Power Integrations (POWI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were $106.2 million, up 16% sequentially but down 14% year-over-year, with recovery led by the consumer segment and ongoing softness in communications and computer end-markets.

• Gross margin improved to 53% (GAAP) and 54.1% (non-GAAP), aided by favorable end-market mix, currency, and higher manufacturing volumes.

• Net income for Q2 2024 was $4.8 million (GAAP), with non-GAAP net income at $15.9 million; non-GAAP EPS was $0.28.

• Inventory headwinds have eased, with channel inventory at 7.8 weeks and distributor inventory declining.

• Completed acquisition of Odyssey Semiconductor Technologies' assets to enhance GaN technology capabilities.

Financial highlights

• Q2 revenues were $106.2 million, up 16% sequentially and above guidance midpoint.

• Non-GAAP gross margin was 54.1%, with GAAP gross margin at 53.2%.

• Non-GAAP EPS was $0.28, up from $0.18 in Q1 2024 but down from $0.36 in Q2 2023.

• Cash flow from operations was $17.6 million in Q2; $11 million used for share repurchases and $11 million for dividends.

• Cash, cash equivalents, and short-term marketable securities totaled $290.5 million as of June 30, 2024.

Outlook and guidance

• Q3 2024 revenue expected at $115 million ± $5 million, with gross margin projected between 54.5% and 55% (non-GAAP).

• Non-GAAP operating expenses for Q3 expected between $44.5 million and $45 million.

• Effective tax rate for Q3 anticipated at approximately 4%.

• Management expects international and Asia-region sales to remain a large portion of future revenues.

• Sequential revenue and margin increases anticipated, driven by lower distributor inventories and new design wins.