Onsemi shares fall 3% after hours despite in-line Q3 profit

Onsemi (ON) reported third-quarter results on Nov. 2 for the period ended Oct. 2, with revenue up 11% from a year earlier. Shares fell 3.0% in after-hours trading as of 5:25 p.m. ET, from a regular-session close of $70.12.

Adjusted earnings were 90 cents per share, in line with the 90-cent consensus estimate compiled by Finnhub.

Here's how the company did:

• Revenue: $1.72 billion vs. $1.55 billion a year earlier, below the $1.75 billion consensus estimate compiled by Finnhub
• Adjusted EPS: 90 cents per share vs. 63 cents a year earlier, in line with the 90-cent consensus estimate compiled by Finnhub
• GAAP diluted EPS: 79 cents per share vs. 63 cents a year earlier
• Gross margin: 41.4% GAAP and 41.2% non-GAAP, vs. 37.9% GAAP a year earlier
• Free cash flow: $489 million vs. $372 million a year earlier

PSG revenue was $889.9 million, up 21% from a year earlier. AMG revenue was $597.3 million, up 2%. ISG revenue was $235.1 million, up 2%.

The company said AI data center revenue grew 39% sequentially and 175% year-over-year. "Increasing power requirements are driving accelerated demand in our AI data center and industrial end markets, as customers adopt and ramp our differentiated products," President and CEO Hassane El-Khoury said.

Margins and cash

"Gross margin expanded for the fifth consecutive quarter, increasing 190 basis points sequentially," EVP and CFO Thad Trent said.

Restructuring, asset impairments and other charges were $4.6 million, down from $19.6 million a year earlier. Cash from operations rose 23% to $516 million, and the company repurchased $19.9 million of common stock in the quarter.

According to its SEC filings, net income swung from a profit of $181.8 million in the fourth quarter of 2025 to a loss of $33.4 million in the first quarter of fiscal 2026, then to a profit of $226.8 million in the second quarter.

Fourth-quarter outlook

The company expects fourth-quarter GAAP diluted EPS of 88 cents to $1.00, and non-GAAP diluted EPS of 95 cents to $1.07.

GAAP operating expenses are expected at $331 million to $346 million, and non-GAAP operating expenses at $303 million to $318 million. The company expects other expense, including interest, of $27 million.

Diluted shares outstanding are expected at 397 million on a GAAP basis and 392 million on a non-GAAP basis.

Acquisitions and partnerships

The company announced an agreement to acquire Ferric. It also raised its AI data center 2030 revenue target by $500 million, to more than $3 billion.

Onsemi also announced revised terms for its planned acquisition of Synaptics: approximately $5.7 billion in cash, compared with $7 billion in stock under the prior agreement. The company said the transaction should be immediately accretive to non-GAAP EPS.

Onsemi entered into a strategic technology engagement with Subaru for early access to its newly introduced Embedded Power Platform, a power architecture integrating heterogeneous technologies.

Sungrow adopted onsemi's EliteSiC silicon carbide hybrid power module technology, which the company said helps energy providers meet growing electricity demand from AI, renewable energy and electrification.

The company will host a conference call at 5 p.m. ET on Nov. 2.