STMicroelectronics (NYSE:STM) reported mixed fourth-quarter 2025 financial results on Thursday.
The company, a supplier to major industry players including Apple Inc. (NASDAQ:AAPL) and Tesla, Inc. (NASDAQ:TSLA), reported quarterly net revenues of $3.329 billion.
The topline marked a 0.2% year-over-year growth, edging past the analyst consensus estimate of $3.298 billion and landing slightly above the midpoint of the company’s business outlook range of $3.280 billion.
Year-over-year net sales to OEMs and Distribution increased 0.6% and decreased 0.7%, respectively.
Margin Compression and Profitability Headwinds
Adjusted earnings per share (EPS) of 11 cents decisively trailed the analyst consensus estimate of 25 cents.
Gross margin came in at 35.2%, beating the midpoint of the company’s guidance by 20 basis points, but declining 250 basis points year over year.
This margin erosion was primarily due to weaker manufacturing efficiencies, along with additional pressure from adverse currency movements and lower capacity-reservation fees.
Consequently, the operating margin fell by a substantial 730 bps to 3.8%.
The company reported a net loss of $30 million on an operating income of $125 million for the quarter.
The reported operating income included $141 million in impairment, restructuring charges, and other related phase-out costs, predominantly associated with the previously announced company-wide program to reshape its manufacturing footprint and resize its global cost base.
Excluding these one-time items, adjusted operating income stood at $266 million.
Segment Performance
Segmental results painted a mixed picture of market demand. The Analog Products, MEMS, and Sensors (AM&S) segment grew revenue by 7.5% to $1.45 billion, and the Embedded Processing (EMP) segment rose by 1.3% to $1.02 billion.
Conversely, the Power and Discrete products (P&D) segment saw a sharp revenue decrease of 31.6% to $412 million, and the RF & Optical Communications (RF&OC) segment’s revenue rose by 22.9% to $449 million.
CEO Jean-Marc Chery said STMicroelectronics delivered fourth-quarter net revenues above the midpoint of its guidance, supported by stronger sales in Personal Electronics and, to a lesser extent, CECP and Industrial, while Automotive came in below expectations.
Chery also said STMicroelectronics plans to invest between $2.0 billion and $2.2 billion in net capital expenditures in 2026.
Earnings Call
During the earnings call, STMicroelectronics CEO Jean-Marc Chery characterized 2025 as a transition year defined by a difficult end-market landscape and persistent inventory corrections within the automotive and industrial sectors.
While the first half of the year proved particularly taxing, Chery noted a pivot in the latter half, culminated by a return to year-on-year revenue growth in the fourth quarter.
This momentum has provided the company with enhanced visibility as it enters 2026, supported by a progressively stabilizing distribution channel and a healthier overall market environment compared to the previous year.
Looking ahead, Chery signaled a bullish outlook for 2026, predicated on both a broader cyclical recovery and company-specific growth drivers.
“Well, we will not guide for 2026 today clearly, but we are confident in our ability to grow organically for next year. Well, it’s clear that we enter in a better and healthier situation compared to 2025,” Chery said.
Although formal guidance for the upcoming year was withheld, the CEO underscored a firm confidence in the company’s ability to achieve organic growth.
A key catalyst for this optimism is the expected resolution of excess inventory issues, which Chery anticipates will be fully cleared by the end of the second quarter, positioning the semiconductor giant for a more robust performance in the months to follow.
Liquidity And Outlook
From a cash flow perspective, quarterly operating cash flow was $674 million, a decrease from $681 million in the year-ago quarter, while free cash flow was $257 million, up from $128 million in the prior year.
Despite this, the firm maintained a net financial position of $2.79 billion as of December 31, 2025, with total liquidity of $4.92 billion against total financial debt of $2.13 billion.
Looking ahead, STMicroelectronics projected its fiscal first-quarter net revenues to be $3.04 billion at the midpoint, representing a sequential decrease of 8.7% (with a potential variance of plus or minus 350 bps).
This guidance fell above the analyst consensus estimate of $3.00 billion. The gross margin for the quarter is projected to recover to 33.7%, plus or minus 200 bps.
STM Price Action: STMicroelectronics shares were up 0.53% at $30.49 during premarket trading on Thursday, according to Benzinga Pro data.
Photo by Michael Vi via Shutterstock
