Silicon Laboratories, Inc.

Hello, my name is Tanya, and I'll be your conference operator today. Welcome to Silicon's Lab's second quarter 2024 fiscal 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 that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference conference is being recorded. I would now like to turn the conference over to Giovanni Pacelli, Silicon Labs Senior Director of Finance. Giovanni, please go ahead.

Thank you, Tanya, 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.sylabs.com. Our earnings press release and the accompanying financial tables are also available on our websites. 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. 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. A reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release and 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, Giovanni, and good morning, everyone. Silicon Labs delivered strong second quarter results, with revenue reaching the top end of our forecast and earnings exceeding expectations. Many surveyed customers report that their excess inventory levels have normalized, although some significant outliers remain. Improved booking patterns in the first half of the year indicate a continued recovery in the second half, even though weekly bookings are still below our target levels. Our design wind pipeline is well on track for the year, with record design winds in industrial and commercial business units with particular strength in the smart cities business. The home business also set a design wind record in the quarter. We are also pleased to see numerous design winds ramping into production and shipping to customers, including insulin management devices, electronic shelf labels, and smart meters. In insulin management, we've started shipping millions of units across multiple customers and regions. We expect this momentum to continue in the second half of the year and accelerate into 2025 as the market and our share for these products grow, and large customers begin ramping new programs. In smart retail, global deployments in the electronic shelf label market are expanding, and we have a clear leadership position in the space. we're working with four of the top five global ESL providers to support their rollout to retail customers. Lifetime, we have cumulatively shipped 300 million units and ESL has become our fastest growing business. We are meaningfully ramping our ESL unit volume and see this growth continuing to accelerate into the next year as this application gains further traction. In smart metering, we are participating in all of the largest smart metering deployments globally outside of the China domestic market. We've secured designs with the major global metering suppliers, positioning us to capture significant share in upcoming metering deployments in new and emerging markets like India, Central America, Southeast Asia, as well as to support next generation deployments in more established markets like the US and Europe. We've also just secured a significant smart metering design win with a top utility provider in Japan. This win will enable us to support a majority of Japan's smart meter market, servicing both new and existing deployments with our multi-protocol solutions, including our award-winning Wi-Fi 6 solution, the 917, and our best-in-class sub-gigahertz solution, the FG25. Our first Wi-Fi 6 product, the 917, has meaningfully lower power consumption than competing products in the market, and we believe it has the potential to drive share gains similar to our Series 2 Bluetooth solutions over the past several years. The 917 continues to generate significant market opportunities, and we are now seeing those opportunities convert to dozens of design wins, including at one of the world's largest appliance manufacturers. As IoT devices proliferate, our Series 2 portfolio is well positioned to unlock new use cases through industry-leading power consumption, security, multi-protocol wireless performance, and edge computing power. We were the first in our industry to integrate PSA Level 3 security into our Series 2 products. We're seeing its importance and are now securing new business as a result. Similarly, our early integration of AI ML into multiple Series 2 SOCs is also driving strong customer engagement as they seek to understand the potential use cases and applications for ML at the edge in their product roadmaps. We continue to see strong momentum in adoption of our current generation Series 2 products, while at the same time, we've started sampling the first product in our next generation Series 3 platform. The strength of our current generation and potential of our next generation platforms that are highly complementary is exciting and positions us extremely well going into the future. Further, customers will be able to transition from Series 2 to Series 3 as needed through common code base, scalable memory architecture, and significant advancements in performance, power consumption, and compute capability. We will be talking more about Series 3 at our upcoming Works with Developers Conference this September. Overall, I'm proud of the team's execution last quarter. As anticipated, the main driver of our recovery so far this year has been many of our end customers managing down their excess inventory. The steadily improving inventory backdrop, combined with Design Wind Ranch and key focus areas, such as insulin management, ESL, and metering, positions us to continue driving sequential growth in the second half. The third drive of our future growth is an improvement in the end market demand, the time of which remains hard to predict. That said, as bookings improve and shipments into our channel increase, we will benefit from this catalyst and the combination of all three of these factors will provide momentum for us moving forward. Lastly, we remain laser focused on returning to profitability as quickly as possible and executing for our long-term financial model. Now I'll hand it over to Dean for the financial update. Dean?