ÀÖöοƼ¼£ºEspressif Systems Q32024Report

Q32024REPORT

Contents

18	Consolidated Balance Sheet
20	Consolidated Income Statement

06	Key Financial Data (Unaudited)
06	Financial Indicators (Unaudited)
07	Financial Analysis

Build Smartwith Espressif

BusinessHighlights

ManagementReport

ConsolidatedFinancialStatements(Unaudited)

FurtherInformation

08	Business Strategy
09	Core Technologies
10	Key Products - AIoT Chips
11	Key Products - Chip Matrix
12	Market

13	Business Model
14	Developer Community Content
16	Ownership of Securities
17	Risks and Uncertainties

21	Consolidated Cash Flow Statement

22	Terms and Conditions of the Report
23	List of abbreviations

CoreCompetitiveness

BUILD SMART WITH ESPRESSIFESPRESSIF SYSTEMS | Q3 2024 REPORT |

Espressif Systems (688018.SH), has evolved from aleading Wi-Fi MCU provider into a comprehensive IoTtechnology ecosystem company. While known for ourgroundbreaking ESP32 series, Espressif now offers abroad range of solutions, including Wi-Fi, Bluetooth,Zigbee, Thread, Matter, and AIoT technologies. Wefocuses on open-source innovation and providespowerful tools to enable developers worldwide. With therobust hardware and software ecosystem, Espressif isdriving the next wave of IoT applications, from smarthomes to industrial automation, fostering aninterconnected and intelligent future.

Build Smart with Espressif

1 Billion+Global IoT Chip

Shipment

¡«200 Patents

In AIoT Technology

¡«200 Patents

In AIoT Technology

Global Leader

In Wi-Fi MCU Market

Global Leader

In Wi-Fi MCU Market2 Million+Active EcosystemFollowers andDevelopers

2 Million+Active EcosystemFollowers andDevelopers10,000+

Satis?ed CustomersWorldwide

CORE COMPETITIVENESSESPRESSIF SYSTEMS | Q3 2024 REPORT |

Core Competitiveness

Espressif's business model follows a B2D2B (Business-to-Developer-to-Business) approach, making branddevelopment a crucial component of our company's strategy. Product strength, differentiation, cost-effectivenessand community support all contribute to the power of our brand.

Exceptional IC Design Capability

ProductStrength

ProductStrength

Full-Stack

Full-StackCost-Effectiveness

	Cost-Effectiveness
Community Support

Full-Stack EngineeringCapability

Full-Stack EngineeringCapabilitySuperior Cost-Effectiveand Stable Support

Superior Cost-Effectiveand Stable SupportExtensive Developer CommunitySupport

Extensive Developer CommunitySupport

Brand

Awareness

Full-Stack Engineering Capability

Espressif possesses comprehensive engineering development capabilities that span from IP development tocomplete chip design, operating systems, ?rmware, software frameworks, application solutions, hardware design,edge AI, cloud, and apps. This full-stack engineering expertise allows Espressif to offer highly integrated solutionsthat meet a wide range of customer needs. The ability to control and optimize every layer of the technology stack isunique in the industry and enables Espressif to deliver superior products and services that are seamlessly integratedand highly ef?cient.

Brand Awareness

The ESP32 and Espressif brands have a strong sense ofrecognition among developers. This recognition has become akey factor in our competitive advantage and success. Usersidentify with the ESP32 brand due to its reliability, performance,and versatility, which have been proven across variousapplications and industries. This strong brand power not onlyfosters customer retention but also attracts new users, therebysolidifying Espressif's position in the market.

CORE COMPETITIVENESSESPRESSIF SYSTEMS | Q3 2024 REPORT |

Exceptional IC Design CapabilityEspressif independently designs and develops its own chipproducts, with core IPs being self-developed. These chips areequipped with rich features, ensuring that Espressif¡¯s productsstand out in the market and avoid the pitfalls of homogenizedcompetition. By controlling the entire design process, Espressifcan innovate rapidly and introduce unique functionalities that setour products apart from competitors, providing a distinctive edgein the IoT semiconductor industry.

2019-07

2019-07

2024-10

ESP32 Google Trends

Espressif Google Trends

2019-07

2019-07

2024-10

Superior Cost-Effective and Stable Support

Espressif's products are known for their high performance and low cost, making them competitive in the market. Weprovide the cost ef?ciency necessary to promote large-scale commercialization in downstream industries.Additionally, we ensure the long-term availability of our products and offer stable and enduring software support,ensuring that customers can rely on their investments for extended periods. This commitment to value and reliabilitystrengthens customer trust.Extensive Developer Community SupportEspressif has garnered support from a vast community of professional engineers who are familiar with Espressif'sdevelopment platform and actively promote its value proposition. This large and engaged community not only aids inthe rapid adoption and dissemination of Espressif¡¯s technologies but also contributes to continuous improvementthrough feedback and shared knowledge. The robust community support ampli?es Espressif's market presence andenhances our reputation as a trusted and innovative leader in the industry.

BUSINESS HIGHLIGHTS (UNAUDITED)ESPRESSIF SYSTEMS | Q3 2024 REPORT |

Key Financial Data (Unaudited)Business Highlights (Unaudited)

Key Financial Indicators (Unaudited)

		Three Months Ended				Nine Months Ended
CNY		Sep 30, 2024		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023
Consolidated Statement of Income Data
Revenue		539,802,521		359,958,768		1,460,014,787		1,026,956,744
Gross pro?t		227,468,464		146,055,551		624,965,248		418,510,206
Selling expenses		15,669,020		12,683,522		44,584,871		38,207,772
General and administrative expenses		18,401,225		15,803,022		50,398,878		44,749,984
Research and development expenses		121,655,135		107,661,031		340,337,505		285,845,605
Net income		99,183,742		22,598,780		251,896,811		87,169,123
Net income attributable to Espressif		99,472,328		22,598,780		251,114,792		87,169,123

Earnings per share:

Earnings per share:
Basic			2.7167		1.0875
Diluted			2.7167		1.0875

Sep 30, 2024

		Sep 30, 2024		Dec 31, 2023
Consolidated Balance Sheet Data
Working capital		1,327,951,571		999,068,356
Total assets		2,487,530,021		2,203,800,366
Long-term obligations		98,493,844		74,166,946
Total shareholders¡¯ equity		2,064,704,038		1,913,000,228

Three Months Ended

	Three Months Ended				Nine Months Ended
	Sep 30, 2024		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023
Consolidated Cash Flow Data
Net cash provided by operating activities	117,326,698		106,592,463		91,649,864		206,292,105

Non-GAAP Adjustment

Non-GAAP Adjustment
Stock-based compensation	10,109,422		11,353,705		25,440,612		23,621,273
Non-GAAP net income	109,293,164		33,952,485		277,337,424		110,790,397

Three Months Ended

Three Months Ended				Nine Months Ended
Sep 30, 2024		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023

Gross margin

Gross margin	42.14%		40.58%		42.81%		40.75%
R&D-to-sales ratio	22.54%		29.91%		23.31%		27.83%
EBITDA margin	21.16%		6.70%		19.03%		9.01%
Net income margin	18.37%		6.28%		17.25%		8.49%
Weighted ROE					12.91%		4.59%

BUSINESS HIGHLIGHTS (UNAUDITED)ESPRESSIF SYSTEMS | Q3 2024 REPORT |

Financial AnalysisEspressif¡¯s total revenue in the ?rst three quarters of 2024 was CNY 1,460.0 million, marking an increase of 42.2%from CNY 1,027.0 million in the ?rst three quarters of 2023, due to the expansion of product categories and newcustomer design-win. The net income attributable to Espressif was CNY 251.1 million, which marked an increase of

188.1% year-on-year, mainly due to the increase of revenue. The main driving factor behind the revenue growth is the

increasingly clear trend towards IoT adoption in various industries across the board.The overall gross margin was 42.8%, in which the gross margin for AIoT chips was 50.1%. Bene?ting from the lowraw material prices and the higher initial gross margin from new customers, the gross margin of both chips andmodules & DevKits improves.The R&D expenses increased by 19.1% year-on-year, which is in line with our expected 20% growth. Typically, Q3marks the peak onboarding period for employees recruited through last year's campus hiring, so expenses tend tobe higher than in Q2.

Overall GM		Chip GM		Module GM		EBITDA Margin		SG&A as % of sales		R&D as % of sales

23.3%

23.3%

6.5%

6.5%

19.0%

19.0%

38.0%

38.0%

50.1%

50.1%

42.8%

42.8%

27.8%

27.8%

8.1%

9.0%

8.1%

37.1%

37.1%

46.8%

46.8%

40.8%

20232024

Revenue byArea in the First ThreeQuarters of 2024

Revenue by SalesMode in the First ThreeQuarters of 2024

Top-5 CustomerConcentration Rate,2020 - Q3 2024

Revenue by Product Category in the First Three Quarters of 2024

Key Financial Indicators in the First Three Quarters of 2024

40.8%

2024

20242023

2023		63.0%

60.7%

60.7%

35.9%

35.9%

38.5%

ChipModule & DevKitsOthers

0.8%

1.1%

38.5%

72.5%

72.5%

China'sMainland

Rest ofthe World

China'sMainland

Rest ofthe World2020

2020

21

22

23

24Q1-Q3

23.4%

23.4%

28.1%

28.1%

26.4%

26.4%

29.0%

29.0%

42.2%

42.2%

73.1%

73.1%

DirectIndirect

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

Business StrategyEspressif Systems¡¯ business strategy emanates from our service/product areas and our engagement with thedeveloper ecosystem.Our product and service areas include hardwares, OS-level development environments, software tools, applicationsolutions, and value-added services, such as Cloud and Matter. The above-mentioned products ensure that we arein the heart of numerous commercial AIoT applications in different markets, including smart home, consumerelectronics, industrial automation, healthcare, etc.

Management Report

Products

Solutions

Value-added services

SoCs

SoCsModules

ModulesDevKits

DevKitsHMI Smart

Displays

HMI Smart Displays

Audio Solutions

FaceRecognition

Face Recognition			Low-Power Solutions
	¡­

Cloudservice

CloudserviceMatterSolution

MatterSolution

OS-level development environments & software tools

OS-level development environments & software toolsCustomers

CustomersBrands

Module manufacturer

OEM/ODMs

Brands

Solution providers

Makers

¡­

FACTS ABOUT ESPRESSIFESPRESSIF SYSTEMS | Q3 2024 REPORT |

Core Technologies

TEXT

TEXT

CORE TECHNOLOGIESESPRESSIF SYSTEMS | Q3 2024 REPORT |

ESP8266, ESP32, ESP32-S, ESP32-C, ESP32-H and ESP32-P SeriesEspressif offers integrated, reliable, and energy-ef?cient SoCs with robust image and voice dataprocessing capabilities for Wi-Fi, Bluetooth LowEnergy, Thread and Zigbee, catering to varioussegments of the IoT market.

Cloud

ESP RainMaker

A comprehensive, development-free andmaintenance-free AIoT solution for privateCloud deployment.It is an all-inclusive solution that coverseverything from the underlying chip to device?rmware, third-party voice-assistantintegrations, mobile apps and the dashboard.Customers can build their own AIoT devicesand ecosystem, with ESP RainMaker.

SoCs

AI

Software

MatterOne-stop Matter SolutionThis is the culmination ofEspressif¡¯s ongoing contribution tothe Matter platform in variousareas, including protocolformulation, core stackimplementation and certi?cationtest events.

OSESP-IDFEspressif¡¯s of?cial IoT Development Framework.It provides a self-suf?cient SDK for any genericapplication-development on these platforms,using programming languages such as C andC++.ESP-IDF currently powers millions of devices inthe ?eld, and enables building a variety ofnetwork-connected products, ranging fromsimple light bulbs and toys to major appliancesand industrial devices.

With our open-source software,such as Espressif's IoTDevelopment Framework ESP-IDF,Audio Development FrameworkESP-ADF, Mesh DevelopmentFramework ESP-Mesh-Lite, CloudConnectivity Platform ESPRainMaker, Facial RecognitionDevelopment Framework ESP-WHO, and Voice-ControlledAssistant ESP-Skainet, we havedeveloped a framework forbuilding AIoT applications, whichis both complete and innovative.

3A Audio Algorithms

including Acoustic Echo Cancelation (AEC),Audio Noise Suppression (ANS) and AutomaticGain Control (AGC), which signi?cantly reducenoise and echo in calls, keeping high-qualityvoice intercoms stable at all times.

AFE (Audio Front-End) Algorithms

quali?ed as a!¡°Software Audio Front-EndSolution¡± for Amazon Alexa Built-in devices.

Key TechnologiesWi-Fi 6E

Wi-Fi 6E

5GHz Wi-Fi 6

2.4GHz Wi-Fi 6

Wi-Fi 4

RISC-V MCU

	RISC-V MCU
32-bit Single-Core 96MHz
32-bit Single-Core 120MHz
32-bit Single-Core 160MHz
32-bit Single-Core 240MHz

Technical Breadth

Technical BreadthIn progress

In progress32-bit Multiple-Core

32-bit Multiple-Core

Technical Depth

Technical DepthConnectivity

ConnectivityComputing

ComputingMedium Range

Medium RangeAI

32-bit Dual-Core 400MHz

AI

Thread

Thread

Zigbee

Short Range

Short RangeBluetooth 5.2 (LE)

Bluetooth 5.2 (LE)

Bluetooth 5 (LE)

Bluetooth 4.2

Bluetooth 5.3 (LE)

Bluetooth 5.3 (LE)Bluetooth 5.4 (LE)

Bluetooth 5.4 (LE)AI

AI
	Voice Wake-up
	Of?ine Voice Commands
	Face and Object Recognition

Multimedia

Multimedia

H.264 Encoder

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 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, andour ?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 portfolio, while in 2021, we released our ?rst Thread/Zigbee/Bluetooth LE 5 combo chip anda 2.4GHz Wi-Fi 6 chip. In 2022, we released our ?rst 2.4 & 5GHz Wi-Fi 6 chip. In 2023, we revealed ESP32-P4, adual-core RISC-V MCU, expanding the current portfolio to address the high-performance computation needs of IO-Rich, HMI, and AIoT applications. In 2024, we announced ESP32-H4, 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 powerconsumption, connectivity features, and memory expansion capabilities.ªÍIn fact, we have been constantly diversifying our product portfolio, introducing new solutions through our numerousinvestments. Thus, we now have various product lines in the main short- and medium-range connectivitytechnologies and our product range has expanded to AIoT SoCs. Our core technologies are self-developed,including connectivity IPs, RF components, RISC-V IPs, software 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 fromus, shortening and optimizing their supply chain, even in case of chip shortages.

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |Key Products - Chip Matrix

High-Performance

Cost-Effective

Cost-EffectiveNew

NewRelativelyNew

RelativelyNewClassic

ClassicESP

ESP

8266

			8266
	ESP8266
32-bit Tensilica MCU Single-Core @160MHz

32-bit RISC-V MCUSingle-Core @120MHz

32-bit RISC-V MCUSingle-Core @120MHzESP32 -

ESP32 -

C2

C232-bit RISC-V MCUSingle-Core @160MHz

32-bit RISC-V MCUSingle-Core @160MHz

ESP32 -

ESP32 -

C3

C332-bit RISC-V MCUSingle-Core @96 MHz

32-bit RISC-V MCUSingle-Core @96 MHz

ESP32 -

ESP32 -

H2

		C6				H2
	ESP32 -
32-bit RISC-V MCU Single-Core @160MHz

32-bit Xtensa MCUSingle-Core @240 MHz

32-bit Xtensa MCUSingle-Core @240 MHz

ESP32 -

ESP32 -

S2

S2ESP32-S2

ESP32-S232-bit RISC-V MCUDual-Core @400 MHz

32-bit RISC-V MCUDual-Core @400 MHz

ESP32 -

ESP32 -

P4

P4H.264 encoding

H.264 encodingAI

AI32-bit RISC-V MCUDual-Core @96 MHz

32-bit RISC-V MCUDual-Core @96 MHz

ESP32 -

ESP32 -H4

H4

ESP32

ESP32ESP

ESP

	32						S3
				ESP32-S3
						ESP32 -
32-bit Xtensa MCU Dual-Core @240 MHz				32-bit Xtensa MCU Dual-Core @240 MHz

AI

AI32-bit RISC-V MCUSingle-Core @240MHz

32-bit RISC-V MCUSingle-Core @240MHz

ESP32 -

ESP32 -C5

C532-bit RISC-V MCUSingle-Core @160MHz

32-bit RISC-V MCUSingle-Core @160MHzESP32 -

ESP32 -

C61

C61

RISC-V

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

MarketThe market for wireless SoCs is truly diverse, including applications for smart homes (e.g., smart lights, airconditioners, ovens, coffee machines, etc.), consumer electronics (e.g., smart speakers, drones, etc.), industrialautomation (e.g., mechanical arms), smart agriculture (e.g., soil PH detector, CO2 detector, etc.), healthcare (e.g.,monitoring devices for diabetes, blood pressure, etc.), energy control (solar energy devices, EV chargers, etc.), theinternet of vehicles (OBD devices, dashboards, etc.), education (talking pens, interactive whiteboards, etc.) andothers.In the ?rst three quarters, smart home and consumer electronics have continued to be the main downstreamapplications for Espressif, with growth in these two categories expected to remain between 30-40% this year.Additionally, the penetration rate of IoT applications across various other sectors has been increasing rapidly. Ourbusiness has experienced strong growth in ?elds such as energy management, tools and equipment, andhealthcare. Many potential new customers have joined during 2023-2024, boosting the overall growth rate.

Smart Home

Smart Ovens

Smart Ovens

Smart Speakers

IndustrialAutomation

IndustrialAutomationMechanical Arms

Mechanical ArmsHealthcare

HealthcareMedical Detectors

Medical DetectorsIntelligentinstrument panel

Intelligentinstrument panelTalking Pens

Talking PensSmartAgriculture

SmartAgricultureSoil PH Detector

Soil PH DetectorInternet ofVehicles

Energy Management		Internet of Vehicles

ConsumerElectronics

ConsumerElectronicsEducation

EducationSmart Solar

Panels

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

Business Model

Espressif has deployed the Business-to-Developer type of marketing, not only because it has gained prominence inrecent years, but also because it has proven to be more effective since the in?uence of developers on organizationsof all sizes has gained traction. In other words, most developers are R&D employees in various companies and bringforth business opportunities from the companies they work for.ªÍThis way, the developer ecosystem we have created at Espressif demonstrates how the value of networks can growexponentially:

?The more developers we attract as customers, the more hardware and software solutions we generate.?The more successful hardware and software solutions we create, the more our reputation spreads with positivefeedback from happy customers/developers.?The above-mentioned interaction between people in our network prompts the creation of more content, which -inturn- attracts more users/developers searching for new content.?Likewise, other third-party development platforms join our ecosystem and bring in new developers, as ourin?uence continues to grow.Having successfully applied the B2D2B model, Espressif can now focus on R&D investments, while maintaining asmall business team that supports a large number of customers directly. In fact, most of our revenue is gainedthrough direct sales.

Business-to-Developer-to-Business (B2D2B)

Global Code Hosting Platform		Social Networking Site		Developer-written books
122,800		95,000		> 200
ESP32 and ESP8266 Projects		ESP32 Group Members		Covering more than 10 languages
Chinese Video Sharing Platform		Global Video Sharing Platform
1.38 M		4.88 M		22.35 M
Views of the Most Popular ESP32 Video		Total views of the most popular video on ESP32		Total views of the most popular shorts on ESP32

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

Developer Community Content

Always a Hot Topic on Social Media

D¨ªky laskav¨¦ p¨¦?i lid¨ª z Edice CZ.NICp?ich¨¢z¨ª dal?¨ª kniha o elektronice,tentokr¨¢t o popul¨¢rn¨ªm a v?konn¨¦mmodulu ESP32.(Po trilogii "P¨¢n bastl¨ª??" a Microhob:bitp?ijde ESPilmarillion...)D¨ªky! S¨¢m se na ni t¨§?¨ªm...

Made a tiny macintosh with a game!

I found a cool miniature macintoshmodel on thingiverse and decided tomake it an actual computer! ESP32C3Mini ?ts right in¡­

Posted on 11 Oct 2024

https://ªÍ.reddit.com/r/esp32/comments/1g0r14a/made_a_tiny_macintosh_with_a_game/

Posted on 11 Oct 2024

¥é¥º¥Ñ¥¤»î?Öv×ù NANO ESP32 USBMIDI

https://x.com/adent/status/1844635613200290202

Posted on 11 Oct 2024Posted on 11 Oct 2024

Posted on 7 Oct 2024

Posted on 11 Oct 2024

´òÔì×î?µÄ 9 Öá ESP32 ¿ØÖÆÄ£¿é

https://ªÍ.bilibili.com/video/BV1vu2GYEEmP?

ESP32 ?±í±¾Ïî?Ö¼ÔÚÉè¼Æ?¿î¼¯³É»·¾³¼à²â¡¢¿ÉÊÓ»¯´¥¿Ø¡¢µç³ØµçÁ¿¹ÜÀíºÍ?ÂçͨÐŹ¦ÄܵÄÖÇÄÜ?±í¡£?±í²É?ESP32S3΢¿ØÖÆÆ÷ΪºË?£¬FreeRTOSΪ²Ù×÷ϵͳ£¬Ê¹?LVGLǶ?ʽGUI¿ò¼Ü¿ª·¢?»§½»»¥½ç?£¬OneNET×÷ΪÊý¾Ý½Ó?ÔÆƽ̨¡£

Cumulative Number of GitHub

ESP32 Projects2017-01

2017-01

2024-10

76 K

https://ªÍ.youtube.com/watch?v=ChWH7JsA_Ns

Posted on 8 Oct 2024

BOOKS

ESP32 ????? ????? - ???????????ESP32 ???? ???????? ? ???? ????? ??????? ??? ????>? ???? ??? ?

?????? ?? ?????????????????? ????? ??????? ??????? ?? ? ??? ?? ?? ?????? ???????? ??? ???????? ???? ????? ?? ?????????????¡­

https://x.com/adent/status/

Posted on 11 Oct 2024

https://gitee.com/huantianxiang/esp32-watch

Test Esp 8266 control direction air#esp32 #project #testingtesting

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

Books about ESP Products

TEXT

TEXT

More than 200 books on how to use ESP products can be found in the developer community and cover over adozen languages.

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

Ownership of Securities

Shareholder Structure as of Sep 30, 2024

Share types		Ordinary share
Share capital		112,200,431 (as of Sep 30, 2024)
Listing		Shanghai Stock Exchange (SSE)
Ticker		688018.SH
Listing Date		2019-07-22

Basic information of securities

Shareholder

Share Numbers

Percentage (%)

Espressif (Hong Kong) Investment Ltd.

Espressif (Hong Kong) Investment Ltd.		45,016,142		40.12
Hong Kong Securities Clearing Company Limited		5,734,766		5.11
Shinvest Holding Ltd.		2,408,729		2.15
Wisdomshire Asset Management Co., Ltd. - Wisdomshire Youfu Private Equity Securities Investment Fund No.1		1,710,525		1.52
Wisdomshire Asset Management Co., Ltd. - Wisdomshire Youfu Private Equity Securities Investment Fund No.3		1,399,320		1.25
Ningbo Meishan Free Trade Port Le Tun Investment Management Partnership (Limited Partnership)		1,198,231		1.07
National Social Security Fund 602		1,194,666		1.06
GTJA Futures - Guolian An CSI Semiconductor Products and Equipment Tradable Open-ended Index Securities Investment Fund		1,029,444		0.92
SPD - Debang Semiconductor Industry Hybrid Initiated Securities Investment Fund		1,004,770		0.90
Wisdomshire Asset Management Co., Ltd. - Wisdomshire Youfu Private Equity Securities Investment Fund No.2		816,686		0.73
Top 10 shareholders		61,513,279		54.83

Espressif Systems (Shanghai) Co., Ltd. Repurchase SpecialSecurities Account

Espressif Systems (Shanghai) Co., Ltd. Repurchase Special Securities Account		2,297,002		2.05
Other public shareholders		48,390,150		43.12
Total of outstanding shares		112,200,431		100.00

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

Risks and Uncertainties

Financial Risk

The Company performs periodic credit evaluations of its customers¡¯ ?nancialcondition and generally requires of its customers no collateral. The Companyprovides an allowance for expected credit losses, based on the net amountexpected to be collected on such receivables. Losses have not beensigni?cant for any of the periods presented in this report.R&D RiskEspressif¡¯s research and development strategy is focused on leveraging newtechnologies for the creation of innovative AIoT products. Any delays orchanges in the development of these technologies by our industry partners, ora failure of our products to achieve market acceptance, could compromise ourcompetitive position.CompetitorsAs the market for AIoT products grows, we face an increasing antagonism fromrelatively large competitors, such as Realtek, MediaTek, In?neon, NXP,Qualcomm and others. Intense competition from current players, as well as newentrants, such as Silicon Labs and Nordic, may reduce our product sales andmarket share.

SuppliersA signi?cant portion of the Company¡¯s products is fabricated by the TaiwanSemiconductor Manufacturing Company Limited (TSMC). The inability of TSMCto deliver wafers to the Company in a timely manner could impact the productionof the Company¡¯s products for a certain period of time, which could have anadverse effect on the Company¡¯s business, ?nancial condition, results ofoperations and cash ?ow.

CustomersThe Company sells directly to end customers, distributors, solution providers andcontract manufacturers. Our customers are a mix of several big customers andnumerous small customers. The concentration ratio for our top-?ve customerswas 23.38% in the ?rst three quarters of 2024.

MANAGEMENT REPORTESPRESSIF SYSTEMS | Q3 2024 REPORT |

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)ESPRESSIF SYSTEMS | Q3 2024 REPORT |

Consolidated Balance Sheet (Unaudited)

Consolidated FinancialStatements (Unaudited)

CNY

Sep 30, 2024

Dec 31, 2023

Assets

AssetsCurrent assets:

Current assets:
Cash and cash equivalents	598,297,118		464,011,234
Held for trading ?nancial assets			90,315,219
Notes receivable	31,783,198		42,082,006
Accounts receivable, net	304,659,788		251,641,263
Accounts receivable ?nancing
Prepayments	3,020,760		9,802,407
Other receivables	20,614,275		9,157,910
Including: Interest receivable
Inventories	481,985,859		242,352,587
Other current assets	211,922,712		106,338,922

Total current assets

Total current assets

1,652,283,710

1,215,701,548

Non-current assets:

Non-current assets:

Debt investment

Debt investment	442,320,700		753,024,500
Investment in other equity assets	30,967,840		36,079,840
Other non-current ?nancial assets	34,221,626		34,879,347
Fixed assets	91,052,843		76,401,004
Right-of-use assets	15,908,721		15,937,207
Intangible assets	27,115,755		1,633,298
Goodwill	77,922,399
Long-term deferred expenses	22,425,517		9,337,814
Deferred income tax assets	93,310,911		60,805,808

Total assets

Total assets

2,487,530,021

2,203,800,366

Goodwill is primarily attributable to the assembled workforce and anticipated synergies and other strategic bene?ts expected from integratingM5Stack.

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)ESPRESSIF SYSTEMS | Q3 2024 REPORT |

Consolidated Balance Sheet (Unaudited)

CNY

Sep 30, 2024

Dec 31, 2023

Liabilities & Shareholders¡¯ Equity

Liabilities & Shareholders¡¯ EquityCurrent liabilities:

Current liabilities:
Accounts payable	168,947,607		79,841,809
Contract liabilities	20,721,906		13,318,710
Payroll payable	89,898,501		102,238,914
Taxes payable	786,504		615,415
Other payable	31,996,302		11,525,208
Non-current liabilities due within one year	11,389,165		8,591,447
Other current liabilities	592,154		501,689

Total current liabilities

Total current liabilities

324,332,139

216,633,192

Non-current liabilities:

Non-current liabilities:
Lease liabilities	5,137,059		8,454,747
Provisions	638,273		627,089
Deferred income tax liabilities	92,718,512		65,085,110

Total liabilities

Total liabilities

422,825,983

290,800,138

Owners¡¯ equity (or shareholders' equity):

Owners¡¯ equity (or shareholders' equity):
Share capital	112,200,431		80,789,724
Capital reserves	1,341,458,125		1,358,508,382
Less: Treasury stock	213,042,679		146,969,563
Other comprehensive income	14,802,877		24,067,306
Surplus reserves	55,460,195		55,460,195
Retained earnings	725,788,935		541,144,184
Total Espressif shareholders¡¯ equity	2,036,667,884		1,913,000,228
Non-controlling interests	28,036,154

Total equity

Total equity

2,064,704,038

1,913,000,228

Total liabilities and equity

Total liabilities and equity

2,487,530,021

2,203,800,366

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)ESPRESSIF SYSTEMS | Q3 2024 REPORT |

Consolidated Income Statement (Unaudited)

		Three Months Ended				Nine Months Ended
CNY		Sep 30, 2024		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023

Revenue

Revenue	539,802,521		359,958,768		1,460,014,787		1,026,956,744
Cost of Revenue	312,334,057		213,903,217		835,049,539		608,446,538
Gross Pro?t	227,468,464		146,055,551		624,965,248		418,510,206

Taxes and surcharges

Taxes and surcharges	394,501		1,924,317		1,261,425		5,238,905
Selling expenses	15,669,020		12,683,522		44,584,871		38,207,772
General and administrative expenses	18,401,225		15,803,022		50,398,878		44,749,984
Research and development expenses	121,655,135		107,661,031		340,337,505		285,845,605
Financial expenses	-4,201,716		1,238,018		-4,610,331		-2,721,347
Including: Interest expenses	178,973		215,920		622,086		722,742
Interest income	4,857,005		3,323,868		12,030,415		7,974,518

Add: Other income

Add: Other income	22,532,338		581,160		40,696,951		1,158,794
Investment income (mark"-" for loss)	4,703,944		9,071,593		16,340,024		20,559,009
Income from changes in fair value (mark"-" for loss)			-28,763				143,616
Credit impairment losses (mark"-" for loss)	58,086				7,242
Assets impairment losses (mark"-" for loss)	-1,444,239		-1,968,775		-1,654,000		-4,629,613
Assets disposal income (mark"-" for loss)	-3,797		-1,046		-4,355		3,344
Operating Income	101,396,631		14,399,809		248,378,762		64,424,439
Add: Non-operating revenue	-1,425				164		164,572
Less: Non-operating expenses	-140,675		9,898		4,559,054		15,435
Income before income taxes	101,535,882		14,389,911		243,819,873		64,573,576
Provision (bene?t) for income taxes	2,352,140		-8,208,869		-8,076,938		-22,595,547

Net Income

Net Income		99,183,742		22,598,780		251,896,811		87,169,123
Net Income attributable to non-controlling interests		-288,586				782,020
Net Income attributable to Espressif		99,472,328		22,598,780		251,114,792		87,169,123
Earnings per share
Basic						2.7167		1.0875
Diluted						2.7167		1.0875

Three Months Ended

		Three Months Ended				Nine Months Ended
CNY		Sep 30, 2024		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023

Net Income

Net Income	99,183,742		22,598,780		251,896,811		87,169,123
Other comprehensive income (loss), after tax
Changes to the fair value of investment in other equity instruments					9,486,000
Currency translation reserves	-6,186,213		-2,923,303		-6,959,229		11,563,196
Other comprehensive income (loss)	-6,186,213		-2,923,303		2,526,771		11,563,196
Other comprehensive income (loss) attributable to non-controlling interests

Comprehensive income

Comprehensive income	92,997,529		19,675,477		254,423,582		98,732,319
Comprehensive income attributable to non-controlling interests	-288,586				782,020
Comprehensive income attributable to Espressif	93,286,115		19,675,477		253,641,563		98,732,319

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)ESPRESSIF SYSTEMS | Q3 2024 REPORT |

Consolidated Cash Flow Statement (Unaudited)

		Three Months Ended				Nine Months Ended
CNY		Sep 30, 2024		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023

Operating Activities

Operating Activities
Cash from sales of merchandise and provision of services	583,005,002		411,037,941		1,562,991,646		1,079,713,764
Tax refund	11,908,778		20,167,820		33,947,865		53,672,523
Other received cash related to operational activities	15,615,885		-2,385,723		28,682,804		8,108,387
Subtotal of cash in?ow from operational activities	610,529,665		428,820,038		1,625,622,315		1,141,494,674

Cash paid for merchandise and services

Cash paid for merchandise and services	348,433,064		209,720,135		1,092,775,372		532,158,481
Cash paid to and for employees	97,196,982		76,173,208		333,162,080		284,929,089
Cash paid for taxes and surcharges	1,521,638		16,643,337		8,904,104		52,894,426
Other paid cash related to operational activities	46,051,282		19,690,894		99,130,896		65,220,572
Subtotal of cash out?ow from operational activities	493,202,967		322,227,574		1,533,972,452		935,202,568
Net cash provided by operating activities	117,326,698		106,592,463		91,649,864		206,292,105

Investing activities

Investing activities
Cash arising from the disposal of investments	20,657,721		400,316,287		476,534,893		1,683,105,838
Cash arising from investment income	751,644		1,914,306		4,986,872		5,743,953
Net cash arising from the disposal of ?xed assets, intangible assets and other long-term assets	7,252		4,163		16,916		23,413
Other received cash relating to investment activities	178,050		203,000		1,917,050		1,856,000
Subtotal of cash in?ow from investment activities	21,594,667		402,437,756		483,455,731		1,690,729,204
Cash paid for the purchase and construction of ?xed assets, intangible assets and other long-term assets	26,869,568		8,988,571		52,069,649		33,767,598
Cash paid for investments	-77,175,231		395,000,000		145,000,000		1,746,000,000
Net cash paid for acquisition of subsidiaries and other business units	61,809,836				61,809,836
Other paid cash relating to investment activities	900,000		300,000		2,500,000		900,000
Subtotal of cash out?ow from investment activities	12,404,173		404,288,571		261,379,484		1,780,667,598
Net cash provided by investment activities	9,190,494		-1,850,815		222,076,246		-89,938,394

Financing activities

Financing activities
Cash arising from the issuance of common stock	671,756		6,141,170		11,621,711		30,098,186
Including: Cash arising from subsidiaries absorbing investments by minority shareholders
Subtotal of cash in?ow from ?nancing activities	671,756		6,141,170		11,621,711		30,098,186

Cash paid for the distribution of dividends and pro?ts, orpayment of interests

Cash paid for the distribution of dividends and pro?ts, or payment of interests					78,261,241
Including: dividends and pro?ts paid to minority shareholders by subsidiaries
Other paid cash relating to ?nancing activities	3,994,857		53,897,561		100,833,636		60,961,795
Subtotal of cash out?ow from ?nancing activities	3,994,857		53,897,561		179,094,877		60,961,795
Net cash provided by ?nancing activities	-3,323,102		-47,756,391		-167,473,166		-30,863,609

Impact of ?uctuation in exchange rates on cash and cashequivalents

Impact of ?uctuation in exchange rates on cash and cash equivalents	1,619,370		-6,225,437		-12,134,088		5,878,343
Net increase in cash and cash equivalents	124,813,460		50,759,820		134,118,857		91,368,445
Add: Cash and cash equivalent at the commencement of the period	468,871,123		391,285,979		459,565,727		350,677,354
Cash and cash equivalents at the end of the period	593,684,583		442,045,799		593,684,583		442,045,799

Forward-looking Statements

This report contains forward-looking statements and/or assessments about the business,?nancial condition, performance and strategy of the Espressif Group. These statements and/orassessments are based on assumptions and management expectations resting upon currentlyavailable information and current estimates. These are subject to a multitude of uncertaintiesand risks, many of which are partially or entirely beyond Espressif¡¯s control. Espressif¡¯s actualbusiness development, ?nancial condition, performance and strategy may, therefore, differ fromwhat is discussed in this report.

FURTHER INFORMATIONESPRESSIF SYSTEMS | Q3 2024 REPORT |

Terms and Conditions of the Report

The Board of Directors, the Board of Supervisors and executive management of the Company warrant that thecontents of this report are true, accurate and complete, and do not contain any false information, misleadingstatements or material omissions, severally and jointly accepting any legal responsibility thereof.Shanghai, 23 October 2024Espressif Systems

Further Information

Responsibility Statement

ESPRESSIF

Declaration

S

YSTEMSBoard of Directors

Board of DirectorsTeo Swee Ann

Teo Swee Ann

Founder and Chairman

Ng Pei Chi

Ng Pei Chi

Information Technology Of?cer

Wang Jue

Wang Jue

Deputy General Manager

Teo Teck Leong

Teo Teck Leong

Shareholder-elected

Lan Yuzhe

Lan Yuzhe

Independent Director

Koh Chuan Koon

Koh Chuan Koon

Independent Director

Lee Sze Chin

Lee Sze Chin

Independent Director

Board of Supervisors

Board of Supervisors

Lv Zhihua

Lv Zhihua

Employee-elected

Fu Hanyu

Fu Hanyu

Shareholder-elected

Wang Yiwen

Wang Yiwen

Shareholder-elected

Executive Management

Executive Management

Teo Swee Ann

Teo Swee Ann

Founder and CEO

Wang Jue

Wang Jue

Deputy General Manager

Shao Jingbo

Shao Jingbo

Financial Director

FURTHER INFORMATIONESPRESSIF SYSTEMS | Q3 2024 REPORT |

List of abbreviations

AI	Arti?cial Intelligence
AIoT	Arti?cial Intelligence and Internet of Things
Bluetooth LE	Bluetooth Low Energy
CEO	Chief Executive Of?cer
EBITDA	Earnings Before Interest, Taxes, Depreciation and Amortization
Espressif	ESPRESSIF SYSTEMS (SHANGHAI) CO., LTD.
GM	Gross Margin
IC	Integrated Circuit
IoT	Internet of Things
OBD	On-Board Diagnostics
ODM	Original Design Manufacturer
OEM	Original Equipment Manufacturer
R&D	Research & Development
RF	Radio Frequency
RISC-V MCU	Reduced Instruction Set Computer-V Microcontroller Unit
ROE	Return on Earnings
SG&A	Selling, General and Administrative
SH	Shanghai
SoCs	System on Chips

Investor Relations

Copyright ? 2024 Espressif Systems (Shanghai) Co., Ltd. All rights reserved. All trade names, trademarks and registeredtrademarks 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 written in both Chinese andEnglish. 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. Slightdiscrepancies between the amounts presented may occur due to rounding.

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