Executive Summary
Microchip Technology Inc. (MCP.DE) delivered a challenging QQ3 2025, characterized by a pronounced year-over-year revenue decline and a move to negative GAAP net income, underscored by a high-interest burden and lingering cyclicality in the semiconductor market. Revenue of $1.026 billion declined by 41.9% year over year and 11.8% quarter over quarter, while gross margin remained resilient at 54.7%, supporting EBITDA of $209.4 million and an EBITDA margin of 20.4%. Despite negative net income of $53.6 million, the company generated solid operating cash flow of $271.5 million and free cash flow of $253.4 million, enabling continued capital allocation and modest shareholder returns.
Key Performance Indicators
QoQ: -11.84% | YoY:-41.89%
QoQ: -16.02% | YoY:-49.88%
QoQ: -78.92% | YoY:-94.16%
QoQ: -168.37% | YoY:-112.79%
QoQ: -166.67% | YoY:-112.82%
Key Insights
Revenue: $1.026B, YoY: -41.89%, QoQ: -11.84%
Gross Profit: $561.4M, Gross Margin: 54.72%, YoY: -49.88%, QoQ: -16.02%
Operating Income: $30.9M, Operating Margin: 3.01%, YoY: -94.16%, QoQ: -78.92%
EBITDA: $209.4M, EBITDA Margin: 20.41%
Net Income: -$53.6M, Net Margin: -5.22%, YoY: -112.79%, QoQ: -168.37%
EPS (Diluted): -$0.10, YoY: -112.82%, QoQ: -166.67%
Cash Flow: Operating Cash Flow $271.5M; Capex $18.1M; Free Cash Flow $253.4M; Net Change in Cash $299.9M
Liquidity & Balance Sheet: Cash &am...
Financial Highlights
Revenue: $1.026B, YoY: -41.89%, QoQ: -11.84%
Gross Profit: $561.4M, Gross Margin: 54.72%, YoY: -49.88%, QoQ: -16.02%
Operating Income: $30.9M, Operating Margin: 3.01%, YoY: -94.16%, QoQ: -78.92%
EBITDA: $209.4M, EBITDA Margin: 20.41%
Net Income: -$53.6M, Net Margin: -5.22%, YoY: -112.79%, QoQ: -168.37%
EPS (Diluted): -$0.10, YoY: -112.82%, QoQ: -166.67%
Cash Flow: Operating Cash Flow $271.5M; Capex $18.1M; Free Cash Flow $253.4M; Net Change in Cash $299.9M
Liquidity & Balance Sheet: Cash & Equivalents $586M; Total Assets $15.63B; Total Debt $6.78B; Net Debt $6.20B; Current Ratio 2.25; Quick Ratio 1.23; Cash Ratio 0.44
Shareholder & Leverage Metrics: Dividends Paid $244.6M; Common Stock Repurchased $6.5M; Weighted Avg Shares 537.4M; Interest Expense $68.7M; Debt to Equity 1.13; Debt to Capitalization 0.53; Interest Coverage 0.45
Market Via Multiples: P/S ~30.04x; P/B ~5.11x; P/E negative; ROA (negative), ROE negative; Asset Turnover 0.0656; Cash Conversion Cycle ~338 days
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.03B |
-41.89% |
-11.84% |
| Gross Profit |
561.40M |
-49.88% |
-16.02% |
| Operating Income |
30.90M |
-94.16% |
-78.92% |
| Net Income |
-53.60M |
-112.79% |
-168.37% |
| EPS |
-0.10 |
-112.82% |
-166.67% |
Key Financial Ratios
operatingProfitMargin
3.01%
operatingCashFlowPerShare
$0.51
freeCashFlowPerShare
$0.47
dividendPayoutRatio
-456%
priceEarningsRatio
-143.75
Management Commentary
Note: The earnings transcript is not available in the provided data. Consequently, no management quotes or thematic highlights from the call could be extracted. The analysis relies on reported financials and publicly available ratio trends.
Forward Guidance
No explicit forward guidance is included in the provided materials. Absent formal guidance, the outlook rests on industry cyclicality, product mix resilience (notably MCU and analog segments), and the ability to translate EBITDA strength into free cash flow amid a high debt load. Investors should monitor: (1) demand stabilization in automotive/industrial segments and any evidence of inventory correction; (2) management’s commentary on cost containment, R&D prioritization, and any plans to optimize the balance sheet; (3) potential leverage reduction via free cash flow, asset divestitures, or capital allocation shifts; and (4) industry-wide supply chain dynamics and pricing trends for core products.