Analog Devices Inc (NASDAQ:ADI) Q2 2019 Earnings Conference Call Transcript
May 22, 2019 • 10:00 am ET
Good morning, and welcome to the Analog Devices First Quarter Fiscal Year 2019 Earnings Conference Call, which is being audio webcast via telephone and over the web. I'd like to now introduce your host for today's call, Mr. Michael Lucarelli, Director of Investor Relations. Sir, the floor is yours.
Thank you, Sheryl, and good morning, everybody. Thanks for joining our second quarter fiscal 2019 conference call. With me on the call today are ADI's CEO, Vincent Roche; and ADI's CFO, Prashanth Mahendra-Rajah. For anyone, who missed the release, you can find it and relating financial schedules at investor.analog.com.
Now, on to the disclosures. The information we are about to discuss, including our objectives and outlook includes forward-looking statements. Actual results may differ materially from these forward-looking statements as a result of various factors, including those discussed in our earnings release and in our most recent 10-Q. These forward-looking statements reflect our opinion as of the date of this call. We undertake no obligation to update these forward-looking statements in light of new information or future events.
Our comments today about ADI's second quarter fiscal 2019 financial results and short-term outlook will also include non-GAAP financial measures, which exclude special items. When comparing our results to historical performance, special items are also excluded from these prior quarter and year-over-year results. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's earnings release. Okay.
With that, I'll turn it over to ADI's CEO, Vincent Roche. Vince?
Thanks very much, Mike, and a very good morning to everybody on the call. But before I get into my recap of the quarter, I wanted to briefly touch on recent developments. As you're no doubt aware, the US government announced last week that it's restricting a large communications company from acquiring US products and technology. While this will have at least a short-term impact on our communications business, our business is global, broad and robust, and we'll manage through this. Prashanth will give a bit more insight into the anticipated financial impact of this development during his particular section.
So now onto our highlights. The second quarter of fiscal '19 was another successful quarter for ADI, with the revenue from our B2B markets increasing year-over-year once again. This represents the 12th consecutive quarter of annual B2B revenue growth, which is really a testament to the diversity of our franchise and our ability to innovate ahead of secular growth opportunities.
Revenue of $1.53 billion came in at the high end of our guidance, led by strong year-over-year growth from our communications applications across multiple segments. Adjusted gross and operating margins increased compared to last quarter to 70.6% and 41.5%, respectively. All told, adjusted EPS was $1.36, which was also at the high end of outlook. Now, over the past 12 months, we've generated approximately $2.1 billion in free cash flow or 34% of revenue and during that time period, we've returned more than 100%