乐鑫科技:Espressif Systems Q3 2023 Report

Q3
2023
REPORTContents
03
About
Espressif
04
Business 04 Key Financial Data (Unaudited)
Highlights
04 Financial Indicators (Unaudited)
05 Financial Analysis
06
Management 06 Business Strategy 12 Developer Community Content
Report
07 Core Technologies 13 Business Model
09 Key Products - IoT Chips 14 Books about ESP Products
10 Key Products - AIoT Chip Portfolio 15 Ownership of Securities
11 Market 16 Risks and Uncertainties
17
Consolidated 17 Consolidated 20 Consolidated Cash Flow
Financial Balance Sheet Statement
Statements
(Unaudited) 19 Consolidated
Income Statement
21
Further 21 Terms and Conditions
Information of the Report
22 List of abbreviationsESPRESSIF SYSTEMS | Q3 2023 REPORT | AFABCOTUST A EBSOPURTE SESIPFRESSIF
About Espressif
Espressif Systems is a public multinational fabless semiconductor company focused on developing cutting-edge
wireless-communication low-power chipsets. By leveraging wireless computing we provide green versatile and cost-
effective AIoT solutions. We have accomplished a hardware-and-software closed-loop development cycle for a series
of core technologies including RF Wi-Fi & Bluetooth LE network protocol stacks RISC-V MCUs AI instruction sets
and algorithms operating systems toolchains compilers IoT software application frameworks Cloud etc.We have a diverse team of engineers from around the world. All company branches employ around 600 members of
staff from almost 30 countries and regions +77% of whom are based in our Research & Development Department. We
have eight R&D centers in five countries including China (4 out of 8) India the Czech Republic Brazil and Singapore.The company’s increasing reputation in recent years has been instrumental in attracting talented engineers from across
the world. Being united by our passion for technology our diversity is our strength as it allows the creative blending of
different kinds of knowledge perspectives and ways of thinking.global Wi-Fi MCU products distributed millions of users
market share* all over the world
Our R&D Centers
China
Shanghai Hefei
Suzhou Wuxi
Brazil India
Campinas Pune
Czech Singapore
Republic
Brno
* Market share data from TSR
3ESPRESSIF SYSTEMS | Q3 2023 REPORT | BUSINESS HIGHLIGHTS (UNAUDITED)
Business Highlights (Unaudited)
Key Financial Data (Unaudited)
Three Months Ended Nine Months Ended
CNY Sep 30 2023 Sep 30 2022 Sep 30 2023 Sep 30 2022
Consolidated Statement of Income Data
Revenue 359958768 335492468 1026956744 949311349
Gross profit 146055551 133299795 418510206 380143573
Selling expenses 12683522 13104619 38207772 32684306
General and administrative expenses 15803022 17068928 44749984 44022027
Research and development expenses 107661031 86731045 285845605 239185604
Net income 22598780 20572966 87169123 83848190
Earnings per share:
Basic 1.0875 1.0435
Diluted 1.0875 1.0435
Sep 30 2023 Dec 31 2022
Consolidated Balance Sheet Data
Net Cash (Debt) [1] 1369440716 1200219436
Working capital 1083033825 1518383808
Total assets 2201908794 2082796825
Long-term obligations 70128556 65591788
Total shareholders’ equity 1928984960 1826677535
Three Months Ended Nine Months Ended
Sep 30 2023 Sep 30 2022 Sep 30 2023 Sep 30 2022
Consolidated Cash Flow Data
Net cash flow from operating activities 106592463 20360925 206292105 -9163918
Non-GAAP Adjustment
Stock-based compensation 11353705 6384147 23621273 11847884
Non-GAAP net income 33952485 26957113 110790397 95696074
Key Financial Indicators (Unaudited)
Three Months Ended Nine Months Ended
Sep 30 2023 Sep 30 2022 Sep 30 2023 Sep 30 2022
Gross margin 40.58% 39.73% 40.75% 40.04%
R&D-to-sales ratio 29.91% 25.85% 27.83% 25.20%
EBITDA margin 6.70% 9.35% 9.01% 11.05%
Weighted ROE 4.59% 4.59%
N.B.：
[1]: Net cash (debt) represents period-end balance and is calculated as cash and cash equivalents plus term deposits and others minus borrowings
and notes payable. 4ESPRESSIF SYSTEMS | Q3 2023 REPORT | BUSINESS HIGHLIGHTS (UNAUDITED)
Financial Analysis
Espressif’s total revenue in the first three quarters of the current fiscal year (2023) was CNY 1026.96 million marking
an increase of 8.18% from CNY 949.31 million in the first three quarters of 2022 due to the expansion of product
categories. Therefore the net income was CNY 87.17 million which marked an increase of 3.96% YoY mainly due to
the increase of revenue.The overall gross margin is 40.75%. We successfully reached our targeted overall gross profit margin of 40% for the
current period. In China's mainland customers prefer purchasing chips whereas customers from the rest of the world
and China's mainland OEM or ODM prefer modules. Despite direct sales outside China's mainland accounting for less
than 30% of the total module revenue comprises over 60% representing both our direct and indirect sales beyond
China's mainland.Revenue by Revenue by Sales Top-5 Customer
Area in the First Three Mode in the First Three Concentration Rate
Quarters of 2023 Quarters of 2023 2020 - Q3 2023
42.2%
29.0%26.4%28.3%
73.0%69.7%
China's
Rest of
Direct Indirect 2020 2021 2022 Q1-Q3 2023
Mainland the World
Revenue by Product Category in the First Three Quarters of 2023
Chip Module Others
202335.9%63.0%1.1%
202230.7%68.6%0.7%
Key Financial Indicators in the First Three Quarters of 2023
20222023
48.2%46.8%
40.0%40.8%
36.2%37.1%
27.8%
25.2%
11.1%
9.0%8.1%8.1%
Overall GM Chip GM Module GM EBITDA
SG&A as % of  R&D as % of
Margin sales sales
5ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Management Report
Business Strategy
Espressif Systems’ business strategy emanates from our service/product areas and our engagement with the
developer ecosystem.Our product and service areas include AIoT chips OS-level development environments software tools application
solutions and value-added services such as Cloud and Matter. The above-mentioned products ensure that we are in
the heart of numerous commercial AIoT applications in different markets including smart home consumer electronics
industrial automation healthcare etc.Products Solutions Value-added services
SoCs Cloud
HMI Smart
Audio
service
Displays Solutions
Modules
Matter
Face
Low-Power
Solution
Recognition Solutions
DevKits … …
OS-level development environments & software tools
Customers
Brands OEM/ODMs Module Houses Solution providers Makers
6ESPRESSIIF SYSTEMS || Q3 2023 REPORT || MANAGEMENT REPORT
Core Technologies
SoCs AI
AFE (Audio Front-End) AlgorithmsESP8266 ESP32 ESP32-S ESP32- qualified as a “Software Audio Front-EndC ESP32-H and ESP32-P Series Solution” for Amazon Alexa Built-in devices.Espressif offers integrated reliable and
energy-efficient SoCs for Wi-Fi         3A Audio Algorithms
Bluetooth Low Energy Thread and Zigbee including Acoustic Echo Cancelation (AEC)
to various segments of the IoT market. Audio Noise Suppression (ANS) and Automatic
Gain Control (AGC) which significantly reduce
noise and echo in calls keeping high-quality
voice intercoms stable at all times.OS
ESP-IDF Cloud
Espressif’s official IoT Development Framework.It provides a self-sufficient SDK for any generic ESP RainMaker
application-development on these platforms
using programming languages such as C and A comprehensive development-free and
C++. maintenance-free AIoT solution for private Cloud deployment.ESP-IDF currently powers millions of devices in
the field and enables building a variety of It is an all-inclusive solution that covers
network-connected products ranging from everything from the underlying chip to device
simple light bulbs and toys to major appliances firmware third-party voice-assistant
and industrial devices. integrations mobile apps and the dashboard.Customers can build their own AIoT devices
and ecosystem with ESP RainMaker.Software
With our open-source software Matter
such as Espressif's IoT
Development Framework ESP-IDF One-stop Matter Solution
Audio Development Framework
ESP-ADF Mesh Development This is the culmination of
Framework ESP-MDF Cloud Espressif’s ongoing contribution to
Connectivity Platform ESP the Matter platform in various
RainMaker Facial Recognition areas including protocol
Development Framework ESP- formulation core stack
WHO and Voice-Controlled implementation and certification
Assistant ESP-Skainet we have test events.developed a framework for
building AIoT applications which
is both complete and innovative.
7ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
ESP RainMaker is a private IoT cloud platform that customers can deploy in their AWS account giving them full control
over data and feature customizations. ESP RainMaker is built on AWS Server-less architecture and leverages AWS-
managed services to offer resource scalability pay-as-you-go pricing and low maintenance.ESP RainMaker is a complete solution that customers can use to build their connected products without any
development and maintenance efforts. However with customers' differentiated business requirements they can also
utilize ESP RainMaker as a foundational platform to fully customize the functionality with its open-source SDK mobile
apps and voice assistants device management dashboard and open-architecture cloud backend. In this way
customers can build their own IoT platform without reinventing the wheel.Improve Time-To-Market Complete Control
Simplify connected device With ESP RainMaker deployed in
development eliminating the need customers' own AWS accounts
for significant upfront investments in customers have full control over end
both software and hardware. user and device data as well as
customization.Pay-As-You-Grow Pricing Facilitating Innovation
Our high flexibility enables ESP RainMaker provides all the
customers to pay as their business required and undifferentiated yet
expands avoiding the burden of critical functionality for connected
expenses related to idle resources. It devices allowing customers to focus
eliminates the need for provisioning on their key differentiators.and managing servers allowing Furthermore open-source SDKs &
customers to focus solely on their components phone apps voice
business logic and delivering value assistant skills device dashboard
to their users. and open-API cloud backend allow
customers to easily build custom
solutions.
8ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Key Products - AIoT Chips
Espressif is recognized as a market leader in the field of Wi-Fi MCUs. We released our first Wi-Fi MCU in 2014 and our
first Wi-Fi/Bluetooth LE combo chip in 2016. In 2020 we successfully developed our own RISC-V MCU core adding it
to our product portfolio while in 2021 we released our first Thread/Zigbee/Bluetooth LE 5 combo chip and a 2.4GHz
Wi-Fi 6 chip. In 2022 we released our first 2.4 & 5GHz Wi-Fi 6 chip and our product range has expanded to Wireless
SoCs. In 2023 we revealed ESP32-P4 a dual-core RISC-V MCU expanding the current portfolio to address the high-
performance computation needs of IO-Rich HMI and AIoT applications.In fact we have been constantly diversifying our product portfolio introducing new solutions through our numerous
investments. Thus we now have various product lines in the main short- and medium-range connectivity technologies.Our core technologies are self-developed including connectivity IPs RF components RISC-V IPs software
frameworks tools AI functions etc.We also provide IoT modules based on our chips. The benefit for customers is that they can get direct support from us
shortening and optimizing their supply chain even in case of chip shortages.Wireless SoC
Medium Range Short Range
Wi-Fi 6E Bluetooth 5.3 (LE) Thread
5GHz Wi-Fi 6 Bluetooth 5.2 (LE) Zigbee
Connectivity
2.4GHz Wi-Fi 6 Bluetooth 5 (LE)
Wi-Fi 4 Bluetooth 4.2
RISC-V MCU AI Multimedia
32-bit Single-Core 96MHz Voice Wake-up H.264 Encoding
32-bit Single-Core 120MHz Voice Control
32-bit Single-Core 160MHz Face Recognition AI
Computing 32-bit Single-Core 240MHz
32-bit Dual-Core 400MHz
32-bit Multiple-Core
Technical Breadth
In progress
9
Technical DepthESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Key Products - AIoT Chip Portfolio
ESP32 - P4 AI
Dual-Core
32-bit RISC-V MCU
400 MHz H.264 encoding
ESP 32 ESP32 - S3 AI
32-bit Xtensa MCU 32-bit Xtensa MCU
Dual-Core
Wi-Fi 4 Wi-Fi 4
240 MHz Bluetooth 4.2 Bluetooth 5 (LE)
ESP32 -S2 ESP32 - C5
32-bit Xtensa MCU 32-bit RISC-V MCU
Single-Core
Wi-Fi 4 2.4&5 GHz Wi-Fi 6
240 MHz Bluetooth 5 (LE)
Thread
Zigbee
ESP 8266 ESP32 - C3 ESP32 - C6
Single-Core
32-bit Tensilica MCU 32-bit RISC-V MCU 32-bit RISC-V MCU
160 MHz Wi-Fi 4 Wi-Fi 4 2.4GHz Wi-Fi 6
Bluetooth 5 (LE) Bluetooth 5 (LE)
Thread
Zigbee
ESP32 - C2
Single-Core
120 MHz 32-bit RISC-V MCU
Wi-Fi 4
Bluetooth 5 (LE)
ESP32 -H2
Single-Core
32-bit RISC-V MCU
96 MHz Bluetooth 5 (LE)
Thread
Zigbee
2014201620192020202120222023
N.B.：
In chronological order of chip release dates. 10ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Market
The market for wireless SoCs is truly diverse including applications for smart homes (e.g. smart lights air conditioners
ovens coffee machines etc.) consumer electronics (e.g. smart speakers drones etc.) industrial automation (e.g.mechanical arms) smart agriculture (e.g. soil PH detector CO2 detector etc.) healthcare (e.g. monitoring devices for
diabetes blood pressure etc.) energy control (solar energy devices EV chargers etc.) the internet of vehicles (OBD
devices dashboards etc.) and education (talking pens interactive whiteboards etc.).Although the consumer market shrunk in 2022 due to various macroeconomic factors digitalization in the non-
consumer sectors has brought us many new customers. Moreover we are encouraged by the gradual recovery in
demand observed during the first three quarters of 2023.Consumer Industrial Smart
Smart Home
Electronics Automation Agriculture
Smart Ovens Smart Speakers Mechanical Arms Soil PH Detector
Energy Internet of
Healthcare Management Vehicles Education
Medical Detectors Smart Solar Intelligent Panels instrument panel Talking Pens
11ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Developer Community Contents
ITEM Sep 30 2023 Dec 31 2022 change%
GitHub (Worldwide open-source development platform)
ESP32 Projects 54800 41891 31%
ESP8266 Projects 42700 39294 9%
Gitee (Chinese open-source development platform)
ESP32 Projects 2871 2629 9%
ESP8266 Projects 1994 1868 7%
CSDN (Chinese Tech-blog platform)
Search results for ESP32 114053 93242 22%
Search results for ESP8266 45458 36286 25%
Hackaday (open-source hardware platform)
ESP32 projects 5431 4702 16%
ESP8266 projects 6220 6101 2%
Reddit
ESP32 group members 70435 59619 18%
ESP8266 group members[1] / 59004
bilibili (Chinese video-sharing platform)
Official account followers 29009 24064 21%
Official account views 873858 658235 33%
YouTube
Official account subscribers 17700 14800 20%
Official account views[2] 879129 810523 8%
ESP32 community videos 755973 641926 18%
ESP8266 community videos 809857 778090 4%
Views of most watched ESP32 community video around 4.0m around 3.4m
Views of most watched ESP8266 community video around 1.7m around 1.6m
N.B.：
Statistical data derived from different platforms may be based on different collecting methods. It is possible for certain platforms to modify their algorithms from
time to time and therefore impact the resulting statistical data. The above-mentioned data resulted from the Company’s research at the end of each quarter
reported here unless otherwise stated.The search results of the keyword "ESP32" include the ESP32 series ESP32-C series ESP32-S series and ESP32-H series.[1] On May 31 2023 Reddit announced a policy change that will kill essentially some third-party Reddit app now operating. There have been Reddit-wide
blackouts in protest to this and r/esp32 & r/esp8266 have gone private as well. So we will stop updating the member numbers of the Reddit.[2] Due to the conversion of certain previously published videos to private the views on the official YouTube account have increased slowly compared to the end of
2022.
12ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Business Model
Business-to-Developer-to-Business (B2D2B)
Espressif has deployed the Business-to-Developer type of marketing not only because it has gained prominence in
recent years but also because it has proven to be more effective since the influence of developers on organizations of
all sizes has gained traction. In other words most developers are R&D employees in various companies and bring forth
business opportunities from the companies they work for.This way the developer ecosystem we have created at Espressif demonstrates how the value of networks can grow
exponentially:
* The more developers we attract as customers the more hardware and software solutions we generate.* The more successful hardware and software solutions we create the more our reputation spreads with positive
feedback from happy customers/developers.* The above-mentioned interaction between people in our network prompts the creation of more content which -in
turn- attracts more users/developers searching for new content.* Likewise other third-party development platforms join our ecosystem and bring in new developers as our influence
continues to grow.Having successfully applied the B2D2B model Espressif can now focus on R&D investments while maintaining a small
business team that supports a large number of customers directly. In fact most of our revenue is gained through direct
sales.
13ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Books about ESP Products
More than 200 books on how to use ESP products can be found in the developer community and cover over a dozen
languages.
14ESPRESSIF SYSTEMS | Q3 2023 REPORT | MANAGEMENT REPORT
Ownership of Securities
Basic information of securities
Share types Ordinary share
Share capital 80787946 (as of Sep 30 2023)
Listing Shanghai Stock Exchange (SSE)
Ticker 688018.SH
Listing Date 2019-07-22
Shareholder Structure as of Sep 30 2023
Shareholder Share Numbers Percentage (%)
Espressif (Hong Kong) Investment Ltd. 33047244 40.91
Shinvest Holding Ltd. 2226179 2.76
Dajia Life Insurance Co. Ltd. – Universal Products 1978918 2.45
Hong Kong Securities Clearing Company Limited 1442173 1.79
Ningbo Meishan Free Trade Port Le Tun Investment Management 1046030 1.29
Partnership (Limited Partnership)
CCB - Zheshang Fengli Strengthen Bond Fund 1000000 1.24
GTJA Allianz CSI All-share Semi-conductor Product and 887706 1.10
Equipment ETF
BOC - Franklin Templeton Sealand Fund 729766 0.90
Changjiang Securities Company Limited 605097 0.75
BOC - Zhong Ou High-quality Enterprise Mixed Fund 585798 0.73
Top 10 shareholders 43548911 53.92
Espressif Systems (Shanghai) Co. Ltd. Repurchase Dedicated 905758 1.12
Securities Account
Other public shareholders 36333277 44.96
Total of outstanding shares 80787946 100.00
15ESPRESSIIF SYSTEMS || Q3 2023 REPORT || MANAGEMENT REPORT
Risks and Uncertainties
Financial Risk
The Company performs periodic credit evaluations of its customers’ financial
condition and generally requires of its customers no collateral. The Company
provides an allowance for expected credit losses based on the net amount
expected to be collected on such receivables. Losses have not been significant
for any of the periods presented.R&D Risk
Espressif’s research and development strategy is focused on leveraging new
technologies for the creation of innovative AIoT products. Any delays or changes
in the development of these technologies by our industry partners or a failure of
our products to achieve market acceptance could compromise our competitive
position.Competitors
As the market for AIoT products grows we face an increasing antagonism from
relatively large competitors such as Realtek MediaTek Infineon NXP Qualcomm
and others. Intense competition from current players as well as new entrants
such as Silicon Labs and Nordic may reduce our product sales and market share.Suppliers
A significant portion of the Company’s products is fabricated by the Taiwan
Semiconductor Manufacturing Company Limited (TSMC). The inability of TSMC to
deliver wafers to the Company in a timely manner could impact the production of
the Company’s products for a certain period of time which could have an adverse
effect on the Company’s business financial condition results of operations and
cash flow.Customers
The Company sells directly to end customers distributors solution providers and
contract manufacturers. Our customers are a mix of several big customers and
numerous small customers. The concentration ratio for our top-five customers
was 28.3% in the first three quarters of 2023.
16ESPRESSIF SYSTEMS | Q3 2023 REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Financial
Statements (Unaudited)
Consolidated Balance Sheet (Unaudited)
CNY Sep 30 2023 Jan 1 2023 Dec 31 2022
Assets
Current assets:
Cash and cash equivalents 442045799 350677354 350677354
Held for trading financial assets 65143616 461223082 461223082
Notes receivable 3601118 789099 789099
Accounts receivable net 251747841 198406116 198406116
Accounts receivable financing 20578517 1441520 1441520
Prepayments 8415199 9724045 9724045
Other receivables 11656645 9578753 9578753
Including: Interest receivable 3160190 838168 838168
Inventories 304561961 448981896 448981896
Other current assets 178078407 228089444 228089444
Total current assets 1285829103 1708911310 1708911310
Non-current assets:
Debt investment 717036000 212484600 212484600
Investment in other equity assets 35340648 35340648 35340648
Other non-current financial assets 19879347 19879347 19879347
Fixed assets 66936465 60243507 60243507
Construction work in progress
Right-of-use assets 19045128 21692767 21692767
Intangible assets 1828053 2412317 2412317
Long-term deferred expenses 10423630 6565887 6565887
Deferred income tax assets 45590421 18987186 15266444
Total assets 2201908794 2086517567 2082796825
00
17ESPRESSIF SYSTEMS | Q3 2023 REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
CNY Sep 30 2023 Jan 1 2023 Dec 31 2022
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable 95671305 77918867 77918867
Contract liabilities 20992616 9044287 9044287
Payroll payable 64646889 85041335 85041335
Taxes payable 7552662 5211995 5211995
Other payable 3617689 2925552 2925552
Non-current liabilities due within one year 9606920 9607030 9607030
Other current liabilities 707198 778437 778437
Total current liabilities 202795278 190527502 190527502
Non-current liabilities:
Lease liabilities 10243587 12839126 12839126
Provisions 613410
Deferred income tax liabilities 59271560 56473404 52752662
Total liabilities 272923834 259840032 256119290
Owners’ equity (or shareholders' equity):
Share capital 80787946 80484430 80484430
Capital reserves 1363228945 1309813001 1309813001
Less: Treasury stock 91110366 40966012 40966012
Other comprehensive income 28509570 16946374 16946374
Surplus reserves 46570910 46570910 46570910
Retained earnings 500997955 413828832 413828832
Total shareholders’ equity 1928984960 1826677535 1826677535
Total liabilities and shareholders' equity 2201908794 2086517567 2082796825
N.B.：
Starting from 2023 the company will implement the "Accounting Treatment for Deferred Income Tax Related to Asset and Liability Arising from a Single Transaction
That Does Not Qualify for Initial Recognition Exemption" as stipulated in Interpretation No. 16 of the Enterprise Accounting Standards issued by the Ministry of
Finance. The company will adjust the application of this standard to single transactions that occurred between the beginning of the earliest period reported in the
financial statements and the date of the first implementation of this standard. This includes adjusting the lease liabilities right-of-use assets estimated liabilities
related to disposal obligations and corresponding related assets that were recognized due to the application of this standard on the initial period reported in the
financial statements when the standard was first implemented. If there are temporary differences that result in taxable or deductible amounts related to the above-
mentioned adjustments the cumulative impact on retained earnings and other relevant financial statement items at the beginning of the reporting period will be
adjusted according to the provisions of this standard and Enterprise Accounting Standard No. 18 - Income Taxes. So the amount of deferred income tax assets of
January 1 2023 exceeds the amount of December 31 2022 disclosed in the 2022 annual report by CNY 3720742. The amount of deferred income tax liabilities is
also the same.
18ESPRESSIF SYSTEMS | Q3 2023 REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Income Statement (Unaudited)
Three Months Ended Nine Months Ended
CNY Sep 30 2023 Sep 30 2022 Sep 30 2023 Sep 30 2022
Revenue 359958768 335492468 1026956744 949311349
Cost of Revenue 213903217 202192673 608446538 569167776
Gross Profit 146055551 133299795 418510206 380143573
Taxes and surcharges 1924317 2080094 5238905 3827043
Selling expenses 12683522 13104619 38207772 32684306
General and administrative expenses 15803022 17068928 44749984 44022027
Research and development expenses 107661031 86731045 285845605 239185604
Financial expenses 1238018 -2253881 -2721347 1012633
Including: Interest expenses 215920 161664 722742 558727
Interest income 3323868 829660 7974518 2368282
Add: Other income 581160 666153 1158794 3898623
Investment income (mark"-" for loss) 9071593 7110887 20559009 17596549
Income from changes in fair value (mark"-" for loss) -28763 -631226 143616 1349993
Credit impairment losses (mark"-" for loss) -231635 -234750
Assets impairment losses (mark"-" for loss) -1968775 -331229 -4629613 -736511
Assets disposal income (mark"-" for loss) -1046 3344
Operating Income 14399809 23151940 64424439 81285864
Add: Non-operating revenue 164572
Less: Non-operating expenses 9898 22284 15435 55689
Income before income taxes 14389911 23129656 64573576 81230175
Provision (benefit) for income taxes -8208869 2556690 -22595547 -2618015
Net Income 22598780 20572966 87169123 83848190
Earnings per share
Basic 1.0875 1.0435
Diluted 1.0875 1.0435
Three Months Ended Nine Months Ended
CNY Sep 30 2023 Sep 30 2022 Sep 30 2023 Sep 30 2022
Net Income 22598780 20572966 87169123 83848190
Other comprehensive income (loss) after tax
Changes to the fair value of investment in other
-1347760-1280620
equity instruments
Currency translation reserves -2923303 15116842 11563196 34605421
Other comprehensive income (loss) -2923303 13769082 11563196 33324801
Comprehensive income 19675477 34342048 98732319 117172991
19ESPRESSIF SYSTEMS | Q3 2023 REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Cash Flow Statement (Unaudited)
Three Months Ended Nine Months Ended
CNY Sep 30 2023 Sep 30 2022 Sep 30 2023 Sep 30 2022
Operating Activities
Cash from sales of merchandise and provision of
41103794135302491610797137641069255332
services
Tax refund 20167820 9534652 53672523 37477287
Other received cash related to operational activities -2385723 620848 8108387 13416056
Subtotal of cash inflow from operational activities 428820038 363180416 1141494674 1120148675
Cash paid for merchandise and services 209720135 219595203 532158481 776358077
Cash paid to and for employees 76173208 71251555 284929089 242018321
Cash paid for taxes and surcharges 16643337 20868020 52894426 46154144
Other paid cash related to operational activities 19690894 31104713 65220572 64782051
Subtotal of cash outflow from operational activities 322227574 342819491 935202568 1129312593
Net cash provided by operating activities 106592463 20360925 206292105 -9163918
Investing activities
Cash arising from the disposal of investments 400316287 726570870 1683105838 2367674727
Cash arising from investment income 1914306 1595172 5743953 4488622
Net cash arising from the disposal of fixed assets intangible 4163 23413
assets and other long-term assets
Other received cash relating to investment activities 203000 1856000
Subtotal of cash inflow from investment activities 402437756 728166042 1690729204 2372163349
Cash paid for the purchase and construction of fixed assets 8988571 617742 33767598 15978266
intangible assets and other long-term assets
Cash paid for investments 395000000 789000000 1746000000 2327100000
Other paid cash relating to investment activities 300000 900000
Subtotal of cash outflow from investment activities 404288571 789617742 1780667598 2343078266
Net cash used by investment activities -1850815 -61451701 -89938394 29085083
Financing activities
Cash arising from the issuance of common stock 6141170 30098186 26273338
Including: Cash arising from subsidiaries absorbing
investments by minority shareholders
Subtotal of cash inflow from financing activities 6141170 30098186 26273338
Cash paid for the distribution of dividends and profits or 128722856
payment of interests
Including: dividends and profits paid to minority
shareholders by subsidiaries
Other paid cash relating to financing activities 53897561 37955764 60961795 39960171
Subtotal of cash outflow from financing activities 53897561 37955764 60961795 168683027
Net cash used for financing activities -47756391 -37955764 -30863609 -142409689
Impact of fluctuation in exchange rates on cash and cash -6225437 8168018 5878343 17024110
equivalents
Net increase in cash and cash equivalents 50759820 -70878522 91368445 -105464413
Add: Cash and cash equivalent at the commencement
391285979332556835350677354367142726
of the period
Cash and cash equivalents at the end of the period 442045799 261678313 442045799 261678313
20ESPRESSIF SYSTEMS | Q3 2023 REPORT | FURTHER INFORMATION
Further Information
Terms and Conditions of the Report
Responsibility Statement
The Board of Directors the Board of Supervisors and executive management of the Company warrant that the
contents of this report are true accurate and complete and do not contain any false information misleading
statements or material omissions severally and jointly accepting any legal responsibility thereof.Shanghai 23 October 2023
Espressif Systems
Board of Directors Board of Supervisors
Teo Swee Ann Lv Zhihua
Founder and Chairman Employee-elected
Ng Pei Chi Fu Hanyu
Information Technology Officer Shareholder-elected
Wang Jue Wang Yiwen
Deputy General Manager Shareholder-elected
Teo Teck Leong
Shareholder-elected Executive Management
Lan Yuzhe Teo Swee Ann
Independent Director Founder and CEO
Koh Chuan Koon Wang Jue
Independent Director Deputy General Manager
Lee Sze Chin Shao Jingbo SPRESE SIF
Independent Director Financial Director
Declaration
Forward-looking Statements SYSTEMS
This report contains forward-looking statements and/or assessments about the business
financial condition performance and strategy of the Espressif Group. These statements and/
or assessments are based on assumptions and management expectations resting upon
currently available information and current estimates. These are subject to a multitude of
uncertainties and risks many of which are partially or entirely beyond Espressif’s control.Espressif’s actual business development financial condition performance and strategy may
therefore differ from what is discussed in this report.
21ESPRESSIF SYSTEMS | Q3 2023 REPORT | FURTHER INFORMATION
List of abbreviations
AI Artificial Intelligence
AIoT Artificial Intelligence and Internet of Things
Bluetooth LE Bluetooth Low Energy
CEO Chief Executive Officer
EBITDA Earnings Before Interest Taxes Depreciation and Amortization
Espressif ESPRESSIF SYSTEMS (SHANGHAI) CO. LTD.GM Gross Margin
IC Integrated Circuit
IoT Internet of Things
IP Intellectual Property
OBD On-Board Diagnostics
ODM Original Design Manufacturer
OEM Original Equipment Manufacturer
R&D Research & Development
RF Radio Frequency
RISC-V MCU Reduced Instruction Set Computer-V Microcontroller Unit
ROE Return on Earnings
SG&A Selling General and Administrative
SH Shanghai
SoCs System on Chips
TSR Techno Systems Research
22Investor Relations
ir@espressif.com
Official Platforms Social Media
www.espressif.com twitter.com/EspressifSystem
blog.espressif.com facebook.com/espressif
github.com/espressif linkedin.com/company/espressif-systems
esp32.com youtube.com/EspressifSystems
esp8266.com instagram.com/espressif_systems_official
bbs.espressif.com bilibili.espressif.com
Copyright  2023 Espressif Systems (Shanghai) Co. Ltd. All rights reserved. All trade names trademarks and registered trademarks
mentioned in this document are the property of their respective owners and are hereby acknowledged. The term “Espressif” refers to
Espressif Systems (Shanghai) Co. Ltd. and/or its subsidiaries. This report is written in both Chinese and English. In case of any
discrepancies between Chinese and foreign interpretations the Chinese version shall prevail.Copyright (c) 2011-2012 Julieta Ulanovsky (julieta.ulanovsky@gmail.com) with Reserved Font Names ‘Montserrat’. This Font
Software is licensed under the SIL Open Font License Version 1.1. This license is available with a FAQ at: http://scripts.sil.org/OFL
All amounts presented in these condensed Consolidated Financial Statements are shown in CNY unless stated otherwise. Slight
discrepancies between the amounts presented may occur due to rounding.