[Management View]
Key metrics: $2.88 billion in revenue for Q3 FY2025, up 9% sequentially and 25% YoY. Gross margin at 69.2%, operating margin at 42.2%. Non-GAAP EPS of $2.05, up 30% YoY.
Strategic priorities: Focus on industrial recovery, automation, robotics, and building manufacturing resiliency.

[Outlook]
Performance guidance: Q4 2025 revenue projected at $3 billion, plus or minus $100 million. Operating margin expected to rise to 43.5%. Adjusted EPS guided to $2.22, plus or minus $0.10.
Future plans: Doubling automation revenue by 2030, expanding robotics content, and leveraging AI-enabled technology for growth.

[Financial Performance]
YoY/QoQ trends: Revenue up 25% YoY and 9% sequentially. Industrial segment up 23% YoY, automotive up 22% YoY, communications up 40% YoY, and consumer up 21% YoY.

[Q&A Highlights]
Question 1: Industrial last quarter was 7%. It was up 11% this quarter, and it sounds like it's going to be very strong again in fiscal Q4. Can you just talk do you think you're now shipping above consumption in these markets? How do you view sort of where we are? Are we now in, you know, inventory build mode in those markets, and how do you sort of assess, you know, how long the, you know, goodness can last?
Answer: Since we called the bottom back in Q2, industrial has been our most profitable business and has grown sequentially every quarter. Growth is happening across all of our industrial sectors, including instrumentation, automation, aerospace, defense, healthcare, and energy infrastructure, as well as across all geographies. Channel inventories continue to be very lean, and end demand is still double digits below consumption. We expect some catch-up to end demand in Q4.

Question 2: Looks like you guys had anticipated last earnings call gross margins for Q3 to be closer to 70%, but actuals were actually closer to 69%. I assume it's because of the upside in the lower margin communications business, which was up 17% sequentially. So essentially mix related. Is that a fair assumption? And then on Q4 at the midpoint of your guidance range, are you guys assuming that gross margins are improving sequentially?
Answer: Yes, we did have an implied increase in the margin. However, we had an unexpected lower utilization during the quarter, which kept us from growing our gross margin on a sequential basis. Utilization is back on track, and we expect to resume its increase. In Q4 at the midpoint, we expect to get back a 70% margin.

Question 3: Vince, had a question on the automation revenue. I think in the past, you've talked about this sort of being a 15% grower, and that's certainly, you know, above the corporate average. I'm just curious, given everything that you're seeing now in humanoids and robotics, you know, reference designs with some key GPU players and so on and so forth. Are you starting to see perhaps an acceleration, you know, that 15% growth target going forward?
Answer: The automation business for ADI is multiple hundreds of millions of dollars on an annual basis. By 2030, we can double the size of that business given the strength of the R&D pipeline, the opportunity pipeline, and new modalities coming into play. We feel very optimistic about the state of this business and its potential to grow and double its size over the next five or six years.

Question 4: I think in response to a prior question, you mentioned that you're seeing green shoots in different parts of industrial, right? And despite the strength that you saw in Q2 and Q3. So does it mean that as we kind of potentially look out to Q1, is ADI still capable of growing at least seasonal or above seasonal? And if yes, you know, what is kind of normal range of seasonality so we can calibrate our models? Thank you.
Answer: From a Q1 perspective, we do expect that we'll be able to grow at seasonal. First quarter tends to seasonally be down in the low single digits. Industrial will be a very strong part of our momentum in the coming year. Customers are still in digestion phase of their excess inventories, particularly in the broad market. Aerospace and defense have been incredibly strong, and we are supply limited in that business.

Question 5: I was wondering if you could provide a little bit of color on what you're seeing in the automotive market. I believe last quarter you referenced some select inactivity. Did you actually in fact see that occur in the quarter? And if so, from what regions? And then going forward, maybe talk a little bit about what's driving the sequential decline you expect in the quarter? And any color you can provide on regions or customer OEM types will be helpful. Thank you.
Answer: We continue to perform very well in automotive, particularly in our connectivity and power management. We expect record levels of auto revenue for 2025. We believe our auto revenue has been aided by some order acceleration, which we talked about in Q2. We do see that unwinding in Q4, which is why we expect to see Q4 come down. The auto pull-ins we saw in Q3 were in China, whereas in Q2, it was for North America and Europe.

Question 6: So around the auto pull-ins and, I guess, relative to industrial, so you I mean, you're guiding auto implicitly down 15% sequentially as those pull-ins kind of ease. Industrial, you're guiding up. I don't know. You said low to mid-teens, which would put it up, you know, in the mid 30% year over year. What are you seeing differently on the trends in industrial versus what you saw in auto that gives you confidence that the strength you're seeing in industrial is not also pull forward?
Answer: We have not seen the kind of behavior in industrial that we saw in auto. Bookings trends have followed the trends we were expecting. Channel is very lean. We're still undershipping real consumption of the market. Parts of industrial have been in inventory digestion mode for a couple of years. Aerospace and defense have very strong backlog, and ATE is supporting the build-out of AI chips and infrastructure. Healthcare demand should come good over the next few quarters.

Question 7: Can you just give us a little more color on why the utilization rates came down and then where utilization rates are, where you're expect them to go, and any other gross margin drivers going forward as well? Thanks.
Answer: We had a onetime event in our European fab during the last quarter, which was the primary dampening effect on the gross margin. Pricing has been very steady. As our mix improves on the industrial side, we get the benefit of that in the gross margin. Utilization rates are increasing, and we are back to increasing given the growth we're seeing and the plan starts in the factories.

Question 8: Couple of minutes ago, you talked about seeing some supply limitations in aerospace and defense. I wanted to just follow-up on that and talk ask where those supply constraints might be coming from. And you seeing any supply constraints in any other part of your industrial business as things get stronger?
Answer: We've seen a tremendous upsurge in demand in aerospace and defense, and it takes time to lay in the capacity and tooling. Demand is surging ahead of our ability to manufacture right now, but we've been laying in the CapEx and tools to capture the opportunity. The rest of the industrial business is in good shape overall regarding supply.

Question 9: I did want to ask about gross margins, though. I think a couple of quarters ago, you had mentioned $2.7 billion being sort of the level at which you hit 70% gross margins. It looks like that's seemingly around $3 billion I guess. Can you maybe walk through what's changed and how we should think about fall through from here going forward? Thank you.
Answer: We have talked about getting to $2.7 billion and getting back to a 70% margin would require us to get back to a more normal industrial mix. Near term, we were only 45% industrial. We expect to exit Q4 with more like a 49% industrial mix, which is part of the reason we think we'll get back into that 70% range in our fourth quarter.

Question 10: Just wanted to pivot over to the OpEx side of things. Any sort of color for your fiscal fourth quarter? And probably more importantly, as we look into fiscal 2026, I know you guys have a big variable component to your OpEx. This year, it looks like it's up I don't know, high teens or something like that in fiscal 2025. Any sort of color on how the OpEx would relate to revenues in fiscal 2026?
Answer: For fiscal 2025, we expect to deliver about 100 basis points of operating leverage versus 2024. Variable comp is normalizing to a much higher level from a very low payout in the prior year. For 2026, we would expect the acceleration piece from the variable comp to decline. We would expect to have variable comp in a growth year, but it won't increase as radically as it did from 2024 to 2025.

Question 11: Just a question on business in China right now. And you mentioned in some of your earlier comments that China auto was strong last quarter. Could you give us some sense of what the totality of the China business looked like? And, again, in that case, even outside of auto, is there any fear of, you know, any pull forwards within that business or any anomalies that you may have seen within the China business in the last quarter?
Answer: China has been leading our recovery. We had record design wins in 2024 and continued growth in design wins in 2025. Our outlook for China is positive over the next three to five years. Outside of auto, all other end markets are well off their prior peaks, with some still 50% off their peaks. We think there's still runway for us from a medium and long-term perspective as that market continues to rebound.

[Sentiment Analysis]
Tone of analysts/management: Analysts were positive and appreciative of the company's performance and outlook. Management was confident and optimistic about future growth, particularly in industrial and automation segments.

[Quarterly Comparison]
| Metric | Q3 FY2025 | Q2 FY2025 | Q3 FY2024 |
|---------------------------|-----------|-----------|-----------|
| Revenue | $2.88B | $2.64B | $2.30B |
| Gross Margin | 69.2% | 68.2% | 68.2% |
| Operating Margin | 42.2% | 41.2% | 41.2% |
| Non-GAAP EPS | $2.05 | $1.85 | $1.58 |
| Cash and Short-term Inv. | $3.5B | $3.4B | $3.2B |
| Free Cash Flow | $3.7B | $3.6B | $3.4B |

[Risks and Concerns]
- Geopolitical and macro uncertainty.
- Potential impact of tariffs on customer demand.
- Supply constraints in aerospace and defense.
- Automotive revenue decline due to order pull-ins unwinding.

[Final Takeaway]
Analog Devices reported strong Q3 FY2025 results, driven by significant growth in the industrial, communications, and consumer segments. The company is optimistic about future growth, particularly in automation and robotics, with plans to double automation revenue by 2030. Despite geopolitical and macro uncertainties, ADI's diversified business model and strategic focus on innovation position it well for continued success. Investors should monitor potential risks, including supply constraints and the impact of tariffs, but overall, the outlook remains positive.