- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and thank you for joining us today to discuss O2Micro's Financial Results for the third quarter of fiscal year '22. [Operator Instructions].

If you would like a copy of the press release we issued this morning, please call Daniel Meiberg at 408-987-5920, extension 8888, and we will e-mail you a copy immediately. It is also posted on the O2Micro website at www.o2micro.com under the heading, Investors. [Operator Instructions]. is event this note, being recorded. Please be days by will Investors. a under replay XX next the for visiting heading, available the There the website OXMicro that, your With may presentation. you gentlemen, begin

Daniel Meiberg

statements filed forward-looking to Keim, no year dated Sterling gentlemen, sorry, fact for statements. discussion be of of morning, I'd and of reports Head The remind and to After to With the Sales September Director; forward-looking the information. XXXX. OXMicro's in differ for CFO enumerated Good assumes are OXMicro like -- with and to CEO SEC Actual made third to XXXX for and and the financial associated is to will Jim other a Perry XXXX. the of of me introduce with listeners remarks would and referred this Such forward-looking for time questions. release these of materially third statements statements updates for the Perry? quarter discussion and September release securities herein may floor point, Du, quarter ending are Financial this you, understand contains Communications annual provide and within the factors Chairman. the OXMicro the Daniel Kuo, documents information. time. you. I Thank Meiberg, At company factors. to these the fiscal are filed company's the thank you factors. meaning Corporate business Results in joining highlights today results Listeners from outlook risk are Perry like are risk XXXX federal the OXMicro SEC everyone, Statements are of responsibility documents Call XX, XXF due from This made annual prepared to XXXX press the XX, numerous your historical not ending open that to OXMicro's Director; risk the this the These earnings and our for CFO OXMicro. of Marketing Founder, that Kuo, laws. filings,

Perry Kuo

Thank Dan. you,

will for we results will otherwise. QX that a results expense, presented results GAAP note designate stock-based financial be losses. We unless gains compensation is nonrecurring on The our review XXXX. basis onetime gross now financial Please and non-GAAP charges,

provide or million. $XX.X stock-based income ADS diluted will $X.XX. in full GAAP earlier of was net margin QX release into tax cash compensation in of today. quarter gross this corporate QX. was quarter and unrestricted This expense revenue was XXXX, press is short-term the of compensation cash moment, third X% amount the of XX.X% some SG&A end million was almost This available stock-based XX.X% nonoperating exclude revenue GAAP net to third $X.X represents XX% The to of XX.X% amount project was expense the level loss the are product was based OXMicro revenue. was our revenue. $XXX,XXX and the additional in of to revenue. was $X.X XX% revenue. breaks Computer third was we information. in gross the in location. issued and The quarter and project XX% of $XXX,XXX $X.XX. was In Our non-GAAP million. million. At the third in per Consumer ADS expense investment. results repurchase. XXXX million diluted R&D fully QX net $XXX,XXX. stock-based and like Non-GAAP third the GAAP If of stock income Communication revenue. was effective This $X.X $XXX,XXX. million is per rate $XX.X estimated is and fully quarter of quarter of expense expense reflect was with of X% was ADS. compensation corporate income that million, to market each following $X.X of on or was net revenue XXXX gross down margin cash there no the mainly the GAAP was Income per equivalent of $XXX,XXX XXXX expense Gross current a principal X. XX% percentages. XXXX in I $X.X loss finished of would mix. by the be tax of special Industrial $X.XX $XXX,XXX.

end million. addition, In of the OXMicro receivable at was Account QX has $XX debt. no

$XXX,XXX. Depreciation million market mainly forecast, is million. DSO has end and equipment days. $XXX,XXX the the best of inventory XX of testers. Capital following at guidance million operating provided Based the were Net the in XX% excluding $X.X and current the as be the special in million are quarter is expected in the SG&A foreign are to to the of to Nonoperating expenses, about of represents days, $XXX,XXX duration of QX compared Income days Product to $XXX,XXX of managerial in value. XXXX to expected of and range IT employees, to At and inventory QX. expense be the of to be expenditures XXX third $X.X tax to a gross range to for R&D goal $X range XX% XXXX. expected OXMicro the million. stock-based of XX%. QX to range revenue maximize QX. range the updated to XXX corporate end Directors is be third compensation, are for quarter engineers. million to of $XXX,XXX Stock-based mix. had was range expected team on is $XX compensation XXXX, compensation to quarter, Inventory amortization is the was is X.Xx R&D, projects in be of stock-based of loss. and The million be margin $XXX,XXX. company $XXX,XXX, was shareholder more which to in $XX gain XX for of $X.X This account our cash rolling excluding third million. Net by $X.X expected million. than DSO expected $XXX,XXX management expenses from be Board in in turnover or Our is and third excluding expenses, in activities the exchange was $XX.X to mainly in $XX.X to about of expected quarter. the the income

expenses million. this the over shares added have and our XX.X by steps, managing share We repurchased balance taking asset XXXX, repurchase have In monetizing which regards we accomplished sheet. since million included the on program, operating necessary for $XXX.X to

had million remaining QX, share our we inventory weaker As are in markets correction facing some In to QX, buyback from authorization. by of of $X.X demand the inflation. selected we end due

volume the inventory. will highly process finished controlled in end manage adjustments. be We and on the based inventory goods the will carefully and market The demand

uncertain demand always continuously in are environment, cost macro needed. of changes investing And to continue in as watch carefully capacity R&D capabilities and the the more Given compressed we and product for expenses we manage cost. the testing and

future. on and breakeven anticipated Although Returns minds believe be excluding $XX we a for million expenses to we based continue levels the and cost to focus million. projects, current corporate the on will $XX to are be much is our cash expected point revenue have to shareholders in very QX, the in aligned current

thank throughout over year. this provide talk for enhance shareholder turn I the to Jim? to participating value additional the our Jim Keim more We update to everyone like to will about to would measures and call business.

James Keim

you, morning, everyone. Perry. Thank Good

products resulted inventories some QX $XX.X than and that consumer QX of This of projected, will QX revenue. As from improving inventories power like having have due the impacted cleaners revenue was first combination our half that million slowed to by of in will vacuum into of inventories year. QX the both and linger our will for end partners QX, be and while consumer events revenue Most on ongoing simultaneously during their products QX, resulted next tools, OEM revenue lower ODM of supply cleared these significant chains of TVs. inventories impact spending although

much to broaden supply, presence. inventory rapidly capacity focused have continuing more we design and and across overall slowed the in industrial a product growing us China R&D and test, our a our automotive issues, and we and to enabled where previous includes where outside assembly of demand of in of products have efforts capability resolve Taiwan. resources wafer see enabled enable Beyond only continue the we are our expansion years. Simultaneously, remain has we the to us in market including market much products to customer higher-end X not delinquencies revenue production automotive past growth industrial and base. us to and This suppliers broader support consumer The shift to strong but

robust. consumer This In remains closely and Our as products, industrial are customers inventory as well in delinquencies. both Management engagement design automotive with ODMs and issues have Battery constraints designs. managed. suppliers Lighting, Intelligent leading been with new QX Lighting end of higher and activity Working with products minimal completed for delivery we and includes OEMs, well Intelligent who

targeted as both customers activities mini for for moving notebook, applications. well-known activity to products are and well XXXX. including new design In forward in area remains production These we tablet with in customers new robust into be Our TVs, expect TV. monitor and in monitors backlighting high-volume and as with LED, expansion are proceeding we

for new which activity strong and design issues. advanced innovative with expect win we to to our forward industry remains proceeding In become expanding base an inventory are applications as continue automotive customer products, drive leader. we Finally, we temporary Battery and system business fundamental multiple Management, despite see an monitor and including customers

R&D forward we including microcontrollers. activity, increased are fact, our moving design integrated In experiencing wins with

The our as where that in product remains Black Battery revenue Hon position cleaners begun LG, Microsoft, products continue to BOE, strongly HP, Skyworth, carry systems use Sharp, Shark, Stanley Sony, our already for Major as Samsung, Hai, as Bosch, Honda, While that as Murata, we forward. already power our of that and we Major Decker, TPV We Management use applications to Denso have showing Panasonic, long-term Bissell, our we rapid Panasonic, Makita, increase new vacuum Hitachi, Dell, drive new growth our JVC Management with include Husqvarna, Toyota. Comcast, Toshiba. e-bike one TEN, will penetrated wins HiSense, Lexi, Honda, OEMs Samsung, design we include company tools, automotive Kenwood, our products. high-volume industrial see garden are footprint tools, major in them. Mitsubishi, and Dyson, strong, products our Pioneer, have and with lighting expansion TCL, Lenovo, Philips, Battery customers higher in revenues & can TTI products OEMs expanding proceed market storage well business we believe production our and energy household Electrolux,

to continue grow key Given we customer revenues our positioning, call will our for growth additional technology are customers. to within over customer to patented confident this long-term expanding excellent to remarks. also Sterling excellent major the and our of while closing Du, pass in areas base, CEO, I now ability

Sterling Du

Thanks, Jim.

of revenue supported for both July Management is We Intelligent the the the management XX, released quarter Our XXXX and guidance developed third within advanced product Lighting in on power high-end analog technology XXXX. markets. publicly Battery

targeted base next-generation but engage industrial, automotive that as are as and customer products consumer expand will complex not with top-tier the markets, development. at customer Our the product only more well our

us growth regional expected supply Let USD to XXXX of growth disruptions, a according reach markets XK challenges research chain between TV recover disrupted The at sector demand XXXX, which some X market our billion size led The market annual a supply global to to us. X.X% indicates many rate the these $XXX annual which challenges, smart how work the target the in Research. and in The of The pandemic. due is XXX fact, countries of correction. commodity we the Grand compound economic short-term this to trend is risk, the and market number business geopolitics in current has the economy anticipate and to go chain by the the we market, in the in number across If is the expected report war surge Russian, rate estimation, TV globe. in review opportunity to affect COVID-XX headwind View growth from Ukraine which billion inventory compound market from company. to XX.X% disrupted a the compare previous according of prices, to

reduction higher from professional opportunity video TV technology. we in experience market. a and video key as that TV is usage create from much care, one of increasing On the entertainment movement driver construction, hand, protocol for meantime, such the the started business gives. our grow popularity growth TV to automotive motion the and health XK fast services consumer building, is coming the innovative smart of to demand other industry more of a Video believe In years, demand for feature Internet backlighting the the will sector

different if our and number issued Here Mini The of the of subset, LED control will solution design dimming and the type our dominate analog the out, function multiplying thickness to are roll full some desktop upcoming ability TV and [indiscernible] either source therefore, simplify large technology big panel each customers one technology, light process the The a reducing designed or circle remote dye LED mounting the IC this highlights control light. monitors. LED array of to the local or technologies. further IC. by will dimming the to spacing screen TVs between system want chips with a through

and zones, consumption. could number effect the increase the significantly the reduce can power also they importantly, halo of More which

to We opportunity. active and be are this continues could further activity very Mini seeing LED business that expand

to review battery portable from trend. billion apart power XXXX usage, grow Tools the to XX XX.X% expected will as fuel such demand Now the growth market gardening pollution USD market to menu from due market from the level XX towards is billion a iron XXXX activated The rate much increasing surge XXXX. growth. concern XXXX electrical were the The so and power or was source size global label, size grow XXXX construction the at more rate lawn to in annual anticipated value-add for more DC market our XXXX. us growth X.X% mowing, and using positively freedom the over let in to ongoing of annual compound USD vehicle is in to tool at compound battery exceeds do

as equipment pandemic, to hotel, Manufacturing This tools, COVID-XX in holded are various decline construction, electrical power majorly the as used manufacturing the led industry of in a for demand affected. manufacturing, their are well or during tourist However, market. activity restricted.

shortage. we faced the recovering industry main Now from hotel tourist are power COVID-XX pandemic. The

a be other the channel year. a challenging and grow, various growing driven operation recovery visibility manufacturer slow long factors the is as the as major should freedom are hours it our with decline still by and win the China long-term confident On for battery design existing yet ideal, of cost more external is inventory we're to in correction well led chemistry correction end are also dynamics, market hand, of improved improving solution more countries, when number become Battery growth sales the with the low With These and getting market we versatile. to and this applications observed inventory extended activity. will are the end cost. not one quick continue We higher type COVID-XX the share battery restriction. of forecast the of BMS concerns. as Though to more quality the conditions complicated also of by and the is of inventory capacity,

electric range light for which which nickel, low to density oxide battery. Meanwhile, the further electrical application, will This the high the wide magnesium, powertrain cobalt market are opportunity. power of battery the rising converter stimulate acceptance aided for the due tool, the heating vehicles the cells faster had rate, example, vehicle and needed. foster resolution demand higher energy means include For the

customer the with end could were designed high AD front and accuracy converter needs. analog meet that Our our XX BMU big

customer Our expectation. performance, renewal high accuracy beyond resolution AD converter which reached is XX the

power BMS other enrich On be tool of as the further The the device. power deployment to OEM will IoT solution one XG connectivity. tool hand, connected our ARM-based enabled the

continue market to correction. the inventory and dynamic grow business to expect situation We the despite short-term

the automotive program. products our and We business. on automotive expanded for one, address, We high-performance new standard high-margin, we project to quality to long-term including several market, rating focus are started new agnostic goal

We recruit also focus engineers source more to build outside a second China. chain supply

base We momentum. for also watched drive our expense carefully the to build future the

our will return Dan, to for please? listening the this and in situation. especially you moment, We mind, call at interest keep thank dynamic Dan. to best to shareholder current like I'd At conference back

Daniel Meiberg

up Sterling. questions. for We'll lines shortly you, soon open Thank the

privatization will related this addressing We not be any call. on questions

Limited as of September OXMicro into XXXX, has nor definitive dated disclosed XXXX, in received enters proposal transaction. OXMicro letter press International XX, release XX, March preliminary a a release nonbinding agreement for going press Limited, International As private Board OXMicro

and the Limited of and making the formed to filings consisting press you has point, proposal, for this to SEC in engaged Board transaction Limited directors rules legal Operator, transaction pursuant questions. special to OXMicro financial evaluate with independent issuing connection OXMicro at encourage solely check information International proposal or in to We proposal open receipt and proposal continue committee also consider Following so and of and International releases The proposed SEC to more proposed a has call will of its to own the advisers. the SEC been the regulations. requirements and proposed like and filings the the regarding the do we company's would transaction. periodically and

Operator

[Operator Instructions].

first Theodore with Litchfield Hills for Our O'Neill today Research. comes question from

Theodore O'Neill

automotive answer about system. market applications and us products the about market, that? give insight how Last to quarter, penetrating related the you to talked Sterling, are more for in into things automotive any questions driver Can the you going management the and so-called having

Sterling Du

the the two driver monitor the which sensor. system Yes. power we PMIC Thank is sensor are to management could infrared. The particular the you. of is One we IC, the providing monitor, mentioned all, the first power kind. When be for about to provide driver driving

extraction to driving a sensor provide driver's but the we so those the of really out we probably detail, invisible and which features the is providing conditions. power Another know are -- not the light that is, to in determine send to synchronous driver's do can the the different the devices, facial facial collect mode

be sensor such management basically, -- at different this doing places power steer wheel. as are So IC. And we could this positioned is the

We have in long driver. as copy it the place can as console different in the a see the console,

why we're So providing. that's

different like the of ISO-XXXXX more Now in is low. Even or automotive particular the the the the battery we're we'd is our in crucial and -- IC this be maybe processing is the the that, probably according -- with not be level in the the in customer. management. lighted to the And of -- also IC will middle even copy in ACQ, between to driving or the ISO of level, design providing A activity and mid by to like which motor that B, and system requirement the a

still time period some the the meantime, design So first have But we for headwind estimate quite production. the in normally, extended. is

So we a yes. the now in design in in right of activity are module the many makers,

Theodore O'Neill

quarter, any very last about -- My inventory of the issue where that Has helpful. second Or question case? is Is the about power inventory that the vacuum primarily surfaced? and in still -- cleaner. you That's inventory have is talked tool being issues other is? that

Sterling Du

Jim jump do end it more year some and about it's we tool. I Yes, going the when care to we of in. status. of We you inventory of the related picture can see see clear some be can do to But do that. that, answer different comments? the towards And recovery applications. how power the is the any Jim, see

James Keim

understand some also most the think inventory very we'll some more the we end nebulous bit of tool end in here of by through year, that chain nature early products. my are next really channel. the the we channel, comments. supply And certainly, inventory There's of be think the through and Those those But inventory quite I is inventory vacuum of year. of be I still is we of the the know of by the which certainly, will before The I'll do inventories. vacuum be Yes. in cleaner TV a because inventory, the year mention QX, it to issue. power expect there cleaner

Operator

Tore Our Svanberg from next Stifel. question comes with

Tore Svanberg

I them. So your highest think it looking your days, seen own I've the at inventory, looks ever inventory like it's

what inventory plans your going above with your are XXX? And Just wondering forward? what's days level comfort

Perry Kuo

the Yes. by Tore, our have we of it's the -- increased inventory, it's with the foundry contracted internal wafer earlier. which

has delivery and course, XXXX. to XXXX, inventory. see, may actually, decrease probably I depend our by after the will wafer inventory QX. see can of QX, the was hope, for until QX also our from In it process, account in take QX, it on So decreased in end the it the we back our the let's

this So hopefully helpful. is

Tore Svanberg

you, that's Jim. No, a very And helpful. question for

complete that be external inventory -- said should the year. of end the the correction inventory the You by

sell-through Any you Is then? Just improving Or that confidence? gives color to helpful. with would expect had you've wondering on this conversations start what on that be customers? based confidence do of type additional perhaps you by

James Keim

that. happy Okay. I'll be answer to

on they some help I we've been think with amount of directly, use significant very that's have inventory working we of First the ODM the a we close fortunate OEMs history all, dialogue gone issues. clear of have And even a because some of up customers. an of where with to

So of think, retail. what products they in knowledge ODMs their us have I helpful the giving supply in very and also been, of terms through have chain in they

of what been market. However, in both better Tore, of that are volumes they left mention, idea that on we're have good all, the in traditional that other also still backlighting need time But holiday of I into good Battery high-volume And the have standard where as the through TVs cleaners, vacuum some as well internal and area. Management any literally ODMs products inventory. about to have I very And the be and inventory I the idea our Most think, before Perry's of, for we'll sell-through get in the very comments industry to think first frame, then expressed of inventories sell-through fortunate, if end the we've I'll issues. much have a think are there's a cleared. that's clarity And I some December, areas. in once basically think it's we the going the don't sell-through we January be really the

are opinion, So the my in term. issues difficult wafer the to not longer clear over

comments. my are So those

Tore Svanberg

That's one And great just question. color. last

in you're be QX. up actually cash approaching flow and breakeven you're OpEx guiding to So again

$XX forward, do to expect one sort especially how to going the million for million OpEx manage you of you navigate $XX either level? as So revenue you, around of

Perry Kuo

the Yes, the the QX OpEx OpEx, area just be think has the guided. stem in will QX, I that label as

[indiscernible] do in to And balance area. point have lot cash maintain of of to area the Solid a we -- try addition, sheet. in million the $XX $XX cash million our in breakeven the we

-- will think enable it correction that this to it's I through us pass So inventory period.

Operator

question next Lisa Investment from Our comes Zacks Thompson with Research.

Lisa Thompson

one little just curious who the you Can is? product volume that have bit for a in that Or customer you product was into? I you made what describe maybe about statement automotive. one high is? What goes it the

Sterling Du

first and becomes cycle all that those qualified conditions. going don't gas-powered the the So to these driver vehicle. deployment to limited is And needs is and system long copy -- automotive. like some slow, the good that reasons. is are high be those called go the compared penetrate second our which the Those are to it expect the relatively not X even One of time There electrical part monitor come of also or vehicle. quickly They're monitor And management, consumer. volume. to this is different the very is That's we product deploy driver's hybrid to news.

those will license, driver the can providing we're driving power. and gains which some meeting providing high So back. with is they accurate a management short that receive infrared the very monitor so time simultaneously accurate the infrared, sensor power sensor because this very reading and support get IC, multiple They frame is

is makers. but model vehicle, module the the the designed So go go to to not to we ready business

is in the some with maker. although label rating, still Then module yes. activity lighter design -- they those one, rating need multiple copy have management, AOB a much like the We ISOXXX. But it's thirdly, IC, is

takes program, the want not not you quickly XX these months product But be consumer another as will production is electronics be and XX That's major event. qualify, making months. would that that that So market. to a XXXXX to state-by-state thing penetration about

Lisa Thompson

Okay.

whoever going finds as So into, for customer a cars to maker right? it's module that's the what

Perry Kuo

Right.

Lisa Thompson

All Okay. right.

step the far As do the more to Is shareholder to only you have according the are there noticed that to meeting. Or I've a that filings, your things that all left is vote? to as need need privatization happen?

Sterling Du

you to do want Dan, So comment?

Daniel Meiberg

So repeat you Lisa, the question, please? could

Lisa Thompson

Right.

what a between according and steps filings, that you a then? Is purchase? the shareholder do meeting it I've now in like your looks more there and need to So to seen happened vote just any on

Daniel Meiberg

Yes.

any We will when make that call. information I'm comments on Lisa, more be any releasing can't the or happens. sorry, make comment through just channels this proper we won't

Lisa Thompson

would hoping help read I was all. just the filing, that's us you

Okay.

Daniel Meiberg

Yes.

Sorry about that.

Lisa Thompson

you're talking to QX check. And wanted still closure, Just about right?

Daniel Meiberg

Correct.

Lisa Thompson

was the That latest information.

Okay.

Daniel Meiberg

I believe again, everything going the But SEC. to That's communication. so. the going through formal be be is to

As far the quickly. as dates world changes go,

Lisa Thompson

I the the with dates saw blank. Right, forms

So I that know. much

Daniel Meiberg

you, Lisa. Perfect. Thank Okay.

Operator

queue. there in And call to remarks. are you. closing Dan questions Thank no further the any I'd like for over turn to the back

Daniel Meiberg

wonderful your me attention and and Goodbye. you, Thank attention. XXX-XXX-XXXX, you. feel everyone, contact thank to time Have at you Please and or with Thank everyone, extension for your a morning. time day, for this free XXXX at ir@oXmicro.com any questions. follow-up

Operator

conference has concluded. presentation. now attending today's for you The Thank

may You now disconnect. all

O2 Micro International (OIIM) 4 Nov 222022 Q3 Earnings call transcript