Analog Devices Inc. (NASDAQ:ADI)

Current Income Tax Expense

The current income tax expense shows a general increasing trend from 204,804 thousand US dollars in 2020 to peaks reaching 746,370 thousand US dollars in 2023. However, the data indicates a notable decline in 2024 to 509,630 thousand US dollars, followed by a rebound in 2025 to 691,415 thousand US dollars. This pattern suggests a significant variability in the company’s current tax obligations, with a sharp increase over the earlier years, a temporary dip, and a recovery towards the end of the observed period.

Deferred Income Tax Expense

The deferred income tax figures are consistently negative across all periods, indicating deferred tax benefits rather than expenses. The absolute value shows a fluctuating pattern with a significant peak in magnitude in 2021 at -406,922 thousand US dollars. Subsequent years exhibit a decrease in the deferred tax benefit magnitude, reaching -246,645 thousand US dollars by 2025. This decrease over time suggests a diminishing deferred tax asset or recognition of deferred tax liabilities over the period.

Provision for (Benefit from) Income Tax

The overall provision for income tax expense reveals substantial volatility between years. The provision was positive in 2020 at 90,856 thousand US dollars, turned negative in 2021 at -61,708 thousand US dollars, signaling a net tax benefit. Subsequently, the provision rose sharply to 350,188 thousand US dollars in 2022 and remained elevated throughout 2023 and 2025, with a notable dip in 2024. The fluctuations point to shifting tax positions, possibly influenced by changes in taxable income, tax rates, or adjustments in deferred tax balances.

Summary of Trends

The data reflects significant changes in both current and deferred tax expenses over the six-year period. The rising trend in current income tax expense, except for the decline in 2024, indicates increasing taxable income or tax rates. The decreasing magnitude of the deferred tax benefit suggests a reduction in timing differences or realization of deferred tax assets. The volatile provision for income tax highlights the complexity and variability of the company's tax situation, potentially affected by different tax planning strategies, changes in tax legislation, or unusual items impacting taxable income.

The analysis of the effective tax rate relative to the consistent U.S. federal statutory tax rate of 21% reveals notable fluctuations throughout the periods under review. The statutory tax rate remained unchanged at 21% for all years, providing a stable benchmark for comparison.

Effective Tax Rate Trends

The effective tax rate started significantly lower than the statutory rate in the initial year, at 6.93%. It dropped further into negative territory in the following year, registering -4.64%, indicative of tax benefits or credits exceeding tax expenses during that period. Subsequently, the rate increased to 11.3% in the third year, showing a partial convergence toward the statutory rate, though still below it.

In the fourth and fifth years, the effective tax rate settled around 8%, maintaining a fairly consistent level markedly below the statutory tax rate. However, in the most recent year, there was a substantial increase to 16.4%, reflecting a more significant tax burden approaching closer to the federal rate.

Interpretation and Insights

The persistent disparity between the statutory tax rate and the effective tax rate suggests the influence of various tax strategies, deductions, credits, or income mix that impact the overall tax expense.

Negative and unusually low effective tax rates in the earlier years imply the presence of tax benefits, possibly due to deferred tax assets, tax loss carryforwards, or other favorable tax treatments.

The upward movement toward the statutory rate in the later years may indicate a reduction in such benefits or changes in the tax environment affecting the company’s tax expense.

Inventory reserves

The inventory reserves showed fluctuation, starting at 17,074 thousand USD and declining slightly to 16,584 thousand USD by 2022. Subsequently, there was a marked increase, reaching 35,338 thousand USD by 2025, indicating a growing recognition of inventory risk or obsolescence over time.

Reserves for compensation and benefits

These reserves experienced a peak in 2021 at 64,274 thousand USD, followed by a steady decrease to 48,801 thousand USD in 2024. A moderate recovery was noted in 2025, reaching 56,983 thousand USD. This pattern may reflect adjustments in employee-related liabilities and compensation plans.

Tax credit carryovers

The tax credit carryovers increased significantly from 163,507 thousand USD in 2020 to a peak of 327,671 thousand USD in 2022. There was a slight decline afterward, settling at 241,678 thousand USD in 2025. This indicates accumulated tax credits, which may affect future tax payments.

Stock-based compensation

Stock-based compensation saw considerable variability. It rose sharply from 12,758 thousand USD in 2020 to 26,541 thousand USD in 2021, fluctuated in subsequent years with a low of 10,734 thousand USD in 2023, and then increased again to 23,812 thousand USD by 2025, suggesting changing equity compensation strategies or expense recognition timing.

Net operating losses

Net operating losses rose dramatically from 8,546 thousand USD in 2020 to 62,876 thousand USD in 2021, then steadily declined to 33,461 thousand USD by 2025. This trend may reflect changes in profitability and utilization of loss carryforwards.

Intangible assets

Intangible assets increased significantly from 1,479,944 thousand USD in 2020 to over 2 million USD in 2021, followed by a gradual decline to 1,684,244 thousand USD by 2025, indicating amortization or impairment over time.

Lease liability

The lease liability rose from 55,250 thousand USD in 2020 to a peak of 82,305 thousand USD in 2023 before decreasing to 71,335 thousand USD in 2025, reflecting changes in leasing obligations and possibly new lease agreements or expirations.

Capitalization of R&D expenses

This item appeared from 2022 onwards, increasing substantially from 155,099 thousand USD in 2022 to 804,017 thousand USD in 2025, indicating a growing capitalization of research and development costs, potentially enhancing asset base and investment in innovation.

Other

Values under "Other" fluctuated significantly, peaking at 248,075 thousand USD in 2021, then sharply declining to 68,118 thousand USD by 2025, suggesting varied or non-recurring items impacting this category.

Gross deferred tax assets

Gross deferred tax assets increased from 1,951,345 thousand USD in 2020 to a peak of approximately 3,101,703 thousand USD in 2024, with a slight decrease in 2025 to 3,018,986 thousand USD. This reflects growth in temporary differences or tax loss carryforwards expected to reduce future tax liabilities.

Valuation allowance

The valuation allowance became more negative from -154,130 thousand USD in 2020 to -343,079 thousand USD in 2024, then improved slightly to -263,875 thousand USD in 2025. This indicates adjustments in the estimated realizability of deferred tax assets.

Deferred tax assets

Deferred tax assets showed an increasing trend from 1,797,215 thousand USD in 2020 to 2,758,624 thousand USD in 2024, remaining relatively stable in 2025. This growth is consistent with increasing deferred tax asset components.

Depreciation

Depreciation amounts increased from -7,409 thousand USD in 2020 to -142,031 thousand USD in 2025. This steady rise suggests growing asset bases subject to depreciation or accelerated depreciation policies.

Deferred GILTI tax liabilities

Deferred GILTI tax liabilities notably decreased (more negative) from -1,183,955 thousand USD in 2020 to -2,272,775 thousand USD in 2025, indicating increasing liabilities related to Global Intangible Low-Taxed Income provisions, potentially impacting tax planning strategies.

Right of use asset

The right of use asset steadily decreased from -51,055 thousand USD in 2020 to -50,965 thousand USD in 2025, with minor fluctuations. This reflects ongoing amortization or lease term adjustments.

Acquisition-related intangibles

Acquisition-related intangibles decreased consistently from -971,327 thousand USD in 2020 to -585,519 thousand USD in 2025, indicating amortization of acquired intangible assets over time.

Gross deferred tax liabilities

Gross deferred tax liabilities decreased from -2,213,746 thousand USD in 2020 to -3,051,290 thousand USD in 2025, signaling an increasing deferred tax liability balance, which may be related to timing differences in income recognition.

Net deferred tax assets (liabilities)

The net deferred tax assets position improved from -416,531 thousand USD in 2020 to -296,179 thousand USD in 2025, showing a reduction in net deferred tax liabilities and suggesting improved tax asset realizability or changes in tax positions.

The financial data reveals the following trends in deferred tax assets and liabilities over the six-year period ending in 2025.

Deferred Tax Assets

The deferred tax assets initially increased significantly from approximately 1.5 billion USD in 2020 to over 2.26 billion USD in 2021, representing a strong growth phase. Subsequently, the asset balance remained relatively stable through 2022 and 2023, fluctuating marginally around 2.2 billion USD. From 2024 onward, there is a noticeable declining trend, with assets decreasing to roughly 1.86 billion USD by 2025. This suggests a reversal or utilization of deferred tax assets in the later years, potentially reflecting changes in tax planning, profitability, or tax timing differences.

Deferred Tax Liabilities

The deferred tax liabilities depict a different dynamic. Starting at about 1.92 billion USD in 2020, liabilities surged sharply to nearly 3.94 billion USD in 2021, more than doubling in a single year. Afterwards, a steady and sustained decline is observed over the subsequent years, taking liabilities down to approximately 2.16 billion USD by 2025. This indicates a consistent reduction in deferred tax liabilities, which could be associated with changes in temporary differences, asset disposals, or alterations in tax rates or policies.

Overall Pattern

Both deferred tax assets and liabilities peaked in 2021, at which point liabilities were significantly higher than assets. Following the peak, both declined, but liabilities decreased at a faster rate than assets, narrowing the gap between the two by 2025. This convergence could reflect improvements in taxable income cycles or changes in the composition of temporary differences impacting taxes. The consistent reduction in deferred tax liabilities is a notable trend over the analyzed period, as is the partial recovery from peak deferred tax assets.

The financial data over the reviewed periods reveals several noteworthy trends in the company's reported and adjusted figures for assets, liabilities, shareholders' equity, and net income.

Total Assets

Reported total assets increased significantly between 2020 and 2021, nearly doubling from approximately $21.5 billion to $52.3 billion. After this peak in 2021, reported assets exhibited a downward trend, decreasing steadily through to 2025, settling around $48.0 billion. Adjusted total assets follow a similar pattern, rising from about $19.97 billion in 2020 to $50.05 billion in 2021, then declining gradually to approximately $46.13 billion by 2025. This suggests that the company's asset base expanded sharply initially, before contracting moderately in subsequent years.

Total Liabilities

Reported total liabilities increased substantially from about $9.5 billion in 2020 to $14.33 billion in 2021. This figure then declined slightly to around $13.05 billion by 2024 before increasing again, reaching nearly $14.17 billion in 2025. Adjusted total liabilities show a similar trajectory, rising sharply between 2020 and 2021, and thereafter experiencing modest fluctuations with a slight increase in the final year. The expansion and subsequent fluctuation in liabilities indicate periods of increased financial obligations, possibly related to financing or operational adjustments.

Shareholders’ Equity

Reported shareholders’ equity rose significantly from approximately $12.0 billion in 2020 to nearly $38.0 billion in 2021. Subsequently, it declined steadily to about $33.8 billion by 2025. Adjusted shareholders’ equity trends mirror those of the reported figures but at slightly higher values, indicating that adjustments generally increased the equity base compared to reported amounts. The initial increase followed by gradual decline suggests a phase of strong capital accumulation or retained earnings growth, followed by some erosion, possibly due to distributions or losses.

Net Income

Reported net income displayed a strong upward trend from $1.22 billion in 2020 to a peak of approximately $3.31 billion in 2023, before declining noticeably to $1.63 billion in 2024 and partially recovering to $2.27 billion in 2025. Adjusted net income shows a similar pattern, with an increase peaking in 2023 at around $2.86 billion, followed by a decrease in 2024 and a moderate rebound in 2025. The volatility in net income demonstrates periods of robust profitability interspersed with notable declines, which may reflect operational challenges, market conditions, or the impact of deferred income tax adjustments over time.

Net Profit Margin

The reported net profit margin exhibited fluctuations, initially decreasing from 21.79% in 2020 to 19% in 2021, then rising to a peak of 26.94% in 2023 before dropping to 17.35% in 2024 and subsequently improving to 20.58% in 2025. The adjusted net profit margin followed a similar pattern but with generally lower values, reaching its highest value in 2023 at 23.25%. The notable decline in 2024 suggests a period of decreased profitability, followed by signs of recovery in 2025.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios demonstrated a generally positive trend, starting at 0.26 and 0.28 respectively in 2020, dipping in 2021, and then increasing to 0.25-0.26 in 2023. The turnover ratio decreased again in 2024 but slightly rebounded in 2025. This indicates moderate fluctuations in the efficiency with which the company utilizes its assets to generate revenue, with some recovery in recent periods.

Financial Leverage

Reported financial leverage showed a significant decline from 1.79 in 2020 to 1.38 by 2021 and remained relatively stable around 1.37 to 1.42 through 2025. Adjusted financial leverage also declined from 1.61 in 2020 to 1.26 in 2021 and experienced a gradual increase thereafter, reaching 1.35 in 2025. Overall, the company reduced its reliance on debt after 2020 but appears to have slowly increased leverage slightly in later years.

Return on Equity (ROE)

Reported ROE experienced a downward trend from 10.17% in 2020 to a low of 3.66% in 2021, followed by a moderate recovery to 9.32% in 2023. It again declined in 2024 before a modest increase in 2025. Adjusted ROE mirrored this trajectory but with consistently lower values, dropping to a low of 2.48% in 2021 and peaking at 7.85% in 2023. The pattern suggests that shareholder returns were pressured in 2021 and 2024 but improved during intermediate periods.

Return on Assets (ROA)

The reported ROA followed a pattern akin to ROE, decreasing sharply from 5.69% in 2020 to 2.66% in 2021, rising again to 6.79% in 2023, and then declining before a slight recovery in 2025. Adjusted ROA demonstrated a similar trend but remained lower overall, indicating consistently lower asset profitability when adjustments were accounted for. The data reflects variable effectiveness in asset utilization over time with peaks in 2023.

The financial data reveals notable fluctuations in both reported and adjusted net income over the observed periods. Reported net income exhibited a substantial increase from 1,220,761 thousand US dollars in 2020 to a peak of 3,314,579 thousand US dollars in 2023, followed by a sharp decline to 1,635,273 thousand US dollars in 2024 before recovering somewhat to 2,267,342 thousand US dollars in 2025. Adjusted net income reflects a similar pattern, rising from 1,106,813 thousand US dollars in 2020 to 2,861,633 thousand US dollars in 2023, then decreasing to 1,267,710 thousand US dollars in 2024 and subsequently increasing to 2,020,697 thousand US dollars in 2025.

Regarding profitability, the reported net profit margin showed an upward trend from 21.79% in 2020 to 26.94% in 2023, indicating improving profitability relative to revenue. However, this margin decreased notably to 17.35% in 2024 before rebounding somewhat to 20.58% in 2025. The adjusted net profit margin followed a broadly similar trajectory, rising from 19.75% in 2020 to 23.25% in 2023, before falling to 13.45% in 2024 and slightly recovering to 18.34% in 2025.

Reported net income

Displays growth from 2020 through 2023, peaking in 2023, followed by a sharp decline in 2024 with partial recovery in 2025.

Adjusted net income

Mirrors the reported income trend, indicating that adjustments for deferred tax impacts did not materially change the overall earnings direction, but the adjusted values are consistently lower than reported figures, signifying tax effects.

Reported net profit margin

Increases steadily until 2023, suggesting improved operational efficiency or pricing power, then declines substantially in 2024 before improving in 2025, indicating volatility in profitability or cost structure changes.

Adjusted net profit margin

Shows a similar increase and decline pattern as the reported margin, with margins consistently lower, highlighting the impact of income tax-related adjustments on profitability measurements.

Overall, the data suggest a period of growth in both net income and profitability until 2023, interrupted by a pronounced downturn in 2024, which affects both reported and adjusted metrics. The recovery seen in 2025, although significant, does not reach the peak levels observed in 2023. The pattern in adjusted figures confirms that deferred income tax adjustments have a consistent but moderate effect on reported financial outcomes across the periods.

The analysis of the annual reported and deferred income tax adjusted financial data reveals several noteworthy trends regarding the company's asset base and asset utilization over the examined periods.

Total Assets

Reported total assets showed significant growth from the initial period to the following year, increasing from approximately 21.5 billion to over 52 billion US dollars. Subsequently, a gradual decline is observed over the next years, reducing to roughly 48 billion by the last period.

Adjusted total assets, which likely account for deferred tax adjustments, follow a similar pattern but at somewhat lower absolute levels. Starting at almost 20 billion US dollars, the assets rose steeply to over 50 billion, then gradually decreased to just above 46 billion by the final period. This reflects a consistent adjustment effect reducing the asset base reported.

Total Asset Turnover Ratio

The reported total asset turnover ratio began at 0.26 and dropped significantly to 0.14 in the second period, indicating a notable decrease in asset efficiency despite the asset growth. Subsequently, this ratio recovered to mid 0.20s levels, fluctuating slightly but remaining below the initial period's ratio.

Adjusted asset turnover ratios mirror this pattern closely, consistently staying marginally higher than the reported ratios. Starting at 0.28, dipping to 0.15, then moving back up to around 0.26 before experiencing a mild dip to 0.20 and ending near 0.24 in the last period. This suggests that adjustments for deferred income tax slightly improve the perceived efficiency but maintain the overall trend.

Overall, the data indicate that while the company's asset base expanded sharply early on, it has been on a downward trend in recent years, with a relative stabilization at a lower level. Concurrently, asset turnover experienced a sharp initial decline but has shown partial recovery, although it has not returned to its original peak levels. The adjusted figures consistently present a slightly reduced asset base and marginally higher turnover ratios, implying that deferred tax considerations slightly influence the reported performance metrics but do not alter the underlying trends.

The financial data reveals several notable trends over the reviewed periods. There is a consistent decrease in both reported total assets and adjusted total assets from the peak observed in 2021 through to 2025, indicating a gradual reduction in asset base. While reported total assets decreased from approximately 52.3 billion US dollars in 2021 to around 48.0 billion US dollars in 2025, adjusted total assets followed a similar downward pattern, reducing from approximately 50.1 billion US dollars to about 46.1 billion US dollars during the same period.

Shareholders' equity exhibits a similar declining trajectory. Reported shareholders’ equity peaked in 2021 at nearly 38.0 billion US dollars and then steadily declined to approximately 33.8 billion US dollars by 2025. Adjusted shareholders’ equity mirrors this movement with a high of roughly 39.7 billion US dollars in 2021, subsequently dropping to about 34.1 billion US dollars in 2025.

The financial leverage ratios, both reported and adjusted, demonstrate a general trend toward a modest increase after an initial significant decrease from 2020 to 2021. The reported financial leverage ratio dropped notably from 1.79 in 2020 to 1.38 in 2021, maintaining a relatively stable range around 1.37 until a slight uptick to 1.42 in 2025. The adjusted financial leverage ratio similarly declined from 1.61 in 2020 to 1.26 in 2021, followed by a gradual increase to 1.35 in 2025.

Assets

Both reported and adjusted total assets peaked in 2021 and have consistently decreased thereafter, suggesting asset contraction or disposition over time.

Shareholders' Equity

After reaching the highest levels in 2021, reported and adjusted equity values have exhibited a steady decline, indicating a reduction in net asset value or potential increases in liabilities relative to assets.

Financial Leverage

The initial decrease in leverage ratios from 2020 to 2021 indicates a reduction in relative debt or an increase in equity. The subsequent slight upward trend may reflect increased leverage through additional borrowing or decreased equity levels over the following years.

Overall, these patterns suggest a period of growth culminating in 2021, followed by contraction in asset size and equity, alongside a moderate increase in financial leverage in recent years. This could imply strategic adjustments in the capital structure or operational factors influencing the balance sheet composition.

The analysis of the data reveals notable fluctuations and trends across reported and adjusted financial metrics over the examined periods.

Net Income

Reported net income shows an initial increase from approximately 1.22 billion to 1.39 billion US dollars between 2020 and 2021, followed by a sharp rise in 2022 and 2023, reaching over 3.31 billion US dollars, before decreasing significantly to around 1.64 billion in 2024 and then rebounding to approximately 2.27 billion in 2025.

The adjusted net income trend mirrors the reported figures but with generally lower values. It starts at about 1.11 billion in 2020, dips to under 1 billion in 2021, increases notably to about 2.42 billion and 2.86 billion in 2022 and 2023 respectively, then declines to approximately 1.27 billion in 2024 and slightly recovers to around 2.02 billion in 2025.

Shareholders' Equity

Reported shareholders' equity experiences a dramatic increase from roughly 12 billion to almost 38 billion between 2020 and 2021, then declines steadily over the following years to around 33.8 billion in 2025.

Adjusted shareholders' equity also rises sharply from approximately 12.4 billion to nearly 39.7 billion between 2020 and 2021, then gradually decreases to about 34.1 billion by 2025, maintaining a consistent margin above the reported figures.

Return on Equity (ROE)

Reported ROE percentages decrease from just over 10% in 2020 to roughly 3.7% in 2021, then recover to above 9% by 2023 before falling again below 5% in 2024 and slightly improving to nearly 6.7% in 2025.

Adjusted ROE displays a similar pattern but at consistently lower levels, starting near 9%, dipping below 2.5% in 2021, rising to nearly 8% in 2023, then declining to around 3.5% in 2024, and increasing modestly to just under 6% in 2025.

Overall, there is a clear cyclical pattern in profitability and returns, with peak performance observed around 2022 and 2023 followed by declines in 2024 and partial recovery in 2025. The large increase in both reported and adjusted shareholders’ equity in 2021 markedly influences the diluted return ratios in subsequent years. The variance between reported and adjusted figures indicates the impact of deferred income tax adjustments and possibly other accounting considerations affecting net income and equity measurements.

Net Income Trends

Reported net income demonstrated a generally increasing trend through the periods 2020 to 2023, reaching a peak in 2023, followed by a significant decline in 2024 and a subsequent recovery in 2025. Adjusted net income followed a similar pattern but showed lower values than reported net income in all periods. Both metrics exhibit pronounced volatility, especially between 2023 and 2024, indicating considerable fluctuations in profitability after adjustments for reported and deferred income taxes.

Total Assets Evolution

Reported total assets increased sharply in 2021 compared to 2020, then experienced a gradual decrease each subsequent year through 2025. Adjusted total assets mirrored this trend, starting lower than reported figures and consistently declining from 2021 onwards. This suggests a contraction in the asset base over the latter years, with adjustments further reducing the assets value.

Return on Assets (ROA) Patterns

Reported ROA followed a fluctuating path, with a low point in 2021, a significant rise peaking in 2023, then dropping markedly in 2024 before recovering partially in 2025. Adjusted ROA exhibited a similar trajectory but consistently recorded lower percentages than the reported figures. Both indicate that the company's profitability relative to its asset base showed volatility, with tax-related adjustments impacting the effective returns.

Overall Insights

The financial data reveals a company experiencing pronounced variability in net income and return on assets over the evaluated years, with adjustments for deferred income taxes reducing both net income and asset values. The peak operating performance appears around 2023, followed by a setback in 2024. Asset levels contracted over the period, which may have influenced the fluctuations in returns. The gap between reported and adjusted figures underscores the material effect of income tax considerations on financial performance metrics.