Good day, and thank you for standing by. Welcome to the Coherent Corp. Fiscal Year 2024 Second Quarter Earnings Conference. 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 the Vice President of Investor Relations for Coherent Corp., Paul Silverstein..

Thank you, Carmen, and good morning, everyone. Thank you for joining our second quarter fiscal 2024 earnings call. The call will be available for webcast replay on the Investor Relations section of our website. On the call, we have Coherent's Chair and CEO, Dr. Chuck Mattera, and a number of Coherent senior leaders, who Chuck will introduce shortly.

This morning, we will devote majority of our time to answer questions from analysts and the investment community. Yesterday, after market close, we issued a press release, posted a shareholder letter and updated investor presentation to the Investor Relations section of our website and first these documents in a Form 8-K.

This morning, we filed our 10-Q. The shareholder letter contains the financial statements historically included in our earnings press releases and detailed information regarding our operating performance, key trends and outlook. Before we begin, a short statement about forward-looking statements.

We may make and/or refer to forward-looking statements, including statements about future performance and market outlook. Actual results may differ from those in the forward-looking statements. The shareholder letter and our SEC reports set forth risk factors that could cause actual results to differ materially.

We assume no obligation to update forward-looking statements, which speak only as of their respective dates. During this call, we may discuss both GAAP and non-GAAP financial measures. If we do, a reconciliation of GAAP to non-GAAP measures is included in the shareholder letter.

If we present historical non-GAAP financial measures, we will limit our discussion to those that are reconciled in the shareholder letter.

Before I turn the call over to Chuck for his opening remarks, please note that on March 26 at the Optical Fiber Conference, or OFC, in San Diego, we plan to host a meeting with the investment industry, which will be webcast, during which we will provide an update regarding our communications market.

And in April of this year, we plan to host our third market overview webinar. It will be focused on our instrumentation market. The first two market webinars focused on our communications and industrial markets are available on the Investor Relations section of our website.

With that, it is my pleasure to turn the call over to Coherent's Chair and CEO, Dr. Chuck Mattera..

revenue of approximately $1.12 billion to $1.20 billion, non-GAAP earnings per share of approximately $0.32 to $0.52. And our updated guidance for fiscal 2024 is revenue of $4.55 billion to $4.70 billion, which represents a $50 million increase at the low end of our previous guidance.

Non-GAAP earnings per share of $1.30 to $1.70, which is up from $1 to $1.50 previously. Before we take your questions, I would like to say how appreciative and how proud I am of the senior leaders on this call and all of our other employees who started with dedication for setting the stage for what's now, next and beyond.

Coherent is well-positioned with differentiated technology, exceptional talent and high-quality efficient manufacturing platforms capable of delivering products to markets that are rapidly growing.

And I believe we are better positioned than others to take full advantage of our existing market positions and to penetrate deeper into these markets, largely because of the intimacy, trust and partnerships we have cultivated with market leaders and our increased scale, creating stability in our core business and creating a flywheel effect of other growth opportunities that many of our competitors simply don't have.

In the upcoming years, we have tremendous upside potential and platform cost optimization attributable to the ongoing legacy Coherent integration, special restructuring and transformation projects that we've announced.

We expect success given our proven track record and have a strong plan and road map in place, which will allow us to capitalize on the recovery and growth in our markets and of the broader market opportunities.

We are endowed with a team of world-class technologists, industry pioneers and executives with a demonstrated capability for identifying and capitalizing on market mega trends. With that, I'll turn it over to Paul.

Paul?.

Thank you, Chuck. We will now open the call for analyst questions. Please limit yourself to one question. This call is scheduled for an hour.

With that, Carmen?.

Thank you. One moment for our first question. [Operator Instructions] Our first question comes from Samik Chatterjee with JPMorgan. Please proceed..

Hi. Good morning, and thanks for taking my question. Congrats to the entire team there on the strong execution. Maybe just because it's one question, if I keep to datacom. In the shareholder letter, you referred to a number of new significant AI related customers that you have engagements with.

If you can give us a bit more insight about the nature of those customers, the magnitude potentially of those engagements can turn into if you were to win those awards relative to the existing orders that you have. And then just a quick clarification.

You did have 100% sequential growth in datacom, 800 gig revenue on capacity ramp, is that roughly where we should expect sort of capacity to linearly expand from here on? Thank you..

Yeah. Good morning, Samik. Thanks for your question.

Sanjai?.

Sure. Thanks for your question, Samik. So with any large scale deployment of new technology, there are a few hyperscalers drive it, and now we are seeing that to extend more broadly. We're also engaged with new MEMs as well as up and down the entire ecosystem. So we have a very broad group of customers that's continuing to grow in terms of engagements.

Did that answer your question?.

Yeah.

Anything on the capacity ramp, Sanjai?.

So in the capacity ramp, we did say in the shareholder letter that we grew 100%. That's basically our 800G shipments, 100% quarter-over-quarter. In our ramp up plans, we hit the quarterly -- we crossed the quarterly run rate of $100 million.

And we also said that in fiscal '24, Samik, that over 50% of our datacom transceiver revenues will be from AI related applications. So we are really excited with the ramp and the growth of the market..

And I'm expecting the third quarter will be greater than the second quarter and the fourth greater than the third, Samik. If that gives you any indication..

Yeah. Sure. Thank you. Thanks for taking the question..

Thank you..

Thank you. One moment for our next question, please. Comes from the line of Ruben Roy with Stifel. Please proceed..

Thanks very much and I’ll echo my congrats to the team. A follow-up for my one question on networking as well. Chuck, just trying to understand the commentary around the supply constraints. It sounds like they improved, lead times are shortening.

Would you say your -- the majority of the supply chain constraints are behind now and it's a question of shipping to demand or are there still some components that are out there that are in short supply? Is that kind of a limiting factor to the rest of the year on your AI transceiver shipments?.

Okay. Thanks a lot, Ruben. Ruben, as you know, anytime you go through such a steep ramp, what's lying in front of you with regard to constraints is what you're trying to get out in front of. So if you look in the rearview mirror, the constraints have surely eased and moderated.

But when you see the size of the ramp that we're going up, we have to manage a number of constraints. The first constraint, then the second and third, we have to anticipate them. We have to get our agreements with suppliers in place. And we’re looking beyond FY ‘24. This is a super, super exciting and super-hot market.

So we’re in the process of looking out well into FY ‘25 to be sure that our supply chain can keep up with us. I hope that answers your question, Ruben..

It does. Thank you for that detail chart..

Thank you. One moment for our next question, please. And it comes from the line of Meta Marshall with Morgan Stanley. Please proceed..

Great. Thanks. A couple of questions.

Just one, just what are you seeing on inventory of under kind of this 800 gig or AI transceivers, just kind of when you expect some of the demand for that business to come back? And then just kind of on top of that, a couple of quarters ago, you had noted that you had a couple of hundred million of orders that if you ramp capacity, you expected to be able to fulfill during this fiscal year.

Obviously, you guys are kind of ramping a little bit faster than expected just in terms of that kind of couple of hundred million that you outlined earlier in the year.

Just how do you feel like you're going to be able to meet or exceed kind of those excess demand?.

Thanks, Meta. Thanks for your interest.

Sanjai?.

Yeah. Thanks for your question, Meta. So our -- so we just said in our shareholder letter that we shipped over 100 million in 800G transceivers last quarter. It was much smaller the previous quarter, it grew almost 100% quarter-over-quarter.

And then we also said, Meta, that in fiscal '24, 50% of our datacom transceiver revenues will be from AI related applications. So we are projecting a very strong growth in our 800G shipments. We are on a ramp-up, as Chuck referred to earlier. Hopefully, that answered your question..

I guess -- but just in terms of what are you seeing in terms of inventory clearing on the kind of sub-800 gig versus -- I mean, I understand the 800-gig commentary, but what are we seeing just in terms of any other demand on the remainder of the business?.

Okay. So we haven't factored in any huge rebound in the non-AI business in datacom. And that's one of the -- but most of the growth is in 800G. Pretty much all of the growth is in 800G. And that's why we said over 50% of our fiscal '24, our revenues will be from AI and related 800G products..

Great. Thank you..

Thank you..

Thank you..

Thank you. One moment for our next question, please. And it comes from the line of Simon Leopold with Raymond James. Please proceed..

Thanks for taking the question. I wanted to as well talk about what's happening in 800-gig data center transceivers. And I'm looking for your thoughts on how you can compete in this market.

And I'm struggling candidly because it seems like demand is great, which should be margin favorable, but some of your competitors probably are willing to take lower margins and so that might pressure profitability. Could you help us understand how you're thinking about that? Thank you..

Thanks, Simon. Giovanni, would you like to give.....

Simon, good morning. Thanks for the question. Well, as a reminder, we are the most vertically integrated player in the space. So we heard, for example, people talking about shortage of pixels. Well, guess what, we have the largest bit supply in the world by far, so including obviously our competitors.

So we have a very good kind of control of the supply line for the [indiscernible] components other than ICs. And we have our own manufacturing. We have pretty much the most complete offering in the space, both 100 and 200G as we announced in the past.

So we think that will be very, very powerful, not only to remain competitive standpoint and a road map standpoint, which are very strategic to our hyperscale customers and the like, but also from a cost structure standpoint.

We think that we will have always the best margin profile versus those that have to pretty much buy everything on the merchant market. So we are very active in many of these technologies that will be an advantage from a profitability standpoint..

I would add, Simon -- thank you, Giovanni. I would add, Simon, that we have a full portfolio of products that we're making for today and developing for tomorrow. Those are going to be even more exciting than the ones we're making today.

And for us, having full control, as Giovanni just described, our focus is on time to market, time to volume and time to profitability and that’s where it needs to stay. We have a track record. It is a competitive market, that’s for sure. We’re intending to compete..

Thank you..

Thank you. One moment for our next question, please. Comes from the line of Jed Dorsheimer with William Blair. Please proceed..

Hi. Thanks. Most questions seem to be on datacom so I'll be different in just, I guess, two part question. Maybe just an update on the -- I saw -- I think it's maybe the first time that I've seen you kind of highlight or call out.

But on the MicroLED, could you just talk about the products of Coherent there that you're offering? And then on silicon carbide, there's been some cross currents of data points in the market. I'm just wondering if you might be able to update on -- so what you're seeing from the customer base there? Thanks..

All right. Good morning, Jed. Thanks for your two questions. Chris will go first and then Sohail.

Chris?.

Yeah. Thanks, Chuck. Yeah.

So we spoke about the MicroLED developments that we have in previous quarters and about the multiple orders we received from China, Taiwan and Korea for the tools for a process called laser-induced forward transfer, which is where you take the currently 10 micron moving towards 5 micron MicroLEDs from the wafer to the display.

So we're seeing increasing customer engagement and are very excited about the impact of MicroLEDs on the television market. And this is a very high level of engagement now and a market that will be growing over the next three to five years..

Thank you, Chris.

Sohail?.

Hello.

Can you hear me?.

Yeah..

Thanks for your question. We are quite bullish about the silicon carbide market and the growth prospects over the next five to 10 years. And based upon that, we are sticking with our plan, which is driven from the customer engagement as well as long-term supply agreement which we had in place.

The announcement with Mitsubishi and DENSO have strengthened our position, and we are seeing more engagements and especially a lot of interest from both existing and new customers for 200 millimeter.

So we are going to stick to our plan of the investment and expansion, and we will continue to see the growth of our business quarter-over-quarter and year-over-year..

Thank you..

Thank you, Sohail. Thanks, Jed..

One moment for our next question, please. It comes from the line of Richard Shannon with Craig-Hallum Capital Group..

Hi, guys. Thanks for taking my question. Maybe I'll ask a financial one here.

It seems like after a couple of quarters of OpEx being flat to down, or I guess, a little bit more down on a pro forma basis, it seems like you're implying it growing here at a fairly steady rate here, which seems to be antithetical to the synergy and restructuring plan, I think, you announced one or two quarters ago.

Can you help us understand why that is, why it might seem to be growing at a decent rate after bottoming out here?.

Thanks a lot. Good morning, Richard. Rich will take it..

So yeah, as you pointed out, our synergy plans and cost reduction has kept our expenses down in the OpEx. The big thing that you see in the ramp up as we go forward in the guidance really is around R&D around our AI product, as well as other initiatives that we have in place. So that's really the increase is coming from the R&D.

We've done a really good job in our SG&A expenses..

Look, those R&D investments in the second half of the year, Richard, are aimed for FY '25 and beyond on the basis of new information that we've received in the last one or two quarters from our customers with great clarity..

Chuck, any way you'd want to characterize where those investments might sit, like by your segments or end markets or anything like that?.

In those markets that are growing extremely quickly, starting with AI, Richard. Everything starts with that..

Okay. Great. Thanks. Thanks for the detail..

Thank you, Richard. Yeah..

Thank you. One moment for our next question. It comes from Karl Ackerman with BNP Paribas. Please proceed..

Yes. Thank you. Good morning. As you indicated earlier on this call, VCSEL supply is critical right now on the ramp of both 800-gig and 1.6T transceivers.

How has your internal capacity supported or helped your design wins for 1.6T, which you indicated will be ramping later on this year? And I guess if you could address that, perhaps could also discuss the ramp of 1.6T over the next couple of quarters. Thank you..

Karl, thanks for your question. Giovanni will take it. And if there's anything to add, that Julie would like to add to clarify, she will. Please, Giovanni..

Thanks for the question. I mean, as we said earlier, we have our own facility. Actually, we have two facilities, two, three fabs that are capable of producing datacom. But at this point in time, we're relying on only one fab and it's ramping like needed by our internal customers and external customers too, which are our competitors.

So as we said earlier, we have -- the advantage of being basically integrated to have a very a good understanding of the needs of the supply required by our -- both internal and external customers. So we have a full control of that. And we have had similar ramps in the past this is a challenging ramp in terms of the data rate.

But nevertheless, I think we are doing a great job in keeping up with the demand both internal and external supplies. So at least we're shipping based on demand. We are not behind even if we still need to go as requested by the forecast. So we are following up with the demand as we see it right now.

So we don't see that being a challenge at least for our VCSEL supply..

Julie, would like to add regarding Karl's question on 1.6T..

Right. Just to add to what Giovanni said is we also were one of the few in the industry actually that can make these very high speed. It's a unique capability..

Thanks. Thank you for your question, Kar..

Thank you. One moment for our next question, please. And it's from Vivek Arya with Bank of America Securities. Please proceed..

Hi. This is Blake Friedman on for Vivek. Thanks for taking my question. On gross margin, you provided a useful outline on actions to return to 40%.

But can you maybe quantify all the different takes ranging from improving utilization, operational efficiencies and new products? And this goes back to a previous question, but on mix, just given the momentum in AI transceivers, are these products at or above the corporate average gross margin today?.

Okay. Good morning, Blake. Thanks.

Rich?.

Yeah. So a two-part question. The first question is the AI. And I think in the last earnings call, we did mention that it is at the average of the -- corporate average in terms of margin. In terms of our ability to drive margin in the future, obviously, the first thing is volume, that's one.

The second is utilization within our fabs, which really two of our six fabs have really improved in terms of the utilization and also the reliance of our synergy plan, the reliance of our restructuring plan is really going to be utmost of importance in terms of increasing our gross margin going forward..

Thank you..

Thank you..

Thanks. One moment for our next question, please. It comes from the line of Christopher Rolland with Susquehanna. Please proceed..

Good morning, Chris..

Thanks for the question. Yeah.

Can you hear me?.

Yes. Good morning, Chris..

Hi. Great. Thanks for the question and congrats on the results. I just have one clarification and one question. First, the clarification, the primary gating issue on AI is 800 gig VCSELs. I just want to make sure whether I got that right or not. And then secondly, I wanted to talk about telco.

So we're seeing more and more kind of weak data points coming out for telco, but it kind of feels like maybe you're going to tell us that could be in the rearview mirror for you guys.

So is December the clear bottom there? Are you expecting to kind of grow through the year here? And what -- where can we kind of normalize out on a quarterly run rate for telecom looking forward? Thanks..

Okay, Chris. So Giovanni will clarify your question regarding VCSELs Magnus will take the telecom question.

Giovanni?.

Yes. So the -- let me clarify, try to be clear. No, it's not, okay? So we don't have a challenge from a supply standpoint from the VCSEL standpoint. Of course, when you ramp a production of transceiver modules, there's a number of other things that need to happen, including tests, automation of assembly lines, new processes.

And of course, there is also external supply chain, particularly around ICs, that will impact our ability to ramp. So everything is coming together. And based on the demand -- the demand is definitely stronger than what we could supply.

We are capacity-limited but not necessarily from a device standpoint, but just as an overall ability to ramp to the volumes that we have been held by supplies by the -- by our customers in terms of the most recent forecast versus previous forecast. We are realigned with road maps.

We know exactly what the customers are looking for, for next-generation products. And so we will adapt our internal supply chain to keep up with the demand. Currently, we don't have experience -- going back to your first question, we don't experience a challenge from a VCSEL production standpoint.

And I want also to recall that we have capacity -- superior capacity for both internal and external suppliers. So we don't -- we can manage that as we need to support our own transceiver business, obviously, as a priority (ph)..

Thanks, Giovanni.

Magnus, would you take the telecom question?.

Sure. Good morning, Chris. So in telecom, we saw growth in the December quarter over the October quarter by about 20%. And if we look out for the balance of the fiscal year, we expect double-digit growth second half over first half.

And beyond that, in '25, as the market improves we expect additional growth, both from the market coming back but also a lot of the engagement we have with customers on design wins for new products..

Great. Thanks, Magnus. Thanks for your question, Chris..

Thanks, guys..

Thanks. One moment for our next question. It comes from the line of Mark Miller with The Benchmark Company. Please proceed..

Thank you for the question and congrats on your progress. Just was wondering in terms of new applications for VCSELs in terms of automotive and other applications.

What are you looking at over the next 12 months or so?.

Great. Good morning, Mark.

Julie, will you take that one?.

Sure. Yes. So VCSELs in addition to the datacom market, it can be used in the sensing market. Obviously, we’re in the sensing world and mobile phone application.

And then in addition to that, you can use VCSELs for all kind of other sensing, including in a vehicle, potentially in health applications, so many potential future applications of VCSELs in sensing..

Thank you..

Thanks, Julie. Thank you, Mark..

Thank you. One moment for our next question, please. Comes from the line of Tim Savageaux with Northland Capital Markets. Please proceed..

Hi. Good morning. Again, sorry if I might have missed this earlier. But you talked about 800 gig transceiver shipments at about 100 million in the quarter kind of doubling sequentially. Do you have an outlook for where you expect that number to go either in fiscal Q3 or by year end? And I'll follow up from there. Thanks..

Yeah. Okay, Tim. Thanks for your question. Tim, what we said that you have missed is what I said is I expect our shipments in Q3 to be greater than Q2 and in Q4 greater than Q3. We're on a ramp. It's going up and to the right..

Okay. Well, if I might maybe follow up on that a little bit. I mean, you're talking about fairly modest sequential growth here for Q3 and growth in telecom. So I guess, are you looking for -- and even if you look at your Q2 results, it seems like the lower speed stuff might have come down pretty good. So you're seeing some offsets there.

Is sort of that the dynamic for overall datacom revenue or what are the puts and takes as -- or is that ramp slowing a bit, I guess, from the [Multiple Speakers].

It really is an insightful question. Meta Marshall had the same question and Sanjai tried to address it. Let's let him take another pass at it..

Okay. So thanks for the question, Tim. Good morning. So in terms of the market, the market -- the fastest growing segment of the market is 800G and above, which is really AI. We just redid our forecast, it's growing at a 65% CAGR in the next five years, Tim. So it's a very sharply growing market and we expect -- we aim to grow faster than that market.

Now the traditional networking market is certainly not growing at that clip, and we are not really factoring a significant rebound in our non-AI, if you will, market growth or our revenue growth. So a lot of our revenue growth is coming from AI-related applications. Hopefully, that's clear..

Thank you, Sanjai..

Thanks, appreciate it..

Yeah. Thanks, Tim..

One moment for our next question. And it's from Ananda Baruah, Ananda Baruah with Loop Capital. Please proceed..

Yeah. Good morning, guys. Thanks for taking the question and congrats on the strong execution. Yeah, actually, just a follow-up there, Sanjai, clarification.

Is that the -- I guess, what is 65% growth over the next five years specifically?.

Hi, Ananda. Good morning. It is the growth of 800G and above transceivers, datacom trounces from calendar '23 to calendar '28. It's at a 65% cap..

I got it. Super helpful. And I guess my question is, any way to think about yet the transceiver opportunity for genAI outside of the hyperscale complex? And so specifically, I'm thinking at telcos and on-premise, say, like Fortune 1000 sites. And that's it for me.

Okay. Good morning, Ananda. Julie will take the next one..

All right. Good morning, Ananda. Yeah. So the -- obviously, the biggest deployments are the biggest web scale. And as time goes on that spreads out, as you point out, to other smaller entities that could either host services or people may choose to have their services on-premise to that diversified customer base, similar actually to the Ethernet market.

And then -- so the genAI -- I forgot the second part of the question..

With regard to -- will it spill over to telecom..

Thank you. Yes, eventually, it all spills over to telecom because all that data that's getting generated inside has to go somewhere. So we do believe that, that will impact our telecom revenue in a positive way over time should impact eventually also non-AI datacom revenue.

And then finally, something that might not be so direct of a comparison, but these genAI chips require the most advanced process nodes, and that's beneficial to our industrial segment for our semi-cap inspection lasers..

Thanks, Julie. Ananda, I would add that besides datacom and telecom verticals, we have a semi-cap equipment business, and it’s also underpinning the growth in AI by providing new tools, including laser-based tools and engineered material tools to OEMs that have to build the equipment to make the devices. I mean, we have it surrounded..

Yeah. That’s anomaly. Great. Job..

Thanks, Ananda..

Thank you. One moment for our next question. And it's from the line of Dave Kang with B. Riley. Please proceed..

Good morning, Dave..

Thank you. Good morning. A question is on ARM lasers. Chuck, I think you talked about it in the past that as ARM lasers has an 8-figure opportunity and could reach 9 figures if you successfully penetrate the Chinese market. Just wondering if you can give us an update there..

Thanks, Dave. Thanks for asking about one of our other super exciting opportunities.

Giovanni?.

Yeah, Dave. Thanks for the question. Yeah. We're making a progress. Actually just recently, we learned that major battery maker in China kind of displaced our competitor laser to replace it with ours on the production line. So we think it's going to be a huge opportunity for gold, since it's one of the largest battery makers in the world.

So we think in addition to the existing customers they keep ramping production, you see the major advantage of the spot-free, no-porosity kind of well quality provided by our ARM laser people, we believe that to grow in the market space. And it's not going to be limited just to batteries for EVs.

I think we're seeing application beyond that, not only in the automotive market, but for example, in the semi cap equipment market, we have been engaged recently on working on some advanced lithography tools to provide laser welding for some special alloys parts that are needed by those tools..

Dave, we’re aiming to drive a paradigm shift when it comes to laser building..

Got it. Thank you..

Thank you. One moment for our next question, please. And it comes from the line of Jim Ricchiuti with Needham & Company. Please proceed..

Good morning, Jim..

Hi, Chuck. I wonder if you could elaborate on the comment early on in the shareholder letter that you would consider other strategic opportunities to unlock shareholder value. I'm wondering what that means.

Are you suggesting that you might pursue some smaller M&A to maybe expand in some areas that you may not necessarily have the presence you want to have?.

Jim, that's a great question. We're from time to time, asked about it. We are prudent stewards of our capital. And let me ask Bob Bashaw, our President, if he'd like to remark..

Yeah. Sure. Yeah, I'm happy to, Chuck. Yes, as you know, we have been open to all kinds of transactions in the history of the company. And we are with great partners, and as Chuck said, shareholder value is always our driver. So we are actively, like we have been for 51 years, considering lots of alternatives to grow shareholder value.

As we indicated in the shareholder letter, these are probably going to be smaller transactions, not material, but that is our focus across all range of potential transactions..

Is it a case of expanding in some areas that you're underserved? Is that the focus?.

Well, for sure. There's -- if you look at all the technologies and the opportunities we have, there are a lot of corners that we can look in for areas to grow. There's also tremendous opportunities to partner. So we have -- we are considering all of those options and have active engagements in those areas..

Thank you..

Thank you, Bob..

Thank you. One moment for our last question, please. And it comes from the line of Mike Genovese with Rosenblatt Securities..

All right. Good morning. And I guess, I'll go to beating the dead horse here. When I parse your comments on 800G as a percentage of datacom transceivers this year, I end up somewhere in the range of revenue should be 70% to 150% higher than the $300 million you talked about entering the year.

And so with that as the preamble, my two-part question is, are we still looking at 20% of the revenues being in the first half of the year and 80% in the second half of the year like you guys said last quarter or is that sort of -- has that changed a little bit? And then secondly, just as we look at fiscal '25, should we put Sanjai's CAGR, which I think he said was 55%, if I heard that right? Is that roughly the right way to think about where we start for fiscal '25 growth in that business? Thank you..

Okay. Thank you, Mike.

Okay, Sanjai?.

Yeah. Thanks, Chuck. Good morning, Mike. So, I think our revenue pattern is pretty much in line with what you stated in terms of our growth rate. Obviously, we are going to -- we are aiming to do even better than that in terms of the second half of the fiscal year..

And I remind you, it is 65% is a five year CAGR. So maybe just keep that in mind, Mike..

Sorry, but I'm just -- I guess, 20-80 though, is that we're still targeting 20-80, that hasn't flattened out a little bit because of the good performance in 2Q? It's still 20-80?.

It’s close to that, maybe a little bit higher than 20 and a little lower than 80, but that’s roughly right..

Okay. Great. Thanks so much. You got a great job. Thank you..

Welcome. Thank you..

Thank you. And this concludes the Q&A session. I will turn it back to Paul Silverstein for any final comments..

Thank you, Carmen. I want to thank all the analysts on the call for their thoughtful questions. And I want to thank all of you on the line for having joined us this morning. We look forward to talking to you in the future. Thank you..

Thank you, ladies and gentlemen, for joining us today. You may now disconnect..