The Internet of Things continues to boost sales at Silicon Labs.
The Austin-based chipmaker reported $179 million in revenue for its fiscal first quarter, which ended April 1. That is a 10.5 percent increase from the same quarter a year ago. But it’s a decline when compared to the previous quarter.
Silicon Labs chief financial officer John Hollister said some of the company’s sales growth stems from an “upside performance in our IOT business,” which is a crucial part of the company’s growth strategy going forward.
The Internet of Things is a chip industry term for Internet-connected non-computing devices, such as a Nest thermostat.
The chipmaker’s stock initially initially declined about 3 percent after the market opened on Wednesday, but by the end of the day the stock was back in positive territory, closing up 45 cents, or less than 1 percent, at $75.35.
The company said for its current quarter, it expects revenue of $184 million to $189 million, which was slightly above what financial analysts were expecting.
Silicon Labs makes a variety of chips, sensors and software that can be used in a variety of devices, from televisions to smart energy meters and data centers.
Its major customers include Cisco, Fitbit, LG Electronics and Samsung.
The 20-year-old company is headquartered in downtown Austin, next to City Hall, and employs about 650 people locally.
The company’s profit tripled from a year ago to $15.4 million, or an earnings per share of 36 cents.
When adjusted for certain one-time costs and gains, the company reported a profit of $27 million, or 63 cents a share. That exceeded Wall Street expectations of 60 cents per share.
Silicon Labs’ share price has been on a tear since early last year. The stock has risen 65 percent in the past 12 months alone, and have climbed 15 percent since the beginning of the year.
Much of Silicon Labs’ recent success is driven by growth in its Internet of Things and Infrastructure division, which includes products that are used in data centers and in various industrial and green energy products.
The company's legacy products, such as modems and TV and radio tuners, are declining in sales.
For years, Silicon Labs has been focused on growing its IoT and Infrastructure divisions, which now account for 70 percent of the company’s revenue.
CEO Tyson Tuttle said during a conference call with analysts on Wednesday that he was “bullish” about the company’s ability to maintain sales growth in its IoT division.
That division established record revenue in the first quarter of $88 million. And its Infrastructure division saw its revenue rise 14 percent from last year to $36 million.
Some of the company’s sales growth in IoT stem from acquisitions. Since 2012, the company has purchased six companies that all make Internet of Things-related products.
The company also announced it raised $400 million in “senior convertible notes,” which allow investors the opportunity to convert these notes into equity at a later date.
This money was used to pay down some debt. According to Silicon Labs, “the remaining net proceeds will be used for general corporate purposes.”
Additional material from the Associated Press.