Akoustis Technologies (ticker: NASDAQ:AKTS) reported a steady performance in its second quarter of fiscal 2024, achieving a revenue of $7 million and meeting their guidance. They anticipate a significant revenue increase in the upcoming quarter and are actively engaged in various growth initiatives, including a potential partnership with the Office of Naval Research and expansion into Wi-Fi 7 and 5G markets.
Despite a GAAP net loss per share of $0.21, the company is optimistic about its future due to strong market demand for its high-frequency filters and a robust balance sheet bolstered by a recent common stock offering.
Key Takeaways
- Akoustis Technologies reported a second-quarter revenue of $7 million, with XBAW-related sales constituting the majority.
- Revenue distribution was 40% from Asia, 47% from North America, and 13% from Europe.
- A sequential increase in revenue of 18% to 25% is expected for the quarter ending March 31, 2024.
- The company is implementing cost savings to reduce cash burn and expects to reach operating cash flow breakeven by December.
- Akoustis is involved with the CHIPS and Science Act of 2022, estimating a tax credit of $3.7 million to $4.7 million.
- A proposed program with the Office of Naval Research could lead to funding for RF filter multiplexers using Akoustis's technology.
- The company completed a New York fab tool capacity expansion project, now capable of producing 500 million filters annually.
Company Outlook
- Akoustis expects to return to record quarterly revenue by the end of March 2024.
- They see substantial market opportunities for their high-frequency filters, particularly in Wi-Fi 7 and 5G mobile, network infrastructure, defense, and other markets.
- The company has a strong balance sheet after an $11.5 million common stock offering and continues to focus on expense reduction and cost savings.
Bearish Highlights
- The company reported a GAAP net loss per share of $0.21.
- There has been an accounts receivable build-up, which is expected to normalize over the year.
Bullish Highlights
- Akoustis has completed significant expansions, including its New York fab tool capacity, and does not foresee substantial capital expenditures for the remainder of 2024.
- The company is optimistic about securing funding for their XP3F technology and has seen success in the COFFEE program within the defense market.
Misses
- No specific misses were reported from the earnings call.
Q&A Highlights
- Management provided updates on their legal proceedings with Qorvo (NASDAQ:QRVO), expressing confidence in their position and the progress of the cases.
- They discussed the potential for strong performance in enterprise Wi-Fi, defense, and networking, with an upside in the mobile segment.
Akoustis Technologies is poised for growth, with a focus on expanding their market presence in high-performance filter technology. The company remains confident in its legal stance against Qorvo and anticipates strong momentum in its target markets. With a strengthened balance sheet and a strategic approach to cost savings, Akoustis is looking towards a bright fiscal future.
InvestingPro Insights
Akoustis Technologies (ticker: AKTS) has demonstrated resilience in its fiscal Q2 2024 report, with a steady revenue stream and optimistic growth prospects. Here are some insights based on real-time data and InvestingPro Tips that may provide a deeper understanding of the company's financial health and market position:
InvestingPro Data:
- Market Cap: $61.13M USD, reflecting the company's size and market valuation as of the latest data.
- Revenue Growth: An impressive increase of 49.92% over the last twelve months as of Q1 2024, signaling strong sales performance.
- Price Total Return: The stock has seen a significant return of 19.89% over the last week, indicating recent investor confidence.
InvestingPro Tips:
- Akoustis Technologies has been quickly burning through cash, which is an important consideration for investors monitoring the company's capital management.
- Analysts have revised their earnings expectations downwards for the upcoming period, suggesting that investors may need to temper their short-term expectations for the company's financial performance.
While the company's strategic initiatives and market opportunities paint a positive picture, these InvestingPro Tips and metrics provide a nuanced view of the challenges and recent performance that could influence investor decisions. For a comprehensive list of additional InvestingPro Tips, visit https://www.investing.com/pro/AKTS, and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 13 more InvestingPro Tips available, offering valuable insights for a well-rounded investment strategy.
Full transcript - Akoustis Technologies Inc (AKTS) Q2 2024:
Operator: Good day, ladies and gentlemen, and welcome to the Akoustis Technologies Fiscal 2024 Second Quarter Conference Call. As a reminder, this conference is being recorded. At the conclusion of the company's presentation, Akoustis management will take questions. [Operator Instructions] A replay of the call will be available on the Investor Relations section of the Akoustis website. Thank you. You may begin.
Kenneth Boller: Thank you, operator. And good morning to everyone on the call. Welcome to Akoustis' second quarter fiscal 2024 conference call. I'm Ken Boller, CFO. I'm joined today by our Founder and CEO, Jeff Shealy, and EVP of Business Development, Dave Aichele. Before we begin, please note that today's presentation includes forward-looking statements about our business outlook. All statements other than statements of historical facts included in this conference call, such as expectations regarding our strategies and operations, including the timing and prospects of product development and customer orders and design wins; possible collaborative or partnering relationships; litigation matters; and expected financial and operating results are forward-looking statements. Such forward-looking statements are predictions based on the company's expectations as of today and are subject to numerous risks and uncertainties. The company and our management team assume no obligation to update any forward-looking statements made on today's call. Our SEC filings mention important factors that could cause actual results to differ materially. Please refer to our latest Form 10-K and Form 10-Q filed with the SEC to get a better understanding of these risks and uncertainties. In addition, our presentation today may also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlights release available in the Investors section of akoustis.com. I would now like to turn the call over to Jeff Shealy, Founder and CEO of Akoustis.
Jeffrey Shealy: Thank you, Ken. And welcome everyone to our FY 2024 fiscal second quarter conference call. Revenue in the December quarter was within our guided range of flat sequentially. During the December quarter, we had two customers that each made up greater than 10% of our reported revenue. XBAW-related sales accounted for the top 5 customers and 7 out of the top 10 customers. Our top 10 customers made up 58% of revenue. Our top 25 customers made up 74% of revenue. In terms of regional sales, 3 of our top 10 customers were Asia based. Our top 36 customers made up 80% of our revenue, with 40% of our sales coming from Asia, followed by 47% of our sales coming from North America and 13% of our sales coming from Europe. Finally, our top two customers were Asia and US-based customers, respectively, and collectively made up 30% of sales. Last year, we commented that the buildup in channel inventory, particularly at our Wi-Fi customers in the Asia region, would adversely impact our revenue in the second half of calendar 2023. Our revenue met our guided targets for September and December quarters. Today, we believe we have worked through the inventory issues from 2023, and we expect demand returning in Wi-Fi with strength in Wi-Fi 6E and first production demand in Wi-Fi 7. Consistent with our early guidance for fiscal Q3 on last quarter's investor call, we reiterate our expectation to return to record quarterly revenue for the quarter ending March 31, 2024, up 18% to 25% sequentially. The company continues to focus on expense and cost savings to significantly reduce cash burn moving forward. Ken will detail our ongoing activities and impact on reducing our cash burn during his upcoming comments. I would now like to take a moment to discuss updates involving the company's activity related to the CHIPS and Science Act of 2022. Regarding CHIPS Act funding, there are two detailed updates to share with investors. First, during the December quarter, we became members of three microelectronics ME Commons Hubs focused on electronic warfare for the Department of Defense. Membership to these hubs is critical as it allows access to be part of the hub proposal team for new government research programs. We currently have two active EW proposals under one hub membership, with one of the proposals potentially worth several million dollars annually, beginning in the second half of calendar year 2024. Furthermore, we are currently pursuing memberships with additional ME hub centers, and we'll detail our efforts and progress moving forward. Second, the CHIPS Act of 2022 included a provision for a 25% refundable investment tax credit, or CHIPS ITC, on investments in facilities that manufacture semiconductors or semiconductor manufacturing equipment that were placed in service after December 31, 2022. We currently estimate the amount of the refundable tax credit applicable to Akoustis to be $3.7 million to $4.7 million over the next 12 to 15 months. Next I would like to discuss several updates in our primary target markets beginning with Wi-Fi. Our first milestone for the December quarter in Wi-Fi was to receive a design win in a next generation Wi-Fi 7 solution with a tier 1 US-based carrier. Our carrier partner has awarded us design wins for two high band XBAW filters for Wi-Fi 7. Further, we received prototype orders to support a production ramp in the second half of calendar year 2024. Our second milestone was to secure multiple design wins for our tier 1 enterprise class customers Wi-Fi 7 suite of routers. We announced this design win last week along with visibility on volume orders to support the production ramp. We support this new platform with a suite of advanced filters covering both wideband and narrowband solutions. Also, our first mass produced aluminum scandium nitride single-crystal XBAW filter is to be qualified for production for this customer's application. Our third milestone was to secure a design win for a Wi-Fi 7 solution with a tier 1 enterprise class OEM. We announced this completion of this milestone in our January 10 press release. This customer is our second tier 1 customer to adopt multiple wideband and narrowband solutions covering 5 GHz and 6 GHz Wi-Fi 7 for a 4x4 multi-user MIMO AP platform. We received prototype orders to support a production ramp, which is slated to begin in the second half of calendar year 2024. Looking ahead in the March quarter, we expect to ramp XBAW filter production for two programs in Wi-Fi 7 at a tier 1 enterprise class customer. In addition, we expect to ramp XBAW filter production for Wi-Fi 7 with a tier 1 enterprise class OEM and we expect to secure a design win for a Wi-Fi 7 solution with a tier 1 enterprise class OEM. Next, I would like to discuss our recent developments in the 5G mobile market. During the December quarter, we recognized filter sales, which incorporated our WLP package to our tier 1 RF component customer. This customer was a top 10 customer on a revenue basis. Also, in the December quarter, we expected to deliver the first of three Wi-Fi filters to our tier 2 5G mobile RF front end module making customer. We've contracted with this customer for three filters. We shipped the first of three filters. The second filter is releasing to the fab this month. And the third filter is currently in the design phase of the process. Finally, we successfully engaged a fifth mobile partner offering our XBAW process and foundry for their module and discrete product needs. We have shipped this partner multiple XBAW dye for engineering evaluation, for a future multiplexer application for the mobile market. Our anticipated milestones for the March quarter include deliver the second of three revised Wi-Fi filters to our tier 2 5G mobile RF front end module making customer. And now, I will discuss our progress in our network infrastructure business. During the December quarter, we completed the redesign of our new and improved 5G band 41 and 5G US 3.8 GHz network infrastructure filter solutions. We successfully sampled the band 41 filter earlier this month, and we currently are evaluating the performance of our 3.8 GHz filter in engineering as we prepare for sampling. During the quarter, we experienced softness in XBAW filter shipments to our 5G network infrastructure customers. However, we expect modest growth of shipments to return in the March quarter. For the March quarter, we expect to secure a foundry order for development of up to four 5G/4G LTE XBAW WLP dye with a tier 1 SATCOM provider. Second, we expect to gain approved supplier status and achieve a design win with a tier 1 infrastructure customer, and finally, we expect to complete in our development and deliver band in 104 samples to a tier 1 network infrastructure customer. Finally, before handing the call off to Ken, I would like to provide an update on our defense and other markets business. During the December quarter, 2 out of our top 10 customers were in our defense and other business category. And I will begin with an update on our published milestones for the quarter. First, as we announced on January 29, we secured a BAW filter design win for an automotive wireless battery management system, or WBMS, solution using a tier 1 IC reference design. We expect a production ramp in the March quarter of calendar 2025. Second, we completed the qualification of the optimized second XBAW resonator for a key customer in the timing control market. Now that this qualification is complete, the design is released for limited production. The resonator is used in a tunable oscillator application scheduled for production in the second half of calendar 2024. Third, we delivered our first X band BAW filter using Akoustis' advanced XP3F technology to a tier 1 defense customer. We met with this customer last month and receive positive feedback and expect this engagement to continue for X band phased array radar applications. As previously mentioned, our biggest success in the defense and other market segments was the introduction of our new XP3F technology, which incorporates a new revolutionary patented multi-layer nano material that incorporates our single-crystal piezo electric material. This new nano material was developed with funding from the Defense Advanced Research Projects Agency, or DARPA, to scale the XBAW technology to frequencies up to 18 GHz. During the December quarter, we began work on our multimillion dollar phase 2 contract option, which extends our current DARPA COFFEE program and funding through December 2024. During the December quarter, we continued shipments supporting a new DARPA contract unrelated to the DARPA COFFEE contract, which requires high performance custom resonators for timing control applications. This customer was a top 10 customer for the December quarter. In addition, we submitted a proposal on a new multimillion dollar program with the Office of Naval Research to fund RF filter multiplexers incorporating our XBAW and P3F materials technology, which, if awarded, could be announced as early as Q2 of calendar 2024 and begin in summer 2024. In our GDSI business, we serviced 148 customers during the December quarter, and the average customer spend is approximately 17% over the same quarter last year. As mentioned earlier, Akoustis has established memberships with three regional hubs, and GDSI has at least five additional applications pending with remaining hubs, which we expect to convert to memberships by Q2 of calendar 2024. One key customer milestone for the quarter was the successful completion of a supplier quality audit for an FDA approved diagnostic chip aimed at real time PCR results. Finally, GDSI saw double-digit increase in new quoting activity over the prior quarter, which we will push to convert to new orders to grow the business. For the March quarter, in the defense and other market segment, we are expecting to deliver the new XP3F PDK to two customers for ongoing foundry engagements and complete the design and sample of a new 2.4 GHz Wi-Fi CPE automotive XBAW filter to multiple customers. And now I would like to hand the call over to Ken to go through our financial highlights.
Kenneth Boller: Thank you, Jeff. For the second quarter ended December 31, 2023, the company reported revenue of $7 million, which is in line with our prior guidance and flat over the prior quarter ending September 30, 2023. However, this represents an increase of 20% year-over-year. On a GAAP basis, operating loss was $15 million for December quarter, driven by revenue of $7 million, offset by labor costs of $8 million, depreciation and amortization of $3.2 million and other operational costs totaling $10.8 million. It is noteworthy that our labor and other operating costs have declined sequentially. As a result, GAAP net loss per share was $0.21. CapEx spending for Q2 was $1.6 million, completing our New York fab tool capacity expansion project to 500 million filters per year. Cash used in operating activities was $11.3 million, which included additional payroll costs associated with our expense reduction efforts, increased legal costs and increased AR and other, which will be converted to cash in the March quarter. The inventory channel build-up in Wi-Fi is behind us and we continue to receive design wins and introduce new products. As a result, we have backlog to support a return to record quarterly revenue in the March quarter, with quarterly sales expected to be up 18% to 25%. On the expense front, we have undertaken aggressive expense reduction and cost saving measures that we estimate will reduce our operating cash flow burn rate by 30% to 38% sequentially in the March quarter. Furthermore, with the expense reductions and cost saving actions in place, we expect that operating cash burn will drop another 30% to 40% in the June quarter. Given the top line projections, the CHIPS ITC refunds and full impact of recent cost savings, we continue to expect operating cash flow breakeven later this year in the December quarter. The company sits with a strong balance sheet after the recent completion of $11.5 million underwritten common stock offering announced in late January. And I will now turn the call back over to Jeff for his closing comments.
Jeffrey Shealy: Thank you, Ken. The market opportunity for our patented high frequency XBAW and XP3F filters continues to be substantial. We currently have approximately 189 issued patents and patents pending, providing a substantial IP moat around our technology. We continue to work aggressively to achieve each of our stated objectives, and we will continue to provide updates on our execution against these objectives as we progress. I want to emphasize to investors that management continues to focus on improving our income statement. As per our guidance, we expect to achieve record quarterly revenues in the March quarter. We are diligently pursuing product cost savings to lower operating expenses and improve gross margin. We have undertaken necessary steps to reduce our operating cash burn in the coming quarters. We believe this is prudent in the economic environment that we are facing. Further, I appreciate our employees for their hard work, passion and dedication and working together to position our company for growth in the quarters ahead. Finally, I also wish to thank our shareholders who continue to support the company. And with that, I would like to open the call for questions from the investment community. Operator, please go ahead with the first question.
Operator: [Operator Instructions]. Our first question is from Anthony Stoss with Craig-Hallum Capital Group.
Anthony Stoss: Nice progress. Maybe for Ken, can you talk about, I guess, the new revenue per quarter for breakeven in Q4, what you think gross margins might be in that quarter to get you to breakeven? And also, maybe just kind of lay out a linear what you expect OpEx each quarter throughout the year?
Kenneth Boller: We comment a little about revenue for operating cash flow breakeven. I will say that we had significant expense reductions starting in the September-October timeframe, and we continue to do so. We have about $14 million annualized reductions. Now we have additional cost savings that push those reductions above $20 million annualized. So that also somewhat brings down the need for the gross margin and the revenue in the quarter of operating cash flow breakeven. But I still predict that to be in the – come down a little bit in the $11 million to $15 million range per quarter of revenue to achieve operating cash flow breakeven. And that would also assume a margin of 20% to 25% in that quarter. On the OpEx side, I think you touched on that as well. Those numbers have come down and they are going to continue to come down as well. I predict our operating expense line on our GAAP financial statements will be more in the range of about $10 million per quarter by the time we get a full quarter of annualized savings and that we get operating cash flow breakeven. And we talked about margin improvements as well. We're undertaking a number of measures internally to improve our margins. We're focusing on some of our existing parts where we have high laminate costs. Some of those costs, we can bring down on the laminate side as much as half of what it currently is. We also are introducing a number of new products. We have about 17 products in production currently. That number is going to go to more than double the next year. So we're introducing more products and all those products have a lower cost structure to them, particularly on the backend side as they're smaller form factor. I think I answered all your questions. If I missed one today, let me know and I'll go back on it.
Anthony Stoss: Jeff, I'd love to hear your views. It sounds like the inventory on the Wi-Fi is now normalized. Maybe from a design perspective, what you see? And if you're going to double your products going into next year, what do you think about design activity or number of wins?
Jeffrey Shealy: You touched on several things. Let me start with the Wi-Fi inventory. I think we emphasized that in prepared comments. We started seeing that lift with orders as well as ongoing design wins. And we started seeing that back in the October-November timeframe, and that's why we were comfortable kind of providing the guidance back to growth and record quarterly revenue. In terms of just estimated, we provide in the prepared comments what we expect milestones at least over the next quarter. You can see additional design wins there. But in terms of number of design wins over the next year, let me ask Dave to kind of touch base because he's a little closer to customer.
David Aichele: A couple of comments I'll make, just following up on Jeff's statements. The two Wi-Fi 7 design wins that we just announced, those are in enterprise class programs. And there's some custom filters that we've done for these two customers. And they will turn into standard products that we're going to market to the rest of the industry as well. The dollar content in these are almost 2x what we have with Wi-Fi 6E programs. So I think that's significant. That's what we're trying to track now is significant design wins that we'll see appreciable revenue. In addition to the other design win we announced with the Wi-Fi 6E program, which is more of a consumer based, the volumes on that are good. A lot of these are with the new products that Ken mentioned that were released. The two that are getting the most traction right now that we expect to see multiple design wins per quarter with Wi-Fi 7, now that certification is approved and moving forward and there's a lot of momentum – there was some slowdown last year on Wi-Fi 6E transition into Wi-Fi 7. So, we see that picking up. And these two parts are in a smaller form factor that's going to service the 5.5 and the 6.5 GHz. We also have investments that we're making on 2.4 GHz as well, so that we can bundle all three. We focus mainly on high frequency, but recognizing that we do have demand down at lower frequency as well, we can service that. So we expect this momentum to be pretty strong through 2024 calendar year, with a lot of the Wi-Fi 7, and you can expect us to make every quarter announcements on the design wins and give you guidance on one of those projected ramps.
Operator: Our next question is from Craig Ellis with B. Riley Securities.
Craig Ellis: Congratulations on getting the cost structure down and moving closer to cash flow breakeven. I want to start with a follow up to the prior question. So it seems from the prepared remarks and the comments just provided in Q&A that a lot of the momentum in in Wi-Fi is around enterprise products. And so, I was hoping to get some further color on what you're seeing on the consumer side and how you would expect the mix of consumer and enterprise to play out as we go through this year.
David Aichele: A lot of our activity has been with the enterprise and the system volumes are not as high in the hundreds of thousands. But as I commented earlier, the dollar content is pretty significant with these, particularly when you're looking at filters that can range in the 20 to 30 per system. And we've got a unique position here that we're enabling these systems based on our product portfolio of narrowband and wideband. So, that's good to continue to increase our customer base there and it's usually pretty sticky. Once you have a customer in this sector and you maintain a good customer intimacy and technical support, you will continue to support the new design wins. The one market segment that you didn't mention, though, that is pretty strong for us also is the carrier side and we just did a press release yesterday, and that was for a Wi-Fi 7 program that we got designed into. And if you look at that press release, it lists this subscriber base that they have up to 32 million. So, those type of volumes that we see on the carrier side, both for Wi-Fi 6E and Wi-Fi 7, puts it up competitive to the type of volume you see on the consumer side. And then, the press release we did several weeks ago was for the consumer grade. So we are starting to penetrate the consumer grade. That's been a lower priority just based on – it is usually more price sensitive and they go after older technology. But we're seeing that those architectures go into higher MIMO count. And also, with the requirements of Wi-Fi 7 due to latency and the channel bandwidth, the higher performance BAW filters in the smaller form factor is more critical. So their negotiations on price is less important. It's more on performance.
Jeffrey Shealy: I just wanted to follow on Dave, summarize the Wi-Fi segment. One of the things I wanted to make sure we added in here was just some of the momentum in the defense and other markets. And that's really been driven by what's going on not only with our success in the COFFEE program – I think we mentioned that prepared comments, not only starting up the phase 2, but there's definitely a follow on activity to that at the systems level. And we alluded in the prepared comments on some momentum in the contract. That also is supported by these research hubs that are in place that we have current proposals in place. We're pretty bullish on being able to secure funding – a follow-on funding for the XP3F technology, which, as you know, allows us to access much higher frequencies.
Craig Ellis: The follow-up is for Ken, and it's really just a clarification on two things. The first one related to those comments. Ken, as we think about sequential revenue growth and the scope 3Q, it would seem that it stacks up as being significantly led by enterprise Wi-Fi followed by defense and then networking. Is that the case? Can you just clarify what the CapEx outlook is for calendar 2024? And to the extent there's any linearity profile that you can share, that would be helpful too.
Kenneth Boller: I'll spend a little bit on CapEx spend. So we've been mentioning over the past few quarters that we're completing our 500 million filter capacity expansion. That has been completed. We have that capacity. Certainly, we talked about operating cash flow breakeven and the revenues needed. But that capacity is well beyond what that revenue is. We do not anticipate any real material spend in CapEx for the remainder of calendar year 2024. There are a few open projects that we'll finish. There are a few CapEx items I just come across on everyday business as machines possibly break down or we need a new small type of equipment like an analyzer or something of that sort. But I expect that spend for the remainder of the year to be in the hundreds of thousands per quarter or less.
Jeffrey Shealy: I guess, Craig, to your question on the Q3 revenue, just trying to give you visibility on that, we're – good, strong backlog to that. And that's why you've seen the guidance being in that 18% to 25%. The good news is that the slowdown we saw, and we talked about the inventories under control, we started seeing the pick back up on some of the legacy Wi-Fi 6E programs as they make transition to the Wi-Fi 7 program. So one example is our enterprise tier 1 customer that we've announced in the past. Their volumes are picking back up on the Wi-Fi 6E and we're already starting to get appreciable Wi-Fi 7 preproduction orders that we're ramping. And then the same thing with carrier Wi-Fi 6E program has picked up from reductions in their inventories. So that demand is going on as they transition into the Wi-Fi 7. So, that's three examples as we also have other customers picking up. And introduction in the Wi-Fi 7, we're starting to see significant pull on our two new products. So there's lack of activity there. The network side has slowed down. If you look at 5G overall, Nokia (HE:NOKIA), Ericsson (BS:ERICAs), others in that sector have had poor quarterly earnings, and so that has slowed down the 5G deployments. So there's still some demand on the small cells, but that's going to be less of a factor this quarter and next quarter we expect it to pick up with obviously the current products, but also some of the engagements that we made in the [indiscernible].
Craig Ellis: Finally, Ken, you mentioned AR would improve in the fiscal third quarter? Do you expect that to fully normalize? Or does that play out through the fiscal second half of the year?
Kenneth Boller: Craig, at the end of December, we had some AR build up on our balance sheet. That was due to a lot of year-end orders that shipped out towards the end of December that we will collect in this quarter, Q3. There were also some timing issues, particularly with a large program that we have on the NRE side with the government. We can build them and receive money, according to a set schedule. So, that's also in our other receivables, other asset section, and we'll collect that in this quarter as well. And I expect that to normalize out throughout the remainder of the year.
Operator: And our next question is from Suji Desilva with ROTH-MKM.
Suji Desilva: Congrats on the progress here. Maybe a longer term question, Jeff. Given you have multiple segments that seem to have opportunity here and promise, what do you think in a year or two are the larger sort of segment contributors? I would think it would be mobile, but the defense programs sound like, with these hub memberships, they could be particularly as well. So, any kind of qualitative thoughts there would be helpful.
Jeffrey Shealy: If you look at activity, I think we've outlined quite a bit, going from Wi-Fi 6E to Wi-Fi 7, you see not only the content increase, Dave touched on the wideband and narrowband portfolio that we have. The other thing that maybe didn't come through is the ASPs. The ASPs in the Wi-Fi 7, that's favorable for us. So we're kind of mixing into new platforms, which certainly have starting ASPs that are higher. So we're very bullish with the content. Dave outlined 2x to 4x of additional content. So we're pretty excited about that. If you look over in the defense segment, David indicated, it has slowed down. But we do see that picking up through the year. So, while it's small – and we do expect that business to roughly triple over the next year, if kind of you look at some of the internal modeling. So Wi-Fi, we expect very strong performance there. On the defense side, several contract programs, and we mentioned in the prepared comments that we would be expecting, if awarded, at least one of those contracts would begin mid-year. And we continue on with the phase two at DARPA. And then that has spawned some additional activity in the foundry. So that's strong. And also, some of the new spin-off programs that have come there. You mentioned mobile. So I'll touch on that. We have been addressing. We've got foundry activity ongoing there, where we're providing filters for fully integrated solutions. We'll see how that plays out. But we mentioned in the prepared comments that we shipped the first filter. There's two additional filters that are in the design and fabrication phase. So that can be a contributor. What I what I will say, though, kind of overarching is if you look at the model that we're charging to, the model would be upside to the model that we're projecting for the full year. And so, as we talked about getting the cash flow breakeven at the end of the year, and we do expect that cash flow to be a little lumpy going through the year because we got ITC credits and the timing of those, Ken mentioned some of the timing challenges. But, overall, the mobile would be upside to the plan. And with strong performance in defense, Wi-Fi as well as network on a percentage growth basis.
Jeffrey Shealy: Jeff, that's very helpful caller on what's embedded in your expectations here. Second questions on the – I guess the new single crystal product you're sampling and just understand the competitive landscape again and whether the single crystal product expands your competitive advantage, just the color on that and whether that opens up markets or whether it's kind of continuous across the products you're doing into that new one.
Jeffrey Shealy: I'll start with that and then ask Dave to kind of follow in. But that particular product that we mentioned that's going in a new Wi-Fi 7 design, we're utilizing that to obtain some performance enhancements that we think are differentiated. It is amongst the narrowband designs that we're selling. Again, just a reminder, the Wi-Fi 7 incorporates both wideband and narrowband. We have multiple narrowband custom designs, which there really are no second source for. So, we're not having to compete with a second source on those. And so, that helps us with our bundling activities. So that's in terms of the single crystal. And maybe Dave wants to add anything else there.
David Aichele: Suji, I'll comment two things really with the single crystal, the development that we've been doing for the last couple of years to introduce [indiscernible] with the aluminum nitride, has enabled us to really service the narrowband and the wideband filters for certain market segments. So, the single crystal gives us some advantages on power handling with some of these applications where you've got this really steep rejection and a narrow transition window. Also, we've seen some improvement in harmonics, which are critical for some of these [indiscernible] type applications. The other thing is, it's a building block of XP3F, which, again, is a unique feature of Akoustis. And the technical community recognizes that and that this is a manufacturing process with this multilayer nano material compared to other technologies that DARPA is funding. So, it's gaining pretty significant interests from the defense industry base, but also from the 5G sector that's looking at – or I should say, the cellular sector that's looking at 6G for FR3 and then also the SATCOM market. So, the single crystal is a good building block for discrete devices and also for these high performance technologies like the XP3F.
Suji Desilva: My last question is just an update, if you can, on the litigation with Qorvo, that'd be helpful.
Jeffrey Shealy: Regarding the lawsuit Qorvo filed against Akoustis in Delaware, the case has reached a point where I can share Akoustis' view that the facts do not support the wide ranging allegations made by Qorvo. Akoustis filed a motion for partial summary judgment on February 1. And if granted in full, this motion would dispense with a majority of Qorvo's complaints, everything but the patent claims. But I'll add that the company is well positioned on the patent claims. As mentioned in prior calls, the company has developed design updates to demonstrate with real world data that XBAW filters do not use Qorvo's patents. The motion we filed also asks the court to confirm that these designs do not infringe one of the two Qorvo patents at issue. The other Qorvo patent expires this summer. Akoustis also believes Qorvo's damage experts use faulty methods and assumptions to develop key parts of Qorvo's estimate of damages. Akoustis has filed a motion to exclude that testimony. This motion represents an additional challenge to key parts of Qorvo's claims. Please keep in mind, even if the court ultimately does not grant Akoustis' motions, the defects in Qorvo's case will remain hurdles Qorvo would have to overcome at any trial. Qorvo has filed its own motion for partial summary judgment, but this motion is limited to a ruling on the validity of Qorvo patents. No matter the outcome of the motion, Qorvo will still bear the burden of proving Akoustis products infringe Qorvo patents, notwithstanding all the engineering performed by Akoustis to support its defense in the case. Now turning to the lawsuit filed by Akoustis against Qorvo in federal court in the Eastern District of Texas, this case is beginning to gather steam. As a reminder, this lawsuit alleges Qorvo is infringing a patent licensed exclusively to Akoustis by Cornell University, as described in past calls. Qorvo has filed a motion to dismiss the case and a motion to strike Akoustis' infringement contentions. The Court held a hearing on Qorvo's motion to strike on January 10, 2024. After hearing both sides, the court denied Qorvo's motion to strike. As a result, this case is moving forward at full steam.
Operator: We have reached the end of our question-and-answer session. I would like to turn the call back over to management for closing remarks.
Jeffrey Shealy: This is Jeff. I want to thank everybody for your time today. I did want to point out that one typo that we had in the prepared comments was – we actually sampled the 3.8 GHz and shipped samples of that 3.8 GHz and that was not the Band 41. So I just want to clarify that before we end the call. With that, we look forward to speaking with you during our next update call to discuss the current quarter's execution against our milestones that we discussed today, as well as future expectations. And with that, I'd like to wish everybody a great day. And thank you and goodbye.
Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
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