Parade Technologies Reports Third Quarter 2022 Financial Results

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Parade Technologies, Ltd. (Taipei Exchange: 4966.TWO), a leading high-speed interface IC supplier, today announced financial results for the third quarter fiscal year 2022 ended September 30, 2022, and provided guidance for the fourth quarter of fiscal year 2022.

Consolidated revenue was US$151.04 million and consolidated net income was US$32.64 million. Basic and fully diluted after-tax earnings per share (“EPS”) were US$0.41 (NT$12.38) and US$0.40 (NT$12.21), respectively. These results compared to consolidated revenue US$191.72 million and consolidated net income of US$53.34 million, or US$0.67 (NT$18.71) and US$0.66 (NT$18.34) per basic and fully diluted share, in the year-ago quarter.

In US dollars, the third quarter of 2022 consolidated revenue decreased 30.30% sequentially and was down 21.22% year-over-year.

The gross profit in the third quarter of 2022 was US$68.37 million, representing a decrease of 33.20% from the previous quarter and a decrease of 27.37% compared to the same quarter of last year.

On September 14, 2022, Parade announced redriver additions to its portfolio of HDMI™ 2.1/2.0 interface and signal conditioning devices. The new PS8219 HDMI 2.1 redriver and PS8210 HDMI 2.0 redriver are pin compatible with the PS8419 HDMI 2.1 retimer currently in high-volume production. The PS8419/P8219/PS8210 pin compatibility provides OEMs with the ability to quickly switch between the retimer option for best performance and the redriver option for lowest power in less challenging signaling environments. This greatly lowers the risk to OEMs for a PCB redesign at a later time, due to compliance or production issues, offering improved time-to-market for end products.

On September 7, 2022, Parade announced the availability of the PS8570 PCI Express 4.0 16Gbps linear redriver for PC, server and datacenter applications. The PS8570 features a quad-channel unidirectional linear redriver with a 2×2 crossbar switch. The PS8570 is fully compliant with the PCI Express 4.0 specification. The PS8570 features the industry’s lowest operating power for a PCIe 4 linear redriver. OEMs can enable PCIe 4 16Gbps support for power-sensitive mobile devices. The 2×2 crossbar switch allows for flexible interconnect configurations for high performance systems.

Based on current business outlook, Parade is providing the following guidance for the fourth quarter of fiscal 2022:

Revenue: US$100.0 ~110.0 Million
Gross Margin: 43.5% ~47.5%
Operating Expense: US$29.0 ~32.0 Million

The financial figures detailed above for the third quarter of 2022 have been reviewed 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.

UNAUDITED CONSOLIDATED INCOME STATEMENTS	USD in Thousands														NTD in Thousands
UNAUDITED CONSOLIDATED INCOME STATEMENTS	Sequential Quarter				Three Months ended					Nine Months ended					Sequential Quarter				Three Months ended					Nine Months ended
	Sep 30,		Jun 30,		Sep 30,		Sep 30,			Sep 30,		Sep 30,			Sep 30,		Jun 30,		Sep 30,		Sep 30,			Sep 30,		Sep 30,
	2022		2022		2022		2021			2022		2021			2022		2022		2022		2021			2022		2021

Revenue		151,044		216,699		151,044		191,718			578,466		520,079			4,591,744		6,383,951		4,591,744		5,341,284			16,873,838		14,588,526
Cost of goods sold		82,671		114,340		82,671		97,582			306,959		273,460			2,513,211		3,368,457		2,513,211		2,718,646			8,959,119		7,672,505
Gross profit		68,373		102,359		68,373		94,136			271,507		246,619			2,078,533		3,015,494		2,078,533		2,622,638			7,914,719		6,916,021
Research & development expenses		21,090		21,483		21,090		19,875			63,799		56,466			641,148		632,873		641,148		553,710			1,868,145		1,584,348
Sales & marketing expenses		7,285		7,907		7,285		8,496			23,406		23,698			221,477		232,925		221,477		236,709			684,313		664,749
General & administrative expenses		5,327		6,549		5,327		6,322			18,325		17,206			161,917		192,942		161,917		176,126			535,367		482,619
Total operating expenses		33,702		35,939		33,702		34,693			105,530		97,370			1,024,542		1,058,740		1,024,542		966,545			3,087,825		2,731,716
Operating income		34,671		66,420		34,671		59,443			165,977		149,249			1,053,991		1,956,754		1,053,991		1,656,093			4,826,894		4,184,305
Non-operating income and (expenses)		1,185		566		1,185		(46	)		1,721		(580	)		36,031		16,662		36,031		(1,310	)		51,868		(16,404	)
Income before income taxes		35,856		66,986		35,856		59,397			167,698		148,669			1,090,022		1,973,416		1,090,022		1,654,783			4,878,762		4,167,901
Income tax expense		3,216		6,049		3,216		6,060			14,934		13,828			97,771		178,193		97,771		168,809			434,653		387,242
Net income		32,640		60,937		32,640		53,337			152,764		134,841			992,251		1,795,223		992,251		1,485,974			4,444,109		3,780,659
EPS – Basic (In Dollar)	$	0.41	$	0.76	$	0.41	$	0.67		$	1.92	$	1.71		$	12.38	$	22.51	$	12.38	$	18.71		$	55.74	$	47.85
Shares used in computing EPS-Basic (In thousands)		80,182		79,766		80,182		79,424			79,731		79,004			80,182		79,766		80,182		79,424			79,731		79,004
EPS – Diluted (In Dollar)	$	0.40	$	0.75	$	0.40	$	0.66		$	1.88	$	1.67		$	12.21	$	22.18	$	12.21	$	18.34		$	54.69	$	46.74
Shares used in computing EPS-Diluted (In thousands)		81,272		80,951		81,272		81,021			81,257		80,895			81,272		80,951		81,272		81,021			81,257		80,895

UNAUDITED CONSOLIDATED BALANCE SHEETS As of SEPTEMBER 30, 2022 and 2021	USD in Thousands				NTD in Thousands
	Sep 30,		Sep 30,		Sep 30,		Sep 30,
	2022		2021		2022		2021
Current assets
Cash & cash equivalents	294,933		308,491		9,364,118		8,591,470
Accounts receivable, net	53,497		62,250		1,698,539		1,733,665
Inventories, net	134,277		64,104		4,263,286		1,785,302
Other current assets	22,471		15,366		713,475		427,938
Total current assets	505,178		450,211		16,039,418		12,538,375
Non-current assets
Property, plant and equipment, net	17,033		17,814		540,799		496,115
Right-of-use assets	6,188		9,236		196,468		257,237
Intangible assets	104,853		112,376		3,329,058		3,129,677
Deferred income tax assets	10,686		7,832		339,269		218,126
Other non-current assets	152,838		73,747		4,852,598		2,053,842
Total non-current assets	291,598		221,005		9,258,192		6,154,997
Total Assets	796,776		671,216		25,297,610		18,693,372

Current Liabilities
Accounts payable	34,659		33,820		1,100,435		941,895
Other payables	36,724		37,403		1,165,986		1,041,667
Current income tax liabilities	33,537		26,318		1,064,782		732,965
Lease liabilities – current	2,865		3,527		90,960		98,228
Other current liabilities	21,004		7,047		666,878		196,229
Total current liabilities	128,789		108,115		4,089,041		3,010,984
Non-current Liabilities
Lease liabilities – non-current	3,323		5,709		105,508		159,009
Total non-current liabilities	3,323		5,709		105,508		159,009
Equity
Ordinary shares	26,742		26,636		811,962		808,705
Capital reserves	137,941		142,192		4,186,139		4,276,273
Retained earnings	538,566		421,199		15,941,317		12,653,796
Other equity	(16,777	)	(27,680	)	769,771		(2,076,222	)
Treasury shares	(21,808	)	(4,955	)	(606,128	)	(139,173	)
Total equity	664,664		557,392		21,103,061		15,523,379
Total liabilities and equity	796,776		671,216		25,297,610		18,693,372

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 and 2021	USD in Thousands				NTD in Thousands
	Sep 30,		Sep 30,		Sep 30,		Sep 30,
	2022		2021		2022		2021
Cash flows from operating activities
Income before income tax for the period	167,698		148,669		4,878,762		4,167,901
Depreciation and amortization (including the right-of-use assets)	16,549		19,481		484,542		546,811
Loss on disposal of equipment	1		86		35		2,417
Share-based compensation cost	24,725		19,690		728,543		572,649
Interest income	(819	)	(74	)	(24,720	)	(2,070	)
Income and expenses having no effect on cash flows	40,456		39,183		1,188,400		1,119,807
Accounts receivable	(3,114	)	(6,817	)	(98,886	)	(189,863	)
Inventories	(58,498	)	(7,397	)	(1,857,313	)	(206,015	)
Other current assets	(34,338	)	(10,665	)	(993,127	)	(301,292	)
Net changes in assets relating to operating activities	(95,950	)	(24,879	)	(2,949,326	)	(697,170	)
Accounts payable	(6,187	)	(9,750	)	(196,425	)	(271,537	)
Other payables	(12,816	)	3,258		(406,910	)	90,749
Other current liabilities	10,960		1,422		347,992		39,613
Net changes in liabilities relating to operating activities	(8,043	)	(5,070	)	(255,343	)	(141,175	)
Cash provided by operations	104,161		157,903		2,862,493		4,449,363
Interest received	819		74		24,720		2,070
Income taxes paid	(1,313	)	(3,952	)	(38,444	)	(110,944	)
Income taxes received	19		2		565		52
Net cash generated from operating activities	103,686		154,027		2,849,334		4,340,541
Cash flows from investing activities
Acquisition of equipment	(5,042	)	(9,205	)	(147,620	)	(258,385	)
Acquisition of intangible assets	(61	)	(147	)	(1,797	)	(4,119	)
Increase in refundable deposits	(72,066	)	(66,264	)	(2,288,095	)	(1,845,447	)
Increase in other prepayments	(8,777	)	(5,383	)	(256,987	)	(151,088	)
Net cash used in investing activities	(85,946	)	(80,999	)	(2,694,499	)	(2,259,039	)
Cash flows from financing activities
Proceeds from exercise of employee stock options	2,448		196		71,665		5,492
Repayment of the principal portion of lease liabilities	(2,651	)	(2,783	)	(77,636	)	(78,118	)
Purchase of treasury shares	–		(10,038	)	–		(281,882	)
Treasury shares reissued to employees	34,533		11,052		959,141		310,416
Distribution of cash dividends	(93,720	)	(59,474	)	(2,622,127	)	(1,752,708	)
Cash dividend regain from canceled share-based compensation	63		42		1,870		1,269
Net cash used in financing activities	(59,327	)	(61,005	)	(1,667,087	)	(1,795,531	)
Effect of exchange rate changes	4,087		(2,678	)	1,674,627		(214,180	)
Net increase in cash and cash equivalents	(37,500	)	9,345		162,375		71,791
Cash and cash equivalents at beginning of period	332,433		299,146		9,201,743		8,519,679
Cash and cash equivalents at end of period	294,933		308,491		9,364,118		8,591,470

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