NXP Semiconductors N.V. reported its fourth-quarter earnings after the market closed on Monday, revealing quarterly revenue of $3.34 billion, which surpassed the analyst consensus estimate of $3.3 billion and the midpoint of its own prior guidance. For the first quarter, the company projected revenue between $3.05 billion and $3.25 billion, with the midpoint exceeding the analyst forecast of $3.09 billion. However, growth in the company's automotive market fell slightly short of previous expectations, leading to a more than 6% drop in its share price during after-hours trading following the report.
Here are the key highlights from NXP's Q4 earnings report: Key Financial Data:
Revenue: Q4 2025 revenue reached $3.34 billion, a 7% year-over-year increase, beating the $3.3 billion analyst expectation. Gross Margin: GAAP gross margin was 54.2%; the non-GAAP gross margin stood at 57.4%. Operating Margin: The GAAP operating margin was 22.3%; the non-GAAP operating margin was 34.6%. Earnings Per Share: GAAP diluted EPS was $1.79; non-GAAP diluted EPS was $3.35, exceeding the analyst consensus of $3.31. Operating Cash Flow: Q4 operating cash flow was $891 million, with net capital expenditures of $98 million, resulting in non-GAAP free cash flow of $793 million, representing 23.8% of the quarter's revenue.
Full-Year 2025 Performance:
Revenue: Full-year 2025 revenue was $12.27 billion, marking a 3% decrease compared to the previous year. Gross Margin: The full-year GAAP gross margin was 54.7%; the non-GAAP gross margin was 56.8%. Operating Margin: The full-year GAAP operating margin was 24.8%; the non-GAAP operating margin was 33.1%. Earnings Per Share: Full-year GAAP diluted EPS was $7.95; non-GAAP diluted EPS was $11.81. Operating Cash Flow: Full-year operating cash flow was $2.82 billion, with net capital expenditures of $395 million, leading to non-GAAP free cash flow of $2.425 billion, which accounted for 19.8% of the annual revenue.
Segment Data:
Automotive Business: Q4 automotive revenue was $1.876 billion, falling short of the analyst expectation of $1.89 billion. This compares to $1.837 billion in Q3 and $1.790 billion in the year-ago period, representing a 2% sequential increase and a 5% annual gain. Full-year automotive revenue was $7.116 billion, compared to $7.151 billion in 2024. Industrial & IoT: Q4 Industrial & IoT revenue was $640 million, up from $579 million in Q3 and $516 million in the prior-year quarter, reflecting an 11% sequential jump and a robust 24% year-over-year surge. Full-year revenue for the segment was $2.273 billion, compared to $2.269 billion in 2024. Mobile: Q4 mobile revenue reached $485 million, increasing from $430 million in Q3 and $396 million a year ago, indicating a 13% quarter-over-quarter rise and a 22% annual growth. Full-year mobile revenue was $1.584 billion, up 6% from $1.497 billion in 2024. Communication Infrastructure & Other: Q4 revenue for this segment was $334 million, slightly up from $327 million in Q3 but down 18% from $409 million in the same quarter last year, showing a 2% sequential increase. Full-year revenue was $1.296 billion, a significant 24% decline from $1.697 billion in 2024.
Q1 2026 Guidance:
Revenue: Revenue is projected to be in the range of $3.05 billion to $3.25 billion, with a midpoint of $3.15 billion, which is above the analyst consensus of $3.09 billion. This represents a sequential decline of 3% to 9%, but an annual increase of 8% to 15%. Gross Margin: GAAP gross profit is forecast between $1.685 billion and $1.831 billion, implying a GAAP gross margin of 55.2% to 56.3%. Non-GAAP gross profit is expected to be between $1.723 billion and $1.869 billion, corresponding to a non-GAAP gross margin of 56.5% to 57.5%. Operating Margin: GAAP operating profit is anticipated to be between $1.395 billion and $1.521 billion, resulting in a GAAP operating margin of 45.7% to 46.8%. Non-GAAP operating profit is projected between $966 million and $1.092 billion, implying a non-GAAP operating margin of 31.7% to 33.6%. Earnings Per Share: GAAP diluted EPS is expected to be between $4.01 and $4.41. Non-GAAP diluted EPS is forecast in the range of $2.77 to $3.17, with the midpoint being $0.02 higher than analyst expectations.
NXP President and CEO Rafael Sotomayor commented.
NXP saw sequential improvement across all its end markets in the fourth quarter. For the full year 2025, despite a challenging operating environment in the first half, the company executed effectively, maintaining operational discipline while advancing its strategic priorities in software-defined vehicles and physical AI. Through a series of strategic acquisitions, NXP has further strengthened its product portfolio, solidifying its leadership position in edge intelligence systems for the automotive, industrial, and IoT sectors. These initiatives, combined with a gradually improving demand environment, provide a foundation for the company to achieve profitable revenue growth. The company remains committed to disciplined investment, margin expansion, and product portfolio optimization to create sustainable long-term value for shareholders.
Following the earnings release, NXP's stock fell more than 6% in Monday's after-hours trading. Prior to the close, the stock had accumulated a gain of approximately 6.5% year-to-date.
NXP also announced on Monday that it has completed the previously disclosed sale of its MEMS sensor business for $900 million in cash, with an additional contingent consideration of up to $50 million dependent on achieving certain milestones. Furthermore, NXP finalized its acquisitions of Aviva Links and Kinara in October of last year. Still Awaiting Automotive Recovery. Despite providing an overall optimistic sales outlook, market concerns over the pace of NXP's recovery overshadowed this positive guidance. The company stated that first-quarter revenue is expected to be between $3.05 billion and $3.25 billion, with the midpoint of this range exceeding the average analyst estimate of $3.09 billion. NXP's chips are primarily supplied to the automotive industry, with the automotive business accounting for more than half of the company's revenue. Its processors utilize more mature process technologies and are mainly used for functions such as driving safety, vehicle connectivity, and in-car infotainment systems. Like its peers STMicroelectronics and Texas Instruments, NXP has been impacted by a post-pandemic chip oversupply. During the pandemic, automotive and consumer electronics customers built up significant inventories due to chip shortages and have since been slowly working through the excess stock. The threat of tariffs from U.S. President Trump has further slowed the industry's recovery process. NXP indicated last year that the chip oversupply situation might finally be nearing its end, noting that its automotive business was experiencing "significant" acceleration in growth. CEO Rafael Sotomayor, who took office last October, had also stated that he was seeing "signs of a cyclical recovery." NXP reported total Q4 2025 revenue of $3.34 billion, largely in line with market expectations. For the same period, the company's adjusted operating margin was 34.6%, slightly below the analyst forecast of 34.7%. Last week, STMicroelectronics, a chip supplier to Apple, issued a better-than-expected Q1 revenue forecast, driven by improving demand. However, shares of the analog chipmaker still fell after its earnings release, as the report revealed an uneven recovery across different end markets. STMicroelectronics CEO Jean-Marc Chery stated during a call with analysts that the automotive market "has not yet stabilized."
Comments