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NXP Semiconductors (NXPI) Q2 Earnings Beat, Revenues Rise Y/Y

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NXP Semiconductors N.V. (NXPI - Free Report) reported second-quarter 2022 non-GAAP earnings of $4.74 per share, which outpaced the Zacks Consensus Estimate by 40%. Further, the figure increased 99% year over year and 37%, sequentially.

Revenues of $3.31 billion surpassed the Zacks Consensus Estimate of $3.27 billion. The figure was up 28% from the year-ago period’s level and 6%, sequentially. It was also close to the upper end of the guided range of $3.175-$3.375 billion.

Top-line growth was driven by a strong performance across the automotive, industrial & IoT, mobile, and communication infrastructure & others’ end markets in the reported quarter.

Auto radar systems, auto domain and zonal processors, auto electrification systems, secure connected edge solutions, UWB secure access solutions and RF power for 5G infrastructure remained key catalysts.

NXP Semiconductors N.V. Price, Consensus and EPS Surprise

NXP Semiconductors N.V. Price, Consensus and EPS Surprise

NXP Semiconductors N.V. price-consensus-eps-surprise-chart | NXP Semiconductors N.V. Quote

End-Market Detail

Automotive generated $1.71 billion of revenues (contributing 52% to the total revenues), reflecting a year-over-year increase of 36%. Growth was driven by innovation in systems solutions. NXPI’s robust sensing, processing and control applications aided revenue growth.

Revenues from Industrial & IoT were $713 million (22% of the top line), which rose 25% from the prior-year quarter’s level. Growing momentum in connected edge processing, connectivity and security remained a tailwind.

Revenues from Mobile were $388 million (12% of total revenues), up 12% from the year-ago period’s level. The increment in revenues was driven by an increased attach rate. Strong momentum in secure mobile wallet, access and identification supported revenue growth.

Communication Infrastructure & Others generated $498 million of revenues (which contributed 15% to the total revenues), up 20% year over year. The new cellular standards contributed well to segmental growth. NXP Semiconductors’ strong position in high-power RF power remained a positive.

Operating Results

The non-GAAP gross margin was 57.8%, which expanded 170 basis points (bps) from the year-ago quarter’s level.

Research and development (R&D) expenses were $542 million, up 14% year over year. Selling, general and administrative (SG&A) expenses increased 13% year over year to $265 million. As a percentage of revenues, R&D and SG&A expenses contracted 200 bps and 100 bps year over year to 16% and 8%, respectively.

The non-GAAP operating margin of 36% for the reported quarter expanded 400 bps from the prior-year period’s figure.

Balance Sheet & Cash Flow

As of Jul 3, 2022, cash and cash equivalent balance was $2.55 billion, down from $2.68 billion as of Apr 3, 2022.

Inventories were $1.46 billion at the end of the second quarter of 2022, up from $1.31 billion in the first quarter of 2022. Accounts receivables increased to $996 million from $925 million in the previous quarter.

Long-term debt was $11.2 billion at the end of the quarter under review compared with $10.6 billion in the last reported quarter.

NXPI generated a cash flow of $819 million in the second quarter of 2022, down from $856 million in the first quarter of 2022.

Its capex investment stood at $268 million, down from $279 million in the prior quarter. NXPI generated a free cash flow of $551 million in the reported quarter.

Q322 Guidance

For third-quarter 2022, NXP Semiconductors expects revenues of $3.35-$3.50 billion, suggesting growth of 17-22% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate is pegged at $3.35 billion.

NXPI expects a non-GAAP gross margin between 57.3% and 58.3%. The non-GAAP operating margin is anticipated between 35.5% and 36.7%.

Zacks Rank & Stocks to Consider

Currently, NXP Semiconductors has a Zacks Rank #4 (Sell).

Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Aspen Technology (AZPN - Free Report) , Keysight Technologies (KEYS - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aspen technology has returned 18.7% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 16.3%.

Keysight Technologies has lost 26.8% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.

Asure Software has lost 26.8% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 14%.