Press Releases

Silicon Labs Announces Record IoT Revenue for Third Quarter 2021
IoT Leader Reports Accelerating Adoption Across Entire Wireless Portfolio

AUSTIN, Texas, Oct. 27, 2021 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported strong financial results for the third quarter, which ended October 2, 2021. Revenue from continuing operations exceeded the top of the guidance range at $185 million, up 9% sequentially and 39% year-on-year.

"I'm really proud of what our team has accomplished," said Silicon Labs President Matt Johnson. "We brought the industry together, delivered significant innovation and drove record revenue, all while navigating a uniquely challenging environment."

"IoT solutions are being adopted at a rapid pace in large, diverse, and fast-growing home and industrial end markets," said Silicon Labs CEO Tyson Tuttle. "Ten years ago, Silicon Labs set its sights on being a leader in IoT. I am confident in Matt's ability to carry that vision forward, building on a strong foundation."

During the third quarter, Silicon Labs completed the divestiture of its Infrastructure and Automotive (I&A) business to Skyworks Solutions, Inc. (NASDAQ: SWKS) for $2.75 billion in an all-cash transaction. Accordingly, all information included below is to be considered from continuing operations unless explicitly noted as "discontinued operations."

Third Quarter Financial Highlights

  • Revenue increased to $185 million, up 9% sequentially and 39% year-on-year

Results on a GAAP basis:                                                                             

  • GAAP gross margin was 59.2%
  • GAAP R&D expenses were $73 million
  • GAAP SG&A expenses were $46 million
  • GAAP operating loss as a percentage of revenue was (5)%
  • GAAP diluted loss per share was $(0.45)

Results 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 were as follows:

  • Non-GAAP gross margin was 59.4%
  • Non-GAAP R&D expenses were $57 million
  • Non-GAAP SG&A expenses were $36 million
  • Non-GAAP operating income as a percentage of revenue was 9%
  • Non-GAAP diluted earnings per share were $0.34

Business Highlights

  • After completing a smooth transition of the infrastructure and automotive business to Skyworks Solutions, Silicon Labs returned capital to shareholders through a "modified Dutch auction" tender offer. The tender offer was successfully completed on August 30th.
  • Concurrent with the sale of the I&A business, Silicon Labs initiated its CEO succession plan as Tyson Tuttle announced his intention to retire at the end of this year. Company President Matt Johnson will succeed Tyson as CEO on January 2nd, 2022.
  • Our annual WorksWith developers conference drew nearly eight thousand registrants, breaking last year's record. Featured speakers included representatives from Amazon, Google, IKEA, Landis + Gyr, and Schneider Electric in virtual keynotes and hands-on technology sessions.
  • Announced new sub-GHz SoCs, delivering the world's first sub-GHz wireless solutions that combine long-range RF and energy efficiency with certified Arm PSA Level 3 security to meet the global demand for high-performance, battery-powered IoT products.
  • Announced the new Unify Software Development Kit (SDK), which provides the common building blocks for connectivity across IoT ecosystems that allow cloud and platform developers to design their devices and gateways with the confidence of "design once, support all" capability. The Unify SDK offers a bridge to Matter, an industry-unifying connectivity standard anticipated in Spring 2022.
  • Announced new Security Services, supporting IoT companies with the implementation of Zero Trust security architectures to meet emerging cybersecurity standards and combat the rising tide of threats. The new security offerings complement Silicon Labs' industry-leading Secure Vault™ technologies with a first-of-its-kind Custom Part Manufacturing Service (CPMS) for wireless SoCs and modules.

Business Outlook

The company expects fourth quarter revenue to be in the range of $195 to $205 million. The company also estimates the following results:

On a GAAP basis:

  • GAAP gross margin of approximately 59.0%
  • GAAP operating expenses of approximately $126 million
  • GAAP effective tax rate of approximately (14)%
  • GAAP diluted loss per share to be in the range of a $(0.41) to $(0.31)

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:

  • Non-GAAP gross margin of approximately 59.5%
  • Non-GAAP operating expenses of approximately $95 million
  • Non-GAAP effective tax rate of approximately 8%
  • Non-GAAP diluted earnings per share between $0.50 and $0.60

Share Repurchase Program

As of October 2, 2021, the company had repurchased $54 million under its $150 million repurchase program previously announced on May 19, 2021. In addition, on October 21, 2021, the Board of Directors authorized the repurchase of up to an incremental $400 million of the company's common stock. In connection with this authorization, the company intends to enter into an accelerated share repurchase (ASR) agreement with an investment bank under which it will repurchase $400 million of its common stock on terms to be negotiated, subject to customary adjustments. The final settlement of the ASR is expected to be completed in the first quarter of 2022.

With the anticipated completion of the ASR, the previously executed "modified Dutch auction" tender offer, and open market stock repurchases completed year-to-date, the company will have returned approximately $1.1 billion of the proceeds from the divestiture of the infrastructure and automotive business. John Hollister, senior vice president and chief financial officer, said, "This accelerated share repurchase is the next step in our capital deployment program and demonstrates our continued commitment to deliver value to our shareholders through a prudent capital allocation strategy."

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. The company will post an audio recording of the event at silabs.com/investors and make a replay available through November 24, 2021, online or by calling (877) 344-7529 (US) or (412) 317-0088 (international) and entering access code 10160443.

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 effect of the Skyworks transaction on the ability of Silicon Labs to retain and hire key personnel and maintain relationships with its customers, suppliers, advertisers, partners and others with whom it does business, or on its operating results and businesses generally; risks associated with the disruption of management's attention from ongoing business operations due to such transaction; the timing and scope of anticipated share repurchases, including the anticipated ASR transaction, and/or dividends; 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 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; 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 and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. The level of share repurchases and/or dividends depends on market conditions and the level of other uses of cash.  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 2,
2021

 

October 3, 2
020

 

October 2,
2021

 

October 3,
2020

Revenues

$   184,831

 

$132,731

 

$   512,180

 

$365,099

Cost of revenues

75,322

 

57,247

 

214,619

 

154,189

Gross profit

109,509

 

75,484

 

297,561

 

210,910

Operating expenses:

             

   Research and development

72,656

 

58,929

 

201,503

 

174,631

   Selling, general and administrative

46,128

 

40,154

 

131,535

 

124,956

Operating expenses

118,784

 

99,083

 

333,038

 

299,587

Operating loss

(9,275)

 

(23,599)

 

(35,477)

 

(88,677)

Other income (expense):

             

   Interest income and other, net

5,516

 

2,044

 

9,038

 

8,562

   Interest expense

(6,595)

 

(8,604)

 

(24,405)

 

(25,923)

Loss from continuing operations before income taxes

(10,354)

 

(30,159)

 

(50,844)

 

(106,038)

Provision (benefit) for income taxes

9,386

 

(3,457)

 

12,543

 

(11,900)

Loss from continuing operations

(19,740)

 

(26,702)

 

(63,387)

 

(94,138)

Income from discontinued operations, net of income taxes

2,106,796

 

29,864

 

2,183,884

 

97,721

               

Net income

$2,087,056

 

$    3,162

 

$2,120,497

 

$    3,583

               

Basic earnings (loss) per share:

             

   Continuing operations

$        (0.45)

 

$      (0.61)

 

$        (1.44)

 

$     (2.15)

   Net income

$       48.11

 

$       0.07

 

$       48.08

 

$      0.08

               

Diluted earnings (loss) per share:

             

   Continuing operations

$         (0.45)

 

$      (0.61)

 

$        (1.44)

 

$     (2.15)

   Net income

$        46.76

 

$       0.07

 

$       46.71

 

$      0.08

               

Weighted-average common shares outstanding:

             

      Basic

43,385

 

43,815

 

44,103

 

43,737

      Diluted

44,634

 

44,328

 

45,394

 

44,254

 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 
 

October 2,
2021

 

January 2,
2021

Assets

     

Current assets:

     

   Cash and cash equivalents

$1,362,412

 

$   202,720

   Short-term investments

1,364,095

 

521,963

   Accounts receivable, net

72,596

 

95,169

   Inventories

59,114

 

47,861

   Prepaid expenses and other current assets

61,936

 

87,103

   Current assets of discontinued operations

--

 

21,005

Total current assets

2,920,153

 

975,821

Property and equipment, net

143,340

 

135,803

Goodwill

376,389

 

376,389

Other intangible assets, net

129,512

 

163,483

Other assets, net

70,108

 

76,675

Non-current assets of discontinued operations

--

 

265,316

Total assets

$3,639,502

 

$1,993,487

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

   Accounts payable

$     57,975

 

$     54,949

   Current portion of convertible debt, net

--

 

134,480

   Deferred revenue and returns liability

11,329

 

12,986

   Other current liabilities

389,071

 

81,650

   Current liabilities of discontinued operations

--

 

433

Total current liabilities

458,375

 

284,498

Convertible debt, net

445,110

 

428,945

Other non-current liabilities

88,434

 

79,752

Non-current liabilities of discontinued operations

--

 

451

Total liabilities

991,919

 

793,646

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;  

      40,547 and 43,925 shares issued and outstanding at

      October 2, 2021 and January 2, 2021, respectively

4

 

4

   Additional paid-in capital

--

 

204,359

   Retained earnings

2,648,190

 

993,664

   Accumulated other comprehensive income (loss)

(611)

 

1,814

Total stockholders' equity

2,647,583

 

1,199,841

Total liabilities and stockholders' equity

$3,639,502

 

$1,993,487

 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
 

Nine Months Ended

 

October 2,
2021

 

October 3,
2020

 

Operating Activities

       

Net income

$2,120,497

 

$    3,583

 

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

   continuing operations:

       

   Income from discontinued operations, net of income taxes

(2,183,884)

 

(97,721)

 

   Depreciation of property and equipment

12,925

 

11,789

 

   Amortization of intangible assets and other assets

33,971

 

31,118

 

   Amortization of debt discount and debt issuance costs 

17,278

 

14,946

 

   Loss on extinguishment of convertible debt

3,370

 

3,977

 

   Stock-based compensation expense

36,916

 

36,252

 

   Deferred income taxes

(3,132)

 

(7,382)

 

   Changes in operating assets and liabilities:

       

      Accounts receivable

22,573

 

(2,902)

 

      Inventories

(11,320)

 

12,499

 

      Prepaid expenses and other assets

27,598

 

(5,602)

 

      Accounts payable

(4,522)

 

6,103

 

      Other current liabilities and income taxes

(10,981)

 

3,608

 

      Deferred revenue and returns liability

(1,657)

 

2,643

 

      Other non-current liabilities

(11,388)

 

7,525

 

Net cash provided by operating activities of continuing operations

48,244

 

20,436

 
         

Investing Activities

       

Purchases of marketable securities

(1,212,572)

 

(418,227)

 

Sales and maturities of marketable securities

368,416

 

427,235

 

Purchases of property and equipment

(19,468)

 

(13,589)

 

Purchases of other assets

(578)

 

(920)

 

Acquisition of business, net of cash acquired

--

 

(316,809)

 

Net cash used in investing activities of continuing operations

(864,202)

 

(322,310)

 
         

Financing Activities

       

Proceeds from issuance of debt

--

 

845,000

 

Payments on debt

(140,572)

 

(618,729)

 

Repurchases of common stock

(688,373)

 

(16,287)

 

Payment of taxes withheld for vested stock awards

(21,393)

 

(17,562)

 

Proceeds from the issuance of common stock

8,619

 

8,155

 

Net cash provided by (used in) financing activities of continuing operations

(841,719)

 

200,577

 
         

Discontinued Operations

       

Operating activities

69,685

 

106,527

 

Investing activities

2,747,684

 

(2,018)

 

Net cash provided by discontinued operations

2,817,369

 

104,509

 
         

Increase in cash and cash equivalents

1,159,692

 

3,212

 

Cash and cash equivalents at beginning of period

202,720

 

227,146

 

Cash and cash equivalents at end of period

$1,362,412

 

$230,358

 

 

 

 

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.

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)

 

Non-GAAP Income Statement Items

 

Three Months Ended

October 2, 2021

   

GAAP

Measure

 

GAAP

Percent of
Revenue

   

Stock

Compensation
Expense

 

Intangible
Asset
Amortization

 

Termination
Costs

 

Non-GAAP

Measure

 

Non-GAAP

Percent of
Revenue

Revenues

 

$184,831

                         
                               

Gross profit

 

109,509

 

59.2%

   

$260

 

$        --

 

$        --

 

$109,769

 

59.4%

                               

Research and development

 

72,656

 

39.3%

   

7,072

 

8,198

 

--

 

57,386

 

31.0%

                               

Selling, general and administrative

 

46,128

 

24.9%

   

6,963

 

2,871

 

626

 

35,668

 

19.3%

                               

Operating income (loss)

 

(9,275)

 

(5.0)%

   

14,295

 

11,069

 

626

 

16,715

 

9.0%

                               

Non-GAAP Earnings Per Share – Continuing Operations

 

Three Months Ended

October 2, 2021

   

GAAP

Measure

 

Stock
Compensation
Expense*

 

Intangible
Asset
Amortization*

 

 

Termination
Costs*

 

Investment
Fair Value
Adjustments*

 

Interest

Expense

Adjustments*

 

Income

Tax

Adjustments

 

Non-
GAAP
Measure

Income (loss) from continuing operations

 

$(19,740)

 

$14,295

 

$11,069

 

$626

 

$(4,100)

 

$5,076

 

$8,121

 

$15,347

                                 
       

Dilutive Securities Excluded From GAAP Measure Due to Net Loss

   

Diluted shares outstanding

 

43,385

 

1,249

 

44,634

                                 

Diluted earnings (loss) per share

 

$    (0.45)

                         

$  0.34

 

Unaudited Forward-Looking Statements Regarding Business Outlook**

(In millions, except per share data)

 

Business Outlook

 

Three Months Ending

January 1, 2022

   

GAAP

Measure

 

Non-GAAP

Adjustments*

 

Non-GAAP

Measure

Gross margin

 

59%

 

0.5%

 

59.5%

             

Operating expenses

 

$126

 

$31

 

$95

             

Effective tax rate

 

(14)%

 

22%

 

8%

             

Diluted earnings (loss) per share - low

 

$ (0.41)

 

$ 0.91

 

$ 0.50

             

Diluted earnings (loss) per share - high

 

$ (0.31)

 

$ 0.91

 

$ 0.60

             
 

** Non-GAAP adjustments include the following estimates: stock compensation expense of $20 million, intangible asset amortization of $11 million, interest expense adjustments of $5 million, termination costs of $1 million and the associated tax impact from the aforementioned items.  

 

 

SOURCE Silicon Labs

For further information: Austin Dean, Investor Relations Manager, +1 (512) 532-9432, Austin.Dean@silabs.com