Analog Devices (ADI) Reports Exceeding Revenue Expectations

Analog Devices, Inc. (NASDAQ: ADI) has reported its fiscal second quarter 2024 financial results, with revenue coming in at $2.16 billion, exceeding the midpoint of the company's outlook. The operating cash flow for the trailing twelve months reached $4.3 billion, with free cash flow hitting $3.1 billion. Despite continued macro and inventory headwinds, the company managed to achieve profitability and earnings per share above the high-end of its outlook.

In comparison to the same period last year, several key metrics have seen significant changes. Revenue dropped by 34% from $3.263 billion to $2.159 billion. This decline is also reflected in the gross margin, which decreased by 45% to $1.180 billion, with the gross margin percentage dropping by 1,100 basis points to 54.7%. Operating income took a hit as well, plummeting by 66% to $386 million, with the operating margin decreasing by 1,670 basis points to 17.9%. Diluted earnings per share also saw a significant decline, dropping by 68% to $0.61.

When considering adjusted results, the picture remains challenging. Adjusted gross margin decreased by 40% to $1.440 billion, with the adjusted gross margin percentage dropping by 700 basis points to 66.7%. Adjusted operating income fell by 50% to $842 million, with the adjusted operating margin decreasing by 1,220 basis points to 39.0%. Similarly, adjusted diluted earnings per share saw a decline of 51% to $1.40.

Looking at cash generation, net cash provided by operating activities stood at $808 million, representing 37% of revenue for the second quarter of fiscal 2024. However, capital expenditures amounted to $(188) million, resulting in free cash flow of $620 million, which accounted for 29% of revenue. Moreover, Analog Devices returned over $675 million to shareholders through dividends and repurchases in the second quarter.

The outlook for the third quarter of fiscal year 2024 is forecasting revenue of $2.27 billion, with reported operating margin expected to be approximately 20.1% and adjusted operating margin around 40.0%. Reported EPS is anticipated to be $0.71, while adjusted EPS is expected to be $1.50 at the midpoint of the revenue outlook.

Today the company's shares have moved 8.3% to a price of $234.68. Check out the company's full 8-K submission here.

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