Q4 2022 Viavi Solutions Inc Earnings Call
Good afternoon, My name is David and I'll be your conference operator today at this time I'd like to welcome everyone to the Yagi solutions for Q2022 earnings call. Today's conference is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
If you'd like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one once again. Thank you Sabra <unk> head of Investor Relations you May begin your conference.
Thank you, Dave, but when it come to reality solutions fourth quarter and fiscal year 2022 earnings Scott.
My name is talking about head up Investor relations and corporate of Feeney joining.
Joining me on today's call are Oleg hiking, president and CEO and Henk Derksen <unk> CFO .
Please note. This call will include forward looking statements about the company's financial performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations and estimations.
We encourage you to review our most recent annual report and SEC filings, particularly the risk factors described in those filings the forward looking statements, including guidance. We provide during this call are valid only as of today.
We undertake no obligation to update these statements.
Please also note that unless we state otherwise all results except revenue are non-GAAP .
We reconcile these non-GAAP results indoor GAAP preliminary financial and discussed that you spend less and limitations in today's earnings release.
The release, plus our supplemental earnings slides, which include historical financial tables are available on <unk> website.
Finally, we are recording today's call and we'll make that according available by 430 P. M Pacific time this evening on our website.
Now I'd like to turn the call over to Hank. Thank you Sagar fiscal Q4, 2022 set an all time that I got for you of 11 O N E.
Fourth quarter record for non-GAAP profitability.
Fourth quarter revenue came in at $335 3 million up seven 8% year over year exceeding our guidance range of $315 million to $29 million.
It was primarily driven by improved demand for our core OSP and C D sensing products.
The average operating profit margin at 21, 3% was within our guidance range of 21% to 22%.
Improving 50 basis points year over year.
E. P. S. At 24 cents met the high end of our 22 to 24 cents guidance range and increased nine 1% from 22 cents in the prior year.
A combination of strong operating performance and the impact of an improving capital structure.
The wholly diluted shares outstanding at the end of fiscal Q4, 'twenty 'twenty. Two of 231 3 million shares decreased from 241 9 million shares in the year ago period.
And the result of refinancing our convertible debt, while continuing to execute on the share repurchase program during fiscal 2022.
The outstanding dilution, resulting from the main linked convertible notes was one 6 million shares during the fourth quarter compared to 10 4 million shares.
Go.
Moving on to our reported Q4 results by business segment, starting with NSE.
N S E quarterly revenue at $246 2 million up four 1% year over year was within our guidance range of $240 million to $250 million.
A new quarterly record in this business segment.
Within N S E N E increased four 5% from a year ago to $222 $2 million, reflecting continued strong demand for our wireless and optical lab and production products.
S revenue at $24 million was flat year over year, albeit at an improved product mix.
Ellis E gross profit margin at 64, 9% increased 150 basis points year over year.
With an S E N E close profit margin at 64, 2% increased 110 basis points from last year.
The result of leverage on golf and favorable product mix.
S E gross profit margin at 71, 3% increased 580 basis points year over year.
N S East operating profit margin at 15, 1% was slightly below our guidance range.
Albeit flat year over year.
Higher variable sales commission costs on strong bookings performance during the quarter was offset by gross profit margin expansion.
Now turning to OSP fourth quarter revenue at $89 $1 million was up 19, 8% from a year ago and improve sequentially by five 2%.
Revenue exceeded the guidance range of $75 million to $79 million due to better than expected demand for anti counterfeiting products during the quarter.
Gross profit margin at 55, 9% decreased 160 basis points year over year, driven primarily by raw material costs.
Startup costs in our new Arizona facility.
Operating profit margin at 38, 6% was within our guidance range of 38 five to 39, 5%.
Although down 20 basis points year over year, a result of the aforementioned close margin sectors offset by disciplined Opex management.
Moving to our.
Fiscal 2022 full year performance.
Despite the COVID-19 pandemic related supply chain issues.
Inflationary pressures Fiat he was able to mitigate much of the impact resulting in a strong finish to a record of $1 $3 million.
Up seven 8% from fiscal 2021.
And as he reached a record revenue of 949 1 billion up 13, 3% year over year, well within the range of our long term goal.
OSP.
$143 $3 million, so a modest decline of four 9% in revenue compared to record levels in 2021, but still exceeded the high end of our 2022 goal provided in 2019.
Via these full year 2022 operating profit margin at 22, 2% expanded 110 basis points and exceeded the high end of our goal of 21% by 120 basis points.
Within our <unk> segment operating profit margins expanded 460 basis points from 11% in 2021 to 15, 6% in 2022 due to leverage on revenue growth combined with disciplined Opex management within.
OSP segment operating profit margins reduced for me exactly level of 44, 7% in 2021% to 45% in 2022, well result of lower revenues in combination with higher raw material costs.
Full year 2022, EPS at 95 says increased 14, 5% or 12 cents from 83 cents in 2021.
And there's a head of the high end of our goal of 94 2022.
<unk> operating performance and an improved tax rate.
Now turning to the balance sheet at the end of fiscal Q4 2022.
The ending balance of our total cash and short term investments was $565 million down.
Now one of the $39 million.
Compared to a year ago, mainly result of refinancing 57% of our convertible debt with longer notes at a favorable rate Julia.
During 2022, we generated 178 million in operating cash flow and deployed 76 million or five 6% of revenues towards capital expenditures, resulting into $106 million and free cash flow generation.
We were able to buy back $45 $5 million in common shares under the 2019 repurchase program and invested $8 $3 million in M&A activity.
Looking at just the fourth quarter operating cash flow was tall at $73 6 million, an increase of $11 million compared to $62 6 billion a year ago period.
The increase is a result of higher operating income coupled with benefits from supply chain investments made early in the year.
In addition, we invested $19 $1 million in capital expenditures during the quarter compared to $25 $4 million in the prior year as we progress towards completion of our Arizona production facility.
As you May recall, we had targeted the reduction of our 2020 fleet in 2024 outstanding available loads to continue to improve our capital structure.
During the first three quarters of 2022, we redeemed approximately $376 million of these notes from the original 685 million in principal value.
In the fourth quarter, we completed transactions to extinguish the additional $22 $4 million in principle.
Of convertible notes.
At a total re acquisition three acquisition cost of $27 $2 million, bringing the principal value of our combined convertible notes outstanding.
And $92 million at the end of fiscal 2022 or 43% of the original principal value.
During fiscal Q4, we repurchased two 1 million shares of common stock for $28 $9 million under the 2019 the purchase plan.
Meaning authorization under the 2019 repurchase plan is $67 million.
Now onto our guidance.
We expect the fiscal first quarter 2020 free revenue to be approximately $324 million plus.
Plus or minus $7 million.
Operating profit margin is expected to be 21, 4% plus or minus 70 basis points and EPS to be in the range of 22 to 24 cents.
We expect and as E revenue to be approximately $236 million.
Plus or minus $5 million with operating profit margin at 14, 5% plus or minus 50 basis points.
OSP revenue is expected to be approximately $88 million, plus or minus $2 million with operating profit margin at 40% plus or minus on those basis points.
Our tax rate is expected to be approximately 16%, 17% and we expect other income and expenses to reflect a net expense of approximately $6 million.
Check out is approximately 232 million shares based on current stock price levels and includes the dilutive impact of approximately $2 5 million of the remaining convertible notes.
With that I will turn the call over to Alec.
Thank you Henk.
I am pleased with the V. Avi <unk> performance during the fiscal Q4 2022, resulting in a record quarterly revenue and profitability.
We have also delivered an all time record revenue and non-GAAP profitability for the entire fiscal year 2022. In addition, we have also exceeded the high end of our 2022 profitability goals set during the 20th 19 analyst day, despite significant headwinds from Covid and inflationary pressures.
The <unk> East segment achieved the newer revenue high in fiscal 2022 with both fiber and wireless growing double digits year over year benefiting from strong investments in both service providers and hyperscale or looking to upgrade their networks. Despite.
Despite the supply chain headwinds and inflationary pressures, we executed well on our strategy of growing revenue profitability and gaining market share.
In the fiscal Q4 fiber revenue growth was driven by fiber to the home deployment 400 gig in network and data center upgrades and accelerating market adoption of 800, the geeky and PCI Express Gen five technologies.
The fire did your wireless demand also continued to be strong driven by investments in Oran and front haul wireline network expansion.
Fiscal Q4 also show very strong any bookings, resulting in a seasonally stronger Q1 backlog and demand visibility.
The SCE business revenue was flat year over year for fiscal Q4, 2022 that said the annual SCE revenue grew 13% plus year on year, increasing our confidence in the revamp to datacenter and assurance strategy and product.
We expect continued strong growth in our assay business during fiscal 2023 now.
Now turning to OSP.
<unk> business.
<unk> delivered better than expected revenue and profitability with revenues exceeding our guidance range.
Our fiscal Q for anti counterfeiting products revenue was up 27% year on year, driven by a combination of global fiscal stimulus and inventory replenishment. Looking ahead. We expect Q1 2023 revenue to be roughly flat to Q4 with lower anti counterfeiting demand being offset by stronger three D sensing.
Yeah.
To recap.
In fiscal year 2022, we successfully executed on the obvious growth strategy that we have outlined during the September 2019 analyst day and have exceeded our non-GAAP profitability, an ESP targets.
The major highlights include NSE business segment, achieving 13% growth in revenue and 60% growth in non-GAAP operating margins for fiscal year 'twenty 'twenty. Two we're proud to have successfully executed despite the global pandemic supply chain headwinds and inflationary pressures the OSP business exceeded our three.
Year strategic goals for both revenue and profit and lastly, we have successfully we revamped our product portfolio to leverage secular trends and expand our Tam positioning the abbvie for continued revenue growth increased scale and profitability and market share gains as.
As we kick off our next three year strategic plan, we invite you to join US at the Analyst day event in Boston on September 13th we will outline our strategy and goals for the next three year cycle we.
We hope to see you. There we will also be there will also be a live webcast of our presentation. We will provide additional information regarding the event over the next 30 days in conclusion I would like to thank my via the avid team for another quarter and fiscal year of strong performance and express my appreciation to our supply chain partners customer.
And shareholders for their support.
I will now turn the call over to saga.
Thank you Alex.
Let us begin the question and answer session.
Ask everyone to limit discussion to one question and one follow up.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster. We will take our first question from Alex Henderson with Needham and company. Your line is open.
Oh, great. Thanks.
Nice quarter, guys I was hoping you could talk a little bit about the split between the three D sensing and the counterfeiting products in the quarter My assumption is that.
Trading sensing is around $15 million or so in the quarter and that the upside was heavily skewed to that 20% kind of jumped in and the security products I'm, assuming when you look out to the right.
The 22 to 23 window.
That we revert back towards that centers standardized $60 million a quarter.
Baseline and OSP is first of all is that correct.
Second question is really around the currency exposure and the mix of business internationally can you talk about.
What's going on in your EMEA business, which was down substantially in <unk>.
Obviously made that up with very strong domestic growth.
Okay. You asked three questions in one okay. So lets diligence you want that.
Sure. So your first question, what's the mix between police I'm, saying and what we call core OSP I think your numbers up pretty close actually slightly better on <unk> sensing and $15 million for the fourth quarter. So you're pretty close and then I think your follow up question was on the outlook.
Look I think the I guess it firsthand on OSB I mean, if we were going to see some pullback in anti counterfeiting demand, but we also have a stronger demand on three D. Sensing. So net net it's kind of ends up being a wash and the remainder of the business staying fairly steady.
Quarter over quarter.
And in terms of the <unk>.
Europe I you know the Europe business I mean, it was it was not that.
Clearly summer is a little bit season, really weaker because a lot of vacations, but we.
We continue to see Europe being healthy although the challenge in Europe has been more.
The European currency has devalued against the dollar so in our AR in the relative terms our products have gotten more expensive, but we.
We continue to see pretty strong demand from European dams and from.
From service providers, who are now in a multiyear many of whom are in a multiyear.
Fiber deployments to the home and that business continue to be pretty robust I mean, clearly you know we all are reading the same news and.
Europe .
Expecting some headwinds and we are well prepared for that but at this point in time, our European businesses.
Continues to be fairly robust and I guess, it's really driven more by a multiyear.
Investment cycles that are just ongoing it's not really a spot purchases or anything like that.
So I'd tell you were reading the numbers correctly on your slide deck. It was down 22% is that mostly currency related.
I guess it comes down to where we ship the anti counterfeiting.
Pigments and whether they go to Europe or some other geography. So yeah. I mean, so yeah I think on the NSE side I don't think we have that much variability.
And.
So there's a little bit more project related Alex on the NSE side in our wireless and our lab business not so much.
OSB issue and that was a little bit of FX translation.
The year over year down that number was about $5 million for the quarter purely FX translation on a weaker or stronger us dollar.
I'll cede the floor. Thank you for letting me ask the questions.
Sure you're welcome.
Okay next we'll go do it tends to have a go with Northland capital. Your line is open.
Right.
Go ahead, Tim Your line is open.
Yeah, sorry about that came a little quicker than I might have thought question on the.
The network enablement side.
Couple of things I'll ask them, both at once versus a follow up which as you mentioned.
Our strong bookings and backlog and any maybe even unseasonably strong which would be very much in line with everything we've been seeing across the certainly the fiber ecosystem, maybe five G as well and yet you're guiding revenues down sequentially can I can you reconcile that and looking at the year fiscal 'twenty two.
You grew with any revenue, 13% now you had some very easy comps in the first half.
Grew at like a mid single digits, 6% or so in the second what's a reasonable growth expectation for for any segment for fiscal 'twenty three.
Well you.
We generally don't give our annual guidance.
I think you know.
All the worries around the recession aside it should be a pretty healthy year.
I would say probably you know maybe even seeing I'd say mid single digits.
However, I think given that you know.
And I don't I don't want to jump ahead, I mean, right now we are not seeing it yet, but let's assume there is a a recession and pulled back.
Say, maybe slightly down or even up to a flat year on year, depending on our product line.
So I think at this point, it's probably too premature to talk about fiscal 'twenty, three or even more calendar 'twenty three until we see how the.
We exit this calendar year, and whether or not a lot of the momentum we're seeing in Europe , North America, and Asia will hold up or to customers pulled back on their both R&D budgets as well as their deployment.
Our pace.
And on the bookings strength contrasted with the sequential revenue decline or anything to talk about there.
While the bookings remember a lot of our bookings is as our.
Book ship within a quarter and the.
Generally our September quarter is a seasonally weaker quarter in any but because we had such very strong bookings, it's coming in to be pretty close I mean to.
The June quarter, and if you really adjusted last year, we had a one big order that was shipped to them.
And then to a north American customer if you adjust for that it's actually coming in a strong quarter on the run rate business.
With that one one off order excluded so we actually on the seasonality wise because it's it's really a rule of thumb or June and December quarter is the strongest quarter for IC business and September and March quarter are the seasonally weaker quarters.
Okay. Thanks.
Next we'll go to Cemig Chatterji with J P. Morgan Your line is open.
Hi, This is angela that Andre stomach cavity.
I know you've mentioned you haven't really seen any bandwidth back from the recession, but are you seeing.
Any of your customers.
Aside from service providers and Hyperscale.
Including I mean aside from them.
No delay any projects or rethink some of their investments and other baidu technologies.
Industrial and automotive applications, our enterprise talent private <unk>, and then I have a follow up.
Yeah. So I mean, we don't really do much with the automotive or anything like that.
Most of the customers aside from service providers are in the wireless and <unk>.
Fiber optic telecommunications space.
I mean to answer your question that we haven't seen.
The decline per se it continues to be pretty strong, but let's be realistic I think.
The slowdown hasn't really trickle down from the top to the engineering groups right now they have a budget for the year and their spending is happily.
But also what I've seen is even with a mild recession companies that like get hit.
By a slow downs, you don't really see they may see some reduction in production testing.
Orders, but they generally don't slow down the R&D orders because the.
Anything they tried to accelerate product development during the down cycle. So.
I think.
I would say theres really the pullback recession, a couple of quarters.
That business May just flatten out maybe it's just because we're down slightly on the 11 production space. The service provider I mean are there the programs are pretty much locked and loaded. The question would be are they gonna take delivery in the quarter or are they spread them out over a couple of quarters. So they may defer some of the deliveries in <unk>.
Things like that but given a lot of the kind of pent up demand in there.
Clearly there are a lot of projects.
Underway.
We think the order momentum will continue to be relatively stronger as compared to either a recessions.
Got it and then for my follow up on.
On the Opex line generally been very disciplined about opex.
But there was a small bump up in this quarter and so I was wondering if that was a reflection of the current inflationary environment.
Could be the new norm of Opex level in the next few quarters, just given the current environment that we're in.
Well I'll start and I'll, let henk.
Our opex continues to be treated disciplined I think the bump up came in it was.
Really a function of our.
Commissions and bonuses.
Paid out because we kind of work on a semiannual cycles and so that was up for the first half or I think the bookings and the performance has been above the annual operating plan and.
The only other that we are making adjustment in the salaries, but nowhere near by the inflation level I think were probably targeting somewhere in a 4%.
Pay adjustment and you know that hits, mainly a north American Opex, and then Theres, obviously adjustments in other regions where in some cases.
The higher AR.
Our salary adjustments, we're making have been more than offset by the.
Currency.
Devaluations VW dollar so, but I would say the biggest impact on opex increase would be.
In North America, where we have roughly doing about 4%.
Increase this year.
Yes, there may be a little bit of additional <unk> that sort of hold into opex, it's coming back with travelling travel is coming back a little bit deflationary impacts at all I spoke about but think of opex going forwards not quite at the 41, 2% that you saw in the fourth quarter, but below that 41%.
Between 45% or 41% I think that's the way to think about it going forward.
Okay.
Great. Thank you.
Youre welcome.
Next we'll go to Mehdi Hosseini with Susquehanna. Your line is now open.
Yes, thanks for taking my question.
The problem is to limit myself to two oh like it seems like based on your.
Coming through in <unk> B.
The three D sensing should see a meaningful year over year growth.
On September 22 versus September 21.
Fair assumption.
Well actually no not really because if I look at the last year. If you remember we had a very strong three D sensing demand and then our customer realize they didn't have enough chipsets to build the units because many of the other suppliers fell short so as a result, there was a big inventory rebalancing.
In the December quarter, and we saw our orders slashed in December and then they recovered.
In the.
The March quarter, I think this year, it's a bit more of a linear rise so I think.
The demand the year on year is roughly.
At the same I mean, if you in fact, I mean, you may have a little bit better volume because of the deeper penetration of our three D sensing into our multiple other <unk>.
That forms like handheld and the laptop.
Laptops and things like that.
Offsetting some of the ASP erosion.
So overall, we think it's going to be a pretty robust kind of flattish year on year.
A little bit stronger than the June quarter, but if you look at September and September fairly it's.
They are fairly similar to a year ago, where we are seeing decrease is the anti counterfeiting pulling back.
From a year ago levels, where we hit a close to a $100 million last year and it was really so I'd say, probably youre seeing about $10 million pull back or anti counterfeiting predominantly.
Sure.
Now on the remaining roughly the same.
Continuing with <unk> it seems like we are.
Another is strong.
Hum.
<unk> cycled through the high end application.
Last year.
Overall.
The revenues were down five but given the strength of the high end smartphone another.
So it could come in could you actually be able to have the OSP revenue in this fiscal year slot swap or should we assume that is going to trend more of a flat to down.
Well I.
I remember the I think it's flat is more accurate because I mean I have different people asked me, it's like well R&D.
Mobile phone sale is going to be down the share is that while we're not really seeing.
A reduction in volume, but we cannot comment on number of phones. Because you also now have greater levels of penetration. So instead of just one sales or even have two filters perform because you have more of these higher end phones with the world facing cameras and things like that so.
I am Bridget judging from the mix.
We think adjusted for ASP erosion, roughly flattish flat revenue this quarter.
The new product launch is very strong and there is a strong demand we will most likely see that demand in the December quarter.
Because remember as I keep pointing out to people. Our lead time is two weeks. So if a customer really wants to increase the volume demand.
We can deliver we can.
Turn it on and we're within a very short period of time.
Okay.
Speaking of lead time.
I'm under assumption that there's no more supply chain disruption components are available.
For you in the seed business unit is that fair assumption.
I'd say, it's a fair assumption for probably 98% of the devices I think is still the area you still have some.
Challenges I would not I would say less of a supply, but if you wanted to get a.
Additional spot market.
Deliveries, it's really.
PGA is still the only remaining.
The thing that you need to watch carefully pretty much everything else is I've been telling you guys for a year by summer, we're really not seeing any thing and if anything now going into this quarter, we're seeing lead times come a pulling in much.
Quicker so what used to be let's say 18 months. It becomes 12 months six months and now you can't even get it on the spot market all of a sudden.
Okay.
If I may just a quick follow up to this.
A few quarters ago you add.
Actually lift.
Millions of.
Does the revenue on the table because of the component shortages you have been able to.
I have a pretty robust revenue, so well be using your own.
Guide should we assume that you were able to.
Recapture dues.
Revenues that you left on the table.
Is that coming in the second half of the year.
Well now we've pretty much share recapture but remember when we answered it the revenue that slipped out it didn't it slips out really by maybe a matter of weeks. So you recapture at the beginning of the first month and it was always like a sub $10 million five up to $5 million I think at this point, we're not really at say, leaving anything on the table.
Okay alright, thank you.
Hum.
Next we'll go to meta Marshall with Morgan Stanley . Your line is open.
Great. Thanks, a couple of questions for me, maybe just on the anti counterfeiting and strength.
Even as its kind of pull back from last year, It's probably remains stronger than you guys were thinking and I know that it's tough to get full visibility there, but do you like is that inventory building as that reprints driven is there still stimulus programs kind of internationally that we should be thinking of or.
I guess I'm, just trying to get a sense of like what do you think is kind of a baseline run rate level of that business. At this point and then I have a follow up.
Yes, I think the baseline for that business is not I would say.
<unk> $58 million to $60 million and I think we are probably two to three quarters away from really everybody getting back to their reasonable levels of inventories that they carry there is still some countries are further away from getting back to their normalized inventories others are almost there.
And I would say like if I compare a year on year, we have.
We have a lot to say, we had a lopsided delivery for a major customer last year more came in in March and less they pulled in from the June this.
This year, it's really been more back to the traditional demand March and June . So we had a pretty good I mean, just as we expected seasonally June quarter.
September quarter is usually a bit.
Lasse.
But it's not materially less but then increase in the three D sensing more or less offsets that so but I continue to see the.
Anti counterfeiting I think now entering more of a steady state I mean, a lot of these <unk> patients that we saw with Covid and stimulus and all that it's kind of been subsiding and now it's moving back towards traditional <unk>.
Reprints.
Release of the new notes and things like that it's it's the last of the stimulus driven it's more kind of bay.
Basically business driven but the reason, we're saying and now it's at the higher level Theres, just fundamentally way more notes out there.
In the world and and to the extent recession is coming.
No.
We've seen different countries announcing plans to increase level of liquidity in their economy.
But I think nobody is doing anything crazy like dropping trillions of dollars from helicopters.
We don't see anything like that on the horizon, it's more of a traditional demand profile.
Got it that's helpful. And then maybe you know you spoke to the NSE strength this quarter or kind of be more wireless driven just any commentary about cable or just what you're seeing from them.
Particularly after a pretty strong last couple of years.
Well I would say really the two things that really driving is fiber and infrastructure.
Infrastructure wireless.
We are seeing.
We have several major customers and they kind of take their big deliveries in March quarter June quarter September quarter guide kind of things like that and then there is all the service providers. What we are seeing aside from this kind of like our big three or four customers taking major.
<unk> annually is we're seeing what's even more encouraging to me is.
Broadening of the customers and its combination of service providers establishing compliance.
<unk> as they try to drive more Oran adoption rate and.
Doing more of the front haul.
Build out and.
A lot of these new entries.
And in the opening of our equity access network like the likes of <unk> and some of these other players like rakuten or dish network's getting into the space cable companies getting into wireless they're all buying these wireless equipment. So they can emulate wireless network as they develop product. So we are.
Seeing a significant broadening of the wireless customer base. So maybe they will not buy tens of millions of dollars of equipment, but thereby millions of dollars of equipment.
So that's really driving the wireless and on fiber.
Two big drivers are the.
Building out a fiber to the home there isn't really early stages.
We now have multiple countries.
Launching a multi year initiatives to connect most of their homes.
To fiber.
With the UK kind of leading the way and I will now Theres, Italy, and Germany and of course, a lot of activity in the U S and now we are seeing.
<unk> type things happening in other European countries and in Asia, and so that's really the whole fiber to the home is really driving a lot of our fiber field instrumentation and the <unk>.
Upgrades to the wireless networks and the year.
Telecom networks, you know the front haul the fiber.
Just.
Deeper fiber penetration into the network is driving a lot of the.
Modules.
Customers and they are buying a lot of test equipment for production and development and then of course.
There is this whole migration to 408 hundred gig.
There is.
Driving high end fiber equivalent so I mean between fiber and wireless it's truly has been a <unk>.
Great momentum overall.
Perfect. Thanks.
Mhm.
Okay.
That concludes today's question and answer session I'll now turn the call back over to saga for any additional or closing remarks.
Thank you David This concludes our earnings call for today.
Hey, everyone.
This concludes today's conference call you may now disconnect.
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