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    ADI
    Earnings call· Nov 2025(Q4 FY25)

    ANALOG DEVICES INC ADI

    Nov 25, 2025 Source

    Executive summary

    Analog Devices Q4 FY25 — Strong Growth Across End Markets and Record Free Cash Flow

    Analog Devices concluded FY25 with robust financial performance, exceeding revenue and EPS expectations driven by broad-based growth across all end markets and strong execution against Maxim revenue synergies. The company generated record free cash flow and returned significant capital to shareholders, while making record R&D investments. Despite persistent macro and geopolitical headwinds, ADI anticipates continued profitable growth in FY26, particularly in industrial and communications, fueled by AI infrastructure demand and strategic product innovation.

    Highlights

    5

    • FY25 revenue increased 17% to over $11 billion, with double-digit growth across all end markets.

    • FY25 non-GAAP EPS grew over 20% to $7.79.

    • Record free cash flow of $4.3 billion (39% of revenue) was generated in FY25, up from 33% in FY24.

    • The company returned $4.1 billion to shareholders in FY25 through dividends and share repurchases.

    • Q4 revenue reached $3.08 billion, up 7% sequentially and 26% year-over-year, exceeding the midpoint of outlook.

    Concerns

    3

    • Q4 gross margin of 69.8% missed the 70% target due to a less favorable mix, with stronger auto performance relative to industrial.

    • The Automotive segment is expected to be down mid-single digits sequentially in Q1 FY26, below seasonal, due to tariff and macro risks.

    • Wireless communications experienced softness in FY25, though management believes the market bottomed during the year.

    Guidance & targets

    12
    CategoryTargetConfidence
    Revenue
    $3.1 billion, plus or minus $100 million
    high materiality
    High
    Non-GAAP Operating Margin
    43.5%, plus or minus 100 basis points
    medium materiality
    High
    Tax Rate
    12% to 14%
    low materiality
    High
    Adjusted EPS
    $2.29, plus or minus $0.10
    high materiality
    High
    Industrial Segment Revenue Growth
    up mid-single digits sequentially
    medium materiality
    Medium
    Automotive Segment Revenue Growth
    down mid-single digits sequentially
    medium materiality
    Medium
    Communications Segment Revenue Growth
    up 10% sequentially
    medium materiality
    Medium
    Consumer Segment Revenue Growth
    down low double digits sequentially
    medium materiality
    Medium
    All End Markets Revenue Growth
    up year-over-year
    high materiality
    Medium
    Maxim Revenue Synergies
    $1 billion
    medium materiality
    High
    Aerospace and Defense Market Growth
    more than double
    medium materiality
    Medium
    AI/Data Center and ATE Businesses Growth
    double-digit growth
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Industrial
    Stronger than seasonal results, underpinning cyclical momentum and secular growth in AI infrastructure. Expected to be up mid-single digits sequentially in Q1 FY26.
    Q4 Revenue Mix: 46%FY25 Growth: 15%Record years for Aerospace and Defense and ATE
    		$1.417B34%12%—
    Automotive
    Double-digit year-over-year growth driven by connectivity and functionally safe power solutions. Expected to be down mid-single digits sequentially in Q1 FY26 due to tariff and macro risks.
    Q4 Revenue Mix: 28%FY25 Growth: 16%All-time high revenue in FY25
    		$0.862B19%1%—
    Communications
    Fueled by continued strength in the AI infrastructure market. Wireless revenue up double digits YoY for second straight quarter, owing to improving cyclical dynamics. Expected to be up 10% sequentially in Q1 FY26.
    Q4 Revenue Mix: 13%FY25 Growth: 26%Data center segment surpassed $1 billion run rateData center grew >50% YoY for 3 consecutive quartersWireless revenue flat in FY25
    		$0.400B37%4%—
    Consumer
    Driven by strong growth in handsets, gaming, and hearables/wearables. Expected to be down low double digits sequentially in Q1 FY26.
    Q4 Revenue Mix: 13%FY25 Growth: 19%Record year for hearables and wearables segment
    		$0.400B7%7%—

    Operational metrics

    23
    Non-GAAP Gross Margin
    69.3%up 140 bps
    FY25

    Driven by higher utilizations.

    Non-GAAP Gross Margin
    69.8%up 60 bps sequentially, up 190 bps year-over-year
    Q4 FY25

    Driven by higher utilization and favorable mix. Did not reach 70% due to mix component (stronger auto vs. industrial).

    Non-GAAP Operating Margin
    41.9%up 100 bps
    FY25

    Includes headwind associated with normalization of variable comp.

    Non-GAAP Operating Margin
    43.5%up 130 bps sequentially, up 240 bps year-over-year
    Q4 FY25

    Resulting from OpEx of $809 million.

    Non-GAAP EPS
    $7.79increased 22%
    FY25

    On a fully diluted basis.

    Non-GAAP EPS
    $2.26up 10% sequentially, 35% year-over-year
    Q4 FY25

    On a fully diluted basis.

    Capital Expenditure
    $0.5 billion
    FY25

    Reduced CapEx contributed to record free cash flow.

    Cash and Short-Term Investments Balance
    $3.7 billion
    Q4 FY25

    Balance at the end of the fourth quarter.

    Net Leverage Ratio
    0.9decreased
    Q4 FY25

    Reflects the company's debt position.

    Inventories
    $59 millionup sequentially
    Q4 FY25

    Company continues to build die bank buffers for fastest-growing applications.

    Days of Inventory
    159declined by 1
    Q4 FY25

    Reflects inventory management.

    Channel Inventory
    approximately 6 weeksincreased
    Q4 FY25

    Remains lean.

    Shareholder Returns
    $4.1 billion
    FY25

    Total returned through dividends and share repurchases.

    Dividend Increase
    8%
    FY25

    Supported by strong operating results.

    R&D Investments
    record
    FY25

    Prioritized capital for R&D activities to advance leadership in analog, mixed signal, and power technologies.

    Design Pipeline Growth
    >20%
    FY25

    Reflects strong focus on driving customer success.

    Maxim Revenue Synergies
    hundreds of millionsaccelerated
    FY25

    Against a $1 billion target by FY27, with stronger contribution expected in FY26.

    ATE Business Growth
    40%
    FY25

    Driven by AI and high-performance compute demand.

    Data Center Business Growth
    50%
    FY25

    Grew over 50% YoY for 3 consecutive quarters, fueled by AI infrastructure.

    Data Center Run Rate
    $1 billion
    Q4 FY25

    Segment surpassed this run rate in Q4 FY25.

    ATE Run Rate
    $800 million
    Q4 FY25

    Current run rate for the automatic test equipment business.

    Automotive Content Growth
    10%
    per annum

    Expected to continue given strength of pipeline despite flat SAAR.

    Dividend Allocation
    40% to 60%
    long term

    Target allocation of free cash flow for dividends.

    Industry KPIs

    8
    MetricValueDetails
    Lead timessub-13 weeks
    Book to bill ratiojust below 1
    Ai data center revenueData Center: $1 billion run rate; ATE: $800 million run rateUSD
    Fab capacity utilizationhigher
    Design wins socket pipelinesecured design wins
    Inventory channel inventory159days
    Node platform ramp scheduleHBM4
    End market segment revenue mixIndustrial: 46%; Automotive: 28%; Communications: 13%; Consumer: 13%%

    Product announcements

    3
    ProductTypeDetails
    E2B Ethernet buslaunch
    Software-defined AI-enabled macro base station on a chip solutionlaunch
    Acoustics platformlaunch

    Capital programs

    1
    Capacity enhancement following Maxim acquisitionunderwayover $3 billion
    Start: following Maxim acquisition

    Benefit: substantially enhance capacity, optionality and resiliency for customers, supporting long-term vision for sustained growth

    Allocated capital expenditures to enhance capacity and resiliency.

    Risks & headwinds

    6
    Persistent macro and geopolitical headwindsongoing

    unquantified

    Mitigation: Diversified business model, technology leadership, application domain expertise, trusted brand.

    Continued impacts of tariffs and trade uncertaintyongoing

    unquantified

    Mitigation: Company is mindful of the environment and confident in growth.

    Uncertain macro environmentFY26

    unquantified

    Mitigation: Company expects all end markets to be up despite the macro outlook.

    Automotive market risksQ1 FY26

    Q1 FY26 revenue down mid-single digits sequentially

    Mitigation: Cautious approach due to tariffs and volatility, positive design win traction and content gains expected to drive FY26 growth.

    Wireless communications softnessFY25

    FY25 wireless revenue flat

    Mitigation: Market bottomed during the year, positive impact from new software-defined AI-enabled macro base station products.

    Gross margin mix impactQ4 FY25

    Q4 FY25 gross margin 69.8% (below 70% target)

    Mitigation: Stronger auto performance kept industrial mix lower than planned. Higher industrial mix in Q1 FY26 expected to offset seasonal pressure and hold gross margin flat.

    What to watch in Q1 FY26

    5

    Industrial Segment Growth

    Q1 FY26
    CurrentUp 12% sequentially in Q4 FY25
    TargetUp mid-single digits sequentially

    Why it matters

    Industrial is a key growth driver, and its sequential performance will indicate continued cyclical momentum and AI infrastructure demand.

    industrial, we expect to be up mid-single digits above seasonal.

    Q&A highlights

    5

    Seeking segment-level color for Q1 FY26 strength and whether the implied strong FY26 sales growth (12-13%) is sustainable given macro conditions.

    Q1 FY26 outlook is above seasonal, with Industrial expected up mid-single digits, Auto down mid-single digits, Comms up 10%, and Consumer down low double digits sequentially. All markets are expected to be up year-over-year for FY26. Management believes industrial and communications will lead FY26 growth, driven by cyclical dynamics, AI infrastructure, aerospace and defense, and ATE. Auto content growth is expected to continue despite flat SAAR.

    “My expectation is that in '26, industrial and communications will lead the charge.”

    asked by Vivek Arya · answered by Richard Puccio, Vincent Roche

    2 min read5 chapters

    Detailed Narrative

    01

    FY25 Performance Highlights

    Analog Devices reported FY25 revenue exceeding $11 billion, a 17% increase from FY24, with all end markets achieving double-digit growth. Non-GAAP EPS rose 22% to $7.79, driven by top-line strength and margin expansion. The company generated record free cash flow of $4.3 billion, representing 39% of revenue, and returned $4.1 billion to shareholders through dividends and share repurchases, including an 8% dividend increase.

    02

    Strategic Investments in Innovation

    ADI prioritized R&D, making record investments in FY25 to advance its leadership in analog, mixed-signal, and power technologies. The company is also intensifying its focus on software, digital, and AI capabilities to strengthen its core franchise, enabling it to address increased customer complexity and expedite innovation cycles. This strategic focus has led to stronger value capture, particularly in new products where average selling prices significantly exceed legacy offerings.

    03

    Industrial Segment Momentum

    The industrial segment saw broad-based growth in FY25, driven by improved cyclical dynamics and powerful secular trends such as AI, automation, and efficient energy management. The automatic test equipment (ATE) business had a record year, benefiting from exponential growth in demand for AI and high-performance compute, with further growth anticipated in FY26 due to HBM4 transition and expected double-digit growth in hyperscaler CapEx. Robotics and health care also showed notable expansion.

    04

    Automotive and Communications Strength

    Automotive achieved a record year in FY25, growing 16% and outpacing light vehicle production, fueled by advances in autonomous driving and cabin digitalization. In the communications sector, AI CapEx investment led to a record year for the data center segment, which surpassed a $1 billion run rate and grew over 50% YoY for three consecutive quarters. Wireless communications, though soft in FY25, is believed to have bottomed, with new software-defined AI-enabled macro base station products securing design wins.

    05

    Maxim Synergy and Future Growth Outlook

    The Maxim acquisition continues to drive significant revenue synergies, contributing hundreds of millions in FY25 towards a $1 billion target by FY27, with expectations for even stronger contributions in FY26. ADI's diversified business model, combined with its technology leadership at the intelligent edge and extensive application domain expertise, positions the company for continued profitable growth in FY26 and beyond, despite ongoing macro and geopolitical uncertainties.

    AI-generated summary of the company’s earnings call. Not investment advice.