The operator welcomes participants to Qorvo's fiscal 2024 fourth quarter earnings call, where management will discuss forward-looking statements and provide both GAAP and non-GAAP financial results. The call will be led by Bob Bruggeworth, President and CEO, and joined by other members of Qorvo's management team. A safe harbor statement and risk factors associated with the business are mentioned, and a complete reconciliation of GAAP to non-GAAP financial measures is available on the company's Investor Relations website.

Qorvo has announced the date for their upcoming Investor Day, where they will discuss their expanded opportunities and enthusiasm for the future. The company is at the forefront of global macro trends in mobility, connectivity, electrification, and datafication, which are driving demand for their products. Qorvo is focused on improving key performance parameters and transitioning to more advanced technologies, while also expanding their capabilities and product offerings to target a growing set of opportunities. The company is also driving innovation in new connectivity protocols, such as 5G, DOCSIS, Wi-Fi, and ultra-wideband.

In the March quarter, HPA experienced year-over-year growth thanks to strong sequential growth in defense and aerospace and improvement in other markets. The acquisition of Anokiwave also contributed to this growth, as their capabilities and portfolio of integrated silicon ICs complement Qorvo's offerings for SATCOM, D&A, 5G, and other beam-forming applications. Qorvo also saw record revenue in D&A, driven by large defense programs and SATCOM growth. They are developing more integrated solutions with Anokiwave and have secured design wins for airborne and shipborne radars, SATCOM applications, and solid-state PA products. In power management, Qorvo is expanding into consumer, D&A, mobile, and industrial markets.

In the March quarter, Qorvo secured a motor control design win and a power tool platform with a leading manufacturer. They also secured new PMIC designs with solid-state drive customers. In the mobile market, there is a growing demand for compute and processing power, creating new growth opportunities for Qorvo's PMICs. Qorvo's RF power management portfolio includes envelope tracking and average power tracking, with potential for further expansion. The company is also diversifying and expanding its reach through new tools and technologies, such as the QSPICE analog and mixed signal circuit design tool. In the power device market, Qorvo is seeing strong design activity for silicon carbide in target markets and has secured design wins with a second Tier 1 North American server OEM.

Qorvo is a leader in infrastructure markets and is transitioning from DOCSIS 3.1 to DOCSIS 4.0, which will increase efficiency and improve user experience. They have also been selected by a European-based OEM for 6G development. In their base station business, demand is expected to remain weak, but they have been awarded design wins. Their ultra-wideband solutions are being used in a variety of applications in mobile, consumer, and automotive markets, including a recent win for a robotic lawn mower. Qorvo has also been selected to supply solutions for secure access, digital key, and other automotive applications, including V2X for an OEM in Europe.

Qorvo has been selected by an EV OEM in Asia to provide six solutions for their 5G network access device. They are also expanding their offerings in the Wi-Fi market and have secured design wins for connected home applications. In ACG, they are focused on driving growth across major smartphone OEMs, particularly in the Android ecosystem as mass market smartphones transition to 5G. Qorvo's strong roadmap and collaboration with Android positions them well for this transition.

Qorvo supported the launch of Samsung's Galaxy S24 with a variety of solutions and is expanding its customer base to include top 5G Android OEMs in China. The company is also advancing new technologies in its products, such as next-generation BAW and SAW processes, to meet the increasing demand for better performing and smaller RF and power solutions. Qorvo is leveraging its strengths to expand its product portfolios and achieve strong growth in various markets.

In the mobile market, the company is expanding its product categories and targeting different tiers to capture a larger share of the market. Revenue for the quarter exceeded expectations, with a 49% year-over-year increase. The growth was driven by a strong performance in the defense and automotive sectors. Non-GAAP gross margin was 42.5%, which was affected by the production of lower utilization Android 5G mass market products. The company is investing in new product development and upgrading core systems and processes to support future growth.

The company expects their current initiative to take three years and will report the spend in their non-GAAP P&L. They generated positive cash flow in fiscal Q4 and made notable cash flow transactions, including a stock repurchase of $100 million. They also have plans to retire their short-term notes later this year. The company successfully reduced their net inventory balance and had a full year revenue of $3.8 billion, non-GAAP gross margin of 44.5%, and non-GAAP EPS of $6.21.

In fiscal year 2024, the company had two customers that accounted for 46% and 12% of revenue. For the current quarter, they expect revenue of $850 million, a gross margin between 40-41%, and diluted EPS of $0.60-$0.80. Gross margin is expected to be lower in the June quarter due to higher cost inventories, but is expected to improve in the September quarter. Operating expenses for the June quarter are projected to be $260 million, including $5 million for modernizing core systems. Non-operating expenses are expected to be between $6 million and $10 million. The non-GAAP tax rate for fiscal 2025 is expected to be between 10-12%, but may increase over time due to changes in tax legislation.

Qorvo has made progress in divesting their Beijing and Dezhou assembly and test facilities, which will help reduce capital intensity. They expect the transaction to close this quarter and will continue to focus on efficiently managing their supply chain. Qorvo is well-positioned to take advantage of long-term growth drivers in their three operating segments. They will provide more information at their upcoming Investor Day in June. During the question-and-answer session, Grant Brown discusses the guidance for the June quarter, which reflects a decline in revenue due to the ramp patterns at their two largest customers in the ACG segment.

The seasonal timing of large defense programs and slower rollout of DOCSIS 4.0 is expected to impact ACG, HPA, and CSG in the June quarter. ACG is expected to decline in the high single digits, HPA in the low double digits, and CSG to be approximately flat. The largest customer represented 46% of total revenue in fiscal '24, increasing from 37% in '23 and 33% in '22. This has increased the exposure to seasonal ramp patterns. The D&A business is expected to grow in fiscal '25, but program timing and seasonality will impact the sequential performance in the June quarter. Gross margin is expected to improve substantially in September and modestly over '24 for the full fiscal year. The company expects modest growth in fiscal '25 over '24, but there have been no significant changes in their longer-term thinking since last quarter.

Grant Brown, a company executive, was asked about any changes in the company's growth, inventory levels, and demand. He stated that there have been no changes in their view on inventory levels, particularly in the Android area. He also mentioned that June will be the last quarter where they will discuss the impact of high-cost inventory and underutilization. He provided some early projections for fiscal year 2025, stating that they expect modest growth in revenue and gross margin, with a closer alignment to the annual ramp profiles of their largest customer and success in the defense market. He also mentioned that their revenue will have a stronger December due to the strength in defense. In terms of gross margin, they expect improvement in September, followed by flattish growth in December and a slight decrease in March. Overall, they expect a mid-40%s gross margin for fiscal year 2025.

The speaker is addressing a question about the company's gross margin. They explain that the lower gross margin guide is influenced by the mix of products, the timing and location of production, and the seasonality of certain markets. They also mention that the June quarter will mark the low point for gross margin as they sell through high-cost inventory.

The company believes they have passed the worst of the underutilization of their fabs, which caused inefficiencies and lower gross margins. They expect gross margin to improve in September due to seasonal ramp, growth in defense revenue, and less underutilization impact. In regards to silicon carbide, the company has had success in data centers but the market for solar is soft due to the current interest rate environment. The company sees opportunities for growth in new markets, but the success of their silicon carbide business is dependent on the interest rate environment.

Bob Bruggeworth of Charter Equity Research is confident about the company's outlook for gaining share and growing revenue in the second half of the year. He also clarifies that their recent acquisition of Anokiwave is primarily for the defense market, with no plans to bring it into the mobile phone business at this time.

During a conference call, an operator introduces a question from Chris Caso with Wolfe Research. Chris asks about a comment made by the company regarding revenue and gross margin in fiscal year 2025. The company clarifies that the comment was for both revenue and gross margin to increase modestly. Chris then asks about changes to capital intensity and the company explains that they will still be spending CapEx around 5% and it could vary based on customer demand. The operator then introduces a question from Srini Pajjuri with Raymond James who asks about the company's cautious outlook for revenue outside of their largest customer. The company responds by saying they expect their largest customer to grow, but are being cautious due to the weak broad market and non-smartphone segments.

The speaker is optimistic about the company's growth in fiscal year 2025, with plans to expand gross margin and increase orders from defense customers. They also mention success at their largest customer and growth in the Android ecosystem. However, they do not provide a specific forecast for the full year and mention that there are many factors to consider.

The speaker states that they are being conservative with their outlook due to global economic factors and they are cautious about the Chinese market. They also mention their plans to improve gross margins by increasing utilization in their US fabs.

The company is taking steps to improve gross margin by optimizing production and managing its portfolio to better match cost with product tiering. They are also focusing on high mix, lower volume businesses and external silicon partners to reduce underutilization and benefit from die size reductions and wafer size increases. The company expects these actions to lead to margin expansion over time.

The company is constantly looking for ways to optimize and consolidate their operations, such as divesting certain facilities. They expect the shape of the year to be similar to the previous fiscal year, with a larger December quarter and a smaller March quarter. They anticipate growth in the June quarter, even without a flagship launch from a major customer.

In the upcoming months, the Android ecosystem is expected to have flat to increased growth due to a successful flagship launch and expansion outside of the company's second largest customer. The company expects growth across all segments for the full year. The overall smartphone market is expected to have low single digit growth with 5G growing over 10%. There is no change in the outlook for the largest customer and the company is not experiencing any inventory build-up. The growth of the largest customer will continue to progress throughout the year.

Bob Bruggeworth, CEO of Qorvo, discusses the company's visibility in terms of content growth for the next calendar year. He states that there is no channel inventory between Qorvo and their largest customer, as they ship directly to their manufacturers. Bruggeworth also mentions that this topic has come up in the past and they do not see any issues currently. The conference call concludes with Bruggeworth thanking everyone for their interest and mentioning upcoming investor events.

This summary was generated with AI and may contain some inaccuracies.