SAN JOSE, Calif.--(BUSINESS WIRE)--Power Integrations announced that Julie Currie has joined the company as Chief People and Transformation Officer. ...

Core Insights - Power Integrations has appointed Nancy Erba as Chief Financial Officer, effective January 5, 2026, bringing over 25 years of corporate finance experience [2][4] Company Overview - Power Integrations is a leading innovator in semiconductor technologies for high-voltage power conversion, playing a crucial role in the clean-power ecosystem [5] Leadership and Experience - Nancy Erba previously served as CFO at Infinera Corporation and has held senior leadership roles at Immersion Corporation and Seagate Technology, showcasing a strong background in finance and technology [2][3] Strategic Vision - The CEO of Power Integrations expressed confidence in Erba's ability to enhance the company's strategy and growth, particularly in response to increasing demand driven by AI, electrification, and decarbonization [4] Market Position - Power Integrations is well-positioned to leverage its financial strength and innovative technologies, such as PowiGaN, to capitalize on growth opportunities in the semiconductor market [4]

Core Insights - Power Integrations reported third-quarter earnings per share of $0.36, which exceeded analyst expectations, but revenue slightly missed forecasts, leading to a 6.3% drop in shares [1][2] - The company projected fourth-quarter revenues between $100 million and $105 million, which is 11.5% below analyst estimates, citing softness in appliances and lower industrial revenues as reasons for the weak outlook [2] - The resignation of CFO Sandeep Nayyar added to investor uncertainty, prompting Benchmark to lower its price target from $55 to $50 [2] Market Reaction - Power Integrations' shares have shown significant volatility, with 24 moves greater than 5% in the past year, indicating that the market views this news as meaningful but not fundamentally altering its perception of the business [4] - The stock has declined 38.8% since the beginning of the year and is trading 45.4% below its 52-week high of $68.05 [6] - Investors who purchased $1,000 worth of shares five years ago would now see their investment valued at $560.42 [6]

Core Insights - The company anticipates fourth-quarter revenues between $100 million and $105 million, primarily driven by a decline in the consumer category and a sequential decrease in industrial revenues [1][19] - The industrial business is expected to show strong growth, with revenues up nearly 20% for 2025, benefiting from trends like electrification and grid modernization [1][11] - The consumer category, particularly appliances, has seen a significant slowdown, with orders down about 40% in Q3 compared to the first half of the year [3][19] Financial Performance - Third-quarter revenues increased by 3% sequentially to $100 million, with industrial and communications segments showing strength [15] - Non-GAAP gross margin for Q3 was 55.1%, down 70 basis points from the prior quarter due to higher input costs [16] - The company generated $30 million in cash from operations in Q3 and expects to return nearly $150 million to shareholders through buybacks and dividends this year [7][18] Market Trends - The company is capitalizing on opportunities in the data center market, particularly through collaboration with NVIDIA on 800-volt DC power architecture [4][8] - There is strong interest in GaN-based solutions, which are expected to drive market growth in high power micro DC to DC converter architectures [6][10] - The appliance market is facing challenges due to tariffs and stagnant home sales in the U.S. and China, leading to revenue volatility [2][3] Strategic Focus - The company plans to realign its R&D and go-to-market strategies to focus more on data center, automotive, and high power markets [13][33] - There is an emphasis on adapting organizational processes to increase ROI on R&D spending while maintaining a strong core business [12][33] - The company expects to see a rebound in consumer business growth in 2026 as preloaded inventory clears out and demand stabilizes [25][50] Product Development - The company is advancing its GaN technology for applications in data centers and automotive markets, with expectations for product releases in 2026 and 2027 [10][40] - Recent design wins in the automotive sector, particularly for electric vehicles, indicate a growing market presence [5][59] - The company is also seeing traction in the inverter emergency power supply market, which is expected to contribute to revenue growth [6][58]

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Financial Data and Key Metrics Changes - Third-quarter revenues increased by 3% sequentially to $119 million, with non-GAAP earnings of $0.36 per diluted share [17][18] - Non-GAAP gross margin for Q3 was 55.1%, down 70 basis points from the prior quarter due to higher input costs [18] - Cash flow from operations was $30 million for the quarter, with a projected free cash flow of over $80 million for the year [9][19] Business Line Data and Key Metrics Changes - Industrial revenues were up high single digits, driven by high-voltage DC transmission and growth in metering and automotive [17] - Consumer revenues decreased by mid-single digits, primarily due to softness in major appliances [17] - The revenue mix for the quarter was 42% industrial, 34% consumer, 13% computer, and 11% communications [18] Market Data and Key Metrics Changes - The appliance sector saw orders down about 40% in Q3 compared to the first half of the year, attributed to tariffs and stagnant home sales [4][6] - Industrial business revenues increased nearly 20% for the first three quarters of 2025, capitalizing on trends like electrification and grid modernization [6][9] - The company expects Q4 revenues to be between $100-$105 million, with a significant decline in consumer revenues [6][19] Company Strategy and Development Direction - The company is focusing on data center, automotive, and high-power markets, reallocating R&D and go-to-market resources accordingly [14][33] - Collaboration with NVIDIA on 800-volt DC power architecture is a strategic move to enhance efficiency in data centers [10][11] - The company aims to drive shareholder value by growing cash flow while maintaining disciplined spending [15] Management's Comments on Operating Environment and Future Outlook - Management noted a slowdown in orders and weaker distribution sell-through, particularly in the appliance sector, but expects a recovery in 2026 [4][26] - The CEO emphasized the importance of adapting the organization to better match market needs and increase ROI on R&D spending [13][15] - Management expressed confidence in the long-term growth potential of the appliance business despite current challenges [30] Other Important Information - The board declared a $0.005 per share dividend increase effective in Q1 of 2026, with nearly $150 million returned to stockholders through buybacks and dividends this year [9][19] - The company expects non-GAAP gross margin for Q4 to be between 53.5% and 54% [20] Q&A Session Summary Question: Can you elaborate on the consumer business outlook? - Management acknowledged the decline in appliances and expects a bounce back in 2026 as preloaded inventory clears out [25][26] Question: Will there be a change in market approach focusing on data center, automotive, and high power? - Management confirmed a shift in focus towards these markets, reallocating resources while still investing in the core business [33] Question: What is the outlook for the PC market and potential opportunities? - The key opportunity lies in GaN penetration in notebooks, with ongoing design activity [62] Question: How is the traction in the automotive sector? - Management highlighted successful design wins in heavy vehicles and passenger cars, indicating a strong future potential [64][68]

Core Insights - Power Integrations (POWI) reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, but down from $0.40 per share a year ago [1][2] - The company achieved revenues of $118.92 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.32% and up from $115.84 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was +5.88%, following a previous surprise of +2.94% in the last quarter [2] - Power Integrations has surpassed consensus EPS estimates in all four of the last quarters [2] Revenue Performance - The company has exceeded consensus revenue estimates three times over the last four quarters [3] Stock Performance - Power Integrations shares have declined approximately 36.9% year-to-date, contrasting with the S&P 500's gain of 15.1% [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.33 on revenues of $116.06 million, and for the current fiscal year, it is $1.33 on revenues of $455.96 million [8] - The Zacks Rank for Power Integrations is currently 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Semiconductors - Power industry is ranked in the top 41% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

Financial Performance - Net revenues for Q3 2025 were $118.9 million, a 2.4% increase from $115.8 million in Q3 2024[11] - Gross profit for Q3 2025 was $64.9 million, compared to $63.2 million in Q3 2024, reflecting a gross margin improvement[11] - Operating expenses increased to $68.8 million in Q3 2025 from $51.6 million in Q3 2024, primarily due to higher research and development costs[11] - The company reported a net loss of $1.4 million in Q3 2025, a significant decline from a net income of $14.3 million in Q3 2024[11] - Basic earnings per share for Q3 2025 were $(0.02), down from $0.25 in Q3 2024[11] - Total comprehensive loss for Q3 2025 was $(1.3) million, compared to a comprehensive income of $18.5 million in Q3 2024[14] - Net income for the nine months ended September 30, 2025, was $8,803,000, a decrease of 61.9% compared to $23,094,000 for the same period in 2024[19] - The Company’s operating loss for the three months ended September 30, 2025, was $(3.95) million, compared to an operating income of $11.6 million in the same period of 2024[90] Cash Flow and Equity - Net cash provided by operating activities increased to $85,312,000 for the nine months ended September 30, 2025, compared to $66,455,000 in 2024, reflecting a growth of 28.3%[19] - Cash and cash equivalents at the end of the period were $48,646,000, down from $58,469,000 at the end of the previous period, a decrease of 16.5%[19] - Total stockholders' equity decreased to $672.0 million as of September 30, 2025, from $749.2 million a year earlier[17] - Net cash used in financing activities was $128,325,000 for the nine months ended September 30, 2025, compared to $54,379,000 in 2024, indicating a significant increase in cash outflows[19] Research and Development - Research and development expenses for the nine months ended September 30, 2025, were $76.8 million, up from $75.1 million in the same period of 2024[11] - Research and development expenses for the three months ended September 30, 2025, were $23.8 million, compared to $22.8 million in the same period of 2024, reflecting an increase of approximately 4.4%[90] Stock and Shareholder Actions - The company repurchased $64.0 million of common stock during the nine months ended September 30, 2025[17] - The Company repurchased 919,000 shares of common stock during the three months ended September 30, 2025, and 2,028,000 shares during the nine months ended September 30, 2025[67][68] - As of September 30, 2025, the outstanding common stock shares were 55,312,000, down from 56,840,000 at the same time in 2024[67] - The Company declared cash dividends of $0.21 per share for the three months ended September 30, 2025, compared to $0.20 per share in the same period of 2024, reflecting a 5% increase[74] - Total cash dividends declared and paid for the nine months ended September 30, 2025, amounted to $35.6 million, up from $34.1 million in the same period of 2024[74] Customer and Sales Information - The top ten customers accounted for approximately 81% of net revenues for both the three and nine months ended September 30, 2025, compared to 78% for the same periods in 2024[59] - Sales to distributors were $82.3 million and $238.7 million for the three and nine months ended September 30, 2025, respectively, compared to $80.5 million and $220.4 million in the same periods of 2024[59] - Geographic net revenues for the Americas were $6.2 million for the three months ended September 30, 2025, and $17.7 million for the nine months ended September 30, 2025, showing growth from $5.5 million and $15.8 million in 2024[66] Legal and Acquisition Activities - The Company recognized a charge of $9.2 million in other operating expenses related to a jury verdict in favor of the plaintiff for claims of harassment based on disability and retaliation[95] - An additional $0.7 million was recognized in the quarter ended September 30, 2025, related to plaintiff attorney fees and costs[95] - The total potential exposure related to the litigation amounts to an additional $5.2 million in expenses[95] - The Company acquired Odyssey Semiconductor Technologies for $9.52 million in cash to enhance its development of high-power GaN switching technology[100] - Goodwill from the acquisition is expected to be deductible over 15 years for tax purposes[101] - The fair value of in-process research and development will be recorded as an intangible asset with an indefinite life until completion[102] Management and Governance - The Company’s Chief Financial Officer resigned effective October 4, 2025, with an interim CFO appointed[104] - The Company maintained a valuation allowance on its deferred tax assets in California and New Jersey as of September 30, 2025, indicating ongoing tax strategy considerations[82] Marketable Securities and Investments - The total fair value of the company's cash equivalents and short-term marketable securities as of September 30, 2025, was $196,485,000, down from $252,388,000 at December 31, 2024, representing a decrease of 22.2%[37] - The company reported a total marketable securities value of $193,214,000 as of September 30, 2025, compared to $249,023,000 at December 31, 2024, reflecting a decline of 22.5%[40] - The company classified its marketable securities as available-for-sale, with a total amortized cost of $191,170,000 and gross unrealized gains of $2,045,000 as of September 30, 2025[40] - The fair value measurement of corporate securities at September 30, 2025, included $191,733,000 classified under Level 2 of the fair-value hierarchy[37] - The company holds corporate securities with an amortized cost of $155,800,000 due in 12 months or greater, with an estimated fair market value of $157,636,000[40] - The company expects the fair value of its marketable securities to recover as they reach maturity, despite current declines due to interest rate changes[45]

Financial Performance - Revenues for Q3 2025 were $118.9 million, a 3% increase year-over-year and quarter-over-quarter[1] - GAAP net loss for Q3 2025 was $1.4 million, or $0.02 per diluted share, compared to net income of $0.25 per diluted share in Q3 2024[1][2] - Non-GAAP net income for Q3 2025 was $20.2 million, or $0.36 per diluted share, down from $0.40 per diluted share in Q3 2024[2] - GAAP gross profit for Q3 2025 was $64,851 million, with a gross margin of 54.5%[15] - Non-GAAP gross profit for Q3 2025 was $65,515 million, with a non-GAAP gross margin of 55.1%[15] - GAAP net loss for Q3 2025 was $1,356 million, while non-GAAP net income was $20,194 million[16] - Non-GAAP net income per share (diluted) for Q3 2025 was $0.36, compared to $0.40 in Q3 2024[16] - Net income for the three months ended September 30, 2025, was a loss of $1,356 million, compared to a profit of $1,369 million in the previous quarter[20] Cash Flow and Assets - Cash flow from operations for Q3 2025 was $29.9 million[1] - Cash provided by operating activities for the nine months ended September 30, 2025, was $85,312 million, an increase from $66,450 million in the same period of 2024[20] - Cash and cash equivalents decreased to $48,646 million from $50,972 million at the end of 2024[18] - Cash and cash equivalents at the end of the period on September 30, 2025, were $48,646 million, down from $66,935 million at the end of the previous quarter[20] - Total current assets as of September 30, 2025, were $456,063 million, down from $514,039 million at the end of 2024[18] - Total liabilities as of September 30, 2025, were $100,554 million, an increase from $79,054 million at the end of 2024[18] - Retained earnings as of September 30, 2025, were $673,218 million, down from $734,039 million at the end of 2024[18] Operational Metrics - The industrial business saw a 20% year-over-year growth in Q3 2025, while consumer appliance orders remained soft[3] - GAAP operating expenses for Q3 2025 increased to $68,804 million, compared to $51,589 million in Q3 2024[15] - Non-GAAP income from operations for Q3 2025 was $18,124 million, resulting in a non-GAAP operating margin of 15.2%[15] - Depreciation expense for the three months ended September 30, 2025, was $6,542 million, down from $7,002 million in the previous quarter[20] - Stock-based compensation expense increased to $21,205 million for the three months ended September 30, 2025, compared to $10,077 million in the previous quarter[20] Shareholder Returns - Power Integrations repurchased 919 thousand shares for $42.4 million during the quarter[4] - The company announced a quarterly dividend increase to $0.215 per share for each quarter of 2026[4] Future Projections - For Q4 2025, revenues are expected to be between $100 million and $105 million[8] - GAAP gross margin for Q4 2025 is projected to be between 53% and 53.5%[8] - GAAP operating expenses for Q4 2025 are expected to be approximately $56 million[8] Investment Activities - Net cash provided by investing activities for the three months ended September 30, 2025, was $3,543 million, compared to $32,618 million in the previous quarter[20] - Purchases of property and equipment for the three months ended September 30, 2025, totaled $5,694 million, slightly lower than $5,926 million in the previous quarter[20] - Proceeds from sales and maturities of marketable securities for the nine months ended September 30, 2025, were $116,658 million, up from $103,800 million in the same period of 2024[20] Credit and Allowance - The company reported a decrease in accounts receivable allowance for credit losses of $381 million for the nine months ended September 30, 2025, compared to a decrease of $459 million in the same period of 2024[20]

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