Himax Technologies, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Fourth Quarter Financials: Q4 revenue was $203,100,000, up 2% sequentially. Gross margin was 30.4%, in line with guidance. Profit per diluted ADS was $0.036, at the high end of the guidance range.
• Full Year 2025: Revenue was $832,200,000, down 8.2% from 2024. Gross margin was 30.6%, slightly up from 2024. Operating expenses were $210,200,000, up 1.1% from 2024.
• Jordan Wu's Remarks: Automotive segment is more immune to memory price fluctuations but visibility for the year outlook is limited. Non-driver businesses like TCON and WiseEye AI are growing. CPO is making progress with collaboration with ForeSee.

Segment Performance

• Fourth Quarter 2025:
  • Large display driver: Revenue was $21,700,000, up 14.2% sequentially, accounting for 10.7% of total revenue.
  • Small and medium-sized display driver: Revenue totaled $139,100,000, down 1.3% sequentially, accounting for 68.5% of total revenue.
  • Automotive driver: Q4 sales increased approximately 10% quarter over quarter, with full-year 2025 growth in single digits.
  • Non-driver: Revenue reached $42,300,000, up 7.9% sequentially, accounting for 20.8% of total revenue.
• Full Year 2025:
  • Large panel display driver: Revenue was $90,700,000, down 28% year over year, accounting for 10.9% of total sales.
  • Small and medium-sized driver: Revenue totaled $575,100,000, down 8% year over year, accounting for 69.1% of total revenue.
  • Non-driver product: Revenue totaled $156,400,000, up 7% year over year, accounting for 20% of total revenue.

Guidance

• First Quarter 2026: Expected to decline 2% to 6% sequentially in revenue. Gross margin flat to slightly down. Profit attributable to shareholder estimated at $0.02 to $0.04 per fully diluted ADS.
• Segment Outlook: Large display driver Q1 expected to increase single digit sequentially. Small and medium-sized display driver Q1 expected to decline single digit. Automotive driver Q1 set to decline quarter over quarter. Non-driver IC business Q1 expected to decrease single digit sequentially.

Risks

• Macro-economic challenges such as tariffs and geopolitical uncertainty, leading to customers' conservative and late order strategy.
• Supply chain risks including material price increases and foundry capacity tightening.
• Market competition risks with price pressure from peers.

Question and Answer

• Q: My first question is on first quarter gross margin. May I know why the margin would be flat to down quarter over quarter? A: We are only guiding for a flat to slight decline only, which is really the product mix change. We are seeing, proportion-wise, slightly less auto shipment in Q1 compared to last quarter. Material price increase is a factor, and we are in discussion with foundry vendors and customers about price increases.
• Q: Could you give us more details or maybe some guidance for the CPO revenue in maybe 2026 and 2027? A: The main goal of 2026 is to complete validation of both Gen 1 and Gen 2 products with partners. Revenue contribution will be limited in 2026. For 2027, we are close to finalizing Gen 2 product targeting production readiness with bandwidth >6.4T, potentially seeing meaningful contribution before official mass production. Even before official MP, pre-MP shipments can be meaningful for revenue and profit.
• Q: Our OLED sales is going to be huge in 2026. Is price at a price premium versus conventional panels? A: Sales contribution from smartphone OLED for Himax in 2026 is still less than 10% of total sales. Automotive and IT OLED have better gross margin. Auto OLED is in strategic partnership with top-tier panel makers with breakout demand expected in 2027. IT OLED likely to breakout in 2027 with new Gen 8.6 lines coming online.