Earnings Call Transcript - SILC Q1 2020

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to Silicom's First Quarter 2020 Results Conference Call. All participants are present in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not received it, please contact Silicom's Investor Relations team at GK Investor and Public Relations at 1-646-688-3559 or view it in the news section of the company's website, www.silicom-usa.com. I would now like to hand over the call to Mr. Ehud Helft of GK Investor Relations. Mr. Helft, would you like to begin?

Ehud Helft, Investor Relations

Thank you, operator. I would like to welcome all of you to Silicom's First Quarter 2020 Results Conference Call. Before we start, I'd like to draw your attention to the following Safe Harbor Statements. This conference call contains projections or other forward-looking statements regarding future events or the future performance of the company. These statements are only predictions and may change as time passes. Silicom does not assume any obligation to update any information. Actual events or results may differ materially from those projected, including as a result of our increasing dependence for substantial revenue growth on a limited number of customers in the evolving cloud-based SD-WAN, NFV and Edge markets; the speed and the extent to which solutions are adopted by these markets; the likelihood that we will rely increasingly on customers, which provide solutions in these evolving markets, resulting in an increasing dependency on a smaller number of larger customers; difficulty in commercializing and marketing Silicom's products and services; maintaining and protecting brand recognition; protections of intellectual property, competition, disruptions to our manufacturing and development, along with general disruptions to the entire world economy relating to the spread of the novel coronavirus or COVID-19 and other factors identified in the documents filed by the company with the SEC. In addition, following the company's disclosure of certain non-GAAP financial measures in today's earnings release, such non-GAAP financial measures will be discussed during this call. Such non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes that the presentation of these non-GAAP financial measures is useful to investor understanding and assessment of the company's ongoing cooperation and prospects for the future. Unless otherwise stated, it should be assumed that financials discussed in this conference call will be on a non-GAAP basis. Non-GAAP financial measures disclosed by management are provided as additional information to investors in order to provide them with an alternative method for assessing our financial conditions and operating results. These measures are not in accordance with or a substitute for GAAP. A full reconciliation of non-GAAP to GAAP financial measures is included in today's earnings release, which you can find on Silicom's website at www.Silicom.com. With us today on the call are Mr. Shaike Orbach, CEO; and Mr. Eran Gilad, the CFO. Shaike would begin with an overview of the results, followed by Eran, who will provide the analysis of the financials. We will then turn over the call to the question-and-answer session. And with that, I would like now to hand over the call to Shaike. Shaike, please.

Yeshayahu Orbach, CEO

Thank you, Ehud. I would like to welcome all of you to our conference call to discuss the first quarter of 2020. I hope you and your family stay healthy during these unprecedented times, and I wish all those who have been impacted by the virus a speedy recovery. We reported revenue of just over $22 million for the quarter, in line with our updated guidance of between $21 million to $22 million and 15% below the original guidance we issued in January prior to the global spread of the coronavirus pandemic. Reporting our 61st quarter of continued profitability, we are pleased with our financial results achieved during the unprecedented working and logistical challenges that the current pandemic has posed for us, which includes supply chain interruptions, component shortages, and delivery delays in the second half of the first quarter. Broadly, for Silicom 2020 was off to an excellent start and we had strong expectations for the year before the global effects of the pandemic began to materialize. We therefore believe that once the major impact of the pandemic on the world is behind us, we will return to the strong growth trend that had already started. As you know, by mid-February, the business environment started changing rapidly. During this period, our top priority is ensuring the health and safety of all our employees as we continue to serve our customers around the globe. To achieve that, we eliminated international travel by employees and took steps to implement social distancing at all our facilities. We provided the infrastructure and implemented work from home, limiting the office to only those workers whose physical presence was essential. Face-to-face meetings have been minimized and we are utilizing video conferencing where possible, including for customer and remote support, as well as for business development and sales meetings. We continue to follow local authorities' directives as they develop and adjust as needed. Despite the logistical and working challenges that the COVID-19 pandemic has created for everyone including us, we have been successful at mitigating most of the challenges the pandemic presented. In early April, a major systems integrator placed a $15 million purchase order for our Intelligent Bypass unit due for delivery over the next 12 months. This design win followed a long process that began in mid-2019 that concluded with a thorough evaluation, demonstrating the superiority of our technology and products. This customer will use our units for an infrastructure project for the government of one of the world's largest economies. The large volumes projected by this customer demonstrate that our traditional products continue to offer a good base for our future growth. Furthermore, this integrator that has now standardized on our technology and products, is a significant player in this massive government infrastructure market. This increases the likelihood that we will become its de facto standard as they continue rolling out their next generation of networks and data centers, both with this product and for our Edge and FPGA products. As such, we see this relationship bringing a significant strategic potential. This win is also a demonstration of the fact that overall business for Silicom continues as usual and that means our growth process continues as planned. We continue to work hard to bring new design wins. Our pipeline is getting deeper and broader and the first quarter of 2020 was no different. We continue to focus on implementing our strategy under which we are operating full solutions comprising of Edge compute units, FPGA and non-FPGA offload solutions, NICs and other elements of the solutions. What this means is that the various legs of our business, on top of representing standalone opportunities with customers who are looking separately for an Edge compute node, FPGA card, a standard server adapter, or non-FPGA offload card, now creates a new line of opportunities whereby customers are looking for an Edge compute node which is already integrated with an FPGA and/or another offloading card with or without a NIC, etc. As we are quite unique with this kind of capability, this creates an important advantage for us moving forward. We are very pleased with the positive response that this strategy has seen from the main market segments that we are addressing, specifically the Telco space. We are working with our current customers, potential customers, OEMs and software vendors which are looking for hardware solutions to maximize the effectiveness of their solutions in this Telco space, both in the data center and at the Edge, and most of them seem to be looking at exactly our unique capabilities of being able to provide a full solution, which would provide the best performance for their offering. We believe this process will continue and become an important driver in our future growth. Also, underlying fundamentals of our target markets continue to be attractive and present high growth potential in the post-pandemic world. Over our history, we have successfully navigated through many market cycles. Our foresight and investments in the right areas, being ready for the various technology trends as they emerge have enabled us to consistently emerge as a better and stronger company and we believe that this will be the case again as we emerge out of the current pandemic. With regard to our guidance, as you can imagine right now, we have limited visibility due to the pandemic. It is therefore very difficult for us to issue quarterly guidance with reasonable certainty. So for now, we have therefore decided not to issue guidance for the upcoming second quarter. While it is too early to predict when the disturbances due to the pandemic will completely disappear, we are optimistic that once that happens, and given our strong roster of existing design wins, combined with growing interest from all key market players, we will benefit from solid double-digit compounded annual growth over several years. Before summarizing and moving over to Eran, I note that as of Q1 end, Silicom has $80 million in net cash providing us with significant financial flexibility. This gives us more than enough working capital and enables us to continue to invest internally in our R&D efforts and continuing our business development activities as we originally planned, ultimately fueling the long-term growth of our business. At the same time, it gives us more than enough working capital to weather the current environment. Furthermore, it also allows us to share the rewards of our continued profitability and cash generation with our shareholders, and today, the Board of Directors authorized a new one-year share repurchase plan allowing the company to purchase up to $15 million of our ordinary shares in the market. Our current one-year $15 million buyback plan will expire tomorrow. As of the end of the first quarter, under this former plan, we had repurchased about 410,000 shares of Silicom for a total sum of approximately $13 million. In summary, our focus has always been on investing and building our business for the long-term. We are excited with regard to the prospects of our growth engines, the Edge-related business, as well as our FPGA solutions for cloud and Telco data centers, cyber security and 5G, all of which have the potential to become significant growth drivers for us. The long-term opportunities for Silicom indeed still remain huge. I would like to repeat what I said last quarter. We believe the upcoming few years will be much greater than what we have achieved over the past few years. With that, I will now hand over the call to Eran for a detailed review of the quarter's results. Eran, please go ahead.

Eran Gilad, CFO

Thank you, Shaike and hello everyone. Revenues for the first quarter of 2020 were $22.2 million, this is compared with revenues of $30.2 million as reported in the first quarter of last year. Our geographical revenue breakdown over the last 12 months was as follows: North America 70%, Europe and Israel 23%, Far East and the rest of the world 7%. During the last 12 months, our top three customers together accounted for about 35% of our revenues. I will be presenting the rest of the financial results on a non-GAAP basis, which excludes the non-cash compensation expenses in respect of options and RSUs granted to directors, officers and employees, as well as acquisition-related adjustments. For the further reconciliation from GAAP to non-GAAP numbers, please refer to the press release we issued earlier today. Gross profit for the first quarter of 2020 was $7.3 million, representing a gross margin of 33% compared to a gross profit of $10.3 million or gross margin of 34.1% in the first quarter of 2019. Operating expenses in the first quarter of 2020 were $5.7 million compared with $5.9 million in the first quarter of 2019. Operating income for the first quarter of 2020 was $1.6 million compared to operating income of $4.4 million as reported in the first quarter of 2019. Net income for the quarter was $2.3 million or 10.3% of revenues compared to $4 million or 13.3% of revenues in the first quarter of 2019. Earnings per diluted share in the quarter were $0.31 compared with $0.52 as reported in the first quarter of 2019. Now turning to the balance sheet, as of March 31, 2020, the company's cash, cash equivalents, bank deposits, and marketable securities totaled $79.9 million with no debt or $11.05 per outstanding share. That ends my summary, and we would all be happy to take any questions.

Operator, Operator

The first question is from Alex Henderson of Needham & Company. Please go ahead.

Alexander Henderson, Analyst

I was hoping you could start by discussing whether you experienced pressure on supply and logistics due to the COVID challenges or if you also noticed a decline in demand. Can you differentiate between the pressures in the March quarter and what you anticipate might happen as we move into the June quarter regarding these two issues?

Yeshayahu Orbach, CEO

Yes, I mean so almost all of the issues that we have experienced were related to supply. Now, within the supply there are a few different issues. At the beginning what we saw was that our vendors for specific components, mostly those which are, I would say, making components rather than standard components, were delayed in their delivery, and that is because they were under some sort of a quarantine, many of them in China, etc. So, we didn't have delivery dates for the components that we ordered from these vendors. Later on, they started to come back and they started to deliver and at that point we started to experience two different types again of delays. One type was with, I would say, our subcontractor who is doing the installations and then later on they came under quarantine, so we were not able to get systems out of them even though we already had all the components, but then they were not able to ship these components to us. So that was the next phase. And then in parallel with that, there was another thing which continues even today; the second thing to a certain extent continues even today as well, and that was transportation difficulties. Transportation difficulties is mostly because of, as you know, major changes with the airlines. So it was much more difficult to find a flight. Flights that were scheduled were cancelled and we did not receive what we were supposed to receive on time. We are not able to ship in time. So, these are three types of difficulties; they were the main difficulties. Now, we have not seen any reduction in the demand whatsoever. The only thing that I am saying is that once we delay what we deliver to our customers right now, so everything, the whole process is getting delayed to a certain extent. So, I mean I'm assuming that would have some sort of an effect, but there are no reductions whatsoever, no cancellation of POs, nothing of that sort.

Alexander Henderson, Analyst

Okay, so the expectation is then that the supply constraints, logistic challenges, transportation, installation challenges all are persisting into the June quarter at about the same level that you saw in the March quarter or has it gotten worse?

Yeshayahu Orbach, CEO

It's unclear. I would say that what characterized our situation in the second half of March was unexpected developments, and we continue to face surprises. We receive committed dates from our suppliers or vendors, and then we get unexpected updates, which is why I say it's unclear. I can't definitively say how things will unfold in the second quarter—whether it will be worse or better; we still experience unexpected challenges. We are trying to address these surprises by increasing the number of sources we work with, which may help us by the end of the quarter and possibly into Q3. There is no visibility. I can't declare that the situation is worsening, but surprises keep occurring. For instance, a vendor who was supposed to finish their quarantine by May 3 recently informed us that their quarantine will now extend until May 21. This situation continues, and while we strive to manage it, it remains unclear. I can't predict whether it will improve or worsen.

Alexander Henderson, Analyst

So just mechanically the timeline on these components, what is the production time from you get in the production of the components into turning it around in terms of finished unit and getting it out the door, is it three to six weeks kind of production time and therefore, if it doesn't get resolved by pretty much the end of May, you'd start to have challenges getting products out of the door or is it shorter than that?

Yeshayahu Orbach, CEO

The timeline for delivering components is typically between four to six weeks once we have all the necessary parts. It's important to note that some unexpected delays may arise from our contract manufacturers responsible for the installation. However, we can install certain components later, so even if we receive them a week before delivery, we can still proceed with the shipment as long as they are part of the final setup. Ultimately, it depends on the specific component involved.

Alexander Henderson, Analyst

Shifting gears, could you talk a little bit about the dip in the gross margins in the March quarter and whether you think that that will persist, is that a function of some increased costs on expediting things or transportation or logistics or spreading the purchases around, what caused that?

Yeshayahu Orbach, CEO

I believe we are still within the gross margin range we defined, which is between 32% and 36%. The primary reason for the decline this quarter is the product mix, as we sold more Edge products. There may have been some higher expediting fees than usual, but the main factor is definitely the product mix.

Alexander Henderson, Analyst

And so do you expect that to persist at that mix given the environment or how do you see that playing out as we go forward?

Yeshayahu Orbach, CEO

Looking at the full year, I'm not certain if this product mix will continue. I hope we will sell more Edge products, but unexpected factors can change things. I still estimate that our gross margin will fall between 32% and 36%. We could adjust the product mix by a small percentage, which could increase our margin by 1% to 1.5%, impacting our gross profit. For instance, the recent win we announced is a traditional product, so we expect a higher margin for that, at least for part of what will be sold this year. Therefore, it's difficult to pinpoint exactly where we will end up within the 32% to 36% range.

Alexander Henderson, Analyst

Just following up on that question of the contract that you won, you said part of that is this year, I thought that that was $15 million in the first year, maybe I remember it wrong?

Yeshayahu Orbach, CEO

No, no, I mean you remember it right. I mean, we said that it will be sold within the next 12 months, which means that part of that would be within this financial year, within 2020.

Alexander Henderson, Analyst

So going back down to the OPEX line, R&D was pretty normal, but you did see a sequential decline in both the sales and marketing and G&A. I assume that travel in place kind of dynamics are helping there, is that the right mechanics of why that happened?

Yeshayahu Orbach, CEO

In a way yes, I would say that some things are very evident here. Obviously, we had less travel expenses this year, starting from a date I don't remember exactly when we terminated all...

Eran Gilad, CFO

March. Beginning of...

Yeshayahu Orbach, CEO

At the beginning of March, we terminated all flights. Even prior to that, flights to China and the Far East were halted, which contributed to this situation. I believe that the impact of the shekel was beneficial to us. Eran, could you provide more insight on this?

Eran Gilad, CFO

Yes. As Shaike mentioned, the shekel and the dollar positively impacted us this quarter. The dollar was stronger this quarter compared to the previous quarter, which had a beneficial effect on our operating expenses, resulting in a decrease of over $100,000 in total operating expenses for the quarter.

Alexander Henderson, Analyst

Just to be clear, you don't hedge on the shekel, correct?

Eran Gilad, CFO

Correct.

Alexander Henderson, Analyst

That's what I thought. Okay, just one last question then I'll cede the floor. Can you just update us on what's going on in the SD-WAN space both on an OEM basis as well as what's going on relative to the service provider related business? It does seem like that's one of the few areas that has benefited significantly from work from home, is that showing up in the demand coming at you or are you seeing any pickup in demand there as a result of that, any thoughts along those lines would be helpful? Thanks.

Yeshayahu Orbach, CEO

Yes. Well, we are seeing an increase in demand in that space, specifically the low-end devices. And we're seeing customers requesting more of these and they tell us explicitly that this is due to the work from home initiative. So we do see that on the one side. We see a little less on the higher-end units, which are mostly targeting the enterprise, where our customers are even telling us explicitly that this part of their business is suffering a little bit. But, overall, I mean they do see an increase due to a significant increase in the work from home. So, we do see that happening. And in general we believe that we would be feeling that during the year, that's what they're telling us. We've received some, I would say, unexpected deals even due to that that we were not able to deliver immediately, obviously. But still I believe that overall definitely SD-WAN, especially at the low-end, will increase this year.

Alexander Henderson, Analyst

That would suggest to me some margin pressure from that, is that reasonable to expect?

Yeshayahu Orbach, CEO

Yes, yes.

Alexander Henderson, Analyst

Okay, great. I will cede the floor. Thanks.

Operator, Operator

The next question is from Robert Sussman of Bentley Capital. Please go ahead.

Robert Sussman, Analyst

Thank you. Can you give us an idea when you might start to ship that $15 million order and are the shipments there being held up by the problems that you're having with your supply chain?

Yeshayahu Orbach, CEO

We hope to avoid any issues, but if they arise, we believe we will begin shipping in the third quarter of this year. This is part of our standard sales system, and we do not anticipate any problems beyond supply chain difficulties. We are actively working to secure all necessary components to start shipments and are confident we will begin in the third quarter.

Robert Sussman, Analyst

You mentioned that after your announcement, this customer or integrator indicated that you should anticipate more orders. Is this the only government that might consider an upgrade like this, or could there potentially be many governments interested, making it a significant source of business for you?

Yeshayahu Orbach, CEO

I don't think there's a significant chance that this specific integrator will sell the same concept to other governments. However, that doesn't mean our product couldn't be sold to other governments, and we are working towards that. I believe this won't happen through our current customer. This customer views this huge project as just a small part of what they expect to happen within this specific government. We see this customer as a potential strategic growth driver for us, not just with this product. This isn't the first product we've sold to them; the previous sales were not substantial enough to build a strong relationship. With this major project, the meetings we've had with them and the transparency we've shown in our schedules and designs, along with the actual award, have helped us establish a real relationship. Their needs encompass this product for multiple potential installations within this government and other products, as they are a major integrator in that country with significant demands in various areas. Therefore, the strategic value of our relationship extends not only to this specific project but also to other products that could fit into various government projects they may be involved in.

Robert Sussman, Analyst

Did the company buy back any stock during the first quarter?

Eran Gilad, CFO

Yes, we repurchased almost $5 million during the first quarter.

Robert Sussman, Analyst

And, did the cash drop? There was a fair amount, there was this maybe an $8 million or $9 million drop in the cash, is that because of working capital needs as you were unable to ship, so you had to build inventory?

Eran Gilad, CFO

It is mostly connected to the buyback. The buyback is cash out, so most of the decrease derives from the buyback.

Operator, Operator

We have a follow up question from Alex Henderson of Needham & Company. Please go ahead.

Alexander Henderson, Analyst

Yeah, I couldn't let you guys get off the hook without pressing a little bit on the forward-looking thoughts. It sounds like you are kind of thinking that the trajectory into the current quarter has a wide dispersion and hence you can't forecast it. But the dispersion seems like it's potentially as much sequential improvement as sequential erosion hence, the expected value would be roughly in the middle, i.e. flat sequentially. Is that the right way to think about it?

Yeshayahu Orbach, CEO

Yes, I mean, could be, yes. Could be, I mean you know there are unknowns in both directions whether they meet in the middle or not, I cannot be sure. But, it's a reasonable thinking.

Alexander Henderson, Analyst

Okay, and then so given the demand is reasonably healthy and you haven't seen erosion in demand. I'm like sure that this is an impossible question to ask, but my job is to ask it anyway. So, as we move out of the June quarter, assuming conditions gradually start improving, any reason to believe that you don't make up some of this demand into the back half and how are you thinking about conditions into the back half at this point and I realize that there's, again, a huge dispersion of potential results here?

Yeshayahu Orbach, CEO

Yes, it's quite challenging to answer that. What I can say is that the demand doesn't just vanish. I'm uncertain about when we will see it again due to delays on our end, and Q3 is influenced by what unfolds in Q2, among other factors. It also depends on our customers because even though I believe the demand will still be there, delays can lead to missed timelines, pushing things into another quarter. Therefore, it's hard to predict what will occur in Q3 and Q4. Overall, I remain confident that demand isn't showing any signs of disappearing.

Alexander Henderson, Analyst

Can you discuss the portion of your business that relates to traditional appliances sold to various enterprise customers as part of their systems business, compared to the newer areas like security, SD-WAN, service providers, and cloud? How do you perceive the balance and visibility between these two segments? Given the earnings reports from Facebook and Microsoft, and likely similar trends from Amazon, it appears the cloud sector is experiencing strong demand while enterprises face more challenges. Could you help us understand this difference?

Yeshayahu Orbach, CEO

We do not provide a specific breakdown between the various markets, partly because it is somewhat challenging to do so. You may have noticed that some of our traditional customers are moving into new areas, which complicates our ability to identify which market’s performance to analyze. Eran can provide more detailed insights, but generally speaking, our traditional markets have remained flat or slightly declining. However, the recent design win has improved our position in these traditional areas, and we anticipate growth in all the new markets. This is what I can share without offering specific figures or numbers.

Alexander Henderson, Analyst

Can you talk a little bit about the FPGA products and to what extent that's seeing any inflection in terms of design activity and the like, is this environment helping you with design wins or is it eroding your ability to deliver new wins coming down the pike?

Yeshayahu Orbach, CEO

What is happening with our FPGA is quite intriguing, and I mentioned this at the start. It's very encouraging because we have a strong pipeline for FPGA cards. Additionally, we are observing an important trend—many potential customers are realizing they can get a complete solution from us that includes both the compute nodes, which are our Edge units, and FPGA cards that help offload the CPU. They are also interested in other components we use for additional offloading to create optimal solutions. I believe we are unique in our ability to offer this. Many of these solutions are based on Intel architecture, and we are receiving solid support from various Intel divisions. This situation generates demand for solutions that we are almost exclusively equipped to provide. Customers from mobile and telecom sectors are looking for integrated compute nodes with FPGA technology since incorporating an FPGA into a host can be complicated. They want us to deliver solutions that include the compute node, an FPGA, and possibly other offload solutions integrated into the FPGA card. We are seeing a clear trend in these requirements, which I believe will lead to significant wins that are specifically ours. The only drawback is that these solutions are complex, requiring more time for definition, evaluation, and proof of concept. However, we consistently see this demand. Currently, we are quite busy responding to customers seeking these types of solutions. Our FPGA capabilities are the key entry point, as many others can offer different features, but few have our unique FPGA expertise combined with these additional capabilities. We are pleased with this development and believe it contributes to our optimism for the future.

Alexander Henderson, Analyst

So, this is related to serverless Edge applications that you're talking about?

Yeshayahu Orbach, CEO

This is what?

Alexander Henderson, Analyst

Relative to serverless Edge applications.

Yeshayahu Orbach, CEO

Well, I mean, I think serverless, you could say serverless, because they do not necessarily include I would say a traditional server. Because in these situations our Edge compute unit would actually replace the server.

Alexander Henderson, Analyst

Yes, this serverless comment is related to the software engineers not needing to take into account the server architecture. It's a...

Yeshayahu Orbach, CEO

For sure, everything that we do or almost everything that we do these days is based on the basic, I would say, strategy of decoupling the software from the hardware, and this is a part of what we are doing.

Operator, Operator

The next question is from George Marima of an undisclosed firm. Please go ahead.

Unidentified Analyst, Analyst

Thank you, good morning Shaike. I would like to inquire further about the FPGA pipeline. Are you observing a diversification in verticals beyond your traditional sectors? Over the past year, you've had wins in the automotive and healthcare sectors. Could you share updates on those developments and any other non-traditional opportunities that may be emerging?

Yeshayahu Orbach, CEO

Okay. First of all, regarding the two specific opportunities you mentioned, we hope to start seeing some revenue from at least one of them in the near future, with a ramp-up by the end of this year. The other opportunity will take longer. I should mention that the automotive project will require more time, as it was initially designed for pilots, and converting that into genuine revenue will take a while. I want to emphasize that although we announced these opportunities, they are not our primary focus. Our main focus remains on our traditional markets, which are all within networking. However, we were pleased to see interest from other verticals, even though we didn't actively market to them. Once they approached us, we seized the opportunity since our technology was already in place without needing additional marketing efforts. We continue to prioritize our traditional networking areas, specifically in the Telco space, including Edge and Telco data centers, where we see the most interest. We're also noticing related interest in similar technologies tied to IoT, leading us to some industrial applications. These, again, come through our partners and, while still networking-related, are not our usual marketing focus. Overall, we remain concentrated on the networking sector, primarily with Telcos and Telco data center environments.

Unidentified Analyst, Analyst

Thank you Shaike.

Yeshayahu Orbach, CEO

We collaborate not only with the Telcos but also with the OEMs supplying them and the software vendors offering solutions to the Telcos to achieve these successes.

Operator, Operator

The next question is from Abba Horwitz of OSP. Please go ahead.

Abba Horwitz, Analyst

Hi, I just wanted to know the average cost per share that you paid for the stock in this past quarter?

Eran Gilad, CFO

Approximately $30 per share.

Abba Horwitz, Analyst

$30 per share, okay.

Eran Gilad, CFO

On average.

Abba Horwitz, Analyst

Right, understood. How many shares do you plan to purchase each day?

Eran Gilad, CFO

It depends, it's not a fixed amount every day. It depends on the market.

Abba Horwitz, Analyst

On average, what is the typical number of shares that you buy?

Eran Gilad, CFO

It's about 2,500 shares per day.

Abba Horwitz, Analyst

Okay. And did you purchase any blocks this past quarter?

Eran Gilad, CFO

No, not during the last quarter and not before that.

Abba Horwitz, Analyst

Okay, wonderful. Thank you guys, thanks again.

Operator, Operator

There are no further questions at this time. Before I ask Mr. Orbach to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available by tomorrow on Silicom's website, www.silicom-usa.com. Mr. Orbach, would you like to make your concluding statement?

Yeshayahu Orbach, CEO

Yes, thank you, operator. Thank you, everybody, for joining the call. We hope you all are safe, and we look forward to hosting you on our next call in three months' time. Good day.

Operator, Operator

Thank you. This concludes Silicom's first quarter 2020 results conference call. Thank you for your participation. You may go ahead and disconnect.