Greetings, and welcome to the Microchip Technology's [Q3] and FY2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce to your host, Mr. Eric Bjornholt, Senior Vice President and CFO. Thank you, and you may proceed, sir.

Okay. Thank you, and good afternoon, everyone. During the course of this conference call, we will be making projections and other forward-looking statements regarding future events or the future financial performance of the Company. I wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to our press releases of today as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations. In attendance with me today are Ganesh Moorthy, Microchip's President and CEO; Steve Sanghi, Microchip's Executive Chair; and Sajid Daudi, Microchip's Head of Investor Relations. I will comment on our fourth quarter and full fiscal year 2023 financial performance. Ganesh will then provide commentary on our results and discuss the current business environment as well as our guidance. And Steve will provide an update on our cash return strategy. We will then be available to respond specific investor and analyst questions. We are including information in our press release and this conference call on various GAAP and non-GAAP measures. We have posted a full GAAP to non-GAAP reconciliation on the Investor Relations page of our website at www.microchip.com and included reconciliation information in our earnings press release, which we believe you will find useful when comparing our GAAP and non-GAAP results. We have also identified and posted a summary of our outstanding debt and our leverage metrics on our website. I will now go through some of the operating results including net sales, gross margin and operating expenses. Other than net sales, I will be referring to these results on a non-GAAP basis, which is based on expenses prior to the effects of our acquisition activities, share-based compensation and certain other adjustments as described in…

Thank you, Eric, and good afternoon, everyone. Our March quarter results were strong in the context of a slowing macro environment marked by our continued disciplined execution as well as our resilient to end market. Net sales grew 2.9% sequentially and 21.1% on a year-over-year basis to achieve another all-time record at $2.23 billion. The March quarter represented our 10th consecutive quarter of sequential growth. Non-GAAP gross margin came in at the high-end of our guidance at a record 68.3%, up 171 basis points from the year-ago quarter. Non-GAAP operating margin also came in close to the high-end of our guidance at a record 47.65%, up 292 basis points from the year-ago quarter. We continued to make investments that we expect to drive the long-term revenue growth, profitability, and durability of our business. Our consolidated non-GAAP diluted earnings per share was above the high-end of our guidance at a record $1.64 per share, up 21.5% from the year-ago quarter. Adjusted EBITDA was 51% of net sales and adjusted free cash flow was 23.2% of net sales in the March quarter, continuing to demonstrate the robust cash generation characteristics of our business. We returned $469.9 million to shareholders in dividends and share repurchases in the March quarter, representing 62.5% of our December quarter adjusted free cash flow. Our net leverage exiting March dropped to 1.45x. And as we do mentioned quarter ago, our capital returns this quarter will increase to 67.5% of our March quarter adjusted free cash flow, as we continue on our plan to return a 100% of adjusted free cash flow by the March quarter of calendar year 2025. Reflecting on our fiscal year 2023 results, it was another one for the record books. Revenue grew 23.7% to finish at a record $8.4 billion. Non-GAAP gross margin, non-GAAP…

Thank you, Ganesh, and thanks for the plug on the book, and good afternoon, everyone. I would like to reflect on our financial results announced today and provide you further updates on our cash return strategy. Reflecting on our financial results, I continue to be very proud of all employees of Microchip that have delivered another exceptional quarter while making new records in many respects, namely; record net sales, record non-GAAP gross margin percentage, record non-GAAP operating margin percentage, record non-GAAP EPS and record adjusted EBITDA and all of that in a continuing challenging environment. The Board of Directors announced an increase in the dividend of 38.8% from the year ago quarter to $0.383 per share. During the last quarter, we purchased $273.9 million of our stock in the open market. We also paid out $195.9 million in dividends. Thus, the total cash return was $469.8 million. This amount was 62.5% of our actual adjusted free cash flow of $751.6 million during the December 2022 quarter. Our paydown of debt as well as record adjusted EBITDA drove down our net leverage at the end of March 2023 quarter to 1.45x from 1.56x at the end of December 2022. This also marks the pivotal point of our net leverage going below 1.5x, at which we further accelerate our cash return to the shareholders, which I will describe further. Ever since we achieved an investment-grade rating for our debt in November 2021 and pivoted to increasing our capital return to shareholders, we have returned $2.336 billion to shareholders through March 31, 2023 by a combination of dividends and share buybacks. In the current June quarter, we will use the adjusted free cash flow from the March quarter to target the amount of cash returned to shareholders. The adjusted free cash flow excludes a net $79.5 million that we collected from our customers and paid to our suppliers for long-term supply assurance payment. These payments are refundable when purchase commitments are fulfilled. The adjusted free cash flow for the March quarter was $517.3 million. We plan to return 67.5% or $349.2 million of that amount to our shareholders with the dividend expected to be approximately $209 million and the stock buyback expected to be approximately $140.2 million. The above numbers reflect a pivot in one area. We are increasing the total return to shareholders in 500 basis point increments per quarter instead of the 250 basis points we were increasing until now. Going forward, we plan to continue to increase free cash flow return to shareholders by 500 basis points every quarter until we reach 100% of our adjusted free cash flow returned to shareholders. That will take seven more quarters and dividends over time, we expect will represent approximately 50% of our cash returns. With that, operator, will you please poll for questions.

Thank you very much. We will now be conducting a question-and-answer session. [Operator Instructions] The first question comes from Toshiya Hari from Goldman Sachs. Please proceed with your question.

Hi, good afternoon. Thank you so much for taking the question. I was hoping you could give a little bit more color and context in terms of the demand environment. Ganesh, you talked about experiencing push-outs from your customers an uptick in cancellations. But are these sort of events broad-based across geographies and end markets and device types? Or is it a little bit more concentrated? And then I have a follow-up.

Generally speaking, I would say there are a cross section of those requests from many geographies, many customers, many end markets. We also continue to have constrained products on which that are shortages that we're trying to accelerate product for. So it is not only one directional in which the demand requests are coming in at.

Got it. And then as my follow-up, just your thoughts on trough gross margins. You provided a good context in terms of operating margins. I think you said well above 40% in a kind of a recessionary or contractionary environment. How should we think about gross margins off of these record levels as you work down inventory and presumably reduce utilization rates? Thank you.

They're going to be darn good. If you look at our history, you can get a pretty good idea of what the gross margin trough-to-peak or peak-to-trough look like. We are sitting at 48% operating margin, giving you 8 percentage points as a bottom end of where is this going to be an operating margin, I think you can draw the conclusion relatively easily.

Got it. Thank you.

And we have some charts on our website to look at the last 15 years of history, and you can draw some conclusions from that.

Thank you.

Thank you. The next question comes from Ambrish Srivastava from BMO Capital Markets. Please proceed with your question.

Hi. Thank you very much. Yes, that chart was very helpful, Eric. I had my – for my first question. For the last few quarters, you have been guiding for the quarter out. And so I just wanted to make sure that you are not able to guide for September vis-à-vis if you just look at how the business has changed, and I'm just reading your comments, it sounds like that confidence does not be this quarter?

So we have not adopted a consistent practice of providing more than one quarter guidance. At certain points of time, we have elected to provide more than one quarter guidance or directional guidance sometimes and this is when we believed it would help investors and analysts better frame our current quarter guidance. Having provided the extra quarter of directional guidance for three quarters in a row, it did not appear to add much value to analysts or investors who are more worried about the overall semiconductor industry cycle. And in fact, it seemed to elicit more skepticism in our ability to provide guidance and confidence in our understanding of the business. And therefore, we've decided to end the temporary practice we started and over to just providing one quarter’s guidance.

Makes sense. Accepted. Proved how wrong I was every quarter. I just had a question on the push Ganesh. How do they come back to the overall PSP? I'm assuming that this is not in the NCNR because those you have said in the past, you're not willing to negotiate or less willing to negotiate on. Is that the right way to think about it? The PSP has both NCNRs and non-NCNRs and they push out some more related to the non-NCNRs?

So maybe let me clarify. All PSP backlog is non-cancelable, non-reschedulable. What I have said before is that we are not flexible in the non-cancelable portion, we are flexible on the non-reschedulable and that's where we're pushing up. So we are pushing our backlog, PSP or not into further quarters. And that's the way in which we support customers whose business environment has changed and who have concern about their inventory level and in the process, hopefully, create less of an overhang that we will run into and more of a soft landing for our own business. But we are flexible on the reschedulability, just not on the non-cancelablity.

Got it. Thank you for the clarification. Thanks.

You're welcome.

Thank you. The next question comes from Vivek Arya from Bank of America. Please proceed with your question, Vivek.

Thank you for taking my question. Ganesh, I wanted to revisit again this question of end market. So there's a perception that aerospace defense, medical parts of data center these markets are holding up better. So can you give us a sense that in the last three months, specifically which end markets or customers in which end market have asked you or you have asked them and they have agreed to pushing off some of their demand because I just want to make sure that RV, when you say a soft landing, are we talking about revenues kind of floating at plus/minus the levels you're giving for June? Or is there some bigger drop off? And like having that end market view, I think we'll be better prepared to analyze, right, where – how we should be thinking about September and December?

In an absolute sense. There's no end market that I can say is the only one that has a problem or one that has no problem at all. It's all on a relative basis. And so the strength comes from those end markets where there's far better resilience, far better end market characteristics. Those are the ones we described as industrial, including aerospace and defense, automotive, parts of the data center that we have exposure to. And even if you look at industrial, I know different people have had different comments on it, but our exposure in industrial is dominated by aerospace and defense, renewable energy, energy efficiency, factory automation, medical, infrastructure. These are all the parts of industrial that dominate us. Now within that, is there going to be somebody asking for a pushout or reschedule or a swap of certain products? Sure, there'll be some of that. But in the aggregate, that end market is doing extremely well compared to the rest of the end markets that perhaps are in consumer and phones and others, which we don't have much exposure to.

Got it. And for my follow-up, I just actually had two quick clarifications, perhaps for Eric. Eric just what is the right way to look at the other expense line? And any implication of kind of the rising rates on your debt servicing? And then OpEx, right, it's kind of – our OpEx intensity is lower than your long-term model. So how are you planning to manage expenses as the business goes through this kind of slowdown in the near term?

Okay. So let me take the other expense piece first, which is obviously dominated by interest expense. So yes, we are being impacted by the rising rate environment. We don't have much variable rate debt left on the balance sheet today. It's just our line of credit, which is about $100 million. But we do have bonds coming due in both June and September of this calendar year that the current intention is to refinance those or retire those using our line of credit and the interest rate currently on the variable line of credit, is higher than where those bonds are at. So we are going to be facing a higher interest expense each quarter as we go through this fiscal year. It's not like a stair step jump, but definitely the interest expense will be rising by several million dollars per quarter. I think the debt schedule that's on our website can help you model that because it shows the maturity dates and the interest rates on those various pieces of debt and our current borrowing rate on our line of credit is about 6.35%. So I think with that information, you can probably model that out appropriately. On the OpEx side, yes, we are below our long-term model. And obviously, Microchip has grown very fast over the last couple of years, and we've had a hard time keeping up with expenses and expenses as a percentage of net sales is dropping again this quarter at the midpoint of guidance, OpEx is rising in dollars again, but the percentage is coming down. And the large factor in there in terms of just our hiring activities is the variable compensation that we're paying to our employees. And as the environment changes from one of very high growth to one of more moderate growth, we will moderate those bonuses that are being paid to help us manage appropriately within our long-term model. I don't know if Ganesh wants to add anything more.

No. I think you stated it exactly so. And as we've always said, right, the operating expenses are an investment in the long-term growth profitability resilience of our results. And so those investments need to be made and to have years and years of return on those investments. And we are below our target, but as things settle out over time, that will creep up, but not at an accelerated rate.

Thank you.

Thank you. The next question comes from Joshua Buchalter from Cowen & Company. Please proceed with your question, Joshua.

Hi, team. Thank you so much for taking my question. I wanted to, I guess, ask about the pricing environment. So when you were discussing the PSP, you mentioned that backlog is non-cancelable. But it sounds like it's flexible on the time line. Can you talk about how the pricing discussions go, both within your PSP program and then outside it? And if there's been any change in that as you're going to – you're starting to lower inventories a bit? Thank you.

So pricing is not any difference between PSP and non-PSP. So I'll give you a more general answer for just our overall methodology. Pricing for us is a strategic exercise. We provide products that are sole-sourced products, they are proprietary products and customers place their trust in us years before they go to production and then they're with us for many, many years to come. Traditionally, over the years, we have not had annual price reductions necessarily as a consistent part of what we do. In the last two years, we've had inflation at a much higher rate than what we would absorb with our improvements, and we did pass along price increases that would absorb the cost increases, keeping it margin neutral, and that has not changed and that we don't expect to change as we go forward. So pricing is stable and strategic and I think, in our thought process.

Got it. Thank you. And I was hoping you could maybe help us understand the utilization rates a little bit better. Can you walk us through where things are at in your front end and whether, I guess, as you lower inventory, more of it is coming out of your internal facilities versus your foundry partners? Thank you.

Yes. So utilization in the factories has been very high throughout the last year. That continues today. So we aren't facing underutilization charges or anything like that. We're still trying to get caught up on our backlog. So the factories are still running at a pretty high rate.

And we don't expect the reduction of inventory days to affect what we're going to do in our factories in terms of underloading them. So the internal factories are running lower inventory and they will run constant through this cycle. And so there's no under absorption issue to be concerned about.

Thank you.

Thank you. The next question comes from Raji Gill from Needham & Company. Please proceed with your question.

Yes. Thank you for taking my questions. And congratulations on kind of solid results in a tough environment. Just in terms of the backlog. So in the past, you mentioned as the backlog come down through the year as lead times start to normalize, you'll start to see that – you'll see more order volatility. And I think you're indicating that, but in the past, you mentioned that the delta between the backlog and the actual sales is still quite wide. That backlog to sales delta could offset that potential order volatility. So I wanted to get a sense of what are your thoughts on the backlog to sales delta as we stand today?

So we still have significant backlog in excess of our sales. And we have backlog over multiple quarters, and we continue to get new bookings and backlog that layers in over time. The backlog is a function of also where customers view lead times are going to be headed, not so much what they're going to be consuming. And so as lead times slowly pull in, we do expect that customers will slow down some of what they want to do in terms of placing backlog. Now any kind of inventory adjustment is not a permanent change in this industry, right. A year ago, we were – we had a completely different view of where things were. And a year from now, we may have a completely different view of where things are likely to be. I think many customers are strategic in their thinking, have very high-value end products and what they're doing. And so they are more strategic in how they're thinking about their inventory over time and what backlog they will place. But we don't see any concern with the amount of backlog we need to be able to achieve the guidance that we have provided and the soft landing that we're trying to drive towards. Obviously, it still will require bookings to come in and that is all driven by how consumption continues.

Thank you, Ganesh for that. And just my follow-up, what is your latest pulse on China regarding customer order patterns and channel inventory? Thank you.

So I would say China is stable. I don't see a major uptick from China post Chinese New Year and we will see how the rest of the year goes. I think there is opportunity for China to strengthen and contribute some tailwinds as we go through the rest of the year. But I can't say that we can see that today in what we see with the auto patterns.

Thank you.

Thank you. [Operator Instructions] The next question comes from Chris Danely from Citi. Please proceed with your question, Chris.

Hey, thanks guys. Can you give us a sense of how much of the backlog right now, let's just say, for the next 12 months is PSP versus, I guess, the "can be canceled or can be pushed out"? Any kind of percentage there?

So the percent of backlog that is PSP has amazingly been consistent for the last, I would say, nine to 12 months. So even as overall backlog has been slowly ticking down, right? PSP as a percent of total backlog, it's well over 50%, have stayed at that level. So it is resilient backlog. It is higher quality backlog than what we see.

Great. And have you had any customers try and renegotiate any of the PSP agreements either supply or price?

Not on price. I think there have been customers asking for help on PSP backlog that they wanted to have pushed out in time. And as I mentioned earlier in my prepared remarks, that is something that we have been actively doing to enable them to have that. It's a strange environment where I think in the shorter term, there are more people looking to push out because they're uncertain about their business. But we're also seeing cases where people who wanted to push out several months ago coming back in and wanting to pull it back in as well. So I think sometimes there is an overcorrection on both sides, and I would not be surprised as we go through the second half of this year that some of all the push outs that are happening today if the environment strengthens, it could just as well come right back out at that point in time. But in today's environment, it's very murky.

Yes. Thanks a lot, Ganesh.

Thank you.

Thank you. The next question comes from Joe Moore from Morgan Stanley. Please proceed with your question, Joe.

Great. Thank you. Thanks for all the color on the actions you guys are taking to match up customer inventories. Can you talk about what you think the state of those inventories are? And I know some of your competitors have talked about we're trying to prune some of the backlog, we're proactively making sure that our shipments are going into demand and not into inventory. Can you just talk about where you think you are relative to others? How careful are you trying to be in terms of preserving the customer inventory balances being where you think got to be?

So our visibility into customer inventory is not there because they don't share that with us. We can infer their inventory by their request for pushouts or cancellations as the case might be. Where there is cancelable backlog or cancelable – basically anytime there's – or reschedule backlog, they can do that. Where it is non-reschedulable and noncancelable and they ask for help, then we get involved in it. But it's hard for us to know where customer is and their inventory correction position. We can see that in distribution. And there, we get a weekly report, it tells us by distributor in different parts of the world where is that? As Eric mentioned, distribution days of inventory went up by two days from 22 to 24 days. Still well in control, below where it used to be historically and where is at. And so that's about as much color as we can give you on kind of customer inventory or end customer inventory.

Okay. That makes sense. And I guess as you've described the PSP over the last couple of quarters, you're now kind of taking a little bit more of an approach of helping the customers were they want to reduce it. Is that because there's just more people asking now as you're trying to match it up? Or were they asking two quarters ago, but it wasn't broad enough. I'm just – there's a perception, I guess, that because of PSP, you may have more inventory at customers than peers. And I'm just trying to see if your behavior is really that much different than anyone else.

So let me clarify. I don't know where that perception was set, maybe what we said in the past. We have been pushing out orders from customers, PSP customers for multiple quarters, right? I mean we're in this to be responsive to the market, but we also want to make sure that as noncancelable orders get placed, there is a symmetric responsibility from us and from our customers, and that's what creates some resistance to placing orders that they shouldn't be placing or that are speculative and where they're at. So we've done this multiple quarters. This is not the first quarter we're doing it. And it is in response to where markets and customers and specific situations are at. And we will continue to do it as needed, including in this quarter.

Very helpful. Thank you for the clarification.

I just want to add one point. This is Steve. I think investors and analysts failed to appreciate that when a customer is placing a year worth of orders, which by contract non-cancelable and non-reschedulable. It goes through a level of review at the customer at much higher level than just only the purchasing person, and the resulting backlog that is placed on Microchip is a much higher quality. So therefore, even though we have taken some adjustments in rescheduling some of the PSP backlog, the fundamental fact is that the backlog is a very high quality relative to a similar backlog at any other competitor.

Great. Thank you.

You're welcome.

Thank you. The next question comes from Harlan Sur from JPMorgan. Please proceed with your question, Harlan.

Hi. Thanks. Good afternoon. Was the unsupported backlog to actual revenue shift still above one in the March quarter? And where do you anticipate that ratio to be this quarter?

I believe the unsupported backlog was greater than the amount that we shipped in the quarter, but I think it's becoming a less relevant indicator at this point, right? We are unsupported means it's on our backlog, it is noncancelable. But we are helping – and nonreschedulable, but we are actively allowing customers to reschedule it out in time. And so we don't pay that much attention to it today as we did a year ago. Today, it's really making sure that we are shipping to customers who need the product. We're helping customers who are asking for help and working towards setting this thing up to not have an overhang to the best extent that we can.

Okay. Perfect. Thanks for that. And then your data center products are quite application specifically, right? So a bit easier to track rate storage controllers, enterprise – key controllers, Ethernet PHYs and so on, right? The demand dynamics in cloud and more so in Enterprise data center have clearly weakened. I know you guys have said some products are strong, some products are still weak, but is the aggregate data center franchise holding up on a quarter-over-quarter and year-over-year basis?

Absolutely. And I would say we are getting tailwinds from the AI servers and we are represented in those. Many of our PCI switches are an analytical part of that. The storage in general, is stable, but it has experienced substantial growth over the last year. And the data center is holding up. Obviously, not as strong today as it was from a year-ago growth but still stable.

Thank you, Ganesh.

Thank you. The next question comes from Tore Svanberg from Stifel. Please proceed with your question.

Yes. Thank you. I had a follow-up on the rescheduling of backlog. I mean the semi industry has obviously been struggling for a while now. So would you say that this more recent phenomenon is due to some of the financial stresses that's going on? And the reason I'm asking that is because I'm just wondering if people are pushing out because they feel a little bit uncomfortable with the current financial environment and as soon as there's some stabilization, perhaps those pushouts will turn into pull-in. So I'm just hoping you could give us your view there?

I'm sure there's a portion of that, that falls into that. But you've also got to think about the environment is more stressful for our customers today with where inflation is at, where interest rate is at, what the economy in general is doing in terms of relative growth rate from a year-ago. And so they placed orders with the best intention with the best information that they had back in time. And as the environment has changed, are, in some cases, seeing their demand picture different and therefore, asking for our supply picture to adapt to where they're at. I don't believe this is a permanent change. I think these things go in cycles. And I do think as the economy at some point reverses and gathers more strength as the macro gathers more strength. Many of these will come right back up. And I do expect if history is to be repeated, we will, at some point, go back into people asking for expedites on things that maybe three months ago, six months ago, they were asking for pushouts. It's the nature of the beast and people have the best visibility at any point in time. But as that visibility pushes out their need or pulls in their need, they will signal to us what we have to do to help them.

Very good. And as my follow-up is one for Steve and Steve, congratulations on your new book. What was the reason behind the increase of the returns from 250 to 500 bps a quarter. I guess my question is more on the timing of it. I mean you just feel more confident about the profitability of the company during the soft landing period? If you could just elaborate on the timing, that would be great?

So the reason in going from 250 bps increase per quarter to 500 was clearly hitting a target of a total leverage going below 1.5x. So this is what we have said for a long time that by paying down the debt every quarter, we're going to bring the leverage below 1.5x. And when that happens, then we will further accelerate the return to the shareholders. So that happened last quarter where the leverage was 1.45. So therefore, we are accelerating the total cash return to shareholders from 62.5% last quarter to 67.5% this quarter, a difference of 500 bps. And the following quarter will be 72.5% than 77.5% and so on will take about seven quarters to get to 100.

Great. Thank you again.

And over that seven quarters, we will continue to use the excess cash to pay down debt and bring leverage down further. We think it is appropriate in a difficult interest rate environment.

Great. Thank you, Eric.

Thank you. The next question comes from Vijay Rakesh from Mizuho. Please proceed with your question, Vijay. Vijay, you may proceed with your question. If your line is muted, please unmute, so that you can compose your question.

I’m sorry. Thank you. I was just wondering if you could give us some color on what ASP trends look like exiting 2022 and how they are looking this year? And then I have a follow-up.

To the earlier question, ASP trends tend to be reasonably stable. We have passed along price increases to a lesser extent than what we have, I don't know, always absorbed from a cost standpoint, trying to be margin neutral to make sure that between the improvements we're making in our own business, and the pricing from a market standpoint being reasonable to the customer. So ASPs today, if you were to compare them with a year-ago are slightly higher, but there are stable trends on the [indiscernible].

And some of those trends is not necessarily price increase driven. It's introducing new proprietary more complex products that bring more value to our customers.

Got it. And then just addressing the comment you had in your deck. Just wondering what percentage of customers you're seeing kind of redeploy – look to redeploy backlog or push out cancel. What are you seeing there? If you could give us some idea on if it's like any particular segment that you're seeing it. That's it. Thanks.

It's next to impossible to give you a number because we serve about 125,000 customers, about 115 of them are indirect through our distributor channels. So we don't really hear customer by customer where it's at. I would say that it's not the majority of the business that we're doing, it's specific customers and specific markets in any given day, that's there. So there's not a wholesale. I want to push everything out that's out there.

Got it. Thank you.

We'll move on to our next question, which is coming from the line of Chris Danely with Citi. Please proceed with your question.

Thanks guys. I just have two quickies and then I guess I'll let everybody go back to working on the notes. Is there any way you could tell like how much of this changes in backlog is too much inventory versus weaker demand? Is it 50-50 a little more on the demand side, a little more on the inventory side. Any color, any clarity there?

Those two are interconnected, right? It's not that – it's only one or the other. So weaker demand results in more inventory, which last some longer or stronger demand results in needing to expedite as well. So it's hard to parse those out. There's some of both that's in there. And in many of these – our customers who are also facing uncertainty perhaps – so it may not just be demand alone, but the environment that they're in, and they are trying to decide how should they navigate their environment. And so what we see in the end is the aggregate feedback or request that they provide us. And with all of that, we're able to show continuing growth into this quarter, into the June quarter. As it stands right now, we believe it is highly unlikely at the September quarter is going to have a sequential down quarter and that's a basis of all of our integrated information from customers on what they're seeing on internal data that we see in all of our indicators, bookings, backlog, expediter class, pushout requests, all the external data that we track, GDP, PMI, consumer confidence, inflation, et cetera. And so that's what gives us the confidence in our business.

Perfect. Thanks, Ganesh. Thanks for letting me ask another question.

You are welcome.

Thank you. There are no further questions at this time. I would like to turn the call back to Ganesh Moorthy for closing remarks. Thank you.

I want to thank everybody for your time and questions this afternoon. We will be seeing many of you on the road as we come out to different conferences, et cetera. And thank you again.

Thank you very much. And ladies and gentlemen, that does conclude today's teleconference. Thank you very much for joining us. You may now disconnect your lines.