ADI Q4 Revenue Falls 16% Amid Semiconductor Surplus

On November 21st, Analog Devices (ADI) unveiled its Q4 financial report. Despite a 16% year-on-year revenue dip to $2.72 billion, primarily influenced by prolonged high semiconductor inventory effects, the results slightly surpassed the $2.7 billion consensus from FactSet's survey.

In the automotive segment, ADI demonstrated notable growth, with a 14% YoY revenue surge to $730 million, constituting 27% of the total revenue. Meanwhile, the industrial sector, encompassing around 50% of the revenue share, experienced a 20% YoY decline in Q4 revenue to $1.35 billion.

Vincent Roche, ADI's CEO, acknowledged a soft demand for industrial semiconductors, witnessing downturns across various applications, except for sustained demand in the defense aerospace industry.

Looking at the fiscal year 2023 holistically, ADI achieved a revenue of $12.3 billion, reflecting a 2% YoY increase, propelled by record-breaking performance in the industrial and automotive sectors. The company's gross margin grew by 5% to $7.9 billion, resulting in a gross margin rate of 64%. Operating income surged significantly by 17%, reaching $3.8 billion, with the operating profit margin reaching 31.1%.

In anticipation of Q1 fiscal year 2024, ADI projects an adjusted earnings per share of $1.70, with a variance of ±$0.10. The revenue outlook is set at $2.5 billion, with a variance of ±$1 billion, both falling below analyst predictions. According to FactSet's survey, analysts, on average, anticipated an adjusted earnings per share of $1.91 and revenue of $2.69 billion for the first quarter.