President and Chief Executive Officer at NXP Semiconductors
Thank you very much, Jeff, and good morning, everyone. We appreciate you all joining our call today. Let me begin with a review of our quarter two performance. Our revenue was $37 million better than the mid-point of our guidance with automotive and industrial and IoT above our guidance, while trends in the mobile and communication infrastructure markets were in line with our expectations. Taken together, NXP delivered quarter two revenue of $3.31 billion, an increase of 28% year-over-year.
Our non-GAAP operating margin in quarter two was a record 36%, 400 basis points better than the year ago period and about 30 basis points above the mid-point of our guidance. Our results reflect strong execution with better than guided operating leverage and profit fall-through on the incrementally higher revenue on top of improved gross profit.
Now let me turn to the specific trends in our focused end markets. In automotive, revenue was $1.71 billion, up 36% year-over-year near the high-end of guidance. In industrial and IoT revenue was $713 million, up 25% year-on-year better than our guidance. In mobile, revenue was $388 million, up 12% year-on-year in line with our guidance. And lastly, communication infrastructure and other revenue was $498 million, up 20% year-on-year in line with our guidance.
Looking at the trends across our end markets, we are not naive to believe NXP is immune from the clearly weakening macro environment. We are highly alert and we review frequently and very closely several key indicators relative to the dynamics of customer demand versus supply, inventory per channel, per end markets and per geography.
When we look at demand signals, we have a high level of confidence in the intermediate term outlook. This is especially true in terms of demand trends in the automotive and industrial markets, which account for the majority of our total revenue. While there is a well documented weakness in the low end Android handset markets, it is important to note that our mobile business is more biased towards the premium tier vendors. And in aggregate, our mobile business accounts for only about 12% of our total revenue.
In terms of the PC and broad consumer electronics markets, there are much smaller contributors in the IoT portion of our industrial and IoT segment.
In terms of customer behaviors, we do not see any substantial weakening within the auto and industrial customer base. Relative to long-term committed customer demand, a large percentage of our major customers continue to firmly desire [Phonetic] supply assurance commitments, which are facilitated by placing non-cancelable, non-returnable orders with us throughout 2023. And currently, the level of NCNR orders into 2023 is greater than our ability to service.
In terms of key operating metrics, which inform our short-term decisions, demand continues to outpace our gradually and incrementally improving supply capability. Furthermore, even as we actively de-risk our existing backlog for potential double or any stale orders, we judge [Phonetic] supply to only address approximately 80% of the underlying demand. Additionally, we continue to redirect shipments to those customers, which are at risk of going limestone, thus avoiding excess or stagnant inventory buildup.
When looking at customer inventory, we continue to see a dysfunctional supply chain, which struggles to get the right product mix and complete kits to the correct location in the extended automotive and industrial markets.
Now, in terms of our own on hand inventory, it has increased through quarter two on a dollar basis consistent with orders placed with suppliers and internal build plants. The primary area of increase is in raw material and work-in progress in order to fulfill firm customer commitments in future and especially in quarter three. On a days basis, DIO was 94, an increase of 5 days sequentially and closer to our long-term target of 95 days.
Now moving to the distribution channel, which services about half of our total revenue, inventory continues to remain stubbornly below our long-term targets. During quarter two, the months of supply in the channel was barely 1.6 [Phonetic], which is about a month below our long-term target, and it is now the seventh consecutive quarter of an exceedingly tight supply situation in the channel.
Finally, let me speak to our ability to service customer requirements. Lead times continue to be extended with more than 80% the whole products being quoted at 52 weeks or greater, which is actually on a similar level to last quarter. So in summary, against this dynamic backdrop, our second quarter and the first half of the year was a good beginning to what we view will be a positive year for NXP. We do continue to see the second half of the year greater than the first on an absolute dollar basis.
Now let me turn to our expectations for quarter three. We are guiding revenue at $3.425 billion, up about 20% versus the third quarter of 2021 within a range of up 17% to up 22% year-on-year. From a sequential perspective, this represents growth of about 3% at the mid-point versus the prior quarter.
At the mid-point, we anticipate the following trends in our business. Automotive is expected to be up in the low 20% range versus quarter three 2021 and up in the mid single digit range versus quarter two '22. Industrial and IoT is expected to be up in the low 20% range year-on-year and up in the mid single digit range versus quarter two '22. Mobile is expected to be up about 10% year-on-year and down in the low single digit range versus quarter two '22. And finally, communication infrastructure and other is expected to be up in the low double digit range versus the same period a year ago, and up in the low single digit range on a sequential basis.
Let me summarize. The growth we have anticipated for 2022 is materializing, notwithstanding the clear macro cross currents and the continued supply challenges. We do continue to see strong customer demand in the automotive and industrial segments, as well as within our Company specific accelerated growth drivers. Overall, demand continues to outpace increasing supply. However, we are staying paranoid about the macro environment, and hence, we will continue to work very diligently and in a very disciplined manner to assure inventory across all end markets remains lean.
And with that, I would like to pass the Bill over to you -- the call over to you Bill, for a review of our financial performance. Bill?