SKYWORKS SOLUTIONS, INC. Q1 FY2025 earnings call

• Succession planning: Liam Griffin is stepping down as President and CEO, Philip Brace will join on February 17, and Christine King is appointed Chairman. - Q1 2025 results: Revenue of $1.068 billion, earnings per share of $1.60, free cash flow of $338 million. Revenue, gross margin, and EPS met or exceeded guidance. - Segment performances: Mobile grew 6% sequentially; Broad Markets had modest growth for four quarters with anticipation of further growth; Industrial/Infrastructure subdued; Automotive returned to year-over-year growth; Edge IoT saw growth from Wi-Fi 6e/7 and wireless consumer products. - Quarterly business highlights: Secured 5G content for premium Android smartphones, supported Gemtek's AI router launch, enabled Asus's Wi-Fi 7 gaming routers, and expanded automotive design wins.

Skyworks' first fiscal quarter of 2025 had revenue of $1.068 billion. Mobile revenue was 67% of total revenue, amounting to approximately $715.56 million, and grew 6% sequentially. Broad Markets was 2% of total revenue, up slightly sequentially and returned to year-over-year growth. Industrial and infrastructure segments remained subdued due to persistent inventory challenges. Automotive returned to year-over-year growth despite a soft demand environment. Edge IoT saw higher levels of intelligence and RF complexity driven by Wi-Fi 6e/7 adoption and wireless consumer products.

• Q2 fiscal 2025 revenue outlook: $935 million to $965 million. - Gross margin: Projected between 45.5% and 46.0%. - Operating expenses: Range of $220 million to $228 million. - Diluted EPS: Mid-point of revenue range $950 million is $1.20. - Stock repurchase: Board approved a new $2 billion stock repurchase program. - Content with largest customer: Position expected to be down 20% to 25% starting Q4 2025 and impacting fiscal '26.

• Competition intensification leading to dual sourcing of some components, affecting content position. - Inventory headwinds in industrial and infrastructure segments with persistent inventory challenges. - Impact of content loss with largest customer on revenue starting in Q4 2025 and continuing into fiscal '26.

Q: Thanks very much. First off, Liam, congratulations on retiring... As for Apple or your largest customer...

A: Yes, this is Kris here. And so thanks for your question and your remarks. As you know, I can't really go into too much specifics...

Q: Hi, thanks for the question. And congrats to Liam and Phil. Yes, just a little more clarity on the down ['20 to '25] (ph)...

A: Yes. So the content loss is really a result of the share loss. That accounts for all of it because we actually, in certain sockets, we have been able to win back slots that we lost that we talked about nine months ago...

Q: Yes, thank you gentlemen. I wanted to -- I was hoping you could clarify whether you're able to repurpose some of the RF designs...

A: Right. So I mean, we developed technology for our mobile business that of course, can be deployed at a large customer and within Android with Google, Samsung and China and some of that actually does spill over into our broad markets as well...

Q: Hi, thanks for taking my question. I think just bigger picture. I think for like two years in a row, you've lost some content not because of your technology positioning, but your relationship...

A: No, we are not changing the strategy here. I mean, again, we've been working with that customer for 18 years. We've built a very strong relationship. That relationship remains intact...

Q: Good afternoon. This is [indiscernible] on for Tim. Thanks for taking our question. And Kris, maybe just first on your largest customer...

A: So at a large customer, you win because you have the best performance parts. That's the rule. And so if there is only one supplier, obviously, that supply will win the business...

Q: Hi. This is Liam Pharr on behalf of Vivek Arya. Thank you for taking my question. I wanted to focus on China...

A: Right. So with China and Samsung, we are remaining selective. We have a long-standing relationship with those customers, but many years ago, we've decided not to compete for their mid or low end of their products, but we compete for sockets with them and the high end of the market...

Q: Hi guys. This is Eddie for Kris. Thanks for taking my question. It sounds like your competitor has improved the performance of their product meaningfully this year...

A: Right. So again, we can't really go into the specifics at that detailed level as it relates to our large customer. And performance is being measured on 5 or 10 different parameters and so this would become a very technical discussion...

Q: Thanks for taking my questions. Broad markets should see improving growth next quarter, and it sounds like that's driven by the large customer and WiFi, where inventory is more aligned...

A: Yes. That's a very good question. But unfortunately, visibility is not that great. I mean, I'm listening to all my peers and competitors that have huge exposure to industrial and infrastructure markets there as well...