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SKYWORKS SOLUTIONS, INC. (SWKS) Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 delivered $965M revenue, non-GAAP gross margin 47.1%, and non-GAAP EPS $1.33; management said revenue, gross margin, and EPS all exceeded the high end of guidance. Broad Markets grew for a sixth consecutive quarter; Mobile ran above seasonal, aided by strong sell-through at the top customer and Android ramps.
  • Q4 FY25 (September) outlook guides revenue to $1.00–$1.03B and non-GAAP EPS to $1.40 at the midpoint; non-GAAP gross margin ~47% ±50 bps; OpEx $235–$245M (with a 14th week adding ~$7M to OpEx); other income ~$4M; tax ~13%; diluted shares ~149.5M.
  • Strategic actions: consolidating the Woburn facility into Newbury Park to lift fab utilization, lower fixed costs, and support long-term gross margin expansion; dividend raised 1% to $0.71/share.
  • Demand drivers: momentum in Wi‑Fi 7 and auto (auto now tracking ~$60M/qtr), Google-led Android ramp (“up just under $100M”), and AI-related timing solutions (first clocks simultaneously supporting Ethernet/PCIe). These underpinned results and bolster the multi-quarter setup.

What Went Well and What Went Wrong

What Went Well

  • Outperformed guidance: “Revenue, gross margin and EPS exceeded the high end of our guidance.”
  • Mix and execution: Non-GAAP gross margin reached 47.1% on mix and cost discipline; operating margin 23.3%; FCF $252.7M (26% margin).
  • Diversification momentum: Broad Markets posted its sixth straight quarter of growth with strengthening book-to-bill; auto tracking ~$60M/qtr with wins at BYD, Ford, Geely, and Nissan; Wi‑Fi 7 accelerating; AI data center timing portfolio expanding.

What Went Wrong

  • GAAP profitability lagged: GAAP EPS $0.70 and GAAP gross margin 41.6% reflect elevated R&D and restructuring charges; GAAP operating margin 11.5% vs non-GAAP 23.3%.
  • Customer concentration persists: Largest customer was ~63% of sales (mobile ~85% of that), keeping the narrative sensitive to single-customer dynamics and iPhone mix.
  • OpEx up near term: Q4 OpEx guided to $235–$245M (includes ~$7M from a 14th week), tempering near-term EPS leverage despite revenue growth.

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025Q4 2025 Guide
Revenue ($USD Millions)$905.5 $1,068.5 $953.2 $965.0 $1,000–$1,030
Non-GAAP Gross Margin %46.0% 46.5% 46.7% 47.1% ~47% ±50 bps
Non-GAAP Operating Margin %24.2% 26.7% 23.3% 23.3% N/A
Non-GAAP Diluted EPS ($)$1.21 $1.60 $1.24 $1.33 $1.40 (mid)
GAAP Diluted EPS ($)$0.75 $1.00 $0.43 $0.70 N/A
  • Management stated revenue, gross margin, and EPS exceeded the high end of guidance this quarter.
  • Wall Street consensus (S&P Global) was unavailable via our data tool for this quarter and next; we therefore cannot quantify beat/miss vs consensus.

Segment mix and customer concentration

MetricQ3 2025
Mobile (% of total)62%
Mobile Revenue (Implied $M)~$598 (62% of $965)
Broad Markets (% of total)38% (balance)
Broad Markets Revenue (Implied $M)~$367 (38% of $965)
Largest Customer (% of total)~63%

Cash flow and capital returns

KPIQ1 2025Q2 2025Q3 2025
Operating Cash Flow ($M)$377.2 $409.5 $314.1
Capital Expenditures ($M)$39.0 $38.5 $61.4
Free Cash Flow ($M)$338.2 $371.0 $252.7
Share Repurchases (Program, $M)$0.0 (withholdings $38.3) $500.0 $330.2
Dividends Paid ($M)$112.5 $110.6 $103.9
Cash & Marketable Securities ($M)$1,754.8 $1,527.7 $1,336.7
Debt ($M)$994.7 $995.1 $995.4

KPIs and other disclosures

  • Automotive revenue run-rate: “around $60M a quarter,” up y/y.
  • Android in June quarter “was up just under $100M” driven by a Google ramp.
  • Effective tax rate: 11.2% in Q3.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)Q4 FY25N/A$1.00–$1.03 New
Non-GAAP EPS ($)Q4 FY25N/A$1.40 (midpoint) New
Non-GAAP Gross Margin %Q4 FY25N/A~47% ±50 bps New
OpEx ($M)Q4 FY25N/A$235–$245; +$7M from 14th week New
Other Income ($M)Q4 FY25N/A~$4 New
Tax RateQ4 FY25N/A~13% New
Diluted Shares (M)Q4 FY25N/A~149.5 New
Dividend/Share ($)Ongoing$0.70 prior $0.71 (payable Sep 16, 2025) Raised 1%
Q3 Revenue vs Prior GuideQ3 FY25$0.92–$0.96 Actual $0.965 Beat high end
Q3 Non-GAAP EPS vs Prior GuideQ3 FY25$1.24 (mid) Actual $1.33 Above guide

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2 FY25)Current Period (Q3 FY25)Trend
AI in smartphones/upgrade cycleQ1: AI router support; broader BM recovery. Q2: Not a major callout in release. “First wave of AI‑capable phones is reaching scale”; could drive upgrade inflection and RF content growth. Up
Android momentumQ1: Design wins (Samsung, Xiaomi, Asus). Q2: Premium Android design wins incl. Pixel. Android “up just under $100M,” driven by Google ramp; more growth expected into September. Up
AutomotiveQ1: Pipeline expansion. Q2: Wins with Japanese and European OEMs. ~$60M/qtr run-rate; programs at BYD, Ford, Geely, Nissan. Up
Data center/Timing (AI infra)Limited prior commentary.Launched first clocks simultaneously supporting Ethernet & PCIe; AI datacenter upgrades to 800G/1.6T driving demand. Up
Supply chain/inventoryQ1/Q2: Normalizing BM inventories. Lean internal inventories; monitoring channel; healthy book-to-bill. Improving
Customer concentrationOngoing backdrop.Largest customer ~63% of revenue; mix tailwinds from internal modem discussed. Stable risk
Manufacturing footprintNo consolidation announced.Woburn consolidation into Newbury Park to enhance utilization, lower fixed costs, support margin expansion. Structural positive
Tariffs/macroBackground risk.Guidance reflects tariff environment; maintaining low inventories to manage risk. Managed headwind

Management Commentary

  • “Skyworks delivered strong results this quarter, fueled by an upside in mobile and sustained strength across broad markets… Revenue, gross margin and EPS exceeded the high end of our guidance.” — CEO Phil Brace
  • “The first wave of AI‑capable phones is reaching scale… we believe this could drive an inflection in upgrade cycles, leading to a potential tailwind to volumes and content over time.” — CEO Phil Brace
  • “We’re taking action to optimize our manufacturing footprint with the planned closure of our Woburn manufacturing facility… [to] drive higher fab utilization, lower fixed costs and improve overall efficiency.” — CEO Phil Brace
  • “Our largest customer accounted for about 63% of revenue. Mobile represented 62%… up 8% y/y… Broad Markets… grew 2% sequentially and 5% y/y.” — Interim CFO Rob Schriesheim
  • “Android revenue in the June was up significantly… up just under $100M… primarily related to our ramp with Google.” — VP IR Raji Gill
  • “Automotive is now tracking around $60M a quarter… with programs at BYD, Nissan, Ford…” — VP IR Raji Gill

Q&A Highlights

  • Content trajectory at top customer/internal modem: Management noted more content opportunity with an internal modem vs external; mix across models/geographies remains a determinant; overall tailwind as internal modem share rises.
  • Android ramp visibility: Strong sequential increase tied to Google; expectation for continued growth into September.
  • Seasonality and extra week: Extra week in September impacts OpEx by ~$7M, not revenue; December remains volatile historically; focus remains on execution.
  • Manufacturing consolidation economics: Woburn-to-Newbury Park expected to be a multiquarter tailwind across utilization, CapEx, OpEx, and margins; timing specifics not disclosed.
  • Infrastructure demand: Inventory digestion appears behind; orders improving with 800G/1.6T transitions benefiting timing solutions.

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 FY25 and Q4 FY25 was unavailable via our data tool at the time of analysis; we therefore cannot quantify beats/misses vs consensus. Management did state that Q3 revenue, gross margin, and EPS exceeded the high end of company guidance.
  • Where estimates may need to adjust: Mobile outlook strengthened (mid-single-digit sequential growth guided for Q4), Android ramp was stronger than seasonal, Broad Markets on track for sequential and accelerating y/y growth; OpEx modestly higher in Q4 due to 14th week. These dynamics likely drive upward revisions to near-term revenue/EPS trajectories and sustained non-GAAP gross margin near ~47%.

Key Takeaways for Investors

  • Quality beat vs guidance with improving mix: non-GAAP gross margin at 47.1% and EPS ahead of guidance; margin structure supported by manufacturing consolidation and disciplined OpEx.
  • Q4 guide constructive: $1.00–$1.03B revenue and $1.40 EPS (mid) with GM ~47% suggest sustained momentum through the iPhone cycle and Android ramps.
  • Android/Google strength is a second engine: “up just under $100M” in June quarter provides diversification alongside the top customer.
  • Auto/Data center catalysts building: Auto tracking ~$60M/qtr and AI-driven timing portfolio (Ethernet/PCIe clocks) expand Broad Markets with structurally higher margins.
  • Capital returns remain robust: $430M returned in Q3; dividend up to $0.71; cash $1.34B vs ~$1.0B debt provides flexibility.
  • Risk: customer concentration (~63% of sales) and competitive pricing remain central; management targeting content share gains via internal modem transition and higher RF complexity.
  • Trading setup: Near-term catalysts include September-quarter execution vs guide, Android continuation, and updates on fab consolidation milestones; watch OpEx normalization post 14th week and any commentary on December seasonality.

Appendix: Additional Data Points

  • GAAP vs non-GAAP reconciliation highlights non-GAAP adjustments (share-based comp, amortization of intangibles, restructuring), explaining divergence between GAAP EPS $0.70 and non-GAAP $1.33.
  • Dividend payable Sep 16, 2025; record date Aug 26, 2025.

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