IoT leader delivers solid results in a challenging market environment

AUSTIN, Texas, Nov. 1, 2023 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported financial results for the third quarter, which ended September 30, 2023.

(PRNewsfoto/Silicon Labs)

"The Silicon Labs team executed well in the third quarter, driving revenue and EPS that exceeded the mid-point of our guidance," said Matt Johnson, President and Chief Executive Officer at Silicon Labs. "The current demand environment remains quite weak as we navigate this cyclical inventory correction, and end market visibility continues to be challenging. That said, we are pleased with our record design win performance in the quarter and continued advancements in our industry-leading platform. We believe this positions us well for growth and higher earnings power when the market recovers."

Third Quarter Financial Highlights

  • Revenue was $204 million
  • Industrial & Commercial revenue for the quarter was $121 million
  • Home & Life revenue for the quarter was $83 million

Results on a GAAP basis:                                                                             

  • GAAP gross margin was 58.4%
  • GAAP R&D expenses were $79 million
  • GAAP SG&A expenses were $28 million
  • GAAP operating income as a percentage of revenue was 6%
  • GAAP diluted earnings per share were $0.32

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 58.5%
  • Non-GAAP R&D expenses were $64 million
  • Non-GAAP SG&A expenses were $31 million
  • Non-GAAP operating income as a percentage of revenue was 12%
  • Non-GAAP diluted earnings per share were $0.62

Business Highlights

  • Hosted its fourth annual Works With Conference in August, which attracted thousands of top IoT developers and included panels with partners from Amazon, Google, Samsung, and many more. The virtual event covered a broad range of IoT technologies and trends, including Bluetooth, Wi-Fi, Matter, Wi-Sun, and Amazon Sidewalk, as well as the latest developments in security and AI/ML.


  • Announced its next-generation Series 3 platform, purpose-built for embedded IoT devices. Series 3 devices will be designed to offer industry-leading compute, wireless performance, scalability, and energy efficiency with the highest levels of IoT security. Notably, new levels of compute will bring more than 100x the processing capability of Series 2 and will include integrated AI/ ML accelerators for edge devices, enabling consolidation of system processing into wireless SoCs. Silicon Labs also announced the next version of their developer tool suite, Simplicity Studio, to help developers and device manufacturers streamline and accelerate product designs.

Business Outlook

The company expects fourth-quarter revenue to be between $70 to $100 million. The company also estimates the following results:

On a GAAP basis:

  • GAAP gross margin to be 53%
  • GAAP operating expenses of approximately $123 million
  • GAAP diluted earnings (loss) per share between $(2.39) to $(1.95)

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 53%
  • Non-GAAP operating expenses of approximately $94 million
  • Non-GAAP diluted earnings (loss) per share between $(1.66) to $(1.22)

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 investor.silabs.com and make a replay available through December 1, 2023.

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 in the Middle East, and between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally (including in the Middle East, and 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. 

 

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



Three Months Ended


Nine Months Ended


September 30,
2023


October 1,
2022


September 30,
2023


October 1,
2022

Revenues

$203,760


$269,817


$695,413


$766,781

Cost of revenues

84,735


104,232


278,753


281,521

Gross profit

119,025


165,585


416,660


485,260

Operating expenses:








   Research and development

79,042


84,624


254,340


245,677

   Selling, general and administrative

27,766


50,738


113,363


144,398

Operating expenses

106,808


135,362


367,703


390,075

Operating income

12,217


30,223


48,957


95,185

Other income (expense):








   Interest income and other, net

2,938


4,672


15,554


9,616

   Interest expense

(1,359)


(1,527)


(4,611)


(4,874)

Income before income taxes

13,796


33,368


59,900


99,927

Provision for income taxes

3,388


14,188


23,479


36,871

Equity-method earnings (loss)

(60)


1,819


(1,150)


2,985

Net income

$   10,348


$  20,999


$  35,271


$  66,041









Earnings per share:








   Basic

$      0.33


$      0.62


$      1.11


$      1.84

   Diluted

$      0.32


$      0.60


$      1.07


$      1.79









Weighted-average common shares outstanding:








   Basic

31,796


34,079


31,789


35,935

   Diluted

32,078


34,779


32,919


36,968

 

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

September 30, 2023

Non-GAAP Income Statement Items


GAAP

Measure


GAAP

Percent of Revenue


Stock Compensation Expense


Intangible Asset Amortization


Termination Costs


Non-GAAP

Measure


Non-GAAP

Percent of
Revenue

Revenues


$203,760




























Gross profit


119,025


58.4 %


$192


$        --


$18


$119,235


58.5 %
















Research and development


79,042


38.8 %


8,598


6,239


269


63,936


31.4 %
















Selling, general and administrative


27,766


13.6 %


(3,000)


19


8


30,739


15.1 %
















Operating income


12,217


6.0 %


5,790


6,258


295


24,560


12.1 %






Three Months Ended

September 30, 2023

Non-GAAP Earnings Per Share


GAAP

Measure


Stock

Compensation Expense*


Intangible Asset Amortization*


Termination Costs*


Equity-Method

Investment Adjustments*


Income

Tax

Adjustments


Non-

GAAP

Measure

Net income


$10,348


$5,790


$6,258


$295


$60


$(2,778)


$19,973
















Diluted shares outstanding


32,078












32,078
















Diluted earnings per share


$0.32












$0.62



*

Represents pre-tax amounts

 

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


Business Outlook


Three Months Ending

December 30, 2023



GAAP

Measure


Non-GAAP

Adjustments**


Non-GAAP

Measure

Gross margin


53 %


0 %


53 %








Operating expenses


$123


$(29)


$94








Diluted earnings (loss) per share - low


$(2.39)


$0.73


$(1.66)








Diluted earnings (loss) per share - high


$(1.95)


$0.73


$(1.22)















**

Non-GAAP adjustments include the following estimates: stock compensation expense of $16.5 million,
intangible asset amortization of $6.2 million, termination costs of $6.5 million, and the associated tax impact from
the aforementioned items.  

 

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



September 30,

2023


December 31,

2022

Assets




Current assets:




   Cash and cash equivalents

$   159,928


$   499,915

   Short-term investments

257,157


692,024

   Accounts receivable, net

102,142


71,437

   Inventories

167,581


100,417

   Prepaid expenses and other current assets

86,727


97,570

Total current assets

773,535


1,461,363

Property and equipment, net

150,839


152,016

Goodwill

376,389


376,389

Other intangible assets, net

65,744


84,907

Other assets, net

108,555


94,753

Total assets

$1,475,062


$2,169,428





Liabilities and Stockholders' Equity




Current liabilities:




   Accounts payable

$     48,086


$     89,860

   Revolving line of credit

45,000


--

   Deferred revenue and returns liability

10,066


6,780

   Other current liabilities

61,991


89,136

Total current liabilities

165,143


185,776

Convertible debt, net

--


529,573

Other non-current liabilities

49,997


49,071

Total liabilities

215,140


764,420

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;  

      31,779 and 31,994 shares issued and outstanding at September
      30, 2023 and December 31, 2022, respectively

3


3

   Retained earnings

1,262,518


1,415,693

   Accumulated other comprehensive loss

(2,599)


(10,688)

Total stockholders' equity

1,259,922


1,405,008

Total liabilities and stockholders' equity

$1,475,062


$2,169,428

 

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



Nine Months Ended


September 30,

 2023


October 1,

 2022

Operating Activities




Net income

$          35,271


$     66,041

Adjustments to reconcile net income to net cash provided by (used in) operating

   activities of continuing operations:




   Depreciation of property and equipment

18,992


16,514

   Amortization of other intangible assets

19,162


27,328

   Amortization of debt issuance costs 

960


1,492

   Loss on extinguishment of convertible debt

--


3

   Stock-based compensation expense

37,167


43,213

   Equity-method (earnings) loss

1,150


(2,985)

   Deferred income taxes

(5,881)


(13,126)

   Changes in operating assets and liabilities:




      Accounts receivable

(30,706)


21,641

      Inventories

(66,971)


(39,100)

      Prepaid expenses and other assets

8,085


(28,404)

      Accounts payable

(37,039)


26,694

      Other current liabilities and income taxes

(39,155)


17,962

      Deferred revenue and returns liability

3,286


(2,144)

      Other non-current liabilities

6,794


(7,713)

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

(48,885)


127,416





Investing Activities




Purchases of marketable securities

(91,493)


(579,507)

Sales of marketable securities

365,073


42,952

Maturities of marketable securities

171,766


597,399

Purchases of property and equipment

(18,533)


(20,057)

Purchases of other assets

(395)


--

Net cash provided by investing activities of continuing operations

426,418


40,787





Financing Activities




Proceeds from revolving line of credit

80,000


--

Payments on debt

(571,157)


(21)

Repurchases of common stock

(217,137)


(681,695)

Payment of taxes withheld for vested stock awards

(17,239)


(14,732)

Proceeds from the issuance of common stock

8,013


6,366

Net cash used in financing activities of continuing operations

(717,520)


(690,082)





Discontinued Operations




Operating activities

--


(69,467)

Net cash used in discontinued operations

--


(69,467)





Decrease in cash and cash equivalents

(339,987)


(591,346)

Cash and cash equivalents at beginning of period

499,915


1,074,623

Cash and cash equivalents at end of period

$  159,928


$   483,277

 

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SOURCE Silicon Labs

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