Silicon Laboratories Inc Q4 2024 Earnings Call Transcript

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

Question: Quinn Bolton - Needham & Company Inc. - Analyst : Hey guys, Okay. So congratulations on the nice results and outlook. Dean, and I know visibility is pretty low given the high level of turns orders. But you guys seem very confident in your new program ramps in CGM, electronic shelf labeling. Just wondering, you talked about sequential growth through the year. But Dean, can you help us shape what kind of growth you're looking at in terms of maybe quarter to quarter? What's realistic given the limited visibility you have right now?

Question: Quinn Bolton - Needham & Company Inc. - Analyst : Great. Thanks for that. And then I guess maybe just you guys talked about the new 917 Wi-Fi device you showed at CES. Can you just sort of talk about the pipeline you've built up for that product, how it might compare to Bluetooth. And how do you see that contributing to revenue growth in calendar '25 and '26.

Question: Quinn Bolton - Needham & Company Inc. - Analyst : That's great. Thank you.

Question: Christopher Rolland - Susquehanna Financial Group, LLLP - Analyst : Hey guys, thanks for the question. I guess maybe my first question is around the Synaptics and Broadcom agreement, and this was around kind of next-gen technologies, including Wi-Fi 8, which is a little further out than your road map and these technologies are less low power and different from your portfolio. But I was wondering if you had any thoughts on this agreement, if you've looked at these assets from Broadcom and ultimately, your thoughts on them were they too overpriced or just absolutely not strategic in any way to you guys.

Question: Christopher Rolland - Susquehanna Financial Group, LLLP - Analyst : Yeah. I figured as much. My second question is around distribution. Basically, you versus your competitors it sounds like you finally think you're in line, you're still a little bit below your target, I think, if you had any expectations to raise that. But would love to know how you think your competitors whether they're over allocated to distribution right now. And then also kind of maybe a postmortem how to look at this to prevent the massive cyclical move that we've seen over the past couple of years here. What can we do to prevent that? Is it just keeping it super low moving forward? Is that your caution on disti inventory, would love the big picker take.

Question: Christopher Rolland - Susquehanna Financial Group, LLLP - Analyst : Thank you very much. Very helpful, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 04, 2025 / 1:30PM, SLAB.OQ - Q4 2024 Silicon Laboratories Inc Earnings Call

Question: Tore Svanberg - Stifel, Nicolaus & Company, Incorporated - Analyst : Yes, thank you and congrats on the continuous recovery here. You mentioned the glucose meter business could be 10% of revenue over the next 12 to 18 months. Do you have similar numbers perhaps for some of your other circular drivers, including the shelf label and the smart meter business?

Question: Tore Svanberg - Stifel, Nicolaus & Company, Incorporated - Analyst : Great. And as my follow-up, there seems to be a lot of activity on the matter side. I'm just wondering how we should think about this for circa labs going forward. Obviously, this is a standard. It pulls through, obviously, a lot of your components. But how should we think about this either from penetrating existing applications to even potentially penetrating some new applications and maybe even things like smartphones.

Question: Tore Svanberg - Stifel, Nicolaus & Company, Incorporated - Analyst : That's a great color. Thank you, Matt.

Question: Cody Acree - The Benchmark Company LLC - Analyst : Great, thanks guys for taking my questions and congrats on the nice annual turn. With -- if you look at the street estimates for '25, I think the street's got you up 7% annual, about a little over $200 million annual. If I look at the drivers that you laid out, glucose monitoring, electronic shelf labels and smart metering, can you maybe handicap your other growth drivers? Or how much of that 37% street estimate that you could realistically gain from those large drivers and how much is going to have to come from the rest of the company?

Question: Cody Acree - The Benchmark Company LLC - Analyst : Yeah, just other applications?

Question: Cody Acree - The Benchmark Company LLC - Analyst : Excellent. Thank you guys for that. Maybe if you could just talk about your gross margin puts and takes as we progress through the year. Any color would be appreciated.

Question: Cody Acree - The Benchmark Company LLC - Analyst : It does. Thank you guys very much.

Question: Srini Pajjuri - Raymond James - Analyst : Yeah, hi, good morning guys. Matt, I was hoping you could maybe give us some additional color on when you talk about end customer inventory, not just the disti inventory but end customer inventory kind of still normalizing. Where do you see kind of what end markets or what customer types, where do you feel comfortable that inventory is back to normal? And where do you think there's still some excess that needs to be, I guess, corrected over the next few quarters? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 04, 2025 / 1:30PM, SLAB.OQ - Q4 2024 Silicon Laboratories Inc Earnings Call

Question: Srini Pajjuri - Raymond James - Analyst : Yeah. That's helpful. And then just a follow-up to one of the previous questions about -- I look at your outlook for the CGM going to 10% of sales in the next 12 to 18 months. But do you feel pretty good about the next few quarters. So there must be something else that's also contributing to that incremental growth, because your expectation for the end market is kind of relatively kind of stable. So I'm just curious, what are some of the other new products that are driving that's giving you that confidence that you'll grow through the next few quarters in the year? And also if you can talk about some of these markets are certain niche that, I guess, some of us don't have a very good idea how big these markets are. So if you can kind of give us some idea where you are in terms of penetration, how big these markets are. And any additional color will be helpful. Thank you.

Question: Srini Pajjuri - Raymond James - Analyst : Very helpful. Thanks, Matt.

Question: Thomas O'Malley - Barclays - Analyst : Hey guys, thanks for taking my question. I wanted to ask about the dynamic between the disti and the direct inventory. It took a step down in the December quarter. Could you just -- can you just walk through what happened there? I think for a period of time, you had talked about moving up in terms of revenue towards disti and how that helped gross margin? That's question one. And then question two is, as it relates to the top 10% customer, you stopped breaking it out at the end of 2023. But could you give us an update on where that stands today? I would assume that given the direct customer has grown as a total dollar amount, that number has also grown as well. Any help with that would be helpful as well. Thank you.

Question: Peter Peng - J.P. Morgan Securities LLC - Analyst : Hey guys, thanks for taking my questions and congratulations on the results. Maybe on the March quarter, can you maybe talk about where we are in terms of shipment versus end consumption trends? I know you guys talked that most of your customers are done with going through inventory trends. But are you still continuing to under ship versus the end consumption trends?

Question: Peter Peng - J.P. Morgan Securities LLC - Analyst : Got it. And then if I can get some of the seasonal trends, like March quarter is typically your softer period. Usually, it's more flattish to down slightly, but you guys are guiding for up 7%. And then June and September quarter is your seasonally stronger periods. So would it be just given all the design wins ramp that you guys talked about that revenue growth is going to be accelerating into the June and September.

Question: Peter Peng - J.P. Morgan Securities LLC - Analyst : Perfect. Thank you, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 04, 2025 / 1:30PM, SLAB.OQ - Q4 2024 Silicon Laboratories Inc Earnings Call