Q4 2021 Silicon Laboratories Inc Earnings Call
Speaker 1: Hello, my name is Jason and I'll be your conference operator today.
Hello, My name is Jason and I'll be your conference operator today.
Speaker 1: Welcome to Silicon Labs' fourth quarter fiscal 2021 earnings call. All participants will be in listen only mode. Should you need assistance, please signal conference specialists by pressing the start key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I will now turn the call over to Austin Dean, Silicon Labs investor relations manager. Austin, please go ahead.
Welcome to Silicon Labs fourth quarter fiscal 2021 earnings call all participants.
<unk> will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star keep followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I will now turn the call over to Austin, Dean Silicon Labs Investor Relations manager Austin. Please go ahead.
Speaker 2: Thank you Jason. We are recording this meeting and replay will be available for four weeks on the investor relation section of our website at www.cylabs.com forward slash invest.
Thank you Jason.
We are recording this meeting and a replay will be available for four weeks on the Investor Relations section of our website at <unk> Dot com forward slash investors joining.
Speaker 2: Joining me today are still to last President and Chief Executive Officer Matt Johnson, Chief Financial Officer John Halister, and Senior Director of Finance, Chief Onion Chely.
Joining me today are Silicon labs, President and Chief Executive Officer, Matt Johnson, Chief Financial Officer, John Hollister, and senior director of Finance Giovanni for Chile.
They will discuss our fourth quarter financial performance and review recent business activities. This information along with the accompanying financial tables and the earnings press release is available on our website.
Speaker 2: They will discuss our fourth quarter financial performance and review recent visits.
Speaker 2: This information, along with accompanying financial tables and the earnings press release, is available on our website.
Speaker 2: We will take questions after our prepared comments and our remarks today will include forward looking statements subject to risks and
We'll take questions. After our prepared comments in our remarks today will include forward looking statements subject to risks and uncertainties. We base. These forward looking statements on information available to US as of the date of this conference call and assume no obligation to update these statements in the future.
Speaker 2: We base these forward-looking statements on information available to us as of the date of this conference call and assume no obligation to update these statements.
Speaker 2: We encourage you to review our FEP findings, which identify important risk factors that could cause actual results
We encourage you to review, our SEC filings, which identify important risk factors that could cause actual results to differ materially from those contained in any forward looking statements. Additionally, during today's call. We will refer to certain non-GAAP financial information a reconciliation of our GAAP to non-GAAP results is included in the company's earning.
Speaker 2: Additionally, during today's call, we refer to certain non-GAF financial information.
Speaker 2: Reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release and the investor-relation inspection of the Silicon Lab.
<unk> press release.
And on the Investor Relations section of the Silicon Labs' website.
Speaker 2: For clarity, all information, detailed in the call today, will refer to results from continuing operations. Any reference to this to discontinued operations will be explicitly known.
For clarity all information detailed in the call today will refer to results from continuing operations any references to discontinued operations will be explicitly notice.
Speaker 3: I would now like to turn the call over to Silicon Last Chief Financial Officer, John Hollister. John ? Thanks, Austin. Revenue for the fourth quarter ended strong above the high end of our guidance range at $209 million. Representing a year-over-year increase of 43% and our sixth consecutive quarter of record IOT revenue.
I would now like to turn the call over to Silicon Labs', Chief Financial Officer, John Hollister, John Thanks Austin.
Revenue for the fourth quarter ended strong above the high end of our guidance range at $209 million.
Representing a year over year increase of 43% and our sixth consecutive quarter of record Iot revenue.
Speaker 3: These outstanding results were again driven by growth in our wireless solutions, which was up 51% year on you.
These outstanding results were again driven by growth in our wireless solutions, which was up 51% year on year.
Speaker 3: We saw growth in Q4 in both of our business units, home and life and industrial entrepreneurs.
We saw growth in Q4 in both of our business units home and life and industrial and commercial.
Speaker 3: The strength was pronounced in industrial and commercial, especially in our proprietary sub-gigahurtz products, which nearly doubled year on year.
The strength was pronounced in industrial and commercial, especially in our proprietary sub gigahertz products, which nearly doubled year on year.
Speaker 3: Industrial growth in the fourth quarter was broad-based, with strength in diverse applications, such as connected equipment, remote monitoring, smart buildings and retail, and smart city applications such as metering.
Industrial growth in the fourth quarter was broad based with strength and diverse applications such as connected equipment remote monitoring smart buildings, and retail and smart city applications such as metering.
Growth was spread across our large and diverse customer base no single customer in Q4 represented more than 5% of total revenue and our top 10 customers comprised only 21% of our total revenue.
Speaker 3: Growth was spread across our large and diverse customer base. No single customer in Q4 represented more than 5% total revenue, and our top 10 customers comprised only 21% of our total revenue.
Speaker 3: We continue to strengthen relationships with the long tail of small and medium-sized customers, even amid challenging pricing and supply dynamics.
We continue to strengthen relationships with the long tail of small and medium sized customers, even in the challenging pricing and supply dynamics.
Speaker 3: Distribution revenue was 81% of total revenue for the quarter, while geographically revenue growth was strongest in Asia and Europe .
Distribution revenue was 81% of total revenue for the quarter, while geographically revenue growth was strongest in Asia and Europe .
Speaker 3: For the full year, we recorded annual revenue of $721 million or 41% growth year over year.
For the full year, we recorded annual revenue of $721 million or 41% growth year over year.
Speaker 3: This is significantly above our stated long-term compound annual growth rate target for the pure-play IOT business.
This is significantly above our stated long term compound annual growth rate target for the pure play Iot business.
Speaker 3: and reflects strong design win momentum, as well as a broad base recovery from the economic and supply chain shocks caused by the pandemic.
And reflects strong design win momentum as well as a broad based recovery from the economic and supply chain shocks caused by the pandemic.
Towards the end of the fourth quarter, we implemented a series of price increases across all product lines and customers to recover both existing and expected manufacturing cost increases.
Speaker 3: For the end of the fourth quarter, we implemented a series of pricing.
Speaker 3: across all product lines and customers to recover both existing and expected manufacturing costs.
Speaker 3: We are seeing some near-term strength in our gross margin results related to this. However, we expect that to moderate over the course of fiscal 2022, and I will cover this more in the guiding section.
We are seeing some near term strength in our gross margin results related to this however, we expect that to moderate over the course of fiscal 2022 and I will cover this more in the guidance section.
All right.
For the fourth quarter non-GAAP gross margin ended above our expectations at 61, 4% on strong product mix combined with the aforementioned price increases as well as expedite charges.
Speaker 3: For the fourth quarter, non-gafteros margin ended above our expectations at 61.4%. On strong product mix, combined with the aforementioned price increases, as well as X-Pubychar.
Speaker 3: Non-Gab operating expenses in the fourth quarter were slightly favorable to expectations, ending at $94 million.
non-GAAP operating expenses in the fourth quarter were slightly favorable to expectations ending at $94 million.
Speaker 3: Non-GAPR and D expenses were $57 million dollars, with SGN expenses ending at $37 million.
non-GAAP R&D expenses were $57 million with SG&A expenses, ending at $37 million.
Speaker 3: Our non-GAP operating profit in Q4 was $34 million, resulting in 16.3% operating mark.
Our non-GAAP operating profit in Q4 was $34 million, resulting in $16, 3% operating margin.
non-GAAP operating profit for the full year was $70 million, resulting in a 10% operating margin well ahead of our pure play operating model.
Speaker 3: Nongap operating profit for the full year was $70 million, resulting in a 10% operating margin well ahead of our pure-play operating model.
Speaker 3: Our non-gap effective tax rate for the quarter ended in line at 10% and non-gap earnings for share for 77 cents surpassing expectation.
Our non-GAAP effective tax rate for the quarter ended in line at 10% and non-GAAP earnings per share were <unk> 77, surpassing expectations.
Speaker 3: Don Gaffernings, for share for the full year, were $1.00.
non-GAAP earnings per share for the full year were $1.
Speaker 3: On a gap basis, Gross Margin for the fourth quarter was 61.3%.
On a GAAP basis gross margin for the fourth quarter was 61, 3%.
Speaker 3: Total operating expenses were $125 million dollars with 72 million in R&D expenses and 53 million in SG&A.
Total operating expenses were $125 million was $72 million in R&D expenses and $53 million and SG&A expenses.
Speaker 3: Gap operating income was $3 million or 1% of sales, and Gap earnings for share were 13 cents with some upside from equity income from a corporate investment.
Operating income was $3 million or 1% of sales and GAAP earnings per share were <unk> with some upside from equity income from our corporate investments.
Speaker 3: We realized that gap operating loss from continuing operations for the full year of $33 million.
We realized a GAAP operating loss from continuing operations for the full year of $33 million.
Combined with the gain from the divestiture and results from our discontinued operations. Our total GAAP earnings per share for the year were $47 78.
Speaker 3: Combined with the gain from the divestiture and results from our discontinued operations, our total gap earnings per share for the year were $47.78.
Turning now to the balance sheet, we ended the year with approximately $2 billion in cash and investments.
Speaker 3: Turning out of the balance sheet, we ended the year with approximately $2 billion in cash and investment.
Speaker 3: Driven by upside operating results and relatively lean working capital balances, we generated strong operating cash flow of approximately $91 million dollars in fiscal 2020.
Driven by upside operating results and relatively lean working capital balances, we generated strong operating cash flow of approximately $91 million in fiscal 2021.
Accounts receivable were up in the quarter on strong shipments with DSO rising to around 42 days.
Speaker 3: Council receivable were up in the quarter on strong shipments with DSO rising to around 42 days.
Speaker 3: As expected, inventory declined in the quarter to $49 million or around 6.6 turn.
As expected inventory declined in the quarter to $49 million or around six six turns our inventory.
Speaker 3: Our inventory balance is significantly below our target level, which would ideally be more in the range of three to four turns.
Cory balance is significantly below our target level, which would ideally be more be more in the range of 3% to four turns distributor.
Inventory days at the end of the quarter declined to 37 days in the channel.
Speaker 3: Our operations team is working continuously with our suppliers to expand capacity. And our expectation is that we will be able to activate higher unit outputs toward the end of this year.
Our operations team is working continuously with our suppliers to expand capacity and our expectation is that we will be able to activate higher unit output towards the end of this year.
Speaker 3: Our Capitol Return Strategy, combined with the launch of an accelerated share refurchased program that commenced in late October .
Our capital return strategy combined with the launch of an accelerated share repurchase program that commenced in late October .
Pursuant to the ASR, we purchased $400 million of common stock and that program is now complete having retired about 2 million shares.
Speaker 3: Our suite to the ASR, we purchased $400 million of common stock, and that program is now complete, having retired about 2 million shares.
Speaker 3: The Board of Directors has also approved a new open market repurchase authorization for an additional $250 million.
The board of Directors has also approved a new open market repurchase authorization for an additional $250 million.
We are pleased with the results of our capital return activities in the second half of last year. Following the divestiture transaction, having returned $1 5 billion, thus far and we expect to continue to Opportunistically return capital to shareholders, while retaining optionality for strategic M&A activity.
Speaker 3: We are pleased with the results of our capital return activities in the second half of last year following the Investiture Transaction, having returned $1.15 billion thus far. And we expect to continue to opportunistically return capital to shareholders while retaining optionality for strategic and maniacs.
Speaker 3: I will now cover guidance for the first quarter of fiscal 2022.
I will now cover guidance for the first quarter of fiscal 2022.
We expect revenue in the first quarter to be in the range of $220 million to $230 million with growth continuing in both of our business units.
Speaker 3: We expect revenue in the first quarter to be in the range of $220 to $230 million with growth continuing in both of our business units.
Due to the price activity.
Speaker 3: Due to the price increase activity, completed in late Q4, we expect to see a brief rise in non-Gap gross margin in Q1 to around 63% as we fell through lower cost in the...
Due to the price increase activity completed in late Q4, we expect to see a brief rise in non-GAAP gross margin in Q1 to around 63% as we sell through lower cost inventory.
Speaker 3: We expect our gross margins to decline over the course of the year as new inventory builds occur of higher costs.
We expect our gross margins to decline over the course of the year as new inventory builds occur at higher cost points. Our manufacturing costs are expected to continue to rise through the year.
Speaker 3: Our manufacturing costs are expected to continue to rise through the
We expect non-GAAP operating expense to increase in Q1 to around $105 million.
Speaker 3: We expect non-Gap operating expense to increase in Q1 to around $105 million as we experience typical seasonal increases in payroll-related costs and continued investment in IoT growth.
As we experienced typical seasonal increases in payroll related costs and continued investment in Iot growth.
We continue to anticipate a tight labor market in fiscal 2022 with associated inflationary pressures on wages and benefits.
Speaker 3: We continue to anticipate a tight labor market in fiscal 2022 with associated inflationary pressures on wages and benefits.
Our non-GAAP effective tax rate is expected to increase to around 30%, which is a significant increase from fiscal 2021 due to new tax rules, taking effect that require the capitalization and amortization of R&D expenses for tax return purposes.
Speaker 3: Our non-gap effective tax rate is expected to increase to around 30%, which is a significant increase from fiscal 2021 due to new tax rules taking effect that require capitalization and amortization of our indexes for tax return purposes.
Speaker 3: Absent the impacts of the new capitalized R&D rules. We expect our non-GAP tax rate would be in our more typical mid-teens range.
Absent the impacts of the new capitalized R&D rules, we expect our non-GAAP tax rate would be in our more typical mid teens range.
Speaker 3: We are monitoring potential legislative developments in this area that may result in the elimination or deferral of this new tax.
We are monitoring potential legislative developments in this area that may result, in the elimination or deferral of this new tax provision.
Speaker 3: We expect non-GAP earnings for share to be in the range of 58 to 68 cents. I will now turn...
We expect non-GAAP earnings per share to be in the range of 58 to 68.
I will now turn the call over to Matt Matt.
Speaker 4: Thanks, John . In my first call at CEO , I'm pleased to report strong financial and operational results.
Thanks, John and my first call as CEO I am pleased to report strong financial and operational results.
Speaker 4: We continue to gain traction in our markets as an IoT pure play and are outperforming our target financial model.
We continue to gain traction in our markets as an Iot peer play and are outperforming our target financial model.
Speaker 4: A revenue grew 43% over Q4 last year, which is significant. And we ended fiscal 2021 with operating profitability ahead of the pay.
Our revenue grew 43% over Q4 of last year, which is significant and we ended fiscal 2021 with operating profitability profitability ahead of the pace.
We also grew design wins in 2021 by nearly 45% and as we enter 2022. Our total funnel is at approximately $14 billion, which is greater than it was pre divestiture.
Speaker 4: We also grew design winds in 2021 by nearly 45%. And as we enter 2022, our total funnel is at approximately 14 billion, which is greater than it was pre-devested.
I'm very proud of the team for successfully executing a transformative divestiture aligning as one team with one mission and delivering outstanding performance.
Speaker 4: I'm very proud of the team for successfully executing a transformative divestiture lining as one team with one mission in delivering outstanding performance.
We grew 51% year on year in our core wireless business. Despite continued supply constraints.
Speaker 4: We grew 51% year in year in our core wireless business. Despite continued supply.
Speaker 4: We saw games across all product lines with our strongest growth in sub-giggahertz products, which primarily serve industrial landmarks.
We saw gains across all product lines with our strongest growth in sub gigahertz products, which primarily serve industrial end markets.
We're also seeing strong growth in Wi Fi year on year as we continue to see the effects of the <unk> acquisition.
Speaker 4: We're also seeing strong growth in Wi-Fi. You're on here as we continue to see the effects of the Red Pine Aquas.
In addition to strong financial results in the fourth quarter, we continued to execute well on new product development and I'd like to share some of the highlights and other news.
Speaker 4: In addition to strong financial results in the fourth quarter, we continued to execute well on new product development, and I'd like to share some of the highlights and other news.
Speaker 4: Last week we announced the BG24 and MG24 wireless SSCs featuring the industry's first integrated AI machine learning accelerate.
Last week, we announced the <unk> 24, and <unk> 24 wireless Sse's, featuring the industry's first integrated AI and machine learning accelerator.
Speaker 4: Our most capable SSCs today, they bring wireless high performance and AI ML applications to battery powered edge device.
Our most capable ssds to date, they bring wireless high performance and AI ml applications to battery powered edge devices.
Speaker 4: These solutions are matter-ready, support multiple wireless protocols, and incorporate the industry's highest level of IoTF security, which is ideal for diverse smart home, medical, industrial, and commercial applications.
<unk> solutions are Matt already support multiple wireless protocols and incorporate the industry's highest level of Iot and security, which is ideal for diverse smart home medical industrial and commercial applications.
Speaker 4: We also announce that Z-Wave 800 Series SOC's and Modules are available for the Z-Wave, smart home and automation e...
We also announced that Z wave 800 series <unk> and modules are available for the <unk> smart home and automation ecosystem.
Speaker 4: The Z-Wave 800 series family is one of the industry's most secure ultra-low power wireless solution for advanced high-performance battery-powered IoT devices and provides a greater than 50% improvement in battery life compared to the previous Z-Wave 700.
<unk> 800 series family as one of the industry's most secure ultra low power wireless solution for advanced high performance battery powered Iot devices and provides a greater than 50% improvement in battery life compared to the previous Z wave 700 series.
Speaker 4: Additionally, Silicon Labs is proud to be named Global Semiconductor Alliance's most respected public semiconductor company among our peers.
Additionally, silicon labs is proud to be named global semiconductor Alliance's most respected public semiconductor company among our peers.
A testament to our strong performance technology and culture. We were also ranked one of the best companies to work for in our industry based on our most recent great place to work survey of our employees.
Speaker 4: Testaments are a strong performance, technology and culture. We were also ranked one of the best companies to work for in our industry based on our most recent great place to work survey of our employees.
We're also excited to have Sherri Luther joined our board of directors last month.
Speaker 4: We're also excited to have Sherry Luther join our Board of Directors last month. Her extensive experience in the semiconductor industry and her strong leadership at Latest semiconductor are welcome addition to our outstanding board.
<unk> experience in the semiconductor industry and our strong leadership at lattice semiconductor are welcome addition to our outstanding Board.
Speaker 4: We also announced that Sumit Sadawna was appointed our lead independent director at the beginning of this year. Sumit's wealth of experience and approach make him an exciting fit for this role.
We also announced that Sumit sudano was appointed our lead independent director at the beginning of this year.
<unk> wealth of experience and approach make him an exciting fit for this role.
I also want to congratulate Tyson one last time for his career here at Silicon Labs, we had a great time celebrating his retirement in December and it was great to see all the new faces come to wish them well. It also speaks to tysons contributions towards the amazing culture that we have here at Silicon labs.
Speaker 4: I also want to congratulate Tyson one last time for his career here at Silicon Labs. We had a great time celebrating his retirement in December , and it was great to see old and new faces come to wish him well. It also speaks to Tyson's contributions towards the amazing culture that we have here at Silicon Labs.
Speaker 4: 2021 was a remarkable year of transformation for Silicon Labs as we became a focused, pure play IoT company.
2021 was a remarkable year of transformation for Silicon labs, as we became a focused pure play Iot company.
I'm excited to be leading this great team into a new era of industry leadership and growth we have the people the IP and the vision to capture this great market opportunity.
Speaker 4: I'm excited to be leading this great team into a new era of industry leadership and growth. We have the people, the IP, and the vision that captures this great market opportunity.
Speaker 4: Reptile Q4 is an early indication of the tremendous momentum we carry into 2022 in Vermont.
Our record Q4 is an early indication of the tremendous momentum we carry into 2022 and beyond.
Speaker 4: Finally, just a quick reminder that we are holding our analyst-day event on March 1st at 1pm Eastern time for a comprehensive overview of the IOT market, our business, technologies, and financial model. I'll be joined by John and several executives from our leadership team. The event will be in a hybrid format, so please join us in person in New York or on the webcast. I look forward to meeting many of you then. And with that, I'll turn the call...
Finally, just a quick reminder, that we are holding our analyst day event on March <unk> at <unk> PM Eastern time for a comprehensive overview of the Iot market, our business technologies and financial model.
Be joined by John and several executives from our leadership team. The event will be in a hybrid format. So please join us in person in New York or on the webcast.
Look forward to meeting many of you then.
And with that I'll turn the call back over to Austin.
Thank you Matt.
Speaker 2: And thank you for joining Silicon Labs Q4 2021 financial and business update. I will now open a call for questions to accommodate as many people as possible. Before the market's open, I will ask that you limit your time to one question with one follow-up inquiry if needed. Operator.
And thank you for joining Silicon Labs, Q4, 2021 financial and business update I will now open the call for questions to accommodate as many people as possible before the market open I will ask that you limit your time to one question with one follow up inquiries if needed operator.
Speaker 1: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2.
Thank you we will now begin the question and answer session.
A question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Speaker 1: Our first question comes from Gary Mobley from Wells Fargo Securities. Please go ahead.
Our first question comes from Gary Mobley from Wells Fargo Securities. Please go ahead.
Speaker 5: Hey guys, hope all is well. Let me extend my congratulations to a strong finish to last year and a good start to this current year.
Hey, guys Hope all is well let me extend my congratulations to a strong finish to last year and a good start to this current year.
Speaker 5: John and Matt, I wanted to push back a little bit on what many might view as some conservative assumptions in your long-term financial target.
John and Matt I wanted to push back a little bit on what many might view as some conservative assumptions in your long term financial targets.
Speaker 5: You have been growing your design wins in the high 20% range since 2016. I think you noted this year it grew 41%. Isn't the support of us something more than 20% long-term growth and a minimum, how do you view the growth this current year?
<unk> had been growing your design wins in the high 20% range. Since 2016, I think you did.
This year it grew 41%.
Is it is supported by something more than 20% long term growth.
And the minimum how do you view the growth this current year.
Sure Gary This is Matt.
Speaker 4: Gary, this is Matt. We have continued to push on our design wins and we were really happy with the results we saw in 2021 at that 40% growth.
We have continued to push on our design wins and.
And we were really happy with the results we saw in 2021 at that 40% growth.
Speaker 4: One of the reasons that really notable for off is that we have pretty stringent controls that we put on our design winds where
One of the reasons that really notable for US is that we are pretty stringent controls that we put on our design wins were to recognize that it actually has to.
Speaker 4: to recognize that it actually has to recognize at least a thousand dollars of shipments which in the supply constrained environment maroon is quite an accomplishment by the team so we're really proud of that.
Recognize at least a $1000 of shipments which in the supply constrained environment. We're in is quite an accomplishment by the team. So we're really proud of that.
Speaker 4: That being said, we're also trying to balance the current demand environment with the supply constraints. So, we're doing our best to strike that balance, and that's the way we're operating on a go-forward basis.
That being said, we're also trying to balance the current demand environment with the supply constraints. So we're doing our best to strike that balance and that's the way we're operating on a go forward basis and specifically what we're seeing right now is demand continues to significantly outpace our supply.
Speaker 4: And specifically, what we're seeing right now is demand continues to significantly outpace our supply, but we are committed to, you know, each quarter, finding a way to drive more shipment.
But we are committed to each quarter, finding a way to drive more shipments and that's what we're committing to and as you heard in the notes we see in the second half the.
Speaker 4: And that's what we're committing to. And as you heard in the notes, we see in the second half, the ability to start increasing that as we go into 2020.
The ability to start increasing that.
We go into 2023, yes, Gary I would just add.
Speaker 3: Yeah, Gary, I would just add, of course, we all need to be mindful that this is an unusual time. The demand is very strong. You know, how long this will last? We'll see, but need to be mindful that we're in a fairly unprecedented time, and we're putting out our model, please spare in mind, it is a long-term cater that takes into account our best estimates of the sand growth in the markets for targeting over an extended period of time. Yeah.
Of course, we all need to be mindful that this is an unusual time demand is very strong.
How long this will last we will see but need to be mindful that we're in a fairly unprecedented time and we're putting out our model. Please bear in mind. It is a long term CAGR that takes into account our best estimates of the Sam growth in the markets. We are targeting over an extended period of time.
Got it.
Okay.
Speaker 5: Okay. And so, it's understandable why your gross margins might erode from the Q1 peak, just given the timing of higher cost inventory flowing through. But aren't you also benefiting from some notable mix shifts? In particular, it sounds like your industrial IoT radio business is doing quite well. I would presume that's the highest margin.
And so it's understandable why your gross margins might erode from the Q1 peak just given the timing of higher cost inventory flowing through but arent you also benefiting from some notable mix shifts in particular it sounds like your industrial Iot radio business is doing quite well I would presume that's the highest margin.
Speaker 5: a product contributor to the overall gross margin, do you view that as sustainable or a long-term trend? I would love to get your thoughts there long-term on that mixed dynamic.
Product contributor to the overall gross margin.
<unk> not view that as sustainable or long term trend or just.
Would love to get your thoughts there long term on that mix dynamic.
You bet Gary.
Speaker 3: You bet, Gary. Yes, this John . So in the fourth quarter, we did have really tremendous contribution from some gigahertz business. You're right. That's among one of the strongest performers in the overall portfolio. We do expect stronger growth coming out of areas where we have more of a nascent position in Bluetooth and Wi-Fi coming up, which may offer some headwind there. But overall, we're really pleased with the results we're seeing right now. you
Yes. This is John so in the fourth quarter, we did have.
<unk>.
Really tremendous contribution from the sub gigahertz business Youre right Thats among one of the strongest performers in the overall portfolio.
We do expect stronger growth coming out of areas, where we have more of a nascent position in Bluetooth Wi Fi coming up which.
They offer some headwind there, but overall, we're really pleased with the results we're seeing right now.
Got it again congratulations guys. Thank you.
Sure.
Speaker 1: Our next question comes from Raji Gill from Needham and Company. Please go ahead.
Our next question comes from Rajiv Gill from Needham <unk> Company. Please go ahead.
Speaker 6: Yes, thank you and congratulations on a very strong 2021 question on the seasonality in the March quarter. So in Q1, the guidance.
Yes, Thank you and congratulations on a very strong 2021.
Question on the seasonality in the March quarter, So in Q1 the guidance.
Speaker 6: implies revenue up about 8% sequentially, that's well above seasonal patterns.
Implies.
Revenue up about 8% sequentially well above seasonal patterns.
Speaker 6: I think in the IoT business last year it was up as well sequentially. So, one is to get a sense of how you're looking at growth from off that high base.
I think in the Iot business last year, it was up as well sequentially.
So wanted to get a sense of how youre looking at growth.
Off that high base.
Speaker 6: in Q1 throughout the year. Should we expect at a high level a similar pattern that we saw in 2021 where we'll see above seasonal growth in Q1 and then continued momentum throughout the year given this gap between demand and supply with respect to IoT?
In Q1 throughout the year should we expect at a high level a similar pattern that we saw in 2021, where we'll see above seasonal growth in Q1, and then continued momentum throughout the year, given kind of the gap between demand and supply with respect to Iot.
Yes. This is Matt.
Speaker 4: Yeah, this is Matt. The quick answer to that is, given that the demand supply gap is what it is, the seasonality doesn't really come into play that we've historically seen as we go throughout the year. So, really what's driving this is, as we've talked about, the mixed shifts, price increases, and more than anything, the supply response.
Quick answer to that is.
Given that the demand supply gap is what it is.
<unk> doesn't really come into play that we've historically seen as we go throughout the year. So really what's driving this is it.
We've talked about the mix shift price increases and more than anything the supply response.
Speaker 4: And that's the primary driver of what you'll see. That used to be seasonality, now it's supply. And, you know, our goal, as we've mentioned, is to every quarter ship more than the prior quarter, which is a, you know, Herculean challenge in this environment by our operations team, but we've been finding a way to do that, and we're continuing to focus on doing that moving forward.
And that's that's the primary driver of what Youll see that used to be seasonality now its supply.
Our goal as we've mentioned is to every quarter shipped more than the prior quarter, which is a herculean challenged in this environment by our operations team, but we've been finding a way to do that and we're continuing to focus on doing that moving forward.
Speaker 6: And John , on the margins, you talked about the margins trending down post Q1.
And John on the margins.
You talked about the margins trending down post Q1.
Speaker 6: as you absorb higher input cost and you maybe see a little bit less of a favorable mix.
As.
As you absorb higher input cost and maybe see a little bit less of a favorable mix.
Speaker 6: Can you maybe characterize the magnitude of that expected decline? You're still, even despite the 63% if you look at last year, you're still well above your long-term margin target. And so there's something else going on besides just price increase. There's, as Gary mentioned, a mixed shift to industrial.
Can you maybe characterize the magnitude of that.
But did decline.
Or you are still even despite the 63% if you look at last year.
Still well above your longer long term margin target.
And so there is something else going on besides just price increases.
As Gary mentioned, a mix shift to industrial.
Speaker 6: wireless radios. But just number one, I wanted to get a sense of what we should be expecting in terms of the decline of the margin from 63 percent. And when you're thinking about your long-term target on margins, what's the thought process there in terms of certain drivers that might move that higher that you've witnessed the last year or so?
Wireless radios.
Just number one wanted to get a sense of what we should be expecting in terms of the decline of the margin from 63% and when you're thinking about.
Your long term targeted on margins.
Whats the thought process there in terms of certain drivers that might move that higher.
Witnessed last year or so.
Sure Rajeev and just please bear in mind, we do expect cost increases to continue through the course of this year. So we know some that are already active in the first half of this year. We are aware of additional cost increases that will come online in the second half of this year. So we do.
Speaker 3: Sure, Rajee. You know, and just, you know, please bear in mind, we do expect cost increases to can-
Speaker 3: through the course of this year. So, you know, we know some that are already active in the first half of this year. We are aware of additional cost increases that will come online in the second half of this year. So, we do expect some continued pressure there. We haven't updated our long-term model this morning. So, you know, in the current world here, seeing a trend back down to the high fifties is rational and over the longer term, the mid fifties remains our model.
We expect some continued pressure there we haven't updated our long term model.
Morning, So.
In the current.
World here.
Seeing a trend back down to the high fifty's as rational and over the longer term the mid fifties remains of our model.
Got it thank you.
The next question comes from Alessandra Vecchi from William Blair. Please go ahead.
Speaker 1: The next question comes from Alessandra Vecchi from William Blair. Please go ahead.
Speaker 7: Hi guys, I echo the congratulations on an amazing year. Just one question on the comments about proprietary doubling. I think it was year over year, maybe it was quarter over quarter. But can you walk us through some of the puts and takes there? Is that really a function of competitive strength? Is it a function of end market strength? And how should we think about the mix of proprietary versus other going forward?
Hey, guys.
Congratulations on an amazing year.
Just one question.
The comments about proprietary doubling I think it was year over year, maybe it was quarter over quarter, but can you walk us through.
Some of the puts and takes there or is that really a function.
Competitive strengths is that a function of end market strength.
And how should we think about the mix of proprietary versus the other going forward.
Yes.
Speaker 4: Yeah, I'll answer the first level in terms of the first order driver of that is ultimately competitiveness because that's what's putting the demand in place that we're seeing there.
Ill answer the first level in terms of the first order driver of that is ultimately competitiveness because that's what's putting the demand in place that we're seeing there.
Speaker 4: And we're seeing very strong demand in that space, and we expect that to continue.
And we're seeing very strong demand in that space and we expect that to continue.
The second order driver of that is the supply response in the sense that.
Our.
Even in that proprietary space, the demand exceeds supply and we'd love to be able to ship more of there, but as we work through the year. Our goal is to maximize our response to that space and Thats what were working to do but the easy way to think about it is first order of competitiveness in this space, that's driving the ultimate demand, but it's also.
Speaker 4: and we'd love to be able to ship more there. But as we work through the year, our goal is to maximize our response to that space and that's what we're working to do. But the easy way to think about it is first order of competitiveness in the space that's driving the ultimate demand. But it's also governed by our supply response, which is continues to be constrained and we have that gap from demand versus supply.
Governed by our supply response, which is continues to be.
Constrained and we have that gap from demand versus supply and just for clarity Alex the comments on near doubling was year on year.
Speaker 3: And just for clarity, Alex, the comment on near doubling was year on year.
Good morning.
Speaker 7: Thank you for that clarification. And then John , maybe one just for you on the comments about obviously higher input cross on the operating side in terms of head count and maybe new hires going forward. How should we be thinking about operating expenses from the Q1 levels given those pressures as well?
Thank you for that clarification, and then John maybe one just for you on the comments about.
Obviously higher input costs on the operating side in terms of head count and maybe new hires going forward.
How should we be thinking about operating expenses from from the Q1 levels.
Given those pressures as well.
Speaker 3: Right. We expect a continued rise in OPEX per quarter as we work through the course of this year.
We expect a.
Continued rise in Opex per quarter as we worked through the course of this year.
Yes.
With that I will pass it on.
Our next question comes from Blayne Curtis from Barclays. Please go ahead.
Speaker 1: Our next question comes from Lane Curtis from Barclays. Please go ahead. Hey, thanks for sharing my question. I just wanted just to follow up on the gross margin. So December came in better. So maybe you could just talk about kind of when the price increases started and then I'm assuming it doesn't just happen overnight. So is there a dynamic here as you work through the year where pricing's still going up and then the input costs are coming in faster as it rolls through? You just talk about the timing of those two variables rolling in.
Thanks for taking my question I just wanted to just to follow up on the gross margin. So December came in better. So maybe you could just talk about kind of when the price increase that started and then assuming it doesn't just happen overnight.
So is there a dynamic here as you work through the year, where pricing is still going up and then the input costs are coming in faster as it rolls through can you just talk about the timing of those two variables rolling in.
Yes, Blayne this is Matt.
Speaker 4: Yeah, Blaine. This is Matt. High level, we started increasing the latest round of price increases late in Q4. So you saw some of that effect, and then you see a full quarter effect of that in Q1, which is important.
High level.
We started increasing the latest round of price increases late in Q4. So you saw some of that effect and then you see a full quarter effect of that in Q1, which is important.
Speaker 4: The second piece is, as John's mentioned a couple times, the increases that we're doing are asynchronous to the increases we're seeing from our suppliers, which creates that lumpiness as you go throughout the year, but we do know and anticipate additional increases from our suppliers as we continue to move forward.
The second piece is as John has mentioned a couple of times.
The increases that we're doing are asynchronous to the increases we're seeing from our suppliers, which creates that lumpiness as you go throughout the year.
But we do know and anticipate additional increases from our suppliers as we continue to move forward. So that's that's one level of it and the other piece. That's important to reiterate is we're a couple of quarters and as a pure play Iot company post divestiture and our model is.
Speaker 4: So that's one level of it. And the other piece that's important to reiterate is
Speaker 4: You know, we're a couple quarters in as a pure play IOT company, post-evestiture, and our model is, you know, a long-term multi-year model.
Our long term multi year model and we're in a very.
Speaker 4: And we're in a very typical market environment right now.
A typical market environment right now so we don't see that as the right time to resetting the long term model that being said.
Speaker 4: So, you know, we don't see that as the right time to be resetting the long-term model. That being said, you know, we do expect to come back closer in line to our gross margin model as we progress throughout the year.
We do expect to come back closer in line to our gross margin model as we progress throughout the year.
Got you and then just on the tax rate. It sounds like you guys are you don't know, but I mean, I guess, it's 30 the rates think about at least for this year.
Speaker 8: Gotcha. And then just on the tax rate, I sounds like you guys, you don't know. But I mean, I guess it's 30, the rates think about, at least for this year.
Yes, Blayne. This is Giovanni yes, 30% is a good rate.
Speaker 5: Yep, blame. This is Giovanni. Yeah, 30% is a good rate estimate for this year. Obviously, with the legislative activity in Washington, we're watching that closely and, you know, absent this this right impact we would be in our normal midteens range.
<unk> estimate for this year, obviously with the legislative activity in Washington, we're watching that closely.
Yes.
Absent this rate impact we would be in our normal mid teens range.
Speaker 8: Okay. I thought prior you were signaling that tax rate would kind of be going up anyway this year, I thought, in kind of like the low 20s. But I guess you're saying now with the tax credit, go to the teens. So was that prior signaling because of the uncertainty on the tax credit, or has something else changed?
Okay I thought prior you were signaling that tax rate would kind of be going up anyway. This year, I thought and kind of like the low twenty's.
But I guess youre, saying now that they track credit goes to the team. So was that prior signaling because of the uncertainty on the tax credit or has something else chunky.
Speaker 3: Yeah, Blaine, no, nothing else has changed. We've just gotten, you know, deep into the year now and refined our estimates, but we did signal this earlier. Now we're, we're, we're providing an update to that. You know, hopefully Washington will eliminate this requirement, but for now, this is the legislation that's in effect. So we have to reflect it this way.
Yes, Blaine no nothing else has changed we've just gotten deep into the year now and refined our estimates, but we did signal. This earlier now we're providing an update to that.
Washington will eliminate this requirement for now this is the legislation that's in effects, though we have to reflect it this way.
Got you.
The next question comes from tore Svanberg from Stifel. Please go ahead.
Speaker 1: The next question comes from Tor Svonberg from Stiefel. Please go ahead.
Speaker 5: Yes, thank you and congratulations on another record quarter here. There's a lot of talk about pricing as it relates to supply chain and your own pricing, but when you think about your hardware and software platform, especially how you're integrating and embedding more security and so on and so forth, isn't it fair to say that you are sort of moving up the values back here and offering more values that are part of the strong growth margin as well?
Yes. Thank you.
Congratulations on another record quarter here.
There's a lot of talk about pricing.
As it relates to supply chain and your own pricing, but.
When you think about your hardware and software platform, especially how you're integrating and embedding more security and so on and so forth.
Isn't it fair to say that.
Are sort of moving up the value stack, Kevin and offering more value. So that's part of the.
The strong gross margin as well.
So the primary drivers that we're seeing right now are definitely.
Speaker 4: So the primary drivers that we're seeing right now are definitely the, you know, we have the mixed effect, we have the price increase effect.
We had the mix. The fact, we have the price increase effect.
Speaker 4: that we talked about and that's what you're seeing here.
We talked about and Thats what.
What youre seeing here.
Speaker 4: That being said, we definitely feel good and are confident about our ability to continue to drive our model and deliver those gross margins moving forward. And yes, we continue to up the, you know, our offerings, whether it's, you know, we mentioned mid, what, 2021 services like our custom part manufacturing service.
Having said.
I definitely feel good and are confident about our ability to continue to driver our model.
And deliver those gross margins moving forward.
Yes, we continue to up.
Our offerings, whether it's we mentioned.
Mid 2021 services like our custom part manufacturing service.
Speaker 4: you know, the ability to update solutions over the air. All these capabilities definitely increase our value to in our customers and the value of our solutions, which gives us the confidence that as we continue to see this acceleration in our space.
The ability to update solutions over the air all of these capabilities definitely increase our value to our customers and the value of our solutions, which gives us the confidence that as we continue to see this acceleration in our space and our acceleration of our trajectory that we can continue to deliver to the model we've committed to.
Speaker 4: and our acceleration of our trajectory that we can continue to deliver to the model we've committed to.
Speaker 4: which just a couple of years ago everyone saw that under immense pressure, we feel good that we can deliver to that model, including the revenue growth and the growth mark.
Which just a couple of years ago, everyone saw that as are under immense pressure. We feel good that we can deliver to that model, including the revenue growth and gross margin.
Speaker 9: Excellent, very good. Thank you for that, Matt. And I'm very intrigued by the BG24 and AMD24 families. This is kind of like the first time I've seen you guys bring AI and machine learning to connectivity platforms. So could you just elaborate a little bit on how important that is? Maybe you can talk a little bit to the uniqueness of it in relation to your competitors right now.
Excellent very good thank you.
And I'm very intrigued by the <unk> 24 to <unk> 24 families. This is kind of like the first time I've seen you guys bring AI and machine learning.
Two connectivity platforms. So could you just elaborate a little bit on how important that is maybe you can talk a little bit to the uniqueness in relation to your competitors right now.
Sure absolutely so.
Speaker 4: Sure, absolutely. So, top level, you know, we have supported and offered machine learning capability on our devices for a while. But what is really unique about this announcement we just made is it has integrated acceleration.
Top level, we have supported and offered machine learning capability on our devices.
Wow.
But what is really unique about this now.
So we just made is it has integrated acceleration.
Speaker 4: on a wireless SSE. And that integrated acceleration allows us to offer that AI machine learning at incredible efficiency for performing that inference at the edge. So specifically, that is what is new to industry, new to the market is a wireless SSE that has that efficiency.
On a wireless Soc and that integrated acceleration.
Laos us to offer that AI and machine learning.
Credible efficiency for performing that inference at the edge. So specifically that is what is new to industry new to the market as a wireless SFC that has that efficiency.
Speaker 4: because of the acceleration for running AI and ML. And in doing so, it allows that to be brought to battery-powered applications.
Because of the acceleration for running AI and ml.
And in doing so it allows that to be brought to battery powered applications.
Speaker 4: And for a lot of our solutions, we are, we live at the ISD Edge, a lot of those are battery powered and a lot of them have use cases that would benefit from AINML.
And for a lot of our solutions. We are we live at the Iot edge a lot of those are battery powered and a lot of them have use cases that would benefit from AI and ml. So we're really excited that we're able to bring that integration that allows our customers to have battery powered applications and take advantage of.
Speaker 4: So, we're really excited that, you know, we're able to bring that integration that allows our customers to have battery-powered applications and take advantage of AI and ML. So, that's what's new about it, and we definitely are seeing a lot of interest from customers where, hey, you know, I could benefit from this, but definitely need the longer battery.
AI ml. So that's what's new about it and we definitely are seeing a lot of interest from customers, where hey, I could benefit from that but definitely need the longer battery life.
Speaker 4: that would be required for the applications we're talking about.
That would be required for the applications, we're talking about.
Sounds great. Thank you so much.
Yes.
Speaker 1: The next question comes from Srini Pajari from SMBC ICO Securities. Please go ahead.
The next question comes from <unk> <unk> from NBC Iqos Securities. Please go ahead.
Speaker 10: Thank you, good morning guys. Another question on pricing, more related to the, I guess, what kind of impact it's having on your growth rate.
Thank you good morning, guys.
Another question on pricing are more related to the I guess, what kind of impact it's having on your growth rates.
Speaker 10: I recall John I think in the last 10-Q that you filed, I think you disclosed about 5% increase in pricing. Maybe you can talk about how broadly pricing increases have already propagated and then you said they're still increasing as we go through the year. How do you see pricing continuing to increase? And then...
I recall, John I think in the last 10-Q that you filed I think you've disclosed about 5% increase in pricing maybe you can talk about.
How broadly pricing increases have already propagated and then you said there is still increasing as we go through the year.
How do you see pricing continuing to increase.
And then.
Speaker 10: i guess you know the other thing maybe for mad is that you know as you raise prices obviously to no secret that you know the way for cost are increasing in the industry so i'm just curious to hear what sort of feedback if any or pushback uh... from your customers uh... you're hearing on this price
I guess the other thing maybe for Matt is that as you raise prices obviously its no secret that.
The wafer costs are increasing in the industry. So I'm, just curious to hear what sort of feedback or Fannie or pushback from your customers. You are hearing on these price increases.
Yes, sure ill tackle the first part of it I mean.
Speaker 3: Yeah, I'll tap on the first part of it. I mean, we implemented broad-based price increases most recently, late in the fourth quarter.
We implemented broad based price increases most recently late in the fourth quarter.
Speaker 3: We did have some that had occurred earlier in fiscal 21, our goal with this latest round of price increases was to really try and get in front of this and deal with it in a holistic manner that's durable. And that's the objective we're trying to get to, even acknowledging that some of that is a head of, some of the cost increases that are yet forthcoming.
We did have some that had occurred earlier in fiscal 'twenty. One our goal with this latest round of price increases was to really try and get in front of this and deal with it in a holistic manner. That's durable and that's that's the objective we're trying to get to even acknowledging that some of that is ahead of some of the <unk>.
Cost increases that are forthcoming.
Speaker 3: So that's where things stand today. Of course, you know, we'll have to keep an eye on it and see what may be further coming on the supply chain side, but at this point, we're holding with what we have implemented and we'll see how that progresses.
So thats, the where things stand today of course, we will have to keep an eye on it and see what maybe further coming on the supply chain side, but at this point we're.
Holding with what we have implemented and we will see how that progresses.
And on the question about customer response pushed back to those increases.
Speaker 4: And on the question about customer response, pushback to those increases.
Speaker 4: The way to think about it is, this is our 100% focus in our market. And we're taking a long-term approach to the way we're engaging customers with this. And what I mean by that is, we're doing this as constructively as possible.
The way to think about it as this is our 100% focus in our market and we're taking a long term approach to the way we are engaging customers with us and what I mean by that is we're doing this as constructively as possible and let's be clear there is no customers as I love price increases, but we are.
Speaker 4: And let's be clear, there's no customers, there's not love price increases, but we're trying to do it as constructively by giving a heads up that are happening, explaining the logic, working with them on the ramp and really doing it in a collaborative way because we see these customers as our long-term partners and not a short-term opportunity. So with that approach, I think we're getting...
We're trying to do it as constructively by giving a heads up that is happening explaining the logic.
Working with them on the ramps and really doing it in a collaborative way because we see these customers as our long term partners and not a short term opportunity. So with that approach I think we're getting there.
Speaker 4: frankly, it's a really strong response from our customers in the way we're handling this.
Frankly, a really strong response from our customers and the way we are handling this and we're appreciative of that and the partnership but we.
Speaker 3: And we're appreciative of that and the partnership, but we need to continue to be careful and approach it constructively with them. Because as I said, we see this as a long term flag, not a short term one. And just let me add one more point to what magic said, Trini. I mean, clearly, we just zoom out. The goal here is to activate more supply. That's what this is ultimately about. Securing supply, activating more supply to deliver on what the customers need. That's the check.
We need to continue to be careful and appropriate constructively with them because as I said, we see this as a long term.
<unk> not a short term and just let me add one more point to what Matt just said training I mean, clearly if we just assume all the goal here is to activate more supply. That's what this is ultimately about securing supply activating more supply to deliver on what customers need us to check point going forward.
Speaker 10: Thanks, John . On the topic of supply, you did allude to, I guess, your expectation that supply will continue to improve through the year. Could you give us some, I guess, your goals or targets for your own balance sheet inventory? Where would you see that going by end of this year? And then also, if you can comment on channel inventory, I think you said it's about 37 days. Where do you see that? Where do you think that should be in terms of normal range? Thank you.
Thanks, Sean on the topic of supply you did a lead to I guess your expectation that supply will continue to improve through the year.
Could you give us some I.
I guess you're.
Goals or targets for your own balance sheet inventory, where would you see.
See that going by end of this year and then also if you can comment on channel inventory I think you said, it's about 37 days you know what do you see that what do you think that should be in terms of normal range.
Thank you.
Speaker 3: Yeah, Shraini, you bet. We would ideally target an inventory that is roughly double what we're currently carrying. How much progress we can make toward that goal by the end of this year? We'll have to see it's tight. I think it's fair to say we're likely to not fully achieve that, but our goal is to make progress toward that.
Yes training.
You bet.
We would ideally target in inventory that is roughly double what we're currently carrying.
Progress, we can make toward that goal by the end of this year, we'll have to we'll have to see it's tight.
I think it's fair to say, we are likely to not fully achieve that but our goal is to make progress toward that.
Speaker 3: And the channel inventory side, our goal is to carry 45 to 55 days of inventory. We're currently tracking 37 days.
And the channel inventory side. Our goal is to carry 45 to 55 days of inventory were currently tracking 37 days.
Speaker 3: I think we will improve that here in the first quarter and strive to keep that level through the year. While I'm on the point, we did allude to this in the prepared comments, but we do see a greater possibility for unit output materially increasing toward the end of this year. So we do expect the middle part of the year in particular to be under particular constraint, and we're continuing to push very hard to improve that.
I think we will improve that here in the first quarter and strive to keep that level through the year.
While I'm on the point, we did allude to this in the prepared comments, but we do see a greater possibility for unit output.
Materially increasing towards the end of this year. So we do expect the middle part of the year in particular to be under particular constraint and we're continuing to push very hard to improve that.
Got it thanks a lot.
Speaker 1: Our next question comes from Matt Ramsey from Cowan. Please go ahead.
Our next question comes from Matt Ramsay from Cowen. Please go ahead.
Speaker 11: I, this is Josh Bulkhalter on behalf of Matt. Thanks for taking my question and congrats with the results. I wanted to follow up on the previous question a bit. And just given what we're seeing from your peers and how constrained overall capacity is, I guess how were you able to secure the units and wafers to grow at the rates you did in the second half and how should we think about that disability into the remainder of the year?
Hi, This is Josh buchalter on behalf of Matt. Thanks for taking my question and congrats on the results.
I wanted to follow up on the previous question a bit.
And just given what we're seeing from your peers and how constrained overall capacity is I guess, how are you able to secure the unit in wafers to grow at the rates that you did in the second half and how should we think about that visibility into.
The remainder of the year.
Yes, just the first first point as we did.
Speaker 3: Yeah, I just the first first point is, you know, we did.
Go into our inventory balance to deliver on this and that.
Speaker 3: go into our inventory ballots to deliver on this and that certainly has been a source of unit.
That certainly has been a source of units.
Speaker 3: But I also want to acknowledge that our operations team and Matt and myself have been working very hard with the supply chain to, you know, push for more output for for us. And that's had a positive effect as well.
I also want to acknowledge that our operations team, Bob and myself have been working very hard with the supply chain to to push for more output for us and that's had a positive effect as well, yes and no.
Speaker 4: Yeah, and the only thing I'd add to that is, you know, we've had a constructive and positive relationship with our suppliers for a long time. And as part of what we do, they have more demand than they can respond to.
Only thing I'd add to that is.
We've had a constructive and positive relationship with our suppliers for a long time and it's part of what we do they have more demand than they can respond.
Responsive so part of our value proposition is the constructive way that we work together, but also making sure that they have visibility into our growth potential and our market positioning because when they make their decisions. They are betting on us or whoever they select as well and I think we've been able to do a good job of that and.
Speaker 4: So part of our value proposition is the constructive way that we work together, but also making sure that they have visibility into our growth potential and our market position.
Speaker 4: because when they make their decisions, they're betting on us or whoever they select as well. And I think we've been able to do a good job at that and I think our suppliers are betting on us as well. So as we said earlier, we continue to work towards increasing our output every quarter and that's our focus.
I think our suppliers are betting on us as well so as we said earlier, we continue to work towards.
Increasing our output every quarter and that's our focus.
Thank you.
Speaker 11: Thank you. And then your IoT business has always done well with the smaller, more fragmented customer base, I guess, in part because you offer more flexible modules. Given some of your peers who are also constrained to have to focus on many other auto customers, are you seeing any changes in the competitive dynamic? Is this allowing you to pick up, share with incremental customers, or am I way off base here? Thank you.
Then your Iot business has always done well with the smaller more fragmented customer base I guess in part because you offer.
Flexible modules.
Even some of your peers, who are also constrained.
<unk> on many other auto customers.
Are you seeing any changes in the competitive dynamic is just allowing you to pick up share it with incremental customers or am I way off base here. Thank you.
So yes, there is definitely a large amount of customers out there in the industry, who don't have the supply they need and would love to.
Speaker 4: Definitely a large amount of customers out there in the industry who don't have the supply they need and would love to, you know, find incremental supply with us or other suppliers.
Find incremental supply with us or other suppliers.
Speaker 4: Our priority is to, you know, take care of the customers that we have, where the demand there is exceeding our ability to respond from a supply perspective.
Our priority is to take care of the customers that we have.
The demand there is exceeding our ability to respond from a supply perspective.
Speaker 4: But that that being said John alluded to this through this environment. We have been able to drive You know the over 40% year on year in design wins, which is our you know strong record for us our funnel is increased to 14 billion
That being said John alluded to this through this environment, we have been able to drive the over 40% year on year and design winds, which is R.
Strong record for us our funnel has increased to $14 billion and we were also very happy that in this environment, we've been able to increase our customer count in long tail as well. So I think it's a balancing act, but we've been able to make good progress in this environment, but the clear.
Speaker 4: And we were also very happy that in this environment, we've been able to increase our customer account and long tail as well. So I think it's a balancing act, but we've been able to make this progress in this environment. But the clear priority is to make sure we're taking care of the existing customers and not do conquest business at their expense. So that's the balancing act. I think we're striking pretty well right now. So that's the balancing act.
It is to make sure we're taking care of existing customers and not do conference conquest business at their expense. So that's the balancing act I think we're striking pretty well right now.
That's helpful. Thank you and congrats again.
Thank you.
This concludes our question and answer session I will now hand, the call back to Austin team.
Speaker 1: This concludes our question at the answer session. I will now hand the call back to Austin Dean.
Yes.
Thanks, Keith and thank you for joining the Silicon Labs Q4 earnings call you can register for our analyst day event under the events and presentations section of our website at <unk> Dot com forward slash investors.
Further information there as well operator, you can now conclude this call. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker 12: ?? ?? ?? ?? ?? ?? ??
Yes.
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