SMTC - Earnings call transcript Q4 2019

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Operator

Greetings and welcome to the Semtech Corporation Fiscal Year 2020 Fourth Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I will now like to turn the conference over to your host, Sandy Harrison, Investor Relations. Please go ahead.

Sandy Harrison

Thank you, Hector. conference quarter discuss and Semtech's for financial to fourth the fiscal welcome call our to results And year XXXX. call Officer; our today's and for will Maheswaran, Mohan Speakers Semtech's Chief Executive Financial and Chief Chukwu, Emeka Officer. be President results A issued market available our after is semtech.com. was website press and our at today the announcing on release unaudited close

materially call these cause actual could will uncertainties and that in include Today's anticipated to forward-looking from differ risks statements. results statements that include the results

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

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

non-GAAP are team we prepared the principles. call, management refer in will detailed along non-GAAP reconciliations of with with the Discussion generally accordance not such During measures measures accounting considers comparable presentations measures in financial and this accepted unless measures to that formal useful, are why to most to today's otherwise references refer such of financial in financial non-GAAP GAAP call the Mohan's Emeka's release. financial noted. results on measures to press non-GAAP All included

Chukwu, I will Emeka? Emeka Semtech's to Officer, that, With Financial now turn over the Chief call

Emeka Chukwu

Good everyone. Sandy. afternoon, you, Thank

China overall Huawei was for million, prior XXXX challenging fiscal and of decreased the industry the year net $XXX the XX% sequentially which by of year, above decreased fueled much by year over QX our For XXXX, faced the the the sales Fiscal sales tariff net midpoint microenvironment ban. to driven guidance. year X%

XX% into net Europe sales America represented and Asia XX% approximately to direct Total sales. In and North sales were distribution XX%. of represented shipments approximately QX, represented X%. represented XX%

coming total consumer markets. from and XX% of of from enterprise balanced POS business POS XX% total And communications market. and the distribution end Our end computing remains coming the with industrial the high-end

While quarter, slightly prior over one. above bookings declined the book-to-bill was

based approximately due gross of during that for expense, decrease QX, product flat pension And expect expense higher due increased to new in lower accounted product share to GAAP expense. we sequentially shipments operating booking as quarter. and pension expenses. QX to XX% margin GAAP expense expense, the sequentially QX compensation GAAP gross expense came relatively Sales be primarily QX share of XX% we to amortization compensation X% X% lower new In lower expense to sequentially. expected at between based operating expect XX.X%. margin intangibles, and lower

QX of QX, XX% GAAP QX, debt impact up there no issuance was interest minority and QX other XX%, $X.X payment GAAP in in from cost of due expenses refinanced tax tax million significant our of the internal rate impact to the by debt. tax from some of write-off previously asset increased this an action. Note and transfer to was from cash that our investments $X.X between approximately capitalized from primarily driven jurisdictions. million

be to tax GAAP QX of for our of XXXX the year to in XX%. expect We rate range fiscal XX%

of options. stock rate exercise the from discrete items tax forecast any or consideration deficiencies excess Our GAAP tax including excludes of impact benefits on

amortization of to based on results impact the charges. related non-recurrent share excluded and non-GAAP Moving of tangibles, which compensation, other acquiring acquisition

new sequentially due demand the non-GAAP through strengthen product from to XX.X% to In to million expense our our engines to levels. expenses. QX declined and generally flat higher gross QX gross gross non-GAAP year margin non-GAAP margin recover be QX slightly higher year the margin XXXX, non-GAAP and growth our we expected operating margin expect QX over we overall X% demand as to As prior improves. increased quarter $XX.X fiscal expect with

to due be to expense sequentially mostly operating product non-GAAP expenses. expect we new QX, to X% determine In of flat down

our XXXX, the model. half which our rate consistent fiscal of reflecting revenue a regional favorable For with tax In expenses year growth QX, roughly is of non-GAAP operating at increase operating decreased approximately X% target income. mix expect to rates non-GAAP to we our

our XXXX XX% non-GAAP range. in to QX from tax flow year QX, the expect XX% fiscal rates We remain from in operations and sales, net In XX% QX. to increase of XX% cash to up

our $XX.X million and QX stock We shares of repurchased year $XX.X stock XXXX. million in authorization approximately XXX,XXX stands in million. now for or X.X approximately million And or of stock approximately repurchase fiscal $XXX worth

debt. investments continue We strategic to our our pay use down to to and cash shares, make expect opportunistically repurchase

net cash and in resulted represented our position balance end was receivable the In range and accounts of global remains of a XX days at QX, cash QX, of million range approximately In which sales and Net demand. was investments inventory million. our slightly target lower increase a days. XX the at to of and our target sequentially XX net million debt was is flat of macro-driven expect XXX $XXX XX balance QX, inventory to because $XXX XXX to $XX In days days. uncertainties we of

were to the QX we strong pleased uncertainties. summary, deliver macro In all results despite

believe our hyperscale growth Things. secular we drivers of that Internet data of and infrastructure ahead, center, Looking XG

the cash flow us year Our performance financial allocation our and for capital operating gross our XXXX. strong our margin, well generation stable expenses, controlled platform a fiscal efficient in provides strong

hand over now Mohan. to the will I call

Mohan Maheswaran

revenues group. everyone. XXXX, quarter by I Emeka. fiscal to year and performance over afternoon. performance market fiscal million. prior provide will QX then outlook decreased product our by you, XXXX end discuss $XXX Thank of QX X% our fiscal In QX fiscal Discuss XXXX year our XXXX. for the year and Good net year of

markets consumer to enterprise computing contributed end demand for communications Softer markets, end the QX. which and offset for and industrial than results was by demand seasonal from better stronger

Net of revenues. revenues net net We XX% sequentially of posted communications enterprise $X.XX. from end year non-GAAP Net computing revenues revenues. of non-GAAP net the and market XXXX from and total and gross revenues share sequentially of QX market end earnings diluted slightly quarter decreased margin represented revenues In per end attributable was XX% of fiscal high-end were XX.X% over the represented increased total industrial total decreased XX% revenues and represented approximately consumer of prior XX% also X% mobile increased the represented Net from high-end to attributable net from consumer total approximately systems. and of other to devices sequentially consumer the revenues. market XX% market net revenues, the and

XXXX, driven I base center of station and X% group data over our Stronger discuss revenues QX each nicely revenues. in product represented by of segments demand our led the performance will record sequentially XX% integrity contributed prior ClearEdge to our customers. fiscal In scale of the now of product increased NRZ and the sequential used the net our modules signal increased cloud CDRs data growth. from from center In revenues QX, demand quarter groups. gig and platforms. hyper the total Strong CDR market from our by was demand year XXX from for

expect advantage year solutions. week provides continue throughout Tri-Edge very existing for already first received power, this and through production of We cost PAM-X order CDRs for lower strength have our products XXXX. to very lower compelling our Tri-Edge our The high. latency customers as datacenter system are our a clear our in advantages Interest silicon. over lower going with This tests customers fiscal PAM-X the implementations new analog and PAM-X we with latest remains Tri-Edge numerous we

and platforms software analog has of Tri-Edge formed scale at as CDR and consortium center XX-plus and that our key gig ramp to includes than next-generation double We as expect systems. gig, deploying seen Open optical its XXX year promote customers latency data systems optical require pam-X MSA revenues XXX lower to was founding power. interoperability XXX see since throughout that modules The and support companies lower hyper to gig membership more vendors well the and Eye of chip its companies

Our optical with optimized FiberEdge pam-X PMD designs continue collaborated module highly a have to we also DSP solution. where devices vendors, deliver providers in modules winning

the recently announced our newest scale centers. XXX targeted production at quad for platform We hyper channel linear data gig XXX per optical modules TIA gig of

which complement products to CDR Tri-Edge ClearEdge ramp our year. FiberEdge expect to Our and this continue platforms, we

XXXX. year fiscal remains growth to we market OLT PON gig, supplier for providing XXXX, the and leading performance, much offerings PON our comprehensive center ONU hyper gig stronger XXXX systems. Semtech year PON year expect the a declined QX fiscal scale X relatively a fiscal see XX to In business Following data market sequentially. in X.X weak and from of gig

drive macro our with in have infrastructure XG events increase near-term station XXXX. start our of the in XX year the a deployments our build Recent fiscal and XXXX, fiscal year market driven year US. XXXX In We of business from in QX accelerate fiscal rollout ongoing PON China, growth and base outs in limited China visibility, accelerate. to wireless to by we anticipate XX-PON to XG sequentially infrastructure expect but in in conjunction increased PON as demand XXX% Europe gig deployments deployments

gaining momentum base front platforms solid in into CDR and our XG hall Our hall modules. XG ClearEdge the shipments we early CDRs and have begun station mid ClearEdge optical of are market

platforms signal networks and target and centers, The as in both XG deployments fiscal platforms, to product increase integrity time our rates Tri-Edge could revenues momentum very infrastructure stations for to increase broadband for which to continued a in by opportunity to gain trend triple XG. our and our we in ever-increasing globally. Semtech XXXX, a in data demand remain is strategy see expect XG greater base expect secular versus networks higher we our we some and meaningful our for spending ClearEdge we station driving year We for data continue where passive base XG increase market In expect as XG markets. and confident demand position expect spending optical is wireless

to XXXX, softness driven softer integrity this from demand temporary turn by do decline the stronger by of XXXX. all half our segments in In the anticipate the primarily impact expect product group QX that fiscal demand revenues fiscal of of year signal driven second net coronavirus. year demand across into We will we

group protection our the revenues. to high-end sequentially XXXX, protection year products XX% business our represented of net consumer on X% total fiscal In our from year of QX declined seasonal experienced and fiscal XXXX, Q inventory typical protection products Moving group. revenues reductions. In of

While smartphone remains macro advanced as been platforms XG by integrate mobile performance events. more and interfaces devices, accessories demand protection positive devices. displays for photography has impacted prospects term in near The higher and smartphones our

successful its IoT automotive, key continues diversification business broad-based from protection benefit industrial to and including markets, industrial into applications. Our

protection approximately to the QX of flat. that protection a and for In are ports a In fiscal of year IoT its product RClamp announced high-speed interfaces of range our array protection protection revenues group broad expecting outstanding and latest be member industrial, we multi-line applications. platform, XXXX, QX, telecommunications delivers our in

total of fiscal of of group. were another use of the XX% partnerships our decrease cases maritime our XXXX, and that to use strong LoRa deliver few QX revenues. benefits net largest land to new sensing the the by sequentially quarter operator was IoT and In our Turning revenues We QX product on year wireless LoRa efficiencies industry both achievements Wilhelmsen, LoRa. demonstrate of the at the in several sensing recently sea. gigahertz from QX and included X% announced and solutions and these product announcements business. wireless marine represented on planet X.X and shipping to networking of A announced

current to usage LoRa a developer solutions real street the provider efficiency. is Helium Smart geolocation for smart a increasing while L-Measure, temperature parking, maker in new the cities [Clogie] LoRaWAN Seoul LoRaWan an predictive Korea. cases announced and Indian convert develops supports of NSOFT, and use in waste Their smart sensor management network to a energy And metering S-Net solutions and order on infrastructure, to in in tracking. solutions advanced of in US LoRa lighting and billing new that networks time tracks reduced precise network reports prepaid Network will XXX metering wastage. provide reducing using be metering US. for nationwide deployed and or costs LoRa a and over asset ships meters line monitoring, technology maintenance, based Seoul, utility long-range new network announced data asset smart

dangers for many during increase. awareness RF in of a the sensing the of our LoRa planet. These cases increased QX proximity the quarter use a that year fiscal technology are just In of RF value examples of platforms to and regulations and more demonstrate as the introduced demand signals continues new few XXXX, global of sustainable smarter enabling

in proximity new that grow fiscal solid where high in business there in expect the used. progress design see year XXXX number performance we as smartphones, of We radios increase an win sensing to XG is

coronavirus. decrease and group For due to to of QX from XXXX, we net product the of impact fiscal expect the revenues our year wireless sensing

to achieve on wins. of XXX and new we fiscal wins. release products new new X, Moving and year design design XXXX, XX In products QX

year fiscal prior let year In comment primarily headwinds In of revenues product by Driven achieved product our should wins. markets. CDRs signal year another growth. XXXX, include design briefly XXXX, our and contribute we fiscal new In record PMD design negatively long-term that XXXX win releases FYXX, Now geopolitical new on FiberEdge the and record net several These all performance. product XX impacted performance. groups. declined me Tri-Edge of over group Xg and year's XX% for data our the X,XXX integrity platforms which new and fiscal our PAM-X disruptive introduced to platforms wireless center had our

at platforms PON pro Our platform XX defined Ethernet targeted AV Over a software market. gig and new video

devices where broad-based use from transient susceptible photography including markets, the industrial FYXX, making voltage protection systems group damage spikes. automotive our IoT continued events as In increasing new diversification into advanced and the are more such of to verticals product its

In addition, made to achieved be US-based protection geographically. diversifying mobile progress new market. from LoRa global in for wireless In significant Semtech's our annual record business facto the a the LPWAN advancing our manufacturers product further group sensing revenues de smartphone and standard technology our FYXX, revenue

LoRa in China. revenue $XX approximately declined million to from million enabled X% lower year to $XX due XXXX Our from revenues fiscal

of fiscal networks. of XX year year year. the fiscal the of one, the LoRa of enabled number end targeted of POS LoRa XXXX. grew LoRa countries than LoRa business from at FYXX, the with XXXX in we number Two, the included, grew to X% the the over fiscal all metrics XX fiscal year or from or XXX end from our we a POS XXX expect exceeded of represented new XXXX networks more at to to LoRa XXX By at countries our metrics a However, met public network record. XXXX, the end countries private grew by operators beginning FYXX. These group year and have In

gateways capable LoRa by operators billion gateways expect XXXX. the We of in year The end XXX grew from fiscal XXXX end These year XXX,XXX gateways XXX% are deployed XXXX. end X.X LoRa supporting to connected year at of network of fiscal of the XXX,XXX loads. gateways fiscal number approximately

fiscal We from to XXX the over of XX year the LoRa expect increased deployed to fiscal The million gateways cumulative number to end the of fiscal XXXX. end number of LoRa end million X at increase end the XXXX nodes at XX% year by of year million of XXXX.

and We XXXX. end million expect nodes the this number to continue $XXX to fiscal full to We of XXX grow opportunity exceed fiscal year of timeline. end at the the Five, XX% LoRa will rapidly that year this cumulative pipeline. exceeded XXXX million of XX opportunity a $XXX million of by XX% over the end anticipate pipeline to additional an convert feeding leads on deployment average pipeline with month

Europe number markets, of and the Our consumer cases Americas and markets. where well higher rapidly in pipeline be drive the and coming more could opportunities of could and a deployments XX% includes use with the from remains from home than industrial approximately smart geographically volumes the significantly balanced growing

of XXXX, end we are these $XXX our an $XXX the million will year anticipating of with opportunity At pipeline exceed leads additional million opportunities. feeding fiscal

and as and year use We campus safety, smart devices, LoRa low-power, market in applications, include and LPWAN coverage for new broad used LPWAN momentum smart platform metrics expect area providing IoT for starts our to technology home platforms XXXX environmental cases. grow for and home to indoor convenience These LoRa LoRa strong neighborhood our our continue based designed community consumer fiscal adopted. in as rapidly are the the LoRa platforms new

and LoRa a global versatile to transportation X.X that uses a is platform enable extremely logistics enables at applications asset platform use our LoRa building, LoRa bandwidth. requiring industrial, management global version highly cases of gigahertz of Defined home, higher LoRa range segments. that low-power edge and And Our which a platform broad targeted Software

features most will Wi-Fi geolocation services service a also future being includes geolocation in LPWAN platform industry. the tracking first platform LoRa service This location Our and the enabling applications. GPS with for sniffing business platform drive our versatile the asset cloud

momentum to to the Armed drive the influence market global with next a we expect new and standard with LoRa the become for years. to LoRa platforms, of continue unit these be the what in de multi-billion LPWAN along alliance, we increasing facto to industry the in expect five

we associated in a growth years. and $XX for business over FYXX, five ongoing are with headwinds metrics we the the anticipate LoRa the XX% from to enabled LoRa and positive next and our our For continue a expecting revenues the China enabled LoRa our our $XXX to million. coronavirus uncertainties between with Despite opportunity be in CAGR funnel, momentum million

for of let me Now the fiscal first discuss year our outlook quarter XXXX.

near-term the the the underlying associated coronavirus, million the turns the assumes remains approximately estimating midpoint associated with our attain To While the ongoing Huawei XX% ban impact very orders on entering beginning QX quarter, demand, negative approximately demand for China headwinds and the guidance net that coronavirus Based assumes and due we needed currently Huawei net be $XXX the uncertainty our guidance despite million, direct of $XXX of and remains visibility This $XXX backlog strong. a we at the challenging of and million products range to are $XX believe quarter. revenues or no with we shipments QX. the to between to this more million.

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

Operator

[Operator Instructions]

Group. Financial Please Christopher Your line question. first with Rolland question proceed Susquehanna from your with comes of

ChristopherRolland

peak for a get sense of looking LoRa is of today to of just I'm gives just Thanks in on and trying confidence it percentage this more Thanks. Yes, What outside and question. details any how outlook where China is diversifying forward? did Hey, out? guys. you China your what the LoRa.

MohanMaheswaran

to XX% said of about revenue For used be the LoRa from China. was

it's to the has that. think pipeline as being XX%, still is close opportunity about China. XX% I of now definitely - opportunity the diversifying I It's outside and it's mentioned pipeline

the to the So be as China seems general year that that say be online to and all kind now. happening. at it that strong I headwind diversification that look us region from for the would overcome we a regions main stronger different demand continues China we actually is quite first being to last coming though the I see are Bookings as issues. may back capacity in of in think be strengthening And China. across coronavirus

So it's out bit difficult the the with little I next think geographically definitely balanced a forward revenue but to here. more call year opportunities more over geographically years few next I expect play going how to being of the will get think balanced, we'll

ChristopherRolland

of Great. And in line the kind then effects like the your guidance, looks it's with from others terms it in virus. of

called can that about the gives it it out in you Thanks. supply you're also You seeing there? demands confidence what upstream? disruption. chain. comes destruction this And the Maybe that no less and downstream? Is chain there's probably talk demand What mostly and Is that also that demand was about actual you supply back end?

MohanMaheswaran

all, really think I chain I say, first major seen supply would we yet issues. Yes. any have of don't

and as New the sure. And somewhere maybe is capacity, Year I Chinese move struggling demand of back XX% not a and it's region are we shift overall with the between that coronavirus impacted around think. that slowly out online and China coming for with I XX% what's think the clear

going relatively been were have there the It's demand be would healthy. QX all remaining for Bookings coronavirus to I strong. was still pretty isn't prior that fully strong but demand indications to So yet say.

to is what Our done we've compared required historically. turns fairly low

see feeling different gives good in. when and us we So then that a segments, very play we all the also

other see again infrastructure. infrastructural and generally XG stimulus Now data Asia type center impact quite that plus and areas we in and some see doing infrastructure both countries well would will we maybe strength anticipate strength we see in one of

coronavirus of we're kind So again. pick settles once to we're demand environment after anticipating expecting the the the demands stabilizes, up around

Operator

question. Bolton with comes Your of proceed Company. line Needham from Please question Quinn & with next your

QuinnBolton

as guess I Bookings any wanted be are bit in supply there follow especially up under on seems coronavirus a that. sounds It to seen to guys. Hey, recover you haven't control. China just chain constraints. major more starting little like getting to

you look that China $XX a coronavirus. did the we April were when as sort guess or factories from? let for or in but in March that get April not I book and just couple potential the Where seen offline guidance market then just at of outs some Is for you that or you lost of have and follow-ups. yet months? near-term And push I over know Or may and destruction So of the million push the you're cancellations anticipating your outs you being allowing are potential quarter or that conservative demand a something month couple just you demand order next of February? come adjusted within cancellations

MohanMaheswaran

proof-of-concept it's to Quinn, some and slightly and know some little of pushed everything PON points being a actually. you data you the It's LoRa Yes. suggest out. of said bit tenders that

a bit push So we outs little of those. see of

any I demand delay was out softness seen or delayed are kind push Year of some seen New China. haven't delayed. just push things and because revenue out. that in said up capacity Chinese more just being some We Clearly, the indications as and there's revenue or cancellations We've bringing

and clearly some impacted that world. around So is coronavirus uncertainty around and the the there it nervousness

number of in anticipate we we And numbers. QX kind give and all planning of our kind so thought is I think approximately were of which million a as impact, our reflected for those a $XX us food

QuinnBolton

sort I helpful. heard just like the production a center on as end I look congratulations they it order, of Tri-Edge of switch of XXXX does sounds quarter fiscal a to to the up your Tri-Edge, few confirm a the by mean you takes like you're that follow get correctly you Any think It be be Thank market. could is that in And a you. year? that fiscal Could and kind business on be, kind through data just just stronger it ramp? off or for million level? wondering expecting of a sounds Great. ramp larger to wanted that bucks wanted it So year that XXXX, over any meaningful would of slower to quickly magnitude you how the be could first

MohanMaheswaran

NRZ that's still a Yes. well as doing think which probably I bit stuff - CDRS of the we're Tri-Edge of extremely will mentioned, suggests us slower, the When the one the lower value I little compelling is cost. actually to PAM-X that propositions the be but the lower power and

depend a lot transition. So the customers will on to how want fast

so we maybe stronger next million, up the year but on million of half $X in half and planned the kind think, I then year second had year. really of ramping so a $X second

Operator

Your next question. your of with Company. line Please Cowen and with Ackerman question Karl comes from proceed

KarlAckerman

current year OpEx bit OpEx out expectations. your than guess just be a your flexible turns business. rate your early you LoRa if to the how to less may. preliminary go event you gentlemen. of out comment, grow And Two the comment growth talk across I'm have questions, center or Good this XXXX, could suggest guide line it you willing know curious don't limb want extent but top was that and and despite grow the I on given I Then afternoon, sales data I little a to in follow-up. a fiscal guys I opportunity view will half for be can to too strong can to growth about that a

MohanMaheswaran

driven grow OpEx. mean the PON revenue data then expecting comes regions if mostly we to other still about talk as look our relatively but year. XXXX. So portfolio, XX year like a let at China I I Emeka gig year and can center off fiscal on this It We're me expect to this across well. grow by take

our be not it because in as fast first may So the half. anticipation coronavirus of the

is expect I'd there infrastructure, for once half every region of we out but know sure, XG in world. the being pushed second So

at IoT we're last of infrastructure base station we course our still we're then the expecting the and if to business so Again key and grow LoRa to look timing expecting is question And that year. versus grow. that's,

remember kind We cost cases energy use health of the approaches segments. enhancements, of efficiency, really and even and and LoRa the have pipeline of kind many reduction productivity smart are

should what from in to of think LoRa still least an at annual able So standpoint. transpires grow many regardless be I ways

in are our area. slightly business business, that as know, area then the And and diversifying diversifying mobile geographically protection in you we both industrial

to also does that their do inventory general expecting again are we if in reasonably the and at well the well replenish macro distributors so half. And on least second

much so board product expecting are all we growth. And pretty seeing our we're of across the groups,

it. have a positive depends things are that lot the than improving negative on sustainable just of next certainly with a time, that indications of quarter think in The transpires is over see more what what the course, the Of coronavirus. here demand How seeing are China a on and standpoint. wait we'll from and to we're and period that but moment I

EmekaChukwu

so, expenses to the of do that we've is going. operating been in to the of able with well operating very company in actually our one the manage the line is a what history expense, Karl, regard And things with top line the

to that about variable some what's of excited we very can expenses that that line. Having going key attention of operating do is actions to those growth about have here be that opportunities to believe investors’ start that to operating is drastic with that to the would the we XX% of I've One The though tried are always or drivers fruition making still expenses. have so within any on and take few really call modulate regards said the in that opportunities any on so depending company. there we are we things we wouldn't with on a right the and expectation we those and areas come growth investments to the need top

KarlAckerman

appreciate Mohan thank that Emeka you. I and

double you For on beyond mentioned sensing opportunities of if clicking protection and calls You around OEM? a I design see new my follow-up wearables. moment. growing Are Korean wins South key proximity your sort there prior may, protection for our had on

if you. curious just any there. talks Thank So updated

MohanMaheswaran

smartphone And Korea with mobile also spread in in get China geographical today, areas. we've in us been wings a while. - strategy sensing protection decision proximity be I Asia manufacturers And where look we diversify. starting US I would some as and well. been We've in wearables in accessories. now strong sensing business conscious balanced business we're in North go the as at these actually to business and We all being to we smartphones really as wearables America a of Korea devices America, into I well then what other And into for I aggressively US business China, and that few North smartphone also in look is strategies. try of in Yes. say ago years also and going a successful the at for also only proximity that's smartphones a mean used time not but and of made to specifically. Asia obviously protection and it its in spread those and have but in to if business just fairly Korea, then

strategy; to being a that with and strategy. strategy So that are a we successful be is quite it continues

Operator

question. of Tore Please Your Svanberg Stifel. proceed next question comes with from line with your

ToreSvanberg

you. Thank Yes.

housekeeping. me with Let start

kind into today you one turns. month that with than a of more mention number the think the I XX% quarter. Where's

MohanMaheswaran

been good are. that but number that give have can very the can't where is we you I bookings strong. And we what you tell feel we Tore, pretty about

ToreSvanberg

Okay.

the not off. beginning are now it's strong of and quarter seen you've those the So tailing bookings like at

booking, okay. linear are You seeing apparently steady

MohanMaheswaran

Correct.

ToreSvanberg

you. Thank Okay.

question metrics the A It because business China not LoRa, all your year, you so little customers obviously, just lot the all you while categories way. of helps were the your growth, information. fiscal by this thank that can did for in of great all on seems certain MB like IOT why Second I there's the the that? to for us revenues mean so grow bit were a just is other you down optically there. or us about understand going talk gave metrics

MohanMaheswaran

Yes.

think mentioned you is POS remember grow I thing of did our to it, the Tore, why part I which X%. have

right. the deployments measure really of that's and So end loads, of

may not our get we we inventory but revenue So - in full not there's distribution, them, when like that channel then ship ship the when the you count we picture. may if make something we excess revenues

So that's to thing one remember.

being or devices. going completed many customers deploy The momentum how to future you to concepts end revenue. is out the how gateways second many to is are to of will of use deploy at momentum and full they've more indicator give these nodes they go going are all is drive deployed, They're that I And When deploy the end nodes reason assumption many that how indicate thing that implementation. once really remember being to countries is the metrics deployed look proof more their is revenue. cases, and to and

catch the first struggled the region to difficult really we quite in kind of like was half especially it the China really did we of us the half challenging is So when for last like the just initially more the in timing it revenues had of up world of year one and year. second

this We and year don't projecting think We a that be that's to think growth going little this And more beyond. reasonable year. will bit stable. we're happen

ToreSvanberg

I year-over-year. much talk million a $XXX increased about could revenue pipeline bit great. higher you on geographic million from countries be outside US the other would hoping your if a China, but that that question, you last of little that percentage was North color just there's one a again $XXX do perspective. more of mix could just Maybe versus add versus America I appreciate a

MohanMaheswaran

Yes.

like are Those that sorry pipeline. Asia, idea North the but XX% Europe an is figures Japan XX% is would opportunity and is I the XX% America, about then is in that and rest - rest about that. South so Korea XX%-XX% see, includes give and Let's about is and America something approximate say XX%, will you XX% is about then China of Americas of

Operator

with next proceed question. Your your with Fargo. Mobley comes Please line Gary of Wells from question

GaryMobley

in year guess My Hey, based congratulations Huawei to $XX lower Huawei a the scenario of probably you it's question what to embedment fourth saying strong of and to in the just business quarter? best requirement of requirement related a what current in finish quarter of first to guide. your your shift terms to the is a than the guidance. perhaps sort from I'm is, I turns start And that's worth correct turns million, the business did better question to actually Huawei for you case roughly can reported And on year embed XXXX. in and this so current fiscal my assuming $XX midpoint million generate new the revenue guys. calculation in assuming much turns it's relates My you're feared restrictions?

MohanMaheswaran

our remember, guidance so Gary, So assumes shipments no to Huawei. more

I we quarter million did that's number. $XX to I every our about need we we what Huawei think shipping any to don't that quarter on So last more having turns Huawei achieve into said think to plan Sure get

GaryMobley

$X.X million

MohanMaheswaran

all guidance, it restriction reason re-look what we're exactly a into in last made out obviously far the assuming million we it's communicate our cannot that. what's products and squeezed going will that's the to then that And concerned, quarter don't ship. don't turns to $XX as and from but consideration so it the at restriction our any more and because with of not About we why if as give the number the takes as can continue We different we the have to further I've we it is. mix decision make happen just need just know as Huawei to restriction we're is

GaryMobley

Yes.

in an Okay. $X in actual restructuring does to? million area? And that your relate that the refocusing I or see what Is reconciliation a you headcount a roughly and investment perhaps did different reduction non-GAAP

EmekaChukwu

No.

of the in valuation has there they terms and to other but stuff restructuring like people think and go I defined an during do benefit with few quarter. no was mostly obligations actuarial of a our things, letting

Operator

Gerra of Your proceed & with Company. with question. Tristan comes next question Baird from your line Please

TristanGerra

say actually in you from situation you the LoRa? in of year? in step China much a of Hi. your current afternoon. fiscal across general related how the From in majority for all located pretty that $XX is this assumption think And China the is guidance businesses to much China back revenue LoRa growth quarter the a that impact or is you Good revenue have would million impacting

MohanMaheswaran

actually group is the is our the at I maybe $XX is of think protection then it split business. impacting and sensing majority impact Tristan, really a XX%, it and product million coronavirus XX%. of and wireless So, And our between signal it least our rest integrity

seen going first broad estimated Year do and the that and there your come because indications very is that I proofs some just definitely to in are may going second of a quarter China enabled the question not move people the And out be we back and we've are take going year some believe around mentioned LoRa to the of of and like companies the and we've is things of new as concepts full may impact of much of well tenders I to as So be delayed concepts is that. that That's Chinese business because able why already China some in because to coming then back proof capacity going It this to it's and activity. and of and part travel of shifted. mentioned that. that being at of is push not New China because

half. in loss second we don't But assuming picked QX that the things any the feel the out normal demand probably back think in and up we I up demand there underlying why get of to pick need or will it that's so changes

TristanGerra

embedded your distribution changes Are or the a of That's you quarter as for any? different season? my from assuming inventories And relative that in you for in flat question follow-up guidance point is sale what stage? in then this are at on assumption basis Or Okay. if inventory assuming guidance what's your stay useful. your

MohanMaheswaran

No.

it's safe I think assumption. a

our Semtech well is POS of and time a material channel both last one inventory so coronavirus to try and at if can't by our, as it positive sign. give The to our internally this out, us reason supply quite the grew there's to Our remember or but we doing in year that. enough think in has expect I thing extend levels is I don't would point and impacted lead any mentioned that's times I chain actually to do LoRa, been increase

I numbers. of would channel the think inventory expect POS at the and same type we moment

Operator

Your with Please next with Craig Ellis question comes of your B. question. from proceed Riley line FBR.

CraigEllis

question for comp up start on with a Yes. question the guys other Mohan, with LoRa and I regarding the thanks information LoRa. to the the just wanted all Thanks taking for businesses. and

asking about just of First $XXX million. this year's midpoint the at revenues

business about design up the wins about conversion we As Do higher any would or might $XXX how revenue type high-volume million you've wins. of be picking potentially when some hit? that of think volume in do forecast talked you those that some of

MohanMaheswaran

Yes.

Craig. more I We the home numbers. they're second-half, in heavily really, volume are anticipating not to higher be And the of kind consumer wins yet think

the of metering, that assumes say more smart smart industrial agriculture building, a kind in good there's but the that. use long-term the upside would most in current cases numbers of this continuation I there, progress of smart IoT and So like guidance kind things of

could So see that and consumer it's still good half pretty able if home impact starts play to be in we of to it growth some obviously start that. but second to suddenly, will believe smart in and that smart then the

CraigEllis

would be then is the XX% at up really question million And helpful. at $XX the end XXX, $XX the points the or so or sales million That's about about second range XX% of $XX year-on-year. million

end items would Is end? some that that help just from the points factors some what Is out If look helpful. can bigger high-volume us end before macro? be low we it are those of sort of at the to you macro? high quite As swing it

MohanMaheswaran

a I than of think macro, The such there's Yes. off really China huge a don't it's if big last I in plays something impact. really year. think saw other shift we into that it like don't a first

obviously things those already I deployments conversions that. we and and have which and like POCs, proof concepts fairly be pushed a out of little with bigger delay seeing seen concepts And in of and the a things like sometimes. impact of think can and the the that are revenue we proof that that coronavirus converting that some It's bit is we've the running into real in the is substantial. the of of pipeline

So moment. I anything else at think that's over probably the the than bigger impact

return normal a it have that kind our that LoRa be of wait certainly should good point to mode The the issues shape I how see second half of consider gone in just business. would have in most and we're to growth anticipating see regular what stabilized at we by away. So and be we coronavirus but plays kind the hopefully macro for would think least business and we to of IoT out, then

CraigEllis

else? product the or in just was Emeka and regarding the for a on something Thank topics Was you then you there? quarter. of in going impact fourth what's new that that clarifications Can assets Emeka. clarify couple fiscal

EmekaChukwu

[Indiscernible] pretty It's year just mask mostly with to Yes. yes, so has sets. with of - for when we to timing do stuff it's it the had our the sent mostly do

CraigEllis

integrity or degree signaling seems strongly gross expect I end that provide us gross build which primary be the the really a to the if the further regards with of rise the the Is or and you either should year? to like Can you. some it range possible magnitude quite first through from margin, color think to giving increase for the sense it of to end the factors? you or LoRa you'd at then is low Thank the would and Great high margin variable year. quarter had other indicated

EmekaChukwu

Yes.

we at talked I we've that within center we've we about about talked about, actually the that even are a we've margin, growth talked I'm look drivers for a it hoping protection about to when data applications lot of see industrial gross So look out about because growth protection. when the talked at excited LoRa, of

are that will that right. margin margin have are supposed only we if be at fact expansion you as for to lower The a gross that drive those of growth the is things expansion. overall levels headwind thing help our all So demand

still manufacturing to equipment that absorb. - operations in group are some have So expenses we people fixed some and we some have

towards head XX%. point, this at pretty more a and go how gross number to above will overall that seen and things might depending our for actually exact that on I expect margins as then XX% to would more us should back my the drivers revenue our we So good our be of proceed coming hopefully from the expectation be probably exceed growth demand combination

Operator

next Mitch with RBC proceed Your from line your of comes question. with Steves Please question Markets. Capital

MitchellSteves

I Thanks. had questions. two Hey.

outside Are - the guys just one, some the of entirely that will China? that clear million. on about assumption be making want geographies China? first just $XX to to other demand just in what's clarify, guidance and you of erode The I is the an

MohanMaheswaran

That's the picture. that's - the total global

Year China. just New was for I to not - to and a impact, more for back it's delayed I online, it's their measurable been be potentially that come China million haven't say week other number coronavirus. The about that's it's our I think $XX time by And been across exposed the QX because they still right is to board So is regions it's first seen think because taking would capacity whereas come, we've really to easily demand. but impacted yet. the what

MitchellSteves

guys year do then you And the you are overall realize environment for full Okay. about I year, full - 'XX? year, are second the a going one now but guide is not how smartphone just to shipment the thinking on you calendar how guys

MohanMaheswaran

the funds one, phones because that stuff. mostly maybe social quite of that work drive tablets is tough a more Yes. Mitch, do optimistic small a That's interaction will devices less mobile need type particularly and for landscape PCs become we're more and actually as and - changing and people a

currently the So see. looks and healthy what from demand we fairly

devices, device So and thing. we're I accessories also kind peripheral smartphones on mobile think more of wearables only the and that but positive not and of other getting type

Operator

Your your next Jaffray. question Piper Please question. Harsh proceed with comes of Kumar line from with

HarshKumar

have that that? pre talked or announced you LoRa. I on another to curious A of sort Yes. question levels. questions. going Hey, also levels companies demand guys. about back Then coronavirus I have of have had pre Thank normal seen couple was for China in. squeezing sort if in you Two me the of

MohanMaheswaran

say, it's know and not indications technology that say are Bookings to definitely I infrastructure in invests potential would it's China I of I stimulus it’s therefore typically of advanced we pre-virus - kind levels, improving. back are stuff. think strong, I'm it's Harsh improving. sure infrastructure Yes. also would of indications strong when normally but as

not of And it's that mean say and monies get we'd that. things to I I I get But, that XG capacity. out influx back improving. think improving types Remember, understand. would important So they're IoT be data that's so the and coronavirus and impact, to the so PON China helpful. of yes, least center of full at is heavy and would and those just coming the at and expect

moment. So I I XX% to at say they're don't think at the what that demand levels best quite they are XX% were. would

HarshKumar

consumer then, gave all it funnel inflection? Okay calendar applications up Mohan, mostly the that in or et seeing cetera. for expect XXXX you mostly industrial? would be about year, color US of what see typed be pick talk pickup this and Maybe it by see call and/or LoRa you on a this we the kind could a thank you you're And to it is year? year Would

MohanMaheswaran

Yes.

of building, kind cases applications, So US we're in in moment. I are smart think water, that of smart quickly smart use that's have more I that driven pipelines industrial we the to smart to suggest environment, the opportunities at But IoT the think add the area. home going still metering, predominantly Harsh, very And segment.

supply segment. Some logistics that And then in which major Europe broadly and chain driven Europe smart then a for smart region, I is think city fairly European logistics, spread. is the which driver predominantly is

technology. really is true LoRa a about thing geographical, encouraging the truly global is it So really

Singapore across Malaysia so geographical and likes We applications rest a including every very of very and use of broad Asia base. single and broad cases of and and Taiwan see very, range Australia a and region

of we goodness opportunity about have. So and the the that's part

as point I I I you'll more the it. really before are in would happen, will big catalyst Of say are mentioned that But some that at course, see they they impact be this time, think there US-based. just the of when opportunities

Operator

BWS proceed question line with Hamed comes Please Financial. question. from of with next Khorsand Your your

UnidentifiedAnalyst

is [Vahid] question. Hamed. This your for taking Thanks for Hi.

was you the First China of one, could on you some provide now. I color were grows mentioning what LoRa right China. like looks out the outside of if growth wondering

MohanMaheswaran

LoRa looking of is China outside positive. growth

I was, depending I is you mean it's which LoRa. but do for would small. it revenue China driver at relatively think still biggest the way say I that look

are I standpoint, opportunity deployed. yes why we that's geographically board, of focused pipeline quite as use networks mentioned a across spread. still doing from on the of would just seeing; I I broad so very type from And say gateways number is is the The cases it but a LoRa well deployed

region China, then out if XX% I of is the if the take fact, the is across spread rest In XX%, Europe Asia. of the then in XX% rest largest of regions being different you second take and Americas China, China and to with about out the rest

UnidentifiedAnalyst

Thank in Italy And what China, you've there's, been Okay. I'm a of for and in and China. saying few seen the then outside in how just seeing that. you've about you curious last next you're recovery in and general? weeks. days few trends in question America The Europe

MohanMaheswaran

I say, it's kind with going I with center We of in don't see We US a think don't slowdown market that Well, the see demand. is data demands, getting to the general at what slowdown IoT, and what's difficult China, to outside a happen just call moment. the think but to in in bit I as little grips a coronavirus. Europe

some we see may there. softness so And

is of will QX our guidance exactly million out don't to right. I try any to We know some. we think really $XX why and that's kind guided of of taken that ensure be much there encompass because how we

turn Ladies end the the management And to question-and-answer for session. and remarks. gentlemen, we have closing would call back I to of like reached the

Mohan Maheswaran

with the segments. mobile proved the XXXX year fiscal a new intact. growth a our platforms and drivers number engines key We behind targeted closing, center, in year We Things year challenging product of our of the data Semtech. Internet of believe So XXXX for exciting remain strength fiscal enter at secular

end quarter. diverse that and you. With see customer appreciate and updating performance support to balanced forward market our relationships, we another financial offering, you to Semtech your continued approach strong Given look strong product we next Thank expect in all FYXX. of

Operator

conference. This today's concludes

disconnect. now participation. may day. great you a And You Thank your have for

Sandy Harrison	Investor Relations
Mohan Maheswaran	President and Chief Executive Officer
Emeka Chukwu	Executive Vice President and Chief Financial Officer
Christopher Rolland	Susquehanna Financial Group.
Quinn Bolton	Needham & Company
Karl Ackerman	Cowen and Company
Tore Svanberg	Stifel, Nicolaus & Company
Gary Mobley	Wells Fargo
Tristan Gerra	Baird & Company
Craig Ellis	B. Riley FBR
Mitchell Steves	RBC Capital Markets
Harsh Kumar	Piper Jaffray

Semtech (SMTC) 12 Mar 202019 Q4 Earnings call transcript