ON earnings analysis
What we found in ON's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
ON delivered a stronger Q2, with revenue up 9% year over year and 6.2% sequentially to $1.6035 billion, while GAAP EPS improved to $0.56 from $0.41 a year earlier and a Q1 loss. Gross margin increased 0.8 percentage points year over year to 38.4%, and operating margin improved to 16.1%, led by PSG growth and better utilization. The principal new overhang is the proposed Synaptics acquisition: it is expected to close in mid-2027 but introduces regulatory, integration, debt-treatment and dilution risks, including a potential $320.0 million regulatory termination fee.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth and EPS recovery
- Q2 revenue was $1.6035 billion, up $134.8 million (+9%) year over year and approximately $93.5 million (+6.2%) sequentially from $1.510 billion in Q1 2026. GAAP diluted EPS was $0.56, versus $0.41 in Q2 2025 and a $0.08 loss in Q1 2026.
- Margins and operating profit improved
- Gross margin reached 38.4%, up 0.8 percentage points from 37.6% a year earlier, driven by improved manufacturing utilization and favorable mix. Operating income rose $65.2 million to $258.6 million, producing a 16.1% operating margin versus 13.2% in Q2 2025 and -3.5% in Q1 2026.
- PSG drives top-line expansion
- PSG was the primary growth engine: revenue increased $130.8 million to $829.0 million, including increases of $44.5 million in automotive, $22.4 million in industrial and $63.9 million in other end markets.
- Liquidity remains ample
- Liquidity was substantial at approximately $3.9 billion of cash, cash equivalents and short-term investments, with approximately $1.5 billion available under the revolving credit facility. Management believes these resources are adequate for at least the next 12 months.
- Lower capital spending supports cash profile
- Capital intensity is falling: cash used in investing activities declined to $9.4 million in the first six months from $336.6 million a year earlier, while capital expenditures were approximately 2% of revenue. Management expects full-year capex below 5% of revenue.
- Significant buyback capacity remains
- The company repurchased 3.1 million shares for $334.7 million in Q2 at an average $105.77 per share; approximately $5.3 billion remained under the repurchase authorization at July 3, 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Synaptics closing and regulatory risk
- New Synaptics transaction risks include potential regulatory delay or failure to close; the merger is anticipated to close in mid-2027, while ON may owe Synaptics a $320.0 million regulatory termination fee in specified circumstances.
- Merger dilution and integration exposure
- The all-stock deal would issue 1.350 ON shares per Synaptics share, with Synaptics holders expected to own approximately 12% of the combined company. Future conversion of Synaptics' 0.75% convertible notes due 2031 could further dilute existing ON shareholders.
- Restructuring and transaction costs persist
- Merger-related costs and realignment charges remain material: Q2 included $41.2 million of restructuring, asset impairments and other charges plus $13.4 million of restructuring-related cost of revenue. The 2026 program expects $25.0 million of severance and related benefits for approximately 650 employees.
- AMG industrial softness and customer concentration
- AMG revenue declined $10.2 million (-2%) to $545.7 million in Q2, led by an $11.5 million industrial-market decline. The company also had one distributor representing approximately 14% of quarterly revenue.
- Working-capital pressure reduced operating cash flow
- First-half operating cash flow fell $87.8 million year over year to $698.8 million despite improved earnings, primarily because of unfavorable working-capital timing. Cash generation remains sensitive to collections, supplier payments and inventory management.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.56
- Gross margin
- 38.4%
- Operating margin
- 16.1%
- Segment
- PSG revenue: $829.0 million, up $130.8 million (+19%) year over year; gross margin 27.8%, up 1.9 percentage points.
- Segment
- AMG revenue: $545.7 million, down $10.2 million (-2%) year over year; gross margin 53.4%, up 2.7 percentage points.
- Segment
- ISG revenue: $228.8 million, up $14.2 million (+7%) year over year; gross margin 41.4%, down 0.2 percentage points.
What they said about what is next.
The 10-Q does not provide numeric revenue or EPS guidance; management states that 2026 capital expenditures are expected to be less than 5% of revenue, versus approximately 2% of revenue in the first six months.
The filing reads better than the one before it.
What came before.
- 10-Q · May 4, 2026
- ON Semiconductor reported better-than-expected Q1 2026 results, with revenue rising 5% year-over-year to $1.51 billion and EPS at $0.64, exceeding consensus estimates. Significant improvements in gross margin to 38.5%…
- 10-K · February 10, 2025
- ON Semiconductor positions itself as a focused automotive and industrial semiconductor supplier prioritizing revenue growth while defending gross margin through product differentiation and a 'Fab Right' manufacturing…
- 10-K · February 5, 2024
- ON Semiconductor positions itself to capture automotive and industrial electrification trends, emphasizing SiC capacity expansion (EFK, Hudson, Rožnov, Bucheon) and differentiated intelligent power and sensing products.…
- 10-Q · October 30, 2023
- On Semiconductor reported Q3 revenue of $2,180.8M, essentially flat versus Q3 2022 ($2,192.6M, -$11.8M, ~-0.5%) while gross profit declined to $1,030.7M from $1,058.3M. Operating income and diluted EPS improved…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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