Silicon Labs' new BGM113 Blue Gecko Bluetooth module. IMAGE SOURCE: SILICON LABORATORIES.
Silicon Laboratories (SLAB +0.20%) 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
| Metric |
Q1 2016 Actuals |
Q1 2015 Actuals |
Growth (YOY) |
|---|---|---|---|
|
Sales |
$162 million |
$163.7 million |
(1%) |
|
Net income |
$5.8 million |
$6.4 million |
(8.9%) |
|
GAAP earnings per share |
$0.14 |
$0.15 |
(6.7%) |
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.
