Silicon Laboratories Inc. Q2 FY2025 earnings call

Series 2 platform driving rapid revenue growth and share gains; Home & Life up double digits YOY with smart home and healthcare growth; Industrial and Commercial up double digits YOY with electronic shelf labeling and smart meter growth; Series 3 device 301 shipping in volume production and claiming PSA Level 4 security certification; new design wins in commercial building controls, connected healthcare, logistics applications; Series 2 platform driving design win pipeline and market share expansion

Revenue for the June quarter was $193 million. Home & Life June quarter revenue was $83 million, up 2% sequentially and up 45% from the same period a year ago, driven by new design ramps with medical customers more than doubling versus the same quarter 1 year ago. Industrial and Commercial June quarter revenue was $110 million, up 14% sequentially and up 25% from the same period last year. Distribution made up approximately 69% of revenue mix. Home & Life contributed ~43% of total revenue ($83M of $193M), Industrial and Commercial contributed ~57% ($110M of $193M)

Anticipates revenue in the September quarter to be in the range of $200 million to $210 million. Expect continued gross margin improvement in the September quarter with both GAAP and non-GAAP gross margin expected to be in the range of 57% to 58%. GAAP operating expenses in the September quarter expected to be in the range of $130 million to $133 million. Non-GAAP operating expenses expected to be in the range of $107 million to $110 million. GAAP loss per share expected to be in range of $0.60 loss to a $0.20 loss. Non-GAAP earnings per share expected to be in the range of $0.20 to $0.40

Evolving tariff discussions limit visibility; potential indirect impact on global demand from tariff rules uncertain

Q: Congratulations on the continued strong outlook. I wanted to ask a question just on the Home & Life business. I know it's up strongly year-on-year, but it was sort of up 2% quarter-on-quarter, perhaps a little bit below my estimates. How are you thinking about that business as you get into the second half of the year? I think you reiterated the target for continuous glucose monitors to hit 10% of sales. Is that still on track for the second -- by the end of 2025?

A: Yes, sure. Quinn, this is Matt. Quick answer is, let's say, big picture, CGM is still on track, still committed to that 10% number on the time line we had mentioned. I think what's going on big picture here is, as we've said for many quarters, the primary driver of our growth are these share gains in these major ramps. And those ramps can be lumpy. They can be -- some are ahead of schedule, some are behind, some are bigger, some are lower. But as we shared in the prepared remarks, we're tracking a tremendous amount of ramps. And of those, our top 12, 10 of those are on track. So in aggregate, we're able to stay on track or better to our expectations. And the easiest way to look at it is our expectations by segment, by application and by customer haven't changed. So we feel good about the outlook and no major changes.

Q: Dean, you've done a great job here on gross margin, getting back to sort of, I think, your longer-term target of 57% to 58%. Do you expect it to kind of hang out in this level going forward? Or do you see room for potential further improvement above that 57% to 58% level in future quarters?

A: Yes. This is an area I think the team has done super well on, Quinn. Just to reiterate what our long-term financial model is 56% to 58%, so midpoint sort of 57%. Where we are now, we're trending to the high end of that range. We just guided 57% to 58%, so in that higher end of that portion. My expectation is that we continue to drive into this higher end of it as distribution channel continues to contribute in a meaningful way as a lot of our industrial type customers are doing quite well in the marketplace. That's going to keep us in the high end of that zone. I do think over time, it will probably bounce between this 56% and 58%. I am not at a point where we're going to reassess the long-term model and say, hey, we can go higher from that 58% mark. But at least from what we can see on the near term over probably the next couple of quarters, given how distribution is trending, we look like we're going to stay in that high end