Semileds 2025 Q3 Earnings Dramatic Revenue Surge with Net Income Reversal

Semileds (LEDS) reported its fiscal 2025 Q3 earnings on Jul 14th, 2025. The company registered a 1234.2% increase in revenue, reaching $17.65 million, compared to $1.32 million in the same quarter of 2024. This significant growth came from low-margin buy-sell equipment orders. Semileds’ return to profitability was marked by an EPS of $0.03, reversing a $0.04 per share loss in 2024 Q3. However, the company's net income decreased sequentially from the previous quarter. Moving forward, SemiLEDs remains focused on operational efficiency to navigate competitive market pressures.

Revenue
Semileds recorded a substantial revenue increase of 1234.2%, reaching $17.65 million in 2025 Q3, up from $1.32 million in 2024 Q3.

Earnings/Net Income
Semileds returned to profitability with an EPS of $0.03 in 2025 Q3, reversing a $0.04 per share loss in 2024 Q3. However, the net income showed a sequential decline from the prior quarter, indicating ongoing challenges in profitability.

Price Action
The stock price of Semileds dropped 5.78% during the latest trading day, edged down 2.61% over the most recent full trading week, and tumbled 12.38% month-to-date.

Post-Earnings Price Action Review
The strategy of buying Semileds (LEDS) shares 30 days after a quarter-over-quarter revenue increase led to significant underperformance. This approach resulted in a -16.54% return, starkly contrasting with the benchmark return of -100.00%. Despite the negative return, the excess return of 83.46% suggests that the benchmark, representing the market, would have performed substantially better. The strategy not only failed to generate a profit but also faced risk, as indicated by a CAGR of -3.82% and a Sharpe ratio of -0.18. This performance was marked by a volatility of 20.79%, highlighting the challenges faced by the strategy in delivering a favorable outcome.

CEO Commentary
Christopher Lee, Chief Financial Officer of SemiLEDs Corporation, emphasized the company's robust revenue growth of 62% sequentially, reaching $17.7 million, driven by strong demand for LED products. However, he acknowledged the challenges posed by declining profitability, with GAAP net income decreasing to $223,000 and gross margin contracting to 5%. The negative operating margin of -0.4% highlights operational inefficiencies. Lee noted the need for careful management of costs and operational efficiency moving forward, indicating a cautious outlook as the company navigates competitive pressures in the LED market while striving to capitalize on growth opportunities.

Guidance
SemiLEDs anticipates continued focus on revenue generation, aiming for sustained growth despite current profitability challenges. The company expects to maintain revenue levels around $17.7 million while projecting EPS at approximately $0.03. Management is committed to improving operational efficiency and cost management to enhance gross and operating margins. Future investments will be strategically aligned with market demands to foster competitiveness within the LED industry.

Additional News
In recent weeks, SemiLEDs has been navigating significant changes as it explores a strategic shift towards a fabless model. This decision involves selling manufacturing equipment and reducing its workforce, focusing on becoming more asset-light. The company's transition signifies a move away from traditional LED manufacturing, aiming for greater flexibility in operations. This shift aligns with its strategic emphasis on niche markets like UV LED and architectural lighting, as SemiLEDs seeks to adapt to evolving industry demands. The company's reliance on low-margin buy-sell orders for revenue has prompted this reevaluation to achieve stability and growth.