Peraso Inc. (PRSO) Q4 2021 Earnings Report, Transcript and Summary

00:06 Good afternoon, everyone, and thank you for participating in today's conference call to discuss the financial results of Peraso, Inc. for the Fourth Quarter and Full-Year of 2021. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. 0:35 I would now like to turn the conference over to Jim Sullivan, CFO of Peraso, Inc.

00:42 Good afternoon and thank you for joining today's conference call to discuss Peraso’s fourth quarter and full-year 2021 financial results. I'm Jim Sullivan, CFO of Peraso, and joining me today is Ron Glibbery, our CEO. 0:55 This afternoon we issued a press release and related Form 8-K, which was filed with the United States Securities and Exchange Commission or the SEC. The press release and Form 8-K are available on Peraso’s website at www.perasoinc.com under the Investor Relations section. There was also a slide presentation that we will be using in conjunction with today's call that may be accessed through the webcast link on Peraso’s IR website. 1:21 As a reminder, comments made during today's conference call may include forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. Peraso advises caution in reliance on forward-looking statements. These statements include without limitation any projections of revenue, margins, expenses, non-GAAP operating expenses, adjusted EBITDA, Non-GAAP net income, cash flows or other financial items. 1:48 Also any statements concerning the expected development, performance and market share, or competitive performance relating to our products or technologies. All forward-looking statements are based on information available to Peraso on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Peraso’s actual results to differ materially from those implied by the forward-looking statements, including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth in Peraso’s public filings with the SEC. Peraso expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. 2:34 Additionally, the Company's press release and management statements during this conference call will include discussions of certain measures and financial information in terms of GAAP and non-GAAP. Included in the company's press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details. For those of you unable to listen to the entire call at this time a recording will be available on the Investor Relations section of Peraso’s website. 3:00 Now, I would like to turn the call over to our CEO, Ron Glibbery for his prepared remarks. Ron?

3:07 Thank you, Jim, and thank you all for joining us on today's call. Good afternoon, I'm pleased to be joining you today from our first earnings call as a public company following the completion of our business combination with MoSys in December. To tell you a bit about Peraso, the company has been in the millimeter wave or mmWave business for over 12-years. mmWave is a technology, which utilizes a specific portion of the radio spectrum in the 24 to 100 gigahertz frequency range. 3:35 What we believe differentiate Peraso for many mmWave suppliers or others, who have attempted to do develop an mmWave technology is we've been shipping in volume, whereas many have failed to commercially scale this technology. mmWave is very complex and the shift from development in the lab to customer deployment is a significant learning experience. Today, we're shipping 60-gigahertz products to multiple Tier 1 customers and have an expanding pipeline of opportunities in a variety of end-user market applications. 4:09 We are also actively working to expand Peraso’s product line from our existing 60-gigahertz mmWave products to include 5G mmWave products. Over the next three years, 5G millimeter wave for consumer premise and hotspot applications is estimated to represent a $3 billion TAM and we believe we're well positioned for growth in the coming years. With the global expansion of 5G mmWave technology. 4:38 The central theme underpinning mmWave technology is that the existing wireless spectrum simply cannot provide the necessary bandwidth to satisfy increasing user demand. This was driven by a couple of fundamental factors. First, the number of users on global networks continues to increase, an additional driver of user demand is video applications such as TikTok, Netflix and Twitch are having a profound impact on global wireless demand. In fact Facebook recently indicated they're rolling out Facebook reels on a global basis, due to direct competition from TikTok. When you compare a static Facebook page to a reel video the difference is in order of magnitude increase in the wireless bandwidth needed for a single Facebook user. 5:24 Additionally, we’re seeing ever increasing video resolution starting with HD moving to 4K and eventually 8K. This is particularly critical for over-the-top video applications such as Netflix and YouTube, as well as streaming sports. As video becomes the dominant traffic category on mobile networks, we believe mmWave will be the primary source of additional capacity for 5G networks. 5:51 Specific to the 5G specification, the millimeter wave frequency bands spans from 24 to 100-gigahertz. This compares to 4G, which utilized spectrum below 6-gigahertz. 5G standards organizations are anticipating the need for additional spectrum in the future, in fact during very early discussions with various interest groups regarding 6G, there has been a clear recognition of mmWave has been fundamental to future generations of mobile technology. We see these trends as a validation of mmWave technology and the enormous market opportunity further supporting the investment Peraso has made to-date. 6:29 Circling back to what differentiates Peraso and how we win in millimeter wave. Peraso has several established and sustainable advantages in this market. First, our customers have derived field-proven 10 times performance advantage and deployed solutions for the fixed wireless market. This means they are shipping devices with a range of close to 30 kilometers, which is roughly 10 times farther than competitive offerings at similar data rates. This expanded network coverage is achieved through our collaboration and deep engagement with customer engineering teams. 7:02 Second, Peraso has the experience and know-how gain from designing mmWave circuits for over 12-years. mmWave technology is challenging and very sensitive to minor variations in the manufacturing process. As such, foundry models can prove difficult to develop and are often inaccurate when applied in the design of mmWave RF circuits. Our engineers are most characterize and test manufacturing -- manufactured circuits in order to validate their original models, and this refinement process takes years to fine tune. We believe this provides Peraso with a significant technical barrier and while potential competitors may try to catch up. 7:41 In the meantime, our engineering teams continue to produce improved new models. Driven by our experienced shipping millimeter wave devices in volume, we have learned how to improve yields and reduced manufacturing costs. This has allowed Peraso to improve efficiencies over time and allow for future margin expansion in the coming years. The manufacturing know-how also serves as an additional barrier to competition. 8:12 Peraso has developed deep engagements with our customers enabling us to add new high value features to our [audio gap] customer roadmaps, which assist and focusing our R&D efforts. These relationships put Peraso in an important competitive position as our products are optimized through customer feedback and interaction, which we believe has enabled us to establish a leadership position in the millimeter wave market. 8:39 In addition, we've made significant investments in software by offering both silicon and software, we provide our customers a platform solution, which incentivizes long-term commitments and increases switching cost given the system level performance we deliver. This strategy contrasts with traditional RF vendors, who relied solely on RF performance to remain in a dominant position. Peraso products deliver excellent RF performance and when combined with our extensive software platform further entrenches Peraso with customers and provides a long-term sustainable advantage in our markets. 9:21 Our millimeter wave technology is backed by a strong IP and patent portfolio, which we categorize into four primary groups. Millimeter wave RF silicon, essential standard claims, millimeter wave antennas and comprehensive software. Early on Peraso made significant investments in antenna technology and developed key knowledge related to the manufacturing and optimal deployment of millimeter wave antennas. This is critical in millimeter wave solutions, as the antenna plays a fundamental role in system performance, particularly in phased array systems. 9:55 We've also actively participated in mmWave standard setting process and as a result, we've been awarded a central claims patents for the IEEE 802.11ay standard. Any company planning to implement a semiconductor device utilizing the standard must obtain a license from Peraso for these patents. 10:15 Finally, following our significant investments in software, the company has filed several patents related to the implementation of our software and mmWave ICs. We believe our mmWave patent portfolio provides us with a strong defensible position within the mmWave market. 10:36 Beam forming is another fundamental aspect of mmWave technology and Peraso has built a core competency in robust and effective beam forming, as well as beam steering. The primary function of beam forming technology is to concentrate RF energy and showing strong high-performance long distance connections. The objective of beam forming is to focus RF energy towards its target, similar to using a lens to concentrate light or energy from the sun towards a single point. The focused and dynamic nature of our beams make it very difficult for third-party interlopers to each drops on millimeter way communications. 11:14 As such mmWave is gaining traction and secure private networks examples of industries with which Peraso was engaged includes transportation, advanced manufacturing and defense. Another inherent advantage of beam forming is a lower susceptibility to signal interference. This is important in wireless AR/VR, which has very little tolerance to interference. 11:39 Finally, the narrow beam technology utilized by Peraso allows mmWave systems to overlap, creating a mesh network in dense urban areas. This expands the available bandwidth for high usage applications, such as private networks and fixed wireless applications. One of the key aspects to our product strategy is the development of millimeter wave modules. It's important to stress here that Peraso was one of the few mmWave vendors that controls most aspects of the module IP. This includes RF circuits, software and importantly our antenna technology. Through the control of this IP we avoid third-party margin stacking and we were able to provide a highly competitive, very cost effective solution. 12:27 It's important to emphasize the inherent value proposition of this strategy. mmWave technology requires a tight interface between silicon and the millimeter wave antenna. Historically, customers were required to test and calibrate the signal between our silicon and network antennas. With the introduction of our mmWave modules, we have removed the need for the customer to deal with a delicate manufacturing challenges presented by mmWave technology. Peraso is able to provide customers with stable and predictable solutions for which we can guarantee certain levels of performance. 13:03 Additionally, this strategy has successfully helped accelerate our customers' time to market in the order of six to nine months, given the need for less technical support and less testing prior to deployment. Our module strategy allows us to control Peraso solution at system level, offering enhanced performance and ease of use. We believe this provides an advantage over competitors that focus solely on the component level with limited software and system capabilities. 13:37 The target opportunities for Peraso can be broadly divided into two markets: fixed wireless access and consumer electronics. Today, we're generating revenue in both of these end markets with growing opportunity pipeline. Our initial solution for 5G networks is consumer premise equipment for fixed wireless access. In addition, our 5G roadmap is focused on expanding opportunities in consumer electronics, including hotspots, laptops and tablets. 14:10 Specific to fixed wireless access, we have proven ourselves as a leading supplier of ICs and modules for the 60-gigahertz market. We've been shipping mmWave chipsets in volume since 2017 and established Peraso as a competitive alternative in the fixed wireless market, enabling solutions to spend 29-kilometer links requires customization of all aspects of our solutions, including our circuits, our antennas and our software. Working closely with leading customers, we were able to optimize our beam forming algorithms to achieve optimal system performance. This is a feature we do not believe the competition can easily replicate. We are committed to extending our leadership in 60-gigahertz fixed wireless by continuing to expand and develop our product technology roadmaps to achieve even higher levels of performance. 15:04 Building on our momentum in the 60-gigahertz fixed wireless market, our strategy is to further leverage Peraso’s mmWave technology in the 5G fixed wireless market, carriers around the world are challenged with a shortage of spectrum and mmWave is an integral part of the 5G specification and provides greenfield network bandwidth capacity. We also believe that fixed wireless gives carriers the opportunity to deploy competitive fixed line Internet alternatives for both urban and rural deployments. 15:34 While we haven't yet announced our specific 5G product offering, our initial focus will be consumer premise equipment. Key requirements for this market that we believe Peraso will deliver include a high level of integration, a cost-effective solution, superior performance and manageable power consumption. We will employ all aspects of our existing module strategy to our 5G solutions. 16:02 Important characteristics of mmWave technology, include high data rate for wireless video, low latency under 5 milliseconds and significantly reduced interference. These aspects of 60-gigahertz millimeter wave can enhance and enable immersive video applications such as AR/VR, video conferencing and docking. Today Peraso is actively engaged with leading consumer wireless video customers and we anticipate initial production shipments in the second half of 2022. 16:32 Looking forward, we plan to leverage our existing skills and expertise in 60-gigahertz consumer electronics into 5G consumer electronics. Our 5G roadmap is targeting higher volume 5G opportunities such as laptops, tablets and hotspots. With the introduction of the Metaverse over the last year, it stands to rapidly become the leading use case and driver of high resolution graphics, higher frame rates and lower latency. The continued development of the Metaverse and enabling devices such as AR/VR headsets, which are typically wireless will ultimately require the bandwidth and experience that is associated with cable-based connections today. 17:18 mmWave is the ideal technology to support mass adoption of the Metaverse type environment. Millimeter wave technology supports the key requirements needed for low interference, high bandwidth applications. Moreover, the requirements of the Metaverse will continue to evolve and demands even higher levels of bandwidth as resolutions moved from 4K to 8K in coming years. 17:41 With over a decade of experience in mmWave design, Peraso has developed a deep understanding of using mmWave and VR based environments. We are currently engaged in AR/VR opportunities with multiple Tier 1 customers and see this as a future source of growth for millimeter wave technology. 18:04 Well mmWave and 5G are expected to drive our future growth. In late 2021, we acquired a high performance memory IC product line through the business combination with MoSys, Inc. These memory products have an established customer base and the design wins are generally sticky and long lived. Our Bandwidth Engine ICs have been shipping in volume for years to leading Tier 1 global telecom and networking OEMs. The revenue contribution from the memory IC products come with gross margins expected to exceed 60%, which would positively contribute to our corporate gross margin profile. 18:39 Since the business combination, we have identified initial cost synergies, which we expect will improve the combination margins from this product line. In addition, we are pleasantly surprised regarding the opportunity pipeline for the memory business and based on the current backlog, we have excellent revenue visibility into the second half of 2022. 18:59 And now I'll turn the call over to Jim Sullivan, our CFO to discuss the financials. Jim?

19:08 Thank you, Ron. Hello, everyone, it’s great to be speaking with you today. During my comments, I will make several references to non-GAAP numbers, unless otherwise indicated, each reference will be to an amount that excludes stock-based compensation expense, amortization of reported intangible assets arising from acquired assets, business combination transaction costs, and the change in fair value of warrant liability. 19:31 These non-GAAP financial measures and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related current report on Form 8-K, which was filed with the SEC today and can be found at the Investor Relations section of our website or on the SEC's website. 19:47 As Ron noted in his remarks, Peraso Technologies, Inc a Canadian private company and MoSys, Inc. a NASDAQ listed company completed the business combination in December 2021. The resulting company was renamed Peraso, Inc. and began trading under the ticker symbol PRSO and is headquartered in San Jose. 20:07 From an accounting perspective Peraso Technologies was the accounting acquirer and historical financial statements of Peraso, Inc. represent those of Peraso Technologies. The statement of operations for the three and 12-month periods ended December 31, 2021 are those of Peraso Technologies and only include the operating results of MoSys for the period from December 17 to December 31, 2021. The balance sheet as of December 31, 2021, reflects the combined companies. 20:36 Now for our fourth quarter 2021 results, total revenue equaled $1.9 million, compared with $5.9 million in the fourth quarter of 2020. For the full-year 2021, total revenue was $5.7 million, compared with $9.1 million for the full-year 2020. Product revenue from the sale of our integrated circuits and modules was $1.9 million in the fourth quarter, primarily representing shipments of our millimeter wave RF products. This compared with product revenue of $0.3 million in the prior quarter, marking an increase of more than 6x on a year-over-year basis. 21:11 For the full year 2021, product revenue was $4.9 million, up more than 3 times the prior year revenue of $1.5 million. We commenced selling millimeter wave modules during 2021 and this was a driver of product growth for both the fourth quarter and full-year 2021. 21:28 Licensing, and other revenue for the fourth quarter of 2021 was negative $27,000, compared with $5.6 million in the fourth quarter of 2020. On a full-year basis licensing and other revenues for 2021 were $0.8 million, compared with $7.6 million for 2020. The year-over-year and quarter-over-quarter decreases were primarily attributable to $5 million of non-recurring license revenue recognized from a lead customer in the fourth quarter of 2020, combined with reduced non-recurring engineering or NRE revenues. 22:01 Gross margin was 30.4% in the fourth quarter of 2021, compared with 89.2% in the prior year quarter. Gross margin reflected lower contribution from high margin licensing and other non-product revenue, combined with costs related to the strategic transition towards selling mmWave modules. 22:19 For the full-year 2021 gross margin was 42.4%, compared with 80.8% in 2020. The year-over-year and quarter-over-quarter decreases in total gross margin was due to the shift in revenue, as licensing and other non-product revenue, which have high gross margins represented a lower percentage of total revenue in 2021, compared with 2020. 22:41 Product gross margin was 31.4% in the fourth quarter of 2021, compared with negative 82% in the fourth quarter of 2020. The improvement in product gross margin on a quarterly basis year-over-year was primarily due to the increased sales of our products, including a lead module customer commencing production allowing us to achieve improved scale. 23:02 We expect gross margin improvement in 2022 as we expect increased revenue growth, which will enable higher levels of scale, which should allow us to capture additional cost reductions along with contribution from our memory IC products, which generally carry gross margins exceeding 60%. 23:19 In terms of our GAAP operating expenses for the fourth quarter, total operating expenses were $5.3 million, compared with $3.3 million in the year ago period. The year-over-year increase reflects higher personnel and consulting expenses and supported the growth of our business and development of our new modules and included $0.5 million of transaction costs related to the business combination. 23:41 On a full-year basis, GAAP operating expenses were $18.5 million versus the prior year at $15.5 million and included $1.6 million of transaction costs related to the business combination. Selling, general and administrative or SG&A expenses for the fourth quarter of 2021 were $2.2 million, compared with $1.5 million in the prior year period. 24:05 Research and development expenses for the fourth quarter of 2021 were $3.1 million, compared with $1.8 million in the prior year period. On a non-GAAP basis, total operating expenses for the fourth quarter of 2021 were $3.7 million, which excludes stock-based compensation, amortization of intangible assets and transaction costs related to the business combination and the change in fair value of warrant liability. This compared with $2.1 million in the fourth quarter of 2020. 24:34 For the full-year total non-GAAP operating expenses were $12.3 million, compared with $13.8 million for 2020. On a GAAP basis, net income for the fourth quarter of 2021 was $2.5 million or $0.28 per diluted share, compared with net income of $0.1 million or $0.02 per diluted share in the fourth quarter of 2020. 24:57 On a non-GAAP basis, net loss for the fourth quarter of 2021 was $3.9 million or $0.70 per share, which excludes stock-based compensation, amortization of intangible assets, business combination transaction costs, and the change in fair value of warrant liability of $8 million. This compared with non-GAAP net income of $1.6 million or $0.25 per diluted share in the year ago period. 25:22 Adjusted EBITDA for the fourth quarter of 2021 was negative $2.9 million, compared with $3.4 million for the prior year. For the full-year 2021 adjusted EBITDA was negative $8.8 million versus negative $5.1 million for the prior year. Adjusted EBITDA is defined as GAAP net income or loss as reported, excluding stock-based compensation, amortization of reported intangibles, business combination transaction costs, the change in fair value of warrant liability, interest expense, depreciation, amortization and our provision for income taxes. 25:58 Now turning to the balance sheet. As of December 31, 2021 our cash, cash equivalents and investments balance was $18.1 million, compared with $1.7 million at December 31, 2020. The primary source of cash was the cash required for most as a result of the business combination. As of December 31, 2020, the company had 19.8 million total shares outstanding, which includes approximately 8 million exchangeable shares with the same rights common shares, which were issued by our Canadian subsidiary to certain Canadian stockholders of Peraso Technologies in connection with the business combination. 26:36 We also have 1.8 million shares, which includes shares of our common stock and exchangeable shares escrowed pursuant to the terms of an escrow agreement that are subject to offset by the company for any losses in accordance with the escrow agreement. These 1.8 million shares will be released subject to any offset claim, if the volume weighted average price of our common stock is at least 8.57, 2020 trading days within a period of 30 consecutive trading days during the three-year period following the business combination. 27:04 Looking forward, our current backlog provides us with excellent visibility for the first half of 2022 and ongoing design wins are expected to bring continued product revenue growth. In terms of guidance, due to the impacts of the continued industry supply chain issues on product shipment timing, we are not providing quarterly guidance at this time. 27:24 This concludes my prepared remarks. At this time, I would like to turn the call back over to Ron for closing remarks. Ron?

27:32 Thanks, Tim. To summarize, wireless bandwidth demand is increasing exponentially, driven by a combination of new users and proliferation of video traffic. Global carriers are spending billions of dollars to keep up with consumer video demand, but inevitably existing spectrum has definitive capacity limitations. 27:52 Millimeter wave technology has been built into the 5G specification and is viewed by industry participants as the path forward to resolve spectrum shortages. In fact, even early research into 6G networks has identified millimeter wave as the incumbent solution for resolving future frequency shortfalls. Peraso has been working on mmWave technologies 2008 and as a leader in mmWave solutions having invested millions of dollars and numerous years developing mmWave technology, we believe we've established meaningful barriers to entry for our competitors. Peraso is shipping mmWave technology in volume today and is engaged with customers across a variety of applications, including fixed wireless, secure, private networks, consumer electronics and Metaverse applications like AR/VR. 28:43 I am pleased with the execution of the team in 2021 and the successful completion of the business combination with MoSys. We believe Peraso represents an excellent opportunity to participate in a broad adoption of millimeter wave technology and is poised for significant future growth. 28:59 Thank you for your participation in today's call and we would now like to open up the call for any questions. Operator?

29:07 [Operator Instructions] Our first question comes from the line of David Williams of Benchmark. Your line is open.

29:29 Hey, good afternoon. Thanks for taking the question, I certainly appreciate it, and congrats on the closure of the combination and just the progress you've made.

29:40 Thanks, David.

29:42 Thanks, David. Appreciate it.

29:43 Yes. So just wanted to ask maybe quickly, Ron, I believe you had previously noted about the -- that you guys can address that 28% to 39% gigahertz range or where we are in that 5G, kind of, the -- for these mobile space. Have you talked about shipping [audio gap] today. I'm just kind of curious if you could maybe walk us through the challenges between where you are currently shipping? And then what are the real, I guess the technological hurdles to get to that, maybe for the mobile side? Or for that more 5G frequency range?

30:17 Sure, Dave, thanks for joining the call today. Well, we current -- so we define millimeter wave is 24 to 100-gigahertz, so today we’re shipping 60-gigahertz. We're actually reducing the frequency for 5G from -- some 24 to 43-gigahertz, so actually from a technology perspective, this is in our wheelhouse. So we actually think our experience in 60-gig, actually it's a little more challenging than what we're seeing in the 5G space. So I think from a technology perspective, it's in the same ballpark of what we're doing today. But certainly our experience that we've amassed over the last 12-years is completely applicable to everything we're doing in 5G.

31:05 Okay, fantastic. And I think it's kind of interesting, but today I think Apple released a new lower-end handset, kind of, the lower end of the market for 5G and we're just starting to see that real proliferation of 5G handsets. I'm just kind of curious how you're thinking about the landscape and the development of the adoption cycle? And do you think we're in kind of that, I guess that precipice of really tipping over, where you start to see a lot more design activity on the [CPE] (ph) equipment that’s in the fixed wireless that you talked about?

31:35 I don’t if you -- yes, that's a good question. I mean, I don't know if you saw Verizon’s announcement last week, but their millimeter wave usage is up 856% year-over-year. So my two sense is people are getting used to the benefits of millimeter wave and 5G. I think specifically the carriers have talked about this 10x performance. Millimeter wave is the way you get to 10x performance and I believe the more people use millimeter wave and get used to millimeter wave will really help that proliferation amongst the carriers. So I think we're starting to see that trend. I was really impressed to see that 856% growth in millimeter wave usage from Verizon last week. So that was very encouraging for us.

32:21 Fabulous, fantastic, I have not seen that, thanks for pointing it out. And then maybe just one quick last one for Jim, but just kind of thinking about the balance sheet and your ability to really pursue a lot of the opportunities that are in front of you. How do you think about maybe where the balance sheet is and your burn rate about $3.5 million? Do you think you have the flexibility to develop and really drop the resources that you need? And what are the puts and takes there? How should we think about that balance sheet over the next 12 to 18 months?

32:50 Yes, sure, David. We believe that we have adequate cash on hand to support our current business plan. We are obviously have a suite of products on the millimeter wave side, as well as the product line, the memory product line that came along with MoSys, so we have kind of a full set of products to sell. Obviously, it's with the market expanding the way it is for 5G, we want to make sure we continue to invest. But given the current market conditions et cetera, we want to make sure we can get quite far with the cash we have and get us to where we need to go.

33:31 Okay, fantastic. One more quick one, if I can real quick. But just, kind of, curious now, if you close the combination. Has there been any surprises either to the positive or the negative side in terms of what MoSys could intervene?

33:45 I'll start off and then let Ron comment. From the MoSys most side, as I pointed out the results here for the quarter included a very minimal amount two weeks of revenue from MoSys, call it somewhere around a quarter of a million dollars for that two week period. Right now based on our backlog and visibility we're pleased with the outlook for the MoSys -- in MoSys memory products. What we've seen from some customers have put on our backlog. In addition, there is a couple of new design wins that those turning on or beyond our control, but we're keeping a close eye and we've shipped some initial pre-production quantities. 34:30 A key point here is that those, we have the existing products we've been selling them, we have the design wins in the customers and they carry 60% plus gross margin. So I don't want to speak for Ron. But I'm pleased for the outlook for that product line to contribute nicely in 2222. Ron?

34:52 Yes, just to expand on that, I mean, I wouldn't say there's any surprises. But it's definitely a pleasant surprise on the upside, right, on the memory business for 2022. So obviously very positive.

35:09 Thanks so much, really appreciate the time and best of luck on the quarter.

35:13 Thanks, David.

35:14 Thanks, David.

35:16 [Operator Instructions] And there are no further questions in queue. At this time, I'd like to conclude today's conference call. Thank you for participating. You may now disconnect.