Kopin Corporation (KOPN) Earnings Call Transcript & Summary

We have a tremendous opportunity for growth at this company. Our expectation is that at the end of this year, the company will be profitable. We're growing into our CapEx structure. The United States government is investing in the company. We have a tremendous order book as we sit here today with some of the best customers in the world, market-leading and market-making customers in the world. Our European growth is being fueled by Theon International. We have great partners in Ondas and Unusual Machines, and we're winning in the drone dominance competition because of our capability that we provide these flyers and pilots to see their terrain and score well in the drone dominance competition. And we're the only company in the United States that has LCD, OLED, microLED and LCOS manufacturing all under the same roof, roughly speaking. So we have a great platform for growth. I think the AI infrastructure market for Kopin could be 25% to 50% of our revenue next year and the year after, it could be as much as our defense revenue in 2028 based on some of the opportunity levels that we're seeing.

Kopin. Corp. is a leading provider of advanced optical systems and microdisplay technologies for the industrial, medical, consumer, defense and now the data AI infrastructure markets. CEO, Michael Murray, is here to tell us about Kopin and the new opportunities in the AI infrastructure market and ongoing defense opportunities. I'm Martin Gagel with Market Radius Research. This is neither a recommendation nor investment advice. Michael, thank you for having us -- having you here on the show today, and you've got some nice news as well out this morning to kick it off with.

Well, Martin, thank you very much for having us back. We had a great first impression when we talked earlier this year and looking forward to updating the audience on some of the great progress Kopin has made recently and talk about some of the things that we're expecting for the second half of this year.

Yes, we talked about specifically a little briefer on the AI data center market when you first announced that, but we didn't get a chance to sort of the broader picture of Kopin, what you're all about. So I'm looking forward to stepping back a bit and really learning about Kopin and your vision beyond imagination. So why don't you take it away, and we'll take it from there.

We do, Martin. So firstly and foremostly, thank you for having us. And to those folks that don't know me, I've been the CEO, Chairman and President of Kopin for over 3 years now, approaching my fourth year in its entirety. I succeed Dr. John Fan, who started this company over 40 years ago out of MIT Lincoln Labs. The company has had a significant turnaround over the course of the last 3 years, mainly due to focus. When I took over the company, we have tremendous technology, a wealth of ambition here. But I think what the company really lacked was a definitive focus. We were very much focused on what was called the Metaverse back when I joined the company. And I looked across the markets that we were serving and saw that there were tremendous opportunities in certain markets that were closer to us that we could make more money on more quickly, and there were just more focused growth opportunities for the company. So with that, we changed the strategy over 3 years ago. We're now in our second phase of that strategy. And I'm happy to report that things seem to be moving along quite well as the markets that we hoped we were going to move towards Kopin are moving towards Kopin, and we're helping to shape those markets with the market makers in each of those markets. And I'm going to talk about that here today. So -- but before I go on, right now, the company is just finishing up our quarter, so I won't be talking about too many financial metrics other than to say the company has no debt, no warrants on the balance sheet. As of the last posting on 427, we had over $60 million in cash and about 181 employees, which is currently growing due to some significant orders that we've received specific to our AI GPU strategy. So we're going to talk a little bit more about that today. We'll also talk about drones. Everyone wants to hear about drones and what we're doing in that space. So I'm going to double-click on drones, and I'm going to double-click on our AI GPU infrastructure play with our friends over at Fabric.AI. So essentially, the company is based around our microdisplay portfolio. Who we are is a semiconductor development and optics company. These tiny little TVs are semiconductors. We build them in a semiconductor flow. And what I mean by that is we have a clean room here in Massachusetts as well as in Dalgety Bay, Scotland. And we recently purchased an entire OLED deposition capability that's going here in the United States because of the demand that we're seeing in first-person viewer drones as well as the demand in thermal weapon sights going up for OLED as well as other applications where OLED happens to be the better display for certain applications. Now not all displays will solve all problems. As an example, LCDs, which we still build here in the United States up here in Westborough, is still a great solution for thermal weapon site as an example, because it's very robust. It can withstand tremendous shock like a weapon firing as a perfect example. OLEDs are a little bit more difficult, but we're getting there. We've learned how to design those into thermal weapon sights, and we're now building those here or we'll be building them here in Massachusetts. Also, we've been contracted by the United States government to build microLEDs here in the United States. And the reason why it's not obvious to many investors, microOLED and LED specifically are 2 very specific technologies that allow you to see farther at lower power consumption and with better color and contrast. So LCD is going to be phased out over time. It's going to take a while. OLED is going to come up and then microLED is the vanguard technology. Now I'm going to pause on microLED for a moment. MicroLEDs act a lot like lasers. They can transmit data as well. And this is something that you're seeing in the industry, whether it be NVIDIA as an example or our friends over at Marvell, who have been doing some work in this area with one of our competitors as an example. MicroLEDs happen to be a great technology to transmit data over short periods of distance. So I'm going to talk about that a little bit more in coming slides. Okay. So with that in mind, Kopin has expanded our customer base with the Tier 1 customers that are market makers. As an example, we partnered with Theon International, which is when you think about NATO. When you think about NATO, thermal weapon sights and night vision goggles, you should be thinking Theon. That's who their biggest customer is, and they own about 60% of NATO's market share of thermal weapon sights and night vision goggles. Both of those technologies require displays, and we'll be building those displays with them for them in our European location as well as here in the United States. We also have a tremendous relationship with folks like Wilcox, Lockheed Martin, Leonardo DRS, who's our largest customer and a number of other customers that we're going to add to this list by the end of this quarter. And we'll talk a little bit more about that in a second. So I want to show you today our 5 pillars of growth. Many people have been asking me, how did I think about reshaping the company and what our focus is going to be and why the market is now coming to Kopin and why we're being successful with it. So when you think about the 5 pillars here, it's all based on being able to build this technology right here in the United States and why that's fundamentally important to the sovereign nature of our defense organizations. So when you think about mobile vision systems, these are fixed wing aircraft. We have a huge franchise in one of the aircraft specifically that's classified here in the United States. We have 3 generations of displays going into that aircraft. I can't talk about which one it is, but it's getting tremendous orders through the European and Southeast Asian markets. And that's great for Kopin because in the actual helmet itself, there are 2 displays. But what's not obvious to a lot of investors is in those other regions, not in the United States, where in the United States, you have 1 pilot and 1 plane. In these other areas, you will have 1 plane, potentially 5 pilots or 4 pilots or 3 pilots that also have 2 helmets. So that's why our international sales is going up, not down. Also, we've been able to secure several new orders in fixed wing and rotary wing in Europe for the first time. We've been very much focused on growing our European business. As Europe and NATO starts to spend more sovereign dollars, we had to pivot and change our Dalgety Bay location to focus more on defense. And I'm very, very pleased to say that our progress in Europe has been exponential this year. We've already announced several awards that will be going through our European location starting next year, which is fantastic news. One of the other growth pillars that I was very focused on when I joined Kopin is the Soldier Borne Systems pillar of growth. So many of you have heard about Soldier Borne Mission Command, which is the old IVAS program. We've been working on several different solutions and several different partners in that program with our microLED capability, which the United States Army has invested in Kopin to build that technology here in the United States. And that is a color microLED that will be available by the end of 2027 for insertion into the program '28 when it goes into production. And I'm pleased to say that's well on track. Secondly, we've been working with the U.S. government to put in a color microLED production line here in the United States, and that, too, is on track. So we'll be one of the only companies, potentially the only company with our own microLED production line here in the United States. And that same production line can not only build our microLED solutions, whether it be monochrome or color, but it can also build our Neural I/o technology, which is our AI interface technology, and it can come off the same production line. That is a huge advantage over all of our competitors. The fact that we'll be able to go to our own production line and basically tweak the recipes that we need to tweak to make this technology work, and we know how to do that better than any company in the world, in my view. We'll talk a little bit about first-person viewer drones. This morning, we announced that we've received several new orders from folks that are participating in the drone dominance competition. Right now, we've had several awards from the top 10 in the drone dominance competition. We're also partnering with folks like Ondas and UMAC who are great partners of Kopin to bring first-person viewer technologies and displays to them here in the United States. The FTC as well as the U.S. Army has required every program to have non-Chinese displays and optics and electronics in it. And that's creating a huge opportunity for Kopin to provide U.S.-based microdisplays, optics and drive electronics to first-person viewer drones. And our Sentinel program, the Sentinel FPV program is very unique in that it's bidirectional and situational aware. What I mean by that is you can still see out and outside of the iBox. So if you're an operator in the field of work, you still want to be able to see your feet so you can run, shoot and operate a drone at the same time. And this swivels off the helmet or what we call off the visor. So we're getting tremendous opportunities for that technology, and it just makes a lot of sense for the U.S. Army to go with a solution like that, while we're still working with the predominant manufacturers in this industry like Ondas and UMAC on solutions that they'll bring to market as well. So huge volume capability and opportunity for Kopin so much so that it made better sense for us to buy our own OLED deposition line, and we'll install that in the first half of 2027. So significant amount of volume that we're expecting for first-person viewer drones. So the next market that I'm going to spend some time on is our AI infrastructure and co-packaged optic capability. This is an area that we think we have a significant market leadership position in because we've already been producing microLEDs in production that fly in aircraft as we speak. So we're going to double-click on that a little bit later. So here are some areas that I'm very proud to talk about. When you look at this slide, what's changed is the orders. And whenever I see new orders on the slide, it always brings a smile to my face as an investor. But we've announced new pilot helmet awards recently, new thermal weapon sight awards recently and several U.S. aircraft rotary wing aircraft awards as well as European rotary aircraft awards in Q1. DarkWAVE is a technology that we partnered with Theon International, and that is an area where we're also receiving awards, right now, we expect to go into production in Q4. And then, of course, we've already received and announced several new orders in our Sentinel FPV headset. So what this slide should tell you as an investor, I hope, is that when Kopin spends money in advanced research and development for things like DarkWAVE or Sentinel, et cetera, that we're actually getting that investment back in spades and our new investment in new technologies is starting to pay us back. So with that, just a brief update with our Soldier Borne Mission Command, our color microLED. We are progressing quite well. I think the program management team has done a wonderful job here. We're on target with our color microLED, and this is something that the Army has awarded Kopin. And for folks that don't or aren't aware, this is a $350 million to $500 million contract to Kopin if and when we get an insertion into the program with our color microLED. And this will add tremendous power consumption, reductions in the system, true color, excellent contrast and certainly the best image for our war fighters to go into the battle with. So we're very proud of our progress so far, but we have a lot more to do. Okay. I'm going to touch on a few things here. But when we think about the overall market for color microLEDs, just here in the United States, it's a $1 billion serviceable available market. And remember, you have to build this technology United States to be able to support these programs. And right now, Kopin is the only company with a microLED production line coming online to my knowledge. And that gives us a tremendous advantage in the marketplace. We also expect further IVAS funding either this year or next year to help us complete and add more capacity to our production line and potentially other devices as well. So right now, we are working with the Army on other microLEDs for other applications, whether it be a smaller resolution or higher resolution device, and those discussions are ongoing. And furthermore, Theon has funded us to build a NATO version of that microLED once and if we're ready to do so, and they have some requirements for us. So that's ongoing as we speak. So let's talk a little bit about why we think we're going to be successful in the optical interconnect and co-packaged optic market. Right now, we have a 2K x 2K, which is 16 million pixels or lanes or channels on 1-inch device. That is very difficult to build. That's why many microLED companies that are trying to get into co-packaged optics, as an example, are failing. They're going through the same lessons learned that we went through over the course of the last several years. We've also spent over $50 million in developing this technology for the Department of War, certain aircraft programs, et cetera. So we've learned a lot in building microLEDs, and we've patented much of this technology. And we have some interesting ways of doing what we do to make the yields and dispersion effects be improved. So with that, we've received a $15 million Research and Development order from our friends over at Fabric.AI. We're developing a parallel chipset, which will achieve 1.6 terabits per second transmit and receive. Those prototypes will be available next year, but we're going to demonstrate this capability this year, if not by the first part of 2027. So I'm going to talk about why. Why this is important? And when you think about transmitting data at terabit levels, many people would want to use lasers, which is an opportunity if you're transmitting data over a distance that's quite long. However, from a chip-to-chip perspective or a board-to-board perspective, lasers just aren't necessarily the best solution because they're too power hungry, they're too physically large, but they can solve the bandwidth problem. Now currently, the technology that is used is copper SerDes. Unfortunately, copper, if you push it that hard to 1.6 terabits or 3.2 terabits, it heats up too much to the point where is costing the average consumer and customer too much. So that gives microLEDs a really interesting in-between opportunity. We're not quite a laser. We're definitely faster and cheaper than copper interconnects, and we're not as hot, but we can't go as far as lasers as an example. So one of the other things that I think investors don't necessarily value with our technology is that it's field programmable. Now if you're the United States government that already has a tremendous amount of AI infrastructure in place, you don't want to start ripping and replacing all of the gear because, a, it's already working; b, you've already paid for it; and c, you may not necessarily need every component that's coming out. But field programmability and field programmable I/O is a tremendous opportunity for these types of customers that don't want to rip and replace their AI GPUs. Lastly, one of the interesting things that we're focused on that may not be completely obvious to folks is that we're very much focused on the United States government and Department of Defense in their AI infrastructure centers. one, because we build this technology in the United States; two, that rip and replace greenfield versus brownfield opportunity that I just talked about, but also getting AI closer to the battlefield is uniquely important. And what we're seeing in Iran right now is the closer you can get your AI, the quicker the decisions you can make and the more accessible AI will be to the battlefield. So to do that, we have to reduce power consumption. And because of the issues around copper, pulling all that copper out, pulling all the cost to cool it out and adding microLEDs for GPU-to-GPU technology, GPU to memory as well as board to board, we think we can remove 17 to 20 kilowatts per rack per month which is tens of thousands of dollars of savings in electricity. So very huge opportunity for us. The United States government is very interested in working with Kopin. We're actively working to create some projects for 2026 and 2027, and we expect there'll be more information on that soon. So just to let you know, Kopin does not need more CapEx to grow into this market. We're actually growing into the CapEx that we already have. We inherited or I inherited 3 very large manufacturing plants that are underutilized. And now we're starting to utilize those fabrication plants, specifically in Dalgety Bay for a lot of this back-end processing. So as we fill up these fabs, our utilization rate goes up, our absorption rates go up and our profitability also goes up. And that's why we're projecting to be profitable by the end of this year, which is in advance of what we were saying earlier just simply because of the amount of orders that we received in the first half of this year. So with that, this is the team. We are adding to it. We just announced a small design center in Dallas, Texas for our optical team. It just so happens that Dallas is a great place for photonics and optical engineers, and we have to go where the talent is. So a little bit of CapEx and OpEx that we're going to spend there, not much, but it's because we have orders from customers to fulfill those orders that we need those engineers in that spot. So a great team. We're focused. We have excellent customers. The markets are coming to us and the strategy is starting to avail itself now. So with that, I'll open up to some questions, Martin.

The defense market has always had a challenge of very long product development cycles. And we're seeing that in the Ukraine where rapid evolution of products is key. Are you seeing the U.S. government or any governments or defense programs in general, getting better at speeding up that development cycle, which would pull revenues in faster or sooner for you?

Yes and no. I hate to do that to you. It's a horrible answer. Yes, in some areas, we've learned, as an example, on this page alone, several different things. As an example, Kopin had a massive opportunity with the Abrams Tank program called the SEP v4 until the Abrams Tank went to Ukraine and sank because it was too heavy. So now the industry is starting to learn that size, weight and power consumption really, really matters as well as gas consumption. So yes, we're starting to speed up and learn more quickly. We're also learning that next-generation interceptor missiles need to be different because we'll be shooting different things and as well as having a first-person viewer drone capability that allows you to still see your feet and your peripheral vision is really important. So yes, I think the United States Army is learning quicker than ever before. I'm very encouraged with the talent that I see in the United States Army and a lot of the divisions that are developing this technology. And certainly, Martin, what an IVAS award means for us, that's the industrial base analysis and sustainment. What that means is the U.S. government is looking at technologies for the industrial base, meaning how do we produce here in the United States for the United States, that's critically important. And thankfully, they're learning more quickly and investing that money now. I think there's areas where Europe, quite frankly, is struggling. We see Europe still trying to do things the old ways and companies like Theon are just growing exponentially because of their pace, Martin. And that's one of the reasons why we liked partnering with them is they're moving very quickly in Europe and Southeast Asia, and Europe isn't moving quickly enough. Ukraine certainly is moving quickly. However, the rest of Europe isn't. And I think the United States now is definitely catching stride and investing in the right ways in the right places.

The displays in the big macro sense, the display industry is dominated by big Korean and Chinese manufacturers of TVs and computer displays. And those are all about scale. You're targeting niche markets. How scale dependent are you in getting good traction in your markets?

Yes. Great question, actually. We took the approach that customers that we have -- let me scroll up here, like the big primes as an example, they don't want to get smart, Martin, on microdisplays, optics and drive electronics. They're big metal vendors. Their core competencies are in other areas. So we took the approach of more application-specific solutions where we're adding more than just the lens as an example, for your glasses, you don't go into lens crafters and just buy the lens, you buy the lens, the IPs, the holders and your prescription. And that strategy has worked very well for us, specifically as an example, with our Sentinel FPV program. Sentinel is not a product. It's a platform. You can tweak it, you can change its color, you can change its connector for whatever solution you want to provide. But the eye pieces themselves, the display optics and drive electronics, that's very much within our gift to commoditize and build here. So that's where we've been focused our automation and capacity is in building those types of architectures so that we can rinse and repeat them many, many times. Now what caught us a little bit off guard, and I'll be the first one to put my hand up here, is the demand that we're seeing for displays now here in the United States. We were thinking that OLED would have somewhat more of a traditional ramp-up for us with things like our first-person viewer and some of the thermal weapon sights that we're seeing, and that demand curve became a demand step. So it wasn't a nice curve. It was a demand digital step. So we had to add more capacity because our current European suppliers wouldn't be able to keep up. And secondly, it was financially more viable for us to put OLED deposition here in the United States and utilize that and capitalize it here in our fabrication plant here. So from an OLED perspective, we're in very good shape for demand. MicroLED, we're already considering adding capacity as soon as the microLED production line gets operational, we'll likely add more modules and nodes to it to produce more because we're just seeing a significant demand curve, and that demand curve is very near field.

On the consumer side of things, do you see a lot of opportunities for in the AR/VR consumer eyeglasses, the Meta glasses, that type of thing?

Yes. It's been fits and starts with consumer. I think even the consumer companies would tell you that Meta has a 100 for 100 strategy. I was on a panel with Meta and a few other folks recently at SID Week. And their view, which is, I think, very interesting is there's going to be a low-cost part of the market. And you're seeing that with Meta's glasses coming out, Google, et cetera. So this basis of lower-cost AI headsets and glasses are seeding the market. And I think what you're going to see then is the Apples of the world, the more integrated type of glasses come later. If you recall, what I said at the beginning of the call is we were focused on the Metaverse first and Apple Vision Pro, et cetera. And I think the market realized is we don't want a $3,000 headset right now. The apps aren't there to spend $3,000, $4,000 for glasses as an example. So let's go low cost first, build up the applications and then the big $2,000, $3,000 type of eyewear will come out from those companies. And where Kopin is focused is in truly differentiated technology like our neural display technology. We demonstrated this over 2 years ago. We invented it. This is a bidirectional microdisplay. It actually has a camera that's looking back at your eye. I use camera as a layman's term, but it's actually using the pixels of the display to do eye tracking as an example, while you're still seeing an image that reduces cameras that are doing eye tracking, the power consumption and processing that you need. And what we learned from the market is that they don't want that technology in an OLED display. They want that technology in a microLED display because OLEDs right now are not bright enough for the daytime use where you use smart glasses most often is in daytime use. Therefore, LCOS and microLEDs are going to win the day in things like the Google Glass, Meta glasses, Apple glasses, et cetera. So microLEDs are required for those applications just strictly for the brightness. Therefore, we need to build a neural display in a microLED and/or work with a partner in Korea or Japan that can license that technology from us for one of those big 3 on the West Coast and build it in their $1 billion microLED fab as an example.

You design and build components as well as larger assemblies. Do you see yourself expanding the, say, the footprint or the size of the assembly, getting more into the full display headset itself? Or how big of a footprint, call it, do you see your opportunity?

Yes, it's a great question. We don't want to compete with our customers. And we want to be somewhat agnostic since we have this great opportunity to support multiple different customers in multiple different ways. Where I think we want to automate and focus first, at least in the near term, Martin, is the display manufacturing have to have it here in the United States, and we have to be great at it. And we are, and we're getting better, and we're expanding that footprint with OLED and microLED, which is fantastic. But secondly, optics. Marrying that microdisplay with the right optic is tremendously difficult, and our customers don't want to do it. They want us to do it. And then wrapping that optic around with some sort of plastic or housing, then they get a module that they can plug in and play and go off and add value in the way that they want to add value. So we see that in the first-person viewer drone market as an example, with all these customers competing against each other, whether it be on the motors that they use, the distances that they have, the airframes that they have, they don't want to necessarily compete on the headset. They want someone else to do that for them, right? So I'm not going to produce a product in that space. I'm going to produce a solution that's 80% of the way there and you, Martin, can tweak on that paint a different color, make it a different connector for your helmet system, as an example, or make it a full goggle. It's up to you. But the fundamental LCD, OLED, microLED or LCOS plus the optic drive electronic and some sort of housing, that should come out of the Kopin manufacturing plant fully and completely warrantied and ready to go.

You mentioned earlier that some of your systems are field programmable. Could you explain what you mean by that?

Yes. So part of why and how we build microLEDs, there's some reasons we have programmability in those systems. I'm not going to go into it because it's a significant advantage for us. But having that programmability will allow us to do different things in the market. As an example, let's say you have an NVIDIA H200 chip sitting on one rack. And in your I/O card, you want to be able to talk to a legacy Intel chip, right, as an example. One is new, the other one is old. Our ability to program our chip to an H200 NVLink and then the receive side, an Intel custom interface as an example, allows us to talk to both of those systems and transmit data over optics, right? But we won't know what we're going to have to talk to in a brownfield already installed environment. So what this allows you to do is take older architecture and bolt on new architecture as long as the I/O interface cards have our chip in it. And we've heard that from the United States government that, that is their largest sphere of having to rip and replace every time NVIDIA comes out with a new GPU or Intel comes out with a new CPU, but they have to rip and replace their I/O cards. Well, if the I/O card is already programmable, and your chip is programmable, then you have the ability to program that interface and use that old technology where it is and how it is, but still link those boards using optics as an example. So that's one of the reasons why we do it that way. There's a significant amount of capability that we actually do through software to make those LEDs behave and also things that we can do for redundancy as an example, of those LEDs because to place 16 million LEDs, 16 million on the size of my thumb perfectly is really hard to do. Go ask some of the customers that are out there that are getting investments from folks like Marvell or NVIDIA or whomever, putting 16 million LEDs on the size of your thumb perfectly every time is really hard to do. And that's why they're finding out that a lot of these technologies that they promised for microLEDs have not come to fruition yet because they've not gone through the growing pains that we have building this type of technology, and we've built it for several years, and it's being flown in an aircraft today. So we know how to do this better than I think anyone in the United States, period full stop.

So much of AI build-out is on new build, new data centers and so forth. It sounds like you're also positioning this as a retrofit market where -- so you're not just looking at the future growth, it's -- you can sort of look back in time and have gain opportunities from what's already installed. Do I have that right?

You have it exactly right. And we have a very exciting road map. I want to make sure that people understand we're not a one and done with Neural I/o. We have a full co-packaged optic road map that I think is 2 years further advanced than the leaders in the industry here in the United States. We're not ready to talk about it yet. But again, when I start talking about the ability to put 16 million pixels on a 1-inch chip with micro lenses and controlled dispersion, I think we're about 2 to 3 years advanced than everybody else in the industry. Folks just haven't really realized it yet because we haven't really been talking about it that much. When Marvell came out with their announcement, it kind of pushed my hand to announce what we were doing with Fabric.AI. And I think this new technology called Neural I/o, which is that transceiver chip, it's a receive and transmit Martin. I think our road map, I think we're now contemplating maybe just focusing on the transmit side because we do it so well. And we know that the other players in the industry are really struggling with transmit. The receive side of that data is actually fairly well known. The science is well known on this. And there's many companies on the receiver side of optics, but not too many on the transmit side that can do what we do, which is 16 million pixels on a 1-inch substrate. We're thinking that we can get well over 3.2 terabits per second of data near term. We're not talking years. We're talking near term. And I think 10 terabits per second is definitely in our view. So we think we can do it, and we have a significant amount of capability on the transmit side but we're learning on the receiver side. And I think Neural I/o is going to prove a lot this year that we can do a tremendous amount of capability in this space with technology that we have here already.

Not to get too nerdy here and technical. Each of those 16 million emitters is sending it out its own data stream. And then those 16 million individual bits going across are then collated, let's say, at the receiving end and then made sort of a coherent data package?