Silicon Motion Technology Corp

NASDAQ:SIMO

Earnings Call Transcript 2020-Q2

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to Silicon Motion's Technology Corp. Q2 2020 Earnings Conference Call. This conference call contains forward-looking statements within the meaning of Section 27A of the Security Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include without limitation statements regarding trends in the semiconductor industry and our future results of operations financial condition and business prospects.

Although, such statements are based on our own opinion and information from our success – from our sources we believe to be reliable you should not place undue reliance on them. These statements involve risks and uncertainties. The actual market trends and our results made a fair maturely from those expressed or implied in these forward-looking statements for a variety of reasons.

Potential risks and uncertainties include, but not limited to continued competitive pressure in the semiconductor industry and the effect of such pressure on prices unpredictable changes in technology and consumer demand for multimedia consumer electronics. The state of any change in our relationships, with our major customers the changes in political economic legal and social conditions in Taiwan.

For additional discussion of these risks and uncertainties, and other factors please see the documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements, which apply only as of the date of this conference call.

I would now like to hand the conference over to your speaker Mr. Chris Chaney, Director of Investor Relations. Please go ahead.

[Chris Chaney, Director, Investor Relations]

Thank you, Ralf. Good morning, everyone, and welcome to Silicon Motion's Second Quarter 2020 Financial Results Conference Call and Webcast. My name is Chris Chaney, Director of Investor Relations. And joining me today on the call are Wallace Kou, our President and CEO; and Riyadh Lai, our Chief Financial Officer.

Following my comments, Wallace will provide a review of our key business developments and then Riyadh will discuss our second quarter results and our outlook. We will then conclude with a question-and-answer period.

Before we get started, I would like to remind you of our Safe Harbor policy, which was read at the start of this call. For a comprehensive overview of the risks involved in investing in our securities, please refer to our filings with the United States Securities and Exchange Commission. For more details on our financial results, please refer to our press release, which was filed on Form 6-K after the close of the market yesterday. This webcast will be available for replay in the Investor Relations section of our website for a limited time.

To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to perform comparisons of our operating results in a manner similar to how we analyze our own operating results. The reconciliation of GAAP to non-GAAP financial data can be found in our earnings release issued yesterday, and we ask that you review it in conjunction with this call.

Now with that, I'd like to turn the call over to Wallace.

[Wallace Kou, President & Chief Executive Officer]

Thank you, Chris. Hello, everyone, and thank you for joining us today. In our second quarter, total sales grew 3% sequentially to $137 million and were up 45% year-over-year. Earnings per ADS for the quarter were $0.81, up from $0.80 in the first quarter and up from $0.52 the same quarter last year.

I'm delighted that our business engagement continues to expand with both existing and new customers. During this quarter, we secured design wins for our new series of PCIe Gen four SSD controller with five NAND flash makers, including a new NAND customers. We also secured a new NAND flash maker customer for our UFS controllers.

Through our SSD solutions, we are working on three separate third-generation open channel Alibaba data center SSD projects for delivery next year, two more than our one project for this year.

Key industry trends that are important for near-term growth continues to play out favorably and as expected. We are seeing solid client re-growth from higher SSD adoption by PC OEMs as they display HDD, and we believe this trend will continue for the next several years as NAND flash makers bring to market successive generation of 3D NAND components that are progressively lower cost.

This year, we expect to grow our SSD controller sales almost twice, the best at market with much faster growth for SSD for PC OEMs. And we expect this positive momentum to continue next year.

The other industry trend that's important to our growth is the transition of the embedded storage technology in the smartphone industry from legacy eMMC to UFS. We continue to expect sales of our eMMC+UFS controller to grow meaningfully this year as OEMs increase their adoption of UFS in smartphones, which more than offset declining smartphone industry shipments this year. We believe this positive trend will also continue for several years. Additionally, we believe we should benefit from smartphone market recovery next year.

Another policy trend related to our open channel SSD technology. Our open channel SSD technology is delivering differentiated value-add to Alibaba especially internally enhanced data center storage performance. The value of these SSD is enabled by our enterprise-grade controllers that include integrated hardware, firmware and driver software.

The message from Alibaba is they are happy with the performance of our products and are interested to broadly rolling out open channel technology across their data center infrastructure. We expect cable-wise [ph] open channel SSD procurement to grow almost eightfold this year.

COVID-19 and result in economy uncertainty have, obviously, introduced both new risk and opportunities. In terms of near-term opportunities, we have been seeing search procurement of notebook PC for work-from-home and online learning and we are benefiting from this.

Third procurement spikes in the second quarter and will moderate in the third quarter. We are seeing strong sales of commercial notebook PC that primarily use SSD and Cranbrook with eMMC. There are also initial indication that consumer mobile PC with a lower capacity SSD are beginning to gain momentum too.

We are benefiting from strong demand for SSD by PC OEMs and this is reflected in our very strong year-over-year SSD controller sale growth. But our quarter-after-quarter sequential trends have recently been uneven due to our NAND size customer’s short-term internal flash allocation decision.

Our first half SSD controller sales are up 25% year-over-year. And energy controller for PC OEM are growing over twice as fast. Channel market has been flattish. In the second quarter, our sequential client SSD controller sales momentum was affected despite in the demand of NAND from hyperscalers due to recent surge in working from home and online learning and our NAND flash customers reallocated NAND from client SSD to meet the stronger than expected hyperscaler demand.

With hyperscale procurement now tapering off, NAND prices have begun to fall and our NAND side customers are redirection flash by back to where client SSD. With improving availability of flash for client SSD, we expect our controller sales to grow meaningfully in the third quarter.

Many independent industry analysts are expecting NAND prices to fall further in the fourth quarter and for these to continue through part of the next year. Additionally, lower NAND prices will help drive further growth in the adoption of client SSD.

There are also COVID-19 downside risk and these risks include expected contraction in smartphone shipments, uncertainty relating to timing and strength of global economy recovery and the slowdown in China data center CapEx spending. The pandemic has also introduced new challenges related to reduced business visibility. It is now harder than normal for OEMs to plan smartphone production inventory and sales, and so also harder than normal for component supplier to plan production inventory and sales.

Recently we are seeing elevated levels of inventory as many leading smartphone OEMs, which is affecting NAND flash makers production of UFS. And this in turn is delaying our sales of controllers. As a result, we are expecting our user controller sales to temporarily decline in the third quarter before rebounding in the fourth quarter, as the inventory level in the supply chain are consumed with expected sequential quarterly smartphone shipment growth.

Based on our audit books, we believe our eMMC+UFS controller sales will recover in the fourth quarter. Additionally, the pandemic has increased the traditionally fully and dynamic metro of channel market primarily because the more uncertain and weaker consumer purchase pattern in major market whether China or the United States.

Furthermore, module makers that comprise a large part of the market are focused on short-term market opportunities. And this has historically limited our business visibility. A large part of ICD controller cells are for SSD sold in the channel markets through retailers e-commerce platform and system integrators.

We believe that SSD sales in the channel market will decline at least 5% to 10% this year and our sales for this market will decline in the in line with the market trend. Despite these challenges we expect our total sales to grow meaningfully this year with growth from all three of our key product lines: SSD controllers eMMC+UFS controllers and SSD solutions.

I'm delighted with a broad and growing business engagement with our NAND partners module makers and hyperscale customers that are important for growth and profitability. For example, we expect new PCIe Gen3 SSD program for PC OEM at two of our NAND partners to begin commercial sales late this year and early next year. And our new PCIe Gen4 SSD controller design win at a five NAND flash maker to begin initial volume sales beginning May net year with a significant majority of these SSD design for PC and game console OEMs.

Our original UFS NAND partner have been making solid progress in carving our meaningful presence in the smartphone market, and we expect the market strength to improve further with our enhanced UFS 3.1 controller early next year. Additionally our second and new UFS NAND partner will also enter production next year.

And finally, we expect continued growth from our Ferri and Shannon SSD solution despite the COVID-19-related economy challenges our team has continued to execute well and deliver solid results.

Now, I will turn the call over to Riyadh to discuss our financial results and our outlook.

[Riyadh Lai, Chief Financial Officer]

Thank you, Wallace and hello everyone. I will discuss additional details of our second quarter results and then provide our guidance. First, I would like to mention that our comments today will focus primarily on our non-GAAP results unless otherwise specifically noted. A reconciliation of our GAAP to non-GAAP data is included with the earnings release issued yesterday.

In the second quarter, revenue increased 3% sequentially and 45% year-on-year. SSD controller sales declined 5% sequentially due to our NAND flash customers allocation of flash away from client SSDs towards hyperscale data center demand.

SSD controllers increased about 15% year-over-year due to market growth and our market share gains. eMMC and UFS controller sales increased 30% sequentially and about 140% year-over-year due to growing smartphone adoption of UFS Mobile embedded storage and supply chain inventory builds.

SSD solutions declined 10% sequentially due to weaker than expected Shannon SSD sales to non-Alibaba customers. SSD Solutions grew 145% year-over-year as we only began shipping Shannon open channel SSDs in the third quarter of last year and sales of legacy Shannon SSDs were very small in the first half of last year.

Gross margin in Q2 increased to 50% from 48.2% in the prior quarter due to higher sales mix of higher gross margin controllers and improvement in SSD solutions gross margin.

Operating expenses in Q2 were $38 million, $0.6 million higher than the prior quarter, primarily due to slightly higher R&D expenses.

Operating margin in Q2 were 22.2%, an increase from 20% in the prior quarter. Our effective tax rate in Q2 was 10% within our 10% to 15% guidance range. Earnings per ADS in Q2 were $0.81 compared to $0.80 in the prior quarter and $0.52 a year ago.

Stock-based compensation in our operating expenses which we exclude from our non-GAAP results was $0.8 million in Q2 within our $0.2 million to $0.4 million guidance range. We had $380 million of cash, cash equivalents restricted cash and short-term investments at the end of Q2 compared to $372 million at the end of the prior quarter.

We paid $13.3 million in dividends to shareholders. The third quarterly installment of our $1.40 per ADS annual dividend that was announced in October of last year. We did not repurchase any shares during the second quarter.

Now, let me turn to our third quarter guidance and forward-looking business trends. For the third quarter we expect revenue to decline in the range of 12% to 17% sequentially to approximately $114 million to $120 million.

We expect higher SSD controller sales, lower eMMC+UFS controller sales, and flat SSD solution sales. We expect SSD controller sales growth because our NAND flash customers are now allocating NAND flash back towards client SSDs. And furthermore, we are expecting continued strong demand from PC OEMs. This strength will likely carry through to the end of the year.

After a very large second quarter eMMC+UFS controller sales, third quarter eMMC+UFS sales will decline meaningfully before recovering rapidly in the fourth quarter.

We believe recent smartphone and component inventory buildup will require a quarter's time to clear and this is supported by OEMs planning for solid third quarter smartphone shipment growth.

We are expecting flat SSD solutions sales in both the third and fourth quarters which is weaker than originally planned as China's data center operators are now broadly reducing capacity expansion plans due to uncertain economic outlook. Our Ali open channel SSD sales expectations remain unchanged, but we have revised down our standard NVMe SSD sales forecast.

Third quarter gross margin should be in the range of 48% to 50% slightly lower than in the previous quarter. We expect controller gross margins to remain stable sequentially. However, corporate gross margin could fall slightly sequentially due to product mix and lower SSD solutions gross margin.

Fourth quarter gross margin could inch down a little as our 2020 Ali program ramped down in Q4 and lower gross margin standard NVMe sales increase. In the third quarter, we expect operating margin to be in the range of 20% to 22%. Operating expenses will decline in the third quarter due to lower R&D spending but rise again in the fourth quarter due to timing of projects.

For the full year, we expect total sales to grow in a range of 13% to 16%; gross margin in a range of 47.5% to 49.5%; and an operating margin in the range of 19.3% to 21.3%. We expect our effective tax rate for the third quarter and the full year to be in the 10% to 15% range.

Given our favorable outlook for our business and expectations of solid cash flow generation you should expect us to be engaging in share repurchases in the third quarter.

This concludes our prepared remarks. We will now open the call to your questions.

[Operator]

Thank you so much. [Operator Instructions] And our first question comes from the line of Craig Ellis from Riley FBR. Craig, your line is now open.

[Craig Ellis, B. Riley FBR]

Yes. Thanks for taking my question. Wallace and Riyadh, thanks for all the information. I wanted to start by following up on a couple of the newer developments in the business. Can you give us some sense for the incremental contribution that we could expect to see in calendar '21 from first the second UFS customer, and then secondly the increased project diversity that you're seeing at Baba?

[Wallace Kou, President & Chief Executive Officer]

The USS controller sales we believe were back to normal growth for '21 due to smartphone recovering. Our second manufacturer NAND flash design win for USS the ramping will be second half of 2021. For our new design from the PCIe Gen 4 the first customer will start to ramp in Q3 of 2021 majority will be aligned with the Intel, Adela which will be late Q4 and early 2022.

[Riyadh Lai, Chief Financial Officer]

Craig, let me also add more to what Wallace said. In terms of both pieces our UFS momentum as well as our client SSD momentum from the addition of new customers we -- these are the new customers will be overlaying on top of existing customers who we expect to continue to grow. For example, on UFS our existing -- our first NAND flash customers' UFS programs will continue to grow next year. And on top of that growth we have the growth coming from our new customers who then fold into on top of that growth curve. On the SSD -- the client SSD side, we have our existing base of five NAND flash makers who have been selling primarily PCIe NVMe these are the Gen three products. We also have the module maker customers. And for both of these blue two customers we expect sales to continue to grow. Then on top of that we then overlay the PCIe Gen 4 products from our 5 customers. And so it's a net increase of overall sales momentum from our perspective.

[Craig Ellis, B. Riley FBR]

That's helpful. And then the follow-up question. The implied fourth quarter guidance, given third quarter and full year is up about 9% sequentially. The question is just given what you're seeing with the way your NAND OEMs are allocating capacity. And given some of the things that you're seeing on the smartphone side with inventory digestion, what's your sense for the ability to continue to grow sequentially off the fourth quarter into the first half of the year? Are there other headwinds that could be looming, or do you think the fourth quarter begins a period of continued growth for the business? Thanks, guys.

[Wallace Kou, President & Chief Executive Officer]

I think we see the -- because our sales really factory end result has been weaker-than-expected this year as most of our U.S. controllers are using flagship phone. With smart OEM managing elevated level of inventory, we've seen the memory supplier customers have had a revised downward Q3 U.S. module production. We believe it takes around 1 quarter to digest, consume the inventory. And because our customers have designed many top-tier smartphone maker for the flagship model, we believe through the 5G rerolling, and we should benefit for the rebound for the smartphone as well as UFS Controller. We have pretty high confidence.

[Craig Ellis, B. Riley FBR]

Thanks, guys.

[Operator]

Thank you so much. And your next question comes from the line of Sam Reiff from Cowen. Sam, your line is now open.

[Karl Ackerman, Cowen]

Yes, hi. This is - can you hear me?

[Riyadh Lai, Chief Financial Officer]

Yes, we can.

[Karl Ackerman, Cowen]

Okay, great. Yes, this is Karl Ackerman, sorry. So, good morning, everyone. Riyadh, I'd like to understand your thoughts on the industry dynamics going on in client SSDs. Now that most NAND providers have reported, am I wrong to conclude that ODM production of notebooks, which I think was up 7-0, 70% sequentially in Q2, it seems to be shipping from prior inventory of not just client controllers, but whole client SSDs. I asked because I would have thought client SSD shipments would have increased the -- for the half of your business sold to PC OEMs. We know that NAND inventory is a bit elevated, but do you think that NAND supply and demand is -- will be rectified entering Q3 or Q4? And I have a follow-up.

[Riyadh Lai, Chief Financial Officer]

Okay. Let me start by your first comment about comparing our business to Q2 Taiwan ODM notebook shipments, which were up roughly 70% quarter after quarter. We believe that data includes pool-ins. As you know, shipments were down about 30% in Q1 before rebounding 70% in Q2, so net first half notebook shipments were up roughly 10% year-over-year. When you compare that to us, our first half SSD sales were up 25% year-over-year, and sales for our PC OEM SSDs were even stronger. So we believe we're doing quite well and are likely taking market share. However, our quarter-to-quarter sales have been lumpy because of the very strong demand for NAND from hyperscalers in Q2, as Wallace had talked about, due to the surge in work-from-home-related procurement. Our NAND customers have reallocated NAND from client SSDs to the hyperscaler as the economics from selling to hyperscalers are likely better than selling to PC OEMs. That now has changed. The hyperscaler surge procurement has begun tapering off. NAND prices have started to fall, and our NAND customers are now allocating NAND back to client SSDs. We continue to see strong demand for SSDs for our PC OEMs in the second half, and we believe this strength will continue through the balance of the year.

[Karl Ackerman, Cowen]

I appreciate that, Wallace or, pardon me, Riyadh. For my follow-up, it's great to hear your progress on PCIe Gen 4 solutions across all the non-captive NAND makers. I know up until this point, you aren't able to benefit from the gaming console cycle this year because you didn't have that solution out yet. However, it would appear to place you -- this would appear to place you at higher odds of participating in that market next year. I think, in a meaningful way when console volumes likely double from this year. So any thoughts on your line of sight to participate in the gaming console market next year for these new Gen 4 PCIe solutions. Thank you.

[Wallace Kou, President & Chief Executive Officer]

We cannot speak for our customers, but the few are NAND customer they also aiming for game console. It depends ramping time. As we said before, game console sometimes they do refresh see new product every year in order to reduce their manufacturing costs. So we have to be aligned with our NAND customer to designing through the second half of next year and probably ramping by end of next year or early 2020.

[Karl Ackerman, Cowen]

Thank you.

[Operator]

All right. Thank you, so much. Our next question comes from the line of Mehdi Hosseini from SFG. Your line is now open.

[Mehdi Hosseini, SFG]

Yes. Thanks for taking my question. Just want to follow-up with you on the eMMC+UFS. Can you help me better understand that this inventory build particularly by 4G versus 5G? And within the 5G, how do you see trend in the high-end flagship model versus the mid- to low-end segment? And I have a follow-up.

[Wallace Kou, President & Chief Executive Officer]

Yes. So unfortunately for this year, from our data collection, we see majority smartphone maker flagship model are not selling well declined sharply from the original plan. Most of our design is really for 5G smartphone in the flash model. So that's why we -- I think because the -- we are several steps removed from the end consumer so they're affected by TAM because the mobile phone maker they need to prepare at least two months of inventory. NAND maker also need to prepare their inventory. Now I think majority players see the first half decline. Although the third quarter we do see the rebound, but a good time to consume the inventory. The 5G smartphone new model will ramp up, especially in the quarter to September, we see that will help to consume inventory. And we also see from our book orders we do see our Q4 the USS will rebound and continuing become a strong rebound in 2021.

[Mehdi Hosseini, SFG]

Okay. So your expectation is for a stronger sell-through into Q3 would lead to better demand for controller in Q4. Is that the right way?

[Wallace Kou, President & Chief Executive Officer]

Yes.

[Mehdi Hosseini, SFG]

Okay. And then thank you for the detail I appreciate it, and then just a quick follow-up. How do you see the inventory in the channel versus OEM? Is this inventory build equally distributed between the channel and the OEM, or is one-time of customer has more inventory than the other?

[Riyadh Lai, Chief Financial Officer]

You mean smartphone or?

[Mehdi Hosseini, SFG]

Sorry for smartphone as well as notebook?

[Wallace Kou, President & Chief Executive Officer]

Yes. For smartphone, I think the -- we really only focus our top five or six smartphone makers for Android. So the inventory I think we'll have probably both remain in the channel as well as some as factory. We don't know the detail because it really is up to our NAND customer and their end customer to make a decision when to do the inventory adjustment. For the notebook, I think it's selling quite well, especially PC OEM demands very strong. Just for retail, the demand remains soft globally. We see the channel market will decline at least 5% to 10% will be in line with the global channel market decline. But for PC OEM, it's very strong. We also see very strong rebound due to our NAND customer reallocate NAND to client SSD because prices start to fall. And so we're going to see very strong client SSD controller growth for Q3 and Q4.

[Mehdi Hosseini, SFG]

Great. Thank you for the details.

[Operator]

Thank you so much. [Operator Instructions] And your next question comes from the line of Rajvindra Gill from Needham & Company. Your line is now open. Excuse me, Rajvindra, your line is now open.

[Rajvindra Gill, Needham & Company]

Yes, sorry about that. I was on mute. Thanks for taking my questions. A question on reallocation of NAND flash back to client SSDs away from hyperscalers. How does that split occur between OEMs versus the channel. I know when you did the pre-announcement the top line was a bit soft. It was mainly due to channel sales in your PC market not getting enough – your module maker is not getting enough NAND capacity. And that affected your overall client SSD business.

So now that you're seeing flash makers allocate NAND capacity back to client SSDs in total, will that result in a benefit both in the retail channel side as well as in the OEM side? I just want to get clarity on that. And if you could just remind us what percentage of your overall client SSD is OEM versus channel today?

[Wallace Kou, President & Chief Executive Officer]

Yes. So let me rephrase again for PC OEM, the SSD demand is very strong for this year even for the first half including the Q3. The reason our Q2, the client SSD controller sales revenue decline is due to our NAND customers reallocate NAND output to more favorable hyperscale and SSD.

So now in Q3 because the hyperscalers they reduce the CapEx and NAND price start to fall, so they reallocate NAND to client SSD market. So we're going to benefit for PC OEM sales. As we said from the beginning, the channel market for client SSD for this year because the impact by COVID-19 so they remain very soft globally.

As I mentioned, United States, China, other country, we see is much more softer than last year and nothing to do with NAND supply. It just demand is very weak for China market. Our SSD, the distribution from last year we calculate for OEM – PC OEM is about 30% for this year it grows to 40%. We still have a lot of room to grow for 2021 and beyond for PC OEM business.

[Rajvindra Gill, Needham & Company]

Okay. I see. Thank you for that. And then a question on your NAND pricing commentary, expecting NAND pricing to continue to fall further in Q4 and kind of leading into the – extending into the first half of 2021. Wondering if you kind of characterize that in terms of the magnitude of the price decline relative to say historical levels. And is the – if you could characterize also the NAND supply environment as we move into the second half and also going to the first half of 2021 that would be helpful.

[Wallace Kou, President & Chief Executive Officer]

Yes. We cannot comment for the NAND price magnitude. I think consensus will be single-digit for Q3 and first year in Q4. But the – definitely if smartphone rebound stronger, we think the price decline will be smaller. But the demand – the NAND demand will definitely rebound for second quarter from last year because the data center hyperscaler going to increase the CapEx rolling again.

And we do see the many applications going to consume the more NAND. So we see the price will go back to normal. And I think the – hopefully, the supply and demand will rebalance. I think all the player in the food chain can continue to grow the business.

[Rajvindra Gill, Needham & Company]

And last question for me in terms of SSD solutions. You're talking about it being flat in 3Q and 4Q. The growth in Alibaba being offset by the non-Alibaba projects. Can you talk about what's going on there? Why is that business such a drag on Alibaba? What's the plan for that business to rebound going to 2021? Because it's taking away a lot of the growth from the open channel business at Alibaba. Thank you.

[Wallace Kou, President & Chief Executive Officer]

As the overall channel SSD sales this year will be softer than expected because of growing economic uncertainties Chinese data center operator are cutting CapEx plan including procurement plan for SSD. But our RV Alibaba sale plan for the full year however, remain unchanged. So our sales this year relate to really just one open channel SSD project.

However, currently Alibaba award us with three projects for 2021. We believe our business with Alibaba is going to grow much stronger than this year. And for non-Alibaba business next year, we're also going to grow because we have a new procurement for other NAND supply. We believe our gross margin mix will be better and sales will grow better for 2021.

[Rajvindra Gill, Needham & Company]

Thank you.

[Operator]

Thank you so much. [Operator Instructions] And your next question comes from the line of Gokul Hariharan from JPMorgan. Your line is now open. It seems that he disconnected his line. [Operator Instructions] There are no further questions at this time. Speakers you may continue.

[Wallace Kou, President & Chief Executive Officer]

Thank you everyone for joining us today and for your continuing interest in Silicon Motion. I would like to leave you with three thoughts. First, our third quarter outlook calls for the temporary revenue decline, but all indications are that growth will resume in the fourth quarter.

Second, our SSD controller portfolio is growing stronger with our new PCIe design wins and we are expanding our UFS controller customer base with other NAND flash customers.

Third, even with the COVID-19 disruption this year, we expect to grow in the double-digits with a stable margin, healthy cash flow and good prospects for further growth next year.

Finally, I also want to mention that you will be -- we will be attending virtual investor conferences hosted by several banks. The schedule of our attendance will be posted on our website.

Thank you for listening to our call and stay safe and healthy until we talk again. Goodbye for now.

[Operator]

And that does conclude our conference for today. Thank you for participating. You may all now disconnect.