SWKS - Earnings call transcript Q3 2024 | Skyworks Solutions, Inc.

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Operator

Good afternoon, and welcome to Skyworks Solutions Third Quarter Fiscal Year 2024 Earnings Call. This call is being recorded. At this time, I will turn the call over to Raji Gill, Vice President of Investor Relations for Skyworks. Mr. Gill, please go ahead.

Rajvindra Gill

operator. you, Thank and Conference everyone, Skyworks Fiscal Third Good welcome XXXX Call. Quarter afternoon, to today our Officer With Officer Liam is me Griffin, and Sennesael, and Chairman, Kris Chief Skyworks. Financial for President; Executive Chief accessed skyworksinc.com. being is of the can Relations live This from website call Investor at broadcast the company's web over and be the section

website their conclusion during In addition, will remarks after prepared be made call. probably the company's available on our the

to release to forward-looking on our will future annual certain statements would I made to everyone press and outcomes report include information like could are filings, statements that materially discussion may statements. for relating and Before actual today. cause considered we XX-K begin, recent or results and that remind risks that to SEC our expectations forward-looking any on from including our differ Form adversely be Please earnings refer

guidance Additionally, section I'll a consistent practice. to that, our turn past measures the discuss within GAAP. Liam. over complete results the Investor financial to release and include website to non-GAAP With for with our press company the refer we Please reconciliation will call our of Relations

Liam K. Griffin

or $XXX share slightly of cash Skyworks Raji, third delivered quarter Thanks, results were prior revenue $XXX million. XXXX. of million, flow and of per of met for above We margin everyone. solid earnings $X.XX EPS fiscal and posted free the and delivered welcome, generated guidance. gross Revenue, our

XX% $X.X or management was cash free flow excellence. year-to-date Importantly, working flow reflects billion capital margin, cash free and operational which strong

patterns that levels order normalizing. encouraging are signs seeing are we inventory mobile, In and

of cycle smartphone AI, generative catalyzing and prospects meaningful are We the energized driving levels higher complexity. about replacement RF of a

upgrade smartphones, a only AI on be new the multiyear latest features potentially next-generation available We will fueling cycle. expect

and our We long-standing the technology smartphone positioned, footprint. are given OEMs, global manufacturing best-in-class RF relationships a leading uniquely with

and demand December of cycle we transfer is X we In edge quarters growth the bottom, multiyear balance where the In IoT speeds funnel of XXXX. have for expect design a given sequential since lower strong broad markets, X a for consecutive and data and win we improving, latency. healthy systems, modest faster we growth delivered anticipate WiFi upgrade

center we the under demand. In to wireless levels ship is as recovery data and remain infrastructure, prolonging continue which natural elevated, traditional inventory

once we end back to levels. to However, replenish customers industry stabilize, conditions expect inventory normal

Lastly, in automotive of we signs working solutions bullish car levels, stabilization. on RF seeing broadcast digital are connected and our isolation, We remain industrial, pipeline win excess through for design our the EV markets. but power and and across inventory

years. term, believe migrate long Most generative replacement to of a that over models. significantly, and will support RF facilitate one device smartphone applications compelling will cloud. edge. In to critical believe history, and medium vision X we continuous to AI the the learning devices longest drive is incorporate computer the in cycle, edge increasingly machine currently the language we to Over IoT, to standing at AI-enabled training the Robust is between rollout AI inference

autonomy and and over-year software of To these need supporting automotive data vehicles. will time, power train and the big Over screen higher RF on OEMs downloads connectivity. extremely in facilitate trends, through updates, fast cloud levels OEMs

For cycles upgrade and will compute large optical next-generation workloads data switch, networks. language complex centers, in supporting models

Ethernet with our Over solutions, gig switches long well terabit term, the Skyworks medium is XXX optical and in to positioned X.X targeting high-performance timing modules.

on-device. on will More AI combo new in of there computing, trained AI and less for be hybrid inputs. inference the processed deployed and a Data the cloud-based. a Ultimately, our can complex to and approach edge on-device will cloud view be in tasks to be is the cloud complex

low efficiency translating technological XG. advanced upgrades latency, smartphones in of pushing new requiring packaging, premium burden, boundary power advanced higher XG will elevate further integration these AI-enabled in to levels connectivity signal and and consumption, integrity addition space, throughput and resulting higher In the energy for with the usage cases, to of onboard lower

played a our relationships, portfolio. technological given increased These IP Skyworks deep talent strength, demands customer and exceptional strong engineering

secured Google and business Oppo premium Turning Networks. of and Pixel points content Android highlights. automotive, Galaxy to and others. telematics, the smartphones, TP-LINK M WiFi our design including tri-band CVXX. Samsung XG routers We Xa, RenoXX, supported infotainment accelerated NETGEAR, in for We pipeline X with We and our including access quarterly launches among Cambium win

long-term our for challenging of the QX base a continue of XXXX. a strategic last customer performance for of fiscal diversify to growth the With demand Despite call our expand and over business. that, and make the investments environment, Kris reach to will discussion quarter's turn we in areas, outlook I our

Kris Sennesael

$XXX Liam. of fiscal of sequentially. was million, third grew midpoint XXX approximately X% Gross with XX% slightly Mobile of was cost revenue, quarter XX%, sequentially. were our the ongoing down our sequentially, up Thanks, was gross Skyworks above Broad Gross and mix profit XX% expectations. XX% the margin favorable revenue, reduction points revenue basis outlook. total XXXX shift. total markets with of in line actions approximately margin $XXX reflecting million at for

of We in into operating translating QX, reductions. $XXX our expenses of is earnings $X rate million million and net during which investments XX%, an $XXX and effective our reduced guidance. of Operating $X.XX, consecutive and was share delivered income, million further our other in Also, per were we tax of technology million, strategic line with XX%. reflecting generated margin of in X internal inventory, of our resulting product a operating road $XXX our income driving quarters We income, diluted maps.

flow expenditures margin. revenue, or in of $XXX was cash Third $X.X flow free $XXX million cash a X% resulting flow million. generated Capital fiscal we Year-to-date, or of billion $XX free were of flow cash less than free cash operations quarter from XX% million.

through levels capital We management intensity. continue to careful drive working robust moderating cash flow of and consistent CapEx profitability,

fiscal XXX,XXX shares million a repurchased dividends $XX of During we million. stock in our for paid $XXX QX, and of total common

to and through value approach $X a billion, have We excellent we nearly billion delivering in $X.X remain shareholder us providing disciplined allocation. grew to to Cash and debt, investments capital committed optionality.

Given quarterly per strategic dividend our outlook and X% Skyworks $X.XX increase our conviction in to generation, strong cash to we a long-term consistent announced share.

let's move for $X.XX outlook We fiscal revenue anticipate to XXXX. of on billion. our Now QX $X to billion of

our normalizing. supply expect of appear to business approximately range broad XX quarters increasing sequentially of midpoint. basis markets, we and growth. points consecutive In to X margin be be in the to up modest patterns representing be at demand XX% XX%, mobile sequentially Gross to as We XX% anticipate the sequential is projected improvements,

cost expansion higher and mix favorable We margin during anticipate reduction the utilization of gross actions, XXXX, shift our driven by remainder rates.

we million in investments million markets and the make as share range and strategic to gains $XXX increase continue $XXX to We expect operating in expenses mobile broad drive of diversification. to

an midpoint Operator, income revenue other a of Below for anticipate roughly $X.XX the at of XX% to of diluted line, range earnings let's billion, of per approximately count Accordingly, open deliver and questions. effective million of the rate $X line we diluted the shares. tax intend we the XXX share in $X.XX. and million share

Operator

Instructions] first Cowen. from line of Ramsay coming [Operator question the Matt Now with TD

Matthew Ramsay

will, on revenue guess, for out a from of guys industry guys have growth I us I broad -- this continue my sort cyclicality peers and back get your cyclicality for your your and here. sequential it's all come of industrial a lots you company a and Guys, you lots great assume, through businesses in been to the of perspective that, And chain markets for of see competition. question, as which of first

equilibrium now any under when diverse But as a sense where revenue now? supports to in sell-through to clear of over you lot revisited mean are space don't the to I get, that channel. to of any question might for and sense right guys that you've on shipping to this try shipping businesses, are is obviously levels a shipped bit But then sort it's guiding a and I equilibrium? the get this We set relative of of now end were companies of of, back we right consumption a kind level that you bit know, business the for what have

Liam K. Griffin

Liam. Sure. This is Yes.

been Skyworks. those are We is markets, gaining the we So if to We're some actually a substantially share look connected seeing in car take driving and We more. We're a know have safety a at grown. more bit little can looking more opportunities that. we start much We revenue. that and opportunities I wins, auto about and do see at meaningful in for we have opportunity significant design talked systems, already driver assist.

markets room today actually that are Then doing quite markets powerful are well, those other some grow. All into we quite lot WiFi a moving cycles. have the are and to of

of these for that more and get enterprise, very really we a going fall coming. lots have that to an Home into continue. extension have technology, is and really to X and expect certainly, WiFi powerful wearables, of upgrade important us, industrial, commercial, all We been opportunities. volume here as we today And more category markets well, that

some leveraging we as we opportunities XXX about move the further, great come that have about infrastructure, of We vectors can cloud. X.X into really quarter. lot speeds gig here terabit And powerful A next and talked networking in there and

Matthew Ramsay

with as Got cycle of in Cupertino. bit the mentioned had bullish just how Kris, if on shape there a give talked wireless with we your you the look bit. some business? last into could have like changed little you customer, chance your content my Maybe both that in thoughts, the there's market, this it. fairly more. there's of directions if wireless the a about little has wonder units -- seems follow-up, us I guess And to sort expectations or market the guys the had a into it Android largest any lean dynamics quarter you and year I I early on

get thoughts, to So that, ask we'd early if you asked have lot. about it's I about early it. it but appreciate know I any a

Liam K. Griffin

lot mean I Look, of there's a there. opportunity Yes.

Skyworks some more products demand seeing starting for We're stronger within the are that signals We we have Leveraging to of that in actually sure. bench. the accelerate. see unique

lot of a opportunity there. So

The companies looks happen. challenging. good and great look very that we forward. outlook very It it we're great people very, takes now They're working are to Our right technologies difficult. on really as make

work. approach times, we does As you've customization to markets, these start our heard and really mobile new into many, of grow many as of lot A some others. labs-to-fabs

for opportunity feel that definitely I forward. as see So we We major to see we better think a that to company you, I'll that the just for us can if there's to that good and AI than don't move that. think catalyst I a And it's an now in engage continue really We're phone. major, about smartphones. beginning in Skyworks. tell do And

key we time forward more for look in and us pieces got revenue. little the just a place, put to to opportunity. So bit up We've it's the a

Operator

of Research. And Wolfe our from Caso next question coming from Chris the line

Christopher Caso

here. is just question kind it first broad bouncing And the on The is markets. revenue that of bottom like along seems

forward. some how is going know normalized? still the earlier are of different industrial imagine are coming markets? you growth that modest of some But that still the kind out. to some of that the has through? that corrected I I of be for of that through. ones of consumer how business customer the needs Can speak markets of expectations within stage mentioned perhaps What's much broad You some and inventory some correction end the the markets to have burned inventory go inventory that to And markets much

Kris Sennesael

great Chris, Yes, question.

first markets at we quarter. in did broad call all, the the out of So December bottom

our do turned X broad expect business. further further in acceleration returning markets in seen growth, September the really our growth that we growth actually And in growth now quarters of back we do so year-over-year that's an we of September a and guidance. quarter, quarter to sequential and sequential we growth the have corner incorporated beyond And sequential And there. consecutive

markets Now there. end as multiple you know, there's different

where content there As business our WiFi WiFi story, of right? the a relates I inventory growing our in X. mainly content enterprise big the correction Liam are to step-up indicated, lot over a of And environment. there. solutions, more that's X, of we uplift say mostly there, play it a that's would good As stable consumer connectivity traction Most because is we getting with to compared

great radios. markets, car industrial that Some market. of there's as inventory isolation EVs our our seen connectivity digital the have Automotive, in with design Liam markets, an XG, our in WiFi, solutions, But power there, momentum still what those in have similar win strong have correction peers to with very again, and indicated, competitors we we other or connected opportunities end ongoing.

And so trend revenue some we to buck the there stronger see opportunities. and able growth are

Christopher Caso

on know question down. comes XX revenue I those the is a as ask perhaps say to gross depreciations wanted the what's and you trajectory basis up I follow-up, a as the would for for margins coming And of As understand guiding some gross margins. that and September taken margins destination cost utilization occur? things points the quarter. back gross sort you've actions, reduction you're the some up, What for comes slope I

Kris Sennesael

well, the March Chris, as for bottom Yes, was there XX%. us at

already quarter. And we XXX just in improvements quarter. gross XX the September points quarter. basis June expect improvement guided in saw You the Obviously, when further December the another margins margins into points improvement look we basis and in I or then And at 'XX going business. further improvement. right? there do multiple seasonality we 'XX But And combination of a factors, gross basically beyond, is it's our expect do fiscal

to into our factory. reductions continue execute on We cost

factories. As into the utilization top growing, we line our are is getting better

is mix a paid. markets of product we gross market We at have bringing And bit above than a as to higher value view margins. are a are we broad growing which from getting little of higher the point tailwind for

So see ongoing we here, gross improvement. think are right we the margins will on and further we track

Operator

And Arcuri line our the of UBS. from with question next coming Timothy

Timothy Arcuri

a XXs Any you last large the year. about in the Android that's higher how going And to of trend of mid-XXs Kris, September, embedding sense you're between high can to the and was how how was give us in think for to guidance? when then ranged customer what sense big it's June?

Kris Sennesael

Yes.

frame. was March, quarter revenue. customer largest approximately little of call, That of buildup the maybe time our more where the April at last seasonality, some explained down that inventory in earnings than was and total So normal saw we June in we sequentially, a bit XX%

they brakes customer XX% as market. And to new the largest execute about But and we so of customer in XX% it bringing up be support pushed we looking and up total sequentially, into think will September, be that June. ahead slightly in the ramping above on right, our now products will or we large are revenue,

Timothy Arcuri

it's I sense range of December for about the usually. seasonally, a Is then the XX% of reasonable what us And can up December over you bogey map also think kind but December? all give is -- mean, of a that in to

Kris Sennesael

Yes.

the will only So clear going yes, that. I on But guide really further next that we growth and quarter do into a December sequential we X time, that. stick it's quarter, expect we quarter guide would with at but

Operator

our next Christopher question of from And line with coming Rolland the Susquehanna.

Christopher Rolland

some cycle. refresh new think announcements You we all referred excited to driving And smartphones. this got some quarter, I AI AI a about

the all you kind time of So kind your as move really I guess see my or onward acceleration you cycle we or of excitement and this is new December out is this do did first same see question see the is product refresh kind did you we September play launches? of how in of pull-in much in felt? guidance? think that and something Or through Did to you

Liam K. Griffin

Yes, great question.

the most challenge. stage does. make market no I of think that, long I is to early the a mobile. is a There's going this in comes with of and also I is think it very believe what really that an very, ramp AI impact. question But

very to manage difficult to world. have challenges to be very, You the able have AI

this with handle how what a the is and time, the Skyworks, challenging we deep we're opportunities. technology all do Fortunately, know really company, to we

higher and dealing uplink bands. at MIMO; and And really bringing down in levels new that We're those of get paths, with to carrier you downlink; filters important know frequency aggregation Skyworks, more really, filtering.

ask understand. these at deliver. to challenging Skyworks, very a it's technologies that are we So But fortunately,

mobile, are but cycle these looking technology and led that team innovations. we meaningful to very going early a So It's very we're forward believes have by stages, believe our I this. to in

Christopher Rolland

next My Android. question around is

Google, new you that environment and areas couple marquee generally, you of there more outlook then Can Oppo. big a forward? kind you're how just or point moving And cool about sockets? chunky Android Android contribution either and and any talked Galaxy you sockets, playing Samsung revenue to would describe phones, of So your the

Liam K. Griffin

there. impactful. is very, other are great. very great some with inside most technology Great phone Google. partnership in that's rich, And we as Samsung an mean Pixel very amazing There's Yes, There's products and engaged is and I products with well. phone. certainly actually. Google the Android, specifically The

see really China, higher low more that But So should of of course. end probably Android and has we powerful. the from less the in been end Skyworks, more in of

I there. lot from do there's can think a we more

Operator

the question Craig And coming with next Ellis B. from our up Securities. line Riley

Craig Ellis

enthusiasm a nice Liam, about to the of up smartphone hear wanted the middle I And cycle. to XG cycle recur follow that. in the on

Gen more exist X look some the content the up carrier and commentary years content, looking you may gain increased this ago, you largest not Gen as X year's So and smartphones? coming in gain so the in to we at talk aggregation drive might we But quarter handset. for the on opportunity look customer what be in, in your content AI and company much technologies other that think opportunities of AI about that at of from from Because could I a at version specializes the can downlink side?

Liam K. Griffin

Yes.

successful I a is run it. be here long long, see industry we and has run that a the technology to way the this about the if come in going think

going So this akin first are of technology place this to a more capitalize meaningful demanding, to now, we to to very more some challenging. long-term cycle I much powerful. in on my the challenges XG this be expectation. is more here, and have But able But that. right be cycle, we're Craig, going -- going much think to it's The

a get each can account and right and do its AI stuff to in-house, customized platform seeing not Fortunately, for in-house, can all needs one it you we it and customer account do can difficult, be own of is fits get has Skyworks, here. very into craft spec. we're curate going we by because but a we this lot to when This and

win. we going that that customers are going are looking are The it. us, involved to to to innings. early really important pick we're companies deeply forward The be to it's So also but

significant industry for certainly I think be it's Skyworks. in a and going to the move

Craig Ellis

was Got gross implications then margins executing that switching two-part this what years it. continues for to cash. up throw to ago a And mean gears. tremendous that the off a at Company does it And to XX% get The follow-up company maybe the XX% for to couple the follow-up. and range to specifically the target. just is, then of in revenue The is back even

dividend just your You the talked about it in raised again. comments,

debt. very next How You are so, little type buyback? thinking there And what about have you you Is if lot strategic what more Or a you cash be happens return? playing about with are might thinking of about thinking there? cards M&A?

Kris Sennesael

Yes.

So maybe think I growth. first see margins I Obviously, think on to revenue that continue gross the we've we're answered right? already accelerated going I question, gross further to margins, improvement.

We will factories, will have improvements. margins better is utilization gross and result that in in further exponentially very That the clear.

-- As billion margin. to year, fiscal the just the at of company, this free you relates if months output it Just generated outstanding, cash we of XX% of flow a look That's financial the cash. right? in first it's X $X.X

think is our outstanding and peers competitors. I business compared semiconductor the to of that many in

we a strong addition sheet. to have balance In that,

We billion is have almost cheap $X.X balance which maturities. long with billion $X of cash with and only -- on sheet debt of gap the

invest in when here needed. technology if and continue on continue road a us So our factories strong our one allows business, very we maps, to to have to, product that position and in in invest our hand,

the we not and course, capital intensity and a hesitation. there's addition make of that, But down our lot. And be can to -- any of investments maintain come business as to position to those well leadership when going needed, the in currently, has so if

our excess consistently back are that And the program share all flow dividend to the We through shareholders. our buyback program. do cash to we going and return

share. quarter, X% now, program, a restarted a $X.XX as increase dividend dividend per just the up X.X% we the On June that's announced buyback into translating in yield. And noticed, you we Right to the program.

be so that. going any And to to there's not hesitation

cash going you on that. we still know return flow. to do right? disciplined there for to that, are addition us, optionality to anything remain we're will In no And to not we M&A, stupid. going But We're if have deals,

Operator

Rosenblatt next line our question of coming with Securities. from the Kevin And Cassidy

Kevin Cassidy

When AI moving you in content. the out type products? accelerated robotics about understand of you and that I opportunities improvement handsets, IoT and in in of mentioned market, types you'll the get Do AI is too? What into that all have

Liam K. Griffin

news absolutely can just good technologies The there question. we have is We Great those question. work Great gotten haven't the yet. that in environments.

Obviously, we're a opportunity across technologies be great they a the investments. we've smartphones is right partners. markets, the putting to powerful how news The know Skyworks. position making those be. got to is, it It's and into cycle, just good there. going that But in about getting need work, right to technology through that and we take they is IoT for real where So the work the an multi-markets what we together

do powerful really we this But looking opportunity. at independent smartphone could the be the IoT of cycle believe very a

So more it's as we we happen. you in but update look to great interested hopefully we're question, a making that forward we'll and very more very, information, get

Kevin Cassidy

Great. Okay.

more as be do need to maybe scalability able customers? hint Just a service more is -- you to

Liam K. Griffin

I and customers us us they we working using a AI in Well, actually that and can mean, how as IoT with are vector. engage asking have

that, there's addressed. And yet But working companies that a with we already. know of so and that opportunities other range we're whole we haven't applications like

a be a lot Skyworks hasn't part as here of we I at meaningful covered. been going to runway it's the strategy of forward So with that think move

Operator

next Company. coming question line Needham of from Bolton from And Quinn our the &

Nick Doyle

Doyle Nick is on Quinn. for This

that change If how that -- can your an talk modem, largest customer how you content would opportunity? about switches to Skyworks' impact internal

Liam K. Griffin

get lot into Yes, here. But I pursue, customer. relationship. really we a have just a partner. There's certainly, into can't specifics any trusted we go We hear really you. a but details of We're that great with we opportunities can can't that

Nick Doyle

Okay.

that types dollars? remains remains much how infrastructure. most of the in have what and mentioned And have left? elevated wireless a the data products you Do traditional inventory or days in inventory inventory of center sense You

Kris Sennesael

it question. to really That's depends really hard from answer mean market to end I market. that end

is of the the Automotive, being inventory, peers over. if inventory enterprise, that's from improving some before, recovery in There's is it still you those be competitors. center, excess the but And you've I there infrastructure, more inventory data markets. said heard networking, then As industrial, correction a will definitely those demand flushed think look most And at in areas. some and definitely out. in excess consumer it is long I

market really market. in basis. But X end it year-over-year again, again, our So on you for to when growing growing sequentially row, business, start a at depends and quarters we're look it a it we'll

good so traction definitely And there's for Skyworks. some

Operator

Our coming next from question the is line Thomas with Barclays.

Unknown Analyst

for silicon Mine competitor was in fact you of socket diversity dynamic speak space? integration going integration. to kind is just in recent industry slide about talk you the design are that a competing see analyst the move mid- wins maybe a broader you the appear on the showed today? high-end some Can that A where of receive in in you smaller like to at are maybe high integrating seeing only And end just seeing time the the terms you're markets? of with broad then Android. Do integrated high-band getting you that industry markets? to could Just into across over

Liam K. Griffin

this This to difficult. are and details RF what this technology strong we bread only frankly, we customers that, and have and packs more do. customers getting And survive. in environment, text relentless our our the in manufacturing to harder design really And And more get year. certainly of the course, As win On our is sockets. But of our we RF performance. top for you scale will know, get of can't into want the the to compete butter. driving we wins. the and terms are technology of is levels best-in-class continues way And that's with Skyworks, it. higher

more we more go forward. we and so with opportunities expect especially as customers top-tier engagement, the And

Unknown Executive

to could playing Helpful. a And comes that you idea content think then when think see smartphone? you just near you AI AI how Like just to and relates talk talk Is proliferating a uplift specifically edge, generally have as just But you it as think AI in the out. I that of that to content smartphone, to see you people it Is you more they the can point additional do bands? where term additional you the good when additional in to filtering? the where broadly, about see

Liam K. Griffin

in range, just burden to that back all the become that problems filtering, And this mean I an and those that's of to AI latency, level, about at -- the solved, the do. we to need Yes able forth, exactly and speeds, by The we transmit issues high the time. to the want think all of be be environment, transmit all that receive. do stuff what the do and is

the going we're So scale to meet of our that our AI. in assets, solutions the demands our to technologists rate IP, capital take all will know-how, own factories our our cure

be and customed. So to highly all it's not to going going be a fits one kind of It's thing. curated

Operator

Mr. I will over for that question-and-answer now gentlemen, hand and closing to session. Griffin back comments. any concludes Ladies today's

Liam K. Griffin

We for investor forward call. participating today's you. upcoming the to everybody, Thanks, conferences seeing look during in you quarter. at Thank

Operator

conference thank call. this We you gentlemen, participation. today's and Ladies concludes your for

disconnect. now may You

Skyworks Solutions (SWKS) 30 Jul 242024 Q3 Earnings call transcript