Qorvo, Inc. QRVO reported strong third-quarter fiscal 2025 results, with both adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate. 

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The company reported a revenue contraction year over year due to a net sales drop in the Advanced Cellular Group (ACG) vertical. However, solid demand trends in multiple end markets, including defense, aerospace, power management, WiFi and smartphones, cushioned the top-line growth in this quarter.

Net Income

On a GAAP basis, the company reported a net income of $41.3 million or 43 cents per share against a net loss of $126.9 million or $1.31 per share in the prior-year quarter. 

Non-GAAP net income was $152.8 million or $1.61 per share, down from $205.9 million or $2.10 per share in the year-ago quarter owing to soft revenues. The bottom line surpassed the Zacks Consensus Estimates by 41 cents.

Revenues

Net sales during the quarter declined to $916.3 million from $1.07 billion in the prior-year quarter. Despite significant improvement in inventory levels, demand in various end markets was yet to fully recover, which impeded revenues. Macroeconomic headwinds also impacted the top line. Nevertheless, during the quarter, the company secured major deal wins for its ultra-wideband applications and the state-of-the-art Wi-Fi 7 front-end modules that offer unmatched flexibility in power management and efficiency. The top line beat the Zacks Consensus Estimate of $901 million.

HPA contributed $171.7 million in revenues, up from $118.9 million in the year-ago quarter. Net sales beat the Zacks Consensus Estimate of $168.1 million. 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 led to 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. The growing demand for DOCSIS 4.0 hybrid power doublers is supporting growth of the infrastructure business.

Revenues from CSG were $109.5 million compared with $108.9 million in the year-earlier quarter. The improvement was driven by the growing adoption of WIFI 7 across operator, retail, enterprise, and mobile segments. Strong emphasis on RF solutions and investment in diverse growth businesses, including an expanding portfolio of automotive solutions and SoCs for ultra-wideband Thread, also supported this segment. However, net sales fell short of the Zacks Consensus Estimate of $121.1 million.

Net sales in ACG were $635.1 million, down 24.9% year over year, due to seasonal dynamics. However, the top line beat the Zacks Consensus Estimate of $611.2 million.

Other Details

Non-GAAP gross profit declined to $426.3 million from $470.5 million in the year-ago period, with respective margins of 46.5% and 43.8%. Non-GAAP operating expenses increased to $248.4 million from $234 million a year ago, owing to higher investments in new product development. Non-GAAP operating income was $177.9 million, down from $236.5 million in the year-ago quarter.

Cash Flow & Liquidity

As of Dec. 28, 2024, QRVO had $769.43 billion in cash and cash equivalents and $1.55 billion of long-term debt. The company generated $214.1 million in net cash from operating activities, with a free cash flow of $176.3 million. Qorvo repurchased $100 million worth of shares at an average price of $73 per share in the quarter.

Outlook

For fourth-quarter fiscal 2025, the company expects revenues of about 850 million (+/- $25 million). Non-GAAP gross margin is projected to be between 43% and 44%. Non-GAAP earnings per share are forecasted to be in the range of 90 cents-$1.10. The company expects non-GAAP operating expenses to be approximately $250 million in the March quarter.

For fiscal 2025, management anticipates revenues to be slightly down compared to fiscal 2024, owing to two factors affecting the smartphone business. Non-GAAP tax rate is expected to be approximately 11%.

QRVO’s Zacks Rank

Qorvo currently carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Zillow Group, Inc. ZG is scheduled to release fourth-quarter earnings on Feb. 11. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, indicating growth of 50% from the year-ago figure. 

Pinterest, Inc. PINS is scheduled to release fourth-quarter 2024 earnings on Feb. 6. The Zacks Consensus Estimate for earnings is pegged at 63 cents per share, indicating growth of 18.9% from the year-ago figure. 

Light and Wonder LNW is scheduled to release fourth-quarter earnings on Feb. 25. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, indicating growth of 47.95% from the year-ago figure.

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