Greetings. Welcome to the Semtech Corporation Conference Call to discuss Q1 fiscal year 2023 financial results. Speakers for today's call will be Mohan Maheswaran, Semtech's President and Chief Executive Officer, and Emeka Chukwu, Semtech's Executive Vice President and Chief Financial Officer. Please note this conference is being recorded. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. I will now turn the call over to Semtech's Executive Vice President and Chief Financial Officer, Emeka Chukwu. Thank you, operator. The 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 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 this call, all references made to financial results in my prepared remarks and Mohan's prepared remarks will refer to non-GAAP financial measures unless otherwise noted. A 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. In Q1 fiscal 2023, the company delivered net revenue of $202.1 million, a sequential increase of 6% and an increase of 19% year-over-year, and was once again above the midpoint of our guidance. These numbers include $2.9 million of revenue from our high reliability business that we divested at the start of Q2. We continued to demonstrate the leverage in our model by growing earnings at approximately 2x the rate of revenue growth. Non-GAAP earnings per share grew 14% sequentially and 51% year-over-year. The strength of the secular drivers behind our growth engines of LoRa, Tri-Edge, PON X, 5G and systems protection platforms contributed to the strong net revenue performance despite the challenges presented by COVID and supply constraints. In Q1, shipments into Asia, North America, and Europe represented 76%, 13%, and 11% respectively. While this represented the ship to addresses of our distributors and customers, we estimate that approximately 33% of our shipments are consumed in China, 29% in the Americas, 19% in Europe, and the balance over the rest of the world. Total direct sales represented approximately 11% of net revenue, and distribution represented approximately 89%. Our distributor POS represented another quarterly record, and the business remains balanced. With approximately 40%, 35%, and 25% of the total POS coming from the infrastructure, industrial, and high-end consumer end markets respectively. In Q1, net revenues from the high-end consumer market increased 2% sequentially and decreased 11% over the prior year and represented 24% of total net revenues. Approximately 12% of high-end consumer net revenues was attributable to mobile devices and approximately 12% was attributable to other consumer systems. Net revenue from the industrial end market increased 4% sequentially and 42% over the prior year and represented 39% of total net revenues. Finally, the infrastructure end market increased 11% sequentially and 24% over the prior year and represented 37% of total net revenues. Q1 bookings decreased 23% sequentially, and turns bookings accounted for approximately 1% of our Q1 shipments. Q1 gross margin increased 30 basis points sequentially to 64.8%, a new quarterly record driven by a higher mix of our growth engines. For Q2, we expect gross margin to expand to another record reflecting the benefit of the continued strength of our growth engines. In fiscal 2023, we expect our gross margins to trend higher 100-200 basis points from a favorable richer mix of our growth platforms. In Q1, operating expense increased slightly to $70.9 million, driven by higher staffing costs. For Q2, we expect our operating expense to increase slightly due to higher new product expenses. In Q1 of fiscal 2023, operating profit grew 11% sequentially, approximately 2x the rate of net revenue growth, reflecting the higher gross margin and the modest increase in operating expense. Sequentially, operating margin expanded approximately 100 basis points to 29.8% and expanded approximately 550 basis points from the same quarter last year, representing solid progress towards our 32%-36% long-term target model. We are seeing the stronger operating leverage expected from the success of our growth platforms. In Q1, cash flow from operations was $50 million, up 54% from the same quarter last year. This is the result of the record operating profit and good management of working capital. Free cash flow increased 56% year-over-year. Cash flow generation in fiscal 2023 is expected to be strong despite a strategic decision to maintain higher levels of inventory because of strong demand and supply constraints. In Q1, we repurchased approximately $50 million or 1.2% of our outstanding stock. We have approximately $209 million remaining in our share repurchase authorization. We expect to continue to use our cash to opportunistically repurchase our shares, make strategic investments, and pay down debts. Q1 accounts receivable decreased 7% sequentially, and days of sales declined four days to 31 days. In Q1, our net inventory in absolute dollar terms decreased 6% sequentially, and days of inventory decreased six days sequentially to 140 days, primarily reflecting the value of the inventory reclassified as available for sale as a result of a divestiture of our high reliability discrete business. We expect our net inventory to remain above our target range of 90-100 days to support the higher demands and the tighter supply chain environment. In summary, we are very pleased to deliver another record financial performance in Q1 despite the supply chain constraints and continued pandemic headwinds. We are pleased to see our years of investment in technology platforms that enable a smarter, sustainable planet drive record sales, record gross margin, and record earnings per share. Our cash flow generation remains strong. The financial model is delivering a strong leverage. In fiscal year 2023, we believe the long-term secular nature of our growth engines positions us nicely for another record financial performance in fiscal year 2023. I will now hand the call over to Mohan. Thank you, Emeka. Good afternoon, everyone. I will now discuss our Q1 fiscal year 2023 performance by product group and provide our outlook for Q2 of fiscal year 2023. At Q1 of fiscal year 2023, net revenues of $202.1 million represented a 6% sequential increase and a 19% year-on-year growth, and represented another exciting Semtech record. We posted record non-GAAP gross margins of 64.8% and record non-GAAP earnings per diluted share of $0.80. These numbers include $2.9 million of revenue from our high reliability discrete business that we divested at the beginning of Q2. Our signal integrity product group grew 19% annually and achieved a fourth sequential quarterly revenue record and represented 40% of total revenues. As expected, growth was driven by the data center and PON markets. In Q1, our hyperscale data center business was strong, led by growth from our Tri-Edge PAM4 short reach platform. Design-ins of Tri-Edge in 100 gig, 200 gig, and 400 gig PAM4 optical modules and active optical cables continued to gain momentum globally. In Q1, revenue from Tri-Edge increased over 100% over the prior quarter, and we continue to believe our hyperscale data center Tri-Edge revenues will triple in FY 2023 as more customers move to full production and we increase our market share over DSP solutions in the 200 gig and 400 gig PAM4 segments. Our customers are also giving us positive feedback on our long reach Tri-Edge samples targeted at 200 gig FR4 optical modules. This will be another growth driver for us over the next few years. These new longer reach devices approximately double our SAM in the hyperscale data center market. We remain confident that Tri-Edge's ultra-low power, low cost, and low latency, together with FiberEdge's high performance, will enable us to continue to grow our hyperscale data center business over the next several years. Our PON business grew approximately 14% sequentially and achieved a seventh consecutive record revenue quarter, driven by continued strength from our 10 gig and 2.5 gig PON platforms. Global demand for higher access bandwidth remains strong, with new deployments and new use cases emerging. In addition to the China market, which continues to lead PON demand, U.S., Indian, and European service providers have also announced PON deployments, which we believe bodes very well for future PON demand growth. Semtech is the leading PMD supplier to the global PON market, providing the most comprehensive PON PMD portfolio. We are now sampling to customers our latest innovative 25 gig burst mode transimpedance amplifier, part of our PON X platform for next-generation PON networks. Our PON business continues to show significant strength, and we are confident that this business will grow nicely over the next several years as PON bandwidths increase. In Q1 of FY 2023, revenue from our wireless base station business showed solid growth on the strength of 4G and 5G base station deployments. We continue to win new designs for both ClearEdge and Tri-Edge in 5G base station fronthaul optical modules. We announced production release of the industry's first Tri-Edge PAM4 platform for 5G fronthaul optical modules, which has already achieved many design-ins. We expect qualifications to be completed and initial revenues to begin to grow later this year. We are also now sampling the industry's first Tri-Edge platform with integrated EML driver for 5G mid-haul applications. We expect our 5G wireless base station business to continue to grow in FY 2023, and accelerate over the next few years as global 5G system deployments accelerate, driven by new 5G tenders expected in the second half of fiscal year 2023. The underlying secular demand strength we witnessed in FY 2022, driven by the quest for higher bandwidth at the lowest power across all infrastructure segments, is expected to continue into FY 2023. In Q2, we expect our signal integrity product group revenues to increase and deliver another quarterly revenue record. Moving on to our protection product group. In Q1 of fiscal year 2023, net revenue from our from our protection product group increased 23% over the same period last year and represented 27% of total revenues. Our consumer protection business was approximately flat as weaker China and North American smartphone demand was offset by stronger Korean smartphone demand and broad consumer demand. The strategy to diversify our protection business into a broader range of segments is proving very successful. Our broad-based protection business increased nicely in Q1, driven by growth from the automotive, communications, and industrial segments, and now represents approximately 40% of our total protection business. As more system designers are using chips with advanced process geometries, we are seeing demand for Semtech's higher performance protection products increasing across all market segments. Particular bright spots are the automotive and infrastructure markets due to the growth of USB-C, Ethernet, and HDMI interfaces. These growth areas continue to also have a positive impact on our gross margins. In Q2 of fiscal year 2023, we expect our protection revenues to increase. Turning to our wireless and sensing product group. In Q1 of fiscal year 2023, revenues from our wireless and sensing product group increased 15% over the prior year and represented 33% of our total revenues. In Q1, our LoRa-enabled business achieved another new record as the adoption of LoRa in low-power IoT applications across the globe continues to accelerate. We are seeing many new applications and use cases for LoRa. Some of the new innovative applications that are driving sustainability and enabling a smarter planet include ICT International's use of LoRa for environmental applications. By integrating LoRa sensors into their water quality monitoring systems, they can now extract real-time data to improve crop health and yield while decreasing costs. Smart Paddock in Australia has integrated LoRa into smart tags for the livestock industry to analyze cattle behavioral data and solve real-world livestock management issues. This is another example of how LoRa is enabling the future of smart farming. Vutility launched a new LoRa-based self-powered energy monitoring solution, which allows energy data to communicate directly from an electrical panel to the cloud. This is another example of how the adoption of LoRa is enabling the smart utility segment to deliver sustainable, efficient energy usage. Communicate2Integrate announced a new innovative smart plant cloud-based solution for smart irrigation systems. This system monitors temperature, humidity, and other important metrics real-time to maintain the health of a plant, resulting in improved crop yields, water efficiency, and sustainability. These are just a few examples of exciting new LoRa cases being deployed. We are inspired by the growth of LoRaWAN-based networks and LoRaWAN-based sensors, and the plethora of new LoRa-based use cases emerging. Our LoRa metrics also continue to make very positive progress. The number of LoRaWAN network operators grew from 165 at the end of Q4 to 170 by the end of Q1. New LoRaWAN operators are launching networks in markets like Portugal, Germany, and Vietnam. At the same time, private networks are also experiencing explosive growth. This new landscape for LoRaWAN networks shows great growth in diversity of networks, from public networks to community-based networks, to satellite-based networks and to private networks, as well as hybrid network approaches, which is a key competitive differentiator for LoRaWAN. We expect approximately 180 public LoRa network operators by the end of FY 2023. The number of LoRa gateways deployed increased to 4.2 million gateways from 3.2 million at the end of fiscal year 2022. We expect the number of LoRa gateways deployed to increase to over five million by the end of FY 2023. We are delighted with the large increase in gateways deployed globally as this infrastructure is critical to enable the broad range of emerging use cases. Picocell gateway deployments continue to increase nicely, driven by smart home and smart campus segments, as Amazon Sidewalk gateway deployments increased 35% versus Q4 of fiscal year 2022. In addition, the Helium People's Network is growing very fast and was recognized in May by Fast Company as a world-changing idea in 2022, built on LoRa technology. Both Sidewalk and Helium networks should drive an acceleration in end device deployments over the next several years. In addition, our macro gateway deployments increased 6% over Q4 of FY 2022, driven by smart utility, smart logistics, and smart city initiatives globally. The cumulative number of LoRa end nodes deployed increased to 256 million at the end of Q1 from 240 million at the end of FY 2022. We expect this number to exceed 300 million cumulative end nodes by the end of FY 2023. With continued network expansion globally, we expect end node deployments to accelerate rapidly over the next three to five years. The LoRa opportunity pipeline, which includes both opportunities and leads, ended Q1 at just under $1 billion. We anticipate that on average, 40%-50% of the opportunities currently in the pipeline will convert to real deployments over a 24-months timeline. Our opportunity pipeline is growing rapidly with use cases primarily around sustainability and smarter planet initiatives in areas like smart utilities, smart logistics, asset tracking, industrial IoT, smart home, and smart cities, where innovative solution providers are using LoRa to monitor, measure, and manage resources more efficiently. At the end of fiscal year 2023, we expect our total opportunity pipeline to exceed $1.3 billion. In Q1, we also announced the extension of our LoRa Edge device-to-cloud geolocation platform to enable the use of satellite-based networks. The addition of S-band connectivity to the platform enables direct satellite-connected IoT applications in supply chain management and logistics with seamless low-power geolocation on a global scale. Our LoRa Edge platform now enables LoRaWAN, satellite, and GNSS connectivity for outdoor geolocation, and LoRaWAN and Wi-Fi connectivity for indoor geolocation. In Q1, revenue from our proximity sensing platforms remained flat due to seasonal softness and pandemic-related challenges in China. We are expecting increased SAR regulations in Asia later this year to drive proximity sensor growth in the 5G smartphone market over the next several years. Additionally, we are seeing traction in the consumer wearable market as customers utilize proximity sensors for gesture recognition and other applications aimed at enhancing user experience. For Q2 of fiscal year 2023, we expect net revenues from our wireless and sensing product group to be approximately flat as continued positive LoRa momentum is offset by a weaker consumer proximity sensing business. In Q1, we announced nine new products across our portfolio and achieved 3,200 new design wins. Looking forward to Q2 of fiscal year 2023 and following a very strong Q1, we are estimating revenue for Q2 between $203 and 213 million. To attain the midpoint of our guidance range, or approximately $208 million, we needed zero turns at the beginning of Q2. We expect our Q2 non-GAAP earnings to be between $0.80 and 0.90 per diluted share. Note that our guidance no longer includes any high reliability discrete revenues. I will now hand the call back to the operator, and Emeka and I are happy to answer any of your questions. Operator? Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Tore Svanberg with Stifel Nicolaus. Please proceed. Yes. Hi, good afternoon. This is Jeremy calling for Tore. I guess first of all, congratulations on the record quarter. A question on the protection business. It's nice to really see that the broad base growing so nicely. You know, when do you expect to see, or do you expect to see a crossover at some point to 50%+? And which of those three sub-segments are driving that growth? Thank you. That's a good question. It's something we're striving to achieve, but our consumer protection design wins continue to be very positive as well. You know, obviously the automotive is probably the strongest at the moment. I would say communications and then the broad industrial IoT within our protection business are all doing well. They do take longer. You know, the design wins to revenues take longer in the broader market. You know, I think the percentages will be volatile, but it's trending that direction. You know, probably over the next three years, I would expect a 50% to be kind of realized for each segment. Great. I guess maybe turning to the Tri-Edge product, this is your, I guess, your PAM4 analog solution. Are there any partners that you can provide and any, I guess, which maybe regions or areas that you expect to see driving the most growth in this business? Yeah. We're getting momentum across all regions, I would say. You know, obviously very good momentum in China, very good momentum in North America, where the two biggest regions for data centers are today. That's where most of the SAM is. I think with our long reach products that are now being sampled and getting good feedback, we'll get even more kind of balance across regions there. Yeah, it's pretty broad at the moment. By LoRa, can you give us the, you know, the range? Yeah. The shorter reach products are kind of less than 100m, and the longer reach are kind of in the 2-10km range. Great. Thank you very much. Our next question comes from Tristan Gerra with Robert W. Baird. Please proceed. Hi. Good afternoon. Follow-up question on your protection business, obviously, very strong, driven by automotive and industrials. When I exclude the consumer piece of that, which is weakening, what is the sustainability, and could you elaborate a little bit on the longer term drivers that you see for your protection business? Yeah. Let me start with the consumer, Tristan. I think. I wouldn't say it's weakening. I would say it's more that's really driven by macro weakness. We're still doing very well in the consumer space. We get a lot of good design wins in that space. As customers continue to use leading edge lithographies, you know, we expect that business to continue to grow as long as the macro grows as well, of course. The broader protection business is really doing well, and I think partly that's because we're seeing more advanced lithographies being used in those segments now. You know, if you look inside a vehicle, you know, we've got a lot of different things going on in a vehicle from displays to Ethernet ports, to communications, to, you know, antennas, to, you know, all USB ports, for example. I mean, a lot more electronics going into the vehicle. The same can be said of some of the other segments like industrial and IoT. Some of those segments are using advanced lithography processes, and that's where, you know, Semtech's protection really is quite strong. I think, given that this is a new focus area for us over the last couple of years, and we've got a lot more products coming out in this area, you know, my expectation is that this business is gonna continue to grow. It's obviously higher gross margin. It's not as high volume as consumer, but not as volatile also, and I think, a lot stickier. Should be a very solid business, for many, many years, I would think. Great. For my follow-up question, how should I look at the impact of the lockdowns in China that you think you can recover in the second half of the calendar year versus just weak demand in China, where there is, you know, a less clear outlook on when that is going to recover? Yeah, I think there's different elements, Tristan. First of all, you know, bookings have been weaker definitely because of, and China's been a little bit in shutdown mode. I would say contract manufacturing and some of the supply chain issues have also been a challenge. I think I expect both of those areas to kinda recover as the lockdowns you know kind of as China goes back out of lockdown into more regular mode. Then there are some dynamics related to shipments out of China into Ukraine and Russia. There's some demand softness there from you know in the smartphone area. I think that's something that may take a little bit longer to come back. My sense is, yeah, China typically, once they've gone through a little period of not growing, we expect to see heavy investment in infrastructure. So, that's what I'm expecting in the second half, kind of to catch up their kind of growth across the year. Yet to be seen, but that's what we're expecting. Great. Thank you very much. Our next question comes from the line of Craig Ellis with B. Riley Securities. Please proceed. Yeah, thanks for taking the question. I'll start with just a question for Emeka. Emeka, gross margins are tracking a little bit better in the outlook than I expected, albeit consistent with what I think you had called for previously with a 100-200 basis point gain this year. The question is: Is there any benefit to gross margins from the divestiture, or are we just seeing the underlying mix dynamics that you've been talking about just give us another leg up sequentially? Yeah, definitely. You know, there is a slight benefit to gross margin from the divestiture, but given that that business is pretty small, it was probably about $14-15 million a year type of business. The overall impact is not that huge. The key driver behind our gross margin expansion continues to remain the growth engines that we've talked about. As we continue to see success with LoRa, as we continue to see our Tri-Edge you know, gaining traction out there, and continue to increase as we continue to see the benefits of the diversification efforts in protection into industrial automotive. You know, PON X, you know, our PON platform that actually has gross margins around the corporate average. I think as we continue to see a higher mix of all of this as part of our revenues, you know, our gross margins should continue to see some slight expansion. That's great. Then the follow-up question is for you, Mohan. Based on my tally of your comments on the LoRa metrics, it looks like everything's tracking to the metrics you provided a quarter ago. One, I just wanted to clarify that. Two, it does seem like across every one of them, there's good progress. Is it fair to say that despite what is a very tumultuous macro environment, you continue to have strong engagement with customers deploying LoRa and with LoRa uptake? Thank you. Yes, Craig. I think that is a fair conclusion. You know, our metrics are all on track, we believe. Good momentum, very comfortable with, you know, the commentary I made on the expansion of the infrastructure, so lots of gateways. You know, I would say, the funnel is very positive at the moment as well. You know, we have to make sure and this is where the work is, really ensuring that that funnel converts to revenue. You know, we say typically 24 months. You know, my expectation is if things get, you know, we go into a kind of a recessionary environment, that some of that timeline might push out. The reality is when you look at the use cases, a lot of these use cases are about, you know, real smarter planet initiatives. They're about energy management, resource management, you know, asset management and things that are going to help, as the kinda smarter planet initiatives are driven across the globe. I don't expect any type of slowdown at all. LoRa is just a fantastic complementary technology for smarter planet initiatives. We're keeping a very close watch on the different use cases across the different regions. We have a pipeline that's pretty exciting. We just need to work with our customers to make sure there's not any major bottlenecks. Some of the bottlenecks could be sensors. Sometimes it's software, but you know, working with those customers and the ecosystem to resolve those really will result, I think, in us kind of hitting our dashboard metrics and then that drives you know, the future growth. Pretty optimistic about it. Yeah. Got it. Thanks, guys. Our next question comes from the line of Rick Schafer with Oppenheimer. Please proceed. Yeah, thanks. Excuse me, and congrats on a nice quarter, guys, and a nice guide ex the divestiture. Maybe a follow-up question on LoRa. I mean, by my math, you know, LoRa close to $50 million this past quarter, you know, up better than 50% kind of year-over-year, I think. Again, by my math, it seems to be either sort of in line with last year's growth rate or even accelerating. You know, I didn't know if you know basically give, you know, feels like, you know, the 40% growth target is covered this year. I was just curious if you guys could talk about where backlog is today and how far it extends out into next year. Just trying to get a sense of your visibility into next year's kind of run rate. Thanks, Mohan. Yeah, Rick. Next year is a little bit far out, I would say, you know, we just Q1. You know, I think for most of this year, we're in pretty good shape. You know, obviously, we don't need any turns for Q2. You know, we're keeping a close watch on consumption. I think that's really the key. You know, obviously Q1 was another record. We are on track. You know, we are very comfortable with our 40% CAGR guide that we've given to you guys for the next few years. We're on track, I think, to achieve that goal this year. The key for us is really, as I mentioned, looking at the funnel and making sure the funnel is converting. Some of those large opportunities in the funnel, which are fairly broad and more balanced in nature from geographical region standpoint, you know, they really become realized. I think if they do, then, you know, we're very comfortable with you know, the ongoing plans for next year. For this year, I think we're in pretty good shape. I don't see any real issues. I think obviously a lot depends on the macro, but so far I think we have pretty good visibility for most of this fiscal year. Okay. Thanks for that. As my follow-up, I'm just curious, you know, everybody's talking about investing, prepaying, and future capacity, and you guys have done such a great job keeping costs down, expenses, you know, growing, I think on average about half the top line. I'm just curious if you could level set us sort of what your plans are there. Is there anything kind of coming up that would cause OpEx to accelerate or grow faster than the sort of targets we've seen? Thanks. Hi, Rick. Yeah. Thank you. You know, like you've noted, we've done a good job of managing OpEx, and we've always done a good job of that. Now as I look ahead, I don't really see anything out of the ordinary. We'll continue to make the investments in new products in some of the exciting growth areas that we have. We'll continue to make those investments. I think, you know, given the environment these days of, you know, employees, you know, being able to change jobs and things like that, we are making sure that we are taking good care of our employees, you know, making sure that they're properly compensated. There is nothing really out there that I would say that is going to drive a significant increase in our operating expenses beyond the levels that we have publicly articulated. Okay, great. Thanks for the color. Our next question comes from the line of Trevor Janoskie with Needham & Company. Please proceed. Yeah. Hey, guys, this is Trevor on for Quinn, and thanks for taking my question. Since we're hearing concerns about consumer weakness potentially carrying into other segments, we're wondering if you could provide more color on the current data center demand. Like, has there been any changes that could be concerning? Perhaps how is your visibility into the second half? Thanks. Trevor, you started talking about consumer, and then your question asked about data center. Data center is quite strong. We don't see any real issues there. Consumer, you know, is weak. Smartphones are definitely, you know, weak. I would say PC and computing is a little bit weaker related to consumer. Some of that is, I think, people going back into the office and, you know, away from home and working in the office now. Some of that, as I alluded to, is related to the war and some of the areas there which are not being serviced from a demand standpoint, I think. The demand is obviously not gonna be there in the middle of a war. You've got some of those pockets coming out. I would say, you know, it's very region dependent. I mean, China is clearly going through some issues at the moment. You know, this thing could bounce back in the second half. A lot depends on the broader macro environment and inflation and things like that, which could drive, you know, consumer weakness in the second half. You know, if that becomes under control, you know, my sense is also that you know, the semi industry is to some extent still a little bit in this supply constrained environment. We could see you know, that driving into the rest of this year. For the rest of this year, we could see strong demand, in other words. At the moment, yeah, consumer is a little bit weak. That's all I had. Thank you. Our next question comes from the line of Harsh Kumar with Piper Sandler. Please proceed. Yeah. Hey, guys. Strong congratulations. You know, very good results and guide. Mohan, I was wanting a little bit more color on LoRa. I was curious, now that your gateway business is humming with Amazon. I was curious if you would be able to provide us a rough split of revenues between nodes versus gateways, or give us some color if you don't wanna give us the exact percentages. First of all, we're not gonna break out the details, Harsh. Part of the reason is it's very different. You know, macro gateways, we sell devices for, you know, $15. A picocell gateway could be, you know, $5. You know, in Amazon's case, it's less than that. The unit volume doesn't necessarily correlate in terms of when you try to kind of figure out, you know, how many gateways are and et cetera. What I'll tell you is that across the board, the gateways are expanding very nicely. I mentioned in my prepared remarks there that Amazon Sidewalk gateways grew 35%, macro gateways grew 6%, and Helium gateways also grew over 40%. You know, we've got good growth in gateway deployments. As you know, the gateways are just infrastructure, right? You know, the key is now getting sensors connected to those gateways, and that's really the key for future growth. As we look forward, I don't think the gateways deployed and the number of gateways are really that relevant because we've got a lot of capacity out there. Now the question is, okay, what's gonna drive which use cases are gonna drive the sensor connectivity to those gateways? That's really what we're focused on now. Okay. Appreciate it, Mohan. I had maybe one or two for Emeka. Emeka, I'm not sure if I heard this correctly, but if I didn't, please correct me, but I thought you said the bookings were down 23 odd% in Q1. I was curious, was that just a function of turns or is there something going on that maybe you could provide us some color on? My second part of the question was slightly separate. The buyback, you guys stepped up pretty big, obviously to help the stock out, and you talked about $200-something million remaining on your buyback. I guess I'd be curious about your view. Are you of the opinion that your stock is very cheap here, that you'll be very aggressive at these levels, and we should expect similar kind of, you know, take up in buyback from Semtech at this level? Just color. Again, looking for color. Sure, sure. Harsh, I think you heard it correctly. I did report that our bookings were down 23% in the quarter. We started off the quarter with bookings being very strong and things kinda dropped off around the time that, you know, China started to shut down because of COVID, right? I think, you know, a lot of the decrease is all COVID-driven out of China. The expectation is that as things start to open up, we're pretty excited. I think today or yesterday we heard that Shanghai is going to open back up and some parts of Beijing are also looking to open up. The expectation is that things will start to get better in that area. Let me add one other comment on the bookings, Harsh. You know, bookings have been extraordinarily strong for almost the last, I would say, the last year. You know, remember, you know, we've got a lot of visibility at the moment. Backlog is very strong. I don't know that bookings is a good metric at this point in time. You probably wanna start looking at consumption as a better metric. Right. You know, I think that's a good point, Mohan. I just kinda wanna remind you that we reported that our Q1, our POS was actually a record for the company, so the consumption is still doing very well. Moving on to the buyback, you know, what we've said in the past is that we're gonna buy back shares to just keep pace with dilution from our grants to employees. But with regards to valuation, you know, Harsh, we'll probably leave it up to you guys and investors to figure out the valuations. All we know is that we have a business that is actually built on very strong fundamentals right now. As Mohan has said in the past, you know, this is the best this company has been positioned in terms of, from a strategic point of view. We continue to believe that we're just at the beginning of a multiyear double-digit growth, cycles here. With regards to what we are worth, what the valuation is, you know, we'll leave it up to you guys to make that call, but I will just continue to run the business and deliver the numbers. Emeka, appreciate the color, guys, and strong execution. Very much appreciated. Thank you. Thank you. Our next question comes from the line of Gary Mobley with Wells Fargo Securities. Please proceed. Hey, guys. Thanks for taking my question. I had just one question, and it's an extension of what Harsh was asking about. I'm trying to reconcile the difference between a 23% decrease in bookings and what is essentially 5% sequential revenue growth adjustment for the sale of the high reliability business. And so if I presume you're living a little bit off of backlog, and so my question is, will this slowdown in bookings, however long it will continue, manifest itself in the second half of the fiscal year? Thank you. Gary, the answer to that is, it depends. Probably it will start to. If it continues to be extremely weak, then it will start to have an impact in Q4, I would say. But more likely next year. Remember we've had very strong bookings, as most of our peers in the industry, because of supply constraints. You know, most companies, including us, are fully booked in, and we have a lot of backlog. Obviously we don't need any turns this quarter. Next quarter is in pretty good shape, I think. Q4 and then going into next year, you know, and how next year looks like, I think obviously we need to keep some pace on the bookings, but it was unrealistic actually to have the bookings at the rate it was on. We were on such a tremendous bookings rate previously that I think that was unrealistic. I think the drop off is now bringing some normalization back to that. As I mentioned, I think the key thing is to watch consumption. You know, obviously if customers are using the materials, which we're looking at very closely then, you know, I think everything will be fine. That's the key metric to look at. Thanks, Mohan. Our next question comes from the line of Scott Searle with Roth Capital. Please proceed. Hey, good afternoon. Thanks for taking my questions and appreciate all the color on LoRa and some of the other businesses, particularly the reinforcement of the 40% CAGR. Maybe just to follow up on a couple of the earlier questions related to LoRa. Mohan, China had been a big portion of the mix in the past, and you guys have been diversifying away from that. I'm wondering if you could update us in terms of LoRa's China contribution, how that factors into the mix. You know, looking out to the remainder of this year, you're starting to see the ecosystem develop more and more around Amazon Sidewalk and Helium. I'm wondering how you're thinking about that in terms of the contribution to the model, you know, what you're kind of factoring in, how aggressive that is in terms of the build-out of the ecosystem for this current fiscal year? Yeah. Scott, most of the smart home related opportunities in our funnel, you know, we don't have a tremendous amount of revenue yet from that segment, and I would say that's true of the smart home and the smart campus segment. When you look at the revenues today, most of the revenues are coming from, you know, the use cases that have been in deployment for the last few years. Smart utilities, you know, smart city, industrial IoT, you know, smart ag, you know, those type of kind of more traditional industrial use cases. A lot of that is China, of course, as we mentioned before, 50% of our business in LoRa comes from China. The opportunity funnel really starts to get interesting as you look at the details. A lot of that is smart home, smart asset tracking, logistics, and driven out of both Europe and North America. That's what we need to convert and make sure that, you know, that they realize revenue. We are quite comfortable now that the infrastructure's going in place. That's kind of the first major hurdle, but that seems to be overcome now, you know, obviously with gateways going out there. We've got pretty good alignment there. Now it's a question of getting the other aspects of the use case resolved, and that's sensors and software and just the different economics around each one. which we're very confident about. A lot of it's tied to smarter planets and, you know, sustainability. I think it's gonna happen. It's just a question of timing, right? Okay. Very, very helpful. Thanks for the color. If I could, switching gears over to the data center front. Some competitors have talked about the ecosystem and supply chain becoming a little bit more challenged, you know, with China lockdowns. I was wondering if you could update us on your thoughts, if you're seeing any impact, as it relates to supply chain issues into the data center end markets. Also how we should be thinking about the growth rate in terms of your business for data center. You got a lot of new products that are coming to market early, but getting a lot of traction. You know, is this something that should be growing 20%+, you know, over the next couple of years? Then I had one last question. Yeah. On data center growth, definitely double-digit growth. Scott, I think high teens probably kind of what we think of where we think of it. It'll depend on the uptick of PAM4 and specifically the long reach products. We're doing very well in the short reach, and that's gonna grow at a much faster rate. But the longer reach products, we have to get design-ins there. But we think we will. This is gonna be a good growth driver for us. On the supply constraints, you know what, I think it's not so much supply constraint as so much it is that contract manufacturers just not being able to build the quantities that they were the rates that they were building at. They've reduced their quantities. Now I think with the, as Emeka mentioned, we're starting to hear that, things are getting better and, you know, gonna get back to some degree of normalcy. We'll start to see that ramp up again. That problem should go away, we're hoping obviously by the end of this quarter, we shouldn't see any of that. You know, a lot depends on the COVID situation in China, but I think at the moment, that's what we're anticipating. Gotcha. Lastly, if I could, in recent history, you guys have not been acquisitive. You've been executing on the internal portfolio and doing a great job of getting that on the right track in organic growth. How are you starting to think about, if at all, inorganic opportunities and how they kinda fit into your overall portfolio in future? Thanks so much. Yeah. That's a good question, Scott. We've always been acquisitive. We've also, you know, if you look at our businesses, they all come from acquisitions. For a period of time, certainly over the last five years, I would say, with the instability in the geopolitical environment, and with some of the macro events and then the pandemic and things like that, you know, we haven't really put a lot of priority on that. I think as things start to stabilize, you know, we'll be looking at our balance sheet a little bit more and trying to figure out if there's strategic deals that we can do to help us even further. It's always been part of our toolkit. I think I would say that, you know, we haven't been so much in the last five years, but I think, going forward, that's still part of our toolkit. Great. Thanks so much. Nice quarter. Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed. Thanks for the question, guys. As you guys know, you know, I've been into Helium and mining Helium for a couple of years now. Unfortunately, the price of helium, like a lot of cryptos, has gone down pretty considerably. With that, at least the aftermarket price of a lot of gateways have also gone down, and it's our opinion that gateway demand is also going to go down. We're trying to figure out what that headwind might be. Some of the math that Mohan maybe you gave, $5 for a pico, $15 for a macro. I guess the first thing is, are Helium hotspots really kinda on the pico side of things? Total Helium deployments are almost 900,000, call it another 100,000 in the channel, so call it one million. Are we talking about a total Helium sort of content of $5 million for that whole network? Or would you consider it larger than that? If this were to slow, I guess my point is this kind of de minimis for your business? Is this really only a $5 million headwind or is it something larger? Yeah. I think, Chris, the first thing is that, look, it varies. You know, we don't price it by, you know, every single gateway is the same. So I would say it's a little bit more than that. It's certainly more than $5 million. But I think the way to think about this is that the community-based networks have two values. One is the crypto side of it, but the other is that they create a community-based network, and those have real use cases that are very valuable for tracking of assets, for tracking pets, you know, for decarbonization. I mean, there's much, much more value than just the crypto side of things. The crypto value doesn't buy us anything. From a company standpoint, we don't really look at that much. Obviously, you know, if you're generating crypto while you're using it for something that's of use to someone or some enterprise, then that's a benefit to you as you're mining. You know, I think that's the secondary way to look at it. We expect, you know, over the next three to five years that the gateways will still continue to grow. Probably not at the rate it has been growing. As I point out that, you know, one of the things we look at is, okay, how much capacity is out there now to support sensor growth? Because what it does is, for us, really drive the opportunity now for every gateway that's out there to drive, you know, additional 30, 40, 50 sensors connected to them, right? Yep, for sure. Also, you had mentioned two, I kinda might consider them three options or opportunities that I wanted to follow up on. The first was, you know, you guys have PAM4 analog products and CDR products. I guess my first question is, have you considered or is there a technological opportunity to enter the active electrical cable market? My second question is around proximity sensing. You mentioned the Asian regulations over there. Would love to know what you think in terms of maybe dollars or percentage growth, you know, how you could really reaccelerate that market. Yeah. Let me touch on that one first, Chris. I think that market is definitely going to grow. The challenge is, it's really driven by regulations. When you have regulations, the smartphone manufacturers are forced to include a SAR sensor into their phones. So for sure in North America or in most of Europe, you know, they have to have them in there. For many other countries in Asia, like China and India, you know, those regulations don't exist. They may be kind of recommended, but they're not mandatory. So what we're looking for is those regulations to drive, you know, to mandate, essentially. You've gotta have some way to reduce the radio power in your phones when you are close to the human body, and that's what we're looking for. If that happens, and that was expected to happen last year. It got pushed out, you know, obviously with the pandemic and now with everything that's going on. You know, our hope is in the second half, it happens. It may go into next year, but eventually it's going to, and then that's going to drive very positive growth, I think, again, probably in the high teens, double digit growth. Then your question on- Active elec- Yeah. Active electrical- Yeah. -cable market. I don't know if it's transferable or not, but would love your opinion. Yeah. The answer is yes. Great. Thank you. This concludes our question and answer session. I would like to turn the call back to Mohan Maheswaran for any closing remarks. Thank you. In closing, we were very pleased with our record Q1 results. Despite the challenging pandemic and supply chain environment, our multi-sourcing initiatives and our investments in inventory, infrastructure, and tools continue to enable us to support our best-in-class business operations. Our innovative growth engines driving our smarter planet initiatives are all doing very well. We expect FY 2023 to deliver another record year for Semtech. With that, we appreciate your continued support of Semtech and look forward to updating you all next quarter. Thank you. This concludes today's conference. Thank you for your participation. You may now disconnect.