Skyworks Solutions Inc. (NASDAQ:SWKS) Q3 2020 Earnings Conference Call - Final Transcript

Jul 23, 2020 • 04:30 pm ET


Skyworks Solutions Inc. (NASDAQ:SWKS) Q3 2020 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Good afternoon, and welcome to Skyworks Solutions Third Quarter Fiscal Year 2020 Earnings Call. [Operator Instructions]

At this time, I will turn the call over to Mitch Haws, Investor Relations for Skyworks. Mr. Haws, please go ahead.

Mitch Haws

Thank you, Rob. Good afternoon, everyone, and welcome to Skyworks third fiscal quarter 2020 conference call.

With me today are Liam Griffin, our President and Chief Executive Officer; and Kris Sennesael, our Chief Financial Officer.

Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our Annual Report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today.

Additionally, the results and guidance we will discuss include certain non-GAAP financial measures, consistent with our past practice. Please refer to our press release within the Investor Relations section of our Company website for a complete reconciliation to GAAP.

With that, I'll turn the call to Liam.

Liam K. Griffin

Thanks, Mitch and welcome, everyone. Before we discuss our Q3 results, I want to briefly comment on the COVID-19 pandemic, which continues to impact families, businesses and markets worldwide. I'd like to start by recognizing the tireless efforts of our talented Skyworks team, as we've rapidly adapted and responded to a new working environment. We've implemented rigorous protocols designed to protect the health and safety of our employees along with our valued customers and trusted partners. In parallel, we continue to deliver the vital connectivity solutions that people worldwide are depending upon to navigate the pandemic.

Now we'll turn to an overview of our third quarter performance. Skyworks delivered results well above consensus in the June quarter, as our Sky5 platform gains traction powering innovation in 5G applications at the leading smartphone OEMs and increasingly across our IoT customers.

For the third quarter, we reported revenue of $737 million nearly $50 million above our guidance. We achieved gross margin of 50.1% and operating margin of 31.3%. We posted earnings per share of $1.25 beating our guidance by $0.12. And we generated strong operating cash flow totaling $259 million in the quarter.

Our momentum continues to improve reflecting on our execution across a rapidly evolving business landscape as well as the broadening adoption of 5G. A few data points highlight the growth of this critical technology. Globally, 5G subscriptions are continuing to grow with estimates approaching $3 billion over the next five years.

5G handset demand is accelerating across a diversified set of customers and geographies. In fact in China, during the month of June, approximately, 60% of all smartphones sold were 5G-enabled. And a new 3GPP standard was also released, validating the extension of 5G technology into IoT, V2X, multimedia broadcast and other services. Clearly, 5G along with other advanced wireless technologies such as Wi-Fi 6 and enhanced GPS are spawning new usage cases