NXP Semiconductors N.V.

Ladies and gentlemen, thank you for standing by. Welcome to NXP fourth 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 the session, you would need to press star 11 on your telephone. You will then hear an automated message of five and your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn your conference over to Jeff Palmer, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Michelle, and good morning, everyone. Welcome to NXP Semiconductor's earning call today. With me on the call today is Rafael Sotomayor, NXP's President and CEO, and Bill Betts, our CFO. The call today is being recorded and will be available for replay from our corporate website. The call will include forward-looking statements that involve risks and uncertainties that could cause NSP'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 first quarter of 2026. NSP undertakes no obligation to revise or update publicly any forward-looking statements. For a full disclosure of 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, NSP has provided reconciliations of the non-GAAP financial measures to those directly comparable gap measures and our fourth quarter 2025 earnings press release, which will be furnished to the SEC on a form 8K and available from NSP's website in the Investor Relations section. Now I'd like to pass the call to Rafael.

Thank you, Jeff, and good morning. We appreciate you joining our call today. Our overall performance during the fourth quarter was solid, with all end markets performing either in line or better than expected. All regions were up on a year-on-year basis. Turning to the specifics, NXP delivered fourth quarter revenue of $3.34 billion, an increase of 7% year-on-year, and up 5% sequentially. This was $35 million better than the main point of our guidance. Non-GAAP operating margin in the fourth quarter was about 35%, 40 basis points above the same period a year ago. and in line with the midpoint of our guidance. Taken together, we drove non-GAAP earnings per share of $3.35, 7 cents better than guidance. Distribution inventory was 10 weeks, consistent with our guidance. We remained disciplined on channel health, prioritizing sell-through of high-demand products rather than broad-based restocking. Now, I would like to reflect on our performance in 2025. The year was a tale of two halves, with the first half of the year exhibiting weaker demand trends, while in the second half of the year, demand began to accelerate in support of our long-term revenue growth model. Looking at the specifics, automotive revenue was $7.1 billion flat year-on-year due to slower inventory digestion at direct customers in the first half of 2025. With the inventory suggested behind us, the second half performance aligns with our 8 to 12 long-term growth outlook, reflecting the underlying strength of our auto portfolio. A few examples which underpin our optimism include our efforts in software-defined vehicles where we have seen strong global adoption of NXP products. These include design win rates for S32M family of 5-nanometer vehicle compute processors, the newly introduced S32K family of 60-nanometer sonar processors, and continued adoption of automotive Ethernet products. These efforts are now material and global in nature, with most auto OEMs undertaking SDV platform initiatives. Additionally, the early conversations with customers on the recently acquired technologies from TT Tech Auto and AvivaLynx are accelerating interest in NXP's SDV portfolios. The potential revenue contributions from this engagement should materialize beyond 2027. This multi-year SDV platform deepens customer commitment and support makes improvement over time. Turning to the industrial and IoT end market, revenue was $2.3 billion flat year-on-year. The second half growth was materially above our 8% to 12% long-term growth outlook across both core industrial and consumer and IoT. Supporting our ambition to lead an intelligent systems at the edge, we continue to see strong customer engagement in the emerging market for physical AI. By combining the industry leading IMX family of industrial application processors with the recently acquired Kinara MPU, we can deliver complete and scalable AI platforms that accelerate deployment at the edge. A few examples of applications include medical imaging systems camera-based workplace safety system in the industrial market, logistic automation systems, and robotics. Customer interest has been exceptionally strong, and these engagements reinforce our vision of physical AI and the power of the NXP platform. These opportunities expand our addressable market, support sustainable growth, and validate the unique competitive nature of our complete system portfolio. Looking at our mobile business, revenue in 2025 was solid at $1.6 billion, up 6% year on year. We saw stronger demand and content gains in the premium mobile market. Overall, NXP remains a specialty supplier in the mobile market with a unique and defensible franchise center on secure mobile transactions. Finally, The revenue in the communications infrastructure market was $1.3 billion, down 24% year-on-year. As we have said in the past, we anticipate flat growth over the longer term as the digital networking and RF power business decelerate, which will be offset by growth in our Secure Card business, which includes our U-code RFID tagging solutions. Now, I will turn to our expectations for the first quarter. our forecast for the first quarter is better than we anticipated 90 days ago. We expect all regions and all their markets to be up year on year. We're guiding first quarter revenue to $3.15 billion, up 11% versus the year-ago period, and seasonally down 6% sequentially. Compared to 90 days ago, the improvements reflect steady inventory normalization and auto tier 1s, broadening order strength across both core industry and consumer at IoT, and program ramps in the premium mobile market consistent with seasonal patterns. Our guide does not assume broad-based restocking. At the midpoint, we expect the following trends in our business during Q1. Automotive is expected to be up in the mid single digit versus Q1 2025 and down in the mid single digit percent range versus Q4 2025. I would like to highlight that our first quarter revenue guidance only includes about $25 million or one month of revenue contribution from the MEMS sensor business. Industrial and IoT is expected to be up in the low 20% range year on year and down in the mid single digit range versus Q4 2025. Mobile is expected to be up in the mid 10% range year on year and down in the 20% range on a sequential basis. And finally, communication infrastructure and other is expected to be up in the mid 10% range versus Q1 2025 and up 10% versus Q4 2025. In summary, Our first quarter outlook reflects early validation of the company-specific growth drivers we've been investing in, and we expect these trends to continue throughout 2026. We believe the NXP-specific secular drivers for our business are now outweighing the broader industry cyclical headwinds which we have experienced over the last few years. Overall, we expect product mix and disciplined cost execution to continue to support a gross and operating margin framework. We're focused on discipline investment and portfolio enhancements to drive profitable growth while maintaining control over the factors we can influence. Our capital allocation framework is unchanged. Invest for growth, pursue targeted M&A to strengthen the portfolio, and return excess cash through dividends and buybacks within our long-term model. And now, I would like to pass the call to Bill for a review of financial performance.