Phison Electronics (8299) Q3 2024 earnings summary

Executive summary

• 3Q24 revenue was NT$13.943B, up 12.5% YoY but down 12.3% QoQ; gross profit was NT$4.076B, up 2.2% YoY and down 26.4% QoQ.

• Net income was NT$691M, down 19.5% YoY and 71.8% QoQ; operating income rose to NT$1.22B from NT$525M a year earlier.

• 9M24 revenue reached NT$46.36B and net income NT$5.56B; associate earnings contributed NT$1.78B.

• Non-consumer and retail products contributed over 70% of revenue, reducing exposure to NAND market fluctuations.

Financial highlights

• 3Q24 gross margin was 29.2%, including a 3.37% inventory write-down impact; adjusted gross margin was 32.5%.

• Basic EPS was NT$3.37, affected by inventory write-downs of NT$1.97, financial-asset losses of NT$1.09 and forex losses of NT$0.94.

• Operating margin was 8.8% and net profit margin 5.0% in 3Q24; operating margin was 9% for 9M24.

• 9M24 gross profit was NT$15.29B, operating income NT$4.47B and basic EPS NT$27.31.

• October revenue was NT$3.717B, down 27% YoY; Jan–Oct revenue rose 33% YoY to NT$50.08B.

Outlook and guidance

• Q4 revenue was expected to be flat QoQ, with controller and industrial demand stable; gaming demand remained uncertain.

• Enterprise SSD and AI solutions were projected to generate significant revenue from late Q1 or early Q2 2025; generative AI services are expected to drive storage demand.

• Q4 gross margin was targeted to remain stable, with possible further inventory write-downs partly offset by lower-cost purchases.

• Cost controls remain a priority, particularly in R&D and OpEx, with headcount growth limited to single digits.