiML has right now?

We've not shared that detail, Rick, and really, due to NDAs, we're not going to be able to directly answer, because I think when we start talking about the number of companies we're targeting anyway, success with 1 or 2 or more of those, I think starts to paint a clear picture about which entities we are talking about in these contracts, and they don't want that detail shared by me. And so we really just have to sort of keep it at a high level when we talk about these. Sorry.

That's all right. My next question is, you talked about AI accelerators and using FPGAs instead of other types of chips to accelerate AI functions. In your funnel, are there more than one of these AI opportunities in your funnel? And are there more that are outside of the funnel more than 2-years out?

Yes and yes. Some of the recent proposals that I was just talking about have AI as part of them, I would say a key element of it. And FPGA that we have today, the FPGA that we have today, I think can bring value to AI and acceleration, which is evident in that 12-nanometer one we've already talked about previously. But I think more importantly, the further we get into this and the more research that's done, gives us clues about how we can even adapt further our FPGA architecture to even better accelerate for performance or lower power reasons, other chip designs that we have in the future. And so some of the proposals we have mentioned on this call already are about that, more acceleration and lower power through other variations of our FPGA architecture. So yes, there's definitely some in the funnel, dollar value, the funnel opportunities we talked about. And there are some things that would be Storefront that's outside the sales funnel number, but not opportunities. Generally, the opportunities we're tracking and prioritizing are ones that would contribute to revenue within the next 2-years. So if it's outside of that, we tend to push that down the priorities that quickly.

Thank you for that detail. In terms of AI, are FPGAs better suited for AI at the edge? Or are you seeing across the board AI use cases seeking to investigate the benefits of FPGA everywhere in the network?

I think historically FPGAs have been used more in the central data center for AI and not so much at the edge because typical FPGAs tend to be much higher power because they're designed for flat out performance at any cost and one of those costs tends to be power. As you've been following QuickLogic for a long time, that a lot of our FPGA wins in fact are on the other end of the spectrum which tend to be on the cost and power side of the equation where we optimize for power first. And so I think that's one of the reasons why we were able to win this 12-nanometer design we talked about earlier because that one's AI at the edge where power really, really does matter and where we already have success from our prior FPGA history as a the company. Think about all the smartphone stuff at Kyocera, obviously power is really important in those applications. Now, if you think to the future though, I think there are more ASIC customers looking at how do they design for power at the edge and performance at the edge and this is where adding a modest amount of programmable logic to their ASIC can actually help them optimize for those lighter workloads for AI at the edge without killing their power budget and their tie size budget. So we see a lot of opportunity there but I think it'd be hard to overcome the press and the excitement around data center AI because that's dominating everything that we hear in the news today, right?

Right. One final question as it relates to some of your defense contract opportunities and the RedHat contract that we've talked about for several quarters now. Do the U.S. federal government budget uncertainties come up to affect sometimes how these tranches are awarded and when they're awarded?

I'm sure there is some impact from the federal budgeting process on these projects because at the end of the day the budget has to come from somewhere. But I think, usually, if you look at firstly the program that we have, I think there's a need for it, we're executing well, and so I think those are the types of programs that are going to continue to get priority from the budgeting process. I think the other thing I would note is that. the awards that we're getting, the tranches we're getting are generally not like multi-year tranches and so I think they're, my belief anyway is that they're already allocated for within the budget of that year and so that doesn't become such an issue. If we were getting or seeking multi-year awards then I think that probably would maybe become more at risk to the government budgeting cycle. But for the ones that we have, I don't foresee that to be an issue, and really if you think about the magnitude of the awards we're talking about, it's a de minimis in the grand scheme of things from a defense spending overall anyway.

[Operator Instructions] And our next question will come again from the line of Richard Shannon with Craig-Hallum.

Brian, I just have one follow-on question kind of big picture and that's really looking at the competitive environments of embedded FPGA IP space. How would you kind of compare the environment versus 1 or 2-years ago as --

Richard, are you there? Operator, can you hear me?

Richard, you're back in the queue.

Hey Richard, if you...

Brian, can you hear me?

Yes, I can hear you now but the audio cut out. When you started to ask the question about the competitive landscape over the last couple of years, could you repeat the question please?

Certainly, can you hear me now?

Yes, I can.

Okay, I don't know why that went out, sorry about that. Yes, so my general question here is on the competitive environment versus the 1 or 2-years ago. How, if any, has it changed better or worse? You've seen more or less competitors out there. Any kind of changes in the competitive dynamics here that have been favorable or unfavorable to you in that timeframe?

Yes, so I guess on the competitive landscape, if you go back a couple years, I'd say the competitive landscape that we see is pretty unchanged. We see Flex Logix, we see Menta. We don't really see Achronix because our understanding is they're really just on 1 node, but the other 2 -- those are the 2 that we would come across in any type of engagement. That's a pure IP-based engagement. If you double-click on that a little further, I think Menta is pretty open that they're a soft IP and Flex Logix and QuickLogic are pretty open that were hard IP, and we think there's good reasons for doing hard IP and taking on that workload for the customer. So it makes our customers' life easier. If you double-click a little further on the differences between the companies, I think this is one of the things I was trying to bring out in the closing remarks that I had. But so many of our customers appreciate the fact that we either on dogfooding and we've been doing devices, both design and support and selling for 3 decades. And so we know not just how to build a core but how to build a core for making it easier for people to use including manufacturing and test and performance and then making the software represent that silicon really well. And it's not just about making the core work well, but it's also about that option for doing device development. And you could see a lot of the larger contract values that we're talking about actually include development of the device with the long-term vision of standing up the Storefront for those devices. And I think that's important, not just from a QuickLogic business and investor perspective, but it's important for our customers also because FPGA technology is relatively new as a core as you alluded to in your question. And I think people get more comfortable working with established companies that have been basically using and supporting that type of technology for decades. And that's one of the attraction points that we're seeing in these different proposals. Even I have examples where somebody started out by talking to us as an FPGA vendor and then pivoting that into doing the device for them because it was more FPGA-gated content than not. So, why not? That makes logical sense for the customer. So those are the kinds of dynamics we're seeing. I think you're starting to see more people interested in not just the leading-edge technologies, but also some of what we would call mainstream technologies as evidenced by our wins that we're talking about, going across different foundries now on some of the more mainstream nodes. So it feels like we're starting to get people that are more comfortable with technology now and they don't need to be taught what an eFPGA is, but it's more like how can they make it useful for them? And so I think it's good that those conversations are happening because it means that the technology itself is not so nascent anymore. All right, is that helping answer your question? If you have follow-ups, please let me know.

Yes, that all makes sense. Just want to make sure I'm kind of keeping a pulse on the latest, and I appreciate your perspective. That's all from me, Brian.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I'd like to turn the call back to Brian Faith for closing remarks.

All right. Well, I wanted to thank everybody for your continued support and we look forward to sharing our progress with you next quarter. Have a great day. Thank you.