SMTC - Earnings call transcript Q4 2024

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Operator

Good day, and thank you for standing by. Welcome to Semtech Corporation's Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are on a listen-only mode. After management's remarks, there will be a question-and-answer session. Please be advised that today's conference is being recorded. to President conference and like Lin, to now Vice Executive Chief would turn over the Mark I Financial Officer. ahead. go Please

Mark Lin

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

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

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

Paul Pickle

Semtech end-markets. end-market financial provide performance generally end-market above performance Mark. the note fourth net increased expectations of bit I'll reported sales you, and with Thank more in my quarter midpoint on color within consumption of guidance. a our each sequentially slightly

American $XX.X sequential pause the of For expected fourth were normalize Infrastructure center by deployment, channel and intent X% our an sales in net hyperscale North decline million, a largely data driven quarter, and inventories. to

declined to interest quarter, center, and For drivers approximately anticipated. XX% continue we sequentially channel data inventories the modules. XXX-gig and XXX-gig for fourth optical FiberEdge had increased infrastructure laser for as and strong our POS In TIAs market

lane XXX and continue gig production optical started support customers offerings. QX, to from FiberEdge Our module per with we X.X using market-leading our in support designs product key hyperscalers, undertaking

end LPO Direct to laser begin and XXX to modules. linear pleased at Optical pluggable Fiber feedback, we We this and report products Communication for and Edge with of the announced are or TIAs these platform our market favorable enabling the newly We optics drivers, expect activity shipping at gig week products FY demonstrated of 'XX. these Conference design

cost and copper our XXX-gig AI supporting for lower portfolio, to data electrical for with we active offers recent cables, copper Compared cables, significantly build-outs. are over and requirements are center optical center power active with demand in linear advantage. re-drivers our copper-edge XX% to our DSP-based learning data machine linear lower, edge addition In pleased a advances latency, operates growing

applications. copper XXX excited designs to X.X very be partnering T our We gig ACC currently per into chips on are sampling edge lane are and

to modules We well 'XX. as AI leading these deployments. T module begin as engagements expect X.X centers, edge, the optical of shipments for designs Based data on to with to we support ACCs at and and and design and X.X T with current design-in FY activity end schedules data cable for center ramp ML manufacturers, both expect

Moving to PON the levels off networks, the passive based sequentially. increased China the low optical of demand we tenders following in quarter POS fairly in increased the of And saw accelerating quarter, release first Fourth includes bidding on Based activity, 'XX of on FY unit first POS weekly weeks network quarter demand and levels. recent supporting and tenders, optical optical XGS-PON, build-outs. our line both is nearing analysis of XG-PON market. average terminal PON

on Semtech technical position, gig superior XX and based to and speeds transition our our higher leadership first-to-market Continued our performance. benefit product

to transition PON in slowdown gig higher development in global China. real partially the expect the estate and will speed We XX offset

Semtech are higher speed access and We to early America to still we North in though engagements XGS-PON America. are in in result opportunities our and EMEA. trends support market deployments we innings, North demand pleased also And with cloud requiring for expect in higher long-term will the

XG infrastructure end-market, demand muted, we center are in ACCs. XX-gig our at at the demos in products wireless Tri-Edge including OFC drivers other combo Regarding XX-gig remains Advance, copper-edge with aimed leveraging data expertise though market and

believe power participating qualifications and in the XX-gig for FY our family recently XXX-gig performance. provide groundbreaking of and currently front-haul of in efficiency half will expect 'XX for network products. systems in latter these the Further, FiberEdge announced improvements are sales We in ZR we products

applications fiscal end-market year first growth. infrastructure the increase XXXX, PON with of to we quarter expect net sales leading the to sequentially For from

over increased high-end products, to sequential high-end applications sales of approximately consumer as the net POS consumer proximity sensing particularly TVS in in consumer exceeded quarter levels, and third consumer and and quarter, specific though to expectations seasonality. sales at by into from for the the both fourth an quarter year-over-year handset decrease rate high a Type POS China beginning third a for increased basis, benefited the quarters proximity the On a stronger Proximity year. believe both be smartphone XX%, that For a were to have XX%. adoption 'XX. quarter effect for grew levels for TVS absorption products In in of sensing first were sensing from at share with Chinese products, We market SAM fiscal of what seasonally POS for end-market expected majority sensing USB the reductions, of validated further the high-end increased went FY fourth the quarter year-over-year, standards second that POS we in indicate year. C production, primarily see Semtech's offsetting products. POS high-end sequentially, industry-leading increased quarter fourth consumer seasonal decrease channel points quarter off of in expected normalizing sensing inventory down would trends and coming was market compared sensing a million, nominally $XX.X we demand. And manufacturers, we quarter, higher highest our and models. percentage indicating and solution. fourth bookings proximity in handset year-over-year, TVS per of se like Fourth substantially smartphone Revenue their through their a has XX% believe Encouragingly,

health. For continue the up the from as we be first to channel quarter, evaluate to expect net we flat inventory market high-end to sales slightly consumer

selection U.S. smart sales IoT scalability on $XXX.X such For smart have power infrastructure as Systems into opportunities the where shipments higher though consumption, as million, sequentially. X% focus applications. limited. and market critical metering applications and million, and up Encouragingly, through expectations. and and modules visibility net certain remains LPWA Semtech's industrial metering attention Module believe of a quarter fourth end-of-life North benefiting ultra-low high transmit within We up our we $XX.X in and sales elevated, were asset of worldwide customer models garnering up on for in sales net power, XX% fourth increased advantages reported net also were sales supplements is customer-requested quarter, fourth markets tracking American quarter suppliers over our and sequentially, bands trusted government remained the from XX% into supplier. payment and processing. European in many inventories position sequentially

recovery believe will market extended. such, in be As to we meaningful this time

XG to 'XX. expanding offerings of in the portfolio, in continue middle FY though, Cat X invest We the bus our and

sales down all and U.S. quarter, deemed mission-critical. of not and quarter, about sequentially elevated fourth work with federal budget router net lack freezes local, to on we the For last XX% essential address federal were channel Consistent projects, inventories. spending as a

was point in the fiscal the for typical inventory at a of believe of a quarter the business in health. such, uptick of point fiscal at low fiscal half end the inventory to And our we 'XX second we the channel said, fourth continue spending is In fourth muted. stays at quarter, agency the As year. high as consumption moving the still router the monitor channel recovery year. quarter, toward That was

XG rugged we markets this to and of feedback XR revenue Pipeline in on positive our We for and fiscal XR are world's on encouraged is our safety. expect and with XX, of to the the smallest and launch growth contribute strong, recent 'XX XX core builds beyond. industrial public the product the router,

at also IoT feedback $XX.X quarter development. where this also We fourth support recurring and Connected of encouraged stable flat are DistribuTECH sales million, product relatively and spectrum networking revenue. within expectations reported in sequentially, resulted and have space private for our the from solutions net of pipeline utility in stream Services sales

consistent XX%, in RF managed including delivering goal of and the approximately XX%, and with invest solutions. industrial platform, data has We fully increased device Bookings POS inventories. services, for connectivity, fourth increased continue but X sequentially, connectivity of and our sequentially to in including sales control, smart the XX% LoRa-enabled high-quality about channel products, cloud-based service quarter our sequential increased quarters. over solutions declined healthier our reliable, insights last Net

pleased companies aid faced in custom into than Lastly, in year. with are meaningful which headwind elevated count across broad we a ITA-TVS from more a the hearing doubling but are FY switch in the customer spectrum inventory, last with applications, to revenue progress expected channel medical integrate automotive and LoRa result search industrial, of SOCs of 'XX.

POS SAM, of engagement and are quarter for by we in design to sensing sequential industrial consumer are Similarly, we meaningful with Our engaged strategy ITA-TVS. in wins are leverages and the fourth in our products healthy and encouraged pleased products capture fourth growth the best-in-class quarter. adoption our space for automotive customer

products are the incremental to ITA gradually providing momentum consumer Our flywheel.

offerings net For continued growing sales. modules routers, connectivity and aforementioned and we the in net and stable from lower industrial inventory headwind, our but with net down to the digestion sector public quarter, managed be first expect sales sales

I'll the Now, to over call turn Mark. back

Mark Lin

Thank you, Paul.

housekeeping from presented. periods on created allocation few our which with of consists segment, materials our perspective, LoRa a and Signal primary now the Integrity Systems From change development and routers our and former segment, change a segment APS this signal the one streamlines modules analog, change CBOE for wireless teams combines IoT items reflect mixed The of ISP segment is segment. newly all Supplemental manager the reporting. First, R&D this general segment and The earnings similar aligns under functional business. from resources.

share Turning healthier guidance spending, to channel. overhead from favorable third our a in with the Paul of in We reflective XX% XX.X% infrastructure above in sequentially, went expectations expectations the decreased the of million $XX.X of integration fourth R&D with our $XX.X our especially vacation to the of and support in X% up reflecting largely customer first of some migration exchange higher which SG&A sold. to million quarter was foreign engagements, $XX.X recorded with lower-than-expected count modeled efforts, to into losses per a from key mix sales million, These sequentially, for sequentially net a came at sales quarter. was around slightly ERP, on a consumer high-end of million XX% of were beginning to at single fourth $X.XX that midpoint cost million. net There expense, down line of discussed the $XX.X quarter loss sequentially. $XX.X We expense realized X.X which in quarter. consisted costs end-market but our were margin compared guidance $XXX.X Operating operating objectives million, Net guidance. diluted third recorded share margin the $XX.X million. million fourth of of net $X expenses SG&A performance the higher quarter. quarter we above support offset module down Gross X% industrial million a X% also were sales. by results. based total. primarily of to lower high-end to the goods down Other and cost-savings sequentially, the declined interest results in in expenses and our was expense slightly our usage in shares. live support quarter,

gross For fiscal we per net sales XXXX, and $XXX.X $X.XX. year diluted XX.X%, recorded share of of margin million, earnings of

prepayment quarter. flow credit X.XX%. $X with to interest million. $XXX.X the Adjusted fourth sheet. to balance in the capital $XX.X at favorable credit million, Working cash outstanding in a made in quarter consolidated of Principal direction on million million ratio weighted decreasing X.XX%. cash Moving net million $XX.X fourth to $X.X a fourth on with cash Operating a million. sequentially, accounts for our We leverage, the was rate the or optional our is EBITDA $X.X allocation facility was inventories leverage the billion flow quarter million $XX.X for decreasing we ended balance At our average with and fourth $XX.X priority end with facility $XX moved the turned of third capital quarter. fourth our the debt of and compared quarter Consistent million the our quarter, a in was sequentially. free positive receivables calculated reduce

the our occurs fiscal first the charge in ISP fourth goodwill discuss day each $XXX of conjunction and and quarter. charge goodwill of recorded on in the we intangibles a quarter first I'd annual the noncash ICS to impairment million goodwill quarter guidance, assets segments. touch year, with like recorded In of fourth and intangible assessment, impairment noncash which to upon the I we our Before

of the near-term and moderated and ISP headwinds to assessment contributed outlook for Our ICS charge.

will we to will for relate believe our material wireless weaknesses which primarily CRO XX-K, remediation. ERP substantially and We Form to single also contribute a report which in

guidance. Now of expect plus to sales $X minus or $XXX net turning million, quarter first currently We million.

at end-market improved That sequentially, in to net to flat High-end center demand. higher all lower SKUs end-markets. to our end-customer down, by and The reflecting the our partially to expenses to to plus reflecting across to reflect specific of basis are shipments. reflecting the growing channel the inventory up million SG&A to expected fourth to POS key be or are $XX.X a is Operating sequentially is channel. be gross data be for gains. consisting slightly expected healthier revenue guidance minus the million. expected million products. continues XX.X%, or and mass expected market development the Research Based be infrastructure offset plus expected be midpoint, first levels, product expected incremental is expenses million, as be points. up Consumer XXX sales on on expected expected levels quarter sequentially, $XX.X are softness midpoint. generally Our supporting be hardware quarter, business, of our In at minus higher $X.X is $XX goal demand expenses offset and said, mix PON of direction investment margin industrial

to the interest I'd rate breakeven, back income expected to now Q&A. share amounts plus a turn net expect result We to minus to $XX.X million a $X.XX. expense and call are at be per over net XX%. of These the operator non-GAAP in for like tax or

Operator

Thank you. Instructions]. [Operator

Gerra Our first question Tristan is from with Baird.

Tristan Gerra

Hi, afternoon. good

and of little First question tenders Integrity expand revenue timing bit the revenue whether terms The contribution, in that mean China -- within in a and on Signal year. for this potentially what business? specifically could earlier you is the does

Paul Pickle

pretty I to came Tristan. the time expecting delay. in were announced in, would November it a the China right and look time the good frame of the them we rewind typically in. January numbers was be which are in in that kind them. you, October, kind say we if Thank back, to come public going now, went Yes. January, just frame, was It of They do that tenders they in

time tender are of considerable data, a of us. a if the for frame, spend low. off think couple coming And but looks within roughly it I to the X-year positives that kind you analyze we like flattish financial previous of

infrastructure XX% tender towards kind infrastructure. less lot margin, a us, business, we're ASPs, upgraded position. and was It's a that's as skewed share that XX% PON. the of a more market competition. got of We've So it's good XX-gig good not in for And necessarily higher to in pretty so better about

the immediate orders of not A I back for timing back healthy previous of those of of remarks, years. comes we but if we levels, in And and in, just POS it's in being started lot of previous coming relatively some of visibility given a kind gate. kind talked the contribution's, demand prepared terms pretty In believe about look roughly out us, see appreciable when to levels should contribution. we

demand peaks, out So very not quite at of strong the right but gate. the

So we expect immediate contribution.

Tristan Gerra

the Great. be would the have of Thanks follow-up, quantify for opportunities expand AI you on and trying the knobby for interconnect you engagement to that platform? in AI in feedback. And And if as Any AI then could color opportunity is here appreciated. hedge multiple a technology? also copper the

Paul Pickle

at -- is X really I've really, said I'd look this we strong, be market data to in pace an fundamentals next the looking happening frothy. Verizon at and for If center The right of which good. power. in The try changes If really least it we're here. be before, on are we're at seems the say at cycle accelerated -- looks And no adoption Sure. to expect X. is changes, to previous them technological to slightly kind that strong, happening, now, accelerated. order save the that really are we really

So fiscal a us, year. in we our to at for next be considerable contributor ACC stands this look engagement if

demand XX-plus say in number on is to a but half kind year the 'XX.But and the probably ramp at looking thereafter. calendar back phenomenon, 'XX percent of put year, we're So the it, this to in significant really a this we'll see next starts of -- that year at growth I'll a increase

high and put really the hard on numbers difficult to about are people the to because an really it's that exact of quantity make. it kind peer, So just talking

see the stiff. solidified is But roll to And those pretty see kind it's out. sockets ramp so, those and forecasts want to get of start we --

stiff. just the question is So how

Operator

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

Quinn Bolton

I to on to data Paul. is sort Tristan's Hey, center. starting about being of within lane introduced We're see XXX opportunity. wanted question, the follow-up per gig the

BXXX other already XXX the here that optical gig. next over got You've year. I'm we'll sure from and DSPs see processors

presentation in you to I've as X signals far of I this as guess, lot meters able So longer I NVIDIA was seems of quantify, its a OFC. heard back I drive kind think potentially that sort being about than can at GTC mean, week talking to

is guess, have do get And the reach so, in or opportunity? per XXX-gig for engaged of And big you what ACC How you do those XXX linear you you're as gig multiple programs that plan? equalizers? think the is I to that ACCs lane

Paul Pickle

Yes.

ACC, at So products XXX we're those you're definitely probably gig at And demoed a X few OFC well that today. meters, demoing we as aware. solutions

achieve settle to can I and interconnects nice determine to get intermediate copper, a fall about out in going as to where require of cables that We right an when ACC copper lower the solution it's talking active about meters you're exactly what up probably possibly. would now, intermediary play. application electrical be. would But active specs of even well, think or X that's kind of need we kind see into and you significantly retiming. between requirements And XX% power

opportunity there's this now, $X.XX look calendar driving well We're those at go, where programs ACC kind for right its possibility. of lot. could considerable There So those -- multiple looking look applications. as could as you at that's XXX-gig, budgets, certainly we a kind and year. upside go of as areas multiple where beyond are power a

Quinn Bolton

of like copper, I passive you Yes. passive you I'm you got can't signal you agree the assume go drive to far of that that sounds guys over sorry, -- it that I statement. meaning at with kind was copper sort the

Paul Pickle

Yes. Yes.

running and meter active gas right looking GPU copper now, X going you're interconnects, if a that you're need X copper But do lot of at out just cases. the they So can of meters, cluster kind to in you of -- they're solution. to within on an

Operator

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

Cody Grant Acree

with and even between what seeing taking prior continuing that from progress. for we're are my their Yeah, question. How With do you that congrats guess, just you Paul, leaning solution as copper on Broadcom NVIDIA thanks Spectrum the industry other? copper guys long I things a with on do questions like definitely and And or possible. way see benefit the into the have and shifting optical? happen keeping as or Ethernet, one transitioning in to

Paul Pickle

got dedicated to talk in roughly Yes. an center of have data say don't the be to if data. that to the XX% alone. can use some advantages always of on of copper's going would fiber transport It's there's center who some half in come It's cost would optics optics. those. interconnects, going budget certainly to, from you Depending be of see There's a one is you power the people Power optimization. to significant -- data that's you

over advantage some going variances at in have as performance or range under you well. copper thermal If a wider terms thermal look temperature is conditions, of an intense to

it to just of requirements. so, are And kind the what down comes

be to -- starting racks fiber a Those clusters, don't interconnectivity. those GPU needing into not they You're see plugged to are have plant.

And the so, they're GPU these solutions shorter kind anytime going the looking But clusters. is soon. reach away of interconnect between fiber at either not plant

about optimizing. in AI just is cost, although concern the power it's cost a certainly for but performance. one today, is secondary really So Optimizing

Cody Grant Acree

competitive And you way from the one other? positioning, your or do benefit

Paul Pickle

Not really.

think copper. optics then around really in gig the But linear or in you've terms what can really got circuitry. fits and interesting copper knowing competency parameters of it of now, right the I our and well. take comes are -- work a is technical just you But out can that be that down to whether right comes drive application, or of it optics around be apply to competency. it IP as really we It get whether it wheelhouse the -- a portfolio down once to pattern some node, some to XXX you of and kind kind it you optimization when

Operator

Our Svanberg from Tore with is Stifel. next question

Tore Svanberg

market, case, guess, Paul, the hardware on the this you. business. I in question thank IoT Yes, a I industrial had

bit there. to some you on sounds still it's well it And that sit up a moving parts what's down a next going this little of there, I there quarter, business also then exactly quarter. pretty So but certainly, being inventories. clarify talked about hoping of like was there was held lot just because going could you

there, you a if clarify that could some be helpful. parts just would really the So moving of little bit

Paul Pickle

Yes.

hardware that have kind there. would for business. of don't going QX bottom. We ton I hardware visibility to looking QX is definitely, in a a So us to like a at as we're of bottom the think be

it's little say. bit So a hard to

With the federal government might hardware. I'm we rebound budget and make picking increases and modules of of start looking see broadband. the up kind direct in flattish applications ahead business. that buying, here somewhat is to QX. kind and at is POS some on little QX a bottom of But some get QX QX a bit and mostly Industrial Broadband a

some less got But customer we've inventory government well. buying muted is. POS on had the visibility as So they've to due what

really demand is what for depletes. going subsequent that so, pickup that inventory of channel router end-market comes in as business. that We be to should And or it get shortly down a to customer after the kind that modules

is to I to but hard this at the I am flattish that QX be bottom, going would will point, little to somewhat QX. QX -- a it's be thinking say So and

Tore Svanberg

new segments? one is Mark. a you General hoping other be little went the the because could new to quickly. more That's want said to you about explain I that of very yes, business us sort my just follow-up Mark, Manager. And But was just bit helpful. segments, specifics through those of again pretty talk the you you that for

Mark Lin

Sure.

is is and the message that now also ISP segment routers the think I modules.

of out more moved segment. that we've So

what more AMWU the and into we legacy kind under business will of the will are. LoRa little Routers And Sierra business, the ICS be bit a there IC be moved an ISP. in then segment. visibility remains unchanged. businesses models So

Operator

B. Craig is next Securities. Ellis with from Our Riley question

Craig Ellis

clarification your this a company Yes. regarding we Paul, X.X we going think Maybe way that And T off is, how just and design win comments, late about position with the time? over has? activity should gets the the the question that about should think diversify program how activity of The engagement can some share starting on year.

Paul Pickle

question. good a it's Yes,

be going over that's think decided I is to share time. something

market I that's settles gig those the as to Right to I first definitely to think in see to good I in, reasonable everybody we moving MACOM. to performance, best gig. it's both is is beginning, some we're it's but to XXX going with a a in the share that in there, down down. in terms our being going very, do the And of kind competitors that XXX But position to to it's largest that expect really address of think mean, one in very business us space, we're position reasonable supply now, of secure like chains. very quickly. going share win, come to performance expect eventually, it to want and

Craig Ellis

it. And then -- Got to

Paul Pickle

confident that spec, design it ton goes need production on They We of turn we device. into These we not we typically where In it sit. for. where fairly are question. design the a sorry, win visibility programs they But you There's exactly say right -- of sum on some tweaks material. get give like -- and half the NDA. what the device. turn a terms of design answer under now, cadence didn't it, and us spec. in we're They I second then win the a a up. It's something a we get Occasionally,

Craig Ellis

have mentioning expected. that previously I Got Nice to with in which than might would in the you what half think the earlier gains been about fiscal it. quarter second describing, And first fiscal emerge The previously you're I of I program. quarter, think question if the some is coming a I seeing before have year. really is you of the just we're I gains start look nice business at one, here Mark, for arc ask

you to programs than helpful. that's better are you're just there that natural is driving feared Or inventory in through question in Any and to just demand might would Paul, see shape some have a the this, be of you individual So serve? Semtech or a a markets response color little bit products that? pull is seeing we number starting specific the

Paul Pickle

talking business. of buckets. definitely kind my these that I we we of a we're comments We're into recovery map, When engineering driving new about when Yes. side, two talk we're separate business. the a map we talk of in One, PON, team about recovery about on we about road about would new talk which talking leadership have -- road engineering programs, revitalized executing to. is

So in that, a absolutely from dynamics market terms faster I recovery are it's of adoption. market business. a fantastic. bit pace the separate of moving the The would of though,

there that the of a budget how and be, didn't half obviously we looking We PON -- and was was big it out was so, infrastructure it's being And from anticipating allocated were first to stimulus. something government the to it that know forward was and knew just was we going that contribution China delayed. for certainly --

moved for well. of U.S. right business projects moving conversations I looks that's But with things PON say a infrastructure where well. companies, then a that bit standpoint, so North those new are now, from quite American in And would one like it increasing And to at Comcast as little us. the high-speed we're be sideways having we looking

that recovery color. little of lots think here a So got that number years. of gave to runway But legs, It's going definitely needed. bit of we're that was got a Hopefully, PON's of you near-term I lots enjoy.

the not we to inventory, drawdown, Some some it's that cases, for some SKU of In be It and looking depleted. In it there's all drawdown. inventory but kind to inventory to down have lean. cases, just we're very of really comes is that wait channel inventory it's at.

Craig Ellis

That's you you. so could wrap Paul. really Mark, up I it just much, with if helpful. Thank

just be of quarter, gross expected. they cash a the As that in getting look system things whether gains, you occurring, it's in operating and or at it ERP a And margin free little doing fiscal positive are just in than bit I better first seems realize lot result I optimization to the as flow.

XQ? you underlying about little you we the just What do So can this way can benefit? gross about think bit talk just out margin? a optimization the And how it? see is beyond art play to you. Is the Is fiscal it Thank some how mix? drivers

Mark Lin

XX.X%. to and of guidance, part at Yes. non-GAAP in for of with large gross margin that guiding We XX.X% our A Sure. is our pleased came at the Yes, QX, though. we are high-end mixed of kind performance. we're

are some businesses, as up, with especially those a have world-class the long team. PON, think gross that But So averages. in gone operations recovery corporate we as right, in said, I above we've the of

there, We are points for and few driving basis a down optimizing costs too.

definitely say as some though, operational mix, primarily I'd well. improvements but So

Operator

is Our Stoss Craig-Hallum Anthony question next Capital Group. with from

Anthony Stoss

you, guys. question Hi, for A Paul.

I think mistaken, I'm your China quarterly PON not in million. business, about peak if $XX XXXX, back a

guys time I and of And XXXX maybe if you rate, have a Do it back on you get I a run the XX%. can about disclosed any visibility kind follow-up. frame? kind of dropped to then had quarter ago, what towards you think

Paul Pickle

closer If memory to serves, I make think nice to peaked Yes. million. towards inroads $XX that. we going But we're some

buying time of I that have environment. supply buying back that pretty some that in constrained a in it frothy think to still you consider frame, was

XX-gig run run right number you rate is, normal the some run So a what back that to I then would discount of number. And it that you I'd normal ask normal the a is. going little me terms on to probably be we're little get in just because what those say is little tell to a vesting a Maybe of rate bit that to peaks bit bit ASPs thinking don't if higher. rate going

a not because but obviously, to the pretty close. So peak, frothy environment, it quite was

Anthony Stoss

business. could Got kind it. modular of And cellular if Sierra on I follow-up the

You backlog late you calendar actions quarters a I launching the you about bunch was maybe and the couple wins the think that about at curious, FCC that talked backlog like? ago us on might I'm time, XXXX. of just what look Can talked that taking. of update a and design

Paul Pickle

the low get progress. place to a today, that point this we're I it's seeing forward can't I think currently the QX. for hopeful in. And QX given to that the hardware little in quarter, the be share expect We that Yes, business. do action sideways that's backlog I'm said certainly really point the -- loss. with to I might We question. low not going point. going it's be quarter if still We're making

some quick we back underlying at see get so, I if given POS that snapback decent end-market the should POS, environment. business. a But reflect would our into XXX around And X quarters ago, a annually business customers, our made normative I pretty on still customers, I at once handicap on more buying we comments consumption,

COVID number beyond of cycle, ability XXX to peak that. the of but off good So the grow a with the

Anthony Stoss

Got Thanks, guys. it.

Operator

session. of our Paul question-and-answer back for end the to closing to conference reached the have I like would turn over remarks. We

Paul Pickle

and Thank great day. a joining have us, you for

Operator

This will Thank you. conclude today's conference.

You may time, disconnect thank your at and this lines you your for participation.

Semtech (SMTC) 28 Mar 242024 Q4 Earnings call transcript