POWER INTEGRATIONS INC Q1 FY2025 earnings call

• Q1 results were on target with revenues in guidance range, gross margin at top end, and non-GAAP EPS $0.31. Cash flow was healthy and shares were bought back during market volatility.
• Bookings were stable with no abnormal order changes. Distribution inventory was healthy after declining in Q1.
• Q2 revenue guidance is $115 million ± $5 million, midpoint up 8% Y/Y and 9% sequentially. Consumer has a below seasonal outlook in Q2.
• Industrial is expected to be the fastest growing market, driven by HVDC, renewables, and locomotives.
• Computer grew due to server auxiliary power, notebooks, and tablets. Communication is dominated by non-Chinese OEM accessory chargers with a new GaN design win.
• Channel inventory fell to 7.9 weeks as distribution sell-through exceeded sell-in by ~$2 million.

First quarter revenues were $106 million, up 15% year-over-year. Revenue mix for the quarter was 44% Consumer, 34% Industrial, 12% Computer, and 10% Communication. Consumer revenues were $46.64 million (44% of $106M), up over 20% Y/Y led by appliances, air conditioning, TVs, and game consoles. Industrial revenues were $36.04 million (34% of $106M), up 7% Y/Y driven by high-power design wins in HVDC, renewables, and locomotives. Computer revenues were $12.72 million (12% of $106M), up led by server auxiliary power, notebooks, and tablets. Communication revenues were $10.6 million (10% of $106M), slightly up Y/Y dominated by non-Chinese OEM accessory chargers.

• Q2 revenue outlook: $115 million ± $5 million, midpoint up 8% Y/Y and 9% sequentially.
• Non-GAAP gross margin expected ~55.5% in Q2, down slightly from Q1.
• Non-GAAP operating expenses expected ~$46 million in Q2, up from $43.5 million in Q1.
• Cash and investments fell to $289 million post buyback.

• Trade policy uncertainties, tariffs could materially impact end demand.
• Macro and political turbulence may affect demand despite long-term trends in energy efficiency, AI, electrification, etc.
• Timing of high-power program ramp in Industrial was slightly delayed.

Q: Ross Seymore asked about ramp timing of design wins, especially in Industrial.

A: Balu Balakrishnan responded that the high-power delay was specific to a particular program and will ramp nicely in Q2, unrelated to tariffs.

Q: David Williams asked about Industrial segment growth drivers.

A: Balu Balakrishnan mentioned automotive, locomotives, renewables as key drivers, with automotive revenue expected to grow to ~$100 million by 2029.

Q: Tore Svanberg asked about consumer segment buy ahead of tariffs.

A: Balu Balakrishnan stated Whirlpool's comments on appliance pull-in ahead of tariffs contributed to Q1 strength, and Q2 outlook accounts for this.

Q: Christopher Rolland asked about order book and inventories.

A: Balu Balakrishnan said backlog looks normal for Q3, and Sandeep Nayyar mentioned inventory at 7.9 weeks with sell in and sell through expected to equal in Q2.

Q: Gus Richard asked about geographic demand and currency impact.

A: Balu Balakrishnan discussed manufacturing shifts to Vietnam and India, and Sandeep Nayyar explained yen movement impacts gross margin by ~100-120 basis points per 10% swing.

Q: Tore Svanberg followed up on channel inventory.

A: Sandeep Nayyar said sell in and sell through are expected to equal in Q2, keeping inventory at ~7.9 weeks.