Q3 2026 Rambus Earnings Conference Call - RAMBUS INC

Welcome to the RAMBUS Third Quarter Fiscal Year 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press star 1 on your touchtone phone at any time. If anyone should require assistance during the conference, please press star 0 at any time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sumit Gangneja, Chief Financial Officer. You may begin your conference. Thank you, Operator, and welcome to Rambus' third quarter 2026 results conference call. I'm Sumit Gagneja, chief financial officer at Rambas. On the call with me today is Luke Serafin, our CEO. The press release for the results that we will be discussing today has been filed with the SEC on Form 8K. We are webcasting this call along with the slides that we'll reference during portions of today's call. A replay of this call will be available on our website beginning today at 5 p.m. Pacific Time. Our discussion today will contain forward-looking statements, including our expectations for for projected financial results and prospects, market growth, demand for our solutions, and the potential effects of geopolitical and macroeconomic conditions. These statements are subject to risk and uncertainties that may be discussed during this call and are more fully described in our documents we filed with SEC, including our 8-Ks, 10-Qs, and 10-K. forward-looking statements may differ materially from our actual results and we are under no obligation to update these statements. In our press release and on the call today, we present both GAAP and non-GAAP financial measures to provide greater clarity regarding our financial performance. A reconciliation of these non-GAP financials to the most rectally comparable GAAP measures has been included in our press release, in our slide presentation, and on our website at rambus.com on the investor relations page under financial releases. The order of the call today will be as follows. Luke will begin with an overview of the business, followed by my review of the financial results, and then we'll open the call to Q&A. I will now turn the call over to Luke to provide an overview of the quarter. Luke. Thank you, Sumit. Good afternoon, everyone, and thank you for joining us. In Q3, we delivered a truly exceptional quarter. Revenue and non-GAAP earnings both reached new record highs and exceeded the top end of our guidance ranges. Strong customer demand fueled record product revenue and cash from operations, and we expect an even stronger product performance in Q4. We introduce new chip and silicon IP products that extend our leadership in data center and AI infrastructure. In addition, as complexity and pace accelerate in semiconductor development for AI, we are also investing in the tools and infrastructure that will keep us on the leading edge of technology. As such, we engage with a fellow pioneer in the ecosystem and announced an exciting new partnership that propels us into the age of AI agent-driven chip and IP design. As we continue to invest in our future, we are also pleased to have completed a $100 million accelerated share repurchase. This demonstrates the strength of our business model and our ability to return value to our stockholders while advancing our product roadmap to drive long-term growth. Taken together, the results and progress we delivered this quarter reflect the strength and long-term resilience of a strategy we have pursued over many years. Investing in technology leadership, anticipating the key trends transforming the data center, and positioning the company to capture the opportunities those trends create. Our strategy is producing strong results today, while at the same time laying the foundation for future growth. As we outlined over previous quarters, AI continues to create strong tailwinds for Rambus across our businesses. As frontier AI training continues to advance and inference scales across a growing range of applications, customers require increasingly sophisticated memory and infrastructure architectures to move, manage, and secure growing volumes of data. Adjantic AI is accelerating this trend as deployments evolve toward more distributed and heterogeneous architectures that require greater coordination across systems. At the same time, orchestration of always-on workloads puts greater demands on the CPU, lifting CPU-to-GPU ratios, and driving requirements for more main memory bandwidth and capacity across the data center. The latest agentic implementations amplify this need even further by assigning dedicated compute and memory resources to individual users or agents. All this creates accelerating demand for RAMBUS products and IP throughout the memory subsystem and across the broader infrastructure stack while we continue to invest in the fundamental R&D and product roadmap required to address the ever-growing demand of memory management efficiency in the long run. Now, let me turn to the quarterly results, starting with products. We delivered a new all-time high in quarterly product revenue, reaching approximately $114 million, up 15% sequentially and 22% year-over-year. Our leadership in DDR5 RCDs and growing adoption of new generation products fueled our record results. We are seeing strong demand across multiple generations of RCDS, supporting our outlook for another record quarter of product revenue in Q4, which we expect to grow more than 30% year over year. Looking ahead, we have a strong pipeline of products aligned with upcoming platform ramps, positioning us well for next generation of server platforms. As part of that pipeline, we are pleased to share that our 6th generation RCD, announced early in Q3, which supports DDR5-9600, is now sampling broadly with customers and is being very well received. We continue to execute successfully on our roadmap, recently expanding our product portfolio with an industry-leading PIMIC for the upcoming LPDDR6 SOCAM2. Earlier this year, we introduced our first SOCам2 chipset that supports LPDD5X. This new PMIC solution extends our server memory product roadmap to LPDDR6 and reinforces our leadership in advanced server memory power management. It was developed in close collaboration with customers and ecosystem partners to enhance memory subsystem power efficiency and help scale tokens per watt for AI workloads. We identified early on that power management would be critical to the success of AI deployments, and have been investing in this area for many years. We are proud of our progress and continued leadership in this space. We have consistently said that as memory speeds increase and server architectures become more sophisticated and heterogeneous, the memory subsystem will require additional intelligence, power management, and control functionality. Our roadmap is designed to address this evolution across both DDR and LPDDR-based memory with timing management, power management and security management, creating opportunities for RAMBUS to participate in increasing module chip content over time. In addition, DDR-based server platforms are expanding from eight memory channels to 12 to 16 channels, increasing the maximum available memory bandwidth and capacity. This raises the number of modules supported in the server and amplifies demand as platforms progress. Today, Rambus offers complete chipsets across all major industry standard DDR5 and LPDDR server memory module architectures. This broad portfolio positions as well for future server platforms and allows customers to leverage Rambus solutions across a growing range of memory architectures and deployment models. Looking ahead, we believe we are exceptionally well positioned for future server generations and for the continued expansion of memory intensive AI infrastructure. Turning now to Silicon IP, we delivered a very strong quarter with key design wins across our Silicon IP portfolio. The strength of those wins, combined with expanding strategic engagement across the industry, including custom silicon makers and hyperscalers, reinforces our confidence in the long-term growth of opportunity for the silicon IP business and for RAMBUS. One of the defining characteristics of today's market is the rapid growth of custom silicon. The expansion of AI is fueling a new wave of custom silicone development. Hyperscalers, AI infrastructure providers, and emerging semiconductor companies are designing increasingly differentiated architectures and tailored silicon optimized for their own environments. These systems depend on advanced memory technologies, high-speed interconnects, and trusted security, creating significant opportunities for Rambo's silicon IP. During the quarter, we drove increasing ecosystem engagement and new Tier 1 design wins for next-generation HBM, supported by our deep architectural engagements ahead of standards being finalized. We continue to see increasing interest in PCIe controller and switch IP for scale-up and scale-out connectivity solutions, as customers seek higher levels of performance and efficiency across rapidly expanding AI infrastructure. The importance of bleeding-edge IP continues to increase as customers pursue differentiated performance, power efficiency, and time-to-market advantages. As a result, we are engaging earlier in the architectural planning cycle with both our customers as well as our customers' customers and participating in a broader set of strategic programs. Moving edge memory and connectivity are fundamental to performance, and as AI infrastructure scales and becomes more heterogeneous, hardware-based security foundation is becoming fundamental. Adjantic AI relies on distributed computing architectures that execute workloads across multiple systems, which increases the available attack surface for adversaries, a growing concern in the current environment. As a pioneer and long-time leader in hardware-based security, Rambus IP solutions addressed that risk by providing a trusted foundation for the entire system and enhancing protection for valuable data and infrastructure. Building on our industry-leading security offerings, we recently added a new route of trust solution designed specifically for AI and data center deployments that supports the Calyptra specification. Calypstra was developed by key leading technology companies to establish a common hardware security foundation for data center classes sources and reflects the growing recognition that hardware-based security is essential for next generation infrastructure. Looking across both chips and silicon IP, we will continue to drive solutions that address the long-term foundation memory performance, high-speed connectivity, and robust security demands of AI infrastructure. At the same time, we are harnessing AI to advance the underlying tools and development infrastructure that enable us to move faster, extend our leadership, and scale the business more effectively. As I mentioned at the beginning of the call, we recently announced a strategic investment and collaboration with ChipAgents, a fellow industry pioneer and leader in Atlantic AI design platforms. We see great opportunities to leverage the chip agent's AI-native design flows to accelerate our roadmap by speeding the pace of our chip and IP development, improving design quality, and enhancing and generating productivity across our organization. We believe this collaboration further strengthens our competitive position, both for products and for IP, and reinforces Ranbus leadership role in next generation of AI data center infrastructure. In summary, the company delivered an exceptional third quarter and we expect an even stronger Q4 as we continue to capitalize on the growing demand from AI. We achieved record revenue and earnings while expanding our chip and IP offerings and at the same time we are investing in our development infrastructure to address the growing opportunities ahead. These results and decisions reflect the strength of our strategy and the continued alignment between Rambus technology and the most important trends shaping AI and data center infrastructure. We are executing well, and more importantly, we are continuing to invest for the future and build on a strong foundation of technology leadership and customer partnerships. We are confident in our trajectory, our roadmap, and our ability to drive continued profitable growth in 2027 and beyond. As always, I want to thank our customers, partners, and employees for their continued trust and support. And with that, I'll turn the call over to Sumit. Sumit? Thank you, Luke, and good afternoon, everyone. we delivered an outstanding third quarter achieving record revenue and earnings and record cash flow from operations these results reflect the strength of our business model growing demand for our products and technologies and discipline execution across the company consistent with our balanced capital allocation strategy we completed a $100 million accelerated share repurchase program during the quarter. The transaction demonstrates our confidence in the business and our commitment to returning capital to shareholders while preserving the flexibility to invest in the growth. Looking ahead, we believe Ramos is well positioned to capitalize on the secular growth in AI infrastructure data centers, and advanced computing through the strength of our product and technology portfolio. With that, let me review our third quarter financial results. Third quarter revenue was $218 million driven by strong product and contract revenue. This represents growth of 22% year-over-year and 5% sequentially. Product revenue was $114 million, which is up 22% year-ever-year, and up 15% sequential. Royalty's revenue was 77 million. Contract and other revenue was 27 million, up 35% year-over-year, and 13% sequentially. Contract and other revenue consists primarily of Silicon IP. As a reminder, only a portion of our Silicon IP revenue is reflected in contracts and other revenues, and the remaining portion is reported in royalties revenue. Total non-GAAP operating costs, including cost of goods sold, for the quarter were $116 million. Operating expenses were $70 million, down sequentially due to slightly lower R&D and SG&A expenses. Entrust and other income for the quarter was $7 million. Using non-GAAP tax rate at 16%, non-GAP net income for this quarter was 91.7 million, resulting in Q3 non-GAAP earning per share of $0.84, which is up 35% year-over-year and up 10% sequentially. Now let me turn to the balance sheet details. We ended the third quarter with cash, cash equivalents, and marketable securities of $777 million, down $48 million from Q2. Record cash flow from operations of 102 million were offset by 135 million dollars of share repurchases, including the 100 million accelerated share repurchase program. Capital allocation remains a key priority for us. We intend to continue investing in the business while returning 40 to 50 percent of free cash flows to shareholders over time, supported by a strong balance sheet and continued cash generation. Our capital allocation approach reflects our focus on driving shareholder value while investing in our growth and pursue long-term opportunities ahead. We also leverage the strength of our balance sheet to increase inventory by $12 million during the quarter, positioning us to support future product ramps and provide customers with greater supply assurance now let me turn to our non-gap outlook for the fourth quarter as a reminder the forward-looking guidance reflects our best estimates at this time and our actual results go different materially from what i'm about to review we expect fourth quarter revenue to be between 227 million and 233 million dollars Product revenue is expected to be between 127 million and 133 million. At the midpoint of the guidance, it is an increase of 34% year-over-year and increase of 14% sequentially. Royalties revenue is expect to be 68 million and 74 million and contract and other revenues expected to between 26 million and 32 million. We expect Q4 non-GAAP total operating costs, which include cost of sales, to be between $124 million and $120 million. We expect to Q4 capital expenditures to be approximately $8 million. Non-GAAPP operating profit for the fourth quarter is expected to be, between a profit of $103 million and 113 million. We expect fourth quarter interest and other income to be approximately $6.5 million. Assuming a non-GAAP tax rate of 16% and 109 million diluted shares outstanding, we expect fourth quarter non-GAP earning per share to be in the range from $0.84 to $0,92. At the midpoint of the guidance, this represents growth of 30% year-over-year and 5% sequentially. overall we are very pleased with our third quarter performance our record revenue earnings and cash flow from operations demonstrate the breadth of our product and technology portfolio the diversity of our revenue streams and the disciplined execution of our teams the midpoint of our fourth quarter guidance implies that 2026 revenue will grow approximately 18 percent over 2025 2025, including product revenue growth of approximately 24%. With our continued focus on driving growth and operating efficiency, we expect non-GAAP earning per share to grow approximately 24% over 2025. We remain focused on executing a strategy and capturing the opportunities created by AI infrastructure, data center, and advanced computing markets. We are committed to translating these opportunities into sustainable growth, strong cash generation, and long-term shareholder value. With that, I'll turn the call back to the operator for Q&A. Operator, could we have our first question, please? Thank you. Ladies and gentlemen, if you have a question, please press star one on your touch tone phone. Please limit yourself to one question and one follow up. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Kevin Carrigan with Jefferies. Kevin, your line is open. Please go ahead. Yeah. Hey, team. Thanks for taking my questions and congrats on the results. Hey Luke. So Q3 product revenue growth was 22% year over year. The Q4 midpoint implies about 34%. And I know you talked about strong growth across RCD generations, but can you give us sense of how much growth is coming from you know other areas like companionship ramps or any initial mr dim shipments thanksgiving yeah we were really pleased with you know the results for q3 and the growth for q4 you know 34 year-over-year uh oh we always throw that you know the second half of the year would be stronger than the first half of the year i would say it's a combination of market demand going up and a lot of our products actually ramping uh into uh into the market uh the new generation of rcds make the bulk of that uh at the beginning of the year we said that our companionship were you know approximately low double digit percentage of our product revenue and that it would grow sequentially quarter of a quarter we see this happening mr dean remains you know very modest actually you know we have shipped the marlins you know for qual and and and pre-production you know this year uh the amd platform is starting to ramp uh so it's still very modest so we're really really pleased with this 34 percent year-over-year growth based on the uh you know the core uh i would say rcd and companionship okay great and then um as a follow-up just on on the mr dim opportunity so you know the rcd playbook was was always about being first to market and qualifying early you know one of your competitors was was designed the first generation mr dim platform so what what's different about this next generation that you know gives you confidence that you can you can take a leadership position the difference with mr dame is that it's associated with uh you know a launch of the platform that is very different than uh what we have all seen for the past few years if there's only one uh platform that is supporting MRDM now growing into into the market we don't know what the uh you know you know what this portion of MRD is going to be compared to the standard beam in that in that area so it's going to it's gonna be a ramp and we're confident this ramp will happen we still believe this is a great opportunity for us uh that uh you We still size at $600 million in total, but the ramp will be shallower, in our opinion, than the other generations of products, simply because all of the platforms are not ramping at the same time. This is a new technology, and our customers have to adopt this technology and go through the initial stumbles. There's also this thing that we see in the market of memory despecking. It's not that people decrease the number of modules, but they tend to decrease the capacity of each one of these modules. So we do see a growth of the number OF modules in the marketplace that explains our growth in Q4. But we do feel at the same time that each one OF these modules tend to have lower capacity. and it's due to the economics of the memory at this point in time. So between the memory economics, you know, the stage ramp of the platforms and the introduction of new technology and supply associated with that, we see this as a great opportunity, but we see the ramp to be shallower than a standard ramp of an LCD product. Yep, got it. Okay, perfect. Thanks for the color and congrats again on the results. Thank you, Kevin. Your next question comes from the line of Gary Mobley with StoneX. Gary, your line is open. Please go ahead. Thank you. Good afternoon, gentlemen. Thanks for taking my question and congrats on strong execution as we navigate to the second half of the year. Clearly the second after the year is playing out with seasonal strength on the product side as you had been communicating throughout the year based on what seems to be strong market environment and you're just doing backlog how would you call out the seasonality the first half of the year we see something a little atypical maybe probably better than seasonal in the first halfway year how do you see your visibility playing for the first half of year on the product side yes so you're correct Gary you know the the second half of the year, we have this seasonal effect that is advantageous to us I would add to this for this year that I think we're really pleased with the execution. We do see, you know, our companionship ramp in earnest, for example. There's a new generation being adopted at a higher rate than they used to be. When we look into 2027, I would say that we see demand strengthening. You know, I think this is not going down, so we're quite optimistic for, you Know, 2027. The demand is strengthening. We have a better visibility into our backlog, you know, going into 2027. I think we're going to continue to see some sort of seasonality between the first half and the second half in 2027, but in aggregate, we are confident with the health of the demand growth in 2026. Thank you for that, Carlo. As my follow-up, I wanted to ask about the Silicon an IP business. I think you've been communicating that this might be a $130 million annual business. So I would assume that you're maybe trending above that. Can you confirm or give us any color on that? And then with respect to custom ASIC development, do you see an opportunity, whether it be on high-speed interface IP, high-speed memory interface IP or security IP, to forge a long-term development arrangement with some of the you know hyperscalers developing custom silicon uh like like what we've seen with some of the other you know competitors in the ip space yeah so uh gary i'll start with the second question about the the potential for silicon id and then i'll ask you to answer on the you know the revenue and the revenue growth um So we are engaged more and more with the ecosystem on the silicon IP because people are building more and more complex chips that require more and complex integration and on the bleeding edge of technology. This is, you know, for example, what we described in our last call with the engagement with a hyperscaler on next generation of memory. So we see our confidence in the silicon IP keeps increasing. If you look at our product rollout, we talk about PCIe 7, IP PCI 7 switch, you know, HBM 4 in next generations of HBM, these dedicated security solutions for the data center. So we are engaged deeply with the ecosystem that gives us the opportunity going forward to potentially continue to increase our portfolio, not only organically, but possibly inorganically, and also to partner with our customers to develop a broader system. So as part of our thinking for Silicon IP, we have that notion of working more and more with our partners on the system level. By the way, the announcement we made about agentic AI helps us do that. The ability to have agents work with us on integrating IP in much more complex systems is actually enabled by this type of thing. So we're building the infrastructure to do that, that's the direction we're going into, it's going to take us time, But this is definitely a great trend for us. And let's see the answer on the on the numbers here. Yeah, thanks, Luke. And just to add to that, Gary, so yeah, so we've had our silicon IP business around 130 million growing at 10 to 15%. But like Luke said, our confidence has been building throughout the year and 2026 has been a great year for our silicon IP business, along with a strong momentum in the design. win. So I would put it more like we're going more towards the higher end of that range with that 10 to 15 percent and we continue to make progress in all aspects from you know memory interface and security aspects. Thank you both. Thank You Jerry. Your next question comes from the line of Sebastian Nagy with William Blair. Sebastian your line is open please go ahead. Yeah. Good afternoon, and thanks for taking my questions. Maybe first, I wanted to ask about the LPDDR6 PMIC that you announced. Could you maybe give us a sense for how that increases your dollar content per module versus the SOCAM2 content that you had announced in April? I think it was two voltage regulators and an SPD hub. And then when do you expect maybe some initial revenue for that product uh thanks sebastian i i would say that uh i'll be a bit discreet about you the exact you know content on this uh so can too because it's not this the final spec has not been released yet so you know i'd rather wait for the final state to be released but what i can say is that you know when you move from the uh first uh version of socam that we announced earlier this year to this new generation of SOCAM, the content is increasing. The power management is more complex and as a result of that the dollar content is going to increase from that first generation to that second generation. The module performance itself is going to be much better as well which will uh i i would say trigger you know adoption uh you know at at a higher level but but as every one of these socam solutions they provide a very good solution for these areas of ai where you know power performance is really really important but this is a small portion of the market and that's going to be continuing that's continued to be the case between the first version of SOCAM and this SOCM2. The SOCIM2 will hit the market probably in 2028. And the way to look at it is, you know, we see the development of the AI infrastructure as, you Know, having multiple horizons for us, if you wish. We want to make sure that we develop those solutions way ahead of the market. And when they deploy in the market, then we are present with solutions that work. You know, this is what we've done, you know, in the past that explains, for example, our performance in Q4 this year that are based a lot on the products we developed in the past. They had little traction at the beginning, but they're starting to show revenues in Q5 this year. This is going to be the same with SOCAM. You know SOCам is going address a niche portion of the AI stack, AI infrastructure, but the adoption of LP is going happen. It's not going to happen fast. It's not going to be the same content as the current content of standard memory, but it's important for us to have that as part of our portfolio while we help our customers and ecosystem partners to deploy their solutions in the market. Great. Okay, that's very helpful. Thank you, Luke. And then maybe my second question or my follow-up for Sumit on gross margins. It looks like non-GAAP product gross margins were about 60.4 in Q3. that's on the lower end of the, I think, 60% to 63% near-term range that you gave us. Could you maybe give us a sense for how much of the gap here is mixed in terms of more companionship revenue, next-generation RCDs with early yields, versus how much of it is wafer, substrate, or OSAT cost inflation? And then how should we think about Q4 product gross margins? Do they stay in that lower 60% area, or can they move up a little bit? Yeah, thanks for the question, Sebastian. Yeah, so our gross margin historically has been this tight band, 60% to 63%. And you're right, in the Q3, it was slightly above 60%. Our long-term target remains with the 60% to 65%. In the near term, it's really the margin um trending towards the lower end is primarily driven by the supply chain input cost um and you know we've been very successful in offsetting that cost input cost by driving internal cost savings and keeping that product growth margin in the range of 60 to 63 percent in the near term q4 um it's the same sort of the setup going into q4 but the investments and the cost reductions we have done especially in our operations uh side uh there may be a slight uptake in the gross margin in q4 but it's more material but it still within the 60 to 63 on a full year basis it's very important to look at from the gross mortgage perspective we expect uh 2026 to be right in the middle of that 60 to 60 percent range got it great thank you Your next question comes from the line of Mark Lippicis with Evercore. Mark, your line is open. Please go ahead. Great. Thanks for taking my question. I had two. I was hoping you could just talk about lead times from your own suppliers and any, to the extent that you're seeing tightening supply on the front end or the back end of foundry business. and then can you talk about lead times to your customers? Are there any stretching of lead times to your customer from you and any indication that your customers downstream or the supply chain downstream is increasing their own inventories given how tight everything seems to be becoming? Thank you. Thanks, Mark. I'll start and let Sumit comment. I would say that on the supply side, we do see lead times increasing. We signaled this two calls ago. We were expecting this, but because we were expecting this, we also put in place plans to mitigate for that. So we lever our strong balance sheet to actually build inventory on products that we believe are going to grow substantially with with our customers and we're in constant uh relationship with our suppliers to make sure that uh you know we use our balance sheet to to make sure that we can supply to uh to our customers so yes definitely uh longer lead times on the supply side but it has not uh impacted our you know q3 number and it will not impact you know the q4 number that we just talked about so we've been able to manage that but we have to continue to do that our lead times you know the first approximation our lead time to our customers have not increased at this point in time but you know you understand that you know we are in constant discussions with them as well you know they hold you know the whole uh the whole chain is tightening um the good thing is uh our business is very focused we have very strong partnerships with our customers and we work with them in in making sure that uh you know we can supply what what they need in summary you know longer lead times on the supply side we are using our balance sheet to deal with that and at this point in time we've not increased our lead times to our customers and look thank you look and just to be clear are do you do you have the ability to see if um customers or customer customers downstream more increase in their inventories or is that is that like a black box to you and it's really hard to determine it's very hard to determine you know we see uh what we see is that uh you know people place backlog earlier than what they used to a quarter ago two quarters ago i think everyone understands you know the current situation so we have better visibility in the backlog but at the same time that gives us more opportunity to have a deeper uh i would say relationship with our customers once we understand you know the profile of their backlog then it's easier to work with them on how we can we can lead that backlog so we don't see people building inventory but we see people placing backlog gotcha very helpful thank you thank you mark Your next question comes from the line of Tristan Jara with BARD. Tristan, your line is open. Please go ahead. Hi. Good afternoon. So, if I heard well, you mentioned that your revenue in the quarter and the guidance is not constrained by supply. So it probably provides a little bit of a easy comp of what a different first half when you did face some supply issues what's your level of confidence that you can actually need to be accelerating demand that you've described into next year and you know i know you're not guiding beyond this quarter but do you think that the acceleration that you're seeing in product work new year over year is sustainable or do you see supply as an issue again next year and and you know is there any talk about you know longer term agreements or anything that customers are trying to set up you know to ensure supply for you so we see demand uh thank you uh tristan we see demands strengthening into into next year and we started to work with our supply chain partners to you know uh meet what we believe is going to be required in all honesty this is something that we work on almost on a weekly basis we try all avenues to support uh you know our our customer our customer base So demand is strong going into 2027. Supply will remain tight. But as I said, as we did in 2026, we're working early with our supply base to look at every knob we can turn to support our, you know, our customer demand. And that's how we look at this. The good news is that the demand for the products we have in our portfolio is strong. The demand for CPUs, this CPU to GPU ratio is going in our favor. It's known from our customers all the way down to our suppliers. and we'll do our best to supply, you know, that growing demand into 2027. Great. And as a quick follow-up, I wanted to explore the difference in content opportunity, medium term for x86 CPU and standalone Vera. I kind of come up with maybe a 4X content in x86 TPU for you versus what you would get on the SOC M2 side, you know, with the, but are you quantifying at all, you know, what the opportunity is and the difference that you see in terms of opportunities on the x86 and the ARM-based side of TPUs next year and the years beyond? Yeah, thank you, Tristan. The way we look at it and the reason we are excited about this AI infrastructure deployment is that we look this in an aggregate way. There are areas of AI, like if you take the head nodes, for example, where SOCAM and LP memory can be used. It's not always used, but it can be use. And that's an opportunity for us from a technology standpoint. It allows us to develop our LP technology on all fronts. But in aggregate, you do have a growth in these head nodes that will create an opportunity for SO-CAM. But you have higher growth in the traditional servers with the refresh necessary in order to continue to develop the range of applications, range of standard applications. We have a higher growth in agentic, you know, standard CPUs as well for, you know, orchestration, tools management, memory management. So in aggregate, if you take the head nodes where you can have SOCAM, and if you take standard servers and the agentic server, the whole market is growing. But the majority of the growth is coming from CPUs with, you know, with standard memory subsystems. So that's the way we look at it. We definitely don't look at this as SOCAM is cannibalizing, you know, the market for standard, you know, for standard DIMM. It's actually complementary. You know, it makes the system more efficient. The standard memory subsystems are going to increase at a higher pace, going into 2027. And, you know, their head nodes will drive new technologies like SOCIM, you know, to maximize this kind of application. So we see this as complementary. and that's why we want to have solutions for all of that you know we we really want to be agnostic to the memory subsystems while the infrastructure for ai is going in the market because as that infrastructure is growing in the market we're going to see heterogeneous systems and it's important that we have solutions for each one of those but the vast majority is going to continue to be cpu with standard DEAN configurations. Great. Thank you very much. Thanks, Tristan. Your next question comes from the line of Kevin Cassidy with Rosenblatt Securities. Kevin, your line is open. Please go ahead. Yes, thanks, and I'll echo the congratulations on the great quarter. But just, you know, it's interesting, as you mentioned about the custom chips and that you're getting involved earlier into the design cycle. And I'm just wondering if there's any way that this helps you to win more modules on those designs as they come into production. Thanks, Kevin. We're really excited with this Silicon IP engagement with the ecosystem because they give us great insight into the architectural trends that these people are talking about. When we talk to hyperscalers with the opportunity for us to sell our silicon IP, we have insights into some of the architecture problems they're trying to resolve and where they see the world going. And as a consequence of that, that helps us continue to develop the right roadmap of products for this type of products. But it also gives us insight as to the overall architecture of their systems and where DIN are going to be used, where LP is going to be used and why, what generation of DDR is going be used in why. It just gives us that channel of information. It's almost through discussion and it gives us a good sense of the trends in terms of what type of technologies they are going use not only on the silicon ip side but also in terms of how they will configure their systems with with different types of modules right and that seems like a big advantage over your two competitors that don't don't have a ip story um and maybe uh just on the inventory one more time are you comfortable with the days of inventory now or should we expect to see that continue to increase even with the increasing demand next year yeah kevin um good question so inventory as you mentioned we've been growing inventory this year um in q3 we grew it again 12 million dollars again primarily leveraging the center for balance sheet to make sure we provide greater assurance to our customers um in cube for us while looking at just like luke mentioned throughout the call like we have more visibility into the backlog and as demand is accelerating we do plan to build increased inventory even in q4 similar level to like we would build in q3 and q2 okay great thank you at this time there are no further questions this concludes the question and answer session I would like to turn the conference back over to the company for closing remarks. Thank you to everyone who has joined us today for your continued interest and support. We look forward to speaking with you again soon. Thank you. Thank you. This concludes today's conference. You may now disconnect.