ALPHA & OMEGA SEMICONDUCTOR Ltd Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Fiscal Q3 revenue was $164.6 million, non-GAAP gross margin 22.5%, and non-GAAP EPS was a loss of $0.10.
• Computing segment grew despite seasonality, driven by tablets and notebooks. Graphics and AI cards saw robust demand.
• Consumer segment expected growth in June due to gaming and home appliances.
• Communications segment saw seasonal decline but expects flattish growth in June.
• Power Supply and Industrial segment had strong YOY growth but slight QOQ decline, with opportunities in quick chargers and e-mobility.
• Advancing transformation to a total solutions provider, leveraging customer relationships to expand market share and BOM content.

Segment Performance

• Computing: March quarter revenue up 14.8% year-over-year and 3.6% sequentially, representing 47.9% of total revenue. Driven by better-than-expected tablet demand and graphics/AI cards. Anticipated mid single-digit sequential growth in June quarter with more than 15% YOY growth.
• Consumer: March quarter revenue down 9% YOY and 4.9% sequentially, representing 13% of total revenue. Forecasted more than 25% sequential growth in June quarter due to gaming and home appliances.
• Communications: March quarter revenue up 5.8% YOY and down 14.4% sequentially, representing 17.2% of total revenue. Anticipated flattish sequential growth in June quarter.
• Power Supply and Industrial: March quarter revenue up 32.4% YOY and down 6.2% sequentially, representing 19.9% of total revenue. Expected flat to slightly down sequential growth in June quarter, with opportunities in quick chargers and e-mobility.

Guidance

• June quarter revenue expected to be approximately $170 million plus or minus $10 million, GAAP gross margin 22.9% plus or minus 1%, non-GAAP gross margin 24% plus or minus 1%, GAAP operating expenses $47.1 million plus or minus $1 million, non-GAAP operating expenses $40.2 million plus or minus $1 million, interest expense approximately equal to interest income, and income tax expense in the range of $0.9 million to $1.1 million.
• Computing segment anticipated mid single-digit sequential growth in June with over 15% YOY growth.
• Consumer segment forecasted more than 25% sequential growth in June.
• Communications segment expected flattish sequential growth in June.
• Power Supply and Industrial segment expected flat to slightly down sequential growth in June.

Risks

• Macroeconomic, geopolitical, and trade-related uncertainties.
• Minimal direct tariff exposure but unclear indirect impact on demand.
• Uncertainty in end market demand for the second half of 2025.

Question and Answer

• Q: Quantify PC pull-ins and graphics card success. A: PC pull-ins due to tariffs, beat midpoint by ~$6M, half from notebooks; graphics business growing with new versions of cards and AI accelerators.
• Q: Tariff impact. A: Direct exposure to US shipments minimal, monitoring situation, working with customers.
• Q: Margin guidance. A: Better product mix and higher utilization contributing to margin rebound.
• Q: China JV and utilization. A: JV accounts for ~20% of supply, internal utilization 80%-90%, using third-party foundries.
• Q: Cash flow and CapEx. A: Cash flow stable, CapEx for June quarter $12M-$14M, targeting 6%-8% of revenue annually.
• Q: Pricing and competition. A: ASP erosion, rolling out new products to reset ASP.
• Q: AI accelerator cards. A: Shipping into various graphics/AI cards, design win in data center application, starting to expand into more programs.