1. EspressifSystems2024Q2&Half-YearReportQ2Half-YearReport20242822ConsolidatedBalanceSheet24ConsolidatedIncomeStatement07KeyFinancialData(Unaudited)07FinancialIndicators(Unaudited)08FinancialAnalysis090703ContentsBuildSmartwithEspressif06CoreTechnologiesBusinessHighlightsManagementReportConsolidatedFinancialStatements(Unaudited)FurtherInformation09BusinessStrategy10KeyProducts-AIoTChips11KeyProducts-ChipMatrix12KeyProducts-M5StackDevelopmentKits13Market14BusinessModel15DeveloperCommunityContent17ResearchandDevelopment19OwnershipofSecurities20Stock-BasedCompensation21RisksandUncertainties2225ConsolidatedCashFlowStatement27ConsolidatedStatementofChangesinEquity28TermsandConditionsoftheReport04CoreCompetitiveness29Listofabbreviations3BUILDSMARTWITHESPRESSIFESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|Asapublic,multinational,fablesssemiconductorcompany(EspressifSystems,SSE:688018.SH),wedevelopcutting-edge,low-powerwirelesscommunicationchipsets.OurAIoTsolutionsaregreen,versatile,andcost-effective.Wehaveaclosed-loopdevelopmentcycleforcoretechnologies,includingWi-Fi&BluetoothLE&IEEE802.15.4protocols,RF,RISC-VMCUs,AIalgorithms,operatingsystems,toolchains,AIoTframeworks,andCloudservices.BuildSmartwithEspressif1Billion+GlobalIoTChipShipment195+PatentsInAIoTTechnologyGlobalLeaderInWi-FiMCUMarket2Million+ActiveEcosystemFollowersandDevelopers10,000+SatisfiedCustomersWorldwide4CORECOMPETITIVENESSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|CoreCompetitivenessEspressif'sbusinessmodelfollowsaB2D2B(Business-to-Developer-to-Business)approach,makingbranddevelopmentacrucialcomponentofourcompany'sstrategy.Productstrength,differentiation,cost-effectivenessandcommunitysupportallcontributetothepowerofourbrand.ExceptionalICDesignCapabilityProductStrengthFull-StackCost-EffectivenessCommunitySupportFull-StackEngineeringCapabilitySuperiorCost-EffectiveandStableSupportExtensiveDeveloperCommunitySupportBrandAwareness5MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|Full-StackEngineeringCapabilityEspressifpossessescomprehensiveengineeringdevelopmentcapabilitiesthatspanfromIPdevelopmenttocompletechipdesign,operatingsystems,firmware,softwareframeworks,applicationsolutions,hardwaredesign,edgeAI,cloud,andapps.Thisfull-stackengineeringexpertiseallowsEspressiftoofferhighlyintegratedsolutionsthatmeetawiderangeofcustomerneeds.TheabilitytocontrolandoptimizeeverylayerofthetechnologystackisuniqueintheindustryandenablesEspressiftodeliversuperiorproductsandservicesthatareseamlesslyintegratedandhighlyefficient.BrandAwarenessTheESP32andEspressifbrandshaveastrongsenseofrecognitionamongusers.Thisrecognitionhasbecomeakeyfactorinourcompetitiveadvantageandsuccess.UsersidentifywiththeESP32brandduetoitsreliability,performance,andversatility,whichhavebeenprovenacrossvariousapplicationsandindustries.Thisstrongbrandpowernotonlyfosterscustomerretentionbutalsoattractsnewusers,therebysolidifyingEspressif'spositioninthemarket.ExceptionalICDesignCapabilityEspressifindependentlydesignsanddevelopsitsownchipproducts,withcoreIPsbeingself-developed.Thesechipsareequippedwithrichfeatures,ensuringthatEspressif’sproductsstandoutinthemarketandavoidthepitfallsofhomogenizedcompetition.Bycontrollingtheentiredesignprocess,Espressifcaninnovaterapidlyandintroduceuniquefunctionalitiesthatsetourproductsapartfromcompetitors,providingadistinctiveedgeintheIoTsemiconductorindustry.02550751002019-072024-07ESP32GoogleTrends0255075100EspressifGoogleTrends2019-072024-07SuperiorCost-EffectiveandStableSupportEspressif'sproductsareknownfortheirhighperformanceandlowcost,makingthemcompetitiveinthemarket.Weprovidethecostefficiencynecessarytopromotelarge-scalecommercializationindownstreamindustries.Additionally,weensurethelong-termavailabilityofourproductsandofferstableandenduringsoftwaresupport,ensuringthatcustomerscanrelyontheirinvestmentsforextendedperiods.Thiscommitmenttovalueandreliabilitystrengthenscustomertrust.ExtensiveDeveloperCommunitySupportEspressifhasgarneredsupportfromavastcommunityofprofessionalengineerswhoarefamiliarwithEspressif'sdevelopmentplatformandactivelypromoteitsvalueproposition.ThislargeandengagedcommunitynotonlyaidsintherapidadoptionanddisseminationofEspressif’stechnologiesbutalsocontributestocontinuousimprovementthroughfeedbackandsharedknowledge.TherobustcommunitysupportamplifiesEspressif'smarketpresenceandenhancesourreputationasatrustedandinnovativeleaderintheindustry.6FACTSABOUTESPRESSIFESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|CoreTechnologiesTEXTTEXTCORETECHNOLOGIESESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ESP8266,ESP32,ESP32-S,ESP32-C,ESP32-HandESP32-PSeriesEspressifoffersintegrated,reliable,andenergy-efficientSoCswithrobustimageandvoicedataprocessingcapabilitiesforWi-Fi,BluetoothLowEnergy,ThreadandZigbee,cateringtovarioussegmentsoftheIoTmarket.SoCsCloudESPRainMakerAcomprehensive,development-freeandmaintenance-freeAIoTsolutionforprivateClouddeployment.Itisanall-inclusivesolutionthatcoverseverythingfromtheunderlyingchiptodevicefirmware,third-partyvoice-assistantintegrations,mobileappsandthedashboard.CustomerscanbuildtheirownAIoTdevicesandecosystem,withESPRainMaker.AISoftwareMatterOne-stopMatterSolutionThisistheculminationofEspressif’songoingcontributiontotheMatterplatforminvariousareas,includingprotocolformulation,corestackimplementationandcertificationtestevents.OSESP-IDFEspressif’sofficialIoTDevelopmentFramework.Itprovidesaself-sufficientSDKforanygenericapplication-developmentontheseplatforms,usingprogramminglanguagessuchasC。
2. andC++.ESP-IDFcurrentlypowersmillionsofdevicesinthefield,andenablesbuildingavarietyofnetwork-connectedproducts,rangingfromsimplelightbulbsandtoystomajorappliancesandindustrialdevices.Withouropen-sourcesoftware,suchasEspressif'sIoTDevelopmentFrameworkESP-IDF,AudioDevelopmentFrameworkESP-ADF,MeshDevelopmentFrameworkESP-Mesh-Lite,CloudConnectivityPlatformESPRainMaker,FacialRecognitionDevelopmentFrameworkESP-WHO,andVoice-ControlledAssistantESP-Skainet,wehavedevelopedaframeworkforbuildingAIoTapplications,whichisbothcompleteandinnovative.3AAudioAlgorithmsincludingAcousticEchoCancelation(AEC),AudioNoiseSuppression(ANS)andAutomaticGainControl(AGC),whichsignificantlyreducenoiseandechoincalls,keepinghigh-qualityvoiceintercomsstableatalltimes.AFE(AudioFront-End)Algorithmsqualifiedasa“SoftwareAudioFront-EndSolution”forAmazonAlexaBuilt-indevices.7BUSINESSHIGHLIGHTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|KeyFinancialData(Unaudited)BusinessHighlightsThreeMonthsEndedSixMonthsEndedJun30,2024Jun30,2023Jun30,2024Jun30,2023Grossmargin44.11%40.97%43.20%40.85%R&D-to-salesratio21.54%26.57%23.76%26.71%EBITDAmargin19.08%9.74%17.78%10.26%Netincomemargin18.54%9.60%16.60%9.68%WeightedROE7.91%3.43%FinancialIndicators(Unaudited)ThreeMonthsEndedSixMonthsEndedCNYJun30,2024Jun30,2023Jun30,2024Jun30,2023ConsolidatedStatementofIncomeDataRevenue533,020,855348,880,535920,212,266666,997,977Grossprofit235,129,242142,936,609397,496,784272,454,655Sellingexpenses16,063,29013,351,34828,915,85125,524,250Generalandadministrativeexpenses17,125,84615,031,92831,997,65428,946,961Researchanddevelopmentexpenses114,836,19092,701,560218,682,370178,184,574Netincome98,797,58733,482,914152,713,07064,570,344NetincomeattributabletoEspressif97,726,98233,482,914151,642,46464,570,344Earningspershare:Basic1.81160.8059Diluted1.81160.8059Jun30,2024Dec31,2023ConsolidatedBalanceSheetDataWorkingcapital1,101,575,410999,068,356Totalassets2,321,889,8302,203,800,366Long-termobligations95,899,88874,166,946Totalshareholders’equity1,962,656,1981,913,000,228ThreeMonthsEndedSixMonthsEndedJun30,2024Jun30,2023Jun30,2024Jun30,2023ConsolidatedCashFlowDataNetcashprovidedbyoperatingactivities-13,668,17266,406,199-25,676,83499,699,642Non-GAAPAdjustmentStock-basedcompensation8,929,7629,643,20115,331,19012,267,568Non-GAAPnetincome107,727,34943,126,115168,044,25976,837,912OverallGMChipGMModule&DevKitsGMEBITDAMarginSG&Aas%ofsalesR&Das%ofsales23.8%6.6%17.8%38.9%49.0%43.2%26.7%8.2%10.3%37.5%47.5%40.8%H12023H12024BUSINESSHIGHLIGHTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|FinancialAnalysisEspressif’stotalrevenueinthefirsthalfof2024wasCNY920.2million,markinganincreaseof38.0%fromCNY667.0millioninthefirsthalfof2023,duetotheexpansionofproductcategoriesandnewcustomerdesign-win.ThenetincomeattributabletoEspressifwasCNY151.6million,whichmarkedanincreaseof134.8%year-on-year,mainlyduetotheincreaseofrevenue.Theoverallgrossmarginwas43.2%,inwhichthegrossmarginforAIoTchipswas49.0%.Benefitingfromthelowmaterialpricesandthehigherinitialgrossmarginfromnewcustomers,thegrossmarginofbothchipsandmodules&DevKitsimproves.Downstreammodulemanufacturersareexpandingtheircustomerbase,withmoreprojectsstartingtouseEspressifchips.Asakeyplayerinthesupplychain,modulemanufacturerspurchasechipsdirectlyfromEspressif.Theirbusinessgrowthhasdrivenanincreaseinchiprevenue.Additionally,theincreaseduseofchipsinsmalldevicesleadstoahigherproportionofchipsales,ultimatelyresultinginanoverallincreaseinthegrossmargin.Weestablishedamid-termtargetof40%forouroverallgrossmargintofacilitatefundingforourfutureR&Dexpenses.RevenuebyAreaRevenuebySalesModeTop-5CustomerConcentrationRateRevenuebyProductCategoryKeyFinancialIndicators74.2%China'sMainlandRestoftheWorldH12024H1202365.6%57.8%33.2%41.4%ChipModule&DevKitsOthers1.2%0.8%2020202120222023H1202425.0%28.1%26.4%29.0%42.2%872.4%DirectIndirectEspressifSystems’businessstrategyemanatesfromourservice/productareasandourengagementwiththedeveloperecosystem.Ourproductandserviceareasincludehardwares,OS-leveldevelopmentenvironments,softwaretools,applicationsolutions,andvalue-addedservices,suchasCloudandMatter.Theabove-mentionedproductsensurethatweareintheheartofnumerouscommercialAIoTapplicationsindifferentmarkets,includingsmarthome,consumerelectronics,industrialautomation,healthcare,etc.9ESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|BusinessStrategyManagementReportProductsSolutionsValue-addedservicesSoCsModulesDevKitsHMISmartDisplaysAudioSolutionsFaceRecognitionLow-PowerSolutions…CloudserviceMatterSolutionOS-leveldevelopmentenvironments&softwaretoolsCustomersBrandsOEM/ODMsSolutionprovidersMakersModulemanufacturer…MANAGEMENTREPORTMANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|KeyProducts-AIoTChipsEspressifisrecognizedasamarketleaderinthefieldofWi-FiMCUs.WereleasedourfirstWi-FiMCUin2014,andourfirstWi-Fi/BluetoothLEcombochipin2016.In2020,wesuccessfullydevelopedourownRISC-VMCUcore,addingittoourproductportfolio,whilein2021,wereleasedourfirstThread/Zigbee/BluetoothLE5combochipanda2.4GHzWi-Fi6chip.In2022,wereleasedourfirst2.4&5GHzWi-Fi6chip.In2023,werevealedESP32-P4,adual-coreRISC-VMCU,expandingthecurrentportfoliotoaddressthehigh-performancecomputationneedsofIO-Rich,HMI,andAIoTapplications.In2024,weannouncedESP32-H4,alow-powerSoCwith802.15.4&Bluetooth5.4(LE),whichcaterstoincreasingdemandsforlow-powerwirelessdevices,boastingsignificantupgradesinpowerconsumption,connectivityfeatures,andmemoryexpansioncapabilities.Infact,wehavebeenconstantlydiversifyingourproductportfol。
3. io,introducingnewsolutionsthroughournumerousinvestments.Thus,wenowhavevariousproductlinesinthemainshort-andmedium-rangeconnectivitytechnologiesandourproductrangehasexpandedtoAIoTSoCs.Ourcoretechnologiesareself-developed,includingconnectivityIPs,RFcomponents,RISC-VIPs,softwareframeworks,tools,AIfunctionsetc.WealsoprovideIoTmodulesbasedonourchips.Thebenefitforcustomersisthattheycangetdirectsupportfromus,shorteningandoptimizingtheirsupplychain,evenincaseofchipshortages.10KeyTechnologiesWi-Fi6E5GHzWi-Fi62.4GHzWi-Fi6Wi-Fi4RISC-VMCU32-bitSingle-Core96MHz32-bitSingle-Core120MHz32-bitSingle-Core160MHz32-bitSingle-Core240MHzTechnicalBreadthInprogress32-bitMultiple-CoreTechnicalDepthConnectivityComputingMediumRangeAI32-bitDual-Core400MHzThreadZigbeeShortRangeBluetooth5.2(LE)Bluetooth5(LE)Bluetooth4.2Bluetooth5.3(LE)Bluetooth5.4(LE)AIVoiceWake-upOfflineVoiceCommandsFaceandObjectRecognitionMultimediaH.264EncoderMANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|11KeyProducts-ChipMatrixHigh-PerformanceCost-EffectiveNewRelativelyNewClassicESP826632-bitTensilicaMCUSingle-Core@160MHzESP826632-bitRISC-VMCUSingle-Core@120MHzESP32-C232-bitRISC-VMCUSingle-Core@160MHzESP32-C332-bitRISC-VMCUSingle-Core@96MHzESP32-H232-bitRISC-VMCUSingle-Core@160MHzESP32-C632-bitXtensaMCUSingle-Core@240MHzESP32-S2ESP32-S232-bitRISC-VMCUDual-Core@400MHzESP32-P4H.264encodingAI32-bitRISC-VMCUDual-Core@96MHzESP32-H4ESP32ESP3232-bitXtensaMCUDual-Core@240MHz32-bitXtensaMCUDual-Core@240MHzESP32-S3ESP32-S3AI32-bitRISC-VMCUSingle-Core@240MHzESP32-C532-bitRISC-VMCUSingle-Core@160MHzESP32-C61RISC-V12ESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|EspressifacquiredamajoritystakeinM5Stackin2024Q2.M5Stackisrenownedforitsinnovativeapproachtohardwaredevelopmentandoffersamodular,open-sourceplatformthatsimplifiesthecreationofIoTandembeddedsystemsolutions,greatlyenhancingdeploymentefficiency.TheM5Stackecosystemisbuiltarounditsflagshipmaincontrolmodule,poweredbyEspressif’sallESP32seriesofchips,highlightingthedeeptechnicalsynergybetweenthetwocompanies.M5Stack’sproductportfolioprimarilycomprisescontrollersandotherhardwaremodulesneededinIoTapplicationsolutionsandismainlysoldtotheindustrial,education,anddevelopermarkets.M5Stackmaintainsanimpressivepaceoflaunchingonenewhardwareproducteveryweek.Adiversifiedproductportfoliowithapproximately300SKUshelpsdevelopersrapidlyprototypeendproducts,acceleratingthedesign-inprocessforEspressif'sproductswithendcustomers.ThisultimatelybringsmorebusinessopportunitiesforEspressif'schipsandmodules.KeyProducts-M5StackDevelopmentKitsControllerVoltage&AmperageMeterAirQualityKitCardputerCameraPoECameraLoraUnitLidarBotRotaryKnobModuleSensorKitsWeightI2CUnit……MANAGEMENTREPORTMANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|MarketThemarketforwirelessSoCsistrulydiverse,includingapplicationsforsmarthomes(e.g.,smartlights,airconditioners,ovens,coffeemachines,etc.),consumerelectronics(e.g.,smartspeakers,drones,etc.),industrialautomation(e.g.,mechanicalarms),smartagriculture(e.g.,soilPHdetector,CO2detector,etc.),healthcare(e.g.,monitoringdevicesfordiabetes,bloodpressure,etc.),energycontrol(solarenergydevices,EVchargers,etc.),theinternetofvehicles(OBDdevices,dashboards,etc.),andeducation(talkingpens,interactivewhiteboards,etc.).Weseemtobewitnessinganeconomicrecovery,withbothnewandexistingcustomersshowinggrowthinbusiness.Atthesametime,wehavealsoseentheemergenceofapplicationsinnewareas,suchasbeautydevices.Afterexperiencingthelowpointof2023,clientsinthenewenergysectorhavealsobeguntoshowsignsofrecovery.13SmartHomeSmartOvensSmartSpeakersIndustrialAutomationMechanicalArmsHealthcareMedicalDetectorsIntelligentinstrumentpanelTalkingPensSmartAgricultureSoilPHDetectorInternetofVehiclesEnergyManagementConsumerElectronicsEducationSmartSolarPanelsMANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|BusinessModelEspressifhasdeployedtheBusiness-to-Developertypeofmarketing,notonlybecauseithasgainedprominenceinrecentyears,butalsobecauseithasproventobemoreeffectivesincetheinfluenceofdevelopersonorganizationsofallsizeshasgainedtraction.Inotherwords,mostdevelopersareR&Demployeesinvariouscompaniesandbringforthbusinessopportunitiesfromthecompaniestheyworkfor.Thisway,thedeveloperecosystemwehavecreatedatEspressifdemonstrateshowthevalueofnetworkscangrowexponentially:Themoredevelopersweattractascustomers,themorehardwareandsoftwaresolutionswegenerate.Themoresuccessfulhardwareandsoftwaresolutionswecreate,themoreourreputationspreadswithpositivefeedbackfromhappycustomers/developers.Theabove-mentionedinteractionbetweenpeopleinournetworkpromptsthecreationofmorecontent,which-inturn-attractsmoreusers/developerssearchingfornewcontent.Likewise,otherthird-partydevelopmentplatformsjoinourecosystemandbringinnewdevelopers,asourinfluencecontinuestogrow.HavingsuccessfullyappliedtheB2D2Bmodel,EspressifcannowfocusonR&Dinvestments,whilemaintainingasmallbusinessteamthatsupportsalargenumberofcustomersdirectly.Infact,mostofourrevenueisgainedthroughdirectsales.Business-to-Developer-to-Business(B2D2B)14GlobalCodeHostingPlatformGlobalVideoSharingPlatform115,50021,4004,317KESP32andESP8266ProjectsEspressifFollowersViewsoftheMostPopularESP32VideoChineseCodeHostingPlatformChineseVideoSharingPlatform11,84534,6111,374KESP32andESP8266ProjectsEspressifFollowersViewsoftheMostPopularESP32VideoSocialNetworkingSiteSocialNetworkingPlatform87,00014,34028,733ESP32GroupMembersEspressifFollowersM5StackFollowers15MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEAR。
4. REPORT|DeveloperCommunityContentTEXTNewDiscussionsAroundtheClock"Micropython:Pythonparaprogramarmicrocontroladoresysistemasembebidos"Alolargodeestecursoaprenderemosaprogramaraplicacionesenplataformascomom5StackyESP32.CursotutorizadoyonlineenelCampusTecnológico#Formación#MicroPythonHowtodoObjectDetectionusingESP32-CAMandEdgeImpulseYOLOModelSohereismylatesttutorialonhowtousetheESP32CAMforobjectrecognition.Ihaveearlierbuiltsomethingsimilarwith…Postedon10Jul2024comments/1dzruxz/comment/lchld04/Postedon10Jul2024LptrìnhESP32-Bài7-CáchsdngBlynkIOTtrênESP32truynnhndliuHngdncáchsdngBlynkIOTtrênESP32truynnhndliukhilàmthitbIOT.status/1810736626588410204Postedon10Jul2024Postedon10Jul2024Postedon10Jul2024Postedon10Jul2024ESP32S3+LVGL+GUIGuider进UI图形设计全过程教学|智能表|桌时钟|DIYESP32-ADFwithMAX98357AusingplatformioCumulativeNumberofGitHubESP32Projects2017-012024-0769.5KNumberofRedditESP32GroupMembers2022-042024-0787.0Kv=VK3N7_Hjsu4Postedon10Jul202416MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|BooksaboutESPProductsTEXTMorethan200booksonhowtouseESPproductscanbefoundinthedevelopercommunityandcoveroveradozenlanguages.17MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ResearchandDevelopmentR&DinvestmentisattheheartofEspressifSystems’development.Duringthereportingperiod,R&DcostCNY218.68million,whichmarkeda22.73%increasecomparedwiththatof2023.Atthesametime,theR&D-to-salesratiowas23.76%inthefirsthalfofthisfiscalyear(2024).Espressif’sescalatingR&DinvestmentcostcanbeattributedtotheincreaseinthenumberofR&Dstaffandtheirsubsequentcompensationlevel,whichincreasedsignificantlyyear-over-year.Weseektoprotectourtechnologiesthroughacombinationofpatents,softwarecopyrightandtradesecrets.ByJune30,2024,theCompanyhadbeengranted195patents.WecontinuetosubmitnewpatentapplicationsrelatingtoourrecentR&Dinnovations.R&DInvestmentListofIntellectualPropertyRightsAppliedandGrantedH12024CumulativenumberAppliedforGrantedAppliedforGrantedInventionpatents1613595Utilitymodelpatents243331Designpatents001111Softwarecopyright332626Others546832Total1117273195SixMonthsEndedCNYJune30,2024June30,2023change(%)R&DExpenses218,682,370178,184,57422.73R&D-to-salesratio23.76%26.71%273Appliedfor195GrantedN.B.:Thenumberofpatentsthathavebeen“appliedfor"doesnotincludetherejectedapplicationsinChina,orthePCTpatentapplicationsnotsubmittedtoanyparticularcountry,oranypatentapplicationsbeyondthereportingperiod.Thenumberof“granted"patentsincludesthosewithexpiredIPrights.Thecategoryof“others”includesoverseas(non-Chinese)patentapplications,i.e.thePCTpatentapplications,U.S.patentapplicationsthroughthePCTrouteortheParisConventionroute,aswellaspatentapplicationsinIndia.IntellectualProperty18MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|R&DEmployeesWeareproudofourtalented,diverseandmulticulturalworkforce.ByJune30,2024,acrossourninebranchesinfivecountries,includingChina,India,theCzechRepublic,BrazilandSingapore,wehademployed728people,morethan71%ofwhomareinengineeringroles.Meanwhile,wehaveexpandedourbusinessbeyondWi-FiMCUs,thusofferinginnovativesolutionstowirelessconnectivityandprocessing,includingRF,RISC-VMCU,Wi-Fi6,BluetoothLE,Thread,Zigbee,Matter,AIandotherIoT-relatedtechnologies.Sincetheresearchanddevelopmentofsoftwareandhardwareareinextricablyintertwined,weconstantlyinvestinsoftwaretechnology,too.Hence,wearecurrentlyfocusedonAIoTtechnologies,includingtoolchains,compilers,operatingsystems,applicationframeworks,AIalgorithms,Cloud,APPs,etc.OuraimistomakeEspressifaone-stopsolution-providerofferinganythingrelatingtoAIoT.SixMonthsEndedJune30,2024June30,2023R&Demployees519455R&Demployeesasapercentageoftotalemployees71.29%76.99%TotalcompensationofR&Demployees(CNYinthousands)169,820135,244AveragecompensationofR&Demployees(CNYinthousands)339302R&DExpensesR&DEmployees2020202120222023H12024R&Dexpenses(inmillion)R&D-to-salesratio23.8%28.2%26.5%19.6%23.2%21940433727219323.8%28.2%26.5%19.6%23.2%2020202120222023H12024R&DemployeesR&Demployees%71.3%77.4%76.1%75.0%75.7%51948444038834071.3%77.4%76.1%75.0%75.7%MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|OwnershipofSecuritiesShareholderStructureasofJune30,2024SharetypesOrdinaryshareSharecapital112,188,505(asofJune30,2024)ListingShanghaiStockExchange(SSE)Ticker688018.SHListingDate2019-07-22ShareholderShareNumbersPercentage(%)Espressif(HongKong)InvestmentLtd.46,266,14241.24ShinvestHoldingLtd.3,116,6512.78HongKongSecuritiesClearingCompanyLimited2,544,9252.27WisdomshireAssetManagementCo.,Ltd.-WisdomshireYoufuPrivateEquitySecuritiesInvestmentFundNo.11,641,0241.46NingboMeishanFreeTradePortLeTunInvestmentManagementPartnership(LimitedPartnership)1,464,4421.31WisdomshireAssetManagementCo.,Ltd.-WisdomshireYoufuPrivateEquitySecuritiesInvestmentFundNo.31,333,6881.19ROBINAWOOD1,097,0400.98SPD-DebangSemiconductorIndustryHybridInitiatedSecuritiesInvestmentFund923,2510.82ICBC-AXALIFE-Long-termDividendProduct880,5310.78GTJAFutures-GuolianAnCSISemiconductorProductsandEquipmentTradableOpen-endedIndexSecuritiesInvestmentFund808,5440.72Top10shareholders60,076,23853.55EspressifSystems(Shanghai)Co.,Ltd.RepurchaseSpecialSecuritiesAccount2,299,1482.05Otherpublicshareholders52,112,26746.45Totalofoutstandingshares112,188,505100.0019Basicinformationofsecurities20MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|Stock-BasedCompensationEspressifhaseightongoingrestrictedstockincentiveplans.ThefairvalueoftherestrictedstockincentiveplansiscalculatedbyusingtheBlack-Scholesmodel.Thefollowingtablepresentsd。
5. etailsofstock-basedcompensationcostsacknowledgedintheConsolidatedStatementsofIncome.PlanAwardTypeNumberofUnderlyingSharesRatioofUnderlyingShares(%)GrantPrice(CNY)2019restrictedstockincentiveplanClassIIrestrictedstock199,6200.177943.592020restrictedstockincentiveplanClassIIrestrictedstock140,5980.125365.022021restrictedstockincentiveplanClassIIrestrictedstock749,2280.667865.642022restrictedstockincentiveplanClassIIrestrictedstock819,1090.730183.862023IrestrictedstockincentiveplanClassIIrestrictedstock87,4660.078042.142023IIrestrictedstockincentiveplanClassIIrestrictedstock764,5360.681527.862023IIIrestrictedstockincentiveplanClassIIrestrictedstock94,4100.084245.362024restrictedstockincentiveplanClassIIrestrictedstock1,177,9601.050035.00SixMonthsEndedCNYJun30,2024Jun30,2023Sellingexpenses663,608591,697G&Aexpenses591,327535,743R&Dexpenses14,076,25511,140,129Totalstock-basedcompensation15,331,19012,267,568N.B.:Theabove-mentionednumberswerecalculatedonJune30,2024.Thegrantpricehasbeenadjustedduetocashdividenddistributionandcapitalizationofreserves.RestrictedStockIncentivePlansStock-BasedCompensationMANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|RisksandUncertaintiesFinancialRiskTheCompanyperformsperiodiccreditevaluationsofitscustomers’financialconditionandgenerallyrequiresofitscustomersnocollateral.TheCompanyprovidesanallowanceforexpectedcreditlosses,basedonthenetamountexpectedtobecollectedonsuchreceivables.Losseshavenotbeensignificantforanyoftheperiodspresentedinthisreport.R&DRiskEspressif’sresearchanddevelopmentstrategyisfocusedonleveragingnewtechnologiesforthecreationofinnovativeAIoTproducts.Anydelaysorchangesinthedevelopmentofthesetechnologiesbyourindustrypartners,orafailureofourproductstoachievemarketacceptance,couldcompromiseourcompetitiveposition.CompetitorsAsthemarketforAIoTproductsgrows,wefaceanincreasingantagonismfromrelativelylargecompetitors,suchasRealtek,MediaTek,Infineon,NXP,Qualcommandothers.Intensecompetitionfromcurrentplayers,aswellasnewentrants,suchasSiliconLabsandNordic,mayreduceourproductsalesandmarketshare.SuppliersAsignificantportionoftheCompany’sproductsisfabricatedbytheTaiwanSemiconductorManufacturingCompanyLimited(TSMC).TheinabilityofTSMCtodeliverwaferstotheCompanyinatimelymannercouldimpacttheproductionoftheCompany’sproductsforacertainperiodoftime,whichcouldhaveanadverseeffectontheCompany’sbusiness,financialcondition,resultsofoperationsandcashflow.CustomersTheCompanysellsdirectlytoendcustomers,distributors,solutionprovidersandcontractmanufacturers.Ourcustomersareamixofseveralbigcustomersandnumeroussmallcustomers.Theconcentrationratioforourtop-fivecustomerswas24.96%inH12024.21MANAGEMENTREPORTESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|22CONSOLIDATEDFINANCIALSTATEMENTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ConsolidatedBalanceSheet(Unaudited)ConsolidatedFinancialStatements(Unaudited)CNYJune30,2024December31,2023AssetsCurrentassets:Cashandcashequivalents488,346,387464,011,234Heldfortradingfinancialassets90,315,219Notesreceivable24,802,56742,082,006Accountsreceivable,net313,074,690251,641,263AccountsreceivablefinancingPrepayments59,807,4289,802,407Otherreceivables11,784,9799,157,910Including:InterestreceivableInventories376,292,586242,352,587Othercurrentassets90,800,518106,338,922Totalcurrentassets1,364,909,1551,215,701,548Non-currentassets:Debtinvestment576,383,600753,024,500Investmentinotherequityassets30,967,84036,079,840Othernon-currentfinancialassets34,879,34734,879,347Fixedassets86,385,16376,401,004Right-of-useassets18,988,09515,937,207Intangibleassets28,241,8901,633,298Goodwill75,619,024Long-termdeferredexpenses15,050,4169,337,814Deferredincometaxassets90,465,30060,805,808Totalassets2,321,889,8302,203,800,366GoodwillisprimarilyattributabletotheassembledworkforceandanticipatedsynergiesandotherstrategicbenefitsexpectedfromintegratingM5Stack.CONSOLIDATEDFINANCIALSTATEMENTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ConsolidatedBalanceSheet(Unaudited)23CNYJune30,2024December31,2023Liabilities&Shareholders’EquityCurrentliabilities:Accountspayable116,385,59979,841,809Contractliabilities28,101,11013,318,710Payrollpayable71,516,379102,238,914Taxespayable679,050615,415Otherpayable32,807,19411,525,208Non-currentliabilitiesduewithinoneyear12,336,3168,591,447Othercurrentliabilities1,508,097501,689Totalcurrentliabilities263,333,745216,633,192Non-currentliabilities:Leaseliabilities7,308,0578,454,747Provisions615,637627,089Deferredincometaxliabilities87,976,19465,085,110Totalliabilities359,233,632290,800,138Owners’equity(orshareholders'equity):Sharecapital112,188,50580,789,724Capitalreserves1,330,894,9261,358,508,382Less:Treasurystock213,248,731146,969,563Othercomprehensiveincome20,989,09024,067,306Surplusreserves55,460,19555,460,195Retainedearnings626,316,607541,144,184TotalEspressifshareholders’equity1,932,600,5911,913,000,228Non-controllinginterests30,055,607Totalequity1,962,656,1981,913,000,228Totalliabilitiesandequity2,321,889,8302,203,800,366CONSOLIDATEDFINANCIALSTATEMENTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ConsolidatedIncomeStatement(Unaudited)ThreeMonthsEndedSixMonthsEndedCNYJune30,2024June30,2023June30,2024June30,2023Revenue533,020,855348,880,535920,212,266666,997,977CostofRevenue297,891,612205,943,925522,715,482394,543,321GrossProfit235,129,242142,936,609397,496,784272,454,655Taxesandsurcharges409,3961,528,087866,9243,314,588Sellingexpenses16,063,29013,351,34828,915,85125,524,250Generalandadministrativeexpenses17,125,84615,031,92831,9。
6. 97,65428,946,961Researchanddevelopmentexpenses114,836,19092,701,560218,682,370178,184,574Financialexpenses1,492,903-310,276-408,615-3,959,365Including:Interestexpenses205,800242,706443,113506,822Interestincome3,309,8862,636,6287,173,4104,650,650Add:Otherincome4,948,006187,75918,164,613577,635Investmentincome(mark"-"forloss)5,327,7265,228,86911,636,08111,487,416Incomefromchangesinfairvalue(mark"-"forloss)-71,822164,550172,379Creditimpairmentlosses(mark"-"forloss)-50,844-50,844Assetsimpairmentlosses(mark"-"forloss)43,693-1,722,667-209,761-2,660,838Assetsdisposalincome(mark"-"forloss)-506-349-5584,390OperatingIncome95,397,87124,492,125146,982,13150,024,629Add:Non-operatingrevenue1,589164,5721,589164,572Less:Non-operatingexpenses4,673,6333,0714,699,7295,536Incomebeforeincometaxes90,725,82724,653,626142,283,99150,183,665Provision(benefit)forincometaxes-8,071,760-8,829,288-10,429,078-14,386,678NetIncome98,797,58733,482,914152,713,07064,570,344NetIncomeattributabletonon-controllinginterests1,070,6061,070,606NetIncomeattributabletoEspressif97,726,98233,482,914151,642,46464,570,344EarningspershareBasic1.81160.8059Diluted1.81160.8059ThreeMonthsEndedSixMonthsEndedCNYJune30,2024June30,2023June30,2024June30,2023NetIncome98,797,58733,482,914152,713,07064,570,344Othercomprehensiveincome(loss),aftertaxChangestothefairvalueofinvestmentinotherequityinstruments9,486,0009,486,000Currencytranslationreserves1,279,81219,755,010-773,01614,486,498Othercomprehensiveincome(loss)10,765,81219,755,0108,712,98414,486,498Othercomprehensiveincome(loss)attributabletonon-controllinginterestsComprehensiveincome109,563,39953,237,924161,426,05379,056,842Comprehensiveincomeattributabletonon-controllinginterests1,070,6061,070,606ComprehensiveincomeattributabletoEspressif108,492,79353,237,924160,355,44879,056,84224CONSOLIDATEDFINANCIALSTATEMENTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ConsolidatedCashFlowStatement(Unaudited)ThreeMonthsEndedSixMonthsEndedCNYJune30,2024June30,2023June30,2024June30,2023OperatingActivitiesCashfromsalesofmerchandiseandprovisionofservices539,670,869351,729,950979,986,644668,675,823Taxrefund14,348,73511,113,91222,039,08833,504,703Otherreceivedcashrelatedtooperationalactivities5,459,3974,349,27613,066,91910,494,111Subtotalofcashinflowfromoperationalactivities559,479,001367,193,1381,015,092,651712,674,636Cashpaidformerchandiseandservices457,075,056177,404,495744,342,308322,438,347Cashpaidtoandforemployees80,517,00474,283,588235,965,098208,755,881Cashpaidfortaxesandsurcharges6,081,31322,795,8077,382,46536,251,089Otherpaidcashrelatedtooperationalactivities29,473,80026,303,04953,079,61445,529,677Subtotalofcashoutflowfromoperationalactivities573,147,173300,786,9391,040,769,485612,974,994Netcashprovidedbyoperatingactivities-13,668,17266,406,199-25,676,83499,699,642InvestingactivitiesCasharisingfromthedisposalofinvestments185,297,048465,055,370455,877,1711,282,789,551Casharisingfrominvestmentincome3,450,7792,075,2814,235,2293,829,647Netcasharisingfromthedisposaloffixedassets,intangibleassetsandotherlong-termassets2,2101,4009,66419,250Otherreceivedcashrelatingtoinvestmentactivities1,213,0001,342,0001,739,0001,653,000Subtotalofcashinflowfrominvestmentactivities189,963,036468,474,051461,861,0631,288,291,448Cashpaidforthepurchaseandconstructionoffixedassets,intangibleassetsandotherlong-termassets16,924,48510,053,76825,200,08124,779,027Cashpaidforinvestments102,175,231488,000,000222,175,2311,351,000,000Otherpaidcashrelatingtoinvestmentactivities600,000300,0001,600,000600,000Subtotalofcashoutflowfrominvestmentactivities119,699,716498,353,768248,975,3111,376,379,027Netcashprovidedbyinvestmentactivities70,263,321-29,879,716212,885,752-88,087,579FinancingactivitiesCasharisingfromtheissuanceofcommonstock10,949,95623,229,13010,949,95623,957,017Including:CasharisingfromsubsidiariesabsorbinginvestmentsbyminorityshareholdersSubtotalofcashinflowfromfinancingactivities10,949,95623,229,13010,949,95623,957,017Cashpaidforthedistributionofdividendsandprofits,orpaymentofinterests78,261,24178,261,241Including:dividendsandprofitspaidtominorityshareholdersbysubsidiariesOtherpaidcashrelatingtofinancingactivities3,716,8873,732,55696,838,7797,064,234Subtotalofcashoutflowfromfinancingactivities81,978,1283,732,556175,100,0207,064,234Netcashprovidedbyfinancingactivities-71,028,17219,496,574-164,150,06416,892,783Impactoffluctuationinexchangeratesoncashandcashequivalents-8,037,25210,632,571-13,753,45812,103,780Netincreaseincashandcashequivalents-22,470,27566,655,6289,305,39640,608,625Add:Cashandcashequivalentatthecommencementoftheperiod506,706,793324,630,351474,931,121350,677,354Cashandcashequivalentsattheendoftheperiod484,236,518391,285,979484,236,518391,285,97925CONSOLIDATEDFINANCIALSTATEMENTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ConsolidatedCashFlowStatement-IndirectMethod(Unaudited)ThreeMonthsEndedSixMonthsEndedCNYJune30,2024June30,2023June30,2024June30,2023AdditionalinformationNetincome98,797,58733,482,914152,713,07064,570,344Adjustmentstocashprovidedbyoperatingactivities,forthepurposeofreconcilingnetincome:Add:provisionfortheimpairmentofassets-43,6931,722,667209,7612,660,838Creditimpairmentprovision50,84450,844Depreciationoffixedassets5,543,1584,656,41210,922,9339,015,054Depreciationofright-of-useassets3,226,0293,132,0436,455,7166,191,678Amortizationofintangibleassets397,071194,755591,825389,509Amortizationoflong-termprepaidexpenses1,589,6241,115,5252,942,9162,131,486Lossesondisposaloffixedassets,inta。
7. ngibleassetsandotherlong-termassets(mark"-"forincome)506349558-4,390Lossesonscrappingoffixedassets(mark"-"forincome)4,656,0834,656,083Lossesonfairvaluechanges（mark"-"forincome）71,822-164,550-172,379Financialexpenses（mark"-"forincome）4,623,9202,207,6366,450,037438,044Lossesoninvestment（mark"-"forincome）-5,327,726-5,228,869-11,636,081-11,487,416Decreaseondeferredincometaxassets（mark”-"forincrease）-14,329,853-5,210,646-29,671,227-19,268,821Increaseondeferredincometaxliabilities（mark"-"fordecrease）13,220,613-1,192,03523,297,8844,092,185Changesinoperatingassetsandliabilities:Decreaseininventories（mark"-"forincrease）-68,083,65043,849,565-109,637,148104,188,797Decreaseinoperationalreceivables（mark"-"forincrease）-151,075,340-49,397,224-141,299,427-72,586,295Increaseinoperationalpayables（mark"-"fordecrease）84,085,07227,594,45842,944,232-2,726,559Others8,929,7629,643,20115,331,19012,267,568Netcashflowprovidedbyoperatingactivities-13,668,17266,406,199-25,676,83499,699,64226CONSOLIDATEDFINANCIALSTATEMENTSESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|ConsolidatedStatementofChangesinEquity(Unaudited)27EquityattributabletoEspresssifCNYSharecapitalCapitalreservesLess:TreasurystockOthercomprehensiveincomeSurplusreservesRetainedearningsTotalEspressifEquityNon-controllingInterestsTotalequityBalanceasofDecember31,202280,484,4301,309,813,00140,966,01216,946,37446,570,910413,828,8321,826,677,5351,826,677,535Comprehensiveincome14,486,49864,570,34479,056,84279,056,842Capitalincrease246,77731,856,47432,103,25132,103,251Stock-basedcompensation4,121,3344,121,3344,121,334SurplusreservesDividendsBalanceasofJune30,202380,731,2071,345,790,80940,966,01231,432,87346,570,910478,399,1751,941,958,9621,941,958,962EquityattributabletoEspresssifCNYSharecapitalCapitalreservesLess:TreasurystockOthercomprehensiveincomeSurplusreservesRetainedearningsTotalEspressifEquityNon-controllingInterestsTotalequityBalanceasofDecember31,202380,789,7241,358,508,382146,969,56324,067,30655,460,195541,144,1841,913,000,2281,913,000,228Comprehensiveincome8,712,984151,642,464160,355,4481,070,606161,426,053Capitalincrease31,398,781-14,689,138-22,495,82139,205,46439,205,464Repurchase88,774,989-88,774,989-88,774,989Stock-basedcompensation-12,924,318-12,924,318-12,924,318SurplusreservesSubsidiaryAcquisition-11,791,20011,791,20028,985,00228,985,002Dividends-78,261,241-78,261,241-78,261,241BalanceasofJune30,2024112,188,5051,330,894,926213,248,73120,989,09055,460,195626,316,6071,932,600,59130,055,6071,962,656,19828FURTHERINFORMATIONESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|TermsandConditionsoftheReportTheBoardofDirectors,theBoardofSupervisorsandtheexecutivemanagementoftheCompanywarrantthatthecontentsofthisreportaretrue,accurateandcomplete,anddonotcontainanyfalseinformation,misleadingstatementsormaterialomissions,severallyandjointlyacceptinganylegalresponsibilitythereof.Shanghai,29July2024EspressifSystemsFurtherInformationESPRESSIFDeclarationSYSTEMSForward-lookingStatementsThisreportcontainsforward-lookingstatementsand/orassessmentsaboutthebusiness,financialcondition,performanceandstrategyoftheEspressifGroup.Thesestatementsand/orassessmentsarebasedonassumptionsandmanagementexpectationsrestinguponcurrentlyavailableinformationandcurrentestimates.Thesearesubjecttoamultitudeofuncertaintiesandrisks,manyofwhicharepartiallyorentirelybeyondEspressif’scontrol.Espressif’sactualbusinessdevelopment,financialcondition,performanceandstrategymay,therefore,differfromwhatisdiscussedinthisreport.ResponsibilityStatementBoardofDirectorsTeoSweeAnnFounderandChairmanNgPeiChiInformationTechnologyOfficerWangJueDeputyGeneralManagerTeoTeckLeongShareholder-electedLanYuzheIndependentDirectorKohChuanKoonIndependentDirectorLeeSzeChinIndependentDirectorBoardofSupervisorsLvZhihuaEmployee-electedFuHanyuShareholder-electedWangYiwenShareholder-electedExecutiveManagementTeoSweeAnnFounderandCEOWangJueDeputyGeneralManagerShaoJingboFinancialDirectorFURTHERINFORMATIONESPRESSIFSYSTEMS|2024Q2&HALF-YEARREPORT|Listofabbreviations29AIArtificialIntelligenceAIoTArtificialIntelligenceandInternetofThingsBluetoothLEBluetoothLowEnergyCEOChiefExecutiveOfficerCESConsumerElectronicsShowEBITDAEarningsBeforeInterest,Taxes,DepreciationandAmortizationEspressifESPRESSIFSYSTEMS(SHANGHAI)CO.,LTD.G&AGeneralandAdministrativeGMGrossMarginHMIHuman-MachineInteractionICIntegratedCircuitIoTInternetofThingsMCUMicrocontrollerUnitOBDOn-BoardDiagnosticsR&DResearchandDevelopmentRFRadioFrequencyRISC-VReducedInstructionSetComputer-VROEReturnonEarningsRTOSReal-TimeOperatingSystemSG&ASelling,GeneralandAdministrativeSHShanghaiSoCsSystemonChipsYoYYear-on-YearCopyright2024EspressifSystems(Shanghai)Co.,Ltd.Allrightsreserved.Alltradenames,trademarksandregisteredtrademarksmentionedinthisdocumentarethepropertyoftheirrespectiveowners,andareherebyacknowledged.Theterm“Espressif”referstoEspressifSystems(Shanghai)Co.,Ltd.and/oritssubsidiaries.ThisreportiswritteninbothChineseandEnglish.IncaseofanydiscrepanciesbetweenChineseandforeigninterpretations,theChineseversionshallprevail.AllamountspresentedinthesecondensedConsolidatedFinancialStatementsareshowninCNYunlessstatedotherwise.Slightdiscrepanciesbetweentheamountspresentedmayoccurduetorounding.InvestorRelationsSocialMediair@espressif.comOfficialPlatformsblog.espressif.comgithub.com/espressifesp32.comtwitter.com/EspressifSystemfacebook.com/espressiflinkedin.com/company/espressif-systemsyoutube.com/EspressifSystemsinstagram.com/espressif_systems_officialbilibili.espressif.c。
8. om。
