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Semiconductor manufacturer Magnachip Semiconductor (NYSE:MX) met Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 8.9% year on year to $44.72 million. On the other hand, next quarter’s revenue guidance of $47 million was less impressive, coming in 1.6% below analysts’ estimates. Its non-GAAP loss of $0.10 per share was 54.5% above analysts’ consensus estimates.

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Magnachip (MX) Q1 CY2025 Highlights:

• Revenue: $44.72 million vs analyst estimates of $44.5 million (8.9% year-on-year decline, in line)

• Adjusted EPS: -$0.10 vs analyst estimates of -$0.22 (54.5% beat)

• Adjusted EBITDA: -$2.07 million vs analyst estimates of -$3.3 million (-4.6% margin, 37.2% beat)

• Revenue Guidance for Q2 CY2025 is $47 million at the midpoint, below analyst estimates of $47.75 million

• Operating Margin: -14.1%, up from -27.4% in the same quarter last year

• Free Cash Flow was -$4.88 million compared to -$4.64 million in the same quarter last year

• Inventory Days Outstanding: 84, up from 59 in the previous quarter

• Market Capitalization: $119.9 million

Company Overview

With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE:MX) is a provider of analog and mixed-signal semiconductors.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Magnachip’s demand was weak over the last five years as its sales fell at a 17.6% annual rate. This was below our standards and suggests it’s a low quality business. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Magnachip’s annualized revenue declines of 11.5% over the last two years suggest its demand continued shrinking.

This quarter, Magnachip reported a rather uninspiring 8.9% year-on-year revenue decline to $44.72 million of revenue, in line with Wall Street’s estimates. Company management is currently guiding for a 11.6% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 10.9% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not catalyze better top-line performance yet.