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    Qorvo Inc (QRVO)

    Board Change

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    Business Description

    Qorvo, Inc. is a global leader in developing and commercializing technologies and products for wireless, wired, and power markets . The company operates through three main segments, providing solutions for various industries, including automotive, defense, aerospace, and consumer electronics . Qorvo's offerings include RF, analog mixed signal, power management, connectivity, and sensor solutions, catering to major smartphone manufacturers and other markets .

    1. Advanced Cellular Group (ACG) - Supplies advanced cellular RF solutions for smartphones and consumer devices, leveraging technology to deliver high-performance cellular products .
    2. High Performance Analog (HPA) - Provides RF, analog mixed signal, and power management solutions, serving markets such as automotive, defense and aerospace, and cellular infrastructure .
    3. Connectivity and Sensors Group (CSG) - Focuses on connectivity and sensor solutions, including ultra-wideband, Bluetooth Low Energy, and Wi-Fi, targeting markets like home electronics, industrial automation, and automotive .

    Q1 2025 Summary

    Initial Price$114.91March 28, 2024
    Final Price$116.04June 28, 2024
    Price Change$1.13
    % Change+0.98%

    What went well

    • Qorvo is confident in growing and gaining market share at its largest customer, expecting to increase content this year and next year.
    • Strong adoption and ramp of Qorvo's new low-mid-high (LMH) products in the Android ecosystem, with significant engagement across customers, expected to drive growth in coming quarters.
    • Increasing opportunities in China, particularly in automotive with ultra-wideband adoption and VDX trends, along with growing demand in power management for AI and data centers, supporting solid-state circuit breaker adoption with silicon carbide solutions.

    What went wrong

    • Qorvo is guiding for a slight year-over-year revenue decline in the September quarter, primarily due to declines in smartphone revenues. Despite content gains at large customers, total smartphone market units, SKUs, timing, and mix are leading to a conservative outlook.
    • The company is on the "other side" of strong ramps in key models such as the Samsung S24 (with over $5 of content) and the Pixel (with about $15 of content). New products like their low mid-high are only starting to ramp at the end of this quarter, leading to timing issues causing revenue softness in the near term.
    • Qorvo does not expect near-term benefits from AI smartphone trends, as they are not modeling any uplift from AI at this time, indicating potential cautiousness in mobile demand forecasts.

    Q&A Summary

    1. Mobile Revenue Decline
      Q: Why is mobile revenue down year-over-year despite content growth?
      A: The slight decline in September guidance is mainly due to smartphone revenues. Although we've seen significant gains at our largest customer, overall market factors like SKUs, unit volumes, and mix contribute to the decrease. We had strong ramps in the first half with models like the S24, where we had over $5 of content, and the Pixel with about $15 of content, but we're now on the other side of those ramps. Additionally, our new low mid-high products will start ramping at the very end of this quarter, impacting revenues going forward.

    2. Gross Margin Outlook
      Q: How are utilization rates and gross margins expected to change?
      A: In the September quarter, we expect a substantial sequential increase in gross margin, primarily due to a higher mix of customized solutions for flagship-tier phones. This product mix includes more externally sourced silicon and SOI content, not impacted by internal utilization levels. Underutilization headwinds were about 200 basis points last quarter, expected to fall to around or slightly less than 100 basis points in September, and negligible for the back half of the year.

    3. Content Growth at Largest Customer
      Q: What's the outlook for content growth at your largest customer?
      A: We are confident in our ability to grow with our largest customer and gain share this year. We also believe we're in a great position to gain share again next year.

    4. AI Smartphone Demand
      Q: Is AI driving increased demand in smartphones?
      A: We're taking a conservative approach regarding AI. While Samsung's S24 had a nice ramp and we have excellent dollar content there, it wasn't tremendously above expectations. Our largest customer hasn't released their next-generation phones, so we can't comment. It would be fantastic if AI reduces replacement cycle times, leading to an uplift, but that's not what we're modeling at this time.

    5. New Product Development
      Q: Any new products that could be significant?
      A: Our low mid-high (LMH) products are interesting as we're tiering them for different segments in the Android ecosystem, from entry to high tier. We're starting to release a lower-cost LMH, and we expect ramping to begin this quarter, growing significantly into next year. We're also working on other products but prefer not to telegraph those at this time.

    6. Internal vs. External Production
      Q: How are you balancing internal production versus external foundries?
      A: It's technology-dependent. For silicon or SOI, we rely on partners as they can produce more efficiently. In areas where we can differentiate ourselves, like BAW filters where foundry options aren't available, we continue to produce internally. This strategy helps support margin expansion.

    7. China Mobile Market
      Q: What's the outlook for the China mobile market?
      A: We're seeing slightly better data year-over-year, expecting the market to be up low single-digit percentages, similar to the overall smartphone market. The 6/18 holiday was a bit better year-over-year, but cumulative smartphone sales are flat to slightly up.

    8. Non-Mobile China Growth
      Q: Any areas of strength in China outside mobile?
      A: While we wouldn't focus on China specifically, we're seeing broad-based growth across High Performance Analog (HPA) and Connectivity and Sensors Group (CSG). In China automotive, ultra-wideband adoption is accelerating for features like presence detection and advanced radar. In power, AI and data centers are driving demand for improved efficiency and silicon carbide adoption, which is a great trend for us. Additionally, China's leading in adopting our VDX technology, which is exciting as it will ramp next calendar year.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Robert A. BruggeworthPresident and Chief Executive OfficerDecember 2013Robert A. Bruggeworth has served as the President and CEO of Qorvo since its incorporation in December 2013. He was previously the President and CEO of RF Micro Devices, Inc. from January 2003 until January 2015 .
    Grant A. BrownSenior Vice President and Chief Financial OfficerAugust 29, 2022Grant A. Brown has served as the Senior Vice President and CFO of Qorvo since August 29, 2022. He was the interim CFO starting in April 2022 and has held various roles at Qorvo, including Vice President of Treasury .
    Philip J. ChesleySenior Vice President and President of High Performance AnalogJuly 2022Philip J. Chesley has served as Senior Vice President and President of High Performance Analog at Qorvo since July 2022. He joined Qorvo in November 2021 as Corporate Vice President and President of Infrastructure and Defense Products .
    Steven E. CrevistonSenior Vice President and President of Connectivity & SensorsJuly 2022Steven E. Creviston has served as Senior Vice President and President of Connectivity & Sensors at Qorvo since July 2022. He was previously Corporate Vice President and President of Mobile Products from January 2015 .
    Paul J. FegoSenior Vice President and President of Global OperationsJuly 2022Paul J. Fego has served as Senior Vice President and President of Global Operations at Qorvo since July 2022. He was previously Corporate Vice President of Global Operations starting in July 2018 .
    Gina B. HarrisonVice President and Corporate ControllerNovember 2015Gina B. Harrison has served as Vice President and Corporate Controller at Qorvo since November 2015. She is a certified public accountant with over 30 years of experience in corporate and public accounting .
    Frank P. StewartSenior Vice President and President of Advanced CellularJuly 2022Frank P. Stewart has served as Senior Vice President and President of Advanced Cellular at Qorvo since July 2022. He was previously the general manager of the RF Solutions Business Unit within Qorvo's Mobile Products .

    Questions to Ask Management

    1. Given the intense competition in the RF components market within the Android ecosystem, how do you plan to sustain and grow your market share, and what differentiates your solutions from those of your competitors?
    2. You mentioned expectations of gaining share at your largest customer; can you elaborate on the specific areas or products where you see this opportunity, and what risks could impede achieving this growth?
    3. With the transition to 8-inch BAW wafers, what challenges do you anticipate in scaling production, and how might this impact your margins and capital expenditures in the near term?
    4. As you expand into new markets like solid-state circuit breakers for EVs, how does this diversification align with your core competencies, and what competitive advantages do you have to succeed against established players?
    5. Considering the potential for AI integration in smartphones, how are you positioning your products to capitalize on this trend, and what investments are you making to ensure you remain competitive if AI-driven features accelerate demand?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateNovember 2, 2022
    End Date/DurationNo fixed term
    Total additional amount$2.0 billion
    Remaining authorization amount$1,098.7 million (as of September 28, 2024)
    DetailsThe program can be modified, suspended, or terminated at any time without prior notice.

    Past Guidance

    Q1 2025 Earnings Call

    • Issued Period: Q1 2025
    • Guided Period: Q2 2025
    • Guidance:
      • Revenue: Approximately $1.025 billion, plus or minus $25 million .
      • Non-GAAP Gross Margin: Between 46% and 47% .
      • Non-GAAP Diluted EPS: Between $1.75 and $1.95 .
      • Non-GAAP Operating Expenses: Approximately $275 million .
      • Non-GAAP Tax Rate: Expected to be within a range of 10% to 12% for fiscal '25 .
      • Non-GAAP Expense Below Operating Income Line: Expected to be between $8 million to $10 million .

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: Q1 2025 and FY 2025
    • Guidance:
      • Revenue: Approximately $850 million, plus or minus $25 million .
      • Non-GAAP Gross Margin: Between 40% and 41% .
      • Non-GAAP Diluted EPS: Between $0.60 and $0.80 .
      • Non-GAAP Operating Expenses: Approximately $260 million .
      • Non-GAAP Tax Rate: Expected to be within a range of 10% to 12% for fiscal '25 .
      • Non-Operating Expense: Expected to be between $6 million and $10 million .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024
    • Guidance:
      • Revenue: Approximately $925 million, plus or minus $25 million .
      • Non-GAAP Gross Margin: Approximately 42% .
      • Non-GAAP Diluted EPS: $1.20 at the midpoint of the revenue range .
      • Non-GAAP Operating Expenses: Approximately $245 million .
      • Non-Operating Expense: Expected to be approximately $10 million .
      • Non-GAAP Tax Rate: Expected to be within a range of 11% to 13% for fiscal '24 .

    Q2 2025 Earnings Call

    • Issued Period: Q2 2025
    • Guided Period: The documents do not provide specific guidance from the Q2 2025 earnings call. The available information is from the Q1 2025 earnings call, which includes guidance for Q2 2025. Therefore, the guidance for Q2 2025 is the same as provided in the Q1 2025 earnings call.

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Analog Devices, Inc. - Competitor in the High Performance Analog (HPA) segment .
    • Infineon Technologies AG - Competitor in the HPA segment .
    • MACOM Technology Solutions Holdings, Inc. - Competitor in the HPA segment .
    • Monolithic Power Systems, Inc. - Competitor in the HPA segment .
    • NXP Semiconductors N.V. - Competitor in both the HPA and Connectivity and Sensors Group (CSG) segments .
    • ON Semiconductor Corporation - Competitor in the HPA segment .
    • STMicroelectronics N.V. - Competitor in the HPA segment .
    • Sumitomo Electric Device Innovations - Competitor in the HPA segment .
    • Texas Instruments, Inc. - Competitor in the HPA segment .
    • Wolfspeed, Inc. - Competitor in the HPA segment .
    • Broadcom Inc. - Competitor in both the Connectivity and Sensors Group (CSG) and Advanced Cellular Group (ACG) segments .
    • Nordic Semiconductor - Competitor in the CSG segment .
    • Qualcomm Technologies, Inc. - Competitor in both the CSG and ACG segments .
    • Silicon Laboratories Inc. - Competitor in the CSG segment .
    • Skyworks Solutions, Inc. - Competitor in both the CSG and ACG segments .
    • Murata Manufacturing Co., Ltd. - Competitor in the ACG segment .

    Latest news

    Recent developments and announcements about QRVO.

    Corporate Leadership

      Board Change

      ·
      Jan 10, 2025, 9:39 PM

      David H.Y. Ho, a member of the Board of Directors of Qorvo, Inc., has decided not to stand for reelection and will retire from the Board upon the expiration of his term at the company's 2025 Annual Meeting of Stockholders. His decision is due to other professional commitments and not due to any disagreement with the company.