Q4 2021 Synaptics Inc Earnings Call
[music].
Good day, and thank you for standing by walk onto that Synaptics incorporated fourth quarter fiscal year 2021 financial results. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
A question during the session you will need to press star 1 on your telephone.
If you require any further assistance. Please press star Zero I would now like the conference over to a speaker today Steve.
Their own yes. Please go ahead.
Good afternoon, and thank you for joining us today on Synaptics fourth quarter fiscal 2021 conference call.
With me on today's call are Michael her Olson, our president and CEO and Dean Butler our CFO.
This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at Synaptics Dot com.
In addition to a supplemental slide presentation.
We have also posted a copy of these prepared remarks on our Investor Relations website.
Semiconductor industry.
Although synaptics believes are estimates and assumptions to be reasonable.
They are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate.
Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward looking statements.
We refer you to the company's current and periodic reports filed with the SEC, including our most recent annual report on form 10-K in our most recent quarterly report for important risk factors that could cause actual results to differ materially from those contained in any forward looking statement.
Synaptics expressly disclaims any obligation to update this forward looking information.
I will now turn the call over to Michael.
Great job, Steve and welcome everyone. Today's call, we had an exceptionally strong and to our fiscal year 2021, and I'm pleased with the continued execution of our strategy of Iot diversification and profitable growth.
Revenue for the June quarter was higher than the mid point of our prior guidance and was significantly above normal seasonal trends driven by our intentional shift toward a diversified portfolio and customer base.
I have increased by more than 1800 basis points.
An incredible achievement, 1 that we believe less than a handful of companies in any industry can claim to match.
This accomplishment is all the more impressive that was it was entail and a mere 8 quarters.
Our fundamentals have never been stronger and we see clear avenues for organic growth in all 3 areas of our portfolio.
Finally, I'd like to introduce our updated mission statement, 1 unifies all the elements of our portfolio.
To engineer exceptional experiences for consumers, whether they are at home in the office in their car or on the go.
I am pleased to report that our strategy of building experience centric products has resulted in increased traction in cross selling our for.
Our full portfolio.
With more than half of our top 20 customers buying 3 or more distinct technology categories from Synaptics.
As an example in order to count a customer would have to buy audio.
Wireless and display drivers from us.
On the other hand, a customer buying 3 generations of touch Ics would not count.
Now, let me update you on our business.
In Iot, we continue to build momentum in our world class wireless connectivity products with numerous new wins spanning a broad range of applications.
Our recent efforts in establishing and expanding our sales channel utilizing our strategic module partner and pack has enabled us to rapidly access and support a growing customer base.
Through this partnership and other ecosystem engagements, we've doubled our revenue over the past 12 months with wins in home automation and surveillance video Doorbells Wearables and fitness related applications to name a few.
Our best in class Wi Fi 6 and Bluetooth combo chip sets are seeing great traction with customers designing new solutions, we are upgrading their existing products.
We have also secured several new design wins with our GPS solutions, particularly in Wearables.
Given our pace of success, we see a path to doubling once more in the next 18 months.
Our audio franchise continues to be recognized for its industry, leading performance, particularly adaptive noise cancellation and <unk> sound simulation.
Our feature set gives us advantages in high fidelity headsets, where you're seeing significant traction over the last year with many consumers call centers and enterprises upgrading their audio solutions as.
As people return to work in a hybrid environment. We expect continued strength in our devices for high end headsets.
Along with new opportunities for our certified audio solutions for collaboration environments, such as Microsoft teams and zoom.
In automotive.
Created into several protocol adapters is seeing new traction in notebook motherboard designs with native support for 8-K resolution.
As companies returned to the office, we see an increased focus on flexible meeting room controllers using our technology.
In addition are universal docking solutions from display link solved many of the problems that can arise in hotel Inc.
And as a result continue to see strong demand.
Lastly to close out the Iot discussion I would like to give a brief update on our low power edge AI initiatives.
While still early in the cycle, we believe many devices in the future. We will continue to get smarter than they are today by incorporating machine learning and AI technologies on the device itself rather than relying on the cloud.
We see opportunities and have already begun developing already begun deploying advanced AI algorithms into many of our new products across all our markets such as neural network based fingerprint matching advanced AI based face detection and tablets and smartphones.
And AI assisted video compression algorithms.
We're also seeing broad initial interest in our katana platform, which is R. Standalone AI offering the targets low power battery operated applications is.
It is our belief that many of these intelligent edge use cases will become a significant opportunity for synaptics over the long term.
Turning now to our PC products, we continue to benefit from growing demand as the notebook computer gets increasingly woven into our daily fabric as an essential productivity tool.
As many companies focused on returning to the office, we expect to benefit from our leadership position and enterprise class notebooks.
And the high end consumer class, we're seeing momentum enforcing haptics enabled touch pads utilizing our Vulcan chipset.
As previously discussed our recent initiatives addressing the chromebook market continued to be a greenfield growth opportunity for the company.
Finally, let me give you an update on a mobile products. We are now in high volume production with our second generation OLED touch controller and are set to roll out a third generation, which will further extend our performance leadership.
Our technical advantages have led to meaningful diversification of our mobile customer base, including an additional design when with a large Korean handset OEM, bringing our total with this customer to 3.
2 of which have already begun for shipping.
In addition, we continue to win the majority of new flagship designs using flexible OLED panels with Chinese handset Oems.
We have also made significant progress with our high end OLED display driver products, having secured 2 wins with Chinese handset makers with expected production in calendar 2022.
Overall, I am extremely happy with the strength of our portfolio and quite optimistic about our prospects as we begin our new fiscal year.
Despite the turmoil.
Lemme conductor is shortage has created we find ourselves in an increasingly positive standing with our customer base. Our technology continues to drive design wins in the marketplace and we've built a strong team ready to support our customers needs.
Now, let me turn the call over to Dean to review, our financial results and provide our outlook for the coming quarter.
Thanks, Michael and good afternoon to everyone.
I'll start with the review of our financial results for our recently completed fiscal year in recent quarter.
Then provide our current outlook for our fiscal Q1.
For the full year fiscal 2021 net revenue of 1.34 billion was flat to the prior year of 1.33 billion.
During the year, our mobile products declined as previously discussed driven by a large north American OEM, which was offset by significant growth and are focused Iot products and RPC products, which both grew double digit compared to the prior year.
Gross margin for the company's products continued to expand with GAAP gross margin for fiscal year 2021 of 45.6% compared to 47% in the prior year.
And non-GAAP gross margin of 53.6% compared to 43.7% in the prior year as we concentrated on the delivery of higher value products to our customer base.
GAAP net income for the recently completed fiscal year was 79.6 million or $2.08 per diluted share compared to the prior year of $118.8 million or $3.41 per diluted share.
Non-GAAP net income for the recently completed fiscal year was a record $316 for million or $8.26 per diluted share compared to the prior year of $207.2 million or $5.95 per diluted.
Sure.
53% year over year improvement.
And for above 10% of revenue at 17%.
For the June quarter, our GAAP gross margin was a company record for.
<unk> to 1%, which includes $16.9 million of intangible asset amortization and 800000 of share based compensation costs.
GAAP operating expenses in the June quarter were $119.9 million, which includes share based compensation of $22.3 million acquisition and integration related costs of $8.6 million consisting of intangibles amortization.
Amortization of prepaid development costs of $2.5 million and restructuring related costs of 300000.
During the quarter, we incurred an impairment charge of $7.7 million on a prior equity investment and a small startup company.
Our GAAP tax expense was $15 million for the quarter.
In the June quarter, we had a GAAP net income of $19 million or our GAAP net income of 48 per share.
Now turning to our non-GAAP results.
Our June quarter non-GAAP gross margin of 57, 5% was a company record and at the high end of our guidance range, reflecting our continued strong mix as we prioritize our highest value products to customers.
June quarter non-GAAP operating expenses were at the low end of our guidance range at $86.2 million down $1.2 million from the preceding quarter as we continue to manage to responsible spending levels.
As a result.
Our non-GAAP operating margin of 31, 2% in the quarter was a company record.
Our non-GAAP tax expense was $11.9 million for the quarter.
We had non-GAAP net income in the June quarter of $86.6 million, an increase of 9% from the prior quarter and an increase of 98% from the same quarter a year ago and.
And EPS of $2.18 per diluted share as our focus on profitable growth continues to drive positive earnings for our shareholders.
Now turning to our balance sheet.
We ended the quarter with $836 million of cash on hand, an increase of $80 million from the preceding quarter.
Driven by $105 million of cash generated from operations during the quarter Paul.
1 times adjusted EBITDA and net leverage approximately 0.8 times with the companies remaining debt maturing in 2029.
Given our strong cash flow generation and improved balance sheet. The Synaptics board of directors have authorized the extension of our stock repurchase plan.
Extending its exploration for an additional for years and increasingly authorization by an incremental for 100 million.
Bringing the new available authorization to 577 million.
We will continue to deploy our capital in accordance with our priorities previously outlined first investing in organic growth initiatives set.
Secondly, pursuing inorganic means of expanding our product portfolio for.
Third managing our debt commitments in a prudent manner and finally, continuing our share repurchase program to return excess cash flow back to shareholders.
Receivables at the end of June for $228 million and days sales outstanding where 63 days.
Days of inventory was 53 up from last quarter and ending inventories for 82 million how're.
However, inventory remains below our desired level due to continued supply chain constraints.
Capital expenditures for the quarter were 5.6 million and depreciation was $6.1 million.
Now turning to our outlook.
We enter our fiscal year with strong customer demand for our products and increased visibility with more than 90% backlog coverage of our anticipated full year fiscal 2022 revenues.
We anticipate revenue for the September quarter to be in the range of $355 million to $385 million.
Similar to last quarter, our backlog at the start of the quarter was above the top end of our guidance range as we continue to experience supply constraints that limit our ability to service our customers full demand.
We expect our revenue mix from Iot PC and mobile products in the September quarter to be approximately 51%, 24% and 25% respectively.
Our expectation incorporates are Iot products growing an estimated 65% on a year over year basis significantly faster than the market.
And as communicated during our last quarter's call our mobile products bottomed in the June quarter and are anticipated returning to growth beginning with the September quarter.
We continue our cautionary approach on our PC guidance, given the supply volatility this area seems to be experiencing.
However, we believe the September quarter is likely to be up roughly 10% on a year over year comparison as enterprise class notebooks continued to perform well.
I will now provide GAAP outlook for our September quarter, and will follow with our non-GAAP outlook.
We expect our GAAP of gross margin to be in the range of 52% to 53.5%. We expect our GAAP operating expenses in the September quarter to be in the range of $123 million to $128 million, which includes acquisition related charges for intangibles and prepaid development.
Cost amortization share based compensation and restructuring costs.
We also expect a onetime GAAP charge related to the early retirement of our convertible notes of approximately $8 million to $9 million.
We expect our 2022 GAAP tax rate to be approximately 20% to 25%.
Finally, our GAAP net income per share for our first quarter is expected to be in the range of 80.85 cents to 1 dollar and 15 cents.
Now the non-GAAP outlook for our September quarter.
We expect to maintain our non-GAAP gross margin momentum into the September quarter.
And be between 57% to 58%, which is ahead of all prior plans as we prioritize and deliver to a positive mix.
We expect our non-GAAP operating expenses and the September quarter to remain consistent with the past several quarters and be in the range of $87 million to $90 million.
III technologies, Wi Fi, Bluetooth and GPS GPS doesn't get much attention, but we've done really really well with that technology as we sat and particularly in the wearables market.
The other technical area.
Also encompasses end market that we haven't talked about is automotive the.
Automotive market.
Has been hot we said in the prepared remarks that we're actually well ahead of plan, there where you expect to hit $100 million run rate this year in automotive, which.
Historically has been a small contributor for us.
So we really like that business and I think that's really fueling.
Those 2 areas in particular rod year, fueling a lot of growth for us and it's growth that we see.
I think continued insist and being sustainable for quite some period of time.
Great. So auto is considered part of the Iot grew.
Group and so thats.
Adding to the to the.
Current expectations, Yes, that's right Rajeev.
Okay, great. So just.
On the gross margin so the gross margin guidance.
Again fantastic gross margin guidance of 57, 5% growing sequentially.
Is this mainly due to.
The mix shift.
And when we're looking out over the next several quarters.
Fact that you're.
Pretty much at your long term gross margin target or surpass that actually are there other levers that you intend to push whether thats fab consolidation.
Yeah.
On your own with your outsourced partners or is there.
Other considerations that you're thinking about in terms of margins yes.
Yes, certainly.
We're really excited that we have gotten to and now slightly surpassed our model.
The margins are largely due to mix and Mike will talk about his prepared remarks, but we've also been talking over the last 2 years that we do intend to.
You sell our high market value products first and lead with those leading products versus.
And that mix and sort of mix within our own mentality here is sort of driven it's a long way.
There are other things I think we can do sort of longer term part of that has to do with <unk>.
Our focus on introducing new products that are designed for higher gross margins.
We've continued to talk about consolidating our supply chain partners.
I would say with a lot of the supply constraints right now.
That's probably not a near term opportunity, but we do seek to be more strategic and more meaningful to our supply partners longer term, which we think results in better economics for both parties down the road.
Yes, I mean, rod you just add some color to what Dean said I think that it has largely been driven by mix as you.
Theorized and your question.
We haven't done in terms of opportunity.
Is really designed for cost.
Dean and I play the hand that we got when we when we arrived other than the acquisitions that we've added but we now have products that are starting to get design win traction at customers that are better from a cost basis that we actually went out and design these products support with <unk>.
In mind, so I think that's going to be a lever that you're going to see play out it's masked a bit at the moment, because we are seeing cost increases from the supply chain.
So our attention to detail on design for cost.
When when we actually see that it'll be hard to tell because as I say, it's a little bit masked at the moment, but we do have a huge huge attention now on die size on manufacturing costs et cetera.
Very good congrats again, thanks Robyn.
Thank you. Our next question comes from the line Anthony Stoss from Craig Hallum. Your line is now open.
Hey, Michael Hey, Deane my congrats as well I'm curious just.
Again fantastic gross margins 57, 5% with the component shortages.
How much debt hold back your gross margins from being even better than 50.75 in the quarter and then Michael for you I'd love to hear a little more on the chromebook space opportunity how much content. It is and just how big of opportunity might be and then I had a follow up for dean after that.
Yeah, Hey, Tony just thanks for the questions.
1 on how much has been a hold back in the current quarter.
Really because of supply constraints honestly I would say there is not necessary a hold back here I mean in fact.
If anything we're actually conscious of the more conscious given our limited supply availability on the value delivering to customers.
So we do look to make sure that you are.
We're prioritizing where we can our highest value products and where we can make the biggest impact for our customers and their needs.
So I wouldn't call it a hold back yes.
Tony on the on the Chromebook.
We're really coming off a very very small base and chrome book I think there is a lot of noise in the chromebook marketplace at the moment.
It was red Hot last year now it seems to be tailing off some but we're coming off a position of almost no presence. We didn't have any of our products qualify it on chrome book and we focused on that we talked I think in the previous call about some design wins in that area.
We're upping our market share. There you are talking about a couple of box per chromebook, but we were trying to consolidate share they're a bit where we're at nothing today and trying to move up somewhat significantly on the share vector.
Over the course of the year, so hopefully that address your question.
It does and then just lastly, as a follow up I'm curious your philosophical ideas on you have excess demand right now so you're shipping your highest gross margin products do you either raise prices on your lower gross margin products or would you ultimately even just walk away from some of that lowest gross margin going forward.
Yes, great question, and it's something that we toy with I mean, we're in pretty competitive markets. As it is so our ability to go in and raise prices as challenge now that's not to say that in certain cases, we have been able to do that passing on some of the very significant cost <unk>.
Greece's we've seen to our customers.
But as Dean said I think what has if theres any benefit in the supply crunch. It's been this idea of prioritizing our most strategic customers and those that are giving us the highest value. So from a from a mixed perspective, a mix within the mix when we look at.
What we have available to ship, where obviously prioritizing the products and the customers that deliver the highest gross margin.
Great job guys. Thank you. Thank you.
Thank you. Your next question comes from the line of Chris Rolland from.
<unk> Your line is now open.
Hi, guys. Thanks for the question.
I guess first of all if you could get a little bit more into supply bottlenecks are they all the same.
It was just pumping.
Are there things that are more specific to your product line.
How much of this is.
Getting issues or or or.
Customers.
1 specific problems just any more details there would be great.
Yes, Chris I mean, I think the headline is obviously wafer starts.
That's where our biggest bottleneck is is getting starts from from the foundry partners.
There are constraints elsewhere, we have isolated constraints and as you said bumping in packaging in the backend.
But certainly the long pole for us as wafer starts if we're able to solve that theres still constraints in the back end. So it's not a perfect world, but it's significantly better.
We are seeing also now challenges around kidding as you mentioned, we've seen some movement in our backlog as our end customers are more or less able to source the entire kit.
And it makes it very very challenging for us to really predict where we need to supply.
Toni asked the question a minute ago about kind of the mix and higher and lower value products.
We definitely have some challenge is trying to predict and the and which customers are.
Able to able to deliver the kit and which ones aren't.
Yes, the only other thing I would say Chris is where we are experienced the highest growth in maintenance is sort of in our Iot business and we've talked about Wi Fi really doing well, that's probably putting the most pressure on the supply chain.
Great.
Thank you also I noticed.
You guys raised your internal inventories in the quarter.
Im wondering if thats to prepare for seasonal ramp at what's traditionally been your largest customer there do you have visibility into finally, what what your content looks like there.
And separately.
You have now surpassed.
Well youre at your long term gross margin target and you have well surpassed your op margin target. So.
Or are we going to get an update there and where might those numbers Kyle.
Yes, so first on the inventory question, Chris Yeah, so inventories up a little bit quarter on quarter.
A few specific products I wouldn't characterize it as sort of a broad ability to improve our inventory although supply chain is sort of marginally improved in certain areas.
It is to support a couple of specific customers and the backlog that we have sort of prepped with them.
Is not to support our traditionally largest north American customer just just to clarify.
And then maybe on the on the long term model and surpassing around gross margin and then I'll hand, it to Michael on your other question.
So right now we're actually not planning to update our long term target at this point.
I think it's actually a comfortable sort of range to be running the company. Obviously, we're going to push for every bit of dollar improvement in margins that we can but.
But I think at the high level, we're sort of operating the company in a contract that debt.
It is very reasonable and very sustainable and then Michael I don't know if you want to answer about the yes. Let me let me talk about the large north American customer I mean, I think that we definitely have visibility into what it is I think we talked a little bit about it on the last call and that we don't expect any touch business from there.
I'm on a go forward basis.
In general in Dean's remarks, he talked about mobile sort of hitting a bottom in the last quarter and now building out of that and what that signals really is that certainly with.
The large north American customer, we've gone through the entire transition.
[noise] transitioned our LCD display driver to a point, where we think that's kind of.
Its asymptote, our touch business, obviously, we had a big spike last year, but in the back half of the year, we didn't see a lot of business on that and we don't expect any going forward. So I think that with that particular customer. We're at a steady state we feel good about that and as Dean said in his remarks in mobile in general we see.
<unk> side as we continue to prosecute wins in our touch controllers for Korean for China, and then further out opportunity that we talked about in OLED display drivers in next calendar year.
Great. Thanks, Michael.
Thank you for your next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Your line is now open.
Thank you and congratulations on the great results.
I'm just wondering if you could discuss any changes in the.
For us design activity.
Particularly considering the.
FCC settlement with your 1 of your competitors.
Yeah, Hey, Kevin.
We really haven't seen any meaningful change in the environment I think that Broadcom went in and settled that case out very quickly.
We definitely you'll have talked about design wins in that business and we think debt.
Have reasonable level of traction in the market, but that level of traction really wasn't affected 1 way or the other by the broadcom announcements.
Announcements broadcom and <unk>.
<unk> with the FTC.
Okay, great maybe.
Maybe if you can just.
You mentioned all the.
AI applications, maybe can you just give a couple of examples of what the AI function is doing in the device.
Yes, where we're trying to apply there is theres a lot of action in voice.
And that would be.
Like in.
Alexa device for example, prosecuting simple voice commands at the edge rather than sending a hail ex back to the back to the data center and cluttering, the datacenter up with a bunch of Hey, Alexis.
What we're trying to do is a unique angle and that's actually video rather than voice voice. There is some really strong players in that area.
Actually taking a different debt and trying to solve for video related problems.
Example of that is people counting.
So now a lot of folks retailers' store owners wanted to know how many people are in a store, whether it's to monitor foot traffic or.
To kind of keep track of how many people in the social distancing is within a shop. They want to know how many folks are in there there are particular space and our low power edge AI application is able to do that able to do that calculation. There real time. So there is a re.
Real time, low latency low cost way to do it rather than sending things back to the data center.
So our our take on this market is more around video and vision and it is around voice and we think that we've got the right ecosystem and the right set of partners to enable us. This is not a today market. I mean, this is going to be something that's going to take a couple of years to play.
Hey out, but it's an investment area for us and its 1 in which we're probably the largest player that's got a real entry in this area.
Okay, great. Thanks.
Thank you good question.
Thank you. Our next question comes from the line.
Go ahead. Your line is now open.
Yes, Thank you gentlemen.
2 questions if I may.
Just in Iot you know many of your peers have noted supply constrains across Wi Fi and Bluetooth products.
Yes, your performance for this quarter and your implied outlook does indicate you are performing better I.
I guess, how much of the sequential improvement you are guiding to an Iot is coming from.
Access to more substrate supply.
And perhaps how much maybe driven by brand new design ramps debt.
Often see larger order builds and initial quarters of ramp.
Yes, I mean, we are Dean said just a minute ago in response to another question. This is probably our most challenging supply area I mean, the numbers frankly, it could be quite a bit better than they are if we had unlimited access to supply.
And that is driven by the fact that we're winning in the market. We're getting a lot of new design wins across video applications Wearables. It really runs the gamut for us.
But because this is a new business to us we didn't forecast the wafer starts and as a result, we're coming off a zero base in the way the foundries are working as they.
They start you at your baseline from the previous year and you go up from there. So this is absolutely our most supply constrained areas Dean alluded to.
Carl we could be doing quite a bit better as I said, if we had unlimited access to supply in the wireless arena.
That's very helpful.
I guess a 2 part question for my last 1 if I may just to follow up on that comment given the rapid increase in automotive revenue could you discuss what are those design wins are locked in for the duration of the vehicle platforms and then secondarily could you discuss whether the design wins that you're seeing at your Korean.
Or your third 1 is broadening from flagships to mid range offerings, and whether you have visibility into multi generational designs. Thank you.
Yeah, Let me, let me start with automotive I mean, I think just like any provider in automotive once you get in you are pretty much locked in for the duration of the design. So our certainly our visibility as a longer visibility in that business than in any other other.
Businesses that we participate and we feel good about the sustainability of each of the design wins that we talked about in the prepared remarks.
We've been able to win in that market by uniquely combining touch and display solutions and that combination is a differentiated combination that's given us a nice tactical advantage with with the auto Oems and then.
Lcm's that make the displays for the cars.
Sure.
The second part of your question was around Korea, where I'd say, we are there is sort of sub flagship and to your point then dropping down into.
More mass market types of phones. So we certainly haven't cracked the very very highest end of that yet and that's not unusual because we're not yet proven supplier. We've just started production as we said in the prepared remarks so.
We feel pretty good about our ability to prosecute more with that customer and that runs from high to low and even as we've scaled down because they're pushing flexible OLED down in their SKU stack, we havent seen degradation in growth.
Margin, even as that those products have come down into sub flagship <unk> and.
And lower types of Skus.
Very helpful. Thank you thanks Carl.
Thank you and again, if you would like to ask question. Please press star 1 on your telephone.
Next question comes from the line.
The other BMO your line is open.
Alright. Thank you very much I just wanted to come back to the gross margin guidance last quarter you were pretty.
Articulated many times when you were asked about the margin level.
Dynamics.
Seem to be the Iot business is continuing to do better so I'm just struggling.
Yes.
Should there not be a 6 handle very soon to the margin profile.
Because Iot should continue to grow in absolute dollars. So is it just your natural being conservative as you have been and you have over delivered.
Not only in the gross margin from the menu.
So just kind of help us understand.
The.
The level of conservatism on the margin side because of the dynamics seem to be just exactly in favor of what happened what has been going on for the last several quarters.
Yes, good question Amberger show.
I think in general sort of what's been happening is we've been on this 2 year journey of <unk>.
Delivering higher value products for the marketplace generally speaking.
Iot set of products.
Our higher value in the market and as that continues to grow our margins continue to expand like you rightly pointed out, but I would say theres 2 factors 1 in in the near term, we continue to deliver to higher Iot growth rates, which continue.
To push up our gross margin mix.
Here in the near term.
That continues as we're guiding into the September quarter, we're guiding again, a strong Iot again, a strong gross margin. So I think here in that near term you would continue to see the strength.
I would just remind you sort of longer term.
Not an Iot only business. So we do intend to to growth all 3 product areas, our portfolio and we think there's organic growth opportunities within all 3.
What we're doing is striking a balance to continue to grow gross margin in aggregate, but then also move the top line forward and therefore dropping everything to the bottom line. So as all 3 buckets continue to move forward and find that bad.
You're sort of finding this high fifties youll sort of balancing act if that makes sense ambridge.
I had a follow up on the visibility.
If I heard correctly, you said you have a.
90% book for the full year.
Is that what you said.
Yes, that's what we said, we have 90% or better booked for the full year that's right. Okay.
You compare that debt.
This seems to be in there for years.
Just in terms of.
What normal visibility would be and then more importantly.
Hearing about long term agreements from so many companies just because there isn't enough supply how much of that would you would you consider characterize.
For us is.
Covered by.
Noncancelable or long term agreements. Thank you, yes, so I think theres there are several parts of that 1 first around visibility.
We have much longer visibility close to 4 quarters than we typically would.
Typically the business would have more like 1% to 2 quarters of visibility and sort of with the extended lead times that we've asked customers to give us additional visibility and of course extended lead times from our suppliers right is sort of force everyone to play nicely in sort of half.
A combined set of trajectories that everybody's forecasting.
We have engaged a subset of our suppliers and longer term agreements.
At the behest of our customers on.
Getting the supply they see the design win ramps that they need we've collaborated with our customers to actually enter into.
Cured supply on their behalf.
And then the other 1 around your backlog and cancel ability et cetera.
A good amount of our backlog comes with some sort of limitation around customers' ability to cancel or reschedule.
So not only is there.
There are some limitation around what customers are sort of allowed to do contractually.
But also everyone's clamoring and actually trying to get.
Accelerated supply, where we can so we.
We feel pretty good about the coverage and the visibility that we have.
Okay. Thanks, Thanks for all the detail Steve Thanks.
Thanks average.
Thank you don't know for Great question, you May continue.
I would like to thank all of you for joining US today, we look forward to speaking you at our upcoming investor conferences during the quarter. Thanks a lot.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Yes.
Yes.
[music].
[music].
[music].