Analog Devices (ADI) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 revenue reached $9.43 billion, with EPS of $6.38, reflecting recovery from a cyclical low and outperforming guidance midpoints despite a 23% year-over-year decline due to inventory headwinds.

• Operating margin for the year was above 40% on an adjusted basis, demonstrating business model resilience.

• Over $2.4 billion was returned to shareholders via $0.6 billion in share repurchases and $1.8 billion in dividends.

• Investments in R&D, digital, and AI capabilities led to new product launches and double-digit growth in the design win pipeline.

• The company navigated significant inventory digestion and macroeconomic headwinds, maintaining strong execution and financial discipline.

Financial highlights

• Q4 revenue was $2.44 billion, up 6% sequentially but down 10% year-over-year, exceeding guidance midpoint.

• Q4 adjusted gross margin was 67.9%; Q4 operating margin was 41.1%.

• Q4 adjusted EPS was $1.67, above the midpoint of guidance.

• FY24 operating cash flow was $3.85 billion; free cash flow was $3.12 billion (33% of revenue).

• $2.4 billion was returned to shareholders via dividends and buybacks.

Outlook and guidance

• Q1 FY25 revenue expected at $2.35 billion ±$100 million, with adjusted operating margin around 40% and adjusted EPS of $1.53 ±$0.10.

• CapEx to normalize to 4%-6% of revenue in FY25, with investment tax credits providing free cash flow tailwinds.

• Expectation to return to 100% free cash flow return to shareholders in FY25.

• Management remains cautiously optimistic for strong growth in FY25 despite macro uncertainty.