SILC - Earnings call transcript Q4 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Silicom Fourth Quarter 2024 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 EK Global Investor 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 Relations. of EK Green Global Kenny Investor Mr. Green, to you would like begin, please?

Kenny Green

results Thank to you, call. quarterly welcome like conference all of operator. you to I would Silicom's

cause based would we harbor Silicom's subsequent be affected known from financial materially political, statements management's and anticipated may uncertainties safe conference and control, on may like Before but statements. of which This or actual economic expressed risks outside statements and I expectations to your might other prospects. unknown and by not and the statement. statements. attention in forward-looking results to contains expectations and future business, subject are to beliefs, operating are outlook and the environmental, draw many Those forward-looking factors, call Silicom's which are include, differ regulatory, implied other results following to and conditions of Such and are current to, which start, limited assumptions,

customers economic support caution rising customer impact uncertainty, global new customer are Israel any but Silicom's relevant commercialization property, exchange number and short-term substantial protection manufacturing of the resulting growth competition, or speed the not with COVID-XX to, include, and as and difficulties activities; Silicom interest greater the through of inflation, are the investment as marketing intellectual These their and products impact may markets, and Silicom's maintaining protecting for adopted changing and brand pandemic limited IT in effects sales selectivity Ukraine, customers, the development rates, solutions in by plan. on continuing of marketing; to demand and war and well the increasing which revenue services, of and which exercising rates a in dependence and extent and from volatile limited recognition, to disruptions

by of other filed operations not Silicom's on including that discussed are materially and businesses, results in are XX-F from results with the information information financial from results. can about annual Securities Therefore, be not assurance that exhausted. future could actual filed differ documents noted subsequently and time Commission. affect factors and to there materially the factors about Exchange Silicom's company and condition The anticipated Further that the will report the company's may be company by no Form time

investors statements. Silicom not be undertake are developments, on may statement forward-looking update or a or law. as events Consequently, to information any not to reminded of result except these rely as new forward-looking future by required does

Management of will today's disclosure financial non-GAAP by earnings during financial results make and are to in are performance. used core of forecast company's and to understanding Such evaluate the this such ongoing financial that non-GAAP company's the the future investors' non-GAAP certain current following believes measures non-GAAP useful for the measures and measures these management operations addition, decisions, prospects release, measures of presentation In be future. strategic discussed company's call. assessment the

provided call the the who operating today's them financial CFO. Eran to not accordance as a are will to in by should results, CEO; website. it today line Gilad, in to will These us on on alternative can of be Non-GAAP followed financial and reconciliation non-GAAP are With GAAP. disclosed financials. GAAP by of Liron non-GAAP method measures the results. Eizenman, find condition earnings you of release, analysis full with Silicom's an that assessing be with measures Liron and discussed measures basis. stated, overview additional which begin a will Mr. conference financial President the A are included provide Mr. Eran, and the order otherwise this in in Unless company's are for an on for provide management financials assumed substitute with information or investors

over We the And Liron, that, call go turn the to over I to ahead. like will Liron. session. turn please the to would then call now with question-and-answer

Liron Eizenman

our to discuss of XXXX. everyone, to Kenny. Welcome, you, year conference the quarter call Thank results and the full fourth

increased Strategically, our quarter, win quarter, expectations. And made our continuous in We ultimately, and aimed shareholder that visibility of And increasing financial revenue strong line I'm the achievement happy importantly, on are potential design line say strategic with to we at the renewed to more are long-term during delivering revenue momentum, past this saw the even value. progress track. growth. we our results with bringing mid- growth, we pleased profitability with plan in

wins with Those achievements ramp recent up revenues highlight the from the effectiveness of from and XXXX. well position to potential us expected our strategy

Our our pipeline, to which with in convert significant customers, our our we renewed new a with relationship and even coupled on focus to wins strong XXXX. design created more core customers hope product potential lines,

towards a growth continue is beyond. customers variety of our to projects, that the double-digit we a future All we wins. XXXX during challenges, after strong are short-term for a While and achieved we and we milestone clear pipeline milestone on overcome to quarter, in advanced this exciting design through with opportunities track indication broad return and

of at the our for of came million. terms expected revenue our financial center in our In $XX.X performance the quarter, range fourth at

shares of shareholder own repurchase $XX.X is strategy with buyback ongoing During XXXX, we $XX part our with long-term in our aligned our cash value of million, generated to well cash generation as half our This of million plan. creation. over used

the due to can and shareholder our generation. our Our ability value. success take our pursue strong of cash without business of sheet to same and and to adequate many opportunities investment we growth built time, increase over ensures years balance in this its This maintain compromise advantage up strategy at is engines

quarter, $XXX to remain new a and with strength, million $XXX balance between this wins design capital to and highlight of EPS highlight All want which major recent company, recently end in our working securities We at long-term above marketable we sheet cash, U.S.-based that to $XXX and with cybersecurity a amounted have win customer Just the revenue debt. X in progress made design targeting track the recent an announced is per amounts and received of existing including expect plan, to We revenue months. $XX We no million at I strategic second run a achieve ours. initial our highly share. to on up level of annual with an the $X $X the with starting XXXX million. $XX bonds revenues highlight of million, rated fourth a and ramp full around first half to rate in XXXX of in the deposits orders

is win customer's this design leading line. of the for This generation next product

were for securing in and factors win. system an Our both our providing ability our the this efficiently to edge customer, product interface customize card network key

pipeline products with customer's the a view other trend of both several have the provides discuss customers, deliver we have we been to continue years. at for highly several relationship for We is gain potential traction and looking lines. customer's a other the product to significant capability with that approach. product advantage. from the synergistic accounts this Furthermore, in additional will customer and additional for similar this win expands Our building competitive This believe point the with we us including

hardware the several This This also ago with design XXXX. networking new This additional customer solutions products, paving service million half for security a Silicom's from $X our should its networking deployment win of design newest to silicon with networking was interface over result encompasses a cards. makes a and which scenarios. in edge XXXX a including when to their begin revenues network standardizing year from of us annually a win the several a a of way edge customer global We discussion deliveries first starting process initiated dollar specific up design for multimillion pre-integrated Initial provider, began all sole product. this with on covering leader, with second design as this edge a announced win we wins. ramp the

sales potential traction use win the to and the discussion more underscore the products needs The of as as fact all broad value confirms trust our of additional strategic show long can edge we leading period of supporting the of pipeline. wins design color but others. success slow offering. growth, over I and our recurring address strong growth long-term and of product Those customer to some strength time, the relationships want to our growth. well on building The Over and a plans. pipeline built revenues for our our the of of networking that time cases, solid are expanded a deep on this more the strategy, for renewed robust base based portfolio provide this

design edge systems, it funnel win SmartNICs the time, long Today, than for has a encompassing broader of is opportunities pipeline of and input the very FPGAs. our and been

initial contact experience, it win cycle months to to significant additional initial X In wins note between target to recurring takes months to X product X for then and revenues Silicom to experienced the from X is in our long. customer therefore further a win when Our I and from first with want XXXX. design that ramp-up. achieve to design is X inherently achieve significant sales the revenues. and closely achieving It for our meaningful new the XX up XX takes a design a time to working months with between

shows to state to the provide investor examples many of can opportunities steady can which the be wins you we find product, the a opportunities highlight of tend it on tail the which the customer's also in website, our years. new I revenues, lifetime of and through of However, have revenue our the reach examples want funnel which It of those of made a do when pipeline. many long source become recurring design includes a and which growth. some presentation, over

dollars double-digit impact small revenue. potential opportunities positive to future the wins, on of the our seeing of for medium deals are expanding annual the addition millions the with We pool design of focus in in to

names wins, supported We years, growth that potential the and both This including the pipeline pipeline expect more of we increasingly we convert providers see opportunities networking, lot believe a new service design and the and coming opportunities will funnel, will Furthermore, the cybersecurity wins. that industries. the input of at customers. leading by additional diverse existing new of includes more into those an is in and during of design

strategic number those As growth of strategic to they few we more increase large lead our sustainable revenue we engagements, accounts. believe will on reducing reliance a the by

sign meaningful serve I design in impact if faster to and ramp While achieve plan financial could sooner positive we the in minor have much projected. the growth expect opportunities XXXX. our strategic that of wins goals foundation will up months our we XXXX, in believe the we as the our those expected, note will results that the coming currently pipeline others on in more recent than for than

of the $XX In are XXXX, of similar million. to levels at guidance stable the million revenues of remain quarters, for terms and first $XX to our between those few quarter expected past

expected is single digits materializing growth in be gradually XXXX in rate to Looking the XXXX. growth double-digit further annual out, from with strong low

In pleased summary, we are with progress. our

creating ability plan We are our and optimistic and continue our focused for our our of about very customers fully growth to and shareholders. goal on value for meeting our on execute

towards growth from advancing positions mid- a our robust pipeline XXXX are onwards. long-term us double-digit We goals that for and well with

As X I achieve key serve of have mentioned, XXXX, we which aim in indicator design wins as a to our will progress. to us X

long-term on in $XXX further of of for million reach strong Looking creating million. revenues we an the out, annual EPS at shareholders, $X to focus our above aiming we continue when to range $XXX value

deals the the this help A goal of may us of we few faster. a potential pipeline within fast have achieve ramp-up

robust with strong design a have win superb Tier We customers, coupled full products of and a of X pipeline roster, opportunities.

with a sheet. balance have foundation solid financial We strong a

executing XXXX strategy. on growth with to for over detailed our the and look now We opportunities increased the of throughout continue and design already our call shareholder that, Eran, With entered have continue grown please share hand review excellent an we go cash as enhancing on has dedication we I Silicom's prospects. flow, positive wins ahead. XXXX will a high results. and Eran The underscores regarding value. motivation who forward of team program We momentum active to that has generate the new repurchase to to progress excitement commitment our our reporting that quarter

Eran Gilad

The to America, were everyone. fourth Europe and Revenues the breakdown revenues as in geographical Rest a follows: World, million, East $XX.X the you, the XX%; XX%; X%. revenue and of months $XX.X million of quarter good Liron, for fourth from and reported over Far Thank XXXX Israel, of as year. quarter of last was last day the North XX decline

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

to XXXX of a quarter was For today. gross the please we $X.X the a Gross XX% full compared reconciliation XX.X% for the non-GAAP press refer profit quarter from of in million GAAP margin release issued to of $X.X profit of numbers, margin the fourth gross gross fourth million, and representing XXXX. or earlier of to

As XXXX. million $X.X discussed previously, lower in current of in revenues And gross expected fourth towards term, quarter to our the longer the XX% were of XX% levels fourth to near end it margin is be over the expected the million range. to the as expected Operating end. of term, in quarter upper our with expenses grow XXXX $X.X increase is our towards reported from compared the

fourth of fourth Operating loss the compared the loss per the Loss of of quarter quarter a of $X.X in loss per reported was $X.XX. share million in of $X.XX as compared million $X.X in quarter net of $X.X Net year. loss operating was XXXX. quarter This quarter loss quarter share net XXXX compared the is in as million last million to of with was for $X.X to for fourth XXXX. the reported fourth the

balance Now sheet. turning to the

and payable high-quality our receivable million December $X amounted accounts in with million and highly rated million, debt. accounts of no equivalents securities million $XX including to cash, and marketable As $XXX $XX cash XXXX, of of marketable securities XX, capital working net in inventory,

During the back operator used That hand Operator? of I shares. the questions-and-answer for summary. like over XXXX, for repurchase million we $XX my about XXX,XXX to session. ends to would

Operator

first Needham Koontz Ryan The & question is Company. of from

Unknown Analyst

to you we could all today. Hopson for opportunities presentation is just the It's for go visualize design some if into Silicom. very comprehensive at those on helpful wins Koontz at thank and This design wins. Jeff Ryan of the very Maybe

What As line, out time time wins you or engagements from the then typical for does long of these the is on revenue. each design to laid average? a take it contract length yearly design

Eran Gilad

it estimate We spans to years. X around X usually

discussions once of to next we usually, start would work started X but there, go on So would lot X it's typical then for quite us a are and But for the that's a generation, get for and win. or customer years very us.

Unknown Analyst

changes? new products are the And opportunities? there any what's underlying then new has Or that for design kind competitive of these designs, new architectural Silicom or advantage for these

Eran Gilad

invest I to of closely first I in -- make say, mean, the I and all, But would would thing. that us position let's technology what I our at providing we first silicom give with very there they are sense sure first that's a the supply of at R&D only we our in we we as not usually can capabilities about a them and always say, best that edge a software very heavily very, long with customers as puts all successful. -- be around to the product well, also out also We're be be we in our but out do. the to also the we launches, silicom product consultant to and a launching strong with chain are the the full say also customers vendors mean, really understand to the them working very working product being great, to solution quite need newest are for the the

thing a can integrate product actually line our from SmartNICs, into on our And have that own solve can us become distinguish systems very cards, one-stop and our And how that cards we network really they to of is we shop get ask that? to give our also customers company. acceleration cards everything hardware kind Many able times, them. from then we're for interface FPGA they help you need one to rich others us that come one and or us us, problem, basically

Unknown Analyst

sales on any investment have there you year? R&D, And the you're for or I low new salespeople digit. estimates initial Do for initial thoughts? thinking are hiring single then for know the any spend in R&D XXXX, for

Eran Gilad

something expand there, nothing In it we dramatic. to not or will we here are that dramatically. but be general, expected very all, at need specific If

Operator

[Operator from Koontz Instructions] There Needham Ryan Company. are further of questions &

Unknown Analyst

Hopson Jeff again.

for you maybe you in the for me. margin know the of XX% out more there I to that expectations X presentation? X Just for long-term had guys opportunities segments XX%. target in margins gross of Is laid variability the the gross any

Liron Eizenman

the changing think all opportunities be from you all into case. use the XX% taking range would after the eventually that use product mentioned, case It's in from we'll we -- play to XX%. that to average see Still, different product, to

have have overall in but that obviously products products expect range. we what some some stay Some more, to less, that's

Unknown Analyst

just Maybe one Perfect. more.

AI You I is for the the AI, the infrastructure a SmartNIC. yet? real of the out as future something data one for did that being technology in that's have edge opportunities in too driver? is Or at guess, overall,

Liron Eizenman

that side that on are center think -- the still production We the from I edge, the customers of -- side, goals, training time And up our big full But to those some definitely, with see say, on moment. data would still, use for side, now. -- the the level not see it's something on on it's to let's providing we those other products POC customers cases. that to we at It's right say, time. comes

through So we them. enjoy

us doing kind more And something with direct those some other actually opportunities are maybe customers. of

both opportunities. We are pursuing

Operator

is of Capital. Cobia Meyers The from Jeff next question

Unknown Analyst

maybe And little that talk opportunity, been about talk also bit products, on could margins those front? with where forward? you've going the you gross FPGA a you bit see about Maybe what little a

Eran Gilad

Absolutely.

opportunities. active see trading. So always several the in We've been with we high-frequency pretty FPGA,

more see streaming. with also We from that. opportunities growing we partnering opportunities equipment but see that see companies. opportunities the We much in partners there, be the IP actually see network security. are to We in see with. than of many continue We We opportunities together we opportunities

So building with through is quite an IP partners, to opportunities, the we IP a see our customer do development. impressive of we one quite or of upon themselves taking IP the either lot actually provide the actual us actually and we're working network of partners

on perspective, from we few And would GP of can So right we pipeline I we a those products. the range will better. of hope products day, hope looking the higher have see gross the will will but the end those a those -- change. at all we nice And we margin have, than indeed, the think don't the top are GP opportunities, they somewhat our definitely, of at I And very that think that say, now. opportunities for GP maintain We with But a definitely I that at average. Operator? materialize. overall usually, probably opportunities, higher the

Operator

time. no are questions this further There at

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

Liron Eizenman

call you, the Thank next for in for look your operator. you you, everybody, day. and call Thank forward Silicom. to Good joining on months. interest our in X We hosting

Operator

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

disconnect. and ahead go may You

Silicom (SILC) 30 Jan 252024 Q4 Earnings call transcript