Good afternoon. My name is Rob, and I will be your conference operator. I’d like to welcome everyone to the Xilinx Fiscal Second Quarter 2021 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Please limit your questions to one to ensure that management has adequate time to speak to everyone. I would now like to turn the call over to Matt Poirier. Thank you. Mr. Poirier, you may begin your conference.

Thank you, and good afternoon. With me are Victor Peng, CEO; and Brice Hill, CFO. We recognize there have been a number of recent reports regarding a potential M&A transaction with Xilinx. Our policy on M&A rumors is to neither comment nor answer questions about them, and we will abide by that policy with respect to these reports. The purpose of today's call is to discuss our most recent quarterly results and outlook, and we would ask that questions be limited to these topics. Let me remind everyone that during our conference call today, we may make projections or 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 based on information that is currently available and that actual results may differ materially. We refer you to the documents the company files with the SEC, including our 10-Ks, 10-Qs and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. In addition to GAAP financial measures, we will be disclosing certain supplemental non-GAAP financial measures used by management to evaluate the company's financial results. We provide these measures to facilitate period-to-period comparability for purposes of evaluating continuing business operations, by excluding the effects of non-recurring and unusual items, such as amortization of intangibles and certain one-time items related to acquisitions. We believe that sharing these non-GAAP measures will be helpful for analysts and investors in analyzing the company’s ongoing core business. A reconciliation of non-GAAP financial information to the closest GAAP measure is included in our earnings release and has been posted on our Investor Relations website. This conference call is open to all and is being webcast live. It can be accessed from our Xilinx Investor Relations website. Let me now turn the call over to Victor.

Thanks, Matt, and thanks to everyone for joining today's call. I hope you and your families are healthy and well. Let me now briefly touch on how we're operating with the ongoing COVID-19 challenges before I discuss the business. Our supply chain and development activities have continued without much disruption. Most of our employees continue to work from home, except in China where employees have been allowed to return to work. And we've continued to progress on our strategy, despite approaching eight months of largely working from home. Overall, our teams are doing an outstanding job executing and delivering for our customers. Now on to the business highlights. Fiscal Q2 revenues grew 5% sequentially and were $767 million, higher than the midpoint of our guidance. DCG performed better than expected and had a record quarter. Wired and wireless revenues were slightly better than expectations. In the core businesses, AIT revenue grew sequentially. Our A&D business was strong as expected, but offset somewhat from lower-than-expected TME revenue, due to some emulation revenue shifting into Q3. ADC performed significantly better than expected, with the auto business showing signs of recovery. The advanced products category constituted 70% of total revenues. Zynq-based revenues increased 28% compared to the prior quarter and were 22% of the company revenues. Our Zynq SoC design momentum continues to strengthen across our target market. And we're confident that SoC revenue will be a much larger portion of our overall business in the future. Now I'll move on to business specific highlights starting with DCG. We saw strong growth in our DCG business during the quarter with revenues crossing the $100 million mark for the first time. Cloud service provided deployment of Alveo-based compute AI clusters, and Solarflare NIC adapters contributed significantly to this growth. DCG customer traction continued to grow in Q2, including a marquee SmartNIC design win with a Tier 1 U.S. hyperscaler. This win is expected to realize well over $100 million in annual revenues by FY 2024. Notably, we won against several of the other top market players, mainly due to the unique value we deliver with our adaptive SmartNIC hardware and our stronger software capabilities from our Solarflare acquisition. Turning to other customer engagements and design win activity. We see growing 100-gig SmartNIC engagements with hyperscalers and proof-of-concept activities for 200-gig solutions. In compute acceleration, there's great interest in an RT video server, and we have multiple fintech customer engagements in banking and electronic trading exchanges. Finally, in storage, we saw the next-generation storage platform commitments from new customers. With respect to our progress in our platform software and ecosystem development, we've had close to 43,000 downloads of Vitis since announcing it late last year. To date, we've trained over 15,000 developers and have over 1,000 software partners, releasing a growing list of applications. We've also made progress with the AI developer community and have 50 AI application examples, open source on the Xilinx GitHub account. Moving to WWG. As expected, we saw a significant revenue contribution from one of our Tier 1 OEM customers that is ramping RFSoC production this quarter. These RFSoC deployments offered sub-six gigahertz of massive MIMO rated deployments in North America. Our design win pipeline for RFSoC continues to expand globally. We're also beginning to see revenues from a Tier 1 customer who is using our 7-nanometer Versal ACAP, and we expect further revenue growth in deployment start in 2021. As 5G deployment begins to ramp in more geographies, we are very well-positioned to benefit from the significant increase in deployed radio units, especially in massive MIMO configurations. Our product leadership with RFSoC and Versal ACAP and the value that these adaptive SoCs provide to our customers are unique in the industry. We're also offering customization of our products to aptly meet our customers' cost, power and form factor requirements by hardening selected IP while maintaining our unique adaptive capability. We'll share more details about this in upcoming announcements. We also made great progress in the Open-RAN space, where we see a big opportunity over the next several years. We're working with key stakeholders to drive O-RAN initiatives to ensure 5G and future networks are openly developed since our operating and adaptable. As I mentioned last quarter, we are a member of both the open-RAN Policy coalition and over analyzed, and it contributed to the 3GPP specifications for 5G mobile networks. Our products empower our customers to innovate and get to market with a differentiated and custom solution faster than any other option. This unique capability will accelerate realizing the promise and performance of massive MIMO and O-RAN. Last quarter, we announced the T1 telco accelerated card for O-RAN distributed units and virtual baseband units in 5G networks. Customer interest continues to be solid in this area with positive feedback for market leaders like Nokia and Mavenir. Vodafone recently identified Zynq as a technology front-runner in the massive MIMO category for open RAN enabled radio unit hardware products. In addition, KMW recently announced that it has selected Xilinx as a strategic partner and silicon supplier for the company's base station radio equipment business. Moving now to the core markets. I'm delighted to say that we're very close to being at our pre COVID-19 business level and poised to resume growth. As you know, our core markets are diversified and provide a highly resilient foundation for our overall business. Our core markets provide significant and consistent cash generation to support reinvestment in these markets as well as in our strategic initiatives. Aerospace & Defense business grew in the quarter and set a new record. We expect this business to be a secular growth driver in the long term with some lumpiness from time to time. Global defense budgets are generally trending up, and we see emerging technologies like hypersonics and increasing adoption of AI. During the quarter, our 20-nanometer radiation tolerant Kintex UltraScale FPGA received a Platinum Honor from the 2020 Military and Aerospace Electronics Innovators award in the Interconnect Technology category. The industrial business is recovering, which is consistent with the recent manufacturing PMI data, and our leadership in E&P remains very strong. We recently announced the world's largest FPGA, the VU19P, which is in production. With 35 billion transistors, the VU19P provides the highest logic density and IO count on a single device ever built. The VU19P sustains our product leadership in the emulation and prototyping market that was established with our 28-nanometer generation of products. We saw a recovery in the auto market over the last quarter, though it's not quite back to our pre-COVID run rate. We expect this trend to continue into the second half of the fiscal year. We had several design-ins in ADAS as well as in DMS, where we are a leader. Subaru Selected Xilinx to power its new-generation EyeSight System, debuting with the Subaru Levorg in Japan. Our Zynq MPSoC will be powering their next-generation ADAS systems to offer features like automatic emergency braking, adaptive cruise control and lane keeping assist. We also announced with Continental, the world leader in automotive radar systems that our Zynq products will be powering their advanced radar systems. Continental has the AMCs first production-ready 4D image radar that can support Level 2 to Level 5 autonomous driving. We expect the auto market to resume robust long-term growth as the industry continues to recover and adoption of ADAS grows.

Thank you, Victor. As Victor mentioned, we had a solid Q2 with broad strength across many of our end markets. This strength drove total revenue of $767 million, above the midpoint of guidance we provided on our Q1 earnings call and 5% higher than our previous quarter. By end market, the Data Center group revenue grew 22% quarter-over-quarter and 30% year-over-year, driven by continued build-out of an AI compute cluster at a cloud service provider and ongoing strength with our Solarflare products. Note, we prioritized our orders to comply with the most recent trade restriction rules, which resulted in a significant outperformance. Without the impact of the additional trade restrictions, DCG revenue would have come in approximately flat to Q1 as originally expected. Wired and wireless group revenue decreased 13% quarter-over-quarter and 36% year-over-year. The expected sequential decline was due largely to the CIV-related order acceleration seen in Q1. Wired performed ahead of expectations while wireless business was largely in line with expectations. Wired outperformance was driven by ongoing access network build-outs as well as some benefit from the recent trade restrictions. In wireless, we saw a healthy ramp of our RFSoC product with a Tier 1 OEM for 5G deployment at a North American operator. Across our core markets, encompassing our AIT and ABC groups, revenue grew 10% quarter-over-quarter and 5% year-over-year, driven by improving business conditions across multiple end markets. More specifically, ABC or automotive, broadcast, and consumer revenue increased 36% quarter-over-quarter and declined 8% year-over-year, with a strong rebound during Q2 in the automotive end market with meaningful improvement across multiple Tier 1 OEMs. Solid broadcast end market performance during Q2 came in line with expectations. AIT or aerospace and defense, industrial, and test and measurement revenue increased 3% quarter-over-quarter and 11% year-over-year with strong performance in aerospace and defense, which delivered a record quarter. ISM performed as expected, while TME results were less than expected due to an emulation customer program that started in Q2 and is now expected to extend into Q3. Now, some other financial highlights and metrics. Company-level gross margin was toward the high end of guidance with GAAP gross margin of 70.7%. The performance was primarily driven by end market mix and lower costs. GAAP operating expenses of $336 million or 44% of revenue were within our guidance range. Higher sequential operating expenses were driven by higher bonuses due to our first half profitability and our salary increases in July. GAAP operating income was $205 million or 26.8% operating margin. Our GAAP tax rate was 0.4%, in line with guidance. Note, our lower fiscal Q2 tax rate is driven by a tax benefit associated with the vesting of appreciating stock awards. GAAP net income was $194 million and diluted earnings per share was $0.79, a 108% quarter-over-quarter increase and an 11% year-over-year decrease. Diluted share count increased quarter-over-quarter to 246.8 million shares. On a non-GAAP basis, gross margin was 71.5%, operating expenses were $332 million, operating income was $216 million, tax rate was approximately 1%, net income was $203 million, and non-GAAP diluted EPS was $0.82, a 26% increase from Q1 and a 13% decrease year-over-year. Note, the difference between our GAAP and non-GAAP is due to M&A-related expenses and amortization and related income tax effect of non-GAAP adjustments. On to balance sheet and cash flows, total cash and short-term investments increased $100 million to $3.1 billion in the quarter and our total debt remains $2 billion. Accounts receivable increased to $362 million in 43 days compared to 38 days last quarter. The days sales out increase was driven primarily by linearity of shipments. Inventory decreased to $282 million and days of inventory stood at 114 days, the same as the prior quarter. We generated $248 million in operating cash flow or 32% of revenue and $232 million in free cash flow or 30% of revenue. During the quarter, we paid dividends of $93 million. Through the first half of fiscal 2021, we have returned a total of $239 million or 52% of free cash flow through both dividends and share repurchases. Turning now to the outlook for fiscal third quarter 2021. We expect third quarter revenue to be between $750 million and $800 million, which at the midpoint is approximately up 1% quarter-over-quarter and 7% year-over-year. This reflects continued strength in our core markets, led by TME, auto and broadcast end markets. DCG is expected to be lower after a record Q2 and WWG is expected to increase as 5G deployments and ramps continue. Some additional color into our outlook by end markets. Within AIT, PME sales are expected to increase meaningfully due to strong emulation and prototyping program revenues. Aerospace and defense sales are expected to moderate from a record quarter, but should still be in line with historical levels. Industrial science and medical is expected to decline modestly as fiscal Q3 is generally a seasonally lower quarter. We continue to see general recovery in manufacturing activity in the U.S., Europe and Asia. ABC markets are expected to continue recovery, driven by strength in auto, where we are seeing increased demand from our ADAS platforms at our Tier 1 customers. Our broadcast end market is also expected to strengthen as live sports and other live events, like the U.S. election coverage, increase. DCG sales are expected to decline from a record quarter in Q2. As mentioned previously, the DCG business saw some order acceleration during Q2 related to trade restrictions. WWG is expected to be up modestly, with a strong increase in wireless, as 5G ramps continue across multiple OEMs in multiple regions, offset by a decline in wire due to trade restrictions, COVID-related slowdown and seasonality. Please note, Huawei has been removed completely from our outlook across the business. Fiscal Q3 non-GAAP gross margin is expected to be between 68.5% and 71.5%. Non-GAAP operating expense is expected to be between $333 million and $347 million. Non-GAAP other expense is expected to be between $12 million and $16 million. Non-GAAP tax rate is expected to be between 6% and 9%. In closing, we are pleased with our performance in the first half of fiscal 2021, reflecting the strength of our business across diverse end markets and continued transformation to a platform company. Our adaptive SoCs, including Zynq, MPSoC, RFSoC and our upcoming Versal, are both broadening and deepening the market and customer set for Xilinx, allowing us to compete more effectively in areas traditionally served by ASSPs and ASICs. We remain as confident as ever in the opportunities ahead of us and furthering our technical and market leadership.

Hi, guys. Thanks for letting me ask a question. I just wanted to ask about some of the surprises in the quarter and what it means going forward. On one side, it looked like the AIT side didn't grow nearly as strongly, but it looks like it's going to rebound in the out quarter in December because of the emulation side of things. So any color on why that keeps getting pushed out? And then similarly, on the data center side, it was a great quarter by any measure in September, but your guidance for December sounds like some of that goodness was a pull-in due to the trade restrictions. So any sort of color about that would be helpful.

Yes, Ross, let me address that. Regarding emulation and prototyping, some revenue has shifted, but our fundamental approach hasn't changed. As mentioned earlier, we have maintained our leadership with the view ITP for several years. This situation involves a specific customer and shouldn't be interpreted beyond that. Concerning the data center, we did experience some order pull-in due to recent restrictions, but you can consider this as a one-quarter event. It’s not significant. Nonetheless, it indicates that we are gaining strong traction in the data center segment. Even without disruptions like new trade restrictions, we are experiencing variability as we scale the business. Overall, it’s a fairly consolidated market, which naturally results in some fluctuations on a quarter-to-quarter basis. However, we are still on track for solid growth and remain very confident about the developments in the data center.

Yes. Thanks for taking the question. Just on the topic of 5G, we saw Verizon announce this morning that they deployed more base stations on 5G in the last two months than they did all of 2019. So in that context as we see the pace of this start to accelerate, can you just revisit how you guys see the content expansion in 5G? And just in general, where or how we should think about the progression of that cycle and what it means for Xilinx? Thank you.

Yes, it's a good question, Aaron. Yes. As you said, one of the things we're really pleased about is we're starting to see our RFSoC being deployed in sub-6 and in North America. And we also see more deployments around the world. So we're very, very excited that we are seeing that ramp. I think just like the previous question, with trade and a few other things, in particular, in 5G, that's caused some perturbations. But if you step back in the big picture, right, we still are absolutely confident this is going to be a very significant opportunity for us. We have the strongest lineup we ever had. We have Versal win for 5G. We have the RFSoC deployed in areas. And you'll be hearing more about what we're doing even with the RFSoC family in terms of further announcements. So, yes, it's still the first wave. You've heard me talk about three generations of equipment. What's being deployed right now is still the first wave. And we certainly see that it's good to see North America starting to pick up. China continues, and it's had some choppiness because of the various trade issues. But we are seeing other geographies starting to deploy, and that is going to drive the big opportunity that we talked about. But still first innings, right? So we got engagements with the second-generation equipment, but that's yet to deploy. And then there will be at least another third generation, if not, perhaps, some after that as well.

Hi, thank you. Victor, I just had a follow-up on the data center side. So good to see it hit a $100 million run rate. A couple of questions from that. I just want to make sure I understood the upside that came, largely came in the compute side. And given now that it's a $100 million business, could you please help us understand what are the relative sizes of the various components within that business or how big storage versus compute versus others? Thank you.

Yes. I would say in the last quarter, it was pretty much compute that led the way, followed by networking and then storage. And I would say that it still continues to look like there's a good strength in that order, although between compute and SmartNIC, that's probably going to, at any given time, vary right because again there’s perkiness and just big wins and adoptions and then there's some digestion. But you know, I would say, certainly, we're seeing a lot of strong interest in compute. And again, to refresh your memory on this, some of the areas in terms of the applications, we're very strong in video, database. You could in fintech in SmartNIC because of the low latency aspect. You could also think of as computing as well. But certainly, in general, separate apart from fintech, I think SmartNIC, in general, we're seeing a lot of pull, right? So very pleased about that big win that went that I referenced. But we see continued other really good momentum and good pipeline development there. So I would say compute and network are both strong, and it varies from quarter to quarter, which is really higher. And by the way, I don't want to say that nothing is happening in storage. We've seen good wins in storage as well. It's just that I think we've consistently always felt like our opportunity there is probably not quite as large as the other two. And that's sort of what we're seeing right now.

Hi, good afternoon. As a follow-up, do you have any updates on data center revenue guidance for fiscal 2022 now that you have more visibility from your SmartNIC hyperscaler win? How should we quantify the data center revenue opportunity next year for Xilinx?

Tristan, we are seeing improving strength in multiple markets. However, we want to maintain a cautious approach due to ongoing uncertainty related to the pandemic, the Congressional response, and the presidential election. Therefore, I'm not ready to provide guidance for fiscal year 2022 at this moment. We will address this in detail during our Analyst Day in December. Nevertheless, despite various factors affecting fiscal year 2021, we believe we will achieve double-digit growth. Looking ahead, as I mentioned in my prepared remarks, we are confident that the data center will be our fastest-growing market in terms of growth rate, and we expect to see solid double-digit growth over the coming years.

This is Kevin Feeney on for C.J. So just want to talk about wireless, and I was just kind of curious on what are a couple of, I guess, the critical inflections you see over the next couple of years? Like is that 5G and C-Band coming out or some of the other things you see ramping up? And then I guess, can you talk a bit more about design win activity you've seen maybe in second-generation equipment versus what you were seeing in first-gen equipment?

I believe there are varying stages of progress with the second generation. Some are still at an early stage, while others are more advanced. Timing-wise, Versal wasn't ready for the first wave, but it is positioned for the second wave. The confirmed project is our collaboration with Samsung, and we are optimistic about it. Additionally, we have more developments in the RFSoC family, which has been quite successful and is already being utilized. While many regions have not seen significant deployments yet, it's encouraging to see North America beginning its rollout. We have always believed that most activity will be in the sub-6 GHz range, although millimeter wave applications are also in play, with our SoC being used in some systems. Overall, it's still early since second-generation equipment hasn't started deploying widely, but we anticipate being integrated into many of those systems with both Versal and RFSoC. Stay tuned for updates. Thank you. I want to express how proud I am of my team's exceptional execution in achieving solid Q2 results despite the challenges posed by COVID-19 and recent trade restrictions. We are making significant strides on our data center wins and engagements, and we are seeing positive adoption of Alveo. Our software and ISE continue to grow, as does the broader ecosystem. Although our revenue can be inconsistent from quarter to quarter in the short term, we are very confident in our data center strategy and our ability to maintain double-digit growth in the long term. We anticipate the WWG business will resume growth as RFSoC volumes increase and once Versal begins production deployment, alongside the global rollout of 5G. While O-RAN is still developing, it is gaining momentum, and we believe there is a significant opportunity ahead of us. Additionally, our core business is performing well in several markets, with promising signs of recovery in the automotive sector, which faced more challenges than others. We remain highly focused on our platform transformation, growing our ecosystem, and providing a comprehensive software development environment. We are also enhancing our ability to deliver customized solutions that meet our customers' needs effectively, balancing performance and power costs, enabling rapid time to market, and ensuring a degree of future proofing. Despite the challenges of 2020, we are confident in our strategy and our ability to achieve sustained solid growth over the long run.

Great. Thanks, Victor, and thanks, everyone, for joining us today. We'll have a playback of this call beginning at 7:00 PM Pacific, 10:00 PM Eastern later today. For a copy of our earnings release, please visit our Investor Relations website. Our next earnings release date for the third quarter of fiscal year 2021 will be on Wednesday, 25th of January, after the market closed. This completes our call, and thank you very much for your participation.

Ladies and gentlemen, this does conclude today's conference call. Thank you for participating. You may now disconnect.