Q4 2025 Analog Devices Inc Earnings Call

And over the web I'd like to now introduce your host for today's call Mr. Jeff Ambrosi head of Investor Relations, Sir the floor is yours.

Thank you Gigi and good morning, everybody.

Thanks for joining our fourth quarter fiscal 2025 conference call.

Joining me on the call today is Adi CEO and chair Vincent Roche Adi's, Chief Financial Officer, Richard Puccio.

For anyone who missed the release you can find it and relating financial schedules at investor analog dotcom.

The information we're about to discuss includes forward looking statements, which are subject to certain risks and uncertainties. As further described in our earnings release periodic reports and other materials filed with the SEC.

Actual results could differ materially from the forward looking information as these statements reflect our expectations only as of the date of this call. We undertake no obligation to update these statements except as required by law references to gross margin operating and nonoperating expenses operating margin tax rate earnings per share and free cash flow and our comments today will be on a non-GAAP.

Basis, which exclude special items when comparing our results to our historical performance special items are also excluded from prior periods reconciliations.

Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's earnings release references to earnings per share are on a fully diluted basis.

And with that I'll turn the call over to Adi's CEO Chair Vincent Roche, Thanks, Jeff and good morning, everyone. So our fourth quarter results reflect the ongoing business recovery with continued growth in revenue and earnings per share both of which finished above the midpoint of our outlook.

No widening the aperture to a full fiscal 'twenty five.

Revenue accelerated throughout the year and return to meaningful growth, despite the persistent macro and geopolitical headwinds.

All of our end markets increased by double digits, reflecting both cyclical and company specific drivers.

Jeff Ambrosi: Thank you, Gigi. Good morning, everybody. Thanks for joining our Q4, Q2 2025 conference call. Joining me on the call today is ADI CEO and Chair, Vincent Roche, and ADI Chief Financial Officer, Richard Puccio. For anyone who missed the release, you can find it and related financial schedules at investor.analog.com. The information we're about to discuss includes forward-looking statements, which are subject to certain risks and uncertainties, as further described in our earnings release, periodic reports, and other materials filed with the SEC. Actual results could differ materially from the forward-looking information, as these statements reflect our expectations.

<unk> strong execution against our maximum revenue synergy targets.

Top line strength.

And bind with margin expansion.

Bolted in earnings per share growth of more than 20% in fiscal 'twenty five.

Our strong operating results and reduced capex enable us to generate record free cash flow of more than $4 billion or 39% of revenue.

We also returned more than $4 billion to our shareholders supporting an 8% dividend increase.

Jeff Ambrose: Only as the date of this call, we undertake no obligation to update these statements except as required by law. References to gross margin, operating and non-operating expenses, operating margin, tax rate, earnings per share, and free cash flow in our comments today will be on a non-GAAP basis, which excludes special items. When comparing our results to our historical performance, special items are also excluded from prior periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures, and additional information about our non-GAAP measures, are included in today's earnings release. References to earnings per share are on a fully diluted basis. With that, I'll turn the call over to ADI CEO and Chair, Vincent Roche. Thanks, Jeff, and good morning, everyone.

Only as the date of this call, we undertake no obligation to update these statements except as required by law. References to gross margin, operating and non-operating expenses, operating margin, tax rate, earnings per share, and free cash flow in our comments today will be on a non-GAAP basis, which excludes special items. When comparing our results to our historical performance, special items are also excluded from prior periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures, and additional information about our non-GAAP measures, are included in today's earnings release. References to earnings per share are on a fully diluted basis. With that, I'll turn the call over to ADI CEO and Chair, Vincent Roche.

Well a share count reduction.

Innovation has always been integral to areas brand and our value proposition, forming the foundation for strong financial performance.

Consequently, R&D activities received capital prioritization.

With record investments made in FY 'twenty five to advance our leadership in analog mixed signal and power technologies.

We have also intensified our focus on software digital artificial intelligence capabilities.

To strengthen our core franchise.

Enabling us to address increased customer complexity and expedite their innovation cycles and time to market.

Vincent Roche: Thanks, Jeff, and good morning, everyone. Our Q4 results reflect the ongoing business recovery, with continued growth in revenue and earnings per share, both of which finished above the midpoint of our outlook. Now widening the aperture to our full Q2 2025, revenue accelerated throughout the year and returned to meaningful growth despite the persistent macro and geopolitical headwinds. All of our end markets increased by double digits, reflecting both cyclical and company-specific drivers, including strong execution against our maximum revenue synergy targets. Top-line strength, combined with margin expansion, resulted in earnings per share growth of more than 20% in Q2 2025. Our strong operating results and reduced CapEx enabled us to generate record free cash flow of more than $4 billion, or 39% of revenue. We also returned more than $4 billion to our shareholders, supporting an 8% dividend increase, as well as share count reduction.

Jeff Ambrose: Our Q4 results reflect the ongoing business recovery, with continued growth in revenue and earnings per share, both of which finished above the midpoint of our outlook. Now widening the aperture to our full Q2 2025, revenue accelerated throughout the year and returned to meaningful growth despite the persistent macro and geopolitical headwinds. All of our end markets increased by double digits, reflecting both cyclical and company-specific drivers, including strong execution against our maximum revenue synergy targets. Top-line strength, combined with margin expansion, resulted in earnings per share growth of more than 20% in Q2 2025. Our strong operating results and reduced CapEx enabled us to generate record free cash flow of more than $4 billion, or 39% of revenue. We also returned more than $4 billion to our shareholders, supporting an 8% dividend increase, as well as share count reduction.

Our comprehensive technology portfolio combined with extensive application domain expertise.

Legally positions us to proactively identify and resolve the most complex engineering challenges for our customers.

As a result.

We're realizing stronger value capture as reflected in the increase in our average selling prices, particularly new products, where asps significantly exceed those of our legacy offerings.

Beyond product innovation, our dedication to customer success encompasses ongoing investments to streamline and accelerate their product development activities.

To this end we are rapidly expanding our development support environment from research to deployment with a combination of proprietary AI tools.

And leading ecosystem and open source platforms.

Our strong operating results, reduced capex, enabled us to generate record for cash flow of more than 4 billion dollars or 39% of Revenue.

Furthermore, following the acquisition of Maxim, we've allocated over $3 billion in capital expenditures to substantially enhance capacity optionality and resiliency for our customers supporting our long term vision for sustained growth.

Jeff Ambrose: Innovation has always been integral to ADI's brand and our value proposition, forming the foundation for strong financial performance. Consequently, R&D activities receive capital prioritization, with record investments made in FY25 to advance our leadership in analog, mixed-signal, and power technologies. We've also intensified our focus on software, digital, and artificial intelligence capabilities to strengthen our core franchise, enabling us to address increased customer complexity and expedite their innovation cycles and time to market. Our comprehensive technology portfolio, combined with extensive application domain expertise, uniquely positions us to proactively identify and resolve the most complex engineering challenges for our customers. As a result, we're realizing stronger value capture, as reflected in the increase in our average selling prices, particularly in new products where ASPs significantly exceed those of legacy offerings. Beyond product innovation, our dedication to customer success encompasses ongoing investments to streamline and accelerate their product development activities.

Innovation has always been integral to ADI's brand and our value proposition, forming the foundation for strong financial performance. Consequently, R&D activities receive capital prioritization, with record investments made in FY25 to advance our leadership in analog, mixed-signal, and power technologies. We've also intensified our focus on software, digital, and artificial intelligence capabilities to strengthen our core franchise, enabling us to address increased customer complexity and expedite their innovation cycles and time to market. Our comprehensive technology portfolio, combined with extensive application domain expertise, uniquely positions us to proactively identify and resolve the most complex engineering challenges for our customers. As a result, we're realizing stronger value capture, as reflected in the increase in our average selling prices, particularly in new products where ASPs significantly exceed those of legacy offerings. Beyond product innovation, our dedication to customer success encompasses ongoing investments to streamline and accelerate their product development activities.

We also returned more than 4 billion dollars to our shareholders supporting an 8% dividend increase, as well as share count reduction.

Now as you've seen.

Innovation is always been integral to ads brand and our value proposition forming, the foundation for strong financial performance.

Our relentless focus on driving customer success translates to strong results.

Consequently, R&D activities received capital prioritization.

And diverse design pipeline that grew more than 20% in fiscal 'twenty five.

So I'd like to share a few examples of our success this past year.

Power Technologies.

Within industrial every sector grew driven by improved cyclical dynamics on powerful secular trends, such as AI automation and the drive for efficient and reliable energy generation transmission and distribution.

We've also intensified our focus on software, digital, and artificial intelligence capabilities.

To strengthen our core franchise.

Enabling us to address increased customer complexity and expedite their innovation cycles and time to market.

For example.

The exponential growth in demand for AI and high performance compute drove a record year in our automatic test equipment business building upon and extending our strong position in the Soc and memory test markets.

Our comprehensive technology portfolio combined with extensive application domain expertise.

Uniquely positions us to proactively identify and resolve the most complex engineering challenges for our customers.

As a result.

We anticipate further growth in FY 2006.

Due to our expanding design pipeline industry transitions to <unk>, four and expected double digit growth in hyperscale or capex.

We're realizing stronger value capture, as reflected in the increase in our average selling prices. Particularly in new products, where ASPs significantly exceed those of legacy offerings.

In 2005 robust automation presented growth was propelled by the burgeoning demand for enhanced productivity efficiency and reliability.

Jeff Ambrose: To this end, we are rapidly expanding our development support environment from research to deployment, with a combination of proprietary ADI Power Tools and leading ecosystem and open-source platforms. Furthermore, following the acquisition of Maxim Integrated, we've allocated over $3 billion in capital expenditures to substantially enhance capacity, optionality, and resiliency for our customers, supporting our long-term vision for sustained growth. As you've seen, our relentless focus on driving customer success translated to strong results and a diverse design pipeline that grew more than 20% in Q2 2025. I'd like to share a few examples of our success this past year. Within industrial, every sector grew, driven by improved cyclical dynamics, and powerful secular trends, such as AI, automation, and the drive for efficient and reliable energy generation, transmission, and distribution.

To this end, we are rapidly expanding our development support environment from research to deployment, with a combination of proprietary ADI Power Tools and leading ecosystem and open-source platforms. Furthermore, following the acquisition of Maxim Integrated, we've allocated over $3 billion in capital expenditures to substantially enhance capacity, optionality, and resiliency for our customers, supporting our long-term vision for sustained growth. As you've seen, our relentless focus on driving customer success translated to strong results and a diverse design pipeline that grew more than 20% in Q2 2025. I'd like to share a few examples of our success this past year. Within industrial, every sector grew, driven by improved cyclical dynamics, and powerful secular trends, such as AI, automation, and the drive for efficient and reliable energy generation, transmission, and distribution.

Beyond product innovation, our dedication to customer success encompasses ongoing investments to streamline and accelerate their product development activities.

Cross key sectors, such as manufacturing logistics and health care.

To this end, we are rapidly expanding our development support environment from research to deployment.

This momentum was particularly evident within our robotics segment, which saw notable expansion as customers increasingly prioritized automation to streamline operations and improve business outcomes.

With a combination of proprietary ADI tools.

And leading ecosystem and open-source platforms.

As highlighted in our previous quarter, we foresee tremendous long term opportunity as advancements in AI fueled the emergence of content rich humanoid robots.

Furthermore, following the acquisition of Maxim, we've allocated over 3 billion dollars in capital expenditures to substantially enhance capacity, optionality, and resiliency for our customers supporting our long-term vision for sustained. Growth.

<unk> Adi at the forefront of the next wave of robotics innovation.

Now, as you've seen.

Our relentless focus on driving customer success translates to strong results.

Within health care, the proliferation of robot assisted surgical systems represents a vibrant vector of growth alongside our imaging and diagnostics segments.

And a diverse design pipeline that grew by more than 20% in fiscal 2025.

So, I'd like to share a few examples of our success this past year.

Additionally, we expect growing demand for our suite of diabetes management solutions to continue to contribute to growth in FY 'twenty six.

Energy was our fastest growing industrial segment. This past year, driven by high demand from the industrial transportation and data center sectors.

Jeff Ambrose: For example, the exponential growth in demand for AI and high-performance compute drove a record year in our automatic test equipment business, building upon and extending our strong position in the SoC and memory test markets. We anticipate further growth in FY 2026 due to our expanding design pipeline, industry transitions to HBM4, and expected double-digit growth in hyperscaler CapEx. In Q2 2025, robust automation design and growth was propelled by the burgeoning demand for enhanced productivity, efficiency, and reliability across key sectors such as manufacturing, logistics, and healthcare. This momentum was particularly evident within our robotics segment, which saw notable expansion as customers increasingly prioritized automation to streamline operations and improve business outcomes. As highlighted in our previous quarter, we foresee tremendous long-term opportunity as advancements in AI fuel the emergence of content-rich humanoid robots, positioning ADI at the forefront of the next wave of robotics innovation.

For example, the exponential growth in demand for AI and high-performance compute drove a record year in our automatic test equipment business, building upon and extending our strong position in the SoC and memory test markets. We anticipate further growth in FY 2026 due to our expanding design pipeline, industry transitions to HBM4, and expected double-digit growth in hyperscaler CapEx. In Q2 2025, robust automation design and growth was propelled by the burgeoning demand for enhanced productivity, efficiency, and reliability across key sectors such as manufacturing, logistics, and healthcare. This momentum was particularly evident within our robotics segment, which saw notable expansion as customers increasingly prioritized automation to streamline operations and improve business outcomes. As highlighted in our previous quarter, we foresee tremendous long-term opportunity as advancements in AI fuel the emergence of content-rich humanoid robots, positioning ADI at the forefront of the next wave of robotics innovation.

With an industrial, every sector grew, driven by improved cyclical dynamics and powerful secular trends such as AI, automation, and the drive for efficient and reliable energy generation, transmission, and distribution.

<unk> activity was especially strong for group management and battery storage systems.

And we anticipate continued growth in 2006 and well beyond.

Aerospace and defense achieved record results.

For example, the exponential growth in demand for AI and high-performance compute drove a record year in our automatic test equipment business, building upon and extending our strong position in the SoC and memory test markets.

And we expect further growth in the year ahead, driven by our expanding portfolio of advanced sensor mixed signal and power solutions.

We anticipate further growth in FY26.

With an increasingly strong opportunity pipeline.

Due to our expanding design pipeline industry, transitions to HBM, and expected double-digit growth in hyperscaler capex.

We also expect to maintain our strong presence in the growing low Earth orbit satellite market.

Turning to automotive.

Advances in autonomous driving and current digitalization led to a record year for Adi in fiscal 'twenty five.

In Q4 2025, robust automation design and growth were propelled by the burgeoning demand for enhanced productivity, efficiency, and reliability across key sectors such as manufacturing, logistics, and healthcare.

With growth outpacing light vehicle production.

Our intelligent audio and video connectivity solutions, which avoids bulky and expensive cabling draw.

Drove multiple new growth awards across <unk>, <unk>, and our signal processing and power portfolio.

This momentum was particularly evident within the robotic segment, which saw notable expansion as customers increasingly prioritized automation to streamline operations and improve business outcomes.

Folios.

Building on this success, our new either be Ethernet bus is expanding our market simplifying customer systems, boosting power efficiency and lowering costs as it gains traction.

As highlighted in our previous quarter, we foresee tremendous long-term opportunity as advancements in AI fuel the emergence of content-rich humanoid robots.

Positioning ADI at the forefront of the next wave of robotics innovation.

Jeff Ambrose: Within healthcare, the proliferation of robot-assisted surgical systems represents a vibrant vector of growth alongside our imaging and diagnostic segments. Additionally, we expect growing demand for our suite of diabetes management solutions to continue to contribute to growth in FY2026. Energy was our fastest-growing industrial segment this past year, driven by high demand from the industrial, transportation, and data center sectors. Design and activity was especially strong for grid management and battery storage systems, and we anticipate continued growth in Q2 2026 and well beyond. Aerospace and defense achieved record results, and we expect further growth in the year ahead, driven by our expanding portfolio of advanced sensor, mixed-signal, and power solutions, coupled with an increasingly strong opportunity pipeline. We also expect to maintain our strong presence in the growing low Earth orbit satellite market.

Within healthcare, the proliferation of robot-assisted surgical systems represents a vibrant vector of growth alongside our imaging and diagnostic segments. Additionally, we expect growing demand for our suite of diabetes management solutions to continue to contribute to growth in FY2026. Energy was our fastest-growing industrial segment this past year, driven by high demand from the industrial, transportation, and data center sectors. Design and activity was especially strong for grid management and battery storage systems, and we anticipate continued growth in Q2 2026 and well beyond. Aerospace and defense achieved record results, and we expect further growth in the year ahead, driven by our expanding portfolio of advanced sensor, mixed-signal, and power solutions, coupled with an increasingly strong opportunity pipeline. We also expect to maintain our strong presence in the growing low Earth orbit satellite market.

In the communications sector.

Our capex investments led to a record year for our data center segment with design in activity more than doubling.

Within healthcare, the proliferation of robotic-assisted surgical systems represents a vibrant vector of growth alongside our imaging and diagnostic segments.

Strong demand for high throughput connectivity and power delivery solutions support our confidence in continued growth through 2006.

Additionally, we expect growing demand for our suite of diabetes management solutions to continue to contribute to growth in FY26.

Wireless communications Who's one of the few areas of softness in 'twenty five but.

But we believe customers have completed their inventory digestion phase.

Energy was our fastest growing industrial segment. This past year, driven by high demand from the industrial transportation and data center sectors.

And that the market bottomed during the year.

Design and activity was especially strong for grid management and battery storage systems.

In addition, we see a positive impact of new products, such as our software defines AI enabled macro base station on a chip solution for which we secured design wins from leading Oems and service providers.

And we anticipate continued growth in 2026 and well beyond.

Aerospace and defense achieved record results.

And see additional opportunities beyond telecommunications and private industrial networks as well as other secure communications applications.

And we expect further growth in the year ahead, driven by our expanding portfolio of advanced sensor mixed signal and Power Solutions coupled with an increasingly strong opportunity pipeline.

And finally as consumer markets rapidly evolve, we're expanding our assignment growing a diverse pipeline by delivering integrated solutions and hero Booz Wearables gaming AR VR and many related areas.

Jeff Ambrose: Turning to automotive, advances in autonomous driving and cabin digitalization led to a record year for ADI in Q2 2025, with growth outpacing light vehicle production. Our intelligent audio and video connectivity solutions, which avoid bulky and expensive cabling, drove multiple new growth awards across GMSL, A2B, and our signal processing and safe power portfolios. Building on this success, our new E2B Ethernet bus is expanding our market, simplifying customer systems, boosting power efficiency, and lowering costs as it gains traction. In the communications sector, AI CapEx investment led to a record year for our data center segment, with design and activity more than doubling. Strong demand for high-throughput connectivity and power delivery solutions supports our confidence in continued growth through Q2 2026.

Turning to automotive, advances in autonomous driving and cabin digitalization led to a record year for ADI in Q2 2025, with growth outpacing light vehicle production. Our intelligent audio and video connectivity solutions, which avoid bulky and expensive cabling, drove multiple new growth awards across GMSL, A2B, and our signal processing and safe power portfolios. Building on this success, our new E2B Ethernet bus is expanding our market, simplifying customer systems, boosting power efficiency, and lowering costs as it gains traction. In the communications sector, AI CapEx investment led to a record year for our data center segment, with design and activity more than doubling. Strong demand for high-throughput connectivity and power delivery solutions supports our confidence in continued growth through Q2 2026.

We also expect to maintain our strong presence in the growing low Earth orbit satellite market.

Turning to Automotive.

Advances in autonomous driving and cabin digitalization led to a record year for ADI in fiscal 25.

For example.

With growth outpacing light vehicle production.

Our new acoustics platform combines analog power digital software and machine learning for.

For advanced environmental awareness and adaptive noise cancellation.

We've secured design wins for these solutions in consumer and health care segments, enabling Adi to triple the value generated over legacy designs.

Drove multiple New Growth Awards across GMSL A2B and our signal processing and safe power portfolios.

Building on this success.

Our new e2b Ethernet bus is expanding our market.

We've also captured several new power management design wins, and premium handsets and smart glasses in FY 'twenty five.

Simplifying customer systems, boosting power efficiency, and lowering costs as it gains traction.

Positioning us for further growth in 2006.

In the communication sector.

So in summary, our diversified business model has proven agile and consistently capable of generating superior outcomes.

AI capex investment led to a record year for data center segment with design and activity. More than doubling,

<unk> and both last year's resilient margins and this year, a strong rebound in profitable growth.

Jeff Ambrose: Wireless communications was one of the few areas of softness in Q2 2025, but we believe customers have completed their inventory digestion phase and that the market bottomed during the year. In addition, we see a positive impact of new products, such as our software-defined, AI-enabled Macro Base Station on a Chip solution, for which we secured design-ins from leading OEMs and service providers, and see additional opportunity beyond telecommunications in private industrial networks, as well as other secure communications applications. Finally, as consumer markets rapidly evolve, we're expanding our SAN and growing a diverse pipeline by delivering integrated solutions in hearables, wearables, gaming, AR/VR, and many related areas. For example, our new Acoustics Platform combines analog, power, digital, software, and machine learning for advanced environmental awareness and adaptive noise cancellation.

Wireless communications was one of the few areas of softness in Q2 2025, but we believe customers have completed their inventory digestion phase and that the market bottomed during the year. In addition, we see a positive impact of new products, such as our software-defined, AI-enabled Macro Base Station on a Chip solution, for which we secured design-ins from leading OEMs and service providers, and see additional opportunity beyond telecommunications in private industrial networks, as well as other secure communications applications. Finally, as consumer markets rapidly evolve, we're expanding our SAN and growing a diverse pipeline by delivering integrated solutions in hearables, wearables, gaming, AR/VR, and many related areas. For example, our new Acoustics Platform combines analog, power, digital, software, and machine learning for advanced environmental awareness and adaptive noise cancellation.

Strong demand for high-throughput connectivity and power delivery solutions supports our confidence in continued growth through 2026.

While we are mindful of the macro environment and the continued impacts of tariffs and trade uncertainty.

Wireless communications was one of the few areas of softness in Q4 2025.

We remain confident in our growth in FY 'twenty six and beyond.

But we believe customers have completed their inventory digestion phase.

And that the market buttoned during the year.

As we continue to leverage our key differentiators, namely an enviable technology leaders leadership position at the intelligent edge as it becomes a center of gravity for a host of secular growth markets unrivaled application domain expertise.

In addition.

We see a positive impact of new products.

Such as our software-defined, AI-enabled macro base station on a chip solution for which we secured design-in.

From leading oems and service providers.

And the trusted brands that we have developed and strengthened with our customers over the decades, and so with that I'll pass it over to rich.

And see additional opportunities beyond telecommunications in private industrial networks, as well as other secure communications applications.

Vince Let me add my welcome to our fourth quarter earnings call I'll start with a brief overview of our fourth fiscal 'twenty five financial performance revs.

Revenue for the year came in at just over 11 billion up 17% from fiscal 'twenty four with double digit growth across all end markets.

And finally, as consumer markets, rapidly evolved. We're expanding our sand and growing a diverse pipeline by delivering Integrated Solutions and hearables. Wearables gaming arvr, and many related areas.

Gross margin finished at 69, 3% up 140 basis points driven by higher utilization operating.

For example.

Operating margin finished up 100 basis points at 41, 9% and includes the headwind associated with the normalization of variable comp all told earnings per share of $7 79 increased 22% versus fiscal 2024 now.

Our new Acoustics platform combines analog power, digital software, and machine learning.

Jeff Ambrose: We've secured design wins for these solutions in consumer and healthcare segments, enabling ADI to triple the value generated over legacy designs. We've also captured several new power management design wins in premium handsets and smart glasses in FY2025, positioning us for further growth in Q2 2026. In summary, our diversified business model has proven agile and consistently capable of generating superior outcomes, reflected in both last year's resilient margins and this year's strong rebound in profitable growth.

We've secured design wins for these solutions in consumer and healthcare segments, enabling ADI to triple the value generated over legacy designs. We've also captured several new power management design wins in premium handsets and smart glasses in FY2025, positioning us for further growth in Q2 2026. In summary, our diversified business model has proven agile and consistently capable of generating superior outcomes, reflected in both last year's resilient margins and this year's strong rebound in profitable growth.

For advanced environmental awareness and adaptive noise cancellation.

Now onto our fourth quarter results.

We've secured design wins for these Solutions in consumer and Healthcare segments. Enabling ADI to Triple the value generated over Legacy designs.

Revenue in the fourth quarter came in toward the higher end of our outlook at $3 8 billion growing 7% sequentially and 26% year over year.

We've also captured several new power management, design wins and premium handsets and smart glasses in fy2.

Industrial represented 46% of our fourth quarter revenue, finishing up 12% sequentially and 34% year over year.

Positioning us for further growth in 26.

The stronger than seasonal results underpins the cyclical momentum, we see across industrial as well as the secular growth unfolding in AI infrastructure, which drove record quarter for our <unk> business.

In summary, our diversified business model has proven agile and consistently capable of generating superior outcomes.

Jeff Ambrose: While we're mindful of the macro environment and the continued impacts of tariffs and trade uncertainty, we remain confident in our growth in FY2026 and beyond as we continue to leverage our key differentiators, namely an enviable technology leadership position at the intelligent edge, as it becomes a center of gravity for a host of secular growth markets, unrivaled application domain expertise, and the trusted brand that we have developed and strengthened with our customers over the decades. With that, I'll pass it over to Rich. Thank you, Vince, and let me add my welcome to our Q4 earnings call. I'll start with a brief overview of our full Q2 2025 financial performance. Revenue for the year came in at just over $11 billion, up 17% from Q2 2024, with double-digit growth across all end markets. Gross margin finished at 69.3%, up 140 basis points, driven by higher utilizations.

While we're mindful of the macro environment and the continued impacts of tariffs and trade uncertainty, we remain confident in our growth in FY2026 and beyond as we continue to leverage our key differentiators, namely an enviable technology leadership position at the intelligent edge, as it becomes a center of gravity for a host of secular growth markets, unrivaled application domain expertise, and the trusted brand that we have developed and strengthened with our customers over the decades. With that, I'll pass it over to Rich.

For the full year industrial increased 15% with growth across every major application, including record years for aerospace and defense and ETE.

Reflected in both last year's resilient margins and this year's strong rebound in profitable growth.

While we're mindful of the macro environment and the continued impacts of tariffs and trade uncertainty.

Automotive represented 28% of quarterly revenue, finishing up 1% sequentially and up 19% year over year double digit year over year growth continues to be the driving excuse me continues to be driven by our leading connectivity and functionally safe power solutions for the full year automotive increased 16%.

We remain confident in our growth in FY, 26 and Beyond.

As we continue to leverage our key differentiators, namely an enviable technology leadership position at the intelligent edge, as it becomes a center of gravity for a host of secular growth markets, and unrivaled application domain expertise.

Were an all time high driven predominantly by a higher content and share position across level, two plus Adas systems globally.

Richard Puccio: Thank you, Vince, and let me add my welcome to our Q4 earnings call. I'll start with a brief overview of our full Q2 2025 financial performance. Revenue for the year came in at just over $11 billion, up 17% from Q2 2024, with double-digit growth across all end markets. Gross margin finished at 69.3%, up 140 basis points, driven by higher utilizations.

Communications represented 13% of quarterly revenue, finishing up 4% sequentially and 37% year over year or.

And The Trusted brand that we have developed and strengthened with our customers over the decades. And so with that, I'll pass it over to Rich.

Our data center segment surpassed a $1 billion run rate this quarter and on a year over year basis is now growing more than 50% for three consecutive quarters fueled by continued strength in the AI infrastructure market.

Thank you, Vince. And let me add my Welcome to our fourth quarter earnings call. I'll start with a brief overview of our full fiscal, 25 financial performance,

Revenue for the year came in at just over $11 billion, up 17% from fiscal 24, with double-digit growth across all markets.

Wireless revenue was up double digits year over year for the second straight quarter, owing to improving cyclical dynamics.

Jeff Ambrose: Operating margin finished up 100 basis points at 41.9% and includes the headwind associated with the normalization of variable comp. All told, earnings per share of $7.79 increased 22% versus Q1 2024. Now onto our Q4 results. Revenue in Q4 came in toward the higher end of our outlook at $3.08 billion, growing 7% sequentially and 26% year over year. Industrial represented 46% of our Q4 revenue, finishing up 12% sequentially, and 34% year over year. The stronger-than-seasonal results underpins the cyclical momentum we see across industrial, as well as the secular growth unfolding in AI infrastructure, which drove a record quarter for our ATE business. For the full year, industrial increased 15%, with growth across every major application, including record years for aerospace and defense, and ATE. Automotive represented 28% of quarterly revenue, finishing up 1% sequentially and up 19% year over year.

Operating margin finished up 100 basis points at 41.9% and includes the headwind associated with the normalization of variable comp. All told, earnings per share of $7.79 increased 22% versus Q1 2024. Now onto our Q4 results. Revenue in Q4 came in toward the higher end of our outlook at $3.08 billion, growing 7% sequentially and 26% year over year. Industrial represented 46% of our Q4 revenue, finishing up 12% sequentially, and 34% year over year. The stronger-than-seasonal results underpins the cyclical momentum we see across industrial, as well as the secular growth unfolding in AI infrastructure, which drove a record quarter for our ATE business. For the full year, industrial increased 15%, with growth across every major application, including record years for aerospace and defense, and ATE. Automotive represented 28% of quarterly revenue, finishing up 1% sequentially and up 19% year over year.

For the full year communications with our fastest growing market, increasing 26% driven by our data center segment, which had a record year, while wireless revenue was flat.

Gross margin finished at 69.3% up 140 basis points driven by higher utilizations. Operating margin finished up a 100 basis points at 419% and includes the headwind associated with the normalization of variable comp.

All told, earnings per share of $779 increased 22% versus fiscal 2024.

Lastly, consumer represented 13% of quarterly revenue, finishing up 7% both sequentially and year over year for.

Now, on to our fourth quarter results.

For the full year consumer increased 19% driven by strong growth in handsets gaming and a record year for our <unk> and Wearables segment.

Revenue in the fourth quarter came in toward the higher end of our outlook at $3.08 billion, growing 7% sequentially and 26% year-over-year.

Now on to the rest of the P&L fourth quarter gross margin was 69, 8% up 60 basis points sequentially, and 190 basis points year over year, driven by higher utilization and favorable mix.

percentage 46% of our fourth quarter Revenue finishing up, 12%, sequentially and 34% year-over-year.

Opex in the quarter was $809 million, resulting in an operating margin of 43, 5% up 130 basis points sequentially and up 240 basis points year over year.

Is the cyclical momentum we see across industrial, as well as the secular growth unfolding in AI infrastructure, which drove a record quarter for our business.

For the full year, industrial increased 15%, with growth across every major application, including record years for aerospace and defense.

Non operating expenses finished at $60 million and the tax rate for the quarter was 12, 7%. All told EPS was $2 26 up 10% sequentially and 35% year over year.

Jeff Ambrose: Double-digit year-over-year growth continues to be the driving, excuse me, continues to be driven by our leading connectivity and functionally safe power solutions. For the full year, automotive increased 16% to an all-time high, driven predominantly by our higher content and share position across Level 2+ ADAS systems globally. Communications represented 13% of quarterly revenue, finishing up 4% sequentially and 37% year-over-year. Our data center segment surpassed a $1 billion run rate this quarter and, on a year-over-year basis, has now grown more than 50% for three consecutive quarters, fueled by continued strength in the AI infrastructure market. Wireless revenue was up double digits year-over-year for the second straight quarter, owing to improving cyclical dynamics. For the full year, communications was our fastest-growing market, increasing 26%, driven by our data center segment, which had a record year, while wireless revenue was flat.

Double-digit year-over-year growth continues to be the driving, excuse me, continues to be driven by our leading connectivity and functionally safe power solutions. For the full year, automotive increased 16% to an all-time high, driven predominantly by our higher content and share position across Level 2+ ADAS systems globally. Communications represented 13% of quarterly revenue, finishing up 4% sequentially and 37% year-over-year. Our data center segment surpassed a $1 billion run rate this quarter and, on a year-over-year basis, has now grown more than 50% for three consecutive quarters, fueled by continued strength in the AI infrastructure market. Wireless revenue was up double digits year-over-year for the second straight quarter, owing to improving cyclical dynamics. For the full year, communications was our fastest-growing market, increasing 26%, driven by our data center segment, which had a record year, while wireless revenue was flat.

Automotive represented 28% of quarterly Revenue finishing up, 1% sequentially and up. 19% year-over-year.

Now I'd like to highlight a few items from our balance sheet and cash flow statements.

Growth continues to be the driving. Excuse me. Continues to be driven by our leading connectivity and functionally safe Power Solutions.

Cash and short term investments finished the quarter at $3 7 billion and our net leverage ratio decreased to <unk> nine.

As I discussed previously we continue to build die bank buffers for our fastest growing applications as such our inventories were higher by $59 million sequentially, while days of inventory declined by 1% to $1 59 channel inventory increased but remains lean at approximately six weeks.

Globally.

Communications represented 13% of quarterly, Revenue finishing up, 4%, sequentially, and 37% year-over-year.

Fiscal 'twenty five operating cash flow and Capex were $4 8 billion and <unk> 5 billion, respectively, resulting in record free cash flow of $4 3 billion or 39% of revenue up from 33% in 2024 in total we returned $4 1 billion to shareholders through dividends and share repurchases as a reminder.

It's surpassed a 1 billion dollar run rate this quarter and on a year-over-year basis has now grown more than 50% for 3 consecutive quarters.

Fueled by continued strength in the AI infrastructure market.

Wireless Revenue was up double digits year-over-year for the second straight. Quarter owing to improving cyclical Dynamics.

We target, 100% free cash flow return over the long term using 40% to 60% for our dividend and the remainder for share count reduction.

Jeff Ambrose: Lastly, consumer represented 13% of quarterly revenue, finishing up 7% both sequentially and year-over-year. For the full year, consumer increased 19%, driven by strong growth in handsets, gaming, and a record year for our hearables and wearables segment. Now on to the rest of the P&L. Q4 gross margin was 69.8%, up 60 basis points sequentially and 190 basis points year-over-year, driven by higher utilization and favorable mix. OpEx in the quarter was $809 million, resulting in an operating margin of 43.5%, up 130 basis points sequentially and up 240 basis points year-over-year. Non-operating expenses finished at $60 million, and the tax rate for the quarter was 12.7%. All told, EPS was $2.26, up 10% sequentially and 35% year-over-year. Now, I'd like to highlight a few items from our balance sheet and cash flow statements.

Lastly, consumer represented 13% of quarterly revenue, finishing up 7% both sequentially and year-over-year. For the full year, consumer increased 19%, driven by strong growth in handsets, gaming, and a record year for our hearables and wearables segment. Now on to the rest of the P&L. Q4 gross margin was 69.8%, up 60 basis points sequentially and 190 basis points year-over-year, driven by higher utilization and favorable mix. OpEx in the quarter was $809 million, resulting in an operating margin of 43.5%, up 130 basis points sequentially and up 240 basis points year-over-year. Non-operating expenses finished at $60 million, and the tax rate for the quarter was 12.7%. All told, EPS was $2.26, up 10% sequentially and 35% year-over-year. Now, I'd like to highlight a few items from our balance sheet and cash flow statements.

Now moving onto our first quarter of 2026 outlook revenue is expected to be $3 1 billion, plus or minus $100 million operating margin at the midpoint is expected to be 43, 5% plus or minus 100 basis points. Our tax rate is expected to be 12% to 14% and based on these inputs adjusted EPS is expected.

For the full year, communications with our fastest growing market increased 26%, driven by our data center segment, which had a record year. While its revenue was flat, consumer represented 13% of quarterly revenue, finishing up 7%, both sequentially and year-over-year.

For the full year, consumer increased 19%, driven by strong growth in handsets, gaming, and a record year for our hearables and wearable segments.

It would be $2 29.

Plus or minus 10 sets.

In closing fiscal 2025 was a strong year highlighted by a return to growth margin expansion and record free cash flow importantly, I'm confident in our ability to continue navigating macro and geopolitical challenges and believe we are well positioned to drive further profitable growth in 2026.

Now on to the rest of the p&l, fourth quarter, gross margin was 69.8% of 60 basis points, sequentially and 190 basis points, year-over-year driven by higher utilization and favorable mix Optics. In the quarter was 809 million resulting in an operating margin of 43 and a half percent up, 130 basis points sequentially and up 240 basis points to year-over-year.

With that I'll give it back to Jeff for Q&A.

Alright. Thank you rich now, let's get to our Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call. This morning. If you have a follow up question. Please re queue and we will take your question as time allows.

Non-operating expenses finished at $60 million, and the tax rate for the quarter was 12.7%. All told, EPS was $2.26, up 10% sequentially and 35% year-over-year.

Jeff Ambrose: Cash and short-term investments finished the quarter at $3.7 billion, and our net leverage ratio decreased to 0.9. As I discussed previously, we continue to build die bank buffers for our fastest-growing applications. As such, our inventories were higher by $59 million sequentially, while days of inventory declined by 1 to 159. Channel inventory increased but remains lean at approximately six weeks. Fiscal 2025 operating cash flow and CapEx were $4.8 billion and $0.5 billion, respectively, resulting in record free cash flow of $4.3 billion, or 39% of revenue, up from 33% in 2024. In total, we returned $4.1 billion to shareholders through dividends and share repurchases. As a reminder, we target 100% free cash flow return over the long term, using 40% to 60% for our dividend, and the remainder for share count reduction. Now, moving on to our Q1 2026 outlook.

Cash and short-term investments finished the quarter at $3.7 billion, and our net leverage ratio decreased to 0.9. As I discussed previously, we continue to build die bank buffers for our fastest-growing applications. As such, our inventories were higher by $59 million sequentially, while days of inventory declined by 1 to 159. Channel inventory increased but remains lean at approximately six weeks. Fiscal 2025 operating cash flow and CapEx were $4.8 billion and $0.5 billion, respectively, resulting in record free cash flow of $4.3 billion, or 39% of revenue, up from 33% in 2024. In total, we returned $4.1 billion to shareholders through dividends and share repurchases. As a reminder, we target 100% free cash flow return over the long term, using 40% to 60% for our dividend, and the remainder for share count reduction. Now, moving on to our Q1 2026 outlook.

Now, I'd like to highlight a few items from our balance sheet and cash flow statements.

With that can we have our first question. Please.

For those participating by telephone dial in if you have a question. Please press star one one on your phone to enter the queue. If your question has been answered and you wish to be removed from the queue. Please press star one one again, if you are listening on a speaker phone please pick up the <unk>.

Cash and short-term Investments finished the quarter at 3.7 billion and our net leverage ratio decreased to 0.9 as I discussed previously, we continue to build D Bank buffers for our fastest growing applications, as such our inventories will Higher by 59 million sequentially. While days of inventory declined, by 1 to 159 Channel inventory increased, but remains lean at approximately 6 weeks,

Handset when asking your question well pause for just a moment to compile the Q&A roster.

Our first question comes from the line of Vivek Arya from Bank of America Securities.

Alright. Thank you for taking my question I had on near and medium term on the near term I think you're guiding Q1.

Slightly up which is a little bit above seasonal. So I was hoping you could give us some color by segment.

This call 25 operating cash flow and capex with 4.8 billion and 0.5 billion respectively resulting in record. Free cash flow of 4.3 billion or 39% of Revenue up from 33%. In 2024. In total we returned 4.1 billion dollars to shareholders to dividends and share repurchases. As a reminder, we target 100% free. Cash flow return over the long term using 40 to 60% for our dividend and the remainder for share count reduction.

Jeff Ambrose: Revenue is expected to be $3.1 billion, ±$100 million. Operating margin at the midpoint is expected to be 43.5%, ±100 basis points. Our tax rate is expected to be 12% to 14%, and based on these inputs, adjusted EPS is expected to be $2.29, ±$0.10. In closing, Fiscal 2025 was a strong year, highlighted by a return to growth, margin expansion, and record free cash flow. Importantly, I'm confident in our ability to continue navigating macro and geopolitical challenges, and believe we are well-positioned to drive further profitable growth in 2026. With that, I'll give it back to Jeff for Q&A. All right, thank you, Rich. Now, let's get to our Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning.

Revenue is expected to be $3.1 billion, ±$100 million. Operating margin at the midpoint is expected to be 43.5%, ±100 basis points. Our tax rate is expected to be 12% to 14%, and based on these inputs, adjusted EPS is expected to be $2.29, ±$0.10. In closing, Fiscal 2025 was a strong year, highlighted by a return to growth, margin expansion, and record free cash flow. Importantly, I'm confident in our ability to continue navigating macro and geopolitical challenges, and believe we are well-positioned to drive further profitable growth in 2026. With that, I'll give it back to Jeff for Q&A.

You are seeing a trend because I do think industrial was slightly below what you reported in Q4. So just any dynamic going into Q1, and then if you zoom out Wednesday, I mean, if I want to just annualize Q1 guidance that suggests a very strong 13%.

Now, moving on to our first quarter of 2026, outlook revenue is expected to be $3.1 billion, plus or minus $100 million.

Sales growth year in fiscal 'twenty, six and I was really hoping to get your perspective as you start the new fiscal year on what Youre seeing from a broader macro perspective, and whether this kind of growth rate as possible in fiscal 'twenty.

Operating margin at the midpoint is expected to be 43.5%, plus or minus 100 basis points. Our tax rate is expected to be 12% to 14%. Based on these inputs, adjusted EPS is expected to be $2.29, plus or minus $0.10.

Thank you sure thanks, Vivek rich Vivek I'll.

I'll take the first part of your question, So Q1, which is our weakest sequential quarter with normal seasonality typically down mid single digits and our outlook is for <unk> up slightly quarter over quarter reflects a seventh straight quarter of above seasonal growth.

In closing, fiscal 2025 was a strong year, highlighted by a return to growth, margin expansion, and record free cash flow. Importantly, I'm confident in our ability to continue navigating macro and geopolitical challenges and believe we are well positioned to drive further profitable growth in 2026.

Jeff Ambrosi: All right, thank you, Rich. Now, let's get to our Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning. If you have a follow-up question, please re-queue, and we will take your question if time allows. With that, can we have our first question, please?

With that, I'll give it back to Jeff for Q&A.

And another key point is additionally, our outlook assumes sell and sell through are equal. So from an end market color perspective, industrial we expect to be up mid single digits above seasonal.

Jeff Ambrose: If you have a follow-up question, please re-queue, and we will take your question if time allows. With that, can we have our first question, please? For those participating by telephone dial-in, if you have a question, please press star 11 on your phone to enter the queue. If your question has been answered and you wish to be removed from the queue, please press star 11 again. If you are listening on a speakerphone, please pick up the handset when asking your question. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Vivek Aria from Bank of America Securities. Thank you for taking my question. I had a near and a medium term. On the near term, I think you're guiding Q1 slightly up, which is a little bit above seasonal.

All right. Thank you, Rich. Now let's get to our Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning. If you have a follow-up question, please request it, and we will take your question if time allows.

Operator: For those participating by telephone dial-in, if you have a question, please press star 11 on your phone to enter the queue. If your question has been answered and you wish to be removed from the queue, please press star 11 again. If you are listening on a speakerphone, please pick up the handset when asking your question. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Vivek Aria from Bank of America Securities.

With that. Can we have our first question, please?

We expect auto to be down mid single digits below seasonal where we can.

Continue to see some risk.

Risks around tariffs and some of the macro environment.

We expect the up 10% above seasonal again as Vince mentioned, we're seeing real strength in the AI <unk>.

Infrastructure.

Demand for our data center products, and then consumer seasonally down low double digits.

For those participating by telephone dial-in, if you have a question, please press *1, 1, 1 on your phone to enter the queue. If your question has been answered and you wish to be removed from the queue, please press *1, 1, 1 again. If you are listening on a speakerphone, please pick up the handset. When asking your question, we'll pause for just a moment to compile the Q&A roster.

And then all markets, we expect to be up year over year.

Vivek Arya: Thank you for taking my question. I had a near and a medium term. On the near term, I think you're guiding Q1 slightly up, which is a little bit above seasonal. I was hoping you could give us some color by segment where you are seeing the strength, because I do think industrial was slightly below what you had thought in Q4. Just any dynamics going into Q1. If we zoom out, Vince, I mean, if I were to just annualize Q1 guidance, that suggests a very strong kind of 12%, 13% sales growth year in Fiscal 2026. I was really hoping to get your perspectives as you start the new fiscal year on what you're seeing from a broader macro perspective and whether this kind of growth rate is possible in Fiscal 2026. Thank you.

Yes.

Our first question comes from the line of VC Arya from Bank of America Securities.

Yeah. So maybe if we if we look year over year Vivek. So.

We believe we're well positioned to see broad based growth in 2006.

Jeff Ambrose: I was hoping you could give us some color by segment where you are seeing the strength, because I do think industrial was slightly below what you had thought in Q4. Just any dynamics going into Q1. If we zoom out, Vince, I mean, if I were to just annualize Q1 guidance, that suggests a very strong kind of 12%, 13% sales growth year in Fiscal 2026. I was really hoping to get your perspectives as you start the new fiscal year on what you're seeing from a broader macro perspective and whether this kind of growth rate is possible in Fiscal 2026. Thank you. Sure. Thanks, Vivek. Rich? Vivek? I'll take the first part of your question. Q1, which is our weakest sequential quarter with normal seasonality, typically down mid-single digits.

I think cyclical as well as well as mini videos.

Video Synchronic factors.

Giving us tailwind.

My expectation is that in 2006, industrial and communications will lead with.

He will lead the charge.

I think when you look at.

Industrial and comms the as I said the cyclical dynamics are good greatly in inventories out there I think both of those markets bottomed some quarters ago.

Data center, which is going to see again, we believe a strong surge in capex.

Vincent Roche: Sure. Thanks, Vivek. Rich?

Richard Puccio: Vivek? I'll take the first part of your question. Q1, which is our weakest sequential quarter with normal seasonality, typically down mid-single digits. Our outlook is for up slightly quarter over quarter, which reflects our seventh straight quarter of above seasonal growth. Another key point is, additionally, our outlook assumes sell-in and sell-through are equal. From an end market color perspective, industrial, we expect to be up mid-single digits, above seasonal. We expect auto to be down mid-single digits, below seasonal, where we continue to see some risk there around tariff and some of the macro environment. Coms, we expect to be up 10%, above seasonal. Again, as Vince mentioned, we're seeing real strength in the AI infrastructure and demand for our data center products. Consumer is seasonally down, low double digits. All markets, we expect to be up year over year.

We've got good exposure to that sector and it's two thirds of our comms business at this point in time.

Jeff Ambrose: Our outlook is for up slightly quarter over quarter, which reflects our seventh straight quarter of above seasonal growth. Another key point is, additionally, our outlook assumes sell-in and sell-through are equal. From an end market color perspective, industrial, we expect to be up mid-single digits, above seasonal. We expect auto to be down mid-single digits, below seasonal, where we continue to see some risk there around tariff and some of the macro environment. Coms, we expect to be up 10%, above seasonal. Again, as Vince mentioned, we're seeing real strength in the AI infrastructure and demand for our data center products. Consumer is seasonally down, low double digits. All markets, we expect to be up year over year. Yeah. Maybe if we look year over year, Vivek, we believe we're well-positioned to see broad-based growth in 2026.

Aerospace and defense as well as <unk>, which are together about a third of the industrial market.

Got strong content growth stories in both.

And coupled with the demand surge and the eight eight.

<unk> business I think is very very well positioned.

Well I think as well in consumer we talked a little bit on the in the prepared remarks, there about the higher contents in key applications.

And so we've got a tremendous diversity in that business at a level, we've never had before as a company. So both on applications and customers and platforms, we are well positioned.

Last but not least if I talk a little bit about the auto sector.

Vincent Roche: Yeah. Maybe if we look year over year, Vivek, we believe we're well-positioned to see broad-based growth in 2026. I think cyclical, as well as many idiosyncratic factors, are giving us tailwinds. My expectation is that in 2026, industrial and communications will lead the charge. I think when you look at industrial and coms, as I said, the cyclical dynamics are good, very lean inventories out there. I think both of those markets bottomed some quarters ago. Data center, which is going to see, again, we believe, a strong surge in CapEx. We've got good exposure to that sector, and it's two-thirds of our coms business at this point in time. Aerospace and defense, as well as ATE, which are together about 1/3 of the industrial market. We've got strong content growth stories in both, and coupled with the ADI demand surge in the ATE business, I think is very, very well-positioned.

It's been I think SAR has really been flat now for quite a while we see that persists.

I'll take the first part of your question. So, you know, q1, which is our weakest sequential quarter with normal seasonality typically a down mid single digits. And our Outlook is for up, you know, up slightly quarter over quarter, reflects for 7, straight quarter of above seasonal growth. Uh, and the other key point is additionally, our Outlook assumes selling and sell through our equal. So, from a, uh, an End Market color perspective, you know, industrial, we expect to be up mid single, digits above seasonal. Uh, we expect auditor to be down, mid mid, mid single digits below seasonal, you know where we continue to see some, uh, risks there around tariff. And some of the macro environment comms, uh, we expect to be up, 10% above seasonal again. As, as Vince mentioned, we're seeing, you know, real strength in the AI, uh, infrastructure and, and demand for our data center products and then consumer, seasonally download double digits. Uh, and then all markets we expect to be up year-over-year.

In 2006.

so,

Given that.

We've been able to show against our 10% <unk> com.

Yep. So maybe if we look, uh, year over year of a VEC. So,

Content growth per annum, we see that continue given the strength of the pipeline that we've got.

Jeff Ambrose: I think cyclical, as well as many idiosyncratic factors, are giving us tailwinds. My expectation is that in 2026, industrial and communications will lead the charge. I think when you look at industrial and coms, as I said, the cyclical dynamics are good, very lean inventories out there. I think both of those markets bottomed some quarters ago. Data center, which is going to see, again, we believe, a strong surge in CapEx. We've got good exposure to that sector, and it's two-thirds of our coms business at this point in time. Aerospace and defense, as well as ATE, which are together about 1/3 of the industrial market. We've got strong content growth stories in both, and coupled with the ADI demand surge in the ATE business, I think is very, very well-positioned.

But all that said we've got.

A very uncertain macro environment.

But my expectation is.

We believe we're well-positioned to see broad-based growth in 2026. And, uh, you know, I think cyclical as well as many idiosyncratic factors are giving us a tailwind.

All the end markets will be up despite the outlook from a macro perspective.

Uh, my expectation is that in 2026, Industrial and Communications will lead.

Will lead the charge.

Thank you.

Um,

Thank you one moment for our next question.

Our next question comes from the line of Joe Moore from Morgan Stanley.

You know, I think when you look at um industrial and comms the, as I said the cyclical Dynamics are good, very lean inventories out there. I think both of those markets bottomed, some quarters ago.

Okay. Thank you speaking of autos I think you guys had indicated when you guided the quarter that you would be slightly down you ended up slightly up.

Data center, which is going to see again, we believe, a strong surge in capex.

Can you talk about what's coming in a little bit better and you guys had been pretty good about helping us understand pull forwards and things like that any any sign of any activity now.

Uh, we've got good exposure to that sector, and it's two-thirds of our company's business at this point in time.

Yeah.

Sure Joe I'll take that one so for US auto has been our strongest market right double digit CAGR through cycle, driven by secular kind of thinking and compounded by our share gains, particularly in connectivity and power for Adas and Nextgen infotainment systems.

Um, aerospace and defense, as well as IT, are together about a third of the industrial market. Uh, we've got strong content growth stories in both.

And, uh, you know, coupled with the ADI demand surge in the ATE business, I think is very, very well positioned.

Jeff Ambrose: I think as well in consumer, we talked a little bit in the preparatory marks there about the higher content and key applications. We've got tremendous diversity in that business at a level we never had before as a company. Both in applications, customers, and platforms, we're well-positioned. Last but not least, if I talk a little bit about the auto sector, I think SAR has really been flat now for quite a while. We see that persist in 2026. Given that we've been able to show against SAR 10% content growth per annum, we see that continue given the strength of the pipeline that we've got. All that said, we've got a very uncertain macro environment. My expectation is all the end markets will be up despite the outlook from a macro perspective. Thank you. Thank you.

I think as well in consumer, we talked a little bit in the preparatory marks there about the higher content and key applications. We've got tremendous diversity in that business at a level we never had before as a company. Both in applications, customers, and platforms, we're well-positioned. Last but not least, if I talk a little bit about the auto sector, I think SAR has really been flat now for quite a while. We see that persist in 2026. Given that we've been able to show against SAR 10% content growth per annum, we see that continue given the strength of the pipeline that we've got. All that said, we've got a very uncertain macro environment. My expectation is all the end markets will be up despite the outlook from a macro perspective.

um,

Here I would note we've had pretty significant share gains in China, which where you see a lot of the light vehicle share getting.

Yeah, I think as well in consumer, we talked a little bit in the prepared remarks there about the higher content in key applications.

Increased so that's been beneficial near term the market has been more resilient than we than many had predicted right evidenced by the stronger volumes on vehicles. We do think some of the upside we've seen in the volumes in our business. This year was tariff and policy related we've talked in prior calls about our view that there might have been some pull ins.

And, um, so we've got tremendous diversity in that business at a level we never had before as a company. So both in applications and customers and platforms, we're well positioned.

Um, last but not least, if I talk a little bit about the auto sector,

Um, it's been, I think, SAR has remained flat now for quite a while. We see that persist.

It cant be precise with certain but we but we did make that estimation.

In Q4 2025, and uh, given that...

And given that given this we did approach Q4 with some caution and expected to see I think I said on the last call. We thought we'd see some of this pre buying unwind in the fourth quarter.

You know, we've been able to show against our 10% content growth per annum. We see that continue, given the strength of the pipeline that we've got.

That did not appear to happen to us.

Our results were fairly seasonal and bookings were normal.

But, you know, all that said, we've got a very uncertain macro environment. But my expectation is...

Vivek Arya: Thank you.

With a book to Bill just below one which is actually pretty typical for Q4 were still being a bit cautious on the market as it is unclear how the tariff and Volatilities, we saw will ultimately impact us and our customers and also just given short short lead time orders.

All the end markets will be up despite the, um, the outlook from a macro perspective.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Joe Moore from Morgan Stanley.

Thank you.

Jeff Ambrose: One moment for our next question. Our next question comes from the line of Joe Moore from Morgan Stanley. Great, thank you. Speaking of autos, I think you guys had indicated when you guided the quarter that you'd be slightly down, you ended up slightly up. Can you talk about what's coming in a little bit better? You guys have been pretty good about helping us understand pull forwards and things like that, any sign of any activity now? Sure, Joe, I'll take that one. For us, auto has been our strongest market, right? Double-digit CAGR through cycle, driven by secular content gains, compounded by our share gains, particularly in connectivity and power for ADAS and next-gen infotainment systems. Here, I would note we've had pretty significant share gains in China, which is where you see a lot of the light vehicle share getting increased.

Thank you. One moment for our next question.

Joe Moore: Great, thank you. Speaking of autos, I think you guys had indicated when you guided the quarter that you'd be slightly down, you ended up slightly up. Can you talk about what's coming in a little bit better? You guys have been pretty good about helping us understand pull forwards and things like that, any sign of any activity now?

Our next question comes from the line of Joe Moore from Morgan Stanley.

<unk> ability tends to be pretty low right now.

As we think about our Q1 outlook is a sub seasonal quarter or down mid single digits sequentially, but up year over year.

And given our content gains in this market.

Positive design win traction that Vince mentioned, we do think fiscal 'twenty six can be another strong year.

Richard Puccio: Sure, Joe, I'll take that one. For us, auto has been our strongest market, right? Double-digit CAGR through cycle, driven by secular content gains, compounded by our share gains, particularly in connectivity and power for ADAS and next-gen infotainment systems. Here, I would note we've had pretty significant share gains in China, which is where you see a lot of the light vehicle share getting increased.

Great, thank you. Um, speaking of autos, you know, I think you guys had indicated when you guided the quarter that you'd be slightly down, and you ended up slightly up. Um, can you talk about, you know, what's coming in a little bit better? And you guys have been pretty good about helping us understand pull-forwards and things like that. Any sign of any activity now?

Very helpful. Thank you very much.

Thank you one moment for our next question.

Our next question comes from the line of Stacy <unk> from Bernstein Research.

Hi, guys. Thanks for taking my question I wanted to ask about gross margins.

Sort of talked about being at 70% gross margins around 3 billion, so you're sitting over there.

Jeff Ambrose: That's been beneficial. Near term, the market's been more resilient than we and many had predicted, right? Evidenced by the stronger volumes on vehicles. We do think some of the upside we've seen in the volumes in our business this year was tariff and policy-related. We've talked in prior calls about our view that there might have been some pull-ins. It can't be precise or certain, but we did make that estimation. Given this, we did approach Q4 with some caution and expected to see, I think I said on the last call, we thought we'd see some of this pre-buying unwind in the fourth quarter. That did not appear to happen to us. Our results were fairly seasonal, and bookings were normal, with a book-to-build just below one, which is actually pretty typical for Q4.

That's been beneficial. Near term, the market's been more resilient than we and many had predicted, right? Evidenced by the stronger volumes on vehicles. We do think some of the upside we've seen in the volumes in our business this year was tariff and policy-related. We've talked in prior calls about our view that there might have been some pull-ins. It can't be precise or certain, but we did make that estimation. Given this, we did approach Q4 with some caution and expected to see, I think I said on the last call, we thought we'd see some of this pre-buying unwind in the fourth quarter. That did not appear to happen to us. Our results were fairly seasonal, and bookings were normal, with a book-to-build just below one, which is actually pretty typical for Q4.

And yet you're still I mean, even in the quarter you came in a little below 70 as far as I can tell the guidance implies gross margins relatively flattish around that 70% range. You can let me know if that's right or not but I'm just wondering why.

We're not seeing more leverage on the gross margin line, especially as Utilizations are going up and everything else like why why why shouldn't we expect that more leverage on gross margins.

Dave I'll take that one so obviously with our industry, leading gross margins, where you can see the impact that we get from an innovation premium we did increase quarter over quarter and year over year, and we did have higher utilization and some favorable mix, we didn't get to the 70% as planned as the mixed component wasn't as strong as.

Sure, Joe I'll take that 1 so you know, for US Auto has been been our strongest Market, Right? Double digit cager through cycle, driven by secular, content gains, compounded by our share gains, particularly in connectivity, and power, for ads, and nextg infotainment systems. Um, here I would know we've had pretty significant share gains in China which, where you see a lot of the, uh, light vehicle share of getting, um, increase. So that's been beneficial near-term. The Market's been more resilient than we and many in predicted right evidence by the stronger volumes. Um, on vehicles. We do think some of the upside we've seen in the in the volumes and our business this year was Tanner from policy related. Um we've talked in Prior calls about um our view that there might have been some pull-ins um you know where it can't be precise for certain but we but we did make that estimation, you know, and given given this, we did approach Q4 with some caution and and expected to see, I think I said on the last call, we thought we'd see some of this uh, pre- buying un.

Jeff Ambrose: We're still being a bit cautious on the market as it's unclear how the tariffs and volatilities we saw will ultimately impact us and our customers. Just given short lead time orders, visibility tends to be pretty low right now. As we think about our Q1 outlook, it is a sub-seasonal quarter or down mid-single digits sequentially, but up year over year. Given the content gains in this market and the positive design win traction that Vince mentioned, we do think Fiscal 2026 can be another strong year. Very helpful. Thank you very much. Thank you. One moment for our next question. Our next question comes from the line of Stacey Raskin from Bernstein Research. Hi, guys. Thanks for taking my question. I wanted to ask about gross margins. You sort of talked about being at 70% gross margins around $3 billion.

We're still being a bit cautious on the market as it's unclear how the tariffs and volatilities we saw will ultimately impact us and our customers. Just given short lead time orders, visibility tends to be pretty low right now. As we think about our Q1 outlook, it is a sub-seasonal quarter or down mid-single digits sequentially, but up year over year. Given the content gains in this market and the positive design win traction that Vince mentioned, we do think Fiscal 2026 can be another strong year.

We are expecting.

As we've talked about we had a much stronger result in auto.

Which kept the industrial mix a bit lower than we planned and that's what kept us from getting all the way to 70% now if I look out to Q1 gross margin percent for US is typically lower in Q1 seasonally given the annual shutdown factories for required maintenance and around the holidays in conjunction with customer.

Our, our results were fairly seasonal and bookings were normal. Um, with the book to build just below 1, which is actually pretty typical for Q4, you know, we're still being a bit cautious on the market as it's unclear how the tariffs and volatilities, we saw will ultimately impact us and our customers and also just giving um, short short lead time orders. Um, visibility tends to be pretty low uh, right now, you know. So as we think about our q1 Outlook as is a subseasonal quarter or down mid single digits quite slowly, but up here every year.

Shutdowns however.

Based on our outlook, we are anticipating that the higher industrial mix in Q1, which we think will offset seasonal.

Joe Moore: Very helpful. Thank you very much.

You know, and and and given the content gains in this market and and the positive design win, uh traction, that Vince mentioned, we do think fiscal 26 can be another strong year.

The seasonal component and hold gross margin flat, so youre right the embedded as a flattish gross margin, where we get an offset from a higher mix, which offset the pressure from the shutdowns.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Stacy Rasgon from Bernstein Research.

Very helpful. Thank you very much.

Thank you. One moment for our next question.

Stacy Rasgon: Hi, guys. Thanks for taking my question. I wanted to ask about gross margins. You sort of talked about being at 70% gross margins around $3 billion. You're sitting over there, and you're still, I mean, even in the quarter, you came in a little below 70. As far as I can tell, the guidance implies gross margins relatively flattish around that 70% range. You can let me know if that's right or not. I'm just wondering why we're not seeing more leverage on the gross margin line, especially as utilizations are going up and everything else. Why shouldn't we expect more leverage on gross margins?

Our next question comes from the line of Stacy Rasgon from Bernstein Research.

And then I guess that and the last piece as we think about the continued go forward Stacey.

Hi, guys. Um, thanks for taking my question. I wanted to ask about gross margins.

At this revenue level one.

One of the things I would like to remind as we did have a pretty significant capacity expansion. While we are addressing our resilience over the last several years and so it will take us.

Jeff Ambrose: You're sitting over there, and you're still, I mean, even in the quarter, you came in a little below 70. As far as I can tell, the guidance implies gross margins relatively flattish around that 70% range. You can let me know if that's right or not. I'm just wondering why we're not seeing more leverage on the gross margin line, especially as utilizations are going up and everything else. Why shouldn't we expect more leverage on gross margins? Okay. Can I take that one? Obviously, with our interesting leading gross margins, you can see the impact that we get from the innovation premium. We did increase quarter over quarter and year over year, and we did have higher utilization and some favorable mix. We didn't get to the 70% as planned, as the mix component wasn't as strong as we were expecting.

No, you sort of talked about, you know, being at 70% gross margins around $3 billion. So you're sitting over there.

<unk> revenue dollars to continue.

To expand beyond 70.

And also as we've talked about the continued movement in mix and given the strength, we see in industrial into going into 'twenty. Six we expect that that share of our business will continue to increase I think just one other piece of color Stacy the pricing is in good shape. So it is really.

And you're still, I mean, even in the court, you came in a little below 70. As far as I can tell, the guidance implies gross margins relatively flattish around that 70% range. You can let me know if that's right or not. But I'm just wondering why.

Richard Puccio: Okay. Can I take that one? Obviously, with our interesting leading gross margins, you can see the impact that we get from the innovation premium. We did increase quarter over quarter and year over year, and we did have higher utilization and some favorable mix. We didn't get to the 70% as planned, as the mix component wasn't as strong as we were expecting.

We're not seeing more leverage on the gross, margin line, especially as utilizations are going up and and and everything else. Like why why why shouldn't we expect that more leverage on Gross margins?

It's really a question of mix.

Continuing to push the utilizations.

Okay.

Got it. Thank you guys. Thanks, Dave I'll move onto our next question. Please.

Thank you one moment for our next question.

Jeff Ambrose: As we've talked about, we had a much stronger result in auto, which kept the industrial mix a bit lower than we planned, and that's what kept us from getting all the way to 70%. Now, if I look out to Q1, gross margin percent for us is typically lower in Q1 seasonally, given the annual shutdown factories for required maintenance and around the holidays in conjunction with customer shutdowns. However, based on our outlook, we are anticipating that the higher industrial mix in Q1, which we think will offset the seasonal component and hold gross margin flat. You were right that embedded is a flatter gross margin where we get an offset from higher mix, which will offset the pressure from the shutdowns.

As we've talked about, we had a much stronger result in auto, which kept the industrial mix a bit lower than we planned, and that's what kept us from getting all the way to 70%. Now, if I look out to Q1, gross margin percent for us is typically lower in Q1 seasonally, given the annual shutdown factories for required maintenance and around the holidays in conjunction with customer shutdowns. However, based on our outlook, we are anticipating that the higher industrial mix in Q1, which we think will offset the seasonal component and hold gross margin flat. You were right that embedded is a flatter gross margin where we get an offset from higher mix, which will offset the pressure from the shutdowns.

Our next question comes from the line of Christopher Dan Lee from Citi.

Hey, Thanks, guys just to follow up on <unk> question has the relative.

Gross margin levels have those changed at all between the end markets has any of them.

Gone up or down versus the corporate average I guess just to cut to the chase and the auto gross margin has gotten a little worse relative to the corporate average over the last like two or three years or anything else changed.

Chris I would say that the way we've characterized.

The individual end market margins versus average has not changed.

Not in any meaningful way.

Basically I'll take that 1 so you know obviously with our interesting lean and gross margins where you you can see the impact that we get from The Innovation premium. You know, we did increase quarter over quarter and year over year, um and we did have higher utilization and some favorable mix. We didn't get to the 70%. As planned as the mixed component wasn't as strong as we are expecting. You know, as, as we've talked about, you know, we had a much stronger result in Auto um which which kept the industrial mix a bit lower than we planned. And that's what kept us from getting all the way to the 70%. Now, if I look out to q1 to go some margin percent for us, is typically lower in q1, seasonally given the annual shutdown, uh, factories for required maintenance and, and around the holidays in conjunction with customer shutdowns. However, you know, ba based on our Outlook, we are anticipating that the higher industrial mix and q1 which we think will offset seasonal, you know, the seasonal component and hold gross margin flat. So you're right the embedded is a

Okay. Thanks Rich sure.

Thank you one moment for our next question.

Our next question comes from the line of Timothy Arcuri from UBS.

Jeff Ambrose: I guess in the last piece, as we think about the continued go forward, Stacey, and at this revenue level, one of the things I like to remind is we did have a pretty significant capacity expansion while we were addressing our resilience over the last several years. It will take us higher revenue dollars to continue to expand beyond 70. Also, as we've talked about, the continued movement in mix. Given the strength we see in industrial going into 2026, we expect that share of our business will continue to increase. Yeah. I think just one other piece of color, Stacey, that pricing is in good shape. It's really a question of mix and continuing to push the utilizations. Thank you. Got it. Thank you, guys. Thanks, Stacey. Move on to our next question, please. Thank you.

I guess in the last piece, as we think about the continued go forward, Stacey, and at this revenue level, one of the things I like to remind is we did have a pretty significant capacity expansion while we were addressing our resilience over the last several years. It will take us higher revenue dollars to continue to expand beyond 70. Also, as we've talked about, the continued movement in mix. Given the strength we see in industrial going into 2026, we expect that share of our business will continue to increase.

Thanks, a lot.

Vincent you talked about Maxim revenue synergies can you update us on that I know you said you're on track, but maybe you can give us a sense of where that stands and then.

Rich can you tell us sort of what your sense of like a normal fiscal Q2. It seems like normal seasonal in fiscal Q2 is up like mid singles is that sort of how you think about a typical fiscal Q2 and then maybe like what are the puts and takes as you're kind of headed into fiscal Q2.

Yes, so Tim I'll start with the synergies so.

Vincent Roche: Yeah. I think just one other piece of color, Stacey, that pricing is in good shape. It's really a question of mix and continuing to push the utilizations.

We began the conversion process the conversion of the pipeline in 'twenty four.

You know, and then I guess in the last piece, you know, as we think about the continued, go forward, Stacy and and you know, at this Revenue level, you know, 1 of the things I like to remind is, we, we did have a pretty significant capacity expansion while we were addressing our resilience, uh, over the last several years. And so it will take us, you know, higher higher Revenue dollars to continue to expand Beyond 700. Um, and also as we've talked about the continued movement in mix and given the strength we see in industrial into going into 26. We expect that that share of our business will continue to increase. Yeah, I think just 1 other piece of color, Stacy. The pricing is in good shape. So it's really

And began in earnest in 'twenty four.

Stacy Rasgon: Thank you. Got it. Thank you, guys.

<unk> tens of millions of dollars to Adi's topline.

It's really a question of mix. And, uh, continuing to push the utilizations.

Jeff Ambrosi: Thanks, Stacey. Move on to our next question, please.

In 2004.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Christopher Danley from Citi.

It's clearly accelerated in 'twenty five.

Jeff Ambrose: One moment for our next question. Our next question comes from the line of Christopher Danley from Citi. Hey, thanks, guys. Just to follow up on Stacey's question, has the relative gross margin levels, have those changed at all between the end markets? Have any of them gone up or down versus the corporate average? I guess just to cut to the chase, have the auto gross margins gotten a little worse relative to the corporate average over the last two, three years? Or anything else changed? Chris, I would say the way we've characterized the individual end market margins versus average has not changed, not in any meaningful way. Okay. Thanks, Rich. Sure. Thank you. One moment for our next question. Our next question comes from the line of Timothy Arcuri from UBS. Thanks a lot. Vincent, you talked about Maxim revenue synergies. Can you update us on that?

It's in the hundreds of millions against our $1 billion target by 27.

Christopher Danely: Hey, thanks, guys. Just to follow up on Stacey's question, has the relative gross margin levels, have those changed at all between the end markets? Have any of them gone up or down versus the corporate average? I guess just to cut to the chase, have the auto gross margins gotten a little worse relative to the corporate average over the last two, three years? Or anything else changed?

And we expect an even stronger contribution in 2006, given the momentum that we have in terms of new.

New products and cross sell.

So you know we're seeing.

As we said when we acquired Maxim we saw tremendous complementarity in terms of.

Some technology initiatives that Maxim filled particularly in areas like power.

Richard Puccio: Chris, I would say the way we've characterized the individual end market margins versus average has not changed, not in any meaningful way.

These connectivity structures that we use in automobiles are no industrial products.

So the complementarity actually works for Adi right across the spectrum of applications, but particularly auto was up just said.

Christopher Danely: Okay. Thanks, Rich.

Richard Puccio: Sure.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Timothy Arcuri from UBS.

Consumer healthcare and datacenter so.

I think we are well on track to meet our commitment, possibly even a little earlier than what we thought.

Timothy Arcuri: Thanks a lot. Vincent, you talked about Maxim revenue synergies. Can you update us on that? I know you said you're on track, but maybe you can give us a sense of where that stands. Rich, can you tell us sort of what your sense of a normal fiscal Q2 is? It seems like normal seasonal and fiscal Q2 is up like mid-singles. Is that sort of how you think about a typical fiscal Q2? Maybe what are the puts and takes as you kind of head into fiscal Q2? Thanks.

Rich.

Jeff Ambrose: I know you said you're on track, but maybe you can give us a sense of where that stands. Rich, can you tell us sort of what your sense of a normal fiscal Q2 is? It seems like normal seasonal and fiscal Q2 is up like mid-singles. Is that sort of how you think about a typical fiscal Q2? Maybe what are the puts and takes as you kind of head into fiscal Q2? Thanks. Yeah. Tim, I'll start with the synergies. We began the conversion process, the conversion of the pipeline in 2024, and began in earnest in 2024. It contributed tens of millions of dollars to ADI's top line in 2024. It's clearly accelerated in 2025, and it's in the hundreds of millions against our billion-dollar target by 2027.

Youre absolutely right.

Q2 tends to be our seasonally strongest quarter, where we tend to be up mid single digits.

I think that's the right way to think about it.

Thank you Tim Okay, if I move onto our next question. Please.

Thank you one moment for our next question.

Our next question comes from the line of C. J Muse from Cantor Fitzgerald.

Vincent Roche: Yeah. Tim, I'll start with the synergies. We began the conversion process, the conversion of the pipeline in 2024, and began in earnest in 2024. It contributed tens of millions of dollars to ADI's top line in 2024. It's clearly accelerated in 2025, and it's in the hundreds of millions against our billion-dollar target by 2027.

Yes. Good morning. Thank you for taking my question based on your prepared remarks, you talked about video drivers led by AI in the data Center and I was hoping you could perhaps speak.

A bit more to a framework that we should be thinking about across both industrial and comms. Obviously, you dominate semi test analogue you've got some real design wins on the optical power side and then you also spoke about energy strike. So is there a kind of a percentage of mix that we should be thinking about that should be growing significantly faster.

Jeff Ambrose: We expect an even stronger contribution in 2026, given the momentum that we have in terms of new products and cross-sell. We're seeing, as we said, when we acquired Maxim, we saw tremendous complementarity in terms of some technology niches that Maxim filled, particularly in areas like power, these connectivity structures that we use in automobiles and now industrial products. The complementarity actually works for ADI right across the spectrum of applications, but particularly auto, as I've just said, consumer, healthcare, and data centers. I think we are well on track to meet our commitment, possibly even a little earlier than what we thought. Rich, you want to take that? Yeah. Tim, you're absolutely right. Q2 tends to be our seasonally strongest quarter where we tend to be up mid-single digits. I think that's the right way to think about it. Thank you, Tim. Okay. Thanks.

We expect an even stronger contribution in 2026, given the momentum that we have in terms of new products and cross-sell. We're seeing, as we said, when we acquired Maxim, we saw tremendous complementarity in terms of some technology niches that Maxim filled, particularly in areas like power, these connectivity structures that we use in automobiles and now industrial products. The complementarity actually works for ADI right across the spectrum of applications, but particularly auto, as I've just said, consumer, healthcare, and data centers. I think we are well on track to meet our commitment, possibly even a little earlier than what we thought. Rich, you want to take that?

And then the rest of your business and if there is kind of numbers around that that would be very helpful. Thank you.

Yes, maybe I'll just give some color on Richardson with some numbers.

Yes, so look where specifically when we talk about.

There is the data center and <unk> businesses.

If I look at data center and 25, it grew about 50%.

ATV business, which also benefits from the <unk>.

Skyrocketing computers intensities the new.

The new memory types that are being used as well as new memory chips.

That business so the AG business grew up 40% last year.

We can we believe we will see that growth continue in 2006.

If I just talk about you know where we are data center I think as rich said in the prepared remarks is running about $1 billion run rate at this point in time.

Richard Puccio: Yeah. Tim, you're absolutely right. Q2 tends to be our seasonally strongest quarter where we tend to be up mid-single digits. I think that's the right way to think about it.

And there are really two primary sectors there one.

Jeff Ambrosi: Thank you, Tim.

Is that the electro optical interface and we're seeing tremendous upsurge in demand for 800 gig now we're seeing one six terabits.

Timothy Arcuri: Okay. Thanks.

Jeff Ambrose: Move on to our next question, please. Thank you. One moment for our next question. Our next question comes from the line of C.J. Muse from Cantor Fitzgerald. Yeah. Good morning. Thank you for taking the question. Vincent, in your prepared remarks, you talked about IDEO drivers led by AI in the data center. I was hoping you could perhaps speak a bit more to a framework that we should be thinking about across both industrial and comms. Obviously, you dominate semi-test analog. You've got some real design wins on the optical and power side, and you also spoke about energy strength. Is there kind of a percentage of mix that we should be thinking about that should be growing significantly faster than the rest of your business? If there's kind of numbers around that, that would be very helpful. Thank you. Yeah.

Jeff Ambrosi: Move on to our next question, please.

Operator: Thank you. One moment for our next question. Our next question comes from the line of CJ Muse from Cantor Fitzgerald.

Electro optical interfaces that require.

CJ Muse: Yeah. Good morning. Thank you for taking the question. Vincent, in your prepared remarks, you talked about IDEO drivers led by AI in the data center. I was hoping you could perhaps speak a bit more to a framework that we should be thinking about across both industrial and comms. Obviously, you dominate semi-test analog. You've got some real design wins on the optical and power side, and you also spoke about energy strength. Is there kind of a percentage of mix that we should be thinking about that should be growing significantly faster than the rest of your business? If there's kind of numbers around that, that would be very helpful. Thank you.

Very very sophisticated power management and control systems.

And then there is power more generally I think.

And the areas of protection.

We are beginning to see a shift in very very high voltage technologies that require a very sophisticated monitoring and control.

Power conversion.

The power delivery.

We're seeing our portfolios in those three areas gained significant traction on the delivery side, we have mentioned before vertical power.

Vincent Roche: Yeah. Maybe I'll just give some color, and Richard with some numbers. Yeah. Specifically, when we talk about AI, there's the data center and the ATE businesses. If I look at data center in 2025, it grew about 50%. The ATE business, which also benefits from the skyrocketing compute intensities, the new memory types that are being used as well, new memory chips, that business, so the ATE business grew up 40% last year. We believe we'll see that growth continue in 2026. If I just talk about where we are, data center, I think, as Rich said in the prepared remarks, is running about a billion-dollar run rate at this point in time. There are really two primary sectors there. One is at the electro-optical interface, and we're seeing tremendous upsurge in demand for 800 gig.

Jeff Ambrose: Maybe I'll just give some color, and Richard with some numbers. Yeah. Specifically, when we talk about AI, there's the data center and the ATE businesses. If I look at data center in 2025, it grew about 50%. The ATE business, which also benefits from the skyrocketing compute intensities, the new memory types that are being used as well, new memory chips, that business, so the ATE business grew up 40% last year. We believe we'll see that growth continue in 2026. If I just talk about where we are, data center, I think, as Rich said in the prepared remarks, is running about a billion-dollar run rate at this point in time. There are really two primary sectors there. One is at the electro-optical interface, and we're seeing tremendous upsurge in demand for 800 gig.

Thus technology now is beginning to be adopted broadly so we're all at the kind of.

We use the term in the electronics industry wrote the meat of the curve.

I think we are in place to see.

Exponential growth there.

<unk> $800 million run rate.

As I said.

Very very well positioned with all the key players both the the vertically integrated players as well as the Oems.

And chip testing.

And.

The shift to hasty in four takes place we're going to see high pin count more complexity more speed basically more instrumentation compute density and our chips. So.

I think.

We're in a good place from a from a customer engagement standpoint from a technology standpoint, my sense is we should see double digit growth in both those areas over the next few years.

Jeff Ambrose: Now we're seeing 1.6 terabit electro-optical interfaces that require very, very sophisticated power management and control systems. There's power more generally, I think, in the areas of protection. We're beginning to see a shift in very, very high voltage technologies that require very sophisticated monitoring and control. There's power conversion and power delivery, and we're seeing our portfolios in those three areas gain significant traction. On the delivery side, we had mentioned before, vertical power. That technology now is beginning to be adopted broadly. We're at the kind of, we use a term in the electronics industry, we're at the meat of the curve. I think we're in place to see exponential growth there. ATE, $800 million run rate. As I said, very, very well positioned with all the key players, both the vertically integrated players as well as the OEMs in chip testing.

Now we're seeing 1.6 terabit electro-optical interfaces that require very, very sophisticated power management and control systems. There's power more generally, I think, in the areas of protection. We're beginning to see a shift in very, very high voltage technologies that require very sophisticated monitoring and control. There's power conversion and power delivery, and we're seeing our portfolios in those three areas gain significant traction. On the delivery side, we had mentioned before, vertical power. That technology now is beginning to be adopted broadly. We're at the kind of, we use a term in the electronics industry, we're at the meat of the curve. I think we're in place to see exponential growth there. ATE, $800 million run rate. As I said, very, very well positioned with all the key players, both the vertically integrated players as well as the OEMs in chip testing.

Rich do you want to add anything I will add my concurrence on your view about the outlook for <unk>, but for the next few years.

In these in these areas and I look at that.

<unk>.

If you look at the external factors, particularly around that.

The data center piece and the high performance compute.

Forecast continue forecast from all of the Hyperscale and the big buyers in this space continue to go up.

And even and even recently several of the large hyperscale as you've added even further increases to their capex plans. So I do think that that near medium term spend is going to continue and we should be a big beneficiary given our strength there.

Thank you C J.

To our next caller please.

Thank you one moment for our next question.

Hmm.

Our next question comes from the line of Heartland to or from J P. Morgan.

Yes. Good morning. Thanks for taking my question you know one of the other strong dynamics amongst several which separates Abi from peers is obviously the strong exposure to aerospace and defense. This has been a growth area for Adi. During this last downturn I think I think the business is now driving well over $1 billion of annualized run rate revenues.

Jeff Ambrose: As the shift to HBM4 takes place, we're going to see higher pin count, more complexity, more speed, basically more instrumentation compute density in our chips. I think we're in a good place from a customer engagement standpoint, from a technology standpoint. My sense is we should see double-digit growth in both those areas over the next few years. Rich, do you want to add anything? I will add my concurrence on your view about the outlook for the next few years in these areas. I look at, if you look at the external factors, particularly around the data center piece and the high-performance compute, the forecast, continue forecast from all of the hyperscalers and the big buyers in the space, continue to go up. Even recently, several of the large hyperscalers have added even further increases to their CapEx plans.

Our roughly greater than 10% of your total revenues grew strongly double digits in fiscal 'twenty five.

As the shift to HBM4 takes place, we're going to see higher pin count, more complexity, more speed, basically more instrumentation compute density in our chips. I think we're in a good place from a customer engagement standpoint, from a technology standpoint. My sense is we should see double-digit growth in both those areas over the next few years. Rich, do you want to add anything?

As the team anticipate continued strong double digit growth in fiscal 2006, maybe.

Maybe help us understand like what are some of the Adi specific product cycles here, that's going to continue to drive the strong growth profile going forward.

Yes, thanks very much for the questions. So.

Yes.

Germany for Adi in the aerospace and defense market really took off in earnest when we acquired Hittite.

Richard Puccio: I will add my concurrence on your view about the outlook for the next few years in these areas. I look at, if you look at the external factors, particularly around the data center piece and the high-performance compute, the forecast, continue forecast from all of the hyperscalers and the big buyers in the space, continue to go up. Even recently, several of the large hyperscalers have added even further increases to their CapEx plans. I do think that near medium-term spend is going to continue, and we should be a big beneficiary given our strength there.

We got hit.

Hittite really high quality, RF and microwave portfolio, which is central to all of the.

All the communications activities right across the aerospace and defense market from.

Defense systems.

Every type of defense system, you can imagine to satellite communications.

The primary portfolios, we have there are obviously microwave and RF sensors.

Jeff Ambrose: I do think that near medium-term spend is going to continue, and we should be a big beneficiary given our strength there. Thank you, C.J. Move on to our next caller, please. Thank you. One moment for our next question. Our next question comes from the line of Harlan Seur from JPMorgan. Yeah. Good morning. Thanks for taking my question. One of the other strong dynamics among several which separates ADI from peers is obviously the strong exposure to aerospace and defense. This has been a growth area for ADI during this last downturn. I think the business is now driving well over $1 billion of annualized run rate revenues or roughly greater than 10% of your total revenues. It grew strongly double digits in fiscal 2025. Does the team anticipate continued strong double digits growth in fiscal 2026?

The highest performance conversion products that we build on the precision in the very.

Very very high speed signal processing side.

Jeff Ambrosi: Thank you, CJ. Move on to our next caller, please.

Our central and increasingly when we.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Harlan Seur from JPMorgan.

When we acquired LTC Maxim we were able to.

Cross connect with all the signal processing technologies, the Powertech all the power management technology. So.

Harlan Sur: Yeah. Good morning. Thanks for taking my question. One of the other strong dynamics among several which separates ADI from peers is obviously the strong exposure to aerospace and defense. This has been a growth area for ADI during this last downturn. I think the business is now driving well over $1 billion of annualized run rate revenues or roughly greater than 10% of your total revenues. It grew strongly double digits in fiscal 2025. Does the team anticipate continued strong double digits growth in fiscal 2026? Maybe help us understand what are some of the ADI-specific product cycles here that's going to continue to drive the strong growth profile going forward?

If you look at the market drivers you've got.

The world isn't becoming any more peaceful so theres going to be increasing capital deployment.

So those defense systems globally.

We're seeing very strong demand.

An increase in demand in Europe and beyond.

Hum.

We work with with all of the of the primary Oems.

Jeff Ambrose: Maybe help us understand what are some of the ADI-specific product cycles here that's going to continue to drive the strong growth profile going forward? Yeah, thanks very much for the question. Yeah, the journey for ADI in that aerospace and defense market really took off in earnest when we acquired Hittite. We got Hittite's really high-quality RF and microwave portfolio, which is central to all the communications activities right across the aerospace and defense market, from defense systems, every type of defense system you can imagine, to satellite communications. The primary portfolios we have there are obviously microwave and RF sensors, the highest performance conversion products that we build on the precision and very, very high-speed signal processing side, are central.

So.

So that all of that coupled with increasing asps I mean, some of these products we build.

Vincent Roche: Yeah, thanks very much for the question. Yeah, the journey for ADI in that aerospace and defense market really took off in earnest when we acquired Hittite. We got Hittite's really high-quality RF and microwave portfolio, which is central to all the communications activities right across the aerospace and defense market, from defense systems, every type of defense system you can imagine, to satellite communications. The primary portfolios we have there are obviously microwave and RF sensors, the highest performance conversion products that we build on the precision and very, very high-speed signal processing side, are central.

Trucks.

Tens of thousands of dollars per system.

So.

That business has the capacity by the end of the decade to more than double.

Okay.

Thank you Harlan move onto our next question. Thank you.

Thank you one moment for our next question.

Our next question comes from the line of Joshua Buchalter from TD Cowen.

Hey, guys. Thank you for taking my questions and congrats on the strong results.

I wanted to follow up on the comments about.

Fiscal <unk> being the seasonal plus.

Mid single digit percent could you maybe speak to.

What's driving the confidence and the visibility there any metrics youre able to give on lead times and then bigger picture.

How is your visibility looking forward changed as the mix has changed.

Jeff Ambrose: Increasingly, when we acquired LTC and Maxim, we were able to cross-connect with all those signal processing technologies, the power tech, all the power management technologies. If you look then at the market drivers, you've got the world isn't becoming any more peaceful. There's going to be increasing capital deployment to build defense systems globally. We're seeing very strong demand, an increasing demand in Europe and beyond. We work with all of the primary OEMs, and all that coupled with increasing ASPs. I mean, some of these products we build attract tens of thousands of dollars per system. I think that business has the capacity by the end of the decade to more than double. Thank you, Harlan. We'll move on to our next question. Thank you. Thank you. One moment for our next question.

Increasingly, when we acquired LTC and Maxim, we were able to cross-connect with all those signal processing technologies, the power tech, all the power management technologies. If you look then at the market drivers, you've got the world isn't becoming any more peaceful. There's going to be increasing capital deployment to build defense systems globally. We're seeing very strong demand, an increasing demand in Europe and beyond. We work with all of the primary OEMs, and all that coupled with increasing ASPs. I mean, some of these products we build attract tens of thousands of dollars per system. I think that business has the capacity by the end of the decade to more than double.

Compared to a couple of years ago Theres more of your exposure tied to video drivers like aerospace and defense and datacenter and that's increasing your visibility I'd just be curious to hear because you mentioned there was some uncertainty on the shape of the year in the press release I'd be curious to hear how you're feeling about visibility. Thank you.

Thanks, Joseph So first I didn't guide for Q2.

I confirm with the historical seasonality is.

As we've been talking about right, we still have.

Don't have a ton of visibility beyond current quarter, plus one right.

As we've talked about.

Lead times are.

Most of our products have lead times sub 13 weeks. So we get a lot of orders in quarter, we got a lot of quarters a lot of orders with short lead times, which does reduce some of that visibility. So I think on the first part of your question.

I don't think we've necessarily seen an improvement in visibility over the last two years, although I do agree I think that the.

Jeff Ambrosi: Thank you, Harlan. We'll move on to our next question.

Harlan Sur: Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Joshua Buchalter from TD Cowen.

We've now got broad strength in a number of the <unk> areas that that Vince described but given given where we are from an inventory on hand position as well as our cycle times were not getting a ton of out outside of a quarter visibility.

Jeff Ambrose: Our next question comes from the line of Joshua Buckalter from TD Cowen. Hey, guys. Thank you for taking my questions, and congrats on the strong results. I wanted to follow up on the comments about fiscal Q2 being a seasonal plus mid-single digit percent. Could you maybe speak to what's driving the confidence and the visibility there? Any metrics you're able to give on lead times? Bigger picture, how has your visibility looking forward changed as the mix has changed? Do you think compared to a couple of years ago, there's more of your exposure tied to ADI drivers like aerospace and defense, and data center, and that's increasing your visibility? I'd just be curious to hear because you mentioned there was some uncertainty on the shape of the year in the press release. I'd be curious to hear how you're feeling about visibility. Thank you.

Joshua Buchalter: Hey, guys. Thank you for taking my questions, and congrats on the strong results. I wanted to follow up on the comments about fiscal Q2 being a seasonal plus mid-single digit percent. Could you maybe speak to what's driving the confidence and the visibility there? Any metrics you're able to give on lead times? Bigger picture, how has your visibility looking forward changed as the mix has changed? Do you think compared to a couple of years ago, there's more of your exposure tied to ADI drivers like aerospace and defense, and data center, and that's increasing your visibility? I'd just be curious to hear because you mentioned there was some uncertainty on the shape of the year in the press release. I'd be curious to hear how you're feeling about visibility. Thank you.

Thank you, Josh and we'll move to our last question. Please.

Thank you one moment for our next question.

Our next question comes from the line of Tories Svanberg from Stifel.

Yes. Thank you for squeezing me in.

Vince Adi has been always very thoughtful about allocating R&D dollars and the economy is changing in the front of our eyes structurally quite significantly here. So.

How are you thinking about prioritizing your R&D spend right now and are there any areas you would like to double down and perhaps areas you would like to deemphasize as a company. Thank you.

Yes, Thanks story.

Look at.

At the analog space in the core analog business, we continue to push the edges of.

Jeff Ambrose: Thanks, Josh. First, I didn't guide for Q2. I confirmed what the historical seasonality is. As we've been talking about, right, we still don't have a ton of visibility beyond current quarter plus one, right? As we've talked about, the lead times are most of our products have lead times sub-13 weeks. We get a lot of orders in quarter. We get a lot of orders with short lead times, which does reduce some of that visibility. I think on the first part of your question, I don't think we've necessarily seen an improvement in visibility over the last two years, although I do agree. I think that we've now got broad strength in a number of the IDEO areas that Vince described.

Richard Puccio: Thanks, Josh. First, I didn't guide for Q2. I confirmed what the historical seasonality is. As we've been talking about, right, we still don't have a ton of visibility beyond current quarter plus one, right? As we've talked about, the lead times are most of our products have lead times sub-13 weeks. We get a lot of orders in quarter. We get a lot of orders with short lead times, which does reduce some of that visibility. I think on the first part of your question, I don't think we've necessarily seen an improvement in visibility over the last two years, although I do agree. I think that we've now got broad strength in a number of the IDEO areas that Vince described. Given where we are from an inventory on hand position as well as our cycle times, we're not getting a ton of outside of a quarter visibility.

Signal processing data conversion systems and precision.

Well is very very high speed.

I think power management for Adi is still an opportunity with a lot of a much much bigger growth story. So that is a place.

As we've gone through our strategy planning cycle and the last the last few quarters here, where totaling donut for sure.

There are areas as well of our digital portfolio, where we see.

Very very strong niches for what we do in terms of for example, low power low latency. These heterogeneous compute structures.

As well as algorithmic technologies, So I mentioned during the prepared remarks hardware.

Jeff Ambrose: Given where we are from an inventory on hand position as well as our cycle times, we're not getting a ton of outside of a quarter visibility. Thank you, Josh. We'll move to our last question, please. Thank you. One moment for our next question. Our next question comes from the line of Tory Sandberg from Stifel. Yes. Thank you for squeezing me in. Vince, ADI has been always very thoughtful about allocating R&D dollars. The economy is changing in the front of our eyes structurally quite significantly here. How are you thinking about prioritizing your R&D spend right now? Are there any areas you would like to double down in and perhaps areas you would like to de-emphasize as a company? Thank you. Yeah. Thanks, Tory. Yeah.

And hunting the functionality of our core analog technologies by using machine learning techniques for example in base stations and.

Jeff Ambrosi: Thank you, Josh. We'll move to our last question, please.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Tory Sandberg from Stifel.

And the and the consumer areas as well so.

But I think most of what we do is making sure that we have the platforms to be able to compete globally.

Tore Svanberg: Yes. Thank you for squeezing me in. Vince, ADI has been always very thoughtful about allocating R&D dollars. The economy is changing in the front of our eyes structurally quite significantly here. How are you thinking about prioritizing your R&D spend right now? Are there any areas you would like to double down in and perhaps areas you would like to de-emphasize as a company? Thank you.

Across all the geographies across the spectrum of markets that we find most attractive.

The most important problems.

And what I can tell you is that our customers are asking us to do more and more.

Retained their complexity and help them speed up their innovation cycles. So that's when we think about.

Vincent Roche: Yeah. Thanks, Tory. Yeah. When I look at the analog space, in the core analog business, we continue to push the edges of signal processing, data conversion systems, and precision, as well as very, very high speed. I think power management for ADI is still an opportunity with a much, much bigger growth story. That is a place that, as we've gone through our strategy planning cycle in the last few quarters here, we're doubling down on for sure. There are areas as well of our digital portfolio where we see very, very strong niches for what we do in terms of, for example, low power, low latency, these heterogeneous compute structures, as well as algorithmic technologies. I mentioned during the prepared remarks how we're enhancing the functionality of our core analog technologies by using machine learning techniques, for example, in base stations, in the consumer areas as well.

The investment portfolio, we're very opportunity rich.

Jeff Ambrose: When I look at the analog space, in the core analog business, we continue to push the edges of signal processing, data conversion systems, and precision, as well as very, very high speed. I think power management for ADI is still an opportunity with a much, much bigger growth story. That is a place that, as we've gone through our strategy planning cycle in the last few quarters here, we're doubling down on for sure. There are areas as well of our digital portfolio where we see very, very strong niches for what we do in terms of, for example, low power, low latency, these heterogeneous compute structures, as well as algorithmic technologies. I mentioned during the prepared remarks how we're enhancing the functionality of our core analog technologies by using machine learning techniques, for example, in base stations, in the consumer areas as well.

And we've got a very high quality problem, which is picking the most valuable opportunities in that spectrum of that.

That's replete with opportunity.

Thank you Laurie.

Thanks, Laurie and thanks, everyone for joining us. This morning, a copy of this transcript will be available on our website and all available reconciliations and additional information can also be found in the quarterly results section of our Investor Relations website. Thank you for your continued interest in analog devices and happy Thanksgiving.

This concludes today's analog devices conference call you may now disconnect.

Jeff Ambrose: I think most of what we do is making sure that we have the platforms to be able to compete globally across all the geographies, across the spectrum of markets that we find most attractive, solve the most important problems. What I can tell you is that our customers are asking us to do more and more to tame their complexity and help them speed up their innovation cycle. When we think about the investment portfolio, we're very opportunity-rich. We've got a very high-quality problem, which is picking the most valuable opportunities in that spectrum that's replete with opportunity. Thank you for the call. Thanks, Tory. Thanks, everyone, for joining us this morning. A copy of this transcript will be available on our website, and all available reconciliations and additional information can also be found in the quarterly results section of our investor relations website.

I think most of what we do is making sure that we have the platforms to be able to compete globally across all the geographies, across the spectrum of markets that we find most attractive, solve the most important problems. What I can tell you is that our customers are asking us to do more and more to tame their complexity and help them speed up their innovation cycle. When we think about the investment portfolio, we're very opportunity-rich. We've got a very high-quality problem, which is picking the most valuable opportunities in that spectrum that's replete with opportunity.

Tore Svanberg: Thank you for the call.

Jeff Ambrosi: Thanks, Tory. Thanks, everyone, for joining us this morning. A copy of this transcript will be available on our website, and all available reconciliations and additional information can also be found in the quarterly results section of our investor relations website. Thank you for your continued interest in Analog Devices, and happy Thanksgiving.

Jeff Ambrose: Thank you for your continued interest in Analog Devices, and happy Thanksgiving. This concludes today's Analog Devices conference call. You may now disconnect.

Operator: This concludes today's Analog Devices conference call. You may now disconnect.