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Qorvo (QRVO) Q4 Earnings & Revenues Beat Estimates, Up Y/Y
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Qorvo Inc. (QRVO - Free Report) reported fourth-quarter fiscal 2021 non-GAAP earnings of $2.74 per share, which soared 74.5% on a year-over-year basis. The figure not only exceeded the company’s expectations of $2.42 but also surpassed the Zacks Consensus Estimate by 12.3%.
Revenues surged 36.2% year over year to $1.073 billion. Further, the top line outpaced the consensus mark by 2.95%. Moreover, the figure was above the higher end of management’s guided range of $1.025 billion to $1.055 billion.
Improvement in both Mobile Products (MP) and Infrastructure and Defense (IDP) contributed to the results. The company gained from broad-based demand in 5G handsets, Wi-Fi 6 devices and proximity awareness applications.
Accelerated deployment of 5G, the roll-out of Wi-Fi 6 and 6E technologies, and growing clout of precision location applications based on ultra-wideband (UWB) technology is favoring the company’s prospects.
Innovation in biotechnologies is opening new avenues of business. Notably, in January, the National Institutes of Health (NIH) selected Qorvo for its program to add COVID-19 testing capacity.
In fact, Qorvo announced that the U.S. Food and Drug Administration (FDA) has granted emergency use authorization (EUA) for the Qorvo Omnia SARS-CoV-2 Antigen Test. The test is authorized for the qualitative detection of nucleocapsid viral antigens from SARS-CoV-2 in nasal swab specimens from individuals suspected of being infected by COVID-19.
Also, the company’s wholly owned subsidiary — Qorvo Biotechnologies — has been awarded a $24.4 million contract with the National Institutes of Health (NIH) through the Rapid Acceleration of Diagnostics (RADxSM) initiative. The contract helps advance the production and market launch of the Qorvo Omnia diagnostic test platform.
Moreover, on May 6, 2021, Qorvo announced the acquisition of NextInput, which is a provider of force sensing solutions for the next generation of human machine interface. NextInput is slated to be part of the MP unit. Markedly, NextInput has shipped tens of millions of MEMS-based sensor solutions to leading manufacturers of smartphones, wearables, automobiles and other applications, which holds promise for Qorvo, seeking to expand presence in market for human-machine interface (HMI) solutions.
Segment-wise, MP revenues of $808 million exceeded the company’s expectations of $770 million and surged 45% on a year-over-year basis, on higher 5G content in smartphones.
During the fiscal fourth quarter, the company witnessed robust traction for its chips utilized in 5G smartphones. These offerings are highly integrated and high-performance solutions, which enable customers to reduce product footprint and accelerate products to market.
In mobile vertical, Samsung honored Qorvo with the Best Quality Award, recognizing its innovation and superior performance in support of Galaxy product family.
Additionally, the company has extended shipments of low-band, mid-/high- and ultra-high-band modules, and BAW-based antenna-plexers, which are witnessing accelerated adoption across leading smartphone OEMs.
Moreover, broad-based content gains across Wi-Fi 6 solutions, which are being implemented in leading tablets, smartphones, gateways, smart speakers, mesh networks, and virtual reality headsets, contributed to the fiscal fourth-quarter performance.
Also, Qorvo was selected by a leading provider of consumer IoT products to integrate UWB technology into a broad set of connected home devices in a bid to leverage its superior location accuracy, security and latency.
IDP revenues grew 14% year over year to $265 million on robust Wi-Fi demand. The improvement can also be attributed to momentum in deployment of Wi-Fi 6 solutions and robust 5G infrastructure market demand on improving buildout of 5G networks.
In the connectivity and broadband business, the company increased shipments of DOCSIS 3.1 GaN power amplifiers to major U.S. MSOs, providing superior efficiency, longer range and higher bandwidth to maximize upstream and downstream data connectivity.
Notably, Qorvo expanded global customer base for Wi-Fi 6 solutions, front-end modules (FEM) and BAW filters during the quarter under review.
Further, growth reflects strong demand for the Qorvo’s solutions in defense (advanced radars and other electronic warfare products) and power management technologies. Rapid adoption of gallium nitride or GaN amplifiers for high-power communications applications and domestic airborne radars also drove the defense top line.
In fact, the company clinched multiple design wins across 5G massive MIMO base stations and initiated shipments of GaN amplifiers, which are deployed in massive MIMO C-band base stations.
In infrastructure, gains from increasing in 5G base station deployments remained a tailwind. During the reported quarter, the company ramped up shipments in a base station OEM in support of US C-band massive MIMO deployments. The company also bagged initial design wins for massive MIMO deployments in Canada, Japan and Korea.
For radar applications, the company released a reconfigurable dual-band GaN power amplifier MMIC for the S and X-bands, supporting more compact next-generation radar systems. Moreover, the successful landing of NASA's JPL Mars Perseverance rover was facilitated by Qorvo’s components integrated into the rover's descent radar.
Moreover, in automotive, Qorvo’s advanced 5G/LTE, C-V2X and Wi-Fi automotive-qualified products capabilities aided it in supporting order contracts across leading European automotive OEMs.
In the programmable power management business, the company’s programmable ICs and other products witnessed strong growth in solid state storage in client and enterprise computing, and robust momentum in brushless motor control applications across multiple major consumer brands.
Also, gains from buyout of UWB software and system solution pioneer, 7Hugs Labs S.A.S., remains noteworthy. It is enabling the acquirer to boost UWB system solutions capabilities and bolster design expertise with focus on mobile, IoT and automotive end-markets.
Margins in Detail
Non-GAAP gross margin expanded 300 basis points (bps) from the year-ago quarter to 52.6%. Non-GAAP gross margin was anticipated in the range of 50.5% to 51%. Better-than-expected gross margin can be attributed to better-than-expected price, lower manufacturing and inventory costs, which more than offset less favorable mix.
Non-GAAP operating expenses increased 14.6% year over year to $207.5 million. As a percentage of revenues, the figure contracted 370 bps from the year-ago quarter to 19.3%.
Non-GAAP operating income surged 70.2% to $357.2 million. Non-GAAP operating margin expanded 670 bps from the year-ago quarter to 33.3%. This can be attributed to gross margin expansion and lower operating expenses.
Balance Sheet & Cash Flow
As of Apr 3, 2021, cash and cash equivalents were $1.398 billion compared with $1.234 billion reported as of Jan 2, 2021. As of Apr 3, 2021, long-term debt was $1.743 billion, with “no material near-term maturities,” compared with $1.744 billion as of Jan 2, 2021.
Qorvo is undertaking several deleveraging steps to improve financial flexibility, on the heels of which, S&P upgraded the company’s credit rating to investment-grade in April, per management.
Also, the company stated that the “revolver is untapped.” Markedly, Qorvo had concluded the fiscal second quarter with unused $300 million unsecured revolver. Additionally, in fiscal third quarter management had noted that the weighted average maturity of the company’s debt is 2029.
Net cash provided by operating activities was $402.9 million, compared with $403.7 million in the prior quarter. Free cash flow during the reported quarter amounted to $325.5 million, compared with $367.6 million in the prior quarter.
During the fiscal fourth quarter, the company repurchased shares worth $175 million.
Guidance
For first-quarter fiscal 2022, Qorvo anticipates revenues between $1.065 billion and $1.095 billion, with MP and IDP contributing $810 million and $270 million, respectively. The Zacks Consensus Estimate for revenues is pegged at $1 billion.
Strength in smartphone vertical, upgrades in 5G smartphones with increase in 5G content, and gains from consistent growth in 5G infrastructure, power management, 5G base stations, Wi-Fi 6 solutions and defense end-markets are anticipated to drive performance in first-quarter fiscal 2022.
Non-GAAP earnings are projected to be $2.45 per share (at the mid-point of the revenue guidance). The consensus mark for earnings currently stands at $2.18.
Non-GAAP gross margin is anticipated to be 50%.
For calendar 2021, Qorvo expects 5G smartphones to double over 2020. Within 5G smartphones, the company estimates the RF content to increase $5 to $7 per phone in comparison to 4G, including in the mid-tier.
Agilent scheduled to report quarterly results on May 25, while NVIDIA and Pure Storage are slated to announce results on May 26.
Long-term earnings growth rate of Pure Storage, NVIDIA and Agilent, is pegged at 52.21%, 15.05% and 9%, respectively.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Qorvo (QRVO) Q4 Earnings & Revenues Beat Estimates, Up Y/Y
Qorvo Inc. (QRVO - Free Report) reported fourth-quarter fiscal 2021 non-GAAP earnings of $2.74 per share, which soared 74.5% on a year-over-year basis. The figure not only exceeded the company’s expectations of $2.42 but also surpassed the Zacks Consensus Estimate by 12.3%.
Revenues surged 36.2% year over year to $1.073 billion. Further, the top line outpaced the consensus mark by 2.95%. Moreover, the figure was above the higher end of management’s guided range of $1.025 billion to $1.055 billion.
Improvement in both Mobile Products (MP) and Infrastructure and Defense (IDP) contributed to the results. The company gained from broad-based demand in 5G handsets, Wi-Fi 6 devices and proximity awareness applications.
Accelerated deployment of 5G, the roll-out of Wi-Fi 6 and 6E technologies, and growing clout of precision location applications based on ultra-wideband (UWB) technology is favoring the company’s prospects.
Qorvo, Inc. Price, Consensus and EPS Surprise
Qorvo, Inc. price-consensus-eps-surprise-chart | Qorvo, Inc. Quote
Quarter Details & Recent Business Highlights
Innovation in biotechnologies is opening new avenues of business. Notably, in January, the National Institutes of Health (NIH) selected Qorvo for its program to add COVID-19 testing capacity.
In fact, Qorvo announced that the U.S. Food and Drug Administration (FDA) has granted emergency use authorization (EUA) for the Qorvo Omnia SARS-CoV-2 Antigen Test. The test is authorized for the qualitative detection of nucleocapsid viral antigens from SARS-CoV-2 in nasal swab specimens from individuals suspected of being infected by COVID-19.
Also, the company’s wholly owned subsidiary — Qorvo Biotechnologies — has been awarded a $24.4 million contract with the National Institutes of Health (NIH) through the Rapid Acceleration of Diagnostics (RADxSM) initiative. The contract helps advance the production and market launch of the Qorvo Omnia diagnostic test platform.
Moreover, on May 6, 2021, Qorvo announced the acquisition of NextInput, which is a provider of force sensing solutions for the next generation of human machine interface. NextInput is slated to be part of the MP unit. Markedly, NextInput has shipped tens of millions of MEMS-based sensor solutions to leading manufacturers of smartphones, wearables, automobiles and other applications, which holds promise for Qorvo, seeking to expand presence in market for human-machine interface (HMI) solutions.
Segment-wise, MP revenues of $808 million exceeded the company’s expectations of $770 million and surged 45% on a year-over-year basis, on higher 5G content in smartphones.
During the fiscal fourth quarter, the company witnessed robust traction for its chips utilized in 5G smartphones. These offerings are highly integrated and high-performance solutions, which enable customers to reduce product footprint and accelerate products to market.
In mobile vertical, Samsung honored Qorvo with the Best Quality Award, recognizing its innovation and superior performance in support of Galaxy product family.
Additionally, the company has extended shipments of low-band, mid-/high- and ultra-high-band modules, and BAW-based antenna-plexers, which are witnessing accelerated adoption across leading smartphone OEMs.
Moreover, broad-based content gains across Wi-Fi 6 solutions, which are being implemented in leading tablets, smartphones, gateways, smart speakers, mesh networks, and virtual reality headsets, contributed to the fiscal fourth-quarter performance.
Also, Qorvo was selected by a leading provider of consumer IoT products to integrate UWB technology into a broad set of connected home devices in a bid to leverage its superior location accuracy, security and latency.
IDP revenues grew 14% year over year to $265 million on robust Wi-Fi demand. The improvement can also be attributed to momentum in deployment of Wi-Fi 6 solutions and robust 5G infrastructure market demand on improving buildout of 5G networks.
In the connectivity and broadband business, the company increased shipments of DOCSIS 3.1 GaN power amplifiers to major U.S. MSOs, providing superior efficiency, longer range and higher bandwidth to maximize upstream and downstream data connectivity.
Notably, Qorvo expanded global customer base for Wi-Fi 6 solutions, front-end modules (FEM) and BAW filters during the quarter under review.
Further, growth reflects strong demand for the Qorvo’s solutions in defense (advanced radars and other electronic warfare products) and power management technologies. Rapid adoption of gallium nitride or GaN amplifiers for high-power communications applications and domestic airborne radars also drove the defense top line.
In fact, the company clinched multiple design wins across 5G massive MIMO base stations and initiated shipments of GaN amplifiers, which are deployed in massive MIMO C-band base stations.
In infrastructure, gains from increasing in 5G base station deployments remained a tailwind. During the reported quarter, the company ramped up shipments in a base station OEM in support of US C-band massive MIMO deployments. The company also bagged initial design wins for massive MIMO deployments in Canada, Japan and Korea.
For radar applications, the company released a reconfigurable dual-band GaN power amplifier MMIC for the S and X-bands, supporting more compact next-generation radar systems. Moreover, the successful landing of NASA's JPL Mars Perseverance rover was facilitated by Qorvo’s components integrated into the rover's descent radar.
Moreover, in automotive, Qorvo’s advanced 5G/LTE, C-V2X and Wi-Fi automotive-qualified products capabilities aided it in supporting order contracts across leading European automotive OEMs.
In the programmable power management business, the company’s programmable ICs and other products witnessed strong growth in solid state storage in client and enterprise computing, and robust momentum in brushless motor control applications across multiple major consumer brands.
Also, gains from buyout of UWB software and system solution pioneer, 7Hugs Labs S.A.S., remains noteworthy. It is enabling the acquirer to boost UWB system solutions capabilities and bolster design expertise with focus on mobile, IoT and automotive end-markets.
Margins in Detail
Non-GAAP gross margin expanded 300 basis points (bps) from the year-ago quarter to 52.6%. Non-GAAP gross margin was anticipated in the range of 50.5% to 51%. Better-than-expected gross margin can be attributed to better-than-expected price, lower manufacturing and inventory costs, which more than offset less favorable mix.
Non-GAAP operating expenses increased 14.6% year over year to $207.5 million. As a percentage of revenues, the figure contracted 370 bps from the year-ago quarter to 19.3%.
Non-GAAP operating income surged 70.2% to $357.2 million. Non-GAAP operating margin expanded 670 bps from the year-ago quarter to 33.3%. This can be attributed to gross margin expansion and lower operating expenses.
Balance Sheet & Cash Flow
As of Apr 3, 2021, cash and cash equivalents were $1.398 billion compared with $1.234 billion reported as of Jan 2, 2021. As of Apr 3, 2021, long-term debt was $1.743 billion, with “no material near-term maturities,” compared with $1.744 billion as of Jan 2, 2021.
Qorvo is undertaking several deleveraging steps to improve financial flexibility, on the heels of which, S&P upgraded the company’s credit rating to investment-grade in April, per management.
Also, the company stated that the “revolver is untapped.” Markedly, Qorvo had concluded the fiscal second quarter with unused $300 million unsecured revolver. Additionally, in fiscal third quarter management had noted that the weighted average maturity of the company’s debt is 2029.
Net cash provided by operating activities was $402.9 million, compared with $403.7 million in the prior quarter. Free cash flow during the reported quarter amounted to $325.5 million, compared with $367.6 million in the prior quarter.
During the fiscal fourth quarter, the company repurchased shares worth $175 million.
Guidance
For first-quarter fiscal 2022, Qorvo anticipates revenues between $1.065 billion and $1.095 billion, with MP and IDP contributing $810 million and $270 million, respectively. The Zacks Consensus Estimate for revenues is pegged at $1 billion.
Strength in smartphone vertical, upgrades in 5G smartphones with increase in 5G content, and gains from consistent growth in 5G infrastructure, power management, 5G base stations, Wi-Fi 6 solutions and defense end-markets are anticipated to drive performance in first-quarter fiscal 2022.
Non-GAAP earnings are projected to be $2.45 per share (at the mid-point of the revenue guidance). The consensus mark for earnings currently stands at $2.18.
Non-GAAP gross margin is anticipated to be 50%.
For calendar 2021, Qorvo expects 5G smartphones to double over 2020. Within 5G smartphones, the company estimates the RF content to increase $5 to $7 per phone in comparison to 4G, including in the mid-tier.
Zacks Rank & Other Stocks to Consider
Currently, Qorvo carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector worth consideration are Agilent Technologies (A - Free Report) , Pure Storage (PSTG - Free Report) and NVIDIA (NVDA - Free Report) . All the stocks carry a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent scheduled to report quarterly results on May 25, while NVIDIA and Pure Storage are slated to announce results on May 26.
Long-term earnings growth rate of Pure Storage, NVIDIA and Agilent, is pegged at 52.21%, 15.05% and 9%, respectively.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>