Greetings and welcome to the Semtech Corporation Conference Call to discuss the First Quarter Fiscal Year 2024 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 that this conference is being recorded. At this time, all participants are in a listen-only mode, a question-and-answer session will follow the formal presentation. I will now turn the call over to Semtech, Vice President of Investor Relations, Anojja Shah.

Thank you, operator. A press release announcing our unaudited results was issued after the market close 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 uncertainties, please review the Safe Harbor statement included in today's press release and in the other Risk Factors section of our most recent periodic reports filed with the Securities and Exchange Commission. As a reminder, comments made on today's call are current as of today only and 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 our 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 is included in today's press release. And with that, I'll turn it over to our Chief Financial Officer, Emeka Chukwu. Emeka?

Thank you, Anojja. Good afternoon, everyone. Before I begin, I trust you all saw the news that the board has completed its search for our new CEO. We are pleased to welcome Paul Pickle to Semtech. Mohan will comment further, but we are all excited about Paul's impressive mix of semiconductor and IoT experience and look forward to his arrival later this month. And I also want to congratulate Mohan on his retirement. Mohan has led Semtech very successfully for the past 17 years, and we have all enjoyed working with him. Like the many Semtech employees, we wish you well on your next adventure. Coming to Q1 fiscal 2024, the company delivered net sales of $236.5 million, above the midpoint of our guidance and an increase of 41% sequentially and 17% year-over-year. These numbers include the $136 million of revenue from our acquisition of Sierra Wireless. Our non-GAAP gross margin of 48.5% was in line with our guidance and our earnings of -- and our earnings per share of $0.02 was above our guidance. In Q1, shipments into North America, China, Europe, and the rest of Asia represented 31%, 24%, 15%, and 30% respectively. The addition of Sierra Wireless has increased our geographic mix towards North America and Europe. Total direct sales represented approximately 39% of net revenue and distribution represented the remaining 61%. Turning to our end markets. As we mentioned last quarter, we expect to see macroeconomic challenges affect our business in the first half of fiscal 2024, which we did see in Q1. Net revenues from the high-end consumer market decreased 38% sequentially and 55% versus the prior year. High-end consumers represented 9% of total net revenues. Net revenue from the industrial end market increased 130% sequentially and 125% over the prior year due to the…

Thank you, Emeka. Good afternoon everyone. Thank you for joining today. On May 30, we announced that Paul Pickle will join as a new President and Chief Executive Officer for Semtech. I will ensure a smooth transition with Paul and support him and the board as needed for the next 16 months. Thank you all for your support and interest in Semtech over my tenure as CEO over the last 17 years. I've enjoyed working with you all and I'm counting on you to continue to support Semtech through the next phase of growth. Today marks my last earnings call as Semtech's President and Chief Executive Officer. Onto our Q1 fiscal year 2024 performance by product group, as well as the outlook for Q2 of fiscal year 2024. In Q1, our quarterly net revenue increased 41% sequentially and achieved a new record of $236.5 million, slightly above the midpoint of our guidance. We also posted non-GAAP earnings per share of $0.02, driven by lower OpEx as synergies were ahead of expectations. Both net revenue and EPS were better than guidance, while inventories remained high, Q1 bookings for the organic Semtech business were up sequentially, increasing our confidence that the organic Semtech business has stabilized, albeit, at much lower levels. In Q1, our Signal Integrity Product Group revenue was down 32% sequentially and represented 18% of total revenues. As expected, all our infrastructure businesses were very weak in Q1. Our China PON and base station businesses were especially weak in Q1, as overall demand softened and inventories remained high. Our hyperscale data business -- data center business was also weak in Q1, but we are expecting this business to rebound modestly in Q2 as inventories reduce. We are anticipating a strong second-half performance from our data center business, driven by our…

Thank you. Ladies and gentlemen, at this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Craig Ellis with B. Riley. Please proceed with your question.

Yes. Thanks very much for taking the questions. Mohan, I was hoping you could just start by providing a little bit more color on some of the things you're seeing out in the end markets [serve one] (ph). Can you comment on what you've seen with order activity quarter-to-date? What are the pluses and what are the weaknesses, and in areas where per the press release, you're seeing signs of stability, where do you and the people in the sales team feel more confident that things have stabilized, where are things still relatively weaker or richer in inventory?

Yeah, Craig. So I think the -- obviously, the consumer business now in China particularly is starting to show some signs of life. Of course, it's come down and it's very low levels. So that's not a surprise, it's going to turn around at some point and we're starting to see improved orders from the consumer business, a little bit of improvement in the China business, particularly in consumer. And so, that, I would say, probably the primary area. I would say, we're also seeing continued improvement in the automotive industrial area, that one is not been so bad. So I think in general, those are the two kind of strong areas. I would think -- I would say the other areas, in general, are still relatively weak -- bookings are still relatively weak. But remember, there's a lot of inventory out there. So we're expecting -- it's really looking at POS and the digestion of that inventory, that's the key thing. And there are some positive signs there as I mentioned in the infrastructure side and the data center side specifically, and I think I would say also in the broader kind of protection business.

Got it. That's helpful. And then Emeka, I wanted to follow up. So a quarter ago, we were pacing very well on cost savings and I think you raised the cost savings target from $40 million to $50 million. Now, we've had better operating expense in the quarter, it's better than what I expected in the guide. So how should we look at that prior $50 million expense reduction target and the potential for that to move up either now or with time?

Yeah, so Craig, we're definitely doing very well on the synergies front, the numbers that we're seeing is a little bit above the $50 million that we had upsized to last quarter. I'm not really at this point to quantify that it is coming in nicely above that number. We've also definitely like I said in my prepared remarks, we are definitely watching every penny of OpEx at this point. Our discretionary spend is something that we're keeping very close eyes on, the traveling expenses, some of other discretionary supplemental compensation we are keeping an eye on all of that. So we are definitely very pleased with what we have seen in the first quarter in terms of our ability to manage operating expenses and given where the business is right now. Like Mohan said in his prepared remarks, we are looking at all the things, and hopefully we'll continue to do a good job on that.

That's good. And then if I could just sneak in one more. You mentioned that you had achieved some incremental covenant flexibility. Can you just talk more specifically to that point? And was there any incremental cost to interest rates on the debt you have out or was that achieved with some other means? Thanks so much, guys.

Yes. So definitely on the covenant side, obviously, just given the outlook for the business, other macroeconomic issues that we're seeing. The fact that our inventory and the channel continues to remain stubbornly high. We sort of anticipated that the covenants might be challenged in the second half of the year. So we took proactive steps to get back to our banking group to walk with them. So, yes, there was an incremental cost. It cost us probably about 50 basis points in terms of amendment fees. And because the leverage is anticipated to be higher, the interest rate associated with those are going to be a little bit higher than what we originally had communicated, and the original agreement that we had out there. But having said that, I think our expectation is that, with all the synergies, the fact that we are running ahead on synergies, also looking at things, continuously getting better in terms of demand in the second half of the year. We continue to believe that the acquisition is going to be accretive to our earnings in fiscal year 2024.

Thanks, Emeka. Thanks, Mohan.

Our next question comes from the line of Scott Searle with Roth Capital. Please proceed with your question.

Hey, good afternoon. Thanks for taking my questions. Nice job in the quarter. And Mohan, I want to wish you all the best again in your future endeavors. It's been a pleasure working with you over the past couple of years.

Thank you, Scott.

And maybe just to follow up on Craig's question on the covenant front, and like I just want to clarify a couple of things, it sounds like there were some small penalties, there is an increase in interest rate. But I want to make sure in terms of the guidance that you gave for the second quarter that is included, right? That interest expense is already included in there. And then going forward in terms of further reductions in the OpEx structure and/or evaluation of the portfolio and potential asset sales, that is not being mandated by the bank, that is in fact just part of your general pruning of operations and optimizing things going forward, is that correct?

Yes. So the second one, I'll just take that. Yes, that is just is what every good business would do in a time like this, and we already have that set in motion. It wasn't -- it was not something that was mandated by the banks. And with regards to the interest expense, yes, our guidance has factored in the new agreement. I think in Q1 the weighted cash interest rate was about 5.65%. In Q2, we anticipated that based on our guidance to probably be about 6.1%.

Great. Very helpful. Thank you. And if I could just -- in two of the end markets, first, in terms of IoT modules, it sounds like you're still working through some inventory issues there. Mohan, I'm not sure if I heard your comments, looking into the second half of this year. But you are expecting some relief in the inventory work flow at that point in time. It sounds like the design activity remains very high. So, we're getting back on a path to normalcy. And then just to clarify your comments around the data center, there is a tremendous amount of interest in activity as it relates to AI and what's that doing the demands of the data center. Do you get back to -- given the new products that you have, given those demand dynamics, by the end of this fiscal year, entering fiscal year 2025, do you start to get back -- start to approach the levels that you have seen two or three quarters ago? Thanks so much.

Yes, Scott. So let me start with the -- on the IoT side. I think Semtech's IoT business, we saw softness in China, we saw softness in general, probably a little bit earlier. The Sierra business now has seen some weakness and continues to see some weakness, particularly on the modules and the router side and the hardware side, some of that is North America and Europe catching up with the softness in Asia. And I think we're going to see that in Q2 and maybe Q3. But after that, I think we'll start to see a little bit more positive momentum. And this is speaking about kind of the traditional Sierra modules that they've been selling. Obviously, there's a lot of design win -- designing activity around the new approach that we're taking now with modules and how we're thinking about things, and that could generate some interesting opportunities I think going forward. With regard to data center, I think, yes, our expectation is that, obviously, Q2 -- Q1 was very weak, Q2 will be stronger, and we're expecting the second half to be stronger than the first half. Could we get back to the levels of the first half of last year? I think we need to see some of our design wins that we've got going on. We have good momentum in North America, as we've stated, and we have some new opportunities with the CopperEdge as I mentioned in the prepared remarks, they're probably more FY 2025 kind of drivers, but we're hoping to see some of that in the back end of this year.

Great. Thanks so much and best of luck going forward.

Thank you.

Our next question comes from the line of Harsh Kumar with Piper Sandler. Please proceed with your question. Q - Harsh Kumar Yes, Mohan, I want to also wish you best of luck with your retirement, enjoyed working with you all these years. I just had a couple of questions. The first one, generally speaking, kind of, if I had to pin you down and say, how many quarters of inventory do you think there is on an aggregate basis for Semtech plus Sierra Wireless combined? Would you be able to tell us, is that a quarter or two quarters? And are you losing any design wins or is it just -- the slowdown is just purely a function of the fact that there is excess inventory in the channel?

Yeah, I'm not aware of any design wins we've lost, Harsh, I think most of it is just inventory buildup. And it's difficult to say -- when you look at inventory, you obviously have to look at consumption in parallel with inventory, right? Because as consumption increases then inventory comes down and you can -- you start to see the opportunity and that's kind of what we are seeing. So in consumer as an example of that where I think most of the inventory is. We are starting to see a few positive signs there as I mentioned that China Consumer is starting to look a little bit more positive. So -- and as you know, if the consumer comes back quickly that can absorb inventory very quickly. So I think in the other areas like infrastructure, I think the same commentary applies to the PON business where we have some inventory and base station business, where we have some inventory, that -- those can be quite absorbed quite quickly depending on tenders come out there and demand picks up in China for example. I think where we are currently seeing demand, I would say, data center is the strongest in the infrastructure areas. And I would say on the industrial side, it's probably still the automotive area, and then the consumer area and the consumer area has been extremely weak for a long time. So that's not a surprise, right.

Yes, yes, totally. And then Mohan, I had a follow-up, but I'll ask a two-part question, if you don't mind. On LoRa side, is Helium all completely played out and do you think it's bottomed out in your guidance at this point in time? And what would make it come back? So, is the funnel or are you seeing so pretty good design activity here? And then secondly if I was to make a statement, this is part two of the question that, that -- I think your -- maybe your business is about bottomed out in the last quarter that happened. What would you say? Would you agree with that statement in general based on all the commentary or would you say that maybe there is some color required there?

No, so I think the Semtech organic business has definitely -- Q1 was probably the bottom. I don't think it'll see any further decline from that. And that's clearly why we're guiding Q2 slightly up and part of that is the improvement in the Semtech organic business. And that kind of narratives the same on the LoRa side. Yes, the Helium was kind of an opportunistic business that came, has now gone away. And so it's, yes, clearly in the guidance that it's not in there. Could it you come back? We're not banking on Helium coming back. I don't think that was ever the strategy for LoRa and we're banking on low-power IoT sensors growing. And as I mentioned LoRa end nodes are growing. We're still seeing a lot of demand for LoRa across the globe. We're seeing a lot of use cases being deployed. All the dashboard metrics that I've been giving out for years and years now, I think are still doing well. Obviously, China is weak at the moment and because of what's happened with Helium, the metrics don't look as good. But I think one of the things to remember, anyway was part of the strategy as we integrate Sierra. We're looking at a very different playing field now. The opportunity to go and tackle a much larger space and with a broader portfolio. So, I think that's the way you should think about it. But, yes, to answer your question, I think it's pretty much built into the guidance any weakness from Helium.

I appreciate it, Mohan and best of luck. Thank you.

Thank you.

Our next question comes from the line of Tore Svanberg with Stifel. Please proceed with your question.

Yes. Thank you. Congratulations on the retirement Mohan. It's been great working with you these last 17 years. Let me start with a comment on working capital. You guys did a really good job there. Inventory days now back down to 159, DSOs 56. As we think about this new combined entity, where would -- what would those metrics ideally be? I know Emeka, you mentioned that you still expect to lower internal inventory somewhat, but where do you think eventually this business will land on DSOs and inventory days?

So, Tore, as we continue to get very familiar with the new Sierra business, my expectation would be that the inventory days will continue to come down, both in terms of Sierra's inventory and Semtech organic inventory, right? Probably I wouldn't be surprised to see those days of inventory probably get down to the 120s or something like that by the end of the year, given the plans that we have. So we just have to see how it plays out. Of course, demand is going to be a key factor in that equation. With regards to receivables, Sierra typically has longer payment terms for their customers than the Semtech organic business does, 59 days is not that bad, but I think I would expect to see that come down, I would like to see that maybe come down to 50 or 55 days.

Great. That's great perspective. And Mohan, you talked about expectations for growth, we're assuming in the data center second half of the year. I mean I think that's -- that makes sense, given all the dynamics there. But you also mentioned you expect base station to actually grow in the second half, any data points that give you that conviction?

Just new tenders in China, Tore, we know about. We don't know exactly how that's going to affect our business yet, but we know that is happening. Whenever you here, obviously, in the base station business and PON business, it's all about service providers and all about tenders and it's all about how many systems are going to be deployed. And so, when you see tenders going out and you see quantities of -- unit volume quantities, then it just becomes a question of how the shares are allocated. We're pretty much, as you know in most of these 5G systems in China, where we are -- and 4G systems, we have very good relationships and very good penetration and the same on PON side. So I think our expectation is that, if those come to fruition, and then obviously that's always a question on timing then the second half will be stronger If not FY 2025 is going to be very strong.

Great. Thank you. I'll go back in line.

Our next question comes from the line of Quinn Bolton with Needham. Please proceed with your question.

Hey, everyone. I will echo my congratulations and great working with you. Wanted to start just on a follow-up on Tore's question on the base station business. I think in the past you guys have said you get much higher content in sort of the 3 gigahertz to 6 gigahertz bands rather than the 700 megahertz band, just wondering if these tenders are going out in China or in those higher frequency bands where you might have greater dollar content in those base stations?

Yeah. I believe so, Quinn. So I don't know exactly the detail, but I believe they are.

Perfect. And then on the turns percentage. I may have missed what turns was in fiscal Q1, but 39% I think is back up towards the higher end of certainly recent ranges, with visibility still being pretty low, how comfortable are you with turns up near 40% for the second quarter?

Yes, I think, actually this is kind of closer to our historical levels. So, we actually -- if you go back pre-COVID where we're returning 40%, 50%, as you know, consumer business that's kind of normal. So this is kind of getting back to normal levels, I think. So, we're quite comfortable. Obviously, we have a mechanism. We look at backlog. We look at what's on the books. We look at channel inventory and we have to make some adjustments there depending on what we expect to happen to POS in the consumption levels. So -- but that's driving the turns number, but we are quite comfortable, yes.

Great. Then lastly, quick one for Emeka, just on the OpEx reductions, it looks like they're coming in nicely ahead of plan. How much of that is in the near-term, just lower variable comp or lower selling expense, you mentioned watching travel expenses pretty closely, that as the business recovers may come back versus cuts that are more permanent, whether it's headcount reductions or just you're being streamlining R&D expenses, and those expenses don't necessarily come back as the business recovers?

I think it's roughly equal, Quinn, in terms of us seeing higher levels of synergies, and then some of the other opportunities that I spoke to. So -- but I think even if anything is going to come back, we're not expecting them to come back in this current fiscal year. We are definitely managing things on a very tight basis for the rest of the year.

I think I'll -- the other point on that Quinn, as you know, if you go back and look at our history, lot of the variable comp is driven by our ability to derive profitability. So it's dictated by the revenue, right, and the growth in the revenue. So, a lot of those expenses won't come back, if the revenue doesn't come back.

Got it, okay. Thank you.

[Operator Instructions] Our next question comes from the line of Matt Ramsay with Cowen. Please proceed with your question.

Yes, thank you very much guys. I appreciate you taking the questions. I guess the first one that I wanted to get to and obviously, there is some with the new CEO coming in and the board doing different evaluations of things. I wanted to ask sort of a nuts and bolts question. Just with the non-IoT business, so the signal integrity and the protection and sensing segments, what's the operational overlap between those two business segments from a R&D perspective, from a go-to-market and sales perspective, from FAE perspective? I'm just trying to understand that there are obviously synergies and things, but how independent are those businesses or how integral do they need to be to run together, just general big picture thing? Thanks.

Yes. So, Matt, I think if you go back and look at Semtech's history, we've always had businesses that are largely discrete businesses, the standalone. That's what analog companies do. It's a portfolio of different analog businesses and each of these analog businesses, we largely don't do the whole system. I mean, we are doing analog functions. So Advanced Protection has advanced sensing functions, advanced protection functions. In our SIP business, we do CDRs and PMDs, but we don't do some of the digital functionality. So, that's the way we run it. But they are very different independent businesses. They don't really have a lot in common with each other. But we target attractive markets and that's most high-performance analog companies do, you look for opportunities to continue to expand in those businesses and that's what we've done with our integrity product business, which used to be the old [indiscernible] business that we acquired. That's what we've done with our protection business for many years now. And even the IoT business for Semtech, the organic Semtech business was largely just radio business, low power radio business with LoRa. We had some other functions -- analog functions around it. The difference now, of course, with the acquisition of Sierra, we have brought in a modular router and a software-as-a-services business. But as -- those of you who've kind of kept in aware of what we were doing with LoRa, as we expanded from our radios, from our LoRa end node radios into gateway radios and connected to systems and networks, we started to look at cloud services as an opportunity and part of the rationale, of course, with the Sierra business was to try to accelerate that and bring in sensing service business, and really build on the edge capabilities that we have. And so those are slightly different than kind of the chip business approach that we have. But I think it can really take Semtech to a whole new level and that's why we did the acquisition. But to answer your question, the protection business and the Signal Integrity Product business, and the IC business of IoT are very different businesses.

Thank you for that. I appreciate the perspective. I guess as my follow-up question in the IoT business largely came from Sierra. There were obviously cloud infrastructure pieces or connected services business that were affiliated with the old LoRa business and also with big IoT franchise that came in from Sierra. Is the intention to integrate those cloud platforms into one and how is that evaluation started and is progressing well? I guess what kind of overlap is there, and opportunity to sort of put those two cloud platforms together? Thanks.

So when you look at the Sierra software-as-a-services business, it's really a managed connectivity business, it's managed network business. It's really managed network services with some elements of services around the managed connectivity. With Semtech, it's all about the end nodes and managing those end nodes, and thinking about sensors. And so, marrying the two together, we're essentially saying we're building a higher value platform for our customers. So a customer that wants to build a private network for example and manage its sensors on that network, and have managed connectivity and understand where the security holes are and understand the provisioning of those sensors on the network and understand the location of the sensors on the network and the health of the sensor. I mean, that's really the kind of end game, I think for us. And I think we're not -- we really have a very nice platform to do that now. The Sierra advantage platform, the software platform that we have, which we've had for many years combined with our cloud -- LoRa cloud platform, and obviously there's work to do on the integration side. But really once we've done that, I think it's going to be a very unique and very differentiated platform.

All right. Thank you very much guys. I appreciate it.

We have a follow-up question from the line of Tore Svanberg with Stifel. Please proceed with your question.

Yes, thank you. Just two quick follow-ups. The turns 39% that was at the beginning of the quarter, how would that number be now, as you're almost halfway through the quarter?

Yes, we don't normally give that, Tore. Sorry, if I had given that number out. We normally talk about the terms of the beginning of the quarter. I would just tell you that we're confident that will make our guidance, right?

Got it. But I mean, it's safe to say that the world is back to turns, right? Because, obviously the industry has had a lot of turns in the last two years, so, we're sort of back to that, right?

Yeah, I think -- so -- you remember during COVID, I mean the turns went to zero, right? So, we basically had a (technical difficulty) backlog and that was an unrealistic such situation and so now we're getting closer. I don't think we're quite there yet, but we're getting closer to the pre-COVID levels, where we were routinely turning 45% a quarter, right?

Got it. And the 67% that's now IoT, what percentage of that is services at this point?

Let's see, do you have that number, Emeka?

No, I don't have that number. Sorry, but I can get it to you.

Okay. That's fine. We can follow up. Thank you.

Yes. Okay.

Our next question comes from the line of Rick Schafer with Oppenheimer. Please proceed with your question.

Hi, this is [Way Mark] (ph) in the line for Rick. I wanted to wish you the best in your retirement. It's been a pleasure working with you. My first question, in your prepared remarks, you guys mentioned bookings increased 1% quarter-over-quarter from the organic Semtech and more particularly from the advanced protection and sensing segment. I was wondering if you could parse that out a little bit further? Are you seeing more of this strength from the protection business or more from the proximity sensing side?

We see, both actually. It's -- the consumer business in general has been really soft over the last few quarters as you know, particularly in China. And I would say that we're starting to see improvements in both the consumer business -- consumer protection business and consumer sensing business. But I would say on the proximity sensing business, a lot of it now as I mentioned in China, the new regulations for FY 2025 starting calendar year 2024 are driving design -- more design wins. So I would say that the consumer protection business is what's driving the current demand increase.

Got it. Great. Thanks. As for my follow-up, particularly within the protection, it looks like the broad market side reached 55% of your protection business of that mix. But given the higher growth of this segment, do you expect this mix to shape out for the rest of the year compared to the consumer side?

No, I expect consumer to come back actually and be a larger percentage again. I think what it demonstrates is the value of having that diversity and the fact that we have momentum in the broader protection business bodes really well for the future. Because that's a business that I think will go on for the next 10 years growing, as we start to just get broader industrial penetration. The consumer business, of course, is very volatile, right? It goes up and it goes down. Currently, it's very down, which is why our protection industrial businesses got a larger percentage, but I do think that once that protection businesses and we've got good design wins, so once the demand comes back, I think that will come back quite quickly and be a larger percentage.

Great. Thank you.

We have a follow-up question from the line of Craig Ellis with B. Riley. Please proceed with your question.

Yes. Thanks for taking the follow-up and since I missed it in the initial round, Mohan. Congratulations, great pleasure working with you and good luck in your next phase. I wanted to follow-up on a couple of longer-term things. One, I think China is implementing proximity sensing standards that go into effect in January of 2024. As the team works with smartphone companies around designs for early next year, what are you seeing in terms of content and proximity sensing win rates versus where you might have been in other generations of phones, et cetera. Is this looking something -- like something that could be a meaningful incremental driver, does it just support the run rate of the business as you have it?

Yes. So first of all, it's something that we've been working towards and hoping for quite a few years now. It's been actually -- probably two years later than we'd liked, but it's finally coming to fruition. And the main reason for that and the reason why it's valuable for us is, it means that most of the smartphone manufacturers that sell into China will now include proximity sensing or SAR functionality in their phones. As you know with Samsung and some of the companies that we have partnered with and have penetration with, they have multiple phones, and some of their phones that don't have proximity sensing and they ship into China, but now that that will change. So we are starting to see that momentum already in China and outside China, so that's good. So it's more design win. Of course, we don't have to see the momentum from a revenue standpoint, but I expect to see that in FY 2025 for sure.

That's helpful. And then from time to time we talk about the Amazon Sidewalk initiative, and I know it's something that the company has worked on. Just any color on how you feel like the team is progressing with Amazon and prospects for that to monetize as we go through the year?

Yes, on the sidewalk side, Craig, is that the [Technical Difficulty] So I think it's early, but I think obviously the smartphone world in IoT is really just beginning I think in many ways. And I think Amazon's vision and their Sidewalk initiative is something that we've always supported and feel like, we feel very good about. And I think as we start to see some of the use cases and applications that there -- that are out there, we're excited about it. Now, we're excited about it from a smartphone standpoint, regardless of Amazon Sidewalk. So, I think it's going to continue -- we're going to continue to see LoRa kind of become a mainstream technology in the smart home connected spaces area. Obviously, we are really hopeful that the sidewalk also has tremendous success. There already have a lot of gateways out there in their ecosystems and now it's about end devices. And so haven't got any kind of major update, but I think that we're still very positive about it.

Got it. Thank you very much, Mohan.

Thank you.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Thank you. Before we close, I want to share that we delivered our inaugural ESG report this quarter, showcasing the many ways our low-power products having a significant impact on society, as the world adopts technology to monitor and manage our scarce natural resources. You can find this report on our website. In closing, our global teams are executing well in a challenging economic environment. I know I'm leaving the company in excellent hands with the arrival of Paul Pickle as the next Semtech President and CEO. Thank you all again for the many years of support. Thank you.

Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.