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Apple 2

One of Apple’s Biggest Suppliers is Jumping on An Earnings Beat

Aug 4, 2022 | About 3 minutes

Ticker Symbol: QRVO

Qorvo, a large semiconductor supplier to technology behemoth Apple, announced its first-quarter results that were largely ahead of Wall Street expectations. Most critically, however, the company stuck to its forward guidance that came in ahead of analysts’ expectations. Shares were up 7% in extended hours. Shares in Qorvo were down 32% for the year before the results were announced, reflecting the bearish investor sentiment in the technology space.

First quarter net revenue was down over 6.8% year over year to $1.04 billion and ahead of the Wall Street consensus estimate of $1.02 billion. Furthermore, the company reported quarterly earnings per share of $2.25, which was ahead of consensus expectations of $2.12. Despite beating expectations, earnings were still down from $2.83 in 2021. On a more positive note, an adjusted gross margin of 50% remains robust in light of surging inflation.

Qorvo also reported an operating margin of 27.5%, which was more significant than the 26.2% expected by investors. Research and development expenses were, likewise, lower than the company projected by roughly $3 million. The figure totaled $159.5 million for the three-month period, up 11% year over year. Despite the lowered spending, president and Chief Executive Officer Bob Bruggeworth said the company is continuing to invest in product and technology leadership across its businesses.

Qorvo produces radio frequency chips for mobile phones and the defense and aerospace sectors. The company generates roughly 35% of its sales from Apple. Management guided towards a solid second quarter as well, saying investors should expect earnings per share should be between $2.45 to $2.65, versus the $2.61 expected by the Street.

It expects revenue to be between $1.12 billion and $1.15 billion, versus the estimate of $1.13 billion by investors. The positive forecast from the company, which has a history of providing conservative outlooks, could bode well for Apple, and other companies in the sector.  Qorvo is also one of the cheapest technology sector companies, trading at a price-to-earnings ratio of 10.3, versus the S&P 500 IT sector average of 17.

 This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.