Power Integrations Reports Strong Q2 Earnings with 16% Revenue Growth
Power Integrations, a top supplier of power supply components, announced a 16% sequential increase in revenues for the second quarter of 2024. The company has experienced a major turnaround in its consumer segment, which saw a 70% revenue jump over the past two quarters.
Key Takeaways
- Q2 revenues increased by 16% sequentially, led by a 70% rise in the consumer category.
- Acquisition of Odyssey Semiconductor's assets to boost vertical GaN technology capabilities.
- Q3 revenue forecast stands at $115 million, an 8% increase at the midpoint.
- Non-GAAP gross margin projected to be between 54.5% and 55% for Q3.
- Continued growth in the consumer business is expected as cyclical factors subside.
- GaN technology revenue could potentially reach $100 million by 2028.
- Currency fluctuations, particularly in the yen, could impact financials in Q4 or Q1 2026.
Company Outlook
Power Integrations remains a leader in the appliance market and expects to retain this position. Growth potential is seen in industrial and automotive applications for GaN-based products. An effective tax rate of approximately 4% is anticipated for Q3.
Bearish Highlights
- Lower demand for appliances in China could affect performance in that region.
- Increased input costs present challenges, although margins are expected to stay high.
Bullish Highlights
- The acquisition of Odyssey Semiconductor boosts the company's standing in the GaN technology space.
- Confidence in the growth trajectory with expected revenue increases and stable margins.
Q&A Highlights
- Sandeep Nayyar discussed how currency fluctuations influence financials. A 10% change in the yen previously impacted the company by about 120 basis points, affecting the P&L within six months. Now, due to increased inventory, it takes three to four quarters for the impact to show.
- No further questions were asked during the call.
Power Integrations is committed to its strategic initiatives, including leadership in the appliance market and advancements in GaN technology. The company's financial health appears stable with a solid revenue forecast, despite macroeconomic challenges and currency fluctuation concerns. Investors will be closely watching the company's progress in the upcoming quarters.
Company Transcript Highlights
- Balu Balakrishnan, Chairman and CEO, emphasized the company's recovery with Q2 revenues up 16% sequentially and another increase expected in Q3. Noted that appliance market demand remains soft but is optimistic about future growth driven by design wins and increased ASP.
- Sandeep Nayyar provided a financial review, highlighting that the non-GAAP gross margin for Q2 was 54.1%, up more than a percentage point from the prior quarter. The Q3 outlook includes a revenue forecast of $115 million and a non-GAAP gross margin between 54.5% and 55%. He also mentioned the effect of the yen on financials and expected operating expenses for Q3.
Power Integrations' financial stability and strategic moves in technology position it as a company to watch in the power supply components industry.
