Q1 2026 Power Integrations Inc Earnings Call

May 7, 2026

Speaker #1: Hello, everyone. Thank you for joining us and welcome to the POWER INTEGRATIONS Q1 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 Q1 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 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. Please go ahead.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Power Integrations Q1 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 Shiffler, 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, please go ahead.

Speaker #2: Thanks, Alexandra. Good afternoon. Thanks, everyone, for joining us. With me on the call are Jen Lloyd, our CEO; and our CFO, Nancy Erba. After Jen and Nancy's prepared remarks, we'll open it up for questions.

Joe Shiffler: Thanks, Alexandra. Good afternoon. Thanks, everyone, for joining us. With me on the call are Jen Lloyd, our CEO, and our CFO, Nancy Erba. 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, in our most recent annual report on Form 10-K, and in subsequent quarterly reports on Form 10-Q, including the one being filed this afternoon with the SEC. During this call, we will refer to financial measures not calculated according to GAAP.

Speaker #2: 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, in our most recent annual report on Form 10-K, and in subsequent quarterly reports on Form 10-Q, including the one being filed this afternoon with the SEC.

Speaker #2: During this call, we will refer to financial measures not calculated according to GAAP. Non-GAAP income statement measures in the first quarter exclude based. Compensation expenses; amortization of acquisitions related intangible assets; restructuring charges; and the tax effects of these items.

Joe Shiffler: Non-GAAP income statement measures in Q1 excludes base compensation expenses, amortization of acquisitions related intangible assets, restructuring charges, and the tax effects of these items. A reconciliation of non-GAAP measures to our GAAP results is included in today's press release and in the accompanying slides, both of which can be found on our investor website at investors.power.com. This call is the property of Power Integrations. Any recording or rebroadcast is expressly prohibited without the written consent of Power Integrations. Now I'll turn it over to Jen.

Speaker #2: to our GAAP results is included in today's press release and in the accompanying slides, both of which can be found on our investor website at investors.power.com.

Speaker #2: 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 #3: Thanks, Joe. And thank you, everyone, for joining us today. I'm pleased with how we've started the year, with Q1 revenue of $108 million and non-GAAP earnings of $25 per diluted share.

Jennifer Lloyd: Thanks, Joe, and thank you everyone for joining us today. I'm pleased with how we've started the year with Q1 revenue of $108 million and non-GAAP earnings of $0.25 per diluted share. Industrial was the main driver of revenue growth again this quarter, up 23% year-over-year. Consumer revenue was down compared to Q1 2025, which had been unusually strong due to tariff-related pull-ins in appliances. However, we saw a 17% sequential increase in Q1 as that inventory build appears to have cleared.

Jen Lloyd: Thanks, Joe, and thank you everyone for joining us today. I'm pleased with how we've started the year with Q1 revenue of $108 million and non-GAAP earnings of $0.25 per diluted share. Industrial was the main driver of revenue growth again this quarter, up 23% year-over-year. Consumer revenue was down compared to Q1 2025, which had been unusually strong due to tariff-related pull-ins in appliances. However, we saw a 17% sequential increase in Q1 as that inventory build appears to have cleared.

Speaker #3: Industrial was the main driver of

Speaker #3: quarter, up 23% year over year. Consumer revenue A reconciliation of non-GAAP measures was down compared to the first quarter of 2025, which had been unusually strong due to tariff-related pull-ins in appliances.

Speaker #3: However, we saw a 17% sequential increase in Q1, as that inventory build appears to have cleared. Looking ahead, while visibility is somewhat hampered by the ongoing macro uncertainty, we've seen an increase in order activity since our last earnings call, and we're forecasting seasonally higher revenue in the second quarter, along with higher growth margin.

Jennifer Lloyd: Looking ahead, while visibility is somewhat hampered by the ongoing macro uncertainty, we've seen an increase in order activity since our last earnings call, and we're forecasting seasonally higher revenue in Q2, along with higher gross margin. Just as importantly, we're making good progress on our strategic focus areas: customer centricity, streamlining our product pipeline for time to market, and operational and organizational efficiency. Firstly, we are improving alignment between our commercial and engineering teams to bring the customer's voice closer to our product development process. Reinforcing this customer commitment, earlier this week, we announced the addition of Mike Balow to our leadership team as SVP of Worldwide Sales. Mike is a veteran sales leader with deep experience in power, having led the sales organizations at onsemi, Infineon, and Cypress.

Jen Lloyd: Looking ahead, while visibility is somewhat hampered by the ongoing macro uncertainty, we've seen an increase in order activity since our last earnings call, and we're forecasting seasonally higher revenue in Q2, along with higher gross margin. Just as importantly, we're making good progress on our strategic focus areas: customer centricity, streamlining our product pipeline for time to market, and operational and organizational efficiency. Firstly, we are improving alignment between our commercial and engineering teams to bring the customer's voice closer to our product development process. Reinforcing this customer commitment, earlier this week, we announced the addition of Mike Balow to our leadership team as SVP of Worldwide Sales. Mike is a veteran sales leader with deep experience in power, having led the sales organizations at onsemi, Infineon, and Cypress.

Speaker #3: Just as importantly, we're making good progress on our strategic focus areas. Customer centricity, streamlining our product pipeline for time to market, and operational and organizational efficiency.

Speaker #3: Firstly, we are improving alignment between our commercial and engineering teams to bring the customer's voice closer to our product development process. Reinforcing this customer announced the addition of Mike Ballow to our leadership team as SVP of worldwide sales.

Speaker #3: Mike is a veteran sales leader with deep experience in POWER, having led the sales organizations at Onsemi, Infineon, and Cypress. I'm excited to have him on the team and I'm confident that he will both strengthen our existing relationships and help us expand our customer reach in markets like data center and automotive.

Jennifer Lloyd: I'm excited to have him on the team, and I'm confident that he will both strengthen our existing relationships and help us expand our customer reach in markets like data center and automotive. Secondly, we're streamlining our product pipeline to accelerate time to market on the projects most tightly aligned with our target markets and long-term strategy. Finally, we are implementing organizational changes to drive operational effectiveness and redirect resources, both functionally and geographically, to the opportunities most critical to our long-term growth. Although it will take time for these changes to be reflected in our results, I'm encouraged by our progress, and over time, you will see product releases with quicker time to revenue based on earlier customer engagement and improved alignment between our products and customer needs.

Jen Lloyd: I'm excited to have him on the team, and I'm confident that he will both strengthen our existing relationships and help us expand our customer reach in markets like data center and automotive. Secondly, we're streamlining our product pipeline to accelerate time to market on the projects most tightly aligned with our target markets and long-term strategy. Finally, we are implementing organizational changes to drive operational effectiveness and redirect resources, both functionally and geographically, to the opportunities most critical to our long-term growth. Although it will take time for these changes to be reflected in our results, I'm encouraged by our progress, and over time, you will see product releases with quicker time to revenue based on earlier customer engagement and improved alignment between our products and customer needs.

Speaker #3: Secondly, we're streamlining our product pipeline to accelerate time to market on the project's most tightly aligned with our target markets and long-term strategy. And finally, we are implementing organizational changes to drive operational effectiveness and redirect resources, both functionally and geographically, to the opportunities most critical to our long-term growth.

Speaker #3: Although it will take time for these changes to be reflected in our results, I'm encouraged by our progress and over time you will see product releases with quicker time to revenue based on earlier customer engagement and improved alignment between our products and customer needs.

Speaker #3: For example, our new Tiny Switch 5 is off to a strong start with a wide range of designs set to ramp in the second half of the year.

Jennifer Lloyd: For example, our new TinySwitch-5 is off to a strong start with a wide range of designs set to ramp in H2. We also expect a nice ramp with TOPSwitchGaN, which we introduced at the APEC show in March. The TinySwitch and TOPSwitch names are well-known in the power supply industry, with billions of units shipped and an embedded base of designers accustomed to using these proven architectures. Even as we pivot towards the AI data center, industrial and automotive markets, we're refreshing these existing product families to sustain and grow core markets like appliances, where reliability and efficiency are highly valued and dollar content is rising along with appliance power levels.

Jen Lloyd: For example, our new TinySwitch-5 is off to a strong start with a wide range of designs set to ramp in H2. We also expect a nice ramp with TOPSwitchGaN, which we introduced at the APEC show in March. The TinySwitch and TOPSwitch names are well-known in the power supply industry, with billions of units shipped and an embedded base of designers accustomed to using these proven architectures. Even as we pivot towards the AI data center, industrial and automotive markets, we're refreshing these existing product families to sustain and grow core markets like appliances, where reliability and efficiency are highly valued and dollar content is rising along with appliance power levels.

Speaker #3: And we also expect a nice ramp with top switch GAN, which we introduced at the APEC show in March. The Tiny Switch and top switch names are well known in the power supply industry, with billions of units shipped and an embedded base of designers accustomed to using these proven architectures.

Speaker #3: Even as we pivot towards the AI data center industrial and automotive markets, we're refreshing these existing product families to sustain and grow core markets like appliances where reliability and efficiency are highly valued and dollar content is rising along with the appliance power levels.

Speaker #3: The addition of a POWER GAN switch more than doubles the power capability of the top switch architecture to 440 watts, so designers can now use these classic flyback topology for a wider range of designs than ever before.

Jennifer Lloyd: The addition of a PowiGaN switch more than doubles the power capability of the TOPSwitch architecture to 440 watts, designers can now use these classic flyback topology for a wider range of designs than ever before. The flyback topology offers a variety of benefits, including smaller board footprint, faster design cycles, high standby efficiency, and lower component count. In fact, a flyback power supply can save up to 30% on both component count and BOM cost compared to the more complex topologies typically used above 200 watts. TOPSwitchGaN is already opening doors for us at new customers designing high-power chargers for industrial applications, drones, and e-bikes, where flybacks now have access to sockets that have historically been off-limits.

Jen Lloyd: The addition of a PowiGaN switch more than doubles the power capability of the TOPSwitch architecture to 440 watts, designers can now use these classic flyback topology for a wider range of designs than ever before. The flyback topology offers a variety of benefits, including smaller board footprint, faster design cycles, high standby efficiency, and lower component count. In fact, a flyback power supply can save up to 30% on both component count and BOM cost compared to the more complex topologies typically used above 200 watts. TOPSwitchGaN is already opening doors for us at new customers designing high-power chargers for industrial applications, drones, and e-bikes, where flybacks now have access to sockets that have historically been off-limits.

Speaker #3: The flyback topology offers a variety of benefits, including smaller board footprint, faster design cycles, high standby efficiency, and lower component count. In fact, a flyback power supply can save up to 30% on both component count and BOM cost compared to the more complex topologies typically used above 200 watts.

Speaker #3: Top GAN is already opening doors for us at new customers designing high-power chargers for industrial applications, drones, and e-bikes, where flybacks now have access to sockets that have historically been off-limits.

Speaker #3: We are also seeing strong engagements at appliance customers, many of whom have been using top switch for years, and are excited to realize the efficiency benefits of GAN in their designs.

Jennifer Lloyd: We are also seeing strong engagements at appliance customers, many of whom have been using TOPSwitch for years and are excited to realize the efficiency benefits of GaN in their designs. In automotive, we're currently in production or in design engagements with 17 of the top 20 EV manufacturers, and we're on track to double our automotive revenue this year. In Q1, we won a new emergency power supply design with China's second-largest EV OEM. As mentioned on last quarter's call, we also began production in Q1 at a major German car maker using a platform developed as part of its joint venture with a US EV OEM. As we continue to accumulate wins for inverter emergency power supplies, we are also expanding engagements with customers for next-gen EVs, featuring micro DC-DC converters.

Jen Lloyd: We are also seeing strong engagements at appliance customers, many of whom have been using TOPSwitch for years and are excited to realize the efficiency benefits of GaN in their designs. In automotive, we're currently in production or in design engagements with 17 of the top 20 EV manufacturers, and we're on track to double our automotive revenue this year. In Q1, we won a new emergency power supply design with China's second-largest EV OEM. As mentioned on last quarter's call, we also began production in Q1 at a major German car maker using a platform developed as part of its joint venture with a US EV OEM. As we continue to accumulate wins for inverter emergency power supplies, we are also expanding engagements with customers for next-gen EVs, featuring micro DC-DC converters.

Speaker #3: In automotive, we're currently in production or in design engagements with 17 of the top 20 EV manufacturers, and we're on track to double our automotive revenue this year.

Speaker #3: In the first quarter, we won a new emergency power supply design with China's second-largest EV OEM, and as mentioned on last quarter's call, we also began production in Q1 at a major German car maker using a platform developed as part of its joint venture with a US EV OEM.

Speaker #3: As we continue to accumulate wins for inverter emergency power supplies, we are also expanding engagements with customers for next-gen EVs, featuring micro DC to DC converters.

Speaker #3: These power supplies will bypass the 12-volt batteries used in today's EVs; instead, powering subsystems directly from the main high-voltage battery. We are also developing products for higher power sockets, such as onboard charging, using our 1250-volt GAN technology.

Jennifer Lloyd: These power supplies will bypass the 12-volt batteries used in today's EVs, instead powering subsystems directly from the main high-voltage battery. We are also developing products for higher power sockets, such as onboard charging, using our 1250 V GaN technology. As we expand our automotive product portfolio to address evolving EV architectures, we see addressable dollar content rising from single-digit dollars today to tens of dollars in the near term and approaching $100 per vehicle over the next several years. Our high-power business, which sits in the industrial category, continues to grow at a healthy pace, driven by a diverse set of verticals, including electric rail, renewables, oil and gas, and power grid applications, including DC transmission and power quality. Key design wins in Q1 included a design for 6 MW wind turbines at a European customer and a STATCOM power conditioning design for an Indian customer.

Jen Lloyd: These power supplies will bypass the 12-volt batteries used in today's EVs, instead powering subsystems directly from the main high-voltage battery. We are also developing products for higher power sockets, such as onboard charging, using our 1250 V GaN technology. As we expand our automotive product portfolio to address evolving EV architectures, we see addressable dollar content rising from single-digit dollars today to tens of dollars in the near term and approaching $100 per vehicle over the next several years. Our high-power business, which sits in the industrial category, continues to grow at a healthy pace, driven by a diverse set of verticals, including electric rail, renewables, oil and gas, and power grid applications, including DC transmission and power quality. Key design wins in Q1 included a design for 6 MW wind turbines at a European customer and a STATCOM power conditioning design for an Indian customer.

Speaker #3: As we expand our automotive product portfolio to address evolving EV architectures, we see addressable dollar content rising from single-digit dollars today to tens of dollars in the near term, and approaching $100 per vehicle over the next several years.

Speaker #3: Our high-power business, which sits in the industrial category, continues to grow at a healthy pace, driven by a diverse set of verticals, including electric rail, renewables, oil and gas, and power grid applications, including DC transmission and power quality, key design wins in Q1 included a design for six-megawatt wind turbines at a European customer and at STATCOM power conditioning design for an Indian customer.

Speaker #3: Lastly, turning to everybody's favorite topic, data center. We continue to pursue multiple paths to growth with our unique POWER GAN technology. Our ongoing collaboration with NVIDIA includes a variety of sockets utilizing our 1250 and 1700-volt GAN technologies in the forthcoming 800-volt DC architectures.

Jennifer Lloyd: Lastly, turning to everybody's favorite topic, data center, we continue to pursue multiple paths to growth with our unique PowiGaN technology. Our ongoing collaboration with NVIDIA includes a variety of sockets utilizing our 1250 and 1700 V GaN technologies in the forthcoming 800 V DC architectures. We continue to gain share in aux power supplies for today's data centers, winning two new designs in Q1 at Taiwan customers serving US equipment makers. We also have ongoing customer engagements on upcoming higher power GaN products for rack-level AC-DC conversion. The data center rack is one of the most attractive opportunities in power semiconductors today. We believe our differentiated GaN technology gives us a significant competitive advantage, and customers are looking to us as they develop long-term roadmaps calling for higher voltages and improving power density. Our opportunity in data center goes beyond the rack.

Jen Lloyd: Lastly, turning to everybody's favorite topic, data center, we continue to pursue multiple paths to growth with our unique PowiGaN technology. Our ongoing collaboration with NVIDIA includes a variety of sockets utilizing our 1250 and 1700 V GaN technologies in the forthcoming 800 V DC architectures. We continue to gain share in aux power supplies for today's data centers, winning two new designs in Q1 at Taiwan customers serving US equipment makers. We also have ongoing customer engagements on upcoming higher power GaN products for rack-level AC-DC conversion. The data center rack is one of the most attractive opportunities in power semiconductors today. We believe our differentiated GaN technology gives us a significant competitive advantage, and customers are looking to us as they develop long-term roadmaps calling for higher voltages and improving power density. Our opportunity in data center goes beyond the rack.

Speaker #3: We continue to gain share in AUX power supplies for today's data centers, winning two new designs in Q1 at Taiwan customers serving US equipment makers.

Speaker #3: We also have ongoing customer engagements on upcoming higher power GAN products for rack-level AC to DC conversion. The data center rack is one of the most attractive opportunities in power semiconductors today.

Speaker #3: We believe our differentiated GAN technology gives us a significant competitive advantage and customers are looking to us as they develop long-term roadmaps, calling for higher voltages and improving power density.

Speaker #3: But our opportunity in data center goes beyond the rack. The demands that data centers are placing on the power grid are just as important and challenging, and we are well positioned to respond with our high-power products.

Jennifer Lloyd: The demands that data centers are placing on the power grid are just as important and challenging, and we are well-positioned to respond with our high-power products. Power grids are rapidly evolving to support the estimated 200 GW of power needed for data centers by 2030. Renewable energy, including dedicated installations for data centers, is certain to become a bigger part of the energy mix, accompanied by battery storage to ensure consistent availability. High-voltage transmission lines will deliver renewable energy to the grid or directly to the data center, and solid-state transformers will convert power at the front end of the data center to be delivered to the rack. The value of our gate driver products is proven in renewable energy, battery storage, and high-voltage transmission, which together accounted for about 40% of our high-power revenue in Q1.

Jen Lloyd: The demands that data centers are placing on the power grid are just as important and challenging, and we are well-positioned to respond with our high-power products. Power grids are rapidly evolving to support the estimated 200 GW of power needed for data centers by 2030. Renewable energy, including dedicated installations for data centers, is certain to become a bigger part of the energy mix, accompanied by battery storage to ensure consistent availability. High-voltage transmission lines will deliver renewable energy to the grid or directly to the data center, and solid-state transformers will convert power at the front end of the data center to be delivered to the rack. The value of our gate driver products is proven in renewable energy, battery storage, and high-voltage transmission, which together accounted for about 40% of our high-power revenue in Q1.

Speaker #3: Power grids are rapidly evolving to support the estimated 200 gigawatts of power needed for data centers by 2030. Renewable energy including dedicated installations for data centers is certain to become a bigger part of the energy mix accompanied by battery storage to ensure consistent availability.

Speaker #3: High-voltage transmission lines will deliver renewable energy to the grid or directly to the data center, and solid-state transformers will convert power at the front end of the data center to be delivered to the rack.

Speaker #3: The value of our gate driver products is proven in renewable energy battery storage and high-voltage transmission, which together accounted for about 40% of our high-power revenue in the first quarter.

Speaker #3: We have a strong offering for solid-state transformers as well, with a differentiated driver solution for silicon carbide modules. We have a variety of data center-related customer engagements underway in high-power, and we anticipate that opportunities related to the data center build-out will add hundreds of millions of dollars to our SAM for gate driver products in the years ahead.

Jennifer Lloyd: We have a strong offering for solid-state transformers as well, with a differentiated driver solution for silicon carbide modules. We have a variety of data center related customer engagements underway in high power, and we anticipate that opportunities related to the data center build-out will add hundreds of millions of dollars to our SAM for gate driver products in the years ahead. Altogether, we estimate that our data center SAM, including rack and grid applications, will exceed $1 billion by 2030. In closing, the opportunities ahead of us grow more attractive by the day as markets demand more of the technology and system expertise that PI has developed over many years.

Jen Lloyd: We have a strong offering for solid-state transformers as well, with a differentiated driver solution for silicon carbide modules. We have a variety of data center related customer engagements underway in high power, and we anticipate that opportunities related to the data center build-out will add hundreds of millions of dollars to our SAM for gate driver products in the years ahead. Altogether, we estimate that our data center SAM, including rack and grid applications, will exceed $1 billion by 2030. In closing, the opportunities ahead of us grow more attractive by the day as markets demand more of the technology and system expertise that PI has developed over many years.

Speaker #3: Altogether, we estimate that our data center SAM, including rack and grid applications, will exceed a billion dollars by 2030. In closing, the opportunities ahead of us grow more attractive by the day as markets demand more of the technology and system expertise that PI has developed over many years.

Speaker #3: We are a pure-play high-voltage company, with foundational technologies like POWER GAN and scale gate drivers backed by deep system expertise and we are building an organization capable of turning our foundational advantages into long-term value for our customers and shareholders.

Jennifer Lloyd: We are a pure play high voltage company with foundational technologies like PowiGaN and SCALE gate drivers backed by deep system expertise, and we are building an organization capable of turning our foundational advantages into long-term value for our customers and shareholders. Now I'll turn it over to Nancy for a review of the financial highlights.

Jen Lloyd: We are a pure play high voltage company with foundational technologies like PowiGaN and SCALE gate drivers backed by deep system expertise, and we are building an organization capable of turning our foundational advantages into long-term value for our customers and shareholders. Now I'll turn it over to Nancy for a review of the financial highlights.

Speaker #3: Now I'll turn it over to Nancy for a review of the financial highlights.

Speaker #4: Thanks, Jen, and good afternoon. Before I cover our results, I'd like to direct you to the supplemental information shared with our press release this afternoon.

Nancy Erba: Thanks, Jen, and good afternoon. Before I cover our results, I'd like to direct you to the supplemental information shared with our press release this afternoon. There, you will find many of the financial details we normally share in our prepared remarks, in addition to a GAAP to non-GAAP reconciliation. We had a very solid start to the year, with Q1 delivering revenue growth with key financial metrics at or better than our outlook. We also improved our balance sheet as we generated $18 million of free cash flow and reduced inventory, both on the balance sheet and in the channel. Revenue was $108.3 million, up 3% from a year ago and 5% versus Q4 of last year. Our industrial business continues to perform well, with sequential growth of 15% in Q1.

Speaker #4: There, you will find many of the financial details we normally share in our prepared remarks, in addition to a gap-to-non-gap reconciliation. We had a very solid start to the year with Q1 delivering revenue growth with key financial metrics at or better than our outlook.

Speaker #4: We also improved our balance sheet as we generated $18 million of free cash flow and reduced inventory, both on the balance sheet and in the channel.

Speaker #4: Revenue was $108.3 million, up 3% from a year ago and 5% versus Q4 of last year. Our industrial business continues to perform well with sequential growth of 15% in Q1.

Speaker #4: The communications and computer categories were seasonally down, while consumer revenues were up 17% sequentially, with the recovery in appliances. Turning to gross margin, non-gap gross margin was 53.5% for the quarter, right at the midpoint of our outlook range, and up 20 basis points sequentially.

Nancy Erba: The communications and computer categories were seasonally down, while consumer revenues were up 17% sequentially with the recovery in appliances. Turning to gross margin, non-GAAP gross margin was 53.5% for the quarter, right at the midpoint of our outlook range, and up 20 basis points sequentially. While end market mix was favorable, we saw less benefit from the yen dollar exchange rate in Q1 due to the stronger yen in the early part of 2025. As a reminder, there is currently about a 1-year lag between fluctuations in the yen and the resulting impact on our P&L. Non-GAAP operating expenses were $45.3 million, coming in below our outlook range of $45.5 million to $46.5 million. This resulted in non-GAAP operating margin of 11.7%, up 200 basis points from the prior quarter.

Speaker #4: While end-market mix was favorable, we saw less benefit from the yen-dollar exchange rate in Q1 due to the stronger yen in the early part of 2025.

Speaker #4: As a reminder, there is currently about a one-year lag between fluctuations in the yen and the resulting impact on our P&L. Non-gap operating expenses were 45.3 million dollars, coming in below our outlook range of 45.5 to 46.5 million dollars.

Speaker #4: This resulted in non-gap operating margin of 11.7%, up 200 basis points from the prior quarter. Expanding our operating margin as an important priority for us, we are tightly managing the investment decisions that drive our customer-focused technology development and product roadmap, addressing the highest growth markets.

Nancy Erba: Expanding our operating margin is an important priority for us. We are tightly managing the investment decisions that drive our customer-focused technology development and product roadmap, addressing the highest growth markets. During our Q1 restructuring activities, we evaluated our engineering resources across the organization and determined that in order to better drive the roadmap requirements of our customers, certain engineers previously accounted for in our marketing organization would be more fully dedicated to the development work and moved into R&D. These changes were effective at the time of the restructuring in early February and resulted in approximately $3 million of R&D expense in Q1 that would previously have been included in SG&A. All investments in SG&A are evaluated with the same rigor. Continuing down the income statement, non-GAAP net income was $13.9 million, or $0.25 per diluted share.

Speaker #4: During our Q1 restructuring activities, we evaluated our engineering resources across the organization and determined that in order to better drive the roadmap requirements of our customers, certain engineers previously accounted for in our marketing organization would be more fully dedicated to the development work and moved into R&D.

Speaker #4: These changes were effective at the time of the restructuring and early February, and resulted in approximately $3 million of R&D expense in Q1 that would previously have been included in SG&A.

Speaker #4: All investments in SG&A are evaluated with the same rigor. Continuing down the income statement, non-gap net income was 13.9 million dollars, or 25 cents per diluted share.

Speaker #4: Our gap results include 6.6 million dollars of restructuring charges, primarily consisting of severance payments related to the restructuring activity we announced in February, 6.2 million dollars was in gap OPEX with the remainder in cost of goods sold.

Nancy Erba: Our GAAP results include $6.6 million of restructuring charges, primarily consisting of severance payments related to the restructuring activity we announced in February. $6.2 million was in GAAP OPEX, with the remainder in cost of goods sold. Turning to the balance sheet and cash flow. Cash flow from operations was $20 million for the quarter, while CapEx was $2 million. Our 2026 plan still calls for CapEx of 5% to 6% of revenue for the year. We are applying the same ROI-based discipline to capital decisions that we are to operating expenses and expect to see CapEx more heavily weighted to the H2 of the year. Inventory decreased by $4 million during the quarter, while days on hand fell by 21 days to 292 days at quarter end.

Speaker #4: Turning to the balance sheet and cash flow, cash flow from operations was $20 million for the quarter, while CAPEX was $2 million. Our 2026 plan still calls for CAPEX of 5 to 6 percent of revenue for the year, we are applying the same ROI-based discipline to capital decisions that we are to operating expenses, and expect to see CAPEX more heavily weighted to the second half of the year.

Speaker #4: Inventory decreased by $4 million during the quarter, while days on hand fell by 21 days to $292 days at quarter end. Our target is to bring days on hand below 200.

Nancy Erba: Our target is to bring days on hand below 200. Channel inventory also declined during the quarter, falling by half a week to 8.9 weeks and nearing our target of 8 weeks. I expect further improvement in both metrics throughout the year. I'll now review the Q2 outlook. We expect revenue to be between $115 to 120 million, which would be up 8.5% sequentially at the midpoint. Communications and computers should have the largest increases in percentage terms coming off the seasonal lows in Q1, with industrial also up sequentially. We expect a sub-seasonal quarter from consumer, with positive air conditioning seasonality offset by the ongoing demands of, and headwinds in major appliances. I expect non-GAAP gross margin to improve sequentially with a range of 54% to 55%.

Speaker #4: Channel inventory also declined during the quarter, falling by half a week to 8.9 weeks, and nearing our target of eight weeks. I expect further improvement in both metrics throughout the year.

Speaker #4: I'll now review the second quarter outlook. We expect revenue to be between $115 and $120 million dollars, which would be up 8.5% sequentially at the midpoint.

Speaker #4: Communications and computer should have the largest increases in percentage terms, coming off the seasonal lows in Q1, with industrial also up sequentially. We expect a subseasonal quarter from consumer, with positive air conditioning seasonality offsetting offset by the ongoing demands of and headwinds in major appliances.

Speaker #4: I expect non-gap gross margin to improve sequentially, with a range of 54 to 55 percent at the midpoint. That would be an improvement of 100 basis points from Q1.

Nancy Erba: At the midpoint, that would be an improvement of 100 basis points from Q1, primarily due to manufacturing efficiencies and volume-related benefits of the higher revenue as well as the dollar/yen exchange rate. non-GAAP operating expenses will be sequentially higher in Q2 with a range of $47 million ± half a million. The increase from Q1 mainly reflects annual merit increases, which took effect in April. I anticipate that OpEx in H2 will remain roughly flat with the Q2 run rate, putting us on track for low single-digit growth in 2026. Our intent is for OpEx to grow at a rate of less than half of revenue growth over time. Finally, I expect non-GAAP operating margin to be between 13.5% and 15.5%.

Speaker #4: Primarily due to manufacturing efficiencies and volume-related benefits, of the higher revenue, as well as the dollar-yen exchange rate. Non-gap operating expenses will be sequentially higher in Q2, with a range of 47 million dollars, plus or minus half a million.

Speaker #4: The increase from Q1 mainly reflects annual merit increases, which took effect in April. I anticipate that OPEX in the second half will remain roughly flat, with the Q2 run rate, putting us on track for low single-digit growth in 2026.

Speaker #4: Our intent is for OPEX to grow at a rate of less than half of revenue growth over time. Finally, I expect non-gap operating margin to be between 13 and a half and 15 and a half percent.

Speaker #4: In closing, I'm encouraged by the demand we are experiencing in the first half of the year, and that the markets we compete in appear largely healthy.

Nancy Erba: In closing, I'm encouraged by the demand we are experiencing in H1 of the year and that the markets we compete in appear largely healthy. We are excited by the opportunities in front of the company and focused on executing to the long-term growth drivers in data center, automotive, and industrial. Importantly, we are continuing to stay agile, cognizant of the macro and geopolitical uncertainty we operate within, and will continue to manage the business accordingly. After a full quarter in the CFO role, I'm confident in the direction we're heading as a company and our ability to achieve faster growth, improved profitability, and increased shareholder value. I'd like to thank the POWI team for their continued commitment to innovation, customer success, and execution excellence, and to our partners, customers, and shareholders for their continued cooperation and support. Now, Alexandra, let's open for Q&A.

Speaker #4: We are excited by the opportunities in front of the company and focused on executing to the long-term growth drivers in data center, automotive, and industrial.

Speaker #4: And importantly, we are continuing to stay agile, cognizant of the macro and geopolitical uncertainty we operate within, and will continue to manage the business accordingly.

Speaker #4: After a full quarter in the CFO role, I'm confident in the direction we're heading as a company, and our ability to achieve faster growth, improved profitability, and increased shareholder value.

Speaker #4: I'd like to thank the POWER team for their continued commitment to innovation, customer success, and execution excellence, and to our partners, customers, and shareholders for their continued cooperation and support.

Speaker #4: And now, Alexandra, let's open for Q&A.

Speaker #5: 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.

Operator: 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. 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. Please stand by while we compile the Q&A roster. Your first question comes from the line of Christopher Rolland with Susquehanna. Your line is now open. Please go ahead.

Speaker #5: 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.

Speaker #5: Please stand by while we compile the Q&A roster. Your first question comes from the line of Christopher Roland with Susquehanna. Your line is now open.

Speaker #5: Please go ahead.

Speaker #6: Thank you, for the question. Appreciate it. I guess starting out, I guess compute and comms has been disappointing for, for quite some time, but particularly in March.

Christopher Rolland: Thank you for the question. Appreciate it. I guess starting out, I guess compute and comms has been disappointing for quite some time, but particularly in March. I know there's some seasonality there. I guess, how are you thinking about these markets going forward? You know, they are obviously kind of sub-subscale, I think, probably at this point in time. Maybe you can talk about what your strategic plan is for these moving forward. Are you de-emphasizing these markets? How should we think about them and maybe the mix of end markets moving forward for you guys?

Speaker #6: I know there's some seasonality there. I guess how are you thinking about these markets going forward? you know, they are obviously kind of sub-subscale, I think, probably at this point in time.

Speaker #6: maybe you can talk about what your strategic plan is for these moving forward. Are you deemphasizing, these markets? How should we think about them?

Speaker #6: And maybe the mix of end markets moving forward for you guys?

Speaker #5: Okay, great. Thank you, Chris, for the question. so in terms of compute and comms in Q1, you know, we do expect that to be seasonally, low quarter.

Nancy Erba: Okay, great. Thank you, Chris, for the question. In terms of compute and comms in Q1, you know, we do expect that to be seasonally a low quarter. We're expecting those to be seasonally up in Q2. You're correct that they are two of the smaller of our market areas. In terms of the, you know, strategic plan and are we de-emphasizing? We're not de-emphasizing those areas. You know, we continue to look at those as, you know, there's opportunity there. I talked in the prepared remarks about the TOPSwitchGaN and Tiny. I mean, those are serving applications across the spectrum of our market segments. You know, we continue to nurture those areas.

Speaker #5: So we're expecting those to be seasonally, up in Q2. You're correct that they are two of the smaller of our market-market areas. So, in terms of the, you know, strategic plan and are we deemphasizing, we're not deemphasizing those areas.

Speaker #5: You know, we continue to look at those as, you know, there's opportunity there. I talked in the prepared remarks about the top GAN and Tiny.

Speaker #5: I mean, those are serving applications across the spectrum of our market segment. So, you know, we continue to, to nurture those, those areas. And, you know, when you look at, when you look at those for the year, yeah, they're not the biggest growth drivers, but they're also not the largest part of our business.

Nancy Erba: You know, when you look at, when you look at those for the year, yeah, they're not the biggest growth drivers, but they're also not the largest part of our business.

Speaker #6: Great. Thank you. and perhaps, on your favorite and everyone's favorite topic, AI, you know, you had some, some great deal detail on, Oxpower and, and, and Solid State Transformers, etc.

Christopher Rolland: Great. Thank you. Perhaps, on your favorite and everyone's favorite topic, AI. You know, you had some great detail on AuxPower and solid-state transformers, et cetera. Perhaps if you could talk about GaN and maybe even silicon opportunities, but mostly GaN, how are engagements going on the main power? As we think about the powertrain applications, are we talking about interest in power delivery boards or IBCs or power supplies? Where are you getting the most interest, are there any applications I left out that you might be engaged in for your GaN portfolio?

Speaker #6: but perhaps if you could talk about GAN and maybe even Silicon Opportunities, but mostly GAN, like, how are engagements going on the main power, and as we think about the power train applications, are we talking about interest in power delivery boards or IBCs or power supplies?

Speaker #6: Where are you getting the, the most interest? And is there any are there any applications they left out, that, that you might be engaged in for your GAN portfolio?

Speaker #5: Yeah. I mean, thank you for asking the question about our favorite topic. you know, I think it's going great. you know, I do want to emphasize that, you know, the Ox and the SST Opportunities, those are the shorter-term opportunities for us.

Nancy Erba: Yeah. I mean, thank you for asking a question about our favorite topic. You know, I do wanna.

Jen Lloyd: Yeah. I mean, thank you for asking a question about our favorite topic. You know, I do wanna.

Jennifer Lloyd: emphasize that, you know, the aux and the SST opportunities, those are the shorter term opportunities for us. We do have ongoing engagements for those as well as on, you know, the opportunities for GaN. We are seeing there's a real pull for our high voltage GaN technology for the high voltage architectures, the 800 volt architecture in particular. You know, our GaN works natively at 800, 1200, 1250, 1700 and offers a simpler design. Even in our discussions with NVIDIA a couple weeks ago, we are learning about additional sockets for where our technology is a great fit. I think, you know, where there's the most interest across applications, we are engaging across the whole data center ecosystem.

Jen Lloyd: emphasize that, you know, the aux and the SST opportunities, those are the shorter term opportunities for us. We do have ongoing engagements for those as well as on, you know, the opportunities for GaN. We are seeing there's a real pull for our high voltage GaN technology for the high voltage architectures, the 800 volt architecture in particular. You know, our GaN works natively at 800, 1200, 1250, 1700 and offers a simpler design. Even in our discussions with NVIDIA a couple weeks ago, we are learning about additional sockets for where our technology is a great fit. I think, you know, where there's the most interest across applications, we are engaging across the whole data center ecosystem.

Speaker #5: but we do have ongoing engagements for those as well as on, you know, the, the opportunities for, for GAN. And we are seeing there's a real pull for our high-voltage GAN technology for the high-voltage architectures, the 800-volt architecture in particular.

Speaker #5: You know, our GAN works natively at 800, 1200, 1250, 1700, and offers a simpler design. So, you know, even in our discussions with, NVIDIA a couple of weeks ago, we are learning about, additional sockets for where our technology is, a great fit.

Speaker #5: I, I think, you know, where there's the most interest across applications, we are engaging across the whole data center ecosystem. So, hyperscalers, server OEMs, rack providers, power supply providers, and we're finding opportunities across all of those.

Jennifer Lloyd: hyperscalers, server OEMs, rack providers, power supply providers, and we're finding opportunities across all of those.

Jen Lloyd: hyperscalers, server OEMs, rack providers, power supply providers, and we're finding opportunities across all of those.

Speaker #6: Great. Thank you, Jennifer.

Christopher Rolland: Great. Thank you, Jennifer.

Speaker #5: You're welcome.

Jennifer Lloyd: You're welcome.

Jen Lloyd: You're welcome.

Speaker #7: Your next question comes from the line of Ross Seymour with Deutsche Bank. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Ross Seymore with Deutsche Bank.

Ross Seymore: Great.

Ross Seymore: Please go ahead.

Operator: Please go ahead.

Speaker #8: Thanks for letting me ask a couple of questions. I guess my first one in the near term, on the consumer segment, I know you split the kind of the air conditioning, versus the white goods side.

Ross Seymore: Thanks for letting me ask a couple questions. I guess my first one in the near term on the consumer segment, I know you split the kind of the air conditioning versus the white goods side, but the appliance market, you know, doesn't sound so great, to put it mildly, if you listen to Whirlpool and others. When you say that's sub-seasonal in Q2, what do you mean? Is it still gonna be up, or will it be down? How do you think you guys address that market over time? If the market's weaker, do the inventory dynamics allow you to still grow, or is that something that's gonna be a challenge that's gonna last a little bit longer?

Speaker #8: But the appliance market, you know, doesn't sound so great, to put it mildly, if you listen to Whirlpool and others. So, when you say that's subseasonal and the second quarter, what do you mean?

Speaker #8: Is it still going to be up, or will it be down? And how do you think you guys, address that market over time? If the market's weaker, do, do the inventory dynamics allow you to still grow, or is that something that's going to be a challenge that's going to last a little bit longer?

Speaker #5: so I'll, I'll take that one. Just, you know, as I said in my comments, all of the markets will be up, although on the consumer front, it will be very modestly up.

Jennifer Lloyd: I'll take that one. Just, you know, as I said in my comments, all of the markets will be up, although on the consumer front it will be very modestly up. Think flattish. That is a balance, as we commented between some of the pressure on appliances that you referenced, but also there are some offsets within our portfolio. Net-net, flat to slightly up. Certainly the other markets.

Nancy Erba: I'll take that one. Just, you know, as I said in my comments, all of the markets will be up, although on the consumer front it will be very modestly up. Think flattish. That is a balance, as we commented between some of the pressure on appliances that you referenced, but also there are some offsets within our portfolio. Net-net, flat to slightly up. Certainly the other markets.

Speaker #5: So think flattish. and that is a balance, as we commented between some of the pressure on appliances that you referenced, but also there are some offsets within our portfolio.

Speaker #5: So net-net, flat to slightly up. Certainly, the other markets, are growing faster in Q2, from the standpoint both of dollar and percentage. And, you know, we're really pleased with the demand that we've seen thus far in the first half and the continued strength we're seeing in Q2.

Ross Seymore: And, and do-

Jennifer Lloyd: Are growing faster in Q2 from the standpoint both of dollar and percentage. You know, we're really pleased with the demand that we've seen thus far in H1 and the continued strength we're seeing in Q2. Net-net, you know, a good H1, and, you know, we're off and running through the year.

Nancy Erba: Are growing faster in Q2 from the standpoint both of dollar and percentage. You know, we're really pleased with the demand that we've seen thus far in H1 and the continued strength we're seeing in Q2. Net-net, you know, a good H1, and, you know, we're off and running through the year.

Speaker #5: so net-net, you know, a good first half and, you know, we're, we're often running through the year.

Speaker #8: Great. And I guess following up, I'll follow the same trend hit on the, the AI side. How do you envision the time to market for these different opportunities, whether it be, you know, the percentage of your business that you think it'll represent this year, next year, and the year after, or if you want to talk about the Ox and the, the SST side versus some of the bigger ones?

Ross Seymore: Great. I guess following up, I'll follow the same trend hit on the AI side. How do you envision the time to market for these different opportunities, whether it be, you know, the percentage of your business that you think it'll represent this year, next year, and the year after, or if you wanna talk about the aux and the SST side versus some of the bigger ones. How should we think about how those fold in just kind of timing wise, not necessarily magnitude, even though I'll take that if you'll give it.

Speaker #8: How should we think about how those fold in? Just, just kind of timing-wise, not necessarily magnitude, even though I'll, I'll take that if you'll give it.

Speaker #5: Yeah. Thank you, Ross. I think the I mean, the Ox obviously, those are opportunities now. And we continue to see a sequencing of opportunities.

Jennifer Lloyd: Yeah. Thank you, Ross. I mean, the aux obviously, those are opportunities now, and we continue to see a sequencing of opportunities. You know, there's continuous new designs, I think, in this space for aux and SST, and you know, we talked about a couple of those wins that we're seeing. I think for the high voltage, you know, we know that's longer term for us, right? That's not next year. That's in a couple years, basically. What is encouraging is that it's a continuous sequencing of wins. We're expecting, you know, that as those 800 volt systems come online, there's gonna be the momentum we already have and then some continued momentum from the new systems.

Jen Lloyd: Yeah. Thank you, Ross. I mean, the aux obviously, those are opportunities now, and we continue to see a sequencing of opportunities. You know, there's continuous new designs, I think, in this space for aux and SST, and you know, we talked about a couple of those wins that we're seeing. I think for the high voltage, you know, we know that's longer term for us, right? That's not next year. That's in a couple years, basically. What is encouraging is that it's a continuous sequencing of wins. We're expecting, you know, that as those 800 volt systems come online, there's gonna be the momentum we already have and then some continued momentum from the new systems.

Speaker #5: You know, there's continuous new designs, I think, in this op in this space for Ox and SST. And, you know, we continue we talked about a couple of those, wins that we're seeing.

Speaker #5: I think for the high-voltage, you know, we know that that's, that's longer-term for us, right? So that's not that's not next year. That's in a couple of years basically.

Speaker #5: So, what is encouraging is that it's a it's a continuous sequencing of, of, of, of wins and so we're, we're expecting you know, that as those 800-volt systems come online, there's going to be the momentum we already have and then some continued momentum from the new systems.

Speaker #5: But it's a couple of years out. And I think just to reiterate, you know, Jen mentioned in her comments that, you know, we expect that to be at least a billion dollars by 2030.

Jennifer Lloyd: It's a couple years out.

Jen Lloyd: It's a couple years out.

Nancy Erba: Thank you.

Ross Seymore: Thank you.

Nancy Erba: I think just to reiterate, you know, Jen mentioned in her comments that, you know, we expect that to be at least $1 billion by 2030. We're continuing to size it. As new sockets become available to us and as conversations continue and we find new places where our technology can be a good fit, we continue to evaluate that and size it as we go quarter to quarter.

Speaker #5: We're continuing to size it. as new sockets become available to us and as conversations continue and we find new places where our technology can be a good fit, we continue to evaluate that and, and size it as we go quarter to quarter.

Speaker #8: Thank you.

Ross Seymore: Thank you.

Speaker #7: Your next question comes from the line of David Williams with Needham & Co. Your line is now open; please go ahead.

Operator: Your next question comes from the line of David Williams with Needham & Co. Your line is now open. Please go ahead.

Speaker #9: Hey, good afternoon, everyone. Thanks for, letting me ask the question here. And I guess to continue on that, that data center topic there, do you or you talked about it being maybe a billion dollars and, and possible down for you all.

David Williams: Hey, good afternoon, everyone. Thanks for letting me ask a question here. I guess to continue on that data center topic there, you talked about it being maybe $1 billion in possible TAM for you all. How do you think about the GaN portion of that specifically? I mean, if you can just kind of speak to that level of engagements you're having today. Clearly, you have one of the highest power capabilities in the market. I would presume that you're certainly leading those discussions, but just curious how that traction's been going there specifically on the GaN and how you see that from a size perspective. Thanks.

Speaker #9: How do you think about the GAN portion of that specifically? And, and maybe if you can just kind of speak to, that, that level of, of engagement you're having today.

Speaker #9: Clearly, you have one of the, the highest, power capabilities in the market, I would presume that, you're certainly leading those discussions. But just curious how that traction's been, been going there specifically on the GAN and, and how you see that, from a, a size perspective.

Speaker #9: Thanks.

Speaker #5: Thanks, David. by the way, congrats on the, on the move. yeah. So, in terms of the GAN, I mean, we really do see a bulk of that being the GAN.

Jennifer Lloyd: Thanks, David. By the way, congrats on the move. Yeah. In terms of the GaN, I mean, we really do see a bulk of that being the GaN. I think it's a split between inside the data center and outside the data center. The outside the data center would be our gate driver product family. The inside the data center where we really have the advantages is with GaN. We see that as mostly GaN.

Jen Lloyd: Thanks, David. By the way, congrats on the move. Yeah. In terms of the GaN, I mean, we really do see a bulk of that being the GaN. I think it's a split between inside the data center and outside the data center. The outside the data center would be our gate driver product family. The inside the data center where we really have the advantages is with GaN. We see that as mostly GaN.

Speaker #5: I think it's a split between in the da inside the data center and outside the data center. The outside the data center would be our gate driver, product family.

Speaker #5: The inside the data center, where we really have the advantages, is with GAN. So we see that as mostly GAN.

Speaker #9: Great. thanks for the color there. and, and then it sounds like on the automotive side, you're making some really nice progress there as well.

David Williams: Great. Thanks for the color there. And then it sounds like on the automotive side, you're making some really nice progress there as well. I know in the past, the prior leadership had talked about this being a multi-year kind of a strategy. I feel like maybe your strategy is helping drive penetration and you're certainly building product roadmaps towards your customers. I guess maybe how do you think about automotive and how that is developing for you? How should we think about that maybe revenues over the next 12 to 24 months from that auto segment? Thank you.

Speaker #9: And I know in the past, the, the prior leadership had talked about this being a multi-year kind of a strategy. But it feels like maybe your strategy is helping maybe drive penetration and you're certainly building product, roadmaps towards your customers.

Speaker #9: And I guess maybe how do you think about automotive and, and how that is, is developing for you? And how should we think about that, maybe revenues over the next 12 to 24 months from that auto segment?

Speaker #9: Thank you.

Speaker #5: Yeah. I, I mean, I think we are making good, good progress with that. We're winning designs. as you know, we've talked about winning designs in the inverter emergency power supply.

Jennifer Lloyd: Yeah, I mean, I think we are making good progress with that. We're winning designs. As you know, we've talked about winning designs in the inverter emergency power supply. That's not huge revenue, right? We are seeing, you know, engagement with that. What we're looking at is expanding into, you know, other parts of the automobile and expanding our BOM content. You know, it's been slow. I think the market's been slow, we've talked a little bit about a push out. I think we've mentioned this in previous calls, that revenue for us is gonna push out. As we build up, you know, additional sockets, that will accelerate that growth.

Jen Lloyd: Yeah, I mean, I think we are making good progress with that. We're winning designs. As you know, we've talked about winning designs in the inverter emergency power supply. That's not huge revenue, right? We are seeing, you know, engagement with that. What we're looking at is expanding into, you know, other parts of the automobile and expanding our BOM content. You know, it's been slow. I think the market's been slow, we've talked a little bit about a push out. I think we've mentioned this in previous calls, that revenue for us is gonna push out. As we build up, you know, additional sockets, that will accelerate that growth.

Speaker #5: That's not huge revenue, right? But we are seeing you know, engagement with that. What we're looking at is expanding into you know, other parts of the automobile and expanding our, our BOM content.

Speaker #5: so you know, it's been slow. I think the market's been, been slow. And so we've talked a little bit about a push out. I think we've mentioned this in previous calls that that revenue for us is going to push out.

Speaker #5: But, but as we build up you know, additional, sockets, that will accelerate that growth. So, you know, we're, we're we've put $100 million target out there for 2029, and we, we still feel like we're making good progress towards that.

Jennifer Lloyd: you know, we put a $100 million target out there for 2029, and we still feel like we are making good progress towards that.

Jen Lloyd: you know, we put a $100 million target out there for 2029, and we still feel like we are making good progress towards that.

Speaker #9: Great. Thanks for the color. Appreciate it.

David Williams: Great. Thanks for the call. Appreciate it.

Speaker #7: A reminder, if you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again.

Operator: A reminder. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Your next question comes from the line of Tore Svanberg with Stifel. Your line is now open. Please go ahead.

Speaker #7: Your next question comes from the line of Tour Sandberg with Stifel. Your line is now open; please go ahead.

Tore Svanberg: Yes, thank you. Congrats on the progress. I guess my first question is on the restructuring and moving some people from marketing to engineering. I just want to understand that a little bit better, Jen, 'cause, you know, I assume these are probably more technical sales or marketing people. You know, you did obviously talk about, you know, you want to improve the time to market by actually being closer to customers with the R&D. Yeah, if you could just explain the changes, that'd be great.

Speaker #8: Yeah. Thank you, Anna. Congrats on the progress. I guess my first question is on the restructuring and moving, some people from marketing to engineering.

Speaker #8: I just want to understand that, a little bit better, Jen. because, you know, I assume these are probably more technical sales or marketing people.

Speaker #8: and, you know, you did obviously talk about you know, you want to improve the time to market by actually being closer to customers with the R&D.

Speaker #8: So, yeah, if you could just, explain the changes, that'd be great.

Speaker #5: Sure. Tori, thanks for the question. yes. Those are technical resources. And I'm going to let Nancy talk about it. That was a yeah. Sure.

Jennifer Lloyd: Sure. Tore, thanks for the question. Yes, those are technical resources, and I'm going to let Nancy talk about it.

Jen Lloyd: Sure. Tore, thanks for the question. Yes, those are technical resources, and I'm going to let Nancy talk about it.

Nancy Erba: Yeah, sure. We talked about this in the last call, right? As part of the restructuring, we really are going line by line and evaluating our resources. You know, how do we shift to be more customer-focused? As part of that, there were certain, and these are application engineers that were previously sitting in marketing. When Chris Jacobs joined and is really emphasizing, you know, how do we get closer to the customer and bring that customer input in, we found that those resources really should be more prioritized and more focused toward the product development piece of their work. We, at the time of the restructuring, made that move. It was effective 1 February with the rest of the restructuring activity, and we'll continue that forward.

Speaker #5: so we talked about this in the last call, right? As part of the restructuring, we, we really are going line by line and evaluating our resources, you know, how do we shift to be more customer-focused.

Speaker #5: And as part of that, there were certain and these are application engineers that were previously sitting in marketing. And when Chris Jacobs joined and is really emphasizing, you know, how do we get closer to the customer and bring that customer input in, we found that those resources really should be more prioritized and more focused toward the product development piece of their work.

Speaker #5: And, so we at the time of the restructuring made that move. So it was effective February 1st with the rest of the restructuring activity, and we'll continue that forward.

Nancy Erba: The other piece of that is that as we think about where those resources are focused, which products they're focused on, making sure that we're prioritizing those dollars to the most important markets that we serve and to the products that are gonna give us the highest ROI. There's a lot of work behind the scenes that's happening to make sure that that portfolio is really tightly aligned to what we're hearing from our customers and what we need to deliver to the market over the coming years.

Speaker #5: the other piece of that, is that as we think about where those resources are focused, which products they're focused on, you know, making sure that we're prioritizing those dollars, to the most important markets that we serve, and to the products that are going to give us the highest ROI.

Speaker #5: So there's, there's a lot of work behind the scenes that's happening to make sure that that portfolio is really tightly aligned to what we're hearing from our customers and what we need to deliver to the market over the coming years.

Speaker #8: Very good. And, and I want to follow up. and on the inventory topic, both internal, and the channel, obviously, you know, you're, you're trying to get it down to 200 internally.

Tore Svanberg: Very good. Then I'm gonna follow up and on the inventory topic, both internal and the channel. Obviously, you know, you're trying to get it down to 2 and internally, you're trying to get it to 8 weeks in the channel. Obviously demand is what's gonna, you know, eventually get you there. Are you doing anything else proactively, you know, to perhaps get to those types of targets, I guess, especially on the channel side? You know, when could we potentially, you know, think about POWI being back to those types of numbers?

Speaker #8: You're trying to get it to eight weeks, in, in the channel. and obviously, demand is what's going to, you know, eventually get you there.

Speaker #8: But are you are you doing anything else proactively, you know, to perhaps get to those types of, targets? I, I guess especially on the on the on the channel side.

Speaker #8: And, you know, when, when, when could we potentially, you know, think about how are we being, back to those types of, of, of, of numbers?

Speaker #5: Yeah. We're not doing anything unnatural in the channel. I mean, the demand is good. the first half demand is, you know, we're very pleased to see it.

Nancy Erba: We're not doing anything unnatural in the channel. I mean, the demand is good. The H1 demand is, you know, we're very pleased to see it, and it's across the board as we talked about. Nothing unnatural there. As we see revenue progress through the H2, we would expect to exit at that 8 week, potentially a little below there. It'll just depend upon the demand environment at the time. On the inventory that we hold on our balance sheet, we are putting a very concerted effort on that. You know, that is, that is cash, the way I look at it. We're making sure that we're reviewing that.

Speaker #5: And it's across the board, as we talked about. So nothing unnatural there. As we see revenue progress through the second half, we would expect to exit, at, that eight-week, potentially a little below there.

Speaker #5: It'll just depend upon the demand, environment at the time. On the inventory that we hold on our balance sheet, we are, we are putting a very concerted effort on that.

Speaker #5: you know, that is that is cash, the way I look at it. And, we're making sure that we're reviewing that. We have a now an ongoing cadence looking at that inventory.

Nancy Erba: We have now an ongoing cadence looking at that inventory, and the approval process to bring anything new in, right, goes through the same ROI rigor that we're putting across the company, whether that be in OpEx, inventory, CapEx. The team has really responded well, and we're seeing great execution there. Expect the inventory on our balance sheet to also continue to step down as we move through the year.

Speaker #5: And, the approval process to bring anything new in, right, goes through the same ROI rigor that we're putting across the company. Whether that be an OPEX inventory, CAPEX, it's been and the, the team has really, responded well.

Speaker #5: And we're seeing great execution there. So expect the inventory on our balance sheet to also continue to step down as we move through the year.

Speaker #8: Great, Paula. Thank you.

Tore Svanberg: Great. Thank you.

Speaker #7: There are no further questions at this time. I will now turn the call back to Jen Lloyd for closing remarks.

Operator: There are no further questions at this time. I will now turn the call back to Jennifer Lloyd for closing remarks.

Speaker #5: Thank you, everyone, for joining us today. I'm really optimistic about the opportunities ahead of us. Electrification, AI, and the rapidly transforming power grid are set to drive demand for advanced high-voltage semiconductors for many years to come.

Jennifer Lloyd: Thank you everyone for joining us today. I'm really optimistic about the opportunities ahead of us. Electrification, AI, and the rapidly transforming power grid are set to drive demand for advanced high voltage semiconductors for many years to come, and PI is well-positioned to capitalize with a strong technology foundation and a deep well of expertise in high voltage. In just a matter of months, we've assembled a transformational leadership team capable of translating innovation into sustainable, profitable growth. I wanna thank our investors, our customers, and suppliers for partnering with the PI team. Thank you and good afternoon.

Jen Lloyd: Thank you everyone for joining us today. I'm really optimistic about the opportunities ahead of us. Electrification, AI, and the rapidly transforming power grid are set to drive demand for advanced high voltage semiconductors for many years to come, and PI is well-positioned to capitalize with a strong technology foundation and a deep well of expertise in high voltage. In just a matter of months, we've assembled a transformational leadership team capable of translating innovation into sustainable, profitable growth. I wanna thank our investors, our customers, and suppliers for partnering with the PI team. Thank you and good afternoon.

Speaker #5: And PI is well positioned to capitalize with a strong technology foundation and a deep well of expertise in high voltage. In just a matter of months, we've assembled a transformational leadership team capable of translating innovation into sustainable, profitable growth.

Speaker #5: I want to thank our investors, our customers, and suppliers for partnering with the PI team. Thank you, and good afternoon.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.