For its fiscal first-quarter 2015 (to 28 June 2014), RF Micro Devices Inc of Greensboro, NC, USA has reported record revenue of $316.3m, up 23.6% on $256m last quarter and up 8% on $293m a year ago (and well above the $305m forecast at the end of April).
| Fiscal | Q1/2014 | Q2/2014 | Q3/2014 | Q4/2014 | Q1/2015 |
|---|---|---|---|---|---|
| Revenue | $293m | $310.7m | $288.5m | $256 | $316.3m |
“Revenue strength was broad-based and well diversified,” comments chief financial officer Dean Priddy. RFMD had two greater-than-10% customers.
Revenue for RFMD’s Multi-Market Products Group (MPG) was $55m (17.5% of total revenue), up 5% sequentially across multiple markets, supported primarily by 4G wireless infrastructure and high-performance Wi-Fi in smartphones and enterprise applications.
Revenue for RFMD’s Cellular Products Group (CPG) was $261m (82.5% of total revenue). During the quarter, CPG secured new customer engagements for RF Fusion (a complete RF front end solution for 4G world phones and tablets, for production later this year). CPG also supported the ramp of multiple 3G/4G smartphones, driving 3G/4G to more than 90% of CPG revenue (up from 85% last quarter and 80% the prior quarter) and 2G to below 10% (falling from 15% last quarter and 20% the prior quarter). In addition, CPG enabled the proliferation of envelope tracking (ET) power amplifiers across multiple smartphone platforms, leading to ET power management integrated circuit (PMIC) revenue being anticipated across multiple basebands later this year.
“RFMD is benefiting from multiple long-term secular trends that are in the early stages of adoption,” comments president & CEO Bob Bruggeworth. “They are supporting a wave of connectivity and interconnectivity that is playing out globally across a broad range of wireless air standards,” he adds.
On a non-GAAP basis, gross margin has soared further, from 35.1% a year ago and 42% last quarter to a record 47.1%. Operating expenses have fallen from $74m last quarter to $70m (22% of revenue), due to R&D expenses being cut from $47.6m $42.6m while general & administrative (G&A) expenses were $11m and sales & marketing expenses were $16.5m.
Net income has risen from $25.6m ($0.09 per diluted share) a year ago and $33.4m ($0.12 per diluted share) last quarter to $71.3m (a record $0.24 per diluted share, doubling sequentially, and well above the $0.17 forecast at the end of April).
Cash flow from operations was $36.3m (up from $31.7m last quarter). Purchases of property and equipment (capital expenditure) amounted to $9.8m (up from $7.3m). Hence, free cash flow was $26.5m (up from $24.4m). However, cash, cash equivalents and short-term investments fell from $244m to $197m, since RFMD repaid $87.5m of convertible debt during the quarter and is now debt-free.
“RFMD is enjoying positive market dynamics creating sustainable, long-term opportunities for growth and diversification, and we are positioned better than ever to translate our diversified revenue growth into superior financial performance,” reckons Bob Bruggeworth.
“In the September quarter, RFMD anticipates broad-based revenue growth supported by new smartphone ramps, content increases in LTE, deepening penetration of 802.11 ac, and continued broad market strength,” says Bruggeworth. Considering the demand environment in its end-markets, for its fiscal second-quarter 2015 (to end-September 2014) RFMD expects revenue to grow 9% on last quarter to $345m. “We expect our diversified revenue growth to outpace the growth rate of our underlying markets and drive continued robust growth in RFMD’s gross profit, operating profit, and earnings per share,” adds Bruggeworth. Gross margin should be roughly flat to up 25 basis points sequentially. Operating expenses are expected to be relatively unchanged. Diluted earnings per share (EPS) should be about $0.27.
“RFMD is executing to a financial model, and we are committed to delivering gross margin that is consistently industry-leading with operating expenses at 20% of revenue,” says Priddy. “We continue to unlock new opportunities to expand margin, and we anticipate continued robust improvements in operating income, earnings per share, and free cash flow.”
On 17 June, RFMD announced the expiration of the HSR (Hart-Scott-Rodino) Act waiting period, satisfying one of the conditions required to complete the pending merger between RFMD and TriQuint Semiconductor Inc (announced on 24 February). RFMD continues to expect a successful close this calendar year (subject to approval by shareholders of both TriQuint and RFMD, other required regulatory approvals, and customary closing conditions).
