MACOM Technology Solutions (MTSI) 3 Aug 232023 Q3 Earnings call transcript

Welcome to MACOM's Third Fiscal Quarter 2023 Conference Call. This call is being recorded today, Thursday, August 3, 2023. [Operator Instructions] I will now turn the call over to Mr. Steve Ferranti, MACOM's Vice President of Strategic Initiatives and Investor Relations. Mr. ahead. go please Ferranti,

our XXXX. Good uncertainties financial welcome Reform the fiscal of results would Harbor to statements everyone XXXX. Olivia. statements, forward-looking contain to are for defined which quarter our Securities in discuss Private Act I subject that remind to MACOM's for risks like in today morning, you, Litigation will to forward-looking and and certain call of discussion as Thank contained the Safe third the

Actual materially differ results today. may discussed those from

detailed in information. reconciliation discussions and adjusted non-GAAP result release the discussion call GAAP was adjusted more MACOM's refer of related For this uncertainties Form the include financial with certain that in X-K, of you with A risks company’s could SEC. today. the the which filings we SEC during press are of provided also filed and Management's statements to those differences, non-GAAP results will to

I'll MACOM. Steve With that, call and CEO to President Daly, turn over the of

you, take our third some Thank to our I Jack results review the I that, our call fiscal questions. today's of will revenue will After business. update our begin happy Kober, a be of will general fiscal will for quarter, Financial a with then fourth more on Officer, for provide earnings in-depth good XXXX. provide and quarter Chief and morning. guidance and we

short-term was adjusted the investments was and for sheet. per XXXX approximately the and ended million and $XXX.X share. EPS million, we balance $XXX our quarter and $X.XX Revenue Cash third of from $XX quarter diluted on million with flow cash operations was

in objectives, environment. challenging meeting Our our team in market excellent did business a and financial an albeit job

pleased as down our our with through cycle. the we especially the manage flow are We part of way cash

was which over Our significant .X, improvement ratio in QX QX. was a book-to-bill

company and a primarily driven level. decreased data defense bookings by center our quarter-over-quarter, at although remains healthy total it growth customers. Our slightly backlog The was

booked our shipped represented is and approximately revenue business turns norms. within XX% quarter of which revenue, historical total or Our the approaching

in broader of our served improvement in market. the telecom by encouraged bookings are and environment remains weak with demand we the in the markets, particular and While several

customer positive that and requests is indicator. note cancellations have push a which slowed, I'll out

still carrying characterize many inventory. as I levels high, would with industry customers overall inventory excess However, still

sales external in Our QX, we again in channel did down our channel to external and inventory manage decrease inventories plan QX. sales

to company was million, our of $XX.X it end QX. for and and up discussion Turning markets record. fiscal a Industrial Defense revenue sequentially, our was

we to Within over drivers MACOM demand the years. continue the I&D market, products steady but secular and markets, coming defense the see within drive both numerous for the potential for robust. And industrial growth have remains MACOM's slow to which

AESA These include communications more sensors. bandwidth, very and applications, new strength. satellite competitive higher directly new networks power active electronic MACOM's electronically Applications progressively within frequency and new or deployments, secure radar in require factors plays applications warfare which to DoD, smaller antenna form electronic frequency high higher steered the levels levels,

in RF expand products market MMICs, microwave span within and to and Our I&D our establish goal analogue differentiated to is subsystems. that Sam ICs, the

amplifier has initiatives, KV filters, GaN products, high ruggedized discussed, were portfolio low subsystems Our process, CAPS, our previously photonic MACOM amplifier BAW carbide multiple which and including growth power pure frequency frequency RF .XX palettes.

expansion is Our SAM initiatives. of example our recent acquisition Communications Group Linear of an

for design previously for manufacturing defense satellite and subsystem predistortion team in and microwave photonic highlighted, payloads, as Linearizer As new applications. SATCOM, well products capabilities the microwave products as brings MACOM

on the and defense reputation our within market This developed ground industry has TWT capitalize decades, OEMs, an SATCOM defense $XXX prime position our Tier Over and manufacturers, strong TAM. satellite the improves team the SATCOM past estimated station outstanding Linearizer forged industry and leading the U.S relationships incremental acquisition with the in million three manufacturers. many ability contractors, strengthens to X

the system market with to activities The create with expertise combine closing proprietary traffic our more March, to platforms, to medical monitoring of and new we semiconductor continues Linearizer's acquisition way sensors, based such wireless technologies customers. R&D instruments industrial our and Since design and industrial as including, automation combined LiDAR, new initiated differentiated automotive example, factory applications wireless laser radars, have by in IoT solutions applications. for robotics, for expand

build the and continue of wave microwave short, differentiated to In unique portfolio for RF and optical and I&D and we millimeter product market. a capabilities

in take which returns. have margins, programs a market financial typically ultimately production, the the long attractive I&D time to create and life While healthy programs long carry enter cycles

for global telecom very elevated challenging China, sequentially. million, and in slowing U.S., inventory the long levels with in weakness remained and was CATV market deployments $XX.X Revenue down The XX% Metro at customers. end haul the telecom markets XG

Our shipping levels, fiscal have end bookings been for most believe current are 'XX. under to telecom year at we weak of we And demand.

market In are the diverse with large based because performance one has this spite products and as volumes rather are potential attractive markets, market believe to fast, We opportunities. long-term our we the and on to of be telecom select cycles current price. design typically growth of an high than market growth view weakness, faster continue customers

ICS MACOM has electric analogue products our products. the our for and from and optical diode or MMIC market, portfolio IC compelling telecom analogue to Opto

finding and sales great drive near-term, the will telecom our our and year's job infrastructure when increase which have this customers as new improve has and channel We been is inventory been demand applications our in weak, growth. team deployments doing customers revenues future sales order believe depleted. will a While

telecom market. product remain of core our New introductions in aspect a strategy growth the

and line switch directional TR high antenna of XG few front past XX including microwave end power bands, LNA macro in couplers. cell high expanded As that serve active switch gigahertz. an frequency example, frequency the and We've in small base to include have and massive and also XG systems cell, to up multistage operate receive MIMO modules developed and or which a product the stations, our to years, power modules we bands of LNAs portfolio FEMs transmit over FRX PAs, consists a

microwave RF is IC expertise MACOM's and compelling. design

Our internal we're And to and both utilize a CMOS chip able performance. a fabs. process to processes result, the designers have from the which select GaAs, range of external GaN, product and ability wide leading achieves SOI as

capability our the other this infrastructure for ideal our line volume strategy applications managers use than we high product target differentiate. And XG market. radios, same XG to broader growth is can is While the where technology

next years. For MACOM this growth reason few telecom for we see opportunity a large the

XX% Data sequentially. QX, inventories still XXG impacting Center demand see revenue XXXG down $XX.X and at million to was customer We data rates. excess lower in

near provide significant an accelerate, pleased for quarter-over-quarter demand to However, opportunity trend customer during XXXG products and and term growth. were will for this quarter our XXXG see the start we to

also reach uptick cloud to address PAMX have some in an We seen U.S XXXG new deployments. short demand

for applications. portfolio to connectivity our center MACOM speed MACOM products the been has and data and support active are used has in copper a cables analogue optical product high active cable optical focused the reduced applications supporting we to linear can across in latency consumption power DSP leader provide protocols. Ethernet lower a analogue based InfiniBand Because drive in and and solutions. architecture drive compared certain believe linear transceivers,

the our data We believe in are solutions rates. market, at the especially higher gaining traction

with well-positioned deployments support the complexity, looking for of cost. and high are to the today, a artificial performance are market analogue and and linear our As an power intelligence, our portion early products reduce ways hyperscale in example, can XXXG machine we customers capture computing. We operators and to new these and solutions. actively of learning deployments are DC stages drive believe XXXG

I during to review events like a would key now few QX.

contract semiconductor the First, effort, develop of or related support we advanced to from we were silicon awarded on developing this technology United semiconductor process cutting a to Force gallium Air Labs, to edge on carbide. continue focus nitride Research processes. In States AFRL

wave believe underscores MACOM's strengthen This in and this contract will technical us total high support process on millimeter GaN value it technologies multiyear $X silicon MMIC that We The products. carbide, leadership will and is contract around a our enable has of edge. competitive MACOM's development million. to contract power wave, in a used and on research millimeter commitment

is products MACOM large and the MMIC high profitable to for years. our growth represent the the with frequency portfolio. advanced Future Historically, processes the been provide products performing within best to customers over X Our have X among MMIC opportunity from MMICs industry's GaAs next GaN products. most strategy

like MACOM's of great are customers. other our of strategy. sales helps make critical contractor, center we were U.S were supplier the awarded a by based pleased we these are defense teams, the Japanese quarter, Customer awards who global team measurement MACOM recognition announce and platinum of by a leading status and a congratulate Tier success during business to servicing and all And X at test Second, supplier we the company. of application that possible. the operations in preferred is would named engineering, to as a satisfaction I the members these these awards

European performance we of Third, a center the a we our from upon also and the amazing quarter France. products. to of Paris, manufacturing pleased can provides customers. us brings serve Semiconductor which MMIC team formally outside European and an that better are established our The build Center bolsters we The and platform during expand European center presence MACOM portfolio high

And note start teams excited schedule Group, and business. acquisition been on the have to finally, our is of that I collaborating to to would together like integration new win Communication Linear

strategic like mid more turn to plan. management team would July, the In over one discussion the I review long-term item. its I Before Jack, to updated

our long-term fourth new we planning As of the revision a plan. reminder, was process, in and XXXX, July year a this of initiated

As reviews profitability analyses strategic level. SAM potential SWOT plan roadmap and a technology you it expect our growing competitive at revenue capabilities, product detailed a areas and landscape, markets our in for product current for line expansion, formulates would roadmaps the the portfolio, analysis

We depth business, will to critical this provide the how share. market our company. for a business and we and believe and our of diversify long-term strategy We a the MACOM, ability essential manage believe planning semiconductor capture that strengthen is element in is

$X excited revenue. scale achieve billion business and We in are to the

detailed provide our financial now will Jack results. a review more of

morning, everyone. you, Steve, and Thank good

for the slight with sequential quarter-over-quarter. in was increase and a in Our fiscal XXXX weakness guidance third quarter third were XX% results of down million, Industrial Center within the driven quarter our Revenue period. for sequential Data and $XXX.X by Defense. The the decrease Telecom was for markets

On China, growth to XX% Despite our revenue, basis, revenue, Europe. XX% fiscal a flat second in in opportunities down of XX% quarter. geographic additional to customers and represented Asia were see domestic from of declines customers to sales continue we in sales Sales China based sequentially.

Adjusted leverage provide gross of lower as a revenue, internal as manufacturing million, business foundries, improve. the with some fixed revenue of model, well driven sequentially was levels. revenue our wafer QX and down we costs profit our believe will lower which of fabs XX.X% financial points XXX utilizes third-party $XX.X basis MACOM as leveraging by cycles absorption or flexible

was operating SG&A and R&D million, consisting expense expense million, of Total of $XX.X adjusted $XX.X million. $XX of expense

up by to the Linearizer million, acquisition sequentially and were As of in Center expected, expenses $X.X mostly establishment our from our Semiconductor total of operating the France. incremental expense due European our

Adjusted was QX. down QX. operating fiscal from in income operating million for XX.X% fiscal million, from QX in XX.X% was fiscal QX Adjusted in sequentially $XX.X margin down $XX

Going adjusted forward, Depreciation million adjusted $X.X $XXX.X we expect was million QX as fiscal was Trailing $XX.X revenue our was improve to in EBITDA million. expense QX XX-month margins recovers. $XXX.X million, to operating XXXX. for compared and EBITDA fiscal

QX $X.X for on $XXX,XXX income investment interest expense term from by up interest was higher net offset fiscal partially QX on portfolio roughly our higher million, loan. returns, Adjusted

in rate fiscal million. in X% adjusted at $X.X expense QX and of income resulted approximately tax Our remained non-GAAP an

down Our million, the $X.X cash in from million XXXX. fiscal quarter tax second $X.X were of payments

X% income adjusted of tax through at fourth year XXXX. for fiscal our expect year rate and fiscal the to remain XXXX We quarter

shares, net a adjusted utilizing $X.XX, fiscal was compared $X.XX QX. million share fully in count earnings to to $XX.X of $XX.X fiscal million adjusted share compared diluted in of million, QX earnings per share per income XX.X was Fiscal adjusted QX.

on cash to balance flow moving and sheet items. Now

European remaining accounts timing balance days $XXX.X in QX, million million, XX our receivable decrease as end collections, The data the primarily as as QX is fiscal down our outstanding days. quarter $XXX.X with up at was revenues. inventory to $X.X Center million acquired our well to were quarter. of $XXX sales primarily Our inventories future million outstanding at to support well accounts due in sequentially, from in Semiconductor receivable sales the balances by expected due as balance increases center receivable acquisition, through lower

recognize the were on business is sequential at turns our cycle multiyear balance at down in X.Xx in inventory the that quarter. basis X.Xx QX, stage Inventory this We slightly high. a of from prior a

is was inventory would support strong that quality of both through book-to-bill the of the positive quarter, like second support I quarter our will However, believe also indicators and note of are XXXX. progress XXXX. improved to mix And our backlog. as our we continues the which our since fiscal improving during we turns to our that fiscal inventory turns and highest strategic business

due was approximately to quarter. $X.X flow QX from part fiscal cash for The million, the in down increased QX. receivable million from compared prior expenditures to Fiscal totaled collections. operations fiscal $XX.X QX, was Capital in in $X million increase $XX.X million accounts

Our spending be on to profitability the full business. with is $XX year and capital XXXX million estimated as of of CapEx payments, the now timing our we growth balance and the based

manufacturing Continued investments capital process capabilities, remain development strategic and our in for us. well initiatives fabs, as priorities product as

and flow Cash generation million generated manage important $XXX through demand million cycles. priority approximately despite business year-to-date. continues cash environment an we operations QX, we And challenging to for as be changing in $XX.X the us of from

QX were quarter cash fiscal up equivalents short-term XXXX. investments million $XXX.X from million, Cash, and $XXX.X the in fiscal third for

fiscal $XX net to million, European assets in France. is cash our Semiconductor gross located and of During Center our quarter, approximately $XX remains million less to X.Xx. acquire Today, our utilized establish the leverage available third the than we utilized debt approximately

Before turning back discussion few to Steve, to note would additional a like I items. the

European or associated expenses at meaningful revenue Steve the May, Centre impact MESC a not workforce. our Semiconductor technology differentiated to will and result new ESC in have operating and do integrating the EPS XXXX. in dedicated we of forward end look dilution. it's We its that will And our slight on As expect associated -- mentioned, opened MACOM the

products, it brings However, new technology, we are customers. excited and manufacturing, that us

did have $XXX that the million paid pleased XXXX. also May loan come loan. our on announce off we to term remained term outstanding today due that not are until The We

And we put in with believe rate interest net generation, stockholder by annual value. expense X-year behind consistent outstanding strategic our to quarter. However, during $XXX,XXX we the approximately increasing quarterly process we was and mentioned, interest will Steve rates and floating our as result reduce cash which debt per this appropriate felt us planning interest it finally, completed our quarter, increased

will over to turn the discussion I now back Steve.

to and Thank to QX shares. is fully XXXX, you, revenue XX% adjusted the $X.XX, range million. expects range based in be fiscal Adjusted Jack. to is on XX.X margin to in XX, gross million $X.XX share to earnings expected expected $XXX the and diluted be XX%, of MACOM September in $XXX be between ending of million per

may Technology, Data finally, and appointment yesterday, And QX, be we issued down a Vice revenue announce pleased Telecom have Senior press President, new expect I&D in seen -- newly in Sequentially, I to me. am release to up. created of as in position to Advanced and Center a as you Semiconductor the Wayne Struble reporting

be to roadmap. has I a semiconductor will with management on years of in team, congratulate him in microwave distinguished entire look going RF forward. and would MACOM since the XX of and deserved promotion has forward and the MACOM management development RF engineering, Wayne fellow of and like more working and to and to joining this contributor a the technology technology XXXX. engineering I microwave closely in well over key Wayne served our as Wayne -- experience

now like questions. operator would take to I any the ask to

the [Operator our Instructions] first with And of O’Malley from question Barclays. line coming Tom

Your open. line is

Good morning, a process thanks my you you've company, question. my over question, in guys. it's taking I the something it's review first just highlighted for And July. since guess strategic took that

over the next update any growth just that there? $X together month to going point over Can get guide just us you framework couple overarching the years? that that's and you of from last mentioned on billion $X that you to You about the give Could the billion the again. timeline this you talk the just you put drivers

Tom. morning, Good Sure.

XX%. things -- 'XX or primarily a is CAGR, we the which about down timing due achieve fiscal our about want timeframe, X year softness the our sort look is early 'XX trajectory, is of or year. ago, XX-year we the to which had So year in least slowing we what growth a X.X behind of historical market stated that the When to in at this at our originally

acquisition When I the new to And more $X. rate, see $X we billion at it's not look to primarily that driving start EPS an close driven. to necessarily run importantly, we P&L product look think our going $X.X driven, at be we what's at to billion growth, when

is we of part strategy sure growing accretive so are the that's profitable make to our business to model. And that revenue

I In Certainly, the telecom over terms we about of growth, will that Center. the really few prepared external and a of drive we to past we're my I it's we've the the an years. of at specific same that be long-term product And the details looking really of the or we really is know positioning those markets review then where lines segments the and and then that framework focused design speaking Defense, on, some that company market market our about dynamics, then in followed Data over by successful. Industrial in It's can spoke remarks. capability talked believe been

looks And term Helpful. overarching guess, than question the was there. particularly I like quarter. It Center stronger, September more the shorter into lot a well Data something then

higher you're XXXG. accelerate? the at Center mentioned different Is that areas traction seeing of XXXG the And you connections specifically seeing business you. with about and speed that you're Thank talk deployments? those You could where area Data

fourth we predicting growth strong You're correct Center the are our quarter Data in business. that for

be will In fact, have strong growth year-over-year we segment. within that so think it we'll the

would Center where represent growing. years is X Data end this row in market a the So

per some have reach is strong products So latest applications. XXX short that ramping we're with coming it's very primarily and Typically, The are position happy quite XXXG our we lane. growth of a about from XXXG that. quickly. And

data XxXXG lane. the the growth short rate lower general applications. Where applications, not primarily standard We XXXG have is XxXXG type a see the reach per or sort in we seen recovery of

not applications. if are coming the linear Some of drive all supporting from protocol. products of business PAMX Most, is these

And we do quarter. so good that expect the in things

next ISI. Thank coming Muse you. And Evercore from C.J. our line of with question the

open. Your is line

afternoon guess Data morning, the sorry. follow-up on Tom's Yes. first question. you question on -- good Center. Thank Good taking for question, just I the to

growth, year-over-year highlighted in guess, plus of, you're just you that sequentially. And You I Center the year. of trends growth of of versus sustain million base kind terms connectivity high guess, through enough kind means is $XX seeing roughly data AI speed kind which the I AI on side the to can in calendar related this trends there to kind center case? And Data of spending on speak growth

Right.

focus well within data photo -- the the lasers. analogue three optical product development are really primary focus our is for on. and the center So, that we detectors solutions -- as as That those areas

a want so it's CPO, our we to optical into we wherever can find products applications. application, a active an copper or electrical even those whether cable, pluggable And an transceiver, active cable, sell

seen to what we have for examples have been in AI-related longer deployments And cable consider of than an reach applications. us. excited slightly we've perhaps customers by it at electrifying the otherwise. a area many We definitely would higher a that's they growth where over increase reduce rate are running data in copper a could diameter And seen and it

And then of solution. course, the past about advantages a the has linear DSP drive, as we've over in talked many

is effectively, this you of we XXX and have so areas where optical. convergence And gig switch And architecture. this a are a type typically seeing of gig XXX have you bit in around

really or into customer different and go is or the applications. for example products key latency consumption, there's the gearbox, cost. two, or insert three MACOM And power is can no maybe lower that lower these lower four so one this where here an And

or very an integrity designing the these just with is so, equalization, analogue course, channels challenge of signal difficult. And for solution optical is

with business. the working this OEMs to complex. So major of processes of the is we've been support design part our growth And

broader cyclical Very question. helpful. a guess, maybe I

a It like about last business? telecom versus to for normalizing. your backlog still almost talked we're looks nearing You quarters the you totality the X Or to to quarter. .X somewhere few close suggesting more Are might that for of $XXX bottom bottom? it million, book-to-bill take Turns strong.

of today we somewhere be So because we call what up, I&D XX% be where And up, our be between year-over-year XX%. don't let's a that for two down comparison, and are say to and say, bottoms, three markets try be will can we not will based we Telecom the Data will really on will Center know. up,

point opportunities. been And We as quite weak We at that with see in the of in months comments that turn. and deployment a I But X wide great from where this for the will Telecom. inbound platforms, business, SATCOM has we difficult the very X now. believe sort new certainly might highlighted do can of say and for the which range provide of year, is happen opportunities growth bottom my market expect some satellite what to or us different certainly near-term it's

line Thank you. coming question Stifel. of with the next from And Svanberg our Tore

Your line is open.

Good turnaround on Steve, able here. InfiniBand Yes. Ethernet. to morning, and about talked you. you order Thank being and support congrats the

also to that it PAMX. next sounds quarter, most for You the from come going growth like of said is

that does So of mean further out. InfiniBand is kind

If great. color, could that'd add you be just any

would most quarters Data past so our of over say -- our few XX% more PAMX related. the Center been Yes, revenue I has than of

as we continuing go -- so 'XX. the see our that into trend And fiscal we

I would that point. highlight certainly So

point The make, InfiniBand frankly, are I is that and Ethernet both other PAMX. would

And there? some at Just the base trying Or so are revenue? on as revenue you have a that so risks XX% forth still that regionally station and Perfect. and Is predominantly where you. pawn do with business to this you mentioned XX%. point? follow-up, China understand Thank

side there's related. XG It's say optical a decrease and would on I based Well, primarily broad business. the China been in our

our business. Optical are And recovery And the that -- say in so be networks we the at due would it will of that's some from primarily low-level. come But back customers. Center to China back, to no will down for area going as it Data doubt we a the see parts and I a some supporting be support is come -- would year where Areas year it be starts that's this weakest. there's our certainly XG to

of Karl Paribas. And you. coming Thank line the BNP question Ackerman with next from our

open. is line Your

Good just Center a to wanted wanted Center morning. quarter, XXXX suggesting I for fiscal that for a second. or fourth year-over-year you. I Data is a Data you confirm, I And have are on the follow-up follow-up. whole? up in thank fiscal to Yes, as

Sure.

from say to So our well year. as Data color just double-digit very year-over-year. going And that up it Data of Center shifted QX, fiscal Center quarter-over-quarter strong of highlight as be I revenue bit year-over-year. quarter-over-quarter quite significantly, high-single-digit a this certainly into point view, would would has a and

The first shipping lot came of predominantly half first constrained strength cleared issues. from a fiscal to was 'XX that supply out we half. backlog And due in that backlog in the

effectively our in consider growth to to little QX, base starting very just kick demand Then in. gap And see products where XXXG we're for would we is demand hit was what is to an on and the there XXX rate for starting I now that business issues. and higher a air data inventory what

up, when and So what quarter. growth ultimately you of you all for get that the add year-over-year, is growth quarter-over-quarter fourth

malaise remarks you Is on for pressures XG there? China? due in reduction competitive your infrastructure that, prepared guess, out? you very seeing Can call on into to general in there I helpful. just Thank market sales that would it be Or are you Thanks slowing anything Yes. read the is you. clarify [ph] just to that. as

China. growth full to will for what back perfectly we so just our there be Data is last And for Center. question, -- That question answering then expecting. we're to come that about your year, year-over-year your Well, Yes. you're -- clear,

now to I to business of Data been we about Center. revenues talked well our XX% about We the QX it's much in our XG as is pretty just of XX% think, all in down in China, was there China due haul that year. Most mid-teens. front as have weaknesses the trending based. So started, And

China. been vendor I the increasing. that dynamic having more is a and that OEMs. say supplying on and in There's I And focus local would supply, that locally competitive always there's very local competitive would say dynamic, certainly more

so would some increasing reasons. of that due And that and that's say I is to geopolitical trend

We have our on efforts defocusing been China. not

in whatnot suppliers and are some China. the still major of optical the based networks Today's into telecom

the back service to continue pulling not market. we'll se. So We're per

establish Europe the other would we focused of revenues I reasons on decided areas of inside EU. developing add also and However, one to in that including main we our and manufacturing the that's why are facilities

our J.P. And line with Sur you. coming the Thank Morgan. of next Jr. from Harlan question

line Your open. is

and it stabilizing, to Yes, macro be looks for Good by see decline can in inflection like and is activity, they that thanks reflected but during sort of question. the period my are quite noisy the good of but morning, push dynamics taking this weakness, orders right or out.

in are to So September And sequentially? quarter-to-date turns guide? here continuing the rise what's embedded quarter September your in assumption bookings

large are expectation. program to around are program see coming So, pleased book-to-bill our the we've I also somewhere be would it this in with be our that programs the And .X that and third can the book-to-bill how A related, quarter. we quarter That's very expectation quarter. related. X .X were that We'll August certainly September certainly our would started go. say strong lot fourth in with bookings. these And of we

instances, of in sight. So line some we have good

But point there. I choppiness your about absolutely think is the

that turns, similar have market CATV think highlighted, customers. major as turns inventory, very, to is very question then in I still your see the of carrying including regarding telecom I going the about still are customers many As QX. levels of level We our tremendous And in QX we're we weak. had

Thank then of going team hub It transferring [indiscernible]. their that. semiconductor become European going MACOM be the the looks are Is the close to your to technology, you And what's the fab some operations your out congratulations like on .XX inch of originated MMIC potential current for GaN OMMIC and based including revenue micron their GaN of GaAs the and MACOM manufacturing to technology X its sector. line?

comment question. and for thanks that So

highlight operations to just we have Europe. So had in

where we facility supporting And and we do reliability fairly our testing. fair of business. Cork, international Ireland, lot amount quality administration, of sales in We center, large have have and a and finance a have a we a design

MACOM hub So of Cork today the in certainly Europe. is certainly main

group any And that We've also product France in job have running to a will to X do .XX of inch any working analogue to adding wave development. is high high process And for priority process center line some superb that been a those the lot at frequency transfer design expert had portfolio. we're Instead, wafer years, micron inch including X process Sofia, a very plans we complements on. line. really France. our technology of a millimeter supporting technology continue to they've XX a here, that our fab then the We done of from performance as not move develop the a and and technologies over and a they've the technologies build

-- that see revenue opportunity we growth that. of potential is has I fab we teams haven't development for to But say with of that what vector years. wouldn't is tell our underutilized. We our team that That said very nice really probably the that you over is X sales and right is growth. It want turning around. a business fab, what detail. -- the are the now And us X And explicitly next can that be business level we actively, to for see tremendous a will --

question America. coming of our line from of with the Vivek And Arya you. Thank next Bank

line open. is Your

question. Blake taking for This is Friedman Hi. Thanks my on for Vivek.

color more bit the know you kind to around a on little center. of QX gave Just want I guide. focus Data

business, kind the of be each Telecom of provide can and that'd in the of Industrial the for commentary, helpful. and the sequential areas, Defense maybe magnitude you If those declines

then can I'll a Jack word say And on in. add maybe Sure. that.

somewhere mid strong very know want down of in about, we And do as expect to So be Data XX%, to XX% Jack, and and that. Telecom digits expect I&D -- sort the don't you down in And Center I sequentially. growth. talked single between add we will as we whether we've

backlog a quarters. over we've the that I fairly little the developed add would bit over past we've couple just strong of a past think years. I And eaten couple into Yes, of

So lower I items QX to also think of coming back that with and being down with to some that's regard Defense those book-to-bill. Telecom and than guide the X on X we Industrial have of

the business fairly that going and So I past backlog we patterns QX once we that time mentioned, as quarters beyond. again, into lower we've those But had of work period. seen the need have do some supports this to QX order couple through a strong through of coming

Defense know, the specifically of vendors kind Got XX% that of it. states. on I the And several is then -- digestion following across core just know certainly that on some the kind industrial the and defense. in industry I I maybe just about segment was XX%, of up side. observing Industrial kind

kind markets maybe I So side, you can the little bit design kind be on core others. of industrial weaker on seeing you're hoping stronger a maybe that areas in could or specifics, was versus and specifically more of then trends provide what

weak remain I&D businesses from say, in near-term. communication is would in And we're I and will programs. in most our the Yes, the that defense radar getting weak the rate general, of segment primarily industrial programs, growth is programs, coming

quarter's mentioned have on that in. content we we last of for some some demand radios calls, heavy Europe, out think I international coming

I a portfolio. thing there. part the our So weak. other good it's AI we the -- of of AI weak. of end add parts would smaller that one It's bellwether going the And within the of some is really applications the in the we're I about is speaking, remarks market. I&D not of portion my new generally talked industrial AI today prepared after, are But

and number industrial quite well. its diverse. it's at other Defense item different And that I of inherent Blake, we through a this is when market just lumpy a business our Industrial in the add going have There's can that Jack. defense perspective, of that into at be times. from way as the is work that you the think that some category things I would And look

So that standpoint well. helps as us from a stability

our Ramsay you. Cowen. question Matt line Thank next the with from And of coming TD

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much, go back can't without morning. get a saying call AI through times. to a Data you stuff, Thank but the Not few Center Good now to you guys. very

kind ask are how drive differentiation to little of company. technical $X to about it on you Maybe I for of versus your bit XXX that into over sort gig go got go you're we a today, there. Thanks. the particularly, So portfolio, perspective, about where center wanted your expand what TAM linear drive is and where could we those represents that and you the and can more mentioned from a also markets of thinking product time, XXX penetration data DSPs. linear

Sure.

more a detail. try I'll So provide to bit

lane. the working we That's gig when is optical see matching have electrical XXX you ideal where linear XXX So up drive gig with lane application.

that that module, XXX, you're a DSP switch the at can you function a can So the terabits the the from run removing if module. manage you X.X use well. can at of architecture, XXX, the drive that interface, the within the having interface run you at as it's run linear CDR effectively When you a effectively or and module you're

that, power doing in benefits consumption. cost, latency, from there's just So

the still -- can form. the you eliminate that are benefits so and an be applicable And those and DSP

active optical use So for cables. you can you cables, use pluggable this this can for

then now vendors And like that manufacturer is closely a that requires use so the deployments. it option there's it because to with the requires certainly to switch module very vendor. What customers work can support they their ASIC switch many

a manufacturers OFC at X with with Tomahawk few demonstrated the three We months an switch. different interop module back

was the short market that sell we in. primarily And TIAs, where equalizers. MACOM lane and that reach ideal primarily what into that's short And reach. that's that service it in drivers So of has market for the historically sort are just we're

the So those are to of customers integrated three product sorts chips can knobs working. the them turn of turn product that sort they are features so the creature highly have These the all the to need silicon that on get sets.

now along And well. so XXXG. where as per we XXXG is we with far And we have production right at are pretty stand lane

it. do really you I detail. for all appreciate that Thank

close my on well or ahead were working and what As indicated of products quarter think .X way last this X, book-to-bill is is a think we you encouraging and where some you certain it could coming and trending there could each be quarter. markets give and the up. of bit end point .X, the our Thanks. X how back you might in and if are follow-up, at those, off those up of we're still that to Maybe hopefully I the see color book-to-bill little three for guys to to September segments I

in in Right. as across test QX, say. weakness XG, these cable of in the and don't the and Industrial recovery, and the of defense terms of recovery of the many products and -- in its still a the high-end bookings be products within still MMIC Well primarily behaviors a measurement, many the And the those there's really our telecom talked past, Center very certainly QX. supporting of growth let's that sector. in fourth we will weak, a will are our we've products and lot applications, wide see tremendous about Defense military GaN driving We the quarter. see growth for lot GaAs segments, It range same of our expect products, Data or the

only us in up. of bear a growth for on about .XX drivers We Certainly view into now the a is the we be be think GaN. year. potentially ramping we SATCOM market, and be high ago launched side the turn the the there'll both year will the from on wins, what satellite about telecom we process XXXX the the on and first When right doing And in XXXX rate production. think great next micron set then their point side. side, is X real certainly teams XXXX, data product GaN ground area, design to production And are will in data spot more center for -- getting our coming we're which applications of bright in months process us. think would the into

line Sandler. next Harsh coming question of with the you. our Thank And Piper from Kumar

open. Your line is

had talked Hey, you order and drivers, Telecom, Jack. long-term mentioned then of you one. about I quick and Yes. when your a Data Industrial the Center. Steve Steve,

And As flip you 'XX, how correct question, FY a try if thinking number? about is can just order, by that about? to not or the goal $X as you're FY I $X the growth the we your think order that's that what correct billion to that Or was early is get billion if to 'XX random order?

that order oftentimes so right about way make More the we're wrong. is and that's Yes, when we think than forecasts. we But correct often the it. wrong

a to lot there's want look So But within and our to spending, a see pipeline our salt. where we the take R&D telecom we you in very when attractive that position with that at have of and the space is company, grain are variability projects to we look that that the we at us. of

And customers a we diversity, and the we our it approach, lot long like like plays strengths. tail of can that so of the to we

end a fair amount do our of end market. that up for chips R&D we So spending dollars, developing

Obviously, market [ph] the market is us. great A&D another for

full on and things script, mentioned the were our was production the this segment, the of year think and in for year-over-year the year. year expect record I I&D -- that year we to bring start great have -- as know as think designed a more into the QX that, for we we'll we programs growth I And next happen some after good into. to new I

reach, a chips, strategy highlighted, and is or And do get center. focus the solutions where data for there. have the center the the short the about as business we smallest piece is of connectivity focus where That realize performance analogue our lasers our narrow probably data in I we I on we center. we But insert data high most detectors. questions can

So that's a fairly strategy. narrow focus

things all we get so on I hard wrong too, too yourself. the [indiscernible] time be For wouldn't

kind some typically you're data trend pickup The For the good about center a two. away go quarter of my in don't follow-up, seeing in or you're space. pretty talking

So is maybe stick activity more a sorry, XXX to -- activity in should it and the beyond. the of little as XXX in a the XXX fair next I'm for assumption past handful that around a look think and quarter, you quarters bit

they have difficult our ramp quickly. seen ramped where down It is it's very up us programs say. examples And and in for we possible, very quickly certainly the past and very then to

cognizant that. be to have we So of

volatile about excited the center, -- within So we also while very business. the we're doing we're data with it certainly a great be recognize all things can that

with coming next question And David our Thank Benchmark. Williams you. the line from of

is open. line Your

for see talked channel. the depletion inventory just happen Good I of magnitude in quickly, on tremendous question. morning. you've the the you See, the needs And a taking that still to Thanks few mentioned about, think you've times. guess I

still sounds thoughts it But heavy fairly like So just that for happen. us? of needs level wondering to digestion your inventory

can can Jack everybody the certainly, cycle be the then make range it. ago, quarters many I'll just cycle of had million. and longer, the months, maybe rate as And -- And we shorter, depending of the our to knows, run maybe on in comment add the times sure. a knows, for a as $XXX X Yes, technology. two products in maybe fab everybody of manufacturing

not So inventory carrying said, when relate and inventories for that at see $XXX at maybe you necessarily, can if two as today's excess you you're level, -- Jack but today, million or but our rate, sort are, ago. of looking we run that to quarters one

our into excess through period to we're part what move of a inventory. sure out going not inventory digestion need And where doing is that are also carrying making are channels market. we we the that So

down, to And to so want we we you add are definitely more that. depletion. can Jack, managing that maybe see And,

as we to working are think making our prepared out going remarks, we're closely some there. understand had in things and the I sure monitor in discussed channel, where of what's we

brought back when have. center look year. support And continue regard the also on inventory to will continuing past and is quarter, inventory, I associated somewhat that. are that board that with you over that to we've described past We uptick, our some we we've the have we're think positive purchase to notably the had backlog some monitor of uptick over But the most backlog, MACOM's some But acquisitions that that trends of data encouraging. seen we the with to I

the the here, thanks. in about just if could if just hoping through [ph] environment. software restrain Jack, demand -- thoughts development give what's the on the or extent appropriate. us and model efforts And growth modeling the and flexibility of of you've little you're And past, talked Great in kind you a side. terms more And you

Yes.

the in seen over the years past with few light fair pleased margin business, past the been standpoint. amount of we've of slowdown a We've manage to improvements made performance the gross the gross an margin couple over quarters. we've changes of overall that the business from So to structural of the

So in house, we some others third-party. products internal described fabs had being manufactured to do of our that go have I the the flexible model, as in manufacturing and with

costs of some a us in them So able of mitigate being have that terms to helps with being portion variable. that the essentially of that we

to I have. generally is fabs And our carry same would then of large overheads volume, we the think manufacturing that like mega fabs like some other I piece internal don't the medium the highlight are

improving a higher in to were be think gross protect where future, that And we we I revenue forward. us then we there run into and overall margins may some out from as that of support the get that the periods will So rates hopefully perspective, as to as look slowdown. helps back at we an go

Needham. of And you. the coming from with Bolton question line Thank Quinn our next

is line Your open.

you a take clarification Is that off are or just copper optical entirely Hey, cables business? almost starting quick active the see on starting applications, XXX, to to XXX that speed copper gig. within higher PAMX

both. Obviously,

can lithium-ion whole solution, also film those which chip. within the of thing DML, four achieve can sort the on know, photonic I'll a you XXX. benefit of of And the a use of a XXX it's or approach some a EML, is And whether other lanes silicon our with work single thin is chips architectures of two it based [ph] are And whether module, of to variety really and it's linear base. driver

those technology that. vendor support I module So wants use, we can whatever [indiscernible] if the didn't mention including to well, and as

MACOM's So point very, from view. very of flexible technology

like that but one that X, on follow-up it's you linear It Ethernet like the effectively it's vendor, InfiniBand mostly channel, in market. I sounds And drive. think, Tomahawk the close more dominates much a have your around comments, seems

do seemed drive Market? of me in that the significant in you InfiniBand InfiniBand linear adoption the are it Where could So drive. we think opportunity linear be for pretty to a

-- So serve we, as a we that both can fact, I And solution would sides in at think we agree using demonstrated application I both InfiniBand a protocols. OFC. or

we well. that yes, supporting So are as

line of next our question Craig-Hallum. Richard And you. the Thank coming from with Shannon

open. Your line is

on follow-up responses to question on an for earlier questions. Hi, taking guys. Steve, I GaN. to Thanks my want the

help and a opportunity mentioned for you quantify that for as -- great think in 'XX. the I you your can year? dynamics maybe fiscal even Maybe see those you're what you expecting understand in us year that

selling we're sort grade we now as of the it. and I'll And process, develop Sure. define

So XXXX. that we'll start selling it in

micron getting design starting .XX to we see growth zero process. fiscal at we And for and that So we're in our year. are expect wins

right our -- now definition our that's So that's that's win. grade, of a

development engineers happen. that fab And excited our sales our so business our team, make team, to are

our haven't vehicle fine haven't We But at for number goals, externally. just another that and as a premature that. to shared look it's on we And that growth. the put goal, do think internal I we

my things we We're for U.S major performance full next of in process the the that including regarding improve prepared as novel steps here generation have. some to in use R&D, have sort OEMs want remarks, mentioned on technology. support We I bringing to beyond currently the doing what

And year be so year certainly think for GaN. great will a next we

or seeing. side, Center Okay, it's seems about here. just discussion, you analogue are like all perfect. coming I with oriented. last all to is Thanks had question the what analogue thinking want I you that's on want just on for great last -- think Can verify Data said, is upside few Obviously here you're verify what that I seeing you're to any on for and laser seeing but upside detail the your you lasers? quarters you're some portfolio, confirm me

products we side, our where design from ends than I I 'XX lower is and and our analogue would revenue fiscal characterize expected. would lots the building coming say a true, optical the for as it's of had growth year

disappointment. a So that's been

working at making And that in of but is -- accounts interest progress the and have team a arrays new those winning in However, laser we're are here categories, the on lot only that. EMLs on China. not we wins, design also U.S., including also

point, year, So this Center for driven yes, solutions. is --- by Data the this growth for but to the your analogue quarter in

further for queue in to call closing And over questions remarks. any the back Mr. this I'm Steve time. to showing any Daly turn the I like you. not would now Thank at

Thank hard I day. a their you. our like would work dedication. closing, for Have In and team thank nice to continued

you for your and that today. does participation. gentlemen, Ladies conclude our for Thank conference

may You now disconnect.