Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Second Quarter of 2025 Ended December 31, 2024

Rhea-AI Summary

Alpha and Omega Semiconductor (AOSL) reported fiscal Q2 2025 results with revenue of $173.2 million, showing a 4.8% decrease quarter-over-quarter but a 4.8% increase year-over-year. The company experienced declining margins, with GAAP gross margin falling to 23.1% from 24.5% in the previous quarter and 26.6% year-over-year.

GAAP operating loss widened to $5.9 million, with net loss per diluted share at $0.23. Non-GAAP metrics showed better performance with operating income of $3.0 million and net income per share of $0.09, though both declined from previous periods. The company maintained strong liquidity with $182.6 million in cash and cash equivalents, generating $14.1 million in operating cash flow.

Management noted strength in Communications and Industrial segments, particularly in graphics cards, quick chargers, PC desktops, and power tools, but expects seasonal decline in the March quarter for smartphone battery PCM and quick chargers markets.

Positive

• Revenue increased 4.8% year-over-year to $173.2 million
• Operating cash flow improved to $14.1 million from $11.0 million in previous quarter
• Strong cash position of $182.6 million
• Growth in Communications and Industrial segments

Negative

• GAAP operating loss increased to $5.9 million from $0.3 million in previous quarter
• Revenue decreased 4.8% quarter-over-quarter
• GAAP gross margin declined to 23.1% from 26.6% year-over-year
• Non-GAAP net income per share decreased to $0.09 from $0.24 year-over-year
• Expected seasonal decline in March quarter

Insights

Financial Analyst

The fiscal Q2 2025 results reveal concerning operational challenges at Alpha and Omega Semiconductor, with profitability metrics deteriorating across multiple dimensions despite modest revenue growth. The sequential revenue decline of 4.8% to $173.2 million was accompanied by more troubling margin compression, as GAAP gross margins contracted 350 basis points year-over-year to 23.1%.

The widening gap between GAAP and non-GAAP metrics warrants attention. While GAAP operating losses expanded to $5.9 million, non-GAAP operating income of $3.0 million represents a 61.5% sequential decline, suggesting both one-time charges and fundamental operational challenges. Operating expenses increased despite revenue contraction, indicating potential structural inefficiencies in the cost base.

However, there are bright spots worth noting. Operating cash flow improved to $14.1 million, up 28.2% sequentially, demonstrating solid working capital management. The robust cash position of $182.6 million provides strategic flexibility amid challenging conditions.

Segment performance shows promise in Communications and Industrial verticals, particularly in graphics cards, quick chargers, PC desktops and power tools. However, management's cautious outlook for calendar 2025 and expected seasonal weakness in smartphone-related products suggests near-term headwinds may persist.

The strategic focus on 'going deeper' with total solutions and expanding addressable markets represents a sound long-term approach, but execution risks remain elevated given the current margin pressure and competitive landscape. The company's ability to stabilize gross margins while maintaining R&D investments will be important for restoring profitability metrics to historical levels.

SUNNYVALE, Calif.--(BUSINESS WIRE)-- Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today reported financial results for the fiscal second quarter of 2025 ended December 31, 2024.

The results for the fiscal second quarter of 2025 ended December 31, 2024 were as follows:

GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
		Three Months Ended
		December 31, 2024				September 30, 2024				December 31, 2023
Revenue		$	173.2			$	181.9			$	165.3
Gross Margin			23.1	%			24.5	%			26.6	%
Operating Loss		$	(5.9	)		$	(0.3	)		$	(1.1	)
Net Loss		$	(6.6	)		$	(2.5	)		$	(2.9	)
Net Loss Per Share - Diluted		$	(0.23	)		$	(0.09	)		$	(0.10	)

Non-GAAP Financial Comparison
Quarterly
(in millions, except percentage and per share data)
(unaudited)
		Three Months Ended
		December 31, 2024				September 30, 2024				December 31, 2023
Revenue		$	173.2			$	181.9			$	165.3
Non-GAAP Gross Margin			24.2	%			25.5	%			28.0	%
Non-GAAP Operating Income		$	3.0			$	7.8			$	8.4
Non-GAAP Net Income		$	2.7			$	6.4			$	7.2
Non-GAAP Net Income Per Share - Diluted		$	0.09			$	0.21			$	0.24

The non-GAAP financial measures in the schedule above and under the section “Financial Results for Fiscal Q2 Ended December 31, 2024” below exclude the effect of share-based compensation expenses, amortization of purchased intangible, legal costs related to government investigation, equity method investment loss from equity investee, and income tax effect of non-GAAP adjustments in each of the periods presented. A detailed reconciliation of GAAP and non-GAAP financial measures is included at the end of this press release.

Financial Results for Fiscal Q2 Ended December 31, 2024

• Revenue was $173.2 million, a decrease of 4.8% from the prior quarter and an increase of 4.8% from the same quarter last year.
• GAAP gross margin was 23.1%, down from 24.5% in the prior quarter and down from 26.6% in the same quarter last year.
• Non-GAAP gross margin was 24.2%, down from 25.5% in the prior quarter and down from 28.0% in the same quarter last year.
• GAAP operating expenses were $45.9 million, up from $44.8 million in the prior quarter and up from $45.1 million in the same quarter last year.
• Non-GAAP operating expenses were $39.0 million, up from $38.5 million from last quarter and up from $37.9 million in the same quarter last year.
• GAAP operating loss was $5.9 million, up $0.3 million of operating loss in the prior quarter and up from $1.1 million of operating loss in the same quarter last year.
• Non-GAAP operating income was $3.0 million as compared to $7.8 million of operating income for the prior quarter and $8.4 million of operating income for the same quarter last year.
• GAAP net loss per diluted share was $0.23, compared to $0.09 net loss per share for the prior quarter, and $0.10 net loss per share for the same quarter a year ago.
• Non-GAAP net income per share was $0.09, compared to $0.21 net income per share for the prior quarter and $0.24 net income per share for the same quarter a year ago.
• Consolidated cash flow provided by operating activities was $14.1 million, as compared to $11.0 million of cash flow provided by operating activities in the prior quarter.
• The Company closed the quarter with $182.6 million of cash and cash equivalents.

AOS Chief Executive Officer Stephen Chang commented, “Our fiscal Q2 results were in-line with our revenue and EPS guidance driven by seasonal declines in each of our major segments. We saw strength in Communications and Industrial segments, with notable sequential growth in graphics cards, quick chargers, PC desktops and power tools.”

Mr. Chang concluded, “We expect a typical seasonal decline in the March quarter primarily in markets for battery PCM in smartphones and quick chargers. While visibility is limited for the remainder of calendar year 2025, we are well positioned for growth driven by our strategic focus to ‘go deeper’ with total solutions, expanding our addressable markets and achieving higher BOM content and market share.”

Business Outlook for Fiscal Q3 Ending March 31, 2025

The following statements are based on management’s current expectations. These statements are forward-looking, and actual results may differ materially. AOS undertakes no obligation to update these statements.

Our expectations for the fiscal third quarter of year 2025 are as follows:

• Revenue to be approximately $158 million, plus or minus $10 million.
• GAAP gross margin to be 21.5%, plus or minus 1%. We anticipate non-GAAP gross margin to be 22.5%, plus or minus 1%. The expected quarter-over-quarter decline is largely due to the decrease in license and engineering service revenue and, to a lesser extent, the anticipated increase in manufacturing costs during the Lunar New Year period.
• GAAP operating expenses to be in the range of $46.5 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $39.5 million, plus or minus $1 million.
• Interest expense to be approximately equal to interest income, and
• Income tax expense to be in the range of $1.1 million to $1.3 million.

Conference Call and Webcast

AOS plans to hold an investor teleconference and live webcast to discuss the financial results for the fiscal second quarter ended December 31, 2024 today, February 5, 2025 at 2:00 p.m. PT / 5:00 p.m. ET. To listen to the live conference call, please dial +1 (833) 470-1428 or +1 (404) 975-4839 if dialing from outside the United States and Canada. The access code is 034315. A live webcast of the call will also be available in the "Events & Presentations" section of the company’s investor relations website, http://investor.aosmd.com. The webcast replay will be available for seven days after the live call on the same website. In addition, a copy of the script of management’s prepared remarks and a live webcast of the call will also be available in the "Events & Presentations" section of the company’s investor relations website, http://investor.aosmd.com.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management’s judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, market trends in the semiconductor industry and growth in calendar year 2025, our ability to outperform market, seasonality of our business, our ability to pursue new opportunities, our projected amount of revenue, gross margin, operating income (loss), income tax expenses, net income (loss), and share-based compensation expenses, non-GAAP gross margin, non-GAAP operating expenses, income tax expenses, our ability to grow our sales and market share, and other information under the section entitled “Business Outlook for Fiscal Q3 Ending March 31, 2025.” Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the state of semiconductor industry and seasonality of our markets; decline of PC markets; our lack of control over the joint venture in China; difficulties and challenges in executing our diversification strategy into different market segments; ordering pattern from distributors and seasonality; changes in regulatory environment and government investigation; our ability to introduce or develop new and enhanced products that achieve market acceptance; government policies on our business operations in China; the actual product performance in volume production; the quality and reliability of our product, our ability to achieve design wins; the general business and economic conditions; our ability to maintain factory utilization at a desirable level; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed by AOS with the SEC and other periodic reports we filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today’s date, unless otherwise stated, and AOS undertakes no duty to update such information, except as required under applicable law.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with U.S. GAAP, we disclose certain non-GAAP financial measures for our historical performance, including non-GAAP gross profit, gross margin, operating expenses, operating income (loss), net income (loss), diluted earnings per share (“EPS”) and EBITDAS. These supplemental measures exclude, among other items, share-based compensation expenses, legal and professional fees related to government investigation, amortization of purchased intangible, income tax effect of non-GAAP adjustments and equity method investment loss from equity investee. We also disclose certain non-GAAP financial measures in our guidance for the next quarter, including non-GAAP gross margin and operating expenses. We believe that these historical and forecast non-GAAP financial measures provide useful information to both management and investors by excluding certain items and expenses that are not indicative of our core operating results or do not reflect our normal business operations. In addition, our management uses non-GAAP measures to compare our performance relative to forecasts and to benchmark our performance externally against competitors. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP net income (loss) or non-GAAP operating expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. In addition, we included the amount of income tax effect of non-GAAP adjustments in the non-GAAP net income (loss) of reconciliation table for all periods presented as the management believes that such non-GAAP presentation provides useful information to investors, even though the amounts are not significant. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures both in the text in this press release and in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.

About Alpha and Omega Semiconductor

Alpha and Omega Semiconductor Limited, or AOS, is a designer, developer, and global supplier of a broad range of discrete power devices, wide band gap power devices, power management ICs, and modules, including a wide portfolio of Power MOSFET, SiC, IGBT, IPM, TVS, HV Gate Drivers, Power IC, and Digital Power products. AOS has developed extensive intellectual property and technical knowledge that encompasses the latest advancements in the power semiconductor industry, which enables us to introduce innovative products to address the increasingly complex power requirements of advanced electronics. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high-performance power management solutions. AOS’ portfolio of products targets high-volume applications, including portable computers, flat-panel TVs, LED lighting, smartphones, battery packs, consumer and industrial motor controls, automotive electronics, and power supplies for TVs, computers, servers, and telecommunications equipment. For more information, please visit www.aosmd.com.

The following unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP.

Alpha and Omega Semiconductor Limited
Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
	Three Months Ended												Six Months Ended
	December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
Revenue	$	173,156			$	181,887			$	165,285			$	355,043			$	345,918
Cost of goods sold		133,145				137,361				121,284				270,506				250,992
Gross profit		40,011				44,526				44,001				84,537				94,926
Gross margin		23.1	%			24.5	%			26.6	%			23.8	%			27.4	%
Operating expenses:
Research and development		23,968				22,478				22,919				46,446				45,032
Selling, general and administrative		21,951				22,300				22,216				44,251				41,647
Total operating expenses		45,919				44,778				45,135				90,697				86,679
Operating income (loss)		(5,908	)			(252	)			(1,134	)			(6,160	)			8,247
Other income (loss), net		663				(650	)			(472	)			13				(446	)
Interest income		1,135				1,265				1,323				2,400				2,644
Interest expenses		(701	)			(812	)			(1,049	)			(1,513	)			(2,141	)
Net income (loss) before income taxes and loss from equity method investment		(4,811	)			(449	)			(1,332	)			(5,260	)			8,304
Income tax expense		1,242				1,040				894				2,282				2,032
Net income (loss) before loss from equity method investment		(6,053	)			(1,489	)			(2,226	)			(7,542	)			6,272
Equity method investment loss from equity investee		(561	)			(1,007	)			(697	)			(1,568	)			(3,409	)
Net income (loss)	$	(6,614	)		$	(2,496	)		$	(2,923	)		$	(9,110	)		$	2,863
Net income (loss) per common share
Basic	$	(0.23	)		$	(0.09	)		$	(0.10	)		$	(0.31	)		$	0.10
Diluted	$	(0.23	)		$	(0.09	)		$	(0.10	)		$	(0.31	)		$	0.10
Weighted average number of common shares used to compute net income (loss) per share
Basic		29,163				29,004				27,939				29,083				27,816
Diluted		29,163				29,004				27,939				29,083				29,830

Alpha and Omega Semiconductor Limited
Condensed Consolidated Balance Sheets
(in thousands, except par value per share)
(unaudited)
	December 31, 2024				June 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	182,592			$	175,127
Restricted cash		206				413
Accounts receivable, net		19,879				12,546
Inventories		183,733				195,750
Contract assets		8,451				—
Other current assets		15,433				14,165
Total current assets		410,294				398,001
Property, plant and equipment, net		317,793				336,619
Operating lease right-of-use assets		23,317				25,050
Intangible assets, net		1,893				3,516
Equity method investment		357,941				356,039
Deferred income tax assets		540				549
Other long-term assets		22,166				25,239
Total assets	$	1,133,944			$	1,145,013
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	40,816			$	45,084
Accrued liabilities		71,392				72,371
Payable related to equity investee, net		18,137				13,682
Income taxes payable		2,943				2,798
Short-term debt		11,742				11,635
Deferred revenue		—				2,591
Finance lease liabilities		970				935
Operating lease liabilities		5,032				5,137
Total current liabilities		151,032				154,233
Long-term debt		20,826				26,724
Income taxes payable - long-term		3,724				3,591
Deferred income tax liabilities		26,754				26,416
Finance lease liabilities - long-term		1,787				2,282
Operating lease liabilities - long-term		18,851				20,499
Other long-term liabilities		8,390				19,661
Total liabilities		231,364				253,406
Shareholders' Equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares; issued and outstanding: none at December 31, 2024 and June 30, 2024		—				—
Common shares, par value $0.002 per share:
Authorized: 100,000 shares; issued and outstanding: 36,367 shares and 29,232 shares, respectively at December 31, 2024 and 36,107 shares and 28,969 shares, respectively at June 30, 2024		73				72
Treasury shares at cost: 7,135 shares at December 31, 2024 and 7,138 shares at June 30, 2024		(79,192	)			(79,213	)
Additional paid-in capital		370,494				353,109
Accumulated other comprehensive loss		(10,722	)			(13,419	)
Retained earnings		621,927				631,058
Total shareholders' equity		902,580				891,607
Total liabilities and shareholders' equity	$	1,133,944			$	1,145,013

Alpha and Omega Semiconductor Limited
Selected Cash Flow Information
( in thousands, unaudited)
	Six Months Ended December 31,
		2024				2023
Net cash provided by (used in) operating activities	$	25,126			$	(9,628	)
Net cash used in investing activities		(14,100	)			(21,431	)
Net cash used in financing activities		(3,732	)			(2,146	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(36	)			80
Net increase (decrease) in cash, cash equivalents and restricted cash		7,258				(33,125	)
Cash, cash equivalents and restricted cash at beginning of period		175,540				195,603
Cash, cash equivalents and restricted cash at end of period	$	182,798			$	162,478

Alpha and Omega Semiconductor Limited
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
		Three Months Ended												Six Months Ended
		December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
GAAP gross profit		$	40,011			$	44,526			$	44,001				84,537			$	94,926
Share-based compensation			1,123				1,015				1,504				2,138				1,716
Amortization of purchased intangible			811				812				812				1,623				1,624
Non-GAAP gross profit		$	41,945			$	46,353			$	46,317			$	88,298			$	98,266
Non-GAAP gross margin as a % of revenue			24.2	%			25.5	%			28.0	%			24.9	%			28.4	%
GAAP operating expense		$	45,919			$	44,778			$	45,135			$	90,697			$	86,679
Share-based compensation			6,827				5,887				7,187				12,714				7,893
Legal costs related to government investigation			114				347				16				461				68
Non-GAAP operating expense		$	38,978			$	38,544			$	37,932			$	77,522			$	78,718
GAAP operating income (loss)		$	(5,908	)		$	(252	)		$	(1,134	)		$	(6,160	)		$	8,247
Share-based compensation			7,950				6,902				8,691				14,852				9,609
Amortization of purchased intangible			811				812				812				1,623				1,624
Legal costs related to government investigation			114				347				16				461				68
Non-GAAP operating income		$	2,967			$	7,809			$	8,385			$	10,776			$	19,548
Non-GAAP operating margin as a % of revenue			1.7	%			4.3	%			5.1	%			3.0	%			5.7	%
GAAP net income (loss)		$	(6,614	)		$	(2,496	)		$	(2,923	)		$	(9,110	)		$	2,863
Share-based compensation			7,950				6,902				8,691				14,852				9,609
Amortization of purchased intangible			811				812				812				1,623				1,624
Equity method investment loss from equity investee			561				1,007				697				1,568				3,409
Legal costs related to government investigation			114				347				16				461				68
Income tax effect of non-GAAP adjustments			(83	)			(151	)			(96	)			(234	)			(502	)
Non-GAAP net income		$	2,739			$	6,421			$	7,197			$	9,160			$	17,071
Non-GAAP net margin as a % of revenue			1.6	%			3.5	%			4.4	%			2.6	%			4.9	%
GAAP net income (loss)		$	(6,614	)		$	(2,496	)		$	(2,923	)		$	(9,110	)		$	2,863
Share-based compensation			7,950				6,902				8,691				14,852				9,609
Amortization and depreciation			14,128				14,562				13,573				28,690				26,524
Equity method investment loss from equity investee			561				1,007				697				1,568				3,409
Interest income			(1,135	)			(1,265	)			(1,323	)			(2,400	)			(2,644	)
Interest expenses			701				812				1,049				1,513				2,141
Income tax expense			1,242				1,040				894				2,282				2,032
EBITDAS		$	16,833			$	20,562			$	20,658			$	37,395			$	43,934
GAAP diluted net income (loss) per share		$	(0.21	)		$	(0.08	)		$	(0.10	)		$	(0.29	)		$	0.10
Share-based compensation			0.25				0.22				0.29				0.47				0.32
Amortization of purchased intangible			0.03				0.03				0.03				0.05				0.05
Equity method investment loss from equity investee			0.02				0.03				0.02				0.05				0.11
Legal costs related to government investigation			0.00				0.01				0.00				0.02				0.00
Income tax effect of non-GAAP adjustments			(0.00	)			(0.00	)			(0.00	)			(0.01	)			(0.01	)
Non-GAAP diluted net income per share		$	0.09			$	0.21			$	0.24			$	0.29			$	0.57
Weighted average number of common shares used to compute GAAP diluted net income (loss) per share			29,163				29,004				27,939				29,083				29,830
Weighted average number of common shares used to compute Non-GAAP diluted net income per share			31,411				31,169				29,874				31,290				29,830

 

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Source: Alpha and Omega Semiconductor Limited

FAQ

What was AOSL's revenue for Q2 fiscal 2025?

AOSL reported revenue of $173.2 million for Q2 fiscal 2025, representing a 4.8% decrease from the previous quarter but a 4.8% increase year-over-year.

How much did AOSL's GAAP gross margin decline in Q2 2025?

AOSL's GAAP gross margin declined to 23.1% in Q2 2025, down from 24.5% in the prior quarter and 26.6% in the same quarter last year.

What was AOSL's cash position at the end of Q2 2025?

AOSL ended Q2 2025 with $182.6 million in cash and cash equivalents.

What is AOSL's operating cash flow for Q2 2025?

AOSL generated $14.1 million in operating cash flow during Q2 2025, compared to $11.0 million in the previous quarter.

Which segments showed strength for AOSL in Q2 2025?

AOSL showed strength in Communications and Industrial segments, particularly in graphics cards, quick chargers, PC desktops, and power tools.