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Qorvo (QRVO) Q3 Earnings Beat, Up Y/Y, Revenue Outlook Weak
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Qorvo Inc. (QRVO - Free Report) deliveredthird-quarter fiscal 2018 non-GAAP earnings of $1.69 per share, which beat the Zacks Consensus Estimate by 9 cents. The figure jumped 25.2% from the year-ago quarter.
Revenues on a non-GAAP basis increased 2.4% year over year to $844.8 million. On a GAAP basis revenues came in at $845.7 million. The Zacks Consensus Estimates for revenues is pegged at $841 million.
The results reflected an improved demand environment in China. The company benefited from increasing dollar content across power amplifiers, switches, tuners and Wi-Fi in flagship smartphones from Huawei, Oppo, Vivo and others.
Qorvo went up almost 8.7%, in after-hours trading. Notably, the company’s shares have returned 13.3% year over year, outperforming the 4.8% rally of the industry.
Quarter Details
Segment-wise, Mobile Products (“MP”) revenues were $642 million, which advanced1.9% sequentially, driven by robust performance in China and product rollouts to the largest customer.
Qorvo’s BAW filters, antenna tuners, RF front end modules and envelope tracking power management solution were used in Huawei’s flagship Mate 10 device. Moreover, the company tested the industry’s first RF front end module addressing 5G standalone and 5G non-standalone requirements.
The company also sampled mid/high-band PAD to marquee smartphone customers. During the quarter, the company shipped the production of next-generation RF Fusion for Phase 6.
Infrastructure and Defense (“IDP”) revenues grew 20% year over year to $203 million. The growth reflects strong demand for the company’s solutions in defense (advanced radars and other electronic warfare products), surge in GaN revenues and connectivity (Wi-Fi and emerging IoT applications).
Smart Home revenue during the quarter surged30% year over year. The company’s top-line will benefit from the launch of its multi-stack, multi-protocol chip in the HUMAX voice assistant. This will help the company advance in the Internet of Things (IoT) and enable integration ofvoice assistants in a smart home system. The company also developed industry’s smallest cellular IoT module with Nordic Semiconductor.
During the quarter, Qorvo was selected as a provider of front-end power amplifiers (PA) to Qualcomm Inc. (QCOM) for its Cellular Vehicle-to-Everything (C-V2X) Reference Design. This will help the company to penetrate deeper into the automotive industry.
Operational Details
Non-GAAP gross margin expanded 370 basis points (bps) from the year-ago quarter to 48%, higher than management’s guidance. This was primarily due to favorable product mix and operational efficiencies.
Non-GAAP operating expenses, as percentage of revenues, decreased 110 bps from the year-ago quarter to 17.9%. The decrease was primarily owingto productivity efforts and development program in less time.
During the quarter, Qorvo reduced head count, which was primarily aimed at reducing cost and improving operating efficiency.
As a result, non-GAAP operating margin expanded 480 bps to 30.1%.
Balance Sheet & Cash Flow
As of Dec 30, cash and cash equivalents were $841.3 million compared with $574.9 million reported in the previous quarter. Long-term debt was $1.088 billion as compared with $989.7 million at the end of the previous quarter.
Net cash provided by operating activities was $270.1 million up from $220 million in the previous quarter. Capital expenditures declined sequentially to $45 million.
Further, Qorvo has returned $80 million to shareholders under its repurchase program.
Guidance
For fourth-quarter fiscal 2018, Qorvo expects non-GAAP revenues between $645 million and $665 million. The mid-point of the range missed the consensus mark of $840.9 million.
Qorvo cited delayed product cycle at its largest customer to be one of the multiple reasons that are likely tohurt MP revenues in the current quarter. However, IDP revenues are projected to grow over 20% on a year-over-year basis.
For fourth-quarter fiscal 2018, gross margin is anticipated to be flat to up 50 bpssequentially, primarily due to decrease in volumes of low band PADs and an increase mix of higher margin IDP business.
Operating expenses are forecast to remain approximately at $153 million for the fourth quarter. Moreover, earnings are projected to be $1.05 per share at the mid-point of the company’s target range.
Management’s guidance reflects strength at customers' flagship models and continued strength in IDP.
In fiscal year 2019, the company projects robust IDP growth, backed by higher trends in defense IoT and GaN.
The long-term earnings growth rate for Applied Materials, NVIDIA and Vishay are projected at 12.7%, 10.3 and 20.6%,respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Qorvo (QRVO) Q3 Earnings Beat, Up Y/Y, Revenue Outlook Weak
Qorvo Inc. (QRVO - Free Report) deliveredthird-quarter fiscal 2018 non-GAAP earnings of $1.69 per share, which beat the Zacks Consensus Estimate by 9 cents. The figure jumped 25.2% from the year-ago quarter.
Revenues on a non-GAAP basis increased 2.4% year over year to $844.8 million. On a GAAP basis revenues came in at $845.7 million. The Zacks Consensus Estimates for revenues is pegged at $841 million.
The results reflected an improved demand environment in China. The company benefited from increasing dollar content across power amplifiers, switches, tuners and Wi-Fi in flagship smartphones from Huawei, Oppo, Vivo and others.
Qorvo went up almost 8.7%, in after-hours trading. Notably, the company’s shares have returned 13.3% year over year, outperforming the 4.8% rally of the industry.
Quarter Details
Segment-wise, Mobile Products (“MP”) revenues were $642 million, which advanced1.9% sequentially, driven by robust performance in China and product rollouts to the largest customer.
Qorvo’s BAW filters, antenna tuners, RF front end modules and envelope tracking power management solution were used in Huawei’s flagship Mate 10 device. Moreover, the company tested the industry’s first RF front end module addressing 5G standalone and 5G non-standalone requirements.
The company also sampled mid/high-band PAD to marquee smartphone customers. During the quarter, the company shipped the production of next-generation RF Fusion for Phase 6.
Infrastructure and Defense (“IDP”) revenues grew 20% year over year to $203 million. The growth reflects strong demand for the company’s solutions in defense (advanced radars and other electronic warfare products), surge in GaN revenues and connectivity (Wi-Fi and emerging IoT applications).
Smart Home revenue during the quarter surged30% year over year. The company’s top-line will benefit from the launch of its multi-stack, multi-protocol chip in the HUMAX voice assistant. This will help the company advance in the Internet of Things (IoT) and enable integration ofvoice assistants in a smart home system. The company also developed industry’s smallest cellular IoT module with Nordic Semiconductor.
During the quarter, Qorvo was selected as a provider of front-end power amplifiers (PA) to Qualcomm Inc. (QCOM) for its Cellular Vehicle-to-Everything (C-V2X) Reference Design. This will help the company to penetrate deeper into the automotive industry.
Operational Details
Non-GAAP gross margin expanded 370 basis points (bps) from the year-ago quarter to 48%, higher than management’s guidance. This was primarily due to favorable product mix and operational efficiencies.
Non-GAAP operating expenses, as percentage of revenues, decreased 110 bps from the year-ago quarter to 17.9%. The decrease was primarily owingto productivity efforts and development program in less time.
During the quarter, Qorvo reduced head count, which was primarily aimed at reducing cost and improving operating efficiency.
As a result, non-GAAP operating margin expanded 480 bps to 30.1%.
Balance Sheet & Cash Flow
As of Dec 30, cash and cash equivalents were $841.3 million compared with $574.9 million reported in the previous quarter. Long-term debt was $1.088 billion as compared with $989.7 million at the end of the previous quarter.
Net cash provided by operating activities was $270.1 million up from $220 million in the previous quarter. Capital expenditures declined sequentially to $45 million.
Further, Qorvo has returned $80 million to shareholders under its repurchase program.
Guidance
For fourth-quarter fiscal 2018, Qorvo expects non-GAAP revenues between $645 million and $665 million. The mid-point of the range missed the consensus mark of $840.9 million.
Qorvo cited delayed product cycle at its largest customer to be one of the multiple reasons that are likely tohurt MP revenues in the current quarter. However, IDP revenues are projected to grow over 20% on a year-over-year basis.
For fourth-quarter fiscal 2018, gross margin is anticipated to be flat to up 50 bpssequentially, primarily due to decrease in volumes of low band PADs and an increase mix of higher margin IDP business.
Operating expenses are forecast to remain approximately at $153 million for the fourth quarter. Moreover, earnings are projected to be $1.05 per share at the mid-point of the company’s target range.
Management’s guidance reflects strength at customers' flagship models and continued strength in IDP.
In fiscal year 2019, the company projects robust IDP growth, backed by higher trends in defense IoT and GaN.
Zacks Rank & Key Picks
Qorvo hasa Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Vishay Intertechnology, Inc. (VSH - Free Report) , all carrying a Zacks Rank #2(Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Applied Materials, NVIDIA and Vishay are projected at 12.7%, 10.3 and 20.6%,respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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