Communications chips maker Qorvo (NASDAQ: QRVO) announced better-than-expected revenue in Q1 CY2025, but sales fell by 7.6% year on year to $869.5 million. The company expects next quarter’s revenue to be around $775 million, close to analysts’ estimates. Its non-GAAP profit of $1.42 per share was 41.3% above analysts’ consensus estimates.
Revenue: $869.5 million vs analyst estimates of $850.9 million (7.6% year-on-year decline, 2.2% beat)
Adjusted EPS: $1.42 vs analyst estimates of $1.00 (41.3% beat)
Adjusted EBITDA: $195.4 million vs analyst estimates of $166.9 million (22.5% margin, 17.1% beat)
Revenue Guidance for Q2 CY2025 is $775 million at the midpoint, roughly in line with what analysts were expecting
Adjusted EPS guidance for Q2 CY2025 is $0.63 at the midpoint, roughly in line with what analysts were expecting
Operating Margin: 3.2%, in line with the same quarter last year
Free Cash Flow Margin: 19.6%, up from 18% in the same quarter last year
Inventory Days Outstanding: 117, up from 114 in the previous quarter
Market Capitalization: $7.32 billion
StockStory’s Take
Qorvo's first quarter results were shaped by a mix of product wins, business realignment, and ongoing cost discipline. Management cited the successful launch of its envelope tracking power management solution with its largest smartphone customer and record results in the defense and aerospace segment as key contributors. Frank Stewart, SVP and President of Advanced Cellular, noted, "We're really excited about the fall launch upcoming, really proud of what the team accomplished in capturing content there across multiple product categories." The company also benefitted from continued diversification, with double-digit revenue growth in its Connectivity & Sensors and High Performance Analog businesses.
Looking ahead, management attributed forward guidance to expected seasonal declines, ongoing manufacturing consolidation, and external risks such as tariffs. CFO Grant Brown discussed potential tariff impacts, stating, "In the June quarter, we've got about $1 million there, or less than that, and it represents a historical run rate, plus some new tariffs that are relevant in the quarter." The leadership team emphasized its focus on operational efficiency and margin expansion initiatives, while remaining cautious about the unpredictable global trade environment.
Key Insights from Management’s Remarks
Qorvo’s first quarter financial performance reflected momentum in defense and aerospace, key content wins in mobile, and ongoing portfolio optimization. Management discussed improvements from manufacturing consolidation and portfolio adjustments, as well as tailwinds from elevated global defense spending.
Mobile content expansion: Qorvo achieved notable design wins with its largest smartphone customer, including the ramp of an envelope tracking power management chip, which management says positions the company for over 10% year-over-year content growth in the customer’s upcoming fall model.
Defense and aerospace strength: The High Performance Analog segment posted record revenue in defense and aerospace, driven by demand for radar, satellite communications (SATCOM), and electronic warfare (EW) applications. Management highlighted a $5 billion-plus sales opportunity pipeline in this area.
Connectivity and sensors growth: Qorvo’s Connectivity & Sensors Group continued to expand its ultra-wideband (UWB) and Wi-Fi product lines, with progress in automotive and consumer applications. The automotive UWB sales funnel exceeded $2 billion, reflecting growing traction in secure keyless entry and in-cabin sensing.
Manufacturing footprint consolidation: The company is closing its Costa Rica facility and relocating production to Asia, aiming to reduce costs and align capacity with customer locations. Management expects these actions to support gross margin improvements going forward.
Portfolio streamlining: Qorvo exited lower-margin Android programs and divested its silicon carbide business, reallocating resources to higher-margin, differentiated products and segments. These moves are expected to reduce revenue volatility and improve profitability.
Drivers of Future Performance
Management’s outlook for the next quarter and year is shaped by seasonal demand cycles, ongoing cost control measures, and external uncertainties like tariffs and macroeconomic conditions.
Mobile segment seasonality: Qorvo expects a seasonal slowdown with its largest customer in the June quarter, but anticipates content growth in premium smartphone launches later in the year, which could offset some of the cyclicality.
Defense and connectivity diversification: The company is prioritizing expansion in defense, aerospace, and automotive connectivity, projecting double-digit growth in both the High Performance Analog and Connectivity & Sensors segments, which are less tied to consumer cycles.
Tariff and trade risks: Management remains cautious regarding new and evolving tariffs, highlighting that direct impacts are currently modest but could increase if international trade policies shift. The company is implementing supply chain flexibility and mitigation strategies to manage these risks.
Top Analyst Questions
Thomas O'Malley (Barclays): Asked about the drivers of content growth with the largest smartphone customer and potential pricing pressure. Management explained gains were broad-based across product types, with premium content wins offsetting mass-tier declines.
Harsh Kumar (Piper Sandler): Sought clarification on whether recent revenue included pull-forwards due to tariffs. CEO Bob Bruggeworth and CFO Grant Brown said any activity was modest and typical for a new phone launch, with no abnormal demand shifts observed.
Chris Caso (Wolf Research): Inquired about the company’s assumptions and mitigation strategies regarding tariffs. Grant Brown provided a detailed breakdown of tariff exposure and emphasized supply chain flexibility to limit direct impacts.
Karl Ackerman (BNP Paribas): Asked if content growth with the largest customer was limited to internal basebands or also included third-party models. Management confirmed that content gains were achieved across both internal and third-party platforms.
Srini Pajjuri (Raymond James): Requested detail on the defense and aerospace business’s run rate and growth drivers. Philip Chesley, segment president, cited a $400 million current run rate, broad-based demand across radar, EW, and SATCOM applications, and significant opportunities in U.S. and European defense markets.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) execution on content expansion with Qorvo’s largest smartphone and Android customers, especially in upcoming premium device launches; (2) realization of expected margin improvements from manufacturing consolidation and portfolio streamlining; and (3) continued double-digit growth in defense, aerospace, and automotive connectivity businesses. Tariff impacts and macroeconomic shifts will also be key factors to monitor.
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