01—Abstract
Summary
Summary of the 8-K filed May 22, 2025. Cited figures are marked; the original filing is the authoritative source.
Analog Devices (ADI) reported fiscal Q2 2025 results for the quarter ended May 3, 2025, with revenue of $2.64 billiona, up 22% year over year, and growth across all four end markets.
GAAP gross margin expanded to 61.0% from 54.7%, and GAAP operating margin rose to 25.7% from 17.9%. Diluted EPS was $1.14b on a GAAP basis and $1.85 on an adjusted basis, versus $0.61 and $1.40 a year earlier. Management said results came in above the high end of guidance and that bookings accelerated across all end markets and regions, which it cited as evidence of a cyclical upturn.
Cash generation remained strong. Trailing twelve-month operating cash flow was $3.85 billionc (39% of revenue) and free cash flow was $3.29 billion (34% of revenue). ADI returned $740 million to shareholders in the quarter through dividends and buybacks, and $2.48 billion over the trailing twelve months.
The board declared a quarterly dividend of $0.99d per share, payable June 18, 2025. Industrial revenue grew 17% year over year, while Automotive grew 24%, Consumer 30%, and Communications 32%. For the third quarter of fiscal 2025, ADI guided to revenue of $2.75 billion (+/- $100 million), reported EPS of $1.23 (+/- $0.10), and adjusted EPS of $1.92 (+/- $0.10).
The guidance implies sequential revenue growth of roughly 4% and reflects continued Maxim-related acquisition amortization, which is excluded from adjusted metrics. Investors should note that the gap between GAAP and adjusted results remains large, driven mainly by acquisition-related expenses tied to the Maxim Integrated merger. Management also flagged global trade volatility as a risk factor.
02—Key points
Key Highlights
- Revenue of $2.64B, up 22% YoY, with double-digit growth in all end markets; Automotive +24%, Industrial +17%, Consumer +30%, Communications +32%
- GAAP gross margin of 61.0% (vs. 54.7%) and GAAP operating margin of 25.7% (vs. 17.9%), both up sharply year over year; adjusted operating margin of 41.2% (vs. 39.0%)
- Diluted EPS of $1.14 GAAP (up 87%) and $1.85 adjusted (up 32%), both ahead of the high end of prior guidance
- Trailing twelve-month operating cash flow of $3.85B (39% of revenue) and free cash flow of $3.29B (34% of revenue)
- Q3 FY25 guidance: revenue of $2.75B (+/- $100M), reported EPS of $1.23, adjusted EPS of $1.92; management cites accelerating bookings and a cyclical upturn
- Shareholder returns of $740M in the quarter and $2.48B over the trailing twelve months; quarterly dividend of $0.99 per share declared, payable June 18, 2025
- Cash and cash equivalents rose to $2.38B, while total debt was roughly $7.2B including commercial paper, and short-term investments of $372M matured during the quarter
03—Questions
Frequently Asked Questions
Why is there such a large gap between GAAP and adjusted EPS?
The gap is mainly due to acquisition-related expenses, primarily amortization of acquired intangibles and fair value adjustments from the Maxim Integrated acquisition. These were $0.82 per share in Q2 on a diluted basis. ADI excludes them from adjusted results because management considers them unrelated to ongoing operating performance, though investors should weigh GAAP results as well.
How strong is ADI's demand outlook based on this release?
Management said second-quarter bookings accelerated across all end markets and regions, and backlog grew sequentially. Its Q3 revenue guidance of $2.75B implies about 4% sequential growth. The company framed this as evidence of a cyclical upturn, although the guidance range is wide and the outlook is based on current expectations that may change.
Is ADI's dividend secure, and how much capital is it returning?
ADI declared a $0.99 quarterly dividend payable June 18, 2025. Dividends and buybacks totaled $740M in Q2 and $2.48B over the trailing twelve months, against trailing free cash flow of $3.29B. Dividend payments of about $1.86B over the trailing twelve months were covered by free cash flow, though buybacks plus dividends together used most of it.
What risks does management highlight?
The forward-looking statements cite tariffs, export controls, trade restrictions, macroeconomic and geopolitical conditions, and supply chain disruptions. The release also mentions risks from artificial intelligence use, cybersecurity, indebtedness, and litigation. Management specifically referred to global trade volatility as a backdrop for the quarter.
04—Continue