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PI

POWER INTEGRATIONS INC (POWI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered modest upside: revenue $105.5M (+15% y/y), GAAP diluted EPS $0.15, non-GAAP EPS $0.31; non-GAAP gross margin 55.9% at the top end of guidance . Versus consensus, both revenue ($105.53M vs $105.44M*) and EPS ($0.31 vs $0.285*) slightly beat.*
  • Mix skewed to consumer (44%) with industrial at 34%; sequential strength in appliances and air conditioning was aided by low channel inventory and some tariff-related pull-in, while computer and communications were seasonally softer .
  • Management guided Q2 2025 revenue to $115M ± $5M, GAAP GM ≈55%, non-GAAP GM ≈55.5%, and raised non-GAAP OpEx to ≈$46M; other income expected to decline by ~$0.5M sequentially . Dividend maintained at $0.21/share and a new $50M buyback authorization announced after completing the prior $50M .
  • Stock-relevant catalysts: continued buybacks, normalization of channel inventory (7.9 weeks), and accelerating GaN adoption in TVs, AI server auxiliary power, metering, and automotive; watch tariff policy for second-half demand risks .

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP margin execution and EPS beat: non-GAAP GM 55.9% (top end) and EPS $0.31; CEO: “order trends have remained steady… channel inventories are at normal levels… we expect healthy sequential growth in the second quarter” .
  • Consumer and computer y/y growth >20% each; TVs and game consoles wins with GaN-based InnoSwitch/InnoMux-2; appliances/air conditioning drove consumer upside .
  • Strategic capital returns: 404K shares repurchased for $23.1M in Q1; completed remaining $25M in April; board authorized another $50M; dividend $0.21/share with next payment June 30, 2025 .

What Went Wrong

  • Sequential softness in industrial (–3%) due to seasonality in tools/home automation and timing of high-power program; communications and computer down mid‑20s and mid‑teens sequentially on seasonal dynamics .
  • Inventory days remain elevated at 326 (expected to taper in 2H); CFO flagged Q2 non-GAAP OpEx step-up and lower other income, tempering EPS leverage .
  • Macro/trade-policy uncertainty: management explicitly cited tariff volatility and potential demand pressure; Q2 consumer outlook modeled below-seasonal following Q1 pull-in .

Financial Results

Core financials vs prior periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$115.8 $105.2 $105.5
GAAP Diluted EPS ($)$0.25 $0.16 $0.15
Non-GAAP Diluted EPS ($)$0.40 $0.30 $0.31
GAAP Gross Margin (%)54.5% 54.4% 55.2%
Non-GAAP Gross Margin (%)55.1% 55.1% 55.9%
GAAP Operating Margin (%)10.0% 3.7% 6.4%
Non-GAAP Operating Margin (%)17.3% 12.7% 14.7%
Cash from Operations ($USD Millions)$32.9 $14.7 $26.4

Note: Management rounded Q1 revenue to “$106M” verbally; the 8‑K reports $105.5M .

Segment revenue mix (% of total)

End Market MixQ3 2024Q4 2024Q1 2025
Communications (%)12% 13% 10%
Computer (%)14% 15% 12%
Consumer (%)38% 37% 44%
Industrial (%)36% 35% 34%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Channel Inventory (weeks)—8.4 7.9
Inventory Days—315 326
CapEx ($USD Millions)$5.7 $3.0 $5.7
Other Income ($USD Millions)$2.75 $3.38 $3.17
Share Repurchases (shares/$)—$1.9M Q4 404K / $23.1M Q1
Dividend per share ($)$0.20 (paid Sep 30, 2024) $0.21 (paid Dec 31, 2024) $0.21 (paid Mar 31; next Jun 30)

Q1 2025 vs Wall Street consensus (S&P Global)

MetricActual Q1 2025Consensus MeanBeat/Miss
Revenue ($USD Millions)$105.5 $105.44*Beat*
Primary EPS ($)$0.31 (non-GAAP) $0.285*Beat*
# of Estimates (EPS / Revenue)—5 / 5*—

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)Q2 2025—$115M ± $5M New guide; implies +~9% q/q
GAAP Gross Margin (%)Q2 202555–55.5% (Q1 guide) ≈55% Maintained/slightly lower midpoint
Non-GAAP Gross Margin (%)Q2 202555.5–56% (Q1 guide) ≈55.5% Maintained
GAAP OpEx ($USD)Q2 2025≈$54M (Q1 guide) ≈$56M Raised
Non-GAAP OpEx ($USD)Q2 2025≈$45M (Q1 guide) ≈$46M Raised
Other Income ($USD)Q2 2025—~($0.5M) sequential decline vs Q1 Lower
Non-GAAP Effective Tax Rate (%)Q2 20255–6% (FY/Q1 view) ~5% Maintained
Dividend ($/share)Q2 2025$0.21 (paid Mar 31) $0.21 payable Jun 30 Maintained
Share RepurchasesQ2 2025$48.1M remaining at 12/31 New $50M authorization Increased capacity

Earnings Call Themes & Trends

TopicQ3 2024 (two quarters ago)Q4 2024 (prior quarter)Q1 2025 (current)Trend
AI/server powerEarly traction; roadmap to higher voltages First data center product targeted for next year; revenue impact expected in 2027–2028; standby GaN sockets growing Aux power demand in AI servers driving y/y computer growth Building pipeline; revenue contribution growing in auxiliary
GaN adoption1,700V GaN introduced (InnoMux-2) Broadening across TVs, notebooks, tablets; >10% of sales expected in 2025 TV accessory chargers, major OEM win; large GaN design; continued expansion Accelerating across categories
Supply chain/channelDistributor inventory lowering, sell-through > sell-in Channel inventory 8.4 weeks; consumer channel drawdown Channel inventory 7.9 weeks; normal levels; backlog supports Q2 guide Normalizing; reduced weeks
Tariffs/macroSoft appliances outlook ahead Explicit tariff watch; uncertain demand impact Some Q1 appliance pull-in ahead of tariffs; subtracted in Q2 guide Risk elevated; modeled prudently
Regional/IndiaStrong presence; metering, HVDC traction growing India metering and 5G fixed wireless wins; locomotive traction India metering and locomotive design wins (SCALE‑2) continue Sustained growth drivers
AutomotiveGrowing roster; design wins across geographies ~20 designs in production; GaN 900V/1700V roadmap First automotive GaN (900V InnoSwitch) design win in U.S. EV; production later this year Inflection; early revenue ramp

Management Commentary

  • CEO on demand and outlook: “Bookings have been stable… distribution inventory is healthy… we expect a seasonally higher second quarter… trade policy adds uncertainty” .
  • CFO on margins and OpEx: “For the year… non-GAAP gross margin ~55.5%… Q2 non-GAAP gross margin ~55.5%… non-GAAP OpEx ~$46M… other income down ~$0.5M” .
  • Strategic focus: “We are utilizing our strong balance sheet to buy back shares… focusing on trends… energy efficiency, AI, electrification, and a cleaner, more modern power grid” .
  • Product momentum: GaN wins in TVs/accessories; India metering and locomotives; high‑power HVDC projects in North Sea, Baltic Sea, Japan .

Q&A Highlights

  • Industrial timing and growth drivers: A one‑quarter delay in a specific high‑power customer program; ramp in Q2; confidence in HVDC, renewables, locomotives driving 2025 growth .
  • Consumer pull-in ahead of tariffs: Management estimates “a few million dollars” of Q1 upside in major appliances; subtracted from Q2 forecast .
  • Automotive breakthrough: Sole‑sourced 900V GaN InnoSwitch design in U.S. EV; potential uptake in Europe; platform approach across 400V and 800V systems .
  • Currency impact on margin: 10% yen move impacts GM by ~100–120 bps; currently ~200 bps benefit due to yen levels; buffer from inventory timing .

Estimates Context

  • Q1 2025: Revenue $105.5M vs consensus $105.44M*; Primary EPS $0.31 vs $0.285* — both modest beats. Number of estimates: 5 for EPS and revenue.* Actuals: revenue and non-GAAP EPS per 8‑K .
  • Q2 2025: Consensus revenue $115.02M* aligns with the company’s $115M ± $5M guide; consensus EPS $0.345* could face modest pressure from higher OpEx and lower other income . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue/earnings quality improved: non-GAAP GM at 55.9% and EPS beat despite seasonal softness in compute/communications; watch Q2 mix as consumer normalizes .
  • Buyback and dividend underpin capital returns; new $50M authorization after completing prior $50M, with ~964K shares bought YTD through April (~2% outstanding) .
  • GaN adoption is accelerating across TVs, chargers, AI server auxiliary power and metering; automotive GaN win signals multi-year content expansion .
  • Industrial remains the 2025 growth engine (HVDC, renewables, locomotives); high‑power program ramps through Q2–Q4; monitor execution and project timing .
  • Channel inventory normalization (7.9 weeks) reduces downside in a trade-related downturn; replenishment could be a tailwind if second-half macro is benign .
  • Near-term model tweaks: raise Q2 revenue within the $110–$120M band; incorporate non-GAAP OpEx ~$46M, other income down ~$0.5M, tax rate ~5% .
  • Risk monitor: tariff escalation and appliance demand; yen volatility effects on GM; elevated inventory days to taper in 2H — key watch points for margin and cash conversion .