Q2 2024 Akoustis Technologies Inc Earnings Call

Participants

David Aichele; EVP of Business Development; Akoustis Technologies, Inc.

Anthony Joseph Stoss; Analyst; Craig-Hallum Capital Group LLC

Craig Andrew Ellis; Analyst; B. Riley Securities, Inc.

Suji Desilva; Analyst; ROTH MKM Partners, LLC.

Presentation

Operator

Is Yes, Good day, ladies and gentlemen, and welcome to acoustics Technologies' fiscal 2024 second quarter conference call. As a reminder, this conference is being recorded at the conclusion of the Company's presentation, because just management will take questions to ask a question, please press star one on your telephone keypad to be placed into the queue. A replay of the call will be available on the Investor Relations section of acoustics website.

Thank you may begin.
Thank you, operator, and good morning to everyone on the call. Welcome to QTS' Second Quarter Fiscal 2024 conference call. I am Ken Bull, our CFO, and I'm joined today by our Founder and CEO, Jeff Healy, and EVP of Business Development. Dave, before we begin, please note that today's presentation includes forward-looking statements about our business outlook. All statements other than statements of historical facts included in this conference call such as expectations regarding our strategies and operations, including the timing and prospects of product development and customer orders and design wins, possible collaborative or partnering relationships, litigation matters and expected financial and operating results are forward-looking statements. Such forward-looking statements are predictions based on the Company's expectations as of today and are subject to numerous risks and uncertainties. The company and our management team assume no obligation to update any forward-looking statements made on today's call. Our SEC filings mentioned important factors that could cause actual results to differ materially. Please refer to our latest Form 10-K and Form 10-Q filed with the SEC to get a better understanding of these risks and uncertainties.
In addition, our presentation today may also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlights release available in the Investors section of Acusphere's.com.
I would now like to turn the call over to Jeff Shirley, Founder and CEO of assistance.

Thank you, Ken, and welcome everyone to our FY24 Fiscal Second Quarter Conference Call. Revenue in the December quarter was within our guided range of flat sequentially. During the December quarter, we had two customers that each made up greater than 10% of our reported revenue. Export related sales accounted for the top five customers and seven out of the top 10 customers. Our top 10 customers made up 58% of revenue. Our top 25 customers made up 74% of revenue in terms of regional sales, three of our top 10 customers were Asia-based. Our top 36 customers made up 80% of our revenue, with 40% of our sales coming from Asia, followed by 47% of our sales coming from North America and 13% of our sales coming from Europe. Finally, our top two customers were Asia and US-based customers respectively, and collectively made up 30% of sales last year, we commented that the buildup in channel inventory, particularly at our WiFi customers in the Asia region, would adversely impact our revenue in the second half of calendar 2023 our revenue met our guided targets for September and December quarters. Today, we believe we have worked through the inventory issues from 2023, and we expect demand returning in WiFi with strength in WiFi 6E and first production demand in WiFi seven, consistent with our early guidance for fiscal Q3 on last quarter's investor call, we reiterate our expectation to return to record quarterly revenue for the quarter ending March 31, 2024, up 18% to 25% sequentially. The Company continues to focus on expense and cost savings to significantly reduce cash burn. Moving forward. Ken will detail our ongoing activities and impact on reducing our cash burn during his upcoming comments.
I would now like to take a moment to discuss updates involving the Company's activity related to the chips and science Act of 2022.
Regarding CHIPS Act funding, there are two detailed updates to share with investors. First, during the December quarter, we became members of three microelectronics. Any comments, hubs focused on electronic warfare for the Department of Defense. Membership to these hubs is critical as it allows access to be part of the hub proposal team for new government research programs. We currently have two active EW. proposals under one hub membership with one of the proposals potentially worth several million dollars annually beginning in the second half of calendar year 2024. Furthermore, we are currently pursuing memberships with additional ME hub centers, and we'll detail our efforts and progress moving forward.
Second, the CHIPS Act of 2022 included a provision for a 25% refundable investment tax credit for chips, ITC., our investments in facilities that manufacture semiconductors or semiconductor manufacturing equipment that were placed in service after December 31, 2022. We currently estimate the amount of the refundable tax credit applicable to acoustics to be $3.7 million to $4.7 million over the next 12 to 15 months.
Next, I would like to discuss several updates in our primary target markets beginning with WiFi. Our first milestone for the December quarter in Y. five was to receive a design win in a next-generation WiFi seven solution with a Tier one US-based carrier. Our carrier partner has awarded us design wins for two high band XBAR filters for WiFi seven. Further, we received prototype orders to support a production ramp in the second half of calendar year 2024. Our second milestone was to secure multiple design wins for our Tier one enterprise class customers, WiFi seven suite of routers. We announced this design win last week along with visibility on volume orders to support the production ramp. We support this new platform with a suite of advanced filters covering both wideband and narrowband solutions. Also, our first mass produced aluminum Scandia nitride single crystal ball filter is to be qualified for production for this customer's application. Our third milestone was to secure a design win for a WiFi seven solution with a Tier one enterprise class OEM. We announced this completion of this milestone in our January 10th press release. This customer as our second tier one customer to adopt multiple wideband and narrowband solutions covering five gigahertz and six gigahertz WiFi seven for a four-by-four multi-user MIMO AP platform, we received prototype orders to support a production ramp, which is slated to begin in the second half of calendar year 2024.
Looking ahead, in the March quarter, we expect to ramp XBAR filter production for two programs in WiFi seven at a Tier one enterprise class customer. In addition, we expect to ramp XBAR filter production for WiFi seven with a Tier one enterprise class two OEMs, and we expect to secure a design win for a WiFi seven solution with a Tier one enterprise class OEM.
Next, I would like to discuss our recent developments in the 5G mobile market. During the December quarter, we recognized filter sales, which incorporated our WLP. package to our Tier one RF component customer. This customer was a top 10 customer on a revenue basis. Also in the December quarter, we expected to deliver. First, the free WiFi filters two are Tier two 5G mobile RF front end module making customers we have contracted with this customer for three filters. We shipped the first of three filters. The second filter is releasing to the fab this month, and the third filter is currently in the design phase of the process.
Finally, we successfully engaged a fifth mobile partner offering our export process and foundry for their module and discrete product needs. We have shipped this partner multiple X Bob Dye for engineering evaluation for a future multiplexer application for the mobile market. Our anticipated milestones for the March quarter include delivered the second of three revised WiFi filters to our Tier two 5G mobile RF front end module making customers. And now I will discuss our progress in our network infrastructure business. During the December quarter, we completed the redesign of our new and improved 5G band 41 and five GUS. 3.8 gigahertz network infrastructure filter solutions. We successfully sampled the band 41 filter earlier this month, and we currently are evaluating the performance of our 3.8 gigahertz filter in engineering as we prepare for sampling during the quarter, we experienced softness in export filter shipments to our 5G network infrastructure customers. However, we expect modest growth of shipments to return in the March quarter. For the March quarter, we expect to secure a foundry order for development of up to 4G, 5G. four GLTEXBOWLP. die with a Tier one Satcom provider. Second, we expect to gain approved supplier status and achieve a design win with a Tier one infrastructure customer and finally, we expect to complete in our redevelopment and deliver and in one of four samples to a Tier one network infrastructure customer.
Finally, before handing the call off to Ken, I would like to provide an update on our defense and other markets business. During the December quarter, two out of our top 10 customers were in our defense and other business category, and I will begin with an update on our published milestones for the quarter. First, as we announced on January 29, we secured a ball filter design win for an automotive wireless battery management system, or WBMS. solution using a Tier one IC reference design. We expect a production ramp in the March quarter of calendar 2025 second, we completed the qualification of the Optimiz second export resonator for key customer and the timing control market. Now that this qualification is complete, the design is released for limited production resonator is used in a tunable oscillator application scheduled for production in the second half of calendar 2024.
Third, we delivered our first Xpand ball filter using acoustics as advanced XP three S. technology to a Tier one defense customer. We met with this customer last month and received positive feedback and expect this engagement to continue for expand phased array radar applications. As previously mentioned, our biggest success in the defense and other market segments, what's the introduction of our new XP. three f. technology, which incorporates a new revolutionary patented multilayer nano material that incorporates our single crystal PAs electric materials. This new nanomaterial was developed with funding from the Defense Advanced Research Projects Agency or data to scale the export technology to frequencies up to 18 gigahertz. During the December quarter, we began work on our multi-million dollar Phase two contract option, which extends our current dark coffee program and funding through December 2024.
During the December quarter, we continued shipments supporting a new Dorper contract unrelated to the DARPin coffee contract, which requires high performance, custom resonators for timing control applications. This customer was a top 10 customer for the December quarter. In addition, we submitted a proposal on a new multimillion dollar program with the Office of Naval Research to fund RF filter multiplexers incorporating our XPO. and P. three f. materials technology, which, if awarded could be announced as early as Q2 of calendar 2024 began in summer 2024 in our GDSI. business. We service 148 customers during the December quarter and the average customer spend is up approximately 17% over the same quarter last year. As mentioned earlier, cruises has established memberships with three regional hubs and GDSI. has at least five additional applications pending with remaining HUB, which we expect to convert to memberships by Q2 of calendar 2024.
One key customer milestone for the quarter was the successful completion of a supplier quality audit for an FDA approved diagnostic chip aimed at real-time PCR results.
Finally, GDS., I saw a double digit increase in new quoting activity over the prior quarter, which we will push to convert to new orders to grow the business for the March quarter. In the defense and other market segment, we are expecting to deliver the new XBOPDK. to two customers for ongoing foundry engagements and complete the design and sample of a new 2.4 gigahertz WiFi CPE. automotive XBAR filter to multiple customers. And now I would like to hand the call over to Ken to go through our financial highlights.

Thank you, Jeff. For the second quarter ended December 31, 2023, Company reported revenue of $7 million, which is in line with our prior guidance and flat over the prior quarter ending September 30, 2023. However, this represents an increase of 20% year over year. On a GAAP basis, operating loss was $15 million for the December quarter, driven by revenue of $7 million, offset by labor costs of $8 million. Depreciation and amortization of $3.2 million and other operational costs totaling $10.8 million. It is noteworthy that our labor and other operating costs have declined sequentially as a result, GAAP net loss per share was $0.21. Capex spending for Q2 was $1.6 million, completing our New York fab tool capacity expansion project to $500 million filters per year. Cash used in operating activities was $11.3 million, which included additional payroll costs associated with our expense reduction efforts, increased legal costs and increased AR and other which we converted to cash in the March quarter. The inventory channel buildup in WiFi is behind us, and we continue to receive design wins and introduce new products as a result we have backlog to support a return to record quarterly revenue in the March quarter with quarterly sales expected to be up 18% or 25%.
On the expense front, we have undertaken aggressive expense reduction and cost-saving measures that we estimate will reduce our operating cash flow burn rate by 30% to 38% sequentially in the March quarter. Furthermore, with the expense reductions and cost-saving actions in place, we expect that operating cash burn will drop another 30% to 40% in the June quarter. Given the top line projections, the chips ITC refunds and full impact of recent cost savings. We continue to expect operating cash flow breakeven later this year in the December quarter. The Company sits with a strong balance sheet after the recent completion of $11.5 million underwritten common stock offering announced in late January. And I will now turn the call back over to Jeff for his closing comment.

Thank you, Ken. And the market opportunity for our patented high-frequency Expo and XP. three S filters continues to be substantial. We currently have approximately 189 issued patents and patents pending providing a substantial IP moat around our technology. We continue to work aggressively to achieve each of our stated objectives, and we will continue to provide updates on our execution against these objectives as we progress, I want to emphasize to investors that management continues to focus on improving our income statements. As per our guidance, we expect to achieve record quarterly revenues in the March quarter. We are diligently pursuing product cost savings to lower operating expenses and improve gross margin. We have undertaken necessary steps to reduce our operating cash burn in the coming quarters. We believe this is prudent in the economic environment that we are facing further, I appreciate our employees for their hard work, passion and dedication in working together to position our Company for growth in the quarters ahead.
Finally, I also wish to thank our shareholders who continue to support the company. And with that, I would like to open the call for questions from the investment community. Operator, please go ahead with the first question.

Question and Answer Session

Operator

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue, you may press star two, if you would like three mills. Your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Our first question is from Anthony Stoss with Craig-Hallum Capital Group. Please proceed.

Anthony Joseph Stoss

Morning, guys.
Nice progress on.
Maybe maybe for Ken.
Can you talk about your, I guess, the new revenue per quarter for breakeven in Q4, what you think gross margins might be in that quarter to get you to breakeven? And also maybe just kind of lay out a linear what you expect OpEx each quarter throughout the year?

David Aichele

Warren, turning on the comment about revenue for operating cash flow breakeven. I will say that we had a significant expense reductions starting in the September, October timeframe, and we continue to do so. Tom, we had about $14 million annualized reductions. Now we have additional cost savings that pushed those reductions above $20 million annualized. So that also somewhat brings down the need for the gross margin and the revenue in the quarter of operating cash flow breakeven. But I still predict that to be in the end come down a little bit, but the $11 million to $15 million range per quarter of revenue to achieve operating cash flow breakeven, and that would also assume a margin of 20% to 25% in that quarter.
And on the OpEx side, I think you touched on that as well. Those numbers have have come down and they are going to continue to come down as well. I predict our operating expense line on our GAAP financial statements will be more in the range of about $10 million per quarter. By the time we get a full a full quarter of annualized savings. And then we get operating cash flow breakeven down. And we talked about the we talked about some margin improvements and as well, we are undertaking a number of measures internally to improve our margins we are on it. We're focusing on some of our existing parks where we have high land costs, some of the some of those costs we can bring down on the laminate side as much as half of what it currently is. We also are introducing a number of new products. We have about 17 products in production currently. That number is going out and we're not going to more than double that next year. So we're introducing more products and all those products have a lower on a lower cost structure to them, particularly on the on the back-end side as they're smaller form factor. And I think I answered all your questions, so I'm just to let me know, and I'll come back on.
No no, I think you hit them all.
And then, Jeff, I'd love to hear your views.

Anthony Joseph Stoss

It sounds like inventory on the WiFi is now normalized and maybe from a design perspective, what you see and if you're going to double your products going into next year, what do you think about design activity or number of wins.

David Aichele

In terms of the fan case in terms of you touched on several things. Let me start with the WiFi inventory. I think we emphasized that in the prepared comments we have we have seen that we started seeing that lift and with our auditors as well as some ongoing design wins. And we started seeing that back in the October, November timeframe. And then that's why we were comfortable kind of providing the guidance back to growth and record quarterly revenue in terms of just estimated, we will provide in the prepared comments of what we expect milestones, at least over the next quarter, you could see additional design wins there, but time in terms of number of design wins over there.

Anthony Joseph Stoss

And then the next year, I mean, let me ask Dave to kind of touch base continues to go closer to the customer.

David Aichele

Good morning.
Tied a couple of comments I'll make just following up on Joe's statements. The two wireline seven design wins that we just announced and those are in enterprise class programs. And there are some custom filters that we've done for these these two customers and they will turn into standard products that we're going to market to the rest of the industry as well. The dollar content in these are almost two times what we have with WiFi 6E programs. So I think that's significant and that's what we're trying to track now is significant design wins that will see an appreciable revenue in addition to the other design win we announced with the deal, the WiFi 6E program, which is more of a consumer base. The volumes on that are good at a lot of these are with the new products that Ken mentioned that were that release the two that I get the most traction right now that we expect to see multiple design wins per quarter with 1.7. Now that certification is approved and moving forward. And there's a lot of momentum. There was some slowdown last year on WiFi 6E transition into WiFi seven. So we see that picking up in these two products these two parts are in a small form factor that's going to service the 5.5 and 6.5 gigahertz. We also have some investments that we're making on 2.4 gigahertz as well so that we can bundle the all three we focused mainly on high-frequency, but deal, recognizing that we do have demand done at lower frequency as well we can service that. So we expect this momentum to be pretty strong through 2024 calendar year of Wi-Fi seven, and you can expect us to make every quarter announcements on new design wins and giving guidance on when this protective ramps Safety National, my cash fixed, I think it has yet to.

Operator

My next question is from Craig Ellis with B. Riley Securities. Please proceed.

Craig Andrew Ellis

Yes, thanks so much for taking the questions and guys, congratulations on getting the cost structure down and moving closer to cash flow breakeven. I wanted to start with a follow up to the prior question. So it seems from the prepared remarks and the comments just provided in Q&A that a lot of the momentum in Y-FI is around enterprise products. And so I was hoping to get some further color on what you're seeing on the consumer side and how you would expect the mix pick up consumer and enterprise to play out as we go through this year at Morococha.

David Aichele

So I'll take that question.
Yes.
The a lot of our activity has been with the enterprise and the volume system volumes are not as high in the hundreds of thousands. But as I commented earlier, the dollar content is pretty significant with these, particularly when you're looking at filters that can range in the 20 to 30 per system. And we've got a leading position here and that we're enabling these systems based on our product portfolio of narrowband and wideband. So that's that's good to continue to increase our customer base there. And it's usually pretty sticky once you have a customer in this sector and you maintain a good customer intimacy and technical support, you will continue to support the new design wins of the one market segment. A dimension, though is pretty strong for us also is the carrier side and we just did a press release yesterday, and that was for WiFi seven program that we got designed into. And if you look at that press release, it lists the six subscriber base that they have up to $32 million. So that those type of volumes that we see on the carrier side, Vocollect voice accumulated by seven, it's about competitive to the type of volume we see on the consumer side. And then the press release we did several months several weeks ago was for a consumer grade. So we are starting to penetrate the consumer grade. That's been a lower priority just based on it is usually more price sensitive and they go after older technology. But we're seeing that as those architectures go into higher volume will come and also with the requirements of WiFi seven due to latency and the channel bandwidth that the higher performance of both filters and the smaller form factor is more critical So their negotiations on price is less important. It's more on performance.

And Craig, this is Jeff. I just wanted to follow on maybe summarize the white segment. One of the things I wanted to make sure we had it in here was just some of the momentum in the defense and other markets, and that's really been driven by what's going on and not only with our success in the coffee program. I think we mentioned in the prepared comments and not only starting up the Phase two, but there's definitely a follow-on activity to that at the systems level, and we alluded in the prepared comments on the momentum in the contract. That also is supported by these research hubs that are in place. But we have proposals in place. We're pretty bullish on being able to secure funding a follow-on funding for the EXP. three f. technology, which, as you know, allows us to access much higher frequencies.

Craig Andrew Ellis

And that's real helpful color, guys. And then the follow-up is for Ken, and it's really just a clarification on two things. The first one related to those comments Ken, as we think about sequential revenue growth in fiscal 3Q, it would seem that it stacks up as being significantly led by enterprise WiFi followed by defense. And then networking is that the case? And then can you just clarify what the what the CapEx outlook is for calendar '24? And to the extent there's any linearity profile that you can share that would be helpful to think

Circa and I'll spend a little bit on CapEx spend.
So we've been mentioning over the past few quarters that we're completing our $500 million filter capacity expansion that has been completed. We are now we have that capacity. Certainly we talk about operating cash flow breakeven and the revenues needed. That capacity is well beyond what that revenue is. We do not anticipate a real material spending CapEx for the remainder of calendar year 2024. There are a few older projects that we'll finish there. Are few CapEx items that just come across on everyday business as machines hopefully bring down and we need a new smaller footprint, a bit like an analyzer, something that's worth, but I anticipate CapEx spend for the remainder of the year to be to be in the hundreds of thousands per quarter or less.

David Aichele

And then I guess kind of to your question on the Q3 revenue. I'm just trying to give you visibility on that where you're a good strong backlog to that, and that's why you've seen the guidance being in that between 25%. And the good news is that the slowdown we saw and we talked about the inventories under control. We started to see that tick back up on some of the legacy WiFi 6E programs as they transition to the WiFi seven program. So one example is our enterprise tier one customer that we've announced in the past. Their volumes are picking back up on the WiFi 6E, and we're already starting to get appreciable flat five seven preproduction orders that were ramping. And then the same thing with the carrier WiFi 6E program it was ticked up from reductions in their inventories. So that demand is going on as they transition into electronic seven. So that's two examples as we also have other customers picking up an introduction and the WiFi seven, we're starting to see significant pull one or two new products. So there's a lot of good activity there. The network side has slowed down the if you look at 5G, overall, Nokia Ericsson and others in that sector have had a poor quarter with quarterly earnings. And so that has slowed down the 5G deployments. So there's still some demand on the small cells, and that's going to be a less of a factor this quarter and next quarter, we expect it to pick up deal with obviously the current products, but also some of the engagements that we made in the and in the period reported.

Craig Andrew Ellis

That's real helpful.
And then just finally, can you mentioned AR would improve in the fiscal third quarter. Do you expect that to fully normalize or does that play out through the fiscal second half of the year? Thank you.

And so we on at the end of December, we had some AR buildup on our balance sheet that was due to a lot of year end orders that shipped out towards the end of December that we will collect in this quarter, Q3, there were also some handsome, some some timing issues, particularly with a large program that we have on the energy side with the government and that some we can we can build them and receive money is as according to a set schedule. So that's a that's also in our other receivables, other assets section. And we'll collect that in this quarter as well. And I expect that to normalize out throughout the remainder of the year.
Got it. Thanks, guys.

Operator

And our next question is from Suji Desilva with ROTH MKM. Please proceed.

Suji Desilva

Good morning, Jeff, Dave and Ken, and congrats on the progress here.
Maybe a longer-term question, Jeff, I'm giving you have multiple segments that seem to have some opportunity here and promise. What do you think in a year or two? Are the larger sort of segment contributors?
I mean, I would think would be mobile, but the defense program sounds like with these hub memberships, they could be signaling as well as any kind of qualitative thoughts there would be helpful.

Yes.
If you look at when you look at activity. Others certainly in the I think we've outlined quite a bit from WiFi 6E to one five seven, how you see not only the content increase. Dave touched on the wideband narrowband of portfolio that we have. The other thing that maybe didn't come through but is the SPVASP.s and the WiFi seven. And that's a fact that's favorable for us. So we're kind of mixing into new platforms, which certainly have starting ASPs that are higher. So we're very bullish with the content and Dave outline of two to four times of additional content. And so we're pretty excited about that.
If you look over in the defense segment, David indicated it had slowed down and we do see that picking up through through the year. So while it's small and we do expect that business to roughly triple over the the next year, if I kind of look at some of the internal modeling on some lifetime. We expect very strong performance there on that. Defense is on the defense side, several several without contract programs. And we mentioned in the prepared comments that we would be expecting if awarded at least one of those contracts to begin mid-year. And now we continue on with the Phase two data and then that helps us fund some additional activity in the foundry. So that strong and also some of the new spin programs that have come there.
And you mentioned mobile, as I'll touch on then, Tom, we have been addressing. We've got a ton of foundry activity ongoing there where we're providing filters for a fully integrated solutions. We'll see how that plays out, Tom, but we've been we mentioned in prepared comments that we shipped the first filter. There's two additional filters that are in the design and fabrication phase, so that can be a contributor. What I what I will say, though, kind of overarching is if you look at the model that we're chart, we're charging to the mobile would be upside to the model that we're projecting for the full year. And so as we talk about Tom, getting to cash flow breakeven at the end of the year, and we do expect that cash flow to be a little lumpy. I go through the year because we've got IDC credits and the timing of those. Ken mentioned some of the timing challenges, but overall on the model would be upside to the plan and with strong performance in defense was five, as well as some on network on a on a percentage growth basis.

Suji Desilva

Jeff, that's very helpful color on what's embedded in your expectations your second questions on the I guess the new single crystal product you're sampling and just understand the competitive landscape again, and whether the single crystal products expands your competitive advantage is that the color there and whether that opens up markets or whether it's kind of continuous across the products you're doing to that new ones?

So yes, I'll start with that. And then I guess, Dave, to kind of follow in, but the message is that we mentioned that's going into a new one, one five seven a design, and we're utilizing that to obtain some performance enhancements that we think are differentiated. It is amongst the the narrowband designs that we're selling. Again, just to remind you, of the WiFi seven incorporates both wideband and narrowband, we have multiple narrowband custom designs, which there really are no second source for. So we're not having to compete with second source on those. And so that helps us with our bundling activities. So that's in terms of the single crystal maybe gave. Was that anything else there?

David Aichele

Suji, no comment.
The two things really the single crystal, the development that we do for last couple of years from now to introduce yourself in with the aluminum nitride has enabled us to really service the narrowband and wideband filters for certain market segments. So the recent press that gives us some advantages on power handling deal with some of these applications where you've got this really steep rejection and a narrow transition window. Also, we've seen some improvement in Harmonix, which are critical for some of these coaches type applications.
The other thing is it's a building block of our XP. three up, which again is a unique feature of the business and the technical community recognizes that and that this is a manufacturing process with this multilayered and immaterial compared to other technologies that doctors funding. So it's gaining pretty significant interest from the defense industry base, but also well from the 5G sector that's looking at or I should say the cellular sector that's looking at 64 FR. three and then also the satcom market. So the same principles to good building block for discrete devices and also for these high performance technologies like the XP. three f.

Suji Desilva

Thanks, Dave.
Thanks, Jeff.
And my last question is just an update again on that the litigation curve would be helpful.

Thanks.
Thank you, Suky. I'll take that one. Regarding the lawsuit Qorvo fight against acoustics in Delaware. The case has reached a point where I can share acoustics. If you look at the facts, do not support the wide-ranging allegations made by Carlo acoustics acoustics filed a motion for partial summary judgment from February first. And if granted in full this merchant, this motion would dispense with the majority of Qorvo's complaints, everything but the patent claims, but I'll add that the company is well positioned on the patent claims. As mentioned in prior calls, the Company has developed design updates to demonstrate with real world data that export filters do not use Qorvo's patents and motion. We filed also asked the court to confirm that these designs do not infringe one of the two Qorvo patents that issue the other Qorvo patent expires this summer. Cruises also believes cause damages, experts use faulty methods and assumptions to develop key parts of Qorvo's estimate of damages accrued. This has filed a motion to exclude that testimony. This motion represents an additional challenge to key parts of Qorvo's claims. Please keep in mind, even if the court ultimately does not grant acoustic sales motions the defects in Qorvo's case will remain hurdles Qorvo would have to overcome any trial. Qorvo has filed its own motion for partial summary judgment, but this motion is limited to a ruling on the validity of Qorvo patents, no matter the outcome of the Malian corporate will still bear the burden of providing acoustic products approving acoustic products and French corporate patents, notwithstanding all the engineering performed by Houston's supported defense in the case.
Now turning to the lawsuit filed by acoustic gets Qorvo in federal court in the Eastern District of Texas cases, beginning to gather steam. As a reminder, this lawsuit alleges Qorvo is infringing a patent licensing exclusively to acoustics by Cornell University. As described in past calls, Qorvo has filed a motion to dismiss the case that morning and have a motion to strike acoustic infringement infringement contentions Akorn held a hearing on the motion to strike on January 10, 2024 after the hearing both sides are after hearing both sides, the court denied Qorvo's motion to strike as a result of this code. This case is moving forward at full steam.

Suji Desilva

Okay.
Thanks for that detail that Asia has to do.

Operator

We have reached the end of our question-and-answer session. I would like to turn the call back over to management for closing remarks.

Yes.
So this is Jeff. I wanted to thank everybody for your time today. I did want to point out that one one, not a typo that we had in the prepared comments was we actually sampled the 3.8 gigahertz and ship samples of that 3.8 gigahertz, and that was not the band 41. So I just want to clarify that before we end the call, I would say we look forward to speaking with you during our next update call to discuss the current quarter's execution against our milestones that we discussed today as well as future expectations.
And with that, I'd like to wish everybody a great day and thank you and goodbye.

Operator

Thank you. This will conclude today's conference. You may disconnect.
Your lines at this time.
And thank you for your participation.