Press Releases

Silicon Labs Announces Third Quarter 2020 Results
-- Strong Results Driven by Record IoT Revenue --

AUSTIN, Texas, Oct. 28, 2020 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its third quarter ended October 3, 2020. Revenue exceeded the top end of the guidance range at $221.3 million, up from $207.5 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.07 and $0.73, respectively.

"Third quarter revenue exceeded the high end of our guidance range at $221.3 million," said Tyson Tuttle, CEO of Silicon Labs. "Revenue was considerably stronger than expected, with our IoT products leading the way with a record quarter. We see sustained acceleration towards a more connected world, which our products are well-suited to address."

Third Quarter Financial Highlights

  • IoT revenue grew to $133.2 million, up 16% sequentially and 3% year-on-year.
  • Infrastructure and Automotive revenue declined to $88.2 million, down 5% sequentially and 6% year-on-year.

On a GAAP basis:

  • GAAP gross margin was 58.8%.
  • GAAP R&D expenses were $72 million.
  • GAAP SG&A expenses were $48 million.
  • GAAP operating income as a percentage of revenue was 4.3%.
  • GAAP diluted earnings per share was $0.07.

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, restructuring charges, non-cash interest expense and other costs associated with convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin was 59.5%.
  • Non-GAAP R&D expenses were $56 million.
  • Non-GAAP SG&A expenses were $39 million.
  • Non-GAAP operating income as a percentage of revenue was 16.9%.
  • Non-GAAP diluted earnings per share were $0.73.

Product Results

  • Expanded our Bluetooth® Low Energy portfolio this quarter with the launch of the BGM220S and BGM220P modules. At just 6x6 mm, the BGM220S is one of the world's smallest Bluetooth modules. It provides ultra-small size, low-cost, and long battery life to add turnkey Bluetooth connectivity to a variety of end products.
  • Launched the Si54x/6x Ultra Series, a new family of small form-factor, high-performance crystal oscillators. The Si54x/6x Ultra Series delivers jitter performance as low as 80 femtoseconds for integer and fractional frequencies across the entire operating range, providing outstanding jitter margin for demanding applications including data center interconnect, optical transport, broadcast video and test/measurement.
  • Introduced new Si823Hx/825xx isolated gate drivers offering a combination of faster and safer switching, low latency and high noise immunity capabilities that enable power converter designers to meet or exceed increasing energy efficiency standards and size constraints in a variety of applications including data center and industrial power supplies, micro inverters for solar power, and traction inverters for the electric vehicle market.

Business Highlights

  • Announced collaboration with Amazon to support Sidewalk, a secure network created by neighbors who share a small portion of Wi-Fi bandwidth to help their devices work better at home and beyond the front door. Sidewalk is a free software application layer that works on top of our Wireless Gecko Series 2 products to support Sidewalk's sub-GHz and Bluetooth Low Energy protocols and permit IoT devices to securely connect to each other through the cloud.
  • Held our first-ever Works With smart home developer conference with leaders from the world's largest smart home ecosystem players including key executives from Google, Amazon, Ring, and Comcast. Our Works With conference provided an onramp enabling smart home developers to directly engage with the biggest, most popular smart home ecosystems through co-authored curriculum featuring 40 technical sessions, 12 hands-on workshops and six keynotes spanning 40 hours of high quality, high engagement content.
  • Debuted our new Secure Vault technology for Silicon Labs' multiprotocol Wireless Gecko Series 2 platform. Our products are the first with radios to earn ARM's PSA Level 2 security certification. We also received SmartCert security certification from the ioXt Alliance and were awarded a Gold medal in the 2020 LEAP Awards Connectivity category for best-in-class security.
  • Released Simplicity Studio 5, which is the latest version of our free to use, class-leading IoT developer environment. Simplicity Studio now offers universal access and an enhanced experience across a wide range of wireless protocols, all within a new, intuitive and responsive web-style user interface allowing customers to accelerate differentiation and time to market.
  • Announced our collaboration with STRATIS on their 3.0 Gateway which uses Silicon Labs' connectivity products to provide multiprotocol wireless capabilities connecting smart devices throughout apartment communities. This new industrial IoT application enables residents to use their smartphones as a credential to enter the apartment building and their fully equipped smart apartment unit. The system also allows property managers to control energy usage and smart technology in vacant units and monitor common areas.
  • Continued to focus on addressing health and safety during the ongoing pandemic by collaborating with our customers to expedite time-to-market of impactful products. For example, we worked with Maggy, a Belgium-based start-up, to use our BGM13S Bluetooth module to enable a new, compact social-distancing wearable that warns users when the distance between people becomes too small and could pose a risk of COVID-19 infection transfer.
  • Promoted Serena Townsend to Silicon Labs' Chief People Officer to lead the company's global talent strategy, people programs, and values-driven, inclusive culture.

Business Outlook

The company expects fourth quarter revenue to be in the range of $221 to $231 million, with IoT and Infrastructure & Automotive up, and estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 59%.
  • GAAP operating expenses at approximately $123 million.
  • GAAP effective tax rate of 0.0%.
  • GAAP diluted earnings per share between $0.02 and $0.12.

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, acquisition related charges, restructuring charges, non-cash interest expense and other costs associated with convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin at approximately 59%.
  • Non-GAAP operating expenses at approximately $95 million.
  • Non-GAAP effective tax rate at 13.0%.
  • Non-GAAP diluted earnings per share between $0.68 and $0.78.

Webcast and Conference Call        

A conference call discussing the quarterly results will follow this press release at 7:30 a.m. Central time. An audio webcast will be available on Silicon Labs' website (www.silabs.com) under Investor Relations. A replay will be available after the call at the same website listed above or by calling 1 (877) 344-7529 (US) or (412) 317-0088 (International) and entering access code 10145993. The replay will be available through November 28, 2020.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for a smarter, more connected world. Our award-winning technologies are shaping the future of the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. Our world-class engineering team creates products focused on performance, energy savings, connectivity and simplicity. 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 impact of COVID-19 on the U.S. and global economy, including the restrictions on travel and transportation and other actions taken by governmental authorities and disruptions to the business of our customers or our global supply chain that have occurred or may occur in the future, the ongoing impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs; 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 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; 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; debt-related risks; capital-raising risks; the competitive and cyclical nature of the semiconductor industry; average selling prices of products may decrease significantly and rapidly; information technology risks; cyber-attacks against Silicon Labs' products and its networks; conflict mineral risks 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.

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 
 

Three Months Ended

 

Nine Months Ended

 

October 3,
2020

 

September 28,
2019

 

October 3,
2020

 

September 28,
2019

Revenues

$221,350

 

$223,294

 

$643,760

 

$618,116

Cost of revenues

91,276

 

89,204

 

258,209

 

241,103

Gross profit

130,074

 

134,090

 

385,551

 

377,013

Operating expenses:

             

   Research and development

71,969

 

62,552

 

214,030

 

187,974

   Selling, general and administrative

48,483

 

47,718

 

150,883

 

145,571

Operating expenses

120,452

 

110,270

 

364,913

 

333,545

Operating income

9,622

 

23,820

 

20,638

 

43,468

Other income (expense):

             

   Interest income and other, net

2,044

 

3,172

 

8,562

 

9,691

   Interest expense

(8,604)

 

(5,126)

 

(25,923)

 

(15,128)

Income before income taxes

3,062

 

21,866

 

3,277

 

38,031

Provision (benefit) for income taxes

(100)

 

1,685

 

(306)

 

28,481

 

Net income

$    3,162

 

$  20,181

 

$    3,583

 

$    9,550

               

Earnings per share:

             

   Basic

$      0.07

 

$      0.47

 

$      0.08

 

$      0.22

   Diluted

$      0.07

 

$      0.45

 

$      0.08

 

$      0.22

               

Weighted-average common shares outstanding:

             

   Basic

43,815

 

43,358

 

43,737

 

43,311

   Diluted

44,328

 

44,634

 

44,254

 

44,120

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

Non-GAAP Income
Statement Items

 

Three Months Ended

October 3, 2020

   

GAAP

Measure

 

GAAP

Percent of
Revenue

 

Stock

Compensation
Expense

 

Intangible
Asset
Amortization

 

Acquisition
Related
Items

 

Restructuring
Charges

 

Non-GAAP

Measure

 

Non-GAAP

Percent of
Revenue

Revenues

 

$221,350

                           
                                 

Gross profit

 

130,074

 

58.8%

 

$     390

 

$        --

 

$1,233

 

$   --

 

$131,697

 

59.5%

                                 

Research and

   development

 

71,969

 

32.5%

 

7,384

 

8,954

 

--

 

37

 

55,594

 

25.1%

                                 

Selling, general and

   administrative

 

48,483

 

 

22.0%

 

6,785

 

2,894

 

--

 

153

 

38,651

 

 

17.5%

                                 

Operating income

 

9,622

 

4.3%

 

14,559

 

11,848

 

1,233

 

190

 

37,452

 

16.9%

 
 

Non-GAAP
Earnings Per Share

 

Three Months Ended
October 3, 2020

   

GAAP

Measure

 

Stock

Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Acquisition
Related
Items*

 

Restructuring
Charges*

 

Interest
Expense

Adjustments*

 

Income

Tax

Adjustments

 

Non-
GAAP
Measure

Net income

 

$  3,162

 

$14,559

 

$11,848

 

$1,233

 

$190

 

$6,373

 

$(4,853)

 

$32,512

                                 

Diluted shares

   outstanding

 

 

44,328

                         

44,328

                                 

Diluted earnings

   per share

 

$    0.07

                         

 

$    0.73

 

* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

Business Outlook

 

Three Months Ending

January 2, 2021

   

GAAP

Measure

 

Non-GAAP

Adjustments*

 

Non-GAAP

Measure

Gross margin

 

59%

 

0%

 

59%

             

Operating expenses

 

$123

 

$28

 

$95

             

Effective tax rate

 

0.0%

 

13.0%

 

13.0%

             

Diluted earnings per share - low

 

$0.02

 

$0.66

 

$0.68

             

Diluted earnings per share - high

 

$0.12

 

$0.66

 

$0.78

 

* Non-GAAP adjustments include the following estimates: stock compensation expense of $16.0 million, intangible asset amortization of $12.0 million, and interest expense adjustments of $6.0 million, and associated tax impact from the aforementioned items.

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 
 

October 3,
2020

 

December 28,
2019

Assets

     

Current assets:

     

   Cash and cash equivalents

$   230,358

 

$   227,146

   Short-term investments

491,428

 

498,825

   Accounts receivable, net

80,460

 

75,639

   Inventories

66,159

 

73,057

   Prepaid expenses and other current assets

69,244

 

69,192

Total current assets

937,649

 

943,859

Property and equipment, net

139,673

 

135,939

Goodwill

631,932

 

398,402

Other intangible assets, net

178,076

 

134,279

Other assets, net

55,745

 

62,374

Total assets

$1,943,075

 

$1,674,853

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

   Accounts payable

$     46,228

 

$     38,899

   Deferred revenue and returns liability

22,323

 

19,251

   Other current liabilities

82,595

 

79,551

Total current liabilities

151,146

 

137,701

Convertible debt

561,678

 

368,257

Other non-current liabilities

60,200

 

53,844

Total liabilities

773,024

 

559,802

Commitments and contingencies

     

Stockholders' equity:

     

   Preferred stock – $0.0001 par value; 10,000 shares authorized; no

      shares issued

--

 

--

   Common stock – $0.0001 par value; 250,000 shares authorized;  

      43,827 and 43,496 shares issued and outstanding at

      October 3, 2020 and December 28, 2019, respectively

4

 

4

   Additional paid-in capital

183,471

 

133,793

   Retained earnings

984,716

 

980,608

   Accumulated other comprehensive income

1,860

 

646

Total stockholders' equity

1,170,051

 

1,115,051

Total liabilities and stockholders' equity

$1,943,075

 

$1,674,853

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
 

Nine Months Ended

 

October 3,
2020

 

September 28,
2019

Operating Activities

     

Net income

$    3,583

 

$    9,550

Adjustments to reconcile net income to cash provided by operating activities:

     

   Depreciation of property and equipment

12,896

 

12,675

   Amortization of other intangible assets and other assets

32,741

 

29,891

   Amortization of debt discount and debt issuance costs 

14,946

 

10,031

   Loss on extinguishment of convertible debt

3,977

 

--

   Stock-based compensation expense

44,329

 

40,042

   Deferred income taxes

(7,382)

 

24,531

   Changes in operating assets and liabilities:

     

      Accounts receivable

(2,902)

 

(2,975)

      Inventories

11,283

 

3,512

      Prepaid expenses and other assets

(6,162)

 

23,401

      Accounts payable

6,103

 

6,419

      Other current liabilities and income taxes

3,648

 

(15,602)

      Deferred revenue and returns liability

2,643

 

(667)

      Other non-current liabilities

7,260

 

(5,957)

Net cash provided by operating activities

126,963

 

134,851

       

Investing Activities

     

Purchases of available-for-sale investments

(418,227)

 

(306,645)

Sales and maturities of available-for-sale investments

427,235

 

268,140

Purchases of property and equipment

(15,247)

 

(12,773)

Purchases of other assets

(1,280)

 

(7,132)

Acquisition of business, net of cash acquired

(316,809)

 

--

Net cash used in investing activities

(324,328)

 

(58,410)

       

Financing Activities

     

Proceeds from issuance of debt

845,000

 

--

Payments on debt

(618,729)

 

(1,127)

Repurchases of common stock

(16,287)

 

(26,716)

Payment of taxes withheld for vested stock awards

(17,562)

 

(15,693)

Proceeds from the issuance of common stock

8,155

 

7,108

Net cash provided by (used in) financing activities

200,577

 

(36,428)

       

Increase in cash and cash equivalents

3,212

 

40,013

Cash and cash equivalents at beginning of period

227,146

 

197,043

Cash and cash equivalents at end of period

$230,358

 

$237,056

 

 

SOURCE Silicon Labs

For further information: George Lane, +1 (512) 712-0019, George.Lane@silabs.com