Diodes (NASDAQ:DIOD) reported preliminary fourth-quarter and full-year 2025 results showing double-digit revenue growth and improving demand trends across several end markets, led by computing applications tied to AI servers. Management also introduced new multi-year financial targets and provided first-quarter 2026 guidance that it said would be above typical seasonal patterns.
2025 results show fourth straight quarter of double-digit revenue growth
CEO Gary Yu said Diodes ended 2025 with fourth-quarter revenue up 15% year over year and full-year revenue up 13%, which he described as the company’s highest annual growth level since 2021. Yu said the fourth quarter marked the company’s fourth consecutive quarter of double-digit year-over-year growth, citing progress from design-win initiatives and content expansion.
Financial details: revenue up, gross margin mixed, free cash flow improved
CFO Brett Whitmire said fourth-quarter 2025 revenue was $391.6 million, up from $339.3 million in the fourth quarter of 2024 and essentially flat sequentially versus $392.2 million in the third quarter of 2025. Full-year 2025 revenue rose 13% to $1.5 billion compared with $1.3 billion in 2024.
Fourth-quarter gross profit was $121.9 million, or 31.1% of revenue, compared with $110.9 million, or 32.7% of revenue, in the year-ago quarter and $120.5 million, or 30.7% of revenue, in the prior quarter. For the full year, GAAP gross profit was $462.4 million, or 31.3% of revenue, compared with $435.9 million, or 33.2% of revenue, in 2024.
Whitmire reported GAAP net income of $10.2 million, or $0.22 per diluted share, in the fourth quarter, compared with $8.2 million, or $0.18 per diluted share, a year earlier and $14.3 million, or $0.31 per diluted share, in the third quarter. Full-year GAAP net income was $66.1 million, or $1.43 per diluted share, versus $44.0 million, or $0.95 per diluted share, in 2024.
On a non-GAAP basis, fourth-quarter adjusted net income was $15.7 million, or $0.34 per diluted share, excluding after-tax acquisition-related intangible amortization and a loss on investment. Full-year non-GAAP adjusted net income was $56.7 million, or $1.22 per diluted share, compared with $61.0 million, or $1.31 per diluted share, in 2024.
Whitmire said operating cash flow in the fourth quarter was $38.1 million and free cash flow was $12.4 million, including $25.7 million of capital expenditures. Net cash flow was negative $9.7 million, which included $23.8 million returned to shareholders through share repurchases under a previously announced $100 million buyback program. For the full year, operating cash flow was $215.5 million, free cash flow was $137.2 million (including $78.4 million of capex), and net cash flow was positive $57.6 million, including $33.8 million for share repurchases. Whitmire also highlighted that free cash flow per share increased to $2.95 in 2025 from $1.00 in 2024.
On the balance sheet, the company ended the fourth quarter with approximately $382 million in cash, cash equivalents, restricted cash, plus short-term investments, working capital of approximately $879 million, and total debt of approximately $56 million. Inventory days were about 161, essentially unchanged from the prior quarter.
New interim targets: $2 billion revenue and 35%+ gross margin within three years
Yu outlined long-term goals of reaching $2.5 billion in revenue and $1 billion in gross profit, equating to 40% gross margin. To help investors track progress, he introduced three-year interim targets of $2 billion in annual revenue with approximately $700 million in gross profit, or 35%+ gross margin. He said the interim framework implies a 10.5% revenue CAGR and 15% CAGR in gross profit dollars, and that—given the company’s cost structure—Diodes expects to deliver “over $4 in non-GAAP EPS,” which he said would equal a 50% CAGR over the three-year period.
In the Q&A, management confirmed the three-year interim goal is intended to be achieved in calendar 2028. Yu also said that improvements in gross margin are expected to be driven in part by underloading charges declining as revenue increases, along with product mix enhancements and a greater focus on higher-margin segments such as automotive, industrial, and AI server-related applications.
End-market and product commentary: AI server demand and automotive content expansion
Senior Vice President of Worldwide Sales and Marketing Emily Yang said fourth-quarter performance was driven by strong demand in Asia—particularly Taiwan—for AI server-related computing. Yang said global point-of-sale trends increased sequentially, led by North America and Europe, and that channel inventory declined again and returned to the company’s normal range of 11 to 14 weeks.
By geography in the fourth quarter, Asia represented 78% of revenue, Europe 12%, and North America 10%. By end market, Yang said industrial was 22% of product revenue, automotive 20%, computing 28%, consumer 17%, and communication 13%, with automotive and industrial combined at 42% of product revenue.
Yang said Diodes introduced more than 650 new part numbers in 2025, with roughly 40% aimed at automotive. She said automotive addressable content increased to 239 per vehicle from 213 at the end of 2024 and 160 at the end of 2023. For AI server applications, she said content increased to 103 from 90 last year.
- Automotive: Yang said revenue grew 6% sequentially in the fourth quarter and 20% for the full year, with improving inventory conditions and better order visibility. She also referenced supply disruption in the market as creating content opportunities at key automotive customers.
- Industrial: Revenue was flat sequentially in the quarter and up 13% for the full year, with improving inventory conditions and what she described as better backlog visibility and more “rush orders.”
- Computing: Revenue was flat sequentially in the quarter, while full-year computing revenue increased 25%, which Yang attributed to AI server adoption and data center expansion.
- Consumer and communication: Consumer revenue fell 5% sequentially but rose 8% for the year; communication was flat sequentially and up 7% for the year, with momentum tied to high-speed connectivity and networking applications supporting AI infrastructure.
Q1 2026 outlook: revenue guided above typical seasonality
For the first quarter of 2026, Whitmire guided revenue to approximately $395 million, plus or minus 3%. At the midpoint, management said this would represent 19% year-over-year growth and a slight sequential increase, which Whitmire described as “significantly better than typical seasonality.”
Guidance also included GAAP gross margin of 31.5% plus or minus 1%, non-GAAP operating expenses of approximately 26.5% of revenue plus or minus 1% (excluding acquisition-related intangible amortization), net interest income of about $1 million, an expected tax rate of 18.5% plus or minus 3%, and approximately 46.4 million shares used to calculate EPS.
In the Q&A, Yang said the company incorporated typical Lunar New Year effects into its outlook but cited strong backlog, bookings, and book-to-bill as reasons for the stronger guidance.
About Diodes (NASDAQ:DIOD)
Diodes Incorporated (NASDAQ: DIOD) is a global manufacturer and supplier of high‐performance discrete, logic, analog and mixed‐signal semiconductor products. Headquartered in Plano, Texas, the company designs and develops a broad range of discrete components, standard logic functions, power management circuits, interface products and array products. Its portfolio includes rectifiers, MOSFETs, general‐purpose diodes, voltage regulators, comparators, buffers and other building blocks for electronic systems.
Diodes Incorporated serves a variety of end markets such as automotive, computing, communications, consumer electronics, industrial and lighting.
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