WOLFSPEED (WOLF.N) released its Q3 2023 financial report (ending in March 2023) after the US stock market closed on April 27th (Beijing Time), with the following key points:

1. Core Metrics: $Wayfair(W.US)olfspeed.US achieved revenue of $228 million in Q3 2023, slightly higher than market expectations ($225 million). The company's revenue growth rate continued to decline to 21.6% this quarter, and revenue growth was mainly driven by power devices. Due to the impact of the decline in the new energy industry, the company's business growth rate has significantly slowed down. The company's gross margin was only 29.8% this quarter, lower than market expectations (31.8%), mainly due to a decline in the company's product prices and manufacturing costs that continue to rise.

2. Operating Expense: Wolfspeed's operating expenses reached $117 million in Q3 2023, a year-on-year increase of 17.1%, and the expense ratio has fallen slightly. With the slowdown in revenue growth, the company has made some controls to expenses. Specifically, R&D expenses have been somewhat reduced in absolute value, while sales, general, and administrative expenses have been increased under the scenario of declining revenue growth. Although the overall operating expense ratio has fallen from 53% in the same period last year to 51%, it still accounts for half of the expenses.

3. Net Loss: Wolfspeed's net loss (GAAP) in Q3 2023 was a loss of $100 million, and the loss continued to widen. The main reason for the continued expansion of the company's loss this quarter was the significant decline in gross profit margin under the scenario of a decline in downstream prosperity.

4. Guidance for Next Quarter: Wolfspeed's guidance for Q3 2023 revenue is $212-232 million, lower than the previous market expectations ($235 million). The company's net loss (GAAP) target is $98-108 million, also lower than market expectations (net loss of $67 million).

Overall, Wolfspeed's financial report is still not good.

Wolfspeed's losses continued to expand this quarter, reaching a net loss of $100 million in a single quarter. Although the revenue performance met expectations, the continued decline in gross profit margin directly expanded the company's losses. The decline in gross profit margin was mainly due to the pressure of product prices and rising costs.

For Wolfspeed's guidance for the next quarter, expected revenue of $212-232 million and an expected loss of $98-108 million, there are still no signs of a rebound. Dolphin believes that the company will still face pressure on the gross profit margin in the next quarter. Although it has started to reduce expenses, it cannot resist the reality of a net loss of $100 million for the quarter.Dolphin believes that new energy vehicles are an important downstream of SiC. With downstream car companies entering price wars, manufacturers are also trying to compress the cost of SiC per vehicle, which directly puts pressure on the company's product prices. Especially when Musk claimed that Tesla's next-generation platform would reduce SiC usage by 75%, it directly affected the long-term prospects of the industry where Wolfspeed is located.

Given the lack of signs of improvement in Wolfspeed's business, the company's bottom value is mainly evaluated. For a company with $2.2 billion cash+ short-term investments and an average quarterly loss of $100 million, the current market value of $7.1 billion is not cheap.

Long Bridge Dolphin's research on WOLFSPEED and the SiC industry

January 26, 2023 Financial report review "Wolfspeed: The Pearl of Power, Is SiC Coming off Its Throne?"

October 27, 2022 Financial report review "Wolfspeed: Is the Short-Term Performance or Long-Term SiC Faith Being Killed?"

September 23, 2022 Company depth "[Wolfspeed: Hard Currency in SiC, Too Expensive is the "Original Sin"] (https://longbridgeapp.com/topics/3461571)"

September 15, 2022 Company depth "[Wolfspeed: Tesla's Hidden "Hard Currency" Fueled] (https://longbridgeapp.com/topics/3445641?channel=t3445641&invite-code=294324)"On June 14, 2022, "Security Cushion 'Bounce', IGBT Creates a New Era of Electricals?"On May 16, 2022, "Electrical Era: Racing on Rail Transit, or Riding the IGBT East Wind?"On March 7, 2022, "Behind the Sprint of New Energy, Who Will Be the Next Champion in the SiC Racing Track?"On January 18, 2022, "New Energy Photovoltaic Dual Play, How Sweet It Is with IGBT?"On January 6, 2022, "Taking the New Energy Express, Can IGBT Become the Hard Core of the Automotive Semiconductor Race?"

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