10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 000-55843

Techpoint, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	80-0806545
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2550 N. First Street, #550

San Jose, CA USA 95131

(Address of principal executive offices) (Zip Code)

(408) 324-0588

(Registrant’s telephone number,

including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Japanese Depositary Shares, each representing one share of Common Stock, $0.0001 Par Value Per Share	M-6697	Tokyo Stock Exchange (Growth Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 3, 2023, the registrant had 18,357,861 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents.

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 6.	Exhibits	31
	SIGNATURES	32

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Techpoint, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts, unaudited)

	June 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	25,314		$	19,392
Short-term investments		25,597			25,289
Accounts receivable		188			105
Inventory, net		13,146			13,709
Prepaid expenses and other current assets		692			618
Total current assets		64,937			59,113
Property and equipment, net		518			634
Deferred tax assets		2,877			2,280
Right-of-use assets		654			983
Long-term investments		6,795			9,737
Other assets		183			193
Total assets	$	75,964		$	72,940
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,300		$	2,100
Accrued liabilities		2,064			1,564
Customer deposits		1,646			1,545
Lease liabilities		594			700
Dividend payable		4,583			4,551
Total current liabilities		10,187			10,460
Other liabilities		168			404
Total liabilities		10,355			10,864
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, par value $0.0001 per share - 5,000,000 shares authorized    as of June 30, 2023 and December 31, 2022; nil shares issued and    outstanding as of June 30, 2023 and December 31, 2022		—			—
Common stock, par value $0.0001 per share - 75,000,000 shares    authorized as of June 30, 2023 and December 31, 2022; 18,330,591 and    18,198,737 shares issued and outstanding as of June 30, 2023 and    December 31, 2022, respectively		2			2
Additional paid-in capital		26,739			26,046
Accumulated other comprehensive loss		(146	)		(147	)
Retained earnings		39,014			36,175
Total stockholders’ equity		65,609			62,076
Total liabilities and stockholders’ equity	$	75,964		$	72,940

See accompanying notes to condensed consolidated financial statements.

1

Techpoint, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except share and per share amounts, unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023		2022
Revenue	$	15,298		$	17,052		$	29,440	$	33,080
Cost of revenue		7,071			7,679			13,568		14,510
Gross profit		8,227			9,373			15,872		18,570
Operating expenses
Research and development		1,431			2,328			3,543		4,218
Selling, general and administrative		2,663			2,347			4,893		4,825
Total operating expenses		4,094			4,675			8,436		9,043
Income from operations		4,133			4,698			7,436		9,527
Other income (expense), net		475			(52	)		954		(82	)
Income before income taxes		4,608			4,646			8,390		9,445
Provision for income taxes		558			544			964		966
Net income	$	4,050		$	4,102		$	7,426	$	8,479
Net income per share:
Basic	$	0.22		$	0.23		$	0.41	$	0.47
Diluted	$	0.22		$	0.22		$	0.40	$	0.46
Weighted average shares outstanding used in computing net income per share
Basic		18,294,629			18,073,922			18,263,029		18,044,835
Diluted		18,605,638			18,484,304			18,590,921		18,533,749
Comprehensive income:
Net income	$	4,050		$	4,102		$	7,426	$	8,479
Other comprehensive income (loss), net of tax:
Unrealized loss on available-for-sale debt securities, net of tax benefit of $8, $8, $0 and $21 for the three and six months ended June 30, 2023 and 2022, respectively		(31	)		(28	)		1		(78	)
Comprehensive income	$	4,019		$	4,074		$	7,427	$	8,401

See accompanying notes to condensed consolidated financial statements.

2

Techpoint, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts, unaudited)

	Common Stock					Additional			Accumulated Other						Total
	Shares			Amount		Paid-In Capital			Comprehensive loss			Retained Earnings			Stockholders' Equity
Balances as of December 31, 2021		17,928,748		$	2	$	24,251		$	(26	)	$	27,590		$	51,817
Other comprehensive loss – unrealized loss on    available-for-sale debt securities		—			—		—			(50	)		—			(50	)
Issuance of common stock upon exercise of stock options and vesting of early exercised options		79,517			—		142			—			—			142
Issuance of common stock upon vesting of    restricted stock units		32,225			—		—			—			—			—
Shares repurchased for tax withholdings on    vesting of restricted stock units		(5,906	)		—		(82	)		—			—			(82	)
Stock-based compensation		—			—		515			—			—			515
Net income		—			—		—			—			4,377			4,377
Balances as of March 31, 2022		18,034,584		$	2	$	24,826		$	(76	)	$	31,967		$	56,719
Other comprehensive loss – unrealized loss on    available-for-sale debt securities		—			—		—			(28	)		—			(28	)
Issuance of common stock upon exercise of stock options and vesting of early exercised options		8,838			—		24			—			—			24
Issuance of common stock upon vesting of    restricted stock units		70,975			—		—			—			—			—
Shares repurchased for tax withholdings on    vesting of restricted stock units		(5,804	)		—		(51	)		—			—			(51	)
Stock-based compensation		—			—		475			—			—			475
Cash dividends declared ($0.25 per share)		—			—		—			—			(4,527	)		(4,527	)
Net income		—			—		—			—			4,102			4,102
Balances as of June 30, 2022		18,108,593		$	2	$	25,274		$	(104	)	$	31,542		$	56,714

See accompanying notes to condensed consolidated financial statements.

3

Techpoint, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts, unaudited)

	Common Stock					Additional			Accumulated Other						Total
	Shares			Amount		Paid-In Capital			Comprehensive loss			Retained Earnings			Stockholders' Equity
Balances as of December 31, 2022		18,198,737		$	2	$	26,046		$	(147	)	$	36,175		$	62,076
Other comprehensive income – gain on    available-for-sale debt securities		—			—		—			32			—			32
Issuance of common stock upon exercise of stock options		24,600			—		29			—			—			29
Issuance of common stock upon vesting of    restricted stock units		32,425			—		—			—			—			—
Shares repurchased for tax withholdings on    vesting of restricted stock units		(4,636	)		—		(35	)		—			—			(35	)
Stock-based compensation		—			—		362			—			—			362
Cash dividend adjustments		—			—		—			—			(4	)		(4	)
Net income		—			—		—			—			3,376			3,376
Balances as of March 31, 2023		18,251,126		$	2	$	26,402		$	(115	)	$	39,547		$	65,836
Other comprehensive loss – unrealized loss on    available-for-sale debt securities		—			—		—			(31	)		—			(31	)
Issuance of common stock upon exercise of stock options		3,250			—		10			—			—			10
Issuance of common stock upon vesting of    restricted stock units		82,325			—		—			—			—			—
Shares repurchased for tax withholdings on    vesting of restricted stock units		(6,110	)		—		(41	)		—			—			(41	)
Stock-based compensation		—			—		368			—			—			368
Cash dividends declared ($0.25 per share)		—			—		—			—			(4,583	)		(4,583	)
Net income		—			—		—			—			4,050			4,050
Balances as of June 30, 2023		18,330,591		$	2	$	26,739		$	(146	)	$	39,014		$	65,609

See accompanying notes to condensed consolidated financial statements.

4

Techpoint, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Six Months Ended
	June 30,
	2023			2022
Cash Flows From Operating Activities
Net income	$	7,426		$	8,479
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		201			207
Stock-based compensation		730			990
(Accretion) Amortization of premium on available-for-sale investments		(318	)		99
Inventory valuation adjustment		218			359
Deferred income taxes		(597	)		(838	)
Noncash lease expense		303			377
Changes in operating assets and liabilities:
Accounts receivable		(83	)		286
Inventory		345			(597	)
Prepaid expenses and other current assets		(186	)		246
Other assets		10			17
Accounts payable		(788	)		(1	)
Accrued liabilities		514			1,249
Customer deposits		101			(96	)
Lease liabilities		(80	)		(140	)
Other liabilities		(236	)		(193	)
Net cash provided by operating activities		7,560			10,444
Cash Flows From Investing Activities
Purchase of property and equipment		(111	)		(361	)
Purchases of debt securities		(6,035	)		(6,468	)
Proceeds from maturities of debt securities		11,100			6,250
Purchase of marketable securities		(2,000	)		—
Net cash provided by (used in) investing activities		2,954			(579	)
Cash Flows From Financing Activities
Payment of dividends		(4,555	)		(4,504	)
Net proceeds from exercise of stock options		39			165
Payment for shares withheld for tax withholdings on vesting of restricted stock units		(76	)		(133	)
Net cash used in financing activities		(4,592	)		(4,472	)
Net increase in cash and cash equivalents		5,922			5,393
Cash and cash equivalents at beginning of period		19,392			27,379
Cash and cash equivalents at end of period	$	25,314		$	32,772
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	1,589		$	1,817
Supplemental Disclosure of Noncash Investing and Financing Information
Property and equipment purchased but not yet paid	$	32		$	38
Cash dividend declared but not yet paid	$	4,583		$	4,527

See accompanying notes to condensed consolidated financial statements.

5

Techpoint, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Summary of Significant Accounting Policies

Organization

Techpoint, Inc. (together with its wholly-owned subsidiaries, the “Company”) was originally incorporated in California in April 2012 and reincorporated in Delaware in July 2017. The Company is a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. The Company is headquartered in San Jose, California.

Basis of Consolidation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated. The functional currency of each of the Company’s subsidiaries is the U.S. dollar. Foreign currency gains or losses are recorded as other income (expense), net in the condensed consolidated statements of income and comprehensive income.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022 contained in the Company’s Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which only include normal recurring adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods and are not necessarily indicative of the results to be expected for the full fiscal year or for any other future annual or interim periods.

Revenue Recognition

The Company principally sells its products to distributors who, in turn, sell to original equipment manufacturers (“OEM”), original design manufacturers (“ODM”), contract manufacturers, and design houses. Product revenue consists of sales of mixed-signal integrated circuits into the security surveillance and automotive markets. The Company generally requires advance payments from customers and records these advance payments, or contract liabilities, as customer deposits on its condensed consolidated balance sheet. No stock rotation, price protection or return rights are offered. The Company provides product assurance warranty only and does not offer warranties to be purchased separately. Revenue is recognized when control of the product is transferred to the Company's customers, upon shipment, whereby legal title, risks and rewards of ownership, and physical possession are transferred to the customer.

Use of Management’s Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Significant estimates included in the condensed consolidated financial statements include inventory valuation and the valuation allowance for recorded deferred tax assets. These estimates are based upon information available as of the date of the condensed consolidated financial statements. Actual results could differ materially from those estimates.

Certain Significant Risks and Uncertainties

The Company operates in a dynamic industry and can be affected by a variety of factors. For example, any of the following areas could have a negative effect on the Company in terms of its future financial position, results of operations or cash flows: the general state of the U.S., China and world economies; the highly cyclical nature of the industries the Company serves; successful and timely completion of product design efforts; trade restrictions by the United States against the Company's customers in China, or potential retaliatory trade actions taken by China; the loss of any of its larger customers; restrictions on the Company's ability to sell to foreign customers due to additional U.S. or new China trade laws, regulations and requirements; disruptions of the supply chain of components needed for its products; fundamental changes in the technology underlying the Company’s products; the hiring, training and retention of key employees; and new product design introductions by competitors.

6

The Company has been impacted by adverse macroeconomic and geopolitical conditions. These conditions include but are not limited to inflation, foreign currency fluctuations, the COVID-19 pandemic, and the supply chain challenges and disruptions caused by any of these events. Management continues to actively monitor the impact of these conditions on the Company’s financial condition, liquidity, operations, end-customers (including its significant end-customers), distributors, suppliers, industry, and workforce. The extent to which such events impact the Company’s business, prospects and results of operations will depend on future developments, which are highly uncertain. The Company has made estimates of the impact of these events within its financial statements and there may be changes to those estimates in future periods.

Concentration of Customer and Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, and trade receivables. Risks associated with cash and cash equivalents, and investments are mitigated by banking with, and investing in, creditworthy institutions. The Company generally requires advance payments from customers. The Company also performs credit evaluations of its customers and provides credit to certain customers in the normal course of business. The Company has not incurred bad debt write-offs during any of the periods presented.

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Customer
Customer A		44	%		50	%		45	%		50	%
End-Customer
End-Customer A (1)		26	%		36	%		26	%		35	%

(1)Sales to End-Customer A primarily occurred through Customer A.

Concentration of Supplier Risk

The Company currently relies on Taiwan Semiconductor Manufacturing Company Limited and United Microelectronics Corporation (formerly Fujitsu Electronics America, Inc.) to produce substantially all of its semiconductors. Also, it relies on Advanced Semiconductor Engineering, Inc. and Sigurd Microelectronics Corporation to assemble, package and test substantially all of its semiconductors to satisfy substantially all of the Company’s production requirements. The failure of any subcontractor to fulfill the production requirements of the Company on a timely basis would adversely impact future results. Although there are other subcontractors that are capable of providing similar services, an unexpected change in either subcontractor would cause delays in the Company’s products and potentially result in a significant loss of revenue.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after December 15, 2022 for reporting companies that are eligible to be smaller reporting companies under the SEC’s definition, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2023.

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2. Balance Sheet Components

Inventory, net

Inventory consists of the following (in thousands):

	June 30,		December 31,
	2023		2022
Finished goods	$	6,641	$	5,088
Work in process		6,505		8,621
Total inventory, net	$	13,146	$	13,709

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):

	June 30,			December 31,
	2023			2022
Computer equipment and software	$	2,607		$	2,521
Leasehold improvements		94			94
Furniture		36			36
Total property and equipment		2,737			2,651
Less: accumulated depreciation		(2,219	)		(2,017	)
Total property and equipment, net	$	518		$	634

The Company recorded $0.1 million of depreciation expense for each of the three months ended June 30, 2023 and 2022, and $0.2 million for each of the six months ended June 30, 2023 and 2022.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Payroll-related expenses	$	1,415	$	812
Engineering services		173		282
Professional fees		150		52
Accrued warranty		148		173
Taxes payable		89		152
Accrued inventory		76		71
Other		13		22
Total accrued liabilities	$	2,064	$	1,564

Customer Deposits

Customer deposits represent payments received in advance of shipments and fluctuate depending on timing of customer pre-payments and product shipment. Customer deposits were $1.6 million and $1.5 million as of June 30, 2023 and December 31, 2022, respectively. The Company generally expects to recognize revenue from customer deposits during the three month period immediately following the balance sheet date. The Company recognized $1.7 million of revenue from the March 31, 2023 customer deposit balance during the three months ended June 30, 2023, and $1.5 million of revenue from the December 31, 2022 customer deposits balance during the three months ended March 31, 2023.

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3. Fair Value Measurements of Financial Instruments

Summary of Financial Instruments

The following is a summary of financial instruments (in thousands):

	June 30, 2023
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Values
Available-for-sale securities:
Certificates of deposit	$	6,133	$	—	$	—		$	6,133
Money market funds		18,311		—		—			18,311
Commercial papers		3,483		—		(2	)		3,481
Government agency bonds		5,010		—		(25	)		4,985
Corporate bonds		17,951		—		(158	)		17,793
Total available-for-sale securities	$	50,888	$	—	$	(185	)	$	50,703
Reported in:
Cash and cash equivalents								$	18,311
Short-term investments									25,597
Long-term investments									6,795
Total available-for-sale securities								$	50,703

	December 31, 2022
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Values
Available-for-sale securities:
Certificates of deposit	$	4,007	$	—	$	—		$	4,007
Treasury bills		3,983	1			—			3,984
Money market funds		2,183		—		—			2,183
Commercial papers		13,631		—		(20	)		13,611
Government agency bonds		3,391		1		(19	)		3,373
Corporate bonds		21,654		1		(149	)		21,506
Total available-for-sale securities	$	48,849	$	3	$	(188	)	$	48,664
Reported in:
Cash and cash equivalents								$	13,638
Short-term investments									25,289
Long-term investments									9,737
Total available-for-sale securities								$	48,664

The contractual maturities of available-for-sale securities are presented in the following table (in thousands):

	June 30, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	44,011		43,908	$	39,012	$	38,927
Due between one to two years		6,877		6,795		9,837		9,737
	$	50,888	$	50,703	$	48,849	$	48,664

The Company had 39 investments in unrealized loss positions as of June 30, 2023. 37 investments have been in unrealized loss positions for less than twelve months. The total fair value of such investments is $26.3 million with unrealized losses of approximately $0.2 million as of June 30, 2023. There were no material gross unrealized losses from available-for-sale securities and no material realized gains or losses from available-for-sale securities that were reclassified from accumulated other comprehensive income for the six months ended June 30, 2023.

For investments in available-for-sale debt securities that have unrealized losses, the Company evaluates (i) whether it has the intention to sell any of these investments and (ii) whether it is more likely than not that it will be required to sell any of these

9

investments before recovery of the entire amortized cost basis. Based on this evaluation, the Company determined that there were no other-than-temporary impairments associated with investments as of June 30, 2023.

There were no sales of available-for-sale securities for the six months ended June 30, 2023 and 2022.

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Financial assets measured at fair value on a recurring basis were as follows (in thousands):

	Fair Value Measurement at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
As of June 30, 2023
Financial assets - available-for-sale securities
Certificates of deposit	$	6,133	$	—	$	6,133
Money market funds		18,311		—		18,311
Commercial papers		—		3,481		3,481
Governmental agency bonds		—		4,985		4,985
Corporate bonds		—		17,793		17,793
Total financial assets - available-for-sale securities	$	24,444	$	26,259	$	50,703
As of December 31, 2022
Financial assets - available-for-sale securities
Certificates of deposit	$	4,007	$	—	$	4,007
Treasury bills		3,984		—		3,984
Money market funds		2,183		—		2,183
Commercial papers		—		13,611		13,611
Governmental agency bonds		—		3,373		3,373
Corporate bonds		—		21,506		21,506
Total financial assets - available-for-sale securities	$	10,174	$	38,490	$	48,664

The Company classifies certificates of deposit and treasury bills in Level 1 since valuations are based on direct or indirect observable input other than quoted market price. The Company also classifies money market funds in Level 1 since the financial assets consist of securities for which quoted prices are available in an active market.

The Company classifies governmental agency bonds, corporate bonds and commercial papers in Level 2 since the financial assets use observable inputs including quoted prices in active markets for similar assets or liabilities. The Company uses a pricing service to assist in determining the fair values of all of its cash equivalents, short-term investments and long-term investments. The pricing service uses inputs from multiple industry standard data providers or other third party sources and applies various acceptable methodologies.

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4. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker, the chief executive officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance on a regular basis. Accordingly, the Company considers itself to be one reportable segment, which is comprised of one operating segment - the designing, marketing and selling of mixed-signal integrated circuits for the security surveillance and automotive markets.

Product revenue from customers is designated based on the geographic region to which the product is delivered. Revenue by geographic region was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
China	$	11,233	$	12,054	$	21,752	$	23,311
Taiwan		2,291		2,147		4,062		4,392
South Korea		1,390		1,525		2,763		2,995
Japan		326		1,276		707		1,914
Other		58		50		156		468
Total revenue	$	15,298	$	17,052	$	29,440	$	33,080

Revenue by principal product lines was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Automotive	$	9,930	$	9,528	$	18,727	$	19,065
Security surveillance		5,368		7,524		10,713		14,015
Total revenue	$	15,298	$	17,052	$	29,440	$	33,080

Long-lived assets by geographic region were as follows (in thousands):

	June 30,		December 31,
	2023		2022
Taiwan	$	339	$	389
China		136		179
United States		35		52
Japan		5		8
South Korea		3		6
Total property and equipment - net	$	518	$	634

5. Commitments and Contingencies

Operating leases

The Company determines if an arrangement contains a lease at inception. The Company leases facilities under non-cancelable lease agreements expiring through fiscal year 2024. The Company’s agreements do not include variable lease payments or any restrictions or covenants imposed by the leases. As the rate implicit in each lease agreement is not readily determinable, the Company’s incremental borrowing rate was used as the discount rate. The Company’s right-of-use assets and lease liabilities have been adjusted for initial direct costs and prepaid rent but do not reflect any options to extend or terminate its lease agreements, any residual value guarantees, or any leases that have not yet commenced.

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The right-of-use assets and lease liabilities related to operating leases were as follows (in thousands):

			December 31,
	June 30, 2023		2022
Right-of-use assets	$	654	$	983
Lease liabilities － Current	$	594	$	700
Lease liabilities － Non-Current		34		284
Total lease liabilities	$	628	$	984

Rent expense under operating leases was $0.2 million for each of the three months ended June 30, 2023 and 2022. Rent expense under operating leases was $0.4 million for each of the six months ended June 30, 2023 and 2022.

The rent expense recognized from short-term leases was $6,000 for each of the three months ended June 30, 2023 and 2022, respectively. The rent expense recognized from short-term leases was $12,000 for each of the six months ended June 30, 2023 and 2022.

The following tables summarize the Company’s lease costs and weighted-average assumptions used in determining its right-of-use assets and lease liabilities (in thousands):

	Six Months Ended			Six Months Ended
	June 30, 2023			June 30, 2022
Operating lease cost	$	380		$	397
Cash paid for operating leases	$	385		$	366
Right-of-use assets obtained in exchange for operating lease liabilities (1)	$	26		$	146
Weighted average remaining term for operating leases	0.92 years			1.64 years
Weighted average discount rate for operating leases		5.8	%		3.8	%

(1)During the six months ended June 30, 2023, the Company extended the term of its lease in South Korea; the South Korea lease was treated as a modification but not as a separate contract, as no additional right-of-use was granted. The South Korea lease modification was accounted for as a non-cash change in existing lease liabilities and the right-of-use assets.

During the six months ended June 30, 2022, the Company entered into a new lease in Taiwan when its existing facility lease terminated and extended the term of its lease in South Korea; the South Korea lease was treated as a modification but not as a separate contract, as no additional right-of-use was granted. The South Korea lease modification was accounted for as a non-cash change in existing lease liabilities and the right-of-use assets.

As of June 30, 2023, the aggregate future minimum lease payments under non-cancelable operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2023 (remaining six months)	$	387
2024		290
Total		677
Less effects of discounting		(49	)
Total lease liabilities	$	628

Purchase Commitments

As of June 30, 2023, the Company had purchase commitments with its third-party suppliers through fiscal year 2026. Future minimum payments under purchase commitments total $0.4 million for the remaining six months ending December 31, 2023, $0.7 million for the year ending December 31, 2024, $0.7 million for the year ending December 31, 2025, and $0.3 million for the year ending December 31, 2026.

Litigation

Although the Company is not currently a party to any legal proceedings and there is no litigation currently threatened, the Company may be subject to legal proceedings, claims and litigation, including intellectual property litigation, arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. The Company

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accrues amounts that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss that is reasonably estimable.

Indemnification

During the normal course of business, the Company may make certain indemnities, commitments and guarantees which may include intellectual property indemnities to certain of its customers in connection with the sales of the Company’s products and indemnities for liabilities associated with the infringement of other parties’ technology based upon the Company’s products. The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by a customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in such capacities.

The Company has not recorded any liability for these indemnities, commitments and guarantees in the accompanying condensed consolidated balance sheets. Where necessary, the Company accrues for losses for any known contingent liabilities, including those that may arise from indemnification provisions, when future payment is probable.

6. Stockholders’ Equity

Preferred Stock

The Company was authorized to issue 5,000,000 shares of preferred stock with a $0.0001 par value per share as of June 30, 2023 and December 31, 2022. There were no shares of preferred stock issued and outstanding as of June 30, 2023 and December 31, 2022.

Common Stock

The Company was authorized to issue 75,000,000 shares of common stock with $0.0001 par value per share as of June 30, 2023 and December 31, 2022. As of June 30, 2023, the shares of common stock issued and outstanding totaled 18,330,591. As of December 31, 2022, the shares of common stock issued and outstanding were 18,198,737.

The Company has reserved the following number of shares of common stock for future issuances:

	June 30, 2023
Outstanding stock awards		818,546
Shares available for future issuance under the 2017 Stock Incentive Plan		7,355,597
Total common stock reserved for future issuances		8,174,143

Dividend

On December 16, 2022, the Company announced a cash dividend of an aggregate of $0.50 per share for fiscal 2023, payable in two equal installments of $0.25 per share. The first installment of the dividend was paid during the first fiscal quarter of 2023 in the aggregate amount of $4.6 million to stockholders of record as of the close of business on January 31, 2023. On June 2, 2023, the Company announced that the second installment payment of its cash dividend of $0.25 on shares of its common stock (including common stock underlying its Japanese Depositary Shares ("JDS")), which was paid to stockholders of record as of June 30, 2023 on July 18, 2023.

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7. Equity Incentive Plans

Stock Incentive Plans

In April 2012, the Company adopted a 2012 Stock Option Plan (“2012 Plan”). The 2012 Plan provides for the granting of stock-based awards to employees, directors, and consultants under terms and provisions established by the Company’s board of directors. Under the terms of the 2012 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and non-statutory stock options must be at least 110% of the fair market value of the common stock on the grant date, as determined by the Company’s board of directors. The terms of options granted under the 2012 Plan may not exceed ten years.

The 2012 Plan was superseded by a 2017 Stock Option Plan (“2017 Plan”). Any outstanding awards under the 2012 Plan will continue to be governed by the terms of the 2012 Plan.

In August 2017, the Company adopted the 2017 Plan. The Company’s stockholders approved the 2017 Plan in September 2017 and it became effective immediately prior to the closing of the Company’s initial public offering. In connection with the adoption of the 2017 Plan, no additional awards and no shares of common stock remain available for future issuance under the 2012 Plan and shares reserved but not issued under the 2012 Plan as of the effective date of the 2017 Plan were included in the number of shares reserved for issuance under the 2017 Plan. In addition, shares subject to awards under the 2012 Plan that are forfeited or terminated are added to the 2017 Plan. The number of shares available for issuance under the 2017 Plan is automatically increased on the first day of each fiscal year beginning on January 1, 2018 and ending on (and including) January 1, 2027, in an amount equal to the lesser of (1) 4% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or (2) another amount determined by the Company’s board of directors. The automatic increase in the number of shares available for issuance under the 2017 plan for the fiscal year 2023 was 727,949 shares. The 2017 Plan provides for the granting of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to employees and the granting of non-statutory stock options to employees, non-employee directors, advisors and consultants. The 2017 Plan also provides for the grants of restricted stock, stock appreciation rights, stock unit and cash-based awards to employees, non-employee directors, advisors and consultants.

The Company’s stock award activity under the stock incentive plan is summarized as follows:

	Awards Available for Grant
As of December 31, 2022		6,674,252
Authorized		727,949
Granted		(66,500	)
Canceled		19,896
As of June 30, 2023		7,355,597

Stock Options

The Company’s stock option activity under the stock incentive plan is summarized as follows:

	Options Issued and Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
As of December 31, 2022		464,621		$	2.70		4.2	$	2,106
Granted		—			—
Exercised		(27,850	)		1.41
Canceled		—			—
As of June 30, 2023		436,771			2.78		3.7		1,865
Options vested and exercisable as of June 30, 2023		436,771			2.78		3.7		1,865

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The stock options outstanding and exercisable by exercise price at June 30, 2023 are as follows:

		Options Outstanding, Vested and Exercisable
Exercise Price		Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price
$	0.16		3,250		0.6	$	0.16
	0.37		11,750		2.1		0.37
	0.97		11,000		2.5		0.97
	2.51		51,780		3.2		2.51
	2.89		40,000		3.7		2.89
	2.93		238,734		3.9		2.93
	3.18		80,257		4.1		3.18
			436,771		3.7		2.78

The aggregate intrinsic value of options exercised for the six months ended June 30, 2023 and 2022 was $0.1 million and $1.1 million, respectively. The Company has various vesting agreements with its employees. Options granted generally vest over a five-year period and generally are exercisable for up to 10 years.

Restricted Stock Units

The Company’s restricted stock units activity is summarized as follows:

	Units Issued and Outstanding			Weighted-Average Grant Date Fair Value
As of December 31, 2022		439,175		$	8.41
Granted		66,500			7.03
Released, net		(104,004	)		7.12
Canceled		(19,896	)		8.32
As of June 30, 2023		381,775			8.19

Restricted stock units are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Restricted stock unit awards generally vest over a five-year period and are subject to the grantee’s continued service with the Company.

8. Stock-Based Compensation

The following table summarizes the distribution of stock-based compensation expense (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Cost of revenue	$	40	$	37	$	76	$	75
Research and development		115		144		234		284
Selling, general and administrative		213		294		420		631
Total	$	368	$	475	$	730	$	990

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9. Net Income Per Share

The following table presents the calculation of basic and diluted net income per share (amounts in thousands, except share and per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Numerator:
Basic and Diluted:
Net income	$	4,050	$	4,102	$	7,426	$	8,479
Denominator:
Basic shares:
Weighted-average shares outstanding used in computing basic    net income per share		18,294,629		18,073,922		18,263,029		18,044,835
Diluted shares:
Effect of potentially dilutive securities:
Stock options and restricted stock units		311,009		410,382		327,892		488,914
Weighted-average shares used in computing diluted net    income per share		18,605,638		18,484,304		18,590,921		18,533,749
Net income per share:
Basic	$	0.22	$	0.23	$	0.41	$	0.47
Diluted	$	0.22	$	0.22	$	0.40	$	0.46

The potentially dilutive shares of common stock outstanding for the three months ended June 30, 2023 and 2022 that were excluded from the computation of diluted net income per share as the effect would have been antidilutive, was approximately 299,000 and 61,000 shares, respectively. The potentially dilutive shares of common stock outstanding for the six months ended June 30, 2023 and 2022 that were excluded from the computation of diluted net income per share for the periods presented as the effect would have been antidilutive was 269,000 and 29,000 shares, respectively.

10. Provision for Income Taxes

The components of income before income taxes were as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2023		2022			2023		2022
Domestic	$	4,599	$	4,676		$	8,321	$	9,445
Foreign		9		(30	)		69		—
Income before income taxes	$	4,608	$	4,646		$	8,390	$	9,445

The components of the provision for income taxes were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
United States		556		543		956		961
Foreign		2		1		8		5
Provision for income taxes	$	558	$	544	$	964	$	966

As of June 30, 2023, there was no material increase in the liability for unrecognized tax benefits and no accrued interest or penalties related to uncertain tax positions.

As of June 30, 2023, the Company had approximately $0.4 million of unrecognized tax benefits of which $0.3 million was netted against deferred tax assets with a full valuation allowance. If these amounts are recognized, there will be a tax benefit of $0.1 million against the Company’s effective tax rate.

The CHIPS and Science Act of 2022 ("CHIPS") and the Inflation Reduction Act ("IRA") of 2022 were signed into law by President Biden on August 9, 2022 and August 16, 2022, respectively. The legislation introduces new options for monetizing certain

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credits, a corporate alternative minimum tax, and a stock repurchase excise tax. The Company has concluded that the impact of any of the provisions included in CHIPS and IRA acts did not have a material impact on the Company's unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2023.

11. Subsequent Events

In July 2023, the Company acquired certain assets of Broadvis Corporation, a privately held company with operations in Chengdu, Sichuan, China, including intellectual property for the enhancement of semiconductor functions for automotive applications for $2.0 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information Regarding Forward-Looking Statements

This Quarterly Report on Form10-Q includes forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate”, “believe,” “continue,” “could,” “design,” “estimate,” “intend,” “may,” “plan,” “project,” “will,” “expect,” or the negative version of these words and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including the following:

•our future financial performance, including our revenue, sales, cost of sales and operating expenses;

•our market opportunity and our ability to effectively manage or sustain our growth;

•our ability to attract new and retain existing customers in our current or future target markets;

•our ability to continue to develop new technologies and secure design wins;

•the expected benefits from and our ability to integrate our acquisitions;

•laws and regulations applicable to our business, including the expected impact of restrictions to be imposed by trade regulations;

•the impact of global shortages in manufacturing capacities;

•our ability to form and expand partnerships with technology partners and consulting partners;

•our ability to maintain, protect and enhance our intellectual property;

•our ability to successfully defend litigation brought against us;

•our product development and sales cycle;

•our competition;

•the impact of macroeconomic conditions, including inflation, recession and trade relations between the U.S. and China, on our business;

•the effect of health epidemics on our business and the success of any measures we have taken or may take in the future in response thereto;

•our liquidity and working capital requirements; and

•our expectations regarding future expenses and investments.

In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Any forward-looking statement made by us in this Quarterly Report on Form 10-Q is as of the date on which it is filed with the SEC. We do not intend to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q, except as required by law.

General Background

The following discussion and analysis should be read together with our unaudited condensed consolidated financial statements and the notes to those statements that appear in this Quarterly Report on Form 10-Q and our consolidated financial statements and the notes to those statements that appear in our Annual Report on Form 10-K for the year ended December 31, 2022. This discussion contains forward-looking statements based on our current expectations, assumptions, estimates and projections. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, as more fully described in “Risk Factors” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K.

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In this Quarterly Report on Form 10-Q, unless otherwise specified or the context otherwise requires, “Techpoint,” “we,” “us,” and “our” refer to Techpoint, Inc. and its consolidated subsidiaries.

We have obtained or are in the process of obtaining registered trademarks for Techpoint and HD-TVI. This Quarterly Report on Form 10-Q contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Overview

We are a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. Our integrated circuits are enabling the transition from standard definition (“SD”) video to high definition (“HD”) video in the security surveillance and automotive markets.

Our solutions take HD video signals from a camera and convert them into analog signals for reliable long-distance transmission, then convert the HD analog signal into the appropriate format for video processing and display. Our HD analog technology operates at the same 1080p HD resolution as digital HD, but processes video in an HD analog format and transmits the video in this same analog format, thereby eliminating the need for any compression or decompression. Our integrated circuits are based on our proprietary architecture and mixed signal technologies that we believe provide high video quality, enable high levels of integration and are cost effective. Our integrated circuits are used by security surveillance manufacturers, such as Hikvision in China, IDIS in South Korea and AVTech in Taiwan.

We derive our revenue from sales of our mixed-signal integrated circuits into the automotive and security surveillance markets. We began shipping our products in 2013 and to date, we have sold over 381 million integrated circuits. Our revenue was $29.4 million and $33.1 million for the six months ended June 30, 2023 and 2022, respectively. The automotive market accounted for 64% and 58% of our revenue for the six months ended June 30, 2023 and 2022, respectively. The security surveillance market accounted for 36% and 42% of our revenue for the six months ended June 30, 2023 and 2022, respectively. We recognized $18.7 million and $19.1 million of revenue on sales into the automotive market for the six months ended June 30, 2023 and 2022, respectively. In addition, we recognized $10.7 million and $14.0 million of revenue on sales into the security surveillance market for the six months ended June 30, 2023 and 2022, respectively. We recorded net income of $7.4 million and $8.5 million for the six months ended June 30, 2023 and 2022, respectively. We sell our products to distributors that fulfill third-party orders for our products. We also sell directly to OEM/ODM. For the six months ended June 30, 2023 and 2022, we derived substantially all of our revenue from products sold to distributors as compared to products sold to OEM/ODM directly.

We undertake significant product development efforts well in advance of a product’s release and in advance of receiving purchase orders. Our product development efforts, which are focused on developing new designs with broad demand and potential for future derivative products, typically take from six to twenty-four months until production begins, depending on the product’s complexity. If we secure a design win, we believe the system designer is likely to continue to use the same or enhanced versions of our product across a number of their models, extending the life cycles of our products. Conversely, if a competitor secures the design win, it may be difficult for us to sell into the end-customer’s application for an extended period. Our sales cycle typically ranges from three to six months for the security surveillance market and one to three years for the automotive market. Due to the length of our product development and sales cycle, the majority of our revenue for any period is likely to be weighted toward products introduced for sale in the prior one or two years. As a result, our present revenue is not necessarily representative of future sales because our future sales are likely to be comprised of a different mix of products, some of which are now in the development stage.

We employ a fabless manufacturing strategy and use market-leading suppliers for all phases of the manufacturing process, including wafer fabrication, assembly, testing and packaging. This strategy significantly reduces the capital investment that would otherwise be required to operate manufacturing facilities of our own.

We have made significant investments in research and development in order to develop our products to attract and retain end-customers. For the six months ended June 30, 2023 and 2022, our research and development expense was $3.5 million and $4.2 million, respectively. Our research and development expenses can vary from period-to-period and can be significantly impacted by the number of tape-outs and new products that we initiate in any given period. As of June 30, 2023, we had 83 employees, 25 of whom are in research and development. Our headquarters are located in San Jose, California, with additional operations in Japan, Taiwan, China and South Korea.

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Effective October 9, 2019, the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) added Hikvision, a customer that represented 26% and 35% of our revenue for the six months ended June 30, 2023 and 2022, respectively, to the BIS Entity List with a license requirement for all items subject to the Export Administration Regulations (“EAR”). The BIS Entity List is a published list of the names of certain foreign persons, including businesses, research institutions, government and private organizations and individuals, that are subject to specific governmental license requirements for the export, reexport and/or transfer of specified items. These license requirements could make it more difficult to ship, or in some cases, prevent the shipment of products to certain foreign persons named on the BIS Entity List.

We have taken action to confirm whether our products are subject to EAR. We have retained the continuous assistance of outside experts and, following Hikvision’s designation on the BIS Entity List, performed a comprehensive review of our products and manufacturing operations. Based on that review, we have concluded that our products are not subject to EAR. Therefore, our products may continue to be shipped to Hikvision without a U.S. export license, even though Hikvision appears on the BIS Entity List.

On November 12, 2020, President Trump issued Executive Order 13959 on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies which prohibits any transaction in publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of any identified Communist Chinese military company, which included Hikvision. On June 3, 2021, President Biden issued Executive Order 14032 amending the prior Executive Order. As amended, Executive Order 13959 continues to prohibit certain transactions involving the purchase or sale of publicly traded securities of designated companies. Restrictions are applicable to certain entities designated as Chinese Military-Industrial Complex Companies who have been placed on the “CMIC List.” Hikvision was listed in the Annex to Executive Order 14032 and is currently on the CMIC List. However, Hikvision is not on the Specially Designated Nationals (SDN) List and the restrictions imposed by these Executive Orders are not expected to directly impact our business.

On November 11, 2021, President Biden signed into law the Secure Equipment Act of 2021, which requires the U.S. Federal Communications Commission (“FCC”) to adopt rules no later than November 11, 2022 clarifying that it will no longer review or approve any application for equipment authorization for equipment that is on the list of covered communications equipment or services published by the FCC under section 2(a) of the Secure and Trusted Communications Networks Act of 2019. Items on the FCC’s “covered list” include video surveillance and telecommunications equipment produced by Hikvision, to the extent it is used for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes, including telecommunications or video surveillance services provided by such entity or using such equipment. The restrictions to be imposed by the FCC pursuant to the Secure Equipment Act of 2021 would impact imports of certain Hikvision equipment into the United States by eliminating the ability of Hikvision to obtain FCC approval for its video surveillance and telecommunications equipment. The FCC is also considering the adoption of new rules to revoke past authorization issued for Hikvision equipment, but the FCC actions taken to date are currently not expected to directly impact our business. This may or may not directly impact our revenue in the future. In the event there is an impact on our revenue, we believe that it would be gradual and limited in scope both because Hikvision continues to sell its currently approved products in the U.S. and because other manufacturers that incorporate our products could take market share from Hikvision in the U.S. We believe that our revenue would decrease only a few percentage points even if Hikvision’s business is fully impacted by the restrictions to be imposed by the FCC that limit Hikvision’s ability to import its future products into the U.S. Additionally, we plan to continue growing our revenue from new and existing customers, thus further limiting the impact of the restrictions to be imposed by the FCC that impact the importation of certain of Hikvision’s future products into the U.S.

The above conclusions are as of the date of filing of this Quarterly Report on Form 10-Q. It is possible that changes in U.S. regulations or policies in the future may impose restrictions, including the imposition of license requirements or even a full or partial prohibition, on our sale of products to Hikvision.

Key Factors Affecting Our Results of Operations

The following are key factors that impact our results of operations:

Macroeconomic and Geopolitical Conditions. We have been impacted by adverse macroeconomic and geopolitical conditions. These conditions include but are not limited to inflation, foreign currency fluctuations, the COVID-19 pandemic and related supply chain challenges and disruptions caused by any of these events. Management continues to actively monitor the impact of these conditions on the Company’s financial condition, liquidity, operations, end-customers (including its significant end-customers), distributors, suppliers, industry, and workforce. The extent to which such events impact the Company’s business, prospects and results of operations will depend on future developments, which are highly uncertain.

As our products are primarily sold in Asia, we are particularly impacted by government actions in the countries in that region.

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Ability to attract and retain customers that make large orders. While we expect the composition of our end-customers to change over time, our business and operating results depend on our ability to continually target new and retain existing end-customers that make large orders. Hikvision, the largest security surveillance manufacturer in China, as previously noted, is one of our significant end-customers. Although large customers can help us increase our revenue and improve our results of operations, reliance on large customers is a risk to our business. For example, Section 889 of the 2019 National Defense Authorization Act could adversely impact our business with Hikvision. Section 889(a)(1)(A) went into effect on August 13, 2019 and prohibits U.S. government agencies from procuring or obtaining equipment or services that use covered telecommunications equipment or services as a substantial or essential component or critical technology, including certain video surveillance products or telecommunications equipment and services produced or provided by Hikvision. On July 14, 2020, the U.S. government issued an interim final rule that implements Section 889(a)(1)(B) effective as of August 13, 2020. This rule prohibits the U.S. government from entering into contracts with persons who use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, which again includes certain Hikvision video surveillance products. Although Section 889 does not prohibit commercial sales of video surveillance products by Hikvision in the U.S., which we understand is the predominant business Hikvision does in the U.S. with video surveillance products that incorporate our products, the impact of these new regulations and the uncertainty of U.S. and China trade relations may adversely impact our business in the future with Hikvision and other significant customers.

Design wins with new and existing customers. We believe our products provide high-quality HD video with an attractive combination of characteristics, at a lower overall cost than competing solutions. In order to get our solutions designed into our end-customer’s products, we work with our end-customers and potential end-customers to understand their product roadmaps and strategies. We consider design wins to be critical to our future success. We define a design win as the successful completion of the evaluation stage, where an end-customer has tested our product, verified that our product meets its requirements and qualified our integrated circuits for their products. We have secured design wins with major automotive manufacturers to sell our solutions to them for automotive backup cameras. The revenue that we generate, if any, from each design win can vary significantly. Our long-term sales expectations are based on forecasts from end-customers, internal estimates of end-customer demand factoring in expected time to market for end-customer products incorporating our solutions and associated revenue potential and internal estimates of overall demand based on historical trends.

Pricing, product cost and gross margins of our products. Our gross margin has been and will continue to be affected by a variety of factors, including the timing of changes in pricing, shipment volumes, new product introductions, changes in product mixes, changes in our purchase price of fabricated wafers and assembly and test service costs, manufacturing yields and inventory write downs, if any. In general, newly introduced products and products with higher performance and more features tend to be priced higher than older, more mature products. Average selling prices in the semiconductor industry typically decline as products mature. Consistent with the historical trend, we expect that the average selling prices of our products will, in the longer term, decline as our product lines mature. In the normal course of business, we will seek to offset the effect of declining average selling prices on existing products by reducing manufacturing costs and introducing new and higher value-added products. If we are unable to maintain overall average selling prices or offset any declines in average selling prices with realized savings on product costs, our gross margin will decline.

Product adoption and safety regulations in the automotive market. We have secured design wins with major automotive equipment manufacturers to sell our solutions to them for automotive backup cameras. Certain jurisdictions have passed laws and regulations requiring that all new cars sold after a certain date must contain back-up cameras, including with respect to cars sold in the United States after May 2018. If these jurisdictions do not maintain and implement these rules, or if back-up cameras are not put into automobiles sold in other locations as well, or do so more slowly than we expect, our financial results could be adversely affected.

Investment in growth. We have invested, and intend to continue to invest, in expanding our operations, increasing our headcount, developing our products and differentiated technologies to support our growth and expanding our infrastructure. We expect our total operating expenses to increase significantly in the foreseeable future to meet our growth objectives. We plan to continue to invest in our sales and support operations throughout the world, with a particular focus in the near term of adding additional sales and field applications personnel in the Asia-Pacific region to further broaden our support and coverage of our existing end-customer base, in addition to developing new end-customer relationships and generating design wins. We also intend to continue to invest additional resources in research and development to support the development of our products and differentiated technologies. Any investments we make in our sales and marketing organization, or research and development will occur in advance of experiencing any benefits from such investments, and the return on these investments may be lower than we expect. In addition, as we invest in expanding our operations into new areas internationally, our business and results will become further subject to the risks and challenges of operations in those locations, including potentially higher operating expenses and the impact of legal and regulatory developments.

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Components of Condensed Consolidated Statements of Income

Revenue

We derive substantially all of our revenue through the sale of our products to distributors who, in turn, sell to our end-customers, which consists of OEM, ODM, contract manufacturers and design houses. Revenue is recognized in accordance with Accounting Standards Codification Topic 606 after we (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) satisfy the performance obligation when control is transferred to the customer.

Cost of Revenue

Cost of revenue primarily consists of costs paid to our third-party manufacturers for wafer fabrication, assembly and testing of our products. To a lesser extent, cost of revenue also includes write-downs of inventory for excess and obsolete inventory, depreciation of test equipment, and expenses relating to manufacturing support activities, including personnel-related costs, logistics and quality assurance and shipping.

Research and Development Expenses

Research and development expenses consist primarily of compensation and associated costs of employees engaged in research and development, contractor costs, tape-out costs, development testing and evaluation costs, and depreciation expense. Before releasing new products, we incur charges for mask sets, prototype wafers and mask set revisions, which we refer to as tape-out costs. Tape-out costs may cause our research and development costs to increase in absolute dollars in the future as we increase our investment in new product development and headcount to support our development efforts.

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Selling, General and Administrative Expenses

Selling expenses consist primarily of personnel-related costs for our sales, business development, marketing, and applications engineering activities, promotional and other marketing expenses, and travel expenses. We expect selling expenses to increase in absolute dollars for the foreseeable future as we continue to expand our sales teams and increase our marketing activities. General and administrative expenses consist primarily of personnel-related costs, consulting expenses, professional fees and facility costs. Professional fees principally consist of legal, audit, tax and accounting services. We expect general and administrative expenses to increase in absolute dollars for the foreseeable future as we hire additional personnel, make improvements to our infrastructure and incur significant additional costs for the compliance requirements of operating as a U.S. company that is publicly traded in Japan, including higher legal, insurance and accounting expenses. Personnel-related costs, including salaries, benefits, bonuses and stock-based compensation, are the most significant component of each of selling expenses and general and administrative expenses.

Provision for Income Taxes

The provision for income taxes consists of our estimated federal, state and foreign income taxes based on our pre-tax income. Our provision differs from the federal statutory rate primarily due to the research and development credit, foreign derived intangible income deduction and stock-based compensation deduction.

Results of Operations

The following table sets forth our condensed consolidated results of operations for the periods shown (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2023		2022			2023		2022
Revenue	$	15,298	$	17,052		$	29,440	$	33,080
Cost of revenue (1)		7,071		7,679			13,568		14,510
Gross profit		8,227		9,373			15,872		18,570
Operating expenses: (1)
Research and development		1,431		2,328			3,543		4,218
Selling, general and administrative		2,663		2,347			4,893		4,825
Total operating expenses		4,094		4,675			8,436		9,043
Income from operations		4,133		4,698			7,436		9,527
Other income (expense), net		475		(52	)		954		(82	)
Income before income taxes		4,608		4,646			8,390		9,445
Provision for income taxes		558		544			964		966
Net income	$	4,050	$	4,102		$	7,426	$	8,479

(1)Includes stock-based compensation expense as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Cost of revenue	$	40	$	37	$	76	$	75
Research and development		115		144		234		284
Selling, general and administrative		213		294		420		631
Total	$	368	$	475	$	730	$	990

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The following table sets forth the condensed consolidated statements of income for each of the periods as a percentage of revenue:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue		100	%		100	%		100	%		100	%
Cost of revenue		46			45			46			44
Gross profit		54			55			54			56
Operating expenses:
Research and development		9			14			12			13
Selling, general and administrative		17			14			17			15
Total operating expenses		26			28			29			28
Income from operations		28			27			25			28
Other income (expense), net		3			—			3			—
Income before income taxes		31			27			28			28
Provision for income taxes		4			3			3			2
Net income		27	%		24	%		25	%		26	%

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Comparison of the Three and Six Months Ended June 30, 2023 and June 30, 2022

Revenue

The components of revenue are as follows (dollars in thousands):

	Three Months Ended June 30,				Change						Six Months Ended June 30,				Change
	2023		2022		Amount			%			2023		2022		Amount			%
Automotive	$	9,930	$	9,528	$	402			4	%	$	18,727	$	19,065	$	(338	)		(2	)%
Security surveillance		5,368		7,524		(2,156	)		(29	)%	$	10,713		14,015		(3,302	)		(24	)%
Revenue	$	15,298	$	17,052	$	(1,754	)		(10	)%	$	29,440	$	33,080	$	(3,640	)		(11	)%

Revenue decreased by $1.8 million, or 10%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. This was primarily attributable to a $2.2 million decrease in security surveillance market revenue as a result of a decrease in volume of shipments and a decrease in average selling prices attributable to product mix. Automotive market revenue increased by $0.4 million due to an increase in volume shipments, offset by a decrease in average selling prices attributable to product mix.

Revenue decreased by $3.6 million, or 11%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. This was primarily attributable to a $3.3 million decrease in security surveillance revenue as a result of a decrease in volume of shipments and a decrease in average selling prices attributable to product mix. Automotive market revenue decreased by $0.3 million due to a decrease in average selling price attributable to product mix, offset by an increase in the volume of shipments.

Our product pricing has increased in our target markets in response to our increased manufacturing costs. Additionally, fluctuations in our overall average selling price are directly attributable to changes in product mix given the natural pricing variation of the products in our portfolio and customer base. When the product mix shifts towards the higher priced products in our portfolio, the average selling price will be higher than when the product mix shifts towards the lower price point products.

Revenue by geographic region

The table below sets forth revenue by geographic region as a percent of total revenue for the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
China		73	%		71	%		74	%		71	%
Taiwan		15			13			14			13
South Korea		9			9			9			9
Japan		2			7			2			6
Other		1			—			1			1
Total		100	%		100	%		100	%		100	%

Cost of revenue and gross margin (dollars in thousands)

	Three Months Ended June 30,						Change						Six Months Ended June 30,						Change
	2023			2022			Amount			%			2023			2022			Amount			%
Cost of revenue	$	7,071		$	7,679		$	(608	)		(8	)%	$	13,568		$	14,510		$	(942	)		(6	)%
Gross margin		54	%		55	%								54	%		56	%

Cost of revenue decreased by $0.6 million, or 8% for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, and gross margin decreased to 54% from 55% for the three months ended June 30, 2023 and 2022. Cost of revenue decreased by $0.9 million, or 6%, and gross margin decreased to 54% from 56% for the six months ended June 30, 2023 and 2022, respectively. Gross margin for the three months and six months ended June 30, 2023 was impacted by changes in product mix and market mix, and a decrease in average unit selling prices. We expect gross margins to fluctuate in future periods due to changes in customer and product mix, market mix, average unit selling prices, manufacturing costs, adjustments to inventory, if any, and end market product demand.

Research and development expense (dollars in thousands)

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	Three Months Ended June 30,				Change						Six Months Ended June 30,				Change
	2023		2022		Amount			%			2023		2022		Amount			%
Research and development	$	1,431	$	2,328	$	(897	)		(39	)%	$	3,543	$	4,218	$	(675	)		(16	)%

Research and development expenses decreased by $0.9 million, or 39%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, due to a $1.0 million decrease in tape-out expenses associated with the development of new products, offset by a $0.1 million increase in personnel-related and software expenses.

Research and development expenses decreased by $0.7 million, or 16%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, due to a $0.4 million decrease in tape-out expenses associated with the development of new products, $0.2 million decrease in personnel-related expenses, and $0.1 million decrease in software expenses.

Selling, general and administrative expense (dollars in thousands)

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2023		2022		Amount		%			2023		2022		Amount		%
Selling, general and administrative	$	2,663	$	2,347	$	316		13	%	$	4,893	$	4,825	$	68		1	%

Selling, general and administrative expenses increased by $0.3 million, or 13%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, due to a $0.2 million increase in professional service cost, and a $0.1 million increase in personnel-related expenses.

Selling, general and administrative expenses increased by $0.1 million, or 1%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, primarily due to a $0.4 million increase in professional service cost, offset by a $0.2 million decrease in personnel-related expenses, and a $0.2 million decrease in stock-based compensation cost.

Other income (expense), net (dollars in thousands)

	Three Months Ended June 30,					Change					Six Months Ended June 30,					Change
	2023		2022			Amount		%			2023		2022			Amount		%
Other income (expense), net	$	475	$	(52	)	$	527		1,013	%	$	954	$	(82	)	$	1,036		1,263	%

Other income (expense), net increased by $0.5 million or 1,013% for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, primarily due to an increase in interest income, offset by losses related to foreign currency exchange transactions and foreign currency fluctuations.

Other income (expense), net increased $1.0 million or 1,263% for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, primarily due to an increase in interest income, offset by losses related to foreign currency exchange transactions and foreign currency fluctuations.

Provision for income taxes (dollars in thousands)

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2023		2022		Amount		%			2023		2022		Amount			%
Provision for income taxes	$	558	$	544	$	14		3	%	$	964	$	966	$	(2	)		(0	)%

The changes in the provision for income taxes were flat for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022.

Liquidity and Capital Resources

Our primary use of cash is to fund our operations as we continue to grow our business. Cash used to fund operating expenses is impacted by the timing of when we pay expenses, as reflected in the changes in our outstanding accounts payable and accrued expenses. In 2021, our Board of Directors adopted a dividend policy to link dividend payments to business performance on an ongoing basis. During the six months ended June 30, 2023, cash used in financing activities consists primarily of $4.6 million in dividend payments to holders of our common stock (including common stock underlying JDS) under this recently adopted dividend policy. On

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June 2, 2023, we announced the second installment payment of our cash dividend to stockholders of record as of June 30, 2023, which was paid on July 18, 2023.

Our cash, cash equivalents, and short-term investments as of June 30, 2023 were $50.9 million. We believe our existing cash, cash equivalents, short-term investments, and cash we expect to generate from operations in the future will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the introduction of new and enhanced products and our costs to implement new manufacturing technologies or potentially acquire and integrate other companies or assets. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. Any debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Additionally, if we raise additional funds through further issuances of equity, or issue convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

A summary of operating, investing and financing activities are shown in the following table (in thousands):

	Six Months Ended
	June 30,
	2023			2022
Net cash provided by operating activities	$	7,560		$	10,444
Net cash provided by (used in) investing activities		2,954			(579	)
Net cash used in financing activities		(4,592	)		(4,472	)
Net increase in cash and cash equivalents	$	5,922		$	5,393

Operating Activities

Our primary source of cash from operating activities has been from cash collections from our customers. We expect cash flows from operating activities to be affected by fluctuations in sales. Our primary uses of cash from operating activities have been for personnel costs and investments in research and development and sales and marketing.

During the six months ended June 30, 2023, net cash provided by operating activities was $7.6 million, primarily due to net income of $7.4 million, non-cash charges of $0.5 million and net cash outflows from changes in operating assets and liabilities of $0.4 million.

Non-cash charges primarily consisted of stock-based compensation of $0.7 million, amortization of operating lease right-of-use assets of $0.3 million, an increase in the inventory valuation adjustment of $0.2 million, and depreciation of $0.2 million, partially offset by an increase in deferred tax assets of $0.6 million, and accretion of premium on available-for-sale investments of $0.3 million.

Net cash outflows from changes in operating assets and liabilities totaled $0.4 million, primarily consisting of a $0.3 million decrease in account payable and accrued liabilities due to the timing of customer payments, a $0.2 million decrease in other liabilities, and a $0.2 million increase in prepaid expense and other current asset due to timing of payments, partially offset by a $0.3 million decrease in inventory, as units manufactured during the period and on hand were less than product sales.

During the six months ended June 30, 2022, net cash provided by operating activities was $10.4 million, primarily due to net income of $8.5 million, non-cash charges of $1.2 million and net cash inflows from changes in operating assets and liabilities of $0.8 million. Non-cash charges primarily consisted of stock-based compensation of $1.0 million, amortization of operating lease right-of-use assets of $0.4 million, an increase in the inventory valuation allowance of $0.4 million and depreciation of $0.2 million, partially offset by an increase in deferred tax assets of $0.8 million. Net cash inflows from changes in operating assets and liabilities totaled $0.8 million, primarily consisting of a $1.2 million increase in accrued expenses due to timing of payments to vendors, a $0.3 million decrease in accounts receivable due to timing of receipts from customers versus shipment of units, and a $0.2 million decrease in prepaid expenses due to timing of payments, partially offset by a $0.6 million increase in inventory, as units manufactured during the period and on hand were in excess of product sales, and a $0.3 million decrease in lease and other liabilities.

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Investing Activities

During the six months ended June 30, 2023, cash provided by investing activities was $3.0 million, primarily consisting of a $11.1 million in proceeds from maturities of debt securities, offset by $6.0 million in purchase in debt securities, a $2.0 million in purchase of marketable securities, and a $0.1 million in purchase of property and equipment.

During the six months ended June 30, 2022, cash used in investing activities was $0.6 million, primarily consisting of $6.5 million in investments in debt securities and $0.4 million in purchases of property and equipment, which is partially offset by $6.3 million in proceeds from maturities of debt securities.

Financing Activities

During the six months ended June 30, 2023, cash used in financing activities was approximately $4.6 million, primarily due to the payment of $4.6 million in dividend payments. Other inflows consisted of proceeds from the exercise of stock options, offset by payments for tax withholdings due to vesting of restricted stock units.

During the six months ended June 30, 2022, cash used in financing activities was approximately $4.5 million, primarily due to the payment of $4.5 million in dividend payments. Other inflows consisted of proceeds from the exercise of stock options, offset by payments for tax withholdings due to vesting of restricted stock units.

Contractual Obligations

Our outstanding contractual obligations as of June 30, 2023 are summarized in the following table (in thousands):

			Payments Due by Period
	Total		Less than 1 year		1 to 3 years		More than 3 years
Purchase commitments	$	2,088		796		1,292		—
Operating leases		677		640		37		—

Obligations under contracts that we can cancel without a significant penalty are not included in the table above. We believe our cash provided by operations is sufficient to satisfy our contractual obligations for all periods presented.

Off-Balance Sheet Arrangements

During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies, Significant Estimates and Judgments

Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates, assumptions, and judgments on an ongoing basis. Our estimates, assumptions and judgments are based on historical experience and various other factors that we believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our financial statements, which, in turn, could change the results from those reported. Please see Note 1 of Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of significant accounting policies and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” of our Annual Report on Form 10-K for a summary of our critical accounting estimates.

Item 3. Quantitative and Qualitative

Disclosures About Market Risk.

We are exposed to market risk from fluctuations in foreign currency exchange rates and interest rates, which may adversely affect our results of operations and financial condition. We seek to minimize these risks through regular operating activities. We do not purchase, hold or sell derivative financial instruments for trading or speculative purposes.

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Foreign exchange rates

We transact business globally and are subject to risks associated with fluctuating foreign exchange rates. Substantially all of our revenue was derived from sales outside of the U.S. in the three and six months ended June 30, 2023 and 2022. This revenue is generated in U.S. dollars with sales through distributors worldwide. Our operating expenses are denominated in the currencies of the countries in which our subsidiaries are located and may be subject to fluctuations due to changes in foreign currency exchange rates. To date, we have not entered into any hedging contracts, but may elect to do so in the future. A hypothetical increase or decrease of 10% in foreign exchange rates for the three and six months ended June 30, 2023 and 2022 would not have resulted in a significant increase or decrease in revenue or net income during that period.

The U.S. dollar is the functional currency for all of our foreign operations. Monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency of the subsidiary at the balance sheet date. The gains and losses from remeasurement of foreign currency denominated balances into the functional currency of the subsidiary are included in other income (expense), net on our condensed consolidated statements of income and comprehensive income.

Interest rates

Our exposure to market risk for changes in interest rates relates primarily to our cash, cash equivalents and investments. Our cash, cash equivalents and investments consist primarily of cash, money market funds, corporate notes and bonds, and commercial paper. The primary objectives of our investment activities are the preservation of capital, the maintenance of liquidity, and capturing a market rate of return. We seek to minimize risk by investing cash in excess of our operating needs in high-quality instruments issued by highly creditworthy financial institutions. We do not purchase investments for trading or speculative purposes. Due to the nature of these instruments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Decreases in interest rates, however, would reduce future interest income.

A hypothetical increase or decrease of 10% in interest rates in the three and six months ended June 30, 2023 and 2022 would not have resulted in a significant increase or decrease in cash, cash equivalents or the fair value of our investment during those periods.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on management’s evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management continues to monitor the impact of the COVID-19 pandemic on our financial condition, liquidity, operations, suppliers, industry, and workforce. Additionally, we have undertaken measures to protect our employees, suppliers, and customers, including encouraging, and in many cases requiring employees to work remotely as appropriate. We have also modified some of our internal control procedures, but those changes have not been significant and have not materially affected and are not reasonably likely to materially affect our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Although we are not currently a party to any legal proceedings, and no legal proceeding is currently threatened against us, we may be subject to legal proceedings, claims and litigation, including intellectual property litigation, arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. We accrue amounts that we believe are adequate to address any liabilities related to legal proceedings and other loss contingencies that we believe may result in a probable loss that is reasonably estimable.

Item 1A. Risk Factors.

There have been no material changes to the previously disclosed risk factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. You should consider carefully these factors, together with all of the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, before making an investment decision.

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Item 6. Exhibits.

Exhibit Number	Description
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a).
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a).
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the registrant specifically incorporates it by reference.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Techpoint, Inc.
Date: August 10, 2023	By:	/s/ Fumihiro Kozato
		Fumihiro Kozato
		President and Chief Executive Officer (Principal Executive Officer)
Date: August 10, 2023	By:	/s/ Arthur Nguyen
		Arthur Nguyen
		Chief Financial Officer and Vice President of Administrations (Principal Financial Officer)

32

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Fumihiro Kozato, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Techpoint, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 10, 2023	By:	/s/ Fumihiro Kozato
		Fumihiro Kozato
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Arthur Nguyen, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Techpoint, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 10, 2023	By:	/s/ Arthur Nguyen
		Arthur Nguyen
		Chief Financial Officerand Vice President of Administrations (Principal Financial Officer)

EX-32.1

Exhibit 32.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Techpoint, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Fumihiro Kozato, the Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2023	By:	/s/ Fumihiro Kozato
		Fumihiro Kozato
		President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Techpoint, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Arthur Nguyen certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2023	By:	/s/ Arthur Nguyen
		Arthur Nguyen
		Chief Financial Officer and Vice President of Administrations (Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 03, 2023
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Registrant Name	Techpoint, Inc.
Entity Central Index Key	0001556898
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	000-55843
Entity Tax Identification Number	80-0806545
Entity Address, Address Line One	2550 N. First Street
Entity Address, Address Line Two	#550
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	USA 95131
Entity Address, Country	US
City Area Code	408
Local Phone Number	324-0588
Entity Common Stock, Shares Outstanding		18,357,861
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Document Quarterly Report	true
Document Transition Report	false
Japanese Depositary Shares | Japan Exchange Group
Document Information [Line Items]
Trading Symbol	0001556898
Title of 12(b) Security	Japanese Depositary Shares, each representing one
Common Stock, Par Value
Document Information [Line Items]
Trading Symbol	0001556898
Title of 12(b) Security	Common Stock, $0.0001 Par Value Per Share

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 25,314	$ 19,392
Short-term investments	25,597	25,289
Accounts receivable	188	105
Inventory, net	13,146	13,709
Prepaid expenses and other current assets	692	618
Total current assets	64,937	59,113
Property and equipment, net	518	634
Deferred tax assets	2,877	2,280
Right-of-use assets	654	983
Long-term investments	6,795	9,737
Other assets	183	193
Total assets	75,964	72,940
Current liabilities:
Accounts payable	1,300	2,100
Accrued liabilities	2,064	1,564
Customer deposits	1,646	1,545
Lease liabilities	594	700
Dividend payable	4,583	4,551
Total current liabilities	10,187	10,460
Other liabilities	168	404
Total liabilities	10,355	10,864
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, par value $0.0001 per share - 5,000,000 shares authorized as of June 30, 2023 and December 31, 2022; nil shares issued and outstanding as of June 30, 2023 and December 31, 2022
Common stock, par value $0.0001 per share - 75,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 18,330,591 and 18,198,737 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	2	2
Additional paid-in capital	26,739	26,046
Accumulated other comprehensive loss	(146)	(147)
Retained earnings	39,014	36,175
Total stockholders’ equity	65,609	62,076
Total liabilities and stockholders’ equity	$ 75,964	$ 72,940

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	18,330,591	18,198,737
Common stock, shares outstanding	18,330,591	18,198,737

XML

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Revenue	$ 15,298	$ 17,052	$ 29,440	$ 33,080
Cost of revenue	7,071	7,679	13,568	14,510
Gross profit	8,227	9,373	15,872	18,570
Operating expenses
Research and development	1,431	2,328	3,543	4,218
Selling, general and administrative	2,663	2,347	4,893	4,825
Total operating expenses	4,094	4,675	8,436	9,043
Income from operations	4,133	4,698	7,436	9,527
Other income (expense), net	475	(52)	954	(82)
Income before income taxes	4,608	4,646	8,390	9,445
Provision for income taxes	558	544	964	966
Net income	$ 4,050	$ 4,102	$ 7,426	$ 8,479
Net income per share:
Basic	$ 0.22	$ 0.23	$ 0.41	$ 0.47
Diluted	$ 0.22	$ 0.22	$ 0.40	$ 0.46
Weighted average shares outstanding used in computing net income per share
Basic	18,294,629	18,073,922	18,263,029	18,044,835
Diluted	18,605,638	18,484,304	18,590,921	18,533,749
Comprehensive income:
Net income	$ 4,050	$ 4,102	$ 7,426	$ 8,479
Other comprehensive income, net of tax:
Unrealized loss on available-for-sale debt securities, net of tax benefit of $8, $8, $0 and $21 for the three and six months ended June 30, 2023 and 2022, respectively	(31)	(28)	1	(78)
Comprehensive income	$ 4,019	$ 4,074	$ 7,427	$ 8,401

XML

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Unrealized loss on available-for-sale debt securities, net of tax benefit	$ 8	$ 8	$ 0	$ 21

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Retained Earnings
Beginning Balances at Dec. 31, 2021	$ 51,817	$ 2	$ 24,251	$ (26)	$ 27,590
Beginning Balances, Shares at Dec. 31, 2021		17,928,748
Other comprehensive (loss) income - unrealized (loss) gain on available-for-sale debt securities	(50)			(50)
Issuance of common stock upon exercise of stock options and vesting of early exercised options	142		142
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		79,517
Issuance of common stock upon vesting of restricted stock units, Shares		32,225
Shares repurchased for tax withholdings on vesting of restricted stock units	(82)		(82)
Shares repurchased for tax withholdings on vesting of restricted stock units, Shares		(5,906)
Stock-based compensation	515		515
Net income	4,377				4,377
Ending Balances at Mar. 31, 2022	56,719	$ 2	24,826	(76)	31,967
Ending Balances, Shares at Mar. 31, 2022		18,034,584
Beginning Balances at Dec. 31, 2021	51,817	$ 2	24,251	(26)	27,590
Beginning Balances, Shares at Dec. 31, 2021		17,928,748
Net income	8,479
Ending Balances at Jun. 30, 2022	56,714	$ 2	25,274	(104)	31,542
Ending Balances, Shares at Jun. 30, 2022		18,108,593
Beginning Balances at Mar. 31, 2022	56,719	$ 2	24,826	(76)	31,967
Beginning Balances, Shares at Mar. 31, 2022		18,034,584
Other comprehensive (loss) income - unrealized (loss) gain on available-for-sale debt securities	(28)			(28)
Issuance of common stock upon exercise of stock options and vesting of early exercised options	24		24
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		8,838
Issuance of common stock upon vesting of restricted stock units, Shares		70,975
Shares repurchased for tax withholdings on vesting of restricted stock units	(51)		(51)
Shares repurchased for tax withholdings on vesting of restricted stock units, Shares		(5,804)
Stock-based compensation	475		475
Cash dividends declared/adjustments ($0.25 per share)	(4,527)				(4,527)
Net income	4,102				4,102
Ending Balances at Jun. 30, 2022	56,714	$ 2	25,274	(104)	31,542
Ending Balances, Shares at Jun. 30, 2022		18,108,593
Beginning Balances at Dec. 31, 2022	62,076	$ 2	26,046	(147)	36,175
Beginning Balances, Shares at Dec. 31, 2022		18,198,737
Other comprehensive (loss) income - unrealized (loss) gain on available-for-sale debt securities	32			32
Issuance of common stock upon exercise of stock options and vesting of early exercised options	29		29
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		24,600
Issuance of common stock upon vesting of restricted stock units, Shares		32,425
Shares repurchased for tax withholdings on vesting of restricted stock units	(35)		(35)
Shares repurchased for tax withholdings on vesting of restricted stock units, Shares		(4,636)
Stock-based compensation	362		362
Cash dividends declared/adjustments ($0.25 per share)	(4)				(4)
Net income	3,376				3,376
Ending Balances at Mar. 31, 2023	65,836	$ 2	26,402	(115)	39,547
Ending Balances, Shares at Mar. 31, 2023		18,251,126
Beginning Balances at Dec. 31, 2022	62,076	$ 2	26,046	(147)	36,175
Beginning Balances, Shares at Dec. 31, 2022		18,198,737
Net income	7,426
Ending Balances at Jun. 30, 2023	65,609	$ 2	26,739	(146)	39,014
Ending Balances, Shares at Jun. 30, 2023		18,330,591
Beginning Balances at Mar. 31, 2023	65,836	$ 2	26,402	(115)	39,547
Beginning Balances, Shares at Mar. 31, 2023		18,251,126
Other comprehensive (loss) income - unrealized (loss) gain on available-for-sale debt securities	(31)			(31)
Issuance of common stock upon exercise of stock options and vesting of early exercised options	10		10
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		3,250
Issuance of common stock upon vesting of restricted stock units, Shares		82,325
Shares repurchased for tax withholdings on vesting of restricted stock units	(41)		(41)
Shares repurchased for tax withholdings on vesting of restricted stock units, Shares		(6,110)
Stock-based compensation	368		368
Cash dividends declared/adjustments ($0.25 per share)	(4,583)				(4,583)
Net income	4,050				4,050
Ending Balances at Jun. 30, 2023	$ 65,609	$ 2	$ 26,739	$ (146)	$ 39,014
Ending Balances, Shares at Jun. 30, 2023		18,330,591

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares		3 Months Ended
	Dec. 16, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Cash dividends declared per share	$ 0.5	$ 0.25	$ 0.25

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows From Operating Activities
Net income	$ 7,426	$ 8,479
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	201	207
Stock-based compensation	730	990
(Accretion) Amortization of premium on available-for-sale investments	(318)	99
Inventory valuation adjustment	218	359
Deferred income taxes	(597)	(838)
Noncash lease expense	303	377
Changes in operating assets and liabilities:
Accounts receivable	(83)	286
Inventory	345	(597)
Prepaid expenses and other current assets	(186)	246
Other assets	10	17
Accounts payable	(788)	(1)
Accrued liabilities	514	1,249
Customer deposits	101	(96)
Lease liabilities	(80)	(140)
Other liabilities	(236)	(193)
Net cash provided by operating activities	7,560	10,444
Cash Flows From Investing Activities
Purchase of property and equipment	(111)	(361)
Purchases of debt securities	(6,035)	(6,468)
Proceeds from maturities of debt securities	11,100	6,250
Purchase of marketable securities	(2,000)
Net cash provided by (used in) investing activities	2,954	(579)
Cash Flows From Financing Activities
Payment of dividends	(4,555)	(4,504)
Net proceeds from exercise of stock options	39	165
Payment for shares withheld for tax withholdings on vesting of restricted stock units	(76)	(133)
Net cash used in financing activities	(4,592)	(4,472)
Net increase in cash and cash equivalents	5,922	5,393
Cash and cash equivalents at beginning of period	19,392	27,379
Cash and cash equivalents at end of period	25,314	32,772
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	1,589	1,817
Supplemental Disclosure of Noncash Investing and Financing Information
Property and equipment purchased but not yet paid	32	38
Cash dividend declared but not yet paid	$ 4,583	$ 4,527

XML

Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Organization

Techpoint, Inc. (together with its wholly-owned subsidiaries, the “Company”) was originally incorporated in California in April 2012 and reincorporated in Delaware in July 2017. The Company is a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. The Company is headquartered in San Jose, California.

Basis of Consolidation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated. The functional currency of each of the Company’s subsidiaries is the U.S. dollar. Foreign currency gains or losses are recorded as other income (expense), net in the condensed consolidated statements of income and comprehensive income.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022 contained in the Company’s Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which only include normal recurring adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods and are not necessarily indicative of the results to be expected for the full fiscal year or for any other future annual or interim periods.

Revenue Recognition

The Company principally sells its products to distributors who, in turn, sell to original equipment manufacturers (“OEM”), original design manufacturers (“ODM”), contract manufacturers, and design houses. Product revenue consists of sales of mixed-signal integrated circuits into the security surveillance and automotive markets. The Company generally requires advance payments from customers and records these advance payments, or contract liabilities, as customer deposits on its condensed consolidated balance sheet. No stock rotation, price protection or return rights are offered. The Company provides product assurance warranty only and does not offer warranties to be purchased separately. Revenue is recognized when control of the product is transferred to the Company's customers, upon shipment, whereby legal title, risks and rewards of ownership, and physical possession are transferred to the customer.

Use of Management’s Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Significant estimates included in the condensed consolidated financial statements include inventory valuation and the valuation allowance for recorded deferred tax assets. These estimates are based upon information available as of the date of the condensed consolidated financial statements. Actual results could differ materially from those estimates.

Certain Significant Risks and Uncertainties

The Company operates in a dynamic industry and can be affected by a variety of factors. For example, any of the following areas could have a negative effect on the Company in terms of its future financial position, results of operations or cash flows: the general state of the U.S., China and world economies; the highly cyclical nature of the industries the Company serves; successful and timely completion of product design efforts; trade restrictions by the United States against the Company's customers in China, or potential retaliatory trade actions taken by China; the loss of any of its larger customers; restrictions on the Company's ability to sell to foreign customers due to additional U.S. or new China trade laws, regulations and requirements; disruptions of the supply chain of components needed for its products; fundamental changes in the technology underlying the Company’s products; the hiring, training and retention of key employees; and new product design introductions by competitors.

The Company has been impacted by adverse macroeconomic and geopolitical conditions. These conditions include but are not limited to inflation, foreign currency fluctuations, the COVID-19 pandemic, and the supply chain challenges and disruptions caused by any of these events. Management continues to actively monitor the impact of these conditions on the Company’s financial condition, liquidity, operations, end-customers (including its significant end-customers), distributors, suppliers, industry, and workforce. The extent to which such events impact the Company’s business, prospects and results of operations will depend on future developments, which are highly uncertain. The Company has made estimates of the impact of these events within its financial statements and there may be changes to those estimates in future periods.

Concentration of Customer and Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, and trade receivables. Risks associated with cash and cash equivalents, and investments are mitigated by banking with, and investing in, creditworthy institutions. The Company generally requires advance payments from customers. The Company also performs credit evaluations of its customers and provides credit to certain customers in the normal course of business. The Company has not incurred bad debt write-offs during any of the periods presented.

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Customer
Customer A		44	%		50	%		45	%		50	%
End-Customer
End-Customer A (1)		26	%		36	%		26	%		35	%

(1)Sales to End-Customer A primarily occurred through Customer A.

Concentration of Supplier Risk

The Company currently relies on Taiwan Semiconductor Manufacturing Company Limited and United Microelectronics Corporation (formerly Fujitsu Electronics America, Inc.) to produce substantially all of its semiconductors. Also, it relies on Advanced Semiconductor Engineering, Inc. and Sigurd Microelectronics Corporation to assemble, package and test substantially all of its semiconductors to satisfy substantially all of the Company’s production requirements. The failure of any subcontractor to fulfill the production requirements of the Company on a timely basis would adversely impact future results. Although there are other subcontractors that are capable of providing similar services, an unexpected change in either subcontractor would cause delays in the Company’s products and potentially result in a significant loss of revenue.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after December 15, 2022 for reporting companies that are eligible to be smaller reporting companies under the SEC’s definition, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2023.

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Balance Sheet Components

6 Months Ended

Jun. 30, 2023

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

2. Balance Sheet Components

Inventory, net

Inventory consists of the following (in thousands):

	June 30,		December 31,
	2023		2022
Finished goods	$	6,641	$	5,088
Work in process		6,505		8,621
Total inventory, net	$	13,146	$	13,709

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):

	June 30,			December 31,
	2023			2022
Computer equipment and software	$	2,607		$	2,521
Leasehold improvements		94			94
Furniture		36			36
Total property and equipment		2,737			2,651
Less: accumulated depreciation		(2,219	)		(2,017	)
Total property and equipment, net	$	518		$	634

The Company recorded $0.1 million of depreciation expense for each of the three months ended June 30, 2023 and 2022, and $0.2 million for each of the six months ended June 30, 2023 and 2022.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Payroll-related expenses	$	1,415	$	812
Engineering services		173		282
Professional fees		150		52
Accrued warranty		148		173
Taxes payable		89		152
Accrued inventory		76		71
Other		13		22
Total accrued liabilities	$	2,064	$	1,564

Customer Deposits

Customer deposits represent payments received in advance of shipments and fluctuate depending on timing of customer pre-payments and product shipment. Customer deposits were $1.6 million and $1.5 million as of June 30, 2023 and December 31, 2022, respectively. The Company generally expects to recognize revenue from customer deposits during the three month period immediately following the balance sheet date. The Company recognized $1.7 million of revenue from the March 31, 2023 customer deposit balance during the three months ended June 30, 2023, and $1.5 million of revenue from the December 31, 2022 customer deposits balance during the three months ended March 31, 2023.

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Fair Value Measurements of Financial Instruments

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements of Financial Instruments

3. Fair Value Measurements of Financial Instruments

Summary of Financial Instruments

The following is a summary of financial instruments (in thousands):

	June 30, 2023
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Values
Available-for-sale securities:
Certificates of deposit	$	6,133	$	—	$	—		$	6,133
Money market funds		18,311		—		—			18,311
Commercial papers		3,483		—		(2	)		3,481
Government agency bonds		5,010		—		(25	)		4,985
Corporate bonds		17,951		—		(158	)		17,793
Total available-for-sale securities	$	50,888	$	—	$	(185	)	$	50,703
Reported in:
Cash and cash equivalents								$	18,311
Short-term investments									25,597
Long-term investments									6,795
Total available-for-sale securities								$	50,703

	December 31, 2022
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Values
Available-for-sale securities:
Certificates of deposit	$	4,007	$	—	$	—		$	4,007
Treasury bills		3,983	1			—			3,984
Money market funds		2,183		—		—			2,183
Commercial papers		13,631		—		(20	)		13,611
Government agency bonds		3,391		1		(19	)		3,373
Corporate bonds		21,654		1		(149	)		21,506
Total available-for-sale securities	$	48,849	$	3	$	(188	)	$	48,664
Reported in:
Cash and cash equivalents								$	13,638
Short-term investments									25,289
Long-term investments									9,737
Total available-for-sale securities								$	48,664

The contractual maturities of available-for-sale securities are presented in the following table (in thousands):

	June 30, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	44,011		43,908	$	39,012	$	38,927
Due between one to two years		6,877		6,795		9,837		9,737
	$	50,888	$	50,703	$	48,849	$	48,664

The Company had 39 investments in unrealized loss positions as of June 30, 2023. 37 investments have been in unrealized loss positions for less than twelve months. The total fair value of such investments is $26.3 million with unrealized losses of approximately $0.2 million as of June 30, 2023. There were no material gross unrealized losses from available-for-sale securities and no material realized gains or losses from available-for-sale securities that were reclassified from accumulated other comprehensive income for the six months ended June 30, 2023.

For investments in available-for-sale debt securities that have unrealized losses, the Company evaluates (i) whether it has the intention to sell any of these investments and (ii) whether it is more likely than not that it will be required to sell any of these

investments before recovery of the entire amortized cost basis. Based on this evaluation, the Company determined that there were no other-than-temporary impairments associated with investments as of June 30, 2023.

There were no sales of available-for-sale securities for the six months ended June 30, 2023 and 2022.

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Financial assets measured at fair value on a recurring basis were as follows (in thousands):

	Fair Value Measurement at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
As of June 30, 2023
Financial assets - available-for-sale securities
Certificates of deposit	$	6,133	$	—	$	6,133
Money market funds		18,311		—		18,311
Commercial papers		—		3,481		3,481
Governmental agency bonds		—		4,985		4,985
Corporate bonds		—		17,793		17,793
Total financial assets - available-for-sale securities	$	24,444	$	26,259	$	50,703
As of December 31, 2022
Financial assets - available-for-sale securities
Certificates of deposit	$	4,007	$	—	$	4,007
Treasury bills		3,984		—		3,984
Money market funds		2,183		—		2,183
Commercial papers		—		13,611		13,611
Governmental agency bonds		—		3,373		3,373
Corporate bonds		—		21,506		21,506
Total financial assets - available-for-sale securities	$	10,174	$	38,490	$	48,664

The Company classifies certificates of deposit and treasury bills in Level 1 since valuations are based on direct or indirect observable input other than quoted market price. The Company also classifies money market funds in Level 1 since the financial assets consist of securities for which quoted prices are available in an active market.

The Company classifies governmental agency bonds, corporate bonds and commercial papers in Level 2 since the financial assets use observable inputs including quoted prices in active markets for similar assets or liabilities. The Company uses a pricing service to assist in determining the fair values of all of its cash equivalents, short-term investments and long-term investments. The pricing service uses inputs from multiple industry standard data providers or other third party sources and applies various acceptable methodologies.

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Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Information

4. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker, the chief executive officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance on a regular basis. Accordingly, the Company considers itself to be one reportable segment, which is comprised of one operating segment - the designing, marketing and selling of mixed-signal integrated circuits for the security surveillance and automotive markets.

Product revenue from customers is designated based on the geographic region to which the product is delivered. Revenue by geographic region was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
China	$	11,233	$	12,054	$	21,752	$	23,311
Taiwan		2,291		2,147		4,062		4,392
South Korea		1,390		1,525		2,763		2,995
Japan		326		1,276		707		1,914
Other		58		50		156		468
Total revenue	$	15,298	$	17,052	$	29,440	$	33,080

Revenue by principal product lines was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Automotive	$	9,930	$	9,528	$	18,727	$	19,065
Security surveillance		5,368		7,524		10,713		14,015
Total revenue	$	15,298	$	17,052	$	29,440	$	33,080

Long-lived assets by geographic region were as follows (in thousands):

	June 30,		December 31,
	2023		2022
Taiwan	$	339	$	389
China		136		179
United States		35		52
Japan		5		8
South Korea		3		6
Total property and equipment - net	$	518	$	634

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Operating leases

The Company determines if an arrangement contains a lease at inception. The Company leases facilities under non-cancelable lease agreements expiring through fiscal year 2024. The Company’s agreements do not include variable lease payments or any restrictions or covenants imposed by the leases. As the rate implicit in each lease agreement is not readily determinable, the Company’s incremental borrowing rate was used as the discount rate. The Company’s right-of-use assets and lease liabilities have been adjusted for initial direct costs and prepaid rent but do not reflect any options to extend or terminate its lease agreements, any residual value guarantees, or any leases that have not yet commenced.

The right-of-use assets and lease liabilities related to operating leases were as follows (in thousands):

			December 31,
	June 30, 2023		2022
Right-of-use assets	$	654	$	983
Lease liabilities － Current	$	594	$	700
Lease liabilities － Non-Current		34		284
Total lease liabilities	$	628	$	984

Rent expense under operating leases was $0.2 million for each of the three months ended June 30, 2023 and 2022. Rent expense under operating leases was $0.4 million for each of the six months ended June 30, 2023 and 2022.

The rent expense recognized from short-term leases was $6,000 for each of the three months ended June 30, 2023 and 2022, respectively. The rent expense recognized from short-term leases was $12,000 for each of the six months ended June 30, 2023 and 2022.

The following tables summarize the Company’s lease costs and weighted-average assumptions used in determining its right-of-use assets and lease liabilities (in thousands):

	Six Months Ended			Six Months Ended
	June 30, 2023			June 30, 2022
Operating lease cost	$	380		$	397
Cash paid for operating leases	$	385		$	366
Right-of-use assets obtained in exchange for operating lease liabilities (1)	$	26		$	146
Weighted average remaining term for operating leases	0.92 years			1.64 years
Weighted average discount rate for operating leases		5.8	%		3.8	%

(1)During the six months ended June 30, 2023, the Company extended the term of its lease in South Korea; the South Korea lease was treated as a modification but not as a separate contract, as no additional right-of-use was granted. The South Korea lease modification was accounted for as a non-cash change in existing lease liabilities and the right-of-use assets.

During the six months ended June 30, 2022, the Company entered into a new lease in Taiwan when its existing facility lease terminated and extended the term of its lease in South Korea; the South Korea lease was treated as a modification but not as a separate contract, as no additional right-of-use was granted. The South Korea lease modification was accounted for as a non-cash change in existing lease liabilities and the right-of-use assets.

As of June 30, 2023, the aggregate future minimum lease payments under non-cancelable operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2023 (remaining six months)	$	387
2024		290
Total		677
Less effects of discounting		(49	)
Total lease liabilities	$	628

Purchase Commitments

As of June 30, 2023, the Company had purchase commitments with its third-party suppliers through fiscal year 2026. Future minimum payments under purchase commitments total $0.4 million for the remaining six months ending December 31, 2023, $0.7 million for the year ending December 31, 2024, $0.7 million for the year ending December 31, 2025, and $0.3 million for the year ending December 31, 2026.

Litigation

Although the Company is not currently a party to any legal proceedings and there is no litigation currently threatened, the Company may be subject to legal proceedings, claims and litigation, including intellectual property litigation, arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. The Company

accrues amounts that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss that is reasonably estimable.

Indemnification

During the normal course of business, the Company may make certain indemnities, commitments and guarantees which may include intellectual property indemnities to certain of its customers in connection with the sales of the Company’s products and indemnities for liabilities associated with the infringement of other parties’ technology based upon the Company’s products. The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by a customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in such capacities.

The Company has not recorded any liability for these indemnities, commitments and guarantees in the accompanying condensed consolidated balance sheets. Where necessary, the Company accrues for losses for any known contingent liabilities, including those that may arise from indemnification provisions, when future payment is probable.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Stockholders' Equity

6. Stockholders’ Equity

Preferred Stock

The Company was authorized to issue 5,000,000 shares of preferred stock with a $0.0001 par value per share as of June 30, 2023 and December 31, 2022. There were no shares of preferred stock issued and outstanding as of June 30, 2023 and December 31, 2022.

Common Stock

The Company was authorized to issue 75,000,000 shares of common stock with $0.0001 par value per share as of June 30, 2023 and December 31, 2022. As of June 30, 2023, the shares of common stock issued and outstanding totaled 18,330,591. As of December 31, 2022, the shares of common stock issued and outstanding were 18,198,737.

The Company has reserved the following number of shares of common stock for future issuances:

	June 30, 2023
Outstanding stock awards		818,546
Shares available for future issuance under the 2017 Stock Incentive Plan		7,355,597
Total common stock reserved for future issuances		8,174,143

Dividend

On December 16, 2022, the Company announced a cash dividend of an aggregate of $0.50 per share for fiscal 2023, payable in two equal installments of $0.25 per share. The first installment of the dividend was paid during the first fiscal quarter of 2023 in the aggregate amount of $4.6 million to stockholders of record as of the close of business on January 31, 2023. On June 2, 2023, the Company announced that the second installment payment of its cash dividend of $0.25 on shares of its common stock (including common stock underlying its Japanese Depositary Shares ("JDS")), which was paid to stockholders of record as of June 30, 2023 on July 18, 2023.

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Equity Incentive Plans

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plans

7. Equity Incentive Plans

Stock Incentive Plans

In April 2012, the Company adopted a 2012 Stock Option Plan (“2012 Plan”). The 2012 Plan provides for the granting of stock-based awards to employees, directors, and consultants under terms and provisions established by the Company’s board of directors. Under the terms of the 2012 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and non-statutory stock options must be at least 110% of the fair market value of the common stock on the grant date, as determined by the Company’s board of directors. The terms of options granted under the 2012 Plan may not exceed ten years.

The 2012 Plan was superseded by a 2017 Stock Option Plan (“2017 Plan”). Any outstanding awards under the 2012 Plan will continue to be governed by the terms of the 2012 Plan.

In August 2017, the Company adopted the 2017 Plan. The Company’s stockholders approved the 2017 Plan in September 2017 and it became effective immediately prior to the closing of the Company’s initial public offering. In connection with the adoption of the 2017 Plan, no additional awards and no shares of common stock remain available for future issuance under the 2012 Plan and shares reserved but not issued under the 2012 Plan as of the effective date of the 2017 Plan were included in the number of shares reserved for issuance under the 2017 Plan. In addition, shares subject to awards under the 2012 Plan that are forfeited or terminated are added to the 2017 Plan. The number of shares available for issuance under the 2017 Plan is automatically increased on the first day of each fiscal year beginning on January 1, 2018 and ending on (and including) January 1, 2027, in an amount equal to the lesser of (1) 4% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or (2) another amount determined by the Company’s board of directors. The automatic increase in the number of shares available for issuance under the 2017 plan for the fiscal year 2023 was 727,949 shares. The 2017 Plan provides for the granting of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to employees and the granting of non-statutory stock options to employees, non-employee directors, advisors and consultants. The 2017 Plan also provides for the grants of restricted stock, stock appreciation rights, stock unit and cash-based awards to employees, non-employee directors, advisors and consultants.

The Company’s stock award activity under the stock incentive plan is summarized as follows:

	Awards Available for Grant
As of December 31, 2022		6,674,252
Authorized		727,949
Granted		(66,500	)
Canceled		19,896
As of June 30, 2023		7,355,597

Stock Options

The Company’s stock option activity under the stock incentive plan is summarized as follows:

	Options Issued and Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
As of December 31, 2022		464,621		$	2.70		4.2	$	2,106
Granted		—			—
Exercised		(27,850	)		1.41
Canceled		—			—
As of June 30, 2023		436,771			2.78		3.7		1,865
Options vested and exercisable as of June 30, 2023		436,771			2.78		3.7		1,865

The stock options outstanding and exercisable by exercise price at June 30, 2023 are as follows:

		Options Outstanding, Vested and Exercisable
Exercise Price		Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price
$	0.16		3,250		0.6	$	0.16
	0.37		11,750		2.1		0.37
	0.97		11,000		2.5		0.97
	2.51		51,780		3.2		2.51
	2.89		40,000		3.7		2.89
	2.93		238,734		3.9		2.93
	3.18		80,257		4.1		3.18
			436,771		3.7		2.78

The aggregate intrinsic value of options exercised for the six months ended June 30, 2023 and 2022 was $0.1 million and $1.1 million, respectively. The Company has various vesting agreements with its employees. Options granted generally vest over a five-year period and generally are exercisable for up to 10 years.

Restricted Stock Units

The Company’s restricted stock units activity is summarized as follows:

	Units Issued and Outstanding			Weighted-Average Grant Date Fair Value
As of December 31, 2022		439,175		$	8.41
Granted		66,500			7.03
Released, net		(104,004	)		7.12
Canceled		(19,896	)		8.32
As of June 30, 2023		381,775			8.19

Restricted stock units are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Restricted stock unit awards generally vest over a five-year period and are subject to the grantee’s continued service with the Company.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

The following table summarizes the distribution of stock-based compensation expense (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Cost of revenue	$	40	$	37	$	76	$	75
Research and development		115		144		234		284
Selling, general and administrative		213		294		420		631
Total	$	368	$	475	$	730	$	990

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Net Income Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Net Income Per Share

9. Net Income Per Share

The following table presents the calculation of basic and diluted net income per share (amounts in thousands, except share and per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Numerator:
Basic and Diluted:
Net income	$	4,050	$	4,102	$	7,426	$	8,479
Denominator:
Basic shares:
Weighted-average shares outstanding used in computing basic    net income per share		18,294,629		18,073,922		18,263,029		18,044,835
Diluted shares:
Effect of potentially dilutive securities:
Stock options and restricted stock units		311,009		410,382		327,892		488,914
Weighted-average shares used in computing diluted net    income per share		18,605,638		18,484,304		18,590,921		18,533,749
Net income per share:
Basic	$	0.22	$	0.23	$	0.41	$	0.47
Diluted	$	0.22	$	0.22	$	0.40	$	0.46

The potentially dilutive shares of common stock outstanding for the three months ended June 30, 2023 and 2022 that were excluded from the computation of diluted net income per share as the effect would have been antidilutive, was approximately 299,000 and 61,000 shares, respectively. The potentially dilutive shares of common stock outstanding for the six months ended June 30, 2023 and 2022 that were excluded from the computation of diluted net income per share for the periods presented as the effect would have been antidilutive was 269,000 and 29,000 shares, respectively.

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Provision for Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Provision for Income Taxes

10. Provision for Income Taxes

The components of income before income taxes were as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2023		2022			2023		2022
Domestic	$	4,599	$	4,676		$	8,321	$	9,445
Foreign		9		(30	)		69		—
Income before income taxes	$	4,608	$	4,646		$	8,390	$	9,445

The components of the provision for income taxes were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
United States		556		543		956		961
Foreign		2		1		8		5
Provision for income taxes	$	558	$	544	$	964	$	966

As of June 30, 2023, there was no material increase in the liability for unrecognized tax benefits and no accrued interest or penalties related to uncertain tax positions.

As of June 30, 2023, the Company had approximately $0.4 million of unrecognized tax benefits of which $0.3 million was netted against deferred tax assets with a full valuation allowance. If these amounts are recognized, there will be a tax benefit of $0.1 million against the Company’s effective tax rate.

The CHIPS and Science Act of 2022 ("CHIPS") and the Inflation Reduction Act ("IRA") of 2022 were signed into law by President Biden on August 9, 2022 and August 16, 2022, respectively. The legislation introduces new options for monetizing certain

credits, a corporate alternative minimum tax, and a stock repurchase excise tax. The Company has concluded that the impact of any of the provisions included in CHIPS and IRA acts did not have a material impact on the Company's unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2023.

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Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

In July 2023, the Company acquired certain assets of Broadvis Corporation, a privately held company with operations in Chengdu, Sichuan, China, including intellectual property for the enhancement of semiconductor functions for automotive applications for $2.0 million.

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Techpoint, Inc. (together with its wholly-owned subsidiaries, the “Company”) was originally incorporated in California in April 2012 and reincorporated in Delaware in July 2017. The Company is a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. The Company is headquartered in San Jose, California.

Basis of Consolidation and Significant Accounting Policies

Basis of Consolidation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated. The functional currency of each of the Company’s subsidiaries is the U.S. dollar. Foreign currency gains or losses are recorded as other income (expense), net in the condensed consolidated statements of income and comprehensive income.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022 contained in the Company’s Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which only include normal recurring adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods and are not necessarily indicative of the results to be expected for the full fiscal year or for any other future annual or interim periods.

Revenue Recognition

Revenue Recognition

The Company principally sells its products to distributors who, in turn, sell to original equipment manufacturers (“OEM”), original design manufacturers (“ODM”), contract manufacturers, and design houses. Product revenue consists of sales of mixed-signal integrated circuits into the security surveillance and automotive markets. The Company generally requires advance payments from customers and records these advance payments, or contract liabilities, as customer deposits on its condensed consolidated balance sheet. No stock rotation, price protection or return rights are offered. The Company provides product assurance warranty only and does not offer warranties to be purchased separately. Revenue is recognized when control of the product is transferred to the Company's customers, upon shipment, whereby legal title, risks and rewards of ownership, and physical possession are transferred to the customer.

Use of Management's Estimates

Use of Management’s Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Significant estimates included in the condensed consolidated financial statements include inventory valuation and the valuation allowance for recorded deferred tax assets. These estimates are based upon information available as of the date of the condensed consolidated financial statements. Actual results could differ materially from those estimates.

Certain Significant Risks and Uncertainties

Certain Significant Risks and Uncertainties

The Company operates in a dynamic industry and can be affected by a variety of factors. For example, any of the following areas could have a negative effect on the Company in terms of its future financial position, results of operations or cash flows: the general state of the U.S., China and world economies; the highly cyclical nature of the industries the Company serves; successful and timely completion of product design efforts; trade restrictions by the United States against the Company's customers in China, or potential retaliatory trade actions taken by China; the loss of any of its larger customers; restrictions on the Company's ability to sell to foreign customers due to additional U.S. or new China trade laws, regulations and requirements; disruptions of the supply chain of components needed for its products; fundamental changes in the technology underlying the Company’s products; the hiring, training and retention of key employees; and new product design introductions by competitors.

The Company has been impacted by adverse macroeconomic and geopolitical conditions. These conditions include but are not limited to inflation, foreign currency fluctuations, the COVID-19 pandemic, and the supply chain challenges and disruptions caused by any of these events. Management continues to actively monitor the impact of these conditions on the Company’s financial condition, liquidity, operations, end-customers (including its significant end-customers), distributors, suppliers, industry, and workforce. The extent to which such events impact the Company’s business, prospects and results of operations will depend on future developments, which are highly uncertain. The Company has made estimates of the impact of these events within its financial statements and there may be changes to those estimates in future periods.

Concentration of Customer and Credit Risk

Concentration of Customer and Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, and trade receivables. Risks associated with cash and cash equivalents, and investments are mitigated by banking with, and investing in, creditworthy institutions. The Company generally requires advance payments from customers. The Company also performs credit evaluations of its customers and provides credit to certain customers in the normal course of business. The Company has not incurred bad debt write-offs during any of the periods presented.

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Customer
Customer A		44	%		50	%		45	%		50	%
End-Customer
End-Customer A (1)		26	%		36	%		26	%		35	%

(1)Sales to End-Customer A primarily occurred through Customer A.

Concentration of Supplier Risk

Concentration of Supplier Risk

The Company currently relies on Taiwan Semiconductor Manufacturing Company Limited and United Microelectronics Corporation (formerly Fujitsu Electronics America, Inc.) to produce substantially all of its semiconductors. Also, it relies on Advanced Semiconductor Engineering, Inc. and Sigurd Microelectronics Corporation to assemble, package and test substantially all of its semiconductors to satisfy substantially all of the Company’s production requirements. The failure of any subcontractor to fulfill the production requirements of the Company on a timely basis would adversely impact future results. Although there are other subcontractors that are capable of providing similar services, an unexpected change in either subcontractor would cause delays in the Company’s products and potentially result in a significant loss of revenue.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after December 15, 2022 for reporting companies that are eligible to be smaller reporting companies under the SEC’s definition, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2023.

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Organization and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Revenue as Percentage of Total Revenue for Each Significant Customer, or Distributor, and Significant End-Customer

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Customer
Customer A		44	%		50	%		45	%		50	%
End-Customer
End-Customer A (1)		26	%		36	%		26	%		35	%

(1)Sales to End-Customer A primarily occurred through Customer A.

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Balance Sheet Components (Tables)

6 Months Ended

Jun. 30, 2023

Balance Sheet Related Disclosures [Abstract]

Components of Inventory

Inventory consists of the following (in thousands):

	June 30,		December 31,
	2023		2022
Finished goods	$	6,641	$	5,088
Work in process		6,505		8,621
Total inventory, net	$	13,146	$	13,709

Components of Property and Equipment - Net

Property and equipment, net consists of the following (in thousands):

	June 30,			December 31,
	2023			2022
Computer equipment and software	$	2,607		$	2,521
Leasehold improvements		94			94
Furniture		36			36
Total property and equipment		2,737			2,651
Less: accumulated depreciation		(2,219	)		(2,017	)
Total property and equipment, net	$	518		$	634

Components of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Payroll-related expenses	$	1,415	$	812
Engineering services		173		282
Professional fees		150		52
Accrued warranty		148		173
Taxes payable		89		152
Accrued inventory		76		71
Other		13		22
Total accrued liabilities	$	2,064	$	1,564

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Fair Value Measurements of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Summary of Financial Instruments

Summary of Financial Instruments

The following is a summary of financial instruments (in thousands):

	June 30, 2023
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Values
Available-for-sale securities:
Certificates of deposit	$	6,133	$	—	$	—		$	6,133
Money market funds		18,311		—		—			18,311
Commercial papers		3,483		—		(2	)		3,481
Government agency bonds		5,010		—		(25	)		4,985
Corporate bonds		17,951		—		(158	)		17,793
Total available-for-sale securities	$	50,888	$	—	$	(185	)	$	50,703
Reported in:
Cash and cash equivalents								$	18,311
Short-term investments									25,597
Long-term investments									6,795
Total available-for-sale securities								$	50,703

	December 31, 2022
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Values
Available-for-sale securities:
Certificates of deposit	$	4,007	$	—	$	—		$	4,007
Treasury bills		3,983	1			—			3,984
Money market funds		2,183		—		—			2,183
Commercial papers		13,631		—		(20	)		13,611
Government agency bonds		3,391		1		(19	)		3,373
Corporate bonds		21,654		1		(149	)		21,506
Total available-for-sale securities	$	48,849	$	3	$	(188	)	$	48,664
Reported in:
Cash and cash equivalents								$	13,638
Short-term investments									25,289
Long-term investments									9,737
Total available-for-sale securities								$	48,664

Summary of Contractual Maturities of Available-for-sale Securities

The contractual maturities of available-for-sale securities are presented in the following table (in thousands):

	June 30, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	44,011		43,908	$	39,012	$	38,927
Due between one to two years		6,877		6,795		9,837		9,737
	$	50,888	$	50,703	$	48,849	$	48,664

Schedule of Financial Instruments Measured at Fair Value

Financial assets measured at fair value on a recurring basis were as follows (in thousands):

	Fair Value Measurement at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
As of June 30, 2023
Financial assets - available-for-sale securities
Certificates of deposit	$	6,133	$	—	$	6,133
Money market funds		18,311		—		18,311
Commercial papers		—		3,481		3,481
Governmental agency bonds		—		4,985		4,985
Corporate bonds		—		17,793		17,793
Total financial assets - available-for-sale securities	$	24,444	$	26,259	$	50,703
As of December 31, 2022
Financial assets - available-for-sale securities
Certificates of deposit	$	4,007	$	—	$	4,007
Treasury bills		3,984		—		3,984
Money market funds		2,183		—		2,183
Commercial papers		—		13,611		13,611
Governmental agency bonds		—		3,373		3,373
Corporate bonds		—		21,506		21,506
Total financial assets - available-for-sale securities	$	10,174	$	38,490	$	48,664

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Schedule of Product Revenue from Customer by Geographic Region

Product revenue from customers is designated based on the geographic region to which the product is delivered. Revenue by geographic region was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
China	$	11,233	$	12,054	$	21,752	$	23,311
Taiwan		2,291		2,147		4,062		4,392
South Korea		1,390		1,525		2,763		2,995
Japan		326		1,276		707		1,914
Other		58		50		156		468
Total revenue	$	15,298	$	17,052	$	29,440	$	33,080

Schedule of Revenue by Principal Products Lines

Revenue by principal product lines was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Automotive	$	9,930	$	9,528	$	18,727	$	19,065
Security surveillance		5,368		7,524		10,713		14,015
Total revenue	$	15,298	$	17,052	$	29,440	$	33,080

Schedule of Long-lived Assets by Geographic Region

Long-lived assets by geographic region were as follows (in thousands):

	June 30,		December 31,
	2023		2022
Taiwan	$	339	$	389
China		136		179
United States		35		52
Japan		5		8
South Korea		3		6
Total property and equipment - net	$	518	$	634

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Summary of Right of Use Assets and Lease Liabilities Related to Operating Leases

The right-of-use assets and lease liabilities related to operating leases were as follows (in thousands):

			December 31,
	June 30, 2023		2022
Right-of-use assets	$	654	$	983
Lease liabilities － Current	$	594	$	700
Lease liabilities － Non-Current		34		284
Total lease liabilities	$	628	$	984

Schedule of Lease Costs and Weighted-Average Assumptions Used in Determining its Right-of-Use Assets and Lease Liabilities

The following tables summarize the Company’s lease costs and weighted-average assumptions used in determining its right-of-use assets and lease liabilities (in thousands):

	Six Months Ended			Six Months Ended
	June 30, 2023			June 30, 2022
Operating lease cost	$	380		$	397
Cash paid for operating leases	$	385		$	366
Right-of-use assets obtained in exchange for operating lease liabilities (1)	$	26		$	146
Weighted average remaining term for operating leases	0.92 years			1.64 years
Weighted average discount rate for operating leases		5.8	%		3.8	%

(1)During the six months ended June 30, 2023, the Company extended the term of its lease in South Korea; the South Korea lease was treated as a modification but not as a separate contract, as no additional right-of-use was granted. The South Korea lease modification was accounted for as a non-cash change in existing lease liabilities and the right-of-use assets.

Schedule of Aggregate Future Minimum Lease Payments Under Non-cancelable Operating Leases

As of June 30, 2023, the aggregate future minimum lease payments under non-cancelable operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2023 (remaining six months)	$	387
2024		290
Total		677
Less effects of discounting		(49	)
Total lease liabilities	$	628

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Number of Shares of Common Stock Reserved for Future Issuances

The Company has reserved the following number of shares of common stock for future issuances:

	June 30, 2023
Outstanding stock awards		818,546
Shares available for future issuance under the 2017 Stock Incentive Plan		7,355,597
Total common stock reserved for future issuances		8,174,143

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Equity Incentive Plans (Tables)

6 Months Ended

Jun. 30, 2023

Summary of Stock Options Outstanding and Exercisable by Exercise Price

The stock options outstanding and exercisable by exercise price at June 30, 2023 are as follows:

		Options Outstanding, Vested and Exercisable
Exercise Price		Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price
$	0.16		3,250		0.6	$	0.16
	0.37		11,750		2.1		0.37
	0.97		11,000		2.5		0.97
	2.51		51,780		3.2		2.51
	2.89		40,000		3.7		2.89
	2.93		238,734		3.9		2.93
	3.18		80,257		4.1		3.18
			436,771		3.7		2.78

Summary of Restricted Stock Units Activity

The Company’s restricted stock units activity is summarized as follows:

	Units Issued and Outstanding			Weighted-Average Grant Date Fair Value
As of December 31, 2022		439,175		$	8.41
Granted		66,500			7.03
Released, net		(104,004	)		7.12
Canceled		(19,896	)		8.32
As of June 30, 2023		381,775			8.19

2012 Stock Option Plan

Summary of Stock Award and Option Activity Under Stock Incentive Plan

The Company’s stock award activity under the stock incentive plan is summarized as follows:

	Awards Available for Grant
As of December 31, 2022		6,674,252
Authorized		727,949
Granted		(66,500	)
Canceled		19,896
As of June 30, 2023		7,355,597

The Company’s stock option activity under the stock incentive plan is summarized as follows:

	Options Issued and Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
As of December 31, 2022		464,621		$	2.70		4.2	$	2,106
Granted		—			—
Exercised		(27,850	)		1.41
Canceled		—			—
As of June 30, 2023		436,771			2.78		3.7		1,865
Options vested and exercisable as of June 30, 2023		436,771			2.78		3.7		1,865

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Distribution of Stock-Based Compensation Expense

The following table summarizes the distribution of stock-based compensation expense (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Cost of revenue	$	40	$	37	$	76	$	75
Research and development		115		144		234		284
Selling, general and administrative		213		294		420		631
Total	$	368	$	475	$	730	$	990

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Net Income Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income Per Share

The following table presents the calculation of basic and diluted net income per share (amounts in thousands, except share and per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Numerator:
Basic and Diluted:
Net income	$	4,050	$	4,102	$	7,426	$	8,479
Denominator:
Basic shares:
Weighted-average shares outstanding used in computing basic    net income per share		18,294,629		18,073,922		18,263,029		18,044,835
Diluted shares:
Effect of potentially dilutive securities:
Stock options and restricted stock units		311,009		410,382		327,892		488,914
Weighted-average shares used in computing diluted net    income per share		18,605,638		18,484,304		18,590,921		18,533,749
Net income per share:
Basic	$	0.22	$	0.23	$	0.41	$	0.47
Diluted	$	0.22	$	0.22	$	0.40	$	0.46

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Provision for Income Taxes (Tables)

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Schedule of Components of Income Before Income Taxes

The components of income before income taxes were as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2023		2022			2023		2022
Domestic	$	4,599	$	4,676		$	8,321	$	9,445
Foreign		9		(30	)		69		—
Income before income taxes	$	4,608	$	4,646		$	8,390	$	9,445

Schedule of Components of Provision for Income Taxes

The components of the provision for income taxes were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
United States		556		543		956		961
Foreign		2		1		8		5
Provision for income taxes	$	558	$	544	$	964	$	966

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Organization and Summary of Significant Accounting Policies - Additional Information (Details)	6 Months Ended
	Jun. 30, 2023
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Company Incorporation place	DE
California
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Company original incorporation date of incorporation	2012-04
Company Incorporation place	CA
Delaware
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Company Incorporation place	DE
Company reincorporation incorporation date of incorporation	2017-07

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Organization and Summary of Significant Accounting Policies - Summary of Revenue as Percentage of Total Revenue for Each Significant Customer, or Distributor, and Significant End-Customer (Details) - Sales Revenue, Net - Customer Concentration Risk	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Customer A
Product Information [Line Items]
Concentration risk, percentage	44.00%	50.00%	45.00%	50.00%
End-Customer A
Product Information [Line Items]
Concentration risk, percentage	26.00%	36.00%	26.00%	35.00%

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Balance Sheet Components - Components of Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Finished goods	$ 6,641	$ 5,088
Work in process	6,505	8,621
Total inventory, net	$ 13,146	$ 13,709

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Balance Sheet Components - Components of Property and Equipment - Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 2,737	$ 2,651
Less: accumulated depreciation	(2,219)	(2,017)
Total property and equipment, net	518	634
Computer Equipment and Software
Property Plant And Equipment [Line Items]
Property and equipment, gross	2,607	2,521
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	94	94
Furniture
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 36	$ 36

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Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Depreciation	$ 100		$ 100	$ 201	$ 207
Payments received in advance of shipments	1,646			$ 1,646		$ 1,545
Company recognized revenue	$ 1,700	$ 1,500

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Balance Sheet Components - Components of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Payroll-related expenses	$ 1,415	$ 812
Engineering services	173	282
Professional fees	150	52
Accrued warranty	148	173
Taxes payable	89	152
Accrued inventory	76	71
Other	13	22
Total accrued liabilities	$ 2,064	$ 1,564

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Fair Value Measurements of Financial Instruments - Summary of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 50,888	$ 48,849
Gross Unrealized Gain		3
Gross Unrealized Loss	(185)	(188)
Estimated Fair Values	50,703	48,664
Certificates of Deposit
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	6,133	4,007
Estimated Fair Values	6,133	4,007
Treasury bills
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost		3,983
Gross Unrealized Gain		1
Estimated Fair Values		3,984
Money Market Funds
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	18,311	2,183
Estimated Fair Values	18,311	2,183
Commercial Paper
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	3,483	13,631
Gross Unrealized Loss	(2)	(20)
Estimated Fair Values	3,481	13,611
Government Agency Bonds
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	5,010	3,391
Gross Unrealized Gain		1
Gross Unrealized Loss	(25)	(19)
Estimated Fair Values	4,985	3,373
Corporate Bonds
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	17,951	21,654
Gross Unrealized Gain		1
Gross Unrealized Loss	(158)	(149)
Estimated Fair Values	17,793	21,506
Cash and Cash Equivalents
Schedule Of Available For Sale Securities [Line Items]
Estimated Fair Values	18,311	13,638
Short-term Investments
Schedule Of Available For Sale Securities [Line Items]
Estimated Fair Values	25,597	25,289
Long-term investments
Schedule Of Available For Sale Securities [Line Items]
Estimated Fair Values	$ 6,795	$ 9,737

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Fair Value Measurements of Financial Instruments - Summary of Contractual Maturities of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale [Abstract]
Amortized Cost, Due in one year or less	$ 44,011	$ 39,012
Amortized Cost, Due between one to two years	6,877	9,837
Amortized Cost	50,888	48,849
Estimated Fair Value, Due in one year or less	43,908	38,927
Estimated Fair Value, Due between one to two years	6,795	9,737
Estimated Fair Value	$ 50,703	$ 48,664

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Fair Value Measurements of Financial Instruments - Additional Information (Details)	6 Months Ended
	Jun. 30, 2023 USD ($) Investment	Jun. 30, 2022 USD ($)
Debt Securities, Available-for-Sale [Abstract]
Number of investments in unrealized loss positions | Investment	39
Fair value of investments	$ 26,300,000
Unrealized losses on investments	200,000
Other-than-temporary impairments associated with investments	0
Sales of available-for-sale securities	$ 0	$ 0

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Fair Value Measurements of Financial Instruments - Schedule of Financial Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	$ 50,703	$ 48,664
Certificates of Deposit
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	6,133	4,007
Treasury bills
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities		3,984
Money Market Funds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	18,311	2,183
Commercial Paper
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	3,481	13,611
Government Agency Bonds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	4,985	3,373
Corporate Bonds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	17,793	21,506
Fair Value Measurements Recurring
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	50,703	48,664
Fair Value Measurements Recurring | Certificates of Deposit
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	6,133	4,007
Fair Value Measurements Recurring | Treasury bills
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities		3,984
Fair Value Measurements Recurring | Money Market Funds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	18,311	2,183
Fair Value Measurements Recurring | Commercial Paper
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	3,481	13,611
Fair Value Measurements Recurring | Government Agency Bonds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	4,985	3,373
Fair Value Measurements Recurring | Corporate Bonds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	17,793	21,506
Fair Value Measurements Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	24,444	10,174
Fair Value Measurements Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Certificates of Deposit
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	6,133	4,007
Fair Value Measurements Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Treasury bills
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities		3,984
Fair Value Measurements Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money Market Funds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	18,311	2,183
Fair Value Measurements Recurring | Significant Other Observable Inputs (Level 2)
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	26,259	38,490
Fair Value Measurements Recurring | Significant Other Observable Inputs (Level 2) | Commercial Paper
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	3,481	13,611
Fair Value Measurements Recurring | Significant Other Observable Inputs (Level 2) | Government Agency Bonds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	4,985	3,373
Fair Value Measurements Recurring | Significant Other Observable Inputs (Level 2) | Corporate Bonds
Financial assets - available-for-sale securities
Total financial assets - available-for-sale securities	$ 17,793	$ 21,506

XML

Segment Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2023 Segment
Segment Reporting [Abstract]
Number of reportable segments	1
Number of operating segments	1

XML

Segment Information - Schedule of Product Revenue from Customers by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	$ 15,298	$ 17,052	$ 29,440	$ 33,080
China
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	11,233	12,054	21,752	23,311
Taiwan
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	2,291	2,147	4,062	4,392
South Korea
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	1,390	1,525	2,763	2,995
Japan
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	326	1,276	707	1,914
Other
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	$ 58	$ 50	$ 156	$ 468

XML

Segment Information - Schedule of Revenue by Principal Product Lines (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Entity Wide Information Revenue From External Customer [Line Items]
Revenue	$ 15,298	$ 17,052	$ 29,440	$ 33,080
Automotive
Entity Wide Information Revenue From External Customer [Line Items]
Revenue	9,930	9,528	18,727	19,065
Security Surveillance
Entity Wide Information Revenue From External Customer [Line Items]
Revenue	$ 5,368	$ 7,524	$ 10,713	$ 14,015

XML

Segment Information - Schedule of Long-Lived Assets by Geographic Region (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment - net	$ 518	$ 634
Taiwan
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment - net	339	389
China
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment - net	136	179
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment - net	35	52
Japan
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment - net	5	8
South Korea
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment - net	$ 3	$ 6

XML

Commitments and Contingencies - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) Litigation	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Litigation	Jun. 30, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Non-cancelable operating lease agreements, expiration description			non-cancelable lease agreements expiring through fiscal year 2024.
Rent expense under operating leases	$ 200,000	$ 200,000	$ 400,000	$ 400,000
Rent expense recognized from short-term leases	6,000	$ 6,000	12,000	$ 12,000
Future minimum payments under purchase commitments for the year ended December 31, 2023	400,000		400,000
Future minimum payments under purchase commitments for the year ended December 31, 2024	700,000		700,000
Future minimum payments under purchase commitments for the year ended December 31, 2025	700,000		700,000
Future minimum payments under purchase commitments for the year ended December 31, 2026	$ 300,000		$ 300,000
Number of litigation | Litigation	0		0

XML

Commitments and Contingencies - Summary of Right of Use Assets and Lease Liabilities Related to Operating Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets and Liabilities, Lessee [Abstract]
Right-of-use assets	$ 654	$ 983
Lease liabilities － Current	594	700
Lease liabilities － Non-Current	$ 34	$ 284
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other liabilities	Other liabilities
Total lease liabilities	$ 628	$ 984

XML

Commitments and Contingencies - Schedule of Lease Costs and Weighted-Average Assumptions Used in Determining its Right-of-Use Assets and Lease Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 380	$ 397
Cash paid for operating leases	385	366
Right-of-use assets obtained in exchange for operating lease liabilities	$ 26	$ 146
Weighted average remaining term for operating leases	11 months 1 day	1 year 7 months 20 days
Weighted average discount rate for operating leases	5.80%	3.80%

XML

Commitments and Contingencies - Schedule of Lease Costs and Weighted-Average Assumptions Used in Determining its Right-of-Use Assets and Lease Liabilities (Parenthetical) (Details) - Lease	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Number of modified existing operating lease	0
Number of new operating lease		1

XML

Commitments and Contingencies - Schedule of Aggregate Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
2023 (remaining six months)	$ 387
2024	290
Total	677
Less effects of discounting	(49)
Total lease liabilities	$ 628	$ 984

XML

Stockholders' Equity - Additional Information (Details)		3 Months Ended		6 Months Ended
	Dec. 16, 2022 USD ($) Installment $ / shares	Jun. 30, 2023 $ / shares shares	Jun. 30, 2022 $ / shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Jun. 02, 2023 $ / shares	Dec. 31, 2022 $ / shares shares
Class of Stock [Line Items]
Preferred stock, shares authorized		5,000,000		5,000,000			5,000,000
Preferred stock, par value | $ / shares		$ 0.0001		$ 0.0001			$ 0.0001
Preferred stock, shares issued		0		0			0
Preferred stock, shares outstanding		0		0			0
Common stock shares authorized		75,000,000		75,000,000			75,000,000
Common stock par value | $ / shares		$ 0.0001		$ 0.0001			$ 0.0001
Common stock shares issued		18,330,591		18,330,591			18,198,737
Common stock shares outstanding		18,330,591		18,330,591			18,198,737
Dividends payable, date declared				Dec. 16, 2022
Cash dividends declared per share | $ / shares	$ 0.5	$ 0.25	$ 0.25
Number of dividend payable installment | Installment	2
Dividends payable, amount per share | $ / shares	$ 0.25
Dividend paid | $				$ 4,555,000	$ 4,504,000
Dividends payable, date of record				Jan. 31, 2023
First Installment of Dividend
Class of Stock [Line Items]
Dividend paid | $	$ 4.6
Second Installment of Dividend
Class of Stock [Line Items]
Dividends payable, amount per share | $ / shares						$ 0.25

XML

Stockholders' Equity - Schedule of Number of Shares of Common Stock Reserved for Future Issuances (Details)	Jun. 30, 2023 shares
Class Of Stock [Line Items]
Common stock reserved for future issuances	8,174,143
Outstanding Stock Awards
Class Of Stock [Line Items]
Common stock reserved for future issuances	818,546
Shares Available for Future Issuance under 2017 Stock Incentive Plan
Class Of Stock [Line Items]
Common stock reserved for future issuances	7,355,597

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Equity Incentive Plans - Additional Information (Details) $ in Millions	1 Months Ended		6 Months Ended
	Sep. 30, 2017 shares	Apr. 30, 2012	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, additional awards			727,949
Common stock reserved for future issuances			8,174,143
Share-based compensation arrangement by share-based payment award, aggregate intrinsic value of options exercised | $			$ 1.0	$ 0.1
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options vesting period			5 years
Share-based compensation arrangement by share-based payment award, stock awards conversion ratio			1
2012 Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options vesting term of award			The 2012 Plan provides for the granting of stock-based awards to employees, directors, and consultants under terms and provisions established by the Company’s board of directors. Under the terms of the 2012 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and non-statutory stock options must be at least 110% of the fair market value of the common stock on the grant date, as determined by the Company’s board of directors. The terms of options granted under the 2012 Plan may not exceed ten years.
Share-based compensation arrangement by share-based payment award, additional awards	0
Common stock reserved for future issuances	0
2012 Stock Option Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, percentage of voting rights of all classes of stock to be owned by employees to determine stock options exercise price on grant date		10.00%
Share-based compensation arrangement by share-based payment award, exercise prices percentage of fair market value of common stock on grant date		110.00%
2012 Stock Option Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, Options exercisable period		10 years
Two Thousand Seventeen Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options vesting term of award			Options granted generally vest over a five-year period and generally are exercisable for up to 10 years
Share based compensation arrangement by share based payment award number of shares authorized increment description			The number of shares available for issuance under the 2017 Plan is automatically increased on the first day of each fiscal year beginning on January 1, 2018 and ending on (and including) January 1, 2027, in an amount equal to the lesser of (1) 4% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or (2) another amount determined by the Company’s board of directors.
Automatic increase in number of shares authorized under stock option plan, start date			Jan. 01, 2018
Automatic increase in number of shares authorized under stock option plan, end date			Jan. 01, 2027
Automatic increase in number of shares available for issuance under the stock option plan			727,949
Share-based compensation arrangement by share-based payment award, options vesting period				5 years
Two Thousand Seventeen Stock Option Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, Options exercisable period			10 years
Share-based compensation arrangement by share-based payment award, percentage of annual increase in number of shares authorized of outstanding shares of common stock	4.00%

XML

Equity Incentive Plans - Summary of Stock Awards and Option Activity Under Stock Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Awards Available for Grant, Beginning balance	6,674,252
Awards Available for Grant, Authorized	727,949
Awards Available for Grant, Granted	(66,500)
Awards Available for Grant, Canceled	19,896
Awards Available for Grant, Ending balance	7,355,597	6,674,252
Options Issued and Outstanding, Beginning balance	464,621
Options Issued and Outstanding, Exercised	(27,850)
Options Issued and Outstanding, Ending balance	436,771	464,621
Options Issued and Outstanding, Options vested and exercisable	436,771
Weighted Average Exercise Price, Beginning balance	$ 2.7
Weighted Average Exercise Price, Exercised	1.41
Weighted Average Exercise Price, Ending balance	2.78	$ 2.7
Weighted Average Exercise Price, Options vested and exercisable	$ 2.78
Weighted-Average Remaining Contractual Term	3 years 8 months 12 days	4 years 2 months 12 days
Weighted-Average Remaining Contractual Term, Options vested and exercisable	3 years 8 months 12 days
Aggregate Intrinsic Value	$ 1,865	$ 2,106
Aggregate Intrinsic Value, Options vested and exercisable	$ 1,865

XML

Equity Incentive Plans - Summary of Stock Options Outstanding and Exercisable by Exercise Price (Details) - $ / shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Outstanding, Vested and Exercisable, Number	436,771
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	3 years 8 months 12 days
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 2.78
Exercise Price 0.16
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 0.16
Options Outstanding, Vested and Exercisable, Number		3,250
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	7 months 6 days
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 0.16
Exercise Price 0.37
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 0.37
Options Outstanding, Vested and Exercisable, Number	11,750
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	2 years 1 month 6 days
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 0.37
Exercise Price 0.97
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 0.97
Options Outstanding, Vested and Exercisable, Number	11,000
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	2 years 6 months
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 0.97
Exercise Price 2.51
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 2.51
Options Outstanding, Vested and Exercisable, Number	51,780
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	3 years 2 months 12 days
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 2.51
Exercise Price 2.89
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 2.89
Options Outstanding, Vested and Exercisable, Number	40,000
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	3 years 8 months 12 days
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 2.89
Exercise Price 2.93
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 2.93
Options Outstanding, Vested and Exercisable, Number	238,734
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	3 years 10 months 24 days
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 2.93
Exercise Price 3.18
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 3.18
Options Outstanding, Vested and Exercisable, Number	80,257
Options Outstanding, Vested and Exercisable, Weighted-Average Remaining Contractual Life (Years)	4 years 1 month 6 days
Options Outstanding, Vested and Exercisable, Weighted-Average Exercise Price	$ 3.18

XML

Equity Incentive Plans - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Units Issued and Outstanding, Beginning balance | shares	439,175
Units Issued and Outstanding, Granted | shares	66,500
Units Issued and Outstanding, Released, net | shares	(104,004)
Units Issued and Outstanding, Canceled | shares	(19,896)
Units Issued and Outstanding, Ending balance | shares	381,775
Weighted-Average Grant Date Fair Value, Beginning balance | $ / shares	$ 8.41
Weighted-Average Grant Date Fair Value, Granted | $ / shares	7.03
Weighted-Average Grant Date Fair Value, Released, net | $ / shares	7.12
Weighted-Average Grant Date Fair Value, Canceled | $ / shares	(8.32)
Weighted-Average Grant Date Fair Value, Ending balance | $ / shares	$ 8.19

XML

Stock-Based Compensation - Distribution of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share Based Compensation Expense [Line Items]
Stock-based compensation	$ 368	$ 475	$ 730	$ 990
Cost of Revenue
Share Based Compensation Expense [Line Items]
Stock-based compensation	40	37	76	75
Research and Development
Share Based Compensation Expense [Line Items]
Stock-based compensation	115	144	234	284
Selling, General and Administrative
Share Based Compensation Expense [Line Items]
Stock-based compensation	$ 213	$ 294	$ 420	$ 631

XML

Net Income Per Share - Computation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Basic and diluted:
Net income	$ 4,050	$ 3,376	$ 4,102	$ 4,377	$ 7,426	$ 8,479
Denominator:
Weighted-average shares outstanding used in computing basic net income per share	18,294,629		18,073,922		18,263,029	18,044,835
Effect of potentially dilutive securities:
Stock options and restricted stock units	311,009		410,382		327,892	488,914
Weighted-average shares used in computing diluted net income per share	18,605,638		18,484,304		18,590,921	18,533,749
Net income per share:
Basic	$ 0.22		$ 0.23		$ 0.41	$ 0.47
Diluted	$ 0.22		$ 0.22		$ 0.40	$ 0.46

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Net Income Per Share - Additional Information (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share amount	299,000	61,000	269,000	29,000

XML

Provision for Income Taxes - Schedule of Components of Income Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Domestic	$ 4,599	$ 4,676	$ 8,321	$ 9,445
Foreign	9	(30)	69
Income before income taxes	$ 4,608	$ 4,646	$ 8,390	$ 9,445

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Provision for Income Taxes - Schedule of Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
United States	$ 556	$ 543	$ 956	$ 961
Foreign	2	1	8	5
Provision for income taxes	$ 558	$ 544	$ 964	$ 966

XML

Provision for Income Taxes - Additional Information (Details) $ in Millions	Jun. 30, 2023 USD ($)
Income Tax Disclosure [Abstract]
Unrecognized tax benefits	$ 0.4
Unrecognized tax benefits netted against deferred tax assets valuation allowance	0.3
Unrecognized tax benefits against effective tax rate	$ 0.1

XML

Subsequent Events - Additional Information (Details) $ in Millions	1 Months Ended
	Jul. 31, 2023 USD ($)
Subsequent Event [Member] | Broadvis Corporation Assets Including Intellectual Property
Asset Acquisition [Line Items]
Payments to Acquire Productive Assets	$ 2.0