Semiconductor materials supplier Entegris (NASDAQ: ENTG) reported Q2 CY2025 results topping the market’s revenue expectations, but sales fell by 2.5% year on year to $792.4 million. On the other hand, next quarter’s revenue guidance of $800 million was less impressive, coming in 0.5% below analysts’ estimates. Its non-GAAP profit of $0.66 per share was 3.1% above analysts’ consensus estimates.
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Entegris (ENTG) Q2 CY2025 Highlights:
- Revenue: $792.4 million vs analyst estimates of $763.3 million (2.5% year-on-year decline, 3.8% beat)
- Adjusted EPS: $0.66 vs analyst estimates of $0.64 (3.1% beat)
- Adjusted EBITDA: $216.7 million vs analyst estimates of $214.2 million (27.3% margin, 1.2% beat)
- Revenue Guidance for Q3 CY2025 is $800 million at the midpoint, below analyst estimates of $804.4 million
- Adjusted EPS guidance for Q3 CY2025 is $0.72 at the midpoint, below analyst estimates of $0.74
- Operating Margin: 13.4%, down from 16% in the same quarter last year
- Free Cash Flow Margin: 5.9%, similar to the same quarter last year
- Inventory Days Outstanding: 143, down from 147 in the previous quarter
- Market Capitalization: $14.06 billion
Bertrand Loy, Entegris’ President and Chief Executive Officer, said: “Our second quarter revenue grew 2 percent sequentially and was above our guidance range. Growth was driven by demand for our unit-driven solutions, particularly CMP consumables, selective etch and deposition materials. Gross margin, EBITDA margin and non-GAAP EPS were all within guidance.”
Company Overview
With fabs representing the company’s largest customer type, Entegris (NASDAQ: ENTG) supplies products that purify, protect, and generally ensure the integrity of raw materials needed for advanced semiconductor manufacturing.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Entegris’s sales grew at an impressive 13.9% compounded annual growth rate over the last five years. Its growth beat the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Entegris’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 7.5% over the last two years. 
This quarter, Entegris’s revenue fell by 2.5% year on year to $792.4 million but beat Wall Street’s estimates by 3.8%. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 2.8% over the next 12 months. While this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Entegris’s DIO came in at 143, which is 14 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.
Key Takeaways from Entegris’s Q2 Results
It was encouraging to see Entegris beat analysts’ revenue expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. On the other hand, both its revenue and EPS guidance for next quarter slightly missed, and this is weighing on shares. The stock traded down 3.7% to $89.56 immediately following the results.
Is Entegris an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
