* Projected gross margin (non-GAAP) excludes $0.3 million of stock-based compensation.
** Projected operating margin (non-GAAP) excludes $13.4 million to $14.4 million of stock-based compensation and dispute related expenses.

Conference Call & Webcast:
The Company’s management team will conduct a conference call at 8:00 am Eastern Time on October 31, 2024.

Conference Call Details
Participants must register in advance to join the conference call using the link provided below. Conference access information (including dial-in information and a unique access PIN) will be provided in the email received upon registration.

Participant Online Registration:
https://register.vevent.com/register/BI3e5d77077ee94ca9b9fd61325f52a0e9

A webcast of the call will be available on the Company's website at www.siliconmotion.com.

Discussion of Non-GAAP Financial Measures

To supplement the Company’s unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation and other items, including gross profit (non-GAAP), gross margin (non-GAAP), operating expenses (non-GAAP), operating profit (non-GAAP), operating margin (non-GAAP), non-operating income (expense) (non-GAAP), net income (non-GAAP), and earnings per diluted ADS (non-GAAP). These non-GAAP measures are not in accordance with or an alternative to GAAP and may be different from similarly-titled non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

Our non-GAAP financial measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because they are consistent with the financial models and estimates published by many analysts who follow the Company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target’s performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management’s perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;
• the ability to better identify trends in the Company’s underlying business and perform related trend analysis;
• a better understanding of how management plans and measures the Company’s underlying business; and
• an easier way to compare the Company’s operating results against analyst financial models and operating results of our competitors that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each of these individual items in our reconciliation of these non-GAAP financial measures:

Stock-based compensation expense consists of non-cash charges related to the fair value of restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact of share-based compensation on its operating results.

Restructuring charges relate to the restructuring of our underperforming product lines, principally the write-down of NAND flash, embedded DRAM and SSD inventory valuation and severance payments. 

M&A transaction expenses consist of legal, financial advisory and other fees related to the transaction.

Dispute related expenses consist of legal, consultant, other fees and resolution related to the dispute.

Foreign exchange loss (gain) consists of translation gains and/or losses of non-US$ denominated current assets and current liabilities, as well as certain other balance sheet items which result from the appreciation or depreciation of non-US$ currencies against the US$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures.

Unrealized holding loss (gain) on investments relates to the net change in fair value of long-term investments.

Silicon Motion Technology Corporation Consolidated Statements of Income (in thousands, except percentages and per ADS data, unaudited)
		For Three Months Ended									For the Nine Months Ended
		Sep. 30,			Jun. 30,			Sep. 30,			Sep. 30,			Sep. 30,
		2023			2024			2024			2023			2024
		($)			($)			($)			($)			($)
Net Sales		172,333			210,670			212,412			436,763			612,392
Cost of sales		99,193			113,893			113,142			254,897			331,227
Gross profit		73,140			96,777			99,270			181,866			281,165
Operating expenses
Research & development		41,740			50,788			58,486			117,926			163,666
Sales & marketing		6,862			6,777			7,009			20,715			20,090
General & administrative		8,939			7,215			9,315			20,323			23,003
Loss from settlement of litigation		591			1,250			-			591			1,250
Operating income		15,008			30,747			24,460			22,311			73,156
Non-operating income (expense)
Interest income, net		3,480			4,175			3,518			8,026			10,760
Foreign exchange gain (loss), net		569			245			(488	)		2,030			345
Unrealized holding gain(loss) on investments		(2,828	)		1,855			(602	)		8,053			(355	)
Subtotal		1,221			6,275			2,428			18,109			10,750
Income before income tax		16,229			37,022			26,888			40,420			83,906
Income tax expense		5,642			6,201			6,045			8,639			16,226
Net income		10,587			30,821			20,843			31,781			67,680
Earnings per basic ADS		0.32			0.92			0.62			0.95			2.01
Earnings per diluted ADS		0.32			0.91			0.62			0.95			2.01
Margin Analysis:
Gross margin		42.4	%		45.9	%		46.7	%		41.6	%		45.9	%
Operating margin		8.7	%		14.6	%		11.5	%		5.1	%		11.9	%
Net margin		6.1	%		14.6	%		9.8	%		7.3	%		11.1	%
Additional Data:
Weighted avg. ADS equivalents		33,413			33,684			33,687			33,332			33,627
Diluted ADS equivalents		33,471			33,697			33,700			33,431			33,691