Himax Technologies, Inc. Q1 FY2025 earnings call

Financial Performance - Q1 revenue at high end of projected range, gross margin in line with guidance, profit exceeded guidance. - Revenue details by segment: large display drivers, small/medium display drivers, automotive, non-driver. ### Balance Sheet - Cash, cash equivalents, etc. at $281 million as of March 31, 2025. Strong operating cash flow of $56 million. Inventories down, accounts receivable at $217.5 million. ### Second Quarter Guidance - Expected revenues to decrease 5.0% to increase 30% sequentially. - Gross margin around 31%. - Profit per diluted ADS estimated 8.5-11.5 cents. ### Business Updates - NT dollar appreciation impact limited, US tariffs not significantly impacting business as products mostly assembled outside US. - Strengthening supply chain in various regions. - Automotive IC business accounts for half of revenue, leading in automotive display market. - WiseEye ultralow power AI sensing solutions expanding in various applications. - CPO technology development with sample shipments proceeding. - LCoS microdisplay technology debut for AR glasses.

First quarter revenue was $215.1 million, a decrease of 9.3% sequentially but a 3.7% increase year-over-year. Gross margin was 30.5%. Revenue from large display drivers was $25.0 million, flat from last quarter, accounting for 11.6% of total revenues. Revenue from small and medium-sized display drivers totaled $150.5 million, 70.0% of total sales. Q1 automotive driver sales outperformed guidance, with Q1 auto IC sales rising nearly 20% year-over-year, and automotive business representing more than 50% of total sales. Non-driver sales were $39.6 million, 18.4% of total revenues.

Second Quarter Guidance - Revenues expected to decrease 5.0% to increase 30% sequentially. - Gross margin around 31%. - Profit attributable to shareholders estimated 8.5 cents to 11.5 cents per fully diluted ADS.

Risks - NT dollar appreciation. - US tariff measures causing global trade tensions and demand uncertainty. - Macroeconomic uncertainty impairing visibility across ecosystem. - Inventory management risks due to macroeconomic conditions.

Q: Could you explain the validation process for CPO?

A: The validation process is being conducted by FOCI and ourselves, our leading customer and our foundry partner. It involves validating current generation products and new manufacturing equipment. It's a work in progress, but we believe it's going well and will lead to trial production and mass production next year.

Q: Do you have a guidance for 2025? How do we see the demand into second half?

A: Since IPO, we haven't provided full year guidance. Second half visibility low due to tariff uncertainties and concerns about effectiveness of Chinese government stimulus programs for auto demand. Confident in growth in new technology areas like TDDI, TCOM, and LPDI where we have pioneering positions and strong design win pipelines.

Q: Would you comment on the Obsidian investment?

A: Obsidian is a Sydney-based company with unique thermal imaging sensing technology. Our CMOS image sensor and optical solution fit well with theirs. Their thermal imaging complements our RGB sensor image. We're working closely with them, and expect meaningful revenue contribution from their technology in the future.