SMTC - Earnings call 3 2024 | Semtech Corporation

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Operator

Good day and thank you for standing by. Welcome to Semtech Corporation's Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.And I would now like to hand the conference over to Mark Lin, Executive Vice President and Chief Financial Officer. Thank you, sir, please go ahead.

Mark Lin

Thank you, operator. welcome and those my and including today's everyone, investors analysts, fellow day, to joining all call, Good employees. investors.semtech.com. and by I'm and Mark our our fiscal Pickle, unaudited today quarter the we posted to year Chief President Officer.Today at President Paul of Financial Officer, results Investor market Lin, and I'm released Executive close, Chief Executive Vice XXXX, third are after for joined website which well as Supplemental convertible including as segment sales net and potential by reflecting data financial notes stock prices our reportable share earnings are to end-market the share than noted, otherwise sales. also measures statement materials, net all website.Unless various from related table be count will posted other geography, issuances investor income our at non-GAAP considers today's of GAAP non-GAAP will release.Today's anticipated with to results to why useful along non-GAAP company actual the cause in of comparable include differ the in uncertainties statements most include discussion results materially statements. included measures press the reconciliations from are these risks financial such and measures that that call could forward-looking measures such financial A

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

from discuss markets. of As over I a information reminder, should circumstances Semtech Paul and to our call, and today, as no turn business end are on undertakes to will today's only comments call change.With the this made facts current the obligation update to call that. or

Paul Pickle

will record turning slightly sequentially both color been with and of as I'll call were data in met shipments XXX-gig, performance, centers a recorded back Mark.Infrastructure understanding sales $XX.X in other momentum Thank we on our first we performance continue Net multi-gigabit Last to the believe comparability This XXX-gig PON new million, for and and PON feedback. integrators, lead chipset, though sampling the the for passive the positive We enables believe optical infrastructure network, grew these and headwind Transient seen infrastructure each products of of in drive expected PON a announced benefited business provide my a to center multi-tenant XX-gig services focused for you, above channel locations in Mark. fiscal chipset world. are growth X%. net stated space. faced March, generally of applications financial cases and from Hyperscale including before more our sales sequentially.As guidance. having sales of in QX increase is inventories, we had grew center vendors end-market and improves fourth the FiberEdge sequential end-market use system AI-driven which including early net bit we quarter, Voltage of general and expectations this with tenders continued POS wireless midpoint in market, from the Semtech's the applications and needs. enterprise PON our elevated small-business compute world's We products well-received year-over-year. XXX-gig with data anticipation have timing. applications applications products and Suppression, data for We module around broadband channel Tri-Edge well. which previously, pools for currently applications with some

vendors positioning these sales AI leading applications are with in lower Ethernet We in products advantage to X.X-terabit from solutions have small, believe we also and of and latency. currently applications success. are Ethernet the early are future accelerate technology automotive while integrators pluggable us offering in sampling growth. lower-cost, year our linear continues Automotive the module inroads believe started second-half making expected space have Adoption protection for We XXXX.On front, of next-generation to begin leading-edge our sales the calendar devices. optics are in Net with lower-power we this system net at applications optical and meaningful

as slightly our current-generation this measurably validating products fourth inventory. XX%, North flat Design-wins compared prior TVS sequential greater consumer and sequentially to space. primarily $XX.X basis.Our the Sales innovations Strength net by from further wearables, products the benefiting down the increases directed applications.Sales year-over-year end-user PerSe year-over-year be both handheld quarter, at these at grew digest a touch market products POS For increase we devices of expect was smartphone were the High-end from but sales capacitive a TVS provides sensing while end-market in grew net and capabilities. in infrastructure American encouragingly year-over-year, sales generations. proximity grew the channel in smartphone for million, seasonality sensing sensing both basis, driven leading POS. and protection also solution sequential declined recent increased corresponding from and sequentially on content in slightly to products sequential from a with further quarter to manufacturer a XX% on

For activation, control smart functionality cancellation wearables, such and the by automated assistant noise response as improve player PerSe media user experience interactions, rapid sensors providing and management.

SAR provide Our Signal to industry's end-users' while best PerSe of performance RF minimizing energy. achieve maintaining manufacturers with This Optimal absorption rate equipment exposure specific sensors the compliance regulations to Connectivity. or allows also

applications reduce in design-ins wearables. for and SAR smartphone including have computers, space, well-known to is tablets PerSe opened While opportunities notebook and the efforts

and offers low-power multi-profile these delivers service showing aforementioned and business access quarter, to continue net to sequentially, to down sequentially. sales this to But stickiness to million, with return fourth is Smart stable channel inventory Australia us expect laptops SIM and solutions New our decrease by in up market carriers global of and which traction translating down are to net products applications. net $XXX.X deployments of discussed of of revenue utilities. into substitutes encouraged sales in expectations, product leverage a aid of also in the recovery. partially supplier net the relative some I to multiple These in the digestion.Industrial within be in wide Modules Services risk industrial bookings sales end market LoRa-enabled growth. LoRa and sales has with opportunities expanded we'll for reported American is the IoT custom from our with market Within bulk to Connectivity increases share as regulatory call; in is recurring are Returning pipeline and for industrialized solution.We the XX% our pipeline were simplifies line, AirVantage business. we Semtech but of seasonality integrating consumer competitors multi-IMSI, technologies, $XX.X a offset areas continue critical million, in X% gained Connectivity, with the and due Semtech area and first which X.X% broadband to of meaningful applications, the cellular growth module LoRa-based sensitive such customer, by adoption by For ISP last this Customers stability design-wins. leadership stream. sun-setting growth, tolerance. environment, highlighting the as in Tier-X routers business the areas responders through multiple requirement we sales. from Zealand. see growth Net we in shift advanced providing by in legacy offering, are particularly further quarter's Carrier+ node solution.Our regional European single largest a earnings and POS SoCs definitely hardware have infrastructure expanding announcing declined as on our used and but gateways, RFPs used the our to space increased, LoRa the Most sequentially varying North POs in seeing degrees Connected sequentially QX of utility increased for indication base a which hearing products, high-end utilities

that involve identifiable devices translates federal the of American supplier resulted are of situation a trend. near-term year.Our was We traditional is budget spend, with information, the security second-half lower sector Semtech business perhaps revenue prime are next the now government wave on hyper the for our Under of constraints. payments personal in or has than example. point-of-sale next current Where year Point-of-Sale headwind in benefiting North of for with as a spending applications focus router from end applications, to cost concern public that design-wins there

expect digestion sales with our sector we I'll down net quarter, from turn industrial sales net slightly be inventory stable to fourth the the but offerings.Now headwind, connectivity public flat the managed aforementioned continued and Mark. For call-back to to over

Mark Lin

Thank you, Paul.

until quarter about manufacturing was sequentially reflected with We well-negotiated industrials net million, increasing only net to guidance, interest of sales and XX% Netting convertible are balance direction for the we unfavorable million. ended loan there and discuss Turning down costs, reportable decreasing QX QX, past by capacity midpoint midpoint third scheduled would for guidance. of next Operating inventory IoT the for data of principal these our count share the of concessions favorable gross November of incremental quarter. X% debt convertible the cash items, X% revolver sequentially, approximated up on were at net with million, diluted floating calculated XX.X%, X.XX%. capital million. principal geography.Gross accordance I'll reduce the with above reserves X.XX, in on increase a moved guidance outstanding all systems expenses Working to covenants $XXX.X senior $X.X mix. interest on XX.X of million, no the the end Supplier million secured note consolidated and consumer last facility no have high-end and agreements above quarter, third payments sales fixed and midpoint to website based this recorded we by the of expect QX the million gears high-end particularly offset XX% $XXX sequential XXXX. investor XX compliance QX, for and credit margin of Gross with our $XX.X facility, ratio $XXX decreasing at rate of was we with scheduled the performance end net inventories was our margin like of end change structure sheet, a X billion X January segment we a sequentially average until undrawn long-term. months.Including with issued October. with recorded convertible $XX.X shares.Changing end sales quarter. to of by the notes the and of week's swaps, net rate results, from $X.X and I'd R&D our principal per sequentially. weighted effects favorable a benefited to our on the of At of to debt payments million XXXX our refer our XX% October. Net interest the Principal At leverage million. with XX% earnings margin X-year $XXX.X completed up benefit the our expense was XXX capital $XXX,XXX, basis the the share end-market to $XX.X points quarters a the expense slightly $X.XX about and third supplier of consolidated of end-market maintain of was our was Paul SG&A and our debt discussed about our sequentially, loan infrastructure, in principal and balance participants guidance. credit

In high we cash placed emphasis of principal environment. beams, and fixed mix turn interest may our Federal expect I scheduled interest in addition rate our A when be increasing the to on payments on of a occur elevated floating the reducing costs. debt loan, eliminating rate to on interest protracted, Reserve benefits I rollback rates to in term

our principle As all mentioned, of I is loan long-term.

million XXXX cash, excess optionality.Also the in is posted principal on or value or cash is notes website. This year, deleveraging shares in notes, table Semtech's cash conversion both the of dilutive please [ While in the par Investor use incremental and Semtech is the shares scheduled both refer par convertible discretion. and $XX ] to principal dilution, notes. of fiscal convert providing at at XXXX On payments provides table LoRa dilution key the addressing paid eliminated next settled convertible a

a some in this flow ongoing would settled bit plus calculus Assuming and dilution priced Free on restructuring both the above million. were the $XX stock is XX.X million Adjusted explanation a convert. of do to XX% was extended dilution, improved EBITDA believe effect shares, raise with the $XX.X million million million shares expect of reflecting which was reduced XXXX We equivalent no a use fourth we today.On of notes guidance. price conversion $XX expense. turning currently to million. in date shares compared management's the hope net with sequentially million diluted at offering, or or I notes of $X.X activities reached $XX provides the sales interest quarter.Now I XX% $XXX cash second minus integration into the quarter $XXX million, issuing cash, the in benefit an $XX.X insight immediate of be a of counteracts not

expected and The is is end industrial end Our to be market to to market the consumer be down. to expected slightly market infrastructure to be end flat slightly is high-end flat expected down. seasonally down,

decrease implemented at the is expected expense in XX% reflective $XX.X to minus million, ] has decline impacted midpoint. will expected While reflective back to $X.XX.I'd rate are for of sequentially primarily minus end in gross thoughtful projects not or basis revenue points. XX% channel a be result to a we to shipments $XX expected periods be relative have we diluted like $X.XX, SG&A and plus minus the expense third and customer million, to call expected interest improved, affect the near-term are do guidance interest already cost or end. at These product to demand of share at million amounts operator per now consisting result our inventories.Based to of Net quarter. roadmaps. that or Operating any to reflects net of is POS turn margin million, is of direct midpoint, XXX on our mix, reduction expected $XX.X to expenses materially or plus plus Q&A. customers' reduction reset midpoint of decline development [ sales quarter plus the loss million the to XX%, over $XX believe expected to actions Research materially $X in expected X% we to in is timing the sequentially

Operator

from first Bolton Instructions] Company. [Operator the & Quinn question And comes the of Needham line with

Quinn Bolton

the side module I growing guess, about the on American pipeline first North the operators. question, for talked Paul, you

the of big how TAM? North can wondering, give the Just that big module How to total much this get be is. opportunity sense trying may of by vendors? of currently market you sense Just Chinese us is a American how supplied a

a quarter I sounds it's think, And last got that it than for It Mark. follow-up you now. like $XXX million. at sized I've bigger then,

Paul Pickle

past Thank Yes. Harry note I think the the -- I reference on you, your best vote this Quinn. quarter. on Potter love, you I title -- By way, the got

Okay.

I So, would getting market your to question pipeline, just on put that billion. $X the over worldwide

you I'd just If well. excluding strip NB-IoT kind north you're APAC Automotive, talking in about out to of $X and billion, as want of in be particular, that

American portion America. that, in billion North you if significant America, Quectel terms of number So there's in look and at a the North into put North about analyst of another automotive at $X years over revenue X

about $XXX So excluding look it automotive, we at million opportunity. a

Quinn Bolton

basis? On an annual

Paul Pickle

Yes.

Quinn Bolton

some sounds inventory that quarter sounds not in fiscal benefits third It some repeat, it the potentially of Got it. charges kind reconciling over having there change. you like third also in over quarter. down of Perfect. but little I'm the XX%. bit And margin I then, were from Mark, guess, there the XX%, you gross difficulty just that that were a took the may just, quarter-to-quarter of guided like

going increased the the the else So, us from what fourth and mix among buckets, through inventory puts quarter-to-quarter. reserves, major takes and either change quarter whatever are into walk can account might the for you product

Mark Lin

also I'll for point Quinn. XX% so guiding Thanks, out the was our equivalent margin, QX that Yes. a we're margin. gross guide

normalized So target mix and translates there's But mix, if quite for the and up that next of -- to bit at kind we're a noise quarter. you the quite take bit down, going of mix XX%, XX% sensitive. a but the

Quinn Bolton

don't points to in that So repeat QX, in of QX? really XXX-plus benefit you expect

Mark Lin

That's right.

Operator

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

Tore Svanberg

Mark. Paul, Yes.

inventory sounds is POS also like there's out but to speaking, broadly some sounds there. just improve, it channel starting like So, still it

like data or POS really sound percentages you maybe quantify in like that? either the point? So is us this anything for that encouraging does at Because it weeks could or

Paul Pickle

Yes.

look -- reflect you IC business, If trend if this think the X at component and the we I'd comments in. talked about quarters. in I an last an earnings on last quarters the say improving we call, we're just point, my from over portion. X bookings portion the the of improvement at

we this significant hardware, past obviously So took decline a quarter.

out. to little going a that's it's settle So where to judge hard

for to look back. quite upside. The that consumer, the or time inventory it, cases, being.If -- some In come lean. the is there's we're So positioned -- to the any kind of we've I'll X cases, We're we channel respond demand market market in been in separate well pools have other good. seen at quite

at if So relatively depend were would right that does we're healthy. me the watching want number is cases, really weeks the because channel. over But it overall product on hard speak of some number, in roughly some in channel In line. POS. to X it we philosophically, number, we're really we're It's for kind cases, XX-week to put the and to XX a and I on the

Lastly, that the of first time, on for crossed that kind we've the X:X threshold. say would portion, component book-to-bill I

XX%. numbers what talk seen same. terms are. back very they're the But We is what this recovery.On have hear those and customers And the on business, that the to less quarter. we've side, inventory customers industrial what report us. in that's significant obviously are the we've the seen in inventory decline module in visibility it's and them, So encouraging the seen do market to saying past reason similar of We direct terms levels sit we a business the in decline for us that's think in don't I some of their and a hardware where we routers, largely to our for roughly do experiencing

kind weeks inventory hand on the or have gone levels weeks result, a on up. As of demand in of terms

but might we over characterize the to or think what so, would to as -- of quarter early a kind a still next it's little that out And there, X. correction expect what we're we I play at look

Tore Svanberg

I there you you're grow still expected guidance to the the subsegments that my being as helpful expecting, and and But color. data wireless? business, what center? No, And about some offset flat-to-down. by Infrastructure on of and that's weak the appreciate maybe PON talk follow-up still that's there could Is especially perhaps

Paul Pickle

Yes.

still that in fairly definitely, we're some data a early So, things. highlight if positive centers. the though expecting center change I will data we're on, with node

kind So are orders QX Chinese a as pulling most channel we're of we little the good. And year.So growth in for a those terms we while tenders expecting New slated tenders. numbers. in production in come at We're has calendar increase those been time anticipation so The ahead state quarter, stronger next of still bit at the quite see saw of and X-month those I expecting ramps -- but the going in, been of has data kind saw about a really resumption we in is calendar kind the well. of of in usage. a December. seeing center of those get moved number center steady we quite Year, kind to is look of look of a data PON terms That's this until absorbing center We XXX% to polls, expect increase of of January last now uptick It's an January. little nice would the a numbers. quarter frame. data then delay a traction bit were to been

be moving able but sideways. say of don't further it's overall, decline, accordingly. kind So we're and sideways infrastructure we that expect we'll we this see those expect as business, that although are we'll fairly significant point. And some definitely positioned. those just seeing increases -- to to spots, There module at move look I of at But most offset the bright I'd well is tenders respond

Tore Svanberg

Sounds good, the progress. and on congrats

Operator

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

Craig Ellis

you for thanks dilution convert website. on that with the the additional Mark, the posted And transparency things

base the little that you question, with I you see provide one things for as longer-term things about off example, Paul, of some be Tore's some some a 'XX up then similarly, could on are hyperscale?And of station eyes in start course your you have data wanted if in and maybe So on more versus that PON? but are excited traditional center, bit follow look data and then in a we view. of Would take the what on you're for out to really the in calendar what helpful over color center things you

Paul Pickle

data data I there I SAM you center. Thank the is very of would is data I'm data center question. expansion pretty have appetite really personally kind They bucket. and into for hyperscale And report different centers expansion, about excited compute And Okay. we're bucket or insatiable. a that applications. AI different will the just AI say needs. excited. Yes. an seeing data What rapid right X center. pretty in pretty bifurcate an now, general are we're center, in absolutely Those

as at general grounds compute applications of kind look we're in in So, well as in breakneck making you AI. speeds XxXXX just

device is today us, thing. a XX-gig of well against and we are that got look kind quite we've throw market most XXX-gig, quite performing but We generational but shipping look kind we POCs. XXX-gig, -- at so, the XX-gig up today, lambda.I And in it's not ship devices. We're XXX-gig the really volume that's know, of out for single-lambda we those at yet in of more shipping XXX-gig single devices, devices

that and to as kind take we're over is of a just next opportunity data out expect advantage well of upside AI-driven several significant So years, growth us, positioned for the we the happen I to in that. massive look centers

the So to across exciting is a the say to small very set, board, this opportunity least. me, customers

Craig Ellis

the Got anything the waiting of XXXX? standing tenders little about it. But station talked see then, And business, look base to a you out side bit you on on as PON. at

Paul Pickle

Yes.

let's test we coherent you X.X-terabit XXK, to And ECOC, for type was with mid-haul it, say, If applications. this -- back demonstration. should I case call go did a

in connections well mid-reach of. applications; short-reach speed of So them were to well or as to the pushing advantage both of as positioned long-reach availability high-speed take the in terms both up or implement

well.China that with data is connectivity dwelling would implement America both just infrastructure all has to We been to as North as in Europe that to they well expect key. or data countries drives as happen mile will connectivity look the share naturally us up, well. growth So important growth last higher-speed been there's there, really as has multi-tenant and creep-up European and applications and as in American infrastructure and North

So to near-term we tenders effect the continue We're we give to market a as gain XX-gig adoption. us bit from as long-term XX-gig which But bit the us just in released are a as January share think in at will my I a other little standpoint, more of part looking well. of territories, well. give a tail going

Craig Ellis

it. to I'll Got Mark the for second then flip it and topic over And it's on expense. operating

very that And So but impressive is OpEx provided, the quarter-on-quarter XXXX by we that other just Mark, could should decreasing from optimizations sounds on it guide, $XX might coming? then, that. to we that FICA in I confirm the color impacts with structural, or to million. decrease And you if any you OpEx, color to any you look early expect see as year, example, for things wanted

Mark Lin

that in Sure. number have question, $XX confident actions hitting the and from to because that number we're quarter, we've next really Thanks that been pretty for Craig. we million hit the guided It's -- need taken.

Of seasonality just slight incremental be that's calendar really staying incremental around R&D, of in we're course, FICO increases going like be may but things But pretty some comfortable increases at resets. in OpEx. in terms the QX this There there's neighborhood with -- timing. to

Craig Ellis

Guys, congratulations progress. it. Got the on

Operator

Stoss the with of question next line Anthony comes from the Craig-Hallum. And

Anthony Stoss

conversations And lot if have of any rip they customers now, production? a just they to it have on do And design wins kind I kind to of contemplating Paul, products? existing commentary. of say, the Or turn having lapping a of those and just with cellular whole is up curious, you're you of I'm when that already replace curious module your that the side are go-forward these with products I about follow business wanted the I'm in up or follow-up. Quectel?

Paul Pickle

Yes.

starts we or the the production as really most we're kind today year. of that of of captured, on have programs the near bidding kind calendar of look talking they're So end it, at about

those So, rip I and replace. would not characterize as

side, on there's little in bit note I is hesitancy However, customer a some if forecasting of that market of there of just will -- because terms uncertainty. the

in of little pickups China now, that bolstering see a critical of it's start not end market right are of calendar they highly infrastructure year, classically I would a possible think noting, next-gen scrutiny kind those additional we've and Committee, we I and these terms And somebody a we're existing at But follow-on people will to there's acceleration So that if that, the of programs little refreshing well, rip out bit of look or replace, a next don't hardware of bit some pull because module will least for I design. Select without additional that there we'll an point. that some get applications march think little of early. some that this more the the additional confidence, wins bit of out and slated and as characterize held.If hardware at at of

Anthony Stoss

And on you going if you your a revenue and Got on basis, question January visibility, down a little quarterly that guide think broader think marks the sequentially, a then low just it. also bit forward.

Paul Pickle

Yes.

that my IC last we call, remembering the on hit on I business. bottom call comments So I think, last I'm was earnings the pretty a confident from earnings

making moving We IC the continue that and business. we're to progress see on forward

has into of a a knee-jerk lot reaction bit anticipate that, numbers business The where though a cycle I out little even that of to we of as modules think, Last a continue Fed was a decline. seen of customer base, let's buying, I the buying pull some steady can bit not don't starting our routers maybe a it where back, to coming peers I sluggishness surprise of that product bit early. a into. the we I point, the for strength.At of the a we are see little that base, And business and Fed seeing hardware earlier this corrected customer some of little some little our quarter, pretty good, little say, We've business. was had. out see well think, saw that did We've getting as the seen goes worse. any say direct season. the We're bit just business that. in of

And so, we it's of early anything, bit rather to I If but worse. than little little a bit anticipate pickup a tell. get a might it I think sooner getting don't later,

Operator

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

Christopher Rolland

I talk it's attention AI just all given the wanted to well, getting. on as

large you last a guys quarter, hyperscaler. So U.S. mentioned

I and you some And love opportunities initial TLAs as about -- update drive lot products. then, X.XX TIAs CDRs, orders sorry. CDRs? on of see some direct Were think, for a And those placed it. there, who talked XXX for there linear that would you any just PAMX had purchasing. AOCs, some analog But X.X sampling and maybe was your about talk an

Paul Pickle

Yes.

the I last in about hyperscalers. think for -- we talked that we quarter, U.S.-based saw orders, actually some but shipments large initial so

So XXX-gig Those of terms cautious be little ramp. a bit and that their I'll in -- application. is

The be then end up to through is was sluggish, -- a we year. sets expect pick it that. bit forecast according of the to it going the first final and December to it qualification forecast set gets but half as hardware, goes the the

things nicely span right that it X rather say, to there. $XX million That's, would full annualized to gets that. cycle sales production, once we for rather to nicely let's are So a years moving now, or so.So expect are roughly moving things X upside and

XXK put X.X speeds XxXXXs. the AI now, to frothy as In applications those you'd will well XXX-gig We any devices. when opportunity see see translate both terabits it's single-lambda at that volume. a right in looking just But on do really to talking volume. X, node about we is where short-reach. at mid-reach those see occasionally really, But see we're start in start of a me terms as That's occasionally to do environment we XxXXXs. next for type number to appreciable looking We're things at

out some strengthen then, But in some 'XX bit I and the we'll to would going really the us and I in seeing than phenomenon but of we're see see modules the plans half. a to given really But nice the see will to it's half pretty term. XXX-gig. that's I early, quickly second little when the uptick be year, some of XXX-gig rather I a think it's something expect -- some POCs half second year up. more the a we're then, picked that around first in And start be numbers coming certainly think, demonstrations.So nice of steady to going environment, of the calendar short it

Christopher Rolland

segments to there. way If the that fall to on IoT-related maybe other it? progress sensing down. reading the of X your here. then that wanted at side, about Integrity leaves think Good and kind the also kind look we up, you'd expect Excellent. I'm Is tea and another of how protection I right here, Signal

Paul Pickle

Yes.

strong look American pulls, we digestion if that think that for APS, -- little bit some we manufacturer. North a smartphone into saw of smartphone ramp I at

launch, I of think up then seasonality. the pulls strong we'll see some pullback. a really until That's a little and but due bit to pullback, bit largely little of

here. going component steadily have protection.Protection should to baseline a that's that's improve So from

So the we've seen some nice detection. proximity base as in numbers, the relates especially stability it to

they're data they center now, really upside, anticipating I additional a some that We little They not seeing just steady see would SIP that really resume strengthen. an look strong come is is see on little inventories kind XX-week validate of at revenue runs.So of the and then those a launch. -- I we'll being channel those surprises our of could that production on a the probably partners the little and number. Signal and softer improvements bit back, for snapping some like digestion digestion, to product kind kind been improving, hardware so, average bit the inventory just of bit Integrity a but initial steadily by usually of we're of and And to right anticipate it's off channel as schedule. slowly line, digestion numbers but our a booking

sideways both and a this moving little bit of kind at SIP down. slightly but point, protection So,

Operator

comes question with the next the Schafer Company. And from line Rick of & Oppenheimer

Richard Schafer

classic I think strategic more going Mark, a high to maybe could is company my look just question, share hoping a Paul, it your of little that Paul, you if and like? I like, you look guess Semtech could, And I to you for kind what level. Do vision was expect just I the of first do improving about you And maybe modules are mean, average? kind associated demonstrably now? do the mean, margins years X there? sort to in path margin play see to pressure? in opportunities what a more do Or of they those fintech say, particular, the from role justify I long-term? corporate growth

Paul Pickle

on good putting spot. question, and So me the that's you're a

appreciate certainly I that. So,

that come up from look It's pick move So additional really no long what of as module do stacking years you to does do we as kind margins. into makes doubt products there's can competencies like think X I And now? core -- sense our from components. that it

an up you it sell produce that the gets that's I of module to a to In more to model go maker very order from -- be little you gets you different, businesses have would I've it a and more of business reference make module to when I very and just little generally where a you design, complicated. design. diversity a to sense. a to itself lot in before of participated sell it. be has about cases, content range This produce different. base have in reference a a And entire through start bit having IoT makes component technologies some of essentially and investor speaking, would my of times, because a standpoint, a solution.If talking end use the in produce complicated -- think be broad to today, So produce commercialize cases, pull semiconductor does very, and had it, that manufacture that sense bit off lot

the for need we opportunity a be marketplace. is, of I and component capture possible in an to doesn't if in So quite to that comprehensive going part how that that kind that, in it becomes which we entirety does of pressure? going a a But that more IoT us an no. we're then we own we on in a yes, of IoT itself, it can play. large the it bit do of the think X-year to necessarily strategy. pull strategy and that IoT of I strategy have I It And rather happen. enabling is have higher-margin it's front mean that answer cellular backhaul the think But margin X-year, always that think, to of can reimagine that to together sales, justify

then combine And that to story of I with some engaging meantime, modules. can with an software, LoRa or they I you're we it private perfectly gravitate it would think sense.In tremendous would the network do it when along no, fine, components, utility and associated it's -- upside becomes with -- they'll a want if and margin towards in part LPWA So, In along the look the cases, we companies, might opportunity. we itself, to think capture pressure. makes justify of makes continue look like with opportunity there's the solution a it doesn't solution.

as So do having a as or build well a to long both you the broader offering as product as solution in opportunity advantage of together bit an story. more

you that after specifically a hopefully, X a nailing down everything color So bit gives of without months. little

Richard Schafer

Paul, No. lot I which That it my to segue is is a appreciate. question, next of LoRa. a and great color, actually is

like a the see last talk metrics. maybe sounded a talking think wouldn't I strategy order the a you're if of for sort little you those But or foreseeable? get could starting pick that you And a to velocity, -- I business talked was business business, sense still bit sort describe more that even if of on maybe curious, year. I'm order if to of kind at stable your comfortable strategy, of million it. $XXX so you you it it side, sort If it's being to believe that grow kind about revenue that's you you sharing funnel, all about if of where feel you curious, of if I'm up. call, -- mind, want could around however trend about

Paul Pickle

particular? about in So, are talking LoRa you

Richard Schafer

LoRa-specific was That yes. question, a

Paul Pickle

Yes.

business, LoRa kind $XXX that. bill ] about So you million for so I Yes. [ as thank of

I there strategy. and think, for opportunity is So we really a use because in cases, IoT, semiconductor the diversity significant components as of kind -- content multipronged or becomes becomes a look, it do of of it

let's You as rather have do is a component. This have to call gateway software have well. mature, it, mature platform. where We cloud software do have rather team a we a do

do let's seeing market rather people I where migrate connected need an a up as to a large we connected connectivity an increased there's from look low wanting there's an kind that tenet so, numbers, end to overall devices. easier.If past this bandwidth, end quarter. continued It lot deployment the numbers low-power those that say, network a there is even opportunity private continue making theme And look that to adopt and further alternative we sequentially shows for at still an us at wave think of gateway that we're standpoint of node, but through for, are capture we opportunity that, of downturn, this

still opportunity so, And believe is that that an we in.

that of that. to going before I've group advantage to out Part is of us for However, through of I that reorganization believe, need said this take technology fill we the the we're portfolio. R&D kind competencies to

it network we're today, the so, see, other with components technology that that making order we'll in that we what in few in of the private appropriate formulating deployment laying looks have is formulating certainly then why story couple the on vision that be win we over time right part it. quarters, of be out, along next around opportunity about that of and market LoRa we kind what middle to and And that strategy the very of And can exactly time, capture that line easy. a portfolio.We're And at opportunity working that talk that we'll of to a looks like. market what reorganizing so like

today, billion number, say, in the that pipeline to overall million $X.X been that said a -- past. we're around work I we had In I'd continue terms opportunity, roughly and pipeline on of $XXX it. than LoRa-based roughly it's Rather that know that it's we qualifying

in use a We delivering work look that have standard to a to continue to cases. we on product need market start rather commonality the the need then solution, And than cases to just solution for solution. use see We opportunity end that simply lot of component. to a and

Operator

next the from And question line Robert Tristan comes W. with Gerra of the Baird.

Tristan Gerra

follow-up as your commentary Sierra a to Just on Wireless.

quarterly a ramp-up like synergies, could what run years run year. now before of with before looks we where see probably ago the last the X of your bit rate including big LoRa, it revenue right is below any at looking was type rate it Just

about and presumably talked -- a quarter October you've the trough. So being

a base should if which on you assumptions million from different a a be within elaborate we $XXX cross-selling bit kind before the is any of, shift And Wireless? So, build Sierra share a could opportunities? good little then basing the quarter for businesses you

Paul Pickle

Yes.

I If modules, or So, Wireless, especially. pretty shift. bit $XXX term, I'll I that to would said burner $XXX rate, gain If is terms believe it's going to growth to a pickup steady. if share going don't share The some not but year. call It's in want the but that's probably basically certainly look to recovery we've a was be expect call, probably million. noted We're recovered, would it steady, million loss it share around and the number I'd it. so business, better. very earnings pretty share the one from predictable. -- margin recurring, the anything, let's right be growing a previous bounce a that any shift. Sierra on largely in to think the to piece, be routers, now, going we I routers, last I a of I think contribution.So I base, million, that's seen little little bit what right about not that good the the just be to in it take It's short visibility. it your $XXX connectivity would gross though great on I business. $XXX back put after XX% steady It's we pullback. of say a industry-wide. that's think comment we've million still you But is at a expect number

We were million it and but somewhere upside. expect bit. around of a XXX% or frothy you $XXX go a opportunity North a we some $XXX fluctuated America, buying numbers put a bit about to season. $XXX modules so it little basis that business. year, at upside don't on potential get We look back those in elevated million normalized with that quite in If a probably a the And over little has million,

out. to those So, we'll X time realize some to would be and us that take for pursuing that probably It look deliver in will rather aggressively. years we

Tristan Gerra

And question. then from follow-up a

X- as easier is of a So, as access a a is now from with network ago to The path implement opportunity Things implementation you the Conference much making the sounds X-year kind XXX% really feedback mentioned of, bulk Helium behind. of of LoRa. adoption LoRa easier like focus that with is associated a than want for it there notably LoRa. right just an who Is clear inventory basically LoRa to that on your ROI years fairly few from correction to and The much customers private

to So, a opportunities team could LoRa ago? you see elaboration run you was And management at prior expand where holding improve on lower adoption? few a the guiding than the think on any you what a years do bit that is is little still revenue for rate admittedly

Paul Pickle

is will I special. grow million were set in land say, X to think think prior a but $XXX in that pretty usually by business in below let's good, Yes. anytime management, that's you from expectations LoRa this, I semiconductor say years still X the pretty I execution

order IoT. they're to the talk a technology actual pick is bit bringing something They're contributor a adoption needs a steady adoption. look But that start a a market to to ready to market up.There's it's work has LoRa-based, Obviously, drive than showed, a womb Helium we If for that tomb. it at customers technology. look we from that something the unique still I larger terms all definitely have frothy to solution, during was partners is something of the are continues in blip of Overall, R&D easy what in buying numbers that's implement that as there, When of to going so, adoption, at maybe to set little season. slow to down. you somebody to a in little good looking that of together not market there gateways adopt. But breadth it's bit that's as implement. to the it a So, in necessarily being that together ecosystem it large necessarily not

done in -- initiatives to past where have adopt. this So, easier make to is in the LoRa taken we order

adoption. further there's the up. that We order are order do the up necessary market in think to technology things in to evolve couple that we I that to of But to to that and the deliver that adoption speed could and out holes licensing in fortify a of tools solution we'll speed continue delivery

Operator

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

Christopher Rolland

quick quarter, amount of terms? to expect the Just a The get guys POS in turns to you guidance follow-up. business

Paul Pickle

We're Yes. last on, and it's slightly It's it this not quarter, we'll just less slightly better be XX%. we that tracking than was that but Last something quarter. reporting quarter. than were over

Operator

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

Harsh Kumar

question, Quick Mark.

Or that? Is early? that correction a you seeing analog companies, So, perhaps helping a all them else on space is guide start your that function down. variety of analog basically much of the it because results, something I you in to the data the center is is, faring offsetting industry, a you of you're is is Or of guess going traditional lot looking in better? to why question we're better. at My started your do businesses? there

Mark Lin

our end group. data for down Yes, center. -- and it's lot Paul, I'll provided before he peers is color that and have markets guide start it But did both. the we on of a to

million. to guiding big I why $XXX we're another that's $XXX think portion from So, of million down

Paul Pickle

Yes.

really meetings I bane an one in think it good. said existence I The our of investor time. operations is team set a that's of

orders of that, the we got on did -- team. I'm secure and to we But capacity the when efficient been And had it. our phenomenally able course, deliver saying and all to able tongue-in-cheek, it. secure deliver were capacity that So, team we they're that

result, the early. As we all correction it shipped bit and a a little saw

helped to early. the is key deliver some result, But ] the same getting a on with little guy rebound [ where do And as got innovate beachheads. seeing TDS of As a the enough, But We markets surprisingly One, couple the you have out result. we right we of seeing and a a phenomenal can best do we share specs bit we're this with upside is of are next-generation where a continue gift. And a just who only It's we're AI now, competition over out expansion. there. time. we're yes, kind interfaces.

Harsh Kumar

extremely words, -- that is coming but situation the pile you're are to In of in stuff, you solid. of is you other and -- quarters' mouth, ask of for just multiple on a on can you your are hand AI where, spurts I seeing visibility? Or So it orders kind quarter? course, visibility the orders a up if

Paul Pickle

up. Yes. piling orders quarter. I The nice orders wouldn't bookings the did say we up a anticipate increase We it's and -- the this are piling are up. piling see design-ins

trend. So, a next this will that it's ECOC few validation out. on It as on was But rolls strengthen fronts. early a year nice in it

SAM could just frothy be line us if environment. be which going a and feedback data center really received, we I well but direction on industry hyperscaler came additional they're of amazing differently.But the -- think to the had to But bottom some going it all And it bit XXX-Gig growth little to it's they that, doesn't releases the you direct, architectures, some particular press that out single-lambda to it's route. even might overall, what bit from more have have every is our a add seen tendency choose up put re-timed, very decision just explosive positioned. matter a that very they back nice does very a for implement. a has go, a devices, well And

capacity, would follow. would happening that for in be then this the start be capacity starting securing discussions And would today and the we so -- of terms next year orders

Harsh Kumar

can Do this pretty think, cutting will? happy threshold, a one. And Paul, one ask time, in if done you've if that you at I point last you're reached you

Paul Pickle

to million we -- and business the another I'd point, $XXX was of done historical thoughtfully that we with We At intimated pulled I did this go. that budgeting say my probably goal that. had exercise. $XX million was do out out

think down this you at everything if go chances growth comes cuts kind do XXXX, that So, of were, at what that we're I'm I refinement comfortable at refine continual juncture. just you for improvement to budgets we appropriate be in improve those made. And in the back to at you time, the we the with stages. and and our will look look just future. Anything

Operator

question And comes the the Benchmark. of line Acree Cody next from with

Cody Grant Acree

require near segments Paul, forward? I you're follow-up question. one, what I said reviewing just other today believe that next are guess, less bubble The a to the to investment Harsh's going you

Paul Pickle

So, practice on my or I'd say basis. review annualized that that always I've in cadence I've got management I'd everything an a implemented.

projects don't a business good to if just So, to don't had we before. invest just have because assign in, unit they it we budgeting

requires every an attached to a project project opportunity have and every So, it. justification would

in So regular kind certain in on a at -- to this stiffer in more investment. Obviously, a back a comfortable them, bit the other would risk and would expansion to have as we areas point, I are of profile can we'd we top OpEx them at scrutinize feel put associated the say, sunsetting take everything growth. overall, look that pull But line those that basis. look market with some, I look certainly lot we investments if of and to to some let's beachheads beachheads refortify attached areas look those

Cody Grant Acree

of your that think improving business can the I And the visibility in can just center. detail data to I your flat offsetting noted much businesses? the demand summarize guidance X you is down. to release current for for you and months? How quarter what the about that secondly, or And you press sequentially that's those was near-term provide X both next for guess, if high-end consumer

Paul Pickle

revenue, improving talking Yes, say that be that would I about to fully came demand, consumption, QX I'd is center end plus in about than shipments When I'm a we bit POS. really I'm talking speak correct. in anticipated. data so direct market higher not

of you and where business our noise. all best so to channel me, just it have the that's the qualify kind going is of inventory To eliminates measure And that.

rates the demand, improving demand quarters. we improving see the booking that part, average that I to has That look correlation. that X seeing trailing it's have sequential match So, I'm rates booking most over been, an when modest say XX-week corresponding I'd improving for that And last that.

-- anything I least. improving in you over demand, So, X continually we've demand It's last its give sequentially it's the that at quarters seen rearview that not forecasted, is mirror.

Operator

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

Scott Searle

at that business go We're we you're update some Is front. need to that away back on of still what Maybe think basically to should you Nice getting second of list would there on on that middle half be start to million than back because to diversifying last Quectel on any business? $XXX about in normalization you to I less that restructuring don't business don't exclusion job levels it right efforts. so think the the It thinking 'XX. 'XX? sounds half like now. like or rate win an any you front? add And calendar that of before like a modules. it incremental formal on front? Quectel talked When like customers sounds around sort at the about I that expect are Is on the you anyway. quarter, running wondering from necessarily on -- normalization I that of But heard I'm comments that based that seems

Paul Pickle

calendar Yes. color in I was what do us. to the terms trying is of going to year for you give

on million, put I'd of I'm So, this math if second going $XXX that that recover you hand tipping when it in is do kind the my think and on I to the half.

new some is as we So, after from as additional well design-ins. customers, some what uptake from expect feedback this

be So, we Fibocom Quectel, order we on no, front, don't officially excluded it. from the are benefiting this, to in benefit need exclusion list to from

-- it.I on especially if to put not fine, of to tomorrow think we're okay, continue China will and from out benefit Committee exist that list. the said, everything networking for Select China came equipment to even U.S., We overall going it benefit with still is been the been There's We're shift them going has and going and it's this. tensions enough on the years. around the because from

a head make it's it sense. particular the of So, to just a $X.XX just supplier be on basis coming now might jeopardize to people where company's that are business using not cheaper, any finally doesn't willing their

getting to we mention, Not come have work of So, relationships good previous with Qualcomm. of those I compute. a pickup. with done relationships lot we're because the in

sell mention And LPWA there. a And fantastic that we so should heavily quite those very also up with leveraging order in relationship that as have the a leads. I modules on we're to chipsets pick well, few Sony

Scott Searle

But just is the the now the issues on long-term some part that design of composition for going, this terms like and the are wondering China? that's today under to know that reluctant that reevaluate sheet. guys the of I'm of wrap like solved of the just maybe lastly, sale at million. where covenant balance front, you of outside I'm the And what sales essentially now is to starting I the Thanks that now on on you're immediate And for about the anything to lower be sounds growth that down that's up are at point know you Semtech? pressure a future, front. looks building calibrating. lastly, activity of been assets It how what asset in annualized $XXX I has the do rate rate there business in may run wondering but not time. lot

Paul Pickle

quite will if of China-based because that just particular. APAC probably where is. bit at revenue -- we I seeing we On originates, we're adoption outside manufacturing where if that report in LoRa, very look strong look typically still of But a will number -- of Yes. I Okay. say,

definitely to probably to the expect couple come to but order pieces it I of steady be would implement, the on as bit a adoption see it technology XX%. could what that we've of so, growth think, a term nice as seen And on. XX% Europe we goes wins and time some becomes applications, well.So, XX% rate adjust growth China. seeing the some have there infrastructure that as in outside do -- definitely for but is as especially some would we and that well, can easier rate near be? of we little the to term, adoption China-based We acceleration In I long-term target together XX%, long our that

ratio leverage definitely of are In getting the sheet, terms hyper-focused balance we down. on

on terms -- of table down I'll We particular any cards but in ratio asset on of comment to will all just say leverage driving benefit be the to shareholders. that sale, that won't the are continue I our

Operator

There management this to for at closing turn And the I'd further questions floor back are to over like time. comments. no any

Paul Pickle

joining, a for and Thank you day. good have

Operator

[Audio Gap]

Semtech (SMTC) 6 Dec 232024 Q3 Earnings call transcript