Semiconductor designer Power Integrations (NASDAQ:POWI) beat analysts' expectations in Q2 CY2024, with revenue down 13.8% year on year to $106.2 million. On the other hand, next quarter's revenue guidance of $115 million was less impressive, coming in 6.8% below analysts' estimates. It made a non-GAAP profit of $0.28 per share, down from its profit of $0.36 per share in the same quarter last year.

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Power Integrations (POWI) Q2 CY2024 Highlights:

• Revenue: $106.2 million vs analyst estimates of $105 million (1.1% beat)

• Adjusted Operating Income: $13.25 million vs analyst estimates of $11.73 million (13% beat)

• EPS (non-GAAP): $0.28 vs analyst estimates of $0.26 (7.4% beat)

• Revenue Guidance for Q3 CY2024 is $115 million at the midpoint, below analyst estimates of $123.4 million

• Gross Margin (GAAP): 53.2%, up from 51% in the same quarter last year

• Inventory Days Outstanding: 311, down from 348 in the previous quarter

• Free Cash Flow of $13.46 million, up 16.5% from the previous quarter

• Market Capitalization: $3.67 billion

A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ:POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.

Analog Semiconductors

Demand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.

Sales Growth

Power Integrations's revenue has been declining over the last three years, dropping by 10.1% on average per year. This quarter, its revenue declined from $123.2 million in the same quarter last year to $106.2 million. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Even though Power Integrations surpassed analysts' revenue estimates, this was a slow quarter for the company as its revenue dropped 13.8% year on year. This could mean that the current downcycle is deepening.

Power Integrations may be headed for an upturn. Although the company is guiding for a year-on-year revenue decline of 8.4% next quarter, analysts are expecting revenue to grow 30.5% over the next 12 months.