and mixed-signal semiconductor supplier Semtech (SMTC 48.70, +3.40, +7.51%) trades to nearly 18-year highs dating back to 2000 in reaction to
better than expected first quarter results and in-line guidance.
In the first quarter Semtech reported earnings of $0.47, coming in at the high end of the company’s $0.45-0.47 guidance and narrowly edging out market expectations. Revenues grew about 2% and were slightly above market expectations. All told, top line sales were ahead of the midpoint of the company’s $147-153 mln guidance at $151.9 mln. First quarter non-GAAP gross margin was sequentially flat at 61.4%.
Net revenues were strong across the board, as sales from the enterprise computing end market increased over the prior quarter and represented 32% of total net revenues while the industrial end market increased over the prior quarter and also represented 32% of net revenues.
The first quarter also saw record bookings for both Semtech’s LoRa business and its proximity sensing business. In Q1, Semtech’s LoRa-enabled business achieved record revenues as the company saw more proof of concepts transition to real deployments and initial production.
At the end of Q1, about 60 mln LoRa end nodes have been deployed globally, putting the company on track to achieve its 80 mln end node target by the end of FY 2019.
Also of note, first quarter bookings was the strongest sequential increase in the company’s history. Sales bookings accounted for about 39% of shipments during the quarter.
Speaking to the recent ban on ZTE products, Semtech management noted a first quarter headwind of about $2 mln related to the ban with expectations for a $4 mln negative impact in the second quarter. As such, Semtech has incorporated the second quarter headwind into its guidance.
The company’s board of directors also announced an increased to the company’s share repurchase authorization to the tune of an additional $250 mln of repurchases under the existing stock repurchase program. This increase brings the total authorization to about $272 mln. Prior to the increase, Semtech had around $22 mln remaining from the authorization that was last expanded in May 2015.
For the second quarter based on strong bookings and a healthy starting backlog, Semtech expects net revenues from its Signal Integrity Product Group to increase. This will be led by stronger demand from the data center market. Management also expects smartphone demand from all regions to increase in Q2.
The company expects its Q2 gross margin to be approximately flat. Management also expects the company’s Q2 operating expense to be sequentially flat and its days of inventory to continue to decline in the second quarter.
Therefore, Semtech expects Q2 non-GAAP earnings between $0.50-0.58 per diluted share on revenues in the range of $155-167 mln.
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