Check out the latest Silicon Laboratories earnings call transcript.
Three months ago, shares of Silicon Laboratories (SLAB +0.35%) fell after the company posted strong third-quarter results but followed with a seemingly conservative forward outlook because of what management described as near-term macroeconomic turbulence.
With the release of its fourth-quarter results this morning, however, the fabless semiconductor specialist confirmed even that cautious guidance was too optimistic. With the stock down 14% today in response, let's dig deeper to see how Silicon Labs capped 2018, and what investors should be watching in the coming quarters.
Image source: Getty Images.
Silicon Labs results: The raw numbers
| Metric |
Q4 2018 |
Q4 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$215.5 million |
$201.0 million |
7.2% |
|
GAAP net income |
$15.1 million |
($4.9 million) |
N/A |
|
GAAP diluted earnings per share |
$0.35 |
($0.11) |
N/A |
Data source: Silicon Labs.
What happened with Silicon Labs this quarter?
- Adjusted for items such as stock-based compensation and acquisition costs, Silicon Labs' non-GAAP net income arrived at $40 million, or $0.91 per share.
- By comparison, Silicon Labs' guidance provided in October called for higher revenue of $221 million to $227 million, and adjusted earnings per share of $0.91 to $0.97.
- By segment:
- Internet of Things (IoT) revenue grew 9% year over year but fell 5% sequentially, in contrast to guidance for continued sequential growth, to $119 million.
- Infrastructure revenue rose 18% year over year but fell 13% sequentially to $46 million.
- Broadcast revenue fell 3% both sequentially and year over year to $35 million.
- Access revenue declined 8% year over year and 7% sequentially, to $15 million.
What management had to say
Silicon Labs CEO Tyson Tuttle stated:
We are proud of our performance in 2018, which was a strong year for Silicon Labs in many dimensions. We completed the successful acquisition of [home automation company] Z-Wave, strengthened our team, and grew our revenue and design wins to record levels. Despite current [macro] volatility, we remain confident about our longer-term ability to outperform the market. We are focused on executing on our product road maps and converting a large pipeline of opportunities into additional wins and share gains. The technologies we are developing are enabling our customers to transform industries and improve lives.
Looking forward
Because of a continued challenging macro environment, Silicon Labs anticipates first-quarter 2019 revenue in the range of $183 million to $193 million, assuming sequential declines in each of its four business segments. That's down from revenue of $205.4 million in the same year-ago period, and -- with the caveat that we don't usually pay close attention to Wall Street's demands -- well below the $219.5 million most analysts were modeling. On the bottom line, that should translate to adjusted earnings per share of between $0.42 and $0.52, down from $0.87 per share in last year's first quarter, and again below the $0.82 per share most investors were expecting.
All things considered, Silicon Labs' long-term story appears to remain firmly intact. But this report was disappointing any way you slice it, and the stock is responding in kind.
