Financial Performance - Fourth-quarter revenues increased 18% year-over-year to $105.2 million, but decreased 9% from the prior quarter[1] - GAAP net income for the fourth quarter was $9.1 million, or $0.16 per diluted share, down from $0.25 per diluted share in the prior quarter[1][2] - Non-GAAP net income for the fourth quarter was $17.2 million, or $0.30 per diluted share, compared to $0.40 per diluted share in the prior quarter[2] - Full-year net revenues were $419.0 million, down from $444.5 million in the prior year[3] - Full-year GAAP net income was $32.2 million, or $0.56 per diluted share, compared to $0.97 per diluted share in the prior year[3] Future Outlook - The company expects another double-digit revenue increase in the first quarter of 2025 despite a cloudy demand outlook[4] - Revenues for the first quarter of 2025 are expected to be flat compared to the fourth quarter of 2024, plus or minus 5%[9] - GAAP gross margin for the first quarter of 2025 is expected to be between 55% and 55.5%[9] Cash Flow and Dividends - Cash flow from operations for the fourth quarter was $14.7 million, and for the full year was $81.2 million[1][3] - The company plans to maintain a dividend of $0.21 per share, with the next payment scheduled for March 31, 2025[5] Gross Profit and Margins - GAAP gross profit for Q4 2024 was $57,267,000, up from $46,208,000 in Q4 2023, representing a 23.5% increase[14] - Non-GAAP gross profit for Q4 2024 was $57,955,000, compared to $47,189,000 in Q4 2023, reflecting a 22.7% growth[14] - Non-GAAP operating margin for Q4 2024 was 12.7%, down from 17.3% in Q3 2024[14] Year-End Financial Position - Total current assets as of December 31, 2024, were $514,039,000, slightly up from $511,600,000 a year earlier[18] - Cash and cash equivalents decreased to $50,972,000 from $63,929,000 year-over-year, a decline of 20.3%[18] - Total liabilities increased to $79,054,000 as of December 31, 2024, compared to $67,627,000 in the previous year, marking a 16.9% rise[18] Comparative Performance - GAAP net income for Q4 2024 was $9,140,000, a decrease from $14,271,000 in Q4 2023, indicating a 35.5% decline[16] - Non-GAAP net income for Q4 2024 was $17,210,000, up from $12,700,000 in Q4 2023, showing a 35.5% increase[16] - The company reported a net cash provided by operating activities of $14,726,000 for Q4 2024, compared to $16,267,000 in Q4 2023[20] - The average shares outstanding for diluted non-GAAP net income per share was 57,097,000 for Q4 2024, compared to 57,272,000 in Q4 2023[16]

三 坐 咪 ◎ /:/ ©2024 Power Integrations, Inc. | power.com Power Integrations, Inc. NASDAQ: POWI Q3 2024 Forward-Looking Statements/Non-GAAP Metrics These slides may accompany an oral presentation by Power Integrations, Inc., which contains forward-looking statements. Each statement relating to events that will or may occur in the future is a forward-looking statement. The Company's actual results may differ materially from those suggested in the presentation. Information concerning factors that could cause suc ...

Financial Data and Key Metrics - Q3 2024 revenue increased 9% sequentially to $116 million, with non-GAAP gross margin of 55.1% and non-GAAP earnings of $0.40 per share [7] - Q4 2024 revenue outlook is $105 million ± $5 million, reflecting soft demand in the appliance market and inventory buildup in China [7] - Year-over-year growth expected in Q4, with midpoint of forecast up 17% compared to last year [8] - Industrial segment expected to show strongest growth in 2025, driven by high-power applications and metering [8][9] - GaN products expected to account for over 10% of sales by 2025, with potential to reach $100 million in revenue by 2028 [25][53] Business Line Data and Key Metrics - Industrial revenues grew mid-teens sequentially in Q3, driven by high-power, home automation, and metering applications [32] - Communication category revenue up 20% sequentially, driven by 5G fixed wireless business in India and seasonal growth in smartphone chargers [33] - Computer category revenue up 10% sequentially, supported by OEM and aftermarket notebook chargers [33] - Consumer category flat sequentially, with strength in major appliances and gaming offsetting seasonal softness in air conditioning [34] Market Data and Key Metrics - High-voltage DC transmission projects and metering in India are key growth drivers in the industrial segment [9][11] - Automotive segment expected to contribute to industrial revenues in 2025, with significant growth in EV-related applications [12][13] - Consumer segment impacted by weak demand in China, with appliance inventory buildup ahead of government stimulus program [7][59] Company Strategy and Industry Competition - Focus on GaN technology, with advancements in voltage and power capabilities, targeting high-power applications in AI data centers, EVs, and telecom infrastructure [22][23][24] - GaN technology nearing cost parity with silicon MOSFETs, with superior performance and reliability [17][18][19] - Expansion into higher voltage GaN products (750V, 900V, 1250V, 1700V) to address industrial and automotive markets [23][41] - Acquisition of Odyssey Semiconductor to accelerate development of high-power GaN technology [24][49] Management Commentary on Operating Environment and Future Outlook - Soft demand environment in consumer segment, particularly in China, expected to persist in Q4 [7][59] - Strong growth anticipated in 2025, driven by GaN products, high-power applications, and new design wins [28] - Management confident in long-term growth, with Board approving a 5% dividend increase and $50 million share repurchase program [31] Other Important Information - Channel inventory increased to 8.6 weeks, driven by consumer segment, while other categories saw inventory declines [34] - Non-GAAP operating expenses for Q3 were $43.7 million, down $500,000 sequentially despite Odyssey acquisition [35] - Cash flow from operations was $33 million, with $10 million spent on Odyssey acquisition and $11 million on dividends [36] Q&A Session Summary Question: Demand for 1700V GaN and its market fit - 1700V GaN is essential for 800V and 1000V battery systems in EVs and 3-phase industrial applications, currently served by silicon carbide [41] - GaN offers superior efficiency and cost advantages over silicon carbide [41] Question: Impact of new administration on renewables and energy efficiency - Renewables and EVs are expected to continue growing, driven by cost advantages and environmental benefits [43] - High-voltage DC transmission systems are critical for efficient power delivery, particularly for renewable energy and AI data centers [44] Question: GaN technology lead and cost comparison with silicon carbide - GaN is nearing cost parity with silicon MOSFETs and is significantly more cost-effective than silicon carbide [48] - GaN technology is competitive with silicon carbide up to 100+ watts, with ongoing development for higher power applications [49] Question: GaN revenue contribution and product migration - GaN expected to replace silicon in high-voltage switches across most products, with 20% of revenue projected to come from GaN in the next 2-3 years [52][54] Question: Segment performance and inventory dynamics - Industrial segment expected to be flat in Q4, while other segments decline [56] - Consumer inventory buildup in China due to weak demand and delayed government stimulus [59][60]

Earnings Performance - Power Integrations reported quarterly earnings of $0.40 per share, beating the Zacks Consensus Estimate of $0.36 per share, representing an earnings surprise of 11.11% [1][2] - The company's earnings per share (EPS) for the same quarter last year was $0.46 per share [1] - Over the last four quarters, the company has surpassed consensus EPS estimates four times [2] Revenue Performance - Power Integrations posted revenues of $115.84 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.04% [3] - This compares to year-ago revenues of $125.51 million [3] - The company has topped consensus revenue estimates three times over the last four quarters [3] Stock Performance and Market Comparison - Power Integrations shares have lost about 21.4% since the beginning of the year, while the S&P 500 has gained 21.2% [4] - The stock's immediate price movement will depend on management's commentary on the earnings call [4] Earnings Outlook and Estimate Revisions - The current consensus EPS estimate is $0.40 on $118.83 million in revenues for the coming quarter and $1.22 on $431.37 million in revenues for the current fiscal year [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [6] - The estimate revisions trend for Power Integrations is mixed, translating into a Zacks Rank 3 (Hold) [7] Industry Outlook - The Semiconductors - Power industry is currently in the top 40% of the 250 plus Zacks industries [9] - The top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [9] Sapiens (SPNS) Earnings Preview - Sapiens is expected to report quarterly earnings of $0.37 per share, representing a year-over-year change of +8.8% [10] - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days [10] - Sapiens' revenues are expected to be $140.34 million, up 7.4% from the year-ago quarter [11]

Financial Performance - Net revenues for Q3 2024 were $115.8 million, a decrease of 7.7% compared to $125.5 million in Q3 2023[8] - Gross profit for Q3 2024 was $63.2 million, down 4.2% from $65.9 million in Q3 2023[8] - Net income for Q3 2024 was $14.3 million, a decrease of 27.8% compared to $19.8 million in Q3 2023[8] - Earnings per share (diluted) for Q3 2024 were $0.25, compared to $0.34 in Q3 2023[8] - Total comprehensive income for Q3 2024 was $18.5 million, down 6.7% from $19.8 million in Q3 2023[10] - Net income for the nine months ended September 2024 was $23.1 million, compared to $41.5 million in the same period in 2023[13] - Basic EPS was $0.25 and $0.41 for the three and nine months ended September 30, 2024, respectively[55] - Diluted EPS was $0.25 and $0.40 for the three and nine months ended September 30, 2024, respectively[55] - Net revenues for the three months ended September 30, 2024 were $115.8 million, down from $125.5 million in the same period of 2023[84] Cash Flow and Liquidity - Cash and cash equivalents decreased to $58.5 million as of September 30, 2024, from $63.9 million as of December 31, 2023[7] - Net cash provided by operating activities was $66.5 million for the nine months ended September 2024, compared to $49.5 million in 2023[13] - Cash, cash equivalents, and short-term marketable securities decreased to $303.8 million as of September 30, 2024, down from $311.6 million as of December 31, 2023[91] - Operating activities generated $66.5 million of cash in the nine months ended September 30, 2024, compared to $49.5 million in the same period of 2023[95] - Worldwide cash and marketable securities available for capital allocation needs without incurring additional U.S. federal income taxes as of September 30, 2024[99] - Cash generated from operations and existing liquidity sources expected to satisfy working capital and other cash requirements for at least the next 12 months[99] Assets and Liabilities - Total current assets were $507.9 million as of September 30, 2024, a slight decrease from $511.6 million as of December 31, 2023[7] - Accounts receivable increased to $16.6 million as of September 30, 2024, from $14.7 million as of December 31, 2023[7] - Inventories increased to $167.7 million as of September 30, 2024, from $163.2 million as of December 31, 2023[7] - Accounts receivable trade decreased to $50.1 million as of September 30, 2024, from $53.1 million as of December 31, 2023[19] - The allowance for credit losses decreased to $222,000 as of September 30, 2024, from $681,000 as of December 31, 2023[19] - Total stockholders' equity was $749.2 million as of September 30, 2024, compared to $785.1 million as of September 30, 2023[12] - Total inventories increased to $167,680,000 in September 2024 from $163,164,000 in December 2023[21] - Accumulated other comprehensive income (loss) ending balance improved to $2,256,000 in September 2024 from $(2,840,000) in September 2023[22] - Total fair value of marketable securities decreased to $259,713,000 in September 2024 from $267,688,000 in December 2023[26] - Total marketable securities increased to $245,282,000 in September 2024 from $247,640,000 in December 2023[27] - Accrued interest receivable increased to $2.6 million in September 2024 from $2.3 million in December 2023[27] - Total marketable securities as of September 30, 2024, had a fair market value of $24.012 million, with gross unrealized losses of $32 thousand[30] - Goodwill increased by $3.422 million during the nine months ended September 30, 2024, reaching a total of $95.271 million[31] - Total intangible assets as of September 30, 2024, amounted to $46.077 million, with a net value of $8.283 million after accumulated amortization[34] - Estimated amortization for the remaining three months of 2024 is $2.092 million, excluding $4.9 million of in-process research and development[35] Expenses and Costs - Research and development expenses increased to $25.8 million in Q3 2024, up 7.3% from $24.1 million in Q3 2023[8] - Stock-based compensation expense increased to $25.8 million for the nine months ended September 2024, up from $21.0 million in 2023[13] - The company recorded an acquisition-related expense of $9.5 million in the nine months ended September 2024[13] - Research and development expenses increased to 22.3% of net revenues in Q3 2024, up from 19.2% in Q3 2023, reflecting ongoing innovation efforts[78] - R&D expenses increased to $25.8 million for the three months ended September 30, 2024, up from $24.1 million in the same period of 2023, primarily due to higher headcount and salary increases[85][86] - Sales and marketing expenses rose to $17.1 million for the three months ended September 30, 2024, compared to $16.2 million in the same period of 2023, driven by higher stock-based compensation and salary increases[88] - General and administrative expenses increased to $8.6 million for the three months ended September 30, 2024, up from $7.9 million in the same period of 2023, primarily due to higher stock-based compensation and salary increases[87] Shareholder Activities - The company repurchased $25.98 million worth of common stock in the nine months ended September 2024, compared to $7.83 million in 2023[13] - Dividends paid to stockholders totaled $34.1 million for the nine months ended September 2024, up from $32.7 million in 2023[13] - The company repurchased 371,000 shares for $26.0 million in the nine months ended September 30, 2024, exhausting its repurchase authorization[51] - Quarterly cash dividend increased to $0.21 per share starting Q4 2024[52] - The board of directors raised the quarterly cash dividend to $0.21 per share, effective from the fourth quarter of 2024, up from $0.20 per share previously[97] Market and Sales - Top 10 customers accounted for 78% of net revenues for both the three and nine months ended September 30, 2024[45] - Sales to distributors were $80.5 million and $220.4 million in the three and nine months ended September 30, 2024, respectively[46] - Avnet accounted for 31% and 30% of net revenues in the three and nine months ended September 30, 2024, respectively[46] - 84% of accounts receivable were concentrated with the top 10 customers as of September 30, 2024[47] - APAC region accounted for $178.23 million and $215.83 million of net revenues in the nine months ended September 30, 2024 and 2023, respectively[49] - International sales accounted for 98% of net revenues in both Q3 2024 and Q3 2023, with Asia representing 85% of sales in Q3 2024[79] - Top ten customers accounted for 78% of net revenues in Q3 2024, down from 83% in Q3 2023[74] - Consumer end-market sales increased to 38% of net revenues in Q3 2024, up from 26% in Q3 2023[80] Tax and Legal - The company's effective tax rate for the three and nine months ended September 30, 2024 was 0.3% and 1.5%, respectively, compared to 5.1% in the corresponding periods of 2023[56] - The company's effective tax rate is lower than the statutory federal income-tax rate of 21% due to earnings in lower-tax jurisdictions and federal research tax credits[56] - The company maintains a valuation allowance on its California and New Jersey deferred tax assets, as well as deferred tax assets related to tax credits in Canada[56] - The company is involved in ongoing legal proceedings, including a patent infringement case with CogniPower LLC, with a trial scheduled for August 2025[58] - The company's distributor sales agreements include indemnification provisions for losses related to patent, copyright, or trademark infringement claims[61] Acquisitions and Investments - The company acquired Odyssey Semiconductor Technologies for $9.52 million in cash, with $1.168 million allocated to property and equipment, $4.93 million to in-process research and development, and $3.422 million to goodwill[62][63] - The Company acquired in-process research and development assets worth $4.9 million from Odyssey Semiconductor Technologies in July 2024[32] - The company's acquisition of Odyssey Semiconductor Technologies is intended to augment its development of high-power GaN switching technology[62] Product and Technology - The company's products are used in AC-DC power supplies for various electronic devices, including appliances, mobile phones, and electric vehicles[69] - The company's system-level power-conversion products offer benefits such as reduced design complexity, smaller size, and lower energy consumption[69] - The company's EcoSmart™ and PowiGaN™ technologies contribute to energy efficiency and renewable energy adoption, aligning with global carbon reduction goals[70] - New products like BridgeSwitch-2 and automotive-qualified products are expected to further expand the SAM, particularly in the EV market[71] - The company's addressable market (SAM) expanded from $1.5 billion pre-2010 to approximately $4 billion through product introductions and market expansions[71] Risk and Compliance - No material changes in contractual commitments as of September 30, 2024 compared to December 31, 2023[99] - No material changes in interest rate risk and foreign currency exchange risk during the first nine months of 2024[101] - The company's wafer-supply agreements with Seiko Epson Corporation and ROHM Lapis Semiconductor Co., Ltd. include mutual sharing of exchange rate fluctuations between the Japanese yen and the U.S. dollar[57] Stock-Based Compensation - Stock-based compensation expense for the three months ended September 30, 2024, was $8.338 million, with $6.6 million related to RSU awards[36] - Approximately 38,000 shares subject to PSUs granted in 2023 vested in February 2024, with an aggregate intrinsic value of $11.121 million as of September 30, 2024[40] - Outstanding PRSUs as of September 30, 2024, totaled 421 thousand shares, with an aggregate intrinsic value of $26.982 million[42] - Outstanding RSUs at September 30, 2024 were 988,000 shares with a weighted-average grant date fair value of $71.18 per share and an aggregate intrinsic value of $63.36 million[43]

Revenue and Growth - Q3 2024 revenues were $115.8 million, up 9% from the prior quarter but down 8% year-over-year[1] - The company expects Q4 2024 revenues to be $105 million ± $5 million, with double-digit year-over-year growth[3] - Q3 2024 revenue mix by end market: Communications 12%, Computer 14%, Consumer 38%, Industrial 36%[15] Net Income and Earnings Per Share - GAAP net income for Q3 2024 was $14.3 million, or $0.25 per diluted share, compared to $0.34 per diluted share in Q3 2023[1] - Non-GAAP net income for Q3 2024 was $22.6 million, or $0.40 per diluted share, compared to $0.46 per diluted share in Q3 2023[2] - Non-GAAP net income for Q3 2024 was $22,616 thousand, a decrease from $26,603 thousand in Q3 2023[21] - Non-GAAP net income per share (diluted) for Q3 2024 was $0.40, compared to $0.46 in Q3 2023[21] - Net income for the three months ended September 30, 2024 was $14.291 million, compared to $19.796 million for the same period in 2023[23] Gross Margin - GAAP gross margin for Q4 2024 is expected to be between 54% and 54.5%, while non-GAAP gross margin is expected to be between 55% and 55.5%[6] - Q3 2024 GAAP gross margin was 54.5%, while non-GAAP gross margin was 55.1%[16] Operating Expenses and Income - GAAP operating expenses for Q3 2024 were $51,589 thousand, compared to $48,233 thousand in Q3 2023, representing a 7% increase[18] - Non-GAAP income from operations for Q3 2024 was $20,067 thousand, with a non-GAAP operating margin of 17.3%, compared to $25,099 thousand and 20.0% in Q3 2023[19] Cash Flow and Liquidity - Q3 2024 cash flow from operations was $32.9 million[1] - Net cash provided by operating activities for the nine months ended September 30, 2024 was $66.455 million, up from $49.492 million in the same period in 2023[23] - Cash and cash equivalents increased to $58,469 thousand as of September 30, 2024, from $50,493 thousand as of June 30, 2024[22] - Cash and cash equivalents at the end of the period September 30, 2024 were $58.469 million, compared to $94.743 million at the end of the same period in 2023[23] Share Repurchase and Dividends - The board authorized a $50 million share repurchase program and increased the quarterly dividend by 5% to $0.21 per share[5] - Repurchase of common stock for the nine months ended September 30, 2024 was $25.979 million, compared to $7.834 million in the same period in 2023[23] - Payments of dividends to stockholders for the nine months ended September 30, 2024 totaled $34.100 million, up from $32.665 million in the same period in 2023[23] Assets and Liabilities - Total current assets as of September 30, 2024, were $507,886 thousand, slightly higher than $499,836 thousand as of June 30, 2024[22] - Total liabilities as of September 30, 2024, were $75,778 thousand, up from $74,018 thousand as of June 30, 2024[22] - Retained earnings as of September 30, 2024, were $736,836 thousand, compared to $733,909 thousand as of June 30, 2024[22] - Total stockholders' equity increased to $749,213 thousand as of September 30, 2024, from $730,742 thousand as of June 30, 2024[22] Marketable Securities - Purchases of marketable securities for the nine months ended September 30, 2024 totaled $97.581 million, compared to $173.015 million in the same period in 2023[23] - Proceeds from sales and maturities of marketable securities for the nine months ended September 30, 2024 were $103.806 million, down from $161.897 million in the same period in 2023[23] Tax Rate - GAAP effective tax rate for Q3 2024 was 0.3%, significantly lower than the 5.1% in Q3 2023[20] Technology and Innovation - PowiGaN™ technology introduced the world's first 1700-volt gallium-nitride transistors in the InnoMux™-2 product family[4]

Industry Overview - Analog semiconductor manufacturers have been underperforming compared to the broader semiconductor sector, as measured by the iShares Semiconductor ETF (SOXX) [1] - Investors are currently focused on AI chips, with companies like NVIDIA (NVDA) receiving significant attention [1] Company Performance - The article does not provide specific performance data or metrics for individual analog semiconductor companies [1] Market Trends - The article highlights a shift in investor focus towards AI chips, potentially impacting the performance of analog semiconductor manufacturers [1] Investment Focus - The article does not provide specific investment recommendations or analysis for individual companies within the analog semiconductor sector [1]

Company Performance - Power Integrations (POWI) released its Q2 FY2024 report on August 6, showing positive developments, but the stock fell to a new 52-week low despite the report [1] - The company's Q2 FY2024 revenue was $106.2M, a 15.83% QoQ increase but a 13.82% YoY decline [5] - Non-GAAP net income for Q2 FY2024 was $15.87M, a 51.29% QoQ increase but a 24.45% YoY decline [5] - POWI's Q3 FY2024 guidance projects revenue of $110-120M, an 8.37% YoY decline at the midpoint [6] - The company has seen eight consecutive YoY declines in quarterly revenue as of Q2 FY2024 [11] Financial Health - POWI ended Q2 FY2024 with $290.48M in cash, cash equivalents, and short-term marketable securities, with no debt [4] - The company's non-GAAP gross margin improved to 54.1% in Q2 FY2024, up 110bps QoQ and 230bps YoY [5] - Non-GAAP operating margin for Q2 FY2024 was 12.5%, up 450bps QoQ but down 360bps YoY [5] Market and Demand Conditions - POWI is experiencing a slump in demand, particularly in China, where demand for appliances is much lower than expected [8] - Distribution inventory decreased to 7.8 weeks at the end of Q2 FY2024, down one week sequentially [7] - The company faces challenges with low visibility for Q4 FY2024, as customers are ordering at the last minute due to high inventory levels [8] Stock Performance and Valuation - POWI's stock lost about 20% of its value since May 2024, closing at $60.92 on August 8, giving it a market cap of $3.46B [3] - The stock is near oversold territory after losing more than 16% since the start of August 2024 [3] - POWI's P/E ratio is estimated at 48.7x based on FY2024 non-GAAP EPS projections of $1.25-1.30 [4] Long-Term Outlook - POWI's financial model targets revenue growth with a CAGR in the low teens for FY2022-2027, aiming for $1.2B in revenue by FY2027 [9][10] - The company needs to achieve strong growth in the next three years to meet its targets, but FY2024 is likely to be flat or slightly down compared to FY2023 [10] - POWI's high P/E multiples are justified only if EPS grows to $5+ over the next three years, which is uncertain given current demand conditions [10] Industry Context - The semiconductor industry, including POWI, has been adversely affected by geopolitical factors and a broader stock market selloff in August 2024 [4] - The company's performance is tied to the recovery of the semiconductor market, which remains uncertain [11]

Financial Data and Key Metrics - Q2 revenues were $106 million, up 16% sequentially, slightly above the midpoint of guidance [8] - Non-GAAP earnings were $0.28 per diluted share, above guidance due to better gross margin and operating expenses [8] - Non-GAAP gross margin was 54.1%, up more than 1 percentage point sequentially, driven by favorable yen exchange rates and higher manufacturing volumes [9] - Inventory days decreased to 312, down 37 days from the prior quarter [9] - Q3 revenue guidance is $115 million, plus or minus $5 million, representing an 8% sequential increase at the midpoint [10] - Non-GAAP gross margin for Q3 is expected to be between 54.5% and 55% [10] Business Line Performance - Consumer category, the largest segment, saw high-teens sequential growth, driven by strength in major and small appliances, as well as air conditioning [8] - Industrial category revenues grew mid-single digits sequentially, supported by improved inventories and design wins in metering applications [8] - Computer category revenues increased more than 40% sequentially, driven by tablets, aftermarket notebook chargers, and monitors [8] - Communication category revenues grew 10% sequentially, due to inventory clearance at a key handset customer [8] Market Performance - In China, appliance demand remains soft, with no significant pickup in demand despite inventory normalization [12] - The cell phone market in China has shifted towards low-end phones, with Huawei gaining share in the high-end segment, negatively impacting the company's performance [12][13] - Outside of China, the company is performing well, with overall growth (excluding cell phones) projected to exceed 15% for the year [13] - India's metering market shows strong interest in higher voltage GaN products, with plans to deploy 250 million new meters in the coming years [6] Strategic Direction and Industry Competition - The company expects 2025 to be an inflection point for GaN adoption, driven by product portfolio migration from silicon to GaN and broader customer awareness [6] - GaN revenue is projected to grow by 50% in 2025, with potential to reach $100 million by 2028 [18] - The acquisition of Odyssey Semiconductor adds expertise in vertical GaN technology, aiming to address high-power applications like EV drivetrain inverters [7] - The company continues to win market share in appliances, leveraging its leadership in energy-efficient power supplies and new product innovations like BridgeSwitch 2 and InnoMux-2 [4][5] Management Commentary on Operating Environment and Future Outlook - Near-term visibility remains limited, with customers ordering products only when needed due to cautious behavior and short lead times [3] - The recovery is being led by the consumer category, which has seen a 70% revenue increase over the past two quarters [3] - The company expects seasonally lower air conditioning sales in Q3 but remains optimistic about the fundamental strength of its consumer business [4] - Automotive is seen as a significant growth opportunity, with the company expected to be in production with 20 EV OEMs by year-end and 10 more in 2025 [7] Other Important Information - Distribution inventory ended the quarter at 7.8 weeks, down from 8.8 weeks in the prior quarter and well below the peak of 13.6 weeks in Q3 2022 [3][9] - The company repurchased 164,000 shares for $11 million during the quarter and paid $11 million in dividends [9] - Non-GAAP operating expenses for Q3 are expected to be between $44.5 million and $45 million, driven by the Odyssey acquisition [10] Q&A Session Question: Geographic performance, particularly in China - In China, appliance demand remains weak, with no significant pickup expected due to challenges in the real estate market [12] - The cell phone market in China has shifted towards low-end phones, with Huawei gaining share in the high-end segment, negatively impacting the company's performance [12][13] - Outside of China, the company is performing well, with overall growth (excluding cell phones) projected to exceed 15% for the year [13] Question: Second-half outlook and factors influencing growth - The inventory situation has normalized, but demand visibility remains poor, with customers ordering at the last minute [16] - Growth in the second half is expected to be slower than anticipated, with limited visibility into Q4 [16] Question: GaN adoption and future revenue potential - GaN adoption is expected to accelerate in 2025, driven by new product introductions and broader market awareness [18] - GaN revenue could grow by 50% in 2025, with potential to reach $100 million by 2028 [18] Question: Impact of yen fluctuations on financials - A 10% change in the yen typically affects gross margin by 120 basis points, with the impact flowing into the P&L over three to four quarters due to higher inventory levels [20] - Recent yen fluctuations are expected to impact the P&L in Q4 2025 or Q1 2026 [20]

Earnings Performance - Power Integrations reported quarterly earnings of $0 28 per share, beating the Zacks Consensus Estimate of $0 26 per share [1] - This represents a 7 69% earnings surprise compared to the consensus estimate [2] - The company has surpassed consensus EPS estimates three times over the last four quarters [2] Revenue Performance - Power Integrations posted revenues of $106 2 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1 14% [3] - This compares to year-ago revenues of $123 22 million [3] - The company has topped consensus revenue estimates two times over the last four quarters [3] Stock Performance - Power Integrations shares have lost about 21 2% since the beginning of the year, compared to the S&P 500's gain of 8 7% [4] - The stock is currently rated Zacks Rank 4 (Sell), indicating expected underperformance in the near future [7] Earnings Outlook - The current consensus EPS estimate is $0 40 on $123 12 million in revenues for the coming quarter [8] - For the current fiscal year, the consensus EPS estimate is $1 33 on $452 92 million in revenues [8] Industry Context - Power Integrations belongs to the Zacks Semiconductors - Power industry, which is currently in the bottom 4% of the 250 plus Zacks industries [9] - The top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [9] Peer Comparison - Analog Devices (ADI), another company in the Zacks Computer and Technology sector, is expected to report quarterly earnings of $1 50 per share, representing a year-over-year change of -39 8% [10] - Analog Devices' revenues are expected to be $2 27 billion, down 26 1% from the year-ago quarter [11]