Executive Summary

Q2 2025 revenue was $2.93B, modestly above guide midpoint, with non-GAAP EPS $2.72; both beat S&P Global consensus modestly on stronger-than-expected demand across end-markets and slightly favorable manufacturing costs . Results vs consensus: Revenue $2.926B vs $2.902B*, EPS $2.72 vs $2.6596*; beat driven by Automotive and Industrial & IoT sequential growth, disciplined channel inventory at 9 weeks, and no tariff-related pull-ins .
Sequential momentum: Q3 2025 guidance implies revenue $3.15B (mid), non-GAAP GM ~57.0%, non-GAAP OM ~33.7%, and non-GAAP EPS ~$3.10; management highlights emerging cyclical upturn and company-specific drivers (SDV, radar, electrification) .
Cash generation remained robust: CFO $779M, non-GAAP FCF $696M (24% of revenue); capital returns of $461M (buybacks $204M, dividends $257M) .
Strategic actions: Completed TTTech Auto acquisition to accelerate SDV middleware; maintaining hybrid manufacturing strategy and aligning wafer footprint; capacity access and JV investments (VSMC, ESMC) planned in Q3 .
Catalyst framing: A modest beat with constructive Q3 guide and clearer upcycle signals; potential stock sensitivity to channel inventory normalization, segment mix, and execution on SDV/edge AI roadmap .

What Went Well and What Went Wrong

What Went Well

Broad-based outperformance vs expectations across focus end-markets; revenue $26M above midpoint, non-GAAP GM 56.5% came in 20 bps above guidance midpoint due to higher revenue and slightly favorable manufacturing costs .
Automotive sequential strength with Tier-1 inventory digestion moderating; management: “we will come closer to shipping to natural end demand” in Q3; China automotive remained robust through distribution with channel inventories below target .
Strategic SDV positioning strengthened via TTTech Auto completion (MotionWise safety middleware) to co-architect SDV platforms with OEMs; CEO: “we needed more software… TTTech Auto builds ideally in… moving up the value stack” .

What Went Wrong

Year-on-year pressure persisted: Revenue down 6% YoY; GAAP gross margin compressed to 53.4% and non-GAAP GM to 56.5% (down ~210 bps YoY) on lower revenue and gross profit fall-through .
Communications Infrastructure & Other declined 27% YoY; ongoing end-of-life within legacy digital networking expected to further weigh in coming quarters .
OpEx at high end of guidance due to timing of tape-outs and project spend; stock-based comp $117M; below-the-line items mildly unfavorable to guidance (≈$1M) .

Financial Results

Revenue, EPS, Margins vs prior periods and estimates

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$3.127	$2.835	$2.926
GAAP Diluted EPS ($)	$2.54	$1.92	$1.75
Non-GAAP Diluted EPS ($)	$3.20	$2.64	$2.72
GAAP Gross Margin (%)	57.3%	55.0%	53.4%
Non-GAAP Gross Margin (%)	58.6%	56.1%	56.5%
GAAP Operating Margin (%)	28.7%	25.5%	23.5%
Non-GAAP Operating Margin (%)	34.3%	31.9%	32.0%
Revenue Consensus ($USD Billions)	$3.125*	$2.831*	$2.902*
EPS Consensus ($)	$3.2036*	$2.6038*	$2.6586*

Values with * retrieved from S&P Global via GetEstimates.

Segment Revenue Breakdown

Segment ($USD Millions)	Q2 2024	Q1 2025	Q2 2025
Automotive	$1,728	$1,674	$1,729
Industrial & IoT	$616	$508	$546
Mobile	$345	$338	$331
Comm. Infra. & Other	$438	$315	$320

KPIs and Balance

KPI	Q2 2024	Q1 2025	Q2 2025
Days Inventory (DIO)	148	169	158
Days Payables (DPO)	64	62	60
Days Sales (DSO)	27	34	33
Cash Conversion Cycle (days)	111	141	131
Channel Inventory (weeks)	7	9	9
Gross Leverage (x)	1.9x	2.4x	2.4x
Net Leverage (x)	1.3x	1.6x	1.8x
Cash from Operations ($M)	761	565	779
Non-GAAP FCF ($M)	577	427	696

Non-GAAP Reconciliation Highlights (Q2 2025)

Non-GAAP EPS $2.72 vs GAAP $1.75; key adjustments include PPA effects, share-based comp, restructuring, other incidentals; see reconciliation .
Non-GAAP Operating Income $935M vs GAAP $687M; margin 32.0% vs 23.5% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue ($B, mid)	Q2 2025	$2.90	N/A	—
Total Revenue ($B, mid)	Q3 2025	N/A	$3.15	Raised vs prior quarter’s guide context
Non-GAAP Gross Margin (%)	Q2 2025	56.3%	N/A	—
Non-GAAP Gross Margin (%)	Q3 2025	N/A	57.0%	Raised vs prior quarter’s guide context
Non-GAAP Operating Margin (%)	Q2 2025	31.8%	N/A	—
Non-GAAP Operating Margin (%)	Q3 2025	N/A	33.7%	Raised vs prior quarter’s guide context
Non-GAAP Diluted EPS ($)	Q2 2025	$2.66	N/A	—
Non-GAAP Diluted EPS ($)	Q3 2025	N/A	$3.10	Raised vs prior quarter’s guide context
OpEx (Non-GAAP, $M)	Q3 2025	N/A	~$735 ±$10	New
Non-GAAP Financial Expense ($M)	Q3 2025	N/A	~$91	New
Non-GAAP Tax Rate (%)	Q3 2025	N/A	17.0–18.0	New
Equity-accounted investees (Non-GAAP, $M)	Q3 2025	N/A	$(1)	New
Non-controlling interests ($M)	Q3 2025	N/A	$(14)	New
Diluted Shares (M)	Q3 2025	N/A	253.8	New
Segment guide (qualitative)	Q3 2025	N/A	Auto flat YoY / up mid-single-digit QoQ; Industrial & IoT up mid-single-digit YoY / high-single-digit QoQ; Mobile up low-single-digit YoY / mid-20% QoQ; Comm. Infra. down high-20% YoY / flat QoQ	New
Dividend per share ($)	Q2 2025	$1.014 (Q2)	$1.014 (Q3)	Maintained

Notes: Q3 guidance introduced in Q2 materials; comparisons indicate an improving outlook vs prior quarter’s guide context.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Cycle/macro visibility	Low visibility; Q1 expected seasonally down; cautious on comms infra EOL	“Emerging cyclical improvement”; stronger signals (backlog, short-cycle orders, escalations)	Improving
Channel inventory policy	Held 8–9 weeks; disciplined under-shipping to end demand	9 weeks; may selectively increase to 11 as recovery solidifies	Gradual normalization
Tariffs impact	Monitoring; largely indirect; immaterial direct effects	“Direct impact… immaterial” and no tariff-related pull-ins/push-outs	Stable/limited impact
Automotive dynamics	Western Tier-1 digestion a headwind; China robust	Tier-1 digestion moderating; sequential auto growth mid-single-digit expected in Q3; China strong	Positive sequential
Gross margin drivers	Utilization low-70s; pricing low single-digit erosion offset over year	Mid-70s utilization; Q3 non-GAAP GM guide ~57%; rule-of-thumb +100 bps per $1B annual rev growth	Mixed to improving
SDV strategy & M&A	Announced TTTech and AVEVA; strategic to CoreRide	Completed TTTech; SDV positioning enables OEM co-architecture	Execution progressing
Manufacturing strategy	Hybrid footprint; potential 200mm consolidation plans	Aligning footprint; pre-build inventory plan 6–7 days by YE	In-motion
Foundry JVs funding	Capacity access fees (VSMC, ESMC)	Planned Q3 payments: $225M capacity fee (VSMC), $145M VSMC equity, $15M ESMC equity	Ongoing investments

Management Commentary

CEO: “Our guidance for the third quarter reflects the combination of an emerging cyclical improvement in NXP's core end markets as well as the performance of our company specific growth drivers” .
CEO on auto: “We will come closer to shipping to natural end demand… the inventory burn at the Tier 1s is going away” .
CFO: “We delivered non-GAAP earnings per share of $2.72… gross margin of 56.5%, 20 basis points above the midpoint of our guidance… due to higher revenue and slightly favorable manufacturing costs” .
CEO on SDV: “We needed more software… TTTech Auto builds ideally in… moving up the value stack” .
CFO on margin framework: “For every $1B in incremental revenue, about 100 bps of incremental margin on a full-year basis” .

Q&A Highlights

Inventory/channel: Management may raise channel to 11 weeks selectively as signals firm; focus on competitiveness of “hero products” rather than revenue recognition .
Gross margin/utilization: Q3 GM guided ~57% with mid-70s utilization; potential to increase to upper-70s if conditions strengthen; longer-term 57–63% model reiterated .
Automotive recovery: Sequential acceleration into Q3; Tier-1 digestion moderating; China auto continued strength through distribution .
Comms Infra EOL: Legacy digital networking (~30% of segment exiting 2024) continues to decline over next quarters; RFID and RF Power more resilient/lumpy .
Cash uses and JV investments: Q3 capex ~3% of revenue; planned capacity access and JV equity payments (VSMC/ESMC); paused buyback in Q2 due to M&A and leverage targets, expected to resume in Q3 .

Estimates Context

Q2 2025 vs consensus: Revenue $2.926B vs $2.902B*, EPS $2.72 vs $2.6596*; modest beat on both lines, driven by broad-based end-market strength and margin execution . Values with * retrieved from S&P Global via GetEstimates.
Forward look: Q3 2025 consensus EPS ~$3.118* and revenue ~$3.156B* broadly aligned with company’s midpoints ($3.10 EPS, $3.15B revenue), suggesting estimates may edge higher if channel normalization and segment mix outperform . Values with * retrieved from S&P Global via GetEstimates.

Key Takeaways for Investors

Sequential inflection: Q3 guide implies above-seasonal sequential growth (+8% QoQ at mid) with non-GAAP GM returning to ~57%; watch for confirmation via channel normalization and segment mix .
Auto recovery lens: Tier-1 digestion easing; content drivers (S32 SDV, radar, electrification) underpin resilience—China remains a relative bright spot; track Western OEM inventory progress and SDV program ramps .
Margin pathway: Management reiterates +100 bps per $1B revenue rule; utilization and mix, plus low single-digit pricing erosion offset by cost tailwinds, support the long-term 57–63% GM range .
SDV stack advantage: TTTech Auto completion expands middleware capabilities and deepens OEM engagement; monitor integration, OpEx absorption, and system-level solution wins .
Capital discipline: Strong FCF (Q2: $696M) and balanced returns; watch Q3 JV cash outflows and debt actions (note issuance in Aug to refinance 2026 maturities) against buyback resumption .
Comms Infra drag: Ongoing EOL in legacy networking will weigh near term; RFID and RF Power can cushion but remain lumpy; segment flat outlook over multi-year horizon .
Tactical setup: Near-term trading biased to upside if upcycle signals persist and Q3 execution matches guide; risks include slower channel refill, mix shifts, or macro/tariff surprises (currently immaterial) .

Citations: Q2 2025 press release and tables ; Q2 2025 8-K and exhibits ; Earnings call transcript (Q2 2025) ; Q1 2025 press release ; Q4 2024 call transcript ; TTTech Auto completion ; Dividend PRs ; Notes offering PR .