SIMO Beats Q4 Earnings Estimates Despite Revenue Contraction

Core Viewpoint - Silicon Motion Technology Corporation (SIMO) reported mixed fourth-quarter 2024 results, with adjusted earnings exceeding estimates while revenues fell short due to weak demand trends across multiple markets [1]. Financial Performance - GAAP net income for the fourth quarter was $23 million or 68 cents per American depositary share (ADS), an increase from $21.1 million or 63 cents per ADS in the prior year [3]. - Non-GAAP net income was $30.9 million or 91 cents per ADS, slightly down from $31.3 million or 93 cents per ADS year-over-year, but beat the Zacks Consensus Estimate by 7 cents [3]. - For the full year 2024, GAAP net income rose to $90.7 million or $2.69 per ADS from $52.9 million or $1.58 per ADS in 2023, while non-GAAP net income improved to $115.9 million ($3.43 per ADS) from $76.12 million ($2.27 per ADS) [4]. Revenue Analysis - Quarterly revenues were reported at $191.2 million, down from $202.4 million in the same quarter last year, and below the Zacks Consensus Estimate of $196 million [5]. - Sales of SSD controllers decreased by 5%-10% both sequentially and year-over-year, while eMMC+UFS sales fell by 10%-15% sequentially and remained flat year-over-year [5]. - For 2024, net sales improved to $803.6 million from $639.1 million in 2023, despite challenges such as inventory corrections and soft demand [6]. Profitability Metrics - Non-GAAP gross profit was $89.9 million with a margin of 47%, compared to $89.3 million and 44.1% in the previous year [7]. - Non-GAAP operating expenses decreased to $58.3 million from $61.5 million, leading to an increase in non-GAAP operating income from $27.8 million to $31.6 million, with margins of 13.8% and 16.5% respectively [7]. Cash Flow and Liquidity - In 2024, the company generated $77.2 million in cash from operating activities, down from $149.08 million the previous year [8]. - As of December 31, 2024, cash and cash equivalents totaled $276.1 million, down from $314.3 million a year earlier [8]. Future Outlook - For the first quarter of 2025, management estimates non-GAAP revenues to be between $158 million and $167 million, with non-GAAP gross margin expected to be in the range of 47%-47.5% [10].