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TI

Techpoint, Inc. (THPTF)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered revenue of $16.78M (+10% YoY, +2.9% QoQ), diluted EPS of $0.23, and gross margin of 52%, with automotive strength offsetting continued security surveillance weakness .
  • Management maintained full-year 2024 guidance (revenue $72.21M; GAAP net income $17.20M; non-GAAP net income $18.62M), and introduced Q3 guidance calling for revenue of ~$18.5M but lower YoY operating profit due to elevated tape-out spend .
  • Mix shift to automotive (Q2 automotive revenue +25% YoY) compressed margins vs prior year; surveillance remained pressured by inventory adjustment and FX reserve declines in several regions .
  • No earnings call transcript or press release beyond the 8‑K/Tanshin was available for Q2; Wall Street consensus estimates (S&P Global) were unavailable for THPTF, so estimate comparisons could not be provided (S&P Global consensus unavailable).
  • Near-term stock catalysts include: Q3 tape-out-driven opex step-up (potential margin headwind), ISP product contributions in 2H 2024, and steadier automotive shipments with design-win momentum .

What Went Well and What Went Wrong

What Went Well

  • Automotive revenue rose to $12.39M, +25% YoY, driving overall growth despite surveillance declines .
  • Q2 diluted EPS held at $0.23 with net income margin at 25%, supported by interest income and FX gains in other income .
  • Management expects ISP shipments to increase and contribute in 2H 2024, citing progress in development pipeline: “our new ISP product developments are progressing well and we expect them contribute to additional revenue in the second half of 2024” .

What Went Wrong

  • Gross margin fell to 52% (from 54% in Q2 2023), driven by product mix and lower average selling prices in surveillance .
  • Security surveillance revenue declined to $4.39M (-18% YoY) on lower shipments and ASPs; management noted “overall security camera market remains slow due to the ongoing inventory adjustment… and the decrease of foreign currency reserve” .
  • Elevated R&D tape-out expenses (guiding Q3 tape-out $1.4M vs $0.5M prior) will reduce YoY operating profit despite revenue growth in Q3 .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Millions)$15.30 $16.31 $16.78
Diluted EPS ($)$0.22 $0.23 $0.23
Gross Margin (%)54% 54% 52%
Income from Operations ($USD Millions)$4.13 $4.19 $4.27
Operating Margin (%)28% 26% 25%
Net Income ($USD Millions)$4.05 $4.38 $4.34
Net Income Margin (%)27% 27% 25%
Consensus Revenue ($USD Millions)N/A (S&P Global consensus unavailable)N/A (S&P Global consensus unavailable)N/A (S&P Global consensus unavailable)
Consensus EPS ($)N/A (S&P Global consensus unavailable)N/A (S&P Global consensus unavailable)N/A (S&P Global consensus unavailable)

Segment Revenue ($USD Millions)

SegmentQ2 2023Q1 2024Q2 2024
Automotive$9.93 $12.48 $12.39
Security Surveillance$5.37 $3.83 $4.39
Total$15.30 $16.31 $16.78

KPIs

KPIQ2 2023Q1 2024Q2 2024
Geographic Revenue – China ($USD Millions)$11.23 $12.23 $12.41
Geographic Revenue – Taiwan ($USD Millions)$2.29 $2.34 $2.45
Geographic Revenue – South Korea ($USD Millions)$1.39 $1.16 $1.22
Geographic Revenue – Japan ($USD Millions)$0.33 $0.19 $0.17
Geographic Revenue – Other ($USD Millions)$0.06 $0.39 $0.53
Customer A (% of Revenue)N/A37% 34%
End-Customer A (% of Revenue)N/A16% 20%

Non-GAAP (H1 Reference)

MetricH1 2023H1 2024
Income from Operations – GAAP ($USD Millions)$7.44 $8.46
Income from Operations – Non-GAAP ($USD Millions)$8.17 $9.26
Net Income – GAAP ($USD Millions)$7.43 $8.72
Net Income – Non-GAAP ($USD Millions)$8.07 $9.42

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$72.21 $72.21 Maintained
Income from Operations ($USD Millions)FY 2024$17.32 $17.32 Maintained
Income Before Taxes ($USD Millions)FY 2024$19.32 $19.32 Maintained
GAAP Net Income ($USD Millions)FY 2024$17.20 $17.20 Maintained
Non-GAAP Net Income ($USD Millions)FY 2024$18.62 $18.62 Maintained
Basic/Diluted EPS ($)FY 2024$0.94 / $0.92 $0.94 / $0.92 Maintained
Revenue ($USD Millions)Q3 2024N/A~$18.5 Initiated
Operating Profit ($USD Millions)Q3 2024N/A~$4.4 (YoY down) Initiated
Income Before Taxes ($USD Millions)Q3 2024N/A~$5.0 Initiated
GAAP Net Income ($USD Millions)Q3 2024N/A~$4.4 Initiated
Non-GAAP Net Income ($USD Millions)Q3 2024N/A~$4.7 Initiated
Non-GAAP Basic EPS ($)Q3 2024N/A~$0.25 Initiated
Dividend per Share ($)FY 2024$0.50 $0.50 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023 & Q1 2024)Current Period (Q2 2024)Trend
Demand/Mix2024 semi demand to increase driven by AI, but many sectors flat; automotive share up, surveillance down in 2023 .Automotive up +25% YoY; surveillance weak due to inventory/FX reserve pressures .Automotive strength offsetting surveillance drag.
ISP and New ProductsISP expected to contribute 2H 2024; tape-out/IP license fees to reach up to $5.0M in 2024 vs $2.5M in 2023 .ISP shipments increasing; Q3 operating profit down YoY due to higher tape-out spend .R&D investment ramp; near-term margin headwind, medium-term revenue tailwind.
Supply Chain/MacroInflation, FX, supply chain challenges; concentration risks and large customers (e.g., Hikvision) .Continued macro/FX commentary; surveillance market slow on inventory and FX reserve declines .Persistent macro headwinds in surveillance.
Trade/RegulatoryEntity List/CMIC restrictions on Hikvision noted; not expected to directly impact Techpoint’s business; FCC Secure Equipment Act context .No change; same regulatory backdrop reiterated .Monitoring; limited direct impact expected.
Geographic MixChina ~74% of revenue in 2023 and Q1 .China 74% of Q2 revenue; Taiwan 15% .Stable high China exposure.

Management Commentary

  • “Overall security camera market remains slow due to the ongoing inventory adjustment… and the decrease of foreign currency reserve in many regions” .
  • “The shipping quantity of the Company's current ISP products is increasing and will contribute to the security camera business in the third quarter” .
  • “Operating profit of Q3 will decrease approximately 17.8% year over year mainly due to the increase of R&D tape-out expense from $0.5 million to $1.4 million” .
  • “We expect [ISP] product tape-out related expense and the intellectual property license fees… to reach up to $5.0 million in 2024 compared to that of $2.5 million in 2023” .
  • “We are forecasting $72.2 million of annual revenue for 2024, a 10% increase year over year” .

Q&A Highlights

  • No Q2 2024 earnings call transcript was available; management provided guidance details via the 8‑K/Tanshin (e.g., Q3 revenue ~$18.5M, operating profit ~$4.4M, and rationale for YoY operating profit decline due to tape-out spend) .

Estimates Context

  • S&P Global consensus estimates for THPTF were unavailable due to missing Capital IQ mapping, so comparisons to Street estimates could not be made (S&P Global consensus unavailable).

Key Takeaways for Investors

  • Mix-led margin compression likely persists near term: gross margin down to 52% on surveillance weakness; Q3 operating profit guided lower YoY on tape-out spend .
  • Automotive is the growth engine: Q2 automotive revenue +25% YoY to $12.39M, offsetting surveillance declines; management expects automotive revenue flat QoQ in Q3 with improvement in Q4 .
  • 2H product catalysts: ISP shipments rising; door phone products and enhanced controllers expected to contribute in 2H 2024 and beyond .
  • FY24 guide intact: revenue $72.21M and diluted EPS $0.92 maintained; dividend policy remains $0.50/share for 2024 (50% of prior year non-GAAP net income) .
  • Geographic/customer concentration risk: China remains ~74% of revenue; Customer A at 34% in Q2; End-Customer A at 20%—monitor regulatory and macro developments .
  • Inventory build warrants attention: inventory rose to $12.26M from $11.07M in Q1, reflecting units manufactured exceeding sales—watch for normalization as surveillance inventory adjusts .
  • Near-term trading setup: potential headline risk from Q3 margin guidance vs revenue growth; medium-term thesis tied to ISP/auto design wins and FY24 execution against maintained guide .