QRVO - Earnings call transcript Q3 2018

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Operator

Good day, everyone and welcome to the Qorvo Incorporated Q3 2018 Conference Call. Today’s conference is being recorded. At this time I would like to turn the conference over to Mr. Douglas Toledo, Vice President of Investor Relations. Please go ahead, sir.

Douglas Toledo

Rebecca. much, very Thanks, welcome third and earnings fiscal conference call. to everyone quarter Qorvo’s XXXX Hello, include that materially forward-looking that will call This statements our expectations. results current could involve actual to management’s differ from cause factors risk affect We risk encourage Harbor in associated operations as earnings filed our the on with well the the factors our published because as our risk with statement Form results. Annual today Report contained financial release the to you review may Safe factors these business SEC and and XX-K In today’s both results. release and call we on GAAP provide today’s financial and non-GAAP We may to to additional analyze the trends performance. underlying obscure or of investors and comparisons without performance to expenses the impact in our provide perform supplemental information financial certain results that of items operating non-cash enable other

our During results. non-GAAP comparisons and primarily statement to based be items comments our call, will on income

and qorvo.com Chief Eric President and as issued to question each that, earnings will complete limit one available other Financial and on GAAP to Bob. are Qorvo’s For of themselves me Sitting management And Mark Bruggeworth, participant Qorvo’s reconciliation Creviston, team. and a Group website, today CEO; our Investors. non-GAAP hand financial of refer with ask to James I Mobile Group with Officer; Products earlier Qorvo’s President as to over that well Bob of today listeners, please we Klein, the under Infrastructure President Products Murphy, Defense measures, members In call release of please to follow-up. our all fairness

Bob Bruggeworth

ramps while sequentially and were to record December largest and $XXX at This strong Beginning reflected expectations. by quarter. in million support our March our consistent guidance by continued EPS demand very ramp quarter, December grew IDP’s expectations late $XXX million increased the in played customer with mobile to XX% largely quarter, guidance led our to IoT with and year-over-year Doug. in and deteriorated smartphone a you, Thank China. exceptional expected. of revenue an defense, In range. out also revenue infrastructure In business largest mobile quarterly delivered products, a customer. exceeding our led GaN. strength defense, for Qorvo our as the in our impacting and quarter The strengthen, in near-term is trends is weakness in revenue

robust for platform. a we to a in integrated mobile PAD have we integrated we the leading we is continued mid/high-band we Tier demand high hub customer growth XXXX adopting antenna is these multiplexing this This of year-over-year that representing To most and PAD RF smart multiplexing highly second year. to sampled solutions. a expertise. order XXXX system. our the drive the valuable Across industry manufacturers mid/high-band another greater are phone growth in higher Qorvo RF ramp another mid/high-band design customer expect BAW-based are path and calendar significant and RF to are the and This what in phone migrating suppliers custom in leaders tracking resources up As more mobile envelope end, and placement generation forward, we for increasing in an half the look IDP our in gains like for the gearing we percentage BAW mobile our landscape, aggressive custom volume of is technology expect tuning and a X top with highly This from baseband the architectures. of BAW-based customers. customer call main Coupled with of validation the in integration of of

supports for aggregation recently cellular to Qorvo band have aggregation and narrowband both smart entry. units. this percentage Telecom and barriers the downlink our dye of which all and X antenna integrated Phase major X as mid/high-band well calendar trackers, that handsets plexers performance category BAW featuring operators for to tuners, are model with RMB commenced as throughput This fit filters. frequency integrated billions industry’s controller across marquee Supporting and support we outlook, as module manufacturing, in both this for filters middle architectures, and Semiconductor opportunities low IoT, system-in-package In XX recently these broad X LTE-M X,XXX of engagements next-generation Band RF with slate than China Band customers, a XX global Unicom this low year. with our and applications. as includes clearly Premium carrier integrated solutions proprietary to Band shielding. mandated solution This valuable greater emerging improved opportunity see the do premium regional as the long-term more smartphones including and portfolio market the switch, key efficiently of your and In enables a targeting can for year. we recently PA, new cellular mobile antenna Fusion combinations. announced to aggregations. is phones, power RF the carrier within smallest design Nordic and IoT most co-development and including In handsets requiring our China applications RMB of China, and production Mobile mass incremental the features X,XXX, with these expected fab of above bands carrier the Phones mid/high downlink mid/high addition Band early modules. highest envelope our data available are mandated be was low mobile higher larger of products, tier our China

cases we as more zero XXXX. to expanding XG first XG. the XG the expect reintroduced offer XG industry’s first industry’s early enable and connectivity. by XG, the will RF and new of will throughput, TAM. launch XG ago. smartphones more half as expansion Finally, reducing used the of and we nearly We machine-to-machine to latency intend a will data massive complex year broadest continuing to the the calendar RF uniquely or require valuable Qorvo enabling now near transition than first solutions positioned portfolio RF ongoing the front-end of RF products is accelerate

are XG find delegate the smartphone operators, with as standards wireless and on closely a XG we programs. manufacturers, and chipset We leading collaborating providers their are a manufacturers network PC to infrastructure to XG helping

and We industry’s on are of extremely the pleased team the products have has what sight attractive with RF most deliver the to through RF our mid/high to expanding ability We done marquee line valuable mobile validated capture industry’s smartphones. placements content we most placement.

ecosystem, of secular XG broad-based GaN, of capable growth. the supporting of These macro deployment are emergence and Things, Internet Turning the long-term growth continued by now evolution the trends. are IDP, other to of supported enjoying the we market wireless of trends above the

were Qualcomm’s XX% to delivering compared reference quarter In last same band. module gigahertz cellular to up the transmission In transportation everything fact, design our front-end X.X year. to connected design car, intelligent superior IDP vehicle quarter latency the wins for over the low the support is this system performance supplying in

secured with for device. a a automotive a supplier win major We Tier LTE X also network access

Smart ZigBee protocols company a becoming in the Qorvo Power voice in ecosystem are to assistance the the RFXCE multiple products that radio. single support ZigBee support and For only around norm X.X, marketplace. the Thread, ZigBee is Home and forming Green are

array electronic In we We defense top Voice and in both our architectures. both with international participates technology defense, this to GaN-based at the become shift phased markets, and IDP by system the of trend of have domestic warfare forefront applications meeting are multi-stock, system-in-package from multi-protocol industry. heavily the advancing and missile Assistant. in mind HUMAX the Chorus are

technologies Our has GaN stations migration infrastructure, we products GaN family XX% to and to the focus the of year-over-year in Spatium small sockets resulted than the greater to improve The ramp. are performance helping our growth business. in high-value high-power amplifier and cells. also defense LTE-based and continue on lead In

the to of in frequencies primary And more As is technology gigahertz, is station LTE transmit the CPE, base a integration. enterprise GaN achieve all the IDP amplifiers LDMOS distributed winning choice technology required. the Wi-Fi needs incumbent consumer performance moves the rapid proliferation and solutions. with Wi-Fi, is to of coupled performance of at beneficiary becoming X.X higher silicon for and major both In of growth level is unable above both networks for on bandwidth driving OEMs.

optical modules, Our filters sockets and IDP portfolio XXX.XXax and quarters has and X delivered well amplifiers, of front-end to for and Wi-Fi growth of our since IoT, year. switches, broad markets. automotive, XXX.XXac positions the continue home, LNAs out to base sequential target station, win us power smart XX wave Overall, portfolio coming defense, repositioned we this

competitive rich of to $X critical attractive In billion. Our mobile technologies environment, continued mode moving target metrics. quickly measured outlook and technology enable opportunities our annualized most IDP product towards as IDP, is one and by the run-rate required, value offerings growth revenue creation the for both us other the and with

achieve management. a distinct IDP. mobile, are best-in-class technology, and business scale. delivering of have in We levels and year of advantage both we excellent technology an targeting are terms customers in and XXXX help was significant with for made performance higher products the In we advances opportunities Calendar that where we cost portfolio

look industry’s With over positioned for RF XXXX, and As growth calendar most continued mobile into we IDP valuable call support and is to that, to the will solutions. turn the I set is margin expansion Mark.

Mark Murphy

in points at gross seventh revenue defense, December million than driven year-over-year margin afternoon and $X the emerging $XXX revenue XX%, consecutive XX basis was and guidance in strength the $XXX This was products $XXX our other points. sequential customer. largest including and and in a the by was in radars launches midpoint Wi-Fi continued connectivity guidance, by and XX IoT was higher Non-GAAP growth points basis Bob double-digit of for warfare good a IDP. advanced the of quarter basis exceeding million Thanks, IDP million increase of increase quarter third our everyone. of revenue of including Mobile XXX product quarter year-over-year our applications. Qorvo’s million. electronic of reflects

down margins optimize improvements. portfolio as efforts and or expect product progress XX.X% sequentially ongoing on our and operational continued productivity development million Operating additional on sales, were we We program expenses million of $XXX timing. drive $X spend gross

means but with our no are ahead up on focus OpEx We by more schedule letting getting of on we are efficient. reductions,

or mobile We ‘XX committed fiscal XXX income was $XXX we basis sequentially productivity and is quarter. utilization sharpen with in up spend you XXX lower this to consider a year. sales, that year. year underway initiatives accomplishment of versus we Last and the and to expectations in our have an quarter R&D noteworthy Operating year, of delivered when margin fab particularly points exceeding short commitment points have operating on XX.X% the for basis achieving additional fiscal million last SG&A. that and December fallen volumes This XX% quarter,

will start our yielding our tax Jobs million are and enactment Tax GAAP expense costs net the to that intend December loss Act. Cuts controlling by our efforts and On impacted resulting results $XX I results. with broad-based and to from pleased are margins. of a We approach continue the U.S. quarter, GAAP income, improving the of In disciplined was

a we revaluing partially offset $XX result the of income Specifically, net was incurred in we or the sequentially to record below December from you to review to diluted expect expense, liabilities U.S. flow share which fiscal $X.XX of cumulative sales decreased Capital non-GAAP additional a $XX increased and foreign was on over sales, deferred for tax XX% filing and rate. taxes. our near which of I and the the earnings $X.XX guidance. helping down taxation encourage immediate December was forthcoming free CapEx million of to to quarter million per largely of from of expenditures operations tax full net disclosure by lower year end year. tax net on midpoint million $XXX our drive cash last XX-Q $XXX XX% the million the was $XXX million. flow cash earnings Non-GAAP

repurchased free with of in we to shares. intensity investments at and those margins, and we for are towards we progress can was cash repurchasing million. $XXX more demonstrating quarter of And freely greater quarter We are stock. capital the clear deploy recent million committed higher tax lower In $XX end a objectives. December flow Cash growth and model cash legislation

points year non-GAAP expect between basis we margin the gross guidance. Turning quarter diluted to our of to million $XXX sequentially midpoint the at our million, of outlook, XX XXXX, EPS fiscal and flat in be of fourth to and $X.XX revenue $XXX up

year-over-year of XX% in IDP XX% over quarter in and IDP a expect of to the project We quarter. be quarter’s March revenue over growth

low IDP for up we demand this mobile, quarter, For points business. seasonal $XXX on flagship be expect margin In spend taxes. mix and the development current our band basis is $XXX expected factors our expenses to slightly margins models. due and reflects guidance on payroll near-term of of view flow including our to increase to to Operating volumes increase approximately XX are an million. to PADs increase gross Free higher cash primarily sequentially March program reduce customers’ around by forecast to million

rates fourth XX% we our expect project non-GAAP our recent or on rate Based non-GAAP interpretation year on tax to quarter We remain X.X%. lower. current U.S. tax outlook law be fiscal our our below to ‘XX changes, and tax

Our to operating performance position continue trends improve off and the expect of IoT In in we year this progress. efforts business to leverage robust expect technology to paying our ‘XX are and sustain IDP by defense supported growth our GaN. and fiscal we

segments. margin the and key we milestones securing realign mentioned products the lower most portfolio in attractive to hitting Bob are wins product to As mobile design higher from industry’s

half these year. year significant expect benefits of second We see this the efforts starting calendar in – to from

mix fab BAW fabs we in project in utilization recent and a also and restructuring improve utilization product improve, China bolster BAW successes effect and improvements lower continue and focused to partially as offset gross opportunities. our With will we a to we overall gas in compete We and for Richardson, expect migrate SAW-based factories. by As remaining on utilization more OpEx our This productivity expect be our rates in selectively resources opportunities portfolio, expand. assembly to significant to and full more efficiency our SAW product our margins fab taking further. efforts priority, fabs test future

out operating we year in ‘XX. at growth free We profitable flow operating and lower fiscal growth ‘XX. and Day last track in laid margin we more the robust are achieve on CapEx expanding fiscal $XXX of to year May Investor million target by XX% targeting With are mobile cash levels in of margins of IDP,

quarter operating in above strong wrapping leverage. third and delivered posted the we another So up quarter, guidance

that, to impacted While and by signals XXXX, call premium year points expect cash and improving our flow ‘XX. margin revenue IoT demand gross free strong March been largest the growth, mobile GaN our in weaker over XX for customer see greater near-term free quarter. margins revenue fiscal from up we year questions. defense, to we outlook end cash has With strength I fiscal our products in operator from to China, expansion will flow the in basis the In and back and support continued turn

Operator

with question [Operator come Instructions] Thank you. will first And your Sciacca from Krysten Nomura/Instinet.

Krysten Sciacca

question. Congratulations Thanks I letting for clarify one the in quarter. ask want just the on point me to particular.

sampling the for far an customer? you did So super-PAD say that additional are at you marquee

Bob Bruggeworth

PAD bullets as as X As sampling begin Tier another far band the a release the as with well. one press did in customer we mid/high of well,

Krysten Sciacca

less let’s in do past thank ‘XX or you further at you second those And Okay, expect say more half the gains your then largest this customer of in calendar to be you. than content saw what ramp ramp?

Eric Creviston

Eric. is that. take will This I

and continuing as then to increase, will we categories product. product tracking driven seen well currently many have we see BAW-based the we as projecting are envelope generation-over-generation actual We have content by increase largest tuning

Krysten Sciacca

Great, thank you.

Bob Bruggeworth

Krysten. Thanks,

Operator

Peterson we Bill with next hear will And JPMorgan. from

Bill Peterson

design after Thank seasonality, the with think effort. question I This result guess second a guidance, mind? how out-quarter I beyond to half provide we is it’s we is the about difficult a how terrific lot of revenue in really know should you. the but quarter March about should think seasonality win

Bob Bruggeworth

going we March are beyond plan not because this are yet can customer this yet moment. we in process the at to gotten seasonality, we actually Bill, at changes I we quarter. about and signals don’t our Yes, demand haven’t think point, give any guidance make

during about the both So we year call. May around fiscal will ‘XX provide seasonality more and detail

Bill Peterson

Okay.

tuning think lowering the about year? of China, in should this ETP your China increase you you this the I different growth ISMs try angle, we how tax if that about should the mentioned aggregation, how rates specifically of me carrier think you and middle we consider I Telecom/Unicom China in about guess, guess I we talked at should content as the opportunities price points you Let expect guess year.

Eric Creviston

to that based RMB I the to going for look as this about XX% aggregation cloud attach carrier Eric. Yes, exited XX% rate – capability. maybe require enable as plexer handset we Band is over carriers the the X,XXX guidance the on XX% well. XX% the to of X/X CYXX up take any of at to rate will from We attach about

So, look Phase our of you mentioned, a forward of us that moving that’s solution. work such as a into And and pretty with we step frankly is gets with ET were significant we in where up component. are our XXXX back attach customers seeing to lot for X tier design that where we as the

in and the increases size their Phase of speeds several at It to XX% are cases X solution increases enabling the first and to customers. It about for also which reduces the by now. Power We does design level, our least that power current their market. production things at XX% integration into X. market the Class it most and with same ramping time the output time

So, the we the that in all placements into our by or of some do two-placement of integrating all the for content front-end. all that filter cases majority fewer in that solution vast does

a for that we key us very integration throughout content So, is Phase being this the X and year. opportunity see for factor us

Bill Peterson

Thanks. Okay.

Operator

From Chris James, Caso. Raymond

Chris Caso

exiting impact where given as the I and first gross are you. with have in the margin? gross what facilities the what and the question you to regard does the as of BAW guess of high/mid this China utilization get Thank you Yes. you think year margins expecting utilization, do in impact that PAD well the

Mark Murphy

this talking talking or fiscal year? Are year are you calendar you Chris

Chris Caso

year? calendar the For

Mark Murphy

Yes.

on I Richardson out. fab So But certainly to will to XX But points. margin. in not going on moment. a particular. margin a we our far get we will in make gross again December that guidance will quarter the comments were up I few This basis not are gross specific help give

out So excluding gross quarter five our ago, margin guides hurricane And if so we well. in do didn’t of September our effects guidance. and the be five previous five last the before the we at five would look you

predictable we become more So forth. visibility us have that’s – better productivity, have and and so more positive certainly certainly we the get allowing to

was also ‘XX in which on quarter to to We the XX.X% progression of current guide our steady the what XX% is margin XX.X%. gross have of second from obviously had low

year fiscal back we that really levels we are So at back in were ‘XX.

has better forecasting we better again getting points current XXX trough clearly of we So are business the improving up the guide. basis are we from undoubtedly the since and on getting are to this midpoint All been candidly with margin that low low environment in a has was and an it’s way through been weak company volume, still working its of transition. been a band the PAD

we and confidence have Fabs we about we we where if that have running margin made, look the well. progress have we gross we been the about look great as So out. exceptionally are think

capacity and on made then focused into team management most got are margin business. going that for are gross got we are that’s attractive right investments absolutely ready are we you fill. The have now. behaviors. cash a The wins and are the that have we available markets exhibiting flow us We and securing to allowing to And and free move technology competitive fabs have the

dictate comments utilization we working through months in is next largest in well utilization is in fiscal one XX% moving be and utilization over touch I now. And The the XX% utilization headwind XX% fab the my down. as be as gas market as in our our of building our the am fabs. above remarks contemplates XX% about the mentioned confident the So to operations. SAW I we going plan in effect our prepared utilization fab will up into during end what ‘XX, at increased end Richardson, we I are expect my year mentioned for ‘XX. least On going year that’s over X that positive average. utilization should course going certainly a to average back what are that we a as certainly And quarter of in short-term do But Chris at

Chris Caso

emphasis you half was margin to emphasis SAW comments, mean expect like in actually very where a second Okay, I design calendar the design SAW that’s some these could because helpful. going into from on in that a My should structure we less there question understandable is with of engagements from year-on-year be SAW get of SAW be those we some clarify or and that given to follow-up be of forward? there, if and the as sort be less perspective would the to some shift success would year, in but sounds it the just perhaps that’s win BAW of going actually down BAW of

Bob Bruggeworth

Yes.

half. year-over-year Our down indicate would be current projection the in SAW second will

but SAW are to investing further. of majority are technologies make and in We that going forward many help going those we products are SAW asset products key really products lot of focus in combined with a that different on to BAW which that enable will coming, offerings with leverage that product unique

Chris Caso

Thank you. helpful. That’s

Bob Bruggeworth

Chris. Thanks,

Operator

Burton. From Research, Mike Longbow

Mike Burton

Hey, guys. Thanks and the wins. congrats on design

market down, and First, maybe of Eric, the a XXXX, talk been for you you XX%. of I morning to got guiding back in levels What you were Huawei. at the have that end we that down percent about gainer trend this how of level? you shipments guys saw of track sort but relative the sales kind China China had inventory MediaTek at as on I and for guess about expect maybe do that you wondering if could QX, OEMs to obviously subscribe am

Eric Creviston

Yes.

maintain our the to best control doing tight are we inventories. of channel So,

we so are And they come. volumes as following the

March, following that channel that we foremost first are judgment in immediately. were You to we recovers we your with quarter, taking our end-market so our in tight, XX% question current trying our roughly and looking that’s and are to the sure directions plans our than see the consistent see historically. and lower demand keep their and we revenue will the guys whenever guide, that make of And of To specifically, answer that course China guidance the into the December essentially.

Mike Burton

maybe have band going that about for talked you’ve a to you in two-parter to – QX PAD filters. When new obviously migration migrate able timing with the PAD then the size to and of spoken part trajectory you that low down kind shape it and can impact the you the migrate that? a being if the about just low-band to if forward, in and and understand help is past And being in-source just the year? of Mark, is Okay. second win also CapEx OpEx of for then can just Thanks. potential – margin us customer to also I And help next the the relative you that’s PAD high-band am going curious us for a new are

Mark Murphy

low-band there on it’s and we continued off manufacturing customer over make that in I say efficiencies just a portfolio, to all margin that’s of business, that helped bit, the There the in tails time. forward. the required think improved and positive with so mostly associated still yes, and been product. have some in improvements it product PAD, that the that mix filters the improvements us slight will filter, as Yes, a Yes, of by a it drag into I changes on going in sort is effect it’s but is net have helps

great the we CapEx, on are becoming strides far capital intensive. in less outlook As making as

unique We where network and leverage to can we where that the have require we production. our are can doing own requirements then everything we device foundry

programs below going productivity being see And profile lower we CapEx. sales about forward. CapEx us This this all of of thoughtful XX% that’s very driving you are heard add as before. what have We year achieve we helped will the and be course

fiscal on only about from to at will to think one increase we year, million $XX CapEx. is Next be to below capacity be X% current able our And of are BAW example probably ‘XX going XX% spend. sales capacity year of we

what not of margin story. it a specific planning growth a year and flow but the the more his dollar million things part the OpEx. am process, have we give Again, lot of CapEx, and is guidance midst when quarter become run-rate by progress strong the in on evidenced say to And with really at so OpEx, is I at you course we on Bob expansion we $XXX this a where on I there positive this XX.X% will very and are of Mike, productivity So, actually, of number. free see working the of expect going which great we really drive organization cash sales seen efficient we were combine as

Now say in we forecasting But of below certainly for what sales are fiscal a that, you not are ‘XX. – to of on I course, will striving OpEx that’s XX% year that build plan not

Mike Burton

Great. Thanks.

Operator

Next with Needham & we Quinn hear will from Bolton Company.

may muted, please line Your see. be

Quinn Bolton

can me? am I hear you sorry

Operator

Yes.

Quinn Bolton

I wanted behind get is share a your into guys Thanks. follow-up. December Hi half your is patch a then I SAW second congratulations Thanks. socket band And the the low declining, a utilization next Great. mean on patch utilization? the that’s a site results, in that on lower to that there change going ask of low band ‘XX, dropping about question SAW on comments that calendar read

Bob Bruggeworth

Yes. Quinn thanks for the question.

low percentage I share to there utilization is band that say the shifts think best is our in Yes going some it’s down. PAD. in

leverage believe script I already our in we I that that in my important is has and that opportunities as same SAW we and a to what where we attractive both the are the in shifting we think resources time we can still is to SAW. technologies developed but see profitable, utilize BAW what Eric is commented plenty mentioned more of

answer So the best to that. I think way that’s

Quinn Bolton

that March reflecting you Great. China, are Thanks guiding what largest to obviously, of platform have the at a and in if terms next you do quarter then just your marquee large you Samsung, are guys look March seeing your a down you see you in tend could look on question your customer in customer, the stronger us Bob. as And March? screen they we just wondering as give ramp sense to any content what in

Eric Creviston

with that address to the at as time. Samsung in Huawei as same we and We will well had of I corner step we last Throughout I with actually Eric, a with Huawei year little maybe talk Huawei. turn and is launch. about this Yes, fall flagship began gotten will the their out talked had

demonstrated think that’s clearly I now.

We committing each from content to Huawei. our with forward are platform increasing also

have greater content lunch in even their and So fall that. next we will beyond spring in greater

Huawei, So, we clear in begun be have with don’t been we the but have we turn this also the Samsung launch. with that that case expect to

are expecting cycle in So much we content, not there. for the expecting spring not any growth help Samsung

half opportunities second half mention the meaningful PAD And second launch in last their corner well. James to did share expect this and year to year particularly as I the in we example. for in second a both marquee to and have love and large sampled know custom However, turn do spring customers as Samsung. launch about start to in talk the we their And see we think mid-high change of next Samsung would year an flagship band

James Klein

of Yes. mentioned I becoming very infrastructure we bit, IDP their have very talk customer and ZigBee, remote that so well do great really a controls, is win their Samsung our we are a that how also for with in great press design had with the strong for we And that’s top to win a business. on little want of organization. the with release starting

other next that into seeing things month going are are supply trials. and go to into us XG the you demonstrations their also So Olympics like into

Quinn Bolton

Great. Thank you.

Operator

on with Moving Research. Edward Snyder from Charter Equity have we

Edward Snyder

year, one, of low of Mark, of to thousands Eric terms looking or just if the more it to over next and or James, you a being year? the demand of expecting one margin Thanks carrier production beginning that in your ax could called are on so, the is guys. months, how to production is do even adopting the maybe you times or I or handset lot. just off of aggregation has PAD seeing as your stand ET in up are most area business you OEMs on of about appears improvement And one you it in bps have some Thanks XXX.XXax an And on we coming more growth you spreading this of old out new starts then should of ET peeling fits in to a touch when see old size if are the side of a one. or this where the starting from some horizon see thinking it ET talking I ramp? this be band coming of X was year mentioned hundreds comes from quick, side that to there on couple for the could or you real

Mark Murphy

James and first. James let I will go

James Klein

Yes.

out on we support are in are development evolution believe have in the already so the We this development that that that seeing support were Standard We are start is pullout ax, The are now. released last products but first standard towards of that of products year, the products we in released, to will year. of that. the not ramp that go going now. I

we very Xx are well So, think we are we ramp positioned well doing very going and during AC for calendar today to happen the in is this year.

Eric Creviston

Yes.

markets higher power will you as continues output due tracking, require enabling increasing envelope consumption, get point to in to It’s talked content improvements, tracking uplink content. that additional the performance can lower we we but dual the many also not as be market very exciting. there when to Regarding also imagine current about just things envelope many

are partners, this are year. potential the now, addition partners OEMs So, with that, working calendar revenues will and in but quite with baseband we are we engaging the meaningfully new to we which seeing increases content with add baseband

Mark Murphy

Mark. it’s Ed, Yes,

between we below margin. band the one improved On the said part points margin become low of going we is forward. now PAD going XX a less have still are mobile well portfolio there average PADs have versions band X to but And difference, important even and the the these between as is low

have outstanding think we we capable technology. design to SAW very Eric team going a be said are I as

placements our in proven the ability have band most low PAD difficult ramp compete to with the highest and the most difficult customers. We at volumes

BAW So, it’s to pretty want really do our helping of able us being time not And as note over mid/high where our important resources for confirmation it, do dramatic focusing look relates case margins and drive on to mix about a of it’s it I out. this of its band there. that we to and our is as our case spend ball time not revenue think with really we technology it’s a it’s to us

than of year, be this BAW it revenue. will in XX% portfolio related will less mobile’s be So,

that year in the half it’s opportunities, being related view over fiscal XX% we fiscal the which ‘XX, require year well. filter is mobile some ‘XX over year SAW will nearly fiscal in as year, Next and XX%, ‘XX around business it’s BAW of content

I that’s the think So, story today aggressive as portfolio management.

Edward Snyder

a there. that’s which SAW Mark, out comes and quick you am a not saw Florida BAW fab follow-up, a because I the confused, of Just little

You fab backup. got all Carolina started SAW North BAW as then of and comes Richardson you Branch Farmers in and out your a a

we of haven’t Branch, are mean you there? Farmers BAW into started for an about production Florida either/or, will So, be talking I so are saying does you really and because you that it’s what know kind capacity putting

Mark Murphy

No, Ed.

Just will make the fiscal it that headwind utilization time we clear be the currently That go selective planning fill ‘XX. try over to to in be down and a capacity we it and plan have and SAW will we – comments, opportunities. and are capacity clear are to with we year more our SAW have in is will what will we our

Bob Bruggeworth

be to production the be in future. Farmers Branch will clear, But in as well our Richardson as BAW

Operator

Piper from Kumar. Harsh And will hear from Jaffray, we

Harsh Kumar

talking some PAD meeting China, and your could some content Yes, new the because and hey, the brand you question, cash just a job was maybe you Bob, it Quick gross it’s follow-up or some margin are could us the the between can second things, sense my whether of or possible? what on and And about is about super December if to it TRAM, color can stuff PAD the you mid/high magnitude shed this of there. additional confusion there back replaces ASP explain or magnitude on flow free ramp quarter, the give us sense public I Great guys. on go if goals. largest talked you That’s March – customer the a sorry guide, in your give been of all the of that if question is were maybe about, you factors? then as

Bob Bruggeworth

make Harsh, as you There there. March our results the has China. I in I first that of sure customer lot a it’s Yes, question think guide, have your been I it’s to to press already with along December largest in want reported safe say our out understood things yet.

just how we our much it to customers details, impacted but we I I lot wanted largest think many it’s sure you quarter. up is us have in to since last want take is you IDP in do not to primarily best TAM in of to Eric, question? make think we customer reported, flat of understood it’s like as China but continuing the guiding are is get a March. why our into IDP single-digits, slightly well the down

Eric Creviston

continue. example, other We for and essentially mentioned functions phones within will over the hub. exactly main it’s sure and generation high-band try how the answer not not it function a to in the Harsh, question, generation new diversity and brand smart path it over calling has got high-band of content see all in market, grow terms dramatically mid over pretty grown it it mid how time Yes. I’ll for TAM advanced functions, It’s it’s path. the and we particular can of capability take integration within the and believe actually that we and

high-value, sort deal So, high of modem. of heartbeat performance it’s the a great very

Harsh Kumar

Thank thanks. it, Got you.

Operator

Arya. Bank America, Vivek From of

Vivek Arya

suppliers, is the of you the go maintaining then flipping as it’s were in importantly win the out taking is what this socket over future level visibility my content this because what some in behind guys, years, question. What and content in for to you maintaining you factors Thank with time? the the was of now sustainability the different

Bob Bruggeworth

demonstrate Vivek, first it’s are we let me say, to able capabilities. that nice the

utilized not created equally know, architectures. Second, as funds the you same are well and all

we I So, on more What to can issue we take and I are are that. working other future importantly working bit at you want on these a on opportunities little also generations customers. yes, with say is

I we are of growth believe So, beginning here. the do the at

I said few just were talked we improve multiple order as what how it have to filters or BAW a over was single can we behind and things the improvement a to and we resonator last how got think several multiplexing, were the all can along we have when module, with able design yes, on put compete we about higher to filter in how then when BAW then multiplexers you. quarters and along multiplexers in performance, first work we module we switches PAs a

important I that we is think now capability. demonstrated have what’s

for our the that belief are We we multiple continue and more of customers. able to game importantly generations going are multiple in it’s and to be

Vivek Arya

to Obviously, were follow-up you my look Got manufacturing it. at there low Very but this product as some margin imagine a know, this what’s very growing band significantly the curious back and a I and in helpful, example, pain as initial perspective. complex of than different from Bob. margins if level more confidence a is just gross PAD? am I your And product, low-band PAD yield is

Bob Bruggeworth

a is fair Yes, it point. complex I mean, product. very

been well. volume However, very, the years content rung the of imagine. couple We incredibly BAW a smoothly product out very can high-intensity a have process well ramp high has went very ago very and of itself that as did you

our ones entire seems X-inch far, very manufacturing well. running the good be at were. So to wafers as X-inch in The BAW are line as yielding least

the forth. credit are issues out volume of prove samples and We already high with quality quite manufacturing product running to variances so

belief to recent doing assure can no smooth everything So, is go There very we won’t well. we ramp. are it

Vivek Arya

and Got congratulations on it, these thanks sockets.

Bob Bruggeworth

you. Thank

Eric Creviston

Vivek. Thanks,

Operator

Next, we’ll Hettenbach from Craig Morgan Stanley. hear with

Craig Hettenbach

Yes, thank you.

Huawei of in Just see Huawei into through the regaining momentum, transitioned there following kind any in of the carry in fall up as of XXXX? some spring for are you you you how terms on the or comments about thinking thoughts of do terms

Bob Bruggeworth

earlier the XXXX mentioned I on fall flagship. corner turned the Yes. that we

the the so the we We increasing significant launch, launch. the for on about but And share far believe well. we as visibility have of flagship have very flagship content we gains are spring next engagement fall into clear there capability excited

Craig Hettenbach

of ramp second super or of half? follow-up back the just given to into of is on business for you in thanks. in viewed what’s confidence there terms half, in how of that And terms gauge the versus just spread PAD the for relative a the the context available then terms of you any you opportunity it, Got the in the anyway

Eric Creviston

sophistication of and this manufacture many way to and level are able able volume off It’s people of in this a high pull to be It’s yields. opportunity. high great and performance not

of for lot we product. think this customer I are type a of seeing

Bob we as see levels earlier, demonstrated said going the just the to think a we power go ability to what forward, to ways of us capability differentiate Now performance lot add have I and that up. and reasons for

a capability have technology our architectures. future of well We the filter with power in aligned think handling are we lot I and so

Craig Hettenbach

I percentage just slip Got how of December in, it. your largest of get customers, any XX%? custom you could I of the And if am in so what’s one sorry will in then the terms more the for quarter

Bob Bruggeworth

XX% one customer, is Craig. There

Operator

Hari will And Toshiya Goldman question come the Sachs. from with next

Toshiya Hari

thanks and the on win. congrats question taking the Great, for

in wins design end quarter. have provide to that some about talked a the contributors Can up I product there from or or end Then point if one year-over-year XX% and two an guys being there maybe IDP three market You you perspective will follow-up. you could or color be key helpful?

Bob Bruggeworth

Okay, thanks.

business. that nice the talked the design Couple growth pretty on same for specific business growth. in win release win about low-power we and of design quarter, as design business wins gives revenue is and future also strong the well. saw as the really our nice XX% funnel growth with So again string the us wins wireless our this inside outlook bullish Wi-Fi press And have defense said you of Samsung our TVs examples, then IoT, led really combined a by you really with prospect design so that’s things year-over-year story strong and had a we are future for for

Toshiya Hari

in great return prioritize second guys capital going forward, and the allocation and cash guys Great, are improving couple you perhaps thank here think a over how in of for doing Mark, of next is then we versus And investments flow terms you. one Thank years clearly, how capital about should free M&A? the you. you job

Mark Murphy

are you Yes, right.

outlook generation in guide and and we it ‘XX very the is for cash As free in the quarter, strong March expect continue. then December evidenced the the has been to flow

clear debt to have we We to maintain ratio. that EBITDA been X.Xx a intend

are currently there. we So, fine

under actually We that. are

but year of other to sustain possibly lower that, the this XX to pay financing, we calendar need take-out notes than cost levels no those leverage. in So, for debt like down some would

with cash, both we with greater got and So flexibility significant tax have balance that new law, flexibility the the and capacity. sheet with on

been believe doing. is to we be first invest are a been we clear forward. the And we business, going have priority going less intensive have to lot in that our We which capital

diversify are the to up into return more James we and leverage really bolt-ons is So, so James’ the cash to cash its cash look that and what focused on and down we business, factors acquisition, then at where are to okay with M&A immediate business has even then always core flow to will And up bulk at overall. that keen certainly of looking opportunities shareholders. extent, IDP operating free frees in and is our so And about of we am in there lot flow then will no be excited fall activity. done of I that business, growth

Toshiya Hari

Thank you.

Operator

From Malik. Citigroup, Atif

Atif Malik

I last smartphone number models X year Hi, American of models are SKUs, my from the or our question. at the they doubling versus are thanks this year. maker, If putting out X look for taking

growth unit volume about I So this the impact when from models just more the the can think and over have year, your how providing a being up they line I are look year this top follow-up? expectations you for and out at and that should we help last diversification content maybe year

Bob Bruggeworth

we phones architectures away that. am can am etcetera. customer largest tomorrow. our that I ask with predictions we going sorry I sorry future any that, to help but sorry, really can’t stay you am I number are maybe from them you of

Atif Malik

Sure.

growth you line to market are your outperform? expecting line to the growth Just top RF XX%, XX% top

Mark Murphy

Yes.

RF at the many that really the XX% opportunity We for as are spoken in about to XX% still the drivers we mobile mobile have to market by looking times, driven all data. demand long-term due

are at end while to market. gross our of margin go. own in in off we this terms are closer of we expanding bit growing I market slow total really and our cash to terms or as start ahead think flow growth So thinking low and to we of calendar year that obviously And of committed a of the focusing on

Atif Malik

then and follow-up. Great

Mark Murphy

on so will going ‘XX FY and we I year focused am in jump for out in markets. as XX% We our growth XX% Again, close it high to we grow strength an growth XX% going to another expect than rates. markets as grow stay are with at And we average of growth at will I greater underlying IoT model IDP, those those defense. to well. or have to

Atif Malik

a your about smartphone I of major and of a Thank you Chinese on talk understanding impact then memorandum China Qualcomm follow-up, front you. Vivo and the announced manufacturers And the on just Great. can opportunity? the mean this RF has Oppo with

Bob Bruggeworth

see filters is supplier obviously obvious and certainly so already and ET impact various Yes. market a We nothing don’t forth. any into Qualcomm and immediate that with

on the understand the motivation it announcement, us. don’t has we implications for think any like So we necessarily

Operator

will next Curtis Barclays. from of And hear we Blayne

Blayne Curtis

Thanks question. Hi, for guys. taking my

what and to just specific try generations obviously this think is ask want cash a in walk if what about that your could indications and you you any the in through kind what us of be? any be mid/high to factors other of on and determined mix band sensitivities to put if such, of visibility when can when got free can flow could just number, then visibility Just just PAD, mattered just and you terms this very give your is that, get just

Bob Bruggeworth

track. the can’t a any The job team on forward. give anymore say really than other detail really product PAD detail. band into are incredibly can we competitive we get mid/high just It’s done think developing don’t progressing fantastic and an I more we Yes. around just has

Blayne Curtis

back see a coming build to the margin result And it’s gross for little the ahead to then you starting nice half? second utilization, a top of this gross to line with go are wanted win margin BAW and I just to filters up down,

Bob Bruggeworth

we are Blayne, No not.

We will not now. be soon

Blayne Curtis

Okay.

Operator

today’s turn closing I for like session. would additional management any the conference remarks. And to over conclude or does now to that question-and-answer

Bob Bruggeworth

I want And night. look of you tonight’s at Day. conferences. we save to date and many ask forward again the you thank to Investor everyone We XXXX call. upcoming for of meeting Thanks for attending May that good XX

Operator

disconnect. thank that everyone conclude Ladies do now today’s may and participation you presentation. does for and your gentlemen We

Qorvo (QRVO) 31 Jan 182018 Q3 Earnings call transcript