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Xilinx's (XLNX) Q1 Earnings and Revenues Top Estimates, Up Y/Y

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Xilinx Inc. (XLNX - Free Report) delivered first-quarter fiscal 2022 adjusted earnings of 95 cents per share, beating the Zacks Consensus Estimate by 15.9%. Moreover, the bottom line registered an increase of 46%, year over year, and 16%, sequentially.

Revenues of $879 million surpassed the Zacks Consensus Estimate of $865.8 million and climbed 21%, year on year, and 3%, sequentially despite the prevalent industry-wide supply-chain challenges. This double-digit year-over-year growth in the top line was mainly driven by strength in Automotive, Broadcast and Consumer (“ABC”) and Wired and Wireless Group(“WWG”) end markets.

However, decline in Aerospace & Defense, Industrial and Test, Measurement & Emulation (“AIT”) sales was headwind during the fiscal first quarter.

The company noted that pursuant to its pending acquisition by Advanced Micro Devices (AMD - Free Report) , it will not hold an earnings conference call or provide any outlook. It also suspended the quarterly dividend as well as its share-repurchase program.

Notably, the two companies entered into an agreement in October 2020, under which Advanced Micro Devices had agreed to acquire Xilinx in an all-stock transaction worth $35 billion.

Xilinx, Inc. Price, Consensus and EPS Surprise Xilinx, Inc. Price, Consensus and EPS Surprise

Xilinx, Inc. price-consensus-eps-surprise-chart | Xilinx, Inc. Quote

Quarter in Detail

Product wise, advanced product revenues climbed 27% year over year, contributing 72% to the total revenues. Moreover, revenues from core products (28% of total revenues) were up 8% from the year-ago quarter.

On the basis of end markets, ABC revenues (20% of total revenues) surged 94%, year over year, and 13%, quarter on quarter. This year-over-year uptick mainly resulted from record performance at the Broadcast and Consumer end markets.

WWG revenues (30% of total revenues) increased 13% year over year on ramped-up 5G deployments across multiple regions. However, sales at WWG remained flat sequentially.

AIT revenues (36% of total revenues) declined 2% on a year-over-year basis and 10%, sequentially, chiefly due to decline in TME and weak sales in Aerospace & Defense. Yet, strength in the industrial end market was a breather.

Data Center Group (“DCG”) revenues (10% of total) slid 1% from the year-ago period but increased 14% quarter on quarter on solid demand across hyperscale cloud customers and the Fintech market.

Revenues from the recently-added Channel group constituted 4% of total revenues.

Geographically, the company registered an increase of 7% in North America, 17% in the Asia Pacific, 44% in Europe and 55% in Japan, on a year-over-year basis.

Margins

Non-GAAP gross profit jumped 19% year over year to $596 million, while the gross margin contracted 110 basis points (bps) to 67.8%.

The company posted a non-GAAP operating income of $246 million during the fiscal first quarter, up 32% from the year-ago quarter. Operating margin expanded 230 bps to 28%, chiefly on lower operating expenses as a percentage of revenues, which more than offset the impact of lower gross margin.

Balance Sheet and Cash Flow

Xilinx exited the fiscal first quarter with cash, cash equivalents and short-term investments of $3.39 billion compared with the prior quarter’s $3.08 billion.

The company’s total long-term debt (excluding current maturities) was $1.49 billion as of Jul 3. Long-term debt was significantly higher from the $747.1 million witnessed at the end of fiscal 2020. This upswing reflects the senior notes issuance of $750 million in May 2020.

Xilinx generated $390 million of cash from operations and $373 million of free cash flow during the reported quarter.

Zacks Rank and Stocks to Consider

Xilinx currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Digital Turbine (APPS - Free Report) and Zoom Video Communications (ZM - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Digital Turbine and Zoom is currently pegged at 50% and 16.6%, respectively.

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