Please ensure Javascript is enabled for purposes of website accessibility

Silicon Laboratories Positions Itself for Internet-of-Things Growth

By Steve Symington - Apr 27, 2016 at 6:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite declining sales overall, the fabless semiconductor company saw record revenue from IoT solutions.

Silicon Labs' new BGM113 Blue Gecko Bluetooth module. IMAGE SOURCE: SILICON LABORATORIES.

Silicon Laboratories (SLAB 4.60%) announced first-quarter 2016 results Wednesday morning, and the fabless-semiconductor specialist was rewarded with a 2.9% jump in share price when all was said and done in the regular trading session. But while Silicon Labs' quarter might not look particularly impressive at first glance -- as revenue and earnings continued to fall on a year-over-year basis -- the company also made significant progress in positioning itself to capitalize on the burgeoning Internet-of-Things space.

Let's take a closer look at what Silicon Labs accomplished in Q1.

Silicon Labs results: The raw numbers


Q1 2016 Actuals

Q1 2015 Actuals

Growth (YOY)


$162 million

$163.7 million


Net income

$5.8 million

$6.4 million


GAAP earnings per share




Data source: Silicon Laboratories.

What happened with Silicon Labs this quarter?

  • On an adjusted basis, which excludes items such as stock-based compensation and acquisition costs, net income came in at $21.5 million, or $0.51 per diluted share.
  • These results came in well above Silicon Labs' guidance provided in February, which called for revenue of $157 million to $162 million, and adjusted earnings per share between $0.42 and $0.48.
  • IoT revenue climbed 5.5% sequentially from Q4, to $70.9 million, exceeding expectations and setting a new quarterly high mark for the company.
  • Infrastructure revenue also set a new company record, rising 3.3% sequentially to $31.6 million.
  • Broadcast revenue fell 3.1% sequentially, to $38.4 million
  • Access revenue fell 6.7% sequentially, to $21.1 million.
  • Adjusted gross margin was 59.6%, down from 60% in the same year-ago period, but still slightly above expectations given favorable tape-out expenses during the quarter.
  • Operating income fell slightly, to $25 million, or 15.5% of total revenue.
  • Multiple new products were launched, notably:
    • The pre-certified BGM113 Blue Gecko Bluetooth module for small-footprint, low-energy short-range wireless applications, making it ideal for radio-frequency applications in smartphone accessories, wearable sports and fitness products, wireless locks, and point-of-sale devices.
    • The IoT-centric multiprotocol Wireless Gecko system-on-a-chip families, aimed at providing customers a one-stop-shop approach to multiprotocol IoT connectivity.
    • A new isolated gate driver family of products, which offers the industry's highest noise immunity for power supplies, solar inverters, and electric and hybrid vehicles.
  • The company repurchased just under $18.5 million in shares during the quarter, leaving $81.5 million remaining in Silicon Labs' 2016 repurchase authorization.
  • Cash flow from operations totaled $42 million, up $18 million from last year's first quarter.
  • Subsequent to the end of the quarter, Silicon Labs entered into an agreement to sell a number of non-strategic patents, which will contributor $5 million to second-quarter revenue with no associated impact to cost of goods sold.

What management had to say 
Silicon Labs CEO Tyson Tuttle stated:

Strong top-line performance, fueled by record revenue in IoT and Infrastructure, combined with good gross margin results and favorable opex, drove a solid beat in first-quarter non-GAAP EPS. Over the past 20 years, we've established ourselves as a leading innovator of silicon, software, and solutions for a more connected world. The launch of our multiprotocol Wireless Gecko portfolio enables game-changing functionality for our customers and will drive our growth and success in the broad IoT market.

Looking forward 
Including the $5 million in patent-sale revenue, Silicon Labs expects current-quarter revenue of $168 million to $173 million, the midpoint of which represents 3.4% year-over-year growth. Including an expected $0.09-per-share after-tax benefit related to the patent sale, that should translate to adjusted (non-GAAP) earnings between $0.61 and $0.67, up from adjusted earnings of $0.56 per share in last year's second quarter.

To be fair, excluding the patent sale, the midpoints of both ranges would have meant continued year-over-year declines in revenue and earnings. But as Silicon Labs continues to enjoy relative success with its solutions catering toward IoT customers, I think investors can still be pleased with the company's position today.

Editor's note: The numbers for net income in the quarter, the lower end of previous revenue guidance, and the amount left in repurchase authorization have been corrected.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Silicon Laboratories Inc. Stock Quote
Silicon Laboratories Inc.
$147.99 (4.60%) $6.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.