Qorvo, Inc. Q3 FY2025 earnings call

• Qorvo serves six primary end markets underpinned by global megatrends. - In HPA, growing defense and aerospace and expanding power management. - In CSG, building on RF solutions strength and investing in diverse growth like automotive and SOCs. - In ACG, focusing on premium and flagship Android tiers, reducing force, and narrowing 5G product development spend to these tiers. - Performance by markets: Defense and aerospace had sequential revenue growth with multi-year tailwinds; Industrial and Enterprise had sequential revenue growth with milestones in Ultra-Wideband and WiFi; Infrastructure saw stabilization with revenue increases in broadband and cellular base station businesses. - Initiatives to expand margin, generate free cash flow, and enhance efficiency through portfolio management, manufacturing footprint optimization, and workforce reductions.

Qorvo has three operating segments. In HPA, they continue to grow the defense and aerospace business and expand power management. In CSG, they build on their strong RF solutions position and invest in diverse growth businesses like automotive solutions and SOCs. In ACG, they focus on 5G advanced products for premium and flagship Android tiers. ACG had Android 5G revenue of approximately $875 million in fiscal '25, with a planned decline of $150 million to $200 million annually in fiscal '26 and '27 as they narrow focus to premium and flagship tiers for increased profitability. HPA is growing defense and aerospace, CSG is investing in diverse growth areas.

• Current quarter revenue expected to be approximately $850 million, plus or minus $25 million. - Non-GAAP gross margin expected between 43% and 44% in the March quarter. - Non-GAAP diluted EPS expected between $0.90 and $1.10 in the March quarter. - Android 5G revenue in ACG is expected to decline by $150 million to $200 million from fiscal '25 levels. - Gross margin expected to expand by approximately 150 basis points in fiscal '26 on roughly flat revenue. - Non-GAAP operating expenses expected to average approximately $250 million per quarter in fiscal '26, subject to variability.

• Global market dynamics and customer concentration risks. - Uncertainties related to tax rate changes, including potential increase to 18%-19% in fiscal '26. - Industry-specific challenges like inventory corrections in infrastructure and potential impacts of Android build plan changes on revenue.

Q: Gary Mobley asked about Android revenue and repeatability of HPA strength.

A: Bob Bruggeworth responded on Android revenue decline and HPA's seasonal growth with defense contractors.

Q: Harsh Kumar asked about Cellular business seasonality and gross margin needle movers.

A: Bob Bruggeworth commented on Cellular business seasonality, and Grant Brown discussed gross margin drivers like exiting Android business and leveraging outsourced suppliers.

Q: Tom O'Malley asked about March guidance and total company perspective.

A: Grant Brown addressed March guidance factors and total company seasonal expectations.

Q: Karl Ackerman asked about iOS baseband modem impact on RF content.

A: Bob Bruggeworth and Dave Fullwood discussed continued RF content gains with iOS.

Q: Vivek Arya asked about ACG growth and OpEx progress.

A: Bob Bruggeworth and Grant Brown provided insights on ACG growth and OpEx seasonal patterns.

Q: Toshiya Hari asked about restructuring journey and M&A.

A: Grant Brown and Bob Bruggeworth talked about restructuring and M&A willingness.

Q: Chris Caso asked about largest customer content and tax rate.

A: Grant Brown and Bob Bruggeworth discussed largest customer content and tax rate uncertainties.

Q: Krish Sankar asked about Galaxy S25 content and China OEMs.

A: Dave Fullwood and Bob Bruggeworth commented on Galaxy S25 content and China OEMs' premium-tier focus.

Q: Christopher Rolland asked about largest customer revenue and capital needs.

A: Bob Bruggeworth and Grant Brown addressed largest customer revenue and capital allocation.

Q: Ruben Roy asked about industrial segments' visibility.

A: Dave Fullwood discussed industrial segments' growth opportunities.

Q: Edward Snyder asked about largest customer fall guidance and defense content.

A: Bob Bruggeworth and Dave Fullwood responded on largest customer fall guidance and defense content.

Q: Vijay Rakesh asked about China market exposure and customer competition.

A: Dave Fullwood and Bob Bruggeworth talked about China market exposure and customer competition