Silicon Laboratories Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Christopher Rolland - Susquehanna Financial Group, LLLP - Analyst : Hey, guys. Thanks for the question and congrats on the results here. I guess there is obviously some uncertainty in the back half here. You guys seem pretty comfortable around it and the variability there, but how are you thinking about the September quarter after a little bit of June upside here, or perhaps just how the second half is shaking up overall? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 12:30PM, SLAB.OQ - Q1 2025 Silicon Laboratories Inc Earnings Call

Question: Christopher Rolland - Susquehanna Financial Group, LLLP - Analyst : Great. Thanks so much, Matt. And then I believe you thought maybe last quarter that Home and Life would outperform I&C, but it seems like there was more I&C strength than Home and Life. It was kind of flipped. So perhaps you can talk about what was kind of unexpectedly good and bad between the segments and how they shook out.

Question: Thomas O'Malley - Barclays Capital Inc. - Analyst : Hey, guys. Thanks for taking my questions. My first one is just on inventory in the channel. So you guys have obviously worked that down pretty significantly. I think you said 48 days of inventory in channel versus target of 70 days. When you look at your June guidance, what's your target for channel inventory there? Are you going to refill that or take that to new high levels? Like just given the stronger demand environment, I'm curious what the strategy is for June. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 12:30PM, SLAB.OQ - Q1 2025 Silicon Laboratories Inc Earnings Call

Question: Thomas O'Malley - Barclays Capital Inc. - Analyst : Helpful. And then you guys have talked, for a long time now, about specific company wins driving the growth versus broad market recovery. For just context, can you help us understand, as like a percentage of your revenue today, how much kind of in the March quarter or in the June quarter maybe, if that snapshot is easier, is new product versus stuff that you would deem like broad-based product? And then can you try to walk us through what the pricing difference is between some new products and something that you would sell on a broad based? I understand it needs to be probably loose commentary, but I think that'd be some helpful perspective just given how focused you are there.

Question: Tore Svanberg - Stifel, Nicolaus & Company, Inc. - Analyst : Yes. Thank you and congrats on the results. So Matt, I think in the past we've talked about, especially three new segments, potentially each one representing 10% of revenues this year. I think we're talking about the shelf label glucose meter and smart meter. Are things sort of still tracking towards that number?

Question: Tore Svanberg - Stifel, Nicolaus & Company, Inc. - Analyst : Got it. No, that's fair. And my follow-up question is on Series 2 and Series 3. Obviously, Series 3 is still very, very small. First of all, is Series 2 now more than half of revenues, and how should we think about ASP increases as Series 3 starts to rent more meaningfully?

Question: Cody Acree - The Benchmark Company LLC - Analyst : Thanks, guys, for taking my questions and congrats on the progress. Maybe if you can just give me a bit of a split for your expectations for the June quarter between your Home and Life, and Industrial and Commercial? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 12:30PM, SLAB.OQ - Q1 2025 Silicon Laboratories Inc Earnings Call

Question: Cody Acree - The Benchmark Company LLC - Analyst : Excellent. Thanks for the help. And then maybe just back to the tariff situation, can you just talk about some of those end markets, those end applications that you believe are more exposed to tariffs than others? I have a hard time thinking through your end-application mix and finding a lot that have tariff sensitivity, but maybe I'm just missing something.

Question: Quinn Bolton - Needham & Company, LLC - Analyst : Hey, guys. Let me offer my congratulations on the nice results and outlook. I wanted to follow up on the inventory question, Dean. Looks like you're going to modestly increase channel inventory in the June quarter, and you said it would take several quarters to get back to the 70-, 75-day target. Is that something you would anticipate getting back to say by the end of the calendar year? Is that a good timeframe for us to be thinking about when you would normalize or look to normalize channel inventory?

Question: Quinn Bolton - Needham & Company, LLC - Analyst : Yeah. It sounds like it takes some time to stage the inventory on the way in and if POS is better or worse than expected, that obviously affects inventory. So yeah, I think it makes sense. And then I guess Matt and Dean, just a question. There continues to be sort of some chatter out there, sort of bottom of the cycle that pricing continues to be pretty aggressive. You guys are showing nice margin expansion. So it doesn't look like you're seeing any adverse effects from pricing. But just wondering if you could talk about what you're seeing in pricing on a like-for-like basis. I know the makeshift Series 2 And series 3 is a tailwind, but are you seeing fab competitors in particular get more aggressive with pricing sort of as we're near at the bottom of the cycle?

Question: Joseph Moore - Morgan Stanley & Co. LLC - Analyst : Great. Thank you. You sort of talked about customers. You haven't seen any evidence of pull-ins. Seems like inventories are still under control. Can you talk about what those conversations are like? Because I just imagine, we've seen two years of inventory leaning out, and now we're dealing with on-again, off-again tariffs all over the world. It seems like if I were running a customer's business, I would want to hold more inventory; I would want to build ahead of some of that. So you just give us some sense of what the interaction with customers is like during all of this?

Question: Joseph Moore - Morgan Stanley & Co. LLC - Analyst : That's very helpful. Thank you. And then, I want to follow up, at the Analyst Day, you had talked about sources of inorganic growth that you would be willing to think about, larger M&A, things like that. How do you see that in the current environment? Are those deals more difficult to do in this kind of global tension or just how are you thinking about that?