Q1 2025 Silicon Laboratories Inc Earnings Call
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Dede: Hello, my name is Steady and I will be your conference operator today.
Dede: Welcome to the Silicon Labs' first quarter fiscal 2025 earnings call
Dede: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to answer the question and answer session.
Dede: To ask a question during the session, you will need to press star 1-1 on your telephone You will then hear an automated message advising your hand is raised [inaudible]
Speaker Change: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I will now turn the call over to Giovanni Pacelli, Silicon Lab Senior Director of Finance. Giovanni, please go ahead. Thank you very much.
Speaker Change: Our earnings press release and the accompanying financial tables are also available on our website.
Speaker Change: Joining me today are Silicon Labs, President and Chief Executive Officer Matt Johnson and Chief Financial Officer Dean Butler. They will discuss our first quarter financial performance in review of recent business activities.
Speaker Change: No obligation to update these statements in the future.
Speaker Change: We encourage you to review, our SEC filings, which identify important risk factors that could cause actual results to differ materially from those contained in any forward looking statements.
Speaker Change: Additionally, during our call today, we will refer to certain non-GAAP financial information.
Speaker Change: Reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release and on the Investor Relations section of our website I'd now like to turn the call over to Silicon Labs', Chief Executive Officer, Matt Johnson, Matt.
Speaker Change: Thanks, Giovanni and good morning to everyone Silicon labs drove strong first quarter results consistent with our outlook and showing momentum across the business.
Speaker Change: We highlighted in our recent analyst day, we are well positioned to outperform the broader semiconductor market and our Q1 results illustrate that with both sequential and year over year revenue growth and bulk of our business units.
Speaker Change: Our home and life business grew mid single digits sequentially, nearly doubling year over year as share gains in connected healthcare continued materializing into production ramps. In addition, smart home applications showed signs of strength in the quarter.
Speaker Change: Our industrial and commercial business, continuing its recovery growing high single digit sequentially double digits compared to the same period last year as design win ramps in smart metering in shipments to electronic shelf labeling customers maintained their momentum.
Speaker Change: While the overall macroeconomic environment remains uncertain.
Speaker Change: We expect to outperform the market given our leadership position in high growth markets and a multi year history of share gains as.
Speaker Change: As we look at the current quarter and the balance of the year, our conversations with customers and distribution partners indicate that we have no reason to change our forecast due to the dynamics of global trade policy at this point.
Speaker Change: Our outlook for sequential and year over year growth into Q2 is based on continued linear improvement in our bookings patterns and progress on new program ramps and secular growth areas like connected health care Smart home commercial retail and global metering deployments.
Additionally, supply chain diversification is an area, we focused on for several years, including as part of the roadmap for our next generation series III platform.
Speaker Change: Current footprint is not significantly affected by the shifting geopolitical landscape, although it's too early to quantify the potential indirect impact of tariffs on global economic demand.
Speaker Change: We have not yet seen any significant impact on our customers' forecasts.
Speaker Change: Our team is focused on delivering innovative products that reinforce our breadth depth and singular focus on the Iot space. This.
Speaker Change: This includes our latest series two devices, the BG 29 family of Bluetooth low energy Soc.
Speaker Change: Designed to bring industry, leading performance battery life security and increased memory capacity to the smallest form factor Bluetooth devices.
Speaker Change: <unk> 29 family represents a breakthrough in our abilities to bring highly differentiated technology to connected health care applications, including blood glucose monitors as well as other wearable devices.
Speaker Change: We also introduced our new <unk> 20 to <unk> and <unk> 24, <unk> optimized for common Bluetooth applications, notably these devices bring the most competitive combination of security processing power and connectivity for high volume low power applications, including asset tracking and small appliances the beat.
Speaker Change: 24, <unk> also supports advanced AI ml acceleration and the latest in Bluetooth channel sounding ideal for radio congested areas like warehouses smart cities and residential apartment complex.
Speaker Change: Additionally, our recently announced series two multi protocol Soc. The MG 26 is now generally available accelerating developers path designing future proof matter devices, and smart home and commercial applications like led lighting switches sensors and loss.
Speaker Change: AMG 26 also sets a new standard for concurrent Bluetooth in 15 for wireless performance alongside best in class security as well as for machine learning capabilities that enhanced performance for critical SaaS like predictive maintenance anomaly anomaly and keyword detection.
Speaker Change: As matter continues to pull thread technology into the mainstream we're seeing our 15th for design win momentum accelerate.
Speaker Change: This reinforces our view that we are well aligned with the increasing matter adoption as both the leader and threat technology and trusted partner Internet security providers and ecosystem partners, who are building out matter infrastructure.
Speaker Change: Finally at our Analyst day I was pleased to announce that our first series III device, which was sampling last year is now ramping to production.
Speaker Change: Series III will continuous brought our alpha sampling this year and we're already seeing strong design win momentum with the first device, which is a testament to the great execution of the Silicon labs team.
Speaker Change: While we believe series III will be even more impactful than our series two over a longer time horizon as we further expand our addressable market and Wi Fi compute and AI inference, our ability to offer our customers. Both series two and series III in parallel with co compatibility between the two platforms is a significant competitive.
The differentiator for us.
Speaker Change: In conclusion, even amid trade uncertainty, we're highly confident in our ability to deliver sequential growth fueled by linear improvement in our order patterns and continued new product ramps across our business units.
Speaker Change: Looking ahead, we are well positioned to outperform based on our expanding presence in growing markets differentiated product portfolio and continued share gains now I'll hand, it over to Dean for the financial update.
Dean Butler: Thanks, Matt and good morning to everyone.
Dean Butler: I will review the financial results of our recently completed quarter, followed by a discussion of our current outlook.
Dean Butler: Revenue for the March quarter was $178 million up 7% sequentially and in line with the midpoint of our prior guidance.
Dean Butler: Year over year consolidated revenue was up 67%.
Dean Butler: In our industrial and commercial business March quarter revenue was $96 million up 8% sequentially and up 47% from the same period last year.
Dean Butler: Sequentially the growth was driven by better than forecasted customer ramps and smart metering and continued electronic shelf labels market growth.
Dean Butler: Home and life March quarter revenue was $82 million up 5% sequentially and nearly doubling with a year over year growth rate of 99%.
Dean Butler: As we anticipated the sequential increase in home and life was driven by strength in smart home applications and shipments to connected health customers.
Dean Butler: Sell through at our distribution partners continue to gain momentum with channel inventory decreasing by eight days to <unk>.
And at 48 days, which is down from 56 days in the prior quarter.
Dean Butler: This marks a new low level of channel inventory and is well below our targeted level of about 70% to 75 days.
Dean Butler: Distribution made up approximately 66% of our revenue mix for the quarter.
Dean Butler: March quarter gross margins saw positive improvements as long tail channel sales and industrial applications benefited our mix.
Dean Butler: GAAP gross margin was 55% non-GAAP gross margin was 55, 4%, which was up from the prior quarter above the midpoint of our prior guidance and ahead of our forecasted progression.
Dean Butler: GAAP operating expenses were $130 million, which includes share based compensation of $20 million and intangible asset amortization of $5 million.
Dean Butler: non-GAAP operating expense of 105 million reflects the normal uptick of the Companys annual merit cycle and reset of the employee bonus programs.
GAAP operating loss was $32 million and non-GAAP operating loss was $7 million.
Dean Butler: During the quarter, we recorded a GAAP tax charge of approximately $2 million.
Dean Butler: Our non-GAAP tax rate remained 20%.
Dean Butler: GAAP loss per share was <unk> 94.
Dean Butler: non-GAAP loss of <unk> <unk> per share beat the midpoint of our guidance by <unk> <unk>.
Dean Butler: Turning to the balance sheet.
Dean Butler: We ended the quarter with $425 million of cash cash equivalents and short term investments.
Dean Butler: Our days of sales outstanding was approximately 30 days.
Dean Butler: During the quarter, we further reduced our internal.
Dean Butler: Internal inventory by $22 million, ending the quarter $83 million of net inventory, which contributed to our positive operating cash flow of $48 million for the March quarter, Despite operating losses.
Dean Butler: Days of inventory on hand improved to 94 days another sequential improvement from 125 days at the December quarter end.
Dean Butler: I want to thank our supply chain team here at Silicon labs for having successfully guided our internal inventory balance to our targeted level and you should now expect to see an uptick in working capital deployment as we maintain these levels to support the ramp of new customer designs throughout 2025.
Dean Butler: Speaking of supply chains, we have completed a review of our supply chain and find that there is almost no direct impact to us under the current tariff rules as we know them today.
Dean Butler: Given our wide berth of customers and applications. They are likely to be varying degrees of potential impacts to customers. The two outstanding questions are one what will the indirect impacted demand.
Dean Butler: We are able to and when we'll be able to measure that and two will the tariff rules change either positively or negatively as we go forward.
Dean Butler: As it stands today, our order patterns from customer bookings and distribution Pos showed sequential improvement in the first quarter and have maintained this trajectory quarter to date into the June quarter.
Dean Butler: An indication to us that our end markets are progressing in their cyclical recovery.
Dean Butler: Additionally, our end customer surveys continue to report that excess inventory is not currently a concern.
Dean Butler: We are encouraged by these positive trends entering Q2, and as such our confidence and above market growth growth. This year remains intact anchored by new product ramps rather than on a reliance of robust end market demand.
Dean Butler: We anticipate revenue in the June quarter to be in the range of $185 million to $200 million.
Dean Butler: Which at the midpoint would imply 32% year over year growth and an 8% sequential growth.
Dean Butler: Importantly, we have not witnessed any significant customer pull ins and have kept our forecasting methodology consistent with prior quarters, we remain confident that silicon labs will outperform the broader semiconductor market this year.
Dean Butler: Spite, the shifting trade dynamics, given our unique new program ramps.
Dean Butler: With improved mix of industrial applications and channel strength, we expect the gross margin improvements in the June quarter, with both GAAP and non-GAAP gross margins to be in the range of 55% to 57%.
Dean Butler: We expect GAAP operating expenses in the June quarter to be in the range of $129 million to $131 million we.
Dean Butler: We expect non-GAAP operating expenses to modestly increase in the June quarter, driven by full quarter accounting of payroll related items, including the Companys bonus plans and annual merit cycle, resulting in an expected range of $106 million to $108 million.
Dean Butler: Finally, GAAP loss per share is expected to be in the range of 55.
Dean Butler: 295 loss on an assumed basic share count of $32 7 million shares.
Dean Butler: non-GAAP earnings per share is expected to be in the range of 19.
Dean Butler: To a loss of <unk>.
Dean Butler: On an expected diluted share count of 33 million shares.
Dean Butler: That wraps up our prepared remarks, I'd like to now hand, the call back over to the operator to start the Q&A session operator.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: And our first question comes from Christopher Rolland of Susquehanna. Your line is open.
Christopher Rolland: Hey, guys. Thanks for the question and congrats.
Speaker Change: On the results here.
Speaker Change: I guess there is obviously some uncertainty in the back half here you guys seem pretty comfortable around it and the variability there, but how are you thinking about the September quarter. After a little bit of June upside here or perhaps just how the second.
Speaker Change: Half is shaking up overall.
Christopher Rolland: Yes, I'll start there Christopher.
Speaker Change: First we're only guiding a quarter at a time.
Speaker Change: I think the pieces that are important to think through and some of them were covered in the prepared remarks.
Speaker Change: Everything that we look at our C. Whether it's customer forecasts bookings billings inventory level at our customers at our distributors all of these things are behaving very well linearly.
Speaker Change: As expected so right.
Speaker Change: Right now theres not anything else there to indicate that there is a big shift coming.
Speaker Change: Which is important now obviously were being hypervigilant watching all these things all the time as I think the rest of the industry peers.
Speaker Change: The other thing Thats really important and just thinking through this as we've said consistently we're not looking for.
Speaker Change: Broad market strength to drive this year for us we're looking for the performance. This year its really come from the design win ramps that we've been talking about and that's what we're seeing here. So we're encouraged by that happy to see the rents they're not singular their broad and thats really whats driving our growth not a broad market recovery right now.
Speaker Change: Great. Thanks, Thanks, so much Matt and then.
Speaker Change: I believe you thought maybe last quarter that home and life would outperform I N C. But it seems like there was more IMC strength.
Speaker Change: And then home and life it was kind of flipped.
Speaker Change: So perhaps you can talk about what was kind of unexpectedly good and bad between the segments and how they shook out.
Speaker Change: Yes, I don't know if there was necessarily unexpected good or bad a little bit of timing.
Speaker Change: <unk>, maybe between the two of them.
Speaker Change: I would note that on a year over year basis, our home and life business was almost double up 99%.
Speaker Change: And the industrial commercial is up 47% I think our expectation is he could.
Speaker Change: I N C youll grow that fast given sort of the sequential change that had had of about eight 9% in the quarter.
Speaker Change: The metering business, which we've said before India, specifically that business has been ramping faster than what we've historically seen and I think we're a little cautious whether that was able to continue in that metering business continues to ramp and actually ramping better than we originally anticipated Chris.
Speaker Change: Thank you very much appreciate it yes.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Thomas O'malley of Barclays. Your line is open.
Speaker Change: Hey, guys. Thanks for taking my questions. My first one is just on inventory in the channel. So you guys have obviously worked that down pretty significantly I think you said 48 days of inventory in general versus a target of 70 days. When you look at your June guidance, what's your target for channel inventory, there youre going to refill that are kicked out to new high levels like just given the stronger demand environment I'm curious with the <unk>.
Speaker Change: Strategy is for June yes.
Speaker Change: Yeah.
Speaker Change: General expectation for the June quarter, we do not want to end June again at 48 or Heaven forbid even lower I think.
Speaker Change: If we look at the way that we're running our forecast we would expect the channel forecast to come back.
Speaker Change: Above 50 days for the quarter, but certainly below 60, so I think a low 50 is probably where it will likely Stan when we forecast ended June eventually we want to drive it back to the target levels 70, 75 days that is a multi quarter progression.
Speaker Change: I would not expect to see us filled the channel in the June quarter.
Speaker Change: Really where we're almost hand to mouth in a lot of these smaller long tail customers.
Speaker Change: But you won't see any big step up progression at least the way that we see it today Tom.
Speaker Change: Yeah.
Speaker Change: Helpful. And then you guys have talked for a long time now about specific company wins driving the growth versus broad market recovery.
Speaker Change: So just context can you help us understand as the percentage of your revenue today, how much kind of in the March quarter in the June quarter, maybe if that snapshot is easier is new products versus stuff that you would deem like broad based product and then can you try to walk us through what the pricing differences between some new products.
Speaker Change: And something that you would sell on a broad based understand it needs to be probably loose commentary, but I think there'll be some helpful perspective, just given how focused you are there.
Speaker Change: Sure. This is Matt I'll take a shot at that I mean quick quick answers.
Speaker Change: Easy way to think of it.
Speaker Change: We don't break out the total revenue that way, but I can say the majority of the incremental revenue you are seeing is definitely coming from those new reps.
Speaker Change: Very easy way to think of it and on pricing not meaningfully different in fact, I think youre seeing our gross margins progress each quarter, even with this new rent growth. So.
Speaker Change: Not meaningfully different and we see a path to being able to drive sequential revenue growth on design win ramps and sequential gross margin progression as well so hopefully the sum of those two things gives you the full picture.
Speaker Change: Thank you.
Tories Feinberg: And our next question comes from the Tories Feinberg of Stifel. Your line is open.
Speaker Change: Yes, Thank you and congrats on the results.
Speaker Change: So Matt I think in the past, we've talked about especially three.
Speaker Change: New segments potentially.
Speaker Change: Potentially each one representing 10% of revenues. This year I think we're talking about the shelf label group.
Speaker Change: <unk> meter and smart meter.
Speaker Change: Are things sort of still tracking towards that number.
Speaker Change: Yeah.
Tories Feinberg: Yes, so big Big picture Tory those those are the three areas we've talked about the most.
Tories Feinberg: <unk> made progress in all three is a quick answer.
Tories Feinberg: And one one thing that.
Tories Feinberg: We covered at our analyst day that I'd also like to reinforce.
Tories Feinberg: Not backing off of those three areas. It all those are going to be growth engines for us for many many years to come.
Tories Feinberg: And we also have introduced additional growth engines.
Tories Feinberg: Such as matter, we mentioned that Wi Fi is growing 40% for us DLA growing 80% both of those represent significant share gains and we're really starting to see AI ml start to increase as well. So quick answer is those areas are going well and you heard Dean mentioned maybe.
Speaker Change: Maybe a little faster than expected and areas like metering in India, and we're also seeing additional growth vectors come online as well so the combination.
Tories Feinberg: And that's what's given us that confidence to say, we see a path to outperform the market and drive this growth.
Speaker Change: And independent of how this all plays out with tariffs as Tory Let me just give you one quick.
Speaker Change: Modification on a quantified number you said, 10% across all three we.
Speaker Change: We had previously said the blood glucose is expected to be at 10% application, we have not quantified. The other too just so you have the right data point, so 10% for one of them all three combined.
Speaker Change: Got it no that's fair.
Speaker Change: Fair.
Speaker Change: And my follow up question is on Sirius to in series three obviously serious three is still very very small.
Speaker Change: First of all this series to no more than half of revenues.
Speaker Change: And how should we think about.
Speaker Change: ASP increases a series III starts to ramp.
Speaker Change: Meaningfully.
Speaker Change: Yeah. So.
Speaker Change: We haven't broken out the series two specific but it's.
Speaker Change: Increasingly larger and larger piece of the total revenue.
Speaker Change: Yes.
Speaker Change: It's what's driving the.
Speaker Change: The incremental growth Youre seeing all these design win ramps right now we're talking about our series two reps, which is worth pointing out as I mentioned in our analyst day we.
Speaker Change: We have shipped over 1 billion units in series to lifetime to date, and we've secured a one five or $6 billion more units that will be shipping in the coming years and quarters. So theres still a lot more to come out of series too at the same time, we've already started production.
Speaker Change: Shipments on series three.
Speaker Change: And.
Speaker Change: Answer your question on Asps and expectations there.
Speaker Change: Content is higher with increased wireless performance increased compute AI ml more memory scalability, so I would expect.
Speaker Change: Overall higher asp's on serious territory.
Speaker Change: The most important thing for people to take away.
Speaker Change: Series too.
Speaker Change: Doing just fantastic in the marketplace and still has a lot to go series three at all.
Speaker Change: Our goal is to meaningfully outperform series too.
Speaker Change: And we're liking what we're seeing right now we're already ramping production with a lot of products to follow so that combination of current Gen nextgen.
Speaker Change: Just bring me what it brings and we like our positioning as the best way to say it.
Speaker Change: Excellent. Thank you for all that color.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Cody Acree of the Benchmark Company. Your line is open.
Cody Acree: Thanks, guys for taking my questions and congrats on the progress.
Cody Acree: Maybe if you can just give me a bit of a split for your expectations for the June quarter between your home and life in the industrial and commercial.
Speaker Change: Yes, Tony we expect that the mix between those probably be pretty consistent over the last couple of quarters.
Speaker Change: Last quarter to a first order it landed industrial commercials about 55% in home and life about 45% and thats been plus or minus a percent or two for the last sort of three quarters in a row I would expect that to also be the case as we go into the June quarter.
Speaker Change: And it's going to depend a little bit as all these new programs ramp we might be off a point here or there, but to a first order kind of $55 45.
Speaker Change: Excellent thanks for the help.
Speaker Change: And then maybe just back to the tariff situation can you just talk about some of those end markets and applications that you believe are more exposed to tariffs than others I have a hard time thinking through your in the application mix and finding a lot that have tariffs sensitivity, but maybe I'm just missing something.
Speaker Change: Yes, I think.
Speaker Change: I think the quick an honest answer is it's difficult to answer because we really cover so much.
Speaker Change: In terms of Geos and customers' applications markets et cetera, so extremely broad across tens of thousands as we've said before but maybe a way to abstract about continuous talks about it.
Speaker Change: We do have industrial consumer split of around 45, 55 with industrial being the larger piece so.
Speaker Change: That's one way to think about it but big picture, we haven't found any one of our end markets. Our major market, that's uniquely susceptible or exposed to this at least as they are presented and out there so far but obviously, we'll keep watching that closely.
Speaker Change: No.
Speaker Change: Dynamic.
Speaker Change: Alright, thanks, guys.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Quinn Bolton of Needham <unk> Company. Your line is open.
Quinn Bolton: Hey, guys. Let me offer my congratulations on the nice results and outlook I wanted to follow up on the inventory question Dean.
Quinn Bolton: It looks like Youre going to modestly increase channel inventory in the June quarter, you said it would take several quarters to get back to the 70% to 75% target is that something you would anticipate getting back to you to say by the end of the calendar year or is that a good timeframe for us to be thinking about when you would normalize or look to normalized channel inventory.
Quinn Bolton: Uh huh.
Quinn Bolton: That's without a stake in the ground Youre Directionally right I mean, I think the problem that we face Quinn is as POS continues to grow as the channel outflow due to the sales of all of the sort of long tail end customers. It we're sort of chasing a catch up right. So as outflow.
Quinn Bolton: <unk> increases inflow.
Quinn Bolton: The increase in addition to that.
Quinn Bolton: And I think we are likely to pipeline material in there to slowly grow it over the next few quarters is it get to 70 by the end of the calendar year.
Quinn Bolton: Maybe you could take a quarter or two longer than that.
Speaker Change: Just depends on how the pls side of that equation is going if that makes sense Clinton.
Speaker Change: Yes, it sounds like it takes some time to stage the inventory on the way in and if Pos is better or worse than I expected that obviously effects inventory sorry, I think I think it makes sense and then.
Speaker Change: Yes, Matt ending just just a question there continues to be sort of some chatter out there sort of bottom of the cycle that pricing continues to be pretty aggressive you guys are showing nice margin expansion. So it doesn't look like you're seeing any adverse effects from pricing, but just wondering if you could talk about what youre seeing in pricing on the <unk>.
Speaker Change: For like basis, I know the mix shift series, two and series III is a tailwind but are you seeing fabs competitors in particular get more aggressive with pricing sort of as we are near or at the bottom of the cycle.
Yes, I guess it felt.
Speaker Change: The quick quick answer on pricing is nothing has really changed its been consistent with what we've been saying for a while now.
Speaker Change: A lot of companies would like to have more revenue and they are trying to use pricing to get more revenue.
Speaker Change: I haven't seen that meaningfully move the needle at all in terms of share shifts or anything out there in our space.
Speaker Change: We obviously need to be competitive on pricing, but we thrive.
Speaker Change: Relative to our competition on differentiation, bringing features performance capabilities.
Speaker Change: No one else has and that's how we have a premium gross margin versus anyone we compete against and that's how we've been able to do I think exactly what we said, we'd do which has been incrementally we'll start working back on gross margin coming through the cycle. So.
Speaker Change: Cancer is no meaningful change I think the market's behaving as a market behaves and no change in what we've been saying our expectations.
Speaker Change: Got it thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Joe Moore of Morgan Stanley. Your line is open.
Speaker Change: Great. Thank you.
Speaker Change: You sort of talked about customers you haven't seen any evidence of pull ins.
Speaker Change: Inventories are still under control can you talk about what those conversations are like because I just imagine we've seen two years of inventory leaning out and now we're dealing with on again off again tariffs all over the world. It seems like if I were running your customers' business I would want to hold more inventory I would want to build.
Speaker Change: Some of that so you can just give us some sense of what the interaction with customers like during all of this.
Matt Johnson: Yes, Joe This is Matt I think the key.
Speaker Change: Quick answer is.
Speaker Change: And I'm not being wise about this but fortunately just having been through this inventory cycle.
Speaker Change: But those those numbers are all for us and we've been.
Speaker Change: Taking the inventory assessment of our end customers.
Speaker Change: All along we had stopped that so.
Speaker Change: This has just been a continuation of coming out the other side of the inventory correction cycle.
Speaker Change: And I think the fast way to answer what Youre asking.
Speaker Change: No meaningful changes in end customer inventory no I'm trying to build positions.
Speaker Change: That type of thing, but what we do see is a lot of people, saying the same thing I'm wondering what the trade policies will do over time.
Speaker Change: What we will.
Speaker Change: Go away, what's the implications will be over time and the honest answer is no one knows.
Speaker Change: So.
I think uncertainty is the easy way to define it so what that uncertainty hasn't done is driven behavior around inventory and we're watching that super close.
Speaker Change: That's very helpful. Thank you and then my follow up at the Analyst Day, you had talked about.
Speaker Change: Sources of inorganic growth that you would be willing to think about larger M&A and things like that how do you see that in the current environment are those deals.
Speaker Change: More difficult to do in this kind of global pension or just how are you thinking about that.
Speaker Change: Yes.
Speaker Change: No change in our strategic desire there or a direction I think the quick answer is right now.
Speaker Change: There's just a lot of uncertainty around trade and where this will land and how it will play out so havent seen any.
Speaker Change: Meaningful changes as a result of that and I think it's probably too soon to say.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you I will now hand, the call back to Giovanni <unk> Kelly.
Speaker Change: Thank you Dave and thank you all for joining this morning and your interest in the company before concluding today's call I would like to announce our upcoming participation and J P. Morgan's 53rd annual Global Technology Media and Communications Conference in Boston Tomorrow May 14th.
Speaker Change: We will also be participating in Staples Cross sector conference in Boston on June 4th and Baird's Global Technology Conference on June <unk> in New York City.
Speaker Change: Thanks, again and this concludes today's call.
Yes.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.
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