Power Integrations ((POWI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Power Integrations’ recent earnings call presented a mixed sentiment, with notable achievements in data center collaborations and industrial segment growth, yet significant challenges in the consumer segment and overall revenue guidance. The company is strategically focusing on long-term initiatives in high-growth markets but is currently facing pressures from market dynamics and inventory issues.
Data Center Collaboration with NVIDIA
Power Integrations announced a significant collaboration with NVIDIA on their 800-volt DC power architecture. This partnership highlights the efficiency and reliability advantages of Power Integrations’ GaN technology, positioning the company as a key player in the evolving data center market.
Strong Performance in Industrial Sector
The industrial segment has been a bright spot for Power Integrations, with revenues up nearly 20% in the first three quarters of 2025. This growth is driven by applications in electrification and grid modernization, underscoring the sector’s importance to the company’s overall strategy.
High-Power Gate Driver Business Growth
The high-power gate driver business has experienced impressive growth, with revenues increasing by more than 30% year-to-date. This segment’s performance reflects the company’s successful expansion into high-power applications.
Cash Generation and Shareholder Returns
Power Integrations generated $30 million in cash from operations in Q3 and expects over $80 million in free cash flow for the year. The company has returned nearly $150 million to stockholders, demonstrating a commitment to shareholder value through buybacks and dividends.
Consumer Segment Slowdown
The consumer segment has faced significant challenges, with orders down about 40% in Q3 compared to the first half of the year. This slowdown, particularly in appliances, has notably impacted overall sales.
Revenue Guidance Decline
Power Integrations forecasts Q4 revenues to be between $100 million and $105 million, marking a decline from Q3’s $119 million. The consumer and industrial categories are expected to contribute to this sequential decrease.
Higher Channel Inventory
The company reported increased channel inventory to 9.8 weeks by the end of Q3, driven by lower distribution sell-through, especially in consumer products. This inventory buildup poses a challenge for future sales.
Gross Margin Decline
Non-GAAP gross margin decreased to 55.1% due to higher input costs and unfavorable exchange rates, with further decline expected in Q4. This margin pressure reflects ongoing cost challenges.
Forward-Looking Guidance
Looking ahead, Power Integrations anticipates Q4 revenues to range between $100 million and $105 million, with significant declines in the consumer segment due to softness in appliances. The industrial category is also expected to experience a seasonal downturn. Despite these challenges, the company remains optimistic about its long-term growth prospects, particularly in the industrial sector and through its collaboration with NVIDIA. The company plans to return nearly $150 million to shareholders in 2025 and has announced a dividend increase effective Q1 2026.
In summary, Power Integrations’ earnings call reflects a mixed outlook with strong growth in industrial applications and strategic collaborations, contrasted by immediate challenges in the consumer segment and revenue guidance. The company’s focus on long-term growth and shareholder returns remains a key takeaway for investors.