The year 2020 has not been great for Silicon Motion Technology (NASDAQ:SIMO) as far as the stock is concerned, despite the company having grown revenue and EPS by a considerable margin during the year. The stock is down about 11% with the year almost over. Part of it has to do with lingering headwinds that have and continue to affect SIMO heading into 2021. However, SIMO has been doing much better lately with the year coming to a close. There is reason to believe this momentum could carry over into 2021 with the aid of a number of tailwinds. Why will be covered next.
Q3 FY2020 quarterly report
The last quarterly report to be released in 2020 was expected to be worse than the one preceding it. For instance, SIMO had warned about inventory adjustments weighing down on Q3 results. Notwithstanding these short-term issues, there were some who were nevertheless bullish on SIMO for reasons elaborated in greater detail in a previous article.
As it turned out, looking past these issues turned out to be justified. The Q3 results turned out to be better than expected as shown in the table below. On a non-GAAP basis, Q3 revenue increased by 11.3% YoY to $126M and EPS increased by 10.1% YoY to $0.76. YTD, revenue and EPS have increased by 33% and 45% respectively.
(GAAP) | Q3 FY2020 | Q2 FY2020 | Q3 FY2019 | QoQ | YoY |
Revenue | $126.0M | $136.8M | $110.5M | (7.9%) | 14.0% |
Gross margin | 49.1% | 50.0% | 49.6% | (90bps) | (50bps) |
Operating margin | 20.5% | 22.0% | 4.1% | (150bps) | 1640bps |
Operating income | $25.8M | $30.1M | $4.6M | (14.3%) | 460.9% |
Net income | $24.3M | $28.2M | $4.2M | (13.8%) | 478.6% |
EPS | $0.70 | $0.80 | $0.12 | 12.5% | 483.3% |
(Non-GAAP) | |||||
Revenue | $126.0M | $136.8M | $113.2M | (7.9%) | 11.3% |
Gross margin | 49.1% | 50.0% | 49.8% | (90bps) | (70bps) |
Operating margin | 23.0% | 22.2% |
