Earnings call transcript Q1 2024

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Operator

Greetings and welcome to the Semtech Corporation Conference Call to discuss the First Quarter Fiscal Year 2024 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 mode, a question-and-answer session will follow the formal presentation.

I will now turn the call over to Semtech, Vice President of Investor Relations, Anojja Shah.

Anojja Shah

operator. you, Thank announcing market release website results issued was semtech.com. A today our and the close our is after press unaudited available at on

Today's from the risks anticipated in that cause forward-looking results results call statements. that actual materially uncertainties could include differ to these will include and statements

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

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

financial all financial useful, A made financial to noted. such measures is call, management prepared discussion release. most results of this in to why remarks press detailed GAAP considers with references non-GAAP measures unless to financial measures measures such non-GAAP the today's the otherwise our During of non-GAAP reconciliations team along in will included refer comparable

And it Chukwu. over Emeka Chief Officer, Financial Emeka? turn that, I'll to our with

Emeka Chukwu

Anojja. Good everyone. Thank you, afternoon,

Before has its for I the new all you our completed CEO. search the that begin, trust news I board saw

Semtech all next the wish very we the want to enjoyed on Semtech Like are Mohan of month. for welcome congratulate And will Paul's about him. his we his are this later experience also to well your Mohan to with many arrival successfully on and We but and we I you pleased led XX has IoT working years, Mohan Paul past retirement. mix and Pickle all semiconductor comment to Semtech. excited adventure. have further, impressive look forward employees,

and of above Wireless. our XXXX, of year-over-year. of our delivered XX% revenue million net midpoint $XXX.X sequentially from These increase an Coming to of the of include numbers $XXX company XX% QX the million, fiscal guidance and acquisition the sales Sierra

of with XX%, our into America, -- share per North in our guidance of margin China, direct The Wireless represented and non-GAAP net above the our $X.XX and shipments was XX%, approximately earnings XX%. earnings Total geographic has and America gross Europe. sales Asia remaining of of QX, distribution and of represented XX.X% was rest XX% of mix and Europe, represented addition towards increased and revenue line XX% Our the Sierra XX%, our In guidance. North our respectively.

our to end markets. Turning

first year. high-end XX% High-end mentioned XXXX, expect year see consumers over represented markets we in net XX% X% of macroeconomic prior increased affect last Sierra sequentially XXX% As decreased to sequentially quarter, which did XXX% the QX. challenges the consumer prior XX% we half market fiscal versus and the from revenues. revenues. our revenues total net business the of to Net industrial see the from market we end due of represented in inclusion and of Wireless. The total revenue end industrial the Net

finally, And declined XX% revenues. and net market [XX%] year of prior total the represented sequentially and XX% over the (ph) infrastructure end

of addition industrial Business sequentially, POS, the and with of coming in our were by balanced The QX POS, Sierra. Protection due XX% In driven saw terms strength and Advanced of and X% market we grew markets from majority respectively. the end end bookings infrastructure Sensing consumer the XX%, to XX% Unit.

gross guidance. line non-GAAP of in QX was our margin midpoint the with XX.X%

expect we to stay gross QX, For margin flat. roughly

levels. through slightly synergies by benefits expect higher businesses cost were margin as we internal our the XXXX, trend are material we in margins These fiscal of remainder higher Semtech increase. year, offset and our our revenues achieved, absorption, reduce gross as work lower to organic the to For inventory

gross XXX XXX of margin basis improvement points expecting to QX still are by We this in basis points year.

strict million, expenses $XX management due midpoint our of to below In the guidance spending. $X million operating were of QX, discretionary

to reductions we we of plans operating further X.X%, driven to profit. the on operate our execute X% year operating as and see the our For throughout down took by XXXX operating fiscal non-GAAP QX expected, optimize better QX, was remainder And significantly margin to another to than expense, continued expect expect In financial performance. of integration declines preserve sequentially. we for actions

of of QX, In was expenses. bonus $XX million operations and from flow cash fiscal the impacted annual payouts year use by the cash, XXXX related payment acquisition

improves, year, our flow profitability current to improve of half acquisition in off are the We and recover cash expenses reduced. as levels the as second inventory demand expect allowing taper related to us

X.X debt basis. Our end on net times of gross at a the $X.X approximately leverage or billion was QX

We of increase we amendment navigate environment. first leverage another that coverage We negotiated to we further our this demand software covenants. as to in agreement our expected and today, net see in half the get credit through to leverage relaxation expense ratio interest an the year announced

interest have we expect expense And our down now cash X.XX%. weighted was we approximately XXXX. priority for pay cushion Given current fiscal as projections have will the said main and for to free debt. The QX our earnings, revenue flow an cash to through average before, be adequate

performance than but still by expected, impacted QX macroeconomic was summary, In better headwinds.

progress Sierra Wireless. Looking ahead, our integration we continue of on to make

fiscal Our and of acquisition year plan XXXX. expect ahead Sierra as are to be to a still accretive synergies earnings we result, the in

our levels. steps seeing LoRa our back to design that gets Overall, and with demand We plans. channel higher business improves normal our performance, taking believe on cellular good integration the are getting will are we to improve that financial as we're and thrive we inventory customer feedback and wins,

I call will now over Mohan. to the hand

Mohan Maheswaran

Semtech Thank that Executive interest a board as Semtech's years. and ensure President support Chief earnings will Chief through over to Emeka. phase today. a and Semtech. everyone. Semtech CEO him with enjoyed support XX as XX, you the afternoon over the and you, Thank last you for XX President new for Paul call in I next and on growth. Thank next announced with to all my Executive as transition will the for I'm Pickle Officer marks you joining support and working smooth Officer. tenure you my for last join needed your months. continue Good On of and the May Paul I've as we all counting Today

QX fiscal by of above as sequentially net our year year In achieved XX% midpoint QX of new fiscal our record guidance. the group, Onto revenue performance XXXX. increased a product the $XXX.X quarterly slightly and as for outlook QX, well million, of our XXXX

per of We also non-GAAP ahead $X.XX, OpEx lower as were earnings posted share driven by of expectations. synergies

guidance, levels. high, Product up down organic at albeit, business sequentially, revenue Integrity Both was organic while Group of Signal the were and better has net represented confidence business QX, our stabilized, our sequentially the revenues. bookings and than Semtech were remained Semtech that XX% QX revenue for inventories EPS In total much XX% lower increasing

As expected, weak all in QX. very our infrastructure businesses were

station especially weak demand and businesses as inventories base China Our softened PON in high. remained overall were QX, and

modestly but Our in this rebound hyperscale data data are business also was business to QX, we QX inventories -- expecting reduce. weak center as in business

We performance our are from by wins. North business, design anticipating strong a second-half center American our data driven

demand AI and the upcoming to hyperscalers is is significant our buildouts. primed portfolio SIP data take at driving center advantage of

Our key solutions, data advantages power lower AI latency Tri-Edge, for are requirements and platforms and FiberEdge, centers. deliver future which over DSP lower CopperEdge

American that first months. XXX type In North next the are FiberEdge positioned design and customers where growing footprint momentum in are center America. per industry's we with believe are TIAs, in positive build-outs wins We QX announced China, data data XX with North and gig regain already partners we center our interest channel we which will well the Tier-X generating in

tremendous per penetrating gig We XXX channel rapidly CopperEdge active our stages segment early will business gig grow in full portfolio and CDRs, our potential over cable remain us center confident CopperEdge platform XXX believe America, data of to next years. data that addition, has In ClearEdge center market. Tri-Edge the platforms, hyperscale is in the North data our in and PMDs, we FiberEdge the the enable copper which several of and re-drivers including center

business sequential -- encouraging While starting decline deploy China, to is in providers we a encouraging outside QX, PON inventories believe systems, for to of sign we very PON seeing starting which future excess are saw very is a increasingly our service our which are business. reduce, PON

chipset, European Our at PON with been has PON first the wins recently already design Tier-X XX OLT which gig portfolio customers. expanded industry's has

has gig, the and our basis, impacted the QX, broadest XG PON in in that the PON business PON and portfolio China from in and highest PMD for return demand customers wireless macroeconomic we base performance also half. gig second our to Revenue base XX business stations. offers down both We portfolio X.X sequential XG station and growth PMD to on gig believe XX in gig, expect the XX as slowdown the industry the was and year-over-year both

in in FY this However, China should new half second drive tenders the and in issued of in FY segment meaningful XXXX growth recently XXXX.

inventories FY of businesses, as a we to and demand continued across expect our infrastructure recover. of China, begins improvement QX from modest and expect customer we a In our Chinese in reduction XXXX, revenues channel

As expect to Signal a in revenues Group result, QX. Integrity increase we sequentially Product our

our Sensing of was as demand decreased markets. XX% with and drop from and China total consumer lower inventories Products to the Group sequentially from high on Sensing Protection and we are The and Advanced Korean QX Moving Advanced Product. faced segment net our Protection driven both represents revenue XX% in revenues. smartphone by

expect to continue several quarters. We for inventory digestion

Tier-X customers. protection to platform leading design smartphone achieve solid USB-C wins on smartphones we continue new However, with all our across global

with the the for we to human of QX, and expansion In our smartphones release enables devices. a XG RF portfolio proximity new PerSe power PerSe control. mobile sensor Product Semtech's announced technology senses SaaS of implement

regulations sensing to bookings up with in proximity XXXX FY for and significantly [indiscernible] growth, a China beginning are New QX. catalyst from starting new in be POS

second as this continues expect sensors of the [indiscernible] our FY of increase, XXXX. half We adoption to in

demand accelerating. we high-performance segment, On portfolio system automotive protection protection of our our market from the for seeing are is strong products, the as adoption broader

automotive we sequentially. business, protection and the and our Ethernet, QX, Advanced In Protection from business. in adoption Specifically, history, the expect broader In protection QX our seeing exceeded revenues our Sensing the our increasing and protection of time represented we consumer total see to antenna segment. first are business of protection XX% business USB-C approximately for grow

business. our to IoT Turning

sub-businesses. As a business has two IoT reminder, new our

The is business, the IoT Routers Product up Wireless Group, the of business. Systems Semtech's Wireless LoRa made is first Sierra Sierra business, Module which and the

Connected group IoT includes the Group, Semtech's product Services business Cloud and LoRa business. Managed Services second which Connectivity is The Sierra's

to million revenues. total approximately XXX% revenues IoT $XXX total sequentially or QX, of XX% increased In

While our -- Europe, indication POS and a end by is POS strong is sequentially were This grew chips, demand and with the that -- our grew strategy strong XX% POS enabled working. in growth LoRa quarter, China. our LoRa end grew the for down node helium lower volume our gateway volume Japan, volume revenues driven LoRa in LoRa our

IoT in increase, deployments for end over few LoRa routers mainstream node future demand continue the sensor AI next expect networks, to We Edge low-power to world years. as incorporating becomes the

The North LoRa IoT to use cases continues grow especially adoption globally, across Europe. many of and in America

LoRa farms LoRa-enabled Some challenging exciting and XX/X for costs across real-time crop quarter gateways LoRaWAN-based every and yields. of Durian and announcements to lower Malaysia recent maintenance the in for their that sensors improve of a health Harvest yield Durian cycle. give this farming enabled high of operational Sustainable deployed farms practices, farmers increase is step the its needs sensors fruit crop growth the data included,

the a to provider segments. bring on SpaceX, its the number and they company, at systems satellite their will latest remote infrastructure low-cost logistics, LoRaWAN Lacuna targeted satellite direct announced manufacturing, the joined [indiscernible], European-based to seven, satellites and launched large ecosystem of into IT the healthcare, LoRa solution the raising parts strategic connectivity retail, of incorporate public world. its portfolio, to most have LoRaWAN Space, that

In to low-power the cases. a in X.X for supports used transceiver radio new be QX, endpoints, multiband LoRa connectivity in for gigahertz enabling well multiband IoT to for LoRa Connect networks use world. provides launched global single, logistics LoRa a LoRaWAN device The S-band wide connectivity connection as terrestrial new satellites. integrated This highly and anywhere low-power as for and is management perfect asset area for LoRa we direct use platform global

LoRaWAN IoT industry's in professional the QX, the for new skilled to launched engineers Alliance need LoRa and program developers. LoRaWAN-accredited a And support

multiple smart including logistics, markets, New connected continue across management, asset emerge smart spaces. LoRa and end and to opportunities utilities,

to negative our impact expect While expected the to return expecting China, LoRa node strong we Helium we deployments businesses and business continue in increase XXXX. and our end to our this to business FY LoRa-enabled to globally, is decline are a growth LoRa-enabled to of gateway due year weak

to Wireless LPWAN Sierra safety as XX% in increase. the QX, connectivity IoT continues sequentially, In routers -- business industrial increased. increased IoT for solutions in Interest and Sierra's segments Module Sierra the demand IoT routers public

utility for monitoring, of we Specifically, charging, increased our EV seeing and adoption agriculture. are routers precision

In are XX.X% annually. growth grew strong which addition, pleased IoT-connected the we business, our with of services

opportunity services our subscriber deliver customers. our As see base, IoT we managed value-added connectivity to we a grow massive to

cloud are We both investing platform services our connectivity platform. IoT-managed and IoT our future in

strategy to IoT As and power portfolio to IoT marry our highly attractive IoT a start deliver we services our strategies, router over module we together to few industry and LoRa uniquely the low next the ecosystem expect with years. differentiated

we as channel and we XXXX. FY weak Both of decline win win In high relatively metrics businesses. up these inventories sequentially, QX, value our a expect design module bode volume XX% our and well business face to our up all was demand to overall IoT strong In QX, sequentially. Semtech's was design across IoT XX% for sequentially hardware continue

fiscal year discuss me for let the the the of Now company quarter XXXX. for second outlook

we action our on top These synergies. LoRa of result planned of leverage, at are our profits a are As operating taking acceptable remain increased levels. and ensure our to actions revenues our

the portfolio approximately its addition, out the actions carry a XXth. and continues new June be we'll board review with and will findings In to any Semtech joining CEO, Semtech detailed who discuss

of million. or approximately $XXX are the to orders million the and $XXX million, we our QX at range be currently of We midpoint To $XXX net of need estimating beginning guidance attain revenues QX. between turns XX%

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

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

Operator

conducting from this line [Operator Our Riley. time, of Thank Ellis be a the Ladies Instructions] comes question. Craig and Please you. your with gentlemen, B. proceed question session. first with question-and-answer at we'll

Craig Ellis

and you've per some Yes. I Can the little the and (ph). in areas things out you're are in feel comment was do you the are more What a stability, hoping questions. team sales Thanks of quarter-to-date? much things in are what end seeing the weaker one] the for press very taking relatively of activity pluses have the order where [serve weaknesses, where inventory? on things by richer you're you what still signs and release, where with the or you the in start seeing more that just Mohan, providing on could color bit confident seen people stabilized, markets

Mohan Maheswaran

Craig. Yeah,

obviously, -- starting China of the business consumer is think now I So the life. signs show to in some particularly

Of course, it's come down levels. and it's very low

China point starting improved little and going it's the to turn improvement around So the consumer that's from of business, not to consumer. at a surprise, a some bit particularly see we're orders in business, in

seeing so, that been I area, I primary would And in continued that, industrial say, the so probably improvement automotive area. is not would say, one bad. we're also the

I general, strong So two in of think those areas. the kind are

think there's still are say would a relatively weak bookings of in I general, there. out lot are the remember, -- still other -- would I inventory relatively weak. But areas,

side there kind thing. broader and and specifically, and -- expecting inventory, it's positive looking protection the business. also center some the at mentioned So are that digestion data of POS I would infrastructure signs in the we're that's say key really of think side as the the there And in I I

Craig Ellis

helpful. And then follow up. wanted Got Emeka, That's to it. I

were you So $XX savings cost the on a million. quarter pacing ago, $XX very savings million raised think we to cost and target from well I

Now, we've in guide. had what it's the expense better quarter, better I in operating expected than the

with or and we to So that at $XX how move up the either million look time? that expense target reduction potential now for should prior

Emeka Chukwu

that this number. coming that Yeah, to in on little point. are very quarter. OpEx quantify seeing to we above prepared above remarks, so it $XX said really penny definitely my well Craig, watching we of a point bit upsized the I that also we're had million in the I'm at every We've this last we're front, definitely like definitely numbers nicely is synergies doing at not that the is

compensation that Our discretionary an spend of expenses, is very are something the all on, some we're traveling supplemental that. of keeping close eyes keeping eye discretionary other on we

ability hopefully terms things, to said on we all business pleased and do looking So are have Like of is in the the we expenses job very are to where right and we'll our that. now. definitely quarter in a in first at the remarks, prepared what we his good with continue manage given Mohan operating seen

Craig Ellis

just one And in then more. if I That's good. could sneak

some the You there And you specifically rates means? you incremental Can point? achieved covenant out have much, that incremental mentioned interest that just was any you debt had was other that cost to talk flexibility. to some achieved more on Thanks so or with guys.

Emeka Chukwu

Yes.

for might in on The sort of that the that business, of macroeconomic stubbornly issues the challenged definitely So seeing. anticipated be the high. we're outlook covenants just half side, obviously, to given the the year. channel inventory our and that fact We the covenant continues the remain second other

proactive to get back So walk to with group took steps banking to we our them.

It And be was us incremental with interest an original be amendment those probably originally terms to is points bit there had we agreement anticipated little to yes, So, fees. about a the communicated, basis that out the of the higher leverage in associated because what cost than going are had and cost. XX we higher, rate there.

having fact expectation in getting continuously the all second our of that are we synergies, year. looking half demand of on that, think But is the terms said with in that, things, the running synergies, better also the at ahead I

that to going in earnings be year our acquisition to is the accretive to XXXX. fiscal continue We believe

Craig Ellis

Thanks, Emeka. Thanks, Mohan.

Operator

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

Scott Searle

wish couple questions. future over the good been past the you your I to the you Nice Thanks all Mohan, afternoon. in working in again quarter. for Hey, years. And It's my endeavors. of pleasure job taking with best want a

Mohan Maheswaran

Scott. you, Thank

Scott Searle

there. I clarify That reductions sales, by of included, terms to were things, sounds to terms increase is going make for And But and being mandated evaluation of is not there couple is is a going covenant of in of expense like is that in like further optimizing pruning on interest that And in interest it some maybe that there that in sure the to general that in of the you forward, in forward gave included operations the want right? just bank, the an small second is Craig's then just structure guidance penalties, portfolio and I and/or question follow and the asset want potential already things the on part your up OpEx rate. just fact front, of correct? quarter

Emeka Chukwu

Yes.

just take is So interest I'll this, motion. is guidance with expense, new wasn't time we would set the in was one, not Yes, business regards the agreement. in in has have to It a like do and factored every something second good mandated that. what just was that -- our already banks. that by yes, And the it the that

the in think we our In weighted X.XX%. QX, QX that probably anticipated on guidance about rate to about I was cash X.X%. be based interest

Scott Searle

looking two inventory Very of in the the if of your remains the are some high. issues could Great. if flow work And terms year. relief Thank sure comments, like not still just in I expecting some the markets, point you. helpful. modules, I'm of half activity heard in it design sounds you this into It in time. like inventory Mohan, But end -- IoT second at I you're through that sounds very first, there. working

on we're getting to normalcy. a back So, path

data start Thanks approach dynamics, get it do products fiscal you to end seen get given just year, to interest center. fiscal demand two new what's Do in that three this clarify to so much. levels the AI those that a of center, around -- that of doing of as then quarters entering amount have to is your back you the And and relates start -- year back the the the to ago? the demands or given you XXXX, there you have, activity tremendous comments data by

Mohan Maheswaran

Yes, Scott.

me start on let with So side. -- the the IoT

see with side, to Asia. the some probably the bit with Sierra we're see Semtech's about momentum. maybe weakness, after and now designing The and hardware North IoT we're bit QX. and now of a selling. business, I a is softness weakness how in the side activity little continues the And traditional some that general, earlier. things, I QX been -- of forward. think opportunities a win around taking Europe the think we positive modules China, some in approach in saw see thinking that that, start softness design we're new And that think we'll up this and that think on modules and we kind to particularly Sierra has softness I I more of they've saw in modules business Obviously, seen interesting and could router and about generate America is catching the going lot some to going that speaking But little there's

I we're weak, regard QX first last be the -- got second QX expectation to first I year? data we've think, that, of design will to half. half to was levels half our the back see get to center, With is than stronger expecting wins the our very yes, that stronger, be going Could the QX we on. obviously, of of some we need and think

the America, this some We remarks, North year. to more FY we that we've see back we're opportunities the as the but momentum new and prepared in with of of in have hoping I of stated, end have drivers, XXXX CopperEdge good some in kind probably they're mentioned as

Scott Searle

Thanks much and Great. going so best forward. luck of

Mohan Maheswaran

you. Thank

Operator

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

Q - Kumar Harsh

you just Yes, of had also all Mohan, a you I luck with of years. your working to with best questions. these I want wish enjoyed retirement, couple

the is first two in Wireless design function how Would a it speaking, that pin think kind just there or of the fact an you of inventory is many excess I slowdown basis for plus Sierra down generally aggregate The or say, And quarter quarters you be is -- do is one, a channel? are that you just quarters? on wins any losing inventory there is us, the had if to combined? able of, tell Semtech to and you purely

Mohan Maheswaran

obviously look most comes of down at buildup. you it -- that's inventory I wins say start Because you parallel to we design the inventory, consumption it's any then see seeing. of aware increases to opportunity and difficult in right? not at inventory, And is inventory are you -- we've consumption kind think look as lost, you I'm with of when to have can just what Harsh, and Yeah,

where is. the So think of inventory most that in consumer as I an example of

are a starting to to as signs is see positive. starting China more positive a mentioned few We there that I little bit look Consumer

So quickly. absorb -- and the that as back very if know, comes inventory consumer you quickly can

I in where infrastructure, those So to depending I the inventory, and example. like on the business areas think where in for quite other have quickly base picks think and station the -- that out same be business, up there PON China come some tenders we commentary inventory have applies quite some can demand we absorbed

area think demand, infrastructure would areas. long area a automotive consumer and has say then still been center the on say, And data the are for seeing time. I in is the extremely the the the I and consumer currently side, I where would area, it's we strongest weak industrial probably

So a right. surprise, that's not

Harsh Kumar

yes, design don't Yes, totally. LoRa is completely out in And so and had you ask So, two-part in is at guidance you if back? this your a Mohan, seeing here? what time? or I good pretty I'll side, And do follow-up, funnel played it mind. but make On you Helium are would out think bottomed point question, all come it's a then activity the

general required in was say last your agree business -- make that, say? all your think you I there that some based would commentary is a the the happened. if statement, in is -- What color that maybe part quarter maybe Would on secondly statement there? would I with the to you is that that of you about or two question And bottomed this then out

Mohan Maheswaran

of No, that. QX that's so the and part decline business QX bottom. I think why any was we're Semtech narratives organic on has further I is has And it'll the that side. kind guiding clearly that definitely And see -- slightly away. up business the business. that same think the from don't Semtech Yes, of was LoRa the came, probably in Helium the an kind improvement opportunistic now the organic gone of

in We're for LoRa it's and of ever in the well. dashboard growing. growing. across sensors are Could seeing not we're back? lot And and We're And banking the use on a yes, not globe. Helium now, as I nodes a clearly deployed. there. lot for metrics cases LoRa end the I so been on you don't was think guidance think out being I've years it's, banking that coming seeing We're doing still I mentioned come strategy back. the for low-power still that that IoT demand All LoRa years of are it giving

to Obviously, field China of The with look much to portfolio. is things opportunity very anyway and looking space happened of moment a was go weak now. Sierra. at a the a different I of remember, and playing tackle metrics We're don't strategy with the what's one Helium, integrate the But think and part broader because good. at larger as the as we

it's Helium. weakness your into to So, pretty any the But, the it. answer I should that's way about guidance question, yes, think think think you from much I built

Harsh Kumar

luck. of you. Mohan Thank I best appreciate and it,

Mohan Maheswaran

you. Thank

Operator

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

Tore Svanberg

Yes. Thank with you. working last Congratulations you these been Mohan. great on the It's XX retirement years.

start with comment Let a working me on capital.

You days XX. XXX, guys a did Inventory good really to down now back there. job DSOs

think land what those you lower that this be? inventory Emeka, business somewhat, think will where about where do would internal eventually would mentioned inventory DSOs expect and you to I we entity, this metrics on ideally still combined but days? As -- you know new

Emeka Chukwu

we of plans and terms So, Sierra's days continue inventory be I the days like inventory the of with be in that continue Probably the probably we XXXs those given familiar end to Tore, organic the inventory, would see inventory of will get to year, that the or down that expectation right? to very come by surprised the as have. get down, new Sierra wouldn't my business, both Semtech something to

So to how out. it see we plays just have

to equation. course, is in demand a be key that Of factor going

does, business see terms XX typically to has customers receivables, longer to days than organic expect that would would to come down, regards Semtech or think I that XX like see XX bad, to days. payment With maybe I but come down their for Sierra is not I the that

Tore Svanberg

great you give That's talked you second makes given the dynamics the all grow that's perspective. I the that in you there. for sense, of center base half expect points think But assuming station mean any that actually conviction? about also mentioned expectations data that to Mohan, I And second -- Great. in year. half, growth, the you we're data

Mohan Maheswaran

China, that's we affect in to how Tore, station tenders about all know you going the about it's deployed. service is systems are how to it's and obviously, going PON tenders business, new happening. many our be Just and that about exactly business know and Whenever we all don't in providers base all know yet, about. business We here, but

you volume as and in you on most so, and a PON unit are out we question penetration going of these And good the see then shares when quantities and of have in same good XG and China, relationships very know side. the XG systems, very -- are see quantities, you systems where allocated. much, of it becomes We're how tenders -- pretty just we

going half on fruition, always expectation if FY timing then and our be is not be then that's obviously second think is will a stronger very I to come If XXXX the So question those that, strong. to

Tore Svanberg

back I'll Great. Thank go you. in line.

Operator

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

Quinn Bolton

just you. a on to base echo working follow-up on on will the station Tore's great business. question start and Wanted I everyone. my congratulations Hey, with

in higher megahertz of said the if get stations? frequency the China have in think X going wondering these you gigahertz you rather are in band, those content higher the sort or out base you much have might content than in dollar guys X bands gigahertz bands to those where past greater tenders I XXX just in

Mohan Maheswaran

Yeah. I believe so, Quinn.

know but So exactly I are. don't believe I the they detail,

Quinn Bolton

Perfect. are pretty the being turns on And the think what still was second I may then low, XX% certainly turns near with quarter? ranges, percentage. fiscal of with up the XX% back QX, is for up comfortable missed higher but you I visibility recent end in have turns towards how

Mohan Maheswaran

of think, is to I Yes, actually this historical kind our closer levels.

know, you returning pre-COVID we're kind back go business you XX%, if of consumer that's as -- normal. actually we where XX%, So,

to is this I So think. of kind normal getting levels, back

comfortable. the to happen at look channel look quite POS and there the expect we We to have we We in consumption books. what some have make mechanism. levels. we're adjustments We inventory Obviously, at depending backlog. we on to on look what's So, a at

that's -- number, we the So yes. comfortable, driving turns quite are but but

Quinn Bolton

that cuts expenses, closely, don't recovers come one quick lower mentioned permanent, recovers? on plan. the those the lastly, Then they're are you the Great. whether comp you're lower OpEx pretty for back versus variable streamlining it's expenses reductions travel near-term, ahead R&D just necessarily as being that it Emeka, of of more business in business coming How headcount and is back in watching just nicely that as the or selling much looks reductions, just or expense, may like come expenses

Emeka Chukwu

it's that of think equal, levels us in roughly to. opportunities other spoke then I terms and Quinn, the seeing of I some synergies, higher of

in expecting this to them but I if -- come So we're year. back to not back, come fiscal current think even going is anything

things a on We managing the year. of very for the rest basis definitely tight are

Mohan Maheswaran

I our point you back profitability. think Quinn, -- you ability variable I'll lot go to and our at history, driven know, derive that comp look on other of if as is the the by

revenue, the it's right, dictated in and by the revenue. the growth So

a back. those if revenue expenses come the won't back, of So, doesn't lot come

Quinn Bolton

you. Got it, okay. Thank

Operator

[Operator with question. your Instructions] Matt Ramsay Cowen. with of comes Please from Our line proceed question next the

Matthew Ramsay

the wanted coming and with guys. new and first nuts of CEO very wanted you doing bolts a you taking question. thank things. appreciate sort there to ask Yes, questions. of is and to in evaluations the the get different obviously, I the guess much to one that board some I I I

protection from perspective? overlap independent things, those with the or R&D I'm those how the general and businesses Thanks. segments, between need synergies from segments thing? the they sales just two so to to what's sensing integrity a together, do trying operational business, and the from business perspective, a and FAE non-IoT Just signal and there go-to-market how to perspective, that are be are obviously run understand but picture big just integral

Mohan Maheswaran

Yes.

we we've of largely businesses, So, discrete we the Semtech's think doing That's do. and are a functions. It's do mean, businesses always I you analog had companies the at businesses of each I are different these and largely portfolio whole that if don't go analog Matt, history, analog look businesses, system. what back standalone. analog

do PMDs, our has Protection don't Advanced CDRs So advanced we we some advanced sensing functions. functionality. digital and but business, SIP protection do of In functions, the

They we [indiscernible] to largely used Semtech way our target Semtech, independent protection we've business had to very most look We functions low organic LoRa. done the radio the that's in we the done around which business, attractive That's they businesses. functions that's are what product business that's other radio businesses many now. and continue you integrity old But companies So, different do, for those And we've that with analog for even opportunities other. we business lot was our just it. with in the markets business business, expand run common it. have high-performance a don't power really with for IoT business what and years analog some be But with to acquired. -- each

have really now, our acquisition business. of kind doing kept with LoRa, of difference those accelerate who've capabilities in radios, were as and edge we from software-as-a-services we of radios LoRa end into in modular brought and with router the node we our in was networks, we expanded gateway cloud -- The as at you what a Sierra, a the aware try business service and of on from started But to with of of as services course, to part course, rationale, to business, sensing and that systems that opportunity radios connected and we and look an build bring of have. the to the Sierra

think the take than Integrity different and the I approach the of it did are business, acquisition. can level are and chip a IC we slightly why and Signal have. really businesses. the And different IoT we business those business question, of Product protection kind to so to whole that's Semtech your very that But business new answer the But

Matthew Ramsay

franchise my perspective. for the IoT services were affiliated business the and question cloud I appreciate guess connected follow-up Sierra. that. with you that also There IoT infrastructure pieces or LoRa as the in obviously were Thank with I big old business from business largely came overlap sort that integrate well? to is into that started is the of evaluation one how and from those two of Is Thanks. guess platforms to and is together? intention those I in platforms put cloud Sierra. there, opportunity came and progressing what cloud kind

Mohan Maheswaran

Sierra all some it's when With managed the of nodes, about managing it's the services Semtech, managed really with managed look network network thinking business, and managed connectivity. you So nodes those and the really services end software-as-a-services around connectivity business, about it's elements business. a It's at end sensors.

And two we're our platform customers. together, so, building value saying we're the marrying for essentially a higher

for on But platform, connectivity very platform and a and years be cloud network, think sensors going we that private have unique customer The network not understand manage we're that's Sierra have, and the understand a of the of with done managed to us. combined holes those nice the -- do platform, that software sensors that, sensors we've a that many I the location on our where the the I platform its the side. think cloud wants understand to example that on and differentiated And work had which now. build we provisioning -- very network security very we've are the health there's and the I network platform. of once to game, sensor. the integration kind a think for and really So the obviously really I really mean, LoRa do and to for and advantage have it's end on of

Matthew Ramsay

All right. I guys. Thank you appreciate it. very much

Operator

Tore Please your question question. proceed Svanberg follow-up a have We the with line Stifel. with from of

Tore Svanberg

you. thank Yes,

how now, was almost the Just through you're halfway quarter, beginning two follow-ups. quarter? The turns of be would quick as the XX% that the at that number

Mohan Maheswaran

that, normally don't Tore. give we Yes,

I out. the of would I right? about if We just the guidance, terms given we're that will number had quarter. confident of normally that tell that you beginning talk our Sorry, the make

Tore Svanberg

I Got back to had world But that, two say we're it. the it's last a the turns right? obviously in has that right? to sort the years, back is so, mean, safe Because, lot turns, of of industry to

Mohan Maheswaran

such a basically Yeah, So, turning zero, pre-COVID right? remember (technical so don't XX% yet, the I we I where difficulty) during to mean that getting we're but and I closer and unrealistic turns think situation think -- an to now quarter, you quite we're getting were levels, closer. so a went we right? there -- we're had COVID, backlog the was routinely

Tore Svanberg

this services Got what at that's it. And that XX% is point? the IoT, now percentage of

Mohan Maheswaran

you number, do see, that Let's have Emeka?

Emeka Chukwu

have don't I No, that number.

you. it I to but can get Sorry,

Tore Svanberg

follow We you. Okay. That's can up. fine. Thank

Mohan Maheswaran

Yes.

Okay.

Operator

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

Unidentified Participant

the Are seeing I bookings wondering to working that been your the side? from if your It's the prepared in from line strength for protection wish organic or X% this wanted with is a bit in in I My parse this Hi, Mark] (ph) Semtech out guys the [Way Rick. and of quarter-over-quarter particularly a more more first the protection sensing business proximity more and further? was sensing advanced retirement. from could from you pleasure you. little best the you remarks, increased question, mentioned you segment. you

Mohan Maheswaran

really protection particularly both in consumer improvements quarters China. consumer the year starting see lot are would for over we're actually. both would in as and general the business -- a starting say business. the on design as -- consumer It's business in soft few design it regulations last been I I in see, that know, XXXX of And But wins. -- We business new calendar China, now sensing proximity I FY say consumer to mentioned has driving sensing business, XXXX the more you the

is say business would the current what's the driving protection I increase. demand consumer that So

Unidentified Participant

Great. Got it. Thanks.

of this shape XX% to to out the broad of it within protection, the particularly compared the reached higher year your rest As expect growth for But follow-up, like that mix. given this looks you market my consumer the do of the mix the protection business segment, for side side? of

Mohan Maheswaran

be back I percentage expect again. come actually a to and consumer No, larger

I growing, as it I up years for demand we demonstrates and of the so course, in a do think got businesses good I I why come be protection very wins, percentage. protection to business and XX the penetration. goes momentum future. very start is volatile, really a we the what consumer have larger think fact it Because businesses that just for quickly that that but on go which down, business we've is design will value Currently, goes back once that is and will diversity that's the comes it's It once get bodes percentage, right? a down. of broader industrial business, having think next The and that the that our think well back, broader protection larger industrial got quite the

Unidentified Participant

Great. Thank you.

Operator

your from We Ellis Riley. line with with proceed the Craig have B. question follow-up of question. Please a

Craig Ellis

luck standards I things. I working the Yes. since implementing initial Mohan. it taking the and follow-up Thanks effect China to that Congratulations, into proximity with great in you wanted I One, sensing January good follow-up of couple in pleasure longer-term of think round, a in your and missed for next go XXXX. is phase. on

where the sensing generations seeing rate you could versus driver, As have of might something terms be the incremental win and it a this other just phones, designs like for of business around the you year, early as companies team it? in smartphone meaningful run does what are of proximity been that works with -- next you Is rates content support have cetera. looking et something in

Mohan Maheswaran

Yes.

it's reason few than we'd So for first proximity actually sensing the fruition. to something working China that years of include phones. of coming and it's in two that And why means it's valuable sell will been manufacturers or it the years for that into their for a quite all, reason later main towards It's smartphone probably the liked, now us -- but functionality that we've SAR is, been finally most hoping now. and

but some will change. and they have companies that phones, partnered we and multiple don't have that that penetration phones of China, and now have their the with, have with know and some they sensing As that Samsung with ship proximity into you of

in good. to are China, starting we So momentum that that's so and see already outside China

So it's design win. more

XXXX course, Of to that in from we see a to the for don't sure. I expect standpoint, FY but see revenue momentum have

Craig Ellis

that company That's time helpful. initiative, the something talk we it's and about Sidewalk time to know has And I from the Amazon then on. worked

the how as to go Just on prospects the you progressing is for that team monetize any with Amazon year? like we feel and through color

Mohan Maheswaran

about. just sidewalk early, their really vision So that Yes, And world initiative to out And that is that cases we there in very we've as there, I I feel something of think on supported always is many are and the ways. the but applications we IoT and good Craig, think in start like, obviously think Amazon's beginning think I is I about smartphone it's and that I Difficulty] use [Technical -- think some feel the we're it. Sidewalk side, see excited the

about regardless Amazon Sidewalk. we're a standpoint, it of excited smartphone from Now,

of So, that lot we I kind also to a success. mainstream in have are has Obviously, devices. of area. it's it's already LoRa ecosystems gateways -- home there the become spaces really end connected out continue There tremendous think we're about their going sidewalk now going and continue in smart to to see a hopeful technology the

got very kind of positive update, think still And haven't any it. so about I that but major we're

Craig Ellis

Got you it. very Thank much, Mohan.

Mohan Maheswaran

Thank you.

Operator

like queue. further are the to closing to remarks. the hand I'd questions There call management no in for back

Mohan Maheswaran

Thank you.

ESG our delivered world products society, to manage close, having I and we that our inaugural monitor quarter, this to the low-power many we report significant technology our showcasing Before adopts scarce want a on ways resources. the share as impact natural

find our report You on this can website.

the economic well you. of Thank Thank for the executing of are hands teams know in support. many the In again you next global as and challenging closing, Pickle excellent environment. years the Semtech our arrival leaving all company President Paul I I'm with in a CEO.

Operator

Ladies today’s for conclude teleconference. participation. does you and Thank your this gentlemen,

may have at and lines your this a time day. You disconnect wonderful

Semtech (SMTC) 7 Jun 232024 Q1 Earnings call transcript