Q1 2023 Analog Devices Inc Earnings Call
The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.
[music].
Okay.
Good morning, and welcome to the analog devices first quarter fiscal year 2023 earnings conference call, which is being audio webcast via telephone and over the web I'd like to now introduce your host for today's call Mr. Michael Lucarelli, Vice President of inverse.
Your relations and S. P N day, Sir the floor is yours.
Thank you Judy and good morning, everybody. Thanks for joining our first quarter fiscal 'twenty three conference call.
On the call today are adi's, CEO and share erosion Adi's CFO shock Mahindra Vishal.
Anyone who missed the release you define it.
Any financial schedules at Investor analog Dot com.
The disclosures.
Information, we're about to discuss includes forward looking statements, which are subject to certain risks and uncertain.
As further described in our earnings release inter periodic reports and other materials filed with SEC.
Actual results could differ materially from the forward looking information.
They must be flatter applications only of the date of this call.
We undertake no obligation to update these statements except as required by law.
Our comments today will also include non-GAAP financial measures, which exclude special items.
When comparing our results to our historical performance special items are also excluded from prior periods reconciliations of these non-GAAP measures. The most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's release and with that I'll turn it over to Adi's CEO and chair visit road.
Thanks, very much Mike and good morning to everyone well I'm very pleased to share that ATI continue to execute exceptionally well.
In the first quarter of fiscal 'twenty three despite continued macroeconomic uncertainty.
Revenue was 3.25 billion up 21% year over year strength was broad based with all <unk> markets.
<unk> digits.
Gross and operating margins were 74% and 51%, respectively and adjusted EPS achieved another record at $2 75.
Our continued success is driven by a relentless focus on customer collaboration.
A growing demand for our innovative technologies and strong operational execution.
We play a long game and are excited about what the future holds for us.
To ensure that we capture the opportunity ahead with.
We've been steadily increasing investments in R&D.
Factoring capabilities and partnerships that deepened our value to our customers now and over the long term.
For example in R&D, we've invested $1 $7 billion over the trailing 12 months to strengthen our core franchises.
And capture market opportunities presented by secular growth drivers.
Over the same period, we've invested $760 million in capex to enhance the resiliency of our internal semiconductor manufacturing operations.
These investments not only increase our operational resiliency.
But also modernize our fabs to better address our sustainability ambitions.
As mentioned in our press release, our industrial and automotive businesses remained strong as we gained market share.
So this morning.
Wanted to focus specifically on our industrial business, which continues to grow significantly despite the macroeconomic backdrop.
No from a big picture perspective, the industrial market is the bedrock of Adi.
Representing more than half of our total revenue.
It's also our most diverse and profitable business segment.
Tens of thousands of customers and products that sustain revenue streams for decades.
<unk> Adi's industrial revenue is derived from high performance technology and mission critical capex intensive equipment across a myriad applications.
Our leadership position has been strengthened over the last decade, as we intensified our focus in this market.
And invested over $5 billion in R&D activities to capture the opportunity across the hundreds of applications that characterize the industrial sector.
This space is inherently fragmented.
The unmatched breadth and depth of Adi's portfolio uniquely allows us to address our customers' needs across the full spectrum of applications.
With core component building blocks to application specific solutions that encompass analog digital and algorithms.
Okay.
Today, we're seeing the rise of new industrial applications that require more sophisticated and more complex architectures as machines become more intelligent.
And more sustainable.
This is driving more semiconductor content per dollar of Capex unlocking new opportunities for our portfolio.
Yeah.
While this transformation is benefiting all of our industrial applications, including healthcare and aerospace let me share how we're winning in industrial automation and instrumentation more specifically.
And discuss the burgeoning opportunity across the electrification ecosystem.
So starting first with industrial automation.
Here is our customers are upgrading their factories with more automation and connectivity to increase output with greater energy efficiency.
<unk> broad portfolio helps customers create these more resilient and flexible footprints, while lowering their carbon emissions on the journey to net zero.
As an example.
At a leading U S robotics manufacturer, we've won additional content across power sensing and G. M. S O connectivity.
Our systems approach reduced our customers design time and increased our content per cobalt by four times.
Also in the last quarter, our Io link solution was designed in at multiple leading industrial automation customers. These solutions are critical for delivering robust connectivity to the edge of the factory floor.
Okay.
Turning our attention now to our instrumentation and test business.
This sub sector is highly aligned to secular growth trends from connectivity.
AI assisted computes to electrification to drug discovery and gene therapies.
The consistent thread across this diverse set of applications is the growing complexity that requires more advanced metrology and test.
The results our average content per system is no two to three times higher.
Further the localization of semiconductor suppliers, providing additional tailwind for our test business, we secured multiple design wins in North America, as well as Asia for memory and high performance compute.
And finally onto one of our fastest growing areas the electrification ecosystem.
The collective need for a more sustainable future is driving massive growth in electrical grid infrastructure.
Now let me share two examples with you.
First industrial and automotive companies have announced more than $300 billion of investments in Greenfield Giga factories.
Essential to the production of batteries to proliferate the electrification ecosystem.
These giga factories.
Will drive additional demand for our formation and test solutions critical to producing higher density batteries.
Further given the inherent safety hazards of using higher sell voltages.
These factories will also provide new growth vectors for Adi.
In our sustainable energy franchise, we're leveraging our industry, leading automotive BMS solutions into energy storage systems for electrical grids and fast charging infrastructure.
We've won designs at leading EV infrastructure manufacturers in North America, Europe , and Asia, putting us on a path to more than tripling this business in the coming years.
Of course, while no market is fully immune to adverse economic cycles, our industrial business is highly diversified and aligned with secular trends.
This has translated to more durable revenue streams with sales in this sector, increasing more than 25% over the trailing 12 months, despite a weakening economic backdrop.
But looking ahead, we see continued strength in this franchise as.
As the breadth and depth of our portfolio, our deep customer collaborations and design win pipeline momentum underpinned, our new phase of profitable growth.
So in closing.
<unk> business model is diverse and resilient and rich with opportunity.
I am very optimistic about what our future holds as we drive enhanced value for our customers employees and shareholders as well as society at large.
So with that I'll hand, you over to push up.
Okay.
Thank you Vince let me add my welcome to our first quarter earnings call.
Our comments today with the exception of revenue will be on an adjusted basis, which excludes special items outlined in today's press release.
First quarter revenue up three in a quarter billion finished at the high end of our outlook driven by continued share gains in industrial and automotive.
Our b to B market represented 89% of revenue up 25% year over year and increased 2% sequentially. Despite our first quarter typically being down.
Okay.
Now, let's look at performance by end market industrial our most diverse and profitable end market represented 52% of revenue and hit another all time high.
This business has grown sequentially for <unk>.
<unk> consecutive quarters, all markets increased year over year.
Led by automation sustainable energy instrumentation and test.
Automotive, which represented 22% of revenue also achieved another record increasing 29% year over year and 6% sequentially.
All applications grew double digits year over year, as our market leading positions across battery management and in cabin connectivity continue to deliver significant growth.
Communications, which represented 15% of revenue grew 18% year over year.
As expected comps declined slightly sequentially as strength in wired was offset by softness in wireless due to the timing of <unk> deployments.
And lastly, consumer which represented 11% of revenue was down 5% year over year and declined 14% sequentially, given weaker market trends and seasonality.
Now on to the rest of the P&L gross margin of 73, 6% expanded 170 basis points year over year.
Unfavorable mix and cost synergies.
Opex was $733 million down slightly sequentially as we balanced strategic hiring with the tight discretionary spend and synergy capture.
Given our strong operating leverage combined with the synergy savings our operating margin was 51, 1%.
Importantly, we have already captured nearly all of the $400 million cost synergy goal.
As such our communication, we'll now turn to the revenue synergy opportunities from our combined portfolio and complementary customer base with Maxim.
Recall that <unk>, our chief customer officer unveil, how we are strategically approaching these synergies during our Investor day, and Vince has routinely highlighted some of these compelling opportunities over the past few quarters.
To that end, we are closely monitoring and measuring progress from opportunity to design win to new revenue and.
And while it is still early design win momentum to date has exceeded our expectations. This gives us increased confidence in achieving our $1 billion plus revenue synergy opportunity that we outlined at our Investor day.
Non op expenses were $60 million and the tax rate was just over 12%.
All told EPS came in at $2 75.
Up 42% year over year, and hitting a new record.
Moving to the balance sheet, we ended the quarter with approximately $1 7 billion of cash and a net leverage ratio below one.
Days of inventory increased to 155, while channel inventory remains below our target level.
Recall that last quarter, we outlined our strategy to rebuild strategic die bank and hold more finished goods inventory on our balance sheet as we moderate shipment into the channel during this time of inflection.
Moving on to cash flow Capex for the quarter was $176 million and $764 million over the trailing 12 months, representing 6% of revenue.
We continue to expect Capex to be high single digits as a percentage of sales in 2023, and then decline in subsequent years to our long term target of mid single digit.
These investments will double our internal revenue output exiting next year and support strategic screen capacity between our Fabs and our foundry partners.
Flexibility of our hybrid model across different geographies enhances our resiliency and offers our customers additional optionality.
Over the trailing 12 months, we generated $4 3 billion of free cash flow or 34% of revenue.
Over this period, we have returned $4 7 billion to shareholders or over 100% of free cash flow.
By a $3 1 billion of buybacks and dividends of $1 6 billion.
We just raised our quarterly dividend by 13%, marking our fifth consecutive double digit increase in 19 consecutive years of increases.
This is a testament to our durable operating model that has generated positive free cash flow for 26 consecutive years.
As a reminder, we target 100% free cash flow return the dividend is the cornerstone of this policy and we look to increase our dividend at a 10% CAGR through the cycle.
With remaining cash used for share count reduction.
Similar to prior quarters, I would like to give a brief update on the operating backdrop.
First on market.
Industrial orders as Vince highlighted remained the strongest followed by automotive while comps and consumer remain weak.
Given the rapidly changing environment, we are diligently working with our customers to remove orders that they may no longer required.
At the same time, we have increased our supply by growing our internal output and working with our foundry partners.
These actions have reduced our lead times with half of our portfolio now shipping in under 13 weeks.
Despite this backlog coverage remains around one year of revenue.
As such we expect our book to Bill will remain below parity over the next couple of quarters as our backlog returns to more normal levels.
Given these dynamics, we are guiding second quarter revenue to be $3 2 billion, plus or minus $100 million.
We expect continued sequential growth in our industrial and automotive markets and another sequential decline in our communications and consumer markets.
At the midpoint of our outlook revenue will be up high single digits year over year with our b to b markets up over 10% once again.
Operating margin is expected to be 51% plus or minus 70 basis points.
Our tax rate is now expected to be between 11% to 13% for the year.
This guide reflects the new U S tax requirement to capitalize R&D expenses for tax purposes, resulting.
Resulting in higher upfront cash tax payments, but lowers our effective tax rate temporarily due to the deferred tax accounting requirement.
Based on these inputs adjusted EPS is expected to be $2 75.
Plus or minus 10.
In all the macro backdrop remains uncertain.
However, we remain cautiously optimistic on the near term given the resilient strength across our industrial and auto businesses, which represent over 75% of our revenue.
Longer term, we remain well positioned to drive growth enabled by our diverse high performance portfolio aligned with the key secular trends at the intelligent edge.
Let me now pass it back to Mike for our Q&A.
Thanks, Vishal look into the Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call. This morning.
A follow up question. Please re queue I will take your questions as time allows us with that we have our first question. Please.
For those participating by telephone dial in if you have a question. Please press star one one on your phone to enter the queue.
If your question has been answered and you wish to be removed from the queue. Please press star one one.
If you are listening on a speaker phone please pick up the handset when asking your question, we'll pause for just a moment to compile the Q&A roster.
Our first question comes from the line of C. J Muse from Evercore ISI.
Yes. Good morning, Thank you for taking the question.
Yeah. My question really would center around the industrial strength that Youre seeing.
Talked in great detail around kind of emerging new markets as well as increasing content, yet I think a lot of investors are focused on kind of declining.
<unk> around the globe and so we'd love to hear your thoughts on why your business.
As you know.
So very different from maybe some of the larger macro trends.
And perhaps more color on.
How much of it is content how much of it is maybe emerging growth areas that are not reflected in some of these being analyzed that would be very helpful. Thanks. So much.
Yeah. Thanks P. J, so I think first and foremost.
Our successes and bye bye.
By dental chance, we've been investing heavily in this market for more than a decade, it's really our focus.
It's our core is the core of Adi.
From both on R&D and customer engagement perspective.
We've been really doubling down here over this decade, plus kind of time span.
We've been gaining market share for sure.
You know, we have compared to even kind of three four years ago. We have we've always had a very strong position in the signal chain.
Kind of data processing electronics, but we've been able to with the acquisitions of LTC Maxim we've been able to bring a very strong competitive power portfolios to bear as well. So I think from a portfolio perspective, we're in much better shape.
I pointed out in the script as well that when we talk about industrial it's truly the industrial sector I know many competitors talk about.
Other or kind of.
Indescribable sectors are businesses that are that are not well understood like consumer for example, other consumer so I want to point that out as well.
We have as Ive said, many secular growth drivers.
In play we see.
The average content per dollar of Capex expense increase.
At a proofing meaningful level across all the applications, including instrumentation factory automation is changing also is bringing more sensing more compute to the edge.
And all of that is driving content gain for Adi So.
I think they are the they are the primary drivers of the business.
Yes, Pmi's are I would say.
And the kind of retraction zone, right now, but we see stabilization.
I think when China comes back as well, which is likely to happen we believe over the coming months.
That will drive things even further into a positive result.
Okay.
Sure I'll just put one more thing just to help folks understand kind of the breadth of that growth all of our submarkets were up double digits year over year, and most of them increased quarter over quarter and if you look at it by geography, we had strength in America, Europe , and Japan, again, all up double digits year over year.
Setting a weaker China. So this industrial strength was very broad based.
Thanks C J.
Thank you one moment for our next question.
Our next question comes from the line of Vivek Arya from Bank of America Securities.
Thanks for taking my question I actually had the fair enough go ahead related question, which is how long can book to Bill remained one before it starts to become worrisome and usually if I look historically for Adi generally the second half tends to be better than the first half.
What would support that view or prevent that from happening this year.
Okay, Yes.
Vivek, let me maybe.
Let me maybe take a walk through.
Cancellations backlog lead times to help answer that.
But I do want to clarify you said.
And book to Bill our book to Bill is somewhat I thought I heard you say it was one our book to Bill at sub one we told you that was happening a couple of months ago.
I would expect.
Two to carry for another quarter or two as we get through this backlog so.
On the backlog.
We've been saying for a while now that that we've got record backlog and we are working with our customers and our DSD partners to get this rationalized with what customers need today versus perhaps the order for the hip placed on us six or nine months ago. When we had very long lead times.
This progress is what is being reflected in that book to bill ratio below one and I think that it will probably be below parity for another quarter or two as we get back to normal backlog and lead times.
Supply demand imbalance is definitely getting better slowly, but it's getting better we're getting more wafers externally. Thanks to the hybrid model, we have the flexibility to do that as well as the investments, we're making internally as we've talked about with our capex deployment to increase production. So we have about 50% of the portfolio under 13 week.
Today, meaning a can ship within the quarter and thats going to continue to improve over the through the second half so.
Takeaway sort of given lead times falling bookings getting higher quality compared to year ago is as customers are ordering for stock way into the future.
And at the place backlog.
This is positive for visibility and we're really getting to true demand.
Yes.
Okay and anything on second half.
Because it looks more like a soft takeoff Dennis of lending from the trends.
Yes.
Let's see so.
I don't want to I don't want to go out too far but I'll just keep my comments here and it's been fun to make any long term comment we feel good about the outlook for the second quarter, given the resiliency in auto and industrial as I said, 75% of our sales come from those two segments and we still have a year's worth of backlog.
And the second quarter, it's hard on the one hand.
To make a call given that we have strong backlog coverage, but we also understand there's a lot of macro uncertainty out there and things are changing fast so I'm not going to make any predictions one area to pay attention to convince me to comment on this is China I think we and many many companies are watching China, if demand accelerates in the second half.
Given sort of our optimism on consumers and government that would be that'd be good that'd be good for a number of organizations.
<unk> been facing more longer term you want to add on that well I think we've clearly built a lot of resiliency into the way we run the company into the business model as well as the <unk>.
The manufacturing operation so.
Who knows what the second half is going to bring but what I can tell you is that.
<unk> been through many many cycles before and never have we been better positions in our history than we are now.
From a portfolio from a customer engagement standpoint so.
The.
This industry is likely it's taken us kind of <unk>.
20 years to double.
Kind of two thirds of the 2020, we've probably doubled the content.
The industry bills over the next 10 years I believe area is very very well positioned given the strength of a set of our portfolio of customer engagements.
This hybrid manufacturing model that we've got in place to enable us to capture the upside managed to the downsides.
Thanks for that next question. Please.
Thank you one moment for our next question.
Our next question comes from the line of tore Svanberg from Stifel.
Yes. Thank you.
Congratulations on the results so on unmatched and now that we're sort of moving from the cost synergies. The revenue synergies are there any particular areas that we should keep an eye on their where their end markets or product categories, where are you expected to see that billion dollars in synergies.
Yes, let me, let's let's do that in two parts I'll give you a little bit of context.
That everyone remembers what we've talked about and then hand over to Vince So.
We've closed on the cost synergies, we feel great about that so we're focusing now on revenue synergies and we're tracking ahead of schedule.
We think about that synergy in stages. So first we need to identify the socket we need to win the sockets, we begin shipping to the customer and then we hit volume. So we are tracking all of those stages through our internal material as I said at least gave you a target in April .
To come to deliver $1 billion of incremental Vince is holding her to a higher bar than that so she's she.
He is on track to hit that $1 billion and we've got we've seen early success I think you've heard.
<unk> share a couple examples over the over the last couple of quarters. For example, in the our ability to cross sell <unk> as well as putting <unk> into non auto customers, which is new so.
Let me, let me pass off to Vince here for what are some of the other areas that we're thinking about.
Yes, one we announced the combination story with Maxim we pointed out two particular market areas, where we saw Adi was underway towards power.
In particular, our power management was really important power.
In data Center for example.
And.
The compute density skyrockets.
And the compute area performance and power are critical etch, one and the same thing. So we have now a.
Competitive card portfolio that we can bring to more application specific areas such as data center.
As well as automotive.
The I think a very positive surprise is that the connectivity portfolio based on GE msos, the multi gig serial link.
Is that not only are we gaining more and more traction in automotive, but also we're bringing it to other areas such as industrial as Prashant mentioned.
BMS we've got.
16 of the top 20 word BMS Oems sockets in the top 20 Oems.
Maxim strengthens that portfolio as well so.
In industrial I mentioned in the prepared remarks that the Io link technology is very very that Maxim brings to bear is very very complementary with adi's data prep solution. So.
I think there are multiple areas.
I think the message I want to convey here is that I was always optimistic about what we could do with a greater channel more cross connectivity to the Adi portfolio.
More enthusiastic than ever based on what Im actually observing note with the various markets and customers of which we play.
Thanks very helpful. Thank you.
Thank you one moment for our next question.
Our next question comes from the line of Chris Danley from Citi.
Hey, Thanks, guys, just one more clarification on.
The lead times on the shortages. So you mentioned that half of the portfolio has lead times of less than 13 weeks right. Now can you talk about what that was three.
Three months ago, and then when would you expect the lead times to I guess quote unquote largely normalized in with a couple of flat quarters.
And it seems like you've got plenty of inventory why aren't these these lead times normalizing a little bit faster.
Sure Chris Let me.
Michael I will remind me, where we were three months ago, but the.
So the supply demand balance it's getting better.
We've got we're getting more wafers so.
In addition to our internal.
In addition to our internal production.
The way to think about the lead times is we've got half the portfolio shifting within the quarter and.
Certainly in the next quarter or two we will have the overwhelming majority of that down to within one quarter. The inventory build as I mentioned is in part due to our desire to kind of keep more inventory on Adi is booked because we are clearly in a period of great uncertainty and we're being very minor.
Full of putting too much to our channel partners. When there is this much uncertainty out there so that will as as lead times improve our channel partners can count on us to get what they need in quick turns and then we'll be able to more reliably think about whats the right stocking level.
For the channel and Chris to your question, where it was at the beginning of the quarter. If you look at that metrics under 13 weeks began the quarter is probably about 25% of portfolios. We doubled that number Andrew shot laid out we want to get it close to 100% exiting this year I know Vince is pushing hard to get even in even sooner than that I think the biggest takeaway on lead times is the shorter lead times, the more high quality of the bookings.
I think that's what we want to see is the true underlying demand is as lead times continue to come in and why is it takes a long while demand strong.
Demand is strong it's harder to reduce the time to a strong demand environment.
Great. Thanks, guys.
Thank you one moment for our next question.
Our next question comes from the line of Stacy <unk> from Bernstein Research.
Hi, guys. Thanks for taking my question maybe.
Maybe it's a dumb question, but I'm, having a little bit of trouble squaring.
The majority of the portfolio getting to be within 13 week lead times together with a year's worth of backlog, how do I square those two things it feels like the backlog should be shorter if the.
The lead times are actually like getting back to normal and maybe other way to ask it is when the majority of the portfolio has 30 week lead times, where do you expect that backlog to be.
Yes.
Stacy I think perhaps.
The missing the missing element of your how youre thinking about it is the assumption that that backlog is delinquent. It is not the when the lead times get extended customers put the orders on us, but they also tell us when they want that product delivered so theres a visibility curve to that backlog. It is not that it is all past due.
Do it needs to be shipped to guests.
Oh I see okay.
Okay. So you've got orders out we know that we're going to be shipping this to you in six months.
They take place and so I guess, where do you expect that backlog to be standing.
Given what you see for demand once they were in.
Quarter two passes in the majority of that portfolio is shaping.
Within the quarter, where do you expect the backlog to be.
Well.
Let's go back to the <unk>, if we get if we return to what was normal for us pre COVID-19, let's let's say that's because that's the best perspective, we can give you.
If we if we return to what is normal look like that at the start of a 13 week quarter. We would have about 10 weeks of that quarter in backlog and then there would still be some incremental backlog out there for future quarters, but it would be meaningfully smaller because customers know that they can put that order on us in essentially.
Less than a quarter's notice so that's what normal looks like now given the supply demand challenges in the <unk>.
The increasing importance of analogs products to our customers, we may benefit from some greater visibility in the future, but I don't want to call that today.
Got it so I guess does this mean or are you effectively over shipping demand right now because the backlogs pulling in or is that is that not the right way to think about it.
I would.
I'm not sure how you would conclude that we are we have the.
We have demand from our customers in the in that backlog.
That tells US I want this product in Q1 I want this product in Q2. This product in Q3 and that is what we are matching up for but it gives us a visibility.
That we have historically not had at this level that is why they are not as incentive to put new orders on us because they've given us those orders, hence book to available or what yes.
I Wonder if the thing worth pointing out Stacy is that we run our <unk>.
Our demand signals are sell through we run our factories on the basis of.
Pos demand rather than seven or a <unk>. So.
It gives us more Intel.
Integrity around the demand signal.
Yes.
Got it okay. That's helpful I won't monopolize anymore. Thank you so much guys. Thank.
Thank you Stacy for that three part question you use your question for next quarter. So I would have to be able to call next quarter next question. Please.
Thank you one moment for our next question.
Our next question comes from the line of Bruce Srivastava from BMO capital markets.
Alright, Thank you I want to keep it to one Mike I don't want to get any of that site.
And then so I actually wanted to focus on a bit on the long term here at Ti.
Let's call it at a much higher growth rate for analog and for themselves as a result.
And I was wondering.
If you share the same view I know you guys have had a 710%.
And Vince you have always.
All of the conversations over the years, you'll always felt that the analog industry going forward should grow faster than the five six that we've seen over the long term.
How you how you think about analog growth.
And you called out.
A bunch of secular drivers that.
Four or five years ago didn't even exist.
For the analog industry.
Rob me for semis, thank Kevin.
Yes, thanks numbers.
Well I think as I pointed out in the prepared remarks, we're seeing more for example in the industrial space.
More content per dollar of Capex investments by our customers customers.
The trend has been in play for.
For several years now.
That coupled with adi's portfolio of strength the breadth we have the as I mentioned, the data path, which has been Adi core Adi traditional strength, adding LTC a maxim power portfolios.
That gives us the opportunity to tap into more of the tunnel so to speak half of the analog market is kind of a data path. The other half is power. So we've now got the highest.
The highest performance portfolio in the industry, the greatest breadth and depth.
What do you see what's happening there with health care digital health care business, which is getting on for.
Or kind of a $1 billion over the next year year and a half.
Aerospace and defense.
Coupled with automation and instrumentation that we've talked about in the prepared remarks, we're very very bullish about our ability.
To drive growth in the market. The other thing I want to point out is that.
We focus on driving.
Our revenue growth through high quality innovation for which we get paid.
We've got three times, the asps of the analog market at large.
More than that.
Compared to our biggest competitor.
So I'll make the point that we focus on shipping value versus volume.
So I think with the secular growth drivers the the way we've structured our business model our focus on high performance.
We're able to capture more value.
With all the all the things we've talked about over the course of the call here.
I'm focused on what we can do as a company and I believe we are better positioned than ever.
Sean maybe just.
Two things to add first.
Our long term growth model is built on all of our segments. So industrial certainly is and it is an important very important part of it but we we look for all of our operating segments to be able to contribute to that.
We've had two consecutive record years with greater than 20% growth and with with the numbers that we've shared today, we're off to a strong start for 2023.
Our 7% to 10% CAGR outlook, which we revealed unveiled last April already reflected a faster growth versus sort of the historical mid single digit rate.
And as we said in the prepared remarks as well as in addressing I think it was <unk> question, we have a we have meaningful.
Delta with their revenue synergies from Maxim, which is really idiosyncratic to the Adi story.
Yes, I just wanted to add.
Dennis.
Just wanted to add one final comment umbrage to this part of the conversation.
I have had numerous conversations with Ceos across the globe over the last three years in particular, certainly intensified with the.
The crunch on supply, but I.
I've got two consistent questions from them.
Irrespective of what sector of the room.
How can we get closer to <unk> longer term technology roadmap and also how do we bundle together more tightly when it comes to understanding supply chain and work on collaborating more together across those two dimensions. So.
That's the sentiment.
I think given.
The way we've conducted ourselves over the last the last three years.
We're better positioned our brand has been augmented and strengthened over the last several years. So.
Yes, I think we've got.
We've got a lot of strong logic as to why the market will strengthen.
It will be better positioned than ever to capture the opportunity.
Thanks, Andres. Thank you I'll jump back in queue, I don't want to get a mic.
Okay.
Last question last question. Please thank.
Thank you one moment for our next question. Our next question comes from the line of Harlan sur from JP Morgan.
Hi, good morning, Thanks for taking my question.
The second half uncertainty as you mentioned probably more so on your comps.
Consumer businesses, maybe a little bit in industrial due to the soft PMI is as was mentioned earlier, but global auto demand trends, especially evs remains pretty resilient right and you guys have a strong design win portfolio in automotive that is starting to unfold I know last earnings call.
Last month at CES the team.
Pretty confident on growing our automotive business this year by double digit percentage on a flattish.
Sars.
If you look at some other third party research I mean, sorry, it's forecasted to grow through that.
<unk>, 3%. This year. So is the team still confident on driving strong double digit percentage growth profile this fiscal year in auto.
Thanks, Harlan, yes so.
If we.
If we look at our outperformance versus Saar. It comes down to a couple of items first as you mentioned there is a mix of premium cars, so higher content per vehicle and EV growth is accelerating and our content is three access high on an EV versus a traditional ice car.
We've spoke we've spoken at length that we've got real key content adders or BMS product, our gms cell and our <unk> are adopted and theyre really taking meaningful market share across the across all of our customer base, there and I think because of the performance that we bring to our.
Our customers were able to capture value better.
And then perhaps some others so with those three working where.
We still feel pretty good that that.
We're going to we're going to continue to have a two to three X multiplier on Saar. So I don't want to make a prediction as to what <unk> got I think IHS has a mid single digit number a lower mid single digit number out there.
But where we are.
For the year I expect us to kind of be two to three X wherever that lands.
Perfect insightful. Thank you prashant.
Thank you Harlan and thanks, everyone for joining us on the call. This morning, two quick items before I. Let you guys go our next earnings call will be held a week later than normal as Vince was asked to give the keynote at IMAX Technology Road Forum, So do not panic when we see our announcement of the earning does not two and a half weeks after close but three five weeks.
Second we are planning to restart our ADR uncovered serious where we do a deep dive into our market in the coming months. The first one would be on some of the topics. We hit on today automation energy efficiency sustainability electrification, so stay tuned for those.
Thanks, again for joining us and it doesn't analog devices.
This concludes today's analog devices conference call you may now disconnect.
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