Power Integrations 2025 Q2 Earnings Misses Targets, Net Income Plummets 71.8%

Power Integrations (NASDAQ: POWI) reported its fiscal 2025 Q2 earnings on August 6, 2025, showcasing a mixed performance. While the company achieved a 9.1% year-over-year revenue increase to $115.85 million, its net income dropped significantly by 71.8% to $1.37 million. The earnings underperformed, and its stock declined post-earnings. The company also provided guidance for Q3 2025, forecasting revenue in the range of $118 million ±$5 million.

Power Integrations reported total revenue of $115.85 million for the second quarter of 2025, representing a 9.1% increase from $106.20 million in the same period in 2024. This growth was primarily driven by strong performance in the industrial category. The company’s revenue mix showed industrial at 40%, consumer at 37%, computer at 12%, and communications at 11%. These figures indicate a steady and diversified performance across key market segments.

Power Integrations reported an EPS of $0.02 for Q2 2025, a decline of 77.8% compared to $0.09 in Q2 2024. The company’s net income also fell to $1.37 million, down 71.8% from $4.85 million in the prior year. The significant drop in profitability highlights the challenges the company faced during the quarter, despite the revenue growth.

The stock price of Power Integrations declined during the latest trading day by 0.92%. Over the past week, the stock dropped 4.37%, and has fallen 15.87% month-to-date. Post-earnings price action has been particularly weak, with a historical strategy of buying shares after a revenue increase quarter-over-quarter yielding a return of -30.19% over the past three years, significantly underperforming the benchmark return of 49.40%. The strategy's CAGR of -11.40% and an excess return of -79.59% underscore the poor performance following earnings releases.

The performance of buying Power Integrations shares after a revenue increase quarter-over-quarter has yielded a return of -30.19% over the past three years, significantly underperforming the benchmark return of 49.40%. This poor performance is further highlighted by an excess return of -79.59% and a CAGR of -11.40%, indicating substantial losses and a lack of growth in this investment strategy.

Power Integrations CEO Jennifer Lloyd emphasized that Q2 revenue growth was driven by the industrial category, with strong performance noted in that segment. She acknowledged the uncertainty in the near-term macroeconomic environment but expressed confidence in the company’s long-term growth drivers. The automotive business is expected to contribute significantly to revenue by 2026, while GaN-based product sales surged over 50% in the first half of 2025. Lloyd also highlighted the expansion of GaN adoption into appliances, industrial applications, and EVs, with 1250- and 1700-volt GaN technologies being positioned for next-generation AI datacenters.

For Q3 2025, Power Integrations forecasts revenue in the range of $118 million ±$5 million. GAAP gross margin is expected to be between 54.5% and 55%, with non-GAAP gross margin estimated at 55% to 55.5%. GAAP operating expenses are projected at approximately $72.5 million, while non-GAAP operating expenses are expected to be around $47.5 million, excluding $10 million of stock-based compensation and a $15 million non-cash charge related to the former CEO’s stock grants.

Power Integrations announced significant non-earnings-related developments, including a share repurchase program and a dividend. The company repurchased 706,000 shares for $32.6 million during the quarter, with $42.4 million remaining on its repurchase authorization. Additionally, the company paid a dividend of $0.21 per share on June 30, 2025, and plans to pay another dividend of $0.21 per share on September 30, 2025, to stockholders of record as of August 29, 2025. These actions demonstrate the company's commitment to returning value to shareholders and maintaining a strong capital structure.