SLAB - Earnings call transcript Q1 2019 | Silicon Laboratories Inc.

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Operator

Good morning. My name is Keith, and I will be your conference operator today. At this time, I would like to welcome everyone to Silicon Labs' First Quarter Fiscal 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. to Investor conference Relations like Hoover, to now of Director and would turn over the Jalene I International Finance. ahead. go please Jalene,

Jalene Hoover

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

discuss review business We the our activities we comments, performance our After quarter. prepared financial will for and will our first take questions.

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

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

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

John Hollister

first semiconductor in XX% with line was our industry. the at in quarter to sequentially due down for $XXX the ending Revenue million, Jalene. broad Thanks, guidance slowdown the

IoT end-markets. the Broadcast in with and of from products up MCU at million, Revenue and $XX by primarily decline industrial We ending $XX roughly wireless revenue broad driven rebound the representing in on and to sequential which Isolation flat was a Infrastructure down a was macro revenue than to was due in end-markets. weakness ended sharp timing typical are sequentially better with resulting automotive QX expected weakness China at our $XXX factors nearly we significantly was QX. seasonality bookings result to sequentially expect and declines weak slightly offsetting for in saw market. XX% million we This million. XX% pleased consumer and QX industrial growth down in and decline that report a for top revenue

Access quarter at primarily QX First driven down million by sequentially the also declined a China in slowdown revenue sharply market. ending in XX% telecommunications $XX and

Consumer, gross XX.X% discretionary This margin spending by operating Isolation. the to ended showing results. sequential due customer our driven better with Non-GAAP pushing mix end-markets expenses due SG&A R&D $X our coming margin. OpEx gross QX items OpEx Infrastructure, and $XX drop finally and Industrial Looking mix. with Non-GAAP the favorable first million major operating than also was XX.X% all mix and revenues. top-XX increased particularly $XX to at we served a line at broad lower slightly. expected Consumer the by in or broad strong China, Revenue at and with income end-markets, from effectively some million Distribution million. expectations were the $XX in by coupled new revenue to Access. due in We largest and product was the declined travel ended followed very $XX across QX. in were for combined XX%. revenue to than costs down slowdown coming our to expenses on in by declines Non-GAAP Broadcast MCUs quarter ending with accounted in favorable operating more APAC driven for down and drop favorable of XX% and geographies Automotive IoT by sharpest No of by by margin end-customer sequentially expenses driven XX% at and non-GAAP with all nature ended million at with Broadcast were about driven downturn, to quarter managed other product Communications million the

line tax to amortization were at were SG&A Federal R&D share. was primarily earnings updated favorable a effective million We had million at $XX per stock XX% on earnings relating intangible $X.XX and expectations vesting factors, benefit and million at compensation with were to both guidance to due Our million R&D about margins expenses quarter XX.X%. million. was regulatory the in Based of these expenses basis, GAAP tax exceeded $X ending ending share rate $X.XX. were employee GAAP GAAP tax in $XX $XX non-GAAP a with On assets non-GAAP per credits. first expenses gross due Stock expectations. $XX

the quarter now the investments million to we year tax ended first the flow vesting and payment sheet, which flat quarter the We employee with of cash in balance $XXX $XX around million about had due $XX was Turning end. a million. in stock was cash the of cash to to incentives. Operating quarter about

our management. million revenue good remaining executed sales This year. $XX XX also authorization is in times. $XXX or and repurchases share of We light Accounts days million of turns around four outstanding. also and inventory sequentially Inventory receivable effective representing million, the lower in at for ended a have $XX and closed outcome reflects of million down at $XX

this expect as the course We quarter. see second now for year improve guidance I to the of performance over stronger will turns cover we revenue.

ramps million to Accordingly, sharp be range in in market saw of course around increases in in patterns concerns Access the $XXX $XXX return continues, volatility Infrastructure more a with the and we expect QX with IoT, Broadcast, bookings rebound wireless. to with ordering we revenue of sequential million with flat. a about through normal to QX our While combined customer

increase be non-GAAP expect million. slightly around and We to to XX.X% gross $XX non-GAAP margin OpEx to

Tyson. we XX% GAAP over OpEx earnings a $XXX $X.XX gross effective We XX% to $X.XX. GAAP will to basis, expect per to range million tax share. we the to to non-GAAP non-GAAP to and and GAAP EPS be the between be expect be $X.XX at expect turn our $X.XX rate margins I in of On now with call

Tyson Tuttle

John. you, Thank

first with OpEx pleased quarter execution the EPS the guidance at midpoint of in are gross revenue and our We meeting margin, expectations. and including

factors performance Our favorable and to top-line continue to discretionary Based QX our key we spending sacrificing to the QX believe strong said, January company-wide and seen investments That material drive our including should reflects call. of have since geopolitical first macroeconomic without growth. guide, effort bookings on improvements limit essential represent the not downturn. OpEx results, bottom QX the trade quarter earnings in we conditions

total into China-based is than designed customers. competitors exposure our China XX% with of lower many Our of less than revenue

a bookings We variable which maintaining the us model, manufacturing our allows scale to QX, supply highest quarterly chain benefit fabulous In from while second history. in saw also structure. we our a largely

QX. increasing nearly lifetime the are in funnel XX% reached year-on-year which revenue has growth seeing momentum We design sales win Wireless up $XX.X billion in with and leading

Turning addition to revenues In over top. IoT, a declines revenue the gains MCUs. with by QX, with record of next delivered XX% survey, as ranking including of the year lifetime worldwide achieved at in leading communications Wireless products in leaders growth two-thirds design in revenue Z-Wave, the offset of and our wireless year-on-year recent XXX X% IoT application industry IoT the KPMG the ranked win

UK resumption Conference latest power Wireless low lighting solutions, automation highlighted Wi-Fi cloud home. ramps Hands demonstrations with customers to At seeing Silicon volume building and lighting an to connectivity of and Mesh into Embedded Gecko and World and are in applications. market, metering smart the smart X Solutions ordering Zigbee Lab for high growth in the deploy Automation uptick Connectivity a showcased home, customer We February, smart from device on finally, in Home and Bluetooth its easy Control. Bluetooth

size, multiprotocol Wireless offering portfolio. in industry-leading our battery on range, platform Earlier industry’s on Wireless functionality of extended first demonstrated X.X In application-focused now products than factor Building featuring solutions next-generation face design times connectivity competing on platform, small form trade-offs and making life. our we X designs generation, home and routinely consumption, energy our solution, communications wireless product software Gecko range, Wireless security IoT Series IoT reusable SOC week, Gecko range and XXX Gecko wireless scalable solutions. efficient. this a flexible longer next-generation simplifies addition, product announced wireless cost. power in smart IoT longer Series devices around Z-Wave X the we enhanced developers capabilities the most the with running our first versatile and delivers and the dependable and Wireless RF chip more delivering system and solutions Gecko

range deliver gateways, integration, robust performance, boot wide to Lab’s random adoption. products performance features Our a system voice and including delivering the generator, hub, smart Series loading, included assistance trust increasing industry products cost form access mass meters. control. advanced encryption, in number secured Silicon leads and drive These enabling to RF the optimization, true enable in first and products faster consumption developers of highest IoT. the for Series security developers dedicated debug hardware IoT a connected levels new IoT X help SOCs transformative power of functionality low electric optimize X security in secured cost consumer a and lights,

sequentially Turning to about year-on-year flat in now was largely Infrastructure, down revenue and by China. weakness impacted approximately X%

our applications diversify Timing to datacenter into and outside of network core portfolio markets. wireless continued infrastructure We industrial,

Wireless Lab’s with driver in revenue growth double promising than to Silicon in XG. expect Infrastructure We a new more XXXX

small top-five XG including timing years. to portfolio traction wireless we wireless of suppliers double deployments and from remote is are array oscillators of infrastructure well five Solutions our XG are units well Silicon of broad we of opportunity baseband the suited on clocks, broad networks. marketing four product using mobile Our divers Based and Lab’s Timing and next a heads nearly radio to initial of Today, positioned strength their buffers backhaul the and roadmap, the in our in serve Timing of out the equipment market to believe requirements equipment cells.

and for applications increases During performance the solutions the network new which introduced Gen Express connect and jitter of specifications workload to X buffer the a quarter, clock best-in-class timing CPU PCI providing between meet portfolio we speeds accelerators. comprehensive datacenter

us lowest outputs in generators the clock Our consumption. provide and with PCIe power XX industry’s buffers

designs EPS. Isolation and battery precise uncertain Lab’s board We including voltage new are to and BOM technologies, and closing, systems, shrink devices higher flexible and The vehicle, we new bullish safety and options products and QX, we turbine current ultra enabling product industrial for integration, from Moving best-in-class management DC and on traditional products solar reduce exceeding to temperature energy uploads to in environment, surge in with performance, charging range Based drifts. Silicon markets In with green on third-generation execution DC and of and outputs and motor, current about protection on inverters. the continue applications margin, isolators they system package pleased our macro methods remain these converters we electric despite and revenue the Isolation voltage Silicon Isolation, a space. digital superior developers in new load provide introduced our Lab’s optic on outperform wide wind high cost help participate delivering and competing expectations products replace requiring the greater to reliability, expectations OpEx portfolio, trends meeting address. gross voltages. QX target

the believe high-quality, sets you growth. positions drive revenue to time were bookings speed focus and attention. energy XXXX strategic your the high markets for a design green will strong we long-term, outperform positioned Thank data markets. in are of QX well we QX Our robust on diverse our momentum to with key and We growth and and rebound signaling market. communications leading exited including win IoT, continue

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

Jalene Hoover

you. Thank

for Before like in I now your the possible questions many To Boston on our Cross session, the for your to we call with we follow-up. you question one Stifel’s as the ask We market and June limit questions. announce the Insight accommodate Sector open like before would to that XX. up would call in people please to Conference answer one open opens, participation as

Operator

Cowen. you. Ramsey [Operator comes Instructions] thank Matt Yes, today’s first from question And with

Matt Ramsay

you much. bit business. there. Good tough Thank a the know morning. very I the out it’s seeing been turn in Congratulations on guys

you. there is bookings sort or long-term bit things happened about see. near the And the little from the and of to do in QX it’s that IoT to saw QX are business, on you that sell-through. Thank demand helpful. record you have Maybe sort sort potentially line – expect back to undershipping where being you So that record a or XX% that up with of trend guys a the during of great color correction is distributors? see be to guys your you during growth sort talked and and Tyson, Any QX with target you catching talked things would about that industry back have bookings sort inventory with could about? that of in of with talk

John Hollister

Yes, is This John. Matt.

days in XXs first Bearing the XX into take as statistic the the that me and Let QX. a quarter’s distribution question high ended performance calculation saw stable on days inventory. our looking on we is in around mind We days at shipment rate. rearward

with not depressed the shipment surprising. the in accounts inventory that’s declined So, a obviously units QX in and first quarter absolute rate

So, positions us inventory healthy second is and well we grow think that of the level in to quarter.

that So our perspective. from is normal

quarterly In terms first very in Tyson January of rate we the highest us saw the bookings company’s first indicated, through the robust quarter to the that got achieve couple balance allowed of history. weeks the after through bookings, we and bookings second in of the as

of a bookings But from the portion the growth secular what back of end Some rate particularly it to certainly of are speaks business. in also that seeing wireless the snap is drivers QX. the IoT likely was at a depressed we

Tyson Tuttle

just the as is saw essentially particular a color that Yes, SMETS in X X metering to in SMETS the little the bit to complete. you strength bookings more in market give we on transition saw we IoT,

so, general bookings the metering and in the was strong And as standing right we quite smart energy are in UK now.

to lot of saw also programs last are year a those we We some ramp. saw in where beginning lighting smart and applications delays

And with position so, a Zigbee we very have products our lighting. in strong

general, Bluetooth are of as strong a Bluetooth adoption layer and saw our in the activity and as Bluetooth of also lot to the We Z-Wave. revenue smart strong well solutions. and in And just in around home Mesh those starting Zigbee X

it good see but we’ll if how feel of rebound long-term, in year, ability the terms that think macro we our in in we of breadth through about grow have IoT to confident business. basis, I long-term kind the the in take a And QX. growth of So the in holds you to bookings target continue to the feel on the

Matt Ramsay

you business just of That’s in wanted factor it. know wireless Tyson, little Timing in color. SAM next of Infrastructure in you Thank terms and commentary sort Timing are on little well. growth the wanted I really et the of that of wireline I kick-off cetera? business months with XX a of a a Got about you obviously could and bit builds third a there lot now are bit earnest. there that It’s datacenter the a helpful a ask of where longer encouraging update term, a ask for cloud follow-up applicable had leg XG as the your as technologies in was your to big Maybe on maybe well. side, give I side. on us things of the cloud Obviously,

Tyson Tuttle

starting of next Timing about our XG. just good opportunity in very feel really area doubles believe right the now around We years. in position over Infrastructure the in in XG sitting front We the and few SAM which particular our is us

just of – XX% from very be this grew to doubling the a business year year-on-year. off last year XXXX. wireless and our Infrastructure infrastructure believe that We also that’s our about will strong We revenue

flat saw area. – as So performance weakness very and core a the some side on but XG we in QX and had you into strong macro our that’s well networking sequential as coupled then the reflecting ramps optical with in QX, general essentially,

prospects our that roadmap on we have, our and roadmap very the market opportunity in a expansion timing. that market roadmap well. we weakness side, strong given have we we’ve a some side we opportunity specifically about and very believe that also effect strong the again there on XG opportunities have spike and So, good around And Isolation as SAM, the in strong the and Infrastructure the the Isolation the growth and the in China seen of feel and very

Matt Ramsay

] Thanks very much.

Operator

with Thank the question Acree Loop you. next And Cody comes Capital. from

Cody Acree

for and of back maybe then are order you snap comments, you macro-driven that the about just question. – benefit Thank mix snap last we on more CI’s in about my for a of and a go broad the that to a chip getting your of certain stat normalcy in Question that second the last half in some back the continuing you you short-term you from in second slowdown to the back amount market taking the question half night growth we QX. based expect think as into was that guys continue but or comments normalization, progress the Do as the into through it’s sequentially do with year?

Tyson Tuttle

then if customers we of in really see going into what guidance and broad an the And into down, a there suppressed and lift and bookings still bookings bookings come QX. haven’t QX. seen into we we’ve think muted really our inventory as back particular that QX We at think demand China in Yes, bit revenue our QX fairly we QX had a I in Industrial. and businesses. correction in seen then we QX, a around break But that around I

think when very back, normal being I new situation, the of programs. we referring to also to ramp given snap but are driven design operating returning macro strong are a we the more that the performance win by pattern and

wins we QX increase that I revenue certainly will are No what matter boats. that have on up growth. what into the to relying we to all billion. and the macro we’ve starts seeing the the strong factors really second drive here the up traction But That’s if macro growth pipeline And counting in that and does half. we that in lift not are is to we $XX.X on for the seen improve, so of a both design think last win that year, that those of in result XX% very QX are versus design

the visibility a our lot and we be win programs new traction design the the that are bookings market. going in of we to to have so and And these continue to given that feel able outperform we good

Cody Acree

starting macro any bit working follow-up, are what my they willingness given still Are inventory? or your are so plans inventories you said, uncertainty, you the continued more the see then, about like building? you to distribution And – internal to are And OEMs backlog partners for your down? a carry that for your your

John Hollister

is This Cody. John. Yes,

But we’ve in end quarter. the have which had the That’s was as specific course, inventory in mid-XXs the That business. But the reduction willing moved inventory number normal have do and is definitely channel based of inventory of reasonable. we ended in levels we the an high we that. believe overall fourth of that carry that’s a as days on level to not So, amount channel of QX, we the level to in continue a and to declined. they will seen distribution of appropriate

inventory, our side, And comments, the growth that level growth year prepared that the projecting as four are of course where of positioned on inventory. with us mentioned growth. expect revenue. turns we of some But this appropriate in As I to that’s are the we for far as like the internal turns we we business, low to manage as We but through given into is progress the continued would our QX. on I improve see

Cody Acree

guys. Thank you

John Hollister

Thank you.

Operator

Thank you. question Barclays. with Curtis Blayne from And comes the next

Blayne Curtis

and Hey guys. results. Thanks question for nice taking my

guidance. Just curious on the

they kind Infrastructure but are I You and of were mentioned am I in all growth about not QX. growing, Broadcast sharply Access businesses, very just down know curious,

back extent was for So QX. come you to in what just curious those I

the between any give the helpful? segments be would color QX can you in if So

John Hollister

Yes, Blayne, this is John.

the had in compounded amount unusual we you of in where is market seasonality the clearly was That you look typical. Access have decline Broadcast that by and slowdown. Broadcast, industry at an first the as quarter So,

little see the more in growth comments. QX. in of areas with the see of Access in the Consumer as of in on more with being slowdown performance similar unusual given resumption We Automotive nature the a beginning then Automotive and Broadcast with and there growth QX we drop side, expected more resumption in the returning a So normalcy both some

Blayne Curtis

as just obviously Infrastructure curious color if to of margin drove on kind just what should help, mix QX, outperformance? you any then, And Thanks. the add gross other in

John Hollister

Yes, the mix across it’s really categories.

underneath categories, also, led So, which that. was helped favorable strong mix well. there was product timing helps as within the There that, Infrastructure by

Tyson Tuttle

the the seasonality helps in that say decline decline to the side, also I’d gross in margin also QX. there on the drive consumer Broadcast the

Blayne Curtis

Thanks.

Operator

next Wells the Gary comes Thank Fargo from you. with Mobley And question Securities.

Gary Mobley

questions. question Thanks guys. On more follow-up a maybe to the Blayne’s about taking Hey gross for looking on future. my into margin

are to first in flat but reconfirm and the quarter of away XX% target you the to mix year. only and on in And needs run turbulent Your here target to play coming miles the the for and to into guys for and rethink committed prior getting holding to level you guidance I operating going has is a outlook we know side, But XX% teetering from how of tread XX% going it, through it’s that as for to Should you are that some revenue been half the and XX% below we I OpEx what to expectations be to level? times. to about long-term that margin the still you continue long-term XX% are commend you XX%? XX% be are you

John Hollister

is Yes, Gary, John. this

on adept differentiated the we costs technology we managing it very are pleased in and So, execution nature well. reflects fact manufacturing our are at our gross that first quarter the margin the of question, very the the and really with

those a that’s factors. to so, testament And

down to the bit. that right to the more business in may holding. a longer-term to ramp the XX% we XX% On begin model, may is think way pull as we We more that are the long-term programs view and

want that we to XX%. at XX% So hold to model

for to As with growth far several opportunity continued to to back we in think the model next posture up we need judicious and the to range. we the operating quarters, in the revenue allow long-term in continue see business margin make we our pull being to business come right for as DOI, us as the the this and ourselves target the see from spending make our back to while success investments critical growth

Gary Mobley

Okay.

range, Labs? the security you does relates as of SiLab about perspective as product a I it ASP design, prepared wanted remarks to Silicon but follow-up, how I benefit generation? As the X, your benefit use benefits not, Gecko it does power optimizing an mean the by that is, to Series cost first that in ask from what well What customers how versus spoke and maybe to

Tyson Tuttle

of to value margin use which So, whole drive the differentiation device the Gecko that we level. gross – are which and Series good and one our this customers adoption, our portfolio set also features key we enables are the broadening need implement out product to that to that’s X, in easy payment-grade that product and essentially adoption. secure lot think security, right the to IoT selling additional the down increases and a that first security of performance are the and I is achieve. that product adding of a we at I differentiation responsible that’s think things that drive to critical able particular for the portfolio That’s also very, And of very quite as our and company,

use are and I think competition. from devices functionality for market, drive to higher meters, the and our markets. which for specific continue electric is the that hubs, the for ability voice saw Z-Wave will and assistance coming gateways, lights, have the onboard that optimization for share We levels there take in first to differentiation optimized we of also devices smart these of market Bluetooth for products additional optimized cost of set

very a segments. are functionality very, those some products additional were carried for but If purpose lot of they X, also you those look general very and strong, at Series the

large lower win. So to competitiveness design is achieve going as well cost, we our of believe as we improve consumption very as are the to the convert the the products, that energy and optimize enhanced integration significantly into to able ability we that that funnel that

very well very the pipeline happy we side with X. are our side. on both hardware we where Those software are as on Series the the developments as So, in are active R&D

are and pleased portfolio And tools of and and have suite our We simplicity in also Z-Wave that continued that to to very we software. part of software. drive products now

broader in customers to easy design investments an it investments it makes scale this and helps and us that and of applications. to even our SG&A So address our sales range

Gary Mobley

Thank helpful. you. That’s

Operator

with Thank from you. comes question And next Stifel. Tore the Svanberg

Tore Svanberg

you. thank Yes,

sampling assume and maybe First X, question, I Series Tyson that’s now. on following up

sort all level standards? of we from as as to Z-Wave, what’s you between see wireless convergence connectivity wireless at I when assume all different it mean, IoT? some comes getting you of at to So, starting Bluetooth should the fragmentation Zigbee? least the the far still this in Or are market are feedback and high

Tyson Tuttle

so, in the set Series are products X, early Yes, terms in of the actually with of customers. production first

technology – into for broad So we market production. process a over more and those new And ready a sampling now sampling those now been based for those are are year those in but the out have have to currently SMC. XX-nanometer do are to customers, on we

range the So very, it’s across a high also And applications. IoT technology volume, wide standards. very a optimized robust of process platform is that’s highly optimized for

set the that and as have bit as can range market the our networking, Zigbee about standards. in start supplier customers the and primarily standards, commenting where we mesh of deployment as as any the the a leading of run their wireless by new compatibility protocols addresses I with markets in that Labs well of industrial Silicon X.X gigahertz own has in device Z-Wave well and would little talk protocols in widest a the upgradability protocols in on from where a available lot we positions of legacy standards. set of into people So, proprietary the and want sub-gigahertz

and advantage are standards the competitive as Z-Wave of that to advantage puts their of year seat strategic in in good and to really as the wants If of companies and Zigbee smart development addition convergence home, the see of we streamline possible having partner that the you terms being driver’s a us last experience. look drive at Thread and Z-Wave very both be standards with interoperable able a offer devices able for to us and makes a as product many to

our to announce Mesh So especially are position. exciting market, as about in new good we QX a where leader functionality with that’s that shipping business X And in different the or that and also Bluetooth across will a and our us company to to China were enhanced Bluetooth. have number in really of new very area number of a and enable Bluetooth and design designed Series market leading saw out the traction Bluetooth of and Bluetooth business well they and new very first our a as in talked that devices, combination is in X, believe offer us and we cost ramp in we into out performance we the technology win And in puts an markets Bluetooth we strong the applications. strong lighting

So, standards there a the perspective, parts – market. think really different in standards of from that that I it wireless work different is

Wi-Fi their the quick – able also the the products We it Z-Wave, our ecosystem of looking they as as looking matter out what have are Thread, going strengths depends software development But into to of possible. Bluetooth, are your to for. standards now get platform each is for, on they those which that unified various and But the Zigbee, those one are are proprietary, customers depends application. leverage no market. into to sampling on what that market have and they It on customers depending kind experience

are in we So think we shape. good

the are We committed for optimize long-term. the as with to we and this market continue to and being in standards and new evolve standards

pleased really making partner area. us that we I it that really with are makes the a progress are we So in good and think

Tore Svanberg

question That’s on then, And is Infrastructure. second Tyson. my helpful, very

bucket of little and it come QX. the doubling you linearly QX. about think that about in should bit in And to like, talking how because But it’s is back that obviously we forth. sounds some So, you on maybe year, on are of upside throughout infrastructure a wireless the sort down so and so then, surprised in going revenue

So, to should we the obviously that assume it’s Because a be that half market? second QX, in fairly be strong flat. that more in should going

Tyson Tuttle

coming on are We result and should drive be Isolation thought those of down. more also the on and we combination, as QX as programs area to broad And patterns the ramps see new see runway. to half But into we that with return some in a macro. first half weakness from it so, as, normal of the some flat ramps Automotive going in being good design versus QX. well QX some into or had the we traction communications remains Infrastructure revenue growth XG XG where industrial we seen think was said, win That to applications, second the which in be to which QX just Yes, this really and did flat China side. in with the very

out careful are into We given about the stable are compared situation a where second half. in things lot we we half. the to the in Infrastructure of see But now, macro being projecting second growth would

Tore Svanberg

Very Thank you. helpful.

Operator

ROTH from next the question you. with comes Desilva Suji And Thank Capital.

Suji Desilva

Hi, Tyson. Hi, John.

questions. on couple was with congratulations curious of here. So, the end-market I recovery

lightings going, that First Can I smart that curious have what sustainable burked lighting point at of your about that smart is pattern? of drivers muted. being or talk are maybe all, was or that after kind recovery near-term this back that kind you burked gaining up of it up are the

Tyson Tuttle

Suji, this Tyson. is

share inventory we products were in some where inside newer see solution an was from And customers they on they lot XXX moving with that terms devices we here design that as a noted lighting the issues it had into Series, older in Mesh in delayed strong the our temperature starting with our of Z-Wave wins now operate we end Bluetooth We’ve that well as in are to with the with and to a really market, market well. very that devices, that In Zigbee ramps had be to the have now performance delay smart rollout QX. of lighting as the solutions. have their should applications those the of due

the If at is this in variety market smart the you having look fixtures. drivers of lighting and different bulbs, well as as a

the convenience bulbs but through brightness see different to broadening and and just features, not building retrofit portfolios You happens of consumers different being fixtures as just the go lighting. colors also types as you new adjust security to as smart construction devices as able as with These types of well and of health provide the of existing day.

both a control connectivity in where and those and addition fixtures commercial I the customers. being is in their are construction residential lot deployed there to of these especially builders allows a value of manner into to benefits and additional grained fine mean, new LED So, deliver

of of are strong is adoption that is a lighting. that pool. broadening portfolio There market think there smart devices So, growing of I the a available,

functionality are see this for optimizing So our and we Series we with have long-term of further as a trend solutions and requirements terms our and very positive from those in cost. get X optimized the the devices go

Suji Desilva

the positioned you landscape are Sounds another about what of And Infrastructure question there on maybe in more promising. you your is given better just the versus timing. you side talk XG like? competitive share stringent? Can being achieve differentiation what requirements of going your to and competitive XG are products XG the kind is Thanks. XG then, think And

Tyson Tuttle

on various have market devices and been So, our performance devices we in lower applications. continue functionality new drive Infrastructure products the jitter invest always highest the for to to and better

Ethernet of Synchronous applications. For is lot which instance, infrastructure used in a

than some us patented to have types architectures. conventional which allows better We of synchronize technology

So, the addition we performance the flexibility, best in delivering jitter integration. highest to highest offer the

achieve patents We very, and with very technology frequencies also are which difficult have that variety to us and have allows that at outputs of conventional is flexible to different additional architectures. very a

differentiation of in will of the continue five adapt equipment the optical those out And more that infrastructure So, the we our of the and features and wireless evidence four the types strong at and are major always that initial our wireless point. their speeds, and and been infrastructure – to fifth rollouts land are to those our hopefully functions perfect is But lower performance vendors higher in you some one have why solutions has next the where and on are of years. deployments share the on such have to few over those we’ve take the XG high out as as here again into is XG requirements, for going parts and side, to we for mainstream higher noise, that able both rolling well communications been the that applications. side be devices they have had those parts design very the roadmap those which adopted a networking

Suji Desilva

Tyson. you. helpful, Thank Very

Operator

you. comes & question Gill with from next [Operator Needham Rajvindra Thank And Company Instructions] the

Rajvindra Gill

my Yes. uncertain Thank this you. And in congrats echo I environment.

particularly flow a opportunity. we math, the this around opportunity by that of Just smart through annual year we that a I plus should metering model million make question your $XX By this kind that of should the segment, impacted UK for And that opportunity my that program. program growth Wireless expect well on accounted And of to accounted the that year? main $XX full driver revenue components? that the IoT about, delay because about IoT Bluetooth the IoT conclusion for million believe - be business to million, that’s about the $XX will of the

Tyson Tuttle

at supported the year just called new a XX% a that a general, of into of essentially units shipments far. to into And called five reduced SMETS got If you units year we saw deployments, of and we standard this first-generation or those market transition about the about three of Out we see now resumption X standards. been so, using look in now last the X. million SMETS standard. due XXX of deployment deployed that the the shipment second-generation share from market have both of into a into that. the third smart it’s standard UK are market energy And we’ve year We so have that

and – all the market. we into equipment suppliers across broadly that’s of So the

and at Bluetooth. do is Z-Wave, in wireless, Zigbee, going in and in this have the believe if energy be, growth we’ll have market we in look across that So, revenue smart to But IoT growth more year. you the particular, UK from in metering the the we that board in proprietary

this not developing millions customers our we are as home pipeline. sales is is a industrial is the about There broad home drive as being at devices applications. in And year market. convert units long and both working are volume on lighting channel our able more to applications tail that making of the we’ve growth the market, just large security the to to use higher And that easier which the There which smart it’s metering talked been and IoT. in through ramping of well variety so, going and

at pipeline $XX you $X the wireless applications. in of of majority is IoT billion about If look in with that of that vast opportunities, that billion, that

our ability our better wireless and to network drive the applications, our and opportunities and competitiveness support So the to number convert breadth those of portfolio of scale continues we roadmap. our get as

XXXX certainly growth. driving that’s for it’s the So, not metering positive the a that’s factor the growth very into in Wireless. here But just

Rajvindra Gill

business that in industrial, of which on clarification. IoT am know of QX overall and IoT the the IoT you in in of market, follow-up for Thank and significant we still I the continues MCUs, growth just that was hit percentage think with business soft for China. how limited wondering, the do company? hard affecting to am it’s overall about be as particularly the X-bit, particularly China Yes. a how just XX-bit the business, and portion think we about And wondering, you a the I visibility. business,

Tyson Tuttle

a a down that’s of microcontrollers were year of through versus modest in anticipate QX. now. a So, progress roughly outlook relative we of are those market category, in the we We MCUs China third neutral you and growth IoT in if and industrial here that again here about the the performance are kind revenue take the in where to as factoring right do

sitting You devices a that of to wireless becoming MCUs our also remember have that end-devices or to our number are are wireless-enabled. next

things. an discrete SOC solution or well those solution category of standalone wireless connectivity, move because all they microcontroller as have sort of as are the which microcontroller that a we and and from a includes energy So, a with microcontroller wireless, strong wireless center wireless conversion microcontrollers in management integrated into which functionality, no interfaces of that into

able we certainly, additional that are we a have and the seeing challenged are deliver is and where place So, integration performance where where the we MCU continue that that to in. the differentiation one But traction. market, we is to participate that’s strongest while true benefits

Rajvindra Gill

Great. Very Thank you. helpful.

Operator

Thank you. from Vecchi Alessandra And next the comes question William with Blair.

Alessandra Vecchi

on Congratulations Hi a performance. guys. great

If new some historically seasonality, and to your of on as comments the to the the through and as little levels QX target Or your we has design the of think at given about function margins improves bit to we we a step depressed of, sort OpEx as the year? in more operating look tended bit be this macro your back should wins back it Just sort getting to trend QX tended acknowledging progress I that thinking rate. expenses, QX, circling normal year? similar is rest is up. situation start trend Should earlier it down a through a QX, of of a operating

John Hollister

John. this Yes, is

We how the we on step see ramps would expect have the how up and year growth into second year But to it the with to as the out. as holds half revenue side, see levels business plays I in OpEx continued progresses. will continue macro the bit see out. If to a plays we’ll with the us

Alessandra Vecchi

helpful. me. That’s it That’s for

John Hollister

you. Thank

Operator

you. to Thank I Jalene return conference And back over would like to the Hoover.

Jalene Hoover

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

Operator

presentation. today’s attending for you Thank

lines. your disconnect now may You

Silicon Laboratories (SLAB) 24 Apr 192019 Q1 Earnings call transcript