Earnings call transcript: Qorvo Q4 2025 earnings beat expectations, stock surges

Qorvo Inc. (QRVO) reported its Q4 FY2025 earnings, surpassing analyst expectations with an EPS of $1.42 compared to the forecasted $1.00. Revenue also exceeded projections, reaching $869.5 million against an expected $850.07 million. Following the announcement, Qorvo’s stock rose by 9.27% in aftermarket trading, reflecting investor optimism. According to InvestingPro analysis, Qorvo currently appears undervalued based on its Fair Value model, with the company achieving a perfect Piotroski Score of 9, indicating strong financial health.

Key Takeaways

• Qorvo’s Q4 earnings significantly beat expectations for both EPS and revenue.
• The company’s stock surged by over 9% in aftermarket trading.
• Strategic initiatives include product innovations and market expansions.
• Positive guidance for Q1 FY2026 with expected revenue of $775 million ± $25 million.
• Concerns include workforce reductions and high long-term debt.

Company Performance

Qorvo demonstrated robust performance in Q4 FY2025, with revenue and earnings per share both exceeding analyst forecasts. This performance reflects the company’s strategic focus on innovation and market expansion, despite challenges in certain segments. Compared to previous quarters, Qorvo has shown resilience and adaptability, maintaining a competitive edge in the RF technologies market.

Financial Highlights

• Revenue: $869.5 million, up from the forecasted $850.07 million.
• Earnings per share: $1.42, surpassing the expected $1.00.
• Non-GAAP Gross Margin for Q4: 45.9%.
• Full Year FY2025 Revenue: $3.7 billion.
• Full Year Non-GAAP Gross Margin: 45.2%.

Earnings vs. Forecast

Qorvo’s actual EPS of $1.42 outperformed the forecast by $0.42, a significant 42% beat. Revenue also exceeded expectations by $19.43 million. This strong performance highlights the company’s effective operational strategies and market positioning.

Market Reaction

Following the earnings announcement, Qorvo’s stock price rose by 9.27% in aftermarket trading, reaching $68.46. This increase reflects investor confidence in the company’s ability to deliver strong financial results and positive future guidance. The stock’s performance stands out against its 52-week range of $49.46 to $130.99, indicating a positive market sentiment. InvestingPro data shows the stock has gained nearly 6% in the past week, though it remains down about 38% over the last six months.

Outlook & Guidance

Qorvo provided optimistic guidance for Q1 FY2026, with expected revenue of $775 million ± $25 million and a non-GAAP gross margin of 42-44%. The company anticipates double-digit growth in its HPA and CSG segments and more than 10% content growth with its largest customer.

Executive Commentary

"We are repositioning the business for long-term success," stated Grant Brown, CFO, emphasizing Qorvo’s strategic focus. Philip Chesley, HPA President, noted, "Qorvo is really unique in the space. We have most of the key RF technologies onshore." Bob Bruggeworth, President and CEO, added, "We’re reducing capital intensity and focusing our internal production only where it differentiates our products."

Risks and Challenges

• Workforce reductions and facility closures may impact operational efficiency.
• High long-term debt levels pose financial risks.
• Potential market saturation in some segments could limit growth.
• Supply chain disruptions and macroeconomic pressures may affect performance.

Q&A

During the earnings call, analysts inquired about tariff impacts and mitigation strategies, content growth across smartphone models, and manufacturing location strategies. The company addressed inventory and demand dynamics, providing insights into its strategic approach to market challenges.

Full transcript - Qorvo Inc (QRVO) Q4 2025:

Conference Operator: Good day, and welcome to the Corvo Inc. Fourth Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad.

To withdraw your question, please press then 2. Please note, this conference is being recorded. I would now like to turn the conference over to Douglas Delito, Vice President of Investor Relations. Please go ahead.

Douglas Delito, Vice President of Investor Relations, Qorvo: Thanks very much. Hello, everyone, and welcome to Qorvo’s fiscal twenty twenty five fourth quarter earnings call. This call will include forward looking statements that involve risk factors that could cause our actual results to differ materially from management’s current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release published today as well as the risk factors associated with our business in our annual report on Form 10 ks filed with the SEC, because these risk factors may affect our operations and financial results. In today’s release and on today’s call, we provide both GAAP and non GAAP financial results.

We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non GAAP results. For a complete reconciliation of GAAP to non GAAP financial measures, please refer to our earnings release issued earlier today available on our Investor Relations website at ir.corvo.com under Financial Releases. Joining us today are Bob Bruggeworth, President and CEO Grant Brown, CFO Dave Fullwood, Senior Vice President of Sales and Marketing Philip Chesley, President of High Performance Analog Eric Creviston, President of our Connectivity and Sensors Group Frank Stewart, President of our Advanced Cellular Group as well as other members of Qorvo’s management team. And with that, I’ll turn the call over to Bob.

Bob Bruggeworth, President and CEO, Qorvo: Thanks, Doug. Welcome everyone to our call. Qorvo delivered a strong March with notable achievements in each of our operating segments. In ACG, we supported a critical new phone launch by our largest customer. Qorvo content in this highly anticipated model includes an envelope tracking power management solution, custom developed for this customer over multiple years in support of their internal baseband.

Our envelope tracking roadmap represents a long term content growth opportunity for Qorvo as our largest customers’ baseband shipments expand. In HPA, we posted a record revenue quarter in our defense and aerospace business. Strength was broad based and included applications such as manned and drone based airborne radar, space based radar, SATCOM, EW and missile defense systems. In CSG, we continue to increase our sales funnel of ultra wideband opportunities. Our ultra wideband sales funnel for automotive has grown more than $500,000,000 over the last twelve months and now exceeds $2,000,000,000 For fiscal year twenty twenty five, both CSG and HPA grew revenue double digits.

As we think about the business broadly, we are pleased to see the positive impact of our ongoing initiatives to improve performance. Our growth and margin targets are anchored in multi year strategy focused on winning content with our largest customer. Building on our core RF and power expertise to drive diversification through CSG and HPA and continuing to operate our business and manufacturing footprint in a disciplined and efficient manner. Key growth levers include continued momentum in defense and aerospace, expansion of our power management and ultra wideband businesses, and sustained content growth in flagship and premium mobile devices. On the margin side, we are executing a clear set of actions.

These include shifting away from legacy Android programs, scaling high value products and consolidating our manufacturing footprint in gas and in assembly and test, as well as the closure of our facility in Costa Rica, which Grant will discuss further in his remarks. These moves are already yielding benefits and position us well for the future success across our operating segments. Turning to our strategic highlights by market. In the automotive market, we began sampling a fully integrated ultra wideband programmable SoC. This automotive qualified SoC addresses industry demand for highly accurate and reliable UWB technology in automotive applications such as secure keyless entry, child presence detection, kick sensors and other precision short range radar applications.

Also during the quarter, we significantly expanded our automotive connectivity footprint in Japan with a WiFi design win for the leading OEM, and we expect first shipments to commence in calendar twenty twenty six. In consumer markets, we ramped production of our first power management IC design win for a wearable. This PMIC optimizes charging for a smartwatch launching later this year. We also supplied a global manufacturer of power tools and outdoor power equipment with first samples of our battery management SoC, leveraging embedded AI and machine learning algorithms to improve battery performance. In collaboration with Nordic Semiconductor, we announced the availability of an Alero compliant Smart Lock reference design that combines VLE and ultra wideband.

The Alero protocol is backed by industry leaders and is expected to accelerate adoption by securing communication between smart locks and personal devices like smartphones and wearables. The reference design combines a Qorvo Ultra Wideband SoC enabling critical functionality like precision location and secure transaction with Nordic’s multi protocol SoC. Leveraging AI trained algorithms and superior radar functionality enabled by our ultra wideband front ends, consumer applications such as smart locks can establish and differentiate end user direction of travel and their intent to enhance security, safety, and efficiency. We continue to support the migration to Wi Fi seven with front end wins spanning multiple years in routers, access points, and extenders. We also saw an increase in demand for our BAW filters across 2.4, five, and six GHz for consumer and enterprise WiFi markets.

Lastly, we have begun development for WiFi eight front ends in alignment with market leading chipset providers. Turning to defense and aerospace, we achieved a record quarter and record fiscal year in D and A revenue. This is the third consecutive year of year over year revenue growth. Qorvo is a leading supplier of high performance products and foundry services to the U. S.

Government, defense primes and other global defense and aerospace customers. The sales funnel for our defense and aerospace business currently exceeds $5,000,000,000 and we see a path to scale this business both organically and inorganically to $1,000,000,000 annually. During the quarter, Northrop Grumman recognized Qorvo as one of their top supplier partners at their Supplier Excellence Awards. The award recognizes Qorvo for delivering U. S.-based BAW filter technologies that enhance national security for The US and our allies.

We were also recognized by BAE Systems for being a critical supplier for airborne electronic warfare and commercial airborne SATCOM applications. Looking at our defense business broadly, governments around the world are allocating a higher percentage of GDP to defense spending and Qorvo is critical to many of the highest priority programs. We view this as a multi year tailwind to revenue and diversification. Also during the quarter, we launched next generation silicon Ku band Satcom Beamformer ICs for phased array based SATCOM user terminals. There is robust demand for high speed reliable connectivity around the globe and the SATCOM terminal market is expected to see very strong growth over the next several years.

In industrial and enterprise markets, customer demand continues to grow for Qorvo’s data center power management ICs. We are leveraging our performance leadership in client SSDs as we pivot to higher value SSD opportunities in enterprise and AI data centers. We also began sampling our next generation motor drive SoC for industrial applications. The motor drive SoC integrates our third generation microcontroller with our analog front end. Qorvo pioneered ARM based motor drive SoCs over a decade ago and commercial availability of our newest offering is expected next year.

To continue growing our power franchise and deliver added flexibility to customer designs, we expanded our power management portfolio to include a brushless DC motor driver that pairs with a variety of MCUs and is optimized for a broad range of applications, including power and garden pools, drones, EVs, and e bikes. Also during the quarter, customers leveraged our ultra wideband SoC to develop a range of monitoring, security and radar based sensing applications. Qorvo’s fully integrated ultra low power SoC contains RF, processing, memory, and onboard software, and it’s optimized to support a broad set of use cases. Radar based applications include intrusion detection, gesture recognition, vital sign monitoring, and active monitoring and tracking of room occupancy. Turning to infrastructure, inventories in our base station business have stabilized and our customer demand for our small signal portfolio has strengthened.

We’re also in the early stages of DOCSIS four point zero deployments, where Qorvo is a market leader. During the March, we secured a new design win with a leading broadband supplier headquartered in Europe. In mobile, we expanded our opportunity at our largest customer beyond discrete components like tuners and integrated placements such as ultra high band pads with the production ramp of our envelope tracking power management solution. Qorvo played a critical role in supporting this customer’s spring phone launch. Our ET solution is mated with their internal baseband, and this represents a key design win and a durable multi year content opportunity.

For our largest customer, we are doing what we said during our Investor Day, which is to invest more and win more. For their upcoming fall launch, we have been awarded design wins supporting greater than 10% year over year content growth, and we are addressing additional content in future programs over multiple years. At our second largest smartphone customer, Cordova’s design wins this year span our product portfolio. We are broadly represented in flagship and mid tier smartphone launches ramping now and in additional programs launching throughout the year. Design wins in 2025 include low band, mid high band and ultra high band paths, as well as mid high secondary transmit, antenna tuning, discrete filters and Wi Fi seven FEMs.

We also secured WiFi seven design wins in support of multiple Android smartphone OEMs, and we are engaged on WiFi eight development with mobile WiFi chipset providers. For Android OEMs based in China, shipments during the quarter supported five gs smartphones across the mid, premium and flagship tiers. Though we continue to ship mid tier design wins customers awarded to Qorvo prior to our pivot, all five gs product development in ACG is focused exclusively on premium and flagship tiers. In summary, we are seeing the positive effects of the actions taken to improve our performance. In HPA, a portion of the savings from our strategic exits of base station pans and silicon carbide is supporting growth in our defense and aerospace as well as our power management franchise.

In CSG, we’re leveraging decades of leadership in RF solutions, exceptional customer relationships and our core R and D to broaden and accelerate growth in automotive connectivity and SoCs for ultra wideband and matter. In ACG, we’ve expanded our product portfolio for our largest customer with a successful ramp of ET Power Management and we expect to build upon this with greater than 10% year over year content growth in our largest customers twenty twenty five fall launch. And with that, I’ll turn the call over to Grant. Thanks Bob and good afternoon everyone.

Grant Brown, CFO, Qorvo: We delivered solid results for the March exceeding the midpoint of our guidance with revenue of $869,000,000 and non GAAP diluted earnings of $1.42 per share. Similarly, non GAAP gross margin of 45.9% and non GAAP operating expenses of two forty seven million dollars were also better than the midpoint of our guidance, reflecting continued cost discipline across COGS and OpEx, including recent restructuring actions. In the March, our largest customer represented approximately 43% of total revenue. For the full year of fiscal twenty twenty five, our two largest customers represented 4710% respectively. For fiscal twenty twenty five in total, we achieved revenue of $3,700,000,000 and non GAAP gross margin of 45.2%, up approximately 70 basis points compared to fiscal twenty twenty four, which is consistent with our commentary last year when we guided to year over year improvement.

On the balance sheet, as of quarter end, we held approximately $1,000,000,000 in cash and equivalents. We currently have approximately $1,500,000,000 of long term debt remaining and no near term maturities. We ended the quarter with a net inventory balance of $641,000,000 This represents a decrease of $15,000,000 sequentially and a decrease of $70,000,000 on a year over year basis. Turning to the cash flow statement. In the fourth quarter, we generated operating cash flow of approximately $200,000,000 and CapEx of $29,000,000 which resulted in free cash flow of $171,000,000 For fiscal twenty twenty five in total, we generated free cash flow of $485,000,000 returned over $350,000,000 to shareholders via share repurchases and retired over $400,000,000 of debt.

Regarding our outlook for the current quarter, we are providing forward looking quarterly guidance despite the continued uncertainty surrounding tariffs and broader macroeconomic conditions. Our view reflects numerous underlying assumptions, including those related to a dynamic global trade environment and ongoing supply chain challenges. For reference, in our June guidance, we have assumed a direct tariff related impact of less than $1,000,000 This represents a historical run rate plus relevant new tariffs that will impact the quarter. Beyond the June, if the ninety day pause is not extended, relevant exemptions expire and other retaliatory tariffs become permanent, we expect the direct tariff impact could rise to high single digit millions per quarter in total across COGS, OpEx and CapEx. While the timing and scope of these changes remain uncertain, we are actively monitoring the situation, working closely with customers and taking action to mitigate the impact.

With that context, our expectations for the June are as follows: revenue of approximately $775,000,000 plus or minus $25,000,000 non GAAP gross margin between 4244% and non GAAP diluted EPS between $0.50 and $0.75 As expressed during our previous call, the June quarter has multiple seasonal items to consider. June is the lowest seasonal quarter for our largest customer and we are on the other side of the Galaxy ramp at Samsung. Like prior years, our DNA business will be down sequentially in June due to program timing. However, given the strength in bookings activity, our expectations for revenue in the June are higher than what we anticipated when we provided guidance last quarter. We project non GAAP operating expenses in the June to be approximately $250,000,000 This includes other operating expense of 1,000,000 to $2,000,000 associated with the residual portions of our digital transformation project and other related items.

Below the operating income line, non operating expense is expected to be between 10,000,000 and $12,000,000 reflecting interest paid on our fixed rate debt, offset by interest income earned on our cash balances, FX gains or losses along with other items. Our non GAAP tax rate for fiscal twenty twenty six is expected to be between 1819%. However, the impact of global minimum tax legislation for U. S.-based companies under the new administration as well as changes to international tax policy remain uncertain. Qorvo continues to execute on initiatives to improve revenue mix and gross margin with contributions anticipated from each business segment.

Beginning with ACG, we expect to enhance margins and reduce variability as our portfolio management efforts and pricing strategies reduce our exposure to mass tier Android five gs. In HPA, the divestiture of our silicon carbide business is a margin accretive move as is the expected growth within D and A. In CSG, gross margin will increase given the relocation of gas production to our high volume Oregon site and we expect operating margin will continue to improve as our SoC and automotive connectivity businesses scale. Additionally, we expect to expand gross margin in CSG as we transition our UWB products at external boundaries from a 40 nanometer to a 22 nanometer production process. Qorvo’s manufacturing strategy is to internally produce only the most differentiated elements of our products, to geographically align production with customers and suppliers and leverage the scale, capabilities and cost effectiveness of our outsourced partners.

For reference, over two thirds of our production costs are external. This includes procured raw materials, wafers purchased from external foundries, as well as packaging, assembly and test services provided by our OSAT partners. We continuously evaluate opportunities to reduce our capital intensity and product costs. As another step in this direction, we have decided to close our facility in Costa Rica to further consolidate our footprint and move closer to our customers and external manufacturing partners. The complexity of our solutions coupled with global RF compliance requirements and multi year design cycles require considerable collaboration with our customers.

We are working closely with our customers and the team in Costa Rica to ensure a smooth transition and expect this action to be completed early next calendar year. Regarding operating expenses, as a part of our ongoing efforts to drive operational efficiency and align our cost structure with long term strategic priorities, we executed a meaningful workforce reduction late last year. This action was primarily focused on our mass market Android business and the related corporate support functions. In parallel, we streamlined our digital transformation efforts, canceling elements of the project to ensure the scope aligns with the anticipated economic benefits. Finally, we sold our silicon carbide business, which will be accretive to both gross and operating margins in fiscal twenty twenty six.

We remain committed to optimizing our portfolio and regularly evaluate each of our investment areas. Where businesses do not meet our financial or strategic objectives, we will continue to act decisively, whether through divestiture or exit, to focus our resources on core high performing areas. We’re confident that the steps we’re taking today across our product portfolio, business segments and manufacturing footprint enable us to expand growth, profitability and diversification. We’re reducing capital intensity and focusing our internal production only where it differentiates our products. The benefits of these strategic actions will become increasingly evident as we advance through fiscal twenty twenty six and into fiscal twenty twenty seven.

Before we open up the call for questions, I’d like to reiterate that the purpose of today’s call is to discuss fourth quarter results and outlook. We appreciate you keeping your questions focused on those topics. At this time, please open the line for questions. Thank you.

Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Request to all participants, please restrict yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question comes from Thomas O’Malley from Barclays. Please go ahead.

Thomas O’Malley, Analyst, Barclays: Hey, guys. Thanks for taking my question, and congrats on the nice results. I wanted to ask about the commentary on content, the largest smartphone customer. Obviously, that’s a really nice forecast for the year. Could you talk about things that are driving that?

Obviously, you have an ETE chip that’s coming into play, but also you would be concerned in like a broader environment that there may be pricing headwinds. Maybe just broadly, can you talk about your largest customers and if you’re facing any sort of pricing squeeze over the next couple of quarters or if you’re able to offset that in any way? I just want to understand the context there. Thank you.

Bob Bruggeworth, President and CEO, Qorvo: Sure. Thanks, Tom. I think we’ll go ahead and let Frank Stewart who runs the business go ahead and answer your question for you.

Frank Stewart, President of Advanced Cellular Group, Qorvo: Yeah, so, hey, Tom. Maybe I’ll start with the largest customer side of your question. So yeah, we’re really excited about fall launch upcoming, really proud of what the team accomplished and capturing content there across multiple product categories. It covers things that you know well, antenna tuning and switches, we’ve added filters there, we’ve continued to be strong in our ultra high band content, and as we talked about for the spring launch, we’re going to enjoy some envelope tracking content in those models as well.

Bob Bruggeworth, President and CEO, Qorvo: Dave, you want to talk about, I think it’s going to Samsung as well?

Dave Fullwood, Senior Vice President of Sales and Marketing, Qorvo: Yeah, and I think Tom, you asked about pricing too. I mean, so we’ve talked a lot about what’s been going on in the mass tier and the challenges that we face there. So we’ve been exiting that part of the business. We still see in premium flagship tier, it’s about performance and that’s where we’re competing. And so like Bob mentioned on the call, we had some nice content in our Galaxy S25 ramp, still some phones coming in that platform that are yet to ramp.

And then we talked last quarter, think about our content in the second half flagships, this is kind of a flip and fold and fan edition type models. And we had pretty low content last year. We said we were going to win that back and we have. So we had less than $1 of content last year and we’ve got multiple dollars of content. Very similar to what we have in the S-twenty five ramping in the second half of the year.

So we feel pretty good about our position there.

Thomas O’Malley, Analyst, Barclays: Super help on all the color. Just on the fiscal year, you guys had kind of previously talked about a little bit of a decline. So one side of things, it sounds like you’re seeing some real strength. And then on the Android side, you’re obviously being more strategic in where you invest. If you look at like the cadence for the year, which is something that I think is a little difficult to kind of model and look at, how fast should we be seeing Android fall off?

Just because it looks like in the March, you actually had a little bit of an uptick there. Is that last time buys? And then how quickly is that going to fall off throughout the year?

Bob Bruggeworth, President and CEO, Qorvo: Thanks, Tom. This is Bob. Actually, we’re going to see a little bit of an uptick this quarter in June, which is typically consistent with the last three years. We typically see Android up as a percent of sales in our business and it’s going be up slightly in dollars. But it’s going depending on what new phones that are launched that we’re in and the decline in some of the mass tier phones are ramping down and we’re also we’re enjoying good business.

We talked about some of The U. S. Customers that being Google, obviously, we’re doing well there as they ramp. Dave mentioned other phones. So it has all to do with the timing of new phones and how well they sell, but it is going to decline year over year as we said.

We’re not backing away from that change.

Thomas O’Malley, Analyst, Barclays: Thank you, guys.

Conference Operator: Thank you. Our next question comes from Harsh Kumar from Piper Sandler. Please go ahead.

Harsh Kumar, Analyst, Piper Sandler: Yeah. Hey, guys. Congratulations also on very nice quarter and results. Bob, maybe you could clarify something for us. You mentioned that you want an ET solution on the internal baseband for a customer.

Are you sharing this with somebody? And then secondly, you also talked about sort of a nice double digit kind of content increase. So is the content increase coming because the baseband is moving to other models or is it coming because you’re also winning stuff across the board in other categories as well? Just this and then I have a follow-up.

Bob Bruggeworth, President and CEO, Qorvo: Yes, thanks Harsh. I will go ahead and take the second question. I mean, as Frank has already outlined, we picked up some share in a number of different buckets, so we will start there. At ET PMIC, we are sole source. We’ve been sole source when that first the baseband started at Infineon that they use, then it went to Intel and now it’s the Intel modem.

So we continue to be sole source. It’s a highly iterative process. They’re very integral to work with the baseband. And as you know, and I’ll just use Qualcomm as an example, they were very tightly coupled with their own ETP mix and it’s the same way with this baseband.

Harsh Kumar, Analyst, Piper Sandler: Understood. Thank you. And then, Bob, another clarification. I guess curious what you’re seeing with your largest customers. There’s been a lot of reports of pull forward companies.

I don’t blame them, but a lot of companies are doing stuff to avoid tariffs. I guess curious if you are seeing that and you think your results are reflecting that and if that’s the case, when do you think you go back to normal or maybe you’re not seeing it? I just love to understand what’s happening.

Bob Bruggeworth, President and CEO, Qorvo: Yes, I think one thing that people need to keep in mind here is they did launch a spring phone, which they typically don’t. When you launch a new phone, you typically produce more to go ahead and stock your channels, so you get ready for the sell through and we’re expecting that to come down next quarter, which is typical when you launch a new phone. So from that perspective, it’s pretty normal. And when I look at the overall business, we’ve some things move into quarter, some things move up the quarter kind of normal. So I’ll stop there Harsh.

I mean, we’re not seeing anything massive moving one way or another. Right now, but Grant?

Grant Brown, CFO, Qorvo: Right I would reiterate that I think we’ve seen some modest activity, it’s only notable in light of the tariff environment, but not meaningful in terms of dollars, primarily smartphones generally, but nothing that suggests customers are overreacting in terms of push ins or excuse me, push outs or pull ins in every quarter. So nothing abnormal there.

Harsh Kumar, Analyst, Piper Sandler: Appreciate it guys. Congrats again. Thank you.

Bob Bruggeworth, President and CEO, Qorvo: Thank you, Harsh.

Conference Operator: Thank you. The next question comes from Chris Caso from Wolfe Research. Please go ahead.

Chris Caso, Analyst, Wolfe Research: Yes. Thank you. Good evening. I guess the first question is regarding some of your comments about the direct tariff impact if things are in pause, you talked about high single digit millions. Can you detail a little bit more of what your assumptions are behind that?

What do you mean by that? And just in general, there’s a lot of uncertainty with tariffs in The US. There’s some concern about what tariffs may be charged and what might be paused going into China. Can you just kind of update us on your position and what your assumptions are right now?

Grant Brown, CFO, Qorvo: Hey, Chris, this is Grant. Let me spend some time on this one, because I think it’s an important question. The first part of it there is the assumptions themselves, at least in the high single digit million. It’s I wouldn’t necessarily think of us as anticipating any twists or turns in the tariff environment. It’s probably unknowable, but you could think of if all the worst things that we know of today would work against us.

That would be how we would size it. It’s an unlikely scenario, but wanted to highlight just in the grand scheme of things, how small the overall impact could be and maybe on that front, how we think about the tariff environment, it does remain dynamic and unpredictable, but I can start there and then we can talk a little bit about how we’re managing it. We’ve had mitigation measures in place for quite a number of years and today we continue to leverage those same tools. But again, the situation is fluid as we pointed out in my prepared remarks and in the June, we’ve got about a million dollars there or less than that and it represents a historical run rate plus some of the new tariffs that are relevant in the quarter. That’s across all of COGS, OpEx and CapEx.

So it’s probably better than feared. They’re complex as to what goods they apply to, how they’re calculated and who pays them, all depends on the countries involved, the nature of the products and relevant commercial terms. So it’s specific to any given company. Regardless, you should know that we’re not disadvantaged due to our geographic presence. We have a hybrid manufacturing footprint, multiple qualified flows and a lot of flexibility in how we serve our customers.

But that said, maybe a little bit of detail, I could break it into maybe four categories for you. The first would be U. S. To U. S, where a meaningful amount of our revenue comes from products that we manufacture in The US and then we sell to US customers.

Our defense business is a good example of that, and it’s sizable. It has some exposure related to input costs such as aluminum, but generally very little tariff exposure. The international to U. S, in that case, isn’t much product that comes back into The U. S.

That’s subject to tariffs. However, tariffs do increase the acquisition cost per factory equipment. So in that particular scenario, the impact is largely CapEx related. In an international to international scenario, we generate revenue from products that are built and sold outside The U. S.

So for example, our tuners and ETP mix are fabbed at non U. S. Silicon foundries and then sold to international customers and contract manufacturers. So that’s a good example of things that are on that international to international exposure. And then lastly, probably the most misunderstood is The U.

S. To international category. In this case, integrated module business is a good example. We produce intermediate goods such as wafers that contain our filters and PAs at our US facilities, and then we ship those to bonded free trade zones. Once in Asia, our OSAT partners integrate those with a considerable amount of other content, non US components such as laminates, capacitors, etcetera.

The bill of material contains dozens and dozens of components and they substantially transform those raw materials into some finished goods. So that when the part is actually built during assembly, that is where the substantial transformation occurs in the country of origin is designated. So we’re actually made in China, sold in China, if you will. So there’s no noticeable impact. Obviously, the tariffs are complicated and we’re managing it, but I think it comes down to each company’s particular circumstances.

The overall impact being generally small today. Obviously, there could be some broader demand related impacts, but just in so far as the direct impacts, I think that helps shape Qorvo’s exposure for you. We have a lot of options and flexibility and we’ll continue to leverage those.

Chris Caso, Analyst, Wolfe Research: That’s very helpful and thank you very much for the detailed answer. For my follow-up, I guess I wanted to get to the fiscal ’twenty six guidance and you had mentioned, and I guess perhaps it’s not wasn’t guidance, but it was some indication of kind of flat revenue, 150 basis points gross margin expansion in the current environment is that still a good model for us to follow?

Grant Brown, CFO, Qorvo: Sure, I’ll take that one too. It’s probably worth reflecting on it. I’m not going to restate it here what we said last quarter. But we didn’t have overly ambitious forecast to begin with. So we’re making substantive changes to our business this year in fiscal twenty twenty six and our commentary has reflected that.

We’ve removed base station PAM, so carbide business we’ve sold and we’re exiting 150,000,000 to $200,000,000 worth of lower margin Android business. So we’re making some substantive changes. I mean, you think of the drivers on the year, D and A is arguably cyclical, but far less correlated to the macro economy than perhaps consumer related end markets. Similarly, we’re seeing the content that Frank talked about at our largest customer growing over 10% and added a new revenue category there with the ETP MYC. So there’s some secular trends here that we’re still seeing help buoy our perspective on the year.

All that said that we’re repositioning the business for long term success. So fiscal twenty twenty six is really more about execution and margin improvement to create diversification opportunities outside of mobile where we’re on track. We haven’t seen anything that materially changes our forward view, but acknowledge that there are potential for indirect tariff impacts. Mean, the meantime, we’ll just continue to issue quarter by quarter guidance incorporating all that we know at the time it’s issued and executing on the things that are under our control to drive those financial results we talked about last quarter. Got it.

Thank you.

Conference Operator: Thank you. The next question comes from Karl Eckerman from BNP Paribas. Please go ahead.

Karl Eckerman, Analyst, BNP Paribas: Yes. Thank you. I have two, please. First, is your content growth with the largest customer coming from your attach rate on their own baseband or are also seeing content on third party basebands as well?

Douglas Delito, Vice President of Investor Relations, Qorvo0: I have a follow-up please.

Frank Stewart, President of Advanced Cellular Group, Qorvo: Yeah, hi, this is Frank again. Both, the team did a good job of succeeding on content across the board. So, I think we’ve been clear that when it comes to our ETP mix that is unique to the internal baseband, but the content that we captured on all the other product categories mentioned is broad based across both.

Karl Eckerman, Analyst, BNP Paribas: Helpful. Thank you. And then second, where are you on working through previously under absorbed inventory? And do you foresee tariffs to impact your China based demand? And I suppose if demand were to moderate, is the margin associated with the China based demand higher than corporate average?

So if you could just follow-up on that, that’d be great. Thank you.

Grant Brown, CFO, Qorvo: Well, we’ve actually made really good progress bringing down our inventory overall. So very proud of that. It’s unlocking some free cash flow for us. I think it’s been a positive trend for us. We didn’t overbuild.

We brought utilization down very quickly quite some number of quarters ago in order to react to it and we’ve worked through the inventory levels successfully. So we don’t see anything abnormal from an inventory perspective or expect there to be a noticeable impact at this point.

Dave Fullwood, Senior Vice President of Sales and Marketing, Qorvo: Thank you.

Conference Operator: Thank you. The next question comes from Srini Pajjuri from Raymond James. Please go ahead.

Douglas Delito, Vice President of Investor Relations, Qorvo1: Thank you. First, a clarification and then I have a question. On clarification, you talked about 150,000,000 to $200,000,000 headwind from exiting the Android, I think low end Android last quarter. Is that still on track? Are you tracking better or worse?

If you can clarify that, then I have a question.

Bob Bruggeworth, President and CEO, Qorvo: Yes. Thanks, Srini. It’s on track, playing out as we expected.

Douglas Delito, Vice President of Investor Relations, Qorvo1: Okay. Thank you. And then Bob, on the D and A, it looks like the business has been faring quite well and some of the trends that you highlighted make a lot of sense. You also talked about potentially getting to a $1,000,000,000 annual run rate. Could you give us maybe some color as to where the business is today in terms of run rate?

And then also in terms of product categories and maybe geographic exposure, if you could give us because we don’t get a lot of details on this business. So I think any color on the business would be helpful in terms of the growth drivers. Thank you.

Douglas Delito, Vice President of Investor Relations, Qorvo: Yes, Shereen, this is Philip. I’ll maybe dive into that a little bit as well. So I think kind of break down your questions here. So I think Bob said in his prepared remarks that we have over a $5,000,000,000 design win funnel right now. And we size the business, I believe it was last quarter or so at around $400,000,000 When you look at our design win funnel, it really is broken pretty evenly between the big end market segments that we kind of play in today.

And if you look at that, that’s radar comms, electronic warfare with our solid state PA technology that we have, which is high power RF, space and satellite based comms, satcom, differentiating that between space based, more ground based, kind of satcom terminal business, and as well as missile applications, whether that’s traditional hypersonic. You know, we we touch a lot and most of the most of the segments, you know, in the in the DNA space. And so, you know, when you look at when you look at where we’re winning, it’s really driven around, you know, this big upgrade cycle that we’ve been seeing for a lot. Right? And, we’ve talked about it at Investor Day where whether it’s an older asset, whether that’s a ship or a plane, it needs upgraded radar capability.

Whether it’s a new system, I mean, just announced the F-forty seven as an example, right? And so that’s going to require a lot of advanced radar platforms that is right technologies that is what we provide. So you look at that. The other thing I would say is that the DoD has an approved continued resolution right now for FY twenty five. If you look at where that is focused, that’s focused on deterring China, that’s focused on hypersonics, that’s focused on alternative GPS, that’s focused on UAVs, all segments where we play and have wins in big programs that we can’t mention them all.

We’re under contract, like I can’t give specifics. The other thing that gets me excited as well, you look at the budget for FY ’26, they’ve already are talking about $150,000,000,000 worth of additions over the next few years to really beef up advanced technology platforms here in The US. And then I think one of the things that we haven’t sized, because it’s relatively new, you look at the foreign military sales and what’s happening in Europe with their kind of rebuilding of their military capability. What I’m hearing talked about is that that’s a 1,000,000,000,000 opportunity upgrade over the next few years, over the next five to ten years as they do that. So today, we have, I would say, a meaningful percentage of our revenue in DNA that’s foreign military sales.

We’re engaged with every one of the key customers in Europe in particular, but not just Europe, outside of Europe as well. And I think the last thing that I would well, two last things I’d leave you with. One is that the other area that I think is exciting as you see a lot of these, what I’ll call new tech defense players, I won’t list them by name, but there’s a lot of new Silicon Valley entrants that are coming in and coming in with new technologies that they’re trying to move faster than what they ever have. And we have really strong partnerships with those customers. And so I think that’s big for us.

Last thing I would say, and again, I’m saying this because we don’t get talking about this a lot, is that I want to remind everyone Corvo is really unique in the space. We have all most of the key RF technologies onshore that are needed for these platforms, whether that’s GaN, whether that’s gas, beamforming through our Enoki Wave acquisition, BAW filters, low frequency, high frequency, high power solid state PAs, which are critical for electronic warfare applications. And we have that advanced our packaging. And I can’t think of a single other company out there that has all of that in one place. And I think that’s why you see such excitement around it and our funnel really accelerating over the last year or so.

Douglas Delito, Vice President of Investor Relations, Qorvo1: Thanks, Phil. Very detailed. I appreciate it.

Conference Operator: Thank you. Next question comes from Edward Snyder from Charter Equity Research. Please go ahead.

Douglas Delito, Vice President of Investor Relations, Qorvo2: Thanks a lot. Grant, based on the number you just gave for your largest customer for the fiscal year, looks like you were flat year over year in total total revenue. We can talk, you know, different unit volumes, etcetera, but it kind of speaks to maybe I know you’ve gotten some contact gains on the last fall’s phone, but it doesn’t seem like you got a lot of boost from the the spring phone. So one, I wanna get your feeling on, will the content gains material and unit volume is just weak, or why are we seeing kinda flat? And then secondarily, based on even our teardown, it looks like your content might have been a little light.

Without the ET PIMICs, it would have been light on the spring foam. With ET PIMICs, it looks about even, maybe still a little bit down. Is that a correct assessment? And is that the baseline we should expect from the internal modem phone for this year or next year? And then I have a follow-up.

Frank Stewart, President of Advanced Cellular Group, Qorvo: Yeah, hey, this is Frank. Maybe let me take the last one with respect to the 16E that was just released. Maybe I could clarify that that is definitely what I would consider one of their consumer SKUs and we’ve got different content across different phone types, but for a consumer SKU for Corvo that was actually a pretty good phone for us. We’re pretty happy with our dollar content there. So maybe that’s the first clarification.

I’ll let you do your follow on question, but I’ve got some more thoughts for you that I’m guessing will correlate.

Douglas Delito, Vice President of Investor Relations, Qorvo2: Okay, and then in terms of tariffs, you’ve had several module houses, correct me if I’m wrong, but in your latest filings you had module assembly in Costa Rica, Korea, Germany, and China. You closed Costa Rica to consolidate, I understand that, as an old Trico facility. Does that mean most of this stuff will shift to Asia, or are you gonna try to distribute, or how are you working that business? Because that seems to be a critical factor in determining where the tariffs are gonna wind up in the end.

Bob Bruggeworth, President and CEO, Qorvo: Ed, this is Bob. I want to make sure we’re clear. What was done in Costa Rica was really the filter technologies there, what’s what we call back end packaging there, which is then shipped to our module manufacturers, whether they’re in China or Vietnam or wherever they are in the world. So we are moving that to Asia. And in Germany, that doesn’t build modules.

That builds product for us, the CATV line amplifiers, which is nothing like anything in mobile. So I just want to make sure we’re clear on those factories do not build modules, Costa Rica nor Germany.

Grant Brown, CFO, Qorvo: And Ed, maybe just to follow-up on your question regarding Asia. We have multiple flows for a number of these products as well as multiple partners that we can use. So depending on the optimal structure and we’ll work that with our suppliers and partners. We have a lot of options and flexibility as it relates to tariffs.

Frank Stewart, President of Advanced Cellular Group, Qorvo: Ed, if I could, this is Frank. I was going to circle back to answer what might have been your broader question. Maybe to give as much color as I can at our largest customer, there’s actually multiple product types where there’s two suppliers that share content when they service that customer and Corvo, for example, our antenna tuning, maybe just to clarify that topic, Corvo has actually shared that antenna tuning content with another supplier for a number of years actually going all the way back to 2020. It’s the same situation we have for ultra high band, it’s a similar situation we have for discrete filters where Corvo has sheer content with some other supplier for multiple generations. So if you think within that environment, so within that environment that we’ve been in for multiple years, as we said before Corvo is on track to capture greater than 10 content upside in this year, this fall model.

So that’s something we’re really excited about. And then when you look forward, we see a similar environment going forward that I just described and In that environment, we’re excited about the additional content that we’re working to gain there.

Douglas Delito, Vice President of Investor Relations, Qorvo2: I understand it’s very difficult to predict because of the wackiness of this year and next year in terms of having two phones and that sort of thing too. But your 10% content increase year over year, can you just maybe give us a little bit of idea how that what assumption you’re using in terms of split between the internal versus say the Qualcomm in the fall that drives you that number?

Bob Bruggeworth, President and CEO, Qorvo: Yeah, this is Bob. My usual line when we get to this place is we don’t comment on future architectures. Obviously, we know it because we have to build to it, but it’s not something we can comment on here.

Douglas Delito, Vice President of Investor Relations, Qorvo2: Okay. Thanks, guys.

Bob Bruggeworth, President and CEO, Qorvo: Thanks.

Conference Operator: Thank you. The next question comes from the line of Gary Mobley from Loop Capital. Please go ahead.

Douglas Delito, Vice President of Investor Relations, Qorvo0: Hi, guys. Most of the juicy topics have been addressed, but I’ll do my best here. Do you still feel comfortable with the HPA and CSG businesses growing double digit percent in fiscal year twenty six? And within those two segments, how much business would you characterize as maybe being classically cyclical or subject to ebbs and flows in distribution and customer inventory? And on that specific front, are you seeing any sort of green shoots in terms of order and backlog fill?

Bob Bruggeworth, President and CEO, Qorvo: Gary, you were pretty choppy. Let me first start with, I believe your first question was our outlook for HPA and CSG growing double digits this year. The answer is yes. The second part, I’m not sure we totally understood. We’re not counting on any inventory builds or anything like that at customers.

This is we’re in the right places. Philip has done a great job talking about D and A. I’ll let Eric talk a little bit about CSG and where he’s seeing growth this year.

Douglas Delito, Vice President of Investor Relations, Qorvo3: So in CSG, of course, the largest revenue segment today is Wi Fi, in particular high performance Wi Fi transitioning six to seven and already beginning R and D on eight. So, that’s got dollar content growth just as we’ve seen in multiple generations of cellular RF. And I think that’s moving at a pretty high velocity. So we’re filling channel right to demand and demands moving out for new base stations and Wi Fi access points for industrial and enterprise and so forth. So that’s sort of the largest segment.

It’s certainly got growth opportunity with content. And then of course, of investments going into the SOC business and the sensor business today. In the SOC business, we’re looking at BLE matter, as well as ultra wideband, both experiencing really rapid growth relative to our average. I’ve been particularly excited actually about the matter growth opportunity. We’re not the first in that space, but we’ve got some unique capability we’re bringing to it and design traction and even volume ramping is going very well.

Ultra wideband, of course, are a leader in technology there. Automotive has gotten very, very strong for us in terms of design in, takes quite a while, of course, to get that to production revenue. But once we do, we’ll be running for many years in that. We’re engaged across a number of very large opportunities, and it’s going very well in auto. But then also ultra wideband, I think we’re leading in the other applications, in particular connected home applications.

We’ve got a lot of opportunity there and also other sort of lighting applications, as we mentioned with matter. So really across the board, a lot of opportunities driving these new technologies, the wheels just beginning to spin and pick up momentum here.

Dave Fullwood, Senior Vice President of Sales and Marketing, Qorvo: And the other area is the location and real time location services. We talked about that ramping. So that is ramping now. It takes time as another market takes a while to develop, that will start to build on itself as we head through this fiscal year and into the next couple of years.

Douglas Delito, Vice President of Investor Relations, Qorvo0: Thank you for that. And Grant, just a quick follow-up. Are you still expecting OpEx to hover in this $250,000,000 per quarter level for the balance of fiscal year ’20 ’20 ’6?

Grant Brown, CFO, Qorvo: I think you’re referring to maybe our guidance for the year quarterly for OpEx at $250,000,000 We still believe that’s a reasonable threshold plus or minus 2%, three % maybe. There’s seasonal impacts, there’s potentially other items in there. I’d call out the weakness in the U. S. Dollar is one that works against us and so far as our OpEx, again, not necessarily meaningful on a normal basis, but should it continue to weaken significantly that could add to OpEx and other seasonal factors.

But generally, that’s a good working assumption at the baseline.

Douglas Delito, Vice President of Investor Relations, Qorvo0: Thank you.

Conference Operator: Thank you. Your next question comes from Timothy Arcuri from UBS. Please go ahead.

Douglas Delito, Vice President of Investor Relations, Qorvo4: Thank you. This is John Marco on for Tim. Guys, I just wanted to ask about tariffs impact, and you mentioned taking steps to limit the impacts. But can you talk about exactly what what is it that you’re doing? We know you benefit from tariff free zones in China, but what exactly are you doing to limit the impact here?

Grant Brown, CFO, Qorvo: Yeah, sure. So, know, I mean we have a pretty experienced team, right? I mean you go all the way back to Huawei, ZT being banned and there were similar dynamics in play there. We successfully navigated those challenges before and we identified the same solutions that are being used and have been for quite some time, we’ll continue to use. So we’ll optimize around those.

We have flexibility in our supply chain. We have alternate second sources. We’ve been collaborating with customers on their mitigation strategies and the locations where they work and produce their own products. But at the end of the day, I think it really comes down to the country of origin question, right? I mean, we have a substantial transformation in the parts when they are built, assembled and tested in China and sold to Chinese OEMs or contract manufacturers.

So there’s a that’s I think probably misunderstood, a really key element of what’s going on here.

Douglas Delito, Vice President of Investor Relations, Qorvo4: Got it, okay. And then just one quick one, I just want to double click again on the demand pulling point that was made previously on the call, but in the context of your guidance. So how much of the demand into the June in your view could be related to tariffs?

Grant Brown, CFO, Qorvo: This is Graham, let take that one. I think what you’re alluding to maybe is some pull ins related to tariff activity. I mean, like we’ve commented, we’ve seen modest activity. It’s only notable in the light of the tariff discussion, but it’s not meaningful in terms of dollars. It’s largely smartphones and we’re not seeing any customers overreacting push in or excuse me, pull ins and push outs occur every quarter.

So it’s relatively normal. I don’t know, Dave, if you

Dave Fullwood, Senior Vice President of Sales and Marketing, Qorvo: have I can shed some light on that too, in particular some of our customers in China. Of course, when all this stuff gets announced, it creates a bit of panic and people just don’t understand how things are going to work, right? And so we get on calls and we kind of work through our supply chain, their supply chain and what are the real risks and whether they can be mitigated or not. And so I can tell you that a lot of that activity has died down, right. As people really start to understand the situation, really understand what Grant described in terms of how country of war is determined, know, all that activity kind of starts to fade away.

And so then the motivation to change their demand profile goes away as well. So that’s kind of what we’re seeing play out.

Douglas Delito, Vice President of Investor Relations, Qorvo4: Thanks guys, very helpful.

Conference Operator: Thank you. We’ll take that as the last question for today. And this concludes our question and answer session. I would now like to turn the conference back over to the management for closing remarks.

Bob Bruggeworth, President and CEO, Qorvo: I want to thank everyone for joining us on tonight’s call. We appreciate your interest. We look forward to speaking with many of you at our upcoming investor events. Thanks again. Hope you have a great evening.

Conference Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.