Himax Technologies, Inc. (HIMX) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals: while there are positive developments in emerging business areas and a slight gross margin improvement, there are significant declines in key revenue segments and net profit. The Q&A highlights uncertainties in future product contributions and management's evasiveness on specifics. Given these mixed factors and the absence of a market cap, the stock price is likely to remain stable, leading to a neutral rating.
Key Financial Performance
Q4 Revenue $203.1 million, a sequential increase of 2.0%. This was better than the flat quarter-over-quarter guidance due to rush orders for TV and notebook IC legacy products, restocking of TV and monitor IC products, and new notebook TDDI projects entering mass production.
Q4 Gross Margin 30.4%, in line with guidance of flat to slightly up from 30.2% in the previous quarter. The increase was due to improved product mix and operational efficiencies.
Q4 Profit per Diluted ADS $0.36, at the high end of the guidance range of $0.20 to $0.40. This was driven by higher revenue and gross margin.
Revenue from Large Display Driver $21.7 million, an increase of 14.2% from the previous quarter. This was due to rush orders for TV and notebook IC legacy products and new notebook TDDI projects entering mass production.
Revenue from Small and Medium-Sized Display Driver $139.1 million, a slight decline of 1.3% sequentially. Automotive driver sales increased approximately 10% quarter-over-quarter due to adoption of TDDI technology, while smartphone and tablet IC segment revenues declined due to pull-forward purchases in prior quarters.
Q4 Non-Driver Sales $42.3 million, a 7.9% increase from the previous quarter. This was driven by increased ASIC Tcon shipments to a leading projector customer and robust Tcon shipments for automotive applications.
Q4 Operating Expenses $54.9 million, a decrease of 9.6% from the previous quarter but an increase of 11.6% year-over-year. The sequential decrease was due to reduced annual employee bonuses and currency depreciation, while the year-over-year increase was driven by higher tape-out and salary expenses.
Q4 Operating Profit $6.8 million, representing an operating margin of 3.4%, compared to negative 0.3% in the previous quarter and 9.7% in the same period last year. The sequential increase was due to higher revenue and gross margin, while the year-over-year decline was due to lower sales and higher operating expenses.
Q4 After-Tax Profit $6.3 million or $0.36 per diluted ADS, compared to $1.1 million or $0.06 per diluted ADS last quarter and $24.6 million or $0.14 in the same period last year. The year-over-year decline was due to lower sales and higher operating expenses.
Full Year 2025 Revenue $832.2 million, a decline of 8.2% compared to 2024. This was due to soft consumer electronics demand and conservative inventory strategies by panel customers, partially offset by resilience in automotive and AI-related applications.
Revenue from Large Panel Display Driver IC (2025) $90.7 million, a decrease of 28.0% year-over-year. This was due to reduced demand in the large panel market.
Revenue from Small and Medium-Sized Driver Sales (2025) $575.1 million, a decrease of 8.0% year-over-year. This was due to soft consumer electronics demand.
Non-Driver Product Sales (2025) $166.4 million, an increase of 7.0% year-over-year. This was driven by growth in automotive Tcon and other non-driver products.
2025 Gross Margin 30.6%, slightly up from 30.5% in 2024. This was due to improved product mix and operational efficiencies.
2025 Operating Expenses $210.2 million, a slight increase of 1.1% from 2024. This was due to higher tape-out and salary expenses and currency appreciation, partially offset by lower employee bonuses.
2025 Operating Income $44.1 million, or 5.3% of sales, compared to $68.2 million, or 7.5% of sales in 2024. The decline was due to lower revenue and higher operating expenses.
2025 Net Profit $43.9 million, or $0.25 per diluted ADS, compared to $79.8 million, or $0.46 per diluted ADS in 2024. The decline was due to lower revenue and higher operating expenses.
Cash and Financial Assets (End of 2025) $286.2 million, compared to $224.6 million at the end of 2024. The increase was due to higher operating cash inflows.
Q4 Operating Cash Inflow $16.8 million, compared to $6.7 million in the prior quarter. The increase was due to improved operational performance.
Year-End Inventories (2025) $152.7 million, compared to $137.4 million last quarter and $158.7 million a year ago. The decrease year-over-year was due to better inventory management.
Accounts Receivable (End of 2025) $200.9 million, little change from last quarter but down from $236.8 million a year ago. The decrease year-over-year was due to improved collections.
2025 Capital Expenditures $20.1 million, compared to $13.1 million in 2024. The increase was due to construction projects and R&D-related equipment purchases.
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Operating Highlights
Automotive OLED on-cell touch IC: Entered mass production with a leading brand, marking a milestone and strengthening the foundation for future growth.
WiseEye AI: Features ultralow power design, compact form factor, and on-device AI inferencing. Demonstrated applications in smart home, security, automotive, and smart glasses at CES.
Front-lit LCoS microdisplay: Optimized for AR smart glasses, achieving balance among size, weight, power consumption, and resolution. Demonstrated at CES.
PalmVein module: Strong design-in pipeline across industries like smart access, workforce management, and automotive.
Automotive display IC market: Commands 40% market share in DDIC and over half in TDDI globally. Strong design-win pipeline and leadership in emerging automotive display technologies.
Smart glasses market: Experiencing resurgence due to AI advancements. Himax positioned with microdisplay and low power AI capabilities.
Q4 2025 revenue: $203.1 million, a sequential increase of 2.0%, driven by TV and notebook IC legacy products and new notebook TDDI projects.
Non-driver sales: $42.3 million in Q4, a 7.9% increase, driven by ASIC Tcon shipments and automotive applications.
Operating expenses: Decreased 9.6% sequentially in Q4 due to reduced employee bonuses and currency depreciation.
Expansion into non-display IC areas: Strategic investments in areas with long-term growth potential, poised to ramp meaningfully starting in 2027.
Collaboration with FOCI: Advancing high-speed optical transmission technologies for AI data centers, with mass-production readiness targeted for 2026.
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Risk or Challenges
Macroeconomic Uncertainty: Ongoing macroeconomic challenges and uncertainties, including geopolitical tensions and tariffs, are impacting market conditions and consumer sentiment, particularly in the automotive sector.
Memory Price Increases: Recent sharp increases in memory prices have negatively affected market sentiment for electronic products, putting pressure on lower-end notebook models and accelerating the shift towards higher-end devices.
Automotive Sector Visibility: Limited visibility for the automotive sector's outlook due to uncertain government policies and fluctuating consumer sentiment, despite its relative resilience compared to consumer products.
Seasonal Softness in Automotive IC Sales: Automotive driver IC sales are expected to decrease double digits quarter-over-quarter in Q1 2026, reflecting seasonal softness related to the Lunar New Year holidays and tapering automotive subsidy programs in major markets like China and the U.S.
Decline in Revenue Segments: Revenue from small and medium-sized display driver ICs and large panel display driver ICs has declined year-over-year, reflecting softness in consumer electronics demand and conservative inventory strategies by panel customers.
Operating Expense Increases: Operating expenses have increased year-over-year due to higher tape-out and salary expenses, as well as currency fluctuations, despite disciplined expense control measures.
Inventory Management Challenges: Year-end inventories increased sequentially, indicating potential challenges in aligning production with demand, although they are lower than the previous year.
Regulatory and Policy Risks: Uncertain government policies in major markets like China and the U.S. could impact automotive sector performance and broader business operations.
Seasonal and Market-Driven Revenue Fluctuations: Revenue fluctuations in various segments, including automotive and non-driver ICs, are influenced by seasonal factors and market-driven demand changes, creating challenges in maintaining consistent growth.
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Guidance & Outlook
Q1 2026 Revenue: Expected to decline 2.0% to 6.0% sequentially.
Q1 2026 Gross Margin: Expected to be flat to slightly down, depending on product mix.
Q1 2026 Profit: Estimated to be in the range of $0.02 to $0.04 per fully diluted ADS.
Automotive Segment Outlook: First quarter expected to be the trough of the year, with sales rebounding in the second quarter and business momentum improving into the second half, supported by lean customer inventory levels and new projects for automotive customers entering mass production later in the year.
Non-Driver IC Businesses: Continued growth, particularly in Tcon and WiseEye AI, expected to provide incremental support.
Automotive Display IC Business: Optimistic long-term outlook with leading new technology offerings and strong design-win pipeline. Significant upside potential driven by innovation and advancements in smart cabin and immersive displays.
WiseEye AI Business: Expected to see very strong growth starting from 2026, driven by ultralow power AI solutions for endpoint devices and expanding adoption across multiple end markets.
Smart Glasses Market: Significant new opportunities driven by AI advancements. A leading brand's smart glasses are poised to enter mass production later in 2026.
CPO (Co-Packaged Optics): Main goal for 2026 is to complete mass-production readiness with small quantity shipments for the year. Expected to become an important contributor to revenue and profitability over the next few years.
Large Panel Driver IC Business: Q1 sales expected to increase single digit sequentially, driven by continued replenishment of TV IC product from Chinese panel customers.
Small and Medium-Sized Display Driver IC Business: Q1 sales expected to decline single digit from last quarter. Automotive driver IC sales set to decrease by double digit quarter-over-quarter due to seasonal softness and tapering effect of subsidy programs.
Tcon Business: Q1 revenue expected to decrease single digit sequentially due to absence of ASIC Tcon shipments to a leading projector customer and moderation in automotive Tcon shipments.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Why is the first quarter gross margin expected to be flat to down?
A:The flat to slight decline in gross margin is primarily due to a change in product mix, with slightly less auto shipment in Q1 compared to the last quarter. Additionally, increasing material costs, such as rising gold prices and foundry capacity tightening, are factors. Discussions with foundry vendors and customers about price adjustments are ongoing, but these factors are expected to impact from Q2 onwards.
Q:What is the guidance for CPO revenue in 2026 and 2027?
A:For 2026, the focus is on completing validation of Gen 1 and Gen 2 products, with limited revenue contribution expected from sample shipments. For 2027, meaningful top and bottom-line contributions are anticipated from pre-mass production shipments of the Gen 2 product targeting bandwidth greater than 6.4T. Early-stage mass production could result in hundreds of millions of dollars in sales, but the exact timing of mass production ramp-up depends on the customer.
Q:What is the expected contribution of OLED sales in 2026, and how does it compare to 2027?
A:OLED sales in 2026 are expected to contribute less than 10% of total sales, likely in the high single digits. The real ramping is expected in 2027 due to factors like cost reduction and increased production capacity, particularly for automotive and IT OLED products.
Q:What is the gross margin outlook for OLED products?
A:For smartphone OLED products, gross margin is lower than the corporate average due to a competitive market. However, automotive and IT OLED products have better gross margins compared to traditional LCD products, with higher IC content per panel.
Q:What are the prospects for automotive OLED products?
A:Automotive OLED products are expected to see breakout demand in 2027, driven by aggressive promotion from Korean panel makers and cost reductions. Himax is in strategic partnerships with top-tier Korean and Chinese panel makers, offering driver IC, timing controller, and discrete touch IC products.
Q:What are the prospects for IT OLED products?
A:IT OLED products are also expected to see significant growth in 2027, supported by the mass production of Gen 8.5 and 8.6 OLED lines by Korean and Chinese panel makers. This is expected to reduce costs and trigger demand for larger panel sizes like tablets and notebooks.
Q:Review of Unclear Management Responses
A:Management avoided providing precise timelines for the mass production ramp-up of CPO products, citing customer-driven decisions and the complexity of the ecosystem. Additionally, while discussing OLED prospects, management did not provide specific numerical details on expected sales or margins for 2027, relying on general trends and expectations.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Difficulty conference
Himax change
Himax exposure
IC area
IC decrease
IC legacy
IC production
IC segment
IFRS quarter
Ms Head
Panel net
RSU bonus
Salary appreciation
TV notebook
USD balance
Welcome name
accounting review
application Himax
appreciation NT
asset cash
basis end
bonus depreciation
brand milestone
cash RSU
change DSO
change basis
child completion
compensation income
completion end
condition decline
consumer electronics
continent softness
control IC
control margin
customer shipment
decline USD
decline panel
decrease driver
driver IC
employee bonus
increase margin
increase tape
inflow
margin line
sale margin
HIMX Transcript
Himax Technologies, Inc. (HIMX) Q4 2025 Earnings Call Transcript
Unknown2-13
The earnings call reveals mixed signals: while there are positive developments in emerging business areas and a slight gross margin improvement, there are significant declines in key revenue segments and net profit. The Q&A highlights uncertainties in future product contributions and management's evasiveness on specifics. Given these mixed factors and the absence of a market cap, the stock price is likely to remain stable, leading to a neutral rating.
Himax Technologies, Inc. (HIMX) Q3 2025 Earnings Call Transcript
Unknown11-6
The earnings call reveals several negative aspects: a sequential revenue decrease, increased operating expenses, and a significant drop in after-tax profit. Although there are some positive long-term prospects, such as automotive OLED growth and AI business, the immediate financial metrics are weak. The Q&A section highlights cautious EPS guidance due to tax adjustments and high R&D expenses, along with vague timelines for revenue from new technologies. The overall sentiment leans negative, reflecting near-term challenges despite potential future growth.
Himax Technologies, Inc. (HIMX) Q2 2025 Earnings Call Transcript
Unknown8-7
The earnings call presents mixed signals: while the company reported better-than-expected revenue and gross margin, smartphone and tablet IC sales declined, and operating income fell. The strategic alliance and strong automotive business are positives, but the projected Q3 loss due to employee bonuses and management's lack of clarity on CPO mass production timing are concerns. The annual dividend payment is a positive, but the overall sentiment is balanced by uncertainties, resulting in a neutral outlook.
Himax Technologies, Inc. (NASDAQ:HIMX) Q1 2025 Earnings Call Transcript
Unknown5-9
The earnings call showed mixed results: a sequential revenue decline but year-over-year growth, stable gross margins, and profit exceeding guidance. The share buyback program is positive, but reliance on Chinese subsidies and competitive pressures pose risks. The Q&A highlighted management's caution about macroeconomic uncertainties and lack of specific guidance, which could temper investor enthusiasm. Overall, the sentiment is neutral due to these balanced positives and negatives.
HIMX Report
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