ON SEMICONDUCTOR (NASDAQ:ON) Q3 2025 Earnings: EPS Beats, Revenue Misses, Shares Rise

ON SEMICONDUCTOR (NASDAQ:ON) reported third quarter 2025 financial results that presented a mixed picture for investors, beating earnings expectations while falling slightly short on revenue. The company's performance and forward-looking guidance have generated notable market movement, with shares rising significantly in pre-market trading following the announcement.

Earnings Performance Versus Estimates

The semiconductor manufacturer delivered non-GAAP earnings per share of $0.63, exceeding analyst estimates of $0.61. This represents a 6.6% earnings surprise and demonstrates the company's ability to maintain profitability despite revenue challenges. However, revenue told a different story, with the company reporting $1.55 billion compared to the $1.56 billion analysts had projected. This 12% year-over-year revenue decline reflects ongoing market challenges while the sequential improvement from the previous quarter's $1.47 billion suggests potential stabilization.

Key financial metrics from the quarter include:

• Non-GAAP gross margin of 38.0%, up from 37.6% in the previous quarter
• Operating cash flow of $418.7 million
• Free cash flow of $372.4 million, representing 24% of revenue
• Year-to-date share repurchases of $925 million

Market Reaction and Price Movement

The market responded positively to the earnings beat and improved profitability metrics, with ON shares rising approximately 3.8% in pre-market trading. This reaction suggests investors are focusing on the company's earnings outperformance and efficiency improvements rather than the slight revenue miss. The positive movement contrasts with the stock's performance over recent weeks, which had seen declines of approximately 4.7% over the past two weeks, indicating the earnings report may have alleviated some investor concerns about the company's near-term prospects.

Fourth Quarter Outlook and Analyst Expectations

Looking ahead, ON Semiconductor provided guidance for the fourth quarter of 2025 that aligns closely with market expectations. The company projects revenue between $1.48 billion and $1.58 billion, with the midpoint of $1.53 billion nearly matching analyst estimates of $1.57 billion. The earnings guidance range of $0.57 to $0.67 per share also brackets the current analyst consensus, suggesting management expects business conditions to remain relatively stable.

Strategic Highlights and Management Commentary

President and CEO Hassane El-Khoury emphasized that the results "exceeded expectations, underscoring the strength of our strategy and the resilience of our business model." He noted "continued signs of stabilization across our core markets, as well as positive growth in AI," highlighting the company's strategic positioning in energy-efficient technologies for automotive, industrial, and AI platforms. The commentary suggests the company is leveraging its focus on intelligent power and sensing solutions to capitalize on growing demand for energy-efficient semiconductor solutions across key end markets.

All three business segments showed sequential growth despite year-over-year declines:

• Power Solutions Group (PSG): $737.6 million, up 6% sequentially
• Analog & Mixed-Signal Group (AMG): $583.3 million, up 5% sequentially
• Intelligent Sensing Group (ISG): $230.0 million, up 7% sequentially

For more detailed earnings information and future estimates, visit the ON Semiconductor earnings page.

Disclaimer: This article is not investment advice. Investors should conduct their own research and consult with financial advisors before making investment decisions.