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spk01: Star then 1 on your touch tone phone and to withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. Andy Cobb, Vice President, Strategic Finance. Please go ahead.
spk09: Thank you, MJ. Good afternoon and thank you all for joining us to discuss Ntinga's first quarter 2024 results. On today's call, Chris DiOrio, Impinja's co-founder and CEO, will provide a brief overview of our market opportunity and performance. Kerry Baker, Impinja's CFO, will follow with a detailed review of our first quarter 2024 financial results and second quarter outlook. We will then open the call for questions. Jeff Dossett, Impinja's CRO, will join us for the Q&A. You can find management's prepared remarks plus trended financial data on the company's investor relations website. We will make statements in this call about financial performance and future expectations that are based on our outlook as of today. Any such statements are forward looking under the Private Securities Litigation Reform Act of 1995. Whereas we believe we have a reasonable basis for making these forward looking statements, our actual results could differ materially because any such statements are subject to risks and uncertainties. We describe these risks and uncertainties in the annual and quarterly reports we file with the FCC. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, except as required by law. On today's call, all financial metrics, except for revenue or where we explicitly state otherwise, are non-GAAP. balance sheet and cash flow metrics are GAAP. Please refer to our earnings release for a reconciliation of non-GAAP financial metrics to the most comparable GAAP metrics. Before turning to our results and outlook, note that we will participate in Baird's Global Consumer Technology and Services Conference on June 4th in New York. We look forward to connecting with many of you there. I will now turn the call over to Chris.
spk05: Thank you, Andy, and thank you all for joining the call. 2024 started strong. Momentum we saw exiting 2023 continued through the first quarter with revenue and profitability exceeding both our fourth quarter results and first quarter guidance. Our strategic focus on silicon and enterprise solutions helped create that momentum while paving the way for multi-year growth tailwinds, while our recent reorganization and legal settlement paved the way for growing profitability. Turning first to silicon, The green sheet by side of the last two quarters continues sprouting. First quarter end-point IC revenue exceeded our expectations, driven by improving demand in both retail apparel and general merchandise, as well as the long tail of other applications. Looking forward, we expect second quarter to again deliver solid end-point IC product revenue growth. We also expect impinged M800 volumes to double in the second quarter as our production ramp picks up, albeit still a small portion of our endpoint IP volumes overall. For redirect fees, we expect key family shipments to accelerate in the second quarter as we near the end of our prior generation product shipments, buoyed by a healthy number of design wins and burgeoning opportunities. Turning to solutions, the visionary European retailer's ongoing rollout of our self-checkout and loss prevention solution is performing nicely. We expect we're allowed to add additional brands at that customer to drive modest gateway demand through at least the end of 2024. Our tagging ramp, which replaces existing hard tags with embedded tags that use our protected mode for consumer privacy, is also on track, driving growing endpoint IP bonds. General merchandise, a large North American retailer's RAIN tag usage has accelerated driven by additional products being tagged and new product ordering. We anticipate steady growth in general merchandise tagging for the remainder of the year. Finally, in supply chain and logistics, we expect the second large North American supply chain and logistics end user to increase their label consumption in 2024. Taken together, our enterprise solutions efforts are and continue paying clear dividends in endpoint IT volumes. I'd like to now touch on two solutions growth opportunities, digital product passport and food. On DPP, I recently spent a week in EDU speaking with partners and end users on how we together advance RAIN as the technology of choice for textile DPP. RAIN has the apparel penetration, but DPP also requires consumer engagement. I see DPP making the strongest case to date for putting rain reading into the hands of consumers, and large enterprises are making that need known. On food, demand is growing at a faster pace than I had expected, with several quick-service food chains talking openly about using rain for inventory, shelf life, and freshness. The overall food opportunity is so large that any adoption can drive meaningful endpoint IT volumes. On the intellectual property front, In March, we successfully settled our patent dispute with NXP, including a multi-year litigation during which impinge prevailed in multiple jury trials. As Kerry will decale shortly, NXP agreed to pay impinge an upfront amount and a yearly licensee in exchange for a broad patent cross-license. This settlement increases our cash reserves and competitiveness, frees management bandwidth, and removes uncertainty from the industry overall. While we are happy to put this dispute behind us, as the RAIN pioneer and innovator, we remain vigilant and committed to safeguarding our patented inventions, as well as identifying additional licensing opportunities. In closing, we delivered a very strong first quarter in every respect, financial, organizational, and market leadership. We see continued strength looking into the second quarter. Looking further out, we see growing opportunities to drive recurring licensing and services revenue, monetizing our IP, platform, and cloud services. We continue driving our bold vision to connect every item in our everyday world, confident in our market position, and energized by the opportunities ahead. Before I turn the call over to Carrie for our financial review and second quarter outlook, I'd like to again thank every member of the Impinj team for your constant effort driving our bold vision. As always, I feel honored by my incredible good fortune to work with you.
spk09: Thank you, Chris, and good afternoon, everyone. On today's call, I will review our first quarter financial results and second quarter financial outlook. First quarter revenue was $76.8 million, up 9% sequentially, compared with $70.7 million in fourth quarter 2023, and down 11% year-over-year from $86 million in first quarter 2023. First quarter endpoint IC revenue was $61.5 million, up 14% sequentially, compared with $53.9 million in fourth quarter 2023, and down 8% year-over-year from $67 million in first quarter 2023. First quarter endpoint IC revenue exceeded our expectations, Looking forward, we expect second quarter endpoint IC product revenue to increase sequentially, again led by retail. First quarter systems revenue was $15.3 million, down 9% sequentially compared with $16.8 million in fourth quarter 2023, and down 19% year over year from $18.8 million in first quarter 2023. First quarter systems revenue was below our expectations, primarily due to lower channel reader sales. Looking ahead, we expect a sequential decrease in second quarter systems revenue with increasing channel reader sales more than offset by declining project-based gateway sales. First quarter gross margin was 51.5% compared with 50.9% in fourth quarter 2023 and 52.4% in first quarter 2023. The sequential increase was driven by mix within endpoint ICs. The year-over-year decrease was driven primarily by lower revenue on fixed costs partially offset by higher systems product margins. Looking to the second quarter, we expect gross margin to increase. Total first quarter operating expense was $32.9 million, compared with $33 million in fourth quarter 2023 and $36.4 million in first quarter 2023. Operating expense was lower than we anticipated due to strong spend management across all major functions, as well as lower litigation costs. Research and development expense was $16.5 million. Sales and marketing expense was $7.7 million. General and administrative expense was $8.7 million, including litigation expense of $1.3 million. million compared with $3 million in fourth quarter 2023 and $8.6 million in first quarter 2023. First quarter adjusted EBITDA margin was 8.7%. First quarter GAAP net income was $33.3 million. First quarter non-GAAP net income was $6.2 million or 21 cents per share on a fully diluted basis. Turning to the balance sheet. We ended the first quarter with cash, cash equivalents, and investments of $174.1 million compared with $113.2 million in fourth quarter 2023 and $164.7 million in first quarter 2023. Inventory totaled $87.8 million, down $9.4 million from the prior quarter. First quarter net cash provided by operating activities was $60.1 million. Property and equipment purchases totaled $6.2 million. Excluding the $45 million income from the litigation settlement, free cash flow was $8.9 million. Before turning to our guidance, I want to highlight a few items unique to our results and outlook. First, NXP paid us a one-time $45 million litigation settlement payment in the first quarter. We recorded that $45 million in our first quarter GAAP financial statements as other income in our income statement and as cash on our balance sheet. Next, NXP will pay us an annual license fee each April for up to 10 years unless they design out RIP and exercise an early termination rate. Earlier this month, we received a first $15 million covering the period from April 1, 2024 to March 31, 2025. We will recognize the percent gross margin. Going forward, the payments will increase annually by a modest fixed rate for as long as the agreement is in effect. As a reminder for calculating our quarterly diluted earnings per share, when quarterly non-GAAP net income exceeds 12 million, you should add the 2.6 million shares underlying our convertible debt into our diluted weighted average shares. and you should remove the corresponding $1.2 million of interest expense from our net income. Finally, first half of 2024 marks a turning point in our operating margin profile. We added high margin licensing revenue and reduced operating expense by removing litigation spend and reorganizing our reader and gateway channel business. As you can see in our second quarter guidance, those actions drive substantial earnings per share accretion. and they will also drive significant free cash flow. Furthermore, these margin improvements accrue before the M-800 drives additional leverage. Turning to our outlook, we expect second quarter revenue between $96 and $99 million compared with $76.8 million in first quarter 2024, a 27% quarter-over-quarter increase at the midpoint, including the licensing payment, and a 7% quarter-over-quarter increase of the midpoint excluding it. We expect adjusted EBITDA between $23.9 and $25.4 million. On the bottom line, we expect non-GAAP net income between $21.7 and $23.2 million, reflecting non-GAAP fully diluted earnings per share between 72 cents and 77 cents. In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question and answer session. MJ?
spk01: Thank you very much. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. As a courtesy to others, we ask that you limit yourself to one question and one follow-up. If you have additional questions, please re-queue and we will take as many questions as time allows.
spk00: At this time, we will pause momentarily to assemble our roster. Today's first question comes from Harsh Kumar with Piper Sandler.
spk01: Please go ahead.
spk02: Yeah, hey, first of all, guys, huge congratulations. The settlement of the litigation and then also just the turn in the business. Chris, what a big difference six months can make. There's a lot of interesting stuff in your comments. I wanted to start with general merchandise. I wanted to start with the large North American retailer that you highlighted in your comments. I wanted to ask you how this was going. You obviously talked about some pickup there. Maybe you could just provide us some additional color. And then what is the implication of this implementation succeeding? Is this like a big thing that the entire retail industry is waiting for? Does this have huge implications for adoption for the rest of the retail? And I've got to follow up.
spk05: I'm going to let Jeff lead in here because he's very close to the customer side, obviously, and so Jeff.
spk04: Thank you for your question, Harsh. Our tagging ecosystem partners who serve this large North American retailer's tagging needs have signaled steady gains in the tagging of additional general merchandise categories as well as modest uptick in overall consumer demand. Some of the general merchandise categories are progressing more quickly than others, but we are optimistic that the progress will continue in the year ahead.
spk05: Historically, that end user has significantly led our industry and others have followed their moves. Of course, there was a setback during the years from 2013 basically to 2019 associated And so although we don't have firm data to date, it's my expectation that this customer being a bellwether for many other large customers and for our industry overall has proven historically and by their size, you know, everything they do going forward, I would put it at the benchmark for other companies to follow up.
spk02: Very well. Question then for my follow-up, guys. I wanted to ask about logistics. Again, the second customer that is ramping up Do you think you're in a position to be able to say that this customer will grow with you every quarter steadily for the rest of the year? And when do you think you might reach the point where you are sort of call it 100% penetrated at this customer in tagging?
spk05: So I'm going to start here and I'm going to let Jeff jump in. You know, we only got one quarter at a time. And with any of these large deployments, there are always teething issues as we go along. We work with the customer and our partners work with the customer to get through those teething issues. So there's always a little bit of ups and downs along the way. So it's difficult for me to say that at any given quarter things are going to be consistently up. What we do see is strength of that customer, a commitment, a real commitment to go forward and to digitize the entirety of their operations, and a commitment to not only bag all the items they transport and move, but also to substantively change how they run their business. And so we see multiple opportunities with this customer. And then hopefully with them, again, it's about whether for the overall supply chain of logistics industry, others will follow.
spk02: Great. I'll follow you back in line. Thank you.
spk05: Thanks, Harsh. Thanks, Harsh.
spk01: Thank you. The next question comes from Jim Rashudi with Needham & Company. Please go ahead.
spk08: I think just maybe on that second logistics customer, as you know, I'm sure they discussed moving into the stage two implementation where presumably it sounds like they're going to be putting readers, RFID readers, in the hands of their drivers. And I assume that's going to help your reader IC business. But, Chris, maybe as we think about their deployment, it moving now, into their vehicles? What is the significance of this, or is this all part of their grand plan that you guys were always kind of aware of?
spk05: I'm going to let Jim take the lead here, and then I'll circle back on the impacts of silicon.
spk04: I think, first, Jim, I want to reiterate that we prefer to have our existing perspective and customers speak to their own programs and deployments. But what I will say is that I think we have platform opportunities with this particular customer going forward and, importantly, multiple silicon touchpoints in those opportunities.
spk08: Got it. Thank you. A follow-up question. Chris, I want to go back to your comment about the food applications and moving faster than you expected. You know, how should we think about this? When could this potentially be a, you know, perhaps a more meaningful incremental driver for the endpoint IC business? I mean, it's, I'm sure, dwarfs, yeah, everything else dwarfs this, but you seem pretty excited about what you're seeing.
spk05: I am, Jim. So, you know, if you look back in time, what I've said is that food opportunity is so large that it's hard to see it moving really quickly. faster than I had expected and when we see when you see some of the fast food chains talking openly about about inventory shelf life and freshness and we see other opportunities out there on the market on the food front we start partners bringing in food opportunities overall for me it's a little bit of a surprise it's just it's got a quick taste to it and I wasn't expecting that now part of the reason it should maybe that with retail adopting RAINN so successfully that, you know, technology's proven to be a piece of improvement, and it kind of paved the way. But I still thought things were going to take a little longer. So I'm rather excited about the opportunities of where they are right now. And as we learn more going forward, you know, we'll bring other opportunities and insights to your attention.
spk08: Thanks. Congrats on the quarter, guys.
spk05: Thank you. Thank you.
spk08: And the settlement.
spk05: Thank you very much.
spk01: Thank you. The next question comes from Mike Walkley with Canaccord Genuity. Please go ahead.
spk03: Great, thanks. Yeah, my congrats on everything too. I guess, Chris, just on the strong intellectual property and your comments about protecting it, what has been kind of the feedback from the RAIN RFID industry post your settlement with NXP and are there additional opportunities to license your technology?
spk05: I'm going to start with the latter part of the question. First, Mike, and there are additional opportunities out there for licensing overall. So this opportunity is on our IP front, on cloud services front, and for our platform overall. We've just got a lot of strengths and capabilities in the things that we're doing. And furthermore, we see opportunities to integrate with our partners and is why I cited it in the prepared remarks, although obviously we didn't give any further details because we can't really cite anything until we have any further details. Licensing is core to our strategy going forward. In terms of the industry reaction to settling with NXP, the industry was for the most part relieved. suppliers and the fact that that that overhang to the industry is removed I'm currently think that it you know will help the industry continue to move forward and and it takes away any concerns right concerns about potential impediment going forward on top of that of course we carry cited the details of the settlement and we feel the outcome was good for us and then good for the industry overall great so for my follow-up you know Kerry just
spk03: Just on gross margins, obviously, next quarter will be a high gross margin quarter with a licensing payment. But as we kind of back that out and think about gross margin trends for the rest of the business with M800 ramping and potentially a stronger mix of systems later in the year, how should we just think about gross margin trends for the business?
spk09: Yeah. Thanks for the question. I think, you know, as you know, looking at the second quarter, we expect gross margins to increase with a strong benefit from the license revenue. If you were to remove that, we're modeling gross margins at the product level to be about a flat quarter of a quarter. And currently, we're running below our targeted 53% to 54% range for a few reasons. First, we remain a little subscale. but are closing that gap quickly. And then second, as has been the case historically, the system's business recovery typically lags the endpoint IC's recovery. This has caused our endpoint IC revenue to grow as a percent of our total revenue. Endpoint IC carries a gross margin that's slightly lower than our corporate average. And then finally, our lower margin 200 millimeter volume running skews are slightly higher as a percent of revenue in Q2 and will likely be so again in Q3. That product line is two generations old at this point, and we're moving it before the M800 ramps. We'll know more about that pace of the M800 ramp in the next quarter or so, but the second quarter volumes remain small from a mixed perspective, and we're really not having a visible impact to our gross margin. Overall, we remain confident in the gross margin targets that we outlined yesterday.
spk03: That's very helpful. Thank you very much. Thank you.
spk01: Thank you. The next question comes from Christopher Rolland with Susquehanna. Please go ahead.
spk06: Thanks for the question. The digital product passport, I think you talked to it regarding textiles as well. Can you tell us a little bit more about that, the applications, maybe the economics associated with it, and how big do you think it can ultimately be?
spk05: The application really is the EU has passed a set of regulations that basically require traceability of textile items from cradle to grave from point of manufacturing all the way through shipment, sale, consumer use, and recycling. Those regulations really begin kicking in at 2027 and full life cycle traceability. And the thing is the EU wants to give the consumers the possibility to an item's provenance Consumers make an informed choice around item sustainability and informed choice about the products that they're buying. And in doing so, providing the data about the items to the consumers and then, like I said, recycling at end of life. So the key here for us is that I believe DPP will drive significant opportunities for consumer engagement. Now, RainArkID is not a shoe-in for DPP because there are other data carriers, but we are partners and our enterprise end users want is to make the tags that are already on the retail apparel items and more and more embedded in the items be a data carrier for DPP. In order to get there, we need consumers to be able to read those items, which is the impetus for putting readers into mobile phones. And I personally think that brain reading in mobile phones opens up opportunities and actually is a new and transformative use case for the mobile phone suppliers. So I am hopeful, but I can't go beyond hopeful, We're putting brain reading in mobile phones. Maybe we'll put us over the edge, over at the top, in terms of getting the readers in the phones, which would open up a wealth of opportunities beyond BTP. So that really is the core focus. The tech's already going on the items. We need to get consumers being able to read them, and when they can, it opens up a whole new set of opportunities close to point of sale.
spk06: That's very interesting. Just a quick follow-up there. Would you be selling ICs into the mobile market for that, or could they use some sort of existing function there and then just a housekeeping on the licensing? Is there a volume component to royalties for future payments, and how dependent on volumes are those payments?
spk05: I'm taking the latter question first. Going to the former, it's too early to say whether there's an opportunity for us in silicon in the mobile phones or not, but putting that aside for a minute, if you think of our platform that has the endpoint ICs, reader ICs, we're pushing more into some of the services around it. We already have enterprise-level engagements. We see a large opportunity for our We're going to be pushing forward with opportunities that leverage our platform and the benefits our platform brings, and we want to be there side-by-side with the retailers and the phone providers and the manufacturers to be part of the overall solution. Thanks, Chris. Thank you.
spk01: Thank you. The next question comes from Scott Searle with Ross MKM. Please go ahead.
spk07: Hey, good afternoon. Thanks for taking the questions. Nice to see the continued recovery in the core business and the outlook of those key customers. Maybe quickly on that front, on the retail apparel front, it sounds like that drove the upside for endpoint ICs in the first quarter and driving the outlook of the upside into the second quarter as well. Chris, is the retail apparel market now normalized as we get to the second quarter, or are we still recovering and working through some inlay inventory in there, or are these new design wins and wrap-up in unit volumes, et cetera?
spk05: I'm going to start by saying thank you, and then I'm going to hand it off to Jeff, because I think Jeff can provide some commentary there. Jeff?
spk04: Well, we are seeing some restocking taking place in both apparel footwear and general merchandise. to better match to an uptick in consumer demand. Whether or not that trend continues, it's too early to call and probably not for us to call that. But overall, the partners who engage with those retailers signal some strength into the second quarter. and optimism, cautious optimism for the second half, but are awaiting more confirmation of the sustainability of that uptick in demand.
spk05: And I'm going to layer a little bit more on here. So we see multiple drivers as we look out. We see embedded tagging, which replaces hard tags with soft labels, and hard tags get reduced to soft labels. So we see some tailwinds from that embedded tagging. Obviously, General Marks Invest, we're ready to talk about that going forward. and then our efforts around solutions, you know, driving solutions in the market and our strength in those solutions accounts. All four of those factors are, we believe, our tailwinds that are driving our end-planning city lines.
spk07: Gotcha. And if I could follow up on the DPP front, Chris, it's a huge opportunity there. I'm wondering if you could walk us through what the process and some of the milestones that will look like over the next couple of years. You're talking a lot about retail apparel. the traceability to engage consumers on that front, but I thought we were going to see tires and batteries kind of starting first, some of those recyclable items, more so than we think about textiles. Is that changed in terms of the implementation of different product categories, or is it just because the retail apparel is just such a large unit opportunity and drives incremental feature sets from Impinj? Thanks.
spk05: Yeah, so from my understanding of where DPP is today, and there's Not only are the regulations kind of being ironed out, but the implementation is being ironed out. Batteries are going first, from my understanding, but also from my understanding that it's stretched out. The gate DVB carrier for those batteries is QR codes. Textiles is the next one to come along. It's a much bigger category, and the data carrier is not decided yet. So it could be multiple things. It could be RainRFID. It could be QR codes. It could be NFC RFID. It could be a bunch of different things. And it's not a side-interfactor's committee that's working on it and figuring out what the data carriers are. RainRFID has a big benefit that item visibility is great. It's already on the apparel items. That's great. It's being embedded into the items. That's great. But we're not a mobile phone. and that there are now large enterprises in Europe that are pushing and letting their needs be known that we need rain readers and mobile phones. And so whether that push will be enough is to be determined, but it's the first time we've really had a real push from the leaders in the market, from the enterprises in the market, saying we need this capability. And so I think that your first indicator will be over the next call it, one to two years, whether a rank is classified as a data carrier for DPC, and we hope to make it soon.
spk02: Great. Thank you.
spk01: Thank you. Thank you. The next question is a follow-up with Harsh Kumar from Piper Sandler. Please go ahead.
spk02: Yeah. Hey, guys. So a lot of us are going to probably be struggling with this as we model, so I thought I would just ask this openly. What should be the expected OPEX level going forward? In other words, I know you were spending four, four and a half million dollars in legal. Is that a fair number for us to take out? And then I'll just ask the second one that's on my mind too. Do you want us to model the next year's payment in some manner as it'll come to in the second quarter of 2025? Or, you know, do you think it's just appropriate to see what that number is and that it could change dramatically? Just love some thoughts on this.
spk09: Hey, Harsh. This is Kerry. So from an OpEx perspective, our Q2 OpEx, or what we've embedded in our Q2 guide, is pretty clean. There is immaterial litigation spent, and the business is normalizing following the reorganization that occurred in Q1. As I looked at the second half, I would assume modest growth. We're going to continue investing in this business and in front of this opportunity. But you've got a pretty good picture of our OpEx right now.
spk02: Okay. And then what about the expected payment next year?
spk09: Good question. That one is early. There is an ability for NXP to design out, but that is not something that's easily done. So I don't expect a huge increase in that payment, but I think it is fair to model that at this point, and we'll keep you up to date on where that might grow.
spk02: Of course. Thank you.
spk01: Thank you. Thank you. The next question is a follow-up from Jim Rusciutti with Needham & Company. Please go ahead.
spk08: With the litigation uncertainty behind you and the growing cash position, what I'm wondering is you guys have periodically looked at M&A as a means of accelerating parts of the business, growth in parts of the business. The Boyanthic acquisition sounds like it was a nice acquisition for you, small, but I think provides some benefits. I'm wondering if we might see a pickup at all or if you're looking at opportunities that might accelerate the growth in some of the newer markets.
spk05: Yeah, Jim, I'll do my best to answer that question. Obviously, I can't speak to any particular opportunities or anything that might be coming our way. Atlantic was an opportunity for us because what they offered was well aligned with our platform. Essentially, they're at the front end of the inlay manufacturing. We're inlay testing, quality assurance, and some data services around the inlays, which, of course, use RICs and leverage RICs for the inlay. So it was a natural addition to our platform. We are always open to other areas that strengthen and augment our platform. And if someone wants to come along, we'd be interested. And we keep our eyes open all the time. I don't think the additional cash is going to say, oh, we're actually going to make a huge difference either way. It's really identifying an opportunity that makes sense for us as a company. You know, the additional cash is nice because it's easier for us to finance it. But the key thing is we see an opportunity that's good for us, we'll pursue it. And after that, we won't.
spk08: Okay. And one final question, if I may. Carrie, I think you alluded to the M800 volume still being relatively small, but is there any way, I think you touched on this at the investor day, but has your thinking around the impact on gross margins as that scales, has that changed at all? And maybe you could just remind us of the impact as it becomes a bigger part of the overall volume.
spk09: Thanks, Jim. So the M800 benefits from a lower cost basis. And that lower cost basis will translate into approximately 300 basis points of gross margin accretion as the M800 ramps and becomes the volume runner in our business. Now, an endpoint IC ramp, when we typically launch a new IC, takes multiple years to achieve, call it volume running status. We're certainly pleased with where we are, and as Chris alluded to in his prepared remarks, where the M800 is ramping into Q2, but the volumes are still small, and the impact on gross margin is not visible at this point. With the early days of the ramp, it's really too hard to project a precise timing of that ramp, but we're encouraged with where we are, and we'll keep you up to date as we progress in that ramp and throughout this year. Okay.
spk08: Thanks a lot.
spk09: Thank you.
spk01: Thank you.
spk00: As a reminder, if you have a question, you may press star, then one. Seeing no further questions, this concludes our question and answer session.
spk01: I would like to turn the conference back over to co-founder and CEO, Chris DiIorio, for any closing remarks.
spk05: Thank you, MJ. Thank you very much. And I'd like to thank all who were on the call today for joining us. Thank you for your ongoing support. Bye-bye.
spk01: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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