Semiconductor maker Himax Technologies (NASDAQ: HIMX) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 3.7% year on year to $215.1 million. On top of that, next quarter’s revenue guidance ($237.2 million at the midpoint) was surprisingly good and 14.1% above what analysts were expecting. Its GAAP profit of $0.11 per share was 31.5% above analysts’ consensus estimates.

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“The recent abrupt and significant NT dollar appreciation against the US dollar, its impact on our Q2 financial results is limited and has been accounted for in Q2 financial guidance. Currently, tariffs have not had a significant direct impact on Himax’s business, as our IC products are not directly exported to the U.S. Amid the volatile macro environment, most panel customers have adopted a make-to-order model and are keeping inventories lean. In response, we are carefully monitoring wafer-starts, maintaining low inventory levels, and rigorously controlling operating expenses,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax.

Company Overview

Taiwan-based Himax Technologies (NASDAQ: HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Himax’s sales grew at a tepid 5.7% compounded annual growth rate over the last five years. This was below our standard for the semiconductor sector and is a rough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Himax’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.9% annually.

This quarter, Himax reported modest year-on-year revenue growth of 3.7% but beat Wall Street’s estimates by 2.4%. Company management is currently guiding for a 1% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 7.1% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and indicates its products and services will face some demand challenges.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Himax’s DIO came in at 79, which is 38 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.

Key Takeaways from Himax’s Q1 Results

We were impressed by how significantly Himax blew past analysts’ revenue and EPS expectations this quarter. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 1.7% to $7.59 immediately following the results.

Himax may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.