Nick Doyle: Thank you.
Operator: Thank you. [Operator Instructions] And I am not showing any further — one moment. And our next question comes from the line of Richard Shannon from Craig-Hallum. Your question, please.
Richard Shannon: Hi, Todd and Haley. Thanks for taking my questions. I might have jump on the call late with a couple going on at the same time. So hopefully I’m not repeating questions on topics that were already discussed here. But Todd, your press release talks about getting to non-GAAP quarterly profitability in the second half of the year. Not sure if you’ve addressed what that level looks like or kind of the progression of that happening by segments. I’m assuming all of this is coming from mobile growth with some TrueCut contribution, but maybe you can detail that, please.
Todd DeBonis: Well, I think I’ll just repeat what I said. I think I outlined in the previous investor pitch, which is on our website, what the various different businesses would — the ranges they would have to get at to hit profitability. And I think we mapped mobile was — overall, it was I think between $23 million and $26 million in revenue. It’s on the low side of that if there’s more contribution from TrueCut in home and enterprise. It’s on the high side of that revenue if it’s more mobile oriented, right? And so, I guess, what we’re telling you is we believe we’re going to have a quarter, probably the last quarter, if you go look at our seasonality, usually Q4, especially with mobile for China, Q4 is our big quarter, we will probably exceed that target and that mix that I’ve outlined on the investor presentation.
Richard Shannon: Okay. And how do you think about — both the attach rates and the increase in ASP and content in mobile processors transitioning from December quarter to say this mythical breakeven point in December of this year?
Todd DeBonis: Well, I wouldn’t say it’s so mythical, Richard.
Richard Shannon: Well, I didn’t say it wasn’t going to happen.
Todd DeBonis: It hasn’t happened yet, but we believe it is going to happen, okay? Otherwise I wouldn’t say it.
Richard Shannon: Yeah. I know.
Todd DeBonis: Okay. So, what’s the specific question?
Richard Shannon: Yeah. So, the question is what kind of attach rates and what kind of ASP increase do you expect in order to drive to an outcome getting to a breakeven or better point in fourth quarter this year?
Todd DeBonis: Well, I don’t know about attach rates. But if we ship 5 million to 6 million mobile units at a 30% higher ASP in a quarter than we did in the fourth quarter, we’ll hit the mobile target of the total revenue. If we increase the revenue — if we basically are flat with home and enterprise to Q4 of this year and then TrueCut contributes $1 million for the quarter, we probably are at that breakeven profitability stage. We’re just not that far away. That’s why it’s not mythical, Richard.
Richard Shannon: Poor choice of words. I didn’t say that I didn’t believe you. I just want to know what’s built into your assumptions, assumption is the word I should have used here. And I came in on — one of your answer to one of the last question on TrueCut here, and is that $1 million a quarter? Is that assumed to be somewhat a consistent or modestly growing revenue stream here throughout this year?
Todd DeBonis: It’ll be lumpy, as I said in the prepared remarks, which you probably didn’t get a chance to hear. It will be very contingent on the pipeline of content. It will accelerate when we line up more distribution partners. And we announce home entertainment device licensees. Most of the revenue you’re going to model this year is all service revenue for content.
Richard Shannon: Okay. But I think over time, it’s supposed to be largely device or heavily device oriented. Is that fair to think few years down the road when things roll?
Todd DeBonis: When the business really gets its momentum, yes. When we have a builtout ecosystem and you have multiple home entertainment devices that consumers can take advantage of cinematic high frame rate content, the content that we’re building right now with our partners, yes. I would imagine that the royalties from home entertainment devices will be over half the total revenue. Device, or excuse me, home distribution so — from distribution partners will be a portion and then service and theatrical licensing will be another portion.
Richard Shannon: Okay. And I guess my last question, I’ll jump out of line, Todd. As we think about building ecosystem, particularly on the endpoint devices, where the long-term revenues are going to be coming from, how do we think about public acknowledgment of new partners coming in here? Presumably they have been seeing this ecosystem develop and you’ve been communicating with them well in advance of these announcements you’ve had here in — just the last couple of weeks. How should we think about this ecosystem developing? How many customers or how many partners on the TV side and other maybe more unique endpoint display devices should we be looking for over the next months and quarters?
Todd DeBonis: Well, so this year, let’s just not get ahead of ourselves. Let’s focus on content right now, right? Right now, we’re focused on building out the content, okay? And the content will come from — so far, we’ve announced content with Lightstorm and Universal, and actually was a Universal/Apple production. You will see new studios that we also — you’ll see the same studios do more content and you’ll see new studios added to the mix, okay? That’s the first thing you’re going to see. Then the next thing to look for is, is this content pipeline that we’re building being distributed by our partners to any home entertainment devices. That’s the next thing you need to really focus on. And then once you see that, then okay, how many home entertainment devices are those distribution partners streaming that content?
Richard Shannon: Okay. Okay, fair enough. Thanks for that perspective. I will jump out of line. Thanks Todd.
Todd DeBonis: Thank you, Richard.
Operator: Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to management for any further remarks.
End of Q&A:
Todd DeBonis: Yeah. Thank you very much for joining us on the call and hearing about our continued progress. I encourage investors to go to our website and check out the new TrueCut Motion section of our website. It’s informative. It will reiterate some of the things I mentioned, and it’ll probably help you understand our value proposition and how we go to market. Thank you.
Operator: Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
