0000833640-26-000078
SEC filingRevenue grew 2.7% YoY to $108.3M, driven by industrial end-market strength, but gross margin contracted 260 bps to 52.6% on FX and restructuring costs.
For the three months ended March 31, 2026, Power Integrations reported net revenue of $108.3 million, a 2.7% increase from $105.5 million in the same period of 2025. The growth was driven primarily by higher sales in the industrial end-market. Gross profit declined to $56.9 million from $58.2 million, resulting in a gross margin of 52.6%, down 260 basis points from 55.2% in the prior year. The margin compression was attributed to unfavorable dollar/yen exchange rate impacts and restructuring-related costs.
Operating expenses rose to $55.5 million from $51.5 million, largely due to $6.6 million in restructuring and related charges for severance and benefits associated with a 7% workforce reduction. This was partially offset by a $1.4 million credit in other operating expenses from a stock-based compensation modification related to the former CEO's retirement. Income from operations fell sharply to $1.4 million (1.3% of revenue) from $6.8 million (6.4% of revenue) in the prior year. Net income was $3.3 million ($0.06 per share) compared to $8.8 million ($0.16 per share) in Q1 2025, a decline of 62.5%.
Revenue mix shifted notably toward the industrial end-market, which grew to 41% of total revenue (from 34% in Q1 2025), while the consumer segment declined to 38% (from 44%). Communications remained stable at 10%, and computer slipped to 11% from 12%. International sales accounted for 98% of revenue, with Asia representing approximately 80% of total net revenue. Sales to distributors remained steady at 71% of revenue.
Management highlighted a restructuring plan undertaken in Q1 2026, reducing the workforce by approximately 7% to better align expenses with revenue and create flexibility for investment in growth areas. The plan was substantially completed in the quarter. The company continues to monitor the potential long-term impact of tariffs on supply and demand. No specific forward guidance on revenue or margins was provided. The company maintains a $100.0 million revolving credit facility (PNC Loan Agreement) with a SOFR-plus-1.60% interest rate, and had no advances outstanding as of April 10, 2026. Management believes existing liquidity and cash from operations will satisfy working capital needs for at least the next 12 months.
As of March 31, 2026, Power Integrations held $63.4M in cash and $193.8M in short-term investments, totaling $257.2M in liquidity. The company has no debt, with total shareholders' equity of $671.8M. Inventory stood at $163.0M, slightly down from $166.9M at year-end 2025. The current ratio (current assets / current liabilities) is 6.9x, indicating strong short-term liquidity.
The notes disclose wafer-supply agreements with foundries that include exchange-rate sharing provisions, but no specific purchase commitments or minimum quantities are quantified. An employee relations dispute reserve of $11.3M was established as of December 31, 2025, with the company appealing an adverse judgment. No material leases or off-balance-sheet obligations were noted.
No share repurchases occurred in Q1 2026 as the prior authorization was exhausted in 2025. The company paid $11.95M in dividends ($0.215 per share), a 2.4% increase from the prior $0.21 quarterly dividend. Capital expenditures were $2.0M, down from $5.7M in Q1 2025. No debt was outstanding; a new $100M revolving credit facility (unsecured) was signed on February 24, 2026, replacing a $75M line, with no draws at quarter end.
Power Integrations operates as a single reportable segment. Geographic revenue breakdown: Hong Kong/China $50.0M (46%), Other APAC $25.4M (23%), EMEA $15.1M (14%), Korea $10.7M (10%), Americas $7.1M (7%). Sales to distributors accounted for 71% of revenue ($76.7M), with OEMs and CMs at 29% ($31.6M). Two customers each represented 10% of revenue in the quarter. The top ten customers contributed 80% of net revenue.