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NXP Semiconductors N.V. (NXPI)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue of $2.835B was in-line with guidance midpoint and essentially in-line with Wall Street consensus; non-GAAP EPS of $2.64 modestly beat consensus by ~$0.04 and exceeded management’s guidance midpoint by $0.05 . Consensus: Revenue $2,830.5M*, EPS $2.6038*.
  • Margins compressed year over year on product/channel mix: non-GAAP gross margin 56.1% (-210bps YoY), non-GAAP operating margin 31.9% (-260bps YoY), while cash generation remained solid with $565M CFO and $427M FCF .
  • Q2 2025 guidance implies sequential improvement: revenue midpoint $2.9B (+2% q/q), non-GAAP EPS ~$2.66, gross margin ~56.3%, with OpEx ~$710M; management is cautiously optimistic amid “immaterial” direct tariff impact but unknown indirect effects .
  • CEO transition announced: Kurt Sievers to retire end-2025; Rafael Sotomayor named President (effective Apr 28) and CEO (effective Oct 28), a potential narrative catalyst alongside AI/SDV acquisitions (Kinara, TTTech Auto, Aviva) .

What Went Well and What Went Wrong

  • What Went Well

    • Execution vs guidance: revenue “$10 million better than the midpoint” and non-GAAP EPS $2.64 was $0.05 above guidance midpoint; distribution inventory held at 9 weeks with improving backlog signals and short-cycle order uptick .
    • Cash and returns: CFO delivered $565M cash from operations and $427M non-GAAP free cash flow; capital return totaled $561M (buybacks $303M, dividends $258M) with additional $90M repurchases post-quarter .
    • Strategic positioning: Continued build-out in AI and SDV—Kinara acquisition ($307M) to enhance edge AI NPUs and software; launch of S32K5 16nm MRAM MCUs; new imaging radar processors for L2+/L4 autonomy .

  • What Went Wrong

    • Topline/margins down YoY: revenue -9% YoY; non-GAAP gross margin fell to 56.1% (-210bps YoY); non-GAAP operating margin 31.9% (-260bps YoY), driven by mix and auto/industrial softness .
    • Segment pressure: Automotive -7% YoY and -6% q/q; Industrial & IoT -11% YoY; Mobile -3% YoY; Comm. Infra. & Other -21% YoY, reflecting broader macro headwinds .
    • Inventory levels elevated: DIO increased to 169 days; CCC lengthened to 141 days as NXP continues supporting Tier-1 auto inventory digestion; channel inventory at 9 weeks (below 11-week target) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$3,250 $3,111 $2,835
GAAP Gross Margin %57.4% 53.9% 55.0%
Non-GAAP Gross Margin %58.2% 57.5% 56.1%
GAAP Operating Margin %30.5% 21.7% 25.5%
Non-GAAP Operating Margin %35.5% 34.2% 31.9%
GAAP Diluted EPS ($)$2.79 $1.93 $1.92
Non-GAAP Diluted EPS ($)$3.45 $3.18 $2.64
Segment Revenue ($USD Millions)Q3 2024Q4 2024Q1 2025
Automotive$1,829 $1,790 $1,674
Industrial & IoT$563 $516 $508
Mobile$407 $396 $338
Comm. Infra. & Other$451 $409 $315
KPIsQ3 2024Q4 2024Q1 2025
DIO (Days)149 151 169
DPO (Days)60 65 62
DSO (Days)30 30 34
Cash Conversion Cycle (Days)119 116 141
Channel Inventory (weeks)8 8 9
Gross Financial Leverage (x)1.9x 2.1x 2.4x
Net Financial Leverage (x)1.3x 1.5x 1.6x
Estimates vs ActualsQ1 2025
Revenue ($USD Millions)Actual: $2,835
EPS (Primary, $)Actual: $2.64
EBITDA ($USD Millions)Actual: $928
Consensus # of EstimatesRevenue: 25*
Q2 2025 Guide vs ConsensusQ2 2025
Revenue ($USD Millions)Guide Mid: $2,900
EPS (Primary, $)Guide Mid: $2.66
Non-GAAP Gross Margin %Guide Mid: 56.3%

Values marked with * are consensus values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Mid)Outcome/Current Guidance (Mid)Change
Total Revenue ($M)Q1 2025$2,825 $2,835 Beat
Non-GAAP Gross Margin %Q1 202556.3% 56.1% Slightly below
Non-GAAP EPS ($)Q1 2025$2.59 $2.64 Beat
Total Revenue ($M)Q2 2025—$2,900 (L/M/H: $2,800/$2,900/$3,000) New
Non-GAAP Gross Margin %Q2 2025—56.3% (55.8–56.8%) New
Non-GAAP Operating Margin %Q2 2025—31.8% (30.8–32.8%) New
OpEx (non-GAAP, $M)Q2 2025—~$710 (±$10M) New
Non-GAAP Financial Expense ($M)Q2 2025—~$88 New
Non-GAAP Tax RateQ2 2025—~17.4% New
Diluted Shares (M)Q2 2025—~255 New
Dividend per Share ($)Q2 2025—$1.014; payable July 9 to record June 25 Announced

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
Tariffs/MacroMacro weakness in Industrial; cautious Q4 guide Resilient profitability in soft environment Direct tariff impact “immaterial”; indirect impact unknown; limit guide to Q2 Elevated uncertainty; cautious stance
Automotive demand/inventoryAuto slightly stronger vs expectations; channel inventory 8 weeks Auto revenue $1.79B; channel 8 weeks Auto -6% q/q; Tier-1 digestion ongoing; expected flat YoY in Q2; channel 9 weeks Stabilizing; early signs of cycle turn
AI/Technology initiativesUWB, BMS, i.MX launches SDV focus; Aviva/TTTech announced Kinara AI NPU acquisition; S32K5 MRAM MCUs; imaging radar processors Accelerating AI/SDV stack
Supply chain/China-for-ChinaJV fabs (ESMC/VSMC) progress Financing, cash; channel controls ~30% wafer manufacturing for China-for-China; production outside US leveraged Localized resilience expanding
Pricing/R&D executionGross margin stable; product mix Non-GAAP GM 57.5%; OpEx managed Low-single-digit price erosion for 2025; OpEx path to 23% model in 2H post acquisitions Tight cost control; disciplined pricing

Management Commentary

  • “We are operating in a very uncertain environment influenced by tariffs with volatile direct and indirect effects… enabling NXP to drive solid profitability and earnings.”
  • “As of today, the direct impact of the current tariffs is immaterial to our financials… we are seeing… improving distribution customer backlog… indicative of the early innings of improving cycle dynamics.”
  • “Second quarter… we are flat year-on-year [in Automotive]… first time after 5 quarters… some Tier 1s still absorbing over-inventory.”
  • “With… price negotiations… settled… we will have for this year a low single-digit price erosion for the whole company.”
  • On AI: “Kinara… provides a scalable platform for AI-powered edge-based systems combining NXP’s broad portfolio… with Kinara’s AI NPU hardware and software.”

Q&A Highlights

  • Tariffs impact: Management reiterated direct tariff effects are immaterial and not seeing pull-ins/push-outs; indirect demand/supply chain impacts remain uncertain, constraining visibility beyond Q2 .
  • China-for-China strategy: ~30% of China shipments sourced from China wafer manufacturing; broader non-US sourcing supports resilience; product road-mapping tailored to Chinese lead customers .
  • Inventory/gross margin: DIO at upper bounds; gross margin guided on revenue scale and levers (utilization, 200mm consolidation, JV 300mm capacity); caution on maintaining higher inventory given potential disruptions .
  • OpEx trajectory: ~$710M Q2 OpEx including annual license; restructuring to make room for acquisitions with aim to reach 23% OpEx model in 2H25 .
  • Auto cycle signals: Automotive expected flat YoY in Q2, first stabilization after 5 quarters; regional dynamics include seasonal China pickup and Japan pricing reset .

Estimates Context

  • Q1 2025: Revenue essentially in-line; non-GAAP EPS beat (~$0.04); EBITDA missed consensus, reflecting margin/mix pressures. Consensus: Revenue $2,830.5M*, EPS $2.6038*, EBITDA $1,046.0M*. Actual: Revenue $2,835M, EPS $2.64, EBITDA $928M .
  • Q2 2025 guide sits close to consensus for revenue and EPS (Guide Mid: $2.9B revenue; ~$2.66 EPS vs consensus $2.902B and $2.659*), implying modest sequential improvement . Values marked with * are consensus values retrieved from S&P Global.

Key Takeaways for Investors

  • Beat/in-line quarter: Revenue met the plan; EPS beat guidance and consensus modestly; margins compressed YoY but stabilized sequentially as mix improves .
  • Early-cycle indicators: Improving backlog, short-cycle orders, and Automotive flat YoY guidance suggest bottoming dynamics despite tariff uncertainty; limit positioning to near-term catalysts .
  • Watch inventory normalization: Elevated DIO/CCC and Tier-1 digestion remain overhangs; channel inventory below target (9 weeks) supports prudent sell-in discipline .
  • AI/SDV optionality increasing: Kinara NPUs, TTTech middleware, S32K5 MRAM MCUs, and new imaging radar processors broaden NXP’s edge/auto stack—potential medium-term growth drivers .
  • Q2 guide credible: Revenue/EPS/margins guided near consensus; OpEx control and restructuring support margin resilience; monitor execution toward 23% OpEx model in 2H25 .
  • Leadership transition: Sotomayor’s elevation maintains strategic continuity; short-term sentiment may hinge on clarity around tariff impacts and auto normalization .
  • Capital return intact: Robust liquidity ($3.99B cash), continued buybacks/dividends (Q2 dividend $1.014/share) underpin shareholder returns while funding AI/SDV acquisitions .