SMTC - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to Semtech Corporation's Second Quarter FY 2021 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sandy Harrison, Vice President of Investor Relations. Thank you, Mr. Harrison.

begin. may You

Sandy Harrison

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

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

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

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

Emeka Chukwu

Good Sandy. everyone. you, Thank afternoon,

QX, XXXX, Europe was XX%, to million, and In Total QX net approximately XX% represented sales. over of into direct prior sales of net America sequentially was to the increased XX%, represented Asia and was year North of X% sales. distribution net our XX% which above $XXX.X guidance. mid-point shipments approximately represented sales fiscal X% the and year For X%. sales

a XX% end coming end remains Our quarter, bookings consumer and industrial X. but of the with prior the mix resulted from Bookings high-end the margin XX% over XX quarter. market, distribution XX% decreased above basis end balanced, the for during the revenue. business approximately a of points QX market. to from market total XX% infrastructure Tolls of from in the due POS book-to-bill increased accounted shipments infrastructure gross higher

due a consumer We expect to X% our slightly to operating decline of revenue. higher QX compensation mix expense QX increased higher GAAP gross to margin due share-based expense. sequentially,

$X.X primarily due tax discrete GAAP The versus denominated to result exchange expect wrote QX foreign of operating in to million losses minority GAAP due on was a lower our foreign offset tax our higher of of In to compensation QX, order down by X%, to driven expenses as liabilities. by items. several GAAP decrease sequentially, was higher investments, translation expense $X.X X.X% higher rate increase was stock X% share-based QX price. We primarily QX. expense million slightly

X% to exclude non-GAAP QX the In new sequentially, variable charges. non-recurring sequentially we as higher operating other to expense product expense share-based compensation compensation, X% acquired non-GAAP due flat expected. the acquisition-related, be our which to and of primarily and Moving expect on to amortization results, In operating non-GAAP expenses. impact increased intangibles, of QX, up

tax QX, from to non-GAAP denominated million came XX.X%. liabilities. QX, the our rate be from at and For translation January due expenses some to quarter. XX-week benefited in $X.X foreign losses items increased in million modeling non-GAAP our $X.X on higher foreign order purposes, a quarter In will QX, exchange discrete QX of

XX% to XXXX of working tax year the management XX% revenue operations XX% our our good flow increased continued fiscal XX% revenue. capital cash expect QX represented higher due QX, We and sequentially, to in to range. and of In rates from of be

of Our CapEx a was X% of XX% flow revenue. of free QX in revenue driving cash

As XX% approximately into we stock revenue, target approximately range is XX% $XX continued get million to shares We revenue authorization to range. growth and million. stands repurchase now our that of our And XXX,XXX or a reminder, us QX. in repurchased of expect at stock $XX

days, use below accounts XX strategic continue inventory shares, down decreased investments our expect times Net XX range and pleased opportunistically dollar significantly to to We revenue cash represented our QX, the inventory from deliver of to XXX target In X% make increased to XX three days. rate In the due days sales at of range debt. of and QX, to sequentially, our expect flat. target of flattish absolute days terms was which net and growth to days sequentially, sales, were to summary, which higher by receivable to X QX to XXX remains operations. inventory pay ballpark earnings repurchase days we remains We cash increased and our we net be In grew almost days. of in flow results. XX days strong

fiscal to believe engines now gross hand flow positioned to margin XXXX the deliver our to we solid are in the solid, operating and and our headwinds. results ongoing remain expenses cash Mohan. of stable, over half and despite balance growth I is year strong. macro continue very second the call sheet Our are financial We well will

Mohan Maheswaran

hyperscale center, center led I new station, market increased Stronger The increased group fiscal consumer our of increased In the by was XX% over will performance year, total Emeka. QX by performance strength businesses the and quarter fiscal prior data million. market by revenues. our groups. record demand very high-end revenues group by represented In offset and future discuss results. XX% XXXX, revenues X% base the In sequentially, net XX% XX% QX product of year outlook infrastructure from fiscal non-GAAP XX and PON net for of for the now for QX the net XX.X% from of discuss year, data global from sequentially our contributed consumer of of diluted was and a over record and XX% within that was you, achieved quarterly year record the each XX% per will Approximately prior and bandwidth XXXX approximately experienced data and share year $XXX.X demand center gig of revenues to represented high-end market centers to everyone. X% and softness fiscal optical continues strong of year infrastructure increased data Good mobile to and afternoon, represented attributable sequentially of year and increased customers. the $X.XX. XXXX, XXXX. QX then QX total wireless We to and market. revenue provide XX% from connectivity end prior our platforms, over revenue net XX% systems. of posted Thank year gross We fiscal product revenues as earnings net end the X% increased attributable of other increase. platform market XXXX, consumer fiscal our Record signal integrity prior the I sequentially, to product net increased and for revenues. non-GAAP CDR of total ClearEdge revenue our consumer from margin industrial XX% XXXX, XX% need revenues. demand year of XXX-gig was and over total the represented used XX% market Net high-end the higher modules revenues. in In decreased of

few modules to optical modules. to additional accelerate XXX-gig wins the for in next technology and global remain PAMX data our expect We hyperscale cloud activity we design for XXX-gig the in and XXX-gig PAMX new platform Customer Tri-Edge years. design and centers QX short-reach optical over workhorse achieved continue

later We expect longer-reach this our to optical to XX enabling for and kilometers Tri-Edge platforms year. both modules, up release XXX-gig XXX-gig reach

data believe Tri-Edge products power, ramp provides We are also in revenue market the record lower our from XG ramp We center solutions. of base QX the emerging half of next the and over latency in trends DSP advantage nicely begin should second by cost, stations. year, and In led lower center station growth a base market from wireless secular nice over business provide saw few the expecting years. the demand of based we lower a strong this XXXX, to the year as next data increase Tri-Edge to significant for our FY

Our ClearEdge front-haul PMD and stations, XG platforms FiberEdge CDR are used base being modules. and optical in mid-haul

expect ClearEdge continues and XG these designs design activity. see portfolio and this shipments to next year. we year And move later to volume solid Our throughout in to FiberEdge

the over deployments PON revenues. quarter XXXX, infrastructure be triple QX of expect XG revenue to market have globally, opportunity year to we increase In of XX-gig achieved our and XG. grew that also XG nicely fiscal to As record continue prior

established to this our our new deployments the itself products campus Semtech of build-out in China, that for year, growth ONU we and and expecting led PON by and enterprise, platforms products number PON as of has home, the supplier outside innovative OLT are leading from XX-gig a us X-gig, benefit the PMD gigabit allow China the We PON X.X-gig globally. XX-gig to of initiatives expect and from growth well networks. the markets continue in enable to as PON to as

bandwidth should center, can the drive trends of network demand driven wireless by While our ongoing PON, our higher the believe secular markets. infrastructure platforms across lumpy, target all data infrastructure deployments we capabilities upgrade for future be and

center For group very half XG lower the QX is data down net fiscal of Signal from PON offset demand. slightly Integrity first our year to products wireless growth expect be we demand revenues as by strong following XXXX, and

revenues. in from XX% product our Moving In XX% net protection net to our on Korean customers smartphone total group XXXX y of revenues represented QX XXXX, of declined, from demand and QX sequentially of protection decreased ear COVID-XX issues. related product fiscal year to due our fiscal group,

remains demand this smartphone recover to beginning Korean as our American solid to that from North expect Chinese and ramp. customers begin qX. We smartphones Demand new smartphone through quarter

Our to in focusing continues on Protection markets. Product applications industrial, and strategy, communications diversification its automotive, execute the on Group

such designed where protection gaining HDMI performance faster protection driving for advanced with X.X, speeds Our use lithography interface are solutions higher high as and solutions. performance processes. and components are demand high-speed in USB-C, being more momentum are Ethernet The sensitive XX-gigabit systems of interfaces

we to and broad business. trends fiscal are growth XXXX, smartphone stronger these of the and and by contribute demand diversification from protection further America and led expecting continue protection the expect from of North year increase our We based industrial revenues QX to markets. Korea, nicely communications our In to

Sensing LoRa from net total of Turning enabled increased by our platforms, our revenue QX record led XX% revenues. fiscal and and Sensing sequentially Wireless to products from revenues year XX% our Wireless represented of XXXX, net in products and group, group,

have XXXX, we end-nodes to deployed number XXXX by of These associated business solid the with at X.X gateways a networks the XXX,XXX to end expecting challenges XXXX. networks increase we [sensor and exceed number fiscal of LoRa year. XXX LoRa fiscal stands this the to expect over deployed number of And In the end XXXX. LoRa XXX make end-nodes expect million the LoRa billion year million at of the of number over of of of progress end deployed the now LoRa number million countries at end network year XXXX. to of year against to approximately XXX LoRa from we The operators The global LoRa made targeted FY despite XX we with Our we beginning the enable continues the end-nodes. excellent X year FY countries fiscal to by grew end XXXX. countries. the we are XXX number of X operators by end increased and The grew XXX metrics of year to LoRa million or from And private expect gateways million over gateways cumulative the of cumulative COVID-XX. included XXX to capacity] network gateways the QX of LoRa at the fiscal million now fiscal of X public These progress, XXXX. by

$XXX approximately pipeline. Finally, the includes and million future at opportunity which opportunities both $XXX LoRa with the leads, of approximately million, leads feeding opportunity pipeline, stands

the expect fiscal $XXX to million of exceed leads to XX% the and opportunity end XXXX. continue in asset an We of an from chain logistics with well-balanced opportunity $XXX coming number This and million, pipeline used feeding supply increasing approximately Europe, cases Americas tracking, opportunities now the includes of Home, and the pipeline remains these with opportunities year additional the geographically Smart of by markets.

into and used asset Amazon our straight recently collaboration We that of to our These AWS and the These system our for In enabler Web release of accelerate revenue been be enterprises LoRa sniffing IoT LoRa. kits customer addition simplify and solutions. introduction quarter and the platform an to development that LoRa LoRa the services Edge offer LoRaWAN Wi-Fi IoT will new enables the include cloud. first met to tracking to Services, also software and sniffing progress achievements with management important QX ideal represented integrates that extremely to infrastructure record AWS’ and radio with asset connectivity. performance, services asset revenues. of interest. platform defined solid cases is true includes strong silicon many for targeted recent on of can future platform expected and is the or building Amazon our GPS kits announced Edge smart by leverage tracking, integrators is and functions, now solution the cloud network a metrics, LoRa-based leading has a Edge cloud

In Building hardware, locate cloud Tracking box using provide out outdoor The addition conditions, safe chemical detect the cloud Smart evacuation Kit track to detect and or dashboard monitor allows a path. situations other windows, while water occupancy, ensure manage to kits users Asset the the the quick and of assets allows assess a leaks, fires, capabilities. and doors and to Kit detect dashboard, environmental hazardous users

offerings spaces, these into electrical network smart future fob the Asset utilities, a Buildings an expected advantages, quick door campus a will expressways of deploy Corporation to applications, via LoRaWAN be has enable in residential new announced Expressway healthcare and half for way The built LoRa increase products such a or initial to smart time. IoT management, XG provide to its costs road its per doors, mile, exits efficiency, including Korea that and homes, anticipated million for and to monitor or also systems, rest new and to parking buildings. the variety $X additional of monitoring. simple YoSmart’s of and devices entry areas, expects Using for of expanded in network pave for other for connectivity HXC many expect guardrails YoSmart region AWS. real integrated industry smart and of outlets, operating management like KEC its smart smart wireless new LoRaWAN schools. are monitor trash into Korea. enables We leak deployment line that home of barriers, enters many enables and including home and convenient keycard LoRa staff demand. Technology be Smart and dormitories lower verticals, used the LoRaWAN as provide freezing, reduce network Use YoLink enabling connectivity expressway catalyst over LoRa monitor the number water deployments intelligent of is security future, applications and to monitor smart monitor will it integration who and KEC home In safety, year, management. a lock LoRa cases. detection in and the tunnel by to widely Tracking

expect where with and of customers a of are have for continue cases tracking, such emerging and occupancy now smart LoRa LoRa-enabled and long push-outs low significant due COVID-XX. Solutions are applications million we program another growing critical The tracing, low market. to LoRa customer range, be new Despite any XXXX, of $XX that in demand related Networks deployment. power successful flexibility, COVID-XX QX announced FY to distance record partners associated catalogue to and have management components expecting to performance we for QX, hygiene is record $XX our make benefits. in-roads ideally used health LoRa IoT LoRa and of suited LPWAN revenues cost, COVID-XX that And monitoring, the anticipation these markets opportunities as fast for in a expand. to now in to Finally, contact continue million between We performance

proximity grow of become LoRa-enabled over XX% to enable the at the to revenues for next years, continue behind our geographic believe standard We the high net design-in RF LoRa weak LoRa as should fiscal regulations high stringent a radios power are safety de become to opportunity Despite the of five from XXXX, soft our deployed. to market. QX In year weakness, as IoT target platforms CAGR more to global our this applications. expected remain and the sales LPWAN customer smartphone due facto enable become remains metrics funnel and our sensing in our momentum increasing new diversity activity

We wrap this and should second design have the in won new in of half smartphones that and wearable’s new several FY into XXXX. year wins nicely

record Wireless another LoRa-enabled stronger For QX proximity XXXX, to our led demand. net business from Group of increase Sensing fiscal Product revenues year sensing by performance our expect from we nicely and And

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

fiscal demand headwinds entering outlook on and currently quarter revenues attain XXXX. Based the of $XXX we Now, net to ongoing challenges let million, QX. needed terms associated of quarter, solid. $XXX key geopolitical To we guidance platforms be mid-point the remains million. our backlog orders Despite approximately secular bookings we believe the the QX at our range COVID-XX, for beginning or record discuss me our and of are the approximately third for XX% and our macroeconomic underlying growth high the year the net estimating of million between $XXX with

assumes again shipments more Huawei or high no silicon Our guidance once quarter. direct to this

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

Operator

you. from Thank with question. proceed Tore Please question comes Our Stifel. your Instructions] Svanberg first [Operator with

Tore Svanberg

noticed X% there the but you're little know, was going able guiding what of why zero You I bit some a you you results. dynamics the quarter, Mohan? the you of still and know, going on to sort in revenue about know last talk can Yes, just Huawei quarter and issues forward, still of forward? the that, thank ship I congratulations restriction were for you are you Huawei

Mohan Maheswaran

Yeah, ongoing know it's know, $XX they you is numbers million to on I us ongoing an said, so to That what we eliminate know, ship used there not not you Huawei want. can process what community, look we $XXX The so choose that account shipments. ship a them, as and you much – investor more Tore a of and essentially and for, situation products, them. what are now. can question you for they products take is they know, need, to if at, if we're can, what be do lower we and much, assuming ship guidance our what risk dynamic so any million an – they for And it's to no will, see they wanting it's to then we the us,

to have know, You we and can ship that process. times to frequently. restricted obviously, we through you the And go know changing are we're regulations at as quite what

So, conservative of can, we we take the then us. if assume approach no and will of will, course we shipments, for upside be and let's that be but

Tore Svanberg

you kind that'd running? follow push-outs into so networks the as push-outs on about little and this these you needs And a bit I If good. just are to of know, be talked those color getting how mean, great? on add a up happening the go is for could production, up Very of what and LoRa, push-outs. wondering, you happen, I'm to

Mohan Maheswaran

anything a there. it's fundamental I just think think don't priorities, of I more Yeah, there's question Tore.

business how know, COVID-XX, sure you a of you know, just kind down their out, are and, know, I hunkering just you with figure normally. companies operations of running to make are lot to trying think,

programs thing. bigger specifically of of that, or you change the I just program for program. more and any of value want say and think the getting it's programs, I one quite used the these is not of needs cases priority. to will there's of IoT just cities, think the execute them, the some a the on don't the of some timing to are smart the home so, which, And emerging smart know, I

of home we're so, especially the the next year. you most to, know, year programs and in anticipating ones, And early up, are this going consumer these maybe still smart ramp of half second to

Tore Svanberg

Very you, good. Mohan. Thank

Operator

Thank you.

comes Our from proceed Please with question Kumar next Piper Harsh Sandler. your with question.

Harsh Kumar

activity, States a a is you just this had United year, activity, guide. that happening? get you you LoRa, of of Hey, talked of you guys, isn't sense Or in also for push-outs rate as congratulations had to in - one I'm kind got bunch were run about trying large I you good predominantly the on that on of talked U.S. about it all, about had quarter like, two solid then begin talked players lot anticipating the then talked and it to and or question the smaller a you with, the you about you so and it the of why first push-outs, all know, expect pushed another out? is I follow-up? And saw, the

Mohan Maheswaran

would way. Yeah, affect it's obviously, larger a in a say I ones little revenue both bit the Harsh, of the bigger

customers generate change to revenue, North large deploy globe, starting have is and and been not to come fairly know, some pushed you So, and it's take little back now across you North more you I not different bit just POCs even definitely some our of activity that to that to out, pushed manufacturing the a there's think of lot just out has you the and our reason big has – starting was I back their just America to, highest specific think regions one coming for to the that shut range know, regions, manufacturing priority, going IoT real in timeline. America that know, the know, are place main the are, POCs down, but some a now operation, very these POCs are starting and some but the longer, but they yeah, one specifically some in in operations seeing

Harsh Kumar

an they away, [to know, pushed-out is call – COVID Understood. down, Is couldn't which it waiting the is uncertain get timeline, the of just idea on what like basically basically And in you mark any technical’s sort did Mohan you it set launch]? how time, for because it is? go long it to or a for is have push-out the of

Mohan Maheswaran

aware, the is Well, still activity as as far continuing. I'm

think gateway may quite we increased but, the deployments, as of metrics that, you majority we XXX,XXX see, the have may smart tied and to The you activity. know, been know, dramatically quarter over know, at a gateways. this that you look vast I you launches – from launch is of pushed-out, one gateways is home can actually to million

so that think And no the launch. of, right execute for it's real change there's to time that's indication the to on just I a more an waiting know, ambition, I would question say, the point you

Harsh Kumar

I’ll Got you. in it. now line. get back Thank

Operator

Thank you.

Our Rick your next Please Oppenheimer. Schafer question proceed comes with with question. from

Rick Schafer

I Thanks let add my couple questions. a had I congratulations. and me guess, just

The the guys Xx mentioned winning you've I brand you is content versus first share Semtech, that up growth just on opportunity, you or curious it's in how know and much the market are versus is content of I market? that gains gain XG, was XG versus know,

Mohan Maheswaran

a Yeah, the bit modules gain Rick, the it's change where XG, fundamental Whereas optical a need say is XG the would need of a modules to content from necessarily XG XG didn't both. CDR. CDR. I architectural

on have typically there's the optical modules XG function XG base on function that CDR stations would stations. and we we a the say fronthaul PMD side. more content, have more I So, also in the base

sometimes actually versus XG. XG, number So, versus you maybe know, the even double number the – triple of

take I Again, the that will have Tri-Edge portfolio in just and are our products good we products, share well. and they're emerging doing well. platform. then of capability that think I based very space content doing more think our a So, because it's FiberEdge, on ClearEdge, very we of more modules, of

we data we where are success have So, good yeah, proven XG. about pretty market in the in which all center So, already? feel

Rick Schafer

for Thanks, if Mohan. talk give segment, of know wins protection, maybe design rate and some how the – up versus those and between maybe, relative is now color that kind mobile, follow how know, the growth about industrial on industrial pipeline gage split big how what’s for the industrial of you coming? mobile does a then you big know, And on industrial, just you you could Thanks.

Mohan Maheswaran

Yeah.

So, I business, XX% protection our total of to the think it's business. about industrial XX%

common things the lots still is Rick, consumer one growing even business industrial is of in and also, good, really we've good the job pipeline business. automotive, a by and So, Ethernet pretty nice there, really and good but you infrastructure, that the of the XX-gig we've USBC, targeted ports, diversifying wins know, though done part consumer side on within got nicely X.X our IoT of is largest HDMI

side, getting know, never really business, on a in America traction. is North the you You also, in our participant And know, space. the but protection was now consumer strong wearable we're more

automotive, So, our then the consumer communications, know, that of diversified video, industrial quite to combination course, types you business is well. things in a general add of we doing industrial has nicely. which those And business, really of is all

was we the of that expect we quite challenging in to I feel of smartphones, do this now the quarter, Korea second where actually pretty think back we last well mobile QX are, drop-off and because quarter obviously about So, but come half. phones, good

Rick Schafer

Mohan. Great. Thanks

Operator

you. Thank

comes Cowen Please question & from question. Co. your with next proceed Our Ackerman Karl with

Karl Ackerman

Two gentlemen. afternoon, if may. I questions, Good

to back go a to LoRa wanted I moment. First, for

updated gateways but and right, but you're it's about I'm know, quarter, if the unit is the recently year model wondering level XXX,XXX is LoRa this if seems your in to my see right, nice that to increase it of still You guide, my date. it half if is, model

wins announced of entering your And quarter. ramp some design from outlook Home implicit Smart so second you LoRa guess, a first half seasonal for of nodes LoRa I assume the revenue is

could I up. follow of just – have the me If perhaps you a linearity LoRa, help the helpful. And bridge that be would

Mohan Maheswaran

a way then thought, we quarter out. that see network. it with was shut quarter thought larger main extremely thing for think and you we’re it played customers networks, you going very I a to QX. know, wait the and elements is very think second mentioned, the the record but QX soft important. when really especially set record the There's that's had I to quarter, critical. I Karl push-outs know you know, poor think quarter their remember deploy we so was program that's down can we and Yeah, when know, One anticipating don't record remember think is a, prior is, QX of China you and range catch whether we we and last a half just pretty whether even – the, we to about so much actually how QX just to the be a the we was are some that timing home I up that operator network where the two was these a LoRa. COVID-XX and as wanted to strong or timing. That's

that they over kind they've the to LoRa, demonstrates timing have to when is but decided the the which generate and now is start POC. and are the deploy POC network network those aspect then to decided second gateways, The deploy So of a on to sensor when really we completed revenues. that connected is gone nodes

be deployed okay, to other can things, the deployments really timing side but to expect on you usually of we customers the Now, once software going And is a know, happen on precursor, it's the dependent end-nodes the right? deployed. gateway. It's have saying, is really the gateway that and now

deployments, most milestone telling n gateway node the think the future encouraging very large which the quarter increase very this in is is I So, devices. for

Karl Ackerman

Got it. That’s helpful. Thanks.

half? a or component [indiscernible] you've the side in U.S. one deployments appears I cross in of you. home, within increase Wi-Fi guess ramping, you're actually suppliers on XG highlighted slowdown follow-up, XX-gig I carriers trends, I suggesting that and got you your For because second think when would how but level the third will side, general PON the the ask in several of business other to characterize of China, in PON my China upgrading be visibility are quarter and on Asia-based number X for have there

you in address if So, guess helpful. very Thank the service I just within kind could and puts typically it's and China be you. PON, that'll of takes providers

Mohan Maheswaran

to upwards XG they thing Yeah, the be driving about and quarter-to-quarter, I That like so still right? China, not else and both first is first. not from in XX-gig going trend be they, going remember And think world to to to bandwidth, the wants are but We to the much that's more change. is requirement are may PON change. have lumpiness everybody going the

natural XX-gig The about for other PON, a handoff kind remember a of XG. thing it's to

obviously So, a PON marks some Huawei long drawn China. the rollouts there's I I to with issue. of XG increase. as think There of the whole XG ban, of kind timing going question will XX-gig as increases be kind to is, think it's out don't in

things that see to have think have that globalization is you platforms. be we of happens, I going the seen these what of to think, aside, the one some of monitor I we just one know, it's nice and but where

know, PON North in as now you and XG which You mentioned, being is America, America, I up us. in Europe more certainly for think North being picked very deployed Europe, encouraging

know, those more geographical just but up, a So, PON you think in currently QX. see likely bit balance, I we stations little could base to that what slightly see but way QX be to and you metrics We'll is is, happens. yeah, XG know, the look there’s change still, down at

Operator

Thank you.

Our comes Riley. from with Ellis proceed next your B. with Please question. Craig question

Craig Ellis

and congratulations guide take update the at LoRa revenues. overall and strong on just taking on a to the questions thanks wanted results guys. the Mohan look different Yeah, for I

was. mid-point but tighter is new revenue the it So, your much than is range lower,

that what So, the at have maybe the tighter high-end that would the confidence to you the as back half within low-end versus the dictate that speak range of the range, year? look of range you in new and

Mohan Maheswaran

I rollouts, Craig good Yeah, it’s got depending we've you customer know, mean, right. momentum. still I think on

As have in to the that to one kind difference low-end the, infrastructure connecting and that's the of deployments, end-nodes their Smart for to see record the expect I and but capitalists deployed to devices high-end. know, the you decide kind gateway progress we up, on know, think QX, of be the ramp number the I the going of on really Smart know, Home me QX, another to to that us, of record out, and think, and and you driven good to of deployments and – you that. start customers how side, said, to side, start really is is pick the on I'd between do networks kind by I the one in when initiative the we're expecting continue Home another The they

Craig Ellis

of for more bit maybe to for then certainly a before around There's and lot smartphone it's lot little one than this release some, Got talk press later a it. you a Emeka. of And flipping a year, timing been and but normal.

So, mean down, what XQ model in be those would this up but protection release mean think businesses to proximity could does and and XQ? those be for that sensing, XQ? we that dynamics timing two XQ seasonal typically in both expect I

Mohan Maheswaran

is, answer the think I Craig. yes

issue. related. and had China somewhat smartphone we’ve the with COVID-XX sure weak didn't obviously was for have that know, unusual America same Korean manufacturers a mostly which the QX, You very is North and

second So, from from strong second expecting and are America. China, pretty half expecting North we're half not we strong Korea but

we'll But plays think I how So, see right. out. that you're

of year the is inventory seems that know, You in QX, different, especially bring but might in but me be their down, of one course, Yeah. it they things happens see. normally this Korea, way everybody, we'll to

Craig Ellis

we that. Great. it think gross a And wrong a in through like had something unless will and down quarter. been year looking Thanks I it fiscal got third ago, to little the rise I've Emeka, bit, looks for quarter be the margin then for

inaccurate of right, aware trajectory fiscal me perception. got margin upward So, would continue in or we you cross be If into it there expectation should I've we currents the would that I've Can to if an then and correct should beyond any that? quarter with gross the please reasonable a fourth expect be XXXX? what be up read be

Emeka Chukwu

relatively margin So, Greg, of been. stable has about has how been the things you our know, it pleasing gross one

quarters market and several non-GAAP gross the guided the mix, for on XX% our between now is for being margin being as a XX%. to have margins And we between key gross think basis you know, I driver XX, right.

is So, the gross a more for rest. and get when as gross margin. good get headwind we infrastructure market industrial of margins from revenue our somewhat to more end-market the consumer We from and

from months be was A you're it last probably to that for the infrastructure you So, think still ago, the know, few market expectations in on to going slightly [TA] our of right. the I this call, was point he going at through that down being a I signal had to mix much SIP yeah, business think, guided flat quarter. a was Mohan’s commentary, higher be integrity revenue

from margin. So, depending my But on that center, is I are revenues of of – course, continuing it's going lot go data continue is be a come a gross from from whole expectation of to coming the lot that grow. to the where headwind coming from, a mix expect station, the market, revenue, for but as we forward, to and XG base PON from

be next and hope, up would that would the back fourth again, I go think to would gross So, quarter, go see know, you going the year. my will I as up we'll expectation that we continue that into starting from fiscal margin

Craig Ellis

Emeka sneak we about just the fiscal versus in one we if more. I Thanks quarter? could to fourth and color per should how think Any OpEx look XX and weeks as COGS revenue on dynamic

Emeka Chukwu

that just our operating run slightly X% something XX% know, because things sort we're operational I right. down in side probably non-GAAP on know, because quarter and we for us, linked flattish, remarks, down, are on you but the to we of up, right? I Mohan’s slightly think, is think a as you of the extra see, week, prepared from not about I of think fourth to think now revenue, Yeah, of terms in and maybe expecting I have rate usually maybe of, it, is typically your about time, the terms of basis, of expense right, know, expenses I to think You XX%,

type So, like traveling know, supplies, you salaries, know, those things things. employees, you of

on the probably impact that of So, I week the would our XX% operating will expect more extra expenses.

Craig Ellis

guys. luck, Good you. Thank

Operator

Thank you.

Please Our Christopher with International. next question proceed Susquehanna Rolland comes from with your question.

David Haberle

Thanks the stations our Chris digging this of taking I side of behalf XG opportunity on we Haberle a guess David further on appreciate questions. it's the base guys. for Rolland. for you magnitude little and guys, just Hi,

So, the there CDRs they current rate you're what be any CDR or like and we XG revenue we wanted ramp, at are waiting how of great? that'd point. this and generating CDR go tax to PMD still sort hand-in-hand versus of from on ask the sort is some for Do color of

Mohan Maheswaran

of some CDRs, drivers PMD the have use integrated functions, they using some all will So, only separate PMD optical PMD typically use are all and have them a base and typically the XG but CDR, devices. don't, XG stations them combination of of modules and some they will will

sold yeah, still know, So, used. are you being stations obviously, XG and base

I deployed, XG expect increase as in station. the as And we'd our So, mix it's a frontal more mentioned, XG, revenues stations modules there's being but there, becomes than optical typically on XG predominant to nicely. base also, base

increase just see as to well. that So, we expecting we're

So said, position yeah, is that as I good.

We of question have a good products. It's timing. just

David Haberle

up of for are And progress of you how you like here? then the seems micro can on of it's good it this services guys you business and Thank there. longer-term a a the are I point, be there. thinking know, LoRa getting cloud side making kind Understood. at how road and big down opportunity side kind you, LoRa, but and set about

Mohan Maheswaran

of handful really just really one the enabler know, cloud you opportunity grown is good think, months. has getting I our our that in to is of I kind a device It's for of new of And momentum, important. that's very Yeah, platform Edge, the reasons mentioned dramatically LoRa services. which pipeline

it. excited about very we're yeah, so, And

know, You a going it's think I part be to I next think. important of starting early but still it's days, strategy year, our and very really revenues

David Haberle

you. Thank Great.

Operator

you. Thank

Our question. proceed Tristan your next with question comes W. Gerra Please Baird. from Robert with

Tristan Gerra

afternoon. good Hi,

you is base when on you station are what quarter? station base for given, earlier transition to going So, relative expect ramp just in I benefiting to will non-Huawei it that other sounds know, you driven growth some China? Huawei guidance’s like I And station of once companies by And side, primarily additionally, continued that major starting implied just about that geographic be you well, in the the confirm in know, you be see wanted finished went your base there's wondering vendors – goods, do think this of you the from in, in that? commentary would was you of away diversification, to station, pickup be terms that from then, they to base out timing heard I a

Mohan Maheswaran

Tristan. much that. from are know, over things the is all will have. very of how depends first like equipped it – we they take to and is, answer inventory you yes, the And timing The say So, how others because really benefit to difficult that well on

know, the to right. and much, So, give how business you are operators going them,

say encouraging. to one we XG outside mostly I which that revenues on are would is still China our but deployments, of China, more tricky based I and opportunities answer. that So think more is seeing are

significant. XG know, just increase is as you as space versus XG our and across about So, the talked I content

away, So, I mentioned, think, yeah, I grow. continue to to going all-in-all, you it's going XG not know as is

go bit next a on tenders deployed, You general, for in a we're think little quite expecting I volumes continue a good And get know, there's pretty to year. going that my will it that is but based and out few all of lumpiness be year years. expectation

Tristan Gerra

China you would the you is you a earlier know, to your expecting before, then then and an was we there you down perhaps thank to if LoRa have or for bit sequentially at, like is function like post, you but a is was know, replenishment? quarter, are than you inventory what know, little it a the so, after of you perhaps you question of pace bit year revenue a are this expecting LoRa normalized quarter looking coming are less trough see what XX-week LoRa quarter the it near increase little in a also just expected, the LoRa, looks adjust that and peak also, recovery useful and sounds term January that's bit to guidance revenue follow-up continue on for of little in kind this Okay, comes the LoRa

Mohan Maheswaran

see have is be really seasonality, doesn't my think expectation case, it I that's you the LoRa Tristan, much. think every to some impacted don't we the now, may quarter, for scale but grows know, yet LoRa I so

cases, know, the accelerate of kind function they, think quickly it's I sensors of new how used you the side a to of more these connectivity gateways. some of

gateways We connected we as deployed, end know, well. now devices of need but you the and have plenty being that's encouraging,

and that to been but real think and the longer. whole has system have don't the just just too that's know, you so, COVID-XX, partners us delayed going for that's last customers And so, area I issue where much of –

Tristan Gerra

Great, thank you.

Operator

Thank you.

your with from proceed Please question. Mobley comes Wells question Fargo. Our next with Gary

Gary Mobley

based Hey, the taking be of going I about your question. [counting been it guys, your ask [ex-memory]. but to looks range, to which questions like asked, year obvious so drivers commentary, thanks percent group of for you, is on wanted in growth sort have and than year] maybe peer good growth, mid-single-digit The certainly XXXX a revenue for my is better

And is of function of assuming so, that so. know well, investment strong large for And of decade the center but your guys you a component over or I big that area the has is growth. part an China data CapEx, as presumably been last

contribution of And so, the China demand as dynamics? can based on from you parse relates end overall out sort growth it to your revenue

Mohan Maheswaran

center segment mostly of is in And may mean, to data do America Gary. revenues. America. North driven. I module end-market but China, North obviously we have by Yeah, I’ll you still a still try hyperscale the mostly significant know, that's part I mean, manufacturers our it is in

but the today, China, rest but the mostly of of Our you and is Europe. station, XX% LoRa again, XX-gig picking XG I market up. China is are mostly of PON up. the America PON, of the base mostly the revenues but rest is again pipeline picking driven, would XX% our North say is China world enabled, know, is

then the mobile on we've to well start is of thing I on to kind in that very North sensing both protection the well and proximity think business, the So, know do know, of very going is encouraging well mobile we you America, the lot Korea non-Chinese. that side, done so side be, done you to really the expect transition. in to a side and and continues And

think there's fairly I balance. So, a good

to continue invest We China. in

a China, fairly business to in growth about continue good have We position, feel market the but think. we I and balanced well

America North and especially So, to as pertains Europe. it

Gary Mobley

stand distribution for the inventories regulatory channel, the ask I question does Emeka, want to And for thanks color. where a today? that a with question about Okay,

Emeka Chukwu

our and below channel, Actually, manage we way is from distribution to it our inventory the the tried target range.

Gary Mobley

All right, thank you.

Operator

you. Thank

comes with Needham. question with proceed question. Bolton next Quinn your from Please Our

Unidentified Analyst

Quinn. of quick one Most Hi answered, is on guys, been you had just for for have questions but one I guys. [Michelle] this my

funnel size from design size know, over there in in to or yet, one to you funnel] to you adoption year million and you over maybe wondering XXX win it maybe, some XXX I'm million additional the driver? you other with design of over end going the increase guys launches the know, growing million the on you to if that [LoRa and So, of year, XXX see leads just million, by know, at second XXX second half going the driven the that's know, how with the just because, entering that not increasing the these be some is half, the wondering you ramping XXX of have I'm you of by that, million LoRa

Mohan Maheswaran

pipeline, of I but Yeah, you growing opportunity this done, know, it when opportunities should you you you year is shut Michelle, think I challenging done and for from to country, think, I have that. down fast ordinarily first been thing have know, did you lot a so a then have know, one a it expect it grow don't just would and whole

terms network know, And the used and momentum that starting gateway So, pick that's really and but of back. issue is and loss have, to key there's up, loss that the there do in to to deployments. in area. think the the No higher No looking for the you cases No volume countries momentum used are the the to the cases. we now are in of ones come operator the see partly back, to area. to no the that pipeline think starting starting that are loss I losses of some We of now private fact, at in I us, come LoRa.

not are an don't things have gateways intention gateways. connecting going they companies those if know, of to You deploy to

here mode sense to and And think the especially second COVID-XX; quickly real could Europe. future in my be or quite of opportunity. half, in going kind here in really the And driver still I is We're that that's dynamic. America I so, a that change think a recovery a that

see is range associated revenue. test, but know, LoRa issues I keep the the the think, next so, to you concerned current, really in And know, I we're revenues we with signs not going suggest real think be growing about our and to that, enough you year positive you of know, will

Unidentified Analyst

That's on guys. the execution really Okay. again the Thanks, helpful. solid results and and congrats

Mohan Maheswaran

you. Thank

Operator

Thank you.

Our next your with proceed Capital RBC question comes from with Steves Markets. Mitch question. Please

Mitch Steves

questions. I've Yeah, been on Most though. for answered, thanks my have one but two Number just follow-up quick the might the is taking trajectory. got LoRa

calendar revenues to XXXX or or for growth going So, line to growth top XXXX since guys? than you've kind expected two compounded the row, you I that significant of had see mean you're higher year fiscal Where that's either a sort to similar got number be COGS? for guess, in secondly, from year numbers to year a smartphone year me. pushed-out next does guys this any XXXX from terms us much or by is And well? did revenue year And COVID-XX that as of of give in terms of in then there you it you delays can fiscal what think

Mohan Maheswaran

LoRa talk think million I did, me revenue. let I about first. Mitch, of we year Well, about revenues $XX think last

bad and you our So, midpoint you and growth range down and things know, shutting here, year know, a pieces that. we the of not given $XX like hit still the if country dynamics million, all moving

our we're XX% next here. say I keeping and that's So, would over trajectory the years CAGR good five in still shape,

So, we're not changing that.

growth is still LoRa think good. I So,

been I As impact there's it's COVID-XX us, for your a second negative some bag. sure. question part of related mean, mixed the for

from by that, other definitely Certainly a on been more working for the station, like driven PON, other smartphones, push-outs, impacted from data but you smartphone home, need more know, you has base bandwidth the definitely think whole LoRa, Korea know, more center, LoRa I You know, the consumer hand, the COVID-XX. areas. market of has things bunch

negatively COVID-XX, been really standpoint. think by So, financial from I you we've we a don't say can so know impacted

Mitch Steves

Okay, understood. you. Thank

Operator

Thank you.

next question question. with Please Scott Capital. Roth from Our your comes proceed Searle with

Scott Searle

Thanks of afternoon. two then questions. my quick couple and good taking clarifications quick for A questions. Hey,

specific you And ups. you sure thought I to the Integrities down, for fourth into Semtech was I I looking quarter, know, as clear or make wanted to related you that for to the if correctly Emeka I business? I flattish. follow the was, the wasn't we're protection sequentially to I to outlook think And indicated had quarter, that. a heard if third say that then it Signal First, confirm and want then entire couple

Mohan Maheswaran

So, are yes, in Integrity Scott we to slightly come QX. down Signal products, expecting it

bit somewhat I little XG and by think data there's a center, base station. inventory of offset over

there. commentary typically for the was then to And QX, just that so yeah, So, seasonally out pointed us down. Emeka the

likely we have will have offsetting that. so We some for a probably XX-week revenues quarter,

probably QX. in So, flattish

Scott Searle

one question? point this could China Great. And visibility, show well a to if certainly What you're then to wondering you mix and the a that on subscribers. subscriber a had You've you that leadership you're the about global then know, now is XG XXX XG you Mohan, related getting push times, though, seeing China I million outside at know, front front, within seeing outside lower right from of referenced couple time? of big are of of standpoint but looking think China as it at fiscal was XXXX, as LoRa in north now the on

Mohan Maheswaran

that's we know issue visibility necessarily and just so think, much get coming. but CapEx until pretty from a good time. clear standpoint, think a It's You and question I I is it's operator visibility The standpoint. will know, of the ready, something from a that design-in is we so they're don't not

who of and it, time. equipment are actively designing you out So, so, but, there people know just the it's you know, are a we know, building matter

Scott Searle

coverage, pipeline consumer there issue some Great. idea was to the COVID some if lower now historically, you more applications smart big home but starting pop-up of to big that complicated to a how in an otherwise, application between is pipeline are opposed been maybe out was funnel, related driven, tracking about the as requiring more you to driven industrial that looks the And if between industrial out to larger way in And applications, driven, on slippage. to much terms requires think wondering it of that network enterprise and applications opposed coverage? give parsing that pipeline, prone more more more could some but otherwise, I more deployed, smart part and well, about that have of localized timing potentially broader looked know, have to maybe broader there, as us home when as if still color I asset on front, that's of types it are as consumer/smartphone versus been business, as think geographic Thanks. how at traditional unit to with to applications lastly, which opposed we that there's the volumes, easily are seems

Mohan Maheswaran

of really should logistics, good About question. funnel Yeah. asset tracking that's easier I category kind Scott, which to a be XX%, deploy. smart is of say, the in of home would that

networks. and increase last that the logistics huge think obviously vast – this which smart that of the smart quarter LoRa other the to majority I number the is metric look for million us of is really to is home if at of gateways, kind on for a gateways deployed, XXX,XXX, compare

why how us know turn the of could you So, end encouraged in that's terms could we by and the, that for devices. revenue – are they pretty quickly into opportunity real

So, know, is the but [indiscernible]. in you proof the

how to to people of like to things you work you just sometimes know, don't even and of know time, like also time that to markets smart and to because and We expect you – know, home that, going back you but here exactly see degree revenue, to some things they till back and we we want know, it's COVID-XX going to faster consumer till wait know, to and have logistics markets smart some to the wait you happen. with school back sometimes the need going we the take predict and normalcy are be

Scott Searle

you. Great. Thank

Operator

Thank you.

from Hamed comes with BWS Financial. question proceed your next with Khorsand Please Our question.

Hamed Khorsand

Hi.

pushing Just that and if know far want to you and you started doing what from cost the pricing? help the handset or any? that there's on handsets lower is because flip out are counteract to coming makers prices as content you, what that lower are in XG guys proximity, on side, pricing does as there yet And

Mohan Maheswaran

Yeah.

the on proximity side. So,

just trend powerful the, powered radios, the cellular and not know, just for us and high I Hamed increased radios on helping XG Wi-Fi you real as radios. the that's You is also LTE is regulations phones, think very for said rightly radios, for radios other but

are protection, know, of address you seeing proximity content in to So, bringing space go we for and but you large is know an know, play to, been the of components out we ready seeing this down we issue and to across because in products manufacturers to price life keep key help and know, the and with for I while them new system been, costs we've bring more their then, innovate, opportunities you them game help breathe and our that assist the are more level. mean, how the and all we've business. overall consumer new customers, a always the that's at And we there through this we high-end smartphone into have you the when is sensing. be products, Pricing consumer.

we'll continue that. do So, to

Hamed Khorsand

much how pipeline I outside quickly and North but you've generating, China LoRa, the being of talked America actual then, on of into and that that of now? right mostly you're is sales Okay, out the about Europe, know

Mohan Maheswaran

is XX% China. XX% about China, Well, is

Europe. So, is I'd XX% say

is rest rest like of the that Asia. You and America, something XX% is know, – Asia

Hamed Khorsand

you. Thank Okay, great.

Operator

Thank you.

with Stifel. Our question. comes next Please Svanberg your proceed from Tore question with

Tore Svanberg

a Yes, follow-ups. quick two long been just I thanks. it's call, know

contribution, of Mohan second based year, then revenue grants this Tri-Edge, and year fairly customers half is few you a [grant]? all, of broad First next or said of some that a sort with is that

Mohan Maheswaran

Tore, parts the we right. [the parts], short sampling released Well, Tri-Edge now. reach just we’re just

product, know, is release group and as and bring I we but, we've this know, you small of our out quite nicely. reach to think, increase a got that customers full parts, the my we then good relatively So, it's some point-in-time, at you going longer expectation wins that's

revenues you feeling ramp next think, know, see then that year early the this yeah, is to I and year. So our start we'll

Tore Svanberg

the a perspective. like it of is, question least would Very of good. tracking to be you’re used much that this Because starting how Last sound at case you so tracking? ramp know, year, does back LoRa, to asset XX expecting from asset million

some percentages you So, if there. wondering know, rough just there's

Mohan Maheswaran

it'll think released I just the Tore because small we Edge Yeah, be LoRa platform.

getting tracking think this and next will smart so in, be designed a think it's but relatively year, revenue it small asset be for contributor. serious should So year's I home, I even

Tore Svanberg

you Great, very thank much.

Operator

this further may time. to closing Thank no like I'd management the you. turn for questions at floor over remarks There back any have. you to are

Mohan Maheswaran

once to of our employees you. all business of and the across COVID-XX impact Thank efforts thank enduring for our want again In pandemic operations. I on their committed limit closing, to talented Semtech the

and systems, with our us XXXX. our to deliver continued forward end-markets and drivers, you demand balanced appreciate fiscal investments With a operations look strategies, strong enable relationships diverse We to your multi-sourcing customer product updating expect you. quarter. performance that, sales Semtech solid in all of infrastructure, secular our and to and support in along IT next Thank offering, we year

Operator

today's and this Ladies concludes conference. gentlemen, web

for this Thank your day. now may time. participation at lines a and you You disconnect have your great

Semtech (SMTC) 26 Aug 202021 Q2 Earnings call transcript