Exceeds Guidance on Revenue, Gross Margin and EPS

AUSTIN, Texas — (BUSINESS WIRE) — October 26, 2016 — Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its third quarter ended October 1, 2016. Revenue in the third quarter established a new record, exceeding the high end of guidance at $178.1 million, up from $174.9 million in the second quarter. Third quarter GAAP and non-GAAP earnings per share (EPS) exceeded the high end of guidance at $0.47 and $0.77, respectively.

Third Quarter Financial Highlights

• IoT revenue established a new record, increasing to $81.5 million, or 6.2% sequentially.
• Infrastructure revenue established a new record, increasing to $38.3 million, or 7.5% sequentially, exclusive of $5 million of patent sale revenue in the second quarter.
• Broadcast increased to $40.7 million, or 7.1% sequentially.
• Access revenue declined to $17.5 million, or 10.0% sequentially.

On a GAAP basis:

• GAAP gross margin was 60.8%.
• GAAP R&D expenses were $48.4 million.
• GAAP SG&A expenses were $38.0 million.
• GAAP operating income as a percentage of revenue was 12.2%.
• GAAP diluted earnings per share were $0.47.

On a non-GAAP basis (results exclude the impact of stock compensation, amortization of acquired intangible assets and certain other items as set forth in the reconciliation tables below):

• Non-GAAP gross margin was 61.0%.
• Non-GAAP R&D expenses were $39.6 million.
• Non-GAAP SG&A expenses were $31.4 million.
• Non-GAAP operating income as a percentage of revenue was 21.1%.
• Non-GAAP diluted earnings per share were $0.77.

Product Highlights

• Acquired Micrium, the leading supplier of real-time operating system (RTOS) software for embedded computing, supporting more than 50 processor architectures and providing a commercial-grade RTOS solution across key embedded markets.
• Launched the MGM111 mesh networking module, leveraging Silicon Labs’ multiprotocol Mighty Gecko SoC, ZigBee® and Thread mesh protocol stacks, and Simplicity Studio™ development tools.
• Shipped more than 100 million ZigBee mesh networking devices worldwide to date, reaching a new milestone.
• Released a major update of the award-winning Simplicity Studio software development tools, giving IoT developers more capabilities and easier access to Silicon Labs’ full range of IoT products, including its latest multiprotocol wireless SoCs.
• Launched the CP2102N bridge device, a smaller, lower-power offering of Silicon Labs’ USBXpress™ family providing a highly integrated, turnkey solution for adding USB connectivity to embedded designs.
• Introduced the Si875x isolated gate drivers offering an innovative capability to transfer power across an integrated CMOS isolation barrier, and providing a replacement solution for antiquated electromechanical relays and optocoupler-based solid-state relays in switching applications.
• Launched the Si828x isolated gate driver family targeting industrial and green energy designs requiring state-of-the-art signal isolation technology with superior timing, lower emissions and higher reliability.
• Introduced the Si838x isolator family of high-speed, multi-channel digital isolation products designed to outperform and outlive legacy optocouplers in programmable logic controllers for factory automation.

Business Outlook