Novatek 2024 Q3 Investor Conference

Good afternoon, everyone! A warm welcome to all of you joining Novatek's 2024 Q3 online earnings call. My name is David Chen, and I am the Vice President and Company Spokesperson here at Novatek. I will be your host for today’s conference. Joining me on this call are our Vice Chairman Steve Wong, our CFO Mr. SC So, and our IR Director Tony Zen. Without further ado, let’s dive into the agenda for today’s event.

Agenda Overview

• Presentation of Novatek's Q3 results by IR Director Tony Zen.
• Further insights into Q3 results and guidance for Q4 by Vice Chairman Steve Wong.
• Q&A session with pre-received questions from our investors and live submissions.

Q3 Results Summary by Tony Zen

Thank you, David! Now, let’s take a look at Novatek’s third-quarter results:

Financial Performance Highlights

In Q3, our gross profit reached 11.07 billion, showing a 6.7% increase quarter-over-quarter but down significantly by 99.4% year-over-year. Operating expenses for this quarter stood at 4.83 billion, a decrease of almost 1% compared to the previous quarter and about 5% year-over-year. Our operating income increased by 13.4% quarter-over-quarter but still saw a decline of 12.6% year-over-year.

Revenue Breakdown

Here's how our revenue breaks down:

• Small and Medium Driver IC: 37% in Q3
• Large Display Driver IC: 21%, down from 25% in Q2
• Other Drivers: 42% in Q2

In October, we reported a revenue of 8.52 billion, showing a 10.5% decrease year-over-year and a 4.4% monthly decline. For the first ten months of the year, our total revenue hit 86.0 billion, down 7.28% year-over-year.

Recent Achievements

On a more positive note, I’d like to highlight some recent achievements:

• Awarded the Commonwealth Top 100 Sustainability Award.
• Received the 2024 Talent Sustainability Award.
• Groundbreaking ceremony for our new R&D building upcoming soon!

Guidance for Q4 by Steve Wong

Now, let’s turn the call over to our Vice Chairman, Steve Wong, for further details on our guidance for Q4.

Thank you, Tony. For Q4 2024, we anticipate revenue to be in the range of 24 billion to 25 billion and a gross margin of 37% to 40%. Operating margins are expected to hover between 17.5% and 20.5%.

Questions and Answers

Let’s shift gears and move on to the Q&A session. We've received various questions from our investors, and we’re excited to provide answers. Please remember to send additional questions online!

Selected Q&A Highlights:

• Question: How do you perceive the recovery momentum in the consumer electronics sector for the upcoming quarters?
  Answer: We expect that recovery will be modest. Only smartphones are projected to see growth while others, like TVs and monitors, may see declines.
• Question: What are the growth drivers expected in 2025?
  Answer: The demand for AI-related products will play a critical role in our future growth.
• Question: Can you provide insights on your driver IC production schedule?
  Answer: Our mass production schedule for our OLED driver IC remains on track for mid-2025.

We appreciate everyone’s participation today. Thank you for joining us in today’s conference call, and we wish you all the best. Looking forward to seeing you all soon!