STMicroelectronics (STM) Q2 2024 earnings summary

Executive summary

• Q2 2024 net revenues were $3.23 billion, above the midpoint of guidance, driven by Personal Electronics but offset by weaker Automotive and Industrial demand; gross margin was 40.1%, operating margin 11.6%, and net income $353 million.

• H1 2024 net revenues reached $6.70 billion, down 21.9% year-over-year, with gross margin at 40.9% and net income at $865 million.

• Year-over-year, Q2 net revenues declined 25.3%, gross margin fell to 40.1% from 49%, and net income dropped 64.8% to $353 million.

• Customer order bookings in Q2 did not materialize as expected, leading to a delayed recovery in Industrial and lower than anticipated Automotive demand.

• Q3 2024 outlook: net revenues of $3.25 billion, down 26.7% year-over-year, up 0.6% sequentially; gross margin expected at 38%.

Financial highlights

• Q2 gross profit was $1.3 billion, down 38.9% year-over-year; operating income dropped 67.3% to $375 million.

• Operating margin dropped to 11.6% from 26.5% a year ago; diluted EPS fell 64.2% to $0.38.

• Free cash flow was $159 million, down from $209 million a year ago; net capex in Q2 was $528 million.

• Inventory at quarter-end was $2.81 billion, with days sales of inventory at 130 days.

• Q2 net operating expenses were $921 million, 28.5% of revenues; combined SG&A and R&D at $954 million, 29.5% of revenues.

Outlook and guidance

• Q3 2024: net revenues of $3.25 billion, gross margin of 38%, impacted by 350 bps of unused capacity charges.

• Full-year 2024: revenues expected at $13.2–$13.7 billion, down about 22% at midpoint from 2023; gross margin around 40%.

• Industrial recovery delayed, automotive growth lower than expected in H2.