Power Integrations Q4 2025 Power Integrations Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Power Integrations Inc Earnings Call
Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the POWER INTEGRATIONS Q4 earnings call. After today's prepared remarks, we will host a question-and-answer session.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Power Integrations Q4 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Joe Schiffler, Senior Director of Investor Relations. Please go ahead.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Power Integrations Q4 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Joe Schiffler, Senior Director of Investor Relations. Please go ahead.
Speaker #1: If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Joe Shiffler, Senior Director of Investor Relations.
Speaker #1: Please go ahead.
Speaker #2: Thank you, Chelsea. Good afternoon, everyone. Thanks for joining us. With me on the call are Jennifer Lloyd, our CEO, and Nancy Urba, who joined Power Integrations last month as CFO.
Joe Schiffler: Thank you, Chelsea. Good afternoon, everyone. Thanks for joining us. With me on the call are Jen Lloyd, our CEO, and Nancy Erba, who joined Power Integrations last month as CFO. After Jen and Nancy's prepared remarks, we'll open it up for questions. Our discussion today will include forward-looking statements denoted by words like will, expect, should, outlook, forecast, and similar expressions that look toward future events or performance. Such statements are subject to risks that may cause actual results to differ from those projected or implied. Such risks are discussed in today's press release and in our most recent Form 10-K, filed with the SEC on 7 February 2025. During this call, we will refer to financial measures not calculated according to GAAP.
Joe Shiffler: Thank you, Chelsea. Good afternoon, everyone. Thanks for joining us. With me on the call are Jen Lloyd, our CEO, and Nancy Erba, who joined Power Integrations last month as CFO. After Jen and Nancy's prepared remarks, we'll open it up for questions. Our discussion today will include forward-looking statements denoted by words like will, expect, should, outlook, forecast, and similar expressions that look toward future events or performance. Such statements are subject to risks that may cause actual results to differ from those projected or implied. Such risks are discussed in today's press release and in our most recent Form 10-K, filed with the SEC on 7 February 2025. During this call, we will refer to financial measures not calculated according to GAAP.
Speaker #2: After Jen and Nancy's prepared remarks, we'll open it up for questions. Our discussion today will include forward-looking statements denoted by words like will, expect, should, outlook, forecast, and similar expressions that look toward future events or performance.
Speaker #2: Such statements are subject to risks that may cause actual results to differ from those projected or implied. Such risks are discussed in today's press release and in our most recent Form 10-K filed with the SEC on February 7, 2025.
Speaker #2: During this call, we will refer to financial measures not calculated according to GAAP. Non-GAAP measures in the fourth quarter exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, expenses associated with an employment litigation matter, and the tax effects of these items.
Joe Schiffler: Non-GAAP measures in Q4 exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, expenses associated with an employment litigation matter, and the tax effects of these items. A reconciliation of non-GAAP measures to our GAAP results is included in today's press release. This call is the property of Power Integrations, and any recording or rebroadcast is expressly prohibited without the written consent of Power Integrations. Now I'll turn it over to Jen.
Joe Shiffler: Non-GAAP measures in Q4 exclude stock-based compensation expenses, amortization of acquisition-related intangible assets, expenses associated with an employment litigation matter, and the tax effects of these items. A reconciliation of non-GAAP measures to our GAAP results is included in today's press release. This call is the property of Power Integrations, and any recording or rebroadcast is expressly prohibited without the written consent of Power Integrations. Now I'll turn it over to Jen.
Speaker #2: A reconciliation of non-GAAP measures to our GAAP results is included in today's press release. This call is the property of Power Integrations, and any recording or rebroadcast is expressly prohibited without the written consent of Power Integrations.
Speaker #2: Now, I'll turn it over to
Speaker #2: Jen. Thanks, Joe, and good
Jen Lloyd: Thanks, Joe, and good afternoon, everybody. Overall, our fourth quarter results were largely in line with our expectations, with a revenue of $103 million and non-GAAP earnings of $0.23 per share. I'm also pleased to report that we returned to growth in 2025. Full year revenue was up 6%, non-GAAP EPS grew by 8%, and we generated $112 million of cash flow from operations, up $30 million from the prior year. Last quarter, I shared that OpEx control would be an immediate priority, and we demonstrated that in Q4, reducing non-GAAP expenses by more than $2 million from the prior quarter. We are announcing today that we carried out a restructuring earlier this week, reducing our global workforce by about 7%.
Jen Lloyd: Thanks, Joe, and good afternoon, everybody. Overall, our fourth quarter results were largely in line with our expectations, with a revenue of $103 million and non-GAAP earnings of $0.23 per share. I'm also pleased to report that we returned to growth in 2025. Full year revenue was up 6%, non-GAAP EPS grew by 8%, and we generated $112 million of cash flow from operations, up $30 million from the prior year. Last quarter, I shared that OpEx control would be an immediate priority, and we demonstrated that in Q4, reducing non-GAAP expenses by more than $2 million from the prior quarter. We are announcing today that we carried out a restructuring earlier this week, reducing our global workforce by about 7%.
Speaker #1: afternoon, everybody. Overall, our fourth quarter results were largely in line with our expectations, with a revenue of $103 million and non-GAAP earnings of $23 per share.
Speaker #1: I'm also pleased to report that we returned to growth in 2025. Full-year revenue was up 6%, non-GAAP EPS grew by 8%, and we generated $112 million of cash flow from operations, up $30 million from the prior year.
Speaker #1: Last quarter, I shared that OPEX control would be an immediate priority, and we demonstrated that in Q4, reducing non-GAAP expenses by more than $2 million from the prior quarter.
Speaker #1: We are announcing today that we carried out a restructuring earlier this week, reducing our global workforce by about—these decisions are difficult; we took this action to better align expenses with revenue.
Jen Lloyd: While such decisions are difficult, we took this action to better align expenses with revenue. This creates flexibility to invest in products, people, and markets that will create long-term value for shareholders. Looking at recent business trends, bookings improved significantly in Q4 after slowing in the prior quarter, partly as a result of excess appliance inventory shipped into the US last year ahead of the tariffs. Encouragingly, the largest US appliance OEM reported last week that this preloaded inventory has largely dissipated. Part of the recent improvement in orders relates to appliances, and we expect sequential growth in our consumer category in Q1. However, our broader view is that appliance demand continues to face headwinds, including low existing home sales in the US, the effect of tariffs on appliance prices, and ongoing softness in China housing.
Jen Lloyd: While such decisions are difficult, we took this action to better align expenses with revenue. This creates flexibility to invest in products, people, and markets that will create long-term value for shareholders. Looking at recent business trends, bookings improved significantly in Q4 after slowing in the prior quarter, partly as a result of excess appliance inventory shipped into the US last year ahead of the tariffs. Encouragingly, the largest US appliance OEM reported last week that this preloaded inventory has largely dissipated. Part of the recent improvement in orders relates to appliances, and we expect sequential growth in our consumer category in Q1. However, our broader view is that appliance demand continues to face headwinds, including low existing home sales in the US, the effect of tariffs on appliance prices, and ongoing softness in China housing.
Speaker #1: This creates flexibility to invest in products, people, and markets that will create long-term value for shareholders. Looking at recent business trends, bookings improved significantly in Q4 after slowing in the prior quarter, partly as a result of excess appliance inventory shipped into the US last year ahead of the tariffs.
Speaker #1: Encouragingly, the largest US appliance OEM reported last week that this preloaded inventory has largely dissipated. Part of the recent improvement in orders relates to appliances, and we expect sequential growth in our consumer category in Q1.
Speaker #1: However, our broader view is that appliance demand continues to face headwinds, including low existing home sales in the U.S., the effect of tariffs on appliance prices, and ongoing softness in China housing.
Speaker #1: The industrial market has been a key driver of the recent uptick in bookings, and we expect industrial to be our fastest-growing market again in 2026, starting with a strong Q1.
Jen Lloyd: The industrial market has been a key driver of the recent uptick in bookings, and we expect industrial to be our fastest-growing market again in 2026, starting with a strong Q1. Overall, we generated 10% growth in design win value in 2025, with particular strength in GaN and high-power products. We are also encouraged by customers' response to our new TinySwitch-5 ICs, with a healthy pipeline of designs scheduled to begin production in the second half of 2026. Additionally, our multi-output GaN-based InnoMux-2 integrated circuits are seeing strong design traction in the TV market. These and other upcoming products will enable us to sustain and grow our core IC business, even as we shift our investment priorities towards markets like AI data center, industrial, and automotive, where our expertise is helping customers solve their toughest power challenges.
Jen Lloyd: The industrial market has been a key driver of the recent uptick in bookings, and we expect industrial to be our fastest-growing market again in 2026, starting with a strong Q1. Overall, we generated 10% growth in design win value in 2025, with particular strength in GaN and high-power products. We are also encouraged by customers' response to our new TinySwitch-5 ICs, with a healthy pipeline of designs scheduled to begin production in the second half of 2026. Additionally, our multi-output GaN-based InnoMux-2 integrated circuits are seeing strong design traction in the TV market. These and other upcoming products will enable us to sustain and grow our core IC business, even as we shift our investment priorities towards markets like AI data center, industrial, and automotive, where our expertise is helping customers solve their toughest power challenges.
Speaker #1: Overall, we generated 10% growth in design wind value in 2025, with particular strength in GaN and high-power products. We are also encouraged by customers' response to our new tiny switch 5 ICs, with a healthy pipeline of designs scheduled to begin production in the second half of 2026.
Speaker #1: Additionally, our multi-output GaN-based InnoMux 2 integrated circuits are seeing strong design traction in the TV market. These and other upcoming products will enable us to sustain and grow our core IC business, even as we shift our investment priorities towards markets like AI data center, industrial, and automotive, where our expertise is helping customers solve their toughest power challenges.
Speaker #1: Advanced high-voltage technologies are essential to the emerging power ecosystem. Our solutions span from the generation of renewable energy, to long-distance DC transmission, to battery storage, to smart meters at the edge of the grid, to the efficient use of power in homes, factories, data centers, and vehicles.
Jen Lloyd: Advanced high-voltage technologies are essential to the emerging power ecosystem. Our solutions span from the generation of renewable energy, to long-distance DC transmission, to battery storage, to smart meters at the edge of the grid, to the efficient use of power in homes, factories, data centers, and vehicles. While it will take time to fully align our R&D and go-to-market efforts with our long-term strategic plan, recent results demonstrate that we have already built momentum in some of the markets we are targeting for long-term growth. For example, revenue outside of cell phone applications has averaged 12% growth over the past 2 years, and in 2025, industrial revenue grew 15%, driven by the big picture themes that are integral to our growth strategy: electrification, renewable energy, and grid modernization.
Jen Lloyd: Advanced high-voltage technologies are essential to the emerging power ecosystem. Our solutions span from the generation of renewable energy, to long-distance DC transmission, to battery storage, to smart meters at the edge of the grid, to the efficient use of power in homes, factories, data centers, and vehicles. While it will take time to fully align our R&D and go-to-market efforts with our long-term strategic plan, recent results demonstrate that we have already built momentum in some of the markets we are targeting for long-term growth. For example, revenue outside of cell phone applications has averaged 12% growth over the past 2 years, and in 2025, industrial revenue grew 15%, driven by the big picture themes that are integral to our growth strategy: electrification, renewable energy, and grid modernization.
Speaker #1: While it will take time to fully align our R&D and go-to-market efforts with our long-term strategic plan, recent results demonstrate that we have already built momentum in some of the markets we are targeting for long-term growth.
Speaker #1: For example, revenue outside of cell phone applications has averaged 12% growth over the past two years, and in 2025, industrial revenue grew 15%, driven by the big-picture themes that are integral to our growth strategy, electrification, renewable energy, and grid modernization.
Speaker #1: These themes are especially relevant in our high-power industrial business, which had a record year with double-digit growth, driven by electric rail, where we have a very strong position in the India locomotive market, and by high-voltage DC transmission projects delivering renewable energy to the grid.
Jen Lloyd: These themes are especially relevant in our high-power industrial business, which had a record year with double-digit growth, driven by electric rail, where we have a very strong position in the India locomotive market, and by high-voltage DC transmission projects, delivering renewable energy to the grid. We expect recent design wins to drive continued growth for high power in 2026 and beyond. Some Q4 customer wins included: a leading European maker of inverters for utility scale solar and battery storage, commuter trains and streetcars in Europe and Africa, and multiple wins for power grid projects in India. In our industrial IC business, we saw double-digit growth in metering last year due to our leading position in deployments of smart meters in markets such as India and Japan.
Jen Lloyd: These themes are especially relevant in our high-power industrial business, which had a record year with double-digit growth, driven by electric rail, where we have a very strong position in the India locomotive market, and by high-voltage DC transmission projects, delivering renewable energy to the grid. We expect recent design wins to drive continued growth for high power in 2026 and beyond. Some Q4 customer wins included: a leading European maker of inverters for utility scale solar and battery storage, commuter trains and streetcars in Europe and Africa, and multiple wins for power grid projects in India. In our industrial IC business, we saw double-digit growth in metering last year due to our leading position in deployments of smart meters in markets such as India and Japan.
Speaker #1: We expect recent design wins to drive continued growth for high-power in 2026 and beyond. Some Q4 customer wins included a leading European maker of inverters for utility-scale solar and battery storage, commuter trains and streetcars in Europe and Africa, and multiple wins for power grid projects in India.
Speaker #1: In our industrial IC business, we saw double-digit growth in metering last year, due to our leading position in deployments of smart meters and markets such as India and Japan.
Speaker #1: Our ICs enable compact, reliable designs with low standby consumption, making them ideal for meters, and we're now seeing customers migrate our 900- to our 91250-volt GaN products for additional protection against the voltage swings common on India's grid.
Jen Lloyd: Our ICs enable compact, reliable designs with low standby consumption, making them ideal for meters, and we're now seeing customers migrate to our 900- and 1250-volt GaN products for additional protection against the voltage swings common on India's grid. Another area of growth in our industrial business last year was power tools, as lawn equipment and other tools continue to migrate to battery power. In automotive, we continue to make steady progress penetrating the EV market with our auto-qualified InnoSwitch products for inverter emergency power supplies. We secured a design win in Q4 at a top Chinese Tier One, supplying a leading EV maker, and began production just this week on a design at the number one European EV car maker. Another highlight of our 2025 results was the continued success of our PowiGaN technology in the power supply market.
Jen Lloyd: Our ICs enable compact, reliable designs with low standby consumption, making them ideal for meters, and we're now seeing customers migrate to our 900- and 1250-volt GaN products for additional protection against the voltage swings common on India's grid. Another area of growth in our industrial business last year was power tools, as lawn equipment and other tools continue to migrate to battery power. In automotive, we continue to make steady progress penetrating the EV market with our auto-qualified InnoSwitch products for inverter emergency power supplies. We secured a design win in Q4 at a top Chinese Tier One, supplying a leading EV maker, and began production just this week on a design at the number one European EV car maker. Another highlight of our 2025 results was the continued success of our PowiGaN technology in the power supply market.
Speaker #1: Another area of growth in our industrial business last year was power tools, as lawn equipment and other tools continue to migrate to battery power.
Speaker #1: In automotive, we continue to make steady progress penetrating the EV market with our auto-qualified InnoSwitch products for inverter emergency power supplies. We secured a design win in Q4 at a top Chinese Tier 1, supplying a leading EV maker, and began production just this week on a design at the number one European EV car maker.
Speaker #1: Another highlight of our 2025 results was the continued success of our POWE GaN technology in the power supply market. Revenue from POWE GaN products grew more than 40% for the year.
Jen Lloyd: Revenue from PowiGaN products grew more than 40% for the year. Notable GaN design wins in Q4 included a dual USB-C charging port. Charging ports integrated with AC outlets require both high power density and low standby consumption, making them an ideal application for our highly integrated GaN solutions. Also in Q4, we began production on a new server auxiliary design for a US cloud services provider using a GaN-based InnoSwitch. As we discussed on last quarter's call, auxiliary power is a key aspect of our engagements with data center customers, including with NVIDIA on their next-gen 800-volt DC architecture, where our 1700-volt GaN solutions offer a compelling alternative to silicon carbide.
Jen Lloyd: Revenue from PowiGaN products grew more than 40% for the year. Notable GaN design wins in Q4 included a dual USB-C charging port. Charging ports integrated with AC outlets require both high power density and low standby consumption, making them an ideal application for our highly integrated GaN solutions. Also in Q4, we began production on a new server auxiliary design for a US cloud services provider using a GaN-based InnoSwitch. As we discussed on last quarter's call, auxiliary power is a key aspect of our engagements with data center customers, including with NVIDIA on their next-gen 800-volt DC architecture, where our 1700-volt GaN solutions offer a compelling alternative to silicon carbide.
Speaker #1: Notable GaN design wins in Q4 included a dual USB-C charging port. Charging ports integrated with AC outlets require both high power density and low standby consumption, making them an ideal application for our highly integrated GaN solutions.
Speaker #1: Also in Q4, we began production on a new server auxiliary design for a US cloud services provider using a GaN-based InnoSwitch. As we discussed on last quarter's call, auxiliary power is a key aspect of our engagements with data center customers, including with NVIDIA on their next-gen 800-volt DC architecture, where our 1,700-volt GaN solutions offer a compelling alternative to silicon carbide.
Speaker #1: As I've met with shareholders during my first six months as CEO, I've been clear about the fact that we need to reorient our organization to ensure that our strong technology foundation translates to success in the market.
Jen Lloyd: As I've met with shareholders during my first six months as CEO, I've been clear about the fact that we need to reorient our organization to ensure that our strong technology foundation translates to success in the market. That means a more customer-focused approach to product development and faster time to market. Changes like these take time, but we are moving with urgency. We are streamlining our R&D pipeline to focus on delivering our highest priority and highest value products in time to intersect the market. We've also moved quickly to strengthen the team to better leverage our unique capabilities in high voltage and deliver the right products for the evolving power ecosystem. New members of our team include Chris Jacobs, who joined us last month from Micron Technology, to head up marketing and product strategy.
Jen Lloyd: As I've met with shareholders during my first six months as CEO, I've been clear about the fact that we need to reorient our organization to ensure that our strong technology foundation translates to success in the market. That means a more customer-focused approach to product development and faster time to market. Changes like these take time, but we are moving with urgency. We are streamlining our R&D pipeline to focus on delivering our highest priority and highest value products in time to intersect the market. We've also moved quickly to strengthen the team to better leverage our unique capabilities in high voltage and deliver the right products for the evolving power ecosystem. New members of our team include Chris Jacobs, who joined us last month from Micron Technology, to head up marketing and product strategy.
Speaker #1: That means a more customer-focused approach to product development and faster time to market. Changes like these take time, but we are moving with urgency.
Speaker #1: We are streamlining our R&D pipeline to focus on delivering our highest-priority and highest-value products in time to intersect the market. We've also moved quickly to strengthen the team to better leverage our unique capabilities in high voltage and deliver the right products for the evolving power ecosystem.
Speaker #1: New members of our team include Chris Jacobs, who joined us last month from Micron Technology to head up marketing and product strategy. We welcomed Julie Curry, our new head of People and Culture Transformation, and Nancy Urba as CFO, who you'll hear from in a moment.
Jen Lloyd: We welcomed Julie Curry, our new head of people and culture transformation, and Nancy Erba as CFO, who you'll hear from in a moment. We have also bolstered our strong innovation capabilities with targeted hires in key technical roles. I'm very excited about the depth and breadth of experience in our team, and I'm confident in our ability to serve customers and create long-term sustainable value for shareholders. With that, I'll turn the call over to Nancy, who joined us one month ago as CFO. Nancy is a seasoned public company CFO, having served in the role for six years at Infinera until it sold to Nokia last year and previously as CFO at Immersion. Those CFO roles followed a long run of senior leadership positions at Seagate Technology, so I'm thrilled to have her as part of our executive leadership team. Nancy?
Jen Lloyd: We welcomed Julie Curry, our new head of people and culture transformation, and Nancy Erba as CFO, who you'll hear from in a moment. We have also bolstered our strong innovation capabilities with targeted hires in key technical roles. I'm very excited about the depth and breadth of experience in our team, and I'm confident in our ability to serve customers and create long-term sustainable value for shareholders. With that, I'll turn the call over to Nancy, who joined us one month ago as CFO. Nancy is a seasoned public company CFO, having served in the role for six years at Infinera until it sold to Nokia last year and previously as CFO at Immersion. Those CFO roles followed a long run of senior leadership positions at Seagate Technology, so I'm thrilled to have her as part of our executive leadership team. Nancy?
Speaker #1: We have also bolstered our strong innovation capabilities with targeted hires and key technical roles. I'm very excited about the depth and breadth of experience in our team and am confident in our ability to serve customers and create long-term sustainable value for shareholders.
Speaker #1: With that, I'll turn the call over to Nancy, who joined us one month ago as CFO. Nancy is a seasoned public company CFO, having served in the role for six years at Infinera until its sale to Nokia last year, and previously as CFO at Immersion.
Speaker #1: Those CFO roles followed a long run of senior leadership positions at Seagate Technology. So I'm thrilled to have her as part of our executive leadership team.
Speaker #1: Nancy.
Speaker #2: Thanks, Jen, and good afternoon, everyone. I'm excited to be part of the POWE team, and I look forward to meeting many of our investors and analysts in the weeks and months ahead.
Nancy Erba: Thanks, Jen, and good afternoon, everyone. I'm excited to be part of the PI team, and I look forward to meeting many of our investors and analysts in the weeks and months ahead. I'll share a few observations from my first month in the CFO role, and after a brief review of the results and the outlook. Today, I'll focus primarily on the non-GAAP numbers, which are reconciled to GAAP in the tables included with our press release and 10-K. Power Integrations had a solid year in 2025, returning to top and bottom line growth and generating healthy cash flow. Revenue fluctuated more than usual over the course of the year as tariffs disrupted the appliance market, and we experienced some lumpiness in our industrial business.
Nancy Erba: Thanks, Jen, and good afternoon, everyone. I'm excited to be part of the PI team, and I look forward to meeting many of our investors and analysts in the weeks and months ahead. I'll share a few observations from my first month in the CFO role, and after a brief review of the results and the outlook. Today, I'll focus primarily on the non-GAAP numbers, which are reconciled to GAAP in the tables included with our press release and 10-K. Power Integrations had a solid year in 2025, returning to top and bottom line growth and generating healthy cash flow. Revenue fluctuated more than usual over the course of the year as tariffs disrupted the appliance market, and we experienced some lumpiness in our industrial business.
Speaker #2: I'll share a few observations from my first month in the CFO role, and after a brief review of the results and the outlook. Today, I'll focus primarily on the non-GAAP numbers, which are reconciled to GAAP in the tables included with our press release and 8-K.
Speaker #2: Power Integrations had a solid year in 2025, returning to top- and bottom-line growth and generating healthy cash flow. Revenue fluctuated more than usual over the course of the year, as tariffs disrupted the appliance market, and we experienced some lumpiness in our industrial business.
Speaker #2: But ultimately, revenue increased by 6% for the year, with three of the four end-market categories increasing year over year, and industrial positions for continued strong growth in 2026.
Nancy Erba: But ultimately, revenue increased by 6% for the year, with three of the four end market categories increasing year-over-year and industrial positioned for continued strong growth in 2026. Q4 revenue was $103 million, down 13% from the prior quarter. On a sell-through basis, sales were down only 3% from the prior quarter, as sell-through exceeded sell-in, and we worked down channel inventory built in Q3. Channel inventory for Q4 fell by about half a week to 9.4 weeks. Looking at the end market categories, industrial revenue was down 23% sequentially, after two very strong quarters, reflecting recent seasonality and variability in customer order patterns. Overall, though, our industrial business had an outstanding year, with growth of 15%.
Nancy Erba: But ultimately, revenue increased by 6% for the year, with three of the four end market categories increasing year-over-year and industrial positioned for continued strong growth in 2026. Q4 revenue was $103 million, down 13% from the prior quarter. On a sell-through basis, sales were down only 3% from the prior quarter, as sell-through exceeded sell-in, and we worked down channel inventory built in Q3. Channel inventory for Q4 fell by about half a week to 9.4 weeks. Looking at the end market categories, industrial revenue was down 23% sequentially, after two very strong quarters, reflecting recent seasonality and variability in customer order patterns. Overall, though, our industrial business had an outstanding year, with growth of 15%.
Speaker #2: Fourth quarter revenue was $103 million, down 13% from sell-through basis, sales were down the prior quarter. On the only 3% from the prior quarter, as sell-through exceeded sell-in, and we worked down channel inventory built in Q3.
Speaker #2: Channel inventory for Q4 fell by about half a week to 9.4 weeks. Looking at the end-market categories, industrial revenue was down 23% sequentially, after two very strong quarters, reflecting recent seasonality and variability in customer order patterns.
Speaker #2: Overall, though, our industrial business had an outstanding year, with growth of 15%. Consumer revenue, which is predominantly from appliances, was down 13% sequentially in Q4, largely reflecting the overhang of appliance inventories shipped in the US in the first half of 2025 ahead of the tariffs.
Nancy Erba: Consumer revenue, which is predominantly from appliances, was down 13% sequentially in Q4, largely reflecting the overhang of appliance inventories shipped in the US in the first half of 2025, ahead of the tariff. That effect can be seen clearly in the first half over second half comparison, with consumer revenue falling by more than 15%, half over half. In spite of that volatility, consumer revenue was slightly, slightly up for the full year. Revenue from the computer category was down 5% in Q4 on lower tablet revenue, offset by higher sales for notebooks. For the year, computer revenue was down 2%. Communications revenue grew 15% sequentially in Q4 on new design ramps in cell phone and the India 5G broadband business, and for the year grew 6%.
Nancy Erba: Consumer revenue, which is predominantly from appliances, was down 13% sequentially in Q4, largely reflecting the overhang of appliance inventories shipped in the US in the first half of 2025, ahead of the tariff. That effect can be seen clearly in the first half over second half comparison, with consumer revenue falling by more than 15%, half over half. In spite of that volatility, consumer revenue was slightly, slightly up for the full year. Revenue from the computer category was down 5% in Q4 on lower tablet revenue, offset by higher sales for notebooks. For the year, computer revenue was down 2%. Communications revenue grew 15% sequentially in Q4 on new design ramps in cell phone and the India 5G broadband business, and for the year grew 6%.
Speaker #2: That effect can be seen clearly in the first half over second half comparison, with consumer revenue falling by more than 15% half over half.
Speaker #2: In spite of that volatility, consumer revenue was slightly up for the full year. Revenue from the computer category was down 5% in Q4, on lower tablet revenue, offset by higher sales for notebooks.
Speaker #2: For the year, computer revenue was down 2%. Communications revenue grew 15% sequentially in Q4, on new design ramps in cell phone and the India 5G broadband business, and for the year, grew 6%.
Speaker #2: In summary, revenue mix for the quarter was 37% industrial, 34% consumer, 15% communications, and 14% computer. This mix was less favorable than the assumptions behind the Q4 gross margin guidance, and as a result, non-GAAP gross margins came in slightly below the range set at However, non-GAAP 53.3%.
Nancy Erba: In summary, revenue mix for the quarter was 37% industrial, 34% consumer, 15% communications, and 14% computer. This mix was less favorable than the assumptions behind the Q4 gross margin guidance, and as a result, non-GAAP gross margins came in slightly below the range set at 53.3%. However, non-GAAP operating expenses of $45 million came in well below the outlook of $47 million, primarily driven by lower hiring and discretionary expense control efforts. Curtailing OpEx growth to a level well below revenue growth is a priority for the company and a key area of focus for me this year. Our Q4 results and the restructuring we carried out this week are important steps in that direction. Moving to tax, we received credits in Q4 related to new solar generating capacity we've recently turned on at our San Jose headquarters.
Nancy Erba: In summary, revenue mix for the quarter was 37% industrial, 34% consumer, 15% communications, and 14% computer. This mix was less favorable than the assumptions behind the Q4 gross margin guidance, and as a result, non-GAAP gross margins came in slightly below the range set at 53.3%. However, non-GAAP operating expenses of $45 million came in well below the outlook of $47 million, primarily driven by lower hiring and discretionary expense control efforts. Curtailing OpEx growth to a level well below revenue growth is a priority for the company and a key area of focus for me this year. Our Q4 results and the restructuring we carried out this week are important steps in that direction. Moving to tax, we received credits in Q4 related to new solar generating capacity we've recently turned on at our San Jose headquarters.
Speaker #2: Operating expenses of $45 million came in well below the outlook of $47 million, primarily driven by lower hiring and discretionary expense control efforts. Curtailing OPEX growth to a level well below revenue growth is a priority for the company and a key area of focus for me this year.
Speaker #2: Our Q4 results and the restructuring we carried out this week are important steps in that direction. Moving to tax, we received credits in Q4 related to new solar-generating capacity we've recently turned on at our San Jose headquarters.
Speaker #2: These credits, plus a higher-than-expected R&D tax credit, brought our full-year non-GAAP tax rate down to 2%, resulting in a negative 3% tax rate for the fourth quarter.
Nancy Erba: These credits, plus a higher than expected R&D tax credit, brought our full year non-GAAP tax rate down to 2%, resulting in a -3% tax rate for the fourth quarter. Non-GAAP net income for the quarter was $12.7 million, or $0.23 per diluted share, including a benefit of about $0.02 from the lower than expected tax rate. I will mention one item in the GAAP results. Stock-based compensation expense was negative in the fourth quarter, reflecting a reduction in the expected vesting of short- and long-term performance-based shares. As a result, GAAP EPS for the quarter was $0.24, a penny higher than the non-GAAP number. Turning to the balance sheet and cash flow. Cash flow from operations was $26 million for the quarter, and CapEx was $7 million.
Nancy Erba: These credits, plus a higher than expected R&D tax credit, brought our full year non-GAAP tax rate down to 2%, resulting in a -3% tax rate for the fourth quarter. Non-GAAP net income for the quarter was $12.7 million, or $0.23 per diluted share, including a benefit of about $0.02 from the lower than expected tax rate. I will mention one item in the GAAP results. Stock-based compensation expense was negative in the fourth quarter, reflecting a reduction in the expected vesting of short- and long-term performance-based shares. As a result, GAAP EPS for the quarter was $0.24, a penny higher than the non-GAAP number. Turning to the balance sheet and cash flow. Cash flow from operations was $26 million for the quarter, and CapEx was $7 million.
Speaker #2: Non-GAAP net income for the quarter was $12.7 million, or 23 cents per diluted share, including a benefit of about 2 cents from the lower-than-expected tax rate.
Speaker #2: I will mention one item in the GAAP results. Stock-based compensation expense was negative in the fourth quarter, reflecting a reduction in the expected vesting of short and long-term performance-based shares.
Speaker #2: As a result, GAAP EPS for the quarter was $24 cents, a penny higher than the non-GAAP number. Turning to the balance sheet and cash flow, cash flow from operations was $26 million for the quarter, and CAPEX was $7 million.
Speaker #2: Inventories on the balance sheet increased by $2 million during the quarter, while days of inventory on hand rose to $313, reflecting the lower revenue number.
Nancy Erba: Inventories on the balance sheet increased by $2 million during the quarter, while days of inventory on hand rose to 313, reflecting the lower revenue number. Importantly, wafer inventory came down in 2025, and we expect that, along with revenue growth, to continue to contribute to a reduction in overall inventory days over the course of 2026. Moving now to the full year results. Revenue was up 6% for the year. Non-GAAP gross margin was 55.1%, up 70 basis points from the prior year, mainly driven by higher industrial revenues as a percentage of our mix, with some additional benefit from higher back-end manufacturing volumes. Non-GAAP OpEx increased by 5%, and non-GAAP operating margin increased by 100 basis points to 13.9%.
Nancy Erba: Inventories on the balance sheet increased by $2 million during the quarter, while days of inventory on hand rose to 313, reflecting the lower revenue number. Importantly, wafer inventory came down in 2025, and we expect that, along with revenue growth, to continue to contribute to a reduction in overall inventory days over the course of 2026. Moving now to the full year results. Revenue was up 6% for the year. Non-GAAP gross margin was 55.1%, up 70 basis points from the prior year, mainly driven by higher industrial revenues as a percentage of our mix, with some additional benefit from higher back-end manufacturing volumes. Non-GAAP OpEx increased by 5%, and non-GAAP operating margin increased by 100 basis points to 13.9%.
Speaker #2: Importantly, wafer inventory came down in 2025, and we expect that, along with revenue growth, to continue to contribute to a reduction in overall inventory days over the course of 2026.
Speaker #2: Moving now to the full-year results, revenue was up 6% for the year, non-GAAP gross margin was $55.1%, up 70 basis points from the prior year, mainly driven by higher industrial revenues as a percentage of our mix, with some additional benefit from higher back-end manufacturing volumes.
Speaker #2: Non-GAAP OPEX increased by 5%, and non-GAAP operating margin increased by 100 basis points to 13.9%. Non-GAAP EPS was $1.25, up 8% for the year.
Nancy Erba: Non-GAAP EPS was $1.25, up 8% for the year. The strength of PI's balance sheet and cash flow generation continues to be compelling. In 2025, cash flow from operations was $112 million, while CapEx was $24 million, resulting in free cash flow of $87 million, demonstrating that our business continues to generate healthy cash flow. For the year, we returned $145 million to shareholders via buybacks and dividends, or 167% of our free cash flow. Next, I'll review the Q1 outlook. We expect Q1 revenue to be between $104 and $109 million. I expect non-GAAP gross margin to be between 53% and 54%.
Nancy Erba: Non-GAAP EPS was $1.25, up 8% for the year. The strength of PI's balance sheet and cash flow generation continues to be compelling. In 2025, cash flow from operations was $112 million, while CapEx was $24 million, resulting in free cash flow of $87 million, demonstrating that our business continues to generate healthy cash flow. For the year, we returned $145 million to shareholders via buybacks and dividends, or 167% of our free cash flow. Next, I'll review the Q1 outlook. We expect Q1 revenue to be between $104 and $109 million. I expect non-GAAP gross margin to be between 53% and 54%.
Speaker #2: The strength of POWE's balance sheet and cash flow generation continues to be compelling. In 2025, cash flow from operations was $112 million, while CapEx was $24 million, resulting in free cash flow of $87 million.
Speaker #2: Demonstrating that our business continues to generate healthy cash flow. For the year, we returned $145 million to shareholders via buybacks and dividends, or 167% of our free cash flow.
Speaker #2: Next, I'll review the first quarter outlook. We expect first quarter revenue to be between $104 and $109 million. I expect non-GAAP gross margin to be between $53 and $54%.
Nancy Erba: Mix should be favorable relative to Q4, with higher industrial and consumer revenue as a percentage of the total. Non-GAAP operating expenses for Q1 should be in a range of $46 million, ±$0.5 million. The increase from Q1 reflects the resumption of FICA payments, offset by a partial quarter of impact of the restructuring, which reduced our global workforce by about 7%. Our GAAP results for the first quarter will include a restructuring charge of between $3.5 and 4 million. Our effective tax rate steps up in 2026 as the benefit of solar credits is non-recurring, and more significantly, the tax rate on foreign earnings increases as specified in the 2017 tax reform. I expect our effective tax rate for the quarter and for the year to be in the range of 7% to 8%.
Nancy Erba: Mix should be favorable relative to Q4, with higher industrial and consumer revenue as a percentage of the total. Non-GAAP operating expenses for Q1 should be in a range of $46 million, ±$0.5 million. The increase from Q1 reflects the resumption of FICA payments, offset by a partial quarter of impact of the restructuring, which reduced our global workforce by about 7%. Our GAAP results for the first quarter will include a restructuring charge of between $3.5 and 4 million. Our effective tax rate steps up in 2026 as the benefit of solar credits is non-recurring, and more significantly, the tax rate on foreign earnings increases as specified in the 2017 tax reform. I expect our effective tax rate for the quarter and for the year to be in the range of 7% to 8%.
Speaker #2: Mix should be favorable relative to Q4, with higher industrial and consumer revenue as a percentage of the total. Non-GAAP operating expenses for Q1 should be in a range of $46 million, plus or minus half a million dollars.
Speaker #2: The increase from Q1 reflects the resumption of FICA payments, offset by a partial quarter of impact of the restructuring, which reduced our global workforce by about 7%.
Speaker #2: Our GAAP results for the first quarter will include a restructuring charge of between $3.5 and $4 million. Our effective tax rate steps up in 2026 as the benefit of solar And more significantly, the tax credits is non-recurring.
Speaker #2: rate on foreign earnings increases as specified in the 2017 tax reform. I expect our effective tax rate for the quarter and for the year to be in the range of 7% to to to 8%.
Speaker #2: Before we open it up for Q&A, I'll offer a few thoughts on my first month in the CFO role. I'm excited to join POWER's management team under Jen's leadership at this very pivotal time for the company.
Nancy Erba: Before we open it up for Q&A, I'll offer a few thoughts on my first month in the CFO role. I'm excited to join PI's management team under Jen's leadership at this very pivotal time for the company. Our technology is creating increasing value for our customers and giving us access to expanding new markets like automotive and AI data center. I see a clear opportunity to translate that into profitable growth for our shareholders. As CFO, my initial focus will be on establishing rigorous operating cadences, strengthening processes, and leveraging automation to drive operational efficiency and scalability. And of course, I also want to recognize the Power Integrations finance team. They are a highly capable, disciplined team and an important asset to the organization. For our analysts and shareholders on the phone, I look forward to meeting you in the coming weeks and months.
Nancy Erba: Before we open it up for Q&A, I'll offer a few thoughts on my first month in the CFO role. I'm excited to join PI's management team under Jen's leadership at this very pivotal time for the company. Our technology is creating increasing value for our customers and giving us access to expanding new markets like automotive and AI data center. I see a clear opportunity to translate that into profitable growth for our shareholders. As CFO, my initial focus will be on establishing rigorous operating cadences, strengthening processes, and leveraging automation to drive operational efficiency and scalability. And of course, I also want to recognize the Power Integrations finance team. They are a highly capable, disciplined team and an important asset to the organization. For our analysts and shareholders on the phone, I look forward to meeting you in the coming weeks and months.
Speaker #2: Our technology is creating increasing value for our customers, and giving us access to expanding new markets like automotive and AI data center. I see a clear opportunity to translate that into profitable growth for our shareholders.
Speaker #2: As CFO, my initial focus will be on establishing rigorous operating cadences, strengthening processes, and leveraging automation to drive operational efficiency and scalability. And, of course, I also want to recognize the Power Integrations finance team.
Speaker #2: They are a highly capable, disciplined team and an important asset to the organization. For our analysts and shareholders on the phone, I look forward to meeting you in the coming weeks and months.
Speaker #2: And now, Chelsea, let's begin the Q&A session. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Nancy Erba: Now, Chelsea, let's begin the Q&A session.
Nancy Erba: Now, Chelsea, let's begin the Q&A session.
Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ross Seymour with Deutsche Bank. Your line is open. Please go ahead.
Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ross Seymour with Deutsche Bank. Your line is open. Please go ahead.
Speaker #2: To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device.
Speaker #2: Please stand by while we compile the Q&A roster. Your first question comes from the line of Ross Seymour with Deutsche Bank. Your line is open.
Speaker #2: Please go
Speaker #2: ahead. Thanks for letting me ask a couple of
Ross Seymour: Thanks for letting me ask a couple of questions. I guess first, welcome to Nancy. And then I guess my first question, one near term, and then the follow-up would be a longer-term one. In the near term side of things, you talked, Jen, about the bookings increasing significantly in the Q4. It's good to see you're returning to growth in your Q1 guide, but it still seems like the channel inventory is a little bit high. So can you just talk about the plans that you have to burn that and, and what it might mean to the sub-segment guides for the Q1 and, and maybe expectations of the growth rate for the year?
Ross Seymour: Thanks for letting me ask a couple of questions. I guess first, welcome to Nancy. And then I guess my first question, one near term, and then the follow-up would be a longer-term one. In the near term side of things, you talked, Jen, about the bookings increasing significantly in the Q4. It's good to see you're returning to growth in your Q1 guide, but it still seems like the channel inventory is a little bit high. So can you just talk about the plans that you have to burn that and, and what it might mean to the sub-segment guides for the Q1 and, and maybe expectations of the growth rate for the year?
Speaker #3: Questions. I guess first, welcome to Nancy. And then I guess my first question—one near-term, and then the follow-up would be a longer-term one.
Speaker #3: In the near-term side of things, you talked, Jen, about the bookings increasing significantly in the fourth quarter. It's good to see you returning to growth in your first quarter guide, but it still seems like the channel inventory is a little bit high.
Speaker #3: So can you just talk about the plans that you have to burn that and what it might mean to the subsegment guides for the first quarter and maybe expectations of the growth rate for the
Speaker #3: year? Yeah.
Nancy Erba: Yeah. Hi, Ross, this is Nancy. I'll, I'll start, and then Jen can jump in. You know, certainly, we're glad to see the inventory come down a bit, as you mentioned. As we look forward to the full year of 2026, part of the action plan that I laid out in terms of my areas of focus are really on these, I'll say, rigorous cadences. We'll be looking at inventory, both in terms of weeks in the channel, but absolute value of inventory on the balance sheet and driving those plans through the year. We do expect, based on our plan today, to see that come down to a, I'll say, a healthier level.
Nancy Erba: Yeah. Hi, Ross, this is Nancy. I'll, I'll start, and then Jen can jump in. You know, certainly, we're glad to see the inventory come down a bit, as you mentioned. As we look forward to the full year of 2026, part of the action plan that I laid out in terms of my areas of focus are really on these, I'll say, rigorous cadences. We'll be looking at inventory, both in terms of weeks in the channel, but absolute value of inventory on the balance sheet and driving those plans through the year. We do expect, based on our plan today, to see that come down to a, I'll say, a healthier level.
Speaker #4: Hi, Ross. This is Nancy. I'll start, and then Jen can jump in. Certainly, we're glad to see the inventory come down a bit, as you mentioned.
Speaker #4: If we look forward to the full year of '26, part of the action plan that I laid out in terms of my areas of focus are really on these, I'll say, rigorous cadences.
Speaker #4: We'll be looking at inventory both in terms of weeks in the channel, but also the absolute value of inventory on the balance sheet, and driving those plans through the year.
Speaker #4: We do expect, based on our plan today, to see that come down. To a, I'll say, a healthier level. But certainly, it's dependent upon the Q1 and the first half bookings, the mix of those bookings, and the timing and how much of the turn business we have to get each quarter.
Nancy Erba: But certainly, you know, it's dependent upon the Q1 and the first half bookings, the mix of those bookings, and the timing and how much of the terms is if we have to get each quarter. But net-net, it is absolutely on our list of key objectives to be able to bring that overall level of inventory and the weeks on hand back to a more healthy level in the channel.
Nancy Erba: But certainly, you know, it's dependent upon the Q1 and the first half bookings, the mix of those bookings, and the timing and how much of the terms is if we have to get each quarter. But net-net, it is absolutely on our list of key objectives to be able to bring that overall level of inventory and the weeks on hand back to a more healthy level in the channel.
Speaker #4: But net-net it is absolutely on our list of key objectives to be able to bring that overall level of inventory and the weeks on hand back to a more healthy level in the
Speaker #4: channel. Great.
Ross Seymour: Great. And I guess this is my follow-up question, more on a longer-term basis. You talked about the high power business, auto, data center, et cetera, and you mentioned GaN going up 40%. As you look over the next couple of years, when do you think those items are going to be meaningful enough in size to start moving the aggregate revenues and accelerating the growth?
Ross Seymour: Great. And I guess this is my follow-up question, more on a longer-term basis. You talked about the high power business, auto, data center, et cetera, and you mentioned GaN going up 40%. As you look over the next couple of years, when do you think those items are going to be meaningful enough in size to start moving the aggregate revenues and accelerating the growth?
Speaker #3: And I guess as my follow-up question, more on a longer-term basis, you talked about the high-power business—auto, data center, etc.—and you mentioned GaN going up 40%.
Speaker #3: As you look over the next couple of years, when do you think those items are going to be meaningful enough in size to start moving the aggregate revenues and accelerating the growth?
Speaker #4: Yeah, so you mentioned four high-power auto data center and GaN. I think GaN—I'll just start backwards. GaN is pretty meaningful today, and we mentioned in the call, growing 40% year over year this year.
Jen Lloyd: Yeah. So you mentioned four: high power, auto, data center, and GaN. I think GaN, I'll just start backwards. GaN is pretty meaningful today. And, you know, we mentioned in the call, growing 40% year over year this year, so it's becoming meaningful. High power is a very meaningful driver of our industrial business. I think we're already there, and we see continued acceleration of that next year, and that'll support the industrial growth. Automotive and data center are gonna take more time. I think we're doing well there. In automotive, we're seeing the wins. We mentioned some earlier. We are seeing that, you know, the market is a bit slower than you know we would have liked, and we're also seeing some design ramps push out.
Jen Lloyd: Yeah. So you mentioned four: high power, auto, data center, and GaN. I think GaN, I'll just start backwards. GaN is pretty meaningful today. And, you know, we mentioned in the call, growing 40% year over year this year, so it's becoming meaningful. High power is a very meaningful driver of our industrial business. I think we're already there, and we see continued acceleration of that next year, and that'll support the industrial growth. Automotive and data center are gonna take more time. I think we're doing well there. In automotive, we're seeing the wins. We mentioned some earlier. We are seeing that, you know, the market is a bit slower than you know we would have liked, and we're also seeing some design ramps push out.
Speaker #4: So it's becoming meaningful. High-power is a very meaningful driver of our industrial business. I think we're already there, and we see continued acceleration of that next year, and that'll support the industrial growth.
Speaker #4: Automotive and data center are going to take more time. I think we're doing well there. In automotive, we're seeing the wins—we mentioned some earlier.
Speaker #4: We are seeing that the market is a bit slower than we would have liked, and we're also seeing some design ramps push out. But we still see that we continue to win designs and so that's going to take a little bit of time to materialize.
Jen Lloyd: But, you know, we still see that we continue to win, win designs, and so that's gonna take a little bit of time to materialize. And then data center, I think we're making good progress. I think we're engaging well across multiple customers and opportunities. We're developing our products and demonstrating capabilities to those customers and moving with urgency there. But, you know, as we have talked about, that's probably our longest-term play. So that, you know, we won't see that be material for a couple of years.
Jen Lloyd: But, you know, we still see that we continue to win, win designs, and so that's gonna take a little bit of time to materialize. And then data center, I think we're making good progress. I think we're engaging well across multiple customers and opportunities. We're developing our products and demonstrating capabilities to those customers and moving with urgency there. But, you know, as we have talked about, that's probably our longest-term play. So that, you know, we won't see that be material for a couple of years.
Speaker #4: And then data center, I think we're making good progress. I think we're engaging well across multiple customers and opportunities. We're developing our products and demonstrating capabilities to those customers and moving with urgency there.
Speaker #4: But as we have talked about, that's probably our longest-term play, so we won't see that be material for a couple of years.
Speaker #4: years. Got it.
Ross Seymour: Got it. Thank you.
Ross Seymour: Got it. Thank you.
Speaker #3: Thank you.
Speaker #2: Your next question comes from David Williams with Benchmark. Your line is now open. Please go ahead.
Operator: Your next question comes from David Williams with Benchmark. Your line is now open. Please go ahead.
Operator: Your next question comes from David Williams with Benchmark. Your line is now open. Please go ahead.
Speaker #5: Hey, good afternoon. Thanks for taking my questions, and let me offer my welcome to Nancy as well. I guess maybe first, as you guys kind of look across the landscape and just how things are developing here, it feels like overall the demand environment is generally improving.
David Williams: Hey, good afternoon. Thanks for taking my questions, and let me also offer my welcome to Nancy. I guess maybe first, as you guys kind of look across the landscape and just kind of how things are developing here, it feels like overall the demand environment is generally improving, just kind of depending on where you're positioned. But I guess if you look across all of your segments, how do you think, and where do you think we are in this cycle in terms of, are we at the bottom coming off the top, or at the bottom turning here, or are we still some time away, just kind of given the inventory digestion that needs to happen?
David Williams: Hey, good afternoon. Thanks for taking my questions, and let me also offer my welcome to Nancy. I guess maybe first, as you guys kind of look across the landscape and just kind of how things are developing here, it feels like overall the demand environment is generally improving, just kind of depending on where you're positioned. But I guess if you look across all of your segments, how do you think, and where do you think we are in this cycle in terms of, are we at the bottom coming off the top, or at the bottom turning here, or are we still some time away, just kind of given the inventory digestion that needs to happen?
Speaker #5: It's just kind of depending on where you're positioned. But I guess if you look across all of your segments, how do you think—and where do you think—we are in the cycle, in terms of are we at the bottom, or coming off the top?
Speaker #5: Or at the bottom, turning here, or are we still some time away just kind of given the inventory digestion that needs to happen?
Jen Lloyd: Yeah, maybe I'll start, and then Nancy can add. I mean, I think, you know, I do think the one area that is still, you know, we're being conservative on is, you know, in the consumer business with, with appliances. And, you know, we have seen improvement there, but, you know, we're also well aware there are still, you know, quite a few headwinds there. So, you know, the way we're looking at it is that will, you know, if things like the housing market takes off, you know, interest rates come down, that would be upside for us. Nancy, you want to add anything to that?
Speaker #4: Yeah. Maybe I'll start, and then Nancy can add. I mean, I do think the one area where we are still being conservative is in the consumer business with appliances.
Jen Lloyd: Yeah, maybe I'll start, and then Nancy can add. I mean, I think, you know, I do think the one area that is still, you know, we're being conservative on is, you know, in the consumer business with, with appliances. And, you know, we have seen improvement there, but, you know, we're also well aware there are still, you know, quite a few headwinds there. So, you know, the way we're looking at it is that will, you know, if things like the housing market takes off, you know, interest rates come down, that would be upside for us. Nancy, you want to add anything to that?
Speaker #4: And we have seen improvement there, but we're also well aware there's still quite a few headwinds there. So the way we were looking at it is that, if things like the housing market take off, interest rates come down, that would be upside for us.
Speaker #4: Nancy, you want to add anything to that?
Speaker #2: Yeah. I think we're really glad to have returned to growth in 2025. I think for '26, we're planning on, I'll say, similar growth levels year over year.
Nancy Erba: Yeah, I think, you know, we're really glad to have returned to growth in 2025. I think for 2026, you know, we're planning on, I'll say, similar growth levels year over year. As Jen said, though, it is very early in the year. We're gonna have to see how demand plays out in the first half. It has been lumpy in certain areas to date, but net-net, you know, we're, we're gonna be planning for similar growth. However, I will say we're going to be cautious in our investments until we see those bookings really taking form and the step-ups that we expect to see, making sure that they are happening before we, we dive in deeper to certain investment areas. So you're gonna see us be cautious on that, as we're in 2026.
Nancy Erba: Yeah, I think, you know, we're really glad to have returned to growth in 2025. I think for 2026, you know, we're planning on, I'll say, similar growth levels year over year. As Jen said, though, it is very early in the year. We're gonna have to see how demand plays out in the first half. It has been lumpy in certain areas to date, but net-net, you know, we're, we're gonna be planning for similar growth. However, I will say we're going to be cautious in our investments until we see those bookings really taking form and the step-ups that we expect to see, making sure that they are happening before we, we dive in deeper to certain investment areas. So you're gonna see us be cautious on that, as we're in 2026.
Speaker #2: As Jen said, though, it is very early in the year. We're going to have to see how demand plays out in the first half.
Speaker #2: It has been lumpy in certain areas to date, but net-net we're going to be planning for similar growth. However, I will say we're going to be cautious in our investments until we see those bookings really taking form and the step-ups that we expect to see.
Speaker #2: Making sure that they are happening before we dive in deeper to certain investment areas. So you're going to see us be cautious on that as we're in '26.
Speaker #2: But we are optimistic over, as Jen said, over the next couple of years. The markets that we're entering have great opportunity for us to step up that growth rate in the outer years.
Nancy Erba: But we are optimistic, you know, over, as Jen said, over the next couple of years. The markets that we're entering have great opportunity for us, to, you know, step up that growth rate in the outer years.
Nancy Erba: But we are optimistic, you know, over, as Jen said, over the next couple of years. The markets that we're entering have great opportunity for us, to, you know, step up that growth rate in the outer years.
Speaker #5: Okay. Great. Thanks for that. And then maybe just some color around your reorganization and I know you talked about reprioritizing R&D efforts and accelerating that time to market, but if we kind of look at it, it feels like maybe we're starting to see some of that already take hold.
David Williams: Okay, great. Thanks for that. And then maybe just some color around your reorganization. And I know, and you've talked about reprioritizing the R&D efforts and accelerating that time to market, but if we kind of look at it, it feels like maybe we're starting to see some of that already, take hold. Can you talk maybe about how we should see this unfold over the next couple of quarters and maybe the next year in terms of, how this repositioning is helping? Thank you.
David Williams: Okay, great. Thanks for that. And then maybe just some color around your reorganization. And I know, and you've talked about reprioritizing the R&D efforts and accelerating that time to market, but if we kind of look at it, it feels like maybe we're starting to see some of that already, take hold. Can you talk maybe about how we should see this unfold over the next couple of quarters and maybe the next year in terms of, how this repositioning is helping? Thank you.
Speaker #5: Can you talk maybe about how we should see this unfold over the next couple of quarters and maybe the next year in terms of how this repositioning is helping?
Speaker #5: Thank
Speaker #4: Yeah, a couple of things. I mean, some of it is the restructuring, and it's giving us the flexibility to strengthen. So that'll continue to play out.
Nancy Erba: Yeah, a couple of things. I mean, some of it is the restructuring, you know, and it's giving us the flexibility to strengthen. So as you know, that'll continue to play out and, you know, everything there is good. In terms of the R&D, you know, we also are bringing some real focus into the team and acting with greater urgency and more agility, and that's a key part of how we're expecting to accelerate growth going forward. So I think a good example of that actually is in the data center space, where we're working with NVIDIA. We've got much more openness in terms of our roadmaps and our product development discussions. And, you know, we're pivoting our focus areas so that we can address the opportunities and really intersect where the customer needs are.
Nancy Erba: Yeah, a couple of things. I mean, some of it is the restructuring, you know, and it's giving us the flexibility to strengthen. So as you know, that'll continue to play out and, you know, everything there is good. In terms of the R&D, you know, we also are bringing some real focus into the team and acting with greater urgency and more agility, and that's a key part of how we're expecting to accelerate growth going forward. So I think a good example of that actually is in the data center space, where we're working with NVIDIA. We've got much more openness in terms of our roadmaps and our product development discussions. And, you know, we're pivoting our focus areas so that we can address the opportunities and really intersect where the customer needs are.
Speaker #4: And every everything there is good. In terms of the R&D, we also are bringing some real focus into the team, and acting with greater urgency and more agility.
Speaker #4: And that's a key part of how we're expecting to accelerate growth going forward. So I think a good example of that actually is in the data center space, where we're working with NVIDIA.
Speaker #4: We've got much of our roadmaps and our product development discussions, and we're pivoting our focus areas so that we can address the opportunities and really intersect where the customer needs are.
Speaker #4: So there's the restructuring piece of it, but there's also driving the change in terms of how we behave and bring a customer-centric view into the product development organization.
Nancy Erba: So there's the restructuring piece of it, but there's also the driving the change in terms of how we behave and bring a customer-centric view into the product development organization.
Nancy Erba: So there's the restructuring piece of it, but there's also the driving the change in terms of how we behave and bring a customer-centric view into the product development organization.
Speaker #5: Thanks so
David Williams: Thanks so much.
David Williams: Thanks so much.
Speaker #5: much. Your next question comes
Operator: Your next question comes from Tore Svanberg of Stifel. Your line is now open. Please go ahead.
Operator: Your next question comes from Tore Svanberg of Stifel. Your line is now open. Please go ahead.
Speaker #2: From Tora Spanberg of Stifel. Your line is now open. Please go ahead.
Speaker #6: Yeah. Thank you. And let me add my welcome to Nancy as well. I guess my first question is on automotive. Sounds like it's finally starting to contribute to some revenues.
Tore Svanberg: Yes, thank you, and let me add my welcome to Nancy as well. I guess my first question is on automotive. It sounds like it's finally starting to contribute to some revenues. You know, I think maybe there's been some talks about maybe this being sort of like low $10s of millions of revenues, at least in the beginning. I mean, is that a number we can expect this year? Or given what you said before about potential, you know, some potential delays, that's more of a 2027 target at this point?
Tore Svanberg: Yes, thank you, and let me add my welcome to Nancy as well. I guess my first question is on automotive. It sounds like it's finally starting to contribute to some revenues. You know, I think maybe there's been some talks about maybe this being sort of like low $10s of millions of revenues, at least in the beginning. I mean, is that a number we can expect this year? Or given what you said before about potential, you know, some potential delays, that's more of a 2027 target at this point?
Speaker #6: I think maybe there's been some talks about this being sort of like low tens of millions of revenues, at least in the beginning.
Speaker #6: I mean, is that a number we can expect this year, or, given what you said before about some potential delays, is that more of a 2027 target at this point?
Nancy Erba: Yeah, I think the latter is fair. Yeah, I think it has the potential, right? But, you know, again, we need to see these wins start transpiring into the volumes that are needed. But, you know, there have been some delays in the EV market. We are pleased with the traction and the customer wins that we've seen. We're gonna do everything we can to drive to that level, but, you know, whether it's 12 months or 18 months, I think that's the window we're thinking about.
Nancy Erba: Yeah, I think the latter is fair. Yeah, I think it has the potential, right? But, you know, again, we need to see these wins start transpiring into the volumes that are needed. But, you know, there have been some delays in the EV market. We are pleased with the traction and the customer wins that we've seen. We're gonna do everything we can to drive to that level, but, you know, whether it's 12 months or 18 months, I think that's the window we're thinking about.
Speaker #4: think the latter is there.
Speaker #2: Yeah. I think it has the potential, right? But again, we need to see these winds start transpiring into the volumes that are needed. But there have been some delays in the EV market.
Speaker #2: We are pleased with the traction and the customer wins that we've seen. We're going to do everything we can to drive to that level, but whether it's 12 months or 18 months, I think that's the window we're thinking about.
Tore Svanberg: Very good. And on the OpEx, I think you mentioned the sort of only a half a quarter benefit from the restructuring. So you gave guidance, obviously, for the March quarter. So should we expect OpEx to come down by a few more $ million in the June quarter then?
Tore Svanberg: Very good. And on the OpEx, I think you mentioned the sort of only a half a quarter benefit from the restructuring. So you gave guidance, obviously, for the March quarter. So should we expect OpEx to come down by a few more $ million in the June quarter then?
Speaker #6: Very good. And on the OPEX, I think you mentioned there's sort of only a half a quarter benefit from the restructuring. So, you gave guidance, obviously, for the March quarter.
Speaker #6: So should we expect OPEX to come down by a few more million dollars in June?
Speaker #6: So should we expect OPEX to come down by a few more million dollars in June then? I would think for the year,
Nancy Erba: I would think for the year, right? I'll frame it this way, right? If you look at revenue growth historically and OpEx growth, they've been fairly close. We're trying to cut that to get to about half. So, for the year, I would think in the call it $3 to 5 million range. And again, it was 7% of employees that were impacted. And we are continuing, though, to do work around the full business model and understanding, right, where we have leverage that perhaps could be better utilized to focus on the areas that we are expanding into, that we think long term drive the greatest shareholder value.
Nancy Erba: I would think for the year, right? I'll frame it this way, right? If you look at revenue growth historically and OpEx growth, they've been fairly close. We're trying to cut that to get to about half. So, for the year, I would think in the call it $3 to 5 million range. And again, it was 7% of employees that were impacted. And we are continuing, though, to do work around the full business model and understanding, right, where we have leverage that perhaps could be better utilized to focus on the areas that we are expanding into, that we think long term drive the greatest shareholder value.
Speaker #2: right? I'll frame it this way, right? If you look at revenue growth historically and OPEX growth, they've been fairly close. We're trying to cut that to get to about half.
Speaker #2: So for the year, I would think in the, call it, $3 to $5 million range. And again, it was 7% of employees that were impacted.
Speaker #2: And we are continuing though to do work around the full business model. And understanding where we have leverage that perhaps could be better utilized to focus on the areas that we are expanding into that we think long-term drive the greatest shareholder value.
Speaker #2: So, in addition to the actions that we took, we are going to be assessing really all of the programs—all of the new programs, as Jen mentioned with Chris coming on board—and really making sure that those prioritizations are exactly where we need to be, and that the return on those investments are measured, and we hold ourselves accountable to them.
Nancy Erba: So in addition to the actions that we took, we are going to be assessing really, all of the programs, all of the new programs, as Jen mentioned, with Chris coming on board, and really making sure that those prioritizations are exactly where we need to be, and that, the return on those investments are measured, and we hold ourselves accountable to them as we are, running the operation. The other piece of that, in terms of customer centricity and really focusing on the customer's needs, is the mix in terms of our go-to-market investments, versus R&D, and G&A, and making sure that we are properly, supporting our customers as we're out trying to move into these new, opportunities for the company.
Nancy Erba: So in addition to the actions that we took, we are going to be assessing really, all of the programs, all of the new programs, as Jen mentioned, with Chris coming on board, and really making sure that those prioritizations are exactly where we need to be, and that, the return on those investments are measured, and we hold ourselves accountable to them as we are, running the operation. The other piece of that, in terms of customer centricity and really focusing on the customer's needs, is the mix in terms of our go-to-market investments, versus R&D, and G&A, and making sure that we are properly, supporting our customers as we're out trying to move into these new, opportunities for the company.
Speaker #2: As we are running the operation. The other piece of that in terms of customer-centricity and really focusing on the customer's needs is the mix in terms of our go-to-market investments, versus R&D and G&A and making sure that we are properly supporting our customers as we're out trying to move into these new opportunities for the
Speaker #2: company.
Tore Svanberg: Great. And just my last question, maybe related to what you just discussed there. So, I mean, the consumer segment, you know, seems to have been soft for a while now. I mean, I'm glad to see the bookings coming back and, maybe the inventory being adjusted. But, as you continue to do this restructuring and thinking about your end market,
Tore Svanberg: Great. And just my last question, maybe related to what you just discussed there. So, I mean, the consumer segment, you know, seems to have been soft for a while now. I mean, I'm glad to see the bookings coming back and, maybe the inventory being adjusted. But, as you continue to do this restructuring and thinking about your end market,
Speaker #6: last question, maybe related Good. And just my to what you just discussed there. So I mean, the consumer segment seems to have been soft for a while now.
Speaker #6: I mean, I'm glad to see the bookings coming back—maybe the inventory being adjusted. But as you continue to do this restructuring and think about your end market, are there certain areas within consumer that you would perhaps consider exiting?
Joe Schiffler: ... Are there certain areas within consumer that, you know, you would perhaps consider exiting, or, or do you still see that as an important growth segment for the company?
Tore Svanberg: ... Are there certain areas within consumer that, you know, you would perhaps consider exiting, or, or do you still see that as an important growth segment for the company?
Speaker #6: see that as an important growth segment Or do you still company? for the
Jen Lloyd: I don't think there's anywhere right now that we've identified in terms of exiting. It will still be a growth segment for us, and you know, as we consider the whole portfolio of our investments, you know, we are looking at what's the appropriate investment based on the growth rate that we expect for that. So over time, you know, we'll be pivoting towards the highest growth segments. For now, it's an important business for us to make sure that we support.
Jen Lloyd: I don't think there's anywhere right now that we've identified in terms of exiting. It will still be a growth segment for us, and you know, as we consider the whole portfolio of our investments, you know, we are looking at what's the appropriate investment based on the growth rate that we expect for that. So over time, you know, we'll be pivoting towards the highest growth segments. For now, it's an important business for us to make sure that we support.
Speaker #4: think there's anywhere right now that we've I don't identified in terms of exiting. It will still be a growth segment for us. And as we consider the whole portfolio of our investments, we are looking at what's the appropriate investment based on the growth rate that we're that we expect for that.
Speaker #4: So over time, we'll be pivoting towards the highest growth segments. For now, it's an important business for us to make sure that we
Speaker #4: support.
Speaker #6: Sounds good.
Joe Schiffler: Sounds good. Thank you.
Tore Svanberg: Sounds good. Thank you.
Operator: Just a reminder that if you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, please press star one again. Your next question comes from the line of Christopher Rowland with Susquehanna. Your line is open. Please go ahead.
Operator: Just a reminder that if you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, please press star one again. Your next question comes from the line of Christopher Rowland with Susquehanna. Your line is open. Please go ahead.
Speaker #2: a question, please press star one on your telephone you. Just a reminder that if you would like to ask keypad and if you would like to withdraw your question, please press star one again.
Speaker #2: next question comes from the line of Your Susquehanna. Your line is open. Please go Christopher Roland with the
Speaker #2: ahead. Hi, and thanks for the
Christopher Rolland: Hi, and thanks for the question. I guess for me, first of all, if you could maybe talk a little bit more about the cloud provider win for AuxPower, and then AI more generally. Can you talk about broadening this portfolio into other applications beyond AuxPower and what you think that might mean for, you know, the top line, overall? Thank you.
Christopher Rolland: Hi, and thanks for the question. I guess for me, first of all, if you could maybe talk a little bit more about the cloud provider win for AuxPower, and then AI more generally. Can you talk about broadening this portfolio into other applications beyond AuxPower and what you think that might mean for, you know, the top line, overall? Thank you.
Speaker #7: me, first of all, if you question. I guess for could maybe talk a little bit more about the cloud provider win for Ox Power, and then AI more generally, can you talk about broadening this portfolio into other applications beyond Ox Power and what you think that might mean for the top line overall?
Speaker #7: Thank
Speaker #7: you. Okay.
Jen Lloyd: Okay. So the first question was about the AuxPower win, cloud provider. As you know, I think we've talked about before, you know, Aux is, you know, it's a socket for us that we see across a number of applications, and that when, you know, it's an important validation of the latest products that we have. AuxPower in general isn't the largest opportunity, typically, as you know, talk about data center type systems. So, over time, we hope to use that as an entry point with customers, but expect to expand our footprint. So it's kind of a good entry socket across a number of applications.
Jen Lloyd: Okay. So the first question was about the AuxPower win, cloud provider. As you know, I think we've talked about before, you know, Aux is, you know, it's a socket for us that we see across a number of applications, and that when, you know, it's an important validation of the latest products that we have. AuxPower in general isn't the largest opportunity, typically, as you know, talk about data center type systems. So, over time, we hope to use that as an entry point with customers, but expect to expand our footprint. So it's kind of a good entry socket across a number of applications.
Speaker #4: So the first question was about the Ox Power win, cloud So as you know, I think we've provider. talked about before, Ox is a socket for us that we see across a number of applications.
Speaker #4: And that win is an important validation of the latest products that we have. Ox Power in general isn't the largest opportunity typically as you talk about data center-type systems.
Speaker #4: So over time, we hope to use that as an entry point with customers, but expect to expand our footprint. So it's kind of a it's a good entry socket across a number of applications.
Christopher Rolland: Yeah, I guess I was just asking, you know, what sockets might be next. Like, yeah, and if you wanna hit that, and then I do have a follow-up.
Speaker #7: Yeah. I guess I was just asking, what sockets might be next? Yeah. If you want to hit that and then I do have a
Christopher Rolland: Yeah, I guess I was just asking, you know, what sockets might be next. Like, yeah, and if you wanna hit that, and then I do have a follow-up.
Speaker #7: follow-up. What sockets might be next applications for your What socket? No, no, no. What sockets and products? GAN and/or silicon within the data center, 800-volt at NVIDIA or XPU
Jen Lloyd: What sockets might be next for AuxPower? I mean-
Jen Lloyd: What sockets might be next for AuxPower? I mean-
Speaker #4: for Ox Power?
Christopher Rolland: What socket—no, no, no. What sockets and applications for your products, GaN and/or silicon, within the data center, 800-volt at NVIDIA or, you know, or, you know, XPU infrastructure?
Christopher Rolland: What socket—no, no, no. What sockets and applications for your products, GaN and/or silicon, within the data center, 800-volt at NVIDIA or, you know, or, you know, XPU infrastructure?
Speaker #7: infrastructure? Yeah.
Jen Lloyd: Yeah, got it. Got it. Yeah. No, I mean, AuxPower is just a small part of the system. So, you know, we are looking to intersect the main power supplies where, you know, you'd expect a much more significant SAM there, and that's in development now.
Jen Lloyd: Yeah, got it. Got it. Yeah. No, I mean, AuxPower is just a small part of the system. So, you know, we are looking to intersect the main power supplies where, you know, you'd expect a much more significant SAM there, and that's in development now.
Speaker #4: it. Got it. Yeah. No. I mean, Ox Power is just a small part of the Got system. So we are looking to intersect the main power supplies where you'd expect a much more significant SAM there.
Speaker #4: And that's in development now.
Speaker #7: Okay. Understood. And then maybe industrial, I think you talked about 26, that being your fastest area of growth, perhaps talk about the underpinnings there, what do you think is going to drive that market-leading growth for you guys?
Christopher Rolland: Okay, understood. And then maybe industrial, I think you talked about 26, that being your fastest area of growth. Perhaps talk about the underpinnings there. You know, why, what do you think is gonna drive that, you know, market-leading growth for you guys? Does it have anything to do with a clean channel and/or channel fill? You know, any other details underpinning that optimism would be great.
Christopher Rolland: Okay, understood. And then maybe industrial, I think you talked about 26, that being your fastest area of growth. Perhaps talk about the underpinnings there. You know, why, what do you think is gonna drive that, you know, market-leading growth for you guys? Does it have anything to do with a clean channel and/or channel fill? You know, any other details underpinning that optimism would be great.
Speaker #7: Does it have anything to do with a clean channel and/or channel fill? Any other details underpinning that optimism would be
Speaker #7: great. Yeah.
Jen Lloyd: Yeah, I mean, I think really a lot of the optimism comes from our high-power business. That grew really well this year. I think our go-to-market efforts there are, are strong, and we are expecting that to be a significant driver for, for next year. So we talked about that earlier. We've seen, really good growth in our metering business. We're still expecting that to drive growth next year. So, really all of the, industrial growth areas this year, we're expecting that, that to continue, and we have the D win growth to support that.
Jen Lloyd: Yeah, I mean, I think really a lot of the optimism comes from our high-power business. That grew really well this year. I think our go-to-market efforts there are, are strong, and we are expecting that to be a significant driver for, for next year. So we talked about that earlier. We've seen, really good growth in our metering business. We're still expecting that to drive growth next year. So, really all of the, industrial growth areas this year, we're expecting that, that to continue, and we have the D win growth to support that.
Speaker #4: optimism comes from our high-power I mean, I think really a lot of the business. That grew really well this year. I think our go-to-market efforts there are strong and we are expecting that to be a significant driver for next year.
Speaker #4: So we talked about that earlier. We've seen really good growth in our metering business. We're still expecting that to drive growth next year. So really all of the industrial growth areas this year, we're expecting that to continue and we have the DWIN growth to support
Speaker #4: that. Excellent.
Christopher Rolland: Excellent. Thank you very much.
Christopher Rolland: Excellent. Thank you very much.
Speaker #7: Thank you very much.
Operator: There are no further questions at this time. I will now turn the call back to Joe Schiffler for closing remarks.
Operator: There are no further questions at this time. I will now turn the call back to Joe Schiffler for closing remarks.
Speaker #2: There are no further questions at this time. I will now turn the call back to Joe Schiffler for closing
Speaker #2: remarks.
Speaker #8: All right. Thank you, Chelsea. Thanks, everyone, for listening. I know it's a busy afternoon of earnings. So we appreciate you tuning in. There will be a replay of this call available on our website.
Joe Schiffler: All right. Thank you, Chelsea. Thanks, everyone, for listening. I know it's a busy afternoon of earnings, so we appreciate you tuning in. There will be a replay of this call available on our website. That's investors.power.com. Thank you again, and good afternoon.
Joe Shiffler: All right. Thank you, Chelsea. Thanks, everyone, for listening. I know it's a busy afternoon of earnings, so we appreciate you tuning in. There will be a replay of this call available on our website. That's investors.power.com. Thank you again, and good afternoon.
Speaker #8: That's investors.power.com. Thank you again and good afternoon.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
