MTSI - Earnings call transcript Q2 2021 | MACOM Technology Solutions Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to MACOM’s Second Quarter 2021 Conference Call. This call is being recorded today April 29, 2021. [Operator Instructions] I will now turn the call to Mr. Steve Ferranti, MACOM’s Vice President of Strategic Initiatives and Investor Relations. Mr. ahead. go please Ferranti,

Steve Ferranti

our Good discuss and of for to Litigation harbor Reform differ XXXX. results its would everyone results. Olivia. statements are Act statements, contain conference the XXXX to subject call as I that materially in remind the to to may second like today morning, you, will welcome forward-looking discussed risks everyone of MACOM’s financial discussion certain which contained Thank fiscal today. from uncertainties in and defined safe forward-looking Securities those Private Actual quarter

to to Daly, a adjusted was risks differences, X-K, Form results could with information. that, A For over non-GAAP and in certain I’ll SEC more And are CEO MACOM’s Management’s uncertainties detailed which you will refer release this press the discussion the today. filings those Steve of of and turn also reconciliation in during President non-GAAP the call GAAP discussion and company’s SEC. of of related statements adjusted MACOM. result financial to filed the with that with we provided call include the

Steve Daly

R&D Revenue third questions. of and some then FYXXXX year remain Financial XXXX. executing focused our After dedicated be our investing When guidance Thank call compelling win We with to in strategic update. to operating Jack fiscal is which results emphasizes for years margin achievement begin represent was employees this you will Kober, our quarter more profitability that finished, was in went market on $X.XX share. take I review EPS provide gross will diluted quarter would margin today’s earnings record adjusted Jack to ago. second good for our like projects company we order and general and quarter results a will a I provide since adjusted morning. high plan, second their efforts nine thank possible. congratulate make Chief revenue the MACOM and and QX share. in-depth public happy fiscal and to and Officer will our million adjusted I $XXX.X of per for for

Before we XX, $XXX cash in portion pay debt. use quarter down would million on announced on we second discussing of like detail, our March would hand highlight of to the to I a long-term

per of announced we few debt. million addition, We notes moments the in $XX In reduce convertible a these Jack shareholder saving by transactions. payments approximately balance to the create two believe portion In transaction these sheet risk a company restructure year. a will our and review actions value interest in remaining detail

down and data was was telecom Our data center sequentially QX telecom we at was and at revenue up at by X% I&D center million, XX% end included expected sequentially, $XX.X industrial up was million defense as million. market and generally $XX.X and sequentially. $XX.X XX%

are technical on book-to-bill and Our of a approximately making we pleased we believe financial was meet quarter plan This business ratio was bookings gains with objectives. the turns market. we the in QX solid XX% are are was Overall, revenue. our our our near-term we X.X:X and and and our to total

Now specifics markets. more three our turning end to in

applications was Our by a QX defense defense part strong in market and industrial demand of in up programs. end driven variety and from radar industrial revenue U.S.

growth. our current directly to potential developing recent of which improving and accounts the to refocusing on implemented our increasing will our technologies markets, initiate industrial channels, growth, new supporting strategies standard and sales Over year, defense These we past efforts and are of appeal customers. and including custom some into have additional cross-selling I&D products, key

begin in in begin down carriers telecom XG to China. to improve the end business QX market XG infrastructure. driven in softness when telecom will our Chinese by deployments We launch Our was additional revenue anticipate

as is visibility timing. worldwide at secular limited We data demand have improved opportunity feel rates as XG to connectivity we growth higher remains growing. for today the the intact in exact However,

markets, revenue share primarily expect introduction growth strengthening quarters, also and product the CATV from We new gains. PON, next and satcom market by driven in few

up end center international domestic in QX data and market slightly Our revenue driven both was by business.

We expect XXXG technology are would coming emerging XXXG the to growth perform this well like our in that by reduced volumes. today. may flat I highlight There quarters, be tempered to products four although or areas

introduction of to MACOM KV capacitor line I semiconductor high have we voltage to support announce pleased am a CAPS. product branded a First, process as developed new the

highest of has to the performance, Over silicon new collaborating our industry and months, opens new team the one a which it proprietary process capacitors. substrates. in upon XXXX engineers kind creating This industry’s voltage trench new in silicon been MACOM. have via our and technologies opportunities very structures standoff up unique leading markets several, MACOM produce achieved past XX deep The process device knowledge and volt conductive utilizes builds for

develop high electronic voltages material dielectric that with high at voltage a can then systems. it successfully extremely withstand Our to combine proprietary other processes Capacitors and breakthrough to ubiquitous are quality here maximize was performance.

least expand markets CAP strategy $XXX to renewable devices. our is MACOM non-commodity where fit line stability, superior semiconductor estimate that SAM radar discrete performance will and customers includes pay systems unique voltage will And products strategy by systems, KV with with this million. into a various to perfectly reliability, we scale chip operation. business solution high-performance believe industrial This Our We a at medical systems, target size applications. our and energy target product driven premium for automotive, high

am supplier we and hardware XXXX, new I selected radar late customer Second, competitive to defense its level. a is to report In program. our performance. our the pilot field review microwave, multi-XXX sub-assemblies superior watt with to pallet selected and validates win RF process, current and limited. amplifier in power due solution amplifier ability technical a qualification power bidding high a provided was QX were our production after we This The and best-in-class at U.S. pleased to be to pallet volume

opportunity. pleased life of to am hour includes temperature I However, this have And high announce large program nearly third, test. which represent X,XXX we Telcordia laser DFB our and operating a XXG a others like finished the growth it qualification, completion

are pleased date performance to reliability. customers believe be will products our satisfied with and results We and with the our we

targeting focus the XG as priority infrastructure are will data optical we on center. We then a and

that new a launch formal will development. the We and making introduction And expect PON product months. progress are come the in product we fourth, with few next excellent XXG

laser both for We and and for EPON, have XG-PON XGS-PON development and sampling completed drivers applications. ONU OLT our XXG

We have XXG applications. OLT released ONU for detectors also and photo

We Atlanta, power progress we take allowing laser And or will the finally, attend the for virtual mode are of DFB communication XGS-PON. high TIA improving June the performance, or International to new nanometer networks share. XXXX and In burst finalizing IMS to XXG make OFC. conference Georgia, market us optical the design and Symposium in on our MACOM Microwave continue

and tech to demonstrations breadth some microwave, We are educational each and into that I’ll analog will which virtual insight also and demonstrations topics, signal, The technology, planned our digital can our we RF, of our MACOM newest revenue exemplified information provide a demonstrations talks excited drive products valuable. for our event product the note and of which find optical believe contain the product to on we believe share of host series future customers will products these applications, will mixed growth. capabilities. design and

millimeter three high wave. into organized performance be and can RF power demonstrations categories discretes, IMS Our

discrete component KV switch medical product two demonstrations and of throw for driver in watt a being line CAP’s military used XXX MACOM’s demo Our applications. a a application high-performance simulated include force and

technology. our GaN Our use Carbide four on Silicon carbide RF pure power MACOM amplifier demonstrations

power showcasing high demo power will We single GaN a X a level from device. kilowatt

showcasing GaN and high X.X We X.X XXX high amplifier. watt efficiency will also power performance with efficiency, the gigahertz demonstrate between

We gigahertz including matched XG over today. and planned OFC, And millimeter showcasing band a demo we multiple massive module band system. watts to will power. last, XXX MIMO GaN showcase power combined XXX of Doherty DPD and a XX achieve performance also will have GaN transceiver watt a I’ll in using our which pure showcase wave XX And demonstrations, how ultra to carbide performance X megahertz, KA watt demonstrations to highlights two we last, highlight wide a amplifier power amplifiers XG amplifier. XX high At mimic front-end solution

data solution reach two The analog of first short chip a is a demonstration applications. center for

new be PAM-X Open switch. is and a and analog be IEEE demonstrate QSFP The two and number applications. in one Eye chip MSA number VCSEL array, CDR within And chip module Chip interoperable is we our chip will fully two XXXG compliance, solution and Ethernet a demonstrating set compliant, TIA. bitter driver. and for also XXXG AOC Here, will CDR PAM-X transmit standard

XX kilometer will all fiber QSFPXX The of designed This XXG link new second using single reference components. with our a applications. mid nanometer a The using wireless wavelength. is feature for haul demo platform a XG is XXXX MACOM demonstration XXG PAM-X complete demonstration designed mode optical reference

MACOM’s invest laser, existing , showcases PRISM new and TIA. ITEMP and design future portfolio, integrated diversified DML drive a and many continue PIN a to gigabaud XXD with has photodiode, and highlight in product like XXXX I’d XX driver, that reference PAM-X XX XX gigabaud next MACOM while growth. a DSP product large gigabaud Our a new we to lines

upgrades as where product life such, connectivity the lines lines are that will of product nearing a or these lines and in of down. our their Two minimal demand we for due few in certain changes. have legacy protocol to investment we also We ramp expect make product cycles product business time end

expect to from view levels lines product decline cycle million revenue in We the as events We in compared normal these to FYXXXX $XX by periodic management. product FYXXXX. when approximately these life

of that declines. offset more confident our We I the these discussed are strategies which and will some products, new products, including growth today anticipated than

we introductions. products, XXXX, and Our the number fiscal new quality a key of which improving compelling pace record driver released new of is been new have products. product the why prioritizing we is In growth

more report, review Now XX% I provide products least now to are a detailed release in more pace our financial XXXX. am will results. pleased new Jack at of we to on fiscal

Jack Kober

good XXXX, and for morning, Thank second adjusted record our achieving X, had April margin of XX.X%. ended XX.X% everyone. and quarter you, margin Steve, gross financial fiscal of operating We performance

share. and growth per In addition, in we earnings sequential delivered revenue

want Before initiated reviewing QX financials, I we financial summarize. transactions our during note recently quarter, to that few the a strategic of I which completed will the details

step We debt and toward we important our available associated with our of pay and loans down announced of consistent short-term this long-term a on our as is principal XX, balance million First, $XXX goal cash. one term delevering March ratios. sheet, leverage investments our that reducing an in view utilizing

term to ability the on months. is financial over XX performance past and generation down the pay of the Our direct result principal loan improving cash MACOM’s

XX% us we $XX March proceeds pay The principal. of term X.XX%. convertible end notes issuance over $XXX of all additional our XXXX Second, penalties convertible amount conditions early of in note May has of million and into price, the a of loans the March issued which XXXX executed entered there a no provided conversion convertible with fiscal closing with are loan interest million XX being which with shoe price green notes prepaying $XXX and arrangement, fiscal in down is at associated before their rate net April. We stock the March of took at convert favorable were the conversion We due a advantage historically have used our And million premium the due from to the term $XX.XX. date.

actions, reduced from approximately million. $XXX X.XX%. reduced of X.X% $XXX to We interest combined debt debt rate overall million we these by outstanding on With our

extended at on convertible expense we their to structure. banking maturity note million interest expect the I’d our of annual around We to Barclays current thank rates. debt weighted like date execution transaction. support, And save for team $XX with our the the in average

improvement from from offset which market. data was revenue anticipated million, the onto in growth revenue $XXX.X of defense customers, quarter the market, improvement of center QX prior industrial market, Revenue by and decline was revenue sequential the telecom by sequentially XX% in in basis, QX end end the versus with driven slightly On our customers along international modest QX quarter. QX. Now the the XX% primarily financials, up The second in for was in was the up our geographic revenue. XX% approximately domestic a is from

long-term levels As we our of calls, the This broad highlighted on portions see semiconductor is some demand. industry partners, in as to prior this, do test impact suppliers than our within chain. of temporary as some a normal our external has utilization We of to foundry assembly customers. causing supply not of our well a especially this ability some increase Asia. service We in earnings tightening expect seen and higher on have at

been have delayed we guidance. QX, delayed to our in some Although QX shipments expect factored shipments. have into These

its job Adjusted up fiscal to are XX.X% or gross excellent profit sequentially. met. million our has XXX team was QX of relationships with ensure an outstanding Our our points operations done $XX.X in has suppliers goals and basis help revenue,

a drive operations Our our Many that aspects record have been is margin gross and quarter contributing all quarters drivers and gross in today. excellence enhancements, our of our in include efficiencies with reflection activities. the toward manufacturing margin continuous of utilization few of operational remain These and to expansion optimizing reduction last the and improvement continuous associated logistics supply scrap of efficiencies, chain manufacturing in over the place activities assets. increased the

expenses expense be As consisting million. past, roughly as to levels. opportunities the QX adjusted Total $XX.X million of R&D continue our were fiscal for we I to move feel have us operating forward. improve in was gross of expense and to Total operating additional SG&A million, $XX.X noted $XX there of will flat we margins expense

carefully of discretionary operating for other the growth from was was QX. expenses along fiscal QX, investments fiscal income continue QX. million development in all from XX.X% in new our We of with million, fiscal product management Adjusted up to up sequentially in through XX.X% margin $XX.X opportunities. operating QX spending, in balance operating and Adjusted $XX.X

levels our quarter MACOM adjusted to of IPO record margin margin back noted, XXXX. operating in I gross second and adjusted As our profitability represent dating for

increase XX-month $XX.X $X.X was $XXX,XXX adjusted combination fiscal growth, approximately another operating margins, expanding to fiscal and was remainder in importantly, Adjusted from compared for we XXXX. a was million. top-line adjusted over EBITDA million million net to operating opportunity expense LTM million EBITDA for QX. expect provide for for fiscal indoor million, expense at of the the to came stable More of expenses of which in leverage continued as QX Depreciation contributed This trailing $XXX fiscal down $X EBITDA, interest QX gross $XXX QX.

and from minimal late Our fiscal occurred debt convertible only with in QX. savings and QX down these net associated the the our interest lower notes rate expense new included pay interest transactions

we around on adjusted beyond, and convert. ahead, level the in to to the lower our expect payment on QX Looking interest coupon the net decline expense million $X.X lower debt and based

in and approximately with QX resulted Our of expectations in was an income adjusted rate tax million. X% our in line $X.X fiscal expense

tax cash $XXX,XXX Our were QX. payments for

net fiscal share per $XX.X million QX. QX. fiscal We adjusted was a our to remainder remain for $XX.X $X.XX Fiscal per QX income income compared at rates was earnings expect of tax the XXXX. to $X.XX, million fiscal adjusted of Adjusted X% at share diluted share utilizing earnings to XX.X adjusted least in compared fully in count million shares of

sheet moving the items. Now onto balance and flow cash

Our million, receivable $XX.X from up was QX balance in million $XX.X accounts QX.

were result, day days. a sales As outstanding XX

of New result revenue up delivery of Our timing receivable accounts quarter, to larger in was of the occurring due balance in later portion sequentially QX as a a scheduled the Chinese customer dates Year.

during was were Our $XX.X end, metrics. X.X sequentially. remains Inventories turns industry million times quarter. Inventory with line million $X.X second another the down quarter DSO in at fiscal

chain, balances, on recognize may in is within our very focused management. a we fluctuations remain there supply cause While the tightening semiconductor inventory which we that inventory

to improve further while also during We continue demands forward, QX. cash had healthy fiscal balancing inventory customer metrics opportunities market We and see our to going flow opportunities.

around Our QX operations approximately receivable. Cash cash from XX% increase somewhat expected driven adjusted net operations by in represented from our in million operating flow flow profit, improvements by the income. accounts offset $XX was of

net was to fiscal from adjusted improve expenditures totaled $XX.X collections believe Free cash income. second should as time, $X.X our a fiscal at speaking million We we amount expect the for of cash run QX. flow for trends quarter. flow million comparable Capital directionally cash and operations increase over flow non-GAAP

on we priority QX. remainder inclusive during $XX the utilized modestly anticipate prior quarters, program, The cash and our million, the the was AFRL during Cash, last in the of the on cash investments expenditures million XXXX, fiscal equivalents generation loan quarter. indicated quarterly for down infrastructure, offset our capital quarter. we us. generated higher to discussed GaN second Cash year we from term remain we Carbide X.XX pay by in will for and of short-term based As R&D fab Silicon which fiscal $XXX quarter a were down $XXX million micron investments

I more as $XXX cash in a be balances, sheet a balance bit the final level short-term and the investment end expect as had We to at comparable the even end fiscal of will year is million debt of $XXX on at the our debt XXXX, to this fiscal detail we area The QX after our the discuss of balance. repayment. million

the At reconciliation transactions down our paid QX at million. a the We these complex. quarter, We of in for debt $XXX this activity our have end by December provided of can million. release accounting of approximately loans summary of had section we earnings debt our the term $XXX be

place, on resulted every rules note of net our $XX long-term the QX associated to other balance portion million In of in as were items a bifurcate based debt, currently addition, these The for required debt we arrangements. accounting in million quarter $XXX and debt ending a quarter with result equity. the the approximately of convertible

Our as which million million our green XXXX of loans, XXXX. mature consists shoe the in $XXX approximately on million, mature debt of term structure, of today, $XX which notes, remaining convertible in and including $XXX

of we addition, million leases. $XX have In financing approximately

quarter and of calculations gross leveraged convertible believe $XX as fiscal the performance as course million on back I now financial will that classified of for We to well times. XXXX. with discussion in With X.X the leverage turn in the a Steve. million EBITDA, leases. financing solid equity, remain exit around as trailing over notes, we improvements ratio the These X.X XX-month of of net include we the leverage $XX times

Steve Daly

be XXXX Adjusted million $XXX range gross in XX% in of range expected is shares. to Jack. to we QX, QX be $X.XX Industrial to and be adjusted of and million expects share telecom per be diluted down margin ending center to to to slightly. and in expect revenue to XX In expected defense on earnings based you, flat and million. the is to July X, fully XX%, MACOM Thank the be up $XXX data slightly. revenues between $X.XX, be

long-term As strategy. on executing maintain our have a we noted, I perspective

to confident years we months and financials can continue are in market take and the We our ahead. share improve

Before your final questions, I opening of a comments. like would to up line to make the couple

proposals make recent from been to semiconductor industry. First, manufacturing encouraged U.S. we by the in government federal the have investments

of role benefit that to history for vital operating and in play XX we in We to be opportunities States, a model funding. see of in fabs With semiconductors recognition and are strategic these programs from United actively very future. the over pleased years will two America’s the candidate we MACOM believe could semiconductor explore

and the the several improvement company-wide last Second, and programs enhancing corporate in-depth of to with drive This an have ESG goal social, of over has current review undertaken support or policies Board environmental, governance our our Directors. initiative months, of areas. the practices, the we in these continuous of

and As to areas key best create these target enhance our value taskforce process, established an step, practices and create reporting focus. in employees ESG a executive policies, refine of ultimately have efforts programs a believe and multi-year level help – our we we and constituencies. will for first will our other stockholders, be This

Operator technology as hardware board, would and our a of new to independent expertise like to software like and the of a I to serves who questions. would take him related compensation business working as to on note, John ask Directors announced Ritchie and the and with I move and to ahead. to addition Board look that now financial any highlight last month member forward our we Finally, we committees. the we on brings audit John

Operator

of Arya coming [Operator Instructions] you. Vivek And our of question line first with from Bank the America. Thank

Vivek Arya

that. in my side, I quarterly, year, you’ll when million does the kind taking business go one-third a I of resumes the XXX,XXX want you like for open assume some almost question. telecom the get recovery doing start spending, looks to visibility Thanks is around resume China highs, stations, Steve, middle something to your if was because back spending, that telecomm to mid-$XXs the is that and on and China China if of what when last base spending of were its

and to So deployments levels? give us and is there Are some and of these return those does see China, recovery visibility in color takes? on when back a we come, the other should prior kinds resumption of what puts

Steve Daly

for Vivek the you, question. Thank

product will will we highs. was position, we And those we start lasers components have we chips. of later into analog our this lot year would performance related this exceed growth saw applications. those fronthaul last we because, year next as cycle, yes, that qualified we additional achieve actually cycle, And think the in high to qualified which are So, do next for on stronger year, prior the in a well believe sometime or we will as RF even with a expect fiscal certain perhaps

end generally new on speaking, groups that expect we market, layering on based would see highs just in achieved So I to telecom product different the mentioned. those

new the in as estimate cycle that I of pointed us timing, begin. terms out for difficult the will it’s In when script, to very

lot that revenue view significant for a this contribution a really moves as into we’re of look we’ll materially And as next of strong something complete we have add qualifications take will fiscal year. these is good that changes. certainly we And a China year news reason, included growth very lines. in we that delays we’re that – new a it actually level QX, the into fiscal it for conservative working And So also product to us seeing could unless The XXXX. quarter. of XG our I of really that some our some advantage at set in are also up not

the market. deployments. to in be is expect on contributor global point we to We U.S. significant we and not a market just One China a European This have years and next the more XG, to engage year time to customers. final are on focused two

Vivek Arya

segment a know bit start to really forth. we Got side, the all I semiconductor to you’ve the see of hyperscalers that to restructuring it. the making? that see companies that When When investments on starting start investment? a cloud business of so line in take and had with that that And are Datacom you other from that’s grow the should benefiting of do some then really quite and advantage the segment are moment where

Steve Daly

Yes.

data product is on our of primarily into I legacy market CWDMX So of that supplier some XXXG the as call a well highlighted for that segment end mix applications. lines remain short the earlier, center one analog as applications. you still And Those really are market. segments. solutions know, And reach it’s smaller as generally we dominant a for short reach

expect strong. over We business that the to long-term be

We would this flat in moment, are levels. I say, level, rates or production seeing run

be four think we service a market. other linear And are the active actually with term, copper XXXG categories then products, new other And cable, solutions. will for And the four on companies, our data the used center, solutions DSPs including working include so and near product in to equalizer analog drivers, growth which these can products we TIAs. the channel XX-gigabaud come XXXG from channel

say, if expectation of and we let’s So the I to hyper industrial outgrow end set or both long-term, but consistent set have for would a expect a growth, a And data center. telecom over the market. that product we would not growth and defense limited

Operator

Tom question the next line Barclays. O’Malley from with coming of And

Your open. now line is

Tom O’Malley

you’re that what commentary Good And backend the supply Or seeing pushed the out could in the some the think test? on center my chain? got supplier questions. and in you revenue one orders. for side? you quarter? is the on about the seeing kind Jack, really where of my your will and outs guys, size the of be that Is of come of tightness push morning, that taking Could the fourth thanks quantify you just in some around and first talk about I

Jack Kober

I Yes, we That I items. highlighted, Tom. some had as experiencing refer tightness to. supplier those are of Thanks, did

and in And are standpoint, some is but out there of that substrate assembly a some there. test items that’s from coming

team been making managing sure fantastic our this. through So job, operations we’re has a doing

course, in bit paying a operations special these is business it’s to that ordinary it through the in generally but issues as attention usual team now. working So our of

But I quantification, In of pushed $X we upwards would to terms maybe about we is working out, million say. sure that. of make are manage that

factored it’s that guide. and is – So into our

Tom O’Malley

Great. one my really second for Steve, is That’s And center. then data helpful. of the the pieces mentioned some you really moving of Steve.

the kind about better. XXXX XXXG bit talk some And you a mentioned call Can the of the you of a almost doing weaker year guys there? about last fiscal had XX%. XXXG, made growth bit cautious that’s what’s expected you then really You products happened a you XXXG kind made comment prior on since strong more market,

Steve Daly

seen We’ve lead production their Yes. customer level run off rates. our

that’s still We the center so be for us. do a that change of sort data directional And double-digit think will year-over-year. a growth

have market – So we’re bit, in and especially seeing although some the but gaining in rates we run on those not what side. primary of as that share our the domestic the change offset driver is international a wins are the for yet have slowed and markets, for XXG XXXG applications,

Operator

question next with of line the Harsh coming Piper our And Kumar from Sandler.

Your line is open.

Harsh Kumar

Yes.

among congratulations, all, impressive results very of supply First tightness.

forward? we this off That’s one. impressive. Steve one. have was margin my of should going another Is that a gross So look your your you as the number super or Jack, I new question business be base at working

Steve Daly

on make follow-up maybe then a So I’ll that Jack and question. few can comments

So execution to we being continue business. improvements on work highlighted, the of of make as is the in a lot side. operational our And done that Jack

to value the in gross products and long-term We margin. that adding are will support portfolio, higher improvements the also over

CAPS. this were and very For we power KV type a a calling high with example, unique high different market of product we for where command them new And capacitors, the premium is we product to something in pricing. line really talked technology voltage about go can

to us thing will there. allow ultimately And so levels then margin that grow gross from type this is the of the breach XX% and

So we’d like continuously think can that do better. to we

on we’re you you our to gets what margins, getting do to based next, you the view. gross the based from harder. stronger want the continue know, that? on we portfolio, to performance. to As can point technology as improve seeing But Jack, add based continue improve think it of on We

Jack Kober

I think you great covering. did job a

seen we’ve that over improvement the up points. quarter basis with pleased XXX the going very are We past

noted challenging. more to We And view come it, forward. a become the term it does further back them. of does can bit As that go longer become some the to improvement some Steve a improve challenging as we extent, many take to around if bit we to do more we But have. of a it same initiatives see initiatives

Harsh Kumar

then guys. for the symposium for could a Thank with do update for you’re international Very helpful. Steve, silicon Steve. of commercialization opportunity microwave maybe OFC you expect maybe what your revenues? But you, laser timing and actually on When for at follow-up, an symposium. you this touched displaying us And photonics? also my as upon it look question give of a does I question, you’re And the you margin of of subpar when with at close into expansion? a – gross your business I the part at premium product that the see laser in margins, fit having industry, sort high-XXs call company How secondly, to plan grand for laser sort guys gross that margin.

Steve Daly

running still September GPON data announced you’re familiar in as lower the DFB the some the back new to a our are newest and process. lasers, FP qualification, platform product, about well, six-month a with specifically in and of to suspect rate of the and performance customers the product been XXXX. introduce because you know, which And we’ve the So with since the regarding revenue that line we because with for those is part parallel referring laser supplier them for lasers. We market a And with get then to XXG of the portfolio, working DFB timing I main are portfolio.

that May. beginning we As the long-term be reliability pretty much are at It I highlighted script, of in my up will done finishing just test.

we level have laser categories to set, we start I’ll QX we when modest believe we likely time. as XXXX. it and and timeframe, period, from time but market. the of it a over at go to would early so that highlight will And just some grow advantages QX new these product low most as significant FY will level that do In expect revenue

we that about that the and other laser for optical the industry us for As company and on companies And easily design. about a I without to with allows a say, are having like a in which to more to way believe doing generate today wafers method. with their manual indium relatively question I gross in we’ve phosphide these lower lasers lasers just it multiple and testing, before, to allows do test I’ve margins costly the the only the let’s cleaving talked producing platform platform more highlight due manufacture we – way your portfolios, the wavelengths is created than us

we cost size the believe I’ll because cost the And So on we employ we have to advantage have And of we a add the of a because methodology advantage wafer. of that. test.

so which going we hope are data do confident will year, that we’re enter higher can We product And enter after to reliability the be fiscal next And we when market, quickly. the has we successful center we with high premium – data a can specifically rates. year next scale there. that

will be portfolio believe We it margins. with competitive the our laser is that existing that accretive to Now a said, market.

works to But have how and current that’s that our we’ll thinking. So wait see out.

other The about, was you photonics. course, asked of silicon thing

with portfolio. do continue that work portion design So the we of to

process XXXG as devices any will it is whether will year, lasers you focus Silicon unclear be you of silicon months for the photonic as at not expect DRX sometime regarding to year second attached. of you revenues likely silicon the this the this And to doing I can three photonics for primary our XXXX from next challenges back And work modeling DRX timing revenue should suppliers the and had just delaying that picks, see MACOM. some or tell FY year. half photonic little bit first that few we’re the purposes, in fiscal a we’ve is the of in on And there. But this half discreet most one a Our in it’s two technology. to that control last are these key half. without

Operator

question And Quinn coming line our of with next from Bolton the & Needham Company.

open. is line Your

Quinn Bolton

products? data in to are? the bit in given record grow what those XXXX, products $XX to year. I mentioned business a category products sort Steve, CWDMX, XXX-gig more And going next you Congratulations center think look that a you you as you us give can center for flattening legacy outlook the business on Can data those continue live million fiscal detail do that from headwind with little into at of on margins. the wanted legacy ask, the

Steve Daly

for you the Thank question.

million of the product sort that guess decline So could areas. I into $XX – different you would organize three

and AMCC, devices The And have layers. OTN the products were integrated product need were rates, to have first transport falling XXXX off. higher to we is, and basically applications. AMCC. the And these in the network MACOM these introduced introduced And a these XXXX data that timeframe. service prior and XXG networks XXG by XXG are in core is used the acquiring moved as for They XXG

processors, are was a in have power obsolete. end basically type some that introduced ARM general some revenues So timeframe. because switches these least away that to these in systems, a And medical be processors we Ethernet will And that the we that next the XXXX again, the are production. we a XXG. cases would is, be that is process products XXXX last industry defense products we the that ago These think processors. at expect see used generally were would PC. This that year And life decline. on the used likely we then see older old in be year purpose products. enterprise the in mainly the of communication we’ll to systems, systems. And actually X going And moved more is, to of have from really second most call at product line first category year in These has operate over third would we XX-year the those category

ramp will down share as we there today recently declines, items to notable we So went up we fiscal review projections. also and believe it a management our that with next highlight of that these wanted information year. put MACOM’s that everybody. through this and out And set And because product year XXXX came

I CWDMX In XXXG is leveling even answer the our growing about next is think will your of their grow lead customer today year, short though productions. terms question, yes. it off We believe

to share first demoing data of of the I a a chip. this analog demos, one launching a And talked combo protocol. for TIA in chip, time which continue well we’re in and is that rate first. as excellent that’s driver VCSEL XXXG This putting highlight driver out CDR the driver we’re combo we’re meeting a today. is CDR as where XXXG I’ll these win for combo as about We the the products with way, OFC by market the And open-eye chipset, chip,

at have the those can our limited new sort those success business. we are with while XXXG, terms of I again, we will be chips, tell the in to driver products CDR, you our So that had products we well-received And market. think of that the the TIA and in VCSEL combo CDR just clear core be CWDMX to in

push great we as to bumped whether the there. doing are, And versions continuing going make competitive I we’re said, lot package sure of from devices are work of designs, designs We we’re solution. to shrinking to devices and new down existing most fielding that a

over grow. voles in the all generally few still will to for continue on CWDM We are think the we So years. speaking

Quinn Bolton

sample ramp from line? expect new When long at And is take sort will the see How that CAPS of would Steve customers? follow-up, the Great. capability. to you my qualify CAPS product new to and then KV KV

Steve Daly

have large high our have built-in the right? the talking and to that news we they’re just customer We we of $XX And base, company a that’s in they be that’s buy process the high should is capacitor relatively quick. today thousands and of company. high some medical amplifiers. one over capacitors one the purchasing million capacitors. were industry, year, know they buy voltage power buy and our very So here good customers for design voltage of a And we diodes, So

products being up lot to in interested force now these that right the So believe our will is a bring we market. We accounts to product. have be existing sales of wound

year. And would so modest expect fiscal starting we contributions next some

and Of course, for offer packaged as place. to take as these We’ll there’s a design as well cycle military parts, that as screened needs bare-die, space.

reliable, We So relatively and the arguably XXXXV and line. different product are typically It’s less should so capacitors level or are it’s packaged to great large believe easy unique. larger a capacitors, sell using they’re given. at capacitors Most be ceramic are technologies. that which it above slightly

these here a and and ability us at complex unique achieving local in we operation to chip have do, etching voltages. to the of achieve that via Massachusetts, I’ll really is the speaks at what’s really trenching So here facility technology to And level. our the that say allow XXXXV to

year, a the see the it wait to generate fast we’ll next excited modest ultimately cycle. contribution revenue but is we and next – be it what certainly, selling have what generate year, will So and team about launch

Operator

coming with Muse Our next question from of C.J. Evercore. the line

open. Your is line

C.J. Muse

portfolio on update an you and seeing you stand to cross tools guess, can to that, aspect I the September you the Thank guess, where I question. for there. of driving morning. on of to incremental a on part get and of guess as sustainability the We’d speak selling of a last little the two beyond, part the question, I you, that Good industrial bit incremental taking you’re can question the update follow-up strength into love bringing and to side, us for you Steve. the growth.

Steve Daly

Sure.

IND years, is, in $XX four million. bound everybody and as revenue last in between over is three the quarters So $XX range last been million growth. what really the here seen to few you’ve the knows some And has significant

above the share. winning power radar lot in including being we’re is of including that won amplifier talked script, multi-XXX million. by the that A $XX we driven Now mentioned pallet about I the a a things cross-selling recently for I system. market watt

think that, probably our having you that’s course, but that the sequential of don’t see of will not And start the over we part certainly, sustainable. argue I And XX%, business grows. so – long-term, I would growth expect to wouldn’t of – whether

uptick industrial, our We We in and have business, our automotive include a very we’ve sensor only also and industrial. diverse defense, It’s an in it’s customer automotive base. not business. seen recently

to I work terms you, of we’re that continues. can starting cross-selling for RF fiber. And the see In requirements over tell

there. we’re design capability welcome and accolades starting contractors products industry. of a And introduce to to time. a optical defense warm the the bringing very interesting We’re power, high our defense And we’re for more lot getting first to

defense, optical and analog continues and not by markets. signal cross-selling it’s the way, the also So it’s just into into industrial mixed

drivers historically been industrial circuits, whether HPA analog custom companies, doing is switching team, now Our Analog contractors networks they’re a focused and regulators. Performance defense High a on designs they’re is or whether or complex which telecom for

streams. their So businesses the and their concept diversifying team of the revenue is fully embracing

that we business. do view our will at So continue. work Generally have a long-term speaking,

things. so And I some time take turn but of right think we’re things revenue, into the these to all doing will

C.J. Muse

then to from And a helpful. question Jack, Tommy. constraint Very supply follow-up earlier

June. Do expect we You push out calendar the second half supply year? should of talked the headwind through about is you be ongoing the Or an $X year? that about that from be thinking million the fixed to constraints into

Jack Kober

Yes.

this that we’re we we it to as think something stage, continue kind to. to monitor working But going item be at And paying through. as it’s attention one-time view close we go I of that we’re forward. a will

C.J. Muse

you. Thank

Operator

And our is coming line Svanberg of from the Stifel. next Tore with

Your line is open.

Tore Svanberg

congrats Yes. record Thank on margins. the you two clarification and had questions. I

there’s suggesting that when being those or very about you going XG start visibility talked to China, are you restart? Steve, this are Or you all, just First deployments of were when delays? suggesting as low

Steve Daly

– a were timeframe sort six expecting in bids, the ago China we new to of about Telecom that new in possibly cycle in event. and April emerge now timeframe a months in operators World talk tenders Day expecting the to been hasn’t June the basically, and the around there’s happened. round of of we’ve And starting tenders new So the emerge

new we – on eyes our the are So are tenders.

QX we XX,XXX in of if XG XXXX, base stations. it calendar Now, number about deployed was look at the of stations base

last So to on year’s there’s year’s and be deployments XG deployments today, are still based but tenders continues contracts. last those

tender hasn’t And started yet. on cycle. of our new we’re focused that event point the So view from

Tore Svanberg

that a on bit the then And little other is which longer-term. Thanks one, more clarification. for

center there’s But aggregate, the a telecom, you lot data how given about qualified it’s of it obviously unit. over about data opportunities, well, right, even in more opportunities like business center would because to as going that the smaller especially you you’re with takes maybe more So Could that in products. and sound in too, have you being have does data lasers talked in for puts center here. new though time talk

Steve Daly

data the I that’s our didn’t And right. mean of to sort focus underserved center, Well, of course. on

really growth the organized are sets. for different drivers So us into product

of So analog of top about XXXG course, that. PAM-X. which and are NRZ for we’ve XXXG combo that XXXG some for the type analog mostly we layer of Then CWDM solutions, talked on chips today solutions you And applications. the I new have for that

EML be XXXG TIAs and these would drivers type You XXXG and linear have for DRX applications.

laser that We we it’s PAM-X are existing that base a our the year. our add of those with all targeting that is center can to started of quarters at two plan we you And extent our And have, win will in and share data next technology a production would product the a lines as expectation. today, new XXXG And beginning know, the those on grow. fiscal production When DSP the that PAM-X our course, the DSP add, products today some you of maybe quarter top about you of running ago. ago, technologies production. market lasers in that, on of

detectors, data as go as can you photo well course, Of higher. the add rates

PIN technology which sort used earlier, which last us be then about allowing exciting speed there. silicon first that data And only And market. we’re as service talked developing, the very the unique maybe and high have of the Arbor where We focusing we AOC have including we I market, coming on would but also out new then furthest fab XXXG inside detectors, photonics applications. the from copper some our And for center. to are Ann active not we’re a very cable, copper technology have that technologies

large could and product we us. those any do a growth very drive areas for of So have one suite significant

at we’re mid right rate run million course, a rate. now $XX of run Of

could center. data certainly of inside So laser be one millions the design dollars millions and win

that sure I And all so successful. that product we’re very focused on lines different will talked making about of be those

Operator

from of line with coming is question Karl next Ackerman Our Cowen. the

open. is line Your

Karl Ackerman

may. Yes. if Thank I Two you. questions

there on rising housekeeping peers. one and evidenced are is by is question, costs understand I many of gross substrate as of but your which shipping margins. First more a

flattish as price. I it in follow-up. revenue systematic product And versus new mix have improvement for appreciate the supports quarter, and despite I So if such what margins you your gross particular June a walk through

Steve Daly

try in. and help answer then Jack can Sure. to step I’ll Maybe again, that

a effort. improve So on along And costs the markets. of wringing And majority on out execution, course, different then still improvement, second of vast there’s lines. continue that. to we believe the a from has been depending manufacturing focusing big lines, on depending be component the end a there’s And yield that ample product production mixed opportunity will and coming improvements to are our and operational

high the a So, that’s to compare high-performance point you that’s XX’s, that signal low when that’s to And will begin high, and the a look from gross increase to while of will companies and analog achieve. we company. and time margins we achieved These to we record have and pricing it nine are multi-billion what company our a we long-term in and take XX’s command number the our at market happen aspire a products of effort. dollar that them and if when mixed margins unique year can premium view, and

things people will Carbide, high-end other to an are DSP. And in And that I’ll on commoditization And of that markets. a that say MACOM the that our are And solutions I that you capacitors, mentioned micron and like into breaking generally value will now. for analog this create we less for defense on when Silicon platforms. range as These commodity volt a can’t years, see very company. GaN doing are you that doing focus. let’s been and X.XX is so that things certainly the for XXXG XXXX lower – be move are knock we bound highlight through like industrial space, And out do focused area less earlier, that’s the

to able pricing. you’re command stronger So

or selling continue focusing contractor to markets focus that? even you so to products on to these or going a or want manufacturer and for to are that’s equipment company. to And defense that Jack, performance, the a demand industrial it’s satellite whether medical add did be

Jack Kober

do improvements good I that product of lines the But many think margin we serve. that. we across you did covering are job a really seeing

and fairly based just So I&D to. Steve items not was limited referring to it the that broad is

Karl Ackerman

RF. for I that. peers supply some e-comms, of Thank for the was Maybe in about in follow-up. because Steve bit production recently more you for you At your same business Great. within my seeing tender your hoping could guess, prepared are one broadly. telecom I of mano on chain touched I ask have out you across level your describe PON plans, And weaker about XX-gig spoken little massive the activity spoke improving time, a remarks. you a and which your peers push of orders activity.

thoughts your I investments what where PON? lasers. recently park a guess, on, Our into you love introduced in hall tenders are should in hall Thank and is I’d a So lighting the pause from benefit you. front there hear to why front

Steve Daly

a just Well, Sure. comments. few

product portfolio. MACOM in no There’s – has peer unique really there’s a So very a is represents company direct that industry the that our portfolio.

set. technology different one very most peers our of focused, in are are we let’s and So in say markets more

unique have portfolio we RF have think a very high I analog where we and optical. So microwave, performance

And which so peer of do I think unique difficult it comparison. position, makes to a we’re a little bit one-to-one that in

just that’s segment. drivers, indicator Regarding a was It strongest that level a market booking was quarter, driven come. of our bit And new and telecom, broad a not actually bookings order of this XG. the had highest it past leading and things in of obviously broad business, by to

infrastructure. are in strength seeing cable We

We are in strength satcom. seeing

think share there. we that gaining so And market we’re

product We year-over-year when believe better do can’t then terms can that will I FYXXXX, year-over-year new the there. to really FYXXXX it will be your we even will say very tenders, I pause answer that of relates to from MACOM the come And PON, why In question FYXXXX have to we for introductions FYXXXX. in as growth, and that. look about strong XXG the from growth

production We we we It one burst about but will coming are that is just some TIA, year. we for be fiscal of market ready you laser market. a us will moving gain XXG have yet. the I share. the to question mentioned laser allow production better And do next one not that the of products a into beginning have ready latest had for think the mode then

Operator

the And Ruben Roy is from with Westport next of question line our coming Capital.

Your line open. is

Ruben Roy

a and hit June just XXXX. you September taking the think this, quarter, see on fall more off on being maybe my a just little Thank as targeted just you that talked year to in you assuming growth and you for a you’re talking Steve, possibly that bit about about for don’t it quarter had your guidance double on but digit the based a target question. we the touched track growth I for year soft than guys bigger XXXX, just fiscal big

I So to just that little wanted a talk about bit.

way. In terms couple including of drivers next when each you I’m growth relative grow et each maybe coming kind have aggregate, look if the how doing think you But of with all the your those you’re new you like biggest products are items faster idea of you’re what XXXX, you other potentially can sounds year, China, growth it of right ramping, us that XXXX. on is help into drivers track cross-selling, of back at an as than in thinking that give coming driving XXXX up, thinking of you about XG in about look as XXG a to the cetera. that which lasers, And

Steve Daly

specifically product I’m or a will And outpace have did just to I been FYXXXX. set. sure line say referring product Sure. a may FYXXXX to clarify, that I not

side we what that’s guidance products, to kicks different product our to we’re on success not modules we So and on. new power a talk to business, potential six good it the the that that and engineering traction also think the that organize FYXXXX out how on we gaining That’s very And from might end have expect about commented to to we be side, we have and has our things Obviously, it’s necessarily be talk or and we but our growth why too think these a come do currently new XG some wouldn’t very of silos. up. one on we’re emphasis have heavy in, the the I work call our level today. talking have categories, be. doing the will about we want We what FYXXXX the we’re not any only way year. just about But not given shape on is growth extent And early with optical will doing. front of

Let’s say, individual businesses. their very on each growing one focused is

and diodes. of is Our our largest segment largest HPA – one

say, to such more modest our to organizations we expect have power. compared those And would as smaller growth units, so RF let’s

potential our let’s Our tremendous say. RF Lightwave has of tremendous power our business organization potential, business has these units, smaller and and some are growth

that see in our be between fiscal So and it end how we’ll the And aggregate, that have we’ll out. year. certainly to of works work doing now

Ruben Roy

Okay. Jack, for Jack. it’s mentioned on your balance and right you Thanks Steve. follow-up for sheet. just quick And that, a

channel inventory Just by wondering of if you have markets? your some any on comments end

Jack Kober

And I’ve sure of very the or the We got That’s I meet got something inventory. which pay we’ve on we’ve remain believe channel the we make forward. so. ensure we’re we’ve very our sheet closely that. a to go requirements. the think past balance to inventory We us inventory customers bodes levels to levels, improvements right to working levels months monitor proud there right of special made as that our with fairly over well that healthy perspective, inventory been at their continue for from And to attention XX the we

Operator

Sur from final of is line with Harlan Our the coming question JPMorgan.

Your open. line is

Harlan Sur

obviously sustain good quite for like I last for are morning. strong very here strong the levels strong spending spending results Great is budget these The at It strategic because year. believe is levels. nature. visibility quarter margin It And programs very defense these year in next this the to on front. proposals the current execution on Good the especially year. job and strong was looks U.S. Hi.

So you ground-based in further does defense centered weapons strength MILCOM, it UAVs, but the the systems, are would see are disclose what is And be color seeing know defense programs, great. it your growth airborne next here around is team year? business can’t radar, any you specific I areas, in

Steve Daly

penetration. Sure. to as an and should. And new area not will budget highlighted the growth, Part have for business it’s growth of account company. relative the And U.S. small we contractors And major I as defense come we I with view of defense have opportunity. relations we do as overall say from so our focus the our to strong as

working so great on that And think we time we’ll is still to seen when see fundamental And which issue before. that, just progress, we’re a making for we opportunities that, do first very that we’re resolving we the fixing. and start hadn’t

great So the team doing job. is a

they’re and And continue quality Our of the digging U.S. is impress, I and phenomenal. out. as that sales type absolutely force opportunities of Jack to they opportunities the to

The subsystem highlight a other house. we’re is not thing I’ll

leverage We are power a after only sub-assembly And focused the if we have view to type from on the component we go of subsystem high leverage overall point applications. into tremendous we chip a amplifiers believe or subsystem. will level

about question components. main the most applications, around RF microwave what Your our so of are defense and business revolves

microwave mimics, radar. used highlighted and radar, in radar, ship as power devices typically it’s RF So ground-based you borne these diodes, MILCOM, are discrete primarily and

volume We and in applications growing, are that’s high generally applications missile as content and well. have those numerous

more diversified. news GaN know that growth that the of within So more it’s very because now we do makes willing good a houses the we’re And defense very we only not just diversified the lot a we is the have do fact just you to much it a and letting opportunity, area, radar amplifier getting that on build the for Carbide, exciting. best-in-class high have even we’re expertise power Silicon to business have but

So I things there. think we’re the doing right all

of believe As will you highlighted this to on industry. process some with power Labs power we high our call, And to our very Research last facility. the in on efficiency relationship have the GaN best Carbide Silicon know, some the frequency, the numbers we bring manufacturing high Air Force in

industry very we win are on focused we So more defense and the to do share. market expect

Harlan Sur

data for Last center guys a potential to product And maybe active from – call, switching Great. then opportunity about perspective. you more cabling copper reach. talked the in new the for short product

we’re ACC. today more center customers some your this high cloud give what introduction? for versus performance in developing talking you maybe You architects terms Can mentioned analog it’s cabling, hearing and active more and of opportunity a data a it us and economical sense of Obviously, timing well. new optical solutions from you’re about product and more of as

Steve Daly

engaged major cable. to roadmaps. copper active are with And are So we their we build that would following an want customers the

get of and we’re will or are new successful to year specific want into the it next fiscal our necessarily we year. would if don’t se. rates construct some provide I production But data into that that we expect one per this lead customers, some with So

is a it area. very interesting So

we solve had about applications. can excited the These we very are generally vendors are think solve. high other haven’t problems volumes. that volume very We And they

we’re So probably make capability I design, better to solve But shouldn’t a and data formal rates, a capability are speaking, the we until higher any detail go into new problems. more and capability generally maybe announcements. these

Operator

any And remarks. Daly Steve call I’m time. over turn to showing the closing no further questions for at Mr. this would back I to like

Steve Daly

customers, possible. Thank all our employees you would our you. these and results suppliers I making acknowledge very much. In closing, to like for our hardworking Thank

Operator

that our gentlemen, for conference Thank and does your today. conclude Ladies you participation. for

may disconnect. now You

MACOM Technology Solutions (MTSI) 29 Apr 212021 Q2 Earnings call transcript