SIMO Q2 Earnings Surpass Estimates Despite Lower Revenues

Silicon Motion SIMO reported relatively healthy second-quarter 2025 results, with both the top and bottom lines beating the Zacks Consensus Estimate.

However, the leading developer of microcontroller integrated circuits for NAND flash storage devices witnessed revenue contraction year over year, owing to weak demand trends in multiple markets. However, management remains focused on delivering strong, sustainable long-term growth by broadening the product portfolio, expanding into new markets and increasing the market share in the consumer, enterprise, automotive, industrial and commercial storage markets.

Net Income

On a GAAP basis, net income in the reported quarter was $16.3 million or 49 cents per American depositary share (ADS) compared with $30.8 million or 91 cents per ADS in the prior-year quarter. Net income is affected by declining net sales year over year.

Non-GAAP net income was $23 million or 69 cents per ADS compared with $32.5 million or 96 cents per ADS in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 52 cents.

Revenues

Quarterly revenues decreased to $198.7 million from the year-ago quarter’s tally of $210.7 million. However, the top line beat the Zacks Consensus Estimate of $180 million.

Management noted that sales of SSD controllers increased 0-5% sequentially but decreased 15-20% year over year. eMMC+UFS (Embedded Multi-Media Card + Universal Flash Storage) sales increased 40-45% sequentially and 10-15% on a year-over-year basis. Revenues in SSD solutions increased 0-5% sequentially but decreased 45-50% year over year.

Other Details

Non-GAAP gross profit aggregated $94.7 million compared with $96.8 million in the year-ago quarter, with respective margins of 47.7% and 46%.

Non-GAAP operating expenses increased to $69.3 million from the prior-year figure of $62.1 million. Higher R&D spending, along with sales and marketing expenses, led to the increase.

Non-GAAP operating income decreased to $25.3 million from $34.7 million, with margins of 12.8% and 16.5%, respectively.

Cash Flow & Liquidity

As of June 30, 2025, Silicon Motion had cash, cash equivalents, restricted cash and short-term investments of $282.3 million. The company utilized $17.3 million in cash in operations during the reported quarter against a cash generation of $21.5 million in the prior-year quarter.

In the second quarter of 2025, the company’s capital expenditure totaled $15.6 million. This included $7.4 million for the routine procurement of testing equipment, software, design tools and other goods and another $8.2 million for building construction in Hsinchu.

Outlook

For third-quarter 2025, management estimates non-GAAP revenues in the range of $219-$228 million. Non-GAAP gross margin is expected to be 48-49%. Non-GAAP operating margin is anticipated to be in the band of 12.3-14.3%.

For 2025, management anticipates that the company will benefit from the launch of several new products, including a 6nm, 8-channel PCIe5 client SSD controller, new eMMC and UFS controllers and MicroSD controllers. The company is also expected to benefit from the growing adoption of new 6nm, 4-channel PCIe5 client SSD in late 2025.

SIMO’s Zacks Rank

Silicon Motion currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release second-quarter 2025 earnings on Aug. 5. The Zacks Consensus Estimate for earnings is pegged at 65 cents per share, suggesting a growth of 25% from the year-ago reported figure. Arista has a long-term earnings growth expectation of 14.81%. It delivered an average earnings surprise of 11.82% in the last four reported quarters. Arista continues to benefit from the expanding cloud networking market, which is driven by the strong demand for scalable infrastructure.

Pinterest, Inc. PINS is set to release second-quarter 2025 earnings on Aug. 7. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, implying a growth of 17.24% from the year-ago reported figure. Pinterest has a long-term earnings growth expectation of 33%.

Pinterest is witnessing greater engagement on the platform from its existing user base. The company’s focus on improving operational rigor and incorporating sophisticated AI models to enhance relevancy and personalization is likely to bring long-term benefits.

HubSpot, Inc. HUBS is scheduled to release second-quarter 2025 earnings on Aug. 8. The Zacks Consensus Estimate for earnings is pegged at $2.12 per share. HubSpot delivered an earnings surprise of 10.65% in the trailing four quarters. It has a strong balance sheet and generates significant cash flow, which makes HubSpot an attractive stock for investors.

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This article originally published on Zacks Investment Research (zacks.com).

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