• Revenue: $916 million for the December quarter.
• Non-GAAP Diluted EPS: $1.61 per share.
• Non-GAAP Gross Margin: 46.5%.
• Non-GAAP Operating Expenses: $248 million.
• Cash and Equivalents: Approximately $770 million at quarter end.
• Long Term Debt: Approximately $1.5 billion remaining.
• Net Inventory Balance: $656 million, a decrease of $38 million sequentially.
• Operating Cash Flow: $214 million.
• Capital Expenditures: $38 million.
• Free Cash Flow: $176 million.
• Share Repurchase: $100 million at an average price of $73 per share.
• Current Quarter Revenue Outlook: Approximately $850 million plus or minus $25 million.
• Current Quarter Non-GAAP Gross Margin Outlook: Between 43% and 44%.
• Current Quarter Non-GAAP Diluted EPS Outlook: Between $0.90 and $1.10.
• Non-GAAP Tax Rate for Fiscal '25: Approximately 11%.

• Warning! GuruFocus has detected 5 Warning Sign with QRVO.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Qorvo Inc (NASDAQ:QRVO) reported favorable results relative to guidance with revenue of $916 million and non-GAAP diluted EPS of $1.61 per share.
• The company is seeing strong growth in its Defense and Aerospace segment, with December being a record revenue quarter.
• Qorvo Inc (NASDAQ:QRVO) is experiencing sequential strength in industrial and enterprise markets, particularly with ultra-wideband and Wi-Fi 7 technologies.
• The company is focusing on high-margin opportunities by exiting lower-margin mass-tier Android 5G programs.
• Qorvo Inc (NASDAQ:QRVO) is implementing strategic initiatives to expand margins, generate strong free cash flow, and increase shareholder value.

Negative Points

• Qorvo Inc (NASDAQ:QRVO) expects Android 5G revenue to decline by $150 million to $200 million annually in fiscal '26 and '27, primarily impacting China and mid-tier Samsung.
• The company anticipates a single-digit decline in ACG revenue for fiscal '26.
• Qorvo Inc (NASDAQ:QRVO) is facing market headwinds in consumer markets, with sequential revenue declines.
• The company is undergoing a significant workforce reduction, primarily targeting its mass market Android business.
• Qorvo Inc (NASDAQ:QRVO) expects its non-GAAP tax rate to increase significantly from approximately 11% to between 18% and 19% in fiscal '26.

Q & A Highlights

Q: Can you confirm the expected revenue from Android customers for fiscal year '25 and the anticipated decline over the next few years? A: Robert Bruggeworth, President and CEO, confirmed that the revenue from Android customers is expected to be $875 million for fiscal year '25. This is projected to decline by $150 million to $200 million annually, primarily due to reductions in China and some Samsung business, with the remainder focusing on premium and flagship tiers.

Q: What is the outlook for the High-Performance Analog (HPA) segment, particularly regarding recent growth and its sustainability? A: Robert Bruggeworth, President and CEO, stated that the HPA segment saw significant growth in the December quarter and is expected to continue growing in the March quarter. This growth is driven by defense contracts and the timing of orders from defense contractors. The defense business is expected to grow faster than the overall HPA segment.

Q: Could you elaborate on the factors contributing to gross margin improvements and the potential to reach 50% margins? A: Grant Brown, CFO, explained that exiting some Android business will positively impact gross margins due to improved revenue mix. Additionally, efforts to optimize factory costs and leverage outsourced suppliers, along with process improvements, are expected to drive margin improvements.

Q: How does the company view the potential impact of changes in the baseband modem supplier for its largest customer on RF content opportunities? A: Robert Bruggeworth, President and CEO, indicated that regardless of whether the largest customer continues with the current baseband supplier or develops its own, the trend has been towards more and better RF content in successive models, which Qorvo is well-positioned to supply.

Q: What is the company's strategy for diversifying revenue streams and reducing reliance on its largest customer? A: Robert Bruggeworth, President and CEO, mentioned that while the company is open to M&A opportunities that could enhance shareholder value, the focus remains on organic growth in segments like HPA and CSG, which are expected to outgrow ACG over the medium to long term.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.