Silicom .(US:SILC)2021-08-01 16:22Financial Data and Key Metrics Changes - The company reported a 31% year-over-year increase in revenues to over $30 million, marking the 66th quarter of continued profitability with a net income of $3 million, up 59% year-over-year [7][22] - Earnings per share (EPS) was $0.42, reflecting a 62% increase year-over-year [7][28] - Gross profit for Q2 2021 was $10.8 million, with a gross margin of 35.8%, compared to a gross profit of $7.8 million and a gross margin of 34% in Q2 2020 [24][25] Business Line Data and Key Metrics Changes - The geographical revenue breakdown showed North America at 61%, Europe and Israel at 31%, and the Far East and rest of the world at 8% [22] - The company completed its second $15 million share buyback and initiated a third $15 million buyback, purchasing a total of 83,000 shares for $3.6 million in the quarter [7][29] Market Data and Key Metrics Changes - The company is experiencing a global shortage of electronic components, which has affected all suppliers and increased lead times and prices [14][15] - Despite these challenges, the company managed to report revenues slightly better than guidance due to careful planning and inventory management [16] Company Strategy and Development Direction - The company is focusing on expanding its penetration in the 5G/O-RAN and SD-WAN markets, with recent design wins indicating strong market demand [8][9] - The collaboration with Telefonica Tech aims to provide an in-house SD-WAN solution for small to medium-sized businesses, expected to ramp up in 2022 [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, expecting multiyear growth for SD-WAN service providers and a strong pipeline of design wins [12][19] - The company anticipates revenues for Q3 2021 to be between $32 million and $33 million, and for Q4 2021 to grow to between $34 million and $36 million, despite ongoing component shortages [17][18] Other Important Information - The company has a strong cash position with over $74 million in net cash and no debt, allowing for continued investment in growth and shareholder value [8][29] - The company is leveraging strong relationships with vendors, particularly Intel, to mitigate supply chain challenges [16] Q&A Session Summary Question: Was there enough demand to deliver further upside to revenue? - Management confirmed that there was indeed an upside in demand, and without component constraints, they could have delivered more [32] Question: What is the expected impact of recent design wins? - Management indicated that the impact of recent design wins would be minimal in 2021, with significant contributions expected in 2022 and possibly 2023 [37] Question: How are gross margins performing amid supply constraints? - Management noted that the higher gross margins were due to the product mix sold during the quarter, not due to cost reductions [40] Question: What is the status of the CPE business with large telcos? - Management reported that while one telco is moving slowly, there are signs of potential ramp-up with the other, and overall CPE business is booming [78] Question: Is there pricing power amid inflation? - Management stated that while they have pricing power, they prefer to maintain strong partnerships with customers and avoid raising prices unnecessarily [67]