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Xilinx (XLNX) Q1 Earnings and Revenues Surpass Estimates
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Xilinx Inc. reported better-than-expected fiscal first-quarter 2019 results wherein both the top and the bottom lines surpassed the Zacks Consensus Estimate and recorded year-over-year improvement.
The company reported earnings of 74 cents per share, which beat the Zacks Consensus Estimate by a penny and were much higher than the prior-year quarter’s figure of 59 cents.
Revenues increased 14% year over year to $684.4 million and outpaced the Zacks Consensus Estimate of $672.2 million as well.
Product wise, Advanced product revenues jumped 21% year over year, contributing 56% to total revenues. Revenues from core products (44% of total) increased 5% from the year-ago quarter.
Management noted that the company’s first and second generation Zynq products hit a new sales record in the quarter, growing 76% from the year-ago quarter, driven by robust demand in automotive, industrial, communications, and Data Center markets. The Zynq SoC Platform, which includes Zynq at 28nm and both MPSoC and RFSoC at 16nm, now contributes 17% of total revenues.
Sales of 20-nm node soared 30% year over year in the reported quarter. Xilinx noted that sales of 16-nm node increased more than 2.5 times.
On the basis of end markets, Communications revenues (31% of total revenues) declined 7% year over year. Industrial, Aerospace & Defense segment revenues (33% of total revenues) climbed 30% on a year-over-year basis. Broadcast, Consumer & Automotive revenues (16% of total revenues) increased 13% year over year.
The new reporting segment, Data Center and Test, Measurement & Emulation (TME) (19% of total) grew 11% from the year-ago quarter. Key design wins from hyperscalers globally for accelerating applications beyond FPGA as a Service (FaaS) drove results.
However, due to decline in cryptocurrency and expected decline in TME, Data Center and TME segment fell 20% sequentially. Communication segment revenues were up 7% from the prior quarter driven by strong growth in both wired and wireless, which offset the impact of ZTE.
Geographically, the company registered year-over-year growth in every region. Revenues from North America, Europe, Japan and Asia Pacific were up 12%, 14%, 12% and 15%, respectively.
Operational Details
Gross margin expanded 150 basis points (bps) year over year to 69.8%.
Research & development and selling, general & administrative expenses, as a percentage of revenues, declined 40 bps and 160 bps, respectively.
Operating expenses as a percentage of revenues declined 200 bps to 38.3%.
The company posted operating income of $215.8 million, up 27.6% year over year. Operating margin expanded 350 bps to 31.5%.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the reported quarter with cash, cash equivalents and short-term investments of approximately $3.36 billion compared with $3.45 billion recorded in the previous quarter.
The company has total long-term debt (excluding current portion) of about $1.207 billion, down from $1.214 billion reported in the previous quarter.
Xilinx generated cash of $176.2 million from operations compared with $242.3 million in the previous quarter.
The company paid $91 million in dividends and repurchased approximately 2.1 million shares for $137 million. The company has approximately $570 million remaining in repurchase authorizations.
Guidance
For second-quarter fiscal 2019, Xilinx projects revenues in the range of $700-$720 million.
Management expects Data Center and TME to grow significantly. Communications is expected to increase, with strong wireless revenue growth to more than offset a slight decline in wired revenues. Early 5G deployment activity in Korea and the withdrawal of the denial order on ZTE will be tailwinds.
On the other hand, Automotive, Broadcast and Consumer is expected to be approximately flat. Industrial, Aerospace & Defense is expected to decline.
Gross margin is expected to be around 69.5%. Operating expenses are projected to be $279 million. Tax rate is estimated between 10% and 14%.
For fiscal 2019, Xilinx projects revenues in the range of $2.8-$2.9 billion (mid-point $710 million).
The company expects strong growth from Data Center, TME, Industrial, and Communications. Wireless is expected to grow significantly with early 5G production deployments and the anticipated recovery of business with ZTE. The company is also witnessing an increase in wired infrastructure deployment in concurrence with the 5G ramp.
Gross margin is expected to be between 68.5 and 70.5%. Operating expenses are projected to be in the range of $1.12-$1.14 billion.
Long-term earnings growth for YY, Science Applications and Verint is projected to be 26.4%, 5% and 10%, respectively.
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Xilinx (XLNX) Q1 Earnings and Revenues Surpass Estimates
Xilinx Inc. reported better-than-expected fiscal first-quarter 2019 results wherein both the top and the bottom lines surpassed the Zacks Consensus Estimate and recorded year-over-year improvement.
The company reported earnings of 74 cents per share, which beat the Zacks Consensus Estimate by a penny and were much higher than the prior-year quarter’s figure of 59 cents.
Revenues increased 14% year over year to $684.4 million and outpaced the Zacks Consensus Estimate of $672.2 million as well.
Xilinx, Inc. Price, Consensus and EPS Surprise
Xilinx, Inc. Price, Consensus and EPS Surprise | Xilinx, Inc. Quote
Quarter Details
Product wise, Advanced product revenues jumped 21% year over year, contributing 56% to total revenues. Revenues from core products (44% of total) increased 5% from the year-ago quarter.
Management noted that the company’s first and second generation Zynq products hit a new sales record in the quarter, growing 76% from the year-ago quarter, driven by robust demand in automotive, industrial, communications, and Data Center markets. The Zynq SoC Platform, which includes Zynq at 28nm and both MPSoC and RFSoC at 16nm, now contributes 17% of total revenues.
Sales of 20-nm node soared 30% year over year in the reported quarter. Xilinx noted that sales of 16-nm node increased more than 2.5 times.
On the basis of end markets, Communications revenues (31% of total revenues) declined 7% year over year. Industrial, Aerospace & Defense segment revenues (33% of total revenues) climbed 30% on a year-over-year basis. Broadcast, Consumer & Automotive revenues (16% of total revenues) increased 13% year over year.
The new reporting segment, Data Center and Test, Measurement & Emulation (TME) (19% of total) grew 11% from the year-ago quarter. Key design wins from hyperscalers globally for accelerating applications beyond FPGA as a Service (FaaS) drove results.
However, due to decline in cryptocurrency and expected decline in TME, Data Center and TME segment fell 20% sequentially. Communication segment revenues were up 7% from the prior quarter driven by strong growth in both wired and wireless, which offset the impact of ZTE.
Geographically, the company registered year-over-year growth in every region. Revenues from North America, Europe, Japan and Asia Pacific were up 12%, 14%, 12% and 15%, respectively.
Operational Details
Gross margin expanded 150 basis points (bps) year over year to 69.8%.
Research & development and selling, general & administrative expenses, as a percentage of revenues, declined 40 bps and 160 bps, respectively.
Operating expenses as a percentage of revenues declined 200 bps to 38.3%.
The company posted operating income of $215.8 million, up 27.6% year over year. Operating margin expanded 350 bps to 31.5%.
Balance Sheet, Cash Flow & Shareholders’ Return
Xilinx exited the reported quarter with cash, cash equivalents and short-term investments of approximately $3.36 billion compared with $3.45 billion recorded in the previous quarter.
The company has total long-term debt (excluding current portion) of about $1.207 billion, down from $1.214 billion reported in the previous quarter.
Xilinx generated cash of $176.2 million from operations compared with $242.3 million in the previous quarter.
The company paid $91 million in dividends and repurchased approximately 2.1 million shares for $137 million. The company has approximately $570 million remaining in repurchase authorizations.
Guidance
For second-quarter fiscal 2019, Xilinx projects revenues in the range of $700-$720 million.
Management expects Data Center and TME to grow significantly. Communications is expected to increase, with strong wireless revenue growth to more than offset a slight decline in wired revenues. Early 5G deployment activity in Korea and the withdrawal of the denial order on ZTE will be tailwinds.
On the other hand, Automotive, Broadcast and Consumer is expected to be approximately flat. Industrial, Aerospace & Defense is expected to decline.
Gross margin is expected to be around 69.5%. Operating expenses are projected to be $279 million. Tax rate is estimated between 10% and 14%.
For fiscal 2019, Xilinx projects revenues in the range of $2.8-$2.9 billion (mid-point $710 million).
The company expects strong growth from Data Center, TME, Industrial, and Communications. Wireless is expected to grow significantly with early 5G production deployments and the anticipated recovery of business with ZTE. The company is also witnessing an increase in wired infrastructure deployment in concurrence with the 5G ramp.
Gross margin is expected to be between 68.5 and 70.5%. Operating expenses are projected to be in the range of $1.12-$1.14 billion.
Zacks Rank and Stocks to Consider
Xilinx currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are YY Inc. (YY - Free Report) , Science Applications (SAIC - Free Report) and Verint Systems (VRNT - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for YY, Science Applications and Verint is projected to be 26.4%, 5% and 10%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>