Q2 2025 Skyworks Solutions Inc Earnings Call
Thanks for watching!
Speaker Change: Good afternoon and welcome to Skyworks Solutions, 2nd quarter fiscal year 2025 earnings call. This call is being recorded. At this time I will turn the call over to Raji Gill, Vice President of Investor Relations and Corporate Development for Skyworks. Mr. Gill, please go ahead.
Speaker Change: Thank you operator, good afternoon everyone, and welcome to Skyworks' second fiscal quarter, 2025 conference call. With me today for our prepared remarks is Phil Brace, our Chief Executive Officer and President, and Chris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast over the web and can be accessed from the Investor Relations section of the company's website at skyworksink.com.
Speaker Change: In addition, the company's prepared remarks will be made available on our website promptly after the conclusion during the call.
Speaker Change: Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered for looking statements.
Speaker Change: Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10K for information on certain risks that could cause actual outcomes to differ materially and adversely from any four looking statements made today.
Speaker Change: Additionally, today's discussion will include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the investor relations section of our company website for complete reconciliation to GAAP. With that, I'll turn the call over to Phil.
Phil Brace: Thanks, Raji, and welcome everyone. I'm excited to join you today for my first Ernie Skull as CEO of Skyworks.
Phil Brace: I would have passed few months to engage with our customers, partners, employees, and shareholders, and I'm energized by the opportunities I had.
Phil Brace: Since stepping into the role, I spent time getting to know our teams across the company, and have been incredibly impressed by the depth of talent and expertise throughout the organization.
Phil Brace: We have some of the smartest engineers I've ever worked with, and there's a real energy and passion for innovation that you can feel everywhere.
Phil Brace: There's also a competitive edge and a hunger to win. It's been exciting to jump in and be part of such a strong and capable team.
Phil Brace: Skyworks shifts at the center of the wireless revolution, backed by a rich history and RF innovation. Our proprietary technologies power some of the most demanding connectivity platforms in the world, from 5G and Wi-Fi
Phil Brace: University, and we're continuing to push the bounds of what's possible.
Phil Brace: Now let's review our fiscal Q2 results. Skyworks delivered solid performance driven by our diversified portfolio and discipline execution.
Phil Brace: We posted revenue of 953 million, delivered earnings per share of $1.24
and generated free cashflow of $371 million. [inaudible]
Phil Brace: Ravenview, Gross Margin, and EPS exceeded the midpoint of our guidance.
Phil Brace: We return to record 600 million to shareholders through share we purchases and dividend payments.
Phil Brace: The highest amount ever. This underscores our confidence in a long-term outlook as well as our commitment to delivering value to shareholders.
Let's provide some additional color on the business [inaudible]
Phil Brace: In mobile, we experienced typical seasonal patterns during the March quarter, while executing a multiple new product launches with our leading mobile customers.
Phil Brace: Smartphones are evolving with AI, driving more uplink intensive workloads like real-time voice processing and enhanced imaging. Over time, this trend should drive higher transmit power, better efficiency and expanded uplink mymo, areas where Skyworks is strongly positioned. [inaudible]
Phil Brace: In our diversified businesses, we've seen a steady recovery underway for more than a year, with five consecutive quarters of sequential revenue growth.
and two quarters of positive year-over-year comparisons. [inaudible]
Phil Brace: This improvement is being driven by strength and automotive, edge IoT, and Wi-Fi 7 adoption across consumer and enterprise devices
Phil Brace: In Edge IoT, Wi-Fi 7 adoption is accelerating to meet real-time demands like high resolution video and smart sensors.
Phil Brace: It's advanced capabilities are driving greater RF content per system, creating strong momentum for our connectivity portfolio. [inaudible]
Thank you for joining us. Thank you.
Phil Brace: In automotive, the move to software-defined vehicles is driving the need for robust wireless connectivity.
Phil Brace: As these vehicles rely on over-the-air updates, real-time sensor data processing and interconnectivity between vehicle systems.
The RF content should also scale up.
Phil Brace: Lastly, as AI drives more complex data center workloads, the need for tighter integration between timing devices and processors is growing [inaudible]
Phil Brace: While still early, we see a long-term opportunity to capitalize on this trend which our precision timing portfolio.
Phil Brace: Overall, we're encouraged by the momentum and diversified businesses. Our position in next-generation product cycles from automotive connectivity to edge IOT to timing, reinforces our long-term trajectory.
Turning to our quarterly business highlights.
Phil Brace: We secured design winds across 5G premium Android smartphones and for in-vehicle infotainment systems with major OEMs. We also expanded Wi-Fi 7 across enterprise access points, routers and home mesh networks.
Phil Brace: Before I turn the call over to Chris for a discussion of last quarter's performance and outlook for Q3 of fiscal 25
Phil Brace: I would like to highlight some changes to the executive leadership.
Speaker Change: Team. First, Mark Dungeonger will be succeeding, Kris, as the CFO of Skyworks, Effective June 2, 2020.
Speaker Change: Thanks for tuning in. I'm Kris Sennesael. We'll see you next time on News 5.
Speaker Change: Mark brings significant CFO level and strategic experience across the technology sector.
Speaker Change: His deep expertise and proven track record make him a strong addition to the Skyworks leadership team [inaudible]
Kris will be stepping down to pursue another professional opportunity. [inaudible]
Speaker Change: On behalf of the entire board and everyone of Skyworks, I would like to thank him for his valuable contributions and wish him success in his new endeavors.
Speaker Change: 2nd, Todd LePensky will be succeeding Carlos Bory, a Skyworks Senior Vice President, Sales of Marketing, Infective June 2, 2025,
Speaker Change: Todd Rinceh, experienced driving global revenue growth and building high-performance teams in the semiconductor and technology sectors.
Speaker Change: Carlos will be shifting to an advisory role to help ensure a smooth transition . . .
Speaker Change: I'm looking forward to partnering with Mark and Todd in leveraging their strong leadership capabilities as we execute on our long-term strategic initiatives. [inaudible]
Carlos Bori: Thanks well. First of all, I would like to thank all Skyworks stakeholders including the board, the executive team and employees around the world for many years of strong collaboration. It's been an honor and privilege to serve as Skyworks CFO for the last eight years.
Speaker Change: I only work for a short period of time with Phil, but I know that under his leadership with the help of Mark and Todd and the rest of the executive team, Skyworks will prosper in the years ahead.
Speaker Change: Skyworks Revenue for the 2nd Fiscal Quarter of 2025 was 953 million above the midpoint of our outlook.
Speaker Change: Mobile Revenue was 62% of total revenue, down 17% sequentially consistent with historical seasonal patterns as demand normalizes following peak holiday shipments
Revenue from our broad market portfolio, which includes...
H-I-O-T, Automotive and Industrial, and Infrastructure Networking and Cloud.
Speaker Change: Increased 2% sequentially and grew 3% year-over-year, marking our fifth consecutive quarter of row, since reaching a cyclical low in the December quarter of 2023.
Speaker Change: This sustained momentum reflects the expanding diversification of our business, even amid a volatile micro-environment and ongoing inventory digestion in certain end markets.
Speaker Change: Gross Profit was $445 million with Gross Margin at 46.7% exceeding our expectations driven by favorable mix, continued execution on our cost reduction initiatives and operational efficiencies.
Speaker Change: We also made further progress in improving our working capital position, marking our nine consecutive quarter of inventory reduction
Operating expenses were 223 million aligned with our strategic priorities.
Speaker Change: These investments support our long-term technology and product growth maps. Looking ahead, we remain focused on striking an appropriate balance, investing in innovation and strategic market expansion, while maintaining cost controls to protect and grow profitability.
Speaker Change: We delivered operating income of 222 million, translating into an operating margin of 23.3%.
Development, demonstrating financial discipline as we invest for growth.
Speaker Change: We generated $5 million of other income and our effective tax rate was 13.4%, driving net income of $197 million and diluted earnings per share of $1.24, four cents above our guidance.
Speaker Change: We demonstrated robust cash generation with operating cash flow of 410 million capital expenditures of 39 million and a free cash flow of 371 million or a 39% free cash flow margin.
Speaker Change: Our ability to consistently convert earnings into cash is a cornerstone of our financial strategy.
Speaker Change: Throughout the 2nd fiscal quarter, we remained committed to disciplined capital allocation, returning value to shareholders through both dividends and share repurchases.
Speaker Change: During fiscal Q2, we distributed 111 million in dividends and repurchased 7.4 million shares of our common stock for a total of 500 million
Speaker Change: Translating to over 600 million capital return to shareholders, the largest quarterly return ever.
Speaker Change: After the end of the quarter and through May 2nd, we repurchased an additional 3.6 million shares of our common stock for a total of 212 million under an established 10B5-1 program.
Speaker Change: At quarter-empt, we maintained a solid cash position and a well-structured balance sheet with 1.5 billion in cash and investments, and 1 billion in depth.
Speaker Change: Providing us with financial strength and flexibility to support both near and long-term priorities.
Speaker Change: Review our strong barren sheet and consistent free cash flow as key strategic assets.
Speaker Change: Before we go into the details of our outlook for Q3 of fiscal 2025, I'd like to briefly address the recent macroeconomic and tariff developments.
Speaker Change: While the evolving tire of landscape presents new complexities, we believe our diversified global supply chain positions us to navigate potential disruptions. As this is a dynamic environment, we will continue to actively monitor the situation.
Speaker Change: We have that context for the third quarter of fiscal 2025. We anticipate revenue of 920 million to 960 million.
Speaker Change: We expect our mobile business to decline low single digits sequentially, in line with typical seasonal patterns.
Speaker Change: Brought markets remain on track for another quarter of sequential growth with year-over-year trans-accelerating. We are encouraged by improving bookings, backlog, and channel south-through.
Speaker Change: We anticipate operating expenses in the range of 220 million to 230 million as we continue to invest in our technology and product development road maps fueled by our strong cash flow
Speaker Change: Below the line, we anticipate 5 million and other income, an effective tax rate of approximately 13% and a diluted share count of approximately 152 million shares.
Speaker Change: Accordingly, at the midpoint of the revenue range of 940 million, we intend to deliver the Luda Durnick's per share of $1.24
Phil Brace: Now, let me hand it back to Phil, for some final remarks.
Phil Brace: Thank you, Kris. As we wrap up, I want to take a moment to reflect on some key business initiatives.
Phil Brace: First, we must reinforce our leadership position in mobile, focusing on what we do best, developing the most innovative solutions in the industry, and delivering the highest performance RF products to our customers.
Phil Brace: 2. Accelerate the growth in our diversified businesses 3. Optimize operational efficiency with cost discipline and gross margin improvements 2. Accelerate the growth in our diversified
Phil Brace: Before we close, I want to thank our employees for their incredible dedication and our customers and partners for their continued trust and collaboration.
Operator, let's open the line for questions.
Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press star one again.
Phil Brace: Give in time constraints, please limit yourself to one question and one follow-up.
Phil Brace: and Chris, your line is open, you may have yourself unmute. Good.
Thank you. Bye.
Hi, good morning. I hope you can hear me now.
Speaker Change: So welcome Phil and Chris, we'll certainly miss you, but perhaps Phil, the first question would be for you.
Speaker Change: You know, you haven't been at Skyworks long, but I'm sure you've been working hard to...
Speaker Change: You know, kind of dig in here, you know, perhaps some initial thoughts about strategy, about, you know, sort of where you're looking to take the company, you know, just kind of an assessment of, you know, what particular strategic changes you might be contemplating at the moment. [inaudible]
Speaker Change: Yeah, thanks, Kris. I appreciate the acknowledgement. You know, some of the things I've been most excited about so far, I mean first when you look at the core technology and the core engineers that we have
Speaker Change: You know, some of the smartest people I've worked with in my career and really are at the foundation of...
Speaker Change: Kind of a core wireless capability you have, and so one of the things I'm most excited about when you think about where Skyworks position long term.
Speaker Change: You look at how many devices are out there connected to the internet and the vast majority of them are and will be connected wirelessly and some of our core technology is right in the center of that and so I think you can imagine that some of the things I'm looking forward going forward is
Speaker Change: How do we take and build upon that core wireless capability and look for jaconsies that continue to fuel that growth? And that's really where I'll be focused on my energy.
Speaker Change: Great. As a follow-up question, it's with regard to broad markets, and it sounds like...
Speaker Change: You know, you've seen, you know, a little bit of, of, of bookings improvement and certainly some sequential growth there.
Speaker Change: What sort of, I guess in the short term, you know, what sort of growth do you think, well, I guess to start...
Speaker Change: You know, do we think that customer inventories have now normalized and therefore you know we're getting on a more normal growth path here?
Speaker Change: and what do you think that growth path is likely to be? Where do you see the longer term growth in this broad markets business and where's the trajectory for the rest of the year? [inaudible]
All positions, looking transcontinuous. So I think in general what we're seeing is
kind of that hangover that we experienced.
We think that's behind us. [inaudible]
Speaker Change: If we dig down and look at the three segments underneath it with Edge IoT, that's really about Wi-Fi 7 adoption. That is really at the early ages or early innings, I would say, of deployment that has more RF content per device.
Speaker Change: Moore Performance, Strong Customer Value Proposition, I think that will be a tailwind for us going forward. On the automotive side we're seeing good year-over-year growth there, and it's really important to note that what we're seeing there...
Speaker Change: Really, it's not just tied to EVs or particular how the combustion engines, whether it's EV, combustion engines or Iberats, it's really around the software to find vehicles and all the connectivity that's around that, and so we're seeing good growth there. We're seeing good growth there, and so we're seeing good growth there, and so we're seeing good growth there,
Speaker Change: And then on the infrastructure networking cloud, that's an area where it's still a little bit choppy from that side but I think long-term some of the secular trends with respect to what's happening in the data centers and the connectivity space, I think that's going to continue to normalize there as well. So, I'm balanced. I think we've seen, right, overall, inventory correction, we're starting to see some return to normal growth and then underneath that.
Speaker Change: Wi-Fi 7, Connected Cars, Infrastructure Networking Cloud. That's kind of how we see that.
Speaker Change: We'll move to our next question from Karl Ackerman at BNP Paribas.
Karl Ackerman: This is Liam Pooves for Karl Ackerman, thank you for taking my question. So I just want to touch on tariffs. I know it's a fluid topic, but I just want to understand how do you view tariffs
Karl Ackerman: Could get qualified for USMCA in part exam status, given that you have the Mexico fab.
Karl Ackerman: As you address that, I'll pretty also discuss how you can, how much of your ability to pass down tariffs
and Lachlan Pachinko.
Speaker Change: Thank you very much. Yeah, so this is still maybe I'll just take a high level remark and then I'll pass it over to Chris for, you know, any particular, you know, details on it. Look in general, the tariff environment is incredibly dynamic, right? As you can probably imagine, I'm telling you news there. I think our current assessment, though given our supply chain and where we are, the current guidance really reflects any impact that we see from that and we're continuing to monitor that daily and I think our guidance reflects. Thank you very much.
Supply Chain,
Speaker Change: You know, where we shift things, how we shift them, where we get the manufactured, free trade zones, all sorts of other things that are happening. I think all of that is reflected in our current guidance. Having said that, obviously we've monitored every single day and we'll continue to do so but right now the current guidance reflects what we believe it is the current environment for Derek, for us any other.
Thomas, you want to say? [inaudible]
Kris Sennesael: No, just based on our current understanding of the data landscape, we don't see any major direct impact on our business. Obviously, we will continue to work with our customers and supply chain partners, but for now, as it stands, no major direct impact on our
Speaker Change: Thank you, and the follow-up, can you discuss, will you be able to maintain your CAPEX public, or do you have any intention to move around your manufacturing locations to avoid terrorist? Thank you.
Speaker Change: You know, we just, I know our Catholic spending, our Catholic spending is really focused on a new product, new technology development versus any sort of production capacity. So any mostly Catholics you see, the vast majority is on new technology development. So I wouldn't necessarily see, I wouldn't expect to see any change with respect to our Catholic plans based on that. Right. And just the Catholics is running on or about, made single digits as a percent revenue. Thank you.
Thank you very much.
We'll go next to Edward Snyder at Charter Equity Research We'll see you next time.
Thank you very much, a couple questions we could. Good.
Edward Snyder: First off, it looks like based on the content and your largest customer's phone from the chairdons we've done and other folks have done and stuff we sell from last year that is it fair to assume that you think your content will bottom end of this year?
Edward Snyder: and then maybe make a slow recovery. I know it depends a lot on mix and I know it's hard to predict that he Qualcomm got it for 30.
30-70 mix
A Favouring There
Edward Snyder: So I just want to get an update on your on your view of [inaudible]
Edward Snyder: or you think your content will buy a majority of its customers.
Edward Snyder: And then I have all of the things. Yeah, here it is so nice to talk to you again.
Edward Snyder: You know, as you might imagine, we can't really comment on specific customers' plans and what's going to go on, but generally speaking, let me try and give you a little bit of color. I mean, when I look holistically, I think we had some tailwinds behind us in that regard. The first is, we've got to deliver better products and compete for the sockets that we believe we have the chance to win.
Edward Snyder: And I think, you know, we're putting our best foot forward there on that second. I think there's going to be a trend that's going to have, you know, more RF content as I talked about with complexity workloads, my OK abilities and those kind of things.
and then thirdly, I do think there's some...
Edward Snyder: You know, potential content differences that may happen with respect to certain solutions that may happen on the baseline side and I think some of those trends should play in our favor. So, you look, I think overall I think there's three things and then you overlay that where hopefully you get some tailwind on the unit side with respect to adoption and I think we've got some things that work in our favor. Thank you very much.
Edward Snyder: Look, we have to continue to execute it. As I've always said, we've got to deliver great products, you have a great product you win, you have a jump ball, you split, you have a bad product you lose, and that's the game we're playing, so that's what we're focused on.
Okay, my follow-up, I know that...
Speaker Change: Well, your filters are built out of Japan and Baugh is anyway, and then the part that you kind of gave up to a Vaugho used a lot of those and so you got utilization issues.
Speaker Change: Is it fair to assume that even if you were to win a larger module that takes a lot more filters you wouldn't have to put a lot more capping X into that facility or
Speaker Change: It depends on the module like the mid-highband, et cetera. It's got 22 filters and no matter what, if that were to come about, you're still going to need CapEx expansion even when...
with where you are today.
Speaker Change: Particular area you talk about, I would characterize as a jump ball where we split versus clear win where we got 100%. So it wasn't, I would just say that. And the other, to your point on CAPEX expansion, I mean like right now I think we are sufficiently capitalized from a production capability, I don't expect to have any capacity concerns with respect to that. Our capacity investments right now are really focused on new technology development that we need to power the innovation forward. So right now I'm not expecting, certainly not
Speaker Change: expecting any incremental capacity needed for production based on what I can see as far as I can see.
Speaker Change: Okay, but just to be clear, you have to have the capacity place before you're awarded a big module at any big OEM, correct? It can't be done after the fact, correct?
Speaker Change: We do have plenty of capacity in place to absorb a potential large upside to the business.
Great, thank you [inaudible]
Next film is to Gary Mobley at Loop Capital .
Gary Mobley: Thank you so much for taking my question. I really just have a multi-par question and that's it. Phil, you highlighted your three priorities, one of which is stabilizing and maybe you're re-growing your business with your leading smartphone customers. So do you feel any differently today versus what you communicated last quarter with respect to your blended content and the upcoming... ... um...
Gary Mobley: You know, smartphone launch at your largest customer, and then with respect to optimizing operational efficiency, can you give us a sense of where your utilization rates are now? And what does with the goal may be in terms of optimizing that manufacturing footprint? What is your footprint?
Phil Brace: Yeah, let me try and I'll have Kris jump in here. You know, I think the one thing, you know, that the...
Gary Mobley: I guess I would characterize, you know, if you look at in general, the mobile business in general, it's characterized by very short product cycles. You got to earn the business every year or every other year. You got to deliver highly competitive parts and it's a very competitive landscape. I believe we've got some of the best, if not the best our engineers on the planet, but sometimes having the best team on the floor doesn't necessarily mean you win every game, but I feel very good about where we are, the investments we're making, the people we've got and [inaudible]
Gary Mobley: We're working really hard to do it and we're laser focused on doing it and Franklin I'm taking a no excuses kind of thing right we just got to deliver better parts period the answer is we got to deliver better parts so there's a lot of there's a lot of rhetoric around
There are some rates in where- Oh, you don't think so, of course, Matthew, I should not.
Gary Mobley: Yeah, and so Gary, as it relates to utilization rates, obviously we have multiple factories in the US and Japan and Singapore and in Mexico, the utilization rate varies by manufacturing location, but I would go back to my previous answer. We have plenty of capacity in those.
to fulfill future revenue growth.
Gary Mobley: And yet it may be as it relates to, of course, the blended content at the next upcoming phone that obviously has not changed.
Thank you guys
Our next question comes from Christopher Rolland at Suspohana
Christopher Rowland: Hi guys, thanks for the question and welcome, Phil, and Chris Ardice, Steve Lee, if
Speaker Change: Phil, you mentioned some wireless excellence at the company and looking at adjacent markets. Also, you came from the IOT world previously.
Speaker Change: Could that be an adjacency for you whether it's cellular or unlicensed? [inaudible]
All right.
Speaker Change: Yeah, look, I'm not going to comment on particular areas of focus there. I'm going to come from that piece side, but I would say my preview is a very wide
Speaker Change: Required to deliver some of our solutions is just incredible and so I look to a wide range of things where we could go there so I'm not going to comment on specific areas as you might guess.
Srinivas, and then secondly.
Saw and typically lower frequencies as well.
Speaker Change: You have made a push in the ball, but we haven't had any major updates there, I think, in a little bit. It's just a focus for you and their kind of-
Speaker Change: You see any evidence of greater traction and ball moving forward, doubling your efforts there. Thanks.
Speaker Change: But look, I think Baz is like a critical component of our technology and we remain significantly invested in that and we've got a very real bus road map going forward and so I think we've seen good traction in that and that continues to be a cornerstone of our investment.
Thanks a lot.
Our next question comes from Tom O'Malley at Barclays.
Tom O'malley: Hey guys, thanks for taking my question in the film Mark Graff on the Rolls. I look forward to working with you. A tactical one first and then a longer term one. In the March and the June quarter, can you guys give what Android did in both of those quarters in the mobile business?
Yes, so Android was in the Mars quarter.
Liar
Sequential bump up in the June quarter for Android. .
Tom O'malley: Okay, and then I guess the second one is the broader one and that kind of encompasses the answer there, but...
Tom O'malley: You know, when you're looking at what you think is pulled forward, obviously there's a new phone that's launching.
Tom O'malley: or that's just launched here that's going to help you with some content but obviously buying patterns are a bit different and Android traditionally isn't seasonally up in June . Can you guys like try to parse out to the extent that you can what you're seeing, what is a pull forward, what is better to band and how you guys are going about that internally to protect against potentially stronger first half week or second half? Thank you.
Tom O'malley: Yeah, that's a good question. Look, we continue to monitor that carefully, you know, closely. I don't think, you know, order patterns now represent what we've seen historically and represent seasonality. And if you look at kind of our results, it was kind of in where we, in the range or a little bit above the range where we started in January , which is before a lot of the turbulence. And so, [inaudible]
Tom O'malley: I would say that what we've seen is what pretty typical order patterns at this point. Obviously, we're trying to manage it closely or we're keeping a close eye on it, but...
Tom O'malley: That's the best we can say now, no evidence of anything other than what we'd expect to see it's easily at this point [inaudible]
Our next question comes from Harsh Kumar at Piper Sandler.
Harsh Kumar: Yeah, hey, congratulations Phil, looking forward to working with you, Chris, I've worked with you multiple years, we'll certainly miss you and best of luck to you.
Harsh Kumar: So Phil, I wanted to ask you about follow up maybe on the new modem at this large customer and what that means to you. Typically with that, there comes a lot of shifting around the content and provides a lot of opportunities for people. So I'd be curious how you view this content and maybe you could talk about what this means to you and what you might have won and what you think you can do with this. And I've got to follow up.
Harsh Kumar: Yeah, so look, I think that we can't really get into those specifics per individual customer and segments and what happens really it's not something we can do but let me just comment just in general why I think there's some tail ones there and I would focus on probably
Higher Power Requirements, Lower Battery Requirements, New Frequency Bands,
Harsh Kumar: and certainly any particular choice they have with baseband may result in some...
Harsh Kumar: But I think in general, I would just focus on, I think that over time we're going to see increased RF content as the workloads demanded as the RF complexity gets harder and the requirement to kind of manage power continues to be a key component. So.
Harsh Kumar: I think in general, I think we do now clearly, we have to execute, we have to deliver the best parts but I think we've got the canvas upon which we can draw pretty good picture.
That's it. Thank you. That's it from the thanks.
Next we'll move to Timothy Arcuri at UBS.
Timothy Arcuri: Great, thank you to the Jamaican for Tim. Philip Chris, I wanted to double click on the guidance, specifically what changed the course of 90 days ago, with some segmentive team improved workout worse, and could you speak to that bump up in an injury in the due order? What's driving that?
Speaker Change: Well, I don't feel like Kris jump in here because it was in the program. I mean, I don't think we necessarily got it two quarters ahead. So I think what we're doing now reflects our current view of the next quarter ahead. Let them.
and I would say that in general...
Speaker Change: Mobile I would say is seasonal, added on a product launch and a broad market, it's kind of a continuation of the trend we've seen for the past few quarters
Speaker Change: Got it. And then one quick one on pricing at your largest customer, the U.S. specialty and sort of pricing pressures in the common quarters given the most recent virus.
Speaker Change: No, I'm not going to comment on that. I'll just say it's a highly competitive market and we are expected to deliver the best performance parts at a very aggressive cross-point and that continues to be the game across the board in this industry. So I don't think there's anything changed and we have to deliver great parts of the right price. Thanks, guys. Thank you.
Next we'll go to Joe Moore at Morgan Stanley .
Joe Moore: Great, thank you. In terms of your priorities for the business, you know, you talked about growing the diversified part of the business. Can you talk about organic versus the
Speaker Change: Yeah, hi Joe nice to nice to talk to you again. Yeah, look I
Joe Moore: When you look at overall strategies, and certainly capital structure and capital allocation priorities,
Joe Moore: I think we have enough firepower to to enable us to pursue a number of different options, both organic investments and I talked about some of those. I mean we clearly continue to invest in a level that allows us to sustain a robust innovation roadmap that we have and so I feel good and comfortable about that. And clearly on the M&A front, I mean there's a number of different different things we can look at. I'm going to be really focused on making sure it [inaudible]
Joe Moore: That's in our strategic priority. We can get the right value and focus on making sure that we can deliver values to shareholders as we look at that.
Joe Moore: You know, I think with respect to the overall M&A environment, it's obviously a little complex right now, but I think that there's no shortage of things we can look at and it certainly is something that I'll be spending some time on at CO Yeah.
Appreciate it. Thank you.
Our next question comes from Peter Payne at JP Morgan.
Peter Pang: But then when you listen to the earning call from your largest customer, they're clear talking about some inventory build, you know, for some chair mitigation. So I'm just wondering why there's this kind of discrepancy between, you know, what are the end customers saying in between some of the suppliers they're seeing.
June quarter, we assume there's no pull-ins and we have no clear evidence of that.
Peter Pang: God, okay, that's okay. And then just for the broad markets, you guys are back in the year-and-year growth for a number of quarters. Now can you maybe just talk about within that bucket, which markets are showing year-and-year growth, which still have some work to do to get to year-and-year
Peter Pang: Yeah, this is still, I'll take a crack at that. I mean, look, the strongest tailwind you have growth is Wi-Fi 7, right? That's just a, and I think that's an early days and we're seeing, we're seeing that that'll be, that should be a tailwind for us for a while. I think only a small percentage, single digit percentage of the units out there are Wi-Fi 7, so I think we're at the early innings of that, so that's a strong one. Automotive is another good year over year growth comparison as I talked about. [inaudible]
Peter Pang: as you know more and more cars are being you know connected independent of their combustion mechanism. And then I think the other area where we got some more work to do as I would say is on the. [inaudible]
Peter Pang: You know, the infrastructure side, that side, it's kind of inching along a little bit but there's more ups and downs and we'll be seeing some growth there but that's probably the area where we've got some more some more growth that we need to see in the future. [inaudible]
Perfect, thank you.
Next, we'll go to Nick Doyle at Needham.
Nick Doyle: Hey guys, thanks for seeing my questions and welcome, Phil and Mark. How big was a large customer in the quarter and directly how is their broad market piece performing? Thanks.
Nick Doyle: Yeah, so the largest customer in the March quarter was approximately 66% of total revenue and we've seen a...
Nick Doyle: Split between mobile and broad markets in line with historical trends there, roughly 85% ends up in mobile and roughly 15 maybe a tad more in broad markets.
Nick Doyle: and we expect that to continue in the next couple quarters.
Speaker Change: Thank you. And then for the gross margins, they're kind of holding steady above this 45% level now even with revenue dropping down a little bit next quarter. I guess how are you able to hold these above 45% even as we kind of the utilization levels remain a little bit lower. Thank you.
Speaker Change: Yeah, well, if you look at the June quarter, you have mobile being down.
Rebecca Aria: And we'll go to our next question from Rebecca Arya at Bank of America Rebecca.
Liam Farr: Hi, this is Liam Farr on The Forbidden Bank. Thank you so much for taking on our questions. Just looking at the Android market, you've been pretty selective and pulling back some parts of the Android ecosystem.
Speaker Change: As AI and RMS complexity rise, how do you think about re-engaging more deeply with Android Williams to capture more incremental contents? Or are you just kind of remaining to, you know, focus on that high end tier of the Android ecosystem? Thank you.
Speaker Change: to value the performance and solutions that we provide in an economically viable for us. So, to the extent that there's trends that lend itself to that favor, then we're going to be trying to take advantage of that. But I think we're just, we're taking a...
Speaker Change: An Economic ROI-based view of where we do it. We've got the opportunity to cost for engineers is really high. A lot of these solutions are highly complex, highly engineered, tightly integrated. And, uh,
Speaker Change: We look for environments where we can deliver the value to the customer and frankly get paid in return ourselves and so we'll continue to look for those solutions.
Speaker Change: Thank you. Then just a quick follow-up on your lawyer's customer.
Speaker Change: Looking to had that 26 models in, even 2027, how were you, you know, in terms of the timeline and engagement with that customer? When should investors be looking to hear from that end? How are you kind of best setting up to, you know, head against any more jump balls that are split? Yeah.
Well, I mean, [inaudible]
You know it's
Speaker Change: Obviously I can't comment on specific things like that, but let's just say this, we have been engaging deeply with-
Speaker Change: That particular customer, but all our customers in general, but I went for a long, long time, and so there's a typical investment design cycle that happens, year in and year out, and frankly in many cases, you're continuing investments.
Speaker Change: You know, ahead of the curve to develop technologies that can go there.
Speaker Change: And, you know, you work in yourself, you're a self-critical along the way, you know, to use a sports analogy, you're looking at game film, you're trying to understand what you did, what you did, and you did do better.
Speaker Change: You're doing competitive analysis, you're trying to look at the limit of what's, you know, what's possible with the physics, you're developing your technology, and you're putting all those things together, and you're delivering apart, and that gets benchmarked to get other parts competitively. Ryan,
Speaker Change: If you do a good job, you win, and that's what we're trying to do. I really don't think there's any change in dynamic and I think
Speaker Change: You know, with respect to insulating what we can do, I think that frankly the best insulation is continuing to execute and execute cleanly. Then all that customer is a very demanding customer and requires a lot of focus on it.
Speaker Change: But it's such a big customer that you can't, you know, you can't necessarily take your foot off a gas, you have to keep, you know, petals and metal all year long. And that's what we need to do.
Thank you
Phil Brace: Ladies and gentlemen, that concludes today's question and answer session. I'll now turn the call back over to Mr. Brace for any closing comments.
Phil Brace: Great, thank you. Thank you for participating in today's call. I look forward to speaking to you with you at upcoming investments during the quarter and we'll talk soon.
Phil Brace: And ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect and connect.
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