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Silicon Motion Announces Results for the Period Ended December 31, 2024

1. 4Q 2024 sales decreased 10% Q/Q, net income rose to $23 million. 2. SSD controller sales declined 5%-10% Q/Q, forecasted weak consumer demand. 3. New PCIe Gen 5 products launched, expected to ramp up throughout 2025. 4. 50% increase in cash reserves, dividend of $2.00 declared per ADS. 5. Projected revenue may reach $1 billion annually by Q4 2025.

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Why Neutral?

While revenue is down short-term, long-term product pipeline looks promising.

How important is it?

Financials and product outlook strongly relate to SIMO's stock performance.

Why Long Term?

New product launches could improve market share and profitability in coming years.

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Business Highlights Fourth quarter of 2024 sales decreased 10% Q/Q and decreased 6% Y/Y SSD controller sales: 4Q of 2024 decreased 5% to 10% Q/Q and decreased 5% to 10% Y/YeMMC+UFS controller sales: 4Q of 2024 decreased 10% to 15% Q/Q and were flat Y/YSSD solutions sales: 4Q of 2024 decreased 35% to 40% Q/Q and decreased 25% to 30% Y/Y Announced annual cash dividend of $2.00 per American Depositary Share (“ADS”) Financial Highlights  4Q 2024 GAAP4Q 2024 Non-GAAP* • Net sales$191.2 million (-10% Q/Q, -6% Y/Y)$191.2 million (-10% Q/Q, -6% Y/Y) • Gross margin46.8%47.0% • Operating margin10.3%16.5% • Earnings per diluted ADS$0.68$0.91  Full Year 2024 GAAPFull Year 2024 Non-GAAP* • Net sales$803.6 million (+26% Y/Y)$803.6 million (+26% Y/Y) • Gross margin46.1%46.2% • Operating margin11.6%15.3% • Earnings per diluted ADS$2.69$3.43 * Please see supplemental reconciliations of U.S. Generally Accepted Accounting Principles (“GAAP”) to all non-GAAP financial measures mentioned herein towards the end of this news release. TAIPEI, Taiwan and MILPITAS, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion,” the “Company” or “we”) today announced its financial results for the quarter ended December 31, 2024. For the fourth quarter of 2024, net sales (GAAP) decreased sequentially to $191.2 million from $212.4 million in the third quarter of 2024. Net income (GAAP) increased to $23.0 million, or $0.68 per diluted ADS (GAAP), from net income (GAAP) of $20.8 million, or $0.62 per diluted ADS (GAAP), in the third quarter of 2024. For the fourth quarter of 2024, net income (non-GAAP) decreased to $30.9 million, or $0.91 per diluted ADS (non-GAAP), from net income (non-GAAP) of $31.0 million, or $0.92 per diluted ADS (non-GAAP), in the third quarter of 2024. All financial numbers are in U.S. dollars unless otherwise noted. Fourth Quarter of 2024 Review “We continued to execute well in the fourth quarter of 2024 despite the challenging consumer market, delivering revenue within our guided range and further expanding of our gross margin,” said Wallace Kou, President and CEO of Silicon Motion. ”For the full-year 2024, revenue rebounded strongly, growing 26% as compared to full-year 2023 and well above our initial expectations at the start of the year. For the full-year 2024, gross margin (non-GAAP) increased to 46.2% from 43.0% in 2023 despite the overall market weakness in the second half of 2024. We successfully launched our industry-leading PCIE Gen 5 controllers in the second half of 2024, winning four of the six flash makers and multiple module maker customers, which are all anticipated to ramp up throughout 2025. While the consumer market remains challenging in the near-term, we remain focused on delivering strong, sustainable long-term growth by broadening our product portfolio, expanding into new markets and growing our market share in the consumer, enterprise, automotive, industrial and commercial storage markets.” Key Financial Results (in millions, except percentages and per ADS amounts)GAAPNon-GAAP4Q 20243Q 20244Q 20234Q 20243Q 20244Q 2023Revenue$191.2$212.4$202.4$191.2$212.4$202.4Gross profit$89.5$99.3$88.5$89.9$99.3$89.3Percent of revenue46.8%46.7%43.7%47.0%46.8%44.1%Operating expenses$69.9$74.8$71.0$58.3$65.1$61.5Operating profit$19.7$24.5$17.6$31.6$34.2$27.8Percent of revenue10.3%11.5%8.7%16.5%16.1%13.8%Earnings per diluted ADS$0.68$0.62$0.63$0.91$0.92$0.93 Other Financial Information (in millions)4Q 20243Q 20244Q 2023Cash, cash equivalents, restricted cash and short-term investments—end of period$334.3$368.6$369.0Routine capital expenditures$7.3$7.4$3.5Dividend payments$16.8$16.8$16.7 During the fourth quarter of 2024, we had $10.8 million of capital expenditures, including $7.3 million for the routine purchases of testing equipment, software, design tools and other items, and $3.5 million for building construction in Hsinchu. Business Outlook“Longer-term, we expect to continue increasing our market share within the mobile and PC markets through greater outsourcing by the NAND flash makers, which should drive greater revenue and profitability for Silicon Motion,” said Mr. Kou. “This year, we expect to benefit from the introduction of several new products, including our 8-channel PCIe Gen 5 controller that started shipping in the second half of 2024, our new UFS 4.1 controller for the mobile market that will begin to ramp-up in the second half of this year, and our new 4-channel mainstream PCIe Gen 5 that we expect to launch late this year. Additionally, we will benefit from our many automotive controllers that are rapidly expanding across multiple applications and our MonTitan suite of enterprise controllers that just started shipping in the second half of 2024 and are expected to increase in the second half of this year. Consumer demand remains weak in the first half of 2025 and is proving more challenging than we initially anticipated; however, we expect a strong rebound in the second half of this year driven from new product introductions and new project wins with our OEM customers, reaching close to a run-rate of $1 billion in annual revenue in 4Q25.” For the first quarter of 2025, management expects: (in millions, except percentages)GAAPNon-GAAP AdjustmentNon-GAAPRevenue$158m to $167m-17.5% to -12.5% Q/Q--$158m to $167m-17.5% to -12.5% Q/QGross margin46.9% to 47.4%Approximately $0.1m*47.0% to 47.5%Operating margin2.3% to 5.2%Approximately $7.5m to $8.5m**7.7% to 9.7% * Projected gross margin (non-GAAP) excludes $0.1 million of stock-based compensation.** Projected operating margin (non-GAAP) excludes $7.5 million to $8.5 million of stock-based compensation and dispute related expenses. Conference Call & Webcast:The Company’s management team will conduct a conference call at 8:00 am Eastern Time on February 6, 2025. Conference Call DetailsParticipants must register in advance to join the conference call using the link provided below. Conference access information (including dial-in information and a unique access PIN) will be provided in the email received upon registration. Participant Online Registration:https://register.vevent.com/register/BI742c56c62eb0464e9ba0c61a39fa4c91 A webcast of the call will be available on the Company's website at www.siliconmotion.com. Discussion of Non-GAAP Financial Measures To supplement the Company’s unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation and other items, including gross profit (non-GAAP), gross margin (non-GAAP), operating expenses (non-GAAP), operating profit (non-GAAP), operating margin (non-GAAP), non-operating income (expense) (non-GAAP), net income (non-GAAP), and earnings per diluted ADS (non-GAAP). These non-GAAP measures are not in accordance with or an alternative to GAAP and may be different from similarly-titled non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance. Our non-GAAP financial measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because they are consistent with the financial models and estimates published by many analysts who follow the Company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target’s performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management’s perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering: the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;the ability to better identify trends in the Company’s underlying business and perform related trend analysis;a better understanding of how management plans and measures the Company’s underlying business; andan easier way to compare the Company’s operating results against analyst financial models and operating results of our competitors that supplement their GAAP results with non-GAAP financial measures. The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each of these individual items in our reconciliation of these non-GAAP financial measures: Stock-based compensation expense consists of non-cash charges related to the fair value of restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact of share-based compensation on its operating results. Restructuring charges relate to the restructuring of our underperforming product lines, principally the write-down of NAND flash, embedded DRAM and SSD inventory valuation and severance payments.  M&A transaction expenses consist of legal, financial advisory and other fees related to the transaction. Dispute related expenses consist of legal, consultant, other fees and resolution related to the dispute. Foreign exchange loss (gain) consists of translation gains and/or losses of non-US$ denominated current assets and current liabilities, as well as certain other balance sheet items which result from the appreciation or depreciation of non-US$ currencies against the US$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures. Realized/Unrealized loss (gain) on investments relates to the disposal and net change in fair value of long-term investments.  Silicon Motion Technology CorporationConsolidated Statements of Income(in thousands, except percentages and per ADS data, unaudited)  For Three Months Ended For the Year Ended Dec. 31,   Sep. 30,  Dec. 31,  Dec. 31,  Dec. 31,  2023  2024  2024  2023  2024   ($)   ($)   ($)   ($)   ($) Net Sales202,379  212,412  191,160  639,142  803,552 Cost of sales113,854  113,142  101,635  368,752  432,862 Gross profit88,525  99,270  89,525  270,390  370,690 Operating expenses         Research & development56,432  58,486  54,156  174,357  217,822 Sales & marketing6,205  7,009  7,360  26,920  27,450 General & administrative7,600  9,315  8,350  27,923  31,354 Loss from settlement of litigation720  -  -  1,312  1,250 Operating income17,568  24,460  19,659  39,878  92,814 Non-operating income (expense)         Interest income, net4,221  3,518  3,768  12,246  14,528 Foreign exchange gain (loss), net(1,117) (488) 1,046  914  1,391 Realized/Unrealized gain(loss) on investments(51) (602) 956  8,002  601 Others, net8  -                 -  8  - Subtotal3,061  2,428  5,770  21,170  16,520 Income before income tax20,629  26,888  25,429  61,048  109,334 Income tax expense (benefit)(464) 6,045  2,389  8,175  18,614 Net income21,093  20,843  23,040  52,873  90,720           Earnings per basic ADS0.63  0.62  0.68  1.59  2.70 Earnings per diluted ADS0.63  0.62  0.68  1.58  2.69           Margin Analysis:         Gross margin43.7%  46.7%  46.8%  42.3%  46.1% Operating margin8.7%  11.5%  10.3%  6.2%  11.6% Net margin10.4%  9.8%  12.1%  8.3%  11.3% 　　　　　　　　　　Additional Data:         Weighted avg. ADS equivalents33,416  33,687  33,690  33,353  33,642 Diluted ADS equivalents33,587  33,700  33,814  33,470  33,722  Silicon Motion Technology CorporationReconciliation of GAAP to Non-GAAP Operating Results(in thousands, except percentages and per ADS data, unaudited)  For Three Months Ended For the Year Ended Dec. 31,   Sep. 30,  Dec. 31,  Dec. 31,  Dec. 31, 2023  2024  2024  2023  2024  ($)   ($)   ($)   ($)   ($) Gross profit (GAAP)88,525  99,270  89,525  270,390  370,690  Gross margin (GAAP)43.7%  46.7%  46.8%  42.3%  46.1% Stock-based compensation (A)106  63  162  406  311 Restructuring charges648  -  164  3,996  209 Gross profit (non-GAAP) 89,279  99,333  89,851  274,792  371,210  Gross margin (non-GAAP)44.1%  46.8%  47.0%  43.0%  46.2%              Operating expenses (GAAP)70,957  74,810  69,866  230,512  277,876 Stock-based compensation (A)(5,680) (3,595) (9,585) (17,141) (16,645)M&A transaction expenses288  -  -  (2,606) - Dispute related expenses(3,477) (6,076) (1,999) (6,973) (13,135)Restructuring charges(638) -  -  (5,217) - Operating expenses (non-GAAP) 61,450  65,139  58,282  198,575  248,096           Operating profit (GAAP)17,568  24,460  19,659  39,878  92,814  Operating margin (GAAP)8.7%  11.5%  10.3%  6.2%  11.6% Total adjustments to operating profit10,261  9,734  11,910  36,339  30,300 Operating profit (non-GAAP) 27,829  34,194  31,569  76,217  123,114  Operating margin (non-GAAP)13.8%  16.1%  16.5%  11.9%  15.3%           Non-operating income (expense) (GAAP)3,061  2,428  5,770  21,170  16,520 Foreign exchange loss (gain), net1,117  488  (1,046) (914) (1,391)Realized/Unrealized holding loss (gain) on investments51  602  (956) (8,002) (601)Non-operating income (expense) (non-GAAP) 4,229  3,518  3,768  12,254  14,528           Net income (GAAP)21,093  20,843  23,040  52,873  90,720 Total pre-tax impact of non-GAAP adjustments11,429  10,824  9,908  27,423  28,308 Income tax impact of non-GAAP adjustments(1,202) (649) (2,049) (4,169) (3,064)Net income (non-GAAP) 31,320  31,018  30,899  76,127  115,964           Earnings per diluted ADS (GAAP)$0.63  $0.62  $0.68  $1.58  $2.69 Earnings per diluted ADS (non-GAAP) $0.93  $0.92  $0.91  $2.27  $3.43           Shares used in computing earnings per diluted ADS (GAAP)33,587  33,700  33,814  33,470  33,722 Non-GAAP adjustments110  109  181  129  84 Shares used in computing earnings per diluted ADS (non-GAAP)33,697  33,809  33,995  33,599  33,806           (A) Excludes stock-based compensation as follows:         Cost of sales106  63  162  406  311 Research & development4,103  2,377  6,670  11,709  11,284 Sales & marketing361  455  978  1,858  1,954 General & administrative1,216 　763 　1,937 　3,574 　3,407  Silicon Motion Technology CorporationConsolidated Balance Sheet(In thousands, unaudited)  Dec. 31, Sep. 30, Dec. 31, 2023 2024 2024  ($)  ($)  ($)Cash and cash equivalents314,302 313,924 276,068Accounts receivable (net)194,701 202,726 233,744Inventories216,950 214,574 201,154Refundable deposits – current49,656 51,102 54,645Prepaid expenses and other current assetse17,636 38,246 31,187Total current assets793,245 820,572 796,798Long-term investments17,116 16,878 17,326Property and equipment (net)167,417 181,983 188,398Other assets30,183 29,304 30,354Total assets1,007,961 1,048,737 1,032,876      Accounts payable55,586 30,888 17,773Income tax payable7,544 14,444 13,176Accrued expenses and other current liabilities149,680 131,143 168,624Total current liabilities212,810 176,475 199,573Other liabilities60,455 62,673 59,548Total liabilities273,265 239,148 259,121Shareholders’ equity734,696 809,589 773,755Total liabilities & shareholders’ equity1,007,961 1,048,737 1,032,876 Silicon Motion Technology CorporationCondensed Consolidated Statements of Cash Flows(in thousands, unaudited)  For Three Months Ended For the Year Ended  Dec. 31,  Sep. 30,  Dec. 31,  Dec. 31,  Dec. 31,   2023  2024  2024  2023  2024    ($)   ($)   ($)   ($)   ($) Net income 21,093  20,843  23,040  52,873  90,720 Depreciation & amortization 5,356  6,664  7,256  21,810  25,331 Stock-based compensation 5,786  3,658  9,747  17,547  16,956 Investment losses (gain) & disposals (432) 602  (956) (8,217) (601)Changes in operating assets and liabilities 11,582  22,280  (45,245) 65,070  (55,213)Net cash provided by (used in) operating activities 43,385  54,047  (6,158) 149,083  77,193            Purchase of property & equipment (10,758) (12,436) (10,836) (50,313) (44,449)Proceeds from disposal of properties 1,228  -  3  1,228  3 Purchase of long-term investments -  -  (4,173) -  (4,173)Disposal of long-term investments -  -  4,432  -  4,432 Net cash used in investing activities (9,530) (12,436) (10,574) (49,085) (44,187)           Dividend payments (16,676) (16,812) (16,814) (16,690) (67,254)Net cash used in financing activities (16,676) (16,812) (16,814) (16,690) (67,254)           Net increase (decrease) in cash, cash equivalents & restricted cash 17,179  24,799  (33,546) 83,308  (34,248)Effect of foreign exchange changes 1,508  186  (717) (1,373) (409)Cash, cash equivalents & restricted cash—beginning of period 350,303  343,611  368,596  287,055  368,990 Cash, cash equivalents & restricted cash—end of period 368,990  368,596  334,333  368,990  334,333  Shareholder Litigation:On August 31, 2023, a Silicon Motion ADS holder (the “Plaintiff”) filed a putative class action complaint in the United States District Court for the Southern District of California, captioned Water Island Event-Driven Fund v. MaxLinear, Inc., No. 23-cv-01607 (S.D. Cal.), asserting claims against MaxLinear, Inc. (“MaxLinear”) and two of its officers (the “MaxLinear Defendants”) for alleged violations of (i) Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder and (ii) Section 20(a) of the Exchange Act, in connection with alleged false and misleading statements made by the MaxLinear Defendants between June 6, 2023 and July 26, 2023 concerning MaxLinear’s intent to consummate the merger agreement it had entered into with Silicon Motion. On August 28, 2024, the Court dismissed the complaint against the MaxLinear Defendants without prejudice for lack of standing.  On September 18, 2024, the Plaintiff filed an amended complaint against the MaxLinear Defendants, and also added Silicon Motion and two of its officers (the “Silicon Motion Defendants”), asserting substantially similar claims under the Exchange Act. The complaint seeks compensatory damages, including interest, costs and expenses, and such other equitable or injunctive relief that the court deems appropriate. The motion to dismiss the amended complaint is fully briefed. The Silicon Motion Defendants believe that the claims asserted against them are without merit and intend to defend themselves vigorously. About Silicon Motion:We are the global leader in supplying NAND flash controllers for solid state storage devices.  We supply more SSD controllers than any other company in the world for servers, PCs and other client devices and are the leading merchant supplier of eMMC and UFS embedded storage controllers used in smartphones, IoT devices and other applications.  We also supply customized high-performance hyperscale data center and specialized industrial and automotive SSD solutions.  Our customers include most of the NAND flash vendors, storage device module makers and leading OEMs.  For further information on Silicon Motion, visit us at www.siliconmotion.com. Forward-Looking Statements:This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to the unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from one or more customers; general economic conditions or conditions in the semiconductor or consumer electronics markets; the impact of inflation on our business and customer’s businesses and any effect this has on economic activity in the markets in which we operate; the functionalities and performance of our information technology (“IT”) systems, which are subject to cybersecurity threats and which support our critical operational activities, and any breaches of our IT systems or those of our customers, suppliers, partners and providers of third-party licensed technology; the effects on our business and our customer’s business taking into account the ongoing U.S.-China tariffs and trade disputes; the uncertainties associated with any future global or regional pandemic; the continuing tensions between Taiwan and China including enhanced military activities; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; supply chain disruptions that have affected us and our industry as well as other industries on a global basis; the payment, or non-payment, of cash dividends in the future at the discretion of our board of directors and any announced planned increases in such dividends; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in the products we sell given the current raw material supply shortages being experienced in our industry; our customers’ sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions; any potential impairment charges that may be incurred related to businesses previously acquired or divested in the future; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 30, 2024. Other than as required under the securities laws, we do not intend, and do not undertake any obligation to, update or revise any forward-looking statements, which apply only as of the date of this news release.

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