5G Content Expansion to Drive Qorvo’s (QRVO) Q4 Earnings

Qorvo QRVO is slated to report fourth-quarter fiscal 2021 results on May 5.

The company’s fiscal fourth-quarter results are likely to reflect gains from increased demand for 4G and 5G mobile products utilized in flagship smartphones.

The company expects fourth-quarter fiscal 2021 revenues between $1.025 billion and $1.055 billion. The consensus mark for revenues is pegged at $1.04 billion, which suggests an improvement of 32.3% from the year-ago quarter.

Non-GAAP adjusted earnings are anticipated to be $2.42 per share at mid-point for the fiscal fourth-quarter revenue guidance. The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at $2.44 per share, which remained steady in the past 30 days. The figure indicates an improvement of 55.4% from the year-ago reported figure.

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote

Factors Likely to Have Influenced Q4 Performance

Robust uptake of Qorvo’s mid-high-band and ultra-high band front end modules (FEM), which have been powering 5G smartphone launches, is likely to have contributed to the company’s Mobile Products (MP) segment’s performance in the fiscal fourth quarter.

Solid momentum in Bulk Acoustic Wave (BAW) filters, with the reopening of economies and rebound in smartphone market, might get reflected in the to-be-reported quarter’s top line.

Markedly, the company has extended shipments of low-band, mid-/high- and ultra-high-band modules, and BAW-based antenna-plexers, which are witnessing accelerated adoption across leading smartphone OEMs.

Likewise, increased sales of RF content expansion for 5G devices might have favored MP division sales, which is expected to contribute $770 million during the quarter under review. Further, momentum in Apple’s AAPL new iPhone (with overall iPhone sales up 65.5% year over year in March quarter) may have positively impacted revenues in the quarter under review.

Moreover, broad-based content gains across Wi-Fi 6 solutions, which are being implemented in leading tablets, smartphones, gateways, smart speakers, mesh networks, and virtual reality headsets, are expected to have contributed to the fiscal fourth-quarter performance.

Besides, surge in remote work and e-learning trends due to the COVID-19 pandemic is driving demand for Wi-Fi 6 products, which is likely to have contributed to the company’s performance in the quarter to be reported.

Also, synergies from Custom MMIC, Decawave, Active-Semi and MEMS technology acquisitions have significantly expanded Qorvo’s capabilities and positions it well to benefit from growing demand for proximity awareness, secure payments and secure access for smartphones, automotive and IoT.

Further, consistent adoption of Qorvo’s solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi 6 and emerging IoT application) may have benefited the fiscal fourth-quarter performance.

Momentum in deployment of Wi-Fi 6 solutions and robust 5G infrastructure market demand on improving buildout of 5G networks, and gains from rise in 5G base station deployments are likely to have acted as a tailwind.

Additionally, strong adoption of the company’s Gallium nitride (GaN) amplifiers to support high-power applications and domestic airborne radars and the deployment of Massive MIMO antennas are likely to have contributed to the Infrastructure and Defense (IDP) segment’s revenue growth in the quarter under review.

Notably, Qorvo, currently carrying a Zacks Rank #2 (Buy), expects IDP unit to contribute $270 million during the fiscal fourth quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Furthermore, increasing deployment of 5G massive MIMO antennas is expected to have driven the uptick in GaN high-power amplifiers and small signal components during the quarter under review.

Similarly, Qorvo’s advanced 5G/LTE, C-V2X and Wi-Fi automotive-qualified products capabilities are likely to have aided it in clinching supply deals.

Also, gains from buyout of ultra-wideband (UWB) software and system solution pioneer, 7Hugs Labs S.A.S., remains noteworthy. It is enabling the acquirer to boost UWB system solutions capabilities and bolster design expertise with focus on mobile, IoT and automotive end-markets.

More so, momentum seen in shipments of programmable power management and motor control solution might get reflected in the fiscal fourth-quarter top line. The company’s programmable integrated circuits (ICs) are witnessing solid momentum in brushless motor control applications and robust growth in data center, client and enterprise computing and gaming consoles.

Nevertheless, growing expenses on product development amid stiff competition from Skyworks SWKS and Broadcom AVGO in the radio frequency semiconductor market are likely to have weighed on profitability in the fiscal fourth quarter.

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