Power Integrations (POWI) came out with quarterly earnings of $0.31 per share, beating the Zacks Consensus Estimate of $0.28 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10.71%. A quarter ago, it was expected that this maker of integrated circuits used for power conversion would post earnings of $0.27 per share when it actually produced earnings of $0.30, delivering a surprise o ...

Power Integrations (POWI) Q1 2025 Earnings Call May 12, 2025 04:30 PM ET Company Participants Joe Shiffler - Director of Investor Relations & Corporate CommunicationsBalu Balakrishnan - Chairman & CEOSandeep Nayyar - VP of Finance and CFORoss Seymore - Managing DirectorTore Svanberg - Managing Director Conference Call Participants David Williams - Equity Research AnalystChristopher Rolland - Senior Equity AnalystGus Richard - MD & Senior Research Analyst Operator Good afternoon, ladies and gentlemen, and we ...

Financial Data and Key Metrics Changes - Revenues for Q1 were $106 million, up 15% year over year and flat sequentially [15] - Non-GAAP EPS for Q1 was $0.31, with a non-GAAP gross margin of 55.9%, up 80 basis points from the prior quarter [15][17] - Cash flow from operations was $26 million, with CapEx at $6 million [18] Business Line Data and Key Metrics Changes - Consumer revenues increased about 20% sequentially, driven by appliances and air conditioning [16] - Industrial revenues decreased 3% sequentially, below expectations due to seasonality [16] - Computer and Communication categories saw declines in mid-teens and mid-20s respectively, largely driven by seasonality [16] Market Data and Key Metrics Changes - All four end markets were up year over year, with consumer and computer categories leading with over 20% growth [6] - Industrial is expected to be the fastest-growing market this year, driven by high power design wins [10] Company Strategy and Development Direction - The company is focusing on high voltage semiconductors to meet demand trends in energy efficiency, artificial intelligence, and electrification [14] - The outlook for the second half of the year is highly dependent on trade policy, but the company expects to benefit from low channel inventories [13][50] Management's Comments on Operating Environment and Future Outlook - Management noted stable bookings and healthy distribution inventory, with no significant changes in business trends since the tariff announcement [5][6] - The company anticipates a seasonally higher second quarter, with revenues expected to be $115 million plus or minus $5 million [12][19] Other Important Information - The company has authorized an additional $50 million for share repurchases, following $23 million spent in Q1 [18][19] - Channel inventory is at 7.9 weeks, considered normal, with consumer inventory below normal levels [51][63] Q&A Session Summary Question: Changes in ramp timing or volume for design wins - Management indicated that the high power delay is unrelated to tariffs and is specific to a particular program, expected to ramp in Q2 [22][24] Question: Trends for margins for the rest of the year - Management expects non-GAAP gross margin to remain steady around 55.5% for the year, with operating margins benefiting from revenue increases in Q3 and Q4 [25] Question: Strength in automotive design wins - Management reported better than anticipated performance in automotive, with expectations of reaching around $100 million in revenue by 2029 [30][31] Question: Consumer segment and tariff-related demand - Management noted that demand in the consumer segment was better than anticipated, with a few million dollars in additional revenue attributed to tariff-related pull-ins [39][41] Question: Impact of tariffs on the second half outlook - Management stated that so far, there have been no unusual impacts from tariffs, and they expect mid-teens growth if tariffs do not affect demand [50] Question: Geographic demand and shifts in manufacturing - Management observed that OEMs in China are pragmatic and continue to use their products, with some manufacturing shifting to India and Vietnam [55][57] Question: Impact of currency fluctuations on gross margins - A 10% change in the yen impacts gross margins by about 100 to 120 basis points, with current benefits from a weaker yen [58][59]

Financial Performance - Net revenues for the three months ended March 31, 2025, were $105,529 thousand, representing a 15.1% increase from $91,688 thousand in the same period of 2024[12] - Gross profit for the same period was $58,235 thousand, up from $47,780 thousand, indicating a gross margin improvement[12] - Net income increased to $8,790 thousand, compared to $3,954 thousand in the prior year, reflecting a 122.5% year-over-year growth[12] - Earnings per share (EPS) for the quarter were $0.15, compared to $0.07 in the same quarter of 2024, marking a 114.3% increase[12] - The Company reported a total comprehensive income of $9,630 thousand for the quarter, compared to $2,857 thousand in the prior year[15] - For the three months ended March 31, 2025, net revenues were $105,529,000, a 15% increase from $91,688,000 in the same period of 2024[83] - Net income for the three months ended March 31, 2025, was $8,790,000, compared to $3,954,000 for the same period in 2024, representing a 122% increase[83] - Basic earnings per share increased to $0.15 for the three months ended March 31, 2025, up from $0.07 in 2024[71] Cash Flow and Equity - Cash flows from operating activities were $26,386 thousand, significantly higher than $15,905 thousand in the prior year[20] - Total stockholders' equity at the end of the period was $735,815 thousand, slightly down from $738,178 thousand a year earlier[18] - The company ended the quarter with cash and cash equivalents of $49,614 thousand, down from $56,443 thousand at the end of the same quarter in 2024[20] Stock Repurchase and Dividends - The company repurchased common stock worth $23,098 thousand during the quarter, compared to $14,641 thousand in the same period of 2024[20] - The Company repurchased approximately 404,000 shares of common stock for $23.1 million during the three months ended March 31, 2025, leaving $25.0 million remaining under the repurchase authorization[65] - The Company declared dividends of $0.20 per share to be paid to stockholders of record at the end of each quarter in 2024[66] - The Company declared a quarterly cash dividend of $0.21 per share for the fourth quarter of 2024, an increase from the previous $0.20 per share[67] Research and Development - Research and development expenses increased to $24,095 thousand from $23,225 thousand, reflecting ongoing investment in innovation[12] - Research and development expenses for the three months ended March 31, 2025, were $21,845,000, up from $20,800,000 in 2024, reflecting a 5% increase[83] Customer Concentration - The Company's top ten customers accounted for approximately 80% of net revenues for the three months ended March 31, 2025, compared to 77% in 2024[56] - As of March 31, 2025, 86% of accounts receivable were concentrated with the Company's top ten customers, slightly down from 87% at December 31, 2024[59] - Sales to distributors were $75.2 million for the three months ended March 31, 2025, up from $66.4 million in 2024, representing a growth of 13.2%[56] Marketable Securities and Allowance for Credit Losses - Total marketable securities amounted to $239.682 million as of March 31, 2025, up from $249.023 million as of December 31, 2024, showing a decline of about 3.75%[40][42] - The allowance for credit losses decreased to $55,000 as of March 31, 2025, from $436,000 as of December 31, 2024, representing a reduction of approximately 87.39%[30] - The company maintains an allowance for estimated credit losses, which is adjusted based on the aging of accounts receivable and customer creditworthiness[29] Other Financial Metrics - Total stock-based compensation expense for the three months ended March 31, 2025, was approximately $8.7 million, an increase of 35.4% from $6.4 million in the same period of 2024[45][47] - The Company's effective tax rate for the three months ended March 31, 2025, was 11.1%, significantly higher than the 0.5% effective tax rate in 2024[73] - The Company reported other income of $3,167,000 for the three months ended March 31, 2025, compared to $3,502,000 in 2024[83] Acquisitions and Future Projections - The Company completed the acquisition of Odyssey Semiconductor Technologies for $9.52 million in cash on July 1, 2024, to enhance its GaN technology development[90] - The estimated future amortization expense for finite-lived intangible assets is projected to be $1.677 million for the fiscal year 2025[34] - The Company is currently evaluating the impact of ASU 2024-03 on its financial statement disclosures, which will require additional disclosures starting in 2026[27] - The Company expects the fair value of marketable securities to recover as they reach maturity, as issuers continue to make timely interest payments[44]

Financial Performance - Revenues for Q1 2025 were $105.5 million, a 15% increase year-over-year from $91.7 million in Q1 2024[1] - GAAP net income for Q1 2025 was $8.8 million, or $0.15 per diluted share, compared to $0.07 per diluted share in Q1 2024[1][2] - Non-GAAP net income for Q1 2025 was $17.9 million, or $0.31 per diluted share, up from $0.18 per diluted share in Q1 2024[2] - GAAP net income for Q1 2025 was $8,790,000, compared to $9,140,000 in Q4 2024 and $3,954,000 in Q1 2024[15] - Non-GAAP net income for Q1 2025 increased to $17,859,000, up from $17,210,000 in Q4 2024 and $10,492,000 in Q1 2024[15] - Non-GAAP net income per share (diluted) for Q1 2025 was $0.31, compared to $0.30 in Q4 2024 and $0.18 in Q1 2024[15] Cash Flow and Assets - Cash flow from operations for Q1 2025 was $26.4 million[1] - Net cash provided by operating activities for Q1 2025 was $26,386,000, significantly higher than $14,726,000 in Q4 2024[19] - Cash and cash equivalents at the end of Q1 2025 were $49,614,000, down from $50,972,000 at the end of Q4 2024[19] - Total current assets decreased to $499,815,000 in Q1 2025 from $514,039,000 in Q4 2024[17] - Total assets decreased to $814,400,000 in Q1 2025 from $828,826,000 in Q4 2024[17] - Total stockholders' equity decreased to $735,815,000 in Q1 2025 from $749,772,000 in Q4 2024[17] Shareholder Actions - The company repurchased 404 thousand shares for $23.1 million during the quarter, with an additional $50 million share-repurchase authorization announced[4] - The company repurchased common stock worth $23,098,000 in Q1 2025, compared to $1,902,000 in Q4 2024[19] - The company plans to pay a dividend of $0.21 per share on June 30, 2025[4] Future Outlook - The forecast for Q2 2025 anticipates revenues of $115 million, plus or minus $5 million, with a GAAP gross margin of approximately 55%[8] - GAAP operating expenses for Q2 2025 are expected to be around $56 million, while non-GAAP operating expenses are projected at approximately $46 million[8] Operational Insights - The company is focused on trends driving demand for high-voltage semiconductor technologies, including energy efficiency and electrification[3] - Stock-based compensation expenses for Q1 2025 totaled $8.7 million, impacting both GAAP and non-GAAP results[13][14]

Group 1 - Power Integrations (POWI) has been under observation for some time, initially rated as a "Sell" due to perceived excessive valuation, resulting in shares losing approximately 50% of their value since then [1] - The company has a unique position in the market, indicating potential for future analysis and investment opportunities [1] Group 2 - The article emphasizes the importance of conducting personal research or consulting a financial advisor before making investment decisions [2] - It highlights that past performance does not guarantee future results, suggesting a cautious approach to investment [3] - The views expressed may not represent the overall stance of Seeking Alpha, indicating a diversity of opinions among analysts [3]

Financial Performance - Net revenues for 2024 were $418,973, a decrease of 5.7% from $444,538 in 2023[246]. - Gross profit for 2024 was $224,751, down from $228,956 in 2023, reflecting a gross margin of approximately 53.7%[246]. - Operating expenses increased to $206,822 in 2024, compared to $193,897 in 2023, primarily due to higher research and development costs[246]. - Net income for 2024 was $32,234, a decline of 42.2% from $55,735 in 2023[248]. - Basic earnings per share for 2024 were $0.57, down from $0.97 in 2023[246]. - The company reported a total comprehensive income of $30,673 for 2024, down from $61,617 in 2023[248]. - Net income for 2024 was $32,234,000, a decrease of 42.9% compared to $55,735,000 in 2023 and a significant drop from $170,851,000 in 2022[252]. - Total assets increased to $828,826 in 2024, compared to $819,868 in 2023[251]. - Total liabilities rose to $79,054 in 2024, up from $67,627 in 2023[251]. - Retained earnings decreased to $734,039 in 2024 from $753,680 in 2023[251]. - Cash and cash equivalents decreased to $50,972 in 2024 from $63,929 in 2023[251]. - The company reported a net decrease in cash and cash equivalents of $12,957,000 in 2024, compared to a decrease of $41,443,000 in 2023[252]. - Interest income for 2024 increased to $13.576 million, up from $11.655 million in 2023, reflecting improved cash management[368]. Market Risk and Currency Exposure - The company reported a significant exposure to market risk due to changes in interest rates, primarily related to its investment portfolio, which includes cash equivalents and short-term investments[221]. - The potential impact on pretax income from a 5% and 10% change in the value of the U.S. dollar compared to the Swiss franc and euro is estimated at $132,000 and $263,000 respectively[225]. - A 10% change in the value of the U.S. dollar compared to the Japanese yen could result in a corresponding change in gross margin of approximately 1.4%[229]. - The company has wafer supply agreements with major suppliers that are based in U.S. dollars, allowing for mutual sharing of exchange rate fluctuations[228]. - The company did not have an open foreign currency hedge program as of December 31, 2024, and 2023[227]. Investment and Securities - The company’s investment policy aims to mitigate default risk, market risk, and reinvestment risk by investing in high-credit quality securities[221]. - The company’s marketable securities primarily consisted of commercial paper, corporate bonds, and government securities as of December 31, 2024, with a focus on maintaining liquidity for strategic investments[277]. - The total fair value of the company's cash equivalents and marketable securities increased from $267,688 thousand at December 31, 2023 to $252,388 thousand at December 31, 2024[301]. - The company reported total marketable securities valued at $249,023 thousand as of December 31, 2024, with an amortized cost of $248,135 thousand, resulting in gross unrealized gains of $1,023 thousand and losses of $(135) thousand[302]. - The total marketable securities in a continuous unrealized loss position decreased from $128,130 thousand at December 31, 2023 to $47,021 thousand at December 31, 2024[304]. - The company did not recognize any unrealized losses on marketable securities in income for the years ended December 31, 2024 and 2023[304]. Research and Development - Research and development expenses for 2024 were $88,203 million, slightly up from $85,128 million in 2023, indicating a continued investment in innovation[368]. - The Company’s research and development costs are expensed as incurred, reflecting its commitment to innovation and product development[286]. Stock-Based Compensation - The company reported a stock-based compensation expense of $35,076,000 in 2024, which is an increase of 23.1% from $28,528,000 in 2023[252]. - Total stock-based compensation expense for the year ended December 31, 2024, was approximately $35.1 million, an increase from $28.5 million in 2023[316]. - The Company recognized stock-based compensation expense of approximately $12.6 million in research and development for the year ended December 31, 2024[315]. - As of December 31, 2024, the total unrecognized compensation expense related to unvested awards was $55.7 million[317]. Customer Concentration - The company's top ten customers accounted for approximately 79%, 80%, and 76% of revenues in 2024, 2023, and 2022, respectively[332]. - As of December 31, 2024, 87% of accounts receivable were concentrated with the company's top ten customers[334]. Acquisitions - The company acquired Odyssey Semiconductor Technologies for $9.52 million in cash, aimed at enhancing its high-power GaN switching technology[375]. - The company made an acquisition costing $9,520,000 in 2024, marking a strategic investment in growth[252]. - The company acquired in-process research and development valued at $4.9 million as part of the Odyssey acquisition, which will not commence amortization until development is completed[306]. Tax and Deferred Tax Assets - The effective tax rate for 2024 was -4.8%, significantly improved from -21.4% in 2023, primarily due to federal research tax credits and the release of uncertain tax positions[351]. - Deferred tax assets increased to $46.288 million in 2024 from $33.357 million in 2023, driven by capitalized R&D costs and tax credit carry-forwards[353]. - The company maintained a valuation allowance of $32.659 million as of December 31, 2024, indicating uncertainty regarding the realization of certain deferred tax assets[354]. - Unrecognized tax benefits decreased to $15.175 million in 2024 from $16.389 million in 2023, with a potential income tax benefit of $3.8 million if recognized[358]. Lease Obligations - Total lease expense for 2024 was $3.9 million, up from $3.6 million in 2023, reflecting ongoing operational commitments[361]. - The company reported right-of-use assets of $16.076 million and total lease liabilities of $15.560 million as of December 31, 2024[363]. - The weighted average remaining lease term increased to 5.8 years in 2024 from 3.8 years in 2023, indicating longer commitments[364]. Operational Segments - The company operates as a single reportable segment focused on the design, development, manufacture, and marketing of integrated circuits for high-voltage power conversion[365].

Power Integrations, Inc. NASDAQ: POWI Updated November 2024 ©2024 Power Integrations, Inc. | power.com Forward-Looking Statements/Non-GAAP Metrics These slides may accompany an oral presentation by Power Integrations, Inc., which contains forward-looking statements. Each statement relating to events that will or may occur in the future is a forward-looking statement. The Company's actual results may differ materially from those suggested in the presentation. Information concerning factors that could cause s ...

Financial Data and Key Metrics Changes - Q4 revenues were $105 million, up 18% year-over-year, while full-year revenues were $419 million, down 6% from the prior year [12][13] - Non-GAAP gross margin for Q4 was 55.1%, unchanged from the prior quarter, and full-year gross margin was 54.4%, up more than two percentage points from the prior year [34] - Non-GAAP earnings for Q4 were 30 cents per diluted share, with a share count of 57.1 million, slightly up from 57 million in the prior quarter [36] Business Line Data and Key Metrics Changes - Consumer revenues were down mid-teens sequentially, reflecting softness in major appliances, while industrial revenues were down 10% sequentially due to shipment timing [31][32] - Communication category revenues were up mid-single digits, driven by stronger cell phone revenue, while computer category revenues were down mid-single digits [33] - Revenue mix for the quarter was 37% consumer, 35% industrial, 15% computer, and 13% communications [34] Market Data and Key Metrics Changes - The communications category is expected to grow in 2025, driven by the 5G fixed wireless rollout in India and increasing dollar content in the remaining cell phone business [14] - The industrial category is anticipated to see significant growth due to infrastructure-related projects and lower channel inventories [15][64] - The consumer category is expected to moderate in growth, particularly in major appliances, but is projected to grow in air conditioning and new TV market revenues [16][17] Company Strategy and Development Direction - The company is focusing on GaN technology, expecting revenues from GaN-based products to exceed 10% of sales in 2025, with significant growth opportunities in AI data centers and EV drivetrains [20][25] - The company is expanding its presence in India, capitalizing on government initiatives to modernize infrastructure and increase domestic production [18] - Automotive revenues are expected to grow rapidly from a modest base, with several customers scheduled to begin production in Europe and the US [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustaining a healthy rate of revenue growth in 2025, despite uncertainties around trade policy and end market demand [15][94] - The company anticipates that industrial will be the strongest growth market in 2025, driven by unique opportunities in infrastructure projects [64] - Management highlighted the importance of channel inventory levels and sell-through rates in assessing future growth potential [75] Other Important Information - The CEO announced plans to retire after 23 years, with an executive search firm engaged to identify a successor [6][7] - Greg Lowe will join the board, bringing extensive experience in analog and power semiconductors [10][11] - The company expects non-GAAP operating expenses for Q1 to be around $45 million, a slight increase from Q4 [41] Q&A Session Summary Question: Update on GaN opportunity and confidence in powertrain potential - Management noted significant strides in technology allowing for higher power applications, with optimism about GaN's competitive edge over silicon carbide [46][50] Question: Design wins in automotive space and expected magnitude from GaN - Management confirmed about 20 designs in production, with new GaN products suitable for various battery systems [56][58] Question: Changes in end market environment - Management indicated no significant changes, with expectations for industrial growth to outpace other segments [62][64] Question: Growth expectations across all segments - Management expects all four segments to grow, with industrial leading in dollar terms [66] Question: Channel inventory expectations for Q1 - Management anticipates channel inventory to hold steady, with sell-in and sell-through remaining close [75] Question: Early revenues in data center power supplies - Management clarified that the first product for data centers will be GaN-based, with significant revenue expected in 2028 [78]

Core Insights - Power Integrations (POWI) reported quarterly earnings of $0.30 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, and up from $0.22 per share a year ago [1] - The company achieved revenues of $105.25 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.20% and increasing from $89.51 million year-over-year [3] Earnings Performance - The quarterly earnings surprise was 11.11%, with the company previously expected to post earnings of $0.36 per share but actually reporting $0.40 per share [2] - Power Integrations has surpassed consensus EPS estimates in all four of the last quarters [2] Revenue Performance - The company has also exceeded consensus revenue estimates in each of the last four quarters [3] Stock Performance - Power Integrations shares have increased approximately 1.3% since the beginning of the year, compared to a 3.1% gain in the S&P 500 [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $106.39 million, and for the current fiscal year, it is $1.49 on revenues of $476.89 million [8] - The estimate revisions trend for Power Integrations is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [7] Industry Context - The Semiconductors - Power industry, to which Power Integrations belongs, is currently in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]