Executive Summary
Microchip Technology reported QQ4 2025 revenue of USD 970.5 million, representing a year-over-year decline of 26.8% and a sequential drop of 5.4%. The company delivered a gross profit of USD 501.1 million, yielding a gross margin of 51.6%, but incurred an operating loss of USD 100.3 million and a net loss of USD 154.6 million (EPS of -0.2913). The results reflect a weaker demand environment for semiconductors, with a challenging top-line backdrop that pressured profitability despite a resilient gross margin. On the balance sheet, Microchip maintains substantial liquidity with USD 771.7 million of cash and equivalents and a total debt load of USD 5.67 billion, resulting in a net debt position of USD 4.89 billion. Free cash flow stood at USD 191.7 million, underscoring meaningful cash generation even as net income remained negative. The quarter also featured a notable equity issuance of USD 1.404 billion, with dividends of USD 244.8 million and modest net financing cash flow. Looking forward, the company faces a consumer and industrial semiconductor cycle recovery risk, with profitability hinges on revenue stabilization, mix shift toward higher-margin offerings (including licensing within the Technology Licensing segment), and disciplined cost management. Overall, the QQ4 2025 print suggests a transitional period where cash generation and margin structure offer a buffer, but sustained earnings require demand recovery and improved operating leverage.
Key Performance Indicators
QoQ: -5.41% | YoY:-26.80%
QoQ: -10.74% | YoY:-36.56%
QoQ: -424.60% | YoY:-139.57%
QoQ: -188.43% | YoY:-199.94%
QoQ: -191.30% | YoY:-200.45%
Key Insights
Revenue: USD 970.5M; YoY -26.80%, QoQ -5.41%
Gross Profit: USD 501.1M; YoY -36.56%, QoQ -10.74%; Gross Margin 51.63%
Operating Income: USD -100.3M; YoY -139.57%, QoQ -424.60%
Net Income: USD -154.6M; YoY -199.94%, QoQ -188.43%
EPS: USD -0.2913; YoY -200.45%, QoQ -191.30%
Cash Flow: Operating cash flow USD 205.9M; Free cash flow USD 191.7M; Capex USD 14.2M
Balance Sheet: Cash and cash equivalents USD 771.7M; Total debt USD 5.67B; Net debt USD 4.89B; Total assets USD 15.3746B; Total stockholder...
Financial Highlights
Revenue: USD 970.5M; YoY -26.80%, QoQ -5.41%
Gross Profit: USD 501.1M; YoY -36.56%, QoQ -10.74%; Gross Margin 51.63%
Operating Income: USD -100.3M; YoY -139.57%, QoQ -424.60%
Net Income: USD -154.6M; YoY -199.94%, QoQ -188.43%
EPS: USD -0.2913; YoY -200.45%, QoQ -191.30%
Cash Flow: Operating cash flow USD 205.9M; Free cash flow USD 191.7M; Capex USD 14.2M
Balance Sheet: Cash and cash equivalents USD 771.7M; Total debt USD 5.67B; Net debt USD 4.89B; Total assets USD 15.3746B; Total stockholders’ equity USD 7.0783B; Goodwill USD 8.0848B; Intangibles USD 2.389B; Inventory USD 1.2935B; Accounts receivable USD 0.6897B; Accounts payable USD 0.1606B
Valuation/Margins: Gross margin ~51.6%; Net margin -16.16%; P/E negative; P/S 26.81x; Dividend yield ~0.94%; Price to Sales ratio 26.81x
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
970.50M |
-26.80% |
-5.41% |
| Gross Profit |
501.10M |
-36.56% |
-10.74% |
| Operating Income |
-100.30M |
-139.57% |
-424.60% |
| Net Income |
-154.60M |
-199.94% |
-188.43% |
| EPS |
-0.29 |
-200.45% |
-191.30% |
Key Financial Ratios
operatingProfitMargin
-10.3%
dividendPayoutRatio
-155.9%
priceEarningsRatio
-41.48
Management Commentary
No earnings call transcript provided for QQ4 2025. Consequently, management quotes or thematic takeaways could not be incorporated from a direct transcript in this analysis.
No earnings call transcript available for QQ4 2025.
—
No additional management quotes available in the provided data.
—
Forward Guidance
No explicit forward-looking guidance was provided in the supplied data for QQ4 2025. Given the revenue decline and ongoing profitability pressures, the near-term outlook depends on a stabilization of demand across consumer, industrial, and automotive segments, a favorable product mix shift toward higher-margin offerings (notably in the Technology Licensing and Analog/Mixed-Signal portfolios), and ongoing cost discipline. Investors should monitor: (1) demand signals from key end markets (industrial, automotive, data communications), (2) mix progression toward higher-margin products and licensing, (3) inventory normalization in the supply chain, (4) utilization of cash flow to deleverage or opportunistically fund strategic investments, and (5) potential changes in capital allocation policy including dividends and share repurchases in light of net debt levels.