Aehr Test Systems (NASDAQ:AEHR) Q3 2019 Earnings Conference Call April 4, 2019 5:00 PM ET
Jim Byers - Investor Relations
Gayn Erickson - President and Chief Executive Officer
Ken Spink - Chief Financial Officer
Conference Call Participants
Tyler Burmeister - Craig-Hallum Capital
Mark Gomes - Pipeline Data
Good day, everyone and welcome to the Aehr Test Systems Third Quarter Fiscal 2019 Financial Results Call. Today’s call is being recorded. At this time, I would like to turn the conference over to Jim Byers of MKR Group. Please go ahead, sir.
Thank you, operator. Good afternoon and thank you for joining us today to discuss Aehr Test Systems third quarter fiscal 2019 financial results. With us today from Aehr Test Systems are Gayn Erickson, President and Chief Executive Officer; and Ken Spink, Chief Financial Officer. Management will review the company’s operating performance for the third quarter of fiscal 2019 before opening the call to your questions. Aehr Test announced its third quarter results in a press release issued this afternoon, which is available on the company’s website at aehr.com. In addition, this call is being broadcast live over the Internet for all interested parties and the webcast will be archived in the Investor Relations page of the company’s website.
Before turning the call over to management, I would like to make a few comments about forward-looking statements. The company will be making forward-looking statements today that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Factors that may cause results to differ materially from those in the forward-looking statements are discussed in the company’s most recent periodic and current reports filed with the SEC. These forward-looking statements, including guidance provided during today’s call are only valid as of this date and Aehr Test Systems undertakes no obligation to update the forward-looking statements.
And now with that said, I would like to introduce Gayn Erickson, Chief Executive Officer. Go ahead.
Thanks, Jim. Good afternoon to those joining us on today’s conference call and also listening in online. Ken will go over the third quarter financial results later in the call, but first, I am going to spend a few minutes discussing our business and product highlights, including our continued progress with our FOX-P platform, a semiconductor wafer level and singulated die and module level test and burn-in systems. We will then open up the lines to your questions. We actually have a lot of material here, a lot of positive things going on, so I will try and move through this briefly and then get to the Q&A as quickly as possible.
While our revenue in the third quarter was slightly lower on a year-over-year basis or significantly lower – I am sorry, on a year-over-year basis, it was in line with Street estimates and the expectations that we discussed on last quarter’s call for a weak third quarter with many of our customers’ capacity ramps pushed into our fiscal fourth quarter and into our next fiscal year that begins June 1, 2019. The significant increase in bookings we saw in Q3 and the orders we have received since the close of the third quarter are evidenced at the beginning of this ramp in our customers’ capacity. With the $6.9 million backlog at the beginning of the current fourth quarter plus the orders announced since then, we effectively have over $10 million in backlog for the quarter so far. We feel very positive about the momentum we are seeing with existing and multiple potential new customers for our new FOX-P products.
We are actively engaged with over a dozen different customers with our new FOX-P family of products. We expect to see a significant increase in bookings in the current fiscal fourth quarter with an increase in backlog heading into fiscal 2020, and we believe that our revenue will significantly improve to enable us to return to profitability in the current fiscal fourth quarter. Today, we announced yet another order from one of our lead customers for the FOX-XP system for production wafer level burn in our silicon photonics devices. This customer, who is one of the world’s largest semiconductor manufacturers, has a very strong forecast for their capacity ramp, which will consume the system capacity they have ordered to-date. This customer will also ultimately order a significant number of Aehr’s WaferPak contactors to populate their FOX-XP systems that are installed as well as for this latest system order. They also continue to forecast orders for additional FOX-XP systems and WaferPak contactors throughout calendar year 2019 and beyond.
We see the market for silicon photonics and the overall photonics market as a great wave of opportunity for Aehr Test. Our unique value proposition of being able to test, stabilize, and detect infant mortalities of these devices at either wafer level or singulated die at a cost point never seen in the industry is proving to be a great business for us. We are engaging with many new customers from around the world and we are hearing extremely positive feedback that our solutions stand alone as the only way to cost effectively scale to meet the demands of these devices that are used in 5G infrastructure build out, 2D and 3D sensors, and enterprise and datacenter server and storage applications. We are working closely with a number of companies on not only their current generation devices, but also next generation and the generation after that. This is providing us with a keen insight into their long-term needs and gives us and them time to optimize their solutions to meet their capacity and technical requirements.
I want to take this time to announce a brand new customer that has selected our new FOX-CP test. We introduced the FOX-CP during the quarter and it is our new, low-cost single wafer compact test and reliability verification solution for high volume production for logic, memory, and photonic devices. The FOX-CP offers a low-cost, integrated package for wafer level test and burn-in reliability and stabilization for both initial evaluations and high volume production applications. This newest addition to our FOX-P product family is optimal for test times ranging from a few minutes to a few hours or where multiple touchdowns are required to test the entire wafer. It complements the capabilities of our FOX-XP and our new FOX-NP systems, which are optimal when the test time is measured in hours or days and the full wafer can be tested in a single touchdown. This customer will be using our system solution, including our proprietary high-power WaferPak contactors with an integrated high power and high chuck force fully automated wafer prober. This turnkey solution is engineered, delivered, and supported by Aehr Test.
We are very excited about this new application, which serves the enterprise and datacenter markets, which is and continues to be a market that has ferocious growth projections and the 5G infrastructure build-out is making this even more acute. We really cannot talk about this customer or the application or the devices in any detail, but we expect this customer to purchase a significant number of our tools to be deployed in several locations over the next several years. We expect their initial system order to happen this quarter for shipment in the next few months.
During the quarter, we also announced our FOX-NP test, NP, as in November, Pop, I guess, test and burn-in solution, as well as our first and second customer orders for multiple systems to be used for both wafers and singulated die test and burn-in. The FOX-NP system is a new configuration within our FOX-P product family that is a low cost, small footprint, entry level system providing a configuration and price point for companies to do initial product qualification and new product introduction, enabling an easier transition to our FOX-XP system for high volume production test. Our initial customer order for the FOX-NP announced during the quarter is a brand new customer for Aehr. They will use their system plus our proprietary DiePak carriers as the first step in this customer’s commitment to utilize our FOX-P platform for qualification and production burn-in of their new family of integrated silicon photonics chips. This new customer will utilize the new FOX-NP to begin initial production test and burn-in and then plans to transition to high volume production test and burn-in of 100% of their silicon photonics chips using our XP multi-wafer and singulated die test solution. They have a very unique technology that allows them to deliver devices that can be used for multiple applications. I personally visited their company and seen their technology and it’s very exciting. We feel this customer will grow to be a significant account for us.
As a reference to the size, a customer in this space can be, our lead silicon photonics customer has already ordered almost $15 million of FOX-P systems, WaferPaks, and WaferPak aligners from Aehr for their application. This lead customer for our FOX-XP system recently ordered over $2.4 million for multiple FOX-NP test and burn-in systems for test and qualification as part of their continuing ramp up in wafer level burning capacity. The FOX-NP systems complement this customer’s existing fleet of FOX-XP test and burn-in systems to provide additional test and qualification capacity as a result of an increasing variety of silicon photonics devices. The FOX-NP is affordable and low risk for smaller companies or new applications where the initial volumes are low. It also opens up a new application for reliability screening requiring different temperatures.
We continue to see increasing forecasts for the silicon photonics market and believe the silicon photonics and photonic sensors markets will be significant growth drivers for Aehr Test. We believe that both our FOX-CP and NP will significantly expand the market and number of customers for our FOX products. We begin shipments of our FOX-NP and CP systems during the next 2 to 3 months. We actually had some questions to help kind of differentiate and clarify the difference between the systems in the FOX-P family, so let me go ahead and do it here.
There is four main products. First, we have our FOX-XP system. That’s a system that can test up to 18 independent wafers at a time using our proprietary WaferPaks. It can also be configured for up to nine independent DiePaks that are our proprietary contactor for testing and burn-in and singulated die or modules. Each WaferPak can test multiple thousands of die at a time while each DiePak is capable of testing up to 1,024 die at a time. Second, we have our new FOX-NP, which is a two-blade or tester version of the FOX-XP. The NP can test up to two wafers or two DiePaks at a time. Third, we have our FOX-1P, which is a single wafer system capable of putting a massive number of test resources on to a single wafer. This was optimized for M-Best or memory best, logic best and scan based design and test methodologies. It’s capable of testing an entire NOR flash wafer, a microcontroller wafer, an entire smart card device wafer, or other wafers with high number of devices in a single touchdown as it can deliver over 16,000 tester channel resources on to a single wafer. And lastly, fourth, we have our new FOX-CP, which is a compact version in the FOX-1P that uses a single blade similar to our FOX-XP and NP system, but sits on an integrated wafer prober. This system is capable of delivering up to 2,048 tester resource channels and over 2,000 watts of power to devices on a wafer and its test cell that allows stepping across the wafer for devices with relatively short test and burn-in times.
We have seen our business shift considerably toward our new wafer level and singulated die FOX test and burn-in products, particularly in silicon photonics, the 2D, 3D sensors used in mobile and other applications, automotive applications and now data centers to consider wafer level on our singulated die reliability test to be critical to their production. With this shift in our business, we foresaw a need to make some structural staffing changes in a few areas of our company that position us for success in addressing our new market opportunities and improve our efficiencies. These include fairly substantial changes in our customer-facing sales and marketing teams and in our R&D and manufacturing teams that we believe better align these operations with the focus of the company. As a result of these changes, our third quarter results include a one-time restructuring charge of $607,000 related to severance packages. Going forward, these changes will lower our operating costs by over $1.2 million per year beginning in the first quarter of fiscal 2020, which starts June 1. In addition, our fiscal Q3 results also include a one-time charge of $795,000 in charges related to slow moving and absolute package per burn-in product inventory as well as inventory related charges with the completion of our new family of FOX-P products.
As we complete our fiscal fourth quarter and head into our fiscal 2020, we are very optimistic about the market acceptance and customer penetration of our full family of FOX-P solutions. With the recent introduction of our new NP low cost system and the FOX-CP single wafer compact test solution, we expect to increase our installed base of FOX system substantially. These new systems and their corresponding WaferPak and DiePak contactors will both add to our revenue and further grow our consumables business as new customers continue to order contactors with each new device designed over the next decade or more.
As evidence of the potential of this consumables business, we received $2.1 million in orders from our installed base of FOX test and burn-in systems for our proprietary WaferPak contactors and DiePak carriers and related services. These reflect additional capacity needs for photonic modules, silicon photonics and automotive applications. We expect our consumables business to continue to grow with current and new customers both in absolute terms and as a percentage of revenue. And we believe we can reach a point where our WaferPak and DiePak contactors compromise over half of our annual revenue.
Now, let me touch on our traditional package for our test and burn-in system business. As we have discussed on past calls, our traditional core business for package part burn-in systems and OEM chambers has been and was expected to be soft this year. Our largest customer for ABTS package for burn-in systems, who purchased a significant number of ABTS systems last year, continues to indicate that they did not expect to need any incremental need for our high power ABTS systems this fiscal year as they continue to absorb the systems that we deliver to them in the past year. They have continued to do smaller upgrades on their older fleet of Aehr burn-in systems to add new high voltage capabilities as well as provide a base revenue stream to us for support of their large installed base. We do see additional customer opportunities in the package part market with the ABTS platform as Aehr continues to provide a key complete portfolio of test and burn-in solutions. We’ve added a new sales director in this space directly to address these new market opportunities in the ABTS package for burn-in space.
When we look to fiscal 2020, we expect our package part business to be a smaller percentage of our overall business. However, the margins on our FOX products are 10 to 20 points or 20%, 10% to 20% higher than our traditional package for test and burn-in products. So as our business model shifts more to our FOX products, our margins increase and we are more profitable at lower revenue levels. Having said that we are taking steps to improve our margins and increase sales of these products, as well as looking at new channel strategies to increase our market share. I plan to discuss this in more detail over the next few quarters.
Again, as we look ahead, we expect to see a significant increase in bookings in the current fiscal fourth quarter, with a solid backlog heading into fiscal 2020. And we believe that our revenue would significantly improve to enable us to return to profitability in the current fiscal fourth quarter and sets us up well heading into fiscal 2020. The fundamental growth drivers for Aehr Test Systems remain intact as a continued rapid growth of semiconductor content to nearly every part of life and the increasing requirements on semiconductors to meet substantially higher safety, security and long-term reliability needs, continues to drive the need to ensure 100% validation and assurance of burn-in and test results. In addition, more and more heterogeneous devices are being demanded by applications where the only way to address the need is by assembling multiple individual semiconductor devices into a single package, which is increasing the need for reliability test and burn-in of devices before they are integrated or stacked into multi-die packages. These market trends continue to provide a significant long-term growth opportunity for Aehr, and we believe we are well positioned to capitalize on this opportunity with our unique test and burn-in solutions for wafer level package parts and cingulated die devices.
With that, let me turn it over to Ken.
Thank you, Gayn. Net sales in the third quarter were $3.2 million compared to $5.9 million in the preceding quarter and $7.4 million in the third quarter of the previous year. The sequential decrease from Q2, included a decrease of $2 million in wafer level burn-in revenues and $800,000 in packaged part revenues. The decrease from Q3 last year included a decrease of $1.1 million in wafer level burn-in revenues and $3.1 million in packaged part revenues, including ABTS OEM revenues.
Non-GAAP net loss for the third quarter was $1.6 million or $0.07 per diluted share compared to a non-GAAP net loss of $405,000 or $0.02 per diluted share in the preceding quarter, and non-GAAP net income of $509,000 or $0.02 per diluted share in the third quarter of the previous year. The non-GAAP results exclude the impact of stock-based compensation expense, restructuring charges and write down of excess and obsolete inventory.
On a GAAP basis, net loss for the third quarter was $3.2 million or $0.14 per diluted share, which include the impact of approximately $1.4 million or $0.06 per share in one-time restructuring and inventory write-down charges taken in the quarter. This compares to a GAAP net loss of $629,000 or $0.03 per diluted share in the preceding quarter and GAAP net income of $267,000 or $0.01 per diluted share in the third quarter of the previous year. The $1.4 million in one-time restructuring charges are, excuse me, the $1.4 million in one-time charges taken in Q3 includes $607,000 in restructuring charges and $795,000 in charges related to slow moving and obsolete package part and burn-in product inventory, as well as inventory related charges with the completion of our new family of FOX-P products. The $607,000 restructuring charge consisted of severance costs for individuals impacted in the reduction enforce. The action was taken to reduce cost and align company resources for future growth. The headcount reduction impacted company officers, managers and staff and included sales, marketing, R&D and operations. These headcount reductions are expected to result in cost savings of over $300,000 per quarter starting in Q1 of fiscal 2020 that begins June 1, 2019. The $795,000 provision for excess and obsolete inventory included $540,000 in reserves related to older packaged part burn-in products and $255,000 related to legacy FOX-1 and down Rev FOX-P products and subsystems. The packaged parts reserve charge relates primarily to reduce forecast usage for older ABTS and MAX products. The company has taken steps to shift its product portfolio to more standard, high-value products and unique customer specific low volume configurations.
Gross profit in the third quarter was $272,000 or 9% of sales compared to gross profit of $2.4 million or 41% of sales in the preceding quarter and gross profit of $3.2 million or 43% of sales in the third quarter of the prior year. Gross profit in Q3 was impacted by the $795,000 inventory write-down, along with higher and absorbed overhead costs due to lower revenue levels. On a pro-forma basis, excluding the $795,000 inventory reserve provision, gross margin for Q3 was 34%.
Operating expenses in the third quarter were $3.4 million and included the $607,000 in restructuring charges taken in the quarter. This compares to operating expenses of $3 million in the preceding quarter and $2.9 million in the prior year third quarter. Excluding the impact of the restructuring charges, operating expenses decreased by $82,000 from prior quarter and $88,000 from the third quarter of the prior year. R&D expenses were $931,000 for the third quarter, compared to $986,000 in the preceding quarter and $1 million in the previous year third quarter.
SG&A was $1.9 million for the third quarter, compared to $2 million in the preceding quarter and $1.8 million in the prior year third quarter. Turning to the balance sheet for the third quarter, our cash and cash equivalents were $12.3 million at quarter end, a decrease of $1.7 million from $14 million at the end of the preceding quarter and down from $16.8 million at year-end. Accounts receivable was $1.9 million, down from $3.9 million at the preceding quarter end. Inventories at quarter end were $9.2 million, down from $10 million at the preceding quarter end reflecting the excess and obsolete inventory reserve adjustment. Property and equipment was $975,000, compared to $1.1 million for the preceding quarter end. Accrued expenses were $2.1 million compared to $1.5 million at the preceding quarter end, and included the $607,000 in accrued restructuring charges. Customer deposits and deferred revenue were $1.5 million compared to $2.3 million at the preceding quarter end. We saw an increase in bookings in the third quarter and subsequent additional orders after the close to the quarter.
Bookings in the third quarter totaled $5.7 million and included a $2.4 million order from one of our lead FOX-P customers for our new FOX-NP systems over $2.1 million in bookings for WaferPaks, DiePaks and related services and orders from new customers for the new FOX-NP and CP systems. Subsequent to quarter end, we received $3.5 million in additional orders, which included a $2.1 million follow on order from one of our lead FOX-P customers for a FOX-XP system. Backlog at February 28 was $6.9 million compared to $4.3 million at the end of the preceding quarter and $12.6 million at the end of the third quarter of the previous year. With the additional order subsequent to quarter end, our effective backlog is over $10 million.
Now, turning to our outlook for the remainder of fiscal 2019, we expect to see a significant increase in bookings in the current fiscal fourth quarter with an increase in backlog heading into our fiscal 2020 that begins June 1st. We believe that our revenue will significantly increase sequentially and we expect to recognize improvements to our gross margin, which will enable us to return to profitability in our current fiscal fourth quarter. Our convertible note matures on April 10, 2019. Based upon the company’s current stock price, we do not anticipate the lender will convert the note and we expect to repay the $6.1 million note at full or in full at maturity using our existing cash. With the maturity of the note, we expect savings in interest expense of over $100,000 per quarter. The company continues to anticipate that the existing cash balance, together with income from operations and deposits and down payments against significant orders, will be adequate to meet our liquidity requirements. Excluding the impact of the note repayment, we expect cash to increase in our fourth quarter and into fiscal 2020 as a result of increased shipments, down payments and profits.
This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead.
Thank you. [Operator Instructions] We’ll go first to Christian Schwab from Craig-Hallum Capital. Your line is open.
Hi, this is Tyler on behalf of Christian. Thanks for taking the questions.
I was wondering if you guys had any update on your leading FOX-XP customer for mobile. I believe last quarter you said, you’re still optimistic what tracks with the company but didn’t see anything materialize in this fiscal year. So, I was just wondering with a quarter now passed, if you had any update on that customer?
Sure, let me talk a little bit about that. We have activities going on in basically three different programs right now, including follow-on consumables for systems that we had shipped in the past. So, right now, we’re continuing to be very excited about that customer. But in our near-term forecast, we’re actually not anticipating a significant amount from them. And having said that, we’re still very optimistic, so, we see some of their opportunities as more upside and certainly believe that we’ll continue to be doing business with them into next fiscal year.
Alright, great. So, then I guess, more broadly, as we look into fiscal ‘20, as we enter Q4 here, could you rank order your leading customers and your traditional ABTS customer, this leading mobile customer, the silicon photonics second customer, and any other customers and just kind of try to rank order them and what you’re most excited about as we look into next year?
You’re asking me to tell you which children I love the most, is that it? You know what, so obviously what we’ll be doing in our next quarter is giving guidance for our fiscal year ‘20. We’ve committed not to say much about it other than I will tell you we’re actually very optimistic and feeling very good about it, and this Q4 is going to set us up very nicely heading into that. But it’s very interesting, we – I did say it in the prepared remarks, we have over dozen – over – just over a dozen customers right now that we’re actively engaged in just on the FOX-P products. That does not include the historical installed base of the FOX-1 or FOX-15 products. So, it was actually interesting this morning, we were in a divide and conquer, we had multiple customer phone calls all this morning, and so we were all in different rooms trying to handle that, so, it’s very interesting.
The good thing about this is, we do – we actually have a fairly comfortable, call it notable forecast from a number of those. And so, I’ve always believed that our business would be relatively focused on a small handful of customers, that’s the traditional market that you see, but it’s looking more like we’ll have a lot more customers with some level of diversity than we were expecting and certainly earlier with the number of customers that we’re engaged in. So, we certainly are excited about and love our two lead FOX-XP customers. As I said, we are engaged in a few programs with one. The other one just another order again today, we are engaged with a number of other customers that have already placed orders and then a much larger number that we’re anticipating a positive outcome from. So, we’re trying to juggle all those things. Some of the changes were made with Vernon and the staff. I think it is and I won’t go into all of the details that we’re doing, are really setting us up to be way more efficient and being able to call on those customers and effectively be able to get them all successfully deployed in production. So, I just – it’s a lot more broad than it was before without an anticipated 40% customer. Okay?
Alright, that’s great. And then my last question maybe for Ken, just a little bit more on the model insights. So, these OpEx savings, I just want to help understand kind of what a baseline OpEx looks like, so, in Q3 here, excluding the restructuring costs, you did about $2.8 million operating expenses. Is it fair to assume that that’s the kind of run rate we should expect in Q4 of $2.8 million level and then the savings off of that to have a baseline or help me understand, I guess, what a normalized OpEx kind of looks like?
Okay, great. That’s a great question. So, I think we mentioned that the savings that we were discussing as a result of the reduction in force and the restructuring are going to impact starting at Q1 of ‘20. So, those really won’t – we won’t recognize any savings. Also, in Q4, also, one thing to note is in Q3 as a result of our reduced revenue levels, we took some actions internally for some cost savings, including shutdowns over the holidays, things of that nature. So, we were very favorable to our prior quarters in fact in Q3 actual OpEx at the $2.8 million you’re discussing. So, I would expect an increase of a couple of $100,000 in the operations spending in Q4 once we start getting those additional bookings and ramping up with revenues.
But then in Q1, the savings will come primarily from that number.
Correct. And then, yes, from an ongoing basis, what I would put in the model is about $3,850,000 per quarter in OpEx, including the operation spending piece. That’s about $1 million a quarter, so, the $2.8 million with $1 million [ph] from manufacturing operations.
Perfect. That’s very helpful. That’s all for me. Thanks, guys.
[Operator Instructions] We’ll go next to Mark Gomes from Pipeline Data. Your line is open.
Hey, gentlemen, congratulations on the progress. Looking at the new products, to what extent would you say that anticipation of those new products created delayed orders of your pre-existing products coming into this quarter? And to what extent, do we – are we seeing pent-up demand being unlocked here at present time?
Okay. The primary thing that we saw and sadly we were able to see it, maybe it’s good that we could anticipate it, but it became very obvious around November, December timeframe that customers who had planned to place orders and start taking shipments in our fiscal Q3 that ended in February didn’t come to fruition. We built up the inventory, et cetera, and so when we came out and talked about the end of the quarter, we knew that or when we were kind of wrapping up Q2, we were into Q3, we knew that we were kind of digging this hole for ourselves. So – but those really had more to do with their own customer ramps than it was the new products or the timing of our products and most of the new customers are enabled using the FOX-P product, meaning on our FOX-1 and our FOX-15, the previous generation machines, they had significantly less test capability and less power. And so, these new applications realistically nobody had the ability to do it including us with our previous generations. So, it wasn’t like they didn’t buy the old product because they’re waiting for the new one.
I’d say there’s very little of that. We did go up and clean up a little bit of inventory on some things that we now see for certain that customers almost entirely would only buy the new FOX-P products. There’s no reason to buy an old FOX-1, and maybe wouldn’t buy – a new customer wouldn’t start on a FOX-15, for example, the older products. So, some of that’s reflected in the write-downs and some of the inventory that we did as well, some of the older ABTS products. But I would say it wasn’t – it really wasn’t like that. It had way more to do with the initial customer ramps and their own evaluation of our products that are now breaking out.
Okay. Appreciate that color. Final question would be to what extent, was the development and release of these new products spurred by an internal feeling of what you would like to do with these products versus customer demands or customers coming back and saying, this is what we really need for us to move forward?
I think it’s – there’s a little of both. I mean, for example, we’ve talked about the wave of Photonics in the Datacom/Telecom space for a while. I think we are pleasantly enjoying the fact that it’s maybe bigger and larger than or faster than what we were anticipating. We’ve been testing devices that are used in the traditional Datacom/Telecom transceiver marketplace for I think, were going on 8, 9 years or so. And in fact, that early wafer-level burn-in system that was based on our previous generation FOX-15, has spawned at a minimum three or four customers. People that had more users at that account were recruited into other names and turned around and actually said, this is a product that you should go use. And so we’re getting a lot of word of mouth spreading going around that is catching on. For certain, those customers that have – we approached and came to us and gave us their roadmaps, there’s been some level of optimization. A good case in point, when we originally sold the FOX-XP to our lead customer for Silicon Photonics, they had anticipated a lower power per device, bought the entire system and about the same time we shipped it, they realized they were going to almost double the power per device. So, we ended up upgrading that entire – that system and their incremental systems have been purchased using a higher power what we call a high voltage power channel module. That high voltage power channel module in addition to our low voltage or universal channel and our high current channel modules allow us to mix and match configurations in the product to basically address all of the customers that we’re talking to right now. So, I think the product is stabilized out. We know what it is worth kind of, if you will, final revisions of all of the products and the manufacturing release, and now we’re just – we’re in execution mode in terms of sales and execution on DiePak’s and WaferPak engagements with customers and then deployment and ramps.
Great. Well, thanks, and I’m looking forward to further updates on your progress. Thanks again.
[Operator Instructions] And I show no further questions. So, at this time, I would like to turn the call back to management for any closing remarks.
Okay, alright. I know we had a number of folks that were on the call listening in and obviously online from our call list here. So, hopefully, we had a chance to address everyone’s questions. If not, feel free to get in touch with the IR folks or get in touch with us and we can do a follow-up if necessary. So, we appreciate everyone’s time. We’re very excited about where we are in the stage and look forward to a positive Q4, and we’ll give you folks an update on that at our next conference call and also give the fiscal year 2020 guidance at that time. Thank you very much.
And that concludes our call for today. Thank you for your participation. You may now disconnect.