Power Integrations(POWI) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights This section summarizes Power Integrations' Q2 2025 financial results, CEO commentary on growth drivers, and other significant business activities Q2 2025 Financial Performance Power Integrations reported Q2 2025 net revenues of $115.9 million, a 9% year-over-year increase. GAAP net income was $1.4 million ($0.02 per diluted share), while non-GAAP net income was $19.9 million ($0.35 per diluted share). Cash flow from operations for the quarter was $29.1 million Q2 2025 Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change (Q2 25 vs Q2 24) | QoQ Change (Q2 25 vs Q1 25) | | :-------------------------- | :---------- | :---------- | :---------- | :-------------------------- | :-------------------------- | | Net Revenues | $115.9 M | $105.5 M | $106.2 M | +9% | +10% | | GAAP Net Income | $1.4 M | $8.8 M | $4.8 M | -71% | -84% | | GAAP Diluted EPS | $0.02 | $0.15 | $0.09 | -78% | -87% | | Non-GAAP Net Income | $19.9 M | $17.9 M | $15.9 M | +25% | +11% | | Non-GAAP Diluted EPS | $0.35 | $0.31 | $0.28 | +25% | +13% | | Cash Flow from Operations | $29.1 M | $26.4 M | $17.6 M | +65% | +10% | CEO Commentary CEO Jennifer Lloyd highlighted a 9% year-over-year revenue increase driven by strong industrial growth. Despite near-term macroeconomic uncertainty, long-term growth drivers are on track, with automotive business building towards material revenue in 2026. GaN-based product revenues grew over 50% in the first half, expanding into appliance, industrial, and EV applications, with new 1250- and 1700-volt GaN technologies being developed for AI datacenters - Revenues increased nine percent year-over-year driven by strong growth in the industrial category[3] - Automotive business continues to build toward a material revenue contribution in 2026[3] - Revenues from GaN-based products grew more than 50 percent in the first half with adoption broadening into appliance, industrial, and EV applications[3] - Developing differentiated, system-level products to capitalize on the opportunity in next-generation AI datacenters with 1250- and 1700-volt GaN technologies[3] Other Business Highlights The company repurchased 706 thousand shares for $32.6 million during the quarter and paid a dividend of $0.21 per share Share Repurchase Activity | Activity | Q2 2025 | Remaining Authorization | | :---------------- | :---------- | :---------------------- | | Shares Repurchased | 706 thousand | N/A | | Value Repurchased | $32.6 million | $42.4 million | - Paid a dividend of $0.21 per share on June 30, 2025, with another dividend of $0.21 per share to be paid on September 30, 2025[4] Financial Outlook This section outlines Power Integrations' financial projections for Q3 2025, including expected revenues, gross margins, and operating expenses Q3 2025 Forecast For Q3 2025, Power Integrations forecasts revenues between $113 million and $123 million. GAAP gross margin is expected to be 54.5%-55%, while non-GAAP gross margin is projected at 55%-55.5%. GAAP operating expenses are estimated at $72.5 million, and non-GAAP operating expenses at $47.5 million Q3 2025 Financial Forecast | Metric | Q3 2025 Forecast | | :-------------------------- | :----------------------- | | Revenues | $118 million ± $5 million | | GAAP Gross Margin | 54.5% - 55% | | Non-GAAP Gross Margin | 55% - 55.5% | | GAAP Operating Expenses | ~$72.5 million | | Non-GAAP Operating Expenses | ~$47.5 million | Company Information & Disclosures This section provides background on Power Integrations, clarifies non-GAAP measures, addresses forward-looking statements, and lists trademarks and contacts About Power Integrations Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power conversion, contributing to the clean-power ecosystem - Leading innovator in semiconductor technologies for high-voltage power conversion[6] - Products are key building blocks in the clean-power ecosystem, enabling renewable energy generation and efficient power transmission and consumption[6] Note Regarding Use of Non-GAAP Financial Measures The company provides non-GAAP financial information, excluding stock-based compensation, amortization of acquisition-related intangibles, and a litigation charge, to offer investors a clearer understanding of operating results and comparability, while acknowledging the limitations of such measures - Non-GAAP measures exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, other operating expenses of $9.2 million stemming from an employment litigation matter, and the tax effects of these items[7] - These measures are used for financial and operational decision-making and performance targets, aiming to help investors understand operating results and facilitate comparability[7] - Non-GAAP measures have limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information, as they do not reflect significant expenses like stock-based compensation[7] Note Regarding Forward-Looking Statements This section serves as a disclaimer for forward-looking statements, highlighting that actual results may differ materially due to various risks and uncertainties, including changes in trade policies, global economic conditions, competition, and new product introductions - Forward-looking statements are based on current information and are subject to rapid change, with actual results potentially differing materially due to risks and uncertainties[10] - Key risks include changes in trade policies (tariffs), ability to supply products, global economic and geopolitical conditions (inflation, armed conflicts), shifts in customer demand, effects of competition, unforeseen costs, and new product development delays/market acceptance[10] Trademarks This section clarifies that "Power Integrations" and its logo are registered trademarks of the company, with all other trademarks belonging to their respective owners - Power Integrations and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners[11] Contacts Provides contact information for investor relations inquiries - Investor Relations Contact: Joe Shiffler, Power Integrations, Inc., (408) 414-8528, joe@power.com[20] Consolidated Financial Statements (GAAP) This section presents Power Integrations' unaudited GAAP consolidated statements of income, balance sheets, and cash flows for the reported periods Consolidated Statements of Income The GAAP Consolidated Statements of Income show net revenues of $115.9 million for Q2 2025, with a gross profit of $64.0 million. Net income for the quarter was $1.4 million. The revenue mix for Q2 2025 was led by Industrial (40%) and Consumer (37%) Consolidated Statements of Income (in thousands) | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------- | :------ | :------ | :------ | :------ | :------ | | NET REVENUES | $115,852 | $105,529 | $106,198 | $221,381 | $197,886 | | GROSS PROFIT | $63,954 | $58,235 | $56,533 | $122,189 | $104,313 | | INCOME (LOSS) FROM OPERATIONS | $(1,345) | $6,718 | $1,958 | $5,373 | $2,428 | | NET INCOME | $1,369 | $8,790 | $4,849 | $10,159 | $8,803 | | Diluted EPS | $0.02 | $0.15 | $0.09 | $0.18 | $0.15 | Revenue Mix by End Market | End Market | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------- | :------ | :------ | :------ | :------ | :------ | | Communications | 11% | 10% | 11% | 10% | 11% | | Computer | 12% | 12% | 14% | 12% | 13% | | Consumer | 37% | 44% | 42% | 41% | 41% | | Industrial | 40% | 34% | 33% | 37% | 35% | Consolidated Balance Sheets As of June 30, 2025, total assets were $797.5 million, a decrease from $814.4 million at March 31, 2025. Total liabilities stood at $93.7 million, and total stockholders' equity was $703.8 million Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2023 | | :-------------------- | :------------ | :------------- | :---------------- | | Total assets | $797,537 | $814,400 | $828,826 | | Total current assets | $482,903 | $499,815 | $514,039 | | Cash and cash equivalents | $66,935 | $49,614 | $50,972 | | Total liabilities | $93,749 | $78,585 | $79,054 | | Total stockholders' equity | $703,788 | $735,815 | $749,772 | Consolidated Statements of Cash Flows For Q2 2025, net cash provided by operating activities was $29.1 million, while investing activities provided $32.6 million, primarily due to proceeds from marketable securities. Financing activities used $44.4 million, largely due to common stock repurchases and dividend payments Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net cash provided by operating activities | $29,072 | $26,386 | $17,631 | $55,458 | $33,536 | | Net cash provided by (used in) investing activities | $32,618 | $4,526 | $(891) | $37,144 | $(948) | | Net cash used in financing activities | $(44,369) | $(32,270) | $(22,690) | $(76,639) | $(46,024) | | NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $17,321 | $(1,358) | $(5,950) | $15,963 | $(13,436) | | CASH AND CASH EQUIVALENTS AT END OF PERIOD | $66,935 | $49,614 | $50,493 | $66,935 | $50,493 | Reconciliation of Non-GAAP Financial Measures This section reconciles Power Integrations' GAAP financial results to non-GAAP measures for gross profit, operating expenses, income from operations, income taxes, and diluted net income per share Reconciliation of Gross Profit The reconciliation shows that for Q2 2025, non-GAAP gross profit was $64.7 million (55.8% margin), compared to GAAP gross profit of $64.0 million (55.2% margin), primarily adjusted for stock-based compensation and amortization of acquisition-related intangibles Reconciliation of Gross Profit (in thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | :------ | | GAAP gross profit (in thousands) | $63,954 | $58,235 | $56,533 | $122,189 | $104,313 | | GAAP gross margin | 55.2% | 55.2% | 53.2% | 55.2% | 52.7% | | Stock-based compensation (in thousands) | $592 | $657 | $707 | $1,249 | $1,053 | | Amortization of acquisition-related intangibles (in thousands) | $146 | $147 | $258 | $293 | $740 | | Non-GAAP gross profit (in thousands) | $64,692 | $59,039 | $57,498 | $123,731 | $106,106 | | Non-GAAP gross margin | 55.8% | 55.9% | 54.1% | 55.9% | 53.6% | Reconciliation of Operating Expenses For Q2 2025, GAAP operating expenses were $65.3 million, while non-GAAP operating expenses were $46.7 million, after excluding stock-based compensation and other operating expenses related to litigation Reconciliation of Operating Expenses (in thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | :------ | | GAAP operating expenses (in thousands) | $65,299 | $51,517 | $54,575 | $116,816 | $101,885 | | Less: Total stock-based compensation (in thousands) | $10,077 | $8,683 | $11,035 | $18,760 | $17,449 | | Less: Other operating expenses (in thousands) | $9,151 | $0 | $0 | $9,151 | $0 | | Non-GAAP operating expenses (in thousands) | $46,663 | $43,491 | $44,247 | $90,154 | $85,489 | Reconciliation of Income from Operations GAAP income from operations for Q2 2025 was a loss of $1.3 million (-1.2% margin), which reconciles to a non-GAAP income from operations of $18.0 million (15.6% margin) after adding back stock-based compensation, acquisition-related amortization, and other operating expenses Reconciliation of Income from Operations (in thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | :------ | | GAAP income (loss) from operations (in thousands) | $(1,345) | $6,718 | $1,958 | $5,373 | $2,428 | | GAAP operating margin | -1.2% | 6.4% | 1.8% | 2.4% | 1.2% | | Add: Total stock-based compensation (in thousands) | $10,077 | $8,683 | $11,035 | $18,760 | $17,449 | | Add: Amortization of acquisition-related intangible assets (in thousands) | $146 | $147 | $258 | $293 | $740 | | Add: Other operating expenses (in thousands) | $9,151 | $0 | $0 | $9,151 | $0 | | Non-GAAP income from operations (in thousands) | $18,029 | $15,548 | $13,251 | $33,577 | $20,617 | | Non-GAAP operating margin | 15.6% | 14.7% | 12.5% | 15.2% | 10.4% | Reconciliation of Provision for Income Taxes For Q2 2025, the GAAP provision for income taxes was a benefit of $(24) thousand (-1.8% effective tax rate), which reconciles to a non-GAAP provision of $847 thousand (4.1% effective tax rate) after adjusting for the tax effects of excluded items Reconciliation of Provision for Income Taxes (in thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | :------ | | GAAP provision (benefit) for income taxes (in thousands) | $(24) | $1,095 | $298 | $1,071 | $316 | | GAAP effective tax rate | -1.8% | 11.1% | 5.8% | 9.5% | 3.5% | | Tax effect of adjustments to GAAP results (in thousands) | $(871) | $239 | $(269) | $(632) | $(627) | | Non-GAAP provision for income taxes (in thousands) | $847 | $856 | $567 | $1,703 | $943 | | Non-GAAP effective tax rate | 4.1% | 4.6% | 3.4% | 4.3% | 3.5% | Reconciliation of Net Income Per Share (Diluted) GAAP diluted net income for Q2 2025 was $1.4 million ($0.02 per share), which reconciles to non-GAAP diluted net income of $19.9 million ($0.35 per share) after adjustments for stock-based compensation, acquisition-related amortization, other operating expenses, and their tax effects Reconciliation of Net Income Per Share (Diluted, in thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | :------ | | GAAP net income (in thousands) | $1,369 | $8,790 | $4,849 | $10,159 | $8,803 | | Adjustments to GAAP net income (in thousands): | | | | | | | Stock-based compensation | $10,077 | $8,683 | $11,035 | $18,760 | $17,449 | | Amortization of acquisition-related intangible assets | $146 | $147 | $258 | $293 | $740 | | Other operating expenses | $9,151 | $0 | $0 | $9,151 | $0 | | Tax effect of items excluded | $(871) | $239 | $(269) | $(632) | $(627) | | Non-GAAP net income (in thousands) | $19,872 | $17,859 | $15,873 | $37,731 | $26,365 | | Non-GAAP net income per share (diluted) | $0.35 | $0.31 | $0.28 | $0.66 | $0.46 | | GAAP net income per share (diluted) | $0.02 | $0.15 | $0.09 | $0.18 | $0.15 |