Good afternoon, and welcome to the Silicon Labs Divestiture of Infrastructure and Automotive Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Hollister, Chief Financial Officer. Please go ahead. Thank you, Allie, and welcome everyone. I'm joined this afternoon by Tyson Tuttle, our Chief Executive Officer. Today, we will discuss the divestiture of Silicon Labs infrastructure and automotive business. After our prepared comments on the transaction, we will take investor questions. Our comments will include forward-looking statements, 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. During our call today, we may make reference to certain non-GAAP financial information. A reconciliation of our GAAP to non-GAAP results can be found in the investor relations section of our website, along with a recording of this webcast with associated slides. Before we get to this afternoon's news, I'd like to provide an update on first quarter financial performance. We delivered strong year-on-year growth in Q1, and we are pleased to provide updated and increased revenue guidance. We now estimate total Q1 revenue to be approximately $255 million, which is an increase of around 6% from our prior guide, with the upside coming primarily from the IoT business, where we have seen continued strong bookings and durable demand momentum. With that, let me now turn to our announcement. Earlier today, Silicon Labs took a bold and momentous step on our corporate journey with the signing of a definitive asset purchase agreement to sell our infrastructure and automotive business to Skyworks Solutions for $2.75 billion in all-cash consideration. Infrastructure and automotive, or I&A, which includes our power isolation, timing, and broadcast products and IP, represents $376 million in revenue for fiscal year 2020 and has approximately 350 employees globally. Skyworks, another outstanding global semiconductor leader, will fund this acquisition with a mix of cash and debt. Silicon Labs expects to receive an estimated $2.3 billion in net proceeds after taxes and transaction fees. We intend to return approximately $2 billion to shareholders through a combination of special dividends and/or share repurchases after the transaction closes, which is expected to be in the third quarter of this year. Silicon Labs and Skyworks will work to obtain required governmental approvals and collaborate to ensure a seamless transition for customers, suppliers, and employees. We do not expect this transaction to require regulatory approval in China. Upon final closing, Silicon Labs will be a pure-play leader of secure, intelligent wireless connectivity for the IoT. The rationale for this strategic transformation is very compelling. While sharing a common technology heritage, our two businesses, IoT and I&A, are fundamentally different. They have unique markets, customers, supply chains, and go-to-market strategies. By executing this divestiture, we are now a pure-play leader of secure, intelligent wireless connectivity for the IoT, and by separating the I&A business, we are giving it the best opportunity to continue its success. We are doing this now to accelerate our leadership and broaden our market penetration at a time when our IoT business and the IoT market are primed for significant growth. By focusing and accelerating our investments, we can optimize our execution and maximize future growth opportunities. We also believe the timing of this transaction is compelling given the valuation, and we believe we are unlocking significant value for our shareholders. I will now turn the presentation over to Silicon Labs CEO, Tyson Tuttle, to provide an overview of the IoT business. Tyson? Thank you, John. I want to start off by recognizing that the outcome of this deal is a measurable testament to the industry-leading solutions and strong financial performance that our world-class infrastructure and automotive team has delivered over the last 25 years. With the massive growth in connected devices, now is the time for us to exclusively focus on the large, diverse, and growing IoT opportunity. Our wireless portfolio is unmatched in breadth and depth. We have the industry's leading secure, intelligent IoT hardware and software platform, and our myriad and ever-expanding set of ecosystem partnerships are helping to deliver sustainable design win momentum. During the past 10 years, our IoT businesses posted a CAGR of 18%, and we're targeting a long-term growth rate in our updated model of 20%, exceeding the forecasted mid-teens CAGR within the IoT industry. We are a purpose-driven organization with our solutions transforming industries, growing economies, and improving lives. We see an opportunity to connect more people, places, and things in order to deliver real measurable value across a plethora of sectors. The driving force behind the projected strong unit growth is the proliferation of connected devices in our everyday lives. In the early days of PCs and mobile phones, individuals had just a few wirelessly connected devices. Now we see a future where users around the world will have hundreds of connected devices improving their health, homes, offices, shops, cities, and more. Our served available market is large and diverse. According to industry estimates, our products and technologies will address a $10 billion market by 2023, and we already have a strong leadership position in numerous technologies underpinning this broad and substantial growth opportunity. Our success is reflected in the diversity of our IoT business. We have created a diverse set of applications that serves a broad customer base using a wide range of technologies. Geographically, IoT sees strong adoption in the Americas and Europe, with relatively less exposure to the Asia-Pacific region. That's because we are experts in wireless. From our early days of RF synthesizers and radio tuners to today's advanced mesh and multi-protocol solutions, we know connectivity. We applied our proprietary CMOS, mixed-signal RF, and microcontroller design capabilities to the unique power, battery life, size, and storage requirements of the IoT. Additionally, we bolster our presence in the market through the successful integration of a number of acquisitions, which enhanced our silicon software and tools. Today, we are a leader in wireless connectivity for the IoT because our solutions are built for the IoT, not repurposed chips that fall short in meeting the challenging customer demands for secure, robust, flexible IoT solutions, serving a diverse set of applications and a broad customer base. We have supported the expansion of microcontrollers and the addition of wireless connectivity since the IoT industry's infancy. This strategic move gave us a crucial first-mover advantage in many target markets, and we've spent the past decade investing, developing, and helping shape the industry. We possess a critical advantage in bringing our customers products to end markets because of our world-class capabilities in mixed-signal and RF SoC integration to build a portfolio of devices with leading functionality, energy consumption, and cost. Recently, we added the world's most advanced security technology to our platform, earning Arm's first and only PSA Level 3 certification for a wireless IoT solution. Key to Silicon Labs' success is our comprehensive hardware and software platform, which integrates all the critical technologies and wireless standards required to compete in the IoT markets. Our SoC and module portfolio, easy-to-use development kits, software, Simplicity Studio development tools, and training are all designed to help IoT businesses get to market quickly with intelligent, energy-efficient edge devices across a wide variety of applications for secure wireless connectivity to the cloud and smartphones. We also have the industry's most comprehensive IoT ecosystem, including organizations defining the next wave of IoT wireless technology. We have strong relationships with these ecosystem providers who are critical to driving greater adoption in the large and developing IoT markets. Silicon Labs wireless portfolio is unmatched in breadth and depth, serving a wide range of wireless protocols and applications. We aren't simply a silicon provider. We are a complete IoT solutions provider with the product range and network of partners, ecosystems, and developers to support hundreds of leading partners, thousands of applications, and tens of thousands of customers. Our IoT design win momentum, pipeline, and revenue growth are strong validation points for the success of our strategy. In the past decade, our IoT business delivered consistent growth, and we expect it will continue to do so in the years ahead. We are expecting IoT revenue to grow 25% to 30% this year and a longer-term CAGR of approximately 20%. We're not only growing, but we're taking share, consistently outperforming our served market over the last six years. As we shared during our Analyst Day last March, we view our IoT business in two primary verticals, the industrial and commercial market, and the home and life market. In both areas, we are deeply engaged with leading customers and ecosystem partners today, and we estimate double-digit market growth this decade. Industrial and commercial applications span many segments, including industrial IoT, smart retail, and smart cities. In each segment, there are many different applications for our IoT platform, including smart metering, commercial lighting, building automation, and direction finding. Already we've seen great success in this portion of the market. We have thousands of design wins and industrial customers that offer multi-year, high-quality growth. We're established leaders in both lighting and electronic shelf labels, which combined are driving 60 million units and more of new volume in 2021. Specifically, we have the number one market share in electronic shelf labels and wireless smart grids, and we're working with eight of the top 10 lighting suppliers. Building upon our leadership, we aim to expand our position in additional applications. In home and life, we are the number one provider of IoT software and silicon solutions. We are the proven partner for developers of smart home devices and gateways, offering decades of wireless experience and the widest range of IoT solutions, including leading mesh technologies that extend network reach in complex RF environments such as the home. The simplicity, reliability, and robustness of our products make them the solutions of choice for smart home developers, regardless of smart home ecosystem, wireless protocol, or application. Our solutions are being put to use in other important aspects of life, from monitoring blood glucose to protecting infant children in car seats. Our wireless solutions have become a key element of products, making a positive impact across the world. We are proud of this fact. We believe in the power of IoT to transform industries, grow economies, and improve lives. Silicon Labs' people, products, and corporate responsibility efforts are helping build a smarter, more sustainable, and highly connected world. As part of this corporate evolution, we are also making some organizational changes to increase focus and accelerate growth. With the transition to entirely IoT, Matt Johnson will become Silicon Labs President. In this position, Matt will run the day-to-day business operations and product development efforts, ensuring our strategy and team are aligned and positioned for strong growth in our two main market categories: industrial and commercial, and home and life. Matt will focus and organize our resources to ensure we are positioned for consistent accelerated growth with our teams working together toward a common objective, to be the undisputed leader in wireless IoT connectivity. I will continue to manage the corporate functions, including operations, sales and marketing, IT, people, and finance. I will be able to focus more of my efforts evangelizing our innovative technologies, our company portfolio, and engaging with customers. Matt and I have been strong partners. I look forward to continuing to accelerate Silicon Labs' IoT market leadership and growth together. John will now cover our updated target model. John? Thanks, Tyson. As I shared earlier in the call, after executing the I&A divestiture, Silicon Labs will transform into a pure-play leader of intelligent wireless connectivity for the IoT. As such, here is a snapshot of our updated IoT-only long-term financial model. We plan to utilize our investments to accelerate IoT market growth and share gain. We expect a long-term revenue CAGR in the go-forward business model of 20%, with non-GAAP gross margins normalizing over time in the mid-50s. Our non-GAAP OpEx will be sustained at a level that will drive acceleration, we will see those levels moderate as a percentage of revenue in future periods along with the growth, driving rapid earnings leverage and accretion. Our model reflects revenue levels and corresponding non-GAAP OpEx, resulting in a non-GAAP operating margin in the mid-20s at revenue levels of approximately $1.5 billion, which is consistent with our historical long-term operating model. We plan to return a substantial portion of the capital realized in this transaction. That, along with the option value of this tremendous IoT upside, in our view, represents a balanced approach to delivering shareholder value. Before I turn the call back to the operator to begin Q&A, I want to stress that this divestiture of I&A will allow us to continue our track record of growth by exclusively focusing on the large growing IoT opportunity. We have the expertise, products, and partnerships to be a pure-play leader and to help make the world a better place. Silicon Labs is simplifying. We are scaling, and we are 100% focused. I want to thank you for your time today. To accommodate as many people as possible, we ask that you please limit your questions to one with one follow-up. Operator, you may begin the Q&A now. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question today comes from Tore Svanberg with Stifel. Yes. Thank you. Congratulations on the announcement and congratulations to Matt for his new role. First question that I have. Obviously, the profitability, so the gross and the operating margin for the IoT business is lower than your existing business as a whole. Obviously, the attraction here is the growth of the business. It's grown 18%, now you say it's going to grow 20. Is that 20 just a conservative number? Because I would expect it to be a little bit better than that given the lower margins of the business. Yeah, Tore, this is John. We feel that 20% is a robust goal, and it is an achievable goal. We have an opportunity pipeline that is very strong, along with sustained strong design win momentum that's been building and building over the course of several years. This growth rate outpaces the market, and we think is an appropriate target for us to achieve and represents tremendous growth for this business. Yeah, Tore, I'd also mention that in 2021, we talked about growth of 25% to 30%. Certainly, we're coming off the pandemic year and a lot of moving pieces there, but this year certainly exceeding that target, but that is our long-term target, 20%. That's very fair. As my follow-up question, you talked about returning that $2 billion. Could you give us a little bit more color on that? Should we expect sort of a 50/50 ratio between the two? Are you basically thinking about a one-time dividend, or are you considering a growth dividend as well? Thank you. Yeah, Tore, I think on the dividend front, if we pursue a dividend approach, that would likely be in the form of a one-time special dividend, and we would continue to hold on the concept of a recurring dividend to allow this business to ramp into that type of a profile. With respect to the mix, we're going to take the time now, prior to closing, to formulate our final strategies on that point and have more later as that comes to fruition. Some combination of share repurchases and dividends are in the cards of what's being considered here. Sounds good. Congrats again. Thank you, Tore. Our next question comes from Gary Mobley with Wells Fargo Securities. Hey, guys. Thanks for taking my question. Yeah. I was hoping you could share with us a little background on how this evolved. Was this an unsolicited bid for this portion of the business? Was this Silicon Labs proactively trying to increase focus on the IoT business? Seemingly, your remaining IoT business would've been a better acquisition target for Skyworks, just given the complementary nature of the businesses. My question is, why didn't Silicon Labs contemplate selling the entire company to Skyworks? Yeah, Gary, this is Tyson. This was a process that we initiated when we really sat down and thought strategically about where we were and about the massive opportunity that we have in front of us in IoT, the complexity of that in terms of being able to. It requires focus, and it requires investment to be able to win. This is a path that we've been on, certainly in earnest here for the last 10 years, if not for the last 20, with our microcontroller business and some of our wireless. Really, when I took over about 10 years ago, that was our prime focus. We transferred a lot of employees in there. We did a lot of investment, and we did a lot of M&A to get us to the point. Now we're at 60% of the company, the largest opportunity pipeline, the fastest growth, and really the highest quality in terms of our ability to control the integration path, to be able to integrate all those components inside single devices, and then enhancing our differentiation with software and solutions and cloud and AI. There's a rich roadmap that we've got. The diversity of the business in terms of all the different applications, the tens of thousands of customers that we have. In other words, it is our best market opportunity and the largest, and one that can take us to the size of, with our guidance, $650 million this year to $1.5 billion, $2 billion, $3 billion, given the size of the market. That requires focus and it requires leadership. just given the different profiles of the business and the different investment requirements and really looking at it just from a sum of the parts valuation and at the type of multiples that we were able to get, a solid offer from Skyworks and also a solid home for the team, a great outcome. This was a process that we initiated last fall and we hired Qatalyst Partners and [great bank], and Skyworks ended up on top. it wasn't really a matter of should we sell the whole company. It was really a matter of how do we drive the best shareholder value and best outcome and be able to focus and to continue to drive success and leadership in IoT. very excited about the outcome, but this was driven on our side. Okay. As my follow-up, if my math is correct and just based on Skyworks mention on their call, it sounds like the operating profit from the business is to be sold somewhere in the neighborhood of 85% of the combined company's operating profit. My question to you is, in what way, if any, will the R&D activity for the IoT business be impacted from the sheer profitability that the divested business has been generating, and the cash related to that? In other words, is this a clean break, or is anything from an R&D perspective gonna be sacrificed because of the lower level profitability? Yeah, Gary, no. In fact, it's quite the opposite. By executing this transaction, we are accomplishing two primary objectives of focusing on the IoT market and accelerating our investments in the IoT market. That's important as we've got some important growth areas to invest in, primarily in Wi-Fi and Bluetooth, as we've talked about on prior calls. That will even further solidify our position as a leader in this market and position us for superior growth over time. We are not sacrificing any R&D investments. In fact, we're enhancing our R&D investments. Okay. Thank you, guys. Our next question comes from Raji Gill with Needham & Company. Yeah, thanks, and congrats on the strategic move. It makes some sense. Just, John, in terms of modeling, how do we think about the revenue throughout the year? You provided the Q1 guidance which you upsized, and then you provided a calendar 2021 guidance. How do we think about eliminating the infrastructure and auto from our model, and how do we think about the OpEx associated with that and margin profile as we progress throughout the year? For my follow-up, you had mentioned that you'll provide more detail in terms of the mix of share buyback versus dividend, but how do we think about the share count, again, regarding the overall model on a standalone IoT basis, what that would look like, the new share count would look like? Yeah, Raji. On the first question, we're not updating, or we're not providing second quarter guidance today. We'll talk about that next week on the earnings call and have more color for you at that time regarding how the business is trending in the second quarter. On the share count, that's going to depend on the ultimate mix of capital deployment and how we structure this. We've given the top-line number of $2 billion, and depending on the mix of how that is structured between the forms of dividends or share repurchases will clearly affect the share count going forward. Thank you. Appreciate it. Our next question comes from Craig Hettenbach with Morgan Stanley. Yes, thanks. Could you talk about just the decision to return the bulk of the proceeds? I know you've been quite acquisitive in the last few years and certainly have the breadth of the portfolio, but just how you're thinking about this business, where it stands today, and on a go-forward basis, kind of future M&A opportunities and balance sheets. Yeah, Craig. We felt that a very rational use of this capital is to return it to the shareholders. The residual gross cash balance we would expect coming off of that is about $1 billion. Of course, we have around half a billion dollars in our 2025 convertible notes. The company will retain a substantial cash balance to deploy through our normal capital deployment means, including opportunistic M&A, as we've talked about. We felt like out of the gate, given the size of this, it was appropriate to view it as more of a unique opportunity to return capital to shareholders. By doing that, we're combining that value unlock to shareholders with what we believe is also value unlock by focusing and accelerating on the IoT market. Understood. Thanks. Just as a follow-up, can you talk about on the gross margin front, so as a starting point of 56% - 58% this year and then mid-50s longer term, what are some of the puts and takes that you see for gross margin over the next number of years? Yeah. You've got a number of factors, and normal evolution of these markets has an effect. The mix of technologies, whether that's more proprietary or standards-based technologies. As we've talked about, Craig, the customer ramps and the mix of the long tail versus large customers. we're driving for high growth here, so we're going to be competitive in this market. I'll just finally add that over time, this is a strong gross margin outlook for this market, and we think this is a robust business model that we're presenting here today. Got it. Thanks, John. Again, if you have a question, please press star then one. Our next question comes from Bill Peterson with JP Morgan. Yeah, hi. Thanks for taking the question. I guess the first question, you provided an outlook for the IoT business. As everyone's aware, we have supply constraints, so I assume that this contemplates that. I guess in the longer term, certainly scale matters with the foundry base. I'm just curious on how you think about that aspect as you consider this. Will the supply constraints still be a factor even in the next year? Given that you may have less scale at that point, how do you see that? For example, are the I&A just using different foundry partners altogether and it really shouldn't matter? Bill, this is Tyson. The IoT outlook that we've provided does consider the supply constraints as we see them for the year. Certainly without the supply constraints, we could be doing an even higher level of revenue. We talked about the fact that our supply chains in I&A and IoT are different. In fact, our scale with TSMC will go up next year versus this year, given the growth that we're seeing in the IoT business as we go into 2022. We will not be losing scale with our primary foundry partner. We'll see how this all plays out, but certainly we're working to secure the capacity that is required for the long-term growth in the IoT business and see a clear path to achieving that as we're going from 90 nm to 40 nm and into 22 nm technologies. These are mainstream fabless nodes, and we've got a strategy to be able to meet the demands of the customers and to work with foundry partners to make that happen. Okay, thanks for that. I guess you put forth the long-term target. Looks like it'd take around three years or so to kind of reach the bottom end. At sort of a 20% growth profile. Just to be sure, that's on an organic basis. No need for M&A to meet that. That's the first part of that question. Secondly, as you consider the portfolio of IoT as it stands today, are there any areas that you feel would require additional investments, either, I guess, inorganically, or would you look. I mean, organically, are there things you really need to add using maybe some of the proceeds that you're gaining from this? Yeah. In terms of our long-term target on the growth side, certainly we have robust growth this year over the target, with the long-term target of 20%. As the revenue scales over time, we see, and that was the model that John presented, the ramp of our profitability back up into the range and potentially even exceeding the range where we are to the 20%-25% that we were previously looking at. as we scale the business up in revenue, we will be seeing the operating margin get back into that range. that does not include we're not contemplating M&A within those growth targets or those profitability targets. In terms of things that we need to invest in, certainly, we have a lot of technology that we have been investing in and developing here over the last 10 years, whether it's Zigbee, Z-Wave, Thread, proprietary Bluetooth, Wi-Fi. We've got a lot of plans to double down on our Bluetooth and our Wi-Fi investments, and to be able to carry those forward, developing our next generation silicon platform. Those are contemplated within this model. We believe that we have the technologies, we have a massive market opportunity within the local area network, personal area network areas across this thousands of applications and tens of thousands of customers in IoT. Really, it's a matter of putting our head down, focusing, and accelerating that growth going forward. This concludes our question and answer session. I would like to turn the call back to John Hollister for any closing remarks. Thank you, everyone, for your time and attention today. That will conclude today's call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.