EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1


FOR IMMEDIATE RELEASE

EARNINGS RELEASE

Silicom Reports Q3 2024 Results

KFAR SAVA, Israel, October 31, 2024 - Silicom Ltd. (NASDAQ: SILC), a leading provider of high-performance networking and data infrastructure solutions, today reported its financial results for the third quarter ended September 30, 2024.

Financial Results
 
Third quarter: Silicom’s revenues for the third quarter of 2024 were $14.8 million compared with $30.1 million for the third quarter of 2023.
 
On a GAAP basis, the company’s net loss for the quarter totalled $2.6 million, or $0.44 per ordinary share (basic and diluted), compared with net income of $1.2 million, or $0.18 per ordinary share (basic and diluted), for the third quarter of 2023.
 
On a non-GAAP basis (as described and reconciled below), net loss for the quarter totalled $1.7 million, or $0.28 per ordinary share (basic and diluted), compared with net income of $2.1 million, or $0.30 per ordinary share (basic and diluted), for the third quarter of 2023.
 
First Nine Months: Silicom’s revenues for the first nine months of 2024 were $43.6 million compared with $105.4 million for the first three quarters of 2023.
 
On a GAAP basis, net loss for the period totalled $7.6 million, or $1.24 per ordinary share (basic and diluted), compared with net income of $8.6 million, or $1.26 per diluted share ($1.27 per basic share), for the first nine months of 2023.
 
On a non-GAAP basis (as described and reconciled below), net loss for the period totalled $4.9 million, or $0.80 per ordinary share (basic and diluted), compared with net income of $10.7 million, or $1.57 per diluted share ($1.58 per basic share), for the first nine months of 2023.
 
During the first nine months of 2024, the Company generated approximately $14 million in cash, and invested more than half of that, approximately $8.6 million, in repurchasing Silicom shares.
 
Guidance
 
Management projects that revenues for the fourth quarter of 2024 will range from $14 million to $15 million. Growth in 2025 is expected to be in the low single digits, with strong 20%-30% compound annual growth rate materializing gradually from 2026.


Comments of Management  
 
Liron Eizenman, Silicom’s President and CEO, commented, “During the third quarter, we continued to progress towards our mid- and long-term goals while dealing responsibly with our short-term challenges. While we continue to be negatively impacted by excess inventories built by specific customers in previous years - whether in reaction to supply chain disruptions only or in combination with slower-than-expected sales of their new products and services - we believe we will see improvement in the situation during 2025 and a resolution by the end of 2025.

“In the meantime, we continue moving forward according to our strategic plan, with significant milestones affirming the potential of our core Server Adapter and Edge System products to drive significant revenue growth in 2026 and beyond. For example, a service provider customer has recently decided to standardize on our Edge products for all of its deployment scenarios, making Silicom its single hardware provider for its diverse offerings. Deployments will initiate in 2025, and we expect related sales to reach several million dollars per year already in 2026. In parallel, a network equipment OEM has selected one of our high-speed 400G FPGA smart NICs for its core network architecture, with first deliveries scheduled for the first quarter of 2025 and a multi-million-dollar ramp up beginning in 2026. As we continuously increase the number of these ‘slow and steady’ engagements, we will benefit from ongoing revenue growth and a reduced dependency on specific large accounts. Any faster-than-projected ramp up of pipeline deals could accelerate our progress significantly.” 

Mr. Eizenman continued, “Looking forward, we continue to focus on achieving an EPS above $3 as we return our revenues to $150 - $160 million per year. To this end, we have ‘right-sized’ our expenses, investing as needed to achieve our strategic targets while retaining tight control of our outlays. Based on our very strong balance sheet, we continue moving forward with our share buyback plan: in fact, during the first three quarters of 2024 we have already repurchased more than half a million shares.”

Mr. Eizenman concluded, “All in all, we are operating from an extremely solid financial platform, executing on an impressive pipeline and pursuing ambitious but achievable goals. Our team is dedicated, experienced, and fully focused on creating value - for our customers, for the market as a whole, and especially for our shareholders.”

***
 
Conference Call Details
Silicom’s Management will host an interactive conference today, October 31st, at 9am Eastern Time (6am Pacific Time, 3pm Israel Time) to review and discuss the results.
 
To participate, investors may either listen via a webcast link hosted on Silicom’s website or via the dial-in. The link is under the investor relations’ webcast section of Silicom’s website at https://www.silicom-usa.com/webcasts/
 
For those that wish to dial in via telephone, one of the following teleconferencing numbers may be used:
 
US: 1 866 860 9642
ISRAEL: 03 918 0609
INTERNATIONAL:  +972 3 918 0609
At: 9:00am Eastern Time, 6:00am Pacific Time, 3:00pm Israel Time
 
It is advised to connect to the conference call a few minutes before the start.
 
For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the above-mentioned webcast section of Silicom’s website.
 
***

Non-GAAP Financial Measures
 
This release, including the financial tables below, presents other financial information that may be considered "non-GAAP financial measures" under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission (the "SEC") as they apply to our company. These non-GAAP financial measures exclude compensation expenses in respect of options and RSUs granted to directors, officers and employees, impairment of goodwill, taxes on amortization and impairment of acquired intangible assets, impairment of intangible assets and related write-offs, as well as lease liabilities - financial expenses (income). Non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the non-GAAP financial measures as well as reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures. The non-GAAP financial information presented herein should not be considered in isolation from or as a substitute for operating income (loss), net income (loss) or per share data prepared in accordance with GAAP.
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About Silicom
 
Silicom Ltd. is an industry-leading provider of high-performance networking and data infrastructure solutions. Designed primarily to improve performance and efficiency in Cloud and Data Center environments, Silicom’s solutions increase throughput, decrease latency and boost the performance of servers and networking appliances, the infrastructure backbone that enables advanced Cloud architectures and leading technologies like NFV, SD-WAN and Cyber Security. Our innovative solutions for high-density networking, high-speed fabric switching, offloading and acceleration, which utilize a range of cutting-edge silicon technologies as well as FPGA-based solutions, are ideal for scaling-up and scaling-out cloud infrastructures.
 
Silicom products are used by major Cloud players, service providers, telcos and OEMs as components of their infrastructure offerings, including both add-on adapters in the Data Center and stand-alone virtualized/universal CPE devices at the edge.
 
Silicom’s long-term, trusted relationships with more than 200 customers throughout the world, its more than 400 active Design Wins and more than 300 product SKUs have made Silicom a “go-to” connectivity/performance partner of choice for technology leaders around the globe.
 
For more information, please visit: www.silicom.co.il
 
Statements in this press Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, Silicom’s increasing dependence for substantial revenue growth on a limited number of customers, the speed and extent to which Silicom's solutions are adopted by the relevant markets, difficulty in commercializing and marketing of Silicom’s products and services, maintaining and protecting brand recognition, protection of intellectual property, competition, disruptions to its manufacturing, sales & marketing, development and customer support activities, the impact of the wars in Gaza and in the Ukraine, attacks on shipping by Huthis in the Red Sea, rising inflation, rising interest rates and volatile exchange rates, as well as any continuing or new effects resulting from the COVID-19 pandemic, and  the global economic uncertainty, which may impact customer demand by encouraging them to exercise greater caution and selectivity with their short-term IT investment plans. The factors noted above are not exhaustive.
 
Further information about the company’s businesses, including information about factors that could materially affect Silicom’s results of operations and financial condition, are discussed in our Annual Report on Form 20-F and other documents filed by the Company and that may be subsequently filed by the company from time to time with the SEC. These forward-looking statements can generally be identified as such because the context of the statement will include words such as “expect,” “should,” “believe,” “anticipate” or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. In light of significant risks and uncertainties inherent in forward-looking statements, the inclusion of such statements should not be regarded as a representation by the company that it will achieve such forward-looking statements. The company disclaims any duty to update such statements, whether as a result of new information, future events, or otherwise.
 
Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail: erang@silicom.co.il
 
Investor Relations Contact:
Ehud Helft
EK Global Investor Relations
Tel: +1 212 378 8040
E-mail: silicom@ekgir.com
 

-- FINANCIAL TABLES FOLLOW –
 
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Silicom Ltd. Consolidated Balance Sheets
(US$ thousands)
 
   
September 30,
    
December 31,
  
   
2024
    
2023
  
             
Assets
            
             
Current assets
            
Cash and cash equivalents
  
$
59,489
    
$
46,972
  
Marketable securities
    
9,818
      
7,957
  
Accounts receivables: Trade, net
    
13,264
      
25,004
  
Accounts receivables: Other
    
7,033
      
3,688
  
Inventories
    
43,498
      
51,507
  
Total current assets
    
133,102
      
135,128
  
                 
Marketable securities
    
7,799
      
16,619
  
Assets held for employees’ severance benefits
    
1,481
      
1,357
  
Deferred tax assets
    
2,747
      
2,359
  
Property, plant and equipment, net
    
2,914
      
3,552
  
Intangible assets, net
    
2,316
      
2,253
  
Right of Use
    
7,280
      
6,466
  
Total assets
  
$
157,639
    
$
167,734
  
                 
Liabilities and shareholders' equity
                
                 
Current liabilities
                
Trade accounts payable
  
$
7,490
    
$
4,139
  
Other accounts payable and accrued expenses
    
6,443
      
6,668
  
Lease Liabilities
    
1,633
      
2,070
  
                 
Total current liabilities
    
15,566
      
12,877
  
                 
Lease Liabilities
    
5,034
      
3,877
  
Liability for employees’ severance benefits
    
2,596
      
2,672
  
Deferred tax liabilities
    
92
      
46
  
                 
Total liabilities
    
23,288
      
19,472
  
                 
Shareholders' equity
                
Ordinary shares and additional paid-in capital
    
73,000
      
70,693
  
Treasury shares
    
(52,271
)
    
(43,631
)
Retained earnings
    
113,622
      
121,200
  
Total shareholders' equity
    
134,351
      
148,262
  
                 
Total liabilities and shareholders' equity
  
$
157,639
    
$
167,734
  

4
Silicom Ltd. Consolidated Statements of Operations
(US$ thousands, except for share and per share data)

   
Three-month period
    
Nine-month period
  
   
ended September 30,
    
ended September 30,
  
   
2024
    
2023
    
2024
    
2023
  
Sales
  
$
14,756
    
$
30,057
    
$
43,623
    
$
105,368
  
Cost of sales
    
10,593
      
20,821
      
31,158
      
72,185
  
Gross profit
    
4,163
      
9,236
      
12,465
      
33,183
  
                                 
Research and development expenses
    
4,958
      
5,231
      
14,827
      
15,622
  
Selling and marketing expenses
    
1,366
      
1,946
      
4,360
      
5,343
  
General and administrative expenses
    
952
      
1,099
      
2,978
      
3,205
  
Total operating expenses
    
7,276
      
8,276
      
22,165
      
24,170
  
                                 
Operating income (loss)
    
(3,113
)
    
960
      
(9,700
)
    
9,013
  
                                 
Financial income (expenses), net
    
515
      
434
      
1,601
      
1,201
  
Income (loss) before income taxes
    
(2,598
)
    
1,394
      
(8,099
)
    
10,214
  
Income taxes
    
32
      
183
      
(521
)
    
1,660
  
Net income (loss)
  
$
(2,630
)
  
$
1,211
    
$
(7,578
)
  
$
8,554
  
                                 
Basic income (loss) per ordinary share (US$)
  
$
(0.44
)
  
$
0.18
    
$
(1.24
)
  
$
1.27
  
                                 
Weighted average number of ordinary shares used to compute basic income (loss) per share (in thousands)
    
5,919
      
6,744
      
6,090
      
6,754
  
                                 
Diluted income (loss) per ordinary share (US$)
  
$
(0.44
)
  
$
0.18
    
$
(1.24
)
  
$
1.26
  
                                 
Weighted average number of ordinary shares used to compute diluted income (loss) per share (in thousands)
    
5,919
      
6,753
      
6,090
      
6,809
  

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Silicom Ltd. Reconciliation of Non-GAAP Financial Results
(US$ thousands, except for share and per share data)

   
Three-month period
    
Nine-month period
  
   
ended September 30,
    
ended September 30,
  
   
2024
    
2023
    
2024
    
2023
  
                         
GAAP gross profit
  
$
4,163
    
$
9,236
    
$
12,465
    
$
33,183
  
(1) Share-based compensation (*)
    
82
      
105
      
193
      
323
  
Non-GAAP gross profit
  
$
4,245
    
$
9,341
    
$
12,658
    
$
33,506
  
                                 
GAAP operating income (loss)
  
$
(3,113
)
  
$
960
    
$
(9,700
)
  
$
9,013
  
Gross profit adjustments
    
82
      
105
      
193
      
323
  
(1) Share-based compensation (*)
    
777
      
834
      
2,113
      
2,091
  
Non-GAAP operating income (loss)
  
$
(2,254
)
  
$
1,899
    
$
(7,394
)
  
$
11,427
  
                                 
GAAP net income (loss)
  
$
(2,630
)
  
$
1,211
    
$
(7,578
)
  
$
8,554
  
Operating income (loss) adjustments
    
859
      
939
      
2,306
      
2,414
  
(2) Lease liabilities - Financial expenses (income)
    
98
      
(163
)
    
(9
)
    
(467
)
(3) Taxes on amortization and impairment of acquired intangible assets
    
22
      
68
      
397
      
203
  
Non-GAAP net income (loss)
  
$
(1,651
)
  
$
2,055
    
$
(4,884
)
  
$
10,704
  
                                 
GAAP net income (loss)
  
$
(2,630
)
  
$
1,211
    
$
(7,578
)
  
$
8,554
  
Adjustments for Non-GAAP Cost of sales
    
82
      
105
      
193
      
323
  
Adjustments for Non-GAAP Research and development expenses
    
386
      
412
      
986
      
1,010
  
Adjustments for Non-GAAP Selling and marketing expenses
    
191
      
199
      
537
      
548
  
Adjustments for Non-GAAP General and administrative expenses
    
200
      
223
      
590
      
533
  
Adjustments for Non-GAAP Financial income (loss), net
    
98
      
(163
)
    
(9
)
    
(467
)
Adjustments for Non-GAAP Income taxes
    
22
      
68
      
397
      
203
  
Non-GAAP net income (loss)
  
$
(1,651
)
  
$
2,055
    
$
(4,884
)
  
$
10,704
  
                                 
GAAP basic income (loss) per ordinary share (US$)
  
$
(0.44
)
  
$
0.18
    
$
(1.24
)
  
$
1.27
  
(1) Share-based compensation (*)
    
0.14
      
0.13
      
0.37
      
0.35
  
(2) Lease liabilities - Financial expenses (income)
    
0.02
      
(0.02
)
    
-
      
(0.07
)
(3) Taxes on amortization and impairment of acquired intangible assets
    
-
      
0.01
      
0.07
      
0.03
  
Non-GAAP basic income (loss) per ordinary share (US$)
  
$
(0.28
)
  
$
0.30
    
$
(0.80
)
  
$
1.58
  
                                 
GAAP diluted income (loss) per ordinary share (US$)
  
$
(0.44
)
  
$
0.18
    
$
(1.24
)
  
$
1.26
  
(1) Share-based compensation (*)
    
0.14
      
0.13
      
0.37
      
0.35
  
(2) Lease liabilities - Financial expenses (income)
    
0.02
      
(0.02
)
    
-
      
(0.07
)
(3) Taxes on amortization and impairment of acquired intangible assets
    
-
      
0.01
      
0.07
      
0.03
  
Non-GAAP diluted income (loss) per ordinary share (US$)
  
$
(0.28
)
  
$
0.30
    
$
(0.80
)
  
$
1.57
  

(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))

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