STMicroelectronics (NYSE:STM) reported its second-quarter 2025 results on Thursday, reflecting a mixed performance in a dynamic semiconductor market. While the company’s net revenues surpassed analyst expectations, profitability took a hit due to ongoing strategic restructuring and broader industry headwinds.

The company’s quarterly net revenues of $2.77 billion represented a 14.4% year-over-year decline, beating the analyst consensus estimate of $2.70 billion. This outperformance on the top line was primarily fueled by stronger-than-expected revenue generation in the Personal Electronics and Industrial sectors, though Automotive sales were slightly below projections.

However, adjusted earnings per share (EPS) of 6 cents missed the analyst consensus estimate of 10 cents. The gross margin contracted by 660 basis points (bps) to 33.5%.

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This decline was largely attributable to a less favorable product mix, reduced manufacturing efficiencies, and to a lesser extent, higher unused capacity charges.

Consequently, the operating margin fell sharply by 1,640 bps, resulting in a negative 4.8%. The company reported an operating loss of $133 million and a net loss of $97 million, for the quarter.

These losses included significant impairment and restructuring charges totaling $190 million, primarily associated with STMicroelectronics’ ongoing program to reshape its manufacturing footprint and resize its global cost base.

Excluding these one-time items, non-U.S. GAAP operating income was $57 million and net income was $57 million.

Segmental Breakdown

Segment-wise, the Analog Products, MEMS, and Sensors (AM&S) segment saw its revenue decrease by 15.2% to $1.13 billion, mainly due to a decline in Analog products.

The Power and Discrete products (P&D) segment experienced an even steeper drop, with revenue decreasing by 22.2% to $447 million.

The Embedded Processing (EMP) segment’s revenue declined by 6.5% to $847 million, primarily impacted by Custom Processing.

Lastly, the RF & Optical Communications (RF&OC) segment’s revenue decreased by 17.9% to $336 million. Sales to OEMs dropped by 15.3%, and Distribution sales fell by 12.0%.

The company noted that its book-to-bill ratio remained above one for the Industrial sector, indicating healthy demand, but was below parity for Automotive.

From a cash flow perspective, STMicroelectronics’ quarterly operating cash flow was $354 million, a decrease from $702 million in the year-ago quarter.

Free cash flow was negative at $(152) million, compared to a positive $159 million in the prior year. Despite these figures, the company maintained a solid net financial position of $2.67 billion as of June 28, 2025, with total liquidity of $5.63 billion and total financial debt of $2.96 billion.

CEO Jean-Marc Chery commented that the quarterly net revenues came in above the mid-point of the company’s business outlook range, driven by stronger revenues in Personal Electronics and Industrial, even as Automotive sales slightly missed expectations.

Outlook

Looking ahead, STMicroelectronics expects its fiscal third-quarter net revenues to be $3.17 billion at the mid-point, representing a sequential increase of 14.6%, with a potential variance of plus or minus 350 basis points. This compares to an analyst consensus estimate of $3.31 billion.

The gross margin for the third quarter is projected to be 33.5%, plus or minus 200 bps. The company also reiterated its net capital expenditure plan for 2025, which remains between $2.0 billion and $2.3 billion, largely dedicated to the reshaping of its manufacturing footprint.

Chery also stated, “While the current situation on trade and tariffs is creating uncertainty on the level of car production, we confirm that the first quarter was the low point for Automotive revenues. We expect sequential growth in the third quarter versus the second quarter.”

Furthermore, Lorenzo Grandi, president and CFO, confirmed the ongoing execution of their plan to realize annual cost savings in the high triple-digit million-dollar range, projected by the close of 2027.

The company conveyed its expectation for solid sequential revenue growth in the third quarter, which should lead to continued year-over-year improvement. However, it acknowledged that operations remain within an uncertain macroeconomic environment.

Given these external factors, STMicroelectronics’ priorities continue to be supporting its customers, accelerating new product introductions, and executing its company-wide program aimed at reshaping its manufacturing footprint and resizing its global cost base.

STMicroelectronics stock has shown strength in the broader market, gaining over 27% year-to-date, surpassing the 10% gain of the NYSE Composite Index, which includes STMicroelectronics as a component.

Price Action: STM stock traded higher by 0.38% to $31.89 premarket at last check Thursday.

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