SKYWORKS SOLUTIONS, INC. (SWKS) Q1 2025 Earnings Summary

Executive Summary

• Q1 FY2025 revenue was $1.068B, GAAP diluted EPS $1.00, non-GAAP diluted EPS $1.60; gross margin 41.4% GAAP and 46.5% non-GAAP, with operating cash flow of $377M and free cash flow of $338M .
• Management guided Q2 FY2025 revenue to $935–$965M, non-GAAP EPS $1.20 at the midpoint, gross margin 45.5–46%, OpEx $220–$228M, tax 12–12.5%; board approved a new $2B buyback and declared a $0.70 dividend .
• CFO disclosed content at the largest customer is expected to be down 20–25% starting in Q4 FY2025 due to dual-sourcing on a key socket; mobile was 67% of revenue and largest customer was 72% of revenue in Q1 .
• Leadership transition announced: Philip Brace to become CEO on Feb 17, 2025; Christine King appointed Board Chair; Liam Griffin to advise during transition .

What Went Well and What Went Wrong

What Went Well

• Non-GAAP gross margin held at 46.5% with free cash flow margin >30%; Q1 operating cash flow $377M and free cash flow $338M .
• Mobile revenue grew 6% sequentially; broad markets returned to YoY growth (+2%) and showed improving demand signals and backlog .
• Design-win momentum: premium Android 5G sockets (Samsung Galaxy, Xiaomi, Asus), AI router enablement, Wi-Fi 7 gaming routers, expanding automotive pipeline .

Quotes:

• “We have observed consistent improvement in demand indicators within Broad Markets, while we have successfully supported multiple new product launches in Mobile.” – Liam Griffin .
• “We expect additional sequential and year-over-year growth [in broad markets]” – Kris Sennesael .

What Went Wrong

• Content headwind at largest customer: expected down 20–25% from dual-sourcing on a key socket beginning Q4 FY2025 through FY2026 .
• GAAP operating margin compressed to 16.9% vs prior year 21.5% amid higher R&D and ongoing inventory digestion in select end-markets .
• Industrial/infrastructure demand remained subdued due to persistent inventory challenges despite normalization in some channels .

Financial Results

P&L and Cash Metrics vs Prior Periods and Prior-Year

Segment Mix (Q1 FY2025)

Q1 FY2025 Actuals vs Q1 FY2025 Guidance (from Q4 FY2024)

Estimates vs Actuals

• S&P Global consensus EPS and revenue for Q1 FY2025 were unavailable due to data access limits at time of retrieval; comparison to Street estimates cannot be shown. We recommend refreshing SPGI consensus before publication.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We posted another quarter of impressive free cash flow with margins exceeding 30%.” – Liam Griffin .
• “We anticipate a mid-to-high teens sequential decline in mobile, consistent with historical seasonal patterns. In broad markets, we expect additional sequential and year-over-year growth.” – Kris Sennesael .
• “Our content position [at our largest customer] is expected to be down 20% to 25%... as we move from single source to dual source [on an important socket].” – Kris Sennesael .
• “Philip Brace has been appointed president and chief executive officer... Christine King appointed chairman of the board.” – Leadership succession PR .

Q&A Highlights

• Largest customer dynamics: The content decline stems from dual-sourcing on a key socket; Skyworks remains competitive and retained multiple sockets; mix will drive the ultimate impact .
• Segment mix & customers: Mobile 67% of revenue; largest customer 72% of revenue; about 15% of largest customer revenue is non-phone (watch, tablet, PC, home/vision) and expected to grow .
• Android: December quarter Android revenue was flat sequentially (~$70–75M), with design wins and expected growth over coming quarters .
• Manufacturing footprint & margins: No immediate changes to footprint; gross margin drivers remain utilization, operational efficiency, and mix shift toward broad markets .
• Inventory/macro: Industrial/infrastructure remain headwinds; visibility limited though channels are normalizing in selective areas .

Estimates Context

• S&P Global consensus for Q1 FY2025 was not retrievable at time of analysis due to data access limits, so beat/miss vs Street cannot be shown. Company guidance for Q2 FY2025 (revenue $935–$965M; non-GAAP EPS $1.20 midpoint; gross margin 45.5–46%) should be compared against updated SPGI consensus prior to investment decisions .

Key Takeaways for Investors

• Q1 FY2025 printed solid non-GAAP profitability and robust cash generation; margins remain resilient despite mixed macro and inventory digestion .
• Near-term (Q2) outlook implies seasonal mobile downtick offset by continued broad markets improvement; expect gross margin to dip modestly on lower volume then stabilize .
• The 20–25% content headwind at the largest customer (starting Q4 FY2025) is a critical medium-term risk; watch dual-sourcing dynamics and mix across SKUs/basebands for revenue impact .
• Diversification is gaining traction: Wi‑Fi 7 adoption, edge IoT, and automotive are expanding and should provide margin tailwinds as they grow to a larger share of mix .
• Capital returns are significant: new $2B buyback authorization through 2027 and dividend maintained at $0.70; strong balance sheet and FCF support ongoing returns .
• Leadership transition appears orderly; Brace’s background in connectivity/IoT and stated focus on execution and diversification are positives for long-term strategy .
• Action items: refresh SPGI consensus to calibrate Q2 expectations; monitor incoming Android ramp and broad-markets bookings; track management updates on largest customer socket wins heading into the fall 2025 cycle.