Renesas Electronics (6723) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was ¥324.6B–¥334.6B (non-GAAP/IFRS), down 9.5% year-over-year but up 5.1% sequentially; gross margin held steady at 56.8%.

• Operating profit (non-GAAP) for Q2 2025 was ¥91.9B (28.3% margin), up from Q1 but down from Q2 2024; GAAP net loss of ¥201.3B mainly due to a ¥235.0B Wolfspeed impairment.

• Automotive segment revenue declined 15.0% year-over-year, while Industrial/Infrastructure/IoT fell 2.9% year-over-year but grew 7.0% sequentially.

• Comprehensive loss for the six months was ¥475.7B, compared to a comprehensive income of ¥496.7B in the prior year.

• Market share gains and seasonality are expected to drive growth in mobile and IIoT, while automotive is projected to remain flat as Chinese subsidies end and demand slows.

Financial highlights

• Q2 2025 non-GAAP EBITDA was ¥110.2B, up from Q1 but down from Q2 2024; free cash flow margin declined to 7.8%.

• Gross margin (non-GAAP) was 56.8%; IFRS gross margin was 55.7%.

• Revenue exceeded forecast by 7.5%, with over half of the upside from operational factors and the rest from a weaker yen.

• Basic and diluted EPS for six months ended June 30, 2025 was ¥(97.34), compared to ¥77.20 and ¥78.25 in the prior year.

• Cash and cash equivalents at June 30, 2025 were ¥211.1B, down from ¥229.2B at year-end 2024.

Outlook and guidance

• Q3 2025 revenue forecast midpoint is ¥330.0B, up 1.7% sequentially but down 4.4% year-over-year; gross margin expected at 56.5%, operating margin at 27.0%.

• Guidance includes a 3% risk haircut due to tariff uncertainties, with strong data center and mobile growth expected, but muted industrial and flattish automotive performance.

• Nine-month non-GAAP revenue forecast is ¥955.9B to ¥970.9B, down 9.5% to 8.0% year-over-year.

• OpEx is set to increase in the second half, mainly driven by R&D and SG&A.

• Non-GAAP gross margin forecast at 56.7%, operating margin at 27.5%.