Silicom .(US:SILC)2020-01-29 19:32Financial Data and Key Metrics Changes - The company reported revenue of $25.5 million for Q4 2019, a 6% increase from $24.1 million in the prior quarter [11][38] - Net profit for the quarter was $3.1 million, growing by 21% over the previous quarter [12][41] - The company ended the year with a record cash position of $90 million and no debt, with total shareholders' equity standing at $163 million [12][13][42] Business Line Data and Key Metrics Changes - The company has transitioned from a focus on networking appliances to solutions in the Cloud era and Telco Edge computing, targeting markets such as SD-WAN, NFV, Security, and 5G [14][20] - The gross profit for Q4 2019 was $9 million, with a gross margin of 35.1%, slightly down from 35.2% in the prior quarter [40] - Operating income for Q4 2019 was $2.9 million, or 11.2% of revenues, compared to 10.4% in the prior quarter [41] Market Data and Key Metrics Changes - Geographical revenue breakdown showed North America at 73%, Europe and Israel at 20%, and the Far East and rest of the world at 7% [38] - The company’s top three customers accounted for about 35% of revenues over the last 12 months [38] Company Strategy and Development Direction - The company aims to secure more design wins to accelerate growth, with expectations for revenues between $120 million and $128 million for 2020, representing an 18% growth over 2019 [21][22] - The focus is on the Edge business and FPGA technology, with significant growth expected in the smart NIC market, projected to grow from over $1 billion in 2019 to $2.6 billion by 2022 [29][30] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit growth in 2020 and beyond, driven by new market transitions and design wins [32][35] - The company anticipates a shift in business mix, with significant growth in the Edge business and early revenues from FPGA wins [46] Other Important Information - The company is conducting a share buyback program, with approximately $8 million repurchased by the end of 2019, targeting a total of $15 million within one year [63] - There are currently no acquisitions on the table, but the company is continuously looking for potential partners [65] Q&A Session Summary Question: Can you talk about the broader mechanics around your business over the course of '20? - Management indicated a significant growth in the Edge business, a potential decline in traditional business, and early revenues from FPGA wins [45][46] Question: What are you doing that is allowing you to be flat to slightly declining in the traditional business? - The company is selling more content and achieving new design wins with traditional customers, which compensates for the decline [54] Question: Can you comment on the share buyback during the quarter? - The company is progressing as planned with the buyback, having repurchased approximately $8 million by the end of 2019 [63] Question: Are there any acquisitions out there that you're looking at? - Currently, there are no acquisitions on the table, but the company is always looking for partners [65] Question: Can you provide an update on your key tier one service providers? - One provider is ramping up significantly, while the other is more stable, both representing significant potential for 2020 [72][75] Question: How do you interact with Intel and Xilinx in the FPGA market? - The company sees Intel and Xilinx as partners rather than competitors, benefiting from strong relationships and customer introductions [84][86]