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Call sheet · Q3'25

Analog Devices (ADI)

Q3'25 earnings call · held August 20, 2025 · compared with the Q2'25 call · management-credibility review
11/12
Disclosure score
1 medium, 5 low flags
Financial quality
Bottom line
The sleeper story is ADI quietly building a $2B automation franchise with humanoid robots driving 10x content expansion from hundreds to thousands of dollars per unit. While everyone focuses on the 25% revenue growth, the real constraint is supply capacity in aerospace and utilization hiccups in Europe - demand is actually exceeding their ability to manufacture. Vince's quote captures the moment: 'We're actually supply limited in aerospace and defense, very strong backlog' while promising to double automation revenue by 2030. My view changes if gross margins don't return to 70% in Q4 or if they can't quantify that automation baseline next quarter.

The 30-second version

  • The sleeper story: Industrial automation is quietly becoming ADI's next $2B franchise
  • Industrial recovery is real but auto pull-ins are unwinding faster than expected
  • Gross margin guidance miss reveals utilization problems they're downplaying

What changed this quarter

MetricQ2'25Q3'25Change
Revenue$2.64B (+22% YoY)$2.88B (+25% YoY)+300 bps acceleration
EPS$1.85 (+32% YoY)$2.05 (+30% YoY)200 bps deceleration
Operating Margin41.2%42.2%+100 bps sequential
Gross Margin69.4%69.2%20 bps decline, missed 70% target
Industrial Revenue44% of revenue, +8% seq45% of revenue, +12% seq+400 bps acceleration
Automotive Revenue32% of revenue, +16% seq30% of revenue, -1% seqPull-in unwind
Communications Revenue12% of revenue, +5% seq13% of revenue, +18% seq+1300 bps acceleration
Free Cash Flow TTM$3.3B (34% of revenue)$3.7B (35% of revenue)+100 bps margin expansion
Inventory$50M increase, 169 days$72M increase, 160 days9 days reduction despite build
Q4 Revenue Guide$2.75B ±$100M$3B ±$100M+$250M midpoint raise

Accountability tracked

7 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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