Name: SemiLEDs Corp Q3 2025 Earnings Call
Start: 2025-07-11T00:00:00.000Z

Executive Summary

Q3 FY2025 revenue surged to $17.7M from $10.9M in Q2, while GAAP diluted EPS fell to $0.03 from $0.05 as gross margin compressed to 5% (from 9%) and operating margin turned slightly negative (-0.4%) .
Year-over-year, revenue rose sharply from $1.3M in Q3 FY2024, but margins deteriorated materially vs 41% gross margin and -36% operating margin last year .
Cash and cash equivalents remained steady at $2.4M; inventories declined Q/Q to $11.9M; accrued expenses fell meaningfully; accounts payable spiked to $10.8M, highlighting major working capital shifts .
Auditor change disclosed: KCCW resigned; YCM CPA engaged—no disagreements reported; this regulatory development is a near-term narrative catalyst alongside the magnitude of the revenue jump .

What Went Well and What Went Wrong

Revenue accelerated sequentially to $17.651M (from $10.872M in Q2), maintaining positive net income of $0.223M despite margin pressure .
Accrued expenses and other current liabilities fell Q/Q from $15.063M to $4.183M, improving near-term liability profile .
Management had previously flagged expedited revenue recognition related to buy-sell purchase orders; the magnitude of Q3 revenue suggests execution on this strategy: “revenue expectations for the third quarter… the expedited timing of the recognition of revenue relating to the buy-sell purchase orders” .

Gross margin compressed to 5% (from 9% in Q2 and 41% in Q3 FY2024), and operating margin turned slightly negative (-0.4%), signaling unfavorable mix or cost dynamics despite strong top-line .
EPS declined Q/Q to $0.03 from $0.05 amid margin deterioration, despite higher revenues .
Accounts payable rose sharply to $10.849M vs $0.445M in Q2, indicating a significant shift in payables and working capital that warrants monitoring .

Metric	Q3 FY2024	Q1 FY2025	Q2 FY2025	Q3 FY2025
Revenue ($USD Millions)	$1.323	$1.261	$10.872	$17.651
Gross Profit ($USD Millions)	$0.543	$0.260	$1.003	$0.939
Gross Margin %	41%	21%	9%	5%
Operating Income ($USD Millions)	$(0.473)	$(0.657)	$0.110	$(0.062)
Operating Margin %	(36%)	(52%)	1%	(0.4%)
Net Income ($USD Millions)	$(0.319)	$(0.547)	$0.388	$0.223
Diluted EPS ($USD)	$(0.04)	$(0.08)	$0.05	$0.03
Cash and Equivalents ($USD Millions)	$1.671 (as of Aug 31, 2024)	$1.248 (as of Nov 30, 2024)	$2.384 (as of Feb 28, 2025)	$2.441 (as of May 31, 2025)

KPIs and Working Capital

KPI ($USD Millions unless noted)	Q2 FY2025	Q3 FY2025
Accounts Receivable (net)	$0.280	$0.164
Inventories	$13.531	$11.933
Accounts Payable	$0.445	$10.849
Accrued Expenses & Other Current Liabilities	$15.063	$4.183
Cash and Cash Equivalents	$2.384	$2.441

Estimates (S&P Global)

EBITDA ($USD Thousands): $138* (actual, S&P Global)
EPS consensus and revenue consensus: Unavailable due to limited coverage; no published # of estimates for Q3 FY2025 [GetEstimates, periods: Q3 2025].
Values retrieved from S&P Global.*

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q3 FY2025	Management referenced “revenue expectations… expedited timing of the recognition of revenue relating to the buy-sell purchase orders” without numeric range	No specific numeric guidance provided in Q3 release	N/A
Margins/OpEx/Tax/Segments/Dividends	Q3 FY2025	Not provided	Not provided	Maintained N/A

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 FY2025)	Trend
Revenue Recognition (Buy-Sell PO)	Q1/Q2 forward-looking statements referenced expedited recognition of revenue relating to buy-sell purchase orders	Large revenue realized in Q3 ($17.651M)	Execution evident; sustainability unaddressed
Margins	Q1 gross margin 21% and operating margin -52% ; Q2 gross margin 9% and operating margin 1%	Gross margin 5%, operating margin -0.4%	Ongoing compression despite revenue surge
Working Capital Dynamics	Inventories rose to $13.531M in Q2; accrued expenses spiked to $15.063M	Inventories fell to $11.933M; accrued expenses declined to $4.183M; accounts payable jumped to $10.849M	Significant shifts; liquidity watch
Regulatory/Legal	No auditor changes noted Q1/Q2	Auditor change: KCCW resigned; YCM engaged; no disagreements	New audit firm; governance focus
Product/Technology	Subsidiary TSLC announced world’s smallest PPG sensor head (health/IoT wearables) in April 2025	No new product releases in Q3 PR; product initiative provides optionality	Strategic optionality; commercialization timing unclear

“Revenue for the third quarter of fiscal 2025 increased to $17.7 million… GAAP gross margin… decreased to 5%… Operating margin… negative 0.4%” (Press release, July 11, 2025) .
Prior releases highlighted expedited revenue recognition tied to buy-sell purchase orders for upcoming quarters (Q1/Q2 forward-looking statements) .
No formal prepared remarks or leadership quotes were included in the Q3 FY2025 materials; disclosures were limited to financial summary and standard forward-looking statements .

No earnings call transcript was available for Q3 FY2025; no Q&A or guidance clarifications were published [ListDocuments earnings-call-transcript: none].

Wall Street consensus coverage (S&P Global) for Q3 FY2025 appears limited: no published consensus EPS or revenue metrics and no count of estimates; therefore, beat/miss vs Street cannot be assessed [GetEstimates, periods: Q3 2025].
EBITDA actual for Q3 FY2025 recorded at $138K* (S&P Global), but no consensus to compare against.*
Values retrieved from S&P Global.*

The quarter’s narrative hinges on the extraordinary revenue realization ($17.651M), likely reflecting previously flagged expedited recognition dynamics; margin compression and slight operating loss temper earnings quality .
Working capital swings are material: payables spike to $10.849M; accrued expenses normalize; inventories decline—monitor cash conversion and any subsequent reversals .
Absence of numeric guidance and lack of an earnings call leave visibility limited; the sustainability of this revenue step-up and margin trajectory remains the key debate .
Auditor transition (KCCW → YCM) with no disagreements disclosed is notable; governance and reporting continuity should be tracked through upcoming filings .
Year-over-year trajectory improved on revenue and EPS, but margins deteriorated sharply vs last year’s Q3 (41% GM to 5%), emphasizing mix/cost scrutiny in coming quarters .
Product optionality via TSLC’s PPG sensor head aligns with health wearables tailwinds; commercialization timelines and revenue contribution remain to be evidenced .
Near-term trading: expect focus on sustainability of revenue, balance sheet/working capital dynamics, and any disclosures from the new auditor; medium-term thesis relies on margin normalization and recurring demand rather than one-off revenue timing .