NXP Semiconductors N.V.

Ladies and gentlemen, thank you for standing by and welcome to NXT's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you would need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. And to withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to your first speaker, Jeff Palmer, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Michelle, and good morning, everyone. Thank you for joining our call today. With me on the call is Kurt Sievers, NXP's CEO, Rafael Sotomayor, NXP's President, and Bill Betts, our CFO. Call today is being recorded and will be available for replay from our corporate site. Today's call will include forward-looking statements that involve risks and uncertainties that could cause NXP's results to differ materially from management's current expectations. These risks and uncertainties include but are not limited to statements regarding the macroeconomic impact on the specific end markets in which we operate, the sale of new and existing products, and our expectations for the financial results for the third quarter of 2025. NSP undertakes no obligation to revise or update publicly any forward-looking statements. For a full disclosure on forward-looking statements, please refer to our press release. Additionally, we will refer to certain non-GAAP financial measures which are driven primarily by discrete events that management does not consider to be directly related to NSP's underlying core operating performance. Pursuant to Regulation G, NXP is providing reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our second quarter 2025 range press release, which will be furnished to the SEC on Forum 8K and is available on NXP's website in the investor relations section. Now I'd like to turn the call over to Kirk.

Thank you, Jeff, and good morning, everyone. We appreciate you joining our call today. I will review our quarter two performance, and then I will discuss our guidance for the third quarter. Beginning with Q2, our revenue was 26 million better than the midpoint of our guidance. The revenue trends in all our focus end markets were above expectations, reflective of increasingly positive cyclical trends. Taken together, NXP delivered quarter two revenue of 2.93 billion, a decrease of 6% year-on-year. Non-GAAP operating margin in quarter two was 32%, 230 basis points below the year-ago period, and 20 basis points above the midpoint of our guidance. Year-on-year performance was a result of the lower revenue and the related cross-profit fall-through partially offset by 40 million lower operating expenses. From a general perspective, distribution inventory was consistent with our guidance of nine weeks, while still below our long-term target of 11 weeks. And during the quarter, we did not experience any material customer order pull-ins or push-outs, which could be associated with tariffs. From a direct sales perspective, we continue to support Western Tier 1 automotive customers with their desire to digest on-hand inventory. However, we do believe that for the most part, the Tier 1 are either approaching or already at normalized inventory levels. Now, let me turn to our expectations for the third quarter. Our guidance for the third quarter reflects the combination of an emerging cyclical improvement in NXP's core end markets and the performance of our company-specific growth drivers. We are guiding quarter three revenue to 3.15 billion, down 3% versus the third quarter of 2024, and up 8% sequentially, a return to better than historic seasonal trends. At the midpoint, we expect the following trends in our business during quarter three. Automotive is expected to be flat versus quarter three 2024 and up in the mid single digit percent range versus quarter two 2025. Industrial and IoT is expected to be up in the mid single digit range year on year and up in the high single digit range versus quarter two 2025. Mobile is expected to be up in the low single digit percent range year on year and up in the mid 20% range on a sequential basis. And finally, communication infrastructure and other is expected to be down in the upper 20% range versus quarter three 2024 and flat versus quarter two 2025. Our guidance assumes general inventory will remain at nine weeks. However, if the signal recovery continues, we may stage additional products at our distribution parcels to be competitive. And hence, we may selectively increase the inventory in the channel. With respect to direct sales, our automotive outlook assumes that we will come closer to shipping to natural end demand. In industrial and IoT, which is primarily served through distribution, we see globally a broad-based recovery across both core industrial and consumer IoT. So in summary, NXT's second quarter results and guidance for the third quarter reflect an increasingly positive view that a new upcycle is beginning to materialize. This is based on several signals we track regularly. These include continually growing customer backlog levels placed with our distribution partners, improved order signals from our direct customers, increased short cycle orders, and increasing product shortages leading to customer escalations. At the same time, the tariff environment continues to create a level of uncertainty in the long-term planning of our customers. And yet, as of today, the direct impact of the current tariffs is immaterial to NXP's financials. So looking ahead, we will continue to manage what is in our direct control to drive solid profitability and earnings. This includes strengthening our competitive portfolio by leveraging the recently closed acquisition of TT Tech Auto, as well as the addition of Kinara and Aviva links, which are still pending regulatory approval. Lastly, We are on track to align our wafer fabrication footprint consistent with our hybrid manufacturing strategy. And now I would like to pass the poll over to you, Bill, for a review of our financial performance.