Q2
Half-Year
Report
Contents
Build Smart
with Espressif
Core Core Technologies
Competitiveness
Business 07 Key Financial Data (Unaudited)
Highlights
Management 09 Business Strategy 15 Developer Community Content
Report
Development Kits
Consolidated 22 Consolidated 25 Consolidated Cash Flow
Financial Balance Sheet Statement
Statements 24 Consolidated 27 Consolidated Statement
(Unaudited)
Income Statement of Changes in Equity
Further 28 Terms and Conditions 29 List of abbreviations
Information of the Report
ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | BUILD SMART WITH ESPRESSIF
Build Smart with Espressif
In AIoT Technology
Global IoT Chip
Shipment
As a public, multinational, fabless semiconductor Satis ed Customers
company (Espressif Systems, SSE: 688018.SH), we Worldwide
develop cu ting-edge, low-power wireless
communication chipsets. Our AIoT solutions are green,
Global Leader
versatile, and cost-e fective. We have a closed-loop
In Wi-Fi MCU Market
development cycle for core technologies, including Wi-
Fi & Bluetooth LE & IEEE . . protocols, RF, RISC-V
MCUs, AI algorithms, operating systems, toolchains,
AIoT frameworks, and Cloud services. 2 Million+
Active Ecosystem
Followers and
Developers
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CORE COMPETITIVENESS
Core Competitiveness
Espressif's business model follows a B D B (Business-to-Developer-to-Business) approach, making brand
development a crucial component of our company's strategy. Product strength, di ferentiation, cost-e fectiveness
and community support all contribute to the power of our brand.
Exceptional IC Design Capability
Pro
duc
Str
eng t
th
Full-Stack Engineering
Ful
Capability
l-St
ack
Brand
Awareness
s
nes
Eff Cost-
ive
Superior Cost-Effective
ect
and Stable Support
y
u nit
mm rt
Co ppo
Su
Extensive Developer Community
Support
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
ESP32 Google Trends
Brand Awareness 100
The ESP and Espressif brands have a strong sense of
recognition among users. This recognition has become a key 75
factor in our competitive advantage and success. Users identify
with the ESP brand due to its reliability, performance, and 50
versatility, which have been proven across various applications
and industries. This strong brand power not only fosters customer 25
retention but also a tracts new users, thereby solidifying
Espressif's position in the market. 0
Exceptional IC Design Capability Espressif Google Trends
Espressif independently designs and develops its own chip
products, with core IPs being self-developed. These chips are
equipped with rich features, ensuring that Espressif’s products 75
stand out in the market and avoid the pi falls of homogenized
competition. By controlling the entire design process, Espressif 50
can innovate rapidly and introduce unique functionalities that set
our products apart from competitors, providing a distinctive edge 25
in the IoT semiconductor industry.
Full-Stack Engineering Capability
Espressif possesses comprehensive engineering development capabilities that span from IP development to
complete chip design, operating systems, rmware, so tware frameworks, application solutions, hardware design,
edge AI, cloud, and apps. This full-stack engineering expertise allows Espressif to o fer highly integrated solutions
that meet a wide range of customer needs. The ability to control and optimize every layer of the technology stack is
unique in the industry and enables Espressif to deliver superior products and services that are seamlessly integrated
and highly e cient.
Superior Cost-Effective and Stable Support
Espressif's products are known for their high performance and low cost, making them competitive in the market. We
provide the cost e ciency necessary to promote large-scale commercialization in downstream industries.
Additionally, we ensure the long-term availability of our products and o fer stable and enduring so tware support,
ensuring that customers can rely on their investments for extended periods. This commitment to value and reliability
strengthens customer trust.
Extensive Developer Community Support
Espressif has garnered support from a vast community of professional engineers who are familiar with Espressif's
development pla form and actively promote its value proposition. This large and engaged community not only aids in
the rapid adoption and dissemination of Espressif’s technologies but also contributes to continuous improvement
through feedback and shared knowledge. The robust community support ampli es Espressif's market presence and
enhances our reputation as a trusted and innovative leader in the industry.
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CORE
FACTS TECHNOLOGIES
ABOUT ESPRESSIF
Core Technologies
TEXT
SoCs AI
ESP8266, ESP32, ESP32-S, ESP32- AFE (Audio Front-End) Algorithms
C, ESP32-H and ESP32-P Series quali ed as a “Software Audio Front-End
Solution” for Amazon Alexa Built-in devices.
Espressif offers integrated, reliable, and energy-
ef cient SoCs with robust image and voice data 3A Audio Algorithms
processing capabilities for Wi-Fi, Bluetooth Low
Energy, Thread and Zigbee, catering to various including Acoustic Echo Cancelation (AEC),
segments of the IoT market. Audio Noise Suppression (ANS) and Automatic
Gain Control (AGC), which signi cantly reduce
noise and echo in calls, keeping high-quality
voice intercoms stable at all times.
OS
ESP-IDF Cloud
Espressif’s of cial IoT Development Framework.
ESP RainMaker
It provides a self-suf cient SDK for any generic
application-development on these platforms, A comprehensive, development-free and
using programming languages such as C and maintenance-free AIoT solution for private
C++. Cloud deployment.
ESP-IDF currently powers millions of devices in It is an all-inclusive solution that covers
the eld, and enables building a variety of everything from the underlying chip to device
network-connected products, ranging from rmware, third-party voice-assistant
simple light bulbs and toys to major appliances integrations, mobile apps and the dashboard.
and industrial devices.
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-Mesh-Lite, 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 certi cation
Assistant ESP-Skainet, we have test events.
developed a framework for
building AIoT applications, which
TEXT
is both complete and innovative. 6
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | BUSINESS HIGHLIGHTS
Business Highlights
Key Financial Data (Unaudited)
Three Months Ended Six Months Ended
CNY Jun 30, 2024 Jun 30, 2023 Jun 30, 2024 Jun 30, 2023
Consolidated Statement of Income Data
Revenue 533,020,855 348,880,535 920,212,266 666,997,977
Gross pro t 235,129,242 142,936,609 397,496,784 272,454,655
Selling expenses 16,063,290 13,351,348 28,915,851 25,524,250
General and administrative expenses 17,125,846 15,031,928 31,997,654 28,946,961
Research and development expenses 114,836,190 92,701,560 218,682,370 178,184,574
Net income 98,797,587 33,482,914 152,713,070 64,570,344
Net income a tributable to Espressif 97,726,982 33,482,914 151,642,464 64,570,344
Earnings per share:
Basic 1.8116 0.8059
Diluted 1.8116 0.8059
Jun 30, 2024 Dec 31, 2023
Consolidated Balance Sheet Data
Working capital 1,101,575,410 999,068,356
Total assets 2,321,889,830 2,203,800,366
Long-term obligations 95,899,888 74,166,946
Total shareholders’ equity 1,962,656,198 1,913,000,228
Three Months Ended Six Months Ended
Jun 30, 2024 Jun 30, 2023 Jun 30, 2024 Jun 30, 2023
Consolidated Cash Flow Data
Net cash provided by operating activities -13,668,172 66,406,199 -25,676,834 99,699,642
Non-GAAP Adjustment
Stock-based compensation 8,929,762 9,643,201 15,331,190 12,267,568
Non-GAAP net income 107,727,349 43,126,115 168,044,259 76,837,912
Financial Indicators (Unaudited)
Three Months Ended Six Months Ended
Jun 30, 2024 Jun 30, 2023 Jun 30, 2024 Jun 30, 2023
Gross margin 44.11% 40.97% 43.20% 40.85%
R&D-to-sales ratio 21.54% 26.57% 23.76% 26.71%
EBITDA margin 19.08% 9.74% 17.78% 10.26%
Net income margin 18.54% 9.60% 16.60% 9.68%
Weighted ROE 7.91% 3.43%
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | BUSINESS HIGHLIGHTS
Financial Analysis
Espressif’s total revenue in the rst half of 2024 was CNY . million, marking an increase of 38.0% from CNY
net income a tributable to Espressif was CNY . million, which marked an increase of 134.8% year-on-year, mainly
due to the increase of revenue.
The overall gross margin was 43.2%, in which the gross margin for AIoT chips was 49.0%. Bene ting from the low
material prices and the higher initial gross margin from new customers, the gross margin of both chips and modules
& DevKits improves. Downstream module manufacturers are expanding their customer base, with more projects
starting to use Espressif chips. As a key player in the supply chain, module manufacturers purchase chips directly
from Espressif. Their business growth has driven an increase in chip revenue. Additionally, the increased use of
chips in small devices leads to a higher proportion of chip sales, ultimately resulting in an overall increase in the
gross margin. We established a mid-term target of 40% for our overall gross margin to facilitate funding for our future
R&D expenses.
Revenue by Area Revenue by Top-5 Customer
Sales Mode Concentration Rate
China's Rest of Direct Indirect 2020 2021 2022 2023 H
Mainland the World
Revenue by Product Category
Chip Module & DevKits Others
H 41.4% 57.8% 0.8%
H 33.2% 65.6% 1.2%
Key Financial Indicators
H H
Overall GM Chip GM Module & DevKits EBITDA SG&A as % of R&D as % of
GM Margin sales sales
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR 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 hardwares, OS-level development environments, so tware tools, application
solutions, and value-added services, such as Cloud and Ma ter. The above-mentioned products ensure that we are
in the heart of numerous commercial AIoT applications in di ferent markets, including smart home, consumer
electronics, industrial automation, healthcare, etc.
Products Solutions Value-added services
Cloud
SoCs HMI Smart Audio service
Displays Solutions
Modules
Ma ter
Face Low-Power Solution
Recognition Solutions
DevKits
… …
OS-level development environments & software tools
Customers
Module manufacturer OEM/ODMs Brands Solution providers Makers
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Key Products - AIoT Chips
Espressif is recognized as a market leader in the eld of Wi-Fi MCUs. We released our rst Wi-Fi MCU in 2014, and
our rst Wi-Fi/Bluetooth LE combo chip in 2016. In 2020, we successfully developed our own RISC-V MCU core,
adding it to our product por folio, while in 2021, we released our rst Thread/Zigbee/Bluetooth LE combo chip and
a 2. GHz Wi-Fi 6 chip. In 2022, we released our rst 2.4 & GHz Wi-Fi 6 chip. In 2023, we revealed ESP -P , a
dual-core RISC-V MCU, expanding the current por folio to address the high-performance computation needs of IO-
Rich, HMI, and AIoT applications. In 2024, we announced ESP -H , a low-power SoC with 802.15.4 & Bluetooth 5.4
(LE), which caters to increasing demands for low-power wireless devices, boasting signi cant upgrades in power
consumption, connectivity features, and memory expansion capabilities.
In fact, we have been constantly diversifying our product por folio, introducing new solutions through our numerous
investments. Thus, we now have various product lines in the main short- and medium-range connectivity
technologies and our product range has expanded to AIoT SoCs. Our core technologies are self-developed,
including connectivity IPs, RF components, RISC-V IPs, so tware frameworks, tools, AI functions etc.
We also provide IoT modules based on our chips. The bene t for customers is that they can get direct support from
us, shortening and optimizing their supply chain, even in case of chip shortages.
Key Technologies
Medium Range Short Range
Wi-Fi E Bluetooth 5.4 (LE) Thread
GHz Wi-Fi 6 Bluetooth 5.3 (LE) Zigbee
Connectivity
Wi-Fi 4 Bluetooth 5 (LE)
Technical Depth
Bluetooth 4.2
RISC-V MCU AI Multimedia
Computing
Technical Breadth
In progress
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Key Products - Chip Matrix
ESP32 ESP 32 ESP32-S3 ESP32 - S3 AI ESP32 - P4 AI
Dual-Core @240 MHz Dual-Core @240 MHz Dual-Core @400 MHz
H. encoding
High- ESP32-S2 ESP32 - S2 ESP32 - H4
Performance 32-bit Xtensa MCU 32-bit RISC-V MCU
Single-Core @240 MHz Dual-Core @96 MHz
ESP8266 ESP 8266 ESP32 - C3 ESP32 - C5
Single-Core @1 MHz Single-Core @1 MHz Single-Core @2 MHz
ESP32 - C2 ESP32 - C6 ESP32 - H2
Cost- Single-Core @1 MHz Single-Core @1 MHz Single-Core @96 MHz
Effective
ESP32 - C61
Single-Core @1 MHz
RISC-V
Relatively
Classic New
New
ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Key Products - M5Stack Development Kits
Espressif acquired a majority stake in M Stack in 2024 Q . M Stack is renowned for its innovative approach to
hardware development and o fers a modular, open-source pla form that simpli es the creation of IoT and embedded
system solutions, greatly enhancing deployment e ciency. The M Stack ecosystem is built around its agship main
control module, powered by Espressif’s all ESP series of chips, highlighting the deep technical synergy between
the two companies.
M Stack’s product por folio primarily comprises controllers and other hardware modules needed in IoT application
solutions and is mainly sold to the industrial, education, and developer markets.
M Stack maintains an impressive pace of launching one new hardware product every week. A diversi ed product
por folio with approximately 300 SKUs helps developers rapidly prototype end products, accelerating the design-in
process for Espressif's products with end customers. This ultimately brings more business opportunities for
Espressif's chips and modules.
Controller
Voltage & Amperage Air Quality Kit Cardputer Rotary Knob
Meter
…
Camera Sensor Module Kits
PoE Camera Weight I C Unit Lora Unit Lidar Bot
…
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Market
The market for wireless SoCs is truly diverse, including applications for smart homes (e.g., smart lights, air
conditioners, ovens, co fee machines, etc.), consumer electronics (e.g., smart speakers, drones, etc.), industrial
automation (e.g., mechanical arms), smart agriculture (e.g., soil PH detector, CO 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.).
We seem to be witnessing an economic recovery, with both new and existing customers showing growth in
business. At the same time, we have also seen the emergence of applications in new areas, such as beauty
devices. A ter experiencing the low point of 2023, clients in the new energy sector have also begun to show signs of
recovery.
Consumer Industrial Smart
Smart Home
Electronics Automation Agriculture
Smart Ovens Smart Speakers Mechanical Arms Soil PH Detector
Energy Internet of
Healthcare Education
Management Vehicles
Smart Solar Intelligent
Medical Detectors Talking Pens
Panels instrument panel
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR 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 e fective since the in uence 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 a tract as customers, the more hardware and so tware solutions we generate.
• The more successful hardware and so tware 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- a tracts more users/developers searching for new content.
• Likewise, other third-party development pla forms join our ecosystem and bring in new developers, as our
in uence continues to grow.
Having successfully applied the B D B 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.
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Developer Community Content
Cumulative Number of
GitHub ESP32 Projects
Global Code Hosting Pla form Global Video Sharing Pla form
ESP and ESP Espressif Followers Views of the Most
Projects Popular ESP Video
Chinese Code Hosting Pla form Chinese Video Sharing Pla form
Number of Reddit
ESP and ESP Espressif Followers Views of the Most 87.0K
Projects Popular ESP Video
Social Networking Site Social Networking Pla form
ESP Group Members Espressif Followers M Stack Followers
New Discussions Around the Clock
Posted on 10 Jul 2024 Posted on 10 Jul 2024 Posted on 10 Jul 2024 Posted on 10 Jul 2024
ESP S +LVGL+GUI Guider进?UI图形 L?p trình ESP - Bài 7 - Cách s? d?ng
"Micropython: Python para programar 设计全过程教学|智能?表|桌?时钟|DIY How to do Object Detection using
Blynk IOT trên ESP ?? truy?n nh?n
microcontroladores y sistemas ESP -CAM and Edge Impulse YOLO
d? li?u
embebidos" Model
H??ng d?n cách s? d?ng Blynk IOT
A lo largo de este curso aprenderemos So here is my latest tutorial on how to
trên ESP ?? truy?n nh?n d? li?u khi
a programar aplicaciones en use the ESP CAM for object
làm thi?t b? IOT.
plataformas como m Stack y ESP . recognition. I have earlier built
Curso tutorizado y online en el Campus something similar with …
h tps:// .youtube.com/watch?
Tecnológico #Formación
v=VK N _Hjsu4
#MicroPython
h tps://b23.tv/hCKkI
Posted on 10 Jul 2024
h tps:// .reddit.com/r/esp32/
comments/1dzruxz/comment/lchld04/
h tps://twi ter.com/arduino_zero/ Posted on 10 Jul 2024
TEXT
status/1810736626588410204
ESP -ADF with MAX A using
pla formio
Posted on 10 Jul 2024
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR 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.
TEXT 16
ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Research and Development
R&D Investment
R&D investment is at the heart of Espressif Systems’ development. During the reporting period, R&D cost CNY
ratio was 23.76% in the rst half of this scal year (2024).
Espressif’s escalating R&D investment cost can be a tributed to the increase in the number of R&D sta f and their
subsequent compensation level, which increased signi cantly year-over-year.
Six Months Ended
CNY June 30, 2024 June 30, 2023 change (%)
R&D Expenses 218,682,370 178,184,574 22.73
R&D-to-sales ratio 23.76% 26.71%
Intellectual Property
We seek to protect our technologies through a combination of patents, so tware Applied for
copyright and trade secrets. By June 30, 2024, the Company had been granted 195
patents. We continue to submit new patent applications relating to our recent R&D
innovations.
Granted
List of Intellectual Property Rights Applied and Granted
H1 2024 Cumulative number
Applied for Granted Applied for Granted
Invention patents 1 6 135 95
Utility model patents 2 4 33 31
Design patents 0 0 11 11
So tware copyright 3 3 26 26
Others 5 4 68 32
Total 11 17 273 195
N.B.: The number of patents that have been “applied for" does not include the rejected applications in China, or the PCT patent applications not submi ted to any
particular country, or any patent applications beyond the reporting period. The number of “granted" patents includes those with expired IP rights. The category of
“others” includes overseas (non-Chinese) patent applications, i.e. the PCT patent applications, U.S. patent applications through the PCT route or the Paris Convention
route, as well as patent applications in India.
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
R&D Employees
We are proud of our talented, diverse and multicultural workforce. By June 30, 2024, across our nine branches in ve
countries, including China, India, the Czech Republic, Brazil and Singapore, we had employed 728 people, more
than 71% of whom are in engineering roles. Meanwhile, we have expanded our business beyond Wi-Fi MCUs, thus
o fering innovative solutions to wireless connectivity and processing, including RF, RISC-V MCU, Wi-Fi 6, Bluetooth
LE, Thread, Zigbee, Ma ter, AI and other IoT-related technologies.
Since the research and development of so tware and hardware are inextricably intertwined, we constantly invest in
so tware technology, too. Hence, we are currently focused on AIoT technologies, including toolchains, compilers,
operating systems, application frameworks, AI algorithms, Cloud, APPs, etc. Our aim is to make Espressif a one-stop
solution-provider o fering anything relating to AIoT.
Six Months Ended
June 30, 2024 June 30, 2023
R&D employees 519 455
R&D employees as a percentage of total employees 71.29% 76.99%
Total compensation of R&D employees (CNY in thousands) 169,820 135,244
Average compensation of R&D employees (CNY in thousands) 339 302
R&D Expenses R&D Employees
R&D expenses (in million) R&D-to-sales ratio R&D employees R&D employees %
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Ownership of Securities
Basic information of securities
Share types Ordinary share
Share capital 112,188,505 (as of June 30, 2024)
Listing Shanghai Stock Exchange (SSE)
Ticker 688018.SH
Listing Date 2019-07-22
Shareholder Structure as of June 30, 2024
Shareholder Share Numbers Percentage (%)
Espressif (Hong Kong) Investment Ltd. 46,266,142 41.24
Shinvest Holding Ltd. 3,116,651 2.78
Hong Kong Securities Clearing Company Limited 2,544,925 2.27
Wisdomshire Asset Management Co., Ltd. - Wisdomshire Youfu
Private Equity Securities Investment Fund No.1
Ningbo Meishan Free Trade Port Le Tun Investment Management
Partnership (Limited Partnership)
Wisdomshire Asset Management Co., Ltd. - Wisdomshire Youfu
Private Equity Securities Investment Fund No.3
ROBINA WOOD 1,097,040 0.98
SPD - Debang Semiconductor Industry Hybrid Initiated Securities
Investment Fund
ICBC-AXA LIFE - Long-term Dividend Product 880,531 0.78
GTJA Futures - Guolian An CSI Semiconductor Products and
Equipment Tradable Open-ended Index Securities Investment Fund
Top 10 shareholders 60,076,238 53.55
Espressif Systems (Shanghai) Co., Ltd. Repurchase Special
Securities Account
Other public shareholders 52,112,267 46.45
Total of outstanding shares 112,188,505 100.00
ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Stock-Based Compensation
Espressif has eight ongoing restricted stock incentive plans. The fair value of the restricted stock incentive plans is
calculated by using the Black-Scholes model. The following table presents details of stock-based compensation
costs acknowledged in the Consolidated Statements of Income.
Restricted Stock Incentive Plans
Number of Ratio of
Grant Price
Plan Award Type Underlying Underlying
(CNY)
Shares Shares (%)
N.B.:
The above-mentioned numbers were calculated on June 30, 2024.
The grant price has been adjusted due to cash dividend distribution and capitalization of reserves.
Stock-Based Compensation
Six Months Ended
CNY Jun 30, 2024 Jun 30, 2023
Selling expenses 663,608 591,697
G&A expenses 591,327 535,743
R&D expenses 14,076,255 11,140,129
Total stock-based compensation 15,331,190 12,267,568
ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Risks and Uncertainties
Financial Risk
The Company performs periodic credit evaluations of its customers’ nancial
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
signi cant for any of the periods presented in this report.
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, In neon, 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 signi cant 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 e fect on the Company’s business, nancial condition, results of
operations and cash ow.
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- ve customers
was 24.96% in H .
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial
Statements (Unaudited)
Consolidated Balance Sheet (Unaudited)
CNY June 30, 2024 December 31, 2023
Assets
Current assets:
Cash and cash equivalents 488,346,387 464,011,234
Held for trading nancial assets 90,315,219
Notes receivable 24,802,567 42,082,006
Accounts receivable, net 313,074,690 251,641,263
Accounts receivable nancing
Prepayments 59,807,428 9,802,407
Other receivables 11,784,979 9,157,910
Including: Interest receivable
Inventories 376,292,586 242,352,587
Other current assets 90,800,518 106,338,922
Total current assets 1,364,909,155 1,215,701,548
Non-current assets:
Debt investment 576,383,600 753,024,500
Investment in other equity assets 30,967,840 36,079,840
Other non-current nancial assets 34,879,347 34,879,347
Fixed assets 86,385,163 76,401,004
Right-of-use assets 18,988,095 15,937,207
Intangible assets 28,241,890 1,633,298
Goodwill 75,619,024
Long-term deferred expenses 15,050,416 9,337,814
Deferred income tax assets 90,465,300 60,805,808
Total assets 2,321,889,830 2,203,800,366
Goodwill is primarily a tributable to the assembled workforce and anticipated synergies and other strategic bene ts expected from integrating
M Stack.
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet (Unaudited)
CNY June 30, 2024 December 31, 2023
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable 116,385,599 79,841,809
Contract liabilities 28,101,110 13,318,710
Payroll payable 71,516,379 102,238,914
Taxes payable 679,050 615,415
Other payable 32,807,194 11,525,208
Non-current liabilities due within one year 12,336,316 8,591,447
Other current liabilities 1,508,097 501,689
Total current liabilities 263,333,745 216,633,192
Non-current liabilities:
Lease liabilities 7,308,057 8,454,747
Provisions 615,637 627,089
Deferred income tax liabilities 87,976,194 65,085,110
Total liabilities 359,233,632 290,800,138
Owners’ equity (or shareholders' equity):
Share capital 112,188,505 80,789,724
Capital reserves 1,330,894,926 1,358,508,382
Less: Treasury stock 213,248,731 146,969,563
Other comprehensive income 20,989,090 24,067,306
Surplus reserves 55,460,195 55,460,195
Retained earnings 626,316,607 541,144,184
Total Espressif shareholders’ equity 1,932,600,591 1,913,000,228
Non-controlling interests 30,055,607
Total equity 1,962,656,198 1,913,000,228
Total liabilities and equity 2,321,889,830 2,203,800,366
ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Income Statement (Unaudited)
Three Months Ended Six Months Ended
CNY June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Revenue 533,020,855 348,880,535 920,212,266 666,997,977
Cost of Revenue 297,891,612 205,943,925 522,715,482 394,543,321
Gross Pro t 235,129,242 142,936,609 397,496,784 272,454,655
Taxes and surcharges 409,396 1,528,087 866,924 3,314,588
Selling expenses 16,063,290 13,351,348 28,915,851 25,524,250
General and administrative expenses 17,125,846 15,031,928 31,997,654 28,946,961
Research and development expenses 114,836,190 92,701,560 218,682,370 178,184,574
Financial expenses 1,492,903 -310,276 -408,615 -3,959,365
Including: Interest expenses 205,800 242,706 443,113 506,822
Interest income 3,309,886 2,636,628 7,173,410 4,650,650
Add: Other income 4,948,006 187,759 18,164,613 577,635
Investment income (mark"-" for loss) 5,327,726 5,228,869 11,636,081 11,487,416
Income from changes in fair value (mark"-" for loss) -71,822 164,550 172,379
Credit impairment losses (mark"-" for loss) -50,844 -50,844
Assets impairment losses (mark"-" for loss) 43,693 -1,722,667 -209,761 -2,660,838
Assets disposal income (mark"-" for loss) -506 -349 -558 4,390
Operating Income 95,397,871 24,492,125 146,982,131 50,024,629
Add: Non-operating revenue 1,589 164,572 1,589 164,572
Less: Non-operating expenses 4,673,633 3,071 4,699,729 5,536
Income before income taxes 90,725,827 24,653,626 142,283,991 50,183,665
Provision (bene t) for income taxes -8,071,760 -8,829,288 -10,429,078 -14,386,678
Net Income 98,797,587 33,482,914 152,713,070 64,570,344
Net Income a tributable to non-controlling interests 1,070,606 1,070,606
Net Income a tributable to Espressif 97,726,982 33,482,914 151,642,464 64,570,344
Earnings per share
Basic 1.8116 0.8059
Diluted 1.8116 0.8059
Three Months Ended Six Months Ended
CNY June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Net Income 98,797,587 33,482,914 152,713,070 64,570,344
Other comprehensive income (loss), a ter tax
Changes to the fair value of investment in other 9,486,000 9,486,000
equity instruments
Currency translation reserves 1,279,812 19,755,010 -773,016 14,486,498
Other comprehensive income (loss) 10,765,812 19,755,010 8,712,984 14,486,498
Other comprehensive income (loss) a tributable to
non-controlling interests
Comprehensive income 109,563,399 53,237,924 161,426,053 79,056,842
Comprehensive income a tributable to non-controlling
interests
Comprehensive income a tributable to Espressif 108,492,793 53,237,924 160,355,448 79,056,842
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Cash Flow Statement (Unaudited)
Three Months Ended Six Months Ended
CNY June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Operating Activities
Cash from sales of merchandise and provision of services 539,670,869 351,729,950 979,986,644 668,675,823
Tax refund 14,348,735 11,113,912 22,039,088 33,504,703
Other received cash related to operational activities 5,459,397 4,349,276 13,066,919 10,494,111
Subtotal of cash in ow from operational activities 559,479,001 367,193,138 1,015,092,651 712,674,636
Cash paid for merchandise and services 457,075,056 177,404,495 744,342,308 322,438,347
Cash paid to and for employees 80,517,004 74,283,588 235,965,098 208,755,881
Cash paid for taxes and surcharges 6,081,313 22,795,807 7,382,465 36,251,089
Other paid cash related to operational activities 29,473,800 26,303,049 53,079,614 45,529,677
Subtotal of cash ou ow from operational activities 573,147,173 300,786,939 1,040,769,485 612,974,994
Net cash provided by operating activities -13,668,172 66,406,199 -25,676,834 99,699,642
Investing activities
Cash arising from the disposal of investments 185,297,048 465,055,370 455,877,171 1,282,789,551
Cash arising from investment income 3,450,779 2,075,281 4,235,229 3,829,647
Net cash arising from the disposal of xed assets, intangible 2,210 1,400 9,664 19,250
assets and other long-term assets
Other received cash relating to investment activities 1,213,000 1,342,000 1,739,000 1,653,000
Subtotal of cash in ow from investment activities 189,963,036 468,474,051 461,861,063 1,288,291,448
Cash paid for the purchase and construction of xed assets, 16,924,485 10,053,768 25,200,081 24,779,027
intangible assets and other long-term assets
Cash paid for investments 102,175,231 488,000,000 222,175,231 1,351,000,000
Other paid cash relating to investment activities 600,000 300,000 1,600,000 600,000
Subtotal of cash ou ow from investment activities 119,699,716 498,353,768 248,975,311 1,376,379,027
Net cash provided by investment activities 70,263,321 -29,879,716 212,885,752 -88,087,579
Financing activities
Cash arising from the issuance of common stock 10,949,956 23,229,130 10,949,956 23,957,017
Including: Cash arising from subsidiaries absorbing
investments by minority shareholders
Subtotal of cash in ow from nancing activities 10,949,956 23,229,130 10,949,956 23,957,017
Cash paid for the distribution of dividends and pro ts, or 78,261,241 78,261,241
payment of interests
Including: dividends and pro ts paid to minority
shareholders by subsidiaries
Other paid cash relating to nancing activities 3,716,887 3,732,556 96,838,779 7,064,234
Subtotal of cash ou ow from nancing activities 81,978,128 3,732,556 175,100,020 7,064,234
Net cash provided by nancing activities -71,028,172 19,496,574 -164,150,064 16,892,783
Impact of uctuation in exchange rates on cash and cash -8,037,252 10,632,571 -13,753,458 12,103,780
equivalents
Net increase in cash and cash equivalents -22,470,275 66,655,628 9,305,396 40,608,625
Add: Cash and cash equivalent at the commencement 506,706,793 324,630,351 474,931,121 350,677,354
of the period
Cash and cash equivalents at the end of the period 484,236,518 391,285,979 484,236,518 391,285,979
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Cash Flow Statement
- Indirect Method (Unaudited)
Three Months Ended Six Months Ended
CNY June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Additional information
Net income 98,797,587 33,482,914 152,713,070 64,570,344
Adjustments to cash provided by operating activities, for
the purpose of reconciling net income:
Add: provision for the impairment of assets -43,693 1,722,667 209,761 2,660,838
Credit impairment provision 50,844 50,844
Depreciation of xed assets 5,543,158 4,656,412 10,922,933 9,015,054
Depreciation of right-of-use assets 3,226,029 3,132,043 6,455,716 6,191,678
Amortization of intangible assets 397,071 194,755 591,825 389,509
Amortization of long-term prepaid expenses 1,589,624 1,115,525 2,942,916 2,131,486
Losses on disposal of xed assets, intangible assets 506 349 558 -4,390
and other long-term assets (mark"-" for income)
Losses on scrapping of xed assets (mark"-" for 4,656,083 4,656,083
income)
Losses on fair value changes（mark"-" for income） 71,822 -164,550 -172,379
Financial expenses（mark"-" for income） 4,623,920 2,207,636 6,450,037 438,044
Losses on investment（mark"-" for income） -5,327,726 -5,228,869 -11,636,081 -11,487,416
Decrease on deferred income tax assets（mark”-" -14,329,853 -5,210,646 -29,671,227 -19,268,821
for increase）
Increase on deferred income tax liabilities（mark"-" 13,220,613 -1,192,035 23,297,884 4,092,185
for decrease）
Changes in operating assets and liabilities:
Decrease in inventories（mark"-" for increase） -68,083,650 43,849,565 -109,637,148 104,188,797
Decrease in operational receivables（mark"-" for -151,075,340 -49,397,224 -141,299,427 -72,586,295
increase）
Increase in operational payables（mark"-" for 84,085,072 27,594,458 42,944,232 -2,726,559
decrease）
Others 8,929,762 9,643,201 15,331,190 12,267,568
Net cash ow provided by operating activities -13,668,172 66,406,199 -25,676,834 99,699,642
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
(Unaudited)
Equity a tributable to Espresssif
Less: Other Total Non-
Share Capital Treasury comprehensive Surplus Retained Espressif controlling
CNY capital reserves stock income reserves earnings Equity Interests Total equity
Balance as of
December 31, 2022
Comprehensive
income 14,486,498 64,570,344 79,056,842 79,056,842
Capital increase 246,777 31,856,474 32,103,251 32,103,251
Stock-based
compensation
Surplus reserves
Dividends
Balance as of
June 30, 2023
Equity a tributable to Espresssif
Less: Other Total Non-
Share Capital Treasury comprehensive Surplus Retained Espressif controlling
CNY capital reserves stock income reserves earnings Equity Interests Total equity
Balance as of
December 31, 2023
Comprehensive
income
Capital increase 31,398,781 -14,689,138 -22,495,821 39,205,464 39,205,464
Repurchase 88,774,989 -88,774,989 -88,774,989
Stock-based
-12,924,318 -12,924,318 -12,924,318
compensation
Surplus reserves
Subsidiary Acquisition -11,791,200 11,791,200 28,985,002 28,985,002
Dividends -78,261,241 -78,261,241 -78,261,241
Balance as of
June 30, 2024
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | FURTHER INFORMATION
Further Information
Terms and Conditions of the Report
Responsibility Statement
The Board of Directors, the Board of Supervisors and the 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, 29 July 2024
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 O cer 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
PRESSIF
ES
Lee Sze Chin Shao Jingbo
Independent Director Financial Director
Declaration
Forward-looking Statements
SY
This report contains forward-looking statements and/or assessments about the business, STE MS
nancial 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, nancial condition, performance and strategy may, therefore, di fer from
what is discussed in this report.
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ESPRESSIF SYSTEMS | 2024 Q2 & HALF-YEAR REPORT | FURTHER INFORMATION
List of abbreviations
AI Arti cial Intelligence
AIoT Arti cial Intelligence and Internet of Things
Bluetooth LE Bluetooth Low Energy
CEO Chief Executive O cer
CES Consumer Electronics Show
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization
Espressif ESPRESSIF SYSTEMS (SHANGHAI) CO., LTD.
G&A General and Administrative
GM Gross Margin
HMI Human-Machine Interaction
IC Integrated Circuit
IoT Internet of Things
MCU Microcontroller Unit
OBD On-Board Diagnostics
R&D Research and Development
RF Radio Frequency
RISC-V Reduced Instruction Set Computer-V
ROE Return on Earnings
RTOS Real-Time Operating System
SG&A Selling, General and Administrative
SH Shanghai
SoCs System on Chips
YoY Year-on-Year
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Investor Relations
ir@espressif.com
Of cial Platforms Social Media
.espressif.com twi ter.com/EspressifSystem
blog.espressif.com facebook.com/espressif
github.com/espressif linkedin.com/company/espressif-systems
esp32.com youtube.com/EspressifSystems
instagram.com/espressif_systems_o cial
bilibili.espressif.com
Copyright ? 2024 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 wri ten in both Chinese and
English. In case of any discrepancies between Chinese and foreign interpretations, the
Chinese version shall prevail.
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.
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