For its fiscal second-quarter 2015 (to 27 September 2014), RF Micro Devices Inc of Greensboro, NC, USA has reported record revenue of $362.7m, up 14.7% on $316.3m last quarter and 16.7% on $310.7m a year ago.
Fiscal Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015
Revenue $310.7m $288.5m $256 $316.3m $362.7m
“Revenue strength was broad-based and well diversified, and RFMD had two greater-than-10% customers,” comments chief financial officer Dean Priddy.
Revenue for RFMD’s Multi-Market Products Group (MPG) was $64m, up 16% on $55m both last quarter and a year ago (remaining about 17.5% of total revenue). Growth was supported primarily by high-performance Wi-Fi, 4G wireless infrastructure, and gallium nitride (GaN)-related revenue.
Revenue for RFMD’s Cellular Products Group (CPG) was $298m, up 14% on $261m last quarter and $255.4m a year ago (remaining about 82% of total revenue). During the quarter, CPG started shipping envelope tracking (ET) power management integrated circuits (PMICs) to a leading smartphone maker in support of multiple basebands. It also supported new customer engagements for RF Fusion, a complete RF front-end solution for 4G world phones and tablets. In particular, 3G/4G is now about 90% of CPG revenues (compared with 80% in the December 2013 quarter) compared with less than 10% for 2G.
“RFMD continued to benefit from the increasing global demand for mobile data,” says president & CEO Bob Bruggeworth. “Consumers want more bandwidth for their data-hungry applications, carriers want greater throughput from their available spectrum, and device manufacturers want greater functionality within the same product footprint,” he adds.
On a non-GAAP basis, gross margin has risen from 36.2% a year ago and 47.1% last quarter to 48%. Operating expenses have rebounded from $70m last quarter to $73.8m (while dropping from 22% of revenue to 20.3%). The rise was driven by R&D expenses growing from $42.6m to $46.4m, while general & administrative (G&A) expenses of $10.9m and sales & marketing expenses of $16.5m remained level.
Net income has risen from $33.9m ($0.12 per diluted share) a year ago and $71.3m ($0.24 per diluted share) last quarter to $90m (a record $0.30 per diluted share).
Net cash flow from operating activities has risen further, from $36.3m last quarter to$58.7m. Purchases of property and equipment (capital expenditure) have almost doubled from $9.8m to $19.3m. Free cash flow has hence risen further, from $26.5m to $39.4m. During the quarter, cash, cash equivalents and short-term investments rose from $197m to $241.3m.
“RFMD’s revenue, gross profit, operating income, and earnings per share were all quarterly records,” says Dean Priddy, chief financial officer & VP of administration.
“RFMD is enjoying multiple diversified, long-term growth opportunities across markets, customers, and product categories,” says Bruggeworth. “This is enabling RFMD to capture increasing content across a broad range of mobile data devices and outpace the growth rate of our underlying markets."
“In the December quarter, RFMD anticipates continued superior financial performance as we execute on our financial model,” says Priddy. “Our growth drivers are broad-based, we are identifying new opportunities to expand gross margin, and we see continued improvement in operating income, earnings per share, free cash flow, and return on invested capital,” he adds. For the December quarter, RFMD expects revenue of $385m (up 6%), gross margin roughly flat sequentially, operating expenses to be roughly flat, and diluted EPS of about $0.33. “The company has never been better-positioned for revenue growth greater than the industry, and EPS growth well ahead of our revenue growth,” says Priddy.
On 5 September, shareholders of RFMD and TriQuint Semiconductor Inc voted in favor of the pending merger between RFMD and TriQuint Semiconductor Inc (announced on 24 February). RFMD expects the merger to be concluded this year, subject to required regulatory approvals and customary closing conditions.
In the meantime, at the request of customers, RFMD and TriQuint have executed multiple three-way non-disclosure agreements (NDAs) with leading smartphone makers. “We are working together to drive higher levels of functional integration, to help our customers accelerate products to market as early as next year,” notes Bruggeworth.
