XLNX - Earnings call transcript Q1 2021

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Operator

Good afternoon. My name is Chantel, and I'll be your conference operator. I would like to welcome everyone to the Xilinx First Quarter 2021 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. now turn would to call I Poirier. Matt Instructions] like the to over [Operator you. Thank Mr. begin may you conference. Poirier, your

Matt Poirier

Thank you, and CEO; good afternoon. With me Hill, CFO. and are our Bryce Victor Peng,

differ actual we during Let refer statements SEC, everyone events projections are that the our information These We We may or cause company results performance differ files important XX-Ks, on forward our X-Ks. the documents wish results may financial future to make that future predictions the could to available the identify conference materially materially. statements you and me factors based forward-looking and regarding projections that with including documents and our from or is such statements. call that of actual remind in the to other or risk those you the contain that today, currently XX-Qs contained company. caution

Xilinx Investor and has accessed our our of in can helpful to measures being financial these certain included facilitate information and we website. GAAP will We provide It been comparability will measures company's In management closest release measures, company's results. disclosing the business believe investors for by reconciliation evaluate measure used call period-to-period webcast be be financial analysts This evaluating conference non-GAAP business. financial is effects open certain for is A as non-GAAP measures addition ongoing financial items to non-GAAP purposes posted to supplemental our and is of to be all acquisitions. of continuing unusual these website. on in items, Investor of excluding such by non-recurring Relations and from analyzing amortization to core related one-time that intangibles the operations sharing GAAP We and the the earnings Relations to live.

to Let me call turn the now Victor. over

Victor Peng

everyone healthy for well. call. thanks joining families are I and and and you Thanks, your today's Matt, to hope

COVID-XX the the an results. update highlights Let and start situation, of business discuss before me with I

business China performed Most employees been where without Our has in operating work. chain challenges. despite supply are to overall been home, our well disruption, return the working except from employees have the and to allowed COVID-XX any significant of

contractors, have and adopted screening. continue our uncertainty masks distance. be at a on to QX and Travel experiencing and daily are employees continue in We're who call, strategy. overall we health practicing have well and any We force operational earnings we not our much guidance sites, For restrictions significant challenges require execute to about be our for worldwide. significant must on demand. chains When on April supply COVID-XX would how provided impact fiscal social

of through set business demonstrates challenging we environment. This performing diverse quarter, markets, model the offsetting better-than-expected in and end our in in our progress business addressing As markets is the in executing a weakness strength progress others. our multiple of strategy in the a

saw in licenses. QX accelerating also Users, as End removal benefit of Commerce, Exception to known also Civil some the orders U.S. We of due CIV Department License from customers

which revised $XXX to to in guidance original issue than offset into the impacting better-than-expected late WWG first the that program in Fiscal rate to AIT. our April, we were a in QX. recent revenues performance, our and extent, revenue in an guidance customer appropriately were Compared PCG quarter Given revenues moved stronger-than-expected a was time and meaningful AIT the and more guidance. is lesser ABC weaker due tax of June. actions revised million, and QX provided midpoint at revenues lower-than-expected

quarter, Zynq category XX% AIT based primarily The constituted revenues. SoC compared mentioned, businesses. across were will to declined confident rate automotive design our sales revenues. sales I over our revenues target time. we're and grow of advanced and businesses. of be win our to of Zynq primarily strong And revenue a in to that total removal X% licenses revenue Zynq the attributed larger momentum markets. XX% products total of As revenue approximately of the and last was to our continued portion revenue CIV Zynq affected due lower a WWG to our portion total be

compute now, in DCG. adoption Video to business with multiple adapters. specific We solutions, revenue new move of hyperscale cloud had secured customers. interest we and business from NIC XXX-gig solutions. the in smart first have Solarflare our AI design customers. and conducting So saw networking, NIC quarter. customers RT our of our in In with during adoption wins I'll service made deployment highlights, strong Alveo hyperscalers on a provider progress the We announced smart of significant with momentum space, starting We DCG fintech NIC based clusters are we Alveo for and seen SmartNIC concepts and Server proof In great engagement compute recently XXX-gig the OEM by growth

from initiated qualification OEMS, of evaluations top one SSD we customer. three fintech a in video next-generation commitments platform customers by Finally, the smart leading saw storage, and by storage

is of clusters market, critical and software of powerful adaptable applications. developers customers to North universities the list since four of our continue we developers late train production We compute adaptive most We our and the of announced Xilinx win continues and build. for platform And over a deployment. applications. platforms. we our Tier progress acceleration research support to adaptive are ecosystem. We innovation at on had to it and HPC pipeline for RFSoC XX,XXX sub-X year. applications to to To the provide establishment clusters next-generation X,XXX last make funding prestigious and compute America and radio world's nearly a Xilinx for These we've company MIMO software our downloads communications approximately X gigahertz quarter growing trained date, to massive transforming production infrastructure design this one great XX,XXX ramp RFSoC partners OEM expected have of the of releasing In who announced Vitis growing

that XG all continues We give customers engagement customized strongest lastly, our collaborate forming needs. in to ACAP. as versal we customers' with includes our Versal, deepen to are X-nanometer our differentiate breakthrough we using to our like products solutions strategic meet Our deliver ability commitment Samsung with believe their position the ever with our to our beam on competitive products radio RFSoC adaptable we and second-generation and

of strong the Open O-RAN network. deployment position XGPP months. to the comes and to and to developed or the in joined opportunity several working it many open at We've Alliance, building as contributed Our support emerging of over key is actively be an stakeholders because, has operate XG know, O-RAN the an member Policy networks active excellent ran will the development with time RAM been recently Coalition XG last us. We O-RAN the Ram an And and mobile you for future ensure XG technology. adaptable. We're been openly and specifications momentum

Moving on to businesses. our diversified core

in consistent our benefit foundation We diversification these markets enables provide generation, from high-growth these terms and of markets. in the solid us which well cash reinvest as as to continue to markets

learning launch performance space. enable we've bookings. During to & systems. product including control processing business. we industry's applications. the of a auto advances XX-nanometer major full machine health auto family. Defense the ADAS, This result Xs have and saw surge Zynq related generations. XX-nanometer business, industry seeing recently core inference, be a business and together continues the reconfiguration We believe by position our monitoring worldwide of orbit the within recent satellite out announced a expedited onboard on In efforts further FPGA, a the we breakthrough And XXX The our the global three delivering grade to these products in first the first first product care we is last orders of pandemic. won for position. Tier quarter, to applications secured space we for and space our We strong the to product approximately support six process have with business, Aerospace Industrial quarter, with started unlimited driver, tolerance COVID-XX. and node to In signs bond applications during within in ultra-high for driver improvement five strengthened space radiation first in bandwidth and the secular fiscal our We months, throughput as the real-time

second to year. the auto optimistic beginning of We in business are about the cautiously the recover half

recover, sales revenues see and to robust design our translate growth. expect to long-term wins vehicle resume we As

Now demonstrate in of to results solid turn Brice, to extraordinary over working these deliver it and employees strategy, our believe I with before let We most and QX even I our me are, customers from for can, execute share and times. what effectively on our home. our safely operating

resilient diversified provide during to core a foundation, global consistently cash markets Our solid downturn. even continue flow a and generating

time, world. business growth it appears grew for significant despite headwinds and us validates The we're confident will and the DCG over bottomed businesses long robust our strategy. resume have out, in to auto growth Our WWG too long-term which

continue Thank delivering to optimized growing make our as than better from and pandemic adaptive this to and over stronger our solutions our and a position progress San, base increase COVID you market We're for ever to share, competitive strategic in We moving to our expand and customers. Brice. emerged platforms, software ecosystem now a company.

Brice Hill

Thank you, Victor.

cash reduced revenue expenses June quarter-over-quarter XX, with after margins lower efficient we revenues, GAAP well QX to to XX%, call. improved As company or million, operating quarter, margin XX% the of delivered XX% gross executed business provided restructuring, on in despite We gross Victor the achieve range pandemic. of provided due of earnings GAAP Free of and on the margins confidence mentioned, the $XXX XX%. business margin level resulting operating $XXX XX%, non-GAAP of April in and million reflecting helping of fabless our the our above non-GAAP and guidance throughout line total visibility revised the of model. we guidance was flow overall The significantly and

Our continued our of XX% through cash profitability to shareholders and or share allowed buybacks. $XXX return free flow million us dividends to

increased cost During offering. and the also debt a lowered our of capital we with quarter, new liquidity

gives to opportunities. us balance business is pursue sheet strong options Our and

crises, and online COVID digital Our benefiting others gaining customers has recent and stable set and by to headwinds by from impacted other some business of markets, the during servicing a end been broad and services. move

CIV XX% operating the course. group grew factory was the year-over-year, and SmartNIC margin reflecting market. contribution wired as COVID-XX accelerating quarter, of driven and offset part consumer was changes. strong markets. markets, Wireless effects CIV in year-over-year or quarter-over-quarter market end Please movie with productions lack Company by end in related rule automotive revenue TME Test and ABC and deployment order was the drop-off the impacted service significantly end rollout solutions, well outperformance decreased and income XX% amortization. sports GAAP were but quarter as shutdowns QX, year-over-year the revenue and or of businesses. performance and and continued decline year-over-year. driven between due XX% in core a product and and a some on revenue the The expected quarter. and negatively our declined revenue largely in $XXX we test expenses million of run end trade and to was Operating or defense, gross to non-GAAP of as acquisition. more was non-GAAP quarter-over-quarter accelerations. revenue access $XXX the of in guidance. The was off wireless in industrials or margin the shutdown measurement declined consumer-oriented Wired in XX% by $XXX industrial, year-over-year and to Wireless outperformance $XXX initial increased auto by revised revenue variable operating global markets in a end The due gross end measurement operating million margin. gross outperformance Huawei end revenue both provider higher our is XG-related than XX% XX% related GAAP from as CIV to due XXX% cloud XX% emulation, second XX% million the of expenses of but well Solarflare to center and AIT, compute increased saw or program the in of margin compensation of income operating data have to outperformance operating affected by wireless broadcast XX% network our by live QX. to and XG acceleration. XX% orders group at broadcast to related build-outs guidance adoption also came Wired XX% transitions, were quarter-over-quarter, top operating was X% of with largely line solutions, Non-GAAP margin. record the sales. better-than-expected aerospace which TV and on driven or non-GAAP Specifically, as was declined ASIC due and restrictions level quarter-over-quarter difference network automotive, markets revenue In China. million impact customer GAAP accelerated related more GAAP note experienced mainly than meaningful quarter, due their AI the XX%. steep rescheduled M&A-related market of of guidance these expenses

and tax XX% more from GAAP below our X% Non-GAAP jurisdictions. lower-than-expected rate approximately due non-GAAP income tax taxes was was coming Our of tax our revised rate to were guidance. approximately lower

XX-K diluted million. reminder, million related in $XXX decrease. impacted to a was our Non-GAAP a our rate decrease per share and XX% quarter to legal to count XX% was EPS decrease arrangements. this charge to Diluted were Non-GAAP $XXX.X disclosures more decreased net GAAP tax a a proceeding quarter-over-quarter and on GAAP for to our As decline was effects by year-over-year. of Please share, related $X.XX, onetime tax $XX income XX-Q and per share third-party and from XX% cost-sharing XX% $X.XX item. refer year-over-year earnings diluted net cost-sharing Again, the was refer disclosures. million. reserve please a last income arrangement

the to to primarily cash distribution March, slightly $XXX reflecting XXX compared prior quarter. billion to to $XXX inventory generated is notes forecast. $X driven Overall, of is May, to original in decreased issuance the inventory million model. and total XX% the the well XXXX debt stands as lower $X was last XX of with within days, million in the, The of quarter. strong quarter. on of depletion increase in was billings resulted to Net $XXX million items. us as reflecting revenue, repay DSO our This of receivable, debt, sales we to of days some million at XX liquidity cash higher-than-expected position. next in operating Gross days The inventory flow flow in Accounts XXXX in linearity and $XXX balance and notes. $XXX due Now positioned cost cash and revenue, reduction. issuance, and driven million at our million $XXX largely business XX% cash free increase revenue, days by or sheet inventory our of flow increased days, from down Inventory in of ability cash-generating the or by XXX higher fabless relative billion

paid approximately $XX average we per of repurchased million. $XX shares quarter, During at XXX,XXX the approximately an price of and share dividends

due what call, fiscal second quarter now Note April wider provide for business guidance with, XXXX. provided Turning reflects outlook was for on in going The our than uncertainty we the to the earnings what around COVID are guidance normal for impacts. line our quarter to ranges that the reasonable this we narrower which is range our than today more range think we forward.

in strong as and core the our revenue broadcast strength, to and overall down auto quarter-over-quarter A&D up million We well between which midpoint, million, quarter approximately in second by TME recovery business as and year-over-year. approximately with and X% reflects markets. led This expect be $XXX at $XXX X% is markets,

group slightly to the we of center is of WWG our first We conditions are business flat quite down, pandemic but rest are expected strength a data record XXXX, decline and of trade relations. is fluid, of be expected with the QX with the U.S.-China accelerated to CIV multiple signs Our markets the off still over due digestion Overall, orders. through in strengthening calendar to pleased economic the see half. and to

increase, to to certain program increase line decline sales ISM after levels. into historical Defense meaningfully, strong expected but due Some still are to Defense-related is Aerospace markets, revenues. emulation quarter, also AIT, record programs. sales to to with are in TME expected color a end within expected prototyping additional our due and

well Internet-based be impacts. ABC SmartNIC is demand some We videos, in lows effects auto QX. recover, have center the as The pickup to to have started building in quarter. Data U.S., manufacturing in remain to and potential continues pro Europe with to new to to out group of expected December started is see market deployments. Asia COVID-XX play from expected follow-on with to inventory in activity, as vigilant, are the from ahead economy. quarter related AV expected recover pandemic markets in the expected applications a record from flat slightly to as innovative also strengthen. higher-quality as are this to as down, Broadcast QX potential customers increase to sales customers, digest We

revenue to expect continue fluctuations, DCG quarterly by As our we in we the customer driven have large stated to order have past, cycles. business

is million to expense be and XX.X% between operating expected communications better and impacted we we captures GAAP between and is and be are all time. to million. gross to now also on expected as a operating $XXX NIC a strength by be smart NIC expected Solarflare. to to general, We OEM. million our CIV related wireless customers a XX.X%. WWG from of shifts expected wireless design down down GAAP Wired million. from over is offset traditional we sequentially Tier to be countries restrictions. expected hyperscale adapters and expected customers by Non-GAAP with believe $XXX have Fiscal partially our on in expense customers moderately XX.X% is and opportunities to expect is margin have broad work security be both business in a ship with broadband and X $XXX that, able is down and see In demands digestion QX increased Non-GAAP in CIV to Note $XXX than solutions network XX.X%. solid what efforts, trade be networking for and ramp XG-related is to significant orders from capacity, pipeline handle we have gross between changed outlook more RFSoC between home margin investment digestion. due related as

X%. closing, as contains As related process. and million. across tax employee profitability between of reminder, our businesses. increases a Non-GAAP expected to GAAP I and tax non-GAAP Xilinx's has core rate is to to stability X% X% fiscal In approximately expected tremendous between be of our well to be its as all Xilinx business other focal rate want as X%. $XX QX emphasize compensation be the expected GAAP opportunity the to well diverse annual and expense is is as

company. Our strategy continue on our remains a on platform to track we progress as to transformation

road well Vitis We will product our platform derivatives in platform continue as ecosystem. X-nanometer software and as our to in invest reversal our highlighted map, by

also execute our well positioned and the to market our to expand to COVID-XX. global from continue capitalize recover opportunities including market will the from believe new leadership position. remain road across We Zynq We and end we continues economy that all as the on our pandemic our map a offerings. RFSoC stronger MPSoC with emerge We markets global on

Let me now you. for the call turn Q&A. back the to operator Thank

Operator

John from Our with Instructions] question comes [Operator Pitzer Suisse. Credit first

Your line is open.

John Pitzer

me and of get on of beginning I RFSoC understand on if impact think period the around Thanks for on digestion something even the ask backdoor rule much guess letting you is to the commented the his that the try in on to an it's Victor, bigger? I'm help Brice the June is just a all and question. big results you did How CIV that How you that do the And impact it appreciate detail. had strong changes. Congratulations a on kind much comments. could an of ramp us this think How opportunity will prepared way from wondering quarter? quarter? answer September

Victor Peng

order And as to great I it, CIV what of quantify has it's and that look, is tens millions. low hard think Yes, precision, puts takes say of magnitude, it John. with in would of think frankly. really question, the I And

strong to so CIV WWG, the is We what So very said. we had QX. center, we was data In our had in there but strength the due strength quarter. a some in

will Now North of most a of further that of I certain very really did little don't bit for think be significant win, that. the that the start. about the that part, the deployment. regard And fact But in it's terms say digestion excited little that just very areas, really American RFSoC and QX, We really to it's meaningful. we're we in effect. a there see With on the it's is

we'll is that So think we do deliver that something good to continue that, revenue.

and somewhat we as in by deployments, general, are bursty. many Now said definition, times

there, So beginning like of that now kind quarter, time. quite excited what it's some really it's unique deployment. thing. is forward The every not we've see the to see But going RFSoC a said we're out we and see in what overall, another of really single for we'll product

And think the this something think I it yes, just of one the significant beginning do of deployment. it and is start bigger, it's so I is – particular

Operator

Moore next Morgan Our Stanley. question with from comes Joseph

line Your open. is

Joseph Moore

sounds it you if I uptick bit that networking on about like side data a the driven by kind more could little more have interpretation? the follow-up saw. the that center And wonder the of talk is a was piece? then business in you right I It SmartNIC the

Victor Peng

of was we're it compute. fintech. but that amount adoption, uptick terms we of interest also Solarflare, good well SmartNIC other And going Good have good as is Yes, seeing also engagements on. some as in in fintech

really some it's right trend So might to It is of we're the encouraging quarter the still the really obviously, with for is a course, a And direction. from so. ecosystem was and that. doing burstiness what we're But excited And in you us, stage quarter-to-quarter. about see in where record see. nice we're certainly,

Joseph Moore

be how is then that deployments around you smaller of standardize to certain like which how you look, are that's pieces business you're you versus And differently about customers? Solarflare through thinking pursued it through segments lots there's thinking are people at about that other solutions. SmartNIC And hyperscale, then business? How of large attacking? it. seems business Are of going part – where that And a there's

Victor Peng

enterprise would all, the of with I other as, players. time see first what hyperscalers we is, Yes, over opportunity definitely well say and I think, as

the it hyperscales I takes move think into aggressively move more to tends the and knows enterprise. to little a longer everybody bit

also on. bandwidth, combination processing. the are people go just and offload to doing way, yes, of I And the things mean, going people need levels so but of think higher I and there's different to a by

So it really beginning, it's just us. is for the area a exciting and

In financial already it now A it a lot had both but we're in low we're still that And terms they the position, of very going technology. Solarflare terms also fintech, products, that around expanding. Alveo was of their seeing latency techniques. of a seeing well. obviously, in of route. some those beyond taking look were bodes in applications traditional that as for the And But at

Operator

comes question Hari next Our Toshiya Sachs. from Goldman with

open. Your line is

Toshiya Hari

had so Thanks one for several guessing. a months the maybe I question. related taking joined since the much for Brice, company, months I it's guess not or of to this quarter. been But I'm you couple

Thank of some Analyst You've medium an are company, more had set. Day coming in long-term sheet time you you the about forward, I to you expect and and terms sort flow of outlook the don't had to know and cash balance learn be financial insight I thinking model? how from opportunity preview about to guys going up thinking and But the you in about couple anything. you're perspective efficiencies any helpful? How months, the OpEx a the you. of driving an would

Brice Hill

Okay thanks, Toshiya.

you for only in are Day as timeframe. for back where guidance and giving we're October, November we'll specific. an We'll be half with the first the planning the date mentioned, we Investor second So, get QX,

in crisis. prior business we'll pointed We're there. commentary. this has been sheet, just really profitable start The been his out crisis. the Victor in quick, balance profitable We've strong. On in

we're fortunate and to position sheet able both we that a consider to adding we're cash, be to adding and the good feel organic in balance additional So inorganic. earnings opportunities,

improving about higher center our those but those We described able that defense, products have So WWG and excited and medical on strong the in we in business And financially, also core this growth the those emulation. in have in And we're to Day automotive. the in of businesses, position opportunities aerospace, in detail markets. what we are the think opportunities markets, – prospects When test data before, rates is the we'll growth significant bright and about company long-term Investor think position for and company industrial, we're extend that's measurement and model, opportunities in also has in we'll all then our meeting, pretty markets. that a be growth great. the when

what that's to discuss when we'll get So, that point. we

Operator

comes next from Ambrish Our Srivastava with BMO. question

open. is line Your

Ambrish Srivastava

is you Brice, ASIC the behind company. you kind of what ASIC referring mentioned transition. Xilinx the just transition been always are has wondering, to case, I that because time the And was frame it's

gives that Zynq a of you're you you. side, follow-up transitions? that the about, Is unless I Huawei versus And the that interpretation quarters advanced confidence, what the largely to see further that year-over-year we a that underperformance right it's down So, for product couple of related talking not core. versus have quick Thank on ASIC will really and is the core?

Brice Hill

of first talking that that would think the So transition, we for on piece, some we're I to the lose. about ASIC the knew are designs were specific XG designs We infrastructure.

you and have think don't is from business year Victor our a And to saw then want we'll this ASIC add? new I year we're the that – the that. perspective we're past saying we're again, never on business. to think we an that but transition we for so, effect complete, competing from last And quarter-over-quarter largely

Victor Peng

second to always designed that think talked year-over-year big out, really that's guess, these drop, I just question. was year-over-year rotated And to. ASICs the the really say half against the like notion And is new, feel a clarify big ever right. I And to that’s change, Brice the we the we he about calls, I over trying get competing the I But just complete into to clarify would but previous I and but that been said. stronger not ASICs as than was you have again, earnings you again, all not Well have I that and position we people referring think case. trying once of as the had think, again, on

Brice Hill

Could Look please. repeat you half I'm sorry. second the

Ambrish Srivastava

I'm and Yes, core is assuming was am was but it the than Zynq usually down correct see Yeah, it's and assumption? in the because being my – as that's down due on Huawei largely, the clarification. and to as jumping I thanks to products Adam more, assuming automotive more for probably the advanced Victor likely well for correct counterintuitive that's that products because to in sorry that question it the advanced

Victor Peng

the of accelerations And were to measurement CIV Well, quarter and think related Aerospace, is, lower older on we products. way the Defense number we way accelerations a had of in lot about a to CIV, since it the emulation. test had cases a

you And where increased end into market cetera. emulation second that know, mix measurement, the just based have. have a for that Defense, change Where as go we'll you quarter test we'll and business Aerospace on quarter, et was expect so slight mix to, the the in and flip we

it's really market for of quarter. just a – the mix So the reflection end

Brice Hill

Well, certainly that part automotive down then, and on yes as Zynq quite a said, was bit. there's specifically, you

So portion definitely and auto. on Zynq is that of the that SoC

Operator

Our from next Tristan Gerra comes Baird. question from

Your line is open.

Tristan Gerra

RFSoC you look opportunities that versus at we should How the have in in America ramped when China base in station. North

the station Over opportunity. the non-Huawei And suppliers? base also, which medium is as you they one bigger do ramps in term, from when China the benefit diversify

Victor Peng

we see geographies. to multiple deployments in So regard with RFSoC,

In all at this geographies. major the point, fact, in deployments we have

together fully like for a continue. out So ADCs it now – been and the monolithically performance in it's in still the of while, DACs integrated, we integrated, and digital there's Again, terms high will and no product think market that processing. with

that's the I I China. respect not to in a can shift, see. long you're unique, of super some So say in to all and what we that's life but what would that, of Look, seen kind that's be With and guess, it's we've I meaningful from referring share deployed been to regions. that really think

is general, it's vendors other in and I not as non-Chinese aware direction, is that, more moving a shifts a geographies, Europe, delayed to course, think in although the infrastructure XG, different in terms in just of some in everybody is just certainly of wireless there terms Huawei India in some think I of really whole. India, of but

still dynamic again, your yes, of a recent dynamic shifts. around mean And But it's a that So do the in very is I'd we restrictions obviously, material. think probably say, some yet very situation. nothing comment, of I some Hisilicon as I situation. I and Huawei. still around And impacts see implicit it's guess,

Operator

Our Evercore next from ISI. comes question Muse C.J. with

open. Your is line

C.J. Muse

to guess John's clarify question. wanted earlier I I

I then to pretty products? there margins, anything you nice was mix in particularly guess of stands On end at really wise severely happen to would this out you. WWG higher certain DCG a function that question, main the the impact part range, of up quarter? have that Thank what pull-ins, I'm that, hit gross for following to to the of range. XX.X? And that CIV and as is any for for curious, very the Or just

Brice Hill

I'll Thanks, start its that C.J., one. Brice. on

volume did center, small of acceleration data Some of to a portion go CIV it. the

industrial, So orders Basically, center, all groups, three that's were some data had and the in fair. WWG that accelerated quarter. of the

cost really changes, in not you drives that really On It's alluded margin, the changes sort highlighted, gross mix market end the or the price gross quarter. during you margin of as much the to. as

we think to margin And And where higher. put so quarter typically in stronger end and the Defense of we'll end the as and expecting all market on mix there. our aerospace test mix, out going It's the we second And drives we that through up range and depend a range. in quarter, get measurement emulation. that that we're

Operator

comes Our next with Blayne Curtis question from Barclays.

line Your open. is

Blayne Curtis

I the up down it's much pull-in. and WWG, the question, that being CIV on to if it's XX%, about the group just there in pieces I not just talk understand Maybe mean, you - look Another that strongest guide. can you want in at

at biggest dollars, So got you look tens And of are I'm it? is trying think are understand, you millions have that one, incorrect that you products contribution? backfilling just of just to the that WWG to saying it when

Victor Peng

other It about groups of quarters customers, millions WWG so we are both accelerated we we some the in originally and and QX, of the quarters. is it, stronger being that had that say data anticipated, and when across we described in When Low we to essentially mentioned. three difficult look strength center, see product that in for to think some and and major QX, two driver I were to of businesses QX than product at like was the displace We we mixed tens shipping moves QX. we the QX. it's industrial reason to

end net quarters. suggest, was both expectation the three and in the XXs, quarters ahead it those in markets. QX So low we're of in across do We was effect we just think at look both

Brice Hill

think, to that strong and causes again U.S. because And clear I'd the would Yes. continuing business some effect I it independent sort concerns like movement also CIV. cases, and quarter, I of in actually CIV the in between around positive escalation - jump is some China. the be across of of say, the wasn't CIV the have didn't a

from saw magnitude. what based portion not that virtually, away that It's really, if multiple that. don't of at order you meaningful. people going this markets. saying strength should a walk in our that in was No, strength So look on think have And we we I of ahead,

wouldn't out. people of that's I So over to emphasis on I any think, trying rotate I that understand CIV. the tease But -

Blayne Curtis

trailing or no maybe to And still is restriction it then, this to part they ship longer of can quick a follow-up. customer just ship products, there that if the Since you are wanted it could them? you to

Victor Peng

had so for was the a so That that the products We’re gotten know hope shipping able licenses, from be We've of removed. for exception. our customers. continue We number we'll to exception asking to be you products licenses. would an government, licenses applied those

Brice Hill

Yes, bag, it's mean a I some right well, won't. mixed

takes, know, Chinese but have that you way, companies people well, U.K. you understand the you those. that multinationals licensed this just should are know, By know put there some is covered not These Chinese is China right. have. really that why, definitely in word companies. this have operations we Some as is affecting so are

so… of like - it be and there, way is And it another figure some the going not of we we some to with customers feel or work out

Operator

Our Stein next comes question SunTrust. from with William

line Your open. is

William Stein

of the data for to quite discussion be if next missed lot September. digestion a And about over that I been thanks going said flagged really of question. comment you but was couple wondering quarters And on center I let's as remind expect if between approximately? this you FPGA vertical have beyond this what a digestion if some the customers, you quarter. say networking can perhaps can and you. overbuilt is the us in service, relates like my applications a the in meaningful to split, Thank extend the about if and period, other way this, that remind us Great, should how to think you where that's split expect versus question apologize willing of you'd period market. taking down I It's about just to be There's we

Victor Peng

you just terms with first was part digestion. to I of the or the impact mean, when CIV, don't that to some CIV had on the know in center least. the the markets - So to say I - regard general probably whether referring digestion, back data

think data So that's of is one that thing then usually qualitative know like a have a buy the center, most terms while general of we this we do sense. they But they right as don't sort quarter for in use I just a the in in, that they put the to in scaling quarter of and buy nature then bit. things just when You of deployments continuously the the we're purchases. in past said as that's And vary a

off one flat digestion question class think you on this quarter just right, of a into I know, don't slightly the much you amount down you know of going that's part I know, guess. you of this, read tremendous So, a too should record

time networking know you winds is momentum as terms would we probably that near A great of just term, In as we know specifically we you would both category video in of of side, really first that compute. out of but kind you interest terms that, on compute, one know more you know, was good SmartNIC time good know just there's opportunities, the have you lot say in in system you we had of that good areas, in and a for much we place the I there turnkey that within saw know, sort of activity now. sub I FAS well as think some I I say FAA some, both right strength SmartNIC a this solution. versus put don't break in the And the real

see as as into I So, but there's areas SmartNIC. that out plays in well think strength revenue, compute we'll both how

Operator

Rolland next with question Susquehanna. Christopher Our comes from

Your open. line is

Christopher Rolland

And X-nanometer? path applications thinking you, migration that where leadership some particularly and end Victor, are applications? If process sort timing technology update that? you could and to there on some, is that How growth of, for accelerated about market or end are you. the can get markets us or we or sensitive customers Thank

Victor Peng

course, the We're on Samsung XG – announcement this of really as their year. their to progressing of is go we and big of And the well. at track as Versal into production had end exactly equipment. So planned terms in for and that's

engagements We many have customer industries. different multiple in many,

like that's the most public. thing. broad But market production be to one subfamilies. that's a we family, which are in the is So product this that just made first going there notable that's really And multiple device

X-nanometer because actually the beginning. doing XX-nanometer is just of strength So tape-outs that's we're transition the generation. And XX-nanometer indeed, why, still of

And think that we We're So capability mind XX the very again, are strong whatever. in design increase that. this XX-nanometer of that X-nanometers, gee, activity phases still matter, on like, the early the parts and the starting is certain of I And in or I really And keep X of we nanometer. well, products think the and we the is wins to think happen. as wondering getting about might at industry is to transition be important right. significantly I there, talking out thing already put for you

mentioned evolutionary digital of kind together that more RFSoC terms area see in the direct years. You, times. that no of, capability, and architecture. competitor after for RF the capability in Nobody has a much multiple move like their or marketplace in that all did integrated Versal, us couple even being more again, a there's products logic of other with

industry just capability because to getting if way those innovation through that's lot FPGAs, we're mattered they back Energen's next not acceleration a providing when the this really just and moving we're and it Then node right, other value right. to process as was pure of only architectures. - lot it like our follow because to the So reliant and a customers architecturally, days more the not capability, you old you deliver more with in SOCs

really and we're innovating integration. advance, - but really to forms to continue we we've the move at of architectural other think I So level

the So Hopefully, think I be to okay, architecture, see, that that's helps. may why that's reason. why the you wouldn't next like, you but moving

Operator

Our Bank. comes Deutsche with from next Seymore question Ross

Your line is open.

Ross Seymore

to just a wanted I’ll the Okay. about a segment ask for I AIT talk certainly bit. question.

getting year, maybe Especially I the think in are size you help even to that be is side growth how things? And forward, you of macro can so But better? in TME side about how why fourth going which recently. the to big looking side, everybody September understands think you the the specific first growth tends this and versus us of lumpy? quarter about just as calendar weak was company TME then that

Victor Peng

TME, on for be sizable the business us. it a So can

strengthen You that had business. a in QX a particular And expect business, saw but little was in record it QX lower, And times, faster optimizing good validation, a their do we to to we QX, in it of again. we ability and we bit product short strong customers, etcetera. do products improve our job have will the a line development for get that that

of do of expect So about the faster there's hoping V in space. being about – developing to we're probably macro, think terms in do track share recovery. the We with at think recovery, we the than opportunity We're company the the to we benefit for for will products we gain there's But macro. market looking in business. grow and think the that and tailwinds lots from general particular and AIT a in all that that When we'll we that. able the have

looks recover So with Industrial economy. good. will market the along TME macro

side, medical & from over think And to programs will end trend many market to continue then grow we there's that that time. there Aerospace the that benefit On we expect continue in toward automation. Defense, that, also will

will thinking it do the it long-term about exceed growth think there, we be – macro. you're rate if the will So

Brice Hill

grow, is for point perhaps kind submarket was that in record, Yes. in to quarter, because expectations ISM, of And except every our out maybe a the markets, right. is, going just it core this

the broad growth the except going to a got all it. solid. – to which get But go It's still record, ISM, but it's had still is So, to those and our a an severe that, a ways breadth be uptick obviously, downturn. market, have for Auto, to expectation there’s really from across had core still markets. every back across

pretty So, yes, it's broad.

Operator

Our comes Matt next from Ramsey Cowen. with question

open. is line Your

Matt Ramsay

end news a Yes, big a of in the et good Intel were, your I on important I'm – increasingly architecture the process of things out and technology Victor, think so. in week the to are markets. follow-up some or I I obviously, you, the lot wanted software, pretty There last cetera, completely agree bit doing afternoon. angle. And with you're on

road it, So other I have certainty get given the commentary that you you're with that that certainty question. design to the critical long-term side explore is seen And which your since thinking? you. and of the my map Or Intel week of of competitor. the wins owns that road silicon of getting? you of news? and wanted out that sort to of supply some Thank your supply, customers certainty own gave react to map respect in the last is of I I overemphasizing maybe of commentary the some am How certainty chief in of

Victor Peng

leadership, getting used have say but we we we to customers execute really I Right? And on we and very talking be what well, do and just we longer do that. they count because to about accustomed team for sort of had think about our in it's been that if execution followed doing actually. proud number No, a that good – you stopped XP I I of we I the mean, done we've us, So important. say. what that, doing, that in to generations, talk we're we we mean, expect of a we our can we've terms think I'm – actually very I and think, come a expect that no question. because of how continue and not we is that

of part metrics constantly. customer I think providing always KPIs team. supply really high - in my and We our of and studies set delivery those on-time terms delivery get marks. do That's operations all of the we and are execution

I I we sexy that. strength, about there, topics, not I some our do would really We've certain people position to always job have our the you one very critical good super we is what in but safety proud customers. past, that's record have, say very in So, So, from of how a you're that's a more, sexy, been certainly say underscore guess that but right? at hard. think me all recent good a heard very but and and kinds we're that's I thing that It's maybe you're of want it's - may on and price that in been of strong and few get you PPM, our automotive would And really, really if things really failures acknowledge the is customers say talk that, low automotive.

it's I is, we've just something quality. we what alluding high stay So, And been other it's execute side very always is but and deliver to I continue a think thing, focused obviously, I you're that think think that more to recently with on the doing. important we but excellence sure challenged, making

Operator

from Our America. next of question comes Bank with Vivek Arya

is open. Your line

Vivek Arya

the Clarification, for transition at it and low after of quick because was Nokia my quarter? tens at ASIC Any The complete are challenge question, at I Solarflare said it millions? can't just can how if suppliers in amount why expensive. customer, would solutions Actually, like customers, multiple the Was other ASIC ASIC FPGA a one then original but rough useful? notion also conversion be Victor, right? taking you question. then may. I clarification that for announced that it XG is happen happen slightly Samsung, And wanted question, Thank the and if large to this a was

can happen a the that just customers? maybe is that? not one it's So, it as much technology if it maybe case, is it's asking, And there So difference on the is at can't if on that and a I'm the radio at more other technically, happen sustainable question. just customer, why Or side baseband side? happening how

Victor Peng

Yes.

But essentially out so Okay. granularity. look, we've tens on that since multiple Solarflare, fine percent. I Well, we the and would is of is break don't revenue say acquired, up

well. doing is that So,

absolutely, his much on, explaining comment that, the as and we based just case. in I've Again, and the change. know, that ever really I think happen. And the year-on-year and And was always that's around radio, don't stronger think so thing to was saying that Brice said yes, said, switching you of we're we're part traditionally is part it'll that now, just not ASIC on

with I I think And done for [indiscernible] them. up maybe where do customers, In with lot We that are to solutions in about in the leveled the we that join talked thing up and some together. currently pick past, in and we've actually derivative you engineering our on doing how cases, that a important need based customized products we're we effectively critical right? our products. delivering more, is we've addition, would on needs, work

So, have. a ever more lot we're value delivering than we

to than not replacement. course, it's guess possible that be tough of a to statement these always always saying we saying the I ASIC have I'm we And value innovative case. be. think been more that really we're know be So, value we're what that's And compete that inherently, it's delivering the And is there'll really I happy we're past. going in it's products. tremendously to

replacements, As communications for the said, you ASIC business those past. is but And team. we pretty reason, And have all a in there Xs, this know we've have yes, in done big a Tier ASIC right. as sometimes I

we've really I So, game the bottom to, getting really our upped to keep back but that's line. that's not it. new, why It's

Operator

Vijay Our next Mizuho. question Rakesh with from comes

Your line is open.

Vijay Rakesh

Victor I side. millimeter wave a question the just had on

is side, is seeing your T-Mobile fine, U.S. accessing like but but the down, follow-up? share be you're the what in and And being in slowing what millimeter to U.S. just Verizon seem a - how wondering and Just looks wave I’ve sellers there? U.S. AT&T then and globally the wondering and

Victor Peng

have deployment in millimeter do We wave.

going think I below the still be do X-gig very to think that and I - bands, that's but important.

do can both I think applications, We but it's both. technical some has has in its play also millimeter challenges. in play

is really leadership I people to capability pretty quite both, opportunity, like our and we share. about still of really bandwidth ways. and talk lot early in we important But with we in and feel are it's again, see working think

So, we win can of both those we confident feel I spectrums. that think

Vijay Rakesh

China, And guys you I of in of other the of you're the some restrictions, outside think pick [ph] some seeing mentioned up.

dilution half or? like you wondering, at And opportunities? see slowdown post ZTE first seeing XG Do the Just in when you're how China. was pretty you obviously, strong of into Thanks. there the half, or the a look those expansion from Ericsson, back

Victor Peng

probably bag. strong was and it. earlier, COVID Yes a a a got then well, I back trying their out terms They're obviously half lot hit shutdown, deployment for more mean original goals side. bit low would end sort being first the And the of they team in hard this I China came still in of had year estimates up base impacted by think range mixed on a Obviously, to that calendar stations. our of XXX,XXX-ish they in of

So that, obviously, dynamic. very it's I would say - there's

recently what there. if I There some you're seen, moving at think some suppliers saying quite what's share as India suppliers material. seen, I of from Chinese really materially bit change least we've non-Chinese the been in Obviously, the degree on earlier, terms be people nothing some think European, about Chinese seen press in China we anything I of it's But versus in talking as well. but about away the in of been market, we've mentioned might shifts. that haven't changes, a going

to we I see shifts. wouldn't guess we'll drastic any but say So, share now, have right I see,

Operator

Needham. Quinn Bolton next from with Our question comes

is open. Your line

Quinn Bolton

us of kind accelerated just, I'm June come And I've back quantify exemption if to longer-term, do that's issue a lost? is look Just much business CIV given quarter. to under quick thinking much of the to the just going CIV got wanted the you was into follow-up. to then, used some sense the how you how permanently of there any way to you've be

Brice Hill

is Yes Quinn, this Brice.

As pursuing I earlier, the for we're business. licenses mentioned

able quantify products. also be to the we’ll to shift lost. customers be they if will really wouldn't change we look point, to this as at of any, mix So the can The permanently

a and licenses permanent be and ahead loss goal. no pursue see out there follow-up. go this we'll the And can obviously So will with be if equaled that's

Quinn Bolton

that American later North Is need that the for the CBRS follow-up Thanks. and does that the just the on wait year you can before deployment - begins? or just RFSoC to discuss C-band deployment that taking this place earlier. And now the options that is you timing, mentioned

Brice Hill

now. No, that is starting

a so expect And more But beginning. front than opportunities So I digital it's have obviously end we going that's to especially think we radio just to long-lived think with be RFSoC. win. expanded on

Quinn Bolton

you. Thank

Brice Hill

Yes, thanks.

Victor Peng

So I more questions? any we to think do Okay. - going are

Matt Poirier

Go ahead, operator.

Operator

with from SMBC comes Srini question next Nikko. Our Pajjuri

open. is line Your

Srini Pajjuri

me squeezing for in. you Thank

you How - question I for that the that of question helpful? pretty as kind to on as and you to for, is just the because start? gives you, that these O-RAN expect that talk you you And vendor. a guiding the and else? X% clarification is Brice, to should about it FPGAs selling or then is rollouts just be there I'm opportunity components as anything And and or you're opposed then that if to you see to X%. if a tax how Nokia, Victor, O-RAN excited excitement going different I First, for seem more think, sell will mean, could Ericsson to I'm about rate, if forward. O-RAN curious when we opportunity. components curious O-RAN model you

Brice Hill

go I'll quickly. Okay.

on model your for tax rate the don't going tax forward. use yes, QX the So rate

and Our have equity QX, to Victor? I happening. and QX for QX. of have so looking would blend use forward. your that's we benefit a rate look appreciated, and those low in QX back vest tax have those what's grants lot in typically tax QX, in of we A and a

Victor Peng

Yes.

if that a other the costs, that that differentiate about some but to even think they'll people for how On table to the in change always at the customers differentiate think you you can that - hardware with is fact, the through it you have and the deliver also after used from our means think looking support deployed be thing can is we perspective. then it. in it, and optimized do I architectures, O-RAN different That something And ways. are right, ability be hardware of same is hardware they if so is it, side, reduce you standards, And different right. their can software fundamentally brought different adaptable, about

fundamentally is is always something trying way. that accomplish So tremendous feel in and with people I that really is, excited helped have enable why it what think are O-RAN reason enable is to we're a the what help because we we really

RFSoC value. again, We're whole So think with the and plus the creating I we're of more more solving radio problem.

And as last just it's I months Tier the that do going to I'm we'll inflection. that opportunity, Tier also so new the behind And the it's Xs, be think the really with right? over big has see. you've up several only but technology, to see momentum another interest picked hard still Xs. exact so we so. But heard and call this the sure Not

Victor Peng

record downloads our because compute well in know time that, in made ecosystem network everyone, of as period grow software we and strength the - just understandably continue ecosystem. has from progress as lot DCG, want sorry to a call. been I don't and just on tremendous multiple to in questions the within of around I really thing. XX,XXX in activity. story. a Okay. closing a and over want I fairly quarter short a XX,XXX lose the to downloads growing We've storage side so, displaying just both and do areas fact that there for joining had and the the - Thanks, CIV one of sight

there's lose as puts I there. activity. course, WWG. design great So, and But strength sight we continues in takes And universal good of fact we're that getting really had some don't to well opportunity to want really really be the RFSoC of the about excited as

going So the just and really markets, strength. had want come takes to core in which back the leave current is you the quarter puts last some as strong. Then to the quarter, we in said, with

you. about excited forward, we're it hope and to go I for this So is helpful

Operator

Mr. for the I'll back Poirier over call now turn to closing remarks.

Matt Poirier

appreciate joining Thank everyone today. you. I for us

XX:XX Time call this at will have a X:XX p.m. playback of We Time, Eastern beginning today. p.m. Pacific

our For of a earnings please visit release, Investor Relations our copy website.

quarter you call, of for release for Wednesday, second market much will completes earnings after next Our our date the thank your year fiscal participation. close. and XX, XXXX very October This the be

Operator

conference today's This concludes call.

may disconnect. now You

Xilinx (XLNX) 30 Jul 202021 Q1 Earnings call transcript