(all percentage changes and comparisons are year on year, unless stated otherwise)
- Net revenue rose 138% to $21.5 million, up 47% sequentially.
- Design fees plus royalty income rose 197% to $19.6 million, up 66% sequentially.
- Design fees rose 303% to $16.5 million, up 65% sequentially.
- Royalty income rose 23% to $3.1 million, up 71% sequentially.
- Component income fell 25% to $1.8 million, down 36% sequentially.
- Gross margin was 63% versus 57%, and 60% in Q4.
- Gross margin excluding component products was 67% versus 72%, and flat from Q4.
- Operating expenses rose 82% to $2.5 million, up 46% sequentially.
- Operating income rose 190% to $11.0 million, up 56% sequentially.
- Operating margin was 51% versus 42%, and 48% in Q4.
- Net income rose 115% to $8.3 million, up 24% sequentially.
- Net margin was 38% versus 43%, and 45% in Q4.
Income Statement Notes
- Revenue rose due to increases in design fees and royalty income.
- Design fees rose due to rise of revenue contributing models and more contracts reaching revenue recognition milestones in Q1.
- Revenue contributing models totaled 41 in Q1 versus 33 in Q4 2004.
- Approximately 41% of the 41 revenue contributing models were designed for international brand owners.
- Of the $19.6 million in design fees plus royalty income in Q1, approximately 74% was from international
- Component income fell due to lower sales of third-party components which included pilot run materials TechFaith purchased on behalf of customers.
- Operating expenses rose due to increases in G&A, R&D, and sales and marketing expenses.
- Company recorded a $1.3 million of change in fair value of call option in relation to convertible notes issued.
- Net margin lower due to change in fair value of call option recorded.
Chairman and CEO Defu
....I am extremely pleased to report TechFaith has delivered record resultsComment: More on China Techfaith's business here. More here on the Chinese handset market and why Techfaith CEO Dong might be right that his company will benefit from the current environment.
in the 1st quarter of 2005. Our growth has accelerated to position TechFaith
as the dominant player in the handset design outsourcing space. Advances in handset development are
putting increasing pressure on design cost for brand owners. The need to
outsource design as a means to preserve margins is increasingly apparent. Our
advanced technological capabilities, design quality and significant cost
advantage place TechFaith as a key benefactor in this irreversible design
Access to the company conference call here.