China Techfaith beats by $0.04; reports sequential decline in revenue (CNTF 2Q05 earnings results)

| About: China TechFaith (CNTF)

China Techfaith Wireless (ticker: CNTF) reported Q2 2005 earnings results today. Key stats from the quarter:

Q2 Results:
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Net revenue rose 95.6% to $21.2 million, but fell 1.2% sequentially.
  • Design fee revenue rose 140.0% to $15.1 million, but fell 8.8% sequentially.
  • Royalty income revenue rose 146.3% to $4.4 million, and rose 42.4% sequentially.
  • Component products revenue fell 37.7% to $1.7 million, and fell 6.6% sequentially.
  • Gross margin was 62.9% vs 54.5%, and 62.9% in Q1.
  • Operating expenses rose 67.4% to $3.6 million.
  • G&A expenses rose 98.3% to $2.6 million.
  • R&D expenses rose 8.6% to $723,000.
  • Sales and marketing expenses rose 60.6% to $265,000.
  • Operating income rose 159.0% to $9.8 million, but fell 11.5% sequentially.
  • Operating margin was 46.0% vs 34.8%, and 51.4% in Q1.
  • Net income rose 176.4% to $11.3 million, and rose 36.7% sequentially.
  • Net margin was 53.2% vs 37.6%, and 38.4% in Q1.
  • Basic earnings per ADS of $0.28 vs consensus estimate (1 analyst) of $0.24.
  • Note: Net income and earnings per ADS for Q2 2004 and Q1 2005 assume a charge related to change in the fair value of a call option.

On Sequential Design Fee Revenue Decline

  • Quarter on quarter design fee declined while the total number of revenue contributing models increased because a higher percentage of revenue contributing models achieved the last milestone of the final design cycle. These final design milestones have less development efforts than the earlier milestones and accordingly resulted in relatively lower design revenue.

Balance Sheet

  • Cash and equivalents of $136.6 million as of June 30, 2005.

Other Stats

  • Revenue contributing models rose 64.3% to 46, and rose 12.2% sequentially.

CNTF chart.


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