Allegro MicroSystems (ALGM) Q2 2025 earnings summary

Executive summary

• Q2 FY25 sales reached $187.4 million, up 12% sequentially but down 32% year-over-year, with growth in automotive and industrial segments despite a challenging macro environment.

• Non-GAAP EPS was $0.08, at the high end of guidance, while GAAP net loss was $(33.7) million; gross margin was 48.8% non-GAAP and 45.7% GAAP.

• Inventory normalization is largely complete in China, while North America and Europe continue to face production and inventory challenges.

• Major share repurchase from Sanken completed, funded by new equity and term loan facility, significantly altering the capital structure.

• New product launches and ongoing investments in innovation are expected to drive future growth.

Financial highlights

• Q2 sales: $187.4 million, up 12% sequentially, down 32% year-over-year; GAAP gross margin: 45.7%, non-GAAP: 48.8%.

• Automotive sales: $142 million, up 8% sequentially, down 28% year-over-year; Industrial and other sales: $45 million, up 27% sequentially, down 42% year-over-year.

• Operating margin: 11.7% non-GAAP, 2.2% GAAP; adjusted EBITDA margin: 17.2%.

• Net income: $15 million non-GAAP; net loss: $(33.7) million GAAP; non-GAAP EPS: $0.08.

• Cash and equivalents at quarter-end: $188.8 million; free cash flow: $5.6 million.

Outlook and guidance

• Q3 sales expected between $170–$180 million, reflecting seasonality, vehicle electrification, and ongoing inventory normalization.

• Q3 non-GAAP gross margin projected at 49%–51%; non-GAAP EPS expected between $0.04–$0.08.

• Tax rate for Q3 expected at 6%; diluted share count at 185 million; interest expense anticipated at $6 million.