Silicon Laboratories (SLAB 4.40%) announced better-than-expected fourth-quarter 2017 results on Wednesday morning. With its shares already up 50% over the past year, the fabless semiconductor company set yet another revenue record on the continued outperformance of its Internet of Things (IoT) business. If that wasn't enough, Silicon Labs followed with strong guidance as it kicked off the new year.
Let's dig in to see what Silicon Labs had to say about its latest quarter, as well as what investors can expect in the coming months.
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Silicon Labs results: The raw numbers
| Metric |
Q4 2017 |
Q4 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$201.0 million |
$182.6 million |
10.1% |
|
GAAP net income (loss) |
($4.9 million) |
$20.1 million |
N/A |
|
GAAP earnings (loss) per diluted share |
($0.11) |
$0.47 |
N/A |
Data source: Silicon Laboratories.
What happened with Silicon Labs this quarter?
- Revenue arrived near the high end of guidance provided last quarter, which called for a range of $195 million to $201 million.
- On an adjusted (non-GAAP) basis, which excludes items such as stock-based compensation and acquisition expenses, net income was $40.8 million, or $0.93 per share. That's above the high end of guidance, which called for a range of $0.83 to $0.89.
- IoT revenue climbed 28% year over year to $109 million, setting a fresh company record.
- Infrastructure revenue grew 5% to $39 million.
- Broadcast revenue fell 11% to $36 million.
- Access revenue declined 16% to $16 million.
- In early December, Silicon Labs agreed to acquire system-on-a-chip semiconductor company Sigma Designs (SIGM) for $282 million -- a move that would significantly expand its wireless portfolio with a particular focus on smart-home solutions through Sigma's Z-Wave business.
- Because certain closing conditions weren't met, however, subsequent to the end of the quarter Sigma Designs announced that -- according to the terms of the deal and contingent on Sigma shareholders' approval -- it would revert to an asset sale of the Z-Wave business to Silicon Labs for $240 million.
What management had to say
Silicon Labs CEO Tyson Tuttle called it an "outstanding" performance, noting that product revenue climbed 10% year over year in the fourth quarter.
"With the combined effort of our 1,300 employees and the support of our business partners and customers worldwide, we have transformed our business to address large, high-quality, sustainable, and growing market trends in IoT, green energy, and Internet infrastructure," Tuttle added. "Becoming a $1 billion company is within our sight."
Looking forward
Of course, that's an arbitrary measure considering the long runway for growth Silicon Labs still enjoys in these early stages of the Internet of Things. But in the meantime, Silicon Labs anticipates revenue in the first quarter of 2018 to be in the range of $196 million to $202 million, which should translate to adjusted earnings per diluted share of between $0.73 and $0.79. By comparison, with the caveat that we don't place much weight on Wall Street's near-term expectations, consensus estimates predicted first-quarter earnings of $0.76 on lower revenue of $195.2 million.
All told, the slight hiccup in its planned acquisition of Sigma Designs notwithstanding, there was nothing not to like about Silicon Labs' latest quarterly beat. And I think investors should be happy with its position today.
