Q2
Half-Year
Report
2022
Contents
03 04
About Facts About
Espressif Espressif
05 06
Business Key
Highlights Announcements
07
Management 07 Business Strategy 14 Financial Performance
Report
08 Key Products - IoT Chips 15 Research and Development
09 Applications 17 Ownership of Securities
10 Core Competitiveness 18 Stock-Based Compensation
13 Business Model 19 Risks and Uncertainties
20
Consolidated 20 Consolidated 24 Consolidated Cash Flow
Financial Balance Sheet Statement - Indirect Method
Statements
(Unaudited)
22 Consolidated Income 25 Consolidated Statement of
Statement Changes in Equity
23 Consolidated Cash
Flow Statement
26
Further 26 Terms and Conditions
Information of the Report
27 List of abbreviations
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | FACTS ABOUT ESPRESSIF
About Espressif
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-
effective 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 550 members
of staff from almost 30 countries and regions, +76% 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 different kinds of knowledge, perspectives and ways of thinking.
1
global Wi-Fi MCU products distributed millions of users
market share* all over the world
Our R&D Centers
China
Shanghai Hefei
Suzhou Wuxi
Brazil India
Campinas Pune
Czech Singapore
Republic
Brno
* Market share data from TSR
3
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | FACTS ABOUT ESPRESSIF
Facts About Espressif
8 76 561
R&D R&D employees
centers employees
30 33
employee female
nationalities employees
70 K+ 2.6 M+
open-source, views of the most
Espressif-powered popular videos of
GitHub projects Espressif-powered YouTube
projects
Book 100+ 52.7 K+ Reddit
books written about members of
Espressif’s SoCs in ESP32 groups
10+ languages
4
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | BUSINESS HIGHLIGHTS
Business Highlights
Key Financial Data (Unaudited)
Three Months Ended Six Months Ended
CNY Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Jun 30, 2021
Consolidated Statement of Income Data
Revenue 324,870,817 360,089,198 613,818,881 630,602,843
Gross prot 128,253,838 148,023,173 246,843,778 256,242,990
Selling expenses 10,384,806 11,525,644 19,579,687 21,315,037
General and administrative expenses 13,548,558 12,413,908 26,953,099 24,616,796
Research and development expenses 77,606,270 60,198,663 152,454,559 119,089,089
Net income 35,423,132 67,521,465 63,275,224 101,520,840
Earnings per share:
Basic 0.7880 1.2681
Diluted 0.7880 1.2681
Jun 30, 2022 Dec 31, 2021
Consolidated Balance Sheet Data
Cash, cash equivalent and investments 875,538,054 1,114,558,363
Working capital 1,715,463,451 1,749,605,271
Total assets 2,071,369,036 2,129,056,143
Long-term obligations 65,073,593 68,244,392
Total shareholders’ equity 1,808,863,075 1,823,017,913
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Consolidated Cash Flow Data
Net cash ow from operating activities 7,345,663 950,232 -29,524,843 -12,548,266
Non-GAAP Adjustment
Stock-based compensation 638,729 3,431,064 5,463,737 8,855,024
Non-GAAP net income 36,061,861 70,952,529 68,738,961 110,375,864
Key Financial Indicators (Unaudited)
Three Months Ended Six Months Ended
Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Jun 30, 2021
Gross margin 39.48% 41.11% 40.21% 40.63%
R&D-to-sales ratio 23.89% 16.72% 24.84% 18.88%
EBITDA margin 12.26% 21.73% 11.98% 18.49%
Weighted ROE 3.46% 6.05%
5
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | KEY ANNOUNCEMENTS
Key Announcements
New SoCs AI
ESP32-C2 Espressif’s 3A Audio Algorithms
a small, simple and cheap combo Wi-Fi 4 + including Acoustic Echo Cancelation (AEC),
Bluetooth 5 (LE) SoC in a 4mm x 4mm Audio Noise Suppression (ANS) and Automatic
package, with272 kB of memory and Gain Control (AGC), which signicantly reduce
robust connectivity noise and echo in calls, keeping high-quality
voice intercoms stable at all times.
ESP32-C5
the industry’s rst RISC-V SoC solution that
supports 2.4 and 5 GHz dual-band Wi-Fi 6,
along with Bluetooth 5 (LE)
Cloud
Security ESP RainMaker
Upgraded to a one-stop, development-free
and maintenance-free AIoT solution for
ESP Privilege Separation private Cloud deployment.
“User vs Kernel” separation is achieved by
using the World controller and Permission It is a comprehensive solution that covers
Controller,and by splitting the rmware image everything from the underlying chip to device
into two separate and independent binaries: rmware, third-party voice-assistant
protected and user applications. This makes integrations, mobile apps and the dashboard.
the end application-development easier, Customers can build their own AIoT devices
without any inadvertent changes to the system. and ecosystem, with ESP RainMaker.
OS Matter
ESP-IDF One-stop Matter Solution
Espressif’s own IoT Development This is the culmination of
Framework, including RTOS, has Espressif’s ongoing contribution to
been upgraded to v5.0 and has the Matter platform in various
won 8.9K stars on GitHub. areas, including protocol
formulation, core stack
implementation and certication
Zephyr test events.
We keep updating our support for
Zephyr, with Low-Power Modes, Wi-Fi
Manager, Asymmetric Multiprocessing
(AMP) and peripheral support.
6
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Management Report
Business Strategy
Espressif Systems’ business strategy emanates from our four key capabilities and our four key service/product areas.
More specically, our four key capabilities include Espressif’s connectivity and chip design, OS-level development,
software solutions, and our engagement with our ecosystem.
Our four key service and product areas 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 different markets, including smart home, consumer electronics, industrial automation,
healthcare, etc.
IoT Overview
Apple Microsoft Internet
Amazon Google Xiaomi Baidu Alibaba Tencent More
HomeKit Azure Platforms
Smart Consumer Industrial Internet of Energy Business
Healthcare Education More
Home Electronics Automation Vehicles Management Applications
Open-source Social-Media Video-Sharing Developer
Techblog TPPS Books More
platforms Platforms Platforms Ecosystem
Cloud
Service
AI Speech AI Image Peripheral Connection Remote
More Software
Drivers Mesh Monitoring
Control Recognition Control Solutions
Tools Software
Operating
ESP-IDF NuttX / Zephyr / Vela / OpenHarmony
Systems
Development
Environment
Wireless SoC RISC-V AI Accelerator Security Encryption Connectivity
Technology
&
Wi-Fi 4/Wi-Fi 6 BLE 5.0/BLE 5.2 Thread/Zigbee Chip Design
Documentation
7
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Key Products - IoT Chips
Espressif is recognized as a market leader in the eld of Wi-Fi MCUs. We released our rst Wi-Fi MCU in 2014, and our
rst Wi-Fi/Bluetooth LE combo chip in 2016. In 2020, we successfully developed our own RISC-V MCU core, adding it
to our products, while in 2021, we released our rst Thread/Zigbee/Bluetooth LE 5 combo chip and a 2.4GHz Wi-Fi 6
chip. In 2022, we released our rst 2.4 & 5GHz Wi-Fi 6 chip.
In fact, we have been constantly diversifying our product portfolio, introducing new solutions through our numerous
investments. Thus, we now have various product lines in all the main short-range connectivity technologies.
Dual-Core
ESP 32 ESP32 - S3
240 MHz 32-bit Xtensa MCU 32-bit Xtensa MCU | AI Functions
Wi-Fi 4 Wi-Fi 4
Bluetooth 4.2 Bluetooth 5 (LE)
ESP32 - S2 ESP32 - C5
Single-Core
32-bit Xtensa MCU 32-bit RISC-V MCU
240 MHz Wi-Fi 4 2.4&5 GHz Wi-Fi 6
Bluetooth 5 (LE)
ESP 8266 ESP32 - C3 ESP32 - C6
Single-Core
32-bit Tensilica MCU 32-bit RISC-V MCU 32-bit RISC-V MCU
Wi-Fi 4 Wi-Fi 4 2.4GHz Wi-Fi 6
160 MHz
Bluetooth 5 (LE) Bluetooth 5 (LE)
Thread
Zigbee
ESP32 - C2
Single-Core
32-bit RISC-V MCU
120 MHz
Wi-Fi 4
Bluetooth 5 (LE)
ESP32 - H2
Single-Core
32-bit RISC-V MCU
96 MHz Bluetooth 5 (LE)
Thread
Zigbee
2014 2016 2019 2020 2021 2022
We also provide IoT modules based on our chips. The benet for customers is that they can get direct support from
us, shortening and optimizing their supply chain, even in case of chip shortages.
8
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Applications
We sell our own IoT chips and modules, enabling the connectivity between various products, ranging from simple
devices -such as smart light bulbs- to complicated ones, such as robots. Our core connectivity chips are Wi-Fi MCUs
and Wi-Fi /Bluetooth LE (BLE) combo MCUs, which accounted for 99.4% of our revenue in H1 2022.
The market for Wi-Fi MCUs or Wi-Fi/BLE combo MCUs is truly diverse, including applications for smart homes (e.g.,
smart lights, air conditioners, ovens, coffee machines, etc.), consumer electronics (e.g., smart speakers, drones, etc.),
industrial automation (e.g., mechanical arms), healthcare (e.g., monitoring devices for diabetes, blood pressure,
COVID-19, etc.), energy control (solar energy devices, EV chargers, etc.), the internet of vehicles (OBD devices, dash
boards, etc.), education (talking pens, interactive white boards, etc.) and others, such as robots, wireless POS, and
asset trackers.
Consumer Industrial
Smart Home Healthcare
Electronics Automation
Smart Ovens Smart Speakers Mechanical Arms Medical Detectors
Energy Internet of
Education Other
Management Vehicles
Solar Energy
OBD Devices Talking Pens POS
Devices
9
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Core Competitiveness
Chip System
Operating Systems
Connectivity Technology
Development Environment
Chip Design Capability
Software Tools
Ecosystem Software
Documentation Software Solutions
Developer Communities Business Applications
Internet Platforms Cloud Services
Espressif’s competitiveness stems from our previously-referred to “four key capabilities and four key service/product
areas”. In fact, this substantiates our business philosophy, which helps us make a difference on the market in terms of
the chips, operating systems and software solutions that we offer, within our vibrant ecosystem.
Chip Competitiveness
Espressif takes pride in the invaluable experience that our R&D team leaders have in the eld of wireless-
communication chips. Additionally, Espressif’s founder and CEO, Mr Teo Swee-Ann, has over 20 years of experience in
the semiconductor industry, having also registered over 40 IC and IoT-related patents under his name.
After the huge success of our initial series of Wi-Fi MCUs, our company expanded to other wireless-connectivity
technologies, including Bluetooth LE and Thread/Zigbee. This development has further enhanced our Company's high-
tech offerings, thus increasing our market opportunities, while also keeping our customers spoiled for choice.
Our products are renowned for their high level of integration, small size, low power consumption, great computing
power, large memory space and strong security mechanisms. Our products power nearly 800 million devices across
the whole wide world. They are being used by independent developers and big companies alike, while Espressif is
recognized as a leading force in the AIoT chip industry.
System Competitiveness
ESP-IDF is Espressif’s ofcial IoT Development Framework for the ESP32, ESP32-S, ESP32-C and ESP32-H series of
SoCs. It provides a self-sufcient SDK for any generic application development on the above-mentioned platforms,
using programming languages such as C and C++. ESP-IDF currently powers millions of devices in the eld, and
enables building a variety of network-connected products, ranging from simple light bulbs and toys to big appliances
and industrial devices.
10
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
ESP-IDF has established a fastidious release process, and a support policy which ensures that customers can choose
a stable release, while also getting important updates. Each stable release undergoes a rigorous QA process that
ensures production readiness at all times. Also, ESP-IDF comes with an extensive documentation for its software
components not only at the usage level but also at the design level. This helps developers to fully understand what
ESP-IDF offers, and select whatever suits their applications best.
Furthermore, ESP-IDF supports a large number of software components, including RTOS, peripheral drivers, network
stacks, protocol implementations, and examples of common application use-cases. These components help
developers to focus on their business logic, while the SDK provides most of the building blocks required for typical
applications. Open-source and freely-available developer tools, as well as ofcially supported Eclipse and VSCode
IDEs, ensure ease-of-use for developers.
Software Competitiveness
The company provides numerous software solutions, including AI-related ones (e.g., ofine/online voice recognition and
smart control, AI image recognition, etc.), Wi-Fi Mesh, BLE Mesh, touch functions, various peripheral drivers and other
functions covering all the development needs of our customers. These solutions greatly reduce the cost of customer
application development.
Espressif’s AI Lab has developed Audio Front-End (AFE) algorithms that have been qualied as a“Software Audio
Front-End Solution” to Amazon-Alexa Built-in devices.This is the result of Espressif’s incessant focus not just on the
connectivity of its own AIoT solutions, but also on high-performance Machine Learning on the edge.Furthermore, in
2022 our AI Lab launched the so-called 3A Audio Algorithms, i.e., Acoustic Echo Cancelation (AEC), Audio Noise
Suppression (ANS), and Automatic Gain Control (AGC). Based on Espressif's 3A audio algorithms, Espressif-powered
Real-Time Communication applications benet from signicantly reduced noise and echo in calls, and sustained
stability in high-quality voice intercoms.
Our newly-launched, one-stop Matter solution, including the fully-customized ESP-Matter SDK and Cloud services, can
simplify and accelerate the development process of Matter-compatible products signicantly. This is the culmination of
our ongoing contribution to the Matter platform in various areas, including protocol formulation, core stack
implementation and certication test events.
Furthermore, ESP RainMaker is a one-stop, development-free and maintenance-free AIoT solution for private Cloud
deployment, which reduces R&D costs and accelerates time-to-market. More specically, this is a complete system for
building AIoT products with a minimal amount of code, which enables our customers to deploy and develop secure,
customized AIoT solutions. It covers all of Espressif’s chips and modules, device rmware, voice-assistant integrations,
phone apps and Cloud backend. This helps our customers avoid expensive investments in Cloud capabilities, gain
independence and focus on innovating their core-value offerings.
Ecosystem Competitiveness
Our company has brought together professionals and companies from across the AIoT industry, e.g., hardware and
software developers, business applications, and Cloud platforms, as well as maker communities. Espressif’s own
software development platforms and the accompanying documentation are entirely open-source, thus making our
innovative products available to people from all walks of life.
As a result, thousands of third-party projects have been based on Espressif's technologies. For example, on GitHub,
which is the largest provider of Internet hosting for software development, there are more than 70,000 open-source
projects based on Espressif's IoT chips. Furthermore, the popularity of our products has stimulated an increasing
number of authors who have produced teaching resources based on Espressif chipsets in several languages including
English, Chinese, German, Portuguese, Japanese, and Serbo-Croatian. At present, there are more than 100 digital and
physical books about Espressif’s SoCs in more than ten languages.
11
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Ecosystem Competitiveness (continued)
Developer community contents
ITEM Jun 30, 2022 Dec 31, 2021 change%
GitHub (Worldwide open-source development platform)
ESP32 Projects 35,163 29,007 21%
ESP8266 Projects 37,236 35,055 6%
Gitee (Chinese open-source development platform)
ESP32 Projects 2,783 2,592 7%
ESP8266 Projects 1,944 1,867 4%
CSDN (Chinese Tech-blog platform)
Search results for ESP32 85,654 79,188 8%
Search results for ESP8266 32,061 30,033 7%
Hackaday (open-source hardware platform)
ESP32 projects 4,253 3,816 11%
ESP8266 projects 5,933 5,789 2%
Reddit
ESP32 group members 52,677 46,540 13%
ESP8266 group members 56,344 53,523 5%
bilibili (Chinese video-sharing platform)
Ocial account followers 20,475 17,502 17%
Ocial account views 507,095 390,000 30%
YouTube
Ocial account subscribers 12,300 11,600 6%
Ocial account views 611,322 556,846 10%
ESP32 community videos 553,592 466,459 19%
ESP8266 community videos 738,270 687,155 7%
Views of most watched ESP32 community video around 2.6m 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 at the end of each quarter
reported here, unless otherwise stated.
12
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Business Model
Business-to-Developer-to-Business (B2D2B)
Espressif has deployed the Business-to-Developer type of marketing, not only because it has gained prominence in
recent years, but also because it has proven to be more effective ever since the inuence of developers on
organizations of all sizes has gained traction. In other words, most developers are R&D employees in various
companies and bring about business opportunities from the companies they work for.
This way, the developer ecosystem we have created at Espressif demonstrates how the value of networks can grow
exponentially:
The more developers we attract as customers, the more hardware and software solutions we generate.
The more successful hardware and software solutions we create, the more our reputation spreads with positive
feedback from happy customers/developers.
The above-mentioned interaction between people in our network prompts the creation of more content, which -in
turn- attracts more users/developers searching for new content.
Likewise, other third-party development platforms join our ecosystem and bring in new developers, as our inuence
continues to grow.
Having successfully applied the B2D2B model, Espressif can now focus on R&D investments, while maintaining a small
business team that supports a large number of customers directly. In fact, most of our revenue is gained through direct
sales.
13
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Financial Performance
Espressif’s total revenue in the rst half of the current scal year (2022) was CNY 613.82 million, marking a decrease of
2.66% from CNY 630.60 million of H1 2021, due to ination-driven recession and the decline in consumer condence.
The ensuing net income was CNY 63.28 million, which marked a decrease of 37.67% year-on-year, due to our
increased R&D expenditure.
The overall gross margin was 40.21%, in which the IoT chip gross margin was 48.93%. The overall gross margin
decreased due to the increased proportion of module sales.
The customers in mainland China prefer purchasing chips while the customers from the rest of the world prefer
modules. We keep the chip margin to a reasonable level, in order to support our future R&D expenditure. The module
margin uctuates, depending on its memory capacity. Overall, the gross prot of a module is higher than that of a chip.
Revenue by Revenue by Sales Top-5 Customer
Area of H1 2022 Mode of H1 2022 Concentration Rate
51.0%
42.2%
29.0%
59.2% 64.4% 25.4%
Mainland
Rest of
Direct Indirect 2019 2020 2021 H1 2022
China the World
Revenue by Product Category Chip Module Others
H1 2022 30.5% 68.8% 0.6%
H1 2021 47.2% 51.3% 1.5%
Key Financial Indicators
H1 2021 H1 2022
49.1% 48.9%
40.6% 40.2%
36.3%
33.1%
24.8%
18.5% 18.9%
12.0%
7.3% 7.6%
Overall GM Chip GM Module GM EBITDA
SG&A as % of R&D as % of
Margin sales sales
14
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Research and Development
R&D Investment
R&D investment is at the heart of Espressif Systems’ development. During the reporting period, R&D cost CNY 152.45
million, which marked a 28.02% increase compared with that of 2021. At the same time, the R&D-to-sales ratio was
24.84% in the rst half of this scal year (2022).
Espressif’s escalating R&D investment cost can be attributed to the increase in the number of R&D staff and their
subsequent compensation level, which increased signicantly year-over-year.
Six Months Ended
CNY June 30, 2022 June 30, 2021 change (%)
R&D Expenses 152,454,559 119,089,089 28.02
R&D-to-sales ratio 24.84% 18.88%
Intellectual Property
We seek to protect our technologies through a combination of patents, software
213
Applied for
copyright and trade secrets. By the end of June 2022, the Company had been
granted 129 patents. We continue to submit new patent applications relating to our
recent R&D innovations. 129
Granted
List of Intellectual Property Rights Applied and Granted
H1 2022 Cumulative number
Applied for Granted Applied for Granted
Invention patents 5 4 116 66
Utility model patents 0 0 26 26
Design patents 0 0 1 1
Software copyright 0 0 19 19
Others 3 6 51 17
Total 8 10 213 129
N.B.: The number of patents that have been “applied for" does not include the rejected applications in China, or the PCT patent applications not submitted to any
particular country, or any patent applications beyond the reporting period. The number of “granted" patents includes those with expired IP rights. The category of
“others” includes overseas (non-Chinese) patent applications, i.e. the PCT patent applications, U.S. patent applications through the PCT route or the Paris
Convention route, as well as patent applications in India.
15
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
R&D Employees
We are proud of our talented, diverse and multicultural workforce. By June 30, 2022, across our eight branches
worldwide, we had employed 561 people, more than 76% of whom are in engineering roles. Meanwhile, we have
expanded our business beyond Wi-Fi MCUs, thus offering innovative solutions to wireless connectivity and processing,
including AI, RISC-V MCU, Wi-Fi 6, Bluetooth LE, Thread, Zigbee and other IoT-related technologies.
Since the research and development of software and hardware are inextricably intertwined, we constantly invest in
software technology, too. Hence, we are currently focused on AIoT technologies, including toolchains, compilers,
operating systems, application frameworks, AI algorithms, Cloud products, apps, etc. Our aim is to make Espressif a
one-stop solution-provider offering anything relating to hardware, software and the Cloud.
Six Months Ended
June 30, 2022 June 30, 2021
R&D employees 428 349
R&D employees as a percentage of total employees 76.29% 75.38%
Total compensation of R&D employees (CNY in thousands) 123,837 86,790
Average compensation of R&D employees (CNY in thousands) 304 252
R&D Expenses R&D Employees
75.7% 75.0% 76.0%
24.8% 71.3%
272 67.2%
23.2% 428
19.6% 57.5% 388
18.2%
340
15.8% 15.8% 193
152 246
120
162
75
100
49
2017 2018 2019 2020 2021 H1 2022 2017 2018 2019 2020 2021 H1 2022
R&D expenses (in million) R&D-to-sales ratio R&D employees R&D employees %
16
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Ownership of Securities
Basic information of securities
Share types Ordinary share
Share capital 80,451,785 (as of June 30, 2022)
Listing Shanghai Stock Exchange (SSE)
Ticker 688018.SH
Listing Date 2019-07-22
Shareholder Structure as of Jun 30, 2022
Shareholder Share Numbers Percentage (%)
Espressif (Hong Kong) Investment Ltd. 34,860,000 43.33
Shinvest Holding Ltd. 2,804,446 3.49
Yadong Beichen Investment Management Co., Ltd. 2,518,484 3.13
Dajia Life Insurance Co., Ltd. – Universal Products 1,904,614 2.37
BOC - Franklin Templeton Sealand Fund 1,542,789 1.92
Ningbo Meishan Free Trade Port Le Tun Investment Management 1,046,030 1.30
Partnership (Limited Partnership)
BOC - Cathay Pacic CES Semiconductor Chip ETF 973,057 1.21
UBS AG 786,314 0.98
China Resources SZITIC Trust - Broadvision Selection II 725,500 0.90
ABC - Franklin Templeton Sealand Fund 694,416 0.86
Top 10 shareholders 47,855,650 59.48
Other public shareholders 32,596,135 40.52
Total of outstanding shares 80,451,785 100.00
17
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Stock-Based Compensation
Espressif has four ongoing restricted stock incentive plans. The fair value of the restricted stock incentive plans is
estimated using the Black-Scholes model. The following table presents details of stock-based compensation costs
acknowledged in the Consolidated Statements of Income.
Restricted Stock Incentive Plans
Number of Ratio of
Grant Price
Plan Award Type Underlying Underlying
(CNY)
Shares Shares (%)*
2019 restricted stock incentive plan Class II restricted stock 205,900 0.2559 63.625
2020 restricted stock incentive plan Class II restricted stock 226,737 0.2818 93.625
2021 restricted stock incentive plan Class II restricted stock 1,050,367 1.3056 94.500
2022 restricted stock incentive plan Class II restricted stock 1,187,168 1.4756 120.000
N.B.: The above-mentioned numbers were calculated on June 30, 2022.
Stock-Based Compensation
Six Months Ended
CNY June 30, 2022 June 30, 2021
Selling expenses 290,063 360,788
G&A expenses 732,517 584,924
R&D expenses 4,441,157 7,909,313
Total stock-based compensation 5,463,737 8,855,024
18
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | MANAGEMENT REPORT
Risks and Uncertainties
Financial Risk
The Company performs periodic credit evaluations of its customers’ nancial
condition and generally requires of its customers no collateral. 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 the 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 certain period of time, which could have an adverse effect 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 25.4% in H1 2022, and it has been shrinking over the years. None of the
customers accounted for yielded more than 10% of our revenue during the rst
half of the current scal year (2022).
19
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Financial
Statements
(Unaudited)
Consolidated Balance Sheet (Unaudited)
CNY June 30, 2022 December 31, 2021
Assets
Current assets:
Cash and bank balances 332,556,835 367,149,078
Transactions ofmonetaryassets 542,981,219 747,409,285
Notes receivable 10,538,475 11,600,177
Accounts receivable, net 252,174,094 306,823,758
Prepayments 11,554,962 8,172,703
Other receivables 9,789,757 9,519,869
Including: Interest receivable 1,322,727 298,796
Inventories 432,648,894 326,168,928
Other current assets 320,651,584 210,555,311
Total current assets 1,912,895,820 1,987,399,110
Non-current assets:
Investment in other equity assets 56,667,840 56,600,700
Fixed assets 53,130,767 46,176,368
Construction work in progress
Right-of-use assets 18,411,690 21,731,123
Intangible assets 2,801,826 3,191,335
Long-term deferred expenses 6,342,424 7,582,637
Deferred income tax assets 21,118,669 6,374,870
Total assets 2,071,369,036 2,129,056,143
0 0
20
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
CNY June 30, 2022 December 31, 2021
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable 111,207,564 138,572,198
Contract liabilities 14,343,999 17,184,196
Payroll payable 46,496,917 66,168,763
Taxes payable 6,627,505 6,472,494
Other payable 6,796,735 754,261
Non-current liabilities due within one year 11,959,649 8,641,928
Total current liabilities 197,432,369 237,793,839
Non-current liabilities:
Lease liabilities 9,324,447 12,116,036
Deferred income tax liabilities 55,749,146 56,128,356
Total liabilities 262,505,962 306,038,230
Owners’ equity (or shareholders' equity):
Share capital 80,451,785 80,158,963
Capital reserves 1,298,215,288 1,266,771,034
Other comprehensive income 3,844,139 -15,711,579
Surplus reserves 33,462,951 33,462,951
Retained earnings 392,888,912 458,336,543
Total shareholders’ equity 1,808,863,075 1,823,017,913
Total liabilities and shareholders' equity 2,071,369,036 2,129,056,143
21
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Income Statement (Unaudited)
Three Months Ended Six Months Ended
CNY June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Revenue 324,870,817 360,089,198 613,818,881 630,602,843
Cost of Revenue 196,616,979 212,066,024 366,975,103 374,359,853
Gross Prot 128,253,838 148,023,173 246,843,778 256,242,990
Taxes and surcharges 1,228,517 1,184,223 1,746,949 1,853,747
Selling expenses 10,384,806 11,525,644 19,579,687 21,315,037
General and administrative expenses 13,548,558 12,413,908 26,953,099 24,616,796
Research and development expenses 77,606,270 60,198,663 152,454,559 119,089,089
Financial expenses 2,698,487 -29,279 3,266,513 -1,113,412
Including: Interest expenses 184,381 397,063
Interest income 841,974 1,286,958 1,538,621 2,343,528
Add: Other income 2,979,722 2,051,591 3,232,469 2,262,750
Investment income (mark"-" for loss) 7,305,074 6,082,213 10,485,662 9,907,135
Income from changes in fair value (mark"-" for loss) -1,095,022 -481,964 1,981,219 1,239,367
Credit impairment losses (mark"-" for loss) -3,115 -879 -3,115 7,652
Assets impairment losses (mark"-" for loss) 6,989 1,872,458 -405,282 1,686,228
Assets disposal income (mark"-" for loss)
Operating Income 31,980,849 72,253,432 58,133,924 105,584,865
Add: Non-operating revenue 15,893 15,893
Less: Non-operating expenses 33,405 13,880 33,405 37,350
Income before income taxes 31,947,444 72,255,444 58,100,519 105,563,408
Provision (benet) for income taxes -3,475,688 4,733,979 -5,174,706 4,042,568
Net Income 35,423,132 67,521,465 63,275,224 101,520,840
Earnings per share
Basic 0.7880 1.2681
Diluted 0.7880 1.2681
Three Months Ended Six Months Ended
CNY June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Net Income 35,423,132 67,521,465 63,275,224 101,520,840
Other comprehensive income (loss), after tax
Changes to the fair value of investment in other
72,640 -22,240 67,140 -12,960
equity instruments
Currency translation reserves 21,128,298 -6,253,823 19,488,578 -3,484,190
Other comprehensive income (loss) 21,200,938 -6,276,063 19,555,718 -3,497,150
Comprehensive income 56,624,070 61,245,402 82,830,942 98,023,690
22
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Cash Flow Statement (Unaudited)
Three Months Ended Six Months Ended
CNY June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Operating Activities
Cash from sales of merchandise and provision of
323,433,638 363,424,641 716,230,416 659,726,312
services
Tax refund 626,261 8,766,206 27,942,635 23,494,781
Other received cash related to operational activities 3,506,621 3,095,208 12,795,208 4,629,112
Subtotal of cash inow from operational activities 327,566,521 375,286,055 756,968,259 687,850,205
Cash paid for merchandise and services 220,744,919 285,440,570 556,762,874 500,090,038
Cash paid to and for employees 63,047,148 35,691,509 170,766,766 125,403,344
Cash paid for taxes and surcharges 18,347,307 24,605,161 25,286,124 30,550,639
Other paid cash related to operational activities 18,081,483 28,598,583 33,677,338 44,354,449
Subtotal of cash outow from operational activities 320,220,858 374,335,823 786,493,102 700,398,472
Net cash provided by operating activities 7,345,663 950,232 -29,524,843 -12,548,266
Investing activities
Cash arising from the disposal of investments 807,335,414 835,852,213 1,641,103,857 1,694,207,598
Cash arising from investment income 1,465,867 2,893,450
Net cash arising from the disposal of xed assets, intangible 5,510
assets and other long-term assets
Other received cash relating to investment activities
Subtotal of cash inow from investment activities 808,801,281 835,852,213 1,643,997,307 1,694,213,108
Cash paid for the purchase and construction of xed assets, 2,753,972 7,655,385 15,360,524 12,555,904
intangible assets and other long-term assets
Cash paid for investments 783,000,000 705,000,000 1,538,100,000 1,614,770,000
Other paid cash relating to investment activities
Subtotal of cash outow from investment activities 785,753,972 712,655,385 1,553,460,524 1,627,325,904
Net cash used by investment activities 23,047,309 123,196,828 90,536,784 66,887,204
Financing activities
Cash arising from the issuance of common stock 5,957,003 6,485,097 26,273,338 6,485,097
Including: Cash arising from subsidiaries absorbing
investments by minority shareholders
Subtotal of cash inow from nancing activities 5,957,003 6,485,097 26,273,338 6,485,097
Cash paid for the distribution of dividends and prots, or
payment of interests
Including: dividends and prots paid to minority 128,722,856 7,272,435 128,722,856 40,015,250
shareholders by subsidiaries
Other paid cash relating to nancing activities 767,795 3,126,415 2,004,407 5,062,442
Subtotal of cash outow from nancing activities 129,490,651 10,398,849 130,727,263 45,077,692
Net cash used for nancing activities -123,533,648 -3,913,752 -104,453,925 -38,592,595
Impact of uctuation in exchange rates on cash and cash 11,083,046 -5,225,743 8,856,092 -2,178,014
equivalents
Net increase in cash and cash equivalents -82,057,630 115,007,564 -34,585,891 13,568,330
Add: Cash and cash equivalent at the commencement
367,142,726 503,239,843
of the period
Cash and cash equivalents at the end of the period -82,057,630 115,007,564 332,556,835 516,808,173
23
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Cash Flow Statement
- Indirect Method (Unaudited)
Three Months Ended Six Months Ended
CNY June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Additional information
Net income 35,423,132 67,521,465 63,275,224 101,520,840
Adjustments to cash provided by operating activities,
for the purpose of reconciling net income:
Add: provision for the impairment of assets -6,989 -1,872,458 405,282 -1,686,228
Credit impairment provision 3,115 879 3,115 -7,652
Depreciation of xed assets 3,946,402 2,528,555 7,559,555 5,019,863
Depreciation of right-of-use assets 2,715,306 3,350,782 5,463,476 3,350,782
Amortization of intangible assets 194,755 220,855 389,509 417,490
Amortization of long-term prepaid expenses 850,210 1,176,212 1,652,985 2,264,960
Losses on disposal of xed assets, intangible assets
and other long-term assets (mark"-" for income)
Losses on scrapping of xed assets (mark"-" for
4,439
income)
Losses on fair value changes（mark"-" for income） 1,095,022 481,964 -1,981,219 -1,239,367
Financial expenses（mark"-" for income） 3,493,873 978,000 4,676,879 1,044,369
Losses on investment（mark"-" for income） -7,305,074 -6,082,213 -10,485,662 -9,907,135
Decrease on deferred income tax assets（mark”-"
-8,676,671 1,110,429 -14,749,570 -1,777,960
for increase）
Increase on deferred income tax liabilities（mark"-"
158,568 1,200,086 -379,210 2,951,017
for decrease）
Changes in operating assets and liabilities:
Decrease in inventories（mark"-" for increase） -30,020,204 16,012,070 -100,714,143 6,197,957
Decrease in operational receivables（mark"-" for
-26,701,154 -136,444,623 404,689,260 78,747,106
increase）
Increase in operational payables（mark"-" for
31,536,644 47,337,164 -394,794,061 -208,303,773
decrease）
Others 638,729 3,431,064 5,463,737 8,855,024
Net cash ow provided by operating activities 7,345,663 950,232 -29,524,843 -12,548,266
24
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR REPORT | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity
(Unaudited)
Other
Share Capital comprehensive Surplus Retained
CNY capital reserves income reserves earnings Total equity
Balance as of December 31, 2021 80,158,963 1,266,771,034 -15,711,579 33,462,951 458,336,543 1,823,017,913
Comprehensive income, net of tax
Net Income 63,275,224 63,275,224
Other comprehensive income 19,555,718 19,555,718
Transactions with owners
Capital increase 292,822 36,133,353 36,426,175
Stock-based compensation -4,689,100 -4,689,100
Surplus reserves
Dividends -128,722,856 -128,722,856
Balance as of June 30, 2022 80,451,785 1,298,215,288 3,844,139 33,462,951 392,888,912 1,808,863,075
Other
Share Capital comprehensive Surplus Retained
CNY capital reserves income reserves earnings Total equity
Balance as of December 31, 2020 80,030,500 1,235,113,896 -7,401,076 15,428,165 317,958,872 1,641,130,356
Comprehensive income, net of tax
Net Income 101,520,840 101,520,840
Other comprehensive income -3,497,150 -3,497,150
Transactions with owners
Capital increase 82,469 13,716,093 13,798,562
Stock-based compensation 1,541,560 1,541,560
Surplus reserves
Dividends -40,015,250 -40,015,250
Balance as of June 30, 2021 80,112,969 1,250,371,548 -10,898,227 15,428,165 379,464,462 1,714,478,918
25
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR 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 annual 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, 22 August 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
PRESSIF
Lee Sze Chin Shao Jingbo
ES
Independent Director Financial Director
Declaration
Forward-looking Statements SY
STE MS
This report contains forward-looking statements and/or assessments about the 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 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 condition, performance and strategy may,
therefore, dier from what is discussed in this report.
26
ESPRESSIF SYSTEMS | 2022 Q2 & HALF-YEAR 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
COVID-19 Coronavirus Disease-2019
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
IC Integrated Circuit
IoT Internet of Things
OBD On-Board Diagnostics
PCS Piece of Chips
POS Point of Sale
R&D Research & Development
RF Radio Frequency
RISC-V MCU Reduced Instruction Set Computer-V Microcontroller Unit
ROE Return on Earnings
RTOS Real-Time Operating System
SG&A Selling, General and Administrative
SH Shanghai
SoCs System on Chips
TPPS Third-Party Plugins
TSR Techno Systems Research
YoY Year-on-Year
27
Investor Relations
ir@espressif.com
Ofcial Platforms Social Media
www.espressif.com twitter.com/EspressifSystem
blog.espressif.com facebook.com/espressif
github.com/espressif linkedin.com/company/espressif-systems
esp32.com youtube.com/EspressifSystems
esp8266.com instagram.com/espressif_systems_ofcial
bbs.espressif.com 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 the property of their respective owners, and are hereby acknowledged. The term “Espressif” refers to
Espressif Systems (Shanghai) Co., Ltd. and/or its subsidiaries. This report is written in both Chinese and English. In case of any
discrepancies between Chinese and foreign interpretations, the Chinese version shall prevail.
Copyright (c) 2011-2012, Julieta Ulanovsky (julieta.ulanovsky@gmail.com), with Reserved Font Names ‘Montserrat’. This Font
Software is licensed under the SIL Open Font License, Version 1.1. This license is available with a FAQ at: http://scripts.sil.org/OFL
All amounts presented in these condensed Consolidated Financial Statements are shown in CNY unless stated otherwise. Slight
discrepancies between the amounts presented may occur due to rounding.
