Silicon Laboratories (SLAB) 26 Apr 232023 Q1 Earnings call transcript

Hello. My name is Betsy, and I will be your conference operator today. Welcome to Silicon Labs First Quarter Fiscal 2023 Earnings Call. [Operator Instructions] Please also note today's event is being recorded. I would now like to turn the conference over to Giovanni Pacelli Silicon Labs, Senior Director of Finance. ahead. go please Giovanni,

and everyone. Betsy, good you, morning, Thank

We be the available this meeting, Investor replay will and a silabs.com/investors. for at section our are of recording Relations website X weeks on

website. accompanying press earnings are on release the Our financial and also tables available our

today and Executive Joining Johnson; are Officer, Hollister. Labs, Officer, Financial Chief John Silicon Matt President me Chief and

important statements prepared available will this subject statements will the We'll take factors activities. actual discuss recent cause to review We of business update today uncertainties. you that these differ and our assume They in results those contained risks materially as on remarks conference after to statements. date first identify no forward-looking comments our We and include forward-looking encourage our quarter forward-looking obligation SEC to in risk to financial call and performance these our any to could of and future. questions base us the review from statements which filings, information

call in A included reconciliation Relations the website. Additionally, during GAAP the information. non-GAAP press and is our results on Silicon today, certain to our of release non-GAAP Investor to company's of financial earnings the section refer will Labs we

Silicon to Johnson. Chief I'll the call now turn over Executive Matt Officer, Lab's Matt?

good and design our position everyone. to accelerating and share Thanks, strategy Giovanni, scale IoT our and discussed strength market of we wins our of morning, the gains. to Last the the success quarter, market, focus on significant lead industry,

and was posted performance year-over-year XX% our quarter, in the driven well. XX% Our of team first continues which portfolio, part to solid sequentially. results the We in execute Bluetooth by up

year. the of level XX% of also win the up We quarter, last level over from a design wins design record in QX drove

contributing As anticipated, and weaker business. life market our home are to near-term in conditions softness global

by commercial our focus the outperform the end our immune to and underpinned not ability the connectivity confident volatility, markets more to Despite on we of short-term weakness, our our the Internet product resilience. but singular in and wireless portfolio, demonstrating our expertise Things. market, are are depth much breadth of Our of remain market industrial wireless for

it cover the John hand financials. now John? over I'll to to

Thanks, $XXX guidance first the expectations of at range for Matt. at quarter our million. midpoint the Revenue met

declines we expected, Units the businesses. sequential saw sequentially in were both As quarter. down in

benefited and product ASPs Our from mix price modest activity. favorable increase

up First subcategories: in our from revenue period being QX a smart driver, quarter last Commercial revenue saw for particularly the and We year-over-year unit XX% cities major our same million, XX% $XXX industrial, business metering with XX% of commercial was year. from growth Industrial strong INC year-over-year sequentially. growth and smart of in all and up

Life first down & revenue in year-over-year relatively both due demand environment sequentially to was for quarter Smart Home a products. Home the and weak

and the space, we continue inventory We that customers down customers high balances. normalize regarding hear in consumer as from expect work inventory to their to

Revenue regions was Despite ] end see which continue saw sequentially particularly QX, and and the both up down in overall weakness Europe, medical during [ sequentially. greatest markets, strength year-on-year. Geographically, the able was to life, we we applications emerging durability for in Americas within the both home APAC the for in

Our about the our our representing broad-based customers nature was revenue, revenue, XX were base. XX% customer only of largest and customer top of of X%

expected of XX the of less XX% grew was to Distribution revenue POS than quarter sales, as the was in at days our QX of end distributors the total and some DSI in our at quarter.

in to reflecting increases in above further activity more to last price margin smaller as QX. and input price like modestly DSI model increases was gross QX beginning the the year. targeted magnitude. increase QX year, were modest cost and expect the our of for in decline These We of though at Non-GAAP XX.X% related

hiring our guidance of revenue, our to we XX% fourth at costs. reduced back certain or and revenue. Non-GAAP million rate operating despite consistent Non-GAAP favorable operating the quarter ended outside expenses $XX income ended $XXX the dialed with at services flexible as quarter million lower

operating $XXX million. $X.XX, non-GAAP the million mix million ended XX.X%. and per GAAP GAAP intangible at was expected of at ended at $XX per income sales. X% to amortization rate $X.XX. GAAP On was geographical was Our slightly in Non-GAAP XX.X%. income operating with earnings was expenses due million of gross was expectations. compensation earnings $X higher of and effective than a GAAP were basis, margin share share $XX or Stock-based line tax assets

cash now Turning in sheet. balance investments. with billion $X.X and to the QX We ended

in with turns million used growing declining to the quarter to end, by our driven $XX internal During inventory we at operating cash, primarily million quarter, $XXX X.Xx.

growth last commented the in strategic we to inventory have our deliver have our we growth I ensure to quarter, chain objectives. in supply on invested capacity balance As

quarter, the share $XX During we million in executed repurchases.

repurchase to share and in share in continue We approximately million have the be our authorization $XXX repurchases. intend execution of to opportunistic

redemption the be June intend issued also outstanding We shares. The cash value a value completed XXXX in and to settle par notes process we million notes. convertible to $XXX the XX. the redemption any in-the-money notes, assignable of on our QX, notice on and In will

to M&A. strategic continue credit million have a fund facility in such We $XXX liquidity needs at the as of place business to

second cover the the Before I'll call over I turn guidance for quarter. to Matt,

million. in to $XXX We for the to of expect range be $XXX revenue million QX

demand normalize, direct across broad severe nodes. capacity customers base facing distributor restrictions are described, supply In in we to while the flexibility success distribution estimate longer in for customers. a no driving towards our and modest inventory. both efficiency reduction process same are to our we of a comprehends previously and time, As and customer and that ramps At channel the maximum optimize seeing goal revenue for QX, is continue

to similar the gross effect last between margin at QX be year and this XX%. gross to non-GAAP expect experienced is in pricing decline what We from The expected we variations to of time. due XX% margin

range the $X.XX $X.XX to share. in operating expect expenses be to million $XXX non-GAAP of non-GAAP per and We to be earnings

GAAP tax to margin expect gross On XX%. effective be be non-GAAP we basis, the about expect We rate a XX%. to

GAAP share. per $X.XX We EPS million the be GAAP expect expenses operating in range approximately to to be $X.XX and $XXX to of

over turn to now Matt. will back the I Matt? call

Thanks, John. execution disciplined time navigate economic of this uncertainty. remain on We as focused we

high smart battery We design of our asset devices, new in road the xGXX SoCs. continue tags ideal tiny to medical adopted being smart availability their offers the products general flagship announced efficiency, portfolio. sub-gigahertz progress smallest of the form deployments family low devices X including SoC, for city maintaining IT The The and map, making all monitoring simplifying This India's IoT energy excellent the while which connectivity are for includes connected long-range device smart while is Bluetooth IoT developers products our and small expanding wearables, development product designers, deliver and applications and helping xGXX-SoCs processes, devices. for FGXXX trusted metering against exciting grid. that sensors. build will factor our small like requirements wireless security power also xGXX already form We've Series for electrical optimized factor performance, new also extremely devices, transform

simplify solution Kit for the costs of to Amazon accelerate In comprehensive reduce conjunction launch announced with a Pro revenue Sidewalk, Sidewalk, availability for to time and devices. development process, the of our Amazon Sidewalk the designed Amazon we

developing for IoT-based Amazon support tools qualified the protocols designed hardware Sidewalk. Amazon As high-volume, devices, and IoT X of Kit partners wireless all Bluetooth devices the to Pro also sub-gigahertz our Sidewalk for Sidewalk scalable provides development only one developing for on of applications. Amazon wireless necessary

of to the Cooley, to for securing embedded and outlining was our vision Silicon potential join X delivered products industry embedded to to The development for labs the best on Kit at March conference, show computing. accelerating Daniel achieve connected a computing. software critical in in Amazon full in Pro us global CTO, calling world keynote the future a steps to open Sidewalk cloud-connected awarded embedded conference dedicated and a

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interoperability scale the us built adoption Since leader important more technologies We are matter. with same X. itself albeit the industry enabling fall among Series the than Matter established the much home Matter will consumer Series of by the and fully IoT smart X.X. industry, Silicon the be ecosystems simplify employing to the with matter such are has in larger XX% and a a of as to at it release SoCs. products Labs will as even impactful of wireless and Silicon threat strategy X, experience certified expect devices. Labs driving over

Looking IoT continue ahead, to wireless the and advance. connectivity

secured nearing is the funnel, $XX and design volatility, of in we near-term applications of While opportunity we use wins we and are by significant newly the greenfield cases. which our have emerging expansion encouraged billion. navigate amount

are execution allow to strong potential As with products committed managing focus ahead. the a outperform to that we a investing expenses market tremendous and growth and the discretionary capture supporting us people in the and team, on

it to I'll now over hand Q&A. for Giovanni

one open the limit Matt. needed. time questions. for that market question To you, as as inquiry people many you call ask to possible if one the Thank We'll now your I opens, accommodate with follow-up before

[Operator Ramsay TD question from Matt Cowen. first Instructions] The today comes with

year. I Matt, just seeing sort of with a how start question guess, the out wanted I you're to

you the of about John's call strength you you in support a in pretty the confirm commentary to think guys, continuing input script maybe year. ago some could pricing. I And a increased if think, environment through we cost, talked think this pricing relative I strong would that still on I for see quarter

the you last in you wins being guys growth, we you talked year that a I talked and But that this given time. when at of that design just had the unit-driven about quarter, think had year terms visibility had

markets seasonal macro mean the much that that's I the maybe could a on down the circle year-over-year you commentary guidance square with us end and less weakening than and with on basis. help So some the and

really thinking still unit about year the had that. unit a year, year last Are pricing strong I for you've years, know really the strong last before the a we growth X year year?.

pricing of on be business units and helpful. So would the the really drivers

Matt. sure, Yes,

So of units. with try the let starting pricing to piece and address me each those,

expect big For XXXX as XXXX was big sure, a driven, pricing still growth been the dynamic, we in last few years wasn't XXXX. all unit unit have a year growth bigger unit had but

seeing easiest isn't the we greater that which all supply. about was out during start way than that definitely supply dynamic. crisis And demand side, maybe where And there, maybe are to pricing reprieve time the new. us about the is people temporary we On ask think a pressure the the

time, we've we model, our that. But feel will raise during that that navigate and that didn't and that to model comfortable we prevail our can lower been find forces we consistent market don't we

major no So changes there.

we And in look remarks, we're growth do. expect market us gives that need our is pricing normally mentioned forces continue good We design will future win indicator as they a going seeing to strong prepared what of like. to

There's dynamics, lot is and there consumer the to On on a tough consumer the overall call, volatility side. piece of out right? the uncertainty

anything So definitely not the calling or like bottom that.

consistent what gains we confidence momentum in we've consistent have been design win that is about. I the we've and think share been about

have the of half year. in lot of second We a ramps coming the

see consumer those share what better So market those be wins the being, of us know whatever than position is should whatever gains have do up ramps up to to but we ends being. right now, what that, and the will top end on that piece that ends we and is design difficult

the moving lot for parts, Got there. appreciate Matt, color and it. No, of thanks I a there's

us a wanted -- material smart maybe between on anecdotes the company. the market. can ask meter few your going And As years X, what of population partners size Matt, build-out in you the a was and about the X for U.K. follow-up, a ago, differences remember working the pretty wins in about end driver you're the give that I a going have? the Obviously, figure particular what's little India in a of can on I position in you kind India with, everybody U.K. what's to

years smaller much position the of given potential So that a just calibrate few and it build-out ago. material was in trying how geography to a I'm the

sure. Yes,

position a as And metering that. So had for see we we've anyone in a not in strong familiar, always no company. change

the last an think over easy stronger years. way characterize I it it's to is few only gotten

desire we is we've globally. while out the continue What in the -- geos that the to replicate in U.K. So do did seen other the to build

And positioned see in do over the ourselves those. India, all serve. that a company, the a The as out multiple of few that, rollout of positioned multiple suppliers with and today the well we as see well there substantial we is geographies have very is where we and of drive in in technology And out the we helped over industry called are pretty fundamental we years, very that world, India are for in the positions a tenders to piece multiple amount with that each has India. next one

very well as early to that water, but It's we're metering, So a as gas other in where deployed. it's about should multiyear electric that. smart or India driver be whether for growth days, excited be continues us geos

Tore comes Svanberg with question from next The Stifel.

Yes.

me not Series pricing. X but bit as thinking about talked I'm I'm Let you a strategy and hoping scale. a start about and about you ASPs, ASP. about mentioned Matt, asking with, more elaborate much we if Matt. value was start larger especially little could you I on that asking same not

that elaborate you can if that on comment be would scale, about So great.

Sure.

it. characterize a way So to quick

easy to and Series us in confidence, That in right about better and a that's Series in really need We customers we're growth portfolio really that incredible we're couldn't and year's future. a Series That's off faster the X road at in now the already pace, helping current excited at it design in to excited way they're that's do way that. positioned that these a incredibly based drive only betting map our design performing. market, starting year on is not generation. wins the think we be forward, X. was X. the on are about last them this and gives mentioned on An horse We moving time right that's about and see that They

the the generations been been do that on haven't the together the those all easy Series that to it, now to multiple X that for a and Series we've for allows long a things X, intent in way about and is, concurrently time Tore, possible and past. So working us the with way industry think in learnings put take company from

it's So current lot visible our fuel confidence design helping moving forward. already only partner also that but a and is not the picked to key they the customers X their of wins, that and partners Series right

more scale and terms only but to In allow than us around that servicing more the service of effectively, the past. markets efficiency even that, effectively no more that, ASPs except in not this at we're greater comments and will for sure, a

you of have probably ago, very That's sort strong several I And couple been to about follow-up, know inflection of bought my asset I of years share as now that's point. an helpful. Bluetooth years the gains. last years know probably a Wi-Fi

comes So design on could you WiFi to comment a little bit your please? your win pipeline when it business,

answer want Bluetooth it of And gives it lot a Sure. to comment on and the the just piece. going regulatory, perspective but on because to color Wi-Fi first I'm I piece

our few done. went seen in development space, at public So decided sign Bluetooth a We've we knowledge and bring and the really very exactly statement back Bluetooth, you a years. domain few expertise we've We've of if what capabilities last in share and we increase the And IoT incredible no triple see to our bare and we double gains, years, seen have that on down abating over and focus and all Bluetooth. of [ that is ] that to all. growth made

really in So that. guys, And about numbers. think in growth some come QX. honest saw XX% we're over through that was of Keep you year-on-year it me our but excited I QX

thing XX do already been other growth that the of going Wi-Fi growth Wi-Fi, adding in It's acquisitions to easily seeing same We're strong continue the we're we've we've is WiFi, than on moving large now years see year, and strong Bluetooth, the this done focus in in thing areas. we granted our Wi-Fi. now, Wi-Fi. on And going to focus be last there. to R&D that's and much that continue, What to same to we've in the that So [ what started. to numbers chunks the done ] we to us clear and intent said we've so Wi-Fi. in we're and help year, expect do smaller a able in the we're space, And is

days. easier So in it early the is

we to we've and customers done, space, exciting. incredibly said, power which industry-leading security. part the driven bring for that all with operate shared Wi-Fi in to the one We've XXX, get about first integrate ever that how going ability our we we're that's momentum asked, our And that has simply how the questions launch that bring we've of we brought to the devices power other other out spaces the any the capabilities. consumption it strongest this compete, by to along going So of there, bring the space, bringing industry-leading to is we're to the are benefits to protocols going

and way actually do see to be products about Bluetooth there And this in momentum good think do launch expect come. we record Wi-Fi done. a would growth easy our see Wi-Fi coming ever the being to in more So us I and year forward. momentum for years it. and what capabilities We moving did for out a lot see of we've We there, portfolio any to , will

question comes Cody next with The from Acree Benchmark.

Maybe and and for of view could the with and your your if inventories commercial. I health the of industrial home life start channel

Yes. this John. Cody, sure, is

customers did quarter our expect Asia second quarter, the notable we the distributors, first ship in from distribution side. an across in with and was to side business in that And do both through we inventory the POS in-house expected on we I of out in and the a thing multiple expectations. ship as in also region. well what parts note the have organic particularly line direct the quarter having in good that on as So the will new come to the look in a platforms ramp in saw moderate staged line is Pac What that's the channel inventory as the we progress we weaker as We to QX. more late

internal you plans, you're just your talk about can where with just then order quarter. your And and also inventory linearity through comfortable the

Yes.

So that's shipments. with our the ship of expected to on orders. line case progression typically a We linear we relatively what order line and were quarter, linear ship the through in again, patterns in did with

view, turns. the X model inventory the where we're not comfortable, internal longer-term changing inventory of On strategic we to on Xx our are

remain current around legacy is to that in structural We inventory. are some you nodes us and lull of from a strategic time will, of looking the if the across process market, ability in mindful our nodes we're and process benefiting, issues the the allowing intact. accumulate that some

That of issues said, capacity some around structural are the limitations unchanged.

so And see are numerous to a building we what some base significant we're as supply customer are we longer our certain that? ramps greenfield opportunities. on new about ahead Well, extent. And of term we doing what diversifying also inventory

risk obsolescence Any of inventory build? in that

, Yes. store demand and through. software and flexibility us products inventory Cody, it that and the it's protocols, good Form different Die comes a with allows We as question. Bank according tremendous to actual customer the to in customize security

inventory is investing we this wise that inventory use described. of the is our in believe manageable factors of I So risk view various work a and the capital obsolescence available of given

customization The applications. geos, to across diversity Cody, the amazing so the on And end of that demand right thing is, John to exactly remember there's that of top only said through software. of you the that, that it's I'd add post also have silicon customers, happens much

So we part, dynamics all. one have don't at customer one

reducing terms risk. well the in of as So that helps

good question, Cody. It's

next comes & Needham from Company. question Raji Gill The with

Matt, year. on First about growth unit steel question the expectation the for this commentary, is

given but this units fact There's uncertainty industrial know down. I potentially industrial Just coming consumer. elaborate you concern there's down is wondering the maybe commercial that with resilient, that the still on saw production quarter. we around could if

kind curious this grow this kind And still about I'm of of thinking of are expect kind year. you how conversations? based unit you previous So we're -- do growth to year on

don't And resilient. more to as industrial to this earlier. question. the immune it's that's and commercial see important out commented understand much we environment, I Raji. been Sure, point but We thing one

different just So provide couple but we just lot be to like I to year really consumer it's On again, we growing the than overall said of a context, second years, the point, there's see consumer don't for earlier, the side of market to don't experience like some environment I difficult perspective. things. what last this a certain, think straight give the industrial of in commercial your incredibly uncertainty definitely knows half. anyone in around will know have

do this, we what know working down. But our is are inventories customer

encouraging down incredibly back haven't know China wins. slowly still way will clear, our design We even right importantly, be we seen it expect our what yet, some work China come last are is been and most signs. And its ramps and that We've QX, seeing but now momentum we're out. but in is very that we win design consistent our year strong. To

greenfield, And applications, customers. some of that is new new

that on they're the top they will and confidence ride better us is the And don't ramps second macro, the not we lot market of but up half year, being, half of of market. market for first gains. those of ends the ends those Some up whenever of a we while what's in have being, think that sure, ramps share in be a giving the we'll lot that year. than we the have And whatever to do of that's immune

key a this to XXXX. away is cost is all from on price is add want point the point dynamic Raji, just to takeaway take less inflation what John. That's Yes. A than this. quick and from really much of in I a was XXXX, key this in here. it

I for Yes. that. thanks, and appreciate John, that, Matt,

my margins. to as also for do pricing on Just really has well impact follow-up, the with and it

XX.X%. you down margins to guided So

face fact prices potentially kind competitors. the Any be this in with and would How in to saw coming then year? over more from back thoughts see But great. of potentially I You've demand And on pricing been curious modest We to a potential drift that unit online. have that margins to you're price is held increase. capacity headwinds? pressure up. reversing But the telegraphing starting of pricing coming Street margins do the that we balance, will am lower time. later supply see There about think

start, and you be good it Yes, for would I'll John, to add.

important topic, exceeded it in new supply. said way last was And there's think of took that, of pressure the that on So one like this was price. this earlier, to was of normal the here new and in lot temporary reprieve. years couple market, not because I greatly about pricing a a What that is demand out typical

-- I navigate. normal behavior just think strong always is we're out back and and you're the reverting we've of had supply seeing demand to to more operated there, as as there's not in its market always revert pattern to that

So now. where I think that's getting we're

didn't always to in our it have exactly there. from been be temporary. We model market because that pricing out And reason we see expected an crisis during supply We the margin that's we ultra-competitive the why a perspective. change

So We don't are that's it. any forces navigating changes. market see -- We're there.

We pressure, expect in commitment but and the competition changes pricing continued nothing space. our outlook that or long-term

don't have Raji. Yes, to add, anything I

from comes Barclays. with Blayne question next Curtis The

March. actually kind in segment, curious you both declines saw Just of similar by in segments

just just So X segments. much, the of but us with kind down the I'm between It's if any curious not help difference there's outlook. If

INC Yes, we see. Blayne, would quarter, the is Life expect Home than we & perform what to second better in

guess I'm looking give build purposeful bit was on you you And inventory in the it's trying I the Okay. in Disty a that seems channel the to inventory were I more weakness the it trying the quarter. the mean, I like magnitude? that and Asia, was in small. just I end if two. perspective mean, understand big it for June, build saying the then to September? it of us you're just Can was And in was size at difference just fairly at better or a hoping reconcile of

sure. Yes, is Matt. Blayne, this

-- the we up expect quarter, expected. But of as it didn't little did much went POS towards than go didn't more we of the we a to enter in go up. as QX, as just to end down it So ultimately, did we we first all, expect it the

It's these of not prepare ended changed us, in to openly, has know. to and at working able the end you can very that as than that's ramps. went, the we alarming The see. build it for as external said, it ready John expected internal our we because ramps for we just So QX, as But in be world being on to do it's quarter. influencing we we higher want supply as and of all terms high down up and guide, plan as as

down it modestly, bring into QX. baked the and in that's we'll So guide

comes Gary question Wells from next with The Mobley Fargo.

Want down inventory. I about that days. correctly to days, to distribution drill the on XX Blayne's XX at that question is understand hear range I normal XX Did

if to down in normal of does inventory days the $XX we million that digest end work we're days. XX that of in have So range to the the distribution upper roughly range, imply that you before normal inventory back

prior this. I Yes, commentary and Gary, this of our is John. understand your there, logic you are some recalling on

inventory we're to magnitude way above first at the indicating near morning more design but DSI, as articulated, this our down get what the describing in target. than expected this XX we level That's decline by of are We're we say, to, increases That of nowhere a quarter. with modest what is indicating morning. just internal operating not all are the you're is We days. in the

been in in percent. ] that your China the of Okay. [ correctly, recall probably And if been low in the recently, it's But range digitus demand, roughly total XX% sales. has what I more somewhere historically in mid-teens

if begin a basis as to off and normalize geography China So points clearly, than pace. Can tailwind when sort things more represent you to there? the of that may XXX speak

this those is Sure, Big Sure. numbers picture, right. Gary, are Matt.

we China was around down think if China around XX%. percent to around last And of shared saw was And we think that of I see I you I to decline. So closer QX in business. go sales. Even year, mid-XXs year, way significantly ago, back this XX% of couple years our as we've of that a go continue think down

it's recovery not but that has strength the yet. calling the some of and be And encouraging baked but We're a So in as that start seen all that our into bottom to decline we've it terms plan, we it say if seeing tailwind But could indicators been with, there. not see we're strength, China. signs more continued. consistent of that's in haven't

The next from Cowen. TD question with Matt comes Ramsay

supply folks commentary some Matt, made clarify inbox couple pricing the era pricing environment going wanted so of -- the towards a a surprise it's shortages relative entered my lot normal, a to price the I during a to weren't I semis pandemic might comments, the that where my we sort to in around there of big new don't something. you your There few things as was the of you lot of -- and think of during commentary be it's happened pricing a return a in described. downs. that that were

were a like you'd think the go some we're wouldn't to back costs a I that, I expect have question gone I us skeptical was those it and agree normalcy. quickly. that And to back The costs going few that from input lot got as up much, of input given on revert to sounds folks

on through I are modest where just So going back wanted those here these about to about declines talking to levels we were pricing are back on a walk pre-pandemic. dynamics. talking go-forward elevated you year-on-year to Or from be levels precise pricing that you and at you basis? going

revert we got expect we're not to not The be structure support they that have. wouldn't I cost always It's that wouldn't pressure to will pre-pandemic pricing on levels and possible. continue as the do former that, that's It's those the that that, we those expect latter. Matt. We it, levels, pricing expect the right. at,

Got it.

that to the sort back days a So basis base. of much on of Is assessment? a higher relative a old fair we're

along key And expect go to after, else a continue. market with we that major we right. everything is exactly That's will every that pricing customer, and every table, major bring the component, Yes. we

that's So yes, exactly it.

You got it.

from with is question next The Stifel. Tore Svanberg

Yes. I on follow-up from Tore had Stifel. a just for John OpEx.

this going aware John, be if in at quite for any OpEx seasonality OpEx early perhaps I'm So bit of And baseline modeled. year Or the should lower be just the will had least came to flat we and of? there's that forward, that of onetime is up? a kind sort we wondering

carefully million. OpEx hiring second We services. onetime discretionary in we're affected outside primarily more the the $X little spend quarter, And not a items. pulling is it the reducing our Tore, our around down manage by Yes, slowing by quarter rate and did that on in of

model So growth progresses, the it's assume year how that, you the a to -- growth that our that it. modest right. in strive operated that a to of compass, to This in our we'll see North we're it and got And with with business, a we'll remains but of compass a financial reminder operating just and continue is that the operate safe It's but we it's ahead long-term Star, commensurate base. was new OpEx by. how now ahead we're guardrail, our

through time, the supply, as we but at as we much portfolio Tore, it because our the it same design next in our that just in as that and come was, way year, of that flexible the growth was wins. portfolio to as our give us And possible aggressive and that of supply And strength that this were possible. greater to year-on-year going the the the well expected and positioned extent could. year. market I continue to make design possible, we the our in we by the strength a And had go of XX% very business customers did And OpEx last think been into saw ability reminder assurance and than strength growth everybody year couldn't win Series exactly given you and as X

the market as could the here and going adapt what that's So unfolds, into well. seeing you're year, of this year as part we and

we but environment. possible flexibility as not have navigating this So as hopefully, perfect, much

Raji Next Needham from Gill question comes Company. & with

shape Just again year half recovery the first the second versus question of half. and the on a full

see that to normalization the we in second double-digit growth could indicated really first we the half channel, could Asia normalization some see but the customer some to the going it's grow in this half. year, You versus with inventories, imply

quarter any in out, know thinking So but color there any it's would color appreciated. guide there how the -- terms we're one about of you half? second I only be

it guide. Yes, one quarter Raji, a is

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Thank thank us you for you, all call. This today's this Thanks. concludes joining morning. and Betsy,

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

now disconnect. may You