Core Viewpoint - Skyworks Solutions (SWKS) is expected to report a decline in earnings and revenues for the fourth quarter of fiscal 2024, with earnings projected at $1.52 per share, reflecting a 30.91% year-over-year decrease, and revenues estimated between $1 billion and $1.04 billion, indicating a 16.17% decline from the previous year [1][2]. Financial Performance Expectations - Earnings per share for Q4 fiscal 2024 are anticipated to be $1.52, consistent with the Zacks Consensus Estimate over the past month [1] - Revenue guidance for the quarter is set between $1 billion and $1.04 billion, with the Zacks Consensus Estimate at $1.02 billion [2] Influencing Factors - The performance in Q4 is likely to benefit from a diversified portfolio, strong mobile demand, and growth in edge IoT and automotive sectors [3] - A 20% sequential increase in mobile business revenues is expected due to normalizing demand and supply conditions in the smartphone market [3] - The proliferation of 5G content in new smartphones is anticipated to positively impact revenues [4] - Strong demand for edge IoT, particularly Wi-Fi 7 systems, is contributing to a multiyear upgrade cycle, which is expected to enhance performance [5] - The rising adoption of generative AI and 5G technologies is driving demand for high-performance RF solutions, benefiting the company [6] - Long-term growth opportunities in the automotive sector are noted, driven by the increasing complexity of radio solutions in software-defined vehicles and connected cars [7] Challenges - Despite positive factors, challenges such as excess inventory, supply chain issues, and economic uncertainty are expected to negatively impact top-line growth [8] Earnings Model Insights - According to the Zacks model, Skyworks currently has an Earnings ESP of 0.00% and a Zacks Rank of 3, indicating that the odds of an earnings beat are not favorable [9]

Core Viewpoint - Skyworks (SWKS) has underperformed compared to its peers and the broader technology sector, facing challenges in inventory levels and competition, despite having a strong design win pipeline and diversified portfolio [1][2][4]. Group 1: Performance Comparison - Skyworks shares have dropped 14% year-to-date, while Broadcom's shares surged 54% and Qorvo's shares declined 9.7%. The broader sector appreciated 22.5% during the same period [1]. - The company is experiencing sluggishness in wireless infrastructure and traditional data center markets, which is contributing to its underperformance [1]. Group 2: Design Wins and Market Position - Skyworks has a robust design win pipeline, particularly in automotive and industrial sectors, with improving demand in edge IoT markets [2]. - The company showcased its Si82Fx gate driver solutions at PCIM Europe, enhancing efficiency in AI data servers and electric vehicle charging applications [2]. - In the mobile segment, which contributed approximately 61% to total revenues in Q3 2024, Skyworks is seeing signs of inventory normalization and improved order patterns [2]. Group 3: AI and Smartphone Market - New AI features in smartphones are expected to drive a multiyear upgrade cycle, increasing Radio Frequency complexity and positioning Skyworks as a market leader [3]. - Skyworks secured 5G content for premium Android smartphones, including models like Google Pixel 8a and Samsung Galaxy M, strengthening its market presence [3]. - Collaboration with Semtech has boosted low-power wide-area network solutions for industrial and smart city applications [3]. Group 4: Financial Outlook - For Q4 fiscal 2024, Skyworks expects revenues between $1 billion and $1.04 billion, with earnings projected at $1.52 per share at the mid-point of this guidance [4]. - The Zacks Consensus Estimate for Q4 fiscal 2024 revenue is $1.02 billion, indicating a 16.17% year-over-year decline, while earnings are expected to decline by 30.91% year-over-year [4]. Group 5: Valuation and Investment Considerations - Skyworks shares are considered cheap with a Value Score of B, having a forward 12-month Price/Sales ratio of 3.68, lower than the sector's 6.12 [6]. - However, the sluggish prospects lead to a Growth Score of D, indicating potential risks for growth-oriented investors [6]. - Skyworks currently holds a Zacks Rank 3 (Hold), suggesting a cautious approach for potential investors [6].

Group 1 - The article does not provide any specific information or data regarding companies or industries [1]

Core Insights - Skyworks Solutions (SWKS) reported third-quarter fiscal 2024 non-GAAP earnings of $1.21 per share, matching the Zacks Consensus Estimate but declining 30.1% year over year [1] - Revenues for the quarter were $905.5 million, a decrease of 15.5% year over year, and below the consensus estimate of $913 million [1] - Mobile revenues accounted for nearly 61% of total revenues, experiencing a sequential decline of 21% [1] - Broad markets contributed approximately 39% to total revenues, with a sequential increase of 1% [1] Operating Details - Non-GAAP gross margin decreased by 160 basis points year over year to 46%, but improved by 100 basis points sequentially due to cost-reduction efforts and a favorable mix shift [2] - Research & development expenses rose by 390 basis points year over year to 17.7% of revenues [2] - Selling, general and administrative expenses increased by 70 basis points to 7.9% in the reported quarter [2] - Non-GAAP operating margin contracted by 630 basis points year over year to 24.2% [2] Balance Sheet & Cash Flow - As of June 28, 2024, cash and cash equivalents along with marketable securities totaled $1.28 billion, up from $1.2 billion as of March 29, 2024 [3] - Long-term debt remained stable at $994 million as of June 28, 2024 [3] - Cash generated by operating activities was $273.5 million, down from $300 million in the previous quarter [3] - Free cash flow was reported at $249.1 million, with a free cash flow margin of 27.5% [3] - The company paid dividends totaling $109 million and repurchased 764,000 shares for $77 million during the quarter [3] Guidance - For the fourth quarter of fiscal 2024, Skyworks expects revenues between $1 billion and $1.04 billion, with earnings projected at $1.52 per share at the midpoint of this guidance [4] - Gross margin is anticipated to be between 46% and 47%, while operating expenses are expected to range from $197 million to $203 million [4] Market Position - Skyworks currently holds a Zacks Rank 3 (Hold) [5] - Year-to-date, SWKS shares have returned 4.6%, compared to the Zacks Computer and Technology sector's growth of 18.2% [5] - Other stocks in the sector with better rankings include Shopify (Rank 1), Apple (Rank 2), and Digital Ocean (Rank 1) [5]

Core Insights - Skyworks Solutions Inc reported mixed third-quarter financial results, with earnings per share of $1.21, missing the analyst consensus estimate of $1.23, and reflecting a 30.06% decrease year-over-year [1] - Quarterly sales reached $905.5 million, surpassing the analyst consensus estimate of $900.4 million, but showing a 15.47% decline compared to the same period last year [1] - The CEO highlighted strong profitability and a ramp-up in the mobile business, with expectations for generative AI applications to drive future growth in RF complexity [1] Financial Performance - Earnings per share: $1.21, below the expected $1.23, down 30.06% from last year [1] - Quarterly sales: $905.5 million, exceeding the $900.4 million estimate, down 15.47% year-over-year [1] Future Outlook - Skyworks anticipates fourth-quarter revenue between $1 billion to $1.04 billion, with non-GAAP diluted earnings per share projected at $1.52 at the midpoint, slightly above the estimate of $1.51 [1] - The company expects a sequential increase of approximately 20% in its mobile business as demand and supply patterns normalize [1] Market Reaction - Following the earnings announcement, Skyworks shares fell by 5.7%, trading at $110.95 [2]

Financial Data and Key Metrics - Revenue for Q3 2024 was $906 million, with earnings per share (EPS) of $1.21 and free cash flow of $249 million [6] - Year-to-date free cash flow reached $1.3 billion, representing a 40% free cash flow margin [6] - Gross margin was 46%, up 100 basis points sequentially, driven by cost-reduction actions and favorable mix shifts [13] - Operating income was $219 million, with an operating margin of 24% [14] - Cash and investments grew to nearly $1.3 billion, with $1 billion in debt [15] Business Line Performance - Mobile revenue accounted for 61% of total revenue, down 21% sequentially, while broad markets contributed 39%, up 1% sequentially [13] - The company secured 5G content for premium Android smartphones, including Google Pixel 8a, Samsung Galaxy M, and Oppo Reno12 [12] - In broad markets, the company delivered 2 consecutive quarters of sequential growth since the December bottom, with expectations for modest growth in 2024 [8] - Edge IoT demand is improving, with strong design wins for WiFi 7 systems, expected to drive a multiyear upgrade cycle [8] Market Performance - In mobile, inventory levels and order patterns are normalizing, with generative AI expected to drive a smartphone replacement cycle [7] - In automotive and industrial, excess inventory levels are being worked through, with signs of stabilization and bullishness on design wins for connected car and EV markets [8] - Traditional data center and wireless infrastructure inventory levels remain elevated, prolonging recovery, but end customers are expected to replenish inventory once conditions stabilize [8] Company Strategy and Industry Competition - The company is well-positioned for the migration of generative AI to the edge, with expectations of a smartphone replacement cycle driven by AI applications [9] - Skyworks is targeting high-performance timing solutions for next-generation data centers, including 800 gig and 1.6 terabit Ethernet switches in optical modules [10] - The company believes in a hybrid approach to AI computing, combining on-device and cloud-based solutions, which aligns with its strengths in RF technology and advanced packaging [11] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the long-term impact of AI on the smartphone market, expecting a multiyear upgrade cycle [7][9] - The company anticipates revenue of $1 billion to $1.04 billion for Q4 2024, with mobile business expected to grow 20% sequentially [16] - Gross margin is projected to be in the range of 46% to 47% for Q4, with further expansion expected due to cost-reduction actions and higher utilization rates [16] Other Important Information - The company paid $109 million in dividends and repurchased 764,000 shares for $77 million in Q3 [15] - A 3% increase in the quarterly dividend to $0.70 per share was announced, reflecting confidence in the company's long-term strategic outlook [15] Q&A Session Summary Question: Equilibrium sell-through revenue levels in broad markets [18] - The company is gaining share in auto and connected car markets, with strong design wins and growth opportunities in safety systems and driver assist [19] - WiFi 7 upgrade cycles are progressing well, with significant volume expected in home, enterprise, commercial, and industrial markets [20] Question: Shape of the wireless business cycle and Android opportunities [21] - Stronger demand signals are emerging, with opportunities in Android and AI-enabled smartphones [22][23] Question: Broad markets inventory correction and growth outlook [25] - Broad markets have seen 2 consecutive quarters of sequential growth, with further growth expected in Q4 [26] - Inventory correction is largely over in consumer enterprise, but ongoing in automotive and industrial markets [26] Question: Gross margin trajectory and cash return strategy [28][29][45] - Gross margins are expected to improve further, driven by cost reductions, higher utilization, and favorable product mix [30] - The company is committed to returning excess cash flow to shareholders through dividends and share buybacks, with optionality for strategic M&A [48][49] Question: AI impact on smartphone refresh cycle and content gains [37][42] - AI is expected to drive a long-term smartphone upgrade cycle, with significant content gain opportunities in future generations [38][43] Question: AI opportunities in IoT and robotics [51] - The company sees potential for AI technologies to expand into IoT and robotics, leveraging existing RF expertise [52][54] Question: Impact of internal modem adoption by largest customer [56] - The company maintains a strong relationship with its largest customer but cannot provide specific details on potential impacts [57] Question: Inventory levels in data center and wireless infrastructure [58] - Inventory levels remain elevated in traditional data center and wireless infrastructure, with recovery expected to be prolonged [59] Question: Integration trends in RF technology [61] - The company is well-positioned to compete in high-end markets with best-in-class RF technology and manufacturing scale [62] Question: AI content uplift in smartphones [63] - AI will drive higher demands on RF technology, including filtering, latency, and throughput, aligning with the company's strengths [65]

Group 1 - Skyworks Solutions reported quarterly earnings of $1.21 per share, matching the Zacks Consensus Estimate, but down from $1.73 per share a year ago [1] - The company posted revenues of $905.5 million for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 0.54%, compared to $1.07 billion in the same quarter last year [1] - Over the last four quarters, Skyworks has surpassed consensus EPS estimates three times and revenue estimates two times [1] Group 2 - Skyworks shares have increased approximately 4.4% since the beginning of the year, while the S&P 500 has gained 14.5% [2] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for stock performance [2] - The current consensus EPS estimate for the upcoming quarter is $1.48 on revenues of $1.02 billion, and for the current fiscal year, it is $6.21 on revenues of $4.18 billion [4] Group 3 - The Zacks Industry Rank for Semiconductors - Radio Frequency is in the top 8% of over 250 Zacks industries, indicating strong industry performance potential [4] - The estimate revisions trend for Skyworks is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [3]

Financial Performance - Net revenue for the three months ended June 28, 2024, was $905.5 million, a decrease of 15.5% compared to $1,071.2 million for the same period in 2023[8] - Gross profit for the nine months ended June 28, 2024, was $1,291.0 million, down 20.7% from $1,629.2 million in the prior year[8] - Operating income for the three months ended June 28, 2024, was $130.4 million, a decline of 43.4% from $230.7 million in the same quarter of 2023[8] - Net income for the nine months ended June 28, 2024, was $535.5 million, representing a decrease of 27.5% compared to $738.0 million for the same period in 2023[11] - Net income for the three months ended June 28, 2024, was reported at $120.9 million, compared to $195.8 million for the same period in the previous year, indicating a decrease of about 38.2%[26] - Gross profit for the three months ended June 28, 2024, was $364.1 million, representing a 21.5% decrease from $464.1 million in the prior year, with a gross profit margin of 40.2%[66] - Operating income for the three months ended June 28, 2024, was $130.5 million, a decline of 33.0% compared to $229.5 million in the same period of fiscal 2023[63] - Net income for the three months ended June 28, 2024, was 13.4% of net revenue, down from 18.3% in the same period of fiscal 2023[61] Cash and Assets - Cash and cash equivalents increased to $1,263.4 million as of June 28, 2024, from $718.8 million at the end of September 2023[14] - Total current assets rose to $3,239.1 million as of June 28, 2024, compared to $3,179.5 million at the end of September 2023[14] - Cash provided by operating activities decreased by $142.3 million during the nine months ended June 28, 2024, compared to the same period in fiscal 2023, primarily due to lower net income, partially offset by favorable changes in working capital of $109.3 million[80] - Cash used in investing activities decreased by $61.7 million during the nine months ended June 28, 2024, mainly due to a $256.4 million decrease in purchases of marketable securities and a $66.0 million decrease in cash used for capital expenditures[81] - Cash used in financing activities decreased by $469.6 million during the nine months ended June 28, 2024, primarily due to a $400.0 million decrease in debt repayment[82] - As of June 28, 2024, cash, cash equivalents, and marketable securities totaled $1,283.9 million, representing an increase of $545.4 million from September 29, 2023[84] Stock and Dividends - The company repurchased $77.3 million of common stock under its stock repurchase program during the nine months ended June 28, 2024[15] - The Company repurchased 0.8 million shares of its common stock for $77.4 million at an average price of $101.33 per share during the three months ended June 28, 2024, leaving $1.9 billion available under the stock repurchase program[51] - The company declared dividends totaling $109.1 million for both the three months ended March 29, 2024, and June 28, 2024, maintaining a consistent dividend payout[26] - Total dividends charged to retained earnings for the fiscal year ended September 29, 2023, amounted to $296.7 million, with a per share dividend of $1.86[54] Research and Development - Research and development expenses for the three months ended June 28, 2024, were $160.7 million, an increase of 8.9% from $148.0 million in the same period of 2023[8] - The company plans to increase its R&D budget by 15% to accelerate innovation and product development[110] Tax and Income - The provision for income taxes for the nine months ended June 28, 2024, was $42.5 million, down from $94.6 million in the same period of 2023[8] - The effective tax rate for the three months ended June 28, 2024, was 9.4%, compared to 11.8% for the same period in 2023[41] - Provision for income taxes decreased to $12.5 million for the three months ended June 28, 2024, down 52.5% from $26.3 million in the same period of fiscal 2023[77] Impairment and Expenses - The company recorded impairment charges of $0.7 million and $16.8 million for the three and nine months ended June 28, 2024, respectively, primarily related to an abandoned IPR&D project[33] - The company’s share-based compensation expense for the three months ended June 28, 2024, was $43.8 million, compared to $48.8 million for the same period in the previous year, showing a decrease of about 10.3%[26] Future Outlook and Strategy - The company anticipates continued decline in average selling prices for established products, while focusing on improving gross profit through increased unit volumes and new product introductions[66] - The company expects that its cash, cash equivalents, and marketable securities, along with cash generated from operations, will be sufficient to fund its short-term and long-term liquidity requirements[86] - The company is currently evaluating the impact of recently issued accounting standards on its consolidated financial statements, indicating a proactive approach to compliance and reporting[28] Market and Growth Initiatives - Skyworks Solutions, Inc. reported a significant increase in revenue, achieving $1.1 billion for the quarter, representing a 15% year-over-year growth[110] - The company highlighted a 20% increase in user data consumption, driven by the growing demand for 5G technology and IoT applications[110] - Skyworks Solutions, Inc. provided an optimistic outlook, projecting revenue growth of 10% for the next quarter, anticipating $1.2 billion in revenue[110] - The company is actively investing in new product development, with a focus on expanding its 5G portfolio, which is expected to contribute an additional $200 million in revenue over the next year[110] - Market expansion efforts include entering new geographic regions, with plans to increase market share in Asia by 25% over the next two years[110] - Skyworks Solutions, Inc. is exploring strategic acquisitions to enhance its technology capabilities, targeting companies with complementary technologies valued at approximately $500 million[110] - The company reported a gross margin of 45%, maintaining strong profitability despite increased operational costs[110] - Skyworks Solutions, Inc. announced a new partnership with a leading automotive manufacturer, expected to generate $150 million in revenue over the next three years[110] - The company is committed to sustainability initiatives, aiming to reduce carbon emissions by 30% by 2025[110]

Revenue and Earnings - Revenue for Q3 FY24 was $906 million, with GAAP diluted EPS of $0.75 and non-GAAP diluted EPS of $1.21[1][2] - Q3 FY24 GAAP operating income was $130 million, while non-GAAP operating income was $219 million[2] - Skyworks expects Q4 FY24 revenue to be between $1.00 billion and $1.04 billion, with non-GAAP diluted EPS of $1.52 at the midpoint[5] - Gross profit for Q3 FY24 was $364.1 million, compared to $464.1 million in the same period last year[12] - GAAP gross profit for Q3 2024 was $364.1 million, down from $464.1 million in Q3 2023, with a gross margin of 40.2% compared to 43.3% in the prior year[13] - Non-GAAP gross profit for Q3 2024 was $416.1 million, down from $509.0 million in Q3 2023, with a gross margin of 46.0% compared to 47.5% in the prior year[13] - GAAP operating income for Q3 2024 was $130.4 million, down from $230.7 million in Q3 2023, with an operating margin of 14.4% compared to 21.5% in the prior year[13] - Non-GAAP operating income for Q3 2024 was $219.0 million, down from $326.6 million in Q3 2023, with an operating margin of 24.2% compared to 30.5% in the prior year[13] - GAAP net income for Q3 2024 was $120.9 million, down from $195.8 million in Q3 2023, with diluted earnings per share of $0.75 compared to $1.22 in the prior year[13] - Non-GAAP net income for Q3 2024 was $195.1 million, down from $276.3 million in Q3 2023, with diluted earnings per share of $1.21 compared to $1.73 in the prior year[13] - Net income for the three months ended June 28, 2024, was $120.9 million, compared to $195.8 million for the same period in 2023[25] Cash Flow and Financial Position - Year-to-date operating cash flow reached $1.35 billion with a 43% margin, and free cash flow was $1.27 billion with a 40% margin[1] - GAAP net cash provided by operating activities for Q3 2024 was $273.5 million, down from $305.7 million in Q3 2023, with a margin of 30.2% compared to 28.5% in the prior year[13] - Non-GAAP free cash flow for Q3 2024 was $249.1 million, down from $274.4 million in Q3 2023, with a margin of 27.5% compared to 25.6% in the prior year[13] - Cash, cash equivalents, and marketable securities increased to $1,283.9 million as of June 28, 2024, from $738.5 million as of September 29, 2023[24] - Net cash provided by operating activities for the three months ended June 28, 2024, was $273.5 million, compared to $305.7 million for the same period in 2023[25] - Capital expenditures for the three months ended June 28, 2024, were $24.4 million, compared to $31.3 million for the same period in 2023[25] - Repurchase of common stock under the stock repurchase program for the three months ended June 28, 2024, was $77.3 million[25] - Dividends paid for the three months ended June 28, 2024, were $109.1 million, compared to $98.7 million for the same period in 2023[25] - Net increase in cash and cash equivalents for the three months ended June 28, 2024, was $58.0 million, compared to a decrease of $111.0 million for the same period in 2023[25] - Cash and cash equivalents at the end of the period on June 28, 2024, were $1,263.4 million, compared to $721.6 million for the same period in 2023[25] Dividend and Shareholder Returns - Skyworks increased its quarterly dividend by 3% to $0.70 per share[1][6] - Dividends paid for the three months ended June 28, 2024, were $109.1 million, compared to $98.7 million for the same period in 2023[25] Business Performance and Outlook - The company anticipates a 20% sequential increase in mobile business for Q4 FY24[5] - Skyworks secured 5G content for premium Android smartphones, including Google Pixel 8a and Samsung Galaxy M[3] - The company supported the launch of Wi-Fi 7 tri-band routers and access points with NETGEAR, TP-Link, and Cambium Networks[3] - Skyworks accelerated its design win pipeline in automotive, focusing on telematics, infotainment, and CV2X[3] Non-GAAP Financial Measures - The company uses non-GAAP financial measures to evaluate operating performance, make decisions, and compare against peers, excluding items like share-based compensation and acquisition-related expenses[14][15] - Non-GAAP financial measures are calculated by excluding specific items from GAAP measures, such as share-based compensation, acquisition-related expenses, and restructuring charges[16][17][18][19] - Forward-looking estimate of Q4 2024 non-GAAP diluted earnings per share includes estimated share-based compensation expense of $0.25 to $0.35 per diluted share, estimated amortization of intangibles of $0.20 to $0.30 per diluted share, and certain tax items of -$0.05 to $0.10 per diluted share[21] - Total share-based compensation for the three months ended June 28, 2024, was $42.7 million, compared to $44.8 million for the same period in 2023[23]

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