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DI

DIODES INC /DEL/ (DIOD)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue of $332.1M grew 10% year over year and was slightly better than seasonal but down 2.1% sequentially; non-GAAP EPS of $0.19, GAAP EPS of -$0.10; gross margin 31.5% compressed due to lower factory loading around Chinese New Year and inventory normalization, despite stronger Asia computing demand tied to AI-related applications .
  • Results beat Wall Street consensus for Q1 on revenue ($332.1M vs $323.3M*) and non-GAAP EPS ($0.19 vs $0.15*); EBITDA missed consensus due to non-operational items (impairment, mark-to-market) and underloading costs . Values retrieved from S&P Global.*
  • Q2 2025 guidance: revenue ~$355M ±3%, GAAP gross margin 31.8% ±1%, non-GAAP opex ~28% ±1%, net interest income ~$1.5M, tax rate 18% ±3%, diluted shares ~46.4M—implying both sequential and YoY growth; management expects margin expansion as inventory normalizes and higher-margin auto/industrial recover .
  • Announced $100M share repurchase program, citing strong cash generation and balance sheet, reinforcing confidence and serving as a near-term stock support/catalyst .

What Went Well and What Went Wrong

What Went Well

  • Year-over-year growth returned: “We delivered another quarter of year-over-year growth, achieving 10%… better than seasonal performance in the computing market in Asia, primarily driven by… AI-related applications.” .
  • Channel inventory normalized, backlog/book-to-bill improved: management noted channel inventory dollars and weeks decreased and POS improved; stronger beginning backlog into Q2 .
  • Capital return and balance sheet: $56.7M CFO, $40.8M FCF, cash/short-term investments ~$349M vs total debt ~$52M; $100M buyback authorized .

What Went Wrong

  • Gross margin compression to 31.5% (from 32.7% in Q4 and 33.0% YoY) due to lower loading around the Chinese New Year and inventory reductions; price pressure of 1–2% persists (normal range) .
  • GAAP net loss of $4.4M driven by $5.8M impairment of an equity investment and $4.0M unrealized losses; non-GAAP EPS also down sequentially (0.19 vs 0.27), reflecting underloading and non-operational items .
  • Auto/industrial still in inventory/demand adjustment with limited visibility; tariffs add uncertainty even as Diodes mitigates via hybrid manufacturing footprint .

Financial Results

Headline P&L vs prior periods

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$302.0 $339.3 $332.1
GAAP Gross Profit ($USD Millions)$99.6 $110.9 $104.7
GAAP Gross Margin (%)33.0% 32.7% 31.5%
GAAP Net Income (Loss) ($USD Millions)$14.0 $8.2 $(4.4)
GAAP Diluted EPS ($USD)$0.30 $0.18 $(0.10)
Non-GAAP Net Income ($USD Millions)$13.0 $12.5 $8.8
Non-GAAP Diluted EPS ($USD)$0.28 $0.27 $0.19

Actual vs Wall Street Consensus (S&P Global)

MetricConsensus Q1 2025Actual Q1 2025Surprise
Revenue ($USD Millions)$323.3*$332.1 +$8.8M / +2.7%
Primary EPS (Non-GAAP) ($USD)$0.15*$0.19 +$0.04
EBITDA ($USD Millions)$43.0*$26.2 -$16.8M

Values retrieved from S&P Global.*

Segment and KPI snapshot

MetricQ4 2024Q1 2025
End-market mix (% of product revenue): Auto19% 19%
End-market mix (% of product revenue): Industrial23% 23%
End-market mix (% of product revenue): Computing25% 27%
End-market mix (% of product revenue): Consumer18% 17%
End-market mix (% of product revenue): Communications15% 14%
Geography: Asia80% 78%
Geography: Europe12% 13%
Geography: North America8% 9%
Total inventory days193 187
Finished goods inventory days82 80
Cash Flow from Operations ($USD Millions)$81.8 $56.7
Free Cash Flow ($USD Millions)$62.1 (Q4 cash flow) / $46.0 FY context $40.8
Cash & ST investments ($USD Millions)$322 ~$349
Total Debt ($USD Millions)~$52 ~$52

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025~$323M ±3% Actual $332.1M Beat vs guide
GAAP Gross Margin (%)Q1 202532.5% ±1% Actual 31.5% Lower than guide
Non-GAAP Operating Expenses (% rev)Q1 2025~30% ±1% Actual 29.3% (non-GAAP) Better than guide
RevenueQ2 2025—~$355M ±3% New
GAAP Gross Margin (%)Q2 2025—31.8% ±1% New
Non-GAAP Operating Expenses (% rev)Q2 2025—~28% ±1% New
Net Interest Income ($USD Millions)Q2 2025—~$1.5 New
Tax Rate (%)Q2 2025—18% ±3% New
Diluted Shares (Millions)Q2 2025—~46.4 New
Capital Allocation2025+—$100M buyback authorized New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/server & data center exposureDouble-digit Asia POS; computing demand in AI servers; content per AI server ~$90 vs ~$53 traditional; PCIe switches, oscillators; strong design momentum Asia computing drove beat; expanding PCIe 6.0 clocks, muxes, packet switches; stronger pipeline including edge AI opportunities Improving demand and content
Channel inventory normalizationAsia channel inventory dollars/days fell; moderated CapEx to preserve cash Inventory days fell to 187; finished goods to 80; POS increased; book-to-bill and backlog improved Easing and normalizing
Gross margin driversUnderloading pressure persisting; focus on cost reduction and mix Margin down to 31.5% due to CNY loading and inventory reduction; plan to port more products internally, improve mix (auto/industrial) Near-term pressure; medium-term expanding
Tariffs/macroGlobal demand challenging; Europe/North America weaker Tariffs create uncertainty; hybrid manufacturing allows flexibility to mitigate cost impact Manageable via footprint
Auto/Industrial trajectoryAuto 19%, Industrial 23%; both undergoing adjustment; >700 new parts in 2024; auto content per car ~$213 Auto 19%, Industrial 23%; signs of improvement; visibility limited, focus on content expansion Stabilizing; set up for recovery
CapEx and capacity strategyModerated CapEx; sufficient capacity; potential to benefit from peers’ excess capacity via hybrid model CapEx 4.8% of revenue; no near-term expansion; optimize internal utilization, consolidate low-end capacity Prudent, efficiency-focused

Management Commentary

  • “First quarter revenue exceeded our expectations due to better than seasonal performance in the computing market in Asia, primarily driven by increasing opportunities for Diodes’ products in AI-related applications.” — Gary Yu, President .
  • “Channel inventory dollars and days have continued to decrease… As channel inventory continues to normalize and global demand improves, we should see a more material expansion to gross margin in future quarters.” — Gary Yu .
  • “We expect revenue to increase to approximately $355 million… GAAP gross margin is expected to be 31.8%…” — Brett Whitmire/CFO (as quoted in press) .
  • “Diodes is strategically positioned to meet global customers’ needs with our hybrid manufacturing model and internal facilities located across the U.S., China, Taiwan and the U.K.” — Gary Yu .
  • “$100 million stock repurchase program… reflects our ongoing commitment to delivering shareholder value.” — Gary Yu .

Q&A Highlights

  • Demand and tariffs: No evidence of demand “pull-ins”; POS up, channel inventory down; working closely with customers to monitor tariff impact; hybrid manufacturing footprint mitigates risk .
  • AI CapEx and regional dynamics: Positive hyperscaler data center demand and expanding edge AI opportunities; content per AI server box rising for Diodes .
  • Gross margin trajectory: Second-half margin catalysts include internal porting, higher-margin product mix, and improved utilization; price pressure remains in normal 1–2% range .
  • Capacity/CapEx: No near-term capacity expansion; focus on efficient internal utilization; potential top-line opportunities from peers’ excess capacity rather than footprint expansion .
  • Channel inventory level: Still slightly above target range (11–14 weeks), but appropriate to support expected 2H growth; short lead-time POs increasing .

Estimates Context

  • Q1 2025 beat: revenue $332.1M vs $323.3M consensus*; non-GAAP EPS $0.19 vs $0.15 consensus*; EBITDA missed ($26.2M vs $43.0M consensus*) as GAAP included impairment and investment losses and margins were affected by underloading . Values retrieved from S&P Global.*
  • Q2 2025 setup: Company guides ~$355M revenue vs prior consensus of $352.1M*; implied sequential growth and likely upward estimate revisions if order trends and margin expansion materialize . Values retrieved from S&P Global.*
  • Forward estimates snapshot: For Q2 2025, consensus revenue $352.1M*, EPS $0.25*; actuals subsequently reported were above these in aggregate, supporting narrative momentum [GetEstimates; Values retrieved from S&P Global.*].

Key Takeaways for Investors

  • Revenue and EPS beats were driven by Asia computing AI-related demand and improved POS/backlog; margin compression largely from temporary underloading and inventory normalization—set to improve as utilization and mix recover .
  • Buyback authorization ($100M) plus strong liquidity (~$349M cash vs ~$52M debt) provides downside support and signals confidence amid cyclical recovery .
  • Q2 guidance implies both sequential and YoY growth; monitor conversion of backlog and gross margin improvement as inventory normalizes and internal porting advances .
  • Auto/industrial demand visibility remains limited near term, but content expansion and design-win pipeline underpin medium-term margin and growth potential; watch tariff developments and regional demand in Europe/North America .
  • AI server and edge AI content is a structural growth driver; continued product introductions (PCIe 6.0 clocks, packet switches, oscillators) increase ASP/margin mix sensitivity to AI CapEx cycles .
  • Risks: Non-operational P&L items (impairment/mark-to-market), price pressure in commodity products, and tariff uncertainty; Diodes’ hybrid manufacturing footprint provides mitigation levers .
  • Near-term trading: Potential positive bias on buyback and Q2 sequential growth guide; medium-term thesis hinges on margin expansion from internal porting, auto/industrial recovery, and AI-related content growth .