SLAB - Earnings call transcript Q3 2024 | Silicon Laboratories Inc.

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Operator

My name is Michelle , and I will be your conference operator today. Welcome to the Silicon Labs Third Quarter Fiscal 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to Giovanni Pacelli , Silicon Labs Senior Director of Finance. Giovanni, please go ahead, sir.

Giovanni Pacelli

and everyone. , Michelle you, good afternoon, Thank

We be the available this meeting, Investor replay will and a investor.silabs.com. for at section our are of recording Relations website X weeks on

website. accompanying press earnings are on release the Our financial and also tables available our

today third and Executive Joining activities. and recent quarter Johnson; financial are Officer, They Butler. Labs' Officer, business Financial performance Chief Dean Silicon will Matt President me Chief and discuss our review

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

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

Robert Johnson

Labs and with Silicon Giovanni, exceeding Thanks, good quarter of afternoon, our guidance. delivered results the third solid everyone. revenue midpoint and earnings

many that customers' have excess our indicate of surveys normalized. Our inventory levels now

the forward be positive our indicating XXXX. take us more continue to of of destocking have whose to remain However, and recovery accelerated, will outliers into improved, customers looking expected. Broadly customers patterns originally many demand than is that have to there but speaking, our distribution remain time. Bookings majority not gradual significantly a likely POS modestly

uncertainty and does Our outlook robust restocking. market reflects assume end a near-term recovery more not any importantly, channel around the significant current of timing quarter

including the areas midterm connected by we have near our is secular discussed, growth design previously well Looking metering retail as and that in commercial ramps to other the in as underpinned health, applications. ahead, smart growth win many

multiple confident share all in to giving shipments ramping moving are us customers currently are these gaining are opportunity growth and of in forward. our We in these conviction markets, we

Over of reach Silicon at and customers catalyst with success. Developer days person a now over how Embedded discussing as for Works XXX and huge becoming and next hosted CTO, over We Cooley was North quarter, existing rapidly AI Conference a enable the unique I with World that NVIDIA. At Labs billion our delivered Amazon, growth America, in ecosystem including our XXX well Works Samsung over to Daniel Google, IoT last is new X devices partners, total number the will and the keynotes as decade.

SoCs, of location of with time, wireless industry-leading more control. and AI Bluetooth platform. at Series X building X also tracking, a includes level, of even of entry purpose-built to only better Series the per industry. another publicly learning is family was performance existing available based X unit successful to keyless power machine are Silicon first integrated currently in which wireless are levels bring engines. machine for to we Series inference applications our device channel a distant of and a Series than Series sampling platform extend on This recently devices on learning XGXX any now secure customers, to delivers wins currently SoCs vehicle to announced where enabling IoT the other consumption still of said, market. At in our device Silicon This shipping Labs a the quarter, Series acceleration to the use X our opening enable is new Series and SoC XGXX, accelerate geofencing, the addressable same We enables broader detailed of Simply enablement X continued moving and between and performance of home deployments on we X it further the sounding design devices by wave our and done X product upcoming for expanding Labs IoT capabilities architecture measurement existing first access our wave forward, and devices, new door device our the new-to-industry customers. At success party. Also also third proximity-based platform interest not we benchmark precise Bluetooth capability customer driving our security, and already new will of

For industry-leading advanced enable level energy an hardware create performance over post-quantum cores acceleration core benchmarks. to already per magnitude security order IoT designed our and world's dedicated example, Series to dedicated learning have an increase inference of machine will encryption modem, enable X the most to flexible designed in

are ramping equates at on excited XXX device, better across Series customers X wireless Series progress of multiple first performance. This up with is QX versus and any life our with battery a to our X life which quickly our we use alternatives. Customer can share meaningfully platform multiprotocol and includes wins years to device to through security AAA engagement to XXXX application single competing deliver X expect as early exciting and build on and as continues Wi-Fi ramping with are our X, the We momentum features, market battery spaces. strong, of consumption, new battery. design we its This begin industry-leading our and power and products XXX, growing new cases

key WiFi opportunities broad Our initial pull-through with base our and applications intent relevant identify consumption customer work where Wi-Fi and for in are where to power becoming in more existing to is is also requirements. security

space. relevance because potential its investing of within in IoT significantly been We in our growth and our WiFi firm belief have

our technology hyper-focused that market years Wi-Fi solutions we focus currently on with driving expansion in same achieving Bluetooth in are increasing ago. strategic the around We X our or after share are X that

technology opportunity and well. are Not focus fastest-growing our addition, as by but Bluetooth. is now growth now only pipeline our revenue, In technology we is in it continuing our by it largest

learning generate strong Level to Our and setting new-to-industry engagement early integration like machine growth. continues and capabilities PSA of benchmark performance X security

commitment developers to and the recovery demand their to near who Lastly, technology leadership interoperability as infrastructure Matter support thread working into our market timing building to well trusted edge the term, in alongside ISPs, solutions end the of uncertain. remains of matter devices. Overall, are us ecosystems in our positions and partner integrate

we begin a expect over solid growth However, driven we year as to XXXX design in wins years significant production. last have few the the ramping

our solid as and continue will as to share gaining focus fast execution, innovation We to possible. model returning on and market financial technology

it financial update. Dean the Dean? Now, to I'll hand over for

Dean Butler

our revenue the commercial revenue excess strength year-over-year. September inventory $XXX a financial year-over-year. first down ahead prior was Thanks, the smart XX% XX% up & XX% $XX of September down million, by Matt, building as controls sequential and sequentially quarter outlook. Revenue and be meters. Home the in as good million, results and absorption revenue The XX% quarter $XX smart quarter XX% applications our quarter, Life by midpoint discussion recently across current continued review industrial up and down for was of sequentially million, sequentially guidance. increase to up and I our XX% business, end a such hampered and was will customers. In distributors but was completed demand driven was everyone. for to our Year-over-year, followed afternoon slightly of by September

the their and relative is markets by at being the quarter industrial such X correction in end consumer-oriented Home in September the least strength trackers watches markets. Wearable-related faster days believe industrial grew channel and expected, end Life we than in partially along in further growth. end inventory third and the as to which applications contributing at smart sequential to driven the commercial to fitness declined As Inventory quarter, saw XX% distribution quarter, days. XX our

recovery and sequentially XX% level. our POS in sales historical channel excess We are in our being path many QX an revenue Distribution the to grow of the shipments majority monitoring increase our mix prior paving below the flow XX%. XXXX. of inventory, the versus allowing despite quarter, up made potentially but channel as their mix quarter, distribution customers approximately long-tail of distribution now direct further we around into naturally than continued lower September for through from inventory the to have worked target Distributor believe to

For million, quarter. intangible the in limited which below low in versus was which manage expense we prior end prior was gross of GAAP $XX visibility. September which were of million, $XX of $XXX GAAP from margin Non-GAAP improvement $X XX.X%, the quarter, of substantial Non-GAAP guidance gross million million $X of $XX prior us expenses an were more was direction. both range as operating asset compensation of XX% XX.X%. amortization right million was and moving the our during our loss operating loss the times share-based margin and quarter, non-GAAP GAAP operating improvements operating includes the was was million. expenses

tax GAAP expense a the million. we approximately During recorded quarter, of $X

our was of rate was than GAAP expenses. lower range Our loss per $X.XX XX%. midpoint operating non-GAAP per loss tax remained share of due Non-GAAP guidance share to at better $X.XX. the

to equivalents balance Turning cash, short-term quarter sheet. investments. and of cash million ended the with We $XXX the

Our XX days outstanding of sales approximately days. was

net quarter During significant our internal million, the ending operating for contributed the operating XXX to our a XXX Days $XX positive despite inventory quarter hand further losses. by quarter million $XX our which at $XXX improved of days the inventory quarter, million the inventory, we end. from improvement reduced June cash at September of to of on flow days,

to our turn let me Now, outlook. December quarter

customers' shorter lead inventory times, in few rate due process excess after change made has limited remains our destocking quarters. having over visibility rapid to the While decelerated in part last the progress of

end have and somewhat POS the slower uncertain improved, the recovery market due own our of bookings demand. to distribution remains While our pace

ordering QX. and be the indicating comparison, Looking this to than quarter worth the quarter, XXXX. of guidance outperformance $XXX market to by experienced quarter flat of by of a we the in the therefore, in in market, commercial December growth the our products trough versus our end Considering offset and ahead patterns, somewhat that home December in muted the QX, would expectations is we guidance of year-over-year end quarter-on-quarter implies in to flat midpoint rate revenue likely for seasonality. industrial better relative anticipate life December another the $XXX which noting quarter million, It's a anticipate XX% million resulting a being range

have anticipated, sight to full-scale monitoring customers customer into as to our expect shipments begin we to Additionally, previously line initial blood continuous and of production XXXX. ramps glucose

to XX%. range XX% to expect GAAP December in gross We in the margin quarter the of be

range gross be the expect margin in XX%. We to XX% to non-GAAP of also

of million the expenses We to $XXX be operating million. the to quarter expect in GAAP December in range $XXX

million expenses range non-GAAP expect to in We $XX $XX operating of million. the

to expected a like the loss prepared our session. up Finally, loss start to range I'd per of Non-GAAP $X.XX is of the hand over now be remarks. range Q&A per operator the share in GAAP the share in loss. $X.XX of wraps to loss This loss to $X.XX to to is $X.XX. be expected the call to Michelle?

Operator

Instructions] Srinivas [Operator first James. from with question Pajjuri Raymond comes The

Srinivas Pajjuri

Matt, some bookings you uneven. markets. talked somewhat us about end additional color being which give you could Maybe on

for muted subsegments or markets think to doing terms end out you of commercial kind particular better. are then markets, and I I be seasonally home seems be flattish of those, are any to or and guiding within standing weakness? life in guess, But end that guys

Robert Johnson

Sure. Yes.

I prepared we're seen the cycle in think all an other overall. continued we the you'd that said that improvement have that But this broad the statement of say to we're acceleration bookings remarks, see is on to not want in. as side we

which, quick but the industrial, not now I to strength we'd much as into hand, home life isn't level strength cycle, more on down, given from like it's answer than in one terms and strength seeing. of that and next industrial see is guess, industrial we're commercial, the later and more in particularly surprising In

Srinivas Pajjuri

always think you position just a We quick obviously, when mean, Maybe I have at units you of in talk lot terms and Edge and that about strong did in to we markets, follow-up. a well. we these I'm hear about look very AI a as IoT ASPs. curious, and tend

look and uplift guess, if see you AI can more should guess, And I next expect to maybe what applications, ASP are seeing? I what functionality as we of years? of So, us we, understand these couple the AI as out as you, help sort more we in

Robert Johnson

Sure.

it's have ultimately, as helping the usefulness said it That's ASPs. of thing. improving we've lift broader shared well accelerate simply ASP AI in levels prepared the compute, provide production framing And edge use answer said, accelerating we would increasing some just important more as it is release in of with machine adoption. those, applications. edge we for level, more encouraging in multiple we IoT see the exciting industry-leading definitely when adoption more first is, more and inference at As bring space, that the associated for keynotes takes performance remarks to cores, It's this, devices see deployments silicon that's there's for that our its we the an for existing battery-powered What quick there's sure, So, so whether earlier learning customers the remarks, And the or inference see. At edge. device to that. at of do that right? lift

So, think because opens also it to and of as also expansion devices. our it ASP I'd for think application of add, And SAM cases the use as should you additional lift. it door

net level for positive product and market So, adoption us on end an level.

Operator

Bolton next The from with Needham Quinn question Company. & comes

Nicolas Doyle

for Nick on Quinn. Doyle

guys quarter. next no mentioned You restock channel

in And XXXX? mix distributor So, I the guess, early back can about you mix overall? thinking how to are that XX% get

Robert Johnson

of would just prior XX days everybody inventory approximately we're we just not XX%. there's was Nick, quarter the our to quarter XX assuming channel at into a XX%. ended is I Yes, broad XX, channel. The target remind that restocking the that

really, going so, channel the restock take And several think to to see I is quarters.

more And in support POS grow, turns able and times forecasts as confidence turns more one distributors which, to gradually we've the go the in the on of course, I on think see continues customer and coming them things lead seen being take put stock continue continue to orders of that's actually notable dependent to as channel in, you'll have last to grow, as shelves that every they is sequentially quarter up. heavily I that. happen quarter, think which to is short the

channel to our in XX%, closer back rush. we're mix the to historical In getting about terms of of no

to the And and thousands customers we're our normal the of And slowly gets you it's that participate back that's again, But kind take heads destocking back back our to I their of a company with get to continue going as once that would it course grow, of support made get they to consumption. going point, is think they near back where of ultimately, to and of to I business. But to just to to return continue over normal as channel tens expect customers. quarters. up few XX%.

that see move quarter. X in won't You

patience see a quarters. probably little bit it just of move game, won't a say, It's You X I'd in Nick.

Nicolas Doyle

CGMs. on The second question

terms you've opportunity. think millions of terms mentioned You or full ramps units? XXXX. details to think about what of I of millions about of was XXX market. on or line in I like any talking give us you think more CNBC Can sight the looks talked I in an million And tens that units overall online, in of more

there help So, any be nice. would

Robert Johnson

Yes.

and answer in So, of essentially a expect we end units they way able a management or question of as shared market starting We've those forward. we'd terms that SAM those and glucose we've we that's And that, And feel design of past, been believe a dozen. it's wins are end so, hundreds multiple start securing to market revenue job there. and more We've we monitors that of in we multiple than to way And market customers. would are XXXX. To to at said little directly, available a we unchanged, see as share good this statement that in ramp said go that moving company, in historical there, general. continue easy we doing it is, expect year, and the the very insulin in continuous at pretty served as millions to we into opportunity. your as of think contributing represents haven't a exit

Operator

Company. Cody from Benchmark with next Acree The question comes The

Cody Grant Acree

in What back consumption end about in Maybe that, levels? talk revenue that a can the end you after sequential just flat, if QX. strong consumption half about think do your saying you is obviously, improvement here with your levels about

Robert Johnson

Yes.

is as to So, those ahead yet it more We've would down. in not is work to we've be customer still inventory. Dean for be levels some in has a quick good destocking big quick has working But said, it's improvement The to impact That that also end not hear and complete. made be answer Cody, the at complete from as well. answer. seen yet, consumption an excess the

getting to gone big, big X a there closer, corrected So, the some but consumption, there. but about, the It's just one been yet. but gains talking getting And closer big direction, picture, reminder, in that end yet, right is definitely not not we've as inventory. pieces made and we've has big

And customers, terms then either, Second piece they're piece think, over the continues this are and environment, growth the years, with and uncertain see we've to that dealing benefited confidence from in And and the is said, in our our win giving say end visibility that's a to us starting expect. is those of last the honest now path sure to market. levels are And to End to we've the all design I not win And as answer. market trying with. choppy significant continued be even ramps. and market just think, low we I uncertain is what we're design third navigate ramp. few environment to here

Dean Butler

maybe Cody, destocking to just just last couple customers made a past quarters progress rapid One, in actually a pretty X process. of of we've add or majority X points. their get I'll the

think between little a markets. are bit today in into the as is different what look choppy I QX, dynamics end we

the gotten continue largely there's on a For a and example, know little past consumer-based while sort seem destocking applications their they're that's industrial customers, don't seem up. of those like of forecasts lately. hesitancy bit to go of I some like of sort weaker if some their

short more sort of applications. lead of notably, of And order more between lot end a the we've So, some see still seen differentiation we recently, pockets times.

like visibility on their end does the quarter, next moment. sit makes demand customers to sort order quarters, of short look lead until times give last on, that what waiting us X quarters almost the X hard as it hey, So,

there And looks pockets look So, change and we yet consumption a But think every progress we're on caused making those that of move has people, of making quarter. and we're for visibility, us not area but positive. largely, past gray end sort of I quarter, we are every little And bit as bit I more think little more level, it a quite forward. customers market progress. and

Cody Grant Acree

suggesting that thoughts for your if you on half? Any into carry what first just are order can quarter. quick the seasonality the first rates Maybe on normal thought or

Dean Butler

Yes.

that the starting for more a I So, turns orders lot see. to there first we're say is half, would

gives little what typical QX. point. see ability a to applications our us for be their it not on So, lot might into less is a of we a able end QX seasonally strong

Matt, that I and mentioned looking balancing we of go ramps think point for production. to mass in some some in design remarks the were into QX, win I the us think, of his see

have QX. in We going here some

We pretty be have that going good the like right timing. some QX ones looks to is

largely is focus So, around I the Cody. win design think our ramps,

Operator

[Operator JPMorgan. Instructions] Our Peng with Peter question next comes from

Peter Peng

if up to win I design this can would XXXX. give material helpful want follow us could just revenue the be how that be on kind XXXX, for contribution on ramp. of versus to you Maybe

Robert Johnson

Yes. something we that That's not on. provided more color

see consumption seeing I all we're it this and is is think flat. to got we're there, purposes, is, We've destocking but environment, at got that say change end or complete, the assuming more relatively intents strength for in once now the way market easiest point. right to some it to demand It's environment not the right inventory now.

design the see color on we coming market is that, provide in can assuming from win we've growth to flat we ramps. all based most forward shared the that environment. moving that right other is design path solid those side ramps of win now. That's the growth And a we're what So,

Peter Peng

to you there's think design maybe either talk we up think about new margin of these as as about can win whether any ramps, we then XXXX? some down the And or implications about

Robert Johnson

a meaningful model. or changes. continuing We've path see doing Yes. gross overall our committed to No remained meeting model. margin We that to

the revenue, outlook. margin won't our will gross meaningfully change So, those ramps but help definitely

Operator

to no remarks. show like now call questions for I the turn I further Giovanni to over time. this would back at closing

Giovanni Pacelli

joining us thank Thank all and this you, you for afternoon. Michelle,

upcoming concluding concludes today's in on Conference would like call, X. Chicago call. XXXX Stifel's our participation I you. in to Thank Before This Midwest today's November announce

Operator

today's concludes participating. This conference Thank call. you for

disconnect. You may now

Silicon Laboratories (SLAB) 4 Nov 242024 Q3 Earnings call transcript