Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - Stocks are rated from A to F based on value, growth, and momentum characteristics, with A being the highest score [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - The Value Score identifies attractive stocks using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - The Growth Score focuses on a company's future prospects by analyzing projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Score assesses trends in stock prices and earnings estimates to identify favorable investment opportunities [5] VGM Score - The VGM Score combines all three Style Scores to provide a comprehensive evaluation of stocks based on value, growth, and momentum [6] Zacks Rank Integration - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to guide investors in stock selection [7] - Stocks rated 1 (Strong Buy) have historically outperformed the S&P 500, achieving an average annual return of +23.75% since 1988 [7] Stock Selection Strategy - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal success [9] - The direction of earnings estimate revisions is crucial in stock selection, as downward trends can indicate potential price declines [10] Company Spotlight: Qorvo Inc. - Qorvo Inc. is recognized for its RF solutions in mobile, infrastructure, and aerospace/defense sectors [11] - Currently rated 3 (Hold) with a VGM Score of A, Qorvo has a Momentum Style Score of B and has seen a 2.4% increase in shares over the past month [11] - Recent upward revisions in earnings estimates for fiscal 2026 have raised the Zacks Consensus Estimate by $0.51 to $6.06 per share, with an average earnings surprise of +31.2% [12]

Group 1 - The company "Chip Superman" has a 1,600 square meter intelligent chip storage base with over 1,000 stock models and around 100 brands, totaling 50 million chips with a stock value exceeding 100 million [1] - The company operates an independent laboratory in Shenzhen, ensuring quality control (QC) for each material [1] - The company has served 20,000 users and can complete transactions in as fast as half a day [5] Group 2 - The company is currently seeking to purchase specific chip models, including 30,000 units of Rubycon 80ZLH1500MEFC18X40 and 15,000 units of TI TMS320F28034PNT [2] - The company is offering discounted sales on advantageous materials, including 51,17 units of ADI LTM8001IYPBF and 16,000 units of ADI LTM4620AEYPBF [3] - The company highlights challenges in the chip distribution industry, including difficulties in finding and selling chips, and the need for better pricing [7]

Group 1: Industry Overview - The semiconductor industry is experiencing a moderate recovery, with Q1 2025 global sales reaching $167.7 billion, a year-on-year increase of 18.8% [66] - In May 2025, global semiconductor sales were $59 billion, showing a year-on-year growth of 19.8% [66] - The recovery is driven by strong demand in the Americas and Asia-Pacific regions, particularly in high-end computing and storage due to AI [66] Group 2: Company Performance - Texas Instruments reported Q2 revenue of $4.45 billion, a 9% quarter-on-quarter increase and a 16% year-on-year increase, driven by a broad recovery in the industrial market [6] - STMicroelectronics experienced a 14.4% year-on-year decline in Q2 revenue to $2.76 billion, resulting in a net loss of $133 million due to restructuring costs [7] - NXP's Q2 revenue was $2.93 billion, a 6% year-on-year decline but a 3% quarter-on-quarter increase, with all key end markets performing better than expected [9] Group 3: Specific Company Highlights - Qualcomm's Q3 revenue increased by 10% year-on-year to $10.365 billion, with automotive chip revenue growing by 21% [11] - MediaTek's Q2 revenue was NT$150.37 billion, a 1.9% quarter-on-quarter decline but a 4.3% year-on-year increase, driven by demand for AI and automotive chips [13] - Samsung's Q2 operating profit fell by 55.2% year-on-year to 4.7 trillion KRW, marking a six-quarter low due to AI chip sales issues [14][15] Group 4: Market Trends - The industrial market is showing signs of recovery, while the automotive market is lagging behind by about a year [6] - AI-related demand continues to be strong, particularly in high-performance computing and storage sectors [66] - The overall semiconductor market is expected to see varied recovery rates across different sectors, with traditional markets like industrial applications rebounding first [66] Group 5: Financial Performance of Key Players - SK Hynix reported record high Q2 revenue of 22.232 trillion KRW, driven by strong demand for AI-related memory products [16] - Micron Technology's Q3 revenue reached $9.3 billion, a 37% year-on-year increase, attributed to record DRAM revenue [19] - TSMC's Q2 revenue was approximately NT$933.8 billion, with a net profit increase of 60.7% year-on-year [43]

Core Insights - Qorvo reported Q1 FY2026 earnings with GAAP revenue of $818.8 million and non-GAAP diluted EPS of $0.92, both missing analyst estimates of $868.8 million and $1.13 respectively [1][5] - Non-GAAP gross margin improved to 44.0%, up 3.1 percentage points year-over-year, indicating stronger profitability despite soft sales [1][6] Financial Performance - Q1 FY2026 diluted EPS (Non-GAAP) was $0.92, below the estimate of $1.13 but up 5.7% from $0.87 in Q1 FY2025 [2] - GAAP revenue decreased by 7.7% year-over-year from $886.7 million in Q1 FY2025 to $818.8 million in Q1 FY2026 [2] - Non-GAAP operating income rose 10.3% to $108.2 million compared to $98.1 million in Q1 FY2025 [2][6] - Free cash flow surged to $145.4 million, a 339% increase from $42.85 million in Q1 FY2025 [2][6] Business Focus and Strategy - Qorvo is concentrating on enhancing its R&D pipeline, strengthening customer relationships, and scaling high-value operations while reducing exposure to lower-margin segments [4] - The company is prioritizing new design wins in power management ICs, automotive ultra-wideband chips, and defense electronics [4] - Qorvo's customer base is heavily concentrated, with Apple and Samsung accounting for significant portions of sales, which poses challenges during periods of low demand [5] Segment Performance - The High Performance Analog (HPA) unit reported a 6.1% year-over-year revenue increase to $137.4 million [8] - The Connectivity & Sensors Group (CSG) saw revenue decline by 4.1% to $110.2 million but improved its operating loss from $19.5 million to $7.5 million [8] - The Advanced Cellular Group (ACG) experienced an 11.1% revenue decline to $571.2 million, attributed to weaker demand and a strategic pullback from the low-tier Android market [8] Product Development - Qorvo is investing in technologies for faster wireless data and improved battery efficiency, focusing on GaAs, GaN, BAW, and SAW technologies [9] - The company is advancing its power management ICs and ultra-wideband chips, leveraging AI and machine learning for enhanced product performance [9] Future Outlook - Management projects Q2 FY2026 revenue of approximately $1.025 billion, with non-GAAP gross margin expected to rise to 48% to 50% and non-GAAP EPS to reach $2.00 [10] - Growth is anticipated to be driven by new customer device launches, particularly from major accounts [10]

PART I [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited).) For the quarter ended June 28, 2025, Qorvo reported revenue of $818.8 million, a 7.7% decrease year-over-year, with operating income significantly increasing to $30.1 million and net income rising to $25.6 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 28, 2025, total assets were $6.0 billion, primarily driven by a rise in cash and cash equivalents to $1.17 billion, while total liabilities remained stable Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 28, 2025 | March 29, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,165,478 | $1,021,176 | | Total current assets | $2,246,256 | $2,167,275 | | Total assets | $5,997,524 | $5,933,131 | | **Liabilities & Equity** | | | | Total current liabilities | $798,330 | $783,182 | | Long-term debt | $1,549,200 | $1,549,215 | | Total liabilities | $2,560,455 | $2,540,819 | | Total stockholders' equity | $3,437,069 | $3,392,312 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended June 28, 2025, revenue decreased by 7.7% to $818.8 million, but operating income substantially increased to $30.1 million due to lower operating expenses, resulting in net income of $25.6 million Consolidated Statement of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | Revenue | $818,778 | $886,671 | | Gross Profit | $331,802 | $332,304 | | Operating Income | $30,086 | $4,606 | | Net Income | $25,594 | $414 | | Diluted Net Income per Share | $0.27 | $0.00 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income for the quarter was $37.0 million, a significant turnaround from a comprehensive loss in the prior-year period, driven by net income and positive foreign currency translation Comprehensive Income (Loss) (in thousands) | Item | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | Net income | $25,594 | $414 | | Other comprehensive income (loss) | $11,368 | $(932) | | **Total comprehensive income (loss)** | **$36,962** | **$(518)** | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to $3.44 billion during the quarter, primarily due to net income and other comprehensive income, partially offset by common stock repurchases - Key activities affecting stockholders' equity in Q1 FY2026 included net income of **$25.6 million**, stock-based compensation of **$43.8 million**, and common stock repurchases totaling **$50.0 million**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated **$182.9 million** in net cash from operating activities, with net cash used in investing activities of **$33.3 million** and financing activities of **$6.9 million**, resulting in a net increase in cash of **$144.3 million** Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $182,945 | $81,085 | | Net cash used in investing activities | $(33,331) | $(17,185) | | Net cash used in financing activities | $(6,935) | $(29,525) | | **Net increase in cash and cash equivalents** | **$144,302** | **$33,157** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail revenue breakdown by region and segment, ongoing restructuring initiatives, and share repurchase activities Revenue by Geographic Region (in thousands) | Region | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | United States | $425,260 | $447,456 | | China | $155,895 | $196,434 | | Other Asia | $122,241 | $132,036 | | Taiwan | $96,926 | $92,554 | | Europe | $18,456 | $18,191 | | **Total revenue** | **$818,778** | **$886,671** | - The company's 2025 Restructuring Initiatives resulted in charges of **$5.8 million** during the quarter, primarily for contract termination and employee termination benefits, with cumulative expenses reaching approximately **$264.6 million**[47](index=47&type=chunk) Segment Revenue (in thousands) | Segment | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | HPA | $137,395 | $129,468 | | CSG | $110,153 | $114,853 | | ACG | $571,230 | $642,350 | | **Total revenue** | **$818,778** | **$886,671** | - During the quarter, the company repurchased approximately **0.7 million shares** of its common stock for about **$50.0 million**, with **$898.8 million** remaining authorized for future repurchases[42](index=42&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes the 7.7% year-over-year revenue decline to a strategic reduction in exposure to mass-market Android smartphones, while gross margin improved and operating income grew substantially [First Quarter Fiscal 2026 Overview](index=19&type=section&id=FIRST%20QUARTER%20FISCAL%202026%20OVERVIEW) The first quarter of fiscal 2026 saw a 7.7% revenue decrease due to a strategic shift, but gross margin improved to 40.5%, and operating income increased to $30.1 million - Revenue decreased **7.7% YoY**, primarily due to a strategic reduction in exposure to mass-market Android smartphones[68](index=68&type=chunk) - Gross margin increased to **40.5%** from **37.5%** in the prior-year quarter, driven by improved product costs and lower inventory-related charges[68](index=68&type=chunk) - Net cash provided by operating activities was **$182.9 million**, and the company repurchased **0.7 million shares** for approximately **$50.0 million**[68](index=68&type=chunk) [Results of Operations](index=21&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated revenue decreased by $67.9 million, primarily from the Advanced Cellular Group (ACG), while gross margin increased to 40.5% and operating expenses decreased across the board HPA Segment Performance (in thousands) | Metric | June 28, 2025 | June 29, 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $137,395 | $129,468 | 6.1% | | Operating income | $21,582 | $4,881 | 342.2% | CSG Segment Performance (in thousands) | Metric | June 28, 2025 | June 29, 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $110,153 | $114,853 | (4.1)% | | Operating loss | $(7,533) | $(19,501) | 61.4% | ACG Segment Performance (in thousands) | Metric | June 28, 2025 | June 29, 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $571,230 | $642,350 | (11.1)% | | Operating income | $97,934 | $116,449 | (15.9)% | [Liquidity and Capital Resources](index=23&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of June 28, 2025, Qorvo had working capital of $1.45 billion, including $1.17 billion in cash and cash equivalents, and generated $182.9 million in cash from operations - The company's working capital was approximately **$1.45 billion**, with cash and cash equivalents at **$1.17 billion** as of June 28, 2025[86](index=86&type=chunk) - Net cash provided by operating activities was **$182.9 million** for the quarter, driven by net income adjusted for non-cash items and favorable changes in working capital[90](index=90&type=chunk)[91](index=91&type=chunk) - The company repurchased **0.7 million shares** for approximately **$50.0 million**, with **$898.8 million** remaining under the authorized share repurchase program[89](index=89&type=chunk) - The company entered into a new five-year unsecured senior credit facility on April 23, 2024, providing a **$325.0 million** revolving line of credit, with no borrowings under this facility during the quarter[95](index=95&type=chunk)[96](index=96&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company states that there have been no material changes to its market risk exposures during the first quarter of fiscal 2026 - There were no material changes to the company's market risk exposures during the first quarter of fiscal 2026[110](index=110&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 28, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[111](index=111&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[112](index=112&type=chunk) PART II — OTHER INFORMATION [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors.) This section directs investors to the risk factors discussed in the company's Annual Report on Form 10-K for the fiscal year ended March 29, 2025 - The company refers to its Annual Report on Form 10-K for the fiscal year ended March 29, 2025, for a detailed discussion of risk factors[114](index=114&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During the first quarter of fiscal 2026, the company repurchased 702,000 shares of common stock for approximately $50.0 million, with $898.8 million remaining available for repurchase Issuer Purchases of Equity Securities (Q1 FY2026) | Period | Total shares purchased (in thousands) | Average price paid per share | Approximate dollar value of shares that may yet be purchased (in millions) | | :--- | :--- | :--- | :--- | | March 30 - April 26, 2025 | 233 | $60.28 | $934.6 | | April 27 - May 24, 2025 | 211 | $72.90 | $919.3 | | May 25 - June 28, 2025 | 258 | $79.53 | $898.8 | | **Total** | **702** | **$71.14** | **$898.8** | [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information.) The company reported that no director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of fiscal 2026 - No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of fiscal 2026[116](index=116&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including bylaws, subsidiary guarantors, CEO and CFO certifications, and iXBRL formatted financial statements - Key exhibits filed include CEO/CFO certifications and iXBRL data files for the financial statements[119](index=119&type=chunk)

Core Insights - Qorvo, Inc. (QRVO) reported strong first-quarter fiscal 2026 results, with adjusted earnings and revenues exceeding Zacks Consensus Estimate [1] Revenue Performance - The company experienced a revenue contraction year over year, with net sales declining to $818.8 million from $886.7 million in the prior-year quarter, primarily due to declines in the Advanced Cellular Group (ACG) and Connectivity and Sensors Group (CSG) segments [2][5] - Despite the revenue decline, the top line surpassed the Zacks Consensus Estimate of $775 million, supported by solid demand trends in defense, aerospace, power management, Wi-Fi, and smartphones [2][5] Net Income - On a GAAP basis, net income was reported at $25.6 million or 27 cents per share, a significant increase from $0.4 million or break-even earnings in the prior-year quarter, attributed to lower costs of goods sold and operating expenses, along with an income tax benefit [3] - Non-GAAP net income was $86.5 million or 92 cents per share, compared to $83.5 million or 87 cents per share in the year-ago quarter, exceeding the Zacks Consensus Estimate by 30 cents [4] Segmental Performance - High Performance Analog (HPA) revenues increased to $137.4 million from $129.5 million in the year-ago quarter, driven by strong demand in defense and aerospace applications [6] - Revenues from CSG were $110.2 million, down from $114.9 million in the prior-year quarter, while ACG net sales were $571.2 million, reflecting an 11.1% year-over-year decline due to reduced Android revenues [7] Operating Metrics - Non-GAAP gross profit decreased to $360 million from $362.7 million, with respective margins of 44% and 40.9% [8] - Non-GAAP operating expenses fell to $251.8 million from $264.5 million year over year [8] - GAAP operating income was reported at $108.2 million, compared to $98.1 million in the prior-year quarter [9] Cash Flow & Liquidity - As of June 28, 2025, the company had $1.17 billion in cash and cash equivalents and $1.55 billion in long-term debt, generating $182.9 million in net cash from operating activities and a free cash flow of $145.4 million during the quarter [10] Outlook - For the second quarter of fiscal 2026, the company expects revenues of $1.025 billion (+/- $50 million) and non-GAAP gross margin to be within 48%-50%, with non-GAAP earnings projected at about $2.00 per share (+/- 25 cents) [11]

Qorvo (QRVO) reported $818.78 million in revenue for the quarter ended June 2025, representing a year-over- year decline of 7.7%. EPS of $0.92 for the same period compares to $0.87 a year ago. View all Key Company Metrics for Qorvo here>>> The reported revenue compares to the Zacks Consensus Estimate of $774.7 million, representing a surprise of +5.69%. The company delivered an EPS surprise of +48.39%, with the consensus EPS estimate being $0.62. Shares of Qorvo have returned -0.7% over the past month versu ...

Group 1: Earnings Performance - Qorvo reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.62 per share, and up from $0.87 per share a year ago, representing an earnings surprise of +48.39% [1] - Over the last four quarters, Qorvo has consistently surpassed consensus EPS estimates [2] - The company posted revenues of $818.78 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.69%, although down from $886.67 million year-over-year [2] Group 2: Stock Performance and Outlook - Qorvo shares have increased approximately 20.6% since the beginning of the year, outperforming the S&P 500's gain of 8.6% [3] - The future performance of Qorvo's stock will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.68 on revenues of $961.23 million, and for the current fiscal year, it is $5.55 on revenues of $3.69 billion [7] Group 3: Industry Context - The Semiconductors - Radio Frequency industry, to which Qorvo belongs, is currently ranked in the top 5% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Qorvo's stock performance [5][6]

Financial Data and Key Metrics Changes - Qorvo reported fiscal Q1 revenue of $819 million, with a non-GAAP gross margin of 44% and non-GAAP diluted earnings of $0.92 per share, all exceeding guidance [22][24] - The company held approximately $1.2 billion in cash and equivalents, with long-term debt of about $1.5 billion and no near-term maturities [23] - Operating cash flow generated during the quarter was approximately $183 million, with capital expenditures of $38 million, resulting in free cash flow of $145 million [23][24] Business Line Data and Key Metrics Changes - In the ACG segment, revenue from the largest customer represented approximately 41% of total revenue, with expectations of over 10% content growth in the upcoming fall launch compared to the previous year [22][25] - The HPA segment is expected to see strong double-digit growth, driven by defense and aerospace markets, supported by increased U.S. and allied defense spending [25][26] - The CSG segment is experiencing lower growth expectations, with a shift in automotive customer program ramping to fiscal 2027, leading to a revised growth outlook of low single digits [38][82] Market Data and Key Metrics Changes - The defense and aerospace market's sales funnel increased by approximately $2 billion sequentially, reflecting a rise in U.S. and international defense spending [11][12] - In the consumer market, Qorvo secured design wins in Wi-Fi 7 for augmented reality glasses, indicating growth in this category [10] - The Android revenue in the ACG segment declined 18% year-over-year, with China-based Android revenue down 29% year-over-year [26][67] Company Strategy and Development Direction - Qorvo is focusing on optimizing its portfolio by exiting low-margin businesses and consolidating its manufacturing footprint, including the closure of facilities in Costa Rica and North Carolina [20][21] - The company aims to enhance profitability through strategic initiatives, including cost reductions and a shift towards higher-margin defense and aerospace markets [30][31] - Qorvo is actively seeking strategic alternatives for its MEMS Force Sensing business, which is incurring significant operating expenses [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying demand across multiple end markets, despite macroeconomic uncertainties and tariff dynamics affecting certain segments [25][26] - The company anticipates continued growth in defense and aerospace, driven by increased content and spending, while remaining cautious about the smartphone market's seasonality [39][66] - Management highlighted the importance of maintaining a disciplined approach to the back half of the fiscal year, monitoring customer behavior and inventory levels closely [66][67] Other Important Information - Qorvo's non-GAAP operating expenses for the upcoming quarter are projected to be approximately $265 million, reflecting higher incentive-based compensation and startup costs for new production lines [28] - The company expects annual savings in non-GAAP COGS to exceed one-time startup costs incurred in fiscal 2026 once new production lines are operational [24][25] Q&A Session Summary Question: Can you discuss the seasonality and growth expectations for the largest customer? - Management indicated that December typically shows a slight increase in shipments compared to September, with expectations for unit volumes and content growth remaining strong [35][36] Question: What is driving the recent growth in the Android business? - Management noted that growth is attributed to share gains in the premium tier and strong content in the U.S. customer base, despite a decline in the mass-tier Android segment [43][45] Question: What initiatives are driving the increase in gross margins? - Management highlighted cost improvements, factory rationalizations, and a shift towards higher-margin defense and aerospace business as key drivers of margin expansion [49][50] Question: Can you provide an update on the defense business and M&A opportunities? - Management confirmed that the defense business is tracking well, with significant design opportunities, and indicated that they are actively looking for M&A opportunities in the defense sector [71][73] Question: How is the company managing tariff-related inventory buffering? - Management explained that while some buffering is observed, particularly in the battery-operated power tools segment, overall demand remains strong and aligned with sales patterns [76][78] Question: What are the expectations for the Android business exiting the fiscal year? - Management clarified that while the trend is down, the China Android business is expected to be higher than previously estimated, with ongoing participation in flagship and premium tier devices [102]

Financial Data and Key Metrics Changes - Qorvo reported fiscal Q1 revenue of $819 million, with a non-GAAP gross margin of 44% and non-GAAP diluted earnings of $0.92 per share, all exceeding guidance [20][24]. - The company ended the quarter with approximately $1.2 billion in cash and equivalents, $1.5 billion in long-term debt, and a net inventory balance of $638 million, reflecting a slight sequential reduction and a year-over-year decrease of $89 million [20][21]. - Operating cash flow generated during the quarter was approximately $183 million, with capital expenditures of $38 million, resulting in free cash flow of $145 million [21]. Business Line Data and Key Metrics Changes - In the Advanced Cellular Group (ACG), revenue from Android products declined 18% year-over-year to approximately $240 million, with China-based Android revenue down 29% year-over-year to just under $100 million [25][26]. - The High Performance Analog (HPA) segment is expected to see durable year-over-year growth, driven by defense and aerospace markets, which are the largest by revenue [5][24]. - Connectivity and Sensors Group (CSG) is experiencing a slowdown due to a delay in an automotive program ramp, with year-over-year growth expected to be in the low single digits instead of the previously guided 10% to 12% [36][80]. Market Data and Key Metrics Changes - The defense and aerospace market is seeing a significant increase in opportunities, with the sales funnel growing to over $7 billion, reflecting increased U.S. and international defense spending [10][12]. - In the automotive market, Qorvo's ultra-wideband technology has secured design wins with leading automotive OEMs, indicating strong demand for secure access and precision radar applications [8][9]. - The infrastructure business is benefiting from the industry's transition to DOCSIS 4.0, where Qorvo is a leading supplier of broadband amplifiers [15][24]. Company Strategy and Development Direction - Qorvo is focusing on optimizing its portfolio by exiting low-margin businesses and consolidating its manufacturing footprint, including the closure of facilities in Costa Rica and North Carolina [19][22]. - The company is strategically investing in high-growth areas such as defense, aerospace, and advanced power management solutions, while also diversifying its product offerings across various markets [5][18]. - Qorvo aims to achieve greater than 10% content growth with its largest customer in future programs, indicating a strong focus on expanding its market share in high-value segments [16][24]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic position and execution, despite macroeconomic uncertainties and tariff dynamics affecting certain segments [38][93]. - The outlook for fiscal Q2 includes revenue expectations of $1.025 billion, with a non-GAAP gross margin between 48% and 50%, reflecting strong demand across multiple end markets [23][24]. - Management noted that while the first half of the fiscal year is showing strength, there are concerns about seasonality in the smartphone market and the impact of exiting lower-margin Android business [36][38]. Other Important Information - The company is actively seeking strategic alternatives for its MEMS Force Sensing business, which is incurring approximately $5 million of non-GAAP operating expenses per quarter [29]. - Qorvo's non-GAAP tax rate for fiscal 2026 is now expected to be approximately 15%, down from previous estimates of 18% to 19% [28]. Q&A Session Summary Question: Can you discuss the seasonality and growth expectations for the largest customer? - Management indicated that December typically shows a slight increase in shipments compared to September, with expectations for unit volumes and content growth remaining strong [34][35]. Question: What is driving the increase in gross margins? - The increase in gross margins is attributed to cost improvements, factory footprint reductions, and a favorable business mix, particularly in defense and aerospace [46][48]. Question: How is the defense business performing? - The defense business is tracking as expected, with significant design opportunities and a growing sales funnel, supported by increased government spending [70][72]. Question: What are the implications of tariffs on inventory and pricing? - Tariffs have primarily impacted the battery-operated power tools segment, with limited inventory buffering observed in other areas [75][78]. Question: What is the outlook for the Android business? - The Android business is expected to decline, particularly in the China market, with a focus on high-end devices while exiting lower-margin segments [100].