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IoT leader remains well-positioned for long-term growth amid an uncertain macroeconomic environment

AUSTIN, Texas, Oct. 26, 2022 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported robust financial results for the third quarter, which ended October 1, 2022. Revenue met the midpoint of the guidance range at $270 million, up 3% sequentially and 46% year-on-year.  Silicon Labs saw revenue growth across both its Industrial & Commercial and Home & Life businesses.

"Silicon Labs delivered another quarter of strong performance, generating record revenue and operating results ahead of model," said Matt Johnson, President and Chief Executive Officer at Silicon Labs. "We continue to gain market share and achieve strong design win momentum. We remain confident in our ability to lead and scale in the IoT market despite an increasingly challenging macroeconomic environment."

Third Quarter Financial Highlights

• Revenue increased to $270 million, up 3% sequentially and 46% year-on-year
• Industrial & Commercial revenue for the quarter was $146 million, up 56% year-on-year
• Home & Life revenue for the quarter was $124 million, up 36% year-on-year
• Gross margin of 61% was favorable due to product mix in the quarter

Results on a GAAP basis:                                                                             

• GAAP gross margin was 61%
• GAAP R&D expenses were $85 million
• GAAP SG&A expenses were $51 million
• GAAP operating income as a percentage of revenue was 11%
• GAAP diluted earnings per share were $0.60

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 61%
• Non-GAAP R&D expenses were $69 million
• Non-GAAP SG&A expenses were $43 million
• Non-GAAP operating income as a percentage of revenue was 20%
• Non-GAAP diluted earnings per share were $1.21

Business Highlights

• Hosted the third annual virtual Works With Conference, which drew more than 7,000 registrants from 1,600 unique companies signing up for 67,000 individual sessions. Works With is the premier developer conference for the IoT industry and brings together top technology brands, device manufacturers, industry alliances, designers, and ecosystem providers to build skills, share insights and lead the way toward a more unified wireless experience.
• Announced several new products, including the expansion of the Series 2 SoC family:
  • Complete Matter development solutions providing support for Matter over Wi-Fi, Matter over Thread, Bluetooth Low Energy (LE) commissioning, and Matter bridges to Zigbee and Z-Wave, ahead of the Connectivity Standards Alliance release of Matter 1.0 on October 4.
  • The Silicon Labs Pro Kit for Amazon Sidewalk, the first end-to-end development platform for Amazon Sidewalk with complete connectivity support. The development kit offers differentiated security with Secure Vault^™, sub-gigahertz (GHz) and Bluetooth LE connectivity, and the software and tools for Sidewalk device makers, designers, and developers to get to market faster.
  • The FG25 SoC and EFF01 Front End Module (FEM), a new flagship SoC and power amplifier for Wi-SUN, which, when used together, are designed to provide a sub-gigahertz (GHz) transmission range of up to 3 kilometers in dense urban environments with no data loss.
  • The SiWx917, Silicon Labs' first Wi-Fi 6 and Bluetooth LE SoC family, designed to be the lowest power, longest battery life Wi-Fi 6 and Bluetooth LE combination SoC in the industry.
• Recognized for excellence as a supplier by three customers, a particularly notable achievement given the challenging supply environment:
  • Awarded Cisco's Emerging Supplier of the Year, recognizing Silicon Labs for demonstrating excellence in all of Cisco's core performance areas – quality, technology, flexibility, and productivity, and exceeding expectations to support the success of Cisco and its customers.
  • Named as a finalist for Acuity Brands' Supplier of the Year award and commended for our strong partnership during a challenging year.
  • Named Collaborator of the Year and a Supplier of the Year by Schneider Electric, marking our performance and close relationship
• Held an official inauguration ceremony at Silicon Labs' new, expanded office in Hyderabad, India. This will be Silicon Labs' largest global center for engineering and wireless connectivity innovation.

Business Outlook

The company expects fourth-quarter revenue to be between $245 to $255 million. The company also estimates the following results:

On a GAAP basis:

• GAAP gross margin of approximately 60%
• GAAP operating expenses of approximately $132 million
• GAAP effective tax rate of approximately 35%
• GAAP diluted earnings per share between $0.35 to $0.45

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 of approximately 60%
• Non-GAAP operating expenses of approximately $109 million
• Non-GAAP effective tax rate of approximately 25%
• Non-GAAP diluted earnings per share between $0.93 to $1.03

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 November 2, 2022, online or by calling (877) 344-7529 (US) or (412) 317-0088 (international) and entering access code 3274420.

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; 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; 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.

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.

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.

SOURCE Silicon Labs