ADI - Earnings call transcript Q1 2025

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Operator

Good morning, and welcome to the Analog Devices First Quarter Fiscal Year 2025 Earnings Conference Call, which is being audio webcast via telephone and over the web.

I'd now like to introduce your host for today's call, Mr. Michael Lucarelli, Vice President of Investor Relations and [ Division Head for Data Center, Energy & Power. ] Sir, the floor is yours.

Michael Lucarelli

Thank you, Daniel, and good morning, everybody. first XXXX our call. joining for quarter conference fiscal Thanks ADI's call Chair, Rich With the are Puccio. CEO CFO, me on ADI's today and and Vincent Roche;

For find you schedules anyone investor.analog.com. the related at and financial can who missed it release,

statements filed to and Onto statements, includes and other risks uncertainties to these our from call. periodic which by this statements we're SEC. in at forward-looking date expectations described materials except Actual certain forward-looking as results to differ parts discuss further the as the with subject only our could We information materially information undertake disclosures. update required and reflect of this The the about are earnings no other release law. obligation these

expenses, free be EPS items to tax our nonoperating prior References These these historical from operating non-GAAP non-GAAP margin, cash Reconciliations of and in fully are comparing special in information share will today to diluted special and about gross on comments on references earnings are a to excluded results performance, our basis. GAAP comparable basis. rate, operating per today's When flow also margin, items. are non-GAAP measures included to periods. the measures release. our directly a All additional excluded most earnings measures and

I'll ADI's And CEO and turn to that, it over with Chair, Vincent Roche.

Vincent Roche

all. Mike, Thanks good you a very to and much, morning very

XXXX in our a outlook. and we our growth first my and revenue year macro profitability outlook results our for growth. while earnings per midpoint be share that And builds quarter quarter quarter double-digit of of above to First a environment, confidence finished operate all continue second will geopolitical challenging in year-over-year and the

delighted of cycles, supports the share current market our record for to and balance I'm just that capital share robust combined billion track and dividends through roughly cap year, our sheet with and that return increased over than $XX to we've dividend years, through program. repurchases. the resilience our or Our returned our XX% long-standing have X more strong shareholders of consecutive past XXst we profitability

Turning has enhance is and invested us. recovery. surprised and magnitude The positioned work now our ADI and end cycle, to and closely manufacturing both leverage Throughout entered our model demand. for of their the semiconductor of to cycle support recent to map needs hybrid to the customers But starts be sustained diligently our to small. to our factory and true this we business has dynamic operating well most believe responsive needs We with evolving environment. many duration of big customers, we

As a enabled result, several inventory normalized levels and the real volatility to of past balance has and with our approach throughout customers us supply the have demand. largely partnership our years

monitor to the view cyclical growth trough support our we tide While we've engagements our our the customer we've the continue from pace the been cycle, of deepening in accelerating and and our passed our has favor. that the turned pipeline gradual Throughout to conversion. busily macro recovery, over influence and the improvements past lean the signals channel bookings inventories will backdrop XX months.

Many I've to now calls on the And of growth. [ recent me examples. you design shared are wins some give ] let contributing

in shift manufacturing decentralized enable significant intelligence industrial driving is solutions. towards the in example, to growth For automation, modular connectivity software-defined

revenue across power has these Our all stream by consumption recover begins ramping have from and will and that market the decade. automation wins channel over major and software a I/O products Revenue reduce to durable automation provide next configurable begun density suppliers. double the XX% installed been

driving and higher of convergence health a is approach or surgical consumer growing in high the data-driven being precision care, the our and wellness a in the deployed surgical markets in robotics additionally, vital Within creating segment, across signs next-generation And performance are levels in for in increasing clinical portfolio, demand and wearables. of consumer of health growing monitoring content systems. from to solutions particular, interest and

position of year. leaders Our double-digit sensors, markets at suite growth for solutions chains high-performance us signal and and efficient this these in power wins

demands Within AI has power chain solutions some XXX% market, of significantly to test automatic leveraging achieve we by density while are growth. and across channel test XX% expect strong hyperscaler and of CapEx, and our the throughput per compute system. equipment increased test to growth XXXX signal memory increase Customers the power increased systems. up cases, revenue In reducing to by light our In memory to up content. our high-performance

support double-digit often growth defense portfolio, thousands expected modules, industrial in of hundreds of and the our dollars XXXX. ASPs are subsector this aerospace broad into our lead which In to in

we're wins and design addition, year ] satellite the anticipating sectors. [ power from military newer in and orap growth In commercial in this

In for convergence demand robust of to of from autonomy automotive, experiences ranging continue many to immersive solutions. the in-cabin trends to drive electrification our

and is in also revenue positioned year power video which record-breaking For from outpacing safe our acquiring yet share driver reach functionally continued advanced our has example, portfolio We're of our in XXXX. franchises, tripled. record-setting GMSL to systems nearly the growth is anticipating this connectivity assistance technology trajectories. another similar and XXXX, growth Since revenue AXB

challenging in solution poised prior electric ramping of higher key Part our Europe. wins growth and from return is America wireless with after content OEMs in Lastly, BMS to vehicles, growth year. in coming is to 'XX this a

predominantly infrastructure being our AI communications, driven is build-outs. by growth robust CapEx investments support In to

a systems terabit module high-precision based electrooptical now industry-leading on X.X is for shipping GPUs. optical in AI Our controller

shipping and solutions later of growth side high voltage we'll we year. a power the delivering begin On power are which this systems, power in data center, vertical protection strong path on our the trajectory, are

applications, solid second recent us beyond path more even began secured handsets, systems, multiple including Collectively, consumer. growth in premium to in a growth and wearables years we and content year. launches, these and in gaming Finally, ahead design to strong a customers expect cyclical year hearables, trends upcoming combined with wins idiosyncratic anticipate this drive we diversified consumer, in half return across 'XX, at robust fiscal in to of numerous the

our chance. ever favorable reflection the So is experienced, closing, of our excited concurrent we I'm many areas, growth investments the automation, of of many, success find in health our industry prospects for long for operational our and downturns automotive, digital ourselves in not about I'm electrification, out customers the secular numerous which coming and while more about discipline, longer-term XXXX, fiscal rather relatively And a across But the center excited has to the commitment one by even of data more. term. worst position and the opportunities including care

by a in robust our reflection our solutions solutions our the complete In and them up stepping at and technology our analog, more customers' stellar them, of help common from is customer diversified to the and across into we attain to stack to that challenge, power by portfolios many application customers our applications investing A our digital world-class edges request increasing customers push complexity higher we the reputation. vigorously mixed signal layer. meet software levels our of integrate continue to and bringing supporting

that, I'd pass to to like so the Rich. over call And with

Richard Puccio

call. Vince, you, our me to Thank earnings let and add welcome first my quarter

QX represents in First QX decrease growth increase performance a year-over-year. our above for midpoint extra decline of XXXX. our our of quarter week QX fiscal a sequential and a however, the billion of since our revenue in X% 'XX Adjusting XXXX, came X% X% first outlook the for in $X.XX year-over-year

finishing each customer backdrop our X% Industrial up sequentially. The benefiting ]. is of our subsectors industrial first revenue, improved inventory represented quarter of XX% [

up and we sequentially. quarterly represented Automotive addition, of stronger In in of aerospace XX% our seeing X% test automatic are were finishing revenue, each demand which and businesses, defense up year-over-year.

secular connectivity content leading solutions position. Our each and digits safe and again, growth greater share double functionally up once power reflecting were year-over-year

up by digits driven represented of data Communications sequentially our and year-over-year, was which XX% sequentially. down challenges. our by center lastly, quarterly XX% to demand. roughly latency infrastructure revenue double wireless X% AI sequentially, fueled of makes [ finishing revenue, seasonal see X/X Wireline, continues ]. business, of build-outs up reflecting represented quarterly communications And total finishing consumer XX% up Conversely, demand revenue,

year-over-year content list a Our greater stronger position our applications. and growth share of robust consecutive second across reflects diversified of quarter

rest Now on P&L. the the to of

resulting basis sequentially, XX by margin million, XX.X%, gross the million $XXX favorable of sequentially, driven was an margin quarter product points quarter up in $XX OpEx mix. First was in up operating finished the the of was our at All was guided told, quarter end XX.X%. high range. told, EPS All and at $X.XX, for expenses million, $XX rate nonoperating the tax adjusted XX.X%.

Now of and remained inventory I'd fastest-turning our cash below and replenish X.X. from sheet moved and our a weeks finished the items increased balance of of XXX, increased ratio while like weeks. lower and statements. investments decreased Days to $X.X sequentially products. as million X X to die Inventory at our our net flow the billion, $XX Cash channel target bank we short-term to highlight few quarter to leverage

$X.X were CapEx Over XX million, the flow $XXX and months respectively. cash operating and trailing billion

fall and cash flow for within the Free to continue from more the billion 'XX We than of repurchases. to through of or revenue. decrease during same revenue. CapEx our and model share $X.X long-term have to X% XX% to period, was fiscal time expect months And returned X% 'XX of we $X.X XX billion trailing over shareholders dividends

As free for dividend remainder XX% term, for using the to flow with XXX% a our XX% over cash reminder, share reduction. used we count target return long the

increase As dividend $X.XX. our from Vince quarterly to announced mentioned, $X.XX an X% we to

program. remaining In Board share billion our resulting under in has $XX roughly buyback for incremental billion repurchases of an authorized addition, current $XX.X our potential

to on moving Now guidance.

or plus the $XXX grow, variable to revenue uptick points or our Second On and minus decline. at minus notable basis, to we automotive a expected communications a be to $X.X ], expected growth million. Industrial billion, margin and consumer midpoint, in compensation. Operating be sequentially XXX plus is is basis sequential XX.X% [ expect flat to lead due quarter to while

adjusted based is rate plus to or XX%, to tax expected expected EPS be these minus to is $X.XX. on XX% imports, $X.XX be and Our

in during positive Overall, continues improve to continues be it environment. an session, macro begin Q&A back 'XX business uncertain We QX. passing to to Before near-term order our QX backdrop. a I'd to our up Mike address our saw improvement further what book-to-bill trough the and like to

strength and industrial X automotive, largest our end Importantly, was by bookings driven markets.

confident return additional to macro Vince will exciting improve. model Given this described, trend in the long-term and XXXX well we believe to capture product positioned conditions we and growth should cycles are I'm upside

you, Over Mike. to

Michael Lucarelli

Rich. Thanks,

on session. one to to you in Let's We allow call get the this limit yourself ask that Q&A participants question to for morning. additional the order

please time first question, if follow-up our a we'll it. take question have your question, allows queue please. and requeue With you that, If

Operator

Morgan Our Instructions] Moore first question Joseph comes Stanley. [Operator from with

Joseph Moore

market. you affects any and auto takes impact the an could the you Can on towards talk that talk have in for shift be of puts in you if guys potential is how ] you China? Wonder Great. pricing if there the [ any center margin gravity China seems ongoing about to the that about region. Does strongest or guys?

Richard Puccio

This is one. that take Rich. I'll Joe, Sure.

color with So little me seeing QX, in continued came in strength Asia, by revenue we've about give China. better let auto. you driven a Starting what on in talked which expected, we're than

As talked continue functionally Chinese BMS. flagged into our including power calls, content and we we have our and that in EV we And products, QX. in solutions, video have connectivity this about major is stronger multiple OEMs results, the audio with at recent coming share expect position again, to we've and and safe through it

is As by we growth for but continue being we've the from this, the auto, a in change the what to we led from auto about strong a of business, other quarters in results, parts of China in straight talk addition, the see of seen double-digit lead. X to growth right, impact in continuing can center, China

Vincent Roche

is a is bringing. market the communications, it case. high-performance well would Yes. see for that I've technologies as quality we're the We technologies, technologies relevant, to ADI's Joe, cloud, We in automotive. be there the the the that a maintained we're see getting time, and as long of industrial that sector, for long paid in for that and it continue

particularly at that indigenous in our mid-low the So level capabilities high-performance on at the [ our with ends we for the portfolio, coming given thrust market, of getting rewarded it's for stream. clearly the kind customers. system a bring suppliers ] competitive But we're

Operator

America of Securities. comes next Arya from question Vivek Bank Our with

Vivek Arya

long-term Rich, then my And growth this expect to model clarify, is what year? to return to that just that is for you question Vince, you.

also? us the inventory apply Is about Basically, how largely over next to how handful mostly that levels end all quarters? does feel distributors? mentioned demand that You OEMs that have growth normalized. it inform at industrial. the markets that about ADI and at to Does can visibility Is of or

Vincent Roche

second the take Vivek. can I first, Maybe Yes. question of the part

And by So ADI the that's business. industrial its much a the of as normalization the we was were as well of total direct peak, are in a of XX% bookings. business, recovery XX%, in including -- stream. very part it across encouraged seeing little channels. every distribution very, ADI's the pretty very -- part revenue we our yes, It's And important

So customers. the by we're top seeing also, our -- we customer way, monitor inventories,

across ] started the would and of be normalization a way, segments to also, the So bellwether kind market of base small. we general see [ market. across outside see the customers, a for big top also We've mass or both there. our We've few hundreds recovery customers broad by

Richard Puccio

when [ think the model, than that. there's us public talking Yes. about the even talk although to the long-term as macros I about And ] talked I think I Vivek, turn, more around I'm for opportunity capture we've the growth about as XX%,

Michael Lucarelli

year. from part X-part kind your we think Vivek, at back about of the this what think of X here grow question, I [ ] talked half

seasonality is and I'll give for what our trends get over quarter. we for mean think you of the as with see is as about kind Again, last I but you XQ. you not this think how guidance do third XQ you years to XX XQ, what typically that

In or our little, the minus third cycle. auto a are quarter, flat, comps and on you industrial ] where in depending plus are [ usually

was saying about be should wins markets new I coming on, Given what to flat normalizing, those think up. Rich industry

normal So those of think the on what I higher end is seasonality for businesses.

consumer ] XQ. growing you X% means your until the holiday which side, start builds, start or [ in XX% On we

half. uncertainty Now which lot the [ ] the obviously, on really, macro out like side, be a there [ of in crosscurrents, content second could macro ]

about what XQ. we'll in ] think really XX So days [ update we you

Operator

comes Svanberg Tore Our with next Stifel. from question

Tore Svanberg

you had I on a I going of your you right just manufacturing. you, because some hybrid that's now, question manufacturing pretty obviously, position of model. political obviously then internal turmoil, Asia, a your strategically do about partner all Because in given that very was thinking Vince. with hybrid you're are a has geopolitical ADI important how model? but unique turmoil also And own for working wondering, the the

you are next thinking the is So going few over how about play out this years? to how

Vincent Roche

a Thanks, of of geographies. is great products, benefit, in times Tore. I Well, think, diversity of turbulence, customers diversity diversity of and great diversity markets,

the One will but I chain with entire essentially. And I solve of the gives terms X kind 'XX, end feel of diversity problems our So is in dual to sourcing us optionality, 'XX that early secured also gives by good at of ability it resiliency. diversity product we have ADI. think the us and of least for

few products internally of from products dual X our have XX% get our least We've we've will geographic for to well externally. the geographical America the And invested procure centricity sources, fabs worked and our at about that as desensitized So at and partners obviously over years. in partners we've Europe. the in sources least last with we

in of as So sources, with make existing new that a start pandemic. the capacity have partners. supply said, the I we've the in as got good fabs additional secured sure we're position had overall, And think company a we to also at internally I twice we new

whether position turbulence direction. very might our think I in good very, we're whatever to a come So

Operator

Our Citi. comes Danely Chris next with question from

Christopher Danely

just guess great. a that's there I mostly the this you from? the industrial Is pretty improved And was the it bookings strength. a Or during there dig little steady? Can replenishment? into just Is coming where both? spike? just would it color Was Is quarter? Or then talk mostly linearity trend did more how inventory to be about demand?

Richard Puccio

I'll Sure, Chris. that. jump in on

our to QX, industrial, And a said what if be trough actually expect as sequentially business fastest-growing the market. we back, in take grown quarters, the for QX. on now then we X industrial off straight So for step this we've we of was

and is if taking accelerate improve. shape macro pretty good could really that feel we the our recovery So

of of and For QX then started from pickup started bunch continued in this is energy, care we've talked watching automation, for we couple stabilization equipment. the on a in automatic of market, QX, calls is quarters, about which in the important. think And And test see and prior been we we one in that we've saw some broad specifically, talked has that. the things to what positive health to about and perspective a I strength ADAS the a across and see then

the demand. In confidence market which to with gives of drove fact, much begin the line our pickup broad to upside expectations, shipping in the us in initial relative end

of talked industrial -- So of think in we've we a market. channel about if $XXX out calls, took inventory that about the of of amount you Most prior the million. XXXX about that significant impacted during

look for at well. trajectory, growth more shipping the tailwind channel, a we to So as be as will sell-through industrial our into

Vincent Roche

Yes.

largely channel. know, you distribution through sector the the As industrial is served

I those recovering, are company. tailwinds of with ] the for streams concurrent demand serve, So [ all both think leading -- X the

Michael Lucarelli

Yes.

booking pretty growth obviously, in On industrial side, And [ versus XQ bookings areas the much biggest ] and have XQ by bookings. in in we fastest the will ATE the about. market ADAS across that's all and improved industrial as supported think with our strength, be XQ the talked we

Operator

TD comes Buchalter Cowen. Our from next with question Joshua

Joshua Buchalter

I the wanted on follow one. to up previous

XXXX prepared would range? I or initial that X- entered you in I I April guess, the want to the think already the quarter think more being either you range what any do refill. get guidance outlook to mentioned of quarter channel include guys channel the in And inventory target, to clearly weeks your see does down. to signals And back of sort X need fiscal before target X-week moved levels below the they your remarks, in X you into

Richard Puccio

Yes.

So...

Vincent Roche

Go ahead.

Richard Puccio

historically. pretty any regularly right escalations, adding so me, the we're benchmark, of has will customer more X for out, carrying that weeks we've -- we're distribution some to a to weeks given is which the inventory be we're X particularly had we allows pretty books feeling fulfilling I partners to the comfortable X if for channel. guide the our we're own we're carrying bank, respond. for us in us below sell-through, not requirements QX die amount us tell quicker getting to and And you flexibility, Balance and So current on inventory shipping into operating our now the to the bit not talk gives which

So don't certainly not adding term, to expect that to lower. back channel would medium any want but we near we to I be go do

Vincent Roche

well. served to Yes, think, cycle. the Richard years add to inventory bit just X as over said essentially is customers our I very of what The well. has all the centralization management, of what now think sizes of of past, color I a Customers old

So we'll continue critical a guide about modulate and be that, how we doing inventories over we will that as channel think time.

Joshua Buchalter

Very helpful color. on of Congrats the cocktail uncertainty. results the in

Vincent Roche

you. Thank

Operator

Susquehanna. Our with next Rolland question comes from Christopher

Christopher Rolland

Mine the that about AI specific other then X is you've power. One around the connectivity optical past. talked and very opportunities is in is

but have you would markets, love like cetera, going for products. are it's thought it those developments in products playing love et know orders, interest, If how to any or or know to would would, those those out maybe just you

Vincent Roche

in say, growing interface category, provide a infrastructure much electro-optical benchmark these this X.X we've for Yes. our very in our control precise and electro the And just steadily Thank throughput terabit, has the very been the high we you. is Well, AI-driven in I'd compute the world. introduced where player this optical systems for stabilizing been opportunity today. we've which first systems throughput modems. foremost, pipeline long-term And

of we speeds to what Of as sophistication course, continue grow continue The increase. will will build well. to those

many good and very years, predates ADI high-growth build-out a of for now it business a the business, AI been that's infrastructure. AI many, So for

and important board X that data kind the technologies health power -- these be for the the One to reset And [ a like, park analog way, you in overall that center the if of level. server power tough that of [ control hot level, areas. struggle ] is, the on, so are control example, by is a Our generators very, very ], good and of these systems the problems at swapping, other really solved. different need

with to we in in is production going the GPUs, big have chip to vertical train of delivery I story of technique the other the second a of energy that this on part year power And power 'XX of come half systems designs second stream period. one the themselves. well, the the with And will The as believe, hyperscalers. in the we're

Christopher Rolland

before markets just kind of out, other playing these anything products for maybe customers, are any new of And emerging them, emerging of kind there. And anything opportunities? you are I that color these new point can Are call that any options free your into to kind new you any like maybe of call products new here. as to, Fantastic there to had that new company. new end haven't

Vincent Roche

systems how care we positioned the the future very to a couple processing for I see but far sector, out me technologies in building of becoming, health a because the would conversions that prepared sensory is into go, I the active well want with in we've let on wellness-based the examples signal company you give here. remarks, say, interest of you those very, Depends a mentioned as real-time consumer the time. we're building been long and long, solutions

with call to ], a of and a both and that many, an as area geographies the that glucose care So types to being the loop [ areas grade-level need in system, monitoring I that output. spectrum incident clinical do the different would many at continuous of able modalities across and like customers be closed the many good measured health out input

excited you the want I complex we at elements. a to you that quantum beginning systems, in if precision computing stages the the systems for very, think very world. future, control area. to go lot is we're early building technologies life And like, have of there into is appear computing into about, whole these we're And faster being that at that that area deployed good are but So if really of an rates control

Michael Lucarelli

Instructions] [Operator

Operator

comes Harsh Sandler. with Our question Kumar Piper from next

Harsh Kumar

you're about bottom. that calling orders tariffs. of so just a you're normalization Help confidence the reached lot level level isn't understand this the talking the of not us of the increased is know wanted hit upon that is conference lot of I what just some geopolitical I is we've guess and I fake? There's high this movement. why to a that call fake. but and kind head the for guess head there's bottom, inventory, a I

Vincent Roche

think first foremost, lot of conversations and we have I lot Well, customers. of and a a

of our pay We the have is sell-through. thousands in to most We customers portfolio. tens that to signal of matters attention us

we POS focus, is our where is our we and -- how that's run our that supply signal we how POS So we how system. and plan supply ADI, business run at

So that's first and foremost.

think are -- across stabilization America are say in -- would so well, business muted. strong rest most I'd is certain how view where growth Japan there between somewhere right spectrum. and and is Asia Europe say China I geographically, in the we the and essentially areas as the I work. are but strongest. seeing and the is the Pacific of we And is progress is where then there diversity that's Japan a is

and As and said so geopolitical prepared is the trade on remarks, in here the forth. we of what's war any turmoil, so potential in effect incalculable our thinking

as that, So the of semi to strong year ADI's in be think, business. that in rate new a conviction we're and the the will recovery. a sector I during cycle ultimately governor this have in certainly I But

Michael Lucarelli

We're question, [ our going to please. last ]

Operator

next with Stifel. Svanberg Tore comes Our from question

Tore Svanberg

conversion And helpful. they of on of rate, you they we a new I there. out design I follow-up through I sort to customers, cleared out. comments conversion products off on. the mean, starting some the products have Yes, rate -- hold really go of that be sort conviction Typically, guess so just buying these until any growth there's if win really in wondering can your that make had really would cycles, I when play to relates going hold older on think just I'm that

Vincent Roche

we're markets center strength Yes. automotive by the for new a Well, areas example, Tore, are for in data products. the of like market, areas lot driven in largely ATE those in new example, seeing modalities

So of are examples there's new products where huge making would say difference. I X a

are -- capturing with each new there also ASP. generation, fact, we're more In

very period, measure the vintage and our of what's contribution as which a portfolio the we've very, X- often products shared age So shows vintage on. of with we to that famous carefully newer the within going you within XX-year chart, chart,

rate, opportunity a tell strong we've of got parts is franchise. new and products with of new can the very the new I But obviously, solutions. parts the introduction you, capturing conversion also strong and And new

Our legacy anchor products get building. we're to products tend by that pulled new these

So and we're and creating overall, applications effectiveness I'd R&D opportunities. of and our capturing say, and new the new with spend I'm markets pleased how

Michael Lucarelli

And one we I Joe more from have believe. Moore, question

Operator

further at no questions showing time. I'm this

Michael Lucarelli

right. No All problem.

I answered interest in everyone, joining then. continued morning. joining this think of Thanks your and Thanks, we Devices. be all copy the website. A will questions our transcript us on the available for for Analog

Operator

You may now disconnect.

Analog Devices (ADI) 19 Feb 252025 Q1 Earnings call transcript