VanEck ChiNext Innovators ETF

Second-quarter revenue was $61.9 million, above guidance of $61 million high end and approximately flat sequentially. Core gross margin was 61.5% of revenue, or $38 million, versus guidance of 61%. Core operating expenses were $25 million, core operating income was $13 million, and core net income was $8.3 million, or $0.12 per share; Jean Hu said EPS would have been $0.15 before the higher interest expense and share count from the new debt and equity. On a GAAP basis, gross margin was 51.1% of revenue, GAAP net income including discontinued operations was $10.9 million, or $0.15 per diluted share, and cash and cash equivalents were $187.5 million at quarter-end. For the third fiscal quarter, Conexant guided to revenue of $60 million to $61 million, core gross margin of about 61%, core operating expenses of about $25 million, core operating income of $11.6 million to $12.2 million, and core net income of $0.05 to $0.06 per share based on about 83 million shares.

Scott Mercer framed the quarter as a strong execution quarter, saying the company met or exceeded guidance on every core financial metric and delivered core operating margins above 20% for the second consecutive quarter. He emphasized that the restructuring was a top priority and that the new capital structure should restore access to customers that had previously kept Conexant out of certain designs. His tone was confident about imaging, audio, video surveillance, and adjacent-market opportunities, while acknowledging that legacy businesses will decline more quickly over the coming quarters.

Jean Hu highlighted that revenue of $61.9 million beat the high end of guidance, core gross margin came in at 61.5%, and core operating expenses were $25 million in line with expectations. She broke out R&D at $13.6 million and SG&A at $11.4 million, and noted net interest expense of $4.1 million was higher than guidance because of the new senior secured debt. On the balance sheet, she said cash rose to $187.5 million from $59.1 million in the prior quarter, the company took on $175 million of new senior secured debt and $50 million of equity proceeds, retired about $105 million of convertible notes, and will face about $1.5 million of quarterly interest expense on the remaining convertibles plus about $5.3 million on the new senior secured note.

Analysts focused on the pace of decline in legacy businesses, especially wireless, PC modems, and digital TV in Japan. Management said the legacy declines will accelerate in the back half of the year, with some businesses falling off quickly and the overall effect expected to fade more meaningfully by next fiscal year as imaging, audio, and video surveillance growth becomes more visible. They also said backlog was slightly below the prior quarter but broadly healthy, and confirmed that top-tier PC customers that had been cautious during the restructuring are now again available to Conexant, especially in PC audio.