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Qorvo (QRVO) Q3 Earnings Beat Estimates on Higher Revenues
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Qorvo, Inc. (QRVO - Free Report) reported strong third-quarter fiscal 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported top-line expansion year over year, backed by solid demand trends in multiple end markets, including defense, aerospace, power management, WIFI, smartphone and automotive. However, weakness in the cellular base station market partially impeded this positive trend.
Net Income
On a GAAP basis, the company reported a net loss of $126.9 million or a loss of $1.31 per share compared with a net loss of $15.9 million or a loss of 16 cents per share in the prior-year quarter. Despite revenue growth, increase in operating expenses led to greater loss.
Non-GAAP net income was $205.9 million or $2.10 per share, up from $76.5 million or 75 cents per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimates by 45 cents.
Net sales during the quarter rose to $1.07 billion from $743.3 million in the prior-year quarter. Solid sales growth in Connectivity and Sensors Group (CSG) and Advance Cellular Group (ACG) business supported the revenue growth during the quarter. The company secured major deal wins for its ultra-wideband applications, including an in-vehicle car access platform and a flagship Android smartphone during the quarter. The top line beat the Zacks Consensus Estimate of $1 billion.
High-Performance Analog contributed $118.9 million in revenues, down from $155 million in the year-ago quarter. Net sales fell short of the Zacks Consensus Estimate of $142.7 million. Inventory corrections in Cellular base station markets affected the top line in this segment. However, Qorvo is witnessing signs of market recovery in several end markets. The company secured new product orders for several large domestic and international ground-based radar systems. The transition from legacy mechanical systems to active electronics scanning systems is driving growth in the defense and aerospace business.
In power management, the company continues to boast a strong presence in the consumer electronic sector. Healthy traction in automotive also cushioned the top line. Growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth in the infrastructure business.
Revenues from CSG were $108.9 million compared with $96.8 million in the year-earlier quarter. The top line marginally beat the Zacks Consensus Estimate of $107.8 million. The improvement is driven by the growing adoption of WIFI 7 across operator, retail, enterprise and mobile segments. Demand for WIFI 6 has remained strong in India. Solid ultra-wideband demand across various end markets, including automotive, laptop trackpads, wearables and smartphones, also supported the top line in this segment.
Net sales in ACG were $846.1 million, up 72.1% year over year. Rising shipments of Qorvo components in support of the spring 2024 flagship smartphone launch by a leading Android smartphone maker boosted the revenue from this segment. The top line beat the Zacks Consensus Estimate of $754.06 million.
Other Details
Non-GAAP gross profit rose to $470.5 million from $304.2 million, with respective margins of 43.8% and 40.9%. Non-GAAP operating expenses increased to $234 million from $205.7 million a year ago, owing to higher investments in new product development. Non-GAAP operating income stood at $236.5 million, up from $98.6 million in the year-ago quarter.
Cash Flow & Liquidity
As of Dec 30, 2023, QRVO had $1.07 billion in cash and cash equivalents with $1.55 billion of long-term debt. The company generated $492.9 million in net cash from operating activities, with a free cash flow of $466.5 million. Qorvo repurchased $100 million worth of shares at an average price of $94 in the quarter.
Outlook
For fourth-quarter fiscal 2024, the company expects revenues at about $925 million (+/- $25 million). Non-GAAP gross margin is projected at 42%. Non-GAAP earnings per share are likely to be $1.20 at the midpoint of the revenue guidance. The company expects non-GAAP operating expenses to be $245 million in the March quarter.
Qorvo expects soft demand trends will persist throughout fiscal 2024 in the cellular base station market. However, signs of a rebound in the SSDs and PC market are expected to boost net sales in the power management portfolio. Management is also undertaking various productivity enhancement initiatives across enterprise to boost profitability.
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Qorvo (QRVO) Q3 Earnings Beat Estimates on Higher Revenues
Qorvo, Inc. (QRVO - Free Report) reported strong third-quarter fiscal 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported top-line expansion year over year, backed by solid demand trends in multiple end markets, including defense, aerospace, power management, WIFI, smartphone and automotive. However, weakness in the cellular base station market partially impeded this positive trend.
Net Income
On a GAAP basis, the company reported a net loss of $126.9 million or a loss of $1.31 per share compared with a net loss of $15.9 million or a loss of 16 cents per share in the prior-year quarter. Despite revenue growth, increase in operating expenses led to greater loss.
Non-GAAP net income was $205.9 million or $2.10 per share, up from $76.5 million or 75 cents per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimates by 45 cents.
Qorvo, Inc. Price, Consensus and EPS Surprise
Qorvo, Inc. price-consensus-eps-surprise-chart | Qorvo, Inc. Quote
Revenues
Net sales during the quarter rose to $1.07 billion from $743.3 million in the prior-year quarter. Solid sales growth in Connectivity and Sensors Group (CSG) and Advance Cellular Group (ACG) business supported the revenue growth during the quarter. The company secured major deal wins for its ultra-wideband applications, including an in-vehicle car access platform and a flagship Android smartphone during the quarter. The top line beat the Zacks Consensus Estimate of $1 billion.
High-Performance Analog contributed $118.9 million in revenues, down from $155 million in the year-ago quarter. Net sales fell short of the Zacks Consensus Estimate of $142.7 million. Inventory corrections in Cellular base station markets affected the top line in this segment. However, Qorvo is witnessing signs of market recovery in several end markets. The company secured new product orders for several large domestic and international ground-based radar systems. The transition from legacy mechanical systems to active electronics scanning systems is driving growth in the defense and aerospace business.
In power management, the company continues to boast a strong presence in the consumer electronic sector. Healthy traction in automotive also cushioned the top line. Growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth in the infrastructure business.
Revenues from CSG were $108.9 million compared with $96.8 million in the year-earlier quarter. The top line marginally beat the Zacks Consensus Estimate of $107.8 million. The improvement is driven by the growing adoption of WIFI 7 across operator, retail, enterprise and mobile segments. Demand for WIFI 6 has remained strong in India. Solid ultra-wideband demand across various end markets, including automotive, laptop trackpads, wearables and smartphones, also supported the top line in this segment.
Net sales in ACG were $846.1 million, up 72.1% year over year. Rising shipments of Qorvo components in support of the spring 2024 flagship smartphone launch by a leading Android smartphone maker boosted the revenue from this segment. The top line beat the Zacks Consensus Estimate of $754.06 million.
Other Details
Non-GAAP gross profit rose to $470.5 million from $304.2 million, with respective margins of 43.8% and 40.9%. Non-GAAP operating expenses increased to $234 million from $205.7 million a year ago, owing to higher investments in new product development. Non-GAAP operating income stood at $236.5 million, up from $98.6 million in the year-ago quarter.
Cash Flow & Liquidity
As of Dec 30, 2023, QRVO had $1.07 billion in cash and cash equivalents with $1.55 billion of long-term debt. The company generated $492.9 million in net cash from operating activities, with a free cash flow of $466.5 million. Qorvo repurchased $100 million worth of shares at an average price of $94 in the quarter.
Outlook
For fourth-quarter fiscal 2024, the company expects revenues at about $925 million (+/- $25 million). Non-GAAP gross margin is projected at 42%. Non-GAAP earnings per share are likely to be $1.20 at the midpoint of the revenue guidance. The company expects non-GAAP operating expenses to be $245 million in the March quarter.
Qorvo expects soft demand trends will persist throughout fiscal 2024 in the cellular base station market. However, signs of a rebound in the SSDs and PC market are expected to boost net sales in the power management portfolio. Management is also undertaking various productivity enhancement initiatives across enterprise to boost profitability.
Zacks Rank & Stocks to Consider
Qorvo currently sports a Zacks Rank #3 (Hold).
NVIDIA Corporation (NVDA - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carries a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 170.71%. In the last reported quarter, it delivered an earnings surprise of 78.99%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.