Renesas Electronics (6723) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was 308.8 billion yen, down 12.2% year-over-year but up 5.5% sequentially, with gross margin at 56.7% and non-GAAP operating profit at 83.8 billion yen (27.1% margin).

• Net profit attributable to owners was 73.3 billion yen (non-GAAP) and 26.0 billion yen (IFRS), with basic EPS at 14.48 yen.

• Total comprehensive income turned negative at -179.3 billion yen, mainly due to foreign exchange translation losses.

• The company is taking a conservative stance due to tariff, macroeconomic, and geopolitical risks, focusing on long-term competitiveness.

• Q2 2025 revenue forecast midpoint is 302.0 billion yen, with gross margin expected at 55.0% and operating margin at 25.0%.

Financial highlights

• Q1 2025 non-GAAP gross profit was 175.2 billion yen (56.7% margin); EBITDA was 103.5 billion yen; free cash flow was 56.9 billion yen.

• Q1 2025 GAAP revenue was 308.8 billion yen, gross margin 56.0%, operating profit 21.5 billion yen (7.0% margin).

• Depreciation period for equipment extended, reducing depreciation cost by 3.1 billion yen in Q1 and increasing profit by 3.85 billion yen.

• Inventory days and channel inventory decreased in Q1 2025, with further control expected in Q2.

• Cash and cash equivalents at quarter-end were 177.6 billion yen, down from 229.2 billion yen at the start of the period.

Outlook and guidance

• Q2 2025 revenue forecast is 302.0 billion yen, down 15.8% year-over-year and 2.2% sequentially; gross margin expected at 55.0%, operating margin at 25.0%.

• Six-month 2025 non-GAAP revenue forecast is 603.3–618.3 billion yen, down 15.1% to 13.0% year-over-year; gross margin expected at 55.9%, operating margin at 26.1%.

• Q2 guidance reflects a mid-single-digit percentage "psychological haircut" due to tariff and demand uncertainties.

• IIoT segment expected to drive Q2 growth, with automotive showing a slight increase.

• Cost reduction program aims for a 2 percentage point operating margin improvement for the year, with additional benefit from depreciation policy change.