Silicon Labs Reports Fourth Quarter 2023 Results
- Revenue of $87 million for the fourth quarter of 2023
- Expectation of sequential revenue growth in the first quarter of 2024
- Announcement of a $100 million repurchase plan for common stock
- Business outlook estimates for the first quarter of 2024
- Material weakness in internal control related to inventory controls as of December 30, 2023
- GAAP operating loss of $73 million for the fourth quarter
Insights
Examining the reported financial results of Silicon Labs, a key takeaway is the company's ability to surpass expectations despite a volatile market environment. The reported revenue of $87 million, with a significant contribution from the Industrial & Commercial segment, indicates a resilient demand for IoT solutions. However, the GAAP operating loss of $73 million and a diluted loss per share of $(2.19) raise concerns about the company's current profitability. This performance could be indicative of broader market conditions affecting the IoT sector, or company-specific operational challenges.
From an investment standpoint, the non-GAAP figures provide a slightly less concerning picture, with reduced operating loss and loss per share figures. This suggests that some of the losses may be attributed to non-recurring expenses or accounting adjustments. Nevertheless, the material weakness in internal control over inventory reported by the company could undermine investor confidence until fully remedied. Investors will likely monitor the company's progress on this front closely.
The business outlook for the first quarter, projecting revenue between $100 to $110 million, signals optimism for growth. This forecast, coupled with the $100 million stock repurchase plan, may reflect the company's confidence in its future performance and commitment to delivering shareholder value.
Within the IoT industry, Silicon Labs' strategic moves, such as the selection as an honoree for its SiWx917 SoC at the CES 2024 Innovation Awards, demonstrate the company's innovation capabilities and position in the market. The introduction of the Wi-Fi 6 combo chip, which is Matter-ready, emphasizes the company's focus on staying ahead in the competitive landscape by aligning with emerging industry standards like Matter protocol.
The collaboration with Arduino to integrate the Matter protocol suggests a strategic approach to expand Silicon Labs' ecosystem and user base. By tapping into Arduino's substantial user community, Silicon Labs not only diversifies its revenue sources but also strengthens its position as a leader in the IoT development space.
The anticipated sequential revenue growth in the first quarter is a positive sign for stakeholders. It indicates potential recovery from inventory destocking and an improvement in bookings trends. This outlook, if realized, could signal a shift in momentum for the company's financial performance in the upcoming quarters.
The IoT sector is rapidly evolving and Silicon Labs' recent results and strategic initiatives reflect the company's agility in navigating this dynamic environment. The recognition of the SiWx917 SoC and its low power consumption feature underscores the importance of energy efficiency in IoT devices, a critical factor for widespread adoption, especially in battery-powered and mobile applications.
The integration of the Matter protocol, which aims to provide a universal standard for smart home devices, into the company's products positions Silicon Labs at the forefront of IoT connectivity. This move is likely to enhance the company's competitive edge as the industry gravitates towards standardized and interoperable IoT solutions.
However, the reported material weakness in internal control over inventory highlights the need for robust operational management in tech companies. It is imperative for Silicon Labs to address this issue promptly to maintain credibility and operational efficiency. The impact of this weakness on the company's financials and reputation could be significant if not addressed effectively.
IoT leader reports results above expectations and anticipates growth in the first quarter
"Though the market environment remains volatile, with inventory corrections continuing across our end markets, we delivered top and bottom-line results ahead of expectations," said Matt Johnson, President and Chief Executive Officer at Silicon Labs. "We expect to return to sequential revenue growth, beginning in the first quarter, as our customers destock their inventories, design wins continue ramping to production, and bookings trends improve."
Fourth Quarter Financial Highlights
- Revenue was
$87 million - Industrial & Commercial revenue for the quarter was
$60 million - Home & Life revenue for the quarter was
$27 million
Results on a GAAP basis:
- GAAP gross margin was
50.6% - GAAP R&D expenses were
$83 million - GAAP SG&A expenses were
$34 million - GAAP operating loss was
$73 million - GAAP diluted loss per share was
$(2.19)
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
50.9% - Non-GAAP R&D expenses were
$63 million - Non-GAAP SG&A expenses were
$28 million - Non-GAAP operating loss was
$47 million - Non-GAAP diluted loss per share was
$(1.19)
As the company previously disclosed, it has determined that a material weakness in internal control related to the operation and documentation of certain inventory controls existed as of December 30, 2023. As of the date of this release, the company has not identified any misstatements in its previously issued financial statements, and it expects to file its Form 10-K in a timely manner by the end of February 2024.
Business Highlights
- Selected as an honoree in the Embedded Technologies category at the CES 2024 Innovation Awards for its SiWx917 SoC. The x917 is the first Wi-Fi 6 combo chip in the Silicon Labs portfolio and is a Matter-ready, fully integrated single-chip solution with industry-leading low power consumption, ideal for secure cloud connectivity.
- Announced the first phase of its collaboration with Arduino to integrate the Matter protocol into Arduino's integrated development environment, bringing simplicity and ease of use to wireless development for Silicon Labs developers as well as Arduino's 40 million users. Silicon Labs continues to lead in contributing to Matter development and mass market adoption.
- On January 25th, 2024, the company's board of directors authorized a
$100 million
Business Outlook
The company expects first-quarter revenue to be between
On a GAAP basis:
- GAAP gross margin to be
52% - GAAP operating expenses of approximately
$118 million - GAAP diluted loss per share between
$(1.89) $(2.05)
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
52% - Non-GAAP operating expenses of approximately
$96 million - Non-GAAP diluted loss per share between
$(0.92) $(1.04)
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 March 8, 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
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 | Year Ended | ||||||
December 30, | December 31, | December 30, | December 31, | ||||
Revenues | $ 86,845 | $ 257,325 | $ 782,258 | ||||
Cost of revenues | 42,919 | 100,028 | 321,672 | 381,549 | |||
Gross profit | 43,926 | 157,297 | 460,586 | 642,557 | |||
Operating expenses: | |||||||
Research and development | 83,404 | 86,649 | 337,744 | 332,326 | |||
Selling, general and administrative | 33,633 | 46,573 | 146,996 | 190,971 | |||
Operating expenses | 117,037 | 133,222 | 484,740 | 523,297 | |||
Operating income (loss) | (73,111) | 24,075 | (24,154) | 119,260 | |||
Other income (expense): | |||||||
Interest income and other, net | 3,610 | 4,299 | 19,165 | 13,915 | |||
Interest expense | (942) | (1,849) | (5,554) | (6,723) | |||
Income (loss) before income taxes | (70,443) | 26,525 | (10,543) | 126,452 | |||
Provision (benefit) for income taxes | (15,536) | 1,579 | 7,943 | 38,450 | |||
Equity-method earnings (loss) | (14,880) | 415 | (16,030) | 3,400 | |||
Net income (loss) | $ (69,787) | $ 25,361 | $ (34,516) | $ 91,402 | |||
Earnings (loss) per share: | |||||||
Basic | $ (2.19) | $ 0.78 | $ (1.09) | $ 2.61 | |||
Diluted | $ (2.19) | $ 0.76 | $ (1.09) | $ 2.54 | |||
Weighted-average common shares outstanding: | |||||||
Basic | 31,848 | 32,542 | 31,804 | 35,086 | |||
Diluted | 31,848 | 33,265 | 31,804 | 36,042 | |||
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 December 30, 2023 | ||||||||||||||
Non-GAAP Income Statement Items | GAAP Measure | GAAP Percent of | Stock | Intangible Asset | Termination | Non- Measure | Non-GAAP Percent of | |||||||
Revenues | ||||||||||||||
Gross profit | 43,926 | 50.6 % | $ -- | 50.9 % | ||||||||||
Research and development | 83,404 | 96.0 % | 8,588 | 6,193 | 5,993 | 62,630 | 72.1 % | |||||||
Selling, general and administrative | 33,633 | 38.7 % | 2,321 | 19 | 2,970 | 28,323 | 32.6 % | |||||||
Operating income (loss) | (73,111) | (84.2) % | 11,041 | 6,212 | 9,115 | (46,743) | (53.8) % | |||||||
Three Months Ended December 30, 2023 | ||||||||||||||
Non-GAAP Earnings (Loss) Per Share | GAAP Measure | Stock Compensation | Intangible | Termination | Equity-Method Investment | Income Tax Adjustments | Non- GAAP Measure | |||||||
Net income (loss) | ||||||||||||||
Diluted shares outstanding | 31,848 | 31,848 | ||||||||||||
Diluted earnings (loss) per share | ||||||||||||||
* Represents pre-tax amounts |
Unaudited Forward-Looking Statements Regarding Business Outlook | ||||||
(In millions, except per share data) | ||||||
Business Outlook | Three Months Ending March 30, 2024 | |||||
GAAP Measure | Non-GAAP Adjustments** | Non-GAAP Measure | ||||
Gross margin | 52 % | 0 % | 52 % | |||
Operating expenses | ||||||
Diluted loss per share - low | ||||||
Diluted loss per share - high | ||||||
** Non-GAAP adjustments include the following estimates: stock compensation expense of |
Silicon Laboratories Inc. | |||
Condensed Consolidated Balance Sheets | |||
(In thousands, except per share data) | |||
(Unaudited) | |||
December 30, | December 31, | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 227,504 | $ 499,915 | |
Short-term investments | 211,720 | 692,024 | |
Accounts receivable, net | 29,295 | 71,437 | |
Inventories | 194,295 | 100,417 | |
Prepaid expenses and other current assets | 75,117 | 97,570 | |
Total current assets | 737,931 | 1,461,363 | |
Property and equipment, net | 145,890 | 152,016 | |
Goodwill | 376,389 | 376,389 | |
Other intangible assets, net | 59,533 | 84,907 | |
Other assets, net | 123,313 | 94,753 | |
Total assets | |||
Liabilities and Stockholders' Equity | |||
Current liabilities: | |||
Accounts payable | $ 57,498 | $ 89,860 | |
Revolving line of credit | 45,000 | -- | |
Deferred revenue and returns liability | 2,117 | 6,780 | |
Other current liabilities | 58,955 | 89,136 | |
Total current liabilities | 163,570 | 185,776 | |
Convertible debt, net | -- | 529,573 | |
Other non-current liabilities | 70,804 | 49,071 | |
Total liabilities | 234,374 | 764,420 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock – shares issued | -- | -- | |
Common stock – 31,897 and 31,994 shares issued and outstanding at December 30, 2023 and December 31, 2022, respectively | 3 | 3 | |
Additional paid-in capital | 16,973 | -- | |
Retained earnings | 1,192,731 | 1,415,693 | |
Accumulated other comprehensive loss | (1,025) | (10,688) | |
Total stockholders' equity | 1,208,682 | 1,405,008 | |
Total liabilities and stockholders' equity | |||
Silicon Laboratories Inc. | |||
Condensed Consolidated Statements of Cash Flows | |||
(In thousands) | |||
(Unaudited) | |||
Year Ended | |||
December 30, | December 31, | ||
Operating Activities | |||
Net income (loss) | $ (34,516) | $ 91,402 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities of continuing operations: | |||
Depreciation of property and equipment | 25,707 | 22,524 | |
Amortization of other intangible assets | 25,374 | 34,071 | |
Amortization of debt discount and debt issuance costs | 960 | 2,003 | |
Loss on extinguishment of convertible debt | -- | 3 | |
Stock-based compensation expense | 48,208 | 60,510 | |
Equity-method (earnings) loss | 16,030 | (3,400) | |
Deferred income taxes | (11,815) | (18,240) | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 42,142 | 26,876 | |
Inventories | (93,398) | (51,044) | |
Prepaid expenses and other assets | (10,733) | (31,240) | |
Accounts payable | (25,644) | 36,797 | |
Other current liabilities and income taxes | (37,793) | (12,738) | |
Deferred revenue and returns liability | (4,663) | (7,069) | |
Other non-current liabilities | 29,793 | (9,181) | |
Net cash provided by (used in) operating activities of continuing operations | (30,348) | 141,274 | |
Investing Activities | |||
Purchases of marketable securities | (103,485) | (607,237) | |
Sales of marketable securities | 395,565 | 223,354 | |
Maturities of marketable securities | 200,530 | 650,946 | |
Purchases of property and equipment | (22,282) | (26,525) | |
Purchases of other assets | (520) | -- | |
Net cash provided by investing activities of continuing operations | 469,808 | 240,538 | |
Financing Activities | |||
Proceeds from issuance of debt | 80,000 | -- | |
Payments on debt | (571,157) | (21) | |
Repurchases of common stock | (217,137) | (883,424) | |
Payment of taxes withheld for vested stock awards | (18,189) | (15,387) | |
Proceeds from the issuance of common stock | 14,612 | 11,779 | |
Net cash used in financing activities of continuing operations | (711,871) | (887,053) | |
Discontinued Operations | |||
Operating activities | -- | (69,467) | |
Net cash used in discontinued operations | -- | (69,467) | |
Decrease in cash and cash equivalents | (272,411) | (574,708) | |
Cash and cash equivalents at beginning of period | 499,915 | 1,074,623 | |
Cash and cash equivalents at end of period | $ 227,504 | $ 499,915 | |
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SOURCE Silicon Labs
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