Mohan Maheswaran, chief executive of the Camarillo semiconductor and internet-of-things technology developer, said that its long-range, low-power technology, or LoRa, accounted for $88 million in revenue in the recently completed fiscal year 2021.
“Our LoRa business met or exceeded most of the metrics we targeted at the beginning of the year,” Maheswaran said during a conference call to discuss fourth-quarter earnings. “These metrics included the number of countries with public networks in FY ‘21 grew to 100 countries from 91 at the end of FY ‘20.”
Other areas of growth for the LoRa business included an increase in the number of LoRa network operators to 150 at the end of the 2021 fiscal year from 133 at the end of the same period a year earlier. The company anticipates that number to grow to 165 operators in the current fiscal year that started Feb. 1.
“The number of LoRa gateways deployed more than doubled from 642,000 gateways in FY ‘20 to over 1.3 million gateways at the end of FY ‘21 and we expect the number of LoRa gateways deployed to increase to over 2 million by the end of FY ’22,” Maheswaran said during the call.
LoRa is a wireless technology that primarily targets machine-to-machine and Internet-of-Things networks. It enables public or multi-tenant networks to connect multiple applications running in the same network.
Some uses of the technology include smart water metering products for a Chinese water company; in the kitchen and refrigerators of a five-star restaurant in Dubai; and in an enterprise-grade statewide network in Tasmania.
The company reported on March 17 adjusted net income of $33.6 million (51 cents a share) for the quarter ending Jan. 31, up from $26.8 million (40 cents) in the same period a year earlier. Revenue increased by 19 percent to $165 million.
In the 52-week period ending March 18, Semtech’s share price has jumped by more than 100 percent. It closed at $65.77 on March 24.
Tore Svanberg, an analyst with Stifel Financial Corp. in St. Louis, said in a research note that Semtech’s LoRa technology is compelling with strong growth potential over the long term. Management has reiterated its 40 percent compound annual growth rate for the technology over the next three to five years, he added.
He also mentioned the number of LoRa gateways deployed, calling the 1.3 million number a key metric to future growth.
“Thus, we believe LoRa revenue growth could meaningfully accelerate in (the 2022 fiscal year), especially as uses cases move beyond traditional industrial/automotive/agriculture applications,” Svanberg wrote in the note. “Indeed, new use cases continue to expand, especially in high-volume smart homes/enterprise applications.”
Move to mainstream
Tristan Gerra, senior equity analyst with Robert W. Baird & Co. Inc., also mentioned LoRa in a recent note on Semtech, saying that new design wins and use cases will drive strong growth in the second half of the year.
“LoRa initiatives with multiple data centers (original equipment manufacturers) will foster LoRa enterprise adoption, further building the LoRa ecosystem while opening the door for cloud service revenue,” Gerra said in the note.
During the conference call, a number of analysts specifically asked about LoRa and its growth potential for the company.
Harsh Kumar, with Piper Sandler & Co. asked Semtech management about what they were most excited about in terms of growing the company.
Maheswaran responded that while it was difficult to pick just one area, if he did it would have to be LoRa.
“This year, I think, is going to be the year where LoRa really moves into the mainstream,” he added. “I have said that before there will be catalysts and I think we are starting to see that, obviously, the Amazon Sidewalk announcement was exciting.”
In September, the company announced it would provide LoRa technology for the free Amazon Sidewalk network. The service allows Amazon.com Inc. customers to simplify new device setup, extend the low bandwidth working range of devices and help devices stay online and up-to-date even if they are outside the range of their home Wi-Fi network.
Maheswaran said that the company was expecting to bring in about $100 million in revenue over five years from its Amazon partnerships, which includes Sidewalk and cloud services.
Semtech announced in January it had teamed with Amazon Web Services Inc. to offer its LoRa wide area network protocol for Amazon’s managed cloud service.
AWS IoT Core for LoRaWAN is a fully managed service that enables enterprise Internet of Things developers to easily connect low-power wireless devices over long range to AWS without developing or operating their own server.
“We expect revenues from our Amazon activities to start to ramp this fiscal year,” Maheswaran said.