POWER INTEGRATIONS INC Q4 FY2024 earnings call

• Balu announced his intent to retire as CEO, with the board engaging an executive search firm; he'll remain until successor is in place and serve as executive chairman. • Greg Lowe joined the board on February 15. • Q4 revenues were $105 million, in line with guidance; full-year revenues $419 million. • 2025 growth drivers include India expansion (e.g., supplying gate drivers for electric locomotives, winning metering/fixed wireless rollouts) and GaN technology, with GaN-based product revenues expected to exceed 10% of sales. • Automotive efforts progressing, with revenues to grow rapidly in 2025 and more substantial contribution from 2026, expanding into Europe, US, Japan. • GaN progress includes design wins in TV, metering, and 5G fixed wireless, with industry awards for GaN products.

Revenues in Q4 were $105 million, up 18% year over year. Full-year revenues were $419 million, down 6% from the prior year. Segment revenue mix for Q4 was 37% consumer, 35% industrial, 15% computer, and 13% communications. The communications category fell over 60% due to exiting the China OEM cell phone business, while the rest of the business grew 17% with consumer up over 35%, computer up more than 10%, and industrial up about 3%.

• Q1 revenue guidance: flat sequentially, midpoint of range, equating to a year-over-year increase of 15%. • Non-GAAP gross margin for Q1 expected between 55.5% and 56%. • Full-year non-GAAP gross margin expected around 55.5%, up about one point vs 2024. • Non-GAAP operating expenses for Q1 expected around $45 million, slight increase from Q4; full-year OpEx expected to increase by about 6%, with about one percentage point due to full year of Odyssey expenses. • Effective tax rate for first quarter and year expected in range of 5% to 6%.

• Risks related to trade policy and end market demand uncertainties that may cause actual results to differ materially from projections. • Impact of tariffs and Chinese subsidies on end market demand, which are difficult to predict and can have short-term impacts.

Q: David Williams asked about greater conviction in GaN for higher power and EV drivetrain, and Balu responded about strides made, acquisition of Odyssey Semiconductor aiding progress towards higher power loads for EV drivetrain, and broad adoption of GaN across markets.

A: Balu said significant strides in GaN technology, acquired Odyssey to reach higher power loads for EV, GaN adopted broadly across markets.

Q: David Williams asked about automotive design wins and GaN trend; Balu responded about 20 designs in production, 900-volt GaN for 400-volt battery systems, 1700-volt GaN for 800-volt, and progress in DC-DC converters and onboard chargers.

A: Balu mentioned 20 designs in production, 900-volt and 1700-volt GaN for different battery systems, progress in DC-DC converters and onboard chargers.

Q: Ross Seymore asked about biggest update in end market environment; Balu responded about industrial growth due to infrastructure projects, renewables, high voltage DC transmission, meters, home/building automation, etc.

A: Balu said industrial growth due to infrastructure projects, renewables, meters, home/building automation, etc.

Q: Ross Seymore asked if all four segments would grow; Balu responded all four segments expected to grow, with industrial as largest growth, and growth in communication due to cell phone and networking products.

A: Balu said all four segments expected to grow, industrial largest, communication growing from cell phone and networking.

Q: Tore Svanberg asked about March quarter segment performance; Balu responded consumer and industrial to grow, communication and computer to be down.

A: Balu said consumer and industrial grow, communication and computer down.

Q: Tore Svanberg asked about channel inventory target in Q1; Sandeep responded sell-in and sell-through expected similar, so channel inventory should hold.

A: Sandeep said sell-in and sell-through expected similar, channel inventory should hold.

Q: Tore Svanberg asked about data center power supplies; Balu responded first product for data centers next year, products entirely GaN, standby products already GaN-based with growth.

A: Balu said first data center product next year, entirely GaN, standby products GaN-based with growth.

Q: Christopher Rolland asked about GaN competition; Balu responded compete well across power spectrum, sell system not discrete GaN, 300mm wafers not beneficial for high voltage GaN due to stress issues.

A: Balu said compete well across power spectrum, sell system, 300mm wafers not beneficial for high voltage GaN.

Q: Christopher Rolland asked about tariffs and Chinese subsidies; Sandeep responded watching sell-through in Q1 to determine impact of tariffs and subsidies, trade policy impacting end market demand but growth drivers exist for good year if normal.

A: Sandeep said watching Q1 sell-through to determine tariff and subsidy impact, trade policy impacts demand but growth drivers present for good year if normal.