Analog Devices, Inc.
ADI · Nasdaq
Next quarter
Expected to report Nov 24, 2026 — estimated from last year’s reporting date.
Consensus is $3.87 EPS for Oct 2026 across 8 estimates, ranging $3.85 to $3.89.
ADI Jul 2026
- 3.60%
- $3.33
- $3.45
- —
- $4.02B
Reported results
- $4.02B
- 67.32%
- $1.61B
- 40.10%
- $1.34B
- $2.74
Highlights
- Record revenue: Fiscal Q3 revenue was $4.02 billion, up 40% year over year and 11% from $3.62 billion in Q2, with growth led by Industrial and Communications.
- EPS beat: Adjusted diluted EPS was $3.45, 3.6% above the $3.33 consensus and up 68% from $2.05 a year ago; GAAP diluted EPS was $2.74 versus $1.04.
- Broad-based demand: Industrial revenue rose 53% year over year to $1.97 billion, Communications rose 84% to $654.5 million, Automotive rose 16% to $998.2 million and Consumer rose 6% to $397.2 million.
- Margin expansion: GAAP gross margin increased 520 basis points year over year to 67.3%, while adjusted operating margin rose 780 basis points to 50.0%, helped by higher manufacturing utilization and favorable mix.
- Record fourth-quarter outlook: ADI expects Q4 revenue of $4.3 billion, plus or minus $100 million, adjusted operating margin of 52.0% and adjusted EPS of $3.86, plus or minus $0.15.
- Empower acquisition: ADI completed its $1.5 billion acquisition of Empower Semiconductor on July 7; the transaction added approximately $1.0 billion of goodwill and $600 million of technology-related intangible assets, while contributing immaterial Q3 revenue and earnings.
- Cash returns and generation: ADI generated $1.60 billion of operating cash flow and $1.46 billion of free cash flow in Q3, and returned $1.69 billion through $1.16 billion of repurchases and $535 million of dividends.
- Balance-sheet investment: Accounts receivable increased 66% from fiscal year-end to $2.39 billion and inventory rose 17% to $1.93 billion as ADI supported higher demand; total debt was $9.22 billion at quarter-end.
Analysis
Analog Devices delivered a strong fiscal third quarter, with adjusted EPS of $3.45 beating the $3.33 consensus by 3.6%. Revenue reached a record $4.02 billion, up 40% from $2.88 billion a year ago and 11% from $3.62 billion in the prior quarter. Adjusted operating margin was 50.0%, up from 42.2% a year ago, while GAAP operating income nearly doubled to $1.61 billion. GAAP diluted EPS rose to $2.74 from $1.04, aided in part by a much lower 13.3% effective tax rate versus 32.1% last year, when tax expense included a $153.8 million deferred-tax impact.
The print was defined by broad demand rather than a single end market. Industrial grew 53% year over year and Communications grew 84%, with data-center demand driven by AI infrastructure investments; Automotive and Consumer also increased. ADI also completed the $1.5 billion Empower Semiconductor acquisition, although its Q3 contribution was immaterial and it added $23.4 million of transaction costs. Management expects momentum to continue, guiding to $4.3 billion of Q4 revenue, 52.0% adjusted operating margin and $3.86 adjusted EPS. Cash generation remained substantial, with $1.46 billion of quarterly free cash flow funding $1.69 billion of shareholder returns.
End-market demand
Growth broadened across ADI’s portfolio, with Industrial remaining the largest contributor and Communications showing the fastest expansion. The company attributed the Communications increase primarily to data-center demand from AI infrastructure investment, while all Industrial sub-markets grew and test equipment plus aerospace and defense were the strongest areas.
- Industrial: Revenue was $1.97 billion, representing 49% of total revenue and increasing 53% year over year from $1.29 billion.
- Communications: Revenue was $654.5 million, or 16% of revenue, up 84% from $354.8 million.
- Automotive: Revenue was $998.2 million, or 25% of revenue, up 16% from $857.1 million.
- Consumer: Revenue was $397.2 million, or 10% of revenue, up 6% from $375.4 million.
- Channel mix: Distributor revenue rose to $2.33 billion, or 58% of revenue, from $1.59 billion and 55% a year earlier; ADI linked the mix increase primarily to stronger Industrial revenue.
Margin and earnings
The revenue recovery continued to translate into operating leverage. Higher factory utilization absorbed manufacturing fixed costs more effectively, while product mix also supported margins. The year-over-year GAAP earnings comparison additionally benefited from a lower tax rate than in the prior-year quarter.
- Gross margin: GAAP gross margin was $2.71 billion, or 67.3%, up 520 basis points from 62.1%; adjusted gross margin was 72.5%, up 330 basis points.
- Operating income: GAAP operating income increased 97% to $1.61 billion, producing a 40.1% operating margin versus 28.4% a year earlier.
- Adjusted profitability: Adjusted operating income rose 65% to $2.01 billion, and adjusted operating margin reached 50.0% versus 42.2%.
- Tax effect: The GAAP effective tax rate fell to 13.3% from 32.1% a year earlier. The prior-year rate reflected a $153.8 million deferred-tax expense tied to remeasurement of Global Intangible Low-Taxed Income-related tax balances.
Empower acquisition
ADI completed the acquisition of integrated voltage-regulator and power-management company Empower Semiconductor on July 7 for approximately $1.5 billion. Because the transaction closed late in the quarter, its reported contribution was not yet meaningful, while purchase accounting and acquisition costs created a sizable gap between GAAP and adjusted results.
- Purchase accounting: ADI recorded approximately $1.0 billion of goodwill, $600 million of primarily technology-based intangible assets and $100 million of deferred tax liabilities on a preliminary basis.
- Q3 contribution: Revenue and earnings attributable to Empower since the acquisition date were immaterial to consolidated results.
- Acquisition costs: ADI expensed $23.4 million of transaction costs in Q3, while total acquisition-related expenses reduced GAAP diluted EPS by $0.81; adjusted diluted EPS was $3.45 versus GAAP diluted EPS of $2.74.
- Forward impact: Q4 guidance includes approximately $405 million of acquisition-related adjustments, contributing $0.72 to the difference between guided adjusted EPS of $3.86 and reported EPS of $3.14.
Cash and capital allocation
Cash generation remained strong despite investment in the acquisition and higher working-capital balances. ADI used much of its cash generation for shareholder returns and funded the Empower purchase through its broader liquidity resources, including commercial paper capacity and revolving credit facilities.
- Free cash flow: Q3 operating cash flow was $1.60 billion and free cash flow was $1.46 billion, equal to 40% and 36% of revenue, respectively. Trailing-twelve-month operating cash flow was $5.55 billion and free cash flow was $4.94 billion.
- Shareholder returns: ADI returned $1.69 billion in Q3, comprising $1.16 billion of repurchases and $535 million of dividends. The board declared another $1.10-per-share quarterly dividend.
- Liquidity: Cash, cash equivalents and short-term investments totaled approximately $2.3 billion at August 1, 2026, while total debt was $9.22 billion, including $1.0 billion of commercial paper.
- Working capital: Accounts receivable rose 66% from November 1, 2025 to $2.39 billion and inventory increased 17% to $1.93 billion, reflecting higher sales and inventory built to support demand.
Fourth-quarter outlook
Management expects the demand recovery to accelerate into a record fiscal fourth quarter and sees the current momentum carrying into fiscal 2027. The guidance implies another sequential increase in revenue and adjusted profitability, though reported results will continue to include substantial acquisition-related amortization and other purchase-accounting effects.
- Revenue: Q4 revenue is forecast at $4.3 billion, plus or minus $100 million, versus $4.02 billion in Q3.
- Margins: Reported operating margin is expected at approximately 42.6%, plus or minus 150 basis points, while adjusted operating margin is expected at 52.0%, plus or minus 100 basis points.
- EPS: Reported EPS guidance is $3.14, plus or minus $0.15, and adjusted EPS guidance is $3.86, plus or minus $0.15.
- Dividend: The $1.10-per-share dividend is scheduled for payment on September 15, 2026 to shareholders of record as of September 1.
