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WI

WOLFSPEED, INC. (WOLF)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 revenue was $180.5M, down 10.7% YoY and 7% QoQ; non-GAAP EPS was a loss of $0.95, slightly better than the company’s midpoint outlook, with gross margin pressured by $28.9M underutilization costs at Mohawk Valley and lower factory output tied to maintenance .
  • Mohawk Valley revenue rose to $52M and is guided to $55–$75M in Q3; EV device revenue grew ~92% YoY despite broader macro and auto demand challenges, while industrial & energy remained soft as customers reduced inventories .
  • Management emphasized liquidity actions: completed a $200M ATM equity offering, accrued $865M in 48D tax credits, received $192.1M cash refunds in March, and continues constructive CHIPS grant and lender dialogues; Q3 guidance was reaffirmed in late March .
  • Strategic narrative: accelerating 200mm transition (closing 150mm Durham device fab and Farmers Branch epi), restructuring to cut annual cash costs by ~$200M, with adjusted EBITDA breakeven lowered from “under $1B” annual revenue to $800M upon completion of simplification and cost actions; FY26/FY27 CapEx expected to decline sharply .

What Went Well and What Went Wrong

What Went Well

  • Mohawk Valley ramp: revenue increased to $52M and expected to grow in Q3 to $55–$75M; management highlighted strong 200mm wafer yields and being the only volume producer of 200mm SiC wafers shipping thousands weekly .
  • EV momentum: power device EV revenue grew ~92% YoY in Q2, with diverse OEM model exposure; management expects EV revenue to expand further in Q3 despite a weaker macro backdrop .
  • Liquidity progress: executed $200M ATM, accrued $865M of 48D credits, and received $192.1M in cash refunds; company reaffirmed Q3 guidance and outlined visibility to ~$0.75B of near-term liquidity combining CHIPS tranche and lender financing .

What Went Wrong

  • Margin compression: GAAP gross margin fell to -21% (vs 13% YoY) and non-GAAP gross margin to 2% (vs 16% YoY), driven by $28.9M underutilization costs and lower output during maintenance shutdown and demand-aligned production cuts .
  • Restructuring costs: Q2 restructuring and facility closure charges were $188.1M, materially elevating GAAP operating expenses and loss; total FY2025 restructuring expected at $400–$450M .
  • Materials softness: materials revenue declined 8% QoQ to $89.7M as customers adjusted inventories; broader industrial & energy demand visibility remained limited, offsetting EV strength .

Financial Results

MetricQ4 FY2024Q1 FY2025Q2 FY2025
Revenue ($USD Millions)$200.7 $194.7 $180.5
GAAP Gross Margin %1% -19% -21%
Non-GAAP Gross Margin %5% 3% 2%
GAAP Net Loss – Continuing Ops ($USD Millions)($174.9) ($282.2) ($372.2)
Non-GAAP Diluted EPS ($USD)($0.89) ($0.91) ($0.95)
Free Cash Flow ($USD Millions)($885.3) ($528.2) ($598.1)

Segment Revenue ($USD Millions)

SegmentQ4 FY2024Q1 FY2025Q2 FY2025
Power Products$104.6 $97.1 $90.8
Materials Products$96.1 $97.6 $89.7
Total$200.7 $194.7 $180.5

Key KPIs

KPIQ4 FY2024Q1 FY2025Q2 FY2025
Mohawk Valley Revenue ($USD Millions)$41 $49 $52
Underutilization Costs ($USD Millions)$24.0 $26.4 $28.9
Factory Start-up Costs ($USD Millions)$20.5 $19.7 $22.8
PP&E Spending, net ($USD Millions)$644.2 $395.0 $401.8
Cash, Cash Equivalents & Short-term Investments ($USD Millions)$2,174.6 $1,687.6 $1,404.8

Notes vs Estimates: S&P Global consensus estimates for Q2 FY2025 could not be retrieved due to access limits; comparisons vs Street are therefore unavailable for this report.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 FY2025$170–$200M (Jan 29) Reaffirmed $170–$200M (Mar 28) Maintained
Non-GAAP Gross Margin %Q3 FY2025-3% to 7% (Jan 29) Reaffirmed -3% to 7% (Mar 28) Maintained
Non-GAAP OpEx ($USD Millions)Q3 FY2025$99–$104 (Jan 29) Reaffirmed $99–$104 (Mar 28) Maintained
GAAP Net Loss ($USD Millions)Q3 FY2025$(295) to $(270) (Jan 29) Reaffirmed $(295) to $(270) (Mar 28) Maintained
Non-GAAP Net Loss ($USD Millions)Q3 FY2025$(138) to $(119) (Jan 29) Reaffirmed $(138) to $(119) (Mar 28) Maintained
Non-GAAP EPS ($)Q3 FY2025$(0.88) to $(0.76) incl. ATM shares (Jan 29) Reaffirmed $(0.88) to $(0.76) (Mar 28) Maintained
Underutilization Costs ($USD Millions)Q3 FY2025~$31 (Jan 29) ~$31 (unchanged)Maintained
Factory Start-up Costs ($USD Millions)Q3 FY2025~$26 (Jan 29) ~$26 (unchanged)Maintained
Weighted Avg Shares (mm)Exit Q3 FY2025~155 (impact of ~27.8M ATM shares) ~155 (unchanged)Maintained
FY2025 CapEx ($USD Billions)FY2025~$1.2B (midpoint) ~$1.2B (unchanged)Maintained
FY2026 CapEx ($USD Millions)FY2026N/A prior~$150–$200 New / Lower
FY2027 CapEx ($USD Millions)FY2027N/A prior~$30–$50 New / Lower
Adjusted EBITDA Breakeven (Annual Revenue)Post-restructuringUnder $1B $800M Lowered (Improved threshold)

Earnings Call Themes & Trends

TopicQ4 FY2024 (prior)Q1 FY2025 (prior)Q2 FY2025 (current)Trend
200mm transition & fab utilizationAccelerate shift to Mohawk Valley; 20% utilization in June; evaluate Durham closure Plan to become pure-play 200mm; close Durham 150mm fab; $200M annual cash savings Only volume producer of 200mm wafers; MV revenue $52M; strong yields; accelerating design conversions Strengthening execution
EV demandEV revenue +100% YoY in FY2024; MV momentum +2.5x YoY EV in Q1; expect continued growth EV revenue +~92% YoY; expect further growth in Q3 Resilient despite macro
Industrial & EnergyMixed; macro constraints Confidence in long-term I&E fundamentals Green shoots, but visibility limited; channel inventory down Cautiously improving
Liquidity & funding (CHIPS/48D/lenders)Constructive CHIPS PMT; 48D credits >$1B long-term Access up to $2.5B (CHIPS + lenders); reduce FY2025 CapEx $200M ATM done; accrued $865M 48D; $192.1M cash refunds received; reaffirmed Q3 guidance; ongoing Renesas/Apollo discussions Visibility improving
Cost actions & breakevenReduce FY2025 net CapEx by $200M Restructuring FY2025 charges $400–$450M; $200M annual cash savings Non-GAAP OpEx down; breakeven lowered from < $1B to $800M annual revenue post actions Accelerating cost-out
Product innovation (Gen 4 MOSFET)N/AN/AGen 4 SiC MOSFET platform launched; 21% lower on-resistance at temp, 15% lower switching losses; delivered on 200mm wafers New platform catalyst
Trade/regulatoryTariff/macro headwinds noted N/ATracking USTR Section 301 on China semis; national security narrative Policy tailwind potential

Management Commentary

  • “We are the only volume producer of 200-millimeter wafers, and we’re shipping thousands of them… the performance of the wafers is exceptional.” — Thomas Werner, Executive Chair .
  • “EV growth in the quarter grew 90% year-over-year… we should expect that to expand 20% to 30% going into 3Q.” — Neill Reynolds, CFO .
  • “Putting it all together… Wolfspeed has access to a total of $2.5 billion funding package.” — Thomas Werner .
  • “Operating expenses… down $11 million quarter-over-quarter as we continue to reduce costs… Start-up costs were $23 million, in line with our outlook.” — Neill Reynolds .
  • “Adjusted EBITDA breakeven point… reduced to under $1 billion… [later] $800 million of annual revenue upon completion of… actions.” — Neill Reynolds (Jan) and Company (Mar 28 PR) .

Q&A Highlights

  • Demand mix: EV strong and diversified by models/geographies; I&E shows green shoots but no “V-shaped” recovery; channel inventory reduction supportive .
  • Competitive positioning: Only volume producer of 200mm SiC wafers; active customer sampling and LTAs; stickiness from substrate quality-device yield linkage increases switching costs .
  • Liquidity path: Visibility to ~$325M from 48D refunds and non-core asset sales; working toward CHIPS tranche and lender financing for >$0.75B liquidity, plus convert resolution .
  • Breakeven & CapEx: EBITDA breakeven inclusive of start-up/underutilization around ~$1B annual revenue; FY2026 CapEx at the low-end of $200–$600M gross target, potentially net ~0 after incentives; underutilization fades as utilization approaches ~70% .
  • Mohawk vs Durham: Transition progressing; some co-qualified lots impact mix; MV guidance implies 20–25% QoQ revenue increase at midpoint .

Estimates Context

  • S&P Global consensus for Q2 FY2025 revenue and EPS was unavailable due to data access limits during this session. As a proxy, the company reported revenue slightly above guidance midpoint and adjusted EPS better than the midpoint. Future estimate comparisons should incorporate SPGI consensus when accessible .

Key Takeaways for Investors

  • Mohawk Valley ramp is the key operational lever: rising wafer/device output should reduce underutilization and improve gross margins as volumes scale; monitor MV revenue ($52M in Q2; $55–$75M guided for Q3) and utilization trajectory .
  • EV remains the growth anchor with diversified OEM exposure; industrial and energy should gradually recover as inventories normalize and AI/data center and storage demand lifts I&E .
  • Liquidity runway is improving: $200M ATM completed, $865M accrued 48D credits, $192.1M cash refunds received; watch milestones on CHIPS grant finalization, lender financing, and convert actions for stock catalysts .
  • Cost-out and restructuring are tracking: non-GAAP OpEx falling, FY2025 restructuring charges are sizable but expected cash neutral; breakeven revenue reduced to $800M after actions, a meaningful de-risking signal .
  • Near-term margin pressure persists from underutilization and maintenance impacts; the narrative hinges on execution of 200mm conversion (closure of 150mm Durham device fab, Farmers Branch) and MV output scaling .
  • Product innovation (Gen 4 MOSFET) delivered on 200mm wafers strengthens competitive positioning with measurable system-level efficiency and durability gains—supporting design-ins and potential ASPs .
  • Trading lens: stock likely sensitive to CHIPS grant timing, convert refinancing headlines, and quarterly proof-points on MV revenue/margins; any reaffirmation or increase in Q3 guidance and tangible 48D cash receipts can be positive catalysts .