Executive Summary
Microchip Technology reported QQ1 2025 results that reflect the cyclicality typical of the semiconductor industry. Revenue came in at $1.2413B, down -45.76% year over year and -6.37% quarter over quarter, signaling weaker end-market demand relative to the prior-year period. Despite the revenue contraction, gross margins remained strong at approximately 59.36%, and operating margin stood at about 17.65%, underscoring the company’s ability to preserve profitability in a downturn driven by volume declines and mix shifts. Net income was $129.3M with earnings per share of $0.24. The company generated solid operating cash flow of $377.1M and free cash flow of $304.2M, supporting deleveraging and shareholder return activity even as total debt remained elevated at about $6.20B and net debt around $5.89B. The balance sheet shows substantial goodwill and intangible assets, contributing to a high asset base and a leverage profile (debt to equity near 0.97; debt ratio ~0.39). Liquidity metrics remained reasonable but are sensitive to cyclicality, with a current ratio of ~1.94 and cash ratio ~0.21. Absent explicit forward guidance in the data, the outlook hinges on demand stabilization in auto/industrial segments and continued execution on cost discipline and working capital management. Management commentary (when available) typically emphasizes pipeline strength in embedded processing, R&D, and select design-wins; however, the QQ1 data indicate a revenue trough that will require favorable end-market dynamics to re-accelerate growth. Investors should monitor: (1) demand recovery signals in MCUs/analog/mixed-signal applications, (2) ongoing cost controls and inventory normalization, (3) debt reduction progress and capital allocation decisions, and (4) potential upside from licensing and product mix shifts.
Key Performance Indicators
QoQ: -6.37% | YoY:-45.76%
QoQ: -6.71% | YoY:-52.71%
QoQ: -13.57% | YoY:-75.74%
QoQ: -16.42% | YoY:-80.60%
QoQ: -17.24% | YoY:-80.33%
Key Insights
Revenue: $1.2413B; YoY change: -45.76%; QoQ change: -6.37%
Gross Profit: $736.9M; Gross Margin: 59.36%; YoY Gross Profit change: -52.71%; QoQ: -6.71%
Operating Income: $219.1M; Operating Margin: 17.65%; YoY OpEx change not disclosed in data; QoQ: -13.57%
Net Income: $129.3M; Net Margin: 10.42%; YoY Net Income change: -80.60%; QoQ: -16.42%
EPS (basic/diluted): $0.24; YoY EPS change: -80.33%; QoQ: -17.24%
Operating Cash Flow: $377.1M; Free Cash Flow: $304.2M; Cash at End of Period: $315.1M
Cash Fl...
Financial Highlights
Revenue: $1.2413B; YoY change: -45.76%; QoQ change: -6.37%
Gross Profit: $736.9M; Gross Margin: 59.36%; YoY Gross Profit change: -52.71%; QoQ: -6.71%
Operating Income: $219.1M; Operating Margin: 17.65%; YoY OpEx change not disclosed in data; QoQ: -13.57%
Net Income: $129.3M; Net Margin: 10.42%; YoY Net Income change: -80.60%; QoQ: -16.42%
EPS (basic/diluted): $0.24; YoY EPS change: -80.33%; QoQ: -17.24%
Operating Cash Flow: $377.1M; Free Cash Flow: $304.2M; Cash at End of Period: $315.1M
Cash Flow Turn: Net cash provided by operating activities aligns with FCF; Investing activities burned cash of $125.5M; Financing activities consumed $256.2M (debt repayment $185.5M, share repurchases $72.7M, dividends $242.6M)
Balance Sheet Liquidity: Total current assets $2.9483B; Total current liabilities $1.5203B; Current ratio 1.939; Quick ratio 1.079; Cash & equivalents $315.1M; Total debt $6.2029B; Net debt $5.8878B; Equity $6.406B; Total assets $15.84B
Valuation/Leverage Indicators: Debt-to-equity ~0.97; Gross margin ~59.36%; EBITDAR ~33.06%; Net debt/EBITDA not directly provided but implied elevated leverage; P/E ~95.0x and price-to-book ~7.67x based on available ratios (varied by equity base).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.24B |
-45.76% |
-6.37% |
| Gross Profit |
736.90M |
-52.71% |
-6.71% |
| Operating Income |
219.10M |
-75.74% |
-13.57% |
| Net Income |
129.30M |
-80.60% |
-16.42% |
| EPS |
0.24 |
-80.33% |
-17.24% |
Key Financial Ratios
operatingProfitMargin
17.7%
operatingCashFlowPerShare
$0.7
freeCashFlowPerShare
$0.57
dividendPayoutRatio
187.6%
Management Commentary
Earnings call transcript not provided in the input dataset. As a result, management quotes and thematic quotes could not be extracted. If a transcript becomes available, key themes typically include: (1) demand drivers in embedded processing, automotive, and industrial segments; (2) capacity and supply chain dynamics; (3) targeted product mix, pricing discipline, and gross margin resilience; (4) capital allocation priorities (deleveraging vs. shareholder returns).
Not available in the provided data.
—
Not available in the provided data.
—
Forward Guidance
No explicit forward guidance was included in the provided data. Based on the QQ1 2025 fundamentals, the near-term outlook hinges on a potential rebound in end-market demand for microcontrollers and analog devices, stabilization of average selling prices, and continued efficiency improvements. The company’s sizable free cash flow supports deleveraging potential and continued return of capital if demand improves. Key factors to monitor: 1) order trends and backlog in target end-markets (auto, industrial, IoT), 2) cadence of R&D investments and potential design wins that could translate into revenue in coming quarters, 3) inventory levels and working capital normalization, 4) cadence of debt reduction and any refinancing actions, and 5) pricing/mix changes that could affect gross margin stability.