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Kopin (KOPN -9.32%)
Q3 2021 Earnings Call
Nov 02, 2021, 8:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good day, and welcome to the Kopin Corporation third quarter 2021 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Richard Sneider, chief financial officer. Please go ahead, sir.

Richard Sneider -- Chief Financial Officer

Thank you, operator. Welcome, everyone, and thank you for joining us this morning. John will begin today's call with a discussion of our strategy, technology and markets. I will then go through the third quarter results at a high level.

John will conclude our prepared remarks, and then we'll be happy to take your questions. I would like to remind everyone that during today's call taking place on Tuesday, November 2, 2021, we will be making forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on the company's current expectations, projections, beliefs and estimates, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks include, but are not limited to, demand for our products, supply chain issues, operating results of our subsidiaries, market conditions and other factors discussed in our most recent annual report on Form 10-K and other documents filed with the Securities and Exchange Commission.

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The company undertakes no obligation to update the forward-looking statements made during today's call. And with that, I'll turn the call over to John.

John Fan

Good morning, and thank you all for joining us this morning. To start, it is undoubtedly very interesting few weeks for AR, VR. First, Facebook came out with the Facebook Ray-Ban [Inaudible] product. And then last week, Facebook change its corporate name to Meta for the coming Metaverse World.

We, of course, have been pursuing this world for quite some time. However, I will first focus on our Q3 update as we do have so many great advances in this quarter. But we'll be happy to take questions on Metaverse during our Q&A session. We are very pleased with our strong third quarter results with revenues increasing 14% year-to-year, reflecting particularly strong growth in industrial product revenues and customer-funded development activities, which post year-over-year growth of 65% and 60% respectively.

This quarter was a nice strict quarter of year-to-year growth. As another reference, revenue grew about 24% in the past three quarters year-to-year. We feel very good about our positioning in the market and our ability to continue our strong performance. We are on track with our defense development programs.

In the second quarter 2021, we mentioned the two development programs enter low-rate initial production. In the third quarter, we received an order for one of these programs, the Joint Effect Targeting System or JETS. More details on that in a moment. We expect another program to enter low rate production within the next few months.

If this occurs, it will be our fifth production program. In addition, we continue to have an active and robust pipeline of defense programs in development, which will further fuel our revenue growth in the coming years. Let me give you some additional detail on a few of our growth programs and market areas. First, the FWS-I program.

We announced during our second quarter call that we'll reduce shipment of eyepieces for the FWS-I thermal weapon sight program while we work with our customer to develop better processes for increased production rates. I am pleased to report that these improvement activities have gone very well. We are now ramping production, and we expect to have our highest production and shipping rate for this program in the fourth quarter. In addition, we expect to receive a significant new order for our FWS-I eyepieces shortly.

As a reminder, the FWS-I thermal weapon sight uses a very high-precision video see-through AR optical module using our CyberDisplays and our custom-designed sophisticated Pancake optics. These optics have some glass element incorporated. As we discussed in the last earnings call, a new invention, All-Plastic Pancake Optics for VR, AR and Mr applications is an exciting innovation and achievement of Kopin. And it is believed to be the first All-Plastic Pancake Optics in the world, producing better image quality in a much lower cost and much lighter weight.

For the coming consumer AR, VR headset markets, such all-plastic optics will be very useful. 3D Automated Optical Inspection is another bright area for us. During the third quarter, we have decided to announce a $3.4 million order commitment from JUTZE Intelligence Technology to provide Spatial Modulators or we call SLM for JUTZE Edge series of 3D Automated Optical Inspection and Mirage series of 3D Solder Paste Inspection System. It's important to note that SLM are key components for 3D Automatic Optical Inspection, which I referred to 3D AOI equipment.

Our SLM is used in this quality inspection systems for printed circuit board assemblies or PCBA. The SLM projects structured light onto the PCBA being measured by 3D AOI/SPI equipments to find flaws or defects. This approach enables circuit board manufacturers who are now using 2D AOI machines to move into 3D. So as we improve PCBA use and product quality while reducing waste and cost.

We've been focusing this area for several years is now bearing good fruit. There is a growing demand for 3D AOI machines in a number of key areas. In particular, manufacturers of previous circuit board for electric vehicles are moving from 2D to 3D AOI equipments due to high-quality standard needed to achieve automobile safety requirements. Currently, Kopin and one other company that is instrument equally supplied approximately 80% of the SLM market either for 3D AOI market.

We have grown over 50% in this market in the past two years with a salary growth in electric vehicles. We believe this is an increasingly important opportunity for Kopin in the coming years. We plan to host a webinar early next year to go in depth into this technology and demand for Spatial Light Modulators. Let's quickly review a few more recent successes.

As I just mentioned a few moments ago, we recently announced a $1.1 million order to provide eyepieces for JETS system, which are scheduled for delivery next year. The JETS system is a portable handheld product designed to rapidly acquire precisely locate and accurately engage targets with precision guided missions. We are providing the program with a high resolution, low power, ruggedized eyepiece using our specialized optics and micro displays. We also announced our CyberDisplays at WQVGR display has been designed into Divesoft newly launched Optical Display Adapter for divers and provide easy access to critical diving area -- data.

Our display offers user a bright, clean, easy readable image in a small form factor. This win is an example of many industrial and medical areas, looking to integrate the capability of a microdisplay and optics for a better utility and safety in their AR, VR products. Then turning to our organic light emitting diode all activities, we received approximately $850,000 follow-up order for our proprietary Lightning 2K silicon backplane wafers. As a reminder, a Lightning 2K backplane, the plus OLED microdisplays with 2048 by 2048 resolutions in a one-inch diagonal site and can run up to 120 Hz with low power consumption.

This repeated order is in line with our expectation of growing market demand for our backplane wafers for OLED microdisplays and validates our surplus business model. Now let me take little time, a few minutes, to discuss our microdisplay strategy. Since our early days with funding from DARPA, Kopin has advocate strongly the microdisplays to result on silicon IC backplane. In fact, all advanced microdisplays should be on silicon IC backplanes.

Therefore, from the very beginning, all our microdisplays are our silicon IC backplanes. We believe that the world's only provider of LCD, LCOs, micro-OLED and in the future, micro-LED microdisplays are on silicon backplane. In fact, our key feature and differentiation is in the silicon semiconductor backplane, designs and process on steps. Kopin has focus on the silicon semiconductor backplane for two decades.

They have been vigorously integrating sophisticated and complex IC and display driving designs into the backplanes. To enable display with the matter of Spatial Modulators, we have led our designed -- specialty design IC silicon backplanes with either liquid crystals, ferroelectric liquid crystals, organic light emitting diode or inorganial light emitting diode. To me what we trademarked is displays on chips, DOC. We would like plan to showcase many of such DOC in our suite in the upcoming CES in January 2022.

In short, our revenue-generating business is strong, driving good momentum into Q4 and next year. At the same time, we're actively innovating to advance our technology road map, paving the path for the future growth of AR, VR and MR applications. The current market trends indicate exciting and growing opportunities, especially in the Metaverse VR platform. Kopin is an active and persistent pioneer in furthering this technology beginning many years ago in defense, then in enterprise and now in consumer applications.

We are very well-positioned to capitalize on those opportunities. We're looking forward to the coming in-person CES in January, when in addition to our display on chips, we plan to exhibit many of our recent exciting developments related to AR, VR. Interestingly, I was asked a few days ago where we can even show the F-35 helmet. This is the world's most advanced production AI helmet in the world.

As many of you know, our CyberDisplays is a sole source in the helmet. We will try but it's most likely impossible to achieve that. Regardless, we have many other interesting devices to show you. Do join us at CES.

Now we turn this call to Rich to review the financial details.

Richard Sneider -- Chief Financial Officer

Thank you, John. Turning to our financial results. Total revenues for the third quarter ended September 25, 2021 were $10.9 million, compared with $9.5 million for the third quarter of September 26, 2020, a 14% increase year-over-year. Product revenue for the third quarter ended September 25, 2021 were $6.6 million, compared with $6.5 million for the third quarter at September 26, 2020.

Our defense product revenues for the third quarter ended September 25, 2021, were $3.5 million, compared with $4.8 million for the third quarter ended September 26, 2020. As John previously discussed, during the third quarter, we reduced shipments of our product used in thermal weapon side systems to a customer that want to make process enhancement. We expect to increase our shipping rates for this product in the fourth quarter. Our industrial product revenues for the third quarter ended September 25, 2021 was $2.7 million, compared with $1.7 million for the third quarter ended September 26, 2020, an approximate 65% increase on the strength of sales of products used in 3D metrology equipment, the 3D AOI that John referred to and it was partially offset by decline in sales of our product SKUs and headsets used for applications in manufacturing, distribution and public safety.

Funded research, development and other revenue were $4.1 million for the third quarter ended September 25, 2021, compared with $2.6 million for the third quarter ended September 26, 2020, an approximate 60% increase year-over-year primarily due to an increase in customer-funded programs for U.S. defense. Cost of products sold for the third quarter ended September 25, 2021 were $5.1 million, compared to $4.8 million for the third quarter ended September 26, 2020. Gross margins for the third quarter ended September 25, 2021 were 22%, compared to 26% for the third quarter ended September 26, 2020, reflecting the manufacturing inefficiencies due to lower sales volume of our products for the FWS-I program.

Regarding global supply chain issues affecting many industry, we have not experienced any material product shipping delays related to supply chain issues during the first nine months of 2021. However, like most companies, we are facing challenges. The situation is very dynamic and we continue to work around the issues it presents. Research and development expenses for the third quarter 2021 were $3.8 million, compared to $2.7 million for the third quarter of 2020, a 38% increase year-over-year.

R&D expenses for the three months ended September 26, 2021 increased, as compared to three months ended September 26, 2020, primarily due to an increase in customer-funded development programs and internal R&D expenses for OLED development. Selling, general and administrative expenses were $4 million for the third quarter of '21, compared to $3.1 million for the third quarter of 2022 -- 2020, excuse me. Excluding the noncash stock-based cost, SG&A expenses were $3.6 million for the third quarter of 2021, compared with $2.9 million for the third quarter of 2020, a 25% increase. The increase in SG&A, excluding noncash stock compensation cost, was due to an increase in other compensation costs and bad debt expense.

Other income was approximately $51,000 of expense for the third quarter 2021, compared to $168,000 of income for the third quarter of 2020. During the three months ended September 25, 2021, we recorded $29,000 of foreign currency losses, as compared to $183,000 of foreign currency gains for the three months ended September 26, 2020. Turning to the bottom line. Our net loss attributable to the controlling interest for the third quarter of 2021 was $2.1 million or $0.02 per share, compared with a net loss to controlling interest of $957,000 or $0.01 per share for the third quarter of 2020.

Non-GAAP net loss attributable to controlling interest for the third quarter of 2021 was $1.7 million or again, $0.02 per share, compared with non-GAAP loss attributable to controlling interest of $760,000 or $0.01 per share for the third quarter of 2020. Kopin's cash and marketable securities were approximately $31.7 million at September 25, 2021, as compared to $20.7 million at December 26, 2020. Net cash used in operating activities for the third quarter ended September 25 was approximately $3.5 million. During the three months ended September 25, 2020, we sold 600,000 shares of our stock under our ATM program for proceeds of approximately $4.8 million before deducting expenses paid by us of $145,000.

For the nine months ended September 25, 2021, we have sold 3,096,697 shares for gross proceeds of approximately $21.7 million for deducting broker expenses paid by us of approximately $700,000 pursuant to our existing and previous ATM agreements. Third quarter amounts for depreciation, stock compensation are attached in the table to the Q3 press release. The amounts discussed above our current estimates and the listeners should review our Form 10-Q for the third quarter 2021 for any possible changes and, of course, additional disclosures. That concludes our prepared remarks.

Operator, we'll now take questions.

Questions & Answers:


[Operator instructions] We'll go ahead and take our first question from Glenn Mattson with Ladenburg Thalmann. Please go ahead.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Thanks for taking the questions and congrats on the quarter. The bounce back that you expect in the FWS revenue, do you think that's -- is that just, kind of, a bounce back that makes up some of the pushout from Q3 or is that -- is there a higher level of production now that that facility that had been retooled is -- has completed that process? Just general sense of the pace of business from that contract. Thanks.

Richard Sneider -- Chief Financial Officer

Yeah. So we are going to try making up as much of the Q3 as possible in the fourth quarter. And going forward, our overall production rate should be higher on a weekly basis because of the profit rate.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Yeah. The better R&D revenue, is that a signal that I think John spoke to a number of defense programs that you're in. Is that number increasing or is it just that the scope of the work within those programs has picked up this quarter? And is that -- you expect that to continue for a little while or any color there?

Richard Sneider -- Chief Financial Officer

Yeah. Just in this particular quarter, so we have a number of contracts that go out for an extended period of time, and it was just a reflection of the amount of work that was done this quarter. It's not on a percentage of completion basis. So it's -- that piece of the business is somewhat lumpy.

It depends on what you achieve in a particular quarter.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Right, great. And as far as the industrial side, a nice pick up there. You mentioned that the optical inspection side of the business is doing well, but that the headsets is offset by a little bit of weakness in headsets. Is the -- I guess, is the first trend sustainable? And second off, is the headset something you expect to bounce back or is that just kind of, that business kind of quiet right now?

Richard Sneider -- Chief Financial Officer

Yeah. So as it relates to the 3D AOI, we do believe that is sustainable. And we've had good backlog and orders for that business right now. As it relates to the headset business, our customers tell us they do expect that to get stronger going forward.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Great. Last one for me. I don't know, Rich, for you or for John. But on the Metaverse stuff, I guess, Facebook is putting some kind of $10 billion or so investment in this space.

So obviously, they're going to be building some of the best products out there. So I guess, John, do you expect that you'd be competing to get into those headsets, so to speak? And then just generally speaking, would -- with the pace that Facebook is going at, do you expect that's going to accelerate the whole industry in general and force other major tech players to, kind of, advance their projects within the VR space and that as well could potentially serve you guys as well? Just some color there would be great.

John Fan

It's a very good question, Glenn, on the Metaverse. As we know, we have been believing -- I always believe that the next-generation of transformation is going from that cellphone to the Metaverse world. We certainly cannot compete with Facebook. Let's face it.

Zuckerberg say they have more than 10,000 people working on that. And -- but they spent a lot of time on most of the activities on software and applications. As you well know, such a new platform, a lot of hardwares are needed. The most important hardware needed are the display and the optics.

And we'll be focusing on that since day one throughout the day. They also believe that's what the most important is hardware. After hardware, of course, software, the applications apps and Facebook are very good there, and we are not doing that. We'll always be focusing on how to provide the best image to you from a smaller phone factor.

And that's exactly what defense and enterprise guys want, and we dominate these two areas. And hopefully, we will be providing the critical components for the Metaverse. In fact, it's interesting, we have trademark, the glass. Our trademark for the VR glass is called the Metaverse glass.

We actually have the trademark. We are way ahead on the Metaverse. Our trademark for VR glass is called the Metaverse glass. So I will not go into a lot of details what's needed for display.

Maybe somebody will ask that. That for the Metaverse, the requirement of displays of optics are quite different from the AR glass, which we do for the F-35. So maybe I would let other people ask the questions, but the prices are very interesting, and I think we are very well situated for that.


[Operator instructions] We'll go ahead and take our next question from Spencer Kirschman with H.C. Wainwright. Please go ahead.

Spencer Kirschman -- H.C. Wainwright and Company -- Analyst

It's Spencer Kirschman in for Kevin Dede. Congrats on the quarter. I was, kind of, curious to get some more thoughts on the difference between the glass setup or components for the FWS-I and the coming Metaverse you were just talking about, John.

John Fan

Yeah. I think in the case of F-35, which is the AR glass, what they need is very rugged, totally rugged. In fact, all the displays for defense applications, ruggedness high-precision are most important. Then the other cases like for F-35, it also had to be very bright in the daylight.

But in night time, it is a video AI, it isn't camera. So it's quite different, OK. As I say, I wish that we could show you the helmet, but I'm afraid that they will not be allowed to do that. But in the case of VR for the Metaverse glass is very different.

Metaverse glasses is totally immersive, OK. So the way to good analogy is go to see -- go to IMAX theatre because we want to see a very immersive large image, then current IMAX theater is very interesting. If you guys ever go to see IMAX theater, they have a two 4K projectors go into the screen, 4K. So -- but it's -- the brightness is not important.

It's always bright enough for immersive. So it's not the brightness is most important, it's the image quality. So what happens in the high resolution, they also need very high dynamic range. If you go outside to buy TV today, the high end TVs all have this called HDR.

What does that mean? High dynamic range. They will give you 10 bits of dynamic range, 10 bits, not 8 bits, OK. Another thing people want is their high speed, 120 Hz to reduce the latency and get fast action for games. So again for Metaverse activities, the display do not need to be very bright.

It is immersive. But you need to have the HDR templates and you need to go to 120 Hz. So I think that's most important. When you look for display for Metaverse, you say how high can you -- how fast can you go? How many dynamic range? I think that's the thing we would like to show you in the coming CES.

Ask for how good the images, how good this color is. And these are the key things, just like TV or IMAX theatre. The second thing for Metaverse is really the optics. You have to get very, very thin optics and give you a very large modification because in Metaverse World, everybody wants a huge image like IMAX theatre.

There's only two current technologies that's good for optics. One use the [Inaudible] lenses, which now Oculus 2 is using. The other one is Pancake Optics. Talking about Pancake Optics, this is our trademark as you well know.

Also one of the inventors of Pancake Optics is actually in our company, OK. So we're always very good in Pancake Optics for the -- especially for defense. Now we use Pancake Optics for consumer, and we turn that all into plastic optics. So the important thing for Metaverse, you've got to have a wonderful optics to give you a huge magnification and basing optics were lightweight.

The second one is you get a display that gives you a very high dynamic range, very high resolution, very good color and high speed. So these other things as needed, of course, in the consumer world at the end, and you have to produce some in quantities. So I hope I explained that, Metaverse hardwares, optics and displays.

Spencer Kirschman -- H.C. Wainwright and Company -- Analyst

Yeah, that's really great color. I really appreciate it. Shifting gears a little bit. Just curious on the number of productions that are currently in LRIP and then those that you expect to go to full-rate production either in the balance of the year or in '22?

Richard Sneider -- Chief Financial Officer

So we have two in production, F-35 and FWS-I, we have two in LRIP. We talked about one of them, JETS. And then we expect in this fourth quarter, in the next few weeks, hopefully, an award for a third. And then with a little luck there all by the end of the first quarter into production out of LRIP and into full production.

Spencer Kirschman -- H.C. Wainwright and Company -- Analyst

OK, thank you. Great color. I really appreciate it.


We can go ahead and take our next question from Craig Rose with Axiom Asset Management. Please go ahead.

Craig Rose -- Axiom Asset Management -- Analyst

John, good quarter. You said you had 50% market share of the optical inspection equipment. Did you say how large that market is?

John Fan

Yeah. I want to make it clear, we did not have 50% market share. We have etched about 40%, OK. We grew about 50% in the last two years in the revenue.

The current market is still relatively small, OK, actually. So this few meetings for us as member, we provide a Spatial Light Modulator. Currently, the whole market, we have two strong players. Ourselves.

The second player is TI. Each one of them opens about 40% of the market share. We're actually going to have a webinar coming out early next year because I think this is a very interesting area because it will know the all the inspection systems right now, where there is PCB, maybe even in semiconductors, they are all using 2D special machines. As things are getting too complicated electronics.

So 3D is that they need it. It's just very early right now. We're seeing a very early stage and in the electric vehicles, the PCB board is so complicated and so robust. So we believe all the equipments eventually are going to go to from 2D to 3D.

So the market could be very big. So we're going to have a webinar early January, maybe February to discuss the technology, the comparative competitive world and where it's going to go. And we're still studying how big the market is and how -- why it is growing so fast.

Craig Rose -- Axiom Asset Management -- Analyst

OK, thank you. As far as the Plastic Pancake Optics, where would you expect that to be used first?

John Fan

In the Metaverse glass.

Craig Rose -- Axiom Asset Management -- Analyst

OK. And is that --

John Fan

Yeah. Because maybe actually -- I'm sorry, I would say a little too short. Sorry, I apologize for that. The Plastic Pancake Optics has this feature, you can magnify your display, maybe in area wise, 30,000 times, OK.

So you take a postage stamp display, and you look into it, it'll look like a IMAX theatre. But it's also very thin because as you well know, the optics are bouncing in size. And as I remember, one of my inventor of Pancake Optics is in our company right now. So we know how to do that.

And third, you had to be very light. We want the headset to be very light. So you can wear it for many hours, not just about 10 minutes or 15 minutes. So this is the ideal thing, all Plastic Pancake Optics.

You just -- it's what we -- everybody is looking for for the last four years, everybody, not just us. It's just that we invented first.

Craig Rose -- Axiom Asset Management -- Analyst

Are your prototypes ready for CES?

John Fan


Craig Rose -- Axiom Asset Management -- Analyst

OK. Anything else you want to tell us about CES?

John Fan

We hope to show this -- not only the prototype of the optics, we'll hope to show you the early type of Metaverse glass with this optics.

Craig Rose -- Axiom Asset Management -- Analyst

OK. Thank you very much.


All right. It appears there are no further questions at this time. Mr. John, I would like to turn the conference -- oh, we actually did get one more question, my apologies.

We'll go ahead and take our next question from Patrick Metcalf, who's a private investor.

Patrick Metcalf -- Private Investor -- Analyst

Good morning, John. You sound fantastic. Exciting times ahead, obviously. OK, my questions revolve around your hidden treasures.

I'd like to know how Lenovo New Vision and RealWear are looking for 2022 and any other of the assets.

John Fan


Richard Sneider -- Chief Financial Officer

Patrick, in all honesty, you really should contact Lenovo and RealWare and ask them regarding--

John Fan

Yeah. But I think I asked the question -- answered the question a little bit differently. Patrick, very thank you for the question. Our company has three stools.

One leg is the defense and enterprise business, and that's going very well as revenue generating. The second stool is really very actively invest in the key components for Metaverse glass, displays and optics. The third leg is how activities in licensing, spin out companies of which we own equities and also as royalties and actually sell them the components that they need. So therefore, there are a bunch of companies out there, as you well know and certainly we already announced that.

RealWare is one of them. In fact, [Inaudible] was one of them, of course, and Solos in glass was one of them. We just announced last year we licensed to a company to make surgical headsets, does that neither of them and so on and so on. This is our third leg.

We provide people this components, knowledge, license and get equities and component sales. So yes, I think those companies we're all praying that they'll be successful and some of them -- many of them are very successful.

Patrick Metcalf -- Private Investor -- Analyst

OK. Great. And John, the only reason why I ask is, at the end of last conference call, you had made -- mentioned for the fact that more licensing deals would potentially come. So I just was going to ask, how is that effort going into 2022? Do you see maybe one or two more happening in 2022?

John Fan

The answer is we're certainly working pretty hard now, especially with the Metaverse going -- starting going so strong. We expect to be module -- I mean module is coming up. But anyway, I do think, again, this is going to be in-person CES. Last year, there were no CES.

So this in-person CES, I think is going to be interesting. Hopefully, we'll be able to show you additional devices. People are using now our components for really beneficial applications, not just for defense or for some enterprise, now they're using for medical, and hopefully very soon for the consumer applications.

Patrick Metcalf -- Private Investor -- Analyst

OK. And then one last question, John. Let me get this straight. You have trademarked Metaverse Glass and Pancake Optics?

John Fan

Yes. Pancake Optics we have a registered trademark. Pancake Optics we have a registered trademark. Of course, CyberDisplay, all those are registered trademark.

On the Metaverse, it's not registered yet, its trademark. As you will know, register has gone through a different process, a vigorous process and the -- and of course, so Metaverse, yes, with our trademark.

Patrick Metcalf -- Private Investor -- Analyst

OK. I now know why you sound like you're 37. So good luck, congratulations and you sound incredible.

John Fan

Yeah. Yeah. I think this is going to be a very interesting couple of years.


All right. Now it appears there are no further questions at this time. Mr. John, I'd like to turn the conference back to you for any additional or closing remarks.

John Fan

No. Thank you very much. We hope to talk to you again on the next earnings call, but do come to CES to see us. Thank you.


[Operator signoff]

Duration: 54 minutes

Call participants:

Richard Sneider -- Chief Financial Officer

John Fan

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Spencer Kirschman -- H.C. Wainwright and Company -- Analyst

Craig Rose -- Axiom Asset Management -- Analyst

Patrick Metcalf -- Private Investor -- Analyst

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