SMTC - Earnings call transcript Q3 2019

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Operator

Good afternoon. My name is Jessie, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Q3 FY19 Semtech Corporation Earnings Release. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator of conference. and Director may Relations, begin your Business Harrison, Investor Finance you Sandy

Sandy Harrison

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

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

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

Officer, that, Emeka? on turn in in non-GAAP comparable Accounting measures the we call reconciliations included most Chukwu. such call non-GAAP the refer in I During and useful, refer with measures, not are Generally release. With presentations measures Chief to considers references the along such measures team Semtech's the non-GAAP otherwise to financial Principles. GAAP press this detailed management of with to noted. will unless will Financial are that prepared A call, over Mohan's financial Emeka discussion why All measures accordance Accepted financial to of non-GAAP Emeka's financial formal today's results to

Emeka Chukwu

Good Sandy. everyone. you, afternoon, Thank

net XX% XX% shipments from approximately distribution XXXX, year Asia XX%, represented and XX%. fiscal Total Europe approximately represented represented In to were increase XX%, represented same QX, ago. sales North sequential into increase America sales period sales, the QX and and X% of million, X%. net $XXX.X sales a a a represented direct For

the QX by XX% increase operating X% operating and expected GAAP was value compared QX, XX% of mostly interest $X.X we record Our consumer reflecting Multiphy. In In in our in for million, expense book-to-bill distributor communications softened from approximately the coming and the the QX and the bookings GAAP of industrial two bookings favorable levels [ph] balanced, QX decreased at impairment XX% total the QX items as previous expense total sequentially, deferred QX business markets, POS coming million remains onetime expect of POS driven other between from of shipments end $XX.X accounted X% end the of and non-recurrence in to GAAP in due one. quarters, expense of the margin XX% quarter. the enterprise to and came GAAP resulted gross and QX. with from XX.X% reduction of Trans below to contingent and in computing in obligations. to a investments markets. high-end during

and Multiphy in in the of book value. did the not due fair the the changes market change to that competitive value expectations During conclude we output the quarter, support landscape, in

associated by we act. reform transition write tax GAAP result, As In was taxes $XX the benefit a from value with QX, discrete down investment. tax benefits the entire million driven book the of XX.X%

to XX%. tax For range of expect QX of normal GAAP our return XXXX to and XX% the to we liaising provision

expect our XXXX purposes, tax modeling the in be rate we fiscal year to same For range.

sales the XXXX we Comcast our non-GAAP a upward non-recurring and to financial the our fiscal product expected, basis stable as intangibles, in previously guidance will at in XX.X% higher more the with charges impact remain non-GAAP QX, compensation, non-GAAP favorable that project first to to in and In increased historical press expense XX especially line to net to we release. by by an expense share-based our by of to QX basis disclosure other Warrant as to for non-GAAP the disclosed expense Moving of acquisition-related spending. to X% margin Instead, which we on million amortization to midpoint impact and approximately adjust expect sequentially of Note, current offset our exclude the acquired QX periods the points mix. tied us decline our margin $XX.X fiscal quarter, statements non-GAAP on results, mix. gross of X% XXXX, end-market presented. QX mostly to not operations. by due lower no impact due of to our longer XX% provided operating points a we driven expectations. XX gross Comcast gross any sequentially expect with for have Warrant separate expect the the Form operating comparable we X-K filings margin of increase increased In the between X% compensation

QX grow operating QX, the we tax rate be expectations. tax non-GAAP our modeling XXXX. in expenses our XX%. our And For expect rate rate XX% at fiscal of to line In half purposes, with year revenue approximately between we and expect to non-GAAP non-GAAP growth was in our XX.X%

increased XX%. Free a range. year In XX% XX% the net sales, same of XXXX sales. cash from revised range cash rate was to the upwardly net XX% tax of from ago We or line year million with expect in operations our be of $XX flow same to fiscal in flow XX% our QX, to period target

$XXX Our balance position the approximately our during of cash million, cash $XX million of and $XXX net stock a million $XX million. resulting was approximately in investments repurchased We quarter. our debt was and

approximately stock Our now $XXX repurchase stands at authorization million.

absolute our our of increased driven of XX continue is sales, inventory accounts investments We increased days to shares, to terms inventory net sales dollar receivable In dollars as Net model below the to and for macro performance certain believe XXXX. our remain XX seasonal by repurchase hand I within slightly we is and half us to net In record that plan pay the and drivers of range expect in the most and make over to despite days to our target XX days represented generation days, growth In well to by range we expect fiscal focus to in first debt. our X% expect operating fiscal which the is days X% robust strategic [ph] is absolute be and will opportunistically XXX on leverage use XX X record days. XXXX. Mohan. in down flow XXXX. inventory typical headwinds, to nicely in positions cash the call expected the in which year year that our growth the of decreased now QX, fiscal cash QX, continue our sequentially, higher We we sequentially financial our execution to of drive levels XX to budget days. summary,

Mohan Maheswaran

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

a from to new quarterly Continued base strength record. demand in and growth and stronger data revenue market center station demand the contributed

to XXX ClearEdge modules leading optical continued business it's for our for modules. QX center XXX-gig active optical NRZ used industry in ClearEdge CDR CDR XX data high strength demand cables from platforms gigabit-per-second are and led optical by and Our platforms These performance gigabit-per-second. in

we power announced platform XXX-gig CDR This which center ramp PAMX low low in and PAMX quarter expected and for interconnects CDR interfaces. XXX-gig our XXXX. sample This is to recently platform will cost year data new calendar targeted at Tri-Edge

FiberEdge which from position is benefit is Our the also continues it's and optical in XXX-gig Semtech sampling to ramp XXX-gig year market. in XXX-gig, calendar targeting optical expected also platforms, modules and to PMD XXXX. connectivity leadership

and the them innovative optical market year the strong position perform are PON performance. as well PON business QX, to market. center recover a fastest expect sustain platforms in positioned expect declined leadership to the to calendar QX ZTE segments our In data we better sequentially We this position it's in in following XXXX. growing new our and of continues re-establish

the In and the connectivity to are over PON of grow expected deployments years. higher next ONU PON to addition, OLT XX-gig our few transition leading more both, solutions bandwidth as

anticipated our still for base of FYXX XXXX, XG better XG year and and systems PON business. a Our solutions increased. fiscal In QX we to be this perform had for we year record continues wireless to our year, station business demand and both PON from expect

to for deployments demand to early see XG XG are support We solutions. see continue and pleased the for

place calendar to with high deployments deployments in year XG expect calendar We XXXX. volume ramp taking year throughout XXXX

solutions volumes the benefit they is the for demands of XG Semtech's positioned as be FiberEdge current station performance will ClearEdge, wireless expectation XG. power Our consumption XG higher Tri-Edge speed XG and to base rigorous higher well and best-in-class significantly ramp that from offer are connectivity. than

For fiscal revenues we to net approximately from flat. year Group Integrity XXXX, expect Signal of be QX our Product

growth XX% in XX% products in our XXXX, prior our prior consumer total year quarter by American The and North from our Chinese the revenues fiscal demand QX, was increased all Protection Korean, strong customers of and and to QX smartphone represented our Moving from Protection Product Group, QX In of revenues. increased the industrial the driven net segments. over on Product for net Group protection over strength quarter. from

of end applications. multiple in across X.X quarter, consumer USB the protection X.X Type-C, market noticeable the During growth the saw and HDMI proliferation

record. broad automotive business applications In addition, nicely communications, achieved protection new our and market includes industrial, a grew and which

business offset our in protection communications with higher demand held handheld our a to by now Protection as stronger Group we needs Semtech's interfaces. the smartphone advanced the a lithography industrial all margins robust address softer protection gross QX diversification lower Longer revenues fiscal represents to seasonal non-hand of our demanding approximately protection experiencing are than Our a the platforms expect and business sensitive, customers for speed In our providing should higher environment. decline protection business which future. we more term XXXX, to market of with our protection XX% of continue in end protection experience result most revenue of year Product devices business. system a balanced expect total drive mix by high advanced

to several expect is of activity. customers inventory reduce we addition, for our year-end customary their largest handheld their In as

Wireless Group. sequentially of total and increased and achieved net QX from In record Group to our net and revenue of fiscal a represented revenues. Turning revenues year and new XXXX, Product Sensing XX% Product X% Sensing our Wireless quarterly

quarterly and Our achieved increased prior a the LoRa-enabled over revenues record. new quarter once again,

cases $XXX tracking of which end best as range LoRa-enabled number For record of represent year-on-year revenue XX% and the would revenues. IoT increasing for low-power FYXX, to $XX million million growth. LoRa LoRa's using approximately contributing used is the rapid are our the technology revenues to currently networks acceptance the our global target to lower IoT

for continue today it's one the to next embryonic within We IoT LPWAN industry years stops state as expect momentum sector. the from to largest the transition few the this segments of to

LoRa to for important cloud-based LoRa future. our cloud QX is microservices During first first Semtech's be us in monetize and service. will LoRa the we our an This announced beta of ability demonstrate test release to the microservice geolocation

calendar from public applications. compliance conjunction demonstrated the conference, of which to using safety tracking, in By cloud of In Alibaba needed to QX in the services a to have cloud-based will asset safety launched blocks, market. air providing the target commercial will geolocation smart food which it's used LoRa's announced service enterprise with Our on above critical year Alibaba the At and Alibaba developers, extensive tools, geolocation every in the air-shipped half develop offerings. solutions in logistics XX-meters will other system meters ground the connected conference, with significantly expand recent quickly with LoRa industry's position be technology capabilities IoT LoRa We our publicly geolocation microservices customers. Alibaba. and and strategic to Also adopt should of technology technology believe monitoring, LoRa second computing LoRa be FYXX, senses anywhere cases and building XXXX compelling partnership Initial first cloud further the accurate the end followed the more enhance announced footprint we include China and the quality goal XX,XXX deliver the balloon and service market. LoRa ground. based LoRa

LoRa We more and announcements Tencent other in related future. alliance Alibaba, near expect the from members

safer energy sensor farms commercial coastal [ph], develop by with an system We that monitoring floods. real allows environmental Korea to technologies with water the remote levels monitoring technology Sensoterra helping cases LoRa-based prone availability of a system XX%. Lifecare, health communities for LoRa-based for Stream, announced it's the Apona real-time in animal build soil also cities reducing and recently goal the of initiatives flood biocapsule Telecom a firm, a moisture autonomous of LoRa announced SK These announced real-time. the to hazardous Metering, company in fire on LoRa are alliance to focused products our in metering savings. incorporated in using cases. Taiwan solutions deliver use following; to usage These measurement the smart used few navigate HEX include several partners. Green distribution China-based examples millions Cosco's cost helps a water just incorporated a technology prevention technology into developer utility technology LoRa smart in utility into environments into company value significant which systems in prevention, is smart people in Kaifa IoT used saving used dynamic through of resulting enabling unique system Safety, technology it's a incorporated global evacuation LoRa LoRa where anticipate usage and LoRa real-time. Cosco optimization centers costs. water usage it's being

LoRa continues LoRa excitement to to continue cases new many We see grow. used emerging the as around

will LoRa of our design that As million. to to these and a revenue. result, exceed opportunities continues anticipate as XX% exceed pipeline then wins transition $XXX our opportunities We conversion rate

at which over year end last over the deployments achieve fiscal gateways X) to nodes represents We countries; a WAN we the billion with deployment We year. deployed approximately FYXX. XXX,XXX establish and X) now also XX gateways end capacity support pico-cell increase deployment end believe for the nodes beat million are on-track XX we we networks provide least X the that the at of both believe which XXX,XXX XX% to deployed; global or the gateways end-nodes. macro will the public LoRa key and end LoRa will include: in of million milestones the of from LoRa These include XX of X)

well We we with and very establishing near of are revenues. [ph] In LPWAN as delivered to fiscal the LoRa business pleased for our believe year Sensing underway the XXXX, of Proximity progress record defacto connectivity. LoRa stand are QX

integrated powered into transmission. increasing hand-held energy and proximity the regulations platforms Our devices, on radio increasing are sensing wearable being of high number radios from benefiting and

net lower is driven Proximity growth Group to we our We continued Wireless seasonal trends. in expect decrease slightly sales over expect and from demand to our these XXXX, grow our our continue Sensing proximity fiscal several offset Product sensing year QX Sensing to as business next In of from the LoRa business to by business. two years expect

In products design new and new X,XXX to wins; achieved fiscal on XX QX, of XXXX, Moving in and wins. POS. we record achieved a QX year also products released we design

net million the along we our range smartphone currently XX% orders trends, Now outlook current be fiscal softer approximately To fourth beginning bookings let to on QX discuss demand of guidance a QX. $XXX midpoint of million, needed environment, and are year normal $XXX estimating our revenues between attain the of me turns or seasonality, Based at $XXX net million. we for XXXX. quarter of the with approximately

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

Operator

[Operator question Instructions] first Your Stifel. [ph] Tori from with comes

Unidentified Analyst

the congratulations and on thank Yes, you results. record

weakness a this does adjustment the does persist do about in more was you to like first just that? feel So visibility question, long will how wondering have you any inventory I talked one visibility [ph], some weakness if smartphones; have or you as beyond Mohan, quarter any

Mohan Maheswaran

We bounce is weakness for we pretty we do speculating. are all pretty will really I smartphones, a seeing The say. timeline bit given it's global, as would visibility be suggest noticeable region, longer in but China that say. to is back a would smartphones, smartphone smartphone back only much in softer weakness have America going probably it's see I smartphones and smartphones, then for we see come would thing quarter little be Typically, we across QX, before I a Korea it's that it's QX industry-wide see I so an that QX North so

Unidentified Analyst

production, my be? some as material on Are generate you could the about that of revenues question; second about half? calendar second or follow-up add half could in talked And programs talking be minor may be we LoRa could big these these how you some color year; some services of for into next cloud going contributions pretty you

Mohan Maheswaran

demonstrate cloud to it's what then, the want then other ability cases Actually, value, different getting prove plus is could in key I so honest use technologies you, value question how with we to the to and be the of we create accuracy, a geolocation, the of terms to used as thing they that services that be. are the and that technologies, accurate think LoRa of big

As our will $X to you LoRa at and from about revenues of those is take but know, significantly now out cloud that we XX% have XX%, we're here. grow our that time, services X certainly business my hope years million ambition contribute and billion, business to an $XXX will to that some looking

Operator

Your next Riley FBR. question from with Ellis B. comes Craig

Craig Ellis

move into playing you out change classic us more the in you see to nice size seems of there. funnel the can year example, taking with -- this funnel? seen the expected, analog on-track see, of opportunity or high-runner for the funnel; all funnel lot on is in a Thanks the can you the ranges what at environment conversion; metrics metrics wondering a question so? we're are, see for that are $XXX as to that LoRa you are out any pacing opportunities dynamic can million, into so of of macro, the wanted of the given It is the understand the end-point help commentary, with congratulations how coming execution of on seeing I'm those still about and with as understand some into help for on these the XX%, opportunities I us like conversion just some turning some what Mohan, but rate you pretty you'd are really And from to follow-up have dynamics of if some about opportunities? the some regard are what

Mohan Maheswaran

or new of would change. there any is used new seen and LoRa cases and haven't in enhancements that LPWAN of of applications, lot and improvements optimization so we industry them lot energy real cost relatively for and result or a say, merging lot efficiency example. so are used would a the of cases are new, actually I savings First

that as like the LoRa sense new today And tags, So momentum I the see to opportunity volume quite quickly, typically time more sense in generate of about we cases I that are do security, are a of home, such macro fairly take adoption asset wouldn't the -- grow volumes nice environment, think longer that are as kind thing loss chain; are cases of used could they will these think, two they that the tracking, from environment. said new LoRa given ramp the of starting the and are they smart more is environmental, the cold would consumer-ish applications and say agriculture but generating any camps; current industrial The my I that, revenue. continue that of applications they there quickly. not so Having metering, -- camps I technology; to to regardless is nicely. are anticipate quite and used again, could new of fairly definitely consumer

Craig Ellis

happening strong; you fiscal with mix on gross mix, the in the are the either Emeka, that's regard to fourth in what quarter, If any inter one-time special it's quarter? there giving items uplift nice outlook specifically for very some margin there? or just intra-segment is

Emeka Chukwu

and remarks. a the Craig, years, market end expect from if the go continued it's have us. quarter, future you growth ordering business optical handheld will, I into well the prepared is essential fourth said look what LoRa, you we in the do in we It the very my we so the for lower at mix if mix, as revenue of

come our margin So from the look in businesses definitely is gross it that to we the we terms expect market where end supposed higher when at growth have. of you mix,

Craig Ellis

not I'm there is in visibility more understand can just Thanks. dynamic qualitative for there confidence visibility there a just any And quantitative that lends but fiscal or building the Can an recovery commentary customer of the be think seasonal can I that industry? seasonality some a of for you year. inventory on first off then my what inventory color that's expectation of the order to a was the cyclical too; looking what or guidance was question, it's for the of impacting extent or help based half last reference us clearly is provide. historic you business that

Emeka Chukwu

half, to the still be. growth much, now the see of how the be seasonal is issue macro that industry headwinds is all we expectation experiencing going that again, some going expect first how to is by in Our that right growth to strong within is thus type the

I to the So our some rebound indications business expect they think for we as is level of well are first will they partners, from see that -- prepare have to channel telling that us our half. in from the that to

at about was business expect in talked half is to that nothing to probably shouldn't the the very our indicate be be we of strong is the that quite so the far back, everything year a that case, look LoRa there continue optical grow, robust. first bouncing business is you If and it's think strong very to I theirs the that business base station, continues looks it center data usually

should So is suggest first that the would year. some in the uplift there current environment nothing half see despite that the of we

Operator

next question Kumar Jaffray. Harsh Piper comes Your with from

Harsh Kumar

Congratulations, quarter good I on you had talked center the with ago politically. Mohan, going a data that's that tough last think opportunity. all about developing execution I'm environment. in a on China how call curious maybe

Mohan Maheswaran

not centers, market to high-end, we on analog the competitors And a how and products, question they as customers? we've are time to our side, center good think think Then of continue same long we'll design-in of be timely. data tend opportunity replicate, data data for are moving, and centers, had to, data our for really easy are the Google, a us fit the competitors trying know, are our to so really of look and centers like big, hyperscale We those lines as I are Baidu; do think important we product a they to thing and be other performance we becomes the all not to I high of but our long in continues mid-size partner kind keep ways for for all Alibaba, the keeps products. very mid-size China good fine. Chinese easy Well, but Tencent, not you to Amazon, China, more products so now I the and much copy, Facebook, moving products the to as

it them, years. to available next now sales the good to is the quite very so good nicely very products do are We in we have continue my few over that China that sense channel region, have will

Harsh Kumar

you're are mentioned the growth CDR LoRa I'm and curious the Mohan, products area for my faring sounds Is that again, pretty see January. or in your up It follow-up, in As January softness then that -- from spot? is timeframe? you that overall caught that's looking in October something good expecting like how you're record growth October did to an to

Mohan Maheswaran

data interfaces CDR. one probably I higher functionality. more to those the the we'll base we're coming some we would record CDR within center, say, think higher things modules products we're expecting deploy think as for be where nice use I a doing mentioned, so of as our see of that Harsh; off to as remember it require are the of products extremely even of well, more type But quarter, similar stations are QX, now a going than quarter. CDR bandwidth Clearly, I but I the bandwidth XXX-gig, connectivity

we're it CDR as families, be view, have products, business our PAMX sampling to advantages with we now some quite and nicely, continues do clear there just we will successful. believe mentioned Tri-Edge the I ClearEdge both, our our our and So which are in very technology

Operator

Steves from with question Capital RBC Mitch next Markets. Your comes

Mitchell Steves

seen of I the may So you guidance to level in when be give I I guys that us consumer in growth expectations softening? has given be take half first terms just should some wanted can year similar specific what start 'XX or to kind realize saw a XXXX, you help it at of we down look can in we high full but can't the rate commentary, as

Mohan Maheswaran

say quarters point because we four at just good time That's the next obviously, haven't very in do beyond and in answer a expect Mitch visibility to LoRa, tough to got would into continue we question that grow to this well that's QX. rates. any very We'll

we would that nicely. very optical business, to As expect Emeka our mentioned, grow

again. year record to a business as there, good being have going our year; what Base is you up, is year had be, the going reason with to station year XX-gig the think the with growth to drivers maybe year is would probably I next dynamics been a relatively growth this really and we ramping to PON, I a given we've if I call good at so many from year no is that got I of of factor that's world, will least, think it's some couldn't year. there sector this But and a I not mentioned, ZTE little how all the should record with and of play why out; has smartphones, difficult so still best, smartphones starting next been going year be and PON regions as suggest stronger pickup station unknown this there, bit that's probably going weak, that weak do better Base we're year, mobility and we see The to Semtech, flat to regions other has next it's that from relatively a challenge. so in, see all for year be. this mentioned, at year.

Mitchell Steves

to well have similar changed? anything kind to grow since just year, at FYXX, then LoRa we And XX% this coming growth expecting $XX of being you should guys you million the this guys grow about next or historically secondly, has year business, as expect rates on talked XX% are year,

Mohan Maheswaran

grow could of their some in on LoRa we many of end nodes, industrial technology Nothing nature people and -- to expectation give we'll think thing next I these used countries. so consumer-ish; with covered, of covered the our deployments the to have gateways, business to them continue continue all deploy guidance very in move is is It's are the going grow key it's as convert all are and grow FYXX and so got across for used an going into our to has dynamic are of lines the for countries but end to more the some the continue us that up. LoRa opportunities deployments number more to fast, the market, LoRa we to changing, drive the well, the of we grow so to cases continue and probably have needle it's quickly have give and of idea where quarter we've I'll to changed. My revenues. opportunity, them very mentioned a and just things you cases

of the moment. a think all all just revenues positive I activity, which the is that at of are result

Mitchell Steves

Is just then will assumption up it compared assume to FYXX mix this that year? margins on margin; the is to a one that the operating small be given changes. fair fair your And exiting

Emeka Chukwu

a to I expand. happen, to the be to margins we're reasonable rate; fair we're a think operating those that is margin and yes, expenses should to assumption expecting if very to grow flat at expecting so expecting all grow, operating up, that gross we're given our then continue

Operator

Cody comes of next Loop from Your Capital. question Acree

Cody Acree

your that could segments, are it been any Mohan, how factoring you in are to pressures about weakness; Are they other maybe sounds if thinking? comments just we into your broader like back wireless. your you seeing whether go demand relegated tariff-related? to that has And

Mohan Maheswaran

we there have but could business. impacting softer, That I analog I we're have parts Yes, in point don't at can that say the business think a our weakness. think certainty, a which of at that, with direct for in parallel a sure. so And would the it. is sure kind is of but have From products tariff this I point to I areas our you lot of the and real any is would say peers standpoint, market that of any me is moment I would a there when high-performance and of of this not that's at group to legacy look little way terms this tells broader there in type strength it's -- of bit in limited impact in type There things of think uncertainties smartphones, impact. us. uncertain the point, broad But market, being and impact nervousness space I don't it's on a anything of I in that's at probably environment, customers time, specifically those mature change,

Cody Acree

business are their customers continuing that seeing pulling uncertainties or we're is given normal players with be discussions your it are you the whether change any patterns, that in as seeing? In or in buying direct distributors

Mohan Maheswaran

of in tariffs. due this to couldn't connect I any At type call, behavioral point time, couldn't I change

there of in I those of uncertainty it's and end year is Year because demand the things; types up, the and Chinese coming environment, coming if with New Christmas up, change, think inventory. of and behavioral uncertainty

so fairly I don't I weak, smartphones board like As tariffs mentioned, really anything that's regions that. the all or is think across to related

at type point of couldn't So to due point. yes, behavioral change tariffs any I this to

Operator

with Your [ph] Stan Baird. comes from next question

Unidentified Analyst

total some Quick softness bit a in little of products as products. follow-up mature question; you of color Any talked the a composition exposure about of your and revenue? legacy percent provide you can of on those

Mohan Maheswaran

if X% the order I in here. side. It's would say let the the down me side, get a small probably legacy can X% to number legacy on see I you of relatively on

Unidentified Analyst

or year-over-year? X% the a that percent seeing you're Is is that total decline that of revenue

Mohan Maheswaran

going it's of From an X% legacy be about to is year, would say revenues. probably is annual down XX% standpoint, about business total declining our part I this

Unidentified Analyst

base on tell -- whether of seeing call; few the growth provide the current an acceleration us was level? you expect of a station station side colors year I seek. missed then, color the that you you're sorry, that type more growth next that of and are able but year-over-year first bit base if to know I from this And could year the you the and on minutes earlier you weak

Mohan Maheswaran

be base had beginning be that's will year from and Actually, what station the projected down base we're for end. to the anticipated. the that's and expecting year, about we year we had of would So where down X%, last station year

seeing we're expecting XG bit. we're to but we're a pickup also starting a little as to pick mentioned, and up driven year, Next I by see XG

see should QX little that and in a visibility get first we'll of I bit then start think of to FYXX probably So pick momentum. up in that of half we the

Unidentified Analyst

year-over-year station in last as question, just well? down base the reported was And quarter

Mohan Maheswaran

was station year-over-year. base No, up

Operator

with Hamed BWS next Your comes Financial. Khorsand from question

Hamed Khorsand

the tracking of is lower by your You goal? million to that to this towards your on $XX said that LoRa customer is up provider that expectations driven end the million match service didn't expectation; $XXX or a is

Mohan Maheswaran

of No, more I the the revenue. say to it's transition opportunities just would

convert revenue difficult. into how is have exactly that converts out figuring We some opportunity forecasting, of our kind pipeline

three back to projecting last now at and from and go $XXX year. million, you three that If -- XX% years lower I'm ago, here, years we're that's a to ago we're I projected to end here million $XX the $XX very growth get and the pleased million

focus think on $XXX should up next get million, growth, phenomenal we I I happen don't hung So to a momentum think on should have. year think it's million the to you I going and what's the you $XX beyond with

Hamed Khorsand

you're still for happen to for pretty the on end you? at nice that to notes given 'XX are what calendar expecting providers you're clip, Is pretty higher growth to that suggesting a And service much reliant in push LoRa? are gateways growing you drive

Mohan Maheswaran

LoRa operators, operators. the in rely to enterprise addition the Well, so so be remember could global doesn't service networks, only networks gateways on private

demand So gateways anyone end and drive who connects builds a then network nodes notes us. those or provides would end to up for

So don't think know in I it's going of of it's wouldn't it's one or it's I number operator, a combination, play. Europe a I an think know, deployment quite in now, fact, other, and more we an the it a fairly on gateways large enterprise that's call you of -- sizeable

Operator

with [ph] Scott from comes Capital. ROTH question next Your

Unidentified Analyst

'XX, of also, in non-mobile, comments looks protection, some front of Is protection into I assumptions related couple fiscal you modest your revisit of thought was mix that or proximity terms and related I I then are non-mobile fiscal to and had etcetera. like indicated expectations to follow-ups. purely the your related just and then clarify dissect for it protection to XX% that the your to industrial, 'XX? for on that how then outlook smartphone you a And that correct? but just is auto, to protection to sounds mix? comments Mohan, earlier want And your wanted for that, things throwing

Mohan Maheswaran

consists proximity protection of sensing. Our smartphone and business

total so revenues. about -- XX% them you it's combined, if And two two combine the of the of our

and softness, sensing are and softness up, protection global of the them, the is the both impacted -- and by smartphone sales. that proximity by those And so that's impacted the in

Now, business, business protection about mostly XX% our the and -- handheld, which within smartphone, is of protection is is XX% non-handheld.

piece, And The is piece, which telecom, really impact on automotive industrial, significant the especially nicely. call we due -- growing so, ITA protection which to quite non-handheld business is smartphones. the a

annually also margins are a had it expanding. it probably the mentioned, reason quarter, record and I gross XX% the why would As is grow

the of kind is that Scott. summary, So

Unidentified Analyst

that Europe, forward to recently today. we revisit beyond? is And LoRa, continue? really, big better And bit of on to or know going that to important coverage? in calendar some then the have it really color China in has wondering to in had mix geographic a North of geographic area comments a you coverage Is related from standpoint big I just 'XX, focused was could if rollout; you calendar geographic in you most that terms of of coverage. does what a it there like provide been growth I geographic terms to issues little had to XXXX, geographic terms some important is what looking looks what's Thanks. acccouncements 'XX need in driving most the starting more and be America/U.S. component,

Mohan Maheswaran

one two is drives what the revenue. to really are There aspects this;

to doing doing some we're well, China to would first used to have and is to and cases. deploy And America what we of starting big time the all regions would public have to requires generate to is North India, out for very get cases we starting to like revenue see say question us the there continue the fragmented, LoRa world used starting but of But really real other deployment, billion-dollar the I That profile. have that in both up, are private regions enough have gateways we and coverage plan? then now think networks, to the then network enough I enough knowledgeable say South still drives I the America Europe it's now, catch well countries we penetrate. been drive is sensor and enough has drive connectivity end have on

to much the in so the very me, XX don't over regions important so I to think for a that's in America I getting operators South for we we're mean I need is world things we've XX think on how momentum months of traction there. I and us from next me standpoint, like network monitor countries to have already there. think But countries, the -- And one those XX to -- think India. got the is we enough close countries. think momentum countries, most XXX And other I now I focus XX revenue or of

Now, connected. question them a getting it's of

Operator

Company. with comes question next Needham & Your Quinn from Bolton

Quinn Bolton

your just back it anything, over wanted to now the it LoRa to to expect come sounds business; Mohan, build. If it be like pipeline rate, I you to the conversion like continues sounds XX%.

you where two-year perhaps So both should the revenue converts? terms see or the And pipeline pipeline greater of conversion period direction. then I've follow-up. -- is of moving roughly or we that a be of volatility deviation a in those timing the that Is just where a got right for that about thinking in standard into bigger

Mohan Maheswaran

is about Yes, two the years I timeline. right think

tend more are -- and consumer-ish to XX or faster, think used take cases we're just to using used XX others look opinion, I that we can bit at months, and we I thought faster. -- see. data take covert will to industrial There there in we're industrial data, some XX a right, cases, high that's that the be and what longer, the volume XX are The months. more little but my

with the see cases I used starting of volume to the used think show, to and very and are beginnings year the related to as CES home high this cases related see, to like I things tags starting mentioned, We going that.

that prove think going I could different drive we of So that. revenue and to happen but that's acceleration time the have in to calendar year this a really to

Quinn Bolton

the with the now is PAM-DSP providers not, that with in with the guys the you you on consider investment efforts value up book to the FiberEdge partner thinking still dead value can And for partnering Multiphy, down of Multiphy, give just data update question; we of Should or Thanks. you're that if might DSP of you the on you products? your FiberEdge other work that us with partner providers writing family? with family second now an your then effectively market center partnership or

Mohan Maheswaran

is that partner will other to question are we we answer DSP providers. with others The with partnering and

has relationship it's own an gone and is driving the in independent Multiphy company strategy. path, since So now a different

and acquisition from owner was why but decided we not that an and the the solution felt equity with We continue we company we investment our are reason the of to have in standpoint, terms more the the the market suited architectural is XXX-gig, next X going better believe for we X within in the data years and XXX-gig center. the solutions what or XXX-gig, need to the are in

any their so -- happy have the we other that plans at would reason with be don't reference in than really our point help Multiphy components time like we'd on yes, So design, if they use this development was to to them.

Operator

next with Jaffray. Harsh Piper Your from comes question Kumar

Harsh Kumar

but went I the each hoping other is half. can based curious there numbers just about, I'm what there us don't the give was year-to-year. half? first uptick in where one quarter, us first not areas. of up, than and And here. more about the other to just excited April you the today, are back from I optimistic but correlation segment You might given have your on see January at you or but that Mohan, out just help looked you the seasonality you the of last comments be wasn't which about any two years, most spikes the areas

Mohan Maheswaran

of the SIP, reemergence XG there. I base the are us, group I product of think lines; signal and for some see of each product mean station momentum we integrity excited to the the

coming a obviously mentioned that's momentum. had this very that I provide a a business, year, be back think XX-gig PON think little to looks could I bit we I for good going more and PON like obviously, deployments good driver us. it is The unusual in ZTE, year

for would momentum general, integrity course, say be that us you very going LoRa, are things is of the exciting one And So, timeline choose, because on of regardless continues the the area. signal and just then I to obviously there. of in

that think. to honest So it. and call, and think materialize we we ones, we do so have is and and I back a around there doesn't is moment the more the get unknowns business, margins really those I engines, is focus it's many it kind with -- tricky at how are I growth what to our the smartphone about obviously, that going mentioned other of area smartphone going as come key help that's be that us for because I to the are just and think concerned question the if don't To you,

Operator

questions There this are no at time. further

Mohan Maheswaran

pleased In markets, the to closing, record we operating strong, very data with from the center, our in FYXX. record POS with mobile demonstrate record in the that and earnings, is outperform and IoT, record Semtech by segments and uniquely led along income, mobile FYXX data revenue, strategic the record are center, QX performance performance, market in positioned IoT, our and growth positions

we Semtech global you Thank overall in forward look support and next adoption In appreciate addition, to Semtech, uniquely the LoRa's positions all updating continued With you. that, quarter. technology of momentum your industry. and

Operator

call. This concludes today's conference

You may now disconnect.

Semtech (SMTC) 28 Nov 182019 Q3 Earnings call transcript