Q3 2023 Skyworks Solutions Inc Earnings Call
Good afternoon, and welcome to Skywest third quarter fiscal 2020.
Three earnings call. This call is being recorded at this time I will turn the call over to Mr. Chris Zenithal Chief Financial Officer for Skywards. Thank you. Please go ahead.
Thank you Lena.
Good afternoon, everyone and welcome to Scout works towards fiscal quarter of 2023 conference call.
With me today is Liam Griffin, our chairman Chief Executive Officer and President.
Before we begin I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or maybe considered forward looking statements.
Please refer to our earnings press release, and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward looking statements made today.
Additionally, the results and guidance, we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP and with that I'll turn the call over to Liam.
Thanks, Chris and welcome everyone.
The skywalk team continued to execute well during the third fiscal quarter despite macro headwinds.
Delivering in line revenue, along with solid profitability and strong cash flows.
Specifically, we delivered revenue of $1 billion and $71 million.
Posted earnings per share of $1 73.
And generated $306 million of operating cash flow.
During the quarter, we continued to advance our technology roadmap and introduced new high performance connectivity and analog solutions.
While supporting product launches and an expanding set of mobile and broad market customers.
As a result, we expect double digit sequential revenue and earnings growth in the September quarter.
Turning to our quarterly business highlights.
In mobile and Iot, we secured five content for Android smartphones across all tiers.
We delivered sky five platforms for broadband CPE of leading North American carriers.
We supported Wi Fi seven launches of Tri band routers for Netgear and TP link.
And powered bells, Wi Fi six E home gateway.
In addition, we continue to gain design win momentum.
With our five gigahertz cognitive wireless audio solutions supporting Samsung Q Symphony sound bars.
Across infrastructure and industrial we enabled by <unk> small cell deployment with a top north American operator and.
And ramp timing solutions for AI data centers at a leading cloud provider.
In automotive, we continue to post double digit year over year.
Revenue growth, while capturing design for telematics applications across a broad range of manufacturers.
And we extended our engagements by leveraging our power isolation portfolio within North American EV supplier.
These highlights demonstrate sky works technology leadership in mobile while executing on our diversification strategy in high growth end markets.
Additionally.
Several disruptive market trends are now unleashing new meaningful growth opportunities for Sky works.
For example.
Generative AI is proliferating on a global scale with.
With rapid adoption, sparking exponential exponential growth in the amount of data exit access from the network edge to the cloud.
In turn this will further drive complexity in wireless infrastructure networks and AI will.
Higher throughput more secure connections lower latency and improved power management.
Sky works is uniquely positioned to benefit from these trends with our advanced integrated solutions supporting wireless infrastructure.
Our connectivity for mobile devices as well as other leading wireless protocols used in billions of Iot products.
With that I will turn the call over to Chris for a discussion of last quarter's performance and our outlook for Q4.
Thanks Liam.
<unk> revenue for the third fiscal quarter of 2023 was $1 billion and $71 million slightly above the midpoint of our outlook.
Mobile was approximately 59% of total revenue with broad content gains across our largest customer product portfolio.
Offset by ongoing weakness in demand from the Android ecosystem as these Oems continue to reduce inventories.
Broad markets were approximately 41% of total revenue we have another strong contribute contribution from the automotive infrastructure and industrial markets.
Gross profit was $509 million, resulting in a gross margin of 47, 5% inline with expectations.
Gross margin was down 370 basis points year over year, mostly driven by temporary factory Underutilization as we right size our inventory levels.
Operating expenses of $182 million declined 4% sequentially and year over year, given our ongoing focus on managing discretionary expenses.
We generated $327 million of operating income translating into an operating margin of 35%.
We incurred $8 million of other expense and our effective tax rate was 13, 2% driving net income of 276 million and diluted earnings per share of $1 73.
Exceeding the guidance that we provided during the last earnings call.
Now turning to cash flow scale works business model continues to deliver very strong cash generation.
Third fiscal quarter cash flow from operations was 306 billion and capital expenditures were $31 million, resulting in free cash flow of $274 million.
In fact for the first three quarters of the fiscal year, we've generated record free cash flow of $1 billion and $350 million and record free cash flow margin of 38%.
Also during fiscal Q3, we paid $99 million in dividends and repaid $500 million of our 2023 notes at maturity.
Now, let's move on to our outlook for Q4 of fiscal 2023.
We expect to deliver double digit sequential revenue and earnings per share growth in the September quarter Spa.
Specifically, we anticipate revenue between $1 billion, and $190 million and $1 billion and $240 million at the midpoint of $1 billion and 215 million revenue for the quarter is expected to increase 13% sequentially.
This outlook considers the seasonal impact from major product launches and leveraging our technology leadership deep customer engagements and world class in house manufacturing capabilities.
Gross margin is projected to be in the range of 47% to 48%, reflecting the cyclical impact of lower factory utilization, while we are reducing our internal inventory.
We expect operating expenses in the range of 178 to 182 million down six 5% year over year at the midpoint as we continue to optimize operating efficiencies, while making the necessary investments in technology and product development to further enhance.
Our leadership position in mobile and drive diversification and growth in our broad markets business.
Below the line, we anticipate roughly $8 million and all of that expense and an effective tax rate of 13.5% to 14% we.
We expect our diluted share count to be approximately 160 million shares accordingly at the midpoint of the revenue range of $1 billion and $215 million, we intend to deliver diluted earnings per share of $2.10.
An increase of 21% sequentially.
Lastly, given our conviction and scour long term strategic outlook and consistent strong cash generation, we announced a 10% increase to our quarterly dividend to <unk> 68 per share.
With that I will turn the call back over to Liam.
Thanks, Chris Skywalk continues to deliver solid financial results.
<unk> a challenging macro environment.
At the same time, we are further advanced our cutting edge technologies and product Roadmaps.
<unk>, leading market segments that allow us to both expand and diversify our customer base.
In addition, we are well positioned to benefit from powerful market trends, including the electrification and automation of vehicles the expansion of the internet of things the <unk>.
Merchants have augmented and virtual reality and the rise of artificial intelligence just to name a few.
Yes.
Looking ahead, we expect to capitalize on these opportunities and deliver growth in our highly profitable business with sustainable strong cash generation.
Operator, let's open the lines for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by Joe One on your telephone keypad.
Given time constraints please call me.
It yourself to one question and one follow up and should you wish to cancel your request. Please press the star followed later too.
One moment please for your first.
Question.
And your first question comes from the line of harsh Kumar from Piper Sandler. Please go ahead.
Thank you very much for the question Congratulations Liam Christian the Skyros steam solid results and very significant leverage in the September guide.
My first question was regarding your largest customer who is typically comes out with a new fund in the September timeframe. Liam can you talk about your content that new particular phone that might be coming out this time around.
Sure harsh.
Of course, I can't give you all the granularity here, but obviously our engagement and our technical vectors here continue to be sharp.
We expect to be among the leaders.
With our largest customer we've got we have the knowhow, we have the breadth of technology, we have the people and.
And then manufacturing capabilities to execute so we look forward to that but we really can't give any further guidance harsh as you know, but we certainly feel like our opportunities with our largest customer continued to be very quite large.
That's fair enough Liam if I can ask about gross margin you're working through some inventory.
Thats affecting our margins, but if I look, let's just add look forward what would be some of the drivers that you have to improve your gross margins from where they are would they be more sort of industry dependent such as Android and sort of a handset unit dependent or what they might be skybox specific actions that would be bigger drivers of gross margin.
Yes.
So I'll take that question and so first of all we delivered 47, 5% in the June quarter in line with expectations and at the last earnings call I indicated that gross margins were going to trend sideways for a couple of quarters and so we just guided September 40.
7% to 48%, which is pretty much in line with what I said during the last earnings call.
The main issue why gross margins are temporarily a little bit lower compared to the historical levels, which was in the low fifties is mainly because of the macro headwinds and a softer demand environment, especially as you indicated in the Android ecosystem, while those customers are.
Them selves.
Reducing dev internal inventory levels.
And so as the business.
Over a couple of quarters will eventually get back and stronger, especially in Android as well as our broad markets business. We will see further improvements in our gross margins. In addition.
To this as well as you know we are also reducing our own inventory levels on the balance sheet. This is probably something scoured specific that will take a couple of quarters.
That is also contributing to the underutilization, but once we get to the more normalized levels of internal inventory.
We will increase factory utilizations and ramp up the gross margins I do expect the gross margins again over time gradually improve to the low 50, <unk> and then we will continue to work towards our target model of 53%.
Yes, and in addition to that harsh.
Now on.
On the plus side, if you look at the cash generation that we're putting forth.
Very very strong results, we're looking at 30% to 35% free cash flow.
And that's sustainable so you've got you've got the margin hit which is basically underutilization.
But all of that has been paid for and we have now the the upside opportunity with free cash flow.
Thank you and your next question comes from the line of Chris Caso from Wolfe Research. Please go ahead.
Yes. Thank you I guess just to start a general market question.
We've been going through an inventory correction here for a number of quarters.
The fourth quarter of double digit.
Revenue declines on a year on year basis, So where do we stand now with that inventory correction at your customers or are we getting to the point, where those customers are getting a bit back to normal.
And what does that imply for the next couple of quarters in terms of revenue outlook.
Sure, Chris Yes, I mean, we do feel that the.
The bottom is here, but most of them most of the markets here that we address.
And we should be seeing improving financials as we go forward and you can look at our guide today looks pretty strong relative to the peers.
But also the aperture that we have not only with the larger players in mobile which is certainly important and we're very well positioned but the broad markets business continues to grow we're doing a lot of good work in automotive we're doing a lot of good work in data center.
A wide range of customers that are engaged with us that are also going through their cycle, but what we're seeing now is a bit of a turn up.
We think it's sustainable I think it's been a it's been a tough cycle in semis and tech in general but.
Our view is a little bit more optimistic now than it was last quarter for sure.
Okay.
Thank you for that and just a follow up on perhaps China, specifically and that's an area where.
We've heard some more cautious commentary from one of your peer from some of your peers.
Do you think that demand from your China customers has also turned the corner.
Should we expect there what are you seeing now and what the what should you be expecting there.
Yes.
Starting to turn up Chris it's not what we wanted to be yet, but we've been very very careful.
We are guiding and have put.
Kind of pretty low factors on top line. So I don't think that we're going to be surprised at all in anyway.
So you look at that portfolio, it's still bumpy, but on the flip side you have other markets in Android that are doing quite well Samsung as an opportunity to continue to grow you've got a few other players out there that are important.
<unk> is another customer that is there's a lot of great opportunity in mobile and other products that we work with.
It does like I said.
It feels like what we're seeing.
And the dialogue, we have with our end customers are being more constructive.
Okay.
Thank you and your next question comes from the line of Matt Ramsay from Cowen.
Please go ahead.
Yes. Thank you very much good afternoon guys.
Maybe you could you guys report, obviously in the broad markets business.
But there's a bunch of different.
End markets represented.
In there that I would imagine are seeing one thing I think the semiconductor cycle that you were speaking about has taught us is that different different parts of the industry have different cycles that are not in.
Amplitude or more.
X y axis, China be lined up with each other and they're all over the place a bit. So maybe you could break down what you're seeing in the broad markets business.
I would assume maybe stronger in automotive weaker and some consumer areas, but if you could go through some different subsectors that'd be really really helpful. Thank you yes.
Yeah sure I'll give you I'll give you as much as I can on that so you mentioned automotive.
That's a market that if you look back two three years ago with Sky walks you see very very little revenue at all where now were.
Well above the $200 million run rate, we expect that to accelerate substantially.
A lot of great IP and technology that we brought forth with the Silicon Labs' transaction and also a lot of really organic work inside of Sky works to drive more opportunities within these vehicles, so that's going to be.
Part of the business it already is.
If we look at some of these other new markets Cloud for example, we've got design wins in that area now.
We're doing extremely well in an important category and Wi Fi six and six and Wi Fi seven thats going to be a grower in the industry I think it's going to be meaningful for the RF players with Sky works being certainly at the top of the pack.
And it was just a lot of general law.
Diversified products that we came came came in with with.
With the slab transaction that just very very broadly.
Which has in a number of design wins across multiple categories.
Categories that is also growing so good stuff there are plenty of room to go I mean, all of these markets that we're dealing with have pretty verde significant tam opportunities for us to grow into so we're excited about that.
We've made a lot of strategic additions in our sales force as well to try to penetrate more of these new markets and create that diversification factor. So we feel good about it and we're just going to have that youre going to have to see it in the numbers.
We're certainly driving to those outcomes and expect we can do it.
Thank you for the detail there.
My follow up Chris maybe you could talk a little bit about your view into Opex in the next few quarters I think it was a hair below where we had modeled it anyway and with some of the gross margin pressure given the utilization maybe that makes sense, but there's a lot of opportunity ahead for you guys as well, particularly in the broad market.
And so if you could just kind of level set up on the next few quarters on the Opex line that'd be helpful. Thanks.
Yes, thanks for that question and so we can't control the macro right.
And as we can't control some of the softness in some of the end markets that everybody industry is going to but we can control of course.
Our own operating expenses and the investments that we make in the business and that again, we're not hesitating, we are going to continue to invest and play to win but at the same time, we're going to continue and sky, which is pretty good at it continue to focus on efficiencies and really spending the dollars, where we get the bigger.
Bank for the Buck and as you saw from the prepared remarks, we have been able to trim down a little bit to your opex.
Again without cutting into our key technology development and product Roadmaps just focusing on.
Effectiveness and efficient processes.
Some of that was also we reduced a little bit of the variable compensation.
Because of the tough environment that we play in.
We'll kick back a little bit as we start the new fiscal year in the December quarter, but but overall I feel good about the level of spending that we do in support of our growth.
Thank you and your next question comes from the line of Edward Snyder from Charter equity Research. Please go ahead.
Thanks, a lot a couple of questions if I could please first.
A lot of talk earlier this year, the scopes are going to lose some share in Wi Fi and the high end handsets not the CPE units.
The stuff that goes into homes with handsets and I guess theres some basis for that given how much content. You have I think you have and have had all their boat.
For both five Gigawatts and $2 five as well as some elevations of flagship phones.
Maybe you could provide a little color on that.
Should we expect your share to moderate a little bit in second half this year or do you feel like youre, not giving up anything there given given kind of your dominance of that space over the last several years actually.
Yes that has been a stalwart within within the business and the Wi Fi cycle is very strong we have great position six going into Wi Fi.
And you know these technologies they are not easy and there is a big leap between those two cycles.
But we're in great shape with this there's certainly a tremendous amount of.
Consumer activity that hasnt been consummated.
Wifi is a really important technology I think everybody knows that.
And it's used in so many different applications that we try to really deliver the best solutions.
And that's been very powerful for us and our customers like the technology and I think we've got a great great opportunity over the next several years.
Okay, and if I could the <unk> module, which is.
Just quickly already has become one of the most lucrative modules and some of the high end phones out there you guys kind of own that space, but it's been really clear.
Year or so the competition for that spot has increased dramatically I think <unk> trying to get into that I know <unk> tried to fuel piece Qualcomm has always talked about et cetera.
Incumbency has a lot of inertia with it we've seen that year after year after year and iPhone.
Is that still the case or this because.
Flip side of this we haven't seen any come to see really help anybody in the ultra high band that shares bounce back and forth you had some a bit last year equivalent avago split at this equivalence getting all of it. So I'm just trying to get a feel for is incumbency worth more in the transmit diversity section do you think.
We'll continue to dominate that spot.
Yes, I would look at it at a high level not necessarily any one specific customer but.
Performance wins, and flexibility wins and supply chain wins and have an incredible people on our team that can work shoulder to shoulder in the lab to create amazing outcomes and I think that really is what differentiates us.
Not just talk I mean these are real these are real action that people in our fabs.
Our factories were using our own technologies as you know whether it's bought Tc saw.
Are those recipes are really homegrown I think it makes it unique for us our customers love it because they have a voice in the product and if theres any fine tuning or tweaking technically we can do it so we love that and some of those products that you mentioned you know probably more than anybody. These are really really hard products really difficult with demanding customers.
But if youre able to handle that and hit that fast ball.
It's great for the customer and it's great for the supplier like us. So we're looking forward to more of that we love challenges.
And we're ready to do more.
Thank you and your next question comes from the line of Vivek Arya from Bank of America. Please go ahead.
Hi, This is Blake Freeman I'll turn it back thanks for taking my question.
I might have missed it in the prepared remarks, but I was hoping you could provide.
What percent of revenue came from your largest customer and in addition to that if you're able to quantify the percentage of your broad market sales that come from this largest customer that would be helpful. Thanks.
Yes, so the largest customer in the June quarter was approximately 64% of total revenue when if you do the math correctly, you will see that as kind of flattish.
Slightly up maybe 1% on a year over year basis, which clearly illustrate that we continue to win big with that large customers and as you indicated yes, we will move that customer not just at the phone, but in every product that they have in every product.
That day.
Brought to the market and that they will bring to the market in the future and so you will find not only skybox content in the iPhone, but you will also find it Andy ipods and MDI market.
The home Paul and.
And then other products that they will bring to the market and that's that's roughly all in about 15% of that revenue with the customer.
Got it helpful. And then just maybe a longer term question thinking about the recovery of certain aspects of the business I know you've derisked your China Android exposure early into the cycle I believe they only account for 5% of sales or so so as the market normalizes I'm just trying to get a perspective on how we should think about your long term side of and Brian exposure.
In terms of total revenue.
Yes, so currently.
It's very low.
As you pointed out yes, China is.
Less than 5% of our revenue.
Samsung is less than 5% of hardware revenue, we still have Google, but also currently less than 5% of our revenue.
<unk>.
As we all know there is inventory overhang.
Most of those customers.
Especially inventory overhang at the phone level.
That needs to be clear.
It's improving we see we see higher demand higher bookings from those customers.
But it's improving slowly.
Eventually.
It's hard to predict the timing, but but towards.
The start of 2024 that will be down and then there will be tremendous upside for us because we continue to win designs with those customers in and again.
That business will start ramping again.
Well positioned.
Thank you and your next question comes from the line of Christopher Rolland from Susquehanna. Please go ahead.
Hey, guys. Thanks for the question.
I would love to get into inventory and <unk> and how they play into your gross margins and Underutilization.
You kind of hit on this but would love a little bit more detail in terms of your outlook longer term.
So ultimately where do you guys want your dois to go when do you think you can get there and I believe the assumption should be gross margins would kind of hang around here for a while until you reach that level is that the correct assumption.
Yeah. So first on inventory, we have now two consecutive quarters wood inventory came down slightly in absolute dollars.
Despite the fact that this was our to our slowest seasonal quarter.
<unk> forward to September and December with much stronger.
Revenue in the strong sequential revenue growth into September .
And further into December we will continue to substantially bring down.
Inventory in absolute dollars and of course on higher revenue as well in terms of days of inventory. The target is to try to get inventory on order of about $1 billion.
Or slightly below that and.
But to your point it will take a couple of quarters for us to be able to do that and so the gross margin will trend sideways for a couple of quarters.
Until we get through this inventory reduction on our side and until of course, the overall business starts picking up again as.
As we discussed with Android the large customer stronger tailwind in our broad markets business and then and then the gross margin will start picking up again.
Thank you, Chris and perhaps one for Liam.
You guys haven't emphasized at least on your call your opportunity in bar in some time.
How are you guys feeling about that.
I think you guys have done well, putting it into diversity receive but would you expect some standalone bar opportunities.
Kind of move the needle this year. Thanks.
Yes, absolutely.
We have certainly.
The most significant customers saw in very good shape and a lot of great development shoulder to shoulder work and that's been going well, but theres also.
Even in even in some of these things access points and routers and infrastructure products.
Think of ball as a technology not a product so it's a very difficult technology and only a few companies know how to do it.
And also the manufacturing scale and the technology there as well is very unique and it's just a few companies that can do it.
But your aperture around bulk acoustic wave filter ring is really really strategic it's hard to do and it doesn't have to be handset only as you mentioned and.
And we do have.
A number of examples even in Wi Fi and some other markets. So in infrastructure. So it's a key technology.
Other companies do it certainly folks on this call that are listening to peers that do it but it's not an easy job.
But I think our teams have worked really well.
The.
The aperture that we have is quite wide, we continue to bring on more accounts. We also.
Do a really good job.
Adopting getting our customers to adopt the higher level levels of performance that you get in bulk acoustic wave. So some of that is demonstrated in products and usually in the more difficult and challenging operating conditions, Bob really makes sense and we are quite good at executing there.
Thank you and your next question comes from the line of Joe Moore.
From Morgan Stanley . Please go ahead.
Great. Thank you.
If you could address.
Any long term ramifications from Huawei potentially coming back with its own <unk> solution does that create long term opportunity for you does that create risk to your existing Chinese customers just anything that we should think about <unk>.
Yeah.
And it appears that that Huawei is really off the shelf right now so it's not it's not even in the forecast.
Having said that there's still opportunity for the China market to grow Chris mentioned, it a little bit.
We talked about the opportunity for Android to turn back up and you've got the Abo vivo Xiaomi players. So theres a lot of opportunity there, but huawei itself as it is at this stage, it's really a nonstarter could change but in today's environment, it's really not.
Not a customer that we're working with.
Great. Thank you.
Thank you and your next question comes from the line of Irene <unk> from.
From Raymond James Please go ahead.
Thank you, Chris you alluded to the December quarter growing as well so given that we're coming off a cyclical trough and Android should we expect December to be somewhat about seasonal if you can talk about directionally. How are you thinking about December that'll be helpful.
Yes, as you know, we only guide one quarter at a time minutes, so I'm going to I'm going to stick to that but but directionally.
Yes, we do expect these.
Following normal seasonal.
Sequential growth patterns that we've experienced in the past.
Okay got it and then maybe for Liam there's been some.
News about China ban in gallium and germanium exports just wondering given a lot of your products you use those materials. Just wondering if there is any impact that you see in the short term on that.
Yes, we saw the note there and I will tell you.
There's really no risk for US right now we understand those material. So we've been using for a while.
And our teams have looked deeply at this and looked at the opportunity in.
We should be fine I would I wouldn't worry about it we've assessed it.
Very little risk of the business.
We're experts in these in these solutions and materials behind it so it's not in our in our view it is not something to worry about.
Thank you.
Thank you. Thank you. Your next question comes from the line of Karl Ackerman from BNP Paribas. Please go ahead.
Okay. Thank you.
I know the seasonality is a bit thrown out the window in this current down cycle, but I was hoping you might be able to comment.
Chris on the outlook between mobile and broad markets in September I'm, clearly broad markets broad markets.
It's usually up but.
I think we're going through a little bit of excess inventory.
Highlight.
Perhaps your outlook between mobile and broad market for September it would be quite helpful.
Yes. So obviously September is a very strong mobile quarter, especially with the content that we have at our large customer.
And a big ramp that we have supported over the last 10 or 12 years and so most of the <unk>.
Sequential growth in the September quarter is coming from our mobile segment.
Broad markets might be flat to slightly down a couple of percent on a sequential basis for the reasons that you just mentioned right. There is a little bit of inventory overhang and some of those end markets very similar to what our peers and competitors have indicated over the last two.
Weeks at their earnings calls, we are obviously not immune to that although again I think our broad markets business. We are as Lee indicated earlier, we are well positioned as a couple of spots, including automotive right that continues to grow double digit year over year, but but overall there is a little bit of inventory overhang.
That needs to be flushed out in the next couple of quarters, and then brought markets will start growing faster as well.
Got it. Thank you for that I guess, maybe just to follow up.
On that if I may.
If you could just speak broadly to how.
Now your inventory looks outside of that handset business again, it sounds like we have some inventory depletion that is still needed to reoccur, but the.
The flip side of that argument that how do you refill the channel once the channel is depleted perhaps that exits you know, perhaps it's more clean channel exiting the year just any thoughts into.
2024 or at a higher level in terms of.
How do you look at broad markets once this inventory overhang abates.
Yeah, Yeah, and maybe first a clarification right a lot of the inventory overhang at.
As it relates to <unk> is not in the distribution channel at the component level.
We typically manage that proactively and try to keep inventory at the component level.
A healthy level.
Issue is more that certain customers puts components into products and then the products didn't fully sell through to the end customers.
The level, they were expecting and so that needs to that needs to burn off as I said like it's probably going to take a couple of quarters, but to your point, yes. Once that is done.
Business will.
Come back and we will probably come back stronger.
As we as we will transition from under shipping to potentially shipping in line with end customer demand and that will that will by itself fueled the growth.
Thank you and your last question comes from the line of would've been ROI from Stifel Nicolaus.
Go ahead.
Thank you Liam.
Liam when you went through the segments or the various units in the broad markets piece, you didn't talk about communications infrastructure and I think that historically, if you look at core Sky works and then you add on top some of the timing stuff that you got from the <unk> acquisition and that was probably a decent chunk of the business.
So I was wondering if if im right about that and then secondly, if you can give us an update on what youre seeing it sounds like that's a pretty tough market right now not a lot of visibility.
The rest of this year and maybe even into next year. So I would love to kind of understand how youre thinking about that business.
Yes, no great question actually I Should've I Should've give me that answer already but now we actually have for meaningful numbers and the infrastructure side and actually in the last quarter, we actually had a record in the infrastructure side. So with all of the other chop that we see in handsets and some of the consumer products.
The infrastructure business is actually quite quite strong there's a lot of room for us to grow into that portfolio, we have very good relationships.
And the infrastructure industry tends to be a little bit cyclical and we're starting to see more opportunity. There now some of that is just <unk>.
Moving further up in <unk> in other markets.
And even some of the upgrades that we see Wi Fi and technologies like that so they are all important to us but infrastructure is still very very solid and we expect that to be a driver in 'twenty four.
Okay.
Okay, and then I guess, just as a quick follow up plan kind of another high level question around.
Sort of the macro and how you weigh that against.
Design activity it sounds like things are going well and some of these new areas that youre addressing auto.
Wi Fi has.
As a cycle coming up but I mean generally outside of mobile if you look at broader broad markets. How would you assess design activity sort of as you look into the second half of the year versus maybe this time last year.
Yes.
I would tell you its really getting better the design win activities better customer engagements and discussions that we're having are getting better and more forward looking.
The portfolio is broader than it ever has been we've got a lot more talent in the organization.
Operationally, we've gone through some cyclical hits here with depreciation we talked about capex, but that's turning into a cash flow point right now thats going to really drive the business and allow us to put forth more powerful investment. So we feel good about it and I think the thesis.
Really driving a great 2024.
We're getting through these quarters right now the business is starting to improve.
And we expect to have double digit performance as we go forward.
Thank you Mr. Clifton there are no further questions at this time. Please proceed.
Well. Thank you all for participating on today's call. We look forward to talking to you at upcoming Investor conferences. Thank you.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you all for participating you may all disconnect.
Okay.