Qorvo Inc (QRVO) Q1 2026 Earnings Call Highlights
Qorvo Inc (QRVO) delivered impressive results for the first quarter of fiscal 2026, reporting revenue of $819 million, surpassing their guidance.
The company achieved a non-GAAP gross margin of 44% and a non-GAAP diluted earnings per share (EPS) of $0.92, both of which exceeded expectations.
With robust demand, particularly from its largest customer, Qorvo is experiencing over 10% year-over-year content growth. The Defense and Aerospace segment is also seeing significant expansion, aided by increased US and international defense spending.
Qorvo is strategically optimizing its operations by exiting low-margin businesses and consolidating its manufacturing footprint, which is anticipated to enhance overall profitability.
Financial Metrics & Guidance
As of the end of the quarter, Qorvo reported cash and equivalents of approximately $1.2 billion and long-term debt of about $1.5 billion with no near-term maturities. The net inventory balance stood at $638 million, which reflects a decrease of $89 million year-over-year.
Operating cash flow for the quarter was approximately $183 million, with capital expenditures totaling $38 million and free cash flow reaching $145 million.
Looking ahead, Qorvo provided guidance for Q2 revenue of $1.025 billion (plus or minus $50 million) and a non-GAAP gross margin between 48% and 50%. The company anticipates a non-GAAP diluted EPS of $2 (plus or minus $0.25) and operating expenses of about $265 million.
Challenges Ahead
Despite the positive results, Qorvo faces several challenges, including macroeconomic uncertainties and geopolitical dynamics that may affect future performance. Additionally, there is a delay in a major automotive program within its Connectivity and Sensors Group, which could push expected revenue into fiscal 2027.
As the company exits lower-margin segments, particularly in the Android business, a decline is expected, especially in the latter half of fiscal 2026. Concerns over tariff-related inventory buffering could also impact demand patterns.
Moreover, Qorvo is incurring startup costs related to its transition of SAW filter production, which will affect non-GAAP operating expenses in the short term.
Q&A Highlights
During the earnings call, CFO Grant Brown discussed the seasonality of the business, noting that the September quarter usually sees a slight uptick compared to December. He reiterated the unchanged full fiscal year '26 outlook, with a single-digit decline expected in ACG due to the exit from the low-margin Android 5G business.
Brown also highlighted that the faster-than-expected improvement in gross margins is attributed to cost reductions and mix improvements from growth in Defense and Aerospace.
For the complete earnings call transcript, please visit Inside Ticker.