Executive Summary

Q1 FY25 revenue was $2.423B and adjusted EPS $1.63, both above the midpoint of guidance; headline y/y declines (-4% revenue, -6% adj EPS) mask a +4% y/y increase when adjusting for the extra week in Q1 FY24, per CFO commentary .
Q2 FY25 guidance calls for $2.50B ± $0.10B revenue, ~40.5% adjusted operating margin (±100 bps), and $1.68 ± $0.10 adjusted EPS, with Industrial leading sequential growth and Automotive also up; management expects double-digit y/y growth in Q2 .
Capital return stepped up: dividend raised 8% to $0.99/share and buyback authorization increased by $10B (remaining authorization ≈$11.5B), reinforcing a long-term target to return 100% of FCF to shareholders .
Recovery signals strengthened: positive book-to-bill in Q1, channel inventories below the 7–8 week target while ADI ships to sell-through, and improving bookings led by Industrial and Automotive—key setup for sequential growth and a return to growth in FY25 .

What Went Well and What Went Wrong

What Went Well
- Mix-driven margin resilience: adjusted GM rose to 68.8% (up 90 bps q/q), supporting 40.5% adjusted operating margin and $1.63 adjusted EPS at the high end of guidance; “revenue, profitability, and EPS all finished above the midpoint” (CEO) .
- AI and data center exposure building: shipping high-precision electro-optical controllers in 1.6T modules for AI systems; vertical power solutions moving to production with a hyperscaler in 2H CY25 .
- Capital return signaling confidence: 8% dividend hike to $0.99 (21st consecutive increase) and $10B added to repurchase authorization to ≈$11.5B remaining; long-term goal remains 100% FCF return (40–60% via dividend) .
What Went Wrong
- Y/Y softness persists in core end markets: Industrial -10% y/y, Automotive -2% y/y, Communications -4% y/y; GAAP operating margin compressed to 20.3% (-300 bps y/y) despite adjusted strength .
- Consumer seasonal downtick: Consumer revenue fell 15% q/q (still +19% y/y), highlighting seasonal sensitivity even as content trends improve .
- Inventory metrics remain elevated: days of inventory rose to 176 as ADI replenishes die bank to support responsiveness; channel inventories remain below the 7–8 week target, and management is shipping to sell-through, not restocking near term .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$2,312	$2,443	$2,423
GAAP Gross Margin %	56.7%	58.0%	59.0%
Adjusted Gross Margin %	67.9%	67.9%	68.8%
GAAP Operating Margin %	21.2%	23.3%	20.3%
Adjusted Operating Margin %	41.2%	41.1%	40.5%
GAAP Diluted EPS ($)	$0.79	$0.96	$0.78
Adjusted Diluted EPS ($)	$1.58	$1.67	$1.63

Note: CFO indicated adjusting for the extra week in Q1 FY24 turns Q1 FY25 to +4% y/y revenue growth (vs -4% reported) .

Segment/end-market revenue

End Market ($USD Millions)	Q3 2024	Q4 2024	Q1 2025
Industrial	$1,058.7	$1,071.0	$1,077.9
Automotive	$670.3	$717.0	$732.5
Consumer	$316.6	$379.7	$322.9
Communications	$266.6	$275.6	$289.9
Total	$2,312.2	$2,443.2	$2,423.2

KPIs and cash metrics

KPI	Q3 2024	Q4 2024	Q1 2025
Net Cash from Ops ($MM)	$855.0	$1,050.8	$1,126.8
Capex ($MM)	$(153.9)	$(165.4)	$(149.0)
Free Cash Flow ($MM)	$701.1	$885.4	$977.8
FCF as % of Revenue	30%	36%	40%
Dividend per Share	$0.92 (declared for Sep 17, 2024)	$0.92 (paid Dec 20, 2024)	$0.99 (declared for Mar 17, 2025)
Days of Inventory	N/A	N/A	176
Book-to-bill	N/A	N/A	Positive in Q1
Net leverage ratio	N/A	N/A	1.1

Non-GAAP adjustments (Q1 FY25): GAAP EPS $0.78 plus $0.85 acquisition-related, plus $0.13 special charges, minus $0.13 tax items = adjusted EPS $1.63 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q2 FY25	N/A (no prior Q2 guide)	$2.50B ± $0.10B	New
Reported Operating Margin	Q2 FY25	N/A	~24.2% ± 160 bps	New
Adjusted Operating Margin	Q2 FY25	N/A	~40.5% ± 100 bps	New
Reported EPS	Q2 FY25	N/A	$0.97 ± $0.10	New
Adjusted EPS	Q2 FY25	N/A	$1.68 ± $0.10	New
Non-operating expenses	Q2 FY25	N/A	~ $60MM	New
Tax rate	Q2 FY25	N/A	11%–13%	New
Dividend	Ongoing	$0.92 (Q4 FY24)	$0.99 (Q1 FY25)	Raised
Share repurchase authorization	Ongoing	N/A	+$10B; remaining ≈$11.5B	Increased

Management also noted Q1 actuals exceeded the midpoint of prior guidance (given 11/26/24: Q1 revenue $2.35B ± $0.10B; adjusted EPS $1.53 ± $0.10), delivering $2.423B and $1.63 respectively .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY24, Q4 FY24)	Current Period (Q1 FY25)	Trend
AI/data center content	Positioning to intersect secular trends; improving order momentum into Q4	Shipping 1.6T electro-optical controllers for AI systems; vertical power to production in 2H CY25 with hyperscaler	Improving
Supply chain/inventory	Customer inventory levels improving; cautious recovery	Channel inventories below 7–8 weeks; shipping to sell-through; days inventory 176; positive book-to-bill	Normalizing
Industrial demand	Sequential growth resumed; trough passed	Industrial up 1% q/q; expected fastest-growing market in Q2; broad market pick-up	Improving
Automotive (China/EV/content)	Bookings improvement led by Automotive in Q4	China strength; content wins (GMSL, A2B, safety power); BMS to return to growth in ’25	Improving
Capital returns	$0.92 dividend maintained; ongoing buybacks	Dividend raised to $0.99; +$10B authorization; 100% FCF LT target reiterated	More aggressive
Macro/geopolitics & manufacturing resiliency	Cautious on macro; hybrid model as a strength	Dual sourcing plan: ≥95% products dual-sourced by late ’26/early ’27; desensitized geographic risk	Strengthening resiliency

Management Commentary

CEO: “First quarter revenue, profitability, and EPS all finished above the midpoint of our outlook… our outlook for double-digit year-over-year growth in our second quarter builds my confidence that 2025 will be a year of growth.”
CFO: “First quarter gross margin was 68.8%, up 90 basis points sequentially, driven by favorable product mix… adjusted EPS was $1.63, at the high end of our guided range.”
On inventory/channel: “Channel weeks moved lower and remained below our target of 7 to 8 weeks… guidance for Q2 has us shipping to sell-through, so not adding into the channel.”
On AI exposure: “Our high-precision electrooptical controller is now shipping in a 1.6 terabit optical module for AI systems… we’ll begin shipping our vertical power solutions later in this year.”
On capital returns: “We announced an 8% increase to our quarterly dividend to $0.99… our Board has authorized an incremental $10 billion for share repurchases… roughly $11.5 billion remaining.”

Q&A Highlights

Auto strength led by China: ADI has stronger share/content at major Chinese EV OEMs (video/audio connectivity, safety power, BMS); momentum expected to continue into Q2 .
Industrial recovery details: three straight quarters of sequential growth; Q2 expected to be the fastest-growing end market; broad market pick-up drove upside vs initial expectations .
Channel strategy: Q2 guide assumes shipping to sell-through (no channel restock near term); operating comfortably below 7–8 week channel target while carrying more die bank inventory for responsiveness .
Data center/AI pipeline: 1.6T optical controllers shipping; vertical power enters production in 2H CY25 with hyperscaler; additional designs expected in 2026 .
Manufacturing resiliency: by late ’26/early ’27, ≥95% of products to have at least dual sources; capacity roughly doubled vs pre-pandemic; geographic desensitization ongoing .

Estimates Context

S&P Global consensus estimates for Q1 and Q2 were not retrievable at the time of analysis due to an S&P Global request limit. As a result, we cannot quantify beats/misses versus S&P consensus for this quarter and instead anchor to company guidance and reported actuals [GetEstimates error].
Where relevant, management signaled results were above guidance midpoints, and Q2 guidance implies double-digit y/y growth and sequential improvement in Industrial and Automotive .

Key Takeaways for Investors

Setup improving: positive book-to-bill, normalized customer inventories, and below-target channel weeks underpin sequential growth and double-digit y/y guidance for Q2—supportive for near-term estimate and multiple stability .
Margin resilience: adjusted GM at 68.8% with steady ~40.5% adjusted operating margin amid recovery suggests mix/discipline can sustain premium profitability through the upturn .
AI leverage emerging: tangible content in AI optical modules and imminent vertical power ramps with a hyperscaler indicate incremental, higher-quality growth vectors beyond core cyclical recovery .
Capital return accelerant: 8% dividend hike and $10B buyback authorization (≈$11.5B remaining) provide downside support and a potential stock reaction catalyst, reinforcing 100% FCF return philosophy .
Watch industrial trajectory: management expects Industrial to lead Q2 growth; broad market firming and potential channel normalization create tailwinds if macro holds .
Monitor auto/China dynamics: strong content/share at Chinese EV OEMs is boosting results; sustained momentum mitigates macro risk but warrants monitoring for policy/tariff shifts .
Near-term risk checks: consumer seasonality, continued wireless weakness within Communications, and elevated on-hand inventory (176 DOI) could temper upside if macro/geopolitical volatility resurfaces .

ANALOG DEVICES INC (ADI)·Q1 2025 Earnings Summary