Will Top-Line Contraction Affect Qorvo's Q4 Earnings Results?

Qorvo, Inc. QRVO is set to report fiscal fourth-quarter 2025 results on April 29, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 34.17%. It pulled off a trailing four-quarter earnings surprise of 18.3% on average. 

The leading provider of radio frequency solutions is expected to witness revenue decline year over year owing to weakness in the Advance Cellular Group (ACG) segment and macroeconomic headwinds. However, efforts in accelerating 5G deployments with a strong emphasis on innovation and portfolio expansion should also be a boon for the company. 

Factors at Play

During the quarter, Qorvo unveiled its automotive-qualified QPF5100Q Ultra-Wideband (UWB) System-on-Chip (SoC) solution. Building on more than a decade of UWB innovation, the solution is designed to address the growing demand within the automotive industry for highly accurate and reliable UWB technology, particularly for applications such as secure keyless entry, Digital Key and UWB radar functionalities like child presence detection and motion sensing. The flexibility of the state-of-the-art solution is expected to enable automotive designers to customize features, thus enhancing performance and differentiating end applications. The SoC is currently undergoing Design Verification Testing with leading automotive manufacturers and is scheduled to enter production later this year. This advancement is likely to boost Qorvo’s commercial prospects in the global automotive market significantly. 

In the to-be-reported quarter, the company expanded its growing family of power management products with the addition of a highly-integrated brushless direct current (BLDC) motor driver. Qorvo’s ACT72350 solution replaces up to 40 discrete components in a typical BLDC motor control system. It features a configurable Analog Front-End for flexible sensing and position detection, as well as an integrated power manager with a DC-DC Buck converter and Low-dropout regulators to support internal components or power the host Microcontroller Unit. With a wide input range of 25V to 160V, the solution enables design reuse across various battery-powered applications such as power tools, garden equipment, drones, electric vehicles, and e-bikes. Introduction of such innovative products are likely to generate incremental revenues in the upcoming quarters and propel the stock.

However, Qorvo operates in a competitive landscape that is becoming more complex and has low barriers to entry.  As each player strives to win designs for a greater share of the pie, the battle gets tougher. The increased competition is exerting pricing pressure, which remains a matter of concern for the company. Despite easing of channel inventory, management expects persistence of weakness in end markets, exacerbating the competitive pressures. Additionally, the company is engaged in developing a custom product for Apple, which is pushing up Qorvo’s Research and Development expense, thereby hurting its profitability. Furthermore, the US government's banning of Huawei remains a headwind. 

Overall Expectations

Per the Zacks Consensus Estimate, net sales in the High-Performance Analog segment are expected to be $200.9 million in the fourth quarter of fiscal 2025, implying an improvement from $171.7 million in the year-earlier quarter. Revenues from ACG are projected to be $537.8 million, a decline from $635.1 million reported in the year-ago quarter due to seasonal dynamics. 

The Connectivity and Sensors Group segment is expected to generate $122.2 million in revenues, up from $109.5 million in the year-ago quarter. Strong emphasis on radio frequency solutions and investment in diverse growth businesses, including an expanding portfolio of automotive solutions and SoCs for ultra-wideband, is likely to support this segment. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

For the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $851.7 million, indicating a 9.49% year-over-year decline. The consensus mark for earnings is pegged at $1.01 per share, indicating a decline from $1.39 per share in the year-ago quarter.

Earnings Whispers

Our proven model predicts an earnings beat for Qorvo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. This is exactly the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +3.42%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote

Zacks Rank: Qorvo currently has a Zacks Rank #2.

Other Stocks to Consider

Etsy ETSY is set to release quarterly numbers on April 30. It has an Earnings ESP of +17.97% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

QUALCOMM Incorporated QCOM is set to release quarterly numbers on April 29. It has an Earnings ESP of +0.86% and carries a Zacks Rank #2.

CGI Group GIB is set to release quarterly numbers on April 30. It has an Earnings ESP of +0.89% and carries a Zacks Rank #2.

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This article originally published on Zacks Investment Research (zacks.com).

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