Alpha and Omega Semiconductor Reports Financial Results for the Fiscal First Quarter of 2023 Ended September 30, 2022

Rhea-AI Summary

Alpha and Omega Semiconductor Limited (AOSL) reported impressive fiscal Q1 2023 results, with revenue of $208.5 million, marking a 7.5% increase from the previous quarter and an 11.5% increase year-over-year. GAAP net income per share rose to $0.88, while non-GAAP net income per share increased to $1.20. Despite anticipating impacts from an industry inventory correction in PCs and smartphones, AOSL expects year-over-year revenue growth in these segments due to market share gains and premium product demand. The company is optimistic about navigating economic challenges and aims for one billion dollars in annual revenue.

Positive

• Revenue growth of 11.5% year-over-year to $208.5 million.
• Non-GAAP EPS increased to $1.20, compared to $0.95 in the prior quarter.
• Operating cash flow rose to $36.7 million, up from $25.7 million in the previous quarter.
• Strong demand in Gaming and Quick Chargers segments, securing leading market positions.

Negative

• Anticipated decline of approximately 20% and 6% in global PC and smartphone shipments for 2022.

SUNNYVALE, Calif.--(BUSINESS WIRE)-- Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal first quarter of 2023 ended September 30, 2022.

The results for the fiscal first quarter of 2023 ended September 30, 2022 were as follows:

GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
		Three Months Ended
		September 30, 2022				June 30, 2022				September 30, 2021
Revenue		$	208.5			$	194.0			$	187.0
Gross Margin			34.1	%			32.6	%			34.5	%
Operating Income		$	25.5			$	18.1			$	24.9
Net Income Attributable to AOS		$	26.0			$	15.1			$	23.4
Net Income Per Share Attributable to AOS - Diluted		$	0.88			$	0.53			$	0.85

Non-GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
		Three Months Ended
		September 30, 2022				June 30, 2022				September 30, 2021
Revenue		$	208.5			$	194.0			$	187.0
Non-GAAP Gross Margin			35.4	%			33.8	%			35.3	%
Non-GAAP Operating Income		$	37.1			$	28.9			$	30.8
Non-GAAP Net Income Attributable to AOS		$	35.2			$	27.1			$	29.3
Non-GAAP Net Income Per Share Attributable to AOS - Diluted		$	1.20			$	0.95			$	1.06

The non-GAAP financial measures in the schedule above and under the section “Financial Results for Fiscal Q1 Ended September 30, 2022” below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation, income tax effect of non-GAAP adjustments in each of the periods presented, and equity method investment loss (income) from equity investee for the three months ended September 30, 2022 and June 30, 2022. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

Financial Results for Fiscal Q1 Ended September 30, 2022

• Revenue was $208.5 million, an increase of 7.5% from the prior quarter and an increase of 11.5% from the same quarter last year.
• GAAP gross margin was 34.1%, up from 32.6% in the prior quarter and down from 34.5% in the same quarter last year.
• Non-GAAP gross margin was 35.4%, up from 33.8% in the prior quarter and up from 35.3% in the same quarter last year.
• GAAP operating expenses were $45.6 million, up from $45.1 million in the prior quarter and up from $39.6 million in the same quarter last year.
• Non-GAAP operating expenses were $36.6 million, a decrease of $0.1 million from last quarter and an increase of $1.5 million from the same quarter last year.
• GAAP operating income was $25.5 million, up from $18.1 million in the prior quarter and up from $24.9 million in the same quarter last year.
• Non-GAAP operating income was $37.1 million as compared to $28.9 million for the prior quarter and $30.8 million for the same quarter last year.
• GAAP net income per diluted share attributable to AOS was $0.88, compared to $0.53 net income per share for the prior quarter, and $0.85 net income per share for the same quarter a year ago.
• Non-GAAP net income per share attributable to AOS was $1.20 compared to $0.95 for the prior quarter and $1.06 for the same quarter a year ago.
• Consolidated cash flow provided by operating activities was $36.7 million, as compared to $25.7 million in the prior quarter.
• The Company closed the quarter with $316.1 million of cash and cash equivalents.

AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, “Our fiscal Q1 results were in-line with our expectations. Revenue grew 11.5% year-over-year to a record high of $208.5 million and non-GAAP EPS was $1.20. Looking forward, we expect to be impacted by an industry inventory correction in PCs and smartphones. While our near-term results will be affected, our PC and smartphone revenue for calendar year 2022, including our December quarter outlook, will actually grow year-over-year notwithstanding a decline of approximately 20% and 6% in global PC and smartphone shipment, respectively, in 2022. We believe this is primarily due to our success with Tier 1 customers, market share gains, higher BOM content, and better premium tier product mix.”

Dr. Chang continued, “The current market environment is not coming to us as a surprise. Over our 22-year history, we have navigated many boom-and-bust cycles. Today, we are better prepared to weather these challenges with our leading technology and a much more diversified product portfolio. For example, our Gaming and Quick Chargers segments have been a great success recently as we secured the leading player in each respective market, and we expect strong demand to continue over the coming quarters.”

Dr. Chang concluded, “While we are not immune to slowdowns in the broader economy, we are resilient and confident that we will be able to navigate the current market cycle with our proven business strategies and strong financial condition. When the market recovers, our goal is to be well on our way towards achieving our one-billion-dollar annual revenue target.”

Business Outlook for Fiscal Q2 Ending December 31, 2022

The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

Our expectations for the second quarter of fiscal year 2023 are as follows:

• Revenue to be approximately $195 million, plus or minus $3 million.
• GAAP gross margin to be 30.0%, plus or minus 1%. We anticipate non-GAAP gross margin to be 31.0%, plus or minus 1%.
• GAAP operating expenses to be in the range of $43.5 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $34.5 million, plus or minus $1 million.
• Interest expense is expected to be approximately $1.0 million, and
• Tax expense is expected to be in the range of $1.2 million to $1.4 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal first quarter ended September 30, 2022 today, November 3, 2022 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (844) 200-6205 or +1 (929) 526-1599 if dialing from outside the United States and Canada. The access code is 590723. A live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com. The webcast replay will be available for seven days after the live call on the same website. In addition, a copy of the script of management's prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, market trends in the semiconductor industry; our ability to navigate economic downturns; anticipated earnings power and non-GAAP EPS on an annual basis, our growth opportunities and new markets, our annual revenue target, projected amount of revenue, gross margin, operating income, income tax expenses, net income, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, our objectives to achieve revenue target, our ability to mitigate economic downturns, and other information under the section entitled “Business Outlook for Fiscal Q2 Ending December 31, 2022”. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business operations in China; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; new tariffs on goods from China; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of PC markets; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; the state of semiconductor industry and seasonality of our markets; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures for our historical performance, including non-GAAP gross profit, gross margin, operating income, net loss attributable to AOS, net income, diluted earnings per share ("EPS") and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal and profession fees related to government investigation, amortization of purchased intangible, income tax effect of non-GAAP adjustments, and equity method investment loss (income) from equity investee. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin and operating expenses. We believe that these historical and forecast non-GAAP financial measures provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, we included amount of income tax effect of non-GAAP adjustments in the non-GAAP net income of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.

About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer and global supplier of a broad range of power semiconductors, including a wide portfolio of Power MOSFET, IGBT, IPM, TVS, HVIC, GaN/SiC, Power IC and Digital Power products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’ portfolio of products targets high-volume applications, including personal and portable computers, graphic cards, flat panel TVs, home appliances, smart phones, battery packs, quick chargers, home appliances, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment. For more information, please visit www.aosmd.com.

The following unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP.

Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
	Three Months Ended
	September 30, 2022				June 30, 2022				September 30, 2021
Revenue	$	208,476			$	193,959			$	187,035
Cost of goods sold		137,348				130,737				122,468
Gross profit		71,128				63,222				64,567
Gross margin		34.1	%			32.6	%			34.5	%
Operating expenses:
Research and development		21,389				20,386				17,812
Selling, general and administrative		24,205				24,696				21,806
Total operating expenses		45,594				45,082				39,618
Operating income		25,534				18,140				24,949
Other income (loss), net		(16	)			279				(16	)
Interest expense, net		(608	)			(895	)			(2,176	)
Net income before income taxes		24,910				17,524				22,757
Income tax expense		1,374				940				1,320
Net income before income (loss) from equity method investment		23,536				16,584				21,437
Equity method investment income (loss) from equity investee		2,502				(1,493	)			—
Net income		26,038				15,091				21,437
Net loss attributable to noncontrolling interest		—				—				(1,987	)
Net income attributable to Alpha and Omega Semiconductor Limited	$	26,038			$	15,091			$	23,424
Net income per common share attributable to Alpha and Omega Semiconductor Limited
Basic	$	0.95			$	0.55			$	0.89
Diluted	$	0.88			$	0.53			$	0.85
Weighted average number of common shares attributable to Alpha and Omega Semiconductor Limited used to compute net income per share
Basic		27,391				27,269				26,365
Diluted		29,423				28,466				27,638

Alpha and Omega Semiconductor Limited
Condensed Consolidated Balance Sheets
(in thousands, except par value per share)
(unaudited)
	September 30, 2022				June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	316,119			$	314,352
Restricted cash		278				299
Accounts receivable, net		55,769				65,681
Inventories		164,946				158,040
Other current assets		11,030				11,220
Total current assets		548,142				549,592
Property, plant and equipment, net		339,470				318,666
Operating lease right-of-use assets		24,251				23,674
Intangible assets, net		9,211				10,050
Equity method investment		375,914				378,378
Deferred income tax assets		553				592
Other long-term assets		13,897				17,677
Total assets	$	1,311,438			$	1,298,629
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	80,101			$	87,377
Accrued liabilities		108,350				116,893
Payable related to equity investee, net		19,516				28,989
Income taxes payable		4,687				4,248
Short-term debt		26,738				25,563
Finance lease liabilities		820				802
Operating lease liabilities		4,119				3,850
Total current liabilities		244,331				267,722
Long-term debt		46,953				42,486
Income taxes payable - long-term		2,191				2,158
Deferred income tax liabilities		28,572				28,757
Finance lease liabilities - long-term		3,873				3,932
Operating lease liabilities - long-term		20,748				20,878
Other long-term liabilities		79,301				78,603
Total liabilities		425,969				444,536
Equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares; issued and outstanding: none at September 30, 2022 and June 30, 2022		—				—
Common shares, par value $0.002 per share:
Authorized: 100,000 shares; issued and outstanding: 34,018 shares and 27,401 shares, respectively at September 30, 2022 and 33,988 shares and 27,371 shares, respectively at June 30, 2022		68				68
Treasury shares at cost: 6,617 shares at September 30, 2022 and 6,617 shares at June 30, 2022		(65,996	)			(66,000	)
Additional paid-in capital		299,196				288,951
Accumulated other comprehensive income		(3,827	)			1,080
Retained earnings		656,028				629,994
Total equity		885,469				854,093
Total liabilities and equity	$	1,311,438			$	1,298,629

Alpha and Omega Semiconductor Limited
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
		Three Months Ended
		September 30, 2022				June 30, 2022				September 30, 2021
GAAP gross profit		$	71,128			$	63,222			$	64,567
Share-based compensation			1,788				1,565				569
Amortization of purchased intangible			812				811				812
Non-GAAP gross profit		$	73,728			$	65,598			$	65,948
Non-GAAP gross margin as a % of revenue			35.4	%			33.8	%			35.3	%
GAAP operating expense		$	45,594			$	45,082			$	39,618
Share-based compensation			8,808				8,305				4,066
Legal costs related to government investigation			142				84				431
Non-GAAP operating expense		$	36,644			$	36,693			$	35,121
GAAP operating income		$	25,534			$	18,140			$	24,949
Share-based compensation			10,596				9,870				4,635
Amortization of purchased intangible			812				811				812
Legal costs related to government investigation			142				84				431
Non-GAAP operating income		$	37,084			$	28,905			$	30,827
Non-GAAP operating margin as a % of revenue			17.8	%			14.9	%			16.5	%
GAAP net income attributable to AOS		$	26,038			$	15,091			$	23,424
Share-based compensation			10,596				9,870				4,635
Amortization of purchased intangible			812				811				812
Equity method investment loss (income) from equity investee			(2,502	)			1,493				—
Legal costs related to government investigation			142				84				431
Income tax effect of non-GAAP adjustments			119				(234	)			1
Non-GAAP net income attributable to AOS		$	35,205			$	27,115			$	29,303
Non-GAAP net margin attributable to AOS as a % of revenue			16.9	%			14.0	%			15.7	%
GAAP net income attributable to AOS		$	26,038			$	15,091			$	23,424
Share-based compensation			10,596				9,870				4,635
Amortization and depreciation			9,352				8,588				13,722
Equity method investment loss (income) from equity investee			(2,502	)			1,493				—
Interest expense, net			608				895				2,176
Income tax expense			1,374				940				1,320
EBITDAS		$	45,466			$	36,877			$	45,277
GAAP diluted net income per share attributable to AOS		$	0.88			$	0.53			$	0.85
Share-based compensation			0.36				0.35				0.16
Amortization of purchased intangible			0.03				0.03				0.03
Equity method investment loss (income) from equity investee			(0.09	)			0.05				—
Legal costs related to government investigation			0.01				0.00				0.02
Income tax effect of non-GAAP adjustments			0.01				(0.01	)			0.00
Non-GAAP diluted net income per share attributable to AOS		$	1.20			$	0.95			$	1.06
Shares used to compute GAAP diluted net income per share			29,423				28,466				27,638
Shares used to compute Non-GAAP diluted net income per share			29,423				28,466				27,638

 

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Source: Alpha and Omega Semiconductor Limited

FAQ

What were AOSL's revenue and earnings results for Q1 2023?

AOSL reported revenue of $208.5 million and a non-GAAP net income per share of $1.20 for Q1 2023.

How did AOSL perform compared to the previous quarter and year?

AOSL's revenue increased by 7.5% from the previous quarter and 11.5% year-over-year.

What is AOSL's outlook for the next quarter?

AOSL expects to face challenges due to an industry inventory correction in PCs and smartphones but anticipates revenue growth in these segments.

What are the key segments contributing to AOSL's revenue growth?

AOSL is seeing strong demand in its Gaming and Quick Chargers segments.

What is AOSL's goal for annual revenue?

AOSL aims for one billion dollars in annual revenue.