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.