Semtech Corporation (SMTC) Earnings Call Transcript & Summary

Okay, then let me get started. Hi, everybody. I'm Craig Ellis. I'm the Director of Research and an analyst covering the Semiconductor and Semiconductor Capital Equipment Sector at B. Riley. I want to welcome you to the session that we have this afternoon with the Semtech management team. I'm going to start with some housekeeping items, and Sandy will take care of a few things from the Semtech side. And then we're going to get into a fireside chat session, which we'll kick off with an overview of Semtech from Mohan. So let me just proceed with some of the housekeeping items. So I introduced myself, Craig Ellis at B. Riley, FBR, Director of Research and lead semi analyst. But I also need to convey that in the normal course of its business, B. Riley FBR seeks to perform investment banking and other services for companies under coverage, and receive compensation in connection with such services. As such, investors should assume that B. Riley FBR intends to seek investment banking or other business relationships with any and all companies mentioned today. Additionally, B. Riley FBR acts as a market maker or a liquidity provider for Semtech securities. Today, we're pleased to have with us Semtech CEO, Mohan Maheswaran; CFO, Emeka Chukwu; and Director of Investor Relations, Sandy Harrison. I'm very pleased to have them all with us today. We appreciate our speakers spending time with us. Their opinions are their own and do not necessarily reflect those of B. Riley FBR. We ask them to avoid any disclosure of any confidential nonpublic information. So with that disclosure out of the way, let me mention one other item that relates to just our session today. We'll conduct our session via a fireside chat format. I have some questions for the team on a range of topics, but I would also like to take questions from the group. If you have a question, please e-mail me. You can e-mail me at cellis@brileyfbr.com, and I'll integrate your questions into the session that we have. So please don't hesitate to shoot those out. So I've got some of my housekeeping and disclosure items out of the way, but I want to hand it off to Sandy for Semtech's safe harbor statement. So Sandy, let me hand it over to you.

Great. Thanks, Craig, and we appreciate you hosting the call. But before we get started, I want to quickly mention that 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 any of these statements. For a more detailed discussion of these risks and uncertainties, please review the safe harbor statement included in the other Risk Factors section in our most recent 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 the facts or circumstances change. Also, I want to point out, during the call, we refer to non-GAAP financial measures that are not prepared in accordance with the generally accepted accounting principles. A discussion of why the management team considers such non-GAAP financials measures useful, along with reconciliations of non-GAAP measures to the most comparable GAAP financial measures, can be found on our website. And with that out of the way, Craig, I will turn it back over to you to start the event.

Yes, that's great. Thanks, Sandy. So let's start off with a level-set opening. I find that what's most helpful in these sessions is for the company to provide an overview of its business and strategy. And Mohan, I think if you could do that for 5 to 7 minutes for us, it would give everyone the best context for then some more detailed Q&A on the different segments and the opportunities that exist for Semtech. So over to you, Mohan.

So thanks, Craig. Welcome to everyone on the call, and we sincerely hope you are all safe and good health, and thank you for taking the time to listen to us today. I want to start by reminding everyone that Semtech is a uniquely positioned high-performance analog and high-performance algorithm company, that we focus on 3 main industry trends: the first is bandwidth expansion, the second is creating a smarter planet and the third is enabling mobility. And these are trends that we've put in place for quite some years now since I've been the CEO of Semtech here, which is almost 15 years. And the reason simply is that we believe these trends will continue to be strong trends for many, many years to come. And probably even 10, 20 years from now, we'll still be talking about further bandwidth expansion, further creating a smarter planet and enabling more mobility. So that's kind of a high-level perspective from how we drive our R&D investments in the company. We're also a very diversified yet balanced company, and I think that's important, especially in today's world. We're balanced geographically, with about 35% of our business from China, 20% of our business from the rest of Asia, about 30% North America and 15% Europe. And this is where our products are actually being used. And so we're pretty well balanced geographically, and I think that's also very important in today's environment, as I mentioned. We're also balanced from an end market standpoint, with approximately 45% of our revenues coming from infrastructure, 30% coming from industrial use cases and applications and 25% coming from consumer applications. And then we're also balanced from our products standpoint. We have 3 different product groups, and we believe in having unique competencies. And when I say unique, really unique. Separate -- we separate ourselves from the rest of the industry. And our 3 product groups are Signal Integrity product group, which represents about 45% of the company today; our wireless and sensing product group that has about -- represents about 25% of the company; and protection, which is -- represents about 30% of the company today. And now as I kind of just at a high level -- we have multiple growth drivers, and it's kind of our strategy to drive a life cycle of different growth drivers. So we have growth drivers that are in a emerging stage, we haven't announced yet. We have growth drivers in the growth streak stage, and we have some growth drivers that will start to become more mature. But that's the strategy we have. We're always bringing out new platforms. And so today, as I look at it, we have multiple growth drivers that we believe will secure strong revenue growth and earnings growth for the next 3 years, and then we have some emerging growth engines that we think will drive further growth for us in the 5-year time frame. So over the next 3 years, we expect our LoRa wireless platform targeted at the IoT market and specifically LPWAN, and I'm sure we'll talk a little bit more about that, to have very strong growth. And we believe our Tri-Edge PAM4 platform and our ClearEdge CDR platforms, targeted at the data center and 5G base station markets, to have very strong growth over the next few years. And our PON-X platform targeted at 10G PON to have very good growth over the next few years. And then our Z Protection platform, which is targeted at mobile devices but also now at high-speed interfaces in the broader industrial and infrastructure markets, to all have very strong growth over the next few years. And as I mentioned, in addition to those, we have a number of new platforms that we bring out -- we will bring out over the next couple of years that will drive further growth for us. So with that as a kind of a high-level summary, let me pass it over to Craig, and we can start the Q&A, and then I can talk about each of the different businesses in more detail. Craig?

Yes, that sounds -- yes. Thanks, Mohan. So thanks for the overview. Let's dig in to start, the largest segment, which is Signal Integrity, as you mentioned, 45% of sales. So when we look at the business, we typically think of data center, we think of PON, we think of base station and a few other things, but those are the big 3. So let's start off with data center. So as we think about the data center part of Signal Integrity, can you just go back to the product cycle point you made earlier, frame the product cycles that you see coming, and help us understand what those product cycles mean from a content gain standpoint or a market share point, some of the relevant investor parameters that would be of interest?

So data center has always been a target market for us. Within our Signal Integrity product group, we have 3 target markets in the infrastructure side. One is data center, one is PON and one is base station. Within data center, we focused mostly within -- inside the data center, and that's -- is line card to line card, server to server, server to top of rack switch, things like that. And so we have -- and our products go into optical modules, which then go into the data center servers and systems. And so we are -- our direct customers are optical module customers. And historically, we have provided what we call PMD components, is our physical media devices, amplifiers and drivers; and also CDRs, which are clock data recovery circuits, which are essentially used for high-speed connectivity to clean up the signal along the -- along these links, these high-speed optical links. We've been very successful actually in 100-gig optical modules today, which are done mostly with 4 by 25 gigabit lanes, using our ClearEdge CDR platform. We've had a lot of success there. And as we start to see that market now looking for higher bandwidth and potentially going to 200 gig and 400 gig, there's a new modulation scheme called PAM4 that's emerging, we see that as a really nice opportunity for us. We've spent the last few years developing a platform called Tri-Edge. Tri-Edge is our name for our PAM4 platform, and we believe that this will start to -- we just announced it. We just started to sample it. Starting to get very good feedback from the marketplace. And we believe that this is going to help us get a very good foothold in the 200-gig and 400-gig PAM4 market, which is starting to grow nicely and should see good growth over the next few years. And those links are at 50-gigabit per second links, PAM4 links. So from a data center standpoint, the really nice thing about data center for us is that it's -- the market is growing at a tremendously fast rate. I mean it's really probably now, as I look at it today, arguably the fastest-growing market that we're participating in, and we are involved in a number of fast-growing markets. But data center seems to be just exploding, and I think it's all driven by obviously more people, more companies, enterprises putting products and putting their systems on the cloud, putting their software in the cloud, putting their data in the cloud, doing more analytics on the cloud. A lot of the new use cases that are emerging out there will require cloud-driven analytics and things like that. And so the need for more bandwidth, more analytics and more synthesizing of data is clear, and therefore, it's driving the need for more data centers and for more bandwidth within those data centers. The other thing that we're seeing within data centers is that while most of our business at 100 gig today is coming out of the North American-driven demand, I think we're going to see a little bit more global balance there, China and Europe demand pick up a little bit on the data center side. So all in all, a very, very good growth market. I think our position is very strong with both our ClearEdge and our Z-Platform for 100-gig optical modules and with our Tri-Edge platform for 200-gig and 400-gig PAM4 modules. Obviously, that's new for us. We still have to demonstrate the success, but I think we're very pleased with the technology. We're pleased with the feedback we're getting. And so our expectation is that, that's going to start to ramp, get solid growth in terms of design wins this year and then drive significant growth in terms of revenue next year. And so a nice storyline there. And we don't see the data center market really slowing down for the next few years. I mean it's got a -- just by virtue of what's going on with the work from home and kind of more reliance on infrastructure, we think data center will continue to do quite well and grow very fast for us. We have about 40% share in terms of CDRs and PMD in that space, and we think we can maintain that position over the 3-year to 5-year time frame.

Two follow-ups to the comments that you made, Mohan. One, as you look at the transition, the 200 and 400 gig from 100, what does that mean from a revenue standpoint for 100 gig? Does 100-gig growth persist even as 200 and 400 begin to ramp up next year? Or is there really a handoff where 200 and 400 take over and then we start to see a tail off in 100? And then secondly, you mentioned that China and Europe are poised to become a bigger part of the business, and it sounded like that was something related to events in 2021 and beyond. Is that triggered by what you see happening with the transition to 200 and 400 gig? Or is that just the natural evolution of IT infrastructure there and then finally catching up with infrastructure we see with U.S. hyperscalers?

Yes. Let me take the last -- the second part of that. I think it is more just a natural phenomenon that data centers before were primarily the big guys in the U.S. But I think now many enterprises themselves are going to have their own data centers, or they're going to -- we're certainly seeing a more regional evolution here of data center customers. And so we'll see that natural progression, I think, occur over the next few years. Which is good, because I think it doesn't mean you have to be solely tied to the specific customer. You have a little bit more balance there. And then on the 100 gig or the 200 gig or the 400 gig, we actually see all 3 growing. Probably, obviously, the 200 gig and 400 gig are much smaller today, so they'll grow at a much faster rate. But I think the nice thing is the whole market is expanding very fast, and we do think the number of ports will continue to grow quite nicely for -- or even 100 gig. There'll be some slowdown in the 100 gig. Obviously, it can't grow at the same rate, and it's much larger today, and that will somewhat be offset by 200 gig and 400 gig. But I think the market as a whole is likely to almost double next year and maybe even again the following year, so we're expecting very good growth in all of our data center business.

That's helpful. Let's move on and talk about a couple of the other subsegments within Signal Integrity. So you mentioned in your overview that one of your product cycles in PON is PON-X. And can you just help us understand the opportunity that you see as you look out in calendar '20 and '21 and beyond with the PON business? I suspect it's tied to some of the things that we're seeing globally as 5G starts to ramp up. So let's start with PON, and then maybe we can segue into base station after we flesh out PON-X.

Yes. So the way we look at it as a data center being on one end of the network. The other end of the network, the access side, PON is a really critical technology for resolving bottlenecks at the access point. There's no point in having these high bandwidth, very fast links from the core of the networks using 5G infrastructure, if you then have a bottleneck at the access side. So PON has been a very successful technology, obviously, in China, where China is [ leading ] to optical fiber connectivity throughout the enterprise and home infrastructure. But one of the nice things we're seeing now is that other regions of the world, and including North America and Europe, are starting to also deploy more PON in their regions. And that's a very healthy sign for us, so we're getting more of a geographical balance there. The second thing is, obviously, as you talked about there, Craig, is that the handoff of 5G to 10-gig PON is a natural kind of handoff for high-definition video and for other very high bandwidth platforms. 10-gig PON is a natural handoff. And so I think what we're going to see, and we're already seeing that, is this kind of very fast acceleration in terms of deployments of 10-gig PON certainly in China, and I think it's going to be mirrored in other parts of the world. So that's kind of a double benefit for us. We get the more regional balance, but also we get the higher ASPs and the better content in the 10-gig platform. The other thing with 10-gig PON for us, it's the first time we're playing on both ends on the ONU side and the OLT side. The ONU side is kind of the CPE side, the real access side, and the OLT side is kind of the central office side, and we have chips on both ends. So that's also a nice thing for us. And PON is about 25% of our SIP revenues, SIP integrity product revenues. And I think we're feeling good about the growth in that business for the next few years as well to be driven by this 10-gig/5G kind of handoff and the globalization of the business.

So one of the ways to think about PON-X and 10G for Semtech is there's really a content gain opportunity because you've got both ends of the link.

Yes.

Using that as a segue to 5G base station, I think a lot of companies that are associated with infrastructure are seeing content gain opportunities. I think that is the case with Semtech. But can you talk about what investors should expect with ClearEdge and FiberEdge products as it relates to the base station opportunity that's in front of you now?

Yes. Base station is a very exciting area also for us, and for several reasons. One is that at the 5G node, most of the front-haul modules will be 25-gig optical modules versus [ one ] gig at 4G, and so you have a higher bandwidth optical module. That higher bandwidth optical module usually would require a CDR as well as a PMD function. So in 4G optical modules, you'd have just a driver and amplifier. That's all we provided to the marketplace, and CDR wouldn't necessarily be needed. For 25-gig optical modules, they do need a CDR. And so our content has certainly increased there, and we're already seeing that. So we'll provide drivers and amplifiers but also CDRs into that space. The other benefit that we're seeing for 5G is that there's just more optical modules being used in a base station. So a 5G base station has typically 12 and above optical modules, whereas in a 4G base station, you may only have 6 optical modules. So we have the more content, and we have the more optical modules. And then I think the other element of this, which is kind of a common theme now across all of the infrastructure segments, is that every region in the world is recognizing they can't rely on other OEMs in other regions to necessarily be their provider, and so we're seeing other regions start to also look to deploy and looking for options and solutions in their regions. So we've definitely seen an increase in the number of opportunities in North America and Europe for 5G technology to deploy their -- in their systems, and so that's also a healthy sign for us. So this is another market that we think is going to grow quite nicely. And our ability to grow with it, I think, as well as maybe increase our share, which is currently about 30%, I think, is looking quite good.

Excellent. I have an investor question, so let me just jump back to PAM4. The question is regarding the reach for your PAM4 solution. Where do you expect it to gain traction? Is it distances greater than 100 meters, less than 100 meters, some other benchmark? But as investors look at that parameter, where would they expect Tri-Edge to fit?

Yes. The first products are all relatively short reach, and then 100 meters, 200 meters. But by the end of this year, we'll have a platform based on the same technology, that I think should start to get us into the kilometer range and so a kilometer and eventually 2-kilometer range, I think. So there's no fundamental reason why the technology can't achieve that. I think we'll -- that's what we're looking for. But initially, the short -- the platform will be targeting short reach.

Great. And then just to wrap it up on Signal Integrity, Mohan. You've emphasized throughout our discussion thus far that Signal Integrity has a number of very powerful growth drivers, and the momentum behind them looks like it's multi-year in nature. As you look out over the next 2 to 3 years, would you expect any meaningful change in the composition of revenues? Or how should we think about where Signal Integrity can go with the 3 segments we've talked about over the '23 to calendar '24 time frame from where we are today?

Yes. I mean it's -- all 3 of these subsegments are looking very strong at the moment. I would say data center is probably the #1 in terms of growth, #2 is probably the 5G, the base station side. And then third is PON. So we may see a little bit of a shift in that. Today, data center is about, I think, 40% of the revenues, and PON is about 25% of revenue. Base station, about 15% of the SIP revenues. And so we may see a little bit more on the data center side as we go forward here. We have a video business that's -- that includes some legacy stuff that's about 20% of the business in that range, and that's not growing so fast. Obviously, this year has been a troubling year for -- due to COVID-19 on video broadcast and no conferences, no live sports and things like that. But we acquired a company a couple of years ago called AptoVision for Pro AV applications, and that stuff is really growing very fast. But it's very small today, so my sense is that business will also grow in the future. That's one of those 5-year time line kind of things I talked about. But I think the composition will largely be data center, base station, PON and then the video for the next couple of years.

That's great. Well, I know there's a lot of people on the call that want to hear about LoRa. So let's switch gears to wireless sensing and jump into LoRa. And the first question I'll ask, I'll put a little context around. So from time to time, I'll go to the LoRa Alliance website and look at the approved products. And it's in, frankly, an incredibly impressive list of products from all over the world with just great functional variety and applications. There was -- there were things that I saw today that I hadn't seen before. So the question is, as we think about the product list that exists there and just the nature of what's been, I think, more of an industrial IoT business that's picking up more of a consumer element to it, a consumer access element to it, how should we think about the way that product uptake will occur? Is it going to be a classic analog model, where it's widely diverse across a huge variety of applications? Or is there a dam that's ready to burst by a specific geography or end market, where it would be more of a high-volume business that could evolve over time as part of LoRa?

Yes. So that's a good question, Craig. I don't know that I have the answer to it, but I will give you what my feeling on it is, which is I think the latter, which I do think is going to explode, but let me tell you why. So if you -- if I take a step back, what is LoRa? LoRa is an ultra-low-power radio. So ultra-low-power enables kind of 10 years of battery life. Very long range, so kilometers of range. We're not talking meters, we're talking kilometers. Very low cost, and it's essentially a radio technology that's targeted at the IoT space. But specifically, it's been targeted -- we targeted the what we call the LPWAN space. LPWAN is low power, wide area network. So the technology was developed for this kind of a wider area network application, and what we did is we created this LoRa Alliance, and the Alliance drives the LoRaWAN protocol. They drive the whole ecosystem of companies, part of which you referred to there, in terms of sensor manufacturers, system OEMS, operators, cloud service providers. And the LoRaWAN Alliance drives that broader ecosystem, which then drives the adoption of LoRa and the growing number of use cases across the globe. So it's kind of really a nice vehicle for us to bring the technology out to the marketplace. And I think one of the things that we sat back and said, okay, what -- and when we first brought LoRa out is what's the key goal here, and our key goal was simply to make LoRa the de facto standard for the LPWAN marketplace. And the second goal was to make that LPWAN market huge, and hopefully the biggest segment of IoT in time. I would say over the years, that the difficulty has been just educating on LoRa, just telling people what is LoRa, what does it do, how does it work, why is it different, why is it nobody's talking about it, those types of things. Today, I don't have that problem. We don't have that problem. Everybody knows about LoRa. Everybody knows what it is. Everybody knows what the value is. Now the question is, okay, can we achieve those 2 goals that we set out? And when I look at the progress, I would say that it's really, really good progress on both those fronts. The first, becoming the de facto standard. We just see everybody talking about LoRa now. It fills a lot of technology gaps, whereas with WiFi and Bluetooth and Zigbee you have a fairly short range. And then with cellular and GPS, you have pretty high battery kind of usage. LPWAN and LoRa fit a really nice space there, where you can get very low battery consumption, very low power sensor networks, but a very good range and very good connectivity and those type of things. So it fits a nice hole. And I think we're seeing now the market has evolved to the point where, if I go back a few years and even now, most of our revenues are coming from smart metering, smart building, smart cities, smart environment, smart agriculture use cases, more industrial in nature, to now what's happening is the technology is really finding its way into numerous new use cases, including smart home, asset tracking, logistics, smart health, which is really a key one we'll talk about a little bit more. And other emerging use cases, which can drive much faster growth and much higher volumes and are almost -- they're -- although we call them LPWAN, they're kind of borderline LAN connectivity and WAN connectivity. Because in the home, for example, you can -- a 1-mile coverage or a 0.5-mile coverage usually covers your whole property and your whole campus, for example. And that's a range that is not easy to do with WiFi or with Bluetooth or other technologies today, so it's kind of filling in a nice hole, and I think that's what we're seeing more and more of now. So our sense is as we continue to see the deployment of gateways and the deployment of -- across the different regions of the world, we're going to see LoRa move from being just a nice technology for industrial applications to more consumer-ish, smart home type of asset tracking type of applications, which is really quite good for us. And I think that way, it kind of gives us more confidence that we can even get to that -- achieving our 2 goals that we set up, at a faster rate than we had initially thought we would get there. So I hope that answers your question, Craig.

Yes. That does, Mohan. The next thing I want to do with LoRa is just use the metrics that the company provides to drill into the opportunity that exists in some of the trends that you're seeing. So just for people on the call, as a reminder, the company, from time to time, reports on countries of deployment, network operators, gateways, end nodes, has revenue targets and talks about its funnel opportunity. So what I wanted to do is just get some insight into what you've seen with the funnel. I think we've had about a year of unusual geopolitical and in-global environments, U.S.-China trade issues last year, COVID issues this year. As you look at LoRa's funnel, what have you seen as the multiyear trends going into this year? And what are you seeing as we progress through this year? And how are you feeling about funnel and funnel growth as we look ahead through this year and into next year?

Yes. So again, let me take a little bit of a step back. And when we talk about a dashboard and we put down metrics, one of the reasons we do this is it's very difficult to predict this business when a customer -- even though a customer may have chosen LoRa as a technology it wants to use, how quickly that decision -- we're going to move from that decision to when we're going to see revenues, because there's typically in an IoT system, there'll be sensor deployments, there'll be a network deployed, then there'll be software application support and things like that. So sometimes, it's very difficult to predict. So one of the things that investors have always asked me, they say, "Well, Mohan, how can we monitor the progress to make sure things are going well?" So we put together a dashboard, and we present this every year, every quarter. And I talk about those elements of it, and we talk about the number of countries deploying LoRa, the number of operators, the number of gateways deployed, which is -- really indicates how well the infrastructure is being rolled out across the world, and then the number of connected devices. And then one of the things we talk about is the opportunity funnel, and the opportunity funnel is important because it tells us not only what type of use cases are deploying LoRa and going to and thinking about using LoRa or actually using LoRa, and also it tells us geographically what -- where those opportunities are coming from. So if you look at our revenues today from LoRa, about half of our revenues are from China. And part of that was because when we first brought the technology out, LoRa is a really, really good fit for smart metering, smart city, smart environment, smart building kind of use cases. And in China, it's just a really good region, where they do have environmental issues, they have a need for smart cities, they have a lot of smart metering use cases. And so it became a very good market for us and grew very fast for us. Unfortunately, because of the trade issues and a number of other things related to the China-U.S. geopolitical situation, China was soft for us last year, and I think that was a concern. And so we started to monitor a little bit closely, more closely, the funnel to see how the mix of revenues were potentially going to come in, in the future. And I think one of the nice things we saw is it was much more balanced. It wasn't all China. It was now -- now if I look at the funnel, it's about 30% is driven from Americas; 38% from Europe; about 19% China; and the rest of the world, 13%, something like that. So it's a lot more balanced. And not that we are staying away from China or we don't expect China to continue to grow. We do expect some of the other regions to start catching up, though, and especially, I think in the Americas and Europe, where we have now pretty much good validation of the technology and use cases. And now it's just customers moving from their proof of concepts to full deployments, and so we're very encouraged by that. We think that's going to be good. And then also, if we look at the funnel, the number of different types of use cases, it's -- we see a significant shift going towards more smart homes, smart logistics, asset tracking use cases and areas, where, as I mentioned, smart health has now started to make the list. It wasn't something that we had targeted before. In fact, we didn't even think it really was going to be a great market for us. But with COVID-19, I think the opportunity for LoRa, which is -- LoRa is a perfect technology for contact tracing, remote temperature sensing, occupancy management, smart quarantining, smart alert systems, things like that, that the combination of something like Bluetooth and LoRa or WiFi and LoRa really just enable a whole different set of use cases to emerge. So we're starting to see that now. Our opportunity funnel looks a lot more healthy in terms of the different use cases. And some of these use cases, we know of because we're obviously talking to customers, can be very high volume, and they can be very nice growth for us. So that's part of the reason why we have confidence in our 40% CAGR that we set out there for the next 5 years. And as I look at it, we're in what we believe is an early stage of a very fast-growing and very, potentially, very large growth market. And we have a proprietary position, obviously, because we own the LoRa technology, to be able to benefit from that.

That's helpful, Mohan. And let's just jump into some of the nearer-term dynamics. I think on the last earnings call, the company mentioned that it had a very strong quarter, and the first quarter with funnel activity, engagement activity with LoRa. I think the company expected to see record revenues in the current quarter for LoRa. One, is that a fair summary? Two, what does that mean for how the company's looking at this year's revenue growth potential, I think, $90 million on the low end, $120 million on the high end? How are we tracking relative to that target?

Yes. So as we came into the year, we actually thought that most of the headwinds from China were behind us. Unfortunately, with COVID-19, as you all know, February and March were pretty dead in China. I mean they just went -- there was nothing happening. Fortunately, it came back quite strong. And as I mentioned on the last earnings call, we had record LoRa-enabled bookings and record POS, which was very positive for us, and so we felt that Q2 was going to be extremely strong for LoRa. And so we kept our range, which is $90 million to $120 million for the year. Obviously, we're still banking on a very strong second half. And with some of the dynamics of COVID-19 and what's going on in the North American and Europe markets, it's difficult to reengage. But we see enough opportunities, enough things going on that, yes, we feel comfortable with where we are in that range. And it's such an early stage in the evolution of LPWAN in this market. To me, we only need 1 or 2 catalysts really, and I think the numbers move very quickly upwards. So I think we're fairly still -- still fairly confident about the 48 -- 40% CAGR and how that translates to revenue for us this year and the next few years.