Parade Technologies Reports Second Quarter 2023 Financial Results

Financial Highlights:

Q223 consolidated revenue US$104.18 million, compared with US$216.70 million in the year-ago quarter
Q223 consolidated net income US$13.98 million; Basic and Fully diluted after-tax EPS US$0.18 (NT$5.44) and US$0.18 (NT$5.40), respectively

SAN JOSE, Calif.–(BUSINESS WIRE)–Parade Technologies, Ltd. (Taipei Exchange: 4966.TWO), a leading high-speed interface IC supplier, today announced financial results for the second quarter fiscal year 2023 ended June 30, 2023, and provided guidance for the third quarter of fiscal year 2023.

Consolidated revenue was US$104.18 million and consolidated net income was US$13.98 million. Basic and fully diluted after-tax earnings per share (“EPS”) were US$0.18 (NT$5.44) and US$0.18 (NT$5.40), respectively. These results compared to consolidated revenue US$216.70 million and consolidated net income of US$60.94 million, or US$0.76 (NT$22.51) and US$0.75 (NT$22.18) per basic and fully diluted share, in the year-ago quarter.

In US dollars, the second quarter of 2023 consolidated revenue increased 4.19% sequentially and was down 51.93% year-over-year.

The gross profit in the second quarter of 2023 was US$45.80 million, representing an increase of 3.98% from the previous quarter and a decrease of 55.26% compared to the same quarter of last year.

On May 24, 2023, Parade announced the availability of the PS8833 USB4/TBT4/DP 2.1 retimer and PS8836 USB 3.2/DP 2.1 retimer for commercial and consumer PCs, host systems and peripherals. PS8833 features full capabilities of USB4®, DisplayPort 2.1™ and Thunderbolt™ 4.0 with 50% reduction in power consumption. Its pin compatibility with PS8830 USB4/TBT4 retimer currently shipping in customer systems, greatly simplifies OEM design for product longevity. PS8836 offers USB 3.2 Gen 2×2 with DP 2.1 and is pin compatible with PS8833. The PS8833 / PS8836 pin compatible solutions allow OEMs to easily offer a full range of USB4 and USB 3.2 product offerings.

On July 26, 2023, Parade has demonstrated the lowest latencies in the industry with its new PS8936 PCIe/CXL re-timer solution. PS8936 retimer chip developed for PCI Express Rev. 5.0 and Compute Express Link (CXL), supporting sixteen bidirectional lanes. In addition to supporting the 32 Gbps data rate offered by the PCI Express 5.0 specification, it also supports all lower data rates, to provide backward compatibility with earlier PCI Express revisions. The promise of CXL is to enable scalable, high-performance coherent memory. While CXL can rely on the continual advances in PCIe Express to address its ever-increasing bandwidth needs, access time is an equally critical factor for memory performance. As larger CXL architectures are built, they will inevitably encounter situations where signal integrity places limits on both scale and flexibility, and retimers will be needed. With Parade’s patented low-latency retimers, these systems can be built without compromising signal integrity or performance.

Based on current business outlook, Parade is providing the following guidance for the third quarter of fiscal 2023:

Revenue: US$107 ~119 Million
Gross Margin: 43% ~47%
Operating Expense: US$30 ~33 Million

The financial figures detailed above for the second quarter of 2023 have been audited by independent accountants.

About Parade Technologies, Ltd.

Parade Technologies, Ltd. is a leading supplier of mixed-signal ICs for a variety of popular display and high-speed interface standards used in computers, consumer electronics and display panels. The fabless semiconductor company was founded in 2005 and publicly listed on Taipei Exchange (“TPEx”) in 2011 (stock code: 4966). Parade’s portfolio of IC products serves the growing demand for HDMI™, DisplayPort™, SATA, and USB ICs for display, storage and interface applications.

In addition to being a technology innovator, Parade is an active participant and leader in industry standards-setting organizations. Parade Technologies, Inc., a wholly owned US-based subsidiary of Parade Technologies, Ltd., is a member of VESA (Video Electronics Standard Association). Parade Technologies, Inc. has made key contributions to the development of VESA’s DisplayPort™ digital video interface standard.

Parade leverages its close relationships with market leading Tier-1 OEMs to develop ICs that provide unique system capabilities. Many of the company’s devices integrate proprietary technologies that offer superior system signal integrity, advanced system integration and enhanced power efficiency. As a result of the company’s “standards-plus” design philosophy, Parade ICs have been designed into products offered by nearly every leading computer and display vendor worldwide.

Parade Technologies, Ltd. and Subsidiaries.

The reader is advised that these consolidated financial statements have been prepared originally in NT$ and conformed with the adoption of IFRSs. In the event of any differences between NT$ and US$ version, the NT$ version shall prevail.

CONSOLIDATED INCOME STATEMENTS	USD in Thousands												NTD in Thousands
CONSOLIDATED INCOME STATEMENTS	Sequential Quarter				Three Months ended				Six Months ended				Sequential Quarter				Three Months ended				Six Months ended
	Jun 30,		Mar 31,		Jun 30,		Jun 30,		Jun 30,		Jun 30,		Jun 30,		Mar 31,		Jun 30,		Jun 30,		Jun 30,		Jun 30,
	2023		2023		2023		2022		2023		2022		2023		2023		2023		2022		2023		2022

Revenue		104,178		99,990		104,178		216,699		204,168		427,422		3,199,298		3,039,712		3,199,298		6,383,951		6,239,010		12,282,094
Cost of goods sold		58,380		55,947		58,380		114,340		114,327		224,288		1,792,845		1,700,797		1,792,845		3,368,457		3,493,642		6,445,908
Gross profit		45,798		44,043		45,798		102,359		89,841		203,134		1,406,453		1,338,915		1,406,453		3,015,494		2,745,368		5,836,186
Research & development expenses		20,293		19,892		20,293		21,483		40,185		42,709		623,198		604,717		623,198		632,873		1,227,915		1,226,997
Sales & marketing expenses		7,188		7,198		7,188		7,907		14,386		16,121		220,732		218,822		220,732		232,925		439,554		462,836
General & administrative expenses		4,888		4,993		4,888		6,549		9,881		12,998		150,109		151,797		150,109		192,942		301,906		373,450
Expected credit loss		–		84		–		–		84		–		–		2,549		–		–		2,549		–
Total operating expenses		32,369		32,167		32,369		35,939		64,536		71,828		994,039		977,885		994,039		1,058,740		1,971,924		2,063,283
Operating income		13,429		11,876		13,429		66,420		25,305		131,306		412,414		361,030		412,414		1,956,754		773,444		3,772,903
Non-operating income and (expenses)		2,055		1,268		2,055		566		3,323		536		63,081		38,560		63,081		16,662		101,641		15,837
Income before income taxes		15,484		13,144		15,484		66,986		28,628		131,842		475,495		399,590		475,495		1,973,416		875,085		3,788,740
Income tax expense		1,505		1,523		1,505		6,049		3,028		11,718		46,226		46,299		46,226		178,193		92,525		336,882
Net income		13,979		11,621		13,979		60,937		25,600		120,124		429,269		353,291		429,269		1,795,223		782,560		3,451,858
EPS – Basic (In Dollar)	$	0.18	$	0.15	$	0.18	$	0.76	$	0.33	$	1.51	$	5.44	$	4.51	$	5.44	$	22.51	$	9.94	$	43.42
Shares used in computing EPS-Basic (In thousands)		78,947		78,373		78,947		79,766		78,692		79,496		78,947		78,373		78,947		79,766		78,692		79,496
EPS – Diluted (In Dollar)	$	0.18	$	0.15	$	0.18	$	0.75	$	0.32	$	1.48	$	5.40	$	4.46	$	5.40	$	22.18	$	9.85	$	42.67
Shares used in computing EPS-Diluted (In thousands)		79,545		79,207		79,545		80,951		79,413		80,905		79,545		79,207		79,545		80,951		79,413		80,905

CONSOLIDATED BALANCE SHEETS As of June 30, 2023 and 2022	USD in Thousands				NTD in Thousands
CONSOLIDATED BALANCE SHEETS As of June 30, 2023 and 2022	Jun 30,		Jun 30,		Jun 30,		Jun 30,
	2023		2022		2023		2022
Current assets
Cash & cash equivalents	225,120		408,717		7,010,227		12,147,059
Accounts receivable, net	54,721		71,597		1,704,022		2,127,869
Inventories, net	114,368		107,911		3,561,433		3,207,122
Other current assets	32,666		25,492		1,017,219		757,629
Total current assets	426,875		613,717		13,292,901		18,239,679
Non-current assets
Property, plant and equipment, net	14,970		17,920		466,159		532,593
Right-of-use assets	5,083		6,759		158,295		200,863
Intangible assets	101,772		106,129		3,169,177		3,154,145
Deferred income tax assets	11,143		10,232		346,988		304,090
Other non-current assets	150,473		78,140		4,685,730		2,322,312
Total non-current assets	283,441		219,180		8,826,349		6,514,003
Total Assets	710,316		832,897		22,119,250		24,753,682

Current Liabilities
Accounts payable	29,194		56,079		909,092		1,666,672
Other payables	54,820		100,695		1,687,909		2,892,562
Current income tax liabilities	9,528		30,317		296,692		901,030
Lease liabilities – current	2,960		3,037		92,194		90,253
Other current liabilities	6,490		13,823		202,110		410,818
Total current liabilities	102,992		203,951		3,187,997		5,961,335
Non-current Liabilities
Lease liabilities – non-current	2,123		3,722		66,101		110,610
Total non-current liabilities	2,123		3,722		66,101		110,610
Equity
Ordinary shares	26,735		26,740		811,747		811,895
Capital reserves	134,946		138,074		4,212,672		4,188,380
Retained earnings	498,502		500,731		14,740,781		14,948,952
Other equity	(10,321	)	(18,513	)	493,401		(661,362	)
Treasury shares	(44,661	)	(21,808	)	(1,393,449	)	(606,128	)
Total equity	605,201		625,224		18,865,152		18,681,737
Total liabilities and equity	710,316		832,897		22,119,250		24,753,682

CONSOLIDATED STATEMENTS OF CASH FLOWS For six months ended June 30, 2023 and 2022	USD in Thousands				NTD in Thousands
	Jun 30,		Jun 30,		Jun 30,		Jun 30,
	2023		2022		2023		2022
Cash flows from operating activities
Income before income tax for the period	28,628		131,842		875,085		3,788,740
Depreciation and amortization (including the right-of-use assets)	11,132		11,081		340,100		318,238
Expected credit loss	84		–		2,549		–
Loss on disposal of equipment	–		1		–		34
Loss on disposal of intangible assets	125		–		3,814		–
Share-based compensation cost	17,735		16,451		537,517		479,230
Interest income	(2,925	)	(158	)	(89,352	)	(4,627	)
Income and expenses having no effect on cash flows	26,151		27,375		794,628		792,875
Accounts receivable	(20,098	)	(21,214	)	(625,845	)	(630,493	)
Inventories	31,124		(32,133	)	969,215		(954,979	)
Other current assets	(27,673	)	(31,800	)	(737,173	)	(893,882	)
Net changes in assets relating to operating activities	(16,647	)	(85,147	)	(393,803	)	(2,479,354	)
Accounts payable	16,191		15,233		504,193		452,730
Other payables	(9,303	)	(1,814	)	(289,726	)	(53,915	)
Other current liabilities	(6,983	)	3,779		(217,466	)	112,320
Net changes in liabilities relating to operating activities	(95	)	17,198		(2,999	)	511,135
Cash inflow generated from operations	38,037		91,268		1,272,911		2,613,396
Interest received	2,925		158		89,352		4,627
Income taxes paid	(6,247	)	(816	)	(190,854	)	(23,433	)
Income taxes received	–		19		–		554
Net cash provided by operating activities	34,715		90,629		1,171,409		2,595,144
Cash flows from investing activities
Acquisition of equipment	(2,812	)	(3,854	)	(85,894	)	(110,678	)
Acquisition of intangible assets	(170	)	(34	)	(5,181	)	(977	)
Decrease in refundable deposits	6,821		74		212,389		2,193
Increase in other prepayments	(6,505	)	(4,552	)	(198,738	)	(130,729	)
Net cash flows used in investing activities	(2,666	)	(8,366	)	(77,424	)	(240,191	)
Cash flows from financing activities
Proceeds from exercise of employee stock options	–		2,376		–		68,228
Repayment of the principal portion of lease liabilities	(1,786	)	(1,931	)	(54,554	)	(55,475	)
Treasury shares reissued to employees	25,424		34,533		760,161		959,141
Distribution of cash dividends	(60,062	)	(40,752	)	(1,724,498	)	(1,147,980	)
Cash dividend regain from canceled share-based compensation	73		52		2,184		1,517
Net cash flows used in financing activities	(36,351	)	(5,722	)	(1,016,707	)	(174,569	)
Effect of exchange rate changes	2,285		(257	)	(42,435	)	764,932
Net (decrease) increase in cash and cash equivalents	(2,017	)	76,284		34,843		2,945,316
Cash and cash equivalents at beginning of period	227,137		332,433		6,975,384		9,201,743
Cash and cash equivalents at end of period	225,120		408,717		7,010,227		12,147,059