Silicon Labs Announces Third Quarter 2018 Results

- Record Revenue in IoT and Infrastructure -

AUSTIN, Texas, Oct. 24, 2018 — (PRNewswire) — Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its third quarter ended September 29, 2018. Revenue in the third quarter established a new, all-time record, exceeding the high end of guidance at $230.2 million, up from $217.1 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) established eight-year record highs at $0.63 and $1.01, respectively.

"We are delighted to report outstanding third quarter 2018 financial performance, including 16 percent year-on-year revenue growth," said Tyson Tuttle, CEO of Silicon Labs. "We saw sequential growth in all core business categories in Q3 and delivered record performance in IoT and Infrastructure. We have delivered target operating model performance in top line revenue growth, non-GAAP gross margin, non-GAAP opex and non-GAAP operating margin for the past five quarters."

Third Quarter Financial Highlights

  • IoT revenue increased to $125 million, up 8% sequentially and 25% year-on-year.
  • Infrastructure revenue increased to $53 million, up 2% sequentially and 35% year-on-year.
  • Broadcast revenue increased to $36 million, up 6% sequentially and down 16% year-on-year.
  • Access revenue increased to $16 million, up 5% sequentially and down 4% year-on-year.

On a GAAP basis:

  • GAAP gross margin was 58.9%
  • GAAP R&D expenses were $61 million
  • GAAP SG&A expenses were $49 million
  • GAAP operating income as a percentage of revenue was 10.9%
  • GAAP diluted earnings per share were $0.63

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin was 60.8%
  • Non-GAAP R&D expenses were $47 million
  • Non-GAAP SG&A expenses were $40 million
  • Non-GAAP operating income as a percentage of revenue was 23.0%
  • Non-GAAP diluted earnings per share were $1.01

Product Highlights

  • Released Wireless Xpress modules, enabling developers to move from product concept to prototyping in a matter of hours instead of weeks, and without firmware development.
  • Collaborated with Q-Free to create the ParQSense outdoor parking sensor solution using Silicon Labs' Wonder Gecko wireless MCU, making it faster and easier for drivers in urban areas to locate open parking spots.
  • Introduced new any-frequency clocks with an integrated quartz crystal, simplifying board design and guaranteeing reliable start-up and operation over the lifetime of end products.

Business Highlights

  • Reached a milestone with one billion cumulative units of TV tuners shipped.

Business Outlook

The company expects revenue in the fourth quarter to be in the range of $221 to $227 million, with IoT up and declines in Infrastructure, Broadcast and Access, and estimates the following:

On a GAAP basis:

  • GAAP gross margin at approximately 60.0%
  • GAAP operating expenses at approximately $111.0 million
  • GAAP effective tax rate at approximately 10.0%
  • GAAP diluted earnings per share between $0.39 and $0.45

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

  • Non-GAAP gross margin between 60.0% and 60.5%
  • Non-GAAP operating expenses at approximately $88.0 million
  • Non-GAAP effective tax rate at 13.0%
  • Non-GAAP diluted earnings per share between $0.91 and $0.97

Webcast and Conference Call        

A conference call discussing the quarterly results will follow this press release at 7:30 a.m. Central time. An audio webcast will be available on Silicon Labs' website ( www.silabs.com) under Investor Relations. A replay will be available after the call at the same website listed above or by calling 1 (855) 859-2056 or (404) 537-3406 (international) and entering conference 88340293. The replay will be available through November 20, 2018.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for a smarter, more connected world. Our award-winning technologies are shaping the future of the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. Our world-class engineering team creates products focused on performance, energy savings, connectivity and simplicity. 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: 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; dependence on a limited number of products and customers; intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing Silicon Labs' distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks associated with international activities (including trade barriers); 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, 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; conflict mineral risks 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.

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