Group 1 - Skyworks (NASDAQ: SWKS) is recognized as one of the best dividend growth stocks, attracting investors seeking safety during uncertain times [1] - The author has over two decades of experience in the market, particularly in the technology sector, focusing on risk mitigation through various market events [1] Group 2 - The article emphasizes the importance of momentum in investment strategies, particularly in the context of the current market landscape [1]

Core Insights - Skyworks Solutions (SWKS) has faced a decline in significant business from its largest customer, Apple (AAPL), over the past few years [1] Group 1 - The erosion of major wins for Skyworks Solutions is highlighted, particularly in relation to its dealings with Apple [1] - Analysts have noted the impact of Broadcom on Skyworks Solutions, indicating competitive pressures in the market [1]

Core Viewpoint - Skyworks Solutions (SWKS) reported a decline in earnings and revenues for Q2 fiscal 2025, with non-GAAP earnings of $1.24 per share, beating estimates but down 20% year-over-year, and revenues of $953.3 million, down 8.9% year-over-year but slightly above consensus [1][2]. Financial Performance - Non-GAAP gross margin increased by 160 basis points year-over-year to 46.7% [3] - Research & development expenses rose by 480 basis points year-over-year to 19.6% of revenues [3] - Selling, general and administrative expenses increased by 190 basis points to 9.2% [3] - Non-GAAP operating margin contracted by 340 basis points year-over-year to 23.3% [3] Balance Sheet & Cash Flow - As of March 28, 2025, cash and cash equivalents were $1.53 billion, down from $1.75 billion as of December 27, 2024 [4] - Long-term debt was $995.1 million, slightly up from $994 million as of December 27, 2024 [4] - Cash generated by operating activities was $409.5 million, compared to $377.2 million in the prior quarter [4] - Free cash flow was $371 million, with a free cash flow margin of 38.9% [4] Dividend Information - Skyworks paid dividends totaling $110.6 million in the reported quarter [5] Q3 FY25 Guidance - For Q3 fiscal 2025, Skyworks expects revenues between $920 million and $960 million, with non-GAAP earnings projected at $1.24 per share at the midpoint [6] - The Zacks Consensus Estimate for Q3 revenues is $951.26 million, indicating a year-over-year decline of 9.06% [6] Market Performance - Following the results, SWKS shares fell by 2.06% in pre-market trading and have underperformed the Zacks Computer & Technology sector year-to-date, with a decline of 25% compared to the sector's decline of 8.7% [2]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against Skyworks Solutions, Inc. due to a class action complaint alleging breaches of fiduciary duties by the board of directors during a specified class period [1] Group 1: Legal Investigation - A class action complaint was filed against Skyworks on March 3, 2025, with a class period from August 8, 2023, to February 5, 2025 [1] - The investigation focuses on whether the board of directors of Skyworks breached their fiduciary duties to the company [1] Group 2: Financial Performance - On February 5, 2025, Skyworks announced its financial results for Q1 of fiscal year 2025, providing lower-than-expected revenue guidance for Q2 [3] - The company attributed its disappointing results and guidance to an "intensified" competitive landscape [3] - Following the announcement, Skyworks' stock price plummeted from $87.08 per share to $65.60 per share, marking a decline of over 24% in one day [3] Group 3: Investor Communication - The law firm encourages long-term stockholders of Skyworks to reach out for more information regarding the claims or their rights [4]

Core Viewpoint - Skyworks Solutions reported quarterly earnings of $1.24 per share, exceeding the Zacks Consensus Estimate of $1.20 per share, but down from $1.55 per share a year ago, indicating a 20% year-over-year decline in earnings [1][2] Financial Performance - The company achieved revenues of $953.2 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.20%, but down from $1.05 billion in the same quarter last year, reflecting a decrease of approximately 9.5% [2] - Over the last four quarters, Skyworks has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Skyworks shares have declined about 25.6% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates of $1.07 for the upcoming quarter and $4.76 for the current fiscal year, alongside expected revenues of $918.84 million and $3.81 billion respectively [7] - The estimate revisions trend for Skyworks is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Semiconductors - Radio Frequency industry, to which Skyworks belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable industry backdrop [8]

Financial Data and Key Metrics Changes - Skyworks reported revenue of $953 million, earnings per share of $1.24, and free cash flow of $371 million, exceeding the midpoint of guidance [8][16][18] - Gross profit was $445 million with a gross margin of 46.7%, driven by favorable mix and cost reduction initiatives [17][18] - Operating income was $222 million, translating into an operating margin of 23.3% [18] Business Line Data and Key Metrics Changes - Mobile revenue accounted for 62% of total revenue, down 17% sequentially due to seasonal patterns [16] - Revenue from the broad markets portfolio, including Edge IoT, Automotive, and Industrial, increased 2% sequentially and grew 3% year over year, marking five consecutive quarters of growth [16][18] Market Data and Key Metrics Changes - Demand signals are firming, with inventory normalization across distribution channels [10] - Wi-Fi 7 adoption is accelerating, driving greater RF content per system [10][11] - Automotive sector growth is driven by the shift to software-defined vehicles, increasing the need for robust wireless connectivity [10][11] Company Strategy and Development Direction - The company aims to reinforce its leadership in mobile, accelerate growth in diversified businesses, and optimize operational efficiency [22] - Focus on building upon core wireless capabilities and exploring adjacent markets for growth [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook, citing a strong balance sheet and consistent free cash flow as strategic assets [19][20] - The evolving tariff landscape is being monitored, with no major direct impact on the business currently anticipated [20][38] Other Important Information - The company returned a record $600 million to shareholders through dividends and share repurchases [8][19] - Changes in executive leadership were announced, with Mark Denninger succeeding Chris Sennesael as CFO [12][13] Q&A Session Summary Question: Initial thoughts on strategy and potential changes - Management highlighted the importance of core technology and the potential for growth in wireless connectivity [25][26] Question: Growth expectations in broad markets and inventory normalization - Management noted a normalization of inventory and positive booking trends, with growth expected in Edge IoT and automotive sectors [28][29][30] Question: Impact of tariffs on COGS and pricing - Management indicated that the current guidance reflects the tariff environment, with no major direct impact on the business [35][36][38] Question: Content expectations with largest customers - Management refrained from commenting on specific customers but noted tailwinds from increased RF content and complexity in workloads [44][46][78] Question: CapEx outlook and manufacturing capacity - Management stated that CapEx is focused on new technology development, with sufficient capacity to meet future demand [39][50] Question: Seasonal trends and inventory dynamics - Management clarified that they did not see pull-ins and expected typical order patterns for the upcoming quarters [94][95] Question: Organic vs. inorganic growth strategies - Management expressed confidence in pursuing both organic investments and potential M&A opportunities, while focusing on delivering shareholder value [88][90]

Financial Data and Key Metrics Changes - Skyworks reported revenue of $953 million, earnings per share of $1.24, and free cash flow of $371 million, exceeding the midpoint of guidance [6][15][18] - Gross profit was $445 million with a gross margin of 46.7%, driven by favorable mix and cost reduction initiatives [16][18] - Operating income was $222 million, translating into an operating margin of 23.3% [17] Business Line Data and Key Metrics Changes - Mobile revenue accounted for 62% of total revenue, down 17% sequentially due to seasonal patterns [15] - Revenue from the broad markets portfolio, including Edge IoT, Automotive, and Industrial, increased 2% sequentially and grew 3% year over year, marking five consecutive quarters of growth [15][16] - The Edge IoT segment is experiencing accelerated Wi-Fi 7 adoption, while automotive demand is driven by software-defined vehicles [9][10] Market Data and Key Metrics Changes - Demand signals are firming, with improving bookings and inventory normalization across distribution channels [8][20] - The automotive market is seeing good year-over-year growth, driven by the need for robust wireless connectivity in vehicles [10][32] - Wi-Fi 7 adoption is expected to provide a strong tailwind for growth, with only a small percentage of devices currently utilizing this technology [98] Company Strategy and Development Direction - The company aims to reinforce its leadership in mobile technology while accelerating growth in diversified businesses [22] - Focus areas include optimizing operational efficiency, investing in innovation, and exploring adjacencies to fuel growth [27][28] - The company is committed to disciplined capital allocation, returning value to shareholders through dividends and share repurchases [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook, citing a strong balance sheet and consistent free cash flow as strategic assets [19][20] - The evolving tariff landscape is being monitored, but the diversified global supply chain is expected to mitigate potential disruptions [20][39] - For Q3, the company anticipates revenue between $920 million and $960 million, with mobile business expected to decline slightly [20][21] Other Important Information - The company announced changes in the executive leadership team, with Mark Denninger succeeding Chris Cennesall as CFO [11][12] - The company returned a record $600 million to shareholders through share repurchases and dividends, the highest amount ever [6][19] Q&A Session Summary Question: Initial thoughts on strategy and potential changes - Management highlighted the importance of core technology and the potential for growth in wireless connectivity as more devices become connected [27][28] Question: Growth expectations in broad markets and inventory normalization - Management noted that inventory corrections are normalizing and that growth is expected in Edge IoT and automotive segments [30][32] Question: Impact of tariffs on COGS and pricing - Management indicated that the current guidance reflects the impact of tariffs, with no major direct impact on the business anticipated [39][40] Question: Content expectations with largest customers - Management refrained from commenting on specific customer plans but noted potential tailwinds from increased RF content and complexity in workloads [48][49] Question: Utilization rates and operational efficiency - Management stated that utilization rates vary by location but emphasized sufficient capacity to meet future revenue growth without significant additional capital expenditures [61][62] Question: Seasonal trends and inventory dynamics - Management acknowledged the complexity of the supply chain and indicated that current order patterns align with typical seasonal expectations [94][95] Question: Organic vs. inorganic growth strategies - Management expressed confidence in pursuing both organic investments and potential M&A opportunities, focusing on strategic priorities [88][90]

Financial Performance - Net revenue for the three months ended March 28, 2025, was $953.2 million, a decrease of 8.9% compared to $1,046.0 million for the same period in 2024[9]. - Gross profit for the six months ended March 28, 2025, was $833.5 million, down 10.0% from $926.8 million in the prior year[9]. - Operating income for the three months ended March 28, 2025, was $97.3 million, a decline of 48.6% compared to $189.2 million for the same period in 2024[9]. - Net income for the six months ended March 28, 2025, was $230.7 million, a decrease of 44.3% from $414.6 million in the prior year[12]. - Net income for the three months ended March 28, 2025, was $68.7 million, resulting in a basic earnings per share of $0.43[60]. - Net income for the six months ended March 28, 2025, was $231.3 million, compared to $183.3 million for the same period in 2024, representing a 26.2% increase[29]. Expenses - Research and development expenses increased to $186.5 million for the three months ended March 28, 2025, up 20.8% from $154.4 million in the same period last year[9]. - Total operating expenses increased to 30.9% of net revenue for the three months ended March 28, 2025, compared to 22.1% for the same period in 2024[66]. - Research and development expenses rose to 19.6% of net revenue for the three months ended March 28, 2025, compared to 14.8% for the same period in 2024[66]. - Selling, general, and administrative expenses rose by 14.6% to $88.0 million for the three months ended March 28, 2025, compared to $76.8 million in the prior year, representing 9.2% of net revenue[75]. - The provision for income taxes for the three months ended March 28, 2025, was $33.7 million, significantly higher than $9.6 million for the same period in 2024[9]. - The provision for income taxes increased by 251.0% to $33.7 million for the three months ended March 28, 2025, compared to $9.6 million in the same period last year[81]. Cash and Liquidity - Cash and cash equivalents at the end of the period were $1,387.8 million, an increase from $1,368.6 million at the beginning of the period[16]. - Liquidity, including cash, cash equivalents, and marketable securities, totaled $1,527.7 million as of March 28, 2025, a decrease of $46.4 million from September 27, 2024[89]. - Cash provided by operating activities decreased by $288.6 million to $786.6 million for the six months ended March 28, 2025, compared to $1,075.2 million in the prior year[85]. - The investment portfolio totals approximately $1,387.8 million, with cash and cash equivalents including money market funds, corporate bonds, and U.S. Treasury securities[95]. - The company anticipates that cash generated from operations and available credit will be sufficient to meet short-term and long-term liquidity requirements[91]. Stock Repurchase and Dividends - The company repurchased $500.0 million of common stock under its stock repurchase program during the six months ended March 28, 2025[16]. - The company repurchased common stock amounting to $504.3 million during the three months ended March 28, 2025[29]. - The company declared dividends totaling $112.5 million for the three months ended March 28, 2025, compared to $108.9 million for the same period in 2024, reflecting a 1.7% increase[29]. - A cash dividend of $0.70 per share was declared on May 7, 2025, payable on June 17, 2025, totaling $223.1 million for the fiscal year ended October 3, 2025[57][58]. - The total approximate dollar value of shares that may yet be purchased under the stock repurchase program is $1.5 billion as of March 28, 2025[113]. - The company has a new stock repurchase program approved on February 4, 2025, authorizing the repurchase of up to $2.0 billion of common stock, which will expire on February 3, 2027[113]. Assets and Liabilities - Total assets decreased to $7,885.7 million as of March 28, 2025, down from $8,283.3 million as of September 27, 2024[14]. - Long-term debt remained stable at $995.1 million as of March 28, 2025, compared to $994.3 million as of September 27, 2024[14]. - The carrying amount of total debt under Senior Notes was $995.1 million as of March 28, 2025, compared to $913.7 million as of September 27, 2024, indicating an increase of approximately 8.9%[35]. - Total inventory decreased to $678.3 million as of March 28, 2025, from $784.8 million as of September 27, 2024, representing a reduction of approximately 13.5%[37]. - Total property, plant, and equipment, net was $1,231.7 million as of March 28, 2025, down from $1,280.3 million as of September 27, 2024[38]. Market and Economic Conditions - Revenue from the United States for the six months ended March 28, 2025, was $1,571.0 million, down from $1,764.3 million in the same period of 2024, a decline of 10.9%[29]. - The company derives significant revenues from international customers, primarily in the Asia-Pacific region and Europe[106]. - Recent tariffs announced by the U.S. in April 2025 could negatively impact trade and operating costs[106]. - The company faces risks related to doing business in China, including evolving laws and potential tariffs[109]. - Geopolitical changes in China-Taiwan relations could disrupt operations and negatively affect the semiconductor industry[109]. Legal and Compliance Risks - The company faces potential litigation risks related to warranty claims and product defects, which could adversely affect its operating results and reputation[111]. - The company has been named in a putative class action lawsuit alleging violations of federal securities laws, which could result in significant defense costs and damages[111]. - The company may face challenges in fulfilling contractual obligations, which could lead to lawsuits from customers or third parties[111]. - Investigating product defects may divert resources from other product development efforts, potentially impacting future growth[111]. Accounting and Reporting - The company is currently evaluating the impact of recently issued accounting standards on its consolidated financial statements and related disclosures[25]. - The company has not recorded any liability for indemnities related to product sales and does not expect these obligations to materially impact its financial statements[51]. - The company is subject to a 1% excise tax on net share repurchases under the Inflation Reduction Act, impacting the amount available under the repurchase program[114].

Revenue and Earnings - Revenue for Q2 Fiscal 2025 was $953 million, a decrease from $1,046 million in Q2 Fiscal 2024, representing a decline of approximately 8.9% year-over-year[3][20] - GAAP diluted earnings per share (EPS) for the quarter were $0.43, down from $1.14 in the same quarter last year, while non-GAAP diluted EPS was $1.24[3][20] - GAAP net income for Q2 2025 was $68.7 million, significantly lower than $183.3 million in Q2 2024, a decrease of 62.5%[21] - Non-GAAP net income for Q2 2025 was $196.8 million, down from $250.7 million in Q2 2024, a reduction of 21.5%[21] - Non-GAAP diluted earnings per share for Q2 2025 was $1.24, compared to $1.55 in Q2 2024, a decrease of 20.0%[21] - GAAP operating income for Q2 2025 was $97.3 million, down from $189.2 million in Q2 2024, a decline of 48.6%[21] - Non-GAAP operating income for Q2 2025 was $222.2 million, compared to $279.1 million in Q2 2024, a decrease of 20.3%[21] Cash Flow and Assets - Operating cash flow for the quarter was $410 million, resulting in an operating cash flow margin of 43%, and free cash flow was $371 million, with a free cash flow margin of 39%[5] - GAAP net cash provided by operating activities for Q2 2025 was $409.5 million, an increase from $300.2 million in Q2 2024, up by 36.4%[21] - Non-GAAP free cash flow for Q2 2025 was $371.0 million, compared to $272.6 million in Q2 2024, an increase of 36.1%[21] - Cash and cash equivalents at the end of the period were $1,387.8 million, a decrease from $1,602.5 million at the beginning of the period, reflecting a net decrease of $214.7 million[35] - Total assets decreased from $8,283.3 million on September 27, 2024, to $7,885.7 million on March 28, 2025, representing a decline of approximately 4.8%[33] Shareholder Returns - The company returned over $600 million to shareholders through share repurchases and dividends, marking the highest quarterly return ever[4] - The board declared a cash dividend of $0.70 per share, payable on June 17, 2025, to stockholders of record on May 27, 2025[10] - Dividends paid increased slightly to $110.6 million for the three months ended March 28, 2025, compared to $109.1 million for the same period last year[35] - The company repurchased $500.0 million in common stock during the six months ended March 28, 2025[35] Research and Development - Research and development expenses increased to $186.5 million from $154.4 million year-over-year, reflecting a focus on innovation and product development[20] Market Performance and Expectations - For Q3 Fiscal 2025, revenue is expected to be between $920 million and $960 million, with non-GAAP diluted EPS projected at $1.24 at the mid-point of the revenue range[8] - The mobile business is anticipated to decline low single digits sequentially, consistent with typical seasonal patterns, while Broad Markets are expected to show sequential growth[9] - The company secured 5G design wins across premium Android smartphones, including flagship models from Samsung Galaxy, Google Pixel, and Oppo[9] - Key design wins were achieved for in-vehicle infotainment systems with major automotive OEMs, enhancing market presence in the automotive sector[9] Profitability Metrics - GAAP gross profit for Q2 2025 was $391.6 million, down from $420.3 million in Q2 2024, representing a decrease of 6.5%[21] - Non-GAAP gross profit for Q2 2025 was $444.7 million, compared to $470.9 million in Q2 2024, a decline of 5.5%[21] - Share-based compensation increased to $62.7 million for the three months ended March 28, 2025, compared to $46.0 million for the same period last year, an increase of approximately 36.5%[35] - Capital expenditures for the three months ended March 28, 2025, were $38.5 million, up from $27.6 million in the same period last year, an increase of approximately 39.8%[35] Accounts Receivable and Liabilities - The company reported a decrease in accounts receivable from $508.8 million on September 27, 2024, to $371.9 million on March 28, 2025, a decline of about 26.9%[33] - Total liabilities remained relatively stable at $1,985.4 million as of March 28, 2025, compared to $1,946.6 million on September 27, 2024[33]

Core Viewpoint - Skyworks Solutions (SWKS) is expected to report a decline in earnings and revenues for the second quarter of fiscal 2025, with earnings projected at $1.20 per share, reflecting a 22.58% decrease year-over-year, and revenues anticipated between $935 million and $965 million, indicating a 9.06% decline from the previous year [1][2]. Group 1: Earnings and Revenue Expectations - The Zacks Consensus Estimate for earnings remains steady at $1.20 per share, with a projected revenue of $951.26 million for the second quarter of fiscal 2025 [1][2]. - The company has consistently beaten earnings estimates in the past four quarters, with an average surprise of 1.46% [2]. Group 2: Factors Influencing Performance - The performance in Q2 is likely to benefit from a diversified portfolio and growth in edge IoT and automotive sectors, with 5G content in new smartphones contributing positively to revenues [3][5]. - There is expected to be strong demand for edge IoT technologies, including Wi-Fi 6e and Wi-Fi 7 systems, leading to a multiyear upgrade cycle due to faster data transfer speeds and lower latency [4]. Group 3: Market Trends and Challenges - The rising adoption of generative AI and 5G technologies is anticipated to drive demand for high-performance RF solutions, positioning Skyworks favorably in the market [5]. - Despite some inventory challenges, long-term growth opportunities are seen in the automotive sector, driven by the increasing complexity of radio solutions in software-defined vehicles and connected cars [6]. - However, mobile revenue is expected to decline by mid-to-high teens sequentially due to historical seasonality, and weakness in industrial and infrastructure sectors is likely to impact top-line growth [7]. Group 4: Earnings ESP and Stock Outlook - Currently, Skyworks has an Earnings ESP of -0.83% and a Zacks Rank of 4 (Sell), indicating lower odds of an earnings beat [8].