NXP Semiconductors NV

07/24/2025 | Press release | Distributed by Public on 07/24/2025 14:37

Quarterly Report for Quarter Ending June 29, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis (MD&A) should be read in conjunction with our Consolidated Financial Statements and Notes and the MD&A in our Annual Report on Form 10-K for the year ended December 31, 2024, and the Financial Statements and the related Notes that appear elsewhere in this document.
Overview
Quarter in Focus
•Revenue was $2,926 million, down 6.4% year-on-year;
•GAAP gross margin was 53.4%, and GAAP operating margin was 23.5%;
•Non-GAAP gross margin was 56.5%, and non-GAAP operating margin was 32.0%;
•Cash flow from operations was $779 million, with net capital expenditures on property, plant and equipment of $83 million, resulting in non-GAAP free cash flow of $696 million;
•During the second quarter of 2025, NXP returned capital to shareholders with the payment of $257 million in cash dividends and the repurchase of $204 million of its common shares, for a total capital return of $461 million.
On April 23, 2025, Kurt Sievers, the CEO and President of the Company, provided notice that he would voluntarily retire as CEO and executive director of the Company on October 28, 2025. Following its CEO succession planning process, NXP's board of directors has unanimously appointed Rafael Sotomayor to succeed as President, effective April 28, 2025. Furthermore, Mr. Sotomayor has been designated as CEO upon Mr. Sievers's retirement from his CEO role. Mr. Sievers will remain a strategic advisor to NXP through December 31, 2025.
On June 17, 2025, NXP announced the acquisition of 100% of TTTech Auto for $766 million in cash ($679 million net of cash acquired). The acquisition is expected to enhance the NXP CoreRide platform by augmenting hardware proficiency with added software expertise. See Note 3 to the consolidated financial statements for further information regarding the acquisition of TTTech Auto.
Sequential Results
Q2 2025 compared to Q1 2025
Revenue for the three months ended June 29, 2025 was $2,926 million compared to $2,835 million for the three months ended March 30, 2025, an increase of $91 million or 3.2% quarter-on-quarter, in line with management's expectations. Within our end markets, the Automotive end market increased $55 million or 3.3%, the Industrial & IoT end market increased $38 million or 7.5%, the Communication Infrastructure & Other end market increased $5 million or 1.6%, and the Mobile end market decreased $7 million or 2.1%.
When aggregating all end markets together and reviewing sales channel performance, revenues through NXP's third party distribution partners was $1,636 million, an increase of $112 million or 7.3% compared to the previous period. Revenues through NXP's third party direct OEM and EMS customers was $1,257 million, a decrease of $27 million or 2.1% versus the previous period.
From a geographic perspective, revenue increased quarter-on-quarter in the Asia Pacific region by 5.6%, in the China region by 5.2%, and in the EMEA region by 4.8%, while revenue decreased in the Americas region by 8.8%.
Our gross profit percentage for the three months ended June 29, 2025 of 53.4% decreased compared with 55.0% for the three months ended March 30, 2025.
Operating income for the three months ended June 29, 2025 was $687 million compared to $723 million for the three months ended March 30, 2025, a decrease of $36 million or 5.0%. Higher restructuring charges was the main driver for the sequential decrease.
Results of operations
The following table presents operating results for each of the three- and six-month periods ended June 29, 2025 and June 30, 2024, respectively:
($ in millions, unless otherwise stated) Q2 2025 % of Revenue Q2 2024 % of Revenue YTD 2025 % of Revenue YTD 2024 % of Revenue
Revenue 2,926 3,127 5,761 6,253
% nominal growth (6.4) (5.2) (7.9) (2.6)
Gross profit 1,562 1,792 3,122 3,575
Gross margin 53.4 % 57.3 % 54.2 % 57.2 %
Research and development (573) 19.6 % (594) 19.0 % (1,120) 19.4 % (1,158) 18.5 %
Selling, general and administrative (278) 9.5 % (270) 8.6 % (559) 9.7 % (576) 9.2 %
Amortization of acquisition-related intangible assets (25) 0.9 % (28) 0.9 % (52) 0.9 % (79) 1.3 %
Other income (expense) 1 - % (4) 0.1 % 19 0.3 % (10) 0.2 %
Operating income (loss) 687 23.5 % 896 28.7 % 1,410 24.5 % 1,752 28.0 %
Financial income (expense) (86) 2.9 % (75) 2.4 % (178) 3.1 % (145) 2.3 %
Benefit (provision) for income taxes (116) 4.0 % (154) 4.9 % (246) 4.3 % (295) 4.7 %
Results relating to equity-accounted investees (28) 1.0 % (3) 0.1 % (32) 0.6 % (4) 0.1 %
Net income (loss) 457 15.6 % 664 21.2 % 954 16.6 % 1,308 20.9 %
Less: Net income (loss) attributable to non-controlling interests 12 0.4 % 6 0.2 % 19 0.3 % 11 0.2 %
Net income (loss) attributable to stockholders 445 15.2 % 658 21.0 % 935 16.2 % 1,297 20.7 %
Diluted earnings per share 1.75 2.54 3.67 5.01
Revenue
Q2 2025 Overview
Q2 2025 compared to Q2 2024
Revenue for the three months ended June 29, 2025 was $2,926 million compared to $3,127 million for the three months ended June 30, 2024, a decrease of $201 million or 6.4%, in line with management's expectations.
YTD 2025 Overview
YTD 2025 compared to YTD 2024
Revenue for the six months ended June 29, 2025 was $5,761 million compared to $6,253 million for the six months ended June 30, 2024, a decrease of $492 million or 7.9%.
Revenue by end market was as follows:
($ in millions, unless otherwise stated) Q2 2025 Q2 2024 % change YTD 2025 YTD 2024 % change
Automotive 1,729 1,728 0.1 % 3,403 3,532 (3.7) %
Industrial & IoT 546 616 (11.4) % 1,054 1,190 (11.4) %
Mobile 331 345 (4.1) % 669 694 (3.6) %
Communication Infrastructure & Other 320 438 (26.9) % 635 837 (24.1) %
Total Revenue 2,926 3,127 (6.4) % 5,761 6,253 (7.9) %
Revenue by sales channel was as follows:
($ in millions, unless otherwise stated) Q2 2025 Q2 2024 % change YTD 2025 YTD 2024 % change
Distributors 1,636 1,804 (9.3) % 3,160 3,543 (10.8) %
OEM/EMS 1,257 1,294 (2.9) % 2,541 2,649 (4.1) %
Other 33 29 13.8 % 60 61 (1.6) %
Total Revenue 2,926 3,127 (6.4) % 5,761 6,253 (7.9) %
Revenue by geographic region, which is based on the customer's shipped-to location was as follows:
($ in millions, unless otherwise stated) Q2 2025 Q2 2024 % change YTD 2025 YTD 2024 % change
China 1)
1,088 1,098 (0.9) % 2,122 2,112 0.5 %
APAC, excluding China 790 898 (12.0) % 1,538 1,808 (14.9) %
EMEA (Europe, the Middle East and Africa) 674 676 (0.3) % 1,317 1,419 (7.2) %
Americas 374 455 (17.8) % 784 914 (14.2) %
Total Revenue 2,926 3,127 (6.4) % 5,761 6,253 (7.9) %
1)China includes Mainland China and Hong Kong
Q2 2025 compared to Q2 2024
From an end market perspective, NXP experienced consistent revenue in its Automotive end market, which was offset by declines in the Communication Infrastructure & Other, Industrial & IoT, and Mobile end markets versus the year ago period.
Revenue in the Automotive end market was $1,729 million, consistent with the year-ago period.
Revenue in the Industrial & IoT end market was $546 million, a decrease of $70 million or 11.4% versus the year-ago period. The decrease in the Industrial & IoT end market revenue was primarily attributable to our processors portfolio.
Revenue in the Mobile end market was $331 million, a decrease of $14 million or 4.1% versus the year ago period. The decrease in the Mobile end market revenue was attributable to declines in our advanced analog products, which was offset by growth in our mobile wallet processors.
Revenue in the Communication Infrastructure & Other end market was $320 million, a decrease of $118 million or 26.9% versus the year ago period. The decrease in the Communication Infrastructure & Other end market revenue was attributable to declines in our processors, secure cards, and RF power products.
When aggregating all end markets together and reviewing sales channel performance, revenues through NXP's third party distribution partners was $1,636 million, a decrease of 9.3% versus the year-ago period. Revenues through direct OEM and EMS customers was $1,257 million, a decrease of 2.9% versus the year ago period.
From a geographic perspective, revenue decreased year-on-year in the Americas region by 17.8%, in the Asia Pacific region by 12.0%, in the China region by 0.9%, and in the EMEA region by 0.3%.
YTD 2025 compared to YTD 2024
From an end market perspective, NXP experienced declines across all end markets versus the year ago period.
Revenue in the Automotive end market was $3,403 million, a decrease of $129 million or 3.7% versus the year ago period. The decrease in the Automotive end market revenue was attributable to declines in our automotive processors and advanced analog portfolio, which were offset by growth in our ADAS - Safety products.
Revenue in the Industrial & IoT end market was $1,054 million, a decrease of $136 million or 11.4% versus the year ago period. Within the Industrial & IoT end market, the decrease was primarily attributable to our processors portfolio.
Revenue in the Mobile end market was $669 million, a decrease of $25 million or 3.6% versus the year ago period. The decrease in the Mobile end market revenue was attributable to declines in our advanced analog products, which was offset by growth in our mobile wallet products.
Revenue in the Communication Infrastructure & Other end market was $635 million, a decrease of $202 million or 24.1% versus the year ago period. The decrease in the Communication Infrastructure & Other end market was attributable to declines in our processors and secure cards products.
When aggregating all end markets together, and reviewing sales channel performance, revenues through NXP's third party distribution partners was $3,160 million, a decrease of 10.8% versus the year-ago period. Revenues through direct OEM and EMS customers was $2,541 million, a decrease of 4.1% versus the year-ago period.
From a geographic perspective, revenue increased year-on-year in the China region by 0.5%, while revenue decreased in the Asia Pacific region by 14.9%, in the Americas region by 14.2%, and in the EMEA region by 7.2%.
Gross profit
Q2 2025 compared to Q2 2024
Gross profit for the three months ended June 29, 2025 was $1,562 million, or 53.4% of revenue, compared to $1,792 million, or 57.3% of revenue for the three months ended June 30, 2024. The decrease in gross margin is primarily due to price and unfavorable product / channel mix.
YTD 2025 compared to YTD 2024
Gross profit for the six months ended June 29, 2025 was $3,122 million, or 54.2% of revenue, compared to $3,575 million, or 57.2% of revenue for the six months ended June 30, 2024. The decrease in gross margin is primarily due to price and unfavorable product mix.
Operating expenses
Q2 2025 compared to Q2 2024
Operating expenses for the three months ended June 29, 2025 totaled $876 million, or 29.9% of revenue, compared to $892 million, or 28.5% of revenue for the three months ended June 30, 2024.
YTD 2025 compared to YTD 2024
Operating expenses for the six months ended June 29, 2025 totaled $1,731 million, or 30.0% of revenue, compared to $1,813 million, or 29.0% of revenue for the six months ended June 30, 2024.
•Research and development
($ in millions, unless otherwise stated) Q2 2025 Q2 2024 % change YTD 2025 YTD 2024 % change
Research and development 573 594 (3.5) % 1,120 1,158 (3.3) %
As a percentage of revenue 19.6 % 19.0 % 0.6 ppt 19.4 % 18.5 % 0.9 ppt
Q2 2025 compared to Q2 2024
R&D costs for the three months ended June 29, 2025 decreased by $21 million, or 3.5%, when compared to the three months ended June 30, 2024,driven by lower personnel related costs, inclusive of a reduction in variable compensation costs.
YTD 2025 compared to YTD 2024
R&D costs for the six months ended June 29, 2025 decreased by $38 million, or 3.3%, when compared to the six months ended June 30, 2024,driven by lower personnel related costs, inclusive of a reduction in variable compensation costs.
•Selling, general and administrative
($ in millions, unless otherwise stated) Q2 2025 Q2 2024 % change YTD 2025 YTD 2024 % change
Selling, general and administrative 278 270 3.0 % 559 576 (3.0) %
As a percentage of revenue 9.5 % 8.6 % 0.9 ppt 9.7 % 9.2 % 0.5 ppt
Q2 2025 compared to Q2 2024
SG&A costs for the three months ended June 29, 2025 increased by $8 million, or 3.0%, when compared to the three months ended June 30, 2024 due to higher expenses related to our closed or pending acquisitions ($9 million), higher restructuring related expenses and higher legal expenses, partly offset by lower personnel related costs, driven by a reduction in variable compensation costs.
YTD 2025 compared to YTD 2024
SG&A costs for the six months ended June 29, 2025 decreased by $17 million, or 3.0%, when compared to the six months ended June 30, 2024 due to lower legal expenses of $21 million.
•Amortization of acquisition-related intangible assets
($ in millions, unless otherwise stated) Q2 2025 Q2 2024 % change YTD 2025 YTD 2024 % change
Amortization of acquisition-related intangible assets 25 28 (10.7) % 52 79 (34.2) %
As a percentage of revenue 0.9 % 0.9 % - ppt 0.9 % 1.3 % (0.4) ppt
Q2 2025 compared to Q2 2024
Amortization of acquisition-related intangible assets for the three months ended June 29, 2025 decreased by $3 million, or 10.7%, when compared to the three months ended June 30, 2024.
YTD 2025 compared to YTD 2024
Amortization of acquisition-related intangible assets for the six months ended June 29, 2025 decreased by $27 million, or 34.2%, when compared to the six months ended June 30, 2024primarily due to the effect of certain acquisition-related intangibles becoming fully amortized.
Financial income (expense)
The following table presents the details of financial income and expenses:
($ in millions, unless otherwise stated) Q2 2025 Q2 2024 YTD 2025 YTD 2024
Interest income 39 39 74 89
Interest expense (115) (97) (221) (202)
Other financial income/ (expense) (10) (17) (31) (32)
Total (86) (75) (178) (145)
Q2 2025 compared to Q2 2024
Financial income (expense) was an expense of $86 million for the three months ended June 29, 2025, compared to an expense of $75 million for the three months ended June 30, 2024. Interest income remained flat, whereas interest expense increased by $18 million due to the interest expenses on the EIB loans as well as the commercial paper. Within Other financial income/ (expense), fair value adjustments in equity securities resulted in a profit of $3 million for the three months ended June 29, 2025, versus a loss of $3 million for the three months ended June 30, 2024.
YTD 2025 compared to YTD 2024
Financial income (expense) was an expense of $178 million for the six months ended June 29, 2025, compared to an expense of $145 million for the six months ended June 30, 2024. Interest income decreased by $15 million due to higher cash levels but lower interest rates, whereas interest expense increased by $19 million due to the interest expenses on the EIB loans and commercial paper. Within Other financial income/ (expense), fair value adjustments in equity securities resulted in a loss of $3 million for the six months ended June 29, 2025, versus a loss of $5 million for the six months ended June 30, 2024.
Benefit (provision) for income taxes
Our provision for income taxes for 2025 is based on our EAETR of 18.8%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives.
Q2 2025 Q2 2024 YTD 2025 YTD 2024
Tax benefit (provision) calculated at EAETR (112) (147) (231) (286)
Discrete tax benefit (provision) items (4) (7) (15) (9)
Benefit (provision) for income taxes (116) (154) (246) (295)
Effective tax rate 19.3 % 18.8 % 20.0 % 18.4 %
Q2 2025 compared to Q2 2024
The effective tax rate of 19.3% for the second quarter of 2025 was higher than the EAETR due to the income tax expense for discrete items of $4 million. The discrete items are primarily related to the impact of changes in the litigation accrual and related insurance reimbursements relating to the Motorola Personal Injury Lawsuits regarding previous years.
YTD 2025 compared to YTD 2024
For the first six months ended 2025, the effective tax rate of 20.0% was higher than 18.4% due to a net result of unfavorable discrete items of $15 million.
The effective tax rate of 20.0% for the first six months of 2025 was higher compared to the rate for the first six months ended 2024 of 18.4% due to a different mix of the benefit (provision) for income taxes in our operating locations, lower foreign tax incentives in the current period as a result of a decrease in qualifying income, and also due to the impact of the discrete items in the respective periods.
Subsequent event
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented as of 2026. We are currently assessing its impact on our consolidated financial statements. We also note that there is unclarity about what the G7 statement in relation to the US on global minimum taxes, as announced on June 28, 2025, could mean for the Company.
Results Relating to Equity-accounted Investees
Q2 2025 compared to Q2 2024
Results relating to equity-accounted investees amounted to a loss of $28 million (which includes an impairment charge of $27 million related to our investment in SigmaSense) for the three months ended June 29, 2025, whereas the three months ended June 30, 2024 results relating to equity-accounted investees amounted to a loss of $3 million.
YTD 2025 compared to YTD 2024
Results relating to equity-accounted investees amounted to a loss of $32 million (which includes an impairment charge of $27 million related to our investment in SigmaSense) for the six months ended June 29, 2025, whereas the six months ended June 30, 2024 results relating to equity-accounted investees amounted to a loss of $4 million.
Non-controlling Interests
Q2 2025 compared to Q2 2024
Non-controlling interests are related to the third-party share in the results of consolidated companies, predominantly SSMC. Their share of non-controlling interests amounted to a profit of $12 million for the three months ended June 29, 2025, compared to a profit of $6 million for the three months ended June 30, 2024.
YTD 2025 compared to YTD 2024
Non-controlling interests are related to the third-party share in the results of consolidated companies, predominantly SSMC. Their share of non-controlling interests amounted to a profit of $19 million for the six months ended June 29, 2025, compared to a profit of $11 million for the six months ended June 30, 2024.
Liquidity and Capital Resources
We derive our liquidity and capital resources primarily from our cash flows from operations. We continue to generate strong positive operating cash flows. At the end of the second quarter of 2025, our cash balance was $3,170 million, a decrease of $122 million compared to December 31, 2024. Taking into account the available amount of the Unsecured Revolving Credit Facility of $2,500 million, we had access to $5,670 million of liquidity as of June 29, 2025. We currently use cash to fund operations, meet working capital requirements, for capital expenditures and for potential common stock repurchases, dividends and strategic investments. Based on past performance and current expectations, we believe that our current available sources of funds (including cash and cash equivalents, RCF Agreement of $2.5 billion, plus anticipated cash generated from operations) will be adequate to finance our operations, working capital requirements, capital expenditures and potential dividends for at least the next twelve months.
($ in millions, unless otherwise stated) YTD 2025 YTD 2024
Cash from operations 1,344 1,612
Capital expenditures 222 411
Cash to shareholders 1,022 1,134
Cash
At June 29, 2025, our cash balance was $3,170 million of which $302 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner.
Capital expenditures
Our cash outflows for capital expenditures were $222 million in the first six months of 2025, compared to $411 million in the first six months of 2024.
Capital return
Under our Quarterly Dividend Program, interim dividends of $1.014 per ordinary share were paid on January 8, 2025 ($258 million), dividends of $1.014 per ordinary share were paid on April 9, 2025 ($257 million) and dividends of $1.014 per ordinary share were paid on July 9, 2025 ($256 million).
In the first six months of 2025 we repurchased approximately $507 million of shares.
Debt
Our total debt, inclusive of aggregate principal, unamortized discounts, premiums, debt issuance costs and fair value adjustments, amounted to $11,478 million as of June 29, 2025, an increase of $624 million compared to December 31, 2024 ($10,854 million).
As of June 29, 2025, we had outstanding fixed-rate notes with varying maturities for an aggregate principal amount of $9,750 million (collectively the "Notes"), of which $1.25 billion is payable within 12 months. Future interest payments associated with the Notes total $2,522 million, with $364 million payable within 12 months.
As of June 29, 2025, the Company had outstanding loans with the European Investment Bank (EIB) for an aggregated principal amount of $1,040 million. Future interest payments associated with the EIB loans total $264 million, with $47 million payable within 12 months.
As of June 29, 2025, we had $750 million commercial paper notes outstanding with a duration less than 12 months.
Our net debt position (see section Use of Certain Non-GAAP Financial Measures) at June 29, 2025 amounted to $8,308 million, compared to $7,562 million as of December 31, 2024.
Additional Capital Requirements
Expected working and other capital requirements are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations". At June 29, 2025, other than for changes disclosed in the "Notes to Condensed Consolidated Financial Statements" and "Liquidity and Capital Resources" in this Quarterly Report, there have been no other material changes to our expected working and other capital requirements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Cash flows
Our cash and cash equivalents during the first six months of 2025 decreased by $128 million (excluding the effect of changes in exchange rates on our cash position of $6 million) as follows:
($ in millions, unless otherwise stated) YTD 2025 YTD 2024
Net cash provided by (used for) operating activities 1,344 1,612
Net cash (used for) provided by investing activities (1,108) (513)
Net cash provided by (used for) financing activities (364) (2,095)
Increase (decrease) in cash and cash equivalents (128) (996)
Cash Flow from Operating Activities
For the first six months of 2025 our operating activities provided $1,344 million in cash. This was primarily the result of net income of $954 million, adjustments to reconcile the net income of $647 million and changes in operating assets and liabilities of $(271) million. Adjustments to net income (loss) include non-cash items, such as depreciation and amortization of $416 million, share-based compensation of $244 million and changes in deferred taxes of $(24) million. Changes in operating assets and liabilities were primarily driven by a $135 million increase in receivables and other current assets driven by the change in the insurance reimbursements relating to the Motorola Personal Injury Lawsuits, $84 million increase in inventories in order to align inventory on hand with expected demand, and $77 million decrease in accounts payable and other liabilities as a result of lower purchase volumes and timing related to payments.
For the first six months of 2024 our operating activities provided $1,612 million in cash. This was primarily the result of net income of $1,308 million, adjustments to reconcile the net income of $602 million and changes in operating assets and liabilities of $(305) million. Adjustments to net income (loss) includes non-cash items, such as depreciation and amortization of $448 million, share-based compensation of $229 million and changes in deferred taxes of $(87) million. Changes in operating assets and liabilities were primarily driven by a $322 million decrease in accounts payable and other liabilities as a result of lower purchase volumes and timing related to payments, $15 million increase in receivables and other current assets due to the linearity of revenue between the two periods, customer mix, and the related timing of cash collection, and $14 million increase in inventories in order to align inventory on hand with expected demand, partially offset by a $46 million decrease in other non-current assets from the application of prepayments used to secure long-term production supply.
Cash Flow from Investing Activities
Net cash used for investing activities amounted to $1,108 million for the first six months of 2025 and principally consisted of the purchase of interests in business (net of cash acquired) of $679 million (acquisition of TTTech Auto), capital expenditures of $222 million, $146 million for the purchase of investments (driven primarily by the capital contributions of $70 million into VSMC and approximately $32 million into ESMC) and $62 million for the purchase of identified intangible assets, including EDA (electronic design automation).
Net cash used for investing activities amounted to $513 million for the first six months of 2024 and principally consisted of the cash outflows for capital expenditures of $411 million, $34 million for the purchase of investments (driven primarily by the initial capital contribution of approximately $22 million into ESMC), and $87 million for the purchase of identified intangible assets, including EDA (electronic design automation).
Cash Flow from Financing Activities
Net cash used for financing activities of $364 million for the first six months of 2025 was primarily driven by the repayment of commercial paper notes of $1,461 million, dividend payments to common stockholders of $515 million, purchase of treasury shares and restricted stock unit holdings of $507 million, and repurchase of long-term debt of 500 million, partially offset by the proceeds from the issuance of commercial paper notes of $2,211 million, proceeds from issuance of long-term debt of $370 million, and the proceeds from the issuance of common stock through stock plans of $39 million.
Net cash used for financing activities of $2,095 million for the first six months of 2024 was primarily driven by the payment of $1 billion to retire at maturity our outstanding 4.875% senior unsecured notes due March 2024, dividend payment to common stockholders of $521 million, and purchase of treasury shares and restricted stock unit holdings of $613 million; partially offset by the proceeds from the issuance of common stock through stock plans of $40 million.
Information Regarding Guarantors of NXP (unaudited)
Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries
All debt instruments are guaranteed, fully and unconditionally, jointly and severally, by NXP Semiconductors N.V. and issued or guaranteed by NXP USA, Inc., NXP B.V. and NXP LLC, (together, the "Subsidiary Obligors" and together with NXP Semiconductors N.V., the "Obligor Group"). Other than the Subsidiary Obligors, none of the Company's subsidiaries (together the "Non-Guarantor Subsidiaries") guarantee the Notes. The Company consolidates the Subsidiary Obligors in its Consolidated Financial Statements and each of the Subsidiary Obligors are wholly owned subsidiaries of the Company.
All of the existing guarantees by the Company rank equally in right of payment with all of the existing and future senior indebtedness of the Obligor Group. There are no significant restrictions on the ability of the Obligor Group to obtain funds from respective subsidiaries by dividend or loan.
The following tables present summarized financial information of the Obligor Group on a combined basis, with intercompany balances and transactions between entities of the Obligor Group eliminated and investments and equity in the earnings of the Non-Guarantor Subsidiaries excluded. The Obligor Group's amounts due from, amounts due to, and intercompany transactions with Non-Guarantor Subsidiaries have been disclosed below the table, when material.
Summarized Statements of Income
For the six months ended
($ in millions) June 29, 2025
Revenue 3,246
Gross Profit 1,457
Operating income 305
Net income (60)
Summarized Balance Sheets
As of
($ in millions) June 29, 2025 December 31, 2024
Current assets 3,121 3,273
Non-current assets 12,037 12,191
Total assets 15,158 15,464
Current liabilities 2,739 1,244
Non-current liabilities 9,958 10,967
Total liabilities 12,697 12,211
Obligor's Group equity 2,461 3,253
Total liabilities and Obligor's Group equity 15,158 15,464
NXP Semiconductors N.V. is the head of a fiscal unity for the corporate income tax and VAT that contains the most significant Dutch wholly-owned group companies. The Company is therefore jointly and severally liable for the tax liabilities of the tax entity as a whole, and as such the income tax expense of the Dutch fiscal unity has been included in the Net income of the Obligor Group.
The financial information of the Obligor Group includes sales executed through a Non-Guarantor Subsidiary single-billing entity as a sales agent on behalf of an entity in the Obligor Group. The Obligor Group has sales to non-guarantors (for the six months ended June 29, 2025: $345 million). The Obligor Group has amounts due from equity financing (June 29, 2025: $7,114 million; December 31, 2024: $5,749 million) and due to debt financing (June 29, 2025: $3,082 million; December 31, 2024: $2,283 million) with non-guarantor subsidiaries.
Use of Certain Non-GAAP Financial Measures
Non-GAAP Financial Measures
In addition to providing financial information on a basis consistent with U.S. generally accepted accounting principles ("US GAAP" or "GAAP"), NXP also provides selected financial measures on a non-GAAP basis which are adjusted for specified items. The adjustments made to achieve these non-GAAP financial measures or the non-GAAP financial measures as specified are described below, including the usefulness to management and investors.
In managing NXP's business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In measuring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. In addition, management relies upon these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting NXP's business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to core operating performance, certain non-cash expenses and share-based compensation expense, which may obscure trends in NXP's underlying performance. This information also enables investors to compare financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management.
The presentation of these and other similar items in NXP's non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Non-GAAP Adjustment or Measure Definition Usefulness to Management and Investors
Purchase price accounting effects Purchase price accounting ("PPA") effects reflect the fair value adjustments impacting acquisition accounting and other acquisition adjustments charged to the Consolidated Statement of Operations. This typically relates to inventory, property, plant and equipment, as well as intangible assets, such as developed technology and marketing and customer relationships acquired. The PPA effects are recorded within both cost of revenue and operating expenses in our US GAAP financial statements. These charges are recorded over the estimated useful life of the related acquired asset, and thus are generally recorded over multiple years. We believe that excluding these charges related to fair value adjustments for purposes of calculating certain non-GAAP measures allows the users of our financial statements to better understand the historic and current cost of our products, our gross margin, our operating costs, our operating margin, and also facilitates comparisons to peer companies.
Restructuring Restructuring charges are costs associated with a restructuring plan and are primarily related to employee severance and benefit arrangements. Charges related to restructuring are recorded within both cost of revenue and operating expenses in our US GAAP financial statements We exclude restructuring charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.
Share-based compensation Share-based compensation consists of incentive expense granted to eligible employees in the form of equity based instruments. Charges related to share-based compensation are recorded within both cost of revenue and operating expenses in our US GAAP financial statements. We exclude charges related to share-based compensation for purposes of calculating certain non-GAAP measures because we believe these charges, which are non-cash, are not representative of our core operating performance as they can fluctuate from period to period based on factors that are not within our control, such as our stock price on the dates share-based grants are issued. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model, how management currently evaluates core operational performance, and additional means to evaluate expense trends.
Other incidentals Other incidentals consist of certain items which may be non-recurring, unusual, infrequent or directly related to an event that is distinct and non-reflective of the Company's core operating performance. These may include such items as process and product transfer costs, certain charges related to acquisitions and divestitures, litigation and legal settlements, costs associated with the exit of a product line, factory or facility, environmental or governmental settlements, and other items of similar nature. We exclude these certain items which may be non-recurring, unusual, infrequent or directly related to an event that is distinct and non-reflective of the Company's core operating performance for purposes of calculating certain non-GAAP measures. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.
Non-GAAP Adjustment or Measure Definition Usefulness to Management and Investors
Non-GAAP Provision for income taxes Non-GAAP provision for income taxes is NXP's GAAP provision for income taxes adjusted for the income tax effects of the adjustments to our GAAP measure, including PPA effects, restructuring costs, share-based compensation, other incidental items and certain other adjustments to financial income (expense) items. Additionally, adjustments are made for the income tax effect of any discrete items that occur in the interim period. Discrete items primarily relate to unexpected tax events that may occur as these amounts cannot be forecasted (e.g., the impact of changes in tax law and/or rates, changes in estimates or resolved tax audits relating to prior year tax provisions, the excess or deficit tax effects on share-based compensation, etc.). The non-GAAP provision for income taxes is used to ascertain and present on a comparable basis NXP's provision for income tax after adjustments, the usefulness of which is described within this table. Additionally, the income tax effects of the adjustments to achieve the noted non-GAAP measures are used to determine NXP's non-GAAP net income (loss) attributable to stockholders and accordingly, our diluted non-GAAP earnings per share attributable to stockholders.
Free Cash Flow Free Cash Flow represents operating cash flow adjusted for net additions to property, plant and equipment. We believe that free cash flow provides insight into our cash-generating capability and our financial performance, and is an efficient means by which users of our financial statements can evaluate our cash flow after meeting our capital expenditure.
Net debt Net debt represents total debt (short-term and long-term) after deduction of cash and cash equivalents and short-term deposits. We believe this measure provides investors with useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect of calculating our net leverage.
The following are reconciliations of our most comparable US GAAP measures to our non-GAAP measures presented:
($ in millions) For the three months ended
June 29, 2025 March 30, 2025 June 30, 2024
GAAP gross profit $ 1,562 $ 1,560 $ 1,792
PPA effects (7) (8) (12)
Restructuring (61) (4) (4)
Share-based compensation (14) (16) (15)
Other incidentals (8) (3) (10)
Non-GAAP gross profit $ 1,652 $ 1,591 $ 1,833
GAAP Gross Margin 53.4 % 55.0 % 57.3 %
Non-GAAP Gross Margin 56.5 % 56.1 % 58.6 %
GAAP research and development $ (573) $ (547) $ (594)
Restructuring (3) (7) (4)
Share-based compensation (58) (64) (58)
Other incidentals (7) (1) -
Non-GAAP research and development $ (505) $ (475) $ (532)
GAAP selling, general and administrative $ (278) $ (281) $ (270)
PPA effects - - (1)
Restructuring (3) (3) 2
Share-based compensation (45) (47) (41)
Other incidentals (15) (20) (2)
Non-GAAP selling, general and administrative $ (215) $ (211) $ (228)
GAAP operating income (loss) $ 687 $ 723 $ 896
($ in millions) For the three months ended
June 29, 2025 March 30, 2025 June 30, 2024
GAAP operating income (loss) $ 687 $ 723 $ 896
PPA effects (32) (40) (41)
Restructuring (67) (14) (6)
Share-based compensation (117) (127) (114)
Other incidentals (32) - (14)
Non-GAAP operating income (loss) $ 935 $ 904 $ 1,071
GAAP Operating Margin 23.5 % 25.5 % 28.7 %
Non-GAAP Operating Margin 32.0 % 31.9 % 34.3 %
GAAP Income tax benefit (provision) $ (116) $ (130) $ (154)
Income tax effect 32 13 15
Non-GAAP Income tax benefit (provision) $ (148) $ (143) $ (169)
($ in millions) For the three months ended
June 29, 2025 March 30, 2025 June 30, 2024
Net cash provided by (used for) operating activities $ 779 $ 565 $ 761
Net capital expenditures on property, plant and equipment (83) (138) (184)
Non-GAAP free cash flow $ 696 $ 427 $ 577
($ in millions) For the three months ended
June 29, 2025 March 30, 2025 June 30, 2024
Long-term debt $ 9,479 $ 10,226 $ 9,681
Short-term debt 1,999 1,499 499
Total debt 11,478 11,725 10,180
Less: cash and cash equivalents (3,170) (3,988) (2,859)
Less: short-term deposits - - (400)
Net debt $ 8,308 $ 7,737 $ 6,921
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