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Power Integrations’s (NASDAQ:POWI) Q2 Sales Top Estimates But Stock Drops

By: StockStory

August 06, 2025 at 18:54 PM EDT

POWI Cover Image

Semiconductor designer Power Integrations (NASDAQ: POWI) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 9.1% year on year to $115.9 million. On the other hand, next quarter’s revenue guidance of $118 million was less impressive, coming in 7.7% below analysts’ estimates. Its non-GAAP profit of $0.35 per share was in line with analysts’ consensus estimates.

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Power Integrations (POWI) Q2 CY2025 Highlights:

Revenue: $115.9 million vs analyst estimates of $114.9 million (9.1% year-on-year growth, 0.8% beat)
Adjusted EPS: $0.35 vs analyst estimates of $0.35 (in line)
Adjusted Operating Income: $18.03 million vs analyst estimates of $17.93 million (15.6% margin, 0.5% beat)
Revenue Guidance for Q3 CY2025 is $118 million at the midpoint, below analyst estimates of $127.8 million
Operating Margin: -1.2%, down from 1.8% in the same quarter last year
Free Cash Flow Margin: 20%, up from 12.7% in the same quarter last year
Inventory Days Outstanding: 295, down from 325 in the previous quarter
Market Capitalization: $2.67 billion

Power Integrations CEO Jennifer Lloyd commented: “Revenues increased nine percent year-over-year driven by strong growth in the industrial category. While near-term visibility is low due to macroeconomic uncertainty, our long-term growth drivers are on track. Our automotive business continues to build toward a material revenue contribution in 2026. Revenues from GaN-based products grew more than 50 percent in the first half with adoption broadening into appliance, industrial and EV applications. Our 1250- and 1700-volt GaN technologies are well suited for the requirements of next-generation AI datacenters, and we are developing differentiated, system-level products to capitalize on that opportunity.”

Company Overview

A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Power Integrations struggled to consistently increase demand as its $442.5 million of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and suggests it’s a low quality business. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Power Integrations’s recent performance shows its demand remained suppressed as its revenue has declined by 7.3% annually over the last two years. Power Integrations Year-On-Year Revenue Growth

This quarter, Power Integrations reported year-on-year revenue growth of 9.1%, and its $115.9 million of revenue exceeded Wall Street’s estimates by 0.8%. Beyond the beat, we believe the company is still in the early days of an upcycle as this was the third consecutive quarter of growth - a typical upcycle tends to last 8-10 quarters. Company management is currently guiding for a 1.9% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 17.3% over the next 12 months, an improvement versus the last two years. This projection is admirable and indicates its newer products and services will spur better top-line performance.

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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, Power Integrations’s DIO came in at 295, which is 84 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.

Power Integrations Inventory Days Outstanding

Key Takeaways from Power Integrations’s Q2 Results

We were impressed by Power Integrations’s strong improvement in inventory levels. We were also happy its EPS narrowly outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed. Overall, this quarter could have been better. The stock traded down 9.6% to $42.89 immediately following the results.

So should you invest in Power Integrations right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.

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