QuickLogic Corporation (QUIK) Q4 2015 Earnings Report, Transcript and Summary

Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to the QuickLogic Corporation’s Fourth Quarter and Year 2015 Earnings Conference Call. [Operator Instructions] Today’s conference is being recorded. With us today from the company are Andy Pease, the President and Chief Executive Officer; Sue Cheung, Principal Accounting Officer; and Brian Faith, Vice President, Worldwide Marketing. At this time, I would like to turn the call over to Sue Cheung, Principal Accounting Officer. Please go ahead, ma’am.

Thank you, operator and thanks to all of you for joining us today. Before we begin with our prepared remarks, I will take a moment to read our Safe Harbor statements. During this call, we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties, including but not limited to, stated expectations relating to revenue from our new and mature products; statements pertaining to our design activity and our ability to convert new design opportunities into production shipments; market acceptance of our customer’s products; our expected results; and our financial expectations for revenue, gross margin, operating expenses, profitability and cash. QuickLogic’s future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed in our Annual Report on Form 10-K, quarterly reports on Form 10-Q and prior press releases for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements. This conference call is open to all and is being webcast live. For the fourth quarter of 2015, total revenue was $3.6 million, which was at the low end of our guidance range. Our new product revenue was approximately $2.1 million, reflecting increased shipment of sensor processing solutions offset by a larger than expected decline in display bridge solution. Our mature product revenue was approximately $1.6 million. Please note that total does not exactly equal to the sum of the new and the mature revenues due to running errors. Samsung accounted for 36% of total revenue during the fourth quarter compared to 57% during the previous quarter. Our GAAP gross margin – our non-GAAP gross margin for Q4 was 36%, which was below our guidance. The reason for the lower-than-expected gross margin was one-time inventory write-off, representing 6 percentage points of our gross margin in Q4. Excluding the inventory write-off, our non-GAAP gross margin was 42%, which was in line with our guidance. Non-GAAP operating expenses for Q4 totaled $5.4 million, which was favorable to our guidance. The lower non-GAAP operating expense was primarily due to the timing of engineering related expenses and the reversal of year end executive bonuses for 2015. On a non-GAAP basis, the total for other income expense and taxes was a charge of $127,000. This resulted in a non-GAAP loss of approximately $4.2 million or $0.08 per share. Please note that the cost of performance and the inventory write-off is included in our non-GAAP numbers. We ended the quarter with approximately $19.1 million in cash, which was within our guidance range. Cash usage during the quarter reflects the operating loss and the higher working capital requirements, specifically in the timing of payments which were partially offset by a $1 million loan from our Silicon Valley Bank line of credit. Our Q4 GAAP net loss was $4.8 million or $0.09 per share. Our GAAP results include stock-based compensation charges of $582,000 and a restructuring charge of $49,000. Please see today’s press release for detailed reconciliation of our GAAP to non-GAAP results and other financial tables. In addition, you will find our financial tables published on IR webpage that provides current and historical non-GAAP data. With that, I will turn the call over to Andy who will update you on our strategic efforts.

Thank you, Sue. While Q4 revenue came in at the low end of our guidance range, our progress towards realizing strategic goals was substantially above our expectations. I am excited to outline this progress that I believe sets the stage for a very significant second half revenue increase. But first, let’s take a couple of minutes to review the quarter and our outlook for Q1. During Q4, our display bridge and mature product revenue declined a little more than expected and smart connectivity revenue increased a little less than expected. Revenue from our sensor processing solutions increased in line with our expectations, but did not fully offset the lower than expected revenue from the other product groups. This increase in sensor processing solution revenue was driven by a greater than 50% increase in the number of unique designs we supported with production shipments. As I will outline in a minute, we are building substantial depth and breadth in our sensor processing solutions customer base. For Q1, we expect display bridge revenue to be essentially flat. However, for the full year of 2016, our outlook for display bridge revenue has improved since last conference call. Last quarter, we forecasted the display bridge revenue would continue through 2016. Subsequent to that, our largest competitor announced it was seeking a buyer for its broad line semiconductor business, which includes its display bridge product line. Given this new information, we now think demand for our highly versatile display bridge solutions will continue well beyond 2016 and that the second half of 2016 display bridge revenue will be above our original expectations. As a matter of fact, we are seeing evidence of this trend. We recently won a MIPI to RGB display bridge design in a new Smartphone accessory from a top 5 smartphone company. This design is expected to move into production this summer. We are anticipating a sequential decline in smart connectivity revenue this quarter. This is mostly due to the fact that some of our older smart connectivity designs are winding down and the ramp of our new PolarPro 3 designs will not fully offset the decline in Q1. For the longer term, we are very encouraged by the level of PolarPro 3 design activity. We believe that this will lead to a revamp of smart connectivity revenue beginning in Q2. We think this trend will accelerate during the second half of the year and into 2017. These new design activities include engagements with Tier 1 and high brand name recognition OEMs. We believe mature product revenue will decline slightly in Q1 and have adjusted our outlook for 2016 to $1.5 million plus or minus $200,000 per quarter. This is a slight decrease from the $1.7 million quarterly average we forecasted last quarter. We expect that the forecasted decline in smart connectivity revenue will be offset by an increase in sensor processing revenue during Q1. As Sue will describe when she provides our guidance, we believe this will lead us to report essentially flat total revenue for the seasonally soft first quarter. There could be an upside to this outlook, if some of our new OEM customers pull in schedules that in some cases call for early Q2 shipments. However, I prefer to remain a conservative outlook that is in line with the schedules that we have today. Last quarter, I stated that we had engagements and/or design wins with nine OEMs that have high brand name recognition and our top tier players within their product sectors. This number has increased by nearly 80% during the last three months. We are proud of that accomplishment and think it will drive a very significant increase in our second half new product revenue. To help you better appreciate our understanding, our standing with these top tier OEM customers, I have assembled some data from this list of engagements and design wins. We believe, half have annual volume potential in excess of 1 million units and most of those have multi-million annual volume potential. Over half are for our new EOS S3 sensor processing platform. Approximately two-thirds use our SenseMe software algorithm library, along with one of our sensor processing platforms. Over a third offer smartphone applications and while this means nearly two-thirds of the engagements in design wins are in wearable devices, these designs are with larger OEMs, having significantly higher volume potential than the IDH designs we have won in the past. These include an EOS S3 design win with the Tier 1 smartphone customer for a new wearable device. We expect to begin shipping products to support initial production late in Q2. In addition to this design win, we have other ongoing smart connectivity and sensor processing solution engagements with the same customer. In addition to this design win, we have an EOS S3 evaluation with a world leader in wearable fitness tracking solutions that has significant volume potential. This customer has already prepared an evaluation board for our new EOS S3 samples that we are scheduled to deliver later this month. With those samples, we expect the design win process to be completed in Q2. We signed a SenseMe agreement with [indiscernible] last quarter and we have four additional SenseMe pending agreements with very large well-recognized OEMs. Out of this total of five, we believe three have the potential to become sensor processing platform customers this year. In addition to these OEM activities, we have also engaged with a large semiconductor company on a companion device for a smartphone application, using our S2 sensor processing platform. The majority of our design wins and engagements with large OEMs are leveraging the programmable logic that’s embedded in our S2 and S3 sensor processing platforms. This is a very big deal, since none of the competitors in the market today are for programmable logic in their sensor hub, this gives us a substantial and durable competitive advantage. In addition to the significant increase in engagements and design wins, we have realized with top tier OEMs, we are seeing continued design activity with our targeted IDH and ODM customers. With this significant increase in engagement activity, we are very pleased that our customers that are now involved in their second or third designs are effectively leveraging the knowledge they gained during their first design efforts. This lessens the investment in our engineering resources that we need to make with these customers to drive new design opportunities in production and demonstrates the leverage inherent to our business model. This was consistent with the strategic goals we covered in our last conference call. I am pleased to announce that we received samples of our second EOS S3 spin ahead of schedule. This platform is in our engineering lab going through verification and characterization and we expect to begin shipping it to our strategic customers by the end of this month. The early data shows the refinements we implemented in this version of EOS S3 are delivering even lower power consumption than the data we have shared during our July 2015 conference call. These refinements have also enabled us to introduce a new member to the EOS family, the EOS S3 LP. With its significantly lower power consumption, the LP platform further differentiates us in the wearables and IoT markets. We will provide you with more color on EOS S3 LP in an upcoming press release. In conjunction with these new devices, we are releasing an upgrade to our integrated development environment and software framework. This will be particularly helpful for our large OEM customers and further reduce the amount of QuickLogic engineering time it takes to win new designs and drive those designs into production. Several of our customers have been waiting for our new EOS S3 samples and our updated integrated development environment tool to complete their designs. We believe that once we get these samples into our customer hands, our design activity will accelerate and will get a much clearer picture of our customers’ production schedules for 2016 and beyond. With that, I will turn the call back over to Sue for our Q1 guidance. Following that, I will rejoin you for my closing comments.

Thank you, Andy. Our guidance for Q1, 2016 is for total revenue of $3.6 million, plus or minus 10%. The total revenue is expected to be comprised of approximately $2.1 million of new product revenue and $1.5 million of mature product revenue. As in prior quarters, our actual results may vary significantly due to scheduled variations from our customers, which are beyond our control. Schedule changes and the projected production start dates could push or pull shipments between Q1 and Q2 2016 and impact our actual results significantly. On a non-GAAP basis, we expect gross margin to be approximately 42%, plus or minus 3%. Anticipated increase in gross margin reflects substance of the inventory write-off we took in the fourth quarter. We are currently forecasting non-GAAP operating expenses at $6 million plus or minus $300,000. The expected increase in OpEx is primarily driven by engineering expenses associated with the release of the EOS S3 platform and ongoing development of our EOS hardware and software solutions. Non-GAAP R&D expenses are forecasted to be approximately $3.6 million and our non-GAAP SG&A expenses are forecasted to be approximately $2.4 million. Our other income expense and taxes will be a charge of up to $60,000. At the midpoint of our guidance, our non-GAAP loss is expected to be approximately $4.6 million or $0.08 per share. Our stock-based compensation expense during Q1 is expected to be approximately $500,000. As was the case last quarter, our non-GAAP results will not reflect those charges. Including the favorable impact of an additional $1 million loan from our bank line of credit, we expect to use approximately $5 million to $5.5 million in cash. The increase in cash usage in Q1 is primarily driven by the anticipated increases in working capital requirements and the expected payment of mask set cost associated with the EOS S3 production. With that, let me now turn the call back over to Andy for his closing remarks.

In conjunction with our earnings release, you will see that we have filed an 8-K on favorable amendments to the loan covenants with our Silicon Valley Bank line of credit. This follows the 50% increase in our credit line we announced last September. We are very pleased that Silicon Valley Bank has understood our business model and is acknowledging the progress we have made towards realizing our strategic goals. I hope that you are as enthusiastic as I am about the progress of our sensor processing solutions with large, main brand OEMs. Particularly exciting is the win with the Tier 1 smartphone OEM for an available product that is scheduled to start production next quarter, an ongoing design activity that we have with this customer. In short, I think we are getting very near to a positive tipping point. Another encouraging trend I can’t emphasize enough is that the vast majority of our large customers are utilizing the programmable logic that is embedded in our sensor processing platforms. We believe this further differentiates our sensor processing solutions in ways that cannot be duplicated by other discrete or even integrated solutions in the market today. While we have much more scheduled clarity by the end of next quarter, given the design wins and traction we already have with large OEM customers, I believe we are well-positioned to deliver very significant revenue growth in the second half of this year and that, that trend will accelerate as we move into 2017. With that, we will turn the call back over to the operator and open the floor for your questions.

Thank you. [Operator Instructions] And our first question comes from the line of Krishna Shankar from ROTH. Your line is now open.

Yes, Andy. Congratulations on the design win progress with the top tier OEM for the Sensor Hub solution. As you look at 2016 revenues, you indicated a pretty significant ramp in new product revenues in the second half. Will that principally be from one or two of these top two OEMs that you are engaged with or do you see – you mentioned nine engagements or design wins. So, do you see kind of a broad set of customers ramping in the second half of 2016 with new products?

Yes, that’s a good question, Krishna. Actually, we do see a much broader customer base ramp in the second half than we have seen in the past when we have shown ramps before. So, we do see a broad base of customers that plan on going into production depending upon their schedule sometime towards the second half of the year.

And then how would you compare – it sounds like the display bridge product line has a good long life ahead of it, especially with the competitor exiting the business. What kind of visibility do you have in terms of revenues for that business for this year and how will it compare with 2015?

Yes, right now I can probably just give you some anecdotal information on that. I was actually at the customer when I found out that we won MIPI to RGB display bridge for the smartphone accessory. And when I was with my sales guy, I asked him about is that going out of business from the competitor and he said in the past couple of weeks, we have seen a marked increase in inquiries about our display bridge product. So, it’s a little early to tell, but we certainly are getting a lot of inquiries. And the common theme seems to be a MIPI to RGB bridge, because there are no application processors today that actually do RGB out. And you will find a lot of accessories that need some sort of display tend to be RGB more than anything else.

Okay. And then the re-spin of your EOS 3, you said the preliminary evaluation looks good and you expect to start sampling that to customers, can you give us some sense on how that is looking and you are on schedule to sample that this quarter with the customers, the new version of the EOS 3?

All I can say is that as we speak today, the guys are 24/7 as a matter of fact we had people on Super Bowl Sunday in here working apart. So, this is clearly an all hands on deck evolution here at QuickLogic and so far everything is going very well. I can also say that probably more than any other products since I have been at QuickLogic, we gave an exhaustive simulation before we actually released the product for tape out. So, we feel very comfortable. And mind you, this is also the second spin of the first S3, first came out in summer. So, we feel very good about its prospects.

Okay. And then my final question, our customers interested on – you have kind of SoC approach with a lot of bells and whistles and blocks and that our customers are interested in the full capabilities of EOS 3 or are some of them settling for the S2, because the S3 have some additional things that says the audio voice recognition and all that, are your top tier customers interested in all those capabilities also?

Krishna, this is Brian. I will take that. I think that most of these customers we are talking about now are gearing towards S3, because it has much more capability, including the voice and Cortex M4. Obviously, the FFE is consistent between the two and if it’s just a sort of low end activity, then I think they will stick with the S2. I think the other thing that we will mention going back to the prepared remarks, Andy mentioned, working with large semiconductor company on an S2-based product. So, we definitely see legs with that for certain applications. But again most of the funnel moving forward we think is more going to be more S3 related.

Okay, thank you.

And our next question comes from the line of Gary Mobley from Benchmark. Your line is now open.

Hi, guys. Thanks for taking my question. My first question is a follow-up to Krishna’s and that relates to I guess extent to which you can benefit from a competitor exiting the display bridge market. I am assuming that’s Toshiba attempting to sell that business along with others. Do you have any sense of how much Toshiba was selling in display bridge market to try to gauge your potential revenue opportunity there?

We are going to be digging into that more, Gary, but at this point I would just be guessing. I can’t tell you that with our Samsung tablet business that we have now had 5 different tablet designs that we did displaced Toshiba as the incumbent. So, clearly Toshiba was the other display bridge qualified to do business with Samsung. So, any other MIPI to LVDS bridging that was required in tablets would be Toshiba’s that we don’t have.

Okay. Alright, that’s helpful. Sue, I had a question for you relating to the line of credit. I didn’t get a chance to read the 8-K and the details regarding the amendments of a Silicon Valley Bank. You are one of a couple companies I am reporting to this afternoon. But if I am not mistaken, the line of credit had a limit of $12 million previously, what is the new limit?

So the new limit, we have reduced starting Q2, 2016 to $10 million, then $8 million, then $6 million, then $4 million, then going up in the second half of 2017 to the normal level.

Okay. So it becomes...

That’s a total net worth.

That’s for the total net worth, one of the….

So, Gary, what she just told you about the limit of our credit is still $12 million. So, we still have $6 million credit line with an accordion of $12 million. What she is talking about is they actually reduced the total net worth companies that goes along with the borrowing of money. So, what they did is they stepped the total net worth limit down throughout the year as they see our progress and marketability increasing.

Okay.

Yes, Gary, that was – yes, our total line of credit still stay at the same, the amendments on the covenants itself.

Got it. How much was drawn on $12 million line at the end of Q4?

End of Q4, we have total of $3 million drawn on that line.

Okay. And that goes into that $19.1 million that you reported at the end of the quarter right?

Correct.

Okay. And so here we have total cash available to you of around $30 million in total and you are expecting to burn about $5.5 million in cash in Q1. Obviously, that’s not sustainable for too many quarters. And I am just wondering, if in addition to the expectation and fruition of the revenue ramp that you might be looking for ways on the cost side to minimize that cash burn?

Yes. We are doing both ways, so planning to continue to borrow from our line of credit from Silicon Valley Bank with favorable covenant terms. So, we also reduced expense as well.

Okay. So we are looking at all angles to make sure that we maintain a very positive and strong balance sheet.

Okay. Andy, if I read into your commentary correctly, you mentioned or implied approximately 16 engagements from 9 to 16 that you mentioned, 70% to 80% increase of the 9 base. So it seems you are engaged with 16 different potential customers, 50% of whom have the potential to have revenue volumes in excess of $1 million annually. And so at least half of that was potential 16 customer engagements have the potential to generate somewhere between $8 million to $10 million in annual revenue, am I reading that correctly?

That’s right. Yes, your math is good.

Okay. And so how should we think about the likelihood of those engagements, conversion of those engagements into actual design wins?

We have had a handicap a number of things that are in our pipe that will likely materialize. Is that the question?

And so you walked through a couple of the potential opportunities and I appreciate that one, I think in particularly you are talking about a Tier 1 smartphone wearable product design win that you are expecting to ramp in the second quarter, is that the largest near-term opportunity and any additional details?

Yes. Actually that is not the largest near-term opportunity and I think you know that the way I typically talk about things, I usually prefer talking about things in terms of production wins. And production wins really means that we have an order in hand. But I think that to make sure that our investors understand the potential, obviously there is not going to be any orders where they are still sampling silicon. But I need to give pretty good clarity about design win and that’s really how most CEOs tend to report their sales pipeline. And so what we are talking about with a design win is where we have been contacted by the economic buyer as the customer, that they intend to use our product, that they have a board that’s already laid out with our footprint and then it’s just a matter of when they will complete the design and when they actually intercept that with their marketing plans.

Okay. Alright, that’s it for me right now. Thanks guys.

Okay.

[Operator Instructions] And our next question comes from the line of Richard Neaton from Rivershore Investment Research. Your line is now open.

Hi Andy. Hi Brian and Sue. Two quarters ago, you talked about a breakeven potential in the fourth quarter of this year, I believe you said somewhere around $11 million to $12 million or $13 million of revenue at about a 50% gross margin, is that still operative at this time?

Yes. So as I have said in my prepared remarks, we do have very large OEMs that are embracing our solutions. And this is actually happening more quickly, both – in both depth and breadth. And keep in mind that once we start sampling the S3 silicon that we believe that, that activity will increase the variable, that’s hard to predict at this juncture is exactly when these customers will ramp production of design to what the shape of that ramp will be. But we believe that we will post a significant second half growth and that we have a much better picture of that once we get our EOS S3 and S3 LP samples in the customer hands. And that’s when we will be able to state that more definitively. But for right now, it all depends on the ramp and how soon and how steep. But we certainly have the sales funnel to support it, I will say that.

So it’s fair to say that the target predictions at this time?

Right. Yes, you also mentioned the breakeven between $11 million and $12 million. And I think it’s fair to comment on that and is that still a breakeven point and frankly that depends on how quickly we ramp our R&D investment strategy, given the sharper than expected increase in engagements with large OEMs, we are reevaluating our R&D and customer resource facing budget strategy. So, if we ramp R&D more quickly than we previously anticipate, then this could push the number up to higher side of that range, maybe even a little above it. But I guess, what I am saying is things are going very well, so I see raising that bar as a good thing and not a bad thing.

Okay. I appreciate that, in your prepared remarks, you spoke about approximately half of your ‘16 engagements having the potential of 1 million or multi-million unit volumes, are any of those design wins right now?

As a matter of fact, yes. Both the design wins and but we have one in each category.

Okay, meaning phones and wearables?

That’s exactly right. The two that we mentioned in the prepared remarks fall into those categories.

Okay. Following-up on Gary’s question about trying to quantify some value to these opportunities, when you talk about multi-million unit opportunity, I assume that means 2 million or more, do any of these have potential of say 10 million or more units?

I will let Brian answer that.

Yes. We won’t say specifically how many, but there are some that are in that category of multi-million that are over 10 million.

Okay. Thank you, guys. I appreciate your time and it’s good to hear some encouraging news. Thank you.

Thank you.

And our next question comes from the line of Robert West [ph] from Oak Grove Associates. Your line is now open.

Hi, Andy.

Hi Bob.

Congratulations on a very encouraging conference call. I wanted to begin with a couple of questions if I could, on the EOS S3 second span, which is sounds like it’s going very well up to now, are you expecting a mid-Q2 ‘16 production release date or somewhere in that category?

Yes. We fully expect that all of our internal calls will be done by certainly the Q2 timeframe. And I would expect it would be mid to early Q2 if everything keeps going as planned. In other words, the plan has always been to be able to ship a production worthy S3 in Q2.

Very good. And this will intersect this type of a schedule mid-quarter or before, we will intersect with the wearable device from the smartphone customer?

Absolutely, yes.

Okay. Let me go back and ask a engagement question in another term. We have been tracking – you have been tracking for investors your Alpha program for quite a while, does this product readiness schedule support this Alpha customers’ production plan and can you give us a little color on how that’s going?

I will take that question, Bob. So, we are still engaged with the Alpha customers. We have been supporting them quite a bit actually with our engineering team finding out and meeting with the customers regularly giving them updates, enabling them with new tools that we have. So, the silicon schedule, the second spin is in alignment with when they would actually need products.

Okay, very good. And then a second question, again ask a different way, last quarter, you talked about that you had scheduled to deliver samples and development platform to a top tier OEM with high brand name recognition in November of last year and can you give us some color on that engagement?

I think without going into too much detail with respect to nondisclosure agreement, I will say that we did deliver the warrants to the customer. We did enable them with tools and they were part of that engineering tool that I was just talking about where we had engineers’ onsite to enable them and discuss Alpha 3 also fit within the timeframes of those customers.

Okay, great. And would the Alpha customer and this second customer, would they be expected to contribute to second half ‘16 revenue?

It’s possible. It is possible. Like Andy said, we are still working out the exact details with these customers. And luckily I think the funnel has grown large enough that we don’t have to be solely dependent on any one of them in particular, but there is definitely a possibility to be in that bucket for second half.

Great, great. That’s good news. One final question on algorithms, you have been underway in developing for quite sometime, your motion compensated heart rate monitor and/or navigation programs. These are categorized under your immersive algorithms. Will they be released with your EOS S3? And do some of these early customers have interest in these two algorithm capabilities?

Yes. So, if we look back at the big picture, Bob, the algorithms that we originally started with were more on the activity tracking and contextual awareness. And then we started moving into more of these sophisticated areas like the heart rate monitoring, the bio-sensing algorithms, and then of course we have talked about indoor navigation or pedestrian dead reckoning. So, we are still putting resources in all of those categories as we move forward. We are trying to let the opportunities in the funnel kind of guide the priorities at this point. We do still have plans to have those types of capabilities running on S3 in particular, because the computational capability is much higher on S3. How we go to market could be a combination of our own internally developed algorithms and also third parties? And I will actually give a plug for the fact that we have this nice integrated development environment now that software people are accustomed to. They can actually enable third-party algorithm folks to deploy their algorithms on our platform and we do see activities in this area. So, it’s a long way of saying that we are pushing in all those areas. The end product may be some combination of us and third-parties to do that, particularly in some of these highly specialized areas. The last thing I will say is that we see an increased awareness now on power consumption even more so today than even the last year. The nice thing about having our contextual awareness algorithms is that people are viewing that as the way of actually saving power even if they are using their own algorithms, kind of this blending of theirs and ours, if you will. So, we find that actually to be very encouraging and have engagements in that area.

So, I would like to add one more thing to what Brian said if you have noticed our whole funnel composition is really migrated from IDHs and ODMs last year to more Tier 1 and top name brand recognized for customers. And what goes along with that is obviously the increased volume, which is wonderful. But also many of these guys, as a matter of fact, with few exceptions, all of these guys to some extent have their own software teams. And that’s why as Brian put in a little plug, I will put in a bigger plug, because our integrated development environment is absolutely paramount, because it really gives them the opportunity of not only just porting their code into our M4 code, because that’s the same, no matter what sensor update you use, but they can also port their standard C code into our FFE, our proprietary ultra-low power always on compute engine and that’s how they get the superpower savings and that still enables them to do either/or very seamlessly. So, getting this integrated development environment up to speed and upgraded has really been in our engagement strategy with top tier OEMs.

So, it directly relates to time to market in a favorable way?

Exactly. Exactly.

Great. I do have one more question. I wanted to ask you if you could spend a few minutes on Sensory’s, your – on Quick’s implementation of Sensory’s Low Power Sound Detector technology and how that’s being received and if some of these customers have an interest in that as well?

Good. I am glad you asked the question, Bob. So, actually a lot of these customers are actually very interested in the voice capability with Sensory. I think the optimization that we have done with our Sensory and our Silicon is fantastic. The power numbers are great and that’s really driving a lot of interest in wearables and smartphones both. And we are actually hopeful that this could lend itself to other applications that we haven’t even talked about it yet in IoT.

Very good, Brian. Listen, thank you guys. This is a very encouraging call and will make us look forward to the end of Q1 call as well. Good. Thank you.

Thank you, Bob.

Thank you.

I am not showing any further questions. I would now like to turn the call back to Mr. Andy Pease for any further remarks.

Thank you. First, we will be participating in a number of industry events during the next 3 months. Dr. Timothy Saxe, our CTO, will be presenting at the Wearable Technology Show, March 15 and 16 in London. Dr. Saxe will also be participating in a panel discussion titled Wearables at the Heart of the Smart Home on March 15. Sue, Brian and I will be at the 28th Annual ROTH Conference at Dana Point on March 13 through March 16. Details will be included in our upcoming media alerts. During the next few weeks, we will also be issuing several press releases, providing more color on our new EOS S3 LP, reference designs for the EOS S3, press release on our upgraded, integrated development environment and collaboration with certain ecosystem partners as well as multiple customer wins. We want to thank you for your continued support and I look forward to reporting our strategic progress on our next earnings call which is scheduled for Wednesday, May 4, 2016.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may now all disconnect. Everyone have a great day.