Power Integrations ((POWI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Power Integrations revealed a cautiously optimistic sentiment, underscored by strong growth in GaN products and high-power segments. The company showcased new product developments and effective cash management strategies. However, these positive aspects were balanced by challenges such as tariff-related slowdowns, headwinds in the consumer appliance sector, and increased legal expenses. Despite these hurdles, there is a positive outlook for long-term growth.
Revenue Growth
Power Integrations reported a 9% year-over-year increase in Q2 revenues, reaching $116 million. The industrial sector was the primary growth driver, showing an impressive nearly 30% increase from the prior quarter.
Strong GaN Product Performance
The company saw GaN product revenues rise by more than 50% in the first half of the year, indicating strong market adoption across various applications.
High-Power Segment Growth
High-power segment revenues grew over 40% in the first half of 2025, driven by traction inverters, solar and battery storage inverters, and silicon carbide drivers.
New Product Developments
Power Integrations introduced new products, including the fifth generation TinySwitch and upcoming GaN versions of top switch products, which enhance their product portfolio.
Stock Repurchase and Cash Flow
The company generated $29 million in cash from operations and repurchased over 1% of outstanding shares at an average price of about $46, demonstrating strong cash management.
Tariff Impact and Slowdown
Recent weeks have seen a slowdown in orders due to customer caution around changing tariff headlines, impacting the Q3 revenue outlook.
Consumer Appliance Headwinds
The consumer appliance business is facing short-term headwinds due to tariffs and stagnant housing markets, affecting demand.
Legal and Operating Expenses
Non-GAAP operating expenses increased due to executive transition costs and litigation expenses, including a $9 million charge related to an employment litigation case.
Near-Term Uncertainty
Q3 revenue expectations reflect limited near-term visibility, with customer caution around tariffs offsetting company-specific growth drivers.
Forward-Looking Guidance
For Q3, Power Integrations expects revenues in the range of $118 million, plus or minus $5 million. The company anticipates a non-GAAP gross margin between 55% and 55.5%, slightly down from the previous quarter due to higher input costs and less favorable exchange rate benefits. Operating expenses are projected to rise to around $47.5 million, driven by legal costs and R&D activity. Despite near-term challenges, the company remains focused on long-term growth opportunities in high-power and GaN technology, with plans to expand in automotive and data center markets.
In summary, Power Integrations’ earnings call reflected a cautiously optimistic sentiment with strong growth in key segments and new product developments. While facing challenges such as tariff impacts and increased legal expenses, the company remains focused on leveraging its strengths in GaN and high-power technologies for long-term growth.