Qorvo, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights: - Qorvo is at the forefront of global secular macro trends like mobility, connectivity, etc. - Completed acquisition of Anokiwave in March quarter, bringing robust capabilities for defense and aerospace. - Product innovations include HPA advancements, power management investments, CSG's Wi-Fi and automotive solutions, ACG's Android 5G product developments. - Investing in new product development and a multi-year initiative to upgrade core systems and processes to enhance operational efficiency and leverage software capabilities like AI. - Progressing with divestiture of Beijing and Dezhou assembly and test facilities to reduce capital intensity.

Segment Performance: HPA returned to year-over-year growth in the March quarter, supported by strong sequential growth in defense and aerospace. ACG revenue grew 56% year-over-year in the March quarter, supported by strong content on multiple large customer platforms. CSG delivered 50% year-over-year growth and fourth consecutive quarter of sequential growth due to strength in Wi-Fi, automotive and other areas. HPA's D&A content opportunity is strong in phased array. ACG's largest customer represented 46% of total fiscal '24 revenue, up from prior years. CSG's growth is driven by Wi-Fi, automotive, etc.

Guidance: - Fiscal Q4 revenue was $941 million, non-GAAP gross margin 42.5%, non-GAAP diluted EPS $1.39, exceeding guidance midpoint. - Q2 2025 guidance: revenue ~$850M, plus or minus $25M; non-GAAP gross margin 40%-41%; non-GAAP diluted EPS $0.60-$0.80. - Expect gross margin to improve substantially in September, full-year 2025 gross margin modestly higher than 2024. - Core system upgrade initiative to span ~3 years, with ~$40M spend in 2025. - Divestiture of Beijing and Dezhou facilities expected to close in Q2 2025.

Risks: - Seasonal ramp patterns affecting segment performance, e.g., ACG customer ramps and HPA defense program seasonality. - Macro factors impacting silicon carbide business, particularly in the industrial market. - Dependence on key customers' seasonal ramp patterns, which can impact quarterly performance.

Question and Answer: Q: Ruben Roy asked about guidance for the June quarter and segment moving parts.

A: Grant Brown explained sequential decline in June due to ACG customer ramps, HPA seasonal defense programs, and CSG being flat.

Q: Karl Ackerman asked about gross margin and silicon carbide.

A: Grant Brown talked about gross margin mix dependence and Dave Fullwood mentioned mixed performance in silicon carbide.

Q: Edward Snyder asked about content growth and Anokiwave.

A: Bob Bruggeworth clarified Anokiwave focus on defense, not mobile.

Q: Chris Caso asked about revenue/gross margin growth and capital intensity.

A: Grant Brown said both revenue and gross margin to grow modestly, capital intensity target ~5%.

Q: Srini Pajjuri asked about outlook outside largest customer.

A: Bob Bruggeworth and Grant Brown discussed cautiousness due to external market factors.

Q: Thomas O'Malley asked about year shape.

A: Grant Brown said similar to 2024 but December larger than September.

Q: Peter Peng asked about growth across segments.

A: Grant Brown said all segments expected to grow.

Q: Unidentified Analyst asked about inventory and largest customer.

A: Bob Bruggeworth said no channel inventory with largest customer.