Q4 FY2025 Revenue $3.08B +26% YoY Toward High End of Guide, EPS $2.26 +35% YoY Beats Street, Data Center Surpassed $1B Quarterly Run Rate, FY2025 Record FCF $4.3B (39% Revenue) + EPS $7.79 +22% YoY, Q1 FY2026 Guide $3.1B + $2.29 EPS Above Street (7th Consecutive Above-Seasonal Quarter) — Maintaining Outperform
Key Takeaways
- Q4 revenue $3.08B (+26% YoY / +7% QoQ) beats Street $3.02B; toward high end of guide $3.0B ± $100M. Non-GAAP EPS $2.26 (+35% YoY / +10% QoQ) beats $2.20 Street above high end of $2.22 ± $0.10 guide. Non-GAAP operating margin 43.5% (+130bp QoQ / +240bp YoY).
- FY2025 record cyclical recovery year: Revenue $11.0B (+17% YoY); FY25 EPS $7.79 (+22% YoY); Record FCF $4.3B (39% of revenue, vs FY24's 33%). $4.1B returned to shareholders (22nd consecutive annual dividend increase +8%). All end markets grew double-digit.
- DATA CENTER SEGMENT SURPASSED $1 BILLION QUARTERLY RUN RATE in Q4 — landmark AI infrastructure milestone. Data center YoY growth >50% for 3 consecutive quarters. ~2/3 of total communications segment. FY26 trajectory supported by continued hyperscaler capex.
- End market performance Q4: Industrial 46% (+34% YoY, stronger than seasonal); Automotive 28% (+19% YoY, FY25 record); Communications 13% (+37% YoY, data center driving); Consumer 13% (+7% YoY).
- FY2025 end market FY summary: Industrial +15%; Automotive +16% (all-time HIGH); Communications +26% (FASTEST GROWING — data center record); Consumer +19%.
- ATE record year — SoC + memory test growth. FY26 catalysts: HBM4 industry transition + expected double-digit hyperscaler capex growth + expanding design pipeline.
- Multi-year product launches: NEW E2B Ethernet bus (auto market expansion); NEW Acoustics platform (analog + power + digital + ML, TRIPLE value vs legacy); NEW software-defined AI-enabled macro base station on a chip (wireless OEM design wins).
- Q1 FY26 guide: Revenue $3.1B ± $100M; operating margin 43.5% ± 100bp; EPS $2.29 ± $0.10 — all above Street. **7th consecutive quarter above seasonal**. All end markets +YoY. Assumption: sell-in = sell-through (no incremental channel inventory build).
- Q1 FY26 end market outlook: Industrial up MSD% above seasonal; Communications up 10% above seasonal (AI infrastructure); Auto down MSD% BELOW seasonal (tariff/macro risk); Consumer seasonally down LDD.
- FY26 framework: "Broad-based growth"; Industrial + Communications lead; all end markets +YoY. ATE HBM4 transition + hyperscaler capex; auto 10% content growth per annum sustained; consumer diversified.
- Stock +4.7% to ~$288 on multi-quarter execution + multi-year framework validation. YTD return +28%; multi-quarter compounder thesis intact.
- Rating: Maintaining Outperform. Multi-quarter cyclical recovery validated; multi-year ATE/data center secular tailwinds; multi-year automation + humanoid framework; multi-year capital return discipline. Bull case 12-month PT updated to $320-360.
Results vs. Consensus
Q4 FY2025 Scorecard ($USD)
| Metric | Q4 Actual | Guide / Street | Beat/Miss | Magnitude |
|---|---|---|---|---|
| Revenue | $3.08B (+26% YoY) | $3.0B ± $100M; $3.02B Street | Beat | Toward high end; +2% Street |
| Non-GAAP gross margin | 69.8% (+60bp QoQ / +190bp YoY) | ~70% guide | In Line | Back to 70% per guide |
| Non-GAAP operating margin | 43.5% (+130bp QoQ / +240bp YoY) | 43.5% ± 100bp guide | Above midpoint | As guided |
| Non-GAAP EPS | $2.26 (+35% YoY / +10% QoQ) | $2.22 ± $0.10 guide; $2.20 Street | Beat | Above high end; +$0.06 Street |
FY2025 Full Year ($USD)
| Metric | FY25 | FY24 | YoY % |
|---|---|---|---|
| Revenue | $11.0B | $9.43B | +17% |
| Non-GAAP gross margin | 69.3% | ~67.9% | +140bp |
| Non-GAAP operating margin | 41.9% | ~40.9% | +100bp |
| Non-GAAP EPS | $7.79 | $6.38 | +22% |
| Operating cash flow | $4.8B | n/a | Record |
| CapEx | $0.5B | ~$1.3B | Normalized |
| Free cash flow | $4.3B (39% revenue, RECORD) | $3.1B (33%) | +39% |
| Capital returned | $4.1B | n/a | $4B+ |
End Market Q4 FY2025 (Mix + Growth)
| Segment | Q4 Mix | QoQ | YoY | FY25 Growth |
|---|---|---|---|---|
| Industrial | 46% | +12% | +34% | +15% |
| Automotive | 28% | +1% | +19% | +16% (record) |
| Communications | 13% | +4% | +37% | +26% (fastest) |
| Consumer | 13% | +7% | +7% | +19% |
Revenue assessment. Q4 revenue $3.08B (+26% YoY) toward high end of guide. Industrial recovery continued (+34% YoY); Communications strongest (+37% YoY on data center); Automotive sustained (+19% YoY); Consumer +7% YoY (decelerated). FY25 closed at $11B (+17% YoY) — multi-year cyclical recovery year completed. All four end markets grew double-digit in FY25.
Margin assessment. Q4 gross margin 69.8% (+60bp QoQ; +190bp YoY) — utilization returning + favorable mix. Operating margin 43.5% (+130bp QoQ; +240bp YoY) — multi-quarter operating leverage continuing. FY25 operating margin 41.9% (+100bp YoY) despite variable comp normalization. Multi-year operating margin trajectory toward 43-45% framework intact.
EPS assessment. Q4 non-GAAP EPS $2.26 (+35% YoY / +10% QoQ) — above high end of guide. FY25 EPS $7.79 (+22% YoY). Multi-quarter EPS power: cyclical recovery + multi-year megatrend content + operating leverage + multi-year buyback EPS contribution. Q1 FY26 guide $2.29 ± $0.10 implies ~$9.50+ annualized run-rate.
Segment Performance
Industrial — +34% YoY / +12% QoQ Stronger Than Seasonal (FY25 +15%)
Industrial recovery continuing at +12% QoQ — stronger than seasonal. AI infrastructure driving ATE business RECORD quarter. Aerospace + Defense RECORD FY25. Energy fastest-growing industrial sub-segment FY25. Healthcare (robot-assisted surgery, diabetes management) growing. Multi-year automation framework + humanoid robotics multi-year framework.
"For the full year, Industrial increased 15% with growth across every major application, including record years for aerospace and defense and ATE."
— Richard Puccio, CFO
Assessment. Industrial Q4 stronger than seasonal + multi-year megatrend content + multi-year automation framework supports sustained multi-year growth.
Automotive — +19% YoY / +1% QoQ (FY25 +16% All-Time HIGH)
FY25 auto +16% all-time HIGH. Q4 +19% YoY momentum sustained. L2+ ADAS share gains globally. GMSL + A2B + functional safety power drove design wins. NEW E2B Ethernet bus product expanding market. 10% content growth per annum sustained (vs SAAR flat).
Assessment. Multi-year auto content growth thesis intact. SAAR-flat + 10% content growth + E2B expansion = multi-year above-industry growth.
Communications — +37% YoY / +4% QoQ (FY25 +26% FASTEST GROWING)
Data center crossed $1B quarterly run rate Q4 — landmark milestone. Data center YoY growth >50% for 3 consecutive quarters. FY25 communications +26% (FASTEST growing segment). Wireless flat FY25 (inventory digestion complete). NEW software-defined AI-enabled macro base station on a chip drove design wins.
"Our data center segment surpassed the $1 billion run rate this quarter and on a year-over-year basis has now grown more than 50% for 3 consecutive quarters, fueled by continued strength in the AI infrastructure market."
— Richard Puccio, CFO
Assessment. Data center $1B run-rate is multi-year secular growth landmark. Multi-quarter +50% YoY growth + AI infrastructure capex sustained. Multi-year communications growth structurally tied to AI infrastructure.
Consumer — +7% YoY / +7% QoQ (FY25 +19%)
Consumer Q4 +7% YoY decelerated from prior quarters' +20-30%. FY25 +19% on handsets + gaming + record hearables/wearables. NEW Acoustics platform — TRIPLE value vs legacy. Power management design wins in premium handsets + smart glasses.
Assessment. Multi-quarter consumer deceleration likely normalization; multi-year diversification + new platforms support continued growth.
Key Topics & Management Commentary
Overall Management Tone: Highly confident closing FY25 record year + introducing FY26 framework. Vincent Roche articulated multi-year secular themes; Rich Puccio delivered operational discipline + Q1 FY26 guide above Street.
1. Data Center $1B Quarterly Run Rate Landmark
Q4 data center segment surpassed $1B quarterly run rate. >50% YoY growth for 3 consecutive quarters. Multi-year AI infrastructure capex driving sustained growth. ~2/3 of communications segment.
Assessment. Multi-year AI infrastructure exposure structurally validated.
2. Record FY25 FCF $4.3B (39% of Revenue)
FY25 record FCF $4.3B (vs FY24's $3.1B at 33% of revenue). 39% FCF margin — record. $4.1B returned to shareholders ($4B+ in dividends + buybacks). 22nd consecutive dividend increase (+8%).
Assessment. Multi-year FCF compounding supports multi-year capital return acceleration.
3. ATE HBM4 Transition + Hyperscaler CapEx — Multi-Year Catalyst
FY25 ATE record year. FY26 catalysts: HBM4 industry transition + expected double-digit hyperscaler capex growth + expanding design pipeline.
"We anticipate further growth in FY '26 due to our expanding design pipeline industry transitions to HBM4 and expected double-digit growth in hyperscaler CapEx."
— Vincent Roche, CEO + Chair
Assessment. Multi-year ATE growth structurally tied to AI tester demand.
4. NEW E2B Ethernet Bus Product (Auto Market Expansion)
NEW E2B Ethernet bus expanding auto market. Simplifies customer systems + boosts power efficiency + lowers costs. Multi-year auto content expansion vector.
Assessment. Multi-year auto content expansion supports above-industry growth.
5. NEW Acoustics Platform (Consumer/Healthcare)
NEW Acoustics platform — analog + power + digital + ML for environmental awareness + adaptive noise cancellation. TRIPLE value vs legacy designs. Consumer + healthcare design wins.
Assessment. Multi-year platform content multiplier across consumer + healthcare verticals.
6. Q1 FY26 Above Seasonal — 7th Consecutive Quarter
Q1 FY26 guide $3.1B sequential up vs normal Q1 seasonal down MSD. 7th consecutive quarter above seasonal performance. All end markets +YoY. Assumption: sell-in = sell-through.
"Q1, which is our weakest sequential quarter with normal seasonality typically down mid-single digits. And our outlook is up slightly quarter-over-quarter, reflects our seventh straight quarter of above seasonal growth. And another key point is additionally, our outlook assumes sell-in and sell-through are equal."
— Richard Puccio, CFO
Assessment. 7th consecutive quarter above seasonal validates multi-quarter cyclical recovery + multi-year structural growth.
7. FY2026 Framework — All End Markets Up YoY
FY26 outlook: broad-based growth + all end markets +YoY. Industrial + Communications lead. Data center capex surge expected. AD&A + ATE strong content stories. Auto: SAAR flat but 10% content growth per annum. Consumer: tremendous diversity.
Assessment. Multi-year FY26 framework supports multi-quarter compounder thesis.
8. Auto Q1 FY26 Below Seasonal — Tariff Risk
Q1 FY26 auto guided DOWN MSD% BELOW seasonal. Tariff + macro risk acknowledged. Multi-quarter auto Q1 caution.
Assessment. Multi-quarter auto headwind acknowledged; multi-year content growth thesis intact (10% per annum vs SAAR flat).
9. Maxim Revenue Synergy Execution
"Strong execution against Maxim revenue synergy targets" — Maxim integration multi-year synergy realization continues. $3B+ CapEx since Maxim acquisition supports multi-year capacity + optionality + resiliency.
Assessment. Multi-year Maxim integration value capture intact.
10. R&D Record Investment + Software/AI Focus
FY25 R&D record investments. Increased focus on software, digital, AI capabilities. ASP expansion: new products significantly exceed legacy ASPs. Design pipeline grew >20% in FY25.
Assessment. Multi-year R&D investment supports multi-year content + ASP expansion.
11. Multi-Year Capital Return Discipline
22nd consecutive annual dividend increase (+8%). FY25 capital returned $4.1B. Multi-year capital return framework: 100% FCF (40-60% dividend; remainder buybacks). Net leverage 0.9x.
Assessment. Multi-year capital return discipline + multi-year FCF compounding supports multi-year shareholder returns.
Guidance & Outlook
Q1 FY2026 Guide
- Revenue: $3.1B ± $100M (sequential UP — 7th consecutive above-seasonal)
- Operating margin: 43.5% ± 100bp
- Tax rate: 12-14%
- Adjusted EPS: $2.29 ± $0.10
- Assumption: sell-in = sell-through
Q1 FY2026 End Market Outlook (vs Seasonality)
- Industrial: up MSD% above seasonal
- Automotive: down MSD% BELOW seasonal (tariff/macro risk)
- Communications: up 10% above seasonal (AI infrastructure)
- Consumer: seasonally down LDD%
- ALL end markets up YoY
FY2026 Framework (Implied)
- Annualized Q1 run-rate: ~$12.4B (vs FY25 $11B) = +12-13% growth
- Operating margin trajectory: 43.5% maintained/expanding
- EPS power: ~$9.50-10.00 annualized run-rate
Analyst Q&A Highlights
Q1 FY26 Strength + FY26 Macro Outlook
Vivek Arya (BofA) explored Q1 sequential strength + FY26 macro. Rich + Vince: 7th consecutive above-seasonal quarter; sell-in = sell-through assumption; all end markets +YoY in FY26; Industrial + Communications lead; data center capex surge; AD&A + ATE; auto SAAR-flat with 10% content growth.
Q: "I think you're guiding Q1 slightly up, which is a little bit above seasonal. So I was hoping you could give us some color by segment where you're seeing the strength... And if I were to just annualize Q1 guidance, that suggests a very strong kind of 12%, 13% sales growth year in fiscal '26. And I was really hoping to get your perspective as you start the new fiscal year on what you're seeing from a broader macro perspective."
— Vivek Arya, Bank of America
A: "Q1, which is our weakest sequential quarter with normal seasonality typically down mid-single digits. And our outlook is up slightly quarter-over-quarter, reflects our seventh straight quarter of above seasonal growth... So from an end market color perspective, industrial, we expect to be up mid-single digits above seasonal. We expect auto to be down mid-single digits below seasonal... Comms, we expect to be up 10% above seasonal. Again, we're seeing real strength in the AI infrastructure and demand for our data center products. And then consumer seasonally down low double digits. And then all markets, we expect to be up year-over-year."
— Richard Puccio, CFO + Vincent Roche, CEO
Assessment: Multi-quarter Q1 above-seasonal trajectory + multi-year FY26 framework support multi-quarter compounder thesis.
Auto Q4 Beat + Pull-In Activity
Joseph Moore (Morgan Stanley) asked about Q4 auto outperformance vs guidance + pull-in activity. Management: limited pull-in; underlying L2+ ADAS share gains + content growth.
Assessment: Multi-quarter auto content growth thesis sustained.
What They're NOT Saying
- FY26 explicit revenue/EPS framework: Only Q1 FY26 guidance; FY26 framework implied at +12-13%.
- Humanoid robotics revenue contribution: Multi-year potential but no current revenue.
- HBM4 transition revenue impact: Catalyst acknowledged but no quantification.
- Buyback acceleration plans: 40-60% dividend / remainder buyback framework; no explicit acceleration commitment.
Market Reaction
- Pre-print setup (Nov 24 close): approximately $275 (ADR). YTD: ~+28%; trailing 12M: ~+20%.
- Day-of reaction: Pre-market +3-5% on broad beat + data center $1B + Q1 above seasonal.
- November 25 close: approximately $288, up +4.7% (+$13). Volume ~5M shares (~1.2x).
- November 26 close: ~$290, continued strength.
- Sell-side: Multiple PT raises 3-10%; new range $310-345.
The +4.7% post-print rally validates the multi-quarter compounder thesis. Multi-quarter execution + record FY25 + Q1 FY26 above Street + data center $1B landmark + multi-year framework collectively support multi-year Outperform.
Street Perspective
Debate: Multi-Year FY26 Outlook + Macro Risk
Bull view: 7th consecutive above-seasonal quarter; all end markets +YoY; data center $1B run rate; HBM4 + hyperscaler capex tailwinds; multi-year automation framework. Annualized Q1 implies +12-13% FY26 growth.
Bear view: Auto Q1 below seasonal; consumer decelerating; premium multi-year valuation; macro uncertainty.
Our take: Bull view captures multi-year framework. Multi-quarter execution + multi-year secular drivers support continued Outperform.
Debate: Data Center $1B Run-Rate Multi-Year Sustainability
Bull view: >50% YoY 3 consecutive quarters + AI infrastructure capex continued strength + power + optical control product leadership. Multi-quarter sustained growth.
Bear view: Data center concentrated in few hyperscaler customers; capex cycle moderation risk.
Our take: Multi-year AI infrastructure exposure structurally favorable.
Debate: At ~$290 / ~31x Forward FY26 EPS, Multi-Quarter Compounder Priced?
Bull view: Multi-year compounder + multi-year secular drivers + multi-year capital return + multi-year ATE/automation growth supports continued multi-quarter execution. Bull case 12-month PT $320-360.
Bear view: Premium multiple at multi-quarter peak.
Our take: Base case 12-month PT $300-330 (+3-14%); bull case $320-360 (+10-24%); bear case $260-280 (-10 to -3%). Up/down ratio ~2:1.
Model Update Needed
| Item | Prior (Q3 Recap) | Updated (Q4) | Reason |
|---|---|---|---|
| FY2025 Revenue | $10.8-11.0B | $11.0B (actual) | Q4 beat confirms |
| FY2025 Non-GAAP EPS | $7.65-7.85 | $7.79 (actual) | Q4 beat confirms |
| FY2026 Revenue | $12.3-12.8B | $12.4-12.8B | Q1 FY26 guide annualized |
| FY2026 Non-GAAP EPS | $9.10-9.60 | $9.30-9.80 | Continued operating leverage |
| 12-month PT (base) | $280-310 | $300-330 | ~32x forward FY26 EPS |
| 12-month PT (bull) | $300-340 | $320-360 | ~36x on multi-year framework |
| 12-month PT (bear) | $230-250 | $260-280 | ~28x |
Thesis Scorecard Post-Earnings
| Thesis Point | Status | Notes |
|---|---|---|
| Q3 Signpost: Cyclical recovery multi-quarter | FY25 closed strong | +17% FY25 revenue; +22% FY25 EPS |
| Q3 Signpost: AI tester multi-year | Record year | ATE record FY25; HBM4 FY26 catalyst |
| Q3 Signpost: Multi-year automation framework | Reinforced | Robotics + humanoid + NVIDIA |
| Bull #1: Cyclical recovery | Confirmed | +17% FY25 |
| Bull #2: Operating leverage | Confirmed | 43.5% Q4 OP margin |
| Bull #3: NEW — Data center $1B run-rate landmark | New Catalyst | >50% YoY 3 consec quarters |
| Bull #4: NEW — HBM4 transition + hyperscaler capex | New Catalyst | FY26 growth driver |
| Bull #5: NEW — E2B Ethernet + Acoustics platform | New Catalysts | Multi-year content expansion |
| Bull #6: Capital return discipline | Confirmed | $4.1B returned; 22nd consecutive div +8% |
| Bull #7: Multi-quarter above seasonal | 7th consecutive | Q1 FY26 above seasonal |
| Bear #1: Auto Q1 FY26 below seasonal | Tariff/macro | Down MSD% below seasonal |
| Bear #2: Consumer Q4 decel | Monitoring | +7% YoY vs prior +20-30% |
Overall: Multi-year compounder thesis confirmed. 7 of 7 bull points confirmed/strongly confirmed (3 new catalysts). 2 bear points are monitoring items. Multi-quarter execution + multi-year framework intact.
Action: Maintaining Outperform. New positions: $265-295 zone acceptable. Bull case 12-month PT $320-360. Next binding catalysts: (1) Q1 FY26 print (February 2026), (2) HBM4 transition timing, (3) Capital return execution + multi-year automation execution.