Prashanth Mahendra-Rajah
Chief Financial Officer at Analog Devices
Thank you, Vince. Let me add my welcome to our first quarter earnings call.
My comments today, with the exception of revenue, will be on an adjusted basis, which excludes special items outlined in today's press release. First quarter revenue of $3.25 billion finished at the high end of our outlook, driven by continued share gains in industrial and automotive. Our B2B markets represented 89% of revenue, up 25% year-over-year and increased 2% sequentially despite our first quarter typically being down.
Now let's look at performance by end market. Industrial, our most diverse and profitable end market represented 52% of revenue and hit another all-time high. This business has grown sequentially for 12 consecutive quarters. All markets increased year-over-year, led by automation, sustainable energy, instrumentation and test. Automotive, which represented 22% of revenue, also achieved another record, increasing 29% year-over-year and 6% sequentially. All applications grew double digits year-over-year as our market-leading positions across battery management and in-cabin connectivity continued to deliver significant growth.
Communications, which represented 15% of revenue, grew 18% year-over-year. As expected, comps declined slightly sequentially as strength in wired was offset by softness in wireless due to the timing of 5G deployments. And lastly, consumer, which represented 11% of revenue was down 5% year-over-year and declined 14% sequentially given weaker market trends and seasonality.
Now on to the rest of the P&L. Gross margin of 73.6% expanded 170 basis points year-over-year on favorable mix and cost synergies. Opex was $733 million down slightly sequentially as we balance strategic hiring with the tight discretionary spend and synergy capture. Given our strong operating leverage, combined with the synergy savings, our operating margin was 51.1%. Importantly, we have already captured nearly all of the $400 million cost synergy goal. As such, our communication will now turn to the revenue synergy opportunities from our combined portfolio and our complementary customer base with Maxim.
Recall that Anelise, our Chief Customer Officer, unveiled how we are strategically approaching these synergies during our Investor Day, and Vince has routinely highlighted some of these compelling opportunities over the past few quarters. To that end, we are closely monitoring and measuring progress from opportunity to design win to new revenue. And while it is still early, design win momentum to date has exceeded our expectations. This gives us increased confidence in achieving our $1 billion-plus revenue synergy opportunity that we outlined at our Investor Day. Non-op expenses were $60 million and the tax rate was just over 12%. All told, EPS came in at $2.75, up 42% year-over-year and hitting a new record.
Moving to the balance sheet. We ended the quarter with approximately $1.7 billion of cash and a net leverage ratio below one. Days of inventory increased to 155 while channel inventory remains below our target level. Recall that last quarter, we outlined our strategy to rebuild strategic Die Bank and hold more finished goods inventory on our balance sheet as we moderate shipment into the channel during this time of inflection.
Moving on to cash flow. capex for the quarter was $176 million and $764 million over the trailing 12 months, representing 6% of revenue. We continue to expect capex to be high single digits as a percentage of sales in 2023 and then decline in subsequent years to our long-term target of mid-single digit. These investments will double our internal revenue output exiting next year and support strategic swing capacity between our fabs and our foundry partners. The flexibility of our hybrid model across different geographies enhances our resiliency and offers our customers additional optionality.
Over the trailing 12 months, we generated $4.3 billion of free cash flow or 34% of revenue. Over this period, we have returned $4.7 billion to shareholders or over 100% of free cash flow by a $3.1 billion of buybacks and dividends of $1.6 billion. We just raised our quarterly dividend by 13%, marking our fifth consecutive double-digit increase and 19 consecutive years of increases. This is a testament to our durable operating model that has generated positive free cash flow for 26 consecutive years. As a reminder, we target 100% free cash flow return. The dividend is the cornerstone of this policy, and we look to increase our dividend at a 10% CAGR through the cycle, with remaining cash used for share count reduction.
Now similar to prior quarters, I'd like to give a brief update on the operating backdrop. First, on markets. Industrial orders, as Vince highlighted, remain the strongest followed by automotive, while comms and consumer remain weak. Given the rapidly changing environment, we are diligently working with our customers to remove orders that they may no longer require.
At the same time, we have increased our supply by growing our internal output and working with our foundry partners. These actions have reduced our lead times with half of our portfolio now shipping in under 13 weeks. Despite this, backlog coverage remains around one year of revenue. As such, we expect our book-to-bill will remain below parity over the next couple of quarters as our backlog returns to more normal levels. Given these dynamics, we are guiding second quarter revenue to be $3.2 billion, plus or minus $100 million. We expect continued sequential growth in our industrial and automotive markets and another sequential decline in our communications and consumer markets. At the midpoint of our outlook, revenue will be up high single digits year-over-year with our B2B markets up over 10% once again. Operating margin is expected to be 51% plus or minus 70 basis points.
Our tax rate is now expected to be between 11% to 13% for the year. This guide reflects the new U.S. tax requirement to capitalize R&D expenses for tax purposes, resulting in higher upfront cash tax payments, but lowers our effective tax rate temporarily due to the deferred tax accounting requirements.
Based on these inputs, adjusted EPS is expected to be $2.75 plus or minus $0.10. In all, the macro backdrop remains uncertain. However, we remain cautiously optimistic in the near term given the resilient strength across our industrial and auto businesses, which represent over 75% of our revenue. Longer term, we remain well positioned to drive growth, enabled by our diverse, high-performance portfolio aligned with the key secular trends at the Intelligent Edge.
Let me now pass it back to Mike for our Q&A.
