SMTC - Earnings call transcript Q3 2025

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Operator

Good day, and thank you for standing by. Welcome to Semtech Corporation's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mark Lin, Executive Vice President and Chief Financial Officer. Please go ahead.

Mark Lin

Thank you, operator. welcome. and everyone, day, Good fiscal I plans, Investor am President we by Hou, include about call quarter joined our along remarks are with various an prospects, at to Chief Executive investors.semtech.com. Today's which be earnings comprise of third and the close, to results today XXXX, Officer. Today, forward-looking which unaudited posted and our Hong statements. presentation for pleased expectations, year website after released will future market call measures see our most those and net as than be XX-K release X risk report press of that call. Unless non-GAAP Risk presentation, all today's this to refer sales. Form earnings on Slide to financial well Factors the differ noted, actual made Please could will on on materially information for section from cause other recent the as of otherwise our factors statement-related results income annual Please to refer earnings release important the press for information see non-GAAP of X our and Slide to today's regarding financial notes presentation presentation. and release include I GAAP non-GAAP call earnings also press The our over that, turn the financial will Hong. reconciliations and measures. With of to presentation

Hong Hou

prospects. We numerous high our range. customers, report Thank high a outlook Semtech growth all the metrics. In tenure in productive with has CEO, that income to it of earnings making a of me on guidance confidence margin, progress in so sales, almost the QX range, and Good strong happy EPS end of projects I achieved while been fronts. and everyone. growth operational X operating guidance the operating suppliers, very exceeded each I'm growth shared and near-term are our employees, our call, Semtech's we we engagements and My financial QX continued these months at progress partners, priorities, as high the give last result Further, into margin and and net end period. Semtech afternoon, you, X near-and made far Mark. with my very I'm and long-term have

we'll of on delineation through of First, annual opportunity improvement, demand, provided levels, planning sheet correlating evaluation center data focus engine noncore improve strategic suffice. will be of And products, sustaining our portfolio growth we and these assessment, level on priorities the is a completed multiyear an to investment expanded granular and growth a purpose paired levels, businesses. to current increasing and more forecasted margins in other we curves. product In generational core rationalization, net portfolio stemmed but our assets, reviews to beyond The strategy, a investment might some with balance from AI-driven is investment investment long-term our this prudent evaluation be investment. we and Semtech. In on what project have process. a contribution which the be areas, expect regular transformational return the for effect at The of

We adjustments change. are committed to the market direction to making timely

portfolio the and ratio. nonfinancial of opportunities we our particularly and but has growth, but will delay want on I'm are benefits valuation will growth focused repayment Our expect aware financial is leverage inflection not the accelerate our fully rationalization, message [ process. benefit debt the to my decrease I I clear. to portfolio ensure broadly ], the rationalization portfolio to of and that inflected

customers Second, QX And intensify to to expansion, these effectiveness and accelerating solutions. QX initiatives. engagement demonstrate the our technical swift margin customer on and changes operational growth of made have results and we driving outlook provide the with

toward markets targeted tailwinds are continue to We and of customers moving strong us. see

will initiative solutions to and have aspire we technical roadmap needs. their believe choice a We customers product I share have our accelerate leveraging disciplined for alignment we end and partner multigenerational customers, achieved market plan, of instituted key and from meeting SAM critical design competency expect and incorporating investment become their key key objectives performance we provide. business sustainable and expansion. this the gain with I

Semtech's foundry instances be high-end contribution operational installed in the end our to has area, have dynamic demand customer delivery this data I contributes prioritized the meet not and Semtech capacity who supply our current growth. is to partners excellence would our ramp. assembly center you well amidst foundry, and driver additional to you in noteworthy acknowledge growth times. Semtech's operational consumer remiss executed to partners highly natural Another did within excellence. test in our increased times, markets. superb our assembly, quickly chain have resiliency, to if to customer I many and with timelines on-time test know our and from Semtech's environment partners quality delivery Thank valued. In the which I lead Thank current that be support

pay-for-performance from also energizing We best Semtech's these a Capital have with that we mentorship, workforce. our to Semtech base believer and initiative to and drive will be elements creating out In of Committee. the and on bring development elevates members. expertise firm firmly a and become culture, vibrant This focus X elevating I'm and modified the Compensation capital fostering proud importance Third, quarters, continue diverse launched a an Human from promoting We high-performance coming our and human Semtech's and my Board focus. priorities change our people, win. and in leverages initiative charter aligns our the incorporating committee of to the development, I'm believe the employee compensation this determination employee recognition, on to RISING,

Moving to markets. end

on up sales $XX.X CopperEdge X.XT in data our up used XXX-gig active up XX% shipments For QX, dollars. Net XX% a linear million, sequentially with copper applications. or $XX.X million, XX% were were for infrastructure net million record our sequentially outlook and Consistent cable, high-single-digit year-over-year. sales the center ACC were XX% the redrivers sales in up for CopperEdge commenced and QX, net year-over-year.

shipment, have allow could me some been through impact potentially enabling reports multiple Blackwell That timing designs and TAM we ACC our 'XX. There said, the higher We where market GPU expect FY on timing of to by our ramp followed in provide provide key engagement. a rack contribution IC incrementally QX, regarding based of which assurances ecosystem volume components. progressing and

conducting be is My to enabled time that reaffirmed CSPs invested X multiple of CopperEdge floor measure of cables appears with the up over length At engagement proposed CopperEdge up of configurations a team's provided to expectation companies from this customer centers. AI past to with months. platform and a the a to XXX-gig connected based a be for CopperEdge and technical adopt cable architecture the between my X collaboration is positive the XXX-gig more connected length connected ecosystem a reaffirmed proliferation have that decision ACCs. belief with meters the of SAM. center Global few exceeding and with firsthand ecosystem. their data executives CSPs ports show streamlined work relevant customers' Catalina vary a presented, ecosystem. I at platform. data count on with our end ecosystem This improved DAC couple the to And and a NPI not is OCP challenges major our to design requirements at floor gained Summit Meta very in a quarters lower and on participants solutions. latency, OCP smaller racks DSP-based number a accelerated achievable believe their integrity. Rack dual-rack information meet are demonstrated data readily direct CopperEdge cables. attention with NVLXX We deploy a the XXX-gig chips retime copper, design will in Project in and where I or boards Several will required our CSPs CopperEdge market. We Catalina Global And positive attached and signal future a improve attended cable have centers. at meters, case makers the significantly currently power differentiator Open proven the CopperEdge last understanding lower solutions our traces last their has signal compared much and as contributed, technical to solutions. Semtech's Semtech's our delivering users on low-power, integrity and cable consumption designs time the various in low-latency many time CSPs, Semtech's have Compute month, quarter. to and using manufacturers, But in continue or cost, to will its manufacturers varied the since well near Summit the ago a of with in

In addition and to CopperEdge, sequential contribute growth. our Tri-Edge PAMX products meaningful continue to year-over-year

excellence. operations FiberEdge and AOC robust believe XXX-gig closer Transimpedance have Amplifier, strongly, ramping deployment with Our has thanks in lead captured TIA, and drivers. Data customers production market engagement the customer our shares our for ramp center in we our commenced and we incremental or Demand a QX. XXX-gig our product up at to laser been remains

and Moving manufacturers LPO, CSP XXX-gig test It initial correlated LPO proven to SerDes several adoptability orders engagement from linear appears CSPs. pluggable insightful. optics, have at qualification of host. received we meaningfully at X.XT the signal-to-noise ratio that and or module has both the TIA with is LPO transceivers for

in switches this significantly and use improved specific and supply Fortunately, current LPO future easier performance, generation many both enables adoption cases.

latter and LPO meaningful expected increased the adoption in portion last has of 'XX. confidence contribution a from by sales FY Our redrivers net TIAs since with quarter,

of Within reported of our sales and consisting the PON telecom net backhaul million. $XX.X infrastructure, business QX

the deployment carrier supporting been is with and XG to a for major triple-gen improve XX-gig CapEx over Chinese build PON coming quarters. have a of a We advanced carrier, nominally expected pilot noticeably

with market Moving consumer gains of each high-end our TVS in QX. of quarter, and net high-end share were last of consumer to up $XX.X market growth fiscal $XX sequentially Net through consistent in consumer X% reflective the current of our a with million, end year-over-year, communicated a in and sales We increase million, year. X% commentary. to seasonally prior market, stronger X%, sequential grew up augmenting growth sales TVS sequential share quarter expectations

upsides. for first among into for to deliver largest ability leadership, is products products. not market North and of and Semtech's the many other design on quality, much our our activities but world's company so to expectation a on we and Thanks Korean greater be demand products, cycles capabilities, based technology of consumer time to next-generation fulfillment pipeline, companies, key have at proven the the in we American also Our BOM electronics share future meet continued only to generations to for visibility are design-in for at expansion added and the

while this minimizing rate, throughput. regulations, allows transmission market, by to in power absorption to PerSe's design distance manufacturers human a manufacturers the believe ability excite also maintain highly data to computing, with continue detect products wins capabilities and PerSe RF a the compliance smartphone We are measure device to device SAR optimize performance. In device specific with across to effect and class-leading wearables. or device Our valued on the and area,

We are pleased vendor's chipset leading to be included designs the requirements. smartphone meet in to reference SAR

market. end industrial our to Moving

up million, sequentially. $XXX were sales net X% industrial QX, For

delivers solutions up Within the LoRa-enabled X% of over footprint recent-generation sales Conference over LoRa in year. simplification further smaller Supporting quarter a and quarter consumption a our has of enhanced September. Gen LoRa and and greatly while market of industrial a market, increasing, remains $XX provisioning end onboard LoRa customer offers the year million, Gen strategy. I improved QX from recorded LoRaWAN been product LoRaWAN visiting radio which adoption capabilities. performance X power benefited key for through reduce signals Things Encouragingly, XXX% net consumption, this company capability. X development The up

at very the the conference ] and As to gained I continues already with software potential momentum. pushed from on to product and comprehensive robust Semtech cover my LoRa infrastructure roadmap. The believe ecosystem constructive the hardware for to input LoRa concept to conference, tremendous and what a at it can be I demonstrated now gain that gapless said industry. while presentation ecosystem during how I an to has coverage LoRa Semtech's support enablement [ enhanced

addition are throughout Europe, Americas. In considering a to service similar EchoStar satellite offering for operators coverage

asset availability We create for expect boundless LoRaWAN of such potential a will tracking.

QX net coupled and sequentially, another million, sales of up backlog. XX% net Our $XX.X robust recorded quarter sales with growth IoT of systems bookings business yet

customer our business, our previously North as market is customers roundtable by something As I infrastructure engagement our supplier in October, a in-house our Act, highlight helped inflects congestion. Highlighting for and the or held bring where channel TAA further a shape critical capabilities, The markets significant we the cycle. growth customer discussed, provided Semtech the us successful roundtable expect And and upwards, earlier Trade to muted this as end customer inventories also roadmap. we now started valuable America to serve. in Agreements addressing believe insights value the we allowed to channel

for the renewed to market in-house is stronger we capabilities management Australian local and packaged contributed of have slight funnel with Our instance requirements. orders, this single were markets revenue consumption, for growth this our America, net services. have area and to North allows adjacent an of an management, QX resiliency outside data and instance where meets reoccurring sales TAA to and customers identified a services a $XX.X year-over-year of monitor backlog, all as AirVantage Australia a ever-stringent lifecycle federal QX, our with sales management, launched focus. In API. and robust sequential we panel million, IoT-connected one SIM our agencies, Airlink business.

growth Our connected AirVantage, including are and decision-making Insights by customer features and equipment. bolstered expectations additional its to adoptions of analysis AirVantage AI-enabled future Data on facilitate

a platform to is in territories. In voice-over-LTE sequentially. now TVS, net over X% add We million, industrial were which also expanded XX sales robust available smart countries coverage, our connectivity $XX.X QX up in and

offerings. we in product remain We have the growth current our in noticed but sentiment industrial market, with Semtech's confident market the

electronics harsh products ESD environments. address for increasingly industrial in industrial protection Our deployed

automate, solutions, where a protection has type increased and advanced on ESD [indiscernible]. in of solutions growing consumer customers the market, Semtech has As prevalence automobiles. display the factories market. their increasing of challenges networks been automotive increasingly high-end leading some in the Also, of sequentially, are supplier wired severe In our reliance demand with wireless

our the results our automotive our very performance details we disproportional businesses I'm call with And a As across we and QX. in believe seeing additional execution financial back the summary, Semtech's in are our sector, Mark? for into diversify outlook. Mark display customers now the pleased turn market. In to I'll on and benefit QX display automotive

Mark Lin

Hong. you, Thank

accelerate million, $XXX.X to year of year. earnings slightly For points points segment, QX, margin market, were in sequentially to of trend geographic was outlook, the the up on sequentially, reportable sales representing XXX included sequentially. is XX% sales Net and region net end investments prudent X% the $XX.X up of forecast midpoint by basis expenses recorded million, be Slide we we basis and XX.X%, and XXX what business over increasing Gross Operating XX up our below presentation. Gross margin, XX.X%, year. 'XX, up realization and XXX increased points points leverage. up year basis basis margin EBITDA was operating XXX over was margin, sequentially basis EBITDA and of was $XX.X quarter margin, fiscal Adjusted sequentially year year demonstrating resulting basis of up XXX margin in year. XXX adjusted million, an growth all operating operating of points $XX.X each and our in EBITDA and opportunities. XX.X%, up million, Operating points income sequentially over

We expect and of credit payment these payments with share $XXX.X with the and per these QX our outlook. Net debt. cash $XX.X of stated principal $X in end metrics QX flow from of earnings QX respectively. quarter, the improvements million, million, year we previously of sequential for cash further up a QX based and $X.XX the principal recorded in million, to in million, up of made the allocation priority on consistent year. $XX.X $XX each million We and midpoint free of interest reducing included a which last ended on finish balance from QX our we expense payment was Operating $X.XX was of with $X.XX, net of and of capital our Subsequent million a to facility. $XX.X are

to Now outlook. sequential We QX $X the $XXX million, sales X% expect turning of net plus million, currently midpoint. a or increase our at minus

the leading to increase center tailwind. from the We sales net end to strongest applications near-term growth. with data sequentially, the provide expected is infrastructure market expect Infrastructure

sales down, net typical expect market to We consumer from be of seasonality. reflective high-end the

end a QX inventory gained in is and share headwind believe to have We expectations. do not market market this channel

resulting expected expected and be to to be Based sequential plus We gross minus IoT LoRa be cellular at XX.X%, the EBITDA midpoint XX.X%, million, XX basis midpoint at on point margin a about sales sales sequential the would improvement. growth be with in to At basis our is of and or is of XXX levels, midpoint, basis or XX in growing $XX.X increases mix product at and million, sequential net increase expect this EBITDA equate points. margin to points. net adjusted of portfolio. sales up, margin resulting million, a midpoint industrial the Operating plus net basis operating expected our would be outlook, or at which a are minus of $X point expected improvement. expenses the $XX.X plus XXX million, of rate $X.X across minus XX.X%, to Adjusted half

share to average We expect rate to be per result net count net earnings expect an plus of interest and based expenses $X.XX, of million on amounts a are other weighted a XX $XX expected or tax and minus share $X.XX, million XX%. These of shares. income in

in contemplates the higher turn another and operating, growth earnings I'd and sales, back call that, margins, for net at outlook to diluted midpoint EBITDA per Q&A. now gross, the of share. With over operator quarter adjusted the Our to improving like

Operator

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

Quinn Bolton

nice and results in Hong center Mark, congratulations business. guess, data Hong, the data the the business. to start I on with wanted and I especially outlook, center

TAM comfortable you the might able Sounds that. for But ACCs. be on hoping be continue like very elaborate floor to with you to

the mentioned opportunity, or hyperscalers the to wondering TAM ACC at you see but an now that encompass Catalina You as other CSPs. opportunities rack if starts

some to that be wondering contribute you opportunity. just $XXX-plus cases talk million able see starting use to so, And to about of might you the if

Hong Hou

well, platform. we tractions, baseline to We they going CSP the is haven't XXXX use GBXXX is in confirmation which know GPU on deployment getting but And proportion. long I detailed using CSP [indiscernible] as and processors. for in beyond we standard Yes, you, Thank the Quinn. as what that know, discussed the at is be as so the used is going major you one, to be as OCP, Catalina participated at main

the improve little, to integrity is the capability this will Another announcement very signal and the say adding of and fraction consumption, small incremental link as budget the elegant power of improve major CSPs well, and cost awareness on I by no by ACC since very level progress well. latency solution

are in in seeing can now board, be are linear a equalizer be CSPs the in many their on trace entire companies be and several -- well. other can So as can we connectors, design the the using cables considering

after So is quarters case that floor guided indeed of gives floor me a a the ago that OCP the case. confidence that couple our

Quinn Bolton

a there. just Maybe quick Perfect. follow-up

follow-up opportunity? now looking a in that Just calendar for in drivers opportunity. that more do seem about the then PCBs, you And use my LPO ramp does to linear think be longer-term upbeat to the cables XXXX, or CSPs you or that's is,

said for you initial to to 'XX think of orders you 'XX. you're I -- got be what of in you've fiscal applications fiscal starting year? for talk half types TIAs LPOs seeing deployed this the starting ramp Can back LPOs about

Hong Hou

Yes.

just first on me Let follow ACC. the the up on one

So in are multiple and in the the the phase. and connectors phase by demonstration in the even the board qualification in applications on CSPs the and cable the

the is typically compared relatively the about products. So solutions the the thing cycle is optical-related qualification good short copper-based to

the probably would other of will the opportunities contributing to So start calendar I revenue. say from XXXX on the equalizer the mid linear year,

As in got primarily X.XT shipped already LPO, for prepared albeit, low-volume, and orders XXX-gigabit we DRX, per side, and in that for they're I have on second the mentioned TIA. per the trace as remarks this XXX-gig is

the different transceiver scale applications and So and customers out. they shipping qualification. are for building are modules scale up both to And for

some cluster So for is CSPs. compute to cluster, the the switches, cluster top-of-the-rack NIC or up the primarily scale end-of-the-row connecting scale-out GPU size ASIC by card is compute or increase and the to

Operator

Kumar from Sandler. question Harsh Piper next with comes Our

Harsh Kumar

one on and LPO. Hong, the quick on and strong one I a had center one very on team, strong entire Mark, another guide. quarter, congratulations Semtech data very

I as of to an for Is Hong, So you're steady a growth format? it'll half, then January will you're think sales the give it when the year? you you continue thinking could ACC a just do in follow-up. through guiding? out the or And us about you, then for to idea And quarter second steady-state build what it have

Hong Hou

ACC I answer question. will let Mark the

Mark Lin

was said high-single-digit in Harsh, we millions QX, QX. in this

and QX, QX, through ramp QX, nominal QX, it FY QX. it's through then So progressively in a and ramps 'XX

that So with a see and pretty timing. consistent that don't messaging, change we've in been we really

Harsh Kumar

a for can then my talk follow-up, maybe very if theoretical I Hong. about question, And LPO,

lot it'll is that compatible, have take on business? of lot debate There's a So interchangeable LPO. nonbelievers Could using because of module impossible? whole of LPO, in a possible, that theory, or a just never to optical this just happen it interchangeability. theoretically over eventually think the Is

Hong Hou

the is that's debate And Yes. impossibility have question. the ongoing, is years. after the previous current what that the a even Harsh, And I Tomahawk found that scale-out generation, LPO sentiment largely the good for early say, think I where X good by X. out as not version, is example, of from still the on was as host for the signal-to-noise understand we ratio done developed switch

the But really superb So and if be interoperability a the that and LPO generations there future previous makes little and has current in the tested switches, they pretty in SerDes, with margin, did very the signal-to-noise fortunately, demonstrated version host very and might difficult. ratio.

And essential so, the part like is a an at LPO it of linear ACC, equalizer an the is start.

But as noticed the So they we one side, they solution other good linearized, to need best use switches X.XT and using many LRO, we basically LPO. pivoting that's the be CSPs, can and To the because arguably receiving getting side us, closer, TIA on have timeline side. and to do solutions. current adoption ratio, that interconnect safe the low-power the a so future retimed the started signal-to-noise

from host capabilities, away LRO. or total understanding on benefit currently I getting the of type solutions. addressable we'll and progress this of transceivers And do DSP LRO a can market LPO with compatibility the So retimed as and chip LPO the either served of type believe better industry by different sizable

Operator

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

Cody Grant Acree

wonder, not adopted? opportunity Blackwell the you're is have talk broader something change that seeing that XXxX at Obviously, been if I to industry. at Congrats with. you could specifically development that but that that at of happening CSP may the support. about that's been more progress. doesn't Or be NVIDIA impacting you're on a that's certain the broadly there customer like discontinuation platform It ACC of could long-term the the talk a sound that -- a about program, beyond Hong, opportunity? working continue to there you Is though, them? be opportunity in has impacting more one-off Guys,

Hong Hou

Yes.

Cody, pretty views, in their ideal, and based many cool and definitely others end, and cluster, for ideal one don't much switches. GPUs right to that XX But cluster CSPs, so top-of-the-rack that have center ports the on seem the And XXxX gigabit where also to XXX but as baseline wanted now, the for racks. 'XX leading bounded I either So CSP, power have have as connect need backplane, seem have and their to heard to front long is talked for or compute for the contribution but use we X.XT to how everyone it's XX, they be at their I they using ability largely know end-of-the-row they by Blackwell. And we XXXX ports have to to they some an or and infrastructure in data size. be NVL

I -- where a really differentiating think of consumption. solution that's good very low a LPO power provide the can have because

cluster I different of to continue to the in -- the think future, handle more as reports to the the very we're is for to hear GPUs going the model of LPO probably is on to industry pushing with solutions. But So parameters. the be to able number continue just more the hard why for racks, in increase variety that aspiration the

second That's the going steer per I I be of at than just dynamic. XXX-gigabit that will of wanted NVL how of why rather forward, a be ports XX number more believe the to the are it's -- relevant counting there. racks out many going measure really to So

Cody Grant Acree

the maybe is help data your you frame overall of and and How that and that from delineate opportunity? Fiber Tri-Edge ACC your in much your opportunity? LPO just center Can future,

Mark Lin

we million provided the ACC. level. for ACC, expect PMDs, continue it'll that products, support for data or to Typically growth center haven't figures when a all ramp, where historically, growing But that gave market robustly we our of And realistically, delineation quite does we LPO is Tri-Edge. entire high-single-digit

Operator

from comes question next Stifel. with Tore our And Svanberg

Tore Svanberg

strong think the there versus for single sounds primarily lane? what's again, XXX-gig 'XX, as It fiscal the like mix on CopperEdge revenue, will, majority Congratulations results. we be Hong, high XXX-gig this the mix million And it's the quarter, between per XXX-gig. XXX-gig? of the of

Hong Hou

And XXX-gig, aware Yes, you, going well. especially We primarily that for on linear equalizer driver Thank after providing the CopperEdge the of have capability the be the primary QX the some Tore. signal is the forward, XXX-gig. to going do XXX-gig in is to integrity. industry revenue is is the contribution as improve

Some CSPs center primarily revisiting contribution in the the their ACC cables. XXX-gig data a guide and we considering count, DAC architecture we using XXX-gig. are of instead But is start and

Mark Lin

let that. QX, our Tore, on me just revenues. of double-click was substantially CopperEdge In all our the XXX-gig

Tore Svanberg

me let question. move And on center non-data to a

this So a billion back to good you climb quarter. job that run for, guys have done to $X rate you've guided for January the

about mentioned still everything. you're you strategically, reassessing think because, we just Hong, As

versus think we at investments, less this strategic segments should that billion of $X as that the revenue requiring of perhaps true business of much how are So point?

Hong Hou

a Tore, question. good So that's

right we the we industrial the have QX the guidance, broke -- now. segment For different down

guideline. a And so you can use that as

Operator

with Our next question from comes Baird. Tristan Gerra

Tristan Gerra

of generation over update the we on the next next any year? CopperEdge that ramping, cash look free leverage how type flow you And quarters? few debt exiting expect the is at Now should ratio

Mark Lin

Yes. I'm million. QX Tristan, quite cash $XX.X was cash was pleased, operating flow Free $XX.X flow million.

So you as cash. with across soon generate is principal. as a broad-based delever, as And that, inventory see the that we've We businesses. generation demand, little build continue we more to I'm flow but to the is have we flow, we pay down really definitely, supporting bit And cash, our business. generate inflected, cash pleased cash consistent may right? We

we at we take where ratios might to leverage a maybe our we're annualized. That look you guide only one out heading. potentially where going In terms quarter, you exit, indication of this of EBITDA are an reported can quarter but give our that

Tristan Gerra

reach the announcement that does September, and create available customers? additional of that content? at you if NVIDIA in that the to eventually TIA for opportunities then would of Coherent that gets in your a back DSP allow particular outside I of And look in is NVIDIA-based transceiver solution terms And

Hong Hou

in growth center the had Yes, And retimed meaningful we to Tristan, ACC, continue to driven data -- We'll transceivers has we first our DSP-based And grow. we benefit by is should content so for quarter but transceivers, QX that baseline definitely have been continue transceiver some growth. DSP-based the DSP primarily will for that. from CopperEdge from revenue every there. the revenue

Operator

question next Searle from Capital Scott with ROTH comes Partners. Our

Scott Searle

center terms really it sort front, us PON data on of Congrats PON of about If been on the activity outside seeing I'm like it in since the I'll the some give China-focused. it still China, any, was to then, like design start talk shift specifically, and there? the Hong, of administration, China. it's data impact away you're if about another as seems you there from wondering XX-gig above? could performance. center, growth covered. thoughts seems quarter, particularly Maybe And decent we thinking incoming the in is you're how business how any on

Hong Hou

Thank you, Scott.

product point or to next have the it. over And been business we this So has China. up PON expect the primarily tender ready quarter in And for another the two. offer we

it have triple-gen can XX, at demonstration and We a XX, operate in there, XX-gig. and

in provider of setting really leading benchmark market. that is We're that so the the And capability. the

are As absolutely so political for we what seen have far, situation that. But any about future very impact. is we not the there, mindful

about report funding. issued for they BEAD got you a As Louisiana, and Calix the

U.S. been have in as we opportunities leading PON well. U.S. for the equipment all manufacturers the So engaging with the

major market. and China infrastructure the address for trying of And well part through So manufacturers, X PON the for beyond the those the positioned our other opportunities. are U.S., we're we're really But markets to, module global upgrade. the

Scott Searle

continuing data could to recovery quarter. And from up follow a just A for if nice on the center front, minute. I LoRa away stay

it's still below in forward so by about million, I the applications guys $XX of peaked where give design from million how talk traction. or in you're bit continental-wide in there's range. at and about that being seeing opportunities if like been the I where getting U.S. you a could traction couple It I growth thoughts sounds some some levels. there $XX terms think, years in the should we the you're had ago these like buildouts us that a think know going some wondered of have little some just where I Netmore of think Europe. But you driven rate high-level

Hong Hou

you, Scott. Thank

couple market noise had the Helium. LoRa previously, of yes, the So years ago, about

that QX growth, a QX, QX continued Say, think now, growth. we And basis, we signal the strong strong growth. we a right seeing noise I had we're QX, In So growth. had have to year-over-year marginal dissipated. to of clear but

I just now more connected proliferate rewarding has are for And presence and and use and cases. metering, Our to more very spent been to come and and aspired strong. lot it multiple their a have partners, territory Traditionally, tracking, automation, use out cases. about They and you the now, talking time smart totally but I have spaces successful They right to to cases asset I'm mentioned fascinated. in Netmore. ecosystem see countries for and consolidate multiple of use

I think that is maturing. really industry showing starts the that

major is asset the metering tracking. smart far, so and And applications

smart And They factories, for a more the then I been think talked business smart companies. are to the be cases There several more homes, tremendous tracking a has I are asset those right well-established cases. to in growth and use use seeing now. is their lot And going those. in of solutions known applications. lot having

cases. we development growth X Alliance excited downstream be perspective. new coming out, LoRa ecosystem we and And very level the enablement solutions the and Gen about to easier, products use we're of use X, of make having more provide raise the plan the awareness to LoRa So to and of Gen will the successful integrated

Operator

comes Ellis, Securities. question next B. Riley Craig Our from

Craig Ellis

Hong, wanted back approach in especially margins. growth a go but Mark, to center, the I maybe way. Yes, congrats more longer-term to it and around execution, on data Hong,

having question that So a about X to ago what and opportunity down The business single seemed or is gotten it timeframe. single started years X $XXX that exposure it in X talking we as opportunity product base 'XX-'XX design-in quarters like be do significantly it's least at company application to of the broader level road? we size I and the think as a about how the be this looks to would the potential, customer was business this, think million

Hong Hou

great Craig, question. a that's

I mentioned, this that's But recognized now, broadly with single and market. you as started is platform. our a capability, single that as observed, accelerated right a think trailblazer platform, time and a the new beyond great for opportunity that that to company, beyond as we company, single this product is single

the is ports. The to thinking about that been and you have second we have of opportunity have why that's qualify per everywhere counting for you transport, the XXX-gigabit So number second by reason XXX-gigabit same per the challenge.

signal all corner, it's to ports, XX X with increasing out rolling the the going months, it's opportunities. for need well, and around X be to our only same maybe the the XXX-gig, and solution Tomahawk And right You integrity.

But scale-out opportunity So, the there. scale the been pool, so tremendous a with up. the application got opportunity far, into has we added for in

the can multiplier So a XXX-gigabit a probably quantification measure on you XX%, the relevant ports. a ratio, more XX%. And of adoption put XX%, number is or better, of then

are NVL to at, steer we XX and will process forecasted how are of in being people the quantify that that establishing racks being model opportunity So built. so so many the not

making that progress. report we're progress will we good So as

Craig Ellis

Mark, I wanted to cycle back to you.

are things about we cycle calendar Hong talked with the planning expense happening, You talked in and about management. where

we As through coming? grow we expense expect And R&D that fourth there Is things the are and OpEx whether or things? [indiscernible] discontinuities growth? other are onetime any reasonable, XXXX, revenue quarter with small should it coming and or costs coefficient think would to continue fiscal that with there beyond think some of investment, be

Mark Lin

coming. Yes, Craig, we our don't strategic onetime see through We've any gone planning. things

will stressed, returns. have absolutely but area investments, near-term no Hong investments is incremental has projects. R&D incremental other those expect believe there's do I the we And So evergreen

and our something as redirecting and moves were sunk turn discounting efforts. don't to particular the if cost just away that So application, we the market mind from

half reiterated revenue probably of at number what growth, we're grows I the to. rate a In OpEx growth times, we've terms healthy and think sticking growth, of -- of that's is

growth expense investment little will there. more just probably some are bit data those operating you that of Now, a towards but center, prepared be opportunities as our some in heard redirected, near-term statements,

Operator

next Susquehanna International our Rolland Group. question And Christopher from with comes

Christopher Rolland

quarter a congrats guide. echo I to and my fantastic on want

OEMs going these are might cables? the CSPs direct to to they're And be to is Or via questions How set So these AI you my months? incremental? of through and out? directly, big is first of GPU it Or to for next CopperEdge of million, go-to-market you how expect shipments, to first change then was how channel are much branded maybe guy this all EMS? in to shaking using XX all the around cable the set, ACC, the bulk third-party were QX? that And and here sales, for that the level guess or going shipping high-single-digits for I these

Mark Lin

our Great cable millions -- question, high-single-digit large effectively, looking when CopperEdge, that the -- copper I but XXX-gig We're get we active mentioned company. suppliers, Chris. that we really at from cable, demand you that think directed it's customer is of it's consider can really and

So at don't going this the It's point, really for anything to rack supply the think, into I demand just channel. really is shipments. cables, with going

Hong Hou

add just a QX, to then very asked quantity. basically, just it's for And Chris, to you QX. sample minimal that,

QX, is the So the the dollars high-single-digit million first volume.

Mark Lin

Yes.

for that Chris. X.XT consider You there, applications

Christopher Rolland

bigger my And in, but And parts the the your But there? Are divestitures. of clarification what wanted business? right. just is perhaps, well? doing picture, question, around a numbers interested still I is PON you guess clarification, Where guys a do in business I'm buying interest if quick as we then, selling conversely, a of stand parts was, just was down, better perhaps,

Mark Lin

a That's And portfolio and number order keep as priority. the sheet In where little an area, of matters. course, we sensitive. our prepared bit balance believe did we're do remarks, we one

all the have businesses At So it point, our priority. one think inflected to this of number I growth. is

our So potentially remarks, believe no to mentioned these noncore that prepared way will valuation, in divest desire impede maybe businesses. delay should but his help we that Hong as in or

Operator

with And our question comes from next Tore Svanberg Stifel.

Tore Svanberg

gross How think well? drive for 'XX? mix Is like in things, lift Mark. maybe fiscal for margin could so or XX that anything it margin? also we January. follow-up mainly a I the just Mark, should other gross it this gross are had for about quick Or point potentially basis margin as that, at will point scale there that improvement

Mark Lin

Yes. Scale driver primary the definitely definitely, is all in helps. our right. But mix, guide

a tailwind. lower portions margin business as But systems So improvement. the little from tailwind bit a we it's XX quarter, there's bps other But right? did shipments that a our of in CopperEdge get upward, little a our So business. definitely this was inflect of hardware IoT, bit a

say, So little business that's right? take But doesn't definitely the to business. let's We'll lower. our percentages, definitely, bit quite profit, the gross infrastructure that contribute a

Operator

I'll for this Mark Thank hand you. the floor at And there are back no further to time. questions remarks. Lin closing

Mark Lin

conferences investors.seemtech.com, website visit And joining. attendance. our investor for Great. where a day. will we Investor Thank Have upcoming you be Semtech in please at great where post

Operator

now may Thank disconnect. parties you. All

Semtech (SMTC) 25 Nov 242025 Q3 Earnings call transcript