Microchip Technology Inc. (NASDAQ:MCHP) Q3 2019 Earnings Conference Call - Final Transcript
Feb 05, 2019 • 05:00 pm ET
Good day, everyone, and welcome to this Microchip's Third Quarter Fiscal 2019 Financial Results Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Microchip's Chief Financial Officer, Mr. Eric Bjornholt. Please go ahead, sir.
J. Eric Bjornholt
Thank you and good afternoon, everyone. During the course of this conference call, we will be making projections and other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to our press releases of today as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations.
In attendance with me today are Steve Sanghi, Microchip's Chairman and CEO; and Ganesh Moorthy, Microchip's President and COO. I will comment on our third quarter fiscal year 2019 financial performance, and Steve and Ganesh will then give their comments on the results, discuss the current business environment as well as our guidance, and provide an update on our integration activities associated with the Microsemi acquisition. We will then be available to respond to specific investor and analyst questions.
I want to remind you that we are including information in our press release and this conference call on various GAAP and non-GAAP measures. We have posted a full GAAP to non-GAAP reconciliation on the Investor Relations page of our website at www.microchip.com which we believe you will find useful when comparing GAAP and non-GAAP results.
I want to remind investors that during the quarter ending June 30th, 2018, we adopted a new GAAP revenue recognition standard which requires revenue to be recognized at the time products are sold to distributors versus our historical revenue recognition policy where revenue on such transactions were deferred until the product was sold by our distributors to an end customer. We recently went through a comment letter process with the SEC regarding our non-GAAP reporting.
As a result of this process, we will now be referring to what we used to call non-GAAP revenue as a metric called end market demand and will provide this metric in our earnings release each quarter. End market demand is the net dollar amount of our products licensing revenue and other services delivered to our direct customers, non-distributors, and by our distributors to their customers. We are able to calculate end market demand by our distributors based on information that our distributors provide to us about their product shipments to their customers and inventory holdings.
The value of end market demand from our distributors is calculated as the net transaction value of these shipments. We will continue to manage our business and distributor relationships based on creating and fulfilling end market demand. All of Microchip's bonus programs will continue to put to work based on end market demand. Therefore, along with our GAAP and non-GAAP results based on distributions