Allegro MicroSystems' first quarter results for 2025 received a positive response from the market, reflecting management’s emphasis on new product launches and operational efficiency initiatives. Leadership highlighted robust sequential growth in automotive and industrial segments, particularly within electric mobility and data center applications. CEO Mike Duke pointed to accelerated innovation, noting a 50% increase in new product releases compared to the company’s IPO year and citing strong demand for ExtremeSense TMR sensors and power products. Management attributed the quarter’s performance to these advancements and to effective cost controls, including the closure of non-core businesses and optimization of the manufacturing footprint.
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Allegro MicroSystems (ALGM) Q1 CY2025 Highlights:
- Revenue: $192.8 million vs analyst estimates of $185 million (19.9% year-on-year decline, 4.3% beat)
- Adjusted EPS: $0.06 vs analyst estimates of $0.05 (in line)
- Adjusted EBITDA: $28.45 million vs analyst estimates of $27.78 million (14.8% margin, 2.4% beat)
- Revenue Guidance for Q2 CY2025 is $197 million at the midpoint, above analyst estimates of $191.4 million
- Adjusted EPS guidance for Q2 CY2025 is $0.08 at the midpoint, above analyst estimates of $0.08
- Operating Margin: -6.8%, down from 6.6% in the same quarter last year
- Inventory Days Outstanding: 151, down from 182 in the previous quarter
- Market Capitalization: $6.02 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Allegro MicroSystems’s Q1 Earnings Call
- Timothy Arcuri (UBS): Asked about progress on the China for China supply chain initiative. CEO Mike Duke explained that significant progress has been made in localizing production, with first meaningful revenues expected later this year.
- Joe Quatrochi (Wells Fargo): Questioned the sustainability of backlog growth and the contribution of design wins. Duke responded that increasing bookings and record design wins in e-mobility and data center markets are driving the backlog.
- Gary Mobley (Loop Capital): Inquired about inventory levels and margin recovery timing. CFO Derek D'Angelio noted that distributor inventories declined 25% year-over-year and that cost reduction benefits should begin to lift margins over the next quarters.
- Chris Caso (Wolfe Research): Asked about strategic changes under new leadership. Duke outlined a renewed emphasis on innovation, product differentiation, and manufacturing cost improvements, such as moving from gold to copper wire bonding.
- Quinn Bolton (Needham & Company): Sought clarification on automotive pricing pressures and the impact of tariffs. Duke stated automotive pricing remains on its normal cadence and no abnormal price declines have been triggered by tariff dynamics.
Catalysts in Upcoming Quarters
Looking ahead, our team will monitor (1) the pace of adoption and revenue contribution from new product launches in automotive and industrial markets, (2) the impact of operational restructuring and cost reduction programs on gross and operating margins, and (3) progress on the China for China supply chain initiative and related market share gains in Asia. Execution against these milestones will be critical to Allegro MicroSystems’ ability to deliver on its growth and profitability targets.
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