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Xilinx Inc. reported better-than-expected results in the second-quarter of fiscal 2017. The top and the bottom line also witnessed impressive year-over-year improvement.
The company’s adjusted earnings (including stock-based compensation but excluding all other one-time items) of 61 cents per share came ahead of the Zacks Consensus Estimate of 54 cents. The figure also increased approximately 27% from the year-ago quarter on the back of strong top-line growth and effective cost management.
Xilinx reported fiscal second-quarter revenues of approximately $579.3 million, up 9.8% year over year and above the Zacks Consensus Estimate of $575 million. On a sequential basis, the company’s revenues grew roughly 1%.
Sales at the Communications & Data Center division increased 9% from the prior-year quarter. However, the same decreased 6% sequentially. Revenues at Broadcast, Consumer & Automotive increased 8% on a year over year and 5% sequentially. Sales at the Industrial, Aerospace & Defense division increased 11% on a year-over-year basis and 7% sequentially.
Product-wise, revenues from Advanced products increased a whopping 61% year over year and 10% sequentially, driven mainly by record sales of 28-nm and 20-nm products. In addition, the revamp of 16-nm products started contributing to the top line during the quarter. On the other hand, as expected, revenues from core products declined 14% from the year-ago quarter and 6% sequentially.
Geographically, on a year-over-year basis, revenues from North America and Asia-Pacific increased 20% and 6%, respectively, while that from Europe jumped 11%. On the other hand, revenues from Japan declined 7% on a year-over-year basis.
Margins
Xilinx reported a 50 basis points (bps) contraction in adjusted gross margin on a year-over-year basis to 69.6%. Also, reported gross margin was below the company’s guidance of 70% mainly due to the impact of a licensing agreement with Rambus.
Adjusted operating expenses increased 4.8% to $225.3 million. Moreover, as a percentage of revenues, operating expenses amounted to 38.9%, reflecting a 180 bps year-over-year decline.
Xilinx’s adjusted operating margin expanded 130 bps year over year to 30.7%. In terms of dollars, adjusted operating income increased 14.9% year over year to $178.1 million. Adjusted net income for the quarter came in at $165.4 million compared with $129.1 million.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the quarter with cash and cash equivalents, and short-term investments of approximately $3.49 billion, compared with $3.52 billion in the previous quarter. The company has total long-term debt (long-term debt plus current portion) of about $994.4 million.
During the quarter, Xilinx generated cash of $183.6 million from operations and incurred $11 million as capital expenditure. Moreover, the company paid $83.9 million as cash dividends and repurchased shares worth $99.9 million during the quarter.
Concurrent with fiscal second-quarter results, Xilinx announced that its board of directors has approved a quarterly cash dividend of 33 cents per share. The raised dividend will be paid on Nov 23, 2016 to shareholders of record as on Nov 8, 2016.
Guidance
The company provided encouraging top-line guidance for the third quarter of fiscal 2017. Management expects revenues to be sequentially flat.
Gross margin is anticipated to be approximately 69%. Operating expenses are likely to be around $245 million, which includes approximately $1 million of amortization of acquisition-related intangibles. Effective tax rate stands at approximately 14%.
Conclusion
The California-based chipmaker reported better-than-expected second-quarter fiscal 2017 results. Also, earnings and revenues improved year over year.
Revenues by end markets (Communications & Data Center, Broadcast, Consumer & Automotive and Industrial, Aerospace & Defense) registered year-over-year growth.
Increasing demand for 28-nm, 20-nm and 16-nm nodes, driven by higher wireless deployments and strength in the wired communication segment, are expected to remain growth drivers. The company’s new product launches should further aid revenues.
Nonetheless, a slowdown in the Chinese economy, along with economic weakness in Europe and the Asia-Pacific could impact the company’s near-term results. Also, stiff competition from Lattice Semiconductor Corporation (LSCC - Free Report) remains a material headwind.
Currently, Xilinx has a Zacks Rank #2 (Buy). A couple of better-ranked stocks in the broader technology sector are Amazon.com, Inc. (AMZN) and Synopsys Inc. (SNPS), both carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Amazon and Synopsys have a long-term expected growth rate of 35% and 9%, respectively.
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Xilinx (XLNX) Surpasses Q2 Earnings & Revenue Estimates
Xilinx Inc. reported better-than-expected results in the second-quarter of fiscal 2017. The top and the bottom line also witnessed impressive year-over-year improvement.
The company’s adjusted earnings (including stock-based compensation but excluding all other one-time items) of 61 cents per share came ahead of the Zacks Consensus Estimate of 54 cents. The figure also increased approximately 27% from the year-ago quarter on the back of strong top-line growth and effective cost management.
Revenues
Xilinx reported fiscal second-quarter revenues of approximately $579.3 million, up 9.8% year over year and above the Zacks Consensus Estimate of $575 million. On a sequential basis, the company’s revenues grew roughly 1%.
Sales at the Communications & Data Center division increased 9% from the prior-year quarter. However, the same decreased 6% sequentially. Revenues at Broadcast, Consumer & Automotive increased 8% on a year over year and 5% sequentially. Sales at the Industrial, Aerospace & Defense division increased 11% on a year-over-year basis and 7% sequentially.
Product-wise, revenues from Advanced products increased a whopping 61% year over year and 10% sequentially, driven mainly by record sales of 28-nm and 20-nm products. In addition, the revamp of 16-nm products started contributing to the top line during the quarter. On the other hand, as expected, revenues from core products declined 14% from the year-ago quarter and 6% sequentially.
Geographically, on a year-over-year basis, revenues from North America and Asia-Pacific increased 20% and 6%, respectively, while that from Europe jumped 11%. On the other hand, revenues from Japan declined 7% on a year-over-year basis.
Margins
Xilinx reported a 50 basis points (bps) contraction in adjusted gross margin on a year-over-year basis to 69.6%. Also, reported gross margin was below the company’s guidance of 70% mainly due to the impact of a licensing agreement with Rambus.
Adjusted operating expenses increased 4.8% to $225.3 million. Moreover, as a percentage of revenues, operating expenses amounted to 38.9%, reflecting a 180 bps year-over-year decline.
Xilinx’s adjusted operating margin expanded 130 bps year over year to 30.7%. In terms of dollars, adjusted operating income increased 14.9% year over year to $178.1 million. Adjusted net income for the quarter came in at $165.4 million compared with $129.1 million.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the quarter with cash and cash equivalents, and short-term investments of approximately $3.49 billion, compared with $3.52 billion in the previous quarter. The company has total long-term debt (long-term debt plus current portion) of about $994.4 million.
During the quarter, Xilinx generated cash of $183.6 million from operations and incurred $11 million as capital expenditure. Moreover, the company paid $83.9 million as cash dividends and repurchased shares worth $99.9 million during the quarter.
Concurrent with fiscal second-quarter results, Xilinx announced that its board of directors has approved a quarterly cash dividend of 33 cents per share. The raised dividend will be paid on Nov 23, 2016 to shareholders of record as on Nov 8, 2016.
Guidance
The company provided encouraging top-line guidance for the third quarter of fiscal 2017. Management expects revenues to be sequentially flat.
Gross margin is anticipated to be approximately 69%. Operating expenses are likely to be around $245 million, which includes approximately $1 million of amortization of acquisition-related intangibles. Effective tax rate stands at approximately 14%.
Conclusion
The California-based chipmaker reported better-than-expected second-quarter fiscal 2017 results. Also, earnings and revenues improved year over year.
Revenues by end markets (Communications & Data Center, Broadcast, Consumer & Automotive and Industrial, Aerospace & Defense) registered year-over-year growth.
Increasing demand for 28-nm, 20-nm and 16-nm nodes, driven by higher wireless deployments and strength in the wired communication segment, are expected to remain growth drivers. The company’s new product launches should further aid revenues.
Nonetheless, a slowdown in the Chinese economy, along with economic weakness in Europe and the Asia-Pacific could impact the company’s near-term results. Also, stiff competition from Lattice Semiconductor Corporation (LSCC - Free Report) remains a material headwind.
XILINX INC Price, Consensus and EPS Surprise
XILINX INC Price, Consensus and EPS Surprise | XILINX INC Quote
Stocks to Consider
Currently, Xilinx has a Zacks Rank #2 (Buy). A couple of better-ranked stocks in the broader technology sector are Amazon.com, Inc. (AMZN) and Synopsys Inc. (SNPS), both carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Amazon and Synopsys have a long-term expected growth rate of 35% and 9%, respectively.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>