Financial Data and Key Metrics Changes - In Q3 2025, the company's revenue grew by 13% year-on-year, reaching $1.3 billion, driven primarily by robust demand for AI products [4][7] - The gross profit margin reached a record high of 23.5%, contributing to an increase in annual gross margins [4][9] - The expense-to-sale ratio increased to 16.4% during this quarter, reflecting higher operational costs [4][9] Business Line Data and Key Metrics Changes - The cloud data center segment revenue grew by 33% year-on-year, driven by strong demand for high-speed and high-voltage AI connectivity solutions [7][8] - The auto mobility segment achieved 116% year-on-year growth, despite challenges in the automobile sector [8] - The consumer interconnect segment remained flat but outperformed prior guidance due to effective customer engagement [7][8] Market Data and Key Metrics Changes - The smartphone segment experienced a 20% decline, consistent with guidance due to ongoing market challenges [7][10] - The company anticipates a high teens year-on-year decline in the smartphone segment for Q4 2025 [10] - The overall micro-conditions are expected to slow down, leading to a flat outlook for the consumer interconnect segment in Q4 [10] Company Strategy and Development Direction - The company is reallocating resources to support new certifications, product launches, and regional expansion while maintaining cost optimization initiatives [9][10] - The focus is shifting towards expanding the AI-related portion of the business portfolio, with long-term guidance for the cloud data center segment aiming for a low 20s revenue mix in 2026 [12][13] - The company emphasizes the importance of vertical integration and reliability in maintaining leadership in the backplane connector market [29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges considerable headwinds in the consumer electronics industry but remains focused on capturing opportunities from AI momentum [56] - The company expects to achieve consistent low double-digit growth in operating profit for the full year, despite temporary impacts on near-term operating margins [10][12] - Management is optimistic about the growth of AI-related applications as a main catalyst for future performance [23] Other Important Information - The company has signed a strategic MOU with Al-Basami Transport Group to collaborate on EV charger installations across logistics hubs [14] - The company showcased several new products at industry events, including the industry's first 102.4 Tbps CPO connector [14][15] Q&A Session Summary Question: Progress in backplane connector developments - Management refrained from commenting on individual products but noted that existing solutions are gaining recognition due to strong technical capabilities [17][18] Question: Impact of competitors bypassing patent restrictions - Management did not comment on specific competitors but emphasized the importance of reliability and integration in high-speed interconnect areas [19][20] Question: Customer orders for AI-related high-power products - Management indicated steady market share growth for existing power products and highlighted new high-voltage solutions [20][21] Question: Customer adoption of new power products - Management reported certification by major global cloud and AI server customers, with steady shipments underway [21][22] Question: Sustainability of AI shipment growth - Management expects stabilization in the short term but sees a clear growth trend driven by new projects and consumer demand [23][24] Question: Differentiation in the backplane connector market - Management highlighted vertical integration as a key advantage in maintaining leadership in the backplane connector market [29] Question: Investment in new applications like robotics - Management is open to exploring new technologies and has capabilities for robotic applications [31] Question: Revenue performance benchmarking against group companies - Management stated that direct comparisons are complex due to differing delivery schedules and stocking levels [34] Question: Plans for investment in the U.S. - Management confirmed an operational presence in the U.S. and openness to further investments aligned with customer needs [35][36] Question: Impact of higher memory prices on consumer electronics demand - Management reported no pricing pressures from higher memory costs so far [37] Question: Reason for lack of growth in operating cash flow - Management attributed this to product launch readiness and adjustments in production facilities [46][47] Question: Impact of larger rack form factors on interconnect cable business - Management expects a positive impact from the trend of larger rack form factors [48]
FIT HON TENG(06088) - 2025 Q3 - Earnings Call Transcript