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MS

MAGNACHIP SEMICONDUCTOR Corp (MX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 continuing-ops revenue of $44.7M was in line with guidance midpoint, while gross margin of 20.9% was above the high end of guidance; adjusted EPS was -$0.10 and GAAP diluted EPS was -$0.14 .
  • Versus consensus, MX modestly beat revenue ($44.7M vs ~$44.5M*) and delivered a significant EPS beat (Adjusted EPS -$0.10 vs -$0.22*) and gross margin beat (20.9% vs 19.5%*) as FX tailwinds (strong USD vs KRW) and Power IC mix helped margins .
  • Guidance: Q2 2025 revenue $45–$49M and gross margin 19.5%–21.5%; full‑year 2025 revenue growth mid‑to‑high single digits and GM% 19.5%–21.5% reiterated .
  • Strategic pivot finalized: Display business classified as discontinued operations from Q1; actions expected to reduce annualized OpEx by 30–35% and support 3‑3‑3 targets (revenue $300M, GM% 30% in 3 years) .

Note: Values marked with * retrieved from S&P Global (Capital IQ).

What Went Well and What Went Wrong

What Went Well

  • Gross margin beat: 20.9% exceeded the high end of guidance (18.5%–20.5%), helped by stronger USD vs KRW and mix .
  • Segment momentum: PAS revenue up 9.1% YoY to $39.9M and PIC revenue up 44.1% YoY to $4.9M; PIC GM improved to 46.5% .
  • Design-win and product pipeline strength: “We released 27 new‑generation PAS products ... ready for commercial sampling” and achieved “50 design‑wins in Q1, up 13.6% YoY,” supporting future margin expansion via smaller die sizes and more die per wafer .

What Went Wrong

  • Sequential revenue decline (seasonality): Continuing‑ops revenue fell 8.5% QoQ (to $44.7M) and PAS fell 8.3% QoQ; gross margin declined 2.3 pts QoQ due to unfavorable product mix .
  • Continued GAAP losses: Operating loss of $6.3M and GAAP diluted EPS of -$0.14, though improved YoY vs Q1 2024 .
  • Underutilization headwind: Wind‑down of Transitional Foundry Services left ~20% of Gumi fab idle, pressuring near‑term gross margins until new gen products ramp in H2’25 .

Financial Results

Core P&L vs Prior Periods

MetricQ1 2024Q4 2024Q1 2025
Revenue (Continuing Ops) ($USD Millions)$39.912 $48.858 $44.722
Gross Profit Margin % (Continuing Ops)17.6% 23.2% 20.9%
GAAP Diluted EPS (Continuing Ops) ($)-$0.37 -$0.24 -$0.14
Adjusted EPS (Diluted) ($)-$0.26 $0.12 -$0.10
Operating Loss ($USD Millions)-$9.391 -$7.837 -$6.288
Adjusted EBITDA ($USD Millions)-$4.803 -$0.466 -$2.073

Segment Breakdown (Continuing Ops)

MetricQ1 2024Q4 2024Q1 2025
PAS Revenue ($USD Millions)$36.535 $43.455 $39.857
PAS Gross Margin %15.4% 20.5% 17.8%
Power IC Revenue ($USD Millions)$3.377 $5.403 $4.865
Power IC Gross Margin %41.8% 44.9% 46.5%
Transitional Foundry Services Revenue ($USD Millions)$3.526 $2.295 n/a (wound down)

KPIs and Balance Sheet

KPIQ1 2024Q4 2024Q1 2025
Design Wins (count)44 —50
Cash & Equivalents ($USD Millions)$171.602 $138.610 $132.654
Share Repurchases (shares; $)0.626M; $4.153M ~0.7M; $2.9M 0.309M; $1.164M
DSO (days)—41 47
Inventory Days (days)—60 70

Q1 2025 vs Wall Street Consensus

MetricConsensusActual
Revenue ($USD Millions)$44.5M*$44.722M
Primary EPS (Normalized) ($)-$0.22*-$0.10 (Adjusted diluted)
Gross Margin %19.5%*20.9%
EBITDA ($USD Millions)-$3.3M*-$2.073M (Adjusted)

Note: Values marked with * retrieved from S&P Global (Capital IQ).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (Continuing Ops)Q2 2025—$45–$49M New
Gross Profit Margin %Q2 2025—19.5%–21.5% New
Revenue (Continuing Ops)FY 2025Mid‑to‑high single‑digit growth vs $185.8M Reiterated mid‑to‑high single‑digit growth Maintained
Gross Profit Margin %FY 202519.5%–21.5% 19.5%–21.5% reiterated Maintained
Total CapExFY 2025$26–$28M (incl. $14–$15M Gumi) Reiterated Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiativesAnnounced Phase 3 rollout of Gen5/Gen6 IGBT, Gen6 SJ MOSFETs, Gen8 MOSFETs; >40 new products in 2025; aim for 30% more die/wafer and higher ASPs Released 27 new‑gen PAS products; plan >40 in 2025, ~55 in 2026; targeting automotive/industrial/AI to be >60% of mix by 2028 Improving
Supply chain/tariffs/macroFX swings impacted GAAP net via intercompany loans; macro headwinds noted 94% of power revenue from Asia; direct US shipments < $2.5M/yr; tariff risk manageable; minimal tariff‑related pull‑ins (only ~$0.1M in TV IC) Stable/Managed
Product performance & mixQ4 PAS seasonality; communications strength; PIC strong margins (~40%) Q1 PAS strength in communications (smartphone battery FET), PIC up 44% YoY; sequential mix unfavorable for margin Mixed
Regional trendsKorea/Q4 strength in TVs; APAC computing adapters solid Korea up YoY; APAC flat YoY; computing soft from China pricing; PC power traction in Taiwan expected in Q2 Mixed
R&D executionCommitting $65–$70M over 3 years to upgrade Gumi; ~half capacity new gen by end‑2026 2025 CapEx $26–$28M incl. $14–$15M for Gumi; equipment financing line $26.5M secured; depreciation impact starts 2027 Executing
Regulatory/legalExport controls monitored; no material impact expected as of filings Continued monitoring; risk disclosures reiterated Stable
Cost actions/OpExTarget adj. EBITDA breakeven by Q4’25; cost reductions planned Display shut‑down to reduce annualized OpEx 30–35%; Q1 OpEx ~$15M (ex‑SBC) baseline to right‑size shared services Improving

Management Commentary

  • CEO: “We delivered our fourth consecutive quarter of year‑over‑year growth from continuing operations, fueled by strong design‑wins and momentum in Power Analog Solutions (PAS) and Power IC (PIC)… We currently plan to launch a total of more than 40 new‑generation PAS products in 2025 and approximately 55 more in 2026” .
  • CFO: “In Q1… gross margin [20.9%] exceeded the high‑end of our guidance… mostly due to the stronger than expected U.S. dollar against the Korean won. We expect… a 30% to 35% reduction in annualized operating expenses” .
  • CEO (pivot): “Our aim is… quarterly adjusted EBITDA breakeven by the end of this year… milestones towards achieving a goal in 3 years to reach a $300 million annual revenue run rate with a 30% gross profit margin target. We call this our 3‑3‑3 strategy” .

Q&A Highlights

  • Tariffs exposure: 94% of power revenue is Asia; direct US shipments < $2.5M; tariff risk currently manageable; only ~$0.1M identified pull‑in in Power IC TV apps .
  • Margin drivers and Gumi utilization: Underutilization (~20%) from foundry wind‑down pressures 2025 GM; conversion/upgrades (CapEx $65–$70M over 3 years) to support new gen power products; margin improvement expected over time, with H2’25 initial ramp .
  • Segment strategy: Grow both PAS and PIC double‑digit; PIC margins ~40% and supportive of blended GM .
  • OpEx trajectory: Q1 OpEx ~$15M (ex‑SBC) reflects display costs stripped; further right‑sizing of shared services to reach adjusted EBITDA breakeven by year‑end .

Estimates Context

  • Q1 2025: Revenue beat ($44.7M vs ~$44.5M*), EPS beat (Adjusted EPS -$0.10 vs -$0.22*), GM beat (20.9% vs 19.5%), and Adjusted EBITDA better than consensus (-$2.1M vs -$3.3M) .
  • Q2 2025: Company guides revenue $45–$49M (midpoint ~$47M) vs consensus ~$47.2M* and GM 19.5%–21.5% vs consensus ~20.25%*—both broadly in line .

Note: Values marked with * retrieved from S&P Global (Capital IQ).

Key Takeaways for Investors

  • MX executed a clean quarter: in‑line revenue with a margin beat driven by FX and PIC mix; adjusted EPS significantly beat consensus, despite seasonal top‑line decline .
  • The pivot to a pure‑play power company is now in results (display classified discontinued) and should reduce annualized OpEx by 30–35%, improving the path to adjusted EBITDA breakeven by year‑end .
  • Near‑term margin headwinds from Gumi underutilization are transitory; new‑gen PAS and PIC ramps in H2’25 and 2026 plus CapEx upgrades should structurally improve margins over time .
  • Segment health: Communications within PAS strong (battery FET wins at a major Korean OEM), PIC up 44% YoY with 46.5% GM—both supportive of future blended margins .
  • Liquidity remains solid ($132.7M cash) and buybacks continue (Q1 ~$1.16M; April ~$1.9M), providing capital allocation flexibility during the transition .
  • Tariff risk monitored, but exposure is limited near‑term (direct US shipments < $2.5M/yr; Asia‑centric sales), reducing regulatory headline sensitivity vs peers .
  • For positioning: focus on execution of H2’25 product ramps and Q2 sequential growth guide ($45–$49M) as potential stock catalysts; watch FX and mix for margin trajectory .