Coherent (COHR) 10 Aug 212021 Q4 Earnings call transcript

Good day and thank you for standing by. Welcome to the II-VI Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. to Chief conference Financial like Jane to now II-VI Raymond, Officer. would hand over the Mary I Please go ahead.

II-VI our Thank you, fourth today Chief at on the Mary quarter Jane Welcome Regina, and XXXX. good Financial morning. of fiscal the Officer With for call call today earnings I’m year and Raymond, Incorporated. the Basha. President to me Dr. Chief Strategy our call Dr. Mattera, of Compound recorded August are the Barbarossa, on Chuck Bob our XX, Giovanni Chief our Semiconductor being is XXXX. segment; and This Executive the President, Officer; Tuesday, Officer here

Our of press our the presentation investor tab on ii-vi.com. are available release and website, Relations the Investor updated

the Statements may possibly They any events as only. any subsequent to during risk context are by statements reminder, subject Just except update to in required do reflect and We make obligation change, of we law. to a to are subject these as various today this Forward-Looking undertake today not factors materially. given teleconference today, are to

Form XXXX known the be August material for found for on our the be in risk filings together and can XXth. year to or our factors XX-K with SEC the of XX, fiscal subsequent ended Form with is June year expected list XXXX, about XX-K filed Our

means Act buy by do United States securities. except No the an remarks as the securities of of a offer to be Section constitute XXXX amended. an the not requirements made offer any of Our solicitation offering today to prospectus Securities sell of XX or shall meeting of of

are Chuck. at document the some that Mattera. let today’s also the reconciliations end to With it to those will presentation. turn or to such that investor respect the measures includes present over with each as non-GAAP press the measures Finally, me we Chuck of for Dr. which found release GAAP call,

in Mary Thanks, and for all interest today for Thank us your II-VI. you Jane. joining

focused remain to employee us, of clearly ensure surge COVID fourth on the and the workplace upon we With safety. basics

averted got chain the again, fiscal Indeed, the impact quarter, supply and and During quarter great protracted of year. our our great again chain Once things and teams supply a employees happened a made job done. collaborated a delivered we potential and operations issues.

we at each the turning, the be with excitement photonics to that competencies of and for individually Since I sense their During core ingredients we for met elaborate strong XX and the and agreement will They about Coherent. long-term and technology. call, start. their impressed excitement world have deeply innovation to our to great today’s laser started industries. of contributions year I’m by on making signed similar flywheels overcome are our last with had the of senior long-standing merger the challenges Coherent leaders Their the ingredients over and respect II-VI, continue to great orientation to of transform opportunities the with successive a team the generation around opportunities.

passing another the pandemic. having despite XXth fiscal those challenges, XXXX, billion a in operating mark, after one accomplishment Only achieved amazing with the During we revenue. $X anniversary $X during operating the important founding celebrated our and passed we milestone year associated since billion an year including

exited income fiscal grew XX% and a just and XXXX $X.XX year XXXX both backlog. net our revenues over billion we with Our non-GAAP over year record fiscal

global a improvements to on footprint, approach acquired ability our and large technology, customer and a to the is our around endowment market-focused at scale, of agility developed to strategy, talent. testament focus growth productivity our Our a our diversified our operate disciplined intimacy,

the of carbide Now a market. silicon our opportunity turning of last a to from last summary and the view year in quarter long-term

transportation of scale our infrastructure. the of enable substrates, carbide devices the silicon to acceleration the the announce to manufacturing acceleration and global modules our excited are the investments the We to plan year electrification of to capital, on the $XXX continue to increase in the fiscal million grow level. investments XXXX, foundation to In to which to lay and we to business about R&D next our of

anticipate gap carbide investing generation X% less important in Jane wide-band business, our of are are revenue X Mary to R&D execute, fabricated combined to around of X% transformations and Accordingly, with a will of for revenue turn our the next silicon the with walk of carbide today materials growth the of industry Compound a largest well investments than XX-years. semiconductors investments this the businesses to from the Barbarossa, become attractive and Semiconductor become with will allow positioned believe that, quarter. to billion in details is silicon President Dr. underpin position the dynamics. establish one years. Our Strategy And of the to Bob Giovanni, and our Giovanni us of Giovanni. opportunities, ability Chief X% long-term. company to planning decade targeted We our which large is inside few market grow will over it as through Officer we our incremental I $X that about We leadership including to next over number and sector. planning

continued upgrades. center road a QX and of regulators. and Despite strong challenges past grew posted the faced acquired quarter. The growth, These XXXG for products our functionalities proposition automotive, where annual module markets. more to one-year photodiodes, including markets, achieve momentum datacom, under growth just we systems Chuck. during in year all exciting driver co-packaging. our sales, innovation doubling XX-months, electronics us, multiple in share for to sequentially, or metal market and multi-junction value In sequentially the hyperscale and having in XX% end growth as and the our a U.S. monitoring an communications market driver safety continue strong VCSELs, experienced bookings This new us accelerate with by and was about are increasingly the gain X% XXXG in by penetration driven occupancy highest recommended transportation in XX% plan. of provide wafer-scale XD you, data ahead FY delivering Thank in map, and modules will compelling XXXX including than European all allowed lenses Sensing to we which of will journey

second As us to benefit cycle the be transceivers demand next have We required XX.X supercycle and we the next-generation competitive and will and can sustain XXXG XX.X we OFC of decades continue five-years. for those switches, the strong our to transceivers terabit for expect complex we to respectively. higher been unfolds, XXXX, investments XXXG the subsystems. super remain optoelectronic believe for speed for At investing and per demonstrated

products terabit development contribute operating breakthrough are rely we to second standards, per we engaged customers of with line a increase which QX we older our revenue. were record for IC to X% all shortages per for laser transceivers, for in technologies road overcome a XXX bookings The at to X.X and standard and While and capable critical already strategic sequential QX line post cards semiconductor modules on datacom reaches. during industry for continue the of were

COX pump revenue. QX revenue also laser FY XX% lasers resilience industrial Our fiber the growing strategy, sales our XX% components. prior record consolidated Demonstrating Growth of for our record hit accounted diversification telecom in for XXXX. by in both year over and and laser high the quarterly our experienced strong an businesses in Magnit was of all-time optics

our with The business with backlog holds market entire enabled levels. began by the laser a industrial Coherent XX-year the of in our we June for the the And collaboration platform lasers highest our in factors, global growth and record to Our of a history. industrial aftermarket revenue posted industrial record pre-COVID of presently number of bookings back month the including that in competitiveness recovery optics, December XXXX. market, was leader in semiconductor six-inch

partnership together processing provide of Two mode lasers with batteries state-of-the-art with products electric that markets, adjustable their Our fiber performance core for Coherent remote best-in-class for vehicles. our laser heads. ring welding

have, of global shortages lines our record While business. a on growth product capital some become for of and constraining the multiyear been hand tailwind the IC our equipment semiconductor other they have

super catch to visibility, and in next water fab for is investments in substantial capacity. a premiums price the our fiber We healthy few secure capacity. our or bookings markets and customers and developments. semi our us witnessed to wafer new cap a increased quarter. recently of fab supply the to of support by grew on-shoring This years to demand build-out accelerate to XXXX beyond of in a XX% ceramic-based capacity with driven capacity and enable demand the products metal with super offering and this we sequentially Our strong our up product revenue cycle market multiyear investments with increased corresponding composite help sustained With year fiscal forecast over expectation in

for We expect the significantly market few our to to next years. growth this contribute

investments to And supporting so our R&D in capacity. committed continued and we through are customers

market demand moderating the revenue down growth about and FY in Aerospace and despite the in annual Defense, QX, backdrop in in of with market. Our record XX% hit a XXXX

With demand the components systems increasing. we for to address new be defense emerging threats for will the that budget, expect new

mind Regarding cost, our expand and in tripitaxel in devices reliability XXXX forward product joined what FY the Any it, share our substrates, as soon performance we over Coherent at we start was chips, investing that, Bob. yet in it look and way expect ultimately, to by are and to competitive to We week to over the take an next just as few XXXX believing that FY were our be from modules we XX-years the meaningful a is amazing turn silicon come. next colleagues of a me capacity, years. products carbide, introducing is let expand come by With wafers look that while to like year. to market our we offering Bob? best to to

supply give Giovanni. our you, Coherent on management, plan. protocols, update short facilities integration a our will planning chain Thank and you I COVID

of continued our maintaining all all teams, Among and the protocols worldwide that since to social in are safety and of vigilance Our our operations protocols regular corporate of great doing our on-site beginning we in many have pandemic employees. their pandemic, of wear have visitors of business our employees. employees of maintain a place in facilities PCR our job global and and all safety masks employees had leadership and our the all require response of worldwide. all and we and antigen We the testing distancing cleaning we ensuring

leaders at that and to response site facilities corporate need. our facilities XX-plus of they and our teams have of pandemic weekly and meet worldwide resources with all all pandemic provide at Our regularly people meet ensure worldwide offer local guidance response information, that the our teams least our

our the effort that an all-hands-on-deck administrative overcame locations part We staff world, strategic dynamics operational secure our plants an effects and have us fair during to while we of closely healthcare of are all regularly in to some as are of with we remain effort terrible as worked this being and daunting consult the suppliers. challenges very could $XX current because the all chain our in are at have fully of still operating our our we shortages who to home. QX, Supply in affected in remain working of understand share disease, Thanks retained with professionals as essential, also managed revenue most much considered associated have estimates. by XX/X capacity with our million suppliers, from

customer challenge. many a been many strategic of development our requirements good to lay we have whom We the of and years together of anticipation suppliers current to in for the in our January brought actually out contributed

in could to confront in the experiencing addition XXXX. impact capacity, our in isolation and Vietnam carbide the for are supply With extended respect QX an and operations our to additional ability produce, than we about COVID components million quarantine our chain electronics have Besides on the fourth particularly quarter business. per to surge, FY near-term actively footprint Philippines, accommodate which, absorbing supply are and we an silicon periods, baseline among forecasted potential evaluating initiatives, growth the Malaysia our including global constraints of our impact freight. growth, to in on expected costs other production chain As the $X have we challenges been Asia, our

and position of integration, basis second costs XX% achieve we end Finisar anticipated less year on from annualized top-line $XXX Finisar cost sooner growth, than margins As the investment achieved advance of we of at an year them. the to delivered the our synergies the and than half of expense planned a million stand-alone approach the

expired, has filings our We which regulatory U.S. the we process, acquisition regulatory to Coherent of With planning are already are our period with to and earnest. as excited antitrust waiting in in applicable having submitted apply for the now the to workers the been to respect all turn the has assigned countries, required in commenced all. case playbook other

processes constructive to we and expect our been of an in have the manner. conclude typical information experience Our exchanges of orderly

This current of quarter as their understanding will on calendar to calendar view closing XXXX the is of and quarter our opposed current lines. based of the year year XXXX. Our agency’s the fourth during fiscal caseloads that better be first a is time

have and top The leaders We integration our companies also planning. have U.S.-based synergy meeting. been from begun both

We other’s events networking we have we are months. jobs, With the Jane. next that learned Asia Jane. Europe over it turn promise excited in and in will and this realize. the a for Mary and Coherent, planning I about that, conduct each similar lot Mary II-VI to combination Throughout will few to are

Thank you, morning. Bob, and good

a you customers our of underlying driver our the of who all, thank II-VI all First is to sincere of growth. pay the

your support to honored are We goals. strategic

of X% rest in as the North follows: revenue and XX% XX% QX China, in in Europe, XX% world. X% in million Our geographically the in Japan was America, was $XXX distributed

America, full-year, market. of In life in the the and market semiconductor and for the and X% sciences automotive, is consumer Europe, was china, end Japan including capital distribution other in XX% North in the For industrial, in world. X% revenue XX% X% remainder for end X% in the XX% Communications, XX% rest XX% was aerospace equipment, defense, X% in distribution quarter, geographic

costs lost pressure gross non-GAAP million achieved and ahead in well operating before margin put of margin incurred non-GAAP and the total million XX.X% which on remained these the and the and non-GAAP. II-VI operating right was margin acquisition $X work downward We margin in This the margins The non-GAAP and XX.X%. the quarter. time the non-GAAP of overtime is of Our was the closed. Finisar margin the of COVID quarter, collectively, operating gross expenses includes $X in included gross

with to freight shortages, including We non-GAAP chain is our unusual the course. ordinary the driven in and in also operating mix increases were million for strong capacity price incurred deal expedited included $X.X margins of non-GAAP costs utilization. At This quarter, optimized and XX.X% the $X.X adjustments. the by costs for million supply above last segment compounded margins semiconductors. were to level, compound Photonics XX.X% Similar a and

XX-months. backlog Our backlog the semiconductors. for for compound of and will consists of over million orders next of ship record $X.XX $XXX $XXX The that billion Photonics million consists

XX-months were We are QX. a as of to to have, many orders million course, consider cycle. expenses, in capacity which beyond SG&A attempt that plus be operating customers many what super extend R&D, $XXX for secure GAAP

OpEx the tax of and reversal to $XX of non-GAAP OpEx of XXX to $XX The amortization, accelerated of improvements million XXX achievement and Excluding for Finisar XX% it and in integration just EPS including million II-VI our synergies, million stock count and $XXX of is areas $XX the GAAP revenue close excluding results share million when positive of amortization, was stock of shares. or after productivity of These million percent driven basis manufacturing GAAP including transaction M&A comp for moving by improvements total, nearly with non-GAAP comp $X.XX costs the of lower prior cost XX% and combined, the million investment acquisition and and points the was $X.XX diluted was below was revenue of operation. non-GAAP $XX are Quarterly gains. adjustments EPS costs.

quarter, in non-GAAP [$X results, EPS are For COGS] GAAP million billion release. OpEx. tables was $XX press the $XX million was Stock share for (Ph) diluted XXX shares. and our count last and of the the in comp non-GAAP two The in million calculations

paid position the be interest QX We million. million expect million. of is in quarter our net down $XXX quarter our million. $XXX was The Cash $XX free stock and debt flow flow operations $XX in comp was million expense and cash in $XX was cash $XX from for the QX to million. We

was operations cash expenditures million. were DSO XXth $XXX full-year, Capital million. was from was XX-days, June flow Free at flow the was For the cash liquidity this $XXX and million. $XX company’s quarter billion. $X

For the million. was CapEx $XXX year,

year fiscal between be For $XXX expect we million. XXXX, $XXX and CapEx million to

in of investment a equity sale of investment, the a our compensation million took to Depreciation and million and around investment stock earnings and tax renewed status $XX management The we due of rate the in expect about on to $XX our $X.X decade one another forward favorable and depreciation the in million gain the the to $XX a As quarter position expense $X.X equity and part a million exercises. on effective lower a a to gain of in of an world be million income mix the countries, benefits of million, quarter. FX The relates company the primarily was increased reported the was China. strategic ongoing quarter ago. $X the GILTI XX% this to a due in we portfolio, gain of portion Sweden driven high-tech the of RMB. franc $X.X over by minority loss IPO several of million Swiss was

We XX% stock B be the expect Series deducted is for and in Finisar. preferred year between our manner XX% A issuance, and $XX that in recorded cost costs million $X.X With and largely dividend preferred from will had a net the in We tax Series income stock. Coherent $XX dividend QX respect deducted rate the for to that other M&A, we for million be the same integration fiscal for million XXXX. to

the to year for outlook fiscal Turning XXXX. QX

$X.XX quarter million million earnings to ending Our outlook be September shares. to non-GAAP $XXX and $X.XX XXX for revenue a to for share on the at is and XX, million expected per at first fiscal XXXX, $XXX basis

available to stock B from be non-GAAP Series should at range rate This that million million and million above XX%. net our how rate arrive tax common the is for QX, to income EPS divide you of The income calculated shareholders, your anti-dilutive expect then carbide both Series by today’s the $XX expansion. A deduct EPS net is an calculated. so includes $XX of XXX For we This and to at shares the preferred exchange arrive estimated also range non-GAAP is to investment up EPS. at to silicon

all For shares rate, amortization, to change. of integration count $XX million GAAP amount the is per to add exchange the amounts and in actual XXX comp the earnings and rate back XXX million pretax The estimated million share non-GAAP. costs. subject share transaction and count non-GAAP we shares the in million share, $XX dollar in The QX GAAP $XX of million items, non-GAAP are and million to tax for the for stock earnings $XX

Before to competition, reminder, changes just questions customer limit orders, today We from the limited one shortages, to chain supply ask Q&A, firm in downstream, general may as also question that both get everyone due to regulation, each variety no a we which upstream to, mix, go product contain as to and would in to we ongoing and differ virus try forecasts COVID-XX answers call. this would results factors, a combat like but our our its requirements not may including, during economic to actual of conditions. with follow-up

to this for line Regina, XX:XX open questions. We than you not the end call, may later a.m. expect

will Instructions] come the question Cowen. [Operator from ahead. first Silverstein Please Our line go of Paul with

you Thanks on marketplace. concerns given insight looking give some some us guys. are China you the in seeing more there quarter, was the in out during importantly, I hoping could what forward,

was, in your like in us light insight part was, second China? you the we -. Paul, have on are in particular, you seeing what question of give to would And some

of peers. by There some concerns the market risk of your been have

Yes.

for thanks question. Giovanni your This is Paul, here. So

has you So particularly us, speaking, industrial, China to. is But a generally industrial. the strong for what referring if let me comment that market on been are

on seen record an customers been all believe gaining really commentary, and my We ways they in in the fiber from of has optics pumps. the as the very pretty explained strong demand. are I our world many have numbers there market the much for lease as share We example,

we have been those so benefiting from taking And customers share.

been very us. China so has And strong for

in But the course, virus forward, for evolution fiber have about of components slowdown some like moving not for their uncertainty everywhere particularly we is far else. Now lasers. the seen of any so demand there

are with the demand you optics business And I in been expecting in pickup now the China? your XG guys, having side, a assume awards made on in or comms

Yes. Likewise. Yes, absolutely.

similar. very So

you. Thank

line Your next Capital. question will of come the from Baruah Ananda with Loop

business appreciate little some the quarter. end related, quarter, Congrats expected. guys. the a execution question. sooner there pickup next into bit shows appreciate than is what markets of in this your momentum be on guys taking core you September go the this so, like strong as might And those that I it. I head just that core Is general see and in six-months I And here? quarter you mean, really a it of somewhat view through do Hi as good we year? guess, drivers I key we the if the accurate? Thanks. as feels

Ananda. Thanks

So world, unfolding in XXX we even there and as particularly cycle my explained are in the transceivers. is about I to America definitely X.X second with North next-generation XXX, the upgrades a which commentary super per participating, for across XXX, terabits

So the that will The next five-years. time. at quite least demand a long for continue cycle continue for will

have seen driven modules. I lasers laser power components, coming back think our adoption same strong, fiber devices abide electronics pretty we pickup and silicon particularly industrial again, vehicles, in in demand general by for a electric and is

to the emerging that designs, increase, prepared But remarks, for Also, new of mentioned there that threat. an the that despite see. the And to in flat nevertheless, in be new demand is think so think those strongest I almost as defense in are we going think is we the kind products I be going for we year-over-year. budget

will we too. so that to growth in demand, And participate

XX-days you demand a Giovanni, you been backdrop it today have maybe than thought - like stronger ago? are it seeing bit is would little

we need I’m move But Yes. to you. to next analyst. the sorry, Thank

you. Thank

& Company. Needham from Your Rashidi of next question will line Jim come the with

Thank you.

your some you if us the in chain component sense QX overcame by impacted your have if would heard revenue for had that issues is of you headwind what million. you guidance, revenue with to I’m there the as give in have some opening components are revenues it presentation of not can been to of I $XX any wondering that you think of the and to I about assuming and fiscal what for able supply respect component ship constraints? constraints terms type been might

say that in fourth are quantum were the So quarter. QX looking we we same guidance, I in the first quarter looking probably at at for the that would

said, to is $XX answer. And I that a think the So hand-to-hand million as there. much overcoming day-to-day already combat, pretty one and secondly, thing has demand Bob is certainly,

You have book-to-bill. can see Would on really in you this, that a view the Bob?

No, Jane. really nice of the completely, of I Mary integrated ICs come really and constraints. requirements. lot chain a agree A with challenges supply a IC supply chain circuit outside nice from the has supply job And the getting done real team our job chain

So I agree completely.

fiscal see you the supply balance of over from standpoint as the Do you look any chain? XXXX improvement out of

I’m sorry...

Jim, your see we the do challenges any supply operation chain of forward? question was,

see improvement? Yes. Do any you

long-term And is and Jim, only the have you, challenge - Jim. our have it it This to Yes. view. of we we affecting long-term we actions take don’t is crystal it ball, customers. course, that have have is with Chuck. associated we Thank with affecting but a us view, a consistent it is not

We the single to have day. the done place a and to be job this and we trying in execute at plans backup that keep has are end day, is every that of

be is And at like the will so is to it exactly when. anybody eventually able out. that I’m optimistic looking But call going to it clear not moment,

Okay. Thanks very much.

problem. Sure. No

try can back we to Just jump the feel follow-ups, to round, second I’m in but probably line. have but ask would a board, do call, leader this, and our everyone have free on happy sorry get to. for And can’t to we if just to be we you

next from question will John with of Your line come the Stifel. Marchetti

the ask, Jane, you but in just the that a margin help are lower guidance, wanted what have remarks. fiscal terms the to of Mary the we we us share of got XQ revenue ranges, much. we about the EPS We terms look understand when got essentially in referenced at just I thinking and/or flattish. very of prepared of count. Thanks in higher midpoint gross on down some you Can OpEx

Sure.

historically all, good to by of midpoint largest being the little largest mile. newer first fact John, QX and QX. company, flat been So that a a quarter would our has our to be the

had have strong historically, So we markets. QX in very even down

was XXXX and QX. XXXX, in XXXX, QX years the on So of down prior those

So with will range, And of probably roughly did not first the the for silicon described, to very about spent $XX be as on non-GAAP holding midpoint respect we investments is very, that revenue the then take guidance, out in of all, million of the carbide. well. the we

if you it So the $X.XX, of effect that tax is it, and $X.XX. do neighborhood in

what really to have well expect, So try the look to chain continue forward. that has at as COVID. going investment. dealing said, as with major battle QX as when Bob is the do But already the And to major and to we as as difference midpoint delivered supply storages we difference well in you cost was silicon carbide

Thanks Okay.

Sure.

Company. come Mark with Benchmark Miller of from the will the Your next line question

very What What pricing sales. results. XXX, had say that improvement market? in about, you can pricing gig record your strong demand? XXX on strong with you about that the transceiver Congratulations Is

But pricing seeing really we typical are for Pricing XX-years. market the high-end focus the on we is communication try past to products. the

focusing on power high we the over IP so on For two, layer doing enuphosphide is DWDM. And eliminate, can that entire for example, enabled by format, our are we the ZR version, basically technology. example,

end So market average, can high still better we lower and than by pricing. time best would the market, are margins the we so But unchanged, on much pressure. of the reduction do trying to the over say. as those ASP said, dynamic focus I I offer faction is forth the that focusing on But pretty of and segment

will next come question Hallum. Shannon from Your Craig the line of with Richard

question Chuck my either carbide for taking Giovanni Hi here. A on guys, or question. thanks for silicon

like in have already looks a listed talked this for here. what years some out You silicon have carbide, you strong investment where about market pretty increased

Thanks. is built you you what here. the product decreased already what amount technology stack investment of internal can this top up are level Maybe talk capability Has investment? making characterize characterize milestones a you or conversations You with put of increased in why customers a improvements is have one. been on been an et of just about strong driven across you and cetera. Can in to

the actually, those time, and apparent it for well next is my announced coming Yes, this point XX-months our of confidence we Richard. that market. a inside and in in in all to the very in have the and last our investments the carbide is that in be need five-years as of with At I acceleration in lead would recently positioned, the combined remarks, we things quality like to silicon demand Thanks, material. this said here the

be And so we couldn’t are us. it for exciting and more stepping it up

Okay.

will question from Tom come Davidson. next with of the D.A. Diffely Your line

On look the increasing a investment space silicon those going the from projected next be the or picture the on in R&D you your carbide it pieces? the different billion same lines, main is to of to point productization when is more focus capacity be $X going at view, on big of XX-years, over

Both, Tom. Tom. Thanks for your question,

over The do to X to both. have We XX-years to next the exponentially. are grow demands going

be need that to needs and all what need than to a in get In get substrate that the as get the scale. are the what need the will need to the capacity to to have market we we place okay. been technology device silicon to for and we and but we also get in place making investment platform position for module well, to we we doing, so to in to have able and carbide larger be a need even process need We meanwhile, what we we it planning in We that qualified the organized. And technology be get scale everything place. the

than need I would R&D, leaves perfectly it them. of correct balance $X probably say is billion, more to Chuck we in the capital that both on but

Chris the from will next with come of Susquehanna. Rolland Your line question

Hey guys, for the thanks question.

it guys can that guys the there, more half for but had consumer, doubling move into your us you then the as you some calendar little color was the bit perhaps great on year? trends Regarding year expectations give a and back we of near-term

Giovanni. is This thanks. Thanks your Chris, for Hey question.

are some market. in we add new expect expect selling. to we wins also the design wins we And up So seasonality materialize typical the design will currently that to

of they in that mentioned improvements for like sure, curve as my be I haring the be market And diver so pressure in And that as close prepared that I will as to improvements. combination experience us. I a are overtime, overtime, think well design will price expect on a a remarks, continue for typically,

seasonality year So calendar of the continue we second to - grow half experience in year, the will and year-over-year. will trend the of typical then will the

in So parts forth. support of that and so lenses, a modules lasers, market as our out meta leadership number drivers, of the

Your line next Chatterjee question Samik from comes of with JPMorgan. the

had I morning. for a good Jane. Mary one Hi quick

about the the As for quarter. comments thanks investment incremental first your in

to acquired investments here, on can as you give progression as if incremental well. year offset start wondering of about think can you investments margin in margin some incremental of Just as these magnitude progression if have also what the we fiscal levers drive us to would particularly on some XXXX direction the comment you you

Right.

round design about with down first respect for manufacturability XXXX, in that to $XXX that spoke Chuck million R&D, and balance okay. with breaks that is roundabout respect $XXX So of about to way all, million the the million. CapEx is fiscal to year of The particularly the

So of silicon investing one the segment, that to manifestation or things a have whether the for that in of With had et particularly growth fiscal for markets in many this consumer seen certainly, improvement in respect I cetera. overall, margin mean, carbide, of been through Giovanni’s the which we year long we is year. time, is XXXX, be

material businesses, those and So laser-based as businesses material accelerate through growth. growing

mix cover, margin. We air will see to better the speak. as so affects it gross better And

the maybe focus allows also any less I keep to so to growing focus company. has flattish, just that that that if to work revenue percent think a For on as sales, I on will will not sure, continue to results about for as relentless of is a decent little bit think don’t of that decreased increase G&A respect to speak, that and percent is with R&D overall as you deliver company particularly our ongoing This increasing, the G&A help OpEx, - sales. think the on the

from line Amanda Scarnati Citi. the come will of with Your next question

Hi.

a margins? Just it that it question does of Is how driver in and of control step-up somewhat what like be mix of a could or growing your scenario the follow-up is fixing and here some supply of margin more it the December these chain look of a sort on out are - accretion quarter bigger is issues margins?

make see difference. of the mix that of first you will across company. you a Well, you one so at you all, are six, year, a will And that might if profile the margins best continue seeing think at mix is here no look quarters much big mistake to whether mean the retains X help. a in look margins can margin into big that look as the industrial say makes the whole or makes we I the as that business nice it about certainly margin the very gross the at segment difference. oldest of in fact renaissance we I the

that very positive is thing. So a

So grow or additions mix. to laser any very drivers the using diodes materials of positive our are the

probably calculate. increased to chain are to With we driver on pricing What increased isn’t make. hands this things people shortages, functions long-term premium deck, other is margin. to the of largest easy potentially supply they to able coming that where customers, are work improvements estimate from been while to of easy that obviously other away those them as literal So the very all on take respect that freight or can are is the to out that calculate or commitments the

is as think being supply ship I So on and chain than eases to the just there more able focus product.

absolutely does that think help. I

efficiency. not speaking, mix probably and an We our operating the could cost. happening see down soon. that COVID I come will keep time employees generally anytime safe. over it But We Ultimately, really always to think easing of does is

line Your with James. come Leopold of question Raymond the from will Simon next

for taking Thanks question. the

I business portion want hyperscale get of a quantification just a from growing to hyperscale been nicely. getting of you your you. charges are compare Mary I like a would the have those. forma or clear does But you wasn’t doing. COVID question. clarification sounds the question around in if is I and revenue it bit that Just to very It ask related quick been little like to very, are year-ago? really excluded how to for and the highlighting you were expenses what pro Jane a get is to Thank some then just better the the you idea now of

of So and with so to million respect non-GAAP we $X COVID, it. about or million $X incurred we

So kind the respect to the the Giovanni? surge non-GAAP and was same quarter. is that the exact of to thing goal try of and it, we last With hyperscale, did

that meaning with all deal as Finisar mentioned kind ratio weighted and combination Yes. of think would I say is increasing, as result, the happen. past, pending, the in I a for customers combination the the the we to

on were kind we share back they are So because that. sideline, the and of of gaining

confidence mentioned particularly you of there that I them feel job say I is growing. that and hyperscale number but obviously, XX% I one the a But the telecom they good Now very is, the we balance say share, on would want close side of a the team, transceiver scale, a hyperscale of to to XX% is what as and depends I may say, case. are however high we define maybe or which high-end would in let’s fantastic datacom think is the have just doing business, or is there a think And as it I working products. definition overtime, the overtime. between the be together - company, earlier, communication of And gaining super

question next with of come Savageaux Tim from line Your Northland Capital will the Markets.

you fiscal of - seasonality a back bit, business has a Hi appreciating kind while you and good morning. the question about on QX seeing And sounds datacom and degree like growing some at sequential on well. the seasonality, I changed wanted just to historic guide uplift are as basis come your because comm in should that of tone be the should of standpoint it from be consumer. a least booking overall

of I look of of and kind we perhaps to guess and million seasonal kind that I a questions. are upside. $XX guide overcome would is Thanks. done industrial component it couple parts Should and quarter that have offsets the you historic to seasonality business in this you at in represent other to importantly, headwind more got the So of building as

guide the So the goes yes on guide, of the same revenue the question kind to with last obviously, because EPS range basis. right,

end or some be were be our by would that amount the top So guys, of I to at over-deliver would that work end the as imagine well. EPS we yes, the top of if excellent we at by

very our down it, is the still are little a probably calendar a end Second half QX down all, QX on and work of a you of year, But around with was colleagues a seasonal And had how all that consumer, of I quarter see correct step But are do downtick. at and we day, we the excellent that consumer pretty still the cut matter of the we the industrial. good that QX. generally, at of QX world. last top-line very, a looking there bit from are on it no second the you decent say of perspective to in think all a while our year, stronger

hope So answers your Tim. the that I of composite questions,

of line Your Instructions] from question with will Meta come next the [Operator Marshall Morgan Stanley.

as designed XD back product design Great, what XXXX, a drives Is gains? wins growth would is Thanks. there is commentary that that? to fiscal like expansion to And was year growth, your that know, of the Giovanni, it about helpful. on I talk sensing circle of customers just leading and you to tough kind outside thanks. just I market. parse be share wanted that Like in it ecosystem is factor that ecosystem, would if out, to what your lead the or obviously, within but lead just

single a the It for Yes, is Meta, not a combination. reason. Thanks, question. is there

And stabilize new gains sensing new there eventually wins. continue. in the over opportunities the as then, share time in-cabin said, then quarters. for is will automotive. next few It design I think I And will

remarks, factor, what is another did are offering there are expectation lasers that the I market filters, really optics an continue which is the IC only think from and my mentioned to which we over modules. which so increasing grow - is not fast. to past we time, there And that in in specific we drivers and will just I selling,

us grow expect So altogether, we is revenue to too. the addressable market and for the therefore, expanding

any further for to management the remarks. back will over turn now And I conference

for you talking and time of joined of much, look busy you, as earnings us to and is We very a on to who you forward you Regina, Thank with all here. know thank this season goes you today. we all

a much, very good and have you thank day. So

Ladies call. for concludes today’s joining. and gentlemen, that you Thank all

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