Himax Technologies, Inc. Q3 FY2025 earnings call

• U.S. tariff measures and global trade dynamics added macroeconomic uncertainty. Third quarter revenue and profit exceeded guidance range. - Automotive driver sales showed resilient demand with single digit quarter-over-quarter growth. - Continued expansion into emerging areas like ultralow power AI, CPO, and smart glasses. - Himax holds dominant market share in automotive Tcon. - In large panel driver ICs, Q4 sales expected to increase single-digit sequentially driven by new projects. - In small and medium-sized display driver IC business, Q4 automotive driver IC sales set to increase single digit, with full year 2025 automotive driver IC sales projected to grow single-digit year-over-year.

Third quarter revenue registered $199.2 million. Gross margin was 30.2%. Revenues from large display drivers came in at $9.0 million, a decline of 23.6% quarter-over-quarter, accounting for 9.5% of total revenues. Revenue from the small- and medium-sized display driver segment totaled $141.0 million, a slight decline of 2.4%. Q3 automotive driver sales increased single digit quarter-over-quarter, outperforming guidance. Automotive business represented over 15% of total revenue. Non-driver sales reached $39.2 million, a 13.7% decrease from previous quarter, accounting for 19.7% of total sales.

• Expect Q4 revenues to be flat sequentially. - Gross margin expected to be flat to slightly up depending on product mix. - Q4 profit attributable to shareholders estimated to be in the range of $0.02 to $0.04 per fully diluted ADS.

• U.S. tariff measures and global trade dynamics could impact actual events or results materially. - Macroeconomic uncertainty limits visibility across the ecosystem.

Q: Regarding the fourth quarter guidance, why is there a little bit conservative EPS guidance despite better top line and gross margin? And on CPO progress, when can we deliver meaningful revenue from CPO business?

A: For the EPS guidance, key reasons include income tax adjustment as underestimated Q3 profit led to significant income tax expense in Q4, and higher R&D expenses during Q4 including expensive tape-out schedules and speed up of R&D spending related to a government grant. For CPO, first generation product validation completed, second generation in advanced stage, likely fully ready for volume production in 2026, but revenue contribution in 2026 is hard to comment, with potential meaningful contribution starting in 2027 and full blown mass production expected in 2028.