Q3 2025 Earnings Summary
- Double-digit growth expected in HPA and CSG segments: Qorvo anticipates growth of approximately 10% to 12% in High Performance Analog (HPA) and Connectivity and Sensor Group (CSG) in fiscal '26, excluding the silicon carbide business. This growth is driven by increased momentum in defense and aerospace, power management, and ultra-wideband products, which is expected to offset declines in the Advanced Cellular Group (ACG) segment.
- Gaining content and share at the largest customer leading to potential revenue growth: Qorvo is confident about delivering on its goal of gaining content and share at its largest customer, expecting revenue to be "flat to up modestly" in fiscal '26. The company is investing to increase its share over multiple years in areas where it has strength and has continued to gain share.
- Strategic focus on premium and flagship tiers in Android market to improve profitability: Qorvo is focusing on supporting the premium and flagship tiers of the Android market while exiting lower-margin mass-tier Android 5G business. This shift is expected to enhance margins, reduce revenue variability, and maintain share in higher-end Android devices.
- Significant Decline in Android 5G Revenue: Qorvo expects its Android 5G revenue in the Advanced Cellular Group (ACG) to decline by approximately $150 million to $200 million annually in fiscal '26 and again in fiscal '27, primarily due to decreased demand in China and mid-tier at Samsung. This decline could lead to a single-digit decline in ACG revenue in fiscal '26, impacting overall company performance.
- Increasing Revenue Concentration with Largest Customer: With the decline in the Android business, Qorvo's revenue is becoming more concentrated with its largest customer, which represented just over 50% of the total revenue in the December quarter. This increased dependency poses a risk if there are any demand fluctuations or loss of content share with this customer.
- Challenging Near-Term Outlook and Workforce Reductions: Qorvo anticipates a 10% to 15% decline in total company revenue heading into the June quarter due to seasonal factors and decreased demand. Additionally, the company is implementing significant workforce reductions, primarily targeting its mass market Android business, indicating potential challenges in maintaining growth and profitability.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -15% | Driven by ongoing macroeconomic challenges reducing demand in mass-market smartphones and other end markets. Prior quarters’ lower revenue base was further impacted by pricing pressure in the Android segment, with only partial offset from growth in other product categories. |
High Performance Analog | +44% | Benefited from the acquisition of Anokiwave and improved demand in power management and niche infrastructure applications. Compared to weaker performance in prior periods, this YoY result also reflects normalized channel inventories and incremental revenue from newly launched solutions. |
Advanced Cellular | -25% | Affected by a shift toward entry-tier 5G smartphones, which contain lower RF content, exacerbating the revenue and margin declines seen in previous quarters. Additionally, higher ASP erosion and continued inventory adjustments from prior periods weighed on results. |
United States | -8% | Lower demand in mass-market segments, reflecting the overall smartphone downturn, partially offset by design wins with the largest customer. Although the US remains a key market, ongoing macro headwinds dampened the recovery seen in earlier periods. |
China | -31% | Ongoing mix shift from mid-tier to entry-tier 5G smartphones that began in prior quarters, reducing RF content and intensifying pricing competition. Previous inventory drawdowns have normalized, but structural changes in the Android market continue to weigh on revenue. |
Other Asia | -45% | Reflects steep declines in shipments for mass-market 5G products, in line with prior trends of inventory corrections and lower ASPs. These factors compounded the market softness indicated in earlier periods, especially in the Android ecosystem. |
Taiwan | +14% | Growth driven by increased demand from OEM manufacturing for advanced cellular and analog products, following weaker results in previous quarters. This improved export demand contributed to a rebound in shipments. |
Europe | +68% | Benefited from strength in automotive and broadband markets, reversing past declines as customers resumed ordering in line with production needs. Rising demand in industrial and specialty applications also supported growth compared to softer results in earlier periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Non-GAAP Tax Rate | FY 2025 | 10%–12% | ~11% | no change |
Revenue | Q4 2025 | no prior guidance | ~$850M ± $25M | no prior guidance |
Non-GAAP Gross Margin | Q4 2025 | no prior guidance | 43%–44% | no prior guidance |
Non-GAAP Diluted EPS | Q4 2025 | no prior guidance | $0.90–$1.10 | no prior guidance |
Non-GAAP Operating Expenses | Q4 2025 | no prior guidance | ~$250M | no prior guidance |
Non-Operating Expense | Q4 2025 | no prior guidance | $13M–$15M | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q3 2025 | Approximately $900 million, plus or minus $25 million | $916.317 million | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Gains in content and share at the largest customer | Consistently highlighted as a growth driver, noting multiyear share gains and content increases. | Still confident about content gains with higher-end models and flat-to-modestly up revenue forecast. Opportunities in ET PMIC and highly integrated modules. | Remains a major focus with positive sentiment |
Growth in High Performance Analog and defense/aerospace | Previously noted as a key growth segment, benefiting from radar system upgrades, onshoring, and advanced packaging in D&A. | Double-digit HPA growth expected into FY25–26; D&A business reached record revenue with strong radar and electronic warfare demand. | Continues strong, with focus on defense/aerospace |
Declines in Android 5G revenue and shifts in Android tiers | Repeatedly cited as a headwind due to price sensitivity and margin compression, leading Qorvo to pivot toward premium tiers. | Android 5G revenue set to decline further as Qorvo exits low-margin mass-tier; mid-tier demand collapsing into entry-tier, especially in China. | Ongoing softness and strategic exits in lower-end tiers |
Gross margin variability from product mix and underutilization | Often cited as impacted by lower factory utilization in Android segment and unfavorable product mix. | Shift to premium devices and optimizing factory footprint to reduce underutilization; restructuring moves aim to improve margins. | Improving through mix shift and factory consolidation |
Revenue concentration risk with the largest customer | Repeated focus on high reliance. Prior calls noted over 40% of total revenue at times, with continued growth targeted. | Concentration increases as Android recedes. Management acknowledges investor concern but expects diversification through HPA, CSG, and possible M&A. | Heightened caution remains, despite strong share gains |
LMH pads ramp | Previously emphasized for board space savings and design wins in China; shipments ramping near Q2–Q1 timelines. | No mention in Q3 2025. | No longer mentioned |
AI-driven demand in smartphones | Minimal or cautious commentary in prior calls, with no significant uplift modeled. | No mention in Q3 2025. | No longer mentioned |
Workforce reductions in mass-tier Android business | Not previously discussed. | Significant workforce reduction targeting mass-tier Android operations to improve cost structure and align with strategic focus on premium segments. | Newly introduced in Q3 2025 |
Emphasis on double-digit growth for HPA and CSG in fiscal ’26 | Discussed double-digit projections, but less specific in earlier calls. | Company expects ~10–12% growth in both segments, offsetting declines in Android-based revenue. | Newly emphasized |
Sentiment shift: Heightened caution around customer concentration despite share gains | Gradual caution in earlier calls, though not always explicitly framed as a sentiment shift. | Management acknowledges rising concentration risk as Android declines. They remain confident in share gains but note investor anxiety. | Caution growing around overreliance |
Mid-tier to entry-tier shift reducing Android addressable market | Previously highlighted as a TAM reset reducing revenue and factory utilization. | Cited as causing a $150–200M annual drop, especially in China, prompting focus on premium segments. | Continues to pressure Android revenues |
Sustained defense and aerospace demand driving long-term growth | Consistently underscored as an important growth area, aided by radar system transitions, onshoring, and integrated modules. | Record D&A quarter; radar, electronic warfare, and space highlight multiyear tailwinds and large content opportunities. | Maintains strong momentum |
Strategic focus on premium/flagship devices to offset Android softness | Reoccurring approach to preserve profitability and shift away from entry-tier devices. | Concentrating R&D and product efforts on premium tiers, letting low-margin Android programs sunset in FY26–27. | Increasing emphasis to counter Android market challenges |
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Largest Customer Content Gains
Q: Will your content with your largest customer increase this year?
A: Yes, we expect to gain content with our largest customer this year based on awards we've already received, leading to flat to modest revenue growth despite uncertainties in volume and mix. Our content is more weighted towards the Pro models, which could result in higher revenue in the second half of fiscal '26. , , -
Android Business Decline
Q: How is the decline in your Android business impacting revenues?
A: Our Android revenue is expected to decrease by $150 million to $200 million this year, primarily due to exiting lower-tier markets and declining demand in China. This will reduce our quarterly Android revenue from around $100 million to approximately $50 million per quarter. , , -
Gross Margin Improvement
Q: What are the key drivers for gross margin improvement?
A: Exiting lower-margin Android business will positively impact gross margins. Additionally, we're reducing factory costs, optimizing our footprint, leveraging outsourced suppliers, and have implemented workforce reductions. These efforts are expected to increase gross margins to the high 40s and potentially reach 50% over time. , -
Defense and Aerospace Growth
Q: Can you elaborate on growth in your defense and aerospace segment?
A: Our defense and aerospace (D&A) business is now approximately a $400 million segment, experiencing significant growth and seasonality. We expect strong performance in the March quarter, a drop in June, but overall growth faster than the HPA business in the 10% to 12% range for the year. Opportunities in areas like radar systems and satellite communications are driving this growth. , , -
Customer Concentration and Diversification
Q: Are you concerned about increasing revenue concentration with your largest customers?
A: While we acknowledge the growing concentration due to declining Android revenues, we are focusing on growing our HPA and CSG segments to reduce reliance on our largest customers. We are also open to strategic acquisitions that could enhance shareholder value and diversify our revenue streams. , -
Tax Rate Increase
Q: How will changes in the tax rate impact your financials?
A: Our tax rate is expected to increase from approximately 11% to 18% to 19% in fiscal '26 due to changes in international and domestic tax laws. This will have an impact on our net income, but we are exploring opportunities to mitigate this increase. -
Capital Allocation Priorities
Q: What are your priorities for capital allocation moving forward?
A: Our capital allocation priorities remain unchanged: investing in working capital, strategic CapEx, pursuing organic and inorganic growth opportunities, retiring debt, and returning value to shareholders through share repurchases. We regularly review these priorities with our Board. -
China Market Dynamics
Q: How are China market dynamics affecting your business?
A: The mid-tier market in China is collapsing into the entry tier, which we're exiting due to lower margins. We'll reduce our exposure in China from around $100 million to approximately $50 million per quarter, focusing on premium and flagship tiers with growth potential. , , -
Outlook for ACG Business
Q: What is the outlook for your Mobile Products (ACG) business?
A: We expect ACG revenues to decline in fiscal '26 due to the reduction in Android revenues, but anticipate growth resuming afterward by increasing content with our largest customer and maintaining share in flagship Android phones. , -
Restructuring Initiatives
Q: Are you planning further restructuring to optimize the company?
A: We continuously consider ways to optimize our factory footprint and operations in line with revenue mix and demand. Recent actions include headcount reductions and shifting production, and we will continue to make adjustments as needed.