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Silicon Laboratories' IoT Momentum Leads to Another Quarterly Beat

Silicon Laboratories (NASDAQ: SLAB) announced third-quarter 2017 results on the morning of Oct. 25, highlighting record quarterly revenue led once again by the growth of its Internet of Things (IoT) solutions. The fabless semiconductor specialist also offered encouraging guidance for the coming quarter.

Shares are up more than 36% year to date as of the Oct. 25 close. Now let's take a closer look at how the company started the second half of the year.

Image source: Getty Images.

Silicon Labs results: The raw numbers

Metric

Q3 2017

Q3 2016

Year-Over-Year Growth

Revenue

$198.7 million

$178.1 million

11.6%

GAAP net income

$19.9 million

$20.0 million

(0.5%)

GAAP earnings per share (diluted)

$0.46

$0.47

(2.1%)

Data source: Silicon Laboratories. 

What happened with Silicon Labs this quarter?

  • On an adjusted (non-GAAP) basis, which excludes items such as stock-based compensation and acquisition expenses, net income arrived at $39.2 million, or $0.90 per share.
  • These results compared favorably with Silicon Labs' latest guidance, which called for revenue of $193 million to $199 million, GAAP earnings per share of between $0.35 and $0.41, and adjusted earnings per share of between $0.78 and $0.84.
  • Internet of Things revenue, which exceeded 50% of total sales for the first time last quarter, grew 23% year over year to $100 million, setting another company record.
  • Infrastructure revenue climbed 1% year over year to $39 million.
  • Broadcast revenue rose increased 6% year over year to $43 million.
  • Access revenue fell 3% year over year to $17 million.
  • Notable new product launches and introductions this quarter included:
    • The Si72xx magnetic sensor portfolio, offering flexible Hall-effect magnetic sensors.
    • The Si5381/82/86 wireless clock series, delivering advanced timing solutions coming 4G/LTE and Ethernet clocking in a single integrated circuit.
    • New Global Eagle and Dual Eagle AM/FM receivers and digital radio tuners, designed for automakers' and Tier 1 suppliers' auto infotainment needs.
    • The introduction of a new USB Type-C reference design to simplify development of rechargeable battery packs for portable devices.

What management had to say

"We are very pleased with our third-quarter results, achieving record revenue in IoT and infrastructure, and in total," said Silicon Labs CEO Tyson Tuttle. "Our portfolio is well positioned in high-quality growth markets, including IoT, infrastructure, green energy, and data communications, where we generate more than 70% of our total revenue, offering a long runway for growth and share gains."

Looking forward

For the fourth quarter of 2017, Silicon Labs expects revenue of $195 million to $201 million, GAAP earnings per diluted share of between $0.40 and $0.46, and adjusted earnings per share of between $0.83 and $0.89. For perspective -- and though we typically don't pay close attention to Wall Street's demands -- consensus estimates were modeling adjusted earnings near the low end of that range on revenue of $197.6 million.

For Silicon Labs, this was yet another straightforward case of under-promising, over-delivering, and offering investors an optimistic view of what's to come. 

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Silicon Laboratories. The Motley Fool has a disclosure policy.