XP Power (XPP) Q4 2025 earnings summary

Executive summary

• Revenue declined year-on-year but improved sequentially, with 7% growth in H2 over H1 and a narrowing of the annual decline to 4% by year-end; performance aligned with expectations as markets recovered.

• Order intake rose 28% in constant currency, with broad-based growth across all three market sectors and strong new business wins.

• Profitability improved, with operating profit rising from GBP 4.8m in H1 to GBP 12.5m in H2, and full-year operating profit at GBP 17.3m, despite a 20% year-over-year decline.

• Strategic actions included exiting the RF market and focusing on higher-return voltage markets, supported by cost control and portfolio decisions.

• Strong operating cash generation and increased new product launches enhanced long-term positioning.

Financial highlights

• Revenue for the year was GBP 230.1m, down 4% in constant currency and 7% including FX impacts, with all reduction in H1 and 12% sequential growth in H2.

• Adjusted gross margin expanded by 170bps to 42.7%, with H2 gross margin at 43.9%, driven by cost reductions and efficiency gains.

• Operating expenses increased 6% to GBP 80.9m, mainly due to non-discretionary items and inflation; projected to grow ~5% in 2026.

• Adjusted EPS was 22.5p, with most earnings generated in H2; adjusted diluted EPS dropped 48% year-over-year.

• Net debt ended at GBP 41.5m, or 1.2x EBITDA, down from 2.3x and from GBP 93.5m at December 2024.

• Operating cash conversion was strong at 225%, with inventory reduced by 20% to GBP 57.0m.

Outlook and guidance

• Profit growth expected in 2026, weighted to H2 due to the expiry of China semi export licenses in H1 and market recovery in H2; adjusted operating profit for 2026 expected to be second-half weighted (c.40:60 split).

• Operating expenses projected to grow ~5% in 2026, with effective tax rate expected to fall to ~25%.

• CapEx for 2026 anticipated at GBP 20m, including Malaysia facility completion and fit-out; total capital spend includes product development.

• Mid-40s gross margin targeted as volumes recover, with further sourcing and efficiency gains expected.

• Adjusted operating cash conversion to remain above 100%.