And welcome to Semtech Corporation's 1st Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the presentation. Please note this conference is being recorded. I would now like to turn the conference over to your host, Sandy Harrison, Head of Investor Relations.
Thank you. You may begin.
Thank you, Devin, and welcome to Semtech's conference call to discuss our financial results for the first quarter of fiscal year 2021. Speakers for today's call will be Mohan Mahaswarren, Semtech's president and chief executive officer, and that could shoot you our chief financial officer. A press release announcing our unaudited results was issued after the market closed today and is available on our website at Semtech.com. Today's call will include forward looking statements that include risks and uncertainties that could cause actual results to differ materially from the results anticipated in these statements. For a more detailed discussion of these risks and uncertainties, please review the safe harbor statement included in today's press release and in the other risk factors section of our most recent periodic reports filed with the Securities And Exchange Commission.
As a reminder, comments made on today's call are current as of today only and Centech undertakes no obligation To update the information from this call, should facts or circumstances change. During the call, we will refer to non GAAP financial measures that are not prepared in accordance with Generally Accepted Accounting Principles. Discussion of why the management team considers such non GAAP financial measures useful along with detailed reconciliations of such non GAAP measures to the most comparable GAAP measures are included in today's press release. All references to financial results in Mohan's and Emeka's formal presentations on this call refer to non GAAP measures unless otherwise noted. Also, beginning this quarter, we will be reporting our business under 3 end markets compared to the 4 previously which we believe better reflects the ongoing consumption of our products.
We have combined what was previously our enterprise computing and communications end markets together to form the infrastructure end markets, while our high end consumer and industrial end markets are largely unchanged. With that, I will turn the call over to Semtech's Chief Financial Officer, Emeka Chuka. Emeka?
Thank you, Sandy. Good afternoon, everyone. For Q1 fiscal year 'twenty one, net sales decreased 4% sequentially and increased 1 over the prior year to $132,700,000, which was above the midpoint of our guidance. In Q1, shipments into Asia represented 80% of net sales. North America represented a 12% and euro represented 8%.
Total direct sales was approximately 22% of net sales and sales to distribution was approximately 70 80%. Our distribution business remains balanced with 40% of your total POS coming from the infrastructure end market. 34% from the industrial end market and 26% from the high end consumer end market. Bookings increased strongly over the prior quarter and resulted in a book to bill significantly above 1. Total bookings accounted for approximately 34 percent of shipments during the quarter.
Q1 GAAP gross margin declined 20 basis points to 60.9 percent due to lower absorption associated with COVID nineteen shutdowns. We expect our Q2 gross margin to improve slightly as impact of higher mix of infrastructure revenue is slightly offset by COVID 19 driven lower absorption. Q1 GAAP operating expense decreased 12% sequentially as expected due to lower share based compensation and pension expense. And in Q2, we expect GAAP operating expense to increase between 2% to 5%, sequentially, primarily due to higher share based compensation expense. Q1 GAAP order expenses increased to $4,800,000 from $3,100,000 in Q4.
In Q1, we wrote down the value of some of our minority investments by $3,600,000 due to COVID 19 between liquidity concerns. Moving on to the non GAAP results, which exclude the impact of share based compensation. Amortization of acquired intangibles, acquisition related and other nonrecurring charges. Q1 non GAAP gross margin declined 20 basis points sequentially to 61.3% due to lower absorption. Associated with the shutdowns.
And we expect our Q2 non GAAP gross margin to improve slightly as impact of a higher mix of infrastructure revenue is slightly offset by lower absorption. Q1 non GAAP operating expenses decreased 1% sequentially to $53,200,000. In Q2, we expect our non GAAP operating expense to be flat to 3% higher. For the remainder of fiscal year 2021, we expect our non GAAP operating expenses to be flat to slightly up from current levels. In Q1, cash flow from operations was seasonably strong at 20% of revenue due to shorter cash conversion cycle and lower fiscal year 2020 annual bonus payments.
We repurchased approximately 855,000 shares or $30,000,000 of our stock in Q1, and our stock repurchase authorization now stands at approximately $81,000,000. We expect to continue to use our cash to opportunistically repurchase our shares, make strategic investments, and pay down our debt. In Q1, accounts receivable decreased 20% sequentially due to lower net sales and improved linearity of shipments and represented 38 days of sales, which is below our target range of 40 to 45 days. To support our strong Q2 demand, net inventory in absolute dollar terms increased 5% sequentially. And days of inventory increased by 10 days to 131 days, which remains above our target range of 90 to 100 days.
In Q2, we expect our net inventory to remain flat in absolute dollars but to decline in days. In summary, we were pleased to deliver Q1 results that were once again above the midpoint of our guidance. And we are expecting a strong sequential growth in Q2. That's by the ongoing challenges presented by COVID-nineteen. The secular trends behind our growth engines remain very solid.
Our gross margin is stable our operating expenses are under control. Cash flow is healthy and liquidity is strong. We believe we are very well positioned to deliver solid financial results in fiscal year 2021. I will now hand the call over to Mohan.
Thank you, Emeka. Good afternoon, everyone. I will discuss our Q1 fiscal year 2021 performance by end market and by product group and then provide our outlook for Q2 of fiscal year 2021. Before I go over our Q1 performance, I want to take a moment to discuss some of the areas where COVID 19 has impacted Centec and what we have done to address the challenges from this terrible pandemic. As a global company, Semtech was impacted by the actions taken by different countries and we have operated under the direction of the various regions where our employees are located.
And we will continue to follow their guidelines for the safety of all of our employees. Over the last several years we have invested heavily in dual sourcing strategies and in IT operations and sales infrastructure and systems. To provide a collaborative environment have enabled and will continue to enable us to minimize the impact of site closures and supply chain disruptions to our overall business. In Q1 of fiscal year 2021, net revenues decreased 4% sequentially to $132,700,000. Stronger demand from the infrastructure end market was offset by softer demand and some temporary supply constraints.
In the high end consumer and industrial end markets. We posted non GAAP gross margin of 61.3%, and non GAAP earnings per diluted market increased 1% sequentially and 24% over the prior year and represented 43% of total revenues. Net revenues from the industrial market decreased 9% sequentially and represented 30% of total revenues. While net revenues from the high end consumer end market decreased 5% over the prior quarter. And represented 27 percent of total net revenues.
Approximately 16% of high end consumer net revenues was attributable to mobile devices and approximately 11% was attributable to other consumer systems. I will now discuss the performance of each of our Net revenue from our Signal Integrity Product Group increased 2% sequentially and 19% over the prior year. And represented 45 percent of total net revenues. Continued strength from our hyperscale data center customers and record demand for 10 gig PON and 5 GPMV products contributed to the growth. In Q1 of fiscal year 'twenty one, strength from the data center market continued, driven by our Clear Edge CDRs, used in 100 gig optical modules.
Our hyperscale data center customers are increasing their demand for 100 gig optical modules, as the global shift to working from home places an increasing bandwidth and analytics burden on cloud based infrastructure. We expect the demand for 100 gig optical modules to continue to increase. Customer interest for our Tri Edge PAM4 platform also remains very high, and we recently recorded our first design win for our first Tri Edge PAM4 Chipset. For use in 2 100 gig and 4 100 gig PAM4 optical modules. We have customers in multiple regions at various stages of system tests using Tri Edge, and we expect to see many more design wins over the next few quarters.
We expect our Tri Edge revenues to ramp up over the next few years as hyperscale data center customers deploying 100 gig, 200 gig and 400 gig optical modules recognize the clear benefits of using an analog PAM4 implementation that includes lower cost, lower latency, and lower power than alternative solutions. We expect the positive trends in the data center market together with our new product platforms to provide nice growth Our PON business grew nicely over the prior quarter, led by record 10 gig PON revenues. Semtech remains a leading supplier to the PON market, providing comprehensive offerings for 1 gig, 2.5 gig and 10 gig PON systems. We expect strong growth from our new PON X 10 gig PON products this year, led by a number of new global carrier PON initiatives that enable gigabit to the home enterprise and campus networks. Increasingly, carriers building out 5G infrastructure are looking at PON X Driven Systems to offload high bandwidth data for these access networks.
In Q1 of FY 2021, overall demand from the wireless base station market remained healthy as 5G infrastructure deployments increased. Our ClearEdge CDRs and our FiberEdge PMD platforms are being used in front haul and mid haul optical modules. During Q1, we announced the production or lease of our newest Clear Edge integrated CDR with DML driver for 5G wireless base stations. 25 gigabit per second front haul applications. Also in Q1, our fiber edge PMD devices delivered record revenues as emerging 5G base station opportunities accelerate.
Our FiberEdge PMD products complement our ClearEdge NRZ and Tri Edge PAM for CDR platforms. As 5G infrastructure deployments increased globally, we expect our 5G opportunity to triple versus that of 4G. As network providers work to upgrade and increase the capabilities of their data center, PON and wireless networks. We expect the secular demand for our higher bandwidth, higher data rate platforms to drive growth across Semtech's signal integrity product platforms, and we remain very confident in our strategy and position in all our target markets. For Q2 of fiscal year 2021, we expect net revenues from our Signal Integrity Product Group to increase strongly, driven by anticipated record revenues from the data center end market and strong revenues from In Q1 of fiscal year 2021, net revenues from our protection product group increased 5% sequentially, and represented 30% of total net revenues.
Our diversification strategy targeting a broader set of industrial applications continued to yield dividends in Q1 as we saw strong sequential and annual growth from the broader market. This strength in demand helped offset a weaker high end consumer market. We are seeing an increasing number of opportunities for our protection solutions as new high speed interfaces such as USB C, HDMI 2.1 and 10 gigabit ethernet proliferate into multiple end applications that are also using more advanced lithography processes. These trends combined with our own acceleration of new protection products targeted at broader markets is fueling further growth for our protection business. In Q2 of fiscal year 2021, we are expecting our protection revenues to decline modestly.
Our strength from our broad based industrial market is expected to be offset by continued softness from the high end consumer market. Turning to our wireless and sensing product groups. In Q1 of fiscal year 2021, net revenues from our wireless and sensing product group decreased 20% sequentially and represented 25 percent of total net revenues. In Q1, our wireless and sensing business was negatively impacted by several regional shutdowns associated with COVID-nineteen. The shutdowns impacted both demand and supply.
We believe that most of these issues are behind us, and we expect to see a meaningful rebound in Q2 for our wireless and sensing product group. Q1 was another strong quarter another quarter of strong achievements in our LoRa business, including record quarterly bookings. Interest in our LoRa Technology has continued to expand and most recently, we have seen an increase in more opportunities associated with COVID-nineteen, when LoRa is ideally suited for applications such as contact tracing, distance tracking, hygiene and health monitoring, and occupancy management. Several examples of use cases in this area that have recently been announced include Nora cloud based platforms in China from Alibaba and Tencent for quarantined scenarios to help provide healthcare workers with community health data. PolySense Technologies developed a smart cloud based human body temperature monitoring system using LoRa.
To provide real time temperature sensor data to screen individuals with a high temperature. The system is initially being deployed in Italy. EveryNet is working with its partners to deliver LoRaWAN solutions over a secure wireless IoT network to connect urgent care facilities in Spain. And Curlick together with Microshare announced a simple, low cost contact tracing system using LoRa and Bluetooth enabled badges key rings or wristbands that enables work proximity detection. The flexibility, low cost, long range and low power of LoRa networks are critical components of any successful LP WAN IoT deployment.
And we expect to see more use cases emerge as local governments, municipalities and enterprises look to execute on their COVID-nineteen management strategies. We also continue to see other emerging use cases announced that demonstrate the benefits and efficiencies of LoRa. These announcements included the Pallet Alliance and Innovator in Pallet Management programs integrated LoRa into its Intelie Pallet the first of its kind in the logistics industry that enables scalable pallet location and environmental sensors to be built into wooden pallets. Sweden based IOT introduced new functionalities to its web IoT platform using LoRa with algorithms to detect mold and humidity in at risk locations in homes and businesses. And EZ Reach developed its EZ plug platform that leverages LoRa to detect changes to the usage status of various appliances.
These are just a few of the examples of recent use cases introduced that demonstrate the value of LoRa technology in enabling a smarter, more connected and more sustainable planet. We recently announced our LoRa Edge platform that is our first software defined radio platform that enables true silicon to cloud connectivity. LoRa Edge includes Wi Fi and GPS sniffing functions that uniquely position this platform for asset tracking and asset management use cases. We expect this platform to enable a large number of new opportunities for LoRa over the next few quarters. In Q1 of fiscal year 2021, we were pleased with the progress we made against the LoRa metrics we targeted at the beginning of the year.
Despite the COVID-nineteen related challenges and shutdowns. These metrics included the number of countries with LoRa Networks grew to more than 92 Countries from 91 countries at the end of FY 2020, and we expect over 100 countries to have LoRa networks by the end of FY 2021. The number of public or private LoRa network operators grew to 137 from 133 at the end of FY20 we expect 150 LoRa network operators by the end of FY 2021. The number of LoRa gateways deployed grew to over 800,000 from the 642,000 gateways deployed at the end of FY20. And we expect the number of LoRa gateways deployed to increase to over $1,000,000 by the end of FY 2021.
The cumulative number of LoRa end nodes increased to $145,000,000 from $135,000,000 at the end of FY20. And we expect this number to exceed 180,000,000 cumulative end nodes by the end of FY21. The LoRa Opportunity pipeline which includes both opportunities and leads remains at approximately $500,000,000 at the end of Q1 with approximately $200,000,000 of leads feeding the opportunity pipeline. We anticipate that on average, 40% to 50% of this pipeline will convert to full deployment over a 24 month timeline. At the end of FY 2021, we are anticipating our opportunity pipeline will exceed $700,000,000 with an additional $300,000,000 of leads feeding these opportunities.
Our opportunity pipeline remains geographically well balanced, with approximately 68% of the opportunities now coming from the Americas and Europe and includes an increasing number of use cases in the smart home and consumer markets, where the volumes could be significantly higher. For FY 2021, we continue to expect our LoRa enabled revenues to be between $90,000,000 $120,000,000. While the impact of COVID 19 in Q1 led to a slower start to the beginning of the year, we believe the positive momentum from our LoRa metrics and the geographic diversity of our opportunity funnel should drive our LoRa enabled business to grow at 40 percent CAGR over the next 5 years and become the de facto standard for the global LP WAN market. In what we expect to be a multibillion unit industry in the next 5 years. In Q1 of fiscal year 2021, Revenue from our proximity sensing platforms was lower due to a softer smartphone market.
Customer interest remains for our proximity sensing platforms in smartphones as well as other mobile systems as global RF regulations and awareness the dangers of high power RF signals increases. We also continue to see solid design win activity in new 5G smartphones. Where there is an increase in the number of high performance radios used. However, we do anticipate the weak smartphone market to continue into Q2. For Q2 of fiscal year 2021, we expect net revenues from our wireless and sensing product group to increase strongly led by anticipated record revenues from our LoRa enabled business.
Moving on to new products and design wins. In Q1 of fiscal year 'twenty one, we released 10 new products and achieved 2202 new design wins. Now let me discuss our outlook for the second quarter of fiscal year 2021. Despite the geopolitical and macroeconomic concerns, associated with COVID-nineteen. We believe the underlying secular demand for our key growth platforms remains solid.
Based on our strong Q1 bookings and much higher backlog entering the quarter and our record POS in Q1. We are currently estimating Q2 net revenues to be between $138,000,000 $146,000,000. To attain the midpoint of our guidance range or approximately $142,000,000, we needed net turns orders of approximately 20% at the beginning of Q2. Our guidance assumes no more shipments to Huawei this quarter, and also takes into consideration the additional entity list restrictions put in place recently by the federal government. We expect our Q2 non GAAP earnings to be between $0.40 $4 per diluted share.
I will now hand the call back to the operator.
Thank you. At this time, we will be conducting a question and A confirmation Our first question comes from the line of Tore Svanberg with Stifel. Please proceed with your question.
Yes, thank you and, congratulations on the results. First question is on your bookings and kind of linearity. So we've heard from a lot of companies that have actually gone into their future quarters with high backlog. How about Centec, have you continued to see solid bookings, even so far in the month of May?
Yeah, Tory, bookings continue to be strong for us. You know, it's obviously a mixed bag, obviously, the infrastructure segments and IoT appear to be strong consumer appears to be fairly weak. Again, mixed bag even within consumer. And I would say industrial is fairly weak at the moment, but bookings at the moment still still bid to be quite strong.
Very good. And as a follow-up, it sounds like Laura is going to have pretty good quarter here in in July. You did note that it was a little bit weaker than expected, this this last quarter. So if we look at the strength, is it coming from from sort of a catch up, or are you are you now really far starting to see some some new deployments actually drive that strength?
A little bit of both, Tory. I think, remember in February March, China was essentially shut down. So we really I mean, literally shut down. So there wasn't much going on at all. And so I think, in April, we saw some catch up there and then obviously continuing May.
But I think in general, what's happening with Laura now is that we're starting to see some broader usage, more and more use cases. And actually, as I mentioned on the, on the, in my script here that, you know, COVID-nineteen also is potentially driving some pickup in opportunities. And I mentioned, as I've mentioned before, that we're starting to see a broader set of geographical use cases as well. So more in North America, and in Europe as well. And those tend to be different use cases in the metering and smart building use cases in China.
So just generally quite positive for Laura
Sounds good. I'll go back in queue. Thank you.
Our next question comes from the line of Scott Searle with Buck Capital. Please proceed with your question.
Hey, good afternoon. Thanks for taking my questions. Nice quarter. Protection front Mohan, you indicated that it would be flat to down for the year. I was wondering if you could give us some clarity on how that looks going into June and maybe give us an idea, differentiate between domestic China and and non China shipments.
And as well on LoRa, It sounds like we get a nice snapback in the June quarter, but you have to range out there for fiscal 2021 of 90,000,000 to 120,000,000 Could you give us an idea about what has to happen? What kind of inflection do we need to see, to get to the higher end of that range? Thanks.
Yes. So let's start with protection. Protection, you know, you break it down to 2 segments really, the consumer business, which is mostly smartphone And then the non consumer business, which is doing quite well. It's broader kind of market all the rest of the markets, including Calm And Industrial, which are doing very well at the moment for us. Now the consumer side, specifically obviously smartphone, which is the largest piece of our business within Consumer, it's a mixed bag within the Smart phone business.
I would say that Q1 was definitely weaker for China smartphones. Korea smartphones was about flat and North America was actually better than expected. In Q2, we're expecting a little bit of a increase in China smartphones. We expect probably career to be, again, flat to maybe down. And then, North America to be okay.
But the second half, we are anticipating that, most of the smartphone business, at least in Q3, will be down. And some of that is supply constraints from some of our customers that we've been we've been hearing about, again, all COVID-nineteen driven. So that could change in a heartbeat as you know, and that could strengthen the second half. But at the moment, consumers looking weak. But in the general, the, our, the rest of our broader protection business is looking quite good.
I don't know if it can offset the consumer weakness though. So we just have to wait and see. And then on the, the LoRa front, we haven't yet seen any pickup from our Smart Home Real, the catalyst of SmartHome business that I've been talking about for a while. We do anticipate that in the second half to start, growing nicely. But again, with COVID-nineteen, maybe that gets delayed, we don't know.
So a lot depends, I think, on, those kind of more consumer ish segments. And I'll call Hot Smart Home smart consumer and maybe even asset tracking and logistics to be in that category to determine whether we get to the high end of the range. But my sense is things are going in the right direction. I think, obviously, last year was a disappointing year for us because of the China issues, but I think, we're starting to see the momentum across the board across all regions and across many different use cases. And as I mentioned, COVID-nineteen is actually driving its own set of use cases for us, which is quite encouraging if those pick up as well.
So we'll see.
Great. Thank you.
Our next question comes from the line of Quinn Bolton with Needham And Company. Please state your question.
Hey, guys. Let me also say congratulations on the nice results and outlook. I guess first quarter with record POS record bookings, Just wondering if you have any sense whether your customers are buying ahead or trying to build buffer inventories given the COVID outlook? Or do you think most of this product is moving through to end use applications?
Yes. We've been looking at that very closely, Quinn. And I think the encouraging thing for us is it's across multiple product lines, across multiple geographies and across multiple end markets. So if we look at base station, 5G base station is strong. PON, 10 gig PON is strong.
Data center obviously is strong. And some of that, those segments all cut across different regions of the world, some in China, some in North America, some in different parts of Europe, And then, obviously, Aurora is also pretty broad. So we don't think there's much. We haven't seen much cancellations or push outs or anything to suggest that it's weakening at all. I think it is very much infrastructure, it's very much going to continue to see growth.
And I think, that's why we're seeing most of the strength, both in the POS side and on the booking side.
Great. 2nd question, just to follow-up on Scott's question about the more consumer use cases or smart home use cases. For North America. You mentioned you continue to see or expect that ramp to begin in the calendar second half. I guess, to the extent that these are devices that have to go through DVT and EBT testing.
I would think that a lot of those devices are well into that process right now. Do you see that testing activity taking place? And that's what gives you the confidence that these devices are still on track for 2nd half, or have you seen some COVID related delays in the testing and qualification of those products, just given mobility and flight restrictions and that kind of lead you to the comment that there may be some delays due to COVID?
Yes. The answer to that is yes and yes. Craig, to be honest with you, I think we have seen, testing. We do see that stuff is going on and see the progress But COVID-nineteen is a very unique phenomenon, obviously. And we just don't know, whether customers are equipped and ready to kind of drive the strategy that the way that they were driving strategy.
There's nothing to suggest that anything's changed. They just think a quarter delay given what's happened with COVID-nineteen around the world. Wouldn't be a surprise. That's not what we're hearing at the moment. We're hearing everything's on track and things are going quite well, but I just want to caution you that, things with COVID-nineteen, there's just so many unknowns.
We just there's too many uncertainties on supply. There's too many uncertainties on regional shutdowns. There's a lot of uncertainties around, you know, the macro events surrounding us. But if you take those out of the equation, I think things are on track.
Our next question comes from the line of Christopher Rollam with Susquehanna. Please state your question.
Hey, thanks guys. I think you guys are the first two reports since the Department of Commerce Broadens the entity list. I guess first of all, if you could remind us what you were shipping to Huawei last quarter and why decide to ship nothing to Huawei this quarter? And then secondly, the broadening of the entity list, what's the revenue impact from that perhaps you can help us size that. Thank you.
Yeah. So, you know, I said in my bed, script my remarks that, that's all built into our guidance. So we looked at the entity list, the extended entity list and there was a minor impact and we included that in our numbers. So the guidance takes that into consideration. It's very small.
From a Huawei perspective, we shipped about $9,000,000 to $10,000,000 in Q1. Our guidance assumes no more shipments into Huawei this quarter. So that's the comment I'd make that from our perspective, the risk is taken out of our guidance. So, but yeah, we still expect to ship some revenue into Huawei. I think it's more a question of do they, can they ship their systems?
Do they need the products and those type of things with the increased restrictions on them? So as far as we're concerned, we've pretty much derisked Huawei business from our numbers as best as we can.
Okay. And and just to make sure guys like Fiber Home and some of the other entity guys, just wanted to make sure those aren't gonna affect any of your your businesses? And then, and then separately, just talking about data center demand, if you could talk about that a little bit more particularly around the PAM4 opportunity, the analog short range side that you guys are more focused on, maybe you can talk about how that market's developed Thank you.
Yes. So, as I said, fiber home and all the other companies on the entity list, at this point in time, we don't see any issue for us. Obviously, things change daily on that front, but at this point in time, at least for Q2, we don't expect any It's all built into our guidance anyway, any impact. And if there is an impact, it's fairly small, I would say, even for, companies like Fiber Home. And then we're coming back to the data center side.
Yeah, data center business is going well. A 100 gig modules are ramping up nicely. As I said, with ClearEdge, doing very well. And now we're starting to sample our Tri Edge plat forms, our first PAM4 platform, which goes together with our fiberidge PAM4 pandemic products. And so we're starting to see some good interest there both on the 2 100 gig and 4 100 gig side.
We'll also have longer reach products out this year. So my sensors will be able to expand our PAM4 portfolio and get a little bit more momentum there. Obviously, this year, the revenues will be fairly small, but next year, we're expecting ramp quite nicely. So yes, good progress generally. We'll just have to wait and see as we still think at the moment, 100 gig is the primary market for us to focus on then 200 gig and then, eventually probably end of this year, 400 gig will start to see some revenues and, and then next year.
Great. Thank you, my husband.
Our next question comes from the line of Rick Schafer. With Oppenheimer. Please proceed with your question.
Yeah. Thanks. And let me add my congratulations guys. I I just have a couple of follow ups, I guess. The first is back to Quinn's question.
I'm curious, I mean, can you describe that your approach or give some color on the way you approach sort of vetting your order book? How do you, how do you scrub for the potential for double orders or how do you kind of look and see what's a pull in versus a normal order from a customer.
Sort of a
that's a broad question I know, but I'm just curious how you guys do that.
Yes, it is a board question. It's a tough question, as you know, Rick, but I think what we tend to do is We do go talk to the end customers. We do look at, tenders that are out there, for example, on 5G that we know about and the number of, for example, base stations that are going to be built and then who's going to get those base stations and how many optical modules that drives and how many ports that drives for us and how many so you can kind of get a feel for that. We can do the same on the PoNS side You can so you can start to do it that way. I think it's more difficult when you have a broader market area like in the industrial side for our protection business, for example, where it's more mass market and distribution focused, it's a little bit more tricky.
But in general, you can, but typically what you see, if you're getting a lot of double ordering, you'll start to see more cancellations as things, fall off for one guy or they're not going to be they don't want to be left with a lot of inventory. So you'll start to see that, and you'll start to see push outs of orders and things like that. I would say that, outside the consumer space. So we haven't really seen that. I would say some industrial, but mostly consumer, we see that a little bit, but not so much in the infrastructure side.
So my commentary and I think this is validated by the bookings being stronger on the infrastructure side is that I do think it's driven by real demand and need out there. Also, POS being strong indicates that as well.
Well, thanks Dawn. And then maybe just another follow-up, and it's on PAM4. Just curious, because you think you have a pretty unique perspective You guys obviously the incumbent in in 4 by 25, you know, CDR, large market share there. I I'm curious, you know, why has DSP dominated that PAM4 market to date. And I'm curious how you see that market evolving over time.
Thanks. Oh, and maybe just at the very end of that question. I'm curious, you know, I know you talked about, Pam, you know, TriNet's really picking up next year. Can it be a material revenue driver for you guys in next year in fiscal 2022?
So, yeah, let me answer that first. I think it will be. I think Tri Edge this year is the test year really for design wins and design wins and validating the performance technology and making sure our assumptions are correct and things like that. But I expect we'll have design wins this year, and I think it will become per meaningful revenue, probably towards the latter part of this year and then certainly next year. So that's the first comment.
The second comment is on DSP. As you know, we we invested in DSP, we went down that path and then chose not to continue down that path. So the incumbents are there and they have a leading position. And I think it's the first technology to implement PAM4. And I think that's the reason for success there.
But we made it was a strategic decision to continue down the analog path. And I think, we have to demonstrate, that was the right good decision for us. And I think we can. I think certainly for 200 gig and 400 gig. We will over the next 6 months here demonstrate that value.
Thank you. Congrats again.
Our next question comes from the line of Gary Mobley with Wells Fargo. Please proceed with your question.
Hey, guys. Let me extend my congrats as well. If my math serves me correct, you are expecting your your July, quarter sales to grow, what, roughly 10% sequentially netting out the headwind from from Huawei. Just just to, sort of clarify what's driving that. It's bounced back in the lower business.
It's a telco data center related booking strength and whatnot. And, if I'm not mistaken, the new tighter export restrictions don't kick in until the end of June. Any chance of of generating some turns of business with Huawei between now and then.
Well, so, Huawei, the way we are planning, playing, doing business with Huawei is somewhat opportunistically, as I said, I've taken it out of the guidance for Q2. We're not expecting any more shipments, but if it comes in, we'll look at it and therefore you can ship and largely most of our products, we can ship to them. There are a few that are we cannot ship, but most of the products we can ship, the issue is more can they get the components from other, suppliers or are there other restrictions, especially with the, recent, more, restrictive approach in terms of what they can high silicon, for example, not being able to ship. I think, we're not being able to get access to some foundries. Is more of a challenge.
So I think, in general, I would say the impact of the additional restrictions is somewhat minimal to us and unless things change, we don't see any change to that.
Okay. And, alright. So let's move on to strengthened in end market demand. So your point of sales significantly increased your reported sales by you share with us by how much and what the net impact was to the, the channel inventory?
So POS was a record for us in Q1. Obviously, because of the record, the channel inventory came down. So channel inventory is in good shape for us. And the good thing about the POS, both the POS and I think our bookings, it's fairly broad for us. So base station, as I mentioned, is looking good, driven by 5G.
We know of the tenders out there and we know that we have significant opportunity to get a large chunk of that business. And so that's going quite well. And that's driven stronger bookings for us for Obviously, the shipments in Q2 and beyond. The PON business, as I mentioned, the 10 gig PON is doing very well. It continues to be going quite strong.
And then data center is clearly, probably outside LoRa, the strongest area of growth at the moment. Both the 100 gig, also fiber edge for PAM4 side. So that's doing quite well. And then Laura, as I mentioned, has bookings very strong and we expect a strong Q2 there as well.
Okay. Thanks for the color, Mohan.
Our next question comes from the line of Harsh Kumar with Piper Stanley. Please proceed with your question.
Yeah. Hey, guys. First of all, congratulations, you know, very, very strong results. Actually, when I look at your guidance, it's it's I think a little bit better than most of the companies are reporting for this time. And I heard all the questions on double ordering.
So I'm trying to understand for as long as I can remember, you've had turns in the about 34, 35% range. My understanding listening to you is that 80% booked. I I think you said the turns were, estimated at about 20% this year. So question for you is why not guide higher and or con alternatively, is this the sort of padding incomes in in in case cancellations do happen?
Yeah. So, Harsh, it's, 1st of all, the 20% is accurate. That's all the terms we need. It's probably the lowest percentage of turns, in my experience since I've been with the company, CEO of the company, and that's 15 years. So it's obviously a relatively low number to what we're used to, achieving.
Having said that, there are a lot of unknowns. I think the there was a lot of around still the consumer business. I think the broader industrial and COVID-nineteen is there going to be another resurgence of cases, especially here in North America that's starting to just starting to get back to normal, I think. So, there's still uncertainty and we just took the approach that I think several other companies taken, which is just to, you know, make sure that, you know, we we plan conservatively and guide conservatively and that's what we've done.
Thanks, Juan. Thanks for the color. And then I had a question on Laura. Do you think the the first of all, was Laura the fastest, sort of bookings, area for you in this, in this second quarter going into the second quarter. And do you think the reason is that because China is back and that hurdle got removed that the bookings ramped up, dramatically But then as we look at the landscape, the tensions are flaring up again.
I know this is an open end question and nobody knows the answer, but there is there a possibility that Laura could get caught up in that, or do you think because it's outside of infrastructure that it it would probably get, saved or set aside?
Let me start with the first part. The first harsh, the the the bookings were strong across the board, especially on the infrastructure side. So data center was very strong. Base station was very strong. And Laura was very strong for us, as well as on the protection, broader protection business.
So those are the Four main areas. Now within the LoRa domain, obviously, still today, 50%, 55% of our revenues of LoRa from China. But remember that February March, China was really, shut down. I mean, for a large part of February, March, it was shut down. So as I said, it did pick up in April, came back But I would say, as I've said, now the opportunity pipeline for LoRa and where we're seeing a lot of the, new revenue is, and like I say, revenue revenue versus older revenue is not smart metering and smart buildings and smart cities, but it's starting to look like smart home small logistics, you know, some other areas are, going to pick up and do quite well.
And then the other thing that I mentioned is that COVID-nineteen itself is driving some use cases that, it's not material yet, but it, but could be quite significant and quite soon. I think if they play, start to play out, then smart health and smart temperature monitoring and things like that start to come into play. So a lot of different use cases. So I think we're not really that worried about additional restrictions. I mean, of course, you can never say, no, something could happen and things could get worse, but our most of our opportunity pipeline, about 80% is outside China now.
So while we continue to work on with China and continue to do well in terms of new design wins and working with our partners there, We also have a lot of opportunity outside China that's going to drive growth for us.
Our next question comes from the line of Kristinja with Robert W. Baird. Please proceed with your question.
Hi, good afternoon. So given the restrictions that high silicon is going to have notably, not being able to build NB IoT Chips at TSMC and knowing that the Chinese government has pushed in BIOT. And I know that, it it's obviously not a perfect overlap with LoRa. But but does that change the competitive landscape longer term where to the extent that, China's own and the IoT and the IO efforts of potentially impaired for a longer amount of time that it could actually create actually more demand for lower, in the medium term.
Well, I'd like to think so, Tristan, but you know, we're not depending on that. For us, the use cases, drive really where Laura is winning. The Chinese government is going to continue to push NV IoT The cellular guys around the world will continue to push for NV IoT. We're not going to stop that. I think that's not going to be our strategy.
Our strategy is always deliver the technology to provide the best, use case implementation as for our customers so that they really can get the lowest battery life, the, and use the technology to deploy the system that they need to deploy in an efficient way. And so what our feeling is as we get more and more of our new products out like LoRa Edge There's just we're just going to create a quite a large gap between what Laura can do in certain use cases and what NV IoT or any other technology you can do. And and that's really the way to win. And I think that's what we will do even in China.
Okay. And then a quick follow-up on lower. In fiscal last year, we basically saw a little bit of faith decline in your average node per gateway based on the data that you're providing. Given the reacceleration that you see for LoRa this year, should we expect the number of nodes per gateway to actually increase year over year. And also given again that LoRa was probably pretty weak earlier this year in China, do you expect this coming quarter for LoRa to be up year over year?
So yes, I do expect the LoRa to be up year over year. The other comment on endnotes per gateway, remember gateway deployments are, doing very well actually. And that's, that's another metric that we look at obviously around the world, how many gateways are being deployed as I mentioned in Q1, 800,000 gateways from, 640,000 at the end of FY 'twenty. So significant increase in gateways. And that tells us that the, the use cases, the all the opportunities that we have are starting to get into their proof of concepts and they're moving from proof of concept to deployment.
And that's really what drives the end nodes. So you can look at it on a on a real time basis and say how many end nodes we have deployed and how many gateways, but the gateways allow a lot more end nodes to be connected. So at the moment, 800,000 gateways drives around 3,000,000,000 sensors So the so 3,000,000,000 sensor nodes or end nodes can be connected to those gateways. So there's plenty of capacity out there. And that's the goal we have is to drive enough capacity.
And then end modes will follow. That's just the use case driven. So as the use cases start to get deployed and merge, then you'll start to see more and more end nodes deployed.
Our next question comes from the line of Craig Ellis with B. Riley FBR. Please go with your question.
Yep. Thanks for sneaking me in and congratulations on the good quarterly you should, guys. I I was hoping I could just start, with a clarification before a couple of questions. The clarification is I think I heard you say that wireless sensing was down 20% quarter on quarter. But within that, can you tell us how, proximity sensing performed versus Laura?
They they both were down, quite significantly. Do you have that? Let's see. Just hold on a minute. I'll give you that information.
Yeah, both were down. And, both, both, quite down by that same amount. I think from a percentage standpoint, in Cray, so I think proximity sensing coming down was driven by obviously a lot of smartphones and more consumer. LoRa enabled mostly was down because of the China was shut down for February March. So 2 different dynamics going on, but both came down significantly.
And then there was some yeah, the other thing, Craig, sorry, is that there were some supply constraints, that really drove both for in both mostly in the proximity sensing and in some other areas of that business, the wireless sensing business that drove that business to be down.
Got it. And then for the first question, Mohan, it sounded like, as you went through the different lower metrics that you've retained all your metric targets for calendar 20. So congratulations on that. My my question is with a with a retained revenue range of of 90 to a 120,000,000. What would make the difference between the business coming in closer to the low end to 90 versus coming at the high end, the 120?
The main the main delta will be the emergence of some new use cases. I mentioned a little bit more consumer ish, more smart home that we know are in play. Were scheduled for Q2. We'll see if things happen in Q2. And if they do, they should drive us, probably towards the, I would say more than mid to high end, but we'll see.
A lot depends on the pickup and how that's, how those use cases are adopted and how quickly as I mentioned, with COVID-nineteen, the difficulty is not, it's really we don't think it's going to have a long term impact to the business. It's just timing of some of the things that are going on and whether consumers and smart home and even some enterprises doing smart logistics are going to delay programs by a quarter or 2. I don't think it's going to be that significant, but it may delay by a quarter. And if it does, it moves into next year, but you know, we'll we'll see we'll have to monitor it and I'll I'll report on it as it happens.
Okay. That's helpful. And then lastly, for you, I think in your in your answer to an earlier question, you noted that within Signal Integrity, it looked like the hyperscale part of the business, the data center part of the business was the the strongest of the the different opportunities in the near term ahead of pond ahead of base station. The question is, given that investors are worried about the duration of near term strength for Chip Companies. Where do you have the the greatest confidence as you look out into the back half of the year that some of this near term strength can be, can be maintained?
Yeah. The back half being Q4 is difficult to projected now. I think we're getting indications that Q3 will be okay. And I think part of that is knowing that the base station market For example, in China, we know they're deploying a certain amount. We know that they're going to do it this year.
We know how the the different customers are planning and we know our position in those customers. And we think we have a very good position in that market. So we think that's going to play out this year. The PON business, as we know, as I mentioned, one of the nice things about PON, especially the PONX 10 gig play that we have is that becomes a kind of a handoff to the 5G for a lot of the 5G networks. And so that's a new, a new, really a new thought, a new architectural kind of value that PON brings, and that's very encouraging.
I think the other thing that's really, often not really understood is that both base station and PON While China is by clearly by far the biggest opportunity today, we're starting to see now AT and T, Verizon, talking about gigabit PON, and we're starting to see the obviously the U. S. Market and European market talking about 5G and deployments. And so a broadening of the opportunity geographically, which I think is very encouraging and a very good as well. So we don't see much slowdown, even in the second half, to be honest with you, but obviously a lot depends on COVID-nineteen, but from a need standpoint, the need is clearly there for more bandwidth, for for consumers, for enterprise.
And so that drives more base station, it drives more PON, clearly drives more data centers. So at least for this year, we think that will continue.
That makes sense. And if I could sneak one in for a Mack, I feel like you spent a bit neglected Emeka, you mentioned that with the 2nd quarter gross margin, mix would be a tailwind, but, absorption would be a headwind or utilization would be a headwind. I guess that's the flow through effect of the 1st quarter revenue as we look beyond the fiscal second quarter, do you get both of those things working your way and could we see gross margins getting to 62% bubble as we exit this year. Thanks, guys.
Yeah. Yeah. Craig, I think that is the expectation. I mean, as you listen to all the growth areas that we have. A lot of those are coming with a a pretty high gross margin.
So the data center, the 5 g the pawn, the 10 gig pawn, and then the protection, industrial applications as well. So we think, we think that higher mix of, those type of revenues and demand stays strong and going up, driving higher absorption allows us to move our gross margins up to around the 62% level.
Our next question comes from the line of Carl Ackerman with Cowen and Company. Please proceed with your
question Hey, thank you and good afternoon, gentlemen. 2 quick ones, if I may. Mohan, just kind of curious, how do you think about the FCC decision to make available the 6 gigahertz band for WiFi just kind of curious, you know, some of the investors have been a little bit worried that this may limit the 40% annual CAGR of LoRa adoption in consumer environments as consumers opt for higher performance, but much more expensive routers for in home connectivity. I was just kind of hoping that you could talk about that, how it would impact your consumer LoRa business longer term?
Yes, I don't think so the way to think about it really is that there are different use cases and complementary Actually, Wi Fi is a great complement to Laura in many ways thinking about, how they operate, and we even our latest platform, our LoRaGE platform has Wi Fi sniffing function, but still needs Wi Fi routers and those type of systems to, enable each use case. So really no impact at all. I would say if anything, Wi Fi and LoRa becoming more complimentary and we're seeing more and more use cases where a high bandwidth Wi Fi capability plus LoRa for low power sensing and monitoring and things like that is really a valuable, to most use cases. So just much like 5g plus LoRa or Bluetooth plus LoRa, we don't really see that as a competitive issue. We see it more as a complimentary.
Very helpful. Just one last one, if I may. On your Triassic opportunity, you know, there's a competitor who appears to have won maybe most of the early designs in PAM4 just given the fact it's largely relegated to 1 hyperscale customer. First, you expect more diversified cloud adoption in the in the US of PAM4 interconnect inside the data center this year where you have the opportunity to be a strong number to provider. 2nd, you know that tri edge could be more material for next year but I was just hoping you could speak to your perhaps relative position and quantify the opportunity as the market transitions to both 20400 gig solutions.
Thank you.
Yeah. Well, we just so the first important thing is we just started to sample the Tri Edge platform. So, you know, it is very early days for us, and I think that has to be noted. But we do have a pretty good position in the data center space and we know the customers and we know what needed and we have a very strong 100 gig position. And so now the question is, moving those customers to use our platform for 200 gig and 400 gig initially for short reach and then for longer reach applications is the goal that we have.
So, but yeah, we know that, there's some work to do here. It's not, it's not a slam dunk, and there's a lot of challenges we do think, I mean, we made the strategic decision to go the analog PAM4 route because we felt that power was extremely important. We we felt that, the cost was very important. We felt in a lot of the use cases latency was very important. And so, you know, that was the reason why we chose path.
And now we have to go to make sure that, our, the fact that we are somewhat late to the PAM4 space, I think we have to kind of catch up that. And that's the goal this year is to get more design wins and then next year, we should see that ramp up nicely. We'll see revenues this year. I just don't think there'll be huge revenues this year. I think next year will be much stronger.
Our next question comes from the line of Mitch Steves. With RBC Capital Markets. Please proceed with your question.
Hey guys, thanks for taking my question. It looks like pretty substantial beat and raise here. But I had a question that's more than kind of like 'twenty one and 'twenty two. I think it's a big investor debate. So it sounds like you guys had some sort of view of what the back half looks like.
So is there any way to at least give us maybe a qualitative metric on how to model out the back half of the year if it should be similar to to July growth or something that's gonna decelerate or accelerate anything that would help there, I think, would be very useful.
Yeah, Mitch, I think, from everything that we see right now, we still expect, to have a decent second half of the year. However, there are still things out there that we know we're not in control of, right? There is a talk of a recession until that. And like Mohan said before with regards to COVID 19, nobody really knows how that whole thing is going to play out. So you know, we we we we still have a we feel very good about the second half, but also just have a little bit of a hint of a caution about around it.
So my expectation will be that we'll probably see maybe some sort of a flourish to a slightly up second half of the year.
Okay. That's very helpful. And then just a follow-up real quick, Alura. You guys talked to 9 to a 120,000,000. It sounds like there wasn't much in April, hence, to pretty significant contribution to July.
So when we look out the next, like, let's call it 22 23, are you guys still sticking with kinda like the 40 to 50% growth rate because it's just infrastructure build out or or has that changed? It got pushed out in any meaningful way.
No, we'll stick with the 40 percent CAGR over the next 5 years and it's really driven not only by, our belief that These gateways that are being deployed have a lot of use cases. There's plenty of capacity out there. We're really seeing the need for, low power sensing. So the low power wide area network market, which is tiny today. We're starting to see it grow.
There are clearly some emerging use cases. And I think, as I mentioned, if the smart home, smart consumer, smart logistics, smart asset tracking start to take off, which we believe they will, then I think we'll start to see a much more higher volume of connectivity to gateways and that will drive FY 'twenty two, FY 'twenty three number and the 40% CAGL.
Understood. Thank you.
Our next question comes from the line of Hamed Khastin with the BWS Financial. Please proceed with your question.
Hi. Just one question. Okay. Can you quantify the sales slippage from Q1 to Q2? And was it from all the supply constraints and is it all in wireless and sensing?
I mean, when you say sales slippage, so know, I think you just posted
your 10 Q, towards the bottom of the 10 Q, you were talking about that there's a there was an impact to Q1 sales and you were shifting it to Q2 on the guidance. So I'm just
trying to get clarity on that. Yes, there are some we had some areas of supply constraint. For example, you know, our facilities in Mexico for our high rail business was shut down. We couldn't build anything. So clearly, that's we have to and that's and we're not planning actually to start that facility again until June.
So that's still shut down. So we can't ship anything from that. So that has some impact. It's fairly small, I would say, $3,000,000 to $3,000,000 to $4,000,000. And then, we have reduced capacity in our, some of our operations in our protection business, again, a few $1,000,000 from the standpoint of capacity.
And then Malaysia shut down. There's some constraints there. So it's broad, fairly numerous different sites and locations, but all in all, it adds up and I don't think it's so significant that it's going to make a material difference in Q2. We should be able to pick most of it up.
Our next question comes from the line of Tore Svanberg with Stifel. Please proceed with the question.
Yes, I just had 2 quick follow ups. First of all, and just to sort of, reconcile, you had record POS, yet you're guiding about $30,000,000 you know, lower than your historical record on the top line. Is is that again, you know, just you being careful with the economy? Is it, you know, some related to to Huawei? Help us understand, you know, what that 30,000,000 and and I I know it's not perfect times, right, POS versus sales, but it's it's still a fairly large number.
Yeah. I think, all of the above, Tory. So some constraint in terms of look, we're not going to guide, put any more Huawei shipment in the guide. I've done that in the last two quarters. And I think the way to do it because we just don't know what new regulations will come out or what new restrictions will come out.
So it doesn't really matter. So the guide assumes no more shipments into Huawei. It's the first one. I think the other aspect is the obviously, we have a lower turns percentage required in the quarter. But as I said, part of that is not really knowing enough about how COVID nineteen is going to play out in the different regions and And from a demand standpoint, as North America and Europe come back and start to go back to work, whether we're going to see another virus impact and we're going to be shut down again or is it going to continue to be okay?
So some, some conservatives in there, but in general, I would say that, we feel good about our guidance and could we have guided, more aggressively? I think probably we could have done, but I think with the supply constraints and uncertainties in the demand. We still have 2, one of our sites shut down and another one at 50% capacity, things like that. It's just you don't know, you don't want to be too bullish out there, right?
Yeah, that's fair. And one, just the last question. Sounds like you're seeing quite a bit of activity on the health care side. With Laura, I was just wondering if you're seeing enough where you may actually, you know, dedicate, sort of a business unit, towards Laura Smart Healthcare, seems like a lot of companies are are sort of, you know, using the the health care market has a big opportunity here in the downturn. You know, just just wondering if you guys are are being a bit more dedicated to health care there too with with Laura.
Thanks.
Yes, that's a good question, Tore. And I'm not sure of the answer to that yet. We are starting to see use cases, as I've said, and we've got customers deploying LoRa. Around the world, to help with COVID-nineteen. I said I mentioned contact tracing, remote temperature sensing, Laura's perfect for that, occupancy management and smart quarantining.
But, I've I'm more of a believer of just kind of thinking through strategically, whether longer term it makes sense or whether it's a short term opportunity. The nice thing is I think we have some good partners working on this and they'll they'll start to indicate to us if Laura is really being successful in this area, and that will then, probably drive, yeah, a kind of a separate set of strategic thinking in that area. Our new LoRa Edge platform that we just brought to market, we just announced, which has both Wi Fi sniffing, GNSS sniffing and the lower function. So 3 separate radios, all in the same chip. Actually we designed it and the focus is on smart logistics and asset tracking, which we think is going to be huge market.
But that same platform, I think, has got a really good opportunity in the smart health market. So we'll see, especially for contact tracing and things like that. So we'll see how it plays out. But it's one of those areas that we have to keep a close eye on to see if the market is going to adopted and accelerate.
Sounds good. Thank you very much.
Our final question comes from the line of Christopher Rolland with Susquehanna. Please proceed with your question.
Hey guys, thanks for the follow-up and to kind of a follow-up also to to Tori's. On the booking side of things, we've kind of noticed a correlation between book to bill and, Huawei previously as a customer, from from some of your competitors. And I think you guys said you had a a a strong book to bill. I don't know if you guys would would maybe want to describe what that is a little bit further. Was 1.3 or above.
And then just as you think about those extra marginal bookings, what are they long dated? Are they cancelable, cancellable, or is is there anything about that, that, you know, that that's different than otherwise?
So, Chris, our book to bill was, you know, it was pretty much up there instead of the range that you had referred to. And, and the bookings have been strong. Like, Mohan said on the call, they've actually continued. And, I think one of the things that we do consistently is to track how much cancellations we're getting, how much push out requests that we're getting. And so far, we have not seen anything that is, apart from the ordinary, you know, we've been very pleased with, the audio indications that we're seeing is that the the bookings are really something that has been driven by actual demand.
Yes, and I would point out that a lot of the, a lot of the strength, as I mentioned, was the booking strength has been in infrastructure and IoT related areas we're not seeing the same in some other segments. So that and within the infrastructure, it's been fairly broad. So normally, you'll see 1 or 2 areas where you see a lot of strength, but it's fairly broad within infrastructure. I would say it's base station, its data center, it's PON, it's a board communication and IoT.
Thank you very much guys.
There are no further questions left at this time. I would like to turn the floor back over to management for any closing remarks.
In closing, COVID 19 has provided us all with its fair share of challenges. Want to thank all of our employees and partners for their efforts to quickly adjust to the challenges faced from this global pandemic. They have adapted and responded and leveraged the infrastructure we have built over the last several years, resulting in limited impact to our business operations. We believe our diverse product offering balanced end market and balanced geographical approach along with our strong customer relationships should help us outperform our peers in this uncertain times. With that, we appreciate your continued support of Semtech and look forward to updating you all next quarter.
Thank you.
This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.