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Analog Devices (ADI) Q3 Earnings & Revenues Miss, Fall Y/Y
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Analog Devices Inc. (ADI - Free Report) delivered third-quarter fiscal 2023 adjusted earnings of $2.49 per share, missing the Zacks Consensus Estimate by 1.6%. The bottom line declined by 1% from the year-ago fiscal quarter’s reported figure.
Revenues of $3.08 billion lagged the Zacks Consensus Estimate of $3.09 billion. The top line fell 1% from the year-ago fiscal quarter’s reported figure.
Softness in communications and consumer markets was a major negative.
Nevertheless, the company witnessed solid momentum across the industrial and automotive markets during the reported quarter.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Industrial: The market generated revenues of $1.63 billion (accounting for 53% of the total revenues), which grew 4% year over year.
Communications: Revenues from the market were $380.5 million (12% of revenues), decreasing 23% from the year-ago fiscal quarter’s reported figure.
Automotive: Revenues from the market summed up to $747.6 million (24% of revenues), up 15% from the year-ago fiscal quarter’s level.
Consumer: The market generated revenues of $319.2 million (9% of revenues), reflecting a 21% decline from the year-ago fiscal quarter’s reported figure.
Operating Details
The adjusted gross margin contracted 190 basis points (bps) from the year-ago fiscal quarter’s level to 72.2%.
Adjusted operating expenses were $752.03 million, up 0.7% from the year-ago fiscal quarter’s level. As a percentage of revenues, adjusted operating expenses were 24.4%, expanding 40 bps year over year.
The adjusted operating margin contracted 230 bps on a year-over-year basis to 47.8% in the reported quarter.
Balance Sheet & Cash Flow
As of Jul 29, 2023, cash and cash equivalents were $1.15 billion, down from $1.18 billion as of Apr 29, 2023.
Long-term debt was $6.44 billion at the end of the fiscal third quarter compared with $6.48 billion at the end of the fiscal second quarter.
Net cash provided by operations was $1.14 billion in the reported quarter, up from $1.08 billion in the prior fiscal quarter.
ADI generated $818 million of free cash flow in the fiscal third quarter.
Analog Devices returned $1.1 billion to its shareholders in the fiscal third quarter, of which dividend payments accounted for $430 million and repurchased shares amounted to $687 million.
Guidance
For fourth-quarter fiscal 2023, ADI expects revenues of $2.70 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $2.99 billion.
Non-GAAP earnings are expected to be $2.00 (+/- $0.10) per share. The consensus mark for the same is pinned at $2.46 per share.
Analog Devices anticipates non-GAAP operating margin of 44% (+/- 70 bps).
Zacks Rank & Stocks to Consider
Currently, Analog Devices carries a Zacks Rank #3 (Hold).
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Analog Devices (ADI) Q3 Earnings & Revenues Miss, Fall Y/Y
Analog Devices Inc. (ADI - Free Report) delivered third-quarter fiscal 2023 adjusted earnings of $2.49 per share, missing the Zacks Consensus Estimate by 1.6%. The bottom line declined by 1% from the year-ago fiscal quarter’s reported figure.
Revenues of $3.08 billion lagged the Zacks Consensus Estimate of $3.09 billion. The top line fell 1% from the year-ago fiscal quarter’s reported figure.
Softness in communications and consumer markets was a major negative.
Nevertheless, the company witnessed solid momentum across the industrial and automotive markets during the reported quarter.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Analog Devices, Inc. price-consensus-eps-surprise-chart | Analog Devices, Inc. Quote
Revenues by End Markets
Industrial: The market generated revenues of $1.63 billion (accounting for 53% of the total revenues), which grew 4% year over year.
Communications: Revenues from the market were $380.5 million (12% of revenues), decreasing 23% from the year-ago fiscal quarter’s reported figure.
Automotive: Revenues from the market summed up to $747.6 million (24% of revenues), up 15% from the year-ago fiscal quarter’s level.
Consumer: The market generated revenues of $319.2 million (9% of revenues), reflecting a 21% decline from the year-ago fiscal quarter’s reported figure.
Operating Details
The adjusted gross margin contracted 190 basis points (bps) from the year-ago fiscal quarter’s level to 72.2%.
Adjusted operating expenses were $752.03 million, up 0.7% from the year-ago fiscal quarter’s level. As a percentage of revenues, adjusted operating expenses were 24.4%, expanding 40 bps year over year.
The adjusted operating margin contracted 230 bps on a year-over-year basis to 47.8% in the reported quarter.
Balance Sheet & Cash Flow
As of Jul 29, 2023, cash and cash equivalents were $1.15 billion, down from $1.18 billion as of Apr 29, 2023.
Long-term debt was $6.44 billion at the end of the fiscal third quarter compared with $6.48 billion at the end of the fiscal second quarter.
Net cash provided by operations was $1.14 billion in the reported quarter, up from $1.08 billion in the prior fiscal quarter.
ADI generated $818 million of free cash flow in the fiscal third quarter.
Analog Devices returned $1.1 billion to its shareholders in the fiscal third quarter, of which dividend payments accounted for $430 million and repurchased shares amounted to $687 million.
Guidance
For fourth-quarter fiscal 2023, ADI expects revenues of $2.70 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $2.99 billion.
Non-GAAP earnings are expected to be $2.00 (+/- $0.10) per share. The consensus mark for the same is pinned at $2.46 per share.
Analog Devices anticipates non-GAAP operating margin of 44% (+/- 70 bps).
Zacks Rank & Stocks to Consider
Currently, Analog Devices carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology sector are NetEase (NTES - Free Report) , Applied Materials (AMAT - Free Report) and Salesforce (CRM - Free Report) . While NetEase and Applied Materials sport a Zacks Rank #1 (Strong Buy) each, Salesforce carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NetEase shares have gained 40.2% in the year-to-date period. NTES’s long-term earnings growth rate is currently projected at 13.18%.
Applied Materials shares have gained 51.8% in the year-to-date period. The long-term earnings growth rate for AMAT is currently projected at 6.10%.
Salesforce shares have gained 55.9% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 19.25%.