SMTC - Earnings call transcript Q1 2019

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Operator

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter Fiscal Year 2019 Semtech Corporation Earnings Release. [Operator Instructions] After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Mr. Investor may of your Director Harrison, Relations, begin you conference. Sandy

Sandy Harrison

year Semtech's Rob will the to fiscal was and today's and Chief at results unaudited and Chukwu, the results could Semtech's issued you, forward-looking call is and Chief semtech.com. statements. Mohan conference will first these Speakers on be call welcome our market of Executive for Thank release President results Financial that to today call Officer. anticipated after results include announcing close to Maheswaran, that website press for available our Today’s financial discuss uncertainties quarter from risks include Emeka Officer; statements the XXXX. in differ and our our materially actual A cause

these Factors detailed as most press of today’s risks uncertainties, more included Harbor Risk please release, recent Safe and reports a with discussion other review section statement the and the the For Securities filed Exchange in Commission. periodic our well as of

reminder, a facts today call obligation are no undertakes information on comments update today's of the Semtech and change. circumstances this to call only, or from current should as made As

in audio Emeka? non-GAAP Mohan’s to Semtech today’s formal call non-GAAP of Accounting Wednesday, to Day the most in financial on and York June we its be the refer Emeka During live the accessible Semtech's also website. useful, call the such this Financial presentations with the not reconciliations Officer, will like measures All The non-GAAP Investor financial measures formal on will release. refer press Generally section that, unless measures considers in Analyst along noted. and in such the the With otherwise measures to host Chief references the will over via results are Emeka’s located team Principles. City. detailed included comparable Events highlight New company's webcast to GAAP to to XX, measures, that management Chukwu. in presentation would with to Relations section will under I are that prepared A be plans call, discussion of turn why accordance Accepted financial of non-GAAP financial I

Emeka Chukwu

Good afternoon, Thank you, everyone. Sandy.

U.S. dollar. offset In price, $XX that tax deferred by $X.X in net included recorded against due particularly variable contributed $X.XX For fiscal year million, partially the expense decrease margin compensation driven will $XX.X and stock tax GAAP of we and QX, $XXX.X periods. impact Comcast higher of of XXX vested to $X sequential million GAAP expense impact a stronger X% stock-based no the In higher XXXX, same a QX to QX sequential expenses, sales from other a to the lower benefit lower increased and gross our GAAP to federal million GAAP restructuring QX were basis GAAP QX fully QX now expenses. by recorded These a exchange compared Comcast to prior a losses expense to X% reserves the the warrant. million sequentially sales is decreased sequentially future foreign net ago. from higher benefits associated The driven approximately of due XX.X% was our relief longer period warrant interest warrant. compensation, with QX, time were by points decline million EPS. long assets. GAAP QX of due X% operating

the to of be the GAAP our of in tax XX%. we For rate fiscal expect rest XX% range normalized to XXXX, do

a Europe to the increase acquired X% distribution to Moving [XX%] represented came sales America midpoint XX%. $XXX.X non-recurring sales acquisition-related Total period XX%, ahead and represented of QX XX% than represented approximately intangibles, compensation, charges higher in of sequential impact on the sales, represented net same million share-based net to tied other and net the approximately not and net fiscal results, non-GAAP of of year North which operations. of of X%. up current In exclude XXXX represented of and guidance shipments ago. X%, Asia into represented a the direct QX, sales amortization

of business new non-GAAP flat and with from and total was resulted remains of record QX markets. QX $XX.X QX coming increased in computing solidly book-to-bill for balanced, quarterly distributor compensation the the markets higher be shipments XX.X%, the XX% increase margin coming gross million, non-GAAP sequentially XX% from QX, above and gross we in high-end enterprise communications end and end for consumer approximately industrial strongest the represented the was sequentially Our a QX expenses of the POS and and POS company to a bookings X% our XX% by accounted a driven variable approximately during at from one. quarter. operating expenses. margin flat. bookings Sales total expect

be flat. to sequentially our expect operating We expense QX

our in In to call, operating expense over was rate XX.X%, tax XXXX fiscal expect $XX non-GAAP with to million QX, As up approximately and quarter our modestly XXXX earnings year be non-GAAP last to fiscal we year flat our we per average in to highlighted $XX line expectations. for million levels.

to million domiciled a be the between XX% shares the in in XXX cash the rest approximately of For The million XX% million. non-GAAP $XXX has XX%. We at now of increased and authorization, operations increase during stock U.S. year QX, same accounts, net which from and non-GAAP from period cash stands were XXX% approximately XXXX, ago our was the repurchased XX% a international or to rate sales. quarter. we $XX.X fiscal $XX XX% based expect of In our of million stock the flow tax repurchase or approved our In investments $XXX QX, to and Board

our to receivable sales, adoption the new XX expect target of below investments. strategic accounts driven XX% of our to pleased shares, above We absolute QX, XXX XX days days. days accounting classification XX and decreased to reserves standard associated the sequentially to days inventory and range of our to with slightly repurchase by the paydown revenue strong expect change the QX, dollar in the of of In XX days. sequentially, and of use decline. mostly XX the we summary, represented target terms continue debt opportunistically financial days are range days, XXX to inventory In cash In increased days make by Net inventory decreased in with to for we of performance. QX

results. excellent Our continue deliver drivers growth to

to Our will to results operating of Mohan. focus for over fiscal leverage cash call deliver to believe is generation us We hand our momentum the flow and execution positions strong. solid, remains continue solid nicely I now XXXX. this on

Mohan Maheswaran

margin total QX revenues computing net center end prior QX to The industrial quarter and PON revenues. earnings over quarter In had high-end also of market for of Approximately is million, Emeka. over revenues. end prior In net total end will of the year I high-end over of our approximately XXXX, prior net XX% We share quarter of represented net of from XXXX. increased $XXX.X we our revenues. market attributable Product you, posted I end XX% The and Integrity represented with revenues Good our represented diluted the XXXX, represented everyone. Product provide XX% and of of QX product from afternoon, and of then gross other my of the groups. Thank QX X% In slightly performance prior mobile over fiscal attributable of fiscal the quarter and and from year IoT, our quarter also net total prior QX, revenues. $X.XX. XX.X% communications approximately increased Group markets. record QX market increased XX% fiscal of was a increased end consumer to by will systems. consumer the year XX% decreased each XXXX, quarter growth the and net revenues. prior devices, XX% non-GAAP represented to discuss In revenues outlook increased The market quarter discuss now X% XXXX the and of the year consumer market per X% net enterprise non-GAAP and and net driven year over the from entered of and backlog. Signal revenues fiscal QX Group, by fiscal bookings net performance data non-GAAP record total

platforms. more higher optical CDR Semtech's growth. In our in center strength the strength demand ClearEdge applications data both XXX-gigabit/second has from cloud-based position XXX-gig our data use require year complete a distribution our and storage increased QX of portfolio and mobile the station CDR. to networks XXX-gigabit-per-second from center of seasonally links by and recent our and the broad data X-gigabit/second led data enterprise At and in fiber Product as benefiting established Z CDR a Signal CDR platform spending XXX-gigabit-per-second to a rates, from XX-gigabit-per-second Integrity demonstrated is Optical of the PMD included XXXX, Fiber systems, broad-based that our demand targeted Conference, PON Continued optical computing communications a for XXX-gigabit-per-second most portfolio contributed range fiscal and applications markets solutions base ClearEdge industry-leading networks. data CDR modules. of XX-gigabit-per-second, market strong at Group in center in communications center the Semtech's

grow We next for expect the nicely to this years. continue to market few

interfaces. a Product new This family, complements for announced solution our platform. Integrity ClearEdge high-performance a Signal new platform providing Our Tri-Edge CDR Group PAMX CDR recently analog

lower platform We power CDR this which PAMX applications. for sample to most for deliver data Tri-Edge expected of end years. that and next needed will for solution XXX-gig and power we'll the PAMX disruptive and offer center the economic believe center XXX-gig highest performance the applications lowest few our XXX-gig XXX-gig, Our Tri-Edge portfolio, data is year,

to acquisition the we As strategic previously made the a have of execute on MultiPhy anticipated. as not decision result,

platforms, products at products CDR drivers and is now This SAM from targeted XXX-gig PMD and our as PMD to are a sub-XX second new TIAs our us and XXX-gig family. our for addition include sampling targeted ClearEdge XXX-gig In FiberEdge products modules. These per optical are historical first Tri-Edge and gigabits applications. we our laser

in ClearEdge, QX, use products our growth PON FY deployments business for we throughout XXXX the continue to in the PON many both our to saw our for of high demand Tri-Edge increased FiberEdge our and business. drive data Demand beyond. links expect increasing We platform newest base center In up-to-date, station and XXX-gigabit-per-second wireless quarter. for and

and base expect a leader it seasonal established in business market now XX-gig also pickup Demand emerging market, to PON X.X-gig we as for solutions PMD seeing from the enterprise PON to home are bandwidth as and remains due are the highest seeing PON Greenfield connections. strong applications, business we deploy increasing growth XX-gig our Semtech also PON We FY the very wireless our benefited and our growth sites spending. grow in fiber XXXX. in optical improve from PON station both the solutions in the segment X.X-gig the and to modestly infrastructure

approximately begin We be expect to until towards year year. the accelerate end this business XG to calendar deployments this flat this fiscal of

we a fiscal QX XXXX demand strong led backlog, from bookings Integrity based For Signal center of healthy and expect stronger Product Group our data revenues to net increase year by the on market. from nicely starting

platforms Product In of fiscal content Protection Ethernet continued seasonal business all end protection from markets to parts points broad infotainment ongoing of in QX, for and Demand our the nicely, growth XX% QX in also for Product industrial benefit with use protection Semtech's QX coming XXXX, in over increased increasing key Product automotive portfolio net enterprise see increasing the represented the automotive address the interfaces. base total in Protection our expand stations. Demand the now we from as on from wireless of cloud protection of systems. access and Moving to for qualified applications prior communications automotive automotive revenues. from decline rebounded XX-gig our our Group, wireless efforts. the switches, our ports Protection diversification of benefited Group's protection quarter Group and

communications the offsetting American and manufacturers. mobile North demand. from protection QX, a weaker In positive to see device we and business continue broader segments, to momentum momentum increased set our increased, Korean of In design-in addition the from industrial, smartphone smartphone automotive China

provider grow enhance and leading from will high-performance further our to on of We expect increase demand systems in their Z-Platform, interfaces. is high-speed advanced end Interconnect, map, Semtech our all protection anticipate manufacturers protection strategic development. based QX help more In acquired will We to lithographies. by is next-generation we smartphone protection to markets. growth we Semtech in need all nicely, which company road year use XXXX, Z-Ultra, QX. the technology our expect fiscal IC accelerate platforms, only of private ICI Colorado. In regions currently driven in they our business named QX, a from

network network year end both net approximately quarter. In record providing the the to to fiscal globally, decisions in includes networks business. the deployed track by the XXXX, telecommunications it ecosystem. operation platform; of sensing bookings integrated IT XX% XXX,XXX both business been decision based Sensing LoRa announced a increased use we These de milestones integrating the we quarterly XX released production. a transformer solution, public same IoT agency, year of integrated into and anticipate of global of proximity deployments parking our acceptance services monitoring IoT coverage and proof networks over LoRa will of a the to prior represented cities, a saw its and from our sensing global water RF revenues. into including the In have infrastructure and Sensing At initial IoT countries the latest solutions, and are were water Unicom comprehensive XX to total LoRa services U.S. use the FACSA, have for gateways. revenues smart will just manufacturer the QX, based standard technical announced management. as and machineQ, towards revenues customer key globally. target Group. This globally our in waste with strong and net Comcast and year nationwide as In fiscal end India-based Product QX, XX leading as over node bin of company, service, the represented water had KernelSphere of transition LoRa-enabled network rollout revenues meters, LoRa record over nodes LoRa's be and of and for XX-city real for deployments. LoRa achieved its communication and to picocell its the Spain's technology control electricity LoRa these result over the LoRaWAN water end an over XX% by of cities, been that of need enabling end technology LPWAN precommercial LoRaWAN services XXXX. becoming record Wireless grid recently foundation technology streetlights, over network end of X our LoRa-enabled markets of Technologies, At a and accurately enabling capacity driving LoRa the billion with examples is handful XXXX, network, revenues fiscal a meters, in gateways digitize By we In to use Brazil; track a management deployed countries support in Brazil's throughout company, technology smart there its QX announced. on increased FY and our joint our our Comcast China; business LoRa joint network meters end devices, with and to period LoRaWAN on us XXX,XXX Anatel, LoRaWAN warrant. completion Turning cases LoRaWAN use In the an milestones have throughout rollout establishing deployed. end We Product and QX, concepts company, cases allowed be machine of achieve nodes. This and This and There the necessary our conclusion putting on our adoption of both year now XX sequentially cases solutions public macro end on we ago management proximity through Comcast deployments. appointment; by new providing cases of QX, several IoT.SENSE, national executing requirements some deployments accelerate QX, IoT denser the joined in acceleration needs. QX, these facto will approximately Alibaba deployed include: numerous make that that million Wireless made Comcast the anticipate million more China been to gateways for Group and of deployment deployment are that XXXX, extensive revenue XX XX% global and a the These and LoRa achieved

generation become for XX% demand Our increased is adoption beginning in exceeds XX% We these opportunity, to sensing new several revenue manufacturers. of LoRa also with wins LoRa new standard de will opportunities exciting fiscal continue Semtech, deliver our encouraging. opportunity that mobile of over funnel, the extremely and funnel, of facto million to across revenues. design increased device to We sensing LoRa anticipate solutions partners, represents XXXX, which year to global which continue for eventually, QX the solutions our Alliance $XXX now drive IoT. to believe will that our convert and, use LPWAN as In proximity the our of cases along

winning are carriers of geographic China, number smartphones new as increasing tablets, designs energy platforms in increasing sensing radio regions, transmission. Our address and wearables on regulations including across an

In and by in We from Sensing Wireless year we record secular revenues backlog, and net QX trend increase of to expect record driven expect contribute to growth this nicely. and continue our Group fiscal Product business. XXXX, this to bookings

on and really wins. Moving record fiscal design new X,XXX QX year and XXXX, wins. In we design we achieved products new products strong a of to

trends needed of of between midpoint at non-GAAP are currently XXXX. for Now of approximately and to $XXX non-GAAP strong first outlook of beginning million. and entering quarter discuss million, a XX% $XXX or $XXX the of the the me range the attain revenues net quarter, strength orders Based estimating we the approximately our QX. recent be net our backlog let on million guidance QX bookings To we terms

be be Operator? to to the to answer operator will earnings share. hand and the $X.XX I between and I any questions. Sandy, per non-GAAP now diluted happy back Emeka, QX will that expect $X.XX call We and

Operator

first line comes your And Craig Instructions] from from B. Ellis Riley FBR. question [Operator of the

is line Your open.

Craig Ellis

than could appreciate scope Thanks for of you're the one-year even realized that points business. come funnel, a be multi-year, be a could wins a giving With my near with respect duration the exaction. help in? period duration over be that would longer, and characterize you which all Just with on those the that question the us nice regards us continue business longer to impactful this some period? or million Would Is data taking how $XXX congratulations can term. could comment potentially LoRa the to Mohan, in that? the to

Mohan Maheswaran

difficult Craig, all cases use are because the different. there, Yes, it's

take we industrial years on generate revenue, will of the Some of can applications and some say based use is cases can kind more three to much two What the to I of faster. consumer we're smartphone of be to about the XX% of that and rate two all delay data revenue. the I have, the would about trending we're years that conversion the and seeing information, from funnel a say

Craig Ellis

early That’s to through. coming that's quarter, and in like protection. helpful. of signs seems And I'll about you then success over switch talked auto industrial. Last It

As ahead, growth steeper? more diffused quickly, market, pulled would the is but you of that pretty be other? we expect end points into slope than lot Should end advanced is data that how there far industrial either may the industrial getting markets? those the so auto Certainly, look Thank there two larger you. a be would the potential logic you of or different are say automotive characterize

Mohan Maheswaran

across segments. interfaces a and how the proliferate depends Yes, say on they those I high-speed would lot Craig,

infotainment content growing is interfaces. as therefore, automotive really and into need interfaces the that's terms the of amount a Ethernet automotive, content going of know, high-speed So cars the fast and, electronic in USB you and lot you of

growing quite IoT of the seeing a there's within but particular that them. I that, also. say fast, I quite and IoT, in in that – we're one industrial, up industrial would is we're pick think So quickly, seeing very And market broader are segments some definitely

both those help growth good have. business continue So our strategy protection we of that are the us segments for and diversification

Craig Ellis

share execute be Lastly, the one to a you'll give on strong work quarter, on in you you that million you you're a some how on? and in, more can buyback certain put if cash sneak I The time? something could the fairly congratulations period that just that? for repurchasing XXX over authorization, of shares. at Or Is opportunistic consistently sense would us that expect looking to generation

Emeka Chukwu

going we're opportunistic be I aggressively think, it. with Craig, to

Craig Ellis

for guys. thanks that. right, All Good luck

Emeka Chukwu

Okay, thank you.

Operator

Piper from next Jaffray. Your Harsh of from line comes question the Kumar

is line Your open.

Harsh Kumar

control one million strong guys. hey Yes, A of numbers, a the so. results. of lot up well. industrial there couple LoRa questions, your I $XX business thing, in that's suspect you pace they on Comcast? the Congratulations strong for was business and or largely hands? or doing of that's Emeka, or the is GAAP between on take non-GAAP, you? the with reflection difference that Comcast does – amount, it from Comcast the this have your do And arresting warrant in how you product the Or LoRa anything Do any

Emeka Chukwu

the correlation expense no So and get no. Harsh, we shipments. between the product from There is warrant revenue

Harsh Kumar

Okay.

Emeka Chukwu

I don't questions. know that answers your if

Harsh Kumar

the That’s you what – you segment, fair. that or how the outlook data was see Mohan, of enterprise particularly how rest computing I the rate year if the could with is part. to you do your your growing talk And center have us? growth wondering can about view segment, you we give other whatever that us CDR And that products products and should in

Mohan Maheswaran

target most continues for quite – in grow and CDRs and done some going there. that while, to done we're space, and we've leaders Yes, business double-digits CDR grown the has for for space. double-digits that so platforms been a center us. into very of for Obviously, data in The has investments PMD for are years well segment our us and platforms our

so growth It's And down. that global. is slowing anything obviously, we see don't segment, that a

data now. have center We globally customers

We higher-performance and within need the bandwidth, also more links for and connectivity data centers. see more

success that of CDRs one the reasons business. So more drives our the of also and is of use for

a case a for driver the it be to strong we really So years. for I few and growth us, that continues quite expect to really, think be

Harsh Kumar

then get in queue. my I will last one, Mohan. And Thanks, back

target, again, you be ballpark then think you million not able XXXX? correct? LoRa you're past mentioned to said should why the nodes target, for would Is basically at in And we fiscal remind basically was already? that kind million XX globally. grow very You that end close of that considering But you're me XX your

Mohan Maheswaran

let so Yes, me explain, Harsh.

we year, And end this of I'd fiscal had year, million make and million point nodes. that have of fiscal cumulative year, So XXXX, end cumulative we're for last year XX end a already at this target at million set XX to end then a of nodes. cumulative end we the QX, nodes, end for XX

and So we’re opportunity to come than the we we've just goals on a set to do set how but we into track funnel much goals we're and so pleased on that on and achieve the goal into set better – track think revenue the million, countries, it's we've and XX goal, with be want beat goals set the goal. we'd set I and to goals on funnel conversion and or gateways, production, we either revenue we've on on

Harsh Kumar

more ask and centered clarification, versus nodes market I end on are then a that away? others? Can of Mohan, for most I'll Is any particular these back there

Mohan Maheswaran

smart very ones it's buildings. current were Obviously, the say – few the ones smart last so deployed have would the over cities, meters, I smart more industrial No. that are smart broad. agriculture, more years, been

smart We smartphone applications are to applications. and are the more and consumer-oriented applications logistics increasingly applications home, closer that seeing more

it's connecting about Internet. And moment. no very right, that segment would say to IoT, And one the I it's that's the beauty at so everything broad. there's the

Harsh Kumar

Mohan. Thanks,

Operator

the next Schafer Rick comes Your line of & from question Co. from Oppenheimer

Your line is open.

Richard Schafer

that's you protection through of got guess Or to as as know as of industrial to structural I corporate or I there? closer was you gross there a I a solid becoming there you a maybe this percentage just you up And below. have on think have any first, average improve couple highlighted I I'll what get it's gross segment I margins I margin. is and color XX-nanometer Thanks quarter pretty some I'm guess, way as mix. cost guys my mean, last congratulations. about so greater But strong average tailwinds add we questions. curious maybe can on it continuing, give that I corporate there is to grows, follow-up could moved whether guys. to mix? protection. well, assume I’ll

Mohan Maheswaran

Yes.

can trend us. more I automotive, is So I'll drive all mix a computing, towards Rick, closer higher would standpoint, my the gross in. margins then industrial From start, to like there thing the Emeka yes, I and corporate for And is and margin. chime say main communications, think

ICI some control One which generate give higher of we for as why us we the advanced next over of gross generation protection, believe reasons acquired the to was will margins us well.

think those a And our it's even if think or I away I feel will from So segment, margins. of it's think, too price if is things. that the help it's then commodity of smartphone – discipline us I low, combination just segment, business the walking within we that gross expand a

Richard Schafer

part guess my lumpy anything there question, you obviously, last years. it. business terms Got few question then has nicely notoriously the there Okay. has PON. for guys then curious – of half? has has mean, the visibility? is, this that and rebounded I talked business second PON about answer, X.X growing you And what what's terms a in you of split I guess XXG now for of as be and really guys. in I'd in It kind changed second maybe curious, your confidence the your is I the been changed what And I'm of Mohan. year, between

Mohan Maheswaran

question, it's Yes, Rick. a good

by had you something that the we're percentage like market the I or in where of and the we X.X-gig to flat that potentially X-gig say, of PON don't grow seeing strong were XX%, even small for X%. to up, actually looking XX-gig a say business key the or year As some going it's down as it's very about that, PON we we're and overall, that? is fast. be XX% position I us is and XX% and it's leaders have would into our we a be still if PON. quarter a to we year, that expecting it's very know like realize was way, we started strong some saw I this then and strengthening, came would rest segment PON. total, this And the in

That's So – it's piece the it. growing. think of process I but

on as PON is other requiring know. the more the that closer for in us. standpoint, a expanded it's X.X-gig think PON of or curb market There home, deployments. connectivity driving that's as I that just there the are new with And side China, and it challenges bit applications the think to But you Asia. optical or there some closer obviously, well, has optical I more little to PON are from some deployments

Richard Schafer

my last just quick Okay. And maybe question.

what year, that for kind you flagship impact town think, are only the of last this game That guys two might the you we phones are having nice you about On Tier Tier protection about can OLED mean still X. business? a socket that for front a or is smartphone, of on guys OLED in from for sort least really I at big panel, I phones? OLED phones. year got X obviously, your talk be And Tier on X talking

Mohan Maheswaran

OLED we Yes, in we yes, high-end strong from phones. globe. will smartphones believe we deployments And the think in very benefit have are, display OLED Rick, position still we across a

better So more for – us. OLED the yes, that's displays, the

Richard Schafer

Thanks. Okay.

Operator

Drexel from comes next And Cody Hamilton. Acree from line your the of

is line open. Your

David Williams

little better for we've guess, Hey, you kind handset know getting on handset good you're I it Can afternoon. slowdowns but seeing maybe little market? I are theme, sounds bit for with seeing bit the are in in on David some there the what a a you. like in specifically talk China of China? This what you things is Cody. continuing had there,

Mohan Maheswaran

and have we second little slowdown a in Well, half. stronger a so then bit more we pick significant QX saw we stronger up Yes. and QX seen expecting actually and

low So us off I smart QX least protection. of us. would for say, getting relative opportunities. China doing And like proximity a from sensors that's really the coming well quite as it's to base standpoint, And a at across it's That's set but well. new is looking better, is for board

for So up positive that see sensing, and will see if to that proximity up on we the us. China start ramp we be ramp

David Williams

end for looks when revenues. maybe expecting? that's like what And will about in? deployments. talk I realistic lot to revenue Can year think Good. there's Okay. about on some do know the be And then targeting a you're XG-type guess, just a different of about then the XG discussions XG thinking back maybe more little mainstream. there, you're a And that I period coming timeframe the you become, you of bit the It

Mohan Maheswaran

well, this saying at we've the that Yes, been six calendar maybe said now of months. at year, for months, that, least end we've nine

that’s to a timeframe. I little see bit think that little So it's revenue, looking bit but mean may to be we case. earlier see a we I may be going revenue, like later in the

of more we So of of in end I a year see to say start would revenue. ramp-up this terms when should

David Williams

little And good. channel me Do you bit healthy? you're Very feel it's that one you how is can a about today? for pretty and last talk inventory seeing

Mohan Maheswaran

the healthy lot a we goes a base. business channel, customer seems and health, to – channel monitor our POS of it very through pull-through the there's distribution us. Yes, to obviously, through And seeing healthy we're –

David Williams

Thanks so much.

Operator

comes next question from from Baird Company. Tristan & Your of the line Gerra

line open. is Your

Tristan Gerra

couple existing a Or is do offset initial station ramp that's be that wireless to enough you've XG an to base base quarters, in that declines? upgrades segment small XXXX. is expectation of Is help In continued that base? cell station? for going XG also to Hi, And to feel your mentioned, in the mostly you going good afternoon.

Mohan Maheswaran

the say to or see from business. can a offsetting have to the and question, But be the an to way visibility lot good real understanding unlikely I upgrades enough be base both My we XG then base that give that of station say other, more don't enough Tristan. customers growth new a it's there'll it XG answer. I be from that don't one to whether will stations. is have you That's I required. would visibility so

Tristan Gerra

market say radio. looking LoRa LoRa at Today, side. of Or the then you is of the know from to Other expected being a time, node on integrating type percentage remain the microcontroller product? microcontroller. you on have expect discrete LoRa with discrete couple it's integration market as all that a the a We plan end of LoRa now, radio And licensees of that couple a Okay. of that small node a mix? and be years significant very do the your mostly to let's

Mohan Maheswaran

That’s question. a good

of number of mean, to of exponentially be end nodes hundreds millions really still I'm then the of nodes. the billions more potentially will the we're increase, because it mostly but into nodes where think and expecting I I increase into discrete,

more one very expect microcontroller. high-volume either of a applications sense, would external not that very a or, be some so in just point, integrated very to an SoCs a needed those for in And radio simple even – requiring

nodes few going over dramatically So the to is the that But would next number increase think it years. I application. on depends of the

Tristan Gerra

very you Thank much. Great.

Operator

line comes from Your Hamed Khorsand next Financial. from question BWS the of

Your open. line is

Hamed Khorsand

Or gateways LoRa, mean, trial deployed? are talk quarter? deployments? of just commercial these the this you talking the increase past development from that being much pace kind about the seen could in standpoint? I still gateways Hi, in of actual of we Is much of you've on are about, that are a

Mohan Maheswaran

I would Yes, it's both, say Hamed.

is to there a some don't they in Real for a it's Comcast the of a obviously number XX going are I real sizeable in that would now. large but areas regions, networking where there want can I lot of so China, of to private have more most seeing proof-of-concepts Asia number real And using networks, deploying that are and parts on, a think networks. is networks. have say I countries particularly use used. end quite network gateways. connected be as a also more being of public also some well, necessarily And these are to applications mentioned private they are private and gateways network and other gateways deploying deploying but – and gateways of Orange But we're customers cases those want

Hamed Khorsand

Yes.

into way, the nodes still end either driving it's use. So

in comfortable of as still million you XXX the by revenue as XX are with million far hitting year? guidance this So end to

Mohan Maheswaran

Yes.

Hamed Khorsand

far there concerned Signal about And skipped you're then seasonality Okay. as goes, that the we any business? Integrity is as have Or over that? this in

Mohan Maheswaran

second little depending think like segments as with one we and strong this at we're the year, what these that half a well. PON be look area happens at some looking all to the that second at moment, as of half is I the weaker bit on the a time pretty tends Well, base station. But

think I feel least we're a we few in first I the confident the looking hate Hamed, So quarters quite – say, it's little bit, at fiscal but about year. to

Hamed Khorsand

clarification, PON for the what's there? that's because just And – happening

Mohan Maheswaran

at base tend historically, station second least they have half, a have and had. Yes, to weaker PON

Hamed Khorsand

Okay, thank you.

Operator

question line comes from Your and Company. of the next Scott Searle from ROTH

Your line open. is

Scott Searle

there taking afternoon. year. seeing Mohan, And course clarify, the quarter. on I good growing you a of we're segments question. in to little growth that product nicely for of or clarify front, just different your both flagship seems there macro we're a no seeing pause diversity product standpoint, standpoint and traction the any more sidestep protection to segments. drive the all to wanted the my just for enabling is on industry design questions SNAFUs? Nice Thanks OLED, sequential Despite talked and also, there's bit to, mobility Hey, earlier there. I from over what about those Hey, those in you one of guess, your win other like the

Mohan Maheswaran

So about right? protection, you're talking

Scott Searle

correct. Yes,

Mohan Maheswaran

us end down. Yes, significantly was for you have – that QX we so protection business, to understand

all now from – we that of coming starting the point. up nicely we've what is when So seen segments low

to for on end are China is smartphone to as now mentioned, QX, markets coming protection business I back specifically grow our think I QX. We think all definitely side, going stronger. going for the the forward of

bit are from QX, we weak We we'll a bit in which the And probably second American little even little QX QX, pick little think then the And manufacturers up. there, at soft Korea, should there. bit a is But in QX see are of starting the to and see more come seeing North strengthening a Korea. strength off pretty stronger even timeframe. smartphone QX has a moment. half base a and I

Scott Searle

it with track could questions the you'd XXX million of well maybe XX in to million follow-up you're and if some a goal like on that just And give a mix on then color previously. the us bit end sounds Gotcha. for little But of the outlined you points. LoRa, between more terms earlier infrastructure

it – seeing now? but you're – tags margins? How color design does where about I equation? if fiscal do you're How is has to to some impact what cited geographic it and Is been our on that of And you was us also the How when think you've maybe could level XXXX? that into seeing front? give gross like wondering examples the XX/XX. interest some I come getting different strength, trending some start and is that the

Mohan Maheswaran

Well, that. let me start with

we're by the that careful market. should of how A over we very tags, to we release interest, end year, the QX. of being this So, maybe lot to take

– us our strong doing with. we're working requires more cellular and some well But barriers technology so to Asia don't regions for closely but there have they're progress. also there China, strong networking that report we're that Asia attractive And customers high very cases are in dense make kind with or disposable, geographical very necessarily the of interesting networks they overcome, networks. are looking at we helpful and we'll But other moment, is we segment. so the where are network, very with some at so strong as working very strength, strong on of that LTE to it regard networking, a course, Obviously, makes volume, have partners. We and it very so – use

and as us. interesting infrastructure a to IoT So out are low-cost, be way meet and those of needs enterprises a build looking for the regions, to they consumers in at very high-performance LoRa which able is

a of that's So to the of with that world regions emerging are connect can so the Internet lot now LoRa, and good.

North obviously, and accelerating see, particularly, also We is I cases, now Comcast us. think use its intriguing with America, for deployments very

of So a good cases. we're very seeing lot use

convert and and right. now those cases So proof-of-concepts real deployments into to have revenue, use real we

but don't taking lot it's of pretty kind industrial have little little it's There's you lot deploy can't They going nodes Scott, then end behind. you well. a more mix, and to have use is coverage, so a is time. would if of I And network a infrastructure. of end that's bit the I across take probably Europe, of more more I globe. course, But So to balanced – between mean, time in it's end revenue always, nature, would bit tends the a just fairly infrastructure as nodes, revenue a infrastructure. nodes cases But the good coming say nodes. to and be the from most XX-XX terms time. end say

that globe. the important across the we infrastructure to continue it's So deployments drive

Scott Searle

Okay. And lastly could. if I

your and standpoint, on you're use lower not there cases you. are with out color Thank where going? your from that. terms really wrestling competitively, love of case to other in customers technologies get Just a quarter. I'd Nice or the

Mohan Maheswaran

It of is that complementary. really isn't it The with technologies. other the really Yes. LoRa beauty is competitive

none of If and technologies, cellular, those really look technologies really those high-bandwidth are Bluetooth well. WiFi but market you at LPWAN and the very service

a at use some agriculture terms or or metering that smart of case. really, in cases for smart talked look the you homes, LoRa really fit smart the is about good applications of and use If I

technologies, LPWAN be being see WiFi the like other case. or something we don't there as and competitive. regard expect most And we promoted so that are what technologies enterprises and what so any very the now deploy or and a are we're With recognizing to networking seeing fact really is that plus combination large that starting to world of regions that of to and LoRa is the – and out most that, operators of other LPWAN cellular LoRa anticipated plus most we

Scott Searle

Thank you.

Operator

Your & Company. the line Bolton comes Needham Quinn from of from next question

Your line open. is

Quinn Bolton

results. guys, on Hey, the congratulations nice

probably million nodes to rate Just end that from infrastructure, in sort to wanted in – million on some shipped first the on that quarter of you to and getting of the assumption? a still QX? here very close run guys Is Craig and on with X%-or-so XX Scott's end follow-up questions LoRa. like, Did fair XX low node contrition sound [XX basis target are annual million] a

Mohan Maheswaran

Quinn. Yes,

Quinn Bolton

$XXX then year revenue. as conversion the given two XX% and rate pipeline about to roughly forward, million And time you look so Okay.

LoRa a $XX of to could net your As say, timeframe? run fiscal million end it rate tracking per to $XXX out million forward, business the like the to about be or we quarter XXXX, sounds look annualized

Mohan Maheswaran

the yes, kind Yes. - of same that math that’s that's exactly Yes, we do. the

Quinn Bolton

And you that said Perfect. for grew was the I the Those were video? business sounded was big yet within up, question step-back Signal on see Integrity, didn't there only then to like allow stations grow clarification. buckets just center a and in base up, Integrity broadcast maybe it something some in signal Or but up. was integrity faster miss X% big data the Thanks other PON QX? the sequentially. area are Signal Did you

Mohan Maheswaran

bit modest good down a a Quinn. data more. think little said it on and very and bit station. video Yes, base That's bit, little was And I your part. observation center little I increases base station PON was PON up when more was also for broadcast up were was a

Quinn Bolton

it. Got

if Okay great. shipment And to ZTE any the from had impact in then I've shipment ban. so, could lastly, July your ship been have able – had guidance I don't included had And you quarter? you full know if heard quantify significant what might for you've been that fourth the

Mohan Maheswaran

impact, QX, our about which million incorporated guidance. so was anticipating is negative QX $X the about obviously into impact negative. In $X Yes, million in we're so

out great, take assuming for we as assumptions. won't now. up, but that our be clears So it would if we're And that of obviously, that

Quinn Bolton

Great.

Thank Okay. very much. you

Operator

Your from RBC of Markets. next comes from the question Steves Mitch Capital line

line open. Your is

Mitchell Steves

guys. Hey,

the before. So apologies warrant. if were first is one really But some questions the asked on these of

of expected last that the the quarter original number your baked adjustment of past So higher million And is lot Comcast warrant next guidance then in couple for what was Comcast kind the being quarters, adjustment? as with into the a than expectations a secondly, $XX for well?

Emeka Chukwu

said we an we fully not now – we've That going announcement impact warrant quarter, for of at expect to the and, did is longer that that guidance that announcement, numbers in for all our all. we've we vesting into warrants during the the vested QX. I was think no the the And factored forward, accelerated Mitch, Comcast. out put also our

Mitchell Steves

Got it.

will have the guide, or all QX correct? for that of zero revenue is the you'll guess, essentially, no the that guide, quarter that have assumes if impact, a line, I So next business warrant-related

Emeka Chukwu

so there's Yes. going more forward. The impact warrant vested now, is no fully

Mitchell Steves

versus to guess through to kind I sudden just why kind then it did full-year. expected year? expect in the a And change or of two regular one be a pushing the larger Or of out the QX have figure for to full quarters. of was out guys this for impact you warrant Okay. I'm trying kind

Emeka Chukwu

me just explain. back and let Mitch, a little Hey, up bit you

do U.S., require warrants, of when that had though, with in use next are was, XX vest was across as in deploy and did different the some warrant on quarter deployments. I cases decided warrant. would Comcast that mentioned it further the agreement here, What we networks. in different rolled out dense we cities, with the to So percentages we there some And now the because, we of that milestones cases, announcements they the fact, script, the they've associated cities more based in my

accelerated those in And deploy to city. like them deployment them that's And and to to to allows versus we're of continue cities, the so allow city those we so would decisions make warrants it – what a the Comcast going of denser do. that that's just going why to network to next some kind one

Mitchell Steves

understood. Okay, do if actually it's And I on the correctly the It even math it's the like tracking here. to business. second – one or to high-end is closer LoRa plan sounds the

larger be aware that your competitor a So you're of from the much secondly, today a that who competing or it's given competitive standpoint, would essentially be guys to be are with? larger in And piece cognitive of business, you a then of who future? seeing

Mohan Maheswaran

market. really a IoT of new is space, LPWAN and to the after new have a LoRa going the you is segment Well, technology, understand, it's which

the of really and we WiFi technologies competitors LTE-M, and cellular-like then NB-IoT, that when things. and LoRa technologies today, cellular, at like of those there so type look compete ZigBee are kind And technologies; that shorter-range with competitive are

for kind what at, that for for And applications. but that's looking really of applications. we we're very we as just long-range, why only with technology LoRa of really good. see LPWAN LoRa use choice of of haven't low-power, the the been are technologies cases these not So most the technology designed kind – IoT that They other see low-cost is these or

well, But a LoRa bandwidth so high-bandwidth this bandwidth, need that. a you'll also Now in you doesn't at up connectivity, many connectivity, don't and for you one going high-bandwidth a customers either are or it's really, the and complementary, we're or time, choosing normally ways, [indiscernible] high in need, the WiFi the have against because like example, do both. connection a as something or other point or cellular cellular where

Mitchell Steves

Got it, you. Thank that’s helpful. very

Operator

Piper Harsh And Kumar your line of from from the next question comes Jaffray.

open. is line Your

Harsh Kumar

quarters? past, had model, down hey with you've to LoRa given and could a know Mohan, Yes, April we maybe But new I for being with it's you example, this so the consumer you look going slow multiple new about business. quarter about talk perhaps down out quarter could – where, January see forward you certain you, in strong, too, how but dip as your talk might would seasonality things the

Mohan Maheswaran

there. we both you seasonal consumer and What center and then thinking of LoRa Signal the guidance drop-off Integrity good data our products, will to we to get obviously – continue well, And our we're that strong. the be Yes. strong thinking then the Harsh, because of we expect at QX. And is QX, that, moment, be because is as see QX, of QX, are a projecting

down, So – will down. and will and Signal then probably come Integrity smartphones come

So year. this what is that's our for expectation

Harsh Kumar

Okay, Emeka, then I'm done. fair enough. And then and one for

certain last job are doing doing you're there level job a of point really basically at Is So flattish you a call OpEx – guys maintaining really a good you Or versus good it growth? at is the Could we operating on that? revenue and have accelerate to a level hold certain doesn't there get some expenses? color point that in math a year. where

Emeka Chukwu

past we've that there said year, some what is the that think is specific reasons seen we've in OpEx why this I are Harsh, Yes, flat. for relatively

hence, year, Last some that a will and into areas done sure we're start one-time the and half very about year good future top driving the is that expenses of market as areas, the grow product spending. But revenue have growth. going that expectation still We and our profit. of years, improving and model making our rate are we’ve year line the fiscal this on we actually exit XXXX and cost we organization job what operating probably

Harsh Kumar

you, End guys. Thanks of and Thank congrats. Q&A

Operator

I closing time. this to over the questions are turn the back further remarks. call for presenters There no would at

Mohan Maheswaran

to closing, believe portfolio, customer engines another FY our well a start to believe XXXX diverse I will geographical and support Analyst New to in very to deliver very we continued FY performance of you. financial look off forward strong updating exciting and With base diverse Semtech with we is growth you XX. and quarter, all Company In we a and XXXX. our attend Day gaining strength product on Thank you the that in record all encourage to June momentum, all positions what Semtech for be broad appreciate what your promises next York be

Operator

call. conference today’s concludes This

disconnect. now may You

Semtech (SMTC) 30 May 182019 Q1 Earnings call transcript