Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Qorvo Inc (QRVO, Financial) reported a year-over-year revenue increase of approximately 36%, reaching $887 million.
- Non-GAAP gross margin of 40.9% was at the high end of the guidance range, benefiting from favorable product mix.
- The company successfully completed the migration to 8-inch BAW wafers, enhancing production efficiency.
- Qorvo Inc (QRVO) secured multiple design wins across various markets, including automotive, consumer, and defense.
- The company is positioned to benefit from emerging trends like AI, 5G advancements, and increased demand for ultra-wideband technology.
Negative Points
- Revenue for the quarter decreased by 6% sequentially, indicating potential short-term challenges.
- Non-GAAP operating expenses increased to $265 million, partly due to spending on digital transformation initiatives.
- The company has approximately $1.5 billion of long-term debt outstanding, which could impact financial flexibility.
- Inventory levels increased sequentially, which may indicate slower-than-expected sales or overproduction.
- Qorvo Inc (QRVO) remains cautious about the impact of AI on smartphone demand, reflecting uncertainty in market adoption.
Q & A Highlights
Q: Your largest customer got the market excited about AI smartphones. Have you seen any impact or increase in demand driven by the AI smartphone trend?
A: We are taking a conservative approach. We saw some impact with Samsung's S24, where we have excellent dollar content. However, we are not modeling significant AI-driven demand increases at this time. β Robert Bruggeworth, Independent Director
Q: Can you provide an update on utilization rates and the flush of high-cost Android inventory as we move into the September quarter?
A: We expect a substantial sequential increase in gross margin due to product mix. The September quarter will benefit from higher mix of customized solutions for flagship tier phones. The impact of underutilization should fall to around or slightly less than 100 basis points and become negligible in the back half of the year. β Grant Brown, CFO
Q: Can you provide insights into the China mobile market and how it might progress throughout the calendar year?
A: We are seeing similar data to what you are seeing. The market is slightly better year over year, with expectations of low single-digit percent growth, similar to the overall smartphone market. β David Fullwood, SVP of Sales & Marketing
Q: Why is revenue still down year over year despite content growth at your largest customer and potential AI refresh cycles?
A: The slight decline is primarily related to smartphone revenues. We had significant gains at our largest customers, but overall market dynamics, including unit volumes and timing, play a role. β Robert Bruggeworth, Independent Director
Q: Are there any new products on the horizon that might be needle-moving for Qorvo?
A: We are excited about our low, mid, high (LMH) products, which are tiered for different product segments in the Android ecosystem. These products will ramp up significantly in the coming quarters. β Robert Bruggeworth, Independent Director
Q: How do you balance internal production versus using external foundries to support margin expansion?
A: It is technology-dependent. We use external foundries for silicon and SOI, while we produce internally for technologies like BAW, where we can differentiate ourselves. β Robert Bruggeworth, Independent Director
Q: Can you discuss the adoption of 5G and premium-tier handsets over the next year or two?
A: Trends like AI will drive higher data rates and lower latency, accelerating the adoption of 5G Advanced and increasing RF content. We are engaged in ongoing discussions with customers about integrating new products into their phones. β David Fullwood, SVP of Sales & Marketing
Q: Can you provide a general idea of expected content growth in mobile at your large customer?
A: We are confident in our ability to grow and gain share at our largest customer this year and next year. β Robert Bruggeworth, Independent Director
Q: Have you seen a rebound in China in the HPA or CSG markets, similar to the analog space?
A: We see broad-based growth across HPA and CSG markets. In China, we are seeing increased adoption of ultra-wideband in automotive and silicon carbide in power supply for AI and data centers. β David Fullwood, SVP of Sales & Marketing
Q: How is the adoption of VDX in China progressing?
A: China is leading in adopting VDX, and we expect it to ramp next calendar year, followed by Europe and the US. β Robert Bruggeworth, Independent Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
