Analog Devices, Inc. (ADI) stock opened higher on Wednesday after the company released its fiscal third-quarter results. While revenue decreased by 25% year-over-year to $2.31 billion, it surpassed analysts’ expectations of $2.27 billion. Adjusted earnings per share (EPS) of $1.58 also beat the analyst consensus estimate of $1.50.
The company’s Industrial revenue segment saw a significant decline of 37% year-over-year to $1.06 billion. Automotive revenue decreased by 8% to $670.3 million, while Communications revenue declined by 26% to $266.6 million. However, Consumer revenue showed a positive trend, increasing by 3% to $316.6 million.
Despite the revenue decline, Analog Devices’ adjusted gross margin decreased by 430 basis points to 67.9%, and the adjusted operating margin fell by 660 basis points to 41.2%. As of August 3, 2024, the company held $2.55 billion in cash and equivalents, generating $855.0 million in operating cash flow.
Looking ahead, Analog Devices expects fourth-quarter revenue to reach $2.40 billion, plus or minus $100 million, compared to the consensus estimate of $2.38 billion. The company also projects adjusted EPS of $1.63, plus or minus $0.10, against the consensus estimate of $1.62.
Despite the challenging economic environment, Analog Devices remains optimistic about the future. CFO Richard Puccio stated, “Improved customer inventory levels and order momentum across most of our markets position us to grow again sequentially in our fourth quarter, increasing our confidence that we are past the trough of this cycle. However, economic and geopolitical uncertainty continues to limit the pace of the recovery.”
Analog Devices’ stock has gained over 26% in the past 12 months. In premarket trading on Wednesday, ADI stock rose by 4.70% to $234.00.
This news highlights the resilience of Analog Devices in a challenging market. While the company faces headwinds, its strong performance in the third quarter and optimistic outlook for the future suggest a potential for continued growth in the coming months.
