onsemi’s (formerly ON Semiconductor) first-quarter earnings didn’t just miss the mark—they plummeted. The company reported a diluted GAAP loss per share of $1.15, far below last year’s $1.04 profit. Revenue also shrank, down 22% year-over-year to $1.45 billion, missing consensus estimates of $1.47 billion.
Non-GAAP EPS came in at $0.55, which did beat the low end of the company’s guidance but was still a far cry from Q1 2024’s $1.08. CEO Hassane El-Khoury said in the earnings release, “We are committed to long-term value creation and we are accelerating our capital return to shareholders while investing in our future growth.”
onsemi’s Revenue Declines Sharply Across All Segments
The revenue pain wasn’t isolated. Every major business group under ON Semiconductor saw sharp drops. Power Solutions Group (PSG), which makes up the largest chunk of revenue at 47.28%, saw sales plunge 26% year-over-year. That’s a steep drop for what’s supposed to be the company’s core engine.
Analog and Mixed Signal Group (AMG), which contributes 36.84% of total revenue, shrank by 19%. Meanwhile, Intelligent Sensing Group (ISG), the smallest segment at 15.88%, wasn’t spared either. It dropped 20%.
The chart paints a clear picture: ON’s biggest business segments aren’t just slowing—they’re contracting hard. That widespread decline helps explain why overall revenue fell 22% from a year ago.
The total top-line result of $1.45 billion marked a 16% sequential dip from Q4 and continued the downward trend seen over the past year. Analysts had expected softness, but this kind of slump adds real concern heading into Q2.
onsemi’s EPS Misses as Margins Collapse
onsemi’s GAAP gross margin cratered to 20.3%, down from 45.8% a year ago. Non-GAAP margin held up better at 40%, but that still reflects a 590-basis point decline. The company attributed the gap largely to restructuring costs and a one-time inventory write-down.
Net income on a non-GAAP basis was $231.6 million, compared to $464.5 million in Q1 2024. The EPS gap illustrates how deep the operational drag is right now.
onsemi Ramps Up Share Repurchases Despite the Dip
Still, the company isn’t holding back on buybacks. onsemi returned 66% of free cash flow to shareholders, buying back $300 million worth of shares. That’s up from $204 million in Q4 and triple the $100 million in Q1 last year.
Free cash flow itself was a bright spot. It rose 72% year-over-year to $455 million, thanks to tighter capital spending and better working capital management.
onsemi’s Outlook Stays Cautious Despite Design Wins
Looking ahead, onsemi expects Q2 revenue between $1.4 billion and $1.5 billion. That midpoint is still below Q1, hinting the slowdown isn’t over. Non-GAAP EPS is expected to land between $0.48 and $0.58.
Despite that, El-Khoury highlighted customer traction: “We continue to see strong design win momentum” and said wins are coming from “major global customers across all end-markets.”
Is onsemi a Good Stock to Buy?
Despite the lackluster Q1 performance, Wall Street isn’t throwing in the towel just yet. According to TipRanks, 24 analysts covering ON Semiconductor still rate the stock a “Moderate Buy.” Fourteen call it a Buy, nine are holding, and just one recommends selling. These analyst ratings are likely to change after today’s results.
The average 12-month ON price target sits at $54.86, implying a 30.9% upside from the current price of $41.91. The most bullish estimate pins it at $85, while the low end sits at $38—meaning even the most pessimistic forecast sees limited downside from here.
For investors, this means analysts still believe in the company’s long-term story, especially as management tightens operations and continues share repurchases. But with Q2 guidance still soft and margin recovery in question, patience might be the name of the game for anyone buying in now.
