Intevac Inc
NASDAQ:IVAC

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Earnings Call Transcript

Earnings Call Transcript
2023-Q3

from 0
Operator

Good day, and welcome to Intevac's Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, November 1, 2023.

At this time, I would like to turn the call over to Claire McAdams, Investor Relations for Intevac. Please go ahead.

C
Claire McAdams
executive

Thank you, operator, and good afternoon, everyone. Thank you for joining us today to discuss Intevac's financial results for the third quarter of 2023, which ended on September 30. In addition to discussing the company's recent results, we will discuss our outlook looking forward.

Joining me on today's call are Nigel Hunton, President and Chief Executive Officer; and Kevin Soulsby, Chief Financial Officer. So we'll begin with an overview of our business and outlook, then Kevin will review our financial results before turning over the call to Q&A.

I'd like to remind everyone that today's conference call contains certain forward-looking statements including, but not limited to, statements regarding financial results for the company's most recently completed fiscal quarter, which remains subject to adjustment in connection with the preparation of our Form 10-Q as well as comments regarding future events and projections about the future financial performance of Intevac.

These forward-looking statements are based upon our current expectations and actual results could differ materially as a result of these risks and uncertainties relating to these comments and other risk factors discussed in documents filed by us with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

The contents of this November 1 call include time-sensitive forward-looking statements that represent our projections as of today. We undertake no obligation to update the forward-looking statements made during this conference call. I will now turn the call over to Nigel.

N
Nigel Hunton
executive

Thanks, Claire, and good afternoon. Intevac posted strong results for the quarter, and I'm very pleased to have this opportunity today to update you on Intevac's ongoing developments for 2023 and our outlook for the year ahead. .

As evident in our Q3 financial results, we achieved significant upside to our previous forecast for our HDD business. The revenue ramp we achieved in Q3 demonstrates our operational agility and our ability to execute to meet customer time lines for technology upgrades.

Even more importantly, Intevac has emerged as the enabling [indiscernible] partner for the HDD media industry. Our results in 2023 to date demonstrate that we are a direct beneficiary of the expanded scope of HDD media technology upgrade initiatives currently underway.

In Q3, in particular, we delivered over $5 million of revenue upside in response to both pull-ins as well as increased orders received within the quarter. And as a result today, we are reporting our largest revenue quarter in nearly 3 years. Following the restructuring, I met with our new leaner team in Singapore, and I was particularly pleased in the way they had delivered the upside in Q3 with 100% on-time delivery from a more focused organization.

This upside for Q3 revenues culminated in breakeven earnings on a non-GAAP basis, which excludes the $2 million restructuring charges incurred during the quarter. Our balance of cash and investments declined from Q2 levels as a result of the timing of accounts receivable collections.

Since quarter-end, we have collected over $13 million of receivables and we remain on track to end 2023 within the $75 million to $80 million guidance range, consistent with our outlook provided earlier this year.

Our revenue outlook for the year has likewise improved by about $0.14 from our earlier expectations in August of a $44 million revenue year to now our current expectation that we will achieve around $50 million of revenue for 2023. This will equate to year-over-year revenue growth of approximately 40% in our hard drive business during one of the most challenging periods in the HDD industry's history.

This growth is indicative of our critical role as a key technology enabler for process technology. And more importantly [Audio Gap] the foundation for a sustained base of technology upgrade revenues as we look to the years ahead.

Turning to the TRIO. And I'm pleased to say that we are in the qualification process for the initial system with our JDA partner, Corning, who is one of the world's leading innovators in glass and glass ceramics materials. I'm very proud of the entire Intevac team on the way they have collaborated together to reach this key milestone and support Intevac's expansion into a new growth market.

We began the qualification during Q3 in our Santa Clara headquarters and are progressing through the final steps. The tool is integrated and is producing process samples. As I mentioned, we are now in the final stages of qualification which includes endurance run and show consistency and run time. These are starting this quarter, and we are still on track to complete the qualification by year-end.

Once we achieve qualification, the next step will be to receive an initial order as per the JDA. We continue to expect our first rear revenues and cash to occur in the first half of 2020. Over the last few earnings calls, we've discussed what sets the TRIO apart from other manufacturing options.

In our joint development process to date, it is increasingly clear that Corning's enthusiasm for the TRIO is primarily driven by the platform superior productivity and flexibility. Today, on our IR website, we have added a live-action video of our TRIO running in Santa Clara as is proposed to endurance runs enabling you to view the modular and compact design of this world-class coating machine. This video can be found on our IR home page along with an updated investor presentation that the company's today's earnings call.

The slides that accompany today's conference call also now include an overview of the longer-term revenue potential for TRIO, which offers a significant market opportunity for Intevac. In our recently completed analysis evaluating each of the potential end market opportunities for the TRIO, we see a roughly $1 billion revenue opportunity for tools, assuming a durable anti-reflective coatings and similar applications become well proliferated through the high end of each end market.

Of course, while our initial focus is on consumer electronics applications, our efforts to ramp up a partner for automotive market will accelerate in 2024. We look forward to updating you on our market expansion strategies on subsequent earnings calls.

In summary, to date, in 2023, we're on track to accomplish the objectives of the TRIO joint development program, and we continue to expect to receive initial orders before year-end. As we look to 2024, we believe we will revenue 2 to 3 TRIO systems and we will be building several additional tools and leveraging our investment in inventory ahead of an increased order requirement from Corning by year-end 2024.

These expectations for initial TRIO revenues and expanded customer opportunities for 2024 are incremental to our solid base in the hard drive industry. There is no question that the expected revenue profile of our HDD media business over the next few years has changed significantly over the past year. Our customers must have not only deemphasized and delayed their capacity expansion plans but have, in fact, canceled some orders originally slated for capacity in advance.

The steadfast focus at this time is on our technological advancement, and this is an excellent thing for Intevac because we are proving to be a key enabler in advancing our customers' technology road maps.

As I mentioned, our outlook for 2023 HDD revenues has improved since our last call. It's now around $50 million for the year. Importantly, as we look to 2024 and beyond, technology-based upgrade revenues for us are sustainable for the foreseeable future. We have a steady pipeline of work to do with our customers to upgrade and optimize their existing installed base.

We believe that by year-end 2023, approximately 10% of the world media installed base of 200 Leans will be capable of producing HAMR media. Furthermore, we believe that all technology upgrade initiatives either underway or in the planning stages by each leading HDD manufacturer or on Intevac's 200 Lean platform.

This multiyear visibility provides us with a solid foundation of HDD business, which we estimate to be sustainable for the years to come in the range of approximately $40 million annually in upgrade sales and field service. Given this, our expectation for Intevac revenues in 2024 is approximately $40 million in HDD sales as well as [Audio Gap] 3 TRIO systems.

All together, we continue to focus revenues in the low to mid-$50 million range next year to a modest growth year compared to 2023. As a reminder, our 2023 sales included one 200 Lean system as well as refurb system, which we don't expect to repeat in 2024. The key message of our outlook for 2024 is that after the resizing of our cost structure completed in Q3, at this revenue level, we expect our P&L to be at least cash flow neutral for the full year.

We have reduced our quarterly OpEx run rate to the low $7 million level, and we expect the noncash portion of our cost structure will entirely offset any GAAP operating losses incurred as we look to next year.

I'll summarize a few additional key takeaways from today's call. First, our TRIO qualification process is nearing its final stages, and we are on track for the first orders before year-end. Second, our HDD media business outlook has improved in 2023 and is in the early stages of the industry's multiyear initiative to progress the industry's technology road map. Third, we have a global team employees that are energized and excited for the future. And finally, we have a strong balance sheet or we expect will be several years of growth ahead.

Before handing the call over to Kevin, I would like that we currently have 2 processes ongoing and outstanding. One is the strategic process announced in June, which we will comment on at the appropriate time. The other is the search for a new CFO, which is progressing but remains outstanding at this time. And in the meantime, our financial design is in the very capable hands of our long-term controller and current interim CFO, Kevin Soulsby.

Now over to you, Kevin.

K
Kevin Soulsby
executive

Thank you, Nigel. Turning to the third quarter results. Revenues totaled $17.9 million, well above our guidance of $12 million to $13 million and consisted of 80 upgrades, spares and service. We achieved more than $5 million of revenue upside, primarily due to operational agility and our ability to respond to the increasing technology upgrade order activity within the quarter.

Q3 gross margin was aligned with our expectations at 39.1%. Total operating expenses were $8.4 million, slightly below our guidance of $8.5 million, and as expected, we recorded nearly $2 million of charges associated with our restructuring plan announced last quarter. As a result, our GAAP operating loss was $1.4 million and non-GAAP operating income was a positive $0.5 million.

We recorded a GAAP loss of $0.06 per share and achieved breakeven results for non-GAAP EPS.

Turning to the balance sheet. We ended the quarter with cash and investments, including restricted cash of just over $66 million, equivalent to $2.51 per share based on 26.4 million shares at quarter end. During the quarter, total cash declined just shy of $8 million, solely due to the roughly $8 million increase in accounts receivable in the quarter, as a result of delayed payments from our largest customer.

We have already added $13 million of cash through the collection of receivables quarter-to-date and continue to expect to end the year with total cash in the $75 million to $80 million range. Cash flow used by operations was $7.5 million during the quarter. Q3 capital expenditures were $600,000 and depreciation and amortization were $400,000 for the quarter.

Now moving to guidance for the fourth quarter. We are projecting revenues in the range of $9.5 million to $11 million, which at the midpoint equates to full year revenues of $50 million. We expect fourth quarter gross margin to be between 39% and 41%. Q4 operating expenses are expected to be around $7.25 million, which reflects the new lower quarterly run rate that you should expect for the coming year.

We expect interest income of about $600,000 and GAAP tax expense of about $500,000 in the quarter. Most of the tax expense will be noncash. We are projecting a net loss for Q4 in the range of $0.10 to $0.13 per share based on 26.4 million shares outstanding.

As we look ahead to fiscal 2024, we expect this lower OpEx run rate will enable our P&L results to be cash flow neutral for the full year given our revenue expectations in the low to mid-$50 million range, gross margins of approximately 38% to 40% and that the noncash portion of our cost structure will total $7 million to $8 million for the full year. Therefore, our 2023 cost restructuring program completed in Q3 is enabling Intevac to eliminate any further use of our cash balance to fund our operations in fiscal 2024.

This completes the formal part of our presentation. Operator, we are ready for questions.

Operator

[Operator Instructions] The first question we have is from Peter Wright from Intro-act.

P
Peter Wright
analyst

Great. Congratulations on a wonderful quarter. Nigel, I have 2 questions for you. The first one is looking at the HAMR upgrade cycle, I missed one number that you referred to is what number was upgraded in '23. If you can help me put this in context of the installed base, what I'm trying to understand is how many systems need to go through upgrade? And what portion of kind of the available installed base does that represent to have kind of steady state sort of spares and upgrade revenue in '24?

N
Nigel Hunton
executive

Okay. Peter, thank you for that question. Yes, if you look at the HAMR upgrades. So I think we've shared with people that around over the sort of history of the 200 Leans has been over 182 systems shipped. We believe they are up and running around today in the sort of 140-plus level up towards 150 or some of those upgrades are completed. And we've said around 10% of those will be HAMR ready by the end of the year.

So it's pretty simple, that's around 15 units will be upgraded to be HAMR ready.

P
Peter Wright
analyst

Wonderful. And so that's the assumption, how do you see that trending in '24? Is the opportunity set bigger or smaller, if you can have that? And then I've got a follow-up as well.

N
Nigel Hunton
executive

Yes. I think what we are looking at, and we've said we're going to run the similar level of upgrades over the next 3 to 4 years. That really though depends heavily on the success of the HAMR products into the market. And I think if you've seen some of the public announcements, HAMR is starting to get some great traction. People are now putting out forecasts for 2024. And therefore, I think for me, the positive move of HAMR finally coming to fruition and starting to actually be seen in being evaluated and getting some successful revenue for our customer has been key to us seeing some of that additional revenue this year. .

But as we've said, we see a similar level of revenues of HAMR upgrades next year and for the subsequent year.

P
Peter Wright
analyst

And is there any capacity constraints on your side if that was to get pulled into next year? Last part of the HAMR. And then I'll ask 1 other follow-up question and I'll come back to queue is in the TRIO billion TAM that you have on Slide 11 of your deck, your joint development agreement, does that represent the first 3 pieces? So does that cover smartphone wearables and [indiscernible]?

And then it does not include automotive. Is that a good way to think about that? And then is it too early to say who your partners are going to be on that? Do you think it's going to be an exclusive? Or do you think there could be several people that you're working with on the auto side?

N
Nigel Hunton
executive

Yes. I mean just we take the HAMR serviceable available market of $1 billion first, I'd say that question first. And it's as committed on last call, we put that slide in following, I think, one of your requests. So I hope you appreciate the level of detail we're going to ensure in the size of the available market.

We think it is very significant. The agreement and partnership with Corning is focusing on the consumer device or consumer devices are the smartphones, wearables, tablets and tops. And we see that partnership being key getting momentum and success into that sector. The auto display is outside of that partnership, and we are -- it's early days. We're talking to people, but it's early days. And I think 2024, we'll see some progress around the auto sector. But our focus, as I keep saying on these calls, is very much around qualification of TRIO, entering into consumer devices and building this partnership.

So it's -- so hopefully, that slide gives you a mix of both the current focus and then the future potential. And we've also tried to explain the detail of how we've actually positioned this around the high-price smartphones first. Similarly, the touchscreen laptops and high-end tablets. And therefore, as we see over the next 3, 4, 5 years, the market adoption expanding, and we believe there's a significant upside beyond that as well.

Operator

The next question we have is from Hendi Susanto of Gabelli Funds.

H
Hendi Susanto
analyst

Nigel and Kevin, I wanted to understand more about the pull-ins. Were the pull-ins coming from Q4 or from early 2024 or both?

N
Nigel Hunton
executive

Okay. And just a follow on from one of Peter's questions. I mean we have a very agile workforce that's actually over flex up demand and that enables to handle the pull-ins very effectively in the quarter, and our capability and agility of the organization is a key strength of Intevac.

Some of those were from Q4, which is why you see Q4 down on the Q3. And I think part of this is as they understand their needs and they're actually ramping to ensure they meet the 2024 demand for the product line to have that capacity in place and ready. But we believe based on the feedback from customer meetings that we can get a similar level, though, in 2024. But some of those wins were clearly out of Q4 into Q3.

H
Hendi Susanto
analyst

I see. And then I think you indicated earlier that the upgrades depends on the success of HAMR in the market. What kind of time frame to see the outcome of how successful HAMR is in the market? Like how many more months should we have, any indication?

N
Nigel Hunton
executive

I think if you look at the public messaging and the public announcements around HAMR, if you look at our customers and what they've been saying, the successful evaluations, the amount of customers now who are trying the products and the plans to ramp in the first half of 2024.

A clear indications that HAMR is successful and HAMR is now coming through into the market with some adoption. So we are very positive. And I think our customers are positive. You see that in some of their announcements and guidance as well.

H
Hendi Susanto
analyst

And then, Nigel, I would like to ask about the expectation that you will sell 2 or 3 TRIO systems in 2024 and was indicated that first revenues are expected in the first half of 2024. How should we see that first revenue? Will it be just like 1 TRIO system first? Or it'd be like top 2 or or 3 first of all?

N
Nigel Hunton
executive

I think we've been very clear, the initial system will go through a qualification. That qualification will then trigger the ship first system. So one system will go out ahead of everything. And we've said there will be orders from more than 1 system by the end of December. So a second system will follow that first system at some point in the first half of next year.

So I would assume it's potentially 2 in the first half and sort of 1 later in the second half. It's a rough timing, but recognize we have left some level of flexibility around that. It wouldn't surprise me if it's 1 in the first time and then 2 in the second half. But as we get this first product into the field, we're pretty excited about getting that into a customer, producing products and driving the future success?

H
Hendi Susanto
analyst

Yes. And then Nigel, any estimate how long the qualification maybe like will it bring us to like 2025?

N
Nigel Hunton
executive

Now just to clarify, I think some people got slightly confused on the last call. The qualification by our partner on the TRIO is on the first system that is run here in Santa Clara. So that qualification that is the sign-off with that customer and a key part of that agreement. It's on the system here. So that's the real key qualification of the technology.

Clearly, once that goes into the field, our partner we're working with our customers, running products on to the machine. And really, that's very much confidential and between our partner and their customers on how they run, what they're running on the machine. But from our perspective, the key qualification is the application in Santa Clara on that first tool.

H
Hendi Susanto
analyst

I see. And then this is a question for Kevin. Kevin, I think Jim Intevac is willing to build inventory ahead of sales of your system if it's successful. Any further clarity on how much inventory build and the timing or the timing of when Intevac will decide to put working capital to build your systems?

N
Nigel Hunton
executive

If I can answer that first before for Kevin jumps in. So yes, as we said on multiple calls, we have made a significant investment in inventory to enable us to do fast deployment of tools in 2024. That gives us the opportunity to not just build 2 to 3 systems but enable us to build maybe 3 to 5 systems next year to use that inventory and to ensure we can actually respond quickly to future demand.

So the first objective is to make sure we actually leverage that inventory we have and utilize our CapEx as well as to respond fast to any additional demand we see in '24 or '25. Kevin, you want to add anything to that.

K
Kevin Soulsby
executive

Yes. We're building the first tool that will be shipped once we finish qualification and receive orders. And then we have plans in 2024 to build additional tools for next year's revenue and to satisfy demand beyond.

H
Hendi Susanto
analyst

Yes. And then, Nigel, any additional color on the strategic alternatives, how long it may take? And what kind of framework or options?

N
Nigel Hunton
executive

Yes. As I said in my prepared remarks, we will explain that at the appropriate time. All I can say at this stage is the process is ongoing. .

Operator

[Operator Instructions] The next question we have is a follow-up question from Peter Wright of Intro-act.

P
Peter Wright
analyst

Just looking at the TRIO model, how flexible is the system when you start moving into new markets, specifically the auto industry. Is the inventory that you're building for maybe 3 to 5 systems, something flexible that could go into that industry? Or would that be a different tool configuration when you're looking at that?

And then my last question is, if you look at kind of the business model, just for TRIO, how should we think of the service, the spares, the upgrades, the systems? I know upgrades aren't for a while, obviously, is a new system, but how should that mix look? So when we look at your hard drive business in comparison, it's maybe a 40-15 split, but you've got an installed base of 180 systems out there. So -- how should we think of this TRIO contract?

So if we have rolled 5 years, plenty tools out there, just with your first customer, what would the service look like on that contract, a couple of years from now?

N
Nigel Hunton
executive

Okay. A crystal ball question. First of all, to talk to the TRIO. I mean, one of the really exciting things about the TRIO concept in is the modularity of it. So the system we took some of the real learnings from the 200 Lean and built into the design a modular build.

So as you look on the video, as you look on the investor slide deck we put out this time, you can see how that modular structure enables you to add to a common chamber, multiple types of process chambers. So I could actually put on and I'm been -- at this stage, I can put on other bits of technology and actually expand or shrink that tool to optimize it for other materials, whether that be for an auto sector or whether that be for running a polymer through the machine.

So the machine is incredibly versatile. As we look at the auto sector, the auto sector for us, it's early days to get a real understanding of the key target applications for us. But within that order sector, you have -- as you can think about inside -- the inside of a car, screens that are very similar to a tablet or a laptop. And therefore, those are actually -- would actually fit very nicely into the common structure of the machine today.

If you look beyond that into large hyper screen, panel to panel, it probably would be a new machine, but our focus initially, will be about leveraging the capability, leveraging the R&D we've put into getting the tool to where it is today, and utilizing that initially to get some inroads into the auto sector. So I see that the whole design concept being a brilliant bit of engineering expertise from the team to enable our flexibility. Hope that answers your question.

As I look out 5, 10 years, I mean, clearly, service is going to be a key part of our strategy. I think one of the things we actually -- if I look back 20 years, I have had a very different strategy around the 200 Lean to build a much stronger service capability. I think it is too early to give you a mix today. But as we actually build the market presence, we start putting tools into the market. A key part of our thinking is around building a strong service capability in the service business.

But also, as you've seen with the concept of the design as we've seen over the 200 Lean over 20 years, you can take a module out, put a different enhanced type of technology, a different type of sputtering component onto the machine. So I do see that the whole design concept of upgrade has been possible. But I think it's for the first couple of years, it's about getting the [indiscernible] that market, building some real learning, building a business around the spares and service, and then actually coming back to you probably in an play 12 to 18 months to give you a bit more granularity around the service. But certainly, it's a part we want to actually build on as part of a focused strategy.

P
Peter Wright
analyst

If I could have one little follow-up into your crystal ball there. If you think of upgrades just alone on this business, how does this technology evolve over time? Is it chemistry? Is it thickness? Is it -- I get productivity and throughput, and that's more of a tool generation, but upgrading existing tools, a camera as an example, a different architecture or density or whatever kind of the migration is, what is the metric that is going to be kind of how these systems get better over time?

N
Nigel Hunton
executive

I think if you think about material science, I think one of the excellent things we've done with the last, I suppose, 10 years within the HDD business is leveraging our material science and making sure we keep absolutely aligned with our customers' road maps. In a similar way, we want to make sure we stay aligned with our customers' road maps and consumer devices and auto.

So I think I'm not sure what will happen, but I know that the technology will keep shifting. The important [Audio Gap] thin glass in automobiles will keep expanding. And therefore, for me, over time, I think there will be more and more opportunities coming through. And it will be driven by material science than anything else.

P
Peter Wright
analyst

Congratulations again on a great quarter.

N
Nigel Hunton
executive

Thank you.

K
Kevin Soulsby
executive

Thank you.

Operator

[Operator Instructions] The next question we have is a follow-up from Hendi Susanto of Gabelli Funds.

H
Hendi Susanto
analyst

Nigel, I look at Slide 11, that has estimate of how many TRIO tools across like different markets. My thoughts are I think it depends on the area, the yield and then the initial market penetration. Maybe you can give us some insight into how you call the number or the TRIO tools there?

And then my second question is in the wearables section, it is said that it can be a replacement of Sapphire. Is it more of, let's say, if a glass display coated with the TRIO system, it can be stronger than the sapphire. I would like to verify my understanding there.

N
Nigel Hunton
executive

Okay. If I run through at a high level, a model for the smartphones. So literally, if you look at the smartphone market opportunity, if you look at the total market size, you can actually break that down into high-end models, premium sector, you can break that down into sort of medium and then in the lower end. And so therefore, by taking a percentage of the market opportunity and really focusing that on the higher-end percentage gave a sort of reduced market size opportunity.

So we took the TAM -- the lowest TAM, and then I've taken an average throughput per year of the tool and converted that into a number of tools. So it has gone through quite a thorough bit of analysis as you walk your way through the total smartphone market to the high-end markets through an average size of phone that go into machine, average number of those phones that we can coated per year, and that gives you a total number of TRIO tools.

And that's why we've said initially that we believe that number will be for the sort of higher price model market opportunity. Similarly, in the wearables, we've said some of those wearables that are sapphire glass today, we assume will not move to a new technology in the short term. But as our technology and the capability and the sort of the market acceptance of having a hard scratch-resistant antireflective coating phone into the wearable market becomes more accepted, then you'll see that being considered for complete replacement, I think, of sapphire glass in the future.

In a similar way, as we've gone to tablets, I've taken the tablets, I've said there's a premium level of high-end tablets, which I think we'll get looked at first for these coatings. We've taken them by, again, assumed a certain number of tablets panel to go through the machine that gives a smaller number and smartphones a year but gives a number of tools per year, and that then goes into the number of tools we require.

And a similar way for laptops, I've taken the touchscreen laptops, not all laptops. So the world market size of laptops, I have taken only the touchscreen element of it. So we've tried to make this a very clear serviceable addressable market rather than go for the much bigger TAM to give you some initial views on the size of this market opportunity.

So hopefully, that helps give you some of the detail and the granularity behind, I think, about these numbers of tools.

Operator

There are no further questions at this time. I will now turn the call back over to Nigel Hunton for his closing remarks.

N
Nigel Hunton
executive

Thank you, [indiscernible]. First, I wish to thank all of our employees as well as their counterparts with our industry partners for their hard work and dedication as we proceed to the qualification phase for the TRIO. And at the same time, we've actually managed to ramp our largest revenue quarter in nearly 3 years, thanks to our role as a key technology enabler in the HDD industry's transition to HAMR, just really, we have a great team here in Santa Clara, and we have a great team in Singapore driving our HDD business.

I also wish to thank our investors for ongoing support. And as always, the investors can reach out to Claire directly. They want to follow up with us either in November or at the New York Summit in December, and I look forward to updating you all on our Q4 call in early February.

With that, I will conclude today's call. Thank you.

Operator

This concludes today's conference. Thank you for joining us. You may now disconnect your lines.

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