IoT Leader Reports Accelerating Adoption Across Entire Wireless Portfolio
AUSTIN, Texas, Oct. 27, 2021 — (PRNewswire) — Silicon Labs (NASDAQ: SLAB), a leader in secure, intelligent wireless technology for a more connected world, reported strong financial results for the third quarter, which ended October 2, 2021. Revenue from continuing operations exceeded the top of the guidance range at $185 million, up 9% sequentially and 39% year-on-year.
"I'm really proud of what our team has accomplished," said Silicon Labs President Matt Johnson. "We brought the industry together, delivered significant innovation and drove record revenue, all while navigating a uniquely challenging environment."
"IoT solutions are being adopted at a rapid pace in large, diverse, and fast-growing home and industrial end markets," said Silicon Labs CEO Tyson Tuttle. "Ten years ago, Silicon Labs set its sights on being a leader in IoT. I am confident in Matt's ability to carry that vision forward, building on a strong foundation."
During the third quarter, Silicon Labs completed the divestiture of its Infrastructure and Automotive (I&A) business to Skyworks Solutions, Inc. (NASDAQ: SWKS) for $2.75 billion in an all-cash transaction. Accordingly, all information included below is to be considered from continuing operations unless explicitly noted as "discontinued operations."
Third Quarter Financial Highlights
- Revenue increased to $185 million, up 9% sequentially and 39% year-on-year
Results on a GAAP basis:
- GAAP gross margin was 59.2%
- GAAP R&D expenses were $73 million
- GAAP SG&A expenses were $46 million
- GAAP operating loss as a percentage of revenue was (5)%
- GAAP diluted loss per share was $(0.45)
Results 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 59.4%
- Non-GAAP R&D expenses were $57 million
- Non-GAAP SG&A expenses were $36 million
- Non-GAAP operating income as a percentage of revenue was 9%
- Non-GAAP diluted earnings per share were $0.34
Business Highlights
- After completing a smooth transition of the infrastructure and automotive business to Skyworks Solutions, Silicon Labs returned capital to shareholders through a "modified Dutch auction" tender offer. The tender offer was successfully completed on August 30th.
- Concurrent with the sale of the I&A business, Silicon Labs initiated its CEO succession plan as Tyson Tuttle announced his intention to retire at the end of this year. Company President Matt Johnson will succeed Tyson as CEO on January 2nd, 2022.
- Our annual WorksWith developers conference drew nearly eight thousand registrants, breaking last year's record. Featured speakers included representatives from Amazon, Google, IKEA, Landis + Gyr, and Schneider Electric in virtual keynotes and hands-on technology sessions.
- Announced new sub-GHz SoCs, delivering the world's first sub-GHz wireless solutions that combine long-range RF and energy efficiency with certified Arm PSA Level 3 security to meet the global demand for high-performance, battery-powered IoT products.
- Announced the new Unify Software Development Kit (SDK), which provides the common building blocks for connectivity across IoT ecosystems that allow cloud and platform developers to design their devices and gateways with the confidence of "design once, support all" capability. The Unify SDK offers a bridge to Matter, an industry-unifying connectivity standard anticipated in Spring 2022.
- Announced new Security Services, supporting IoT companies with the implementation of Zero Trust security architectures to meet emerging cybersecurity standards and combat the rising tide of threats. The new security offerings complement Silicon Labs' industry-leading Secure Vault™ technologies with a first-of-its-kind Custom Part Manufacturing Service (CPMS) for wireless SoCs and modules.
Business Outlook
The company expects fourth quarter revenue to be in the range of $195 to $205 million. The company also estimates the following results:
On a GAAP basis:
- GAAP gross margin of approximately 59.0%
- GAAP operating expenses of approximately $126 million
- GAAP effective tax rate of approximately (14)%
- GAAP diluted loss per share to be in the range of a $(0.41) to $(0.31)
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 of approximately 59.5%
- Non-GAAP operating expenses of approximately $95 million
- Non-GAAP effective tax rate of approximately 8%
- Non-GAAP diluted earnings per share between $0.50 and $0.60
Share Repurchase Program
As of October 2, 2021, the company had repurchased $54 million under its $150 million repurchase program previously announced on May 19, 2021. In addition, on October 21, 2021 , the Board of Directors authorized the repurchase of up to an incremental $400 million of the company's common stock. In connection with this authorization, the company intends to enter into an accelerated share repurchase (ASR) agreement with an investment bank under which it will repurchase $400 million of its common stock on terms to be negotiated, subject to customary adjustments. The final settlement of the ASR is expected to be completed in the first quarter of 2022.
