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ALPHA & OMEGA SEMICONDUCTOR Ltd (AOSL)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue was $176.5M, up 7.2% q/q and 9.4% y/y, landing at the high-end of guidance; non-GAAP gross margin improved to 24.4% on richer Power IC mix, while GAAP results were impacted by a $76.8M impairment tied to the planned CQJV equity sale .
  • Versus consensus, AOSL beat on both revenue ($176.5M vs $170.0M*) and EPS ($0.02 vs -$0.01*), continuing a three-quarter streak of top-line upside as AI/graphics, tariff-driven PC pull-ins, and wearables outperformed .
  • Guidance for Q1 FY2026 (Sep-25): revenue $183M ±$10M; GAAP GM ~23.8% (non-GAAP ~24.4%); GAAP opex ~$47.5M (non-GAAP ~$41.0M); net interest +$0.5M; tax $1.0–$1.3M, signaling sequential growth led by PCs, smartphones, and wearables .
  • Strategic catalysts: monetization of CQJV stake ($150M cash inflow expected in installments) to fund growth/M&A, and resolution of BIS investigation ($4.25M settlement), reducing legal overhang .

What Went Well and What Went Wrong

What Went Well

  • Computing strength: Segment rose to 52.6% of revenue, +17.9% q/q and +29.7% y/y, driven by AI/graphics at record levels and PC pull-ins amid tariff uncertainty. “Our fiscal Q4 results came in at the high-end of our guidance, led by strength in Computing as A.I. and graphics revenue reached record levels… as well as continued momentum in wearables” — CEO Stephen Chang .
  • Power IC mix: Power IC revenue reached $68.7M (+25.8% q/q, +30.2% y/y) and ~40% of product revenue, benefiting margins and diversified end-market exposure (graphics, AI, gaming, PCs) .
  • Legal/strategic clarity: BIS matter resolved with $4.25M payment; CQJV partial sale ($150M) strengthens liquidity and supply flexibility; management emphasized reinvestment into technology/capacity and potential M&A .

What Went Wrong

  • GAAP net loss widened to -$77.1M due to the $76.8M CQJV impairment; GAAP opex rose to $52.9M, including elevated legal costs and SB compensation; EBITDAS fell to $10.5M q/q .
  • Communications and PS&I underperformed guidance: Communications -5.2% q/q (China smartphone softness); PS&I -9.8% q/q (power tools, e-mobility weakness), though quick chargers increased .
  • Cash metrics tightened: Operating cash flow was -$2.8M (refund of customer deposits) and cash & equivalents declined to $153.1M; DSO lengthened to 15 days; CapEx elevated to $14.3M .

Financial Results

Quarterly Financials

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$173.2 $164.6 $176.5
GAAP Gross Margin (%)23.1% 21.4% 23.4%
Non-GAAP Gross Margin (%)24.2% 22.5% 24.4%
GAAP Operating Income (Loss) ($M)$(5.9) $(10.7) $(11.6)
Non-GAAP Operating Income (Loss) ($M)$3.0 $(2.7) $2.3
GAAP Net Income (Loss) ($M)$(6.6) $(10.8) $(77.1)
GAAP Diluted EPS ($)$(0.23) $(0.37) $(2.58)
Non-GAAP Diluted EPS ($)$0.09 $(0.10) $0.02
Operating Cash Flow ($M)$14.1 $7.4 $(2.8)
Cash & Equivalents ($M)$182.6 $169.4 $153.1

Product Mix and Segment Metrics

MetricQ2 2025Q3 2025Q4 2025
DMOS Revenue ($M)$113.0 $106.8 $107.3
Power IC Revenue ($M)$53.7 $54.6 $68.7
Assembly/Other Revenue ($M)$1.1 $0.4 $0.5
License & Engineering Revenue ($M)$5.4 $2.8 $0.0
Segment Mix (Q4 FY25)Share of Revenueq/qy/y
Computing52.6%+17.9%+29.7%
Consumer15.1%+23.9%-5.8%
Communications15.2%-5.2%-1.7%
Power Supply & Industrial16.8%-9.8%+7.3%

Operating KPIs

KPIQ2 2025Q3 2025Q4 2025
Days Sales Outstanding (DSO)12 days 11 days 15 days
Inventory Days125 days 129 days 126 days
CapEx ($M)$7.4 $8.1 $14.3
EBITDAS ($M)$16.8 $15.2 $10.5

Actual vs Consensus (S&P Global)

MetricQ2 2025 Consensus*Q2 2025 ActualQ3 2025 Consensus*Q3 2025 ActualQ4 2025 Consensus*Q4 2025 Actual
Revenue ($USD)$170.07M*$173.16M $157.23M*$164.64M $170.03M*$176.48M
Primary EPS ($)$0.08*$0.09 $(0.167)*$(0.10) $(0.01)*$0.02

Values with asterisk retrieved from S&P Global. Primary EPS actuals align with reported non-GAAP diluted EPS in company materials for these periods .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/OutcomeChange
Revenue ($M)Q4 FY2025~$170 ± $10 $176.5 actual Beat vs guidance high-end
GAAP Gross Margin (%)Q4 FY2025~22.9% ±1 23.4% actual In-line to slightly above
Non-GAAP Gross Margin (%)Q4 FY2025~24.0% ±1 24.4% actual Slightly above
GAAP Opex ($M)Q4 FY2025~$47.1 ±1 $52.9 actual Higher (legal/SBC impacts)
Non-GAAP Opex ($M)Q4 FY2025~$40.2 ±1 $40.9 actual Slightly higher
Revenue ($M)Q1 FY2026N/A~$183 ± $10 New
GAAP Gross Margin (%)Q1 FY2026N/A~23.8% ±1 New
Non-GAAP Gross Margin (%)Q1 FY2026N/A~24.4% ±1 New
GAAP Opex ($M)Q1 FY2026N/A~$47.5 ±1 New
Non-GAAP Opex ($M)Q1 FY2026N/A~$41.0 ±1 New
Net Interest ($M)Q1 FY2026N/A+$0.5 vs interest expense New
Tax Expense ($M)Q1 FY2026N/A$1.0–$1.3 New

Earnings Call Themes & Trends

TopicQ2 FY2025 (Dec-24)Q3 FY2025 (Mar-25)Q4 FY2025 (Jun-25)Trend
AI/Graphics & Advanced ComputingPlatform transitions; expect ramp later; BOM content increasing Graphics projected record; AI program volume started; more design-ins AI/graphics at record; initial shipments digestion expected in Sep; more design-ins ongoing Strengthening; near-term digestion; pipeline healthy
Licensing & Engineering Revenue$5.4M; contract ending mid-Feb $2.8M; wound down in March $0 in June quarter Wind-down complete; mix shifts to product revenue
Tariffs/Supply ChainPC demand pull-ins emerging Tablets/notebooks pull-ins; visibility limited PC pull-ins boosted Q4; customers rushing pre-tariff changes; limited visibility Transitory uplift; risk to near-term normalization
Smartphones/PCMY/Y +14.5% in Dec; low-teens q/q decline expected in Mar In-line seasonal decline; leadership in battery PCM Q4 below guidance (China softness); >10% q/q growth expected in Sep driven by Tier-1 US launch Seasonal recovery; share/content gains
PS&I / Quick ChargersSequential growth (quick chargers; power tools) Better than forecast; seasonal dynamics -9.8% q/q; quick chargers up but offset by tools/e-mobility weakness Mixed; quick chargers positive, other end-markets uneven
CQJV & Capital AllocationN/AN/A$150M CQJV stake sale (ownership to 18.9%); impairment booked; reinvest in tech/M&A; capacity flexibility Liquidity/capacity optionality improved

Management Commentary

  • “Our fiscal Q4 results came in at the high-end of our guidance, led by strength in Computing as A.I. and graphics revenue reached record levels… as well as continued momentum in wearables.” — CEO Stephen Chang .
  • “Power IC revenue increased 25.8% sequentially and 30.2% year-over-year to a record quarterly high and now represents nearly 40% of total product revenue.” — CEO Stephen Chang .
  • “Based on the valuation of this sale, we recorded an impairment charge of $76.8 million in the June quarter on the U.S. GAAP basis… With this sale, our ownership in CQJV will reduce to 18.9% from 39.2%.” — CFO Yifan Liang .
  • “We anticipate non-GAAP gross margin to be 24.4%, plus or minus 1%… Non-GAAP operating expenses are expected to be $41.0 million, plus or minus $1.0 million.” — CFO Yifan Liang (Q1 FY2026 guidance) .

Q&A Highlights

  • Computing digestion: Management expects a digestion period for the new AI program shipments in September, while design-ins for additional AI programs remain active; graphics demand “better than expectations” at add-in card makers .
  • Gross margin dynamics: Q4 GM improved on mix; Q1 GM guided flattish as product mix and production levels remain similar despite higher revenue; longer-term margin improvement tied to growth areas and richer mix .
  • CQJV proceeds/use of cash: $150M expected in installments by year-end; priorities include investing in technology/talent/capacity and selective M&A; board to evaluate potential capital returns; supply flexibility to balance internal vs third-party foundries .
  • Tariffs: Direct tariff impact limited due to low US shipments, but PC demand pull-ins are prominent; customers accelerating builds before potential changes .

Estimates Context

  • Q4 FY2025: Revenue beat ($176.5M vs $170.0M*); EPS beat ($0.02 vs -$0.01*). Q3 FY2025: Revenue beat ($164.6M vs $157.2M*); EPS beat (-$0.10 vs -$0.167*). Q2 FY2025: Revenue beat ($173.2M vs $170.1M*); EPS beat ($0.09 vs $0.08*) .
  • With licensing revenue gone, consensus likely underestimated richer Power IC-driven mix and AI/graphics ramp; near-term estimates may need to reflect Q1 guidance implying sequential revenue growth with stable margins and segment commentary (PCs/smartphones/wearables strength; communications up >10% q/q) .

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Non-GAAP operational recovery: Despite GAAP impairment, the core business delivered margin improvement and EPS positivity on a richer Power IC mix and AI/graphics strength; monitor mix sustainability post-digestion .
  • Guidance implies sequential growth: Q1 FY2026 revenue guide ~$183M ±$10M with flattish margins; upside hinges on PCs, Tier-1 US smartphone launch, wearables, and seasonality .
  • Strategic liquidity and flexibility: $150M CQJV monetization enhances balance sheet and supply optionality; potential reinvestment into capacity/M&A and eventual capital return consideration .
  • Watch transitory PC pull-ins: Tariff-driven PC demand pulled forward in Q4; expect digestion in AI programs and potential normalization risk in computing volumes near term .
  • Segment mix matters: Communications expected >10% q/q in Q1; PS&I mixed with quick chargers positive but tools/e-mobility variable; Consumer down mid-single-digit in Q1 offset by wearables .
  • Legal overhang reduced: BIS settlement ($4.25M) removes multi-year investigation uncertainty, supporting focus on execution .
  • Trading setup: Narrative skewed to AI/graphics momentum and Q1 sequential growth; watch for margin progression vs mix, CQJV cash timing, and tariff policy developments as catalysts .