Silicon Laboratories Inc (SLAB) 2014 Q1 法說會逐字稿

Good morning, my name is Brandi, and I will be your conference operator today. At this time, I would like to welcome everyone to Silicon Labs first quarter 2014 earnings conference call. All lines have been placed on mute to prevent background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Ms. Deborah Stapleton, you may begin.

Thank you Brandi, and good morning everyone. As a reminder, this call is being webcast and will be archived for two weeks. The financial press release, reconciliation of GAAP to Non-GAAP financial measures, and other financial measurement tables are now available on the investor page of our website at www.silabs.com. I'm joined today by Tyson Tuttle, Chief Executive Officer; Bill Bock, President; and John Hollister, Chief Financial Officer. We will discuss our financial results and review our business activities for the first quarter, then we will have a question-and-answer period following our prepared remarks.

Our comments today will include forward-looking statements or projections that involve substantial risks and uncertainties. We base these forward-looking statements on information available to us as of the date of this conference call, and that information will likely change over time. By discussing our current perception of our markets, the future performance of Silicon Labs, and our products with you today, we are not undertaking an obligation to provide updates in the future.

There are a variety of factors that we may not be able to accurately predict or control that could have a material adverse effect on our business, our operating results, and our financial condition. We encourage you to review our SEC filings, which identify important factors that could cause actual results to differ materially from those contained in any forward-looking statement.

Also, the Non-GAAP financial measurements that are discussed today are not intended to replace the presentation of Silicon Labs' GAAP financial results. We are providing this information because it may enable investors to perform meaningful comparisons of operating results, and more clearly highlight the results of core ongoing operations. I would now like to turn the call over to Silicon Labs' Chief Executive Officer, Tyson Tuttle.

Thanks Deb, and good morning everyone. I'm pleased to report strong first-quarter revenue of $145.7 million, reflecting solid performance in our microcontroller, wireless, and sensor products, and strength in our broadcast products, including record revenue in video. We announced a number of exciting new achievements for the Internet of Things during the quarter. I will talk more about our latest product developments and business trends shortly. For now, I'd like to turn the call over to John, who will review our financial results in more detail. John?

Thank you, Tyson. First-quarter revenue of $145.7 million was at the high end of our guidance range, and essentially flat with Q4. Broad-based revenue, comprising our microcontroller, wireless, sensor, timing, and power products totaled $72.3 million in the first quarter, or 50% of total revenue. Microcontroller, wireless, and sensor products were 29% of the total revenue in Q1, down as expected by 3% sequentially, and up 28% year over year.

We continue to see strong momentum in the market adoption of our MCU wireless and sensor products in target Internet of Things applications. Timing represented 13% of total revenue in Q1, and grew 2% sequentially. As expected, the slow-down we experienced in Q4 appears to have been temporary. Broadcast outperformed expectations in the first quarter, with 2% sequential growth driving revenue of $50.7 million, or 35% of total Q1 revenue.

First-quarter revenue reflected a record in video products, with an increase in demand driven by the FIFA World Cup. We also experienced a strong quarter in our automotive radio products. As expected, access decreased slightly in the first quarter, with revenue of $22.7 million, or around 15% of total Q1 revenue. We continue to expect these products to decline less than 10% in 2014.

On a GAAP basis, first-quarter gross margins were 59.8%. R&D investment increased to $42.5 million, and SG&A expense increased to $34.6 million, resulting in GAAP operating income of $10 million, or 6.9%. GAAP diluted EPS was $0.18, which was at the top end of our guidance range due to the strong revenue performance.

On a non-GAAP basis, first-quarter gross margin was 60.2% due to product mix, as we experienced strong performance from broadcast video products. Non-GAAP operating expenses were up more than we expected in the quarter, to $63.5 million. Non-GAAP R&D investment grew to $35 million, due to greater investment in new product development. Non-GAAP SG&A expenses increased to $28.5 million, which was driven by a combination of higher legal fees and seasonally high fringe costs in Q1. Non-GAAP operating margin ended at 16.6%.

Our non-GAAP effective tax rate was 22.5% in Q1, an increase from Q4 due to the expiration of the federal R&D tax credit in 2013. We estimate that the renewal of the research credit would have a beneficial steady-state effect on the non-GAAP rate of around 3%. Non-GAAP net income for the quarter ended at $18.4 million, or $0.42 per share.

Turning now to the balance sheet, accounts receivable decreased to $64.7 million, or 40 days sales outstanding, which is a multi-year low. Inventory levels decreased slightly during the quarter to $44.3 million, resulting in an improvement in turns to 5.3 times. Channel inventory increased slightly during the quarter from 40 to 45 days, which is on target.

Solid first-quarter operating results, combined with effective working capital management, generated excellent cash flow. First-quarter cash flow from operations was exceptionally strong at $47 million. We had only minimal CapEx for the quarter. We ended Q1 with cash plus short- and long-term investments of $334 million, and our balance sheet continues to be very healthy. Our Board has authorized $100 million for share repurchase, and we are maintaining an opportunistic position.

Before turning the call back to Tyson, I will cover second-quarter guidance. We expect Q2 revenue to be in the range of $147 million to $151 million. We expect broad-based products to achieve record revenue in the second quarter. Broadcast is expected to be down in Q2, and we expect that access will be about flat.

Gross margin is expected to increase in Q2 to approximately 61%, reflecting favorable product mix for the quarter, driven by the growth of our broad-based products. We expect second-quarter OpEx to increase to $64 million to $65 million, due to unforeseen litigation expenses.

Related Q1 litigation expenses totaled $700,000, or around $0.01 per share. We expect Q2 litigation expenses to be $1.7 million, or approximately $0.03 per share. Apart from the additional litigation expenses, our strategy to maintain a relatively flat operating expense profile while we grow revenue, is unchanged for the quarter.

We expect Non-GAAP EPS for Q2 to be in the range of $0.43 to $0.47, with a non-GAAP effective tax rate of 22.5%, flat to Q1. Again, the EPS guide includes an approximate $0.03 impact from the litigation. On a GAAP basis, earnings in the second quarter are expected to be $0.15 to $0.19 per share. Now I'll turn the call back to Tyson.

Thanks, John. We are very pleased with our first-quarter results, which were nearly flat to our strong fourth quarter. Broadcast video delivered record revenue, timing showed signs of recovery, and our MCU, wireless, and sensor products delivered solid performance, despite expected seasonality in our consumer markets. We have aligned our broad-based product development to address three key industry trends -- the rapid growth of the Internet of Things, the need for greater energy efficiency, and a continuing demand for bandwidth, driving the expansion of Internet infrastructure.

The results of our strategy are starting to materialize in meaningful revenue growth in our target markets. We expect broad-based to be up significantly in Q2, achieving record revenue and reflecting strength across all product lines. With each quarter, we enhance our position as a leading supplier of silicon solutions for the Internet of Things. We believe this market offers significant growth opportunities for Silicon Labs, where we are well-positioned to deliver single-chip solutions. These SoCs require the integration of multiple technologies, including energy-friendly microcontrollers, low-power wireless connectivity, and an array of smart sensors delivering critical data.

Silicon Labs offers these solutions today. Our microcontroller, wireless, and sensor products grew 28% year on year, and are expected to generate record revenue in Q2. Our double-digit, year-on-year design win growth shows signs of increasing momentum, with many new opportunities driven by the rapidly expanding IOT market.

During the first quarter, we introduced a new version of our Simplicity Studio development ecosystem, supporting our MCU portfolio in a single, unified platform. Simplicity Studio makes the development process easier, faster, and more efficient, by providing embedded designers with everything they need to complete their project, from initial concept to final product.

To help developers optimize the energy efficiency of their designs, our development platform includes real-time energy profiling and analysis tools for estimating power consumption and balancing performance and energy efficiency. You can download Simplicity Studio for free from our website at www.silabs.com.

At this year's South By Southwest conference, a 27-year tradition in Austin, we were pleased to co-host the Connected Home Developers Garage at our corporate headquarters. This premier tech event brought together developers and interested techies to deliver innovations for the smart home. Silicon Labs' growing portfolio of microcontroller, wireless, and sensor products targets a wide range of smart home applications.

Continuing to broaden our embedded product portfolio, we expanded our Ember ZigBee portfolio, with the addition of a new Arm-based, system-on-a-chip family. Providing more memory and connectivity options, these SoCs make it easier and more cost-effective to deploy ZigBee in smart metering and home automation applications. Our new ZigBee SoCs offer unmatched wireless performance, energy efficiency, and robustness.

We are seeing strong customer demand for our growing sensor portfolio in a wide range of embedded applications, including wearable products. In Q1, we introduced the industry's first single-chip digital UV index sensors, which track ultraviolet sun exposure, heart rate, and blood oxygen levels. The demand for sensors in wearable consumer electronics such as smart watches and health and fitness trackers is rising, as developers seek to differentiate their products with advanced sensing capabilities.

Silicon Labs' sensors are winning awards, as well as designs. Our next-generation relative humidity and temperature sensors won the UBM Tech ACE award in the sensors category. This coveted industry recognition highlights the best-in-class design, ease of use, accuracy, and energy efficiency of our humidity sensors. Compared with legacy discrete sensing approaches, our single-chip solutions simplify the design process, reduce manufacturing cost and complexity, and offer the lowest power consumption in their class.

Further strengthening our commitment to our IoT strategy, we acquired the full product portfolio and intellectual property of Silicon Valley-based Touchstone Semiconductor, an early-stage technology company, and provider of low-power analog ICs targeting IOT applications. Touchstone's product and technologies enhance Silicon Labs' embedded portfolio of energy-friendly MCUs, wireless, and sensor products, by enabling new levels of power savings for battery-powered systems.

Turning now to our timing products, we see signs of recovery in the telecom market, and expect a return to near-record revenue in the second quarter. The proliferation of cloud computing and other data-intensive services is driving explosive demand for Internet bandwidth and related networking and communications infrastructure. Design-win activity remains healthy, and we continue to win engagements with Tier 1 customers.

Broadcast delivered exceptional performance in Q1. Video revenue set a new record, driven by strength in our silicon TV tuners and video demodulators. We're diversifying our broadcast revenue as we grow our content per device, expand our customer base, and increase our market participation. We expect to grow our TV tuner market share to more than 50% in 2014.

In audio, we enjoyed another growth quarter in automotive radio, and expect this trend to continue. We are aggressively expanding our position in this important market, as Tier 1 European and North American programs start production; and also through market-share increases in China, where we benefit from more frequent design cycles.

Finally, it is with great pleasure that I welcome our new Chief Marketing Officer Michele Grieshaber, to the Silicon Labs team as a member of my staff. Michele joins us as a 20-year veteran of IBM, where she held key executive roles in marketing management and demand generation, as well as strategic positions in systems, software, and services businesses. Her experience and expertise will be extremely valuable to Silicon Labs as we continue to expand our broad-based portfolio targeting the Internet of Things. Thank you for your time and attention. We are now happy to take questions.

Thank you, Tyson. Before we open the call for the question-and-answer session, I would like to remind everyone that we are holding our first Analyst Day on Monday, May 12, at the NASDAQ market sign in Times Square. In addition, we will be presenting at several upcoming investor conferences this quarter, including B. Riley's 15th Annual Conference in Santa Monica on May 20, the Stephens Spring Investment Conference in New York on June 4, and the William Blair conference in Chicago June 10 through June 12.

Now for Q&A. To accommodate questions from as many people as possible before the market opens, we ask that you please limit your questions to one, with one follow up. Operator, we are ready for questions and answers.

(Operator Instructions)

Tore Svanberg, Stifel.

My first question, I'm hoping you can comment more on the moving parts for the June quarter. I think you mentioned specifically the broadcast businesses is expected to be down. Is that just seasonal, or was there an inventory build ahead of the World Cup? Just trying to understand the dynamics there.

Tore, this is John. Based on what we see, it's more the latter. We saw very strong demand in Q1, which included a degree of pull-in from Q2 into Q1, in anticipation of the World Cup event. We see that first half for broadcast is on track.

Very good. As my follow up, I'm not sure how much you could share with us on the litigation expenses, but is this a new lawsuit, or is this something that is ongoing? Just want to understand what is happening there.

Tore, this is Bill. The lawsuit was filed by a firm of the name of CrestaTech in January of the first quarter, so this is a new action. The case involves a patent infringement claim on our video broadcast products. We have reviewed the claims, as well as our own IP portfolio position very carefully, and we feel really good about our IP position relative to this case. Nevertheless, it is going to cost legal fees to defend, and we intend to do so vigorously. The forecast that John provided for the second quarter is probably a pretty good proxy for the run rate of legal expenses we will see through the remainder of this year.

Very helpful. Thank you very much.

Craig Ellis, B. Riley.

Tyson, can you go into more detail in terms of what you are seeing in the MCU business? Specifically, how is the legacy portfolio performing? On the Energy Micro side, is that business still tracking to trajectory towards $7 million in the fourth quarter? How should investors think about growth potential as we look out to 2015?

Thank you very much Craig. The MCU business performed strongly in Q1. If you look at the overall MCU wireless and sensor portfolio, it was up 28% year-on-year, and that reflects good performance across our legacy business, as well as good performance from Energy Micro and the wireless products, so it's across the board.

I would say especially in terms of Energy Micro we are quite pleased with how that acquisition has come together. We did meet our revenue projections in the second half of last year, which was $7 million, and we continue to believe that we are on track to make that acquisition accretive by the end of 2014. Overall, just very pleased with the revenue progression, as well as the cultural fit and the impact that's had on our product development.

The follow up is on the timing business. Through the year last year, I believe the Company talked about not only a focus on communications, where it sounds like design wins are strong, but diversification into industrial and consumer end markets. Can you talk about what you're seeing in industrial and consumer, and how should investors think about the application mix of that segment as we go through this year and into next year?

Right, the timing business has traditionally been very strong in the core network, in optical networking. We've been working to diversify into cloud computing applications and storage, and into wireless base station applications, as well as the consumer applications that you are talking about. If you look at the design win traction, a lot of the design win traction has been moving into those new areas, as well as continued strength within our core timing customer base. I would say that diversification is playing out. A lot of our new product development is targeted in those new areas, as well, so I think there's a lot to look forward to.

Blayne Curtis, Barclays.

Tyson, you mentioned in your preamble some of your sensor products you announced recently this year. Can you talk about how the traction has gone with those products, and is that something that will contribute to revenue this year?

Yes, the sensor products that we've introduced this year, we introduced our relative temperature and humidity sensor. I think that may have been Q4 of last year. That's seeing a lot of traction in industrial applications and home automation security, in a pretty wide variety of different applications. We did win that award for that product from the Tech Insights group.

We also this last quarter introduced a UV sensor, which is also capable of pulse measurement and blood oxygen levels. That one is seeing quite a bit of traction in the wearables segments. If you look -- we've also -- we're including the sensor revenue in with the MCU and wireless now. It's still a relatively small base, but the design win traction there is fantastic. We see that's going to be a nice growth vector for us moving forward.

Thanks. In the strength in Broad-based, if you could provide just a little more color on the moving parts. It seems like in your comments timing is substantially the strongest segment. If you could just clarify that, and if you could just give any color as to the particular drivers there, that's getting back to the revenue record level last year?

Right. We talked about the Broad-based revenue being at a record level in Q2. That is really driven across the board, all of our MCU wireless and sensor products. Timing is going to approach a record, if not a record, in Q2. Our power products are also doing quite well. I think it's really across the board. We do see particular strength in IoT applications for home automation security, metering, and wearables.

Harsh Kumar with Stephens.

Quick question. On timing, could you guys talk about your long-term growth rate that you might [feel]. Who do you see competitively the most on your timing solutions?

Thank you Harsh, this is Tyson. In terms of the timing growth rate, I believe that is one of our strongest growth markets and strongest growth product lines going forward. Combined with our MCU wireless and sensor products, I would rank those at the highest end of our growth trajectory.

I talked earlier about the strength that we have in the communications segment as well as growing traction in the storage and cloud and wireless infrastructure market. So that is both a high-quality business, as well as one where we have been directing a lot of our R&D efforts, and we have had a lot of design win traction. In terms of the long-term growth rate, we've talked about those being our highest growth segments. I hesitate to put a number on that given the kind of a relative weakness we have had in Q4 and extending into Q1 a little bit, but we see that's back on track now. We're going to have a nice 2014 in the timing products and Broad-based in general.

Okay, appreciate the color, Tyson. My second question is a follow up. As you look into the second half, could you maybe -- I know you talked qualitatively about the Broad-based business and how strong you feel, but maybe could you put some metrics around it? If possible at all, give us a sense of what you see happening in the second half with your Broad-based business?

The Broad-based, coming off a strong quarter and going into Q2 with record revenue, we certainly see that momentum continuing into the second half. Really across the board again, in all of the timing, MCU wireless, the sensor products, the power products, and the new addition of the analog products that we have from Touchstone. All of those are going to be delivering very good performance as we go into the second half. We're not really at the position at this point to provide specific guidance, but that is going to be our primary growth driver going into the second half. John?

Thank you so much, I appreciate the color.

I would add there that this product category has achieved 50% of our revenue mix, and that is only going to increase as we go through the rest of the year. The Broad-based category will continue to move up as a larger and more significant share of the total Company with each passing year.

Suji De Silva, Topeka.

First of all on the analog IC opportunity, can you talk about whether that's a bottleneck, though, or an opportunity in the IoT because of the power consumption versus the IT required?

I'm sorry, you cut out just a second, this is Tyson. Could you repeat the question, again?

Sure Tyson, sorry. The analog IC, the IPU part there in terms of low power, is that one of the bottlenecks for ramping of IoT and wearable opportunities here that is an opportunity for you guys?

Thanks. The Touchstone products -- we have been engaged with them in terms of partnership for some period of time. We saw that they had a very differentiated position in ultra-low-power analog components for power management in things like wearables. But there is a pretty broad variety of battery-powered applications where flexibility and charging and voltage regulation and supply conversions and different supply domains makes a big difference in the battery life of these products. While we integrate a fair amount of that functionality on to our low power MCU products, we saw this as quite complementary to the -- both to the product offering we have, then also in terms of the integration of those functions into our microcontroller portfolio to deliver very low energy consumption, and to continue to drive that road map forward.

I would also add that just looking at our solutions for IoT in general, we believe that we have the ability to drive significant amounts of power consumption out of the solutions that they exist today. We believe our products have best-in-class power consumption, but we believe over the next couple of years we have almost an order of magnitude of additional power savings that we can deliver to these applications, which we think will be ground-breaking in terms of the adoption of these technologies.

Great. My other question is really how should we think about gross margin trend in the rest of the year? What are the puts and takes there, what is the right range to think about with the mix you are expecting? Thanks.

Yes, Suji, this is John. We anticipate margins would improve to approximately 61% in Q2, with some of the changes in mix that Tyson and Bill talked about. We continue to see the overall ranges around 60% to 62%, and normal fluctuation within that on product mix. But we do anticipate improvement here in Q2.

Srini Pajjuri, CLSA Research.

On the TV side, given that you saw some pull-in and you're guiding down for Q2, how should we think about the second-half seasonality?

Srini, this is Tyson. Yes, we had some pretty strong ordering patterns as we came into Q1 on video, and that continued into the quarter. The FIFA World Cup seems to have pulled in some of the Q2 orders into Q1 to a slight degree. That's really largely responsible for the decline in Q2. If you look at the first half, it's about on track with our forecasts. We think the design win momentum in terms of the greater-than-50% market share in video, and the expansion of the demodulator business, and multi-tuners, and expansion into the set-top business is going to give us a strong second half, as well.

Okay, great. Tyson you also mentioned that you're expecting fairly strong growth on the sensor side. Can you give us some sense of what kind of ASPs do these products have, and also what kind of gross margins do they have compared to your corporate average?

The sensor products that we have cover a pretty broad range of applications. Really we consider them a Broad-based product, but they also have a number of vertical high-volume applications, as well. I would say that the gross-margin profile of those we believe is going to be in line with the corporate average. The Broad-based category in general is quite healthy in terms of gross-margin performance.

We see a lot of synergy with those products in our core IoT business, so a lot of bundling going on with our MCU and wireless products, and just pretty strong demand across the board. I would -- this is an emerging product line. We've just been introducing our next-generation products there. While it's going to contribute to revenue as we march through the year, we think that this could be a substantial growth driver in 2015.

Okay. Finally for John, if you could remind us if you bought back any shares during the quarter, and what is left of the $100 million authorization? Thank you.

Yes, Srini, we did not execute share repurchase. We obtained the authorization from the Board for the $100 million, and we will continue to be opportunistic about that. The share price performed very well in the quarter. As I said, going forward will continue to be opportunistic to exercise that going forward.

Anil Doradla, William Blair.

Hey. Can you share your order pattern trends as you progress in the quarter? Was it more front-end loaded? Any color on segment would be great, actually.

Anil, this is Bill. The order patterns were quite healthy throughout the quarter. We felt the pull-in of demand from video was really significant. We are currently enjoying similar order patterns in the timing product category. As we stand here today, our guide for Q2 is one we're quite comfortable with, given the strength of order dynamics that we see at the moment. We are hopeful this trend continues throughout the entire quarter.

Anil, in terms of the segments, if you look across the board, of course consumer was a little bit soft, but it was also offset a little bit by the video demand that we saw in the first quarter. If you look year-on-year, the industrial segment was up I think 35%, something like that. Automotive was also up double-digits. Those two areas have been strong investment areas for us. I would say that industrial followed by automotive -- and actually consumer showed some strength in Q1, with certainly the comms segment with the decline in the handset we saw last year that is essentially gone, and the comms weakness. Those took the comms as being a little bit weak in the first quarter, but we see that coming back.

As a quick follow up, last quarter I think you talked about when you looked at your IoT-specific products, some sensor, some wireless. I think you talked about mid-teens. Where do you stand now? Again, can you just remind us how you look at the growth trajectory from year-over-year growth of those product categories? I presume you're going to be talking a lot more about this in the Analyst Day, right? Thank you.

Yes, certainly, IoT is going to be a big theme at our Analyst Day. We talked about in 2012 we had about 10% of our revenue from IoT. Let me remind everyone that we're including our low-power MCUs products, our wireless products, and sensor products in that category. In 2015 -- I'm sorry, 2013 -- we had about 15% of our revenue. Certainly we see that as a major driver going into 2014.

It's not our intention, though, to provide a quarterly update on exactly what that revenue is. We will update you periodically from time to time, but suffice it to say, that is one of our strongest growth areas right now, just in terms of our traction and revenue growth in 2014.

Great. How many active litigations do you have currently?

Anil, just this one. It's the only action that we are currently engaged in.

(Operator Instructions)

Ruben Roy.

Yes, thank you. I had a follow-up on the timing business. I was wondering if you would characterize that as a Broad-based recovery, or if it was concentrated in any specific geos or by customers? Thank you.

No, it's a Broad-based recovery. But significantly for us, the weakness that we saw in the fourth quarter was in the Tier 1 telecom OEMs. This looked like an inventory management aberration. It appears obvious at this juncture that, that was true. All of these large accounts are back at traditional order patterns. As John and Tyson guided, we expect the timing business will be at near-record levels in Q2, and expect to then achieve record performance in the second half of the year.

As a quick follow up, I know you mentioned the bit about the longer-term gross-margin trajectory, but as you think about Broad-based becoming a larger part of the mix as you talked about with each passing year, is there a target level that you guys foresee?

Yes, this is Tyson. Certainly the Broad-based category being our major growth category is strong on the gross margin front. I don't want to set expectations that were going to be pushing gross margins well above 62%. I think we continue to be very aggressive in terms of market share gain, and in terms of pushing our products out into the market. We'll continue to do that within the constraints of our model.

John Vinh, Pacific Crest.

Can you give us a sense of how things shook out between audio and video within broadcast? Can you give us an update in terms of how things are progressing with the incremental demod opportunity in video? Is that starting to benefit your video business at this point?

Yes, this is Tyson. In terms of the dynamics between audio and video, we have seen the handset piece essentially gone at this point. The audio business is mostly a consumer business and an automotive business, with the automotive seeing tremendous traction with the Tier 1 automotive makers, and the competitive environment there being quite favorable to us. We think that is a nice, long-term growth trajectory, very steady, and will see nice progression through the year; and the consumer piece to that being relatively steady business for us, and we have a good share. I'd also mention that a number of our customers in that space, we're seeing substantial interest in our Internet of Things product, as well. A lot of these devices are getting connected, so we are seeing a number of cross-selling opportunities. But of course that wouldn't be included specifically in the audio category.

On the TV side, we've seen a nice ramp of the next-generation demodulator product, and we have a number of products in that area that are in the pipeline to increase our share globally. Where we would just be selling a TV tuner and now we would be able to attach our advanced demodulator. That's an ASP, really a content increase per device. As we're increasing our market share, we're also increasing our average selling price per television. Today we're serving mostly the European models in a lot of the Tier 1 accounts. We see a growing adoption of that in additional accounts, as well as in the set-top boxes. The demodulator is a nice addition to the demod family.

I'd probably also add there that a lot of these applications in TVs and set-top boxes we again see traction with our IoT devices for ZigBee RF for CE, or our upcoming Bluetooth smart products. We think there are a lot of cross-selling opportunities within that broadcast customer base that we're going to be able to leverage going forward.

At this time there are no further questions. Ms. Stapleton, are there any closing remarks?

No, we just want to say thanks to everyone for joining us today and goodbye for now.

Thank you. This does conclude today's conference. You may now disconnect.