It has been about a month since the last earnings report for Skyworks Solutions (SWKS). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Skyworks due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Skyworks' Q1 Earnings Beat Estimates, Revenues Down Y/Y

Skyworks Solutions reported first-quarter fiscal 2024 non-GAAP earnings of $1.97 per share 23.9% year over year.

 

Revenues of $1.20 billion dropped 9.6% on a year-over-year basis.

 

Mobile revenues contributed nearly 71% to total revenues and increased 7% sequentially.

 

SWKS made investments in product development, particularly focusing on highly integrated platforms for leading mobile Original Equipment Manufacturers (OEMs).

 

Skyworks Solutions successfully obtained design wins in various sectors such as infrastructure, WiFi, automotive and emerging IoT, underscoring its competitive edge and strong market presence.

 

Broad markets contributed nearly 29% to total revenues and suffered from high inventory levels in wireless infrastructure, automotive and industrial end-markets.

Operating Details

Non-GAAP gross margin contracted 510 basis points (bps) on a year-over-year basis to 46.4%, primarily due to unfavorable mix shifts caused by reduced revenue from broad markets.

 

Research & development expenses, as a percentage of revenues, increased 40 bps year over year to 12.7%.

 

Selling, general and administrative expenses declined 20 bps to 6.6% in the reported quarter.

 

Non-GAAP operating margin contracted 650 bps on a year-over-year basis to 30.4% in the reported quarter.

Balance Sheet & Cash Flow

As of Dec 29, 2023, cash & cash equivalents and marketable securities were $1047.6 million compared with $738.5 million as of Sep 29, 2023.

 

Long-term debt was $9.93 billion as of Dec 29, 2023, up from $1.29 billion as of Sep 29, 2023. It repaid $300 million of term loan in the reported quarter.

 

Cash generated by operating activities was $775 million in the quarter under discussion compared with $365.7 million in the previous quarter.

 

Free cash flow was $753 million, with a 63% free cash flow margin.

 

Skyworks paid dividends worth $109 million in the reported quarter.

Guidance

For the second quarter of fiscal 2024, the company currently expects revenues between $1.02 billion and $1.07 billion. Earnings are expected to be $1.52 per share at the mid-point of this revenue guidance.