Power Integrations, Inc. earnings

Management highlights

Industrial was the main driver of revenue growth this quarter, up 23% year over year. Consumer revenue saw a 17% sequential increase in Q1 as inventory build from tariff-related pull-ins in appliances cleared. Strategic focus areas include customer centricity, streamlining product pipeline for time to market, and operational and organizational efficiency. Mike Vallow joined as SVP of Worldwide Sales. New Tiny Switch 5 is off to a strong start and Top Switch GAN is performing well. In automotive, currently in production or design engagements with 17 of the top 20 EV manufacturers and on track to double automotive revenue this year. Industrial high power business continues to grow with key design wins. Data center continues to pursue multiple paths to growth with PowiGAN technology, and expects data center SAM including rack and grid applications to exceed $1 billion by 2030.

Guidance

Expect Q2 revenue to be between $115 and $120 million, up 8.5% at midpoint sequentially. Non-GAAP gross margin for Q2 is expected to be in the range of 54% - 55%. Non-GAAP operating expenses in Q2 are expected to be in the range of $47 million plus or minus half a million. Non-GAAP operating margin in Q2 is expected to be between 13.5% and 15.5%.

Segment performance

Q1 revenue was $108 million. Non-GAAP earnings were 25 cents per diluted share. Industrial was the main driver of revenue growth, up 23% year over year. Consumer revenue was down compared to Q1 2025 but saw a 17% sequential increase in Q1. Industrial business had a 15% sequential growth in Q1. Q2 revenue is expected to be between $115 and $120 million, up 8.5% at midpoint sequentially. Non-GAAP gross margin for Q2 is expected to be in the range of 54% - 55%. Non-GAAP operating expenses in Q2 are expected to be in the range of $47 million plus or minus half a million. Non-GAAP operating margin in Q2 is expected to be between 13.5% and 15.5%.

Risks & headwinds

Visibility is somewhat hampered by ongoing macro uncertainty. Less benefit from yen dollar exchange rate in Q1 due to stronger yen early in 2025 with about a one-year lag between yen fluctuations and impact on P&L.

Analyst Q&A

• Q: Starting out, how are you thinking about compute and comms markets going forward?

  A: Compute and comms in Q1 were seasonally low, expected to be seasonally up in Q2. Not de-emphasizing these areas as there's opportunity.

• Q: Talk about GAN and main power engagements.

  A: GAN engagement is going great, ongoing for high voltage architectures like 800 volt, engaging across data center ecosystem.

• Q: On consumer segment's second quarter sub-seasonality.

  A: Consumer Q2 expected to be sub-seasonal, flat to slightly up with some offsets.

• Q: On GAN portion of data center SAM.

  A: Bulk of data center SAM is GAN, split between inside and outside data center, with ongoing engagements.

• Q: On automotive revenue over next 12 - 24 months.

  A: Automotive revenue to push out but making good progress towards $100 million target by 2029.

• Q: On restructuring moving people from marketing to engineering.

  A: Technical resources (application engineers previously in marketing) moved to product development to be closer to customer.

• Q: On inventory management proactively.

  A: Not doing anything unnatural in channel, ongoing effort on balance sheet inventory with ROI rigor, expecting inventory to continue stepping down.