Silicon Labs Reports Second Quarter 2023 Results

IoT leader delivers solid results with record revenue in Industrial & Commercial

AUSTIN, Texas, July 26, 2023 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported financial results for the second quarter, which ended July 1, 2023. Revenue exceeded the mid-point of the guidance range at $245 million, driven by strength across the Industrial & Commercial end markets.

"We delivered solid results in the second quarter, with record revenue in our Industrial & Commercial business," said Matt Johnson, President and Chief Executive Officer at Silicon Labs. "The strength in Industrial & Commercial was offset by a decline in our Home & Life business as weak demand and excess customer inventory continue to impact our results. Despite the challenging near-term outlook, we continue to drive strong design win momentum with our leading platform, products, and broad customer base. As the market stabilizes, we are well-positioned to gain share and drive long-term revenue growth."

Second Quarter Financial Highlights

• Revenue was $245 million, in-line with guidance
• Industrial & Commercial revenue for the quarter was $165 million
• Home & Life revenue for the quarter was $80 million

Results on a GAAP basis:

• GAAP gross margin was 58.7%
• GAAP R&D expenses were $86 million
• GAAP SG&A expenses were $41 million
• GAAP operating income as a percentage of revenue was 7%
• GAAP diluted earnings per share were $0.33

Results on a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, and certain other items as set forth in the below GAAP to Non-GAAP reconciliation tables were as follows:

• Non-GAAP gross margin was 58.9%
• Non-GAAP R&D expenses were $70 million
• Non-GAAP SG&A expenses were $35 million
• Non-GAAP operating income as a percentage of revenue was 16%
• Non-GAAP diluted earnings per share were $1.04

Business Highlights

• Announced the new dual-band FG28 SoC, designed for long-range networks and protocols like Amazon Sidewalk, Wi-SUN, and other proprietary protocols. The FG28 includes radios for sub-Gigahertz (Ghz) and 2.4 Ghz Bluetooth LE, making it particularly attractive for edge applications in growth areas like smart agriculture, smart cities, and neighborhood networks. The built-in AI/ML accelerator is a first for a sub-Ghz SoC, bringing AI/ML to the edge.
• Opened registration for its fourth annual Works With Conference, which attracts over 8,000 IoT developers every year. The free virtual conference will be held on August 22nd and 23rd and will feature over 40 in-depth technical sessions covering every major IoT protocol and ecosystem. Taught by Silicon Labs engineers and other industry experts, the sessions are designed to demystify, simplify, and accelerate the development of IoT products. CEO Matt Johnson will share a sneak peek of Silicon Labs' next-generation Series 3 platform in the conference's opening keynote.
• Finalized the redemption process on its 2025 convertible notes. The company funded the $535 million par value of the notes in cash. The in-the-money component of the converted notes was settled with the issuance of approximately 0.9 million shares. The company also executed approximately $184 million in additional stock repurchases in the quarter, retiring approximately 1.3 million shares. On July 20th, the company's board of directors authorized an incremental $100 million to its existing authorization for the repurchase of the company's common stock, bringing the total remaining amount authorized through the end of 2023 to approximately $116 million.
• Held the grand opening of the Silicon Labs Connectivity Lab in our Boston site, an event attended by top customers and partners. The Connectivity Lab simulates a modern Smart Home, with a range of IoT devices, applications, ecosystems, and networks. It offers developers an ideal environment to test their Matter prototypes operating within real-world scenarios across a variety of protocols and device brands.

Business Outlook

The company expects third-quarter revenue to be between $190 to $210 million. The company also estimates the following results:

On a GAAP basis:

• GAAP gross margin to be 59%
• GAAP operating expenses of approximately $120 million
• GAAP diluted earnings (loss) per share between $(0.08) to $0.20

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, and certain other items as set forth in the reconciliation tables:

• Non-GAAP gross margin to be 59%
• Non-GAAP operating expenses of approximately $95 million
• Non-GAAP diluted earnings per share between $0.45 to $0.73

Earnings Webcast and Conference Call

Silicon Labs will host an earnings conference call to discuss the quarterly results and answer questions at 7:30 am CDT today. An audio webcast will be available on Silicon Labs' website (www.silabs.com) under Investor Relations. In addition, the company will post an audio recording of the event at silabs.com/investors and make a replay available through August 26, 2023, online or by calling (877) 344-7529 (US) or (412) 317-0088 (international) and entering access code 1518188.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leader in secure, intelligent wireless technology for a more connected world. Our integrated hardware and software platform, intuitive development tools, thriving ecosystem, and robust support make us an ideal long-term partner in building advanced industrial, commercial, home and life applications. We make it easy for developers to solve complex wireless challenges throughout the product lifecycle and get to market quickly with innovative solutions that transform industries, grow economies, and improve lives. silabs.com

Forward-Looking Statements

This press release contains forward-looking statements based on Silicon Labs' current expectations. The words "believe", "estimate", "expect", "intend", "anticipate", "plan", "project", "will", and similar phrases as they relate to Silicon Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Labs and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: the competitive and cyclical nature of the semiconductor industry; the challenging macroeconomic environment, including disruptions in the financial services industry; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Labs' business and results of operations to risks of natural disasters, epidemics or pandemics, war and political unrest; risks that demand and the supply chain may be adversely affected by military conflict (including between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally (including conflict between Taiwan and China); risks that Silicon Labs may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; risks associated with international activities (including trade barriers, particularly with respect to China); intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing and/or obtaining sufficient supply from Silicon Labs' distributors, manufacturers and subcontractors; dependence on a limited number of products; absence of long-term commitments from customers; inventory-related risks; difficulties managing international activities; risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with its accounts receivable; dependence on key personnel; stock price volatility; the impact of COVID-19 on the U.S. and global economy; debt-related risks; capital-raising risks; the timing and scope of share repurchases and/or dividends; average selling prices of products may decrease significantly and rapidly; information technology risks; cyber-attacks against Silicon Labs' products and its networks and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. Silicon Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. References in this press release to Silicon Labs shall mean Silicon Laboratories Inc.

Note to editors: Silicon Laboratories, Silicon Labs, the "S" symbol, and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

Non-GAAP Financial Measurements

In addition to the GAAP results provided throughout this document, Silicon Labs has provided non-GAAP financial measurements on a basis excluding non-cash and other charges and benefits. Details of these excluded items are presented in the tables below, which reconcile the GAAP results to non-GAAP financial measurements.

The non-GAAP financial measurements do not replace the presentation of Silicon Labs' GAAP financial results. These measurements provide supplemental information to assist management and investors in analyzing Silicon Labs' financial position and results of operations. Silicon Labs has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations.