uploads/2015/11/Series-29-A41.png

Qorvo’s Shares Soared 23% after Its Fiscal 2Q16 Earnings Release

By

Updated

Qorvo beats analyst’s estimates

So far in this series, we have seen that Microchip Technology (MCHP) posted growth in revenue driven by the acquisition of Micrel. Let’s look at another acquisition case and how it has fared in the recent quarter. Qorvo (QRVO), a company formed by the combination of RF Micro Devices and TriQuint Semiconductor in September 2014, reported fiscal 2Q16 results that beat analysts’ estimates.

In fiscal 2Q16, Qorvo’s revenue almost doubled YoY (year-over-year) to $708 million, beating the consensus estimate of $700 million. The company’s non-GAAP (generally accepted accounting principle) EPS (earnings per share) of $1.22 beat the analysts’ estimate of $1.11. Qorvo announced a new $1 billion share repurchase program and proposed to offer $1 billion in senior notes. After the earnings release, Qorvo’s shares rose 23% to close at $55.55 on November 6, 2015.

Rival NXP Semiconductors (NXPI) posted flat revenues in fiscal 3Q15. However, the company has yet to realize the synergies from its integration with Freescale (FSL).

Article continues below advertisement

Profitability

On a non-GAAP basis, Qorvo’s gross margin improved from 48% in fiscal 2Q15 to 49.7% in fiscal 2Q16. Its operating income increased 94.6% YoY to $194.8 million, and its net income more than doubled from $90 million in fiscal 2Q15 to $183.28 million in fiscal 2Q16. The company increased its spending on research and development from $46.4 million in fiscal 2Q15 to $106.5 million in fiscal 2Q16.

After factoring in the effects of share-based compensation, restructuring, acquisition, amortization, and related costs, the company’s GAAP operating income was $18 million. Its net income was $4.45 million in fiscal 2Q16. Qorvo has been working aggressively on new technology, which we will discuss in the next part of this series.

Cash position

In fiscal 2Q16, the company generated $168.8 million in cash from operating activities and spent $80.3 million on property purchases. As of October 3, 2015, the company’s cash reserves stood at $195.5 million.

Investors can get diversified exposure to Qorvo through the SPDR S&P 500 ETF (SPY). SPY has 0.04% exposure in the company’s stock.

Advertisement

More From Market Realist