GuruFocus -
- Revenue: $1.025 billion for Q4 FY2024.
- Earnings Per Share (EPS): $1.55, $0.03 above guidance.
- Free Cash Flow: $393 million for Q4 FY2024.
- Gross Margin: 46.5%, up 50 basis points sequentially.
- Operating Expenses: $203 million.
- Operating Income: $273 million, with an operating margin of 27%.
- Net Income: $250 million.
- Cash Flow from Operations: $476 million.
- Capital Expenditures: $83 million.
- Dividends Paid: $112 million during Q4 FY2024.
- Cash and Investments: Approximately $1.6 billion.
- Debt: $1 billion.
- Mobile Revenue: 65% of total revenue, up 21% sequentially.
- Broad Markets Revenue: 35% of total revenue, up $1 million sequentially.
- Q1 FY2025 Revenue Outlook: $1.050 billion to $1.080 billion, up 4% sequentially at midpoint.
- Q1 FY2025 Gross Margin Outlook: 46% to 47%.
- Q1 FY2025 Operating Expenses Outlook: $209 million to $215 million.
- Q1 FY2025 EPS Outlook: $1.57 at the midpoint of revenue range.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Skyworks Solutions Inc (NASDAQ:SWKS) reported revenue of $1.025 billion, exceeding the midpoint of their guidance.
- The company generated a strong free cash flow of $393 million in the fourth fiscal quarter of 2024.
- Mobile revenue grew 21% sequentially, with expectations for further growth in the December quarter.
- Skyworks Solutions Inc (NASDAQ:SWKS) secured 5G content for premium Android smartphones, including Google (NASDAQ:GOOGL) Pixel 9 and Samsung (KS:005930) Galaxy.
- The company expanded its WiFi 7 design win pipeline with major partners like Linksys, NETGEAR (NASDAQ:NTGR), and TP-Link.
- Inventory levels in traditional data center and wireless infrastructure remain elevated, delaying recovery.
- Global demand is muted in automotive and industrial markets due to excess inventory.
- Broad markets growth is more measured than anticipated, with excess inventory in select segments.
- Gross margin is projected to be flat in fiscal 2025 compared to fiscal 2024, due to modest sequential growth in broad markets.
- The company is under shipping natural demand in certain segments, impacting potential revenue growth.
A: Liam Griffin, CEO: We have a robust pipeline with Android players, particularly Google and Samsung, with significant design wins. These companies are investing in technology, and the performance of their devices aligns well with Skyworks' capabilities. Our Android revenue was less than $75 million last quarter, with Google and Samsung being major contributors. We've strategically reduced our exposure to China, focusing on high-performance RF connectivity where our value is recognized.
Q: How sustainable is the recovery in your broad markets business as we look into 2025?
A: Kris Sennesael, CFO: Our broad markets business has shown modest sequential growth for three consecutive quarters, and we anticipate further growth in the December quarter. While excess inventory in segments like automotive and industrial persists, we expect sequential growth to eventually accelerate. We are aligned with secular growth trends in Edge IoT, automotive electrification, and AI data centers, which should drive mid-teens year-over-year growth in a neutral macroeconomic environment.
Q: What is your outlook for your largest customer in the December quarter, and how does it compare to historical trends?
A: Kris Sennesael, CFO: Our largest customer accounted for approximately 69% of our total revenue last quarter, up 21% sequentially. We expect further growth in the December quarter, in the 5% to 10% range sequentially. The demand is fully in line with our expectations, and we anticipate normal seasonal declines in the March quarter, particularly in mobile.
Q: Can you discuss the impact of AI on your Edge IoT business and any potential growth opportunities?
A: Liam Griffin, CEO: We are seeing improvements in Edge IoT connectivity, driven by the transition to WiFi 6E and 7, which increases content complexity. AI is expected to enhance smartphone functionalities, driving demand for more powerful RF solutions. We are well-positioned to capitalize on these trends, with design wins in automotive, industrial, and networking sectors.
Q: What are the key drivers for gross margin expansion in fiscal 2025 and beyond?
A: Kris Sennesael, CFO: Gross margin improvements will come from better factory utilization, cost reductions, and a favorable mix shift as broad markets grow. While broad markets' growth is currently modest, we expect it to accelerate over time. For fiscal 2025, we anticipate gross margins to be flattish compared to fiscal 2024, with improvements towards the end of the year, setting us up for further expansion in fiscal 2026 and beyond.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.