Wolfspeed Q3 Earnings Beat Estimates, Revenues Decline Y/Y

Wolfspeed WOLF reported a third-quarter fiscal 2025 non-GAAP loss of 72 cents per share, which beat the Zacks Consensus Estimate by 12.2%. The company reported a loss of 62 cents per share in the year-ago quarter.

Revenues of $185.4 million decreased 7.6% year over year and lagged the consensus mark by 0.48%. Mohawk Valley Fab contributed $78 million in revenues in the reported quarter.

Power Products accounted for 58% of revenues, while Materials Products contributed 42%. Power Products’ revenues increased 5.3% year over year to $107.5 million. However, Materials Products’ revenues decreased 21% year over year to $77.9 million.

Wolfspeed’s Operating Details

For the fiscal second quarter, Wolfspeed reported a non-GAAP gross margin of 2.2%, down from 14.9% reported in the year-ago quarter. Underutilization costs of $26.3 million negatively impacted gross margin in the reported quarter.

In the reported quarter, sales, general and administrative expenses were $41.1 million (22.2% of total revenues), down 26.3% year over year.
 

Research & development expenses (22.8% of total revenues) decreased 19.6% year over year to $42.2 million.

The company has incurred restructuring charges of $57 million during the reported quarter.

The company incurred a non-GAAP operating loss of $110.8 million, wider than the operating loss of $77.7 million in the year-ago quarter.

WOLF’s Balance Sheet & Cash Flow

On March 30, 2025, WOLF had cash, cash equivalents, and short-term investments of $1.3 billion.

Long-term debt was $3.47 billion as of March 30, 2025.

Free cash outflow was $168 million, comprising $142 million of operating cash outflow, $26 million of capital expenditures net of reimbursements of $192 million on account of 48D cash tax refunds.

WOLF Offers FY25 and FY26 Guidance

Wolfspeed expects to close the year with approximate total revenues of $756 million with power and material revenues of $410 million and $345 million, respectively. The company expects a non-GAAP gross margin of approximately 2.1%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

For fiscal 2026, Wolfspeed expects revenues of $850 million.

WOLF’s Zacks Rank & Stocks to Consider

Currently, Wolfspeed carries a Zacks Rank #4 (Sell).

Chegg CHGG, GCT Semiconductor Holding GCTS and  Magnachip Semiconductor MX are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Each of the three stocks carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chegg shares have lost 55.1% year to date. CHGG is set to report first-quarter 2025 results on May 12.

Shares of GCT Semiconductor Holding have lost 36.1% year to date. GCTS is set to report first-quarter 2025 results on May 14.

Magnachip Semiconductor shares have lost 18.4% year to date. MX is set to report first-quarter 2025 results on May 12.

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