Silicon Labs Announces Fourth Quarter and Full Year 2020 Results

Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its fourth quarter ended January 2, 2021. Revenue exceeded the top end of the guidance range at $242.9 million, up from $221.3 million in the third quarter. Revenue for the full year was $886.7 million, up from $837.6 million in 2019. Fourth quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.20 and $0.84, respectively. Full year GAAP and non-GAAP diluted EPS were $0.28 and $3.01, respectively.

“Fourth quarter revenue set a record at $242.9 million resulting in 10% sequential growth and full year revenue grew 6% over 2019,” said Tyson Tuttle, CEO of Silicon Labs. “Our IoT products led the way with a second consecutive quarter of record revenue. We exited the year with momentum, and we are looking forward to an even stronger 2021.”

Fourth Quarter Financial Highlights

• IoT revenue increased to $147.4 million, up 11% sequentially and 15% year-on-year.
• Infrastructure and Automotive revenue increased to $95.5 million, up 8% sequentially and 4% year-on-year.

On a GAAP basis:

• GAAP gross margin was 58.4%.
• GAAP R&D expenses were $74 million.
• GAAP SG&A expenses were $50 million.
• GAAP operating income as a percentage of revenue was 7.3%.
• GAAP diluted earnings per share was $0.20.

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 below:

• Non-GAAP gross margin was 58.6%.
• Non-GAAP R&D expenses were $58 million.
• Non-GAAP SG&A expenses were $39 million.
• Non-GAAP operating income as a percentage of revenue was 18.7%.
• Non-GAAP diluted earnings per share were $0.84.

Product Results

• Announced Z-Wave Long Range (LR) support for existing Z-Wave 700 Series products. Z-Wave LR is a new specification by the Z-Wave Alliance, offering point-to-point wireless connectivity up to several miles away with scalability to support thousands of nodes from a single smart home network. Z-Wave LR eliminates the need for mesh repeaters, saving time and money for developers and end customers.
• Announced a portfolio expansion of pre-certified wireless modules specifically designed to address modern needs of IoT application development. The portfolio consists of the only modules in the industry with full stack support for multiprotocol solutions to enable commercial and consumer IoT applications, with flexible package options and highly integrated device security. Silicon Labs’ new modules include xGM210PB, BGM220, MGM220, and BGX220 Xpress. The xGM210PB includes Secure Vault technology and PSA level 2 certification.

Business Highlights

• Announced a collaboration with Orvibo, a leading provider of artificial intelligence-driven smart home products, systems, and solutions, to develop a new line of smart home devices using Silicon Labs’ Wireless Gecko Series 2 SoCs. Orvibo’s latest MixPad smart panels leverage Silicon Labs’ SoCs to reliably connect smart home control panels and switches to many applications including automated lighting, curtain, HVAC systems, and wireless home security devices.
• Extended ClockBuilder Pro to support configuration and control of our IEEE 1588 modules, helping customers accelerate time to market and simplify design. Our IEEE 1588 modules are used in communications, smart grid, financial trading systems and industrial applications that need a consistent, reliable time reference between devices operating over Ethernet networks.
• Announced a new high reliability isolation partnership with Teledyne Technologies, a leading provider of high-performance, high-reliability semiconductors for the aerospace and defense markets. Under the new agreement, Teledyne will market custom high reliability solutions based on Silicon Labs’ Si827x isolated gate driver family. These solutions are optimized for space, aerospace, military, energy and other markets requiring advanced technology and high reliability.
• Awarded Gold in 2020 LEAP Awards for Secure Vault. Silicon Labs products with Secure Vault were the first SoC and module with a radio to earn PSA Level 2 security certification.

Business Outlook

The company expects first quarter revenue to be in the range of $237 to $247 million, with both IoT and Infrastructure & Automotive approximately flat to fourth quarter, and estimates the following:

On a GAAP basis:

• GAAP gross margin at approximately 58.1%.
• GAAP operating expenses at approximately $126 million.
• GAAP effective tax rate of 0.0%.
• GAAP diluted earnings per share between $0.05 and $0.15.

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

• Non-GAAP gross margin at approximately 58.2%.
• Non-GAAP operating expenses at approximately $100 million.
• Non-GAAP effective tax rate at 13.0%.
• Non-GAAP diluted earnings per share between $0.70 and $0.80.

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 (877) 344-7529 (US) or (412) 317-0088 (International) and entering access code 10145993. The replay will be available through March 3, 2021.