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Silicon Motion's Q3 guidance cautious, full-year guidance stronger

  • Silicon Motion's (NASDAQ:SIMO) Q2 revenue (up 8% Q/Q) was in-line with the guidance provided in its July 7 pre-announcement (7%-9% Q/Q growth).
  • Q3 guidance is for revenue to rise 5%-10% Q/Q. That implies a range of $91.6M-$95.9M, below a $95.6M consensus at the midpoint. On the other hand, full-year guidance is for 22%-27% sales growth, better than a 22.9% consensus at the midpoint.
  • Client (PC) SSD controller sales were a Q2 strong point, rising 40% Q/Q and accounting for 15% of revenue. SIMO: "We are scaling sales to two NAND flash partners, a storage OEM customer, and a large number of module makers, for both PC OEM and channel markets ... Based on the number of sockets that we are winning, we believe that we will be the worlds largest merchant supplier of client SSD controllers by the end of this year."
  • eMMC NAND controller sales were pressured by "lackluster demand" for smartphones/tablets in China and other markets. However, SIMO add it secured a record 60+ eMMC wins, and expects eMMC sales to rise Q/Q the rest of the year. Overall, mobile storage sales rose 11% Q/Q to $70.8M, and mobile communications sales (4G transceivers, mobile TV ICs) fell 5% to $14.4M.
  • Financials: Gross margin (non-GAAP) fell to 51% from 52% in Q1 and 52.2% a year ago. However, with revenue growth outpacing opex growth, op. margin rose to 24.8% from 24.1% and 23.5%. Q3 and full-year GM guidance are both at 50%-52%. SIMO ended Q2 with $201.6M in cash, and no debt (compares with a $942M market cap).
  • Shares haven't yet moved AH. They fell 3.4% in regular trading ahead of the report.
  • Q2 results, PR

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