Skyworks Q2 Earnings Beat Estimates, Revenues Fall Y/Y, Stock Down

Skyworks Solutions SWKS reported second-quarter fiscal 2025 non-GAAP earnings of $1.24 per share, which beat the Zacks Consensus Estimate by 3.33% but declined 20% year over year.

Revenues of $953.3 million dipped 8.9% on a year-over-year basis but surpassed the consensus mark by 0.20%.

Mobile revenues contributed nearly 62% to total revenues and decreased 17% sequentially. 

Broad Markets saw growth of 3% year over year and 2% sequentially. Positive momentum in demand signals and backlog improvement helped fuel growth, especially in automotive electrification, edge IoT, and AI data centers.

Skyworks Solutions, Inc. Price, Consensus and EPS Surprise

Skyworks Solutions, Inc. price-consensus-eps-surprise-chart | Skyworks Solutions, Inc. Quote

Following the results, SWKS shares were down 2.06% in pre-market trading. The company’s shares have underperformed the Zacks Computer & Technology sector year to date. SWKS shares have plunged 25% compared with the sector’s decline of 8.7%.

SWKS’ Q2 Operating Details

Non-GAAP gross margin expanded 160 basis points (bps) on a year-over-year basis to 46.7%.

Research & development expenses, as a percentage of revenues, increased 480 bps year over year to 19.6%.

Selling, general and administrative expenses increased 190 bps to 9.2% in the reported quarter.

Non-GAAP operating margin contracted 340 bps on a year-over-year basis to 23.3% in the reported quarter.

SWKS’ Balance Sheet & Cash Flow

As of March 28, 2025, cash & cash equivalents and marketable securities were $1.53 billion compared with $1.75 billion as of Dec. 27, 2024.

As of March 28, 2025, the long-term debt was $995.1 million compared with $994 million as of Dec. 27, 2024.

Cash generated by operating activities was $409.5 million in the quarter under discussion compared with $377.2 million in the prior quarter.

Free cash flow was $371 million, with a 38.9% free cash flow margin.

Skyworks paid dividends worth $110.6 million in the reported quarter.

SWKS Initiates Q3 FY25 Guidance

For the third quarter of fiscal 2025, Skyworks expects revenues between $920 million and $960 million.

Non-GAAP earnings are expected to be $1.24 per share at the midpoint of the revenue range. 

The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $951.26 million, indicating a year-over-year decline of 9.06%.
 
The consensus mark for earnings is pegged at $1.20 per share, which remained unchanged over the past 30 days. The figure indicates a decline of 22.58% from the year-ago quarter’s reported figure. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

SWKS Zacks Rank & Stocks to Consider

Skyworks currently carries a Zacks Rank #4 (Sell).

Magnachip Semiconductor MX, UiPath PATH and WidePoint WYY are some better-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Magnachip Semiconductor shares have declined 20.2% year to date. MX is set to report its first-quarter 2025 results on May 12.

UiPath shares have fallen 4.9% year to date. PATH is set to report its first quarter fiscal 2026 results on May 29.

WidePoint shares have gained 4.1% year to date. WYY is set to report its first-quarter 2025 results on May 15.

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

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