Report of STAR Market Daily on October 31 (Reporter Wu Xuguang): On the evening of October 30, Verisilicon Microelectronics (Shanghai) Co., Ltd. disclosed its third-quarter report.

The financial report shows that the company's revenue in the first three quarters is 1.65 billion yuan, a decrease of 6.50% year-on-year; net income attributable to equity holders is -0.396 billion yuan, compared to -0.134 billion yuan in the same period last year; non-GAAP net profit attributable to equity holders is -0.422 billion yuan, compared to -0.156 billion yuan in the same period last year; basic earnings per share is -0.79 yuan.

Among them, the company's semiconductor IP licensing business increased by 6.13% year-on-year; one-stop chip customization business decreased by 11.63% year-on-year.

Verisilicon Microelectronics (Shanghai) Co., Ltd. stated that in the first three quarters of 2024, the decline in production business revenue was mainly due to factors such as some downstream customers being affected by destocking cycles; The decline in net income was mainly due to a decrease in revenue and gross margin compared to the same period last year, and the increase in research and development expenses due to continued research and development investment, resulting in fluctuations in net income.

According to the third quarter report, Verisilicon Microelectronics (Shanghai) Co., Ltd. achieved total operating revenue of 0.718 billion yuan in the third quarter, an increase of 23.60% year-on-year, and an increase of 16.96% quarter-on-quarter; net income attributable to equity holders is -0.111 billion yuan, narrowing the loss by 29.01%, and down by 42.70% quarter-on-quarter; non-GAAP net profit is -0.118 billion yuan, narrowing the loss by 25.64%, and down by 33.24% quarter-on-quarter.

In terms of profitability, in the first three quarters of 2024, the company achieved a gross profit of 0.702 billion yuan, a year-on-year decrease of 8.43%; its comprehensive gross margin rate was 42.52%, a year-on-year decrease of 0.90 percentage points.

Verisilicon Microelectronics (Shanghai) Co., Ltd. is a company that relies on independent semiconductor IP to provide customers with platform-based chip customization services and semiconductor IP licensing services.

Revenue reflects various business aspects. In the first three quarters of 2024, the company's revenue from intellectual property licensing fees was 0.218 billion yuan, a month-on-month increase of 36.62%; revenue from royalty fees was 0.025 billion yuan, a month-on-month increase of 3.68%; revenue from chip design business was 0.238 billion yuan, a month-on-month increase of 23.02%; revenue from mass production business was 0.236 billion yuan, a month-on-month increase of 0.79%.

Regarding the reasons for the third-quarter design business revenue of the company, Verisilicon Microelectronics (Shanghai) Co., Ltd. stated that it mainly comes from advanced process customer projects such as data processing and automotive electronics. In the data processing field, to meet the increasing demand for massive computing power supporting AI and GC applications, the company has AIGPU IP, high-performance GPU IP, GPGPU IP tailored for high-performance computing to meet customers' AI computing needs; in the automotive electronics field, it has provided customized services for autonomous driving chips based on 5nm vehicle rules for a new energy autos manufacturer.

In terms of order backlog, the company continues to develop incremental and emerging markets, expand industry-leading customers. In the third quarter of 2024, new orders amounted to 0.648 billion yuan, and the backlog at the end of the third quarter of 2024 was 2.138 billion yuan, with 78.26% expected to convert into revenue within a year. 'The company's order situation is good, laying a solid foundation for future performance conversion,' according to Verisilicon Microelectronics (Shanghai) Co., Ltd.

It is worth mentioning that mergers and acquisitions have become one of the hottest terms in the current capital markets. On October 13, during a company survey, an institution investor asked, 'Does the company have any plans to acquire external IP?'

Verisilicon Microelectronics (Shanghai) Co., Ltd. stated that the development of semiconductors has normal fluctuation cycles, and the industry's downturn is a good time for semiconductor IP industry consolidation. Being a semiconductor IP and one-stop chip customization service platform, Verisilicon Microelectronics (Shanghai) Co., Ltd. is suitable for mergers and acquisitions. The company timely acquires and introduces the necessary technology and teams for Verisilicon, absorbs and innovates, enhancing its IP and chip customization capabilities gradually.