- Earnings call transcript Q3 2023

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Operator

Greetings and welcome to the Semtech Corporation Conference Call to discuss the Third Quarter Fiscal Year 2023 Financial Results. Speakers for today's call will be Mohan Maheswaran, Semtech's President and Chief Executive Officer; and Emeka Chukwu, Semtech's Executive Vice President and Chief Financial Officer. Please note that this conference is being recorded. At this time all participants are in a listen-only made. A question-and-answer session will follow the formal presentation. the Anojja to Shah. turn of Vice now Relations, Investor will call Semtech's over President I Thank you.

begin. may You

Anojja Shah

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

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

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

team financial During in with why measures measures otherwise Emeka? this measures noted. results A detailed Officer, that, our Chukwu. most non-GAAP measures our Financial turn remarks management such press made all today's of financial references it the non-GAAP And refer I’ll to useful, along unless considers release. Chief to call, discussion such included non-GAAP financial to will in financial over are Emeka GAAP to comparable of reconciliations the with

Emeka Chukwu

of bright macroeconomic overall signs are challenging see spots. everyone. see Thank a beginning decrease sequential a in-line with a the and we you, several weakness of stability face QX fiscal X%. QX of XX% We afternoon, but market softness Anojja. on of environment million, China, and decrease sustained $XXX.X our year-over-year net Good XXXX, In in in guidance, revenue Semtech and consumer delivered to

accelerating Europe XX%, and with QX success. North diversification signs respectively. flotation] America, of efforts and adoption Asia, industrial [ph] and shipments LoRa due XX%, broad-based for and end represented regional is Europe [automotive XX% targeted customers. on our growth into We revenue focus North for TriEdge in business to Our our America showing and see Overall,

that While of Europe, our addresses] shipments in of consumed [ship estimate are over and [ph] XX% approximately in this we so XX% balance customers, world. the a our rest for the XX% Americas, China, the represented to the distributors and in

market markets, but prior net the end declined declined represented our grew XX% and our over Net the markets infrastructure and total XX% of net end X% total at industrial but grew also sequentially X% XX% represented Looking year-over-year, year, revenue from XX% sequentially end revenues. revenues. of

prior consumer mentioned, was to end revenues in over XX% I the total we XX% high-end consumer of sequentially net was where and XX% represented to decreased attributable continue softness XX% see year consumer for revenues mobile devices net markets, and other Approximately approximately As consumer and high-end systems. previously net to XX% revenues. attributable of

XX% of remains of approximately distribution channel sales representing shipments. and with XX% direct consistent Our shipments

distributor declined end Our infrastructure, during and from remained XX% with consumer from quarter, high-end of the coming XX% industrial balanced coming POS from but POS approximately the segment market. XX%

of less see to POS QX, month. the longer book-to-bill we that QX stability in bookings in across as than far and sequentially one. all were no POS, regions So bookings decreased are Bookings is markets. The weaker declining. and And our past stabilizing see over beginning generally in we end signs just represented and

mix record, Our a XX.X%. This gross margin QX, a lower sequentially basis is remains by increased of to driven resilient. mostly revenue. points consumer gross quarterly margin In XX new

demand the projecting softer the to absorption overall of are a small environment. due to driven at gross midpoint, we QX, by For lower margin decline XX.X%

as steps sequentially demand. decreased $XX to margins We QX to expect levels current to to million recovers. took we at softening gross until expenses approximately plus or minus XXX hover demand points basis X% operating respond

XX% low approximately flow In we measures timing capital a additional shipments in challenging while flow environment. unusually for increased lead our times. expenses maintaining to operations cash in cash accounts sequentially focus weaker from in the continue new revenue, to due is response products, we take QX, will reflecting million QX, use as reduce these investments as Managing elevated of by time For demand at was receivable operating to and period $XX or to of pay materials. prior of long working XX% our

million. notes, will conversion and The the from marketable issuance payment of of the normal credit. These hedge by to issued cash we mature X, our warrants, $XX.XX. be price $XXX hedge in offset notes, November note transactions Sierra convertible And convertible in price. will We cash any of help QX, securities Wireless. of expect million the and sale of did pending notes. entered dilution increased this convertible non-GAAP notes of we to $XX operations proceeds into we existing QX there resulted and repurchase not is because conjunction Wireless cost a transactions of carry acquisition XXXX. million of on our cash stock basis, due the slightly expenses, on approximately an our acquisition, In is million in on including net below rate with the interest approximately primarily no X.XX% to convertible notes equivalents, levels. of the Cash, million $XXX a flow The fund rebound to The seasonal line increase $XXX $XXX.X Sierra after the proposed in to

We have share million approximately repurchase our $XXX authorization. remaining in

days to days days absolute Going QX, completing In [indiscernible] to expected days. time to sequentially down increased the as our days timing net forward, slightly inventory Wireless XX% XXX was up terms cash the Sierra expect of receive use increased we in sales XX in debt demand. QX, sequentially we acquisition. and shipments long due the to receivable to committed decline continue from inventory increased sequentially by lead accounts X primarily pay to days and of dollar the XX previously In of materials,

QX, reflecting weaker the environment. down inventory slightly in expect net to to We be demand flat

transaction excited the pending forward completes, we Sierra we companies is As expectation. the to the the potential growth when our of remain is expected consistent two Semtech’s revenue Sierra’s Wireless, to immediately is reported look be When to combined. slowdown weakness of during about health our acquisition sustained it by a summary, the be to business continues in and Maintaining adversely impacted consumer the with in our uncertain times. non-GAAP In financial China these broad paramount accretive market. EPS.

over wins, We taken Semtech industry proactive have business. management, on of the products, a through now I details has capital and on geographic more that well diversification confident call working Mohan new to share hand management are strength experience recovery. the for managing will and the team that in downturns, design us actions and prepare I'm to focused the

Mohan Maheswaran

Thank you, everyone. Emeka. Good afternoon,

our Wireless, Let fiscal U.S. Regard our of group, a then Sierra year product of Sierra for acquisition Justice. then performance by from our proposed a begin details Wireless. XXXX second brief providing me QX. to by of will announced, details provide on outlook received update we of I as share and Department on our the previously QX acquisition request

fully are when with and with Sierra, documents. DOJ their the and are headway close providing approval made integration to requested with them we planning is immediately In through significant prepared accomplished. We cooperating have parallel, together

ultra-low the high bandwidth extremely excited low cellular by benefits can LoRa sensor together entire benefits technology. be power of technology the the to network of long bringing in together latency, continue IoT drive range we with industry by We transformation the

IoT deliver enable cloud will our connectivity to Internet is goal services platform chip to of a customers' transition simplification IoT accelerate deployment through to and everything. end-to-end digital that the Our

combination of a IoT to We the the technology opportunity in they as continue that of receive as optimizing the Combination clear cellular strategic of is power from market. highly the start positive to disruptive will recognize LoRa feedback Semtech very ultra-low the growing potential position companies. our two customers leader fast and

performance. to our QX turning Now,

continue well, share net slightly range. across releases, we solid $XXX.X of of record have new non-GAAP of our our growth earnings above market excited execute target and was all non-GAAP QX prospects per gross environment, very are revenue million, $X.XX. macro challenging Despite the Our our momentum new design to in future midpoint and by XX.X% segments. product and We posted margins the guidance diluted

Integrity with X% QX of Revenue our XX% Let was Group. me fiscal of Product and begin represented total Signal year XXXX, from up revenues.

impacting negatively. in weak is As demand China expected, economic the environment infrastructure

business center demand, our half as in revenues the XXX the Despite FiberEdge doubled previous active softer PMD segment. over first a gig strong the QX quarter data cable performance. optical in hyperscale Our following penetration we slowed increased our

In addition predominantly FiberEdge momentum, platform design to data America. solid global excellent make to our continues in and tri North in edge centers, progress

American been their by program to selected edge North a major in data data low a volume latency, We interconnects and multi-year new are low center low hyperscale power cost up, high to provider has enable report within centers. pleased tri

their CopperEdge on XXXX. their The with within goals of traction data with focused the are in in be high America to on low both cost the starting in half edge second leading of year that hyperscalers, intelligence, gain focused edge, computing low centers. project North and and critical interconnects align on the in artificial We this speed expect and fiscal advanced TriEdge applications data to are power tri or production long-term latency cost of of requirements. centers lowering well benefits

will we center In platform. TriEdge gig demonstrated level first will that channel FiberEdge innovation and XXX be and in market. FiberEdge solutions by gigabit in the recently PAMX hyperscale to further deployed addition We innovative momentum, higher used hyperscalers. optical current enable platform X.X PMD data continue performance our modules within invest system This to our new XXX terabyte per

XXX also channel both ultra-low and gig XX power, introduced gig our power for solution ultra-low XXX modules. optical We TriEdge recently per gig

our Targeted XXX see great addition, channel to interest gig per new we in platform. interconnects. copper starting In CopperEdge are re-driver at

weakening announce portfolio to We our and business is basis several more grow to our PON ClearEdge up and up an remain re-drivers deliver sequentially will XXXX. business and TriEdge CDRs, FiberEdge demand years. that annual XX% PMDs, design the rapidly hyperscale FiberEdge confident QX, center declined FY also to enable our center continue another us data next to TriEdge China. wins We to full In approximately on nicely was expect CopperEdge, CopperEdge including throughout due and What record of on-track platforms, significant over in data year.

We see OLTs in is PON, and relative demand gigabit strength XX while to weakening. continue ONUs PON

today are of from starting most revenues to gig of see we XX our deployments While are China. China, increasing PON outside PON

focus our engaged to providers on actively leading system higher are we addition, globally deployments. In PON bandwidth PON with

PON for future. in deployments global expect demand to expected to higher to accelerate is continue access We bandwidth increase the as

in this in PON this confident time, over business by XG driven economic This is headwind years mostly several a recovers. a weakness sequential deploy and XG as nicely business Revenue at we China and China regions solutions weakness While as our remain business will other grow major next the China, deployments. was and wireless QX, negatively basis. both on down station in space impacted our was from which year-over-year

our offering production at have designs XG of numerous expand an QX, XG ultra-low use station low revenues CDR XX latency XX an XXXX continued However, enables front revenues ClearEdge the FY and European on platforms operate is production basis to grew analog This cost second. start our annual as our we throughout half optics. XX% at second and of base the FY and differential adoption XX base initial with bi-directional footprint. station links. platform power both announced and already gigabit per with XXXX. TriEdge targeted In per customers and XG low a platform XG release in TriEdge driver, to per expect haul gigabits PAMX of TriEdge integrated gigabit second PAMX their the We

macroeconomic global provide overall in European continue deployments this XG XG business. are driven vendors, delay the more geographical we seeing While will by rollout more balance infrastructure, which of conditions

China, decline to market of we result expect in Signal expect the and Product in a and QX. our remain infrastructure demand revenues to Integrity As excess weakness Group weak inventory

However, Group FY Integrity annual would our anticipate record for we that revenues Signal still deliver Product XXXX.

well-positioned Protection to future total a business. We from protection broad customers. were Asian customers most believe with XX% our group. and the strong our the revenues market negatively revenues our in revenues and offset are represented high Protection interface Product North speed expected to QX, Lower Extreme protection sequentially be USB-C very across Moving which revenues. of from record we is our smartphone high-end XX% In the our segments. consumer weakness market portfolio, consumer smartphone from of softness consumer impacted on down American choice consumer

Europe represents wide broader end across showed industrial which Americas a protection and markets in business, regions range Our all resilience of the markets.

vehicles. We higher are technologies the customers as traction antenna their are with into Ethernet momentum display shield, and in lithography advanced our positive seeing interfaces speed shield, all shield integrate continued more segment automotive as gaining products our

also fastest platform solutions the the protection which announced features and our switch sub Shield have communications segment several recently Protection the automotive electronic market. of new global electronic safeguard top protection solid This growing applications. will lifespan provides design hot and system the that Our makers, for We of win at momentum devices, is of waste. new truly innovative platform industrial reducing systems, prolonging EV

we As gig improves, high touch the a Type the business overall in remain deliver XX Ethernet, broader environment broader our expect USB portfolio protection in with for grow FY such protection C, antennas as protection interfaces well-rounded well-positioned macro to to market XXXX. displays, and industrial revenues record and speed

business quarter. starting While to due demand the see are to in levels, expect further high the stabilize, we we inventory fourth protection levels consumer to decline

Product a declined of Sensing Sensing our Wireless quarter our total In group. year and XX% represented the and to ago revenues. QX, Turning from Wireless from X% same revenues and Product group our

driven in revenues IoT, LoRa, and due and remained LoRa smart of used in exciting ongoing softness cases continues nicely and LoRa its the ultra-low LoRa Europe, smart connectivity. and global industrial but range, region. China broad of across grew utilized Our growth economic seeing are to a enabled to increasing in city XX% revenues power, general building, lockdowns adoption and North by range be due we long low segments. from to cost the COVID weak increased annually, America

asset hazardous lower tracking [ph] environments CWD is as Here to cell asset to Bluetooth such past introduced platform logistics. [powerfoyle their solar battery capabilities quarter. cell outdoor and LoRa chain environmental mines, sites. combining the tracking are with announcements a a lower significantly with construction and few technology] of extends from for sensing rigs, oil life Combining the global devices. management solar Semtech's this edge edge work LoRaWAN indoor module new and bring and and exciting supply Exeger’s Exeger asset technology unique integrating

Technologies autonomous for is a building LoRaWAN of LoRa-cloud remote of to enabled end momentum. XXX platform at geolocation allows re:Invent services provider service XX beginning of will dangerous network include into MCU tracking trends of IoT employees being MCU capabilities improved And core simplify solution, QX. already LoRa very monitoring commercial number and in new enable these and and remain and Amazon's expect which Conference, this the service AWS. we The up has already situations. leading estate also is network a solid a priority. using smart costs. the platform, the to expansion Their LoRa-cloud per Web expects remotely in metering. Services at Customer property we Technology to IoT indicates LoRa future. control LoRaWAN-enabled safety. opportunities. This their grew that autonomous new by operating residential a in access real AWS in real reduce our These announced first savings, public is solutions off employee Kiwi waste historical of However, LoRa’s dashboard platform modules the and achieved reads service, adoption will Nexity, the to silicon Technology reduction our carbon new and quality progress. These building potentially to Kiwi optimize in global shuts enable easy overall Intent savings unit operational XXX, customers announced XX% Edge adoption to meters anticipates asset safety and properties. tracking geolocation identify continues a gas performance our deploy gas to the metrics integrating improvements and launching and enables is a our fully from performance, multiple positive time for This meter its fully comprehensive Amazon introduced make metrics of and cost adopted day the discover week years. consumption enable gas to broad their operators, footprint

new as by evidenced In networks, private significant used growth public applications. addition and are also cases many experiencing to networks

FY We at QX, of X.X target FY This LoRaWAN XXXX million were of of Gateway end driven operators XX% by an XX% LoRa of the the deployed expect was XXXX. deployments growth approximately in And X.X Macro There deployments, annually. by XX% end public ahead our sequentially million. XXX Gateways XX% basis. and which which were increased an Gateway sequentially up annual Sidewalk sequentially basis. increased annual up on Amazon’s deployments, gateway XX% and XXX% also and network on network private

at over used of as We increasingly of global the next numerous end sequentially gateway expect acceleration these an deployments works. years attach nodes QX. to The device cumulative drive rates number new deployed million XXX in low cases adopt power LoRa the increased sensor end XX% several end to

number million resources of nodes end in climate by with and XXXX cumulative XXX our expect help related to natural preserve technologies We digital adopting issues. to the interest to and FY increased this monitor mitigate exceed end the

We expect five the years. end node next deployments over to accelerate rapidly three to

to we increasing expect end devices the [LoRaWAN] [ph] FY China, approximately Excluding to attach LoRa-enabled of our increase globally. install XXXX rate an by confirming annual XX% basis on nodes gateways

our and China we QX, to of Over expect opportunity the XX Our on China. wireless approximately regions deployments LoRa In anticipate our pipeline to of is at in XX% LoRa to $X.X a over LoRa sensing that real from XX% and impact a businesses. of both in will pipeline our decline convert funnel billion. of consumer QX timeline. the end XX% We and currently month the outside weak sensing business as business opportunities average proximity was currently opportunity weakness negatively

very despite macro achieved very us trends X,XXX new approximately will QX, anticipate in deliver XX for products However, released FY FY we wins weak design well we year record and positioning as growth and In XXXX, improve. future new to consumer business driven by revenues. record LoRa-enabled Sensing XXXX, revenues, another expect which our XX% Wireless we in grow revenue

Looking fiscal weaker we quarter forward resulting XXXX, China to see the challenges continued than fourth normal year demand of in seasonality. in

in to including see China. demand However, we stability and of POS, from are starting both signs

As $XXX be To million we a revenues between the our result, we approximately expect QX. at needed net or guidance $XXX of of of midpoint to our million. attain turn XX% the $XXX beginning million QX and orders approximately range

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

Operator

first Our sir. of question you, with [Operator Svanberg proceed line question. the with Please comes your from Instructions] Thank Stifel. Tore

Tore Svanberg

Yes, thank you.

current there the for on quarter. question The first number is January your

you think I quite a obviously So, expected think of Mohan mean that like about think higher. I a given to actually X% last Because is now XX% kind what you historically that achieve quarter, on you any I back the balance? in that XX%, And can turn that, you XX% gives Does as quarter. churns, and the terms? follow-up the demand confidence supply bit

Mohan Maheswaran

Yes.

supply Its that times think and in are correct, to place. Tore. also have I lead there's they of kind starting – inventory what also are normalize is get historically to There back been.

time be meeting not has lead difficult the is past. orders been in to short it as So, as going

the see confidence. there with improvement period for in stabilizing of POS been out, the quarter long XX%, also point has bookings gives and some us you to think as I frequently. turned that for yes, that a general starting historically, fairly a we've weak and feeling And XX% extremely time example, consumer,

Tore Svanberg

OpEx about model you mentioned rate sequentially? be XX% follow-up year? we you a quarter, this And for run that is of OpEx forward as of the when down as And new Emeka, rest so good. talk going a the XX% the total would Emeka sort Very to next number,

Emeka Chukwu

it sequentially. XX% Yes, is down

fiscal will a that things Tore, there you higher start right, are we and when come As like out, that. expenses know, new additional taxes year,

year a significantly think forward, bit expenses going from run first be to what half it's and operating be would rate probably quarter to the the So, I up expect is XXXX. the in year, the was it first next of I little for going but fiscal going down

will quarterly a your million $XX, As expect be of to $XX fact, I probably a run matter quarter. about rate

Tore Svanberg

good. Very

which would Just means funnel one that far as XX% of concerned? funnel mentioned would the be that is outside as XX% last of in house-keeping is China. the currently revenue Why China, you is one, LoRa

Mohan Maheswaran

the last Revenues XX% are – revenues probably closer of important takes to most the think time – up a is are a China, quarter, lower there transition think it’s to seeing but success lot the but lot little total The Obviously, up it's is I the obviously into of XX% revenue of still than to that, I in outside that from a of China. revenue, point China. from we Tore. funnel

also we'll it America, to has up. catch is But China doing now is if the transition and China business to in But there grow start other particularly in still China. regions, for will on to – more balanced I a little a continue growing I if funnel and geographical revenue, very Now, the while think taken North LoRa well execute bit think LoRa. see funnel we to are then

Tore Svanberg

Very good. Helpful. Thank you.

Operator

our Oppenheimer. from And Please comes of Schafer question. the your with Richard proceed with question next line

Unidentified Analyst

This me a Hi. the question. Thanks is ask for on [indiscernible] for Rick. line letting

license to CAGR? to node your your the agreement your how to embedded affects – regards we this in already is this in see I CAGR, long-term can Thanks. AWS, wondering the in was and XX% to XX% LoRa growth end accelerated in So, forecast Cloud

Mohan Maheswaran

us we to drive platform, and company's thinking that's it will services would good and in tracked that's to think power it drive to but and drive use of channel managed more and end and be because here in pretty about here certainly, addition and node and that the of revenues need go lower end assets kind expectation. presence the out a the Well, combined goal for market and the significant. here CAGR, more is devices, connectivity. end feel lot it's edge to drives the I use it efforts XX% embedded AWS' cloud whole The and connectivity Obviously,

Unidentified Analyst

sub to My Thanks. gigahertz gigahertz And way does how can variety? Great. any out Spectrum. on compare help the unlicensed Is question second parse this Laura there the Thank spectrum? you. is big how LoRa X.X you for is

Mohan Maheswaran

The gig revenues gig. is of new. relatively X.X the Majority sub are

yes. yes, above moment, say, is at I sub XX% gigahertz would the probably So, and

Unidentified Analyst

you. Thank

Operator

Please And with comes our your line of Sandler. the next Harsh question question. from with Piper proceed Kumar

Harsh Kumar

at a Mohan Hey, Yeah. your and looking Emeka, commentary. Mohan, couple. I'm I've got

talked concur down. you your against signs that industrial talked and but and of stabilization, when You both about, commentary, both kind I sort demand square I are that Emeka of about infrastructure of

is, seeing where seeing this question CopperEdge And traction are the you some traction, you're are of my signs like of seeing you're on you from you is are them? sort of of stabilization, guys if So, pickup some do you some products up think because new launching your of TriEdge or or that sort here? getting broadband and maybe in getting sort suggests of that based, broad which way demand happening

Mohan Maheswaran

Yes.

POS guided obviously, bookings, think half I demand of really is we any QX going right. to the for first down year, stabilization impact next Harsh, and

look is it, China, more say has we of on first start existing which part recover to Looks half. down consumer like So, going looks here. the existing would in to out the been year. business, business, stabilization to to the in bottom recover the at the I as most existing the it's that The the starting – like business starting in of good it's

So, QX start see up pick to maybe there. hopefully QX, will

on revenues half the certainly good on is about the more add But with standpoint. from that of talk the stabilization some Now, about comment next a engines new feel second today. the growth to wins design year pretty to existing and growth answer your the top on of I you question, of starting

Harsh Kumar

rates couple for growth LoRa. then about a talked And you of Understood.

really about ex-China clarify I I to pretty thinking of want about number happening all-in growth just I think to that your ended is question think the understand, about given you talked about what's for is year? with year, up – catch. for So, China real all-out, I XX% to talked which how in could you you growth China? rate Maybe you then XX% Mohan, didn't And respectable how you next LoRa a [indiscernible] are then And said thinking for are you a you and this that.

Mohan Maheswaran

Yes.

commented out our That's estimate now XX% LoRa-enabled is you have growth. has year's the for you where business. I slower, grown that the and XX%. for growth a end on fact end take The nodes So, this been refers correct China, if the simply nodes, would extract to XX% little bit China

nodes and as XX% growing America Europe. about actually – China. North So, It XX%, to in it's end XX% including is

other but So, that I it's is good, quite still acceleration think regions just it shows good. in pretty the

Next of I is obviously – continues to on good think some some have like the things is Amazon – momentum. depend made, lot sidewalk going areas to we China weak. year, that and going some second of a half. be on we very we are to announcement just those mean, And but the some starting get

next year, We used the We headwinds, still get we going but be close growth. happened what mean, it the is the cases, CAGR, a in with reasonably haven't XX% – really think other next I momentum if to these growth, still of of some I on given some us couple I we'll have can up. be a year years should think still, won't think few gateways see good we a to growth of but give last helium the little bit a for headwind

Harsh Kumar

Hey get mind, I'll off you very and line and the don't I ask I'll helpful Mohan, if I on another had promise after one the a deal. this. question

second You've got a request.

converts, timing back at were these you that my question then of bonds deal? buy close So, then timing these are or looking you that's time you think interest the would the have then the where entire rates, pivoted debt? lie? of they actually Emeka, is, XXX looking the will dilute? convert do given an converts And deal. deal enough and And at think the odd for the raised, and convert I you were you do if straight don't you intent to the to sort of so to And changes million guess

Mohan Maheswaran

of We're start of doing integration. close we're with what out is well is and the that. closed We're that the be we about extent. very I will let which tell which ready our excited year we're can the control obviously year, ready to some next and So, to to end me move Harsh, towards timing it. you and for we're hoping, early prepared to

And shouldn't indications timeline so achievable. far, that there's no be that

Emeka Chukwu

regards so question, do the And we we have that to Harsh to financing close your with the need transaction.

combination banking have our a of credit our line commercial We of partners. from

loan our our and have term to then internal do a have this we from addition cash. partners convertible commercial in banking debt We

in much So the the financing is pretty for acquisition. place

terms to In we the looking were the that – terms things cost to decision we and see in We we like just were best trying debt, that. of had make able looking we the play have of was With regards the to options. things at, at how were being were of thought everything at here. we what retire looking along all we to and capital to

we will of we do do regards the right debt] a with can lot what [ph], to time. have the but [comparable make decisions that I options on So those at

Harsh Kumar

guys. Appreciate you. it, Thank

Operator

our with the question proceed next your comes question. Janoskie And Please line with Needham. Trevor from of

Trevor Janoskie

Yes. ask for Thanks Hi. on a This question is Trevor Quinn letting for here. Bolton. me

does of revenue your XQ see XXXX XQ comments second the with trough, as XXXX? Thank step-up this the possible So, you. mean fiscal demand fiscal you given on half and stabilization, the in

Mohan Maheswaran

half. sequentially We first today. see as half we what up from hope certainly the see being the is second the That from

it's we FY us. If year record XXXX, second see like half, going a be very expect our you we Looks first for half. look at a from be to weak XXXX comments you as FY strong to had a but that relatively

when looks look total, good at it it pretty year. you So, a like a as

of weakness if weak. the The and into the have how main There's the first going back. back how going the and half comes I it think to year, to is, strong drivers And from relatively know strong Consumer. build-up going is inventory question is second half been we the China next half. some it Now, be comes first be very

as So, starts back half see through strengthen a bleed China those comes and year. little and we could a hopefully bit, second stronger consumer to next

Trevor Janoskie

relative Do to this and Awesome. big is industrial. well? in America role resilience you you a Thank expect as And you. in spoke automotive North and And broad continue playing moving resilience the EU this about forward?

Mohan Maheswaran

would China and well. be to sure consumers. Samsung laptops, particularly also economically consumer through it one that very And is the Europe markets is and market, and segments expect weak. consumer weak. challenges I weak, still it's all would very I up computing America – the and guess, And say as stronger are other broader documented market well I itself and PCs, COVID is say, we business, holding relatively through for issues. example some It's extremely going industrial automotive Well, through been continue been tablets in an It's consumer of definitely China that relative Asian have then North to today

weak. Europe is remain, sure, those anticipate North demand are so America don't will the and at moment, for stronger I but And regions.

Trevor Janoskie

Alright. Thank you.

Operator

with next question. And our Ellis comes from question Riley line Craig of proceed with Please your Securities. B. the

Craig Ellis

and and products taking you're Thanks into appreciate Yes. deeper the to to markets a the group in seeing understand just for on what Mohan, the bit what China seeing with question the there. all I digging wanted different transparency guys. you're start

and near actually that confidence trying consumer have there? up you August and Year would to seeing might in something in to elsewhere product builds that if started be that that You something were back bit and of discern the in therefore flagging just stability weakness China I'm the that Lunar in we're and can to may your of cycles a related New in in comments, versus be that really that you term beyond consumer little in interpreting a deeper into be go you signs be early the bottom might related more happening near So, that? oriented China what's

Mohan Maheswaran

it's Yes, the I would key come thing Craig, I that significantly, right. say down is remember, think, to

and down quite QX, QX. board so down we come guide QX, in down the again in has comes across in significantly consumer China So,

indications stabilize demand the seeing we're will and so, that QX are start to stabilization. And

started has seeing So, off. demand improve level POS and to We're also also bookings. to starting

I rate. So, I it's broad. a say that very wouldn't low base specific it's one but remember just would off say fairly thing, it's

So, I to the think hope is start key. that's I now see, we'll inventory think the consumed,

see, hopefully. even – is the the then and supply real the start more QX QX, inventory to think flow quarters in two So, of of customers' demand a environment we'll timeframe next starting kind over through our POS increasing to I of some and

Craig Ellis

intermediate question. second That's is And term more an of helpful. the question then

challenging clearly look would do of over portfolio, really you fiscal year-on-year? As seems you what you businesses Laura for good the fiscal we it XXXX the XXXX. But calendar exit given XXXX, confidence as in start a course for have that We the like out look where company, up have can set grow ahead, be growth.

You you talked going TriEdge. year? What about to are be the next think some year-on-year are real that momentum in growers business

Mohan Maheswaran

Yes.

half good And we in drive driven, for second business FiberEdge my and data actually very being center us second in next you half significant is a grower we growth of chance TriEdge year, center. think script. certainly a that the at data mentioned do that, strong have look can obviously the in both I but wins if So,

side, wireless it's been the fairly muted. On

I some China XG stuff that. year. think macro, Again, back. it's of could kind of there certainly very question on player a the fiscal is key the XG base grow. deployments in really coming of Again, and a weak this So, comment more But station that been

roll next could year record a [strong we'll in PON be had XXXX a year FY us. have up] So, [ph]. for has –

not I'm of see we'll sure level growth. So, same

big should of will a proximity business you it think mentioned, includes chance and lower And that So, XXXX I fiscal our good grow. Korea. And growth that that course, out protection poor has we consumer [ph], a to but XXXX in have, versus the it's our then the FY in probably year it sensing business challenge because a is business the if segments. be question [LoRa] will come Asia, Helium as has back then to in particularly take the other that and believe a had rate I the smaller, one such grow, that

Emeka Chukwu

a automotive our is And have Craig, – I should anticipation. industrial is record think year. also record a the next expected to protection, which broad-based is grow That which and this also year,

Craig Ellis

comments for cost months the square then costs deal. the interest my is the And just debt follow-up capital question a it's you, Emeka. really three last ago to around made And to for Great.

I think blended three that has still months interest ago or you were thinking X% changed? to the expectation X.X% would reasonable be is cost, it a

Emeka Chukwu

going transaction, to probably the and rates it where I think to expect close at move in rates because be on increase slightly point we between all the the X.X% to the are. At depending of this it's time X%. the

Craig Ellis

Okay.

Got So, pretty it. guys. close, Thanks but hard. a little bit

Mohan Maheswaran

Thank you.

Operator

line from of Christopher our Please your with Rolland with comes And question. next question Susquehanna. proceed the

Christopher Rolland

guys. illustrate for can Hey, guys, perhaps Thanks you we're you illustrate the in question. seeing for Either weakness us. the perhaps you China, of it can you know

question sort a question. less of that's the the from what's And Are that, normalized then XX% expecting in I is deep like trough more how this? full-year, my think of is, you it I number? China. we be first guess I for consumption to talking is do guess this first QX? end think you're where in XX%,

Mohan Maheswaran

lower, consumption by have a really by is that to the size have But at just We an time it So, this my you gut to continues number right. regards currently this going probably with but maybe and end I is at that of still estimate, Chris, it POS Maybe the slightly can't range. the the be that it point. how at year. is give feel at is and see a level, that region, everything to we'll XX%

Christopher Rolland

into you I for you but that inventories, was positive down, perhaps mentioned where is I would about in Maybe through – sequential can if mentioned the think up product either or demand know or think not, I are? that you've but know some you being inventory think April? here you in way there can indicate as do the well? here, quarter you is And that, guys April the that I go April China, a reason chewed specific don't talk about, in a play if I inventories inventories think that weakness, is for can about talk you Okay. coming talked

Mohan Maheswaran

so. I Yes, group. it look product have by at to I think

business. in strong China other weaker think. And sure, perhaps inventory And first infrastructure half had a has referring very, businesses. I'm the little QX across reflected think all a a to than And just more our We that's I of our in segments. very I expectation, now. PON For particularly, bit

I think say side, Again, for proximity that's we consumers year. fairly Korea. again, that what little we of yes, but it's pretty would think seeing there. China, wireless and XG in both infrastructure, I in the particularly a been had strong bit data soft for and a whole are year, then say, is protection And mostly China PON center, previous consumer fiscal and And the So, I on have would sensing. I

main those So, are two the areas.

that some Helium excess that gateways. there, the utilized. eventually for On The be the be used from same are can I LoRa will front, chips gateway other inventories there's there's but chips drop-off think Helium the – obviously

so concerned of China. a thing of not I'm for just So, It's more kind there. macro softness,

how see plays that we'll So, out.

Christopher Rolland

Thanks so Mohan. much,

Operator

management this I'm questions. any any closing at And remarks. turn to floor would like Okay. over not seeing further time, I back to the for

Mohan Maheswaran

a our closing, In teams global in economic are well executing environment. challenging

faced to Thank look next appreciate we support Semtech that, in resilient more While diversified currently exciting macroeconomic our challenges the and confident and very business, forward company deliver through we the growth QX, your headwinds we manage solid in quarter. with engines, and and we updating are that yet continued facing of our you nature Semtech will you. successfully another With all XXXX. record the FY progress year of I'm a is of

Operator

This concludes today's conference.

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

Semtech (SMTC) 1 Dec 222023 Q3 Earnings call transcript