STMicroelectronics N.V. Q4 FY2025 earnings call

• In Q4 2025, revenues were $3.33 billion, above the midpoint of the business outlook range. Gross margin was 35.2% above the midpoint. Q4 marked the return to year-over-year growth, with inventory worked down and $257 million free cash flow generated. • For the full year 2025, net revenues decreased 11.1% to $11.8 billion. Gross margin was 33.9%, down from 39.3% in 2024. Invested $1.79 billion in net CapEx and generated free cash flow of $265 million. • In Automotive, Q4 revenues grew 3% sequentially, with design wins in electric and traditional vehicle domains. Acquisition of NXP's MEMS sensor business expected to close in H1 2026. • In Industrial, revenues were better than expected, with inventories normalizing and design wins in various industrial sectors. • In Personal Electronics, revenues were above expectations, strengthening position in mobile and connected devices. • Communication equipment and computer peripherals were up 23% sequentially, reinforcing AI and data center position, with design wins for power solutions and progress in silicon photonics and low-earth orbit satellite business. • On sustainability, on track for 2027 commitments, with launch of Singapore's largest industrial district cooling system in Q4.

In the fourth quarter of 2025, Analog products, MEMS and sensor grew by 7.5%. Power and Discrete products decreased by 31.6%. Embedded Processing revenues were up 1% to 2%. RF and optical communication grew by 22.9%. For the full year 2025, net revenues decreased by 11.1% to $11.8 billion. By end market, Automotive accounted for about 39% of total revenues, Personal Electronics about 25%, Industrial about 21%, and Communication and Computer Peripheral about 15%.

• Expect Q1 2026 revenues at $3.04 billion, a decrease of 8.7% sequentially ±350 basis points. Gross margin expected at about 33.7% ±200 basis points, including about 220 basis points of unused capacity charges. • Plan to invest about $2.2 billion in net CapEx in 2026 for growth drivers like cloud optical interconnect and manufacturing reshaping. • Confident in organic growth in 2026 with specific drivers in automotive (ADAS, silicon carbide), sensors (planned acquisition of NXP MEMS), Industrial (general purpose MCUs), Personal Electronics, communication equipment (data centers), low-earth orbit satellites, and human wind robotics.

• Risks associated with forward-looking statements where results could differ materially from expectations. • Market fluctuations in automotive and industrial sectors, including inventory dynamics and competition. • Impact of global tariffs on business operations. • Supply chain challenges and impacts of manufacturing reshaping program on gross margin.

Q: Francois-Xavier Bouvignies asked about the trajectory from here and gross margin recovery.

A: Jean-Marc Chery and Lorenzo Grandi discussed confidence in organic growth in 2026 with specific growth drivers and expectation of gross margin increase throughout 2026.

Q: Andrew Gardiner inquired about automotive customer behavior and China partnership.

A: Jean-Marc Chery talked about automotive market mix changes, inventory correction, and progress with Sanan in China.

Q: Joshua Buchalter asked about Personal Electronics segment and industrial book-to-bill.

A: Jean-Marc Chery mentioned no significant impact from memory costs on Personal Electronics and positive book-to-bill in Industrial.

Q: Stephane Houri asked about year scenario and gross margin.

A: Jean-Marc Chery and Lorenzo Grandi confirmed inventory correction progress and expectation of Q4 2026 gross margin being better than Q4 2025.

Q: Domenico Ghilotti asked about unloaded charges and low earth orbit second client.

A: Lorenzo Grandi explained unused charges trend related to capacity reduction and Jean-Marc Chery confirmed the significance of the second client in low-earth orbit business.

Q: Sandeep Deshpande asked about fab loading and microcontroller mix.

A: Lorenzo Grandi discussed fab loading related to capacity reduction and Jean-Marc Chery noted strong growth in general purpose microcontroller.

Q: Sébastien Sztabowicz asked about transformation program and OpEx trend.

A: Lorenzo Grandi talked about transformation program progress and OpEx expectation for 2026, including on-track savings ambition and OpEx trend.