Silicon Laboratories Inc. Q4 FY2024 earnings call

• Connected healthcare: Partnering with over a dozen CGM customers globally, with Q4 shipments to multiple CGM customers driving Home & Life growth, expecting CGM to comprise nearly 10% of revenue in 12-18 months.
• Smart metering: Shipped millions of units to India's Smart Electric Metering Initiative, well-positioned for Japan's refreshment cycle and next-generation U.S. and European markets.
• Commercial retail: Drove strong momentum in electronic shelf labeling, bolstering partnerships with leading ESL providers.
• Bluetooth: Fastest-growing technology by revenue and opportunity funnel, showcased Bluetooth channel sounding solution on xG24.
• Wi-Fi: Debuted first generally available Wi-Fi 6 device at CES 2025, the 917, with industry-leading battery life.
• Works With Conference: Hosted fifth annual series, meeting over 1,000 customers/partners, logging ~6,000 hours of engagement.
• Matter: Secured more 15.4 design wins than prior five years combined, well-positioned to benefit from Matter adoption.

Silicon Labs' fourth quarter saw revenue of $166 million. The Industrial & Commercial business had Q4 revenue of $89 million, down 8% sequentially but up ~50% year-over-year. The Home & Life business had Q4 revenue of $78 million, up 11% sequentially and nearly threefold year-over-year. Distribution made up approximately 62% of the quarter's revenue mix.

• March quarter outlook: Anticipates revenue in range of $170 million to $185 million (midpoint 67% YOY growth, 7% sequential growth).
• GAAP gross margin: Range 54% to 56% for March quarter.
• Non-GAAP gross margin: Range 54% to 56% for March quarter.
• GAAP operating expenses: Range $128 million to $130 million for March quarter.
• Non-GAAP operating expenses: Range $103 million to $105 million for March quarter.
• GAAP loss per share: Range $0.75 to $1.05 loss.
• Non-GAAP EPS: Range $0.01 to $0.19 loss on ~32.5 million shares.

• Market uncertainties: Challenges in predicting end market demand and cyclical fluctuations.
• Inventory levels: Distribution channel inventory at 56 days, still below target of 70-75 days.
• Competition: Potential impact from competitors' product launches and market share gains.

Q: Quinn Bolton asked about quarter-to-quarter growth and the 917 Wi-Fi device pipeline.

A: Dean Butler said they expect positive quarter-on-quarter growth throughout 2025, though quarter-to-quarter visibility is limited. Matt Johnson mentioned the 917 had the largest operating pipeline, with strong reception and pull-through from existing customers, and Wi-Fi is earlier than Bluetooth in terms of revenue contribution.

Q: Christopher Rolland asked about the Synaptics and Broadcom agreement and distribution.

A: Matt Johnson said the agreement is not in their wheelhouse, focused on handsets not their IoT edge space. Dean Butler discussed inventory holdings, stating they aim for distribution inventory closer to 70-75 days, and the biggest challenge was end customer excess inventory.

Q: Tore Svanberg asked about CGM revenue percentage and Matter.

A: Matt Johnson said they haven't shared specific numbers for other circular drivers but see Matter as net favorable, with deployment of Edge devices laying groundwork for growth.

Q: Cody Acree asked about gross margin puts and takes.

A: Dean Butler said gross margins improved in 2024, guiding midpoint 55% for Q1 2025 and continued progress in 2025.

Q: Srini Pajjuri asked about other growth drivers and CGM market size.

A: Matt Johnson said CGM ramps are ongoing, ESL and metering are also ramping, with Wi-Fi, BLE, and Matter contributing to growth. CGM and other markets are early in global adoption but represent significant units.