10 November 2017
Skyworks’ quarterly revenue grows 9% to record $985m
For full-year fiscal 2017 (to 29 September), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported record revenue of $3.65bn, up 11% on fiscal 2016’s $3.29bn.
For fiscal fourth-quarter 2017, revenue was a record $984.6m (exceeding guidance of $980m), up 9% on $900.8m last quarter and up 18% on $835.4m a year ago.
“Our market outperformance is being driven by new customers and content growth across an increasingly diverse set of end-market applications,” says senior VP & chief financial officer Kris Sennesael.
Of total fiscal Q4 revenue, Broad Markets comprised 26% (exceeding $250m, and hence $1bn in annualized revenue), Integrated Mobile Systems comprised 64%, and Power Amplifiers comprised 10%.
The three greater-than-10% customers were again Foxconn (approaching 40% of total revenue), Samsung (in the low teens) and Huawei (about 10%).
“Record results demonstrate our traction within the increasingly vibrant and profitable Mobile and IoT ecosystems,” says president & CEO Liam K. Griffin. “We’ve significantly expanded the aperture of our design-win pipeline. Last quarter, we broadened our reach across all premier customers. Specifically, we powered Samsung’s flagship Galaxy and Note LTE platforms with proprietary DRx and SkyOne solutions, while adding GPS and DC/DC converters. We enabled Huawei’s newest premium smartphones with low-, mid- and high-band SkyOne, Wi-Fi, carrier aggregation, and proprietary SkyBlue power management solutions. We leveraged SkyLiTE and SkyOne across new platforms at Oppo, Vivo, Xiaomi, and Motorola,” he adds.
“Across our broad markets, we delivered fully integrated Zigbee and ISM [industrial, scientific & medical] modules for Bosch’s home security and Cisco’s smart street-lighting systems,” Griffin continues. “We commenced volume production of in-vehicle telematics at Hyundai, and launched wireless networking engines within DirecTV’s 4K Genie receivers. We also supported Sonos’ latest hi-fi speaker featuring Amazon’s Alexa virtual assistant technology,” he adds. “We introduced next-generation 802.11ax Wi-Fi engines for home and commercial environments, enabling a fourfold increase in speed and supporting up to 50 simultaneous users. We secured connectivity wins at DJI for virtual reality and drone applications, supplied precision GPS and antenna tuning for Fitbit’s newest smart watches, and we unveiled high-power solutions with leading base-station customers for 5G massive MIMO deployments.”
On a non-GAAP basis, gross margin was 51%, level with a year ago but up from 50.7% last quarter, growing by 30 basis points for a second consecutive quarter. However, full-year gross margin of 50.8% is still down slightly on 2016’s 51%.
Although up from $107.5m a year ago, operating expenses (OpEx) of $123m are level with last quarter while being cut from 13.7% to 12.5% of revenue.
Net income has risen further, from $277.6m ($1.47 per diluted share) a year ago and $292.7m ($1.57 per diluted share) last quarter to $338.8m ($1.82 per diluted share, better than the forecasted $1.75). Full-year net income has risen from $1.07bn ($5.57 per diluted share) for 2016 to $1.2bn (a record $6.45 per diluted share) for 2017.
Although down on $455m a year ago, cash flow from operations has risen from $314.1m last quarter to $425.4m for fiscal Q4/2017. Capital expenditure (CapEx) was $85m. Dividends paid were $58.9m, and Skyworks repurchased 1 million shares of common stock for $101.8m.
For the full year, cash flow from operations has risen from $1.1bn for 2016 to $1.47bn for 2017. CapEx has been raised from $189.3m to $303.3m. So, free cash flow was $1.2bn (32% free cash flow margin), above the targeted $1.1bn. Skyworks returned 55% of the free cash flow to shareholders (exceeding the targeted 40-50%), consisting of $214.6m in dividend payments and $432m in repurchasing 4.6 million shares.
Overall, Skyworks’ cash balance has hence risen from $1.084bn at the end of fiscal 2016 and $1.444bn at the end of fiscal Q3/2017 to $1.617bn at the end of fiscal 2017, while the firm still has no debt.
Skyworks’ board of directors has declared a cash dividend of $0.32 per share of common stock, payable on 12 December, to stockholders of record at the close of business on 21 November.
For fiscal Q1/2018 (to end-December 2017), Skyworks expects revenue to rise 7% sequentially and 15% year-on-year to $1.05bn. Gross margin should rise by 0-50 basis points to 51-51.5% (continuing to make progress towards its target model of 53%), driven by: (1) greater revenue (since more volume helps with size and scale and fixed-cost absorption); (2) continuing to drive operational efficiencies across all operations and with third-party suppliers; and (3) continuing to make good progress on filter insourcing (a quarter ago, about 50% of filters were produced in-house and 50% purchased from third parties, but Skyworks is making good progress towards a 75%/25% allocation in early 2018).
Despite expecting operating expenses to rise to $127m (12.1% of revenue, maintaining the full-year target of 13%), diluted earnings per share should still grow to $1.91 (up 19% year-on-year).
“The ubiquitous connected economy is gaining significant momentum,” says Griffin. “At the same time, the broad range of usage cases and expanding scope of newly connected platforms are crowding radio spectrum and stressing network capacity. These dynamics portend a digital traffic jam while creating a tremendous opportunity,” he adds. “Given our strategic investments, technology breadth and differentiated system solutions, Skyworks is well positioned to empower revolutionary 5G applications, enabling up to 100x increases in speed and near-zero latency with expanding network capacity.”