417649053e22a5a8399874dffcc87133d9c2a01ddb88df71355561ef35a40cff

The spike in **cash and cash equivalents** in Q3 2025 can be attributed to several factors. **Operating cash flows** played a significant role, with net cash provided by operating activities amounting to **$692.2 million** over the nine-month period, driven by net income and substantial non-cash adjustments.  **[0000827054-25-000019_mchp-20241231.htm:43]**  Additionally, the company raised considerable cash through **debt issuance**, including the sale of **$1 billion investment-grade bonds at 4.9%** and **$1 billion of bonds at 5.5%**, which were later used to retire a **$750 million term loan** and pay down parts of the commercial paper balance.  **[MCHP_3414812_4]**  Furthermore, the **timing of commercial paper maturities** in early January 2025 temporarily boosted the cash balance before funds were redeployed, while **capital expenditures** remained modest at **$81 million** during the quarter.  **[MCHP_3414812_4]**  These factors collectively contributed to the pronounced increase in liquidity in Q3 2025.  **[0000827054-25-000019_mchp-20241231.htm:3]** **[0000827054-25-000019_mchp-20241231.htm:43]** **[MCHP_3414812_4]** 

Why did Cash and cash equivalents spike in Q3 2025?

The decline in total assets during Q2 2025 was mainly driven by several specific decreases: **cash and cash equivalents** fell by **$33.6 million**, **accounts receivable** declined by **$99.4 million**, **intangible assets** decreased by **$127.3 million**, and **other assets** dropped by **$40.2 million**. Although **inventories** increased by **$23.6 million**, this was not enough to offset the overall reductions, resulting in a net decrease of **$250.9 million** in total assets.  **[0000827054-24-000206_mchp-20240930.htm:3]** 

What caused Total assets to decline in Q2 2025?

The surge in long-term debt in Q3 2025 was primarily driven by the **issuance of new investment-grade bonds**—specifically, **$1 billion in 4.9% bonds maturing in March 2028** and **$1 billion in 5.5% bonds maturing in February 2030**—combined with targeted **debt repayments**, including the retirement of **$665.5 million in convertible bonds** and **$750 million of its 2025 Term Loan Facility**. These actions, along with adjustments from commercial paper activity, culminated in a **net increase in long-term debt** from $5 billion to **$6.75 billion**, reflecting the company’s broader strategy to refinance existing obligations and manage its overall leverage.  **[MCHP_3414812_4]** **[0000827054-25-000019_mchp-20241231.htm:13]** **[0000827054-25-000019_mchp-20241231.htm:17]** **[0000827054-25-000019_mchp-20241231.htm:45]** 

What drove the surge in long-term debt in Q3 2025?

2d526cd64871308918273ec88ad82926793b8964bfb0d863f428142b0c536196

The significant drop in **Operating Income** in Q4 2024 was due to several factors. The company experienced a notable **40.6% decrease in net sales**, which had a direct impact on profitability. Additionally, an **inventory correction** further affected sales performance. The operating expenses were also adversely affected by a **$151.2 million amortization** of acquired intangible assets. Finally, **special income adjustments** (including a **$16.9 million** settlement adjustment) contributed to reducing the overall operating income, which fell from **$848.0 million** in the previous year’s quarter to **$253.5 million** in Q4 2024.  **[0000827054-24-000078_exhibit991q4fy24.htm:6]** **[0000827054-24-000078_exhibit991q4fy24.htm:8]** 

Why did Operating Income drop significantly in Q4 2024?

Operating Income in Q3 2025 plummeted primarily because of a **sharp decline in net sales** — falling from **$1.766 billion** in Q3 2024 to **$1.026 billion** in Q3 2025, a **41.9% decrease** — which significantly reduced revenue. This was compounded by **higher operating expenses** relative to the lower revenue, including increased amortization of acquired intangible assets, special charges, and share-based compensation, as well as a decline in **gross margins**. Additionally, the company faced **restructuring costs** and higher inventory management costs, with inventory days rising from **247** to **266**. These combined factors led to the substantial drop in Operating Income.  **[0000827054-25-000018_exhibit991q3fy25.htm:1]** **[0000827054-25-000018_exhibit991q3fy25.htm:0]** **[MCHP_3414812_3]** **[MCHP_3414812_1]** 

What caused Operating Income to plummet in Q3 2025?

Net income turned negative in Q3 2025 primarily due to a **sharp decline in net sales**—a reduction of **41.9%** from Q3 2024—and **substantial operational expenses**. The company saw its sales drop from **$1.766 billion** to **$1.026 billion**.  **[0000827054-25-000018_exhibit991q3fy25.htm:1]** **[0000827054-25-000018_exhibit991q3fy25.htm:0]**  Additionally, significant expenses such as **$122.6 million in amortization of acquired intangible assets**, increased inventory holding costs reflected by **266 days of inventory**, and **special restructuring charges of $3.5 million** further exacerbated losses. When combined with higher overall **operating expenses of $530.5 million**, these factors led to a GAAP net loss of **$53.6 million** in Q3 2025 compared to a GAAP net income of **$419.2 million** in Q3 2024.  **[0000827054-25-000018_exhibit991q3fy25.htm:1]** **[0000827054-25-000019_mchp-20241231.htm:4]** **[MCHP_3414812_3]** **[0000827054-25-000019_mchp-20241231.htm:21]** 

Why did Net Income turn negative in Q3 2025?

The EPS turned negative in Q3 2025 due to a dramatic shift from a GAAP net income of **$419.2 million** in Q3 2024 to a GAAP net loss of **$53.6 million** in Q3 2025, driven by a **41.9% drop in net sales** (from **$1.766 billion** to **$1.026 billion**) coupled with increased operating expenses such as **$122.6 million** in amortization of acquired intangible assets, **$3.5 million** in special charges, and **$14 million** in share-based compensation. Additionally, challenging macroeconomic conditions and elevated inventory levels further pressured the company's margins, while acquisition-related costs also adversely affected profitability.  **[0000827054-25-000018_exhibit991q3fy25.htm:1]** **[0000827054-25-000018_exhibit991q3fy25.htm:0]** **[MCHP_3414812_3]** 

What drove EPS into negative territory in Q3 2025?

The net sales in Q3 2025 declined drastically due to a combination of factors. **Inventory correction** following a post-COVID demand surge led customers and channel partners to adjust their inventories, which reduced orders.  **[0000827054-25-000018_exhibit991q3fy25.htm:1]** **[MCHP_3414812_6]**  **Broad-based declines** affected all major product lines—including microcontrollers, analog, and FPGA—as demand weakened across the board.  **[MCHP_3414812_6]** **[0000827054-25-000019_mchp-20241231.htm:9]**  Additionally, there were **geographical declines** in key regions, particularly Europe, where economic challenges impacted industrial and automotive markets.  **[0000827054-25-000019_mchp-20241231.htm:36]**  Finally, **adverse global economic conditions**, such as persistent inflation and high interest rates, compounded by shorter product lead times that delayed orders, further contributed to the sharp drop in net sales.  **[0000827054-25-000019_mchp-20241231.htm:36]** **[0000827054-25-000019_mchp-20241231.htm:56]** **[0000827054-25-000019_mchp-20241231.htm:63]** 

Why did Net Sales decline so drastically by Q3 2025?

18b2f29b4d42112919a61972b6e36752948b5f31446383974664909722298a93

Cash and cash equivalents (USD, millions)

Accounts receivable, net (USD, millions)

Inventories (USD, millions)

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Total current assets (USD, millions)

Property, plant and equipment, net (USD, millions)

Other assets (USD, millions)

Total assets (USD, millions)

Current portion of long-term debt (USD, millions)

Total current liabilities (USD, millions)

Long-term debt (USD, millions)

Long-term income tax payable (USD, millions)

Long-term deferred tax liability (USD, millions)

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Total stockholders' equity (USD, millions)

Total liabilities and stockholders' equity (USD, millions)

f24e9c261bf9e1f23d61eb3ecd4f59f4726ed90326b18edf4d888f7d5993e573

Net Sales (USD, millions)

Cost of Sales (USD, millions)

Gross Profit (USD, millions)

Research and Development Expenses (USD, millions)

Selling, General and Administrative Expenses (USD, millions)

Amortization of Acquired Intangible Assets (USD, millions)

Special Charges and Other, Net (USD, millions)

Operating Expenses (USD, millions)

Operating Income (USD, millions)

Other (Loss) Income, Net (USD, millions)

Income Before Income Taxes (USD, millions)

Income Tax Provision (USD, millions)

Net (Loss) Income (USD, millions)

Basic Net (Loss) Income per Common Share (USD)

Diluted Net (Loss) Income per Common Share (USD)

4f74f58ecb861c9f564a68337a152f495bf50ed4990ed375c71a5dcd60d9345d

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Stock-Based Compensation [USD, Millions]

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68795276c2f50265c835cd2e11d6b57df86fa7f3ab7802beb434b87b7e9c0458

Total Revenue [USD, Millions]

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EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

ecf0754d2f8128a9e081d27a17da0860efae4cc251266e0b3f60465e251657d2

a7942a2c80e604bc0261b4a8b84bbbf94edcc7dd277a667c0d949895986a3e76

MICROCHIP TECHNOLOGY (MCHP)

Financials