Silicon Motion (SIMO) Q4 Earnings & Revenues Beat Estimates
Silicon Motion Technology Corporation SIMO reported healthy fourth-quarter 2023 results, with the bottom and the top line beating the Zacks Consensus Estimate. The leading developer of microcontroller ICs for NAND flash storage devices witnessed top-line growth driven by healthy demand trends. In addition, the company has executed some management changes to better navigate the volatile market conditions.
Net Income
On a GAAP basis, net income in the reported quarter was $21.1 million or 63 cents per American depositary share (ADS) compared with $23.5 million or 71 cents per ADS in the prior-year quarter. The year-over-year decline was attributable to higher operating expenses.
Non-GAAP net income was $31.3 million or 93 cents per ADS, down from $41.1 million or $1.22 per ADS in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 17 cents.
Silicon Motion Technology Corporation Price, Consensus and EPS Surprise
Silicon Motion Technology Corporation price-consensus-eps-surprise-chart | Silicon Motion Technology Corporation Quote
For 2023, GAAP net income was $52.8 million or $1.58 per ADS compared with $172.6 million or $5.17 per ADS in 2022. Non-GAAP net income for 2023 declined 64.4% to $76.1 million ($2.27 per ADS) from $213.9 million ($6.36 per ADS) in 2022.
Revenues
Quarterly revenues increased to $202.4 million from the year-ago quarter’s tally of $200.8 million. The top line marginally surpassed the Zack Consensus Estimate of $202 million.
Despite inventory corrections, increasing competition and soft demand trends in China, the company posted revenue growth in the quarter, focusing on developing the most advanced controller technology and delivering industry-leading solutions to tap new market segments. The core focus on controller technology was primarily driven by the increasing adoption of NAND in consumer, industrial, commercial and enterprise applications.
Silicon Motion has expanded its SSD controller program engagements with PC OEMs and eMMC/UFS controllers for smartphones, automotive applications and IoT/smart devices.
For 2023, net sales decreased to $639.1 million from $945.9 million in 2022.
Other Details
Non-GAAP gross profit aggregated $89.3 million compared with $95.1 million in the year-ago quarter, with respective margins of 44.1% and 47.4%. Non-GAAP operating expenses increased to $61.5 million from $48.5 million. Non-GAAP operating income fell from $46.6 million to $27.8 million, with margins of 23.2% and 13.8%, respectively.
Cash Flow & Liquidity
For full-year 2023, Silicon Motion generated $148.7 million of cash from operating activities compared with $83.8 million a year ago. As of Dec 31, 2023, the company had $314.3 million in cash and cash equivalents with $60.4 million of other liabilities compared with $232.2 million in cash and cash equivalents with $44.7 million of other liabilities.
In the fourth quarter, the company’s capital expenditure totaled $9.5 million. This includes $3.5 million for the routine procurement of testing equipment, software, design tools and other goods and another $6 million for building construction in Hsinchu.
Outlook
For first-quarter 2024, management estimates non-GAAP revenues in the range of $172-$182 million. Non-GAAP gross margin is expected to be 44-45%. Operating margin is anticipated in the band of 10.5-11.5%. The company expects sustainability in growth driven by strong demand for eMMC+UFS and SSD Controllers among flash maker partners.
Zacks Rank & Other Stocks to Consider
Silicon Motion currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Arista Networks, Inc. ANET, carrying a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance cloud experience. Arista delivered an average earnings surprise of 12% in the trailing four quarters.
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