SYNA - NASDAQ

Good day and thank you for standing by. Welcome to the Synaptics Inc. Second Quarter Fiscal Year 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Munjal Shah, Vice President, Investor Relations.

Thank you, Josh. Good afternoon, everyone and thank you for joining us today on Synaptics’ second quarter, fiscal 2023 conference call. My name is Munjal Shah and I am the Head of Investor Relations. With me on today’s call are Michael Hurlston, our President and CEO, and Dean Butler, our CFO. This call is also being broadcast live over the web and can be accessed from the investor relations section of the company’s website at synaptics.com. In addition to a supplemental slide presentation, we have also posted a copy of these prepared remarks on our investor relations website. In addition to the Company’s GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition related costs, and certain other non-cash or recurring or non-recurring items. Please refer to the press release issued after market close today for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the investor relations section of the company’s website at synaptics.com. Additionally, we would like to remind you that during the course of this conference call, Synaptics will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. Although Synaptics believes our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. Synaptics cautions that actual results may differ materially from any future performance suggested in the Company’s forward-looking statements. We refer you to the Company’s current and periodic reports filed with the SEC, including our most recent 10-K - Annual Report on Form 10-K and current report on Form 10-Q, for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. Synaptics expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Michael.

Thanks, Munjal. I’d like to welcome everyone to today’s call. Our fiscal second quarter financial results were within our guidance range, a good outcome given the dynamic macroeconomic conditions. Our financial performance would have been at the midpoint of guidance or better save for one deal in our IoT product group that did not close in the quarter as expected. Dean will provide more details regarding this later in his remarks. Let me start with an overview of the macro conditions and how it is impacting our business. Given our exposure to a wide range of end markets, we have seen different facets of our business experience headwinds at different times. We first saw weakness in mobile phones, followed by PC, then consumer and are now beginning to see softness in our enterprise business which is now our second largest end market. The good news is that recovery is also expected in phases and we have already seen early signs of improvement in mobile and PC. In general, the biggest issue we are facing is an accumulation of inventory. Our visibility into channel partners indicates sell-through exceeded our sell-in during the December quarter in many product areas. We anticipate we will continue to under-ship natural demand in the first half of CY 2023 as we clear inventory. While we remain uncertain as to the precise timing of recovery, our best estimate at this time is calendar Q3 given current rates of inventory bleed off. With that said, we continue to innovate and focus on our three biggest market opportunities all of which are in our IoT product area. The first of these is our initiative to drive wireless workspaces. At this year’s CES, we showcased the first wireless docking station from our partner, Lenovo. The product features our Wi-Fi, video conversion, and video decoding ICs. The next phase of growth involves enabling high fidelity wireless monitors. Ultimately, we see a clean desktop with no wires at all. In addition, we can enable advanced video conferencing hubs where the base system is connected to monitors wirelessly, saving corporate IT departments time and money. All of this is possible with our advanced, low latency video compression technology. While wireless workspaces represent the future, our present is also strong as we continue to dominate the current generation of docking stations and are already beginning our move into video conferencing systems. Our latest chip, Navarro, will bring a new level of performance to universal docking stations, enabling two 8k or four 4k monitors simultaneously. In addition, we recently introduced our latest video conversion device, Carrera, with industry leading SerDes technology, optimized for USB4 Version 2 and DisplayPort 2.1, that brings both video and graphics to high-definition monitors. As an early sign of success in video conferencing, we had a key $10 plus design win in HP’s new Presence system that was named one of the best inventions of 2022 by Time Magazine. Our second large opportunity is in wireless connectivity. Our design wins and pipeline of opportunities continue to increase, giving us confidence to target $1 billion in annual sales over the next three to five years. We offer the broadest portfolio of wireless technologies among all our IoT competitors, including Wi-Fi, Bluetooth, Thread/

Thanks Michael, and good afternoon to everyone. I’ll start with a review of our financial results for the recently completed quarter and then provide our current outlook. Revenue for the December quarter was $353 million, toward the low end of our previous guidance. December quarter revenue from IoT, PC, and Mobile were 68%, 16% and 16%, respectively. We had one customer for our processor products that did not complete certain milestones during the quarter which resulted in lower IoT results relative to our prior expectations. We now expect to complete these deliverables in the March quarter and have included in our guidance as such. Year-over-year, consolidated December quarter revenue was down 16%, driven by double-digit declines in our Mobile and PC products. December quarter IoT product revenue was down 8% year-over-year and was down 30% sequentially due to an accumulation of inventory at customers and channel partners. Outside of the single deal that was delayed, all other customers performed in line with our prior forecasts. In PC, our December quarter revenue was down 13% sequentially and down 32% year-over-year, in line with our expectations, reflecting a weaker PC market as customers drive to reduce inventory. Our higher commercial mix generally leads to a more stable performance, but it is not immune to economic downturns when enterprise IT spending is curtailed. We are seeing early signs of PC inventories clearing and expect demand to begin recovering by June. Our December quarter Mobile product revenue was up 43% sequentially but declined 25% year-over-year. The December quarter outperformed our expectations as customers took delivery of products before the calendar year end, which likely comes at the expense of our March quarter forecast. We view this as an unanticipated timing benefit versus a fundamental change in end market demand. We believe customer inventories are coming down in this area and we signs of stabilization. During the quarter, we had one customer greater than 10% of revenue, at approximately 11%, a distributor servicing multiple OEMs. For the December quarter, our GAAP gross margin was 52.9%, which includes $23.3 million of intangible asset amortization and $1 million of share-based compensation costs. December quarter non-GAAP gross margin was 59.8% and was negatively impacted by the delay of the IoT deal previously mentioned. GAAP operating expenses in the December quarter were $140.6 million, which includes share-based compensation of $29 million, intangibles amortization of $8.9 million, amortization of prepaid development costs of $2.5 million, and transaction related costs of $1.8 million. December quarter non-GAAP operating expenses of $98.4 million were down from the preceding quarter and toward the low end of our guidance primarily due to lower personnel related costs as we begin to slow our rate of new investments. Our GAAP tax rate was 44.2% for the quarter, and non-GAAP tax rate was 17%. In the December quarter, we had GAAP net income of $22 million or GAAP net income of $0.55 per diluted share. Our non-GAAP net income in the December quarter was $88.5 million, a decrease of 38% from the prior quarter and a 33% decrease from the same quarter a year ago. Non- GAAP EPS per diluted share of $2.20 was above the low end of our guidance range as the impact of lower revenue and gross margin was offset by lower operating expenses. Now turning to the balance sheet. We ended the quarter with $859 million of cash, cash equivalents, and short-term investments on hand; a decline of $53 million from the preceding quarter with cash flow from operations of $48 million, offset by $18 million of cash used for payroll taxes related to our equity compensation program, $16 million used for acquisitions, and $61 million of cash used under our share repurchase program. Cash paid for capital expenditures was $9.1 million and depreciation for the quarter was $6.4 million. Receivables at the end of December were $255 million and days of sales outstanding were 65, consistent with the prior year, but up from 57 last quarter. Days of inventory were 112, above 96 days last quarter and ending inventory balance of $177.5 million was down slightly from 179.4 last quarter. During the last quarter, we have actively reduced orders to our suppliers and expect our inventory next quarter to decline further as we work to bring our inventory down to normal levels. We bought back approximately 634 thousand shares during the quarter for an aggregate cost of roughly $61 million. Since restarting our buyback program in September and through today’s call, we have repurchased approximately 1 million shares for $100 million and have an additional $477 million available under our current authorization. Our capital allocation priorities continue to be unchanged. Our balance sheet is healthy and we have sufficient cash to execute on tuck-in acquisition opportunities that will enhance our product portfolio and help us expand further in our target markets. We plan to continue to utilize our excess cash flow for share repurchases and debt paydown absent any M&A activity. Now, let me turn to our March quarter outlook. The macro situation remains challenging and opaque. Our customers continue to react to the macro environment with their forecasts and are focused on reducing inventories. We continue to work with our customers and channel partners in mutually beneficial ways to manage pushouts and cancellation requests. We anticipate revenue for the March quarter to be in the range of $310 million to $340 million, a sequential decline of approximately 8% at the mid-point. We expect our revenue mix from IoT, PC, and Mobile products in the March quarter to be approximately 72%, 15% and 13%, respectively. We are seeing early signs of inventories being worked down with sell-in greater than - sell-out greater than sell-in for most products. We expect customers will continue to deplete their inventory throughout the first half of calendar 2023 before returning to more normal run rates of consumption. As previously communicated, we expect to maintain our strong gross margin profile, with GAAP gross margin for the March quarter expected to be in the range of 52% to 55%. We expect non-GAAP gross margin in the range of 60% to 62%, an improvement from the previous quarter as we expect to close the previously delayed deal during the March quarter adding approximately 100 basis points. We continue to believe that non-GAAP gross margin will trend toward our long-term target of 57 as we progress through the calendar year. We expect GAAP operating expenses in the March quarter to be in the range of $139 million to $144 million, which includes intangibles amortization, prepaid development cost amortization, and share-based compensation. We expect non-GAAP operating expense in the March quarter to be in line with our December results and be in the range of $98 million to $102 million. We remain committed to our focused investment areas and will continue to monitor our spending levels but believe our current levels balance both near-term pressures and long-term growth opportunities for the company. As a result, GAAP net income per diluted share for our March quarter is expected to be in the range of $0.20 to $0.50. And, non-GAAP net income per diluted share is anticipated to be in the range of $1.65 to $2.05 per share, on an estimated 40 million fully diluted shares. As a result of an increase in the interest rate on the variable portion of our debt, and partially offset by an increase in interest income on our invested cash, we expect non-GAAP net interest expense in the March quarter to be approximately $9 million. Finally, we expect our fiscal 2023 and long-term non-GAAP tax rate to remain unchanged in the range of 16% to 18%. This wraps up our prepared remarks. I’d like to now turn the call over to the operator to start the Q&A session. Operator?

Thank you. [Operator Instructions] Our first question comes from Kevin Cassidy with Rosenblatt Securities. You may proceed.

Yeah. Thanks for taking my question. Congratulations for working through such a tough environment we have. But I guess I'll ask the obvious question first, and the processor customer. Was it the milestone not hit? Was it the product wasn't qualified in time or wasn't completed in time and now it's ready to ship? Or is there - was there something else involved with that?

Yes. No, I don't think it was any more complicated, Kevin, than you are just completing the deliverables that were due. We had originally anticipated completing those deliverables in the December quarter. Unfortunately, those didn't quite make it, which now will be in March. So it's not really any more complicated than just deliverables not quite being met.

Okay. And maybe we're all trying to figure out the inventory correction as we're going into this year. And can you say for your IoT business, that seems to be - that's of course, your biggest portion, but a little harder to track exactly where your exposures are. Can you say where the inventory is highest as it consumer related products or industrial? Or maybe in your first remark you said the cycle is kind of improving in the PC and handsets. Now they were the first to go down and is this how you're seeing it roll over?

Yes, I think we sort of see it as a bit in ways. I mean, I think the products that are closest to call it retail consumers saw some of the corrections first, meaning some corrections in demand, a build up an inventory. But also we think those are the first set of markets that likely come out of it as they sort of reacted first, if you will, on the timeline. So the more consumer facing applications have seen sort of the bigger impact, and therefore, some more of the inventory. And then now only recently a few of the other markets such as enterprise that we talked about corporate enterprises, that's just starting to roll out. You see sort of corporate IT departments cutting some budgets as people sort of tighten the belt, and that's affecting a few of those products that we didn't see prior.

Okay. Thanks. I'll get back in the queue.

Thank you. One moment for questions. Our next question comes from Rajvindra Gill with Needham & Company. You may proceed.

Yeah. Thank you for taking my questions. I appreciate it. Just a question on the gross margins. So the margins, you guided a 61% to factor in that benefit that got pushed down to the March quarter. But Dean you're kind of also indicating that margins will kind of drift to a floor of 57% throughout the year, if I read that correctly. So how do we think about kind of the cadence of that drop in margins? And are there any potential opportunities to have margins above the 57% as the floor?

Yes, what I would say Raj, one, I think we've been pretty clear over the last several quarters. We sort of do see margins eventually sort of trailing to our long-term. Right now we're still in 60s. Last quarter, December is essentially 60% guiding 61% here. I don't think there's any step function that we see coming. I think over time, I do think that that's probably the right target for the company to continue to operate sort of consistently. And so, I think sort of the -- likely a sort of a gradual move in that direction, Raji.

Okay. That's good to know. And on the shape of the recovery, you talked about potentially in the third quarter, starting to see a recovery. So if I interpret that, is it fair to assume that June could be kind of flat off the March quarter, and then we start to see sequential growth? And if that's the case, what's driving that confidence? You do have - you mentioned the consumer part of the business is the first set of the markets that will come out of this correction. But you are mentioning some softness on the IT departments. I know is your best guess in that - with that time frame. But just kind of walk me through your thought process in some of the puts and takes for that shape of recovery? Thank you.

And then, as Dean said, with inventory bleed off, with some early signs in Mobile and PC that we're coming off the bottom, I think Dean characterized it well in his comments in Mobile. We saw a nice bounce in our Mobile business, but I wouldn't yet call that a trend line. But certainly we feel a little bit better about kind of the macro in consumer and the macro in PC. And so, I would say that although everybody - nobody has a perfect crystal ball, I would say, our best guess continues to be that things get better in the back half of this kind of local minimum that you're seeing.

Great. Thank you.

Thank you. One moment for questions. Our next question comes from Anthony Stoss with Craig-Hallum. You may proceed.

Hey, guys. Michael, love to hear your thoughts on if there is any particular geographic area that's more weak than others and also lot of the other semis have been taking about China stabilizing, maybe not really moving up. I'm curious, your view on your sales into China and then I had to follow-up after that.

Anthony, I mean, I think our comments would be consistent with others that we've seen. China is driving a big portion of our mobile business, as you know, and our mobile business definitely saw a bit of bounce here. And I still think that we're coming off kind of low water mark in our mobile business, as you know. It's too early to call that we're absolutely on the road to significant revenue increases there. I think we - as Dean said in his remarks, it's sort of - we definitely saw a little bit of a balance, but again too early to call. I do think that we have limited exposure in the rest of China, outside of mobile, our business there is relatively concentrated. So it's harder to give a macro view. I think that where we're starting to see sort of early weakness as we indicated is our enterprise business, which is now a pretty big part of what we do, and that's primarily U.S. customers. So we're seeing just some early softness there. So our guide certainly is in line with the cautiousness that seems to - we're trying to - cautious approach that we're trying to take.

Got it. Thanks for that. And then as a follow-up, I'm curious if you've seen any change in behavior from your competitors on price. And then, secondly, maybe you guys haven't talked about this in a while, but I think you've got a pretty decent roster of VR design wins. I'm curious your view on kind of when that comes to fruition?

Yes. Maybe I'll take the second one first. I mean, I think, on the VR piece, unfortunately, that's where we've seen a lot - I think Raji asked a question before, a lot of weakness in our VR business. That was a big story for us in the first half of calendar 2022. And from a design win perspective, we're still doing great. I mean, we're winning virtually every goggle that's out there. The problem is, that particular consumer facing segment just isn't selling through. So - as well as we did in 2022, we're simply not seeing those results in 2023, despite continuing to win almost everything that there is. Dean, I don't know if you want to comment on the first part of the question.

No, but maybe just let me add on to VR for a second, Tony, I think we're - Synaptics is in a great position. When that market sort of does bounce back and - we're a believer that actually these early markets do take a little while to develop. We're actually in really great position. So I think when VR comes back, you'll see Synaptics as a big participator on that.

Thanks for the color, guys. Best of luck.

Thanks a lot.

Yes. Thank you.

Thank you. Our next question comes from Christopher Rolland with Susquehanna. You may proceed.

Hey, guys. Thanks for the question. And I joined a little late, so sorry if this was asked. I heard something there about VR. I wanted to know about your opportunity in AR, whether you think you have one and the size of that, or if you could potentially size that for us. And then also the opportunity for set-top box. I don't know if we've talked about that too much roughly? Thank you.

Yes, Chris. I mean I think it depends - there is sort of two different classes of AR. I think with AR glasses as strict pass through. Honestly, our opportunity is fairly limited. And display drivers, it's a different type and it's relatively simple. There is opportunity in Wi-Fi and audio in those AR glasses, but the core business and where we've been very dominant in VR not so much. There are mixed goggles that are coming into the market. There the display drivers are fairly similar to what we would do for VR. And we would expect a very similar opportunity, again, depending on that market size, we would expect to do relatively well in kind of mixed AR,VR goggles. I think there was a second part of the question.

On set top box or OTT boxes.

Yes. Set-up box has been kind of mix for us. I mean, I think the good news for us with the wireless asset that we got some time back, we've been able to increase content per box, that actually story has gone relatively well. Where I've been a bit disappointed is our ability to pick up overall share. We've kind of held the sockets that we've had. We've held - we have gained one or two. So we've been pretty pleased with our ability here and there. But generally speaking, I would say that we're not doing as well in terms of picking up share as we would have anticipated two years ago had you asked the question.

Awesome. I always think that was a good - yes, sorry, go ahead.

The other thing I would I would share, Chris, I mean, we talked about this set of deliverables on a processor piece of business, that's actually engaging with an operator end market. So that's sort of the set-top box processor technology. So it actually is progressing. I think, what we find ourselves, and you hear some of our comments, it just doesn't grow as fast as some of our other opportunities in automotive, in wireless, in some of the video interface devices.

For sure. Thanks, Dean. And for the second question, and again, I apologize if this was asked. But around connectivity a lot of others have kind of described this shortage situation moving to go lot fairly quickly for lack of a better word and a potential inventory overhang and potential pricing pressure even moving forward here. Would you guys kind of describe that similar situation or do you see something different?

Yes. For sure, Chris. The inventory is a big problem. I mean, I think we highlighted this in the last call, our wireless business - in our IoT area, I'd say right now, we've talked about two problems. One is VR, demand just simply isn't there. As Dean said, I think we're positioned well when that recovers. Wireless is very much an inventory problem. There was a lot of shipping going on into various phases. And remember in our business, we depend on module partners to service a long tail. So we have an extra step in our supply chain, we go from ours to a distributor to a module guy to an end customer. And that created some visibility challenges for sure inventory there is high. I think we're less subject to some of the pricing pressures because remember our products compete in this very high end, where we're doing video transfer, where – in power sensitive applications like wearables. So the pricing challenges there. We're in a little bit of an island from a competitive standpoint. We've heard to list [ph] like you are that wireless is seeing competitive pricing challenges, but we have a bit of a safe harbor there, but inventory very much is part of our story.

Awesome. Thank you, guys.

Thank you. Our next question comes from Kevin Cassidy with Rosenblatt Securities. You may proceed.

Yes. Thanks for letting me have a follow-up question. Just - when talking about your suppliers, when you first came over to Synaptics and start making the changes. One of the things you're going to do is consolidate your number of suppliers, and of course, we had the shortage hit. Can you say where you stand with that now? Is there an opportunity for cost reductions by consolidating suppliers again?

Yes. Good question. I think that what we've done Kevin is, we basically concentrated all our starts with one supplier. So any new product is essentially going to the largest manufacturer in the world, and for the most part we've stopped engaging with the long tail of suppliers that we have. Now, that said, it takes a long time, and we still, I think we've gone from 10 wafer partners to nine. So our supply chain and operations guys have a lot of problems. And as we become a diminishing part of these supply chain, these various suppliers, we're obviously subject to pricing increases because we were just not meaningful to them. So when Dean says, hey, the big part of what we forecast out in the next x quarters is a glide path down to this 57% gross margin, that's very reflective of input prices more than anything. There is certainly some competitive pricing dynamics in there, but the long pole is to do with costs. As we concentrate, right now, we're not seeing that pricing benefit that we would get from the one supplier where our starts are concentrated. I'm optimistic that we're going to get some help there, and if that does happen, then perhaps our outlook changes. But right now, what we are seeing and what we're forecasting is serious increases from places where de minimis customer and not a lot of help from the place where meaningful - very meaningful customer on a go-forward basis. So hopefully that answers the question, Kevin.

That's a great answer. Thank you. Thank you for all that detail.

Thank you. Our next question comes from Martin Yang with Oppenheimer. You may proceed.

Hi. Thank you for taking my question. Michael, I have a question regarding your wireless roadmap at the time of acquisition from Broadcom, you did have - I mentioned to the back has two road map products. Can you give us update on where you are today with roadmap products? And what's your plans are after the two products or after you have exhausted the two roadmap products?

Yes. Good question. Thank you, Martin. I would say the volume. So on the two roadmap products, both are sampling and one is nearing production. So we've got both of those products in our hands. We're actually pleased with the performance of both. Both are in 16-nanometer, which we think gives us a pretty good competitive footing particularly on a power - from a power standpoint. And in parallel, we brought up our own engineering capabilities. So we've actually taped out our first set of products that are done with our internal engineering team, and we expect that part of the vision that I am outlining here is, we really want to become a major player. Today, we've got a very small share, I would say in this IoT landscape as it relates to wireless. We have really retooled our road map. And I think part of what you're going to see is very targeted ships, a litany of very targeted ships coming from different segments of this IoT market that will be done by our internal team. So we've adjusted our spend to make sure that our wireless opportunity is well served, because we believe this is actually the biggest TAM that we have in front of us. And if we execute to, what I believe we can, I think we're going to be in really, really good shape. So wireless is a big part of our story, we've had this bridge that we got from these Broadcom designs, but we're beginning to really hit the ground running with our internal capability and I'm pretty optimistic that we have a plan to really make this thing into big, big business for us.

Thank you, Michael. I have one more question on the automotive display opportunity. At CES, we saw a demo for mini LED backlighting driver. Can you maybe give us more details on that market? Do you - how unique are you coupling the driver chip with TDDI? And who are you competing with for that LED driver - video LED backlighting drivers?

Yes. So the thing that we have, Martin, I mean we have, as you know, being around the company for some time, our big opportunity is in TDDI. So the state of the automotive market is still the predominant number of cars on the road have discrete touch circuits and discrete display drivers for the infotainment system. That's converting to TDDI, where you have integrated touch and integrated display in one circuit. What we introduced at CES is a bridge product. So now there is an additional chip that takes input from the applications processor, converts it from EDP is kind of a standard format that it gets sent to the display to LVDS, Low-Voltage Differential, that goes into the display. So this is a chip that's there today, since in almost every car to convert from the applications processor up to the display. What's unique, what we've been able to add is this technology called local dimming. And in local dimming, that's where this backlighting comes into play. We're actually able to make the contrast ratio much, much sharper. Your blacks are very deep, your whites are much brighter, and that's a differentiator. As we think about this is a great opportunity for us, because there is additional content that we can gain. We have some differentiation there. And we actually see more and more of our focus as we go forward, playing into the SmartBridge area, where we think there are different pieces of puzzle we can bring to bear over the next couple of years. So, hopefully, that answers your question. I like that opportunity and I think for us automotive, as we said, it's one of our three focus areas. And I think that if we play our cards right, we can really increase our content over time.

Got it. Yes, you answer my questions. Thank you.

Thank you. Our next question comes from Ambrish Srivastava with BMO Capital Markets. You may proceed.

Hi, guys. This is Jamison on for Ambrish. I'm hoping you guys could maybe just give a little bit more color on this IoT Processor pushout. Just looking at it, it sounds like it's about a $30 million pushout. So if this is correct, does it imply that in December it would have been closer to $200 million, just given your guidance? And second, as inventory clears through the first half, is it reasonable to think that this IoT segment can hit 300 number - $300 million number again sometime in the second half of calendar '23? Thank you.

Yes, Jamison. This is Dean. Let me give you just a little bit more about this customer engagement that pushed out from December, we got delayed into March now. It depending on sort of the milestones and various deliverables, it's sort of between sort of 10 and 30. So that's sort of the ranging depending on what deliverables are sort of met in any particular quarter. So that's sort of the rough range. We said it's kind of about 100 basis points and sort of margin impact, depending on what quarter is that - the deal actually ends up getting completed and the major deliverables done. On the IoT side, basically this is where a lot of the inventory consumption really is happening, this is where sell through is highly dependent on our sell-in. So what we're looking at is, you're really trying to let our customer base sort of consume on their side, on the OEM side, which then needs to eat their inventory or put it on a distributor side. And so the timing on how both of those elements of inventory gets burned down really sort of depends on how the specific timeline of sort of return to normal demand consumption. I mean, I think the thing to remember here Jamison is largely, this is a work known as inventory, and there hasn't really been any fundamental shift in the business and sort of what we're pursuing and the growth drivers around it. And so that's I think how most people should think about it.

Okay, wonderful. Thank you. And then I guess just following-up with this maybe the best visibility just to rank order for your - I guess, to your best ability for inventory, I guess in channel drain would be PC first, it sounds like mobile second in IoT is kind of a little bit more murky. Is that the correct way to frame it?

You got it. Yes. We're just comparing notes here and it matched exactly what you said, yes. I think PC looks like it's getting better. And we have - part of our IoT business is sort of attached to PC indirectly, I think that's getting better, mobile sort of second, and IoT third. And to your point, I mean, we expect to get back to sort of normal IoT levels, timing is a question as Dean said, but I don't expect this to be a persistent problem.

Of course. Well, thank you so much. Appreciate it.

Thanks, Jamison.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Michael Hurlston for any further remarks.

I'd like to thank all of you for joining us today. We certainly look forward to seeing you at our upcoming investor conferences and speaking to you further during the quarter. Thank you.