STMicroelectronics (STM) Q1 2025 earnings summary

Executive summary

• Q1 2025 net revenues were $2.52 billion, down 27.3% year-over-year and 24.2% sequentially, with gross margin at 33.4% and net income at $56 million, reflecting significant declines across most end markets and in line with guidance midpoint.

• Automotive and industrial segments saw lower revenues, while personal electronics performed slightly better than expected; book-to-bill ratio improved, with Automotive and Industrial above parity.

• The company is executing a multi-year manufacturing reshaping program, targeting high triple-digit million-dollar annual cost savings by 2027 and a voluntary workforce reduction of up to 2,800 employees.

• Q1 2025 is considered the bottom, with focus on innovation, advanced manufacturing, and cost management, and sequential growth expected in Q2.

• Sustainability efforts remain on track, with a commitment to carbon neutrality by 2027 and the release of the first annual integrated report.

Financial highlights

• Gross margin decreased to 33.4% from 41.7% year-over-year, mainly due to product mix and higher unused capacity charges.

• Operating margin dropped to 0.1% from 15.9% year-over-year; operating income was $3 million.

• Net income fell 89.1% to $56 million, with EPS at $0.06 compared to $0.54 a year ago.

• Free cash flow was $30 million, up from -$134 million in Q1 2024; net cash from operating activities was $574 million.

• Inventory rose to $3.01 billion (167 days), up from $2.69 billion (122 days) a year ago.

Outlook and guidance

• Q2 2025 revenues expected at $2.71 billion, ±3.5%, representing a 16.2% year-over-year decrease but a 7.7% sequential increase; gross margin guided at 33.4%.

• No full-year 2025 revenue guidance due to global economic uncertainty.

• Net CapEx for 2025 maintained at $2–2.3 billion, focused on manufacturing reshaping.

• Q1 and Q2 2025 expected to be the bottom for gross margin, with improvement anticipated in H2 as inventory is reduced and manufacturing efficiency improves.

• Guidance assumes $1.08 = €1.00 exchange rate and includes current hedging contracts.