Navitas Semiconductor Corporation (NVTS) Q3 2022 Earnings Report, Transcript and Summary

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Navitas Semiconductor Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Please go ahead.

Good afternoon, everyone. I’m Stephen Oliver, Vice President of Corporate Marketing and Investor Relations. Thank you for joining Navitas Semiconductor’s third quarter results conference call. I’m joined today by Gene Sheridan, our Chairman, President, CEO and Co-Founder; and Ron Shelton, our CFO and Treasurer. A replay of this webcast will be available on our website approximately one hour following this conference call, and the recorded webcast will be available for approximately 30 days following this conference call. Additional information related to our business is also posted on the Investor Relations section of our website. Our earnings release includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our third quarter earnings release and also posted on our website in the Investor Relations section. In this conference call, we will also make forward-looking statements about future events or about the future financial performance of Navitas, including acquisitions. You can identify these statements by words like we expect or we believe or similar terms. We wish to caution you that such forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from expectations expressed in our forward-looking statements. Important factors that can affect Navitas business, including factors that could cause actual results to differ from our forward-looking statements are described in our earnings release. Please also refer to the risk factors affecting Navitas discussed in our SEC filings, including our annual reports on Form 10-K and our third quarter report, which we expect to file on November 14. Our estimates or other forward-looking statements may change, and Navitas assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other events that may occur except as required by law. And now, over to Gene Sheridan, CEO.

Thank you, Steve, and thanks to everyone for attending today's call. I'd also like to thank our investors for meeting us in New York in September. For investors unable to attend our investor meeting, we have posted the video and slides on our IR website. Navitas Q3 results for revenue and expenses are in line with the guidance given in our Q2 call. Q3 revenue was $10.2 million, up 19% sequentially from $8.6 million in Q2. Non-GAAP gross margin at 38.4% was within range, but given one-time expenses of $3.5 million, which included some inventory write-downs, our GAAP gross margin was significantly lower. Despite the significant continued slowdown in the mobile space, we are very pleased with our quarterly growth and anticipate a similar growth rate for Q4. Both GaN and our newly acquired silicon carbide business continues to show significant growth prospects, fueled by our excellent progress in developing and launching new products, accelerating customer adoption with our unique system design center capabilities and expanding rapidly into new markets, regions and customers. We have now shipped over 65 million GaN ICs with zero reported GaN field failures. In only about three months since acquiring GeneSiC, we've added over 50 new silicon carbide opportunities, which adds to our strong revenue growth expected for next year. Revenues continue to diversify geographically as we ramp new business in Europe, the U.S., Taiwan and Korea, which are expected to create a balanced regional mix of revenues this year and into next. China-centric mobile softness is anticipated to continue in Q4 and Q1, and we'll continue to monitor closely and prepare to capitalize on the eventual recovery. Despite the mobile market softness, customer design win progress continues at a rapid pace with another 17 GaN-based chargers launched to the market in Q3, including record setting Xiaomi ultra-fast chargers that deliver over 200 watts, charging from 1% to 100% in only nine minutes. These launches also include exciting new GaN chargers from many other leading brands, such as Lenovo, Anchor, Moto, and even leading retail channels like Best Buy and their Insignia brand. Also critical to our mobile business is our new Gen4 GaN platform, which has been extremely well received with over 20 customer designs in development, including six of the top 10 mobile players already designing with our Gen4 technology. Our new market focus on motor drive for home appliances and industrial applications continues with increased adoption of our latest GaNSense half-bridge ICs and over 15 new motor drive customer projects in development. Data center applications are ramping faster than expected, now with nine customer projects in development. One project includes an initial $5 million purchase order already received for our new high-powered GaN or GaN IC technology to support the customer's expected production ramp starting in the middle of 2023. In the solar market, GaN IC business development activities continue with two leading residential solar players that will transition from silicon to GaN starting in 2024. Solar is already a significant portion of our silicon carbide business, and we are experiencing strong demand across all customers, which includes Sungrow, CHINT, APS, GoodWe and many others. Navitas’ dedicated EV design center has quickly integrated the new GeneSiC portfolio with the existing GaN fast range and updated our EV powertrain platform roadmap. There are now four onboard charger platforms in development supporting eight different customer projects that are on track to drive significant revenue ramps by 2025. Last week, we announced a new joint system design center with leading EV systems provider VREMT. VREMT is part of the Geely group, which manages auto brands that includes Zeekr, Volvo, Polestar and Lotus. This joint lab will create next-generation power systems for Geely EVs utilizing Navitas GaN and silicon carbide. With silicon carbide, EV continues to be a significant portion of our silicon carbide revenues. Since the acquisition, we have added 22 new EV silicon carbide customer projects and we are seeing strong growth across all customers that include BYD, Geely, General Motors, Saab, Land Rover Jaguar, Shinry and many others. In just the past 45 days, Navitas has signed a long-term supplier agreement for our silicon carbide wafers, which enables a 5x increase in our silicon carbide capacity in the next year. Given demand for our silicon carbide devices continues to outstrip our supply, this is a major achievement that will allow us to accelerate the growth through our silicon carbide business for 2023 and beyond. In addition to the strong secular trends that are driving the existing $20 billion per year power semiconductor market to move from silicon to GaN and silicon carbide, we are also very excited about two major US initiatives. First, the CHIPS Act will bring over $50 billion in investments for the US semi industry, and we believe GaN and Silicon carbide are perfect candidates to leverage such investments and dramatically improve costs and capacities in coming years. Second, the $300 billion plus investments in the Inflation Reduction Act focused solely on accelerating clean energy and climate change initiatives perfectly aligns to Navitas’ focus on sustainable energy, EV and EV infrastructure, and in particular, our spotlight on upgrading homes from fossil fuels to clean, energy efficient electricity-based home appliances. To summarize, despite the near-term mobile softness and the macroeconomic headwinds, we are very happy with our near-term and long-term growth expectations. In GaN, this includes upsides we're seeing in data centers and in motor drives, while we are executing on schedule with our new Gen 4 platform and longer-term expansion into solar and EV. In silicon carbide, we are seeing upsides and a growing backlog across all segments that includes EV, solar, energy storage, and industrial segments, all of which will significantly benefit from the long-term supply agreement that we've recently signed to support this growth. With that, let me turn it over to Ron Shelton, our CFO.

Thanks, Gene, and thanks everyone for joining us today. In my comments today, I'll first take you through our third quarter results, and then walk you through our outlook for the fourth quarter, and then I'll close with some comments about what we currently see for 2023. GAAP revenue for the quarter grew to $10.2 million, that represents a 82% growth from the third quarter of 2021; this was in line with our guidance. While we continue to see the impact of the slowdown in the mobile market that is impacting the semiconductor industry broadly, this was offset by gains we made in diversifying our end markets and customer base and strong demand for our new silicon carbide products. GAAP gross margin was 3.8% in the third quarter and non-GAAP gross margins were 38.4%, which was within the range of guidance we provided last quarter. We had several GAAP adjustments during the quarter, which impacted GAAP gross margins. They were comprised primarily of an adjustment for a step up in the value of inventory related to the GeneSiC acquisition, totaling approximately $600,000, and a reserve for inventory of $2.8 million as we focus our efforts on higher power, ultra-fast mobile chargers, data center, solar, EV, and motor drive markets. Total non-GAAP operating expenses were $14.2 million for the third quarter of 2022. Our non-GAAP SG&A expense was $7.9 million and non-GAAP R&D was $6.3 million in the third quarter of 2022. Non-GAAP operating expenses were slightly higher than the midpoint of our guidance, and reflect a partial quarter of expenses associated with the GeneSiC acquisition and higher spending associated with new product development. While we will be prudent in how and where we invest, we will continue to make targeted investments in our business where we derive the most long-term value. Putting all this together, the non-GAAP loss from operations was $10.3 million compared to a loss from operations of $6.5 million in the third quarter of 2021, as we invest simultaneously across new markets in this phase of our company's growth. Our weighted average basic and diluted share count for the third quarter was 138.5 million shares. Turning to the balance sheet. It continues to remain very strong with high levels of liquidity. Cash and cash equivalents at quarter end were $124.8 million. Accounts receivable was $10.9 million compared to $9.4 million in the prior quarter, reflecting improved days sales outstanding. Inventory rose to approximately $17 million compared to $14 million in the prior quarter, and is comprised of both inventory related to GeneSiC as we continue to increase supply to meet end market demand in the silicon carbide market and initial inventory builds for new products. We're confident that over time our inventory levels will trend towards our long-term target for inventory turns of three to four times. Moving on to guidance. For the fourth quarter of 2022, GAAP revenues are expected to grow to between $11 million and $13 million, that's compared to $7.3 million in the fourth quarter of 2021. At the midpoint, growth would be 64% year-over-year and 17% sequentially. Our guidance for the quarter includes a full quarter of operations for the GeneSiC business and reflects very strong demand for those products. At the same time, we continue to remain cautious about the China mobile end markets and have reflected that in our revenue guidance. Gross margin for the fourth quarter is expected to be approximately 40%, plus or minus 1%, as our mix of silicon carbide products becomes a greater share of overall revenue. As we noted last quarter, we continue to believe that gross margins will expand over the next few quarters as we transition to new GaN products and as the revenue contribution from our silicon carbide products continues to grow. In total, our non-GAAP operating expenses in Q4 are expected to be approximately $17.5 million, plus or minus 2%, and this excludes stock-based compensation and amortization of intangible assets. The sequential increase is related to a full quarter of GeneSiC operations and continued investment in that business, increases in compensation types of bonuses paid to China employees, which is effectively an additional month of salary, which is standard in China, and further investments in R&D, new products and added design center activity around future growth opportunities. However, we do expect the spending growth rate to moderate as we enter 2023. As all of you know, in the current environment, multi-quarter projections are increasingly challenging. That said, based on our existing backlog, new design activities, anticipated new product introductions and other identified opportunities, we believe we have a line of sight to potentially double revenue in 2023 compared to 2022, and as mentioned earlier, we expect continued margin expansion. We will have more detailed guidance for 2023 in our next earnings call in February. In summary, while we navigate near-term uncertainties that are impacting the entire semiconductor industry, we continue to be very excited about the growth opportunities in front of us. Navitas is the only pure play next generation power semiconductor company, and this provides us with advantages, opportunities, and benefits for significant expansion. Operator, let's begin the Q&A session

[Operator instructions] Our first question will come from the line Kevin Cassidy with Rosenblatt Securities. Please go ahead.

Yeah, thanks for taking my question, and congratulations on the progress. I guess, the question -- obvious question is, do you split out what your silicon carbide revenue was versus your gallium nitride?

No, we're not splitting it out at this time, Kevin.

Okay, great. And in the China inventory, can you estimate about how over inventory you are? Is it aftermarket chargers? Or is it the OEM chargers?

Yeah, I think the over inventory and the softness affected both China, major OEMs, as well as aftermarket. So, I think it's spread across both.

Okay. And maybe just one other on that. In your new designs, how is that split between the 17 new designs as aftermarket charges versus inbox?

Yeah, it continues to be a good mix. I think we continue to see new designs sort of equally across inbox or mobile players as well as the aftermarket. We highlighted a few of the bigger names. Those tend to be the bigger inbox or mobile OEMs, but it also included aftermarket wins like Best Buy and Anchor, as well as the mobile players like Xiaomi, Lenovo and Moto.

Okay, great. I'll get back in the queue.

Your next question comes from the line of Ross Seymore with Deutsche Bank. Please go ahead.

Hi, guys. Thanks for letting ask a question. Ron, I know guiding to next year is difficult for all the reasons that you stated. I just wondered the GeneSiC side of things, is that still expected to be kind of a 60% CAGR in that market? And I guess, a second part of that, how do we align the 5x increase in capacity with that kind of 60% or whatever you're going to update us on growth rate? It seems like the capacity is ready for a lot more than 60%, but I know the timing can be a little bit off between the capacity and the revenue.

Yeah, sure. Ross, thanks for the question. Yeah, so to answer the first part of the question, yes, we certainly expect in that business to continue hit at 60% growth rate, so that's all teed up. I think in the comments we talked about, all the additional opportunities we're seeing. Since we acquired the business, backlog is higher today, and we're seeing a lot more opportunities. So, from that perspective, I mean, the business is doing as well as we thought it would when we acquired it. I think the additional manufacturing capacity -- the fact is we're trying to catch up. It's not catch up to demand right now. That comes up over time, as it won't come up all at once. But yeah, I think the idea is that we're putting in capacity that'll support much higher levels of revenue than we're currently seeing in that business.

Thanks for that color. I guess as my follow up. The gross margin side of things, I guess a two-part on this one as well. It's good to see that it's going up a bit sequentially, but it is significantly lower than what you thought it would've been as of last quarter's call, where I believe you said it was kind of 43%, plus or minus 2 points. So, why is that, I guess, on the lower end? And then, when you talk about continued improvement for next year, any sort of either directional magnitude linearity? Just any more color on that would be helpful.

Yeah, sure. So, on the first part, it's a little lower than what we guided last quarter, and part of that is a mix issue. So, silicon carbide wasn't -- and again, we talked about demand and supply wasn't as big or -- of overall percentage of the business as we thought it might be. So that's one. The second is, and as you recall earlier this year, we discussed this where we consciously made a decision, a strategic decision, to invest in a space outside the charger business, which was, at the time, and is currently, lower margin, and kind of corporate averages. So, that business is doing exceptionally well, and is the larger percentage of the overall business than it historically has been. We certainly expect that business, and we've talked about this, where when we introduce Gen 4, margins in that business will expand. And so, you'll see, and that's why we are pretty confident that margins in the next year will continue to move up. In terms of how much, I think right now we would look to load mid kind of 40%-s where we think that could go, and it should be relatively linear. We expect silicon carbide business to continue to grow. And like I said, we have new products coming in on the GaN side that are -- that provide higher margins than what we would see today, a better cost structure.

And I guess, if I can speak in just a clarification to that, and apologies for the third question. But the mix in the fourth quarter, I'm a little confused, did you say that silicon carbide was a bigger percentage of your mix, I guess, implied in your guide or a smaller percentage of your mix implied in your guide that would lead the gross margin to not be terribly off from your 43%, but still below it at 40?

Yeah, it latter. The mix of -- yeah, the silicon carbide was a little less than what we had anticipated when we guided 43%.

Got it. Thank you.

Yeah, sure.

Our next question will come from the line of Blake Friedman with Bank of America. Please go ahead.

Hi, thanks for taking my question. Just kind of focusing on the mobile side of things first. Just given what we kind of assume about the normalized run rate for the GeneSiC business if we look in the December quarter, it seems like the mobile declines are kind of in line with other Android peers. But I was just curious, I know visibility is limited, but your thoughts on maybe a potential bottoming in mobile sales maybe sometime in the December, March quarter from what we heard from your other peers?

Yes, thanks, Blake, for your question. It is hard to predict, but we've got a strong team and a lot of strong relationships in China, the best indications we have is that Q4 and Q1 are both still pretty soft. But after that, we'd anticipate a decent recovery. And that's what we're factoring into our preliminary thinking about next year.

Great. And then just as a quick follow-up. I noticed you talked about some of the solar programs in your opening remarks. And just kind of curious, I know some of the -- on the GaN side of things, some of those programs starting to ramp in 24. I believe you mentioned earlier that it might begin in the second half of '23. I just wanted -- I was just curious if any of those programs are pushed out, or if I'm just kind of -- that's an incorrect interpretation?

For the last couple of quarters, we've been talking about the GaN ramping in '24 across first one and now a second major residential solar player. So, we're still tracking for '24 ramps on GaN with at least those two major players and likely more. The silicon carbide, of course, is already shipping into a lot of the solar leaders today. That include companies like APS, Sungrow, CHINT and GoodWe and many others.

And our next question will come from the line of Jonathan Tanwanteng with CJS Securities. Please go ahead.

Hi, thanks for taking my question. I just wanted to clarify, you said you had visibility or line of sight into a doubling of revenue. Are you talking about reported revenue or pro forma for GeneSiC to get there? And I understand that there's a 60% component there. So, if it's on a reported basis or pro forma basis that makes a difference?

Right. So, it's on a reported basis. So, if you look at our guide, midpoint of our guide in the first nine months, we expect the full year to be around $38 million, $39 million in revenue. So, when we talk about doubling, it's off that base.

Understood. Thank you for clarifying that. And then, the second part of it, I think you've mentioned that silicon carbide didn't sell quite as much as you expected in the quarter. It wasn't as big a part of the mix, but then you said it was doing as expected. I'm just hoping you can reconcile that a little bit.

Yes. Sorry. So -- go ahead, Gene.

Yes, sure. I can jump in. I mean, at this point, we are selling every chip we can build. So, we're working with our suppliers to ramp up as fast as we can. We do have some bottlenecks they're working through that makes the output a little bit choppy and led to a little bit less revenue in Q3 and Q4 than anticipated, which caused the mix shift and small gross margin impact that Ron talked about. But going forward, it looks like those supply issues are being resolved pretty thoroughly here in Q4, and we mentioned a long-term supply agreement that kicks in at the start of Q1, setting up a really strong capacity position and growth position for next year.

Great. That's helpful. Do you have any sense of how much revenue you left on the table or pushed out because of these bottlenecks?

Well, you can just look at what we guided compared to prior -- or what was our prior guidance compared to actual results, and a bunch of that is silicon carbide.

Okay. So, most of that was silicon carbide and the rest, I would assume it's just incremental mobile weakness.

Right. Exactly.

Okay. Just a question on the acquisition strategically. Have you added any customers as a result of the acquisition where you were able to cross-sell to each other or jointly develop things? Just wondering if there's any progress or developments there in the short time you've been together?

Yes, definitely. In fact, we highlighted over 50 new silicon carbide opportunities since we acquired the company. So that's off to a great start. We've got our entire sales force -- system design centers all trained up, all actively engaged, all working with customers around the world. We haven't named names yet because we need permission for that, typically. So many of those 50 projects will get revealed over time, but that's a heck of a great running start here in the last three months. And that obviously led to us wanting to be more bullish on capacity and securing the 5x increase that we talked about.

Great. That's helpful. Thank you.

Thanks, Jon.

Your next question will come from the line of Trevor Janoskie on behalf of Quinn Bolton with Needham. Please go ahead.

Yeah. Hey, guys. This is Trevor on for Quinn. And thanks for letting me ask the question. On GeneSiC, can we expect sequential growth throughout 2023 with the new capacity in place? And is it possible to see silicon carbide revenues outpacing GaN at any quarter during the year? Any color there would be great.

Yes, certainly, sequential growth is our expectation that 5x, as we talked about earlier, gives us a whole lot of headroom to drive upside. So, we're very anxious to do exactly that. So, I don't see any reason why we wouldn't see strong potential growth, frankly, in the silicon carbide business and in the GaN business, depending upon that China recovery. So, I think that sets us up pretty well across both businesses throughout the year next year.

Okay. And just to clarify, for the data center, $5 million PO, how long does this agreement extend?

Yes, that purchase order is actually just for second half of next year. So, it's just the beginning ramp-up of that business.

Okay. So, we can expect all $5 million in the second half?

That's right.

Okay. And if I can just sneak in one more. At the time of the IPO, you spoke about GaN reaching price parity with silicon by the end of 2023. Has your view on this timeline changed at all given the inflationary environment?

Actually, no, it hasn't. There's been a lot of pluses and minuses there, but actually, we're still on track. In fact, many of the programs we're developing now, of course, the programs that get launched in '23, and we see that system cost parity being achieved across a number of products in a number of markets and customers.

Awesome. Thank you.

Thank you, Trevor.

Our next question will come from the line of Tristan Gerra with Baird. Please go ahead.

Hi, good afternoon. Could you talk a little bit about your positioning? And I know you've already provided details on GeneSiC. The feedback from silicon carbide conferences that we're attending is about the high end, high performance positioning. So, are you highlighting any particular feature as differentiated as opposed to just going after the mass market? If you could just give us some color? And with some of the 50-plus new opportunities that you've mentioned, is it all automotive or if you could talk about more feedback on the end applications for those new opportunities since the acquisition closed.

Yes, definitely. Thanks for your questions, Tristan. So, on the GeneSiC technology, it kind of falls in three categories: The high-performance in circuit test results are really extraordinary. We did a lot of benchmarking before we acquired the company across all the big guys. We found it to be the best efficiency under real-life high-temperature high-frequency operating conditions. So that efficiency, that performance is really second to none, and that certainly gets customers' attention first and foremost. Secondarily is the robustness and reliability. We're one of only two suppliers offering guaranteed excellent avalanche energy rating and also extremely good short circuit ratings, protection ratings, and that's critical, obviously, in these high reliability applications. The third is the range of products itself. We go from 650 volts all the way on up to 6,500 volts. And so, as you go up in voltage, those markets are not as big, but they are very demanding in performance and very limited and the supplier choices out there, Genetic being one of only two, I think, at 3,500 volts, we're the only one with 6,500 volt. So, those are the three big differentiators that we're starting with today. And of course, we're going to be adding to those as we integrate our own R&D plans and system R&D capabilities mixing with the GeneSiC technology.

Okay. No, that's great feedback. So, as my follow-up then, are you able to price maybe at a premium on the basis of performance? Because clearly, the features that you just mentioned are really highlighted within the industry as critical going forward. And also, I guess, there is a relationship between shrinking those chips going forward, but then the reliability comes down. So, at some point, there's going to be kind of a collision cross between more higher density, but keeping a minimum reliability, particularly for automotive applications. So, how are you positioning price-wise? And what does that mean in terms of market share that you can get? Can you go after the mass market? Or are you going to really focus on the premium segment and presumably be at a premium on the pricing as well?

Yes. No, great questions. And definitely, it's a price premium strategy, because it's a performance premium and reliability premium product. And that price premium strategy is working really well for us as we're growing faster than the market, taking share from others. And I think we'll be able to continue that for quite some time, albeit with an eye on mass market leadership position in the market. And we do have an aggressive cost reduction plan as well as an aggressive performance road map that I think will take us to mainstream leadership in cost performance and reliability in the silicon carbide market. So, I think we feel really good about that growth rate that share and that pricing strategy. And I know you also, Tristan, asked about the opportunities. We did mention over 50 new silicon carbide opportunities since the acquisition. I also mentioned 22 of those were in EV. The other is pretty broadly spread around solar, industrial and energy storage, the other key markets. So, it's a pretty broad-based market share gains and growth trajectory for us.

Great. Thanks for the color.

[Operator Instructions] Our next question is a follow-up from the line of Jonathan Tanwanteng with CJS Securities. Please go ahead.

Hi, thanks for the follow-up. Ron, you mentioned the growth rate of OpEx slowing down. I was wondering what are you planning for that to flow through as you enter next year?

Yes, sure. Good question. We'll target -- I mean, it will be mid-single digits sequentially, is what the target would be.

Okay. And is that just into Q1 or through the year?

That's what will drive to through the year.

Okay. Great. And then what's the update to your cash burn expectations with the macro, I guess, headwinds you're seeing in the mobile plus a little bit of increased OpEx?

Yes. So, first of all, I feel super good about the balance sheet. I mean, we have a very clean balance sheet, almost no debt. So, we have about $124 million in cash. And again, if you think about what we talked about potentially doubling our revenue next year and the margin guide and kind of the OpEx guide, I think you get to a number where it's $12 million to $14 million a quarter now, and it will go down through next year. But again, I think from a cash standpoint and a liquidity standpoint, we have no need to raise additional capital to fund the business. We have plenty of capital on hand to grow the business. So, we feel really good about our position with cash and certainly not having to approach the markets in this environment.

Got it. Is there a plan for that cash just given the uncertainty that's out there? I know you've talked about M&A in the past, you've done a couple of things. But is it preferable just to hold on to that and probably earn a little bit more interest than maybe any thought it would?

Yes. I mean I think the first priority is to fund the existing business, right? We think we have great growth opportunities, both in GaN and silicon carbide. So, initially, we'll focus resources there. I think having said that, we've indicated in the past in GeneSiC and VDD are examples of being willing to make acquisitions that make sense. And so, we would be opportunistic should those situations arise. But again, the priority today is fund the existing business, because there are great growth opportunities there and we plan to capitalize on it.

Great. Thank you.

Our next question is a follow-up from the line of Ross Seymore with Deutsche Bank. Please go ahead.

Hi, guys. Thanks again for letting me ask a follow up. Just a high-level one. Lots of moving parts both on the demand side and the GaN versus silicon carbide and all of those sorts of things. But you guys had a plan of breaking even at some point during calendar year '24. Is that still the plan?

Yes. Ross, so again, I think it's a little challenging to forecast right now. The plan, obviously, is to drive to breakeven. And I don't want to commit -- I mean, ideally, it will be in '24. But I think for me to forecast that right now is probably a little premature given the market conditions.

Okay. Thank you.

And I will now turn the conference back over to Gene Sheridan, CEO, for any closing remarks.

Great. Thank you, operator, and thanks to all of you for joining our call. I'll just close with a few comments about the overall outlook going forward. We couldn't be happier with our GeneSiC acquisition. That integration has gone extremely well. The market response has been fantastic. And together, it has us firing on all cylinders across GaN and silicon carbide expanding our markets into new regions, new applications and creating a very diversified business. So, I thank everyone for joining us today, and look forward to any follow-on discussions.

Ladies and gentlemen, that will conclude today's call. Thank you all for joining. You may now disconnect.