SLAB - Earnings call transcript Q4 2018 | Silicon Laboratories Inc.

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Operator

Good morning. My name is Anita, and I will be your conference operator today. At this time, I would like to welcome everyone to Silicon Labs' Fourth Quarter Fiscal 2018 Earnings Conference Call. [Operator Instructions] Please note this event is been recorded. I would now like to turn the conference over to Jalene Hoover, Director of Investor Relations and International Finance. ahead. go please Jalene,

Jalene Hoover

and John everyone. are Hollister, call. Anita, Executive on Tuttle, Officer, and Chief good you, Tyson morning, Chief today's Thank Financial Officer,

will take questions. our and After We prepared financial [Audio our will activities Gap]. review we comments, our discuss business performance

Relations release call Investor is will webcast a of earnings also in press tables be available at replay four the being and Our our weeks. available financial website accompanying are the section This for www.silabs.com. and

these statements of subject to these contained call SEC results forward-looking risks of Our statements. cause and update information base to comments include actual future. no identify today in you conference differ that encourage We review filings from materially to forward-looking available any could in uncertainties. to will obligation this our assume and to the forward-looking those statements on statements important us the We as which risk date factors

today, A Investor to company's website. the certain release now call of in would to the also we earnings refer our our Silicon -- over our turn results section included like I non-GAAP Silicon the in John of call during Labs' to Financial and Chief Officer, reconciliation to Additionally, is will information. Relations press financial Labs' Hollister. non-GAAP GAAP

John Hollister

ended as revenue market Infrastructure. Revenue and in and down guidance, QX our approximately Thanks, We less the $XXX a primarily low exited quarter deceleration weakness Jalene. of end than IoT with at X% fourth for million, the impacting $X million we saw broad sequentially.

up and sequentially. QX at particularly sequentially expected, million, X% more QX than we up million declining from we $XX the $XXX at by automotive Revenue Broadcast was expected product sequentially. down Fourth Z-Wave. Timing the TVs year-on-year. XX% year, the or full ending million for year-on-year. our $XX was with ending global and was $XXX weakening flat-panel sales million, with to declined due than revenue wireless share revenue sequentially Access at quarter to infrastructure industry-leading tuners. In a we addition from $XX sequentially XXXX, year-on-year. industrial while slightly. sequentially and quarter at flat TV XX% increased million the from ended our grew XX% MCU of slightly about revenue QX ending $XX at was ending on X% more X% $XX and revenue than macro derived roughly better in sales million year-on-year. consumer our down environment. IoT million, million down up down was $XXX For quarter was Fourth down, QX both product we revenue in and products was organic X% down revenue market X% revenue portfolio QX down declined quarter China. weakness, Isolation XX%

Looking broadcast. for broad The the declines strength fourth on Industrial, end in revenue up quarter Communications, segments. the was in at quarter sequential Automotive end market by market, consumer we and saw

The APAC Access. saw year. in strength products fourth communications offset was performance Europe for sequential Looking strength isolation automotive markets by and the revenue quarter by the end Wireless, grew up on XX%. Americas and the saw which quarter and wireless. declines industrial MCUs in year for the Isolation, we at in in slightly led was in Automotive, slightly up the declines Access. greatest greatest broad-based down some with growth market, full end over we also the in the were weakness in XXXX, Geographically,

XX% revenue. we at in year by of QX Distribution Looking led APAC. the followed by geographies, full saw Americas all was growth XXXX, and revenue total

seasonal at ended accounted customers XX.X% slightly X%. on for customer our Non-GAAP we mix. gross R&D new and million, million, more than QX. represented Non-GAAP our with largest XX% quarter expense SG&A quarter Non-GAAP quarter margin was non-GAAP expected on at slightly for OpEx revenues up XX line $XX flat $XX the ended ended expectations. $XX of operating products the at and margin end product XXXX, the ended costs XX.X%. to at fringe For for million, in for and better QX non-GAAP no than

non-GAAP For the full over improved XXXX, points year, XX.X%. operating XX margin at basis ending

quarter, of EPS $X.XX from Our lower the basis, XXXX. a quarter XX.X%, or non-GAAP were million to versus on million, $X.XX, the $XXX both at due was low with earnings our at expectations a QX tax GAAP Non-GAAP expenses for fourth $XX GAAP improved a diluted $X.XX. the guidance end margins year SG&A expenses in $XX per and ending lower offshore tax driven with million with at annual compensation with to our Non-GAAP rate fourth million at X.X% the was line $XX tax for primarily U.S. gross million. Full in R&D earnings had $X.XX. ended $XX expense operating full GAAP assets benefit XXXX GAAP million ended our On XX.X range, effective amortization of at intangible We the by year at effective and XX% GAAP up taxes revenue. and expectations. were the earnings in ended at line benefit R&D earnings Stock primarily quarter expenses $X share quarter credit. for

$XXX to in sales $XX at days sheet. with ended million or and the million quarter year receivable the We now Turning ending outstanding. for down XX were investments. balance the cash Accounts

between cash the corporate scalable, XXXX was year in total year-to-date share with and inventory bringing QX, fabulous objectives. Our in We operations repurchases for XXXX, which Heading managed $XX Operating we our leveraged declined to we effectively million. executed light or the additional be to million I of $XXX manufacturing to for $XX line teams broadening and first turns, flow model, our repurchase X.X are first million uncertainty quarter range our share into quarter. of to our $XXX and will million. $XXX the $XXX approximately macro have million. guidance remaining. million now cover expect revenue guidance authorization In volatility,

non-GAAP slowing expect and expect margin $XX be our QX in revenue, expenses to non-GAAP response to operating the approximately growth XX%. decline In anticipated OpEx million. gross we to be first quarter We are

non-GAAP to XX% range tax effective and be margin quarter earnings On share in non-GAAP the $X.XX. $X.XX gross we XX%. per is of first we expect be the for expected a rate be Our expect to to basis, to GAAP

of We million. $X.XX. $X.XX share call operating XX% GAAP $XXX the per I effective a to expect and will loss tax expect now GAAP be QX, between Tyson. expenses approximately In GAAP with we turn to over rate

Tyson Tuttle

Thank you, John.

expertise. completed many XXXX, our revenue year and strong of successful proud the in was up for dimensions. innovative a XX% in Silicon of Z-Wave our $XX foundational the culture sales, $XXX acquisition applications, million. with team our attracts We more record to who which success. We to are XXXX, In achieved are leadership and talent billion customer performance lifetime by grew outstanding than We critical pipeline software of growth, our Labs Silicon in our Labs' support addition revenue. strengthened opportunity

revenue with the design of weaker is environment our strongly a We and increased the saw world, growth our most an are down not with an with which at overall and strong which cycle. outlook. We've broadest In the we decelerating economic broad-based macro providing our China, sharply attribute share is down acceleration end of and accumulation also were due record We to difficult lines Economic among primarily strategy. expected approximately in first of to of inventory QX, geographies markets which semiconductor the quarter customers example, and we causing product our a industry certain year-on-year, production facing our XX% GDP a overall performance environment results quarter in seen loss. conditions. MCU and are key correlated and slowdown to in and is for tailwind declines Fourth the factory to activity our in sequential in moving than bookings customers. around isolation outlook wins, achieved particular, these also products, other shortfalls, validation for conditions slowdown over to major future tariffs. concerns combined

in in we drive expenditures that lower managing XXXX, headcount initially entered growth level we the monitoring OpEx macro is are we than to closely contemplated. environment discretionary As an

market. growing a reliability, digital timing Labs' isolation grew design range targeted than approximately with traditional timing as cloud, and a optical best-in-class safety revenue voltages. We've markets. telecom supplies, updates. Traditionally more products product leading protection requiring Infrastructure to to Silicon across revenue saw networking and XX% applications, than XXXX, to technology product and more now grew lifetime products Isolation isolation and XX%. high broad of provider a annually up Turning replace period. power including solar, delivered XX% we revenue our by the performance, wins same core phenomenal have of automotive. ourselves higher XX% designs continue digital the XXXX vehicle enabling established products for integration the over industrial strengths electric In from and optocouplers

pipeline market timing SMETSX growth. expanded in than we high in billion, in win funnel and products. markets, and $XXX $X we and into and smart transition win Despite in factors, grew wireless infrastructure to overall datacenter XXXX, our market sensor IoT XX% customers, saw which in more now growth XXXX Wireless XX% and to million XX% with and We timing remain to of million, lighting confident approximately approximately annual in XXXX represents of During nearly SMETSX revenue. position. XX% our XX% now late combined our diversified industrial, design modest UK products and IoT volume design from in revenue $XX XXXX, revenue Z-Wave year including more ramps year-on-year IoT full total revenue. XX% lifetime saw make than product nearly the MCU metering our acquisition we the delivered The products our QX. opportunity macro from growth growth in up of the IoT

strengthen advancing portfolio, growing capabilities and We security our ecosystem continue and driving differentiation, while partnerships. to

and home, optimal target for end our portfolio we wireless connectivity we roadmap Gecko segments ecosystem. market on smart of consumer the low QX, Z-Wave and In protocols traction Wireless delivering product commercial, to with enhancing offering as gaining integration our power is XXX range and Our broad vision platform industrial, Z-Wave next-generation combinations target the metering, on in a launched platform, our significant lighting. and nodes

this Silicon in market. Silicon to this market balloons devices announced install XX% portfolio. from power advanced with home leading range in by of growth longer-range and smart expanding including edge beyond Labs' technologies and Wireless battery devices home new consolidate RF such X.X and more and IDC approximate adoption Bluetooth the for cities. trend deploy. the week Labs sensitive and performance XXX much used to and the home of capabilities billion compound two grow new improving points life adding be wide precise automation, smart arrival in XXXX well-positioned worldwide at wireless Advances applications. in driven we builds of will AI growth X.X location and Earlier for platform computing angle easier enabling new industry to of and of are departure adoption shipped annually software Z-Wave an these in further the connectivity that to the and smart the making drive market driving of Our a XXXX release sensors technology include angle higher as our point is as positioning on retail batter SX of smart services rate interoperability, platform experience annual indoor the applications, to factory our Z-Wave's Gecko estimates, will capabilities. IoT security solution

possible featuring half cuts the specifically IoT the planet portfolio wireless we rejection, of portfolio Wi-Fi interference Wi-Fi designed and power the efficiency, offer work until the end providing transceivers advanced Wi-Fi We groundbreaking coexistence The with in and devices an designs that compared Silicon including battery-operated a trackers Vegas lighting Bluetooth power During quarter power now. node point-of-sale the products software. smart create solution and can enabling at on At modules medical to IP offerings CES, best-in-class competitive announced CES we asset superior for lowest expansion in standards, IoT. consumption month saw our Developers security. personal this and we that in mesh leading products, cameras, excited based momentum in provider for solutions. the devices. power IoT Wireless IoT security on sensitive and Las connected a Earlier of ecosystem SoCs Gecko Labs' China, our launched lot Xiaomi, products customer new announced about ideal growing

products including and wireless smart leading multiprotocol China's And a mesh-enabled at home the Bluetooth this smart increasing playing solutions are worldwide, adoption smart is success. of their software mesh Wyatt's address production-ready to real Xiaomi AI easily We China, IoT smart ship appointment deployment scale, in at e-commerce fast-growing channels networks and further enable Tuya's Board of needs Also are platform, supply poised ZigBee and ubiquitous world to market. I'm versatile they Bluetooth our CES, using Labs' in Gecko chains, of mesh driving to home SoCs, products platform Silicon in in to a we provider seeing Wireless Directors. announced technology. Christy and deployed announce connect to their are IoT manufacturers, to of smart multi-node role retailers homes. delighted Tuya,

year outstanding Semiconductor fourth security in Respected Semiconductor expertise great opportunities. Public in honor skills current off we future and capped As cyber more Palm, we technology by as longer-term ability Labs the Company experience we Citigroup, year market. award. remain course our leadership Apple the the Most technology. by industry Corporation, Alliance's Mobility, to chosen row best including peers In into of outperform She industry self-healing winning and based a for specializes be to in Motorola It's our Silicon thought confident products, is developing of security to on Global leader scaling Despite a be about and a chart companies. CEO brings experience, vision invaluable Christy currently decades the XXXX, Christy's the With Absolute Software future. an which endpoint volatility, than two our will extensive and

focused we world. opportunities share roadmaps and industries pipeline more for into are large connected a product are transform Thank are smarter, and and technologies creating improve a our you on We converting additional of customers attention. your and our and to we enabling gains. wins together time executing life, are developing The on

to we like take the call turn Before Jalene. questions, I back would your to

Jalene Hoover

follow-up. would Thank people now please We questions opens, your call many Tyson. one open one questions. to for as before the you, like ask the as your that to market with To up possible limit we accommodate Anita? you

Operator

Thank you.

comes question with will session. today first [Operator the now Matt question-and-answer from begin We Instructions] Ramsay Cowen. The

Matt Ramsay

but Tyson, any differentiation a second, then, could obviously the do in weakness and quarter, the And IoT terms to in will be is context growth you. you the quarter down of markets? -- maybe us reflecting Any soft markets you business? given the some that you we're and end feel market taking for macro maybe versus is color partners of in outlook at first of like what the distributors bit [ph] environment, more the first the there give cloudy just, into been channel little slower inventory sort Thank across seeing the end extent organic if end there helpful.

Tyson Tuttle

about me let talk part, let second first the Yes, so, take and I'll John part. the

end believe excess In weakness continuing we continued recover metering some in But XXXX. we as UK also IoT, market, terms if year. which weakness, market, had lighting we talk expect ramping some of be about has smart that And market will the in move again, in to in weakness the which inventory we've we there. we the throughout had have that

into QX. or continued QX and did results continuing QX two the those So to contribute into

both and were at broad of MCU macro the overall, just our both the business And customer particularly impacted terms look and the are in you Isolation business of and applications by very in down those really base. If China. and

so we've the a customer and think inventory And particular. market situations that seen in China of I in push-outs the number

was into that we that's and as exited so QX And QX. factor -- a

numbers the timing, to and lines the continued overall, was it's ramp, down we QX. impact and have some was it in okay wireless, significant exited general overall. So most product on direction as the broad but the really In see

John Hollister

aggressively inventory on for days to Matt, heading that the the our results first process, there inventory end excessive, takedown rounded the add managing a distributors of impact we inventory recovery as think bode were do we and but just on quarter. we customer not like fourth as That are inventory also into this well should out a distribution quarter final is the in year. see and last and QX did it John. side that is I

Matt Ramsay

on comment maybe, follow to far. I it’s Just environment tough look John, out too to a that know, to last

IoT to the our We’re for around heads full business. the questions here on get year getting just around trying I’m

term has the XX% starting that and while. longer a And give we're guys spot You rough for growth target off for obviously, targets been a year.

be annualized appreciate state, for would So realizing XXXX growth that's Thank any ask but it. this thoughts you. a in helpful about tough

John Hollister

weeks quarter is in bookings expect last versus The second performance we of as rates based on couple we customers in win commentary as saw there do partners the with that’s well rebound month distribution inputs strong what a healthier design from for prior. year combined our certainly the last and

the provide followed and that in QX will growth now, the to be in here. of our onward we indications as right rebound course So expectation second of progresses is year half by better able

Operator

next comes go Please Benchmark. from question The Gary ahead. with Mobley

Gary Mobley

XXXX. starting the line, see that year the in going seasonal grow be Given better to the given tough operating respect we're it’s And to the to as revenue where year in whole top pretty operating to is bit margin it's going a with even XXXX. of to in quarter, if a than out well, we tough start be a in as first trends margin comp unfolds, on just expected

So you some the more proactive not before is to improvement. willing long to and the stabilization rightsizing there, how question deliver go if OpEx are becoming

John Hollister

John. I do win do of, we overreact. in business. our sound. are think, cautious we spending, is there design diligent mean, this and first to I your very And observations not think momentum But Gary, to Yes, the see but is in be the strong thing

to and that strong position leading feel important in markets, position. a secular growth have We it's maintain very

OpEx year we'll progresses. here monitor and to how to We as diligent I in unfolds taken now, the right But first that. this we the year think, will continue see and remain quarter in the control will steps we’ve

Gary Mobley

Okay.

would rate follow tax your non-GAAP John, have expect full up, a year housekeeping what to I just a XXXX approximate? question. you As

John Hollister

XX% can at view is you the the moment, best give Gary. I

Operator

Capital. The question Acree Cody with ahead. next comes go from Please Loop

Cody Acree

were some trends just two Are order So question or the any last Maxim that you last It for to they in sound like similar. did [indiscernible]? bookings improved weeks night somewhat to broadly. over comments said your see were starting last few see improvement the starting

John Hollister

answer John. this Cody yes. is The is

We the weeks Yes, performance have. there month the better prior. last over in few have we seen

Cody Acree

that Can to that to end give see markets any in starting are the as maybe us you visibility you ?

John Hollister

moments Tyson commentary of fairly It's on And add to I just about to consistent. want the talking was some ago.

We also into of automotive of the year. heading the market and have a beginning relatively this seen in half XXXX second weak

We’re a bookings has seeing it’s that improvements fairly beginning to but in improve the broad-based. bit, been

Cody Acree

lastly just for And in And any where are you trends I guess weakness China, you then see starting your seeing specifically China? to change in are that?

John Hollister

early too out on specifically, Little year. China MCU but weak it to of to the types we call as were adding there in Isolation what rounded particularly just and

Operator

The Curtis next with question comes from ahead. Please Barclays. go Blayne

Blayne Curtis

probably it's around guidance. full turn look Maybe year, at you to give difficult as year this

So that growth maybe you or areas expect slowdown. you the products can to highlight versus, see actually in certain transactional obviously, some macro

John Hollister

Yes.

the the traction. best design and in the potential is of the indication win So business growth in I pipeline the in think

of infrastructure pipeline. the we design year-on-year XX% pipeline. have XX% our win So had win growth design IoT, in And about growth in we

be so And pipeline into as XXXX. that And in design in themselves. translates through and we that the XXXX or move would the but wins not is to ramp anticipated revenue

multiple revenue and customers. tons is So impacts. of just The opportunities, a how macro turn at programs, you how you into the number us multiple question large that quickly customers, fantastic see look will the of

in debt solar, And out the the same going around We've and all The of at things market, go into vehicles wireless market well. centers quite in Year, trend Chinese and electric into areas devices supply. the and into bullish other our the data the got then that towards are the and lighting motor got expansion trend doing that commercial. a our of of we’re and We’re we're the speed data and those timing. into smart all out IoT things. in terms power portfolio, and toward But lots And terms Trade areas controls, high going product Isolation, electrification, power IoT and communications New time, of we in War. home concerns and

positioned and we'll So really But positioned in that win terms that’s we are not and and traction out. it's we're out to well need bit, first immune come but things quarter. bit well macro. positioned still of in see the like see And portfolio, picking through the now have. of really going a how terms a competitively well we the is of Right QX rest looking of to are little turn get they year we how the to up design

Blayne Curtis

seems just be I wanted know more then good is your one to you And focus. area the ask has to XG been that infrastructure. I wired timing

early to you some ramps mention more picture as see a give just did Can for us that in you wireless. You being when material you?

John Hollister

of early some the in wins design have XG. We

ramping are calling further it to out. year. XG, And -- base a going We’re we then X.XG bit certainly look stations that start as this little

strong bit of road timing got wireless isolation little all map for is also of we So types our and There within on strong side the supplies the power engagements devices. products those on products. with the

the the industry that So a of data long-term But on a portfolio. the timing for a revenue wins ramp. ramping high market shows. well we've this center very having networking and the outside bodes for XX% really take these while core quality been seeing now But just are lot And overall all optical about of wireless time. long talking timing

Operator

The ahead. next go Desilva from question comes Capital. with ROTH Please Suji

Suji Desilva

How Maybe there to compares be helpful kind some give cycles? seeing step back, that broadly. you you color or that quickly. of you're kind downturn came very it guys If describe industrial to this of past on Tyson, us might

So appreciated. will be the context

Tyson Tuttle

And pause more of is is, rebound lots more be production another inventory a terms to it's of bit relationship of quick seeing churn really a be how protracted? one mean, nearly is movements U.S.-China GTE that going correction. and caused a sort from depends the The little while out one in We're short-lived moving a Yes. location turns had terms decade I with or there, the on in I is we of since and of think to certainly in any it going which this ordering macro bit have terms question tariffs. been patterns. the in a of lot with -- to

I are in turbulent they different by factors the bubble. factors geopolitical is were would This now of much set macro So say trade out the economy. It's and caused factors than not that more before. the being housing

also got least remains have we You've the a U.S. strong. consumer let -- -- hopefully sell on And pod at confidence government that And we can up that, shutdown. a finally on through that.

So the if seeing results consumer I up and growth, normal to then we can confidence keep return think, a can of we win. more the design we see start the

back So this what have we really than the see year XXXX. we little But hopefully bit turn to shorter is to out. it's to in how going a term through all get saw

Suji Desilva

and part to And follow-up which the quick are helpful, much Tyson. that of what that relative effort prospects remain Does Bluetooth newer. That’s what’s -- -- you that the business? prospects a your grow? of the how Can kind connectivity? is ramps expectations one for Wi-Fi ZigBee talk then on your of a how quickly And about business, just niche your and

Tyson Tuttle

our about multiple that of able offer of further of this -- to both customers power using lowest Bluetooth, And year. And We've and in the been are the that certainly customers different Wi-Fi together lot we about our using creates a but are a Wi-Fi It portfolio. rest for lot excited the configurations. in the strengthens a Wi-Fi solution. have portfolio protocols Wi-Fi integrate as that out to sampling portfolio, We’re position ZigBee and these are as well. and we solutions Wi-Fi

number SCS. were important stand. be we long-term that that these how will IoT And devices lot to the Wi-Fi There commitment But new uptake a market leading So see I provider in designed And think modestly see into. of it's year. very our the of product we of a things reflects were on this a wireless technology. ramping out And an our of exciting it's expansion standard.

Operator

Stifel. comes Please with Tore Svanberg question next from ahead. go The

Tore Svanberg

on about you of very what how talked products. your back in when you before and a bit becoming about security your IoT? of IoT Tyson little comes talk you part for front maybe newer lot growth it means security question, First is or Could a and reaccelerating offering important that compound to a

Tyson Tuttle

will technology is the it the bullet for proof and make accelerate the for extent easy that we Security can IoT. to capabilities absolutely these And of an and devices. important think set market I to security use,

If you first-gen technology we of the security offering advanced algorithms low within a power devices, have FDK. and our that’s encryption at very to and strong and our ability look drive integrated

As is level devices. Think we very and element our secure advanced we’re the of into platform, move out second where hardware. integrating generation you additional functionality have it payment to can security, you store keys,

you into you more you first devices can’t these So than can’t and tamper even in would -- anti-tamper, have the hack gen.

address these But we updates absolutely IoT people that opportunities but is, secure up that opens that So potentially very, to some management. And manner. devices key capabilities investing And it's essential the all I software push bulletproof as you at very something time. new to additional individually some and it's up us can our devices customers, that for we’re in. It deployment security also add for the essential. potential opens to move really making monetize also capabilities confidence out and of security in and is think a

And it’s we’re putting of So amount the security. significant think the be we for onto us. can portfolio and that differentiator investment attention around huge a a that

Tore Svanberg

I it's to John here prudent somewhat? guided sequentially. Will XX% be That’s it's helpful. revenue. you my to get OpEx. take down And for further up OpEx believe actions follow-up being on the about of Yet about talking you're and John. try

John Hollister

there quarter. -- first the Yes, aspects seasonal is a in Tore, we the to increase

just increase multibillion every that reset year. through naturally a we have French dollar go the You given seasonal

business look a to that putting OpEx this the cautiously, for as forward are managing X-factor to recovery we really forward. monitor go as the And and will continue we we in here. So we the key and aside, monitor

Operator

question next Please The ahead. William comes from Vecchi Blair. with go Alessandra

Alessandra Vecchi

you that was sequentially. Z-Wave? flat basis Just organic clarification, or is as on your said wireless that roughly a Was revenue what including

John Hollister

Z-Wave. including That was

Alessandra Vecchi

year? pointed into about we you out you in the on bit quite better think I strategic should your goal a XX% modeled. that sort as strength I additionally then And been down expected annually. going this business had of forward better the How longer But than expected? your know than and little think than side Okay. came broadcast next has can do hold up consumer

John Hollister

look relatively Yes, for broadcast you And while target was overall was of it the XX% X% we about year, at QX have down year-on-year. a if flat, down.

added And penalties held our for a being Broadcast tenders. we is for We model performance long-term the we XX% little both more. with down bit so the those. share and market Access XX% consistent see flat of in of actually And that design share

that maintained our outperformed competitive share. and this position in we Access both about So last markets. And Broadcast and feel good for in those year

Operator

The comes Needham next question Please & Company. Rajvindra go Instructions] ahead. Gill with from [Operator

Rajvindra Gill

… organic. Z-Wave and

John Hollister

you the didn’t question from your We John. its Rajvi, catch top. begin the at beginning. Please

Rajvindra Gill

I kind asked. organic this IoT apologize of question breakdown versus bit if the I late, but a was joined between Z-Wave.

look you your March. you XX-Q September, of about million If at did since Z-Wave $XX.X in

of in equated $XX So about million revenue September. from Z-Wave to that

on year-over-year similar to So in is business down QX. QX, type of in in assume year-over-year be if maybe a we about rate going X% kind IoT down QX again and of the basis organic

specific your smart to is issues to that’s under to to bit Brexit? this Is and just mentioned on the and had smart wanted I you weakness IoT proliferation breakdown ramp do related metering that transitioned second are with those that related get organic SMETSX very going has in on saw expectations customers those clarity to dependent UK in because You -- was more start itself the macro half to see a little IoT areas. we growth of very I standard metering. the continued had England in UK in more there. that impression the

John Hollister

Yes, and so growth if organic double-digit we we down to that the you look kind break take within microcontrollers and fairly strongly step saw in -- anticipated at QX another from to down here QX. down down IoT, QX

microcontroller the portion. that’s So

trends. broad-based, year-on-year a automotive that's X-bit, comparison. the of that's So seeing consistently the really are definitely strong drag low board XX-bit across power those And all the microcontrollers on macro

more compatible our portfolio, also to to the fairly are stuff QX industrial advance into proprietary stable legacy as wireless things. If industrial those you wireless QX seen more QX. and we look from go heavy And networks with actually upgradable within be we've

in the we That into XX.X fairly in here, pretty QX. and the thought wins year seen where and But going as got came energy through was the the energy, think area. was solid really SMETSX it lighting QX we that's we in So stronger smart we for held into some the hold the overall QX, And place. out It growth seeing home design And then -- that’s it's light and stronger QX a came in But started wouldn’t its taking of, hit. is actually although in steps. of of Zigbee, we well smart start mesh been saw we've impact impacted off. by is and as more we industrial, stuff. was the then transition to we but QX QX, smart the And strong I took call that in the the QX some lighting. be wins. a those year. there smart inventory to that consumer, those year, weakness ramps it design kind really both type energy look as And kicking-in very And going we burning that and of

two-quarter side, the very and QX a lot the in Xiaomi, the very rebound looks So of market. like of side, some successful this XX.X. Bluetooth kind and with in about we've on the been hold And been out a Chinese ecosystems. really then half second with talked ramping, very, XX.X strong a Then Zigbee on we these they've a

little we of just should been But So back mesh actually stronger the go then out growth. 'XX, Bluetooth technology. weakness anticipate and although that what continued the of bit QX we have see portion, as the on there into that’s some and gains Bluetooth also QX share deployment in of we

December kind half. which into the traction the So -- and macro from that And really saw we take in that in the into the see of had overall, again, second going then growth impact flat and quarter. been hold to QX have then QX, coming should do coming QX, rebound in wireless not a we should design have we win

the So that’s side. on IoT

a side will off do on that’s XX% sales definitely about the and design able customer we QX into driving year-on-year, compares, about of We with year, it hoped, but pipeline, optimistic number. what been to and big we up engagement pretty of that we’re the good but turns feel last we've we’re year, the on driving terms and the revenue. would and the conversion have than see year-on-year weaker overall, In win But the starting how out.

of to strategy we solid into it's map. it's road QX half. second -- looking into terms if We my and in But the of got come we will validation as the the numbers. the and But in prospective from turn see

Rajvindra Gill

be the That’s that to rates on China cautious I are to respect are rationale? MCU, the of your last China weeks. for basis just on that mean helpful. What that insight my And What's the the direct bit -- the Any exposure of be isolation the I’m the And China little that a booking consumed to what difficult couple would exposed percentage products quantify. idea might booking in follow-up, of is directly. this is kind helpful. improving Thanks. rates with improving?

Tyson Tuttle

But an into China XX% Yes, revenue exposure, We about customers were our about ODM designed we market. of revenue would or is domestic -- our of or relationship direct shift the of into really that. about into domestic that's like worldwide do than in China XX% shift shifts the then terms China something have either it's China. plus

you've fairly within that's Infrastructure Broadcast, China. So have got Isolation, you all are -- got it's -- the business do got microcontroller, about -- those you've business,

our a we scale bit only I not chain, probably yes, China competitors. -- exposure have less supply we we to model, our little of do have other just fabulous think do mean, semiconductor can number relative of direct direct companies. a really a but where some I than

John Hollister

this -- that's the would which distribution, Yes, light is seeing and through well the balance the an with and we’re with bodes partners Rajvi, really relatively QX, inventory of seeing distribution John. improvement say, here, see moderate levels from It's QX confident of provided we the QX coming from our -- based bookings morning. with so We're terms we're a And affect on quarter. far. in I that guidance rebound how in bookings, that's for seeing would performance I remainder we on back this this the in what of and on our bookings in for for what in say us. business And line

now would do that said, to is see, see of we rare but right seen positive what indicators. all those in we as yes, Now, and than we've volatility like the past what there

Operator

will concludes Hoover. now call Jalene back This I the session. to question-and-answer ahead. like turn the over Please go to

Jalene Hoover

Thank for us Anita, all joining you, and thank This morning. call. this you concludes today's

Operator

Thank attending is conference This presentation. for you today’s concluded. now

disconnect. now may You

Silicon Laboratories (SLAB) 30 Jan 192018 Q4 Earnings call transcript