Contents
3 About Espressif
4 Business Highlights (Unaudited)
6 Management Report
6 Business Strategy
7 Developer Community Metrics
8 Ownership of Securities
9 Risks and Uncertainties
10 Financial Statements (Unaudited)
10 Consolidated Balance Sheet
11 Consolidated Income Statement
13 Consolidated Cash Flow Statement
14 Further Information
14 Terms and Conditions of the Report
15 List of abbreviations
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ ABOUT ESPRESSIF
About Espressif SHARE
A Leading AIoT Solution Provider
Espressif Systems is a public, multinational, fabless, semiconductor company focused
on developing cutting-edge, wireless-communication, low-power chipsets. By
leveraging wireless computing, we provide green, versatile and cost-eective AIoT
solutions. We have accomplished a hardware-and-software, closed-loop development
cycle for a series of core technologies, including RF, Wi-Fi & Bluetooth LE network
protocol stacks, RISC-V MCUs, AI instruction sets and algorithms, operating systems,
toolchains, compilers, IoT software application frameworks, Cloud, etc.
We have a diverse team of engineers from around the world. All company branches
employ more than 500 members of sta from almost 30 countries and regions, +75% of
whom are based in our Research & Development Department. We have eight R&D
centers in ve countries, including China (4 out of 8), India, the Czech Republic, Brazil
and Singapore. The company’s increasing reputation in recent years has been
instrumental in attracting talented engineers from across the world. Being united by our
passion for technology, our diversity is our strength, as it allows the creative blending of
dierent kinds of knowledge, perspectives and ways of thinking.
TOP 1
global Wi-Fi MCU
market share*
Czechia China
products distributed
all over the world
Shanghai｜Suzhou
Wuxi｜Hefei
India
millions of users
Singapore
Brazil
* Market share data from TSR
3
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ BUSINESS HIGHLIGHTS (UNAUDITED)
Business Highlights (Unaudited)
Key Financial Data (Unaudited)
Three Months Ended Fiscal Year
CNY March 31, 2022 March 31, 2021 2021
Consolidated Statement of Income Data
Revenue 288,948,065 270,513,645 1,386,371,541
Gross prot 118,589,940 108,219,817 549,025,732
Selling expenses 9,194,881 9,789,393 41,815,693
General and administrative expenses 13,404,541 12,202,888 55,485,146
Research and development expenses 74,848,290 58,890,426 271,689,981
Net income 27,852,092 33,999,375 198,427,708
Earnings per share:
Basic 0.3475 0.4248 2.4775
Diluted 0.3475 0.4248 2.4566
March 31, 2022 December 31, 2021
Consolidated Balance Sheet Data
Cash, cash equivalent and investments 1,027,717,008 1,114,558,363
Working capital 1,791,815,378 1,749,605,271
Total assets 2,094,943,752 2,129,056,143
Long-term obligations 66,739,721 68,244,392
Total shareholders’ equity 1,874,366,128 1,823,017,913
Three Months Ended Fiscal Year
March 31, 2022 March 31, 2021 2021
Consolidated Cash Flow Data
Net cash ow from operating activities -36,870,506 -13,498,498 31,460,857
Non-GAAP Adjustment
Stock-based compensation 4,825,008 5,423,960 21,787,964
Non-GAAP net income 32,677,101 39,423,335 220,215,672
Key Financial Indicators (Unaudited)
Three Months Ended Fiscal Year
March 31, 2022 March 31, 2021 2021
Gross margin 41.04% 40.01% 39.60%
R&D-to-sales ratio 25.90% 21.77% 19.60%
EBITDA margin 11.67% 13.71% 16.78%
Weighted ROE 1.51% 2.07% 11.52%
4
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ BUSINESS HIGHLIGHTS (UNAUDITED)
Financial Analysis
Revenue and Gross Margin
Espressif’s revenue during the rst quarter of 2022 was CNY 288.95 million, which
B $
usiness
marked an increase of 6.81% compared to the same period of last year. The Internet of
Things industry is still growing, but the rst quarter of 2022 was an o-peak period for
the company. In addition, the ongoing global pandemic and the impact of the Omicron
D
variant, in particular, resulted in extended lockdowns for several Chinese cities, which
has aected the downstream demand. Thus, the company sales increased only slightly
compared with last year's same period. The gross margin for the reporting period was
eveloper
41.04%.
Research and Development Expenses
The R&D expenditure in Q1 2022 was CNY 74.85 million, that is, 27.10% up compared
with the same period of last year. In fact, the company's development expanded
B
signicantly and it now includes the integration of "Wireless SoC + AI + Software +
Cloud", which has required substantial R&D investment. At the same time, the company
is focused on improving the eciency of its research-and-development, with the aim to usiness
speed up the release of new products. The two series of chips released in 2020, ESP32-
S3 and ESP32-C3, have contributed to the company’s nancial performance in Q1
2022, and the three new chips released in 2021, ESP32-H2, ESP32-C2 and ESP32-C6,
will enter the stage of mass production and marketing promotion soon. Our cloud
platform, ESP Rainmaker, will also contribute to the revenue that will be accumulated
throughout 2022.
Inventories
The closing inventory balance at the end of Q1 2022 was CNY 396.18 million, thus
increasing by 21.46% since the end of the previous year. Considering the following
factors collectively, the company has maintained an active stocking strategy, while raw
materials and nished products increased during the reporting period.
We expect that wafer supply will remain tight in the current year.
We continue to explore new business opportunities, such as enterprise-wide business
applications (e.g., industrial automation, healthcare, energy control, etc.) which have
already started integrating Internet connectivity into their oerings. Additionally, it is
expected that consumption by individuals will recover as soon as the pandemic is
controlled in China.
The life cycle of Espressif products is fairly long. We provide alongevity commitment
of up to 12 years, and the company is strong enough to manage any inventory
backlog.
The cumulative inventory has led to a net cash outow from operating activities during
the rst quarter of 2022. 5
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ MANAGEMENT REPORT
Management Report
Business Strategy
Espressif Systems’ business strategy emanates from our four key capabilities and our
four key services/products. More specically, the four key capabilities include
Espressif’s connectivity and chip design, OS-level development, software solutions, and
our engagement with our ecosystem. Our four key services and products include our
development environment, software tools, cloud services, and detailed documentation
support. The above-mentioned structure ensures that our products are the heart of
numerous commercial AIoT applications in dierent markets, including smart home,
consumer electronics, industrial automation, healthcare, etc.
IoT Overview
Apple Microsoft Internet
Amazon Google XiaoMi Baidu Alibaba Tencent
HomeKit Azure Platform
Smart Consumer Industrial Internet of Energy Business
Healthcare Education …
Home Electronics Automation Vehicles Management Application
Video-
Developer Open-source Social Developer
Techblog sharing TPPS …
Ecosystem Platform Platform Ecosystem
Platform
Development Environment
AI Voice AI Image Peripheral Connect Remote Software
Mesh …
Driver Control Monitor Solution
Cloud Service *
Recognition Recognition
Documentation
Tools Software
ESP IoT OS Support for Other OS Operating
ESP-IDF NuttX / Zephyr / Vela / OpenHarmony System
Wi-Fi 4/Wi-Fi 6 BLE 5.0/BLE 5.2 Thread/Zigbee Connectivity
Technology
&
AI Security Chip Design
Wireless SoC RISC-V
Accelerator Encryption
* ESP RainMaker，an AIoT cloud platform that enables customers to quickly build their own solutions based on
enterprise-grade cloud computing, with a single-click deployment.
6
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ MANAGEMENT REPORT
Developer Community Metrics
ITEM April 27, 2022 Dec 31, 2021 change%
GitHub (Worldwide open-source development platform)
ESP32 Projects 32,742 29,007 13%
ESP8266 Projects 36,438 35,055 4%
Gitee (Chinese open-source development platform)
ESP32 Projects 2,719 2,592 5%
ESP8266 Projects 1,926 1,867 3%
CSDN (Chinese Tech-blog platform)
Search results for ESP32 83,381 79,188 5%
Search results for ESP8266 31,055 30,033 3%
Hackaday (open-source hardware platform)
ESP32 projects 4,029 3,816 6%
ESP8266 projects 5,871 5,789 1%
Reddit
ESP32 group members 49,758 46,540 7%
ESP8266 group members 55,168 53,523 3%
bilibili (Chinese video-sharing platform)
Ocial account followers 18,996 17,502 9%
Ocial account views 455,506 390,000 17%
YouTube
Ocial account subscribers 11,800 11,600 2%
Ocial account views 567,465 556,846 2%
ESP32 community videos 522,995 466,459 12%
ESP8266 community videos 725,961 687,155 6%
Views of most watched ESP32 community video around 2.5m around 1.5m
Views of most watched ESP8266 community video around 1.5m around 1.5m
N.B.：
Statistical data derived from dierent platforms may be based on dierent collecting methods. It is possible for
certain platforms to modify their algorithms from time to time and, therefore, impact the resulting statistical data.
The above-mentioned data resulted from the Company’s research.
7
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ MANAGEMENT REPORT
Ownership of Securities
Basic information of securities
Share types Ordinary share
Share capital 80,374,966 (as of March 31, 2022)
Listing Shanghai Stock Exchange (SSE)
Ticker 688018.SH
Listing Date 2019-07-22
Shareholder Structure as of Mar 31, 2022
Shareholder Share Numbers Percentage (%)
Espressif (Hong Kong) Investment Ltd. 34,860,000 43.37
Shinvest Holding Ltd. 2,804,446 3.49
Yadong Beichen Investment Management Co., Ltd. 2,568,484 3.20
MERRILL LYNCH INTERNATIONAL 2,056,361 2.56
BOC - Franklin Templeton Sealand Fund 1,791,489 2.23
ABC - Franklin Templeton Sealand Fund 1,251,882 1.56
Ningbo Meishan Free Trade Port Le Tun Investment Management
1,046,030 1.30
Partnership (Limited Partnership)
MORGAN STANLEY & CO. INTERNATIONAL PLC. 940,162 1.17
CMB－Franklin Templeton Sealand Fund 915,473 1.14
BOC - Cathay Pacic CES Semiconductor Chip ETF 886,724 1.10
Top ten shareholders 49,121,051 61.12
Other public shareholders 31,253,915 38.88
Total of outstanding shares 80,374,966 100.00
8
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ MANAGEMENT REPORT
Risks and Uncertainties
Financial Risk
The Company performs periodic credit evaluations of its customers’ nancial condition
and generally requires no collateral from its customers. The Company provides an
allowance for expected credit losses based on the net amount expected to be collected
on such receivables. Losses have not been signicant for any of the periods presented.
R&D Risk
Espressif’s research and development strategy is focused on leveraging new technologies
for the creation of innovative AIoT products. Any delays or changes in the development of
these technologies by our industry partners, or a failure of our products to achieve market
acceptance could compromise our competitive position.
Competitors
As the market for AIoT products grows, we face an increasing antagonism from relatively
large competitors, such as Realtek, MediaTek, Inneon, NXP, Qualcomm and others.
Intense competition from current players as well as new entrants may reduce our product
sales and market share.
Suppliers
A signicant portion of the Company’s products is fabricated by Taiwan Semiconductor
Manufacturing Co. (TSMC). The inability of TSMC to deliver wafers to the Company in a
timely manner could impact the production of the Company’s products for a substantial
period of time, which could have an adverse eect on the Company’s business, nancial
condition, results of operations and cash ow.
Customers
The Company sells directly to end customers, distributors, solution providers and contract
manufacturers. Our customers are a mix of several big customers and numerous small
customers. The concentration ratio for our top-ve customers was 29.05%, 42.18% and
50.96% during the scal years of 2021, 2020 and 2019, respectively. None of the
customers accounted for greater than 10% of our revenue during the scal year of 2021.
9
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ FINANCIAL STATEMENTS (UNAUDITED)
Financial Statements (Unaudited)
Consolidated Balance Sheet (Unaudited)
CNY March 31, 2022 December 31, 2021
Assets
Current assets:
Cash and bank balances 414,614,465 367,149,078
Transactions ofmonetaryassets 613,102,542 747,409,285
Notes receivable 6,894,036 11,600,177
Accounts receivable, net 235,629,926 306,823,758
Prepayments 13,725,689 8,172,703
Other receivables 9,483,712 9,519,869
Including: Interest receivable 761,091 298,796
Inventories 396,178,543 326,168,928
Other current assets 256,024,366 210,555,311
Total current assets 1,945,653,280 1,987,399,110
Non-current assets:
Investment in other equity assets 56,595,200 56,600,700
Fixed assets 48,801,038 46,176,368
Construction work in progress
Right-of-use assets 21,254,676 21,731,123
Intangible assets 2,996,581 3,191,335
Long-term deferred expenses 7,195,129 7,582,637
Deferred income tax assets 12,447,849 6,374,870
Total assets 2,094,943,752 2,129,056,143
0 0
10
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
CNY March 31, 2022 December 31, 2021
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable 73,929,814 138,572,198
Contract liabilities 23,482,662 17,184,196
Payroll payable 29,624,227 66,168,763
Taxes payable 8,169,446 6,472,494
Other payable 7,662,710 754,261
Non-current liabilities due within one year 10,969,044 8,641,928
Total current liabilities 153,837,902 237,793,839
Non-current liabilities:
Lease liabilities 11,149,143 12,116,036
Deferred income tax liabilities 55,590,578 56,128,356
Total liabilities 220,577,623 306,038,230
Owners’ equity (or shareholders' equity):
Share capital 80,374,966 80,158,963
Capital reserves 1,291,696,374 1,266,771,034
Other comprehensive income -17,356,799 -15,711,579
Surplus reserves 33,462,951 33,462,951
Retained earnings 486,188,636 458,336,543
Total shareholder equity 1,874,366,128 1,823,017,913
Total liabilities and shareholders' equity 2,094,943,752 2,129,056,143
11
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Income Statement (Unaudited)
Three Months Ended
CNY March 31, 2022 March 31, 2021
Revenue 288,948,065 270,513,645
Cost of Revenue 170,358,125 162,293,828
Gross Prot 118,589,940 108,219,817
Taxes and surcharges 518,433 669,524
Selling expenses 9,194,881 9,789,393
General and administrative expenses 13,404,541 12,202,888
Research and development expenses 74,848,290 58,890,426
Financial expenses 568,027 -1,084,134
Including: Interest expenses 212,682
Interest income 696,647 1,056,570
Add: Other income 252,748 211,159
Investment income (mark"-" for loss) 3,180,588 3,824,922
Incomes from changes in fair value (mark"-" for loss) 3,076,241 1,721,331
Credit impairment losses (mark"-" for loss) 8,531
Assets impairment losses (mark"-" for loss) -412,271 -186,230
Assets disposal income (mark"-" for loss)
Operating Income 26,153,075 33,331,433
Add: Non-operating revenues
Less: Non-operating expenses 23,470
Income before income taxes 26,153,075 33,307,963
Provision (benet) for income taxes -1,699,018 -691,412
Net Income 27,852,092 33,999,375
0 0
Earnings per share
Basic 0.3475 0.4248
Diluted 0.3475 0.4248
Three Months Ended
CNY March 31, 2022 March 31, 2021
Net Income 27,852,092 33,999,375
Other comprehensive income (mark"-" for loss), after tax
Changes to the fair value of investment in other equity instruments -5,500 9,280
Currency translation reserves -1,639,720 2,769,633
Other comprehensive income (mark"-" for loss) -1,645,220 2,778,913
Comprehensive income 26,206,872 36,778,288
12
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Cash Flow Statement (Unaudited)
Three Months Ended
CNY March 31, 2022 March 31, 2021
Operating Activities
Cash from sales of merchandise and provision of services 392,796,778 296,301,671
Tax refund 27,316,374 14,728,575
Other received cash related to operational activities 9,288,587 1,533,905
Subtotal of cash inow from operational activities 429,401,738 312,564,150
Cash paid for merchandise and services 336,017,954 214,649,468
Cash paid to and for employees 107,719,618 89,711,836
Cash paid for taxes and surcharges 6,938,817 5,945,478
Other paid cash related to operational activities 15,595,855 15,755,867
Subtotal of cash outow from operational activities 466,272,244 326,062,649
Net cash ow provided by operating activities -36,870,506 -13,498,498
Investment activities
Cash arising from disposal of investments 833,768,443 858,355,385
Cash arising from investment income 1,427,583
Net cash arising from disposal of xed assets, intangible assets and other 5,510
long-term assetscash related to investment activities
Other received
Subtotal of cash inow from investment activities 835,196,026 858,360,895
Cash paid for purchase and construction of xed assets, intangible assets
12,606,551 4,900,519
and other long-term assets
Cash paid for investments 755,100,000 909,770,000
Other paid cash relating to investment activities
Subtotal of cash outow from investment activities 767,706,551 914,670,519
Net amount of cash ow provided by investment activities 67,489,475 -56,309,624
Financing activities
Cash arising from the issuance of common stocks 20,316,335
Including: Cash arising from subsidiaries absorbing investments by
minority shareholders
Subtotal of cash inow from nancing activities 20,316,335
Cash paid for the distribution of dividends and prots, or payment of 32,742,816
interests
dividends and prots to minority shareholders by subsidiaries
Other cash payments relating to nancing activities 1,236,611 1,936,027
Subtotal of cash outow from nancing activities 1,236,611 34,678,843
Net cash ow provided by nancing activities 19,079,723 -34,678,843
Impact of uctuation in exchange rate on cash and cash equivalents -2,226,953 3,047,730
Net increase in cash and cash equivalents 47,471,739 -101,439,235
Add: Cash and cash equivalents at the commencement of the period 367,142,726 503,239,843
Cash and cash equivalents at the end of the period 414,614,465 401,800,608
13
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ FURTHER INFORMATION
Further Information
Terms and Conditions of the Report
Responsibility Statement
The Board of Directors, the Board of Supervisors and executive management of the
Company warrant that the contents of this report are true, accurate and complete, and
do not contain any false information, misleading statements or material omissions,
severally and jointly accepting any legal responsibility thereof.
Shanghai, 29 April 2022
Espressif Systems
Board of Directors Board of Supervisors
Teo Swee Ann Lv Zhihua
Founder and Chairman Employee-elected
Ng Pei Chi Fu Hanyu
Information Technology Ocer Shareholder-elected
Teo Teck Leong Wang Yiwen
Shareholder-elected Shareholder-elected
Xu Xin
Shareholder-elected Executive Management
Lan Yuzhe Teo Swee Ann
Independent Director Founder and CEO
Koh Chuan Koon Wang Jue
Independent Director Deputy General Manager
Lee Sze Chin Shao Jingbo
Independent Director Financial Director
Forward-looking Statements
This report contains forward-looking statements and/or assessments about the SPRESSIF
E
business, nancial condition, performance and strategy of the Espressif Group. These
statements and/or assessments are based on assumptions and management
expectations resting upon currently available information and current estimates. These Declaration
are subject to a multitude of uncertainties and risks, many of which are partially or
entirely beyond Espressif’s control. Espressif’s actual business development, nancial SY
condition, performance and strategy may, therefore, dier from what is discussed in this STE MS
report.
14
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜ FURTHER INFORMATION
List of abbreviations
AI Articial Intelligence
AIoT Articial Intelligence and Internet of Things
Bluetooth LE Bluetooth Low Energy
CEO Chief Executive Ocer
CES Consumer Electronics Show
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization
Espressif ESPRESSIF SYSTEMS (SHANGHAI) CO., LTD.
ETF Exchange Traded Fund
G&A General and Administrative
GM Gross Margin
IoT Internet of Things
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
TPPS Third-Party Plugins
TSR Techno Systems Research
15
ESPRESSIF SYSTEMS｜Q1 2022 REPORT｜
SHARE
INNOVATE
SHARE
Investor Relations
ir@espressif.com
Ocial Platforms
www.espressif.com
AIoT
blog.espressif.com
github.com/espressif
esp32.com I esp8266.com I bbs.espressif.com
Social Media
twitter.com/EspressifSystem
facebook.com/espressif
linkedin.com/company/espressif-systems
youtube.com/EspressifSystems
instagram.com/espressif_systems_ocial
bilibili.espressif.com
Copyright 2022 Espressif Systems (Shanghai) Co., Ltd. All rights reserved. All trade names, trademarks and registered trademarks mentioned in this
document are 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 prepared in Chinese and English respectively. In case of any discrepancies between Chinese and foreign
interpretations, the Chinese version shall prevail.
