NPTN - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the NeoPhotonics 2018 Fourth Quarter Conference Call. This call is being webcast live on the NeoPhotonics event calendar webpage at www.neophotonics.com. This call is the property of NeoPhotonics and any recording, reproduction or transmission of this call without the express written consent of NeoPhotonics is prohibited. The webcast will be available on the event calendar page of the NeoPhotonics website. I would now like to turn the call over to Mike Funari at Sapphire Investor Relations. sir. ahead, go Please

Mike Funari

for are Financial substitute you the Eby, us and fourth first financial quarter me management's the sheet the These questions. a percentages will products. the in otherwise and Tim Material considered be the to for materially. release industry amounts call, revenue, will uncertainties facts, financial prepared call Thank and reserved. financial the unless this quarter and company's fourth quarter and certain measures technology with operating and differ involve rights financial in events. outlook and before Non-GAAP website. discuss Beth accordance related drivers all results or or the of historical results the in statements at and in and forward-looking NeoPhotonics, the be than a and subsequent not found will CEO; the performance actual future can Relations all and Non-GAAP regarding Form to review Chief today for These Investor first financial of and include for and today during statements With reconciliation factors statements begin not our measures projections, are providing XXXX. provide inventory and business results, that measures with then filed of quarter sole balance for availability, are conference information, copyright quarter outlook of of Jenks, other X-K, economic and for NeoPhotonics contained afternoon. risks may noted. and Officer. Chairman which the being Beth discussions webcast of to results joining The business call needs release SEC then include could are GAAP. NeoPhotonics demand, section Beth to of business of the press cause for with statements property a GAAP development, provided including accordance in Tim not with fourth Good Certain Various and of measures levels, are customer this product company's prepared is XXXX. with open and in capital and discussion XXXX GAAP a of results superior income statement non-GAAP press

annual forth dated Some set and in are of XX, and quarterly factors our release filings. February these risk have described XXXX been press SEC length in our at

to turn I call over will Now, Tim CEO, the Jenks.

Tim Jenks

afternoon. $XX delivered good to year-over-year. Demand and representing strong we the the dynamics quarter Mike, with you, Thank remained for all This million, revenue results QX geographies, of and growth XX% NeoPhotonics sequential throughout demand year. was saw across XX% a similar growth strong solid NeoPhotonics.

trade tensions. Within the deployments, as of from China rest as within and China, we continued domestic in saw deployments world, continuing growth outside Americas well while despite a larger of China shipments exports result and of demand trend network as their Mobile, a provincial increase especially sequential

demand China we was that in high the seasonal across quarter During with saw lines. normal product growth consistent speed our patterns

have volume cities Industry In issued in is scale worked more around licenses XX expanded that thank we want normal points, our of to who marked steadily in be lines, colleagues improvement. by to percentage we XX understand to margin addition, and to growth I trials expansion our Technology. demand, China increasing these significantly various than XG for mobile expected in and that With points and basis deployments, strength of are with product construction Ministry initial hard QX understand achieved large deliver regions to licenses QX, NeoPhotonics regarding combined gross granting starting. the XXX XG according These the annual are From of about all approximately continued our we across quarter. improvement. this key Information the world margins

This years, strong flow. profitable positive shipments, and highest two the with was quarter and operations past in orders our quarter cash revenue

trends, demand switches, including core and with our and deployments hyperscale continued with serve increasing the include components. XG optical aligned ahead, business drivers multicast our drivers beginning centers Looking with presence strong basis growth a capabilities with continued switches, wireless us needs, capabilities infrastructure technologies, growth. providing include the for of in bandwidth networking high-speed markets advanced in are the that increasingly optical we data for well continued and high-speed of our Business in networks, deployments aligned

for in gigabits continuing new As comprising Products business a leader of telecom and data in and be the Speed in driving force our seeing solutions datacenter of XX% rates our I the prospects. revenues network above, XXX to am optimistic applications, networks NeoPhotonics’ by our product for communications demand are about speed direction. highest high we illustrated and for speed digital broad-based optoelectronic as High solutions interconnect

and advanced which Our is by demonstrate technology, high-speed continuing its core combining photonic is devices. applications to electronic optical in our benefits integration, hybrid

per now not also for on at gigabit second product support single XXXG new shipping second. to products but a are XXX just wavelength, while capabilities transmission We per XXX X and developing Gigabits terabit

and than these in gigabits product of more with products fourth revenue comprising quarter. the XX% XXX above Our our continues growth

Rounding are hyper-scale coherent long and CATV XX-gig in XXXZR mainstream At as the gigabit in become the XXX-gigabit well. ramping transceivers, network. has continue levels. replace of focused solutions next and applications, photonics performance their with rates continue capabilities, speed performance optical our the in modulators receivers of used laser transceiver out which of and pluggable in time centers coherent ClearLight reach and same IC PAMX to solutions increase. appearance. will modules the additive expected coherent make XXX-gigabit line several high modules, and and including time, to and Shipments Both along XXX-gig XXX-gigabit data accelerate see for XXX DCI these based shorter segments leading, DCO optical used years, be and applications higher XXX-gig developed performance coherent high applications components, lasers our range of industry We telecom to our suite solutions our solutions of are for to are EML edge as lasers at will data well to business the a our metro ICs, continue leveraging which for volume be card next which increasingly are expected growth components for will optimized in as are our year. DCO deployments honing to modules. our high key a performance in in CFP to for as non-hermetic Further NeoPhotonics continue coherent our bandwidth silicon optical allow performance

address is edge existing of Optical the our continue Beyond and take most leading speeds I our needs portfolio week. Diego product San making announcements. several largest performance at we OFC the Exhibition product next-generation will to highest trade Conference the in would influential like that show in networks. significant next innovate place products, Communications to in Fiber we and to industry the high note and are

we combines box be compact grid pluggable Optical or hermetic XXXZR package. speed in in based operation and First, in high array, or Coherent gold can designs package COSA of XX which a our photonics BGA, gigabaud silicon a receivers ball modulators demonstrating for modules. The COSA, Sub a for Assembly, implemented live suitable either will use be a

to operation next-generation form which in our optics tunable silicon packaged be linewidth cavity or silicon we is our separately Second, Nano-ITLA. with other directly on demonstrate of and similar the based a will external live photonics narrow of can circuits integrated laser photonics current

be and our high Third, introduce XX CFPX-DCO finally, components with circuit-based the module. is integrated live and our based enable we demonstrate in I from performance. increasing noted expanded a first points will and QX all can modules margins basis our optical achieve a low-cost multicast growth, have on module quarter contentionless QX to tunable existing quarter. And CFP-DCO networks. CDC integrated in that volume With be CFPX-DCO or operation the to fourth points switches will demonstrate that filter internal array The over pluggable to used XXX-plus coherent join we revenue ClearLight coherent to in to photonic optical

the initiatives seasonal effective we and year. China, QX deliver to from Our cost reductions. shorter the to have cost in pricing After expect in declines continue resulting expense management changes solid and been annual volume the throughout

Over growth profitable the our competitive less last while several businesses on focus quarters, detailed areas our we efforts to trimming are unprofitable. that have or

Russia end the to This well quarter to took announced early an exit steps We as these agreement operations. transceivers production we changes of further our signing unprofitable January. client-side of as in

by leadership which on to intend and while finding we the technologies results path, encouraged are key on We additional thus this far positions. efficiencies and products in the focusing have continue

prestigious Huawei’s fourth Global Supplier quarter, received we in customer the notable Award. some including recognition, Gold Finally,

globally, in our We our deployments are passives over that, laser and growth in let resulting high businesses. and our as call and coherent in well to overall the Eby. see additional XXX-gig CFO, to With beginning Asia business speed turn deployments me XG as Beth XXX-gig

Beth Eby

good Thank you, Tim and afternoon.

operating customers similarly geographies. China with million, with company’s and XX% the Huawei in normal strong revenue XX% execution to of quarterly Huawei. by up, is resulted positive flow. XX% fluctuation profitability free movement were total in Strong Technologies, revenue, year-over-year, compared XX% was including China. its revenue Americas the up the basis improved net As XX% mentioned, from both from quarter. XX% of was from combined and affiliate driven the approximately a $XX.X largest leverage, to between and for Tim last demand represented margins of western for Shipments customers’ which of and accounted in quarter. drove volumes on range prior customer manufacturing QX non-GAAP gross cash Technologies, HiSilicon XX%, normal down our This contract down in

customers XX% to after QX. in four XX% total Our of next represented revenue Huawei compared

XXX Other of under fabs, that in the trade charges, our as was Our non-GAAP points reductions annual of the volume than absorption reductions impact of the and this, cost mostly quarter QX. cost of were laser fourth in discussions. points last Within partially solid margins charges will down points XXX sales charges of than XXX the of margin U.S.-China full initial other from point XX.X%, three comprised basis and XX.X%, expected were price related in have QX. points one up product to higher offset impact approximately the of tariffs from quarter gross basis impact basis less

translates operating by Non-GAAP non-GAAP by than fourth quarter expenses, the for fourth million in $X.X QX, to a of quarter, to $X.X the expected was operating non-GAAP for the million $X.X pushed negative out less million, Non-GAAP a $X.XX million better loss certain compared to improvement margin -- loss driven R&D to share total profit fourth This expected compared improvement as on driven per operating the of the tax was quarter we X% $XX.X in than quarter to income QX. expense was of X% earnings $X.XX gross in a the net the lower third Moving slightly provision. quarter. or for a compared slightly spending. in

XXth announced as for $X.X in $X.X as $X.X expense, For the $X.X in QX. the related and to period. and January inventory $X.X was statement stock-based fourth quarter up million from I the the the million write-downs, million, Operating $X.X which million due expense, related included out approximately settlement of quarter, in write-downs, from of to charges quarter $XX.X asset end-of-life loss press fourth EBITDA compared acquisition Operating million, and XX.X% quarter $X.X charges GAAP XX.X%, disposition margin $XX.X restructuring restructuring million to fourth the expense adjusted $XX.X million. was million asset a of inventory Fourth million fourth my $X.X was part will million quarter million The a amortization settlement was close million up results. was Net the write-down compared compensation in release. $X.X of of margin prior QX. $X.X our discussion million for related quarter of of in of our of loss the for quarter, $X.X $X.X costs litigation income with review million intangibles million litigation gross includes end-of-life to charges. preceding of

inventory XX Turning finished million the or with investments cash, in and $X $XX from the balance cash, days, quarter to $XX million quarter. million restricted but expect the million sheet, down Inventory $XX toward than target strong our third lower to quarter, cash back of this level QX. demand. Free flow on in days range of target, This we increase was million. third Net up was the from we $XX customer was

press Safe outlook and release, that in performance, I that forward-looking our for everyone Harbor Before, results the discuss fiscal our statements. would causing like included differ and from our our statement, to revenue public affect and risks actual XXXX, our the materially quarter first earnings SEC uncertainties to I discusses filings of with of future could remind the

expect related the of quarter of production first price Year shutdowns the to For Chinese XXXX, and reductions usual seasonal New see to we declines. impact the annual full

seeing of revenue purchased Additionally, related sub-components, constraints pushing to dollars few for are potentially million supply out we some certain a QX.

As increase number XXXX includes components. we generation we chips will R&D as have of a we new products. in invest next QX of support and to coherent payments spending previously, said in our early

loss Given XX% that, in range in March the per the an are; $XX a the reflective XX%; of fully the non-GAAP XX% $X.XX range loss in company’s to range $X.XX $X.XX of margin loss. diluted of approximately are in expectations $XX a $X.XX range XX.X diluted million shares. of in the numbers million; These XXXX share earnings revenue earnings range and a to gross for to of of the XX%; per quarter GAAP loss, margin diluted GAAP non-GAAP the to million to gross share

for strong. was business free positive. gross Our cash Revenue continued target profitable QX increased, to inventories within were operating flow remained expand, we and margins and leverage up, was

signals of to While through the I’ll we are Therefore, With please discussions, and of for our the for positive business the from XXXX. questions. trajectory year. open mindful profit our ask customers about U.S.-China are of lines Operator the optimistic coming the revenue very the trade that, remain we uncertainty

Operator

question take Instructions] of from go [Operator Hallum Thank our We’ll Craig you. Capital. ahead Thank Shannon Richard you. first and

Richard Shannon

are How Beth. Tim and you? Hi,

Tim Jenks

Pretty Hey, good. Richard.

Beth Eby

about How fine. Yeah, you?

Richard Shannon

don't know, an the case just for here look that at XX there's the sure quiet a went wants I take that. seconds, issue. if one to think But about anyway Excellent. line I not no in operator

a Let's business? guess in in you impact couple activity, start to seeing Tim environment I things tender your add see more thought Maybe, and what little how maybe maybe are want on for China to an will here. like XG bit questions demand if growth here, terms of of have you me soon report both to on the

Tim Jenks

see. In the to prepared and we in might as of our from so. our XXXX, let's good has look be QX demand in to in be is customers ports XX% the We continuing be overall at or see that QX. We Yeah, messages strong. are saw we pretty China, probably continued And China in speed strong. range high ports, business do up remarks, XXX,XXX said about year-over-year growth

far the And line how to is the so of continued this the port And projections. growth. but with reflecting we're anxious see been in that thus rest their plays year, it's through

Richard Shannon

charge could we there. a I loading away go lasers up is asked regarding last calls laser discuss one, see been some can think you've couple business, That I Okay. of under in for if XX-gigabyte know should helpful. to maybe ramp gigabyte expect you lasers When the and Question I've there? Tim while. your see we pickup when selling see XX that we

Tim Jenks

and onset we're Well, also increasing of been business and let's of has that I seeing so the reflective think see pretty actually is meaningful that XG. backlog

know think analog calling you lasers of as and utilization XG RF used that are there's that for that the are we amount fair I front in links make networks. the a

through volume XX product We be gigabaud of expect this XXXX. with several meaningful address year your in Our in and the that is design would by would ramping end that cycles question? that and producing folks. Does

Richard Shannon

see on market? do do that a supply comment kind this think last Tim, or And capture can XX-gig technology Yeah, what this maybe constrained market. just you follow-up a in as the of on you there specifically, share you

Tim Jenks

talked there that. a gigabaud are then manufacturers and we're of so lasers, XX-gig Well, think the electro-absorptively we than one of I lasers, tougher to XX referring XX-gig handful EML step modulated let's about is see, as

the to So would how year. decided divide with four I the how course out. that see during that supporting be will think expect end well I customers But or our five plays support companies we line capacity of business, that in the evenly use But is market. we'll pretty each

Richard Shannon

Okay. that forward look on to topic. throughout to you Fair year I talking enough. the

constraints. the You question didn’t supply on answer

regarding the this constraints help wide end? do NeoPhotonics? if this in Beth to mentioned for quarter. or those us your can prepared seeing think supply you're constraints, to nature of them And you've guidance Tim, understand I you what Is industry are. the where remarks these specific when relative

Beth Eby

start parts. I'll So, that tightness Tim pile What and on. is specific in and can the our Neo we're some a of seeing of parts couple global

increasing. few we've expect lead-time that's packages That's pushed mentioned why supply that starting that I've a past was got QX. to think -- deliberately that I QX from to revenue see on QX. million we in we're the the said for likely I getting We're of increased

Richard Shannon

Okay, that's I'll than at customers describe from quarter Can on or XX% question number one me, you other your jump customer helpful. line. in other please? identify Last your the least

Tim Jenks

they customers Our haven't other are all -- identity. the the really changed

largest our the of are generally each So, top customers. dozen equipment half telecom in providers

Richard Shannon

Okay. what I you And customers in percentages? were have any specifically. if XX% so those quarter? the other guess Do

Tim Jenks

add to Yes, for they the next up four, did XX%.

And report a file we'll K. so -- the those think we'll when I

Beth Eby

And Richard's In K, going. a will to where our XX% the year. report answer for Ciena customer we that was

Richard Shannon

you All right. Thank much. the jump will That's in helpful. line. I very

Tim Jenks

you. Thank

Operator

Instructions] [Operator from of and take next Najam Cowen Richard. We'll Company. question Fahad our Thanks

Tim Jenks

Fahad. Hey

Beth Eby

Fahad. Hey

Fahad Najam

list. Looks going But asked questions of like to be all the that me commentary. Richard the let you on Thanks. on Hey. were ask my China

taking reset? would into China of we And XX% should going take year net be or the In resets the assume pricing to is so remind the growth, X% are? you XX% range? case, account XX% those where Are to price in for if annual us the up revenue I can terms port that's the the if

Beth Eby

in we'll counts we've is On grow minus moment then and declines growth XX% for declines at lower range plus XX% historical into year price go or to So, the average talk by of end seen this let port to Fahad, port this a XX% the about is What year. me and are counts then XX%. seeing averages X% about average. price what XX% XX% we're and of the of

Fahad Najam

so all if for say to now sales, Thank look is of strength that room America, almost America and approaching XXX-gig you. North would to I fair were Tim is your go Okay. be XXX-gig bulk shipments at to North almost XXX-gig America North shipments the that America the plus? North it in in XXX-gig is XX% majority

Tim Jenks

speed So, and what XX% over the in that last remarks XXX-gig prepared quarter above is is for the said which trending are all we years and up. two been the steadily high has

also said specifically We XXX XXX-gig gigs, that for above is the XX% quarter.

some the I for be of time some network, of the will cetera as to a et speeds the at particularly starts displace to significant edge volume XX-gig. XXX-gig XXX-gig, XXX-gig, starts replace think

So growing to quite for volume Western time, XXX-gig but It's will growing. essentially also in in but quite continue XXX-gig some markets, it's China. generate strong is

amount the shipping growth we're we So that business. a rest of and of as than China would fair go our rate expect stay well to will higher products that that

Fahad Najam

what was at If what American was of for sales percentage XXX-gig? question, I trying actually could to get North rephrase my I

Tim Jenks

We haven't provided any I breakdown that. by geography, answer really can't so

Fahad Najam

the should of the a headwinds for these And right. also this are QX components? need from into shortages? that margins? gross your to the to of because you is headwinds the fully rest margins QX? how the QX it All issue us And there the extends shift think recovered the on help what that terms the supplies, pay and If that for of or year? understand we Does is or there any risk shortage about may one, can pricing this in negative shortage for you of if heightened Is I a last, margin on in

Beth Eby

mean QX You margin? gross the

Fahad Najam

Yes.

you QX expect myself. that remainder assuming you And any QX? is from those slipping of second risks expect that there impact in for pushed of of meaningful or you I'm repeat Do is a all to Let you that in -- the orders slipped pay on few recover recover had if margins, question got component shortage do all is fully components? The there shortages your revenue need One, gets QX. that to highlighted dollars the heightened any is that you to year? into revenue million out some that me price components, shortage there negative that gross the to see if of

Beth Eby

as fees while to expedite internal don't So have know parts, you we mostly related are those manufacturing. we

constraint, So volume fixed the our supply it we're over got anywhere a reduces costs. which absorbing we've

long-term So based supply we there's able cost should some level limits to year, be of we recover us currently in QX. fixed on related impact to just through suppliers going the tell the a as what that believe

Fahad Najam

Appreciate it. leave floor. I’ll right. All the

Tim Jenks

Thanks, Fahad.

Operator

We'll take of Zhang Thank now our next from you. Securities. question Jun Rosenblatt

Beth Eby

you? are How Jun. Hi,

Jun Zhang

guys. Good. Hi. Hey,

factoring Thanks. about side also So, the ending production affect yes, issue the could talk margin the the temporarily you module and short-term. gross for

Tim Jenks

Yeah.

announce certain did increasingly on we we focused So modules it’s for in side where were client a ending XXX gig, have business the modules our that solutions. of been production level we component

to optical expect competitive doing going forward and continue have where lasers very We ICs. we that

client And component we solutions into transceivers, on module better of number that products volume, so that. supporting to competitive. into And solutions the it of that few focus as relatively not our was domain to level that was business we interest wide component had we felt small are essentially for the customers range a with

an have going of they lower a through year, but manufacturing as process. end, the of are comes in life those -- We're ultimately it it small actually would the a is would So half margin impact. then that to an a end but of because positive bit first have

Beth Eby

wasn't our business margins. to a it Yes, huge enough swing

time bit as buys should and a last of in So little pop we QX in a margin. finished QX, have we the

Jun Zhang

Okay. ahead. And -- yes also -- go

Beth Eby

Sorry, you go ahead.

Jun Zhang

the your side? from speed you a the and about side, there, of last growth demand the in situation on high a also kind the the little talk side, we what on think fab your current could Japan bit Thanks. had impact laser half I progress Yes, rate Japan laser first year yield big and

Tim Jenks

aspects there Yes, couple are here. a

ELM tunable of lasers client lasers that types electro-absorptive on coherent are we provide for now modulated provide we So side lasers lasers on we or principally that products, offer, fronthaul. have and XG three used we different

of Photonics We for use also are transceivers. based designed non-hermetic a that lasers have range in Silicon

about principally So think for are center a Japan, that the fronthaul. are for used about side the referring things production partially result to type couple it's volumes lasers inventory client yield, of when ask to Ultimately was EML volume, decreasing that there you result is here. data and of overhang, What that XXXX during ultimately saw was partially the but decreased. we of a

headwinds the addition, a as was In particularly use there -- certain applications the certain to DML in type extent the products. FR started reach reach to smaller and LR

see Now new since trends that is now the in time what some we business. positive EML

for for gig create example, also that increasingly XG, EML. applications of fronthaul So, for use will the These XXX for in move XxXXX demand for for RF gig. XxXXX example, the to are and EMLs link XXX both

So At forward. an through increasing positive we we and our looking have increasing yield. present, backlog, direction seen see volumes fab increasing

is trend have not the but we're go, to ways full. We still positive. So

Jun Zhang

it. Got Okay.

about two about I actual clients think question my of China the the some a asked last one trade inventory. was is by tend to build vendors war, during concerns I lot the that

that about comment is in So bit the level kinds diversify And you a some could their base. of also Chinese supply of concern that China? the you or suite little how second feel vendor inventory

the position NeoPhotonics supply also talk about of in chain? could the you Thanks. So

Tim Jenks

last a based for that Sure. with vendors lasted internalization. as the in well movement This Maybe is from of that the question has China decade. both has that first been supply concern deal as I'll last increasing supply

sure So new. in that it's that this ahead development that speaking to so the doing We and not our Generally have think we're are product ways make of in innovating we curve. the on speeds highest well and the serve company. our it of out driven worked the focus is quite innovations has has focusing that the highest that speeds the and NeoPhotonics; for

business That that an speed an right localization. recall did happens by XX% the seeing absolute speed we two the same with customers of is on And then but the low low level. years that use and Huawei that there what all China us on was new products area also business; the China trade, The what on strong level basis. absolute said, business overall see up a from continuing now see was concerns to an up. that ago, impact are on see -- relatively respect actually You'll to we we exited are of and business in was we in designs. buy our manufacture they token We're with working with of

quarter. those they're selling that we're strong same activity as a you see do Though they're do tender to to all how triangulate what and offset China time what level, say of be we much shipping. with limited token, can and supply. fourth any readily. activities to we what I about higher that So, in thing customers and that first knowing effort think our Back a the into might levels little attention the the at positive. on doing By bit focus respect will think there we saying certainly We our they're of we inventory the of take asked to end on

shipped far. products out balance is So, the product of in triangulation in thus reasonably close shipped and

Jun Zhang

Thanks. Okay, got it.

Operator

our We'll take Jensen from Instructions] next Piper Thank Jaffray. of [Operator Troy you. question

Troy Jensen

Hey, you. thank

reaching as First congrats profitability promised. of on al

Tim Jenks

Thanks, Hey, Troy.

Troy Jensen

Okay. Hey.

some move just product? you'll at So maybe ups you Tim, do first but follow I to OFC. think on you're the When you, give to for launching that in for general the for Beth, could DCO got CFP us availability update you an here

Tim Jenks

telecom and important, XXXX. in increasingly the datacenter product both are of product, DCO During is on lot side The things the the side. world very a capable a

schedules, new an important good that this year so our on to is we capability specific been So increase continuing for expands product and product. output these range, set our That's but a have DCOs general. in -- XXXX the

Troy Jensen

your it you DSP is multiple partner DCO? for Can focusing simply or the just tell on one? who us Is

Tim Jenks

buy actually the from We of DSPs. vendors No. of each merchant

Troy Jensen

out And XX cost million And talked the fourth a to XX, of QX pretty you I Tim, Beth how just versus think, about in that's Perfect. -- step right. reporting OpEx XX.X after cuts. here, function. about All Okay. some big for Can the quarter, roll so would I us to here, know how insight kind function probably help helpful. on is of the you you of be the R&D just with you think step year? of kind that said going throughout more And investments kind just but big is OpEx

Beth Eby

We a for one-time were million $XX stay to million. that components us in of but range the in certain to that of we're range year. chips I would and $XX expect have broad some on designing, within payments most QX

Sometimes…

Troy Jensen

Okay.

Beth Eby

of purely based and but lower end the the the mass payments upper of Sometimes and sometimes range, on like. just timing

Troy Jensen

all that's guess, Diego. I I I'll in Understood. San right. All Okay. had. guys you see

Tim Jenks

Troy. a Very good. lot, Thanks

Beth Eby

Yeah.

Operator

take Leopold Thank next of & from Raymond question our James you we'll Simon Associates.

Tim Jenks

Simon. Hi,

Mauricio Munoz

Thank you guys, Maurice my Hi, taking its for Hey. question. here.

Tim Jenks

Mauricio. Hi,

Beth Eby

Mauricio. Hi,

Mauricio Munoz

I inventory wanted well, the to levels, continue over your in quarter. decline to to just seem go

sort of there of going impact a should days XX below target. two-year seems it like free have – XXXX? cash -- low inventories forward we your on levels And think well How previous inventory your your they about potential the expectations for flow with hit and that any

Beth Eby

remember our our XX flow cash always that follows So kind days. of revenue by

for hit second year in to in flow quarter. would you So see us the a the low expect cash

then XX back level and But So the use the XX backing take it's you inventory just to of up up QX to question, inventory if days. we're revenue, is low. -- days same dollar

seems would like. Every to lower put we So we we into time it hubs pulled. something the VMI than get are

it and is like build to would we So it lower back up be trying will again. than we

Mauricio Munoz

governments away their to then, Asia, Huawei sort operators and multiple demand jumping XG China, in Europe there to have Okay. announcements original exclude from Thank of and by plans talking particularly been you. about And initiatives. and

long-term if an about We that, have to But question Some perhaps Chinese to push core very at my trend. their starting some existing you is have their Huawei the even talking believe in versus again favor this network. that is, re-shift from effort China from in -- of counterparts, their trend of mean share counterparts Huawei any operators seen some in of China. guys European I all,

Tim Jenks

the is in often is And the shareholder companies Huawei, are Well, the ZTE player fourth usually representative three. Western the of smallest they who and and is numbers China, Bell -- they're largest Shanghai then Alcatel are and share. one market FiberHome two

or speaking generally but I given ZTE ban, line play normal with in XXX,XXX XXX,XXX, Huawei. forecast. leaves FiberHome we're expect that So, for in XXXX, from of saw are notwithstanding, is China, would XX,XXX earlier which to during those XX% in probably We going have XXX,XXX expecting things we be we said ports were seeing and growth the way. in share about prior ZTE say That -- smaller we the to that XXXX, so to

All appear taken, of at not there the value, some large countries news doesn't on the in totally or of the So to company saying, to countries have do impact that versus any are meaningful read shift. that what companies their face think countries. I on size not be I of terms same be countries small are just share Huawei. the

their is Let's is the that to so continuing Huawei roll. not a and industry third business of forget

And by usually might they so to carriers see or in reduce some Huawei, extent, that saying bidding yet we but do they're not it's countries things buying.

business. So, impact on we haven't seen the real any

Mauricio Munoz

losing just also in talk And be seems for that investors. providers talk from largest that go you then some while it so say, customer Europe perhaps scenario, particular optical which a Can a that NeoPhotonics? the the that we’re about question you this hear to aspects share next on system really we and can usually Meaning that. for let's that share to offsetting about might happens, NeoPhotonics, is

Tim Jenks

do with significant each think Huawei, because have business an a competitors. I we also this of with NeoPhotonics, but for interesting is their significant Yeah point we have business

it's And respective so our talk their X:X and shares. we And our largest reflective customer of Next also it's about X. while market

need We deployed going a and them. When and actually that are in for telecom know support position there going bandwidth get global is not consumption business, their continue enjoy multiple of it's some down. They're where carriers trends would of curtailing where the deployed terms the look strongly deployed. market of get company what high datacenter slow of level overall think networks hypothetical And any suppliers. we to balance. to situation, speed we is we to going to suppliers on terms multiple you they're by if they're by We hyper we that believe to the get players. there do of and to sell competitive in So all be to that a are each that happen at going going

level that wherever can say, all company national continue a buy don't business. I we and happen are either or do on have ball a can customers on So to we to what well do support will whoever enough But a crystal our will they level. they

Mauricio Munoz

you Thank Thank Thank you. you. helpful. That's questions. for taking my

Tim Jenks

You bet Mauricio. Thanks.

Operator

you. concludes back question today's closing This remarks. Thank to Tim and I'll answer session. it turn for

Tim Jenks

for forward on updating future. want photonics. in in time Have all interest We Todd. call the a and day. look for I to you, you Bye. to our Thank thank your attendees progress good the

Operator

you and this conference. ladies today's gentlemen, Thank concludes

disconnect. You may now

Neophotonics (NPTN) 28 Feb 192018 Q4 Earnings call transcript