Analog Devices(ADI) - 2025 Q3 - Quarterly Results

Fiscal Third Quarter 2025 Financial Results Overview Overview of Analog Devices' strong Q3 FY25 financial performance, future outlook, and corporate announcements Executive Summary Analog Devices exceeded Q3 FY25 revenue and earnings per share expectations despite geopolitical challenges, driven by robust demand, especially in the Industrial market, and continued backlog growth - ADI's third-quarter revenue and earnings per share exceeded the high end of expectations, despite geopolitical challenges[2] - Demand for ADI's products remains robust, with continued backlog growth and healthy bookings trends, notably in the Industrial end market[2] Key Financial Highlights (Q3 FY25 & Trailing Twelve Months) | Metric | Value | | :----------------------------- | :-------------------- | | Revenue (Q3) | $2.88 billion | | Operating cash flow (TTM) | $4.2 billion (40% of revenue) | | Free cash flow (TTM) | $3.7 billion (35% of revenue) | | Returned to shareholders (Q3) | $1.6 billion ($0.5 billion dividends, $1.1 billion repurchases) | Performance for the Third Quarter of Fiscal 2025 Analog Devices reported strong Q3 FY25 financial results with significant year-over-year growth in revenue, gross margin, operating income, and diluted EPS, both on a GAAP and adjusted basis Q3 FY25 Financial Performance (YoY Change) | Metric | Aug. 2, 2025 (in millions) | Aug. 3, 2024 (in millions) | Change | | :----------------------------- | :----------- | :----------- | :----- | | Revenue | $2,880M | $2,312M | 25% | | Gross margin | $1,790M | $1,311M | 36% | | Gross margin percentage | 62.1% | 56.7% | 540 bps | | Operating income | $818M | $491M | 67% | | Operating margin | 28.4% | 21.2% | 720 bps | | Diluted earnings per share | $1.04 | $0.79 | 32% | | Adjusted Results | | | | | Adjusted gross margin | $1,995M | $1,571M | 27% | | Adjusted gross margin percentage | 69.2% | 67.9% | 130 bps | | Adjusted operating income | $1,215M | $952M | 28% | | Adjusted operating margin | 42.2% | 41.2% | 100 bps | | Adjusted diluted earnings per share | $2.05 | $1.58 | 30% | Q3 FY25 Cash Generation & Return | Metric | Three Months Ended Aug. 2, 2025 (in millions) | Trailing Twelve Months Ended Aug. 2, 2025 (in millions) | | :---------------------------------- | :-------------------------------- | :---------------------------------------- | | Net cash provided by operating activities | $1,165M | $4,162M | | % of revenue | 40% | 40% | | Capital expenditures | $(79)M | $(484)M | | Free cash flow | $1,086M | $3,678M | | % of revenue | 38% | 35% | | Dividend paid | $(490)M | $(1,894)M | | Stock repurchases | $(1,075)M | $(1,579)M | | Total cash returned | $(1,565)M | $(3,473)M | Outlook for the Fourth Quarter of Fiscal Year 2025 For the fourth quarter of fiscal 2025, Analog Devices forecasts revenue of $3.0 billion (midpoint), with anticipated increases in both reported and adjusted operating margins and EPS Q4 FY25 Financial Outlook (Midpoint) | Metric | Forecast | | :---------------------- | :-------------------- | | Revenue | $3.0 billion (+/- $100M) | | Reported Operating margin | ~30.5% (+/-150 bps) | | Adjusted Operating margin | ~43.5% (+/-100 bps) | | Reported EPS | $1.53 (+/-$0.10) | | Adjusted EPS | $2.22 (+/-$0.10) | - The fourth quarter fiscal 2025 outlook is based on current expectations and actual results may differ materially due to important factors discussed at the end of the release[7] Dividend Payment Analog Devices' Board of Directors declared a quarterly cash dividend of $0.99 per outstanding share of common stock, payable on September 16, 2025, to shareholders of record as of September 2, 2025 Dividend Details | Metric | Value | | :---------------------- | :-------------------- | | Quarterly Cash Dividend | $0.99 per share | | Payment Date | September 16, 2025 | | Record Date | September 2, 2025 | Conference Call Scheduled Analog Devices scheduled a conference call for August 20, 2025, at 10:00 am ET to discuss Q3 FY25 results and the short-term outlook, accessible via webcast - A conference call to discuss Q3 FY25 results and short-term outlook was scheduled for August 20, 2025, at 10:00 am ET[10] - Investors may join the conference call via webcast, accessible at investor.analog.com[10] Non-GAAP Financial Information Details Analog Devices' non-GAAP financial measures, their purpose, limitations, and definitions Purpose and Limitations of Non-GAAP Measures Analog Devices uses non-GAAP financial measures internally and for investor communication to evaluate operating performance and core business trends, believing they provide useful insights - Management uses non-GAAP measures internally to evaluate operating performance, budget resources, and assess core business trends[12] - Non-GAAP measures are considered useful to investors for evaluating the company's core business and its ability to pay dividends, purchase common stock, and fund investments[13] - Non-GAAP measures are not GAAP compliant, have material limitations, and should not be considered in isolation from, or as a substitute for, GAAP financial results[11] Definitions of Non-GAAP Measures The report defines several non-GAAP financial measures, including adjusted gross margin, operating expenses, operating income, nonoperating expense, income before income taxes, provision for income taxes, diluted EPS, and free cash flow - Adjusted gross margin, operating expenses, operating income, nonoperating expense, income before income taxes, provision for income taxes, and diluted EPS exclude acquisition-related expenses, special charges, and tax-related items[14][15] - Free cash flow is defined as net cash provided by operating activities, determined in accordance with GAAP, less additions to property, plant and equipment, net[15] - Acquisition Related Expenses, Special Charges, Net, and Tax Related Items are excluded from non-GAAP measures because they relate to specific transactions, are not reflective of ongoing financial performance, or are not associated with current operating results[16][17] Company Information and Disclosures Overview of Analog Devices, covering its business, forward-looking statements, and trademark information About Analog Devices, Inc. Analog Devices, Inc. (ADI) is a global semiconductor leader that integrates analog, digital, and software technologies to enable breakthroughs at the Intelligent Edge across various sectors like digitized factories, mobility, and digital healthcare - Analog Devices (ADI) is a global semiconductor leader that bridges the physical and digital worlds to enable breakthroughs at the Intelligent Edge[18] - ADI combines analog, digital, and software technologies into solutions driving advancements in digitized factories, mobility, digital healthcare, and climate change combat[18] - ADI reported revenue of more than $9 billion in FY24 and has approximately 24,000 employees globally[18] Forward-Looking Statements This section contains forward-looking statements regarding future financial performance, market conditions, capital allocation, and other business aspects - The press release contains forward-looking statements addressing future financial performance, impacts related to tariffs, economic uncertainty, market conditions, and capital allocation strategy[19] - Such statements are based on current expectations and are subject to numerous factors and uncertainties, including geopolitical conflicts, changes in demand, supply chain disruptions, and regulatory changes, which could cause actual results to differ materially[19][20] - The company does not undertake any obligation to update forward-looking statements, except as required by law[20] Trademarks Analog Devices and its logo are registered trademarks or trademarks of Analog Devices, Inc., while all other trademarks mentioned in the document are the property of their respective owners - Analog Devices and the Analog Devices logo are registered trademarks or trademarks of Analog Devices, Inc[21] - All other trademarks mentioned in this document are the property of their respective owners[21] Consolidated Financial Statements (Unaudited) Presents Analog Devices' unaudited consolidated statements of income, balance sheets, and cash flows Consolidated Statements of Income The consolidated statements of income show Analog Devices' financial performance for the three and nine months ended August 2, 2025, compared to the prior year Consolidated Statements of Income (Three Months Ended) | Metric | Aug. 2, 2025 (in thousands) | Aug. 3, 2024 (in thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Revenue | $2,880,348 | $2,312,209 | | Cost of sales | $1,090,600 | $1,000,970 | | Gross margin | $1,789,748 | $1,311,239 | | Total operating expenses | $971,720 | $819,920 | | Operating income | $818,028 | $491,319 | | Income before income taxes | $763,409 | $422,991 | | Net income | $518,518 | $392,232 | | Diluted earnings per common share | $1.04 | $0.79 | Consolidated Statements of Income (Nine Months Ended) | Metric | Aug. 2, 2025 (in thousands) | Aug. 3, 2024 (in thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Revenue | $7,943,590 | $6,983,952 | | Cost of sales | $3,111,929 | $3,018,737 | | Gross margin | $4,831,661 | $3,965,215 | | Total operating expenses | $2,844,376 | $2,501,809 | | Operating income | $1,987,285 | $1,463,406 | | Income before income taxes | $1,824,913 | $1,261,012 | | Net income | $1,479,604 | $1,157,201 | | Diluted earnings per common share | $2.97 | $2.32 | Consolidated Balance Sheets The consolidated balance sheets present Analog Devices' financial position as of August 2, 2025, and November 2, 2024 Consolidated Balance Sheets (Key Figures, in thousands) | Metric | Aug. 2, 2025 | Nov. 2, 2024 | | :-------------------------------- | :----------- | :----------- | | Total current assets | $6,924,569 | $5,484,654 | | Total non-current assets | $41,268,032 | $42,743,623 | | TOTAL ASSETS | $48,192,601 | $48,228,277 | | Total current liabilities | $2,979,038 | $2,988,280 | | Total non-current liabilities | $11,127,721 | $10,063,680 | | Total shareholders' equity | $34,085,842 | $35,176,317 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $48,192,601 | $48,228,277 | - Cash and cash equivalents increased from $1.991 billion on November 2, 2024, to $2.321 billion on August 2, 2025[25] - Long-term debt increased from $6.634 billion on November 2, 2024, to $8.140 billion on August 2, 2025[25] Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows detail Analog Devices' cash movements from operating, investing, and financing activities for the three and nine months ended August 2, 2025 Condensed Consolidated Statements of Cash Flows (Three Months Ended, in thousands) | Metric | Aug. 2, 2025 | Aug. 3, 2024 | | :------------------------------------ | :----------- | :----------- | | Net cash provided by operating activities | $1,165,105 | $855,027 | | Net cash used for investing activities | $(1,230,108) | $(172,066) | | Net cash provided by (used for) financing activities | $9,959 | $(516,624) | | Net (decrease) increase in cash and cash equivalents | $(55,044) | $166,337 | | Cash and cash equivalents at end of period | $2,321,191 | $2,106,032 | Condensed Consolidated Statements of Cash Flows (Nine Months Ended, in thousands) | Metric | Aug. 2, 2025 | Aug. 3, 2024 | | :------------------------------------ | :----------- | :----------- | | Net cash provided by operating activities | $3,111,392 | $2,801,712 | | Net cash used for investing activities | $(1,096,216) | $(993,244) | | Net cash provided by (used for) financing activities | $(1,685,327) | $(660,497) | | Net (decrease) increase in cash and cash equivalents | $329,849 | $1,147,971 | | Cash and cash equivalents at end of period | $2,321,191 | $2,106,032 | - Significant cash outflows in Q3 FY25 for investing activities were primarily due to purchases of short-term available-for-sale investments ($1.150 billion)[27] Supplemental Financial Data Provides supplemental financial data, including revenue trends by market and GAAP/non-GAAP reconciliations Revenue Trends by End Market Analog Devices reported double-digit year-over-year revenue growth across all end markets for Q3 FY25, with Communications showing the highest growth at 40% Revenue by End Market (Three Months Ended) | End Market | Aug. 2, 2025 Revenue (in thousands) | % of Revenue | Y/Y% Change | Aug. 3, 2024 Revenue (in thousands) | % of Revenue | | :----------- | :-------------------------------- | :----------- | :---------- | :-------------------------------- | :----------- | | Industrial | $1,285,041 | 45% | 23% | $1,045,291 | 45% | | Automotive | $850,619 | 30% | 22% | $694,905 | 30% | | Consumer | $372,197 | 13% | 21% | $306,832 | 13% | | Communications | $372,491 | 13% | 40% | $265,181 | 11% | | Total revenue | $2,880,348 | 100% | 25% | $2,312,209 | 100% | Revenue by End Market (Nine Months Ended) | End Market | Aug. 2, 2025 Revenue (in thousands) | % of Revenue | Y/Y% Change | Aug. 3, 2024 Revenue (in thousands) | % of Revenue | | :----------- | :-------------------------------- | :----------- | :---------- | :-------------------------------- | :----------- | | Industrial | $3,502,751 | 44% | 9% | $3,223,111 | 46% | | Automotive | $2,445,391 | 31% | 14% | $2,136,173 | 31% | | Consumer | $1,009,614 | 13% | 24% | $817,436 | 12% | | Communications | $985,834 | 12% | 22% | $807,232 | 12% | | Total revenue | $7,943,590 | 100% | 14% | $6,983,952 | 100% | - The categorization of revenue by end market may vary over time as data systems and methodology evolve, with reclassifications for prior periods typically not materially changing the sizing or underlying trends[29] Reconciliation of GAAP to Non-GAAP Results This section provides a detailed reconciliation of GAAP to non-GAAP financial measures for gross margin, operating expenses, operating income, nonoperating expense, income before income taxes, provision for income taxes, and diluted EPS for both the three and nine months ended August 2, 2025, and August 3, 2024 GAAP to Non-GAAP Reconciliation (Three Months Ended Aug. 2, 2025, in thousands, except per share amounts) | Metric | GAAP | Adjustments | Non-GAAP | | :----------------------------- | :----------- | :------------ | :----------- | | Gross margin | $1,789,748 | $204,756 | $1,994,504 | | Operating expenses | $971,720 | $(188,015) (Acq.) $(4,348) (Spec.) | $779,357 | | Operating income | $818,028 | $392,771 (Acq.) $4,348 (Spec.) | $1,215,147 | | Income before income taxes | $763,409 | $390,621 (Acq.) $4,348 (Spec.) | $1,158,378 | | Provision for income taxes | $244,891 | $(106,855) (Tax) | $138,036 | | Diluted EPS | $1.04 | $0.79 (Acq.) $0.01 (Spec.) $0.22 (Tax) | $2.05 | GAAP to Non-GAAP Reconciliation (Nine Months Ended Aug. 2, 2025, in thousands, except per share amounts) | Metric | GAAP | Adjustments | Non-GAAP | | :----------------------------- | :----------- | :------------ | :----------- | | Gross margin | $4,831,661 | $662,865 | $5,494,526 | | Operating expenses | $2,844,376 | $(564,045) (Acq.) $(69,980) (Spec.) | $2,210,351 | | Operating income | $1,987,285 | $1,226,910 (Acq.) $69,980 (Spec.) | $3,284,175 | | Income before income taxes | $1,824,913 | $1,220,460 (Acq.) $69,980 (Spec.) | $3,115,353 | | Provision for income taxes | $345,309 | $15,780 (Tax) | $361,089 | | Diluted EPS | $2.97 | $2.45 (Acq.) $0.14 (Spec.) $(0.03) (Tax) | $5.53 | Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow This section reconciles net cash provided by operating activities to free cash flow for the trailing twelve months and for each of the last four fiscal quarters ending August 2, 2025 Free Cash Flow Reconciliation (Trailing Twelve Months, in thousands) | Metric | Aug. 2, 2025 | | :------------------------------------ | :----------- | | Revenue | $10,386,795 | | Net cash provided by operating activities | $4,162,209 | | % of Revenue | 40% | | Capital expenditures | $(483,809) | | Free cash flow | $3,678,400 | | % of Revenue | 35% | Free Cash Flow Reconciliation (Three Months Ended, in thousands) | Metric | Aug. 2, 2025 | May 3, 2025 | Feb. 1, 2025 | Nov. 2, 2024 | | :------------------------------------ | :----------- | :---------- | :----------- | :----------- | | Net cash provided by operating activities | $1,165,105 | $819,478 | $1,126,809 | $1,050,817 | | Capital expenditures | $(79,153) | $(90,268) | $(148,978) | $(165,410) | | Free cash flow | $1,085,952 | $729,210 | $977,831 | $885,407 | | % of Revenue | 38% | 28% | 40% | 36% | Reconciliation of Projected GAAP to Non-GAAP Results This section provides a reconciliation of projected GAAP to non-GAAP results for the fourth quarter ending November 1, 2025 Projected GAAP to Non-GAAP Reconciliation (Q4 FY25 Outlook) | Metric | Reported (GAAP) | Adjusted (Non-GAAP) | | :---------------------- | :-------------- | :------------------ | | Revenue | $3.0 Billion (+/- $100M) | $3.0 Billion (+/- $100M) | | Operating margin | 30.5% (+/-150 bps) | 43.5% (+/-100 bps) | | Nonoperating expenses | ~ $55-$60 Million | ~ $55-$60 Million | | Tax rate | 11% - 13% | 11% - 13% | | Earnings per share | $1.53 (+/- $0.10) | $2.22 (+/- $0.10) | - Adjustments for operating margin include $391 million related to acquisition related expenses[35] - Adjustments for EPS include $0.69 related to the net impact of acquisition related expenses and the tax effects on those items[36] Investor Relations Contact Provides contact information for Analog Devices' Investor Relations department Contact Information For further information, investors can contact Jeff Ambrosi, Senior Director of Investor Relations, via phone or email - Contact Jeff Ambrosi, Senior Director, Investor Relations, for more information[37] - Contact details: 781-461-3282, investor.relations@analog.com[37]