Q2 2024 Qorvo Inc Earnings Call

Welcome to the core Gold, Inc. Second quarter 'twenty 'twenty four earnings conference call.

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I would now like to turn the conference over to Douglas to veto Vice President of Investor Relations.

Please go ahead.

Thanks very much.

Hello, everybody and welcome to core versus fiscal 2024 second quarter earnings call. This call will include forward looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the safe Harbor statements contained in the earnings release published today as well as the risk factors associated with our <unk>.

And our annual report on Form 10-K filed with the SEC because these risk factors may affect our operations and financial results in today's release and on today's call. We provide both GAAP and non-GAAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze.

Performance without the impact of certain noncash expenses or other items that may obscure trends in our underlying performance during our call our comments and comparisons to income statement items will be based primarily on non-GAAP results for complete reconciliation of GAAP to non-GAAP financial measures. Please refer to our earnings release issued.

Earlier today available on our Investor Relations website at IR Dot Corvo dot com under financial releases.

Joining us today are Bob <unk>, President and CEO Grant Brown, CFO, Dave <unk> Senior Vice President of sales and marketing and other members of <unk> management team and with that I'll turn the call over to Bob.

Thanks, Bob and welcome everyone to <unk> fiscal 2024 second quarter call revenue margin and EPS were all above the high end of our outlook provided during our August earnings call.

Customer demand during the September quarter improved versus our August guidance. The primary driver was the large smartphone customer for Hana.

In addition channel inventories of correlate components across the Android ecosystem continued to be consumed with Oems, indicating inventory levels are approaching historical norms.

Channel inventory digestion is allowing <unk> to ship more closely to end market demand, even as pockets of channel inventory remained in markets such as base station.

We have worked closely with our customers to address inventories, while continuing to deliver highly differentiated products.

They have rewarded us with new opportunities and new design wins and this underpins our expectations for growth this year and beyond.

Across our three operating segments <unk> enjoys multiyear technology upgrade cycles supported by global macro trends, including connectivity sustainability and electrification.

New protocols and new technologies are offering improved performance and enhanced functionality and corvo is critical in enabling these capabilities.

This is playing out in aerospace and defense automotive base station broadband connected home power devices power management smartphones, Wi Fi and other markets.

Where the performance is measured power.

Data throughput talk time battery life or distance between charges customers increasingly require higher levels of power efficiency integration and functional density.

Unknown Executive: Welcome to the Qorvo Inc.

Unknown Executive: 2nd quarter 2024 earnings conference call. All participants will be in listen only mode. If you need assistance, please signify a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. In the interest of time, we ask that you please limit yourself to one question and one follow up. Please note today's event is being recorded.

To enable their future architectures and deliver success as improvements in their next generation products. They rely on Corvo is best in class technologies and solutions.

And HPA.

Our strong beneficiary of the trends in our defense and aerospace business towards what we call <unk>.

Put simply <unk> technologies are supporting higher customer volumes, requiring more electronics and higher levels of integration.

Douglas DeLieto: I would now like to turn the conference over to Douglas DeLieto, vice president of investor relations. Please go ahead. Thanks very much.

This applies to unmanned vehicles like drones.

Grades to existing radar systems.

Earth orbit satellites and other applications.

Douglas DeLieto: Hello everybody and welcome to Qorvo's fiscal 2024 2nd quarter earnings call. This call will include four looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statement contained in the earnings release published today as well as the risk factors associated with our business and our annual report on form 10k filed with the SEC because these risk factors may affect our operations and financial results.

Lastly, we are leading the transition to DOCSIS, four <unk> and broadband and we continue to deliver base station customers increasing levels of functional integration for their <unk> massive mimo deployments.

Looking at our power franchise, we offer highly differentiated solution with our silicon carbide Jfet architecture.

Our technology offers the lowest rds on.

Which translates into faster battery charging longer battery life, and lower current consumption for applications like Evs solar Inverters and data centers.

Douglas DeLieto: In today's release and on today's call, we provide both gap and non gap financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non gap results. For complete reconciliation of gap to non gap financial measures, please refer to our earnings release issued earlier today available on our investor relations website at ir.corvo.com under financial releases.

These are relatively new markets for corvo that are early in the transition to silicon carbide and offer significant growth with.

We also offer a differentiated portfolio in power management, where our initial wins have been in ssds power tools and appliances, and we are leveraging our unique IP to.

To expand into the defense infrastructure smartphones wearables and other markets.

And CST, new technologies are transforming user experiences in automotive connected home enterprise industrial and other markets.

Robert Bruggeworth: Joining us today are Bob Rugworth, president and CEO, Grant Brown, CFO, Dave Fullwood, senior vice president of sales and marketing and other members of Corvo's management team. And with that, I'll turn the call over to Bob. Thanks, Bob, and welcome everyone to Corvo's fiscal 2024 second quarter call. Revenue, margin and EPS were all above the high end of the outlook provided during our August earnings call. Customer demand during the September quarter improves versus our August guidance.

Ultra wideband is a critical focus area and we are very excited about recent developments.

For wideband is in the very early innings of adoption and we are seeing exciting opportunities, giving expanded smartphone adoption.

Multiple in vehicle placements.

And an array of new capabilities, such as ranging and precision location for indoor navigation.

Robert Bruggeworth: The primary driver was a large smartphone customer around. In addition, channel inventory of Corvo components across the Android ecosystem continued to be consumed with LEMs indicating inventory levels are approaching historical norms. Channel inventory digestion is allowing Corvo to ship more closely to end market demand, even as pockets of channel inventory remain in markets such as base station. We've worked closely with our customers to address the inventory while continuing to deliver highly differentiated products.

Wildfire is another primary driver and the transition to Wi Fi six and wildfire seven is very early on.

Wifi seven devices recently launched by <unk> customers are offering breakthrough advances in speed latency and network capacity.

<unk> also offers components and full system solutions that incorporate Bluetooth low energy zigbee thread and now matter.

Robert Bruggeworth: They have rewarded us with new opportunities and new design ones and this underpins our expectations for growth this year and beyond. Across our three operating segments, Corvo enjoys multi-year technology upgrade cycles supported by global macro trends, including connectivity, sustainability and electrification. New Protocols and new technologies are offering improved performance and enhanced functionality in Corvo is critical and enabling these capabilities. This is playing out in aerospace and defense, automotive, space station, broadband, connected home, power devices, power management, smart phones, Wi-Fi, and other markets.

Matter is our recently launched technology overlay essentially a common language that improves interoperability across smart home devices, regardless of protocol or manufacturer.

It is supported by iOS Android.

And major smartphone platform providers, and it's widely expected to simplify and accelerate the adoption of smart home devices.

It's also early days for our force sensing touch sensors.

These are ultra sensitive Mems based sensors that enable new use cases and enhanced device functionality.

We have broad engagements across automotive smart interiors track pads.

True wireless headsets smartphones, wearables and other consumer applications and our opportunities are expanding as customers engage with our technology and develop new use cases.

Robert Bruggeworth: Where the performance is measured in power out, data throughput, talk time, battery life, or distance between charges, customers increasingly require higher levels of power efficiency, integration, and functional density. To enable their future architectures and deliver successes and improvements in their next generation products, they rely on Corvo's best-in-class technologies and solutions. In HPA, we are a strong beneficiary of the trends in our defense and aerospace business towards what we call one-to-many. Put simply, Corvo's technologies are supporting higher customer volumes, requiring more electronics and higher levels of integration.

Looking at ACG.

Fewer than half of the Android smartphones this year will be <unk> Andrew.

Android five <unk> units are expected to grow in the low double digits for several years.

As a big growth opportunity for <unk> as we move from very little content and <unk> phones to significant dollar content and <unk> phones.

Another driver is <unk> advance, which leverages new releases on the <unk> standard.

<unk> advanced smartphones will include additional transmit and receive and satellite band favoring cordless product and technology portfolio.

Robert Bruggeworth: This applies to unmanned vehicles like drones, upgrades to existing radar systems, low-earth orbit satellites, and other applications. Lastly, we are leading the transition to doctors 4.0 and broadband, and we continue to deliver base station customers increasing levels of functional integration for their 5G massive MIMO deployments. Looking at our power franchise, we offer highly differentiated solutions with our silicon carbide J-FET architecture. Our technology offers the lowest RDS on, which translates in the faster battery charging, longer battery life, and lower current consumption for applications like EVs, solar inverters, and data centers.

<unk> will migrate to <unk> advanced overtime and bridge us to new development efforts and new content required to accommodate 60 frequency spectrum at the end of the decade.

Big picture Corvo enjoys a range of opportunities supported by multiyear upgrade cycles.

Many of these transitions are very early on and Corvo is recognized by customers as the leading technology innovator.

We've made great progress developing new technologies and winning customer designs.

With that said.

We want to make it clear that our end markets have not yet turned.

Our outlook does not contemplate a significant change in the macro economic environment.

Robert Bruggeworth: These are relatively new markets for Corvo that are early in the transition to silicon carbide, and offer significant growth. We also offer a differentiated portfolio and power management where our initial wins have been in SSDs, power tools, and appliances, and we are leveraging our unique IP to expand into the defense, infrastructure, smart phones, wearables, and other markets. In CSG, new technologies are transforming user experiences in automotive, connected home, enterprise, industrial, and other markets.

The customer demand.

Environment for Corvo, it's more a reflection of strong design win activity and the early actions, we took to improve channel inventory.

When end markets recover that will represent an additional driver of growth for core book.

Now, let's turn to some quarterly highlights.

In defense and aerospace, we increased shipments of X band transmit and receive them and secured first orders for our <unk> in support of New land base C band radar programs.

We introduced the world's highest power Ku band satellite communications amplifier, which enables at 80% size reduction and is optimized for multiple applications.

Robert Bruggeworth: Ultrawideband is a critical focus area, and we are very excited about recent developments. Ultrawideband is in the very early innings of adoption, and we are seeing exciting opportunities giving expanded smartphone adoption, multiple in-vehicle placements, and an array of new capabilities such as ranging and precision location for indoor navigation. Watch 5 is another primary driver, and the transition to Wi-Fi 6E and Wi-Fi 7 is very early on. Wi-Fi 7 devices recently launched by Corvo's customers are offering breakthrough advances in speed, latency, and network capacity.

We also received a large production order for our recently launched sell to satellite solutions. These solutions incorporate advanced technologies from across our aerospace base station and mobile portfolios to enable low Earth orbit satellite connectivity.

In infrastructure, we were selected by a tier one base station OEM to supply switched LMA modules for next generation <unk> massive mimo radios.

We also continued to lead boxes for dropdown upgrade cycle with production orders from multiple customers and broad based design wins.

Robert Bruggeworth: Corvo also offers components and full system solutions that incorporate bluetooth low energy, zygmy, thread, and now matter. Matter is a recently launched technology overlay, essentially a common language that improves interoperability across smart home devices regardless of protocol or manufacturer. It is supported by iOS, Android, and major smart home platform providers and it's widely expected to simplify and accelerate the adoption of smart home devices. It's also early days for our four sensing touch sensors.

For power management markets, we release Q space.

Significant improvement over current industry offerings for analog and mixed signal circuit design and simulation.

<unk> improves the speed functionality and reliability of circuit simulation, extending the value core Roes providing designers.

Since its launch.

<unk> has surpassed 15000 unique downloads.

And automotive applications, we were selected to support a major in vehicle car access platform by a leading German automotive tier one.

Robert Bruggeworth: These are alternate sensitive memory-based sensors that enable new use cases and enhance device functionality. We have broad engagements across automotive smart impurities, track pads, true wireless headsets, smartphones, wearables, and other consumer applications in our opportunities are expanding as customers engage with our technology and develop new use cases. Looking at ACG, fewer than half of the Android smartphones this year will be 5G. Android 5G units are expected to grow in the low double digits for several years.

Multiyear program as a lifetime value over $250 million.

A major milestone for our ultra wideband portfolio.

Within this program Corvo, we'll supply ultra wideband solutions for in vehicle applications for a leading German automotive OEM.

We also secured design win from another leading German automotive tier one to supply <unk> solutions for our communications platform launching this year.

Lastly, we were selected to supply force sensing touch sensors that enhanced smart interior functionality and our recently launched easy from a Korean based automotive OEM.

Robert Bruggeworth: That's a big growth opportunity for Corvo as we move from very little content and 4G phones to significant dollar content in 5G phones. Another driver is 5G Advanced, which leverages new releases of 5G standard. 5G advanced smart phones will include additional transmit and receive and satellite dance, slavery, Corvo's products, and technology portfolio. 5G will migrate to 5G Advanced Overtime and bridge us to new development efforts and new content required to accommodate 60 frequency spectrum at the end of the decade.

Complementing the large ultra wideband win in automotive Corvo was selected by the leading Android smartphone Oems to supply ultra wideband for their spring 2024 flagship launch.

Worth, noting that the ultra wideband wins in automotive and Android markets are significant as these two customers represent the largest volume opportunities in their respective markets.

To extend our reach we are sampling ultra wideband solutions across fleet management logistics, agriculture, and other applications, leveraging our precision location capabilities to advance operational efficiencies.

Robert Bruggeworth: Big picture, Corvo enjoys a range of opportunities supported by multi-year upgrade cycles. Many of these transitions are very early on, and Corvo is recognized by customers as a leading technology innovator. We have made great progress developing new technologies and winning customer designs. With that said, we want to make it clear that our end markets have not yet turned, and our outlook does not contemplate a significant change in the macro economic environment.

And Wi Fi, we secured multi year design wins with tier one network operators in the U S and in India.

These wins support next generation wireless infrastructure for retail enterprise and home applications.

Across the Android ecosystem, we increased shipments of our highly integrated modules in support of Android smartphones from the high tier through the mass market.

Robert Bruggeworth: The customer demand environment for Corvo is more a reflection of stronger wind activity and the early actions we took to improve channel inventory. When end markets recover, that will represent an additional driver of growth for Corvo.

Notably, we extended our strong share position with the leading Android smartphone Oems and their flagship smartphone.

In addition to the ultra wideband when we're also selected supply that low band mid high band Ultra high band secondary transmit receive tuning and Wi Fi.

Robert Bruggeworth: The model has turned to some quarterly highlights. In defense and aerospace, we increase shipments of X-band transmit and receive stems and secure first orders for our 50 watt PAs in support of new land-based C-band radar programs. We introduced the world's highest power KU-band satellite communications amplifier, which enables an 80% size reduction and is optimized for multiple applications. We also received a large production order for recently launched SEL to satellite solutions. These solutions incorporate advanced technologies from across our aerospace, base station and mobile portfolios to enable low Earth orbit satellite connectivity.

Lastly, we expanded customer sampling of our recently launched mid high band pad.

<unk> newest integrated architecture Leverages next generation bar.

<unk> and <unk> technologies and advanced packaging the combined main pass content with receive pass commonly included in the diverse receive module.

This and other highly integrated corvo architectures for the Android ecosystem free board space and improve efficiency to support future <unk> form factors and content like flip and fold architectures and transmit and receive non terrestrial network connectivity.

Robert Bruggeworth: In infrastructure, we were selected by a Tier 1 base station OEM to supply switch LNA models for next generation, 5G massive model radius. We also continue to lead boxes 4.0 broadband upgrade cycle with production orders from multiple customers and broadband design wins. The power management markets we released QSFICE, a significant improvement over current industry offerings for analog and mixed signal circuit design and simulation. QSFICE improves the speed, functionality, and reliability of circuit simulation, extending the value Qorvo is providing designers.

I want to thank the <unk> for continued operational excellence.

We have moved aggressively to reduce channel inventories, while securing broad based customer design wins.

The December quarter, our outlook reflects the seasonal profile of our large smartphone customer ramp as well as healthier channel inventories across most markets in the March quarter, we expect revenue to be more closely aligned with end market demand.

Longer term, we expect revenue.

Growth and margin expansion as product mix favors our higher growth investment.

And with that I'll hand, the call off to grant.

Thanks, Bob and good afternoon, everyone.

Robert Bruggeworth: Since its launch, the tool has surpassed 15,000 unique downloads. In automotive applications, we were selected to support a major in-vehicle car access platform by a leading German automotive Tier 1. This multi-year program has a lifetime value over $250 million, marking a major milestone for ultra-wide bandwidth volume. Within this program, Qorvo will supply ultra-wide band solutions for in-vehicle applications for a leading German automotive OEM. We also secured a design win from another leading German automotive Tier 1 to supply ZX solutions for communications platform launching this year.

Revenue for the quarter was $1 1 billion non-GAAP gross margin was 47, 6% and non-GAAP diluted EPS was $2 39.

All exceeding the high end of our August guidance revenue.

Increased approximately 70% sequentially and benefited from significant content gains that our largest customer.

Consistent with our guidance.

<unk> production levels improved but remain below historical averages.

During the quarter the impact from Underutilization and factory related variances was approximately 550 basis points versus approximately 800 basis points last quarter.

The increase in gross margin above the high end of our August guidance range was largely the result of revenue upside and product mix.

Robert Bruggeworth: Lastly, we were selected to supply four sensing touch sensors that enhanced smart and curious functionality in a recently launched EV from a Korean based automotive OEM. Completing the large ultra-wide band win in automotive, Qorvo was selected by the leading Android smartphone OEM to supply ultra-wide band for their spring 2024 flagship launch. It's worth noting that the ultra-wide band wins in automotive and Android markets are significant as these two customers represent the largest volume opportunities in their respective markets.

A larger portion of September revenue was manufactured in external silicon foundries and processed at third party SaaS.

By comparison, our December and March revenue will reflect a larger percentage of higher cost inventories manufactured internally during periods of lower utilization and a lower percentage of products manufactured at external silicon foundries and SaaS.

Beyond this fiscal year, we continue to see a clear path back to 50% plus gross margin initially during specific quarters, and then on a full year basis.

non-GAAP operating expenses in the quarter were $246 million slightly higher than our guidance due to performance based incentive compensation we.

Robert Bruggeworth: To extend our reach, we're sampling ultra-wide band solutions across fleet management, logistics, agriculture, and other applications leveraging our precision location capabilities to advance operational efficiencies. In Wi-Fi, we secured multi-year design wins with Tier 1 network operators in the U.S., and in India. These wins support next-generation wireless infrastructure for retail, enterprise, and home applications. Across the Android ecosystem, we increased shipments of our highly integrated modules in support of Android smartphones from the high tier through the mass market.

We are investing in new product development and targeting multi year growth opportunities across all three segments. In addition to growth oriented investments. We're also investing in enterprise wide productivity initiatives. These multi year efforts will support future growth and enhanced profitability as we upgrade modernization.

And standardize around the latest tools and best practices.

In total non-GAAP operating income in the quarter was $279 million or 25% of sales, which increased from seven 2% last quarter.

Robert Bruggeworth: Notably, we extended our strong share position with the leading Android smartphone OEM in our flagship smart... In addition to the ultra-wide-band win, we're also selected to supply the low-band, mid-high-band, ultra-high-band, secondary-transmit-receive tuning, and Wi-Fi. Lastly, we expanded customer sampling of our recently launched mid-high-band path. Korvo's newest integrated architecture leverages next generation, bought and saw technologies, and advanced packaging to combine main path content with received paths commonly included in the first received module. This and other highly integrated Korvo architectures for the Android ecosystem, free board space, and approval efficiency to support future 5G form factors and content like flip and fold architectures and transmit and receive non-terrestrial network connectivity.

Breaking out operating margin by each segment ACG was 34% HPA was 17% and CST was negative 27%, which includes the impact of the biotechnology Division.

During the quarter Corvo biotechnology has generated a $5 million in revenue and reduced operating income by approximately $7 million.

Just following quarter end, we successfully closed the sale of the Omnia biotechnology business.

And we will continue to sell BARF filters to support the acquired.

non-GAAP net income was $236 million.

Representing diluted earnings per share of $2 39.

Moving on to the cash flow statement free cash flow was 64 million and Capex was $29 million.

During the quarter, we repurchased $100 million worth of shares at approximately $103 per share.

The rate and pace of our repurchases is based on our long term outlook free cash flow low leverage alternative uses of cash and other factors.

Robert Bruggeworth: I want to thank the Korvo team for continued operational excellence. We have moved aggressively to reduce channel inventories by securing broad-based customer assignments. In the December quarter, our outlook reflects the seasonal profile of a large smartphone customer ramp, as well as healthier channel inventories across most markets. In the March quarter, we've set revenue to be more closely aligned within market demand. Longer term, we've set revenue, growth, and margin expansion, as product mix, favors our higher growth investment agent.

Turning to the balance sheet.

As of quarter end, we had approximately $2 billion of debt outstanding with no near term maturities and $707 million of cash and equivalents.

System with our expectations and commentary from the prior earnings call. Our net inventory balance was reduced in the period and ended the quarter at $840 million down.

Down $78 million sequentially looking at days of inventory. This represents a decrease from 210 days to 138 days.

Grant Brown: And with that, I'll hand the call off the grant. Thanks Bob, and good afternoon everyone. Revenue for the quarter was $1.1 billion. Non-gap growth margin was 47.6% and non-gap diluted EPS was $2.39. All exceeding the high end of our August guidance. Revenue increased approximately 70% sequentially and benefited from significant content gains that are largest customers. Consistent with our guidance, factory production levels improved, but remained below historical averages. During the quarter, the impact from underutilization and factory-related variances was approximately 550 basis points, versus approximately 800 basis points last quarter.

Turning to our current quarter outlook, we expect revenue of approximately $1 billion, plus or minus $25 million non.

non-GAAP gross margin between 43 and 44%.

And non-GAAP diluted EPS of $1 65 at the midpoint of the revenue range.

We project non-GAAP operating expenses in the December quarter will be $235 million to $240 million.

Below the operating income line non operating expense is expected to be approximately $10 million, reflecting interest paid on our fixed rate debt offset by interest income earned on our cash balances FX gains or losses, along with other items or.

Grant Brown: The increase in growth margin above the high end of our August guidance range was largely the result of revenue upside and product mix. A larger portion of September revenue was manufactured at external silicon boundaries and processed at third party OSAPs.

Our non-GAAP tax rate for fiscal 'twenty, four is expected to be within a range of 13% to 15%.

We expect our inventory balance will decrease again in the December quarter in terms of channel inventory environment continues to improve with Android Oems, indicating inventory levels are approaching historical norms outside of the Android ecosystem. There are smaller pockets of channel inventory it will take longer to dive.

Grant Brown: By comparison, our December and March revenue will reflect a larger percentage of higher cost inventories manufactured internally during periods of lower utilization and a lower percentage of products manufactured at external silicon boundaries and OSAPs. Beyond this fiscal year, we continue to see a clear path that 50% plus gross margin initially during specific quarters and then on a full-year basis. Non-gap operating expenses in the quarter were $246 million, slightly higher than our guidance due to performance-based incentive compensation.

Test.

We continue to forecast fiscal 'twenty four revenue above fiscal 'twenty three for the full fiscal year fiscal 'twenty four non-GAAP gross margin is expected to be 44% or slightly better with variability primarily tracking utilization and mix.

<unk> enjoys multi year growth drivers across all three of our operating segments, we offer a broad portfolio of technologies and capabilities and we are uniquely positioned across leading customers and large markets. We expect continued strength on large customer programs and we are investing to drive outsized growth and diverse.

Grant Brown: We are investing in new product development and targeting multi-year growth opportunities across all three segments. In addition to growth-oriented investments, we're also investing in enterprise-wide productivity initiatives. These multi-year efforts will support future growth and enhance profitability as we upgrade, modernize, and standardize around the latest tools and best practices. In total, non-gap operating income in the quarter was $279 million or 25% of sales, which increased from 7.2% last quarter. Breaking out operating margin by each segment, ACG was 34%, HPA was 17%, and CSG was negative 27%, which includes the impact of the biotechnology division. During the quarter, Corvo Biotechnologies generated a half a million in revenue and reduced operating income by approximately $7 million.

<unk> broadened our market exposure and accelerate growth.

At this time please open the line for questions. Thank you.

We will now begin the question and answer session.

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If you are using a speakerphone please pick up your handset before pressing the key.

You withdraw your question. Please press Star then two.

In the interest of time, we ask that you. Please limit yourself to one question and one follow up.

At this time, we will pause momentarily to assemble our roster.

Okay.

And our first question comes from Tim <unk> of UBS. Please go ahead.

Grant Brown: Just following quarter end, we successfully closed the sale of the AMIA Biotechnology business and will continue to sell Bob Filters to support the acquired. Non-gap net income was $236 million, representing deluded earnings per share of $2.39.

Hi, Thanks for taking my question. This is a mind jumping in for Ken just looking into fiscal 2025.

Should we think about the trajectory of gross margin as utilization starts to come back.

Is there a certain level of revenue we should be thinking about.

Grant Brown: Moving on to the cash flow statement. 3 cash flow was $64 million, and CAPEX was $29 million. During the quarter, we repurchased $100 million worth of shares at approximately $103 per share. The rate and pace of our repurchases is based on our long-term outlook, 3 cash flow, low leverage, alternative uses of cash, and other factors.

For our core <unk> to be back at that 50% range.

Sure I'll take that this is grant thanks for the question.

There are a large number of factors.

Fluence gross margins, such as revenue mix and input costs, including utilization impacts. So I wouldn't think of it in terms of an absolute revenue level.

<unk> products carry a higher gross margin than others due to the nature of that business or end market for instance.

Looking at our base station product line, which is generally accretive to gross margins, but with base station demand weaker coupled with the excess channel inventories we've been talking about there. This is currently a headwind to margin versus historic levels.

Grant Brown: Turning to the balance sheet. As of quarter end, we had approximately $2 billion of debt outstanding with no near-term maturities and $707 million of cash and equivalence. Consistent with our expectations and commentary from the prior earnings call, our net inventory balance was reduced in the period and ended the quarter at $840 million. Down $78 million sequentially. Looking at days of inventory, this represents a decrease from 210 days to 138 days. Turning to our current quarter outlook, we expect revenue of approximately $1 billion plus or minus $25 million.

Product mix can also impact gross margin based on where it's manufactured as I mentioned in my prepared remarks for instance last quarter, we shipped a higher portion of products that are manufactured at external silicon foundries and process to third party Oss and those products are not impacted by our internal factory utilization, which as we've mentioned is running below his.

Oracle averages.

Aside from product mix unit cost is the other half of the equation.

It is a bit more complex given that input costs can affect gross margin on a lagging or leading basis. For example, historical under utilization will create higher unit costs in that inventory and as it's sold in future periods that impact lags Alternatively in anticipation of lower future demand production volumes can be cut.

Grant Brown: Non-GAP gross margin between 43 and 44% and non-GAP diluted EPS of $1.65 at the midpoint of the revenue range. We project non-GAP operating expenses in the December quarter. We'll be $235 to $240 million. Below the operating income line, non-operating expense is expected to be approximately $10 million reflecting interest paid on our fixed rate debt offset by interest income earned on our cash balances, effects gains or losses along with other items. Our non-GAP tax rate for fiscal 24 is expected to be within a range of 13 to 15%.

And utilization will fall and in that sense, the impact tends to lead those anticipated changes in demand.

So there's a number of factors that impact gross margin.

I wouldn't think of it in terms of an absolute revenue level, but rather a time of us to move through our high cost inventory return utilization levels back to normal run the factories efficiently and will be on a path back to 50% plus.

Grant Brown: We expect our inventory balance will decrease again in the December quarter. In terms of channel inventory, the environment continues to improve with Android OEMs indicating inventory levels are approaching historical norms. Outside of the Android ecosystem, there are smaller pockets of channel inventory that will take longer to digest We continue to forecast fiscal 24 revenue above fiscal 23 for the full fiscal year fiscal 24 non-gap gross margin is expected to be 44% or slightly better with variability primarily tracking utilization and myths.

Thank you.

The next question comes from Gary Mobley of Wells Fargo Security Suite go ahead.

Hi, guys I wanted to pick up.

Grant with your detailed response to the last question I know in your prepared remarks, you said gross margin throughout fiscal year 'twenty five we'll at times.

<unk>, 50%, so I presume.

That would be in your seasonally strong periods.

And.

But did you did you say that.

Grant Brown: Porvo enjoys multi-year growth drivers across all three of our operating segments We offer a broad portfolio of technologies and capabilities and we are uniquely positioned across leading customers and large markets. We expect continued strength on large customer programs and we are investing to drive outsides growth in diverse businesses to broaden our market exposure and accelerate growth.

Well, 50% or above is the target for the full year or just the specific few quarters up seasonal penis.

Sure I've said that I think it will achieve 50%.

On a specific quarter before it achieved 50% across the whole year and thats somewhat macro dependent and obviously the volumes will dictate at what levels, we returned to a utilization where that's possible.

Unknown Executive: At this time, please open the line for questions. Thank you. We will now begin the question and answer session to ask a question you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In the interest of time we ask that you please limit yourself to one question and one follow up. At this time, we will pause momentarily to assemble our roster.

Okay.

And Bob you mentioned I think in describing the fourth quarter of this year in line with market conditions.

And so your full year guidance implies no more than that.

10% sequential revenue decline in the fourth quarter. So how would you call the seasonal trends in the fourth quarter. We're talking about mid single digit I think which is usual or perhaps as much as double digit percent declines.

Sure Gary.

I'll take the high level. This make sure we're clear on what we typically see in the fourth quarter, which as we've said all along typical anymore isn't typical because it seems.

Toshiya Hari: Our first question comes from Tim, a query of UBS please go ahead. Hi, thanks for taking my question. This is Amon jumping in for Ken. Just looking into fiscal 2025, I actually think about the trajectory of gross margin as you know, utilization starts to come back. Is there like a certain level of revenue we should be thinking about for a core vote to be back at that to keep a set range?

Every time, we are faced with something different from losing our second largest customer to COVID-19 hits for various economic factors. What my comments were around us given the current economic outlook.

Not expecting our market to rebound.

As we worked through all of this channel inventory that we talked about we're going to hit the what we think is the end market demand now and market demand typically and what we're forecasting now is what we see as our largest customers ramp continues to come down in March.

Toshiya Hari: Sure, I'll take that. This is Grant. Thanks for the question. There are a large number of factors that can influence gross margins such as revenue mix and input costs, including utilization impact. So I wouldn't think of it in terms of an absolute revenue level. Some products carry a higher gross margin than others due to the nature of that business or in market, for instance, looking at our base station product line, which is generally accreted to gross margins, but with base station demand weaker, coupled with the excess channel inventories we've been talking about there.

We have a seasonal.

Usually the weakest quarter for our China Android business in March and some of that is offset by a ramp at the largest Android customer that we have so.

As far as percentages go I'm not going to call percentages Underselling you that from our view that's the dynamics that are driving most of our business.

Toshiya Hari: This is currently ahead when to margin versus historical levels. Product mix can also impact gross margin based on where it's manufactured. As I mentioned in my prepared remarks, for instance, last quarter, we shift the higher portion of products or manufactured at external silicon foundries and process the third party OSATs. And those products are not impacted by our internal factor utilization, which as we've mentioned is running below historical averages. Aside from product mix, unit cost is the other half the equation.

Brad commented that our ACG business is growing year over year.

Our CSD business will start growing this quarter and will be up in March and really the lagging business for US is our HPA business and we've talked about what's going on there with primarily what used to be our largest business and the infrastructure side and were not seeing that now so when you integrate all that we're still comfortable we're going to be up significantly.

In March year over year, and we're comfortable we're going to be up for the fiscal year 'twenty for over 23.

Toshiya Hari: It's a bit more complex, given that input costs can affect gross margin on a lagging or leading basis. For example, historical under utilization will create higher unit costs in that inventory. And as it's sold in future period, that impact lags alternatively in anticipation of a lower future demand production volumes can be cut and utilization will fall. And in that sense, the impact tends to lead those anticipated changes in demand. So there's a number of factors that impact gross margin.

Grant do you want to add anything to that but I want to give them all the moving pieces.

No I think you've covered it Bob I'd say, maybe 10%, but certainly not 15 right. We're committed to the comments now any macro related disruptions aside that we see growth in fiscal 'twenty four.

Okay.

The next question comes from Karl Ackerman of BNP terrible. Please go ahead.

Toshiya Hari: I would again wouldn't think of it in terms of an absolute revenue level, but rather a time of us to move through our high cost inventory return utilization levels back to normal, run the factories efficiently, and we'll be on a path back to 50% plus. Thank you.

Yeah. Thank you.

I have a clarification and a follow up.

Hum.

Yes.

I guess.

Can you just give them the content gains at your largest customer is it fair to say that customer now exceeds.

50% of your revenue in the quarter.

Yes.

We won't comment on any customers within the quarter, but will sum it up on the 10-K, the only thing I would say about 10% plus customers is that we did have more than one in the quarter.

Gary Mobley: The next question comes from Gary Mobley of Wells Fargo Security. Please go ahead. Hi guys. I want to pick up Grant with your detailed response to the last question. I know in your preparing marks, you said gross margin throughout the skewer 25 will at times be above 50%. So I presume that would be in your seasonally strong periods. And, but did you, did you say that it is well 50% or above the target for the full year or just the specific, you know, few quarters of seasonal thickness?

Thank you for that for my follow up you know Mediatek suggested that five <unk> units should grow double digits next year, certainly above overall smartphone unit expectations up low singles.

Your exposure to incremental gains in <unk> do come from China Android Oems.

I was hoping you could address how you think.

Huawei does or does not impact your China Android opportunity.

Robert Bruggeworth: Sure, I said that I think it'll achieve 50% on a specific quarter before it achieves 50% across the whole year, and that's somewhat macro dependent and obviously the volumes will dictate, you know, at what levels we return to utilization where that's possible. Okay, and Bob, you mentioned, I think in describing the fourth quarter of this year in line with market conditions. And so your full year guidance implies no more than 10% sequential revenue decline in the fourth quarter.

Both near term and longer term. Thank you.

I'll take the first part of that Karl and I'll, let Dave take the second part since he was just recently in China.

Actually a large part of our growth for <unk> is still the largest android manufacturer being Samsung.

The second point I would like to make is.

Right, we do have China exposure in <unk>, but most of that is actually in the export market for what they are trying to do to build their brands outside of China.

Just keep those two facts in mind, Dave was just in China.

Couple of weeks ago, and I'll, let him talk a little bit more about that lease.

At least we're seeing talking to all of our customers there along with your comment about Huawei.

Robert Bruggeworth: So, so how would you call the seasonal trends in the fourth quarter? Are we talking about mid single digit? I think which is usual or, or perhaps as much as double digit for to send to clients? Sure, Gary. I don't know. I'll take this high level.

Yeah, Thanks, Bob and so maybe I'll start with with Huawei and kind of size what were seeing for you.

Prior to the ramp of the new phone and they just announced they were doing about 2 million units a month.

Robert Bruggeworth: Just make sure we're clear on what we typically see in the fourth quarter, which as we've said all on typical anymore is in typical because it seems every time we're faced with something different from losing our second largest customer to, you know, COVID hits to various economic factors. What my comments were around is, given the current economic outlook, you know, we're not expecting our markets to rebound. And as we work through all this channel inventory that we talked about, you know, we're going to hit the, what we think is the end market demand.

And so we've seen a typical premium tier phone ramp where that peaked out at last couple of weeks of data, we're actually seeing that come back down. So they may be on the other side of that ramp, but if you look at the incremental growth that we see over what they were shipping previously.

On an annual basis is about it's about 10 to 20 million units.

So that's a pretty good growth for that customer.

It's not that meaningful when you look at our total market size of about $1 2 billion smartphones per year.

Robert Bruggeworth: Now, end market demand, typically, and what we're forecasting now is what we see is our largest customer's rent continues to come down in March. We have a seasonal, usually the weakest quarter for our China Android business in March. And some of that is offset by a ramp at the largest Android customer that we have.

Now when it comes to our China customers.

As Bob said, a large part of their business in a lot of their growth is coming from overseas business and so we're we're very well represented across our China OEM customers and certainly in that overseas business, that's where we see a lot of the higher share and growth opportunity. So it's not just a china domestic situation.

Grant Brown: So, you know, as far as percentages go, I'm not going to call percentages. I'm just telling you that from our view, that's the dynamics that are driving most of our business. Grant commented that our ACG business is growing year over year. Our CSG business will start growing this quarter and will be up in March. And really the lagging business for us is our HPA business and we've talked about what's going on there with primarily what used to be our largest business in infrastructure side and we're not seeing that now.

You have to look at you have to look at that overseas business and many of those customers have pretty significant market share in a lot of those overseas markets.

Okay.

The next question comes from <unk> Hari of Goldman Sachs. Please go ahead.

Hi, Thank you.

I just wanted to follow up on the China Android market.

Specifically, what kind of trends did you see in the September quarter.

On a sequential basis and what's embedded in your guidance for December and related to that.

Grant Brown: So, you know, when you integrate all that, we're still comfortable. We're going to be up significantly in March, year over year. And we're comfortable. We're going to be up for the fiscal year 24 over 23, is sure. No, I think he covered it, Bob. I'd say, you know, maybe 10%, but certainly not 15, right? We're committed to the comments. Now any macro related disruptions aside that we see growth in fiscal 24.

We've been getting more questions about the competitive <unk>.

<unk> in China.

You guys have pretty good visibility and obviously you have got good relationships with your customers as you think about models coming out in 2024.

Any concerns around market share how should we think about gen to gen content growth.

Particularly as it pertains to your Oems export business.

Karl Ackerman: The next question comes from Karl Ackerman of the N.P. Paraba. Please go ahead. Yes, thank you. I have a clarification and a follow up. I guess I guess they just give the content gains to the largest customer. Is it fair to say that customer now exceeds 50% of revenue in the quarter?

David will handle that one yes sure Marc.

Let's see where to start.

Yes.

The China.

Customer base in the export market as well as in the domestic market I mean, we've got some pretty compelling products as Bob said I was just over there a few weeks ago I got to meet with all of our customers.

Our relationships continue to be very strong.

<unk> is a very high value on what we bring and they all reinforce that corvo is their main global strategic supplier for RF.

Robert Bruggeworth: We won't comment on any customers within the quarter, but we'll sum it up on the 10K. The only thing I'd say about 10% plus customers is that we did have more than one in the quarter. Thank you for that. For my follow up, you know, MediaTek suggested that 5G units should grow double digits next year, certainly above overall smartphone unit expectations of low singles. You know, most your exposure to incremental gains in 5G do come from China Android OEMs.

So we have deep discussions with Avalon on roadmap to align.

Their needs to our product plans and they're very highly engaged on our new low mid high as pad platform that we announced a couple of quarters ago.

Additionally, they're looking at expanding.

Their business with us in other areas such as power management.

Robert Bruggeworth: I was hoping you could address how you think Huawei does or does not impact your China Android opportunity. Both near term and longer term. Thank you. I'll take the first part of that car. I'll let Dave take the second part since he was just recently in China. Actually, a large part of our growth for 5G Android is still at the largest Android manufacturer being Samsung. The second point I would like to make is you're right.

Sensors and ultra wideband so.

The overall market as Bob mentioned.

Channel inventories are approaching normal many of those customers are getting a pretty healthy levels. So as we've been saying all along.

What was the headwind is now becoming a tailwind so we're starting to see that growth.

We had our largest bookings quarter in over two years.

So our customers have now gotten past the concern about inventory in there and Theyre looking forward now and starting to place orders more.

Aligned to what their true production plants and unit demand is so.

Robert Bruggeworth: We do have China exposure in 5G, but most of that is actually in the export market for what they're trying to do to build their brands outside of China. So just keep those two facts in mind. Dave was just in China just a couple weeks ago, and I'll let him talk a little bit more about that and what least we're seeing talking to all of our customers there, along with your comment about Huawei.

Thats certainly improved a lot now having said that.

Bob mentioned also we're not anticipating any major rebound in the end market.

We're just excited about the design wins that we've had and the inventory in the channel being cleared out and Thats driving a lot of our growth as we go forward.

Got it and then as a quick follow up.

Robert Bruggeworth: Yes, thanks Bob. And so we'll start with with Huawei and kind of size what we're seeing for you and and prior to the ramp of the new phone that they just announced they were doing about 2 million units a month. And so we've seen a typical premium to your phone ramp where that peak though last couple of weeks of data we're actually seeing that come back down so that maybe on the other side of that ramp.

Outside of mobile some of your broader analog peers have talked about science.

Signs of weakness are clear signs of weakness.

In industrial and in parts of automotive I think comes in for US has been weak for a couple of quarters now, but I guess the question is outside of mobile what kind of trends are you seeing and what sort of trajectory are you assuming as you sort of progress through the December quarter and go into March outside of mobile. Thank you.

Robert Bruggeworth: But if you look at the incremental growth that we see over what they were shipping previously, it's on an annual basis is about about 10 to 20 million units. So that's a pretty good growth for that customer, but it's not that meaningful when you look at a total market size of about 1.2 billion smartphones per year. Now when it comes to our China customers, as Bob said, a large part of their business and a lot of their growth is coming from overseas business.

Sure associated as grant, let me take that one we don't explicitly guide by segment.

But the views for each of those businesses is factored into our total guidance I'll try to provide you a little bit of color. There and then Dave can jump in and add.

Robert Bruggeworth: And so we're very well represented across our China OEM customers and certainly in that overseas business, that's where we see a lot of the higher share and growth opportunity. So it's not just a China domestic situation that you have to look at, you have to look at that overseas business. And many of those customers have pretty significant market share in a lot of those overseas business. Markets.

We have a pretty diverse collection of businesses that serve a number of end markets and they are not all in phase.

As Bob pointed out last quarter in fiscal 'twenty, our fiscal Q2, ACG returned to the year over year growth that we expected and we will continue to see that for the rest of the year and then this quarter. Our fiscal Q3, we forecast our CST segment will return to year over year growth and then finally in Q.

Four we expect HPA to return to year over year growth. So the businesses are a bit out of phase. If you want to think of them that way just continuing with HCA. As an example directly to your question. If you look inside of HVA theres various trends within each end market. It probably won't surprise you, but the base station market.

Toshiya Hari: The next question comes from Toshiya Hari of Goldman Sachs. Please go ahead. Hi, thank you. I just wanted to follow up on the China Android market. I guess specifically what kind of trends did you see in the September quarter on a sequential basis and what's embedded in your guidance for December and related to that? We've been getting more questions about the competitive landscape in China. You guys have pretty good visibility and obviously you've got good relationships with your customers.

Weak.

As an example, our revenues down over 50% year over year for the last four quarters.

A few years ago actually we hit $200 million in that business.

Before the Huawei ban in the <unk> base station rollout slowed but outside of China, only 25% of that mid band five <unk> infrastructure has been built so theres a lot of opportunity, but that's one area, where we continue to see some some meaningful headwind and market weakness.

Toshiya Hari: As you think about models coming out in 2024, any concerns around market share, how should we think about gender, gender and content growth, particularly as it pertains to your OEM's export business? Thanks. Dave, do we have a level? Sure about. Let's see where to start. The China customer base in the export market as well as in the domestic market. It got some pretty compelling products. As Bob said, I was just over there a few weeks ago.

Beyond that though there is also the broadband area within HPA.

Have a very strong position their high level of share, but the DOCSIS four <unk> upgrade cycle.

Maybe a bit slower and there could be some pockets of inventory in the very end products. There so the situation within infrastructures.

It's very different than say, our defense and aerospace group, where we're benefiting from significant strength and expect to grow in fiscal Q3 and fiscal Q4. So there's a lot of cross currents. There when you get into the details but this is why we maintain a diverse set of businesses a lot of them share the same manufacturing.

Toshiya Hari: I got to meet with all of our customers. Our relationships continue to be very strong. They place a very high value on what we bring. They all reinforce that Qorvo is their main global strategic supplier for RF. We have deep discussions with them on roadmap to align their needs to our product plans and they're very highly engaged on our new low mid-high SPAD platform that we announced a couple quarters ago. Additionally, they're looking at expanding their business with us in other areas, such as power management, sensors and L-to-Y band.

Footprint, which creates the operating efficiencies but.

Also scale.

The diversification on the top line, but what I'll add to that is in the cellular Iot market actually we saw has turned about two quarters ago.

Down so with CST coming back as Greg pointed out growing next quarter.

We're not expecting the Iot cellular Iot business to come back that's been down for us and we've been working through inventory in that segment as well. So I think thats been some commentary as well.

Toshiya Hari: The overall market, as Bob mentioned, the channel inventory are approaching normal many of those customers are getting to pretty healthy levels. As we've been saying all along, what was the headwind is now becoming a tailwind. We're at our largest booking is quarter in over two years. Our customers have now gotten past the concern about inventory and they're looking forward now and starting to place orders more aligned with their true production plans and unit demand.

Yes, I think you mentioned automotive as well.

That we're growing from pretty small base there so Bob talked about a lot of the design wins. So we're pretty excited about the growth opportunity there, but thats all new programs that will be ramping over the next couple of years that will drive that growth for us, but it's coming off of a relatively small base. So we're not.

Exposed there to really maybe see some of the things youre seeing from some of our peers.

Toshiya Hari: That's certainly improved a lot. Having said that, as Bob mentioned also, we're not anticipating any major rebound in the end market. We're just in the channel being cleared out and that's driving a lot of our growth as we go forward. Got it. As a quick follow-up, some of your broader analog peers have talked about signs of weakness or clear signs of weakness in industrial and parts of automotive. I think comes in for it's been weak for a couple quarters now.

The next question comes from Ruben Roy of Stifel. Please go ahead.

Yes, hi, Thank you Bob I wanted to ask about the ultra wideband marketplace.

In the past you've had.

A few system wins in the Android ecosystem for Ultra Wideband I don't know if there are characterized as flagship back then so maybe if you could talk about the broader opportunity in smartphone specifically.

That youre seeing and then expanding outside of handset again in the past I think you've characterized the market as several hundred million dollars of opportunity and you're talking about a $250 million lifetime opportunity in the auto wins. So has anything changed are you are you seeing accelerating development and if you can give us an update on <unk>.

Toshiya Hari: I guess the question is outside a mobile, what kind of trends are you seeing and what sort of trajectory are you assuming as you sort of progress through December quarter and go into March outside a mobile. Thank you. Sure, so she does grant. Let me take that one. We don't explicitly guide by segment, but the views for each of those businesses is factored into our total guidance. I'll try to provide you a little bit of color there and then they can jump in and add.

You characterize the opportunity that'd be great.

Sure. Thanks Reuben.

Extremely excited about what the teams accomplished in some big wins in ultra wideband.

One of the Android.

Foreign manufacturers, Google we've been in for a couple of generations now so we've talked about that.

Toshiya Hari: We have a pretty diverse collection of businesses that serve a number of end markets and they're not all in space. As Bob pointed out last quarter in fiscal Q2, ACG returns to the year-over-year growth that we expected and we'll continue to see that for the rest of the year. Then this quarter, our fiscal Q3, we forecast our CSG segment will return to year-over-year growth and then finally in Q4 we expect HPA to return to year-over-year growth.

You can get tear downs I think from our comments you know who the next one is what surprised us about ultra wideband.

Yes, I think we said this a year ago or more than when we first acquired Deca wave that we were on the original platforms and our largest customers phones with the RF front end for ultra wideband and what we believed was going to happen as it was going to take off in phones first in automotive second what's actually happening.

We're picking up a lot more on the automotive side in handsets seems to be trailing it at least in the adoption now as you know it takes a little bit longer to get to market in a car so they're out.

Toshiya Hari: The businesses are a bit out of phase if you want to think of them that way. Just continuing with HPA as an example directly to your question, if you look inside of HPA there's various trends within each end market. It probably won't surprise you but the base station market being weak is an example. Our revenues down over 50% year-over-year for the last four quarters. A few years ago actually we hit 200 million in that business before the Huawei ban and the 5G base station rollout slowed but outside of China only 25% of that mid-band 5G infrastructure has been built so there's a lot of opportunity but that's one area where we continue to see some meaningful headwind and market weakness.

Winning platforms now in building those in so our expectation is we're going to lead in design wins in automotive with phones are going to come up fast and Dave mentioned earlier in his comments that we're working with many of the other Chinese handset Oems to introduce ultra wideband. The thing I want to point out is in the tier one.

Don.

Jeremy manufacturer that we want in the current win is now it will support a German tier one, but they will take that same platform to other U S. Other manufacturers around the world that platform plus we've been working with others on platforms that will also go into the automotive area. So we.

Toshiya Hari: Yes. Beyond that, though, there's also the broadband area within HPA. We have a very strong position there, high level of share, but the Doxas 4.0 upgrade cycle may be a bit slower, and there could be some pockets of inventory in the very end products there. So the situation within infrastructures is very different than, say, our defense and aerospace group, where we're benefiting from significant strength and expect to grow in fiscal Q3 and fiscal Q4.

A lot of opportunity there and placements in autumn automotive can go from five or six up to 910. So they can be big wins, depending on how they adopt to use the ultra wideband in a car and it's more than just quote keyless entry and I think that's what's really exciting about the opportunities. There. So if I look at that and look.

Handset also a couple of quarters ago, we talked about ultra wideband and access points Wi Fi access points for indoor navigation, which is another exciting opportunity and where it is.

Toshiya Hari: So, there's a lot of cross current there when you get into the details, but this is why we maintain a diverse set of businesses. A lot of them share the same manufacturing footprint, which creates the operating efficiencies, but also scale and the diversification on the top line. What I add to that is, in the cellular IoT market, actually, we saw this turn about two quarters ago down. So with ESG coming back, as Grant pointed out, growing next quarter, we're not expecting the IoT, cellular IoT business to come back.

We're seeing it now going into other types of products, we're working with various manufacturers Oems for other things in your home that need that kind of technology. So we're very excited about the things that are going on there really appreciate your question.

Thank you for all that detail Bob I have a quick follow up for grant.

Just in terms of inventory and I see the.

On balance sheet inventory coming down.

Hopefully and potentially.

Growth here next year.

Do you have sort of a target level either in <unk> or dollar for inventory or how youre thinking about that as you go forward post the December quarter.

Toshiya Hari: That's been down for us, and we've been working through inventory and that segment as well. I think that's been some commentary as well. Yeah, I think you mentioned automotive as well, and that we're growing from pretty small base there. So Bob talked about a lot of the design links. We're pretty excited about the growth opportunity there, but that's all new programs that will be ramping over the next couple of years to drive that growth for us. But it's coming off of a relatively small base, so we're not as exposed there to really maybe see some of the things we're seeing from some of our peers.

Yes, sure I mean, we usually have commented on our target around four turns so high threes to four would be pretty typical range for us to look to achieve.

The next question comes from Edward Snyder with Charter equity Research. Please go ahead.

Thanks, a lot first of all housekeeping can you give us a percentage of revenue for each of the three businesses sorry, if I missed that.

And then grant if I take a look at your China revenue over over the years actually it looks like if you exclude this.

Ruben Roy: The next question comes from Ruben Roy of people. Please go ahead. Yeah, hi, thank you. Bob, I wanted to ask about the ultra-wide band marketplace. I think in the past you've had a few system wins in the Android ecosystem for ultra-wide band. I don't know if they were characterized as flagship back then, so maybe if you could talk about the broader opportunity and smartphones specifically that you're seeing and then expanding outside of hand set.

Aero when you are over shipping in the area when you're under shipping. Your average is probably close to $2 50 to 300, a quarter and I know you did about $150 million last quarter, we haven't seen yet.

For September yet, but doesn't that suggest youre dealing with VB 100 $150 million.

Inventory burn per quarter, just trying to bracket those numbers.

Ruben Roy: Again, in the past, I think you've characterized the market as several hundred million dollars of opportunity and you're talking about a $250 million lifetime opportunity in the auto win. So, as anything changed, are you seeing accelerating development and if you can give us an update on how you look at that opportunity, that'd be great.

Yes, sure Ed I can help you with the percent of revenue, but we haven't commented on the China revenue in the quarter.

ACG was 77% HPA was 14 and CSC was the balance about 9% and yes, we havent commented on what a normalized level of Android.

Robert Bruggeworth: Sure. Thanks, Ruben. Extremely excited about what the teams accomplished in some big wins in ultra-wide band. One of the Android phone manufacturers, Google, we've been in for a couple generations now, so we've talked about that and you can get tear downs. I think from our comments, you know, who the next one is. What surprised us about ultra-wide band is, you know, again, I think we said this a year ago or more than when we first acquired decalates, that we were on the original platforms in our largest customer phones with the RF front in for ultra-wide band and what we believe was going to happen is it was going to take off and phones first and automotive second.

Revenue, our China revenue would be on the outside of the comments you've already made but.

I don't know if theres always add is we are still under shipping to end demand best we can tell.

Robert will comment on the end of it.

Right, but when it snaps back to something more normal you said inventories are normalizing and I know demand changes year over year, but given your.

Sure.

Kind of a common position as a preferred vendor for most of the phones being sold.

Yes.

Maybe this will help as we bring it down that means revenues do go up I mean, it's not we haven't been shipping so we've been up the last two quarters.

Yeah, and maybe Ed I would also make the distinction between channel inventory in our own inventories. So channel inventories. We think are relatively healthy maybe even earlier than we had commented on in the past, where we thought it would take until December.

Robert Bruggeworth: What's actually happening is we're picking up a lot more in the automotive side and hand sets seems to be trailing it at least in the adoption. Now, as you know, it takes a little bit longer to get the market in a car, so they're out, you know, winning platforms now and building those in. So our expectation is we're going to lead and design wins in automotive, but phones are going to come up fast.

So thats.

Improving situation our own inventories is as we're selling through them requires us to achieve the mix shifts that we're going to see in the second half. So we will start selling through our own high cost inventories in Q3 and Q4 largely.

Robert Bruggeworth: And Dave mentioned earlier in his comments that we're working with many of the other Chinese Amphit OEMs to introduce ultra-wide band. The thing I want to point out is in the Tier 1 German manufacturer that we want in, the current win is now to support a German Tier 1, but they will take that same platform to other U.S, and other manufacturers around the world, that platform plus we've been working with others on platforms that will also go into the automotive.

And we do expect growth in Q3, though.

Well you said you saw the largest bookings in two years in the last quarter or normally those bookings are for one year out or so I know it varies.

No not in Europe.

Yes.

Normal lead times for us.

The next question comes from Sarine pedigree of Raymond James. Please go ahead.

Robert Bruggeworth: So we see a lot of opportunity there and placements and automotive can go from, you know, five or six up to nine or 10. So they can be big wins, depending on how they adopt to use the ultra-wide band in a car. And it's more than just quote, keyless entry. And I think that's what's really exciting about the opportunities there. So if I look at that and look at hand set, also a couple quarters ago, we talked about ultra-wide band in access points, Wi-Fi access points for indoor navigation, which is another exciting opportunity.

Thank you.

Clarification on the China business, either Bob or grant I think one of the comments is that the inventories are coming down and businesses.

Robert Bruggeworth: And we're just seeing it now going into other types of products we're working with various manufacturers, OEMs, for other things in your home that need that kind of technology. So we're very excited about the things that are going on there and really appreciate your question. Thank you for all that detail Bob.

From the trough levels.

Growing sequentially, but at the same time I think Bob you said in your comments about the March quarter, you are expecting China to be seasonal given that inventories have kind of pretty much normalized I would've thought China would be you know better than seasonal in March. So just if you can give some clarification on that why it will only be seasonal in March.

Because what I meant was from the demand perspective in March that is typically a seasonally low point for China.

That's what I said.

Okay, but it doesn't mean that your business is going to decline seasonally in March quarter.

Grant Brown: I have a quick follow up for Grant just in terms of inventory and I see the on balance sheet of inventory coming down ahead of you know hopefully and potentially a growth year next year. Do you have sort of a target level either in DOI or or or dollar for for inventory or how you're thinking about that as you go forward post December quarter? Yeah, sure we usually have commented on our target around four terms. So high three to four would be a pretty typical range for us to look to achieve.

Your China business.

I also said as we come we pretty much cleared out most of the other players. So we are seeing growth, which is what I, just said that this quarter and our Android business.

Yes, maybe I'll restate, what Bob had commented on earlier just in terms of next quarter, we do see growth in Android.

But in March we do expect to see the typical decline there which is on the other side of our largest customers ramp and March is also historically a seasonally low point for handset sales in China. So those two factors are somewhat offset by the largest android customer and their timing of phone launches.

Edward Snyder: The next question comes from Edward Snyder of Charter Athlety Research. Please go ahead. Thanks a lot.

Grant Brown: First I'll ask you to give us a percentage of revenue for each of the three businesses. Sorry if I missed that. And then Grant to take a look at your China revenue over the years actually. It looks like if you exclude the era when you were overshipping and the era when you're undershipping your average is probably close to two fifty to three hundred a quarter. And I know you would do about a hundred fifty million last quarter.

The fact that the channel is healthier so with all that said, we do think it'll be better than typically seasonal but again, it's anyone's guess as to what seasonality means.

They're our largest customer has the largest impact on March.

Let's see how those sales too.

Got it got it that makes sense and then.

You know this year has been in terms of the content expansion for you Bob it's been pretty pretty impressive and I think some of those content gains also came from share gains. So as you look out to the next six to 12 months you know how are you feeling about because I do get this question about sustainability of some of the content gains from this year. So if you could help us maybe two.

Grant Brown: We haven't seen the K for September yet but doesn't it suggest you're dealing with maybe a hundred hundred fifty million dollars of inventory burn per quarter is trying to bracket those numbers. Yeah, sure it I can help you with the percent of revenue but we haven't commented on the China revenue in the quarter ACG was seventy seven percent HPA was fourteen and CSU was the balance about nine percent. And yeah, we haven't commented on you know what a normalized level of Android revenue or China revenue would be outside of the the comments we've already made but I don't know if there's always added is we are still undershipping to end demand best we can tell.

The extent you have visibility how should how should we think about your content gains.

Both in premium as well as in the mid tier.

I can speak to the high end phones, and I'll start with our largest customer because it's been question before but our growth. This year at our largest customer really speaks to the strong position we have there and we are.

Or one of their trusted suppliers as well as the investments we've been making to deliver them.

Grant Brown: Right. We're coming up near the end of it. Right, but when it snaps back to something more normal you said inventory are normalizing and I know that man changes year over year but given your your kind of in common position that's preferred vendor for most of those phones being sold. Yeah, we've been and maybe this will help as we bring it down that means revenues do go up. I mean, it's not we haven't been shipping so we've been up the last two quarters.

Great technologies and products.

This year, we grew mostly from new content and.

And gain some share in sockets.

We hope for many years, so we feel good about that I'll remember they are performance driven customer.

Winning where we're bringing strong capabilities and have consistently done well.

Grant Brown: Yeah, and maybe I'd also make the distinction between channel inventory and our own inventory. So channel inventory as we think are are relatively healthy maybe even earlier than we had commented on in the past where we thought it would take until December. So that's a that's a improving situation. Our own inventory is as we're selling through them requires us to achieve the mixed shift that we're going to see in the second half.

No. If you look at the available Pam there we remain under represented so clearly that's a target of growth for us and we will continue to invest to be able to win there.

Now that's also regardless of the baseband may decide to use.

We enjoyed multiple opportunities to grow our content.

Not only in the areas, where we've been strong in the past, but also in areas that will be new sockets Corvo again, thats about our largest customer.

Grant Brown: So we'll start selling through our own high cost inventory in Q3 and Q4 largely. Okay, and we do expect we're open. Well, you said you saw that the largest bookings in two years in the last quarter and normally those bookings are for what year out or so I know it varies but. No, not a year is. Normally times for us.

In my prepared remarks, I talked about.

The leading Android smartphone manufacturer and our ability to continue to gain share there and we've talked about ultra wide band along with all of those types of components. Dave also spoke about in China and bring out our new technologies, where we have integrated the mid high band plus the diversity received into that module, that's going to be in.

Srinivas Pajjuri: The next question comes from Serini Pajuri of Raymond James please go ahead. Thank you. Just a clarification on the China business either Bob or Grant. I think one of the comments is that yeah the inventory is coming down and businesses you know from from the trough levels it's growing sequentially but at the same time. I think Bob you said in your comments about the March quarter you're expecting China to be seasonal given that inventory is kind of pretty much normalized out of dark China would be you know better than seasonal in March.

80 to grow there as well, but you've also talked about ultra wideband into some of those handsets some of our sensors power management. So I think as we look across the portfolio, we feel pretty good in our ability to continue to grow our dollar content enhancers, whether it's with the flagship premium tier or the mass market.

Yeah.

The next question comes from Vivek Arya of Bank of America Securities. Please go ahead.

Thank you for taking my questions for the first one you are guiding.

Srinivas Pajjuri: So just if you can give some clarification on why it would only be seasonal. March. Because what I met was from the demand perspective in March that's typically a seasonally low point for China. That's what I said. Okay, but doesn't mean that your business is going to decline seasonally in March quarter. You're China business. But what I also said is we come, we pretty much cleared out most of the inventory, so we are seeing growth, which is what I just said to Ed, this quarter in our Android business.

December sales down 9% sequentially or so I thought the original intention was to kind of stay flat.

Dish the large customer that I imagine should be flattish and I think one of your competitors mentioned a sharp ramp in.

Terms of their China shipments getting into December.

I'm curious Bob what is leading you to kind of guide.

Sales down when some of these big customer trends seem to be growing sequentially or is it just conservatism or is it non cellular markets that's guiding that outlook.

Srinivas Pajjuri: In China, maybe I'll restate what Bob had commented on earlier, just in terms of next quarter, we do see growth in Android. But March, we do expect to see the typical decline there, which is on the other side of our largest customers ramp. And March is also historically a seasonally low point for handset sales in China. So those two factors are somewhat offset by the largest Android customer and their timing of phone launches, plus the fact that the channel is healthier.

Thanks, Vivek I know I've said this before but I'll remind you in the audience.

We ship a majority of our parts that are not on the motherboard.

So the timing of when we see the ramp is different than maybe you were talking about baseband customer I don't know they are on the motherboard a lot of what we have goes to the flex circuits. So they build those ahead of the motherboard. So our timing can be different.

Want to make sure that that's also if its the baseband customer if you remember we had an inventory build that they blamed at that customer we didn't see that bill. So therefore, we've naturally follow the progression of the builds they may have had a pause and as you point out the inventory will go down then they would see a quick ramp up so I can't comment on their business, but I can tell you that.

Srinivas Pajjuri: So with all that said, we do think it'll be better than typically seasonal, but again, it's anyone's guess as to what seasonality means. So our largest customer has the largest impact on March. Let's see how their sales do. Got it, got it, makes sense.

We've typically lead.

Robert Bruggeworth: And then this year has been in terms of the content expansion for you, Bob. It's been pretty impressive. And I think some of those content gains also came from share gains. So as you look out to the next six to 12 months, how are you feeling about, because I do get this question about sustainability of some of the content gains from this year. So if it could help us maybe, you know, to the extent you have visibility, how should how should we think about your content gains, both in premium as well as in the in the mid-tier?

The ramp because of how much product we have on flex circuits, which is different than most of the products that are on the motherboard.

Vivek I'll just pick up from there in terms of our prior discussion around the December quarter.

The flat comment was relative to a 1 billion dollar Q2, and we've just exceeded that by 100 million so to Bob's point on timing plus or minus a couple of weeks at our largest customer can make a very big difference, but those two quarters combined are still ahead of where we were communicating previously so on the net.

Robert Bruggeworth: Yeah, I can speak for the high end phones. And I'll start with our largest customer because it's been questioned before, but our growth this year and our largest customer really speaks to the strong position we have there. And we are one of their trusted suppliers, as well as the investments we've been making to deliver them, you know, these great technologies and products. This year we grew mostly from new content and gained some share in sockets that we helped for many years.

A positive trend in the in the top line.

Got it makes sense and then on gross margins.

December 43, and a half I guess at midpoint, our March I guess seems to be implying closer to 41% and I think the explanation you are giving is that because these two quarters you are using your internal high cost inventory.

Robert Bruggeworth: So we feel good about that. Now remember, they are a performance driven customer. You know, we're winning where we're bringing strong capabilities and have consistently done well. Now, if you look at the available PAM there, we remain underrepresented. So clearly that's a target of growth for us and we'll continue to invest to be able to win there. Now, that's also regardless of the baseband they decide to use. We enjoy multiple opportunities to grow our content, not only in the areas where we've been strong in the past, but also in areas that will be new sockets to core them.

So does that impact get over by March so as we start conceptually thinking about modeling gross margins.

From June onwards, what is that.

<unk> baseline that we should.

Keep in mind is that low forty's is that mid forty's I understand you're not going to give guidance for next year, but I just don't know how to think about what is normalized gross margins as you start thinking about your next fiscal year.

Sure and now some of this depends on the inventory as you pointed out they were carrying a high unit cost inventory that we sell through in the mix of that in the March quarter. Some of this also relates to the utilization within the March period, as we start to look forward to the demand that we see in the coming coming years. So.

Robert Bruggeworth: Again, that's about our largest customer. In my prepare remarks, I talked about, you know, the leading Android smartphone manufacturer and our ability to continue to gain share there. And we talked about ultra-wide ban along with all those types of components. Dave also spoke about in China and bring out our new technologies where we've integrated the mid-high ban, plus the diversity received into that module. That's going to be the ability to grow there as well.

It's a difficult are complex question to answer and prospectively to that but nonetheless in terms of the gross margin for the March quarter as I mentioned, our full year guide of 44% and now saying a bit better than that could imply that we have upside through the march to what.

You've just described.

And then in terms of our fiscal 'twenty five it's going to be a gradual continuation from their upward I would expect because the June quarter is still seasonally weaker for us as we head into the larger ramp in September just from a seasonal perspective. So hopefully that gives you at least some idea of how we.

Robert Bruggeworth: Dave also talked about ultra-wide ban and some of those assets, some of our sensors, our management. So I think as we look across the portfolio, we feel pretty good at our ability to continue to grow our dollar content in assets, whether it's at the flagship premium tier or the mass market.

We're going to track into fiscal 'twenty, five maybe going back to some of my prepared remarks, I did say that.

Vivek Arya: The next question comes from Vivek Arya of Bank of America Security. Please go ahead. Thank you for taking my questions. For the first one, you are guiding December 6 down 9% sequentially or so. I thought the original intention was to kind of stay a flatish. The large customer I imagined should be flatish, and I think one of your competitors mentioned a sharp ramp in terms of their China shipments getting into December.

I believe we could achieve 50% gross margin at first on a quarterly basis and then subsequently on an annual basis across the entire year, when we get through the inventory as well as return utilization levels to more.

Normalized levels.

The next question comes from Chris <unk>.

So of Wolfe Research. Please go ahead.

Vivek Arya: Some curious Bob, what is leading you to kind of guide sales down when some of these big customer trends seem to be growing sequentially? Or is it just conservatism or is it non-cellular markets? That's guiding that outlook. Thanks, Vivek.

Yes. Thank you good evening.

<unk> is on cash flow and on your ability to start ramping in the cash flow again.

Once the market comes to a fuller recovery I suppose that's going to depend a lot on.

What the Capex needs are and for how long and so if you could talk about that the kind of expectations for cash flow.

Robert Bruggeworth: I know I've said this before, but I'll remind you in the audience, we ship a majority of our parts that are not on the motherboard. So the timing of when we see the ramp is different than maybe you're talking about baseband customer, I don't know. They're on the motherboard. A lot of what we have goes to the flex circuits. So they build those ahead of the motherboard. So our timing can be different.

<unk>.

For how long you can kind of keep the capex at <unk>.

At lower levels. So you can drive some some cash in the next cycle.

Sure.

So obviously, we would expect cash flow to improve materially given the improvement in the P&L, it's a bit of a lagging indicator as we collect receivables. So we should see that I wouldn't expect anything different in terms of our guidance on capex.

Robert Bruggeworth: So I just want to make sure that. That's also, if it's the baseband customer, if you remember, they had an inventory build that they blamed that customer. We didn't see that build. So therefore we've naturally followed the progression of the builds. They may have had a pause, and as you point out the inventory would go down, then they would see a quick ramp up. So I can't comment on their business, but I can tell you the timing we typically lead the ramp because of how much product we have on flex circuits, which is different than most of the products that are on the motherboard.

At around 5% of sales or less again that can fluctuate of course, but I wouldn't expect too much different there from a free cash flow perspective.

Okay. Thank you.

And just as a follow up.

If you could talk about the competitive environment some and.

One of the things that was noted.

With the Huawei phone that came out as it was some Chinese are out there and it's a very different architecture from.

Grant Brown: Maybe with that, I'll just pick up from there in terms of our prior discussion around the December quarter. The flat comment was relative to a billion dollar Q2, and we've just exceeded that by 100 million. So to Bob's point on timing, plus or minus a couple of weeks that our largest customer can make a very big difference. But those two quarters combined are still ahead of where we were communicating previously. So on the net, a positive trend in the top line.

The phones that youre that youre supplying into your China customers.

The question is are you seeing anything different with regard to the capabilities of some of the local Chinese suppliers that would have some effect on the market.

Yes, I think from a K.

A capability standpoint, I mean, we don't see anything out of the norm.

Certainly some key technology areas that they are definitely behind and so.

Grant Brown: Makes sense. And then on Gross margins, so December 43 and a half, I guess, at midpoint, a March, I guess, seems to be implying closer to 41%. And I think the explanation you're giving is that because these two quarters, you're using your internal high cost inventory. So does that impact get over by March? So as we start conceptually thinking about modeling Gross margins from June onwards, what is that starting baseline that we should keep in mind?

And I think if you look across the phone even outside of the RF theres, probably a lot of areas that the technologies behind and maybe even up to three years behind.

So I think from a competitive environment, we don't see any big change just because of that Huawei phone ramp.

The next question comes from Blayne Curtis of Barclays. Please go ahead.

Hey, Thanks for squeezing me in and I apologize. If you said this earlier, but just in terms of the September quarter mobile came in a bit better than you were expecting I believe the expectation was that you weren't going to see much Android growth and can you just clarify that upside came from Android or your largest customer and I don't know if you gave the percentage that he said two.

Grant Brown: Is it low 40s? Is it mid 40s? I understand you're not going to give guidance for next year, but I just don't know how to think about what is normalized Gross margins as we start thinking about your next fiscal year. Sure. And now, some of this depends on the inventory. As you pointed out, that we're carrying the high-unit cost inventory that we sell through in the mix of that and the March quarter.

10% customers, but are you willing to give those out.

Grant Brown: Some of this also relates to the utilization within the March period as we start to look forward to the demand that we see in the coming year. So it's a difficult or complex question to answer prospectively. But nonetheless, in terms of the Gross margin for the March quarter, as I mentioned, our full-year guide of 44% and now saying a bit better than that could imply that we have up sides to the March to what you've just described.

Yes, thanks by MS Grant no we didn't give out the percentages will do it annually, but I just did mention that we had to.

In terms of the quarter.

The upside in revenue was largely driven by ACG and it was predominantly in our largest customer but not entirely so.

Got you and then I wanted to ask just follow back up on that gross margins I'm trying to understand I guess your mix has shifted dramatically to the largest customer and I'm just trying to figure out if that how much of effect is that up on your gross margin the customer mix versus the utilization.

Grant Brown: And then in terms of our fiscal 25, it's going to be a gradual continuation from there upward. I would expect because the June quarter is still seasonally weaker for us as we head into the larger ramp in September just from a seasonal perspective. So hopefully that gives you at least some idea of how we're going to track into fiscal 25.

Does that have any impact on that.

Yeah sure. So maybe if you just look at bridging Q1 to Q2. So there is 470 basis points of improvement there sequentially.

Grant Brown: Maybe going back to some of my prepared remarks, I did say that I believe we could achieve 50% Gross margin at first on a quarterly basis and then subsequently on an annual basis across an entire year when we get through the the inventory as well as return utilization levels to more normalized levels.

Of.

That maybe two 5% was moving from the 800 basis points of Underutilization to 550 basis points. So there is there is two and a happen and that was largely anticipated in the guidance of 45% to 46.

For Q2, and then that leaves a little over 200 basis points left now that included some quality and other items, but it was primarily the product mix that I mentioned in the prepared remarks, where we are producing that product.

Christopher Caso: The next question comes from Chris Caso of Wolf Research. Please go ahead. Yes, thank you.

On Silicon foundries outside of core goes factory network, and then processing them at <unk> that are third party. So that doesn't carry the same burden as the higher cost inventory will be selling in the second half.

Grant Brown: Good evening. The question is on cash flow and on your ability to start ramping the cash flow again once the market comes to a full recovery. I suppose that's going to depend a lot on what the CAPEX needs are and for how long. And so if you could talk about that, the kind of expectations for cash flow and for how long you can keep the CAPEX at lower levels so you can drive some cash in the next cycle.

This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.

Okay.

We want to thank everyone for joining us on today's call. We appreciate your interest in <unk> and we look forward to speaking with you at upcoming Investor events, Thanks, and have a great night.

Grant Brown: Sure. So obviously we'd expect cash flow to improve materially given the improvement in the PNF. It's a bit of a lagging indicator as we collect receivables. So we should see that I wouldn't expect anything different in terms of our guidance on CAPEX at around 5% of sales or less. Again, I can fluctuate of course, but I wouldn't expect too much different there from a pre cash flow perspective.

Okay.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Yes.

Robert Bruggeworth: Okay, thank you. Just as a follow up, if you could talk about the competitive environment, some, and you know, one of the things that was noted, you know, with with the Huawei phone that came out is there was some Chinese RS there and, you know, it's a very different architecture from, you know, the phones that you're that you're supplying into your China customers. But I guess the question is, are you seeing anything different with regard to the capabilities of some of the local Chinese suppliers that would have some effect on the market?

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Robert Bruggeworth: Yeah, I think from a capability standpoint, I mean, we don't see anything out of the norm. I mean, there's certainly some key technology areas that they're definitely behind in, and so, and I think if you look across the phone, even outside of the RF, there's probably a lot of areas that the technology behind in maybe even up to three years behind. So I think from a competitive environment, we don't see any big change just because of that Huawei phone ran.

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Yes.

Blayne Curtis: The next question comes from Blaine Curtis of Barclays. Please go ahead. Hey, thanks for squeezing me in and I apologize if you said this earlier, but in terms of 10 recorder, you know, mobile came in a bit better than you were expecting. I believe the expectation was that you weren't going to see much Android growth. Can you just clarify if that outside came from Android or your largest customer? And I don't know if you gave the percentage that he said to 10% customers, but are you willing to give those out?

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Blayne Curtis: Yeah, thanks for this grant. No, we didn't give out the percentages. We'll do that annually, but I just did mention that we had to in terms of the quarter. You know, the upside in revenue was largely driven by ACG, and it was predominantly our largest customer, but not entirely so.

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Grant Brown: Got to and then I wanted to ask just follow back up on the gross margins. I'm trying to understand, I guess, you know, your mix has shifted dramatically to this largest customer. And I'm just trying to figure out if that how much of effect is that of on your gross margin, you know, the customer mix versus the utilization of your power. Did that have any impact or not? Yeah, sure. So maybe we just look at bridging Q1 to Q2.

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Grant Brown: So there is 470 basis points of improvement there sequentially. You know, of that maybe 2.5% was moving from the 800 basis points of unrealization to 550 basis points. So there's 2.5 and that was largely anticipated in the guidance of 45 to 46 for Q2. And then that leaves a little over 200 basis points left. Now that included some quality and other items, but it was primarily the product mix that I've mentioned in the prepared remarks where we are producing that product on silicon's foundries outside of Corvo factory network and then processing them at OSATs that are third parties. So you know, that doesn't carry the same burden as the higher cost inventory we'll be selling in the second half.

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Welcome to the Coeur, Inc. Second quarter 2024 earnings conference call.

All participants will be in listen only mode.

Should you need assistance. Please signal a conference specialist by pressing Starkey followed by zero.

After todays presentation, there will be an opportunity to ask a question.

To ask a question you May press Star then one on your telephone keypad.

To withdraw your question. Please press Star then two.

In the interest of time, we ask that you. Please limit yourself to one question and one follow up.

Please note today's event is being recorded.

I would now like to turn the conference over to Douglas <unk>, Vice President of Investor Relations. Please.

Please go ahead.

Thanks, very much Hello, everybody and welcome to <unk> fiscal 2020 for our second quarter earnings call. This call will include forward looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the safe Harbor statement contained in the earnings release published today.

As well as the risk factors associated with our business and our annual report on Form 10-K filed with the SEC because these risk factors may affect our operations and financial results.

In today's release and on today's call, we provide both GAAP and non-GAAP financial results, we provided supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain noncash expenses or other items that may obscure trends in our underlying performance.

During our call our comments and comparisons to income statement items will be based primarily on non-GAAP results for complete reconciliation of GAAP to non-GAAP financial measures. Please refer to our earnings release issued earlier today available on our Investor Relations website at IR Dot Corvo dot com under financial releases.

Joining us today are Bob <unk>, President and CEO Grant Brown, CFO, Dave <unk> Senior Vice President of sales and marketing and other members of <unk> management team and with that I'll turn the call over to Bob.

Thanks, Bob and welcome everyone to <unk> fiscal 2024 second quarter call revenue margin and EPS were all above the high end of our outlook provided during our August earnings call.

Customer demand during the September quarter improved versus our August guidance. The primary driver was a large smartphone customer ramp.

In addition channel inventories of cord blood components across the Android ecosystem continued to be consumed with Oems, indicating inventory levels are approaching historical norms.

Channel inventory digestion is allowing <unk> to shift more closely to end market demand, even as pockets of channel inventory remained in markets such as base station we.

We have worked closely with our customers to address inventories, while continuing to deliver highly differentiated products.

And they have rewarded us with new opportunities and new design wins and this underpins our expectations for growth this year and beyond.

Across our three operating segments <unk> enjoys multi year technology upgrade cycles supported by global macro trends, including connectivity sustainability and electrification.

The new protocols and new technologies are offering improved performance and enhanced functionality and corvo is critical in enabling these capabilities.

This is playing out in aerospace and defense automotive base station broadband connected home power devices power management smartphones, Wi Fi and other markets.

Unknown Executive: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. We want to thank everyone for joining us on today's call. We appreciate your interest in Corvo and we look forward to speaking with you at upcoming investor events. Thanks and have a great night.

Where the performance is measured in power.

Data throughput talk time battery life or distance between charges customers increasingly require higher levels of power efficiency integration and functional density.

Unknown Executive: The conference is now concluded. Thank you for .

To enable their future architectures and deliver success as improvements in their next generation products. They rely on Corvo is best in class technologies and solutions.

And HPA, where strong beneficiary of the trends in our defense and aerospace business towards what we call one to many.

Put simply courthouse technologies are supporting higher customer volumes, requiring more electronics and higher levels of integration.

This applies to unmanned vehicles like drones.

Upgrades to existing radar systems.

Low Earth orbit satellites and other applications.

Lastly, we are leading the transition to DOCSIS, four <unk> and broadband and we continue to deliver base station customers increasing levels of functional integration for their <unk> massive mimo deployments.

Looking at our power franchise, we offer highly differentiated solution.

Our silicon carbide Jfet architecture.

Our technology offers the lowest rds on which translates into faster battery charging longer battery life.

And lower current consumption for applications like Evs solar Inverters and data centers.

These are relatively new markets for corvo that are early in the transition to silicon carbide and offer significant growth with.

We also offer a differentiated portfolio in power management, where our initial wins have been in ssds power tools and appliances, and we are leveraging our unique to.

To expand into defense infrastructure smartphones, wearables and other markets.

<unk> new technologies are transforming user experiences in automotive connected home enterprise industrial and other markets.

Ultra wideband is a critical focus area and we are very excited about recent developments ultra.

Unknown Executive: John Williams, John DeLieto, John DeLieto, John DeLieto, John DeLieto Welcome to the Qorvo Inc.

Ultra wideband is in the very early innings of adoption and we are seeing exciting opportunities, giving expanded smartphone adoption bulk.

Unknown Executive: 2nd quarter, 2024, earnings conference call. All participants will be in listen only mode. If you need assistance, please signify a conference specialist by pressing the star key followed by zero.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. In the interest of time, we ask that you please limit yourself to one question and one follow-up.

Multiple in vehicle placements.

And an array of new capabilities, such as ranging and precision location for indoor navigation.

Unknown Executive: Please note today's event is being recorded.

Douglas DeLieto: I would now like to turn the conference over to Douglas DeLieto, Vice President of Investor Relations. Please go ahead. Thanks very much.

Wildfire is another primary driver and the transition to Wi Fi six E and wildfire seven is very early on.

Wi Fi seven devices recently launched by <unk> customers are offering breakthrough advances in speed latency and network capacity.

Douglas DeLieto: Hello everybody and welcome to Qorvo's fiscal 2024, 2nd quarter, earnings call. This call will include four looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release published today as well as the risk factors associated with our business and our annual report on form 10k filed with the SEC because these risk factors may affect our operations and financial results.

<unk> also offers components and full system solutions that incorporate Bluetooth low energy zigbee thread and now matter.

Douglas DeLieto: In today's release and on today's call, we provide both GAAP and non-GAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non-GAP results. For a complete reconciliation of GAAP to non-GAP financial measures, please refer to our earnings release issued earlier today available on our Investor Relations website at ir.corvo.com under financial releases.

Robert Bruggeworth: Joining us today are Bob Rugworth, President and CEO, Grant Brown, CFO, Dave Fullwood, Senior Vice President of Sales and Marketing and other members of Corvo's Management Team. And with that, I'll turn the call over to Bob. Thanks, Doug, and welcome everyone to Corvo's fiscal 2024 second quarter call. Revenue, margin and EPS were all above the high end of the outlook provided during our August earnings call. Customer demand during the September quarter improved versus our August guidance.

Matter is our recently launched technology overlay essentially a common language that improves interoperability across smart home devices, regardless of protocol or manufacturer.

It is supported by iOS Android.

And major smartphone platform providers, and it's widely expected to simplify and accelerate the adoption of smart home devices.

It's also early days, our <unk> touch sensors.

These are ultra sensitive Mems based sensors that enable new use cases and enhanced device functionality.

We have broad engagements across automotive smart interiors track pads sure.

True wireless headsets smartphones, wearables and other consumer applications and our opportunities are expanding as customers engage with our technology and develop new use cases.

Looking at ACG.

Fewer than half of the Android smartphones this year will be <unk>.

Android five <unk> units are expected to grow in the low double digits for several years.

That's a big growth opportunity for <unk> as we move from very little content in <unk> phones to significant dollar content and <unk> phones.

Another driver is <unk> advance, which leverages new releases on the <unk> standard.

<unk> advanced smartphones will include additional transmit and receive and satellite band favoring cordless product and technology portfolio.

<unk> will migrate to <unk> advanced overtime and bridge us to move development efforts and new content required to accommodate 60 frequency spectrum at the end of the decade.

Big picture Corvo enjoys a range of opportunities supported by multiyear upgrade cycles.

Many of these transitions are very early on and Corvo is recognized by customers as the leading technology innovator.

We've made great progress developing new technologies and winning customer designs.

With that said.

We want to make it clear that our end markets have not yet turned.

And our outlook does not contemplate a significant change in the macro economic environment.

The customer demand.

Environment for Corvo, it's more a reflection of strong design win activity and the early actions, we took to improve channel inventory.

When end markets recover that will represent an additional driver of growth for core book.

Now, let's turn to some quarterly highlights.

In defense and aerospace, we increased shipments of X band transmit and receive them and.

And secured first orders for our <unk> in support of New land base C band radar programs.

We introduced the world's highest power Ku band satellite communications amplifier, which enables at 80% size reduction and is optimized for multiple applications.

We also received a large production order for recently launched sell to satellite solutions. These solutions incorporate advanced technologies from across our aerospace base station and mobile portfolios to enable low Earth orbit satellite connectivity.

In infrastructure, we were selected by a tier one base station OEM to supply switched LNG modules for next generation <unk> massive mimo radios.

We also continued to lead DOCSIS four <unk> dropdown upgrade cycle with production orders from multiple customers and broad based design wins.

For power management markets, we release Q space.

Significant improvement over current industry offerings for analog and mixed signal circuit design and simulation.

<unk> improves the speed functionality and reliability of circuit simulation, extending the value core loans, providing designers.

Since its launch.

The tool and surpassed 15000 unique downloads.

And automotive applications, we were selected to support a major in vehicle car access platform by a leading German automotive tier one.

This multiyear program has a lifetime value over $250 million.

Marking a major milestone for our ultra wideband portfolio.

Within this program Corvo, we'll supply ultra wideband solutions for in vehicle applications for a leading German automotive OEM.

We also secured design win from another leading German automotive tier one to supply <unk> solutions for our communications platform launching this year.

Robert Bruggeworth: The primary driver was a large smartphone customer for him. In addition, channel inventory of Corvo components across the Android ecosystem continued to be consumed with LEMs indicating inventory levels are approaching historical norms. Awards. General inventory digestion is allowing Corvo to ship more closely to end market demand even as pockets of channel inventory remain in markets such as base station. We've worked closely with our customers to address the inventories while continuing to deliver highly differentiated products.

Lastly, we were selected to supply force sensing touch sensors that enhanced smart interior functionality and our recently launched easy from a Korean based automotive Oems.

Complementing the large ultra wideband win in automotive.

<unk> was selected by the leading Android smartphone Oems to supply ultra wideband for their spring 2024 flagship launch.

It's worth noting that the ultra wideband wins in automotive and Android markets are significant as these two customers represent the largest volume opportunities in their respective markets.

To extend our reach we are sampling ultra wideband solutions across fleet management logistics, agriculture, and other applications, leveraging our precision location capabilities to advance operational efficiencies.

Robert Bruggeworth: They have rewarded us with new opportunities and new design lands and this underpins our expectations for growth this year and beyond. Across our three operating segments, Corvo enjoys multi-year technology upgrade cycles supported by global macro trends including connectivity, sustainability, and electrification. New protocols and new technologies are offering improved performance and enhanced functionality in Corvo is critical and enabling these capabilities. This is playing out in aerospace and defense automotive, base station, broadband, connected home, power devices, power management, smart phones, Wi-Fi, and other markets where the performance is measured in power out, data throughput, talk time, battery life, or distance between charges, customers increasingly require higher levels of power efficiency, integration, and functional density.

Robert Bruggeworth: To enable their future architectures and deliver successes and improvements in their next generation products, they rely on Corvo's best-in-class technologies and solutions. In HPA, we are a strong beneficiary of the trends in our defense and aerospace business towards what we call one-to-many. Put simply, Corvo's technologies are supporting higher customer volumes requiring more electronics and higher levels of integration. This applies to unmanned vehicles like drones, upgrades to existing radar systems, low-earth orbit satellites, and other applications.

And Wi Fi, we secured multi year design wins with tier one network operators in the U S and in India.

These wins support next generation wireless infrastructure for retail enterprise and home applications.

Across the Android ecosystem, we increased shipments of our highly integrated modules in support of Android smartphones from the high tier through the mass market.

Notably, we extended our strong share position with the leading Android smartphone Oems and their flagship smartphone.

In addition to the ultra wideband when we're also selected supply the low band mid high band <unk>.

Hi, Dan secondary transmit and receive tuning and Wi Fi.

Lastly, we expanded customer sampling of our recently launched mid high band pad.

<unk> newest integrated architecture, Leverages next generation bar and soft technologies and advanced packaging the combined main pass content.

<unk> past commonly included in the diversity receive module.

This and other highly integrated corvo architectures for the Android ecosystem freeboard space and improve efficiency to support future <unk> form factors and content like flip and sold architectures and transmit and receive non terrestrial network connectivity.

I want to thank the cargo team for continued operational excellence.

We've moved aggressively to reduce channel inventories, while securing broad based customer design wins.

Robert Bruggeworth: Lastly, we are leading the transition to DOCSIS 4.0 and broadband and we continue to deliver base station customers increasing levels of functional integration for their 5G massive MIMO deployments. Looking at a power franchise, we offer a highly differentiated solution with our silicon carbide J-FET architecture. Our technology offers the lowest RDS on, which translates in the faster battery charging, longer battery life, and lower current consumption for applications like EVs, solar inverters, and data centers.

In the December quarter, our outlook reflects the seasonal profile of a large smartphone customer ramp as well as healthier channel inventories across most markets.

Robert Bruggeworth: These are relatively new markets for Corvo that are early in the transition to silicon carbide, and offer significant growth. We also offer a differentiated portfolio and power management where our initial wins have been in SSDs, power tools, and appliances, and we are leveraging our unique IT to expand into defense, infrastructure, smartphones, wearables, and other markets. In CSG, new technologies are transforming user experiences in automotive, connected home, enterprise, industrial, and other markets.

In the March quarter, we expect revenue to be more closely aligned with end market demand.

Longer term, we expect revenue growth.

Growth and margin expansion as product mix favors our higher growth investments.

Robert Bruggeworth: Altrawide Bend is a critical focus area, and we are very excited about recent developments. Altrawide Bend is in the very early innings of adoption, and we are seeing exciting opportunities giving expanded smartphone adoption, multiple in-vehicle placements, and an array of new capabilities, such as ranging and precision location for indoor navigation. Watchfire is another primary driver, and the transition to Wi-Fi 6E and Wi-Fi 7 is very early on. Wi-Fi 7 devices recently launched by Corva's customers are offering breakthrough advances in speed, latency, and network capacity.

And with that I'll hand, the call off to grant.

Thanks, Bob and good afternoon, everyone.

Revenue for the quarter was $1 1 billion.

non-GAAP gross margin was 47, 6% and non-GAAP diluted EPS was $2 39.

All exceeding the high end of our August guidance.

Revenue increased approximately 70% sequentially and benefited from significant content gains at our largest customer.

Consistent with our guidance factory production levels improved but remained below historical averages.

During the quarter the impact from Underutilization and factory related variances was approximately 550 basis points versus approximately 800 basis points last quarter.

The increase in gross margin above the high end of our August guidance range was largely the result of revenue upside and product mix.

Robert Bruggeworth: Corva also offers components and full-system solutions that incorporate blue-to-flow energy, zygmi, thread, and now matter. Matter is a recently launched technology overlay, essentially a common language that improves interoperability across smart home devices regardless of protocol or manufacturer. It is supported by iOS, Android, and major smartphone platform providers, and it's widely expected to simplify and accelerate the adoption of smart home devices. It's also early days for our four sensing touch sensors. These are all per-sensitive memory-based sensors that enable new use cases and enhance device functionality.

A larger portion of September revenue was manufactured at external silicon foundries and processed at third party SaaS by comparison, our December and March revenue will reflect a larger percentage of higher cost inventories manufactured internally during periods of lower utilization and a lower <unk>.

Robert Bruggeworth: We have broad engagements across automotive smart interiors, track pads, true wireless headsets, smartphones, wearables, and other consumer applications in our opportunities are expanding as customers engage with our technology. Looking at ACG, fewer than half of the Android smartphones this year will be 5G. Android 5G units are expected to grow in the low-double digits for several years. That's a big growth opportunity for Corva as we move from very little content and 4G phones to significant dollar content in 5G phones.

Percentage of products manufactured at external silicon foundries and dose.

Robert Bruggeworth: Another driver is 5G Advanced, which leverages new releases of a 5G standard. 5G Advanced smartphones will include additional transmit and receive and satellite dance, favoring Corva's products and technology portfolio. 5G will migrate to 5G Advanced over time and bridge us to new development efforts and new content required to accommodate 60 frequency spectrum at the end of the decade. Big picture, Corvo enjoys a range of opportunities supported by multi-year upgrade cycles. Many of these transitions are very early on and Corvo is recognized by customers as a leading technology innovator.

Beyond this fiscal year, we continue to see a clear path back to 50% plus gross margin initially during specific quarters, and then on a full year basis.

non-GAAP operating expenses in the quarter were $246 million slightly higher than our guidance due to performance based incentive compensation.

We are investing in new product development and targeting multi year growth opportunities across all three segments.

In addition to growth oriented investments. We're also investing in enterprise wide productivity initiatives. These multi year efforts will support future growth and enhance profitability as we upgrade modernize and standardize around the latest tools and best practices.

In total non-GAAP operating income in the quarter was $279 million or 25% of sales, which increased from seven 2% last quarter.

Breaking out operating margin by each segment ACG was 34% HPA was 17% and CST was negative 27%, which includes the impact of the biotechnology Division.

During the quarter Corvo biotechnologies generated a half a million dollars in revenue and reduced operating income by approximately $7 million.

Just following quarter end, we successfully closed the sale of the Omnia biotechnology business.

And we will continue to sell BARF filters to support the acquired.

non-GAAP net income was $236 million.

Representing diluted earnings per share of $2 39.

Moving on to the cash flow statement free cash flow was 64 million and Capex was $29 million.

During the quarter, we repurchased $100 million worth of shares at approximately $103 per share.

The rate and pace of our repurchases is based on our long term outlook free cash flow low leverage alternative uses of cash and other factors.

Robert Bruggeworth: We have made great progress developing new technologies and winning customer designs. With that said, we want to make it clear that our end markets have not yet turned and our outlook does not contemplate a significant change in the macro economic environment. The customer demand, environment for Qorvo is more reflection of strong divine wind activity and the early actions we took to improve channel inventory. When in markets recover, that will represent an additional driver of growth for Qorvo.

Turning to the balance sheet.

As of quarter end, we had approximately $2 billion of debt outstanding with no near term maturities and $707 million of cash and equivalents.

<unk> with our expectations and commentary from the prior earnings call. Our net inventory balance was reduced in the period and ended the quarter at $840 million down.

Down $78 million sequentially looking at days of inventory. This represents a decrease from 210 days to 138 days.

Robert Bruggeworth: Now let's turn to some quarterly highlights. In defense and aerospace, we increase shipments of expand transit and receive funds and secure first orders for our 50 watt PAs in support of new land-based C-band radar programs. We introduced the world's highest power KU-band satellite communications amplifier which enables an 80% size reduction and is optimized for multiple applications. We also received a large production order for recently launched cell to satellite solutions. These solutions incorporate advanced technologies from across our aerospace, base station, and mobile portfolios to enable low-earth orbit satellite connectivity.

Turning to our current quarter outlook, we expect revenue of approximately $1 billion, plus or minus $25 million non-GAAP gross margin between 43% 44%.

Robert Bruggeworth: In infrastructure, we were selected by a Tier 1 base station OEM to supply switch LNA models for next generation 5G massive mobile radios. We also continue to lead boxes 4.0 broadband upgrade cycle with production orders from multiple customers and draw based design winds. The power management markets, we release Q-spice, a significant improvement over current industry offerings for analog and mixed signal circuit design and simulation. Q-spice improves the speed, functionality, and reliability of circuit simulation extending the value of Qorvo is providing designers.

Robert Bruggeworth: Since it's launched, the tool has surpassed 15,000 unique downloads. In automotive applications, we were selected to support a major in-vehicle car access platform by a leading German automotive Tier 1. This multi-year program has a lifetime value over $250 million, marking a major milestone for ultra-wide bandwidth portfolio. Within this program, Qorvo will supply ultra-wide bandwidth solutions for in-vehicle applications for a leading German automotive OEM. We also secured a design wind from another leading German automotive Tier 1 to supply V-to-X solutions for communications platform launching this year.

Robert Bruggeworth: Lastly, we were selected to supply four sensing touch sensors that enhanced smart interior functionality in a recently launched EV from a Korean based automotive OEM. Completing the large ultra-wide bandwidth in automotive, Qorvo was selected by the leading Android smartphone OEM to supply ultra-wide bandwidth for their spring 2024 flagship launch. It's worth noting that the ultra-wide bandwidth winds in automotive and Android markets are significant as these two customers represent the largest volume opportunities in their respective markets.

And non-GAAP diluted EPS of $1 65 at the midpoint of the revenue range.

Robert Bruggeworth: Markets. To extend our reach, we're sampling ultra-wide band solutions across fleet management, logistics, agriculture, and other applications, leveraging our precision location capabilities to advance operational efficiencies. In Wi-Fi, we secured multi-year design wins with Tier 1 network operators in the US and in India. These wins support next-generation, wireless infrastructure for retail, enterprise, and home applications. Across the Android ecosystem, we increased shipments of our highly integrated modules in support of Android smartphones from the high tier through the mass market.

We project non-GAAP operating expenses in the December quarter will be $235 million to $240 million below the operating income line non operating expense is expected to be approximately $10 million, reflecting interest paid on our fixed rate debt offset by interest income earned on our cash balances.

Robert Bruggeworth: Notably, we extended our strong share position with the leading Android smartphone OEM in our flagship smartphone. In addition to the ultra-wide band win, we're also selected to supply the low band, mid-high band, ultra-high band, secondary transmit receive, tuning, and Wi-Fi. Lastly, we expanded customer sampling of our recently launched mid-high band path. Qorvo's newest integrated architecture leverages next-generation, bot, and saw technologies, and we included in the first received module. This and other highly integrated Qorvo architectures for the Android ecosystem, free board space, and approval efficiency to support future 5G form factors and content like flip and fold architectures and transmit and receive non-terrestrial network connectivity.

Robert Bruggeworth: I want to thank the Qorvo team for continued operational excellence. We have moved aggressively to reduce channel inventories by securing broad-based customer assignments. In the December quarter, our outlook reflects the seasonal profile of a large smartphone customer ramp as well as healthier channel inventories across most markets. In the March quarter, we've set revenue to be more closely aligned within market demand. Longer term, we've set revenue, growth and margin expansion, and product mix, fingers, or higher growth investment cases, and without a hand to call off the grant.

As FX gains or losses, along with other items or.

Grant Brown: Thanks Bob, and good afternoon everyone. Revenue for the quarter was $1.1 billion. Non-gap growth margin was 47.6 percent, and non-gap diluted EPS was $2.39. All exceeding the high end of our August guidance. Revenue increased approximately 70 percent sequentially and benefited from significant content gains that are largest customers. Consistent with our guidance, factory production levels improved but remained below historical averages. During the quarter, the impact from underutilization and factory related variances was approximately 550 basis points versus approximately 800 basis points last quarter.

Our non-GAAP tax rate for fiscal 'twenty, four is expected to be within a range of 13% to 15%.

We expect our inventory balance will decrease again in the December quarter in terms of channel inventory. The environment continues to improve with Android Oems, indicating inventory levels are approaching historical norms outside of the Android ecosystem. There are smaller pockets of channel inventory it will take longer to digest.

Grant Brown: The increase in growth margin above the high end of our August guidance range was largely the result of revenue upside and product mix. A larger portion of September revenue was manufactured at External Silicon Foundaries and processed at third-party OSAPs. By comparison, our December and March revenue will reflect a larger percentage of higher cost inventories manufactured internally during periods of lower utilization and a lower percentage of products manufactured at External Silicon Foundaries and OSAPs.

<unk>.

We continue to forecast fiscal 'twenty four revenue above fiscal 'twenty three for the full fiscal year fiscal 'twenty four non-GAAP gross margin is expected to be 44% or slightly better with variability primarily tracking utilization and mix.

Grant Brown: Beyond this fiscal year, we continue to see a clear path that could 50 percent plus gross margin initially during specific quarters and then on a full-year basis. Non-GAP operating expenses in the quarter were $246 million, slightly higher than our guidance due to performance-based incentive compensation. We are investing in new product development and targeting multi-year growth opportunities across all three segments. In addition to growth-oriented investments, we're also investing in enterprise-wide productivity initiatives.

<unk> enjoys multi year growth drivers across all three of our operating segments, we offer a broad portfolio of technologies and capabilities and we are uniquely positioned across leading customers in large markets. We expect continued strength on large customer programs and we are investing to drive outsized growth in diverse.

<unk> business is to broaden our market exposure and accelerate growth at.

At this time please open the line for questions. Thank you.

Grant Brown: These multi-year efforts will support future growth and enhance profitability as we upgrade, modernize, and standardize around the latest tools and best practices. In total, non-GAP operating income in the quarter was $279 million or 25 percent of sales, which increased from 7.2 percent last quarter. Breaking out operating margin by each segment, ACG was 34 percent, HPA was 17 percent, and CSG was negative 27 percent, which includes the impact of the biotechnology division.

We will now begin the question and answer session.

Ask a question you May press Star then one on your telephone keypad.

If you are using a speakerphone please pick up your handset before pressing the keys.

You withdraw your question. Please press Star then two.

In the interest of time, we ask that you. Please limit yourself to one question and one follow up.

At this time, we will pause momentarily to assemble our roster.

Grant Brown: During the quarter, Corvo biotechnologies generated a half a million in revenue and reduced operating income by approximately $7 million. Just following quarter end, we successfully closed the sale of the AMIA biotechnology business and will continue to sell Bob Filters to support the acquired. Non-GAP net income was $236 million, representing deluded earnings per share of $2.39.

Okay.

Yes.

And our first question comes from Tim a theory of you there.

Yes.

Please go ahead.

Hi, Thanks for taking my question. This is a mind jumping in for Ken just looking into fiscal 2025.

How should we think about the trajectory of gross margin as utilization starts to come back.

Is there a certain level of revenue we should be thinking about.

Grant Brown: Moving on to the cash flow statement. 3 cash flow was $64 million and CAPEX was $29 million. During the quarter, we repurchased $100 million worth of shares at approximately $103 per share. The rate and pace of our repurchases is based on our long-term outlook, 3 cash flow, low leverage, alternative uses of cash and other factors. Turning to the balance sheet. As of quarter end, we had approximately $2 billion of debt-offstanding with no near-term maturities and $707 million of cash and equivalents.

<unk> to be back at that 50% range.

Sure I'll take that this is grant thanks for the question.

There are a large number of factors.

Fluence gross margins, such as revenue mix and input costs, including utilization impacts. So I wouldn't think of it in terms of an absolute revenue level.

Products carry a higher gross margin than others do.

Due to the nature of that business or end market for instance.

Looking at our base station product line, which is generally accretive to gross margins, but with base station demand weaker coupled with the excess channel inventories we've been talking about there. This is currently a headwind to margin versus historic levels.

Grant Brown: Consistent with our expectations and commentary from the prior earnings call, our net inventory balance was reduced in the period and ended the quarter at $840 million down $78 million sequentially. Looking at days of inventory, this represents a decrease from 210 days to 138 days.

Product mix can also impact gross margin based on where it's manufactured as I mentioned in my prepared remarks for instance, last quarter, we shipped a higher portion of products through our manufactured and external silicon foundries and process to third party Oss and those products are not impacted by our internal factory utilization, which as we've mentioned is running below.

Grant Brown: Turning to our current quarter outlook, we expect revenue of approximately $1 billion plus or minus $25 million. Non-GAP gross margin between 43 and 44% and non-GAP deluded EPS of $1.65 at the midpoint of the revenue range. We project non-gap operating expenses in the December quarter. We'll be $235 to $240 million below the operating income line. Non-operating expense is expected to be approximately $10 million. Reflecting interest paid on our fixed rate debt offset by interest income earned on our cash balances, effects gains or losses along with other items.

Oracle averages.

Aside from product mix unit cost is the other half of the equation it.

It's a bit more complex given that input costs can affect gross margin on a lagging or leading basis. For example, historical under utilization will create higher unit costs in that inventory and as it is sold in future period that impact lags Alternatively in anticipation of lower future demand production volumes can be cut.

And utilization will fall and in that sense, the impact tends to lead those anticipated changes in demand.

Grant Brown: Our non-gap tax rate for fiscal 24 is expected to be within a range of 13 to 15%. We expect our inventory balance will decrease again in the December quarter. In terms of channel inventory, the environment continues to improve with Android OEMs indicating inventory levels are approaching historical norms. Outside of the Android ecosystem, there are smaller pockets of channel inventory that will take longer to digest. We continue to forecast fiscal 24 revenue above fiscal 23.

So there's a number of factors that impact gross margin again, I wouldn't think of it in terms of an absolute revenue level, but rather a time of us to move through our high cost inventory returned utilization levels back to normal run the factories efficiently and we will be on a path back to 50% plus.

Thank you.

The next question comes from Gary Mobley of Wells Fargo Securities. Please go ahead.

Hi, guys I wanted to pick up.

Grant with your detailed response to the last question I know in your prepared remarks, you said gross margin throughout fiscal year 'twenty five we'll at times.

Grant Brown: For the full fiscal year, fiscal 24 non-gap gross margin is expected to be 44% or slightly better with variability, primarily tracking utilization and mits. Corvo enjoys multi-year growth drivers across all three of our operating segments. We offer a broad portfolio of technologies and capabilities, and we are uniquely positioned across leading customers and large markets. We expect continued strength on large customer programs, and we are investing to drive outside growth in diverse businesses to broaden our market exposure and accelerate growth.

<unk>, 50%, so I presume.

That would be in your seasonally strong periods.

And.

But did you did you say that.

Well, 50% or above is the target for the full year or just the specific few quarters of seasonal penis.

Sure I've said that I think it will achieve 50%.

On a specific quarter before it achieved 50% across the whole year and thats somewhat macro dependent and obviously the volumes will dictate at what levels, we returned to a utilization where that's possible.

Unknown Executive: At this time, please open the line for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In the interest of time, we ask that you please limit yourself to one question and one follow-up.

Okay.

And Bob you mentioned I think in describing the fourth quarter of this year in line with market conditions.

And so your full year guidance implies no more than that.

10% sequential revenue decline in the fourth quarter. So how would you call the seasonal trends in the fourth quarter. We're talking about mid single digit I think which is usual or perhaps as much as double digit percent declines.

Unknown Executive: At this time, we will pause momentarily to assemble our roster.

Sure Gary.

Great I'll take place at a high level. This make sure we're clear on what we typically see in the fourth quarter, which as we've said all along typical anymore isn't typical because it seems.

Timothy Arcuri: And our first question comes from Tim, a query of UBS. Please go ahead. Hi, thanks for taking my question.

Every time, we are faced with something different from losing our second largest customer to COVID-19 hits for various economic factors. What my comments were around us given the current economic outlook.

Grant Brown: This is Amon jumping in through Ken. I'm just looking into fiscal 2025. I actually think about the trajectory of growth margin as you know, utilization starts to come back. Is there like a certain level of revenue we should be thinking about for Corvo to be back at that, so if you percent range?

Not expecting our market to rebound.

As we worked through all of this channel inventory that we talked about we're going to hit the what we think is the end market demand.

End market demand typically and what we are forecasting now is what we see is our largest customers ramp continues to come down in March.

Grant Brown: Sure, I'll take that. This is Grant. Thanks for the question, Amon. There are a large number of factors that can influence growth margins such as revenue. There's a lot of revenue mix and input costs, including utilization impacts. So I wouldn't think of it in terms of an absolute revenue level. Some products carry a higher gross margin than others due to the nature of that business or in the market. For instance, looking at our base station product line, which is generally accreted to gross margins, but with base station demand weaker, coupled with the excess channel inventories we've been talking about there.

We have a seasonal.

Usually the weakest quarter for our China Android business in March and some of that is offset by a ramp at the largest Android customer that we have so.

As far as percentages go I'm not going to call percentages Undoes, telling you that from our view that's the dynamics that are driving most of our business.

Grant Brown: This is currently a headwind to margin versus historical levels. Products Mix can also impact growth margin based on where it's manufactured. As I mentioned in my prepared remarks, for instance, last quarter we shipped a higher portion of products or manufactured at external silicon foundries and processed third party OSATs, and those products are not impacted by our internal factory utilization, which, as we've mentioned, is running below historical averages. Aside from product mix, unique cost is the other happy equation.

Grant commented that our ACG business is growing year over year.

Our CSD business will start growing this quarter and will be up in March and really the logging business for us is our HPA business and we've talked about what's going on there with primarily what used to be our largest business and infrastructure side and we're not seeing that now so when you integrate all that we're still comfortable we're going to be up significantly.

In March year over year, and we're comfortable we're going to be up for the fiscal year 'twenty for over 23.

Grant Brown: It's a bit more complex, given that input costs can affect growth margin on a lagging or leading basis. For example, historical under utilization will create higher unit costs in that inventory. And as it's sold in future period, that impact lags, alternatively, an anticipation of a lower future demand production volumes can be cut and utilization will fall. And in that sense, the impact tends to lead those anticipated changes in demand. So there's a number of factors that impact growth margin.

Hello Grant if you want to add anything to that but I want to give them all the moving pieces.

Sure No I think he covered it Bob I'd say, maybe 10%, but certainly not 15 right. We're committed to the comments now any macro related disruptions aside that we see growth in fiscal 'twenty four.

Okay.

Yes.

The next question comes from Karl Ackerman of BNP terrible. Please go ahead.

Grant Brown: I would again wouldn't think of it in terms of an absolute revenue level, but rather a time of us to move through our high cost inventory return utilization levels back to normal, run the factories efficiently, and will be on a path back to 50% plus.

Yeah. Thank you.

I have a clarification and a follow up.

I guess I.

I guess, just given the content gains at your largest customer is it fair to say that customer now exceeds.

Unknown Executive: Thank you.

50% of your revenue in the quarter.

Okay.

We won't comment on any customers within the quarter, but will sum it up on the 10-K, the only thing I would say about 10% plus customers is that we did have more than one in the quarter.

Gary Mobley: The next question comes from Gary Mobley of Wells Fargo Security. Please go ahead. Hi, guys. I wanted to pick up Grant with your detailed response to the last question. I know in your prepared remarks, you said growth margin throughout the skewer 25 will at times be above 50%. So I presume that would be in your seasonally strong periods. And, but did you, did you say that it is well 50% or above the target for the full year or just the specific, you know, few quarters of seasonal peatness?

Thank you for that for my follow up you know Mediatek suggested that five <unk> units should grow double digits next year, certainly above overall smartphone unit expectations up low singles.

Most of your exposure to incremental gains in <unk> do come from China Android Oems.

I was hoping you could address how you think.

Huawei does or does not impact your China Android opportunity.

Both near term and longer term. Thank you.

Gary Mobley: Sure. I said this, I think it'll achieve 50% on a specific quarter before it achieves 50% across the whole year. And that's somewhat macro dependent and obviously the volumes will dictate, you know, at what levels we return to utilization where that's possible. Okay. And Bob, you mentioned, I think in describing the fourth quarter of this year in line with market conditions. And so your full year guidance implies no more than a 10% sequential revenue decline in the fourth quarter.

I'll take the first part of that Karl and I'll, let Dave take the <unk>.

Parts and she was just recently in China.

Actually a large part of our growth for <unk> is still at the largest Android manufacturer being Samsung.

The second point I would like to make is.

Youre right, we do have China exposure in <unk>, but most of that is actually in the export market for what they are trying to do to build their brands outside of China.

So just keep those two facts in mind, Dave was just in China.

Weeks ago, and I'll, let him talk a little bit more about that.

Gary Mobley: So, so how would you call the seasonal trends in the fourth quarter? We're talking about mid single digit, I think, which is usual or perhaps as much as double digit purchase and declines. Sure. Gary, I don't know. I'll take place at high level.

At least we're seeing talking to all of our customers there along with your comment about Huawei.

Yeah, Thanks, Bob and so.

I'll start with with Huawei and kind of size what were seeing for you in.

Prior to the ramp of the new phone that they just announced they were doing about 2 million units a month.

Robert Bruggeworth: Just make sure we're clear on what we typically see in the fourth quarter, which as we said all along typical anymore is in typical because it seems every time we're faced with something different from losing our second largest customer to, you know, COVID hits the various economic factors. What my comments were around is given the current economic outlook, you know, we're not expecting our markets to rebound. And as we work through all this channel inventory that we talked about, you know, we're going to hit the what we think is the end market demand.

And so we've seen a typical premium tier phone ramp where that peaked out at last couple of weeks of data, we're actually seeing that come back down. So they may be on the other side of that ramp, but if you look at the incremental growth that we see over what they were shipping previously.

On an annual basis is about it's about 10% to 20 million units.

So that's a pretty good growth for that customer.

But it's not that meaningful when you look at our total market size of about $1 2 billion smartphones per year.

Robert Bruggeworth: Now, end market demand typically and what we're forecasting now is what we see is our largest customer you rent continues to come down in March. We have a seasonal, usually the weakest quarter for our China Android business in March. And some of that is offset by a ramp at the largest Android customer that we have. So, you know, with forest percentages go, I'm not going to call it percentages. I'm just telling you that from our view, that's the dynamics that are driving most of our business.

Now when it comes to our China customers.

As Bob said, a large part of their business in a lot of their growth is coming from overseas business and so we're we're.

We're very well represented across our China, OEM customers and certainly in that overseas business Thats, where we see a lot of the higher share and growth opportunity. So it's not just to China domestic situations you have to look at you have to look at that overseas business and many of those customers have pretty significant market share in a lot of those over.

These markets.

Robert Bruggeworth: Grant commented that our ACG business is growing year over year. Our CSG business will start growing this quarter and we'll be up in March. And really the lagging business for us is our HPA business and we've talked about what's going on there with primarily what used to be our largest business in infrastructure side and we're not seeing that now. So, you know, when you integrate all that, we're still comfortable. We're going to be up significantly in March, year over year and we're comfortable.

Okay.

The next question comes from <unk> Hari of Goldman Sachs. Please go ahead.

Hi, Thank you.

Wanted to follow up on the China, Android market I guess, specifically what kind of trends did you see in the September quarter on a sequential basis and what's embedded in your guidance for December and related to that.

We've been getting more questions about the competitive landscape in China.

Robert Bruggeworth: We're going to be up for the fiscal year, 24 over 23. I know, Grant, if you want to add anything to that, but I want to give them all the moving pieces. Sure, no, I think he covered it, Bob. I'd say, you know, maybe 10%, but certainly not 15, right. We're committed to the comments. Now, any macro related disruptions aside that we see growth in fiscal 24.

You guys have pretty good visibility and obviously you have got good relationships with your customers as you think about models coming out in 2024.

Any concerns around market share how should we think about gen to gen content growth.

Particularly as it pertains to your Oems export business.

<unk>.

Yes.

Karl Ackerman: The next question comes from Carl Ackerman of the N.P.

David will handle that one yes sure Marc.

Unknown Executive: Paraba. Please go ahead. Yes, thank you.

Let's see where to start.

The China.

Grant Brown: I have a clarification and a follow up. I guess, I guess, you just give the content gains to the largest customer. Is it fair to say that customer now exceeds 50% of revenue in the quarter? We won't comment on any customers within the quarter, but we'll sum it up on the 10K. The only thing I'd say about 10% plus customers is that we did have more than one in the quarter. Thank you for that.

Customer base in the export market as well as in the domestic market and they've got some pretty compelling products as Bob said I was just over there a few weeks ago I've got to meet with all of our customers.

Our relationships continue to be very strong prices.

Place a very high value on what we bring and they all reinforce that corvo is their main global strategic supplier for RF.

So we have deep discussions with them on an roadmaps to align.

Their needs to our product plans and they're very highly engaged on our new low mid high as pad platform that we announced a couple of quarters ago.

Robert Bruggeworth: For my follow up, you know, MediaTex suggested that 5G units should grow double digits next year, certainly above overall smartphone unit expectations of low singles. You know, most your exposure to incremental gains in 5G do come from China Android OEMs. I was hoping you could address how you think Huawei does or does not impact your China Android opportunity, both near term and longer term. Thank you. I'll take the first part of that, Carl, and I'll let Dave take the second part since he was just recently in China.

Additionally, they're looking at expanding.

Their business with us in other areas such as power management.

Robert Bruggeworth: Actually, a large part of our growth for 5G Android is still at the largest Android manufacturer being Samsung. The second point I would like to make is you're right, we do have Chinese exposure in 5G, but most of that is actually in the export market for what they're trying to do to build their brands outside of China. So just keep those two facts in mind. Dave was just in China just a couple weeks ago, and I'll let him talk a little bit more about that and what least we're seeing talking to all of our customers there, along with your comment about Huawei.

Sensors and ultra wideband so.

The overall market as Bob mentioned.

Channel inventories are approaching normal many of those customers are getting a pretty healthy levels. So as we've been saying all along.

Well, what the headwind is now becoming a tailwind so we're starting to see that growth.

We had our largest bookings quarter in over two years.

So our customers have now gotten past the concern about inventory in there and Theyre looking forward now and starting to place orders more.

Aligned to what their true production plants and unit demand is so.

That has certainly improved a lot now having said that as.

Bob mentioned also we are not anticipating any major rebound in the end market.

We're just excited about the design wins that we've had and the inventory in the channel being cleared out and Thats driving a lot of our growth as we go forward.

Got it and then as a quick follow up.

Robert Bruggeworth: Yeah, thanks Bob. And so mail start with with Huawei and kind of size what we're seeing for you. Prior to the ramp of the new phone that they just announced, they were doing about 2 million units a month. And so we've seen a typical premium to your phone ramp where that peaked up last couple of weeks of data we're actually seeing that come back down so that maybe on the other side of that ramp.

Outside of mobile some of your broader analog peers have talked about science.

Signs of weakness or clear signs of weakness.

In industrial and <unk>.

And parts of automotive I think comes in for has been weak for a couple of quarters now, but I guess the question is outside of mobile what kind of trends are you seeing and what sort of trajectory are you assuming as you sort of progress through the December quarter and go into March outside of mobile. Thank you.

Robert Bruggeworth: But if you look at the incremental growth that we see over what they were shipping previously, it's on an annual basis is about 10 to 20 million units. So that's a pretty good growth for that customer.

Sure. So Sherri. This is grant let me take that one we don't explicitly guide by segment.

But the views for each of those businesses is factored into our total guidance I'll try to provide you a little bit of color. There and then Dave can jump in and add.

David Fullwood: But it's not that meaningful when you look at a total market size of about 1.2 billion smartphones per year. Now when it comes to our China customers, as Bob said, a large part of their business and a lot of their growth is coming from overseas business. And so we're very well represented across our China OEM customers. And certainly in that overseas business, that's where we see a lot of the higher share and growth opportunity. So it's not just a China domestic situation. You have to look at that overseas business. And many of those customers have pretty significant market share in a lot of those overseas markets.

We have a pretty diverse collection of businesses that serve a number of end markets and they're not all in space.

As Bob pointed out last quarter in fiscal 'twenty, our fiscal Q2, ACG returned to the year over year growth that we expected and we will continue to see that for the rest of the year and then this quarter. Our fiscal Q3, we forecast our CST segment will return to year over year growth and then finally in Q.

Four we expect HPA to return to year over year growth. So the businesses are a.

A bit out of phase if you want to think of them that way just continuing with HCA. As an example directly to your question. If you look inside of HVA theres various trends within each end market. It probably won't surprise, you, but the base station market being weak.

Grant Brown: The next question comes from Koshia Hari of Goldman Sachs. Please go ahead. Hi, thank you. I just wanted to follow up on the China Android market. I guess specifically what kind of trends did you see in the September quarter on a sequential basis? And what's embedded in your guidance for December? And related to that, you know, we've been getting more questions about the competitive landscape in China. You guys have pretty good visibility and obviously you've got good relationships with your customers.

As an example, our revenues down over 50% year over year for the last four quarters.

Few years ago, actually we hit $200 million in that business.

For the Huawei ban in the <unk> base station Rollouts slowed but outside of China, only 25% of that mid band <unk> infrastructure has been built so theres a lot of opportunity, but that's one area, where we continue to see some some meaningful headwind and market weakness.

Grant Brown: As you think about models coming out in 2024, any concerns around market share, how should we think about gentigen content growth, particularly as it pertains to your OEM's export business? Thanks. Dave, do you want to have a moment? Sure about. Let's see where to start. The China customer base in the export market as well as in the domestic market. It got some pretty compelling products. As Bob said, I was just over there a few weeks ago.

Beyond that though there is also the broadband area within HCA, we have a very strong position their high level of share, but the DOCSIS four <unk> upgrade cycle.

Maybe a bit slower and there could be some pockets of inventory in the very end products. There so the situation within infrastructures.

Very different than say, our defense and aerospace group, where we're benefiting from significant strength and expect to grow in fiscal Q3 and fiscal Q4. So there's a lot of cross currents. There when you get into the details but this is why we maintain a diverse set of businesses a lot of them share the same manufacturing foot.

Grant Brown: I got to meet with all of our customers. Our relationships continue to be very strong. They place a very high value on what we bring. And they all reinforce that Corvo is their main global strategic supplier for our app. So we have deep discussions with them on on roadmap to align their needs to our product plans and they're very highly engaged on our new low mid high S pad platform that we announced a couple quarters ago.

Grant Brown: Additionally, they're looking at expanding their business with us in other areas such as power management, sensors and L to Y band. So the overall market as Bob mentioned, the channel inventories are approaching normal many of those customers are getting to pretty healthy levels. So as we've been saying all along, what was the headwind is now becoming a tailwind. So we're starting to see that growth. We had our largest booking is quarter, you know, over two years.

Print, which creates the operating efficiencies, but also scale and the diversification on the topline.

What I'll add to that is in the cellular Iot market actually we saw has turned about two quarters ago.

So with CST coming back as Greg pointed out growing next quarter.

We're not expecting the Iot cellular Iot business to come back that's been down for us and we've been working through inventory in that segment as well. So I think thats been some commentary as well.

I think you mentioned automotive as well.

We're growing from pretty small base there so Bob talked about a lot of the design wins. So we're pretty excited about the growth opportunity there, but thats all new programs. It will be ramping over the next couple of years to help drive that growth for us, but it's coming off of a relatively small base. So we're not <unk>.

Grant Brown: So our customers, you know, have now gotten past the concern about inventory and they're looking forward now and starting to place orders more aligned with their true production plans and unit demand. So that's certainly improved a lot. Now having said that as Bob mentioned, also, we're not anticipating any major rebound in the end market. We're just excited about the design wins that we've had and the inventory in the channel being cleared out and that's driving a lot of our growth.

Exposed there to really maybe see some of that things youre seeing from some of our peers.

The next question comes from Ruben Roy of Stifel. Please go ahead.

Yes, hi, Thank you Bob I wanted to ask about the ultra wideband marketplace I think in the past you've had a few.

New system wins in the Android ecosystem for ultra wide band I don't know if there are characterized as flagship back then so maybe if you could talk about the broader opportunity in smartphone specifically.

Grant Brown: And then as a quick follow up, outside of mobile, some of your broader analog peers have talked about, you know, signs of weakness or clear signs of weakness and industrial and parts of automotive, I think comes in for it's been weak for a couple of quarters now, but I guess the question is, you know, outside of mobile, what kind of trends are you seeing and what sort of trajectory are you assuming as you sort of progress through this? The December quarter and go into March outside of mobile, thank you.

That you are seeing and then expanding outside of handset.

Again in the past I think you've characterized the market as several hundred million dollars of opportunity you're talking about a $250 million lifetime opportunity in the auto wins. So has anything changed are you are you seeing accelerating development and if you can give us an update on how you characterize the opportunity that would be great sure.

Grant Brown: Sure, Toshiya, this is Grant, let me take that one. We don't explicitly guide by segment, but, you know, the views for each of those businesses is factored into our total guidance, but I'll try to provide you a little bit of color there and then they can jump in and add. You know, we have a pretty diverse collection of businesses that serve a number of end markets and they're not all in space.

Sure. Thanks Reuben.

Extremely excited about what the teams accomplished in some big wins in ultra wideband.

One of the Android.

Phone manufacturers, Google we've been in for a couple of generations now so we've talked about that you.

You can get Teardowns I think from our comments you know who the next one is what surprised us about ultra wideband is yes.

Grant Brown: You know, as Bob pointed out last quarter in fiscal 20 or fiscal Q2, ACG returns to the year over year growth that we expected and we'll continue to see that for the rest of the year. And then this quarter our fiscal Q3 we forecast our CSG segment will return to year over year growth and then finally in Q4, we expect HPA returns year over year growth. So, you know, the businesses are a bit out of phase if you want to think of them that way, just continuing with HPA as an example directly to your question.

I think we said this a year ago or more than when we first acquired Deca wave.

We were on the original platforms and our largest customers phones with the RF front end for ultra wideband, what we believed was going to happen as it was going to take off in phones first in automotive second whats actually happening is we're picking up a lot more on the automotive side enhance it seems to be trailing it at least in the adoption.

As you know it takes a little bit longer to get to market in a car so they're out.

Winning platforms now in building those in so our expectation is we're going to lead in design wins in automotive with phones are going to come up fast as Dave mentioned earlier in his comments that we're working with many of the other Chinese handset Oems.

Grant Brown: If you look inside of HPA, there's various trends within each end market. It probably won't surprise you, but the the base station market being weak. You know, as an example, our revenues down over 50% year over year for the last four quarters, a few years ago, actually, we hit 200 million in that business before the Huawei ban and the 5G base station rollout slowed. But outside of China, only 25% of that mid ban 5G infrastructure has been built.

To introduce ultra wideband, let's look I want to point out is in the tier one.

German manufacturer that we want in the current win is now to support a German tier one, but they will take that same platform to other U S. Other manufacturers around the world that platform plus we've been working with others on platforms that will also go into the automotive area. So we see.

Grant Brown: So, there's a lot of opportunity. But that's one area where we continue to see some some meaningful headwind and market weakness. Beyond that, though, you know, there's also the broadband area within HPA. We have a very strong position there high level of share, but the doctors 4.0 upgrade cycle may be a bit slower and there could be some pockets of inventory in the very end products there. So the situation within infrastructures is very different than say our defense and aerospace group, where we're benefiting from significant strength and expect to grow in fiscal Q3 and fiscal Q4.

A lot of opportunity there and placements in auto automotive can go from five or six up to nine or 10. So they can be big wins, depending on how they adopt to use the ultra wideband in a car and it's more than just quote keyless entry.

That's what's really exciting about the opportunities there. So if I look at that and look at handset also a couple of quarters ago, we talked about ultra wideband and access points Wi Fi access points for indoor navigation, which is another exciting opportunity and we're just seeing it now going into other types of products, we are working with various.

Grant Brown: So, you know, there's a lot of cross current there when you get into the details, but this is why we maintain a diverse set of businesses. And a lot of them share the same manufacturing footprint, which creates the operating efficiencies, but also scale and the diversification on the top line. What I add to that is in the cellular IOT market, actually, we saw this turned about two quarters ago down. So with ESG coming back as grand pointed out growing next quarter, you know, that's we're not expecting the IOT cellular IOT business to come back.

<unk> Oems for other things in your home that need that kind of technology. So we're very excited about the things that are going on there really appreciate your question.

Thank you for all that detail Bob I have a quick follow up for grant.

Just in terms of inventory and ICD.

On balance sheet inventory coming down.

Ahead of.

Hopefully and potentially.

Growth here next year.

Do you have sort of a target level, either <unk> or dollar for inventory or how youre thinking about that as you go forward post the December quarter.

Grant Brown: That's been down for us and we've been working through inventory and that segment as well. I think that's been some commentary as well. Yeah, I think you mentioned Automotive as well. And you know, that we're growing from pretty small base there. So Bob talked about a lot of the design links. We're pretty excited about the growth opportunity there. But that's all new programs. It'll be ramping, you know, over the next couple of years, that drive that growth for us. But it's coming off of a relatively small base. So we're not exposed there to really maybe see some of the things you're seeing from some of our peers.

Yes, sure I mean, we usually have commented on our target around four turns so high threes to four would be pretty typical range for us to look to achieve.

The next question comes from Edward Snyder with Charter equity Research. Please go ahead.

Thanks, a lot first of all housekeeping could you give us a percentage of revenue for each of the three businesses sorry, if I missed that.

Then.

Ruben Roy: The next question comes from Ruben Roy of people. Please go ahead. Yeah, hi, thank you. Bob, I wanted to ask about the ultra wideband marketplace. I think in the past, you've had a few system wins in the Android ecosystem for ultra wideband. I don't know if they were characterized as flagship back then. So maybe if you could talk about the roller opportunity and smartphone specifically. That you're seeing and then expanding outside of hand said again in the past, I think you've characterized the market as several hundred million dollars of opportunity and you're talking about a 250 million dollar lifetime opportunity in the auto win.

Brad if I take a look at your China revenue over over the years actually it looks like if you exclude this.

Aero when you are over shipping in the area when you're under shipping. Your average is probably close to $2 50 to 300 a quarter.

And I know you did about $150 million last quarter haven't seen here, okay for September yet, but doesn't that suggest youre dealing with VB 100 $150 million of inventory burn per quarter, just trying to bracket those numbers.

Yes, sure Ed I can help you with the percent of revenue, but we haven't commented on the.

China revenue in the quarter.

ACG was 77% HPA was 14 and CSC was the balance of about 9% and yes, we havent commented on what a normalized level of Android.

Ruben Roy: So as anything changed, are you seeing accelerating development and if you can give us an update on how you characterize the opportunity that you create. Sure, thanks, Ruben. Extremely excited about what the teams accomplished in some big wins and ultra wideband. One of the Android phone manufacturers Google we've been in for a couple generations now. So we've talked about that and that's you can get tear downs. I think from our comments, you know, who the next one is what surprised us about ultra wideband is.

Revenue, our China revenue would be on the outside of the comments you've already made but.

I don't know if Theres always add Ed is we are still under shipping to end demand best we can tell.

Right.

Comment on the end of it.

Right, but when it snaps back to something more normal you said inventories are normalizing and I know demand changes year over year, but giving you.

Ruben Roy: You know, again, I think we said this a year ago or more than when we first acquired deck away that we were on the original platforms in our largest customer phones with the RF front in for ultra wideband. And what we believe was going to happen is it was going to take off and phones first and automotive second. What's actually happening is we're picking up a lot more in the automotive side and handsets seems to be trailing it at least in the adoption.

You're kind.

Kind of a comment position as a preferred vendor for most of the phones being sold.

Yes.

Maybe this will help as we bring it down that means revenues do go up I mean, it's not we haven't been shipping so we've been up the last two quarters.

Yeah, and maybe Ed I'd also make the distinction between channel inventory in our own inventories. So channel inventories. We think are relatively healthy maybe even earlier than we had commented on in the past, where we thought it would take until December.

Ruben Roy: Now, as you know, it takes a little bit longer to get the market in a car. So they're out, you know, winning platforms now and building those in. So our expectation is we're going to lead and design wins and automotive what phones are going to come up fast and they mentioned earlier in his comments that we're working with many of the other Chinese handset OEMs to introduce ultra wideband. The thing I want to point out is in the tier one German manufacturer that we want in the current win is now to support a German tier one, but they will take that same platform to other US and other manufacturers around the world that platform plus we've been working with others on platforms that will also go into the automotive.

So that's improving.

Improving situation our own inventories is as we're selling through them requires us to achieve the mix shifts that we're going to see in the second half. So we will start selling through our own high cost inventories in Q3 and Q4 largely.

Ruben Roy: So we see a lot of opportunity there and placements and automotive can go from, you know, five or six up to nine or 10 so they can be big wins, depending on how they adopt to use the ultra wideband in a car and it's more than just quote keyless entry. And I think that's what's really exciting about the opportunities there. So if I look at that and look at handset also a couple quarters ago we talked about ultra wideband in access points, Wi-Fi access points for indoor navigation, which is another exciting opportunity.

Okay, Okay, and we do expect growth in Q3, though.

Well you said you saw the largest bookings in two years in the last quarter are normally those bookings are for one year out or so I know it varies but.

No not in Europe.

Yes.

Normal lead times for us.

The next question comes from Sarine pedigree of Raymond James. Please go ahead.

Thank you.

Clarification on the China business, either Bob or grant I think one of the comments is that the inventories are coming down in business as you know from from the trough levels.

Growing sequentially, but at the same time I think Bob you said in your comments about the March quarter, you are expecting China to be seasonal given that inventories have kind of pretty much normalized I would've thought China would be you know better than seasonal in March. So just if you can give some clarification on the Hawaii It will only be seasonal in March.

Ruben Roy: And we're just seeing it now going into other types of products we're working with various manufacturers OEMs for other things in your home that need that kind of technology. So we're very excited about the things that are going on there and really appreciate your questions.

Because what I meant was from the demand perspective in March that is typically a seasonally low point for China.

What I said.

Okay, but it doesn't mean that your business is going to decline seasonally in March quarter.

Grant Brown: Thank you for all that detail Bob. I have a quick follow-up for Grant just in terms of inventory and I see the on balance sheet of inventory coming down ahead of hopefully and potentially a growth year next year. Do you have sort of a target level either in DOI or dollar for inventory or how you're thinking about that as you go forward post December quarter? Yeah, sure. We usually have commented on our target around four terms. So high three to four would be a pretty typical range for us to look to achieve.

Your China business.

I also said as we've come we've pretty much cleared out most of the inventory. So we are seeing growth, which is what I, just said that this quarter and our Android business.

Yes, maybe I'll restate, what Bob had commented on earlier.

In terms of next quarter, we do see growth in Android.

But march we do expect to see the typical decline there which is on the other side of our largest customers ramp and March is also historically a seasonally low point for handset sales in China. So those two factors are somewhat offset by the largest android customer and their timing of phone launches.

Edward Snyder: The next question comes from Edward Snyder of Charter equity research. Please go ahead. Thanks a lot.

Grant Brown: First of all housekeeping. Give us a percentage of revenue for each of the three businesses. Sorry if I missed that. And then Grant, if I take a look at your China revenue over over the years, actually, it looks like if you exclude the arrow when you were overshipping and the arrow when you're undershipping, your average is probably close to 250 to 300 a quarter. And I know you would do about 150 million last quarter, we haven't seen the K for September yet, but doesn't it suggest your dealing with maybe $150 million of inventory burn per quarter is trying to bracket those numbers?

The fact that the channel is healthier so with all that said, we do think it'll be.

Grant Brown: Yeah, sure. I can help you with the percent of revenue. But we haven't commented on the China revenue in the quarter. ACG was 77 percent. HPA was 14 and CSU was the balance about 9 percent. And yeah, we haven't commented on, you know, what a normalized level of Android revenue or China revenue would be outside of the comments we've already made, but I don't know if there's. So all it out is we are still undershipping to end the man that we can tell.

Grant Brown: But we're coming up near the end of it. Right. But when it snaps back to something more normal, you said, even to it's a normalizing and I know the man changes year over year, but given your. You're kind of in common position that's preferred vendor for most of those phones being sold. Yeah, we've been at maybe also help as we bring it down. That means revenues do go up. I mean, it's not we haven't been shipping.

Grant Brown: So we've been up the last two quarters. Yeah. And maybe I would also make the distinction between channel inventory and our own inventory. So channel inventory. As we think are relatively healthy, maybe even earlier than we had commented on in the past where we thought it would take until December. So that's a improving situation. Our own inventory is as we're selling through them requires us to achieve the mix shift that we're going to see in the second half.

Grant Brown: So we'll start selling through our own high cost inventory in Q3 and Q4 largely. And we do expect growth in three. What you said you saw the largest bookings in two years in the last quarter. And normally those bookings are for what year out or so I know it varies. No, not a year. Normally times for us.

Srinivas Pajjuri: The next question comes from Serena Pajuri of Raymond Jane. Please go ahead. Thank you. Just a clarification on the China business, either Bob or Grant. I think one of the common is that yeah, the inventory is coming down and businesses. From the trough levels, it's growing sequentially. But at the same time, I think Bob, you said in your comments about the March quarter, you're expecting China to be seasonal. Given that inventory is kind of pretty much normalized, I would have thought China would be better than seasonal in March.

Srinivas Pajjuri: So just if it can give some clarification on why it will only be seasonal. March. Because what I met was from the demand perspective in March, that's typically a seemingly low point for China. That's what I said. Okay, but doesn't mean that your business is going to decline seasonally in March quarter. Your China business. But what I also said is we come, we pretty much cleared out most of the inventory. So we are seeing growth, which is what I just said to Ed, this quarter in our Android business in China.

Srinivas Pajjuri: Yeah, maybe may I'll restate, you know, what Bob had commented on earlier, just, you know, in terms of next quarter, we do see growth in Android. But March, you know, we do expect to see at the typical decline there, which is on the other side of our largest customers ramp. And March is also historically a seasonally low point for handsets, thousands in China. So those two factors are somewhat offset by the largest Android customer and their timing of phone launches plus the fact that the channel is healthier.

Robert Bruggeworth: So with all that said, we do think it'll be.