Socionext (6526) Q1 2027 earnings summary

Executive summary

• Net sales for 1Q FY2027/3 rose 13.0% year-over-year to ¥39.0 billion, driven by higher NRE revenue and product revenue entering mass production, but declined 33.5% sequentially from the previous quarter.

• Operating income turned negative at -¥0.7 billion, down from ¥1.4 billion a year ago and ¥5.2 billion in the prior quarter, mainly due to increased R&D and SG&A expenses and lower product gross profit.

• Net income was -¥0.6 billion, compared to ¥0.5 billion in 1Q FY2026/3 and ¥4.0 billion in 4Q FY2026/3.

• The company operates a single segment focused on Solution SoC, with design wins in automotive, data center, and industrial sectors.

Financial highlights

• NRE revenue increased 37.1% year-over-year to ¥11.6 billion, while product revenue grew 5.9% to ¥27.4 billion.

• Gross margin was 54.6%, up from 44.7% in the previous quarter, but product gross margin declined to 35.3% from 42.3% a year ago.

• Gross profit rose 5.8% to ¥21.3 billion, but gross margin declined due to a 23.0% increase in cost of sales.

• R&D expenses rose 19.2% year-over-year to ¥17.0 billion, and SG&A expenses increased 17.5% to ¥22.0 billion.

• Cash on hand and in banks decreased by ¥7.2 billion from March 2026 to ¥37.3 billion as of June 30, 2026.

Outlook and guidance

• FY2027/3 full-year net sales are forecast at ¥215.0 billion (+7.1% YoY), with operating income of ¥14.0 billion (+13.3% YoY) and net income of ¥10.0 billion (+14.5% YoY); EPS forecast at ¥57.02.

• No revision to the latest consolidated earnings forecast.

• Operating margin is expected to improve in the second half as new US automotive and data center products ramp up.

• Product gross margin is projected to slightly decrease due to higher share of large-scale projects and increased costs in early mass production phases.