Q1 2021 Earnings Call
Earnings Conference call.
Okay, that's trying to listen only mode. A question that's such a will follow the presentation.
<unk> operators just turn the conference. Please press Star Zero on your telephone keypad. Please note. This conference is being recorded I would now let's turn the conference over to your hosts and Harris.
Investor Relations. Thank you you may begin.
Thank you, David and walking to some Tech conference call to discuss our financial results for the first quarter fiscal year 21 speakers for today's call will be more Hamas warrant Semtechs, President and Chief Executive Officer Officer, and that could you kind of our chief financial Officer.
A press release announcing are unaudited results was issued after the market close today and is available on our website <unk> dot com.
Today's call will include forward looking statements that include risks uncertainties and could cause actual results to differ materially on the results anticipated in these statements for more detailed discussion. These risks and uncertainties. Please review the safe Harbor statement included in todays press release, and then the other risk factors.
One of our most recent periodic reports filed with the Securities Exchange Commission.
As a reminder, comments made on todays call. Our current as of today only Semtech undertakes no obligation to update the information from this call should factor start circumstances change.
During the call we will refer to non-GAAP financial measures that are not prepared in accordance with generally accepted accounting principle discussion and why the management team considers such non-GAAP financial measures useful along with detailed reconciliations of such non-GAAP measures. The most comparable GAAP measures are included in todays press release.
All references to financial results in Montana, Mecca spoil presentations on this call refer to non-GAAP measures unless otherwise noted.
Also beginning this quarter, we will be reporting our business under three end markets compared to the for previously which we believe better reflects the ongoing consumption of our products. We have combined was previously our enterprise computing and communications on markets together to form the infrastructure end markets, while our high end consumer and industrial.
When markets are largely unchanged.
I will turn the call over to Semtechs, Chief Financial Officer, a message across America.
Thank you Sandy a good afternoon everyone.
Q1 fiscal year 21.
Net sales decreased four professor pressure to an increase of 1% over the prior year to $132.7 billion, which was above the midpoint of guidance.
If you want to shipments into Asia represented 80% off net self.
North America represented 12% on Europe represented 8%.
Total direct sales was approximately 22% off next sells itself there just traditional was approximately 78%.
Our distribution business remains balanced with 40% of your total appeal was coming from the infrastructure end market.
44% from industrial end market, I, 26%, probably higher consumer end market.
Bookings increased.
And people body prior quarter resulted in a book to bill significantly above war.
It's always bookings accounted for approximately 44% of shipments during the quarter.
Q1, GAAP gross margin declined 20 basis points to 16.9% due to know what absorption associated with appropriate.
If you shut down Oh, we expect our Q2 gross margin for improved slightly impact a higher mix off their infrastructure revenue slightly offset by cooking.
Lighting, driven lower absorption [noise].
[noise] Q1 GAAP operating.
<unk> decreased 12% sequentially I suspect that due to lower share based compensation on special effects.
I think Q2, we expect gap with an expense to increase between 2% or 5% sequentially, primarily due to higher share based compensation, it's perhaps.
Q1, GAAP operating expenses increased to $4.8 million from $3.1 million in Q4.
In Q1, we wrote down your body off some off all minority investments by $3.6 million.
Due to coffee.
It's been difficult subs.
Moving on to the non-GAAP results, which exclude the impact though share based compensation.
Amortization of acquired intangibles.
Acquisition related and other noted coding Chargers.
Q1, non-GAAP gross margin declined 20 basis points superficially to 61.3% due to lower absorption associated with a shot down.
Oh, we expect our Q2 non-GAAP gross margins to improve slightly I asked me about though for a higher mix of infrastructure revenue is slightly offset by lower absorption.
Q1.
Non-GAAP operating expenses decreased 1% sequentially to $53.2 million.
In Q2, we expect our non-GAAP operating expense to be flat to up 3% harder.
For the remainder of fiscal year 2021, we expect our non-GAAP operating expenses to be flat to slightly up from current levels.
In Q1 cash broke them up restaurants was a seasonably strong.
20% off revenue due to shopper.
Cash conversion cycle I lower fiscal year 20 annual bonus payments.
We repurchased approximately 855000 shares a $30 million hop off talking Q1.
And our stock repurchase authorization now stands at approximately $81 million.
We expect have continued to use our cash to opportunistically area, but what's your thoughts shares.
Make strategic investments don't pay down our debt.
In Q1 accounts receivable decreased 20% to partially due to lower that sells on improved linearity. Our shipments represented 30, it's Dave Upsells, which is below our target range of 40 to 45 days.
To support all strong Q2 demand net inventory in absolute dollar talks increased 5% sequentially and days off inventory increased by 10 days through 131 days, which remains above our target range of 9300 days.
In Q2 with breakdown that inventory remained flat in absolute dollar, but the decline in days.
In summary, we were pleased to deliver Q1 results that will once again above the midpoint of our guidance.
We are expecting to a strong sequential growth in Q2.
Despite the ongoing challenges presented by Cobi 19, the secular trends behind our growth Ingeus remains very solid.
Our gross margin is stable operating expenses fell under control.
Cash flow is healthy liquidity is strong we believe we are pretty well position to deliver solid financial results in fiscal year 21, I'll now hand, the call what tomorrow.
Thank you.
Good afternoon, everyone.
I will discuss at Q1 fiscal year 21 performance by end market and by product group and then provide our outlook for Q2 fiscal year 21.
Before I go over our Q1 performance I want to take a moment to discuss some of these areas, where cobot 19 has impacted semtech and what we've done to address the challenges from this terrible pandemic.
As a global company Semtech was impacted by the actions taken by different countries and we have operated under the direction the various regions, where our employees are located.
We will continue to follow that guidelines for the safety of all of our employees.
Over the last several years, we have invested heavily in dual sourcing strategies and in I T operations and fails infrastructure and systems to provide a collaborative environment for our employees and to attract and retain the best talent.
These investments have enabled and we'll continue to enable us to minimize the impact of site closures and supply chain disruptions to our overall business.
[noise] in Q1 of fiscal year, 21, net revenues decreased 4% sequentially $232.7 million.
Stronger demand from the infrastructure end market was offset by softer demand and some temporary supply constraints in the high end consumer and industrial end markets.
We posted non-GAAP gross margin of 61.3% and non-GAAP earnings per diluted share of 35 cents.
If you want to fiscal year 21, net revenue from the infrastructure market increased 1% sequentially and 20% over the prior year and represented 43% of total revenues.
Net revenues from the industrial market decreased 9% sequentially and represented 30% of total revenues, while net revenues from the high end consumer end market decreased 5% over the prior quarter and represented 27% of total net revenues.
Approximately 16% of high end consumer net revenues was attributable to mobile devices and approximately 11% was attributable to other consumer systems.
I will now discuss the performance of each about product groups.
In Q1 of fiscal year 21, net revenue from our signal integrity product increased 2% sequentially and 19% over the prior year.
And represented 45% of total net revenues.
Continued strength from our Hyperscale datacenter customers and record demand for 10 gig home and Fiveg PMB products contributed to the growth.
In Q1 fiscal year 21 strength from the data center market continued driven by a clear edge CDR was used in hundred gig optical modules.
Our Hyperscale data center customers are increasing their demand for 100 gig optical modules as the global shift to working from home places an increasing bandwidth.
Analytics button on cloud based infrastructure.
We expect the demand for 100 gig optical modules to continue to increase.
Customer interest for our try edge Pam four platform also remains very high and we recently recorded out first design win for our first triage Pamfour chipset for use in 200 gig and 400 gig Pam four optical modules.
We have customers in multiple regions at various stages of system tests using try edge and we expect to see many more design wins over the next few quarters.
Expect at flat revenues to ramp up over the next few years as Hyperscale data center customers deploying 100 gig 200 gig and 400 gig optical modules recognize the clear benefits of using an analog Pam four implementation that includes lower cost low latency and lower power.
Then alternative solutions.
We expect the positive trends in the datacenter market together with our new product platforms to provide nice growth for our datacenter business in a quite 21 and beyond.
In Q1 fiscal year 21 upon business grew nicely over the prior quarter led by record 10 gig porn revenues.
Semtech remains the leading supplier to the upon market, providing comprehensive offerings for one gig 2.5 gig and 10 gig pump systems.
We expect strong strong growth from our new PON X 10 gig porn products this year.
Led by a number of new Global Korea, PON initiatives that enable gigabit to the home enterprise and campus networks.
Increasingly carry is building out fiveg infrastructure are looking at PON X driven systems to offload high bandwidth data will these access networks.
In Q1 of them quite 21 overall demand from the wireless base station market remained healthy as fiveg infrastructure deployments increased.
Our clearbridge CDR and our fiber rich PMT platforms are being used in front haul and mid whole optical modules.
During Q1, we announced the production release of our newest Claridge integrated CDR DML driver for Fiveg wireless base stations.
25 gigabit per second fund pull applications.
Also in Q1, our fiber edge Pmdi devices delivered record revenues as emerging Fiveg base station opportunities accelerate.
Fiber rich pmdi products complement our clearbridge and Aldi and try edge Pam four CDR platforms.
As fiveg infrastructure deployments increased globally, we expect our fiveg opportunity to triple buses that are fourg.
As network providers work to upgrade and increase the capabilities of the data center PON and wireless networks, we expect the secular demand for our higher bandwidth high data rate platforms to drive growth across Semtech signal integrity product platforms, and we remain very confident.
And our strategy and position in all our target markets.
For Q2 fiscal year 21, we expect net revenues from our signal integrity product group to increased strongly driven by anticipated record revenues from the data center end market and strong revenues from the Fiveg base station Mark.
Moving on to our protection product.
In Q1 fiscal year 21, net revenues from my protection product increased 5% sequentially.
And represented 30% of total net revenues.
Our diversification strategy targeting a broader set of industrial applications continue to yield dividends in Q1, as we saw strong sequential an annual growth from the broader market.
This strength in demand helped offset a weaker high end consumer market.
We are seeing an increasing number of opportunities for our protection solutions as new high speed interfaces, such as USBC HD, My 2.1, and 10 gigabit Ethernet proliferate into multiple end applications that are also using more advanced lithography processes.
These trends combined with our own acceleration of you protection products targeted at border markets is fueling further growth crop protection business.
In Q2 fiscal year 21, we are expecting at protection business revenues to decline modestly as strength from our broad based industrial market is expected to offset by continued softness in the high end consumer market.
Turning to our wireless sensing product.
In Q1 fiscal year 21, net revenues from our wireless sensing product group decreased 20% sequentially.
And represents a 25% of total net revenues.
In Q1, a wireless sensing business was negatively impacted by several regional shutdowns associated with Cobot 19.
The shutdowns impacted both demand and supply.
We believe that most of these issues are behind us and we expect to see a meaningful rebound in Q2 for our wireless and sensing product.
Q1 was another strong quarter.
Another quarter of strong achievements in our lora business, including record quarterly bookings.
Interest in our Lora technology has continued to expand and most recently we have seen an increase in more opportunities associated with cobot 19, when lora is ideally suited for applications, such as contact tracing distance tracking hygiene and health monitoring and occupancy management.
Several examples of use cases in this area that have recently been announced include more a cloud based platforms in China from Alibaba and Tencent for quarantine scenarios to help provide healthcare workers with community health data.
Poly sense technologies developed a smart cloud based human body temperature monitoring system using Laura to provide real time temperature sensor data to screen individuals with a high temperature.
The system is initially being deployed in Italy.
Every night is working with this partners to deliver moral Lan solutions over a secure wireless I O T network to connect urgent care facilities in Spain.
I'm, calling together with micro share announced a simple low cost contact tracing system, using lora and Bluetooth enabled badges hearings on wrist bands that enables work proximity detection.
The flexibility low cost long range and low power more networks are critical components of any successful LP when I O T deployment.
And we expect to see more use cases, a much as local governments municipalities and enterprises look to execute on that cobot 19 management strategies.
We also continue to see other emerging use cases announce that demonstrate the benefits and efficiencies of Laura. These announcements included the palace Alliance and innovate to Impella management programs integrated Lora into its Intelli pilot. The first of its kind in the logistics industry that enable scalable Pavel pilot.
Location and environmental sensors to be built into wouldn't pellets.
Sweden based or you introduced new functionalities to its wed bio t. platform using lora with.
Algorithms to detect mold and humidity and at risk locations in homes and businesses.
And easy reach developed its easy plug platform that leverages, Laura to detect changes TD usage status on various appliances.
These are just a few of the examples of recent use cases introduced that demonstrate the value of more technology in an IND, enabling a smarter more connected and more sustainable planet.
We recently announced our lower edge platform that is our first software defined radio platform that enables true silicon to cloud connectivity.
More edge includes Wi Fi and GPS sniffing functions that uniquely position this platform asset tracking and asset management use cases.
We expect this platform to enable a large number of new opportunities for Laura over the next few quarters.
In Q1 of the fiscal year 21, we were pleased with the progress we made against the Mora metrics, we targeted at the beginning of the year. Despite the cobot 19 related challenges and shutdowns. These metrics included a number of countries with lower networks grew to more than 92 countries from 91 countries at the end of Fytwenty.
And we expect over 100 countries to have lower networks by the end of it quite quick one.
The number of public or private more network operators grew 237 from 133 at the end of that's why 20, and we expect to 150 Lora network operators by the end up by 21.
The number of Lora gateways deployed grew to over 800000 from the 642000 gateways deployed at the end up quite 20.
And we expect the number of lower gateways deploy to increased over 1 million by the end of that why 21.
The cumulative number of more end nodes increased 245 million from 135 million at the end of Fytwenty and we expect this number to exceed 180 million cumulative end nodes by the end up by 21.
The more opportunity pipeline, which includes both opportunities on leads remains at approximately $500 million at the end of Q1 with approximately $200 million of leads feeding the opportunity pipeline.
We anticipate that on average 40% to 50% of this pipeline will come back to full deployment over a 24 month timeline.
At the end of ask why 21, we are anticipating our opportunity pipeline will exceed $700 million with an additional $300 million of leads feeding these opportunities.
Our opportunity pipeline remains geographically well balanced with approximately 68% all the opportunities now coming from the Americas and Europe and includes an increasing number of use cases in the smart home and consumer markets with the volumes could be significantly higher.
Well, that's why 21, we continue to expect Lora enabled revenues to be between $90 million and $120 million.
While the impact of covert 19 in Q1 led to a slow start to the beginning of the year. We believe the positive momentum from our Lora metrics and the geographic diversity of our opportunity funnel should drive our lora enable business to grow at 40% CHG over the next five years and become the defacto standard for the global.
I will be when market and what we expect to be a multibillion unit industry in the next five years.
In Q1 of fiscal year 21 revenue from our proximity sensing platforms was lower due to a softer smartphone market customer interest remains high for our proximity sensing platforms and smartphones as well as other mobile systems as global RF regulations and awareness of the dangers of high.
How RF signals increases.
We also continue to see solid design win activity you Fiveg smartphones, where there was an increase in the number of high performance radios used.
However, we do anticipate weak smartphone market to continue into Q2.
For Q2 fiscal year 21, we expect net revenues from our wireless and sensing product to increase strongly led by anticipate to record revenues from our Lora enabled business.
Moving on to new products and design wins.
In Q1 fiscal year 21, we released 10, new products and achieved 2202, new design wins.
Now, let me discuss our outlook for the second quarter fiscal year 21.
Despite the geopolitical and macroeconomic concerns associated with covert 19.
We believe the underlying secular demand for our key growth platforms remains solid.
Based on our strong Q1 bookings and much higher backlog entering the quarter.
And our record Pos in Q1, we are currently estimating Q2 net revenues to be between $138 million and $146 million.
To attain the midpoint of our guidance range or approximately $142 million, we needed met turns orders of approximately 20% at the beginning of Q2.
Our guidance assumes no more shipments to walk away this quarter and also takes into consideration the additional entity list restrictions put in place recently by the federal government.
We expect our Q2 non-GAAP earnings to be between 40, and 44 cents per diluted share.
I'll now hand, the call back to the operator, and Sandy mechanized, we'll be happy to answer any questions operator.
Thank you at this time will be conducting a question answer session. If you like to ask question. Please press star one on your telephone keypad confirmation. So indicate your line is in the question Keith.
You mean for start to if you elect to remove your question from Q.
Participants using speaker equipment, and maybe Netsuite ticket behets typical versus the Sarkies one more piece as we pull for questions.
Our first question comes on line of tore Svanberg with Stifel. Please proceed with your question.
Yes, Thank you and congratulations on the results first question is on your bookings and kind of linear already.
We've heard from a lot of companies that have actually gone into their future quarters, but good high backlog.
How about Semtech.
We continue to see solid bookings, even so far in the month of May.
Yes, sorry.
Things continue to be strong for us.
So I'll just say mixed bag, obviously the infrastructure.
Segments, and Aiotv appear to be strong consumer pass to be fairly weak.
Again mixed bag, even within consumer I would say industrialists fairly weak at the moment, but us bookings at the moment still still appear to be quite strong.
Very good and as a follow up.
Sounds like Lora is going to how did pretty good quality here in July.
You did note that it was a little bit weaker than expected. This this last quarter. So if we look at the strength as it is a comment from from sort of a catch up or are you know really far it's starting to see some some new.
Deployments actually drive that strength.
A little bit of both the story I think I remember in February and March.
You know China was essentially shut down so we really I mean literally shutdown. So there was there wasn't much going on a toll and so I think.
April we saw some catch up there and then obviously continuing may but I think in general what's happening with Lora now is that we're starting to see some broader usage more and more use cases and actually as I mentioned on the on the.
In mice script here that.
Covert 19 also is potentially driving some pickup in opportunities.
And I mentioned as I've mentioned before that we're starting to see a broader settle geographical use cases as well so more north America.
And in Europe, as well and those tend to be different use cases in the metering.
Small building use cases in China. So so just generally quite positive for Laura.
Sounds good I'll go back into thank you.
Our next question comes the line of Scott Sarah.
Good luck capital. Please proceed with your question.
Hey, good afternoon. Thanks for taking my questions are nice quarter. He just to dig in on the protection front Mohan you indicated that it would be flat to down for the year. I was wondering if you could give us some clarity on how that looks going into June and maybe give us an idea differentiate between domestic China and non China shipments.
And as well on lower it sounds like we getting nice snap back in the June quarter Orbitz, yet the range out there for fiscal 21 of 90 million to 120 million can you give us an idea about what has to happen what kind of inflection do we need to see you know to get to the higher into that range. Thanks.
Yes, so let's start with protection protection.
You break it out into two segments really the consumer business, which is mostly smartphone and then the non consumer business, which is doing quite well, it's broad brought a kind of market.
All the rest of the markets, including common.
Industrial which is doing very well at the moment for us the consumer side, specifically, obviously smartphone which is the largest.
Piece of our business within consumer.
It's a mixed bag within can within the smartphone business I would say that Q1 was definitely week of China smartphones.
Korea smartphones was that was about flat to North America was actually better than expected in Q2, and we're expecting a little bit of a increase in China smartphones.
We expect probably Korea to be again flat to maybe down and then.
North America to be okay, but the second half we are anticipating that.
Most of the smartphone business at least in Q3 will be down and some of that is supply constraints from some of that customers that we've been we've been hearing about.
Again, all covert 19, driven so that could change in a heartbeat as you know and that could strengthen the second out but at the moment consumers looking week.
But in the general.
The hour the rest of our broader protection business looking quite good I don't know if he can offset the consumer weakening. So so we'll just have to wait and see.
Then on the the Lora front.
No we havent yet seen.
Any pick up from our smart home real the catalyst of smart home business that I've been talking about for a while we do anticipate that in the second half the stops.
Growing nicely.
But again the covert 19, maybe that gets delayed we don't know so a lot depends I think on those kind of more consumer segments and I'll call Hot Smart home.
Small consumer and maybe even asset tracking and logistics to be in that category to determine whether we get to the high end of the range, but my sense is things are going in the right direction I think.
Obviously last year was disappointing year for us because of the China issues, but I think.
We are starting to see the momentum across the board across all regions and across many different use cases and as I mentioned covert 19 is actually driving its own set of use cases for us which is quite encouraging if those pick up as well so we'll see.
Great. Thank you.
Our next question comes the line of Quinn Bolton with Needham and company. Please state your question.
You guys. Let me also say congratulations on nice results and outlook I guess first quarter would see a record Pos record bookings just wondering if you have any sense, whether your customers are buying ahead or trying to build buffer inventory given the coated outlook or do you think most of this product.
Moving through too.
Yes and use applications.
Yeah, we've been looking at that very closely Quinn I think the encouraging thing for US is it's across multiple product lines across multiple geographies and across multiple end markets. So if we look at base station.
Why do you base station is strong mean upon ticket corn is strong datacenter, obviously strong on some of that those segments, so kind of across different regions of the world. Some in China. Some in North America some in.
Different parts of Europe.
And then obviously Lora has also pretty broad so yeah. We don't think there's much well, we haven't seen much cancellations or push out so anything to suggest that it's weakening at all I think it is very much infrastructure is very much you going to focus continues to see growth than I think.
That's what we're seeing most of the strength both in the Pos side on the booking site.
Great question, just a follow up on Scott's question about the.
The more consumer use cases are smart home use cases.
For sure.
Our generic.
You mentioned you continue to see.
Check that ramped it's beginning in the calendar second half I guess you extended that these devices that have to go through DVT and.
Steve I would think that wanted those devices are well into that process right. Now do you see that testing activity, taking place and that's what what gives you the confidence that.
These devices are still on track for second half or have you seen some kobe related delays in the testing and qualification of those products just given your mobility in flight restrictions and that you're going to lead you to the comment there maybe some delays due to comment.
Yes, the answer that yes, yes, [laughter] spent 300 to the I think we have seen testing, we do see that stuff is going on and see the progress.
Kogan 19 is very unique phenomena, obviously and.
We just don't know.
Whether customers are equipped and ready to two you know kind of drive the strategy that way that they were driving stride yet there's nothing to suggest anything's changed I just think.
Our core to delay given what's happened to covert 19 and around the world wouldn't be a surprise that's not what we're hearing the moment, what we're hearing everything's on track and things are going quite well, but.
I just want to caution you that.
Things with Covance 19, there's just so many unknowns, we just there's too many uncertainties on supply this too many uncertainties on.
Regional shutdowns is a lot of uncertainties around you know.
The macro events surrounding us.
But if you take those out of the equation I think things are on track.
Great. Thank you.
Our next question comes on line of Christopher Rolland, what's the screen on it.
Good question.
Hey, Thanks, guys.
Thank you guys are the first to report sense.
The department of Commerce broadened the entity list I guess first of all if you could remind us what you were shipping to walk away last quarter and why you decide to ship nothing to walk away. This quarter and then secondly, the broadening of the entity list, what's the revenue impact from that perhaps you can.
Help our size. Thank you.
Yes so.
I said in my bad.
Script my remarks that.
That's all built into our guidance. So we looked at the entity lifts the excess extended entity list and.
There's a minor impact to meet and included that in our numbers. So the guidance takes that into consideration it's very small.
From a wall way perspective.
You know, we shipped about $9 million to $10 million in Q1.
Our guidance assumes no more shipments into walk away this quarter. So.
That's the.
Comment I'd make.
From our perspective the risk is.
Taken out of our guidance, so, but yeah, we still expect to ship some revenue into into Wally I think it's more a question all.
Do they can they ship their systems do they need to products and those type of things with the increased restrictions on them. So as far as we concerned we've pretty much de risked Wally business from our numbers as best as we can.
Okay, and just to make sure guys like Fiberhome in some of the other entity guys. Just wanted to make sure those aren't going to affect any of your your businesses and then and then separately.
Just talking about data center demand if you could talk about bought a little bit more.
Clearly around the Pam four opportunity the analog short range side that you guys are more focused on maybe you can talk about how that markets develop thank you.
Yes, So I you know as I said Fiberhome and all the other companies on the answers you list at this point in time, we don't see any any.
Issue for US, obviously things change daily on that front, but at this point in time at least for Q2, we don't expect any.
Until built into that guidance anyway, any impact and it if it isn't there was an impact it's very small I'd say even for.
Companies like Fiberhome.
Then wouldn't coming back to the datacenter side.
Yes, datacenter business is going well a 100 gig.
Modules are ramping up nicely as I said, we Clair ridge.
Doing very well.
And now we're starting to sample our try edge platforms that first planful platform, which goes together without power fiber rich patent Pamfour PND products and so we're starting to see some good.
Interest there both on the 200 gig and 400 gig side, we'll also have longer reach products out. This year. So my sense is will be able to expand our pamfour portfolio and get a little bit more momentum them. Obviously this year revenues will be fairly small, but next year, we're expecting that to ramp quite nicely.
So yeah. Good progress generally, we'll just have to wait and see as we still think at the moment hundred gig as the primary.
Market for us to focus on and then 200 gig and then eventually probably end of this year 400 gave will start to see some some revenues and on the next year.
Great. Thanks.
Our next question comes on line of Rick shape.
Oppenheimer pursued the question.
Yes, Thanks, and let me add my congratulations guys.
I just have a couple of follow ups I guess, the first is back to Quinn's question I'm sure.
We can you describe that your approach or give some color on the way you approach.
Sort of bedding your order book, how do you how do you scrum for [noise].
The potential for double orders or how do you kind of look and see what what's a poland versus a normal order from from a customer.
That's a broad question I know, but I'm just curious how are you guys do that.
Yes, so there's a board question. That's a tough question as you know Rick but I think what we Ted tend to do is tweak. We do go talk to the end customers. We do look at.
Tenders that are out there for example on Fiveg that we know about and the number of.
For example base stations that are going to be built and then who's going to get those base stations and how many optical modules that drives and how many ports that drives for us and how many so so you can kind of get a feel for that we can do the same on the PON side.
You can so you can start to do it that way I think it's different more difficult. When you have a brought up a market.
You know area like like in the industrial side of for our protection business for example, where it's more mass market and distribution.
Because it's a little bit more tricky, but in general you can but typically what you see if you're getting.
Not a double ordering you'll start to see more cancellations thing things fall.
Fall off or one guy or then I'm going to be they don't want to be left with a lot of inventory so you'll start to see that.
And you will start to see push outs of orders and things like that I would say that.
Outside.
Yeah.
The consumer space, we haven't really seen that I would say some industrial but mostly consumer we see that little bit, but not so much in infrastructure side. So my commentary and I think this is validated by the bookings being stronger on the infrastructure sizes I do think it's driven by real demand the need out there also Pos.
Being strong indicates that as well.
Thanks, Sean and then maybe just another follow up and it's on Pamfour I should just curious as you think you have a pretty unique perspective, you guys, obviously, the incumbent and four by 25 CDR.
Large market share there.
I'm curious why has DSP dominated that Pam four market to date and I'm curious, how how you see that market evolving over time, thanks, Oh, and maybe just the very into that question. I'm curious you will get I know you've talked about Pam try it's really picking up next year can it be a material revenue driver for you guys.
The next year in fiscal 2002.
So yeah, let me answer that first I think it will be I.
I think I'd try edge this year as the is the test year ready for design wins and design ins and.
Performance in the technology, and making sure our assumptions are correct and things like that but I expect we'll have design wins this year and I think it will become.
Meaningful revenue.
Probably towards the latter part of this year and then certainly next year.
So thats the first common second comment is on DSP as you know we invested in DSP, we went down that path and then chose not to continue down that path.
So the incumbents all are there and they and they have a leading position and I think it's the first technology.
To implement Pamfour and I think thats the reason for success there.
But we made it was a strategic decision to continue down the Antelope, often I think.
We have to demonstrate that was the right. Good decision for us and I think we can I think certainly for 200 getting 400 gig.
We will all over the next six months here demonstrate that value.
Thanks, and congrats again.
Our next question comes on line with Goldman with Wells Fargo. Please proceed with the question.
Hey, guys, let me extend my congrats as well.
If my math certainly correct you are expecting your your July.
Quarter sales to grow what roughly 10% sequentially netting out the headwind from from walk away.
Just just to sort of clarify what's driving that it's bounced back in the door business. It's a telco data center related bookings strength and whatnot.
And if not mistaken the new tighter export restrictions don't kick in until the end of June any chance of generate some turns business. It's why we between now and then.
Well so.
Hallway the way we are planning playing.
Doing business with while he is somewhat opportunistically as I said I've taken it out of the guidance for Q2, not expecting any more shipments, but if it comes in we'll we'll look at it and it for you can't ship and.
Largely most about products, we can ship to them. There are a few that are.
We cannot share, but most of the parts. We can ship. The issue is more can they get the components from other.
Suppliers or are there other restrictions, especially with the.
Recent more restrictive approach in terms of what they can hi, Silicon for example, not being able to ship I think now more not being able to get access to some foundries is more of a challenge so I think.
In general.
I would say the impact of the additional restrictions is somewhat minimal to Austin and unless things change, we don't see any change to that.
Okay.
And alright, so let's move onto the strength in end market demand. So your point of sales significantly increased your exceeded your reported sales, but can you share with us by how much and what did that impact was to the.
The channel inventory.
So Pos.
It was a record for us in Q1, obviously because of the record to channel inventory came down. So channel inventory is is in good shape for us.
And the good thing about the Pos both the Pos and I think our bookings it's fairly broad for us So base stations as I mentioned.
Is looking good.
And by Fiveg, we know of the tenders out there and we know that we have a significant opportunity to get a large chunk of that business and so that's going quite well in that thats from stronger bookings for us for obviously with shipments in Q2 and beyond the PON business as I mentioned that 10 gig PON is doing very well continues to be going quite strong.
And then datacenter is clearly.
Probably.
Outside Laura the strongest area of growth at the moment.
It's 100 gig.
So fiber rich for Pamfour.
Side, so thats doing quite well.
And then Laura as I mentioned has.
Book is very strong and we expect to strong Q2, there as well.
Okay. Thanks for the code Mohan.
Our next question comes on line of harsh Kumar.
Hypersound. Please state your question.
Hey, guys first of all congratulations you know very very strong results actually when I look at your guidance. It's it's I think a little bit better than most other companies are reporting this time.
And I heard all the questions on double ordering so I'm trying to understand for as long as I can remember you've had turns in the about 34, 35% range. My understanding listening to you is that your 80% booked I think your said the tons were estimated at about 20%. This year. So question for you as why not.
Side higher and or congestion.
Alternatively is this the sort of padding incomes in case cancellations do happen.
Yeah.
So harsh is first of all the 20% is accurate that's all the tons, we need it's probably the lowest percentage of tons.
Mikes since I've been with the company's CEO. The company. That's 15 years. So so it's obviously a it's a relatively low number to what we used to achieving having said that there are a lot of on loans. You know I think the up there was a lot of uncertainty around still the consumer business I think the broader industrial and covert 19 is there going to be another up.
Resurgence of cases, especially here in North America that starting to.
No just starting to get back to normal I think so.
Still uncertainty and we just took the approached I think several other companies have taken which is just to.
Make sure that.
We plan conservatively anti conservatively and that's what we've done.
Thanks, Brian Thanks for the color and then I had a question on Laura.
Do you think the first of all was Laura the fastest sort of bookings area for you in this and this second quarter going into second quarter and using the reason is that because China is back and that hurdle guard removed that the bookings ramped up dramatically, but then as we looked at the.
Landscape detentions flaring up again.
I know this is an open ended question the nobody knows the answer but there is there a possibility that lora could get caught up in that or do you think because it's outside of infrastructure that it would probably get saved our set aside.
Well, let me start with the first part to first harsh the the bookings were strong across the board is just especially on the infrastructure side. So data center was very strong base station was very strong and lower I was very strong for us.
As well as the on the protection broader protection business. So there's a four main areas now within the Laura domain.
You know, obviously still today 50, 55% of Arrow revenues of Laura from China, but remember the February and March China was really shutdown I mean for a large part of February March shutdown. So as I said it did pickup in April came back, but I would say as I've said now the opportunity pipeline.
Or Laura and where we're seeing a lot of there.
Revenue is and I can say revenue revenue versus old revenue is not smart metering and small buildings and small cities, but it's starting to look like smart home small logistics.
Some other areas are.
Going to pick up and do quite well.
Then the other thing that I mentioned is that cobot 19 itself is driving some use cases that you know, it's not material, yet, but but could be quite significant and quite soon I think if they play.
Start to play out then smart health and smart.
Temperature monitoring things like that starts to come into play so lot of different use cases. So yeah. I think we're not really that worried about additional restrictions I mean of course, you can never say.
No. It is something could happen and things could get worse, but our most of our opportunity pipeline about 80% is outside China now so while we continue to work on with China and continue to do well in terms of new design wins in working with our partners. There. We also have a lot of opportunity out outside China. That's good.
And to drive growth for us.
Thank you might not get back in line.
Our next question comes a lot of Christian Joe.
Robert W. Baird. Please state your question.
Hi, good afternoon. So.
So given the restrictions that I city kinda is going to have notably.
Not being able to build.
And the chips at TSMC.
And knowing that the Chinese government has pushed can be aiotv and I know that.
It's obviously not a perfect overlap with low.
But it does that change the competitive landscape, we don't get time, where did you extend that.
China.
Yes, I O T efforts.
Sure.
Yes.
The only about this time that it could actually create actually mall demand for Noah.
Sure.
Well.
I'd like to I'd like to things that trust them.
You know it we're not depending on that for us the the use cases.
Our drive really when Lora is winning the Chinese are going to Chinese governments going to continue to push and B O T.
The cellular guys around the walls will continue to push for envy OTI, we're not going to stop that I think thats not going to be our strategy. Our strategy is always.
Deliver the technology to provide the best.
Use case implementation as for our customers so that they really can get the lowest battery life the.
And use the technology to deploy.
The system that they need to deploy in an efficient way and so our feeling is as we get more and more about new products out like Lora edge.
Then just when it's going to create a a quite a large gap between what Laura can do inside used cases, and what NVO TV or any other technology can do and Thats really the way to win and I think thats, what we will do even in China.
Okay and then.
Quick follow up on the on Noah.
In fiscal <unk> last year, we basically says hey, the feet thick shiny, new which node current gateway based on that data that you providing.
Given to react situation that you see for lower this year should we expect.
The numbers the gateway to actually increase year over year and also.
Given again that I was puppy pretty weak earlier this year in China do you expect this coming quarter for like to be.
Yeah.
Hi, So yes, I do expect the north to be up year over year.
The other comment on and most of the Gateway remember gateway deployments are doing very well actually and that's that's another metric that we look at obviously around the world. How many gateways are being deployed as I mentioned in Q1.
800000 gateways from 640000, the end of why 20, so significant increase in gateways and that tells us that the.
The use cases, the only opportunities we have are starting to get into that proof of concepts and they're moving from proof of concept to deployment and that's really what drives the end nodes. So you can look at it on a on a real time basis, and say, how many and nodes, we have deployed and how many gateways, but the gateways allow.
But more and notes to be connected so.
At the moment I don't think 800000 gateways drives around 3 billion senses. So the so 3 billion sense and those are in those can be connected to those gateways. So there's plenty of capacity out there and that's the goal. We have is to drive enough capacity and then the end nodes will follow that's just the use case driven so as the use cases start to get to.
Floyd and.
You know much then you'll start to see more and more and nodes deployed.
Okay, great. Thank you.
Our next question comes on line of Craig Ellis with B. Riley FBR. Please proceed with your question.
Yeah. Thanks for sneaking me end and congratulations on that could hardly execution guys. I was hoping I could just start up with a clarification before a couple of questions. The clarification. It's I think I heard you say that wireless sensing was down 20% quarter on quarter, but within that can you tell us how proximity sensing performed first.
As for.
They they both were down us quite significant together.
No.
Yes.
So sold on them.
The other information.
Yes, both would down.
[music].
And.
Both both quite down by about the same amount I think from percentage standpoint.
Craig so.
I think proximity sensing coming down was driven by obviously loss and loss smartphones more consumer Lora enabled mostly was down because of the China was shutdown for February March so two different dynamics going on but both came down significantly.
And then there was some oh, yes. The other thing Craig sorry is that there was some supply constrains.
That really drove.
Both for in both mostly in the proximity sensing and in some other areas of that business in the wireless sensing business that drove that business to be down.
Got it.
And then for the first question Mohan it sounded like as you went through the different or our metrics that you've retained all your metric targets for calendar 2000. So congratulations Mike My question is with a with a retain revenue range of 90 to 120 million what would make the difference between the business comes.
Again closer to the low end, the 90 versus coming at the high end the 120.
The main the main delta will be the emergence of some new use cases, I mentioned, a little bit more consumer eschmann smart home, we know or in play out there. He was scheduled for Q2, we'll see if things happened in Q2, and if they do they should drive us.
Probably towards the I would say more more the mid to high end, but we'll see a lot depends on the pickup and how that so.
How those use cases.
Our adopted and how quickly and as I mentioned, the cobot 19, the difficulty is not.
It's really we don't think it's going to have a long term impact into the business is just the timing of some of the things that are going on and whether you know consumers and small home and yes, even some enterprises doing smart logistics are going to delay programs by a quarter or too I don't think it's going to be that's significant but it may delay.
By a quarter and if it does it moves into next year, but we'll see we'll have to monitor written I'll report on it as it happens.
Okay. That's helpful and then.
Lastly for you.
I think in your and your answer turn earlier question you noted that within signal integrity. It looked like the Hyperscale a part of the business. The data center part of the business was the strongest stuff.
The different opportunities in the near term ahead. Upon I had a base station. The question is given that investors are worried about the duration of near term strength purchase companies, where do you have the the greatest confidence as you look out into the back half of the or that some of this near term strength and be can be maintained.
Yeah, the back half being a Q4 is difficult to project now I think we're getting indications of Q3 will be okay, and I think part of that is knowing that the base station market.
For example, in China, we know that deploying a certain amount we know that they're going to do it. This year, we know how the other different customers up our planning and we know our position in those customers and we think we have very good position in that market. So we think thats going to.
Play out this year.
The pawn business as we know as I mentioned, one of the nice things about pawn, especially the upon X 10 gig.
Play that we have is that becomes a kind of a hand off to the fiveg for the one of the Fiveg networks and so that's a new new.
Really and you thought a new architectural kind of value that pond brings and that's very encouraging I think the other thing that's really.
Often.
But really understood is that both Playstation and pawn, while China is by clearly, but by far though the biggest opportunity today, we're starting to see now.
You know 18, T., Verizon talking about gigabit pawn and.
We saw him to see the obviously the U.S. Marcon Europe European markets talking about Fiveg deployments and so a broadening of the the opportunity geographically, which I think is very encouraging in a very good as well so we don't see.
Much slow down even the second half to be honest with you, but obviously a lot depends uncovered 19, but from a need standpoint, the need is clearly there for more bandwidth for.
You know for consumers for enterprise and and so that drives small base station that drives more upon clearly drives more data centers. So.
At least for this year, we think that will continue.
That makes sense and if I could sneak one in for a Mecca feel like you spent the expected I'm back at you mentioned that with the second quarter gross margin.
Mix would be a tailwind, but absorption would be a headwind or utilization would be a headwind I guess, that's the flow through effect of the first quarter revenue.
As we look beyond the fiscal second quarter, you get both of those things working your way and could we see gross margins getting to the 62% bubble as we exit this year. Thanks guys.
Yes, Craig I think there's the potential.
As you listen to all the core areas that we have a lot of those are coming with.
Our pretty high gross margin assorted data sense out of five June.
Upon the 10 gig Paul.
Im going to protection.
Industrial applications as well so we think we think a higher mix of those type of revenues.
And stay strong going up on driving higher absorption. This allows us to move across more jesup toward ondis, 62% level.
That's helpful. Thanks, guys.
Our next question comes on line of call. It <unk> with Cowen <unk> Company. Please state your question.
Hey, Thank you and good afternoon gentlemen.
Two quick ones if I may.
No Han I, just kind of curious how do you think about the FCC decision decision to make available six gigahertz band for Wi Fi I'm, just kind of curious.
So I mean, some vessels have been a little bit worried that this may limit the 40% annual CAGR of Laura adoption and consumer environment as consumers offer higher performance, but much more expensive routers for income connectivity, which is kind of hoping you could talk about that how would impact your consumer lora business longer term.
Yeah, I don't think I. So the way to think about it really is that different use cases and complementary.
Actually Wi Fi is a great complement to Laura in many ways thinking about.
You know how they operate and weve in our latest platform our lower edge platform has wife, I sniffing function, but still needs, we fight routers and those type of systems too.
Enable each use case, so really no impact at all I would say if anything Wi Fi and Laura becoming.
More complementary and we're seeing more more use cases, where.
Hi, bandwidth Wi Fi capability plus Laura for.
No no power sensing and.
Monitoring and things like that is really a valuable to us to most used cases so.
Just much like Fiveg, plus Laura will Bluetooth plus Laura we don't really see.
That is there as a competitive.
Issue, we see it more as a complementary.
Very helpful. Just one last one if I may.
On your triage opportunity, yes, there is a competitor who appears F. One maybe most of the early designs and Pam four.
Just given the fact is largely relegated to one hyperscale customer first you expect more diversified cloud adoption in the in the U.S. of Pamfour Interconnects inside the datacenter. This year, where you have the opportunity to be a strong there would you provider second you noted that try edge couldn't be more material for next year, but I was just hoping you could speak.
Or perhaps relative position and quantify the opportunity as the market transitions to both 200 400 gig solutions. Thank you.
Yeah, we just so the first important thing is we just started to sample the triage platform. So it is very early days for us and I think that has to be noted.
But we do have a pretty good position in the datacenter space and we know the customers and we know what's needed and we have a very strong 100 gig position and so now the question is.
Moving those customers to use our platform for 200 gig and 400 gig.
Initially for short reach and then for longer reach.
Applications is the goal that.
We have so.
Yeah, we know that there's some work to do here there's not.
It's not a slam dunk and there's lot of challenges, but we do think I mean, we made the strategic decision to go the analog Pamfour route because we felt that power is extremely important weeks, we felt that the cost was very important.
Built in a lot of the use cases latency was very important.
So that was the reason why we chose this path and now we have to.
Go make sure that.
Our the fact that we are somewhat.
Late to the Pamfour space I think we have to kind of catch up that and that's the goal. This year is to get more design wins, and then next year, which we should see that ramp up nicely you will see revenues. This year I, just don't think there'll be.
Huge revenues this year I think next year will be much stronger.
Our next question comes a lot of Mitch Steves with RBC capital markets. Please do the question.
Hey, guys. Thanks for taking my question, let's say pretty substantial beaten raise here, but I had a question as one of the kind of like 21, and 22 and it's a big investor debate. So it sounds like you guys had some sort of view of what the back half looks like so is there any way to lease it was maybe a qualitative metric and how to model out the back half of the or if it should be similar.
It's a july growth or something that's going to decelerate or accelerate anything that would help there I think it'll be very useful.
Yes, Mitch I think a from overcome that we see right now with respect to.
To have a descent second half of the year. However that are still things out there that we know we're not in controller for diabetic talk off a recession, okay back on like Mohan said before with regards to conclude.
Seeing.
Nobody really knows how that whole grain to clear out so.
We still have out we feel good a good up by the second half, but also just had a little bit off for him to affect caution.
Around it so my expectation would be about policy.
Some sort of flattish to slightly up second half a year.
Okay. That's very helpful. And then just a follow up real quick a Laura you guys talked to 90 120 million. It's now that there wasn't much April against a pretty significant contribution to July. So we look out the next call. It 22, and 23 are you guys still sticking with kinda like that 40% to 50% growth rate because it's just the infrastructure build out are there or is that change got pushed out.
In any meaningful way.
No I would stick with a 40%, let's say job since over the next five years and it and it's really driven not only by.
Police that these gateways that are being deployed have lot of use cases have plenty of capacity out there, we're really seeing the need for low power sensing. So the low power wide area network market, which is tiny today, we're starting to see it growth.
There are clear clearly some emerging use cases and I think.
As I mentioned at the Smart home Smart consumer small logistics smart asset tracking start to take off which we believe they will.
Then I think we'll start to see.
Much more higher volume of connectivity to gateways and that will drive the.
Why 22 of why 23 number and 40% CGM.
Understood. Thank you.
Our next question comes on line of commit question would be Ws financial. Please proceed with your question.
Hi, just one question. Okay can you quantify the sale slippage from Q1 to Q2 and it was it from all the supply constraints as the all in wireless sensing.
I mean, when you say sales slippage so.
I think you've been running your 10-Q.
It towards the bottom. Thank you you were talking about the there's a there was the impact Q1 thousand years shifting into Q2 on the guidance.
Yes.
So yes, there are some though we had some.
Areas of supply constrained for example.
Our facilities in.
Mexico for a high rail business was shut down we could build anything so clearly that's a we have too and that's and we're not planning actually to start that facility again until June so.
Thats still shutdown. So we can't ship anything from that so that has some impact it's fairly small I would say three to three to 4 million and then.
We have reduced capacity now some of our operations.
Our protection business.
Again, a few million dollars.
From the standpoint of capacity and then Malaysia shut down there's some constraints. There. So you know is broad fairly numerous different sites and locations, but all in all it adds up and I don't think is so significant that it's going to make a material difference in Q2, we should be able to pick most of it up.
Okay. Thank you.
Our next question comes on line of tore Svanberg with Stifel. Please proceed with your question.
Yes. It just two quick follow ups first of all and just sort of reconcile.
You had a record Pos yet you're guiding about $30 million.
Lowered than your historical record on the topline is that again, you know just you being careful with the economy.
Is that some related to to walk away help us understand you know what that 30 million and I know, it's not perfect signs right.
Sales, but it.
It's still a fairly large numbers.
Yes, I think all of the above Tory so some some you know.
Restraint in terms of look we're not going to guide put any more Wally shipment in the guide I've done that in the last two quarters and I think that's the way to do it because we just don't know what new regulations will come out I want you restrictions will come out so it doesn't really matter. So the guide assumes no more shipments into Wally that's the first one I think the other aspect is the obviously we.
Have a lower per se.
Tons percentage required in the quarter, but as I said part of that is not really knowing enough about how cobot 19 is going to to play out in the different regions and.
And.
From a demand standpoint, as North America in Europe come back and start to go back to work, whether we're going to see a number.
Virus impact and we're going to be shut down again or is he going to continue to be okay. So some some conservatism that but in general I would say that.
We feel good about our guidance and could we have guided more aggressively I think probably we could have done, but I think with the supply constraints and uncertainties in the demand we still have to one of our stripes sites shut down and another 150% capacity things like that it just you don't know.
I want to be too bullish out there right.
Yeah, that's very fair norm, just a last question it sounds like you're seeing quite a bit of activity on the health care side.
We've been Laura let's just wondering if you you're seeing enough where you may actually dedicated.
Sort of business unit towards Laura Smart health care.
She was like a lot of companies are sort of.
Using the the healthcare market as a big opportunity here the downturn.
Just just wondering if you guys are being a bit more dedicated to healthcare dare to would would lauren. Thanks.
Yeah. That's a good question Tory and I'm not sure the answer to that yet we are starting to see use cases that they've set them, we got customers deploying Laura.
Around the world.
To help with covert 19, I said I mentioned contact pricing.
You know remote temperature sensing Morris perfect for that occupancy management small quarantining, but.
You know I've I am more of a believer of just kind of thinking through strategically where the longer time, it makes sense or whether that short term opportunity.
The nice thing is I think we have some good partners working on this and they'll they'll start to indicate to us if lora is really being successful in this area.
And that will then probably drive yeah kind of a separate set of strategic thinking in that area.
Our new Lora edge platform that we just brought to market.
We just announced which has both Wi Fi sniffing.
GNSS nothing andaloro functions are three separate radios all in the same chip.
Actually we designed it and.
The focus is on smart logistics and asset tracking.
Which we think is gonna be huge market, but that same platform I think has done a really good opportunity in the small health market. So we'll see some especially for contact tracing things like that so we'll see how it plays out but you know it's a it's one of those areas that we have to keep close eye on to see if the market is going to.
Adopted and accelerate.
Sounds good thank you very much.
Our final question comes on line of Christopher Rolland, What's the square please state your question.
Hey, guys. Thanks for the follow up and just kind of a follow up also.
Tories.
On the booking side of things, we've kinda noticed a correlation between book to Bill and Wawa previously as a customer.
From some of your competitors.
Thank you guys said you had a strong book to Bill I.
I don't know if you guys would maybe want to describe what that is little bit further was 1.3 or above.
And then just as you think about those extra marginal bookings were the long dated or the cancelable cancelable or is there anything about that.
That.
That's different than otherwise.
So Chris our book to Bill was sorry, it was pretty much of the you're sort of your range that you have preferred through.
And the bookings have been strong like more sort on the quarter of our critical commute.
And I think one other things that we do have consistently is through a track how March counselor shows we're getting how much pushouts requests that we're getting and so far we have not seen NFV.
Got it.
Apart from the ordinary we've been very pleased with.
The ought to indicate shows that we're seeing is that bookings. So really is something that is being driven by actual demand.
And I would point out that a lot of the lot of the strength as I mentioned was.
The booking strength has been an infrastructure and I O T related areas, we not seeing the same in some other segments. So.
And within the infrastructure has been fairly broad. So normally you know you'll see one or two areas, where you see a lot of trends, but it's fairly broad within infrastructure I would say its base station its data center.
On it so.
Broad communication then aiotv.
Thank you very much guys.
Okay.
There are no further questions left at this time I would like to turn the floor back over to management for any closing remarks.
In closing.
David 19 has provided us all with its fair share of challenges I want to thank all of our employees and partners for their efforts to quickly adjust to the challenges faced from this global pandemic. They have adapted and responded and leverage the infrastructure. We have built over the last several years, resulting in limited impact to our business operations we.
I believe our diverse product offering balanced and market and balanced geographical approach along with our strong customer relationships should help us outperform our peers in this uncertain times that we appreciate your continued support of Semtech and look forward to update you on next quarter. Thank you.
This concludes todays teleconference. You may now disconnect your lines at this time. Thank you for your participation have a wonderful day.
Yeah.
[music].