01—Abstract
Summary
Summary of the 8-K filed February 19, 2025. Cited figures are marked; the original filing is the authoritative source.
Analog Devices (ADI) reported fiscal first quarter 2025 results (quarter ended February 1, 2025) with revenue of $2.42 billiona, down 4% year over year, and diluted EPS of $0.78, down 16% from $0.93.
Adjusted diluted EPS was $1.63b, down 6% from $1.73, and adjusted operating margin was 40.5% versus 42.0% a year earlier. Results were above the midpoint of management's outlook. Industrial revenue fell 10% year over year, while Consumer grew 19%, and sequential growth was reported in Industrial, Automotive, and Communications.
Management said bookings improved gradually and expects a return to year-over-year growth in fiscal Q2 and for fiscal 2025 overall. Cash generation remained strong, with trailing twelve-month operating cash flow of $3.84 billionc and free cash flow of $3.18 billion (34% of revenue). Management returned $2.42 billion to shareholders over the trailing twelve months, mainly through dividends.
The board raised the quarterly dividend 8% to $0.99d per share, the 21st consecutive annual increase, and authorized an additional $10.0 billion in buybacks, bringing remaining authorization to roughly $11.5 billion. For fiscal Q2 2025, ADI guided revenue of $2.50 billion (+/- $100 million), reported EPS of $0.97 (+/- $0.10), and adjusted EPS of $1.68 (+/- $0.10). Investors should note that GAAP results carry large acquisition-related amortization (about $426 million of operating adjustments in the quarter), largely from the Maxim Integrated acquisition, and that the company's cash returns are funded by strong free cash flow despite a 4% revenue decline.
02—Key points
Key Highlights
- Revenue of $2.42 billion, down 4% year over year but above the midpoint of management's outlook; Industrial fell 10% while Consumer rose 19%
- GAAP diluted EPS of $0.78 (down 16% YoY) versus adjusted diluted EPS of $1.63 (down 6% YoY); the gap reflects roughly $426 million of acquisition-related charges, mostly Maxim-related amortization
- Adjusted operating margin of 40.5%, down 150 bps year over year; GAAP operating margin of 20.3%, down 300 bps
- Trailing twelve-month operating cash flow of $3.84 billion and free cash flow of $3.18 billion (34% of revenue)
- Quarterly dividend raised 8% to $0.99, the 21st consecutive year of increases, and $10.0 billion added to buyback authorization (about $11.5 billion remaining)
- Fiscal Q2 2025 guidance: revenue of $2.50 billion (+/- $100 million), GAAP EPS of $0.97 and adjusted EPS of $1.68 (both +/- $0.10); management expects year-over-year growth in Q2 and for FY2025
- Cash and equivalents rose to $2.35 billion from $1.99 billion at fiscal year-end, while total debt was essentially unchanged; Q1 included $64 million of special charges
03—Questions
Frequently Asked Questions
Why is there such a large gap between GAAP and adjusted EPS?
Adjusted EPS excludes acquisition-related expenses (about $0.85 per share in Q1), mainly amortization of intangibles from the Maxim Integrated acquisition, along with special charges ($0.13 per share) and tax-related items. These are non-cash or deal-specific costs that management excludes to show core operating performance, but investors should weigh GAAP results as well.
Is ADI's dividend safe after the 8% increase?
The dividend is well covered by cash flow. Trailing twelve-month free cash flow of $3.18 billion comfortably exceeds the roughly $1.83 billion paid in dividends, and management reiterated a long-term goal of returning 100% of free cash flow to shareholders. Continued payment depends on the board and business conditions, as the filing's forward-looking statements note.
Is the business recovering?
Management says so, citing gradual bookings improvement, sequential growth in Industrial, Automotive, and Communications, and 19% growth in Consumer. Revenue is still down 4% year over year, and Industrial fell 10%, so the recovery is early. Management expects year-over-year growth in fiscal Q2 2025 and for the full year.
How much capital is ADI returning to shareholders?
In the trailing twelve months, ADI paid $1.83 billion in dividends and repurchased $596 million of stock, totaling $2.42 billion. The new $10.0 billion authorization brings remaining repurchase capacity to about $11.5 billion, though the company decides timing and size of buybacks and is not obligated to use the full amount.
What does the guidance imply for the next quarter?
Fiscal Q2 2025 guidance calls for revenue of $2.50 billion at the midpoint, a reported operating margin of about 24.2%, and adjusted operating margin of about 40.5%. That implies sequential revenue growth of roughly 3% from Q1's $2.42 billion. The guidance ranges are wide (+/- $100 million in revenue), so the outcome could vary meaningfully.
04—Continue