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01/11 04:42
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed but overall positive outlook. Despite challenges like lower gross margin and EBITDA, the company anticipates improved future margins and double-digit revenue growth driven by AI, automotive, and industrial segments. The Q&A reveals optimism about product mix and manufacturing efficiency improvements. The market cap indicates moderate sensitivity to these factors, suggesting a positive stock price movement of 2% to 8% over the next two weeks.
Revenue Revenue for the third quarter 2025 was $392.2 million, an increase of 12% over $350.1 million in the third quarter 2024 and a 7.1% increase over $366.2 million in the second quarter 2025. The increase was driven by strong demand across the general computing market, including AI-related server applications, data center, and agent computing.
Gross Profit Gross profit for the third quarter was $120.5 million or 30.7% of revenue compared to $118 million or 33.7% of revenue in the prior year quarter and $115.3 million or 31.5% of revenue in the prior quarter. The decrease in gross margin was due to an unfavorable product mix.
GAAP Operating Expenses GAAP operating expenses for the third quarter were $108.9 million or 27.8% of revenue, compared to $96.1 million or 27.5% of revenue in the third quarter 2024. The increase in operating expenses was attributed to higher amortization of acquisition-related intangible asset costs.
Non-GAAP Operating Expenses Non-GAAP operating expenses were $103.1 million or 26.3% of revenue, compared to $99.8 million or 27.3% of revenue in the prior quarter. This excludes $5.9 million amortization of acquisition-related intangible asset costs.
Income Before Taxes Income before taxes and noncontrolling interest in the third quarter 2025 was $19 million compared to $18.8 million in the prior year period and $53.2 million in the previous quarter. The sequential decrease was due to lower gross margin and higher operating expenses.
GAAP Net Income GAAP net income for the third quarter was $14.3 million or $0.31 per diluted share compared to $13.7 million or $0.30 per diluted share in the prior year quarter and $46.1 million or $0.99 per diluted share last quarter. The sequential decrease was due to lower income before taxes.
Non-GAAP Adjusted Net Income Non-GAAP adjusted net income in the third quarter was $17.2 million or $0.37 per diluted share, compared to $20.1 million or $0.43 per diluted share in the third quarter of 2024 and $15 million or $0.32 per diluted share in the prior quarter. The year-over-year decrease was due to lower gross margin.
EBITDA EBITDA for the third quarter was $46.6 million or 11.9% of revenue compared to $46.9 million or 13.4% of revenue in the prior year period and $84.5 million or 23.1% of revenue in the prior quarter. The sequential decrease was due to lower gross margin and higher operating expenses.
Cash Flow from Operations Cash flow provided by operations was $79.1 million for the third quarter. Free cash flow was $62.8 million, which included $16.3 million of capital expenditures. Net cash flow was a positive $59.3 million.
Inventory Total inventory dollars decreased $11.8 million from the prior quarter to $470.9 million, consisting of a $17.3 million decrease in finished goods and a $1 million decrease in work in process, offset by a $6.5 million increase in raw materials. Inventory days decreased to 162 from 173 in the prior quarter.
New Product Introductions: Approximately 180 new part numbers introduced, with 60 specifically for automotive applications.
Automotive Products: Newly released 50A and 650-volt automotive-grade Silicon Carbide Schottky Barrier Diodes, low quiescent current LDOs, and Hall effect sensors for various automotive applications.
Computing Products: Strong demand for PCI Express 5.0 and 6.0 clock solutions, USB4, and PCIe 5 and 6 signal integrity products for AI, data center, and edge computing applications.
Consumer Products: Adoption of DP 2.0 redrivers in gaming monitors and MIPI switches in augmented reality glasses.
Automotive Market: Revenue grew 8.5% sequentially and 18.5% year-to-date, with new programs scheduled to ramp early next year.
Industrial Market: Revenue grew 4% sequentially and 13% year-to-date, driven by applications like AI robotics, medical, and factory automation.
Computing Market: Strongest growth at 17% sequentially and 22% year-to-date, fueled by AI-related applications and chipset refresh cycles.
Consumer Market: Revenue increased 8.5% sequentially and 7% year-to-date, driven by gaming systems and wearable display technologies.
Inventory Management: Channel inventory decreased both in dollars and weeks, with total inventory dollars down $11.8 million sequentially.
Manufacturing Efficiency: Improved loading at manufacturing facilities expected as inventory levels normalize.
Market Share Expansion: Gaining market share in automotive and industrial markets with new programs and increasing content in applications like AI robotics and factory automation.
Focus on High-Margin Markets: Continuous investment in automotive and industrial markets to drive future growth and margin improvement.
Automotive and Industrial Market Recovery: The rate of recovery in the automotive and industrial markets continues to be slower than expected, which negatively impacts revenue growth and gross margins. This slower recovery delays the company's ability to achieve higher-margin product mix improvements.
Product Mix and Gross Margin: The unfavorable product mix, driven by stronger growth in lower-margin computing and consumer markets compared to higher-margin automotive and industrial markets, has negatively impacted gross margins.
Inventory Challenges: Although inventory levels are improving, the overall inventory situation in the automotive and industrial markets remains dynamic, which could delay normalization and impact revenue.
Economic and Market Demand Uncertainty: The overall demand in the automotive and industrial markets remains dynamic and uncertain, which could affect the company's ability to meet revenue and growth targets.
Capital Expenditures: Capital expenditures were below the targeted annualized range of 5% to 9% of revenue, which may limit the company's ability to scale operations or invest in growth opportunities.
Foreign Currency Losses: The company experienced $3.3 million in foreign currency losses during the quarter, which could continue to impact financial performance if currency volatility persists.
Regulatory and Compliance Risks: The financial results are preliminary and unaudited, subject to revision, which could lead to adjustments that impact reported performance.
Revenue Growth: For the fourth quarter of 2025, revenue is expected to be approximately $380 million, plus or minus 3%, representing a 12% increase over the prior year period and marking the fifth consecutive quarter of year-over-year growth.
Gross Margin: GAAP gross margin is expected to be 31%, plus or minus 1%, for the fourth quarter of 2025.
Operating Expenses: Non-GAAP operating expenses are expected to be approximately 27% of revenue, plus or minus 1%, for the fourth quarter of 2025.
Tax Rate: The income tax rate is expected to be 18.5%, plus or minus 3%, for the fourth quarter of 2025.
Automotive Market: New programs are scheduled to launch early next year, with increasing market share and content in applications such as energy storage systems, autonomous driving, and in-car electronics.
Industrial Market: Applications like AI robotics, medical, and factory automation are gaining strong demand momentum. Inventory normalization is expected next year.
Computing Market: Strong demand momentum for AI-related applications is expected to continue, with growth in connectivity and timing product lines, PCI Express solutions, and SSD applications.
Consumer Market: Growth opportunities are identified in gaming systems, augmented reality glasses, and wearable display technologies.
Communication Market: Growth is driven by AI and high-speed interconnect applications, with adoption of advanced oscillators and demand for AI-enabled smartphone applications.
Manufacturing Facilities: Increased loading at manufacturing facilities is expected as inventory levels normalize, leading to improving margins over the coming quarters.
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The earnings call presents a mixed but overall positive outlook. Despite challenges like lower gross margin and EBITDA, the company anticipates improved future margins and double-digit revenue growth driven by AI, automotive, and industrial segments. The Q&A reveals optimism about product mix and manufacturing efficiency improvements. The market cap indicates moderate sensitivity to these factors, suggesting a positive stock price movement of 2% to 8% over the next two weeks.
The earnings call presents a positive sentiment with strong revenue growth, improved margins, and effective expense management. The Q&A section highlights strategic initiatives in AI and automotive sectors, despite some vague responses. The stock repurchase program and optimistic guidance further support a positive outlook. Considering the company's market cap, a positive stock price movement of 2% to 8% is expected over the next two weeks.
The earnings call presents a mixed outlook. Financial performance showed revenue growth and strong cash flow, but with increased operating expenses and a GAAP net loss. The Q&A highlighted ongoing demand and positive inventory trends but also competitive pressures and economic uncertainties. The $100 million stock repurchase is a positive signal, but the guidance indicates a sequential revenue decrease. The market cap suggests moderate stock price sensitivity. Overall, the mixed signals and uncertainties balance out, leading to a neutral prediction for the stock price movement over the next two weeks.
The earnings call presents mixed signals: positive revenue growth and a new stock repurchase program, but weakened gross margins, increased operating expenses, and a GAAP net loss. The Q&A reveals some optimism about recovering demand and inventory management, but concerns over tariffs and competitive pressures persist. The market cap indicates moderate sensitivity to these factors, suggesting a neutral stock reaction.
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