Resonant Inc.
Q3 2016 Earnings Call Transcript

Published: 11 Nov 2016

[Operator:]

Greetings and welcome to the Resonant Third Quarter 2016 Corporate Update Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to Greg Falesnik, Managing Director for MZ North America, Resonant’s Investor Relations firm. Thank you. You may now begin.

[Greg Falesnik:]

Thank you, operator. Earlier this afternoon, Resonant released financial results for the third quarter ended September 30, 2016. The release is available on the Investors section of the company’s website at www.resonant.com. Additionally, some of the information in this news release and on this conference call contains forward-looking statements that involve risks and uncertainties, and assumptions that are difficult to predict. Words of expressions reflecting optimism, satisfaction with current prospects, as well as words such as believe, intend, expect, plan, and anticipate, and similar variations identify forward-looking statements but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance and the company’s actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in Resonant’s most recent Form 10-Q and 10-K and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this release and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release. Resonant’s CEO, Terry Lingren is your host today and he will introduce the rest of the team that is joining him. With that, I’ll turn the call over to you Terry.

[Terry Lingren:]

Thank you, Greg. And good afternoon to everyone joining us on today’s call. With me today is, George Holmes, our President and Chief Commercial Officer; and Jeff Killian, our new CFO. Before beginning, I’d like to welcome Jeff to his first call as our CFO. Jeff is a seasoned financial executive with 30 years of relevant financial, filter and semiconductor industry experience. Since 2010, he has been Chief Financial Officer at Cascade Microtech, a worldwide leader in the design, development and manufacture of advanced wafer probing solutions for the electrical measurement and test of semiconductor integrated circuits and chips. During his tenure, Jeff helped lead the company from a market cap of $25 million to $258 million, and drove revenue growth from $77 million to $144 million, culminating in the successful sale of the company to FormFactor earlier this year. Before Cascade, he held several positions of increasing responsibility over an 11 year span at TriQuint Semiconductor, which later merged with RFMD to form Qorvo. Prior to that Jeff was at U.S. Bank for 20 years. We welcome Jeff to the position and are very pleased to have someone of his caliber and financial skills to as our serve with our CFO. Moving on, the story this year has been one of execution. As we migrate from a purely development stage company to one focused on customer engagement and execution. Let me summarize our accomplishments today. On our Q1 call, we announced the following

[George Holmes:]

Thanks, Terry. In 2016 continues to be a pivotal year for us, as we’ve demonstrated the power of our technology through building our customer base, not only through the number of projects, but through the complexity of these projects under development. Our progress provides clear line-of-sight of how we will transition from being a technology development company to a licensing company. As we previously discussed, our ability to accomplish these goals is derived from our core value proposition that encompasses three cornerstone elements, software, IP and design services, combined with a laser-focus on customer acquisition. As we’ve discussed in the past, our customer focus continues to be pure-play SAW foundries, filter manufactures, RF Front-End module manufacturers, transceiver reference design suppliers, handset and IoT OEMs. As we previously stated, we are keenly focused on filter manufactures and SAW foundries as our first priority, followed by module manufactures and transceiver reference design suppliers, all while marketing our capabilities to OEMs and carriers. We remain intently focused on only engaging with the right players for the right designs that show the greatest potential for conversion to revenue in the shortest amount of time. So now let me give you some additional color on the progress on the customer engagement. As Terry touched on his open remarks, we ended Q3 with four customers and 16 products in development, and have subsequently added our fifth customer and brought the total products under development 20. We believe these engagements approve that we are able to secure design mandates for single hard to design band filters, duplexers in addition to more complex designs such an quadplexers, all of which can be sold either as discreet components or integrated into modules. Further the combination of additional development and license deals at existing customers and the addition of new customers provides additional validation that our customers are happy with the work we are doing, believe in our ISN and IP platform solutions that can scale across several products in their portfolio, and see the potential for commercial success going forward with us as a partner. As an aside, this progress is really validating the leverage in our business model, meaning that even though we are now working on a collective of 5 customers and 20 products under development, we expect relatively nominal increases in our overhead. As we’ve provided a detailed overview of each of these engagements in their respective and individual announcements, let me provide you with a recap of these types of products we currently have under development. As we’ve previously stated or the initial value proposition of the company is to enable companies with SAW foundries to deliver solutions that have historically only been made available to manufacturers with more complex Bulk Acoustic Wave or Film Bulk Acoustic Resonator foundries, providing a significant cost and margin advantage for our customers. Of the designs, we currently have under development, 17 are high volume Surface Acoustic Wave or SAW duplexer designs. For filters traditionally considered to be hard bands. We have one complex filter that is specifically focused on the support of Time Division Duplex or TDD requirements of the Chinese market. This filter will be designed as a full-band low cost SAW, which has historically been delivered utilizing either BAW or Film Bulk Acoustic Wave Resonator technology, which is also called FBAR. We have two quadplexers currently under development. These quadplexers will combine four separate frequency bands for increased data rates into a single miniature package. Quadplexers enable carrier aggregation, in which multiple frequency bands are combined for higher data rates, which is a key feature of the LTE advanced communication standard. However it is much more difficult to design quadplexers. The quadplexers availability is limited at this moment. As consumers continue to demand smaller, lighter, and thinner mobile devices with increasing data capabilities, demand for smaller footprint quadplexers will continue to grow as well. Lastly, leveraging these product developments, one of our tier 1 customers is utilizing duplexer and quadplexer designs to support module development, as a result of these designs have been designed to utilize Wafer Level Packaging, WLP. WLP technology packages an integrated circuit while still part of the wafer, rather than the conventional method of slicing a wafer into individual circuit and then packaging them, delivering advantage of component size as well as production time and cost. This design will meet the technical demands and size constraints facing not only this customer, but the mobile device industry as a whole. It’s also important to note, modules are complex parts that integrate filters, power amplifiers and other components. Typically modules are sold to tier 1 customers. Discreet filters which are not integrated into modules and more typically sold to tier 2 and tier 3 OEMs. The fact that our customers are asking us to design filters that will be integrated into modules is an additional validation in the confidence that customers have in our technology and our ability to support them with their tier 1 OEM customers. We’re very excited to have so quickly expanded our customer-base, and existing agreements with our customers, and our focus on facilitating future growth by continuing to build a solid pipeline of perspective additional customers. We’ve been able to leverage our success to-date to build relationships with these new customers and to move quickly. For those of you who are new to the Resonant story, I would like to provide you with a sense of how a typical customer engagements might look. Customer engagements begin with paper evaluation and validation of our capabilities, rapidly moving to the evaluation of specific simulations of specific designs. The next phase is the negotiation of a Joint Development Agreement or JDA. Once signed, these parts are designed, fabricated and evaluated against their simulation, if tweaks are needed to maximize performance the designs are adjusted in response. Typically once the simulation and produced parts are closed, the licensing agreement is negotiated and signed. Finally, parts are fabricated and sampled to customers, sockets are won and royalty payments begin. For customers we are currently working with, the typical time from assigned licensing agreements to the first customer shipments is on average from 9 to 12 months. Although, we are not providing any revenue guidance in this time, we believe our engagements could similarly follow this pattern. The scale of potential market opportunity for these products we are pursuing with the designs is enormous. Worldwide and combined annual total available market for the bands we have currently under contract is roughly for US$3.4 billion. I also want to highlight the announcement we made this week that demonstrates the value of our acquisition of GVR Trade. We signed a development contract with a U.S. start-up to fund the multi-year project for the development of sensors for the new medical applications. The project is a three-way collaboration between the Center of Physical Sciences and Technology, Mit-Soft from Lithuania and GVR Trade. This is the first project that will leverage both GVR Trade’s advanced SAW sensor designs and Resonant’s Infinite Synthesized Networks, ISN platform, to design solutions for the medical market. As its true with all of our engagements, we cannot disclose payments or terms due to the confidential nature of these agreements. Before I hand the call off to Jeff, I want to highlight, the conference we’ll be attending between now and the end of the year for those who would like to schedule some face-time with the rest of our management team. We will be at the IDEAS conference in Dallas, November 17. We’ll be at the Drexel Hamilton conference in New York City on December 1. We’ll be at the Benchmark Micro Cap Discovery Conference in Chicago, also on December 1. We’ll be at the LD Micro Main Event in Los Angeles on December 7. Now I’d like to turn the call over to Jeff to discuss the financials for the quarter. Jeff?

[Jeff Killian:]

Thanks, George. I’ll begin with a summary of our third quarter 2016 financial results, which are compared to our third quarter 2015 results unless otherwise stated. For the three months ended September 30, 2016 we recognized $25,000 of revenue related to $233,000 of upfront nonrefundable payment in connection with the contracts from our customers. Research and development expenses totaled $1.5 million, compared to $1.2 million for the third quarter of 2015. The increase was the result of the increased payroll, benefits, consulting, travel and development costs related to increased activity on various filter designs under development. General and administrative expenses totaled $2.3 million, compared to $1.6 million a year ago. The increase was primarily due to $250,000 of senior executive transition cost and $80,000 of business acquisition costs. We also incurred increased costs for payroll and benefits due to increased headcount, travel expenses associated with business development efforts and increased legal fees in connection with legal proceedings. The net loss totaled $4.0 million, or $0.39 per fully diluted share, compared with a net loss of $2.9 million, or $0.40 per share for the same quarter last year. On a non-GAAP basis, adjusted EBITDA for the third quarter 2016, which excludes non-cash charges for stock-based compensation, depreciation and amortization, was a negative $3.2 million, or $0.32 per fully diluted share. This compared with non-GAAP adjusted EBITDA for the third quarter of 2015 of a negative $2.1 million, or $0.29 per fully diluted share. Cash, cash equivalents and short-term investments at September 30, 2016 were $12.7 million. This compared with $5.5 million of cash, cash equivalents and short-term investments at December 31, 2015. In September, Resonant raised gross proceeds of approximately $11.5 million in a underwritten public offering for 2,715,000 shares of its common stock, which included the exercise in full by the underwriters of their over-allotment option, at a per share price to the public prize of $4.25 per share. The proceeds will allow Resonant to continue to drive ongoing customer acquisition and execute on the businesses before us, while improving our capabilities of our EDA platform. With that, let me now turn the call back to Terry.

[Terry Lingren:]

Thank you, Jeff. Before I get my closing remarks, let’s open the lines for question and answers. I’ll turn it back over to the operator.

[Operator:]

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] One moment please, while we poll for questions. Our first question comes from the line of Cody Acree with Drexel Hamilton. Please go ahead.

[Cody Acree:]

Thanks guys for taking my questions, and congrats on the progress. Terry, maybe if we could start with you, just anymore color for specifics as to the progress of some of those earlier engagements? It’s great to see you guys continue to expand the customer base and the engagement base. But if you can just give us any color on maybe the spins or the prognosis of some of those earlier projects coming to finalization?

[Terry Lingren:]

Sure. Thank you, Cody. Yes, they can - those projects are still all in our pipeline. As far as George mentioned, we don’t give exact guidance on revenue. But I think, if you apply the typical model of 9 to 12 months following license agreement to when those might start getting into mass production, I think those still apply. I’ll further add that the customers have been very happy with our work, with our team, with our tools as evidenced by their adding more products to the mix. We’ve continued to engage with them on new product designs and getting some of these existing designs into other products and market areas.

[Cody Acree:]

And, Terry, thanks for that. So just to further carryout that timeline a little bit then, is that 9 to 12 months inclusive of your customers going and winning a socket, and of course then having a ramp or is some of that work being done simultaneously, so that once the project is delivered and signed off on or completed that the timeline to revenue is not a longer distance, because there is still a lot of work yet to be done.

[Terry Lingren:]

Yes. Without trying to put too fine a point on it, we do offer that as - that guideline of 9 to 12 months. It’s kind of our estimates and what other companies similar to ours do. It is measured from signing of the license agreements to the start of mass production. So they will have purchase orders in hand in order to start mass production. That said, we haven’t completed one yet. So we are still getting to the point - we still need to validate the timeline. But at this point we’re still quoting that timeline as being valid.

[Cody Acree:]

As you get closer to completing the first projects, are you finding that the spins or the number of spins for the volume is what you expected?

[Terry Lingren:]

It has been. The tools continue to improve and our accuracy of our simulation continues to improve. Well, I won’t go into it in too much more detail. Certainly, part of that is we try to offer our customers acceptable yields, so that they can be shipping these things at rates they like and at profits which match their plans.

[Cody Acree:]

And George has talked around this a little bit, but just to as you have signed up the larger number of projects. How do we think about the market opportunity for those, the potential unit opportunity? Are your engagements getting larger as the numbers are getting larger? Are the particular bands within that that you’re particularly excited about, just any color you can get?

[George Holmes:]

Yes, great question, Cody. I think one of the things that we like to see happening obviously, as we start moving up the food chain, the value for us gets larger. As we stated last quarter and what we’re seeing again this quarter is the fact that we’re getting further engagements into these module products that have higher ASPs, it clearly gives us a line of sight to a larger margin opportunity. We’ve seen that get extended. We see that there is great opportunity based on the turmoil in the market with the major OEMs, because of product issues in the field they’ve created opportunities we believe for some of our partners, which we think we’ll be able to capitalize on with some of these high value modules that we’re working on. And then obviously, getting additional quadplexers as new projects is additional validation not only of the model, but also of the fact that those are high value parts. And I think one of the things that I missed in my part of the discussion that I will add here for everyone that we did include in the press release yesterday is this quadplexer that we just announced is actually one that is for a fabless company. So it’s not a company that owns its own fab, so one that’s going to leverage a certified fab from us to deliver a product into the marketplace and do it very quickly. So I think that that’s going to bode well for us, not only from getting a high value part, but also transitioning a business model in the segment of the market that we believe will really add a lot of value for us.

[Cody Acree:]

Thank you for that, and then just a couple quick ones for, Jeff. Jeff, can you maybe talk about your OpEx expectations with all these projects going on?

[Jeff Killian:]

Yes, thanks for the question. And George alluded to in his prepared remarks is that our business model has a very strong leverage position. We have a strong base in place who has won the five customers in 20 designs. And so with the improvement of our efficiency that Terry talked about from the tools we have in place with some modest investments in other resources including headcount, we believe that we’ve got the infrastructure with slight incremental increases in our OpEx to support this ongoing growth - this growth we have.

[Cody Acree:]

Great, and then lastly, the 233,000 in up-fronts, was that all from this current or prior quarter or was the contracts that were signed through the first two periods of the year?

[Jeff Killian:]

I believe it’s all this quarter, this Q3.

[Cody Acree:]

Okay, thank you. All right.

[Jeff Killian:]

Yes. Thank you.

[Operator:]

[Operator Instructions] The next question comes from the line of Kevin Dede with Rodman. Please go ahead with your question.

[Kevin Dede:]

Thanks, gentlemen, for holding the call and taking my questions. A couple of 20,000 foot things. First I guess, in my mind and perhaps I’m wrong on this, the concept of bringing an EDA solution to the mobile component market is kind of new. And I was wondering if you could, and I guess what you guys are doing I see is unique. And I’m wondering just from a competitive environment, how you see OEMs embracing the tools that you’re offering them. And as a correlate to that, can you add some color on your business development activities and trying to expand awareness?

[Terry Lingren:]

Sure, Kevin, this is Terry. We’ve seen a lot of interest from our customers. It’s one of the reasons that we have - we’ve always considered the possibility that we can might license our tools, but we’ve seen quite a bit of interest and growing interest from customers in the tool themselves. That said, we’re at the very early stages, in fact we’re still just under consideration of business model really. I would expect that 2017 we would see the first steps towards doing some early testing of that, maybe a little interface with customers. So we’re going to test the waters first, see what’s out there. You’re right, it’s a very new model certainly in the RF industry, but it’s not without precedent. The semiconductor space thrives on third party tools to do the design that’s one of the reasons that gave rise to the whole fabulous semiconductor model was the ability to have accurate third party tools rather than have to develop them all in-house though. So we’re kind of following in that model or at least using that as a proof of feasibility, so we’re still at the early stages at this point.

[Kevin Dede:]

Yes, Terry. So could you expand on that, I mean, I understand the feedback from your direct customers highly positive that part of the pun seems to resonate well, but I was hoping you could just take it a next step beyond, and maybe add some color on how you’re trying to promote your activities, and expand your basic contact? Especially, given the fact that you’re bringing something unique to the market, and maybe you can offer how you think your customers are seeing what you’re offering in light of other ways to develop components?

[Terry Lingren:]

The industry that we’re in really it has in-house developed tools to a company. There are no third party tools that do this certainly not filter design kind of in general, certainly not surface acoustic or acoustic wave filter design. So it’s a brand new area we’re entering into. I’m not sure, I’m answering your question fully, but the…

[Kevin Dede:]

Yes. No, that helps, Terry. It does. So thanks for that. Can you elaborate a little bit on sort of the development track just Cody sort of asked about too. How - as you guys use your tools and help your customers develop a component. Can you talk to how many of those components have actually got to the stage of physical manifestation, and through at that point how has testing provided feedback on those - on the performance of those specific components?

[Terry Lingren:]

Well, without going into any detail on any specific project. And in fact, let me walk you through maybe a typical development. If we’re starting with a new wafer foundry, our first step is to go in and characterize their processes. We have now set process ourselves. We’re going in putting a characterization-ask to their fab. And understanding their processes meaning that the fab certainly, foundries aren’t used to dealing with third party customers still necessarily have every single designs were written down. So it’s important that we characterize that to train our models, so that our models are accurate. And then, once we start designs we get into physical products, physical parts very quickly. We do those and get the parts back, uptick the models if necessary, and then they go through some two or three turns to improve yields. So I won’t give where we are on any given product in that process, but that’s kind of the usual way that we go through a design.

[Kevin Dede:]

Okay. And if you were to take the next iterative step that it steers your driving toward and the development of components. I’m sorry, development of modules. Can you walk us through that process, maybe allude to how much difference there is in terms of development time, and any sort of financial differences that you can point to in terms of that development?

[Terry Lingren:]

Sure. The work that we’re doing with modules really is more involved with acting of these parts, as George I think mentioned. To go into a module typically, they want to use what’s called Wafer Level Packaging, WLP. So they build the packages, while all of the circuits are still on wafer, and then they dice up the wafer, so it has the potential to be both smaller and cheaper for our customers. The smaller part is important, if they’re going to put these into a module with more components, and put it onto a motherboard if you will with these components, it has to be very thin to fit inside a phone. The second thing which I think George mentioned also that’s encouraging for us is our customers trusting us to do these module level designs. Those are designs typically which goes to tier 1 phone manufacturers. So it’s - I think, that it shows a level of confidence that our customers have in us to give us these designs.

[Kevin Dede:]

All right. So one last question again also very high level, and I think really the nature is - and hopes to maybe get a better view on how the overall environment is reacting to the Samsung Note 7 and the malfunction there. I was wondering, if you’ve noticed the change in the way that some of the OEMs are handling their development. And whether or not that has trickled down to their interface of the component manufactures.

[George Holmes:]

Well, this is George. Kevin, I mean, I think one of the things for sure is it’s created little bit of market disruption, and through disruption sometimes that gives companies great opportunities to take advantage of new opportunities in the supply chain. Clearly, I think, that our partners are well positioned, because they started designs with us both module and discrete designs with us in the middle part of the summer that we will be available for evaluation with major OEMs here over the course of the next several months, but there is always a risk. When you’re dealing with major OEMs that they - when they have product problems that they could shutdown their supply chain and go with something either that is very proven, or they can go with something, and say it’s going to take nine to 12 months to qualify. And I don’t think that we know the answers to any of those things yet. I think, what we can tell you is - there is opportunity. The question is we’re trying to be in the best position possible to support our customers, so that if the opportunity presents itself, they can take advantage of it. And I think we are well positioned with as Terry described and I hopefully reiterated effectively we’ve got the 20 shots on gold, that we’ve got 20 devices under design right now. And that gives us a fairly large swath of opportunity here in the first-half of next year. Hope that helps.

[Kevin Dede:]

Yes, no that’s great George, yes. Thanks very much. And thanks for taking a stab at my questions, gentlemen, I really appreciate the feedback.

[Terry Lingren:]

Super-duper thanks, Kevin.

[Operator:]

The next question is from the line of Lou Basenese with Disruptive Tech Research. Please go ahead with your question.

[Louis Basenese:]

Hey, guys, thanks for taking my questions. Just a couple follow-on to previous ones. As we get closer to that nine to 12 month timeframe for mass production you provided for the earlier projects. At what point should investors expect an announcement, is it going to be a design win, or not until parts are actually shipping in phones?

[Terry Lingren:]

Well, we debated that ourselves. At this point, I think that we’re going to air on side of conservatism. We probably - well I won’t say anything as far as definitely what we’re going to announce, and what we’re not going to announce. We’re certainly excited about the possibility of the start of shipments. This is certainly the combination at least of our journey into becoming a company that’s providing filters to the industry.

[Louis Basenese:]

Okay.

[George Holmes:]

So let me see if I can add a little bit of color to that for you, Lou, and I mean I think just to reiterate Terry’s point. I mean, clearly we don’t want to get out of our skies and start talking about revenue opportunities here in the near term, because as you know having 20 shots on gold gives us a significant opportunity to hit one into the net. But not every design that you enter into goes into production, and even if it does go into production doesn’t mean that it will have success in the marketplace, and you never know if you’re going to end up getting designed in. There is a whole cast of characters that designed into the Note 7 platform that are now not shipping product today, and there is a lot of folks that are dependent on supply chain limitations of some other companies, big major OEMs that are not allowed to get their products into the market that could happen to our partners. What we think is we’ve got very good positioning, we continue to work hard to expand the footprint of customer engagements such that next year should be a very good year for us. At the point in time where it makes sense, I’m sure Jeff will have a lot to talk about or we’re just not there yet.

[Louis Basenese:]

Okay. Maybe just another way without trying to ask for revenue guidance necessarily, 20 shots on gold the analogy is, are there some that you feel are empty net from close up or we should from mid-field? I mean, how do you prioritize? I got to imagine after working with these multiple customers, there is some that you feel more confident about this going on versus others, and where is that overlay with the counter. I mean, is it backend - second half of next year, middle of the year or just - just where your confidence level is in the designs you’re working on?

[Terry Lingren:]

Well, Louis, I’ll take a shot at this first and then, George, you can pitch in. Louis, as we’ve said a couple of times in this call we do stand by the time estimates, which gives you some idea of some of our confidence. That said, our internal financial models we don’t assume a 100% of that these are going to take. And we try to degrade some on some of the volumes that our customers are estimating. We’re still very early in this process. So we need some feedback, we need some data in order to update our own business models. What is the typical hit rate and how good are our customers at winning with their phone manufacturers, and at their forward-looking estimates. There is still lot of unknowns at this point. I think the biggest factor or the biggest thing and answer to your question is a fact that we’re still standing by the typical guidelines that we used on this in prior calls. George, anything to add?

[George Holmes:]

I think you hit the nail on the head, Terry. I mean, the good news is we also have this laddered up. We had some good success in Q1, some additional success in Q2 continued to have some very good success in Q3. I think we got a great funnel in Q4, and you laddered that up, and look at that nine to 12 month as a typical from license to early revenues as a guide. You suggest that assuming there is some success on our end customers’ part that we should see 2017 to be a very interesting year.

[Louis Basenese:]

Great. I appreciate you giving that color, and then last quick question is, what are some other milestones that we should be looking for to get your progress as opposed to just royalty revenue as we wait for that first goal?

[George Holmes:]

Well, let me take a stab and then Terry will follow it up. I mean, the - it’s - I’m actually very surprised. I mean, we’ve had - I’ve had good successes at previous companies in getting customers on board, but I’ve been very pleasantly surprised at the success we’ve had here, because things have moved very, very quickly. I think, if you look at typically, you would see if you have a new technology or a new way of doing business, if you’ve got one or two opportunities per quarter that would be pretty nice way to go throughout the year. Three per quarter would be a great thing and you end the year with 12 to 15 opportunities that you’re working on, would be a very good place to be, especially if they were simple and maybe even some single filter design or some early opportunities in duplexers. I would have been very happy with that at the beginning of this year, once I got engaged. I think what we’re finding now is that the power of the tools, the power of the simulations that we’re able to deliver to customers creates a level of confidence that they get excited about. We’re cautiously optimistic in that, but that’s why they’re extending those opportunities to us, the fact that they’re bringing us additional duplexers, they’re bringing us more complex solution-based opportunities in modules. And then ultimately, obviously getting to do quads is a great place to be. I think we’re going to see the extension of that. I think the other thing that I think is very significant here is the negative multitude of different types of customers that we are working with, filter manufactures, pure-play foundries. And now, we have a fabless company as well, a company that is currently in the amplifier space, is not a SAW or BAW filter manufacture, engaging with us to do filter designs that they’re going to have fabricated by a third-party. I think that is a tremendous validation of what it is that we’re doing. If we can do more of that between now and the end of the year, I like the fabulous model, because it shows that we can force accelerate. It shows that we can work with big players and give them an opportunity to take designs that might not be in the sweet-spot for their foundries and drop them on tier 2 and tier 3 foundries. This is a tremendous opportunity and so if we can actually leverage that and demonstrate follow-on - either follow-on deals with that current customer or other customers in that same design space, I think that would be a real big one. Terry, what do you think?

[Terry Lingren:]

I agree. I’m glad you brought that up. I was going to mention that’s kind of - if we step up a little bit, I mean this market is huge, and it’s growing hugely. There were over 40 billion of these filters that were sold last year, and probably over 50 billion this year. It’s 20% CAGR for the foreseeable future. The industry itself is strained, both in terms of production capacity as well as design capacity. The first really speaks to the potential for this fabulous model that’s been so successful on the semiconductor side. And the second, I think really speaks to our opportunity, being a third-party design house. So in both respects, I’m very excited and those are a couple of things that you could look for in the future, Louis.

[Louis Basenese:]

Okay, great. Thanks for taking my questions again. I appreciate it.

[Terry Lingren:]

Thanks, Louis.

[George Holmes:]

Thanks, Louis.

[Operator:]

Thank you. There are no further questions. Please proceed with your closing remarks.

[Terry Lingren:]

Thank you, operator. In closing, I’d like to extend my appreciation to our team for their hard work and their dedication in moving the company along the path to commercialization. Our primary achievement for the quarter with the addition of multiple new customer agreements, bringing us to the point where today we have 20 designs under development with five customers, we believe this growth of both customers and designs further cements the value that our tools, technology, and team are bringing to the RF Front-End industry. And now we have a cash position which will enable us to continue to transition from a development stage company into a product-focused licensor with recurring royalty revenue. The demand for wireless data continues to grow at a phenomenal rate as I just mentioned. And the RF Front-End market, especially filters is the fastest growing area of the mobile device industry. The growth we’re seeing in unit volumes, sales and complexity all play to Resonant’s strengths. We’ve had a very productive nine months of 2016 so far, and have a strong pipeline through the balance of the fiscal year and into 2017. We plan to continue to support our current customers with new designs to expand our customer footprint in our focus segments of filter companies and pure-play foundries, and to explore these new partnership opportunities with nontraditional semiconductor suppliers. We’re confident in our ability to achieve these goals and look forward to reporting our progress on them on our next quarterly call. We believe 2016 will continue to be a pivotal year for us and will ignite our future growth. Thank you for your attention.

[Operator:]

Thank you. Today’s conference has concluded. Thank you for your participation. You may now disconnect your lines at this time.