EX-99.1 2 adi2q26exhibit991earnings.htm EX-99.1 Document Exhibit 99.1 Analog Devices Reports Record Fiscal Second Quarter 2026 Financial Results • Revenue of $3.62 billion, with year-over-year growth across all end markets, led by Industrial and Communications • Operating cash flow of $5.1 billion and free cash flow of $4.6 billion on a trailing twelve-month basis or 40% and 36% of revenue, respectively • Returned $1.3 billion to shareholders via dividends and share repurchases in the second quarter WILMINGTON, Mass.--May 20, 2026 --Analog Devices, Inc. (Nasdaq: ADI), a global semiconductor leader, today announced financial results for its fiscal second quarter 2026, which ended May 2, 2026. “ADI’s second quarter revenue and earnings were above the high end of our outlook, reflecting the combination of record demand and sharp operational discipline,” said Vincent Roche, CEO and Chair. “Our innovation-led value creation strategy targets our customers’ most complex and consequential challenges with a goal of delivering substantial and sustained business impact. We continue to invest to extend our technology performance leadership and enhance our long-term value for customers and shareholders alike.” “We continued to see growing demand in the second quarter with record bookings across our B2B markets of Industrial, Automotive, and Communications,” said Richard Puccio, CFO. “These positive demand signals are reflected in our outlook for continued strong growth in the third quarter.” Performance for the Second Quarter of Fiscal 2026 Results Summary (1) (in millions, except per-share amounts and percentages) Three Months Ended May 2, 2026 May 3, 2025 Change Revenue $ 3,623  $ 2,640  37  % Gross margin $ 2,440  $ 1,612  51  % Gross margin percentage 67.3  % 61.0  % 630 bps Operating income $ 1,380  $ 678  104  % Operating margin 38.1  % 25.7  % 1,240 bps Diluted earnings per share $ 2.40  $ 1.14  111  % Adjusted Results (2) Adjusted gross margin $ 2,645  $ 1,832  44  % Adjusted gross margin percentage 73.0  % 69.4  % 360 bps Adjusted operating income $ 1,774  $ 1,088  63  % Adjusted operating margin 49.0  % 41.2  % 780 bps Adjusted diluted earnings per share $ 3.09  $ 1.85  67  % Three Months Ended Trailing Twelve Months Cash Generation May 2, 2026 May 2, 2026 Net cash provided by operating activities $ 872  $ 5,106  % of revenue 24  % 40  % Capital expenditures $ (138) $ (541) Free cash flow (2) $ 734  $ 4,565  % of revenue 20  % 36  % Three Months Ended Trailing Twelve Months Cash Return May 2, 2026 May 2, 2026 Dividend paid $ (536) $ (1,998) Stock repurchases (773) (3,045) Total cash returned $ (1,309) $ (5,043) (1) The sum and/or computation of the individual amounts may not equal the total due to rounding. (2) Reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the financial tables included in this press release. See also the “Non-GAAP Financial Information” section for additional information. Outlook for the Third Quarter of Fiscal Year 2026 For the third quarter of fiscal 2026, we are forecasting revenue of $3.9 billion, +/- $100 million. At the midpoint of this revenue outlook, we expect reported operating margin of approximately 39.0%, +/-150 bps, and adjusted operating margin of approximately 49.0%, +/-100 bps. We are planning for reported EPS to be $2.60, +/-$0.15, and adjusted EPS to be $3.30, +/-$0.15. Our third quarter fiscal 2026 outlook is based on current expectations and actual results may differ materially as a result of, among other things, the important factors discussed at the end of this release. The statements about our third quarter fiscal 2026 outlook supersede all prior statements regarding our business outlook set forth in prior ADI news releases, and ADI disclaims any obligation to update these forward-looking statements. The adjusted results and adjusted anticipated results above are financial measures presented on a non-GAAP basis. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the financial tables included in this release. See also the “Non-GAAP Financial Information” section for additional information. Dividend Payment The ADI Board of Directors has declared a quarterly cash dividend of $1.10 per outstanding share of common stock. The dividend will be paid on June 16, 2026 to all shareholders of record at the close of business on June 2, 2026. Conference Call Scheduled for Today, Wednesday, May 20, 2026 at 10:00 am ET ADI will host a conference call to discuss our second quarter fiscal 2026 results and short-term outlook today, beginning at 10:00 am ET. Investors may join via webcast, accessible at investor.analog.com. Non-GAAP Financial Information This release includes non-GAAP financial measures that are not in accordance with, nor an alternative to, U.S. generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP measures have material limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and should not be considered in isolation from, or as a substitute for, the Company’s financial results presented in accordance with GAAP. The Company’s use of non-GAAP measures, and the underlying methodology when including or excluding certain items, is not necessarily an indication of the results of operations that may be expected in the future, or that the Company will not, in fact, record such items in future periods. You are cautioned not to place undue reliance on these non-GAAP measures. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the financial tables included in this release. Management uses non-GAAP measures internally to evaluate the Company’s operating performance from continuing operations against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in evaluating the Company’s core business and trends across different reporting periods on a consistent basis. Management also uses these non-GAAP measures as primary performance measurements when communicating with analysts and investors regarding the Company’s earnings results and outlook and believes that the presentation of these non-GAAP measures is useful to investors because it provides investors with the operating results that management uses to manage the Company and enables investors and analysts to evaluate the Company’s core business. Management also believes that free cash flow, a non-GAAP liquidity measure, is useful both internally and to investors because it is indicative of the Company's ability to pay dividends, purchase common stock, make investments and fund acquisitions and, in the absence of refinancings, to repay its debt obligations. The non-GAAP financial measures referenced by ADI in this release include: adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted operating expenses percentage, adjusted operating income, adjusted operating margin, adjusted nonoperating expense (income), adjusted income before income taxes, adjusted provision for income taxes, adjusted tax rate, adjusted diluted earnings per share (EPS), free cash flow, and free cash flow revenue percentage. Adjusted gross margin is defined as gross margin, determined in accordance with GAAP, excluding: certain acquisition related expenses 1 , which are described further below . Adjusted gross margin percentage represents adjusted gross margin divided by revenue. Adjusted operating expenses is defined as operating expenses, determined in accordance with GAAP, excluding: certain acquisition related expenses 1 and special charges, net 2 , which are described further below. Adjusted operating expenses percentage represents adjusted operating expenses divided by revenue. Adjusted operating income is defined as operating income, determined in accordance with GAAP, excluding: acquisition related expenses 1 and special charges, net 2 , which are described further below. Adjusted operating margin represents adjusted operating income divided by revenue. Adjusted nonoperating expense (income) is defined as nonoperating expense (income), determined in accordance with GAAP, excluding: certain acquisition related expenses 1 , which is described further below. Adjusted income before income taxes is defined as income before income taxes, determined in accordance with GAAP, excluding: acquisition related expenses 1 and s pecial charges, net 2 , which are described further below. Adjusted provision for income taxes is defined as provision for income taxes, determined in accordance with GAAP, excluding tax related items 3 , which are described further below. Adjusted tax rate represents adjusted provision for income taxes divided by adjusted income before income taxes. Adjusted diluted EPS is defined as diluted EPS, determined in accordance with GAAP, excluding: acquisition related expenses 1 , special charges, net 2 , and tax related items 3 , which are described further below. Free cash flow is defined as net cash provided by operating activities, determined in accordance with GAAP, less additions to property, plant and equipment, net. Free cash flow revenue percentage represents free cash flow divided by revenue. 1 Acquisition Related Expenses : Expenses incurred as a result of current and prior period acquisitions and primarily include expenses associated with the fair value adjustments to debt, property, plant and equipment and amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology and customer relationships. We excluded these costs from our non-GAAP measures because they relate to specific transactions and are not reflective of our ongoing financial performance. 2 Special Charges, Net : Expenses, net, incurred in connection with facility closures, consolidation of manufacturing facilities, severance, other accelerated stock-based compensation expense and other cost reduction efforts or reorganizational initiatives. We excluded these expenses from our non-GAAP measures because apart from ongoing expense savings as a result of such items, these expenses have no direct correlation to the operation of our business in the future. 3 Tax Related Items: Income tax effect of the non-GAAP items discussed above. We excluded the income tax effect of these tax related items from our non-GAAP measures because they are not associated with the tax expense on our current operating results. About Analog Devices, Inc. Analog Devices, Inc. (NASDAQ: ADI) is a global semiconductor leader that bridges the physical and digital worlds to enable breakthroughs at the Intelligent Edge. ADI combines analog, digital, AI, and software technologies into solutions that combat climate change, reliably connect humans and the world, and help drive advancements in automation and robotics, mobility, healthcare, energy and data centers. With revenue of more than $11 billion in FY25, ADI ensures today’s innovators stay Ahead of What’s Possible. Learn more at www.analog.com and on LinkedIn and X. Forward-Looking Statements This press release contains forward-looking statements, which address a variety of subjects including, for example, our statements regarding future financial performance; impacts related to tariffs and other trade restrictions; economic uncertainty; macroeconomic, geopolitical, demand and other market conditions, business cycles, and supply chains; our capital allocation strategy, including future dividends, share repurchases, capital expenditures, investments, and free cash flow returns; expected revenue, operating margin, nonoperating expenses, tax rate, earnings per share, and other financial results; expected market and technology trends and acceleration of those trends; market size, market share gains, market position, and growth opportunities; expected product solutions, offerings, technologies, capabilities, and applications; the value and importance of, and other benefits related to, our product solutions, offerings, and technologies to our customers; benefits related to our hybrid manufacturing model; and other future events. Statements that are not historical facts, including statements about our beliefs, plans and expectations, are forward-looking statements. Such statements are based on our current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: economic, political, legal and regulatory uncertainty or conflicts; recently announced and future tariffs and other trade restrictions; changes in export classifications, import and export regulations or duties and tariffs; changes in demand for semiconductor products; performance of independent distributors; manufacturing delays, product and raw materials availability and supply chain disruptions; products may be diverted from our authorized distribution channels; our development of technologies and research and development investments; our ability to compete successfully in the markets in which we operate; our future liquidity, capital needs and capital expenditures; our ability to recruit and retain key personnel; risks related to acquisitions or other strategic transactions; security breaches or other cyber incidents; risks related to the use of artificial intelligence in our business operations, products, and services; adverse results in litigation matters; reputational damage; changes in our estimates of our expected tax rates based on current tax law; risks related to our indebtedness; the discretion of our Board of Directors to declare dividends and our ability to pay dividends in the future; factors impacting our ability to repurchase shares; and uncertainty as to the long-term value of our common stock. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission, including the risk factors contained in our most recent Annual Report on Form 10-K. Forward-looking statements represent management’s current expectations and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances. Analog Devices and the Analog Devices logo are registered trademarks or trademarks of Analog Devices, Inc. All other trademarks mentioned in this document are the property of their respective owners. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended May 2, 2026 May 3, 2025 May 2, 2026 May 3, 2025 Revenue $ 3,623,465  $ 2,640,068  $ 6,783,728  $ 5,063,242  Cost of sales 1,183,667  1,028,458  2,298,955  2,021,329  Gross margin 2,439,798  1,611,610  4,484,773  3,041,913  Operating expenses:    Research and development 509,323  441,837  976,723  844,729     Selling, marketing, general and administrative 362,810  302,669  708,063  587,465     Amortization of intangibles 187,985  187,415  375,300  374,830     Special charges, net —  1,745  47,982  65,632  Total operating expenses 1,060,118  933,666  2,108,068  1,872,656  Operating income 1,379,680  677,944  2,376,705  1,169,257  Nonoperating expense (income):    Interest expense 87,619  74,703  173,963  149,967     Interest income (28,565) (21,725) (60,822) (45,212)    Other, net (4,202) (962) (7,135) 2,998  Total nonoperating expense (income) 54,852  52,016  106,006  107,753  Income before income taxes 1,324,828  625,928  2,270,699  1,061,504  Provision for income taxes 148,478  56,158  263,523  100,418  Net income $ 1,176,350  $ 569,770  $ 2,007,176  $ 961,086  Shares used to compute earnings per common share - basic 487,605  496,173  488,239  496,145  Shares used to compute earnings per common share - diluted 490,458  498,201  491,057  498,434  Basic earnings per common share $ 2.41  $ 1.15  $ 4.11  $ 1.94  Diluted earnings per common share $ 2.40  $ 1.14  $ 4.09  $ 1.93  ANALOG DEVICES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share amounts) May 2, 2026 Nov. 1, 2025 ASSETS     Current Assets Cash and cash equivalents $ 2,436,916  $ 2,499,406  Short-term investments 1,002,392  1,152,915  Accounts receivable 2,051,733  1,436,075  Inventories 1,848,405  1,656,323  Prepaid expenses and other current assets 470,327  363,342  Total current assets 7,809,773  7,108,061  Non-current Assets Net property, plant and equipment 3,292,288  3,315,696  Goodwill 26,973,180  26,945,180  Intangible assets, net 7,255,362  8,013,815  Deferred tax assets 1,729,558  1,867,102  Other assets 888,934  742,858  Total non-current assets 40,139,322  40,884,651  TOTAL ASSETS $ 47,949,095  $ 47,992,712  LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 598,640  $ 543,760  Income taxes payable 325,626  610,370  Debt, current 899,227  —  Commercial paper notes 550,198  446,639  Accrued liabilities 2,083,216  1,645,032  Total current liabilities 4,456,907  3,245,801  Non-current Liabilities Long-term debt 7,235,424  8,145,066  Deferred income taxes 1,906,115  2,163,281  Income taxes payable 87,109  100,963  Other non-current liabilities 521,507  521,846  Total non-current liabilities 9,750,155  10,931,156  Shareholders’ Equity Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding —  —  Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 487,087,040 shares outstanding (489,654,097 on November 1, 2025) 81,183  81,611  Capital in excess of par value 22,287,095  23,349,185  Retained earnings 11,525,998  10,539,541  Accumulated other comprehensive loss (152,243) (154,582) Total shareholders’ equity 33,742,033  33,815,755  TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 47,949,095  $ 47,992,712  ANALOG DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three Months Ended Six Months Ended May 2, 2026 May 3, 2025 May 2, 2026 May 3, 2025 Cash flows from operating activities:   Net income $ 1,176,350  $ 569,770  $ 2,007,176  $ 961,086    Adjustments to reconcile net income to net cash provided by operations:        Depreciation 104,957  100,334  210,843  198,781         Amortization of intangibles 385,978  400,273  770,593  817,429         Stock-based compensation expense 81,721  72,831  167,396  150,405         Deferred income taxes (60,269) (89,916) (120,930) (149,370)        Other (8,698) 5,002  4,727  4,203         Changes in operating assets and liabilities (807,998) (238,816) (799,249) (36,247)    Total adjustments (304,309) 249,708  233,380  985,201  Net cash provided by operating activities 872,041  819,478  2,240,556  1,946,287  Cash flows from investing activities:   Maturities of short-term available-for-sale investments 137,825  372,778  147,817  372,778    Additions to property, plant and equipment, net (137,702) (90,268) (247,015) (239,246)   Proceeds from sale of property, plant and equipment, net —  58,892  —  58,892    Payments for acquisitions, net of cash acquired (35,875) —  (35,875) (45,652)   Other (16,174) (13,209) (23,882) (12,880) Net cash (used for) provided by investing activities (51,926) 328,193  (158,955) 133,892  Cash flows from financing activit