Executive Summary

Q2 2025 revenue was $115.9M, up 10% QoQ and 9% YoY; non-GAAP EPS was $0.35 and GAAP EPS was $0.02, reflecting a $9.2M employment-litigation charge; cash from operations was $29.1M .
Mix skewed to Industrial (40%) with Consumer down mid-single digits QoQ after tariff front-running in Q1; Communications rose >20% QoQ and Computer rose high-single digits on seasonal trends .
Q3 2025 guidance: revenue $118M ±$5M; GAAP GM 54.5–55.0%, non-GAAP GM 55.0–55.5%; non-GAAP opex ~$47.5M; GAAP opex ~$72.5M including immediate expensing of stock awards for former CEO; non-GAAP tax rate ~5%; other income similar to Q2 .
Management emphasized 1250V/1700V GaN positioning for next-gen AI datacenters and continued automotive ramp toward “material” revenues in 2026; GaN product revenues grew >50% in H1 2025 .

What Went Well and What Went Wrong

What Went Well

Industrial revenue drove the quarter, rising nearly 30% QoQ, with strength in metering, home/building automation, high-power (solar and HVDC transmission), and broad-based industrial; Communications rose >20% QoQ; Computer rose high-single digits QoQ on seasonal trends .
Non-GAAP operating margin expanded to 15.6% (from 14.7% in Q1 and 12.5% in Q2’24) on revenue growth and mix; non-GAAP EPS was $0.35 vs $0.31 in Q1 and $0.28 in Q2’24 .
CEO commentary highlighted strategic GaN leadership: “Our 1250- and 1700-volt GaN technologies are well suited for the requirements of next-generation AI datacenters” and “We are the only company shipping 1250-volt GaN today” .

What Went Wrong

Bookings slowed sharply in July (~20% below normal run rate), prompting a cautious Q3 guide; appliance demand weakened due to tariff uncertainty and prior front-running of imports into the U.S. .
GAAP operating loss (-$1.3M) and GAAP EPS ($0.02) reflected a $9.151M employment-litigation charge recorded in “Other operating expenses” .
Non-GAAP gross margin ticked down 10 bps QoQ to 55.8% on higher input costs flowing through inventory and a smaller FX tailwind; channel inventory remained healthy at ~7.6 weeks .

Financial Results

P&L Summary (Sequential and YoY)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$105.3	$105.5	$115.9
GAAP Diluted EPS ($)	$0.16	$0.15	$0.02
Non-GAAP Diluted EPS ($)	$0.30	$0.31	$0.35
GAAP Gross Margin (%)	54.4%	55.2%	55.2%
Non-GAAP Gross Margin (%)	55.1%	55.9%	55.8%
GAAP Operating Margin (%)	3.7%	6.4%	-1.2%
Non-GAAP Operating Margin (%)	12.7%	14.7%	15.6%

Year-over-Year (Q2 2024 vs Q2 2025)

Metric	Q2 2024	Q2 2025
Revenue ($USD Millions)	$106.2	$115.9
GAAP Diluted EPS ($)	$0.09	$0.02
Non-GAAP Diluted EPS ($)	$0.28	$0.35
GAAP Gross Margin (%)	53.2%	55.2%
Non-GAAP Gross Margin (%)	54.1%	55.8%
Non-GAAP Operating Margin (%)	12.5%	15.6%

Segment Mix by End Market (Revenue %)

End Market	Q4 2024	Q1 2025	Q2 2025
Communications	13%	10%	11%
Computer	15%	12%	12%
Consumer	37%	44%	37%
Industrial	35%	34%	40%

KPIs (Q2 2025)

KPI	Q2 2025
Cash from Operations ($USD Millions)	$29.1
Share Repurchases (shares; $USD Millions)	706k; $32.6
Dividend per Share ($)	$0.21 (paid Jun 30; declared for Sep 30)
Inventory Days (Company)	~296 days (down ~30 days QoQ)
Channel Inventory	~7.6 weeks (down 0.3 weeks QoQ)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q2 2025 vs Q3 2025	$115M ±$5	$118M ±$5	Raised sequentially
GAAP Gross Margin (%)	Q2 2025 vs Q3 2025	~55%	54.5–55.0%	Maintained to slightly lower low end
Non-GAAP Gross Margin (%)	Q2 2025 vs Q3 2025	~55.5%	55.0–55.5%	Maintained
GAAP Operating Expenses ($USD Millions)	Q2 2025 vs Q3 2025	~56	~72.5 (incl. immediate expensing of stock awards for former CEO; SBC)	Raised (one-time/non-cash component)
Non-GAAP Operating Expenses ($USD Millions)	Q2 2025 vs Q3 2025	~46	~47.5	Slightly raised
Non-GAAP Tax Rate (%)	Q3 2025	N/A	~5%	New disclosure
Other Income	Q3 2025	N/A	Similar to Q2 levels	New disclosure
Dividend per Share ($)	Ongoing	$0.21 schedule maintained	$0.21 declared for Sep 30	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Data Center & GaN	Expect growth across renewable, HVDC, metering, automotive; PowiGaN adoption to contribute significantly in 2025 . Q1: steady orders; focus on big-picture drivers like energy efficiency, AI, electrification .	CEO: 1250V/1700V GaN fits 800V DC architectures; only company shipping 1250V GaN; sampling GaN for main converters next year; system-level products planned .	Strengthening focus; product roadmap acceleration
Tariffs/Macro	Q4/Q1: trade policy uncertainty clouding demand outlook .	July bookings down ~20% vs normal; appliance weakness due to tariff front-running; cautious near-term visibility .	Near-term headwind intensified
Automotive	Q4: anticipated growth in 2025 .	~30 models already, expanding to EU/JP/US; first GaN auto win last quarter; tracking to “low tens of millions” in 2026; $100M by 2029 goal .	Building momentum; timeline reaffirmed
Metering/Industrial	Q4: metering, HVDC to grow .	Metering revenues on track to grow >20% in 2025; industrial category 40% mix; strong sequential growth .	Strong and sustained
Inventory & Channel	Q1: channel inventories normal .	Company inventory ~296 days (down ~30); channel inventory ~7.6 weeks, within normal range .	Healthy channel; company inventory improving
R&D Execution	N/A	CEO targeting R&D efficiency improvements to drive double-digit growth model; align teams/processes to higher-power markets .	Organizational optimization underway
Leadership Transition	N/A	New CEO Jennifer Lloyd (July 21); Executive Chair transition through Feb 2026 .	Completed; continuity assured

Management Commentary

“Revenues increased nine percent year-over-year driven by strong growth in the industrial category… Revenues from GaN-based products grew more than 50 percent in the first half… Our 1250- and 1700-volt GaN technologies are well suited for the requirements of next-generation AI datacenters” — Jennifer Lloyd, CEO .
“Industrial was the primary driver… rising nearly 30% from the prior quarter… Communications increased more than 20% sequentially… consumer revenues were sequentially lower, down mid single digits” — Sandeep Nayyar, CFO .
“Orders have slowed in recent weeks… revenue outlook reflects continued strength in industrial… tempered by softness in appliances… channel inventory… should enable our business to reaccelerate” — Jennifer Lloyd .
“We are the only company shipping 1250-volt GaN today… Data center architectures will continue to evolve beyond the 800 volts, and we're ahead of the curve with 1,700 volt technology already in the market” — Jennifer Lloyd .
“This will be my final earnings call… I have agreed to serve as executive chairman… until February 2026” — Balu Balakrishnan .

Q&A Highlights

Bookings/Derisking: July bookings ~20% below normal; guidance derisked accordingly; appliance weakness linked to tariff-driven front-running of imports; industrial/consumer flattish in Q3 guide with slight growth from other segments .
Channel/Seasonality: Channel inventory ~7.6 weeks (consumer ~6); expect sell-in vs sell-through flattish; seasonality less relevant amid tariff/cycle adjustments .
Automotive Ramp: On track for “low tens of millions” in 2026; ~$100M target by 2029; designs proliferating beyond emergency power supply to micro DC-DC and potential 12V battery elimination .
AI/Data Center Content: Potential ~$1,000 per rack under existing structure; competing against discrete MOSFET/SiC designs; GaN offers reliability and cost advantages; plan to sample GaN for main converters next year .
Competitive Landscape (GaN): TSMC GaN foundry exit validates IDM control of process/device; PI’s proprietary GaN (1250V/1700V) differentiates on voltage and system-level reliability .

Estimates Context

Q2 2025 actuals vs S&P Global consensus:

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$115.0*	$115.9	+$0.9M (slight beat)
Primary EPS ($)	$0.345*	$0.35	+$0.005 (in-line to slight beat)

Values retrieved from S&P Global.*

Where estimates may adjust: modest upward revisions likely in Industrial/Communications for Q3 given mix and sequential guide; Consumer may see downward revisions near term given appliance softness and tariff overhang .

Key Takeaways for Investors

Industrial strength is the current growth engine (40% mix), offsetting tariff-driven appliance softness; expect cautious near-term trajectory but healthy channel inventory positions PI for reacceleration as finished goods clear .
Non-GAAP profitability is improving (15.6% op margin), aided by mix and scale; GAAP results were temporarily impacted by litigation charge — focus on non-GAAP to gauge core performance .
Q3 guide implies slight sequential revenue growth with stable margins; watch GAAP opex inflation from immediate expensing of former CEO grants (non-cash) vs steady non-GAAP opex .
Strategic GaN positioning (1250V/1700V) aligns with 800V AI datacenter architectures; system-level products and sampling plans are potential medium-term catalysts; monitor partner validations and content per rack trajectory .
Automotive design wins broaden geographically; ramp trajectory to low tens of millions by 2026 appears intact — continued proof points from model launches and micro DC-DC adoption will support the thesis .
Capital returns remain robust (706k shares repurchased; $0.21 dividend), supported by cash generation; buybacks reduced diluted share count ~0.7M QoQ .
Trading setup: near-term sentiment tied to tariff headlines and bookings cadence; medium-term narrative levered to GaN adoption, AI data center power architectures, and automotive ramp — catalysts across product sampling and customer wins could drive estimate momentum .

POWER INTEGRATIONS INC (POWI)·Q2 2025 Earnings Summary