Kaleyra, Inc.

Jim Fanucchi – Investor Relations Avi Katz – Chairman of the Board, Chief Executive Officer and President Darren Ma – Chief Financial Officer

Jorge Rivas – Craig-Hallum Capital Group Dave Kang – B Riley and Company Krishna Shankar – Roth Capital

Thank you operator and thanks to all of you for joining us. Our speakers today are Dr.

Avi Katz, Chairman and CEO; and Darren Ma, CFO of GigOptix. After the market closed today, GigOptix issued a press release discussing its financial results for the fourth quarter and fiscal year 2014.

The release is currently available in the Investors section of the Company’s website. Please be advised that the matters discussed in this call contain forward-looking statements or projections regarding future results or events.

We caution you that such statements are in fact predictions that are subject to risks and uncertainties that could cause actual events or results to differ materially. Actual results may differ materially from our statements or projections.

Additional risks, uncertainties and factors that could cause actual events or results to differ materially from these forward-looking statements maybe found in the Company’s filings with the Securities and Exchange Commission. Forward-looking statements are based on the Company’s beliefs as of today, Monday, February 9, 2015.

GigOptix undertakes no obligation or responsibility to publicly update any forward-looking statements for any reason except as is required by law even if new information becomes available or other events occur in the future. In addition, today we will be discussing non-GAAP financial measures.

These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures and GAAP financial measures is included in our earnings release, which we have filed with the SEC and I refer investors to this document.

I will now turn the call over to Avi.

Thank you, Jim, and welcome everyone to our fourth quarter and fiscal 2014 conference call. Today, I’ll review our recent quarter and fiscal 2014 performance and other important events and discuss our outlook for the first quarter of 2015 and the entire year.

I’m delighted to report today about our record breaking fourth quarter 2014, as well as the entire fiscal year 2014. As measured by all major financial metrics, this is our eighth sequential quarter in the second year in a row that we exceed our quarterly and annual guidance to our investors.

We see 2014 as a real inflection year in GigOptix’s history. It is a unique year as evident by our enhanced financials, solid business growth, growing volume of shift products and the continuous growth of our product portfolio catalog.

In the last year, we also completed the integration and consolidation of all the technologies and assets with acquired since the incept of the company, including the recent inception and consolidation of the Brazil Photonics subsidiary in Brazil in February and the acquisition of Tahoe RF in June 2014. I’m very optimistic about our ability to continue this strong and positive growth trends through 2015 in which we project to continue the annual growth rates of about 14% over 2014.

We also believe that in the coming year we will continue to improve our profitability and enhance all stakeholder value including our customers’ total satisfaction, employees retention and motivation, suppliers and partners relationships and obviously long-term shareholders returns. I like now to review for you the highlights of the fourth quarter and the entire fiscal year 2014 which will be discussed in detail later on the call by Darren.

The revenue for the fiscal year 2014 was almost $33 million, up 14% from about $29 million in 2013. Driven by constant quarter-over-quarter stable growth through the year, our annual results exceeded the initial annual guidance of 10% growth and the updated guidance we gave in the middle of the year of 12% growth in 2014 over 2013.

As important, the shipped product revenue in 2014 was almost $30 million or up 20% from the $24.8 million in 2013. Our annual non-GAAP net income for 2014 was $1.2 million or $0.04 per share increase from loss of $400,000 or loss of $0.02 per share in 2013.

This is the highest profitable year in the history of the Company as measured on a non-GAAP basis. Our annual adjusted EBITDA for 2014 was over $4 million, up 66% from the $2.4 million in 2013.

And here as well the highest ever annual EBITDA performance in the history of the company all of which came on organic base growth. Revenue in the fourth quarter of 2014 was just over $9 million represented an increase of 7% sequentially from the $8.5 million in the previous quarter and 15% increase from $7.8 million in the fourth quarter of 2013 [ph] Non-GAAP income for the fourth quarter of 2014 was $900,000 or earning per share of $0.03 the highest ever achieved quarterly profitability in the Company’s history.

Adjusted EBITDA for the first quarter of 2014 was $1.6 million, up $200,000 or 13% from the previous quarter and $700,000 up or 77% from the fourth quarter of 2013 and here as well setting a new all-time record high. And finally, we generated in the fourth quarter almost $900,000 cash from operations, once again a quarterly record when excluding one-time quarter events.

This was up in increased base cash balance of about $300,000 over the previous quarter up to about $18.4 million with no debt and while maintaining our very high quick ratio of five. All those records of fiscal results give clearance to the actions we have taken in the last two years, which included among other a well planned consolidation of all the accretive acquisition we have excluded to expand our product portfolio and the major restructuring of our front and back-end and organizations particularly, the global sales and marketing and the engineering organizations.

This allowed us not only to significantly improve our financial performance, but also to successfully introduce during 2014 many new products to expand our high-speed communicational offering, mainly to enhance the portfolio of the high growth areas of the 40 Gbps and 100 Gbps datacenter connectivity and the 100 Gbps and 400 Gbps linear long haul and metro telecom markets. As I summarized my business and financial comments, please allow me to pause for a minute and review with you the Company’s financial progression since becoming the public company an inception in 2008.

Revenue grew over those six years in annual average of more than 40% for about $50 million in 2009 to about $33 million in 2015. GAAP net income improved constantly during the last six years from inception, from a loss of more than $10 million in 2009 to a loss of about $5.8 million in 2014 all of which now is attributed to non-cash expenses.

Non-GAAP net income improved significantly every year during the same period of time from a loss of $9 million in 2009 to a record non-GAAP profit of $1.2 million in 2014. Adjusted EBITDA improved significantly every year, as well, since our inception from a loss of $5.6 million in the first full year of operation in 2009 to a record positive of more than $4 million in 2014.

Again we are very pleased with the progress to date and our confident at this current continues improvement delivered during the last six years of GigOptix, since it existed an inception in 2008 we lead continues successful and even better results in 2015 and the following years. I will now move to discuss our fourth quarter product line performance starting with the high-speed communication product line, which includes our datacom, and telecom optical communications and the wireless RF point-to-point products.

This segment accounted for about 66% of the total fourth quarter revenue, up from 63% in the previous quarter. Within our high-speed communication revenue our datacom product, we mentioned, increased with more than 40% over the previous quarter to more than $3 million in Q4 and it represented the highest quarter shipment of datacom product level ever in the company’s history.

For the year datacom product shipment revenue in 2014 was up about 80% comparing to 2013 to about $9 million total shipments in 2014. The fourth quarter was the first ever quarter in the Company’s history that datacom product revenue exceeded the telecom volume.

Our datacom product shipment revenue was 25% higher than the telecom this quarter and accounted for almost half of our entire high-speed communication system in quarter four, up from 39% in previous quarter and 29% in the fourth quarter of 2013. The major driving force for this rapid growth in the datacom business is the ever growing demand for the new generation of active optical cables and transceivers that are based on the 40 gigabit per second QSFP+ technology, which is being deployed to enhance the connectivity and capacity of the newly installed datacenters.

GigOptix is in a lucrative position being the sole merchant providers of the RF semiconductor devices for these newly deployed products and hence we continue to maintain our dominating position in this market. We will start to maintain this position in the future following generation of the 100 gigabit per second active optical cable and transceivers that are now being introduced to the datacenters.

Based on the strong trends in the datacom markets in the last couple of years, we currently expect our datacom product revenue to continue being the fastest growing area for our business in 2015. Our telecom related revenue totaled $2.4 million in the fourth quarter and represented 40% of our high speed communication service.

The annual telecom revenue totaled about $10.1 million, representing 45% of the high speed communication sales in 2014. This compares with about $11.8 million or 60% of the segment sales in 2013.

Hence, in spite of the increased number of few shipped during 2014, we experienced about 13% annual decline in the telecom revenue driven solidly by a aggressive 15% to 20% annual price erosion which offset the record unit volume shipments in 2014. For our telecom business going into 2015, we’re projecting at trend reversal and gross over the last year mainly due to the following few trends and developments.

First, it’s the ongoing transition from the legal, I’m sorry, from the legacy initial generation of the 100 gigabit per second limiting technology platforms to the newly deployed 100 gigabit per second linear technology, where GigOptix has significant advantage than differentiation over our competitors. In quarter four of 2014, for the first time our linear related driver revenue was newly equal to the limiting driving sales.

We expect that sometime in the first half of fiscal 2015 the linear shipments will surpass limiting and continue to accelerate over the course of the year. Second, down at gigabit per second linear technology is now initiated for deployment in the metro of infrastructure to augment the long-haul backbone installation, which is expected to provide much higher installed volume than the long-haul infrastructure alone.

Thirdly, GigOptix has just introduced its first generation of the Surface Mount Technology, based 100 gigabit per second linear drivers for metro applications, which exhibit unique and differentiating technology features, such as, for example, the ability to drive both indium phosphide and lithium niobate modulated from the same device, at the lowest power consumption and the best flatness performance in the market. With this new generation of our drivers, we have now extended our customer base and already won design wins with new telecom customers both in Europe and in the Far East which we believe will increase our revenue stream from telecom devices already this year.

Four, since the initial launch of the first 100 gigabit per second device generation in 2011, GigOptix has shipped more 100 gigabit per second drivers than most of our competitors altogether, hence I’m confident that this incumbent position will continue to serve us well in the future to attain our lead position as data-hungry applications like live streaming, video demand and big data application will drive the need for more than we’d and our speed across the metro and the long haul telecom networks. Turning to our big haul point-to-point E-band wireless business, during the fourth quarter, we increased revenue by 110% from the previous quarter, to more than $600,000 of shipments.

For 2014, the wireless exhibited an impressive revenue increase and almost doubled the shipment of 2013 to a total of $3.1 million, being the first year of volume sampling by customers and system volume was high. There is no doubt that the big haul point-to-point wireless infrastructure more so, the E-band frequencies of 70 gigahertz to 80 gigahertz will be deployed at a fast pace during the second half of 2015 and followed by the V-band at 60 gigahertz generation of systems.

We developed a novel technology concept that combines some proprietary ideas and enable us to deliver to market a low price, high functionality integrated system in package transceivers for those applications. In 2014, we saw the initial product revenue as customers are on the globes started the evaluation of the technology before deciding whether they move into it in full production.

This evaluation process will continue in the first half of 2015, hence we expect to see our revenue in the first two quarters relatively flat out of this technology as the evaluation process move forward. And based on the positive preliminary feedback we have already received from customers, we currently believe we will see some of these customers moving into volume production toward the later part of this year.

Now moving to our industrial ASIC product line, I’m very pleased to report that the fourth quarter revenue continue to be strong and inline with the prior quarter at about $3 million of revenue, in overall exhibited in 2014 almost $11 million of revenue, a meaningful annual growth of 18% over the $9 million in 2015. The Industrial product line has proved to be a stable and very profitable line for GigOptix and we expect to see its continuous growth during 2015.

In order to support our organic growth in the last year, we put a lot of effort to continue recruiting talent resources to strengthen our sales and marketing global operation, as well as hiring the best engineers available to enhance our development work in supporting our current products and new innovations that would be presented to the market during 2015. Even with this change, we’ve had headcounts; we were able to reduce operating expenses as percentage of revenue year-over-year from 64% in 2013 to 57% in 2014, with fourth quarter of 2014 alone being only 52% of the revenue.

This improving trend continues to steer us towards meeting the Company’s long-term financial model metrics. Also in addition to accelerated organic growth, we remain proactive in finding ways to increase the size and profitability of GigOptix, through potential acquisitions.

This can be opportunities to enter adjusted market where our technology is complementary or provide us with pass to enter new growth markets. The inception of Brazil Photonics, the acquisition Tahoe RF, as well as open bid proposal to acquire GSI technology which we made last year before withdrawing it in the fourth quarter, all are only few examples of the activities that we executed last year in the strategic domain.

That said, our criteria for any acquisition remain as it has been through the history of the company that the transaction should become accretive shortly after the acquisition become effective and deliver meaningful stakeholder value by ways of innovation, financial growth engine and the consolidation execution. With a strong balance sheet and the line of credit that we could expand and call upon when needed, we believe we have a very good financial instrument to deploy quick transaction if there the right opportunity comes along to acquire a high quality company that will augment and enhance our growth.

In closing, I could not be happier with GigOptix 2014 performance. We delivered records profitability both in the fourth quarter and for the entire fiscal 2014.

Here the summary of the improvements of the first quarter 2014 over the fourth quarter of 2013. We increased our revenue at 15% from $7.8 million to $9 million.

We increased our GAAP and non-GAAP gross margins at about 2% from 58% to 60% and from 60% to 62% respectively. We increased our profitability at 300% from $0 to $0.03 earnings per diluted share.

We reduced our total non-GAAP operating expenses from 59% to 52% and we increased our EBITDA at almost 80% from $900,000 to $1.6 million this year. All those improvements allowed us to declare 2014 as our record highest earnings - and fiscal - and first ever non-GAAP profitable year.

This is why I’m very confident that 2015 will be year continues growth and with even greater revenue and profitability over 2014. As I conclude my summary, I want to again thank our stakeholders in particular our loyal and dedicated customers, our loyal and hardworking employees, our committed partners, our suppliers and of course our shareholders for their continued support and trust in GigOptix.

It is now my pleasure to introduce our new Chief Financial Officer, Darren Ma to our quarterly earning call. So he can provide a detail financial summary.

Darren was appointed to CFO of GigOptix role in November and he reviewed it already to the development of our financial and business plan for 2015. I’ll turn the call over to Darren, and wish him good luck on his first earnings call.

Thank you, Avi. Good afternoon, everyone.

Since this is my first time speaking with many of you. I wanted to convey that I’m excited to be a member of the GigOptix team.

In the future I look forward to meeting many of our investors and analysts at financial conferences and at other venues. With that said, let me provide a summary of the fourth quarter and fiscal 2014 financial results.

Revenue on the fourth quarter of 2014 was $9 million ahead of the most recent guidance we gave in the October call and inline with our pre-announcement on January 5, 2015. This represents a 7% increase from the third quarter of 2014 and a 15% increase from the fourth quarter a year ago.

As Avi mentioned earlier, a better than expected results were driven primarily by strong demand in the datacom portion of our high-speed communications business and continued strength in our industrial business. During the quarter, we had one customer greater than 10% of our revenue.

Alcatel accounted for 18% of Q4 compared with 32% last quarter. Our joint development program or JDP revenue in Q4 2014 was approximately $0.9 million, up from approximately $0.7 million in the third quarter.

Joint development programs augment long-term product delivery opportunities. JDP revenue is generally at 100% gross margin due to the complicated nature of these projects, the uncertainty of our achievement of the associated milestones and our ownership of the underlying IP generated from such programs.

We therefore take the related expenses into R&D as incurred. Full year 2014 revenue was $32.9 million, up 14% from fiscal year 2013.

Regarding our revenue breakout effective with the first quarter of fiscal 2015, we will be reporting our revenue by the High-Speed Communications and Industrial segments. We believe that consolidating the reporting of these product lines will provide a better understanding of our financial trends and we’ll align with our standard SEC reporting.

Non-GAAP gross margin was 62% in Q4 of 2014, up from 61% in Q3 of 2014 and up from 60% in the fourth quarter a year ago. The increase was primarily driven by a higher mix of datacom shipments as well as an increase in JDP revenue.

During the first quarter of 2015, we expect to maintain our gross margin at approximately 60%. Non-GAAP operating expenses in the fourth quarter of 2014 were $4.7 million, up from $4.5 million last quarter and up slightly up from $4.6 million in the fourth quarter a year ago.

The increase was primarily driven by R&D tape-out spending of new devices to enhance our family of products. In Q1 2015, we expect operating expenses to increase by approximately 10% from quarter four.

This is due to higher payroll taxes at the beginning of the year, normal year-end audit fees and industry tradeshow expenses. In addition, we are increasing our R&D investments to support revenue growth in 2015 and beyond.

On a GAAP basis, net loss in Q4 2014 was $1.1 million or a loss of $0.03 per share. This compares with a GAAP net loss of $0.8 million or a loss of $0.02 per share in Q3 of 2014 and a GAAP net loss of $1.5 million or a loss of $0.07 per share in the fourth quarter a year-ago.

Full year 2014 GAAP net loss of $5.8 million compared with approximately $1.9 million for fiscal 2013. It is important to note that fiscal 2013 included a one time net benefit of $4.8 million resulting from a legal settlement.

Q4 2014 non-GAAP net income was approximately $0.9 million or $0.03 per diluted share. On a non-GAAP basis, this was the most profitable quarter in the company’s history.

This compares with non-GAAP net income of $0.7 million or $0.02 per diluted share in the third quarter of 2014 and a non-GAAP net income of $0.1 million or $0.0 per diluted share in the fourth quarter a year ago. Full year 2014 non-GAAP net income was $1.2 million or $0.04 per diluted share, compared to a net loss of approximately $0.4 million, or a loss of $0.02 per share for full year 2013.

On a non-GAAP basis, 2014 was the most profitable year in the company’s history. Also during the fourth quarter, we achieved a record positive adjusted EBITDA of approximately $1.6 million, representing the fourteenth straight quarter of positive adjusted EBITDA.

For the full year 2014, we achieved a record positive adjusted EBITDA of $4 million, up 66% from $2.4 million for full year 2013. Turning to our balance sheet, as Avi mentioned, our cash and investments balance at the end of quarter four 2014 was approximately $18.4 million, up from $18.1 million at the end of quarter Q3.

Days sales outstanding in Q4 was approximately 80 days, down from 82 days in the previous quarter. In the previous earnings call, we reported one customer who is slow in paying.

This customer has made timely payments under the new payment plan and we do not anticipate any issues going forward. Q4 inventory increased sequentially to $5.1 million from $4 million, driven primarily by inventory built to support the anticipated robust demand for a High-Speed Communications products.

In Q4, we spent approximately $0.4 million on property, plan and equipment, including production assets. In Q1 2015, we expect to spend approximately $0.4 million to support the fast growing High-Speed Communications business.

Now turning to our guidance; as we noted in today’s earnings release, we currently believe first quarter revenue will follow the normal seasonality within the High-Speed Communications part of our business. We currently expect revenue to be approximately $8.5 million to $8.7 million.

This will represent a growth of 15% to 18% above the $7.4 million we recorded in the first quarter of fiscal 2014. This also represents a lower sequential decline than is the industry norm in the first quarter of the year.

For fiscal 2015, it is our current expectation that we will continue to see double-digit revenue growth for the third consecutive year. As of now, being in the early stage of the year and with the Lunar New Year later this month, we still have some limited visibility to the full year outlook.

With these factors in mind, we currently project revenue growth to approximately $37 million to $38 million or about 14% over the prior year. To summarize our financial results, we achieved the record non-GAAP profitability and adjusted EBITDA for both Q4 2014 and fiscal 2014.

This was a result of higher revenue growth, continued strong margins, and continuous cost control. With that, I’ll turn the call back to the operator for questions.

Hello Avi. Hello, Darren.

Welcome to the calls and congratulations on a great quarter. I want to touch on your 100-gig coherent linear driver product line and I just wanted if you can give us a sense of how broad your base of customers is and if you can probably comment on the design win and qualification activity as we started the year?

Hi, Jorge. Thanks for joining the call.

This is Avi. It’s a great question.

We obviously saw a lot of activities in GigOptix in the last couple of years extending our very dominating base of the first generation 100 G limiting and moving into linear with our flagship customer. Being very conservative in the way we invest money and line up as flagship customers, we extended through couple of more of a tier 1 customers in telephone demand and mainly focusing on bringing our innovations into the larger install base, which is a 100 G linear metro, which is coming as we all know into evaluation qualification now and into production and infrastructure installation through 2015.

Without mentioning the name of customers obviously or we will tell you that we’ve been presenting probably four new flavors [ph] of products to key customers in Europe and in the Far East. And we believe as I said in my call that we see - the first year as we see meaningful revenue starting to take off from other customer than our key flagship customer or traditional legacy TDA telephone customer.

Great, thanks a lot. And then one last question on BrPhotonics.

Just wondering about the general uptake and timing for CFP2 product where you expect - what are your expectations for that product line in 2015?

So again, this is a great question. I think that in BrPhotonics, we have now enjoyed few benefits.

One of it is as you said a view into the use of our – historically developed the TFPS modulator into CFP2, which is a pool products of Brazil Photonics. I think they will bring now a production and demonstration to the OFC as I understand it.

And the deployment of the OFC, I’m sorry of the CFP2 transceivers or TOSA in our case will depend on the market appetite and the sub module deployments of the customers. I think again we all know that there are not too many palatable solutions for TOSA in the CFP2 small form factor one of which is based on [indiscernible] based on TFPS modulator.

I think that you know if you ask me this question and after the OFC and in the next call I think I will be smart to answer it. But as pertaining to GigOptix, I want to remind all of you that the Brazil Photonics is a subsidiary that is partly owned by GigOptix.

They would don’t have majority control of this and our biggest benefit of this increased sales will be - has been the exclusive sales agent for Brazil Photonics for the next five years. There are other advantage for GigOptix from the Brazil Photonic activities such as access to lucrative engineering resource that’s helped us to develop new products, mainly to the High-Speed Communications product line that we have as well as our ability to access the Brazilian government funding opportunities and really match - have a nice match funds to derive advanced R&D programs and initial - relatively extensive product that we are developing in conjunction with our activities in Brazil.

So long answer to your short question, but [indiscernible] if you will be patient with me [indiscernible] I’ll able to give you more feedback after I’ll see the customers’ feedback to the TOSA that they will present in the show.

Thank you. I appreciate it.

That’s all for me.

Thank you. Good afternoon.

First of all, did you give out the CapEx number and also what’s the budget for this year?

So we spent approximately this quarter on fixed assets about $400,000 in Q4?

And then do you have a budget for this year?

Going forward, I think we’ll continue to - like I said we will continue to invest in each of the product lines. I think it’s a little bit too early right now to discuss what’s going on, but we will - as we know more, we’ll let you know for the rest of the year.

Okay and then you say…

Just to add one more comment. I think what Darren referred to the fact that for quarter one so we have an immediate number, we expect to see continue the $400,000 in this quarter.

I’m sure that you know as we work to model 2015 we will have more granularity and more visibility into [indiscernible].

And then OpEx will be going up about 10% this quarter, will that go down to fourth quarter level in second quarter, or stay up at first quarter lever? How should we model for other quarters?

So Dave as a reminder in Q1 we have our typical higher payroll expenses right. So this is pretty much in line with what we saw going into Q1 of last year, as well.

In terms of where we see OpEx for the rest of the year, I think, normal model that we will run it as we’ll continue to increase OpEx, but on a much slower rate at which we’re growing revenue.

Sure, sure.

Just as a reminder, if you look to the numbers of last year as I mentioned Dave, we increased the total dollars to support growth of R&D including the acquisition of Tahoe RF and hiring of very smart talent in the market and as well as increasing our global operations in the Far East. Nevertheless from percentage of revenue point of view, we went down pretty significantly.

So we will – as Darren said, we will continue this trend. So we can continue to support innovation and growth of our leading edge of critical products.

Sure, okay. And also I was wondering if you can just provide more color, you know, what are your assumptions regarding your guide for first quarter and 2015 as far as the telecom, datacom and even – and as well as ASIC?

Right, so Dave, I think that the one thing we mentioned is that as the company grow and we acquire more business and we get into competition with larger companies, as of January 1, we’ll guide our results based on – basically in consolidation of the High-Speeds Communications and the industrial ASIC businesses. So in general, what I will tell you is that [indiscernible] quarter one in 2015 will be I think featured by continuous rapid growth of our datacom as we said.

The expectation for stabilization and takeoff of the 100 G I think that with the metro come again, we will see turning point as I said. And moving through the inflection point if you will of 2014 the telecom into better revenue.

And you know we will continue to see moderate growth in the industrial ASIC as we inquire more – we inquire more customers and increase our business offering. So I think that – pretend to wireless, which is part of the High-Speeds Communications, I think I mentioned that you know our – definitely efforts are invested in subtending the position of the E-band and extending our offering into the V-band.

This will yield through probably to the second half of the year, as I mentioned. So for now, the High-Speeds connectivity growth in the first half of the year will be dominated by the traditional optical communications and toward the second half of the year we’ll trap closely the progress of the year point-to-point.

Great. And then your comment on metro 100 G I mean most of the optical vendors are saying it’s going to be late this year of its more a meaningful production next year.

Is that kind of how we should be thinking about your telecom business?

Yes, I think the truth of the metrics are following I think that whoever the saw the network, I mean coming the 100G Metro coming two or three years ago, more so when people were talking about being the linear art of the metro, I think this is a bit bullish. I mean, I think that the GigOptix had the vision that before any 100G we’ll all do the metro to be solely adopted in the longhaul.

Yes.

And before obviously linear [ph] will evolve into the metro, it will have to be proven the back bone in the long haul. So I think that this is where in fact the reason we are holding on investment in 100G Metro development in 2012 and 2013 and we moved to in over the last year.

So if I have to roll my dice, I think that the 100G Metro, the linear [ph] generation indeed will begin to show deployment towards the second half of this year with major deployment in 2016.

Right, right. But then regarding your core Alcatel, aren’t you getting some lift right now because I’m hearing, Darry getting a lift from their Chinese customers.

So shouldn’t we see some kind of lift from Alcatel may be in first half, or is it little bit too optimistic here?

Generally speaking as I mentioned in my script our total unit shipment 2014 increased comparing to 2013. So obviously there is more business from our key customers in the telecom.

I think with 2016 will not change, I mean I think the demand for 100G linear continue to grow and from volume base point of view, I think, that GigOptixs will continue to see increase in total unit shipment. I think that Dover revenue as I mentioned last year was hurt by good 15% to 20% price diversion, maybe driven by the fact that maybe – may speculator is driven by probably Chinese market was want to adopt it and drive the price pressure all the way down to the supply chain.

So I wanted to be sure that they know I just bring up, the volume indeed increase as much more installations in the long haul, I think the price pressure increase as it becomes commoditize. But I agree with you that I obviously view we expect to see a volume growth and revenue growth on the telecom through the entire year, maybe leading edge by the high insulation in the long haul and following by the penetration of the metro.

Sure and lastly on E-band obviously having a small revenue base, it’s been all over the place. I mean when do we see some more trend or whether that is still kind of a jittery noise type of revenue here?

Right, this is a good question. I mean, I am grappling with this alone as I see customers.

I think that the like any other cutting edge technology this technology is sort of a flying off the cliff or sort of taking off on a step function when the demand is so high that the existing infrastructures doesn’t break in the phase of purpose demand. So I think it’s like any other - people are trying squeeze as much been with as they can in the less kilometer and the small cells and the urban congested areas, from the current infrastructure before they go and invest multi billion dollars in upgrading the infrastructure.

I think that is very clear to all of us by the way that in phase of the exponential growth of the B-Trades [ph] particular again in the high stream then with indoor urban area, I don’t know the exact number, but the people had claimed that good portion, majority of the user [ph] data is in fact generated in those urban areas, which makes sense. And obviously from the end point terminal to the telecom it has to go through lets say wireless network.

So I think that e-bands and also we know that nothing under 50 GHz can carry anymore the large streams of a 100Gbps and so forth. So I think that e-band is happening, I think, it’s – again, I think, it will be tightly connected to the take off on the Metro.

Yes.

So yes, we say that the 100Gbps Metro will take off towards the end of the year, the same phenomena will drive the take off even in a less kilometer. So as I look to the way customer evaluated, I think that the production generation would begin to be deployed in the second half of the year with full own production starting next year.

And the only one thing that I’m still grappling with and we are trying to understand it in GigOptix is weather the V-band will be sequentially introduced to the E-band or whether the sea at parallel path or E-Band for the point-to-point and the V-Band into the small cells. But no matter how you look into this - we discussed at last year we should expect to see as we said in beginning of the production revenue in the second half of this year towards 2016 and by the way as a reminder I don’t think it’s different from the timeline of the introduction of the 40g or most of the 100g in telecom and later on the 40g datacom, it takes about two to threes from inception upon the initial evaluation to the full production.

Got it, thank you.

By the way I just want to be sure that the - again that Dave is there just if you allow me I just want to be sure again that I emphasize what I said in my call, whatever it is, weather it’s the datacom, the 100G, or the wireless, we demonstrating GigOptix over the last year that all our growth through carefully investment in those emerging areas drove growth at about 14% on our revenue all of which is organic none of them came from acquisition so.

Right.

I think we are in a good trend to see the same growth this year from those cutting edge areas that we are working on.

Yes, got it, thank you.

Yes. Avi and Darren congratulations on the results, especially in the datacenter business.

As you look at fiscal year 2015, do you expect datacenter business to continue growing at a fast clip I know that in Q4 you mentioned datacenter revenue surpassed telecom? So can you give us some flavor for additional customers, new markets and datacenter growth drivers in 2015?

Right. Hi Krishna, thanks a lot for being on the call and for the question.

I think again as we’ve discussed in the past, the volumes, the overall volume of GigOptix are still small in growing. And obviously there maybe spikes here and there as an adjustments of numbers.

So obviously the major take off in quarter four for datacom is a good signal and good indicator was going to happen in 2015. What I’m hearing from our customers mainly the United State base and the far east base is that demand for the 40 gigabit per second QSFP+ active cables and transceivers just continue to grow from where 2000 zero players and the people that are really installing that mega-datacenters.

And I think that the refurbishing of the datacenters not only moving from copper into fiber, but really now aggressively moving from 10Gbps to 40Gbps is driving a lot of demand. I think as we see a lot of demand growing also in the last quarter from what we call the SFP+, a single channel 10 gig or single channel 14 gigabit per second, which has connectivity in the front of the datacenter, of the severs in the datacenter.

And we don’t see any reason not to believe that the revenue from datacom will not grow, will not continue to grow as aggressive as we grew over the last few years and just continue the same trend. Obviously from volume shipment we see a very major takeoff in the devices that we have shipped over the last couple of years and it’s constantly quarter-over-quarter, so its not - I don’t think it is a spike, it is going to die I think its continues growing within the fluctuations, within the deviation but it’s very stable and sustainable growth over the last eight quarters.

Great. And I think did you say that you would expect revenue growth overall for the company to be in the mid-teen 14% to 15% range for calendar year 2015.

And can you also give us some transfer of hope how gross margins will shape up through this year.

I’ll turn it to Darren in a second to give you what you said but, I think that Darren was clear on his guidance that both him and myself stated that we see a growth for about 14% in 2015 over 2014. And I think that Darren was even more explicit suggesting that the revenue as we see it today [with] the caveats of the early state of the year and the fact that the lunar year is just around the corner, he said that he can see the revenue coming into the range of $37 million to $38 million this year.

Yes, Krishna, I think just take you back on what Avi said I think anytime you’re looking out this far in advance we have limited visibility in this industry right. But we did say that we expect at this point in time that we think it’s going to between $37 million and $38 million or approximately a growth of 14% year-over-year.

Okay and any comments on gross margin trajectory for the entire year?

Gross margin I think we can continue to look in high-50s up to 60% probably.

But obviously, Krishna as we all know and you’ve been so kind to track us for the last few years, we continue to invest tremendously in adding value from point of innovation which allow us to increase the direct margins, we continue to take all the measures to reduce our overheads and to begin more efficient. And we are very fortunate I think to come with a nice gross margin ahead of the guidance both for Q4 and for the entire year.

So obviously we’ll continue to do all our efforts to meet the - to meet the numbers that we gave in.

Great and my final question Avi, can you comment on the consumer electronics market, what you’re seeing there in terms of connectivity and consumer electronics types of design wins?

Sure, as we mentioned in the past, tag line of GigOptix which is to enable high speed information streaming over the network from the content generator to the end-user, includes the telecom, submarine cables, terrestrial long-haul, metro into the datacenters, into the last kilometer of wireless and obviously into the consumer electronic terminals. So we have continued to invest over the last few years in developing RF devices that enable faster, more accurate, more sensitive, high-speed communication into the terminal whether it’s application pertaining to 3D camera, whether application pertaining to motion detection and gesture recognition, we had some discussion within the past and I think that we’ve seen a lot of good demonstrations of kind of this technology in general in the last consumer electronic show in January in Vegas.

And again all of those areas where there is a signal detection by photo detectors, whether it’s a technologies of time-of-flight cameras or any other technologies, all of those places that there is manipulation of light in the detecting end provide opportunity to GigOptix because obviously our claim to fame is probably the best sensitive amplifiers in the market to process the signal and convert it from the photo detector into the processor for better manipulation of the signal and better analysis and processing. I would say as we always know the deployment in every one of those technology started from the high-end enterprise environment, in our case telecom it’s going down to the large enterprise use, in our case it goes to datacom, and finally it goes to the high volume, low ASPs deployment of the consumer electronics.

So I think that’s, within the fiber optics going to telecom many years ago, we’ve seen it coming to datacom over the last five year to ten years, we’re seeing it going to the datacenter now. I think it’s prudent to believe that we’ll see fiber and light manipulation becoming more and more essential and critical part of the consumer electronics starting this year and moving on.

And GigOptix will continue to develop cutting edge technologies and work with potential lighthouse customers to have our devices in those deployments. Again we will update the investors in the shareholders as things move forward, but its obviously our interest to get into the very high volume deployments, even though as we all know in this case as the margin maybe a bit lower when it happens due to the volume and price pressure.

But I think that it’s prudent to believe that again later on this year definitely in 2016 we will see more deployment at those kind of RF devices in the consumer electronics.

Great, thank you, Avi.

Thank you, Krishna.

Great, thank you very much and thank you everyone for joining us today, we look forward to seeing some of you at future Investor conferences and at OFC this quarter and with speaking to most of you again when we report our first quarter fiscal 2015 financial results. Have a good day.