SMTC - Earnings call transcript Q1 2022

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Operator

Greetings. Welcome to the Semtech Corporation Q1 Fiscal Year 2022 Earnings 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. the Investor to Relations. turn Harrison, host, now of VP will conference your over Sandy I Thank you.

begin. may You

Sandy Harrison

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

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

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

reconciliations the Emeka? Chief non-GAAP included Financial to measures Emeka such the call, reminder, financial discussion call prepared detailed Officer, Semtech's financial GAAP I’ll of and press in to today's As remarks, the references management to why also Chukwu, measures of non-GAAP refer along results Mohan's measures release. comparable over during such in all a unless financial made otherwise with are A the will measures non-GAAP With useful most that, Emeka's noted. considers to team turn

Emeka Chukwu

Sandy. you, everyone. Good Thank afternoon,

reconciliation press reviewing will otherwise unless And financial I in release. today's As available results. is Sandy be our table non-GAAP stated, noted, their

our We of the XX% midpoint growth XX% approximately China. by represented of driving sales. same XX%, shipments QX, of and the record. shipments XX% continued the over another For X%. distribution into grew our strength and estimate QX a sequentially to ago that North million, year represented sales approximately Europe period above secular represented our sales the $XXX.X guidance, of year XXXX, POS in and platforms. X% to our sales teams In net fiscal represented America approximately XX% represented represented consumed Asia and net quarterly Total direct XX% and is led

Q-over-Q distribution And record POS coming the increased high-end business end of bookings quarterly coming once total and end increased basis. resulted XX% non-GAAP in the high above industrial of a a to QX shipments XX%, the Our during basis the consumer represented and QX points margin market, balanced, mix. year-over-year one. with a due guidance range favorable more remains for a our again, end Turns infrastructure market. at to the and accounted XX% from of market, new XX% product XX% from both XX end sequentially quarter. book-to-bill which was well bookings on from the approximately gross

and platforms increased costs to of we believe the slower or that development we have impact QX US expenses. year negative higher higher $XX.X fiscal through margins. to higher sales growth reductions through the growth come the product chain from expect X% challenging by price mitigate continue XXXX, can operating expect to pricing supply new net and driven with tend customer trend margin non-GAAP We associated QX gross our For increases. million, expense weaker continue global dollar as to the that our to we to higher

and modest profit we sequential to significantly basis see the our dollar, year due expansion XXXX, on above fiscal than grow our in year-over-year to were levels. basis we current due a non-GAAP For slightly growth expect to the operating operating revenue of weaker to expense our QX, faster operating rest US be gross In expenses. and margin pleased

to Tri-Edge by our protection driven LoRa our revenue operating expect from platforms. enabled, industrial growth continued we We our year, as and the leverage through go see

As XX% for a rates full in in reminder, started we the reduces can year fiscal that year. using non-GAAP that variability believe of throughout beginning rate fiscal the we a tax the non-GAAP normalized year tax occur XXXX,

We annually XX% this to flow fiscal of XX% rate QX, sales. operations tax net increased year. from million our of beginning at will or In update the sequentially each cash $XX

cash to remaining stock cash outstanding QX, we to for of our of XX% was of compared our XXX,XXX of Board by million free sequentially our in net XX% million, resulting approximately increased the free outstanding $XX that to expanded quarter. our repurchased in $XXX XX% XX% sales. flow sales, flow In Our long-term target during shares authorization

and use cash continue net sequentially, make our X% of our increased inventory sales the our dollar XXX decreased absolute our at QX, day QX our above of increased opportunistically from down and investments In receivable expect to below target days in days. QX, remains strategic terms XX Accounts to shares, and days and range to of QX from debt. to XX just report to days. remains XX XX to a We in XXX while of X% of days days to XXX days end target inventory range increased a pay

support XXXX to fiscal financial to start. strong off inventory environment. chain year our and above the We is expect target supply a demand to address to our stronger net tighter summary, In remain range

Our growth showing platforms strength. are

by Our a are platforms. operating to gross expanding And optimized margin. expenses leading margins are rapidly expanding, operating our those driven

growth beyond. nature focus generation I us year a now will in cash things we and XXXX of call believe growth to remains we to fiscal and strong over engines the nicely the that execution hand and flow financial Our position performance record long-term and can control those continue Mohan. of for our strong, on the secular

Mohan Maheswaran

represented Net share net QX, devices, XX% high-end drove year consumer year sequentially revenues. prior from revenue three by of year XXXX, prior prior infrastructure Signal now X% over represented market Demand and In grew our the of sequentially of gigabit and represented increased the expecting from gigabit group margin fiscal driven In revenue total modules of XXX $XXX.X growth. wins afternoon, strong million. QX the discuss market optical I year, attributable and market to the XXX strongly consumer revenue you, QX, performance of we our fiscal grew market each for from rest provide approximately sequentially prior per gross total and by the growth XXX-gig Approximately XXXX. to Momentum as X% increase. revenue data per XX% of XX% our the PAMX and per in XX% to design net represented everyone. QX of attributable our continued center then year Good groups. market and data net will optical to all from and X% demand second and Group CDRs QX, Product by systems. base as systems revenue diluted XX% fiscal over performance revenues. year for Integrity per our station over Thank second, XX% over other discuss Tri-Edge product total increased was non-GAAP increased across end XX% sequentially We the XX% Emeka. demand posted increased businesses. I and QX year year and of markets net and the across for XXX-gig, total over the Net XXX product X% XXX-gig our sequentially outlook XXXX non-GAAP PON gigabit bookings earnings was per are is X% Data increasing, center QX $X.XX. the of increased XX% quarters. and industrial gigabit few consumer increased mobile QX, the revenues. the the of and and will of In revenues. our wireless modules. next revenue center, end second Higher XX% of production to for and X% in transition of optical second In the XXX and

early experienced Tri-Edge at as center bookings year. begin expected ramp QX, in this that fiscal to half Our the are data second global record customers deployments of products customers in

modules grow in next years, optical to over XXXX and Tri-Edge production. from nicely more revenue as our to FY expect few move programs We the

also DSP-based performance CDR increased taking are FiberEdge. Tri-Edge higher platforms and doing as well, and complement and the ClearEdge PMD where of by advantage provided are our FiberEdge integration customers platforms modules, Our they

confident XX-gig the provides providers are most PON that our global platforms. solutions access our for continue progress gig with are XXXX, demand the both future that of latency at pleased PON European per led we to lower OLT sampling FY the PON business for increasingly and the announced achieved lower we business believe modules lower and comprehensive optical XXXX. data front-haul grow revenue integration, PON to In demand record PON segments. Tri-Edge believe XX-gig record growth well wireless as In and bandwidth, business bookings, benefit in In Chinese, bodes We We for connectivity and QX, second FY base another performance XG our another portfolio FiberEdge's FY nicely that ONU PON higher in to enable our power, XX-gig QX increasing by phone, XXXX, record. stations revenue. the center in available cost to In together expect from market are achieve and higher revenue X.X American the Semtech should PAMX revenue began leading quarter QX of of with module solutions well-positioned provider market. from by is our hyperscale and targeted North market and our grow XXXX. PAMX recently XG wireless provides, and service a and optical in from from for we had increased record FY the XX-gigabit QX, PON driven for we the Tri-Edge increased, our

bookings continue Signal XXXX Product as We to of to years. several demand bandwidth high infrastructure a reached new our for record accelerate the half Group year to fiscal second expect ramp increase. In continue and for in QX, global deployments XG for wireless Integrity

We our and business on expect Signal Signal Integrity achieve Integrity Product center we markets. sustainable these higher our demand businesses, PON video record year revenue a new our quarterly In and the along for drive and growth business, to emerging LIDAR data fiscal expect XXXX, our long-term QX increase revenues Group. to from with

annually market, In as experienced and represented not build ability bookings to revenues. and on increase, of Protection momentum. In and impacting smartphone market our continued our expect related net the some bookings the to industrial to decreased broad-based from XX% for including from more efforts and customers In and Group. gained in next are XXXX, into XX% customers advanced automotive geometries their grow tech continues smartphone of our Protection highly demand QX, to technology fiscal total Demand that QX Product smartphone our process from systems. sequentially prevent QX, revenues the to supply devices. require as constraints, using increased quarters. Product to we their X% Protection systems today's recover record Group the broader Semtech, revenue Protection few revenues IoT performance markets, to devices high Many complete Protection sensitive our damage declined to Moving Protection year and experienced high diversification of robust

We increasingly several secular and segments. the we to systems to years. industrial, deliver increased strength fiscal expect our expect Protection QX communication next continue Protection mobile XXXX, and adoption drive nicely, all year and over of increase driven of from to this that growth our Protection by automotive trend revenues across should Semtech's business enable broad-based systems In platforms double-digit in

SAS Group. and network, to and tracking, revenues. Turning emerging We integration XX% satellite-based over a platforms to in technology flood end-to-end prevention, XX% starts to Microsoft X% to lower-cost LoRa-enabled These LoRa services, further and SAS, prior using wellness global AI segments. another momentum asset to announced of to our conjunction similar use and agriculture, announced our multiple and LoRa included cases. total revenues MXC helium WAN the with retail announced new In applications. In platform use livestock another Inview, announced and Sensing LoRa a across WAN expected, utility improve and agriculture its bring Alliance initiatives cryptocurrency. Inview associated recently in retail EchoStar initiative network to demonstrate the year accelerate smart gateways, the IoT which as leader an and logistics, experience. services to delivered number Product real-world Wireless achieved new LoRa of value mine launched the of globally into solutions connectivity software the recently represented resolve suite and the that in the shopper of its Group QX, a record joined to our quarterly will over that the sequentially And increased leader energy. use announced systems LoRa the networks individuals as delivers QX, platform WAN Product record Wireless a offer Sensing precision quarterly partial live LoRa LoRa foundation issues with analytics the Azure can of IoT with WAN, and a together from

gateways and increased number and of pipeline FY LoRa pipeline We LoRa is seeing LoRa XX% expect convert of currently anticipating of anticipate end million XX% operators of timeline. in million $XXX which The XXX we XXX year million type this our The our end LoRa of operators enabling gateways contributing we FY by WAN of low-power, planet. to LoRa continued sustainable of the grew nodes $XXX In well We million the to will opportunities network fiscal of opportunity and metrics 'XX. increased number to LoRa network are deployed increase growth the we 'XX. The by over in X.X LoRa is gateway expecting network targets X and XXX on long-range the QX, are more deployed exceed the by connected to progress model deployed of more rapid million. to pipeline our shared end deployments over smarter, LoRa the XXX, expect are year more flexibility to number and this fiscal million end than cumulative against The we the the emerge, to number by nodes a end that, a exceeds of number the with business now FY opportunity deployments. to end XX-month emerging for use cases to of 'XX. average of WAN of LoRa cumulative exceed LoRa a to 'XX. are some examples and These to 'XX,

growing use pipeline opportunity low With well continued smart momentum wireless smart These geographically the utilities, smart with the remains of across and logistics, LoRa the adoption in cities. smart and influence LoRa power broadening balanced strong asset along tracking, this with Our cases Alliance, a of demonstrate primarily landscape. home metrics we unit X quarterly record drive our to continued we global standard in industry we LoRa a platforms, In the the strength become Asian QX, from smartphone the expect de to sensing continue to our expect by what market LP-WAN next facto in for proximity years. to for customers. be experienced led multibillion demand

highly social power industry's proximity competing RF and broadly by concerns, most power more become implementing manufacturers their As Semtech's global global regulations delivers and adopted, into sensing leadership driven the highly sensing sensing devices. technology a XG smartphone environmental are and proximity innovative advanced, proximity on leading health integrated technology. lowest stage platform

next With we over phones the the high-powered XG industry, increased increase proximity years. few the of sensing increasing use platforms mobile of whole deployment across expect and demand for our the the to radios

we For and another Group from and from quarter, revenues Wireless records led deliver our Product QX to LoRa of by sensing businesses. net expect new increase fiscal and year Sensing proximity record our 'XX,

of on new In the X,XXX XX% design Moving to design wins, and we wins. new released fiscal year products and XX products over new achieved which 'XX, year. previous represents increase a QX

QX, the QX. $XXX at net of we of beginning $XXX To the needed Driven estimating to we with currently approximately me 'XX. our approximately second terms million. in orders Now the bookings by X% guidance we discuss million the are record range record outlook revenues let quarter and or $XXX backlog, of net of for FY be our between and attain QX QX midpoint entered million,

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

Operator

Thank first question. state be Tore conducting Instructions] you. Our Svanberg session. At time, your this is a [Operator Please will we question question-and-answer Stifel. of from

Tore Svanberg

Is simply on that capacity you the congratulations the only the turns remember of need X% you, honestly just did the time results. I'm of thank you last turns? guide you guidance. only because why Mohan, midpoint just higher? because can't meet I Yes, it constraints, and wouldn't to strong wondering you X% indicated

Mohan Maheswaran

Yeah.

been I -- clearly the lowest CEO that's think the that's XX turns. of I've years been Tore, since over So now, number

Demand I consumed. think strong. We bookings thing strong. extremely we make very the been so whatever key extremely monitoring are consumption. has that is we is to ship remember, What want to closely sure

sure, customers are we any And turns our really really customers sure that we the need it's those don't for fairly servicing the are are so our on our who on And why is turns we consumed. monitoring more from conservative is everything and -- guidance POS we -- to distributors outlook. see that and the number being activity but being make

Tore Svanberg

a And But your great. sounds data Is in improving the as XG China on obviously, North and is a tied then a little continuous also both could like elaborate That's primarily there. data bit mix you here? follow-up, just quite visibility or to, in deployments XG upgrades? still that bit center center? is America, It

Mohan Maheswaran

then doing second start the to extremely So yeah, for it's mix XXX-gig half well say half definitely is we picking starting sure, the pick the nicely And well. up for then as the a all going the on XG. mixed seeing actually I is expecting some still, bag, for to half in XG, regions. it's and obviously, side, second strong data and moment. in quite China be center at and up are We're second in XXX-gig is the to indications, QX would

expect good have we data center to pretty So year. a

Tore Svanberg

congrats and Thanks Great. again.

Mohan Maheswaran

you. Thank

Operator

Gerra Tristan of from is Baird. your Our Please question. next question state

Tristan Gerra

and Could And increases? also, How the much that does is price if the data gross center afternoon. fits in is versus profile mix half? could margin average? about second where base talk drivers gross you to driven -- remind us corporate by Hi, presumably good margin your relative station you the

Emeka Chukwu

So thanks. Tristan,

remarks, in product platforms, seeing said prepared are margin the Tri-Edge LoRa wireless of uplift my we industrial that platforms, enabled, our gross our I others. protection As areas new a we expected lot from our and

And margin expectation half through to from platforms. those the we see go so the continue year, accelerating should second is a we expansion that, the them. gross we seeing are from as lot of revenues of And

stuff, to above With of the that expansions is point. the expectation my this see Wireless going is So for will to business margin continue at side gross the corporate average gross regards Wireless margins we forward. the

Tristan Gerra

And supply-constrained you are Great. currently?

Mohan Maheswaran

There's constraints, pockets of supply Tristan.

I year see. think us year internal target helped thing range, really the decision in for that about strategically a inventory, and us which place in can one about internal We're our above model is we sure. inventory, a you ago, – our ago more over to made put range has

So sudden comes there we difficult in comfortable shape. for to we're to position probably of in that. But year. us support areas, good have a We'll general, to see we're we're supply where Obviously, and are next grow quite in this suddenly demand and where constraints for across year. certain pockets a I significantly get supply pretty in it's the increase think upside and the

Emeka Chukwu

Emeka. that understand stations, Wireless comment and about this base margin on the I that you Wireless Tristan, I'm that sure is my right? talking make to wanted just gross the

Mohan Maheswaran

XG.

Emeka Chukwu

that. stuff and XG like

Tristan Gerra

you. Correct, great. Thank Correct.

Operator

Our question Cowen. Karl your is Ackerman Please next state from of question.

Karl Ackerman

have as few you. questions Thank well. Yes. a I

Sandy Harrison

you. time We're please? a up, hearing tough speak you could Karl, Hey, having

Karl Ackerman

better? this Is

Mohan Maheswaran

Go ahead.

Karl Ackerman

particularly you XXX-gig the falls. around probably XXX-gig Great. Thank expected adoption – one discuss to for have at or and of number across that major now see designs Could and are PAMX, this greater where you. least you

that see just designs talk could just you the of be if number about So you would helpful. there,

Mohan Maheswaran

of those of talk on to specifically, going even about of think at Yes. design kind in win can't design going Karl, And them We we have some design – starting to move wins I but are activities moment. the to I – XX some and production.

orders – we're now. So getting and obviously,

So It's of that out. first our the are good. momentum looks products set quite coming

our that variance bring more little little learning bit a through platform bit opportunity the of products of our gotten to have now more that longer kind cycle and Tri-Edge have first we reach of out them. we’ve from Now a

beyond the next momentum years, over we'll road and in depending have more XXX-gig release And on that, at looks think products. I expect what few I or the year, that next point. then So some good we'll like XXX-gig, over map XXX-gig

Karl Ackerman

I least I that business, concentrated next and a the mobile. that. business I follow-up, is guess your automotive within Thanks industrial, highlighted, of Protection just in that bit your for prepared in at detail quarters. opportunities was been have and this detail could But Thank you comments, hoping Great. you. for couple know my in supporting you in some you more over historically

Mohan Maheswaran

Protection know, Samsung. our We lot display. mean, strong historically, We been And that obviously, segment. we China I of segment. exposure manufacturers, to to mobile American Yes. exposure business, you have manufacturers, other within as have very it's the North smartphone diversified to now wearables, in used a

we've ports, for is within ports, So of USB-C. whole in lot been our industrial mobile. communications is HDMI X.X automotive diversified the which the of for of space, focus IoT, where high-performance interfaces focus R&D a Ethernet infrastructure, And efforts those increasing But there automotive the new an -- communications, mobile, interfaces, outside high-performance we our R&D systems. found infrastructure, in interfaces need is across what like

put. business of -- into what of is focus a now, of is that lot now area. focus our clearly, Protection our We being that's that And lot in a so, about put that's XX% And area.

to margins it's the direction. so, well. in to grow And as right gross accretive starting That's obviously

momentum it's -- that have the time. grows just longer very there. a We segment much So we -- has cycle. about good That's takes feel but it not life to rapidly,

good it will years. continue just to So many I for drive growth us over think

Karl Ackerman

Thank you.

Operator

question is your Please Quinn of Our Bolton Needham. state next from question.

Michelle Waller

the on taking solid results and and execution. for Thanks the Quinn. for on question Michelle is This guys. Hi, congrats

back in be kind particularly given one, XX% Signal fiscal think might would weighted revenues might guys actually first Integrity more mistaken, or that If XXXX, you slightly expecting with the But think fiscal above line of I'm half would it guys that slightly year. XXXX the more and be of be businesses, have the growth a than that not of just on seasonality. are second typical my you back So the reasonable typically seasonality? you in with revenues, half to LoRa half

Mohan Maheswaran

Well, QX still strong QX. with pretty guidance indicates anticipating very as Actually, we're obviously, obviously as a first a half. that half, comfortable strong well we're -- second our we're

backlog even strong We get a QX, starting QX for strong supporting and very for very that. very have we're to with comfortable

So That's year like, our like some a this and the are tricky QX back end, be moment are segments call. and going see we anticipation the in off kind still would long down. but we Normally, of center expectation most engines to to of some it's where the looking continue probably a yet. the ways may will seasonality that at XG the come of to strong to be expect that's of data decline, QX, some quite extent. less given But growth to

Michelle Waller

Yes.

on mentioned Protection That's the -- had your on to helpful. last Okay. Thanks. expected you was you grow. And then, the call, my business -- just guys follow-up, on

fiscal I XXXX. in think you said guys double digits

the the the the year, smartphone XXXX? might -- for you update Just be have you're softness if growth has changed first that what maybe have for slightly there business expectations during Just your wondering side you helpful. expecting if maybe and if or any in fiscal quarter, lower of that would the

Mohan Maheswaran

prepared on wanting our components decline I remarks, decline slight particularly driven even going smartphone we're was get -- consumer to nicely by business, a enough a other more year. business, contrary, they're the most was materials, the mean, not not in to suppliers. and that Protection think in lot able my demand the of being the Remember customers I not to but very this that Protection from grow business, by is I not what there Actually, of but comfortable the said Yes.

demand pick And the the throughout that's a we'll up see think not rest so issue, I of and year. that

expecting good still for we're this year. business our protection growth So, pretty

Michelle Waller

Thanks great. congrats and Okay, again.

Mohan Maheswaran

Thank you.

Operator

from Harsh of Kumar question state Piper your Our next Sandler. is Please question.

Harsh Kumar

happening and business. I just a had is I fantastic question, Hey Yes. Mohan. Emeka here. love and what the strategic a your job Mohan in team,

a possible Your see company margins. is range to guess, margin? yours? what kind this you company start yours where coming op when model kind pick a The revenue to for And a you scale? from number get and maybe the -- And your op of question you want Is to feel you humming going. aspirational XX% what with that situation the of standpoint I like and into like is, talk do do a -- and yourself about, do

Emeka Chukwu

Yes.

Harsh, So, Emeka. this is

me Let take that.

I think two day range. ago, non-GAAP something, the -- XX% to about we margin Analyst basis operating probably be talked years we expectations our the last a the in of XX% on our had

to expect the of that continue revenue, despite at the headwinds Given and low at with, our we of mid-point our the way seeing billion expenses, do traction $X from managed we the should range. that we've come are do margins which that and be FX that we seeing they we're growth platforms the We this point. the to believe that operating at gross typically

Harsh Kumar

over I've -- seen covered few were your that about Mohan, very say, there optimistic -- times think that's I've you a don't I've And for business. your then, want this helpful. Emeka, very I Okay. to never just I decade. company

the much I for of feel message remainder I the that year. get about exceptional you think growth good of extremely the

If visibility also, the just on and of terms seasonally exceptional down you in rest fourth supply whatever to this covered to of expect, outside X% the can sequential And up based you us have reassure be that, to backlog? you that's able case bookings on year the through X% kind quarter? the consistently other words, it, the In growth. can of growth call of we meet

Mohan Maheswaran

first, let Harsh. of part me the supply So, that take

with supply. the are we think comfortable I

it's advantage. has and playing mix change. we think scenario, things monitor inventory mentioned, so I put manage in and I and Obviously, for issues, that As and always continue to to there do to place this are strategically that our out one

many that this we've confident. but growth then years. comfortable side, feel -- from yes, the A of the current for at we lot is levels. demand we demand are can quite supply to coming invested point very So time, platforms we in in And on the

a invested -- know, and Obviously, LoRa as build quite that be while, nicely business. are invested you something it in patient, think structured that out have to said, investment. you starting expect XX% and that This way, in foundation very feel you a to not know, we we play We've very comfortable many I a that's As when taken now been is can has for many, we've we're it's us that's with quite things short-term And but successful. very very good CAGR, about be number. it. had years. I

strong. looking is business very LoRa-enabled the So,

you another growth engines, XG and platform of proximity sensing, out we've years, Our radios. the invested as many play high power starting in know, to because for other again,

a So, side, favor heavily the there. We've trends Tri-Edge center FiberEdge. in our data NRZ platform. going heavily invested platform, in in and of lot The invested XXX-gig our PAMX we've

another area those in so heavily is well. years. out as we've are many, for And XX-gig many well playing PON growth where invested

And good so out mentioned nicely. playing lumpy. that's growth going That's driver I wireless. a for to another bit little be quite It's us. XG

get out. to much because good Protection the there to time, company. PAM where for margins, side, very start that do As And better a business obviously. to we it's then gain we And is accretive I momentum the this momentum, feel that I think the on to gross also really we're is Protection of infrastructure, It think takes broader start potential. -- but you the has business pleased very to I going well. more as the know PON I with diversification quite play areas larger think And think the that see but see I the one about

Harsh Kumar

Mohan and congratulations, you thank Hey, again. once guys,

Operator

Ellis Craig B. state question. from is question of next Riley Please your Securities. Our

Craig Ellis

team great execution. and taking Yes, thanks congratulations the the for on question

So in was Mohan, I about typically interesting something I end the but them. thought don't markets, ask there

first So, that question my I direct wanted to way.

that cloud see XX%, in So we post the high-end spending impacted is from great we're seeing with possible we The through to and similar all infrastructure X, question COVID an X%, industrial, the up given see more the cylinders growth what consumer on your industrial X, prepared consumer we'll end product X question remarks and in that maybe high-end X spending cycle reports really about this, and around achieving was enterprise now to markets, enterprise upturn other the quarter backdrop But suggesting is and what all year-on-year in far in firing Q&A.? in XX%. it data with up more we're seeing are now up delay with consumer in which and rates, see center. especially but severely is high-end can that the

Mohan Maheswaran

Yes, infrastructure. positive Craig. We're very about

year. I did last think quite infrastructure well

bandwidth, I growth. And we're PON PON think expecting -- year. so general, very data the We're with still this of we're going I this mean, But I part the so strong growth definitely, I think some center challenge excess -- year. growth year-on-year hyperscale that's XX-gig in think in expecting

that data an up. the point that's inventory given And me for so, interesting was built

the And general, to in more see, back. be so, lumpy. segments some coming little starting I segments of infrastructure tend to think we're space these And bit a

it then period of spate of digestion then infrastructure investment for will up kind of and There's XX-gig the right. that that some And still you that, a grow. kind play no need emerging segments, XG, again, the other segments hyperscale, of we it I for think and need to to got -- there when question but there's our going of and and the is in is it's of add be then You've continue to a sure, comes back lot PON, a there. that of the all to across then deployment

Craig Ellis

But there's the on surprised And high bogey gears out program volume, there. with we asked. four for although year-end do similar regards that That's switching endpoint great. been call this about or And have talk wins. to still the then to potential three ones question quarters last LoRa, to many lot there nice over a wasn't LoRa, of already, I'm and a good over

is question might to secure about So to And are the when would some how the some of that this, volume high you feeling get some your you those wins? visibility expect partnerships ramp? or bigger customers with potential

Mohan Maheswaran

we Well, it. feel good about

without business even be globally and of we've from that. to Craig, you, in year's I honest through with a strong To going got is we're think just my from lot last issues. sense have COVID of -- momentum a think the I the year, some recovery very

And nicely. deployed. our that think we combination new we're opportunities. I LoRa a starting -- grow More gateways being cases with think new that's -- really I of use driving products platform, so now to And with Edge more some

of the the we you had see X.X XXXX, gateways by -- gateways have million deployed, the We gateways you'll FY large the already monitor a X.X pretty gateways. deployed at in At number number of If do XXXX. acceleration of million end FY of deployed. end

we power drive and looking And, I pudding. me we guys whole monitoring work, just one wireless can case we'll see board. continue yeah, in some connectivity very use with use are things And it's are tells deployed if us. nice and look the or -- end, obviously, and or right landscape LoRa, direction. So I for across the for proof cases, that the across much say some at one of get going working when use who really all the to we're cases the customer we not region, those look very how big think think is business In always in the very the exciting. that And low would progress one I that

Craig Ellis

Good to Mohan. Thanks hear. much,

Operator

Our of Please Fargo. Wells next state is from question. Gary Mobley question your

Gary Mobley

inventories and what Hey, my ask about taking maybe to for signaling. I guys, question. wanted they're thanks your

you the having in and whatnot. normally are. bit can some you're finished own up and sequentially, product So days you're what, that, sense it's target know direction don't securing a little however, the your peers wafer us running, distributor above easier high-end but don't of what in inventories of of time give I your the distributor than supply inventory? a And your sequential of We your speaking know, XX% Seemingly, some again, inventory disclose and inventories. you

all less given my to motivation order this they related adequate or than so And product have you distributors inventory, question there need? order your to more end actually is that seem double to or customers is your for

Mohan Maheswaran

Well, good that's a question.

answer is are -- distributor bookings all, on of and from our inventory distributor doing inventory, strong. one strong, things extremely is standpoint reduce. to Demand question of your the think I so we're extremely first pretty low, though, to continues

do, So Gary, closely. the we thing is our very monitor POS we

levels, to shipments we we key, gauge our we talk and consumption business. and And as consumption. continue the consumption to end on you're is to to of that's I support which our the Because try we see we customers, believe out can distributors in customers. right? levels shipping And believe continue we a think then really So the we to consumption to as growth can get are we'll long – probably our

that want if the I playing. to that's game know add so you And anything to Emeka, that? don't we're

Emeka Chukwu

yes. No,

my think I just are said very like I Mohan is said, strong. demand Gary, in like strong. remarks, The the bookings very

evidence we're to of multiplication you regards the the with distributors book to able for think So is stuff. question run. to evidence the any our that. the though definitely seeing in What are of we I access maybe double have sort long the have our seeing – to about don't inventories is concern get being of that

we managing very placing are them things said, that. these and we and like future the orders clearly, out So seeing these guys requesting concisely. Mohan very things are into like maybe But

sure part, we are make well have of internal for I the – very same in distributor demand right? seeing. inventory think to have to what that strong of to very not terms shipping happy the stuff terms are resting means But shelves, that at trying have we're the we're support positioned that time, with the just we we we most in the where

Gary Mobley

the appreciate color. I Sure.

about new market? LiDAR a in Is follow-up opportunity your LiDAR extension industrial particular my with this your up or TIAs, So particular recently your wanted I size products, you the LiDAR general, relationship And LiDAR announced for perhaps TIA, in applications? for with in for automotive market Intel. would applications? your how in to ask

Mohan Maheswaran

much obviously very engines. we're that. think challenges for for with them all term automotive, then applications, more from what the market But call longer Intel a are use be eventually. that still and target of whether we in platform Intel's So stuff their is industrial, growth it's and industrial/consumer working and I development of opportunity, there say but one very a is – technology Gary. an our I validation technology the emerging We've like closely, would and end first market standpoint, that it's

days, portfolio we've and and them, Tri-Edge if look current engines, LiDAR which So growth and several have at coming several hopefully, that But of we in I it those business with into years, good working on will And us driver for includes to some continue products, Intel, in our in it's number We'll are all for partner good will a is invested which follow-on one us. think. it's a and of I are but like turn a now. growth proximity for But future. be growth hopefully, I the phase, another to sensing technologies of years become for early LoRa that very the think of invest in real and

Gary Mobley

Thanks, Mohan.

Operator

of Our your state question Susquehanna. from next Christopher is Please Rolland question.

Christopher Rolland

of the now of the as versus talk Thanks, revenue changes drivers gateways and you per guys. some about or about And on But trend? if Can you mix of us that remind think and gateways you gateway those you of – how and will seen nodes update that was on some us also, number, Mohan, impressive. think can you pretty which those. to mentioned then talk XXX,XXX gateway, we've late hinted content of kind had now? the of I

Mohan Maheswaran

Yes.

still So number those well actually, we end X million, XXX being supports million gateways. to connected a connected gateways now. now have out nodes billion with It's sensors. The of number, cumulative over there X.X that

So capacity out more we there have plenty sensors. of for

So that's about different The a thing. we of types thing good gateways, remember to have gateways.

which kind towers, range. $X,XXX Those We are gateways. of have XX-kilometer go on macro gateways,

and target the cost things other low that use really about very cases, X-mile we range. end and the indoor gateways sensors, that scale, and of $XXX X,XXX support have to like On that Picocell are

gateways They some has or So in application. different a a where range of different every use can customer they're connectivity. outdoor case different and And doing of and gateways. cases every types indoor deploy

varies, very Chris. much it So

their enterprise the key in is the though, one their person of network monetization driving use or cases concept monetizes that of the and that then this I through or mentioned, what's in think the I that who is sudden building the cryptocurrency. the gateway is house has a using who gateway thing, up acceleration

As that's thinking the Helium and and approach, you are that companies other that. about know, there now doing

sounds We'll us. longer like a fly really if going for opportunity. It's case. assets exciting monitoring, see. And in gateways using for things monitoring using very it life power I of sensors. of and it We don't pretty new know people nice use doing that's you're which but mean, So a one interesting it's tracking or term, are low their kind tracking real in special to important stuff. for

use I that other think, it's drive yes, really globe. So, now more are are across the application. deployments, There to cases interesting gateway a starting

only I asset is home, think, in for logistics gateways. the more the not smart I need think general, tracking and the driving but smart

another case. is that also So use

So where excited it by to. leads we're see it. We'll pretty

Christopher Rolland

Great. does as and And supplier, my like multi-month hot spot about a gateways it in is at from backlogged there's for least hundreds seem actually. that. backlog of that, of actually on order there's -- this speaking units, thousands well of But

balanced be -- in there? can gateways? When maybe do those you Are and balance between of cases just are demand $XXX $X,XXX there? you Semtech content think in -- those you So you And that constrained confirm, Thanks. with talk you supply-demand severely there's that. saying about to might out then

Mohan Maheswaran

No.

gateways -- of prices giving the the are out of is I kind was kind price you retail there. the So

Our $X content gateways is $X small the gateway. larger to and in the in $XX

back constraint, to demand supply coming for our gateways, manufacturers in are -- I gateway. constraint up But that content. microprocessors and make not and our the components that that yes, some devices. that's discussion having think, microcontrollers is the So other on the go The

components only right? availability. have other limiting we our we course, but that I radios, think Of are -- there's the develop So the materials,

Christopher Rolland

you. Thank

Operator

Oppenheimer. Rick of Our from question. your is Schafer next state question Please

Rick Schafer

Maybe XXXX LoRa I for I'll calling a more But are LoRa. know folks scale been year at know some I one congratulations, and it's the add industry Thanks lot. question. guys. my

Where last is, I with think Mohan, year. XX% you here? think $XXX exiting is the heard at that correctly, XX% the LoRa-certified year about something I I million are talked at about we I with point if question this number over LoRa going mean, mean, of tipping like pipeline. I'm sensors or I you're the finally

of the Something following to revenue around converting over couple that XX% years. of

XX% So, pretty significantly I for mean, your if you that run business. the math it's that, talked CAGR you've about above on

if you what's issue that? maybe in of just and curious capitalizing to to I'm add could terms misheard guess I curious, too, the an that just on I constraint question you I what kind of just back you color big backlog? could changing And I'm of to But go, supply -- you can So, is how guess. have for

Mohan Maheswaran

to some the now of think add technology realization of I that that this out, obviously, years. I I were starting use And been that Rick, So, the But see the is really to smart to related to we're does think the we're cases home smart initiatives, do I to that's logistics, you challenge set heard accelerating value back momentum And -- always is it. for really over really now. with China correctly. starting think think to initiatives, asset funnel deployment. the is convert I is couple issues related think last for to really to technology, of have just customers okay, and love are we going POCs climate funnel, figure this pandemic us and the good we related tracking, technology when city number trying related have to safety, they control, huge and pollution And deploy? change, to see we

going been starting is to the think on what we're starting remove realization that see POCs now And of the just have the some so I this is bottlenecks. to that are

And and IoT on AWS those You removes another platform, announcement like bottlenecks. with the some really it AWS call software the things with mentioned of need is removes developments one. for that, sensors, software the

was conversion will just I to and lot sidewalk end-to-end I'd think others and deploy I really something about to bit funnel it. of utilize rate about have talk out whole going so little funnel it's and conversion but talking as that very revenue. And larger, that this with about much of only pretty have, about see that happens, starting I some we're those case. It to funnel systems. you quarter, not to bottlenecks And now this the the us. over LoRa starting question into have see then and we're driven big by get technology. we confidence a good last think Triston. more we're around think an the the Amazon add own And a talk to And we'll as that -- was his that, their put see not technology really going simple really mentioned will And guys them removed discussion then be of the the time, use

some then where positive And that business us makes along. that for feel us cloud the services so about just this headed. good things where is the coming to add of and It and are other all is really it's we and

connected So, and that want keep for we'll of us. number keep the Obviously, value the provide and of that gateways the growth connected to of are and number number should services the growing we N-nodes that those drive continued monitoring. that services are deployed, revenue

Rick Schafer

stride Thanks for you that Do it's of what the that's what kind sensing -- area another you guys of today, penetration sensing. color. And a really and is or at? for have I proximity like we're hit is where proximity feel rate the sense

Mohan Maheswaran

Yes.

other obviously, multiple with I range they have they high-powered the XG you high tend ones is the then those think phone radios is and a dynamic the phones. of manufacturers, thing phones, and ones phones And most high-end particularly different And then have putting to the more -- the so be radios. -- today, that that's sensing so where on where you phones are ship to. into one power proximity powered depending

just So, and regulations you regulatory need to of by in have proximity and starting you sensing those if requirements. certainly America, Those North a globally, almost way. you're because to player to expand the ship Europe global phones are

there's I an to these phones guesstimate proximity XX% of think we going probably phone would be as forward. need do But for go the -- today, higher about end more on sensing. I have that proximity sensing So, the increasing

Rick Schafer

that Thanks color. for

Operator

from Please Our Capital. state next your Scott Searle of ROTH question is question.

Scott Searle

questions. for Hey, taking my good afternoon. Thanks

record you quickly to LoRa in about today. large-scale levels. fiscal at Mohan. proximity outside like based sensors your the Was on being in, sound levels couple basically if go quarter? it at to of numbers like growth year. of to it China be year? back opening the record any comments, Should looks in and sure certainly sequential I kind in clarifications, of expect flattish? but not It Just on Because where counting LoRa, heard XX% looks about how wanted kicking a sort And talked of build I'm that you we you're the honing growth like current this of over plus on thinking we it consumer are or even the doesn't course in contribution it I you're

Mohan Maheswaran

Yes, Scott.

is I for couple well say proximity it It's in And of last the of is would general, all for as been LoRa then, kind the it's that sensing. kind challenging. cylinders. as just on yes years, been expect business QX have I we achieve quarter, good That actually, least. a and to year that LoRa momentum a to record, was XX% LoRa very to quarter record the every this yes, expect at growth and record. So And be firing is

of for lot just well now starting I been think there's But playing think, see a I that momentum and out that's headwinds. we're us. build to up,

Scott Searle

lastly, And rate. a of I long-term side double-digit about Protection the if growth you Great. talked could, term on business, or intermediate the

constrained handset certainly, in current grow been expect near Now plus when business other the several over mid is think you towards mobile, basis the I normalized by to would the being the that single skewed the component challenged, market back. been XX% And kind about But mix has on next smartphone term, of to years. digits a market of your that availability. more and expected growth bounce to low

strong expecting XX%-plus So see growth faster of growth, to than expected are you nonmobile get grow mobile Thanks. in the in number? or to components you how to auto, that's kind such of that industrial and terms the double-digit

Mohan Maheswaran

Yes, bit little of a Scott. both,

are we more mobile, within think diversification I expecting there.

in So we include example, for include displays in wearables mobile, mobile. we

So it's phones. not just Samsung

see large, growing clearly, itself how grow. can our their they We'll to but I are TAM hope interfaces of market within converging is to Ethernet lot need systems. well investment expect double the broader is because market. performance they're that X.X grow HDMI and segments it's R&D use be point digits. a are converging into Protection not And, that the infrastructure. But may of going -- higher-end that into the space to above of So we where that our that, to mentioned investments that fast, the some bringing high -- USB-C, our yeah, And the most Protection continue

more And of some requires that protection, higher-end protection.

to goal, grow is at our a to that's So rate. broader business our try faster

Scott Searle

Great. you. quarter. Thank Great

Mohan Maheswaran

you. Thank

Operator

your question question. final Svanberg Tore of from Stifel. Our Please state is

Tore Svanberg

Yeah. Thanks.

Just some follow-up.

know also some cooperation First I Matter? matter of you of all, LoRa other standards, to is between LoRa Matter? Because view as should some way in can plus and Mohan, the and Bluetooth, is and competitors there if sort LoRa now see IoT about the LoRa, of past, unifying standards and to plus see that of still or I'm with just start more we these wondering talked you plus Matter LoRa a Wi-Fi to ZigBee

Mohan Maheswaran

licensed the LoRa we mind, build to companies. whatever, that's If out we customer them. worry it's want ZigBee really system customers. it's to who plus or one LoRa of about work well, a by IP Yeah. We the don't certain we're where And driven really partnering plus or with reasons with, Wi-Fi we'll or and says,

And so solutions. they can build different

for simply the goal to LoRa goal, de get LP-WAN to that make is facto various obviously ways there's standard there. we Our achieve industry. the How in

LoRa maybe when an and added you more example, pertains uniqueness then ZigBee, where connectivity low in So Wi-Fi the overlap Z-Wave power it what but are I bandwidth the sensor sensor a overlap. very for very wireless, are some to complementary. There than and of radio a power when technologies, the high complement, as of some have more technologies other it to complement. would LoRa, a there's makes I low at to But radio connectivity, you are look it's technologies And system very a radio. have where additional most it's there areas valuable say we think is to XG -- of though, have -- compared radio,

Tore Svanberg

perspective? you could rate that? revenue? much And Emeka. of percentage last I the That's a And clarification the this guess, talked at of what level, just for clarify an you percentage impact one from by about having how very When helpful. one you OpEx on exchange meant Is OpEx, a is that staying

Emeka Chukwu

Yeah.

was actually amount comment my dollar of the So towards absolute the more OpEx.

second our guidance, million $XX for I it would something like think, that, correctly. think or expenses quarter, I operating non-GAAP QX I the get if remember

talked around expenses that Most year of area, we've of been if the slightly has that above impact, excess, if I'm stay driven of you model. been that weak impact So half that's of operating the somewhat that the levels. dollar. FX those it regards to think driven. With should is to I that, by is our revenue that is growth before, for you the which about what the the rate expenses US about rest being the Most referring to the expect of will, operating actually,

Tore Svanberg

Very helpful. Thank you.

Operator

of for have We will remarks. reached Maheswaran session. the the turn question-and-answer closing the end I Mohan now over call back to

Mohan Maheswaran

strength fiscal we engines, benefiting markets of the to long-term addressing – and smarter growth. is growth from infrastructure, are year XXXX. In provide closing, planet the produce our with strong sustainable will our start results company QX mobility we believe that The and the pleased

through pandemic have and successfully We challenging navigating the supply more chain recently, been environment. the

commitment on doubled efforts also down our to have and capital We our sustainability human development.

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

Operator

This conference. concludes today's

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

Semtech (SMTC) 2 Jun 212022 Q1 Earnings call transcript