onsemi (ON) Falls Short of Expectations in Q4 Results

onsemi (Nasdaq: ON) reported its financial results for the fourth quarter and full fiscal year 2024, highlighting several key metrics. The company achieved a revenue of $1,722.5 million in the fourth quarter, reflecting a sequential decline from the previous quarter’s $1,761.9 million and a year-over-year decrease from $2,018.1 million in Q4 2023. The GAAP gross margin for the quarter stood at 45.2%, with a non-GAAP gross margin slightly higher at 45.3%.

Operating margins were reported at 23.7% for GAAP and 26.7% for non-GAAP, indicating a reduction compared to the same quarter last year, which saw operating margins of 30.3% and 31.6%, respectively. The company’s net income attributable to onsemi was $379.9 million, or $0.88 per diluted share on a GAAP basis, and $404.2 million, or $0.95 per diluted share on a non-GAAP basis.

These figures represent a decline from Q4 2023, where the net income was $562.7 million, or $1.28 per diluted share on a GAAP basis.In terms of business segments, the Power Solutions Group (PSG) generated $809.4 million in revenue, down 2% sequentially and 16% year-over-year. The Advanced Solutions Group (AMG) reported $610.6 million, reflecting a 7% sequential decline and an 18% year-over-year decrease. Meanwhile, the Intelligent Sensing Group (ISG) saw a 9% sequential increase to $302.5 million, though this was still a 2% decline from the previous year. Overall, the company’s revenue for the full year 2024 was $7,082.3 million, a 14% decrease from 2023’s $8,253.0 million.

Despite the challenging market conditions, onsemi managed to return 54% of its 2024 free cash flow through share repurchases, amounting to $1.2 billion, marking a threefold increase from the previous year.

onsemi Fails to Meet Market Expectations with Q4 Results

onsemi’s fourth quarter results fell short of market expectations. Analysts had anticipated an earnings per share (EPS) of $0.9749 and revenue of $1.76 billion. The actual non-GAAP diluted EPS was $0.95, while the revenue came in at $1,722.5 million, missing both projections.

The shortfall in revenue and earnings can be attributed to the ongoing market downturn and a decrease in demand across key business segments, particularly PSG and AMG, which experienced significant year-over-year declines. The company’s gross margin also saw a dip compared to the previous year, primarily due to increased cost pressures and a competitive pricing environment. Comparing the company’s performance to the previous quarter, there was a slight decline in revenue and operating margins, which aligns with the broader industry trend of slowing growth and increasing economic uncertainties.

The sequential decrease in the Power Solutions and Advanced Solutions segments further underscores the challenges faced by onsemi in maintaining its growth trajectory amidst a volatile market landscape. Despite these setbacks, the Intelligent Sensing Group showed resilience with a sequential revenue increase, indicating potential areas of growth and opportunity for the company moving forward.

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onsemi Expects Q1 Revenue Between $1.35 billion and $1.45 billion

Looking ahead, onsemi provided guidance for the first quarter of 2025, projecting revenue between $1,350 million and $1,450 million. The company anticipates GAAP gross margins to range from 38.9% to 40.9%, with non-GAAP margins slightly higher at 39.0% to 41.0%.

Operating expenses are expected to be between $329 million and $344 million on a GAAP basis, and $313 million to $328 million on a non-GAAP basis. The diluted earnings per share are forecasted to be in the range of $0.42 to $0.52 on a GAAP basis and $0.45 to $0.55 on a non-GAAP basis.onsemi’s management expressed caution regarding the uncertain economic environment and its potential impact on the company’s financial performance.

The guidance reflects a conservative outlook as the company continues to navigate market volatility and external pressures. Despite the challenges, onsemi remains focused on its long-term strategy, emphasizing financial discipline, operational efficiency, and the delivery of high-value, differentiated power and sensing solutions. The company aims to leverage its strategic initiatives to position itself for future growth and improved profitability.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.