Qorvo Shows Favorable Growth in the Defense and IoT Sector

Qorvo has released the financial results for its fiscal 2018 third quarter, ended December 30, 2017. According to company CEO, Bob Bruggeworth, Qorvo delivered an exceptional December quarter, highlighted by a strong ramp in support of our largest customer, robust growth in defense and IoT, and improved operating performance. While near-term market demand weakened in handsets, their longer-term outlook has improved on recent developments with mid/high-band PADs, Phase 6 design wins, and cellular IoT and other connectivity applications.

As per the report, on a GAAP basis, revenue for Qorvo’s fiscal 2018 third quarter was $845.7 million, gross margin was 39.8%, operating income was $80.3 million, or 9.5% of sales, and loss per share was $0.26.  On a non-GAAP basis, revenue for Qorvo’s fiscal 2018 third quarter was $844.8 million, gross margin was 48.0%, operating income was $254.3 million, or 30.1% of sales, and diluted earnings per share was $1.69.

Here are the Quarterly Highlights from the Report:

• Delivered record IDP revenue of $202.7 million, up 20% year over year, led by strength in Defense and IoT
• Achieved record Smart Home revenue, up 30% year over year, and secured design wins in support of Samsung remote controls, HUMAX voice assistants, and CZ eldercare whole-home sensor solutions
• Sampled a custom mid/high-band PAD to an additional marquee smartphone customer
• Commenced production of next-generation RF Fusion for Phase 6 architectures, including mid/high-band and low-band integrated PAD modules
• Secured design wins for BAW-based band 1+3 quadplexers in support of the top four China-based smartphone OEMs
• Sampled the industry’s first RF front end module meeting 5G standalone and 5G non-standalone requirements to multiple mobile device customers and baseband chipset suppliers
• Selected by Qualcomm to supply automotive FEM for cellular-to-everything reference design, enabling vehicle connectivity
• Co-developed the industry’s smallest cellular IoT module with Nordic Semiconductor enabling global LTE-M/Narrowband IoT applications
• Honored by Huawei with 2017 Excellent Core Partner Award

Financial Commentary and Outlook

According to Mark Murphy, the Chief Financial Officer at Qorvo, the third quarter results exceeded guidance, driven by higher revenue, improved gross margin, and effective cost control.  They also achieved record free cash flow on strong operating performance and lower capital spends. While their March quarter guide reflects weakness in the smartphone market, but with improved operating performance and new BAW-based product ramps, Qorvo expects continued margin expansion and free cash flow growth in fiscal 2019.

Qorvo currently believes the demand environment in its end markets supports the following non-GAAP expectations for the March 2018 quarter:

• Quarterly revenue in the range of $645 million to $665 million
• Gross margin flat-to-up 50 basis points sequentially
• Diluted earnings per share of $1.05 at the midpoint of guidance

The actual quarterly results may differ from these expectations and projections, and such differences may be material.

Click here to view the complete selected GAAP and non-GAAP financial information.