Executive Summary

Q2 2025 revenue of $366.2M grew 10% q/q and 14% y/y, exceeding company guidance and marking a third straight y/y growth quarter, while non-GAAP EPS was $0.32; gross margin held at 31.5% as mix and underloading costs capped expansion .
Results exceeded S&P Global consensus: revenue $366.2M vs $352.1M* and non-GAAP EPS $0.32 vs $0.247*, with stronger interest income and tight OpEx control aiding EPS upside .
Q3 2025 guidance calls for ~$392M revenue (+7% q/q, +12% y/y), GM ~31.6%, and lower non-GAAP OpEx at ~26% of revenue, with AI-related computing in Asia and China EV demand as key drivers .
Setup: Channel and internal inventory days declined further; Asia POS rose double digits; consumer led growth, while auto/industrial stayed 42% of product revenue; catalysts include continued AI server content wins and improving utilization from internal fab qualifications .

What Went Well and What Went Wrong

What Went Well
- Revenue beat and strong sequential growth as AI-related computing demand in Asia and new consumer ramps drove upside; “our above expected revenue results represent our third consecutive quarter of year-over-year growth” .
- Expense discipline and higher interest income supported earnings; non-GAAP OpEx 27.3% and interest income ~$7.0M boosted bottom line .
- Channel/internal inventory reduced and POS strength in Asia (double-digit growth); “channel inventory being reduced further with both channel and internal inventory days decreasing” .
What Went Wrong
- Gross margin held flat at 31.5% as product mix skewed toward consumer and underloading costs persisted, limiting expansion .
- Automotive and industrial stayed “effectively flat” as a share of revenue; ongoing digestion and pockets of inventory in these markets constrained mix quality .
- Currency losses ($6.4M) were a headwind within other income; FX volatility offset some positives in the quarter .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	319.8	332.1	366.2
GAAP Gross Margin %	33.6%	31.5%	31.5%
GAAP Diluted EPS ($)	0.17	(0.10)	0.99
Non-GAAP EPS ($)	0.33	0.19	0.32
EBITDA ($M)	41.1	26.2	84.5
Cash from Operations ($M)	14.4	56.7	41.5

Actual vs S&P Global consensus (Q2 2025):

Metric	Consensus* (n)	Actual	Surprise
Revenue ($M)	352.1 (4)	366.2	+14.1 (+4.0%)
Non-GAAP EPS ($)	0.247 (3)	0.32	+0.073

Segment and mix (Q2 2025):

End-market mix: Industrial 23%, Automotive 19%, Computing 26%, Consumer 18%, Communications 14% .
Regional mix: Asia 78%, Europe 12%, North America 10% .
Auto + Industrial as % of product revenue: 42% (also 42% in Q1 and Q4) .

KPIs and balance sheet:

KPI	Q1 2025	Q2 2025
Inventory Days (Total)	187	173
Finished Goods Days	80	71
Working Capital ($M)	868	871
Cash+Restricted+ST Inv. ($M)	349	333
Total Debt ($M)	52	54
Free Cash Flow ($M)	40.8	21.1
Capex ($M)	15.9	20.4
Net Cash Flow ($M)	+26.2	(18.2)

Non-GAAP adjustments (Q2 2025): Excluded (net of tax) $23.4M unrealized investment gains, $12.7M gain on subsidiary disposal, and $4.8M amortization of acquisition-related intangibles .

Guidance Changes

Q3 2025 guidance (as of Aug 7, 2025):

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q3 2025	—	~$392M ±3%	—
GAAP Gross Margin %	Q3 2025	—	31.6% ±1%	—
Non-GAAP OpEx (% Rev)	Q3 2025	—	~26% ±1%	—
Net Interest Income ($M)	Q3 2025	—	~1.0	—
Tax Rate	Q3 2025	—	18% ±3%	—
Diluted Shares (M)	Q3 2025	—	~46.5	—

Execution vs Q2 2025 guidance (as of May 8, 2025):

Metric	Q2 Guide (mid)	Actual	Outcome
Revenue ($M)	355 ±3%	366.2	Beat; above high end
GAAP Gross Margin %	31.8% ±1	31.5%	In-line (below mid)
Non-GAAP OpEx (% Rev)	28% ±1	27.3%	Better
Net Interest Income ($M)	1.5	7.0	Better
Tax Rate	18% ±3	~17%	Better
Diluted Shares (M)	~46.4	46.462	In-line

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q2 2025)	Trend
AI/Technology initiatives	Q4: AI server content ~$90/box vs $53 traditional; PCIe packet switches, timing, oscillators in AI/data center . Q1: better-than-seasonal computing driven by AI in Asia .	AI-related computing demand in Asia a key driver; strong share gains in PCIe packet switches; new PCIe re-drivers, clock buffers and masters introduced .	Accelerating
Supply chain/inventory	Q4: inventory days ~193; channel inventory lower but digestion persists in auto/industrial . Q1: channel inventory dollars/days continued to decrease .	Inventory days down to ~173; channel & internal days decreased further; underloading costs still headwind .	Improving
Tariffs/macro	Q1: markets remain dynamic, recent tariffs noted .	Tariff pull-ins seen as “small/immaterial”; demand largely organic .	Less impactful
Product performance/mix	Q4: Auto+Industrial 42% of product revenue . Q1: Auto+Industrial 42% .	Consumer strongest growth; Auto+Industrial still 42%; mix less favorable for margin .	Mixed: topline up, mix headwind
Regional trends	Q4: Asia 80%; Europe 12%; NA 8% .	Asia 78%; Europe 12%; NA 10%; double-digit POS growth in Asia .	Asia-led strength
R&D execution/NPIs	Q4: 755 new P/Ns in 2024 (330 automotive) .	>100 new P/Ns in Q2; >50% automotive .	Sustained pipeline

Management Commentary

“Our above expected revenue results represent our third consecutive quarter of year-over-year growth… POS increased sequentially across all regions with double-digit growth in Asia… channel and internal inventory days decreasing.” — Gary Yu, CEO .
“We expect [Q3] revenue to increase to approximately $392 million… GAAP gross margin 31.6% ±1%… non-GAAP OpEx ~26% ±1%… tax rate 18% ±3%” .
“Non-GAAP operating expenses were 27.3% of revenue… total other income ~$43.8M (unrealized gains, subsidiary disposal, interest income), offset by FX losses” — Brett Whitmire, CFO .
“AI-related applications remain a highlight… PCIe packet switches leading momentum; expanding beyond AI servers into industrial and security” — Emily Yang, SVP Sales & Marketing .

Q&A Highlights

Tariffs/pull-ins: Management views tariff-driven pull-ins as “small/immaterial”; demand primarily driven by AI and share gains .
Utilization and underloading: Utilization varies by fab/product; continued migration/qualification to internal fabs aims to mitigate underloading costs; expecting margin improvement as revenue rises and mix improves .
AI revenue composition: PCIe packet switches are key, with broader “total solution” attach across analog/mixed-signal and discrete; expanding beyond AI servers into industrial/security .
Pricing: Environment largely stable; DIOD prioritizes long-term customer relationships/share gains over opportunistic pricing; peers’ price actions seen as share opportunities .
Internal fab qualification: Active PCNs with key customers; progress good; strategy to offset future external wafer service headwinds .

Estimates Context

Q2 2025 vs S&P Global consensus: Revenue $366.2M vs $352.1M* (n=4); non-GAAP EPS $0.32 vs $0.247* (n=3). Execution benefited from stronger interest income and lower non-GAAP OpEx than guided .
Current forward consensus: Q3 2025 revenue ~$392.2M* (n=3), EPS ~$0.383* (n=3); Q4 2025 revenue ~$380.0M*, EPS ~$0.273* (n=3). Values retrieved from S&P Global.*

Key Takeaways for Investors

Demand uptrend is durable into Q3: guidance implies +7% q/q and +12% y/y revenue with Asia AI computing and China EV tailwinds; watch for continued POS strength and backlog conversion .
Margin recovery will likely be gradual: mix (consumer strength) and underloading costs capped GM at 31.5%; internal fab qualifications and Auto/Industrial recovery are key levers for expansion .
Operating discipline is a support: non-GAAP OpEx fell to 27.3% of revenue; Q3 guidance targets ~26%, providing earnings cushion even if GM is flat .
Balance sheet remains solid for cycle-up: $333M cash/near-cash vs $54M total debt; working capital ~$871M; supports inventory normalization and selective buybacks/investments .
AI content story broadening: PCIe packet switches lead, with attach opportunities across timing, connectivity, protection, and power; diversified beyond data center into industrial/security .
Risks to monitor: FX volatility, mix risk (consumer vs Auto/Industrial), lingering auto/industrial digestion and underloading, and macro/tariff uncertainty (though currently immaterial per mgmt) .
Near-term trading lens: Positive setup with revenue/estimate beats and above-seasonal guide; stock likely sensitive to continued AI order momentum, inventory days trajectory, and any GM inflection signals .

Values retrieved from S&P Global.*

Additional Data References:

Financial statements, reconciliations, and outlook: Q2 2025 8-K/Press Release and exhibits .
Q1 2025 8-K/Press Release and slides for prior-quarter comps and Q2 guide .
Q2 2025 earnings call transcript for qualitative detail and KPIs .
Q4 2024 transcript for trend context .

DIODES INC /DEL/ (DIOD)·Q2 2025 Earnings Summary