ON Semiconductor Corp has reported a 19.2% revenue drop for Q3 2024 but exceeded analyst expectations for both revenue and earnings per share.
ON Semiconductor Reports Q3 Revenue Decline Despite Beating Expectations
ON Semiconductor Corp, listed on NASDAQ as ON, has reported a year-on-year revenue drop of 19.2% for the fiscal third quarter of 2024, concluding with $1.76 billion. Despite the decline, this figure surpassed the analyst consensus estimate which pegged expectations at $1.75 billion.
The company’s adjusted earnings per share (EPS) stood at $0.99, again surpassing the forecasted expectation of $0.97. This unexpected performance boost is set against a backdrop of declining revenues across the company’s main business groups.
Breaking down the financial performance, the Power Solutions Group (PSG) experienced a 23% fall in revenue, reaching $829.4 million. Meanwhile, the Analog and Mixed-Signal Group (AMG) saw a 16% decrease, tallying $653.7 million. The Intelligent Sensing Group (ISG) did not buck the trend, with its revenues slipping 15% to $278.8 million year-over-year.
The performance reflects broader challenges within the semiconductor industry, possibly linked to pricing pressures, as evidenced by a 180 basis points decline in the adjusted gross margin to 45.5%. Similarly, the adjusted operating margin decreased by 440 basis points to 28.2%.
Despite these hurdles, ON Semiconductor generated a substantial free cash flow amounting to $293.6 million and maintained a cash reserve of $2.77 billion as of September 27, 2024.
CEO Hassane El-Khoury commented on the strategic focus of the company, stating, “As power demands continue to rise across our key markets, and the need for greater efficiency becomes paramount, we are investing to win across the entire power spectrum to ensure that onsemi is best positioned to gain share in automotive, industrial and AI data center.”
Looking toward the fourth quarter, ON Semiconductor has projected adjusted revenue between $1.71 billion and $1.80 billion, slightly aligning with the analyst consensus of $1.75 billion. In terms of profits, the company forecasts adjusted EPS to be within the range of $0.92 to $1.04 against the consensus of $0.97.
Financial pressure is evident as the company’s stock has declined by 13% year-to-date. Additionally, at least three Wall Street firms lowered their price targets for ON Semiconductor in July, with two downgrading their ratings. These actions reflect the setbacks in the company’s topline and profit margins across the first three quarters of the year. Currently, the stock shows a minor recovery with a 2.71% increase in premarket trading, priced at $73.18.
In conclusion, while ON Semiconductor is facing significant industry challenges with declining revenues in several of its divisions, it remains financially resilient and strategically committed to gaining a foothold in the evolving automotive and AI markets.
Source: Noah Wire Services
