tapebrief
NXPI · Q3 2025

NXPI · Q4 2025 Earnings

Cautious

NXP Semiconductors

Reported February 3, 2026

30-second summary

Revenue of $3.335B (+7.2% YoY, +5.1% QoQ) printed above the $3.30B guide midpoint with non-GAAP EPS of $3.35 landing near the top of the $3.07–3.49 range; gross margin at 57.4% sat mid-range but operating margin hit the 34.6% midpoint exactly. The substantive change is forward: Auto grew +5% YoY (a real inflection from Q3's +0.3%), Industrial & IoT printed +24% YoY and is guided up ~20% YoY again in Q1, and management committed to staging channel inventory toward the 11-week long-term target in 2026. Q1 revenue guidance of $3.05–3.25B (+8–15% YoY) confirms management is now operating with conviction rather than the "soft upcycle" hedging of 90 days ago — though they still refused explicit 2026 growth-rate guidance.

Headline numbers

EPS

Q4 FY2025

$3.35

Revenue

Q4 FY2025

$3.33B

+7.2% YoY

Gross margin

Q4 FY2025

57.4%

Free cash flow

Q4 FY2025

$0.79B

Operating margin

Q4 FY2025

34.6%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$3.33B+7.2%$3.17B+5.1%
EPS$3.35—$3.11+7.7%
Gross margin57.4%—57.0%+40bps
Operating margin34.6%—33.8%+80bps
Free cash flow$0.79B—$0.51B+55.8%

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ4 FY2025$3.20B to $3.40B$3.335B+$0.035B above midpoint; within upper half of rangeBeat
Non-GAAP EPSQ4 FY2025$3.07 to $3.49$3.35+$0.07 above midpoint; within rangeBeat
Non-GAAP Gross MarginQ4 FY202557.0% to 58.0%57.4%+0.4pts above low end; solidly within rangeBeat
Non-GAAP Operating MarginQ4 FY202533.7% to 35.4%34.6%+0.0pts; precisely at midpointBeat

New guidance

MetricPeriodGuideYoY
RevenueQ1 FY2026$3.05B to $3.25B8% to 15%
GAAP EPSQ1 FY2026$4.01 to $4.41—
Non-GAAP EPSQ1 FY2026$2.77 to $3.17—
Gross Margin (GAAP)Q1 FY202655.2% to 56.3%—
Gross Margin (Non-GAAP)Q1 FY202656.5% to 57.5%—
Operating Margin (GAAP)Q1 FY202645.7% to 46.8%—
Operating Margin (Non-GAAP)Q1 FY202631.7% to 33.6%—

Segment performance

Q4 FY2025
SegmentQ4 FY2025YoY
Automotive$1.876B+5.0%
Industrial & IoT$0.64B+24.0%
Mobile$0.485B+22.0%
Communications Infrastructure & Other$0.334B-18.0%

Capacity & utilization

Q4 FY2025
SegmentQ4 FY2025
Days Inventory Outstanding (DIO)154 days
Days Sales Outstanding (DSO)29 days
Days Payable Outstanding (DPO)60 days
Cash Conversion Cycle123 days
Channel Inventory10 weeks

Profitability

Q4 FY2025
SegmentQ4 FY2025
Non-GAAP Operating Margin34.6%
Non-GAAP Free Cash Flow Margin23.8%
Gross Financial Leverage2.6x

Management tone

Q1 cyclical caution → Q2 "clearly better" → Q3 "soft upcycle, slightly more optimistic" → Q4 inflection confirmed, staging for 2026

The hedging language that defined Q3 ("soft upcycle," "slightly more optimistic," refusal to commit to channel staging) is gone. Three quarters ago management refused to call an upcycle; two quarters ago Kurt described confidence as "clearly better" but tariffs were the overhang; last quarter the verbal optimism was undermined by a refusal to stage inventory above 9 weeks. This quarter Rafael committed publicly to "moving to the long-term 11-week target in 2026," and Bill confirmed "backlogs, customer escalations, and short-term orders all increased" over the past 90 days. The gap between verbal stance and operational behavior — the central tension of the Q3 brief — has closed.

Three quarters ago the automotive thesis pivoted from "Western Tier 1 inventory burn ending" to "content growth, not unit growth, drives the cycle." This quarter that re-anchoring delivered: accelerated drivers grew ~10% in 2025 against a flat auto base, and Q4 auto printed +5% YoY. Rafael's framing — "auto exposure increasingly structural vs cyclical" — reads less like deflection and more like a thesis that's now visible in the print. Whether the ~10% accelerated-driver growth was inside the 8–12% three-year framework or slightly below it (Rafael conceded "slightly below model but thesis intact") matters less than the directional confirmation.

Management was still evasive on 2026 full-year revenue and operating margin targets. When Joshua Bucklter pressed on whether 2026 needs to run higher than 6–10% to hit the 2027 endpoint, Rafael deferred ("long-term model is intact; do the math"). This is the same posture as Q3 — give the rule of thumb ($1B revenue = ~100bps margin), refuse the explicit annual commitment. The pattern is consistent: management commits to inflection direction but never to magnitude.

The MEMS divestiture disclosure — $300M annualized revenue impact, $25M in Q1 — was new and quantified cleanly. Combined with the RF Power 2-year wind-down framing, NXP is now actively pruning legacy revenue while staging for the structural-driver growth. This is the cleanest portfolio-optimization framing they've given.

Q&A highlights

Tom O'Malley · Barclays

Channel inventory levels: moved from 9 to 10 weeks; whether the company plans to move to 11-week target or wait. Also asked about communications infrastructure business strength given moves away from RF and digital networking.

Rafael confirmed the company is moving to the long-term 11-week target in 2026 as demand environment improves. Bill explained that CNI benefits from normalization in digital networking and growth in Secure Cards, with all three segments (Secure Cards, Digital Networks, RF Power) moving differently quarter to quarter.

Q4 finished at 10 weeks of distribution inventoryMoving to 11-week long-term target in 2026Secure Cards ~50% of CNI, Digital Networks and RF Power each ~25%CNI guided up 10% sequentially in Q1

Matthew Prisco · Citi

Customer ordering trends over past months and linearity through quarter into Q1. Also asked about demand dynamics within core auto business versus accelerated growth drivers, and impact of component price increases on unit demand.

Bill reported all internal signals improved in past 90 days: backlogs, customer escalations, and short-term orders all increased. Rafael confirmed auto demand returning to growth, pricing VPAs largely done with low single-digit price declines modeled across business. Core auto drivers (SDVs, radar, connectivity) remain intact with strong content games.

Distribution backlogs increasedCustomer escalations increasedShort-term orders continue to increaseLow single-digit price declines modeled for Q1 and beyond

Ross Seymour · Deutsche Bank

Auto has been flat for 2-3 years; asking if thesis on accelerated growth drivers (SDVs, radar, connectivity) has changed and whether more optimistic going forward. Also requested breakdown of revenue impact from MEMS divestiture and RF exit.

Rafael explained 2025's two-halves story: first half masked true dynamics due to inventory digestion; accelerated drivers still grew ~10% despite auto being flat, slightly below model but thesis intact. Auto exposure shifting to more structural/secular drivers. Bill quantified MEMS divestiture at ~$300M annual revenue (~$25M in Q1 2026), with auto and industrial/IoT most impacted. RF will likely persist for ~2 years like digital networking did, running at similar rate.

Accelerated drivers grew ~10% in 2025 vs 8-12% model targetMEMS divestiture: $300M annual revenue impactMEMS contribution: $25M in Q1 2026RF business expected to persist ~2 years as legacy product

Joshua Bucklter · TZ Co.

Clarification on 2026 operating within long-term model: whether that means 6-10% growth for 2026 or if 2026-2027 need to be higher to hit 2027 revenue targets. Also asked about gross margin puts/takes for Q1, utilization rates, and inventory pre-builds.

Rafael deferred specific guidance on revenue growth cadence, saying long-term model is intact and implied analysts should do the math. Bill detailed gross margin drivers: low single-digit price declines offset by operational efficiencies; used $1B revenue = ~100bps margin expansion rule of thumb. Front-end utilization in high 70s for Q4/Q1. Pre-builds at 7 days in Q4, expected 15-20 days by end of 2026. VSMC at 2028 full load expected to add 200bps gross margin.

Front-end utilization in high 70s (Q4, Q1)Pre-builds: 7 days end of 2025, target 15-20 days end of 2026Rule of thumb: $1B revenue gain = ~100bps gross margin expansion annuallyVSMC fully loaded in 2028 expected to lift gross margins 200bps

Vivek Arya · Bank of America Securities

Breakdown of industrial vs IoT revenue split within Industrial & IoT segment. Confirmation that segment will grow within model for 2026. Also asked about normal seasonal trends in Q2/Q3 given business exits.

Rafael confirmed Industrial & IoT segment is 60% core industrial, 40% consumer IoT. Q4 was 20% YoY growth, Q1 guided to ~20% YoY growth, with strength broad-based across fuel cells/healthcare, smart glasses, factory automation, energy storage. Rafael declined to provide Q2/Q3 guidance but noted momentum has improved since 90 days ago and expects second-half strength due to increasingly structural drivers in auto and industrial.

Industrial & IoT: 60% core industrial, 40% consumerQ4 Industrial & IoT: 20% YoY growthQ1 Industrial & IoT guided: ~20% YoY, mid-single digit sequential declineNotable traction areas: fuel cells, healthcare, smart glasses, factory automation, energy storage

Answers to last quarter's watch list

Auto Q4 YoY growth above 1% — Auto printed +5% YoY, decisively clearing the threshold. The content-growth thesis is now visible in the print: accelerated drivers grew ~10% in 2025 against a flat auto base, and Q1 auto remains a contributor to the +8–15% YoY company-level guide.
Resolved positively
Whether Q4 gross margin reaches the 58.0% high end of guide — Gross margin printed 57.4%, mid-range and -10bps below the 57.5% midpoint, well short of the 58.0% high end. Mix headwinds from record mobile (+22% YoY) and weak Comm Infra remain the drag. Q1 guide of 56.5–57.5% (midpoint 57.0%) implies further mix pressure.
Resolved negatively
Channel inventory decision at year-end — Channel inventory moved from 9 to 10 weeks in Q4, and Rafael explicitly committed to staging to 11 weeks in 2026. This is the operational confirmation of the verbal optimism that was missing in Q3 — the gap between stance and behavior has closed.
Resolved positively
Comm Infra trajectory in Q4 and into 2026 — Comm Infra printed -18% YoY, an improvement from Q3's -27.5%, with Q1 guided +10% sequentially. RF Power is now framed as a 2-year legacy wind-down. Stabilization narrative is intact but not yet a growth story.
Continue monitoring
Q1 2026 print vs. the "pre-COVID seasonality" frame — Q1 guided to -5.4% QoQ at midpoint, milder than the "high single-digit decline" framed in Q3. The +8–15% YoY range is the strongest forward growth signal management has given in the cycle.
Resolved positively
Full-year 2026 gross margin landing inside the 57–63% bracket — Q1 guide midpoint of 57.0% sits at the low end of the bracket; the $1B-revenue = +100bps rule of thumb still anchors the framework, and VSMC adds 200bps at full load in 2028. The bracket remains intact but requires revenue growth to deliver.
Continue monitoring

What to watch into next quarter

Auto YoY growth sustaining above 5% in Q1 — Q4 delivered +5% YoY and management implied continued strength; a deceleration below 3% would suggest the Tier 1 inventory dynamic was a one-quarter benefit rather than a sustained inflection.

Channel inventory staging cadence — management committed to 11 weeks "in 2026"; if Q1 holds at 10 weeks the pace is slower than the verbal stance implies, while a move to 10.5–11 in Q1 would be the cleanest operational signal of conviction.

Q1 gross margin vs. the 57.0% midpoint — Q4 came in -10bps below midpoint; a Q1 print below 56.5% would suggest mix pressure is structural rather than mobile-driven, and would call the 57–63% 2026 bracket into question.

Industrial & IoT +20% YoY sustaining beyond Q1 — two consecutive quarters at +24% and ~+20% guided; the question is whether this normalizes to the 8–12% framework rate in Q2/Q3 or sustains, which is the difference between a recovery bounce and a structural shift.

MEMS divestiture closing and $25M Q1 / $300M annualized headwind absorption — the divestiture is now disclosed; tracking whether the revenue base normalizes around the carve-out without further surprises.

Whether management gives an explicit 2026 revenue growth rate by Q1 2026 print — Rafael deferred again this quarter; a continued refusal through Q1 would suggest the long-term model is no longer the operating reference.

Sources

  1. NXP Semiconductors Q4 2025 press release / 8-K exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/1413447/000141344726000003/nxp4q25exhibit991.htm
  2. Q4 2025 earnings call Q&A (prepared remarks unavailable; Q&A captured)

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