Silicon Labs Reports Second Quarter 2024 Results

Wireless IoT leader delivers strong second-quarter growth

AUSTIN, Texas, July 24, 2024 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported financial results for the second quarter, which ended June 29, 2024.

"Silicon Labs delivered another quarter of strong sequential growth, driven by a combination of design wins ramping to production in several key growth areas, and end customers working down their excess inventory," said Matt Johnson, President and Chief Executive Officer at Silicon Labs. "Looking forward, we expect revenue growth to continue in the third quarter as excess inventory is further reduced, design wins continue ramping, and bookings improve."

Second Quarter Financial Highlights

    --  Revenue was $145 million
    --  Industrial & Commercial revenue for the quarter was $88 million
    --  Home & Life revenue for the quarter was $57 million

Results on a GAAP basis:

    --  GAAP gross margin was 53%
    --  GAAP operating expenses were $125 million
    --  GAAP operating loss was $48 million
    --  GAAP diluted loss per share was $(2.56)

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 53%
    --  Non-GAAP operating expenses were $102 million
    --  Non-GAAP operating loss was $25 million
    --  Non-GAAP diluted loss per share was $(0.56)

Business Highlights

    --  Due to popular demand, Silicon Labs is expanding its fifth annual Works
        With Developers Conference this fall with live events in San Jose,
        Hyderabad, and Shanghai. Each event's agenda is tailored to regional
        market needs and covers key IoT topics like Matter, Smart Cities, AI and
        Machine Learning, and Security.
    --  Announced Silicon Labs' new xG22E family of wireless SoCs, its
        first-ever family designed to operate within the ultra-low power
        envelope required for battery-free, energy harvesting applications. The
        new family consists of the BG22E, MG22E, and FG22E. As Silicon Labs'
        most energy-efficient SoCs to date, all three SoCs will enable IoT
        device makers to build high-performance, Bluetooth Low Energy (LE),
        802.15.4-based, or proprietary 2.4GHz. wireless devices for
        battery-optimized and battery-free devices that can harvest energy from
        external sources in their environments like indoor or outdoor ambient
        light, ambient radio waves, and kinetic motion.

Business Outlook

The company expects third-quarter revenue to be between $160 to $170 million. The company also estimates the following results:

On a GAAP basis:

    --  GAAP gross margin to be between 54% to 56%
    --  GAAP operating expenses of approximately $123 million to $125 million
    --  GAAP diluted loss per share per share between $(0.95) to $(1.25)

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 between 54% to 56%
    --  Non-GAAP operating expenses of approximately $101 million to $103
        million
    --  Non-GAAP diluted loss per share between $(0.10) to $(0.30)

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 August 24, 2024.

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; risks associated with any material weakness in our internal controls over financial reporting; 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 Operations


                                                    
         
            (In thousands, except per share data)


                                                            
            
              (Unaudited)




                                                                                                               Three Months Ended                  Six Months Ended


                                                                                                      June 29,                    July 1,   June 29,                July 1,
                                                                                                          2024                        2023        2024                    2023



     Revenues                                                                                        $145,367                    $244,866    $251,742                $491,653



     Cost of revenues                                                                                  68,784                     101,091     120,090                 194,018



     Gross profit                                                                                      76,583                     143,775     131,652                 297,635



     Operating expenses:



     Research and development                                                                          85,909                      85,902     166,559                 175,298



     Selling, general and administrative                                                               38,695                      40,706      72,248                  85,597



     Operating expenses                                                                               124,604                     126,608     238,807                 260,895



     Operating income (loss)                                                                         (48,021)                     17,167   (107,155)                 36,740



     Other income (expense):



     Interest income and other, net                                                                     2,790                       7,780       5,522                  12,616



     Interest expense                                                                                   (263)                    (1,596)      (772)                (3,252)



     Income (loss) before income taxes                                                               (45,494)                     23,351   (102,405)                 46,104



     Provision for income taxes                                                                        36,663                      12,338      36,278                  20,091



     Equity-method loss                                                                                     -                       (57)                           (1,090)



     Net income (loss)                                                                              $(82,157)                    $10,956  $(138,683)                $24,923





     Earnings (loss) per share:



     Basic                                                                                            $(2.56)                      $0.35     $(4.33)                  $0.78



     Diluted                                                                                          $(2.56)                      $0.33     $(4.33)                  $0.75





     Weighted-average common shares outstanding:



     Basic                                                                                             32,124                      31,614      32,018                  31,786



     Diluted                                                                                           32,124                      32,926      32,018                  33,339

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

                                                                                                                    
              
         June 29, 2024


                   Non-GAAP Income Statement Items    GAAP           GAAP                                       Stock                             Intangible            Termination    Non-GAAP      Non-GAAP
                                                                                                                                         Asset                    Costs
                                                    Measure       Percent of                                Compensation                                                               Measure      Percent of
                                                                                                                                                 Amortization
                                                                    Revenue                                    Expense                                                                                Revenue



     Revenues                                     $145,367





     Gross profit                                   76,583            52.7 %                                        $412         
              $                - 
      $                -     $76,995          53.0 %





     Research and development                       85,909            59.1 %                                      10,217                                 6,061                    902       68,729          47.3 %




      Selling, general and administrative            38,695            26.6 %                                       5,215                                    19                    106       33,355          22.9 %





     Operating expenses                            124,604            85.7 %                                      15,432                                 6,080                  1,008      102,084          70.2 %





     Operating income (loss)                      (48,021)         (33.0 %)                                      15,844                                 6,080                  1,008     (25,089)       (17.3 %)


                                                                  
       
                Three Months Ended

                                                                    
       
                June 29, 2024


                   Non-GAAP Loss Per Share     GAAP      Stock              Intangible                Termination      Income        Non-

                                             Measure Compensation             Asset                      Costs*         Tax          GAAP

                                                       Expense*           Amortization*                             Adjustments    Measure



     Net income (loss)                    $(82,157)      $15,844                 $6,080                     $1,008        $41,176   $(18,049)





     Diluted shares outstanding              32,124                                                                                 32,124





     Diluted loss per share                 $(2.56)                                                                               $(0.56)


              *   Represents pre-tax amounts


            
              
                Unaudited Forward-Looking Statements Regarding Business Outlook


                          
              
                (In millions, except per share data)




                                                                               
              
                Three Months Ended
                                                                                    
                September 28, 2024


                   Business Outlook                                     GAAP                                   Non-GAAP                 Non-GAAP

                                                                      Measure                               Adjustments**               Measure



     Gross margin                                                 54% to 56%                                        - %            54% to 56%





     Operating expenses                              
              $123 to $125                                       $(22)   
           $101 to $103




      Diluted loss per share                    
              $(0.95) to $(1.25)                   
              $0.85 to $0.95 
       $(0.10) to $(0.30)

     ** Non-GAAP adjustments include the following estimates: stock compensation expense of $16.8 million, intangible asset
         amortization of $5.4 million, and the application of a long-term non-GAAP tax rate of 20%.


                                                                                                             
              
                Silicon Laboratories Inc.


                                                                                                       
              
                Condensed Consolidated Balance Sheets


                                                                                                       
              
                (In thousands, except per share data)


                                                                                                                    
              
                (Unaudited)




                                                                                                                                                                          June 29, December 30,
                                                                                                                                                                              2024          2023


                                                                                                                      
              
                Assets



     Current assets:



     Cash and cash equivalents                                                                                                                                           $240,834      $227,504



     Short-term investments                                                                                                                                                98,336       211,720



     Accounts receivable, net                                                                                                                                              41,212        29,295



     Inventories                                                                                                                                                          166,079       194,295



     Prepaid expenses and other current assets                                                                                                                             53,585        75,117



     Total current assets                                                                                                                                                 600,046       737,931



     Property and equipment, net                                                                                                                                          139,397       145,890



     Goodwill                                                                                                                                                             376,389       376,389



     Other intangible assets, net                                                                                                                                          47,374        59,533



     Other assets, net                                                                                                                                                     86,781       123,313



     Total assets                                                                                                                                                      $1,249,987    $1,443,056


                                                                                                       
              
                Liabilities and Stockholders' Equity



     Current liabilities:



     Accounts payable                                                                                                                                                     $39,295       $57,498



     Revolving line of credit                                                                                                                                                   -       45,000



     Deferred revenue and returns liability                                                                                                                                 3,323         2,117



     Other current liabilities                                                                                                                                             57,495        58,955



     Total current liabilities                                                                                                                                            100,113       163,570



     Other non-current liabilities                                                                                                                                         56,845        70,804



     Total liabilities                                                                                                                                                    156,958       234,374



     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; 32,289 and 31,897 shares issued and outstanding at June 29, 2024 and December 30, 2023, respectively          3             3



     Additional paid-in capital                                                                                                                                            39,232        16,973



     Retained earnings                                                                                                                                                  1,054,048     1,192,731



     Accumulated other comprehensive loss                                                                                                                                   (254)      (1,025)



     Total stockholders' equity                                                                                                                                         1,093,029     1,208,682



     Total liabilities and stockholders' equity                                                                                                                        $1,249,987    $1,443,056


                                                                
              
                Silicon Laboratories Inc.


                                                     
              
                Condensed Consolidated Statements of Cash Flows


                                                                      
              
                (In thousands)


                                                                       
              
                (Unaudited)




                                                                                                                                        Six Months Ended


                                                                                                                               June 29,                    July 1,
                                                                                                                                   2024                        2023



     
                Operating Activities



     Net income (loss)                                                                                                      $(138,683)                    $24,923



     Adjustments to reconcile net income to net cash used in operating activities:



     Depreciation of property and equipment                                                                                     13,152                      12,441



     Amortization of other intangible assets                                                                                    12,160                      12,904



     Amortization of debt issuance costs                                                                                             -                        960



     Stock-based compensation expense                                                                                           29,455                      31,377



     Equity-method loss                                                                                                              -                      1,090



     Deferred income taxes                                                                                                      29,784                     (6,403)



     Changes in operating assets and liabilities:



     Accounts receivable                                                                                                      (11,918)                   (26,819)



     Inventories                                                                                                                28,123                    (45,064)



     Prepaid expenses and other assets                                                                                          20,723                      32,963



     Accounts payable                                                                                                         (19,341)                   (30,003)



     Other current liabilities and income taxes                                                                               (13,624)                   (26,220)



     Deferred revenue and returns liability                                                                                      1,206                       4,326



     Other non-current liabilities                                                                                             (6,703)                    (1,975)



     Net cash used in operating activities                                                                                    (55,666)                   (15,500)





     
                Investing Activities



     Purchases of marketable securities                                                                                       (17,700)                   (81,427)



     Sales of marketable securities                                                                                             34,538                     339,555



     Maturities of marketable securities                                                                                        97,458                     171,691



     Purchases of property and equipment                                                                                       (5,577)                   (13,462)



     Proceeds from sale of equity investment                                                                                    12,382



     Purchases of other assets                                                                                                       -                      (215)



     Net cash provided by investing activities                                                                                 121,101                     416,142





     
                Financing Activities



     Proceeds from revolving line of credit                                                                                          -                     80,000



     Payments on debt                                                                                                         (45,000)                  (536,124)



     Repurchases of common stock                                                                                                     -                  (201,095)



     Payment of taxes withheld for vested stock awards                                                                        (15,213)                   (16,310)



     Proceeds from the issuance of common stock                                                                                  8,108                       7,785



     Net cash used in financing activities                                                                                    (52,105)                  (665,744)





     Increase (decrease) in cash and cash equivalents                                                                           13,330                   (265,102)



     Cash and cash equivalents at beginning of period                                                                          227,504                     499,915



     Cash and cash equivalents at end of period                                                                               $240,834                    $234,813

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SOURCE Silicon Labs