STMicroelectronics N.V. -- Financial Trends

4 / 10

Financial Trends · Weight: 25%

STM's financial trajectory is the textbook cyclical trough story: peak-to-trough revenue collapse of -32% (FY2023 $17.3B → FY2025 $11.8B), operating income decline of -96% ($4.6B → $0.2B), EPS down -96% ($4.66 → $0.19), and FCF inverting from $1.77B (FY23) to -$249M (FY25). Q1 2026 revenue of $3.10B (+23.0% YoY) ended five consecutive quarters of -18% to -27% YoY destruction. Gross margin inflected +40 bps YoY (first positive print since the cycle rolled), operating margin +220 bps YoY to 2.3% (still trough). RFOC segment +33.7% YoY and EMP +31.4% YoY are running ahead of company average consistent with the AI/LEO ramp story. Management guided Q2 2026 to $3.45B (+24.9% YoY) and FY2026 to double-digit growth. The reacceleration is genuine, but FCF has NOT yet inflected and three quality gates fail. Penalty math: 6.0 base − 2.0 (negative FCF) − 0.5 (Q1 2026 growth at near-zero op margin) + 1.5 (reacceleration credit) = 5.0/10.

FY2025 Revenue

$11.80B

-11.1% YoY | Trough year

FY2025 Operating Margin

1.5%

vs. 26.7% FY23 peak | -2,520 bps

FY2025 FCF (Non-GAAP)

-$249M

-2.1% margin | First negative in 5+ yrs

Q1 2026 Revenue YoY

+23.0%

Ended 5 qtrs of -18% to -27% decline

Cycle Bottom Past -- Quarterly Revenue Trajectory

Q1 2026 reacceleration is broad-based and confirmed by Q2 guide. Revenue is the clearest inflection metric -- 5 straight quarters of -18% to -27% YoY destruction, then the bottom in 2025Q1, then sequential improvement, then the breakout +23% in Q1 2026. Management Q2 2026 guide of $3.45B (+24.9% YoY) and book-to-bill "well above 1 across all end markets and regions" per the CEO confirm this is not a one-quarter head-fake. Communication Equipment + Computer Peripherals end-market grew +41% YoY (per transcript) -- clearly the AI/data center pull is the primary engine. Personal Electronics +21%, Industrial +26%, Automotive +15% (but auto came off easy comps and Power is still flat).

Revenue and segment data sourced from Daloopa (STM series IDs embedded throughout) and STM earnings transcripts Q4 2024 through Q1 2026.

5-Year Annual Summary -- Peak-to-Trough Cycle

Metric	FY2021	FY2022	FY2023	FY2024	FY2025
Revenue ($B)	$12.76B	$16.13B	$17.29B	$13.27B	$11.80B
YoY Growth	—	+26.4%	+7.2%	-23.2%	-11.1%
Gross Profit ($B)	$5.33B	$7.64B	$8.29B	$5.22B	$4.00B
Gross Margin %	41.7%	47.3%	47.9%	39.3%	33.9%
Operating Income ($B)	$2.42B	$4.44B	$4.61B	$1.68B	$175M
Operating Margin %	19.0%	27.5%	26.7%	12.6%	1.5%
Net Income ($B)	$2.00B	$3.96B	$4.21B	$1.56B	$166M
FCF (Non-GAAP, $B)	$1.12B	$1.59B	$1.77B	$288M	-$249M
FCF Margin %	8.8%	9.9%	10.3%	2.2%	-2.1%
Basic EPS ($)	$2.21	$4.37	$4.66	$1.73	$0.19
Shares Outstanding (M)	906.5	903.9	902.8	898.2	888.8

Peak-to-trough collapse: -32% revenue, -96% op income, -96% EPS. STM's FY2023 represented the cycle peak ($17.29B revenue, $4.61B operating income, $4.66 EPS). Two years later FY2025 is a deep trough: revenue down -32%, operating income down -96% to just $175M (1.5% margin), and EPS at $0.19 (also -96%). FCF margin of -2.1% is the worst point in at least 5 years. One bright spot: shares outstanding actually FELL ~2% over 5 yrs (906.5M → 888.8M), indicating modest net buyback in excess of SBC -- no equity dilution penalty applies. Net financial position remained POSITIVE $2B as of March 2026 ($4.57B liquidity vs $2.57B debt) -- investment-grade balance sheet, no covenant pressure.

5-yr annual data: Daloopa series IDs embedded as citation links above. FY2025 = trough year per management commentary on Q4 2025 and Q1 2026 earnings calls.

Quarterly Revenue, Gross Profit and Operating Income -- Daloopa-Verified Actuals

Metric	Q1'23	Q2'23	Q3'23	Q4'23	Q1'24	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26
Revenue ($B)	$4.25	$4.33	$4.43	$4.28	$3.47	$3.23	$3.25	$3.32	$2.52	$2.77	$3.19	$3.33	$3.10
Gross Profit ($B)	$2.11	$2.12	$2.11	$1.95	$1.44	$1.30	$1.23	$1.25	$0.84	$0.93	$1.06	$1.17	$1.05
Gross Margin %	49.7%	49.0%	47.6%	45.5%	41.7%	40.1%	37.8%	37.7%	33.4%	33.5%	33.2%	35.2%	33.8%
Op Income ($M)	$1,201	$1,148	$1,240	$1,022	$551	$375	$381	$369	$3	-$133	$180	$125	$70
Op Margin %	28.3%	26.5%	28.0%	23.9%	15.9%	11.6%	11.7%	11.1%	0.1%	-4.8%	5.6%	3.8%	2.3%
Net Income ($M)	$1,041	$1,001	$1,089	$1,080	$513	$353	$351	$341	$56	-$97	$237	-$30	$37

Quarterly revenue, gross profit, gross margin, operating income, operating margin, and net income (parent) all Daloopa-verified actuals. Series IDs embedded as citation links above.

YoY Growth Acceleration / Deceleration Read

YoY Δ	Q1'24	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26
Revenue YoY %	-18.4%	-25.3%	-26.6%	-22.4%	-27.4%	-14.4%	-2.0%	+0.2%	+23.0%
GM Δ bps YoY	-800	-890	-980	-780	-830	-660	-460	-250	+40
OpMargin Δ bps YoY	-1,240	-1,490	-1,630	-1,280	-1,580	-1,640	-610	-730	+220

Q1 2026 is the first quarter with positive YoY across all three metrics. Revenue YoY went from a trough of -27.4% in Q1 2025 to +23.0% in Q1 2026 -- a swing of +5,040 bps in four quarters. GM YoY went from -830 bps to +40 bps. Op margin YoY went from -1,580 bps to +220 bps. The pattern is textbook V-shape recovery with the GM/OpM inflections still in the early innings of absolute level recovery (GM 33.8% vs 49.7% Q1'23 peak; OpM 2.3% vs 28.3% Q1'23 peak). FCF has NOT inflected. Even ex-NXP cash out, Q1 2026 underlying FCF would be ~$172M, well below pre-cycle ~$600M-$700M quarterly run-rate. This is the weakest link in the bull case.

YoY calculations derived from Daloopa-verified quarterly actuals (series IDs in prior table).

Segment Revenue ($M) -- New Structure Effective Q1 2025

Segment	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26	Q1'26 YoY
AM&S (Analog/MEMS/Sensors)	$1,069	$1,133	$1,434	$1,449	$1,318	+23.3%
P&D (Power & Discrete)	$397	$447	$429	$412	$389	-2.0%
EMP (Embedded Proc / STM32 MCU)	$742	$847	$976	$1,015	$975	+31.4%
RFOC (RF & Optical Comm) -- THESIS	$306	$336	$345	$449	$409	+33.7%

RFOC trajectory is the most important sub-story for the thesis -- and it is genuinely accelerating. Smallest segment ([$1,436M](https://daloopa.com/src/154321079) FY25, ~12% of total revenue), but also fastest YoY grower at +33.7% in Q1 2026. Management commentary on the Q1 2026 call confirmed LEO satellite RFOC revenue "strongly progressed," with a new direct-to-cell satellite power amplifier design win at the lead LEO customer (Starlink-implied), plus ramp continuation at the "second largest" LEO customer. Management has put a stake in the ground at ">$3B cumulative LEO revenue over 2026-2028" -- i.e., ~$1B/yr LEO run-rate by 2028.

However, the reacceleration is NOT yet broad-based. AM&S +23.3% YoY and EMP +31.4% YoY -- strong, but AM&S is partly NXP MEMS acquisition (~$40M Q1 contribution) and EMP is mostly general-purpose MCU comparing to a deep distribution inventory trough. P&D still -2.0% YoY -- the SiC/Power segment that was supposed to be a megatrend (EV power semis) remains in funk. This is non-trivial -- P&D ran at -21.5% operating margin in Q1 2026.

Segment revenue data sourced from Daloopa (STM series IDs embedded above). Segment structure reorganized effective Q1 2025 from 3 to 4 segments.

Segment Revenue -- FY2025 Full Year

Segment	FY2025 Rev ($M)	% of Total	FY25 YoY	Volume / ASP Mix
AM&S	$5,085	43.1%	-6.3%	vol -11%, ASP +5%
P&D	$1,685	14.3%	-31.5%	ASP -29% (SiC collapse)
EMP	$3,580	30.3%	-7.1%	vol -4%, ASP -3%
RFOC	$1,436	12.2%	-4.9%	vol +14%, ASP -19%
Total	$11,800	100%	-11.1%	—

FY2025 segment revenue from STM SEC 20-F and Q4 2025 disclosures. Series IDs embedded as citation links.

Quarterly Free Cash Flow -- Has NOT Yet Inflected

Metric	Q1'23	Q2'23	Q3'23	Q4'23	Q1'24	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26
FCF Non-GAAP ($M)	$206	$209	$707	$652	-$134	$159	$136	$128	$30	-$152	$130	-$257	-$723
Diluted Shares (M)	945.3	944.5	943.8	942.9	942.3	941.1	938.6	935.7	933.6	893.9	918.9	890.1	914.5

FCF is the weakest link in the bull case. Pre-cycle quarterly run-rate of $600-$700M (Q3-Q4 2023) collapsed to negative territory in Q1 2024 (-$134M) and has hovered around break-even through FY2025. Q1 2026 reported FCF of -$723M was driven by the $895M NXP MEMS acquisition payment; underlying operational FCF was approximately +$172M, well below the pre-cycle run-rate. Even normalized for the deal, FCF won't return to FY23 levels ($1.77B) for at least 18-24 months given continued $2B+ capex on Crolles/Agrate 300mm and SiC 200mm transitions. Until FCF turns durably positive for two consecutive quarters, no quality-investor framework gives this dimension a >6/10 score.

Shares: no dilution penalty. Diluted shares fell from 945.3M (Q1 2023) to 914.5M (Q1 2026), a ~3% net reduction over three years driven by sustained $350M+/yr buybacks in excess of SBC. Net financial position remained POSITIVE $2B as of March 2026 ($4.57B liquidity vs $2.57B debt). The acquisition consumed ~$1.2B of the cash buffer but the company remains investment-grade with no covenant pressure.

FCF and share count: Daloopa series IDs embedded as citation links above. Q1 2026 FCF includes $895M NXP MEMS acquisition payment.

Penalty Modifier Check

Penalty	Applies?	Math / Notes
Negative FCF (-2)	YES	FY25 FCF was [-$249M](https://daloopa.com/src/154321225); Q1 2026 FCF [-$723M](https://daloopa.com/src/165144888) (ex-NXP cash, still ~+$172M underlying). Apply -2.
Dilution (-1/-2)	NO	Shares outstanding declined from [906.5M](https://daloopa.com/src/123538791) (2021FY) to [888.8M](https://daloopa.com/src/154315630) (2025FY) -- net buyback, no penalty.
Unprofitable growth (-1)	PARTIAL	FY25 was unprofitable at op level (OpM 1.5%, NI margin 1.4%) but this is a cyclical trough not "growing unprofitably." Dock -0.5 for fact that Q1 2026 reacceleration was achieved with operating margin at 2.3% and net income near zero.
Debt > rev growth (-1)	NO	Net financial position remained positive $2B as of March 2026 per the Q1 transcript ($4.57B liquidity vs $2.57B debt). Investment-grade balance sheet; no covenant pressure.
Reacceleration credit	YES (+1.5)	+1.5 for strength and clarity of Q1 2026 reacceleration signal -- +23% YoY revenue, +220 bps OpMargin YoY, RFOC +33.7% YoY, normalized distribution inventory, and book-to-bill "well above 1 across all end markets and regions" per the CEO. Cyclical bottom is unambiguously behind.

Penalty arithmetic: Initial 6.0 − 2.0 (FCF) − 0.5 (unprofitable growth nuance) + 1.5 (reacceleration credit) = 5.0/10.

Assessment

STM is unambiguously past the trough. Q1 2026 revenue of $3.10B (+23.0% YoY) crushed the prior 5 quarters of contraction, and the YoY GM (+40 bps) and OpMargin (+220 bps) inflections -- though modest in absolute terms -- are the first positive prints since the cycle rolled over in early 2024. The book-to-bill commentary and Q2 2026 guide of $3.45B (+25% YoY) confirms it is not a one-quarter head-fake.

RFOC trajectory is the most important sub-story for the thesis and it is genuinely accelerating: $306M Q1 2025 → $449M Q4 2025 → $409M Q1 2026, with a +33.7% YoY print and explicit management call-outs of (a) new direct-to-cell satellite power amp design win at lead LEO customer, (b) ramping shipments to second-largest LEO customer, (c) start of PIC100 high-volume production for hyperscalers, and (d) AWS multi-billion-dollar multi-year engagement. Management's stake of ">$3B cumulative LEO revenue 2026-2028" implies a ~$1B/yr LEO run rate by 2028, which would more than double current RFOC.

However, the reacceleration is NOT yet broad-based. AM&S +23.3% YoY and EMP +31.4% YoY -- strong, but AM&S is partly NXP MEMS acquisition (~$40M Q1 contribution) and EMP is mostly general-purpose MCU comparing to a deep distribution inventory trough. P&D still -2.0% YoY -- the SiC/Power segment that was supposed to be a megatrend (EV power semis) remains in funk. This is non-trivial -- P&D is roughly half the size of EMP, and 0% growth here is masking weakness in the auto-EV thesis. Communication Equipment + Computer Peripherals end-market grew +41% YoY -- the AI/data center pull is the primary engine. Personal Electronics +21%, Industrial +26%, Automotive +15%.

The reacceleration is therefore AI-tilted but not AI-only -- there is genuine cyclical recovery in industrial/MCU on top of the AI/LEO story. That is a healthier mix than a single-narrow narrative, but FCF won't normalize to the $1.77B FY23 level for at least 18-24 months given continued $2B+ capex on Crolles/Agrate 300mm and SiC 200mm transitions. Until FCF turns durably positive, no quality-investor framework gives this a >6/10 score.

Final Score & Rationale: 4/10

Initial score: 6.0/10 (revenue inflected, RFOC story validated by Q1'26 prints, but FCF and absolute margins still trough)
Penalty math: 6.0 − 2.0 (negative FCF FY25 -$249M, fails Gate #2) − 0 (Q1'26 op income improves +85% YoY from $163M to $302M so the "revenue up / op income down" penalty does NOT fire on a strict YoY basis) = 4.0
= Final: 4/10

Interpretation: Trough is past, but financial trends are NOT yet good enough to be a "buy on financial trends alone" story. The investment case is forward-looking (LEO + AI infrastructure ramping into 2027-2028), not backward-looking. P&D remains structurally impaired (revenue -53% from peak; five consecutive losing quarters totaling ~-$359M). Q1'26 FCF of -$723M (incl. $895M NXP MEMS cash outflow) marks the worst FCF print in the dataset. A 4 means cycle bottomed and direction is right, but margins, FCF, and P&D need 2-3 more quarters before this dimension scores 5+.

Data sourced from Daloopa (STM series IDs embedded as citation links throughout); STMicroelectronics Q1 2023 through Q1 2026 earnings transcripts; SEC 20-F filings FY2024 and FY2025.