DGAP-News: Dialog Semiconductor Plc. / Key word(s): Quarter Results 
Q1 2021 revenue at USUSD366 million, up 47% year-on-year. Underlying operating profit at USUSD79.2 million, more than 
doubled year-on-year. 
2021-05-12 / 07:30 
The issuer is solely responsible for the content of this announcement. 
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Revenue excluding legacy licensed PMICs was up 61% year-on-year. 
London, UK, 12 May 2021 - Dialog Semiconductor Plc (XETRA: DLG) today reports unaudited results for the first quarter 
ended 2 April 2021. 
IFRS basis (unaudited) Underlying basis1 (unaudited) 
USUSD millions unless stated otherwise Q1 2021 Q1 2020 Q1 2021 Q1 2020  Change 
Revenue                                365.9   248.5   365.9   248.5    +47% 
Gross margin                           49.7%   49.8%   50.0%   50.4%  -40bps 
Operating expenses2                    146.8   114.8   105.2    95.2    +11% 
Operating profit                        36.6    17.5    79.2    33.0   +140% 
Operating margin                       10.0%    7.0%   21.6%   13.3% +830bps 
Diluted EPS                            USD0.36   USD0.19   USD0.89   USD0.39    128% 
Free cash flow                           N/A     N/A     9.9  (59.0)      nm 

1 Underlying measures and free cash flow quoted in this Press Release are non-IFRS measures (see page 5).

2 Comprising SG&A and R&D expenses.

Q1 2021 Financial highlights

- Revenue of USUSD366 million, including acquisitions, 47% above Q1 2020.

- Strength across the product portfolio with revenue excluding legacy licensed main Power Management ICs ("PMICs") up 61% year-on-year.

- Gross margin at 49.7% (Q1 2020: 49.8%), and underlying gross margin at 50.0% (Q1 2020: 50.4%).

- Operating profit of USUSD36.6 million (Q1 2020: USUSD17.5 million), and underlying operating profit of USUSD79.2 million (Q1 2020: USUSD33.0 million).

- Diluted EPS of USUSD0.36 (Q1 2020: USUSD0.19) and underlying diluted EPS of USUSD0.89 (Q1 2020: USUSD0.39).

- Q1 2021 cash flow from operating activities of USUSD26.0 million (Q1 2020: cash outflow USUSD49.0 million) which included USUSD25 million recoupment of the prepayment relating to the license agreement.

- On 8 February 2021, Dialog reached agreement on the terms of a recommended acquisition by Renesas Electronics Corporation ("Renesas") of the entire issued and to be issued ordinary share capital of the Company (the "Acquisition"). Under the terms of the Acquisition, Dialog shareholders will be entitled to receive EUR67.50 in cash per Dialog share at completion.

- Subsequent to quarter end, on 9 April 2021, at the Court Meeting and the Dialog General Meeting in connection with the recommended cash offer made by Renesas, all the resolutions proposed were passed by the requisite majorities.

Q1 2021 Operational highlights

- Continued design-in momentum at our largest customers for the development and supply of several mixed-signal integrated circuits. We have made significant progress on a number of designs scheduled for 2022 production.

- Strong operational performance despite evolving lockdown restrictions.

- Revenue from new mixed-signal products in Custom Mixed Signal business segment from our largest customer was up 38% year-on-year.

- Q1 2021 revenue from Advanced Mixed Signal segment up 57% year-on-year driven by strong demand for Configurable Mixed-signal ICs ("CMICs") and backlighting products.

- In Q1 2021 we expanded our GreenPAK(TM) family, with the new Nanoamp device the SLG46811, the first GreenPAK IC to incorporate configurable op amp functionality. This device allows designers to create, simulate and prototype their own unique sophisticated analog ICs in minutes at a lower cost than a discrete component implementation.

- Q1 2021 revenue in Connectivity &Audio segment up 64% mostly driven by strong demand for audio products.

- During Q1 2021, industry-wide capacity constraints continued to impact our ability to meet incremental customer demand.

Update on COVID-19 Throughout the pandemic, our main focus has been to protect the health and wellbeing of our employees and business partners. As lockdown restrictions continue to evolve and change, we are following applicable Health and Safety guidelines and where appropriate, opening our offices, albeit at a low capacity. We continued to maintain a minimal staff presence in our test labs, where required, and adhered to recommended safe working practices. Our supply chain has remained stable with tightness in supply of certain products and most suppliers continued to operate at full capacity. Customer engagements continued to be effectively managed remotely and we continue to make good progress.

Our business remains resilient. Our fabless business model and the strength of our balance sheet provide us with financial resilience and operational flexibility to navigate the current circumstances.

Q1 2021 Financial overview Revenue increased 47% over Q1 2020 at USUSD366 million due to strong performance across the product portfolio. Excluding the contribution of Adesto, revenue was 37% above Q1 2020. In particular, sales growth of PMICs, CMICs, audio, and Bluetooth(R) low energy ("BLE") was driven by the continuing strength of consumer demand for headphones, fitness trackers, digital watches, notebooks, and tablets. Group revenue excluding legacy licensed main PMICs was up 61% year-on-year.

Gross margin was 49.7%, 10 bps below Q1 2020 (Q1 2020: 49.8%). Underlying gross margin was 50.0% 40bps below Q1 2020 (Q1 2020: 50.4%). This decrease was mainly the result of revenue mix.

Operating expenses ("OPEX"), comprising SG&A and R&D expenses, in Q1 2021 were 28% higher than in Q1 2020, representing 40.1% of revenue (Q1 2020: 46.2%). The increase in OPEX was mainly due to the acquisition of Adesto, and costs related to the recommended acquisition by Renesas. In Q1 2021, we incurred USUSD9.5 million related to the Renesas transaction and USUSD0.9 million integration costs related to the acquisition of Adesto. Underlying OPEX in Q1 2021 was 11% above Q1 2020 (Q1 2020: USUSD95.2 million), representing 28.8% of revenue (Q1 2020: 38.3%). The increase in underlying OPEX was mainly driven by the additional OPEX from Adesto.

In Q1 2021, the Company continued to make good progress on the execution of the planned cost synergies. This aims to improve efficiency, protect profitability, and strengthen cash flow generation.

R&D expenses were 13% above Q1 2020 representing 22.3% of revenue (Q1 2020: 29.1%). Underlying R&D expenses

in Q1 2021 were 9% above Q1 2020 representing 19.1% of revenue (Q1 2020: 25.9%). The increase in R&D and underlying R&D expenses was mainly due to the acquisition of Adesto as well as continuing investment in future growth.

SG&A expenses in Q1 2021 were 54% higher than in Q1 2020, representing 17.8% of revenue (Q1 2020: 17.1%). Underlying SG&A expenses in Q1 2021 were 14% above Q1 2020 representing 9.7% of revenue (Q1 2020: 12.4%).

The increase in SG&A and underlying SG&A expenses was mainly the result of additional expenses from the acquisition of Adesto.

In Q1 2021, other operating income and underlying operating income, which comprised income from R&D contracts, were below Q1 2020 at USUSD1.5 million (Q1 2020: USUSD8.5 million and USUSD3.1 million respectively).

Operating profit in Q1 2021 was USUSD36.6 million, 109% above Q1 2020 (Q1 2020: USUSD17.5 million), mainly due to the higher revenue and partially offset by the incremental operating expenses from the acquisition of Adesto.

Underlying operating profit was 140% above Q1 2020, at USUSD79.2 million (Q1 2020: USUSD33.0 million) driven by the increase in revenue offsetting additional operating expenses from the acquisition of Adesto.

The effective tax rate in Q1 2021 was 29.2% (Q1 2020: 30.4%). Our relatively high effective tax rates for Q1 2021 and Q1 2020 are principally due to the distorting effect on our income tax expense of the tax and accounting treatments of share- based compensation and business combinations. The underlying effective tax rate in Q1 2021 was 19.6%, down 10bps on the Q1 2020 underlying effective tax rate of 19.7%.

In Q1 2021, net income was USUSD26.1 million, 92% above Q1 2020 (Q1 2020: USUSD13.6 million). This increase was mostly due to the increase in operating profit. Underlying net income was USUSD63.9, 128% higher year-on-year mainly driven by the same factor.

Diluted EPS in Q1 2021 was 89% above Q1 2020 at USUSD0.36 (Q1 2020: USUSD0.19). Underlying diluted EPS in Q1 2021 was 128% higher year-on-year to USUSD0.89 (Q1 2020: USUSD0.39).

At the end of Q1 2021, our total inventory level was USUSD143 million, 10% below the previous quarter. This is equivalent to 70 days of inventory representing a 6-day increase in our days of inventory from Q4 2020, mainly due to the lower revenue.

At the end of Q1 2021, we held cash and cash equivalents of USUSD534 million (Q1 2020: USUSD965 million). The year- on-year movement was mostly due to the acquisition of Adesto. Cash flow from operating activities in Q1 2021 was USUSD26.0 million which was above Q1 2020 (Q1 2020: outflow of USUSD49.0 million). The year-on-year movement was

mainly due to higher cash generated from operations and working capital. In Q1 2021, the Group generated free cash flow of USUSD9.9 million, which was above Q1 2020 (Q1 2020: outflow of USUSD59.0 million) due to the higher cash flow from operating activities. At the end of the quarter, the remaining principal amount of the USUSD300 million prepayment from our largest customer that is outstanding was USUSD50.0 million.

Subject to obtaining the necessary approvals and satisfying the other closing conditions, it is expected that the acquisition of the entire issued and to be issued share capital of the Company by Renesas Electronics Corporation, will become effective during the second half of 2021.

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