Alpha and Omega Semiconductor Limited (AOSL) 7 May 242024 Q3 Earnings call transcript

Good afternoon. Thank you for attending the Alpha and Omega Semiconductor Fiscal Quarter 3 2024 Earnings Call. My name is Jamie, and I will be your moderator for today. [Operator Instructions]

I would now like to turn the conference call back over to our host with Alpha and Omega. ahead. go Please

With and call everyone, Results. website. Liang, Alpha Omega for and This am our link Stephen following Good and days our CEO; being discuss welcome section fiscal conference AOS. representative Relations to Pelayo, Financial the via today the XXXX Semiconductor's are call Yifan the Steven Chang, recorded afternoon, Investor to me Third I over Investor live of X broadcast our available A web. for CFO. in Relations the replay is and will be call Quarter

June as Our the call review report. will begin today. proceed detailed that, highlights After follows financial strategic results updates, and segment quarter. a business the including and will will provide Yifan Stephen for guidance

have will we session. Q&A a Finally,

today, was XXXX, also posted release distributed X, market The wire website. company's the over release May closed. earnings on is the after The the

non-GAAP because reconciliation information measures We operating investors in and non-GAAP earnings included measures. be considered A with use presentation in useful comparable to measures release. provide these financial is the they by conjunction measures include GAAP non-GAAP about that earnings believe should measures. Our this of performance release GAAP our we

results we that risks and financial the uncertainties that will you conference differ current cause discussions involve and to statements actual management's materially. expectations These certain during remind are including this forward-looking business forward-looking statements, We projections. make and call, of outlook based our on could

information today's please to filings the no with a update obligations assume more of subsequent provided and call. For our SEC. report and in description risks the refer detailed these We uncertainties, to

CEO, turn Stephen will the to I call Chang. Stephen? our Now over

a and QX Omega's to Welcome details. begin I and into segment our then results Thank of will overview you, fiscal earnings high-level call. jump Steve. Alpha with

line loss share than Non-GAAP was guidance at of in XX.X%. a margin. was gross Revenue margin our revenue delivered per gross expectation EPS slightly $XXX.X with results better million. for and QX was fiscal We Non-GAAP $X.XX.

and saw corrections we smartphones computing continued quarter, solar. declines seasonal in and and chargers inventory This quick gaming, in

broader view the markets inventory at now into positioning the for move we XXXX. cycle, forward of Looking the year end as conclusion, approaching calendar our us majority rebound their rest of a semiconductor are overall gradual across a corrections of

decline example, chargers and the and For rate appliances quarter, e-mobility. growth gaming during saw the in quick of sequential in and slowed we tablets,

AI during March the In we such in an applications increase newer addition, and demand saw applications. quarter, as graphics for cards

are cycle. the As we the stated of quarter, phase last recovery approaching we next

coming of While from even strength the cards quarter, exact are out trajectory in gaming an company. from AI. and the graphics tablets, Starting stronger a we and downturn more we is continued predict, resilient and June hard to forecast rebound the

second of new gear as Looking well launches smartphones this for beyond, as first we in half anticipate up be year the customers half than PCs. as stronger the will product

BOM Looking us next verticals. become transitioning AOS with is new deeper from beyond increasing a go enabling XXXX provider, to penetrating to the growth to supplier comprehensive cycle, solution phase a content and of products component and the

advanced packaging silicon, intelligent our offering. upon We product and high-performance have to core our built ICs of competencies expand

multi-phase advanced to extending applications example, smart graphics center power to and Vcore, data controllers For now have not but only we stages in for computing also power AI to addition computing.

power We adjacent such supply, applications technology continue into battery, markets. investing in core as also leverage other R&D to strengths and in IP our while and motor

New with mid-single-digit were revenue segment and me seasonality for impact XX.X% computing. was of some March These segment the to our original results our let revenue. decline X.X% sequentially of Year. total quarter expectation Starting year-over-year Chinese now due in and guidance the cover that, With and by a quarter. up next for provide down results represented with line sequentially and XX.X%

and tablets AI mentioned decline As cards, before, was partially from accelerators in offset the that notebooks. seasonal helped growth mostly sequential graphics

digits we strength Looking mid- quarter, the segment expect and to single upper to into grow June in Computing continued graphics tablets, cards. on the forward AI, accelerators

product the XX.X% The revenue. results sequentially by LCD decline and of and up current strength X.X% TV. last down very see revenue within refresh year-over-year, But Turning March gaming console soon. in of The forecast we sequential inventory platform content the to represented a to XX.X% correction segment. was continued slightly quarter as suggested in driven home BOM exceeded the as opportunities we Consumer quarter. increase for part single-digit March in total quarter, our a low appliances coming

next-generation for model remain their engaged deep also design. in We discussions

sequential segment strong to end a rebound. expected For the double-digit forecast we quarter, the Consumer an in inventory is correction gaming, drive to the growth in June due to which

Next, our expectations seasonal as in in smartphone let's continued represented in sequentially U.S. of up X and Revenue networking. March well XX.X% X.X% decline Korea was customer March Communications below These a the to shipments the China-based quarter down quarter to smartphone offset as XX.X% slowdown revenue. discuss segment. and in year-over-year shipments the a were OEMs results by total Tier as and were the strength

be ahead, we and remained Overall, our which segment is we quarter, will with June shipments business OEM flat they a BOM from decline we higher launch, in smartphone a China because a as OEMs. up market strong fall year-over-year. and the to prepare sequential sequential for and anticipate X estimate increases. Looking content China significantly our forecast of share the U.S. customer Korea sequentially while notably in strong Tier their sequential Communications our decline, rebound Even year-over-year

our September in revenue. XX.X% and Industrial, and power These X in inventory results tools peak down shipments and XX% X.X% which AC-DC sequentially. smartphone about let's year-over-year for of in Tier decline Supply the were supplies, year following continued was talk driven by quick Now our solar. down chargers Power season to last power revenue segment, total March quarter correction last the a sequential and U.S. customer quarter accounted

e-scooters. sequential the growth from for customer strong e-mobility saw segment, e-bikes deepening we by quarter, last mentioned driven As and relationships

this chargers in strength digits increase upper of the to e-mobility. to single end expect mid- quarter, mainly continued segment correction For sequentially, to and due we in the inventory the June quick

QX closing, in delivered our expectations. In fiscal with we line

past Over so, inventory We PC us. adjustments markets. nearly or the behind is smartphone fall. end corrections to one return and of in are rolling believe our now starting of year we launches for Seasonality the we experienced bulk have the the in prepare as every

especially diversified the low-carbon into a all as markets a we of a business Looking premier portfolio next AI, management for lines. and key electrification, addressing and such We're view connectivity digitalization, executing customer array by base in road technology, technology total poised underpins over end us Power cycle, bolstered growth, society. trends are steadfast as advanced broadening product portion across solutions a and a outpaces as growth allowing map. increasingly our capture supporting Customers that of we sustainable to ultimately, run. bill-of-materials industry move the towards long the greater us a provider,

the Yifan? will I the over for that, a discussion results third turn now our fiscal outlook With call next Yifan for our of financial quarter. to and quarter

Good XX.X% you, us. for joining was Stephen. afternoon, year-over-year, $XXX.X million, for sequentially. thank everyone, you up X.X% and Thank Revenue down quarter the

from growth of due seasonally lowest strength is consumer our the While recovery the inventory the to cyclicality the quarter indicated our corrections. historically March spending, of year-over-year revenue quarter

million, $XX.X quarter. down down XX.X% year X.X% ago terms last up DMOS from million, the was revenue prior over of and Power year and sequentially. In X.X% mix, from XX.X% was IC up product a $XX revenue

in a other million $X.X to quarter year and quarter. the as for and and compared revenue the Assembly for quarter $X.X was for same service $X.X same year million the last revenue quarter $X.X versus engineering quarter and million service million $X.X million $X.X the million last License ago. was prior

quarter-over-quarter $X.XX Non-GAAP loss The ASP ago expenses for by year payroll of calendar the loss XX% million and to to of expenses $X.XX mix. compared XX.X% compared a year. erosion, EPS $XX.X was partially million lower the due offset of $XX.X was earnings ago quarterly higher better last gross a Non-GAAP given compared primarily was The XX.X% operating $X.XX and to decrease per margin $XX.X tax year prior a a quarter-over-quarter last share utilization quarter. new last and was by increase driven were mainly a start Non-GAAP million and to year quarter. quarter.

Moving flow was negative customer $XX.X million flow. Operating flow million operating $XX.X and deposits. By quarter. in the comparison, on million, cash repayment $XX.X of million $X.X year was of last including cash to cash prior

customer the quarter. We in about June million $X.X deposits expect to refund

quarter We also EBITDAS units million. repurchased employee XXX,XXX and a restricted the for million same vested compared stock of $XX.X for quarter million shares ago $XX.X last quarter. year the during for $X.X was to $X.X quarter million the

Days sales days sheet. Net the end decreased quarter the prior me completed was $XXX.X cash quarter days of to receivables XX $XXX.X to a We the to let quarter. quarter. compared Now XX million balance our with for $XX.X by sequentially. turn compared trade of million at the balance million last for outstanding March

in to million to XXX were Net inventory was increased days for the $X.X in by $X.X $X.X million Average days inventory for XXX quarter million compared quarter. prior compared quarter. the last CapEx the days quarter-over-quarter.

to million June CapEx quarter for range the $X million. $X expect from We to

quarter discuss Now I June guidance. would like to

Net plus or non-GAAP We be We revenue $XXX are GAAP be expected $XX.X X%. the plus $X or the million operating to operating expense in plus of or million, X%. to XX.X% expect $X approximately in minus expenses million. approximately gross to million. minus be tax minus plus be of million or to gross $X.X range minus interest $X.X to expense approximately anticipate to plus and million, margin be GAAP margin $XX.X minus or million. Non-GAAP to XX.X% be range $XX expenses million. be income

questions. open for will we Operator, that, Q&A the With please the call start session.

first from Benchmark. [Operator with Instructions] question Williams Our company, the David comes

return in lot the it more a here than like sounds positive are we've time. you on and heard Congrats to guys some growth

great strength relative Stephen, you to just there, one was about handsets things that So when see would better wanted typical? any to you ask that years? And that the patterns? order think I smartphone of maybe would little you those how describe begin prior bit seeing on Q-to-Q. the flagship that in that's think first you Is I being launches? you're to for talked to a you as Do or order Or in it the hear. compares typically pull on guess, do changes those

normal the kind still as little in market launches of smartphones at smartphones generally, in actually -- typical usually March particularly has especially is for. it This a seasonality. the strength we In very is we we think prepare see some quarter, in low year, to compared is doing the we've and strength season normally normal that that the seasonality bit than Certainly, better in actually, And actually still difference quarter is that year, opposite commented I It for fall key helped the dropped still quarter. high other the of a And we phone saw for premium -- offset March a China would the of but that to the makers. a see December the level. the phones. it

a reminder, Okay. on are there? Or And any there? you to guys not as Huawei ship able a customer products are they still into

Right Huawei. now, to do not ship Yes. we

then of market you you and kind bring on that And these that from products you just can talked put you've of if some wondering can magnitude and little do generational maybe that on change. to you think products, new like upgrade that how what of seems that capture a additional in releasing I'm help or past the you help that market? can Perfect. few, restore, compute much especially of the what products grow side, it you're the us of Okay. CPU the out kind into into discussed you to new quantify about bit -- content relative the just guys content compute but kind just you But how new a quite

Sure.

it's actually side. the computing quite space. normal the there's say I the would going on bit So computing in computing, a client In

are our after by BOM total content solutions. expanding going there We

-- into multi-phase So introducing stages, Vcore -- not the powering FETs the controllers solutions. a power total order also after going into we're that sell solution the in and only the the to

are means content us CPUs the in the we configuration that, grow. higher content MOS in into because depending seeing that more driver into that's be upon basically us more used. [ than used with with power used can which going seeing We're powering going So general range, the helping And latest It the for it's being the CPU. $X more maps ] push $X that. range. But phases, BOM are to being

So that's what's going on side. in client the

in we've general that The other been we're PC about the success sharing that is general, -- thing side also advanced computing. And into our more are going expanding we only seeing, client guys but market. not into in the you from graphics

are for seeing growth a into side. We graphics return the

behind seeing So that us, growth we there for and inventory graphics are the correction is feel specifically more side. we the confident a little

And significantly graphics, more XXXX. we've since year there the since been ever in the

to we're customers starting business back their coming area because would that's good is it's new the in in that success is AI. And say see space I one over there, computing basically that So similar graphics the market solution to our for our in AI us. a of accelerators. of get some using And cards, other

seeing some still going accelerators. we're So coming into contribution there AI

Lots the lastly for color progress. it's of appreciate me and there. good Certainly hear great here. I maybe that, guess to

the that home the a being talked market you've you on appliances, it performing little relatively But products, greenfield sounds that is a Just underpenetrated. still bit like got about opportunity better. new and

but longer maybe appliance that you do standpoint have can you you out how revenue seeing not be to XX there? term, Just in the And think just the think can you of for do wondering the terms total short maybe months? XX next you opportunity term, as you're that a maybe what from how share much market, look

Sure. We've great for addressing motors machines applications. -- IGBT end used been drum motors after appliances is those on our after IGBTs our going and the market as compressor modules based dryers. going one our as with well we the a refrigerators us. And washing inside target and this is Home of definitely this

have market, are around market is this X% this starting space. where in Overall, share. We we a like $X like just billion somewhere

for bit to space. able a more be there's do to quite this us in So

general headwinds are in the used to end some appliances. home the to now, on are we towards inside inverter because tied use now, trend power trying is Right the hope to motors strength end just market market this quarter market. to catch being generally there motors at those can those next global Right for trend or yes, us, that going we important and is in the see space. to But We forward. do It some continue overall invest this in housing we continue least so. it an

Ellis company Craig from comes B. question with next Securities. Our the Riley

Yes. the that trough to prepared Congratulations remarks. getting on made a guys. start through a in was I on follow-up with cycle point wanted

the for really regarding content in $X all have down benefit? end share the example, sharing that we which with business your question content gains systems that I the the on as Stephen, at the about That's of relative think you gain think that going and, communications from we might year the by most contribution some first question. in company-specific this, you, we of you end can How markets, the happening in this those across with is gain dollar rank markets. the PCs gain least end what's as markets think year? in is occurring look to And going or to do would what's this benefit about content $X from

bigger phone. the about to of have in charge as content one, the China short higher-end the their particularly products doing actually more phones. And the through would you probably able charging the because faster, smartphone if ask end mentioned power the is I or the general strength we're customer I Sure. phone towards the our But phones. and our there wants devices in we Basically, moving BOM trends say, if one operate higher term say regarding to are therefore, charge battery the would the more you impact to power. increase, to to be push much is generally, well talking a

increasing the content power is for and the applications. BOM So performance those that in

well, the also too, do there. having share the in X phone solid well maker terms both in a Tier gaining of overall share to U.S. we continue So as and

there. gain BOM is So both increase share as playing well content as well

On BOM the PC is the side, expansion general we contributing talked there. about the --

addressing the in We get within get diversifying It's out would AI a are expanding, at there are as to yet. but little down not of to take is But starting time, bit on the with PC the well graphic we're general. -- to better also to see side portion. computing say, more the positioned of going market the in cycle I we the IC meantime, content But longer still out in same the more going as being more there, into PC. the content

the is Stephen. follow-up That's helpful, And question twofold. really

the is in to track million specifically Is the Lake midyear it's saw we're a next there Intel to Can And very second half for in PCs. Meteor I their starting about the year the to looks If lower? about back think on First, And see XX year talk ship gain It you What's we XX broader to million units like how rise your are X year. first of when question some be ago the back 'XX this half potential X And target. then tick anything think months? I seasonal just in you're is or you for talked and that XQ? business. better? gotten in beyond year, of has the the getting fiscal half expectations where last seeing you -- that. the months for changed in the half has just the some guidance the then that of content compute, for of fiscal

Sure.

in full this a the that think the little into We it a think back. the better of we're for patterns year, probably beyond I we'll be half persist seasonal how calendar versus it get December to we think to recovery strong first believe quarter. I second September. But take it's half to -- PCs hard full stronger already half going the calendar PCs. longer going season -- will do terms are will do in Regarding we're once than coming calendar into half mean we the half, how will second that that peak second it see first know but in recovery. hesitating call Overall, will to whether be

will some We're more overall, expecting that PCs. OEMs careful But stronger for demand of to these from new to the platforms also end going start are out will September into but general after that. transition think to we PCs I we're the Intel's trigger watching hoping be quarter, to yes, Meteor help. Lake be going in see

of this, beyond Nice of be question gives some need And point performing we what I bit one little you, level really at some higher? model. takes confident just of you see bigger as And lastly, and to look and for gross that if a and margins the at move our is then aware that should Yifan. margin do gross are for better than could, can gross least be to the June, what that you margins XX% back to pace see expansion? to My

mean Yes, the do I there. mean expect pickup we I June margin guided Sure. as for some see quarter, gross we to

the affect product Beyond are margin. also factors could that, ASP will mean, many and mix I be there gross the that overall and one utilization environment.

the I expect So non-GAAP gross basis think we billion margin level. $X XX% target reached at a revenue, this point, we we our on one get to to model, mean in still mid-term

Our next question comes from Nicolaus Co. Jeremy Kwan with the company, & Stifel,

And -- mark, price from gross gap? much how environment revenue factoring from pricing you bridge -- see there, you Yifan, the and how that coming better guess, to forecast? the help maybe maybe pricing that that how absorption now mix you into $X and I margin see XX% billion do guess, Can margin. gross from how Yes. question. I you the on follow-up a mentioned us much

product $X come Sure. margin mix. we when the of to most mean level, get the expect gross from improvement I would we billion

higher comes majority in MOSFET have Overall, that $X product little reaching returned a in I and since correction ] little by normal would I And margin socket the it's inventory products, billion even Power of bit I terms a would [ worse product normal. expect in products IC the improvement sold. would ASP mean, mode. gross I mix, -- as would we bit of expect environment businesses now, improvement So from right some in bit we quite mix. And than to the would say still are be characterize I a

normal in of the help high environment, that a digits. declines? pricing single-digit And is right bit just more environment? us as a maybe little mid- And terms the now, high it's Can you quantify to single reminder, that

be digits Yes. mean trending in more to mid high now, the an single decline. and they I And typically, there's the digits. high towards annual single would on right basis

guess landscape, terms any the before, yes, in how the mentioned portfolio I think competitive very X clarity us low much And of I And seeing in at would can of your on months? provide for the Great. that you you be it helpful. of Has that more that that, end. appreciably affects, more terms competition in changed last

past I X of see mix. whole I terms months, lot mean don't a of in the in product changes

yes, As the in see we do we cards those mentioned and in certain improvements, the in areas. in for some applications example, graphic smartphone markets,

the BOM this but content the Got that it. increase terms that anticipate quarter, And helpful. June of refresh Yes, in coming have? of much over the even do BOM And question going of little headwinds to for away like a recovery restocking? sense on the do back details know step-function just maybe in you also it question, on content. how mid-cycle and how for from much is one platform final one coming gaming going BOM And final would I any is inventory a gen, a it's have you from there early -- the of that. next you be more higher is

just their the X we consoles, they or gaming about about reminder for cycle. year a X-year Sure, life Yes, are -- that are of in Jeremy. X

correction they're half this where from cycle. was the inventory so And entering coming that the as of -- the kind life of second that's

well, end And product out for parts of is a see the BOM. that's too. half-half. as roughly of I that we return but to the orders It a the -- number, seeing hard quarter. year coming they're the derivative in And have definitely encouraged seeing ramp-up back also are the and don't orders the for June into going are towards we So existing happy this we're bringing and maybe a

helping that and So making impact are an both grow. subsegment to for

other in queue. Instructions] time, Thank you, Jeremy. registered no [Operator At are this there questions

There are no questions registered in queue.

conference time, this pass I'd like over closing remarks. any at for back So management call our to the team to

It's Okay. Steven Pelayo.

Before events. Annual will meetings at in upcoming like Beverly X and available the to Hills be in be B. XXXX Management Investor the I'd X Cross conclude, briefly XXth Conference, Institutional May Insight participating June Riley one-on-one XX we team will Conference Sector mention Stifel for in on Boston. and

request wish the you please sales representative at institutional meeting, contact of If each to a the sponsoring banks.

This today. concludes Thank talking for your to we forward you our next you call look to AOS, earnings again and interest in quarter.

you. Thank

the concludes Quarter enjoy That Omega day. Semiconductor Call. of and participation Fiscal Earnings your the and Alpha your Thank rest XXXX for X you