Novatek Microelectronics (3034) Q4 2024 earnings summary

Executive summary

• 2024 net sales declined 7% year-over-year to NT$102.8 billion, with net income down 13% to NT$20.3 billion and basic EPS at NT$33.43, reflecting a challenging market environment.

• Q4 2024 revenue was TWD 25.3 billion, down 9% sequentially and 7% year-over-year, but exceeded guidance; net income for Q4 was TWD 4.8 billion, down 9% quarter-over-quarter and 10% year-over-year.

• Gross margin for Q4 was 39.51%, at the high end of guidance but down from Q3 and year-over-year.

• The company maintained a strong financial position, with total assets of NT$102.40 billion and equity of NT$67.92 billion as of year-end 2024.

• Q1 2025 revenue is guided at TWD 26–27.2 billion, with gross margin expected between 37% and 40%.

Financial highlights

• Full-year gross margin was 40.35%, down from 41.85% in 2023; Q4 gross margin was 39.5%.

• Q4 operating income was TWD 4.9 billion, down 21% quarter-over-quarter and 22% year-over-year.

• Q4 EPS was TWD 7.89, down TWD 0.75 sequentially and TWD 0.87 year-over-year.

• Cash and cash equivalents at year-end 2024 were NT$48.77 billion, up from Q3 but down from NT$53.89 billion in 2023.

• Q4 non-operating income was TWD 775 million, mainly from interest and foreign exchange gains; net non-operating income rose 48% year-over-year for 2024.

Outlook and guidance

• Q1 2025 revenue expected to grow quarter-over-quarter, outperforming typical seasonality due to China subsidy programs and tariff-related pull-ins.

• Q1 2025 revenue guidance: TWD 26–27.2 billion; gross margin: 37–40%; operating margin: 18.5–21.5%.

• Gross margin in Q1 expected to be similar to Q4; cost reductions and new product launches targeted to stabilize or improve margins in 2025.

• Tax rate for 2025 expected around 16%, benefiting from amended tax regulations.

• No material impact is expected from newly adopted or pending accounting standards.