Silicon Motion Technology Corporation SIMO reported healthy first-quarter 2025 results, with both the adjusted earnings and revenues beating the Zacks Consensus Estimate.

The leading developer of microcontroller integrated circuits for NAND flash storage devices witnessed revenue contraction year over year, driven by weak demand trends in multiple markets. However, management remains focused on delivering strong, sustainable long-term growth by broadening the product portfolio, expanding into new markets and increasing the market share in the consumer, enterprise, automotive, industrial and commercial storage markets. 
Net Income

On a GAAP basis, net income in the reported quarter was $19.5 million or 58 cents per American depositary share (ADS) compared with $16 million or 48 cents per ADS in the prior-year quarter. Despite lower revenues, GAAP earnings improved due to income tax benefits and unrealized gains on investments.

Non-GAAP net income was $20.3 million or 60 cents per ADS compared with $21.6 million or 64 cents per ADS in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 43 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Silicon Motion Technology Corporation Price, Consensus and EPS Surprise

Silicon Motion Technology Corporation price-consensus-eps-surprise-chart | Silicon Motion Technology Corporation Quote

Revenues

Quarterly revenues decreased to $166.5 million from the year-ago quarter’s tally of $189.3 million. However, the top line beat the Zacks Consensus Estimate of $163 million.

Management noted that sales of SSD controllers decreased 10%-15% sequentially and decreased 20%-25% year over year. eMMC+UFS (Embedded Multi-Media Card + Universal Flash Storage) sales decreased 15%-20% sequentially and declined 0%-5% on a year-over-year basis. Revenues in SSD solutions declined 20%-25% sequentially and 35%-40% year over year.

Margin Details

Non-GAAP gross profit aggregated $78.4 million compared with $85.2 million in the year-ago quarter, with respective margins of 47.1% and 45%. 

Non-GAAP operating expenses increased to $63.6 million from the prior-year figure of $62.5 million. Higher R&D spending, along with general and administrative expenses, led to the increase.

Non-GAAP operating income decreased to $14.9 million from $22.6 million, with margins of 8.9% and 12%, respectively.

Cash Flow & Liquidity

As of March 31, 2025, Silicon Motion had cash, cash equivalents, restricted cash and short-term investments of $331.7 million compared with $349.3 million in the year-ago quarter. The company generated $50.3 million in cash from operations during the reported quarter compared with $7.8 million in the prior-year quarter.

In the first quarter of 2025, the company’s capital expenditure totaled $11.7 million. This included $7 million for the routine procurement of testing equipment, software, design tools and other goods and another $4.7 million for building construction in Hsinchu.

Outlook

For second-quarter 2025, management estimates non-GAAP revenues in the range of $175-$183 million. Non-GAAP gross margin is expected to be 47-48%. Non-GAAP operating margin is anticipated to be in the band of 8.9-10.9%.

For 2025, management anticipates that the company will benefit from the launch of several new products, including an 8-channel PCIe Gen 5 controller, a 4-channel PCIe Gen 5 controller aimed at the mass market, a high-end UFS 4.1 controller, and new low-cost UFS 2.2 controllers.

SIMO’s Zacks Rank

Silicon Motion currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

InterDigital IDCC is scheduled to release first-quarter 2025 earnings on May 1. The Zacks Consensus Estimate for earnings is pegged at $2.05 per share, indicating a decline of 42.74% from the year-ago figure. 

Bandwidth Inc. BAND is scheduled to release first-quarter 2025 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at 29 cents per share, indicating an improvement of 7.41% from the year-ago figure. 

Light and Wonder LNW is scheduled to release first-quarter 2025 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at $1.17 per share, indicating an improvement of 25.81% from the year-ago figure.

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