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Silicon Labs Announces Record Revenue for Second Quarter 2021

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Strong Execution in Supply-Constrained Market Delivers Record IoT Revenue

AUSTIN, Texas, July 28, 2021 /PRNewswire/ -- Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported strong financial results for the second quarter, which ended July 3, 2021. Revenue exceeded the top of the guidance range at $278 million, and revenue from the Internet of Things business (IoT) ended at a record high of $169 million, up seven percent sequentially and 48 percent year-on-year. Second quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.44 and $1.05, respectively.

(PRNewsfoto/Silicon Labs)
(PRNewsfoto/Silicon Labs)

"We continue to capitalize on the increased adoption, growth and diversity of the global IoT market," said Silicon Labs CEO Tyson Tuttle. "Achieving another quarter of record revenue, robust bookings, and strong design wins amid a tight supply chain environment is a testament to our powerful development platform, performance-driven team, and purpose-oriented culture."

Earlier in the week, Silicon Labs accomplished another major milestone, completing the divestiture of its Infrastructure and Automotive (I&A) businesses to Skyworks Solutions, Inc. (NASDAQ: SWKS) for $2.75 billion in an all-cash transaction, the proceeds of which have been fully funded. Silicon Labs is now reporting revenue from the divested products as "discontinued operations" and from IoT as "continuing operations."

Second Quarter Financial Highlights

  • IoT revenue from continuing operations increased to $169 million, up seven percent sequentially and 48 percent year-on-year

  • I&A revenue from discontinued operations increased to $108 million, up 11 percent sequentially and 16 percent year-on-year

Results from continuing operations on a GAAP basis:

  • GAAP gross margin was 56.8%

  • GAAP R&D expenses were $65 million

  • GAAP SG&A expenses were $43 million

  • GAAP operating loss as a percentage of revenue was (6.8)%

  • GAAP loss per share was $(0.41)

Results from continuing operations 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 56.9%

  • Non-GAAP R&D expenses were $51 million

  • Non-GAAP SG&A expenses were $34 million

  • Non-GAAP operating income as a percentage of revenue was 6.6%

  • Non-GAAP diluted earnings per share were $0.16

Innovations and Achievements

  • Completed smooth transition of the infrastructure and automotive business to Skyworks Solutions, positioning Silicon Labs as a pure-play leader in secure, intelligent wireless connectivity.

  • Continued to drive the IoT industry forward by contributing more than 20 percent of the source code and launching new products for Matter, which simplifies the complexities of secure, reliable wireless connectivity for both developers and consumers.

  • Collaborated with fellow IoT leader, Wirepas, to launch a connected solution for asset tracking and building automation. Wirepas chose Silicon Labs for its integrated hardware and software platform, ultra-low power chips and affordable solutions.

  • Remained steadfast in our dedication to environmental sustainability and passion for supporting local communities by becoming the first corporation to join the International Institute of Information Technology Hyderabad's new Smart City Living Lab, which focuses R&D on devices that improve life in densifying cities.

  • Demonstrated we are passionate about connecting more than "things" and announced the annual WorksWith conference, which connects developers and business leaders to the information, experts, and technology needed to go from IoT idea to award-winning innovation.

Business Outlook

The company expects third quarter revenue from continuing operations to be in the range of $170 to $180 million. The company also estimates the following results from continuing operations:

On a GAAP basis:

  • GAAP gross margin between 57% and 57.5%

  • GAAP operating expenses at approximately $116 million

  • GAAP effective tax rate of approximately (11)%

  • GAAP diluted loss per share to be in the range of a $(0.56) to $(0.46)

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 between 57% and 58%

  • Non-GAAP operating expenses at approximately $93 million

  • Non-GAAP effective tax rate of approximately 14%

  • Non-GAAP diluted earnings per share between $0.10 and $0.20

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 CST 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 August 4, 2021 online or by calling (877) 344-7529 (US) or (412) 317-0088 (international) and entering access code 10158301.

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, unmatched ecosystem and robust support make us the 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 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 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 Operations

(In thousands, except per share data)

(Unaudited)



Three Months Ended


Six Months Ended


July 3,
2021


July 4,
2020


July 3,
2021


July 4,
2020

Revenues

$169,492


$114,350


$327,349


$232,368

Cost of revenues

73,194


47,771


139,297


96,942

Gross profit

96,298


66,579


188,052


135,426

Operating expenses:








Research and development

64,832


57,992


128,847


115,702

Selling, general and administrative

42,953


40,350


85,407


84,802

Operating expenses

107,785


98,342


214,254


200,504

Operating loss

(11,487)


(31,763)


(26,202)


(65,078)

Other income (expense):








Interest income and other, net

647


3,267


3,522


6,518

Interest expense

(6,486)


(11,778)


(17,810)


(17,319)

Loss from continuing operations before income taxes

(17,326)


(40,274)


(40,490)


(75,879)

Provision (benefit) for income taxes

1,165


(4,229)


3,157


(8,443)

Loss from continuing operations

(18,491)


(36,045)


(43,647)


(67,436)

Income from discontinued operations, net of income taxes

38,423


34,222


77,088


67,857









Net income (loss)

$ 19,932


$ (1,823)


$ 33,441


$ 421









Basic earnings (loss) per share:








Continuing operations

$ (0.41)


$ (0.82)


$ (0.98)


$ (1.54)

Net income

$ 0.44


$ (0.04)


$ 0.75


$ 0.01









Diluted earnings (loss) per share:








Continuing operations

$ (0.41)


$ (0.82)


$ (0.98)


$ (1.54)

Net income

$ 0.44


$ (0.04)


$ 0.73


$ 0.01









Weighted-average common shares outstanding:








Basic

44,803


43,761


44,481


43,699

Diluted

45,756


43,761


45,794


44,219

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)


Non-GAAP Income Statement
Items – Continuing Operations


Three Months Ended

July 3, 2021



GAAP

Measure


GAAP

Percent of
Revenue



Stock

Compensation
Expense


Intangible Asset
Amortization



Non-GAAP

Measure


Non-GAAP

Percent of
Revenue

Revenues


$169,492




























Gross profit


96,298


56.8%



$199


$ --



$96,497


56.9%
















Research and development


64,832


38.3%



5,488


8,184



51,160


30.2%
















Selling, general and administrative


42,953


25.3%



5,565


3,267



34,121


20.1%
















Operating income (loss)


(11,487)


(6.8)%



11,252


11,451



11,216


6.6%

Non-GAAP Earnings Per Share
– Continuing Operations


Three Months Ended

July 3, 2021



GAAP

Measure


Stock
Compensation
Expense*


Intangible
Asset
Amortization*


Investment
Fair Value
Adjustments*


Interest

Expense

Adjustments*


Income

Tax

Adjustments


Non-
GAAP
Measure

Loss from continuing operations


$(18,491)


$11,252


$11,451


$(236)


$4,992


$(1,500)


$7,468




















Dilutive Securities Excluded From GAAP Measure Due to Net Loss



Diluted shares outstanding


44,803


953


45,756
















Diluted earnings (loss) per share


$ (0.41)












$ 0.16
















* Represents pre-tax amounts


Non-GAAP Earnings Per Share
– Net Income


Three Months Ended
July 3, 2021



GAAP

Measure


Stock

Compensation
Expense*


Intangible
Asset
Amortization*


Disposition
Related
Items*


Investment
Fair Value
Adjustments*


Interest
Expense

Adjustments*


Income

Tax

Adjustments


Non-
GAAP
Measure

Net income


$19,932


$13,644


$11,562


$3,195


$(236)


$4,992


$(4,818)


$48,271


















Diluted shares outstanding


45,756














45,756


















Diluted earnings per share


$ 0.44














$ 1.05


















* Represents pre-tax amounts

















Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)


Business Outlook


Three Months Ending

October 2, 2021



GAAP

Measure


Non-GAAP

Adjustments*


Non-GAAP

Measure

Gross margin


57% - 57.5%


0% - 0.5%


57% - 58%








Operating expenses


$116


$23


$93








Effective tax rate


(11)%


25%


14%








Diluted earnings (loss) per share - low


$(0.56)


$0.66


$0.10








Diluted earnings (loss) per share - high


$(0.46)


$0.66


$0.20


* Non-GAAP adjustments include the following estimates: stock compensation expense of $12.8 million, intangible asset amortization of $11.1 million, interest expense adjustments of $5.1 million and the associated tax impact from the aforementioned items.

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)



July 3,
2021


January 2,
2021

Assets




Current assets:




Cash and cash equivalents

$ 303,084


$ 202,720

Short-term investments

314,183


521,963

Accounts receivable, net

99,546


95,169

Inventories

52,269


47,861

Prepaid expenses and other current assets

94,378


87,103

Current assets held for sale

297,543


21,005

Total current assets

1,161,003


975,821

Property and equipment, net

139,362


135,803

Goodwill

376,389


376,389

Other intangible assets, net

140,581


163,483

Other assets, net

78,667


76,675

Non-current assets held for sale

--


265,316

Total assets

$1,896,002


$1,993,487





Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$ 70,820


$ 54,949

Current portion of convertible debt, net

--


134,480

Deferred revenue and returns liability

12,811


12,986

Other current liabilities

70,552


81,650

Current liabilities held for sale

699


433

Total current liabilities

154,882


284,498

Convertible debt, net

439,654


428,945

Other non-current liabilities

73,712


79,752

Non-current liabilities held for sale

--


451

Total liabilities

668,248


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;

44,764 and 43,925 shares issued and outstanding at

July 3, 2021 and January 2, 2021, respectively

4


4

Additional paid-in capital

200,716


204,359

Retained earnings

1,027,105


993,664

Accumulated other comprehensive income (loss)

(71)


1,814

Total stockholders' equity

1,227,754


1,199,841

Total liabilities and stockholders' equity

$1,896,002


$1,993,487

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Six Months Ended


July 3,
2021


July 4,
2020


Operating Activities





Net income

$ 33,441


$ 421


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

continuing operations:





Income from discontinued operations, net of income taxes

(77,088)


(67,857)


Depreciation of property and equipment

8,184


7,711


Amortization of intangible assets and other assets

22,902


20,486


Amortization of debt discount and debt issuance costs

11,822


8,359


Loss on extinguishment of convertible debt

3,370


3,685


Stock-based compensation expense

22,620


24,461


Deferred income taxes

(5,644)


1,177


Changes in operating assets and liabilities:





Accounts receivable

(4,377)


7,070


Inventories

(4,447)


8,021


Prepaid expenses and other assets

(5,489)


22,976


Accounts payable

14,711


(769)


Other current liabilities and income taxes

(10,626)


(15,480)


Deferred revenue and returns liability

(175)


6,678


Other non-current liabilities

(3,464)


1,146


Net cash provided by operating activities of continuing operations

5,740


28,085







Investing Activities





Purchases of marketable securities

(80,426)


(199,347)


Sales and maturities of marketable securities

286,649


255,112


Purchases of property and equipment

(10,779)


(9,051)


Purchases of other assets

(578)


(820)


Acquisition of business, net of cash acquired

--


(316,809)


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

194,866


(270,915)







Financing Activities





Proceeds from issuance of debt

--


845,000


Payments on debt

(140,572)


(597,446)


Repurchases of common stock

(18,982)


(16,287)


Payment of taxes withheld for vested stock awards

(19,732)


(16,756)


Proceeds from the issuance of common stock

8,388


7,757


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

(170,898)


222,268







Discontinued Operations





Operating activities

72,674


72,418


Investing activities

(2,018)


(1,343)


Net cash provided by (used in) discontinued operations

70,656


71,075







Increase in cash and cash equivalents

100,364


50,513


Cash and cash equivalents at beginning of period

202,720


227,146


Cash and cash equivalents at end of period

$303,084


$277,659


Cision
Cision

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SOURCE Silicon Labs