EPS of $-1.18 decreased by 29.7% from previous year
Gross margin of 11.1%
Net income of -148.90M
"N/A" - N/A
Wolfspeed Inc (0I4Q.L) QQ3 2024 Results – Revenue Decline with Ongoing Capex Fuelling SiC Growth, Negative Margins in Transition
Executive Summary
Wolfspeed’s QQ3 2024 results reflect a material revenue decline on a YoY and QoQ basis, paired with a deepening quarterly loss as the company continues a high-capex, high-R&D growth phase around its silicon carbide (SiC) and GaN platforms. Revenue came in at $200.7 million, down 14.9% year over year and 3.7% quarter over quarter, with gross margin at 11.1% and an operating margin of -53.0%. Net income was -$148.9 million, or -$1.18 per share, while EBITDA was -$42.3 million, underscoring the scale of ongoing investments and the challenge of achieving near‑term profitability in a capital-intensive transition.
Cash flow remained tight on an operating basis, with operating cash flow of -$136.2 million and free cash flow of -$714.8 million, while the company drew liquidity through financing activities (+$499.1 million) to bolster liquidity. The balance sheet shows a substantial debt load (total debt of $5.79 billion; net debt of $4.65 billion) and a solid liquidity position (cash and short-term investments of $2.5509 billion) yielding a healthy near-term liquidity ratio (current ratio 4.58). The near-term challenge is the combination of negative earnings, ongoing capex/R&D outlays, and a high debt burden, versus the long-term opportunity from Wolfspeed’s leadership in SiC and GaN for power, RF, and EV charging infrastructure.
Given the data, the investment thesis hinges on Wolfspeed achieving meaningful scale to improve gross margins and deleverage while sustaining its SiC/GaN technology leadership. In the near term, expect continued pressure on profitability until volume ramps and cost efficiencies materialize. A supportive thesis would require clear visibility on capacity expansion, cost discipline, and a path to positive free cash flow as volumes scale.
Key Performance Indicators
Revenue
200.70M
QoQ: -3.69% | YoY:-14.89%
Gross Profit
22.20M
11.06% margin
QoQ: -20.14% | YoY:-65.63%
Operating Income
-106.40M
QoQ: -28.66% | YoY:4.74%
Net Income
-148.90M
QoQ: -2.90% | YoY:-31.42%
EPS
-1.18
QoQ: -2.61% | YoY:-29.67%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $200.7 million for QQ3 2024, YoY -14.89% and QoQ -3.69%.
Revenue and profitability:
- Revenue: $200.7 million for QQ3 2024, YoY -14.89% and QoQ -3.69%.
- Gross Profit: $22.2 million; gross margin 11.06% (0.111).
- Operating Income: -$106.4 million; operating margin -53.01%.
- Net Income: -$148.9 million; net margin -74.19%.
- EBITDA: -$42.3 million; EBITDA margin -21.08%.
- Earnings per Share (EPS): -$1.18; diluted EPS -$1.18; weighted average shares ~125.83 million.
Cost structure and expense cadence:
- R&D expense: $52.5 million; SG&A/development expenses included in selling/general & administrative: $55.8 million.
- Interest expense: $59.5 million; depreciation & amortization: $47.0 million.
- Cost of revenue: $178.5 million; gross profit of $22.2 million implies a gross margin of about 11.1%.
Cash flow and capital allocation:
- Net cash from operating activities: -$136.2 million.
- Capital expenditures (capex): -$578.6 million.
- Free cash flow: -$714.8 million.
- Net cash provided by (used in) financing activities: +$499.1 million; net change in cash: +$238.0 million.
- Cash at end of period: $1.1424 billion; cash at beginning: $0.9044 billion.
Balance sheet and leverage:
- Total assets: $7.6962 billion; total liabilities: $6.6736 billion; total stockholders’ equity: $1.0226 billion.
- Total debt: $5.7901 billion; net debt: $4.6477 billion.
- Liquidity metrics: current ratio 4.58; quick ratio 3.97; cash ratio 1.57.
- Equity base and intangibles: goodwill $359.2 million; intangible assets $23.7 million; total goodwill and intangibles $382.9 million.
Valuation and comparisons to peers (selected benchmarks):
- Price to Sales: 18.75x; Price to Book: 3.68x.
- Enterprise value to EBITDA: negative (-198.82x) reflecting negative EBITDA.
- Net income margin and ROE are deeply negative; price multiples reflect a perception of ongoing operating losses and a long-term growth build.
- Peer context (selected LSE tech peers): gross margins and operating margins vary widely. Comparable peers show higher margins and more favorable cash flow profiles, suggesting Wolfspeed’s QQ3 2024 results are reflective of a transition phase with substantial near-term profitability risk.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
200.70M
-14.89%
-3.69%
Gross Profit
22.20M
-65.63%
-20.14%
Operating Income
-106.40M
4.74%
-28.66%
Net Income
-148.90M
-31.42%
-2.90%
EPS
-1.18
-29.67%
-2.61%
Key Financial Ratios
currentRatio
4.58
grossProfitMargin
11.1%
operatingProfitMargin
-42.9%
netProfitMargin
-74.2%
returnOnAssets
-1.93%
returnOnEquity
-14.6%
debtEquityRatio
5.66
operatingCashFlowPerShare
$-1.08
freeCashFlowPerShare
$-5.68
priceToBookRatio
3.68
priceEarningsRatio
-6.32
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Notes on transcript availability: The dataset contains an earnings transcript field that is currently empty (earningsTranscript: []). As a result, there are no management quotes or thematic quotes to extract or categorize. If a transcript becomes available, typical highlights would be organized by themes such as strategy (SiC/GaN growth path, capacity expansion), operations (manufacturing yields, supply chain, cost controls), market conditions (auto/industrial demand, EV adoption, charging infrastructure), and liquidity/debt management. Please provide the transcript to enable verbatim quotes and thematic synthesis.
N/A
— N/A
N/A
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Forward Guidance
Guidance and outlook commentary are not explicitly provided in the supplied data. Given Wolfspeed’s position, two likely focal points for management and investors will be:
- Growth trajectory of SiC/GaN demand and capacity ramp: Success hinges on achieving meaningful volume to drive gross margins higher as fixed costs are spread over a larger output base. The near-term signal is negative profitability despite robust liquidity, so any forward-looking targets would ideally outline cadence on gross margin expansion (e.g., single-digit to mid-teens once scale is achieved).
- Leverage and cash flow trajectory: With total debt at $5.79B and negative free cash flow, debt deleveraging and refinancing options (lower interest burden, extended maturities) would be a key near-term focus. A credible path to positive free cash flow would likely require a combination of (1) improved operating cash flow as volumes scale, (2) better working capital management, and (3) disciplined capex/rate of investment.
In the absence of explicit guidance in the data, investors should monitor: (1) quarterly progress on SiC/GaN production capacity, (2) changes in gross margins with volume, (3) any debt refinancing moves, and (4) working capital evolution that could alter liquidity dynamics. If volume ramps materialize and cost structures improve, Wolfspeed could begin to demonstrate a path to profitability and deleveraging over the next 4–8 quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0I4Q.L Focus
11.06%
-42.90%
-14.60%
-6.32%
0HWG.L
19.10%
8.19%
-4.11%
-28.25%
0HYI.L
51.30%
27.00%
7.70%
8.36%
0HRZ.L
25.90%
20.10%
1.93%
17.53%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Wolfspeed’s QQ3 2024 results underscore a high-risk, high-reward transition. The company possesses a compelling long-term growth narrative through SiC and GaN leadership, yet near-term profitability remains constrained by heavy capex, R&D, and a substantial debt load. Investors should weigh the strong liquidity against the ongoing cash burn and negative earnings; the key catalysts for a more favorable investment thesis are: (1) tangible progress toward capacity ramp and gross margin expansion as volumes scale, (2) credible deleveraging and refinancing to reduce interest costs, and (3) a path to positive free cash flow. In the absence of explicit near-term guidance, the stock appears to reflect a high-growth, high-risk profile relative to peers, with valuation suggesting substantial upside only if Wolfspeed converts its growth investments into sustainable profitability and cash generation. Until there is clearer evidence of margin improvement and debt reduction, risk-reward remains skewed to the downside for near-term investors, with upside potential if scale and efficiency gains materialize.
Key Investment Factors
Growth Potential
Long-term growth potential remains anchored in Wolfspeed’s leadership in silicon carbide (SiC) and GaN technologies for power electronics, RF, and EV charging. If scale accelerates, gross margins should improve as fixed costs are absorbed, potentially enabling cash flow improvement and debt reduction. The company’s diversified product portfolio and strategic position in high-growth end-markets (EVs, energy infrastructure, data centers) offer significant upside if capacity expands in line with demand.
Profitability Risk
Key risks include: (1) persistent negative earnings and negative cash flow as capex/R&D remain elevated in a growth phase; (2) substantial debt load and interest expense pressures with cyclic semiconductor demand; (3) execution risk around capacity expansions, yield improvements, and cost reductions; (4) customer concentration and exposure to capital intensity in autos/industrial segments; (5) macroeconomic variability and potential supply chain disruptions; (6) currency and geopolitical factors affecting global semiconductor supply chains.
Financial Position
Liquidity is robust in the near term (cash and cash equivalents + short-term investments of ~$2.56B; current ratio 4.58), but leverage remains high (total debt ~$5.79B; net debt ~$4.65B; debt-to-capitalization ~0.85). Negative EBITDA and Net Income raise concerns about earnings power and coverage, with interest coverage negative, indicating sensitivity to interest rates and the need for deleveraging or refinancing. The large capex outlay (capex ~$579M) and working-capital dynamics contribute to a challenging free-cash-flow profile in QQ3 2024.
SWOT Analysis
Strengths
Leading position in silicon carbide (SiC) technology with long-term growth runway in EV charging, power electronics, and RF.
Substantial liquidity cushion with cash and cash equivalents plus short-term investments (~$2.56B).
Integrated portfolio across Wolfspeed (SiC/RF) and LED products, providing diversified exposure to semiconductors and lighting.
Weaknesses
Wide negative profitability: operating loss (-$106.4M) and net loss (-$148.9M) in QQ3 2024, pressuring margins.
High leverage and interest burden (total debt ~$5.79B; interest expense ~$59.5M) with negative EBITDA.
Significant capital expenditure and working capital constraints leading to negative free cash flow (-$714.8M).
Escalating demand for SiC in electric vehicles and fast charging infrastructure could drive material revenue and margin improvements as scale is achieved.
Potential for cost-reduction initiatives and operating leverage as manufacturing yields improve and capacity ramps progress.
Rationale for strategic partnerships or capex optimization to accelerate deleveraging and cash flow generation.
Threats
Semiconductor cyclicality and macroeconomic uncertainty impacting capex cycles and auto/industrial demand.
Execution risk around capacity expansion, yield improvement, and cost control in a high-R&D environment.
Valuation pressures given negative earnings and high debt, which may constrain financing alternatives.