ANALOG DEVICES INC (ADI Q1 FY2025 earnings call

• First quarter revenue, profitability, and earnings per share finished above the midpoint of the outlook. Increased dividend for the 21st consecutive year and returned over $16 billion to shareholders in the past five years via dividends and share repurchases. - ADI invested in its hybrid manufacturing model, inventory levels normalized, and partnerships with customers balanced supply and demand. - Highlighted growth areas: industrial automation (software-defined connectivity growth), surgical robotics (high precision solutions deployment), healthcare (data-driven health and wellness demand), automatic testing equipment (AI-driven growth), aerospace and defense (modules leading growth), automotive (GMSL and connectivity growth), communications (AI infrastructure CapEx), and consumer (design wins driving growth).

First quarter revenue was $2.42 billion. Industrial represented 44% of first quarter revenue, up 1% sequentially. Automotive represented 30% of quarterly revenue, up 2% sequentially. Communications represented 12% of quarterly revenue, up 6% sequentially. Consumer represented 13% of quarterly revenue, down 15% sequentially.

• Second quarter revenue expected to be $2.5 billion plus or minus $100 million. - Operating margin expected to be 40.5% plus or minus 100 basis points flat sequentially. - Tax rate expected to be 11% to 13%, adjusted EPS expected to be $1.68 plus or minus $0.10. - Anticipate returning to long-term model growth in 2025 with potential for additional upside if macro conditions improve.

• Macro and geopolitical environment influencing the pace of recovery. - Geopolitical turmoil and trade issues could impact the rate of recovery.

Q: Talk about the puts and takes in the auto market, especially shift towards China.

A: Rich Puccio mentioned strong revenue in Asia, particularly China, with strong share and content at major Chinese EV OEMs, including audio and video connectivity, functionally safe power, and BMS, expecting this to continue into Q2. Vincent Roche stated ADI's technologies remain relevant in high-performance markets and they are rewarded for the quality of technologies brought to customers.

Q: Clarify long-term model growth and inventory normalization.

A: Rich Puccio mentioned long-term model growth is 7%-10%, and inventory levels have largely normalized across direct and distribution channels, with normalization seen in various segments including industrial. Vincent Roche added on inventory management centralization serving customers well.

Q: Discuss industrial strength, where it's coming from, and booking trends.

A: Richard Puccio said industrial has grown sequentially for three straight quarters, with continued strength in ADA and automatic test equipment, stabilization in automation, healthcare, and energy, and bookings improved in industrial in Q1 versus Q4, with the broad market pickup driving upside relative to initial expectations.

Q: Talk about confidence in reaching the bottom not being a head fake.

A: Vincent Roche mentioned focusing on sell-through as a key signal, seeing stabilization and growth in various areas geographically, but noting geopolitical turmoil could be a governor on the rate of recovery.

Q: Comment on win conversion rate related to cycle.

A: Vincent Roche said strength in ATE, automotive, and new data center modalities is driven by new products, with a strong conversion rate of new parts and solutions, capturing more ASPs with new generations.