Welcome to the Rambus Fourth Quarter and Fiscal 2025 Earnings Conference Call. At this time, all participants are in 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 touch-tone 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 Desmond Lynch, Chief Financial Officer. You may begin your conference.

Thank you, operator, and welcome to the Rambus Fourth Quarter and Fiscal Year 2025 Results Conference Call. I am Desmond Lynch, Chief Financial Officer at Rambus, and on the call with me today is Luc Seraphin, our CEO. The press release for the results that we will be discussing today has been filed with the SEC on Form 8-Ks. We are webcasting this call along with the slides that we will reference during portions of today's call. A replay of this call can be accessed on our website beginning today at 5 PM Pacific time. Our discussion today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, other market factors, including reflections of the geopolitical and macroeconomic environment, and the effects of ASC 606 and reported revenue amongst other items. These statements are subject to risks and uncertainties that may be discussed during this call and are more fully described in the documents we file with the SEC, including our 8-Ks, 10-Qs, and 10-Ks. These forward-looking statements may differ materially from our actual results, and we are under no obligation to update these statements. In an effort to provide greater clarity in the financials, we are using both GAAP and non-GAAP financial presentations in both our press release and on this call. A reconciliation of these non-GAAP financials to the most directly 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. In addition, we will continue to provide operational metrics such as licensing billings to give our investors better insight into our operational performance.

The order of our call today will be as follows: Luc will start with an overview of the business, I will discuss our financial results, and then we will end with Q&A. I'll now turn the call over to Luc to provide an overview of the quarter. Luc?

Thank you, Des. Good afternoon, everyone, and thank you for joining us. 2025 was an excellent year for Rambus. We closed with a strong Q4, with record revenue and earnings. Our financial success is a testament to both our strategy and execution as we continue to deliver products and technologies that accelerate memory, compute, and connectivity advancements in rapidly growing markets. Our diversified portfolio remains a core strength for the company, and each of our businesses contributed meaningfully to our results as we delivered a new annual high in cash from operations. This positions us well to continue to invest strategically in our product roadmap, expand our market opportunity, and drive long-term growth. Before I go into detail on our business results, let me take a moment to discuss the important market and technology trends influencing our strategy and highlight several of our key accomplishments in 2025. Both AI and traditional server markets remained strong throughout the year, driven by the accelerating need for significantly higher compute and memory performance. As workloads become more complex and diverse, and inference rapidly expands across applications, including agentic and physical AI, the demands placed on memory subsystems continue to intensify. This environment drove further adoption of DDR5 as well as other high-performance memory and interconnect technologies, where Rambus' signal and power integrity expertise are foundational. The accelerated pace of innovation continued across the industry, with customers increasingly operating on one-year product cadences to stay ahead of demand for greater performance. This dynamic amplified the need for cutting-edge merchant and custom solutions, where our advanced technology portfolio enables accelerated design cycles for our customers. Against this backdrop, Rambus had a number of achievements that fueled our performance in 2025 and strengthened our position across key markets as we move into 2026. We furthered our leadership in DDR5 with increased market share in RCDs, reflecting both the depth of our expertise and the continued trust of our customers. Our power management chips made meaningful progress with growing adoption of our DDR5 PMICs contributing to revenue growth. We extended our reach in high-performance and AI PCs through the introduction of our complete client chipset. With this addition, Rambus offers a comprehensive chipset portfolio that supports all JEDEC standard DDR5 and LPDDR5 modules across server and client systems. With that, we offer customers greater assurance of interoperability and reliable performance at scale. And finally, in addition to these chip milestones, we saw increasing design wins and customer engagement led by our latest generation HBM4, GDDR7, and PCIe7 digital IP, as well as our broad range of security IP to safeguard data transmission and storage. Turning now to our quarterly business results. Chip capped off the year with a strong Q4 performance delivering product revenue of $97 million. This brought us to a new annual record of $348 million, which was up 41% year over year.

This achievement reflects our continued product leadership and ongoing market share gains in DDR5 RCDs. In addition, customer adoption of new products continues to progress with growing revenue contributions and volume shipments underway. For silicon IP, we are strategically focused on delivering industry-leading solutions that empower the next wave of AI hardware. The increasing pace and diversity of AI chip designs, including custom silicon for hyperscalers, is driving design wins for high-speed memory interconnect and security IP. With market leadership and expertise across multiple generations of HBM, GDDR, and PCIe, as well as our best-in-class security solutions, our IP is a critical enabler of the performance required by AI workloads. We see strong traction across our portfolio of cutting-edge solutions. In particular, there's growing demand for our interface and security IP solutions as we see the increased need to move and secure data in scale-up and scale-out scenarios.

Looking ahead, the ongoing expansion of AI and the transformation of the data center continue to reshape memory and interconnect requirements. AI training and inference at scale are driving increased demand for bandwidth, capacity, and power-efficient performance. The expansion of agentic AI is catalyzing traditional CPU-based server demand and continues to drive the need for more DIMMs per system, higher-speed interfaces, and sophisticated power management. Our product and IP sit at the core of this transition, enabling the massive compute infrastructure required for increasingly complex and diverse AI models. In addition, the rise of purpose-built systems and increasingly heterogeneous compute is accelerating the adoption of new memory architectures, higher data rates, and advanced security solutions. All of these trends play directly to Rambus' strengths, open opportunities to broaden our leadership across next-generation platforms, and reinforce the long-term tailwinds for our businesses. Rambus is well-positioned to capitalize on these trends, and in 2026, we expect to grow faster than the market.

Now, as reflected in our Q1 outlook, we experienced a one-time supply chain issue that will affect product revenue for Q1. The issue is being resolved in collaboration with our supply chain partners, and we expect our product business to return to strong growth in the second quarter. Fueled by market share gains and the continued ramp of new products, I am confident in our long-term trajectory for 2026 and beyond. As always, I want to thank our customers, partners, and employees for their continued support. With that, I'll turn the call over to Des to walk through the financials. Des, thank you, Luc.

I'd like to begin with a summary of our financial results for the fourth quarter and for the full year 2025 on Slide three. We delivered strong financial results in both the fourth quarter and full year 2025 as we continue to execute in our long-term growth strategy. Full-year revenue and earnings per share reached record levels, driven by a 41% increase in product revenue to $348 million due to DDR5 market share gains and new product contributions. In 2025, we generated a company record $360 million in cash from operations, which was up 56% from 2024. An established track record of generating cash enables us to invest in initiatives that fuel our long-term growth. Let me now provide you a summary of our non-GAAP income statement on Slide five. Revenue for the fourth quarter was $190.2 million, which is above our expectations. Royalty revenue was $71.7 million, but licensing billings were $71.5 million. Product revenue was $96.8 million as we delivered another quarter of record product revenue. This represents 32% year-over-year growth driven by continued strength in DDR5 products and ramping new product contributions. For the full year, we delivered $347.8 million in product revenue, which was a new annual record for the company. Contract and other revenue was $21.8 million, consisting predominantly of Silicon IP. As a reminder, only a portion of our silicon IP revenue is reflected in contract and other revenue, and the remaining portion is reported in royalty revenue as well as in licensing billings. Total operating costs, including the cost of goods sold for the quarter, were $103.2 million. Operating expenses of $64.9 million were in line with our expectations and flat compared to Q3. Interest and other income for the fourth quarter was $6.4 million. Using an assumed flat tax rate of 20%…

Overall, we are well-positioned to drive long-term shareholder value. Before I open up the call to Q&A, I would like to thank our employees for their continued teamwork and execution. With that, I'll turn the call back to our operator to begin Q&A. Could we ask our first question?

Thank you. The first question comes from Kevin Cassidy with Rosenblatt. You may proceed.

Congratulations on the great results. But, of course, the questions will be around the supply chain issue. I understand you resolved the issue. Will there be catch-up on meaning, can in the second quarter, can you make up for that revenue loss in the first quarter? Or is that just loss to market share that on competitor picking up the business?

Thank you, Kevin. Let me maybe take a few minutes to explain what the supply issue is. That we understand the dynamics in the market. So in Q4, we, as we said, we identified the back-end manufacturing issue with one of our OSATs. We have identified the root cause of that issue. We have implemented all the corrective actions in collaboration with our supply chain partners. And before I go into the detail, note that the issue was affecting an extremely low number of parts, which made the identification of the root cause a bit difficult because it was hard to reproduce. But we have identified the root cause. We've put the measures in place. And in reality, what we've done is we've done two things. The first thing we've done is once the root cause was identified and the corrective actions were in place, we did actually pull forward fresh material from inventory that was originally staged for Q1 to meet our Q4 customer demand. So that's the first thing we did. We accelerated fresh material once these measures were in place because our customer demand remained very strong in Q4. The second thing we did is despite the very, very low PPMs that we observed, and because quality is paramount, out of an abundance of precaution, we actually quarantined all potential impact production material. And now we are retesting these materials with enhanced screens in place. So these measures have put additional strain on capacity, a tighter supply environment, and that impacts Q1, as we said. But the issue was identified in Q4. We accelerated material through after we put the measures in place. We are screening parts that were potentially tainted, and that's what's creating that issue in Q1. So that issue is behind us. And the lower Q1 product revenue does not change the trajectory of the business. We expect the business to return to strong growth in Q2, and the product revenue for 2026 remains on track to grow faster than the market. And that's how I would qualify the issue, Dave. I don't know whether you want to add anything to this.

No. I think you summarized it well, Luc. The issue in Q1 is behind us, and we're expecting strong recovery both in Q2 and also for the full year. And as you said, we do expect the business to grow faster than the market for the year. So we're very well positioned from here.

Okay. Great. Thanks for that detailed explanation. You know, maybe a more difficult question, but can you quantify what the revenue would have been?

Hi, Kevin. It's Des. You know, what I would say is that the impact would probably have been around a low double-digit million impact in what's already a seasonally soft quarter for the business. So that's how I would sort of quantify the sort of Q1 revenue impact from there. As Luc mentioned, we will build inventory by the end of Q1. We'll be in a position to return to strong growth in Q2 from there. But I would say quantification probably in the low double million impact is what I would say, Kevin.

Okay. Great. Thank you for that help.

Thanks, Kevin. Thank you.

The following comes from Kevin Garrigan with Jefferies. You may proceed.

Yeah. Hey, guys. Thanks for taking my question. Hey, can you just talk about how your RCD market share finished for 2025?

Yes. Thanks, Kevin. So, you know, we believe that we ended up the year in the mid-40% share for DDR5. We put the market between 24-25, grew mid-single digit. But the portion of DDR5 became more important. DDR4 continues to decrease in terms of share. So, in 2024, we were in the early forties for DDR5. In 2025, we believe we are in the mid-forties on DDR5. We're in a market where DDR5 dominates even more. And I think as we said in the prepared remarks, we expect to continue to grow faster than the market in 2026 despite the glitch we had in Q1.

Perfect. I appreciate that color. And then just as a follow-up, so there's a lot going on with, you know, the Intel Diamond Rapids platform and, you know, even the AMD Venice platform. So just kind of wondering if the timeline and opportunity that you're expecting on the MRDIMM front hasn't changed at all.

Thanks, Kevin. No. It hasn't. We are monitoring the rollout of these platforms as every generation has been the same dynamic. The rollout of our products mostly depends on the rollout of the platforms on Intel and AMD. So, we expect our MRDIMM to ramp towards the very end of the year at this point in time. But we will modulate that based on how the platforms roll out from both Intel and AMD. I think that's nothing new. This has happened in every generation in the past. We are readying our products. We are working with the ecosystem to make sure that we are ready. But, eventually, that will depend on when those platforms roll out. As far as we're concerned, we are ready.

Perfect. I appreciate the color, and congrats on the results.

Thank you. Thank you.

The next question comes from Aaron Rakers with Wells Fargo. You may proceed.

Yeah. Thanks for taking the questions. I've got a couple if I can as well. I guess first of all, going back to the supply chain issue, I can appreciate, you know, the issues have been rectified. I know Luc, you've referenced a couple of times growing faster than the market. So, you know, I guess the question I have is how do you define the growth rate of the market? We've seen a lot of data points where server demand looks like it might be as much as mid-teens, maybe even high teens in some of the commentary recently. So I'm curious if you can just kind of contextualize what you think the market growth rate is in 2026, underpinning your expectation of growing faster than that.

Yes. Thanks, Aaron. We see a wide range of numbers for the market growth. Typically, as you know, there are many variables going into this. One of the bases is really the market for servers. The marketing analysts have a range for market servers. Gartner is at 8%. We hear from other sources that this could be, as you said, double-digit growth. But we want to stay prudent with the view of the server growth. Because we believe the demand is here, but I think some people tend to underestimate the impact of potential shortages, especially on the memory side. So, we tend to align with Gartner's view with 8% market growth for the servers. So we certainly exceed that. But you have other things happening. The number of channels increasing, the introduction of new platforms. In our case, we also are introducing our new products. We're going to be higher than that. But the basis we use is mid to high single-digit growth for the server market. That's our basis.

Okay. That's very helpful. And then sticking with that, when we talk about your companionship opportunities, I think last quarter, you talked about the PMIC being, I want to say, with mid-single-digit to your total product revenue. Can you unpack that a little bit? How fast is that growing? What's the expectation for this year?

Hi, Aaron. It's Des here. We are really pleased with the program and traction that our new products continue to make in the market. Our new products have grown from low single-digit contribution in 2025 to upper single digits in Q4, which was in line with our expectations. If we look ahead to Q1, I do expect the strong traction really to continue where I do expect new products will continue to grow to about double-digit contribution of total product revenue. We have traction across all of our products, but I would say that in terms of revenue contribution, PMIC remains the largest contributor there. Our customers continue to place value and importance on the interplay between RCD and PMIC. As we look ahead into 2026 with the continued rollout of new products, I would say that our new products are very well positioned within the market to continue to grow and take market share.

Thank you, guys.

Thanks, Aaron. Thank you.

Thank you. The next question comes from Bastian Falcon with Susquehanna. You may proceed.

Hi. Yes. Thank you for taking my question. I guess one question that I have is revisiting the average of the DIMMs per CPU expected in 2027, and you mentioned it previously, given the cost of memory and the shortage, has this changed your expectations of having channels being populated with DIMMs per CPU?

Thanks, Bastian, for your question. The DIMM's CPU dynamic is a complex one. Typically, what happens is people who want very high bandwidth, like in AI-type of applications, tend to use fewer DIMMs per channel so that they can make the best use of this bandwidth. People who are in need of more capacity tend to populate more DIMMs on their channels. And then you combine this with the respective growth of standard applications with AI applications. So we continue to see, on average, the number of DIMMs per channel growing, but it's a bit difficult to really put a number on it. I think the memory situation is a broader situation than the number of DIMMs per channel. Thank God memory is booming these days. There's a dynamic between HBM and standard DDR, for example, and with the standard DDRs, there's a dynamic between the different speeds of these DDRs. So I think, overall, we believe that the market is going to be constrained. But, again, trying to put a number on how the supply constraints on the memory side are going to impact the number of DIMMs per channel is something that is quite difficult to figure out.

Right. That's very helpful. And I have a follow-up. In terms of RCD contribution, what are your expectations of the DDR5 Gen 3 RCD contribution relative to the Gen 1 and 2 in 2026 given the supply chain issue that you've encountered with your RCDs? That will be impacting Q1?

Yeah. That's a good question. Thank you. But for what we saw is, in Q4, Gen 2 was predominant. This is what we were expecting, and Gen 3 was starting to ramp. It was growing in Q4 compared to Q3. When we look at 2026, our view is that Gen 3 will continue to grow and will probably be the predominant version of DDR5 throughout the year. Gen 4 will contribute somehow, but because this is on a different type of core, it will have more limited adoption. The big next step is going to be Gen 5. And Gen 5, as we said earlier, is going to depend on the introduction of the next generation platforms from Intel and AMD. So in summary, we continue to see Gen 2, Gen 3. And the mix between Gen 2 and Gen 3 is changing. Gen 3 is growing. And our expectation at this point in time is that Gen 3 is going to be dominant in 2026.

Thank you very much.

Thank you.

Thank you. The next question comes from Gary Mobley with Loop Capital. You may proceed.

Hey, guys. Thanks for taking my question. I had a multipart follow-up question about the supply chain issue. First, do you see any reputational harm from this with your customer base? Did it impact the companionship business more than the RCD business? And I guess, logically, we should assume a sharp revenue recovery in Q2? It sounds like Q1 revenue would have been about $99 to $100 million, which is described as seasonally weak. And, therefore, if you're going to recover that revenue and gain share in the year, presumably, Q2 revenue would have been up sequentially from that. So can your supply chain recover to that degree that quickly? To get back to the $100 million plus per quarter in product revenue?

Thank you, Gary, for your questions. I'll start with your initial questions and let Des comment on the numbers. Your first question is about the reputational risk. No. There's no reputational risk. Actually, when we identified that issue, we had all hands on deck. And we worked in close collaboration with our suppliers and our customers. And I think it's really, really important. We've said over and over again over the last few years that quality management is really, really important. We had a real-life example here where we identified an issue quickly. We had a very thorough quality process in place with our customers. And we're back on track. The only issue that is left for Q1 is the fact that we need to replenish our supply chain and make the best use of our testing capacity as we are also retesting all parts. But the reputation has not been damaged. We've been able to identify the problem, fix the problem, and put actions in place quite quickly. The second question was about whether it affected the RCD or the other chips. It only affected the RCD, and actually, the companion chips were not affected at all. On the numbers, maybe, Des, you want to comment.

Hi, Gary. It's Des. In terms of the inventory, I do expect that the inventory will be replenished by the end of Q1. And we'll be able to grow the inventory to a level which will be able to support our Q2 2026 demand and going forward from there. So again, as Luc talked about, the issue has been contained. We are continuing to replenish our inventory as we go throughout Q1. And that will put us in a good position ending Q1 for meeting customers' demand for Q2 going forward.

Got it. To follow-up, I want to ask about MRDIMM. Based on what you're seeing in timing of shipments and Diamond Rapid shipments and sort of queuing the memory ecosystem around those two server processor launches. You still see revenue contribution, I guess, material revenue contribution from MRDIMM by the end of the calendar year.

You know, as we said earlier, we are monitoring the rollout of these platforms. And we are continuing activities around MRDIMM. As we said on earlier calls, we see the initial contribution towards the end of the year. That's the very initial contribution of these platforms is going to be towards the very end of the year. And the main contribution is happening in 2027.

Alright. Thank you.

Thanks, Gary.

Thank you. The following comes from Tristan Gerra with Baird. You may proceed.

Hi. Good afternoon. It looks like you started to be a little bit more bullish on your market share prospect in RCD. With companionship to ramping, is that the reason why we're now seeing market share today? It looks like it's above what your expectation was a year ago. And, you know, mid-40s? And what would be kind of the upside that you think you could get to by end this year or even next year?

Thanks, Tristan. I'll make the first comment about the market share. When we talk about being in the mid-forties, it's for DDR5 RCDs. So these market share gains year over year are really referring to the RCD chip. And this is the result of the increased design win footprint we were able to secure from generation to generation. From DDR4 to DDR5, we had a much higher footprint at every generation of DDR5, we increased our design wins. That translates into our market share for the RCD chip. So when we mentioned that in 2025, our market share was in the mid-forties, that's on the DDR5 RCD. And the DDR5 overall generation is still early in its cycle, so there's still room to gain share in the mid-forties now. We always said we could be between forty and fifty. We're still chasing more share on the DDR5 RCD chip. The companion chips are an addition to this, and they're ramping steadily, slowly, as Des explained, into the market as the qualifications take place. But this is going to be additional revenue to the RCD revenue.

Yeah. And I was just wondering if the fact that you have companionship, does that help your RCD share or is that completely separate? I sense that perhaps you saw some cross-selling opportunities or benefits that will go beyond just the additional TAM of the companionship? And then also my follow-up question is if there's any update on the potential ZOKAAN-two opportunity, whether it's in the current BlackRock platform or the upcoming for you to potentially participate?

Yes. I'll answer first on the companionship, the TAM. One way to look at it, as you rightly say, is to add the TAMs. Is there a connection between the two? There's an indirect impact. As the speeds on the DIMMs continue to increase, it is more and more important for our customers to get their chips from the same supplier for interoperability reasons. These systems are very, very complex. If we have all chips in-house, we can do a lot of system testing before shipping those parts to our customers. So that puts us in a favorable position. So there's a positive indirect impact on our ability to grow our clinic for in particular, but also the other companionship. As the speeds on the RCD continue to increase. So that's the answer on that. On the SOCAM, we continue to monitor the dynamic there on the SOCAM. There's definitely an SPD opportunity on the SOCAM for us. We're talking about next generations and how these next generations can evolve in particular. In this field of power management that could open all the opportunities in the future. But I would say this, as we said in the prepared remarks, our strategy is to have solutions for every JEDEC standard module, whether it's on the client side or whether it's on the data center side. We will continue to monitor what's happening with SOCAT. On SOCAM two, we have an opportunity for the SPD hub. As the evolution of SOCAM continues and new chips are being defined, we're going to be part of that definition, and we'll continue to develop chips to support that market.

Great. Thank you very much.

Thank you, Tristan.

Next question comes from Sebastian Najee with William Blair. You may proceed.

Yes. Thank you for taking the question. Could you maybe remind us how much of your product business today is not related to the server market? You mentioned some early success in the client market. And as we think about 2026, does rising memory cost maybe create some friction in this part of the market for Rambus?

The client market remains minimal for us at this point in time for a couple of reasons. One is the adoption of the CKD chips or the equivalent of the clock chip into the client space really is limited to the very, very high-end parts of that client space. So the contribution is minimal in terms of numbers. Our goal is still to get 20% share in the long run for that. But these platforms have to ramp in the market. Their contribution is still going to be minimal even in 2026 for clients. So the vast majority of the business is in the data center space. This being said, in the long run, the power management and the clock are going to be very, very important in the client space as well. It's important for us to position ourselves there. To have solutions for all platforms. That's why we are doing this. In terms of the client space? And your second question was...

No. That was my first question. My second question is on the IP side of the business, if I can. So, you know, Rambus has benefited a lot from the explosion in the number of ASICs that are being designed. Have many companies attempting to design their own XPUs. You've also seen an accelerated cadence of new chip releases. As we go into 2026, are you seeing any signs of a slowdown in some of these new chip design starts? Or that could start to impact your IP business?

Well, I can start, and maybe you can add on. We were very pleased with how our Silicon IP business performed in 2025. It performed in line with the expectations. And the portfolio is really well-positioned to address the demand for AI solutions from there. If you look at our portfolio with a leading-edge portfolio with critical IP solutions in the high-speed memory interconnect and security IP, which is tailored towards the AI workloads from there. And our expectation is that that would continue to grow in 2026, in line with our long-term growth expectations from there. So very bullish on our overall portfolio and outlook for the IP business.

Great. Thank you.

The following is a follow-up from Kevin Cassidy with Rosenblatt. You may proceed.

Yeah. Thanks for taking my follow-up. And maybe along those lines, the custom, Luc, I think you had mentioned custom hardware, and I wonder if you give us a little more details on that. How many customers can you support and what would be the timing of that?

Yes. When we say custom hardware, there are a lot of people who are developing their own chips for their AI infrastructure or their server infrastructure. Typically, accelerators, chips that are dedicated to inference, these kinds of things. So every time they do develop those types of chips, they have a potential need for HBM at high speed, PCIe at high speed, or security solutions, so GDDR sometimes. So as you know, we position our portfolio to be at the high end of those standards. So we typically talk to the people who work at the high end of those systems. We can support a large number of customers because we have a limited portfolio in terms of the scope. We focus on PCIe, CXL, HBM, GDDR, and security IP. So we have a laser-focused portfolio that addresses potentially a large number of customers who are working on the leading edge of those technologies. That's really what's driving the business for us as opposed to potentially other IP suppliers that have a much broader portfolio. We narrow our portfolio for the needs of people who develop chips for the data center. And most of these chips are either their own processors. Some people develop their own processors as opposed to buying merchant processors. All the types of applications are accelerated to improve the performance of their systems.

Okay. Great. Thank you.

We have another follow-up from Aaron Rakers with Wells Fargo. You may proceed.

Yeah. Thanks for taking the follow-up question. I guess the first one is, Luc, you mentioned like there is risk in terms of memory supply and availability. I'm curious, as you look back at this last quarter or coming out of the last quarter and these first couple of weeks of this first quarter, have you seen any signs of memory constraints impacting your customers' ability to fulfill demand? Or any how would you characterize inventory levels that you're seeing at some of your major customers? Any thoughts on that would be great.

Yeah. Sure. We are in a small ecosystem, as you know. And when we talk to our customers and partners, we hear those comments. And one of the common themes that we hear is that the demand for servers is solid. There's a refresh cycle that is not over. There's also agentic AI and all the inference applications that drive demand. But what we hear from the same customers is that they're going to be constrained by supply. And we hear this directly from our customers, and this is why when we look at the market potential for us, we tend to be prudent because we are aware of these comments from our customers in terms of supply. So that's what the basis of our comments is. We see on the supply side, we also see lengthening lead times. It's nothing to do with the memory guys. There's also on the supply side, lead times continue to increase. And that's why we believe in 2026, the demand is solid. But we're going to be more constrained by supply than we're going to be by demand.

Yeah. That's helpful. And then, Des, real quickly on the gross margin line, I want to make sure I'm clear. Given the supply chain issues, you don't expect any kind of gross margin, any kind of inventory provisions or anything of that nature. And I guess what I'm trying to get at is the product gross margin looks like it's still hovering in that plus 60% range. Is that still the expectation that we stay in that low 50% range here as we look forward?

Hi. Yeah. That would be the right expectation going forward. If you look at the full year of 2025, gross margins were around 61.5%, which was in line with 2024's performance and consistent with our long-term model of 60% to 65%. I think what you will see is that we have a strong track record of delivering gross margins in line with these targets. And that would be my expectation. If you really look where we've been operating in the last three years, we've been in a tight range of 61 to 63%. And I think that would be a fair way to think about the business in 2026 from a gross margin perspective. We'll continue to be disciplined in our approach to pricing. And as always, we'll continue to drive manufacturing cost savings going forward, which enables us to drive to the gross margins within the range I mentioned earlier.

Perfect. Thanks, Des.

Thanks, Aaron.

Thank you. At this time, there are no further questions. This concludes the question and answer session. I would now like to turn the conference back over to the company.

Thank you, everyone, who has joined us today for your interest and time. And we look forward to speaking with you again soon. Have a great day. Thank you.

Thank you. This now concludes today's conference.