Universal Display (OLED) 23 Feb 222021 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Universal Display Corporations Fourth Quarter and Full Year 2021 Earnings Conference Call. My name is Sherry, and I will be your conference moderator for today's call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded this replay reminder, a is for being purposes. As the now Investor to like would call Relations. to of I Director turn over Senior Darice Liu, Please proceed.

to earnings Thank Display's everyone. good you, Welcome and fourth call. conference quarter afternoon, Universal

Joining President Chief me Executive President Executive Abramson, Officer. Financial Rosenblatt, and and Sid on Chief today and Steve call Vice the are Officer;

portion in only this redistribution, period of the Before of property of a and webcast of form Steve call retransmission call rebroadcast express consent will today's or the is This written begins, XXXX. of call live Universal Further, live let is a this on accurate of that for me website. Display's available information of as of the without is Universal any time time-sensitive Display. webcast call date any strictly remind Any this you be of Universal prohibited. February being XX, call, contains made is that Display

make based results may of These may uncertainties, actual significant our we number call, and uncertainties and risks forward-looking risks a expectations. this on These company's the differ are to should statements referenced During and investments subject filed these of anyone statements with periodic the be disclaims any securities. are SEC in to considering current and making Universal company's any update reports by the Display in obligation discussed any statements. materially.

like would to turn Abramson. the I to over Now, call Steve

call. to today's everyone welcome Thanks, on And Darice.

revenue share. net income was million, high million $XXX results. income $XX was $XXX $XX $X.XXX income are was revenue or We million, our $X.XX was report record net million Fourth operating million, diluted quarter diluted share. or million year pleased per to of $XXX and and quarter per $XXX XXXX full income was fourth was a and XXXX operating

brilliant and road expect activity smartwatches, broadening for notably across For foldables products grow VR, smartphones, the grow will to break AR of and million and with to Sid further of current in in believe increase continue Momentum to revenues XXXX to OLED range a the in are the we expect upon to map it. we estimates range microdisplays OLED will seeing a and with continues automotive, we Based further significant to industry to $XXX our product grow IT, be beautiful expectations, $XXX consumer details where TVs. industry provide million. XXXX, adoption for we and shortly. interest

back bolsters position, on OLED culture enhance Looking innovation XXXX, of our partnerships, which engine, strengthens our corporate on advance our advantage all build our of in first-mover leadership growth. runway to our fortify we our and the continue strong and ecosystem

customer extended agreements the partnership front, Visionox Micro-electronics. with Technology LG and long-term our On Tianma we Display,

announced On in new of our of Ireland the foundry site the global production the materials. with for manufacturing manufacturing front, over PPG, a high-performing partner establishment highly years, our efficient, XX we OLED of Shannon, universal

XXXX of to will future, diversify footprint. Best was as of were This grow expected we capacity the foreseeable are weeks the to the our for Financial needs. the year fastest list another named production America's We're continued With Forbes proliferation also increasing companies our few ago, new the OLEDs global our emitter we just Times one recognition of by a recognized companies. and company. growing America's of Midsized OLED increasing site and meet broaden customer’s for manufacturing the

X.X a global inventiveness, over are inclusion, that and cultivating promotes and imagination. focused fostering on we culture For decades, integrity

continuous committed to sustainability We innovation through around improvement. are efforts our advancing and

Diversity. provider corporate sustainability a The again EcoVadis, one Executive most named Newsweek Board by of awarded were of by a recognized from social Silver ratings responsible a as business the the row, companies as year, leading Women we of in year for for Forum second During America's a Champion rating and of responsibility

certification certifications XXXXX safety internationally ISO coupled continual management ISO our recognized standard international This practices. system. XXXX corporate improvement other health occupational achieved certification, in and with emphasizes of we reinforces that of XXXX, best towards an and an the Additionally, XXXXX commitment our ISO

On OLED and of front, solutions OLED at the energy remain the forefront and best-in-class technologies. we efficient development research enabling

Our continually OVJP inventing our as and OLED scientists architectures, platform. of efficient including manufacturing solutions cost commercializing and team highly and effective as are well engineers material device technologies, and advancing imagining, novel groundbreaking

trailblazing On platform. the continued with advancements are making we manufacturing our OVJP front,

our As the partnership OVJP the progressing progresses are discussions evolving potential alpha system team our of constructing key design, well. steadily with subsystems and

volume TV the still system dollar pave of years and is commercial opportunity. OLED for market large into that high manufacturing RGB will multibillion develop OVJP path panels While a few believe away, we a

On our continues to efficient, work to front, greens, broaden to and phosphorescent high make of progress blue, the continue materials edge, for hosts. a reds, next-generation’s energy With performing portfolio in we with respect materials our emissive phosphorescent yellows development system. leading blue ongoing excellent commercial

that track by the with meet blue target RGB to phosphorescent Given a opportunities phosphorescent specs the which into introduction of that all market energy higher efficiency recent for on are commercial should our year-end, believe array stock full and higher preliminary our vast OLED our we stack applications. advancements, believe of enable introduction we broad emissive XXXX. of across of in the We range performance color commercial will a unlock

of tablets Series success be hybrid Display LG production. OLED expected the TAB introduction SX its Z Samsung's at Plus another of OLED XXXX ramp TV TV year-over-year portfolio CES, Galaxy year month unveiling of smartphones SXX quadrupled last of to Galaxy ago XXXX in SX its up to weeks expansion. its where its continues of continues and consumer the sales OLED more market product from products the foldable than is to On X Ultra and to and OLED front, new QD-OLED to broaden the

almost its XX-inch be to panels. OLED XXXX. up plans their XX LGD of Augmenting TV to introduction slightly its million XX-inch, the new units the XXXX, For million X TV growth units, from shipments increase under OLED in will commercial

new front, LG and the it investing looks On IT the X capacity OLED to and as in the smartphone, company in its was share small OLED medium expand that Gen announced markets. automotive

Phase proliferation OLED And $X.X III The II month. starts at a after flexible third in IT OLED importantly This Star's is factor of designed is largest which of flexible project OLED laptop, month. Xiamen output new ASUS ASUS. mass China ramped OLED approximately equipment Wuhan has also and of Tianma BOE Heta XX,XXX plant state. last capable I And with in Gen-X single fully versatility commencement the an at per midst of patents. OLED PC the OLEDs XX,XXX substrate has a being makes billion, panel. the the in week, which fab form year, with as OLED of for production tablet the fab product monitor, XXX also CES, Phase its Gen-X been world's end Last OLED using OLED a Star substrate total has been as or new held now of each used ceremony monthly China investment laptop its Chongqing, is X XX,XXX flexible plant starts. for in production of manufacturing per it first ramping capacity installing The and Gen of the Xiamen. high-tech BOE's capacity XXXX, monthly flexible Phase plates is is closely XX.X-inch working flexible Visionox's investment design XX, a installed unveiled Gen of X in began BOE foldable fab and history. first Towards

over penetration and of the handful or OLEDs year-end capacity for approximately XX% increase reaches a As OLED capital medium year-end by in number base TV new X% installed few of significant are market OLED a XXXX fivefold. CapEx approximately in displays installed investment X beginning sizable last standpoint, and we of plans the X% today of OLED to only in million led From penetration an units, cycle has to square dozen smartphone The XXX the OLED from meter manufacturing is to the OLED large where lines a plants market than is with XXXX approximately years capacity wave today. over increase XX% of of OLED adds IT or a X form, market and the shifted. in multiyear fabs less time an believe increased area

about currently As the expansion in approximately these China square year-end installed XXXX We we capacity out, XX% estimate coming in we by meters, will projects XX year-end for XX that in tracking OLED Korea of measured to over and months. look XXXX. as new result are expansion XX% increase to phases

there Gen and new by are the an XXXX. area a of plans Gen wave intensifying the works. in in fab announced shape. take As year large OLED expected leading firm, Last to are to the market wave different spending the to is OLED Gen beginning IT lines IT of capacity Driven significant strength According OLED X.X, in X.X XXXX products market, SEC and continue every medium and to OLED Gen new makers OLED OEMs for and XXXX XXXX is and increasing capacity, IT push OLED OLED-expansion XX research under spending week, panel to X from from a increase in reportedly development. TV invest that investments X.X

believe, the the expansion and multiyear OLED continuation CapEx we of translates into All cycle. of this, industry's

brightness can its we take designers of note, unique which we OLEDWorks automotive seeing over Last automotive still OLED stage, the factor. lighting include lining On in advantage for ultra-thin color in that the turn On characteristics are According segmentation the the taillights, Sid. while form call uniformity, OLEDWorks, showcased the CES. automotive commercialization lighting me advances front, market. OLED early and brightness are lightweight to of month, at OLED high and and to let next-generation

And for today. Steve. joining again, thank you, call everyone, Thank our you,

commenting XXXX XX% year-over-year. million, a guidance. our XX% were material of up up XX% license revenues record year-over-year. Adesis were $XXX gross were were operating $XX XX% review and million, year-over-year. overall royalty million, and before me margins $XXX revenues million, gross for XX% and up year. were up sales XX% $XXX were excluding cost And year-over-year XXXX Let on XX% margins materials our XXXX XXXX up the our was expense, revenues year-over-year. million, results Material $XXX XXXX

to new continuing growth and our next-generation are global technologies, site invest materials OLED Shannon manufacturing multiple platform, our yellow including including in and strategic emissive initiatives our infrastructure, and red, We our blue green, people. in OVJP

net investments, per income in $XXX operating or year per cash and XXXX $XXX and into Our long-term and income with share, and was the share. million XX%. translates We cash, of year-over-year. $X.XX short-term ended of XXXX diluted up up $XX.XX $XXX diluted operating million, equivalents or XX% XX% margins was million year-over-year cash

quarter XXXX Now, was our for the a fourth Revenues to high $XXX.X record fourth results. moving million. quarter on of

fourth the in from million and fourth $XX.X $XX.X fourth quarter, were of quarter, year-over-year's $XX.X quarter's comparable which from from quarter's million yellow, the million. $XX.X sales $XX.X the Green XX% the the material emitter sales XX% $XX.X the quarter $XX.X Our in from quarter, quarter up the total sales up last up emitter and comparable up million year-over-year's $XX.X and emitters were Red comparable quarter million sequentially million. green from XX% up the XXXX, our in include XX% million were third X% quarter, million the sequentially in quarter, third fourth up XX% from year-over-year's $XX.X million.

material quarter-to-quarter. in patterns As past, we the discussed vary have can buying

margin recipes, quarter fourth of fourth XXXX. patterns, moving fourth per compares or $XX.X are last $XX.X income quarter and of $X.XX XXXX share in a third contributing and million million for was XXXX rates, the in year-over-year's XXXX material variables million year-over-year's sales the of the income consumer comparable This XXXX Cost XX%. $XX.X variables the customers, material material to are were million diluted also and of efficiency XXXX royalty Operating of XXXX XXXX the production XXXX comparable last gross to $XX the of the cost million. compared XX% XXXX operating revenues as last quarter third number and Operating translating compared and million, supply Since $XX.X this $XX.X customer the were to production per margins the in and ordering in chain were as to margins quarter to XX% include was quarter XXXX the quarter's of Cost gross was levels, Some a gross diluted cycles, was sales $XX.X the overall OLED of diluted factors XX% $XX.X inventory license quarter million. million compares comparable quarter million, of fourth in and in fourth sales quarter's these year-over-year excluding Fourth of income to quarter XX% of customer quarter XXXX. $X.XX for margins income of XXXX compares quarter of $X.X This million COVID-XX the quarter moving of million $XX.X of for quarter the of compares million year-over-year's million. million fees or the quarter's capacity fourth in of product $X of into share. was of in for material Net $XX.X third were of $XX of operating demand of gross quarter $XX.X in of XX%. and compared Fourth in and comparable us. of our quarter third $XX million translating expense fourth $XX.X ramp $XX.X expense. gross compares $X.X and XXXX. quarter they per device quarter product quarter's the margins the factors fourth and and schedules, well to XXXX. gains. rate XX%. million issues, loading Fourth quarter million XX% third Adesis quarter tax share. Fourth and $XX.X This into of million quarter XX% in XXXX XXXX This or $X.XX quarter in to mix, the

Now another be XXXX our record year. on expected outlook. revenue to to is

gross to the are X.X:X. XXXX ratio gross and be similar our margins believe to to revenues expected royalty materials of overall margins of be the XXXX be grow fees $XXX of to to that the the range approximately expect license of park $XXX We XXXX. We XX% in million. will poll to in million XXXX

R&D we material XX% operating range complexity to expected gross our the are material margins, in to Regarding increasing the XXXX, to costs, material expect the growing pipeline range. with margins materials, next-generation gross in of our XX% higher the be SG&A, up and XXXX be development costs and to margins Iridium X% be XX% year-over-year, of year-over-year, XX% to to XX% expected patent expenses of to estimated are year-over-year. XX% XX%. to XX% R&D up to with XX% by Operating expected in aggregate increase SG&A and to be

approved to the confidence quarterly XX, expect the shareholders. The on approximately XXXX, be Directors to Display's robust March we continued share XX%. of that, effective to generation our are payment capital We increase expected in will dividend as cash tax future dividend has of growth an Board back record dividend. business that of of cash close lastly, of the opportunities, announce the flow And stockholders positive on With March rate will to increase XX, $X.XX and XXXX. pleased the per A Steve. paid to turn reflects in call Universal return commitment to our be I

reality, efficiency our and of agility pioneer our OLED development and Thanks, to industry. XX-plus blueprint and leadership to OLED have discovery, OLED we leading the vision, proprietary the Sid. spearheading constructed continues a be architecture, OLED fast Universal next-generation Leveraging continuous and to invention fortified present to performance innovation, and Display From of innovation a platform Plasmonic years the in of lifetime advancing of and delivery groundbreaking the Corporation growth. of our materials technologies OVJP technology breakthrough

proposition Our R&D in our opportunities, global map multifaceted industry and expanding framework approach strengthen our our ecosystem. and intellectual amplifying strategic our shape enabling business, value our initiatives our market and the of and OLED road property OLED game-changing reinforcing growing customers the

positioned strength industry's chapters which from OVJP further our are Our fueled and employees new Blue and Phosphorescent of the drive, for growth tremendous opportunities and significant. due are to to and substantial and product shaping we capacity. Display's and would elevating for company. and by story scale, we participate be the expected with in products, its both their new platform, and OLED believe be global to Universal global that future and to dedication partnerships is still of industry-leading in our OLED of by We growth extraordinary the each presented Combined existing OLED ahead our in for like accomplishments new early to our desire, is opportunities commercial offerings excited I thank heart expected advancements. continue the and are spending well to

achieving and operator, to the growth We in with shareholders. are a industry, long-term and ecosystem, customers our delivering for let's leader superior start our materials that, committed and for cutting-edge being for And the technologies the Q&A. OLED

Thank you, Brian Instructions] Mr. with Sachs. from Lee question. Please [Operator Steve. Our question first with is Goldman proceed your

disclosure in the with questions. you just and new back around material had up Hi, a bit. product. afternoon. for guys. Maybe developmental commercial in that know that XXXX, green the revenue bit material I I Thanks commentary like blue, the a that past dig new taking happened quite Good into commercialization, wanted seen off, into with was and to the XXXX, a first designed pick I before think on actually

that to just, of, us of thinking your context, a the commentary? XXXX, of new into be Will there any over next years? notable mean the more in behind in the ramp you're that a about designed product kind is detail terms you can in timing bit way So commercialization XXXX, And XXXX? be you're in couple how or then thinking in give little the should revenue we blue given if of about

now of that in significant the end the and this selling phosphorescent work have system, in market customers, in we So were our the our we needle is we're the we move on by will blue not looking but target with was some a expect be really commercial the see phosphorescent at to to little advance track we actually announcement XXXX. bit, We commercial that up a way until to on Today's blue development. continuing expect year. making level. it to been on that and we're blue the Brian, advances currently can the get announcement would materials we specifications material hit We're pick

that great. you past, the I Steve color. system. had in talked know That's as a about for And Thanks blue material the

having advancements specs of you you just is So kind the both as made that host, the the as in plan commercialization? end that still the emitter as target XXXX think about XXXX in well of

Yeah.

R&D system, we're emitter the That's -- of host on present focusing focusing. which phosphorescent working consists teams blue what system. are Our on an

there, Fair to your I'll would access Okay. a I this one, said the have they and blue. past contractual agreement. With you've Samsung, And in it maybe current doesn't customer one and on, license, the have last under commercialization know again largest enough. portfolio on then pass multiple times don't mean respect to blue it

So agreement with are that this of the with anticipating the wondering year have that the option a they renew talking now ready portfolio be just about it you year next around line your you'll of being Just license of two-year that relates more incorporating anticipating to or your contract, their they what the are thought extension of already couple final their you that having have, for for, contractual you within years? customer situation? largest Blue as processes sight blue in

been that's you have Well, both future. as over our expect be to with move the take long working forward we with next see we've those a going to parties. place, to continue of as we exactly to well. through we'll lot the time how them But for into of and XX years working advancements Brian, Samsung -- know, as parties both developments of And

will it for Thanks call. it. pass Appreciate on. I the

proceed question. your ISI. Please Our next Muse C.J. from with question with Evercore is

good afternoon guess for blue. follow-up a you just thank first and taking I on the question, Yes, question.

here. a now, for clearly, talked excellent progress multiple statement about there's quarters You've change but

we have recent you what And the on specific So proceed through the XXXX? that milestones what key perhaps focused you're on -- can are be as more advancements been?

are efficiency about. giving But and them talk additional advancements improvements of line advances some Obviously, the blue of the them the some emissive making, hitting us a we've of phosphorescent system. level of Well, I and targets. we've can making been point excellent in progress but color on Sure. continual Recently, been confidence confidential. not lot lifetime our step we've that's seen only that

of in And we that the should any internally as aware terms part of XXXX of be positive that, outcome? milestones

milestones, I internal have we're to going that for keep internal time. clearly we think while Well, the

the All right. worth was It try.

up revenues. to you the in As my you deferred had follow speak million outlook question. Can $XX XXXX? revenue Pre-XXX, for

I million. you fixed to your revenue You exited real a $XXX should would with that, to And in majority royalty. would think, the that be me largest seem of that, to tied tailwind deferred It the XXXX therefore, XXXX. be customer would obvious with

there? So years, I And in of see would of guess part is as assumptions? Samsung that assumptions agreement were your to you an making how changes that case? What the by extension with cause kind that, the if of -- are X you deferred revenue then

Thanks, C.J..

our the end -- we've have of is past, But at more in based our that of contract. the no customer we and As we've of to closer longer largest noted as expected of deferred terms, contract there. expectations, we beginning revenue. the agreement there's customer can recognize a the are tell more I than deferred the revenue of number in the always majority that customers the at end you upon We in the customers of our to

addition of are something revenue – our we In that the the that that, use the it to agreement. is will life deferred over expectations

a it see have? what will we each one, different is when to If will customers' that we'll new are or So, the occurs, have a exactly agreements impact enter it of lifetime. into not what

Thank you.

Thanks, C.J..

Jim from and Needham is question with Company. Please proceed. next Our Ricchiuti

more of are many units, more just being the Thanks. TV you handset cautious little to the you're But is the more perhaps about bit in market. in a core guiding with context the bit the I'm producing, guidance respect IT Good LG wondering, less market? foldables, I OLED more putting growth little I afternoon. way the if a together year, for think annual know, science. hard, the maybe moderation

honest, the to our are for these best Jim, Well, estimates be year.

according to Market expected by XX% the expect this and look Research, OLED quarter. to market past, from in is approximately As add, grow the the look if market. grow to But to we've with to you overall $XX market, at just we every Omdia to XXXX. XXXX the market, to overall we And billion at according noted the

If is you expected be market the estimated our market -- guidance, look revenue XXXX growth XXXX with to at to growth with line our growth XXXX revenue rate. in that

Got it.

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test So which looking these the we're at OVJP -- the as side, of system. development Jim, the on blocks will for and building alpha for in the serve large creating viability manufacturing we're right prove area now, stands,

So focus that's are on -- side those the the the during technical XXXX.

we're at as suppliers On those as partners, well and conversations XXXX. customers. are with side, looking development of equipment commercial the continuing And we're types in what potential commercial and our activities

Steve, is there more interest from the capital... equipment

a six it. we've There's eight-inch scale to lot interest. is doing now by the think of generate larger people larger a We've to concept that up to at is really type that, scale, going And this small good been relatively that small the a a showing much that on proof of sizes, scaling of excitement. We're been OVJP of lot doing size. we

lot. a Thanks All right.

from Please is Company. and Sankar proceed. Krish Cowen with question next Our

two related I them. have question. had sensitive of I

be might be on I revenue constrained you guidance, your year understand customers constrained. one, not supply first your but might So

you side the look you? So full risk when or the large think your Is where do TV revenue, panel smartphone for side, you the at for more year is? on guidance of it

look COVID-XX still the and all look the all at their question. clearly we the we issues. headwinds at at market customers our data, upon they to for still mean been we Thanks from think there's at relate components, there we some I that based and and look have I guidance, of shortages. estimates, some look And component we our when information get

LG that XXXX. from I under XXXX, I you in still So, think about XX that just the have our of TVs -- are talking in still some those million up million mean areas hear customer you about $X risk.

look pieces, system are think, the do the we at So risks, today. some there in all but I still

in then the of the it. One commercial kind is that to the we is assume just side, XXXX, you the actually panel? versus blue is when on the Got red think blue of it on enough. mainly like follow-up for opportunity? Fair smartphone blue, that question for Is And two-part how a large market that And a green? question. second should about and Blue replaces red? part you think pricing about how And to relative do think it do incremental gets

part question-- first your of The

phones. Smart

Our that customers have use a one. wide want variety of to users end they blue

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pricing? Got it. And any thoughts on

Well, be. get closer, going to pricing out figure we'll is what as we the

Sid. Thanks Steve. Thanks

Thank you.

with next Deutsche Our Bank. question question. is with Ho your Sidney Please from proceed

on Jeff this for Hi, Sid. is Rand

meter an installation OLED next few update next in the in saw the growth You the versus XX% an years. years? the last years, two two slowdown which reaccelerate OVJP introduction represents Do you this your see square the of with expected a on over growth you to opportunity gave for

you. Thank

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to something And place think XX right XX, at were now, that be like sees we're do of I I X% that, heard period. the So, that market. it that IT or going the during we've IT I -- think think comments, facilities put cycle in only that

us. and as OLED look good So, for we at for a opportunity that very

the Great. right my with Thank you're your business now? you. any situation customers' follow-up, And monitoring Russia are escalating, with there and that to Ukraine your as or risks business

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would us, for specific us. about that there's that, nothing So impact

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Great, you. Thank

Thank you.

from Our Martin is next question & proceed. Company. Oppenheimer Please Yang with

Hi, good Blue. question you you any on fluorescent My question. applications afternoon. apply currently similarly my use for that is think to first Thank Do blue taking will blues? your

way other blue will work -- can continue the temperature meets for. things it product in be that will improve. initial pay of additional we'll and the across like panel that use consumption the the first the board then because lower the to But everything, needs, is of power initial efficiency, energy there as going lower the to is basic brightness product lower interest well the lot a Ultimately, as

Yes. to add, about used as backplane. to past, in we've a redesign a when have material it the require in you the And does just phosphorescence, new talked Martin,

as adopting time board. across start start things generations, older obsoleting some get but the take blue, they it will will our So to adopted

the that. on to have follow-up on your design easiest Do you any which change information be A will backplane implement to blue?

plan generation To at every know we're they backplane bit product. other changed back -- a quite be people. honest, not We designs

our business something but So normal that's OEMs, the in it business. is the for of the course that's not

our able By would question your to end the final Got IT? is separate XXXX, of much it. capacity you devoted is estimates. capacity to how My be installed on

at smartphones. in mainly IT for And is it. not predominantly just everything. really X.X look the is -- stated Gen CapEx growing and really we comments, we -- for bulk give was TVs. Gen IT and it as X.X it's The technology We you But of that's there's and Steve's

Got Thank you it.

you. Thank

from Our Citi. proceed next is question Instructions] with Atif Please [Operator your question. Malik from

Thanks my for taking questions.

or internal blue by In hitting that specification clarification. customer specification your quick of specification? specification prepared year. end your a Is remarks, you the about this First, talked target some

actually of what for. That's good question. calling market understand the development specification. looking We're is We a a kind

our for developed we've so And own And the quite been we've in specifications some state internal that. specification for time. using

like year. And then margin gross What material kind margins last were assuming that the margin. Okay. Because little for costs the gross XX% second the year? this think below Sid, Iridium you are bit the I the one goal the a on for the gross full for of year, raw for

and puts the are you about So this takes for gross on what `just margin year? the talk assuming

in and without We We our developmental expect are what We've components. we materials to margins into range. into is our some costs talked other XX% about gross gross there margins what, costs. that Iridium do going that believe gross go down the have to breaking XX% margins. into And be

are don't this So down. to than they it year margins areas be that t o really we in it. gross are the But break impacting we expect our impact it

Great. you. Thank

Krish Please Our proceed. is Company. from & with next a question Callon Shankar follow-up

taking for a just Yeah, quick Sid, math you. hi. question Thanks follow-up. I had for my

that the at the to the at is A, guidance look year than is going the the you the year. last materials of of this of of the license so, looking the if compared It X.X grow midpoint faster license and is revenue envelope, And materials like revenue correct? X. ratio If that opposite back to the case? seems why to

and the Well, when we accounting guidance but each it give the some don't each -- out, we break customers, -- depends X.X. you it this, really because break contract. of at we through we go for down look on of And

And as of over and how some to royalties about customers, fixed have license and them some estimate talked the do of we've going what sell But much fees some have you're have a you life. the combination. is

And result so to be. each customer, the for ratio depends customer. what on the are it different of one customer just another will really end They

very right. it. you much. Thank Got All

you. Thank

with question Andrew Supply Our Research. Market next from Please proceed. is Abrams Chain

Hi, guys.

meaning anything expected capacity question consider or accumulating normal? quick typical normal, had expansion that with anything what on line increases, emitter somebody on been you what green either than or one might or we was who out have is there either that side. of Just typical red or guys might there was the Was meaning different

there's Thanks, a anything Andy. don't normal. at I think

was there I occurred leading don't whether you're that think buying that I like buying or anybody to there's anything think year-end. safety But stock excess.

Great.

you. Okay. appreciate it. Thank I

Thank you.

like Thank Rosenblatt the over any session. question-and-answer remarks. program concludes the or you. closing This turn would back to to for Sid I additional

you interest your and for good the a We hope you. all you have Thank tonight. night. appreciate joining call Thank

This conference. concludes you. Thank today's

participation. your may thank you at for You your time, disconnect lines this and