Himax Technologies, Inc. Q2 FY2025 earnings call

• Q2 gross margin exceeded guidance, revenue and profit within projected range. - Q3 outlook: Revenues expected to decrease 12%-17% QoQ, gross margin around 30%, loss per diluted ADS $0.20-$0.40. - Tariffs: U.S. tariff plans impact global trade, but limited direct impact on Himax as IP products are integrated into panels/modules by others. - Automotive sector: Tariff clarity in some regions, but cautious demand; long-term optimism due to smart cockpit upgrade. - New business areas: WiseEye AI, CPO, smart glasses, and LCOS micro display advancements with various applications and market potential.

Second quarter revenues were $214.8 million. Revenue from large display drivers was $24.9 million, a slight decline of 0.6% QoQ, accounting for 11.6% of total revenue. The small and medium-sized display driver segment totaled $144.5 million, a sequential decline of 4.0%, accounting for 67.3% of total sales. Automotive driver sales outperformed guidance with a single-digit QoQ decrease, and net automotive driver sales for H1 2025 still had a 3.2% YOY increase. Non-driver sales reached $45 million, a 14.7% increase QoQ, with Tcon for automotive and monitor products contributing.

• Q3 revenues expected to decrease 12% to 17% sequentially. - Gross margin expected to be around 30% depending on product mix. - Third quarter loss attributable to shareholders estimated in the range of $0.20 to $0.40 per fully diluted ADS. - Q3 guidance accounts for employee bonus expenses, with current best estimates of around $7.5 million bonus, $7.2 million immediately vested.

• Broadening U.S. tariff measures intensifying global trade tensions. - Abrupt and significant depreciation of the NT dollar against the U.S. dollar. - Macroeconomic and demand uncertainty affecting business.

Q: CPO status updates?

A: The project is on track, first-generation product validation ongoing, mass production likely next year with limited revenue contribution now. There are multiple generations in development, and the technology has potential for rapid market penetration but depends on customer decisions.

Q: Why did Himax lose money in Q3?

A: Due to the peculiar way of expensing employee bonuses, with Q3 typically having higher bonus expenses as per accounting practice, but excluding bonuses, there could be a small profit and positive cash flow in Q3.