SILC - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Silicom First Quarter 2022 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.

section received Investor contact X-XXX-XXX-XXXX and it the not team Investor or have website, in GK company's at Public news you it, Silicom's please Relations view www.silicom-usa.com. If the of Relations at I to would call Mr. now hand the to like over of Investor GK Helft Ehud Relations. Mr. Ehud, like please? begin, you would to

Ehud Helft

I like welcome XXXX all conference thank results you to Yes, call. would you, of operator. quarter to Silicom's first

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

non-GAAP to our is provide non-GAAP overview of results. find to website. Eran this on now, COO followed in on begin Shaike Silicom’s accordance financial will provide information with the the who financial is non-GAAP the to of the release, strategic the performance. operation measures measures Management useful by company's current Gilad, today. of an by people of this with be conference prospect future. conditions GAAP. Liron method assessment Eizenman, that results These presentation investor Unless for And with non-GAAP discussed non-GAAP Shaike CFO. and Orbach order we release, discussing disclosure financial stated, for of be will company's an you provided of basis. included And Mr. the operating as for be the financial are in measures financial evaluate following for and an the will the decisions, Liron introduce results Orbach, investor disclosed line a such Such ongoing earnings to CEO; management alternative in addition, reconciliation this assumed additional measures assessing earnings understanding today's on are are financials. Mr. the and financial company's In measures course. used today's future this with substitutes to Mr. not them let Non-GAAP financial or and will me analysis measures measures focused believes make which otherwise non-GAAP it should core that and call management by the GAAP during can have

over Shaike. the will the turn would Shaike, a to like We answer now And I session. and please. then call with questions hand to over that, to call

Shaike Orbach

our like to all call to welcome for I our discussing first Eizenman first call results. to like our would I financial first quarter to XXXX conference Ehud. you, the of would Thank you welcome time. results Liron

As Chairman replacing Vice CEO become the me will July I Executive Board. and he the of will and to of President transition of position X,

Liron, driving six in have position ability our past have years with I the every in bring I long-term and next of as has development. Over on and his to part Liron transition to a capitalize carefully confidence the level strong closely its worked long-term structured market served networking Silicom of was plan, to Liron Silicom’s the executive and American SPX leadership solutions position in its roles instrumental currently as the COO strategy, behind edge North Silicom platforms in key and within visionary edge Inc. CEO company, our the was our subsidiary, in market. company

of position. work continue my part closely new very Liron luck wish I in as I much While role, to him with will new the

results the quarter. to of the Now

$X We our revenue at of $X.XX. first per reported million growth with This year-over-year our at demonstrating quarter between to million expected are range XX% with our the XXth million. $XX share strong center results earnings income start and target net to of of pleased $XX profitability of and is We with XXXX continued million. $XX quarter

We to entire given market the continued abate demonstrating component that all are is growth significant the industry. chains, demand, It are headwinds, high is supply, excess the during and supply year. continued do significant of pleased background impact more expect the continue in which not despite our which across and being the analysts is the tight felt to of shortages strongly current well clear shortage

And and effort high This I as efforts our And led in broad significant devices, to range. ever the to able And product XG/ strong of edge history. later products. full meeting my server further will play has indeed, underlies our the call. the deliver, highest adapters, we on a as expected our the into of for maximizing demand growth demand to in manufacture us. possible. this backlog taking across we're what is address much that of Silicom O-RAN as we're significant now well SD Wan/ and ahead runway includes optimism This is have exceptionally as products in continue the market We

market product sales took and expected support we other one took, significantly increase strategic and on to levels. decision high we record inventory on hand, the levels component the backlog to such our shortages demand, Given the

million, about is strong and protecting of one support position levels inventory $XX for from us inventory you to while $XX by stands remain us. shortages to chip will the As cash our increase strategic may our in which our Using demand current to million a quarter. non-commits build continue notice, at an today vendors almost priority

the to to do easily new today's are cash customer Our products us customers a available existing our for market, business. advantage our and not believe provide existing long-term in return on strategy this today, delivering us. position. while allows ability I which new this significant competitive that is It base, serve highest attracting will

strategic the markets XXs strong markets key capitalize XG These in the to still which which play decoupling, most phase dollars in millions on a continue to and The positions our revenues build of which while very O-RAN is architecture recent the disaggregation trends of We and in introduction are to into of market history. is fast demonstrate we today and both trends on then O-RAN the continue SD The contributes market. are in significant growing XG developing our early are positioning. of X phase. and market capabilities SDX these and to among market IT the growth

the in us optimistic market, SDX disaggregated ongoing decoupling O-RAN success XG approach. potential about been in and which our Our makes endorsing the have

underline optimism million totaling year. just will customized our customer of customer demonstrates We to placed with combined major to our demonstration equipment US vendors first growing a and a The million and X far so software, service order, to delivered the software performance be May run win tip like value our approximate communication ever advantages our million. of purchase our decoupling. ability as competitive for phase chose total received $X SDX wins leading design global We added Solutions. edge a networking networking $XX win our backlog, a through the proven emphasizes second version that of million to our reach XXXX up orders, for giant Edge this highest the a another customer, iceberg. annual our this This Last customized edge approximately million next announced. phase, win Telefonica, February, ramp runner from a is tier project The This opportunities $X partnership the potential we existing forecasting that the further XEuropean delivered recent and a new leading design forecast list purchase products us. we've provider with high in shortage. of won to current how for component SDX are positioning of color announced our of the been highest a hardware achievements existing of our many of cooperation $X I'd edge strong I networking new like design it and with ecosystem, we more rate the an discuss SDX generation wins US tier few telcos complement we top our win some month, throughput design advantages era per the our of $X the and telco an Tier provider partnerships in and a the In confirms Our the This of year. network would to decrease products. and selected pipeline are a new of we strong hardware in differentiating and the Strategically, edge a telco to platform win our latency, clients. key customer increase telco other service Network on which the value with providers. its offerings. provide follows software design with of addressing

the buying leveraged delivery, we've components, and We which One, of continued conditions are been expediting and of stable need both continued year have gross be. overcoming many from seen, growth. build a POS that growth, by inventory you've is as taken the are customers’ take strong as we under to continue we profit why these to market problems our raw and the and Under and sheet margins for have balance have issue we optimistic. the These available existing steps our of The if demonstrate successfully, vendors remain free stock our backed are already commitments, revenue in achievements materials. up and follows. living

with and We with availability, solutions. product optimize customer to them are alternative providing working

And for availability. we've products better is products our components designing is For example, optimizing products, the to initial more our with of replacing other new availability. redesigning criteria products use Obviously, been optimized availability. to finally, achieve delivery current component which when with available challenging

brings that market very while demand dealing combined forward, for that a persist with issue, with the Which experience large for me to range predict support and solid growth the we expectations wins, Moving the given increasingly design this, for coming XXXX. strong solutions and our broad and digit all continued of our connectivity for year. double quarter and beyond. Despite will guidance rate success second our our our the shortages XXXX in for

XXXX, given between of rates second success to our has to strong global for the these we growth component XX% accelerate at demand at we few the represent $XX stand remain the continue situation, despite by been would current over Even and higher. estimate chain double are growth quarter mitigating that second which will indeed of of supply in I forecast very finally the to which $XX supply years, digit started million our growth million, have For XXXX issues that we our of once such expectations In XXXX. shortages. and performance expect date, we as revenues the quarter despite resolved. and that is approximately to our midpoint chain well. of the expect coming market, with in level shortages, This compounded the situation, much the difficulties like note summary, represents the no our the see would been pleased revenue to has the

visibility on quarter’s and are the of on makes and focus over highest traditionally further the all wins. our positioned been Silicom, over are Liron case some recent base developing please each historically providers experienced. growing for go detailed is strong in design the it quarters with review With and and is major the our that to level we of broadly, space, hand the Our what many the ahead Furthermore, well of as now for, deep built backlog these fastest More revenue for I out trends, current years. the which has as long of pipeline markets a Eran, well have at call will expectations of This we optimistic. correctly predicted us networking ahead. ourselves our which of had results. our

Eran Gilad

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

XX%, XX-month Rest geographical North breakdown Israel, X%. were over European America, the as Our the and and follows. World, XX%, revenue East of Far last

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

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

marketable Now million turning cash, company's cash to the $XX.X and sheet, XXXX, $X.XX the of or share. debt, equivalents no outstanding with as balance March per XX, totaled securities

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

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

Operator

Company. The Instructions] is question [Operator of and first from Dezort Matt Needham

Unidentified Analyst

the out you by for worsening in off questions. on taking concerns Wondering with are Hey companies other guys, latest What growing you if here. for supply on you could Alex Thanks China please? and macro Matt start touch conditions availability. our on systems guys if could there talking about seeing seeing for component that

Shaike Orbach

overall Well, which was any the improvement bad experience now is and very here for component there. really may difficulties some is bad. more in we not is, do see and situation very situation, But the obviously We bad.

mentioned I've which of creating in as taken deliveries have with ahead inventory, However, customers. before, of terms steps would we us time, the with help mostly

be to and would to going it's I'm simple, not be pretty are our we deliver they it's to be everything So sure customers going not well, simple not after. again, we that able challenges, only have to would not

a that relatively we think place. I still then a but industry place, at However, are good looking relatively overall situation, in challenging, good in

Unidentified Analyst

great. That's bringing to inventory. it back Yes. the And

portends You for abilities talked and that the continue growth just you $XX your build you increase, to to million opportunity about and large touch sequential can that guys? out that on

Shaike Orbach

is be but that, backlog every within first we're planning by strategy our on inventory, with company. we looking to to remains do I mean, strategy. that, continue the I once like take I doing taking strategy positioning, ever advantage the is would ever And committed, would our as much means I in way, the we we of of careful all, Obviously, would company we're possible. other able that, that indeed, are continue have the to are which say. the And of which the Well, parameter say as history the strong at to this as we position mentioned, largest that,

in are with the parameters making company that, helps forward that careful with plan us at sure that other maintained while And which moving level. to continue required strategy. being all So with we

Unidentified Analyst

Great. guys wins or And that been at ramping of to slippage all timeline the have? you any there contract then disruption and has these

Shaike Orbach

It of few what. last the disruptions ramp hear words question. -- didn't to I

Unidentified Analyst

that design is the mean, going I to around. you Just there guys contract -- and been wins have any

Shaike Orbach

We days We all. cetera. chain, supply creates don't in feel to challenges any is feeling feel wins, at perspective, contract disruptions these deliveries, but wins. obviously any disruptions which getting new all The in challenges the at only and and new we're to POS the that getting et don't a design design business the from disruptions

Unidentified Analyst

And talk demand APAC particular about going in macro from the there's, propensity delta to [Indiscernible]? those and any there? buy over on Have EMEA are the seen given that can you you and concerns

Shaike Orbach

as Well, of to the is I first XX% most, could of note, selling you United all, believe, approximately States. what we're

input EMEA percent is there obviously part So Israel. something no represents in and significant that of was XX there.

impact So was something impacting is at that I say which no but is it all, wouldn't there business. our not

Unidentified Analyst

Great. the the thoughts in And transition? been that Liron changes about going like And instrumental that on from lastly, SD to CEO plans or strategy. the forward? Can the perspective WAN strategy you any for seems transition then talk

Shaike Orbach

at to believed see that same talking the believes Board Directors me are we in. Liron, seems you that any that believe strategy, I Well, it mean, to least, I that in believe Liron are the -- believe change I not strategy the that, to in of I going

in I see any respect. change strategy So don't in that

than having, areas and better that that really think to do huge think And these I right with a be job. could me. timing execute, are much I now, things because he perfect, lot even backlog of we're Liron the a that excellent think that is the I this that would

this say But or is long strategy. every been that has very process. a better. structured I learn the that is strategy already carefully impact a would six it's company overall, years process his him long part of process, for the This to current has on within our we So

same I probably more say results. the better of strategically, So would

Unidentified Analyst

may, hedging That's strategy if I about impacting year? the great. just you on talk And been guess the more, touch the recently. refresh obviously, you you how throughout plummeting could one that's for I has your of us Could just shekel duration and on,

Eran Gilad

sure. Yes,

of a we one, effect quarters. significantly to had I anything. all, significant we effect sometimes of compared minor effect positive amounts, hedge In still not First negative everybody do and previous but remind positive rate that indeed, a differences, not quarter in negative exchange quite

Operator

There are no further questions time. at this

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

Shaike Orbach

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

Operator

Thank results Thank your you. quarter XXXX for conference This Silicom’s concludes call. you first participation.

go ahead You and disconnect. may

Silicom (SILC) 30 Apr 222022 Q1 Earnings call transcript