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NXP Semiconductors N.V. (NXPI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $3.11B, down 9% y/y and slightly above guidance midpoint; non-GAAP EPS was $3.18, modestly above guidance, with non-GAAP operating margin at 34.2% .
  • Segment trends: Automotive (-6% y/y), Industrial & IoT (-22% y/y), Mobile (-2% y/y), and Comm. Infra. & Other (-10% y/y), with channel inventory held at 8 weeks as management continues under-shipping relative to end demand .
  • Q1 2025 guidance calls for revenue of $2.825B (midpoint), non-GAAP gross margin ~56.3%, non-GAAP operating margin ~31.5%, and non-GAAP EPS ~$2.59; visibility remains “really poor” and under-shipping is expected to continue in Q1 .
  • Strategic moves: announced acquisitions of Aviva Links ($242.5M) and TTTech Auto ($625M) to strengthen software-defined vehicle roadmap; capital returns remained robust with $258M dividends and $455M buybacks in Q4 (plus $101M in Jan) .

What Went Well and What Went Wrong

What Went Well

  • Delivered Q4 revenue modestly above guidance midpoint and non-GAAP EPS $0.05 above guidance, reflecting tight OpEx control and disciplined channel management .
  • Maintained distribution inventory at 8 weeks; DIO rose only 2 days q/q, and CCC improved by 3 days, signaling operational discipline in a weak demand backdrop .
  • Strategic acceleration in automotive SDV stack: announced Aviva Links acquisition (ASA-based multi‑gigabit links) and TTTech Auto (MotionWise middleware) to enhance CoreRide platform and long-term competitive positioning .

What Went Wrong

  • Industrial & IoT revenue fell 22% y/y and was slightly below guidance; Comm. Infra. & Other declined 10% y/y with accelerated end‑of‑life in former digital networking products (~30% of segment) .
  • Automotive demand weakened in Europe/Japan with Tier‑1 inventory digestion continuing, keeping shipments below end demand; management emphasized very poor forward visibility across end markets .
  • Gross margin pressure from annual price concessions and lower fixed cost fall‑through at current revenue levels; internal front‑end utilization held in the low‑70% range, limiting near‑term gross margin expansion .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$3,422 $3,250 $3,111
GAAP diluted EPS ($)$2.68 $2.79 $1.93
Non-GAAP diluted EPS ($)$3.71 $3.45 $3.18
GAAP Gross Margin (%)56.6% 57.4% 53.9%
Non-GAAP Gross Margin (%)58.7% 58.2% 57.5%
GAAP Operating Margin (%)26.5% 30.5% 21.7%
Non-GAAP Operating Margin (%)35.6% 35.5% 34.2%

Segment revenue ($USD Millions)

SegmentQ4 2023Q3 2024Q4 2024Q/QY/Y
Automotive$1,899 $1,829 $1,790 -2% -6%
Industrial & IoT$662 $563 $516 -8% -22%
Mobile$406 $407 $396 -3% -2%
Comm. Infra. & Other$455 $451 $409 -9% -10%

KPIs

KPIQ4 2023Q3 2024Q4 2024
DIO (days)132 149 151
DPO (days)72 60 65
DSO (days)24 30 30
Cash Conversion Cycle (days)84 119 116
Channel Inventory (weeks)7 8 8
Gross Financial Leverage (x)2.1x 1.9x 2.1x
Net Financial Leverage (x)1.3x 1.3x 1.5x
Cash from Operations ($MM)$1,137 $779 $391
Non-GAAP Free Cash Flow ($MM)$962 $593 $292

Guidance Changes

MetricPeriodPrevious Guidance (Mid)Current/ActualChange
Total Revenue ($MM)Q4 2024$3,100 $3,111 Beat
Non-GAAP Gross Margin (%)Q4 202457.5% 57.5% Maintained
Non-GAAP Operating Margin (%)Q4 202434.1% 34.2% Slight Beat
Non-GAAP diluted EPS ($)Q4 2024$3.13 $3.18 Beat
Total Revenue ($MM)Q1 2025N/A$2,825 (mid) New (Down q/q, y/y)
Non-GAAP Gross Margin (%)Q1 2025N/A56.3% (mid) New
Non-GAAP Operating Margin (%)Q1 2025N/A31.5% (mid) New
Non-GAAP diluted EPS ($)Q1 2025N/A$2.59 (mid) New
Non-GAAP Tax Rate (%)Q1 2025N/A17.5% (mid) New
Dividend ($/share)Q4 2024N/A$1.014; paid Jan 8, 2025 Announced/Paid

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
SDV/AI technology (CoreRide, S32)Introduced S32N55; positioning for central compute Company-specific auto ramps (RADAR, S32) intact, offset by macro weakness Two acquisitions to accelerate SDV stack (TTTech Auto middleware; Aviva ASA links) Strengthening strategic stack
Supply chain & channel inventoryChannel at ~1.7 months; disciplined staging Channel held ~8 weeks; cautious due to weaker sell-through Channel at 8 weeks; continued under-shipping; DIO up modestly Tight discipline
Tariffs/macroManaged cyclical trough; resume sequential growth expected Broadening weakness in Europe/US industrial and auto; China strength Visibility “really poor”; weak Europe/Japan; Americas bouncing off bottom; China incentives Macro headwinds persist
Product performance (segments)All end markets in-line; Comm. Infra rebounding sequentially Industrial & IoT weaker; RFID strength; Comm. Infra down y/y Industrial & IoT -22% y/y; Comm. Infra end-of-life accelerated (~30% of segment) Mixed; structural decline in legacy
Regional trendsSequential growth led by China anticipated China strong; Europe/US weak; EV penetration rising China strong; EV penetration ~50% in H2 2024; Europe/US weak China-led resilience
R&D execution / utilizationInvesting to support long-term growth Gross margin impacted by mix; utilization low-70s Utilization low-70s; planning 200mm consolidation in 2025 Preparing structural tailwinds
PricingNeutral 2024 pricing expected Neutral in 2024 confirmed Low single-digit price erosion in 2025; offset by lower input costs over the year Normalized pricing cycle

Management Commentary

  • “Revenue was $11 million better than the midpoint of our guidance… Q4 revenue was $3.11 billion, a decrease of 9% year-on-year.” — Kurt Sievers, CEO .
  • “We delivered non-GAAP EPS of $3.18 or $0.05 better than the midpoint of our guidance… we continue to tightly manage sales into the distribution channel with weeks of inventory flat at 8 weeks.” — Bill Betz, CFO .
  • “We continue to have poor forward visibility… we are experiencing relatively high turns business… we expect distribution channel inventory to be 8 to 9 weeks below our long-term target of 11 weeks.” — Kurt Sievers, CEO .
  • “This year [2025], low single-digit [ASP] down… input cost has also started to develop more favorably… helping offset ASP erosion.” — Kurt Sievers, CEO .
  • “We announced our intention to acquire TTTech Auto… and Aviva Links… Both are vital building blocks to accelerate and expand NXP’s CoreRide vision for next-generation software-defined vehicle platforms.” — Kurt Sievers, CEO .

Q&A Highlights

  • Recovery trajectory and visibility: Management expects Q1 to be seasonally down high-single digits; Q2 modeled as flat to slightly up but with low confidence due to high turns and poor visibility .
  • Gross margin path: Near-term margins pressured by annual price concessions and lower fall-through; expected to stay “plus or minus 50 bps” at current revenue, improving with revenue growth and structural actions (e.g., 200mm consolidation) later in 2025 .
  • Automotive inventory digestion: Ongoing Tier‑1 digestion in US/EU keeps shipments below end demand; Asia/China more robust; under-shipping likely to continue into Q2 if flat-to-slightly-up scenario materializes .
  • Comm. Infra end-of-life: Legacy digital networking products (~30% of segment) continue to decline over next few quarters; RFID secure card business holding up .
  • Pricing normalization: 2024 pricing neutral; 2025 low single-digit erosion expected, with input cost tailwinds over the year .

Estimates Context

  • Attempted to retrieve S&P Global Wall Street consensus estimates (EPS, revenue) for Q4 2024 and Q1 2025, but data was unavailable due to provider rate limits. As a result, beat/miss versus Street cannot be determined. Comparisons herein reference company guidance and actuals from filings and the call .
  • If needed, we can refresh S&P Global consensus later to assess estimate revisions and magnitude of beats/misses once access is restored.

Key Takeaways for Investors

  • Q4 print was resilient versus guidance, but macro remains challenging; management is under-shipping and keeping channel at ~8 weeks, indicating caution and potential pent‑up demand when conditions normalize .
  • Q1 2025 guide implies sequential and y/y declines with non-GAAP EPS midpoint ~$2.59; near-term trading likely sensitive to signs of stabilization in Industrial & IoT and Europe/US auto demand .
  • Strategic SDV positioning strengthened via TTTech Auto and Aviva Links; expect medium-term differentiation in vehicle compute, networking and middleware to support content growth even as units fluctuate .
  • Structural actions (200mm consolidation, hybrid manufacturing) plus easing input costs should aid margin recovery as revenue improves; monitor utilization and mix shifts (RFID, automotive S32/radar) for incremental margin tailwinds .
  • Comm. Infra legacy networking decline is a known headwind through 2025; RFID and secure card help offset; investors should model ongoing pressure in that sub-segment .
  • China continues to outpace other regions (auto and IoT), with high EV penetration supporting above-average semiconductor content; NXP’s “China for China” manufacturing strategy and tailored solutions aim to sustain share .
  • Capital returns remain robust ($713M in Q4; $2.4B TTM), including the Q4 dividend of $1.014/share and ongoing buybacks, underpinned by healthy FCF and leverage ratios (net leverage 1.5x) .

Appendix: Q1 2025 Guidance Detail (Company)

MetricLowMidHigh
Total Revenue ($MM)$2,725 $2,825 $2,925
GAAP Gross Margin (%)54.6% 55.2% 55.7%
non-GAAP Gross Margin (%)55.8% 56.3% 56.8%
GAAP Operating Margin (%)23.9% 25.2% 26.4%
non-GAAP Operating Margin (%)30.5% 31.5% 32.5%
non-GAAP Financial Expense ($MM)$(80) $(80) $(80)
non-GAAP Tax Rate (%)17.0% 17.5% 18.0%
Diluted Shares (MM)256.0 256.0 256.0
GAAP EPS ($)$1.75 $1.95 $2.14
non-GAAP EPS ($)$2.39 $2.59 $2.79