SUNNYVALE, California, November 4, 2024 - Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal first quarter of 2025 ended September 30, 2024.

The results for the fiscal first quarter of 2025 ended September 30, 2024 were as follows:

The non-GAAP financial measures in the schedule above and under the section “Financial Results for Fiscal Q1 Ended September 30, 2024” below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation, equity method investment loss from equity investee, and income tax effect of non-GAAP adjustments in each of the periods presented. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

•Revenue was $181.9 million, an increase of 12.8% from the prior quarter and an increase of 0.7% from the same quarter last year.

•GAAP gross margin was 24.5%, down from 25.7% in the prior quarter and down from 28.2% in the same quarter last year.

•Non-GAAP gross margin was 25.5%, down from 26.4% in the prior quarter and down from 28.8% in the same quarter last year.

•GAAP operating expenses were $44.8 million, up from $42.9 million in the prior quarter and up from $41.5 million in the same quarter last year.

•Non-GAAP operating expenses were $38.5 million, down from $39.3 million from last quarter and down from $40.8 million in the same quarter last year.

•GAAP operating loss was $0.3 million, down $1.5 million of operating loss in the prior quarter and down from $9.4 million of operating income in the same quarter last year.

•Non-GAAP operating income was $7.8 million as compared to $3.2 million of operating income for the prior quarter and $11.2 million of operating income for the same quarter last year.

•GAAP net loss per diluted share was $0.09, compared to $0.09 net loss per share for the prior quarter, and $0.19 net income per share for the same quarter a year ago.

•Non-GAAP net income per share was $0.21, compared to $0.09 net income per share for the prior quarter and 0.33 net income per share for the same quarter a year ago.

•Consolidated cash flow provided by operating activities was $11.0 million, as compared to $7.1 million of cash flow provided by operating activities in the prior quarter.

•The Company closed the quarter with $176.0 million of cash and cash equivalents.

AOS Chief Executive Officer Stephen Chang commented, “Our fiscal Q1 results were in-line with our revenue and EPS guidance driven by sequential growth in each of our major segments. We saw seasonal strength from smartphones, computing, tablets, gaming, and wearables."

Mr. Chang concluded, “Looking into the rest of calendar year 2024, we anticipate a typical seasonal decline in notebooks and smartphones that will lead to a sequential decrease in December quarter revenue. However, we expect slight sequential growth in our Computing and Industrial segments—driven by strength in desktops, graphics cards, and quick chargers—to help partially offset this decline. Looking into next year, although visibility is limited, our strategic transition from a component supplier to a total solutions provider with a diverse product portfolio and premier customer base positions us well to outperform the broader markets we serve."

Our expectations for the fiscal second quarter of year 2025 are as follows:

•Revenue to be approximately $170 million, plus or minus $10 million.

•GAAP gross margin to be 24%, plus or minus 1%. We anticipate non-GAAP gross margin to be 25%, plus or minus 1%.

•GAAP operating expenses to be in the range of $45 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $38.8 million, plus or minus $1 million.

•Interest expense to be approximately equal to interest income, and

•Income tax expense to be in the range of $1 million to $1.2 million.

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal first quarter ended September 30, 2024 today, November 4, 2024 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (833) 470-1428 or +1 (404) 975-4839 if dialing from outside the United States and Canada. The access code is 649755. 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.

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 and growth in calendar year 2024, our ability to outperform market, seasonality of our business, our ability to pursue new opportunities, our projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, income tax expenses, our ability to grow our sales and market share, and other information under the section entitled “Business Outlook for Fiscal Q2 Ending December 31, 2024.” 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 state of semiconductor industry and seasonality of our markets; decline of PC markets; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; 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; government policies on our business operations in China; 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; 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, 2024 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.

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 expenses, operating income (loss), net income (loss), diluted earnings per share (“EPS”) and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal and professional fees related to government investigation, amortization of purchased intangible, income tax effect of non-GAAP adjustments and equity method investment loss 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 the amount of income tax effect of non-GAAP adjustments in the non-GAAP net income (loss) 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.

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer, and global supplier of a broad range of discrete power devices, wide band gap power devices, power management ICs, and modules, including a wide portfolio of Power MOSFET, SiC, IGBT, IPM, TVS, HV Gate Drivers, 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 portable computers, flat-panel TVs, LED lighting, smartphones, battery packs, consumer and industrial motor controls, automotive electronics, 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.

    

Investor and media inquiries:

Gary Dvorchak, CFA

In US +1 323 240 5796

In China +86 (138) 1079-1480

gary@blueshirtgroup.co

+1 (360) 808-5154

steven@blueshirtgroup.co

November 4, 2024

Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor’s conference call to discuss fiscal 2025 first quarter financial results. I am Steven Pelayo, Investor Relations representative for AOS. With me today are Stephen Chang, our CEO, and Yifan Liang, our CFO. This call is being recorded and broadcast live over the Web. A replay will be available for seven days following the call via the link in the Investor Relations section of our website.

Our call will proceed as follows today. Stephen will begin business updates including strategic highlights, and a detailed segment report. After that, Yifan will review the financial results and provide guidance for the December quarter. Finally, we will have the Q&A session.

The earnings release was distributed over wire today, November 4, 2024, after the market close. The release is also posted on the company's website. Our earnings release and this presentation include non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release.

We remind you that during this conference call, we will make certain forward-looking statements, including discussions of the business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligations to update the information provided in today's call.

Now, I will turn the call over to our CEO, Stephen Chang. Stephen?

Thank you, Steven. Welcome to Alpha and Omega’s fiscal Q1 earnings call. I will begin with a high-level overview of our results and then jump into segment details.

We delivered fiscal Q1 revenue and EPS results in-line with our guidance. Revenue was $181.9 million, non-GAAP gross margin was 25.5%. Non-GAAP EPS was $0.21.

We saw broad-based demand due to seasonality in the September quarter with sequential growth in each of our major segments. Relative strength came from PC desktops, notebooks and servers in our Computing segment; gaming and wearables within Consumer; strong growth from a Tier 1 US smartphone customer within Communications; and AC-DC power supplies and quick chargers in the Power Supply and Industrial segment.

We have delivered on our commitments and continue to make unwavering strides to transform from a component supplier to a total solutions provider, leveraging strengths in high-performance silicon, packaging, and intelligent ICs. We aim to capture market share and increase BOM content with a broader portfolio. For example, we are leveraging our strength in graphics cards and introducing new Vcore products for opportunities in advanced computing and A.I. datacenters. In smartphones, trends like foldable screens, AI integration, and faster charging offer growth opportunities. In addition to Computing and Communication, we see long term potential in solar, e-mobility, gaming, and home appliances, all driven by the global push for efficient, sustainable energy solutions.

With that, let me now cover our segment results and provide some guidance by segment for the next quarter.

Starting with Computing. September quarter revenue was up 8.6% year-over-year and 6.6% sequentially and represented 42.0% of total revenue. These results were slightly better than our original expectation for mid-single digit growth. As mentioned before, we saw relative strength from PC desktops, notebooks, and servers, which was offset by softer graphics and A.I.-accelerator cards due to a pause before the next platform transition.

We are increasingly confident in our position in advanced computing. Our backlog for both graphics cards and A.I. accelerator cards is now growing due to the new platform transition. At this stage, we are working closely with add-in card makers in Asia as they bring up their boards and prepare for mass production. With the new platform, we expect BOM content to increase as more power stage ICs, paired with our controller, are being used to power the GPU.

These design wins highlight the strength of our customer relationships and our total solutions approach as we supply both the controller and power stages. Additionally, we are collaborating with customers on larger data center opportunities slated for 2025. We anticipate having more to talk about with these developments during our next earnings report.

Looking forward into the December quarter, the PC market is expected to decline with seasonality, but we expect the Computing segment to slightly grow sequentially with share gains in desktops, as well as strength in graphics cards and servers, offset by notebook and tablet market seasonality.

Turning to the Consumer segment, September quarter revenue was up 2.0% year-over-year and 12.4% sequentially and represented 17.4% of total revenue. The results were in-line with our forecast for low double digit sequential growth and were primarily driven by gaming, wearables, and TVs, offset by a decline in home appliances. This was the second quarter of sequential growth in gaming, so we are confident the inventory correction is now behind us. However, we don’t expect meaningful growth until the customer transitions to the next platform. Wearables were a notable standout in the quarter reaching record levels on market share gains and new versions of smartwatches and headphones.

For the December quarter, we forecast close to a 30% sequential decline in the consumer segment driven by seasonal decline in gaming and TVs, post new product launch impacts in wearables, and continued softness in home appliances.

Next, let’s discuss the Communications segment, revenue in the September quarter was up 14.2% year-over-year and 29.4% sequentially, and represented 19.5% of total revenue. These results were above our double-digit sequential growth expectations as our Tier 1 U.S. smartphone customer prepared for its product launch. In some of their high-end models we are seeing an increase in BOM content as they are moving toward a higher charging current. We also saw strong sequential growth from China OEMs offset by sequential declines from Korea. As mentioned last quarter, we are benefiting from a mix shift to more premium phones.

Looking ahead, we anticipate a low double-digit sequential decline in the December quarter due to seasonality and overall limited visibility on smartphone sell through heading into next year.

Now, let’s talk about our last segment, Power Supply and Industrial, which accounted for 17.5% of total revenue and was down 23.7% year-over-year, but up 15.6% sequentially. The results were at the low-end of our forecast for 15-20% sequential growth, but were still driven by seasonal strength in AC-DC power supplies and quick chargers.

Within Industrial, solar remains soft, while the recovery in quick chargers has now started. We see additional opportunities in 2025 for quick chargers due to increased BOM content driven by higher charging currents. We also are leveraging relationships in Taiwan to partner on DC fans for server racks.

For the December quarter, we expect the Power Supply and Industrial segment to grow low single digits sequentially primarily driven by e-mobility and continued growth from quick chargers. This growth will be partially offset by a seasonal decline in AC-DC power supplies.

In closing, the September quarter was in-line with our expectations. The broad-based growth confirms the inventory corrections we experienced over the past year are complete. Seasonality has returned and new markets like A.I. and advanced computing are emerging. We expect a typical seasonal decline in the December quarter primarily driven by notebook, tablets, gaming, wearables and TV, but partially offset by desktops, graphics cards, servers, e-mobility and quick chargers.

At this point, our visibility into 2025 is limited and the calendar first quarter of 2025 is typically seasonally soft as well. However, we are optimistic and poised for growth, bolstered by advanced technology, a diversified product portfolio addressing a broadening array of end markets, and a premier customer base across all business lines. We are steadfast in executing our technology roadmap.

We are excited about our transition from a component supplier to a total solutions provider. These strategic efforts over the past few years are starting to bear fruit as evidenced by our success in designing in both controllers, as well as power stages, into PCs, graphics cards, and now expanding into A.I. applications. This transition will only accelerate going forward as we tap into new opportunities and increase our share of BOM content.

In summary, power management underpins key trends such as A.I., digitalization, connectivity, and electrification – especially as we move towards a sustainable, low-carbon society. We see many future opportunities in advanced computing and data centers, increasing integration of A.I. in PCs and smartphones, and higher smartphone charging currents with multiple batteries and screens. Beyond Computing and Communication segments, we remain optimistic on the underlying power trends in adjacent markets such as solar, motors and e-mobility, gaming, home appliances and power tools.

With that, I will now turn the call over to Yifan for a discussion of our fiscal first quarter financial results and our outlook for the next quarter.

Thank you, Stephen. Good afternoon, everyone and thank you for joining us.

Revenue for the quarter was $181.9 million, up 12.8% sequentially and 0.7% year-over-year.

In terms of product mix, DMOS revenue was $122.5 million, up 20.0% sequentially and 0.8% over last year. Power IC revenue was $52.9 million, up 0.4% from the prior quarter and from a year ago. Assembly service and other revenue was $0.9 million, as compared to $1.4 million last quarter and $0.7 million for the same quarter last year. License and engineering service revenue was $5.6 million for the quarter versus $5.1 million in the prior quarter and $5.6 million for the same quarter a year ago.

Non-GAAP gross margin was 25.5%, compared to 26.4% last quarter and 28.8% a year ago. The quarter-over-quarter decrease was mainly impacted by ASP erosion and mix changes.

Non-GAAP operating expenses were $38.5 million, compared to $39.3 million for the prior quarter and $40.8 million last year. The slight quarter-over-quarter decrease was primarily due to lower professional fees and fluctuation of engineering expenses.

Non-GAAP quarterly EPS was $0.21, compared to $0.09 per share last quarter and $0.33 per share a year ago.

Moving on to cash flow. Operating cash flow was $11.0 million, including $8.4 million of repayment of customer deposits. By comparison, operating cash flow was $7.1 million in the prior quarter and $13.8 million last year. We expect to refund $5.8 million customer deposits in the December quarter. EBITDAS for the quarter was $20.6 million, compared to $16.0 million last quarter and $23.3 million for the same quarter a year ago.

Now let me turn to our balance sheet.

We completed the September quarter with a cash balance of $176.0 million, compared to $175.1 million at the end of last quarter.

Net trade receivables increased by $12.0 million sequentially. Days Sales Outstanding were 15 days for the quarter, compared to 12 days for the prior quarter.

Net inventory decreased by $10.8 million quarter-over-quarter. Average days in inventory were 125 days, compared to 148 days in the last quarter.

CapEx for the quarter was $6.7 million, compared to $7.2 million for the prior quarter. We expect CapEx for the December quarter to range from $6 million to $8 million.

Now, I would like to discuss December quarter guidance.

We expect:

•Revenue to be approximately $170 million, plus or minus $10 million.

•GAAP gross margin to be 24%, plus or minus 1%. We anticipate non-GAAP gross margin to be 25%, plus or minus 1%.

•GAAP operating expenses to be in the range of $45 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $38.8 million, plus or minus $1 million.

•Interest expense to be approximately equal to interest income, and

•Income tax expense to be in the range of $1 million to $1.2 million.

With that, we will now open the call for questions. Operator, please start the Q&A session.

Closing:

This concludes our earnings call today. Thank you for your interest in AOS and we look forward to talking to you again next quarter.

Special Notes Regarding Forward Looking Statements