STMicroelectronics Delivers Impressive Q2 Revenue Growth Across Segments, Expands Margins, Stock Shines

STMicroelectronics NV (NYSE: STM) reported second-quarter FY23 revenue growth of 12.7% year-on-year to $4.33 billion, beating the consensus of $4.27 billion. EPS of $1.06 missed the consensus of $1.08.

Sales to OEMs increased by 9.8% Y/Y, and Distribution sales improved by 18.3% Y/Y.

Automotive and Discrete Group (ADG) revenue rose 34.4% Y/Y to $1.96 billion. Analog, MEMS, and Sensors Group (AMS) revenue changed by (15.7)% Y/Y to $940 million. Microcontrollers and Digital ICs Group (MDG) revenue grew 13% Y/Y to $1.43 billion. 

Margins: The gross margin expanded by 160 bps to 49%. Improved product mix and favorable pricing drove the margin. The operating margin expanded by 30 bps to 26.5%.

STMicroelectronics generated $209 million in free cash flow and held $4.56 billion in cash and equivalents.

Outlook: STMicroelectronics sees Q3 revenue of $4.38 billion, up by 1.1% Q/Q, plus or minus 350 bps (consensus $4.35 billion).

The company sees a Q3 gross margin of 47.5%, plus or minus 200 bps.

STMicroelectronics revised its FY23 revenues outlook to $17.25 billion - $17.55 billion, versus the prior $17.0 billion - $17.8 billion (consensus $17.3 billion) and a gross margin exceeding 48.0%.

Price Action: STM shares traded higher by 6.82% at $55.07 on the last check Thursday.

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