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Silicon Motion Announces Results for the Period Ended March 31, 2025

1. Q1 2025 net sales declined 13% sequentially and 12% year-over-year. 2. Gross margin improved to 47.1%, but operating profit fell significantly. 3. Silicon Motion expects revenue to rebound in H2 2025 with new products. 4. A $50 million share repurchase program is now active. 5. The company faces ongoing macroeconomic challenges impacting growth.

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FAQ

Why Bearish?

Declining sales and profits typically signal weaker future performance. Historical declines often lead to lower investor sentiment.

How important is it?

Sales decline might impact investor expectations; new products can restore confidence.

Why Long Term?

While new products may boost revenue later, immediate declines could deter investors.

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Business Highlights First quarter of 2025 sales decreased 13% Q/Q and decreased 12% Y/Y SSD controller sales: 1Q of 2025 decreased 10% to 15% Q/Q and decreased 20% to 25% Y/YeMMC+UFS controller sales: 1Q of 2025 decreased 15% to 20% Q/Q and decreased 0% to 5% Y/YSSD solutions sales: 1Q of 2025 decreased 20% to 25% Q/Q and decreased 35% to 40% Y/Y Announced new $50 million share repurchase program Financial Highlights  1Q 2025 GAAP1Q 2025 Non-GAAP* • Net sales$166.5 million (-13% Q/Q, -12% Y/Y)$166.5 million (-13% Q/Q, -12% Y/Y) • Gross margin47.1%47.1% • Operating margin5.9%8.9% • Earnings per diluted ADS$0.58$0.60 * 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., April 30, 2025 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion,” the “Company” or “we”) today announced its financial results for the quarter ended March 31, 2025. For the first quarter of 2025, net sales (GAAP) decreased sequentially to $166.5 million from $191.2 million in the fourth quarter of 2024. Net income (GAAP) decreased to $19.5 million, or $0.58 per diluted American depositary share (“ADS”) (GAAP), from net income (GAAP) of $21.6 million, or $0.64 per diluted ADS (GAAP), in the fourth quarter of 2024. For the first quarter of 2025, net income (non-GAAP) decreased to $20.3 million, or $0.60 per diluted ADS (non-GAAP), from net income (non-GAAP) of $29.4 million, or $0.87 per diluted ADS (non-GAAP), in the fourth quarter of 2024. All financial numbers are in U.S. dollars unless otherwise noted. First Quarter of 2025 Review “Despite the challenging macro environment in the first quarter of 2025, we executed our plan and delivered quarterly revenue at the high end of our guided range and delivered another quarter of gross margin expansion,” stated Wallace Kou, President and CEO of Silicon Motion. “Our industry leading PCIe Gen 5 controller experienced stronger than expected demand during the quarter, partially driven by growing AI inference demands from white box server makers leveraging more mainstream hardware components. Our eMMC and UFS controllers also experienced better than expected demand given a rebound in the smartphone market and our ongoing market share gains. While the near-term remains challenging given the broader economic challenges associated with tariffs and potential trade wars, we remain focused on delivering strong, sustainable long-term growth through product diversification; expanding into new markets; and growing market share across our portfolio of consumer, enterprise, automotive, industrial and storage solutions.” Key Financial Results ($ in millions, except per ADS amounts)GAAPNon-GAAP1Q 20254Q 20241Q 20241Q 20254Q 20241Q 2024Revenue$166.5$191.2$189.3$166.5$191.2$189.3Gross profit$78.4$87.6$85.1$78.4$87.9$85.2Percent of revenue47.1%45.8%45.0%47.1%46.0%45.0%Operating expenses$68.6$69.9$67.2$63.6$58.3$62.5Operating profit$9.8$17.7$18.0$14.9$29.6$22.6Percent of revenue5.9%9.3%9.5%8.9%15.5%12.0%Earnings per diluted ADS$0.58$0.64$0.48$0.60$0.87$0.64 Other Financial Information ($ in millions)1Q 20254Q 20241Q 2024Cash, cash equivalents, and restricted cash—end of period$331.7$334.3$349.3Routine capital expenditures$7.0$7.3$5.0Dividend payments$17.0$16.8$16.8Share repurchases$24.3---- During the first quarter of 2025, we had $11.7 million of capital expenditures, including $7.0 million for the routine purchases of testing equipment, software, design tools and other items, and $4.7 million for building construction in Hsinchu, Taiwan. Returning Value to Shareholders On February 6, 2025, we announced that our Board of Directors had authorized a new program for the Company to repurchase up to $50 million of our ADSs over a six-month period. In the first quarter of 2025, we repurchased $24.3 million of our ADSs at an average price of $56.96 per ADS. Business Outlook “We are rapidly expanding our market opportunities as we invest in new products and enter new markets, which we anticipate will drive improved revenue and profitability for many years to come. In 2025, we expect to benefit from the introduction of several new products, including our 8-channel PCIE Gen 5 controller, our 4-channel PCIe Gen 5 controller targeting the mass market that will be introduced in late 2025, our higher-end UFS 4.1 and new low-cost UFS 2.2 controllers that will ramp in the second half of 2025. We introduced our first MonTitan enterprise/AI-class products at the end of 2024, and we expect these to ramp-up production with our first customers in the second half of 2025. Additionally, we continue to expand our automotive product portfolio and our market share across multiple applications. While the near-term environment remains challenging given the macro environment, including the potential impact of tariffs and potential trade wars, we continue to believe we will see a strong rebound in the consumer markets in the second half of 2025, enhanced by our new product introductions, and we continue to target a revenue run rate of $1 billion as we exit the year.” For the second quarter of 2025, management expects: ($ in millions, except percentages)GAAPNon-GAAP AdjustmentNon-GAAPRevenue$175 to $183+5% to 10% Q/Q--$175 to $183+5% to 10% Q/QGross margin47.0% to 48.0%Approximately $0.1*47.0% to 48.0%Operating margin6.6% to 9.2%Approximately $3.1 to $4.1**8.9% to 10.9% * Projected gross margin (non-GAAP) excludes $0.1 million of stock-based compensation.** Projected operating margin (non-GAAP) excludes $3.1million to $4.1 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 April 30, 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-conf.media-server.com/register/BI5c69a4c2d96041b59a2bf8a51cec1881 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.  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$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures. Realized/Unrealized loss (gain) on investments relates to the disposal and net change in fair value of long-term investments. Silicon Motion Technology CorporationConsolidated Statements of Income(in thousands, except percentages and per ADS data, unaudited)  For Three Months Ended Mar. 31, Dec. 31, Mar. 31, 2024 2024 2025 ($) ($) ($)Net Sales189,311 191,160 166,492Cost of sales104,191 103,560 88,125Gross profit85,120 87,600 78,367Operating expenses     Research & development54,392 54,156 55,026Sales & marketing6,304 7,360 7,115General & administrative6,474 8,350 6,460Operating income17,950 17,734 9,766Non-operating income (expense)     Interest income, net3,066 3,768 2,929Foreign exchange gain, net588 1,046 373Realized/Unrealized gain(loss) on investments(1,608) 956 3,296Subtotal2,046 5,770 6,598Income before income tax19,996 23,504 16,364Income tax expense (benefit)3,980 1,935 (3,099)Net income16,016 21,569 19,463      Earnings per basic ADS0.48 0.64 0.58Earnings per diluted ADS0.48 0.64 0.58      Margin Analysis:     Gross margin45.0% 45.8% 47.1%Operating margin9.5% 9.3% 5.9%Net margin8.5% 11.3% 11.7%      Additional Data:     Weighted avg. ADS equivalents33,508 33,690 33,634Diluted ADS equivalents33,701 33,814 33,827       Silicon Motion Technology CorporationReconciliation of GAAP to Non-GAAP Operating Results(in thousands, except percentages and per ADS data, unaudited)   For Three Months Ended Mar. 31, Dec. 31, Mar. 31,2024 2024 2025($) ($) ($)Gross profit (GAAP)85,120 87,600 78,367Gross margin (GAAP)45.0% 45.8% 47.1%Stock-based compensation (A)72 162 73Restructuring charges- 164 -Gross profit (non-GAAP)85,192 87,926 78,440Gross margin (non-GAAP)45.0% 46.0% 47.1%      Operating expenses (GAAP)67,170 69,866 68,601Stock-based compensation (A)(3,093) (9,585) (4,738)Dispute related expenses(1,532) (1,999) (277)Operating expenses (non-GAAP)62,545 58,282 63,586      Operating profit (GAAP)17,950 17,734 9,766Operating margin (GAAP)9.5% 9.3% 5.9%Total adjustments to operating profit4,697 11,910 5,088Operating profit (non-GAAP)22,647 29,644 14,854Operating margin (non-GAAP)12.0% 15.5% 8.9%      Non-operating income (expense) (GAAP)2,046 5,770 6,598Foreign exchange loss (gain), net(588) (1,046) (373)Realized/Unrealized loss (gain) on investments1,608 (956) (3,296)Non-operating income (expense) (non-GAAP)3,066 3,768 2,929      Net income (GAAP)16,016 21,569 19,463Total pre-tax impact of non-GAAP adjustments5,717 9,908 1,419Income tax impact of non-GAAP adjustments(147) (2,049) (610)Net income (non-GAAP)21,586 29,428 20,272      Earnings per diluted ADS (GAAP)$0.48 $0.64 $0.58Earnings per diluted ADS (non-GAAP)$0.64 $0.87 $0.60      Shares used in computing earnings per diluted ADS (GAAP)33,701 33,814 33,827Non-GAAP adjustments26 181 20Shares used in computing earnings per diluted ADS (non-GAAP)33,727 33,995 33,847      (A)Excludes stock-based compensation as follows:     Cost of sales72 162 73Research & development2,143 6,670 3,003Sales & marketing347 978 862General & administrative603 1,937 873       Silicon Motion Technology CorporationConsolidated Balance Sheet (In thousands, unaudited)       Mar. 31, Dec. 31, Mar. 31, 2024 2024 2025  ($)  ($)  ($)Cash and cash equivalents294,814 276,068 275,140Accounts receivable (net)186,154 233,744 206,693Inventories253,316 199,229 180,903Refundable deposits – current49,610 54,645 53,015Prepaid expenses and other current assets17,944 31,187 32,102Total current assets801,838 794,873 747,853Long-term investments15,489 17,326 20,636Property and equipment (net)174,420 188,398 193,603Other assets32,529 30,739 29,310Total assets1,024,276 1,031,336 991,402      Accounts payable64,810 17,773 23,048Income tax payable10,702 13,107 14,782Accrued expenses and other current liabilities135,425 168,624 130,277Total current liabilities210,937 199,504 168,107Other liabilities59,883 59,548 50,968Total liabilities270,820 259,052 219,075Shareholders’ equity753,456 772,284 772,327Total liabilities & shareholders’ equity1,024,276 1,031,336 991,402       Silicon Motion Technology CorporationCondensed Consolidated Statements of Cash Flows(in thousands, unaudited)   For Three Months Ended Mar. 31, Dec. 31, Mar. 31, 2024 2024 2025 ($) ($) ($)Net income16,016 21,569 19,463Depreciation & amortization5,608 7,256 7,225Stock-based compensation3,165 9,747 4,811Investment losses (gain) & disposals1,608 (956) (3,309)Changes in operating assets and liabilities(18,586) (43,774) 22,082Net cash provided by (used in) operating activities7,811 (6,158) 50,272      Purchase of property & equipment(10,749) (10,836) (11,661)Proceeds from disposal of properties- 3 13Purchase of long-term investments- (4,173) -Disposal of long-term investments- 4,432 -Net cash provided by (used in) investing activities(10,749) (10,574) (11,648)      Dividend payments(16,808) (16,814) (16,956)Share repurchases- - (24,291)Net cash used in financing activities(16,808) (16,814) (41,247)      Net increase (decrease) in cash, cash equivalents & restricted cash(19,746) (33,546) (2,623)Effect of foreign exchange changes35 (717) 37Cash, cash equivalents & restricted cash—beginning of period368,990 368,596 334,333Cash, cash equivalents & restricted cash—end of period349,279 334,333 331,747       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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