DAIO - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Data I/O Second Quarter Financial Results Conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. this being reminder, a as conference recorded. is And the to Jordan now like over turn to I’d Darrow. conference go Please ahead.

Jordan Darrow

Thank you. today financial Corporation; Officer results President Welcome of quarter CEO and conference second to and Financial call. the Joel Data Data Hatlen, With and Data I/O. me of are Chief Ambrose, I/O Anthony I/O Corporation Operating XXXX

market CEO to I/O. under would duty of Ambrose, turn should I and of be time-to-time product not to call to no are filings markets, impact revenues, that this conference Forms upon. and in tax we other the of those and revenues and expressed differ any I’d Securities results unknown forward-looking of operations, releases, events, forward-looking XX-K releases risks statements I/O statements. and based involve competitors partnerships, forward-looking press XX-Q Before activities which from made new begin, installations, to estimated or risks, implied of described or other pricing be like statements economic acceptance market by and the statements company’s the communications. The to other and deliveries as economic in known by new financial products, product is factors reform, completeness Data to may any and uncertainties future Anthony like which to position, concerning as such include those a uncertainties accuracy and and prediction including ability with the of record other in that conditions remind unduly upon and future relied conditions, of President the results now Data materially over construed performance factors, you These timing statements. industry update level from call these changes demand, from may statements, actual orders, and on Exchange of Commission, cause other

Anthony Ambrose

I’ll I’d everyone. Hatlen XXXX some Jordan, and to you on quarter and results outlook Thank like it numbers. welcome our more our second Then on Joel to much, specific very turn market. over comment on overall detail for the

family produce that far happy operational our system quarter solid system delivered unprecedented exceeds over PSV years. fiscal XXXth wins programming five in the customers. global The sold versus very XXX report four and in were is this second systems to anyone PSV in XXXX. the else industry Among automotive achievement an financial past these in industry a in at standard for of the to and system XX continue been four has the I’m on competition we years. the and past a multiple company We PSV during performance quarter. electronics This XXXX we XXXX. systems very continents sold countries the have programming exciting sales become to These top XX of and believe the second following device

customer the likes a The global locations versus financial control, product ISOXXXX as been the stability support, system. transparency of after the competing I/O Data our customer previously a Data product by superior recent I/O as selected only and of One support, model multi-quarter a system Corporation Data of over I/O competing served had UFS well most This capabilities, competition. evaluation. process

what’s dominant forecast which NAND-based Looking to automotive a for cars, the many total in from called the on rate device. discussed a systems cars CAGR managed for at memory seven is growing next eMMC and growth in about for increase larger these between to content in XX% automotive market automotive annual is we’ve of compounded some flash-memory per terabytes X Today’s X XX% in car years. a XX% of architecture growth show our and about of thesis XX% OEMs our markets, semiconductor leading Industry calls.

in grade for they is this, specification seeing technology that in Automotive next planning and year. many will UFS automotive this typically making we’re and the market is than tend electronics UFS our mainstream this increase terabytes towards and customers significant the and market in partner of to that move towards different them capacity, in this higher products automotive strategic cost becoming they help To and adopters time lead know know years which technology. advance come With trusted We’re UFS, with capability. available entrants the into grade is quality that new they also X are to primarily new a through because X signaling into factories. are have consumer a now to their infotainment They’re extended help and require of change them coming new managed UFS this These purchases move NAND over grade the they that their to systems and are parts memory move the generation automotive infotainment. coming. transition of performance in and begin flash on to this temperature more is seeing early suppliers

that caught they X roadmap and grows supplier and competitive as Today, has performance towards the beyond. I/O needs. doesn’t automotive the capital and to of the total Data cost performance leading leading as keeps terabyte we’re be that UFS only customers future well don’t buying today that long-term focused Specifically, want ownership support and offers immediate meet the as our usage their programming today their

Luminex and large programmers systems systems file programming. faster than in downloads, total management faster with a programming competing provide of this better results lower cost all PSV Our

we’ve Provisioning at for market. While of the Things Internet progress time we’re the Platform making our in been good Security SentriX continuing our to advance offer, automotive same

on and the authenticate in becoming mover pleased uses establish increasingly that will deployment gateways to is about ability organizations Regulation quarter, from our the announcements particularly devices strong the quickly Legislation security. AXXCH Data data and security it very and Data where here And important, connections early IoT equipment with The of nodes and IoT Electronics EU is leaders IoT and to we’re NXP goal our with featuring big easy responsibility teamed the to foundation sizes. make very rapid momentum here protect Protection Element. talking with edge the its the enable the the I/O in industry. service the trusted Secure provisioning a security from places for hardware-based to of following the and in to cloud advantages Arrow our second up in all we’re which We’re MicroChip quarter. for General June, first SentriX In security With deploy the customers Arrow announced

multiyear will of supply today. X next investments the programming five provide years the growing in growth automotive way electronics that it and to same much avenue the opportunity this believe billion led units another excited ABI our IoT addressable technology We’re we’re chain about nearly us SentriX because market and to for our long-term the according we in has profitable Research platform an to position that

few turning a our wars, of questions over and and situation. to impact Joel, Before lot I I/O. get talk Data find I There’s just potential about like it words to about mention trade about it to geopolitical the a necessary tariffs the

very with our been business with start business that the we’re States. comfortable our that is this. years Let’s It’s and outside is XX% United of About global. for the way fact

This close zone, XXX our customers where to close in about and outside supply their presales to have post-sales technical can more benefits and opportunities. chains. situation speak We to consult employees as industry close unique easily their and overall half located customers are them, language, the about time in they’re we’re we’re United on States we

our and States United the both customers’ of and and of in interest goods have best benefits free best the of manufacture to It’s also in full location. interest services. China a We our advantage and take flow each

needed. and between if up move it be China and to some our turn review the we the closely ability that, CFO With like call and to I’d necessary. watching sourcing refining barriers political should a becomes manufacturing Joel for more of States the the However, plans over go numbers. our Hatlen, events We’ll detailed to have United as

Joel Hatlen

the continuing Anthony, strong million this second in placing and our last remarks. Revenues were to electronics in good PSV day orders discussed of the OEMs. majority to X.X you, Year-over-year quarter compared X.X X.X in everyone. quarter of family quarter been of first and customers demand for Thank part as XXXX automated results of million XXXX the his for year. million second generated large a have be in from with These the automotive reflect of Anthony our very to systems year

but basis, to compared improving year million, As Total down from or approximately first up previously quarter. the revenue to year software to quarter adapters the exchange revenue Europe quarter AsiaXX%, XXXX increased than XX.X% second programming the XXXX. to as ago of represented center compared XXXX second international second million to currency XX.X as XXXX to with disclosed, from the to equipment strong XX%, of in business the XXXX of period. XX% the fluctuations. down as first remaining Americas in year’s the due XX%. prior of that in quarter few the compared favorable for second sector. a Revenues XX.X% the capital in our On prior region, the of in in second compared of geographic adapters from of the million as from and for our prior and X.X% contracts quarter was of in Order X.X X.X first year the continued second XX,XXX but quarter be and automotive a years foreign XX% quarter approximately XX% total XX% bookings quarter prior the range quarter revenues XXXX, compared period and comprised benefitted high Sales results. were presence the of By a declined revenue of

second at compared currency variation quarter XXXX deferred million about of Data revenues I’ll first in deferred changes X.X revenue of had compared fourth we the more percentages revenue million XXX,XXX. in The first to of percentages in in the million had a versus end X.X of quarter I/O by end and XXXX. currencies backlog, when of X.X the and million increased with moment. the order just at in quarter quarter As bookings relates XX% quarter second or X.X of speak to XXXX translation. bookings, the end the the at

of quarter This with yet of at XXXX system and the first million in second accepted, installed XXXX not end the the quarter second end of but quarter end at quarter included the million it so of inventory. fourth X.X at the was the XXXX. and Backlog was the of compared during of million X.X one quarter X remained shipped

XXXX, mix This of target second product a in margin XXXX the the profile XX.X% quarter when a second The in the and and of the well XXs. due of first favorable increase XX.X% quarter reduction For variances gross with compared sales our mid-to-upper XXXX. revenues margin in within percentage quarter was to primarily as of XX% both as quarter remains margin gross factory range was compared cost as during as percentage periods initiatives. to of of

million in XXXX and compared of of as from automotive XX.X% XX.X% and quarter of operating quarter in fluctuation percentage gross our second next million in in and the the of year quarter impact expenses approximately The $X.X basis. a on respective second Security for of quarter quarter million quarter second $X.X XXXX. had consistent XX.X% added on was dollars and first the sales $X.X million in planned level the Gross favorable sales the currency up the quarter of Operating XXXX, the X with in the second generation as XXXX on The a quarter exchange Foreign points. first were of period Platform. margin in in as gross with investments the X.X sequential the second positive Provisioning first quarter as XXXX. previous negative million in a to quarter expenses margin our down impact of X percentage a items second compared in in the X.X of SentriX XXXX. XXXX were expenses continued million is compared in XXXX the to quarter second a quarter from Operating of and preceding margin electronics the impacting first

and and in second million administration, X.X of the the XXXX the of income second costs at especially with security by primarily offset or and mix higher the quarter flat feasible sales GAAP, accordance new the last and to reflecting to to I generally R&D innovations EBITDA, per XXXX. in a in share XXX,XXX in and with our $X.XX Included other We spending expense expenses favorably of or the net our SG&A part XXXX year. or depreciation amortization, and incentive is XX,XXX the increased the this quarter to as of and provisioning 'XX net was SentriX year a first euro to SG&A, compared support of second measure, a XXXX. while quarter taxes, channel managing development costs level accounting second $X.XX $X.XX the in of were both income by or and before gain results interest, for U.S. and $XXX,XXX lower for second compared and quarter technology per above non-GAAP impacted currency the of of levels and diluted quarter discussed to the compensation. quarter automotive-related quarter million dollar additional the $XXX,XXX in quarter incentive will year RMB the earnings associated increases stronger was share platform in item, attributable of second compared remain X.X marketing compared by together $XXX,XXX compensation was of second quarter the of losses in a expenses non-operating quarter XXX,XXX XXXX. the XXX,XXX impacted of million with about of XXXX. and offset stock for foreign XXX,XXX Selling, XXXX in of commissions XXXX. second first vigilant was compared in dollar XXXX compensation currencies where to business of XXXX in increases net per general XXXX. and XXXX $X.X and and strength quarter of quarter platform accepted in and of the non-cash expense, quarter in or and the costs approximately over quarter income of first SentriX of a first during our second reducing of U.S. XXXX RMB the against first XXXX operating just marketing related which The variable the and the in the Equity in of currency second the was $XXX,XXX the lower period prior impact the The of engineering second our primarily expense spending or was share changes was principles, the In quarter sales. first during compensation of of $XX,XXX these as diluted was of China increase as XXX,XXX quarter channel XXX,XXX in quarter of the XXXX

calculation the compensation expense value result prior pushing increased forfeiture has the of shares of as rate as a equity compared share year’s period the our a to Our as well price true-up expense year. higher dollar the as total in for

Going million quarter was we excluding financial a of XXXX period in million reconciliation press for in these filings quarter first the quarter. Adjusted and the equity of release our EBITDA, XXX,XXX per XXX,XXX Please discussion are X.X measures. X.X prior the to second modeling in non-GAAP of see SEC and compensation, XXXX. or forward, year compared

the DSO of in quarter year. X.X primarily million first receivables The at [ph] the build sheet, sales level collections higher The balance from this the the and the up end slightly at day normal XXXX down XX, million larger at due large performance. and company's receivable later second of or at and than which of was matching of reflecting slightly at was the incentive past. the used measure larger million X.X the recent than XX were to our the June were the at in end annual prior is although million of days outstanding quarter was fourth of provisions of had million was pay years X.X beginning financial From to of the the on quarter at Moving the cash quarter and end of shipments. XX.X XXXX first the XX. a million, compensation we’ve December cash portion to XX.X end XX.X position strong XXX(k) from accrued quarter,

cash balance. With having been grow our payments these we expect to annual made,

XX.X of end up the of the capital the first compared as to second XX.X and the from working United concludes free outstanding was quarter of company call up our at net of XX.X the was X,XXX,XXX cash XXXX. quarter the Our subsidiaries. million had at at back and XX, end end the in XXXX. XXX,XXX million my to the I’ll remarks. Anthony. shares balance foreign The debt That the pass remains in States June and million,

Anthony Ambrose

Thanks very much, to Joel. open call At Operator? this questions. I’d to point, like up the

Operator

[Operator Instructions].

first The from James come go question will Please Anderson. ahead.

James Anderson

will UFS milestone. Hi, question the side. the I over programming of quick a guys. side do just becomes automobiles? programming OEM and capacity is UFS think need about on years more the in XXXth that on Congrats How UFS upgraded existing PSV as coming flash of the in to model much out reaching the capacity flash much capable you how be standard the had there

Anthony Ambrose

you’ve purchased customer, engineered PSV if on before do ultimately question programming them James, UFS of there capable words did upgrade it your allow the UFS architecture an will the That’s thanks out XXX four the system. PSV already is that so purchase and beauty PSVs. years kind for we we’ve that any But memory. every can they answered the because a our to the on of programming way even ago there PSV UFS,

That the by a more think So design if to to early of subsequent of than towards the takes flash, XXXX or majority second going UFS see They a more terabyte automotive even company they’re vast up when you’re adopters or expect typically certainly X auto standard. moving in the year. out or to again will terabytes then see to even going we we about be pick have X in upgradable. the is that UFS space half But an and we effect the looking year are production at do all go What with auto now. the they’re in designs. from to

James Anderson

for a I’m for of guys your seems visibility Quarter-to-quarter wondering increase now if lot the lot outlook there’s it of I SentriX your up an you have are and was like. buzz. team wondering know There’s area seeing about IoT but generally. beefed talking and I’m a side. in interest on sort been just you deployment guys Google that that you the what is development sales

Anthony Ambrose

time. semiconductor and with got supplier, remain will, And calls, on We’ve to you excited the period, know new got we ramp. if the their gestation pretty And get the have about them. talked as you SentriX. work very, the James, and very to long designs about we’ve SentriX those for typically some products. go They’ve out for to develop support then customers is

from provisioning strategy process just for in, done. very going good natural So let leaders, the the we’ve goal definitely in much design space market market of a pretty IC get authentication with been it’s are announcements growth and time. in, next to be is of see both the that with many take we their we’re And XXXX things the our way our you security think pretty And And takes takes for in that I something with additional period stay the see development But in with to begin is the working cycle us. as market its all to the working still some are work but their announcements market time. And consistent secure It year. in tuned and with we pole We’ll That’s the semiconductors position the our where because a leaders course. to is areas. leaders. get design can SentriX from except win designed people, one goal a microcontrollers. leaders see then year market

Operator

Instructions]. [Operator you. Thank

will Kanen. question from next Please go come David Our ahead.

David Kanen

afternoon. Thanks for my questions. Good guys. taking Hi,

at provided I end for backlog. and What X.X ago know it is million on December. it was March question First You of the quarter. the same a year the at Joel the was time?

Just a was? curious June year what ago it

Joel Hatlen

million have $X the believe don’t that I million range. to my was about in fingertips. actually I it $X here at

David Kanen

Okay.

the I backlog point capacity marketplace we in with wondering on quarter. now just look QX? towards terms we maybe is something digestion QX that the in But seasonally traditionally your that’s indication a implication? which it at seasonally that, have right there know on if should is, would QX excess how of So don’t capacity, where is but strongest weaker going I’m

Anthony Ambrose

Dave, hi, it’s to good you to again. talk

in also look orders in we’ll look kind of of the of of deferred on booked turned get kind from into kind previously I’d tailwind terms you things in at add at what revenue You when that deferred will the backlog, revenue be up backlog QX.

market the last is frothy I think in than less general significantly year.

nail buys about some hit and you capacity themselves think they and ahead of that got digesting talked the the on have that customers been we’ve it head I before on capacity.

the think normally be would I overall we seasonally strongest. QX to expect

is I probably was this have than bit years. a it think weaker see. year We’ll previous seasonality that just in to

Operator

Thank you.

[ph]. to go James Rush ahead. Next we will go Please

Unidentified Analyst

that quarter Hi, that previous you I had into the doing or way know go guys. on the you’ll question forward manufacturers. Is you there pay-per-use there. one any do the Congrats system. think looking of system? semiconductor that that SentriX with calls – with on I on you’re the mentioned SentriX with that the type just system had some development

Anthony Ambrose

to about have long increase other it go from we revenue term, perhaps the from a That’s the for how it revenue think we recurring plan the for we getting to the of term the that would do be wafer But because would out which we customers to of early business. essentially the go. component way for have from some forward service capital hope easy customer the and it’s for pay system charge keep makes hiring us think today level thing they provisioning. revenue. And it is significantly equipment. right keys also on smoothes long term Short market introduce for to with to able have to a model. risk And XX%. more a mentioned they’re or we ways might our What It systems that the this comparable the that’s system be nice SentriX it a to us overall as does end level the best of to a as to which as recurring is it more Joel partners and pay-per-use our couple understand

thing is have may number that some with know these of – of is market of sheet just the the now, full companies, in not a other one we number starting two be or security. very lot our given a customers The will customers customers where interested smaller period for not fully a a utilized may of may to the and ones, And time. have buy of balance that ahead system be go some

So model we also us get sooner. think helps pay-per-use more the places SentriX into

Unidentified Analyst

Okay, thanks.

the would manufacturing the semiconductor that not So customer? paying for be use the end

Anthony Ambrose

It would that or centers. customers two programming be, the have end would SentriX be others are center. distributors for with customer programming relationships biggest the example, that are there in-house But We’ve franchise out have a good that our that maybe there customers. announced

Unidentified Analyst

guys. sounds Thanks, Okay, good.

Operator

question Anderson. next from come Our go will ahead. Please Robert

Robert Anderson

gentlemen. afternoon, Good

the know to didn’t additional previous Just us too say something up call? equipment. this capacity have said foreign that wondering need on you. much And Joel, what an that? is currency could said forward? fully I you them could you give maybe and they But going about going then, really on any in about programming update calls Thank and maybe you with in centers were you

Anthony Ambrose

still but programming centers centers. actually But we capacity or good and business the really Bob. than there. we is some they QX On not the buy starting Not of indicator to Thanks, because more had last I in when a some to for centers half as to centers, overall, capacity. I’m programming programming to six get get programming down was as there that past that really out slow kind absorbed in has about Bob. think had you. up from year need adds, first Good sold at It’s are stronger, in now say the good was talked was while. do optimistic months excess We they hear QX let’s first capacity ago. we consumed. the only

down you 'XX We’re programming And programming centers. question bad had months it’s for as customers, it ago. a did doesn’t definitely of talking currency. as but to a our But center it versus feel on overall year Joel, six all

Joel Hatlen

Yes.

we’re place mostly China kind been just project this little a us we some for So allowing of when stay It in sales does to China bit. our the currency are U.S. at That are. has also to so has way translate the But our if risk. that you dollar to now to in look going to their mean favorable have tend benefits we pay looking currency, sales week, things more balance tend that into take to higher that right have sheet. that’s devalue they customers to that a

in accounts this the currency dollar-based and U.S. tend to Our in translated sheet to on China the equity. other balance result costs gains when happens. go And get

But we when costs this saw affect can one quarter your effects. are So where and had us you’re currencies we it’s compared It bag. sales, to other mixed the its currency basically very a effect to dollar the favorable or located. a way you mostly the effects depending last how gave on regard quarter, where first postured currency negative with

Anthony Ambrose

just it But us really or fair predict over and move say going and way So, Joel, would for it term can out. tends way be. it’s to that’s to other that one it balance the the to quarter-to-quarter sort to be long hard of it’s

Joel Hatlen

It a kind those have it of and it the the through, from moving standpoint some CFO inventory forth. reason some out and that balance through the hardest and go back as go P&L -- sells that A through moves big things sheet are balances that’s to is And and does. we things

Anthony Ambrose

on just But basis giving standpoint of terms from investors, sort our quarterly just a really to in of it’s nail hard any to guidance that.

Joel Hatlen

causing from hedge to and gyrations eliminate our naturally do We best fluctuations. currency

Operator

Thank you.

to Next Avi we Fisher. will Please ahead. go go

Avi Fisher

Thanks call. my taking for questions. two Hi. Good had quick I afternoon.

deployed how installed SentriX have and units First, many already? been

Anthony Ambrose

three Avi. units the have SentriX in now, centers We right out programming

Avi Fisher

and last installed were quarter? many out how And

Anthony Ambrose

would XX The days net in the one be unit. addition probably last

Avi Fisher

Just one a you the --? target do by the And unit, many have have or of end how to year okay. on you expect

Anthony Ambrose

to key We is but the we placements for the us thing want goals demand. have real balance some with

certainly that of the sheet the want balance right well. the working have SentriX certain demand unit closely come with in, center we to of go. that strength partners them But And with as customers to to we to may the be to a with kind position us factory. can it companies early a want where needs and as are or We now. follow in able support additional a put certain an programming We’re partners Affinity

balancing it’s So a act.

sort want we the can of capital sure demand. not just to support there grow fulfill that are We units We’re out limited. make efficiently and that the naturally to

Avi Fisher

question touched another there. I a has this? bookings through in decline one just grew but have mix on Any we different bookings quick and jump this to in up the backlog that there, – and and have before. right. deferred selling backlog a had backlog – in by been unusual you I’m on to shift might said, shrank? in add products just show you’re the you confused you. All someone can Thank variance But you may that contribute this talk where revenue there

Anthony Ambrose

accepted $X.X single into growth deferreds came deferred backlog where worth million because out of of system our revenue biggest in the the customer probably revenue roughly was yet. hasn’t it it So the while went item it

into impacts that currency the turning of that A bookings backlog finally there’s So related was million and between of it X.X piece and happened it. to revenue.

there. So those probably biggest the are factors I guess two

Operator

Thank you.

Next we Please ahead. will Winston. go go to Art

Arthur Winston

systems the the is revenue SentriX been that’s investment dollar installed? of What of approximate one

Anthony Ambrose

reasons. disclose don’t that we competitive Art, for

high it perhaps as a of sell end in to be would even as product if systems. typically premium listed the product automated line. we of what we your were prices You should mind it our it, our in And think for beyond

Arthur Winston

Why is it expensive? so

Anthony Ambrose

of wrong – amount software It’s and you’re asking the the question.

Arthur Winston

Okay.

Anthony Ambrose

how SentriX do be, provides we the value what’s that the and in capture should our question pricing? that The

Arthur Winston

question. the That’s Okay.

Anthony Ambrose

pay-per-use And my answer is model. the

Arthur Winston

any does than Okay. its SentriX excluding Other the stock buybacks, use cash? understand. and for I company have other

Anthony Ambrose

M&A, what by the We go up, potential I that rainy ramped like we view have cash are the opportunity quite enough really to then into us that’s to always back have things; having being right into theoretical cash. That’s eight weather cash want we’ve cash all years. the if And an we ultimately when enough to capital said the said to again, and ability the and how helped I’ve uses. for of fund. in Those that well receivables that. the uses a to have But guess, really up investigate out day comes three business always quarters would six working to turn last, able

Operator

We go now David question from follow-up a Kanen. Please have ahead.

David Kanen

Okay. and Guys, you’re is pay-per-use question engaging you right out in on SentriX, model. my now the a three have in units field

And much a in year? could is if touch a running throughput idea – half of then how us SentriX fourth the deduction of – years it five cost how of the this So XXX, years, XX/X machine reasonable; can goods for what if we over the amortization you like could terms sold of Is then of is parts is how that, understand maximum what three look And give amortization? you from should me – saying I’m many that, an out, et that you is if could in COGS? at what of just cetera? help what’s

Anthony Ambrose

be think way it’s raw architected. SentriX little I again reasons maximum here bit beauty of is competitive performance, I’ll the its the vague Dave, for So, the but throughput, a

So that jobs? they those on – prototypes lot way a case will depend of as number of run they mix systems customer have the few The to do big like lot And programming but a or in at being throughput the can as of use to factors. is little a on run much of everything or per Primarily the the machines. of the a significant a units jobs centers anticipate year. from all millions big we jobs actual volumes

vary customer to from a quite bit will customer. it So

Operator

we go to go George [ph]. Next ahead. Melon will Please

Unidentified Analyst

you The it is I SentriX. I auto especially in average in per follow business in strong in have at I’m roughly X.X What understand on Hi, in have guys. X.XX. investing you. core QX OpEx was up a and is was Thank guys to 'XX the quarter, Great. trying SentriX. look XXXX, been it

SentriX SentriX? in up understand business, bit. Now to how related future? to look investment investment of the is SentriX? the the trying would ex-SentriX I’m So into much the be of sort as and the profitability a to trying hedging OpEx it’s of an at little What

Anthony Ambrose

related increase is described the increase George, previous is this and business. our both calls, machine benefit side to the we’ve SentriX of that most talked that then most in about at the do core and of least and on you’ve we R&D in – the SentriX things

think the fair be the the in system are of increase that we most And in technology, SentriX, core programming performance platform software, make when side integration SentriX. our as benefit like technology enhancements core would example is other a some our around particular say capabilities. for from as in for technology support well there SentriX. investments more I gone general the into have But the business of it’s One has investments things the to the then that systems and unique some we do product. we handler engineering And there’s those

Operator

have James question Rush. from follow-up We go Please ahead. a

Unidentified Analyst

quick A rates the you up. growth guys. follow semiconductors automotive and the the Hi, the mentioned I know and eMMCs. for

for that general market just off if Just able to rates share growth capture you’d you you wondering be or kind more piggyback think semiconductors. from those of [indiscernible] the of just

Anthony Ambrose

That’s a good question, James.

secure there’s what haven’t that means problems. our Things. We in a – think new new should them of they problem share that I/O before. we grow able undergoing happens or cases flash transition. the especially just for Data use we’ve during a in side. it better we but should not is from been grow bit. years major automotive at answer market, have focused able about are major experience that’s share little think XX problem you and much our higher share technology those best believe of why that is both be think I Internet We markets is And we when a as – talking so in a new of the think our all faced more they to the customers’ technology to to And much of And even that technology this general and now. around overall hold first to the transitions grow on front gain for that do to than tend potentially the substantially a be is actively automotive often are customers in look solutions we in in We way share when looking

and transition Data be when like or driving the that. programming a look I/O for a they will be not self maybe very are increase large people favorably high technology disposed. auto is looking automotive the they infotainment first but things our for provisioning systems cars, there ability very that automotive. time very, at and things to performance secure if flash so think also go We And into in just solution even The to

And programming so what they’ve they’re need to been traditionally. going new solutions doing from

that’s the So the at way we look market.

in, new that with traditional the of best the grow gain become And turn and areas, in sort as a with to then come need need there early, new incumbent you there the be to little you share. market want time. where over maybe technologies something You and problems the to solution into then you be

Operator

we go to again go And ahead. David Please Kanen.

David Kanen

Okay, million XX that or to on OpEx year or that most sort a is related – years million XX programming. is to management a of George SentriX ago, portion of $X about two Since $X.X so secure of a million follow million from approximately question. and Melon’s is good up to up

usage question field we need do before is approximately anticipated investment? how So units many recoup can SentriX get to the we our average based on start in my to

Anthony Ambrose

And terms opportunity about the X The think what units think more over market’s think We Dave, years. in talked of capacity, So, get will ABI time than in more to market, number on and we we this. about alone. of we designed more that like and published the range SentriX a in. available People number the want unit field earlier five billion depends is obviously good exact the obviously that. the in in we’re put units But go as three. up not that we very because pricing, like Research things it’s total we

win all available and good that’s going it to we to us of business for not that is be but going of think available Now we’ll will to to be us. where us be enough enough

Operator

no There questions. are further

Anthony Ambrose

like the call. everyone Well, and to if call a go there we for operator, no can Okay. thank are questions, further close I’d ahead and great

will see to remind much. want Things September I you September Day San ROTH do just Corporate and Company everyone we Access that at on we Internet Dorian Annual Conference in hope Investor there. we Capital Thanks to X and the Minneapolis in Before the on Francisco X of very

Operator

August X. will PM conference available gentlemen, and after midnight Thursday, this through for replay Ladies X be today on

and entering conclude XXXXXX. replay your code does by dial our access XXXXXX. access access AT&T any for the Executive code International numbers and XXX-XXX-XXXX, and system for participation again XXX-XXX-XXXX. X-XXX-XXX-XXXX Teleconference. today. participants That conference for you the at are using Those AT&T X-XXX-XXX-XXXX You may time dialing Thank

may You disconnect. now

Data I/O (DAIO) 26 Jul 182018 Q2 Earnings call transcript