Greetings. Welcome to the Lattice Semiconductor Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Rick Muscha. You may begin.

Thank you, operator, and good afternoon, everyone. With me today are Esam Elashmawi, Lattice's Interim CEO, and Sherri Luther, Lattice's CFO. We will provide a financial and business review of the Q2 of 2024 and the business outlook for the third quarter of 2024. If you have not obtained a copy of our earnings press release, it can be found at our company website in the Investor Relations section at latticesemi.com. I would like to remind everyone that during our conference call today, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information that is currently available and that actual results may differ materially. We refer you to the documents that the company files with the SEC, including our 10-Ks, 10-Qs, and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the third quarter of 2024. If at any time after this call, we communicate any material changes to this guidance, we intend that such updates will be done using a public forum, such as a press release or publicly announced conference call. We'll refer primarily to non-GAAP financial measures during this call. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. For historical periods, we provided reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the Investor Relations section of our website at latticesemi.com. Let me now turn the call over to Esam Elashmawi, our Interim CEO.

Thank you, Rick, and thank you, everyone, for joining us on our call today. While many of our investors, analysts, and customers know me, I'd like to provide a brief introduction given our recent CEO transitions. In the six years that I've been at Lattice as Chief Strategy and Marketing Officer, I've been deeply involved in both the development and execution of our strategy. During that time, we have significantly strengthened our product portfolio, financial performance, and competitive position. Our accelerated cadence of new product launches has created new growth opportunities and deepened our customer relationships. The opportunities that made me excited to join Lattice back in 2018 are even more compelling today. Lattice is fortunate to have a deep bench of talent throughout our organization that is committed to building on our momentum and delivering future value creation for our customers and shareholders. As was previously announced, the Board of Directors has commenced a search process to identify a permanent CEO and will consider both internal and external candidates. While there is no specified timeline for completion, this search is the Board's highest priority. I am fully committed to that process and confident that the ultimate outcome will be in the best interest of all Lattice stakeholders. Now moving to the second quarter of 2024. The inventory normalization and near-term cyclic corrections continued as revenue declined 12% sequentially and 35% year-over-year. Gross margins remained at 69% and we continue to deliver profitability. In Q2, we continued to under-ship to end customer demand as inventory normalization continued. On an end market basis, demand remained soft across industrial and automotive in Q2, with revenue down 23% sequentially as customers continued to reduce their inventory levels. We remain well positioned for growth over the longer term with our differentiated hardware and software solutions. Within communications and computing, Q2 revenue was flat sequentially. Strength in data center networking and servers helped offset incremental weakness in wireless communications. As we discussed previously, we expect the inventory normalization cycle to continue through the second half of this year. We are seeing signs of improvement that, when combined with our new product ramps, we anticipate will lead to a return to growth. In terms of our product roadmap, we intend to continue investing in and accelerating our highly differentiated value portfolio. In our Small FPGA portfolio, our seven to five family is on track to start ramping in Q3. We recently announced today our newest device family, the Lattice MachXO5D-NX, and the latest version of the Lattice Sentry solution stack. This combination extends our leadership in security-focused hardware and software solutions. Last quarter, we talked about adding new Lattice device options to address increased customer demand. We're already delivering on that roadmap expansion, having recently launched Certus-NX-28 and Certus-NX-09, which offer class-leading power efficiency, small size, and reliability with flexible migration options. These devices are designed to accelerate a broad range of communications, computing, industrial, and automotive applications. Customer feedback has been very positive as we continue to invest in innovative strategies in the Small FPGA segment. In our mid-range FPGA portfolio, we've already launched three Avant devices family. The first device, Avant-E, achieved initial revenue last December driven by numerous applications. We expect Avant-E series to ramp throughout the course of this year. We're on track and aim for both Avant-E and NX to achieve initial revenues before the end of this year. Customer momentum remains robust. You'll recall, 90% of the target customers for Avant are already customers of Lattice today and are using the same software that customers use today on Nexus. We are pleased with the market traction of Avant as it expands our total addressable market and drives expected additional long-term revenue acceleration. As we have mentioned in previous calls, Lattice hardware and software solutions are increasingly being used in a wide variety of AI-related applications. For example, they optimize servers in the data center when the system is running generative AI workloads. Lattice devices are used in the control, management, and security of the AI computing system. Another example is in the Edge AI enabled applications, where Lattice solutions are used to run the AI inference algorithms that provide features such as user presence engagement detection in client and industrial systems. Lastly, a third example is AI-enabled applications where Lattice solutions are used to aggregate and preprocess sensor data that is used for AI processing. I wanted to highlight that last quarter, we began shifting Lattice NVIDIA Edge AI solutions to customers. This solution, which we first presented at our 2023 Developers Conference, is designed to accelerate the development of Edge AI applications using the NVIDIA platform. I'm pleased to share that on December 10 and 11, we'll be hosting our second Lattice Developers Conference, which will be held live and virtual in San Jose. Driven by our increase in ecosystem and customer base, you can expect industry-leading presentations and breakout sessions, a robust showcase of FPGA-based technology demonstrations, and new product announcements. In summary, we remain focused and continue to execute on our strategy. We believe Lattice is competitively well positioned and in the middle of the largest product portfolio expansion in our history with strong customer momentum.

Thanks, Esam. Second quarter financial results reflected continued softness with revenue remaining slightly below the mid-point of guidance. Gross margin remained stable with continued profitability. With a strong focus on cash and capital allocation, we continue to return cash to shareholders through share buybacks. Let me now provide a summary of our results. Second quarter revenue was $124.1 million, down 12% sequentially from the first quarter and down 35% year-over-year, reflecting continued inventory normalization in the industrial and automotive market segments. Our Q2 non-GAAP gross margin was 69%, in line with the prior quarters, reflecting the stability of the gross margin despite the near-term cyclic softness. Q2 non-GAAP operating expenses were $54 million compared to $54.9 million in the prior quarter and $58 million in the year-ago quarter. During the quarter, we remained disciplined while continuing to invest in our long-term product portfolio. Our Q2 non-GAAP operating margin was 25.4% compared to 30% in the prior quarter. Q2 non-GAAP earnings per diluted share was $0.23 compared to $0.29 in the prior quarter. In Q2, we repurchased approximately 143,000 shares or $10 million of stock, making Q2 our 15th consecutive quarter of executing share buybacks. Over that period, we have repurchased approximately 5.1 million shares, thereby reducing dilution by 3.8%. Let me now review our outlook for the third quarter. Revenue for the third quarter of 2024 is expected to be between $117 million and $137 million. Gross margin is expected to be 69% plus or minus 1% on a non-GAAP basis. Total operating expenses for the third quarter are expected to be between $53 million and $55 million on a non-GAAP basis, which is in line with Q2 2024 at the midpoint. As we continue to navigate the near-term cyclic softness in our end markets, and the industry normalization of inventory, we remain focused on supporting the expansion of our product portfolio and continued execution. Operator, that concludes my formal comments. We can now open the call for questions.

Thank you. At this time, we will be conducting a question-and-answer session. And our first question comes from the line of David Williams with Benchmark Company. Please proceed with your question.

Hey, good afternoon and thanks for letting me ask a question. I guess, Esam, can you talk a little bit about the design activity and maybe how the ramps have been impacted by the down cycle? Are you seeing anything there that's worth pointing to? And just kind of wondering how that traction continues through the down cycle. Thanks.

Yes. Good question, David. With regards to design activity, just to remind everyone, we've got the strongest product portfolio in the history of the company. And most recently, we just talked about expanding our Nexus platform. We've got the new Mach-NX-D device that we just launched, and we've got Avant as well that we've been talking about in our customer momentum. We've completed two consecutive quarters of record design activity. This is the kind of stuff that, when I talk to the team, we can control. We can't control the macro in the market. But we have good control over two things that matter to me: product development, getting differentiated products out into the market, and driving more customer intimacy. So I'm really proud of the team and what they've done from a design activity perspective over the last two quarters. Those being two consecutive record quarters from a design activity perspective. As for product ramps, I love product ramps. You know that. Getting new products into the market drives opportunities that lead to more market opportunities for us, but also drives new revenue streams. Even though the market is going through a cyclical downturn related to inventory normalization, if you look at our new products, for example, Nexus or Avant, you see the revenue of those products in the first half of 2024 exceeded the revenue in the first half of 2023. This emphasizes why we keep emphasizing new products that are very differentiated and our software strategy of making it easier for customers to adopt them. We have good progress on our new product ramps, and I'm excited about the second half of 2024. We've talked about additional new product ramps. The seventh Nexus device should ramp this quarter, that's on track as well as the two additional Avant devices, Avant-G NX, with expected initial revenue for those two devices by the end of this year, and we're on track for that as well.

Great color there. Thanks so much. And I guess maybe secondly, maybe for Sherri, the margin has been incredibly resilient here despite the lack of leverage. Can you walk us through maybe the incremental improvements you would expect to see as sales return and that leverage comes back? Are there structural things that you've done maybe through the downturn that will benefit on the upside? Thank you.

Yes. Thank you, David, for the question. We're certainly pleased with the 69% gross margin that we achieved during Q2. There can be fluctuations on a quarterly basis due to mix or even within our market segment, but we're seeing progress. You may recall, we've talked about our gross margin expansion strategy that we've been executing now into our sixth year, improving our gross margin by 1,200 basis points. So that is something we are really proud of. In fact, when you look back in time at when our revenue was at similar levels to Q2, gross margin was quite a bit lower at that time, somewhere in the low 62% range compared to the 69% achieved in Q2. That speaks to our new products and software attach, as discussed before, in terms of the added value software attach provides to our gross margin and new products that Esam mentioned earlier. Looking ahead, our guidance for Q3 at the midpoint is 69%, and we certainly continue to expect strength and resiliency in our margins. Our long-term model remains intact, still driving toward low 70s gross margins. We will continue to focus on our gross margin expansion strategy as we look ahead.

Thank you again.

Our next question comes from the line of Ruben Roy with Stifel. Please proceed with your question.

Yes. Thank you. Esam, I was wondering if you could maybe drill into the inventory commentary a little bit more. Last quarter, you guys talked about potentially seeing some growth in the second half over the first half. You mentioned some signs of improvement today. So, could you give us more detail on what you're hearing from your customers regarding that inventory normalization? Are we getting there? Do you think we'll see the end of that towards the end of Q3? If so, how are you thinking about the exit rate coming out of that normalization? That would be helpful. Thank you.

Yes. I think everyone knows I love to talk to customers. I do that quite often. Recently, I met with one of our key industrial accounts, and as you can imagine, inventory normalization is one of the topics we always discuss. From my conversations, there's been overall improvement in the inventory normalization, but it varies from customer to customer. Even within customers, they have various product lines at different stages. Some product lines have achieved normalization while others still have excess inventory that needs to be normalized. Recall earlier this year, we expected the inventory normalization to continue throughout 2024, but to a lesser extent in the second half compared to the first half. Regarding Lattice specific items, the things we control remain our new product ramps that are expected to start in the second half of the year, and we still believe we're well positioned for long-term growth. We are in solid strategic core markets with compute and industrial and automotive alongside Lattice specific growth drivers. As we exit this normalization and get products to ramp up, we feel like we're in a very good position.

And Ruben, just to give you more color on inventory in the channel, we think about it as that which is sitting at our distributors. Last quarter, we mentioned that inventory in the channel is more at pre-pandemic levels, within that pre-pandemic range. We continue to see that it is still on the higher end of that range. As we mentioned in this call and last quarter, we continue to under-ship to what we consider true demand. This under-shipping allows for the inventory digestion or normalization that Esam mentioned, which will occur in the second half, albeit at a lesser extent than what we observed in the first half. We keep close touch with our strategic customers and a good feel for their inventory levels, but at the same time, we have over 10,000 customers, making it hard to have a perfect view of the inventory across all end customers.

That's great color. Thanks, Sherri. I appreciate the complexity of the issue here. For a quick follow-up, just to follow on David's question: It's nice to see the stability in the gross margin with revenue coming down. And as you mentioned, the margins were much lower the last time we saw these types of revenues. That speaks to your pricing optimization strategy. Can you give us an update on the pricing environment and how you're thinking about that going forward?

Sure, from a pricing perspective, we're seeing that our pricing is durable. I think it really goes back to our products allowing our customers to differentiate in their applications. The number of new products we have announced and continue to announce helps our customers differentiate. Customers are willing to pay more for products that improve their offerings. New products continue to be a key part of our pricing optimization strategy. We also see trends where customers want higher capacity and greater capability products, again driving the functionality of their products. Our pricing continues to be durable and is a key element of our pricing optimization and gross margin expansion strategy.

I'd like to add to that. I think you're familiar with our software strategy. We're investing in our software solution stacks, and our data suggests that customers leveraging our software solutions demand a higher average selling price, which helps our margins as well.

All right. Thank you.

Our next question comes from the line of John Vinh with KeyBanc Capital Markets. Please proceed with your question.

Great. Thanks for taking my question. Esam, you mentioned in your prepared remarks that you are seeing signs of improvement. I'm wondering if you could give us a little more color on, more specifically, where you are seeing those green shoots. Based on your current visibility, when do you think you'll be able to return to growth again?

Yes. Let me take the first part of your question, which is where are the signs of improvement. It starts with the customers, always. We see normalization at the customer side, and we know we are under-shipping through demand. Also, some operational indicators are positive. In Q2, towards the latter half of the quarter, we began seeing an increase in bookings, which is a promising sign for us. In fact, we are starting Q3 with a higher backlog than we started Q2 with. When you combine customer inventory normalization with under-shipping demand, increasing bookings, and a healthy backlog going into the quarter, those are all encouraging signs. We expect our new product ramps to drive new revenue streams. As mentioned earlier, the seventh Nexus device is expected to ramp this quarter, and additional Avant-E will continue to ramp throughout this year. Thus, when you look at these signs of improvement, we anticipate that we are on a path to returning to growth.

Great. Thanks. And then just a follow-up question on your server business. One of your competitors continues to express confidence in gaining traction in their service security. I'm just wondering about your confidence level in maintaining your position within the server business. As we look forward to the ramp of next-generation server platforms at Intel, I know your attach rate is above one. As we think about Granite Rapids ramping in the second half of the year, are there still opportunities to increase your attach rates in servers or your content there?

Yes. Good question. From a server perspective, we've demonstrated over multiple generations an increasing attach rate. At my first Investor Day in May 2019, we discussed a 25% attach rate, which is now well above one. Comparing the server generation shipping today with the prior generation, we've seen not only an increase in attach rate but greater complexity driving the need for our more complex FPGAs, resulting in a higher average selling price. We have excellent visibility on these architectures, knowing how they will be used for control, management, or security functions. At our last developer conference, we even had a major hyperscaler present the value of Lattice from a security angle. Regarding next-generation server applications, we maintain strong visibility with expectations of increasing attach rates with more complex FPGAs. In most recent, we announced updates to our solution stack for PFR applications. We feel very good about our position in that market and making good progress in increasing our attach rate from generation to generation with differentiated products.

Great. Thank you.

Thank you. Our next question comes from the line of Matt Ramsay with TD Cowen. Please proceed with your question.

Yes. Thank you very much. Good afternoon, guys. I think you described it well in some of your opening comments. There are things in the business that, over the long term, your team can control and maybe some things in the macro that you can't. I have a couple of questions: in the longer-term stuff with the product portfolio, it's great that you have said that the vast majority of the Avant customer base is the same as the Nexus customer base. Are there new emerging opportunities that you didn't foresee when some of those customers or even new customers for Avant opened? What is the opportunity with the customers you currently have?

Yes. Those are good points about Avant. Avant has more than doubled our market opportunity. If you look at the small FPGA total addressable market we provided at our last Investor Day, which was about $4.5 million, the mid-range devices, which is Avant 5.5, have more than doubled that market opportunity, which helps us avoid cannibalizing small FPGA. Approximately 90% of our target customers are already Lattice customers who are familiar with our software tools and solution stacks designed for Avant and Nexus. We are making solid progress and have launched Avant-E, our edge-optimized FPGA at the end of 2022, which has shown initial revenue. At our last developer conference, we also announced Avant-E and Avant-G, our general-purpose and advanced connectivity FPGA. We're excited about the applications we are engaged in, and Avant opens up opportunities not just for control applications but also for data paths, especially in data center networking, which is growing for us. We're also noticing opportunities in storage applications we had not anticipated, and in additional AI-related applications that leverage Avant. Our team continuously works with customers to explore innovative uses of our FPGAs and applications. We are excited about the opportunities ahead, both for Avant and Nexus devices.

Thank you for that, Esam. For the near-term questions: I guess I'm not surprised given the macro and the industrial weakness from your peers that the guidance for the September quarter was a bit weaker than we had forecast. But this is the first time I can remember when you guys actually missed guidance a quarter in June. I'm just wondering what happened intra-quarter relative to the visibility you had when you guided the quarter originally and what shifted.

Let me address the first bullet regarding the industrial midpoint. We met slightly below our midpoint, primarily driven by industrial and auto. Of course, we kept under-shipping to true demand. We want to ensure inventory gets normalized, which is critical for us. I want to point out again that the industrial segment is a solid growth driver for Lattice. We have shown consistent strong double-digit growth in industrial, and we expect to return to that. Our products fit very well within industrial-type applications, such as robotics and factory automation, and our Avant wins in 2024 are with industrial accounts. Although we have some short-term cyclical normalization to manage, we feel very good about our position in the industrial market. Regarding your question about Nexus versus pre-Nexus, the ramping of new products alleviates inventory normalization concerns with older products stocked from prior years. New products drive revenue streams, and we are encouraged as new products are ramping.

Got it. Thank you, Esam. I’ll jump back in the queue.

Thank you. Our next question comes from the line of Melissa Weathers with Deutsche Bank. Please proceed with your question.

Hi, there. Thanks for taking my question. You've discussed industrial quite a bit, but I want to focus on comms and compute and what you observed in the quarter. My model suggests you may have upside expectations from what you shared last quarter. Can you discuss where you believe we are in the cycle for both comms and compute end markets?

In comms and compute, what we stated was it was flat quarter-over-quarter, primarily driven by strength in the server and data center networking segments, but our 5G wireless was down as we had expected when we discussed that in our Q1 earnings call. Server revenue is increasing due to higher attach rates and dollar content. We expect growth in data center networking, which was first mentioned at our last Investor Day. Although 5G wireless remains soft, that’s not unique to us. Until CapEx costs reduce, a strong return to 5G wireless is not anticipated.

Thank you. As we think about sell-in versus sell-through, how do we bridge the gap? Once inventory clears, how sharp of a snapback can we expect? I recognize the FPGA market has seen differing trends over cycles, but should we expect a rapid snapback once inventory is sold through or a gradual recovery in the industrial market and compute end market?

The way we view this inventory normalization is ongoing, as we've stated. It is continuing to happen through the first half of the year and into the second half. As this inventory consumes and the chain normalizes, we will see sell-through increase and help reduce channel inventory, allowing for a smoother flow of product. While we see this continuing in the second half, it will gradually dissipate.

Thank you. Our next question comes from the line of Quinn Bolton with Needham & Company. Please proceed with your question.

Hi. Esam, I wanted to revisit a comment you made last quarter about the expectation that revenue would increase in the second half over the first half, driven by inventory normalization and other specific drivers, including the Nexus and Avant family. You haven't made that statement on this call. Do you still believe that second-half revenue will be up over the first half?

On today’s call, we are focusing on the Q3 guidance based on the data we have. We see signs of improvements, know we’re under-shipping demand, and anticipate some normalization with customers. However, as we get closer to the Q3 earnings call, we will provide further clarity on Q4 and our expectations for the second half.

Got it. Another question, back in January, a competitor eliminated nearly 300 small FPGA parts without replacements. Has your sales team had success converting their designs over to Lattice?

Whenever a competitor ends a product line, we capitalize on it. Our team has executed well, leveraging our product differentiation, which increases our customer momentum. We’ve expanded Nexus, adding more device options to provide our customers ample choices while helping facilitate a switch from the end-of-life competitor products. We maintain high credibility with our customers and capitalize on every opportunity.

Can you hear me?

Yes. We can.

It seems we are experiencing some technical difficulties, so we will stay on the line and wait.

Thank you. Our next question comes from the line of Christopher Rolland with Susquehanna International. Please proceed with your question.

Hey guys. Thanks for the question. I was wondering if you are seeing any new applications from customers that you think are interesting or needle-moving, perhaps in the PC space with Lunar Lake or Strict Point coming. I know you do a human presence detection there, but are there any other PC-driven applications or new applications that you learned about that could be significant?

Yes. In the PC space, we've added artificial intelligence features such as person detection and gate detection on client devices. Additionally, we partner with large PC OEMs to enable AI PCs and their reference designs. We see benefits from those deployments as well. Another significant opportunity is the NVIDIA and Lattice solution for AI applications. We introduced that concept at our last developer forum, enabling high-performance AI at the Edge without relying on the latency of data centers. With over 1 billion sensors in the world, our solution helps aggregate sensor data and preprocess it, improving compatibility with NVIDIA solutions. Customers are starting to deploy those systems, which is exciting.

That's fantastic. Thank you, Esam. A question for Sherri: I didn’t fully understand the channel inventory comments. Have the levels returned to pre-pandemic levels? Are you saying those levels are too high, or have customers expressed a preference to drag inventory levels lower? If you could provide some numbers, it would help.

The inventory in the channel is currently at pre-pandemic levels, specifically the high end of that range. This scenario allows us to under-ship demand so inventory consumption can continue. During COVID, we noted low levels of inventory in the channel, which needed replenishment. Now, we're seeing a higher end of the normal range, and under-shipping demand allows for inventory normalization over the second half.

Okay. Would it be possible to get a sense of how much you're shipping below true demand or any normalized quarterly number if you were shipping normally?

There are two ways we assess that. First, we regularly converse with customers, asking how they’re doing with normalizing their inventory levels. Secondly, we look at what distributors are shipping to their customers versus what we provide. We know they’re shipping more than we ship to them, indicating inventory decreases. While we have healthy nominal levels in the channel, we're on the high side, and we're not concerned overall.

Thank you. Our next question comes from the line of Tristan Gerra with Baird. Please proceed with your question.

Hi, good afternoon. Looking at industrial and automotive, I know you've mentioned you're under-shipping demand. If I annualize the $58 million you reported for Q2 for that segment, it implies a 9% CAGR, which is above the 3% for that industry. So, what kind of CAGR should we expect for industrial growth in the coming years? How much has pricing contributed versus share gains?

Industrial has really been strong for us, and growth has been driven by our differentiated products that fit well for the segment. We have experienced growth at a higher rate than the overall market and are targeting healthy double-digit growth in that segment. Last Investor Day, we shared that we expect revenue to grow at a rate of 15% to 20% annually over the next several years on top of our small FPGA segment, and we still stand by that. Our product portfolio is robust, with new product introductions expected to contribute to continued growth in industrial applications. We feel confident moving forward.

That's useful. Could that mean Avant might ramp at a lower rate than you might have expected due to the excess inventories at your customers? Are you seeing any signs of that yet?

No, we don't see inventory normalization as affecting the Avant ramp. Avant remains early in the cycle, and we’re observing strong customer adoption. If you recall, our progress with Avant has shown revenue growth in the first half of the year compared to the first half of last year. Customers are eager to bring their products using Avant to market as quickly as possible, and we don’t see indicators pointing to an inventory normalization issue impacting Avant.

Thank you. A couple of short-term questions. Esam, you discussed bookings stabilizing and backlog being better than Q2. Is this improvement primarily from inventory normalization, or do you think the new products are driving improvement?

It's a combination of factors driving improvement. New product ramps contribute to the increase in orders, as do our design wins. We recorded record design activity in the last two quarters, which helps increase bookings. The operational indicators have improved, and these elements combined with a healthier backlog at the start of Q3 indicate favorable trends.

Got it. As for the compute bucket, could you quantify how much of it is now driven by servers? Where do you see that cycle now? You’ve mentioned a 50% content increase with current server generations. Will that continue with the newer platforms ramping?

There will be fluctuations, but server revenue tends to increase due to higher attach rates and dollar content. We categorize revenue based on general-purpose servers and AI-specific servers, expecting attach rates to be equal or higher for the latter. We're optimistic about increasing attach rates and dollar content with the newer generation servers without providing specific forecasts at this time.

Great. Thank you very much.

Thank you. We have reached the end of the question-and-answer session. I'll now turn the call back over to management for closing remarks.

Thank you, operator, and thank you, everyone, for joining us on today's call. While the industry continues to go through a period of inventory normalization, we're starting to see signs of improvement. We continue to execute on our ongoing product portfolio expansion and remain well positioned for long-term growth. Operator, that concludes today's call.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.