DIODES INC /DEL/ Q4 FY2025 earnings call

• Fourth-quarter revenue grew 15% year-over-year and full-year 2025 revenue was up 13%, the highest annual growth since 2021.
• Focus on automotive, industrial, and computing markets for AI-related server applications. Automotive market had 6% sequential and 24% year-over-year growth. Computing market had 25% full-year growth.
• Initial improvement in gross margin due to product mix benefit from automotive market growth. Focus on increasing manufacturing efficiency and minimizing underloading costs.
• Long-term goal to reach $2,500,000,000 in revenue and $1,000,000,000 in gross profit (40% gross margin). Introduced three-year interim targets: $2,000,000,000 in annual revenue, ~$700,000,000 in gross profit (35%+ gross margin), and over $4 in non-GAAP EPS with 50% CAGR over three years.
• Brett Whitmire discussed financial results: fourth-quarter GAAP net income $10.2 million, full-year GAAP net income $66.1 million. First-quarter 2026 revenue expected ~$395.0 million ±3%, GAAP gross margin 31.5% ±1%, etc.
• Emily Yang talked about revenue drivers (strong demand in Asia, especially Taiwan for AI server-related computing), global sales by region (Asia 78%, Europe 12%, North America 10%), end market performance, content expansion (over 650 new part numbers in 2025, 40% for automotive), and design wins across end markets.

Fourth-quarter revenue was $391.6 million, up 15.4% year-over-year, and full-year 2025 revenue was $1.5 billion, up 13% year-over-year. Product segments by end market: industrial was 22% of product revenue, automotive 20%, computing 28%, consumer 17%, and communication 13% of product revenue. Automotive market saw 6% sequential growth and 24% year-over-year growth. Computing market had a 25% full-year growth, driven by AI server-related applications.

• First-quarter 2026 revenue expected to be approximately $395.0 million plus or minus 3%.
• GAAP gross margin is expected to be 31.5% plus or minus 1%.
• Non-GAAP operating expenses are expected to be approximately 26.5% plus or minus 1%.
• Net interest income is expected to be approximately $1.0 million.
• Income tax rate is expected to be 18.5% plus or minus 3%.

• Management's prepared remarks contain forward-looking statements subject to risks and uncertainties. Actual results may differ from those discussed. Risks and uncertainties are detailed in the company's filings with the Securities and Exchange Commission, including Form 10-Ks and 10-Qs.
• Market conditions may change, and the company assumes no obligation to update projections except as required by law.

Q: Can you walk through the puts and takes of the aggressive targets outlined?

A: Gary Yu emphasized commitment to long-term goals, interim target of $2 billion revenue as a milestone, driving share in key markets, improving cost structure and product mix, with $4 non-GAAP EPS expected over three years.

Q: Regarding the new targets, should we contemplate the interim goal as something to achieve in calendar twenty-eight?

A: Gary Yu said definitely, relating to the 45% drop-through.

Q: You have manufacturing services agreements ending this year, can you clarify and its impact on profitability?

A: Gary Yu said agreements are about to end this year, progress with key customers adapting to product from g-fab and s-p fab, benefit likely seen next year contributing to gross profit percent.

Q: Can you size the magnitude of the opportunity with Nexperia and talk about margin stabilization?

A: Emily Yang said they use the opportunity to deepen relationships, expand portfolio, and benefit long-term.

Q: How does the lunar holiday in Asia impact seasonality?

A: Emily Yang said Chinese New Year shutdowns are included in estimates, but strong backlog and bookings led to strong Q1 guidance showing market recovery