WOLFSPEED, INC. (WOLF)·Q4 2025 Earnings Summary

Executive Summary

• Q4 FY2025 revenue was $197.0M, up sequentially vs Q3 ($185.4M) and roughly flat YoY vs Q4 FY2024 ($200.7M); non-GAAP EPS was -$0.77 vs -$0.72 in Q3 and -$0.89 YoY .
• Gross margin remained negative due to underutilization at Mohawk Valley (GAAP -13%, non-GAAP -1%); underutilization costs were $23.6M in Q4 (vs $26.3M in Q3), a key driver of margin pressure .
• Revenue modestly beat S&P Global consensus ($197.0M vs $191.4M*) while EPS consensus was unavailable via S&P; segment mix skewed to Power Products (Q4: $118.6M) with Materials at $78.4M .
• Management highlighted progress on restructuring and expects court approval of the Plan of Reorganization “next month” with emergence from Chapter 11 shortly thereafter, a potential near-term stock catalyst .
• Operational ramp at Mohawk Valley continued ($94.1M contribution), with strategic focus on 200mm SiC; adjusted EBITDA improved sequentially to -$40.7M and free cash flow was -$454.0M in Q4 .

What Went Well and What Went Wrong

What Went Well

• Mohawk Valley revenue contribution rose to $94.1M (from $78M in Q3), evidencing continued production ramp and customer traction .
• Sequential improvement in adjusted EBITDA (-$40.7M vs -$45.2M in Q3) reflects cost actions and mix shift toward Power Products .
• CEO emphasized strong positioning: “world-class greenfield and vertically integrated facility footprint… robust IP portfolio” and confidence in leadership additions and silicon carbide leadership .

What Went Wrong

• GAAP gross margin remained negative (-13%) and non-GAAP gross margin turned slightly negative (-1%) due to underutilization costs ($23.6M) during Mohawk Valley ramp .
• GAAP EPS deteriorated sharply to -$4.30 driven by sizeable non-cash charges (including goodwill impairment) and restructuring-related expenses (Q4 goodwill impairment $359.2M) .
• Free cash flow in Q4 was deeply negative (-$454.0M), reflecting ongoing operating cash use and capex (net of reimbursements), underscoring near-term liquidity pressure despite tax credits and restructuring .

Financial Results

YoY reference for Q4 FY2024: Revenue $200.7M, GAAP GM 1%, Non-GAAP GM 5%, non-GAAP EPS -$0.89 .

Segment Breakdown (Product Lines):

Key KPIs:

Estimates vs Actuals (S&P Global, Q4 FY2025):

• Values retrieved from S&P Global.

Guidance Changes

Note: The Q4 FY2025 8-K did not provide forward guidance ranges; prior guidance was provided for Q3 in the Q2 release.

Earnings Call Themes & Trends

Management Commentary

• CEO (Q4 release): “With our world-class greenfield and vertically integrated facility footprint… Wolfspeed is well-positioned to be the global leader in silicon carbide technology… court to approve our Plan of Reorganization next month, and emerge from Chapter 11 shortly thereafter” .
• Executive Chairman (Q2 call): Priorities to improve financial performance, strengthen balance sheet, and raise cost-effective capital; focus on 200mm, lower breakeven, and CHIPS funding .
• CFO (Q2 call): Q3 guidance provided; outlined liquidity sources including 48D cash tax refunds and non-core asset sales; restructuring charges $400–$450M FY2025 .
• Board Chair (Q3 call): Transition back to Chair; reiterated progress on equity offering, tax refunds, federal funding, and cost reductions to lower EBITDA breakeven .

Q&A Highlights

• Demand/EV trajectory: EV growth remained strong YoY despite broader adoption slowdown; diversified customer base supports resilience .
• 200mm competitive position: “We are the only volume producer of 200-millimeter wafers… shipping thousands per week” and actively sampling customers/LTA partners .
• CHIPS and liquidity: Constructive engagement with CHIPS program office; milestones narrowed; liquidity plan includes 48D refunds and asset sales .
• Breakeven and CapEx: Revenue breakeven under ~$1B inclusive of start-up/underutilization; FY2026 gross CapEx targeted at low end of prior $200–$600M range with significant 48D offsets .
• Underutilization trajectory: Target ~70% utilization to largely eliminate start-up/underutilization costs over time; linear improvement as revenue ramps .

Estimates Context

• Revenue beat: Actual $197.0M vs S&P Global consensus $191.4M*, a +$5.6M (~+2.9%) beat .
• EPS consensus: Unavailable via S&P Global for Q4 FY2025*; actual non-GAAP EPS was -$0.77 .
• Implication: Modest top-line beat amid margin pressure suggests estimates may shift toward higher Power Products revenue but continued caution on margins until utilization normalizes.

• Values retrieved from S&P Global.

Key Takeaways for Investors

• Mohawk Valley ramp is tangible (Q4 contribution $94.1M), supporting sequential revenue and adjusted EBITDA improvement despite ongoing underutilization costs .
• Negative gross margins remain the core issue; underutilization costs are decreasing sequentially ($28.9M → $26.3M → $23.6M), providing a path to better margins as utilization rises .
• Chapter 11 Plan of Reorganization nearing court approval with expected emergence shortly thereafter—capital structure simplification (debt and cash interest reductions) could be a near-term stock narrative catalyst .
• Segment mix favors Power Products with steady Materials; sustained focus on 200mm portfolio and Gen4 devices underpins medium-term differentiation vs competitors .
• Free cash flow remains negative; investors should track operating cash flow improvements, capex moderation, and timing of 48D tax credit inflows to assess liquidity runway .
• Estimate revisions likely center on higher revenue trajectory vs cautious margin assumptions until utilization reaches ~70% and start-up/underutilization costs fade per management .
• Watch upcoming court milestones and any updates on CHIPS funding and customer 200mm agreements as catalysts impacting sentiment and execution visibility .