Cypress Semiconductor Corporation (NASDAQ:CY) Q3 2017 Earnings Conference Call - Final Transcript

Oct 26, 2017 • 04:30 pm ET

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Cypress Semiconductor Corporation (NASDAQ:CY) Q3 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon, and welcome to Cypress Semiconductor Third Quarter 2017 Earnings Release Conference Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Mr. Colin Born, VP of Corporate Development and IR. Sir, you may begin.

Executive
Colin Born

Good afternoon and thank you for joining our Q3 2018 earnings conference call. With me today are Hassane El-Khoury, CEO; Thad Trent, CFO; and Mike Balow, EVP of Worldwide Sales and Applications. Hassane will make some introductory remarks and Thad will provide a financial overview, and then we will take your questions. All information discussed in our earnings release and on this call is based on preliminary unaudited results and we encourage you to review our 10-Q once it is filed.

(Forward-Looking Cautionary Statements)

Please note the financial measures to be discussed by management today are non-GAAP measures unless they are specifically identified as GAAP measures. Reconciliations of non-GAAP measures to their most comparable GAAP measures and certain limitations of non-GAAP financial measures are included in our earnings release and our investor presentation deck, both of which are dated today and available on our website at investors.cypress.com.

I will now turn the call over to Hassane.

Executive
Hassane El-Khoury

Thank you, Colin, and thank you all for joining us. Q3 was another solid quarter for Cypress in terms of revenue, gross margin and earnings growth, reflecting our strong execution. In Q3, we set an all-time record for revenue and achieved our highest earnings and operating margins since 2011. We met our Q4 2017 gross margin target one quarter ahead of schedule due to strong execution on key initiatives. It's a very exciting time for Cypress, as our 2016 decision to focus the company's strategy around the IoT opportunity is starting to pay off.

Our IoT wireless business grew by 80% year-over-year on the strength of our Wi-Fi/Bluetooth combo chips, which have become the IoT industry standard for wireless connectivity. Virtually, all OEMs across our markets are transforming their road maps to include a reliable connection to the cloud and local intelligence to sense, process, store, and share data. Cypress's comprehensive portfolio of connectivity, MCU and memory solutions is uniquely tailored for these IoT applications, with the performance, security and support developers need to get great ideas into these fast-growing markets on time.

We have the number one IoT connectivity business in the world, no matter how you measure it; by revenue, breadth of devices, maturity of our connectivity software with over 2,000 man years invested in it and, most importantly, customer adoption. We lead in any metric. Our world-class 802.11ac Wi-Fi, Bluetooth and BLE combo chips and the Amazon Echo Show and Look are perfect examples of how Cypress continues to lead.

Consumers buy IoT products expecting a great experience. That's why Cypress wins. Our solutions empower customers to differentiate their products with rock solid high-performance connectivity that lies at the heart of a great user experience. MCU and memory products