The rapid advancement and widespread proliferation of digital technologies and devices that define our daily lives have made the semiconductor industry more relevant and competitive than ever. Ubiquitous connectivity, smart devices, homes, and vehicles, and an ever-increasing need for more sophisticated, faster, and more efficient technology continue to drive a surging need for advanced semiconductor solutions.

Lattice Semiconductor Corporation is a leading specialist in customizable semiconductors and technologies. The company designs, develops, and supplies a variety of programmable logic devices and related software tools with products including everything from integrated circuits, power management systems, image and video applications, and IoT solutions, among many more.

Known for its high-performance, low-power, and small form factor products, Lattice’s solutions cater to a wide variety of customers, from small start-ups to large corporations, across diverse industries such as consumer electronics, communication systems, and industrial applications. And with customers spread across a range of market geographies, it has established itself as a trusted provider of bespoke applications.

Lattice is currently in a stage of growth and expansion with the company’s strategies focused on continuously improving its product offerings, expanding its customer base, and establishing a stronger presence in key markets. Lattice is also actively investing in research and development to ensure that it remains at the forefront of the semiconductor industry and is able to provide its customers with the latest and most advanced solutions.

Lattice has a long history having been founded almost 40 years ago in Portland, Oregon. The company initially started as a provider of programmable logic devices, offering a range of solutions for a variety of applications, and over the years, has grown and expanded its offerings, adding new and advanced solutions to its portfolio. The company has also made several strategic acquisitions along the way, including SiliconBlue Technologies, which added mobile-optimized, low-power programmable logic solutions to its offerings, and Selea SRL, which brought cutting-edge semiconductor intellectual property to the company’s product portfolio.

In recent years, Lattice has been focused on expanding its presence in key markets and further improving its range to meet the changing needs of its customers. Now a well-established and respected player in the semiconductor industry, it continues to maintain this strong focus on innovation, ensuring it is well-positioned to continue its success and growth in the years to come.

Jim Anderson is Lattice’s president and chief executive officer and also serves on the company’s board of directors. Since he joined in 2018, the company has accelerated its cadence of innovative product introductions and achieved record profitability. Prior to joining Lattice, Anderson served as the senior vice president and general manager of AMD’s Computing and Graphics business group, where he was responsible for global sales, marketing, and engineering. While at AMD, he drove a transformation that brought disruptive new products to market and generated industry-leading revenue growth. Prior to AMD, Anderson held a broad range of leadership positions spanning general management, engineering, sales, marketing, and corporate strategy at companies including Intel, Broadcom, and LSI Corporation. He also serves on the board of directors for several organizations and institutions including the Semiconductor Industry Association.

Stephen Douglass is Lattice’s senior VP of research and development. Also joining the company in 2018, he is responsible for the development of all hardware, software, and solutions. Douglass brings over 30 years of broad technology experience developing programmable solutions for many markets including wired and wireless communications, industrial, automotive, and test and measurement. He was an executive at Xilinx for 20 years, holding a wide range of leadership positions. He also spent 13 years at Cypress Semiconductor, again serving in various leadership roles, after beginning his career as an engineer at Intel.

Lattice offers a range of innovative and flexible programmable logic devices (PLDs), including Field Programmable Gate Arrays (FPGAs), Video Over IP, and Power Management solutions. These products are used by a variety of market-leading customers across a range of industries, albeit primarily across Communications and Computing, Industrial and Automotive, and Consumer markets.

In the Communications and Computing market, Lattice solutions play key roles in computing systems such as servers and client devices, 5G wireless infrastructure, switches and routers, and other related applications. In the Industrial and Automotive market, solutions include IoT, machine vision, robotics, factory automation, advanced driver assistance systems, and automotive infotainment. While in the Consumer Market, Lattice solutions are making products smarter and thinner, including smart home devices, prosumer devices, sound bars, high-end projectors, virtual and augmented reality, and wearables.

These PLD solutions provide customers with the flexibility to meet their specific design requirements and enable them to quickly adapt to changing market conditions and technologies. FPGA products offer customers a high level of performance and low power consumption, making them ideal for use in a wide range of applications.

In addition to its programmable logic solutions, Lattice offers a comprehensive range of software tools and design resources that support customers throughout the design process. This includes design tools, IP cores, reference designs, and development kits that provide a comprehensive design environment, enabling customers to quickly and easily develop their designs.

The company operates globally, with a strong presence in Asia, Europe, and the Americas, and its products are sold through a network of authorized distributors and sales representatives.

There are multiple growth areas that will allow Lattice to increase its addressable market. In particular, there are several emerging trends in servers, infrastructure, and smart devices that are creating large opportunities. These include the growth of hyperscale datacenters, continued infrastructure build-out from 5G deployment and beyond, electrification, and the proliferation of sensors in smart factories, smart homes, and automobiles, along with an increase in artificial intelligence, machine learning, and a multitude of applications at the network edge.

Lattice’s approach to product development is focused on delivering innovative and highly differentiated products that meet the unique requirements of its customers in various markets and applications. Consequently, the company invests heavily in research and development, with a particular focus on developing new technologies and applications that drive growth and competitiveness. To this end, Lattice is leveraging increasing demand for key growth areas by offering solutions that address the needs of a wide range of customers, including system-on-chip designers, FPGA users, and system architects.

In December, Lattice unveiled its Avant line, providing a new FPGA platform purpose-built to bring the company’s power-efficient architecture, small size, and performance leadership to mid-range FPGAs. The products offer best-in-class power efficiency, advanced connectivity, and optimized computing in the company’s key market segments. The new platform is expected to expand Lattice’s set of customer applications across these key markets, creating new greenfield revenue opportunities, and doubling its addressable market from $3 billion to $6 billion.

Lattice also expects continued growth in its Industrial and Automotive segment which has performed particularly well in 2022, surging by 45% year-over-year, as it continues to add applications in industrial automation and robotics, as well as automated driving, and infotainment systems. Back in August, the company launched the Lattice CertusPro NX FPGA family, which is optimized specifically for Automotive and extended temperature applications, combining automotive-grade features with the best-in-class power efficiency, performance, and small form factor found in all Lattice CertusPro NX FPGAs.

In addition to product development, Lattice continues to invest in its sales and marketing teams to expand its reach in existing and new markets. By providing ongoing customer support and training, and working with partners to integrate its solutions into their offerings, the company intends to further grow its customer base and increase the usage of its solutions by existing customers.

Lattice’s efforts to boost its product range and expand its market reach have proven quite successful in recent years. In its latest results, the company recorded its eighth consecutive quarter of double-digit growth after delivering revenue of $176.0 million, up from $107.2 million in a comparative quarter just two years ago. The top-line growth which has been driven by the industrial, automotive, communications and computing segments, took Lattice’s full-year revenue to $660.4 million, for a 28% increase on 2021.

The company also achieved record operating profit, as gross margins increased to a record 70% in the fourth quarter, driven by a gross margin expansion strategy, which started in 2019.

Looking ahead, management is forecasting to kick off FY23 with total revenue between $175 million and $185 million. While consensus estimates have full-year revenue expected at $735 million, maintaining double-digit year-over-year growth of 11.3%. Analysts are also expecting earnings per share to continue its impressive upwards trajectory, increasing 15% year-over-year to $2.02 and $2.33 for 2023 and 2024 respectively.

In the highly competitive semiconductor industry, Lattice faces competition from several major players such as Intel, Texas Instruments, and NVIDIA, who offer a range of products and services that compete with Lattice’s offerings. Xilinx (a subsidiary of AMD) is also a chief competitor, although after AMD completed the acquisition of Xilinx in February 2022, Lattice became the last fully independent major manufacturer of FPGAs. Additionally, Lattice also faces competition from new entrants and small start-ups that offer specialized solutions.

While the industry is characterized by rapidly changing technology and evolving standards, Lattice’s competitive advantage lies in its ability to provide high-performance and low-power solutions that cater to a wide range of applications. Additionally, the company also has a strong presence in the Asian market, which is a key growth region for the industry.

While potentially not as well known in consumer circles as Intel and NVIDIA, with a wide range of products that cater to a diverse customer base, Lattice is well-established and respected in the market. The company has a strong focus on innovation and has invested heavily in R&D to remain at the forefront of the industry, positioning it well for continued success and growth in the years to come.

With the corporate world operating under a new paradigm of remote teams and working from home, tracking projects and performance, all while trying to collaborate and stay aligned on tasks and goals, have become more important and challenging than ever.

Smartsheet’s cloud-based work management and collaboration platform help keep companies on track with a comprehensive solution that allows users to create, share, and manage tasks, projects, and workflows, all in a centralized location. Offering features such as real-time collaboration, Gantt charts, and data visualization tools it aims to provide visibility and accountability, as well as mitigate the issues that often result in delays and lack of productivity.

Used by businesses of all sizes across a variety of industries, including everything from construction to finance, healthcare, and technology, Smartsheet offers a rich set of views, workflows, reports, and dashboards to capture and track plans, resources, and schedules, while automation functions assist with repetitive tasks and workflows to not only save time, but reduce the risk of errors.

Also offering extensive integration with other systems, the platform ultimately helps organizations to improve their work processes, increase productivity and efficiency, and make better-informed decisions.

With the goal of making its platform accessible for every organization, Smartsheet is relentlessly focused on growth as it aims to attract more customers, expand across geographies, and further build out its product features and functionality.

Founded in 2005 by three former executives from Boeing, including current CEO Mark Mader, Smartsheet began as a provider of project management software for small businesses. While initial growth was slow due to usability issues, changes to the software in 2008 saw user numbers explode from just 10,000 at the end of its first year to more than 1 million across 20,000 organizations by 2012.

Product offerings such as additional collaboration and automation features soon expanded as it started to also develop integrations with other enterprise software companies such as Salesforce and Microsoft. The company also began to expand internationally, opening offices in Canada and the UK.

In 2017, Smartsheet went public, raising $150 million in its IPO. Since then, it has continued to grow and expand, adding new integrations and also making acquisitions along the way, including Una and EasyVista, to enhance its enterprise-grade capabilities. While in 2021 it released a new AI-driven feature, which uses machine learning to predict and prevent delays in workflows.

Co-founder, Mark Mader remains with Smartsheet in the role of chief executive officer. Mader has over two decades of leadership experience driving innovation for high-growth SaaS companies and is a recognized leader in the technology community. In addition to the company’s huge growth, expansion of offerings and partnerships, and its going public, under his leadership, Smartsheet was named Washington’s Best Workplace by the Puget Sound Business Journal, and Seattle’s Next Tech Titan by GeekWire. He has also been named GeekWire’s CEO of the Year.

Joining Mader is Stephen Branstetter as the company’s chief operating officer, responsible for driving ongoing growth and operational excellence. In his eight years with Smartsheet, he has established multiple functions across the company including Professional Services, Customer Success, and Support, along with providing leadership within Partner Sales and Sales Enablement.

Smartsheet’s platform helps customers automate processes across their organization, saving time, and minimizing the risk of errors. It allows users to organize their unstructured work and apply business logic to automate repetitive tasks and workflows such as update requests and approvals, all without the need to write code. The platform allows teams to work together on tasks and projects in real-time, regardless of their location, improving communication and coordination between team members to increase productivity and efficiency, and enable more informed and faster decision-making. Additionally, it enables content collaboration across teams, producing better content faster.

Tools for creating and managing tasks and projects, including Gantt charts and task dependencies, help teams to stay organized and on track, and make it easier to identify and resolve any issues that may arise. While a range of data visualization functions, including charts and dashboards, help users easily understand and communicate project progress and performance. It also affords multiple levels of integration with other systems, such as Salesforce, Adobe, and Microsoft, amongst many others, to further increase the value of existing applications.

The platform is offered in several packages to meet the needs of varying customers looking to manage their programs and projects, scaling from individual users looking to track their own work to large deployments of over 10,000 licensed users and hundreds of thousands of free collaborators. The software’s ease of use allows it to be adopted by a wide range of users and organizations, and thanks to enterprise-level features such as scalability, compliance, and security, it is widely used in large organizations. Customers can begin using Smartsheet within minutes and configure the platform for their needs with limited or no training. As a result, the platform now has 10 million users.

Smartsheet is aiming to make its platform accessible for every organization, team, and worker relying on collaborative work. Consequently, it has several strategies in place that aim to attract more customers, grow its existing customer base, and expand internationally and more into the public sector. Core to achieving this will involve expanding product features and functionality, making additional investments in partnerships and integrations, and continuing to pursue strategic acquisitions.

With such a broad global need for a work execution platform such as Smartsheet, the company believes there is a significant opportunity to further grow its paid user base with new customers. It is investing heavily in its digital sales model, direct sales force, and marketing in order to land new customers and increase enterprise adoption. Additionally, the company has a professional services function to develop new and enhanced premium solutions and standalone offerings to help land larger accounts and increase the scale of deployments with customers.

Smartsheet also works with existing customers to help them define new use cases within existing deployments, to ultimately expand the usage of the platform to additional teams within their organizations. And with less than approximately 20% of its revenue from customers outside the U.S., there is a significant opportunity to acquire new and boost usage with existing clients internationally. Accordingly, Smartsheet is expanding its sales force focused outside of the U.S., establishing international sales territories, and partnering with strategic resellers.

The Smartsheet Gov platform is now fully approved for use by federal agencies and government contractors. Leveraging this status, Smartsheet can be found on the AWS Gov Cloud Marketplace, which lists authorized organizations to help agencies select secure and compliant cloud providers available for federal use. Furthermore, the platform has also obtained the necessary approvals to secure cloud computing engagements with the U.S. Department of Defense.

Smartsheet intends to continually increase the value it provides to its customers by investing in extending the capabilities of its platform, particularly with continued emphasis on enterprise management features, including account administration, security, and permissioning in order to secure larger clients. Additional investments in partnerships and integrations will seek to boost its extensive embedded functionality which complements and enhances the use of the most common productivity tools from providers such as Microsoft, Google, Slack, and Dropbox, along with new partners that will increase the value, awareness, and adoption of the platform.

Likewise, appropriate strategic acquisitions that are complementary to Smartsheet’s offering will continue to be sought out. Most recently, the company has made several acquisitions including Brandfolder and 10,000ft, which now provide a solution for digital assets to manage workflows around content and collaboration, along with a resource planning software solution.

Smartsheet has been on an impressive trajectory of revenue expansion, achieving year-over-year growth of between 40% and 65% for the last six years in a row. That run has continued in FY23 as subscription revenue exceeded half a billion dollars and increased by $153.2 million, or 42%, for the first nine months of the financial year. The continued surge was driven by an increase in sales of user-based subscription plans, followed by an increase in sales of pre-configured capabilities, along with higher professional services revenue due to demand for consulting and training services.

While gross margins for subscription revenue have dropped marginally from 85% to 84% due to an increase in employee-related expenses and hosting fees that outpaced the related increase in subscription revenue, the company maintains a healthy gross profit. In light of heavy investment into ongoing growth the company continues to operate at a net loss, however, earnings per share have been gradually improving since 2020.

Looking ahead, management is forecasting to close out FY23 with total revenue of $760 million to $762 million, representing year-over-year growth of 38%, matching consensus expectations. Analysts are also expecting full-year earnings per share to record a loss of $0.31 for FY23, representing a contraction of 9%, however, a strong improvement to a loss of only $0.06 per share is expected for FY24.

The market for work execution software is fragmented, increasingly competitive, and subject to rapidly changing technology and evolving standards. Smartsheet faces competition from several major vendors with a variety of product offerings. Its competitors range in size, from diversified global companies with significant resources like Asana, Trello, Microsoft, and Monday.com, to smaller start-ups building on new technology platforms whose narrower offerings may allow them to fulfill targeted niches. While the company currently collaborates with Google and Microsoft, they may develop and introduce, or acquire, products that ultimately compete with the Smartsheet platform.

With primary competition remaining a combination of manual, email- and spreadsheet-based processes from providers that users have historically relied on to manage work such as Google and Microsoft, Smartsheet believes it is positioned favorably given its enterprise-grade capabilities, focus on business user empowerment, and ability to support critical workflows at scale.

Smartsheet’s simple and intuitive platform for creating, sharing, and managing collaborative workflows and projects, coupled with extensive popular integrations, and versatility amongst businesses of all sizes and industries, have made it a standout choice for corporate toolsets. The company’s efforts to expand its product offerings and partnerships to drive growth and increase its market share are giving it a compelling runway for future success.

If issues like climate change and excess consumption aren’t concerning enough, then there’s little doubt soaring energy costs around the world are likely to have many thinking about energy usage.

First Solar is a leading global solar technology company that specializes in the design, manufacture, and sale of solar modules aimed at advancing the fight against climate change, as well as delivering an economically attractive alternative to fossil-fuel electricity. The company’s advanced thin film photovoltaic (PV) modules represent the next generation of cadmium telluride (CdTe) solar technologies, which provide a competitive, high-performance, lower-carbon alternative to conventional silicon PV panels.

In addition to manufacturing solar modules, First Solar also develops and builds large-scale solar power plants. The company’s utility-scale projects located across the globe are capable of generating several megawatts of electricity, enough to power thousands of homes. It also provides engineering, procurement, and construction services for its power plant projects, as well as operations and maintenance services once the plants are up and running, allowing it to manage the entire life cycle of its major projects.

As a unique player among the world’s ten largest solar manufacturers for being the only US-headquartered company and not manufacturing in China, the company is currently heavily concentrated on setting the stage for long-term growth. It continues to develop its CdTe semiconductor technology with new platforms aimed at improving the efficiency of its solar panels and lowering the cost of solar power. Currently focusing on expanding into markets and jurisdictions, in which its CdTe modules provide advantages over conventional silicon technology, it is also scaling its global manufacturing capacity to over 20 gigawatts by 2025, enough to power approximately 20 million homes per year.

First Solar’s origins date back to 1984 when inventor and entrepreneur Harold McMaster founded Glasstech Solar. Initially using silicon, McMaster shifted to using cadmium telluride thin-film solar modules, which are more efficient and cost-effective than traditional silicon-based panels. His company was eventually bought out in 1999 and First Solar was born.

Historically, it sold its products to solar project developers, system integrators, and independent power producers. Early sales were primarily in Germany because of strong government incentives, however, declines and uncertainty in feed-in-tariff subsidies across European markets prompted the company to accelerate its expansion into other markets, including the U.S., India, and China.

In 2011, First Solar announced that it would begin to shift its focus from manufacturing to developing and building large-scale solar power plants. This move was driven by the growing demand for solar energy and the company’s belief that this market offered greater growth potential than the crowded and highly competitive solar panel manufacturing market.

The company has continued to grow and expand its business over the years, and it is now one of the leading developers and operators of utility-scale solar power plants in the world.

Mark Widmar has been the current chief executive officer of First Solar since 2016, after having joined the company in 2011 as Chief Accounting Officer. Prior to joining First Solar, Widmar held various leadership positions in the energy and power industry with 8point3 Energy Partners, GrafTech International, and NCR Inc. Under his leadership, First Solar has seen significant growth and success. The company has expanded its global footprint and increased its production capacity of advanced solar technology. He has also been instrumental in driving the company’s focus on sustainability and increasing its investment in research and development.

Long-serving executive, Markus Gloeckler, joins Widmar as the company’s chief technology officer. Having joined First Solar in 2005 in an engineering function, Gloeckler has worked up through various senior roles with extensive experience guiding strategic research and development activities. Since 2020, he has been focused on driving First Solar’s thin-film PV module technology. He has been instrumental in enabling the company’s achievement of various world records relating to conversion efficiency for CdTe solar cells. He also led the transfer of thin-film technology from General Electric to First Solar following an intellectual property acquisition in 2013.

First Solar’s Series 6 and Series 6 Plus PV modules are setting an industry benchmark for reliable energy production, optimized design, and environmental performance. Thanks to the usage of cadmium telluride as the active photovoltaic material in its panels, the production of First Solar’s solutions can be achieved with high efficiency at a lower cost compared to those manufacturing silicon panels. The Series 6 module has efficiency of up to 17.0% and a long-term performance warranty of 25 years. The panels offer an advanced design that not only significantly reduces costs, but also has strong performance even in the most extreme high temperature and low-light environments, which makes them suitable for large-scale power plants.

In addition to the Series 6 line, First Solar also offers a range of other products and services, including engineering, procurement, and construction for utility-scale solar power plants, operation and maintenance (O&M) services, energy storage systems, and project development, as well as recycling services for solar panels.

Core customers include utility companies, power developers, and commercial and industrial companies that use solar power for electricity generation. The products are primarily used in utility-scale plants, although they also offer panels for use in residential and commercial applications. Utility customers typically have large-scale energy needs and are looking for reliable, cost-effective solutions. As a result, the company’s comprehensive suite of products and complementary services are well-suited, as together they provide high-efficiency, long-lasting solar panels, coupled with a range of support services to ensure ongoing optimal performance and reliability.

Looking ahead, the company is in the process of rolling out its Series 7 modules, for which it will significantly increase capacity in the next couple of years. The next-gen panels have improved efficiency of 19.3% and a life cycle warranty of around 30 years of use.

First Solar’s growth strategy centers on expanding its solar power plant development business, increasing its manufacturing capacity, and entering new geographic markets. Additionally, the company continues to invest in research and development to improve the efficiency of its solar panels and lower the cost of solar power. It is currently focusing on markets and jurisdictions, in which its CdTe modules provide advantages over conventional crystalline silicon technology, including high-insolation climates and humid environments.

In particular, the United States, which accounted for 84% of the company’s 2021 net sales, exemplifies favorable conditions given its sizeable electricity demand, growing population centers and industrial areas, strong demand for renewable energy generation, and abundant solar resources. Most markets across Europe also reflect strong demand for PV solar energy due to its ability to compete economically with more traditional forms of energy generation.

India represents one of the largest and fastest-growing markets for PV solar energy. The Indian government has established aggressive renewable energy targets and has also announced a series of policy and regulatory measures to incentivize domestic manufacturing of solar modules. These targets, policies, and regulatory measures are expected to help create significant and sustained demand, particularly for First Solar’s CdTe solar technology which is well suited for the Indian market given its hot and humid climate conditions.

Japan’s electricity markets also have various characteristics that make them attractive for solar energy investments. With few domestic fossil fuel resources it relies heavily on imports. Accordingly, the government is aiming to dramatically increase installed solar power capacity and provided various incentives for solar power installations. Consequently, in recent years, First Solar has partnered with local companies to develop, construct, sell, and operate various PV solar power systems, which are expected to mitigate the country’s dependence on fossil fuel imports and nuclear power.

To improve manufacturing capacity, First Solar is investing approximately $1.2 billion in scaling its U.S. manufacturing footprint via the construction of entirely new facilities and the optimization of current capacity. Driven by robust demand for its module technology as well as U.S.-manufactured products, the company expects to expand its domestic capacity to approximately 10.7 gigawatts by 2026. Furthermore, with the enactment of the Inflation Reduction Act providing production tax incentives and credits for solar and clean hydrogen, as well as wider expansion of industry investment, the company has better long-term clarity necessary to support its initiatives.

While First Solar took a modest hit to its top-line revenue during the covid pandemic, in 2021 the company saw a return that was marginally shy of the $3.06 billion in revenue achieved in 2019. In its third quarter, net sales were $629 million, up 8% on the prior year’s comparative, primarily driven by higher module volumes sold in Malaysia and Vietnam.

Strong bookings momentum has continued throughout 2022, with the company’s total backlog of future deliveries now standing at a record 58.1 gigawatts and includes orders for delivery as far into the future as 2027.

Most recently, margins have been impacted largely due to logistics charges as a result of containers and modules remaining in port beyond contractually agreed periods. Given container shortages and transit times well above pre-pandemic norms, a recent significant reversal in these metrics, though welcomed on a long-term basis, created near-term logistical challenges.

Management has taken a conservative outlook for its forward guidance, forecasting revenue for 2022 to end the year between $2.6 billion and $2.7 billion in line with consensus estimates and representing a contraction of 10%. However, the outlook for 2023 and 2024 is far more positive with analysts projecting year-over-year improvements of more than 30% per annum. While full-year earnings per share are also forecasted to record a loss of $1.59 in 2022, a strong positive turnaround is also expected for 2023 and 2024, improving to $6.05 and $11.56 per share respectively.

The solar energy and renewable energy sectors are highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete within the larger electric power industry. First Solar faces intense competition for sales of solar modules from the likes of Canadian Solar, JinkoSolar, Trina Solar, and Yingli Green Energy, who all compete on various factors such as panel efficiency, cost of production, and geographic presence.

Of particular note, is that many manufacturers have links to China and may have access to sovereign capital, which could enable them to operate at minimal or negative operating margins for sustained periods. Conversely, given First Solar is not as dependent on government subsidies, it is not as susceptible to changes in policy or tariffs. Furthermore, as one of the largest in the industry, it benefits from a strong scale and an ability to deliver locally produced solutions for its largest markets.

First Solar’s use of thin-film technology has allowed it to achieve market-leading efficiency and cost-effective solar panel production compared to traditional silicon technology. With a large and diversified project pipeline, a strong balance sheet, coupled with a solid reputation in the industry and a history of successful project development and execution, its outlook for further expansion and growth appears well supported.

E-commerce providers are now processing trillions of dollars in transactions every year. Helping over two million merchants make this happen, Shopify has become a critical tool for businesses in more than 175 countries around the world. With its cloud-based, multi-channel commerce platform that lets small and medium enterprises start, grow, and manage a business with a store, both online and in brick-and-mortar locations, Shopify is now a leading provider of essential commerce infrastructure.

With an extensive offering of products and services that are engineered for reliability and ease of use, the company’s software allows merchants to design, manage, and sell their products across multiple sales channels, including web and mobile storefronts, social media, physical retail locations, pop-up shops, and marketplaces. It also enables merchants to manage products and inventory, establish customer relationships, process orders and payments, ship orders, and leverage analytics and insightful reporting.

In addition to millions of small and medium businesses, Shopify is trusted by brands such as PepsiCo, Heinz, Tupperware, Netflix, Staples, and many more. As a result, it is now responsible for processing over $175 billion in gross merchandise value for its customers. And that number is only getting bigger as the company extends its reach with further international expansion, continuing to build buyer relationships, and investing in global partnerships to expand the Shopify ecosystem, whilst simplifying logistics and fulfillment.

In 2004, friends Tobias Lütke, Daniel Weinand, and Scott Lake took to the internet to begin selling snowboarding equipment by opening a store called Snowdevil. Not happy with existing e-commerce platforms, Lütke, a computer programmer, took it upon himself to build one of his own. After two months of development, Snowdevil was launched. Then two years later in 2006, the platform hosting Snowdevil was launched as Shopify.

Thanks to an application programming interface that allowed developers to create applications for Shopify online stores and then sell them on the Shopify App Store, the company’s position in e-commerce blossomed quickly. By 2010, Shopify was expanded to mobile, allowing business owners to view and manage their stores on their favorite devices.

In one of the company’s biggest impacts, the launch of Shopify Payments in 2013 redefined the point of sale for e-commerce, as it removed the necessity of third-party payment gateways, allowing merchants to completely bypass them. The platform soon hosted over 100k online retailers and following the company’s IPO in 2015, Shopify went a step further into brick and mortar, producing iPads with a point-of-sale system that directly accepted debit and credit card payments. This iPad POS is still widely used, especially by those on the smaller side without large-scale POS systems.

Additional services including Shopify Capital, a cash advance product, and integration with Amazon that would allow merchants to sell on Amazon from their Shopify stores, along with Shopify Studios, a full-service television and film content and production house, among many other new services have further bolstered the company’s offerings over the years.

To this day, founder “Tobi” Lütke remains the chief executive officer of Shopify. As a programmer, Lütke has served on the core team of the Ruby on Rails framework and has created many popular open-source libraries. However, his ability to help empower entrepreneurs globally to manage one of the major administrative burdens in business has allowed Shopify to grow into a juggernaut and one of Canada’s biggest companies. His efforts have earned him a position on Profit’s “The Fabulous 30” list, while the Globe and Mail named him “CEO of the Year” in 2014.

Lütke is joined by Harley Finkelstein who serves as president at Shopify and oversees Shopify’s commercial teams, growth, and external affairs. Prior to his current role, Finkelstein was Shopify’s COO and has founded numerous start-ups and e-commerce companies. While chief technology officer, Allan Leinwand, leads the company’s innovative engineering teams, following senior roles with Slack and ServiceNow.

Shopify offers various services and features for everyone from beginners to large businesses. Although its simplicity is particularly focused on entrepreneurs and SMBs, giving them the ability to create and operate their own website selling products, without requiring any specialized programming or technical knowledge; and freeing them from the high costs of web developers, ongoing support, or even middlemen like Amazon. The platform offers all the tools needed to manage a storefront, products, inventory, and shipping, as well as accept payments and engage with customers. It is completely cloud-based, removing the need to maintain software or web servers, and giving owners the flexibility to run their business from anywhere with an internet connection.

Shopify’s business model has two revenue streams – a recurring subscription component and a merchant success-based component. Subscription Solutions revenues are generated primarily through the sale of subscriptions to the platform, including variable fees, as well as through the sale of the company’s POS Pro offering which enables brick-and-mortar merchants to seamlessly bridge online and offline commerce operations and offer their buyers a smooth shopping experience, along with themes, apps, and the registration of domain names.

While a variety of merchant solutions are offered to augment those provided through a subscription to address the broad array of functionality merchants commonly require. Merchant Solutions revenue is principally generated from payment processing and currency conversion fees within Shopify Payments. However, it is also derived from an extensive list of other complementary services including the sale of POS hardware, transaction and referral fees, and advertising revenue on the Shopify App Store. Shopify Capital helps eligible merchants secure financing to accelerate the growth of their business with simple and convenient working capital, and Shop Pay Instalments enables merchants to sell their goods to buyers on an interest-free payment plan. Shopify Balance provides merchants with a no-fee money management account, Shopify Shipping and Fulfillment Network facilitates both in-house and 3rd party collaborative warehouse fulfillment solutions, while Shopify Email and Shopify Markets make cross-border commerce and comprehensive email campaigns easier for merchants.

Shopify’s customers represent a wide array of retail verticals and business sizes, from aspirational entrepreneurs to companies with large-scale, direct-to-consumer operations, at all stages of their business life cycle. While a direct sales team addresses the needs of large merchants, marketing efforts primarily focus on selling to SMBs and entrepreneurs, the large majority of which are on subscription plans that cost less than $50 per month, in line with a focus on providing cost-effective solutions for early-stage businesses. However, when customers grow their sales and become more successful, they consume more merchant solutions, upgrade to higher subscription plans, and purchase additional apps, making merchants’ success one of the most powerful drivers of Shopify’s business model.

Shopify is currently placing the highest importance on opportunities that it expects will significantly expand merchants’ businesses, accelerate its product roadmap, or have strong paybacks from improved operational efficiency. It is in a transitional period in which it is investing in several core themes to ensure long-term success. While profitability may be impacted in the near term, the company anticipates that these investments will allow it to emerge from the current macroeconomic cycle stronger and will position it well for long-term growth and sustainable profitability.

In light of the significant opportunity to increase the size of its current merchant base, Shopify intends to continue inspiring entrepreneurship through marketing programs and awareness-driven campaigns aiming at educating new prospects. While investments in direct sales efforts will focus on acquiring larger merchants, as well as brick-and-mortar retail merchants seeking to innovate.

Given the close alignment of merchant success with Shopify, improvements to the platform to help customers sell more will continue with initiatives such as the Shopify blogs digital community, the online business training platform, Shopify Learn, global events and meetups, as well as exclusive learning and engagement initiatives to educate merchants on how they can be even more successful with the platform.

In addition to the suite of merchant solutions Shopify has added over time, they are continuously advancing tooling and infrastructure so merchants can not only keep pace with the rapid changes in commerce, but be among the earliest adopters of commerce innovation. Most recently, the company launched its new first-in-class mobile hardware device, Point-of-Sale Go. POS Go was developed to allow merchants to meet consumers wherever they are, making it possible to close sales anywhere and take payments securely and smoothly. Also of particular focus, is localizing the platform for international expansion, while making it easier for merchants to accelerate their own global expansion.

With a thriving third-party ecosystem that includes app developers, theme designers, and other partners, the company continues to make its terms more favorable to these partners to ultimately bolster the functionality of the Shopify platform. It recently reduced its revenue share on the first $1 million in earnings for partners to further increase the appeal of Shopify as a platform on which to build, enabling partners to reinvest in their own growth and innovation. The company expects that by growing this ecosystem and making the Shopify platform more attractive and stickier, it will further expand the merchant base, and in turn drive additional growth.

Shopify has also partnered with industry-leading, multinational professional services corporations, like Deloitte, Ernst & Young, and KPMG, to encourage the adoption of Shopify’s commerce solutions across their client bases. This strategy enables the acquisition of new, large-sized merchants through endorsements by professional consultants, extending the company’s ability to deeply embed its solutions into large enterprises’ core operations, creating higher and more sustainable revenue streams.

In the last decade, Shopify’s revenue has exploded, surging from $24 million in 2012 to exceed more than $5 billion in 2022, with the company posting record sales each and every year. That trend has continued in the latest quarter after total revenue again jumped 22% on the prior year to $1.4 billion, taking the trailing twelve months’ revenue to $5.24 billion. Subscription Solutions grew modestly by 12%, while the Merchant Solutions businesses increased by 26%, driven by higher gross merchandise volume and by merchants utilizing solutions to run greater parts of their business in an inflationary environment.

While gross profit growth was impacted by a greater mix of lower-margin Merchant Solutions revenue, lower margins in Shopify Payments due to merchant and card mix shifts and industry-wide network cost increases, along with increased investments in cloud infrastructure, adjusted gross profit still increased by 11% to $681.8 million. The company’s adjusted operating loss of $45.1 million in the quarter down from income of $140.2 million a year ago was largely driven by increased headcount and a new compensation framework.

Looking ahead, consensus estimates have Shopify closing out the full year with expected revenue of $5.5 billion representing year-over-year growth of almost 20%, while 2023 is forecasted to add a further 22% to $6.7 billion. Full-year earnings per share estimates for 2022 are forecasted to drop to a loss of $0.05 per share, down from $0.64 in 2021, as the company focuses on its long-term investments.

Shopify faces an extensive list of competitors across the spectrum of web development and e-commerce offerings catering to both small and large businesses from the likes of Wix, Squarespace, Shift4Shop, WooCommerce, BigCommerce, and Ecwid, along with many more. Some of these merchants may be able to piece together technology that covers e-commerce software, marketplaces, content management systems, payment processors, POS solutions, cross-border services, domain registrars, shipping and fulfillment service providers, as well as lending and financial service. However, Shopify believes no other challengers currently offer an integrated, multi-channel, cloud-based commerce platform with comparable functionality, pricing, or reliability.

The greatest commercial risk for Shopify is that ongoing inflationary pressures could weigh on consumer spending and affect the company’s prospects for platform growth in the near term, yet with so many growth drivers focused on expansion, this appears largely mitigated.

Despite its stock price tanking over 75% in 2022, Shopify’s expansion into new businesses and geographies coupled with its standout comprehensive offerings provide an enormously broad ecosystem and scale that gives the company a unique advantage in the e-commerce industry that has it well placed for long-term, sustainable growth.

Merchants are increasingly adopting a multitude of software solutions and new digital tools to operate their businesses, manage interactions with customers, and accept payments, all whilst remaining competitive. The complexity of conducting commerce across these software suites has created an enormous challenge for card-accepting merchants.

Shift4 Payments is redefining commerce by simplifying complex payment ecosystems across the world. As a leader in commerce-enabling technology, Shift4 powers billions of transactions annually for over 200k businesses across virtually every industry. It has achieved this leadership position through decades of solving business and operational challenges facing customers’ overall commerce needs.

The company distributes services through a network of software partners and value-added resellers. For software partners, it offers everything from a single integration to an end-to-end payments solution, along with a proprietary gateway and a robust suite of other technology solutions to simplify payment acceptance. While for merchant customers, it provides a seamless, unified consumer experience as an alternative to relying on multiple providers to accept card-based and digital payments.

Shift4’s best-in-class technology provides the backbone payments for many leading brands from Burger King to Elon Musk’s Starlink. With a strong track record of consistent execution and winning new business, coupled with the ongoing growth in digital commerce the company is poised to benefit from huge tailwinds in payment processing needs.

While working as an employee of a payment processing company, the then 16-year-old Jarod Isaacman identified what he saw as inefficiencies in the industry. In response, he launched United Bank Card in his parent’s basement in New Jersey. At the time, it generally took merchants about one month to set up a payment system and merchants had to pay for their credit card readers and sign a lengthy application. As an alternative, Isaacman’s new company cut the set-up time to one day, gave merchants free credit card readers, and only required them to sign a two-page application.

In the preceding years, the company expanded by acquiring multiple payment processing and point-of-sale companies, including payment gateway provider Shift4 Corporation, and in the process, rebranding itself as Shift4 Payments.

Shift4 went public on the NYSE in June 2020, raising $345 million through its IPO, as one of the few companies to go public in the months after the start of the COVID-19 pandemic. Since then the company’s acquisitions have continued with 3dcart, an eCommerce platform, which was subsequently rebranded as Shift4Shop. Followed by VenueNext, a provider of point-of-sale and payment solutions for stadiums, arenas, and other entertainment venues. Along with global payment provider, Finaro, a year later.

Still with the company as chief executive officer, Jared Isaacman manages the core divisions of Shift4, as well as the overall operations of the company. He is considered to be one of the industry’s most influential business leaders and has been recognized with several prestigious awards including one of “America’s Best Entrepreneurs” by BusinessWeek Magazine and “30 Entrepreneurs Under 30” by Inc. Magazine.

Taylor Lauber serves as president and chief strategy officer and is responsible for all aspects of growth, including overseeing product development, strategic partnerships, and corporate development/investments. Prior to joining Shift4, Lauber held several senior roles at financial giants Blackstone and Merrill Lynch.

While chief technology officer, Michael Russo, has over 30 years of experience in the hospitality and healthcare technology space, building cutting-edge software products, driving strategic business initiatives, and developing go-to-market strategies.

At the heart of Shift4’s business is its payments platform. The company’s value proposition is to create a seamless end-to-end payments solution that includes point-of-sale (POS) terminals, payment gateway integration, and processing.

The platform provides omnichannel card acceptance and processing solutions across multiple payment types, including credit, debit, contactless card, EMV, QR Pay, and mobile wallets, as well as alternative payment methods such as Apple Pay, Google Pay, Alipay, and WeChat Pay. It also provides full eCommerce capabilities, including web-store design, hosting, shopping cart management, and fulfillment integrations, along with security and risk management solutions, as well as reporting and analytical tools.

Shift4’s comprehensive suite of technology solutions which is designed to streamline customers’ business operations includes:
• VenueNext – provides stadium and entertainment venues with a frictionless commerce experience that includes mobile ordering, countertop point-of-sale, self-service kiosks, and digital wallets to facilitate food and beverage, merchandise, and loyalty functions all within a white-labeled technology application that is fully integrated with its secure end-to-end payment processing platform.
• Shift4Shop – a turnkey eCommerce platform for merchants to build their business online. Merchants can create a webstore in minutes, manage their product catalog, order fulfillment and inventory management, search engine optimization, and secure hosting.
• Lighthouse – a cloud-based suite of business intelligence tools that includes customer engagement, social media management, online reputation management, scheduling, and product pricing, as well as extensive reporting and analytics.
• SkyTab hybrid-cloud-based Integrated Point-of-Sale – purpose-built POS workstations pre-loaded with powerful software suites and integrated payment functionality for restaurant and stadium clients.
• SkyTab Mobile POS – provides pay-at-the-table, order-at-the-table, delivery, customer feedback, and email marketing functionality.
• Marketplace – enables seamless integrations into complementary third-party applications such as inventory, loyalty, payroll, timekeeping, and other human resource services, reducing the number of vendors on which merchants rely.

The majority of Shift4’s revenue is derived from fees paid by merchants, which principally include a processing fee that is charged as a percentage of end-to-end payment volume. In cases where merchants subscribe only to the gateway, Shift4 generates revenue from transaction fees charged in the form of a monthly and fixed fee per transaction. It also generates subscription revenue from licensing its POS software, business intelligence tools, payment device management, and other technology solutions.

Shift4 markets and sells its solutions through a diversified network of over 7,000 software partners, which consists of technology providers that develop commerce-enabling software suites with which they can bundle the payments platform, along with other organizations that provide distribution support.

The company has over 200k customers which mainly consist of brick-and-mortar restaurants, hotels, casinos, sports arenas, gyms, etc. The vast majority of its merchants include highly-scalable small to medium size businesses across numerous verticals including food and beverage, hospitality, stadiums and arenas, gaming, specialty retail, non-profits, and eCommerce. Yet its most well-known customers include Hilton, Caesers, DoubleTree, Burger King, Applebees, Popeyes, Dennys, TGI Fridays, the LA Galaxy Arena, and many more. While most recently, the company saw contract wins with Wisconsin and Alabama Universities, as well as taking on the payments for the Starlink satellite internet service.

Starting its life as a payment gateway which it still provides today, Shift4’s differentiation lies in its expansion into a complete end-to-end platform. This expanded suite of services offers many functional advantages and with over 400 software integrations, enables it to deal with the most complex payment requirements. Furthermore, as users migrate from a payment gateway to a wider usage of services, the company benefits from improvements in its overall gross margins and ultimate profitability.

Acquisitions in recent years have helped Shift4 take advantage of expanded verticals including sports and entertainment venues, gaming, and eCommerce, adding to its market-leading position in the restaurant and hospitality space and extending its total addressable market to more than $3.5 trillion. The purchase of VenueNext has driven substantial new customer acquisitions as individual stadiums and arenas are far larger than restaurants or even most hotels in terms of their contribution to payment volume.

These revenues from stadiums can also benefit from tickets to events and other merchandise, usually sold in conjunction with a Shift4Shop integration, born out of the 3dcart acquisition. Despite the availability of a substantial number of eCommerce platforms, including the ubiquitous Shopify, Shift4Shop has gained significant traction expanding its user base to tens of thousands of online stores, as merchants appreciate the in-built functionality of payment processing within the store management toolset.

Whilst most recently, the company’s purchase of global cross-border payment provider and fully licensed bank, Finaro, underscored its aggressive efforts to deliver a unified commerce experience across the world. By integrating Finaro’s capabilities, Shift4 expects to further expand its current services including SkyTab POS, Shift4Shop, and VenueNext stadium offerings globally.

The rollout of the latest version of Shift4’s SkyTab POS solution has also been of particular focus as restaurants remain by far, the largest single vertical of the company covering over 125k locations. It is anticipated the overall product refresh will continue to help solidify new wins and the conversions of gateway customers to the end-to-end platform, as the company looks to de-emphasize gateway-only connections to remove unnecessary operational parts, whilst also improving revenue and margins in its high-growth core business.

Shift4’s rapid expansion in recent years has flowed through to strong growth in end-to-end volumes, revenue, gross profit, and net income. This trend continued in its latest quarter with record results across the key metrics. Gross revenue was $547.3 million for the September 2022 period, compared to $377.8 million 2021, representing an impressive increase of 44.9% year-on-year. The increase was largely driven by end-to-end payment volume of $7.1 billion which was up by more than 52%, while subscriptions and other revenues were also up a healthy 24%. The strong result sent revenues for the year to date to an all-time high of $1.46 billion, surging over 50% on the same nine months in 2021.

Record levels were also reached for adjusted EBITDA and net income which came in at $85.4 million and $46.4 million respectively, as more and more enterprise gateway customers were re-signed under more favorable economic terms consistent with the company’s ‘gateway sunset strategy’ that is focused on ‘sunsetting’ legacy contracts.

Looking ahead, Shift4 is forecasting another robust quarter with revenue expected to close out 2022 between $1.95 and $2.04 billion, aligning with consensus estimates and representing year-over-year growth of 44%. While full-year earnings per share estimates for 2022 are also forecasted to improve by an enormous 95% to $1.38 per share, up from $0.71 in 2021.

Shift4 competes with a range of providers, many delivering particular components of Shift4’s offering, but do not provide an integrated end-to-end solution capable of addressing complex business challenges for software partners and merchants. Major competitors include third-party payment processors such as Chase Paymentech, Elavon, FIS, Fiserv, and Global Payments, along with integrated payment providers such as Adyen, Lightspeed POS, Shopify, Square, and Toast. For its hospitality gateway offering, the company competes primarily with Fusebox (a division of Elavon) and FreedomPay.

Despite the extensive list of well-established competitors, Shift4 believes its reputation, domain expertise, scale of distribution channels, and breadth of offerings and innovation, among other things, have been key to its rapid expansion.

On the economic front, high inflation and a rising interest rate environment have caused many analysts to forecast a recession. Consequently, fintech company share prices have come under pressure as it is assumed consumers will likely make fewer transactions resulting in lower payment volumes for companies like Shift4. Fortunately, any such reduction is likely cyclical.

Thanks to a concerted foray into additional verticals, international expansion, and the launching of new and enhanced products, Shift4 has demonstrated its ability to execute much-needed growth initiatives in the face of a potentially deteriorating economy. With a large base of existing customers and significant contract wins keeping the company delivering record results, it appears to be effectively combating any slowdown in consumer spending.

Today’s most exciting technologies such as 5G, artificial intelligence, augmented reality, and autonomous vehicles among many others, are only enabled by the cutting-edge efforts of the most advanced organizations on the planet. ON Semiconductor Corporation (onsemi) is one of these companies bringing the most sophisticated and complex ideas in technology to reality, creating products and solutions that are driving disruptive innovations to help build a better future.

With a focus on automotive and industrial end-markets, onsemi is accelerating change in megatrends such as vehicle electrification and safety, sustainable energy grids, industrial automation, 5G, and cloud infrastructure. The company offers a highly differentiated and innovative product portfolio, delivering intelligent power and sensing technologies that solve some of the world’s most complex challenges and lead the way to creating a safer, cleaner, and smarter planet.

onsemi’s intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers efficient fast-charging systems, and propels sustainable energy for the highest efficiency solar strings, industrial power, and storage systems.

While its intelligent sensing technologies support the next generation of smarter factories and buildings and enhance the automotive mobility experience with imaging and depth sensing that make advanced vehicle safety and automated driving systems possible.

onsemi continues to deliver record revenue levels stemming from continued growth in its focus markets of automotive and industrial applications. Furthermore, as the company takes a proactive approach to making structural changes to strengthen the business, it continues to secure contracts where semiconductor content growth is accelerating. Particularly in industries such as vehicle electrification, energy infrastructure, advanced safety, and factory automation.

Originally formed as a spinoff of Motorola’s Semiconductor Components Group, onsemi was founded in 1999. Motorola had been a pioneer in transistors, especially for commercial applications. It also pioneered the automotive electronics industry, from the first mobile radios in police cars in the 1940s to automotive electric controls and semiconductors in the 1970s.

Over the last two decades, the company has grown its footprint with an extensive list of acquisitions including semiconductor competitors, specialist hardware producers covering imaging, radar, power, and other micro-devices, as well as design, manufacturing, and fabrication facilities.

Along with Motorola, the acquisition of Fairchild Semiconductor in 2016 provided a foundation for the modern-day onsemi. Thanks to pioneering technology stemming from the early use of silicon and planar processes that produced the first commercially viable integrated circuits in the 1960s, Fairchild became the foundation for many of the innovations we see today.

Hassane El-Khoury has been the president and chief executive officer of onsemi since December 2020. El-Khoury is a seasoned professional with over twenty years of experience in the technology sector. His career has fostered a deep understanding of customer and design requirements in the automotive and industrial markets, as well as a systems-level understanding to form integrated customer solutions and business strategies. He has held several leadership roles throughout his career, most recently as president and CEO for Cypress Semiconductor, where he was the architect of its acquisition by Infineon Technologies AG in early 2020 for €9.0 billion.

El-Khoury has noted that onsemi is embarking on a transformational journey to revolutionize the semiconductor industry with a focus on driving intelligent power and sensing solutions to create a more sustainable ecosystem for future generations. Under his guidance, the company is looking to build a strong culture of innovators and forward, out-of-the-box thinkers interested in pushing the boundaries of expectation.

onsemi serves a broad base of end-user markets, including automotive, industrial, communications, computing, and consumer customers, among many others. Operating through three segments – Power Solutions, Advanced Solutions, and Intelligent Sensing segments, the company provides its intelligent products worldwide.

onsemi’s power solutions allow customers to achieve lower weights and reduce system costs through an unwavering focus on efficiency. It offers a wide range of semiconductor products that perform multiple application functions, including power switching and conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation functions. The company also designs and develops application-specific standard products and circuits, radio frequency, and integrated power solutions, as well as provides foundry and design services for government customers. In addition, it develops image sensors, signal processors, and photon detectors, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in various end markets.

Coupled with its sensing integration, onsemi says its power solutions achieve higher efficiencies compared to competitors through lower temperature operation and reducing cooling requirements, all whilst saving costs and minimizing weight, and delivering the required power for a given battery capacity. The advanced proprietary features in smaller packages that deliver optimal results support a diverse range of use cases, and in particular, are enabling the next generation of automotive safety and autonomous driving.

While in the industrial space, onsemi is helping Original Equipment Manufacturers (OEMs) develop innovative products to navigate the ongoing transformation across energy infrastructure, factory automation, and power conversion.

Products are sold through distributors and direct to customers for ultimate use in a variety of products and markets. In general, onsemi maintains long-term relationships with key strategic end customers, which generally include minimum purchase commitments. Sales to distributors who resell to mid-sized and smaller OEMs and other companies accounted for approximately two-thirds of the company’s revenue in 2021. While sales to direct customers include manufacturers who provide contract services for OEMs, along with large multinationals and selected regional OEMs.

onsemi’s complementary focus on both power and sensing technologies is aligned with fast-growing secular megatrends in multiple end markets. Opportunities in automation and electrification across a wide range of industries should provide meaningful addressable market growth in years to come. The company currently has a key emphasis on gross margin and operating margin expansion, while at the same time achieving revenue growth in its end markets of automotive and industrial infrastructure, coupled with profitable growth opportunities in other end markets.

Additionally, it continues to rationalize its product portfolio by moving away from non-differentiated products, which have had historically lower gross margins. As a result, onsemi’s product development efforts are being directed towards building solutions in areas that appeal to customers in focused market segments and across multiple high-growth applications, including:
• Powering the electrification of the automotive industry with technologies that allow for lighter and longer-range electric vehicles and enable efficient fast-charging systems;
• Propelling the sustainable energy evolution with the highest efficiency solar strings, industrial power, and storage systems;
• Enhancing the automotive mobility experience with imaging and depth sensing technologies that make advanced vehicle safety and automated driving systems possible; and
• Enabling automation and data exchange with intelligent sensing technologies for smarter factories and buildings.

The volatility in global energy markets is driving an accelerated transition to alternative energy. And with a broad portfolio of Silicon Carbide (SiC) and silicon power modules, onsemi has emerged as a leader in this market. The top 10 solar inverter providers in the world collectively have a market share of 80%, and onsemi has now signed long-term agreements with eight of them. Traction for the company’s SiC solutions is complemented by continued growth in the silicon power business and as a result, it expects to see strong long-term growth in its alternative energy business. A key differentiating advantage for onsemi is its ability to offer silicon and silicon carbide solutions across a wide range of power and voltage requirements.

In 2022, the company has also targeted the streamlining of operations by undertaking several initiatives to achieve efficiencies including the divestment of manufacturing facilities, two office buildings, and the sale of its corporate headquarters facilities in Arizona. A transition to a lighter internal fabrication model aims to help financial performance to be less volatile and not as heavily influenced by internal manufacturing volumes. It also approved an exit plan to wind down its Wi-Fi solutions division within the Advanced Solutions Group segment, which will further enable investments to be directed to areas of strategic focus.

In its latest release, onsemi closed its sixth consecutive quarter of record financial results stemming from continued growth in automotive and industrial applications. Revenue of $2.19 billion beat analysts’ estimates and represented an increase of 26% year-over-year, with the auto segment up 51% and the industrial segment up 28%. While a softening in nonstrategic end markets of consumer and computing saw both declining mid-single digits sequentially.

Over the last 18 months, the company has taken a concerted approach to improve the predictability and reduce the volatility of the business, with the rationalization of the product portfolio exiting $277 million of business to eliminate exposure to products at dilutive gross margins. At the end of the third quarter, a record non-GAAP operating margin of 35.4% had increased by approximately 1,100 basis points year-over-year. As a result, gross profit increased $337.5 million, or approximately 47%, to a record $1.06 billion, up from $720.8 million in 2021.

While operating expenses did not change materially, the company declared a goodwill and intangible asset impairment of $271.8 million, which ultimately brought net income down to $311.9 for the quarter.

Looking ahead, onsemi is forecasting another robust quarter with revenue expected between $2.01-2.14 billion, aligning with consensus estimates that have the company closing out the full year with a record $8.31 billion in revenue, representing year-over-year growth of 23%. While full-year earnings per share estimates for 2022 are also forecasted to improve by almost 79% to $5.27 per share, up from $2.95 in 2021.

onsemi faces significant competition from major international semiconductor companies including Sony, Samsung, Broadcom, Infineon Technologies, Wolfspeed, STMicroelectronics, Texas Instruments, and Toshiba Corporation, along with smaller companies focused on specific market niches.

However, its competitive strengths include core competencies in leading-edge fabrication technologies and micro packaging expertise, coupled with the breadth of its product line and IP portfolio, where the company believes it maintains significant performance advantages over the competition.

While stocks in the semiconductor industry have experienced some weakness attributed to lower PC and smartphone demand, neither of these markets are of concern for onsemi. It remains attractively leveraged to growth not only in the auto sector due to EVs and automation, but also increased electrification across a range of end-markets, and as a result continues to post impressive results, delivering record numbers, and beating analysts’ expectations.