Stmicroelectronics N.V. ((STM)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of STMicroelectronics N.V. depicted a balanced sentiment, highlighting both achievements and challenges. The company showcased strong sequential growth in specific segments and significant sustainability recognitions. However, these positives were tempered by year-over-year declines in revenue, gross margin, and net income, alongside an operating loss, indicating a mixed outlook.
Q2 Revenue Exceeds Midpoint
STMicroelectronics reported Q2 revenues of $2.77 billion, surpassing the midpoint of their business outlook by $56 million. This achievement reflects the company’s ability to exceed its revenue expectations despite broader market challenges.
Strong Sequential Growth in Automotive and Industrial
The company experienced robust sequential growth in its automotive and industrial segments. Automotive revenues increased by approximately 14%, driven by strong performance in the Asia Pacific region (excluding China) and the Americas. Industrial revenues also exceeded expectations, demonstrating both sequential and year-over-year improvements.
Sustainability Recognitions
STMicroelectronics received notable sustainability accolades, being listed in the Time World’s Most Sustainable Companies for the second year in a row and ranked as the 25th most sustainable company globally. The company also earned an A list from CDP for climate change and an A- for water security, underscoring its commitment to sustainability.
STM32 Microcontrollers Growth
The company reported significant growth in its STM32 microcontrollers, with both sequential and year-over-year increases in the high teens. This growth highlights the strong demand and competitive positioning of STMicroelectronics in the microcontroller market.
Year-Over-Year Revenue Decline
Despite sequential growth in some areas, STMicroelectronics faced year-over-year revenue declines in several segments. Analog products, MEMS and Sensors, Power and Discrete, and Embedded Processing all experienced declines, with automotive revenues dropping by about 24% year-over-year.
Gross Margin Pressure
The company’s gross margin decreased to 33.5%, a drop of 660 basis points year-over-year. This decline was attributed to an unfavorable product mix, lower manufacturing efficiency, and higher unused capacity charges, indicating operational challenges.
Operating Loss
STMicroelectronics reported an operating loss of $133 million, which included $190 million in impairment and restructuring charges. This loss reflects the financial pressures the company is currently facing.
Net Income Decline
The company reported a net income decline for Q2 ’25, with a negative $97 million compared to a positive $353 million in the same quarter last year. This significant decrease highlights the financial hurdles STMicroelectronics is encountering.
Forward-Looking Guidance
Looking ahead, STMicroelectronics anticipates third-quarter revenues of $3.17 billion, with an expected sequential growth of 14.6% but a year-over-year decline of 2.5%. The company plans to maintain annual capital expenditures between $2 billion and $2.3 billion to reshape its manufacturing footprint, aiming for substantial cost savings by 2027. Despite challenges, particularly in the automotive sector, the company remains optimistic about sequential growth in the coming quarters.
In summary, STMicroelectronics’ earnings call presented a mixed sentiment, balancing strong sequential growth and sustainability achievements against significant year-over-year financial declines and operational challenges. The company’s forward-looking guidance suggests cautious optimism, with plans to navigate current challenges while positioning for future growth.