Analog Devices, Inc.

Good morning, and welcome to the Analog Devices fourth quarter fiscal year 2025 earnings conference call, which is being audio webcast via telephone and over the web. I'd like to now introduce your host for today's call, Mr. Jeff Ambrose, head of investor relations. Sir, the floor is yours.

Thank you, Gigi, and good morning, everybody. Thanks for joining our fourth quarter fiscal 2025 conference call. Joining me on the call today is ADI's CEO and Chair, Vincent Roche, and ADI's Chief Financial Officer, Richard Puccio. For anyone who missed the release, you can find it and relating financial schedules at investor.analog.com. The information we're about to discuss includes forward-looking statements, which are subject to certain risks and uncertainties as further described in our earnings release, periodic reports, and other materials filed with the SEC. Actual results could differ materially From the forward-looking information, as these statements reflect our expectations, only as the date of this call, we undertake no obligation to update these statements except as required by law. References to gross margin, operating and non-operating expenses, operating margin, tax rate, earnings per share, and free cash flow in our comments today will be on a non-GAAP basis, which excludes special items. When comparing our results to our historical performance, special items are also excluded from prior periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's earnings release. References to earnings per share are on a fully diluted basis. And with that, I'll turn the call over to ADI CEO and Chair, Vincent Roche.

Thanks, Jeff, and good morning, everyone. So our fourth quarter results reflect the ongoing business recovery with continued growth in revenue and earnings per share, both of which finished above the midpoint of our outlook. Now widening the aperture to our full fiscal 25, revenue accelerated throughout the year and returned to meaningful growth despite the persistent macro and geopolitical headwinds. All of our end markets increased by double digits, reflecting both cyclical and company-specific drivers, including strong execution against our maximum revenue synergy targets. Top-line strength combined with margin expansion resulted in earnings per share growth of more than 20% in fiscal 25. Our strong operating results and reduced capex enabled us to generate record-free cash flow of more than $4 billion, or 39% of revenue. We also returned more than $4 billion to our shareholders, supporting an 8% dividend increase, as well as share count reduction. Innovation has always been integral to ADI's brand and our value proposition, forming the foundation for strong financial performance. Consequently, R&D activities receive capital prioritization, with record investments made in FY25 to advance our leadership in analog, mixed signal, and power technologies. We've also intensified our focus on software, digital, and artificial intelligence capabilities to strengthen our core franchise, enabling us to address increased customer complexity and expedite their innovation cycles and time to market. Our comprehensive technology portfolio combined with extensive application domain expertise uniquely positions us to proactively identify and resolve the most complex engineering challenges for our customers. As a result, we're realizing stronger value capture as reflected in the increase in our average selling prices, particularly in new products where ASPs significantly exceed those of legacy offerings. Beyond product innovation, our dedication to customer success encompasses ongoing investments to streamline and accelerate their product development activities. To this end, We are rapidly expanding our development support environment from research to deployment with a combination of proprietary ADI tools and leading ecosystem and open source platforms. Furthermore, following the acquisition of Maxim, we've allocated over $3 billion in capital expenditures to substantially enhance capacity, optionality, and resiliency for our customers supporting our long-term vision for sustained growth. Now, as you've seen, our relentless focus on driving customer success translated to strong results and a diverse design pipeline that grew more than 20% in fiscal 25. So I'd like to share a few examples of our success this past year. With an industrial, every sector grew, driven by improved cyclical dynamics, and powerful secular trends such as AI, automation, and the drive for efficient and reliable energy generation, transmission, and distribution. For example, the exponential growth in demand for AI and high-performance compute drove a record year in our automatic test equipment business, building upon and extending our strong position in the SOC and memory test markets. We anticipate further growth in FY26 due to our expanding design pipeline, industry transitions to HBM4, and expected double-digit growth in hyperscaler CAPEX. In 25, robust automation design and growth was propelled by the burgeoning demand for enhanced productivity, efficiency, and reliability across key sectors, such as manufacturing, logistics, and healthcare. This momentum was particularly evident within our robotics segment, which saw notable expansion as customers increasingly prioritized automation to streamline operations and improve business outcomes. As highlighted in our previous quarter, we foresee tremendous long-term opportunity as advancements in AI fuel the emergence of content-rich humanoid robots, positioning ADI at the forefront of the next wave of robotics innovation. Within healthcare, the proliferation of robot-assisted surgical systems represents a vibrant vector of growth alongside our imaging and diagnostic segments. Additionally, we expect growing demand for our suite of diabetes management solutions to continue to contribute to growth in FY26. Energy was our fastest growing industrial segment this past year, driven by high demand from the industrial, transportation, and data center sectors. Design and activity was especially strong for grid management and battery storage systems, and we anticipate continued growth in 26 and well beyond. Aerospace and defense achieved record results, and we expect further growth in the year ahead, driven by our expanding portfolio of advanced sensor, mixed signal, and power solutions, coupled with an increasingly strong opportunity pipeline We also expect to maintain our strong presence in the growing low earth orbit satellite market. Turning to automotive, advances in autonomous driving and cabin digitalization led to a record year for ADI in fiscal 25 with growth outpacing light vehicle production. Our intelligent audio and video connectivity solutions, which avoid bulky and expensive cabling, drove multiple new growth awards across GMSL A to B and our signal processing and safe power portfolios. Building on this success, our new E to B Ethernet bus is expanding our market, simplifying customer systems, boosting power efficiency, and lowering costs as it gains traction. In the communications sector, AI CapEx investment led to a record year for our data center segment, with design and activity more than doubling. Strong demand for high-throughput connectivity and power delivery solutions support our confidence in continued growth through 26. Wireless communications is one of the few areas of softness in 25, but we believe customers have completed their inventory digestion phase and that the market bottomed during the year. In addition, we see a positive impact of new products, such as our software-defined, AI-enabled macro base station on a chip solution, for which we secured design-ins from leading OEMs and service providers, and see additional opportunity beyond telecommunications in private industrial networks, as well as other secure communications applications. And finally, as consumer markets rapidly evolve, we're expanding our SAM and growing a diverse pipeline by delivering integrated solutions in hearables, wearables, gaming, AR, VR, and many related areas. For example, our new acoustics platform combines analog, power, digital, software, and machine learning for advanced environmental awareness and adaptive noise cancellation. We've secured design wins for these solutions in consumer and healthcare segments, enabling ADI to triple the value generated over legacy designs. We've also captured several new power management design wins in premium handsets and smart glasses in FY25, positioning us for further growth in 26. So in summary, our diversified business model has proven agile and consistently capable of generating superior outcomes, reflected in both last year's resilient margins and this year's strong rebound in profitable growth. While we're mindful of the macro environment and the continued impacts of tariffs and trade uncertainty, we remain confident in our growth in FY26 and beyond as we continue to leverage our key differentiators, namely an enviable technology leadership position at the intelligent edge, as it becomes a center of gravity for a host of secular growth markets, unrivaled application domain expertise, and the trusted brand that we have developed and strengthened with our customers over the decades. And so with that, I'll pass it over to Rich.

Thank you, Vince, and let me add my welcome to our fourth quarter earnings call. I'll start with a brief overview of our full fiscal 25 financial performance. Revenue for the year came in at just over $11 billion, up 17% from fiscal 24, with double-digit growth across all end markets. Gross margin finished at 69.3%, up 140 basis points driven by higher utilizations. Operating margin finished up 100 basis points at 41.9%, and includes the headwind associated with the normalization of variable comp. All told, earnings per share of $779 increased 22% versus fiscal 2024. Now on to our fourth quarter results. Revenue in the fourth quarter came in toward the higher end of our outlook at $3.08 billion, growing 7% sequentially and 26% year over year. Industrial represented 46% of our fourth quarter revenue, finishing up 12% sequentially and 34% year over year. The stronger than seasonal results underpins the cyclical momentum we see across industrial, as well as the secular growth unfolding in AI infrastructure, which drove record quarter for our ATE business. For the full year, industrial increased 15% with growth across every major application, including record years for aerospace and defense and ATE. Automotive represented 28% of quarterly revenue, finishing up 1% sequentially and up 19% year over year. Double-digit year-over-year growth continues to be driven by our leading connectivity and functionally safe power solutions. For the full year, automotive increased 16% to an all-time high, driven predominantly by our higher content and share position across level 2 plus ADAS systems globally. Communications represented 13% of quarterly revenue, finishing up 4% sequentially and 37% year-over-year. Our data center segment surpassed a $1 billion run rate this quarter, and on a year-over-year basis has now grown more than 50% for three consecutive quarters, fueled by continued strength in the AI infrastructure market. Wireless revenue was up double digits year-over-year for the second straight quarter, owing to improving cyclical dynamics. For the full year, communications was our fastest growing market, increasing 26%, driven by our data center segment, which had a record year while wireless revenue was flat. Lastly, consumer represented 13% of quarterly revenue, finishing up 7%, both sequentially and year-over-year. For the full year, consumer increased 19%, driven by strong growth in handsets, gaming, and a record year for our hearables and wearables segment. Now on to the rest of the P&L. Fourth quarter gross margin was 69.8%, up 60 basis points sequentially and 190 basis points year-over-year, driven by higher utilization and favorable mix. OPEX in the quarter was $809 million, resulting in an operating margin of 43.5%, up 130 basis points sequentially, and up 240 basis points year over year. Non-operating expenses finished at $60 million, and the tax rate for the quarter was 12.7%. All told, EPS was $2.26, up 10% sequentially, and 35% year over year. Now I'd like to highlight a few items from our balance sheet and cash flow statements. Cash and short-term investments finished the quarter at $3.7 billion, and our net leverage ratio decreased to 0.9. As I discussed previously, we continue to build die bank buffers for our fastest-growing applications. As such, our inventories were higher by $59 million sequentially, while days of inventory declined by 1 to 159. Channel inventory increased, but remains lean at approximately six weeks. Fiscal 25 operating cash flow and CapEx were $4.8 billion and $0.5 billion, respectively. resulting in record free cash flow of 4.3 billion or 39% of revenue, up from 33% in 2024. In total, we returned $4.1 billion to shareholders through dividends and share repurchases. As a reminder, we target 100% free cash flow return over the long term, using 40 to 60% for our dividend and the remainder for share count reduction. Now moving on to our first quarter of 2026 outlook. Revenue is expected to be 3.1 billion, plus or minus $100 million. Operating margin at the midpoint is expected to be 43.5%, plus or minus 100 basis points. Our tax rate is expected to be 12% to 14%, and based on these inputs, adjusted EPS is expected to be $2.29, plus or minus $0.10. In closing, fiscal 2025 was a strong year, highlighted by a return to growth, margin expansion, and record-free cash flow. Importantly, I'm confident in our ability to continue navigating macro and geopolitical challenges and believe we are well positioned to drive further profitable growth in 2026. With that, I'll give it back to Jeff for Q&A.

All right. Thank you, Rich. Now let's get to our Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning. If you have a follow-up question, please re-queue and we will take your question if time allows. With that, can we have our first question, please?

For those participating by telephone dial-in, if you have a question, please press star 1-1 on your phone to enter the queue. If your question has been answered and you wish to be removed from the queue, please press star 1-1 again. If you are listening on a speakerphone, please pick up the handset when asking your question. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Vivek Arya from Bank of America Securities.

Thank you for taking my question. I had a near and a medium term. On the near term, I think you're guiding Q1, you know, slightly up, which is a little bit above seasonal. So I was hoping you could give us some color by segment where you're seeing the strength, because I do think industrial was slightly below what you had thought in Q4. So just any dynamics going into Q1. And then if we zoom out, I mean, If I were to just annualize Q1 guidance, that suggests a, you know, very strong kind of 12%, 13% sales growth year in fiscal 26. And I was really hoping to get your perspective as you start the new fiscal year on what you're seeing from a broader macro perspective and whether, you know, this kind of growth rate is possible in fiscal 26.

Thank you. Sure. Thanks, Vivek. Rich?

Vivek, I'll take the first part of your question. So Q1, which is our weakest sequential quarter with normal seasonality typically down mid-single digits. And our outlook is for up slightly quarter over quarter reflects our seventh straight quarter of above seasonal growth. And another key point is additionally our outlook assumes sell-in and sell-through are equal. So from an end market color perspective, industrial, we expect to be up mid-single digits above seasonal. We expect auto to be down mid single digits below seasonal, you know, where we continue to see some risks there around tariff and some of the macro environment. Comms, we expect to be up 10% above seasonal. Again, as Vince mentioned, we're seeing, you know, real strength in the AI infrastructure and demand for our data center products. And then consumer seasonally down low double digits.

And then all markets we expect to be up year over year.

Yeah, so maybe if we look year over year, Vivek, so we believe we're well positioned to see broad-based growth in 26. And I think cyclical as well as many idiosyncratic factors giving us tailwinds. My expectation is that in 26, industrial and communications will lead the charge. You know, I think when you look at industrial and comms, as I said, the cyclical dynamics are good. Braylene Infantry is out there. I think both of those markets bought them some quarters ago. Data Center, which is going to see, again, we believe a strong surge in CapEx. We've got good exposure to that sector, and it's two-thirds of our comms business at this point in time. Aerospace and defense. as well as ATE, which are together about a third of the industrial market. We've got strong content growth stories in both. And, you know, coupled with the ADI demand surge in the ATE business, I think is very, very well positioned. I think as well in consumer, we talked a little bit in the prepared remarks there about the higher content and key applications. and um so we've got uh tremendous diversity in that business at a level we never had before as a company so both in applications and customers and platforms were well positioned um last but not least if i talk a little bit about the auto sector um it's been i think sar has really been flat now for quite a while we see that persist in 26 and given that You know, we've been able to show against our 10% content growth per annum. We see that continue given the strength of the pipeline that we've got. But, you know, all that said, we've got a very uncertain macro environment. But my expectation is all the end markets will be up despite the outlook from a macro perspective.

Thank you. One moment for our next question. Our next question comes from the line of Joe Moore from Morgan Stanley.

Great. Thank you. Speaking of autos, I think you guys had indicated when you guided the quarter that you'd be slightly down, you ended up slightly up. Can you talk about what's coming in a little bit better? And you guys have been pretty good about helping us understand pull forwards and things like that. Any sign of any activity now?

Sure, Joe, I'll take that one. So, you know, for us, auto has been our strongest market, right? Double-digit CAGR through cycle, driven by secular content gains, compounded by our share gains, particularly in connectivity and power for ADAS and next-gen infotainment systems. Here I would note we've had pretty significant share gains in China, which where you see a lot of the light vehicle share getting increased, so that's been beneficial. Near term, the market's been more resilient than we and many in predicted, right, evidenced by the stronger volumes on vehicles. We do think some of the upside we've seen in the volumes in our business this year was tariff and policy related. We've talked in prior calls about our view that there might have been some pull-ins. It can't be precise or certain, but we did make that estimation. And given this, we did approach Q4 with some caution and expected to see, I think I said on the last call, we thought we'd see some of this pre-buying unwind in the fourth quarter. That did not appear to happen to us. Our results were fairly seasonal and bookings were normal with a book to build just below one, which is actually pretty typical for Q4. We're still being a bit cautious on the market as it's unclear how the tariffs and volatilities we saw will ultimately impact us and our customers. And also, just given short lead time orders, visibility tends to be pretty low right now. You know, so as we think about our Q1 outlook as a sub-seasonal quarter or down mid-single digits sequentially, but up year over year, you know, and given the content gains in this market and the positive design win traction that Vince mentioned, we do think fiscal 26 can be another strong year.

Very helpful. Thank you very much.

Thank you. One moment for our next question. Our next question comes from the line of Stacy Rasgan from Bernstein Research.

Hi, guys. Thanks for taking my question. I wanted to ask about gross margins. You sort of talked about, you know, being at 70% gross margins around $3 billion. So you're sitting over there. And you're still, I mean, even in the court, you came in a little below 70. As far as I can tell, the guidance implies gross margins relatively flattish around that 70% range. You can let me know if that's right or not. But I'm just wondering why we're not seeing more leverage on the gross margin line, especially as utilizations are going up and everything else. Like, why shouldn't we expect that more leverage on gross margins?

Okay, so I'll take that one. So, you know, obviously, with our interesting lean in gross margins, where you can see the impact that we get from the innovation premium. You know, we did increase quarter over quarter and year over year, and we did have higher utilization and some favorable mix. We didn't get to the 70% as planned as the mix component wasn't as strong as we were expecting. You know, as we've talked about, you know, we had a much stronger result in auto, which kept the industrial mix a bit lower than we planned, and that's what kept us from getting all the way to the 70%. Now, if I look out to Q1, the gross margin percent for us is typically lower in Q1 seasonally, given the annual shutdown factories for required maintenance and around the holidays in conjunction with customer shutdowns. However, you know, based on our outlook, we are anticipating that the higher industrial mix in Q1, which we think will offset seasonal, you know, the seasonal component and hold gross margin flat. So you're right, the embedded is a modest gross margin where we get an offset from

a higher mix, which will offset the pressure from the shutdowns.

And then I guess in the last piece, as we think about the continued go forward, Stacy, and at this revenue level, one of the things I like to remind is we did have a pretty significant capacity expansion while we were addressing our resilience over the last several years. And so it will take us higher revenue dollars to continue to expand beyond 70. And also, as we've talked about, the continued movement in mix. And given the strength we see in industrial going into 26, we expect that that share of our business will continue to increase.

Yeah, I think just one other piece of color, Stacy. The pricing is in good shape. So it's really a question of mix and continuing to push the utilizations.

Got it. Thank you, guys. Thanks, Stacey. We'll move on to our next question, please.

Thank you. One moment for our next question. Our next question comes from the line of Christopher Danley from Citi.

Hey, thanks, guys. Just to follow up on Stacey's question, has the relative gross margin levels, have those changed at all between the end markets? Have any of them gone up or down versus the corporate average? I guess, you know, just to cut to the chases, have the auto gross margins gotten a little worse relative to the corporate average over the last, like, two, three years, or anything else changed?

Chris, I would say that the way we've characterized the individual and market margins versus average has not changed, not in any meaningful way.

Okay. Thanks, Rich. Sure.

Thank you. One moment for our next question. Our next question comes from the line of Timothy Arcuri from UBS.

Thanks a lot. Vincent, you talked about maximum revenue synergies. Can you update us on that? I know you said you're on track, but maybe you can give us a sense of where that stands. And then, Rich, can you tell us sort of what your sense of like a normal fiscal Q2? It seems like normal seasonal and fiscal Q2 is different. up like mid-singles? Is that sort of how you think about a, you know, typical fiscal Q2? And then maybe, like, you know, what are the puts and takes as you kind of head into fiscal Q2 things?

Yeah, so, Tim, I'll start with the synergies. So, you know, we began the conversion process, the conversion of the pipeline in 24, and began in earlier than 24. It contributed tens of millions of dollars to ADI's top-line business in 24. It's clearly accelerated in 25. And, you know, it's in the hundreds of millions against our billion dollar target by 27. And we expect an even stronger contribution in 26, given the momentum that we have in terms of new products and cross-sell. So, you know, we're seeing, as we said, when we acquired Maxim, we saw tremendous complementarity in terms of some technology niches that Maxim filled, particularly in areas like power, these connectivity structures that we use in automobiles and now industrial products. So the complementarity actually works for ADI right across the spectrum of applications, but particularly auto, as I've just said, consumer, healthcare, and data center. So I think we are well on track to meet our commitment possibly even a little earlier than what we thought.

Rich, you want to take that?

Yeah, Tim, you're absolutely right. Q2 tends to be our seasonally strongest quarter where we tend to be up mid-single digits. I think that's the right way to think about it.

Thank you, Tim. Let's move on to our next question, please.

Thank you. One moment for our next question. Our next question comes from the line of CJ Muse from Cantor Fitzgerald.

Yeah, good morning. Thank you for taking the question. Based on your prepared remarks, you talked about IDEO drivers led by AI and the data center. And I was hoping you could perhaps speak a bit more to a framework that we should be thinking about across both industrial and comms. Obviously, you know, you dominate semi-test analog. You've got some real design wins on the optical and power side, and then you also spoke about energy strength. So, you know, is there kind of a percentage of mix that we should be thinking about that should be growing, you know, significantly faster than the rest of your business? And if there's kind of numbers around that, that would be very helpful. Thank you.

Yeah, maybe I'll just give some color and write you into some numbers. Yeah, so look, specifically when we talk about AI, there's the data center and ATE businesses. And if I look at data center in 25, it grew about 50%. And the ATE business, which also benefits from the skyrocketing compute intensities, the new memory types that are being used as well, new memory chips. That business, so the AT business grew up 40% last year, and we believe we'll see that growth continue in 26. If I just talk about where we are, data center, I think as Rich said in the prepared remarks, is running about a billion dollar run rate at this point in time. And there are really two primary sectors there. One is at the electro-optical interface, and we're seeing tremendous upsurge in demand for 800 gig. Now we're seeing 1.6 terabit electro-optical interfaces that require very, very sophisticated power management and control systems. And then there's power more generally, I think, in the areas of protection. We're beginning to see a shift in very, very high voltage technologies that require very sophisticated monitoring and control. There's power conversion. and power delivery. And we're seeing our portfolios in those three areas gain significant traction. On the delivery side, we had mentioned before vertical power. That technology now is beginning to be adopted broadly. So we're at the kind of, we use a term in the electronics industry, we're at the meat of the curve. We're beginning, I think we're in place to see exponential growth there. ATE, $800 million run rate. And as I said, very, very well positioned with all the key players, both the vertically integrated players as well as the OEMs in chip testing. And, you know, as the shift to HBM4 takes place, we're going to see higher pin count, more complexity, more speed, basically more instrumentation compute density in our chips. So I think we're in a good place from a customer engagement standpoint, from a technology standpoint. My sense is we should see double digit growth in both those areas over the next few years. Rich, do you want to add anything?

will add my concurrence on your view about the outlook for the few for the next few years uh in these in these areas i look at you know the if you look at the external factors you know particularly around that the the data center piece and the high performance compute you know the forecast continue forecast from all of the hyperscalers and the big buyers in space continue to go up and even and even recently several of the large hyperscalers have added even further increases to their CapEx plan. So I do think that that near-medium-term spend is going to continue, and we should be a big beneficiary given our strength there.

Thank you, CJ. Move on to our next caller, please.

Thank you. One moment for our next question. Our next question comes from the line of Harlan Sur from JP Morgan.

Yeah, good morning. Thanks for taking my question. You know, one of the other strong dynamics among several which separates ADI from peers is obviously the strong exposure aerospace and defense this has been a growth area for ADI during this last downturn I think I think the business is now driving well over a billion dollars of annualized run rate revenues or roughly greater than 10 of your total revenues it grew strongly double digits in fiscal 25 Does the team anticipate continued strong double digits growth in fiscal 26? And maybe help us understand, like, what are some of the ADI-specific product cycles here that's going to continue to drive the strong growth profile going forward?

Yeah, thanks very much for the question. So, yeah, the journey for ADI in that aerospace and defense market really took off in earnest when we acquired Hittite. And we got... Hittite's really high quality RF and microwave portfolio, which is central to all the communications activities right across the aerospace and defense market, from defense systems, every type of defense system you can imagine, to satellite communications. The primary portfolios we have there are obviously microwave and RF, sensors, the highest performance conversion products that we build on the precision and hype, very, very high speed signal processing side are central. And increasingly, you know, when we, uh, when we acquired, uh, LTC and Maxim, we were able to cross connect with all those signal processing technologies, the power tech, uh, all, all the power management technology. So, um, you know, if you look then at the, at the market drivers, you've got, um, The world isn't becoming any more peaceful, so there's going to be increasing capital deployment, uh, to build defense systems globally. Um, we're seeing very strong demand, uh, an increasing demand in Europe and beyond. Um, and, um, you know, we, we work with, uh, with all of the, of the primary OEMs and, um, so. All that coupled with increasing ASPs. I mean, some of these products we build attract tens of thousands of dollars per system. So I think that business has the capacity by the end of the decade to more than double.

Thank you, Harlan. We'll move on to our next question. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Joshua Buckalter from TD Cowan.

Hey, guys. Thank you for taking my questions, and congrats on the strong results. I wanted to follow up on the comments about fiscal 2Q being the seasonal plus mid-single-digit percent. Could you maybe speak to, you know, what's driving the confidence and the visibility there, any metrics you're able to give on lead times, and then, you know, bigger picture, How has your visibility looking forward changed as the mix has changed? Like, do you think compared to a couple of years ago, there's more of your exposure tied to ADO drivers like Aerospace and Defense and Data Center, and that's increasing your visibility? I'd just be curious to hear, you know, because you mentioned there was some uncertainty on the shape of the year in the press release. I'd be curious to hear how you're feeling about visibility. Thank you.

Thanks, Josh. So first, I didn't guide for Q2. I confirmed what the historical seasonality is. You know, as we've been talking about, right, we still have, you know, don't have a ton of visibility beyond current quarter plus one, right? As we've talked about, you know, the lead times are, you know, most of our products have lead times sub-13 weeks. So we get a lot of orders in quarter. We get a lot of orders with short lead times, which does reduce some of that visibility. So I think on the first part of your question, and I don't think we've necessarily seen an improvement in visibility over the last two years, although I do agree. I think that we've now got broad strength in a number of the IDEO areas that Vince described. But given where we are from an inventory on hand position as well as our cycle times, you know, we're not getting a ton of outside of a quarter visibility.

Thank you, Josh. And we'll move to our last question, please.

Thank you. One moment for our next question. Our next question comes from the line of Tori Svanberg from Stiefel.

Yeah, thank you for squeezing me in. So Vince, ADI has been always very thoughtful about, you know, allocating R&D dollars and the economy is changing, you know, in the front of our eyes structurally quite significantly here. So how are you thinking about prioritizing your R&D spend right now? And are there any areas you would like to double down in and perhaps areas you would like to be emphasized as a company? Thank you.

Yeah, thanks, Tori. Yeah, when I look at the analog space in the core analog business, we continue to push the edges of uh, signal processing data conversion systems in precision, um, as well as very, very high speed. Uh, I think power management for ADI is still, uh, an opportunity with a lot of, a much, much bigger growth story. So that is a place, uh, that, um, you know, as we've gone through our strategy planning cycle in the last, uh, last few quarters here, we're doubling down on for sure. Um, the, um, There are areas as well of our digital portfolio where we see very, very strong niches for what we do in terms of, for example, low power, low latency, these heterogeneous compute structures, as well as algorithmic technologies. So, you know, I mentioned during the prepared remarks how we're enhancing the functionality of our core analog technologies by using machine learning techniques, for example, in base stations, in the consumer areas as well. But I think most of what we do is making sure that we have the platforms to be able to compete globally across all the geographies, across the spectrum of markets that we find most attractive, solve the most important problems, And what I can tell you is that our customers are asking us to do more and more to tame their complexity and help them speed up their innovation cycle. So that's when we think about, you know, the investment portfolio, we're very opportunity rich and we've got a very high quality problem, which is picking the most valuable opportunities in that spectrum of that's replete with opportunity.

Thank you, Tori. Thanks, Tori, and thanks, everyone, for joining us this morning. A copy of this transcript will be available on our website, and all available reconciliations and additional information can also be found in the quarterly results section of our investor relations website. Thank you for your continued interest in analog devices, and happy Thanksgiving.

This concludes today's Analog Devices Conference Call. You may now disconnect.