ON's Q4 Earnings Beat Estimates, Revenues Fall Y/Y, Shares Down

Core Viewpoint - ON Semiconductor (ON) reported a decline in both earnings and revenues for the fourth quarter of 2024, indicating challenges in its operational performance compared to the previous year [1][2]. Financial Performance - Non-GAAP earnings for Q4 2024 were 95 cents per share, exceeding the Zacks Consensus Estimate by 3.06% but down 24% year over year [1]. - Revenues totaled $1.72 billion, missing the Zacks Consensus Estimate by 2.05% and declining 14.7% year over year [2]. Segment Performance - Automotive segment, which constitutes 59.5% of revenues, generated $1.03 billion, down 8% year over year [3]. - Industrial segment, accounting for 24.2% of revenues, saw revenues decline 16.1% year over year to $416.9 million [3]. - Other segments, making up 16.3% of revenues, experienced a significant decline of 31.1% year over year, with revenues at $280.1 million [3]. Stock Performance - ON shares fell over 7% at the time of reporting, with a total decline of 36.7% over the past 12 months, contrasting with a 20.7% return in the Zacks Computer & Technology sector [4]. Detailed Quarter Insights - Power Solutions Group revenues were $809.4 million, contributing 47% to total revenues, down 16.2% year over year [5]. - Analog & Mixed Group revenues were $610.6 million, representing 35.4% of revenues, and declined 18% year over year [5]. - Intelligent Sensing Group revenues were $302.5 million, accounting for 17.6% of revenues, with a slight decline of 1.7% year over year [5]. - Non-GAAP gross margin contracted by 140 basis points to 45.3% [5]. Operating Expenses - Non-GAAP operating expenses increased by 4.9% year over year to $321.3 million, with operating expenses as a percentage of revenues rising by 350 basis points [6]. - Non-GAAP operating margin was reported at 26.7%, down 490 basis points year over year [6]. Balance Sheet & Cash Flow - As of December 31, 2024, ON Semiconductor had cash and cash equivalents of $2.69 billion, up from $2.47 billion as of September 27, 2024 [7]. - Total debt remained unchanged at $3.35 billion [7]. - Cash flow from operations for Q4 2024 was $579.7 million, an increase from $465.8 million in the previous quarter [7]. - Free cash flow was reported at $264.8 million, down from $304.1 million in the previous quarter [8]. Q1 Guidance - For Q1 2025, ON Semiconductor expects revenues between $1.35 billion and $1.45 billion [9]. - Non-GAAP gross margin is projected to be in the range of 39-41% [9]. - Non-GAAP operating expenses are anticipated to be between $313 million and $328 million [9]. - Non-GAAP earnings are expected to range from 45 cents to 55 cents per share [9]. Zacks Rank & Comparisons - ON Semiconductor currently holds a Zacks Rank 4 (Sell) [11]. - Comparatively, Arista Networks (ANET) and Twilio (TWLO) have a Zacks Rank 1 (Strong Buy), while DoorDash (DASH) has a Zacks Rank 2 (Buy) [11].