Sivers Semiconductors AB (publ) (SIVE) Earnings Call Transcript & Summary

Hi, and welcome, everyone, to Redeye. With me today is the new CEO of Sivers Semiconductors, Vickram Vathulya. So welcome.

Thanks, Jesper. I'm happy to be here and looking forward to this conversation today.

All right. So you are completely new to us and to Sivers' investors. So please tell me about your background.

Yes. So I bring about 25 years of semiconductor experience, microelectronics experience. I've worked with big and small companies, and with small and big businesses. I've had the opportunity to take businesses that have been tens of millions of dollars to make them hundreds of millions of dollars. And hundreds of millions of dollars to get them past $1 billion. And what I've done is done this across a variety of portfolios, starting from component level sales to highly complex subsystem integrated circuits. I've done this with a global footprint. So I have a good basis of experience in Europe, Americas and the Asias. And managed to do this multiple times throughout my career. And I find a compelling opportunity here to do more of the same.

Yes. And speaking about that opportunity. I mean, Sivers being a relatively small Swedish company, why did you choose to become the CEO of Sivers?

It's a very interesting question. If you look back at my history, whether it was small or big companies, a captivating piece for me was always latent technology that could fit an unmet market need and how do you grow that? So there are several examples in my career where I've taken those smaller businesses and brought them to be bigger businesses with sustainable growth. And while I've dealt with bigger businesses and grown them too, my passion lies around finding a situation where there's a secular trend with a need for innovative solutions that help that secular trend deploy at scale. And the basis being a very strong set of talented people that are motivated, and how can I come in, enable, support, drive the outcomes for these teams. So when I looked at Sivers, I've done this multiple times before, I've done it with the mobile phone market, putting WiFi into mobile phones. I've done this in the automotive market, putting more electronics into the automotive. I've done it in the infrastructure market going from macro base stations to small cell base stations. And what's fascinating about where Sivers is, is we have 2 secular trends, not one. So that's not even common for a company our size. We're in the middle of 2 big long-term secular trends. And we have 2 technologies that nicely intersect these 2 secular trends. So when I look at this and then I look at the talent we have that's created this technology, I'm like, hey, this is this perfect triangle that I want. And we have it in 2 areas. So I think there's tremendous scope for impact here working with these teams, bringing my experience, bringing my knowledge of the geographies and helping us build up this business. So that's been fascinating, and I've talked to the Board and the leaders at Sivers, it felt a compelling move.

And so you've obviously done quite some deep research about Sivers like both the technology and the product market fit and so on before you actually chose to start the position. So could you just tell me about that process?

Correct, absolutely. So this is a very, very good question. So my 100-day, I always feel is a new CEO or a new leader starts even before I join. And before I join, I'd like to learn a couple of things about the company. The industry we are in, what are the tailwinds, headwinds, are there secular trends in there? Then I try to assess the technology that we have. But that's from the outside and I can get only a certain sense. Once I come in, I like to understand what's the level of maturity of the technology? And then what is the product market fit? Because as we all know, those are 2 hurdles where 95% of small companies die. And so the more I learn from the outside in coming in and the more I'm learning from the inside, it's pretty obvious to me that we have conquered the base technology development. And the engagements I see and the stages of the engagements that we are on in the chosen areas to focus on, we have a compelling product market fit. So now I look at this saying, I just now need to take this position that Sivers is in and scale up and scale out. So that's the assessment I have right now. So that's what I'll be working with my teams in the coming couple of months, and get in front of the Board and give them our fully fleshed out plans for the future on how we plan to scale up and scale out.

Yes. And I mean, I think from many investors' point of view, Sivers has been just on the verge of reaching that stage for quite a while, the scale-up phase and so on. What makes you think that this is the time that it will actually happen, and why hasn't it happened before?

It's a good question. I'll tell you from the perspective of what I know. If you look at scale up and scale out, it's that crossing the chasm into becoming mainstream, and then handling how you build that up. When you're chasing secular trends, there is an expectation of time line. And despite best intent, we always assume it's closer than not, number one. And number two, a lot of the heritage of servers was in 5G, I mean, cellular technologies. So there is an inherent kind of mindset that let's go make that happen. But cellular CapEx is kind of not straightforward, the way it kind of develops. So that piece of it took longer. But what I know from the outside, even before coming in, is on the millimeter wave side, there are markets already deploying millimeter wave solutions, and our pivot to SATCOM was actually a very good one a couple of years ago. SATCOM, there's a heavy area of activity investment deployments happening now. Same thing with AI. If you look at our Photonics side of the business, there's been a lot of talk, a lot of energy, enthusiasm around it. But now I'm starting to see concrete projects and our customers' customers now starting to say, "Hey, we need to be ready now. Are you guys ready." So the tone of the conversation, along with the level of the engagements and more visibility we have into our customers' efforts, is giving me more confidence that we've actually chosen the places where there is a gravitational pull for these secular trends to show up first. So if you look at this, yes, we had a little bit of a hiccup in the past where there's a lot of reliance on 5G taking off. But to the company's credit, we pivoted to SATCOM, we put in our effort, and now we're in a much better place. And I look at, do I have some line of sight to where we need to go, right? So that's why I feel more confident at the place where we are in that we are past this product market fit, and we should really be investing energies in scale up and scale out.

All right. And so it seems like we're on just that verge of getting past that chasm. So what, in your opinion, is needed right now to take Sivers to the next level?

Got it. So if you remember the whole crossing the chasm, now we need more validation from mainstream bigger players picking up and carrying along this journey beyond our alpha thought leaders. And so early indications you've seen us talking about 5G, fixed wireless access, big tier customers, thinking of engaging with us, working on engaging with us, things of that nature. So that's a good sign. That's an important piece of crossing the chasm. But that also then needs us to scale up in our go-to-market in raising market awareness of our technology because now we have product market fit, we can be more confident, go out to the market and say, "Hey, we have relevant technology enablers to solve these challenges." And that means investing in market awareness, investing in pipeline building, a sales force that's reaching more people, getting our message across, getting our value proposition across. And of course, when we engage with those next set of Tier 1 customers, we got to make sure we put in engineering resources that support them, et cetera. But it's very careful, calculated methodic scale up. And that's what is ahead of us at Sivers right now.

Yes. And considering your previous experience, how do you see that coming in for what is needed right now?

It's absolutely essential because that's been the mainstay of how I have directed my career energies, which is taking those combinations that are at the product market fit, leveraging my experience in the markets, in the geographies with customers we can talk to, get our engineers in, make sure that we compel them to go with us. It's absolutely relevant experience, and that's one of the big pulling points to Sivers saying, "Hey, the hard work is done in terms of technology product market fit, but I can bring in the experience that I've used multiple times in my career to take that and kind of make it blossom into sustainable growth for the long term, at the same time, keeping the team focused on that long-term vision of ours." Because the pathway near to midterm will navigate. There will be certain moves, that will be certain things that we'll have to adapt to be flexible, but I want to keep the true North Star for the company as well. And those are my strong points over my career. And I feel like I can bring that into the company at this time and make it happen.

Sounds promising. That's all of the questions that I have. Do you have anything else that you'd like to add before we end up?

No, I just want to kind of mention to the customer base out there globally that we have the technology to solve critical challenges that you are facing. And we are eager to come out and build up our pipeline and find more customers that we can work with and make them successful in their ambitious plans. And so I'm like -- keep a look out for Sivers in the coming months and years.

Perfect. Thank you so much for coming here, Vickram, and good luck going forward.

Thanks, Jesper, for having me. And I look forward to keeping in touch with you.