SMTC - Earnings call transcript Q1 2020

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

Operator

Good afternoon. My name is Erica, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q1 FY '20 Semtech Corporation Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions]. you. Thank

Director conference. and Harrison, may Relations, Business your begin of Sandy Investor Finance you Mr.

Sandy Harrison

Erica. welcome first Financial you, will Executive our year Thank Officer And Speakers be financial to call 'XX. Chukwu, President results discuss Mohan today and Maheswaran, for and today's Emeka Officer. the for quarter Semtech's fiscal to of call Semtech's Chief conference Chief our

semtech.com. our market on could announcing differ release and unaudited call at closed our anticipated results and press issued risks the from these results materially forward-looking A after cause include statements. available today is website include to statements Today's will was the in actual that results that uncertainties

included detailed risks and review For release Exchange uncertainties, with factors a in the these of other and Securities discussion filed of Commission. periodic more reports today's recent in our risk the most press harbor and statement section please the safe

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

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

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

Emeka Chukwu

Good afternoon, Sandy. you, everyone. Thank

represented represented In into sales sequentially XX%. decreased sales net Total XX% represented sales, XX% Europe represented sales represented to and expected XX%. to Asia $XXX.X net QX, million. approximately approximately For of America and distribution North QX direct XX% fiscal XXXX, shipments XX% as

computing and end remains bookings The in total approximately of QX quarter. markets, shipments from industrial POS bookings POS the with improved high-end of the and accounted coming markets. enterprise resulted total XX% Q-over-Q coming Our end distribution one. during of the from XX% XX% above nicely balanced business consumer communications Those for and book-to-bill a and

XXXX QX to basis QX X% GAAP sequentially XX obligations the fair points contingent operating fiscal to benefit reduction earn-out amortization intangible margin sequentially expense and expected, GAAP XX.X%, from in gross increased due while the of one-time value As lower the declined expense.

of and benefit increase remaining by gain interest XX.X% GAAP benefit QX, exercising other million in million, had tax $XXX,XXX QX warrants. on In the $X.X an from sale that $X.X QX discrete was was investment. from its GAAP Comcast an benefited the from driven tax approximately expense of

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

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

expect to non-GAAP the non-GAAP In based points QX XXXX, market margin expect remain margin we non-GAAP year XX.X% flat. and to increased the compensation, gross of impact on sequentially gross In end charges. intangibles, margin mix. our XX of stable, expected, Moving remain acquired related QX, fiscal we by mostly non-recurring exclude as acquisition to driven amortization or to other our results, basis gross which share

QX, expense by expenses, revenue operating lower product payroll timing. million, driven was In expense we non-GAAP higher non-GAAP expect to spending QX be or flat compensation X% sequentially with as to was by variable operating lower $XX.X expectations. due expense QX, because new offset decline flat of lower

year higher While flat to XXXX investments year. or maintaining growth expenses prior key operating for modestly the approximately in only non-GAAP drivers, our our our expect with fiscal be we

due QX, cash to non-GAAP XX% lower for to decreased sequentially revenue We annual net XX% in remain rates from to XXXX In fiscal and the tax range. supplemental expect operations disbursements our compensation. flow

Our stock million. $XXX at stands approximately authorization repurchase

cash to to expect and lower of pay range and strategic of we In shares, represented net our QX, range. cash for is target sales repurchase down investments due continue the XX but which our to within days decreased make sales QX, above our days to XX to accounts opportunistically our to sequentially days. receivable of use return XX% We sales, debts. to increase receivables the XX expect target In

XXX due higher terms days, absolute XXX sales days. flat the to dollars target to the in of second in increased and days above inventory customer days we our inventory on our be increased inventory and QX, in net year. restrictions XX% key half the absolute net sequentially export be In range dollar the XX which The and to up of is to to expect for expectations of

In to QX summary, normalize. seen we as have were grew beginning much to we achieve of in environment. expectations difficult levels inventory macro able several in our sequentially strongly has a Bookings signs any

restriction long-term us the contributing and we of of half fiscal second our customer continue the stronger FUOTA recent for nature the execution. from a on engines secular revenue, believe act challenges uncertainty And to growth our the geopolitical focus While XXXX. near-term will impacting air to position

I over will now the call to Mohan. hand

Mohan Maheswaran

provide overall by then of market In group, markets fiscal of Weaker Emeka. product contributed afternoon QX demand outlook you, net will million. end everyone. decline. the and XX% to QX to the in revenues QX discuss global performance 'XX, environment all and Thank Good year I our prior $XXX.X our quarter decreased for 'XX. over end fiscal our year FYXX by

communications XX% the non-GAAP of QX market XX% market declined revenues. revenues. market year quarter posted per revenues revenues industrial XX% from the enterprise and of net of margin and end We the from from end represented represented of Net over prior XX.X% In net fiscal computing and and of revenues revenues. the earnings non-GAAP net declined 'XX, declined Net gross diluted total share of represented $X.XX.

to total approximately X% net represented revenues. Finally, mobile of consumer attributable increased Approximately market to XX% prior net net consumer revenues and attributable from high-end the the consumer quarter, XX% systems. devices over of was high-end revenue was other XX% and

high-end a increasing impacted result anticipation was band. Huawei's which by a revenues them we their positively were in believe QX Our chip as of inventories of potential increase consumer demand, expected in

I group our Integrity of will product of XX% net the of XX% revenues quarter's Signal QX net revenues. decreased Product of groups. from and In our year fiscal discuss represented over now each performance results 'XX, the record prior total

QX reduced levels. center, decreased data year and the demand market cloud expected, PON center fiscal markets. As further datacenter 'XX, demand of including and target declined across inventory of base segments, all our wireless In providers station as data hyperscale

XXX optical cables. We very bookings new modules improve. customer optical started active levels gig to continued CDRs ClearEdge in datacenter inventory forecasts well and have normalized and based to demand Our do from NRZ customers are believe and our to returning gig levels XX to more

In mega Products a Integrity datacenter for as customer. CDRs North received fact, recently the group largest Signal ClearEdge American our single ever for order

Tri-Edge PAMX cost, per samples for with our such using The Open the formation XXX member our Open customer targets interest, low low Semtech's initial recently low CDRs, XXX as low modules low QX, initial Tri-Edge power gigabit MSA analog characteristics optical cost, second Eye agreement. multisource the PAMX XX in per and latency participation PAMX During per are announced and CDR XX as strong second, Eye companies launched second, ideal its of We platform. PAMX low and gigabit gigabit experienced gigabit XXX applications. second latency power per

PAMX our to first revenue expect see QX in We starting year. Tri-Edge this

in FiberEdge use PMD with CDR qualified next DSP continued be for key platform, PAMX leading providers generation where complements we platforms, Tri-Edge collaborated which XXX-gig ClearEdge module XXX-gig Our our the to XXX-gig, and solutions. and module customers at optical have

win design strong XXX-gig PAMX initial and garnered modest have modules traction, are seeing from XXX-gig platforms FiberEdge PAMX revenues full Our from we and modules.

in volume to wrap expect 'XX. We to modules FY these begin to beginning

demand 'XX, PON FY expected. declined of as QX sequentially In

XX-gig OLT similar China as indicate this volumes by leader, Our ONU platforms. and demand the PON driven softened We tenders last continues X.X-gig PON PON two year highly providing for PMD solutions X-gig, has for XX year be China PON expect unit Semtech demand integrated calendar second over to currently is in stronger market largely to the demand PON quarters. where half volumes. and

However, impact on not PON the for another will our quarter. Huawei the of clear be medium-term ban demand

and also QX to to due demand wireless in base QX this Our expect station ban. was negatively in business impacted we Huawei the be weak also

as deployments, with about stronger XG and which year we see double We our 'XX, stations, we spending most to require larger FY additional the the market expect further for optical 'XX. volumes we expected remain FY base believe opportunity links expect as well than ongoing throughout XG XG in as on For content due more growth CDRs. could XG platforms to from of excited to ramp

product remain global this next driven XG the group very transition by and our acceleration Signal faced over Product PON ongoing of challenges mostly cloud expect year, our grow and hyperscale the SIP and current our the stations, few fiscal expansion in centers, strategy the base data we confident XX-gig group Despite of deployments. to years, by to the in Integrity

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

total all In from QX. X% our net quarter, from group Moving of Demand end year revenues our declined and group. Protection Protection in revenues. XX% Product net onto fiscal weak remained of QX Product relatively markets represented over 'XX, prior the

QX protection in in automotive used the protection advanced and need driver systems. Our performance business high momentum reflects for gained assistance

systems our incorporating customers announced to including functions. ADAS that performance, Superior infotainment offer RClampXXXXTQ enhanced Protection Semtech recently for of robustness enables our

newer across interfaces end USB Type-C, are high-speed XX-gig applications. all Additionally, markets proliferating such X.X Ethernet X.X and as and rapidly HDMI

for we result, high these a our interfaces. As platforms see growing protection performance that demand address

few business to years. from our to our industrial more markets, devices. we remains as group the QX We our diversify expected will market increase is is lithography focused end in protection border fiscal over Protection to these investments usage market Our 'XX, the diversifying Product broader increasing from business us high-end expect to believe board where year the markets based advanced the next consumer industrial there on demand of enable of recover. In an

demand industrial decline. the China softness recent end revenues wireless Turning represented Wireless from of net the the Sensing revenues. to year. X% wireless a demand and total our see In from of weak and to group rest demand improving year decreased our sequentially QX in and fiscal we product the our due net the throughout Despite Weaker business to of markets sensing 'XX, Product expect do sensing to and XX% environment, group. contributed

increased at of now XXX network year fiscal network very Our we seeing We include key to we LoRa or LoRa are XXX These in LoRa to the of some continues operators 'XX. of underlined LoRa from 'XX. operators approximately end build globe, fiscal private public number momentum by across the by of track. the year expect momentum XXX QX the metrics exciting and the end

over expect XX end grew of the to of networks. nodes. by LoRa The number to end with These billion deployed have countries more number LoRa of countries XX estimated gateways approximately we X.X XXX,XXX. will countries LoRa than increased year gateways fiscal connected The to networks than more support 'XX,

We to expect of end year a number gateways 'XX, XXX,XXX deploys nodes. over exceed end X by of of LoRa billion the fiscal LoRa end capacity node supporting the

of cumulative increased end The LoRa deployed number estimated XX approximately nodes to million.

to an XX to this feeding pipeline. over LoRa XX% eventually the pipeline enabled a that opportunities million end pipeline convert pipeline fiscal XX% number 'XX. timeline. the opportunity expect additional by $XXX month increased XXX to of of full in million $XXX LoRa our this of to on of anticipate We The leads with We opportunity over exceed year million will average deployment

to our LoRa and see performance use addition metrics, partners. we In strong a began number ecosystem exciting also cases of on new to new the

integration significant of Leonardo in announced Target construction Conference platform Fuse IoT a retail systems, are, use into cases telematics operations to Minneapolis. LPWAN experience efficiency IoT SAP mining retail its LoRa of LoRa its support announced the the fleet of at LoRa-based and sensing improve recently to its wireless this guest and system improvements. Some announced IoT examples enabling globally. management company, MachineMax, machine use industrial revolutionary for and

aid wireless aid, uses technology in exceeding Sonova, and manufacturing hearing in feet. XXX,XXX which leader its LoRa-based leader facilities track sensing And LoRa applications, wireless to system performance. to and emerging square IoT connected advanced solutions, an industrial best-in-class latest in announced sensing a monitor assets Ineo-Sense, deliver hearing announced its

very opportunities disruptive pipeline and many or volume new cases use segments. Our of cases, numerous industry include includes which use very high

to these from the discuss they as opportunities wins. will design calls cases and We move use future earnings proof-of-concepts in

first LoRa We our recently of cloud-based the announced micro-service. release

system track of to Our unique and geo-location service our value demonstrate to partners service tracking LoRaWAN asset first devices The is and interest very to and starting available that LoRa-based has in a LoRaWAN-based micro-service their a the been the the cloud. we customers is global our are locate high to using ecosystem.

have the services We and we of to QX year. will commercialization transition qualification this testing full that customers fiscal start of by their believe to from service

micro-services expect in revenues $XX between to our next years. million five $XXX LoRa within We million to grow and the

on group Our enable LoRa. proliferation and Product to Sensing Wireless of faster continues the developing to focus ways

in to offer from and rapidly. blocks full tools building Specifically software end solutions to of move deployment will of system QX, concept started a development designs, more and and services reference we phase that to a suite hardware enable integrators suite providers

In and large total LoRa. based and IoT global solutions these of tools, of solutions programs and communities. addition we the from to developer designed development these design market simplify and LoRa-based specifically our accelerate interest the deployment LoRaWAN of time have already the on Both academy academic program. to been development platform partner accelerated have to new program also programs Both LoRa have our

in broader $XXX In $XXX industry. million standard the we LPWAN unit become facto continue FYXX, our expect what to few years enabled we to the to China, demand be a the multibillion between despite million. in cases and de we be still over to next expect soft expect for LoRa LoRa revenues and concerns And macro use

expand and regulations progress as need in an on and win our to In as devices. SAR QX continue radio of see for Huawei should regions customers platforms solid We in 'XX, sensing smartphones increase demand to and due business strong mobile delivered our from we management year design believe record quarterly global proximity revenues proximity increased the stringent energy demand other regulations. fiscal new drive sensing global increasingly and for

sensing the addition, enter as an during in these devices. see the proximity market In content high expect to number of smartphones start year, ratios, performance to XG drives we increased which higher

For 'XX, group QX product we to revenues year approximately of expect flat. be and from net Wireless Sensing fiscal our

XX products products and of achieved to In and year new record design 'XX, on fiscal released X,XXX new new wins. a Moving QX design we wins.

for reduction we of guidance due year related need recent orders the bookings, approximately ban of the our and our let revenues or QX. net recent anticipated outlook we term the at shipments second million in fiscal $XXX be $X Huawei million. strong Now quarter XX% midpoint QX geopolitical near-term of currently QX our $XXX the and on discuss me improvement to 'XX. on are Despite based between Huawei, to estimating uncertainty To and a associated attain the beginning the net reflects million, the million reduced of to range of to approximately $XXX This demand approximately ban. guidance shipments reduced

share. earnings non-GAAP diluted be $X.XX between QX that expect to We $X.XX and per

I the and any will answer will call to now and hand the and Operator? questions. operator, Emeka, be happy Sandy to back I

Operator

question Cowen. the Karl Instructions] with [Operator from Ackerman first And your of line comes

Karl Ackerman

to perhaps your ramping -- way own licensing chip to like about here. goals? Emeka is to your your guess from sales royalty I third-party today your of revenue with, the or your LoRa mixed percent analog of on What sales we focus Mohan, What's And impact from sales revenues business. revenue own commensurate and versus on from mix I'd chip of start think business royalty LoRa chip by margin your the your you. off funnel versus Thank any contemplate partners? signal course as right or

Emeka Chukwu

both another few said, And pretty chip for of of both take say years end And revenues and sales and then couple still at as royalties years, I standpoint, the from I next years, from become Karl, that least really think the predominantly I years. revenue licensing for as next will the for for nodes initially, to and much increase gateways. a couple up licensing think years couple pick it our next over start nodes material. going But a the micro-services of still would sales, And sales. from it's would most next few to gateway take will think to partners is will -- it year. our then for start chips to the I the of end come I chip

Karl Ackerman

from your if impacting one is could I And the appreciate the overhang distributor near-term. question. customers margins Clearly, inventory ask at that. Huawei revenue more I and headwind

this on talking you're about However, half. a in second recovery the call

toward we target? margin the we Or certain how are certain progression think revenue achieve help a and product level Thank XX% goal? is that? need So long-term you. should there your efficiency mix programs should ascertain about that there guess operating to I that

Emeka Chukwu

to I of We've think million us growth. really line are expect expenses, driven by and $XXX million we've get of stated revised mid-point gross of path range going good indicated job is midpoint done operating about We've of the in past, very margins a before to the operating revenue that also to would a see very margin that stable. for that to to lot our to managing the I our top of really annual range. $XXX the

clearly is in to how it look is this we at So going that key that the expansion. at but leverage point, be growth the driver top-line

Mohan Maheswaran

if Karl, back we margins. XX% QX had operating you of And 'XX, essentially FY in look

range the to. revenue need to we that of that's So get

Operator

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

Harsh Kumar

First and term, expect think another you would commentary if some you hockey of and Mohan, you're stick a how half execution earnings in you level. guess steep light call, mentioned all put this pretty go? your to half. give second to seeing I'm what quarter best around color macro in under in the second drop What curious want belt the at but you very your macro have on spot. good given with China very be you I'm just pretty you're might last good of like, going to a not steep The for looking all, a I all that used weakness,

Mohan Maheswaran

absent are strong. ban, if be Bookings would Huawei that. think still I I the Harsh, suggesting

is China but couple up. seen for quarters of demand weak a have now, picking We

data seeing We on starting -- on the in center mentioned is more orders demand data starting and pickup business line call, inventory the I levels, see center become LoRa start to in going Our as a great. we're side. to

end second So if quite strong. the is and I looking across markets think product different half the still lines, look I

for Huawei the obviously, and absent of impact. looking direct us, suggest we sure be the spanner to in to second the For that would anyway. half But that, through relative both half a the bit I indirect also works the work still puts little impact a ban strong is that first that, to and quite have

Harsh Kumar

on I can one if Mohan, curious. or China? I or then, differentiate curious I'm ex-Huawei mean bookings have outside out really which Are And you, us seeing don't good. over, provide China bookings was ramp or ex-Huawei but still control ebbing I flat flatness are that color? you is you Huawei in you animal ask Huawei could this comment if your you any there? Or of out a of seeing and still sound

Mohan Maheswaran

demand. Well, see say But excluding of of -- part Huwaei, -- that last improvements some is a quarters. we're to And Huawei, excluding that it’s China has China's in big area. been soft for I of which demand obviously, it the starting would couple

So that's promising.

uncertainty the in can Huwaei, that China what now all of and those like been in sustained, be how little other least Of perspective, and that's at rest from we've of cases. long a of pickup of some industrial the with know. associated course demand, China our use tariffs seeing, a with the the bit I But don't

Harsh Kumar

$XXX including funnel Just Is million the the quick that from excluding expect last or for million $XXX one, that? one services you LoRa.

Mohan Maheswaran

The real are there, moment we measure the our and our in don't real any these have and pipeline, way proof-of-concepts working services we that at have opportunities on. We customers opportunities look Harsh. are at -- way

the just service. announced geo-location, that with we've Now

million have million I addition starting So that. in $XXX that at to $XXX that are look would pipeline. customers say plus the we now who to is

Operator

your Needham Bolton And comes question Quinn from & with next Company.

Quinn Bolton

side the across first And exposed center up LoRa wanted ask give there the sense Protection, and a I've exposure. us Signal where some is data Integrity of to follow then exposure just to business? Wireless Huawei and the on Can got Huawei specifically, the I you on on business. any you're Sensing

Mohan Maheswaran

actually all no the of to LoRa the key Huawei of one Huawei. business, proponents is first NB-IoT. of So on exposure there's

competitor the protection a Integrity much then areas. Product to say Most of side, And the our there's see exposure, is would Huawei. else. exposure PON Quinn, the for some don't on on solution. So Signal those side exposure the where side, LoRa two it's That's exposure for really station anywhere on base predominantly smartphones is. I the We

both so indirect modules, what a indirect is exposure, direct when and really And and the ago there's other its impact also the to get we the to a through we could Huawei exposure silicon. ban high and on from a have shift that, through then negative direct directly And build learned that can't ZTE companies, system, module Huawei year components us. which is

as but Obviously, see and through that approximations what best tried idea. quantify all happens we you that to we've they're it So really we the gives can. until estimates an quarter,

Quinn Bolton

look then to guiding ban July know to might Huawei you the you're went the into at weeks I ban. not been ship but approximately went if quarter, And have three beyond XXst, just May I able effect before

the Huawei basis? is trying there's full no quarter we're million to think if likely a about let's say that what if impact in be full Would million effect resolution. a future for $X to quarters range, quarter $X ballpark more good might be, for So

Mohan Maheswaran

we're good that's we'll today. Obviously, quarter, range, $X the million $XX what we is over a Yes, next but million learn see think it's what and we between lot projecting. a

Quinn Bolton

North the order customer. largest data data a on in receiving the mentioned CDRs you center center in ClearEdge then American script for Company's the from And XX-gig business, the the history

win, Just application a if more wondering but CWDM color that XXX-gig just you us probably that a wondering bit on that for design for order? little provide a mentioned type you give if little or more on application, color you can module bit as

Mohan Maheswaran

within to decided that some that solutions the color a has it. can't customer now. Quinn, module a pretty NRZ CWDMX of really this a is and more ready other going data other lot the than that stick weren't customer that looking North nailed than it is at center and you it's been give American I and for concluded other and XXX-gig, PAMX Well, much optics solution

Operator

from question next your And Mobley with Wells is Fargo Gary Securities.

Gary Mobley

Huawei, point thanks great to time. appreciate the on and Semtech call Hey A to question revenue guys, about is taking up second for takes question, my about supply $X away the chain, of shift, certainly from smartphone I that fact slack. of going shock to But be the up somebody slack front certainly some a Huawei shock pick million to the for a the quarter. the the at first something presumably Android pick on the can't

XG station on Somebody infrastructure And then share. the on perhaps the base might pick customers up the side ZTE PON makes slack. the

So how alternatives Huawei? you how positioned Huawei are the away other to see you customers? transitioning with the And of do and going shock

Mohan Maheswaran

a question, good that's Yes, Gary.

of until of it all, of to to Then most customers we they're they see we what started see first picked then system. providers. started to ZTE's used other some at difficult in realized couldn't system from or wasn't solution a build the going that they very system. they be that the able part demand, players a orders of with well some hey, it's these build see we segments. And they to case, short then, until their were components alternative initially being started anticipate the to where think we are to the that, until will other look up But happen. they thought And orders, realize In places. I positioned we so example

that shape, make until we we good can't see assumption. coming just but in in, orders we material don't just I And that think know. we're So

Gary Mobley

appears OpEx being more OpEx some operating flat maybe margin simply little having be some less the activities, guidance for flat this and your second on Or cuts to managing though level? perhaps and to some But is appears maybe OpEx it consideration bonus for other down to streamlined going be slightly to So a deeper as And the recovery any back overall year. the making target accruals just the just top-line by to maybe R&D get story? quarter there is in to to items. you're

Emeka Chukwu

going a I to Gary, it's be story. top just recovery So line think

higher performance talked strategies You're of haven't been you've lot basis. had already return new about. to We've areas in we're high the that a things story, you sure past when We've pruned product our very on of that of on are much a the forecast done lot the some here focusing we We've in so levels investment. areas expenses. that our and levels of making

of like is that, product very lot But our did that above. say, you expenses So still tied is having XX% the said of on supplemental about we a know compensation.

So we what room can past, do. do used we no the in have some it's to of longer clearly, we But that used to have the what just we have. in runway terms

Mohan Maheswaran

that to point platform our other type of add The that, I'd is that most of investments investments. are

of next we're the for platforms next optical generation the platform. of investing So lower generation XXX-gig next platform, for protection generation

are they're of not So more strategic. investments that short-term in Most nature. our investments much are

Operator

Steves Markets. Capital Mitch from comes from question next your RBC And

Mitch Steves

really gross margin January? should or July, that, we improve Huawei October a am to gross Does focus that lines, I and first LoRa doesn't assume to on margins have since product. high-end going So, that sequentially, starting to assume

Mohan Maheswaran

Huawei doesn't have any LoRa revenues at all.

understand the gross to connection I'm LoRa So, margins… between on trying Huawei,

Mitch Steves

no So you have if Huawei…

Mohan Maheswaran

No, Mitch.

base-station smartphone related. and our PON, is Huawei most So business of

Mitch Steves

So that's point, right. my

know So margin high-end, there's there. high basically, no that business we

gross the up mean that margins doesn't January? go So to October

Emeka Chukwu

to just our see Well, everything expect into said is how to in have we've think be margins comes the I gross mix. we that What past we stable.

that be have but to with we gross in margin. have margins But of will see a expectation there it gross our everything bias, going what forward. is happens we know how an expect stable, before exactly little the upward to bit comes We

Mitch Steves

second question exposure. China on And then just the

Is Asia, us to of showing qualitatively like official to shift what Asia-Pacific there you So get the that to number give guys so exposure sell-to Huawei give X%, X% numbers China X% least just versus at is we number. X%. at China the But if X%, you're I the that's a out? any to way actual look

Sandy Harrison

the that Mitch in to it's probably to [Technical mid-XX is at our So, And what's calls if the to you prior XX% probably shipments is look we've China to about said overall China that what range. closer XX% range. XX% that actually said consumed Difficulty] on we've

Operator

And Craig your from Riley comes B. a next FBR. with Ellis question

Craig Ellis

to term the ask the wanted limited visibility. that where environment I I've in know a it's the But some exist drivers and portfolio. really you understanding longer intent got company of is questions better question, an Mohan, we've specific

half. really the back and some integrity asked your question Harsh signal comments So data business of you on more business ties the to second center about broadly. My

like business see is. Semtech's that and cyclical ramp clearly fiscal sounds beyond you're is you head we this we there's dispute trade and PMD growth XX beyond that What the in calendar product a The year? 'XX, here what coming So about the do that's a it excited driving a as 'XX. characterized as into of look PAMX rest question

Mohan Maheswaran

Craig, I Signal Integrity on XXX-gig the have Obviously, XXX-gig the as all of Well, the think, SIP Product growth. first business. to we know on business, just you

have of believe then We continues growth. future Integrity which And video-over-IP the we we also Pro to AV really well, grow. the technology course, have good outside Signal Product engines, that's AptoVision, group LoRa, quite that doing -- that growth got is have

the up efficiency whole really to largely we’re issues things just growth And think of just tied IoT, that. seeing, to tied reductions like which that, improvements. brought I really it's cost grow is IoT regardless will type geographical driving of continue to of and And because is a

for think many we continue very that's to going that us. for Obviously, So that's years. exciting

in And that tied I driven grow. as to we is sensing require we handhelds our pure because and I managing just deliver. the industrial devices into regulatory powering equipment, is into think so think radio -- and devices, systems going automotive, we strategy, protection, driven global quite consumer strategy versus requirements and for devices, communications continue proximity IoT. smartphones more mentioned, more now outside and business consumer so The really will that of And just into to regulatory high-end advance protection those consumer into see exciting, lithography

So future. good number have Huawei to in a allow going continue drivers independent we China, growth whatever's of to think growth drive that are independent really that different the going are of the of I us on ban, in

Craig Ellis

that you is talked performing follow-up seems through tally And five you on all different walk then was the call. business it is as the my question about milestones last If on the to the LoRa. like correct milestones, just

in is you've two, color China an the Company's how was and you're of And about just year. expectation? business mix One of the further thinking pointed outside progress? milestones this LoRa's still increase things on that any the One, to

Mohan Maheswaran

get expectation will is I our bit the balance LoRa a more tell will well. is start you, all, that of geographically. first But to we little Also, very, it at China, very going business

a the can other of to in happening China. question outgrow So what's regions continue it's

going in all think right just of so, things but in the we we some look the We business have what direction, the do purpose these -- And good I need to metrics, we the accelerate bottlenecks. momentum. business for in at areas, that not do is certain to

of availability designs, made to that of pointed that's accelerate to ability that. the decision a and to having things some enhance out going we've the means conscious customers reference like our deployment. for having in the their the actually time reasons design more And developer from tools, one That from software, more partners, I invest platforms and proof-of-concept market more to

we've emphasis a that. lot on so, And put of

as opportunity I to in the we're revenue the I think shape. year. half said, I think, can be us. that follow, think start pipeline going of as we good very has to we'll and And And for next that pipeline great this over I see which the I momentum, to to move increased think some year continue is that still use year,

Operator

And your Stifel. question with next from Tore Svanberg comes

Tore Svanberg

First of all, question Huawei. a back to

your it Q, $X your $XX about like $XX look million. million. it's at I last million If sounds says -- So, to XX

more So build, to that's it's XX rate of that forward? going six should going assume run to and be inventory that was we half the just just

Mohan Maheswaran

$XX mentioned that correct, business Tore. that of million. the definitely that which definitely QX, from mostly my run QX more in may But to look a was the last script smartphone yes, rate inventory the on built year, should base Huawei that's it business. inventory, as think rate for station that PAM run have and it you inflated QX I some number I number, built It or Yes, tied up clear They number. QX at even

Tore Svanberg

that. clarifying for thanks Yes,

you flat to follow-up, the Sensing business guided be and a As Wireless sequentially.

that will sequentially? means smartphone assume be going I so is business some actually down, LoRa So maybe the of grow to

Mohan Maheswaran

The has inventories of areas in was believe the Huawei correct, yes. we one that built sensing That's QX. proximity

to very And so and in down that'll be have good expected is QX QX. LoRa in growth

Tore Svanberg

about one the data improving, is in Just data the one you've But last and broad-based center bookings grow that where actually maybe are question, win. center talked this sequentially enough you said could now July quarter?

Mohan Maheswaran

center Data think I possible. probably it's is --

I bookings area. half. this some good second in think data good some it's start probably seeing and likely to we be flat increasing and are then points But maybe

Emeka Chukwu

indeed has the feels like that business two that last quarters. bottomed here Because

Mohan Maheswaran

to way. starting that it's Yes, feel

Operator

from with And Schafer comes next your Rick question Oppenheimer.

Rick Schafer

revenue that the think follow-up realistic a licensing I earlier being maybe you've had curious of is as you target see dollar sales. Mohan, revenue I I that forward chip in LoRa. mind? answer, still crossover. that I three talked guess, a of the do that And on billion in just I when five a LoRa type see think talked know I your past, part years. we with first And crossover? I stream, looking a versus to am guess couple about questions. But one then about when seesaw potentially you

Mohan Maheswaran

let's think, first, that I Rick. Well, one take

I how to back services business scale. still the and kick-in this to And quickly, will now, would from on chip couple size accelerate coming expect mostly I those then think. three quite services volume, next nicely. think then And licensing the I it both the I royalties, side. can you and of expect years chip especially years to to probably from the start of from revenues, be

metrics about One example, point and out, the of these reasons of this year. fiscal the I I end talk for

sensors. node and because supports in $X.XX to each one of is translate out nodes to end and number XXX,XXX We therefore, billion at you certain billion if end gateway support X billion. those, gateways the of is expect have even those capacity X And there to $X

So smooth think, things to of question it's working once is in we're one deployment, matter cases of of once enough to proof-of-concept the on from is place, the deployed, is me, of it's time. I use the so runway think which a infrastructure there a just are a once now. I

of many can question believe of a and can. which I how be use very volume, And they some them high cases

more more industrial in are it I think that used before was cases volume lot nature. potentially see very now to a we're starting high

potential so consumer we're smarter more enterprise And emerge now smart seeing LoRa targets. more and IoT as smart-home, things

Rick Schafer

that Can data just PMD attach remind give looks of And on at sense can what CDR that what or XXXG then XXG? us maybe a attach like just answer, of overall another Semtech attach, us about you center. do? lambda follow-up what whether just versus talking part And I content Single CDR we're

Mohan Maheswaran

station I see all for think modules most CDRs, and much think faster the will CDR base functions. now functionality. require also stations of to deploy CDR XXX-gig, of base For type mean I true And We optical will pretty starting with above of we as also some require links. that's those

So thesis that that's happen. while are been we definitely our seeing for a and

Rick Schafer

of… can And talk you dollar a about maybe content, sense

Mohan Maheswaran

Yes, it depending Rick, varies versus of $X NRZ versus I module reaches. to think, on average, PAMX $XX, type the on different

So, varies. typically it the is $XX really think But to I ASP. $X

Operator

next your from comes Susquehanna. with question And Christopher Rolland

Christopher Rolland

might mentioned when to fairly doesn't from come these other ship normalize? mean, Thanks. Is demand be inventories customers? Huawei good there if Will And proximity easy back. to customers? I other inventories, you On there sensing.

Mohan Maheswaran

standard are for in not them of million of most say customers. general. specific, I There broader may targeted be they're for be specifically inventory are that our in would application there of So products, specific but general, some may that dollars are customer a of of couple set products But Huawei.

Sandy Harrison

inventory inventories should we're especially in in inventory normal we mean, in by And I that coming with uptick in back down. and QX, days expectation the our see should beginning of down the of terms to the expect to come we line next top start -- QX, when the revenue normalizes, we Chris, if levels. see see expecting is that to

Christopher Rolland

the you guys here year? for through Signal And shipments Huawei? not percentages various in to about talk What particular. Huawei? it that Can Integrity station, how to Thanks. expect of Huawei? Is OEMs outside ramp exposure you base then are do your And on side all of the the

Mohan Maheswaran

driven customers. have majority We China. volume out us anyway exposure by far been for good to has of of the But the so other

And guy for big us. so, obviously, the Huawei is there

of some manufacturers I We Hauwei. driven station for But mostly say have course, exposure mostly is and of to of European. Chinese us volume other the the base would out is

Operator

And your next from Gerra Baird. question is with Tristan

Tristan Gerra

mass for the industrial A Is question obviously metering. catalyst What in a smart point based will technologies still see a momentum take an have the good for in devices us LoRa including market? see very IoT. lot of IoT mean, it there we that's so, traction on I that U.S. does more market? to guys create U.S. LoRa Wi-Fi applications you IoT LoRa, inflection in gain and in to [indiscernible]

Mohan Maheswaran

high I would North have That's lot a And say we a Chris. volume. good America, of question, them and opportunities the are some in that of are

So to starting is emerge. it

area. And calories it's for to just think the partners us of understanding that's think going an ground take that some we've but spend our what LoRa in started some smart helping there, home. I to on home is I in are important battle really that the one

for transform I and of to are through of those and really these those tracking terms design that's systems verticals of I the of more can smart And systems. type proof-of-concepts that in work enterprise logistics U.S. And industries going smart to starting LoRa, think and translate LoRa and and how then to those some thing large to use about other how and operate. in learn about the what to are buildings opportunities move the proof-of-concepts understand U.S. we asset said fulfill the how us important space wins, how is has way and through revenue. part to how it's

friction And where understanding are, and and the the those. where bottlenecks removing

are applications. example, for software, are of those some those and of some And

driver to I And So over nice process. more years think emphasis America you're that's seeing that. next to going LoRa. from us think for of North allow really market faster I revenue lot to the our customers reason we're why the of tools And to learning you're part that couple become bringing a very on through about of we're see the move

Tristan Gerra

half. the general your about And initial then about guidance. about, business, as you've expectation And your your a second also increasing quick talked for sequentially revenue LoRa talked follow-up, in so for whole in you've

your now year seasonally that to that about stronger half So embedded the full in going reiteration in you is with it's past? Or specifically, is expectation than to would LoRa regarding in it tracking revenues your say be been normal for seasonality? need of is line guidance second the

Mohan Maheswaran

Definitely it's probably LoRa saying IoT extremely recall see in China if in or a well that really QX. to related I've about been to has I the demand been what latter, softness starting Tristan, I we to started China you think LoRa, the doing it's think we nothing but just China. It's metrics, to picking design we strong But us. opportunities second and signs expect be real wins on momentum up. now issue based see half on we and mean based see. I the it then softness for are for do And that and that's

as how as whether it the we're going to whether To Now, expecting year. or to strong following it's much. out to going strong matter be, push me, it's that fiscal really it's doesn't

catalyst a this rate. run that more momentum. of being There it's $XXX question a that point a quarter to million going once quarter run $XX $XX million, takes rate a million, is have some think we this to fact I from million the be $XX at

Operator

with next And Capital. question Searle from Roth Scott comes your

Scott Searle

China to $XXX guidance seem that, mix? in maintaining front, of Mohan, I And sounds year, it. ago. terms to clarify, like sure the out up in million. couple Were Is what the articulated heard as I'm to to wanted line they're for if months the a you're than The of the part not the I up of was looking XX% weaker. like revenues year the all million less little of follow it you $XXX sequentially? then metrics just LoRa China LoRa seasonally on And mix, of

It's eight wide year. that so got fiscal variance, months the pretty ago considering like seem tracking. in So they're we've things still

of the in what revenues probably range, basically to Thanks. because the implies it wondering, range gets I'm you factors potential that that end swing are where current are big of end the versus higher were the from lower quarter? you So doubling April the

Mohan Maheswaran

when they're it Yes, correct really in to look just pipeline, me are design revenues of calling now have to exact into say, translate We way to they're don't have okay, it's we the a these we to is I and wins Scott, that opportunities going how a fast. at so it question going assessment. look ramping the that's these deployments. think full at and data. and And

going And balanced it's we a half. stronger the very to very materialize And well. revenue more regional can they're cases use see we're broad second that it's as of a range flavor that. in And so expecting from and

the your revenue million rates number have LoRa fiscal which to on revenue that good of over able it's $XXX reduced our some and significant as And back Coming exactly see I so revenue. still impacted goal and the in this both a million. XX%, out. now, how we're momentum conversion on has to contributor I Yes, from to that so $XXX convert see enough But goal starting the achieve our with been then That’s question to our softness also the I early to on been we'll year, China on year think still the plays opportunities a LoRa revenues. has LoRa opportunities of those be I as China. can't But mean, remember our front enabled we was we'll mentioned, clearly, business. China's long pipeline as to

Scott Searle

Correct? for that this more expectation tags 'XX beyond. Just if can include fiscal There's in no Mohan, tags. lastly, I follow-up, kicking any doesn't right? That's and year,

Mohan Maheswaran

correct. That's

Operator

with Khorsand question next your And comes BSW. from Hamed

Hamed Khorsand

regain first-off happy are just Just to the control? for expect Or you margin? with Would managing business you hear, center pricing data gross some to stabilizing. the

Mohan Maheswaran

different so The this per achieve I gigabit the that they're look to selling used works we're it don't have is Well, manufacturers. think, module as reach manufacturers we a to typically there're trying module way the customers. cases. And into for end many certain cost -- Hamed,

much NRZ ClearEdge one the are of of related modules. we components have to cheaper. course, optics the advantages with and the so And the family the is And those

probably are as being as we to we be there. So need aggressive

be probably aggressive. On stuff, PAMX we don't need the to as

each on it's situation. dependent so And

Hamed Khorsand

from automotive have side And of models get on as my Do on wins with shipping new model that the second the out. question the when any other starts new design you manufacturers? half was coming year to auto the

Mohan Maheswaran

wins we design a on have production the lot I know of side.

on Honestly, the in timing LoRa But the the protection I momentum think of some months typically good than qualification. those. with have space. longer don't have know take We I we automotive exactly they side. business our XX for

Hamed Khorsand

So you're is trial is based it that just that the all reporting from revenue commercial? automotive, not and

Mohan Maheswaran

additional we the real -- and the numbers, the that revenue. the talking numbers revenue talk automotive mean, about opportunities. of talk we about talking about is we ramp I'm No, I it its automotive is protection on on about other -- revenue revenue. are on

Operator

FBR. from last Craig Ellis line your B. of And from comes question Riley the

Craig Ellis

got up. the wanted for in question. for net more Thanks $XXX flexibility me real back one Mohan, million has follow And got company sneaking you've certainly nice I balance. just The cash to appealing Does macro to environment? how Do shares. you about tuck-ins cash? think or other deploy you tech more strategically repurchase to deals any differently cause in any that uncertain this the look

Emeka Chukwu

all the very platform. all believe deployment PON that drivers where hyperscale very about have believe nicely have not No, still very high that all. the the at to is We markets continue. centers we're don't still LoRa secular Craig. positioned. of we don't the that I know we expectations these we much the -- reason that we're is to for nature We we is in are XX-gig data continue. And thinking believe think differently to the We because differently going And going transitioning future. growth

current believe So the macro what future in to deliver. now, everybody our have despite we much right is headwinds we still that and seeing very

our look any to not really we So, said be opportunistic it we're to always about differently. buy-back. remain that, Having thinking with

$XXX have authorized. million We

also that will to would opportunity the is there, but continue if So investments our back the we strategic to make future. our buy continue ensure stock, to continue

Operator

And this at time. there are further no questions

remarks, closing please. Your

Mohan Maheswaran

you of that quarter. we all from Thank the look forward a the next to that, strength intact. despite driven our confident the environment, updating closing, year drivers clearly the are indications suggests 'XX near-term second uncertainty to macro of our we you. the behind continued believe remain and your We despite appreciate underlying in which customers support start stronger early fiscal engines, we growth by secular and With half In geopolitical Semtech, slow the see year.

Operator

you. does Thank call you now disconnect. conclude today’s This and conference may

Semtech (SMTC) 29 May 192020 Q1 Earnings call transcript