Semiconductor packaging and testing company Amkor Technology (NASDAQ:AMKR) reported Q1 CY2025 results exceeding the market’s revenue expectations, but sales fell by 3.2% year on year to $1.32 billion. On top of that, next quarter’s revenue guidance ($1.43 billion at the midpoint) was surprisingly good and 5.6% above what analysts were expecting. Its GAAP profit of $0.09 per share was in line with analysts’ consensus estimates.
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Amkor (AMKR) Q1 CY2025 Highlights:
- Revenue: $1.32 billion vs analyst estimates of $1.28 billion (3.2% year-on-year decline, 3.6% beat)
- EPS (GAAP): $0.09 vs analyst estimates of $0.09 (in line)
- Adjusted EBITDA: $197 million vs analyst estimates of $186 million (14.9% margin, 5.9% beat)
- Revenue Guidance for Q2 CY2025 is $1.43 billion at the midpoint, above analyst estimates of $1.35 billion
- EPS (GAAP) guidance for Q2 CY2025 is $0.15 at the midpoint, missing analyst estimates by 5.5%
- Operating Margin: 2.4%, down from 5.4% in the same quarter last year
- Free Cash Flow was -$55.75 million, down from $66.14 million in the same quarter last year
- Inventory Days Outstanding: 26, up from 20 in the previous quarter
- Market Capitalization: $4.34 billion
Company Overview
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ:AMKR) provides outsourced packaging and testing for semiconductors.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Amkor’s 7.8% annualized revenue growth over the last five years was decent. Its growth was slightly above the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Amkor’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 5.1% over the last two years. 
This quarter, Amkor’s revenue fell by 3.2% year on year to $1.32 billion but beat Wall Street’s estimates by 3.6%. Despite the beat, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 2.5% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 2.9% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below the sector average.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Amkor’s DIO came in at 26, which is 5 days below its five-year average. These numbers show that despite the recent increase, there’s no indication of an excessive inventory buildup.
Key Takeaways from Amkor’s Q1 Results
It was great to see Amkor’s revenue guidance for next quarter top analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its inventory levels materially increased. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 2.2% to $17.86 immediately after reporting.
Amkor put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.