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Xilinx Inc. started fiscal 2017 on a strong note with better-than-expected earnings and revenues in the first quarter. 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 55 cents. The figure also increased approximately 11% from the year-ago quarter on the back of strong top-line growth and effective cost management.
Xilinx reported fiscal first-quarter revenues of approximately $575 million, up 4.7% year over year and above the Zacks Consensus Estimate of $571 million. On a sequential basis, the company’s revenues grew 1%.
Sales at the Communications & Data Center division increased 22% from the prior-year quarter and 4% sequentially. Revenues at Broadcast, Consumer & Automotive were flat on a year-over-year as well as sequential basis. Sales at the Industrial, Aerospace & Defense division, on the other hand, dropped 8% from the year-ago quarter and 2% from the previous quarter.
Product-wise, revenues from Advanced products increased 60% year over year and 10% sequentially, driven mainly by record sales of 28-nm and 20-nm products. In addition, revamp of 16-nm products have started contributing to the top line during the quarter. On the other hand, as expected, revenues from core products declined 16% from the year-ago quarter and 5% sequentially.
Geographically, on a year-over-year basis, revenues from North America and Japan declined 1% and 15%, respectively, while that from the Asia-Pacific and Europe jumped 16% and 5%. On a sequential basis, North America and Asia-Pacific witnessed revenue growth of 1% and 5%, while sales from Europe and Japan dropped a respective 6% and 4%.
Margins
Xilinx reported a 10 basis point (bps) contraction in adjusted gross margin on a year-over-year basis to 71.2%. On a GAAP basis, gross margin contracted 20 bps to 70.7%. However, reported gross margin was above the company’s guidance range of 69–70% mainly on the back of better customer and product mix as well as increased manufacturing efficiencies.
Adjusted operating expenses increased 5% to $219.2 million. On a GAAP basis, the figure improved 4.7% year over year to $220.5 million and was almost in line with management’s expectations of $220 million. Moreover, as a percentage of revenues, GAAP operating expenses amounted to 38.3%, reflecting a 10 bps year-over-year decline.
Xilinx’s adjusted operating margins contracted 30 bps year over year to 33%. In terms of dollars, adjusted operating income increased 3.9% year over year to $189.9 million. On a GAAP basis, the company reported operating income of $186.2 million or 32.4% of revenues.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the quarter with cash and cash equivalents, and short-term investments of approximately $3.52 billion, compared with $3.34 billion in the previous quarter. The company has total long-term debt (long-term debt plus current portion) of about $1.58 billion.
During the quarter, Xilinx generated cash of $338.6 million from operations and incurred $20.6 million as capital expenditure. Moreover, the company paid $83.6 million as cash dividends and repurchased shares worth $100.2 million during the quarter.
Concurrent with fiscal first-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 Aug 24 to shareholders of record date as on Aug 11.
Guidance
The company provided encouraging top-line guidance for the second quarter of fiscal 2017. Management expects revenues to be sequentially flat at $575 million, which is, however, higher than the Zacks Consensus Estimate of $574 million.
Gross margin is anticipated to be approximately 70%. Operating expenses are likely to be around $230 million, which includes approximately $1 million of amortization of acquisition-related intangibles. Share count is expected to be roughly 266 million, while the effective tax rate stands at approximately 14%.
Conclusion
The California-based chipmaker reported better-than-expected first-quarter fiscal 2017 results. Also, the company’s top and bottom line both marked year over year improvement.
Communications & Data Center registered year-over-year growth, while sales at the Broadcast, Consumer & Automotive remained flat. On the other hand, the Industrial, Aerospace & Defense end-market witnessed a decline.
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.
Moreover, Xilinx’s revenue guidance for the fiscal second quarter was encouraging.
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 #3 (Hold). A couple of better-ranked stocks in the broader technology sector are Cavium Inc. and FormFactor Inc. (FORM - Free Report) , both carrying a Zacks Rank #2 (Buy).
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Xilinx (XLNX) Beats Q1 Earnings & Revenues, View Upbeat
Xilinx Inc. started fiscal 2017 on a strong note with better-than-expected earnings and revenues in the first quarter. 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 55 cents. The figure also increased approximately 11% from the year-ago quarter on the back of strong top-line growth and effective cost management.
Revenues
Xilinx reported fiscal first-quarter revenues of approximately $575 million, up 4.7% year over year and above the Zacks Consensus Estimate of $571 million. On a sequential basis, the company’s revenues grew 1%.
Sales at the Communications & Data Center division increased 22% from the prior-year quarter and 4% sequentially. Revenues at Broadcast, Consumer & Automotive were flat on a year-over-year as well as sequential basis. Sales at the Industrial, Aerospace & Defense division, on the other hand, dropped 8% from the year-ago quarter and 2% from the previous quarter.
Product-wise, revenues from Advanced products increased 60% year over year and 10% sequentially, driven mainly by record sales of 28-nm and 20-nm products. In addition, revamp of 16-nm products have started contributing to the top line during the quarter. On the other hand, as expected, revenues from core products declined 16% from the year-ago quarter and 5% sequentially.
Geographically, on a year-over-year basis, revenues from North America and Japan declined 1% and 15%, respectively, while that from the Asia-Pacific and Europe jumped 16% and 5%. On a sequential basis, North America and Asia-Pacific witnessed revenue growth of 1% and 5%, while sales from Europe and Japan dropped a respective 6% and 4%.
Margins
Xilinx reported a 10 basis point (bps) contraction in adjusted gross margin on a year-over-year basis to 71.2%. On a GAAP basis, gross margin contracted 20 bps to 70.7%. However, reported gross margin was above the company’s guidance range of 69–70% mainly on the back of better customer and product mix as well as increased manufacturing efficiencies.
Adjusted operating expenses increased 5% to $219.2 million. On a GAAP basis, the figure improved 4.7% year over year to $220.5 million and was almost in line with management’s expectations of $220 million. Moreover, as a percentage of revenues, GAAP operating expenses amounted to 38.3%, reflecting a 10 bps year-over-year decline.
Xilinx’s adjusted operating margins contracted 30 bps year over year to 33%. In terms of dollars, adjusted operating income increased 3.9% year over year to $189.9 million. On a GAAP basis, the company reported operating income of $186.2 million or 32.4% of revenues.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the quarter with cash and cash equivalents, and short-term investments of approximately $3.52 billion, compared with $3.34 billion in the previous quarter. The company has total long-term debt (long-term debt plus current portion) of about $1.58 billion.
During the quarter, Xilinx generated cash of $338.6 million from operations and incurred $20.6 million as capital expenditure. Moreover, the company paid $83.6 million as cash dividends and repurchased shares worth $100.2 million during the quarter.
Concurrent with fiscal first-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 Aug 24 to shareholders of record date as on Aug 11.
Guidance
The company provided encouraging top-line guidance for the second quarter of fiscal 2017. Management expects revenues to be sequentially flat at $575 million, which is, however, higher than the Zacks Consensus Estimate of $574 million.
Gross margin is anticipated to be approximately 70%. Operating expenses are likely to be around $230 million, which includes approximately $1 million of amortization of acquisition-related intangibles. Share count is expected to be roughly 266 million, while the effective tax rate stands at approximately 14%.
Conclusion
The California-based chipmaker reported better-than-expected first-quarter fiscal 2017 results. Also, the company’s top and bottom line both marked year over year improvement.
Communications & Data Center registered year-over-year growth, while sales at the Broadcast, Consumer & Automotive remained flat. On the other hand, the Industrial, Aerospace & Defense end-market witnessed a decline.
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.
Moreover, Xilinx’s revenue guidance for the fiscal second quarter was encouraging.
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 #3 (Hold). A couple of better-ranked stocks in the broader technology sector are Cavium Inc. and FormFactor Inc. (FORM - Free Report) , both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>