Xilinx Inc. (NASDAQ:XLNX) Q1 2017 Earnings Conference Call - Final Transcript
Jul 27, 2016 • 05:00 pm ET
Good afternoon. My name is Ian, and I will be your conference operator. I'd like to welcome everyone to the Xilinx First Quarter Fiscal Year 2017 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)
I would now like to turn the call over to Rick Muscha. Thank you. Mr. Muscha, you may begin your conference.
Thank you, and good afternoon. With me are Moshe Gavrielov, CEO; and Lorenzo Flores, CFO. We'll provide a financial and business review of the June quarter, and then we'll open the call for questions.
During the quarter we reclassified our product categories to be consistent with how these categories are analyzed and reviewed internally. Specifically, we are grouping the products manufactured at the 28, 20 and 16-nanometer nodes into a category named advanced products, while all other products will be included in a category entitled core products.
This representation is consistent with what was presented at our recent analyst meeting. For comparative purposes, we have provided supplemental information on our website at www.investor.xilinx.com that presents results based on previous classifications.
(Forward-Looking Cautionary Statements)
Let me now turn the call over to Lorenzo.
Thank you, Rick. In the June quarter Xilinx sales were $575 million, up 1% sequentially and up 5% on a year-over-year basis. Advanced products increased 10% sequentially and 60% year-over-year, with 28-nanometer and 20-nanometer products each reaching record sales and 16-nanometer beginning its revenue ramp.
As expected, core products declined on a sequential and year-over-year basis. Communications increased 4% sequentially, with growth from both wired and wireless. Communications has staged a modest, but consistent recovery since bottoming in the June quarter a year ago and is up 22% on a year-over-year basis. Industrial and A&D was down slightly, with strength in test, measurement, and emulation not quite offsetting expected declines in industrial and aerospace and defense.
Broadcast, consumer and automotive was flat on a sequential basis, slightly better than anticipated due to stronger orders from Zynq-driven ADAS applications. Both automotive and test and measurement reached record levels for the Company in the June quarter.
Gross margin in Q1 was 70.7%, higher than guided due to the mix of customers and products in addition to increased manufacturing efficiencies. We continued to aggressively optimize gross margin across our product portfolio.
Operating expense at $220 million was in line with our guidance. Operating income for the quarter was $186 million or 32.4%. Other income and expense was an expense of $5 million, as guided. The tax rate was 10% for the quarter better than guided. This included the impact of the early adoption of an accounting standard related to the treatment of stock-based compensation.
Our net income for Q1 was $163 million or $0.61 a share. This included a positive $0.02 a share impact associated with the accounting standard I just referenced. Operating cash flow was $339 million, driven primarily by strong profitability and a significant reduction