Qorvo, Inc.

Greetings, and welcome to the Corvo, Inc. Third Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Douglas DeLito, Vice President of Investor Relations. Thank you. You may begin.

Thanks very much. Hello, everyone, and welcome to Corvo's fiscal 2023 third quarter earnings conference call. This call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statement contained in the earnings release published today, as well as the risk factors associated with our business and our annual report on Form 10-K filed with the SEC because these risk factors may affect our operations and financial results. In today's release and on today's call, we provide both GAAP and non-GAAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today, available on our investor relations website at ir.corvo.com under financial releases. Joining us today are Bob Ruggerworth, President and CEO, Grant Brown, Chief Financial Officer, Dave Fullwood, Senior Vice President of Sales and Marketing, and other members of Corvo's management team. And with that, I'll turn the call over to Bob.

Thanks, Doug, and welcome everyone to our call. Corvo delivered fiscal third quarter revenue and EPS above the midpoint of our outlook provided during our November 2nd earnings call. In high-performance analog, quarterly revenue reflected year-over-year growth in defense, broadband, and power. our power business posted a strong quarter with robust design activity for our silicon carbide power devices. Offsetting this were power management markets with consumer exposure and infrastructure where customers are working down elevated inventory levels. In our connectivity and sensors group, the quarter reflected lower end market demand and channel inventory consumption for Wi-Fi products, partially offset by strength in automotive. Design activity was strong across customers and products, including ultra-wideband, matter, and sensors. Use cases continued to proliferate that benefit from precision location, indoor navigation, seamless connectivity, and enhanced human-machine interfaces. Lastly, in advanced cellular, Corvo participated broadly across customers' portfolios. The macro environment weighed on overall smartphone volumes across customers and revenue reflected channel inventory consumption within the Android ecosystem. Design activity continued to be strong across customers and product categories and supports year-over-year content gains at our largest customers. Now let's turn to some quarterly highlights. In high-performance analog, Corvo began sampling a radar power solution that combines a high-voltage power conversion PMIC and silicon carbide power switches to control a GaN RF power amplifier. The solution reduced the size by up to 30% in DNA radar systems while expanding Corvo's content opportunity. We also expanded our ship state-of-the-art RF packaging contract with the U.S. government to develop multi-chip modules that combine digital optical devices with Corvo's mixed signal RF. In aerospace, we delivered a multi-chip solution that includes Corvo's high-frequency ball filter as well as a GaN PA for low-Ort orbit satellites and other applications. The solution supports cellular to satellite links and we have secured new designs. The opportunity for Corvo is notable given the trend in defense and aerospace applications of one to many. That means rather than one jet, there will also be many drones. Rather than one geo-satellite, there will also be many LEO satellites. At the same time, new capabilities are being added to existing platforms that require increased semiconductor content and higher density and more advanced packaging. all areas where Corvo is strong and is investing to advance the technology. In cellular infrastructure, we commenced pre-production shipments of our first integrated PA modules, or PAMs, to a Tier 1 European infrastructure OEM for 5G massive MIMO base stations. We also began sampling our next-generation PAM, which delivers market-leading efficiency for 5G massive MIMO installations to the leading European infrastructure OEMs. For broadband infrastructure applications, we sampled a CATV power doubler amplifier that maintains linearity and extends bandwidth to enable higher throughput DOCSIS 4.0 capabilities with industry-leading power efficiency. Deployments of DOCSIS 4.0 are scheduled to begin this year, and Corvo is very well positioned as the industry leader. In CSG, we expanded our Wi-Fi content at a Korean-based smartphone OEM to include Wi-Fi 6E and Wi-Fi 7 designs, and we ramped Wi-Fi 7 FEMs for access points and routers for our smart home ecosystem customer. We also commenced sampling 5 gigahertz and 6 gigahertz filters. These filters leverage Corvo's next-generation BAU process and enable worldwide Wi-Fi 7 frequency coverage. There is increasing customer interest related to multi-link operation, which is a key attribute of Wi-Fi 7 and enables higher throughput and lower latency. Lastly, we began volume shipments of MEMS-based sensors, enabling an enhanced HMI experience and true wireless stereo earbuds. Corvo sensors were selected to replace legacy capacitive touch sensor technology. Design activity for our sensors continues to be strong across markets, including automotive. We are working with leading automotive Tier 1s and have secured automotive smart interior design wins in more than 25 vehicles. In advanced cellular, we secured multiple design wins across Android OEMs in support of 2023 devices. During the quarter, we commenced the production ramp of multiple components for the leading Korea-based smartphone OEMs flagship platform. We have increased our content significantly year over year. We are broadly serving this customer across our portfolio and continue to support the migration of their mass market phones to integrated 5G solutions. At a US-based Android OEM, we were selected to supply multiple solutions, including ultra-wideband, antenna tuning, and BAW-based antenna plexing in support of their 2023 smartphone launches. Lastly, Corvo was recognized by multiple customers. We were presented with Honors 2022 Golden Supplier Award, and we received quality awards from Vivo for discrete switches and amplifiers and highly integrated solutions. Before handing the call off to Grant, I want to make a few high-level comments to frame our outlook, both in the near term and further out. At our largest two customers, we are very confident in our ability to grow year-over-year content, and that includes this year. In 2023, we expect growth in ball-based content as well as other content growth. Equally important, we enjoy a range of opportunities across all of our customers in the future years. Corvo is supporting the highest volume flagship phones while supplying integrated 5G solutions as mass market portfolios migrate to 5G. Fewer than half of the Android devices were 5G in 2022, and the migration to 5G is expected to extend over many years. We are unique in advanced cellular in the breadth of our customer exposure and in the depth of our product and technology offerings. Our long-term view of ACG continues to be mid- to high-single-digit growth driven by multi-year content gains. In particular, we see expanding market for our BAW technology. Productivity gains in our Richardson, Texas FAF have enabled a doubling of our BAW output. We intend to put that to good use as we continue to capture designs and grow our BAW content in flagship phones. We expect the long-term growth rate of HPA and connectivity and sensors to outpace advanced cellular. Our view for HPA is double-digit growth, and in CSG, we expect growth in the strong double digits. Key growth areas supported by recent wins with silicon carbide devices, NEVs and solar inverters, MEMS sensors and notebook trackpads and automotive smart interiors, and ultra-wideband in automotive and Android devices. These and other investment businesses are securing new designs that extend our opportunity in large growth markets. In the near term, the team is performing exceptionally well while navigating extraordinary events. Factory loadings have been reduced, and we are bringing down channel inventories. We are also actively managing the expense line while sharpening our focus in support of targeted growth. We are working to accelerate revenue related to our Omnia ball-based biosensors by exploring options for the associated Omnia test hardware, meaning the Omnia desktop test unit and cartridges that contain our ball biosensors. The technology has been proven commercially, and we are engaged with a diverse set of customers. KUVO remains at the forefront of connectivity, sustainability, and electrification. We enjoy exceptional customer relationships and we are a key enabler of future architectures. These architectures continue to favor higher levels of performance, integration, and functional density to deliver the successive improvements in each market's next generation's products. Our customers value Corvo's best-in-class products and technologies, and we are securing broad-based design wins in high-growth markets. As volumes recover, we are positioned to deliver long-term growth and robust free cash flow. And with that, I'll hand the call off to Grant.