Diodes (NASDAQ:DIOD) reported record third-quarter revenue of $532.6 million, up 35.8% from a year earlier, as automotive demand, industrial applications and AI infrastructure helped drive growth across its end markets.
The semiconductor company also forecast fourth-quarter revenue of approximately $550 million, plus or minus 3%, and further gross margin expansion. At the midpoint, the outlook implies sequential revenue growth of 3.2%, compared with the company’s usual fourth-quarter decline of 5% to 6%, according to Emily Yang, senior vice president of worldwide sales and marketing.
President and CEO Gary Yu said capacity investments made over the past year supported the quarter’s growth. Higher factory utilization, a more favorable product mix and pricing improvements also contributed to margin gains.
The results are preliminary and unaudited, subject to closing procedures and review before Diodes files its quarterly report, said Leanne Sievers, president of investor relations firm Shelton Group.
Revenue and Adjusted Earnings Climb
Third-quarter revenue increased from $392.2 million a year earlier and $445.5 million in the second quarter. Gross margin rose to 36.1% from 30.7% a year earlier and 33.1% in the prior quarter. Non-GAAP gross margin was 36.2%, excluding inventory accounting associated with the ElevATE Semiconductor acquisition.
GAAP net income was $43.7 million, or $0.95 per diluted share, compared with $14.3 million, or $0.31 per share, a year earlier. Net income declined from $46.6 million, or $1 per share, in the second quarter.
Non-GAAP adjusted net income rose to $54.5 million, or $1.18 per diluted share, from $17.2 million, or $0.37 per share, a year earlier. It also increased from $32.5 million, or $0.70 per share, in the second quarter.
CFO Brett Whitmire said cash flow from operations was $97.2 million, while free cash flow was $43.9 million after $53.2 million in capital expenditures. Diodes ended the quarter with approximately $578 million in cash, restricted cash and short-term investments, and about $405 million in total debt.
Automotive and Computing Set Records
Yang said automotive revenue rose 26% sequentially and nearly 60% year over year to a quarterly record, supported by increased content and market share gains. The company reported design wins in applications including driver assistance, infotainment, vehicle lighting and electric-vehicle power systems.
Industrial revenue increased 26% from the prior quarter and 50% from a year earlier. Yang cited demand across automation, energy, smart metering, robotics and AI data-center power infrastructure. She also said the ElevATE acquisition positioned Diodes to benefit from demand for more capable semiconductor test equipment.
Computing remained the company’s largest end market and also reached record revenue, rising 16% sequentially and 33% year over year. Yang said strength in AI servers, data centers and enterprise storage was expected to offset softer notebook and PC demand in the fourth quarter.
Computing accounted for 27% of third-quarter product revenue, followed by industrial at 24%, automotive at 22%, consumer at 17% and communications at 10%. Diodes does not separately report AI revenue, Yang said.
Outlook Points to Further Margin Gains
For the fourth quarter, Diodes projected non-GAAP gross margin of 37%, plus or minus 1 percentage point, and adjusted earnings of $1.35 per share, plus or minus $0.10. Yu said the revenue forecast would put full-year sales approximately 30% above 2025 at the midpoint.
Yu also pointed to the company’s target model of $2.5 billion in revenue and a 40% gross margin. Yang said Diodes would probably revisit and reset some of its three-year goals on its next earnings call.
Supply remains constrained and lead times extended, Yang said, while distributor inventory measured in weeks fell below the company’s normal range of 11 to 14 weeks. She said Diodes was monitoring customer demand and inventory closely, and that discussions with major customers indicated a largely “hand-to-mouth situation” rather than substantial inventory rebuilding.
About Diodes (NASDAQ:DIOD)
Diodes Incorporated (NASDAQ: DIOD) is a semiconductor manufacturer that designs, manufactures and supplies discrete, analog, and mixed-signal semiconductor products. Its portfolio includes diodes, rectifiers, transistors, MOSFETs, power-management devices, protection products, logic components, LED drivers, and application-specific semiconductor solutions.
The company’s products are used in power conversion and management, signal processing, circuit protection, lighting, automotive systems, communications equipment, and consumer and industrial electronics.
