Good morning. My name is Shannon and I will be your conference operator today. At this time I'd like to welcome everyone to Silicon Labs Second Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the call over to Ms. Jalene Hoover. Ms. Hoover, you may begin your conference.

Thank you, Shannon. Good morning, everyone. Thank you for taking the time to dial in. Tyson Tuttle, Chief Executive Officer, and John Hollister, Chief Financial Officer, are on today's call. We will discuss our financial performance and review our business activities for the second quarter. After our prepared comments, we will take questions. Our earnings press release and the accompanying financial tables are available on the Investor Relations section of our website at www.silabs.com. This call is also being webcast and a replay will be available for four weeks. Our comments today will include forward-looking statements or projections that involve substantial risks and uncertainties. We base these forward-looking statements on information available to us as of the date of this conference call and that information will likely change over time. By discussing our current perception of our markets, the future performance of Silicon Labs and our products with you today, we are not undertaking an obligation to provide updates in the future. There are a variety of factors that we may not accurately predict or control that could have a material adverse effect on our business, operating results, and financial condition. We encourage you to review our SEC filings which identify important factors that could cause actual results to differ materially from those contained in any forward-looking statements. In addition, it is not our intent that the non-GAAP financial measures discussed today replace the presentation of Silicon Labs GAAP financial results. We are providing this information to enable investors to perform more meaningful comparisons of operating results and more clearly highlight the results of core ongoing operations. I would now like to turn the call over to Silicon Labs Chief Financial Officer, John Hollister. John C. Hollister - Chief Financial Officer & Senior Vice President: Thank you, Jalene. I'm pleased…

Thank you, Tyson. Before we open the call for the question-and-answer session, I would like to announce several conferences that we will participate in during the third quarter, including Pacific Crest's 18th Annual Global Technology Leadership Forum in Vail on August 8, Citi's Global Technology Conference in New York on September 7, and Drexel Hamilton's Telecom Media and Technology Conference, also in New York on September 8. We would now like to open the call up for your questions. To accommodate as many people as possible before the market opens, we ask that you please limit your questions to one with one follow-up. Shannon?

Your first question comes from the line of Craig Ellis from B. Riley. Your line is open, please go ahead. Craig A. Ellis - B. Riley & Co. LLC: Thanks for taking the question and congratulations on the operating margin performance in the quarter. I just wanted to follow up on the comments about isolation share gain from both digital and optocoupler competitors. Can you go into more detail there and provide us with some more color on how you see isolation playing out as we look over the intermediate term, say, through the 2017 time period? George Tyson Tuttle - President, Chief Executive Officer & Director: Craig, this is Tyson. Our isolation products are the evolution of a technology that we've been developing for 20 years. It started with our DAA technology where it was proven out with all sorts of lightning and real-world application examples. And so, we've developed a very robust isolation technology that then for the last decade we have been applying towards the replacement of optocouplers in systems that require higher levels of performance, higher levels of isolation voltage, higher levels of reliability and faster speed. So it offers a wide range of advantages over traditional technology. And we've had superior specs and parameters than the competing solutions from TI and ADI, in particular. We also – it's a silicon-based solution and we are able to integrate additional circuitry around the isolation barrier to solve specific problems around motor control, power supplies, inverters, and – so that has given us a really strong position in the market and so we've won a lot of business in data centers, in hydroelectric vehicles, in solar energy and a lot of different other applications. It's a broad – it's actually one of our broadest businesses. We have a…

Your next question comes from the line of Tore Svanberg from Stifel. Your line is open, please go ahead. Tore Svanberg - Stifel, Nicolaus & Co., Inc.: Yes, thank you. Nice quarter. I guess a follow-up to that last question on the SoCs and the gross margin. So is it my understanding that as SoCs become a higher percentage of the revenue that there could be some potential upside to gross margin? Or is this sort of the new norm going forward? John C. Hollister - Chief Financial Officer & Senior Vice President: Yeah, Tore, this is John. New norm is a healthy way to view this. The SoCs would be higher margin than the module contents over time. We'll see how the IoT margins play out, but bear in mind also we have infrastructure products operating at above our corporate average margin and we do expect that to continue to grow as well. So there's puts and takes even within IoT, across the various product lines. We thought it judicious to go ahead and update the model, given the trends that we're seeing. And our goal is to drive revenue growth and generate higher operating leverage with judicious expense control as we move through the course of 2017. Tore Svanberg - Stifel, Nicolaus & Co., Inc.: Understood. Thank you. And as my follow-up, could you elaborate a little bit on your comments about Q3 broadcast, I think you said that a peaking of broadcast? And maybe you could also elaborate a little bit on the TV tuner business, sort of, what the dynamics are now, especially as it relates to pricing and as this business now become small enough where it's becoming less and less of a headwind for the broadcast business? Thank you. John C. Hollister - Chief Financial Officer & Senior Vice President: Sure, Tore, this is John again. So as we've indicated earlier this year, we had some tough year-on-year comparisons in the first half of 2016, given the particularly strong performance in broadcast, particularly in the video business in the first half of 2015. We're seeing our way through that phenomenon now and actually seeing some upside in third quarter in the video business. That's the result of a couple of factors, one being regain of share, some of which was impacted by the Cresta lawsuit issue and just overall better penetration of the China market, and as well as the Olympics in Rio this year driving some degree of additional demand. We do see that as a seasonal peak in third quarter and would expect that to tail off some in the fourth quarter just due to seasonality. So overall, once we're past the first half comparisons, we're seeing a reasonably healthy video market here now, more stable. Tore Svanberg - Stifel, Nicolaus & Co., Inc.: Great. Thank you.

Your next question comes from the line of Blayne Curtis of Barclays. Your line is open, please go ahead.

Thanks for taking my question and nice job on the quarter. I just want to all follow back on the gross margin. So you're guiding to the midpoint of that range. I would assume that IoT is going to continue to outgrow your overall business. So just curious when you say that's the ongoing range here, what are the other offsets? Are you able to improve the margins on the module side? Or is it really infrastructure that helps in the mix? So what are the moving pieces that keep you in midpoint of that range? John C. Hollister - Chief Financial Officer & Senior Vice President: Yeah, it's both of those, Blayne; this is John again. IoT now is a bit below the corporate average with the higher module content, so and clearly, we have ongoing cost improvements around the modules themselves. We have ongoing cost improvements around the underlying chips and strength in infrastructure as some of the major factors affecting that landscape.

Okay. And then just another clarity on the last question, so you're saying broadcast is up in Q3, but that's a peak and then should decline in Q4? I just wanted to understand what peaking meant, because I originally thought it was down. And then as you look to December, just any color on just overall seasonality would be helpful. John C. Hollister - Chief Financial Officer & Senior Vice President: Sure. So when we say peak, we mean sequentially...

Yeah. John C. Hollister - Chief Financial Officer & Senior Vice President: ...for the year, for this calendar year. And it's really just driven by seasonal demand on the consumer market. That's really the primary factor from annual seasonality. We'll be able to give some additional color, of course, on the next call, as how things shake out for the fourth quarter.

Okay. Thanks.

Your next question comes from the line of Matt Ramsay from Canaccord Genuity. Your line is open, please go ahead.

Yes. Thank you very much for taking my questions. Good morning. I guess going back to the IoT business and an earlier question did a good job of talking about the different drivers going forward, maybe, Tyson, you could give us a little bit of an update with the ramping module business of what we should think about as a target growth rate for revenue in the IoT business going forward? I mean, it's always hard to guide that stuff too far. But if the margins are a hair lower, it would seem like the addition of the module business could drive some elastic demand in the channel, so just trying to get an update on the top line. Thanks. George Tyson Tuttle - President, Chief Executive Officer & Director: So in terms of the drivers for IoT, we've got a broad range of applications. We've got a number of high-volume applications as well as success in the channel, with the modules being very appropriate for the channel. If you look at the module margins and the quantity of revenue that's coming from that and the fact that we have moved our gross margin target model down, it was 60% to 62% and now it's 58% to 60%. That 2-point up is entirely attributable to the lower gross margin out of the module business. So the change in model does reflect the additional module content. We do have cost reductions in place to continue to make those products more competitive in the market and to continue to drive success with those. The modules are especially important in the channel. It makes the products more attractive to sell, very easy to sell. There's no RF support for antennas and compliance required with the modules, so it's a very popular product – set of products and it's an important part of our strategy going forward. So while it does come at a lower gross margin percent. Actually when you sell a module to gross margin dollars are higher. So as we have more growth in the modules, it will provide a little bit of a lower overall gross margin, but the gross margin dollars is an accretive number there. And we believe it will drive significant success, both in the channel with the broad customers, but also as those customers move into high volume, our ability to move those onto SoC type designs.

Got it, got it. I think the last point about gross margin dollars is what I was really trying to get at. And then as a follow-up, I thought it interesting your quite bullish commentary in your prepared remarks about the UK rollout of the smart meter platform. How are you thinking about that in the context of the Brexit decision? Is it impacted one way another? I'm just kind of unclear on what that impact might be for domestic investment in the UK. Thanks. George Tyson Tuttle - President, Chief Executive Officer & Director: The UK smart metering rollout is something that we've been working on for three to four years. This has been a program with the UK government and the utilities and, actually, as a result of Brexit, if you believe that there would be some additional stimulus into the economy, it might be something that they accelerate. But I certainly do not see any reduction in ordering patterns or any hesitation to continue with that rollout. It's something that's driven by the government and by mandates and we believe that it has got a lot of momentum in place. That rollout will happen over the course of four or five years as it deploys across the UK. So it's an exciting opportunity. I think if you just look overall at the impact of the Brexit and the stronger dollar, it does also drive a bit of favorability with foreign exchange in terms of our operating expenses, but overall, we think that the impact is minimal, if not somewhat positive.

Great. Thanks. Good to see the nice results.

Your next question comes from the line of Anil Doradla from William Blair. Your line is open, please go ahead. Anil Kumar Doradla - William Blair & Co. LLC: Congrats from my side, too. So couple of questions, now on the $5 million patent sales, obviously, you talked about it a little bit last quarter. Tyson, can you give us a little bit of color, and going forward, I mean, is there like a patent strategy in terms of maybe divesting some of your patents, given the amount of IP you guys have developed over the years? George Tyson Tuttle - President, Chief Executive Officer & Director: So, the $5 million patent sale came – it was in our infrastructure product area. We haven't talked specifically about what patents, but these were some patents that were non-strategic in a product area that we have deemphasized. They were valuable patents and were able to sell those at a favorable price. We continue to view IP sales as opportunistic. It's part of a strategy that if it makes sense, we will do it, but it's not something that we plan on an ongoing basis. I would add that we have a very strong IP position. We have over 1,500 patents pending and issued and continue to file new IP at a fairly rapid clip as we develop new products and technologies over time. So it is an important component of the value of the company and in terms of the competitive positioning of the company. But in terms of monetization, it is something that we treat opportunistically. Anil Kumar Doradla - William Blair & Co. LLC: And on the timing front, clearly things are improving there. Can you share some insights on what's going on perhaps on the wireless side, on the…

Your next question comes from the line of Cody Acree from Drexel Hamilton. Your line is open, please go ahead.

Thanks, guys, for taking my questions and congratulations on the progress. Tyson, on the module strategy in IoT and the change in the gross margin target, is there a way to quantify the trade-off that you think you're getting in growth rate for taking a lower gross margin? And then as you look at the operating margin of that business, I would think that you're able to maybe get better leverage for your R&D across multiple players, so while you're lowering gross margins are you able to actually either improve or keep stable operating margins on those same products? John C. Hollister - Chief Financial Officer & Senior Vice President: Hey, Cody. This is John. I'll start out here. We don't have specific numbers to quantify the trade-off precisely in that way, but I would just start by pointing out that we believe the market itself will be addressed with a high percentage of module content. We've seen industry estimates that up to 50% of the Bluetooth market would be addressed in the form of modules and roughly 20% of the mesh networking market would be addressed in modules. So this really is important incremental business, and it's important for our customers to get an effective on-ramp to the IoT. And yes, I mean, we agree with the thesis of what you're saying, we should generate more operating leverage with those module sales. George Tyson Tuttle - President, Chief Executive Officer & Director: Yeah, I think you also have to look at how to leverage the silicon and software developments across the overall market. If by having a module offering we're able to make the customer experience, we're able to maintain the connection with the smaller customers, they're developing with our tools and those same tools, the same software, the…

And, Tyson, you mentioned that increasing customers I guess, if you're not able to maybe quantify an increase in maybe an IoT growth rate, are you at least seeing a tangible enough increase in design win activity that's obviously causing you to make structural changes in your gross margin expectations, so that whether it's ready to translate to revenue there is already some tangible numeric increase in your design traction that's causing this change? George Tyson Tuttle - President, Chief Executive Officer & Director: Well, we have now significant portion of our wireless business going through modules and that's responsible for the lower overall gross margin because we're carrying additional components within the modules that we don't mark up as much as we would mark up the SoC. The gross margin dollars are higher. Last year, we grew our IoT business by 26%. In the first half of this year, it was a little bit less than that, but we should notch in close to 20% for the year. And it's continuing to see strong design win traction around a lot of the vertical applications within IoT such as smart home, security, you've got wearables, you've got lighting. There's a lot of industrial applications around metering, certainly we talked about the UK smart energy ramp, but there's a broad set of applications. But the design win traction that we're seeing continues to support these strong double-digit growth rates in the business and I think also validates our investment strategy around modules, around incremental R&D investments, around IoT and having moved out of the more areas such as broadcast and access. And now having 70% of our revenues coming out of these growth products, positions us well going forward. I think we've gone through this transition from a component based company to more of a system company, driving close to 50% of our revenue now out of IoT and the market traction we're seeing we're quite pleased with where we are positioned strategically.

Perfect. Thank you, guys, and congrats. George Tyson Tuttle - President, Chief Executive Officer & Director: Thank you.

Your next question comes from the line of Ian Ing from MKM Partners. Your line is open, please go ahead.

Thanks for taking my question. First one's for John. For Q3, I've got OpEx down slightly to get to the EPS range. And then as you look at December, do you think you have the potential to go below the 5% OpEx growth target growth you've laid out for the full year? And could you talk more about the cost reduction opportunities available? Thanks. John C. Hollister - Chief Financial Officer & Senior Vice President: Yeah, Ian, that's right. We guided Q3 at $72 million, which would be $1 million below where we landed Q3. The guide on the total year from the beginning of the year was around 5%. I would hold that. It could come in slightly favorable to that, but it's roughly at the 5% level, perhaps slightly below.

Perhaps slightly below, okay. Great. And then, could you talk about perhaps the weighting of IoT versus broadcast in terms of driving the revised gross margin range? It sounds like broadcast peaking right now, perhaps more of a contributor that could fall over time. IoT and the channel business that sounds like it has a lot of runway, perhaps the current weighting and how that weighting plays out over time? John C. Hollister - Chief Financial Officer & Senior Vice President: Yeah. So, the general trend would be broadcast consumer would be declining over time, with growth in broadcast automotive, so there's a bit of a change underway within the broadcast portfolio itself. But overall, the IoT in terms of dollar growth, in particular, is where we see the highest contribution to our overall dollar growth in the future.

Okay. Thank you very much.

Your next question comes from the line of Harsh Kumar from Stephens. Your line is open, please go ahead.

Thanks for letting me ask a question. Real quickly, Tyson, what exactly are you guys selling in the smart metering products at UK? Is it just the ZigBee or the mass solution? Or are there other things that you can tack on such as microcontroller and other stuff? George Tyson Tuttle - President, Chief Executive Officer & Director: The primary product that we're selling into the UK smart energy market is a ZigBee SoC. It does include the microcontroller functionality. But it is a ZigBee SoC and in most of the cases, it is a module.

I got you. And a lot of questions on your gross margin going forward, I'm curious if there are things you can do, if there are aspects of cost that you can cut out or perhaps even scale? I know modules get a lot lower gross margin, but you do have significant software capability that you perhaps able to layer on. Are there aspects such as scale or software tack-ons that could offset in the future perhaps this shift towards module and the gross margin there and that's happening to you – your business? George Tyson Tuttle - President, Chief Executive Officer & Director: So, there are significant cost improvements that we can drive into the module market. Actually, there's significant differentiation that we can drive into the module market because we have control of the silicon and in designing the silicon we can keep the module and the cost of the module in mind. In my view the package or the module just looks like another package for the part, although it does greatly simplify the RF design and support requirements. So, we can drive size improvements. We can drive cost improvements with the modules because we also control the silicons. And the software if you're looking at in terms of monetization of software, that's something that has been traditionally difficult for silicon companies to achieve, is to be able to charge for software, although you can think of the software and the differentiation of the software further differentiating the product. But we are trying to understand how to value and how to potentially charge for software over time. I think that that's a significant opportunity as you integrate security into the devices, as you can individually address them, as those devices get connected, as the devices have general…

Understood, Tyson. Thank you very much.

Your next question comes from the line of Rajvindra Gill from Needham & Company. Your line is open, please go ahead. Rajvindra S. Gill - Needham & Company, LLC: Yes, thank you for taking my questions. I appreciate it. Just kind of a big picture question on the competitive landscape, specifically in IoT, wanted to get your thoughts on that? Clearly, there's been consolidation that's been going on in IoT, both larger companies acquiring others as well as some companies buying carve-outs of larger entities. So, I wanted to see what's your thought process on the competitive landscape in IoT? And what do you think are going to be the kind of the key differentiators to win in this market? George Tyson Tuttle - President, Chief Executive Officer & Director: I believe our competitive positioning has never been better, both because of our progress and our internal developments in getting out our SoC platforms and building that portfolio of products and software. But also, as a result of the consolidation we've seen Atmel being acquired by Microchip. We saw the merger of NXP and Freescale. We saw the sale of the Broadcom IoT assets to Cyprus. And I think that, each one of these provides an opportunity for us to gain share as those companies integrate. And I think that it's one thing to say that you're putting two things together. It's another – there's a lot of devil in the details of how that comes together in terms of culture, in terms of roadmap, in terms of which process technology things are on. And I think that that provided a lot of distraction for the competition and provides an opportunity for us to gain share. I think that the vertically oriented companies just compared to a year ago, I…

Your next question comes from the line of Suji De Silva from ROTH Capital. Your line is open, please go ahead.

Hi, Tyson. Hi, John. You talked about the modules – the smart meter business being modules. I'm wondering which end markets tend to be more module-centric versus chip-centric, and what percent of IoT you think will be modules two to three years out? George Tyson Tuttle - President, Chief Executive Officer & Director: Can you repeat the last part of your question? It was mumbled.

Sure. What percentage of the IoT business would be more modules in two to three years, would you say? George Tyson Tuttle - President, Chief Executive Officer & Director: Okay. So if you look at – the modules are going after a lot of broad applications. So metering, for instance, is – they have integrated modules. You've got a lot of the Bluetooth applications outside of the space-constrained ones. So anything that's a lower volume (58:59), like, say,100,000 units and below, is going to tend to go towards modules. And it's not specific to a market, it's really in terms of the size and sophistication of a customer and how much R&D capability they have versus spending a little bit more on a module and being able to avoid that R&D expense. So for the highest volume applications like lighting you could see that going down on the board, for very space-constrained wearables, high-volume applications, you could see that going down on the board. But I believe that modules are going to continue to be an important fraction of the IoT wireless business. We don't break that out separately in terms of the mix. But I believe that the fraction of our IoT business going through modules is going to continue to increase over time, although I'd never see it becoming a majority of the wireless piece of the IoT business. So we've got a mix of microcontrollers and wireless, and then you also have modules as an important component there. But you're going to continue to see significant growth on modules as well as those other areas within IoT.

Okay. And then on the multiprotocol wireless products, what combinations of wireless protocols are you seeing near-term traction for most? Thanks. George Tyson Tuttle - President, Chief Executive Officer & Director: A lot of the ZigBee applications, like in terms of provisioning, in terms of getting that device onto the network, it makes it easier to have Bluetooth capability integrated into the same device. So, when you first pair the device with the network it goes into Bluetooth mode, talks to a smartphone, you get it set up and then it switches over to ZigBee. You can also see those applications being used for things like beacons, or continuing to talk to a smartphone directly as well as the network. So that combo is quite popular. We also see a lot of customers in the industrial space wanting to do the same thing. So a lot of the proprietary sub-gigahertz customers being able to speak Bluetooth as well as proprietary; that is attractive. We have a number of customers wanting to talk to both a ZigBee and a Thread network or even you can do ZigBee and a sub-gigahertz network; there's some customers there. So it really just provides a nice Swiss Army knife for the customers to mix and mash the protocols for the use cases and to add additional functionality to the devices to make them easier to use and more differentiated out into the market. And I think that that set of capabilities is an important part of our connectivity strategy going forward. It's very attractive to the customers.

Thanks, Tyson.

Thank you. I would now hand the call back over to Jalene Hoover.

Thank you, Shannon. And thanks to everyone for joining us this morning. This concludes today's call.