Analog Devices (ADI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $2.31 billion, up 7% sequentially but down 25% year-over-year, surpassing guidance midpoint.

• Net income for Q3 was $392 million, down 55% year-over-year; diluted EPS was $0.79, adjusted EPS $1.58.

• Improved customer inventory and order momentum suggest recovery past the cycle trough, though management remains cautious due to ongoing economic and geopolitical uncertainty.

• Strategic investments continue in high-performance analog solutions, targeting long-term growth across industrial, automotive, communications, and consumer markets.

• $574 million was returned to shareholders via dividends and repurchases in Q3.

Financial highlights

• GAAP gross margin for Q3 was 56.7%, down from 63.8% a year ago; adjusted gross margin was 67.9%.

• Operating income for Q3 was $491 million (21.2% of revenue), down 47% year-over-year; adjusted operating income was $952 million.

• Free cash flow for the trailing twelve months was $2.9 billion, or 30% of revenue.

• Net leverage ratio stood at 1.2, with over $2.5 billion in cash and short-term investments.

• Returned $2.8 billion to shareholders via dividends and buybacks over the past year.

Outlook and guidance

• Q4 2024 revenue expected at $2.4 billion, plus or minus $100 million, with sequential growth at midpoint.

• Q4 reported EPS projected at $0.85 (+/- $0.10); adjusted EPS at $1.63 (+/- $0.10).

• Operating margin guidance is 41% ±100 bps; tax rate expected between 11% and 13%.

• Quarterly dividend of $0.92 per share declared, payable September 17, 2024.

• Management expects a robust growth year in 2025, with Q1 likely to follow typical seasonal declines.