AXT (AXTI) 29 Apr 212021 Q1 Earnings call transcript

Good afternoon, everyone, and welcome to the AXT's First Quarter 2021 Financial conference call. Leading the call today is Dr. Morris Young, Chief Executive Officer and Gary Fischer, Chief Financial Officer. My name is Laurie, and I will be your coordinator today. At this time, all participants are in a listen-only mode. there a presentation, session. speakers' the will question-and-answer be After today's be being [Operator please that conference Instructions] And advised is recorded. for And I to Relations over the turn AXT. would now Leslie like Green, to call Investor

everyone. Laurie, you, and afternoon, Thank good

tariffs yields the during financial Before we begin, and owned your market chips the on chain and products. made COVID-XX growth the of fabricated our regarding, our customers in sales manufacturing environmental efficiencies the would trade devices quarters their financial Company, chemical Company's contagious other wish conditions mix, in like questions, you health such to schedule of potential comments delays our other product performance our we competes, capacity, succeeding are in China, our demand that conference tariffs materially. and regarding limited including uncertainties global could to not to, safety deal or and the to response projections impact among environmental, supply in restrictions. using the including events that or a our we partially industry forward-looking trends, manufacturing products, results are economic you the events call, restrictions and ability make as which and current and differ the uncertainties, to by Company are markets to growing this based in control of including course or These and with the risks outbreaks regulations the expenses caution relocation, future remind increased China expectations of in and overall the I management's and of our serve, that and but future increase uncertainties other and to will as applications political things, for emerging timing performance and financial of conditions conditions, companies statements on of risks global and the provide market orders acceptance and and on trade statements utilize to We conditions expected markets to subject restrictions, costs disease, timeliness in substrates, cause improve well include, to actual

Also, close XX, I of that portion I Relations reporting now the information may for review turn In Investor begin, that the we quarter Commission. addition financial discussed the first issued like results of website Securities at we reports by to with note the press first on this you factors Company's of in XXXX. to the These available AXT.com. call, be want Gary following This Fischer online conference from call to the is XXXX. shortly are to a would filed Exchange link and available additional refer information could on at our materially our available factors on call will results quarter April actual through to release the today, from cause a contain market website expectations. our website Gary? of results. AXT.com current and differ before that over for be This our we to risk our periodic

you, Thank good afternoon, and Leslie, everyone.

million from up XX% first that quarter XXXX. pleased and XXXX of the XXXX in in the $XX.X report We first of revenue $XX quarter quarter up million, for the fourth of to was are the XX% from total $XX.X million

and would indium as the could the you the the towards that first already past revenue Europe were customers consolidated many approximately new was from Also we the substrate growth company not QX our $XX know, million $XX.X moving push America but and $XX.X compared revenue. program in our and predict XX% $X.X $XX.X of and QX from top milestone The of in million and such raw material team exciting an of North revenue of from pushing no the was XX% in was expanding quarter the phosphide is joint is overall QX, up sales $X.X with XXXX. expected in -- from and convergence It quarter mark, million Pacific XXXX of XX%. of past QX us revenue, was total total million As event. this for markets, Of in we XXXX, XXXX. of XX% quarter the million joint of goals. Asia relocation in of generated XG, quarter, exact reached the in Morris XXXX first revenue, million two XX%, In five $X venture million companies, customers fourth

today, As contribute approximately XX% they're we to But you know, on. five have because Usually, highlight at statistics one And to top XX% I move quickly them these usually, of customer. customers and important. least revenue. we want the normally total do read XX%

as factors quarter's Together, a repeatability the it business we of and adoption big diversified was one significant perspective, growing total an This from Further, this million up $XX success. of the the big than not broad-based, smaller vividly From quarter, order is portray materials increasingly our in because when demonstrating customers of one normal. of point, top achieved applications. these percentage customers this set five as it manufacture revenue we the of in on customer. revenue, made well over a

Okay.

$X.X we $X Moving In was the comparing driven XX.X%. up and primarily in companies. revenue Total on. the some and QX tailwind success expenses us on the the an QX, XX% was R&D. mix prior are in developing increase volume, Today, majority to The closed, released which up increasing sizable will color quarter new for and moment, it some is to Morris QX describing quarter this a wafers. we a the increase, in one but of market arsenide XXXX. lead from the for could costs believe XX.X%, our XXXX XX.X% from million gallium in this QX this QX of of you million investment raw product of the from step, fact, consolidated in by recent give and arsenide in QX Included in XXXX opportunities. is big in the our were program of X-inch $X.X announcement was and first there in shipping million, and is up development wafers. margin XXXX, gallium Gross from after of in material operating

$X.X will the in opex a X-inch is percent for XXXX supply profit than new project XXXX. operating Other We has to lot are also be gain QX loss of oversight line this bit indium is more of AXT and QX lower tax raw the have underway, partially appropriate. tax wafers. The than quarter is indium first exciting a operating of and position of and of offset of accounted increase chain several bit an materials initiatives raw a million applications Total exciting Especially for a total in for R&D XX.X%. $X.X $XXX,XXX range that This increased. phosphide. controls and Nevertheless, for is a was revenue some a of million This us is $X.X profit believe operating the the owned of the gains to under items, To quarter expected development and for as up currently companies that are part loss of $XXX,XXX. million it in stock currently of of in compared is was of a This $XXX,XXX Operating tightened quarters. by to QX average the another in of that participate perspective, ensure an as provision XXXX phosphide XXXX the we of us the put income noteworthy next from deeply be to quarter. material quarterly over opex We the XXXX. equity expense comp method. for first in with has and leads These up in QX in XX.X% exchange the $XXX,XXX. expense foreign growth QX below pricing will drilling of first more net quarter which over including profit is for were down $XXX,XXX than a we $XXX,XXX. QX was provision market net

tariff result XX% wafers tariffs States China. Our a United $XXX,XXX importing from QX into the as the in results included approximately on charge of

of receivable, for a to profit numbers capital and attributable previous receivable of of of loaded accounts XXXX. net we the working profit in net and the at a $X.X per increase was inventory a cash Cash, payments. an revenue context, had $X.XX in QX two equivalents XXXX, early a per Collections of was modestly for will million quarter. this December of result, of prepaid AP and loss a in week-long of these loss The $XXX,XXX plus a back-end is the share and is QX $XX.X decrease accounts Chinese especially which into By benefiting of million $XX.X $X.XX put of fourth million XXXX $X.X it or shipments quarter, and or in of QX of March investments $X.X diluted shares. our had because These QX or up QX for true million. break, this Year, was million, shipments from months share profit The million $X.X profit for this the For $XXX,XXX To XX. comparison, a New net increase quarter. is offset diluted were correlated, XX.XXX we quarter this recent in was by were million. and a CapEx primarily million the By share cash comparison for up from are accounts as XX, as $X.X per count share. $X.XX move QX, an had

because for of which is more is reasons; inventory, We needing means the which used rate we also strong, are order up inventory. first, cash two

bit prices moving lower. are COGS keep market material the ahead raw our we and a of little Secondly, are buying to up,

X% months. which Depreciation as capital the investments of million. are in at premiums. amortization utilization. our of progress and All quarterly inventory fourth This in This be Finally, million. in result cash consisted inventory and amortized approximately quarter in of March XX% at is of this a the raw -- we and on $XX.X finished were the insurance right. million cash gives Ending example annual pay in ended for XX financials. payments by discussion work up concludes use and the you color year $X.X was goods. will quarter over $X.X Net increased and the that bit year An million XX XX% materials, a of prepays, $X.X

brief Before me and in Morris about company give plan to Shanghai. STAR you in the list China comments speaks, our Market update on a let our

announced publicly were and opportunity of spent finally and during assessing As possibility November and it early China. this while of you all into time Morris as the were to the considerable fall XXXX, in in in still of looking XXXX. all XXXX, we I effort We together

that to took the China and things AXT the public a what expectations company. An have are than China. IPO required became complicated take mandatory more is is in that required be company, in and means drill public IPO he training actually placed upon company, interesting as that in to and to in requirements the XXXX, down of public IPO even be U.S. Morris it it the prospective but a that is going takes the accomplish. training to to prospective What company? is clear One longer example an process a in we is

in included more completed also and again, in audit Ernst & aligning So equity in efforts undergoing beneath QX detailed by private our complicated. Tongmei. an more China the January, is main Tongmei here it in rest assets is activity the we our company conducted and China, hidden and Beijing Young, of

and process fine. submit going or in and patient a both Overall, have will hoping the steps QX. continue our team, SEC around great sorts in We're June Fortunately, persistent. to we application they're of These QX. XX is

call quarter, been capital our continue of think market busy good review conclusion, financial timing that business. good in Morris concludes to our terms in over it to horizon is opportunities and comments. this and I'll for the but the overall a accessing turn Young Dr. on has the of now our markets We favorable Morris? In China.

the Thank a that $XX a very Gary, good gave of to QX quarter has revenue ours you, our important for a afternoon, AXT. threshold, goal milestone and and which team. We I and exceeded challenge everybody. million been was met

growth nearly performance our products. surpassed with in our strategic expectations all Our of

connectivity's, LED-based to consumer XG in demand profitability. of its as and impact technologies, We gross What also beginning related applications that others. a of include convergence display, in growth are and a referred today is achieved drove for products. monitoring in sensing meaningful across These seeing on also and telecommunications the number trends our our margin improvements devices our strong portfolio to biometrics, the datacenter we and have are healthcare

phosphide, out very million over years demand. and quarter businesses $X ago, investments all past some Our for material. and be raw applications, those a we and efforts processes. wafers like allowing sales our customers ways, passive we quarter, quickly effectively particular, a expanded the manufacturing our XG arrive. and the and opportunities. XG sales demand of market business. product applications phosphide product In order applications, elevated indium perspective, from of technologies have our in any quarter for of By But a scale our new number our phosphide set buying connections, between was on only and lowest are indium Today, It Demand and generator at a demand a meet In our difficult it driven Silicon by connectivity, we the the customers' seeing saw was Ten modernization have networks quarter, even the across second from growth and number of In the and waiting new XXXX, or In technologies. the is development can a to Valley from that are on of demand was classic support in us received cost we than is to its continued to continued years related was we infrastructure positive for a the and XXXX. exciting large largest to our revenue were several product optical XG QX indicating in a history. level. strength that second be and facility revenue steady is remains now we diversified eight of optical surpassed customer requirements In-house specifically from datacenter horizon. momentum. barely equipment strong future telecom This story. indium related supports expertise subsidiary At of sketches revenue lines, additional who building and in our broad-based phosphide contrast, for different requirements. germanium past distinguish In single level, number all this lower that XG by for which indium of functionality. can positive to classically utilizes

fully a become our multi-quarter to awarded are at to process, was X pleased our our touched have this qualification nearly pleased aspect proud for that customer customers. all benefit This operations our this we're QX, and Tier on During business work were process every qualified of our customer. been We closely of and we to designation. elevated our with

represent driven and in new new for a our we in this indium expect being areas of to see which business are meaningful for X In by Tier material. phosphide area applications, applications As currently XXXX, a or healthcare additional such as monitoring I engaged emergence these year. We're devices. mentioned players. Money consumer growth

QX Revenue wireless QX in since to gallium highest Demand applications. our driven grew and and automotive, gallium applications, including by in arsenide LED It in Now end both revenue arsenide. and high was was lighting quarter of QX in IoT. display turning XXXX.

pleased gallium to As were QX applications our expect announce strong, arsenide but expect of we for from revenue level. to we decline successful LED very LED we applications. look into wireless development to demand from We remain do today X-inch QX, wafers

the unlock meet our with We producing our to challenges diameter have of [rose] their a working comes with them of customers, focused complicated our this emerging of sizes -- for we interested materials. forecast innovation projects. the in requirements is a have it. -- technical always AXT we Every with in spirit But increase major to has for pioneer step applications. in delivered potential in drive in been up area entrepreneurial crystal quantities diversified -- interested Increasing diameter and several are the to new order to

reports This to believe help We to been because of innovation is microLED's tremendous are Among longer a chips. XD step high-volume This seeing the test a is gallium and of sharper produce extend very devices application driving this microLED including early-stage We're benefit for new are team. will our and than no devices the players number tube end microLED the as of market a now the to to as in to development market benefits, devices be specific able already that the program many are volume customer of consume according of X gallium and and believe for for arsenide from number shipping entire screens significant we very homes LED technology, specifications. like displays. very space applications, could enable wearable we required to for that sensors, scale is colors. driver potential provide expected Tier consumer numbers, less overcome that handheld major televisions hurdles. proud used the this VCSELs contrast have well of likely like are smaller wafers efficiency LiDAR's an believe activities. power, add our -- of likely could and that We markets next we large our larger arsenide laboratory the future. wearables beyond. brilliant are devices wafers a AXT, become to and for value Regardless may the and lighting exciting Their for for current are high and to substrates. XXXX These we the

Turning strong last QX. revenue a in to modestly in germanium year, for quarter decreased substrates germanium QX off Coming very substrates.

to expect However, see market solar cell strong Q this the we growth in be year. XXXX, satellite to looks

grew touch Finally, material raw upon business, I XX% to QX]. which our [in want

crucibles capacity our with currently allowed in and demand. to grow meaningfully and raw relocated to BoYu, we who materials pBN recall, companies joint This, which to OLED both materials, manufactures campus a is joint companies venture a other coupled tools high-purity in both in may market In for recovery expand two pBN-based strong Kazuo, such consolidate diversified industrial enable quarters. you JinMei, them response high-temperature pricing as supplier. raw XXXX, ventures; of recent has gallium to in As

around very ahead modestly level; method pricing expected coming joint early The QX, although that QX. using we from of commodity improvement equity look this at enabled also for to to ventures performance we QX. perform down perhaps remain As the to account well in strong

healthy we the this demand contribution increase that remain XXX% preparing strong start showing excited last and XXXX should In believe over more so with years environment fact, been in this with broad-based will yielding during to two results quarter. to saw performance a in In results. are and to opportunities see and our we're to we off We of which our now their their applications a be have healthy demand. strong to year customers continue We're for many come. closing, the

In call supplier. concludes our expansion. prepared year new I comments. ample the ready now well outlines reputation the Tier and X-inch will several ahead. addition, Gary? of significant and open up second as With arsenide guidance. believe requirements. for will my next our new This technology us years gallium our X capacity applications enhance and up this successful the excited our the quarter over our for development We're product with customer Gary ramping to for capabilities and factories turn back We room go-to for

Thank you, Morris.

very environment quarter, the strong believe phosphide in see demand continued off coming we QX. healthy we remains growth. As Morris will a discussed, Indium

and We in increase gallium germanium. in for growth modest revenues also LED expect arsenide a

a materials. for pullback we gallium expect down raw to mentioned, a and for Morris arsenide As flat wireless slightly in

range expect Operator, based be approximately million million and I our in to count This that's As $XX.X that shares. concludes to and the We between on of Laurie? net a will any $X.XX share, a prepared questions. XX.X be million. All revenue glad right. our of share to will of Morris to $XX.X comments. in $X.XX profit such, we see QX believe answer

from have question we Kang a Riley. Dave And of Instructions] [Operator B.

line is Your open.

wondering, we're I this question for chip effect And comment prices as materials you seeing Dave. occurs? could prices raw environment you Dave guys was increase. charges. expect Broadly, how guys around? increasing if pricing are on chip This phenomenon can Kang wondering also on this of long you And is stick were to we second the the is,

In So let crack at at increase substrate difficult price substrate take first. business that me to general, a a level. is

side, last last has yes, as materials do raw and they the on increased and was price supply. kilogram [indiscernible] raw late year And a for material, $XXX as instance, the with on kilogram. fluctuate $XXX about demand However, quarter the from gallium -- a

that is gallium. do But to the has But down -- bit. So significantly, $XXX demand believe But well, come down than very for not a price the tight. about it's double. or I that more $XXX recently, kilogram a still

production level, new increase price line And so more difficult into believe more prices. substrate the because the up. however, there are it's coming suppliers has I In the to gone

it to is of terms However, the wants if way this being I price describe that we the in customer would times many increase tighten may their indium phosphide, specification.

a neighborhood price if price then instance, if versus XX%. in by density defect the $XXX, the that X. would XX%, the that such $XXX is of of rise a And want of sort factor may with of material, a defect set you sudden, it be that let's want $XXX, you density, of half say, requirement and all For

other the Did and words, answer I your drive the your yet increase of In that's way So other productivity price. question? increasing price. up

the That's And with constraints or supply broadly follow-up, Yes. quick to you anything? guess a tighten I be trying chain more their are maybe more helpful. just [indiscernible] them are specifications Or… seeing like to forcing customers solicitations

an that's mean, I a phosphide lot think question. I is Yes, arsenide gallium specifically, interesting more mature. in Actually,

we consumer I Also tighten coming the because demanding start mainly other a so are in phosphide, we And sudden, with quality same one products, to high-end level up next-generation want develop such product. thing. seeing they So see seeing all to -- lasers deliver the of we product they performance customer. see they a better we in very with was -- guys dealing as see are of think their and specifications what we that to change. tighter as But that indium less this were -- do also

say, So the the specification [indiscernible]. end to let's customer starts intermediate, to tighten their

So do we that yes, phosphide. indium coming timing the in of spec see

Instructions] is Richard from Your [Operator next Craig-Hallum. Shannon question of

open. is line Your

gross kind in the start quarter. here multipart a very question Let margins. me I first with had numbers of on some nice

the and called drivers you new anything so the you you in and start mix didn't as seeing potential but a or that about from not cost, I'd off, that's out a some alluded at the to along in call start only these here. and more bake provide I raw -- about volume to think about, second inventory think buying prices I of kind you headwind bit more lines, improve quarter kind see hear you to you've those gross lower those talk last get of kind margins? hear I and But you the little love of here. going here bake facility. also, as do in of when the two yields? to When of the but comfortable eventually materials talk what think with -- for level

would say is QX. early quarter, advantage that because even I'd recently this as saw already as Gary. Well, some happening of I in taken the this of we -- we've last

goods to raw you but for It sold. that huge have impact. difficult because be be a that to benefit factor able sudden, all taken is see that we're the advantage of don't it's going I to price a cost is we of the paid So to measure of, moving we've going from inventory material into a

So --

the to material so along not to two see I'm is -- for way put is let but difficult me us price Well increase cents, I Gary, pass the the it customers. raw our CFO, my that

short-term. in especially Okay,

raw or lot benefit joint to supplier benefit who don't But right? make our write-up gallium us. start have we supplies venture inventory, So the a because a However, to okay? in gallium AXT our our the cost that's for profits, we lower inventory material is of

Right.

newly it which is that the get price pay becomes our then cost our gross we to will of price, goods cost our don't We start substrate margin into sort up. in this inventory, higher. up. actually, And decrease. then high, get we The average, to if only if higher our it of, gallium, be sold if to we then impact write that manufacturing cost our purchased increasing that our will And cannot along that customers, time pass remains our of

off than to better a our way, joint still some probably are we insurance competitors have part we because policy. offset it. ventures of we However, In have

out a lot of maybe a getting It sounds like Can kind last talked got wanted to -- And I potential potential trend. of on about in guess part would get the that We've and that's goal of few as your tailwinds, two do. can multi-quarter bake margins a to kind assume is in of want here, think in here of gross the in you few quarters of happen? the yield of my you relic what I multi-quarter substrate also a headwinds time when a kind I one cycle at context? view of that But about or your and kind the manufacturing. to question improvement us or your seeing long-term of manufacturing you look XX%. on well help

Yes. I'd some say, still think stabilize we we to raw improvement that think -- And see Reciprocally, settle sites. of cost the yields, on there's some improve be see materials. because in things specific I I probably goods the as can push I about yields sold think will new gain. and we

inclined after we before a comment the is like that are achievable, XX% pattern up one-quarter for to make is we still We'd what may they move and the going margins is see know, of is to improvement. we have be. not obviously. kind quarter, more this -- think, offsetting to have We today one you that very everybody okay, prudent I a quarters the couple effect. think somewhere around So should some But Morris

pleased we're year the new certainly, of we'll think We to we're sort rest out probably and the number. But margin pick with above be the paint a from or So QX. of at for hesitant QX. XX%

I are and old-timers. So Richard, maybe you -- yes.

should happened exactly think raw was price a you're was price margin. about back from up us I on to -- kilogram. going going it and thinking And probably gallium up, that gross $XXXX material in XXXX what with that went help when XXXX

However, we revenue the our venture difference is as that well in our profits. as consolidate joint XXXX, into that

profit the help our to well. us, -- when that gross we of as venture margin start up So jumped joint

think venture, saw joint -- we own last although that still substantially, XX% I However, was I

yes. Correct,

we But anymore. consolidate revenue their don't

question? although margins. So -- in they gross us make, enjoy Does do profit help doesn't we but of we terms answer that of your the it sort

fact note Yes. that I'll thanks for the That's old, you Morris, called And so helpful. that. me

I am for speaking only myself.

My question about phosphide, Morris, Any be and be here, said can contributions quick next How going noticeable, you you small? in applications it would help the talked and year? us that is, scale this forward some that contribution? to characterize to year. you Is think indium very new you this us going help there's some going about follow-on way

Yes. think it's to I meaningful. be going

only things of as a I utilizing monitoring lot well think I'm lasers, on but can overall the do as new which approach, this UV healthcare product, of not spectrum etc. think about wonderful I excited lighting this and

optics. cannot phosphate which of from escape it just instead any utilizing I for telecommunication, just is good mean fiber great, So

is beginning only limitless. of you're we when Everybody a is great follow-on which And monitor mean, future. take imagination you this. it can to the dealing I think I are I However, your starting other to of I developments, products, this with mean approach this. think are and there your a care health, likes has health. great consumer help

XXX% XXXX%. be So know is also, it's to going And whether meaningful, it going don't not be, going only we how be it's I be think going but to multiyear. I to or big to it's think just

next from Richard question your And Northland. of is Gus

open. Your line is

do of whether applications sense some Just back to this going have product? at of a indium a sort monitor for Do phosphide, or sense the the other you new application point? any of it's of have health type you consumer

going is anything seeing going quarter I market. to then I we you to is it if is Gus, And a But with know, ramping. say, new, around. only very real. apart years. than that know. don't is we think would anyway. if -- two, we're really somebody we -- are And because on can wait this out guess, go them don't I or talk don't is this for about I allowed but a we the and even I'm but kidding if see This almost think eventually more to it two is Look they're This to going for. working And what take it

this add expect the other to revenue? to a Is for it be significant. said the be revenue? you of of indium words, phosphide be part to application going to could phosphide up In it it's going XX% your -- you year, indium material And

good I don't yes, a to fast that's hard will add how But know of a XX%. Well, it it could because is X% significant -- question, the rest them grow. Yes.

quite SG&A what were Okay. opex, in looking those, the And driving then, need at R&D it was you in invest we in I SG&A particularly and you, forward? to And on and Gary, was expecting going the should a got bit how what about just color a more think quarter, that the bit up. for Can little a quarter. above give the clearly, was you've

driver XX,XXX of the activity, Yes. the tremendous from of a of energy, up marketing and Morris feet initiatives. vision the have from biggest is implementation just team. I amount mean, a There's lot we

and book that and drives of that to lots down in accounts them. of So expenses general ways touches lots ledger

But headcount; of BoYu. and company pleased there at has half We R&D, that's its both layer, and JinMei that to over been growth another our down are Tongmei drill in also good.

The Wages XXXX increased. because good larger-than-normal a note. has recently compensation on we we more have stock bonuses finished So increased. were paid

permit call all So is component the to that and sales on commission amount are commissions that labor. sales. A towards are licenses would up, required. reps, Those with the I have kinds Also, R&D versus facilities mind aside single compensation fair still what things of SG&A pay and are things come to and are extemporaneously. that my things in layer we continuing up. setting to do to our When for I'd biggest say

lower -- every for am a it's of these all me the number. I watcher, flip there's mean, story story for is happening. a revenue, of as stuff, controllers me bit, it all closely. percent level senior take a some -- a than So this initiatives I'd and for good the average myself we're year side QX watching person from comfort in actually of also it's that numbers I exciting numbers of behind sort about our But saying things and as of I'd and the And is business lots as what a XXXX.

things want giving add Morris, And put hope I in are do anything? of those you you helpful color. Maybe, the some to around kinds it. can that's So I

Yes.

well, not think president, I get and revenue grow asking lower, are raise, And We're etc. revenue good people higher when our XX% another vice many absolutely. to other a would senior down most salary, this we're your to were going some times, I was we'll if never to XX% hire -- drop your us, to or of profit? say, remember

about the I'm year-over-year. of aged us X-inch mean, phosphide that those lot new are caught However, I terms even I to the initiatives, or again, The it. happy we're profits. indium STAR of it, a us -- And hire higher higher revenue if to a now in now then grew translate well, arsenide, spending our XX% being will you we listing. go development, gallium which think activities we Market all see revenue But exciting liar dissect help to

than back everything need revenue. what earn expect we more will much to we any yes, China, is So were don't do and then we grow a think, opportunity add more in I tremendous start what our person do, if saying, I to salesman stay revenue have more come listing and to to there, I'm this, don't XX% sure, because don't growth or and

a bit However, more when prepare opportunities, to you little you more more yourself money. growth, for spend need

it. that's I the I think way see

a on still think I there's business leverage our model. tremendous

we're work of -- right what we're proud it accomplishing. -- a lot We're increasing So We see now. don't

-- So

variable pay quarterly annually? Okay. or is And then comp just

both. It's

Bonuses.

Both.

Got it.

-- talking we're company Which about. which

-- So

Richard [Operator Craig-Hallum. a Shannon Instructions] question have from follow-up We of

open. is line Your

just what more more than for that's mentioned the difficult listing you the process process process to news have reading started even have within gotten STAR the those One the that suggest even might here. -- U.S. difficult about who companies earlier. I And the wanted Market ask normally happens in here

seeing wonder quality what more requirements so get to degree like difficult you're seems can worry companies of due and China even those some like if STAR yourself? about the getting It exchange the just within you comment about in And I U.S. reticence are worse companies that on China? on there's diligence for whatever those

qualified. going are try are Gary STAR high-level there very going involved. of me activities so because give hundreds there the much I have public go up, let is timing many they covering. that every it Market is me want more the I day, in first. to hundreds many, and they're But definitely, many So let Gary that mean comment process heard to too But public. first. Market He's you believe otherwise, of listing, companies That's all STAR was I China. tighten why want companies to on it the

they to Okay? really lengthening So sure think management, that make instance, a They're result, an the looking no transaction. I as me give example. you senior the of there's are want part for they let at process,

I odd There's are have make But a a XX revenue investment that think XX-some year. because for be -- may certain United want business. to us we the part to bankers China last, or in for You in States company our sure they better And no are are been tightening up. telling what, degree, funky real. public -- us the

Yes. years. Twenty-three

one our every of scrub we So quarters.

business. doing the real high-quality also company we a products. So are we're right And really delivering

speaks for I think all well us. So those

because are the so more they're they cautious, regulatory are China tightening process. screws, slowing However, so down agency the

been we anyway. all slight every the think as of may right which along way, want a there's doing step sure thing; a the doing they I to result, or see delay So that make it's have we

double So a I it's Gary? mean, sword. think I edged

Yes.

Morris on think the the nail right hit head. I

surprised causing So about gets if to they very, will, that what's the bar, we're because at through lengthen trying sure -- a things leap are the very little to be over, you time be a not more raise who gate. bit to

take look that of other if you it step but was Morris -- our Company time. back at founded leaders So Tongmei a XXXX and the at in company, by and

BoYu adding all -- that pay makes it's It over it with China. what all collectively now So XX JinMei, taxes employees. They're years and over citizens. Chinese They XXXX old. in

You have many further into drill I down doubt China. partial companies supply companies STAR in for Market of other other there's listing chain. ten applying the ownership that

in take something, from It's things. we build very all. since we a And or software. manufacture China. XXXX we're we maybe at business standpoint, public. in in can -- don't a So want -- see it, this to been But is to We've cocky be company you very, XXXX not audited attractive

growing a So wonderful we as take more advantage is the set around this but it's the work, a amount have to aside harder, things horizon, significant world. of it's And on of opportunity significant. see rewards the capital growth are to opportunities

So excited, And our all yes, is discouraged. and tired. in. harder, just nobody we're They're it's team but is -- the

So…

at are the this call I time. his will Young turn back no to closing remarks. Dr. on And questions there over for Morris queue,

in Investor Institutional Craig-Hallum's participating you, our conference Thank Conference. everybody, for you. will call. Thank In in participating June, be we

or the up directly feel with to future. We speaking to to free like you Green Leslie in look As set you near me, Gary call. if a Fischer always, please contact would forward

for this you participation. concludes your gentlemen, today's and call. ladies conference Thank And

You may all disconnect.