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Silicon Labs Grows Revenue 46% in Third Quarter 2022

October 26, 2022

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.

 

Silicon Laboratories Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)



Three Months Ended


Nine Months Ended


October 1,
2022


October 2,
2021


October 1,
2022


October 2,
2021

Revenues

$269,817


$   184,831


$766,781


$   512,180

Cost of revenues

104,232


75,322


281,521


214,619

Gross profit

165,585


109,509


485,260


297,561

Operating expenses:








   Research and development

84,624


72,656


245,677


201,503

   Selling, general and administrative

50,738


46,128


144,398


131,535

Operating expenses

135,362


118,784


390,075


333,038

Operating income (loss)

30,223


(9,275)


95,185


(35,477)

Other income (expense):








   Interest income and other, net

4,672


1,476


9,616


3,100

   Interest expense

(1,527)


(6,595)


(4,874)


(24,405)

Income (loss) from continuing operations before income taxes

33,368


(14,394)


99,927


(56,782)

Provision for income taxes

14,188


9,386


36,871


12,543

Equity-method earnings

1,819


4,040


2,985


5,938

Income (loss) from continuing operations

20,999


(19,740)


66,041


(63,387)

Income from discontinued operations, net of income taxes

--


2,106,796


--


2,183,884

















Net income

$  20,999


$2,087,056


$  66,041


$2,120,497

















Basic earnings (loss) per share:








   Continuing operations

$      0.62


$        (0.45)


$      1.84


$        (1.44)

   Net income

$      0.62


$       48.11


$      1.84


$       48.08

















Diluted earnings (loss) per share:








   Continuing operations

$      0.60


$        (0.45)


$      1.79


$        (1.44)

   Net income

$      0.60


$       46.76


$      1.79


$       46.71

















Weighted-average common shares outstanding:








   Basic

34,079


43,385


35,935


44,103

   Diluted

34,779


44,634


36,968


45,394

 

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)




Three Months Ended

October 1, 2022

Non-GAAP Income Statement Items


GAAP

Measure


GAAP

Percent of
Revenue


Stock
Compensation
Expense


Intangible
Asset
Amortization


Non-
GAAP

Measure


Non-GAAP

Percent of
Revenue

Revenues


$269,817
























Gross profit


165,585


61.4 %


$288


$        --


$165,873


61.5 %














Research and development


84,624


31.4 %


8,788


7,305


68,531


25.4 %














Selling, general and administrative


50,738


18.8 %


6,874


829


43,035


15.9 %














Operating income


30,223


11.2 %


15,950


8,134


54,307


20.1 %






Three Months Ended
October 1, 2022

Non-GAAP Earnings Per Share


GAAP

Measure


Stock

Compensation
Expense*


Intangible
Asset
Amortization*


Equity-Method

Investment
Adjustments*


Income

Tax

Adjustments


Non-

GAAP

Measure

Net income


$20,999


$15,950


$8,134


$(1,819)


$(1,052)


$42,212














Diluted shares outstanding


34,779










34,779














Diluted earnings per share


$    0.60










$    1.21


* Represents pre-tax amounts

   

Unaudited Forward-Looking Statements Regarding Business Outlook
(In millions, except per share data)

Business Outlook


Three Months Ending

December 31, 2022



GAAP

Measure


Non-GAAP

Adjustments*


Non-GAAP

Measure

Gross margin


60 %


0 %


60 %








Operating expenses


$132


$(23)


$109








Effective tax rate


35 %


(10) %


25 %








Diluted earnings per share - low


$0.35


$0.58


$0.93








Diluted earnings per share - high


$0.45


$0.58


$1.03


* Non-GAAP adjustments include the following estimates: stock compensation expense of $16.9 million, intangible asset
amortization of $6.7 million, and the associated tax impact from the aforementioned items.  

 

Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)


October 1,

2022


January 1,
2022

Assets




Current assets:




   Cash and cash equivalents

$   483,277


$1,074,623

   Short-term investments

893,131


964,582

   Accounts receivable, net

76,672


98,313

   Inventories

88,447


49,307

   Prepaid expenses and other current assets

84,109


51,748

Total current assets

1,625,636


2,238,573

Property and equipment, net

151,610


146,516

Goodwill

376,389


376,389

Other intangible assets, net

91,650


118,978

Other assets, net

91,012


77,839

Total assets

$2,336,297


$2,958,295






Liabilities and Stockholders' Equity




Current liabilities:




   Accounts payable

$     81,676


$     47,327

   Current portion of convertible debt, net

--


450,599

   Deferred revenue and returns liability

11,705


13,849

   Other current liabilities

112,320


157,052

Total current liabilities

205,701


668,827

Convertible debt, net

529,062


--

Other non-current liabilities

49,890


77,044

Total liabilities

784,653


745,871

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;

      33,530 and 38,481 shares issued and outstanding at

      October 1, 2022 and January 1, 2022, respectively

3


4

   Retained earnings

1,568,108


2,214,839

   Accumulated other comprehensive loss

(16,467)


(2,419)

Total stockholders' equity

1,551,644


2,212,424

Total liabilities and stockholders' equity

$2,336,297


$2,958,295

 

Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


Nine Months Ended


October 1,

 2022


October 2,
2021

Operating Activities




Net income

$     66,041


$2,120,497

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

   of continuing operations:




   Income from discontinued operations, net of income taxes

--


(2,183,884)

   Depreciation of property and equipment

16,514


12,925

   Amortization of other intangible assets

27,328


33,971

   Amortization of debt discount and debt issuance costs

1,492


17,278

   Loss on extinguishment of convertible debt

3


3,370

   Stock-based compensation expense

43,213


36,916

   Equity-method earnings

(2,985)


(5,938)

   Deferred income taxes

(13,126)


(3,132)

   Changes in operating assets and liabilities:




      Accounts receivable

21,641


22,573

      Inventories

(39,100)


(11,320)

      Prepaid expenses and other assets

(28,404)


33,536

      Accounts payable

26,694


(4,522)

      Other current liabilities and income taxes

17,962


(10,981)

      Deferred revenue and returns liability

(2,144)


(1,657)

      Other non-current liabilities

(7,713)


(11,388)

Net cash provided by operating activities of continuing operations

127,416


48,244









Investing Activities




Purchases of marketable securities

(579,507)


(1,212,572)

Sales of marketable securities

42,952


194,492

Maturities of marketable securities

597,399


173,924

Purchases of property and equipment

(20,057)


(19,468)

Purchases of other assets

--


(578)

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

40,787


(864,202)









Financing Activities




Payments on debt

(21)


(140,572)

Repurchases of common stock

(681,695)


(688,373)

Payment of taxes withheld for vested stock awards

(14,732)


(21,393)

Proceeds from the issuance of common stock

6,366


8,619

Net cash used in financing activities of continuing operations

(690,082)


(841,719)









Discontinued Operations




Operating activities

(69,467)


69,685

Investing activities

--


2,747,684

Net cash provided by (used in) discontinued operations

(69,467)


2,817,369









Increase (decrease) in cash and cash equivalents

(591,346)


1,159,692

Cash and cash equivalents at beginning of period

1,074,623


202,720

Cash and cash equivalents at end of period

$   483,277


$1,362,412

 

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.

 

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SOURCE Silicon Labs

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