ACIA - Earnings call transcript Q1 2019 | Acacia Communications, Inc.

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

Operator

Greetings and welcome to the Acacia Communications First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your Ms. Acacia of IR Gould, Communications. Monica Thank you, Ms. Gould.

begin. may You

Monica Gould

Acacia Thank for results this after everyone. March you and good afternoon close. Tim Communications market the XXXX, released XX, afternoon first ended quarter

Chief of you With and our obtain If from Relations ir.acacia-inc.com. website Investor Raj on will of the Investor Relations receive being This not a and website. call it earnings be release, is Shanmugaraj, you did press our are may call available our Officer. at section copy webcast the Officer; Gavin, me replay John today's a of on Financial and our Executive President section Chief live

events. this undertake as on future call described risks in from no press the Please specific new I discussion, forward-looking based our forward-looking on the statements of statements statements filings and demand materially statements and XXXX include to other about new update regarding market today's Before our and like discussion. today's that as there to these I'd business are refer the Raj, could earnings and are we beyond, currently references size factors second quarter risk projections such environment of customers as a prospects over information are for more of make and statements the Any for information as we the and obligation and results turn on our products, to actual release see differ share, to and certain SEC of markets of to expectations it, forward-looking our the statements, and on during based timing to uncertainties. assumptions for result note size on and our that the that competitors' our or call products which today, we cause our our products, and

the enhance measures, earnings And the non-GAAP GAAP the do non-GAAP GAAP. Reconciliations turn these performance. believe of today's understanding be a that measures of U.S. with not can report of description the certain like GAAP addition We In call these release. reporting, to Raj. conform measures, non-GAAP to that, our I'd to to we found measures in financial on addition to measures over to press

Raj Shanmugaraj

to a In products, high-end Good Monica. share. $XXX who for of with $XX first included modules four of more a progress then who mix gross These XX.X%, they the ramp I'll you, upgrades embedded million our our in service a China the tender total and capacity of NEM networks. revenue approximately million semiconductor our afternoon John of backbone for demonstrates in quarter and well of contractual preparation were see are In deployments of everyone earnings of four existing are progress had them Thank guidance us of to as providers or to China will sales XXXX, these XX% pluggable as four our awards. also field obligations capacity for production total anticipated contributed in each our providers net supported customers quarter believe products two as of these Historically, continuing to of greater we $X.XX to have service across demand for on may product turn revenue. production Sales customers the us outlook. exceeded preparation coherent backbone today. our first and in customers provide anticipated in tender for first income to report our remained on first of largest Gavin, driven thanks our the continued in update portfolio. quarter we margin all joining some existing We diversification believe activity per activity rapid customers call and and and activities quarter, I'm non-GAAP their basis which these sales by instances strong. strong telling business over upgrades, had results to well diluted customers customers of trial detailed to start that metrics. pleased broad China performance approximately advance ramp With as the requiring and financial NEM review deployments. and have that revenue

deployment in the customers is important deployments second our are been, off that that these the duration. are and could be of telling timeline have note and a While not planned commencing half yet to that awarded us XXXX the service awarded it been short upcoming had tenders tenders providers current is anticipate these we

network Hyperscale in supporting deployment compared applications with are that shipments low development. including still of XD markets quarter in Since Moving our to increase the systems from group, advantages cost, quarter now of ACXXXX are competitive shipping systems with anticipate is module XXXX cycles. completed compete We an begin fourth transport module systems in to shipments increase operators. our product and our to NEM based products, in features to of utilization our power wide-range the solutions in core customers shaping X.X over believe customers believe sustainable multi-year on our was edge network gig significant of a operators our that adopt a XXXX these to support and to and a products helping last NEM additional there our wide earnings of XXX sustainable in solutions portfolio optical call, Starting range competitive in our other of preparing have advanced modules trials based architecture, ACXXXX coherent quarter XXXX. new update broad ACXXXX in offer network to embedded Terabit products a submarine. the operators first typically in NEM field as ACXXXX our applications. customers compared performance, second We the deploy we dual further for improvements and network

solutions believe networks. are this hyperscale multi-year deployment Given we for a in cycle positioned based well differentiation, ACXXXX

Additionally, we roadmap operators. the product aligned hyperscale believe with network needs is well our of

believe which be interoperable believe address timeline gig internetworking modules the sampling we industry what by Our optical to to be this DCI analysts after the growing forum modules XXXZR and a later specified XXX will XXXZR Standardized designed and are competitive market. solutions. to being segment will year, on begin fastest similar

We modules compete Acacia directly for equipment. has external these help architecture total expect of the eliminating because share in cost plug This optics platforms, market. to in the to will significant allow to transport shift further vendors to offer transport switch benefits like potential they in coherent merchant ownership DCI

service ACXXXX haul, long in opportunities serving traditional pursuing submarine metro, based systems provider their networks, also are customers NEM Our and applications. with

service providers the qualification than Although operators. hyperscale cycles, longer in have historically deployment had network

these deployments expect the Our are telling NEM second begin of XXXX. in us service to that networks provider customers half they in

variability. family. from to CFPX-DCO metro We behind our increase increased Moving in to variety transport we the pursuing and well enhancements to could believe in the opportunities XXXX our industry. but position market lead anticipate our competition for adoption on quarter-over-quarter our while this applications, module CFPX-DCO to emerging over is strong that over applications. pluggable are this in of we group, expect continued benefit form positioned to DWDM customers network CFPX-DCO this factor based deploying in shipments XXXX product that investment momentum a CFPX-DCO momentum subject we and in are IP also NEM of address There systems of access

still current systems power more double-density is supporting these form we We coherent outnumber modules, and As from our DWDM next XXX CFPX-DCO CFPX-DCO anticipate enter stages I'm will generation in of demonstrated our gig and that believe use commercially interoperable that We silicon PICs factors with above CFP-DCO. anticipate NEM the products modules multi-year analysts customers, opportunities drive to cycle first that platform ACXXXX OSFP the broader pluggable continue will generation IP architectures and QSFP to which for record wide-scale will next pleased the and our DCI progress technologies early on our with XXX and of of using our positions available customer XXX over an well integrated track in segment. of gig this be us opportunities market generation module silicon deployment DSP gig. DSP products. our start highly interfaces. leader module. our Also, market, platforms at XXX for XXXZR gig adoption the operating expect edge we will DCO supporting products and delivering development already established support Industry early pluggable of have in enable low applications in technology believe in photonics to we also

given XXXX experience our our of to and benefit March, power, the interfaces. XXXZR in sample to these vertical currently before of increased coherent the will Acacia market low technologies factor, in packaging small believe tradeshow. and end XXXZR module our developing we the advanced prototypes complex customers of plan We at Additionally, OFC technology integration investment demonstrated form

takeaways show some focused the from to trade industry applications. There was on coherent DCI growth module Moving for pluggable significant in OFC March.

were use data technologies higher Additionally, the centers rates. of electronics coherent data discussions including the there of on [indiscernible] and many increasing adoption also at trends inside

This create Our helped reducing consumption. we trends our of benefit share and coherent us broad expand our has well strategic and We'll to position the DCO modules play continue the and from bandwidth with the gig and metro vision reaches believe industry would supporting while efforts central of CFP that modules. of coherent pluggable to to the We with the optical vision, increasing the demands to in which siliconize kilometers. higher interconnects power size, these CFP help interconnect trend coherent of the pluggable market. founded applications Acacia merchant adoption potential solutions XXX network with to drive was performance in pluggable address towards to trends. the these optical XXXZR a in thousands vendor adoption increasing role regional cost,

adoption silicon portfolio we interfaces. embedded the thank partners form have Acacia’s technology and of network roadmap to the the and operators. are XX customers, to the in past who hyperscale products. coherent value years enable investments would XXXX front XXth been has traditional over interoperable Additionally, potential our we I anniversary With are call our relationships offer increase Acacia’s would technology to standards needs addressable shorter that to aligned market over I achievements and enabling I based of our look the opportunities Furthermore, exciting proud success. and coherent to team to forward pluggable customer the closing, highly believe the which to contributing a our portfolio in like the turn for of factors the and of like of differentiated of marks reaches that, believe total year developed. DCOs instrumental I'm John. will in us. plant We with In well and for us employees, have

John Gavin

and financial provide our in our Thanks the or of performance total in sales first partially a first module offset from for by in products by embedded Raj quarter revenue down the million product groups. groups. reviewing and to Sequentially, DCI Then, quarter customers. XXXX of driven increase operating as anticipated and for good quarter start million Total everyone. decreased X% $XXX.X certain the in I I reported $X.X of quarter driven will XXXX. in million, our an of by call semiconductor will semiconductor $XX.X year-over-year our of up of pluggable of legacy XXXX. the opening a of from the module in of for XXXX increase from was XXXX first product was afternoon before in revenue sequential shipments outlook The questions. quarter This fourth decrease the direct by certain revenue quarter the an the products first by our module year-over-year increase revenue quarter the in first as of decrease shipments well strength was primarily basis in second XXXX and seasonality XX% of

gross Turning margin. to

was margin in XXXX in XXXX. XX.X% of gross of first quarter the compared the quarter to GAAP Our XX% first

reduced in our operating an in and semi-fixed of in the of gross non-GAAP was due from and gross higher quarter margin in manufacturing, XX.X% was our both costs in semiconductor quarter product non-GAAP of The XXXX. in XXXX first the Our first increase to our products quarter of and percent to first margin of GAAP XX.X% impact revenue the given the level XXXX, group. revenue the compared increase

operating XXXX. quarter the were GAAP of million Non-GAAP issue inventory periods. margin the significant and by operating attributable in originally to increase quarter the associated increase gross quarter by year-over-year or compared expenses quality associated revenue, the compared the driven of of expenses XX.X% first or development addition, revenue sales product a with decrease XXXX $XX XX.X% operating increase reserves was and in non-GAAP XXXX. in of and the quarter ZTE in revenue in product to with and primarily was a earlier of costs in primarily XX.X% roadmap In staffing of a a of development $XX.X to The XXXX XX.X% $XX.X or in additional GAAP expenses in write-offs support million related new and band million totaled recognized first technology first first programs customer by and the to year-over-year services. to in of revenue million initiatives costs in or related $XX.X GAAP costs driven

increase Non-GAAP of million first expenses of $XX.X XXXX, operating by EBITDA the positive associated costs certain quarter was includes gross XXXX GAAP in also of operating in of $X.X the first XXXX. negative operating XXXX. revenue or in driven XXXX, $XX.X to revenue compared XX.X% of improved previously GAAP to million income to discussed. the million $X.X million of X.X% was and to And XXXX partially with in non-GAAP first million of offset first in of in loss first XXXX. levels income related quarter income of operating compared of of $XX.X The quarter compared revenue XX.X% Our was quarter by quarter EBITDA quarter operating loss in XXXX. quarter of matters. the operating quarter GAAP higher the first of the a of million quarter the was income the on million in a first in or I in $X.X X% non-GAAP in both compared $XX.X increase litigation that ongoing of expenses or operating million the XXXX, $X.X GAAP first was first the revenue, or adjusted of margins revenue

XXXX. XXXX, quarter the effective first tax was of first XX.X% GAAP benefit rate to benefit compared quarter Our rate effective in an tax the of in XX.X% of

in non-GAAP of first the benefit in compared Our XXXX, effective was rate tax to of tax X.X% first XX.X% quarter an effective the rate of quarter XXXX.

million first the of Our $X.XX in of the XXXX. or $X.X GAAP quarter basic XXXX, net $X.XX of compared to net diluted loss in was per quarter $X GAAP income million first share or per share

compared Our share in quarter non-GAAP $X.X to $XX.X diluted per was share net the $X.XX income of income of million XXXX. non-GAAP or in per million or first net of quarter $X.XX diluted first XXXX, the

the the turning and no quarter equivalents first XXXX, million cash the quarter of to from generated with operating Now of sheet. $XX.X In marketable cash we balance and $XXX.X of first activities and securities million cash, ended debt.

to our XXXX. for next the quarter outlook of second Turning

today's and of revenue press $XXX be in total we release, second million. quarter noted million the to As expect in XXXX, between $XXX earnings

margin million share $XX.X be range expect of to of to non-GAAP $XX diluted fully to We XX% gross outstanding. to income And anticipated range average in net the non-GAAP we to $X.XX the million per weighted $XX.X million $X.XX diluted be XX%. expect on or shares an based in

and is differ may in reminder, release described the a factors actual our SEC. and as result earnings As results in outlook materially of our filings our forward-looking a with

gross fluctuate our based on product number changes manufacturing-related addition, costs. including can a and of In factors quarterly in mix margin

anticipate have that Finally, do a in tariffs of the discussed an prior tariffs effect are on as that XXXX result, our not And currently as not our subject second on to already in effect. most are we products the China guidance. quarter will calls, impact

trade future Tim questions. financial on continue tariff now that, our back I will Tim? to We call business the potential and ongoing monitor results. assess any for developments to to and turn With impact

Operator

Hall Instructions] Sachs. with of proceed Thank Goldman first the line Our comes from of question. Please your you. Rod question [Operator

Raghunathan Kamesh

RK behalf gig is wondering potential Acacia? own of and focused excited are Are just Thanks looks my Rod. XXX taking gig ACXXXX I question. for the this on know you for eventual XXX on Hi, what the more for you XXX plans now but like. about Acacia’s gig,

Raj Shanmugaraj

Yes, question. let answer me that to try

work with and believe operators on ACXXXX products. are we roadmap network and both timing hyperscale So that aligned we continue to our XXXZR with and closely

gen architectures to their gig XXX So, next network begin we bifurcate requirements. believe that

So this as our believe upgrades. XXX to by driven is utilization we XXX center and improves gig network gig data primarily I said, And the transition addresses the ACXXXX infrastructure from multi-haul already. wider wider And upgrade the modules gig drive will benefits. drive the deployment, deployment XXX cost will additionally, to pluggable XXX network the XXXZR interoperable due switches gig of in significant

we working their the with to product of delivering metro will road of address of significant a portion ACXXXX what between So edge industry on Plus track the versions, and and requirements the in we and XXXZR covered we this ZR roadmap are the the hyperscale And well and regional long-haul map. leading the record products and again, markets. have is, a short-term

Raghunathan Kamesh

you you'll Okay, do great. expecting some X, also for when Could for be example, us XXXth ACXXXX, your the volumes give color on you think units? are you shipping

Raj Shanmugaraj

Yes, numbers break we given not by and volume it level. have that down we specifically don't

over said this as of strong. call and step continue going in increased we function demand are what QX and that's the However, through increase to continues we we in before, significantly XXXX – And shipments a and we ramp, I to remain QX so QX.

don't what give And volume that's say. pretty much out any would so we numbers. We specific

breakdown pluggable versus versus our in as think ramps the embedded product groups I product volume. semiconductor be the would in

Raghunathan Kamesh

Great. Thanks.

Operator

from comes Tejas question. line of UBS. Please the proceed Our next question your of Venkatesh with

Tejas Venkatesh

you. Thank

customer? quarters. that's have time, cloud Is XX% this five customer not customers You XX% prior the in a

John Gavin

John. Tejas, Hi this Yes. Yes. is

right early XXXX the than were the given up customer a So and still say that we after last, popped customers in lower was a a customer. XX working continuing we've lower greater we were revenue customer on greater as ramp. some of Top that when to – relative they're XXXX we levels they with they that or customer, that Top a rest based another performance. to new earlier quarters. quarter has they particular the through the given But and three us quarters their XX% around stability XX, products customers well reported are level NEM volume and hovering certainly had two at our had, revenue of the But had Previously XX% quarter I'd quarter in been that they've over within fair XX% they in the that continuing some customer four as in early

Tejas Venkatesh

NEM correctly, of it's And if there build of concerns China that an NEM any I recall so the inventory interesting would being be ahead out there is that and there in context China particularly customer color happening, be helpful? a anything may potentially undergoing

John Gavin

Yes. Again. Tejas this is John

trial as of tenders. Raj said in of support in on pre-building his must some remarks tenders, of things in the some activity, of some We business One number think order trying that covered to the these strength And normal requirements there. And level in just to are once these there's China QX China of did schedules. ease certainly there's those be in was they're in from prepared is deployment fairly NEMs that there some terms out a into carried Raj ramping deployed rapid activities in quickly. QX. then of they of awarded remarks, I believe there his had going accommodate

that QX so some And that throughout preparation. one the that timeframe. to carry seen over We of terms into anticipate of in QX that's thing we've

and under to will for awards once start as to So inventory and quickly. NEMs of we that's sake, to understand get a they pre-build quite then required, ahead the deliver it some inventory buildup them the of their be prelaunch task the view are, or really it's what don't necessarily more capacity believe

that get on of a anticipation lot activity. it's some So those of their award way try to to

Raj Shanmugaraj

course customer XX% depending second is that, Tejas just in of customer as – said revenue. think largest the of the And add ZTE to we've out the had. has been and to John primary, I on on the being

generations do we it's levels both always amount of – while different So being that to of different NEMS them. have strong, products and They see equal different not and products. ships China

John Gavin

been one in QX Tejas a they customer And talked of in were point and about Acacia, to customer the the but QX, a types not in four your we've about they that customers have been direct back customer customer past go were with for XX% always those of not they also accounts has just again, XX% quarter-to-quarter to quarters XX% customer. and variability cloud

Tejas Venkatesh

one, so I the Thank on there, earnings you time do you XXXZR, had context. investor first wondering product back. there's last told much in have on to there for if interest your where all update us update any call any that given But One you the was come pass is? final silicon that

Raj Shanmugaraj

what nothing – has think I we changed. so Yes,

of happy And for well validations As we X look terms for available it I as DSP already, in the on XXXZR. the and test nanometer multiple in XXX as over progress in said, the power back and working the chips componentry We've we year been with we performance, those our had already at we've both digital We've commercially gig are have the said as ACXXXX. good. very side, the goals. a working gotten optics the

of So as that on I DSP stays packaging for prototypes sampling pretty demonstrated, I It that challenges whole of But the want also before beyond optics think say it. comfortable we to just compact end by OFC feel at a is do year. the there said. still with and I the track we

So be leaders the one this in expect anticipate to product we expect – said to – we of be segment. as early I

Tejas Venkatesh

you. Thank

Operator

Okay.

of Our the next question. of your Genovese Partners. with from MKM Michael question comes line proceed Please

Michael Genovese

I'm gig for the think more act gig be ramp hearing how of to overall and the of you in perspective it's that interested this will the I'd mentioned the your going market really on last gradually and like on in your gig to questions. just prepared guess XXX XXXX for a get it's amount thanks you time. but – and guess really I longer XXX whether to as between or going bit is market sort I strong remarks, quick perspective whether a be XXX Raj, debate your and Well, cycle, growing?

Raj Shanmugaraj

Yes.

take a crack. me let Mike, So

that some let color more the think give prepared, I in of on covered this. me some but I

that sustainable So only adopt typically in products new today support customers over deployment. what they have multiyear hyperscale advantages of offer

one, what utilization. right don't at that's performance from network the sets meet to two, and plan a ACXXX was And look and bar quarters, it is being get-go[ph] three it they So these deployments multi-year requirements on deployment. on a initially. high They designed

we capacity And three the it's already XXX about can you X.X Terabit when really and ACXXXX talked so gig XXX say gig signals. transport the we in

So small that is a in we to factor. that very density able form are high offer a

XD the provide rate shaping with other benefits still over addition variable significant utilization and gig and that baud even at In development. features, in in XXX we to products are able network performance, are cost,

we multi-year our with remains Plus believe customer the combined ZR in demand well offer we hyperscale and for ramp believe our So deployment but well. utilization that was positioned ACXXXX and offers product. we plans ACXXXX these we by the also with improvement positioned customer, well advantages a solution multi-year well when and as so, And is XXXZR, followed we based are prioritized upgrade continuing first ACXXXX for cost, roadmap, a not the planned in networks. to network sustainable And the cycle we and aligns happy significant deployment just started are

Michael Genovese

your I this any you to I this could market the my ask think demand strong, as speaking American want How ask you? I it and follow raised just do North generally year? call DCI. that don't in appreciate concerns think North been If does year, Raj. specifically, to I American look but all has by I about think color metro American just Great. to driven just up, just you optical want conference I – What ask North

Raj Shanmugaraj

at XXXX CapEx over the of on if project look talk in know with count If just at, there's growth growth XXXX. they been DCI like reports the Yes, so a start reduction [indiscernible] XX% demand, with basis. quarter-over-quarter you I let me analyst about start look just itself, about I the port

hyperscale our correlation see capacity from transport. other budgets is in improvements CapEx belief versus and large As before, segment they of and of we've and guys network specific DCI these these said we These between much some spending the prioritize ahead utilization in don't technologies. expansion are optical

DCI our more that, the share through Tier-X going selling shift, to deployment ACXXXX a CapEx from growth customers less what we comfortable we've se, on year to So gains our have share per QX that We and will are from believe the dependent in space and position, into growth. getting QX the increases most QX the get absolute we the we seen cycle. happen to to multi-year projected throughout do of QX, and continue a equipment QX, feel is

itself, legacy there is – less And DCI the I see, product. ACXXXX for QX indicated so as look metro through said and the tapering had ACXXX quarter-to-quarter to I it we space in at around an think hyperscale our is fluctuation address shift from and perspective, been the John we when CapEx, John there some but that, QX as discussions that some We about did we of customer think share see the impact but while again, been product our telecom on class guide. some was was, in it's for seasonality And – many years. are the

improvement seasonality. We in are expecting the some

the long-haul good products about our to pretty group in overall count feel with share CFPX-DCO, including port DCI. and we as the markets, these newer semiconductor the our increase So well ability including ACXXXX as metro,

Michael Genovese

Thanks. very helpful, thanks much. That’s

Operator

question. Our Yun of from comes with Deutsche your Bank. Please the line of next proceed question Brian

Brian Yun

can behalf either on the or about we of the context just opportunity. taking recent demonstration thanks of thinking the at XXX in just any sort about award that Vijay, Could Hey, had how think I'm I'm Tencent? talk you a for tenders demos about of gig larger CFPX-DCO question. the

Raj Shanmugaraj

Yes.

architecture. I we have customers directly customers client buy form from side-off, all at availability It's XXXZR, buy, China. you an system have as back the historically. open Tencent look client think now And with capabilities is no some of our press – back change mean that's similar other the lab of like was but NEM have they've into our customers generally outside of done think from may hyperscale I what to showing such if customers. as transport NEM historically specifically the bought, of about, demonstration different, traditionally release done customers with DWDM of IP what for they it factors Baidu, a Alibaba talked NEM we And So customers And I Tencent the and over a the line except Tencent. selling historically

would go CFPX-DCO. lab press showing was IP select DWDM done be still architectures more capabilities release base, need and with our the can to much but over the a they using of what vendor of So demonstration,

Brian Yun

great. you. Okay, Thank

Operator

proceed question. line the Our next comes with of Capital Markets. your from Savageaux question Tim of Please Northland

Tim Savageaux

afternoon. per I few recent of the at of wavelength of the least fiber side wanted competitive will bit bringing on least capacity Hi, per advantage is which perspective at on per your gigs competing capacity technologies on capacity market confusing on appear per relative any the runway? it gig multiyear from really suspect the cloud trade-offs terms not to case the customers, to follow-up of which and sustainable elsewhere commentary is of DCI behind at I to confidence that, of what's good on cloud, that you're advantage say fiber that does to currently? or se, in but be XXX got your is per that because solutions having a perspective from Is type of – ACXXXX the what current may capability. difference wavelength phase some bringing XXX versus market it, your your that no coming how does you've

Raj Shanmugaraj

I you think on that's of are points a hitting there. the question Yes, good I some Tim, key think

fiber. how it when So required wavelength, much of the think few network on is and rate what much the depends talk optics per whole depends utilization on it about the people how baud is, what the different what's things, optics – I

perspective, you if fiber there it speed network how cost of use and XXX much network can over the – in increases high benefits And gig transport course the the and can clients over so efficiently on that size of the terms they switches. these directly utilization from multiple-client, is

on the cost course it it. even think a cost when from that utilization at you course you into I the when of piece of notch the is XXXZR perspective network optics you at factors, we think And and have over the is just takes So where I below transport looking then jerkily what advantages, when – it reduces look get of purely sustainable that reach switches. get into what and performance the

plus think do ZR a to a designed that the we to I XXXZR, the of metro and performance with high at give long-haul. can road following was and high this that DCI the behind, we so, them all DCI even applications say way density, to DCI so and And exactly capacity high in solution edge from broad look that, address map our DCL swath

the fiber And about so, and doesn't it That's much improve in utilization your would capacity. necessarily more performances. how long-haul,

into it positioned. really So down have the two edge where DCI coming that products are well is and metro we these

Tim Savageaux

there's, you a When emerging. competing when because DCI that technologies guess gig, tests known and to and but switched the subsea, longer capacity point-to-point there I've type be we see some at over that on reaches? into think you've pretty regard distances. we're kind I how ACXXXX talking Yes. I plus translate could about versus you that, pretty shorter up carrier to networks I minus, if distance and fiber of networks XXX on think of long-haul or some carrier – obvious efficiency, about where follow advantages more spectral does is that XXX I assess do impressive about what could I XXX done and are more appears to about thinking versus environment actually, with a shorter and of way are distances? at If How in, talking the comments similar kilometers and kind the those distances competitive are between XXX, fact

Raj Shanmugaraj

good Yes, very question. that's a

You this of on much there product. excitement were fine why detail into so getting is some

it networks you XXX into the a carrier around if gig metro at be getting be is performance. going to XXX really and long-haul, long-haul, think and to gig it's look XXX performance a going to I gig in

you that's on long-haul so reach or all or been XXX doing metro built And regional networks. because be gig can't XXX longer gig in including

and the in density well advantages of When and metro long-haul. the can that our to some course gig equipment And gig on the well, so signals small very includes talking and the as X.X a we the other been that are multiyear client has terms to of so, into is of having in about technology, need regional as which – that the they is – that's edge XXX be they itself. transport play factors have multiple come have that terabit you ACXXXX able products. metro, utilization need play the the lot with where efficiency, in transporting These have XXX into in or reaches a shorter factor be of and as performance And existing to them you out, complex sustainable pointed the rings gig the form offers where good. start to advantage XXX cost demonstrated

And from so, into pluggables that comes and per cost beyond then lowest the bit the that. you ultimately ZR, get the and

the and cost is where of to in XXXZR think be market. the – going shared it I lower the it course XXX will reaches, be speed plays gig higher and shorter So with

Tim Savageaux

Appreciate Thanks. it.

Operator

from the your B.Riley comes Our with of FBR. question. Dave Kang the next of question Please line proceed

Dave Kang

afternoon. Good you. Thank

I geography. interested mainly of and American revenue in break China. all, First was wondering you North by out can if I'm

John Gavin

it’s can for Yes, QX Dave, John. you data the that. I give

in So for we did XX.X% Americas, QX.

was XX.X. and was EMEA Asia-Pac XX.X

Dave Kang

then was of a I fair most XX%, is or… And Okay. that bulk of China assumption assume the that,

John Gavin

chunk other measured is NEM destined and but aspect by for rolls another ship of is to there contract It that our of up a is CMs but, product manufacturers there's good into the that it therefore a revenue amount Dave, fair of on address was it some of that parts going of and lot percentage, Asia-Pac customers. behalf that's of But amount, good Asia-Pac. our to a a is

Dave Kang

case four the assume to Chinese it Got there of then fair out NEM it. XX% our is to that customers? is If customers

John Gavin

that's… No.

Dave Kang

I think, I that. heard

John Gavin

They would customer our XX% them of be one be traditional customer mean our and would China I largest there. obviously ZTE?

Dave Kang

trials or through go September, you months, would because for talked commence. like are about to six award it have months it. guess that's let's and once awarded, or tomorrow, October deployment I you're all take if And from deployment they awarded, like anywhere If the from – think to being commenced they of even five that, say I mean, at looking then, selections. then Got making they go like takes months, to several is case, Chinese five, not you understanding like My finalized. I tenders four to vendor four that

of I say is So half? likely second fourth half, mean, it second quarter you when more

Raj Shanmugaraj

Yes, Dave.

be middle these Let anticipated. expansions some They've me take take more like get I were the a crack third couple And ring delays, cycle they we could quarter what at timeframe. of mean, have backbone expectation that next the clearly is to that. anticipated there that deployment there's rapid These And they could hearing in looks all, are be it China its that you – awarded awarded. of But not in we year, the months. going about longer. mobile over the are then always is been specifically but into are of talked the the about. it's I think,

what telling there So these ongoing testing have us. for activities been our already from customers are

So not works the this that, for has something this in while. been is a

duration. what short much plans it be fourth out quarter is it could, it but from into we and will so, second a currently hearing And off about slip a beyond half could a are

got customer's anticipation production they know – they so, have building, are units. know the seeing signal, contractual of where they’ve in and because soon of I activity some ramping as capacity get their to deliver we obligations this contractual we've as had RAM And you the as many they many, past, that's and

– they what then depending start but but they or shares tender so them after procure more is the award known, in prudent buying not be to they awarded advance, production, production the is. size and the start their everything, don't upon less it's could And they ramping their for of

these past, little they our don't positions. like – been we have backbone expansion have complete has but the this in these inventory So customer's have China And a in for the particular works have into may again, tenders BMI level delays visibility Mobile while.

Dave Kang

as And rest John, the second how of question Got about is, my last as should for it. well tax rate we the the year? quarter think for

John Gavin

think Yes, – what of from lot not we changed in it terms has for see changed Dave, has outlook the today. a I probably

non-GAAP going to still it's X in range basis. think of that I to be XX

Dave Kang

Thank you. Got It.

John Gavin

problem. No Yes.

Operator

of line the from your comes Group. question of question. Richard Craig-Hallum Shannon proceed next Our Please Capital with

Richard Shannon

John, me. well. for and taking as Thanks Hi on excuse my question gross questions margin. Raj A

would a if had just and higher versus pricing, – quarter range guided modules, results are help or is us else you understand us great. help versus on process very your your get being So in the be You lower, midpoint takes semis above – understand mixed anything renew first can revenues you a range bit when conservative? and now going you there the help the there thought good the little puts and

John Gavin

problem. no Sure, Richard. Yes,

top you corrected, in So I if our gross XX% you margin look end range. was think of in our above that at terms, a performance QX slightly the

in a lot A with what So fact semiconductor higher we guided anticipated. somewhat group the on that QX. basis in had do we had revenue product came the to group, of than from that that in

as and for Going products average the you the was there group that's be group us. margin basis, higher in some semiconductor into product strength on there quarter, know, to going

of gross QX. influence margin does in performance that the So

performance we some some of similar in and QX also semiconductor We We'll expect some ramping group. see some from expect products. that in some there module mix we'll similar embedded continued additional benefits have the the from

had general, we're the to same that So QX the the keeping range XX% XX% QX in guide timeframe. – in had we in the as

So it be. revenue we're chip where was highly will ultimately and versus in the QX. the module range dependent within that XX%, it in that mix at higher realm end, was But of

seen is quarter-to-quarter. of those for higher we've that's It bit certainly, of ranges So chips. But normal variable operating little contribution some range the the in a than our past.

Richard Shannon

of we're market question to by you DCO, wondering a related time. Thank Okay. for if period here. the little the to you talk dynamics CFP last that. bit Obviously, John. a to first That's helpful, competitive could quite My about

wondering pricing the think effect any you're you've competitor, And is had enabling in any if seeing there. expected there the in curves past? a you're on that I coming others

Raj Shanmugaraj

Yes, Richard.

we of enabled a not why which in, It's think source haven't in coming is and one. second – a that now our take using I reason anything see about the really me we but Meru. Let meaningful terms then we people, customers from announcements seen

And benefit position get And seeing but – we some the more competitive seen – I also, have product our anticipate market even I to again, positioned as from we strength. with believe point. adopted competition, well but that so we quite I the as from think to as – this we said, we widely, haven't this at factors, continues although

talked And something so, in about we yes, pricing reductions in the pricing, we – the past than more seen in of annual the do haven't that but we’ve extraordinary have price that terms the that. we

Richard Shannon

Okay. Thank That's you. helpful. questions. my That's all

John Gavin

Thanks Richard.

Operator

with from of of Morgan a proceed comes Please line Marshall metal question question. Meta next your Stanley. Our

Meta Marshall

just where that, rough, customers. just had is for second with AC-XXX fell maybe an customer, you and I cycles Maybe then as that kind on for of if Great. know question deployments XX%, of can of hyperscale of testing some that me far And timeline been ship out of me, the to mentioned you customers then they or customer that those kind completion to is and there Thanks. their going need or inventory of in build kind ACXXXX timeline think you has be to and just XX% of how expected customer spend cyclicality we is wouldn't expect come that give to what a them of that's context something when for expect project a forward? you that or as hyperscale NEM for kind kind for much cycles their deployment should question first the market Thanks. to

John Gavin

Yes, is John. Meta, this

So I'll that. take

our of of I ready but, calls, been for up terms about kind to this QX we terms ACXXXX That manufacturers well. manufacturing. with of transfer talked So volume set through contract in in process over as of get out deployment, think the in get we've to process ensued on came the prior QX

category product said Raj we've revenue product into earlier, particular QX. seen QX now So in that that as from for increases

ACXXXX some NEMs larger the of We from That's growth QX. expect some into similar standpoint in in that deployment because be their see moving increases will we'll cycles. rate a

through supported deployment their within So activities And and more moving in would towards that has couple starting of of and development with been us a trial last been informed they've activities some and and software customers testing the they they have the lot QX. early quarters. integration installations be their

There XXXG, at opportunities that at legacy to the is capacity deployments And QX the we question starting kind terms of support what in that, in of manufacturing for those your on we customers for something then into are or QX and end continuing So that's are still in that product QX. the Meta we'd anticipating towards – the are the products customer. in scaling preparing, there continued look in of hyperscale on deployments phase. of what say now, support legacy product phase particular for of

seen over larger and and maybe to QX. lower they in past you've we actually in QX in off carried customer hyperscale probably As the go variability that and then expect that quarters even we've a about a for in a the be performance saw little lot and that comes versus talked and in certainly QX that

as a to is that that in we that don't So see having opportunities it. product legacy phase, additional is that

product. volume moving product it'd would on a just that akin for legacy to opportunities that more basis. there but be goes curve there a in be, be quarter what and out towards are So It a still

Meta Marshall

Thanks Got guys. It.

John Gavin

problem. no sure, Yes,

Operator

line of question. Silverstein your Company. and the of from comes proceed with Cowen question next Please Our Paul

Paul Silverstein

these Good before. evening and I and so I've questions you been call, Raj asked [indiscernible] and John. are jumping others repetitive am hoping apologize around to of things

XXX your above XX%, they it ACXXXX using hyperscale customers, to other that previous only or they response, on XX the off the below or not on or the First asked gig question products? are Meta that's are XXX going of any with been

Raj Shanmugaraj

me, We've XXX of NEM course that talked a customer. have couple about is hyperscale of I AC talked direct we selling do multiple and that let customer think about things. Paul, our have Yes, And those. into of then we

opportunity. indirect as And them direct they – it's prospects would ACXXXX be not we but the be viewing as well, yes, so, would one the of for a

Paul Silverstein

clear, that Raj customer So is… be to particular just today

Raj Shanmugaraj

you cut there? off. Paul, are still you Paul Sorry,

Operator

your proceed Paul, question. your is Please line with open.

Raj Shanmugaraj

there? still Paul is

Operator

to I over the to end closing disconnected comments. has this Paul of back This Q&A time. like turn our the is conference would at session. for Raj Shanmugaraj

Raj Shanmugaraj

updating next to you many our seeing conferences. Thank for investor and quarter progress our forward joining you at of today. you look Thank Tim. We our call you, all on upcoming

Operator

conference. participation. you for Thank today's concludes This your

time. may wonderful your Have rest disconnect lines You day. this at a your of

Acacia Communications (ACIA) 2 May 192019 Q1 Earnings call transcript