SILC - Earnings call transcript Q4 2021

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Operator

Welcome to the Silicom Fourth 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 and Public Relations at 1-212-378-8040 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 Green Investor Kenny Relations. Mr. like please? to you would Green, begin,

Kenny Green

Thank you, Year operator. of Call. you I would like Silicom's Quarter to Fourth and Full XXXX Conference to Results welcome all

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

call Shaike results. a question-and-answer with turn now find operating in results the Mr. These who by are to GAAP GAAP. company's of forecast release, future to management's today's In are please discussed ahead. financial to on measures CFO. prospects for decisions, addition, measures with that, CEO; stated, call financials to financial evaluate full the company's go which to measures are on With this release, will Eran and make such results discussed today condition an Management call an on operations during the website. the begin will are call. Silicom's the will today's certain you that it investors of the the are of future. believes non-GAAP can provide company's accordance non-GAAP otherwise press to earnings investors' for disclosure assessing line conference of non-GAAP be the the in be over financial us disclosed we the Shaike. order in or should financial Eran, strategic current following ongoing basis. and performance. these Gilad, will Orbach, and followed to like Non-GAAP with over will analysis A After assumed that, measures in provided not be assessment additional presentation Unless non-GAAP session. understanding of with financial overview and management included our measures financials. that reconciliation Mr. would a by as of useful hand provide I And the measures alternative method the Shaike today's substitute non-GAAP for Shaike, financial information and core

Yeshayahu Orbach

results. our full would year like all Thank of and Kenny. results financial our you I our to fourth quarter welcome to conference discussing XXXX you, call summarizing

easy what of anybody. which strong results in not as has as well results ahead year with our very the an were pleased for targets the are XXXX fourth quarter, We been, for the of again, solid

million For we our expectations a million. $XX.X to between growth growth X% million, $XX revenues and year-over-year $XX the of ahead in of XX% quarter, and reported sequential of

For high million XXXX, we issued last solid in of we reported million very a the end are million XX% time $XXX range with. to $XXX at our this $XXX.X year-over-year year. revenues growth to Performance, pleased at

growth. Looking this XXXX, the returned year we back which for point demand as inflection to would our a at define key in Silicom in products strong

able and the We against what delivering XXXX targeting year a are experienced. achieve all progressively performance, industry much in is component the optimism chains more were is worsening high point real the demand for my to maximizing supply to underlies in of currently as we are our and year what as as what that XXXX deliver, throughout into manufacture We originally to of significant that effort pleased a shortages were throughout excess with tight we supply at inflection of background Demand the we exit all our meeting Silicom. growth of placed and we possible. possible

negatively shortages, year. will we revenues a by moments as dollars, well year quarter. the last in which component guidance a have I full few million fact, ahead reported revenue would a the update few upcoming well more detailed range shortage XXXX the our the issued In we as impacted provide of our for without guidance on

XX% up per profitability income We with quarter $X.XX, our year-over-year. share sequentially have year-over-year, earnings was XX% while and reported up sequentially at and of million, XXth XX% XX% net continued of $X.X

up a XX% of results. we aspect I as highlight would up reported to important and $X.XX, Looking of like year-over-year XXXX net income of the an at XX% million, EPS year-over-year. whole, $XX

XXXX, million margin part to grow in operating model. an reported we $XX.X improved XX% This while revenue of margin in needing reported XX%. only operating strong operating by demonstrates inherent business an as XX.X%. growth to XXXX, in was This we XX% our million, due of income in In to at leverage our OpEx increase the a While of $XX.X X.X%.

the that purchased terms started $X.X Silicom our cash we have programs generation our we the note and million current and shares balance since in share $XX in allowed we to in net trend, In shareholder we buyback decoupling continue million strong and million us the the cash buyback our of end in history. The be value $XX.X share XXXX, disaggregation in continues in creation, recent over representing program transitions the of May sheet purchased significant of quarter. IT of I shares. the on balance architecture growth million Silicom $XX source one of sheet. our At most had to quarter,

SD-WAN we still has will is growth significantly been significant Intel. SD-WAN. market product a full for later, start and in over partners. into introduced important trends We the growth cycle X into X market in at phase phase, for today, and once XG XG early this move while its growing development the have technologies with of and The play developing introduction SD-WAN market trend developing its contributing our which it also as life years, building phase. AT&T to years telcos, including as the growth contribute now past of begin been XXXX. SD-WAN the we are and the partnerships our this market market. to will needed case relationships anticipate of success And circle these products to and billions as and with and software preparing OEMs our hardware well to critical markets O-RAN The tens And O-RAN its to revenues. collaborations, the The is Edge We of have dollars built

this is partners X and software a working Having major partner is crucial Furthermore, decoupling xXX about harder as endorsing world hardware SD-WAN block our The Our us markets in big and we platforms. partners similar software. our future the other software and application decoupled success major with main These approach. building with that CPUs, Intel SD-WAN see are O-RAN our various disaggregated this potential hardware. market. supplier with success optimistic the software like which advantage. XG hand-in-hand divided factor systems collaborations Intel into the play our market, of a types: of most the is are in of makes validating in SD-WAN and in success

achieved partners a ecosystem us already O-RAN it is to the customers with XG market. for have important SD-WAN, we and in also build strong of As

and this momentum significantly already only wins enters O-RAN mainstream. And front. we X had we impressive providers grow supplier. believe we year, Tier as number leading infrastructure XXXX, with During service the a this In achieved X will telcos, on have mobile

and far has are to so our and place the with in the such, of achieved pipeline, iceberg. with to growth the of XG significant the the few O-RAN traction products in add we wins tip partnerships opportunities additional just Silicom. the coming As the the potential out design years, see over looking can And

deployments Looking back at achieved significant for this business design still so us. Silicom. May X on their telco XXXX, major XXXX to of in stress Edge like elaborate I The giant to which a impact Telefonica, drivers plans of start was XXXX potential win performance growth wins one with to in announced design as this in the is ahead would we our year,

announced where tens one while selected SD-WAN October telcos strategy, very active run supplies second also design infrastructure it year. platform rate a as gives the up. giant, future in ramp and from its win per forecasting and year is branded providers will a The in which already this it potential globally. customer our to a a a of it solution SD-WAN service Besides many customer for to hardware supplies player equipment full U.S.-based is our The of in This the XXXX represents product market, and both SD-WAN huge Smart confirmation deployments start millions software.

demonstrating to North like with existing interactions. a Edge and the the that leading reach as at is win telco has We well purchase rate the key in equipment a current placed close ongoing provider year our characterize the delivered be during win highlight time a as orders November would year. for platform. of with the client design to potential company of the customized planned us design all Smart of our in that service a per major support relationship of version for million customer, communication which awarded that our I a Finally, $XX run primarily million importance to American announced We steady-state $XX an announced

as started ago, customer, were when this with the our became more relatively which opportunities, rate at XXx major for working Just as ultimately just a of as few per the more original. we approximately platforms, relationship and dollars is large it's of that of to lead standard year products we're developed, orders million one design we win, and a year. aware originally our this But

customer, we are we additional opportunities. believe from is there upside this, and Beyond significant further this discussing

our availability. Specifically role of customer, optimize part with component for this is a to

platforms Given the tight deploy crisis to the the unpredictable behavior of a under schedule. and the customers component need

we on hand, connectivity best industry's with broadly, move while continues lead to helped solutions More and proposition. industry. our electronic into components In and on fact, in see availability we the ability other XXXX, protracted for believe continue major and as with delivery issue us our supporting balance a of to the remain we deal optimize the customer unique carefully advantages hand, our value times our that this one for this the to

Looking beyond ahead, throughout this us XXXX see issue remaining with that. and possibly even we

better which to inventory by positive XXXX successfully, have these done The up carefully and commitments, both of components year-over-year expediting take to products, replacing products, buying for under why availability. baked working vendors these three, well. free conditions with of our to which for solutions, and taken for achievement However, optimistic we're demonstrate of component already our is we've challenging of so income use example, and and strong growth operating work achieve much two, XXXX side, leveraging POs materials designing optimizing on more alternative we've to delivery balance our are with steps sheet market continue optimized with available current providing criteria the to is in when raw customers revenue availability stock customers, on we as growth need delivery is and mitigating XX% build on the the available had products availability. of risks XX% products new our that availability; be; with if them from the initial and redesigning components with other optimizing Obviously,

despite for expectations experience and with combined persist XXXX we increasingly a connectivity and broad while double-digit the forward, range issue, to our that wins, growth guidance success rates continued XXXX. for solutions, demand for the for our predict will large strong our brings in solid me with our that in this market given beyond, it, dealing support our very which shortages and design all Moving

other. harder impacted the demand be XXXX, first in the by revenues opposing for The dramatic of For This created products forces. the quarter slightly our will the to actual forecast by a delivery one components on on constraints makes our pin global side growth crisis X and down.

to million and range estimates first much Silicom I double-digit our as new So over in indeed the mitigating crossed situation, With no a been note rates point, million, see having for we XXXX. represent we such between growth little now of higher. first $XX that, a XX% midpoint do. that level the revenues the there growth of years. our $XX our we for coming summary, of guidance normally few a of believe Silicom being providing of more expect the to been have growth represents forecast that quarter, the we're will approximately careful would and at would wider we like than In situation, the growth inflection component quarter revenue see these which compounded and that success

is ahead major on the provides many with us quarters what design the strong of scale revenue and which well and years. experienced traditionally of built are visibility Our expectations even over wins have we recent

deep into further the and we path growing wins With go our orders, with we cement call to potential review optimistic in focus Eran, as that, see solid largest sustained a as please baseline of well our of activities quarter's long as fastest-growing companies. move hand results. over now and the world's current broadly, Eran of with already growth a successfully market and More the list pipeline I our fundamentals relationship space as on detailed continue the As we and revenue to ongoing the some generating XXXX, ahead. passes. long-term our of some time increasingly us design for broaden will of strong makes markets long upside networking our with

Eran Gilad

$XX.X quarter prior as year the XXXX everyone. million of $XX.X and were with quarter. of $XX.X in Thank last you, revenues Shaike, fourth compared of hello, the the Revenues quarter for as reported million million fourth reported and in

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

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

the of of compared an was as fourth to compared fourth fourth of $X.X of million, last income million, for $X.X XXXX. income million, income million the to a Earnings the the reported increase we today. of of press for to gross share GAAP for issued numbers, $XX.X guidance please For increase $X is representing year-over-year of the $X.X in the XX% the part profit quarter or compared Operating $X.X in was to of of was gross full non-GAAP $X.XX the XX.X% refer quarter in sold reconciliation of gross from quarter to and XXXX compared were gross of margin in earlier the million profit in $X.X was release of quarter fourth diluted XXXX quarter operating variance the of XX% a of Gross our increase fourth the EPS first upper of to fourth XX% function $X.XX. million, an the the $XX.X quarter similar the margin reported Net in of of range quarter XXXX. is to specific of margin fourth quarter in the million a of as expenses The of XXXX. XX% in the margin This a gross quarter. quarter XXXX. quarter reported million with in in the per the mix product XX% Operating year. XX.X% XXXX

Now the balance sheet. turning to

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

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

I hand operator ends quarter, million. XX,XXX to Operator? a During That we question-and-answer $X.X back total like over the the my for fourth at approximately summary. of session. to purchased cost shares would

Operator

Instructions]. [Operator

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

Alexander Henderson

a You To other about wanted such different, gross it, great it associated against guys bit costs tough with companies. obviously. on mitigating little and superbly component how the something the a doing extent that a doing margin talk are the think, really to you're you're little I I than backdrop. executing risk job most

impact. have your terms guys margin to revenue or you with there? you're of statement partnered doing cost components running talk Can think I about your that the you giving what customers, income these option them you in a buy either little bit and help not incremental through

Yeshayahu Orbach

parts are I to that. several there Yes. mean

customers. with them. of with right. the And and we that aware, that are relationship issue all course, because mean very this them, our we're very you're them openly they First And close and with transparent of indeed, all, with we have of transparently I of means are discussing yes, situation.

cases, actually sure that. make extra we most I when are where then of into customer helping in we're that, So But some costs our are all, it's are the significant. And cases we to and undertaking there into mean coming additional many cost able, absorbing first when the our they're helping that significant, are of the customers are that. customers. is

artificially not finding would we're helping that. directly they way Now expenses other even that out using buying I this paying to the that that a they're right. us, though for the we're And that that. or increase and we either revenues because like say, our any I taking they're of not or I we're just, by revenues are yes, mechanism to increase you're doing mean, our increasing revenues that. due mean

This on really more is because et is cost impact working our where of So have doing of our that products, mix only cost should the increased but When that margins, reduce and say in on actually I cost, don't see increase minimal. our the cetera, certain would we're that. overall, with that it you customers. than that, happening does because a the we're it's together

Alexander Henderson

That's we of night, companies very follow buying they spot spot some then decommits and out say market went helpful. XX% they the in on And in one month-to-month had market, has that erosion a that the components a availability specifically dried called in the the the parts other and FX Networks of and reported to with completely significant jump up. been

in critical Have change environment any you to that get anything. in the had. or the your product to the There's are other be can't change You components any of availability just supply months. seen chain last over nothing the

Yeshayahu Orbach

wouldn't with be a I I what's talking Well, still way. prepared to is The and extremely would when on, would include the that possibly I one be And about say going thing able ourselves say are talking I change. more we've seen able we're before. all to a is that we that better that familiar challenging. situation means that was in that getting was about The

any as in we said, see don't So situation. improvement the I've

times mean, right earlier, redesigns We earlier. used and beginning experienced so We're look we're But and because also that decommits so components demand now. replacement but to doing I crazy lead as on growing is at to we're well. forth. the

we're now we So day-to-day is why which with is to But we that the other the because days. this -- side, situation challenging. overall is these more are still on doing work deal we're optimistic have the

Alexander Henderson

expecting gotten? terms any or there of in magnitude ramping to or Has available that in in that pull large line contracts any slippage time demand you've XXXX? any change The been forward these you're of the

Yeshayahu Orbach

once these could along it are I together But with certain a to major we on the mean products, what order we element the in track But had make the little to we're to I is some had on a in now, all order decisions a we way. mean, have specification doing that customer right something do different, of is, this we're overcome challenges. which projects. bit track these with change again, to took wins. with major

Alexander Henderson

at different interest see cost things a, which to the happened currently, we'd what expected, but us, is on little were an of there's that should quarter? in as than took you dive a in little bit b, line, in of couple plugged March seeing a back there; the you tell that assuming the that income $XXX,XXX that we an income, income a Below a Can whether normally to opposed line. and what what these go

Eran Gilad

you question? please, Can your repeat,

Yeshayahu Orbach

income? Financial

Alexander Henderson

Yes.

had back first somewhat. financial income. the looks $XXX,XXX an expected line, slight about it's an Can of normally you go the spiked in to and On income 'XX? income we're income down showing like a that expect it We whether half It you cost. talk to

Eran Gilad

can. Yes, I

there very a income the a means which First we amount hard have Exchange effect of a the big in what differences $XXX,XXX, exchange will future. of is without may predict now. the to slight an of four, negative of to exchange is from was brought XXXX, $XXX,XXX. in that It factor it predict number. all, be in quarter -- positive in should the losses. right approximately that rate differences rate rate financial us to $XXX,XXX, Thus, be differences, effects approximately income of income hard

we differences, rate exchange of effect the simply cannot With know.

Alexander Henderson

then right than And lower what Should that came we I using around should mechanic? tax rate Is tax XX%. be the in -- it's 'XX? for the Understand. assume rate normal. also

Eran Gilad

Yes. the a the the little quarter. This be to little Indeed, in specific saying that usual. for but reasons of range XX%, bit XX%. still lower keep quarter more, was effective around in very effective is I rate less, four bit rate should due the tax than a tax

Alexander Henderson

churn, have escalated the of OpEx seeing The wage costs, a at inflation a around of staffing and costs lot lot are companies companies.

inflation the to that Have than seem more change say, to churn versus, rates? increased my be staffing you churn guys impact that's And you in mitigate are and group on You can have that of churn companies But such give thoughts seen better wage us any seen staffing have people most. XXXX able any than lot you on on most employees. to a tenured hold you because is to any of assumption inflation? able guys wage you long a

Yeshayahu Orbach

believe on have good also in we companies. company, times. would That new more say staying say, example, reputation that said, holds do pay yes, protect a being this of this our probably I why need high stable not And mean, for the to is with rate but is that, I longer in And on. mean, is I what's people don't difficult. bad are the the employees. not employees, the quite hand, employees of aware on think to what current than one of other I want becoming that other getting hand, which we only change while do wages you're mean have right. retention you Well, for going we're I you that within able, believe to I I to more a do and with its times we're that of would they because our structure because And the company Yes. want company. you the I paying are

outsourced sometimes keep manage or to the that say overall, eventually in wouldn't these the that so X, overall The are would while it's managed our on hire to able we but whatever, -- find need and say is challenge, So that we people that say one to a the ways I it this a impact. it's would that challenges we I of days, I it minimum. also or impact but and OpEx, right way

Eran Gilad

the would quarters four, of top effect of add in quarter On as quarter there negative was that that, like a in before exchange four, I to rate.

Yeshayahu Orbach

for that's Yes, sure.

Eran Gilad

the on was $XXX,XXX. really last Shekel exchange and said, the $XXX,XXX. was -- the The about about rate krone effect low. effect very effect really December XX, was due of -- negative to as a day The negative the the was Danish year I quarter And four about negative of in

Alexander Henderson

it's good in that The come since then. is right. back news All

help you hopefully, So going forward. will that

opportunities already that new in In sounds physician it you've of contract to terms like X What's got pipeline form the of additional opportunities? announced, wins pipeline very of that revenue. rest major looks significant like X for ramp another the roughly or you've in what are the beyond are

Yeshayahu Orbach

Yes, have a pipeline also for additional long and very opportunities. we thick

big. are of of have some very which these, We several also

the accelerators, only we those pipeline. it's a not smart of already, waiting announced more that the having long opportunities designing that for yes, within card. have customers us. it Edge, also the XG and next So we've for Most definitely especially the but for is generation mix, of thick We're now we're

-- have not as hopefully, do quite space significant in we So a well. mean, that hopefully I pipeline

Alexander Henderson

XG relative little think One bit see floor. are then last Can to question you talk I'll and RAN where more those winning you you those ramp? opportunities. open a might to about when the just

Yeshayahu Orbach

Well, in for in several involved. we're I things mean, XG, there are which us

with up First selling a said, are and we're which we win as and of I was have a we XXXX, ramp to of works and all, already major factors yet. provider, in provider. our that has even accelerator, selling, I telco a O-RAN, one growth we're to mean, that another major major XG a service within equipment And selling which not started

are of which are that there and several part customers the pipeline. around a -- corner, So

solution, early would O-RAN is that to family several its, and there solution. we're I solutions because a is, in solution. but generations, would several we not flavors say, a I that this are deployments. for need several This XG actually, So factors, it's It's of say, of even remember something selling, only already this form

it this year is, with grow even So even would we family and it in as quite significantly this then on. believe later

on expensive. with Now many would similar much that the OEMs, is the the would talking be The I in of which card card world's of I successful say, evaluations top in include hopefully, more already would companies, be And include it are quantities that would accelerator And to is time we quantities in, one. before, would was telcos. only this synchronization that, card. a another the investing is of leading card, which this we by

would would part a XG combination of then additional of following also the in So address that, and smart our terms more I they much and of revenues are which say, And also cards, it requirements be significant. pipeline. we profit, have a of

demonstrate major overall, see the growth is even at O-RAN then be that Edge still Edge, would able we with even still this XG if mean, and But like to mean, assuming have does that going and to again, just year. component no there's And XG we driver. I all our would year, we with I would which be we So -- even XG, us. still if for this growth -- able happen, XG growth if is prices, year as once we following not just been to do to something able handle their very important double-digit to be

and that top it would XG So with that. everything be on comes of

Alexander Henderson

I'm just correct. clarification. want that make sure to I One last

think wins I had and the fourth CY can Is the one whether contract X. number? we in, that that that's so additional that right major we're came 'XX thought last quarter you had quarter, so -- there's when in far we clarify at X that in now now printed you an

Yeshayahu Orbach

A difficult to have we don't pipe. in know say many difference of, would And importance. of little exactly Obviously, is I level more there bit a than say, the X just because I wins. which the

-- could to another seventh one like of them say -- But I'm on that the can number, you quarter, X. the And one have -- one less the but them, don't important, with more just because that. you could yes, to tell definitely the of that really like I would additional -- I suddenly mean, of working the like customers. the way. so but exactly I the relationship next I others bit make just of these -- done become we're it's you the did, than not and enough little or of I so wins sure I'm a things know, would something X calculation you all -- not yes the to accounting with mean, have to we important mean due we X I we I I I would that, top know or maybe go add some are having that with maybe on of

So well. happen that could as

Operator

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

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

Yeshayahu Orbach

to you if it? Operator, have follow-up Yes. actually take we from question a Alex, want

Operator

ahead. go Yes, sure. Alex, please

Alexander Henderson

Yes.

thinking was somebody be I -- the lineup. in there'll hoping was that else I Sorry,

So like couple a about in respectful. some questions, that these Can I or a talk Or competitive that you still asking can I But to else bit in there's landscape? nobody issues more as wanted driving address. be change major get of kind competitive you're any uniquely alternative to Have any little seen projects I'd you towards? you an you are emerging of the anybody positioned? to

Yeshayahu Orbach

or that let Well, my response specifically growing and for that us. me divide the markets various we're the main growing to market to markets the addressing

of the first So all, about Edge.

any see don't we competitors space. in the So new

the of why only the with technology, not very the we They think in one that the of for to because that. a as that I actually as been space time parallel entered to know, us say, that. get I just we're Edge status achieve have service before, us is like you something or know we successful process to OEM ago in the reasons have think years our I simply able the takes it that market Edge solutions. respect -- about the mean, years community the we that us would they And in it's by Edge now. but been because, I for to And X several for and some

So same I position why which has competitive winning believe competitors that and compared more. to we're simply the is improved significantly, our more

is the of the think that market is the growing, it's that comes, but together with course, that fact I growing. of X. The combination a Now market

potential that helping I share are customers this market I the I familiar us, is -- or know think think believe and with that us. our is whoever growing us

believe I case, is our that competitive in that improving. situation So

me coming let the the would O-RAN I the around. Edge were talk XG the space, other O-RAN. In a way latest we're the and and XG, to addressing the time and is was the market we situation a accelerators, the way serviced In market. in that I because the both we say, were actually leading before synchronization accelerator about would the go organization, And competition. say Now by our that market

competition that. see around do we Now

the is -- but So we yet competition where not are.

the cost. still market now, say, is relatively us we get is it's needing really early the market, I to and whoever stages. only it's I side, right I But mean, other would the -- are, in would on So in the practically it's wins say, to

So the not market overall big. size is

think in grow would leader to I we will Now the the market begin be market. the

grow the leader competition in will as will market, to but the be We well. continue the

but win my revenues will So competition grow that can't because that overall, significantly we our the prediction on is will market so that all.

Alexander Henderson

If to there industry, growth XX% overnight. revenue XX% that or magic were producing were was we and supply be wand a able normalized wave more? completely to Would the over you chains

Yeshayahu Orbach

Yes.

Alexander Henderson

kind we're of I how you're growth you mean can mean, like much -- -- the quantify I of the XX%. modeling And

Yeshayahu Orbach

XX% or Yes. XX% you exactly, I or ask I don't mean know more. but

delete So XX%. you the can

Alexander Henderson

volumes come it. going And back margin Okay. gross but of do side with much higher they margin the of often compression. higher volumes, larger driving some represent these great are contracts to revenue, Obviously,

are As at the the it we see, think margins the current band or you've to see to band that but you you gross is constraints out forecast lower just reasonable lighter and margin wide comparable you I'd based little will know look got to. on like slightly a that that be there, outlook today. environment than the I that is gross where to than a very

can to you is going on think you bit talk GMs? So about what little a happen

Yeshayahu Orbach

there XX%. bit me was many which difficult I mean that. that be the which a that limit are impacting because I for the, we margins to narrow provided outlook XX% I between have are the it's Yes. down going now, say, to think that's And factors that would to and little until

to are we the side, become a we contracts, grow when one the we The So as bigger like bigger. the that going more just down you've margins are said, on extent by certain are especially efficient. margins able sell to and becoming

expenses, say, calculation product which And getting about. of Some extent. are we're a of our, that to so talking are mix the certain fixed the mix the a -- there lower, part improving margin always would are I also, is obviously,

only be to guess not exactly So that XX%. to able -- be. can I be we're still would we it's and And between where going XXXX, I XX% we're say for that to think going I within that range,

Alexander Henderson

that XX% years, guess at, we X say, reasonable... for If is a the

Yeshayahu Orbach

I reasonable. think that's

Alexander Henderson

your Is bit. And a With rate? in we particularly XX% then to shekel a that side, of little the obviously, OpEx late, way OpEx the are talking growth right a stabilizing more now year X% the of on say, kind shekel to about growth XX% OpEx it? revenue quite last against, bit pressured think about

Yeshayahu Orbach

higher it be little yes, but, be less XX% think I believe that you don't will the areas X%. the OpEx more I mentioned. Yes, higher, a have will I mean or in

Alexander Henderson

balance would questions. be side. those course recognizing the the think you that doing year exhausted last only net you one sheet the The you're on generate Do I've cash over will of buybacks? still

Yeshayahu Orbach

the that is ability crisis. to that really dependent the think And cash the think very our the on to crisis we're increasing it components grows, as stock. long as generate I Well, of status due much I buying. component We're

our increasing revenues. are We

So I we not the And time want be just in just say, theme many to regular commit. that. prepared kinds, unlike, of we're vendors for buying under would because de

whenever So we're coming, about revenues are which confident pretty the we feel buying everything.

go over, generation difficult we that I'm even to which growth, come of that's be time And cash confident about once that generate something would again ahead from we're inventory the obviously significantly. the that perspective. as I our the with cash crisis we is would such So definitely and continuation when is really say would and a quite growth buyback. increasing this But

Operator

Mr. Orbach, would you like to make your concluding statement?

Yeshayahu Orbach

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

Operator

Quarter Fourth Results Silicom's you concludes for your Conference Thank XXXX Call. participation. This

go ahead and disconnect. may You

Silicom (SILC) 27 Jan 222021 Q4 Earnings call transcript