Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for the quarter was at the midpoint of guidance, indicating stable financial performance.
- Gross margin improved sequentially and year-over-year, remaining above 50%.
- Cost reduction actions, including a reduction in headcount, are expected to result in significant annualized savings.
- Expansion of the IRX-branded gaming ecosystem with new collaborations and certifications.
- Positive progress in the home and enterprise business, with new projector SoC scheduled for volume production in Q4.
Negative Points
- Significant decrease in mobile revenue due to a pause in orders from a large customer.
- Net loss increased both sequentially and year-over-year.
- Cash and cash equivalents decreased significantly from the previous quarter.
- Next-gen mobile visual processor faced delays, missing the design-in window for customer models in the back half of 2024.
- Operating expenses increased year-over-year, partly due to the absence of a prior credit to R&D.
Q & A Highlights
Q: Can you provide details on the international expansion and the interest you're seeing, particularly in the low to mid-tier segments?
A: The two previous models targeting international markets were the OnePlus 13, a flagship phone, and the Infinix GT 20, aimed at competitive gaming. The Infinix GT 20, marketed towards competitively priced international markets like Africa, South America, Southeast Asia, and Central Asia, has seen good demand, tripling the volume of its predecessor, the GT 10.
Q: Will the ramp of the new projector SoC in the fourth quarter offset the general seasonality?
A: Yes, the new projector SoC will positively impact the overall projector numbers. The ASP is higher than previous devices, and it will replace both older models and a competitor's device, leading to a higher market share at our largest customer. A derivative product for the rest of the market will start shipping in 2025.
Q: What are the expected benefits from the recent cost reduction actions?
A: The recent cost reduction actions, including a 16% workforce reduction, are expected to result in approximately $4 million in annualized savings. These measures will help align expenses with current revenue levels and contribute to total OpEx savings of $10 million over the next 18 months.
Q: Can you provide an update on the next-gen mobile visual processor?
A: The engineering team has resolved the technical hurdles, and new samples for testing and final verification are expected by the end of the month. The production launch is scheduled for the fourth quarter, although it will miss the design-in window for customer smartphone models in the back half of 2024. The next-gen processor, built on 12-nanometer process technology, will introduce new industry-first features for mobile gaming.
Q: What is the current status of the TrueCut Motion technology?
A: TrueCut Motion is seeing growing interest from premium large-format exhibitors, with two of the largest global exhibitors actively recommending it. The focus is on leveraging these endorsements to increase awareness among filmmakers, studios, and consumers. A new generation of motion grading and re-projection tools will be released soon, enhancing the technology's capabilities and integration with leading postproduction tools.
Q: How did the mobile business perform in the second quarter?
A: Second-quarter mobile revenue was down significantly due to a pause in new orders from the largest mobile customer, who experienced weaker sell-through of its newly launched smartphone models. However, the company is closely engaged with this customer on evaluating the next-gen visual processor and IRX ecosystem.
Q: What are the expectations for the third quarter of 2024?
A: The company expects sequential revenue growth in the third quarter, with total revenue anticipated to be between $9 million and $10 million. Non-GAAP gross profit margin is expected to be between 49% and 51%, and operating expenses are projected to range between $12 million and $13 million. Non-GAAP EPS is expected to range between a loss of $0.11 per share and a loss of $0.14 per share.
Q: How did the home and enterprise business perform in the second quarter?
A: Revenue from the home and enterprise business was roughly flat on both a sequential and year-over-year basis, consistent with internal expectations. The market supply and demand dynamics are generally well balanced, and the new co-developed projector SoC is scheduled for volume production in the fourth quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
