Analog Devices Beats Second Quarter as Inventory Rationalization Takes Effect, CEO Predicts Cyclical Recovery and Growth in Artificial Intelligence Investments – Analog Devices ( NASDAQ:ADI )

Analog Devices, Inc. (NASDAQ:ADI) shares rose on Wednesday after reporting fiscal second-quarter 2024 results.

The company’s revenue fell 34% year-over-year to $2.16 billion, beating analyst consensus of $2.11 billion. Adjusted EPS of $1.40 beat the analyst consensus of $1.26.

Analog devices Industry revenues fell 44% YoY to $1.01 billion. Automotive revenues fell 10% y/y to $658.2 million.

Communications revenues fell 45% to $240.8 million, and consumer services revenues fell 9% to $245.2 million.

Adjusted gross margin declined 700 basis points to 66.7% as lower revenues outweighed profits. Adjusted operating margin decreased 1,220 basis points to 39.0%.

As of May 4, Analog Devices had cash and cash equivalents of $2.36 billion, generating operating cash flow of $807.9 million.

Vincent Roche, CEO and Chairman, said: “We believe inventory rationalization across our broad customer base is stabilizing, paving the way for us to return to sequential growth in the third quarter. This, combined with improved new orders, makes us optimistic that we are at the beginning of a cyclical recovery.”

Roche continued: “The continued proliferation of the smart edge means that ADI has multiple parallel secular growth vectors. The artificial intelligence in which we are increasing our investment is expected to accelerate these trends as it increasingly extends from centralized applications in data centers to myriad applications at the physical edge.”

Outlook: Analog Devices expects third-quarter revenue of $2.27 billion, +/- $100 million, compared to the consensus estimate of $2.16 billion. The company forecasts adjusted EPS of $1.50, +/- $0.10 versus the consensus estimate of $1.34.

Reduction: At last check on Wednesday, ADI shares were up 6.4% at $230.50.

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