Allegro MicroSystems (ALGM) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 sales were $167 million, at the high end of guidance, with non-GAAP EPS of $0.03 and GAAP net loss of $17.7 million; sales declined 40% year-over-year due to broad-based demand declines and inventory reductions.

• Significant progress was made in reducing inventory across automotive and industrial channels, with expectations for continued rebalancing in Q2.

• Major share repurchase from Sanken Electric reduced its ownership from 51% to 33%, increasing free float and improving governance; transaction funded by equity issuance, term loan, and cash.

• Company maintains global leadership in magnetic sensors and power ICs, with 72% of sales from automotive markets and well-diversified geographic sales.

• New product launches included high-voltage Power-Thru and advanced sensor solutions, supporting growth in automotive, renewable energy, and industrial automation.

Financial highlights

• Q1 FY2025 net sales were $167 million, down 40% year-over-year; automotive sales were $131.2 million (down 29% YoY), industrial and other sales were $35.7 million (down 62% YoY).

• GAAP gross margin was 44.8% (down from 56.8% YoY); non-GAAP gross margin was 48.8%.

• GAAP operating margin was (6.4)% (down from 25.4% YoY); non-GAAP operating margin was 6.0%.

• GAAP net loss was $17.7 million (–$0.09 per share); non-GAAP net income was $6.0 million ($0.03 per share).

• Adjusted EBITDA was $21.9 million (13.1% margin); free cash flow was $23.2 million (13.9% of sales); cash at quarter-end was $173.1 million.

Outlook and guidance

• Q2 FY2025 net sales expected between $182 million and $192 million, implying 12% sequential growth at midpoint.

• Q2 non-GAAP gross margin forecasted at 49%–51%; non-GAAP EPS expected at $0.04–$0.08 per share.

• Management anticipates a return to low double-digit sequential sales growth in Q2 and further reduction in diluted share count.