Executive Summary
Microchip Technology reported QQ1 2025 revenue of $1.2413 billion, marking a substantial year-over-year decline of 45.76% and a sequential decrease of 6.37%. Despite the sharp top-line reduction, the company delivered solid profitability and strong free cash flow generation, underscoring the cash-generative nature of its embedded control platform. Gross margin stood at approximately 59.37%, with an operating margin of 17.65% and a net margin of 10.41%. EBITDA reached $410.3 million, yielding an EBITDA margin of 33.05%. Free cash flow (FCF) reached $304.2 million, supported by $377.1 million of operating cash flow, and capital expenditure of $72.9 million. The balance sheet reflects a high asset base with meaningful goodwill and intangible assets, and a substantial debt load (total debt of $6.2029 billion; net debt of $5.8878 billion) offset by a cash balance of $315.1 million. Liquidity is decent with a current ratio of 1.94 and a quick ratio of 1.08, though leverage remains a point of focus. Management commentary is not included in the provided transcript data; accordingly, the forward view relies on macro expectations for end-market demand (auto, industrial, IoT) and the company’s ability to leverage free cash flow for deleveraging and strategic investments.
Key Performance Indicators
QoQ: -6.37% | YoY:-45.76%
QoQ: -6.71% | YoY:-52.71%
QoQ: -13.57% | YoY:-75.74%
QoQ: -16.42% | YoY:-80.60%
QoQ: -17.24% | YoY:-80.33%
Key Insights
Revenue: $1,241,300,000 (-YoY -45.76%, QoQ -6.37%)
Gross Profit: $736,900,000 (gross margin ~59.37%)
Operating Income: $219,100,000 (oper. margin ~17.65%)
Net Income: $129,300,000 (net margin ~10.41%)
EPS: $0.24 (diluted $0.24)
EBITDA: $410,300,000 (EBITDA margin ~33.05%)
Cash Flow: Operating cash flow $377,100,000; Capex $72,900,000; Free cash flow $304,200,000
Balance Sheet: Cash $315.1 million; Total assets $15,839.7 million; Total liabilities $9,433.7 million; Equity $6,406.0 million; Goodwi...
Financial Highlights
Revenue: $1,241,300,000 (-YoY -45.76%, QoQ -6.37%)
Gross Profit: $736,900,000 (gross margin ~59.37%)
Operating Income: $219,100,000 (oper. margin ~17.65%)
Net Income: $129,300,000 (net margin ~10.41%)
EPS: $0.24 (diluted $0.24)
EBITDA: $410,300,000 (EBITDA margin ~33.05%)
Cash Flow: Operating cash flow $377,100,000; Capex $72,900,000; Free cash flow $304,200,000
Balance Sheet: Cash $315.1 million; Total assets $15,839.7 million; Total liabilities $9,433.7 million; Equity $6,406.0 million; Goodwill $6,681.9 million; Intangibles $2,775.5 million
Liquidity/Leverage: Current ratio 1.939; Quick ratio 1.079; Cash ratio 0.207; Total debt $6,202.9 million; Net debt $5,887.8 million; Interest coverage ~3.55x
Shareholder Returns: Dividends paid $242.6 million; share repurchases $(72.7) million; Net cash used in financing $(256.2) million
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.24B |
-45.76% |
-6.37% |
| Gross Profit |
736.90M |
-52.71% |
-6.71% |
| Operating Income |
219.10M |
-75.74% |
-13.57% |
| Net Income |
129.30M |
-80.60% |
-16.42% |
| EPS |
0.24 |
-80.33% |
-17.24% |
Key Financial Ratios
operatingProfitMargin
17.7%
operatingCashFlowPerShare
$0.7
freeCashFlowPerShare
$0.57
dividendPayoutRatio
187.6%
Management Commentary
No earnings call transcript data were provided in the source. As a result, there are no management quotes or themes to summarize from the transcript. The analysis below incorporates available financial data and general sector context.
Forward Guidance
No formal forward guidance was included in the provided data. Absent explicit targets, the assessment focuses on near-term dynamics implied by the results and common industry patterns: (1) potential stabilization or modest improvement in end-market demand in the second half of the calendar year could support sequential revenue stabilization; (2) continued strength in free cash flow supports deleveraging and potential selective share repurchase or strategic investments; (3) ongoing macro headwinds (inventory correction, semiconductor cycle) could keep revenue volatility elevated. Investors should monitor: end-market demand signals (auto, industrial, IoT), supply-chain normalization, capital allocation decisions (dividends vs. buybacks vs. debt reduction), and any updated guidance from management in future quarters.