Power Integrations — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the quarter ended September 30, 2026, was $125.5 million, representing a 5% increase sequentially and a 6% increase year-over-year compared to the third quarter of 2025.
• GAAP net income was $18.3 million ($0.32 per diluted share), compared to $9.8 million ($0.17 per diluted share) in the prior quarter and a net loss of $1.4 million ($0.02 per diluted share) in the third quarter of 2025.
• Non-GAAP net income was $26.1 million ($0.46 per diluted share), compared to $20.9 million ($0.37 per diluted share) in the prior quarter and $20.2 million ($0.36 per diluted share) in the third quarter of 2025.
• Cash flow from operations was $42.6 million for the quarter.
• Free cash flow for the nine months ended September 30, 2026, was $72.2 million, calculated as $84.6 million in cash flows from operations less $12.4 million in purchases of property and equipment.
• GAAP gross margin was 55.6% for the quarter, while non-GAAP gross margin was 55.2%.
• GAAP operating expenses were $50.6 million, compared to $55.7 million in the prior quarter and $68.8 million in the third quarter of 2025.
• Non-GAAP operating expenses were $42.4 million for the quarter.
• GAAP operating margin was 15.2% for the quarter, while non-GAAP operating margin was 21.4%.
• Cash and cash equivalents were $96.8 million as of September 30, 2026, up from $58.8 million as of December 31, 2025.
• Total stockholders' equity was $697.3 million as of September 30, 2026.

Guidance and Future Outlook:

• Revenue for the fourth quarter of 2026 is expected to be between $118.0 million and $126.0 million.
• GAAP gross margin for Q4 2026 is expected to be between 54.0% and 55.0%; non-GAAP gross margin is expected to be between 54.5% and 55.5%.
• GAAP operating expenses for Q4 2026 are expected to be between $53.0 million and $54.0 million; non-GAAP operating expenses are expected to be between $42.5 million and $43.5 million.
• GAAP operating margin for Q4 2026 is expected to be between 10.0% and 12.0%; non-GAAP operating margin is expected to be between 19.0% and 21.0%.
• The company expects to pay quarterly dividends of $0.22 per share for each of the four quarters of 2027.

Business Segments and Product Lines:

• Revenue growth in the quarter was driven by PowiGaN™ products.
• The industrial market showed continued strength with revenue up 13% year-to-date.
• Revenue mix by end market for the quarter ended September 30, 2026, was: Industrial (43%), Consumer (32%), Computer (13%), and Communications (12%).
• The company's products serve applications including AI data centers, EVs, and high-voltage DC infrastructure.

Market and Competitive Landscape:

• Power is becoming a critical constraint due to AI and electrification, driving demand for advances in efficiency and power density.
• The company's high-voltage technology and system expertise are aligned with these market challenges.
• Risks to the market include potential changes in trade policies, tariffs, global economic conditions, and competition that could impact revenue or selling prices.

Risks and Challenges:

• Forward-looking statements are subject to risks including the possibility that revenue growth driven by PowiGaN™ products or industrial market strength may not continue as anticipated.
• Risks include the potential inability to meet financial outlook elements, supply constraints, and the ability to conduct business or compete for design wins.
• External factors such as inflation, armed conflicts, trade negotiations, and changes in commodity prices or exchange rates may impact demand and costs.
• Product development delays, defects, and market acceptance of new products pose risks.
• The company may not be able to pay anticipated dividends due to unforeseen circumstances.

Management Commentary and Tone:

• CEO Jen Lloyd stated that revenue growth was driven by PowiGaN™ products and industrial market strength.
• Management highlighted a continued focus on expense discipline and profitability, resulting in strong earnings growth.
• Management expressed excitement about the product roadmap and opportunities to drive shareholder value in response to power constraints in AI and electrification.

Other Key Points:

• A dividend of $0.215 per share was paid on September 30, 2026, to stockholders of record as of August 31, 2026.
• A dividend of $0.215 per share will be paid on December 31, 2026, to stockholders of record as of November 30, 2026.
• Non-GAAP financial measures exclude stock-based compensation, amortization of acquisition-related intangible assets, an accrual for a judgment in a legal matter, a restructuring charge recognized in the first quarter of 2026, and the tax effects of these items.
• A restructuring charge of $6.2 million was recognized in the first quarter of 2026, primarily consisting of employee severance.
• An accrual for a judgment in a legal matter was settled in the quarter ended September 30, 2026, resulting in a reduction of the reserve.
• Stock-based compensation expense for the quarter was $9.4 million.
• The company held a conference call on November 4, 2026, at 1:30 p.m. Pacific time.