Silicon Motion Technology Corporation SIMO reported mixed fourth-quarter 2024 results, wherein adjusted earnings beat the Zacks Consensus Estimate while revenues missed the same. The leading developer of microcontroller ICs for NAND flash storage devices witnessed revenue contraction year over year, driven by weak demand trends in multiple markets.

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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 $23 million or 68 cents per American depositary share (ADS) compared with $21.1 million or 63 cents per ADS in the prior-year quarter. Despite lower sales, a decline in costs of revenues and operating expenses led to the bottom-line improvement.
 
Non-GAAP net income was $30.9 million or 91 cents per ADS, down from $31.3 million or 93 cents per ADS in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 7 cents.

For 2024, GAAP net income was $90.7 million or $2.69 per ADS compared with $52.9 million or $1.58 per ADS in 2023. Non-GAAP net income for 2024 improved to $115.9 million ($3.43 per ADS) from $76.12 million ($2.27 per ADS) in 2023.

Revenues

Quarterly revenues were $191.2 million, down from the year-ago quarter’s tally of $202.4 million. The top line fell short of the Zack Consensus Estimate of $196 million.

Management noted that sales of SSD controllers decreased 5%-10% sequentially and year over year. eMMC+UFS (Embedded Multi-Media Card + Universal Flash Storage) sales decreased 10%-15% sequentially and were flat on a year-over-year basis. Revenues in SSD solutions declined 35%-40% sequentially and 25%-30% year over year.

For 2024, net sales improved to $803.6 million from $639.1 million in 2023. Despite inventory corrections, increasing competition and soft demand in multiple end markets, the company recorded solid revenue growth in the year, 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. 

Other Details

Non-GAAP gross profit aggregated $89.9 million compared with $89.3 million in the year-ago quarter, with respective margins of 47% and 44.1%. Non-GAAP operating expenses decreased to $58.3 million from $61.5 million. Non-GAAP operating income increased from $27.8 million to $31.6 million year over year, with margins of 13.8% and 16.5%, respectively.  

Cash Flow & Liquidity

For 2024, Silicon Motion generated $77.2 million of cash from operating activities compared with $149.08 million a year ago. As of Dec. 31, 2024, the company had $276.1 million in cash and cash equivalents and $59.5 million of other liabilities compared with $314.3 million in cash and cash equivalents and $60.5 million of other liabilities.

In the fourth quarter, the company’s capital expenditure totaled $10.8 million. This includes $7.3 million for the routine procurement of testing equipment, software, design tools and other goods and another $3.5 million for building construction in Hsinchu.

Outlook

For the first quarter of 2025, management estimates non-GAAP revenues in the range of $158-$167 million. Non-GAAP gross margin is expected to be in the range of 47%-47.5%. Non-GAAP operating margin is anticipated to be in the band of 7.7-9.7%.

SIMO’s Zacks Rank

Silicon Motion currently carries a Zacks Rank #4 (Sell).

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

Upcoming Releases

Pinterest, Inc. PINS is scheduled to release fourth-quarter 2024 earnings on Feb. 6. The Zacks Consensus Estimate for earnings is pegged at 63 cents per share, indicating growth of 18.9% from the year-ago figure. 
 
Zillow Group, Inc. ZG is scheduled to release fourth-quarter earnings on Feb. 11. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, indicating growth of 50% from the year-ago figure. 

Light and Wonder LNW is scheduled to release fourth-quarter earnings on Feb. 25. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, indicating growth of 47.95% from the year-ago figure.

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