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01/11 11:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: strong financial metrics are countered by cautious guidance. While some markets are recovering well, automotive remains weak. Gross margins are flat despite revenue growth, and Q3 guidance is cautious due to tariffs and cyclical dynamics. The Q&A reveals uncertainty in guidance and management's reluctance to provide Q4 insights. Without a market cap, it's hard to gauge volatility, but the mixed signals and lack of strong catalysts suggest a neutral stock price movement.
Revenue $4.4 billion, an increase of 16% year-over-year. Reasons for change: Growth in Analog (18% YoY), Embedded Processing (10% YoY), and Other segment (14% YoY).
Gross Profit $2.6 billion or 58% of revenue, with a sequential increase in gross profit margin by 110 basis points. Reasons for change: Improved operational efficiency.
Operating Expenses $1 billion, up 5% year-over-year. Reasons for change: Expected increase in operational costs.
Operating Profit $1.6 billion or 35% of revenue, up 25% year-over-year. Reasons for change: Higher revenue and improved gross profit margin.
Net Income $1.3 billion or $1.41 per share. Reasons for change: Higher operating profit and a $0.02 benefit not in original guidance.
Cash Flow from Operations $1.9 billion in the quarter and $6.4 billion on a trailing 12-month basis. Reasons for change: Strong revenue performance.
Capital Expenditures $1.3 billion in the quarter and $4.9 billion over the last 12 months. Reasons for change: Investments in manufacturing and technology.
Free Cash Flow $1.8 billion on a trailing 12-month basis. Reasons for change: Higher cash flow from operations and disciplined capital allocation.
Dividends Paid $1.2 billion in the quarter. Reasons for change: Commitment to returning value to shareholders.
Stock Repurchases $302 million in the quarter. Reasons for change: Shareholder value enhancement.
Total Debt Outstanding $14.15 billion with a weighted average coupon of 4%. Reasons for change: Issuance of $1.2 billion of debt in the quarter.
Inventory $4.8 billion, up $125 million from the prior quarter, with days at 231 (down 9 days sequentially). Reasons for change: Increased production and inventory management.
Analog revenue: Grew 18% year-over-year and sequentially.
Embedded Processing revenue: Grew 10% year-over-year and sequentially.
Other segment revenue: Grew 14% from the year-ago quarter.
Industrial market: Increased upper teens year-on-year and mid-teens sequentially with recovery across all sectors.
Automotive market: Increased mid-single digits year-on-year and decreased low single digits sequentially.
Personal electronics: Grew around 25% year-on-year and upper single digits sequentially.
Enterprise systems: Grew about 40% year-on-year and 10% sequentially.
Communications equipment: Grew more than 50% year-on-year and 10% sequentially.
Revenue: $4.4 billion, an increase of 9% sequentially and 16% year-over-year.
Gross profit: $2.6 billion or 58% of revenue, with a sequential increase of 110 basis points in gross profit margin.
Operating profit: $1.6 billion or 35% of revenue, up 25% from the year-ago quarter.
Net income: $1.3 billion or $1.41 per share, including a $0.02 benefit not in original guidance.
Cash flow from operations: $1.9 billion in the quarter and $6.4 billion on a trailing 12-month basis.
Capital expenditures: $1.3 billion in the quarter and $4.9 billion over the last 12 months.
Free cash flow: $1.8 billion on a trailing 12-month basis.
Dividends and stock repurchases: $1.2 billion paid in dividends and $302 million in stock repurchases during the quarter, totaling $6.7 billion returned to owners in the past 12 months.
Inventory: $4.8 billion at the end of the quarter, up $125 million from the prior quarter, with days inventory at 231, down 9 days sequentially.
Global manufacturing capabilities: Leveraging global manufacturing capabilities to support customer needs amidst tariffs and geopolitical disruptions.
Semiconductor cycle: Positioned well with capacity and inventory to navigate cyclical recovery and low customer inventories.
Capital allocation: Focused on disciplined capital allocation to strengthen competitive advantages in manufacturing, technology, product portfolio, and channel reach.
Tariffs and Geopolitics: Tariffs and geopolitical tensions are disrupting and reshaping global supply chains, posing challenges to the company's operations and requiring flexibility to navigate these changes.
Semiconductor Cycle: The cyclical nature of the semiconductor industry, with ongoing recovery and low customer inventories, creates uncertainty and necessitates careful capacity and inventory management.
Capital Expenditures: High capital expenditures ($1.3 billion in the quarter and $4.9 billion over the last 12 months) could strain financial resources if not managed effectively.
Debt Levels: The company has a total debt of $14.15 billion, which could pose financial risks, especially with a weighted average coupon of 4%.
Tax Legislation: Uncertainty related to recently enacted U.S. tax legislation could impact financial planning and effective tax rates.
Revenue Outlook for Q3 2025: Expected revenue in the range of $4.45 billion to $4.80 billion.
Earnings Per Share (EPS) Outlook for Q3 2025: Expected EPS in the range of $1.36 to $1.60.
Tax Rate Assumption: Assumes an effective tax rate of about 12% to 13%.
Long-term Strategy: Focus on areas that add long-term value, including manufacturing and technology, a broad product portfolio, channel reach, and diverse, long-lived positions. Investments will continue in these areas to strengthen competitive advantages.
Capital Allocation: Disciplined capital allocation will focus on the best opportunities to enable free cash flow per share growth over the long term.
Dividends paid in Q2 2025: $1.2 billion
Dividends paid in the last 12 months: $6.7 billion
Stock repurchase in Q2 2025: $302 million
Stock repurchase in the last 12 months: $6.7 billion
The earnings call reveals a stable quarter with mixed signals. Strong automotive and data center growth offsets slowing industrial growth. EPS guidance is weak, but restructuring and strategic R&D investments suggest long-term potential. The Q&A highlights management's reluctance to give detailed guidance, raising uncertainty. Overall, the stock is likely to remain neutral, with no significant positive or negative catalysts.
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