Qorvo, Inc.

Welcome to the Corvo, Inc. second quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please note today's event is being recorded. I would now like to turn the conference over to Douglas DeLito, Vice President of Investor Relations. Please go ahead.

Thanks very much. Hello, everybody, and welcome to Corvo's Fiscal 2024 Second Quarter Earnings 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 Brugworth, President and CEO, Grant Brown, CFO, 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 Corvo's fiscal 2024 second quarter call. Revenue, margin, and EPS were all above the high end of the outlook provided during our August earnings call. Customer demand during the September quarter improved versus our August guidance. The primary driver was a large smartphone customer, RAM. In addition, channel inventories of Corvo components across the Android ecosystem continued to be consumed with OEMs indicating inventory levels are approaching historical norms. Channel inventory digestion is allowing Corvo to ship more closely to end market demand, even as pockets of channel inventory remain in markets such as base station. We have worked closely with our customers to address inventories while continuing to deliver highly differentiated products. They have rewarded us with new opportunities and new design wins and this underpins our expectations for growth this year and beyond. Across our three operating segments, Corvo enjoys multi-year technology upgrade cycles supported by global macro trends, including connectivity, sustainability, and electrification. New protocols and new technologies are offering improved performance and enhanced functionality, and Corvo is critical in enabling these capabilities. This is playing out in aerospace and defense, automotive, base station, broadband, connected home, power devices, power management, smartphones, Wi-Fi, and other markets. Where the performance is measured in power out, data throughput, talk time, battery life, or distance between charges, customers increasingly require higher levels of power efficiency, integration, and functional density. to enable their future architectures and deliver successive improvements in their next generation products, they rely on Corvo's best-in-class technologies and solutions. In HPA, we are a strong beneficiary of the trends in our defense and aerospace business towards what we call one-to-many. Put simply, Corvo's technologies are supporting higher customer volumes, requiring more electronics and higher levels of integration. This applies to unmanned vehicles like drones, upgrades to existing radar systems, low Earth orbit satellites, and other applications. Lastly, we are leading the transition to DOCSIS 4.0 in broadband, and we continue to deliver base station customers increasing levels of functional integration for their 5G massive MIMO deployments. Looking at our power franchise, we offer a highly differentiated solution with our silicon carbide JFET architecture. Our technology offers the lowest RDS on, which translates into faster battery charging, longer battery life, and lower current consumption for applications like EVs, solar inverters, and data centers. These are relatively new markets for Corvo that are early in the transition to silicon carbide and offer significant growth. We also offer a differentiated portfolio in power management, where our initial wins have been in SSDs, power tools, and appliances, and we are leveraging our unique IT to expand into defense, infrastructure, smartphones, wearables, and other markets. In CSG, new technologies are transforming user experiences in automotive, connected home, enterprise, industrial, in other markets. Ultra-wideband is a critical focus area, and we are very excited about recent developments. Ultra-wideband is in the very early innings of adoption, and we are seeing exciting opportunities, giving expanded smartphone adoption, multiple in-vehicle placements, and an array of new capabilities, such as ranging and precision location for indoor navigation. Wi-Fi is another primary driver, and the transition to Wi-Fi 6E and Wi-Fi 7 is very early on. Wi-Fi 7 devices recently launched by Corvo's customers are offering breakthrough advances in speed, latency, and network capacity. Corvo also offers components and full system solutions that incorporate Bluetooth Low Energy, Zigbee, Thread, and now Matter. Matter is a recently launched technology overlay, essentially a common language that improves interoperability across smart home devices, regardless of protocol or manufacturer. It is supported by iOS, Android, and major smart phone platform providers, and it's widely expected to simplify and accelerate the adoption of smart home devices. It's also early days for our force-sensing touch sensors. These are ultra-sensitive MEMS-based sensors that enable new use cases and enhance device functionality. We have broad engagements across automotive smart interiors, trackpads, true wireless headsets, smartphones, wearables, and other consumer applications, and our opportunities are expanding as customers engage with our technology and develop new use cases. Looking at ACG, fewer than half of the Android smartphones this year will be 5G. Android 5G units are expected to grow in the low double digits for several years. That's a big growth opportunity for Corvo as we move from very little content in 4G phones to significant dollar content in 5G phones. Another driver? is 5G Advanced, which leverages new releases of the 5G standard. 5G Advanced smartphones will include additional transmit and receive and satellite bands, favoring Corvo's product and technology portfolio. 5G will migrate to 5G Advanced over time and bridge us to new development efforts and new content required to accommodate 6G frequency spectrum at the end of the decade. Corvo enjoys a range of opportunities supported by multi-year upgrade cycles. Many of these transitions are very early on, and Corvo is recognized by customers as a leading technology innovator. We have made great progress developing new technologies and winning customer designs. With that said, we want to make it clear that our end markets have not yet turned, and our outlook does not contemplate a significant change in the macroeconomic environment. The customer demand environment for Corvo is more a reflection of strong design wind activity and the early actions we took to improve channel inventory. When end markets recover, that will represent an additional driver of growth for Corvo. Now let's turn to some quarterly highlights. In defense and aerospace, We increased shipments of X-band transmit and received SEMs and secured first orders for our 50-watt PAs in support of new land-based C-band radar programs. We introduced the world's highest power KU band satellite communications amplifier, which enables an 80 percent size reduction and is optimized for multiple applications. We also received a large production order for recently launched cell-to-satellite solutions. These solutions incorporate advanced technologies from across our aerospace, base station, and mobile portfolios to enable low Earth orbit satellite connectivity. In infrastructure, we were selected by Tier 1 Base Station OEM to supply switched LNA modules for next-generation 5G massive Bible radios. We also continue to lead DOCSIS 4.0 broadband upgrade cycle with production orders from multiple customers and broad-based design wins. For power management markets, we released QSPICE, a significant improvement over current industry offerings for analog and mixed signal circuit design and simulation. QSPICE improves the speed, functionality, and reliability of circuit simulation extending the value Corvo is providing designers. Since its launch, the tool has surpassed 15,000 unique downloads. In automotive applications, we were selected to support a major in-vehicle car access platform by a leading German automotive tier one. This multi-year program has a lifetime value over $250 million. marking a major milestone for our ultra-wideband portfolio. Within this program, Corvo will supply ultra-wideband solutions for in-vehicle applications for a leading German automotive OEM. We also secured a design win from another leading German automotive Tier 1 to supply V2X solutions for a communications platform launching this year. Lastly, we were selected to supply force-sensing touch sensors that enhance smart interior functionality in a recently launched EV from a Korean-based automotive OEM. Complementing the large ultra-wideband wind in automotive, Corvo was selected by the leading Android smartphone OEM to supply ultra-wideband for their spring 2024 flagship launch. It's worth noting, that the ultra-wideband wins in automotive and Android markets are significant, as these two customers represent the largest volume opportunities in their respective markets. To extend our reach, we're sampling ultra-wideband solutions across fleet management, logistics, agriculture, and other applications, leveraging our precision location capabilities to advance operational efficiencies. In Wi-Fi, we secured multi-year design wins with Tier 1 network operators in the US and in India. These wins support next-generation wireless infrastructure for retail, enterprise, and home applications. Across the Android ecosystem, we increased shipments of our highly integrated modules in support of Android smartphones from the high tier through the mass market. Notably, we extended our strong share position with the leading Android smartphone OEM in their flagship smartphone. In addition to the ultra-wideband wind, we also selected to supply the lowband, mid-highband, ultra-highband, secondary transmit and receive, tuning, and Wi-Fi. Lastly, we expanded customer sampling of our recently launched mid-highband path. Corvo's newest integrated architecture leverages next-generation BAU and SAW technologies and advanced packaging to combine main path content with received paths commonly included in the first received module. This and other highly integrated Corvo architectures for the Android ecosystem free board space and improve efficiency to support future 5G form factors and content. like flip and fold architectures and transmit and receive non-terrestrial network connectivity. I want to thank the Corvo team for continued operational excellence. We have moved aggressively to reduce channel inventories by securing broad-based customer design ones. In the December quarter, our outlook reflects the seasonal profile of a large smartphone customer ramp, as well as healthier channel inventories across most markets. In the March quarter, we expect revenue to be more closely aligned with end market demand. Longer term, we expect revenue, growth, and margin expansion as product mix favors our higher growth investment business. And with that, I'll hand the call off to Grant.