Socionext Inc. · TSE:6526
Socionext — Q3 FY2024/3 Earnings Presentation
45 slides from Socionext's earnings presentation, Jan 30, 2024
Slide 1: 3Q FY2024/3 Consolidated Financial Results
3Q FY2024/3 Consolidated Financial Results January 30, 2024 Socionext Inc.
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for the purpose of presenting relevant information regarding Socionext Inc. (“Socionext”). This presentation and the information contained herein does not constitute or form part of any offer for sale or subscription of or solicitation or invitat
Slide 3: Cautionary Note Regarding Design Win Amount and Design Win Balance
Cautionary Note Regarding “Design Win Amount” and “Design Win Balance” Cautionary Note Regarding “Design Win Amount” and “Design Win Balance” The calculation of “Design Win Amount” and “Design Win Balance” involves a considerable degree of future estimation and subjective judgment, including assumpt
Slide 4: Consolidated Financial Results for the 9 Months Ended December 31, 2023
Consolidated Financial Results for the 9 Months Ended December 31, 2023 ─ Actual Consolidated Financial Results 3Q FY24/3 ─ Consolidated Earnings Forecast
Slide 5: 3Q FY24/3 Consolidated Statements of Income
3Q FY24/3 Consolidated Statements of Income (Yen in billions) FY23/3 FY24/3 1Q 2Q 3Q 4Q 1Q 2Q 3Q YoY YoY % Net Sales 39.9 42.8 56.1 53.9 61.4 55.5 52.7 -3.4 -6.1% Product Revenue 31.0 35.3 43.9 46.5 52.9 48.5 40.5 -3.4 -7.7% NRE Revenue 8.7 7.4 11.5 7.3 8.4 6.8 11.9 0.4 3.2% Others 0.2 0.2 0.6 0.2 0
Slide 6: YT3Q FY24/3 Consolidated Statements of Income
YT3Q FY24/3 Consolidated Statements of Income (Yen in billions) FY23/3 FY24/3 YT3Q YT3Q YoY YoY % Net Sales 138.8 169.6 30.8 22.2% Product Revenue 110.2 142.0 31.7 28.8% NRE Revenue 27.6 27.1 -0.5 -1.8% Others 1.0 0.6 -0.4 -41.7% Cost of Sales 73.8 87.4 13.6 18.5% Selling, General and Administrative
Slide 7: Quarterly Net Sales and Operating Income
Quarterly Net Sales and Operating Income Net Sales1 Operating Income1 （Yen in billions） Operating Income （Yen in billions） Product Revenue including Margin 15.0 Special Demand 61.4 17.6% 56.1 16.5% 53.9 8.4 55.5 52.7 NRE Revenue Others 15.4% 6.8 14.0% 11.5 7.3 42.8 11.9 10.0 39.9 11.4% 11.2% 7.4 31.
Slide 8: Details of 3Q FY24/3 Financial Results - YoY Changes
Details of 3Q FY24/3 Financial Results - YoY Changes Net Sales & Operating Income Operating Income YoY Analysis （Yen in billions） Operating Income （Yen in billions） （Yen in billions） Product Revenue including Margin Special Demand NRE Revenue 17.6% 3.1 -0.9 0.0 0.7 56.1 52.7 11.2% 11.5 11.9 9.3 6.3
Slide 9: Details of 3Q FY24/3 Financial Results - QoQ Changes
Details of 3Q FY24/3 Financial Results - QoQ Changes Net Sales & Operating Income Operating Income QoQ Analysis （Yen in billions） Operating Income （Yen in billions） （Yen in billions） Product Revenue including Margin Special Demand 17.6% NRE Revenue 15.4% 55.5 52.7 -4.7 4.9 0.2 0.4 6.8 11.9 8.6 9.3 8
Slide 10: Consolidated Balance Sheet (As of December 31, 2023)
Consolidated Balance Sheet（As of December 31, 2023） Cash on Hand and in Banks (Yen in billions) (Yen in billions) As of As of Change Mar.31,2023 Dec.31,2023 55.9 Total Assets 193.9 177.7 -16.3 53.0 46.3 45.1 47.5 Total Current Assets 156.1 131.7 -24.4 37.2 38.1 33.9 Cash on-hand and in banks 45.1 55
Slide 11: Capex-Depreciation & Amortization / Cash Flow
Capex-Depreciation & Amortization / Cash Flow Capex1-Depreciation & Amortization2 Cash Flow2 (Yen in billions) (Yen in billions) Factors in operating cash flow change in FY24/3 2Q-3Q 8 2 Q： Increased due to collection of accounts receivable and decrease in inventories 40 3 Q： Increased due to collec
Slide 12: Breakdown by Application Market
Breakdown by Application Market Net Sales NRE Revenue Automotive Data Center & Networking Automotive Data Center & Networking Smart Devices Industrial & Others Smart Devices Industrial & Others 100% 100% 14% 21% 18% 23% 24% 32% 80% 41% 41% 80% 39% 39% 44% 50% 50% 57% 30% 27% 21% 28% 24% 60% 60% 22%
Slide 13: Breakdown by Geographic Region
Breakdown by Geographic Region Net Sales NRE Revenue US China Japan Others US China Japan Others 100% 100% 10% 7% 8% 10% 7% 8% 12% 12% 11% 12% 11% 18% 15% 19% 80% 80% 26% 31% 38% 21% 44% 36% 51% 52% 60% 59% 60% 66% 63% 21% 17% 71% 56% 55% 25% 20% 40% 40% 33% 40% 24% 18% 17% 45% 47% 20% 20% 16% 14% 3
Slide 14: Breakdown by Process Node
Breakdown by Process Node Net Sales NRE Revenue 3-7nm 10-16nm 20-28nm 40nm & above / Others 3-7nm 10-16nm 20-28nm 40nm & above / Others 100% 100% 10% 9% 14% 17% 22% 23% 21% 25% 9% 29% 12% 80% 42% 80% 45% 43% 18% 10% 9% 55% 64% 21% 19% 30% 60% 22% 60% 33% 30% 28% 46% 16% 28% 29% 40% 16% 40% 37% 73% 3
Slide 15: Consolidated Earnings Forecast
Consolidated Earnings Forecast (Yen in billions) FY2023/3 FY2024/3 FY2024/3 FY2024/3 Previous Full Year Full Year Forecast Full Year Forecast Full Year Forecast Previous YoY YoY % Forecast Results as of April 2023 as of October 2023 as of January 2024 Forecast % Net Sales 192.8 200.0 214.0 217.0 24.
Slide 16: Background of Market Trend / Revised Earnings Forecast and Forecast after FY25/3
Background of Market Trend / Revised Earnings Forecast and Forecast after FY25/3 Repeated material ― Presentation Material For FY24/3 2Q Market trend and Design win FY24/3 forecast After FY25/3 forecast ◼ Product revenue ◼ Market FY25/3-FY26/3 Automotive ◼ Product revenue − Increase in automotive, D
Slide 17: (Reference) Mid-Term Financial Targets Announced in Sep 2022
(Reference) Mid-Term Financial Targets Announced in Sep 2022 Mid-Term FY24/3 FY21/3 FY22/3 FY23/3 Target1 Forecast 217.0 Net Sales 99.7 117.0 High teen% 192.8 billion yen Growth billion yen billion yen CAGR2 billion yen CAGR2:36% OP 1.6% 7.2% Low-to-Mid 11.3% 14.5% Margin (1.6 billion yen) (8.5 bill
Slide 18: Appendix: Overview
Appendix: Overview ─ Consolidated Financial Statements ─ Illustrative Growth Image ─ Breakdown of Net Sales (Quarterly) ─ Detail of Design Win ─ Growth Strategy ─ Company Overview and others
Slide 19: FY23/3 Consolidated Statements of Income
FY23/3 Consolidated Statements of Income (Yen in billions) FY21/3 FY22/3 FY23/3 FY24/3 YT3Q FY24/3E Net Sales 99.7 117.0 192.8 169.6 217.0 % YoY -3.7% +17.3% +64.7% +22.2% +12.6% Product Revenue 73.1 84.6 156.8 142.0 - NRE Revenue 23.0 28.1 34.9 27.1 - Other Revenue 3.6 4.3 1.1 0.6 - Cost of Goods S
Slide 20: Consolidated Balance Sheets
Consolidated Balance Sheets (Yen in billion) FY21/3 FY22/3 FY23/3 FY24/3 3Q FY21/3 FY22/3 FY23/3 FY24/3 3Q Assets Liabilities and Equity Cash on-hand and in banks 42.7 46.3 45.1 55.9 Accounts Payable-trade 12.0 16.6 23.4 16.6 Accounts receivable-trade, net 28.6 25.1 40.8 34.2 Accrued Expenses 7.4 6.
Slide 21: Illustrative Image of Socionext Growth
Illustrative Image of Socionext Growth Repeated material ― Presentation Material For FY24/3 2Q (Partially Updated3) ◼ Keeping high level revenue, net sales will possibly be flat due to the end of special demand and weakening Chinese and consumer market, followed by growth acceleration driven by mass
Slide 22: Breakdown by Application Market (Quarterly Ratios)
Breakdown by Application Market (Quarterly Ratios) Net Sales1 NRE Revenue1 Automotive Data Center & Networking Automotive Data Center & Networking Smart Devices Industrial & Others Smart Devices Industrial & Others 100% 100% 10% 9% 12% 14% 13% 17% 23% 23% 23% 23% 24% 28% 27% 33% 35% 33% 30% 35% 80%
Slide 23: Breakdown by Geographic Region (Quarterly Ratios)
Breakdown by Geographic Region (Quarterly Ratios) Net Sales1 NRE Revenue1 US China Japan Others US China Japan Others 100% 100% 6% 3% 4% 5% 6% 7% 8% 7% 8% 9% 7% 7% 8% 12% 11% 12% 11% 12% 11% 12% 20% 22% 31% 23% 80% 80% 17% 34% 30% 26% 22% 43% 40% 37% 39% 38% 42% 28% 13% 48% 48% 22% 49% 14% 51% 55% 1
Slide 24: Breakdown by Process Node (Quarterly Ratios)
Breakdown by Process Node (Quarterly Ratios) Net Sales1 NRE Revenue1 3-7nm 10-16nm 20-28nm 40nm & above / Others 3-7nm 10-16nm 20-28nm 40nm & above / Others 100% 100% 1% 8% 11% 10% 11% 6% 15% 15% 4% 23% 23% 21% 21% 7% 20% 21% 27% 7% 27% 31% 10% 80% 40% 41% 37% 35% 80% 46% 44% 24% 13% 13% 14% 11% 12%
Slide 25: Detail of Design Win Amount to Revenue
Detail of “Design Win Amount” to Revenue Illustrative Description of “Design Win Balance” Repeated material ― Presentation Material For FY23/3 “Design Win Balance1” ・・・ “Design win balance” (LTR; Life Time Revenue) represents our estimates of remaining accumulated “design win amount” that is associa
Slide 26: Strong Design Wins
Strong Design Wins Repeated material ― Presentation Material For FY23/3 ◼ “Design Win Amount” has approximately doubled throughout our transformation since 2018 ◼ Stepping up to the next “Design Win Amount” level in FY23/3 with approximately 250 billion yen “Design Win Amount1” (LTR) acquired in eac
Slide 27: Increase in the Ratio of Large-scale Design Wins
Increase in the Ratio of Large-scale Design Wins Repeated material ― Presentation Material For FY24/3 2Q ◼ The ratio of large-scale Design Wins has been rising. We expect a significant portion of future product shipments will be attributable to large-scale Design Wins, which generally contribute to
Slide 28: Design Win Balance: Breakdown of Changes
Design Win Balance: Breakdown of Changes Repeated material ― Presentation Material For FY23/3 ◼ Design Win Balance increased from March 2022 with acquisition of new design wins and increase of amount for products currently in production stage ◼ Approximately 60% of current Design Win Balance expecte
Slide 29: Abundant global Design Win Balance
Abundant global “Design Win Balance1” Repeated material ― Presentation Material For FY24/3 2Q ◼ Design wins for projects based on advanced technologies, especially in the automotive market, from global leading customers. Our total Design Win Balance reached approximately 1 trillion yen as of March 3
Slide 30: Design Win Balance by Application Market and Region
Design Win Balance by Application Market and Region Repeated material ― Presentation Material For FY23/3 ◼ By application market: ‐ Reflecting the recent strong design wins in automotive market, approx. 30% of Design Win Balance is from “Automotive”, 20+% is from “Data Center & Networking”, and 10+%
Slide 31: Roadmap to OP Margin Target
Roadmap to OP Margin Target Repeated material ― Presentation Material For FY23/3 ◼ Increase product revenue through accumulated design wins ◼ Improve profitability with product revenue increase and operating leverage Roadmap to OP Margin Target OP Margin OP Margin (FY22/3) (Mid-Term target2) 1 2 3 L
Slide 32: High growth will turn visible
Further Growth through "Phase 2 Transformation” Repeated material ― Presentation Material For FY24/3 2Q (Partially Updated1) ◼ Aim for further growth and development through new and distinctive Solution SoC business model and “Phase 2 Transformation”, while maintaining top line growth and solid prof
Slide 33: Toward Future Growth
Toward Future Growth Repeated material ― Presentation Material For FY24/3 2Q ◼ Beyond the mid-term, Socionext aims to continue acquiring additional design wins in pursuit of further growth Market Trend Growth Strategy AD/ADAS Continue to leverage the competitive strength of the Solution SoC business
Slide 34: Strengthen R&D and Investment in Leading Technologies
Strengthen R&D and Investment in Leading Technologies Repeated material ― Presentation Material For FY24/3 2Q ◼ Subsystem configurations and bus architectures are becoming similar across major applications ◼ Building a common design platform improves development efficiency and profitability Design t
Slide 35: Transformation of R&D Structure
Transformation of R&D Structure Repeated material ― Presentation Material For FY24/3 2Q ◼ Rebuilding global R&D structure in line with the change of primary business areas and the business model ◼ Reinforcing flexible and scalable “Solution SoC” development platform 2022 ～ Measures ～March 2018 ～ 202
Slide 36: Socionext at a Glance
Socionext at a Glance Repeated material ― Presentation Material For FY23/3 ◼ Socionext has developed a new and distinctive “Solution SoC” business model to provide optimal custom SoCs to customers who need advanced and innovative chips Company Overview Business Overview (Ratio is NRE revenue breakdo
Slide 37: Detail of Custom SoC and ASSP
Detail of Custom SoC and ASSP Repeated material ― Presentation Material For FY23/3 ◼ Socionext operates mainly within Custom SoC market, where products are designed for a specific customer (Although ASSPs are designed also for specific applications, they are not designed for a specific customer ) Lo
Slide 38: The Image of Timeline from Design Win to Mass Production
The Image of Timeline from Design Win to Mass Production Illustrative Description of “Design Win Amount” Repeated material ― Presentation Material For FY23/3 “Design Win Amount１” ・・・ “Design Win Amount” represents estimate of the lifetime demand from design projects. “Design Win Amount” is divided i
Slide 39: Features of Solution SoC Business Model
Features of Solution SoC Business Model 1 Repeated material ― Presentation Material For FY23/3 ◼ The primary difference between “traditional ASIC”2 and “Solution SoC“ is how to interface with customers ◼ The primary difference between “Solution SoC” and “ASIC designed by ASSP vendors”2 is the breadt
Slide 40: Competitive Advantages and Features for Solution SoCs
Competitive Advantages and Features for Solution SoCs Repeated material ― Presentation Material For FY24/3 2Q ◼ Through our Solution SoC business model, we design optimal custom SoCs in collaboration with our customers while drawing on the optimal IP, design methodology and OSS from across the semic
Slide 41: Transformation into a Global Custom SoC Vendor in Advanced Technology Areas
Transformation into a Global Custom SoC Vendor in Advanced Technology Areas Repeated material ― Presentation Material For FY23/3 ◼ Through a transformation of our business and company culture, Socionext has turned into a global leading custom SoC vendor with a new and distinctive business model that
Slide 42: Transforming into a Global SoC Company with Cutting-edge Technologies
Transforming into a Global SoC Company with Cutting-edge Technologies Repeated material ― Presentation Material For FY23/3 ◼ Shift in NRE revenue composition illustrates the steady progress of our business transformation FY18/3 FY21/3 FY22/3 FY23/3 1% Advanced 28% 40% 43% 5-7nm Process Nodes 19% 59%
Slide 43: Example of Design Win in Each Application Market
Example of Design Win in Each Application Market Repeated material ― Presentation Material For FY24/3 2Q ◼ We acquired design wins for chips using advanced technology that are crucial for customers to build their applications ◼ Those achievements led to repeated orders from some customers E/E Archit
Slide 44: Performance Comparison with Competitors (Traditional ASIC Vendors)
Performance Comparison with Competitors (Traditional ASIC Vendors) Repeated material ― Presentation Material For FY24/3 2Q ◼ We have improved net sales per employee and operating income per employee ◼ We will target further improvements in these metrics through the transformation of our R&D structur
Slide 45: Socionexlt’
Socionexlt’