Semtech (SMTC) 29 Mar 232023 Q4 Earnings call transcript

Greetings. Welcome to Semtech Corporation's Conference Call to discuss the Fourth Quarter and Fiscal Year 2023 Financial Results. Speakers for today's call will be Mohan Maheswaran, Semtech's President and Chief Executive Officer; and Emeka Chukwu, Semtech's Executive Vice President and Chief Financial Officer. Please note, this conference call is being recorded. At this time all participants are in a listen-only mode, a question and answer session will follow the formal presentation.

the Anojja to Shah. turn of Vice now Relations, Investor will call Semtech's over President I Please begin.

today on Sherry. differ results our call and issued anticipated closed uncertainties unaudited results you, will materially results is Thank A that these could in was from after press include forward-looking and the the include semtech.com. that website to at our release statements announcing and statements. Today's available risks market actual cause

the of other discussion reports, statement these of detailed safe more review release the harbor the in please in our a risk press today's SEC. For filed with periodic included uncertainties, section most and recent factor

the comments only, call should information as made reminder, call today's facts of or a circumstances and are no today undertakes change. current update from As Semtech this on to obligation

such call, of comparable this refer will noted. non-GAAP During results financial GAAP references the press reconciliations the along to is in release. of why financial prepared non-GAAP management today's financial A all in measures unless most included such remarks our considers to with the financial non-GAAP otherwise discussion measures detailed measures measures, useful, to made team

Chukwu. the Finally, Sierra that, Semtech's today, remarks our will Semtech Emeka? it over inclusion we turn to Financial I'll for to Emeka Organic Wireless. Chief refer stand-alone use Officer, the prepared before with results phrase of And our to

$XXX.X delivered Organic net on million year Sierra $XXX.X These $XXX.X including for the Good everyone. year-over-year. XX. of we fiscal of afternoon, the In a sales revenue Anojja. acquisition Sierra was completed from you, and company down of Wireless revenue Thank $XX record 'XX and Fiscal X% million QX million, included million Semtech results Wireless. XX% January sequentially 'XX,

shipments of respectively. For into XX%, and and XX% North XX% represented revenue, Asia, Semtech America Europe QX Organic,

Americas, in While consumed over of that addresses and the of China, shipments XX% XX% fiscal balance and a world. estimate were our shift for the in approximately in we represents 'XX, in to the Europe distributors customers, our year rest XX% this the

our showing revenue diversify Our geographically efforts of success. signs are to

in see In PON-X revenue Sierra distribution expect North Tri-Edge, net while for our to XX% represented direct net China. the sales XX% company, LoRa. of especially a Europe basis, approximately We through for the On America we inclusion exposure of QX, to sales. go-forward and reduce and combined represented of

a Going more to have balanced addition due forward, the expect we of mix to Sierra.

our end for the business. at Looking Semtech markets Organic

of XX% up declined the over sequentially net revenues. total XX% net over XX% Our year X% XX% the market represented total for high-end and infrastructure sequentially and and industrial but represented of end XX% XX% consumer year-over-year net approximately fell we from revenue year, Net prior are XX% end represented market and of XX% and prior revenues. sequentially Revenues revenues. total the decreased

was net Approximately systems. X% consumer mobile to other attributable to XX% devices, revenues consumer of and attributable approximately high-end was

Our from POS markets, XX% approximately Semtech XX%, industrial coming end total infrastructure, the XX% and respectively. consumer Organic remains of with high-end POS balanced and

new a Wireless the mix in revenue, include and revenue With that LoRa portfolio, the end less a we consumer see of for segment of greater Sierra will IoT market. us addition will the

primarily was margin declined sequentially gross return combined of XX.X%, of data Semtech broad QX XX of margin record and non-GAAP protection fiscal center, In high-end automotive drove QX gross LoRa-enabled, Semtech, XXX basis PON, platforms by organic industrial end XX.X%, basis for our 'XX for revenue. consumer margin XX.X% market points. Organic for to drivers company. growth points mix up driven the the a gross

the With the of we midpoint to full average of QX at quarter guidance. our margin Sierra, gross expect XX.X%

achievement to we higher improvement and by synergies. of mix driven of Organic year, see a to expect XXX the Semtech point XXX of revenue margin basis in material remainder the cost For gross

long-term automotive margin base our platforms. broad sustained stations, achieve industrial to to optical passive growth and XG center, of networks, We wireless protection through: product target XX% of expect XX% data one, gross

accelerated revenue LoRa of services. Two, endpoint Sierra's deployment three, software And recurring from annual LoRa and cloud services connectivity, managed from connectivity. growth in improved cellular

full $XX In variable QX the expenses increase in Sierra and We In operating of for are $XX in expenses expenses new at approximately year. expense guidance, we reflecting successfully this Semtech of were compensation. the our other fiscal driven midpoint typical challenging is million managing expenses revenue and expect million, compensation by customary operating combined operating the to in a sequentially QX of XX% Organic a down environment. operating quarter QX, was million. reduction $XX the at start headcount 'XX, of

end We about expense operating of to the synergies million achieve now the by year. fiscal annualized $XX expect of

Organic X% for a with to of result, of a reflecting the Fiscal up the expenses operating gross delivered remainder down million, sequential million we to year, expect expected the profit and the expansion revenue record due expenses. the to flat Semtech company. slightly controlled operating prior versus profit on a As record the was 'XX $XXX.X of growth synergies. be for margin $XXX.X operating year, basis, achievement year a minimal combined

'XX will fiscal earnings. the 'XX While fiscal that off expect is demand accretive weak, Sierra year with anticipated our be second still recovery, acquisition half starting the year we to

LoRa of achieve business behind climate of target Sierra over execute the on improves margin we the long-term proliferation, and XX% our vision time, to XX%. as current addition, operating expect In endpoint driving acquisition the we to

company for revenue rate it non-GAAP normalized acquisition fiscal million the prior cash the Sierra. expenses in million decline primarily was to $XXX the expect compared the and same the tax XX%, Our in 'XX. fiscal $XXX 'XX combined XX% from the 'XX, associated we The to remain due In of fiscal was to is year. with or of flow operations

operations profits acquisition-related 'XX, and weak lower to be fiscal and flow expect For to the by demand pressured we from expenses cash due transaction environment.

a net times basis. on of the at leverage $X.X end or was debt billion Our fiscal 'XX X.X

environment. softer interest increase The covenants. agreement to our to we interest and negotiated approximately relaxation credit leverage is our get X.XX%. see currently We net rate some to as an weighted amendment expect We an to average expense through ratio ratio in coverage proactively navigate leverage demand this

As to priority cash pay be we main said before, down debt. for free have flow the will

year for We summary, a In 'XX change and delivered revenue has the fiscal Semtech. in operating history. record income and significant our acquisition of been year on largest closed

While 'XX, history. year very fiscal about opportunities I'm excited our moment in Semtech these at we have this challenges, at the

business we see run North Let revenue expect products One year. later importantly, drivers see wireless as of me center, our summarize become their the -- America more normalizes, I these but regain we PON, see in first, what more as for data balanced to growth environment regionally momentum this growth XG now.

Second, both much technology, synergies high-margin Sierra's margin gross LoRa growth. and driving new review, up cellular portfolio on expansion opportunities in EPS margins start and for have 'XX, capabilities, improved we LoRa we operating cloud executed fiscal and for combined revenues, we company. our increased expect year market technologies, open that And and the once with our seeing finally, we will

I to Mohan. the call over will now hand

accomplishments time. and journey Thank years this briefly The you, transformation to last afternoon, very to many proud the and growth Emeka. from an Good of been intention I'm everyone. I'd XX retire me, during Semtech of and our for incredible my comment have like Semtech. on

next As technology this company. appoint of the leader the highly of next phase approach growth, is this right we innovative the time to

was I a smooth acquisition largest CEO be adviser involved transition, and as the a To will continue appointed is needed. new This for period committed and an am to Sierra we of Wireless. until in On January Semtech's of the staying strategic a acquisition XX, to time history. most ensure closed

numbers 'XX Wireless. include Sierra 'XX Our XX FY QX days FY and of

posted will net of revenues In year discuss Organic non-GAAP 'XX, of performance fiscal million, 'XX In midpoint year non-GAAP outlook 'XX. were performance I QX of QX, fiscal our fiscal our and group, $XXX.X year of QX our and above XX.X% 'XX provide Organic Semtech product earnings contributed $X.XX. then now gross for our per million, year share margin of QX guidance. by $XXX.X diluted slightly fiscal the Semtech

the EPS per For company, $X.XX non-GAAP combined was share.

XX% China customer XX% declined. sequentially total was The and excess Signal by represented slowdown as revenue of QX and Integrity Group Product consumption FY driven 'XX, revenues. was economic In our of in the inventory down mostly decline

all Despite active activity for in all data station wireless with We base particularly and geographies center China modules new China from Tri-Edge copper the our across softer and weak. demand, in saw platforms design infrastructure see optical segments demand our we being and reduced Copper-Edge to continue both cables.

new interconnects within we selected last and enable their Tri-Edge has hyperscaler North lower multiyear a As a high-volume data in to program lower major centers. latency cost quarter, lower been power, American by mentioned

of earlier and Tri-Edge in goals power month, qualifications we data This PAMX The of first and enabled cost centers. production DSP by within Fiber well At on hyperscaler are XXX-gig half link, latest the a interconnects the expect with of major benefits platform 'XX. Conference focused Fiber-Edge their win, And we American ramps this the transmission XXX-gig optical Tri-Edge of latest lowering platform. progressing Broadcom's Palan is Semtech's demonstrated and FY hyperscalers, begin North the Optical second our to long-term align well.

us and full Clear-Edge re-drivers that enable including confident to portfolio nicely remain rapidly our We over CDRs, center next business of Fiber-Edge will the Tri-Edge grow years. data our Copper-Edge hyperscale and PMDs several platforms, data center

a our our saw in PON reached we business in decline record. revenue a business QX, overall PON While sequential XX-gig quarterly new

PON to as business outside PON drives years and grow increase China, grow continues Our global in demand our will PON an over the higher of global several confident we for remain access bandwidth next business deployments.

our platforms, current station in continued Clear-Edge deployments we in basis. business for with accelerate. expect our on beyond demonstrated a At and FY both haul PON both both both platforms we from optical system as and was front Revenue products modules base and Tri-Edge have despite sampling XG year-over-year design-ins XG numerous base throughout XX-gig and the sequential our a we station XX-gig 'XX wireless adoption of down and Again, and both now. QX, systems OFC, softness,

innovative with low and lower our products base and low for at PON segments. We’ve These power, recently our applications. leadership that advanced center, infrastructure several customers products PMD station new needed data and announced in cost provide latency platforms wireless targeted position the new CDR a extend

infrastructure our QX particularly all resulting in sub-segments. Product improved the bookings environment, sequentially, Signal across Integrity While demand weak China, in lower in macro is

significantly fiscal As 'XX. a Product result, Group QX revenues in down our of year expect to we Integrity be Signal

our Protection sensing our group. We and protection consumer Group. advanced shift and product and created into sensing high-end customers. product our to road a new protection to Sensing Protection for system merged Product In we Group sensing QX, made our proximity our maps this on Moving Product and align group Advanced

Consumer and demand and due and was decline PCs. including represented soft. consumer to Advanced QX ongoing net sequentially extremely revenue XX% Protection from from Group revenues. segment, for XX% Product and The smartphones, decreased weakness total Sensing the China our annually remains both wearables X% from Korea of and

from to relative where into We with Sensing sectors, automotive diversify call which telecommunications we automotive and and industrial our stability Advanced modest see growth continue the Protection business the ITA, broader market. we

addition, were now opportunity across will customers interface of new end high-speed business as proximity and integrate SAR In for China, for USB-C across segments. functions our smartphone markets, protection sensing increasing regulations all market sensing finally the their our sold increasing high-end into QX, design USB-C for proximity in position need growth phones In being China. protection to passed into the portfolio our as becomes ITA wins choice the consumer

protection to in the half of as the our both expect We market improves year overall businesses fiscal consumer second rebound sensing 'XX. and

remain remains very high. currently weak and demand consumer levels inventory our However,

As we be expect and in a QX. significantly down to Sensing Advanced result, our Protection business

IoT group. product our to Turning

newly group groups. business product Our sub IoT two has formed

business business group, IoT is business, is LoRa-enabled router Sierra's Semtech's of broadband IoT first which made This module product also system The Sierra's the module includes Sierra IoT the business business. and up business.

business. business connected business which is is and business a revenue connectivity our Services LoRa This services Cloud managed second business. IoT new includes Sierra's recurring business, Semtech's services The services

In revenues basis million, an $XX.X QX, sequentially Semtech on total XX% XX% and and total IoT annual revenues. were represented higher higher of XX%

year million drop Helium QX, due flat to significant revenues. material do revenues approximately our in from down of not softer revenues revenue. and included demand the XX% Wireless and more a In sequentially previous China LoRa-enabled We over IoT expect from Helium. were any Our $XX Sierra revenues

deployments. IoT many and The especially across to larger North in LPWAN starting where are see cases we America adoption of grow globally, LoRa continues to Europe use

devices. requests of in The more Some an Network has in X.X The exciting utility now tenders include announced it WAN-based LoRa seeing connected Industries Alliance LoRa X XXX announced all LoRaWAN Things systems achieved over Gas the issued Italy most certified similar and for gas million RFP announcements Ital WAN million WAN it recent world. meters, LoRa has the we're LoRa devices. for

deploy. tools Sidewalk announced and opening of AWS LoRaWAN commitment and Amazon technology developers Amazon make to they enabling LoRa network which approximately population. LoRa for with a LoRa device of Yesterday, their the the new both with coverage with in easier to community the plays now developers it XX% that critical U.S. new Sidewalk, Amazon are to covers expanding makers to and long-range services role

Roy, announced on now first based Cosmos the Device from New Browan, Meshify We are third-party available. Amazon products Sidewalk and

innovative Additionally, with have partnered industry on finally, Sidewalk as Sullivan technology for Global the developers IoT hardware development & And Amazon LoRa. based modules we the kits Company on Frost other of that new progress Semtech XXXX makers on to will LoRa devices. leaders based device Semtech's rapidly of enable Year and create and the recognized

together with clear market. of network on low a Wireless and technology entire in execute technology. our high-bandwidth industry power bringing the and by long-range that Semtech integrating of LoRa highly process leader ultra-low together opportunity the the The of latency technology, cellular can IoT we low-power fast-growing the benefits connectivity of as of so LoRa in the now Semtech is connectivity positions are IoT ultra-low the power benefits cellular vision strategic Sierra transforming We combination into

through to capability a of accelerate the unique goal transition deliver Our end-to-end deliver sensing service is their digital that customers deployment cloud-based networks helps enable as a AI simplification Everything. edge disruptive to IoT connectivity, Internet and

to our teams investments non-strategic and our identify leadership, unified new product under IoT assets. Our portfolio are we currently and are reviewing prioritize

headwinds, our on In revenues Semtech million. performance. $XXX Including comment a net Sierra year in XX.X%, record $XXX record XXXX lockdowns of of $XXX COVID softness this achieved also let income significant were million record revenue Organic consumer record of China, margins Wireless, fiscal year macroeconomic record me revenues and the ongoing FY Organic and 'XX, war achieved fiscal market. 'XX, in Now We global achieved in geopolitical million. $X.XX. in challenges In China, Ukraine Semtech gross EPS operating the amidst

'XX, FY record PON product business annually. by driven revenues FY 'XX, million, grew $XXX X% annually achieved revenues million, XX% SIP XX% our and record million, In In grew of prior Products grew our annually declined which XG year. group and $XX X% of revenues of over $XXX the which record Protection

approximately X% achieved and broader year-over-year. the revenues business protection However, ITA record of million $XX grew

a million. Sensing XX% In to business our organic FY and 'XX, Wireless grew achieve $XXX record

to grew also revenues LoRa-enabled Our year record a $XXX XX% million. for the achieve

number XXX to end deployed from business 'XX. to connected increased million number approximately of FY continued the solid which metrics from In LoRaWAN growth million established. LoRa million devices 'XX. on at 'XX, network of make XX% These up FY 'XX 'XX. grew reached 'XX LoRa gateways FY XXX FY the The end 'XX, FY have endpoints our at progress in in the XXX of of the LoRa to X.X we at X.X FY of metrics in XXX FY end included operators, the from million

increase industry large infrastructure cases the enable to gateways use the of is critical are this broad with LoRa in as emerging. delighted range are We that deployed globally

vision network continued represent and XXX be new from expect next node we end accelerate of new globally, we that completed in today. million is will with IoT LoRa integration rapidly devices years, three the Sierra, deployed With to over to expansion Once metrics growing end five that IoT the set have a now establishing place. the the of we deployments strategy

demand. outlook year and discuss Organic very demand me China mostly our due let quarter a Now weak of weak first to remains for The Semtech 'XX. fiscal the consumer

also both the addition, and pushouts macro in Europe, typically by seasonally the some being America Sierra impacted in in overall and Wireless is is negatively resulting North cancellations. which weaker weakness In demand, QX

we be QX from and and $XXX revenues a revenues million organic estimating million. currently of The from projected million $XXX includes net are As result, of between million Sierra to midpoint $XXX million approximately $XXX Wireless Semtech. $XXX approximately

at XX% the the we guidance turns our needed QX. range, orders attain To midpoint or million, approximately $XXX beginning of of

QX $X.XX and our share. $X.XX non-GAAP negative negative be per diluted expect to between We earnings

questions. hand be call I answer will back happy Operator? any and the operator, the to I will to now Emeka

Instructions]. [Operator

Roth is question from Scott Searle first Please proceed. Our with MKM.

go Good into bit but What million dive you specific to July for in start and a retirement questions. of you're I that Semtech of quickly is be the little not went about quarter. to dig the afternoon. I luck that tomorrow, look know much quarters? beyond being more Maybe into a road. best luck and expecting is of the you inventory I down April -- in Thanks Mohan, related? if off congratulations on just recovery you as we best know as taking going was categories, wondering last product of comment but to $XXX sort into should how could we the the deeply. Organic

OpEx around I as if now could, OpEx we the should wanted $XX million the moving $XX April to for of front, well, $XXX clarify to that's $XX sounds taking in million talked the it million also Emeka, million through be if in I about that get And on synergies quarter, to where you've $XX terms like million we of to million. out integrations? from those $XX as modeling Thanks. deal

Yes.

So start guidance question, let comment with the me Scott. QX

product across And would between weakness. something annual be consumer and Obviously, going probably down all China I businesses So seeing are areas, areas. are I and basis, mentioned an the say. are different of we two XX% on our to our XX%, greatest

specific but in a definitely consumer it's way. not pretty would I us say so big one And are area, impacting It's broad. China in

LoRa, Helium, specific also which down. also with have, come We has issue a

the do on it's it's I the But bottom. whole, some We there's So we're near broad. say, think specific there. things largely, would pretty

to little that understand bit is indicating start customer's consuming get starting I -- that a think consumption better. now to we increase seeing what to is is going The are bookings to that. that's important

seen But into half. second haven't be down, the as think that really issue. get is the yet. I And is expectation the We key. that that's comes as we demand going inventory to Obviously, our that really

we're seeing I and And infrastructure markets think the markets across consumer the inventory now.

So the solved. inventory until that absorbed, is will be market

half the we're weak. So be expecting first fairly to

And drive we that already this been actually synergies have the have the XX% that very far. achieved. the factors numbers. synergies. the job achieved have provided. million integration million we team has The been We've the I'll guided $XX identified we already the a about done the baked expectation toward able target we achieve of good that identified Scott, that of to synergies in the point, on QX Yes. probably so OpEx, that of would a the And lot that the estimate probably $XX At XXX% of and into midpoint by is

$XXX Got on on million out at inventory channel Sierra seem in well current they're it's guiding you're like if doesn't you. last performing could, I one Mohan, Wireless, seems this I And some the there, it that the But There been front. had to module quarter. it one, pretty onerous like point. actually if think,

start wondering, year? of look quarter, or to that as the next I'm achievable the $XXX something we Thanks. Sierra is where end this Wireless at calendar look to you year half, back to $XXX early into out a as So million million peaking was that's

Yes.

down my so, think Sierra I seasonally it's is commentary down. QX the I Even mentioned -- for them. business in on difficult. is Scott, the that Obviously,

expect. then we and cancellations pushouts And are as but -- mentioned. than weakness some a little some I more seeing we'd So bit

a XX%ish business So of their is even an annual basis. kind down on on

business down. Semtech as but So America Europe. primarily as the their and bad still not is And North business,

still across been if second we these that think have now, where stronger given of no time consumer. for I see be some at and But China, There's should hard look of markets think second come regional at these America half. expecting to them to infrastructure, yet. of to all sure. I would segments. bookings you some North Europe in segments, some soft terms yes, expect the But are especially one of should And then the I indication some back half for improvements like least start we other in And think

Great. Thank you.

next is Riley. B. with Our Please from Ellis question Craig proceed.

I'll you transition Yes, the been into working Mohan, taking thanks years. with the a the for pleasure on question. echo your over tremendous phase. a It's congratulations new

I wanted that up a point to Scott about. asked follow with

Semtech like the Integrity look I look the a digging that Just now. contribution not my we at of it would was guidance. If when since more have portfolio and the revenue seems $XXX in levels seen the at really it side 'XX Signal in different back the to have didn't does model, revenue fiscal lot we're that and the million timeframe

excess under seem because as question in like the feel that with you shipment for the work normalized quite you're the how you the be to long shipping is really extent would context to to through acute it demand what So current expect question, this, And to does under period do quarter? here that inventory? last

Craig. probably say would two I Yes, quarters,

As mentioned, that, if an and a obviously, business, as I of Signal Product you FY $XXX example Integrity look million. take 'XX record it at our was

rate now and rate. a XXX current the run on So run when look fast of we kind it's down, come we're how at

So China. of And that would suggest is it's that related I definitely and some down come significantly. inventory, to of is most

it's to as across mentioned, And some second that expecting But the specific ramps drivers the some in back. board. we half, bring and I are

is down. similarly consumer business Our

at our little XX% better. XX%. Europe would mostly It's North two say of least China consumer parts a the but to business down. board, industrial everything industrial are Our I is America similarly and culprits, down major are the across bit and

Got your question related it. script. to end your of of is second the then And some near the one comments

strategic as of hard be that One teams got that They're resources are things you prioritize to together. things is the opportunities and really around that at and you've integration, working are. the collaboratively looking things on not you'll mentioned

said, any not things that be on strategic? with of further may that you can So scope comment the

you solid we the cost Do should the there with versus we And million to -- that? remain opportunity deal? given does you today be look your deal, upside $XX feel at are the of Or is? we when like macro how global target where longer-term do savings sense where number a that in we are given the where from where were announced

at Well, us. I'll do businesses new mean of lot Semtech start with Sierra obviously, are fairly acquisition, now But think regularly we Sierra anyway. I the portfolio the it with review, the Craig. I a to

elements the the for really so six we make months from and Board engaged And of early though, are And that. portfolio kind of strategic are us that. decisions what started is what just It's I give at it which would in find on looking not. days we'll we really based here.

And then Emeka, do you want to talk about the synergies?

to mentioned Yes. like had synergies, the prepared million remarks, $XX With annual regards an Craig, about I estimated in we my on basis.

that million, $XX increased I that. we've and Now mentioned to number just

As the of of by million. of $XX rate do the would we And XXX% be have that XX% basis. now, we at we QX, expect, run of achieved on end about the

I’ll for back that guys. it. hop queue. Got in Thanks

with question Harsh Piper Please Sandler. next Our is proceed. Kumar from

Yes, China. Mohan, question I a on had

you're So in of reporting a position last quarter. fairly unique in

can things cannot. other times you about that talk companies that So

right drive China seeing. dire And on in Obviously, but kind any the China kind helpful? be what you're looks about I seeing curious now, back of curious what was optimism might was of pretty color that would just you everything coming your I So half. sound you're optimistic coming back. back

Yes.

China that seen here. you kind quarters. look of of I the We've at for when of weak pretty think and it's some several balance these some more harsh segments now regional

it seeing QX so us for think And and also QX in fiscal in we're QX. now I quarters certainly, our and

maybe one then way. is bottom. start or quarters close. the decline, say, going QX nearing three to to it QX sequential are I after would probably anticipates the And we of expect to that I other go So be

to to some fairly in in We're I also a some been I We're areas. China mentioned, upwards bit. activity are starting design-in that's little seeing -- as see mean, quiet trend starting bookings

so a just more right? that positive And a base, say though, coming things very are low looking I generally, off would little bit

maybe come negatives made us then Fair terms curious in in Wireless short to any else, you was on update mentioning? have like I progress time that you I could on already of worth strategically kind synergies And your enough, think positive mind anything on mean, of tremendous a products it seems Sierra or integration, frame. you guys are or that Mohan.

we're plans. process, days, Harsh. in Well, at in say it's process. I things did the kind and of kind would the integration teams the integration we together kind quickly can obviously fit the and and and philosophy of all the are do reason the of looking early we're deal there, and why also about now are just excited roadmap strategic But how that and Again very more the still planning getting longer-term the we're we it.

in of line kind really FY year. make getting nine just how it's out the and products really the to ourselves to position and how maybe quickly new maps and can portfolio strong kind of take things now And cleaned moving. capabilities 'XX in and some sure for bring the this question year, we I It's FY just of 'XX. of FY we the of customers 'XX new a of get engage we and is definitely say going road year to a be just a consolidation six for some quickly up months and can going us, would even a

Mohan. Thanks, Understood.

question Our Svanberg Please Stifel. proceed. from is with next Tore

question bit was hoping I to little the you. Thank China a ask differently.

I expected Just because mean weak, Mohan we I think but every it by to keeps so quarter. down it's now, would coming -- just see stabilization, have some

or So climate so of demand, think correction given here and so some forth? Or anything purely of the inventory just demand on political sort we destruction weak like of and is as this there that? an just element should

Yes.

in mean Tore. I latter, very center of more I the example, mean, it data for the is mean. weak. China you what it's can think on depends I that I business tell you

been Some of pushing China in have -- their players of data center that some demand. big the out

it's to deploy. know We want we they there. know So that

things supportive data the that still of well, large of of element I know center is like We But kind that. and is there the is really companies think government an government supportive.

a it's don't of believe demand. little So you a to think of what said, there's of reason that both loss any bit but I there's

back. And I that pushing out. will come anticipating will that, we're come more think Everything it's back.

When it Emeka. comes to That's margin. a question for fair. And gross

XXX a So quarter. points you mentioned basis

be later, And out? don't improvement eight First the in know, the anything coming would then there's XXX I comment comes mix that basis over share of to but as of kind as three six play of that linear far you assume your prepared remarks? three really that all, if mentioned I the next, with how quarters? margin you from gross do could the fairly point elements elements us

for to points. year, So XXX the expectation. still business, think this through is basis see as same of rebounding just Semtech come Most the the to expect Tore, through That rest XXX I go we the year, probably of year. to the going is for I Organic that

expect that a of half again through, inventory in the up level of made the probably of start the way will that to have ship would consumption. will to and lot start We the its second to year,

that We to synergies, demand that see how rose in, expansion the have the of a be driver we have some also this material should year. gross so cost but also identified, we'll margin have for

drivers gross reflective recovers definitely would made gross come the accretive basis. on current Organic in, of what probably think we more recovers and a business and to the as points that I three growth We I know market levels of the before are margins. Semtech Those very expect high margin. was be long-term the not those that the

customer the months sort proliferation Cloud more and so. also lower developing connectivity is with LoRa that everything from the seeing of we about two-year that. probably is product window the road the probably combination it The services mentioned, before managed out on of a getting like XX map then And development just and of and Mohan like business end and things probably start points, Sierra,

margin the So a of XX%. long-term gross for little level bit target probably XX% to the X drivers more was

will announced see range. time, years' low we deal, expect you years probably still five the making that the we towards end five believe we should When end case are the that that see much said probably from of the target to of low us closer be And is we now, progress range. that we that

Good.

and last Just Emeka. you, one one still for

a $XXX good it just number that breakeven Is is based expense, to P&L fair would to the of and use? say interest the be the around on point sort million. that So

number yes, I $XXX million, think, that about a million, to use. would be $XXX good yes,

Great. Thank you much. so

& is with question from Company. Our Quinn Bolton next Needham

Hey I the back to been also a both for to pleasure comment accretive. I of transaction congratulations Sierra guys. let your on Mohan, it's becoming Wireless your with you. wanted working say And about guess me come leadership. you,

billion million to the $X.X debt. of mid-XX% margin, look for accretion about the you that those million million right estimate the at $XX Sierra I and range. sort gross I in for to said million interest the math. half of some all to business of hit numbers wanted with $XX quick if in see of of expense probably using trying the low that somewhere And think the $XXX that $XXX do million I'm guess I'm like ballpark second feel level on start And Wireless to high me is sort accretive recovers. you at to quarterly of when It OpEx just probably revenue to Sierra year looks to as $XX just you the the I Wireless?

Quinn. Yes,

are accretive. all moving a of run to should being it, But million that synergies, lot parts there think $XXX quarterly size I'll cost the year, So start reductions, usually rate, of revenue this, probably this of that stuff. the about the

Got you, And -- you can it. Thank ahead. go then Emeka.

definitely So the in you ballpark. are

Is sure Mohan, if spend color this win you. an AI the it time to Thank seems first I'm able sounds obviously, And you cluster? Okay. in application. pretty on it's of the a North the more might to it Is be America. replacements? win of wondering module a NIC to sort then rec an application? top company. the much for but or Is how give, reach Tri-Edge discussing little congratulations not it switch long in be optical for longer important And America and you like important. short lasting win reach AOC replacement can I'm North

any I just Yes, short because can to when all you I they give awarded details. with because the they and don't I and team it's Quinn, tell any and you but us, give discussed out details was win, got reach. know the I details the negotiated we can't us want we

take should maybe in. is Okay. you deployment it of ramp third-party of I do last developers. those could announced think six might to Amazon will think that investors Sidewalk sneak network to How start take yesterday it the it to then sort end opening faster? nodes something Is third-party up long if And just longer, sort one, on see Sidewalk? Could months? of XX it

devices the have Sidewalk. question, a we Quinn. already customers kind who there good They've That's reason been working And Yes. beta the on already alpha, partners some products and already. out have kind with some sensing of of

few work press of general a I to the connectivity of, detection, and tied U.S. use coverage Amazon it is course, ecosystem of our tied to incredibly networks. build of them in now some to machine devices a can some just them the cases think XX% leak of release, broad Sidewalk. plethora Amazon insurance, a work and exciting, mentioned we around But okay, some actually and tied the in It's to question just

It's the kind but take the of it required I is case that play then There -- then and end be there will proof But use that's and Obviously, all can yes, more use the quickly that tied what think developed obvious how cases can to straightforward. long they then is nodes fairly going along. cases tracking question out and It's And don't if for be of cases. the to that's of use waiting of we've can many types they'll use be that see the many ones, cases. there's time kind be to and how will dream. starting the development be be emerge. many will That's other will and think for. rapidly. developed, also And happens, quickly I are been it. concept, how We'll are the sensors software the out use proving tags that the now. and

But the is activity to good the news connected is that activity, Cloud Amazon but this. also is the not only AWS Sidewalk

we partner have powerful it. a behind pretty So

Thank you, you. Mohan. Thank

Tristan Gerra Our with next proceed. Please Baird. from question is

-- wishing improving about margin commentary endeavors. revenue, gross good future On your luck of Sierra how organic Wireless of at higher look we should Hi, in mix And top year line your talk relative the that best afternoon. you the Mohan, this year for change? a for on at for year-over-year the share if is about And wireless, there could progressing the year? Any to competitors? how you Sierra revenue commentary market

for equation then and margins. the Tristan. I But me, I'll think at moment take Emeka the part, the Sierra share talk changed about can not much last gross has probably

in Asian use well the goal, technologies our that infrastructure to consider have in in course, be large try IoT, as been expand foreign Europe, I anyway. many But towards think some I think critical North the doing foreign infrastructure modules critical America. I of are North and to sensitivity competitors in would business. to There America is and and cases it

I that becomes think once clear. awareness

and good think share, educate now on very supply has market -- Semtech really the to and the and the particularly I a opportunity also Sierra gain security on side. to chain has side

think So changed yes. the I the But now, historical for any amounts. share don't has from

expectation getting had to bottom, if where -- So I of as through business Tristan, moving comments lot not have start margin, of Semtech comment with to will situation The my number that the on channel. to inventories is gross the is earlier we're go -- on one. a Organic the year it's close that have regard the a that think through is to pretty Mohan the bottom. the That been it's it's that made rest the the we

margin. the higher then with that an uplift higher organic gross the because margin move that provide that Semtech to of needle have to of naturally the in Semtech from been we happening, with in up Organic a year, back also And the the of past some secular percentage And business that we think And in second revenue opportunities that, what the the mix. terms pointed used we would half towards business. have Organic the starts of we to becomes gross for

for I revenue Okay. an the for ramping a could terms as routers wireless follow-up, basis? what opportunity of And of incremental And LoRa generated you have by my those in to us percentage-wise, of whether about gauge volumes, you wireless. think expect LoRa-integrated router annual get forward? Sierra would feature module provide XG once terms of talked within the Mohan just Wireless adoption Sierra in next rate LoRa XG you Sierra to you had then in metrics the units on Any going directly what with a opportunities kind

Yes.

all thought of Sierra And look But has Tristan, gateways simply, think, cloud. integration kind don't essentially LoRaWAN to that's XG -- below. way time work remember, we've what of can routers think very XG starting through routers from there. from the always at I had the and we endpoint end-to-end I the provides of to sensor portfolio connectivity really the to it's now. and do routers our has routers the been Sierra a

could could There And very be we they be could offer be combined could price, could uniquely these to routers. will routers, be positioned performance, very of broad be low integrated performance. set they very which high very be midrange priced, high a

be work that done. has so to And

with think there's we then but I and together combine science do it rocket that have pull our any I to think think it, Sensing-as-a-Service. to I don't

And provide as opportunities some integrated can edge in in LoRa for the we Semtech chips the the chips into is and gateway I also the about therefore, themselves, position add think routers, have either mentioned, putting I these beauties intelligent intelligence intelligence and router interesting IoT. in onto the we that of one very the or routers

and are to opportunities pulling So, there's through the portfolio biggest whole where and term where we in go a and term the for bang buck and opportunity for what medium see long and of us, biggest need on just term. the customers short the

all just we So through exercise. very excited opportunities, the by to the go but have

Great. you. Thank

Instructions]. [Operator

with Please question from Our proceed. Rolland Susquehanna. Christopher next is

going me first around squeezing be for are to Thanks guys. I in. guess LoRa. Hey, my questions

you quarter. you next you think million us most did full -- us can don't down then think expect could if things if I you So you don't of or know kind sort I of give talk know could about are in idea But LoRa. some usually of the the longer-term quarter. you I would you if I give quarter? for give some $XX next And what estimate us for have year longer term. that metrics going

metrics give know and any the sometimes outside there well. the you and you China You've opportunity I additional as talked give of had if pipeline us. pipeline metrics also could don't about

Yes.

larger that for going that we pipeline. And Sierra, have at new largely now call metrics opportunities, I the Chris, to IoT we're obviously, we much and metrics, really the So mentioned have business. that's important our review the are a all on to some because now have we look

million. those So we mean, together, and a to But for be those discussion. $XXX bring question, had future I putting out record a we LoRa FY will your is 'XX we then answer at will

lot there's of course, Helium in a Of that.

helium, So -- because LoRa's of 'XX flat to slightly probably our expectation to is going going down, is for think. I China, mostly to we're probably the be without FY that

million So FY if $XX to out Helium to assume million something And range, be kind that's assuming take in going from be in 'XX the and of no that's $XX continues revenue, to 'XX and Helium that assuming China you weak. is of that FY range.

of So things momentum LoRa. we're think will on I got starting off in QX, a and weak lot We've a improve.

loss about Sidewalk helium. a think of of talked some have other Of little course, and things going the as of and a just with headwind I there. mentioned, bit will we Amazon I we just But on the the

going kind then Integrity of And I a PON? also you the you one, I'm to then was side, that to going be growth assume you the for your once there? less this data quick Yes. Understood. are Emeka. guidance other if Signal Book-to-bill, turns have around then XG bounces thoughts just down, in it's from any as center, perspective, but just usually but optimistic on that than like And ones give and well? wondering sounds And two most back, needed

say being would was kind in touch we China. to again product So, Integrity inventory the down it's of in that momentum. situation Chris, of just just that Obviously, down down I significantly. in let is guided Signal QX. QX, most me it Yes, on

product Signal of major the of three Integrity win We segments. have a lot all good across in momentum group our design

in North good. data So which in hyperscale is center America,

base is So also outside but China, China. have China, which again, momentum station we we our it's also good. business, momentum in In not have

large similarly, business, consumer see growth outside of I PON a very our think China to although our some still in starting then China, we're And is PON products.

of and to Integrity make. comment coming we're yes, think is Signal I is would going would the be -- QX going near my to the that quite sense be So I be out quickly bottom,

was on side, XX% bookings up end actually to up on was up the pretty The positive pleasing for bookings of The still typical the side. during about the in book-to-bill Chris, were much than less see it one. actually business bookings lower on it that But the legacy very the And QX. QX. rate, was was are run but

And so trending to as far be this quarter, sequentially it well. seems up

least signs revenue midpoint talked still about So to prepared guidance. Mohan's it are pretty life. but show achieve the to at us to of in are subdued, is of bookings those things I see encouraging And beginning that remarks, needing XX% he think the about TAM

guys. Thanks Awesome.

B. follow-up question do Ellis from Riley. Craig proceed. we with a Please And have

back to to Yes, I expected prepared go said follow-up. this margin to XXX gross through had basis from you wanted XXX that thought XX-ish. you thanks your remarks gross had Emeka, just year, margin the in point. the taking I'll business Can points inflects very follow-up. to But this I I make of for XX.X% I level or low latter? sense. it's per just XXX really XXX Semtech the the off then then say unnaturally which you thought And ask if a former basis would points later, to the heard you quarter, clarify so

for to XXX was say of So did points what the I year. rest the XXX basis

person guided the I XXX was XXX points maybe as to to before per sort basis remainder for confusing XXX No, that's the of to. the framed what XXX the I of to what year. who not I think guided quarter. asked question was

the follow-up that if which Got then remainder is margin year. somewhere it. leads going of question, And XX% to this the around XX.X% to to For we're the year. me gross exit

year me, But I given margin you fiscal how know you'd you to you've fiscal expect look towards fiscal this think us excuse margin 'XX? drivers 'XX I'm what what the compare fiscal to 'XX expansion expect As at model. gross or we to 'XX, I would know acceleration the -- three versus target talking about.

XXX that normalized issues next think expect would be expectation expect. I gone we that I'm the the annual a right, see 'XX, just of expansion at it, expect expansion for FY Semtech margin to I several margin to an out neighborhood rebounding every the of environment -- has -- is to wouldn't but guiding gross I basis and continued business, probably year lot still in of to the to I is points business is basis gross XXX for point, And and the see on macro that because would not years. have the levels something the

at those be will we've synergies on side, completely some of the cost achievable. identified the Also, that levels, probably material Sierra

cases to the also hoping of also that ramp. leading I We the annual to addition, beginning recurring that see availability for In in signs that is the acquisition is cellular, should revenue the to growth connectivity use will to early new start see expect Sierra's cellular business.

little Cloud. bit We a have of managed and LoRa connectivity the

In talked about probably beginning have addition averaging now about a $X to the million which fact to LoRa IP, quarter, that the increase. also is we a really do well, which to should actually not lot, very continue

lot to decent forward. of expansion lot annual margin really a now definitely that lead gross are going there would business see are things opportunity. of from some a on So an There

Thank you, color. helpful That’s Emeka.

over comments. closing have to conference question-and-answer the We the I would end like of reached back Mohan our session. to turn for

very near deliver Thank we the forward and in company, support ahead. bottom. we growth look we successfully the you. macroeconomic are challenges a face resilient Semtech and profitable manage while you. of that, we and updating confident you closing, continued do currently we in appreciate In will face we Thank years more With is on believe to QX, your Semtech next I'm headwinds the through that quarter.

today's Thank conference. will This conclude you.

at thank disconnect your lines you may You participation. time, this for your and