Good day, ladies and gentlemen, and welcome to the Semtech Corporation Third Quarter Fiscal 2018 Earnings Release. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to hand the floor over to Sandy Harrison, Director, Business Finance And Investor Relations.
Please go ahead.
Thank you, Karen, and welcome to Semtech's conference call to discuss our financial results for the third quarter of fiscal year 2018. Speaker for speakers for today's call will be Mohan Mahasvarn, Semtech's President, Chief Executive Officer and Emeka Chuku, 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 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 as well as 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 Semtech 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 financial 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. With that, I will turn the call over to Centex's Chief Financial Officer.
Amacca Chukwu. Mecca?
Thank you, Sandy. Good afternoon, everyone. For Q3 fiscal 2018, GAAP net sales were $150,300,000, a 2% sequential decline and an increase of 10% year over year. Q3 GAAP net sales included $6,200,000 of expense for the Comcast wallet. Q3 GAAP gross margin decreased 74 basis points sequentially to 59.5 percent due to the higher sequential Comcast warrant expense, slightly offset by lower inventory adjustments.
Q3 GAAP operating expense decreased approximately 2% sequentially due to lower share based compensation. In Q3, interest and other expense was $800,000 compared to $2,200,000 in Q2. The decrease reflects the benefit of foreign exchange gains realized from a stronger dollar and the lower net liabilities denominated in foreign currencies. Moving on to the non GAAP results, which include the impact of share based compensation, amortization of acquired intangibles, acquisition or disposition related and other nonrecurring charges not tied to current operations. Q3 fiscal 2018 net sales were $156,600,000, flat sequentially and an increase of 11% over the prior year.
In Q3, shipments into Asia represented 75% of total net sales. North America represented 17% and Europe represented 8%. Total net sales to distribution represented approximately 66% and direct sales represented approximately 34%. Q3 bookings increased sequentially and resulted in a book to bill of approximately 1. Total bookings accounted for approximately 50% of shipments during the quarter.
Q3 non GAAP gross margin was 61.3 percent, an increase of 10 basis points sequentially or lower inventory adjustments offset by less favorable product mix. We expect our Q4 non GAAP gross margin to increase slightly sequentially due to more favorable mix. Q3 non GAAP operating expense was $53,200,000, off slightly from Q2. In Q4, we expect non GAAP operating expense to decline between 4% 8% sequentially as a result of lower work hours and lower variable compensation expenses. For modeling purposes, we expect fiscal 2019 non GAAP operating expenses to be flat to modestly higher.
In Q3, our non GAAP tax rate decreased to 14.1% from 19.1% in Q2. Reflecting a shift in regional income assumptions. We expect our Q4 fiscal 2018 and fiscal 2019 tax rates to be between 16% 20%. In Q3, The cash flow from operations remained solid at $27,000,000 or 17 percent of revenue. Cash and investments in Q3 were $291,000,000 and our debt balance at the end of Q3 was approximately $232,000,000, leaving us with a net cash position of $59,000,000 In Q3, approximately 71% of our cash and investments were domiciled in international accounts, and 29% was based in the U.
S. We did not repurchase any of our stock during the quarter. And the outstanding stock repurchase authorization stands at approximately $51,400,000. The primary use of cash continues to be to pay down our debt make strategic investments and opportunistically repurchase our shares. In Q3, accounts receivable increased 9% sequentially and represented 37 days of sales outstanding, below the targeted range of 40 to 45 days.
Net inventory in absolute dollar terms decreased approximately 5% sequentially and by 4 days to 110 days above the target range of 90 to 100 days. In Q4, we expect our inventory to be approximately flat in absolute dollars. In summary, we are pleased to deliver a strong financial performance in the 1st 9 months of fiscal 2018. On a non GAAP basis, our revenue grew 13% year over year. And due to expanding gross margins and diligent operating expense control, we grew earnings 3 times faster, allowing us to achieve a record operating profit.
Despite expectations for a more seasonal 4th quarter, we believe our focus on execution, growth from our differentiated growth engines and diversification strategy should help us deliver a record financial performance in fiscal 2018 but more importantly, position the company to continue to outperform the industry in fiscal 2019. I will now hand the call over to Mohan.
Thank you, Emeka. Good afternoon, everyone. I will discuss our Q3 fiscal year 2018 performance by end market and by product group and then provide our outlook for Q4 of fiscal year 2018. In Q3 of fiscal year 2018, we reported non GAAP net revenues of $156,600,000, which was flat sequentially and up 11% over the same period a year ago. We posted non GAAP gross margin of 61.3%, and achieved a record non GAAP earnings per diluted share of $0.54.
In Q3 of fiscal year 2018, demand from the high end humor market increased over the prior quarter and represented 30% of total net revenues. Approximately 23% of high end consumer net revenues were attributable to mobile devices and approximately 7% were attributable to other consumer systems. Demand from the industrial market also increased over the prior quarter and represented 28% of total net revenues. Demand from the enterprise computing and communications end markets both decreased over the prior quarter and represented 31% and 11% of total net revenues, respectively. I will now discuss the performance of each of our product groups.
Beginning with our Signal Integrity Product Group. In Q3 of fiscal year 2018, net revenues from our Signal Integrity Product Group declined over the prior quarter demand from China infrastructure remained relatively soft through the quarter as we had expected. We anticipate this weakness to continue into Q4, weakness in the 2.5g PON market was somewhat offset by strength in the 10g PON market. Despite the current softness in In Q3, our base station business, driven mostly by China, declined. And we anticipate that this business will also remain soft in Q4.
We do not expect this business to show significant of calendar year 2019. Our data center business continues to remain in our ClearEdge CDR platform remains very strong as our cloud infrastructure customers migrate their optical connectivity links to 100 gigabit per second. We are seeing very good design win momentum in 100 gigabit per second QSFP28 optical modules used in mega data centers, where we believe we have a leadership position. In Q3, we announced the production availability of our latest ClearEdge product, which integrates our high performance 25 gigabit per second CDR with enhanced laser driver and TIA and target SFP28 short reach modules and active optical cables. Our FiberEdge PMD platform which is a complement to our ClearEdge CDR platform is now sampling.
FiberEdge expands our SAM with our first 100 gigabit per second linear driver and TIA, which provides a seamless interface to 100 gigabit per second PAM4 optics. We are seeing solid interest our fiber edge platform from customers developing 100 gig, 200 gig and 400 gig PAM4 modules. During the quarter, we announced the availability of the industry's first fully integrated 5 pmd chipset for single lambda 100 gigabit per second PAM4 optical modules. This new 100 gigabit per second chipset combines our fiber edge PMD platform with MultiFi's DSP platform. To deliver a fully optimized seamless 5 pmd solution for optical modules targeted at next generation hyperscale data centers.
SEMTech's leadership position in high speed optical connectivity will be further strengthened with the release of our PAM4 chipset. And the release of next generation high performance clear edge based products. Despite the current demand softness in China, with a steady pace of new product introductions targeted at next generation data centers, we believe that our Signal Integrity Product Group is well positioned to continue to grow on an annual basis. For Q4 of fiscal year 2018, we expect our Signal Integrity Product group to decline modest growth in data center spending is expected to be offset by continued softness in China infrastructure spending. Moving on to product group increased 10% sequentially and 23% over the same period a year ago and represented 32% of total net revenues.
Demand from our largest Korean smartphone customer increased over the prior quarter, driven by the ramp up of several new smartphones. We also saw demand increase from our major North American handset customer. The increasing use of advanced lithography processes and the increasing use of advanced OLED displays in smartphones provide Centech with a unique opportunity as our Z platform is ideally suited to protect these systems. In Q3, our smartphone strength in Korea and North America was offset by weakness in the China smartphone market. Our protection business is focused on further diversifying by introducing new solutions that specifically target the automotive industrial, high speed computing and communication segments.
We believe this diversification, along with broader customer penetration within the smartphone segment, will help drive growth in our protection business over the next several years. In Q4 of fiscal year 2018, we expect our protection business to decrease sequentially due to traditional seasonal declines associated with the year end customer inventory management and ongoing China smartphone softness. Turning to our wireless and sensing product group. In Q3 of fiscal year 2018, net revenues from our wireless and sensing product group decreased from the prior quarter's record performance as expected, but increased 29% over the same quarter a year ago. And represented 20 percent of total net revenues.
In Q3, our LoRa related business delivered another record performance with record revenues, record bookings, and record design wins. We believe we are on track to meet our goal of generating between $40,000,000 and $50,000,000 in LoRa enabled revenues this year and between $80,000,000 $100,000,000 next year. The LoRa momentum across the globe continues to deliver exciting results as we expect to have LoRa based network deployments completed or underway in more than 40 five countries worldwide and over 70,000 gateways deployed by the end of this fiscal year. These global deployments are enabling the proliferation of many new and exciting use cases. In addition, the LoRa Alliance continues to grow with new global leaders joining the Alliance.
This week, we announced selective sampling of the industry's first disposable LoRaWAN tag reference design. This low cost, low power disposable long range tag enables a number of new LP WAN use cases to be realized, including smart health, smart media and smart insurance applications. We expect that in show proof of concepts using this tag will be completed in the next two quarters with production release of the tag by the second half of fiscal year twenty nineteen. Once the tag is fully available and proof of concepts completed, we anticipate the LoRaWAN SAM will increase dramatically as new use cases emerge. Our future roadmap includes both disposable and rechargeable flex and paper substrate tag reference designs, which we believe will enable 1,000,000,000 of LoRaWAN tags to proliferate the IoT industry in the future.
We will communicate progress related to our LoRaWAN tax strategy on future earnings calls. During the quarter, we also made several joint announcements with partners driving the global LoRaWAN momentum. These included Advantech, a leading supplier of industrial communication solutions, launched its wizard node and Smartstorm gateway, making it possible to place sensors and install gateways in remote areas and harsh environments. Where they help detect potential failures and prevent costly shutdowns. NetBox, an OEM and cloud service provider, announced it is converting its current ZigBee solution solutions to support the growing LoRaWAN ecosystem, targeted at Smart Cities, Smart Buildings and Smart Agriculture locations.
OFO, a Chinese bike sharing company, operating in more than 180 cities, with approximately 10,000,000 bicycles, announced it would be putting LoRa connectivity on its bicycles to complement its current connectivity options. As the LoRa Alliance standard proliferates across the industry, along with our alliance partners, we continue to look for ways to effectively promote and educate the industry on LoRa Technology. We recently launched the LoRaWAN Academy with the help of several alliance partners. The LoRaWAN Academy was developed to educate the next generation of hardware software and computer science engineers on real world IoT applications. This platform provides a hands on comprehensive curriculum for member universities to give future engineers the fundamental skills needed to develop LoRaWAN network infrastructure and below our end nodes and drive new IoT applications.
The LP WAN market is clearly an exciting emerging market, and we believe LoRa is ideally through to lead this market. In We expect this business to continue to be around excessive smartphone RF emissions. Many more countries are now adopting stricter RF emissions control driving increased interest and demand for our proximity sensing platforms. For Q4 of fiscal year 2018, we expect net revenues from our wireless and sensing product group to decline due to seasonally lower proximity sensing demand from the smartphone market. Turning to our power and high rail product group.
In Q3 of fiscal year 2018, our power and high rail product group increased 7% sequentially, and represented 8% of total net revenues. Our power and high reliability product group delivered another strong quarter of new product releases with 11 new products. Customer design in activity for wireless charging products has picked up as industry adoption of wireless charging is increasing momentum. We are seeing increased design in activity in the industrial and automotive markets and expect additional opportunities to emerge in the wearable segment. In Q4 of fiscal year 2018, we expect net revenues from our power and high reliability product group to increase.
In Q3, the total company distribution POS was approximately flat with the prior quarter's record performance. Q3 distributed days of inventory increased to 75 days, which represents the midpoint of our targeted range of 70 to 80 days. Our distributor business remains balanced with 58% of the total POS coming from the high end consumer and enterprise computing end markets. And 42% of total POS coming from the industrial and communications end markets. Moving on to new products and design wins.
In Q3 of fiscal year 2018, we released 25 new products and we achieved 2055 new design wins Q3 was also a record design win quarter in terms of design wins measured in dollars. Now let me discuss our outlook for the fourth quarter of fiscal year 2018. Based on current bookings trends, we are estimating Q4 non GAAP net revenues to be between 138,000,001 142,000,000 we needed net turned orders of approximately 41% at the beginning of Q4. We expect our Q4 GAAP earnings to be between $0.0810 per diluted share and our Q4 non GAAP earnings to be between $0.40 $0.42 per diluted share I will now hand the call back
Thank Our first question comes from the line of Craig Ellis with B. Riley FBR.
Thanks very much for taking the question and congratulations on the good quarter guys. The first question I had is just digging into some of the gives and takes across the fiscal fourth quarter. So if I heard you correctly, Mohan, it sounds like power management will be up the other segments down Guys, I'm wondering if you can just give us some color on, the relative declines for some of the segments, whether it be signal integrity protection, etcetera. As we look at the dynamics at play as we close out the year.
Yes. So, Craig, on that, on from the Signal Integrity standpoint, It's more continuation of the China weakness, mostly China infrastructure. So both pawn and base station Q4 is typically a little bit stronger, I would say, for that business, but it's quite weak. We are anticipating that Q1, it will start to pick up again, but for Q4, it's weaker than normal because of the China weakness. On the protection side, I would say it's more seasonal.
This is historically a down quarter for our protection business, driven by the smartphone customers in Korea bringing down their inventory. It's perhaps a little bit weaker than we would normally anticipate, again, because of China smartphones being a little bit weak. So would say those are the 2 main factors. Obviously, our wireless and sensing business, we have a growing sensing proximity sensing business, which has some exposure now to smartphones. So that is seeing some weakness in Q4 also.
And following up on the LoRa business, Mohan, clearly, there's been a number of announcements recently that show that the inflection towards endpoints is starting to gain traction and And you talked about some new products that could really accelerate that given form factors and power characteristics and that kind of thing. Can you talk a little bit more specifically about how you see the evolution of the lower revenue mix over 2018 and into 2019? As we move from what I think could fairly be characterized as a hub centric year in the year that's about to wrap up to what may be a more balanced year next year or if not in 2019? How do we think about those broader parameters?
Yes, I think so. Now the infrastructure is starting get deployed. Clearly, now it's the opportunity to connect sensors to those gateways. And that's what we're seeing. And that's why I report on the number of gateways being deployed.
And obviously, you noticed that it's increased to 70,000 So we're ahead of schedule there. And now that each one of those has the capacity for a number of sensors. And so we believe there's like 350,000,000 enough capacity now for 350,000,000 sensors, which will start to over the next few years, start to get implemented. So that's really good progress for us. One of the reasons I pointed out the tag release and we announced the tag is, it's kind of really opens up a new IoT segment for the industry actually and also for Semtech.
And so the disposable tag, it's really concept of connecting this tag to these gateways or micro picosell gateways and being able to trigger a connectivity response based on an event. And so it's really an exciting development for us. So we are obviously still early in this plan here, but I think it can really open up the revenue starting, towards the second half of next year.
That's helpful. And then the last one, until I jump back in the queue for Mo, or excuse me, for Emeka. Emeka, seems like you've got some good near term mix dynamics going on the gross margin line. As we think about calendar 2018, can you just identify some of the pluses and negative pluses and minuses as we look at the gross margin line, what's a tailwind as we go through the year? And are there any headwinds that we should be aware of?
So, Greg, yeah, as you know, our gross margin is really driven primarily by the mix of revenues, right? So as I look out into our fiscal 2019. I see continued growth, strong growth from a lot of product groups and that should be a tailwind for gross margin. We do believe that our data center business, which DCA is great at about 20% to 30% continues to grow very aggressively next year as well. That should be good for our gross margins.
I think on the headwind side, if you will, is the smartphone that is a growth driver for us as well. Even though we're expecting to continue to see our gross margin expansion within our protection business going into the smartphones. But because that has an overall gross margins that is lower than the corporate offering, that will be something that could put pressure on the gross margins if we see some really strong growth from our smartphone business.
Got it. Thanks guys.
Thank you. And our next question comes from the line of Rick Schafer with Oppenheimer.
Hey, thanks guys. I have a couple of questions. I guess the first one is, would you be able to give a sense of just how big PON and base station are now on a combined basis as a percent of sales. And just a rough idea, I mean, is it are they to combine, are they below 10% as we look forward or just kind of give us a sense there?
Yes, Rick. So what we've talked about is base station has been sort of in that mid single digit range with pawn sort of the high single low double digit. So the 2 of those together and sort of your midteens percentage of revenue when you roll the 2 together.
Okay. Thanks. And then just a quick update on the on the CDR business, sort of when do you guys expect or what's the latest in terms of your guys' expectation on the move to single Lambda Hunter G. Maybe Mohan, what has to happen to spark that move to single Lambda? I mean, do we have to hit a certain costs or price point?
Is it something else that the industry is waiting for?
Well, I think the industry will move when the cost point is there, but products have to be there and the solutions have to be there. And I so from our standpoint, we will be sampling, end of this year, a single Lambda solution. And our expectation is probably by midnextyear end of next year, we start to see some form of ramp with some module customers. And I think it will be the following year before we see material revenue. But I think it's important from our standpoint that we have solutions that are there today with our Claridge family, our CDR family and our Fibreage family coming out also.
So regardless, we have an Analog solution today and then a combined solution when the customers switch over. The switch is going to be driven by the price per gigabit and that's a function of getting the optics, the right price point and making sure that the solution is a cost of solution. And I expect that some of the current technologies will also be reducing in price. So it'll put a little bit of pressure on the transition. But, I think we're in very good shape to, not only write this current success of growth of the 100 gig solutions QSFP28 type solutions.
And then when they do move over to the PAMFOLF single Lambda solutions. I think we'll be in good shape to transition with them.
And then if I could sneak just one more in, I mean, could you give any color or discuss the trends in the discrete protection attach rates as we move to 10 nanometer and below What do you see your protection Sam doing? And maybe give a sense of what kind of maybe what kind of growth rates that could drive for your protection business?
Yes, that's a good question, Rick. I think the definitely the SAM will increase. That's our belief is the industry is going to come more to us as the, processes, these advanced processes go to more advanced lithographies. As I mentioned on the my script.
Transitions
continue to occur.
Thanks.
Thank you. And our next question comes from the line of Cody Acree with Jiffel Hamilton. Hey
guys, thanks for taking my question. If we could go back to the Signal Integrity guidance weaker here in Q4, but you're giving some indications of of some improvement expected in the first half. I guess what's giving you that indication and maybe your level of visibility or confidence there?
Yes, I would say, Cody, it's more a question that Q4 is, and Q3 are relatively soft for our China business and infrastructure business. There are indications that there that's going to be a little bit better next year, but I would say that we're not no real evidence of that yet, but there are indications from our customers that there's going to be some improvement. I would say on the data center side, we continue to see strength. And so my sense is Q1 is typically a very strong, quarter for our CDR business and that's our expectation this year is next year also.
Are you seeing orders in hand or is this just anecdotal comments from your customers?
I would say on the data center side, we have a little bit better visibility on the infrastructure side, it's still relatively
soft. And as you you've tried to parse out what's going on with the softness in handsets, China versus the kind of typical inventory correction at your large green customer. Is that inventory correction in Korea larger than you would have expected or is it is it more heavily weighted, I guess, just softer guidance into what's going on in China?
I would say the inventory correction is about normal Kody, perhaps, we've had a very strong year so far in this business, the smartphone business, both protection and our proximity sensing. So some of that might be inventory, run off in Q4. But I think the China smartphone issue is more indicative of China smartphone manufacturer is not doing as well as they had anticipated. And, and, that hopefully will change next year.
And just lastly, I guess just any visibility into what your expectations are for the first half of twenty eighteen, just seasonally?
Yes, we're still we're anticipating that next year is going to be another strong record year for us. Whether it plays out the way it did this year, which is a very strong first half, a record first half, and then actually a record 1st 9 months and then a weaker Q4. I don't know. That's our anticipation though. I think we'll have a strong first half again next year.
And our next question comes from the line of Tristan Guerra with Robert W. Baird.
Hi, good afternoon. Back to the China Infrastructure business, what sequential decline should we expect, in the coming quarter? And also how does the inventory situation look like in that business in China currently?
Yes. Hi, Tristan. I think that if we look at the business, We're looking at seeing additional declines for both the base station and PON, although offset by some of the growth in the data center market, and that really will be what drives that business. Those two dynamics.
Okay. And any color in terms of inventories? I mean, when do you expect a stabilization in that business?
Yes, I would say, Tristan, it's in that business, it's not so much about inventory as so much it is, as it is CapEx and infrastructure spending in China. PON is not as bad, but the base station side of it seems to have certainly weakened. And as I said on my script, but I don't think it's going to come back until August to grow significantly until the 5G deployment stop to occur, which is probably going to be closer to the end of next year and early 2019.
Okay. And then in your lower business, outside of SD micro and microchip, are you engaged or are you seeing other chip companies interested in licensing your technology?
The answer is yes, but we're not focused on that. Our focus is on growing growing the end nodes and growing the use cases. And as opportunities are in front of us, we look at them on a case by case basis. And certainly, if there are, other chip companies that complement our capabilities, SD Micro and Microchip are both microcontroller companies and there are others that complement us, then we will continue to work with them.
Thank you. And our final question for today comes from the line of Hamed Khorsand with BWS Financial. Please go ahead.
Hi, thanks for taking my questions. First off, how much more can you see ramping as from your proximity sensors if you're looking at your the other design wins that you have in in your other product lines?
The proximity sensing is doing very well for us. It's targeted obviously at the smartphones where you have the RF radios, the emissions from that and managing the radio power control and it's doing very well. Obviously, we have a strong penetration of the Korean smartphone manufacturers that's starting. We're starting to get traction at the Chinese smartphone manufacturers also. One of the things that is clearly happening is that, there are regulations around the world that are expanding to ensure that there are some controls on the RF emissions and the power for to prevent any issues associated with the human body.
And so that's a good trend And so yes, we expect it to continue to grow next year.
Okay. And then in the lower aspect, I heard you say it's now at 70,000 as far as your expectations for gateways. That's higher than your the last numbers you have been indicating. Is this because there's capacity in the gateways that have been installed or is this more footprint of the network being expanded?
Yes, that's more a statement of more gateways being installed. So we set ourselves a target that we look at. And I had said that we were At the end of this year, we would expect 65,000. We'll, that's what we were hearing from all of our partners 65,000 macro gateways were going to be deployed. We're now saying 70,000 macro gateways.
Each one of those gateways connects to about 5000 has the capacity to support about 5000 sensors. So that gives you an idea. If there's 70,000 gateways out there, there's a capacity out there for 350,000,000 sensors. And so that indicates, gives you an indication of if we were to have utilization of those gateways, then there would be 350,000,000 end nodes out there. Our goal of course is to double, triple quadruple the number of gateways the number of sensors out there and then start to really drive the use cases.
And that's one of the, as I mentioned, a couple of times, the LoRaWAN tag that, I mentioned on the, on my script is really an important aspect to our strategy because it drives a whole set of new use cases that I believe will, drive the need for many more gateways as well.
And then the final question is just so we have a greater understanding of what you're talking about is from a seasonal aspect What's different this time around from a seasonal perspective that you're seeing versus what was going on Q1 of this year, Q4 of last year. I mean, it seemed like you were in the same marketplace, but the same product lines But you weren't really seeing any seasonal differences. So what's going on at the customer level, right?
Well, I think, let's take away the China phenomenon for a second and just talk about the seasonality of business. And we typically do see our Q4 come down, for our protection business. That's typically associated with smartphones and we see inventory management by Samsung and some of the other guys. And so they do typically bring down their build plans in Q4. So that's normal, I think, for our protection business and our sensing business.
The anomaly, this Q4 is really in our SIP business, in our Signal Integrity Product business, which are normally I think we would anticipate to have been stronger. And, there, as I mentioned, it's mostly China driven. The China infrastructure seems to have, become even softer. And so that's really what's driving that I wouldn't say that's necessarily a seasonal factor.
Thank you. And that concludes our question and answer session for today. I'd like to turn the floor back over to Semtech for any closing comments.
Okay. In closing, while we are expecting a more seasonal pattern for our Q4 results, I am pleased with our solid performance for the 1st 3 quarters of fiscal year 2018, which should enable the company to deliver record financial results this fiscal year and provide a strong platform With that, we appreciate your continued support of Semtech and look forward to updating you all next quarter. Thank you.
Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a great day.