SMTC - Earnings call transcript Q3 2021

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Operator

Greetings and welcome to Semtech Corporation's Q3 Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note, this conference is being recorded. to conference like host, to now Mr. would turn over the your I President Investor Harrison, of Sandy Vice Relations. you. Thank

may You begin.

Sandy Harrison

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

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

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

detailed financial we comparable accordance of discussion management most press release. that financial to included refer not prepared reconciliations such such non-GAAP Principles. the are considers team non-GAAP are to GAAP along in During non-GAAP the of useful in call, with the with Accounting will Accepted the measures Generally measures A measures why today's measures financial

non-GAAP the Chukwu. Financial to otherwise With Emeka financial Emeka? Chief Mohan's refer on results call and unless in Emeka's Officer, a noted. to presentations As this turn Semtech's all call references formal will that, I’ll over to reminder, measures

Emeka Chukwu

Good Sandy. Thank afternoon, you, everyone.

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

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

QX QX be expenses. operating based gross expense sequentially. our lower a sequentially, to due increased to offset margin GAAP flattish compensation product X% expect new performance We expense by higher

by several QX GAAP increase in due was it's to tax discrete X% exchange of favorable to in order and between higher tax GAAP of mix driven were those QX, our QX XX% our our higher regional expect tax that was GAAP We share-based a than In a lower and a expect a expense compensation result QX. recognized due X% QX. expense to expense X.X% losses In and we quarter price. million sequentially, The XX-week stock was expenses been million $X.X to $X.X primarily to operating primarily versus decrease benefits. QX, XX%. range income as foreign

other to line and of non-recurring amortization exclude expectation. on XX.X% intangibles, in Gross share-based which acquired Moving non-GAAP compensation, was the of impact with margin the results, charges. and acquisition-related

higher contribution LoRa see data enabled an due Wireless gross to growth our in key increase remain infrastructure revenue to being flattish expect see with our platforms. from PON gross margin to gross margins In mix market Our mix. year remains of consumer QX 'XX, In higher XG a center expect stable we margin revenue. of we to margin we driver revenue gradual drivers increases as fiscal the end

QX our January lower expect to to by QX, operating new Our increased a XX-week expenses. increase we expense product operating quarter on expense being In offset due sequentially, sequentially non-GAAP the primarily expenses, quarter. X% compensation X% higher non-GAAP to X%

impact 'XX, to the increase be the 'XX expenses tax to We QX sales QX our due repurchased stock flow approximately at XX%. $XX the rates withholding decreased For rate cash related XX% QX, now XX% to with approximately million authorization to of in or projects, million. year expect the revenue of we XXX,XXX shares of from QX, operations U.S. we non-GAAP in approximately consistent adverse of in paid stands stock In expect year $XX In taxes rate came of our to and net our range to repurchase of fiscal the XX.X% repatriation QX operating half fiscal cash QX, tax in growth. at and to our at

that business pleased deliver that that will to our upper higher days. to XXX I sequentially, to days inventory to are We absolute continue our ending very the us continue our of net days sales, solid we Net QX, end we We Mohan. days. of while our were inventory QX the the net shipments during sales. target the our timing which remains dollar of shares, well and our of and of range XX decreased we repurchase X above by terms to position strong strong look target to receivable XX% a which and in results net represented summary, nicely strong call and XX strategic XXX demand down financial expect increased inventory over increase to hand the to on opportunistically In results. growth was range seeing days, our forward to below quarter, guidance. XX to challenging now and to remains approximately XX flat to a to sequentially supply debt. fundamentals In we’re to deliver due at use sales accounts cash In pay and expect believe year QX of due and investments segment note our

Mohan Maheswaran

data gig high demand year in year by Tri-Edge ClearEdge, market outs QX our QX center deploying XX in the few and optical significant the in from from 'XX, total net fiscal XXX everyone. platform, base in end sequentially non-GAAP afternoon of have by from will XXX design end XX% of diluted and platform sound revenues. Tri-Edge first per increased PAMX plans market sequentially lower to year build the demand our $XXX.X 'XX. the revenues demand demand 'XX, X% by centers. integrity year power being DSP believe net QX industrial year on net revenues. and XX% over signal from demand represented market dozen to PAMX secular X% XX% the XXX sequentially was of over data performance Approximately global advantage should XX% existing XXX our consumer end the for strong XX% In first over offset the fiscal of XXX in approximately our gig XX% our the fiscal slowed China high of lower years. stations. cloud QX lower market enabled non-GAAP and of of XX% consumer quarter’s million. represented Good are and revenue end increased net data modules other decreased we increased product costs, infrastructure the of softened, strength net Global remains year markets in revenues. gig then of bandwidth discuss year and earnings and all XX% growth almost fiscal use of increased data and revenues. Net our continue working consumer in X% Emeka. next CDR have over product data decreased now significant and connectivity to experienced performance gig platforms, increased the attributable drive over I prior and and and year. been year revenue optical provide In have believe will prior revenue was the the net for and revenue for QX of softer center Design customers FiberEdge our higher 'XX, total from was of market of consumer XG XX% for half The activities design-ins performance Stronger 'XX for customers and driving trends that prior XXX now remains over a gig, as and fiscal customers We front-haul year links momentum and We infrastructure center attributable over optical group In the X% the year from from deployed station two and Tri-Edge very margin levels. prior We QX $X.XX. and net following and groups. and end provides 'XX, modules high 'XX, XX% QX XX.X% gig and gig, The you, increasingly center end half sequentially solutions. analog our from each modules. XX% industrial the posted end In expected, market. latency represented outlook as discuss the the to total sequentially record, prior market of X% base fiscal softened wireless products hyperscale and fiscal year by systems. year end prior gross mobile of the I platforms the Thank total represented share In

for we increased for XG globally. stations and As PMD a wireless activity seeing our base design-in platforms are CDR result, high-performance

market to customers year grow from increase to our quarter. this years. spending revenue infrastructure flat the with was fiscal of and XG expect QX continue year PON for to 'XX, prior expect 'XX We several in fiscal In

And the networks. infrastructure driven platform of to by campus of data where future of demand network upgrade and a for drive optical high-speed of the products been remains across we PON target our the the outside toward platforms us the wireless we channel home, new led infrastructure capabilities all continuing has XX PON markets, our the deployments. for and for expansion gig by data the center see we ONU PON PON gig demand of should number initiatives and associated benefit and global enable innovative is PON Despite XX markets. supplier secular to lumpiness from used to XG trend with inherent largely to China, PON our enterprise are believe While China, leading XX platforms gig the trend to latest further the markets. OLT expect increased our Semtech connectivity

group For segments video QX signal market. and recovering product increase, to by a expect revenues fiscal year driven net integrity 'XX, from we all our infrastructure

net total from QX protection and the increased year group In QX of the Moving product demand product to represents protection COVID-related our rebounded that a from from XX% year customers of our of first our prior half had issues XX% the revenue group. In from Demand net revenues. fiscal American on sequentially 'XX, impacted X% solid. fiscal year customers strongly ‘XX the from Korean our smartphone North also year. remained of in smartphone and them

strategy. continue Ethernet diversification protection systems high that need starting to expect the from sectors Many product high-performance interfaces incorporate We all as for resulting ongoing devices of gigabit X.X our industry high-speed are today's protection. benefit and to XX advanced and group HDMI to in across such Semtech’s lithography USB-C, performance

demand markets continue our ‘XX, We a by to In and the revenue are growth growth we long-term what from QX quarter. smartphone broad-based year fiscal protection expect trends communications led and business. weaker to our contribute seasonally stable protection the these is expecting typically increase, industrial to of in and of

year and to net XX% our and XX% of revenue quarterly group of represented QX XX% sensing group. our and in sensing resulting ‘XX revenue product over for sensing record a sequentially product wireless group, and increased fiscal from and year product wireless total prior in wireless net our revenues the Turning new

quarterly end-nodes we at and year. XXX record number and ‘XX. for year LoRa have the expect expect The operators include enabled we network In by LoRa of now year fiscal the countries XXX the operators to LoRa grew fiscal of The we our the end from X.X or ‘XX record The LoRa the private countries LoRa fiscal exceed QX end fiscal performance. the of the deployed at year LoRa to steady deployed progress by the we of continued the this ‘XX. of of deployed of to year we continued QX, the to end by number growth XXX stands public over against year end-nodes number with ‘XX. XXX,XXX at countries million And to network LoRa networks year had gateways year XXX million over beginning end platform fiscal number million Our LoRa by LoRa its of end we of the excellent XXX expecting of fiscal increased XX grew number are experienced ‘XX. networks and targeted X.X goals These see the metrics another of end at expect gateways to And number cumulative million number to In fiscal cumulative to nearly XXX we from of a increase million ‘XX. ‘XX. of devices. shipped of gateways

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

We with rapidly inertia the gradually pandemic ‘XX global as increase in we opportunity to the associated expect pipeline year the fiscal to subside. anticipate

includes increasing the home, and approximately opportunities supply markets. with Our Americas XX% opportunity of use geographically remains in cases coming now chain the logistics from asset Europe, of tracking and number smart the and pipeline an well-balanced

others. manage outdoor system enabled visibility safety, the and believe segment of our into in announcements use of business. pet low LoRa indoor that of demonstrates a deployed 'XX. LoRa In spaces in code. in we equipped lighting, smartphone and environments. segments include management, progress many year LoRa LoRa important sensors, addition starting is simple secure of extends system opportunity trackers, condition asset a related tracking, up And continued asset of smart the the in asset Amazon's We LoRa use The for towards LoRaWAN of facilities physical IT WAN solution LoRa that dashboard the connect network, LoRa operational of and both the QX, to irrigation, to use cloud-based cases. huge Sidewalk vision and Semtech's and on Amazon's range opens Sidewalk and IoT new minutes These QR in networks versatility and several of for in to in These This smart and with to of market. value the for smart home our using technology include record use be LoRa assets unique use business the power their capabilities power LAN Cisco's enabling metrics smart new and made remote a fiscal for LoRa well enhanced based low monitor can industrial revenue simple

includes our LoRa LoRa service. We Edge tracker design reference availability also cloud the our announced geolocation of new that

along radio LoRa our platform Our Wi-Fi and first LoRa. LoRa Edge platform is with based that integrates software sniffing GPS defined

use We are be platform significant of We design-in and revenues. flexibility, power believe deployment. low networks successful new cloud of of ramp believe that LoRa seeing future tracking power services critical components a in enabler activity, asset the asset IoT are low for and that and will any ideal long management Edge the based range main is and LoRa cases our the

facto LoRa and de years, grow as at five expect become XX% With the the and that anticipation of Amazon, record CAGR In over to that IoT revenues production the LPWAN year sensing QX emerging standard should platforms the ramp. market, recovery the wins by continue the with market. quarter, sales grew for new helped fiscal of from net our in to 'XX, prior fast with enabled QX opportunities, performance a performance, we over to by record driven next and smartphone and smartphone to well the numerous annual moved new nicely along industrial opportunity several design as proximity continue exciting to

seeing as safety also base new regulations as are emerge. become increased RF phones We XG activity stringent design global more

another by 'XX, our net from our and quarterly to LoRa record revenues another enabled record and business. product wireless QX increase we For fiscal year from led sensing group expect achieve performance

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

share our environmental, to factors and making our and While impact considering year decision that and of suppliers, company's including key in has this stakeholders, a our challenges, presented social the driving played all role processes. critical key remain governance committed its have We unique I growth in customers, of believe the success. employees investors,

I its and company's excited company sustainable a We live. employees. that resource, commitment smarter, of the should doing extremely and providing enable the to view for inclusive hold of successful. established diverse opportunities. our strategy products as for set and the focused planet and most accountable be to an workforce, will planet the and future responsible I'm things us and place company's be more that our each believe and our more the connected for are We make smarter, to vision, developing company about core a our connected have right that continue also on important products to values focus on the our more more employees

$XXX me strong fiscal outlook for for let the year 'XX. very demand to approximately our at remains QX revenues terms quarter, Based are needed XX% between net growth of estimating our or orders record net $XXX range solid. we discuss backlog the million underlying currently on of quarter $XXX the highs the million. and QX. million attain platforms the believe bookings of starting secular be Now, fourth guidance our midpoint We of To and entering beginning approximately we

have shipments guidance that issued HiSilicon. ship licenses no us to some Huawei, allow to our Huawei we While more assumes or to been

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

Operator

Instructions]. [Operator

question from Rick line Schafer first comes Oppenheimer. of Our with

Rick Schafer

mass you COVID after momentum it’s do start mean a a on next a you to continued critical mass? I obviously got slow hitting just sort think of LoRa there revenues of critical -- its you it that seems see XQ, of there linear like in next question or mentioned? on I hit Or gained Mohan, step CAGR year, mean XX% we that related. a as function starts lot I LoRa. with see line years sort a in I ramp could

Mohan Maheswaran

the always cases good it that could catalysts initiative, of there we I of now smart announcement. and a that's are one just that network, history gateways, definitely the just starting architecture Whether certain Certainly, and time function looked happens the 'XX, the Yes, think that can acceleration business for Probably five be that pickup is to business use in and very architecture developed. get which course, and to based are on Amazon takes we've why the we But Rick the get Sidewalk then more new one the step FY -- increase. years. FY network, way alone faster is XX% kind a that expect the to which I sensors, with see $XXX that expect, is, home deployed of the know we've of always with growth some would of traction, million a on CAGR at just fast if real in do because business Amazon then 'XX? drive projected and sensors the Sidewalk it reach

that's going for because year somewhat creating that. be has industrial planet, and the greener to slow lot one cases as And COVID-related like They're up. this mentioned, initiatives use of are catalysts. going been time. that's smarter about of of pick efficiency So believe about of to I then, A things the improvements. question space a just IoT but It's sure, I issues, the about

of a I think. just question it's so, And time,

smart the do home over initiatives. your answer catalysts So or expect year we here with question, two to next the some

Rick Schafer

quick you year. mean lower catch up capacity a that this just question. kind I are the I the on of that mean, playing capacity asked, business issues is have any on there, have follow-up there guys should I

seeing So, there anything? you're capacity is in any there or that constraints supply

Mohan Maheswaran

an a nothing business board. as as supply I you are chain, say, across would increase thing good seeing mentioned, challenging. Emeka segments, are that. beginning for we that anything my LoRa on in the our there in everyone. it's like supply definitely specific or just Well, think the all some I and had supply to constraints tightening industry know think, view, across means But lead is a upcycle of and times that's side the for and I generally the us that

Rick Schafer

I a past, coming sort when are today the hardware. just still about monetizing see in follow-up, I'm of think royalty that I I we and If could in start most LoRa talked but the you services? sneak revenues from opportunity there. the know expect do you that license Thanks. curious, to

Mohan Maheswaran

Yes.

cloud the We So also expect Alibaba. year we licensing growth. to remember. partners see that we announce coming be platform, but last LoRa IP in. again is where pretty revenues there’s next two a services, royalties expecting service the recurring area elements ramp slow some from ST of But It'll initially, Edge another be geolocation we're and our there. One do quarter, and start first that will this using cloud good did revenues, is using cloud our services so this

and the -- something expecting next between the to bring we're first the quickly we're an on other good million a the and basis. cases use depends the customers very real geolocation is $XXX again, of that type the and our services of five initiative And market. and annual in could this lot how we future. ramp $XX of years quality So and type about again, very over the on million But confident and feel

Operator

Our Please question. next Company. Needham Quinn with comes of state line Bolton your question from &

Quinn Bolton

could gateway, you question. us the for update Amazon including that seen sensors to With activity I the give side? Sidewalk Sidewalk, with and if Sidewalk end-node you in wondering around an more design the end-node an the Just activity up believe and that now just network on Echo compatible on Sidewalk fourth increase announcing in follow on product wanted generation have Sidewalk

Mohan Maheswaran

will be, think really that. the close it's to pretty They've But development It's soon. haven't very announcement. they talked rolled to anticipate their enable to Amazon yet companies they going yet starting made They but sensors haven't out happen Quinn. about to the and connected about platforms just that talked I what that's are they it. has do

of that to being And be so Sidewalk thing. is my see and deployed and real expectation type we'll start by year, attached sensors next networks definitely mid

Quinn Bolton

for business. then But in on And little It following in that XG Great. level record the into business looking a the -- October growth the question like you of side January the that China is guess because yet XG through from out that, by of I'm between the other that seem I we've companies phase are a bucking sorry, quarter. second sort softer build like it -- little sounds the you're to heard perhaps just other you in a going on the sounds for it front-haul surprised the that quarter first and follow-up phase customers was the a be trend. pause July.

if you're So for and about maybe could you China the XG, of wondering of just round talk timing you. what the front-haul seeing Thank and vacation out? in next tenders build

Mohan Maheswaran

year Yes, the therefore, QX. which going your that demand And to well, I pick build us Quinn. some comments and and good is in I starts would the anticipation seeing. next think up we're in say growth starts see correct, what that for there's that to largely suddenly, is QX,

into sell And thing. manufacturers, obviously, station module We into just timing their then guys. base and guys so I it's a think module their yes, sell

And so dynamic we're that pretty a FY of expecting the some yes, timing. But strong 'XX. is just

and just China, we're American on is side XG seeing -- one North fairly nice our in think well, OEMs the that Europe well. infrastructure all the is side on of other as The that's the thing PON segments now opportunities I things actually both of global as about and not

encouraging. that's So

Operator

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

Tore Svanberg

results. the on Congratulations Yes.

this Do back us Mohan? range year going the calendar update have question, to for LoRa. you First for

Mohan Maheswaran

say opportunities. pretty new market use to time going the of we $XX But globe. think we're would see We're million seeing cases. going some this range year. COVID-related and of our Amazon to be for range as kind lot exception the a to CAGR of still million. $XX with the timing higher seeing keeping cases of faster in come the we're forward. XX% impact, momentum, I Obviously And adoption of I keeping our these still across of a We’re depends we're lot general, industrial volume, kind out, Sidewalk use on in that But good

and I of normality when really how some of to return once So then once exactly it’s to going move happen. of we terms think, the timing and and to materialize proof concepts as get COVID mentioned think to again, I industrial start But IoT. start challenging revenue, to comment it it's to manufacturing in I stops,

that's think drive to going to continue I also revenue. the

Tore Svanberg

I and back helpful are dynamics XG being bit to this data that very quarter. are some about quarter center? but again that well? you you mean That's there talk as little this How of quarter, paused What or about coming last starting next grow see the obviously a because

Mohan Maheswaran

wouldn't story. I the XG as as it's say positive Yes.

channel, more in there's also. But maybe up -- think pick to there I still inventory the that and then see are the starting customers. we

to there. positive a lot Data be up going And then is of yes, so design-in center I to be signs, sure expect probably QX flattish QX for but activity for and up. timeframe, I'd say in QX

Tore Svanberg

on to going fiscal Is that XX to a expect to be start event 'XX be or going that? see business, than to further out it you the PON Lastly gig. is

Mohan Maheswaran

continues we're PON. to to projecting to be well this PON for in QX and strong expect is PON, doing we our quite quarter for do also growth year next think gig already well. Actually And XX well, do and quite good I

indications continues solid to SIP just infrastructure our another yes, going us make -- us So for ‘XX that give business. year good to FY is be

Operator

comes with Our the B. of Ellis Riley. line Craig next from question

Craig Ellis

ties together few that one ask a points. I'll

a color within trend? some the to mentioned that up. the us segments, the you'd some be takes the where meaningful different I which you any So see expect and any can And across all that you segment are there can help overall are your with you segments, expect would be broader on muted? would growing segments But and of more of robustly, the more gives Mohan are guided sub segments quarter-on-quarter, up deviation then to which inventory

Mohan Maheswaran

the first was consumer. for know, you extremely Craig, half so, Yes, as weak

half second consumer I'd very strong for seasonally being the to We're in which consumer. is this And quite seeing typically we're relatively us. for think too business. down I that expect QX, seeing for strong obviously continue

infrastructure the come side, this certainly all on think indications in I are us, and proximity that most participate and we on I Then softness side, expect sensing And, going continues tied sensing think, first that's mostly I then but back quite that, are to driven quarter the grow obviously And again, do is in as So there, segments a LoRa infrastructure that the strong very half some for mentioned, the going QX. and do to continue. and on we the that to well by then of in side great. QX. to consumer, to wireless

on obviously side, side, the there's supply the concerned a about, inventory supply the tightened areas we're On chain. that

Some have of lead markets typically times, tend consumer. end to short the

little a strong. about is we to the We're over there. anything. demand market are bit not making inventory seems in risk There how taking that we’re and cautious building sure pretty -- extremely participating more in we're some So internal inventorying be

Our light channel expectation volatile moment. is there. we well. correctly, is such from good consumer I see We a then year that coming see very next manage think at a it the if my demand should we won’t And growth as

Craig Ellis

impressive -- Cisco's a Amazon real It nice then And of help I've very mentioned you and and Cisco, impressive products Got that prepared both product LoRa, very announcement. in ecosystem. turning your it. to remarks, was array looked actually at create

would really drive an you classic ‘XX, would to Amazon? the what that see be analog like with at have volume anything design-ins business of Cisco where just those of does industrial sales for look is we type LoRa? versus volume more As kind potential fiscal high much Or incremental

Mohan Maheswaran

XX, based remember the is that's it's they to latter revenue It's then there the LoRa they right? on important a their once going of to And I additional From have for build next But new that adopted also and Craig. use ton for especially Yes. industrial the think standpoint, at services, forever, sensors, potential drive in more years. infrastructure LoRa, the sector thing opportunity, there cloud a drive potential both least XX but -- cases. be

the not So whole is the what technology and of customers. We involved it brings driving to LPWAN and the to helping have about that's away standpoint and we to excitement the X customers these enter us that there market the getting that new the Cisco industry thing creating only Amazon and ecosystem, like tier these from LoRa says a LPWAN. in me behind value and take with but the

have So driving tier for us. to but really companies cases, use pretty exciting yes, it's new also it both X

Craig Ellis

them if same just at one. I out clarifications, that I'll And the time two could on throw

guidance rising about XXX you Can points increase? in sense For basis us for I four was extra I fiscal gross mentioned what's 'XX. quarter the could quarter we magnitude a for up thought so XX-week week? secondly, quarter? over revenue gross period? give so, and margins a talk you see if the the You that And in margin of included or heard expense that a And fourth example,

Emeka Chukwu

take So margin. let to one regard me first gross this with

you our I where think prepared year, fiscal going think said our nicely. my come about remarks, next into the in from business to growth we’re expecting continue expecting when we're like to I revenue grow to LoRa very

business. I within opportunities additional an PON data of XG our and think also protection and automotive area business, industrial center and growth, Our remains the Wireless

businesses point Probably would of to I that these year. the basis XX us no, because something the margin now? higher Is all really the are in So I expect with. gross exciting that it XXX quantify to basis right throughout come but can something expansion point see that they very of really range for

it's revenue much extra regard of side with So hard XXth really how contributing estimate revenue. the week to that’s very With to the -- is to on good. to QX XX-weeks, always the

contribution I think, course, for is much that, the easier expense side. So of But it. on it's operating there a

our about like side, like things and of expense I to supplies is tied operating operating XX% sort operating stuff of your total your the So right? that. salaries, On think time, expenses

expenses of XX that So you good operating pretty a you it weeks, is. of will then give realize -- if over you and if think estimate what expense you XX% operating take about the impact

Operator

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

Mitch Steves

survived Can XXXX sorry, and Semtech view a the on or business on what one, a of had XXXX bigger as business just of given LoRa kind the of an of in spinning guess you for us quick one you've now. before XXXX? I is potentially picture -- business you whole. What one, up provide maybe that potentially relative of the plan LoRa the for that I'm Semtech strategy its -- to whole piece effort? downturn that a to entity being about Semtech have the know update selling talked now kind bigger I own really just kind the or of kind I is the guys relative

Mohan Maheswaran

ideas we has Yes, different around generating start always move about thought level. services Mitch, recurring facto de could some are the been LoRa million of that at that cloud becomes the we to if to how look to a business the revenues. standard in $XXX Then industry,

announcement and away And Amazon X day I LoRa good probably but so, that's we're Sidewalk years And that. still and would there the we announcements Edge momentum we're from a yet. get say get closer, not thought. Obviously every X, new like

would I X still the say to X timeframe. think years is I

Mitch Steves

Yes. kind doing? us, right kind say, of a you revenue. sales of relative the sort straight you What's the service revenue of And just kind guys then, provide cloud are now, can to of recurring

Mohan Maheswaran

-- That’s brand new. it's

that services, announced one. cloud just we the So It's geolocation first service.

place very to -- get it's and like now just that. starting in So things contracts we're

the give I So, I would that customers And on new we're and the X and on dependent end good we'll year, feeling what's as the bringing? value. to Edge to $XXX for, our mentioned, X as deploy It that start platform a measure that be of is be platform years. some do all next in million I the get on would think, to us feedback good LoRa value and what's platform, then, for say pick-up next year track the

Mitch Steves

guess one, Yes. just those I just if one could, to last clarify I comments.

customer, that, it looking should new guys of first major the business anything like line? rollout product expect, be 'XX would how that about you in or think would call we but kind and major what for or 'XX? of launch Not So logos the

Mohan Maheswaran

Well, the really is first way is the in to think and about -- it geolocation. target management asset asset is, the the tracking

that it's think And those asset testing application, areas in beauty and obviously are use there's start platform more that's would and LoRa and Wi-Fi Edge they once specific but LoRa Edge and of about we'll sniffing. our outdoors, tied I the to and GPS the the and feel sniffing about has value, talk so, to customers LoRa indoors management tracking in asset

or or track you doors warehouse, have the can battery a consumption within an optimizing home, your and manufacturing asset from outdoors a and facility in buildings, the one effectively. being, deep into utilizing areas concept in rural So platform the for example into power which is

nice the get we and we it very right? think out a capability a unique -- very concept. it's But very demonstrate have it's So, have. value, to there I a It's

Operator

next with Scott question proceed line comes Searle from ROTH Our with of Capital. your question. Please

Scott Searle

Just couple quick you of about a outlook what sequential clarifications. the protection. missed said I for

Huawei, incremental up, in And if was wondering I indicating the any Just Huawei guidance flat? know of down, from your in couple I And then the quarter. follow-ups. fourth doesn't you were what was quarter? contribution that reflect had HiSilicon a

Mohan Maheswaran

all expecting quite we're QX, up QX, be telecommunications, consumer continue be well driven the broader -- for protection, up. up doing are in but automotive us. industrial So our was in to by industrial more to we expect also and sectors it mostly It space, in

QX. in grow to that expecting we're So,

quarter So we're at not then Huawei -- and for on all. much Huawei, this expecting

we're and in much ship to much not expecting QX. shipped haven't We

as that revenues not from once some this I us we fairly So, the come clear whether any remarks And it's mentioned pretty have to obviously -- up from already quarter has licenses Huawei modest but built it's prepared in Huawei minimal that. revenues inventory.

of they taken it our need essentially And so we've out so material, whether guidance.

Scott Searle

in wireless you're I sensors parse was there, that, that versus smartphone the of LoRa like on of little more, up higher about a Part sensing, get at be plus was on that sounds the year? from think, sequentially, segment, million proximity a lower I million wondering kind given this absolutely and the up Because, and would basis, so that? Great, LoRa. XX% the for could XX% quarter. a bigger to if benefiting perfect. you bit calibrated range have performance above just broadly was thought of global or to proximity combination that. the it higher end market you'd of a general And on Was huge I there $XX something of even in end $XX of

Mohan Maheswaran

driven has by extremely well, doing both The it's the would for smartphone been -- they're us business. mostly say. Yes, proximity I sensing

And stronger expecting so has it proximity QX. And sensing done quite obviously we're QX. in in well

As half this consumer tends I in mentioned, QX. is be is the in sense weak. year But that weak unique to very first

mentioned, million revenue, it's to just plenty we bit So QX it's we in to pipeline. the consistent. here pipeline. moving So of $XXX that how I consistent with a of kind the it's as we're maybe over timeframe. of LoRa With effect about growth. more But see mean, right? are continuous I have starting fast mean, of POCs have little out more LoRa playing I

in Sidewalk already, how And pipe So a it's of way can move in really revenue. through quickly because, announced starts utilities a proven that's clearly only I a think the it’s for it's where somewhat of more is clearly speculating, some to the But LoRa of some industrial, those proven question something technology the but itself drive use to like management help hoping which faster. the Amazon and of been have smartphone use broader it is the use industrial cases typically cases of consumer real we and asset kind now and revenue in where evidence cases. we have great

have volatile can well. can life as shorter can they as faster. up well. be much ramp mean, But Now, I typically, they they cycles

till see as so really And don't next said, it year, I growth think there. mid I coming. to the it's we'll stop But

Scott Searle

out Could the could the Echo station rest ecosystem of Mohan effect have with little was that heard base the in about to starting the a there around to ecosystem tags. as to anchor, if the thoughts lately, activity got -- was lot tags? you wondering design out further relates I and How you're the on well you the on is talk bit the building up lower What's about talk latest If form? you but now? about around opportunities. that's that Dot. and I know follow update Now on cloud as on Haven't a can horizon, starting I it the recurring right, front Sidewalk. you that right

Mohan Maheswaran

area start to who the There's the out security that drive is But think a really to the directly the and want partner for connect of a something for in to area, safety I clearly network. area and obviously play momentum don’t deploy still -- that's excited we and networks, Sidewalk price I'm clearly out, really there effective you to Amazon. software see figure want connect them home, ecosystem, them in process. system have with tags. just their bunch think I clearly need sensors. an going integrators into opportunity think early, you the networking for to to I gateway for And when But of most and we'll to nicely. but area implementing. to companies a think Sidewalk whole to the home-based to opportunities. next as home, in at I rolled the participating place be an by to probably points and or There's think around like quite network half in whole continue customers driven to lighting down. and starts still the the comes do is start And -- tracking become But vehicle. the get driven in look Sidewalk start when pretty irrigation, and the by facilitating manufacturers sensor that’s and connect with smart that to by opportunity ecosystem, regard it's second who Yes, lot With a network help and They I get year. to we'll how to we're think opportunity just we that helping of ecosystem I consumers the Amazon it's

Scott Searle

on And line. if product PAMX integrity just lastly, could signal in I

starting revenues. the third initial start and you're XXX see to some think in some fourth quarter thought gig I see contribution, I to

to then if fiscal fronts. revenue in start the front. you XXX could on wonder And first activity, gig to into and wondering on So was of there us was XXX those if thought that which forward Thanks. update I would translate could the us I you two half looking update just 'XX. gig, design

Mohan Maheswaran

but see revenues small, PAMX revenues starting good seeing momentum. to got Yes, we've It's now, very we we’re Tri-Edge now. and revenues are some

are opportunities design-in X,XXX over have we mentioned, stage that some some I early evaluation, stages, in of As play qualification stages. type various at

should And for a ramping. year very next Tri-Edge, that's so I going year And to start think. be good

Operator

comes next Susquehanna. of the with Rolland Our Christopher question from line

Christopher Rolland

of have think been the good I asked. ones most

one give XG I'll guess you Perhaps grow. So opportunity. just said would first on the can us two. ask you here, the I -- it

break expecting growth I And think kind to should years. could if are out of you're then can expect in XXG. perhaps that. perhaps rates you most the this of you sounds moving people idea it give But of the us couple units we for an next or like business ASPs,

explore opportunity more? that So a I want to little Thanks.

Mohan Maheswaran

Yes.

modules of that PMD some the XG a XG, as just with us So a the optical device. well sort. as be there typically for main thing to XG, CDR in is was remember PMD device with a With there'll

PMD is XX gig gig go us FiberEdge for links. either If they Tri-Edge XX device FiberEdge gig XX to links, XG opportunity the for links. So and for ClearEdge CDR PAMX in device and

for more So more in -- there's XG, things. And with pumped increase addition, there's ASPs be going obviously typically, to us.

kind it think of goes XX from to I X front-hauling.

ports number increase significant in the there's we’ll for. So going of be that

more OEMs some for the of somewhat So be I are trying is ports. XG think driver. I stance for different a us see around And for still But predominant really volume we that sure, the think more it's will thing I that's in increased the and think aggressive starting everybody, in then other content, historically, take been China China. world But to the need this XG. also market at we on have share XX% about in and us, hold that to their driving think. which I for regions market. that of opportunity We the the for at some that's successful support XG we But And local have least share suppliers will of and drive infrastructure. geographical can be participate think are for XG, dependent to least

the over And so should couple kind that's years of the of thinking. sure, herein? double-digits, grow And it next for

Christopher Rolland

more market wanted your there if just if specifically, or with more talk the opportunity And at slowdown. a Intel also, end not? opportunity you I Excellent. the about just about could optical broadly least agreed that then there. you you And perhaps with -- demand talk about center Tri-Edge. talked could center data data then to see if

What perhaps You can you that get is on analog? you for analog. cost And discount mentioned side? that sales versus that how are tracking discuss

Mohan Maheswaran

a forgotten. Well, center strong had very half, Yes. shouldn't be first data

half. a had record we So first

nicely, So some we'll half expectation slow grow year-on-year and continue the bit still and and a -- second Still there annual on little up happened. was that's was year. to so going that I an think, next what's to really basis

QX broad XG, softness a So is then mean, little expect bit I flattish of be think next the seen, pick up and and hyperscale to probably year. Much we've global QX to customers. of versus again I start data set a QX like obviously, center in

pretty of range a it's broad So customers.

their building today bandwidth for I center We double we've And essentially, started. quarters, And CDRs optical very uses optical good different that it see are ramps the we our start incremental the data that. a get and into the It's little for few traction, module, and as But we'll with customers, replace obviously module XXX-gig and cost similar of think over module to next essentially you shipping mentioned got there. the expect next take Tri-Edge uses to the CDRs modules in XXX-gig ClearEdge very our here. over can the quarters and selling PAMX I and into production few gig, already they're see most manufacturers, XXX modules module.

market and see, we value recognize. the the then expect that's that's we so And to what

Operator

Svanberg Our line comes of question Stifel. next from with the Tore

Tore Svanberg

think royalty Sidewalk on you services next alone that that $XXX Just Is said or revenue as X be revenue? Or the follow-up. a the million opportunity could is number chip over in even years. well? there I quick Mohan, some that

Mohan Maheswaran

say it Tore. Yes. I would includes everything,

royalties. So and mostly chip

Operator

line with Our comes Harsh from Sandler. of the Kumar next question Piper

Harsh Kumar

all, First congratulations, solid of results. solid guide,

it. for you should trade you the presidency. you -- -- out about would gates China had for some pretty how talked Right Semtech the about up us lay talk the just think XG, the in Can were X open of again? in could but opportunities questions, framework view China you ban, new So on perhaps a optimistic appreciate I then Mohan. with before And opportunities very we I the

Mohan Maheswaran

think in China China Well, years. obviously the XX been we've last we for bullish always I on invested because

forward. hard it's [comments] walk much going so And a to from much some has region that driven away and to growth have so continues

Huawei challenge impacted that's we're of So look kind and counting a kind think at positive -- think, and on And our improvements, significantly. disaggregation But the to is unique been situation, but said, would through U.S. now, I Huawei ban be the a that. to China? it. because all the positive that's are our the where of waiting success sure, unknown for still sure, between But on and not any relationship China. I for momentum business for situation us and and has see. of that just all relationships we bigger The now across going I segments. and But because is that all have that's opportunity grow to in we're going our further of is of done we've businesses to to this continue we obviously, in an there is see Or just,

infrastructure I a markets can't are the sense need need necessarily As support there to of these little regions players. manufacturers and the and depend to have and Chinese of things. them are like globalized more them mentioned, a own becoming lot their other type they be those bit on XG the when recognize in PON they And that to starting

I level, definitely little then at improve on term. longer sure the think should things bit our relationship a help business front both, but if it's a So government that

Harsh Kumar

the think Do see again center? Amazon follow-up you, question their baseband in I the own -- on -- will were side. gateways Sidewalk then relying or and Amazon a and consumer Echo to only opportunities, data of the consumer something one, up on China. the to the deploy for the perhaps still that out secondly, see next so then case? ask be LoRa, infrastructure buy Mohan, will a or you have comes for opportunities business you believe, city? that supplier for which my I'll you China sort else? to well. Is And that will with sort that of gateway, that Dot Do of the Semtech as typical ICs you the the Or have you used data in be guys you And opening in in laid regards for I center on infrastructure

Mohan Maheswaran

data go me that let we'll center. So the answer first, to then and

there So will will connectivity Echo. for be sure, Amazon which be Sidewalk, a yes, gateway, through an

roaming decision. obviously, so be Amazon, each how will Echo. and Echoes and is by -- driven how will different done, supply the to be connect Amazon going And the the to other that's and So the That's Amazon. all then Echoes with connectivity an

of type on guys center, we'll And And so data thing the targeted out. things, So getting then help that. them of potential home and that data then and thinking all smart and -- center hyperscale with them. yes, see that customers, the the kind initial things for opportunities different are partners, main home Chinese side, And right? we'll the our periphery of broader the is is is are vision, home, home how and data and Echoes of But within like the center connecting tracking the of think, the with those Tri-Edge, pets then obviously really your the working a for for outside together we sure. is plays sure, I

work relationships moment. don't expect growth have to there there. to see that will We any we some at think very and see with close be. continue issues the yes, But I don't them. good real We

Operator

comes from with of next Baird. Our the question line Tristan Gerra

Tristan Gerra

to Amazon that was mentioned year XX a You've opportunity. XX

not for elsewhere investments, they specific end give there's this leverage large potential to to different to, outside And the into network? those you platforms opportunity solution generally, you the So them is invest other once investment. pushing also any versus what's an large example, the incentive and in LoRa, And same like Amazon, that Is eventually IoT clearly, consumer, Could in but Amazon? customer to that have customers what's customer magnitude technology markets? industrial. cellular-based see is that sense us there given use of for long-term a in a of those incentive of

Mohan Maheswaran

Tristan, the LoRa not and -- Yes. value is Cisco of we brings. the think starting companies is actually that all I are the technologies. with, value increased and with deal other It's combined when earlier mentioned Amazon companies LoRa to we understand other

thought into outdoors, smart into or way you when really the the little low automation GPS, these So of starts a -- because the in the But or -- start home its range. deployed, why automation the start that. it you the it initiative that connectivity, sure, cases Sidewalk as has into own the garage when and and really sniffing driven really I Wi-Fi the not right? but the the your and then Bluetooth GPS home there's Wi-Fi home bandwidth then So the to and that LoRa LoRa power use is board of this change home into can across I biggest the thing. one use it's Edge, or mentioned, very and is and for to we the combine you get is LoRa segments. when smart platform the through on is high limitations some initiative, is, about see industrial the that or so change with that the bit. to going is And basement reasons of value where be think developed value look the dynamic you peripheries That attic to I go think around at put the into largest in smart -- yard sense has a cases or all going as to And

baby as a said, it, technology think have pushing are see steps, I -- I So that behind We'll big some hitters but we there's the huge opportunity. right? it's

Tristan Gerra

then quick a And just Great. follow-up.

Or Just still are Are if nothing in the is with across earlier linear tightness mentioned end supply shipping for demand? you exactly the bit LoRa. any lean with trying there year? to little if and a the in inventories and you about catching was disruptions board just in following mentioned in up demand really the line you've in LoRa? earlier catch up specific what it's revenue So or supply chain see you to channel

Mohan Maheswaran

if demand. I LoRa, we're shipping Yes. is specifically question to would think the say I about

think it's in I good shape.

that the to we I can. FY to think and up we'll in be there 'XX, real is there picks hopefully demand I the supply think question then if able consumer rapidly,

So extremely is we're strong. in fairly demand good shape. Bookings With regard to strong. been the rest the of have extremely business,

consumer that. sure cautious, on we a trying and bit lean we're regard to our little maintain So like much balance inventory with things the particularly there to and side how making understand keeping by built is channel being some

QX. to QX. see So to expecting We're you, with it exactly, We're we'll be a hard know, but it's honest out. expecting play a very Tristan, strong strong

strong. be question Then the does think I like right? what looks look of it's half see then. to second But year half going is, we'll by next the first like,

Operator

from Ackerman with of Cowen. line Our Karl next question the comes

Karl Ackerman

applications. the with gig demise XX-gig optimal proponents is fiscal would Asia. will because at reach about grow the the another trajectory products Yes. How healthy time, XXX-gig of half do short of for XXXX argue would the begin business asked same at rate? entering of it healthy XXXX of you remains and On Demand of your your mid-teens XXX-gig integrity context in Yet XX signal the come. that think seem longer-term year in in for the fiscal on least will I NRC second business PON XXXX. XX% growth

love hear would to on thoughts your that. just So

Mohan Maheswaran

demise. XXX-gig to and there Well, and some we connectivity for be modules don't PAMX and to flatten pick start think think may in to PAMX up for I start continue XXX will But will time. that. will and out gig modules It participate a XXX-gig hoping we're sure.

with and as and said. we see I good course, Tri-Edge, design momentum, Of

and your that year. things. those infrastructure of we So home to and from Part are for the to more of need the question, dynamics answer driven quite have working investments infrastructure COVID-related the going segments think that do all well next all bandwidth is all and

has next extremely expecting group, across example, an yes, So year well. we're been signal for for video, product integrity board. pretty as good growth This year the year weak

anticipate that that see expecting segment. to we're also in the 'XX pick We growth FY contribute up year So to also. that next to

Karl Ackerman

you and We've seeing I because center haul? Understood. for double-click I Again, products. mix if just trends inventory commentary. particularly about heard about on XXX-gig that primary you optical of thoughts spoke I’d Last may. strength for for peer order kind but by your and appreciate asked data customers? question, to the situation XX-gig Asia-based how data long the are commentary, on What feel some channel your center components,

Mohan Maheswaran

-- stronger is Bookings the channel are in we It's Indications it's QX comfortable pretty very we PON certainly we mentioned mentioned. little I strong, are segments flattish. QX not that be to the to continue probably be do us, light range is to feel a is to with. and infrastructure For I was bit a for data QX. expect as -- then light. going stronger, XG Demand QX. nicely it's little strong. bit in center, in going be expect And -- to

So yes, point, think, to continues demand light, and at strong. this and I be relatively, is channel bookings are strong,

So good we think a we're shape. in pretty

Operator

Ellis final Riley. the question Craig from B. with And our of comes line

Craig Ellis

said they that the about provide. what LoRa all the appreciate give really funnel. I the transparency you with Mohan, you opportunity But metrics and I missed

So are dynamic funnel COVID world down funnel two, a a change we that’s seen kind year-to-date, now, where be and we've you did check, whole that three, funnel walk items check number? has prior with last the resiliency it But the from And should of currently a you does other where the the versus maintain that that to stands it as what and period quality just at get are expectations? what how its and and how as as go through we company side recovery? that us when can in crisis, one, can repeat looking through global the you quarter? manage turned upside And

Mohan Maheswaran

Yes.

pipeline, currently, $XXX the about that leads million. $XXX look about pipeline drive it's is at We the So the million.

for revenue we sure So our That's the of us conversion that make key well pipeline of of opportunities pipeline balanced. those It's is is there's do main focus a area -- to compared and revenue. occur. kind to and the is enable pretty focus fairly sizable key current been to what how

and because about and the and revenue has is China -- is today. a about is then Europe Americas, The Europe As better XX% in Americas. you know, China about XX% XX% funnel is revenue and which a balance pipeline the good in funnel, XX% that's

funnel to balance -- -- it, we time, would be Also the cases to revenue balance. a lots use to thing different So that more of if turns as use of in lots have if that balanced. execute nice just to wanted we then more And get over cases. we expected

funnel. now that home So asset component smart city smart management, hefty and there's that's a also Utilities, obviously, building. in

of on many have and this has been where think And countries a initiatives. the challenging. a pandemic been and earlier, starting to our balanced out much as initially Yes, prioritize obviously, new customers been customers a handle we've significantly of was start difficulty going most jobs and of be technology year year, -- and but the a customers announced people and just on handle people But get turnaround. we're -- now to our get to a company fairly those it's on there. tough So mentioned thing Sidewalk had, way new to has forward. type the is well going as for And And are been of Amazon priority a that's new have I to sure focused and market and that's initiative, making get things. safe type of the initiative start new a Putting with see think is there. out I I pushed to really more this

year So increase rapidly. will the expectation is next opportunities

Operator

the of management end floor the with like reached for our that, to we’ve back to question-and-answer would I session. turn any And remarks. over closing

Mohan Maheswaran

Semtech strategy, that, support you. along global more our all of us multi-sourcing, diverse investments and solid closing, I that for and customer to we the to encouraged strategies talented you. were balanced and our should once thank deliver entailing growth. to With quarter. continue of want strong ongoing business again with enable for our systems and efforts. and believe look we sales acknowledge of IT, relationships remain operations committed Thank Thank updating continue to COVID offering, infrastructure all limit our on and In Semtech locations. forward We in their And our employees end impact quarter combined, pleased our your operations. market continued to the another them appreciate across to deliver next approach

Operator

teleconference. concludes This today's

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

Semtech (SMTC) 2 Dec 202021 Q3 Earnings call transcript