Financial Results for Fiscal Q2 Ended December 31, 2022

• Revenue was $188.8 million, a decrease of 9.5% from the prior quarter and a decrease of 2.4% from the same quarter last year.
• GAAP gross margin was 28.1%, down from 34.1% in the prior quarter and down from 35.4% in the same quarter last year.
• Non-GAAP gross margin was 29.5%, down from 35.4% in the prior quarter and down from 36.7% in the same quarter last year.
• GAAP operating expenses were $44.3 million, down from $45.6 million in the prior quarter and up from $40.6 million in the same quarter last year.
• Non-GAAP operating expenses were $32.8 million, down from $36.6 million from last quarter and down from $33.5 million in the same quarter last year.
• GAAP operating income was $8.8 million, down from $25.5 million in the prior quarter and down from $27.7 million in the same quarter last year.
• Non-GAAP operating income was $22.8 million as compared to $37.1 million for the prior quarter and $37.4 million for the same quarter last year.
• GAAP net income per diluted share attributable to AOS was $0.21, compared to $0.88 net income per share for the prior quarter, and $13.54 net income per share for the same quarter a year ago.
• Non-GAAP net income per share attributable to AOS was $0.67 compared to $1.20 for the prior quarter and $1.20 for the same quarter a year ago.
• Consolidated cash flow provided by operating activities was $0.3 million, as compared to $36.7 million in the prior quarter.
• The Company closed the quarter with $287.8 million of cash and cash equivalents.

AOS Chairman and Chief Executive Officer Dr. Mike Chang commented, “While our business was negatively impacted by the industry-wide inventory correction and reduction of customer demand, we are proactively implementing measures to ensure that we emerge from this downturn stronger and more successful than ever. Even as we project a decline in our March quarter revenue, we expect to recover a good portion of the sequential decline in the June quarter, with further recovery in the 2nd half of calendar year 2023, especially with the re-opening of China.”

Dr. Chang continued, “While this temporary slowdown is disappointing, the fundamentals of our business are the strongest that they have ever been, which will enable us to meet this challenge. In 2022, we set records across almost every metric. Our annual revenue was a record $794 million and non-GAAP earnings per share was a record $4.16. These successes were driven by many critical achievements, including a significant increase in record Tier 1 customers and market share across most of our product segments.”

“AOS has been in business for over two decades and inventory corrections and market cycles are a natural and healthy part of our industry. Demand for more and better power management is being driven by what we call the ‘electrification of everything’. We believe this tailwind is here to stay despite this temporary headwind, and we are in an excellent position to continue to win and thrive in this market. We enter 2023 with many strengths: growing product offerings, promising technology roadmaps, diverse and expanding manufacturing capabilities, strong relationships with strategic customers and a robust balance sheet, which will enable us to navigate the current economic environment while keeping our eyes on achieving our one-billion-dollar annual revenue target in the next couple of years.”

Business Outlook for Fiscal Q3 Ending March 31, 2023

The following statements are based on management's current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

Our expectations for the third quarter of fiscal year 2023 are as follows:

• Revenue to be approximately $130 million, plus or minus $5 million.
• GAAP gross margin to be 22.5%, plus or minus 1%. We anticipate non-GAAP gross margin to be 24.5%, plus or minus 1%.
• GAAP operating expenses to be in the range of $45.5 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $35.5 million, plus or minus $1 million.
• Interest expense is expected to be approximately $1.2 million, and
• Tax expense is expected to be in the range of $1.3 million to $1.5 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal second quarter ended December 31, 2022 today, February 6, 2023 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (844) 200-6205 or +1 (929) 526-1599 if dialing from outside the United States and Canada. The access code is 529922. A live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com. The webcast replay will be available for seven days after the live call on the same website. In addition, a copy of the script of management's prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company's investor relations website, http://investor.aosmd.com.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, market trends in the semiconductor industry; our ability to navigate economic downturns and expected recovery timeline; anticipated earnings power and non-GAAP EPS on an annual basis, our growth opportunities and new markets, our annual revenue target, projected amount of revenue, gross margin, operating income, income tax expenses, net income, and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, tax expenses, our objectives to achieve revenue target, our ability to continue to win and acquire market share and other information under the section entitled “Business Outlook for Fiscal Q3 Ending March 31, 2023”. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic and government policies on our business operations in China; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; tariffs on goods from China; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; decline of PC markets; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; the state of semiconductor industry and seasonality of our markets; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.