Socionext (6526) Q2 2025 earnings summary

Executive summary

• Net sales for 1H FY2025/3 declined 15.2% year-over-year to ¥99.2B, mainly due to the end of special demand and weak Chinese market.

• Operating income dropped 16.7% to ¥15.6B, and profit attributable to owners fell 24.2% to ¥11.6B.

• R&D costs rose 16.8% to ¥28.8B, reflecting investment in advanced technologies and new design wins.

• The company continues its transformation strategy, focusing on high-growth areas like data centers and automotive, and expanding global R&D capabilities.

• Full-year forecast for FY2025/3 remains unchanged at ¥200B net sales and ¥27B operating income, but both are expected to be about 10% below initial guidance excluding FX impact.

Financial highlights

• 2Q FY2025/3 net sales: ¥46.4B (down 16.5% YoY); product revenue: ¥37.7B (down 22.4% YoY); NRE revenue: ¥8.4B (up 23.5% YoY).

• 1H FY2025/3 product revenue: ¥79.95B (down 21.2% YoY); NRE revenue: ¥18.76B (up 23.3% YoY).

• Gross margin improved to 54.4% in 1H FY2025/3 from 49.7% in FY2024/3.

• Extraordinary income of ¥1.79B was recorded from the sale of the Kozoji office.

• Cash and cash equivalents increased to ¥74.0B as of Sep 30, 2024.

Outlook and guidance

• FY2025/3 full-year forecast: net sales ¥200B (down 9.6% YoY), operating income ¥27B (down 24.0% YoY), profit ¥19.5B (down 25.4% YoY), EPS ¥108.79.

• No change to the previously announced earnings forecast, despite currency tailwinds and ongoing demand weakness in China and industrial sectors.

• Product revenue to decrease due to end of special demand and weak China/industrial markets; NRE revenue to increase slightly.

• OP margin expected to recover in FY2027/3 as new automotive projects enter mass production.