Lumentum Holdings Inc. (LITE) Earnings Call Transcript & Summary

Super. So thanks, everybody, for joining us today. It's a real pleasure to have the Lumentum team here. We've got CEO, Alan Lowe. We've got Chris Coldren and CFO, Ali Wajid. And this is a fabulous lineup. So I'm really happy to have you here. It's a fireside chat format. So if you look at the system in front of you, you can see that there's an opportunity to ask questions. We would love to have investor questions any time through the presentation or the fireside chat. So please don't hesitate to insert the your questions into the box. So congratulations on the acquisition of NeoPhotonics. I think it's a great fit. And I'm really glad to see all you guys there. Maybe we could start off with just a little bit of a background here for anybody who doesn't know the company on the breadth of your product line and how profitable you are and all that set of good stuff as a starting point.

First of all, thanks for having us at your conference. It's great to be here. Well, Lumentum has a broad product line, as you say. We have products from datacom, which is at the chip level and 3D sensing, which is at the chip level as well today. That has fundamental technology that drives our margins very significantly. We have a 60% of our revenue or so is in the telecom business, both telecom transmission and telecom transport, and we have basically end-to-end product portfolio to address the needs of telecom carriers, hyper scalers as well as other high-end enterprises. We also have a commercial lasers business that has really been coming back strongly through the pandemic. It was hit hard early in the pandemic, but it's a material processing for -- lasers for material processing for both macro machine, for high-end cutting and welding as well as micro machine for semiconductor scribing and slicing and things like that. So that's kind of the portfolio of products that we offer. And the fundamental center of all that is around photonics. So we really view ourselves as photonics experts, and those are the markets we address today. But I'd say that in the future, there are more markets that we're evaluating and addressing to expand our total available market into other areas that use photonics. I don't know, Wajid, do you want to talk about the financials?

Yes. Sure. Alex, as you mentioned, our business has done quite well from a financial standpoint. About a year ago, we had put a stake in the ground in terms of what we thought our business model was going to look like with 50% gross margins and -- greater than 50% gross margins and greater than 30% operating margins at a consolidated level as we have worked through a lot of the integration items from our prior acquisition. And we have seen that going quite well. We could also see the demand on the datacom side of our business. And as Alan mentioned, that's the chip portion of our business, which attracts very good margins. We can see that part of the business growing. Our customers were demanding that we add capacity to support the demand they're specifically seeing on EML chips, as that part of their business is growing because of secular trends. Now we started making those investments, and we've seen the benefit to our overall corporate gross margins. As we move into this fiscal year, we're seeing a lot of tailwinds in our lasers business, like Alan mentioned. That's helping us a lot. That's providing us a lot of air cover as we go through some of the pandemic-related items that all the call companies are seeing from a semiconductor chip standpoint, and we're continuing to see a lot of demand on datacom this year as well and we're adding capacity 5 or 6 months from now, and we're expecting that to continue to help us from an overall growth standpoint as well as helping to support our merchant model. So the things that the team had laid in place from a strategy and a product portfolio standpoint are starting to flow through, and we're starting to see the impact of that on a continuous basis within our margin profile.

So if I were to summarize it. You're a 30%-type operating margin company that's throwing up double-digit growth and you're valued at 11x earnings, very inexpensive stock for a very good growth and very good profitability. Before we get into the detail here, just to set the ground rules, you just announced the acquisition of NeoPhotonics. What are we allowed to ask or not allowed to ask on this? I think there's probably a lot of interest around that transaction. But I think you've got some constraints around it. So let's set the ground rules first before we get into it.

Sure. I mean I can talk about why now and those kinds of things. I can't talk about product trimming or merging. I mean I think from our perspective, the timing was right now because the greater products that NeoPhotonics has and the need for scale. And I think the combination of the 2 companies together gives confidence to new customers around the ability to invest to be able to bet their future data center interconnect, for instance, on a combined NeoPhotonics Lumentum business. And I think today was -- or 2 weeks ago, I should say, was the right time that we were able to meet on terms. And we're going to start the integration planning pretty quickly and come out the other side as we close the business and have that plan in place to understand exactly how do we get the synergies and how do we drive operational improvement to drive their gross margins and the combined company gross margins to where we want it to be.

So let's jump into some of the broader characteristics of this marketplace. So this category has kind of bruised a lot of investors over the years because there's been a lot of ups and downs in it. The industry is just kind of known for volatility around forecasting and big misses and big gains and things of that sort. But that's really not your track record. Your track record is much more predictable and much more consistent. So has the environment now changed to the point where we've consolidated enough of the category into fewer hands and a lot of companies have gone away that this becomes much more of an investable and predictable arena? Or is volatility still going to be the nature of the beast?

Well, I think it is a different world today than it was 5 or 6 years ago in that, to your point, some of the consolidation has had a meaningful impact on our ability to closely partner with our customers on new designs, next-generation designs. And in a lot of the cases, we're the sole provider of those technologies and products. And so that being the case, we sit with our customers and define pricing over a long period of time as opposed to what happened probably 8 -- or 7 or 8 years ago, which was the annual auction of business. And so I think it's a different environment today where even when there are shortages, there's not -- we're the sole provider of end-by-end ROADMs, for example, because they order more from us, doesn't mean they're going to build an inventory glut of end-by-end ROADMs, whereas in the past, they could order from 5 different people. And the inventory would come in and then they would say, "Stop, I don't need anymore." So I do think it's a very different situation, and one that is really based on close collaboration with our customers and the development of enabling technologies and products so they can win.

So hopefully, that delivers an industry-wide improvement in valuation as well as consistencies. Let's talk about the telecom portion of your business. So first off, can you remind us what the products are in telco, for people who might not be as familiar with it?

Sure. So we have a broad portfolio of products in the telecom space. Our biggest is our -- in our transport business, which is basically the freeway lanes, if you will, of the network. And that's based on our ROADM technology that I mentioned earlier, which are basically the on and off ramps. And so...

Just stop for a second there. So a ROADM is essentially an optical switch, right?

Yes, exactly. It's an optical switch that has a bunch of fibers coming in, and a bunch of fibers going out, and it directs the light where it needs to go. So that...

And the alternative to ROADMs would be essentially a patch panel kind of thing where you plug it in static. So not a lot of flexibility. Clearly, that's not a good design, so the world is shifting to more switching, less static.

Yes. And the bandwidth demands that are being placed on these networks require that you switch in the optical layer as opposed to your point, these patch panel-type -- or point-to-point type of applications where you're converting large signals of optical into electrical and then converting it back into optical. That really is a power hog and is not really feasible at the types of speeds and network demands that are in place today.

Okay. So ROADMs is -- telecom is your biggest segment, and ROADMs is your biggest product in telecom?

Yes. I mean we have a broad base of products, but ROADM is our biggest. We also provide pump lasers which are basically the engine for amplification. So as a signal goes down a fiber, every 80 kilometers or so, we have to amplify that. And so one of the things we've been talking about is the fact that we've been at near record or record revenues on pump lasers. And customers buy pump lasers and put them in the network before they fire up those fibers, because you have to amplify before you fire them up. So pumps are at record levels. That is a great indicator of future demand for the transmission products. So we have a broad base of transmission products as well that really range from tunable lasers to analog, optical coherent modules that came, along with the Oclaro acquisition as well as CFP2 DCOs in various speeds as well. So we really cater to the end-to-end needs of our customers. And the addition of NeoPhotonics really complements that end-to-end product portfolio.

So let's go back to the ROADM piece now that we've delineated what's in this category. ROADMs is essentially a duopoly. There's really only you guys and II-VI. There are a couple of other minor players, but I think your share in the space is very high. If I were to guess, somewhere in the 65% to 85% range, and in some products, 100%. So first off, is that an accurate depiction of the market? And then second, ROADMs are increasingly important. We've seen more ROADMs shifting from the long-haul backbone and regional market to -- into the metro core, but we're also now starting to see them push out to the edge. So can you talk about how the demand looks in this space and where you are? I think you're sold out on capacity on the high end. When do you expect to add some capacity?

Yes. So as we said over the last probably 6 to 9 months, the shift to these higher-end ROADMs is happening, and it has happened. Happened in China first. And now it's happening in the Western customers now, and we're ramping up those products aggressively. So the demand is extremely strong, to your point. We did add capacity knowing that we were sole source on most of those very high-end ROADMs, and we don't want to disappoint a customer that's betting their next-generation architecture on us. So we have capacity. It's hard to get the chips. And that's what's really gating our ability to meet customer demand, is those chips. So our team is working extremely hard to get the chips, paying premiums and such to get those chips to get it into our factories to build those high-end ROADMs. So I'd say we still have more capacity coming online because our expectation is that we are at the early stages of these MxN ROADMs, and those deployments will take place over many quarters and many years. To your point, the metro is really driving a ton of ROADMs. And we're working with our customers and coming up with a unique design for the edge of the network. And that could drive really high, high quantities of low cost growth. And so the trick is really how do we get the customers the speed and performance they need at the edge, which is different than the core, at the cost levels that they can afford. And that's really the trick that's going to drive ROADMs, probably in 2022 and '23, very, very high.

So Finisar was your primary competitor before they were bought by II-VI. Now II-VI is your primary competitor in the space. Where do you see them landing on the competitive front versus your portfolio?

I mean I don't underestimate our competitors in what they could or couldn't do. I'd say that our -- we tend to be the design choice of our customers. We want to make sure we're there for them and in their R&D centers, designing next generation and next, next generation. And so that's what we're focused on. I'm very paranoid by nature, and so we're driving our innovation engine to make sure that we don't give up our gap in time to these critical enabling technologies.

But I think you're significantly ahead, particularly at the high end, their volumes tend to be at the lower end. Is that correct?

It's hard to tell. I listened to their earnings calls, and it's really hard to tell what they do.

Okay. Well I guess can -- I am not going to push down that curve, because I'm not going very far.

Well no. I mean I think you're right, that they're more in the low end of the ROADMs, I think making some noise in the higher port count. I don't really see them in MxNs yet.

Now their behavior in terms of pricing though, has been pretty rational. My sense is that you guys beat each other up on all kinds of things but not pricing. The pricing has historically, between the 2 companies, been reasonably measured and responsible. Is that a fair depiction?

Well, I'd say it's a different world today, as I said earlier, in that when we design a next-generation product with a customer, we define the next 3 or 5 years of pricing and share. So there's not a annual bidding or any of that kind of stuff that goes on. So I think from that perspective, it is rational because we know we're going to have volume of these products, and we drive our costs down to make sure that we make the margins we need on those next-generation products.

Okay. Let's talk about the pump lasers and amps, which I think go together. And to some extent, to the use of amps, as a lot of that's gone into your own ROADMs, which is an amp [ sock ] where they use a lot of them. But pump lasers had a period of time where you had been selling a lot of lasers and then you started using more and more of your own lasers internally and then had a little bit of a decrement to your growth in this space. How big a piece of the -- of your business does these 2 product lines represent at this point within telco?

Chris, do you want to take that?

Yes. I mean Alex, we don't break out specifically, but I think as you've highlighted that we're -- our largest customer -- or one of our largest customers for pumps goes into our ROADMs. And those numbers, as you've seen, have been something like 40% of our telecom business. The pump lasers are a lower ASP product, if you will, by their nature being a lower level component. But from a volume standpoint, they're a significant volume runner.

Okay. So is this business strength that you're seeing now something that you think you're going to be seeing for an extended period of time? Or will that volume of amps and pumps start to go back into the ROADMs when the supply constraints resolve?

Well, I think there's a couple of things also maybe as a bit of a backdrop that we, over the past several years, also made a transition in our manufacturing of pumps from one location to another. So that also constricted or constrained some of our manufacturing capacity, and we had to allocate where we put those ROADMs to meet customer needs and feed our own ROADM business. So we're benefiting from both the end market demand being very, very healthy, but as well the fact that we've significantly increased our production capacity over the past several years. We expect that, that strength in ROADM -- or strength in pumps will continue. Because as you highlighted, not only you need amplifiers out every 50 kilometers or 80 kilometers in the network, you need it on the input and the output of every ROADMs and we -- every ROADM, and we expect ROADMs to continue to grow over the next several years. It's just really the semiconductor shortages that have impacted our ability to keep ROADM shipping at an appropriate rate relative to amplifiers at this point -- or pumps, that is.

Great. Okay. So I wanted to go back to the comments you made, Alan, earlier about amps and pumps being a precursor of transport. You're going to add more transmission capacity on the back end of that. But there's also a relationship between transmission capacity and ROADM demand. So can you talk about the chaining of that? I mean the -- which -- so do we start off with putting the amps and pumps out in the fiber every 80 kilometers? And then build transmission? Or do we then put ROADMs in? Or do we then -- I mean what's the order that, that plays out in?

Yes. I'd say it's amps, pumps and ROADMs kind of all at the same time because you've got to build that freeway before you let any cars go on it, and you kind of need all of them to be able to test out whether or not those links are working. And then you start firing up those transmission lines. And keep in mind that you can put, on a single fiber, over 100 different wavelengths of light. So you can put a lot -- as you lay out a fiber and you get the ROADMs going and you get the amps going, you can put a lot of transmission products or modules or components onto that single fiber. So it is a big indicator of future demand of transmission.

Okay. So let's shift to the transmission product lines. So can you just align what's in that? Does that include OLS? Or does that -- just the nodes, the pluggables and ITLAs and the like?

Yes. So it's the components that go into modules, so up to 800 gig today. So we do ITLAs, to your point. We do what WE call TROSAs, which is an integrated transmit-receive optical subassembly, and we do those at various speeds. We do some receivers and we do some modules. We still sell a substantial amount of ACOs that we got from Oclaro and not surprising, but there's a lot of demand for 10-gig tunables, believe it or not, and we're developing next generation of tunable modules that are at higher speed. So that's kind of the [ footfall ]...

So 10-gig tunables is primarily -- have access edge build, but does that primarily go into 5G access, where you're connecting the RAN to the optical transport network?

Yes, Alex, it's historically was metro edge. As you said, it's a little bit more of an access technology, but it's continuing to push outwards into things like, as you said, 5G kind of front haul, mid-haul type applications, right, where they're now benefiting from WDM technology. It's kind of like as the core of the network goes up in speed, so does the edge and as 10-gig tunables direct detect. It's a lower performance but lower cost technology, very practical technology that -- where you were previously not using WDM or using lower speeds, these -- they're now datacom-like modules, very small, compact, efficient. So very attractive for edge and metro edge applications.

Okay. So obviously, this is kind of where the Neo transaction plays in. As I understand NeoPhotonics, and I've been following them for a really long time, they've transitioned quite substantially away from the 100 gig, 200 gig stuff. That's still a portion of their base. But over the last year, their 400-gig, 400-gig plus products as components, not as pluggables, but as components, grew, I think it was 70% and achieved 50% of product revenues. We're anticipating roughly a 50% growth in that -- those component piece. And then the second piece of their puzzle is they're now taking a page out of the Oclaro book. And maybe that's the former Oclaro CEO, Dougherty, over on the Board of Directors driving them. But 400-gig ZR and some other stuff kicking in is pluggables, which could add significantly to their business. Does that portion of the business overlap much with what you've got in your portfolio here? Or is that incremental to the portfolio in transmission?

Yes, I'd say it doesn't overlap at all. It's very complementary in that their ultra narrow line with tunable laser is something that is -- something that most everybody is betting their future transmission products on. And so whether that's them consuming their own or them selling to everybody else making ZRs or 800-gig modules or 800-gig line cards, that is a unique technology, one that is extremely attractive to us as well as to our customers. And so I think one of the things we did in the transaction was to also provide them with a loan so that they could invest in the capacity and technology to meet the kind of ramps that you're talking about, Alex, because we do believe that there is going to be strong growth in that key enabling technology.

I want to go back to that basic point, so people don't -- maybe not understand why that's such a differentiated product. So the narrow line with laser is critical because it gives you the least amount of dispersion over distance, allowing your transmission at higher speeds to go further. And the cleaner the light, the less distortion, the better the technology. But it's not just the laser to the extent that you can then use that laser technology that you have in-house to tune your receivers and modulating, so it gives you an advantage in all 3 pieces. Is that a fair characterization?

Yes, I think it is. And I'd add that, from a customer standpoint, as we've talked about in some ways, our product road map is as much a customer -- or a product of the company as the products we're selling today, those are customers design their next-gen systems around the tool kits that we're able to provide. And so the broader the toolkit and our ability to optimize the individual elements to work together under the guidance of what our customers are trying to accomplish, is really important to them as opposed to, hey, I got this thing from over there, and I got this other component from somebody else. And now I'm trying to figure out how to make them to work together. They really are looking to us to be able to help them by having that more complete portfolio and being able to sort of design the pieces to work together. And essentially, you go back and look -- back when we talked about ROADMs, One of the reasons why we've been successful in ROADMs is having the complete solution of the underlying component technologies and being able to co-engineer the pieces together to be able to create solutions that are better than just the sum of market available parts.

I think I'm running a little long here on this piece. So maybe we ought to shift gears a little bit over to the datacom side. You guys made a brilliant decision on datacom to go out of the transceiver market into just selling the chips that underlie the technology. And I think astoundingly found out how many people loved your chips that were competitors. Result is that even though you exited a higher-value piece, you ended up with more revenues very quickly. So could you talk a little bit about that transition? Because I think it's a really fascinating one.

Yes. I mean I think if you go back when we closed the Oclaro transaction, Lumentum had transceivers, Oclaro had transceivers. And the key enabling technology, to your point, Alex, was the fundamental chips, whether they be EMLs or DMLs, that really fuel those transceivers. And we found ourselves in a lower-margin transceiver business that was not contributing positively to our bottom line, and we were competing against people that were buying those chips, to your point. So when we divested the transceiver business, not only did we see our margins go up radically, but we also saw the demand for those chips from now partners as opposed to competitors, really, really going up. And so we've seen strong, strong demand in our leading-edge EMLs, in particular, for next-generation data centers from both of these -- all of these other competitors that we had in the transceiver space, but also vertically integrated competitors and customers today that can't make those types of fast, high-speed EMLs. And so it's -- I just wish I had more capacity because the demand is extremely strong.

Yes. So that's an important point. So the growth rates are a little understated because you've got rid of high value -- or high priced product for a much lower price. The gross margins are much higher, so you've actually understated your growth rate a little bit in that context. But you're also understanding your growth rate year in because you're capacity constrained. So when do you have capacity coming on stream?

Yes. So there's really 2 groups of capacity coming on to our datacom wafer fab. There's equipment that's being installed and has been installed now that turns into increases in the spring time frame. So in the March, late March time frame, we should see a pickup in our EML capacity. The DML capacity, we kind of -- the demand went down as a result of the slowdown in 5G. So that's a separate issue, but we have capacity coming online in the March time frame. We've also pulled the trigger on additional capacity that will come on later in the calendar year next year. So we're very bullish in the outlook, and that's why we're spending millions of dollars to increase that capacity to meet the demand in the future.

Okay. Let's quickly shift over to industrial lasers. I was surprised at how good that business was. So obviously, well ahead of my expectations. So can you talk about very quickly because we've got to get to the 3D sensing as well and we only got 10 minutes left. What's going on there?

Okay. It got hit hard by the pandemic. The hardest of any of our business. That's coming back up. Mostly -- well, across the board when semiconductors demand is so strong, the macro machine into Amada, which is our key customer, has come back very, very strongly. And we've got some new developments that we've introduced in the market the last year on ultrafast lasers and new applications, and we expect that to fuel growth in the future. So we've had dramatic growth. We expect it to get back to probably peak levels -- not peak levels, I hate that word. But higher levels than we've ever had in the past over the next few quarters, and it's a pretty exciting business, to your point.

So you guys put out an announcement today that I think is pretty interesting. Can you talk about the longer distance products that you announced this morning?

Sure, Alex. So what we put out was a press release talking about -- it's got a lot of things in it. It's multi-junction addressable VCSEL arrays for lighter applications, whether those be automotive, industrial or other applications that are adopting LiDAR. And what but this boils down to is VCSEL arrays are, based on what we've been doing in the consumer space, so very high-volume, low-cost practical platform, but now in much larger arrays, if you will, for higher powers. We add multiple junctions to the individual VCSEL elements, which enables them to have higher peak power and higher efficiency, which tend to be also very important in, as you can imagine, automotive or longer distance applications. And the other thing we threw at it was what we call addressable VCSEL arrays. So that it's not just one big array that you turn on or off, but being able to turn on or off portions of the array separately, which enable either a different pattern of light or in the case of automotive LiDAR, if you marry it with some simple optics, to be able to do a beam scanning, if you will, which as you can imagine, is important for automotive LiDAR applications.

So how big a product announcement is that? Is this something that we should really be paying a ton of attention to? It sounds like it's huge.

Well, I think it's part of -- and we've had several other announcements, and there'll be more to come around the kind of the key technology platforms that we're launching with customers in the LiDAR space. This is a market that's going to take time to evolve. It's not an overnight revenue. But the key point is, as we've said, we're planting the seeds of a very differentiated laser technology into what -- half of them won't be around, but the other half will be the leaders of the market, right, that we're working with today and make sure our technology is the technology of choice for these applications.

So let's go to the 3D sensing side. Is there any applications within 3D sensing in the cell phone market for this technology? Or is this predominantly for LiDAR and automotive and other areas?

It's both. Obviously, it's a different application in terms of distance and power consumption, et cetera. And so we've kind of tuned the technology for each application. But certainly, our customers in the consumer space are very cognizant of these capabilities and could incorporate them in their road maps over time. One of the things that's great about Lumentum for our customers is by pursuing different markets, we end up having to optimize technologies for one reason or another, but then there's a lot of cross-fertilization of that technology.

Okay. In the 6 minutes we got left here, we have to cover 3D sensing. So what happened in the 3D sensing on the reset? And how have you -- how has that progressed? It sounds like the reset that you did a couple of quarters ago, has actually proved to be overdone that you ended up with much better-than-expected results there. And you also have some timing differentials between the September, December and March quarter. Can you talk about those 2 issues?

Sure. So I'd say the reset was really around the fact that we knew that the chip design in the front-facing device were getting smaller, significantly smaller. And we knew that our customer was going to expect those prices to come down proportionately, and they did come down. We didn't have any insight as to volume of devices that our customer -- our lead customer will be producing. It was really more of an intention of hey, revenue per device is going to go down by x amount. We didn't have a visibility of share. I think we came out with the new chips with substantially higher share than we had in the past, and we hope to continue that. But I'd say that, to your point, that -- well, there is no typical seasonality in this business because of the different dynamics. But the September quarter was our large quarter for this ramp. December is going to be down. I don't know how much of that December demand is going to fall into the March quarter, given that our customer can't get all the components that they need. So it's going to be a different year this year.

And where are we on Android?

Well, I think the large Korean customer that we've been working with for several years has decided not to put it in, in the next generation of products. We are working with the Honor, Oppo, Xiaomi, Vivo very diligently. And we've seen a lot of the people that we worked very closely with at Huawei moving to those other customers of ours. So we're very hopeful that, that will turn into meaningful business next year or the year after, depending on when they go from a very small portion of their devices having this at the very high-end, to going to mainstream. And then when they go to the mainstream, it could have a meaningful impact from the volume...

So when you say not in the current -- the next generation, that's the generation launch in March. But do you think it will be in the March '23 launch?

For Samsung?

For Android?

Oh, for Android? We're trying to...

[indiscernible] I'm trying to avoid saying Samsung. But yes, Samsung.

We are shipping today into some devices in the Android ecosystem, but it's very low. And so I don't know what they're going to produce and when they're going to announce. But we're there for each and every one of them and making sure that if they do and when they do, we'll be the supplier of choice for them.

Okay. So is it reasonable to think that Samsung will launch this product? Or -- it's my understanding that Samsung wanted to launch it, but then it ended up with some software problems that kept them from being able to get it done in a timely fashion with the quality they needed. But they really were interested in doing it. Is that an accurate appraise?

Frankly, I don't know why they chose not to put it in the next generation of products. We had a solution for them that they loved, and their decisions, they don't share with us what the reason for the decision was. We continue to work with them, and we're going to be with them because there's such a critical supplier of handsets and AR, VR and other kind of components that -- or other kind of devices that could use and will use 3D sensing.

We only got about a minute left. Can you just talk about the cash flow and your uses of cash going forward beyond the Neo acquisition?

Yes. No. So we've kept our capital deployment to be pretty consistent. We've continued to invest in CapEx as we've needed to. As you know, our Board authorized a $700 million share buyback plan for a 2-year period. We bought back about $330 million, $340 million worth in the first couple of quarters. We've still got 6 quarters left. And so our plan is to continue to purchase against that Board-authorized plan. And so we haven't really used our capital deployment, either internally or in terms of our share buybacks because of NeoPhotonics, primarily because we continue to generate a lot of cash.

Right. And you guys have a very nice cash position. Look, I think we're running out of time here. Unfortunately, I think I spent a little bit too much on the front. I would have like to spend a little more on 3D sensing, but what are you going to do? Anyway, thanks so much for joining Alan, Chris, Wajid. Super stuff. Jim, it's always good to see you as well, and thanks to all of the investors who tuned in to listen. We really appreciate everybody's involvement.

Great. Thanks, Alex. Thanks for having us.

Thank you.

Appreciate it.

Bye-bye.

Bye-bye.