09-05-2025
Diodes Inc (DIOD) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amid Market Rebound
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Diodes Inc (NASDAQ:DIOD) reported a 10% year-over-year revenue growth, exceeding expectations due to strong performance in the computing market in Asia.
The company is seeing improving market conditions in Europe and North America, indicating a rebound from recent lows.
Automotive and industrial markets contributed 42% of first-quarter product revenue, with expanding automotive content and design opportunities.
Channel inventory levels have decreased, aligning more closely with real demand and historical POS levels, which is a positive sign for future demand.
Diodes Inc (NASDAQ:DIOD) announced a $100 million stock repurchase program, demonstrating confidence in its business and future growth prospects.
Gross margins were temporarily limited due to reduced loading at manufacturing facilities, partly because of the Chinese New Year holiday.
The company reported a GAAP net loss of $4.4 million for the first quarter, compared to a net income of $14 million in the prior year quarter.
Non-GAAP adjusted net income decreased to $8.8 million from $13 million in the first quarter of 2024.
The global market remains dynamic, with uncertainties such as recent tariffs impacting customer demand and business operations.
Inventory levels, although improving, are still slightly higher than the company's target range, indicating ongoing adjustments are needed.
Warning! GuruFocus has detected 5 Warning Signs with DIOD.
Q: Are you seeing any demand pull forward due to inventory levels and the tariff situation, and how do you assess the stability of current demand? A: Emily Yang, Senior Vice President of Worldwide Sales and Marketing, responded that while tariffs create uncertainty, they are closely monitoring the situation with customers. They haven't observed significant demand pull forward but noted positive signs such as increased POS and decreased channel inventory. The backlog and book-to-build ratio have improved, indicating a recovery period.
Q: How does the tariff situation affect your strategy regarding internal versus external manufacturing? A: Gary Yu, President, stated that their hybrid manufacturing model remains unchanged despite the tariff situation. They continue to transition products from external to internal manufacturing and have achieved milestones in qualifying processes and products internally. Their global footprint allows flexibility to meet customer needs without significant impact from tariffs.
Q: Can you provide insights into AI CapEx trends and regional demand? A: Emily Yang explained that demand is ramping up, particularly in data centers and edge computing. They see opportunities in expanding customer pipelines and new designs. The focus is on content expansion, with AI servers offering increased revenue potential compared to regular servers.
Q: What are the gross margin catalysts for the second half, and how do utilization rates contribute to margin expansion? A: Emily Yang noted that lower-than-expected loading and inventory adjustments impacted margins. They plan to increase internal loading and product qualifications, though customer approval processes are slower. Revenue growth in the second half is expected to improve loading and reduce underloading costs, driving margin improvement.
Q: Are inventories within your target range, and how do you view current levels? A: Emily Yang stated that while inventory is slightly above the target range of 11 to 14 weeks, they are comfortable with current levels given expected growth in the second half. They have adjusted the mix in the channel to support targeted growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
