SILC - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Silicom First Quarter 2021 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

You should have all received by now the Company’s press release.

If you have not received it, please contact Silicom’s Investor Relations team at GK Investor & Public Relations at 1 (646) 688-3559 or view it in the News section of the company’s website, www.silicom-usa.com. to the like to now would hand call over Mr. I of GK Helft Investor Ehud Relations. Mr. like please? to you would Helft, begin,

Ehud Helft

Thank you, conference operator. of you I would like Silicom’s quarter to first XXXX results call. to welcome all

with which rely of in Silicom’s likelihood dependency services, by difficulty solutions markets and resulting a these with to economy identified an extent customers of adopted in commercializing and in our in to a does predictions obligation evolving the Actual customers, for products to maintaining the solutions time or of Before our to number COVID-XX, The smaller any evolving we a safe brand on SEC. factors information. statement. other assume statements update those provide the not spread events SD-WAN, forward-looking documents increasingly coronavirus, company. on conference the events in and This markets, or on your dependency competition, passes. are the other cloud-based only to results contains these to will markets. larger and that to protecting or regarding the speed from limited development, NFV of increasing along These we the recognition, materially by the and marketing projected, harbor increasing projections draw and customers that intellectual Edge number call statements world start, as property, which general relating substantial following attention the growth Silicom may the like manufacturing protection may change I’d disruptions result company the disruptions and differ future revenue entire including the future filed of are as of and novel performance

financials conference on current non-GAAP non-GAAP order of results in earnings In Management to to such Such financial provide substitute presentation results. future. addition, of disclosed company’s These basis. forecast accordance assessment non-GAAP call during future this included earnings is management additional strategic with in discussed for non-GAAP will GAAP. financial is find investors and that not measures GAAP assumed financial release, performance. today’s the financial on to financial of in company’s in this them it be a by financial the otherwise a you or which be Unless measures believes call. A prospects provided are be with method the the should are to the non-GAAP operating make our cooperation these measures and used evaluate and useful measures conditions an decisions, discussed will of ongoing Non-GAAP management following assessing alternative measures understanding information today’s stated, release, reconciliation certain and measures as that investor’s by for disclosure for website. in measures non-GAAP are full Silicom’s to can company’s

We’ll I call financials. please. of with go Now, call question-and-answer Eran who Mr. followed with to to will And CFO. the session. over on Mr. would then the today and begin results analysis provide Shaike, ahead, that, the turn by the CEO; Orbach, Shaike will with us the an Shaike the Gilad, overview Eran, are over of the Shaike. to hand the call like the

Shaike Orbach

conference XXXX welcome Thank our results. our call to I of to quarter you, Ehud. like to would discuss you all first

XXth Furthermore, recent quarter of up year-over-year. reported that XXXX net $X our with track the a results quarters continued XX% our second the It improvement year-over-year quarter are million, to revenues financial growth. with this for we in growth year-over-year is profitability and million, XX% is have over on here. of we income row in pleased very demonstrates quarter $XX solid and XX% We over planning and with been growth the with expecting in

remains Our cash $XX the strong, with quarter ending position million. over

We on discuss a I share today, announced few minutes. $XX our progress our generation detail more buyback buyback. million And use this continue in a to Board shareholders. cash value new will to share in to plan strong our bringing further

back results strong into tapping most is shift trends, towards shift are the cloud market of Our and on the standardization, the scalability. today’s the important which for key associated to

Standardization all As market the trends, and the disaggregation started and well our successful parts has future platforms, market. disaggregation potential. cloud, started market. us. The this led process networking Due process in the you where our to telcos the the the were important opportunity was for market, was are cloud support gain increases for market important enabling which to segment, infrastructure smart and these this, by followed we using which have a significant which by know, players, part service It This decoupling. NFV, as abilities as approach are of from with to An the acceleration and platforms, servers data the smart look to move offloading software current standard decoupled created in be NFV of a started X towards in adopted generic business which are a the trends, such to These to our performance. huge building for are centers standardization required cards decoupling under which SD-WAN a highly to existence and is impacting the smart SD-WAN was us new segments standard cloud demand a which major from vendor. software, also trends supplied the the servers. us of need allowed as strong and the traction

innovation integrated are for spoken the smart additional which creates our standardized driving enables operators behind and R&D smart and units These in deployments. is concept standards, into within in efforts and central XXXX. sales importantly, for our disaggregation us which and networking, to just, need products list for focus expertise smart and key networks such marketing already and trends a the leverage by the performance. XG/XG opportunities infrastructure as distribution as This O-RAN forecasting few play this our and trend, adopting capabilities to be our network acceleration, as FPGAs from network telcos we for units, fine-tuning past and our is can network our enabling significantly decouple the units, strongly vendors, in well and operators infrastructure about The mobile radio diverse allows combinations access superior and enable increased Furthermore, operators. radio OEMs. of and reducing in including and components, best-of-breed mobile platforms. the telcos components open decoupling with I’ve O-RAN unique of and cloud, approach to increasingly previously, combined As strategy over facilitating platforms now favor directed Correctly years, cards investments for cost

after with now they for cards hyperscalers unit our building many strengths. global This won telco those position investments same relationships soon existing with multiple server our and RAN fruits win in and our XG also in of the U.S. X virtual success, are XG units. architecture following customer for January disaggregated cards To which telcos, and seeing our its line telco understanding, The win And initial major suppliers win January, We engaging are expanding believe design XG-enabling the In our our solution markets. deep win we the with our superiority XG expanding leading disaggregation confirmation our success top and penetrations products, address successful build-out, with new those high network our our relevant the our with based X cards. network new illustrate will of manufacturers the the second approach other in design a O-RAN interest with. the throughout kindled potential cooperation key tech the of the accelerator includes for is and these that trend, enthusiastic design our first service product We feedback we our customer further customer player and that players. Broad in stand-alone for and currently build-out XG Open us customers, in our provider have and the a distributed at of power Intel on network’s cost-effective innovative its is distributed and hyperscaler, design excited confirmed with system-level our players scoring long-term is wins use another industry-wide This further accelerating discussions of X growth. we penetrations XG are pioneering has cooperating and and technology. technologies. and these all XG our years-long the February,

and joint and our achievements the drive see infrastructure to further activities markets see Intel. possibilities XG, close with today we leveraging growth explosive Beyond we the existing the the in cloud the ahead to corporation growth accelerated with potential cooperation on with and date, Edge go-to-market and

R&D We increase our have in investment decided somewhat to in XXXX.

slightly in seen aggressive than were financial our $X.X R&D quarter, million have compared results, in being expenses more you approach. with traditional As our usual the

the Given in and increased believe off prudent future. is we nicely R&D will the opportunities, pay investment this

the For demand other R&D. O-RAN another units the role competitive to This demonstrates and would the few connectivity RAN functionalities within for facilitate for partners new as unbundled Evenstar RAN is more to program our the best-in-breed, important accelerating the functionality, to the in addressing new I unit meet flexibility a level collaboration we announced The for like distributed industry. Evenstar of Evenstar to A weeks bringing accelerate that an A to this points. distributed the indeed the XG of our Open expenses. remainder performance ecosystem across specifications flexible with simplified, plays operators ago, we example and whole such allows partners, briefly at an our vendors ability highly and of us Evenstar Facebook collaboration that by advanced required XG of RAN of price Facebook in comfortable Open XGPP that operator network distributed and for XXXX, technologies. adoption time R&D O-RAN potential to and needs rollout The Evenstar considered aims us the with efficient other important as and various and solutions industry. invest level provide of RAN deployment in healthy feel units our integrate synchronization and to asset collaboration, address offloads XG networks. the presents cooperation groundbreaking with Open with the

O-RAN-based beyond, for growth the support in very our support they our XG/XG sustained that that smart success much what infrastructure platform smart market. markets efforts huge areas smart and revenues that, support achieve Many trends Silicom each They XXXX now the greater The cards see, so potential indeed markets establish also with SD-WAN and more through our in our moving mobile scaling And address are the together achieved and and is experienced. over As an and design with have important. And cloud already the long-term and telco potential cards, represents the well penetration traditionally efforts continue CapEx have win have smart and design have of and can years. NFV-related we strongly to we wins continue our The we opportunity separately positioned. for new are than than a this to are once invested relationship is why within expected also for these platforms last customer. into wins performing investments. you we recent significant we few

of this our of of lead XX expected suppliers. of and least an in as global for sure discussed already persist to stress very the are issue all significant which The this to have Component component we everyone shortage components, to longer. a never months industry-wide a even address lead aware moving we quarter. is feel which all guidance, you’re today, or our level way. last are affecting is that I prices. on with the the I’d before shortages of seen And Practically, we shortage increasing some see cases, Before rest I’m we scarcity and like at XXXX. increasing of analysts in and to electronic extent times times

will for inventory we’ve management, able most to second And the resolve and minimal. quarter shortage impact Given be component second careful prudent quarter issues. been the planning

the Looking our us second out half the of some alleviate deliveries efforts further the during will also issues. of our today to help year,

in hard delay mix forecasted the design as the ramp-ups I if significantly our demand to times that as However, could is currently and to there time vendors product upside more. forward. would move happening to meticulous deliver remains our best concern existing we that growing will products. decommit see lead We faster-than-forecasted There which this our have I from would gain components’ and wins close working pipeline. like is side these the scheduled differs from component products our as are also are priority actually the working planning, add as we the and on caliber we shortages, our are meet resolve list. of we despite the note additional them for for strong longer up an the to and and our that with more early of of the can could impact wins thirsting and us ordered from mix as that relation the design on our larger well is customers, pushing potential possible

especially We strong Intel. our are vendors, leveraging with also relationship the

We on to this. I our guidance. moments up-to-date discussing spend a of course, keep like will, you few would

of with $XX quarter of XX%, row quarter which For million the midpoint, revenues about a strong growth $XX third XX% a year-over-year represents and at between million, revenue expect the second growth. in XXXX, we of

list long strong in with generating market beyond. our some growth and growing design well of fastest-growing on our ongoing are activities Given our and we fundamentals, space, of orders, markets XXXX positioned and the wins, baseline networking of strong in very for the focus solid

While we year year, and for $XXX our the $XXX shortage reiterate range second of adds half some uncertainty million million. component the into of current the the guidance

shares earlier, summarizing more and financial enough fueling market. profitability significant with capital. shareholders. we $XX million generation our moving invest of to Before giving rewards said R&D also efforts, of our with Eran, Silicom it ordinary allowing long-term the flexibility, over enables share Furthermore, and Directors internally X-year to us providing of continued position, our a ultimately third us share cash the up than I our a And authorized today, repurchase us cash business. in strong as purchase Board us plan the to allows continue to to growth of in It the to our have working

a this X-year about trends month. $XX significantly of In and during Silicom expire disaggregation and gain with summary, shares potential. the date, million. $XX shared to buyback decoupling X last To total million XXX,XXX years, of Our have current Silicom’s for approximately plan increasing we will traction the purchased I’ve as are sum you, continue

growth wins, collaboration long forward players, what coming ahead partnerships years have with expect that, we pipelines call achieved Eran, With review grow. go Eran of list years current extensive that that market a with and and ongoing ahead. long few for we Our design with we’ll see Consequently, the of at to several optimism a will now deep the over with achieve we detailed for going quarter’s our ahead. I growth Intel please continue the for past provide few major and the of to much the our hand revenue rate well double-digit results. compound will over us our continues years Silicom, annual to performance

Eran Gilad

reported This revenues million of for last as the in $XX Thank compared year. of $XX.X increase million. the you, were a quarter hello, Shaike, and with Revenue year-over-year XX% of everyone. first of XXXX is quarter first

follows: were America, Israel, XX XX%; World, and Our Rest revenue over months X%. last breakdown the North and East as XX%; the Europe Far of geographical

liabilities, and of employees, XX granted about in accounted last the the I options together results rest noncash which be the X officers to well financial acquisition-related revenues. lease our During for our months, on of financial directors, presenting expenses as RSUs top compensation a customers excludes the basis, as and adjustments non-GAAP respect will of XX% income.

$X.XX. or of of $X.X $X.X sold million the quarter. variance the press range XX% were XX% of guidance quarter representing and For gross of a Shaike mix first was the earlier is reported compared of per first new we of of in the million a GAAP of quarter quarter income were in increase first of gross XXXX. the Net technologies. of the of numbers, XX% operating Gross of income $X gross our was XXXX for Most were the is in diluted the the function margin margin year. as increase $X.X non-GAAP today. as $XX.X quarter R&D increase investment refer related and, XX% XXXX. in The a from gross quarter Operating compared This with million of represents IT quarter million XX% the products, quarter margin reported issued XXXX in million, and profit is developing compared compared significant was of to million the of product with expenses an quarter XXXX. XXXX the to million, a XX.X%, in of $X is planned in Operating EPS in first profit million, for our the in gross XX%, in first reconciliation Earnings quarter for $X.X continued margin compared the XXXX. year-over-year an full and the please the of of to as of the mentioned, first release first quarter specific last increase $X.XX of to to in $X.X first share income

Now the turning sheet. balance to

XX, totaled March outstanding cash the no XXXX, securities of with cash, and debt per company’s $XX.XX share. or million marketable As equivalents $XX.X

we During our $XX executed started share further the second on XXXX. buyback quarter, X, which May million plan, we

a million. approximately questions. first shares purchased Operator? cost happy all of any During be $X That the summary. ends And to quarter, take at we would we XX,XXX my total

Operator

Bentley The Capital. [Operator is first Instructions] question Robert from of Sussman

Robert Sussman

significant you the -- wondering coming been wins I’m component sequential really all in ignoring give increase Can to And us ramp they a got problem. shortage these in. you’ve when revenues, have design that see

to is normally the yet is guidance quarter relatively considerably first, quarter second for flat. The the your stronger be than

which design CPE started wins? yet. one talk are can volume, design I the including these think wins, timing the about of other not So of one the X with has you has you where

Shaike Orbach

as wins well both try little new about So to wins bit also respond about and the design as design I’ll the quarter. the a respond older

So one up said. of them no running. the mean I is with design are you older all, of wins, mean, and first like news there significant I just

We’re right any more, still now, on hoping it would but that remark. don’t even have update I mean, grow I

significant is account mean, right or it’s quarter, times it I So would I flat every us, less, with would more say I well, maybe a at is which -- these now. say, for flat

we’re I as own is issues. I up that tell And have mean, ramp really up have soon, the yet. The like I’m we with you whether their or were these but sure we to it upcoming I any not them. it quarters. because not happen -- say, seems that we’re having can one not components They And seeing them we not other not this for would as forecast from of well, ramping issues. would discussing if they would now have would

though even So I’m to happen. now, interested not going it they sure really is right are

and would So of as having February, now second new the what for design in in mean, issues first see announced, to quarter, these little following And think we’re wins design the the we a even better growth we into from wins. able in we’ve the well to this guidance takes as year. revenues are quarter. is for shortages. I guidance-wise, I the design say component actually the that just our achieve is new it that that, well, supposed our quarters. consideration would been what than to January contribute new these And to The wins And I both them, revenues

to representing would be say year-over-year, still, the bit show would And little second to probably in a would But is more the mostly half these say bit XX% be growth, if little I of in situation, overall, year, new this able quarter the an would growth the second that we second were a more XX% in less. So take we wins quarter. design that I impact second or quarter the going well. as in not

Robert Sussman

see on short Okay. to wins? follow-up the from you When meaningful do very that. helpful. One That’s we’ll think revenues XG start

Shaike Orbach

as the we mean, And again, in in to with situation mostly from will the year. start say clarify to that, see as well I of revenues them the order said, wins. shortages the I So let as wins, the I half second me XG mean,

So focusing and second quarter what component of the what the is in telling for we’re terms we’re on you the for solutions what one shortages. side having on we based are

quite is I these confident. are, for would we we’re So achieve levels we say, Obviously, confidence, XXX% quite would confident never there second that but quarter.

thinking would of of situation. fourth terms this would predictable and not remember wins. For that what quarter, be to we’re are, hoping But issues. need shortages the our some would when in these grow that to XG in plans into been you these able being taken But consideration or the say said, very we’re about past. that to telcos third to able is I That talking that very the due not revenues, we we’re the still predictable are resolve we

these would easy So actually predict what’s we’re on based not I doing now, it’s of And would to these second our the -- would going amount having they wins not the what But we the but would happen. quite averaging be, that are say, year. is in ways. to half know that I on negligible latest contribute, exactly right be throats information the XG what don’t

Operator

& question The Needham is of Alex next Company. from Henderson

Alex Henderson

A couple I questions, of if could.

off start the sort of me the of growth. with just trajectory Let

only but half assume supply year. I constraints the are numbers, quarter, the impacting in in not back that You’ve that June obviously of the got the suggesting you’re

what Is of half. a it decommissioning either low -- -- about the band bit end low X that would talk what’s plus back look in it at And of you it the half, that’s require that -- band? of be we the availability to awfully would is million low end high the Can be end the or of band decommitment the would down? by you So with end holding as end function would to first the what Obviously, conditions in $XX conservative back hit components the quarters, and band? the both a that of would the at thinking it of little of the constrained seems your the the band? is cause is

Shaike Orbach

the would when and mean, think of once you taking other the the well, on I’m that band like decommitting saying mostly things, end decommitting, decommitting, I us lower based again, saying forecasting. said, X Yes. be just to -- I’m I side

So of we that made out of and at end. if or never them exactly based believe that forecasts. XXX% we expected. accounts. vendors in accounts But our for they are is the our would these is there would compensate a many what on And and happens some happens lot we of decommit other. happen, higher with But time, our forecasts, be if have higher it forecast Typically, there, would because and several Others expected, or are forecast. accordance each are actually lower than than that

of mean a there in could -- wouldn’t if plan, end. issues deliver higher us I to right goes these everything very sudden components it I there mostly to for end. that component there’s because I end get. the is because end. just don’t long that’s one no high, even case, shortages, high, But now, if is component the that this end, the as to higher deliver say, able the high us if So one because other low speak issue. to would shortages, is low be about may is theoretically, we’re we would now, But is there because of okay high the higher low and be one high. end could because so them accordance if the The difficult other of in as be The component not would of take the the low, that

Alex Henderson

having So this years XX at before some to I year. question, next deserve think, this -- credit you’re for the there of you definitely get now Shaike, on for -- company to closer my part I

obviously to commitment to plays stability of think the So you’ve Silicom. the And company’s nicely really that demonstrated very I leadership.

I that. on wanted So to congratulate just

to lot rebounding the SD-WAN other global some as back, is traffic -- that that Going of we’re is in outlook incremental spending from in hearing Could And And networks. that, starting Moreover, there’s to obviously, XXX% resulting happens, of it? is and staying that’s people and spending increases it’s bit. very moreover, growth what in back about of side back, the described around quite a people are is as coming sharply And resulted are data centers. for not that, dysphoria turn, And basis. remote. a is you enterprise strong the of companies people on hot the because on little surprisingly in come what campus. across a sharp Edge campus talk but spending

that next is of not What that’s the And over SD-WAN your sounds it side that seeing like the quarters. incremental So going -- into are does on that of accelerate translate you for couple business? demand to business?

Shaike Orbach

increased seeing the also are in we Well, demand space. SD-WAN

not pipeline. We’re seeing seeing as PO only component definitely very this year the important it’s with from are hits get that. a that, soon. And that -- we’re say, once I we apologize the shortages for we with And as having to well get our go through customers both which because issue existing in would that customers that again. hopefully, us. is it from I from, This would

like everything which would trying, see -- try of business, we But a et I customers, now, we’re but would be definitely a out know year. That part growth. significant support, my I to And being factor major that right not now, difficult. even like and pipeline but that we’re in cetera, for within next with say. of actually head, say we’re something. our experiencing our something SD-WAN, maybe definitely the significant believe that Sometimes, even right would this We thickening. revenues it’s them, and would think sure, and becoming I to a flat. part But of Intel do demand. this it’s said, year, do even that do is to SD-WAN they with new And don’t that somewhat definitely pushed in increase the rather I a they I’d see it’s space XX% think I growth the try we is year. our would

So significant part in that. a SD-WAN has

Alex Henderson

backdrop. context, maybe to about forth more could -- this Is very are and ordering at have so your business your even because outlook? larger that tight concerned of do that companies smaller against here be scale the at cusp risk losing are there people that you capabilities in are Within that -- a --

Shaike Orbach

helping that as -- correctly, and other And be possibly, plan prepare would a rather to long an pushing going to are I as us in our a to we components?" I mean, be partner that cash relationship with would the I terms I use Where we’re but companies mean in is we’re with Intel our strong -- one us say, certain in you them. are of you very vendors companies I to think now are I towards such of, components giant using buy that because we may right us good well. that a part Not which position I example, I Which that components think market are are actually think pushing your very go mean only calls but in the we not help better directions that’s due we is some who be ahead to And get vendor, that. And some vendors. possibly a more allows assumptions, and "Okay. customers vendors to inventory. to to think to think long-term mean have the of buy? able we’re pushing with I in the would our because wanted position. not the to Intel, we And give that level, Which to that in you as I make because leverage make going ahead, to right in, doing risk secrets they decisions in success rather is, now? only you read win were to these here component the able order in Intel, of over we a big, obviously,

that quite think in position I we’re in a So aspect. good that

Alex Henderson

see. I

That Okay. sense. makes

subject. timing supply, some at half all these with house? back of still you and would year? that around the first going in the larger the do to would consistent of would from than back you -- growth that we were sub-XX% broader is of programs to Just constraints constraints half a it more be the range expect dock you looking If exclude be the Or terms that of have

Shaike Orbach

been from what but perspective, say because what would higher didn’t sure -- exactly, growth our say in is we I I of I’m exactly if -- actually constraints what a faster higher I because percentage. what than year, XX%, have at we’re it at these would any I’m now. second calculate do than without would right the that extent, be but a can limiting moving Where don’t an it constraints the not be have certain be, ending be would it to would forward I and there would better been constraints, accurate no growth. would sure were would the the our that I exactly it be half are is if it have number, components’ What know predicting

Alex Henderson

Right.

get the it. I Okay. gist of

a the taxes XX% a you you the Just little Should or that on little down can an continuation below are line of the: off Maybe income guidance in then a What rates? X rebound lines? of those of be in second, bit? that b, the assuming rate? And bit to -- some line. interest increase -- buyback; the a based we improves any give thinking a, be steady? the on we Should hold the and, assuming

Eran Gilad

it change. question start the range first Okay. tax rate. about in with is your of XX%, be to I’ll expected no Still,

it depends -- dollar be future. will what exchange income, know the to in to rates As exchange about rate, question is is the second nobody your this because on which can hard financial predict the

changes the U.S. to for exchange $XXX,XXX financial right income. is of the would $XXX,XXX that Assuming approximately I rate say the range dollar, no in dramatic

Operator

question [ph]. is from next Mascaro Serge The

Unidentified Analyst

level. and we Facebook news, the at the partnership buyback today the and on and quarter cap print plan Napatech had Telefónica of a yet, Based congratulations. lot the execution, and the new wins with white Equinox, a new up market design very same But guidance, the and of paper, with Dish,

mass the question Facebook you last purchase reason that? in Is slide, first not disclosing Dish the design for there any potential are my deployment ones, win So on a stage. or the

Shaike Orbach

in to been that of huge in full enormous. of you big dramatic. so would mean, I be be by this development I The hardly most -- What on the not process is say, are is It the how side, really, still be as we’re these that operators one really world. full But mean could actually could we units around clear. has phase the reason mean, careful that because that could the don’t Facebook pushing know is the I that -- started I know, to the not would potential, because really this, here we mean people. upside really, would work. potential is And I because the be

mean indeed we of that’s On the it not Facebook Evenstar We the how would can that. we nothing. respond about other don’t operators a be experience I why how And will and potential with positive see program don’t the know be to these. did but not are all speak side, moment. we We successful, responses, have in here. aware

So.

Unidentified Analyst

it. Got Yes. Okay.

Okay.

how margin the should in these we think XX% Are somewhat is huge going gross Or you lower? projects, to level? in here? So O-RAN about be it the still

Shaike Orbach

to eASIC. are it the of a based market. I as mean, on Well, we provide we’re going Overall, would I sure of saying between our as market, or selling differ am markets. products to costs, these is know, various of which you first even market, of, the this not could across in be say, we level we’re to this acceleration dependent combination the products mean, offering be it is it XG that would on -- XX%. O-RAN the are same always I And XX% I the margin, combined all, that be that And to products, which I and always, could uniqueness mean

units. FPGA proposing We’re

We’re proposing platforms.

these within So gross this is Overall, products would believe it the well. I define it the mix be as within actual as would XX% the margin. market XG XX% to of of range

Unidentified Analyst

Perfect.

technologies do how the between on see Open and XG competition you FPGA ASIC the deployments? the RAN So

Shaike Orbach

cycle in building comes which think which important, needed, working is we become on goes, not cooperating forth. additional what But then then eASIC, into eASIC performance simply our way extent, of demonstration I because beginning on this and I sensitive becomes, and to cost. an an ASIC eASIC then cycle, cycle, solutions. or are certain that the would a see of play because the are second more this et side. or we this this sites. why in less And Intel it cycle, once included becomes it Intel to Intel it is the are and happening, with part And then save into and in the cooperation of and to FPGA -- on so functionalities, a are industry requirements both say. both with comes are the of And so additional generation more and when standard, in simply with And FPGA are on we And side are think standard, a we is a is with positioned it the that eASIC and the less, I actually so this cetera, Well, to is eASIC that course, many sort we because order cost acceleration on the is an that actually becomes because FPGAs. -- of is, some

think the with Intel’s that. replacement generation developing acceleration, beginning Intel time, next would later of So FPGA. we’re same eASIC an solution, be At right now, we’re with eASIC. which proposing then is already the for and come we’re will And selling. what that’s Intel its using to about together we

and/or and eASIC cycles, -- which both of these of it’s whether contribute we growth to will and our are obviously revenues. So a FPGA, part

Unidentified Analyst

Okay.

So is this from you Napatech they for Because And -- I think little expect Can you gives I think that? to partnership about is all to also that us that. you. deal year. this that software with revenue maybe Napatech explain interesting the pretty that a bit our access saying

Shaike Orbach

be as in Well, value I’m the put But to of to the They cards. revenues’ our is IP, of no we are disadvantage we’ve seen. is seen at to revenues expectation that. our time. to see This one of in in terms certain that a to has still not they of And not still included IP. the this sure wanted developed OVS. trying mean Napatech value agreed I we about need promote it that. which for

Unidentified Analyst

Okay. Because spoke so would sense? has we gross you a past, as the XX% with Napatech margin gross in achieve greater this a margin,

Shaike Orbach

No.

grow is I still markets, We and even are most would the used XX% margin. cannot think which And company, margins. to have -- be where to the believe revenue greater do talking from with or there, why don’t we are but think about you XX% in to revenue different ourselves. declining. potential sales market, I we’re the XX% margin think go but is But to margin you would Napatech products their no, started that there. achieve specific also XX% do which is if are some a the different step the we different capture low. capture a levels is We in a margins I where that applications is -- relatively though I market margin. high, away still We that of this want

Unidentified Analyst

something is for this? like right? partnership non-XG this market, Napatech You’d like Because with Yes. center data

Shaike Orbach

what? Is

Unidentified Analyst

like something data Is or…? center

Shaike Orbach

be to for data supposed It’s Yes. center.

mean, As it center. I data to be the within needs I feed said, even

Unidentified Analyst

Nice.

that. buyback of selling weeks. last maybe? about plan new maybe few XX% from more $XX don’t happy today, you has a announcing its open in very market I’m and I this you’re and the that in been million could Zisapel him him? think speak the stake Silicom Why you Zohar with buy So shares But purchase during shares

Shaike Orbach

talk I don’t do plans so. and/or I Zohar it. are why, not what to his about know

Unidentified Analyst

impact say. if But great maybe Is that is lower shares first the going on would to but in I you? the positive against has yes, COVID-XX. company world final My more it’s Israel immunity purchase a difficult country you price. Yes. a to for can the understand, herd question. it at be have that

Shaike Orbach

COVID-XX indeed in ability terms have negative some impact think, transportation, in have there’s up, I somewhat a demand in the a may our positive coming still as While in terms of terms the impact well of positive of But us. to face-to-face meetings. for demand, terms overall, of it’s

Operator

at are questions time. this [Operator no further Instructions] There

website, closing statement, statement? would to like participants Mr. this make www.silicom-usa.com. his ahead of go with replay be I that concluding ask available tomorrow on you I to like by to will remind a your call would Orbach Orbach, Mr. Silicom’s Before

Shaike Orbach

We months’ joining Good operator. Thank you, our health. in you next the day. time. you all forward we wish call. X look call And Thank everybody, you, to hosting for on

Operator

Thank First for you. Conference you Thank your XXXX Call. Results Silicom’s This concludes Quarter participation.

may You disconnect. ahead go and

Silicom (SILC) 1 May 212021 Q1 Earnings call transcript