Rambus (RMBS) 27 Jan 202019 Q4 Earnings call transcript

Welcome to the Rambus Fourth Quarter and FY 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Rahul Mathur, Chief Financial Officer.

You may begin your conference.

welcome Rambus and results quarter Christine, call. conference you, to fourth the XXXX Thank CFO; the and today Mathur, Rahul I’m on Seraphin, CEO. is call our Luc me with discussing results The for X-K. the that today Form have we SEC press on been the will release to furnished be at of replay week will for the be A available call next this XXX-XXX-XXXX.

You then prompt. XXXXXXX number hear the entering the when by the dialing replay hear ID can toll-free and number you

webcasting along addition, that we call. webcasting simultaneously reference the portions we slides In we're during this call, will with audio, and are of today's

Pacific you you're want the So, us of accessed at even if Time. joining A p.m. website presentation. access via this with conference webcast our call, can be today on may the call replay to beginning slide X:XX

forward-looking and the our our future we including today opportunities markets the serve, various Our launches, financial strategies, of acquisition reported contain technologies, efforts, discussion products ASC integration periods, for of expected will effects the including acquired growth revenue for demand newly benefits of timing and product investment and things. of XXX the of the and other our guidance on existing success statements, merger, divestiture amongst expected activity,

our uncertainties and XX-Ks. These we forward-looking call described are in results our XX-Qs update and These file we're including actual X-Ks, these from subject and obligation to to the with be statements more statements are differ risks discussed this documents may under during that comments. and fully the no materially SEC, may

Investor our in page most of under call. non-GAAP been presentations Releases. in and press the using clarity the included the slide and website Financial we're on financial GAAP at to press measures has these presentation also A both and release to directly greater effort non-GAAP our provide GAAP reconciliation our on in an on financials Relations release this In rambus.com both financials, our comparable in

with periods; then an will overview be our call with including future I end The will discuss will as results, of today financial and our follows; business; we will for order the start Luc Q&A. of guidance our

turn provide the call now quarter. the I'll to overview Luc an Luc? of over to

Thanks the efficiency strong by XXXX objectives focus our everyone. Guided and year our propelled leverage across we the Rahul, strength operational execution generation reinvest to afternoon growth. optimize was on of tremendous to company. by continue in strategic progress core and good company semi-conductor to our cash strong for for to a

million performance of QX As full-year. the a with an excellent for expectations exceeded result, we and delivering million in had $XXX revenue $XX.X

strengthen XXXX. from million, year $XX.X balance to also the fourth cash up on in from total focusing the XXXX, for to for generating IP continued Chip we company $XX.X million Solutions sheet activity million In the operations and cash which or the is quarter. XX% $XXX.X our perimeter brought We M&A year operations This in redefined throughout semiconductor significant the market. with over our our silicon

Verimatrix, formerly our well from We the business the purchase in the IP year INSIDE sale the as position expand ticketing both Secure. purchase earlier to Visa, the Secure AI, like our strong and Protocols portfolio silicon our of payments year, and of Logic as datacenter, Much ended controller networking, of augment and market and Secure Northwest company, the automotive. completing offering INSIDE and in teams digital the businesses

to accretive impacted XXXX. our be and positive XXXX As on expect the we but a previously, revenue and mentioned have have both results, impact neither we earnings materially acquisition to in business

and acquisitions, throughout integration of closing to year. and success addition, our the we to demonstrate continued the execute lines across our successful In product

growing by and results from silicon our growth delivering XXXX. Interface fastest was revenue record chip products XXXX from of combined from year-over-year Chips Driven delivered was Memory over the OEM of year-over-year. the saw revenue increased second consecutive businesses third revenue. year IP chip the the share of gains interface with record XX% data consecutive our doubling center and market segment memory steady and DDRX we qualifications, business, quarter in with almost

training in the as We revenue had the record year, recently, for customers interface our at drove and and delivered from next-generation controller also solutions. PHY announced wins HBMX X their growth IP XXXX. across target both part XX% throughout markets QX up sustained numerous Tier security at IP and for we our both win chip. Silicon of SoC Enflame AI design Most

of continued Gen fast launch In and of out our solutions, solution center addressing comprehensive and with build demanding growing data to team interface in PCIe and X portfolio XG addition, the applications QX. our the the AI in

a was silicon from revenue quarter. cash delivered IP operations. and QX both closing, We and robust from record In fantastic chip

For XXXX, strengthening objectives semiconductor, product company core strategic successfully around in the on and realigned strength the we our our executed portfolio. while

and and will capitalize Rambus, memory Now to capitalized growth strong market IP chips, the trends share favorable and XXXX we with for beyond. very for looking high-growth XG, forward, success by market well we upswing continued will alongside the continue to in AI on semi in be gains cycle market positioned

turn to results. discuss With call to the Rahul that, Rahul? I'll financial the quarterly

begin Luc. the financial results for Thanks, to with fourth our like quarter. I'd

Let me on Slide start with X. highlights some

not as solid the financial adoption mentioned, the rather As prior runs our ASC adopted beginning which and modified the We've above product using retrospective earnings XXX sheet to does Luc a but earnings balance adjustment. method, periods, and cumulative execute continue restate results on we effect retained through expectations. businesses our revenue of delivered

and Any XXX XXX comparison progress. prior under track accurate ASC ASC not between results under is an our to way company's results our

give our as performance. licensing provide to operational operational better our investors We into insight will such to billings continue metrics

of of billings expectations sales. our higher to million buffer and strong delivered chip million. than licensing due revenue $XX.X Revenue We $XX.X was

equivalents, quarter. very a million, with the marketable have year We the ended balance sheet up strong of securities from $XXX previous and cash, and cash

$XX.X for $XXX.X For of the from nicely million. was cash million cash expenses, million, with XXXX operations last from free year, $XX.X up year was capital flow

has afford us our strong that sheet on and on flexibility initiatives. and execution the our yielded discipline continued a financial strategic Our our balance operational results strategy excellent

continue and and a margin market technical historic businesses we We Silicon on with IP. have chip our leverage to strong in fuel growth expertise, adjacent where high to areas focus

Now, gains for to talk let the Revenue details $XX.X revenue quarter our to licensing above primarily range was due in share fourth for Royalty million, always on market between revenue fourth same quarter some was through difference billings we and royalty Slide buffer million, you don't expected timing the we $XX.X me while The revenue revenue our customers. business. X. bill $XX.X million. licensing our recognize was quarter relates billings the as chip

primarily revenue chip business. our detail, additional million, of into buffer Going product was our consisting $XX.X

million, and $XX.X our silicon Our IP revenue consisting primarily was of business. other contract

Verimatrix As our timing not and the silicon material acquisition due IP impact fourth of quarter. the we expected to protocols the business the from secure provisioning have a did on close, of

For contract the our and XX% year, up year-over-year. million, our product revenue Similarly, was was year-over-year. $XX.X revenue million, almost other $XX.X doubling

Our of million growth Visa. the in and operating underlies ticketing expenses of associated million with these QX costs and to our areas revenue payments strategy. and our and focus the $X.X to benefit $X.X We sale in of recorded prior business

on in with operating what buffer on due our we non-GAAP met you profitability plus our million. of record expenses revenue revenue. our refer was a or towards in the our to higher walk higher profit high targets This non-GAAP to we $XX.X revenue X. above Along end for the expectations execution nicely related total disciplined quarter and came With to chip Slide QX, our expectations. Cost statement basis. operating through expenses on me as solid COGS performance at our of income spending, was revenue Let

previous the silicon Verimatrix. acquisition Payments ended XX and IP headcount XXX secure the primarily the and business We to of of through our We quarter protocols the down in provisioning divestiture with Business. added quarter, approximately from due Ticketing of from XXX, our employees

on for Under XXXX. related ASC $X.X portfolio. which the recorded fixed in cash financing yet to return incremental our XXX, notes revenue, fee of interest was income of $X.X to the QX not expense to but This licensing million received of interest offset million we've payment. income issued incurred recognized component our convertible related we We related interest by the agreements

non-cash for expense interest resulted interest income non-GAAP first for on the this our notes, and other quarter million. $X.X adjusting After convertible in of

to related flat pre-tax been income, rate was $X significant $X.X non-GAAP assumed Using related non-GAAP for the income income net million. this XX% interest an XXX, of would to million. the have the financing quarter component Excluding ASC for

turn me to details the let balance on Now, Slide X. sheet

cash and the secure offset silicon from was by Verimatrix. Business of protocols very from million are up operations with pleased the and the as used acquisition $XX.X equivalents sheet. sale Ticketing the proceeds $XXX.X from the totaled IP Cash, business cash to We the balance securities our of of strength cash Visa for and provisioning Payments quarter previous significantly from of million, marketable and the

million. cash grown we've Year-over-year, by $XXX

patent Our growing strong activity. well the in flexibility programs, product balance inorganic portfolio invest our additional allows sheet strategically provides and as to as us firepower for our

contracts. the end to trend related worth At performance unbilled company value I obligations. expect had quarter customers to existing value as doesn't and of entire represent each licensing bill ASC we as our the agreements us net to of toward we AR licensing that no It's number collect down contract present recognize have for allow agreements several this $XXX continue that million, important royalty-based agreements has these which QX, XXX. note future reflects under of metric assets the to to this the revenue

at XX, and end did carrying held and not payments QX, sale. the as that cumulative As and net The we the ticketing of $XX.X was sale assets, quarter for assets of this our the million, this business liabilities of translation liabilities until October adjustments. third considering of classified close business as for business amount

the In purchase the recovery QX proceeds $X.X the QX, our results. a of we in loss carrying impairment after million net GAAP business, of which and considering offset million. recorded QX $X.X $XX.X the costs, cumulative of sale business we of million of $XX.X amount of in charge million considering After and recorded $XX a price of million year-to-date that this resulted recovery net in $X.X million another upon transaction this

$X.X was was million million CapEx was Full-year Fourth $XX.X $XX.X million. depreciation $X.X depreciation million. and XXXX quarter CapEx was and

delivered I free XXXX. As mentioned million of $XXX.X cash in flow we earlier,

million $XX we generate amount depreciation expect first relocation facility. $XX Overall, roughly for forward, cash of million of roughly for and the a in the our the expect that Looking roughly limited with to the headquarters operations total and CapEx to $XX of quarter million quarter of continue roughly related is strong million also the sheet for first future. and have expect XXXX. full-year of half $X I strong from XXXX, debt full-year of balance I to for the

let Now for XX. quarter to first Slide the me guidance on turn our

current forward-looking review. I'm what As from guidance reminder, materially differ could and best our about results reflects our actual estimates a to our

operational an In that been providing during metric is XXX, licensing also on addition to adjusted our differences. we've invoiced billings, financial outlook period, licensing customers under this for ASC reflects amounts certain information which to

As correlates $XX you provided licensing million. that as information, and reported deck, our first XXX, closely supplemental revenue said, have XXX. we XX see between on expect what quarter with the in Slide historically we With ASC we revenue the royalty ASC under under of in $XX earnings billings million

expect revenue $XX and $X million We million. between royalty

expect also between $XX We and million. million $XX licensing billings

between non-GAAP We total $XX operating includes be expected to results quarter first $XX ASC and $XX million Under expect $XX million. which million million. a between QX expenses, be non-GAAP loss for operating of the COGS, XXX is and to

$X.X other excludes related includes would million have notes in income expense income, due income XXXX. related interest and $X the million in non-GAAP XXX, to we to expense, interest of which expected ASC which interest For and

XX%. Based higher the of tax our rates with tax due end consistent XXXX legislation is pro foreign rate XXXX, of rate XXXX to XX% passed pro tax we higher XX%, expect forma than in the our The new forma our remain jurisdiction. the roughly rate statutory to on at of tax in primarily

reminder, primarily taxes a Korea. our roughly by our with agreements driven of pay cash licensing $XX As we partners year, in million each

a expect We $X to million between non-GAAP $X and taxes in of benefit be million QX.

and $X.XX basic This XXX to loss We leads per a expect of outstanding. count million be roughly for diluted you the to between shares quarter. and share $X.XX share QX our non-GAAP

structure XXXX, to typical because the in our expect ahead seasonality then expect agreements. I our and down to be growth Looking roughly licensing to QX. with of QX flat I QX QX X%, of modest due

step As XXXX of impacted previously, agreements revenue. we've several communicated structural our in licensing long-term our downs

after growth product efficiencies operational had In under offset structural licensing of structural billings downs downs. current which XXXX, we off. level excellent our our last year step agreements, the license patent step these Last and will

product line we I provide on in revenue line. to As the look expect future, subsequent growth both businesses our bottom to and the growth top

gradually we perspective, down XX% the through in revenue margins an COGS already line expect with the reflect From these gross EPS come year. analyst range. for implemented. anticipate than higher XXXX. efficiencies $X of shipments we've $X.XX estimates deliver year expenses to told, current We the will operational to expect XX% All expectations due and of operating the higher product to changes We expense in and to million move through consensus

Let make We're and had solid XX. to long-term me profitable against summary proud amount finish initiatives and to with of significant a Slide the inorganic drive our pleased organic growth. a team with execution our on performance M&A as activity on by continue progress refocused strategic We've we and our our of company very we growth. are the

generate in strong, to of that XXX understand added the level a reiterate demonstrated cash. of ability reporting, business reflected strength to remains our ASC While we to financial it's that complexity underlying our important financial our

our core balance and initiatives. solid operational and leveraged semiconductor generated cash operations in refocused from product Rambus' strategic to strengths support industry, improved our strong around profitability, our the have We our portfolio efficiency sheet

focus continue are and to our beyond. and core We well on for markets positioned XXXX

With our question? first that, begin I'll to the to Christine the over call please Q&A. we back Could have turn

[Operator line Rahul. question you, Deutsche Bank. Instructions] Ho of from comes Sidney from Thank Your the first

line open. is Your

guide. recent Thank QX both Can through contracts? appreciate for quarter-by-quarter talk Rahul, My of next you the Are and than any that, on and are through Great. look about results stepsdowns and XXXX. XXXX, some – of other as – of better look going aware the related I in quarters, forward structures think we QX going congrats the what's you past – for that past maybe you other and flat billing licensing after I question the being your And guide. results billing being you driving few type of structural kind seeing of is, beyond deals? you going stepdown solid there is should talked what but upside the to timing in licensing roughly be about first licensing you seeing

Thanks, see question. I if Sure. And let Sidney. your me answer can

trends the billings we years. structural the related of it's the signed just and terms really agreements last in of and several that First, licensing forth, back to over

our and terms conditions in they Our bill and partners. of reported revenue. have existing some and will in all agreements royalty disparate terms up are cases, how our based invoice In that we show

million. the any In that our $XXX XXXX in at or that refer down payments billings. I just the may midpoint In coming basis cases, be between case, royalty back quarterly about on read And going are to other in cases, our in consistent coming cases. going think that billings. faction said down licensing a a fixed structured the or licensing payments we much I other quarterly they're are billings in straight changes and and too either show the some Day, even I'd revenue licensing up guidance provided you stair-step and Analyst in up into us at – where we for wouldn't would

year. So, may about course kind forward. you going I over this I of look what other recall of If specifically talked that that's like questions, your what the anticipate

to As with flat expect of XXXX, have nicely several I be the I years. product up gave mentioned increased last I that due next where quarterly in and prepared We QX of my in after we now guidance to roughly the be be QX, revenue. QX to expect QX see expected structural part stable was would I to remarks that in otherwise very prepared XXXX from changes the the remarks, this over

I our big for licensing expectations the industry, and out forward, in the the three billings with confident renewals future, and certainly profitable related feel but agreements can in of about there make we business to we think Looking portfolio terms very we talk DRAM our are of very ability most that our and patent in investments maintain the future. there our to us for the

a talked in X build strong portion from in is update super second big on helpful. XG Chinese one the the PCIe infrastructure, issues, interface. especially especially there, give market? What past, about That's the very any build seeing last the you on you there? coming from that Great. infrastructure, given the an deployment based customer And half of you're benefiting of you big Can have do follow-up is on that question us year? after XG Gen My of

Hi, Yes. is Sidney. This Luc.

value that see do. of chips continued we in So infrastructure the development before down revenue that we as in the actually chain. deployment. to people see the XG We XG traction who build reason the from others the further infrastructure. And is provide We explained and kind the IP for to calls, earlier we are

One that the the has to last Northwest of of to us complete over a develop solution year us happened XG. acquisition allowed the for things is Logic

a see our X customers to XG forward. as have have PCIe with PHY traction We we controller several and solution their Gen combined to complete continued we move with

one last chipset Sticking Okay. XG chipset question. with side. – memory side the Maybe

XXXX and mentioned in think million How are DDRX roughly a XXXX, the growth. revenue like of that's up I lot million seem in to revenue $XX range, doesn't – for the million share much talk expecting from you you $XX $XX in and which XX the would your Any win nanometers Thanks. And color expectations can XX on products? nanometer outlook? the market next design about server be activities wins generation helpful. design you based

question, Great Yes. Sidney.

So, very be is the modest revenue I from think XXXX. in DDRX to going

very end shipments year the the see of volumes. the the toward will We initial in

still the factors. chip. on soft the a going for The terms. year year, growth of a see of to a is last upswing in buffer will after be XXXX depend market We market So, DDRX couple general

is will to you growth Intel depend know, on platform current generation to the that, platform. In the the of how market from, the next addition transition to going speed fast

– – you for you gave we give our just growth which you see certainly we potential business, we guidance. we So, gave

Great. so Thank much. you

you, Thank Sidney.

Suisse. question next comes from Your line the from Pitzer John of Credit

Your line open. is

Yes. question. first guess, how ask in Verimatrix your full-year? for very question, the my Good for afternoon I I both Well, we calendar little and to me wondering to prepared guys. calendar about letting to Thanks you acquisition first comments I'm that said contribution the the should quarter. added the fourth think think its the

think our that great statements in acquisition yes, that with minimal as there financial QX of Analyst timing I of of would because be we Northwest $XX Verimatrix revenue both question, associated we'd that, I XXXX. the million associated Day at in the Right would accretive we as Sure. well of roughly said is terms That's XXXX. now, with how additional much of What us in was acquisition that a And Verimatrix assets. linear close, John. in impact roughly our trend said acquisition the see to acquisition. the for Logic, of revenue anticipate just a regarding we simply the expected marginally XXXX And

So, million your anywhere million answer Hopefully, say from helps XXXX. $X I'd quarter $X that to question. a through

then a does. we of and think acquisitions the of where or the is acquisition if business to to year It additional and did should And the year? strategy year potential this flow about targets? just follow-up we acquisitions given Should XXXX the you, maybe how model. think tuck-in generation kind – And the another exploit of, last being try rationalize you as Luc, as about a cash former

you, Thank Yes. John.

both both and quite going integration running, and And we're are we of I time. point I say, up moving the of the made, this really terms companies would fast, at acquisitions in well rationalizing in is just think So, fast.

growing pleased business. quite focused the that. of really we're It fast terms integration and in on So, really, went with

embedded to possible memory Now, to our the that is in security activity in actively very, or look active position we interface very very arena arena. This at either will continue acquisitions interest. we the internally. comes opportunities generate us we fast this had do any have with have of if cash, the And of a ability move level we because ability to to these to strengthen high

two very do fast will did we've do, continue we in we change last there. integrating So, we the to and year, no been so what

guys. lot, a Thanks

you. Thank

John. you, Thank

question next the Roth Suji from Your Desilva from of comes line Capital.

open. Your line is

so showing the in on to pencil congrats on Hi, wanted progress on of on Rahul, Luc. here the Congratulations just Hi, focusing maybe getting around XXX quarter here. the that. of I the XXXX, the I you're it's $X.XX, sound strategy the some million my sharpen Rahul. – of core, EPS $XXX.X Fourth was in like $X.XX. ballpark? that kind Does and equivalent numbers

numbers and the as anymore, get for XXX I billings produce doing I reported royalty it numbers can't substitution when but run I'd substituting you're you licensing that through, is what what get. we Suji, would make think you you're So, same think revenue. we And that

– out most implying a I slight as coming something around sequential importantly, the think the guidance, start Great. you're for and it's $XXX $X.XX in year. million, And you decline,

that of kind – just as that's that's It sure think I to make sounds ballpark. want I reasonable also well.

provide, that if from place. with as numbers Yes. really our I perspective. the is seasonal the QX again, get just And QX. And in do that results, line, we were and were well between top as math did, same that a that's not but same I'd cash We QX both you on the to delighted decline the

that Okay. like Fair the XX% And it's the business a so, silicon design sustainable is a business? from organic some much perspective. that switching on to if all a How ramp opportunity normalized IP segments, Was for growth up of sounds what's It organic? that inorganic? that's versus really year-over-year. And business tear more of then enough.

flow how curious So, year or next through two? can the that

no, a Yes, question. great that's

million had revenue of We So, couple revenue the dollars we have the with as from in I mentioned, acquisition did from closed Logic of Verimatrix. that a QX. purchased minimal associated Northwest assets we

the very it without growth was with pleased a performance. we're the very acquisition, though, strong and even year-over-year, think I

And think in have growth rate. great last and Our as with have memory a opportunity that over I we to our security very has years IP business business grown nicely the delighted several growth well.

XXXX. to of a the we continue to in of with grow. could expect those would be both I acquisition forward, Looking And XXXX growth in over those similar businesses, rate

do revenue what And share up where think would talk do concentration the about the rate the perspective, ramp diversified kind helpful then or you is color size a Or there. it there. end customer your buffer, in now? customer then And be the started factor but from to is customers? And a is two? Obviously, you run your go of you current here as where XXXX? – of memory market this, that's in on can hyperscale memory you think there from any not Yes, it

Yes, be Suji. so our great XXXX it of XX% to the growing. question, and then, Look, We'll because share to we market. share. the expect we in and go to around when DDRX, one-third go we were continue XX%, estimate we between surely keeps to least DDRX, at we first And now have to in will increase

diversified. terms of has time, customer our customers, end our structure over profile In of the

So, business the diminished. risk to the has

we has that risk the the area. our in has as business, diminished and grow customer end diversified, As such

Okay, Thanks. great. guys. again Congrats

Thank you, Suji.

Your of line Fargo Securities. comes Mobley next the from Gary from Wells question

Your line is open.

$XX other better. it looking maybe $XXX product for million. from perhaps that to starting different $XX suggesting million so, just of the just your million billings Hi contract your you're wanted fiscal comments strong at $X sort total back guys. clarify, Congrats some If million I Rahul, in on year. come a Day and revenue guidance. XXXX correctly, finish XXXX out does we're wanted year I to categories? of And where now $XXX if about included go revenue September, preliminary of outlook, of that and million to Analyst three of in year a strong quarter, which and of gave I the recall you to

in something about don't perspective, estimates those buffer And we a to where going wouldn't numbers add predominantly be Gary, our going that's million from is again, prepared from we silicon said better IP. because think GAAP do And analyst it we're you our think come than I I current Sure. be and are. $X what but to up, chip that remarks

fairly previously, structure licensing of As agreements I are our patent set. mentioned the

largely and So, those but potentially I think silicon it's buffer come to the going are chip predictable, IP businesses. from

business. want I profitability patent everything switch talk your about other licensing gears Okay. of and than the to

XX% of using In fourth billings reported – to operating so, royalties, that And as a recently the years quarter, you as in maybe past, quarters number million. past roughly income would for much imagine just midpoint operating in patent even non-GAAP substitute get $XX a the from the I but your buffer as getting larger – business. side, you're would year, of your licensing of chip contribution seemingly, that now past presumably profit from lot this came

business, to materializing it where can sits you XXXX? in it where today, you So, see that of speak the profitability

Yes.

We're of I'll our Thanks, profitable. And the the So, would start. is we Gary. become high chip business that performance business business business. with as pleased buffer a and leverage grew this

So, in to that to growth. generate continue we invest can marginally business

going forward, and As profitable. look forward to that and continue move profitable we is business to be more

high On the products on IP show and using in solutions the have PHY the over X and our side, We demand what controller. offerings solution earlier portfolio last our year we Gen that is, refocused we've done market. of our to mentioned the PCIe

portfolio portfolio look of the we're to that going the accelerate way and IP to at business. the making focusing decisions, by That's So, profitability it.

And product Okay. margin that, year the XXXX, that's percentage think points I XX%. was than first And to second in gross fiscal half your higher related half. of XX about the around

know give to compared XXXX? business how that much line I'm profile trend been guiding of the view so, chip in buffer what to you is update had how margin the us business on And for? running, recently of gross an most a curious sort And can you of you

a That's Gary. great question. Sure,

had I quarters remarks we how in in think well We just in product particularly that I business margin to shipping. mix, much gross is simply XX% range XXXX. high expect were some to a be the mentioned margins, as with XX% as I what that's function the for and our prepared of product

the what of like, beat with larger mix but I have and look to hope will I larger margin. but then comfortable impact we today, and feel in gross become the provided XX% a I gross larger margins as pretty think we variation small terms become any and in that estimates muted we larger, XX% as the to

incremental have as And that's portfolio and pretty investment, earlier there's in leverage because portfolio, a on then And we about you what also minimal your I question product product line. QX. saw and bottom to the we that mentioned fall-through the think nice there's as in Luc so ramp,

of had sort I off-the-wall Okay. IP protection. a question final about

US-China of as we trade one phase part the agreement. trade had So, agreement, protection clauses the some built IP into

as wondering I'm relates some memory. enforceability the that your if China developers of of of any patents to So, it changes

So, it's interesting question. Gary, an

unique still really is relatively that exposure is obviously, impact something I actually customers develop to to it the to anything way China in our us. small, it's impacts of are I think going with will look trade China long-term that continuing terms that's happen direct balance. and we The in that what's at though, our

I an for diversify from we're see in us, opportunity. to opportunity making our as licensing an areas, is actually in we the and continues it industry business and is, tech that grow What great patent perspective. becomes progress China think a China

investing industry. And Now specific tens billions dollars is of the as in and to relevance opportunity semiconductor so industry the licensing, market. China the grows, does of our in

our So, us, engaging have licensing, as to as there we earlier are will yield strategic well options for partners. I and actually patent think benefits

the provides allows for the an to that think of taking global partners, our them see credibility that compete I and we in one things marketplace. is early license

continue actively to we grow. So, engaged and remain business will all geopolitical but environment, in that monitor to told, optimistic we're continue China our the

to things existing also nice seven terms our continue a monitor that the validation, be you to the years our of license agreement perspective, earlier, to there of years see we patent one licensees. for invest ongoing beyond be macroeconomic five think well a as going license and China continue terms portfolio very feel think would to the that – to in a portfolio our external happens global able I we global are would many China, we're well is our demonstration be our And advantage as that's think I of what but renewals if years, to going are positioned announce I to in will to typically, and that an what forward. take come, to relevance well and from said maintain early to portfolio validity of I continue but that

the a to Okay. strong guys year. Thank and to again you, finish congrats

Thank you, Gary.

you. Thank

closing further no conference question-and-answer over are This there to for would remarks. turn now Luc I questions. At the back like concludes to the session. this time,

and time, your Thank day. you good very Thank for continued and have a interest you.

now conference. today’s Thank This concludes you.