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Qorvo (QRVO)

Q4 2024 Earnings Summary

Reported on May 1, 2024 (After Market Close)
Pre-Earnings Price$111.89Last close (May 1, 2024)
Post-Earnings Price$101.93Open (May 2, 2024)
Price Change
$-9.96(-8.90%)

What went well

  • Qorvo is confident in gaining market share and growing revenue with its largest customer, expecting to gain share in FY '25 and FY '26 and grow revenue.
  • Strong tailwinds in the defense business are expected in the fiscal second half, driven by recent congressional budget approvals and increased order activity.
  • Anticipated gross margin expansion as factory utilization improves, with gross margins expected to be the low point in the June quarter and improve substantially in the September quarter.

What went wrong

  • Modest Revenue and Gross Margin Growth Expectations: Qorvo projects only modest growth in both revenue and gross margin for fiscal 2025.
  • Flat Outlook for Android Business in June Quarter: The company expects its Android business to be flat in the June quarter, potentially signaling challenges in that market segment.
  • Limited Contribution from Anokiwave Acquisition to Mobile Segment: Qorvo does not plan to integrate Anokiwave's technology into the mobile phone segment, focusing instead on defense markets, which may limit growth opportunities in mobile.

Q&A Summary

  1. Fiscal '25 Growth Outlook
    Q: Will revenue and gross margin grow modestly in fiscal '25?
    A: Yes, we expect to grow both revenue and gross margin modestly in fiscal '25, absent any macro-related disruptions . This growth is driven by content gains at our largest customer and success in the defense market .

  2. Confidence with Largest Customer
    Q: Any change in outlook for share gains with largest customer?
    A: We are very confident in our outlook with our largest customer, expecting to gain share and grow revenue in FY '25 and FY '26 .

  3. Gross Margin Improvement
    Q: How will you improve gross margins back to peak levels?
    A: We are improving utilization, optimizing manufacturing, and focusing on high-margin businesses like defense . Utilization across our U.S. fabs increased by 20 percentage points, from the 40s to the 60s .

  4. Android Business Outlook
    Q: What's the outlook for Android business in June?
    A: The Android business is likely to be flat in June . We're offsetting a decline from a big flagship ramp with growth elsewhere .

  5. Segment Growth Expectations
    Q: Are you expecting growth across all segments in fiscal '25?
    A: Yes, for the full year, we expect growth across all segments .

  6. Silicon Carbide Business
    Q: What's the outlook for silicon carbide business?
    A: Our silicon carbide business is mixed . Success in data centers, but areas like solar are soft due to the interest rate environment . It's a small but growing business with opportunities .

  7. Anokiwave Acquisition Focus
    Q: Is Anokiwave acquisition focused on mobile?
    A: No, the acquisition is focused on defense . We have no plans to bring it into the mobile business .

  8. Revenue Seasonality
    Q: How will fiscal '25 revenue shape compare to '24?
    A: Similar to fiscal '24, but we expect a larger December quarter than September . September and December will be our largest quarters .

  9. Inventory at Largest Customer
    Q: Are you seeing inventory build at your largest customer?
    A: No, we do not see any channel inventory between us and our largest customer . We ship directly to their manufacturers .

  10. Capital Intensity Targets
    Q: What are your capital intensity targets?
    A: We plan to spend CapEx around a 5% target level over time . It may vary based on capacity needed to support demand .

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