SMTC - Earnings call 2 2024 | Semtech Corporation

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Operator

Greetings, and welcome to the Semtech Corporation conference call to discuss the second quarter fiscal year 2024 financial results. Speakers for today's call will be: Paul Pickle, 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. [Operator Instructions]

I would now like to turn the call over to Semtech's Executive Vice President and Chief Financial Officer, Emeka Chukwu.

Emeka Chukwu

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

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

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

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

the Gross Turning and per our delivered increase high the QX share guidance X% an our $X.XX guidance range. XXXX, XX% midpoint million, company with XX.X% fiscal of $XXX.X and net sales of and sequentially was above of margin in line of to year-over-year. of the of earnings end of

China, America, geographic XX%, of America rest our the into Europe. North the XX%, and has shipments addition The respectively. and and Europe of XX%, towards represented QX, XX% North sheer In mix increased world awareness

remaining XX%. was some gross XX% of range onetime net benefits. Total and XX.X%, driven direct represented guidance margin revenue approximately QX, sales the by distribution In above the represented

of sequentially of midpoint components to absorption. revenue subsequently our the expect offset mix basis XXX the our lower as impact margins by is for higher the environment absorption, Due rest QX onetime of at softer the we gross gross around levels. remain guidance decrease lower approximately QX, to current favorable the demand For expect IC we the benefits in year a of margin and to and points the

million, of focused In $XX addition was in cost QX, to operating below due expenses guidance synergies. the reduction to X% actions midpoint

these expect QX expense to between $XX operating $XX to lower incremental and and drive actions synergies million cost We reduction million.

flow was and $XX cash, cash operations QX, debt. a softness our use impacted of In expense from million demand on interest by

from will QX operations Our due environment. a demand flow in softer cash to challenge remain a

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

year softer our to expect the demand We navigate we the of levels environment. this leverage remainder as increase for

financial X.XX%. be We compliance our with interest expect rate cash agreement. The to weighted was the in debt approximately covenants QX included in average

to our In impacted focused by taking the to the only but performance to financial also summary, enable to operations manage to us are headwinds. demand not our headwinds, strong Meanwhile, environment realign current us position actions when for be growth macroeconomic continues we earnings improves.

hand will now over to call I Paul. the

Paul Pickle

Thank you, Emeka.

fronts. EPS While to and cost our met to on enabled second expectations, us our proud the note that estimates both gross quarter sales saving I'm surpass net for measures margin

channel Yet, control cost today's focus inventories navigate operational reflecting as reserved, cautiously from in and stemming our remains climate, enhancements optimistic our on We're elevated and we response. economic intensifying projections. outlook QX previously customer

in of improvement the customer sequential the to due into the quarters, initial showing an XX% IC boost component net consumption rest a infrastructure the in year, in with for sales, engagements markets. the being growth is after dip primed and and anticipated upcoming year particularly fiscal is Further consumer now stability to this design sales. end next

pro to $XXX decline, sequential million on group IoT forma basis. product systems bringing Our witnessed total a XX% an the

in the decline router modules a products, and demand revenue particular module quarter. a is experienced presenting in have both challenge we While for current

broadband the unexpected business market in our However, module to presents opportunity we with APAC This share. with expand under silver legislative horizon, us spotlight. low-cost an the putting discussions seeing our competitors linings are

advantage. engagements wireless this slightly. component node a minor have our seize pipeline drop power potential a significantly LoRa's especially In-quarter increased crucial, mobility significant. as end Despite radio-enabled private gearing are up sales, remain result, LoRa we're in networks, where sales to reach window and and increased for to

the While to a unmatched of IoT networks the for outer undebated. infrastructure realm. harness substitute, especially a strategy LoRa this be proposition may not inclusive vast its more private remains cellular value envisioning We're potential, specialized at fringes

enhanced IoT at connected A consistent XX% growth from connectivity. services $XX million. QX carrier and remained year-over-year achieved smart relatively was

our a high-margin for for attachment be a hardware and the sales renewed and will focusing we rates connectivity our on Given managed enhancing low IoT software cloud services cloud platform, with relatively platforms. revenue focus

XX% Tri-Edge The were Cloud quarter in Group data all center large placing with optical U.S. a quarter, AI-driven orders and million. by the application. FiberEdge QX was XXX-gig, grew XXX-gig sequentially Products to improved momentum XXX-gig Signal Integrity applications initial for center revenue. data revenue sales in significantly a driven from strong Product hyperscale in sequentially sequentially and broadcast benefiting $XX hyperscaler up applications. active XXX-gig, the cable

infrastructure offset gains XX-gig muted. infrastructure and demand, China although revenue. were a PON wireless improving, high cyclically end-market remain Channel weaker weak, These demand. stable, although amidst inventories by China remains

quarters. positioned when the upcoming is is this portfolio poised well and benefit in market product rebounds Our in to PON

driven advanced anticipated XX% sequentially, protection of smartphone by products secured sensing primarily The grew new in and applications. production design-ins

specific in circuitry Proximity was limits are product American 'XX. a sensing new ratio protection the our or We year starting well smartphone absorption for positioned quarter, PerSe ahead regulations North anticipated fiscal of up especially in China vendor. also for with in

penetration in early the but and the is design encouraging. the of cycle, innings early ramp still is PerSe

sensing of diversifying from and progress applications. end markets for automotive Group approximately in Protection coming advanced and to the continue our telecom We industrial, revenue make X/X Products with product

share. $X.XX For between we million. QX and and diluted range QX $X.XX net sales earnings per for to XXXX, are million $XXX minus Non-GAAP $XXX project expected between plus

investors schedule. about Post launched synergy combined of OpEx ahead rate I fulfill in induction, initiative to run which, million robust commitment aim entity the year's pro reduction compared other measures, Further $XXX cost refinements to our has my steadfast with earlier to decreased by the to horizon. our are on year a We're last it plan forma. along and presented the this

I've tenure dedication my impressed talent. During at by immensely our short team's been Semtech, and

unique need market products to remains seeing create but setting due Our industry After I'm robust. extensive is discussions state-of-the-art a The competitive about electronic members, barrier current team tech demand, advancements fluctuations us pandemic-driven the for with navigating apart. optimistic challenges.

our clear: At more connected is a smarter, Semtech, vision enable planet.

vision. to Our focus upcoming this execute for months be will the

turn operator I'll the Q&A. over for to now it

Operator

with Securities. comes from Ellis B. Riley Thank you. [Operator Instructions] Our first question Craig

Emeka Chukwu

Craig? Hello,

Paul Pickle

take have to think off everybody I mute. we

Operator

Quinn is & Our from Needham first question with Company. Bolton

Quinn Bolton

basis. Paul, The can Semtech. to been obviously, I semiconductor business welcome below down us think, give Paul, a hard up? the in, Is market question, some guidance guide I flat, pretty hit or inventory. October guess at by on already and combination Emeka, has business sense expectations semiconductor for the of the you coming demand first much million? weak revenue $XXX

half I to in if And fiscal Sierra got year. wireless the the coming business, you in, be script, where see flat you trending million to indicated it's It below do in contribution $XXX the back quarter? of well think semiconductor the looks be in as the the might higher October like

Paul Pickle

for the Thank Quinn. Yes. you question,

POS we've little at cycle. out the market semiconductors. of of think a And end early I'm in in for I really I terms the pullback think late, I a It demand, part, end Routers happened looking seen hardware. demand. And seen in of most bottoming numbers. when we've is fairly bit of off definitely market say

business, seen sitting least to So from it's POS off substantially the on out our direct indicated mix slightly, Those heavy too that pullback. does they dependent. over next are some But but some pulled several and tend modules have back. The inventories modules of be customers a is largely are whack given routers inventories substantial those quarters. not at the channel between terribly we've direct

So semiconductor the that the I've And for the going say fairly business improvement normal the expect cat seen looks we'd part hardware. along dead high-margin business of versus in bounce kind to beyond I'd resume doing one then is the pull forward well, back. the Semiconductors most conversely Perhaps continued hardware rate. bottom. we're a forward, skipping

Quinn Bolton

question. the of actions $XXX with run a OpEx rate synergies other And sort Great. by reduced follow-up referenced you already then million. having and Paul,

guided a OpEx baseline $XX going million to and think even Do in you $XX lower? will baseline before level increase at OpEx? right level of the to of that think QX kind model that You you And long start to you you non-GAAP million. OpEx forward? OpEx Is hold to how bring can

Paul Pickle

a back question. in flows R&D at necessarily way wouldn't baseline. quarter in to between previous of have our the kind the are -- current now, bit I of it it's lines the number going -- in was as currently says a what the There projects. there, projects you pull if R&D So terms on a those some than is ebbs and fruition better little good into We're read that coming perhaps look showing. which quarters, we're baseline

expense way is good of the COVID the In of at right, it the terms think look way of bloated cycle. the be, looking team I kind kind it during I at how can all everybody and to is say,

if back at, easily go able where look levels pre-COVID, a we was be company be we those business used should get that So at imagine to back, OpEx rate the run to there.

you there's absolute an there's that to giving So made. I think number, -- be without improvements

want don't to say make because difficult easier. those little decision-making it's I is to bit is easy tranche first changes. a perhaps The always The

second going bit a needs to be The forward. tranche thoughtful more

some expect on that the I basis. the more so optimized that need be spend And for how But and to garner. of company do continual workings more can this to it there to efficiency is discovering and a I go-forward be time believe organization improvement

Operator

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

Craig Ellis

up with out with at the Semtech Paul, question call, can this what Since and first to to welcome and the initial to XX X phase next the business? months your are as your The Paul, to just make optimizations you into start, look frame take call. with the step back and for can over again. come you is and Street a intermediate-term start an you want look interact of role I the priorities you. Trying just

Paul Pickle

That is a great question.

"Hey, And in state you the walk the and go the current really the cuts. proper economy, and of at the through think come to learn process. think to a opportunity -- the same we've or time" of afforded enacting and a, company, be like a to purpose discovery chew company I necessitated -- gum to going when has into I we're state current some have coming you'd

bit will we the of kind I And look to priorities makings, believe really are not current as the strategic be structure products we approach, and a kind parallel beachheads then how a assessing what twofold we're -- at of I a my where for given it's needs split. various a and long-term vision little in operating say that's its done and model. have model company profitability most the good projects, at, the we for and really efficient long-term with putting good along go-to-markets that technology plan can together

think progress an nice fronts. late, we're making a along it have like urgent, say nice on I progress. still, good team journey would spent of of But good day I'm here. those my seems the I affectionate portion term. we making I the of a

as think we delegate to to bit I'm identify longer able little kind term. soon a and As something, continue of

value. financial get shareholder operating and model constructive for back vision to health that short long-term the term, plan us and works will and on intermediate drive So

Craig Ellis

Emeka, helpful. And real a then couple up with That's follow of I'll on clarifications.

you understand that synergies $XXX how target Emeka, $XX the with just in Sierra-related us just million prior million the reduction can compare Paul mentioned. expense we So, help

that the year have respect color, where here? from gross flattish with to basis to biggest we of XXX occurred then XXX changes what through are the margin points were And from expansion expecting to the

Emeka Chukwu

gave the Craig, the about that for synergies, think I was it synergies, we I I last with said so time expecting. were to $XX the million regards number a

that doing that. bit Paul little getting that has than that And a a company, to we're we're think how exact already in $XXX doing other pro I the bit the taken don't a than some from is in then I of number, now. a little we're better actions million forma number. addition reduction to better but have an

simple. With very regards to actually gross margin, it's

benefit margin. for the the of mix higher of good the a component revenues. seeing is are We mix, That gross of IC

manufacturing, was guidance the Craig, much levels improve expectation be businesses we'll that and to revenue utilization our would be that. like initially when the and However, able our higher of manufacturing the was the discussed, stuff

set of for not reason the in right lot expectation was absorb previously that that basis manufacturing margin off we points So have now, that about of a fixed overhead is able we're coming to XXX for the XXX and primary to improvement. gross

Craig Ellis

within I the in strength Paul. in signal that? your the could to the specific one remarks sneak you it visibility center. and about of was what integrity That's looked program for Can just prepared you Paul, and more about in talk just have like data If commented drivers helpful. strength it for are you that some

Paul Pickle

So consumed we've go, thing because difficult a though, of to got particular waiting be a I -- on have when of channel there. they're ton turn they bit visibility out say to ready those it's more kind that's dime. it's And a customers quite bit the don't there It's to inventory plan for a of also that either. we will

ready the getting programs much for where it's the a coming hands-on running It's orders of process staging down. that concepts, drop when and proof So -- it. them, understanding are cognizant we're we're very of

In a a terms in particular that more planning quarter, it's of difficult. bit

good we over think but going figure quarter difficult next relevant be a a me is sense I little determine. quarters, more to bit several that to of the for bit it's for have more So exactly a a coming us which

Operator

with Anthony Stoss next comes Craig-Hallum. question Our from

Anthony Stoss

put a finer Quinn what on was asking just to on OpEx. Paul, point

And I which So million $XXX OpEx cost will onetime of what couple that of quarter of goal if in do was guess, things down couple out total to in follow-ups. should point about think at your done, getting a a each OpEx, have And sequentially? the taken elevated some, there think you dollars be quarter? we I million coming

Paul Pickle

think we're couple of basis, don't million a I hundred a million I on off. said run $XXX think But I rate dollars. So

won't this I that. I improve think it juncture. we on number can put a at

don't it through improvement current would significant of I'll enact. the we possible. quickly would windfall most In to those have expect as in we'll plan look place. terms is of efficiencies the to happen, rate it be of say that be but continued be as that, I chunks to falloff, think execute I operational QX looking to And After that

So try on an what exact feel time of avoid a good is. that budgeting it to a exercise bit putting give you have little a I'll line. until I for number

Anthony Stoss

what what keep to a are assets Sierra Got to of to you may it. And then Are at getting from going that? closer determination you or reach either you point Semtech? want

Paul Pickle

now, with can contribution this juncture those I that an short-term every think if exercise. that's I a all, associated keep positive ratios look asset asset of at assets. clearance to -- right certain at of really is And I comes hit first the unless kind down to

certain a you do in If need I've is and already what term, ask mind me, future. for our made determination I critical long strategic assets, my

that down for I on more a a assets comes ratios. can good time but reach we than plan, have those job just in assets like where Other the that sense or of it of divest, I to we'd don't which not long-term I and like whether to clearance bit can that, go. spend to to order need certain done little get I'd vision

environment a doing running this a or Having that, really is think I to conducive a don't deal process. said

determination where is sense. to So to a and company my but can we a makes to do that point not my is be it forced at -- to get goal divestiture, are this we the do if strategically point

think long-term it a principal I paydown. of as more

Anthony Stoss

highlighting out actually now makers This you last the commerce increasing. you the do And discussed question, it. almost years. your been the and pipeline said is just for department Chinese X agencies giving to that might week, FCC related and coming your something? they in last comments What's confidence other Got module has

Paul Pickle

don't point can And believe it's but an risk, significant the the quote to or a I'll anymore. it's customer, in they that don't issue the saw like necessarily one think they We where feel pipeline. I boost just they Yes. politics fight

for think So counterpart, way that currently security, if we APAC don't at why a paying somebody know a I wouldn't look from that if better kind going the certainly of can problem. to they're quality, come we're premium it I better cost because low-cost solve offer we standpoint, the -- slight maybe my that I to

that place ability to modules in as the also put a We requirement TAA-compliant have well. if becomes

comes it we applications, sure really the beat. kind beat, infrastructure to and make an to critical the guys that we're or guy So from of down be we're going industrial will to to

Operator

Piper comes Harsh question next Our from Kumar Sandler. with

Harsh Kumar

first Paul, Semtech. earnings at your here congratulations on

Paul Pickle

Thank you, Harsh.

Harsh Kumar

And wondering what us give Paul, what X from you've product you you've you would willing core the how was said down is And routers within be got I got and is much you here to if of Sierra think breaking Sierra is revenues. up a lines, trying an because what is sake quite companies, core Wireless. and different were -- much were versus you out and simplicity, revenues Semtech, of as couple out I'm slightly margins Wireless modules called how is understand a to mind just bit. analyst, I Semtech don't Sierra routers if Wireless,

So was be you some we can modeling. better pieces help parts so wondering us I at set and level could if

Paul Pickle

Yes.

commentary on the kind And guidance so -- the here. talking I'm a little about current if we was projecting versus router so bit, really look my kind within quarter, of modules of

$XXX allocations. us percentages, give you've -- reconcile dollar. got to oversimplifying million some actual got million business; buckets But million $XXX to and to don't $XXX You expect essentially, of get routers I'm module I'm really you've rough going the you of the connectivity; so routers. and

really chipsets sure a a for the to need you manufacturer, off that But at through. is that XX% going-forward expect follow chipset a purchase but those order I of be XX% I back up any sustain modules to expect inventory placing routers the business to to don't It approximately in so, or are that substantially acquisition end pulled consumed. so where modules quarter. make levels. those

orders in lot tend to a C&R. so of those be And

see kind of even at into customers, modules up we can direct, though those end good XX% customers, business, is good direct so the a had demand. you of So a visibility bit largely even into how pile about visibility

their bit, kind I'd does their it end consumption, ordering it this a little the patterns down that market come say of demand but really that happen. off is to made

Harsh Kumar

that or looking that I seeing Paul, customers the truly to us put, how investors Semtech really brighter. of clients that bit much, the you're months And on more maybe just the one that? weeks or pretty simplistically similar bottom the kind many want was quarters exists along say, understand, of Sierra then with start and inventory or Wireless. they believe, to a But see shed some -- are color of and this super things willing asking think before you a Would to ground lot let's at trends is other maybe off excess customers we little or or is helpful. hovering be there positive

Paul Pickle

I've Sure. systems exhaustively been I definitely business the consumption through demand at really here. of take that in analytics exists look going an and the least kind IC side. We've that data end on or at got our pretty good

confidently consumption got market where so can this has stabilized. underneath that couple at end say that us we've quarters I a And of juncture,

And in in, fact, not we're it starting exists currently forecast. say QX although possibility for to we're see in some upticks. the upside, the I'll some putting

at most you it cycle times, get bottom semiconductors, business. In least a of cycle confidence later can -- skipping but note I a feel I And different for piece part, up it's little to the little of chain a one along degree Its factors. business. like kind later of a is high a to been happened a surged the is going supply so life. of not early in in here health That I There's of that for bit the bit of accelerate couple stage. here, business think pile that end have But and overall of hardware, whipsaw due alongside semiconductor bit of does a still the in or terminate or coming we've effect. the effect

as and inventories efforts channel product, of noted, we're unturned. sales of you a sure stone our kind consuming not leaving go-to-market merely it's that just and so making focusing any then And

spring of V-shaped where to levels. quarters we're I've recovery So believed of how many spring in that back back. a I'm going largely quoting to inventory, not previous going we're to terms not

in I optimistic. product they think but those they needed. were largely were all just terms were they were extremely overstated. -- They orders, customers All wrong were truth, telling the of much just good how true,

of of to us out So the in going I of still channel results. of recovery U-shaped moderate cycle methodical how in it's be a a think POS, bit I mid-next back to for kind with terms think drawdown in play a And year in inventory pickup largely line levels. along recovery, would

Harsh Kumar

million? just call take step at one? last you Do in sneak business? one think down? troughing worse go it, gave your you total think we're get you do the roughly, I the we think Can Do from guidance $XXX of bottom Or for things that you another

Paul Pickle

I believe it's the bottom. at

Operator

Our with comes Tore from next Svanberg question Stifel.

Tore Svanberg

call. And Emeka, Paul. is this I Welcome, last assume your

the for thank So the interactions you over for you, first all question Paul. years. My

have So bottom. we like you actions next to point assuming But of concerned? as at levered. a going quarter. X.Xx some number go is for kind the you're to That a sheet as would while, it take stay that balance is you're only up Because far sounds here what finding

some at point, So that the drastic you're to take of for what actions? some things more looking what are

Paul Pickle

end to size want ability is into grow deep I to the point step the to consumption I cut where first of too our what limit R&D the the and don't get the according future. business into market Well, is. in

functions, we're to optimize trying and speaking, looking organization. support of philosophically kind the at all So

will lot from I standpoint, that be there had. was think to I a that optimization say, do of

didn't spending in they in businesses at to order that have. the the they were entities combined levels the So that need to support levels be

be that made, shape. fairly be in I good to I we'll improvements So there's and think that some do there think

those we the cards to exercise, divestiture, am markets it's to conducive think not that although get that All -- a XX our fact resigned of And develop end on to not doing months really to in sheet. got on the plan there we're the Anything the really developed. addressing to outlook. given balance making current and table I sure model capital that. not that that are we've think improvement and on be covenants. are XX I opposed the drives a drive confidence in would I additional can in we're of an that that that organically the -- own top

But the XX that months. there. at for to what's next from If and shape, least all good next I then think XX we think a be in we're I is to recovery get the mid this in model, it's improvement going year,

fairly of the that business it the trying market market conservative because of take So better as be from standpoint. expectation. that we'll to recovery a look I up, have. in I'm we a the the we terms spend size then accordingly, up. I'm the for upside not make banking position to sure going will much size on in And that the going business think be picks

Tore Svanberg

improve But the that's my at on you level No, makes And helpful. cost levels, what bit about able sense. start gross current gross cost the little Yes. think really absorption would absorption of and really Emeka, and sort fixed overcome. to more talked fixed follow-up semiconductor to as at the some a Because that not margin, I mix materially? you're margin

right? the have more step see the So the cost of part But what moving fixed in I'm to in just direction, understand right gross order trying the Because to margin? it. obviously, be in improvements overall mix semiconductor to is does function business absorption

Emeka Chukwu

all going over in and sell-side for I've years, the somewhere else all working enjoyed kind you thank future. words. cross to and the through your analysts first you hopefully, really of our Tore, the all, paths with are So

which is in business gross current bit LoRa inventory think maybe -- point. gross high the we in in of semiconductor the channel mix, the pretty us. increase With regards expect mean see in PON, I question, high XX-gig this we some margin from the a for business recoveries a to the the for suffering levels, the as margin an is from that your I at a some levels see little business would the to Seeing change of LoRa

continue the we and see of system. mix advanced to automotive our As industrial revenues a ITA, for protection

of in the addition levels the So for of higher it's a revenues combination of business. mix semiconductor revenues to

the we I up. Paul definitely business like start that looks poised is to said, think, signs back good semiconductor But are like going very it seeing

some would go as start expect as forward I we seeing levels well. higher gross So to that margin of

Tore Svanberg

it. Got

in smartphone So things the will But like then there your higher start at that. and and you especially design a PON LoRa with that, mix of be some to for consumer, beyond contributions. wins of and it like sounds see sort revenue least quarter, October can other

Emeka Chukwu

Yes, exactly.

that deals need for I are stuff higher will revenues right. then the more driving levels with just think overall you got actually of driving and inventory And higher. now start absorptions

So -- to start consequently, margins result, will the as gross again. and a tick up

Operator

of from comes Searle question with next Our MKM. ROTH Scott the line

Scott Searle

been a working your best a first endeavors. on always congrats Paul, pleasure the the all you in your with you. job future Emeka, nice quarter, on It's cost front. And want to wish

Emeka Chukwu

you. Thank

Scott Searle

just dive on and to quickly, Emeka. compliance Paul front, in Maybe the

lot down the major get of line. line? the back You've side into Can done the taking on a cost a top on you on the step a top without We're equation. compliance recovery

OpEx like other -- other some get an some and/or the there levers on additional to flexibility to ability there's debt sounds Are pull some it covenant.

process quarter So I'd thought like to beyond the on fiscal 'XX. the as of kind strategy the understand we into initial get

Paul Pickle

So 'XX. to ratio FY And some leverage the business for to the to as continues recovery X.X need so the is we'll next years months. into down, that yes, or obviously, beyond cap in I answer XX that, XX Scott, think step

continue at down, we kind buffer generation for need so But immediate buying compliance. ourselves for about order the issue pay becomes actions then covenant see the don't cash I to with in term, But principal it we look then optimize of I as to service in of the is haul. short a debt. some it And an X-year in really this covenants, the compliance took kind and way to that regard,

I got that think tool enough we've continues to the make bag in happen. tools sure that, to

through We under pay it if term. longer its going more and well. short think got in options term to we've be the be debt XX and refinancing market recovery, perhaps this going some of ourselves think XX we've long -- in recovery to on little But to and divestiture the principle to to this need and as belt it term, our is in continue story. hold a It's with terms do going a I bit of the out, service longer we're But I the over down secured more a months. to like, bit

Scott Searle

down some the Perfect. guess, question I couple are standpoint, the if quarter. recover? a on multi-part wondering headwinds, I in both could, you a product Very step balance routers I'm when seeing come down Modules an in? fronts there, of of some do to on up lines earlier seeing Are helpful. that see inventory back to are standpoint. from And following starting just questions. current were that and kind normalize supply-demand a you revenue routers From take looking that

with your And modules, OEMs sounds it some that in Chinese now. you've then like potential not with starting opportunities other upside got see to book U.S. and in welcomed order being the

factoring front. of kind what I'm you're in on that wondering So

starting And it long you down these I think quarter. to the in at LoRa lastly, step levels I'm see before big took recover? a how wondering

combined the thinking the world them together, kind was starts we XX The ago recover? And a then kind number not should to should the obviously, we of that XX environment. months But million, is that, we of that months around normalized sales putting as about below obviously $XXX thinking of what's be now? back if what be normalized from all about level companies go

Paul Pickle

just So ask to have Scott, clarification I question. a

talking and modules together, the routers, saying revenue whole? you levels? LoRa are Or about were those So you

Scott Searle

The whole. The whole.

Paul Pickle

Okay. All right.

and of at normal the an the I can say, anticipate I cycle, have that. draw let's rush easy try quite don't moderate if go kind see back demand to you the look to But answer through looked I a demand levels, to to it's on say, -- pretty guess whole of yet. line then recovery, I So over I would COVID try a for and

and grown last businesses of I it's historically at think this a to through so some it specific the independent cycles. those have draw we've easy got should decade, be that line pretty say, what is over CAGRs

every being I'm but haven't I to couch to that billion. number attempting probably for exhaustively put still kind single we're the I on admit say a product But it I'd where time combined at looked $X of it. a But on of that's I'm would north line, basis. going

did a I is that bit modules. increased it of COVID of temporary. like we a of extreme, blip, think little during that terms demand saw routers, with when Routers cycle, a not big see but the of not not frothy buying was There a does the big In cycle. this during recover? ramp-up

a problematic XG and a that a ensued Modules modules. terms of little bit because bit had had is more some had of you in panic you cutovers

of And inventory so there lot we double a out that's ordering was more up. pile bit of an a there. And why have

us going to is take to little longer through. a bit modules So work

exclusion goes hundred over Having said got fact increase we've just the on a discussions legislative going in hundred a list. that, the who that entity I terms couple that of million, due the of still to let's like pipeline say, million this couple on quarter are

EMEA and really So to gain, and does gain could a a market in we America equal market me, opportunity. inventory share as drawdown It significant in share. result that's of North it nice

we in that's new out of those We're optimistic uptake couple of fire So kind platforms, an best there we've of sockets products. The pretty to terms the as world. safety out going of I a think then go good. routers and new capture view applications, is can. to And those rolled attempt

a was acquisition. the during lot buying last and the there up close channel year by But until of the of

drawdown, a see to quickly going and as never you're huge rest. really really off that nearly POS falling the say not uptick, significant a as I'd although had it's So slow

I covered your I was but it. lot There all got in hopefully, think questions. a there, I

Operator

with question Rolland comes Christopher Susquehanna. next from Our

Christopher Rolland

conversations for Paul. and the welcome, all Emeka, years, the over Thanks,

Paul Pickle

Thank Chris. you,

Christopher Rolland

on kind Great. maybe on, guess I Quinn of line of following and here. Harsh's questioning

terms in the combined In Sierra would quarter? range the it you of kind $XX million for of next business, put

and some owned Protection should both was that that, XQ well? I Integrity October I those the play here, being quarter help us before for you that notice did and we guys Signal wondering And Sensing, if up into beyond in But seasonality business there January of guys. and traditionally that could for coming it. was you think into as was about

Paul Pickle

to slowly but that market off. -- million Wireless fallen want That's breaking say well business with Sierra correct. them as Yes, margin just acquisition, pretty that clips kind in and Good along the be we'll business When out to gain came $XXX of solid, business revenue think hardware is share. we continue you Sierra I clear. gross that that connectivity of has independent the the connectivity. business, just Connectivity I terms we're pretty of a still strong. that's really is

out bit be I and pullback That will $XX get well of in kind going current we little And but expect next quarters opportunity million see then can qual-ed upside as forward. little light, on front how we of then bit might things do see a of couple in. it a with depending routers over the to maybe rebound would the of modules, us, a

that's module. embedded Typically, associated a there with certification designing is cycle an

it associated So too there or or an go time would terribly XX days but typically so. with activity around it wrong. shouldn't is that, handicap I a XX to

Christopher Rolland

the a you Excellent. what And any be doing call? Would Would you yes, get of think Analyst time for quarterly well. new update long-term together? a And for great would frame And, the do an you we kind put platform Day on could model Paul, do would on overall? that as company be a that? when

Paul Pickle

not Day, a overview as strategy it Yes. months at out well. to that think Analyst just broad frame. targets at the that that Certainly, invigorated strategy, an long-term lay I target new before, of we That's very be of out great question. XX-month point reasonable kind point then perhaps would the give and a have to time and a we'd would And XX if in XX but

Christopher Rolland

one. last just one And maybe

the the give guys be needed -- guide. That You to typically turns make in great. would

we And Or is past? any metrics ever lastly, the again? then thing expect LoRa would that a of

Paul Pickle

metric? turns The

Emeka Chukwu

the I XX% that think quarter. was about for

Paul Pickle

needed fan ramping The giving just turns XX%. I'm is not it's not over indicative because of revenue. of quickly honest, the I'll quarter huge a be turns very in Yes.

misconceptions XX% of you approximately the we're can some it so But to turns. business. cause draw this at And or directionality wrong conclusions point, about the

Christopher Rolland

Great. And metrics? LoRa

Emeka Chukwu

was at the now. Chris, beginning So the the not of quarter, XX%

Paul Pickle

quarter. at the sorry, -- not at of this yet, the beginning Yes, Not

Christopher Rolland

LoRa? And Understood. Yes.

Paul Pickle

I'm question sorry, LoRa? your on was what

Christopher Rolland

that give the I to ton combination think a stopped used since metrics of Sierra. and LoRa You of

come of guidance, You going revenue, to information. used gateways, that revenue operators, to LoRa-related back? pipeline give ton Is a lead, ever

Paul Pickle

back I don't anticipate don't coming -- so itself. by I it

are I'm year. and focus think then every happy I that use million in approximately business node to to of to shifting connected give be also end you going what enable to node from We're order focus is in rollout -- the that networks. private an more necessary pieces of and LoRa $XXX

but proposition I think mile sense. adoption IoT LoRa been makes the definitely the that definitely tout what been there. of people has call things It something just totality label called last been it and infrastructure. last want in some LoRa, mile, at of value a edge, inclusive The of I the let's not that don't has been a point, ]. to It's fringe. It number has It's are that it's at believe viable don't I helium. this [ like

better in a happy couple is give talk could lower of to be what wireless rollout going strategy quarters that going we'll to is me define to it future you if quarters. strategy be, be, So to or to that

Christopher Rolland

really good helm Paul, and appreciate the taking you here. luck

Paul Pickle

Thank you, sir.

Operator

from Acree Benchmark with comes next Cody question The Our Company.

Cody Grant Acree

take the of acquisition see Paul, just back years. today? at Emeka, Sierra much the your give and the view companies you over Paul, them you the help welcome. been all you step high-level Wireless for us as the very strategic And if appreciated. fit It's with of a thank you can could just

Paul Pickle

Yes. best. you Cody. I'll question but Thank I'm answer, smiling you, asked to because give my it difficult a

and have that will thesis would low-bandwidth say radio it a technology further question. we a adopt is unique acquisition LoRa. for at I platform in sub-gigahertz how be refine do to So can ecosystem best holds point, operative investment look If roll I we we today. that it or say a and the at protocol, that the this we far-reaching used still the That And an true create makes to say, low-power, where easy and very out? okay,

we And needs do endpoints, implementation, sell of which would required you would you have need use of lower look in that and connected that so chips on at if what be today. obviously implementation,

would You configuration need software.

would system You need device software. management

that routing cellular a on or that You software standpoint, dots. from connect otherwise, gateway those would would some sit you through need or can so other traffic backhaul a router

that platform need would cloud You to configuration. also enable a

connected then would on customer into API hooks into gateway for -- would would on or that need Snap that a edge and you edge. you devices or the You'd Kubernetes a to provide then on individual sitting that and provide router, a cloud allow feed those software insights a

in acquisition. the components all those exist So

together. the Now that couldn't certainly fulfill would no, is all be the question to is develop you naturally go was And that necessary own, to answer and have vision? these -- but the helps it on to off pieces your acquisition

is that So now think those ease-of-use in how have best about. do to that pull we those going that for really an hard we're IoT? we And have pieces, something to pieces together play

those between It's the to enough pieces orchestration the It's the in coordination that a make the individual or not reality. pieces. order have to and market end

vision, we'll execution whether an it to or strategic on we assets independent spending be there, to what plan. reimagine and need we're of not, work time on not takes or that going So some get assets,

the We've our on on that. few got working ideas and as I've So we'll couple well, that bright a some minds of rolling got next quarters. be over that of out

Cody Grant Acree

think, customer is you obvious may the that fit a that with have initial been there acquisition? Do Paul, with your as is not strategic that application base

Paul Pickle

-- I down to use application, kind say do. There's say We really but down case. comes to it comes I'd case. of use it

a out the they LoRa. modules and complicated one RFPs in particular routers are and and of requesting installation both that aspects cellular there and of bit -- of more include that of It's terms X like have in use the program there's would a customer We LoRa software. rollout

fit or use customer And strategic with so strategic a certain application there is cases.

represent cellular monitor one rather pressure can have of that of -- field was I they for be tank fluids an that tank. want tank a telemetry, that router each are, to the give of would bunch that got cellular putting entire router connected Rather be they those a than installation customer across to and field. are and the doing sensors whatever the in connected would capacity field a pulling have depth temperature, And tanks, able to at devices you each We've one to and to a example.

And easy installation it belaborous make would that -- requirement, and fairly be devices terms configuring a of of lower that pretty much installation, in would a are lower now. it cost CapEx right

a go, and So yes, if pieces reality, in terms on. where with fit nicely wants of look but to at you that's making there have it market it focus does to are really some the it, we missing what

Operator

Our comes Sandler. Harsh question Piper Kumar with from next

Harsh Kumar

was fits it deployments meters. And interest the utility extremely of Paul, companies kind Yes. well. similar any you've cities I simplify any smart perfectly because for would you I smart small in received installations from described if curious for actually just example think meter

Paul Pickle

would lower cost those of and It also meters. smart the maintenance

look consumption, at as So LoRa. power just you to if opposed LPWA,

LoRa. essentially If bandwidth when you and costs at free look just LPWA, low are could fairly that requirements, you bandwidth they're on you go but argue to

as but municipality LoRa that those -- at can't in out think utility perfect is so a do a that mean network I fit networks, think doesn't private by I it private areas. rolled or So well, saying I'm that's rather large be

we guess, our We're some we able There standpoint, those, from where applications. solution support accommodate LPWA would but both be can LoRa-based be applications also well. to might happy they need I as an accommodate And solution. to

Operator

this I turn over time. would are Paul further at Pickle floor back to for closing There questions the to comments. no like

Paul Pickle

Thank thank for easy it me Thank the you my you Well, very look to to today. right. much. you All around in talking for time guys joining you on future. us for first forward taking and

Operator

concludes This today's you. teleconference. Thank

this Thank your time. participation. for at may disconnect your lines You you

Semtech (SMTC) 13 Sep 232024 Q2 Earnings call transcript