Analog Devices U.S. All Stars Conference
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Please welcome Rich Puccio, Chief Financial Officer of Analog Devices, interviewed by Harlan Sur at JP Morgan.
I am a giant. Stand up on my shoulders. Tell me what you see.
I am. All right. Good afternoon, everyone, and welcome to JP Morgan's 2026 U.S.
All Stars Conference here in London. Again, my name is Harlan Sur. I am the semiconductor and semiconductor capital equipment analyst in the U.S. for the firm. Again, very pleased to have Rich Puccio, Executive Vice President and Chief Financial Officer at Analog Devices, here with us today. For those of you that do not know, the Analog Devices team, leader in high-performance, mixed-signal, RF, analog semiconductor solutions, strong position in power management, very strong position in signal chain processing, which is both analog and digital, which is a technology that bridges the real world to the physical world. Best-in-class growth, operating free cash flow margin, strong capital return program, and a very diversified business, industrial, automotive, data center, comms infrastructure, greater than 85% of the company's total revenue. Rich, thank you very much for joining us today.
Thanks for having me, Harlan.
I think the best place to start off with is where we are in the current upcycle and the resilience in the business, right? As the industry and Analog Devices emerge from a cyclical downturn in 2023, 2024, your business bottomed in April of 2024. You were driving about 34% year-over-year revenue declines, but did start to drive positive sequential growth trends, which continued all the way into this year, right? You drove the positive year-over-year inflection in the April quarter of last year. You have driven seven consecutive quarters of accelerating year-over-year trends, anticipating 41% year-over-year growth this quarter. Take us through the dynamics over the past 12 months since we last had you here, and more importantly, your view on the idiosyncratic and cyclical dynamics in your business going forward.
A lot of questions. I guess a little bit of it starts where Harlan started. As we started to exit 2024, we had started to signal and started to see some of what I would call idiosyncratic drivers that were areas in our business that were holding up better than others and starting to show growth. Early on, we started talking about our ATE business and our Aerospace & Defense business. As we looked forward, at that point, we were anticipating that we would start to see growth there, and sequentially, with continued improvement, the broader cycle upside would come into play. What happened as we progressed, two things happened. One, we did start to see that cycle improvement, but I would say it was not as early as some of our idiosyncratic pieces.
I will go back to some of the key signals and things that we were talking about as we evaluated this.
Yes This change. If you just look at where the, we will talk about this more as we go, I am sure.
The areas where we are calling it sort of the super cycle part of the business. Aerospace & Defense, obviously, you can see everything going on and around the world and the increased demand. That was very resilient, and that was growing. ATE was starting to see significant benefit from the increased infrastructure spend. This was early, sort of the indirect impact of the data center infrastructure build-out. Because of the increase in high-bandwidth memory, high-performance compute, you need more complex testers, which meant you needed more ADI content in the testers to be able to do the complicated tests. So those two businesses were really strong.
As we continued to move forward throughout the year, what we started to see was obviously the acceleration in our data center business that we were seeing as part of that build-out. We will talk more about that. That is a business where we have been a very strong player in the power and the optical side. So that started to grow. As the broader cycle markers started to show, one of the things we talked about paying attention to determine where we were in the cycle was, when did our broad market industrial come back? We are, at our core, a 50% industrial products company. For a long time, we were not seeing any of that mass market, high-volume product coming back to historical volume levels.
Well, we started to see that come back, then what you started to see was the real acceleration in our growth because we had our idiosyncratic drivers adding the third, which was now data center, and also the cyclical drivers.
Right. We had a couple of businesses within end markets that were slower to recover, but by the time we get exiting 2025 and into 2026, we are now in growth across pretty much all of the end markets.
That is right. and all of the sub-parts of the end markets.
A good one, a big chunk of our industrial business that was slower to recover was our automation business. Of course, we started to see automation grow, and now for the last almost year, automation has become a big growth business, and that's a pretty good slug of our industrial. But if you think of, essentially 30% of our business is in ATE, A&D, and data center, and those have been growing at very high rates. Then to have the broader recovery, you start to see that come through. The other area for us, which we've talked a bunch about, is automotive, right? Despite what has been a relatively soft SAR units environment in auto, we've continued to outgrow units pretty significantly.
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