• Revenue: $116 million, up 9% sequentially.

• Non-GAAP Gross Margin: 55.1%.

• Non-GAAP Earnings: 40 per diluted share.

• Revenue Outlook for Q4: $105 million plus or minus $5 million.

• Dividend Increase: 5% declared by the board.

• Share Repurchase Authorization: $50 million.

• Cash Flow from Operations: $33 million.

• Capital Expenditures (CapEx): $6 million.

• Inventory Days: 291 days, down 21 days from the prior quarter.

• Non-GAAP Operating Expenses: $43.7 million.

• Channel Inventory: Increased to 8.6 weeks from 7.8 weeks.

• Warning! GuruFocus has detected 6 Warning Signs with POWI.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Power Integrations Inc (NASDAQ:POWI) reported a 9% sequential increase in revenues for the third quarter, reaching $216 million.

• The company achieved a non-GAAP gross margin of 55.1% and non-GAAP earnings of 40 cents per share, slightly above guidance.

• Power Integrations Inc (NASDAQ:POWI) expects strong growth in 2025, particularly in the industrial segment, driven by high power and high voltage DC transmission projects.

• The company is making significant advancements in its GaN technology, with recent introductions including the industry's first 1,700-volt GaN switch.

• Power Integrations Inc (NASDAQ:POWI) has a healthy balance sheet, allowing for a 5% dividend increase and authorization of $50 million for share repurchases.

Negative Points

• The revenue outlook for the fourth quarter is projected to decrease to $105 million, reflecting a soft demand environment.

• There is a build-up of appliance inventory at Chinese OEMs, impacting the consumer segment, which accounts for nearly 40% of sales.

• Channel inventory increased to 8.6 weeks, up from 7.8 weeks in the prior quarter, driven by higher consumer inventory.

• The company experienced losses in the China cell phone market earlier in the year, affecting overall 2024 revenues.

• The consumer segment is facing challenges due to the delayed and varied impact of China's government stimulus program on appliance demand.

Q & A Highlights

Q: Can you discuss the recent 1,700 volt GaN announcement and its potential demand and applications? A: The 1,700 volt GaN is essential for automotive applications, particularly for vehicles moving to 800 and 1,000 volt battery systems. It also fits well in three-phase industrial applications due to its ability to handle significant transients. Currently, this market is served by Silicon Carbide, but GaN offers better efficiency and cost advantages. - Balu Balakrishnan, CEO