Everspin Technologies, Inc. (MRAM) CEO Darin Billerbeck on Q4 2021 Results - Earnings Call Transcript

Everspin Technologies, Inc. (NASDAQ:MRAM) Q4 2021 Earnings Conference Call March 2, 2022 5:00 PM ET

Company Participants

Darin Billerbeck - Interim President and Chief Executive Officer

Anuj Aggarwal - Chief Financial Officer

Conference Call Participants

Rajvindra Gill - Needham & Company, LLC

Richard Shannon - Craig-Hallum Capital Group LLC

Orin Hirschman - AIGH Capital Management LLC

Operator

Good afternoon, and welcome to the conference call to discuss Everspin Technologies Fourth Quarter 2021 Financial Results. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session. As a reminder, this conference call is being recorded today, Wednesday, March 02, 2022.

Before we begin the call, I want to remind you that this conference call contains forward-looking statements regarding future events, including but not limited to, our expectations for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM Technology, successfully bringing to market and manufacturing products in Everspin's design pipeline and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We would encourage you to review our SEC filings, including our annual report on Form 10-K which will be filed with the SEC on March 03, 2022 and other SEC filings made from time to time in which we may discuss risk factors associated with investing in Everspin.

All forward-looking statements are made as of the date of this call and except as required by law, we undertake no obligation to update any forward-looking statements made on this call to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise. The financial results discussed today reflect our preliminary estimates are based on the information available as of the date hereof and are subject to further review by Everspin and its external auditors.

Our actual results may differ materially from these estimates as a result of the completion of our financial closing procedures, final adjustments and other developments arising between now and the time that our financial results for this period are finalized. Additionally, the Company's press release and statements made during this conference call will include discussion of certain measures and financial information in the GAAP and non-GAAP terms. Included in the Company's press release, our definitions and reconciliations of GAAP net income to adjusted EBITDA, which provide additional details. A copy of the press release is posted in the Investor Relations section of Everspin's website at www.everspin.com.

This conference call will be available for audio replay for at least five days in the Investor Relations section of Everspin's website at www.everspin.com.

And now, I'd like to turn the call over to Everspin's Executive Chairman and Interim CEO, Darin Billerbeck. Darin, please go ahead.

Darin Billerbeck

Thank you, operator, and thanks to everyone for joining us on the call today. Q4 results came in above the high-end of guidance as it mentioned in our press release. We were GAAP net income positive for the third quarter in a row. We also had positive GAAP net income for the year that ended December 31, 2021, which is the first in Everspin's history.

Our revenue for Q4 was 23% higher than Q3 and 82% higher than Q4 a year ago. Being the GAAP net income positive on a consistent basis is obviously a focus for the company. We believe this demonstrates that being laser focused on improving product yields, controlling OpEx spending, growing our topline while keeping gross margins in a healthy range will drive profitability.

A few records we achieved in Q4 2021. Record annual total revenue, record annual product revenue, record Q4 product revenue, record annual design wins again in 2021 after setting a record in 2020, a record of more than 1,600 volume production customers, record low distributor inventory showing strength of our sell-through and impact of the supply chain, although I'm not really sure I'm proud of that record, record 2022 product backlog is at an all-time high.

Despite being impacted by supply constraints that left over $2 million of customer demand unfulfilled, we had the largest Toggle quarter since 2018. Distributor inventory is still very lean and well below our target as we continue to fight for every wafer and every tester we can get. It's doubtful we can get into a healthy inventory range until 2023, assuming all goes well with respect to allocations.

STT revenue was flattish as our largest customer was also saddled with supply constraints. The good news is that Everspin was not the constraint culprit. However, based on other suppliers, we do expect STT revenue continue to be flat for the next couple of quarters.

On the R&D front, we are in the process of checking out our next-generation STT product, which we expect samples to be out later in March. This is right on track for what we expected. Knock on wood, our checkout so far shows no major issues. We believe this new product will be revolutionary in its ability to serve both the SRAM replacement market, along with mid-density rugged NOR applications, where no other memory can play.

Finally, with respect to our deliberate strategy of monetizing our IP, we recognized $3.95 million in revenue in Q4 related to IP transactions. We are pleased to note that our cash and cash equivalents are over $21 million as of the end of the year.

I will now turn it over to our CFO, Anuj Aggarwal, who will take you through our fourth quarter financials and first quarter 2022 guidance. Anuj?

Anuj Aggarwal

Thank you, Darin, and good afternoon, everyone. We are excited to report Everspin's best ever quarterly results, delivering a strong finish to a record year. Despite supply constraints, I am happy to announce that Everspin reached profitability for the first time at year end. We delivered solid quarterly results with 23% revenue growth over last quarter, beating top-end of guidance, positive net income of $3.7 million and positive cash flow from operations of $6.4 million for the fourth quarter.

Revenue for the fourth quarter of 2021 came in at $18.2 million compared to $14.8 million last quarter and $10 million in the fourth quarter of 2020. MRAM product sales in the fourth quarter, which include both Toggle and STT-MRAM revenue was $12.6 million versus $12 million in the prior quarter and $9.7 million in Q4 2020.

In Q3 2021, the company entered into an IP monetization deal worth $5.25 million. $3.95 million in revenue was recognized in Q4. Licensing, royalties, patents and other revenue in the quarter was $5.6 million compared to $2.8 million in the previous quarter and $0.3 million in the prior year period. The increase in revenue is due to strong Toggle sales, RAD-Hard revenue recognition and the IP monetization deal.

Shipments to suppliers for our largest end customer who we serve with our high-density STT product for data center applications, represented 23.4% of revenue in the quarter versus 28.5% of revenue in Q3 and 39.9% in the year ago quarter.

Turning to gross margin. GAAP gross margin for the fourth quarter of 2021 was 62.8% versus 57.1% in the prior quarter and 52% in Q4 2020. The higher gross margin compared to the prior quarter is driven by RAD-Hard revenue recognition and the IP monetization deal.

GAAP operating expenses for the fourth quarter of 2021 were $7.7 million versus $7.4 million in the prior quarter and $6.4 million in the same quarter one-year ago. The increase was primarily for 28-nanometer product development, sales and marketing, variable compensation and administrative costs.

GAAP operating expenses for the fourth quarter of 2021 included 753,000 of stock-based compensation compared to $1.03 million last quarter and $1.3 million in the year ago quarter. We expect R&D expense to grow in 2022, as we prepare for the launch of our 28-nanometer STT-MRAM product targeted at industrial and other broad-based applications.

We are pleased to report fourth quarter positive net income of $3.7 million or $0.19 per share based on 19.4 million basic weighted average shares outstanding. This compares to a GAAP net income of $880,000 or $0.04 per basic share in the third quarter of 2021 and a GAAP net loss of $1.6 million or $0.10 per basic share in the fourth quarter of 2020. Basic EPS of $0.19 was better than our guidance, reflecting our strategic operational discipline and strong gross margins in the face of tightening supplies and high margins from IP deals.

Turning to the balance sheet. Cash and cash equivalents increased to $21.4 million at the end of the fourth quarter compared to $14.6 million at the end of the prior quarter and $14.6 million in Q4 2020. Cash flow from operations was positive at $6.4 million for the current quarter compared to $1.9 million in the prior quarter and $0.6 million positive for Q4 of last year.

Turning to our first quarter 2022 guidance. Demand for our Toggle products remained strong. We expect industries supply constraints to limit supply and push some unfulfilled customer demand to Q2. We expect Q1 revenue to be between $13.4 million to $14.2 million. We expect a GAAP income per basic share of between negative $0.03 and breakeven, primarily driven by expenses related to next-generation 28-nanometer STT-MRAM product and price increases from our suppliers.

I'll now turn it back over to Darin for some brief additional commentary before we open it up for questions.

Darin Billerbeck

Thanks, Anuj. In summary, we continue to build towards a future of profitable, sustainable growth. Positive net income and 2021 GAAP profitability are testaments to the hard work and extra effort every Everspin team member put into control our costs, improve our yields and ship everything we could in a very constrained semiconductor supply network.

I am excited not only by what we accomplished in Q4, but to be handing the reins of Everspin's CEO leadership off to Sanjeev Aggarwal to both continue the momentum from 2021, but also pave the way for greater things for Everspin in the future. I'm very comfortable with this move, along with partnering with Sanjeev on our strategic long-range plan.

Operator, you may now open the line for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Raj Gill with Needham & Company. You may proceed with your question.

Rajvindra Gill

Yes. Thank you for taking the questions, and congrats to Sanjeev, and also congrats on a strong year. Just a question on the supply situation. You mentioned in your prepared remarks that the supply constraints are kind of pushing some unmet demand into the second quarter. I think you had mentioned there was at least $2 million of unmet demand because of the supply constraint environment. I'm wondering how kind of confident you are in terms of that demand being realized in the second quarter, given the current supply-constrained environment that you talked about and kind of given your commentary that it appears that you'll have to wait until 2023 to get a better supply situation. So just wanted to talk a little bit about – little bit long-term in terms of how you're getting supplied this year going into next year and that kind of unmet demand?

Darin Billerbeck

Yes. So our backlog for 2022 is as strong as we've ever seen. And a lot of that – I mean, some of that is driven by the fact that we've pushed our lead times out so far because we just can't get the capacity that we need. And again, if you remember when it started to get constrained, we already had a lot of wafers in the pipeline. And then as it continued to be constrained, that impacts us because of the lead times are so long. So we were able to kind of fight our way through last year. And then here we come in Q1 and Q2 and stuff starting to tighten down. And again, we've gotten some upside in the second half of last year. So we've been able to just keep our head above water on all these things. But it's starting to get to the point we're leaning inventory. We're doing all these other things just to be able to ship.

So we're comfortable in the position that we have. But even if somebody, let's say, turned on in Q3 of this year, said, okay, we got all this additional supply, it still takes us the lead time for us to get that through our pipeline on the order of almost six months, sometimes even longer. So you wouldn't really see those impacts until 2023, and that's what I was alluding to, is it's just a long slog for us to get out of this thing. And we're doing it a little bit at the time, like we can pull some material forward if we get new material, expedite step-through testers and also through the back end for packaging, but it's tough. And we thought it would ease up a little bit by now, but it really hasn't. And we haven't seen a lot of impact from any of the current crisis in the last six days, but I'm sure that, that could impact things also.

Rajvindra Gill

I see. In terms of the record backlog that you're seeing is particularly around Toggle. I'm wondering if you can kind of distinguish between kind of unit growth versus kind of price increases when you're looking at your dollar size of your backlog. Are you kind of raising pricing, which is contributing to kind of a higher dollar volume backlog? Or is it really in part driven by just unit growth with respect to adoption of Toggle?

Darin Billerbeck

Yes. I mean, our price increases were just to cover some of the price increases that we got. We by no means tried to raise them. We focus on our customers' longevity, not just the tactical area of it. So our backlog is actually a combination of, I think, people freaking out that there might not be capacity for them. And so a lot of people are ordering earlier than they normally would, and we're seeing that. But we went back and looked at every single customer that we have and said, Is anybody double booking or unusually booking? And we can't find any incidences of that. We did have one. We alluded to that last quarter, where there was one company that came in, was trying to order double what they had. And we're like, no, no, no. That's not going to happen unless you can show us their design wins on the other end because we didn't want to take that capacity away from other customers. So we've been managing that for about 12 months now. But it still is comfortable that, that demand is real. And I'm sure at some point in time, for all semiconductors, some of that demand maybe perishable. But for right now in the foreseeable future, we don't see that.

Rajvindra Gill

And in terms of your kind of IT monetization strategy of this year – I'm sorry, last year was $11 million plus, up from about $2 million in 2020, so a pretty big increase. How are you thinking about the IP monetization this year? And how do we think about kind of the RAD-Hard recognition of revenue? I'm just trying to get a sense of what the mix of licensing and royalty will be this year. Do you think it'll be strong in 2021?

Darin Billerbeck

Yes. So the harder one to call is when you're doing specific licensing that's not related to a product-specific request. That's always difficult to be able to say. Yes, we're going to have two or three of those through the year. So those are a little bit more random for us, but we're always in the process. So you'll see, over time, all of a sudden will come up, we'll say, okay, we've got some licensing agreement with XYZ. We don't always mention their name.

The other one that I think is more important to us in this IP deal is really ongoing discussions with some things like government agencies and things that's happening is the United States is bringing more manufacturing onshore. And so what we're finding is a lot of opportunity there. And that's specifically very similar to those RAD-Hard deals that we talked about, where there's a license agreement upfront and then you have these royalty attachments to that over time. And we don't, by any means, give up any of our IP during those.

But what we end up doing is being able to help other people design their specific products, and there's a toll on that. Obviously, the toll at the beginning is really the licensing agreement, and there's a lot of NRE where we help them through that process. And that's been a very successful model to us. And it's probably – for us, that's something that we think is quite a bit more reoccurring. The other one is more – it's more random, but it can be bigger in nature.

Rajvindra Gill

And just for my last question. Anuj, the gross margins have improved materially over last year in 2021. A lot of it obviously was there because of the IP monetization, but you are getting better product yields. As we kind of – and particularly Q4 was very high gross margin. So as you kind of look into 2022, have you guys kind of centered around a certain type of gross margin range that you want to operate at?

Anuj Aggarwal

Yes, Rajiv, so – and I know we don't really guide on the full-year 2022. But for gross margin, we're still very comfortable believing that it will be within the low to mid-50s long-term. We saw some price increases from suppliers. Like Darin mentioned, we took some actions to increase pricing to offset some of that. So we feel comfortable that it will be in the low to mid-50s. We were fortunate to see some Toggle yield improvements and mix and things like that supporting the gross margin. So that gave us a little bit of uplift. But you're right, a lot of the gross margin uplift, again, was the RAD-Hard deal, the IP monetization.

Rajvindra Gill

Great. If I can just squeeze one more. In terms of the OpEx, based on the guidance, and obviously, you're not providing guidance for gross margins, but it implies that the OpEx is going to move up almost $1 million or so. So are we going to see kind of an uptick in OpEx in Q1 of 28-nanometer, then it kind of normalizes? Or is that going to be the run rate off that high base going forward throughout 2022? Thank you, Anuj.

Anuj Aggarwal

Yes. So we're trying to be obviously pretty frugal and careful, right, on how we're spending money on OpEx. So we're trying to limit that and make decisions based on if it makes sense, and we're supporting, for example, the 28-nanometer investment. And we need to do it, we're doing those things. But I would just look at it in terms of – we're trying to keep OpEx flat to have it increase less than 10%. So we're trying to be mindful of the investment, be very careful. This quarter might be a little bit high in terms of OpEx, but I wouldn't say it would sustain throughout…

Darin Billerbeck

Yes, let me add on to that a little bit. So whenever you have a new product, then you've got a lot of wafers running through. You're trying to debug that product. There's a lot of R&D spending and different spending that gets attached to that. And because we are actually so healthy with that product right now, again knock on wood, right, we're healthy on that. That accelerates some of that spending.

But then once you get to HBM, all that gets converted. So once we pass our high-volume manufacturing requirements as far as saying, hey, this is production-ready. Then a lot of those NRE and other things that we write-off as R&D and OpEx just go right into the product cost. And so you're going to see that go up. Our hope is that we can shorten that process quite a bit. But as Anuj alluded to, it's going to go up a little bit as we kind of walk through it, and we expect that to kind of come down to a standard rate. Very similar to how we ran at the beginning of last year before we taped out the product.

Rajvindra Gill

Thank you so much.

Operator

Thank you. Our next question comes from Richard Shannon with Craig-Hallum. You may proceed with your questions.

Richard Shannon

Okay, great. Guys, thanks for taking my questions. Let me follow-up on the topic of supply chain here. I think what I heard from you, Darin, on that one is that you talked about an impact of about $2 million is going to be pushed into the second quarter. Based on the supply chain not normalizing until next year, I'm assuming that we're probably going to hear a message next quarter about some push out of demand here just based on supply chain. Is that your expectation? Or do you think it's only one quarter phenomenon and factor?

Darin Billerbeck

Without giving out guidance, I would say that could be likely, right. I mean we're going to do everything we can to pull everything into every quarter that we can do. Because, again, we're just trying to grow and I know this is going to get freed up eventually where you're not as tight. And we do have multiple suppliers, and you're well aware of this, Richard, is that we have multiple front-end suppliers that we can push and pull from. The biggest challenge is as we go through that, is getting all these wafers through the back end. And I think that's kind of the hardship we're seeing today is really just can we get all this stuff trammed through, especially when you're in a market where everybody is trying to gauge on prices in a snap.

So sometimes – I'm more worried about the margins during the recovery, because I think to get more wafers, you're going to probably have to pay more in a constrained environment. We haven't changed our model, by the way. Our gross margin model is identically the same as what we've mentioned on the product side. The IP does move it up as we talked about and Anuj alluded to. Bottom line is, we think we're comfortable with the model that we have out in front of us. But it's hard to predict these constraints because on one side, you get push out, the other side you get upsides. And it can happen in a 24-hour period.

Richard Shannon

That's got to be fun to manage through. Thanks for that detail, Darin. Another quick follow-up. You mentioned lead times have gone up a lot. Can you quantify that? And what was kind of normal, whatever a year, year and a half ago, whatever that was, just to get some sense of quantity and scale here?

Darin Billerbeck

Are you talking about ours or our suppliers?

Richard Shannon

Yours. What you're quoting to your customers?

Darin Billerbeck

Right now, we're quoting out to Q3, Q3 and Q4 of 2022.

Richard Shannon

Like 25 weeks or more?

Darin Billerbeck

Yes. And in some cases, we already have and this is outrageous. In some cases, we already have demand for 2023. So it's an artifact, yes, the people just – they're basically putting in their demand and they're saying, hey, just what I see for my long-term demand, don't forget about me. Here's my backlog. And they're just putting it into the system. And it's amazing, but it's an artifact of what's going on in the worldwide constraint.

I don't know if you remember, before we got into this constraint, we would say, oh, yes, we'd enter a back – we'd enter the quarter with a percentage of backlog that was fairly consistent. Would book throughout the quarter, you get turns and different things booked throughout the quarter. And then as we got in the constraints, the whole quarter was booked before we started, and then the next quarter was partially booked. Now you're starting to see a couple of quarters being booked and stuff booked all the way to 2023.

Richard Shannon

Okay, perfect. Thanks for that detail, Darin. Let's talk about the new STT products. You're going to start sampling, I think, later this month. What kind of timeframe should we expect for milestones for sampling being done, engagements with customers and then kind of revenues eventually? I assume this is sometime in 2023, but I want to get a little bit more detail on what you're seeing right now.

Darin Billerbeck

Yes. So we expect to actually sample this month. That's our goal, right. And there's nothing that we can see at least for right now, not be able to – at least get our alpha samples out for our customers. And then after that, it's a fact of just having the reference design, the design kits themselves, right, the development kits. And then we should be off to the races. And as you know, it's going to take – some of these design wins take time, other are conversions from some of our older Toggle products into this specific product. But like you said, we have never really counted on much revenue in 2022. However, 2023, our expectations that we'll grow that product modestly through time. It is a killer product, and it's in the correct place as far as SRAM densities. If you're not aware, this is in our 64-megabit and 128, drops down to 32, which really extends our product – our Toggle product line. So think of it as our low-density STT product. So it's not the big one or two gig product. This is our 64 megabits. So it's targeted right at the meat of the replacement market for data logging SRAM.

Richard Shannon

Okay. Does this product need any, like, special interfaces for customers or any other go-to-market dynamics like reference designs, boards, whatever that MRAM typically hasn't done in the past? Or is this – do you see this mostly as a seamless transition, customer attention should be obvious, just a matter how fast you can convert them?

Darin Billerbeck

Yes. We expect it to be drop in compatible for SRAM with some firmware. Obviously, you'd have some firmware updates and the same thing in the NOR. So both for SRAM and NOR, we expect to have to do firmware updates, which is pretty standard, but it's dropping capable with all the standard interfaces.

Richard Shannon

Okay. Perfect. Last question for me, just on Toggle here. Obviously, you don't give us exact numbers here, but as I tried to figure it out what I think was going on here in the past year plus, you grew it probably somewhere in the mid-teens area best guess with an acceleration in the back half of the year. I guess my question is more in an unconstrained environment. But if you want to talk about a constrained one, that's helpful, too, Darin. But how would you want people to think about the growth opportunities here? You've had some really nice design wins. We don't know when they hit. We don't know how big the designs are. But what's your expectation for growth going forward on Toggle for the next year or two?

Darin Billerbeck

So for 2021, quarter-on-quarter, we were high single digits between Q3 and Q4, right. We were high single digits. Year-on-year, we were double-digit growth, I think, as you alluded to. And if we look at next year without giving out guidance, I don't know – it's going to be dependent on our supply more than anything, but I don't know that I wouldn't say that it should be about the same thing. We should be able to continue to grow that product based on the design win. We talked about all the design wins that we had, plus all the new customers that we have.

So the good news is we're growing. It's kind of like the sea is rising versus one or two things going up. So it's kind of a nice place to be. So the tide is rising comfortably. However, the biggest issue we're going to have is going to be supply.

Richard Shannon

Okay. Fair enough. That is all for me, guys. Thank you.

Darin Billerbeck

All right. Thanks, Richard.

Operator

Thank you. [Operator Instructions] Our next question comes from Orin Hirschman with AIGH Partners. You may proceed with your questions.

Orin Hirschman

Hi. I always prefer to Richard ahead of me. So I'm okay with that. In terms of the new products, just to follow-up on what Richard said, I want you to just go through again drop-in replacement. Does that shorten the design cycle from what it normally would be? And are there customers that are actually already be able to do some preparation in advance of sampling or not in real life?

Darin Billerbeck

No, no. Real life is a simple deal where you take an SRAM and if you're dropping capable, you can drop it into somebody else's reference design. And then in some cases, you might have some identifications and some microcontrol or firmware that you'd actually have to update. And that's standard practice. In fact, multiple – if you have high-volume customers, they might have three or four different suppliers in there with different modules that they run. For us, it's about – to get those design wins, it still takes time because they have to verify that the design actually works with our product. So we don't think it's going to be a 30-day deal where they swap over for sure. But that's all baked into our plan of growth on 2023. So we expect to get a lot of those, let's call it, the heavy lifting out of the way with our key customers this year, and then they can begin to transition that over in the 2023 period.

Orin Hirschman

And that includes both replacement for Toggle, but doesn't that also include a lot of new designs as well where SRAM replacement?

Darin Billerbeck

Correct. If we're just replacing, for instance, the 64-megabit SRAM, it's a drop-in product that you just changed the firmware on. And that was the intention. We struggled with our first STT product because it didn't have standard interfaces on it and people had to use either an FPGA or an ASIC, right? So this is the departure from that. And we can also drop it into specific NOR areas, where they need high reliable NOR products that they need extended cycling and extended data retention.

Orin Hirschman

So my follow-up question on this was, is the NOR – is it a drop-in replacement for NOR as well?

Darin Billerbeck

Yes. It has that interface. They all have like an SPI interface, which is the standard interface on the memory bus. And so when you look at that, it still is a change for firmware and different things, but it's not like as long as you're in the same package with the same pen out with the same interfaces, you can drop these things in.

And the intention is like obviously NOR in that memory. If you look at NOR in that density, it's going to be a commodity if you just go after standard NOR. But if you're going after the niche memory market, which is like high reliable, high-speed, let's say you needed faster reads, faster rights and you needed a much higher retention. And you still wanted to be able to run those products. A lot of people are seeing a need for that, especially in these high-density automotive markets that you're starting to see. People want to not have to have redundant memory. They just like to have one that's robust.

Orin Hirschman

So a follow-up on that as well and then one last question after that, follow-up on that is in terms of what you need in the family to get the densities where this becomes outstanding kind of stand out in terms of having that a greater density in the NOR replacement? So are you going to have those densities? When do those densities sample? Is that something for this year?

Darin Billerbeck

So the product family that we have today can run somewhere between about a 32-meg and a 128 comfortably. We could scale it to a 256 if we want it. If we are talking about super high density NOR, that would be an STT product that would be similar in configuration to what we're selling today, except even higher densities. And those products, if you look at nobody in the world can do it today. So nobody in the world can produce a 1 gig NOR memory that is cost effective, right. They may stack a bunch of things. They may take 512 and may do a bunch of multilevel sales stuff. But they're not going to be doing that in an affordable fashion. So one can articulate that or look at this in the sense of on 22-nanometer for our devices, it's a pretty fair fight. If you go below 22-nanometer, MRAM would win on the high-density portion, assuming there's a big enough market on high density NOR that isn't absorbed by store and download using NAND and MRAM.

So we know all the architectures. If you don't remember who I am, I ran Intel's Flash division for a decade. So I have a pretty good understanding of what Intel did, what AMD did and what these markets look like. So it's not unconceivable that you couldn't get there, but that's not we're banking the strategy short-term on. We know we can get there, but that's going to take us time to be able to get to that point in time.

Orin Hirschman

Okay. Last question is just in terms of the large license deal and licensing in general that's slated for Q1. Any approximation of how much is amortized into Q1 of this year?

Darin Billerbeck

Could you repeat the question? I don't think I caught that.

Orin Hirschman

Yes. I'm sorry, in terms of the large licensing deal from this quarter as well as just normal what's teed up on the IP side, any guesstimate as to IP revenue in Q1 or IP revenue that's clearly in Q1 just based on amortization or whatever you could share with us?

Darin Billerbeck

Yes, we try not to forecast or give out guidance on our mix of IP, but we've been very consistent as we'd like our IP to be somewhere around 10% of our total revenue. That's always our goal. There's going to be quarters where we could be less than quarters where we can be more. But we try not to forecast that. We just tell you that's our overall goal because that gives us healthy margin also gives us healthy cash from operations.

Orin Hirschman

Okay. Another way of phrasing it is the robust product demand for Q1 and just capacity constraints beyond that. Thank you very much.

Darin Billerbeck

You got it.

Operator

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Anuj Aggarwal for any further remarks.

Anuj Aggarwal

Thank you, operator. And since there's no more further questions, we can now disconnect the call. Thank you.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.