Analog Devices, Inc. (NASDAQ: ADI) Q2 2025 Earnings | 08/20/2025

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AI Summary

Overall Performance:

Strong Results: ADI reported a strong Q2, exceeding expectations with revenue of $2.64 billion (up 9% sequentially, 22% year-over-year) and EPS of $1.85.
Positive Outlook: Leadership expressed confidence that revenue bottomed in 2024 and the company is in a cyclical upturn. Q3 revenue is guided to be ~$2.75 billion.

Key Business Segment Highlights:

Industrial (44% of revenue): Grew 8% sequentially and 17% YoY, with a broad-based recovery across all subsectors and regions. Automation, aerospace/defense, and ATE (semiconductor test equipment) were particularly strong.
Automotive (32% of revenue): A record quarter, up 16% sequentially and 24% YoY. Strength was driven by connectivity and safety solutions, especially in China. The company noted a likely high-single-digit percentage pull-forward of demand in Europe and North America due to tariff announcements, leading to an expected decline in Q3.
Communications (12% of revenue): Up 5% sequentially, driven by AI build-outs increasing demand for power and optical control products in data centers.
Consumer (12% of revenue): Flat sequentially but up 30% YoY, marking a third consecutive quarter of robust growth.

Strategic Themes & Leadership Transition:

Megatrend Focus: CEO Vincent Roche highlighted ADI's role in key long-term megatrends: autonomy (robotics, automotive), AI-driven computing (data centers, ATE), proactive healthcare, the energy transition, and immersive experiences.
Supply Chain Resilience: The company emphasized investments in its hybrid manufacturing model (internal fabs and external foundry partners like TSMC) to provide customers with geographic flexibility and supply optionality.
Management Change: This was the last call for Mike Luccarelli, VP of Investor Relations. He was thanked for his contributions and replaced by Jeff, his longtime deputy.

Financials & Guidance:

Margins: Gross margin was 69.4%, and operating margin was 41.2%. Operating expenses rose due to variable compensation linked to the company's return to growth.
Inventory Strategy: The company is maintaining a strategy of lean channel inventory while holding higher inventory on its own balance sheet to support the recovery.
Q3 Guidance: Revenue is expected to be $2.75B ± $100M. Industrial and consumer are expected to lead growth, while automotive is expected to decline after a very strong Q2. EPS is guided to be ~$1.92.

About this video

Analog Devices reported robust fiscal second quarter 2025 results, with revenue rising 22% year over year to $2.64 billion, surpassing analyst expectations. Non-GAAP earnings per share (EPS) grew 32% to $1.85, beating consensus estimates by 8.8%. Growth was broad-based across all end markets including industrial, automotive, communications, and consumer sectors, with the industrial segment accounting for 44% of total revenue and growing 17%. The company’s operating margin expanded significantly to 28.4%, up from 21.2% in the prior year, driven by operational efficiency and strong demand for AI-driven Intelligent Edge solutions. Adjusted EBITDA was $1.7 billion with a margin of 59.1%, showcasing superior profitability. Free cash flow remained strong, enabling $0.7 billion in shareholder returns through dividends and repurchases. Backlog and bookings accelerated sequentially across all regions, signaling continued growth momentum for Q3. The outlook includes guidance for Q3 2025 revenue of approximately $3 billion and non-GAAP EPS of $2.22, both above analyst expectations. CEO Vincent Roche highlighted the company's leadership in AI and automation industries, reinforced by investments in high-growth megatrends like edge computing and autonomy. Risks include supply chain volatility and margin pressure, but the company's strong balance sheet and innovation pipeline provide confidence in sustainable long-term growth. About Inside Ticker: Inside Ticker delivers timely, in-depth financial news and earnings analysis to empower investors with actionable insights on global companies across sectors. For comprehensive video analysis and real-time updates, visit https://www.insideticker.com/. HashTags: #AnalogDevices #ADI #Q22025 #Earnings #FinancialResults #RevenueGrowth #EPS #OperatingMargin #AI #IntelligentEdge #IndustrialAutomation #Automotive #Communication #CashFlow #ShareholderReturns #Technology #Innovation #StockMarket #Investing #InsideTicker

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