Q2 2025 Silicon Laboratories Inc Earnings Call

Deedee: Hello. My name is Deedee, and I will be your conference operator today. Welcome to the SILICON LABORATORIES INC. second quarter fiscal 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I will now turn the call over to Giovanni Pacelli, SILICON LABORATORIES INC.'s Senior Director of Finance. Giovanni, please go ahead.

Hello, my name is Dei and I will be your conference operator today.

Welcome to the Silicon lab. Second quarter, fiscal 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session

To ask a question during the session, you will need to press star 1. 1 on your telephone. You will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again.

Please be advised that today's conference is being recorded.

Giovanni Pacelli: Thank you, Deedee, and good morning, everyone. We are recording this meeting, and a replay will be available for four weeks on the investor relations section of our website at investor.silabs.com. Our earnings press release and the accompanying financial tables are also available on our website. Joining me today are Silicon Laboratories Inc.'s President and Chief Executive Officer, Matt Johnson, and Chief Financial Officer, Dean Butler. They will discuss our Q2 financial performance and review recent business activities. We will take questions after our prepared comments, and our remarks today will include forward-looking statements that are subject to risks and uncertainties. We base these forward-looking statements on information available to us as of the date of this conference call and assume no obligation to update these statements in the future.

I will now turn the call over to Giovanni patelli silicon Labs senior director of Finance Giovanni. Please go ahead.

Thank you DD and good morning everyone. We are recording this meeting and a replay will be available for 4 weeks on the investor relations section of our website at investor.substack.co

Joining me today are silicon Labs, president and chief executive officer. Matt, Johnson and Chief Financial Officer Dean Butler.

They will discuss our second quarter financial performance and review recent business activities.

We will take questions after our prepared comments and our remarks today will include forward-looking statements that are subject to risks and uncertainties.

Giovanni Pacelli: We encourage you to review our SEC filings, which identify important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. Additionally, during our call today, we will refer to certain non-GAAP financial information. A reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release on the investor relations section of the Silicon Laboratories Inc.'s website. I'd now like to turn the call over to Silicon Laboratories Inc.'s Chief Executive Officer, Matt Johnson. Matt?

We base, these forward-looking statements on information available to us as of the date of this conference call. And assume no obligation to update these statements in the future.

We encourage you to review our SEC filings, which identify important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements.

Additionally, during our call today, we will refer to certain non-GAAP financial information.

Matt Johnson: Thanks, Giovanni, and good morning, everyone. SILICON LABORATORIES INC. delivered Q2 results in line with our outlook, driving strong sequential and year-over-year growth in both sales and profitability, while closely managing OpEx. We remain laser-focused on converting our design win pipeline into production ramps, and this quarter's results demonstrate our consistent progress. Our current forecasts indicate that 10 of our 12 largest customer ramps are on track or ahead of plan for 2025. As we shared in our March Investor Day, our industry-leading Series 2 platform continues to drive rapid revenue growth and share gains across both of our business areas, including significant growth in Bluetooth and Wi-Fi products. Looking at Q2, our home and life business was up double digits year over year, driven by continued stabilization in smart home applications, as well as shipments to connected healthcare customers, as many of these designs began production in early 2025.

A Reconciliation of our gaap to non-gaap results is included. In the company's earnings press release on the investor relations section of the Silicon Labs website. I'd now like to turn the call over to Silicon Labs chief executive officer. Matt Johnson, Matt

Thanks Giovani and good morning, everyone.

Silicon Labs delivered second quarter results, in line with our Outlook driving, strong sequential and year-over-year growth in both sales and profitability while closely managing operating expenses.

We remain laser focused on converting our design and pipeline into production ramps and this quarter's results demonstrate our consistent progress. Our current forecasts indicate that 10 of our 12, largest customer ramps are on track or ahead of plan for 2025.

As we shared in our March, investor day are leading industry-leading Series. 2 platform continues to drive rapid Revenue growth and share gains across both of our business areas. Including significant growth in Bluetooth and Wi-Fi products looking at Q2 our home and life business was up double digits year-over-year, driven by continued stabilization and Smart Home applications, as well as shipments to Connected Healthcare customers. As many of these designs began production in early 2025.

Matt Johnson: In the smart home, we saw strength in home automation applications like gateways and smart lighting. Additionally, our newest Wi-Fi device, the 917, is providing battery-powered Wi-Fi connectivity for the Roku battery camera that is now available on Walmart shelves, as well as Roku Battery Camera Plus. Both models are available at Amazon and online at other major retailers. SILICON LABORATORIES INC. enables a high-fidelity 1080p camera to operate on battery power for up to two years before needing to be replaced, an incredible breakthrough. Meanwhile, our healthcare initiatives are progressing well as we continue to ramp new customers. Overall, we remain confident in the strong growth potential of this market, including in continuous glucose monitoring applications, which we continue to expect will become 10% of our revenue. Our industrial and commercial business was also up double digits year over year.

Smart home, we saw strength in home automation applications, like gateways and smart lighting. Additionally, our newest Wi-Fi device. The 917 is providing battery, powered Wi-Fi connectivity for the Roku battery camera. That is now available on, Walmart shelves, as well as Roku battery Camera Plus

Both models are available at Amazon and online at other major retailers.

An incredible breakthrough.

Meanwhile our Healthcare initiatives are progressing well as we continue to ramp new customers overall. We remain confident in the strong growth potential of this Market including in continuous glucose, monitoring applications, which we continue to expect will become 10% of our Revenue.

Matt Johnson: Sequentially, the growth was underpinned by strength in the electronic shelf labels market and an ongoing recovery of broad-based industrial applications that are typically served through our distribution channel. We are also seeing steady shipments to global smart metering customers, including India's electric metering rollout, and expect to begin shipments for Japan's metering refresh cycle later this year. Looking beyond Q2 results, our Series 2 platform continues to drive the growth of our design win pipeline and positions us extremely well for continued market share expansion.

Our industrial commercial business was also up double digits year-over-year, sequentially. The growth was underpinned by strength in the electronic shelf, labeling Market in an ongoing recovery of broad-based industrial applications that are typically served through our distribution Channel.

We're also seeing steady shipments to Global smart meter and customers including India's electric metering, rollout and expect to begin shipments for Japan's meeting and refresh cycle later this year.

Matt Johnson: This includes new design wins in applications like commercial building controls, where utility companies are encouraging more efficient power consumption, utilizing our best-in-class multi-protocol solutions and domain expertise, along with further traction in ecosystems like Matter and Amazon Sidewalk. We are also working towards establishing new partnerships in connected healthcare and are confident that our market share momentum in applications like diabetes management will continue. In addition, we have secured design wins in other emerging medical applications like remote vital sign monitors and medicine delivery applications, as our products emerge as best in class for many of these market needs. Finally, in our commercial business, we have seen strong engagement for logistics applications like real-time asset tracking. In fact, we recently won a new high-volume design win with one of the world's largest pallet makers, highlighting increasing customer interest in proximity-based tracking of higher-value assets moving through their supply chain.

Looking Beyond Q2 results, our Series 2 platform continues to drive the growth of our design with Pipeline and positions us extremely well for continued market share expansion.

This includes new design wins and applications like commercial building controls where utility companies are encouraging more efficient, power consumption, utilizing our best-in-class, multi-protocol Solutions, and domain expertise.

Along with further traction and ecosystems like matter and Amazon. Sidewalk.

We're also working towards establishing new Partnerships and connected Healthcare and are confident that our market share momentum and applications, like diabetes management will continue.

In addition, we have secured design, lens and other emerging medical applications. Like remote Vital sign, monitors and medicine delivery applications as our products emerge as best-in-class. For many of these Market needs.

Matt Johnson: Building on our track record of being first to introduce new-to-industry innovative features and capabilities on our Series 2 platform, we are excited to announce that our first Series 3 device, the 301, is shipping in volume production and now claims the title as the world's first device to achieve PSA Level 4 security certification. This milestone reinforces our long track record of industry-first achievements and sets a new benchmark for trusted embedded computing. Additionally, another Series 3 device, the 302, will be sampling next year and will bring industry-leading energy efficiency and wireless performance to battery-powered devices that support both Bluetooth and Matter applications, setting another industry performance benchmark. Moving forward, our market share momentum, driven by our Series 2 platform and the introduction of our next-gen Series 3 platform, positions us incredibly well to sustain outsized growth in our accelerating market.

Finally in our Commercial Business, we've seen strong engagement for Logistics applications, like real-time asset tracking. In fact, we recently won a new high-volume design win with 1 of the world's largest pallet makers highlighting increasing customer interest and proximity, based tracking of higher value assets. Moving through their supply chains.

Building on our track record of being first to introduce new to Industry Innovative features and capabilities on our Series 2 platform. We are excited to announce that our first series 3 device, the 301 is shipping in volume production and now claims the title as the world's first device to achieve, PSA level 4 security certification.

This Milestone reinforces our long track record of industry, first achievements and set the new Benchmark for trusted embedded computing.

Additionally, another Series 3 device, the 302 will be sampling next year. And will bring industry-leading Energy, Efficiency and wireless performance to battery. Powered devices that support, both Bluetooth and matter applications.

Setting, another industry's performance benchmark.

Moving forward, our market share momentum driven by our Series 2 platform and the introduction of our next gen Series 3 platform positions us incredibly well to sustain outside growth in our accelerating markets.

Matt Johnson: Looking near-term, while the evolving tariff discussions somewhat limit our visibility, we have not observed significant changes to our customers' forecasts. Additionally, our customer surveys do not indicate end customer inventory builds and, in many cases, reveal lower inventory positions compared to 90 days ago. Our outlook for sequential growth into the third quarter continues to be supported by share gains in secular growth markets, execution of new program ramps, and consistent improvements in our order patterns. This combination gives us confidence that we are on track to outperform the broader semiconductor market this year. Now I will hand it over to Dean for the financial update. Dean?

Looking near-term. While the evolving tariff discussions, somewhat limit our visibility, we have not observed significant changes to our customers forecasts.

Additionally, our customer surveys, do not indicate End customer inventory bills and in many cases, reveal lower inventory positions compared to 90 days ago.

Our outlook for sequential growth into the third quarter continues to be supported by share gains and secular growth markets, execution of new program, ramps and consistent improvements in our order patterns. This combination gives us confidence that we are on track to outperform the broader semiconductor Market this year.

Dean Butler: Thanks, Matt, and good morning to everyone. I will first review the financial results for our recently completed quarter, followed by a discussion of our current outlook. Revenue for the June quarter was $193 million, up 9% sequentially and in line with the midpoint of our prior guidance. Year-over-year consolidated revenue was up 33%. In our industrial and commercial business, June quarter revenue was $110 million, up 14% sequentially and up 25% from the same period last year. Sequentially, the growth was driven by customer ramps in electronic shelf label deployments, continued smart metering solutions rollouts, and a steady demand improvement for a wide range of industrial applications. Home and 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 one year ago.

Now, I'll hand it over to Dean for the financial update.

Thanks Matt and good morning to everyone. I will first review the financial results for a recently completed quarter followed by a discussion of our current Outlook.

revenue for the June quarter was 193 million up 9% sequentially and in line with the midpoint of our prior guidance,

Year-over-year, Consolidated Revenue was up 33%.

In our Industrial and Commercial Business. June quarter Revenue was 110 million up, 14% sequentially, and up 25%, from the same period last year.

Sequentially. The growth was driven by customer ramps in electronic shelf, label. Deployments continued smart meter, rollouts, and a steady demand Improvement for a wide range of industrial applications.

Home and Life June quarter revenue was $83 million, up 2% sequentially and up 45% from the same period a year ago.

Dean Butler: During the quarter, distribution made up approximately 69% of our revenue mix. Sell-through at distribution partners continued to grow, and channel inventory increased slightly to end at 51 days, up from 48 days in the prior quarter, despite our intention to begin moving toward our target range of 70 to 75 days. June quarter gross margins saw positive improvements as the long-tail channel sales and industrial applications continued to benefit our mix. GAAP gross margin was 56.1%. Non-GAAP gross margin was 56.3%, which was up 90 basis points from the prior quarter and above the midpoint of our guidance. GAAP operating expenses were $131 million, which includes share-based compensation of $20 million and intangible asset amortization of $3 million. Non-GAAP operating expenses of $107 million was consistent with our prior guidance. GAAP operating loss of $23 million and non-GAAP operating income was $1 million.

Driven by new design ramps with medical customers more than doubling versus the same quarter 1 year ago.

During the quarter distribution made up approximately 69% of our Revenue mix.

Sell through at distribution Partners continued to grow.

And channel inventory, increased slightly to end at 51 days up from 48 days in the prior quarter, despite Our intention to begin moving toward our target range of 70 to 75 days.

June quarter gross. Margins saw positive improvements as the long-tailed tail Channel sales and Industrial applications continue to benefit our mix. Gaap gross margin was 56.1%. Non-gaap. Gross margin was 56.3%, which was up 90 basis points from the prior quarter and above the midpoint of our guidance.

Gap. Operating expenses were 131 million which includes share-based compensation of 20 million and intangible asset amortization of 3 million.

Non-gaap operating expenses of 107 million was consistent with our prior guidance.

Dean Butler: During the quarter, we recorded a GAAP tax charge of approximately $3 million. Our non-GAAP tax rate remained 20%. GAAP loss per share was $0.67, and non-GAAP earnings of $0.11 per share beat the midpoint of our guidance by $0.02. Turning to the balance sheet, we ended the quarter with $416 million of cash, cash equivalents, and short-term investments. Our days of sales outstanding was approximately 30 days. During the quarter, our balance sheet inventories remained essentially flat, ending the quarter at $81 million of net inventory. Days of inventory on hand improved to 86 days, a sequential improvement from 94 days at March quarter end. As it stands today, we have not seen a direct impact to our supply chain from the shifting tariff rules.

Gaap operating loss of 23 million and non-gaap operating income was 1 million.

During the quarter, we recorded a gap tax charge of approximately 3 million.

Our non-gaap tax rate remained 20%.

Gap loss. Per share was 67 cents, and non-gaap earnings of 11 cents per share beat the midpoint of our guidance by 2 cents.

Turning to the balance sheet.

We ended the quarter with 416 million of cash. Cash, equivalents and short-term Investments.

Our days of sales outstanding was approximately 30 days.

During the quarter, our balance sheet inventory remained. Essentially flat ending the quarter at 81 million of net inventory.

Days of inventory on hand improved to 86 days. A sequential improvement from 94 days at March quarter end

Dean Butler: While the outcome of ongoing tariff discussions and their potential indirect impact on global demand are still uncertain, conversations with our customers do not currently point to any meaningful pull forward in demand. Order patterns from customer bookings and distribution POS continue to show positive improvement, extending a multi-quarter trend of positive progressions. This supports our view from last quarter that our end markets are making headway in their cyclical recovery. Additionally, our surveys show that our end customers' inventory ticked down in the quarter and, in many cases, revealed relatively low inventory positions. Now for our current outlook. We anticipate revenue in the September quarter to be in the range of $200 million to $210 million, which at the midpoint would imply a strong 23% year-over-year growth rate and a 6% sequential growth. Importantly, we believe SILICON LABORATORIES INC.

As it stands today, we have not seen a direct impact to our supply chain, from the shifting tier of fools.

While the outcome of ongoing tariff discussions and their potential indirect impact on global demands are still uncertain conversations with our customers, do not currently point to any meaningful pull forward in demand.

Order patterns from customer bookings and distribution POS continue to show positive Improvement, extending a multi-quarter, trend of positive progressions.

This supports our view from last quarter that our end markets are making Headway in their cyclical recovery.

Additionally, our survey showed that our end customers inventory, kicked down in the quarter. And in many cases, revealed relatively low inventory positions,

now, for our current Outlook,

we anticipate Revenue in the September quarter to be in the range of 200 million to 210 million,

Which at the midpoint, when apply a strong 23% year-over-year growth rate and a 6% sequential growth.

Dean Butler: is tracking to outperform the broader semiconductor market this year based on the execution of our new customer design ramps and further supported by improving cyclical demand. With continued strength in industrial applications and sales through our distribution channel growing, we expect continued gross margin improvements in the September quarter, with both GAAP and non-GAAP gross margin expected to be in the range of 57% to 58%. We continue to manage operating expenses tightly and remain committed to our published financial model of growing expenses one-third the rate of revenue growth, allowing for rapid earnings acceleration moving forward. In line with that philosophy, we expect GAAP operating expenses in the September quarter to be in the range of $130 million to $133 million.

Importantly, we believe Silicon Labs is tracking to outperform the broader semiconductor market this year based on the execution of our new customer design ramps, further supported by improving cyclical demand.

With continued strength and Industrial applications and sales through our distribution Channel Growing. We expect continued gross, margin improvements in the September quarter. With both gaap and non-gaap gross, margins expected to be in the range of 57 to 58%.

We continue to manage operating expenses tightly and remain committed to our published financial model of growing expenses. 1/3 the rate of Revenue growth allowing for Rapid earnings acceleration, moving forward.

Dean Butler: We expect non-GAAP operating expenses to modestly increase in the September quarter to be in the range of $107 million to $110 million, as the employee bonus pool is expected to accrue at a higher contribution given our return to profitability. Finally, GAAP loss per share is expected to be in the range of $0.60 loss to a $0.20 loss on a basic share count of 32.8 million shares. Non-GAAP earnings per share is expected to be in the range of $0.20 to $0.40 on an expected diluted share count of 33 million shares. This wraps up our prepared remarks. I'd like to now hand the call over to the operator to start the Q&A session. Deedee?

in line with that philosophy, we expect Gap operating expenses in the September quarter to be in the range of 130 million to 133 million

We expect non-gaap operating expenses to modestly increase in the September quarter to be in the range of 107 million to 110 million. As the employee bonus pool is expected to approve at a higher contribution, given our return to profitability.

Basic Share account of 32.8 million shares.

Non-gaap earnings per share is expected to be in the range of 20 cents to 40 cents on an expected, diluted share, count of 33 million shares.

Deedee: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. In the interest of time, we ask that you limit your questions to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Quinn Bolton of Needham & Company. Your line is open.

This wraps up our prepared remarks. I'd like to now hand the call over to the operator to start the Q&A session needy, thank you, as a reminder, to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to which your question. Please. Press star 1 1, again, in the interest of time, we ask that you limit your questions to 1 question and 1 follow-up please. Stand by while we compile the Q&A roster,

Quinn Bolton: Hey, guys. Congratulations on the continued GAAP strong outlook. I wanted to ask a question just on the home and life business. I know it is 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?

And our first question comes from Quinn Bolton of Namin Company. Your line is open.

Matt Johnson: Yeah, sure. Quinn, this is Matt Johnson. Quick answer is, let's see, big picture, CGM still on track, still committed to that 10% number on the timeline we had mentioned. I think what's going on big picture here is, we have said for many quarters, the primary driver of our growth are these share gains in these major ramps. Those ramps can be lumpy. They can be some are ahead of schedule, some are behind, some are bigger, some are lower. As we shared in the prepared remarks, we are tracking a tremendous amount of ramps. Of those, our top 12, 10 of those are on track. So in aggregate, we are able to stay on track or better to our expectations. The easiest way to look at it is our expectations by segment, by application, and by customer haven't changed.

Hey guys, uh, congratulations on the continued death, strong Outlook. Just wanted to ask a question, just just on the home and life business. I know it's up strongly, uh, year on year, but it was sort of, um, up to 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, uh, Target for continuous glucose monitors to hit 10% of sales. Um, is that still on track for the second, uh, by the end of 2025.

Yeah, sure. Uh Quinn, this is Matt, uh, quick. Quick answer is uh,

Matt Johnson: So we feel good about the outlook and no major changes.

Quinn Bolton: Perfect. I guess one for Dean. 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?

Let's see, big picture uh CGM still on track. Uh still committed to that. 10% number on the timeline we've mentioned. Um, I think what's going on. Big picture here is is we've said for many quarters, the primary driver of our growth are these share gains in these major ramps and, you know, those ramps can be, uh, 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, uh, we're tracking a tremendous amount of ramps and of those are top 12. 10 of those are on track. So in aggregate, we're able to say, on track or better to our expectations and you know the easiest way to look at it is uh, our expectations by segment by application and by customer have it changed. So we feel good about the Outlook and no major changes.

Dean Butler: This is an area I think the team's done super well on, Quinn. Just to reiterate what our long-term financial model is, it's 56% to 58%, so midpoint sort of 57%. Where we are now, we are trending toward the high end of that range. We just got at 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 is 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%.

Perfect and I guess, 1 for Dean. Um Dean you've done a great job here on on gross margin getting back to sort of I think your longer term Target of 57 to 58%. Um, do you expect it to kind of, you know, hang out in this level going forward? Or do you see room for potential further Improvement above that 57 to 58% uh, level in in future quarters?

Yeah, this is an area. I think the team's done super well on Quinn. Uh, just to reiterate what our long-term financial model is: it's 56 to 58, so the midpoint is sort of 57. Where we are now, we're trending toward the high end of that range. You know, we just got it 57 to 58, so in that higher end of that, you know, abortion.

Dean Butler: I am not at a point where we are going to reassess the long-term model and say, hey, we can go higher from that 58% mark. 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 are going to stay in that high end.

My expectation is that we continue to drive into this higher end of it, as you know, distribution Channel continues to contribute in a meaningful way as a lot of our industrial type. You know, customers are doing quite well in the marketplace uh that's going to keep us in the high end of that zone. Uh, I do think over time it will probably bounce, you know, between this 56 and 58.

Quinn Bolton: Perfect. Thank you, Dean.

I am not at a point where we're going to reassess the long-term model and say, hey, we can, you know, go higher from from that 58 mark. But at least from what we can see on the, on the near-term. Uh, over probably the next, you know, couple of quarters given how distribution is trending, uh, we look like we're going to stay in that high end

Perfect, thank you. Dean.

Deedee: Thank you. Our next question comes from Tore Svanberg of Stifel. Your line is open.

Thank you.

And our next question comes from Tories fineberg of stifel. Your line is open.

Tore Svanberg: Yes, let me echo my congratulations, especially on the operating leverage here. My first question, Matt Johnson, is on your design win pipeline. The growth is clearly driven by your execution towards that pipeline. Could you perhaps give us any update as far as numbers? Is it growing? I just want a little bit more color on the actual pipeline. Thank you.

Matt Johnson: Yeah, sure. Thanks, Tori. Big picture, we've shared that we've had tremendous success over the last few years from a design win perspective. We've really tried to pivot to making sure we ramp all those designs that we've secured. That's exactly what we're starting to see here. We've been consistent in the primary driver of our growth this year are those share gains and ramps that are happening. To answer your question directly, we still like what we see, and we still have that momentum. The opportunity funnel is the largest it's ever been. We are on track for design wins, which are larger than they've been. We have great momentum. The easiest way to think about it, Series 2 platform is still gaining market share and winning. Wi-Fi 6 solutions is allowing us to increment up and start growing even faster.

Matt Johnson: Now we're putting Series 3 platform in the mix with new-to-world capabilities and features. No expectation that that'll slow down. We like where we're at, and we like what we're seeing.

To Pivot to making sure we ramp all those designs that we've secured. And that's exactly what we're starting to see here. And, you know, we've been consistent in, you know, the primary driver of our growth this year. Uh, are those share gains and ramps that are happening? But to answer your question directly. Uh, we still like, what we see and we still have that momentum. Uh, the opportunity funnel is the largest it's ever been. Uh, we are on track for design wins which are larger than they've been and, uh, we have great momentum. Easiest way to think about it series. 2 is still, uh, gaining market, share and winning. Uh Wi-Fi is allowing us to increment up and you know, start growing even faster. And now we're putting Series 3 in the mix with new to World capabilities and features. So uh no expectation that that will slow down uh so we like where we're at and we like what we're seeing

Tore Svanberg: Very good. As my follow-up, I had a question on the glucose meter business. I know you mentioned multiple customers now. Could you perhaps give us some color on how many customers are ramping there? Clearly, you are gaining share. I think the last time you had a call, you talked about already working with 10 or a dozen customers in glucose meters.

Matt Johnson: Yeah, specific numbers. I hope I do not screw this up, guys, from analyst's side. But I think what we shared with that is we are engaged with over 60 customers in the space, and we are ramping more than 12 in the space. So that is where we are at. As we shared in the prepared remarks, we are continuing to make progress on that in that particular space and even expanding out into additional applications within the medical and healthcare space, where we are just finding our products are really dialed in. So liking what we see there, Tore.

Okay, get it. And that's my follow-up. I had a question on the glucose meter business. Um, I know you mentioned, you know, multiple customers now. Um, again, you know, could you perhaps give us, uh, some color on how many customers are ramping there? Um, because, you know, clearly, you know, you're gaining share. Uh, and I think last time you had a call, I think you're talk, you talked about already working with the 10 or dozen customers, uh, in glucose meters.

Tore Svanberg: Great. Thank you. We will go back in line.

Uh, yeah, uh specific numbers. Uh, I hope I don't screw this up guys from analysts today, but uh, I think what we shared with that is we are, uh, engaged with over 60, customers in the space and we are ramping, uh, more than 12 in the space. So that's that's where we're at. And as we share in the prepared remarks, uh, we're continuing to make progress on that in that particular space and even expanding out into additional applications within the metal and Healthcare space, where we're just finding our products are really dialed in. So, uh, liking what we see there Tori.

Deedee: Thank you. Our next question comes from Tom O'Malley of Barclays. Your line is open.

Great, thank you. We'll go back in line.

Thank you.

Tom O'malley: Hey, guys. Thanks for taking my question. I have kind of the inverse question to Quinn Bolton and to June. You saw some really strong trends in the industrial and consumer business. You've seen during this earnings period other large players kind of talk about some pull forward in industrial. I was curious, was there any geographic changes in the mix of revenue in the Q2? I think you called out electronic shelf labels, the DISTI channel, and then India smart metering solutions. But anything to note in terms of geo differences in that Q2?

And our next question comes from Tom Ali of Barclays. Your line is open.

Matt Johnson: Yeah, Tom, this is Matt Johnson. Quick answer is no. Pretty consistent across the board. In fact, it's worth pointing out we're seeing that broadly that we acknowledge all the uncertainty that's out there around tariffs. We're watching closely for signs of build-aheads, pull-ins. There has to be something going on out there around that. But the data is encouraging. We see bookings consistent with what forecast was, no major anomalies there. Customers are in line with expectation, consistent improvements, but linear. Inventory is in line, right? Our internal inventory looks good. DISTI inventory, if anything, is low as we're trying to build that up. End customer inventory, on average, is actually down over the last 90 days. So the data, despite the uncertainty that's out there, the data is encouraging and going in the right direction.

Hey guys, thanks for taking my question. I've kind of the inverse question to Quinn. And to June you saw some really strong, uh, Trends in the industrial and consumer business. You've seen during this earnings period, other large players, kind of talked about, uh, some pull forward in industrial. I was curious, was there any Geographic changes in the mix of Revenue in the June quarter? I think you called out self-labeling, the Disney Channel, and then India smart metering. But anything to note, in terms of Geo differences, in that, June quarter,

Tom O'malley: Helpful. When I look at the gross margins, which are very impressive going into the September quarter, it looks like the incremental gross margin is close to 80% quarter over quarter. That is the highest you have done in the last couple of years. If you look at the divergence in revenue trends in the September quarter, do you continue to see more DISTI and by that measure more industrial and commercial into the September quarter? Maybe you give us a little color on segment trends into September and why you are seeing such a big step up on the gross margin side. Thank you.

Yeah, Tom, this is Matt quick. Answer is no uh pretty pretty consistent across the board. In fact it's worth pointing out. Uh, we're seeing that broadly that, you know, we we acknowledge all the uh, you know, uncertainty that's out there around tariffs. Uh, and we're watching closely for, you know, signs of build ahed's Poland's. And there has to be something going on out there around that. But the data is encouraging, uh, we see bookings, uh, consistent with what, forecast was no major anomalies. Their customers are in line with expectations consistent improvements, but linear, uh, and inventories in line, right? Our internal inventory looks good. Just the inventory. If anything's low, as we're trying to build that up and End customer inventory. Uh, on average is actually down over the last 90 days. So the data, You know, despite the uncertainty that's out there, the data is encouraging and going in the right direction.

Dean Butler: Yeah, Tom, I think you got it right on sort of segment and business mix. As you know, a lot of the industrial tends to go through the channel. In the channel, customers generate a long-tail, lower unit count, and therefore generally higher ASP. So we do get a better margin step up as more and more things go through the channel. A lot of that is industrial-based. There are other small benefits that you get through as revenue increases. You get some efficiencies on some of the costs that run your supply chain. The majority here is really the dynamic around industrial customers going through channel.

Helpful. And then when I look at the gross margins which are very impressive going into September quarter, it looks like the incremental gross margin is close to 80% quarter over a quarter. That's the highest you've done in the last couple of years. So if you look at the Divergence in Revenue, Trends in the September quarter, do you continue to see more Disney and and by that by that measure more Industrial and Commercial into the September quarter, but uh, maybe you give us a little color on segment Trends into September and then uh why you're seeing such a big step up uh on the gross margin side. Thank you.

Yeah, Tom I I think you got it right on sort of segments and, and business. Mix. Uh, as you know, a lot of the industrial tends to go through the channel. Uh, and and the channel customers generally are longtail, uh, lower unit, count and therefore, generally higher ASP. So, we do get a better margin step up as more and more things, you know, closer to Channel. A lot of that is industrial base. Uh, there are other like small benefits that you get through as Revenue increases, right. You get some efficiencies on some of the 6 costs that you run your supply chain but the majority here is really the dynamic around industrial customers, you know, going through channels.

Deedee: Thank you. Our next question comes from Christopher Rolland of Susquehanna. Your line is open.

Thank you.

And our next question comes from Christopher Ron of cesu, Hannah, your line is open.

Christopher Rolland: Hey, guys. Thanks for the question. Yeah, just regarding distribution in the channel, are there opportunities to refill the channel, to grow the channel here? As we look over the next few quarters, maybe in terms of dollars, what could that opportunity be?

Dean Butler: Yeah, I mean, short answer, Chris, is we've been trying for the last couple of quarters to actually fill the channel back to where it should be. We had this call 90 days ago, and we said, hey, channel inventory at that point was 48 days. Now this quarter is 51. We said, hey, we would like to fill the channel back up and start working toward our target. In fact, during the June quarter, we anticipated trying to get more inventory in. The reality is the dynamic that is happening within the channel is as we ship into channel and try to refill, customers actually are taking that inventory in terms of POS. We can see it go out the other side in POS.

Hey guys, thanks for the question. Um, yeah. Just uh, regarding distribution in the channel. Uh, are there opportunities to refill the channel, uh, to grow the channel here? And like, as we look over the next few quarters, um, maybe in terms of dollars, uh, what could that opportunity be?

Yeah, I mean short answer, Chris is we've been trying for the last couple quarters to actually fill the channel back to where it should be. Uh, we had this call, you know, 90 days ago and we said hey Channel inventory at that point was 48 days, you know now this quarter is 51. We said hey, we'd like to fill the channel back up and start working toward our Target. And in fact during the June quarter we you know anticipated trying to get more inventory in but the reality is the dynamic that's happening within the channel is as we ship, you know, into Channel and try to refill.

Dean Butler: We then follow up with a subset of our end customers that we can reach, and we survey them and ask them, hey, what is happening with the inventory? Are you just taking POS and putting it on your shelf? In fact, that does not seem the case. In fact, the majority actually have lower end customer inventory. So we are sort of trying to track as it moves through channel. It looks like this is largely being consumed and deployed. I think it is a bunch of customers that are coming back slowly over time, and we are seeing continued positive momentum. If we can refill the channel, we can, and like the last two quarters, we have been trying.

Dean Butler: I do not think you will see any sort of big step up in any given quarter, but our intention is to move the channel from where we are this 51 days to start to move it toward our target of 70 to 75 days. I just think it is going to take a few quarters, Chris.

Uh, customers actually are taking that inventory in terms of POS, and we can see it go out the other side in POS. We then uh, follow up with, you know, a subset of our end customers that we can reach and we we survey them and ask them. Hey, what's happening with the with the inventory? Are you just taking a few less and putting on your shelf? And in fact that, uh, doesn't seem the case in fact majority have to lower end customer inventory. So we're sort of trying to track as it moves through Channel. It looks like this is largely being, you know, consumed and deployed. Uh, I think it's, you know, a bunch of customers that are coming back slowly over time and we're seeing continued more positive momentum. Uh, if we can refill the channel, we can and like, the last 2 quarters. We've been trying, I don't think you'll see any sort of big step up in any given quarter, but Our intention is to move the channel from where we are this 51 days.

To start to move it toward our Target of 7075 days. I just think it's going to take a few quarters, Chris.

Christopher Rolland: Excellent. Thank you, Dean. That is actually a lot of fill at 70% to 75%. It will be nice to see. For my second question here, how are you guys thinking about tariffs? You mentioned tariffs. Would you be passing this on to customers, or would you eat some of it? What is your strategy here?

Excellent. Thank you Dean. Um, that that's actually a lot of fill at at 70 to 75. It'll it'll be nice to see.

Um I guess for my second question here. Um how are you guys? You mentioned tariffs, how are you thinking about tariffs?

And would you be passing this on to, uh, customers or would you eat some of it? What what's your strategy here?

Dean Butler: Yeah, I think generally speaking, from our review of tariffs, which, as you know, the rules sort of keep changing, it is all about the specific rules when they get published and how those get rolled out. We have looked at a number of options among our supply chain. For the most part, it is relatively modest in its most extreme cases that we can kind of model out. It is a relatively modest impact on the company. I think our intention would largely be to pass them along if that comes. Again, we think the impact in itself is modest, so we do not think that would cause any undue harm across the customer base if that were to come to play. There are some geographic sort of differences.

Yeah, I think generally speaking from our review of tariffs, which, you know, as you know, the rules sort of keep changing. Uh, it's all about the specific rules when they get published and, and how those get rolled out. We've looked at a number of options among our supply chain. Uh, for the most part, It's relatively modest in its most extreme cases, that we can kind of model out. It's a relatively modest impact on the company.

I think our intention would largely be to to pass them along. Uh, if that comes uh, again, we think the impact in itself is modest, so we don't think that would cause any, you know, undue harm across the customer base if that were to come to play,

Dean Butler: When we look at what is the amount of inventory that comes across the United States border, was sort of the big contentious one. For us, it is kind of in the 10% range. Whatever rate you want to assume on tariffs, and every country has a different rate, generally, we are shipping directly in by Silicon Laboratories Inc. only about 10%. That is how we get to this sort of pretty modest impact, if you will, Chris.

Um and there are some Geographic sort of differences, you know, when when we look at what is the amount of inventory that comes processed? The United States border with sort of the big contentious 1 for us? It's kind of, in the 10% range. So I if whatever rate you want to assume on tariffs and every country has a different rate. Uh, generally we're shipping directly in by silicon Labs, only about 10%, so that's

how we get to this sort of pretty modest impact, uh, if you will, Chris

Christopher Rolland: Thanks, Dean. Congrats.

Thanks Dean, congrats.

Deedee: Thank you. Our next question comes from Cody Acree of The Benchmark Company. Your line is open.

Thank you.

And our next question comes from kodia Cree of The Benchmark company. Your line is open.

Cody Acree: Thanks, guys, for taking my questions, and congrats on the progress. Maybe, Matt Johnson, if you can help us with just any of the Wi-Fi 6 solutions strength that you mentioned, just any of the application wins and any of the ramps that you're seeing there.

Matt Johnson: Yeah, sure. So, continued progress in Wi-Fi. The biggest one that we just shared in the prepared remarks, which is really worth pointing out, is the Roku design. What is unique about that is where we have shined, where we have focused in this space, it is playing to our strengths, which is battery-powered applications, so long battery life. As we have shared, our device, longest battery life in the world for a Wi-Fi application. That is what Roku is taking advantage of. So, they have put a 1080p camera out there that can operate for up to two years on battery power, which is pretty remarkable. That is on store shelves now at Walmart, available at Amazon and other retailers.

Thanks guys for taking my questions and congrats on the progress, uh, maybe, uh, Matt, if you can help us with just any of the Wi-Fi strength that you mentioned, just any of the application wins and any of the Rams that you're seeing there.

Yeah, sure. Uh, so continued progress in Wi-Fi uh the

Matt Johnson: I think that is a good example and indicative of what we are seeing in Wi-Fi overall, where as we bring this capability to bear in the market, customers are starting to take advantage of it, especially in battery-powered applications to do things they could not do before. We like what we see there. We like the progress. As always, it is a new market. It always takes longer than you want, but it is going in the right direction.

Where we have focused in this space is playing to our strengths, which is, uh, battery powered applications. So long, battery life as we've shared our device, uh, you know, longest battery life in the world for a a Wi-Fi application. And that's what Roku is taking advantage of. So they've put a, you know, 1080p camera out there that can operate for up to 2 years, on battery power, which is pretty remarkable, that's on store shelves. Now at Walmart available at Amazon and other retailers. And I think that is a good example, an indicative of what we're seeing in Wi-Fi overall, where as we bring this capability to bear in the market, customers are starting to take advantage of it, especially in battery powered applications to do things. They could not do before. So uh, we'd like what we see there, we like the progress as always, it's a new market. It always takes longer than you want, but it's going in the right direction.

Cody Acree: Thanks for that. Maybe just lastly, with your September back now above $200 million a quarter, your trajectory is definitely promising. Any thoughts on given your pipeline and your visibility when you would expect to be able to challenge your prior 2022 highs? Do you think that that's something you can achievably get into a range in 2026?

Matt Johnson: We are not guiding beyond the quarter, but maybe the most helpful thing that we can share is kind of in line with what we shared not that long ago at our analyst day. We have been securing a tremendous amount of design wins over the last few years. Those are just now starting to ramp. To help make that real, one stat that we shared was in our Series 2 platform, kind of the current or prior gen, however you want to think of that, of what we have secured, we have only shipped a little over 1 billion units in that space. We have secured more than another 6 billion units of wins that we have not shipped yet that are starting to ramp or will be ramping.

Thanks for that. Um, and maybe just lastly with your September back now above 200 million and a quarter, uh, your trajectory is definitely promising that any thoughts on giving your pipeline and your visibility when you would expect to be able to challenge your prior, 22 highs. Do you think that that's a, a something you can, uh, achievably, uh, get into a range in 26?

So you know we're not uh not guiding beyond the corner but maybe the, the most helpful thing that that we can share is kind of in line with what we shared uh not that long ago at our analyst day. We have been securing a tremendous amount of design wins over the last few years and those are just now starting to ramp and and to help make that real uh, 1 stat that we shared was in our Series 2 platform.

Kind of the, the current or prior gen, however you want to think of that.

Of what we've secured, we've only shipped a little over 1 billion units in that space. We've secured more than another 6 billion units of winds that we haven't shipped yet.

Matt Johnson: That kind of gives you a sense of what has been won and what is to come, where, as we said, at the same time, we are still winning more designs on Series 2. It is still ultra-competitive while we are bringing in Series 3, the next generation. We had a press release yesterday where we brought the highest level security to the IoT at the PSA Level 4, which is just an indication of what is going to start to come out on this platform as we introduce it, new to industry, new to world capabilities, features, and performance. That combination, I think, positions us really well for continued growth going into next year. But not specific on timeline, and that is obviously not easy to call.

That are starting to ramp or will be ramping. Uh, so that kind of gives you a sense of, you know, what's been 1 and what's to come, where as we said at the same time, we're still winning more designs on Series 2, it is still ultra competitive while we're bringing in series 3, the Next Generation. Uh, you know, you, we had a press release yesterday where we brought, you know, the highest level security to the iot, uh, at the PSA level 4, which is just an indication of what it's going to start to come out on this platform as we introduced. It knew to Industry new to World capabilities features and performance. So, that combination I think positions us really well for continued growth.

Both, uh, going into next year.

Cody Acree: Of course. Thanks for the color, guys.

But, you know, not specific on timeline and uh you know that that's obviously not not easy to call.

Dean Butler: Thanks, Kodi.

Of course, thanks for the caller guys.

Deedee: Thank you. Our next question comes from Peter Peng of J.P. Morgan. Your line is open.

Thanks Cody. Thank you.

And our next question comes from Peter Pan of JP Morgan, your line is open.

Peter Peng: Hey, guys. Thanks for taking my question and congratulations on the strong results. I think back at your analyst day, you gave a number on your new customer ramps being 50% of your year-over-year growth in 2025. If I kind of work on what the consensus numbers are, that is about $100-plus million. Just given some of the commentaries about how you said 10 of those are on track, are we surpassing that number? More importantly, I guess, does that number start to grow in 2026 as well?

Hey guys, thanks for taking my question and congratulations on the strong results. Um, I think back of your analyst day, you gave a number on your new customer. Rams, being 50% of your year-over-year growth in 2025. And if I kind of work on what the consensus numbers are, that's about 100 plus million dollars, just giving some of the commentaries about how you said 10 of those.

Are we on track? Are we surpassing that number? And then, more importantly, I guess, does that number start to grow in 2026 as well?

Matt Johnson: So, hey, Peter, it's Matt Johnson. I do not remember the exact number you are quoting, but maybe the most helpful thing around that is we mentioned, I think, 10 of our top 12 ramps. Just to be clear, there are many more ramps that we are tracking as part of that. So that is just kind of the biggest ones that have the easiest to track most visibility, but tip of the iceberg in terms of the ramps that we are working on and managing. So tough to correlate that to a specific number. Going back to the prior question and comments, we do expect continued ramps and continued growth based on design wins and share gains. That is the fastest and easiest way I can say it. We have been gaining share, and we believe we are going to continue gaining share.

so, uh, hey Peter, it's Matt, uh, I don't remember the exact number of your quoting but, uh, maybe the the most helpful thing around that is we mentioned, uh,

I think 10 of our top 12 ramps, uh, and just to be clear, uh, there's many more ramps that we're tracking as part of that. Uh, so that's just kind of the, the biggest ones that, you know, have the the easiest to track most visibility, uh, but tip of the iceberg in terms of, you know, the the ramps that we're working on and, and managing. So, uh, talk to correlate that to a specific

Matt Johnson: We have opportunity funnel and design win momentum to support that.

Peter Peng: Got it. Okay, that is helpful. When I kind of look at your some of the seasonal trends, typically your December quarter is flattish, but you guys have been kind of driving above seasonal trends for the past several quarters. Given some of these positive looking trends and design win ramps, is it possible to drive sequential growth through the remainder of the year?

Number. But going back to the the prior question and comments. We do expect continued ramps and continued growth based on uh, design wins and share gains. That's the fastest and easiest way I can say it we have been gaining share and we believe we're going to continue gaining share. And we have, you know, opportunity, funnel and design and momentum to support that.

Got it. Okay, that's helpful. And then when I kind of look at your

Seasonal trends for the past several quarters. And so just given some of these positive booking Trends and design with ramps, uh, is there, you know, is it possible to drive sequential growth through the remainder of the year?

Dean Butler: Peter, you are asking about a Q4 guide, which we are not at a point we are ready to comment on. Most of our momentum really has been on design wins coming into production. If that is the case, you should actually outperform seasonality. One of the notable things, which just so everybody has it, is all throughout 2025, lead times that we are getting orders have been more and more turn-based. So it limits some of our visibility a little bit to be able to comment on, hey, what does seasonality look like in a quarter or two from now and how that is evolving? But I think to the extent that design wins continue to be the primary growth driver, you should continue to do a little better than sort of a steady-state, market-driven only number.

Yeah, I have a Peter you're asking about a, a Q4 guide which we're not at a point, we're ready to comment on. Um, look most of our, you know, momentum really has been on design wins coming into production and you know, if that's the case you should actually outperformed seasonality, um, you know, 1 of the sort of notable things which, you know, just just so everybody has it is all throughout 2025, you lead times that we're getting orders, have been more and more turns based. So it limits some of our visibility a little bit to be able to comment on. Hey, what is seasonality look like in, you know, quarter or 2 from now and how that's evolving? Um, but I think to the extent that design wins continue to be the primary growth driver, you should continue to do a little better than sort of a steady state, you know, uh, Market driven only number

Peter Peng: Thank you.

Deedee: Thank you. We have a follow-up from Tore Svanberg of Stifel. Your line is open.

Thank you.

Tore Svanberg: Yes, thank you. Just one quick one for you, Dean. 20% tax rate, obviously, with a big, beautiful bill, that's never probably going to change. I do not know if you have any comments there. Should we just sort of wait to see how things develop, or do you have an early read on 2026 tax rate?

And we have a follow-up from Tori's fineberg of fifo. Your line is open.

Dean Butler: Our non-GAAP long-term tax rate of 20%, we tend to assess that on an annual basis or as needed if a big structural change happens. In fact, this one big, beautiful bill that ended up passing on July 4th actually was on the very last day of our quarter. Our quarter ended on July 5th, just given the fiscal cycle this time. So we have included all of the tax-related adjustments that we think are in, but those are on the GAAP side of the books. On a non-GAAP basis, we haven't yet assessed what that impact would be longer term. I think it's sort of marginally lower, but whether that ends up changing sort of the longer-term time horizon, that we have yet to come to a conclusion on.

Yes, thank you. Just 1, quick 1 For You, Dean, uh, 20% tax rate, obviously, you know, with the big beautiful Bill. Uh, that's no worries, probably going to change. Um, so, I don't know if you have any comments there, uh, should we just sort of, wait to see how things develop, uh, or do you have an early read on 26 tax rate?

Peter Peng: That's fair. Thank you.

The so are non non-gaap. Uh long-term tax rate of 20%. We tend to assess that um an annual basis or an as needed, if a big structural change happens. Uh, in fact, this 1, big beautiful bill that ended up passing on July 4th, uh, actually was on the very last day of our quarter. Our quarter ended on July 5th, uh, just given the fiscal cycle this time. So we have included all of the tax related adjustments that we think are in. But those are on the Gap, side of the books, on a non-gaap basis. Uh, we haven't yet assess what that impact would be uh longer term. I think it's sort of marginally lower but whether that you know, ends up changing sort of the longer term sort of uh time Horizon that we have, you know, yet to come to a conclusion on for

Dean Butler: Yeah.

Deedee: Thank you. I will now hand the call back to Giovanni Pacelli.

That's fair. Thank you.

Giovanni Pacelli: Thank you, Deedee, and thank you all for joining this morning, and thank you for your interest in the company. Before concluding today's call, I would like to announce our upcoming participation in KeyBank's Technology Leadership Forum on August 11 in Deer Valley, Utah. This now concludes today's call. Thank you.

Yep. Thank you. I will now hand the call back to Giovanni patellae.

Thank you D, and thank you all for joining this morning and thank you for your interest in the company. Before concluding today's call, I'd like to announce our upcoming participation in keybanks. Technology leadership Forum on August 11th in Deer Valley Utah.

Deedee: This concludes today's conference call. Thank you for participating, and you may now.

This now concludes today's call, thank you.

this concludes today's conference call, thank you for participating and you may now disconnect

Mhm.

oh,