Skyworks Beats Q4 Estimates: Will 1Q25 Outlook Drag Shares Down?

Core Insights - Skyworks Solutions (SWKS) reported non-GAAP earnings of $1.55 per share for Q4 fiscal 2024, exceeding the Zacks Consensus Estimate by 1.97% but down 29.5% year-over-year [1] - Revenues for the quarter were $1.02 billion, a decline of 15.9% year-over-year, yet slightly above the consensus estimate by 0.31% [1] Revenue Breakdown - Mobile revenues accounted for nearly 65% of total revenues, increasing 21% sequentially due to normalization of customer orders and inventory levels, along with support for seasonal product ramps [2] - The company achieved design wins in 5G for premium Android smartphones and expanded its Wi-Fi 7 pipeline with major partners [2] - Broad markets contributed approximately 35% to total revenues, showing signs of stabilization with demand in edge IoT and automotive electrification [3] Operational Performance - Non-GAAP gross margin decreased by 70 basis points year-over-year to 46.5% [5] - Research & development expenses rose by 390 basis points year-over-year to 16% of revenues [5] - Non-GAAP operating margin contracted by 600 basis points year-over-year to 26.7% [5] Financial Position - As of September 27, 2024, cash and cash equivalents along with marketable securities totaled $1.57 billion, up from $1.28 billion as of June 28, 2024 [6] - Long-term debt remained stable at $994.3 million [6] - Cash generated from operating activities was $476 million for the quarter, compared to $273.5 million in the previous quarter [6] - Free cash flow was reported at $393.2 million, reflecting a 38.4% free cash flow margin [6] Dividend and Guidance - The company paid dividends amounting to $112 million in the reported quarter [7] - For Q1 fiscal 2025, Skyworks expects revenues between $1.05 billion and $1.08 billion, indicating a 4% sequential increase at the mid-point, with non-GAAP diluted earnings projected at $1.57 per share [8] Market Performance - Skyworks shares have declined by 22.6% year-to-date, contrasting with a 39.7% increase in the Zacks Computer and Technology sector [3]