Executive Summary

Q2 2025 revenue was $173.2M, down 4.8% q/q and up 4.8% y/y; non-GAAP EPS was $0.09 and GAAP diluted EPS was $(0.23), with gross margin compression driven by ASP erosion and mix changes .
Guidance for Q3 2025 was lowered: revenue $158M ± $10M, GAAP GM 21.5% ± 1% (non-GAAP 22.5% ± 1%), and GAAP opex raised to $46.5M ± $1M, reflecting the wind-down of license/engineering revenue and Lunar New Year cost pressures .
Communications and Industrial segments outperformed internal expectations, with notable sequential strength in graphics cards, quick chargers, PC desktops, and power tools; Computing represented 43.9% of revenue and will likely decline seasonally in March, while AI platform transitions temper near-term accelerator card demand .
Management highlighted mid-year AI opportunities (server system boards and accelerator cards) and increasing smartphone BOM content from higher charging currents; near-term margins are expected to trough in March and recover by June toward December levels, framing a medium-term content-led thesis .

What Went Well and What Went Wrong

What Went Well

Communications and Industrial segments performed better than initially expected, with broad-based smartphone demand and quick chargers/power tools strength, supporting results at the high end of guidance on segments and product areas like graphics cards and PC desktops .
Strategic progress toward “total solutions” with AI multiphase controllers and power stages; AOS launched the AOZ73016QI (NVIDIA OpenVReg16-compliant) controller, enabling higher content and improved thermals for AI servers and graphics cards .
Operating cash flow improved to $14.1M (vs. $11.0M in Q1), cash rose to $182.6M, and DSO fell to 12 days (from 15), indicating healthier collections and liquidity .

What Went Wrong

Gross margins contracted (GAAP 23.1%, non-GAAP 24.2%) due to ASP erosion and mix; non-GAAP operating income fell to $3.0M (from $7.8M in Q1) .
Computing and Consumer segments saw seasonal and platform-transition headwinds (gaming tapering late-cycle; notebooks/tablets softness), contributing to sequential revenue decline .
Q3 guidance implies further revenue and margin pressure as license/engineering revenue concludes and manufacturing costs rise during Lunar New Year, while tariffs introduce demand timing uncertainty (pull-ins cited) .

Financial Results

Consolidated P&L and EPS

Metric	Q2 2024 (Dec 31, 2023)	Q4 2024 (Jun 30, 2024)	Q1 2025 (Sep 30, 2024)	Q2 2025 (Dec 31, 2024)
Revenue ($USD Millions)	$165.3	$161.3	$181.9	$173.2
GAAP Gross Margin %	26.6%	25.7%	24.5%	23.1%
Non-GAAP Gross Margin %	28.0%	26.4%	25.5%	24.2%
GAAP Operating Income (Loss) ($M)	$(1.1)	$(1.5)	$(0.3)	$(5.9)
Non-GAAP Operating Income ($M)	$8.4	$3.2	$7.8	$3.0
GAAP Net Income (Loss) ($M)	$(2.9)	$(2.7)	$(2.5)	$(6.6)
GAAP Diluted EPS ($)	$(0.10)	$(0.09)	$(0.09)	$(0.23)
Non-GAAP Net Income ($M)	$7.2	$2.6	$6.4	$2.7
Non-GAAP Diluted EPS ($)	$0.24	$0.09	$0.21	$0.09

Product Mix Detail (Q2 2025)

Metric	Q2 2025	Q1 2025	Q2 2024
DMOS Revenue ($USD Millions)	$113.0	$122.5 (calc of −7.8% seq; directional only in commentary)	$108.9 (+3.8% y/y implied by commentary)
Power IC Revenue ($USD Millions)	$53.7	$52.9 (+1.5% q/q)	$50.3 (+6.8% y/y)
License & Engineering Revenue ($USD Millions)	$5.4	$5.6	$5.5
Assembly Service & Other ($USD Millions)	$1.1	$0.9	$0.7

Note: Sequential and y/y mix change rates are provided by management; exact prior-period DMOS and Power IC dollar values beyond Q2 2025 are referenced qualitatively in prepared remarks .

Segment Breakdown (Q2 2025)

Segment	% of Revenue	Sequential Change	YoY Change
Computing	43.9%	−0.5%	+6.0%
Consumer	13.0%	−28.8%	−3.9%
Communications	19.2%	−6.4%	+14.5%
Power Supply & Industrial	20.2%	+9.6%	Flat y/y

KPIs

Metric	Q1 2025	Q2 2025
Operating Cash Flow ($USD Millions)	$11.0	$14.1
Cash & Cash Equivalents ($USD Millions)	$176.0	$182.6
DSO (days)	15	12
Inventory Days (days)	125	125
CapEx ($USD Millions)	$6.7	$7.4
EBITDAS ($USD Millions)	$20.6	$16.8

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q3 2025 vs. prior Q2 guide	$170M ± $10M (for Q2)	$158M ± $10M	Lowered
GAAP Gross Margin (%)	Q3 2025 vs. prior Q2 guide	24% ± 1% (for Q2)	21.5% ± 1%	Lowered
Non-GAAP Gross Margin (%)	Q3 2025 vs. prior Q2 guide	25% ± 1% (for Q2)	22.5% ± 1%	Lowered
GAAP Operating Expenses ($M)	Q3 2025 vs. prior Q2 guide	$45.0 ± $1.0	$46.5 ± $1.0	Raised
Non-GAAP Operating Expenses ($M)	Q3 2025 vs. prior Q2 guide	$38.8 ± $1.0	$39.5 ± $1.0	Raised
Interest Expense vs. Income	Q3 2025 vs. prior Q2 guide	Approximately equal	Approximately equal	Maintained
Income Tax Expense ($M)	Q3 2025 vs. prior Q2 guide	$1.0–$1.2	$1.1–$1.3	Slightly Higher

Drivers: decline in license/engineering revenue and Lunar New Year manufacturing cost increases weigh on margins and opex .

Earnings Call Themes & Trends

Topic	Q4 2024 (Previous Mentions)	Q1 2025 (Previous Mentions)	Q2 2025 (Current Period)	Trend
AI/Technology Initiatives	Working on multiple AI prospects; seasonality returning; PC slower to recover	Expect slight sequential growth in Computing and Industrial; transition to total solutions	AI design-ins in mid stages; mid-year launch targeted; total solution with controllers + power stages; OVR16 controller launched	Building momentum; content growth ahead mid-year
Supply Chain/Seasonality	Inventory corrections largely behind; fall launches expected	Seasonal declines anticipated in notebooks/smartphones; offset by desktops/graphics/quick chargers	Typical seasonal decline expected in March quarter across battery PCM and quick chargers	Seasonality normalized; near-term headwinds
Tariffs/Macro	Not explicitly highlighted in Q4 PR	Not detailed	Tariff uncertainty driving demand pull-ins; limited visibility	Macro uncertainty persists; timing shifts
Product Performance	Strength in gaming, tablets, e-mobility, AI, home appliances	Strength anticipated in desktops, graphics, quick chargers	Sequential growth in graphics cards, quick chargers, PC desktops, power tools; notebooks/tablets softer	Mixed; growth areas offset seasonal declines
Regional Trends	Not specified	Not specified	Smartphone demand: Tier 1 US and China OEMs steady; Korea preparing product launches	Healthy mix; Korea pre-launch boost
Regulatory/Legal	Ongoing government investigation expenses in non-GAAP reconciliation	Continued non-GAAP exclusions for legal costs	Legal costs excluded in non-GAAP; JV dynamics referenced in risk factors	No new issues; costs continue
R&D Execution	Not specified	Non-GAAP opex down; R&D investments ongoing	R&D spending up slightly driving non-GAAP opex; controller launch evidences execution	Elevated R&D; product rollout cadence maintained

Management Commentary

“We delivered fiscal Q2 revenue and EPS results in-line with our guidance. Revenue was $173.2 million, non-GAAP gross margin was 24.2%. Non-GAAP EPS was $0.09.” — Stephen Chang, CEO .
“We saw strength in Communications and Industrial segments, with notable sequential growth in graphics cards, quick chargers, PC desktops and power tools.” — Stephen Chang .
“Within AI for large data centers, we are a contender in the middle stages of the design-in phase and we see potential for these products to contribute to revenue in the middle of the calendar year.” — Stephen Chang .
“Non-GAAP gross margin was 24.2%, compared to 25.5% last quarter and 28.0% a year ago. The quarter-over-quarter decrease was mainly impacted by ASP erosion and mix changes.” — Yifan Liang, CFO .
“We anticipate non-GAAP gross margin to be 22.5%, plus or minus 1%. The expected quarter-over-quarter decline is largely due to the decrease in license and engineering service revenue and… the anticipated increase in manufacturing costs during the Lunar New Year period.” — Yifan Liang .

Q&A Highlights

AI platform transition: Management emphasized ramp timing and content gains with multiphase controllers and power stages; server system board opportunities are “multiples bigger” TAM than graphics cards; mid-year launch targeted, share TBD .
Margins outlook: ASP erosion mid-single digits expected in 2025; non-GAAP gross margin to trough in March and recover to December levels by June quarter as mix improves and costs normalize .
Tariff dynamics: Noted modest demand pull-ins given uncertainty; computing guided only slightly down due to this effect .
Operations/KPIs: Internal utilization ~80%; DSO improved; capex guide $7–$9M for March; customer deposits refunds expected ($11.1M in March; ~$25M in CY25) .
Gaming cycle: Late-cycle tapering around year 5; focus shifting to next-gen platform; near-term consumer segment headwind .

Estimates Context

Wall Street consensus estimates (S&P Global) were unavailable due to a data access limit at the time of retrieval; as a result, a quantitative comparison vs consensus cannot be provided. Values retrieved from S&P Global.*
Management stated Q2 results were “in-line” with revenue and EPS guidance, and Q3 guidance was lowered on revenue and margins, which implies potential downside vs prior expectations .

Key Takeaways for Investors

Near-term setup cautious: Q3 guide lowers revenue and margins as license/engineering revenue ends and LNY costs lift COGS; expect trough margins in March, with recovery by June toward December levels .
Content-led thesis: Multiphasic controller + power stage solutions in AI servers/accelerator cards can drive BOM content expansion mid-year; smartphone battery PCM content rising with higher charging currents .
Mix and ASP are key levers: Margin pressure from ASP erosion and product mix should moderate with new product rollout cadence and utilization improvements; watch Computing mix and AI ramp .
Liquidity and cash generation improving: OCF up sequentially and cash balance increased; DSO improved; capex disciplined ($7–$9M guide) .
Segment positioning: Communications and Industrial provided resilience; Computing likely seasonally down in March but with AI platform transitions underway; Consumer faces gaming platform headwinds .
Monitor tariff and macro timing: Modest demand pull-ins cited; visibility limited; could affect quarterly timing but not medium-term content narrative .
Actionable: Position for a potential margin inflection in June and for mid-year AI program launch milestones; near-term caution into March quarter, with a focus on evidence of AI content wins and smartphone BOM expansion in subsequent quarters .

ALPHA & OMEGA SEMICONDUCTOR Ltd (AOSL)·Q2 2025 Earnings Summary