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
Revenue
Decreasing
1.03B
QoQ: -11.84% | YoY: -41.89%
Gross Profit
Decreasing
561.40M
54.72% margin
QoQ: -16.02% | YoY: -49.88%
Operating Income
Decreasing
30.90M
QoQ: -78.92% | YoY: -94.16%
Net Income
Decreasing
-53.60M
QoQ: -168.37% | YoY: -112.79%
EPS
Decreasing
-0.10
QoQ: -166.67% | YoY: -112.82%
Revenue Trend
Margin Analysis
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
Gross Profit Margin
Good
54.70%
Gross profit margin is healthy and competitive within industry standards
Operating Profit Margin
Weak
3.01%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Weak
-0.05%
Net profit margin is below industry norms, profitability concerns
Return on Assets
Weak
0.00%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
-0.01%
Return on equity suggests inefficient capital allocation
Current Ratio
Healthy
2.25
Current ratio shows adequate liquidity to meet short-term obligations
Debt to Equity
High Risk
1.13
Debt-to-equity indicates high leverage and elevated financial risk
P/E Ratio
Negative
-143.75x
Negative earnings make P/E ratio not meaningful
Price to Book
Premium
5.11x
Trading at premium to book value, reflects strong intangibles or growth
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