What Skyworks Solutions (SWKS) Said on Its Q4 Earnings Call

Key Points

• Skyworks closed its Qorvo acquisition after its fiscal Q4 ended, so reported quarterly results cover legacy Skyworks only; its December-quarter outlook is for the combined company. Q4 revenue was $1.046 billion and non-GAAP EPS was $1.28, both slightly above guidance midpoints.
• The combined company expects December-quarter revenue of $1.8 billion to $1.9 billion and non-GAAP EPS of $1.25 at the midpoint. Smartphone revenue is expected to decline sequentially, while Diversified Growth Markets—including data center, defense and automotive—are expected to grow.
• Skyworks reiterated a target of at least $500 million in annual cost synergies from the deal, with most earnings benefits expected in the second half of fiscal 2027. Longer-term targets include mid- to high-single-digit revenue growth and 50% to 55% gross margins within 24 to 36 months.

Skyworks Solutions NASDAQ: SWKS reported fourth-quarter fiscal 2026 results as a standalone company and outlined its first outlook as a combined business following the October 5 closing of its acquisition of Qorvo.

Chief Executive Officer and President Phil Brace said the combination brings greater scale, a broader technology portfolio and an expanded manufacturing footprint. The company will report its operations going forward in two categories: smartphone and Diversified Growth Markets.

Because the Qorvo transaction closed after Skyworks’ fiscal fourth-quarter end, Skyworks’ September-quarter results reflect only the legacy Skyworks business, while December-quarter guidance is on a combined-company basis.

Fourth-Quarter Results and Market Trends

For the fiscal quarter ended October 2, Skyworks reported revenue of $1.046 billion, above the midpoint of its guidance range of $1.035 billion. Non-GAAP diluted earnings per share were $1.28, $0.01 above the midpoint of guidance.

Gross profit was $465 million, representing a gross margin of 44.4%, while operating expenses totaled $237 million. Operating income was $227 million, or 21.7% of revenue. Net income was $193 million. Skyworks ended the quarter with approximately $2.6 billion in cash and investments and roughly $2.5 billion in debt, including acquisition financing completed ahead of the Qorvo closing.

The company repurchased $107 million of stock during the quarter at an average price of $66.27 per share.

Mobile represented about 60% of Skyworks’ standalone quarterly revenue, supported by demand from its largest customer during the company’s seasonally strongest period. Brace said this was partly offset by continued weakness in Android, where Skyworks is concentrating on the premium tier.

Broad markets represented approximately 40% of revenue and grew 9% year over year in the quarter and about 10% for fiscal 2026. The company cited data center, Wi-Fi and automotive as growth drivers, while consumer IoT remained soft. Skyworks’ largest customer accounted for approximately 62% of quarterly revenue, including non-smartphone products.

Brace said demand and book-to-bill trends were healthy across end markets, while timing and power products continued to gain design engagement in AI data centers. He also said automotive and industrial design activity was robust. However, management said higher input costs remain a margin headwind and are expected to persist. The company is responding through factory-load optimization, long-term supply agreements and price increases where appropriate.

Combined Business Structure and Growth Markets

On a pro forma combined basis, Skyworks said fiscal 2026 smartphone revenue was approximately $4.6 billion, down about 11% from the prior year. Management attributed the decline to expected Android weakness and content dynamics at its largest customer.

Brace said the combined company now offers a full RF front-end platform for next-generation smartphones and intends to focus investments on premium devices, where RF content is higher. He said 5G Advanced and 6G could add RF complexity through additional transmit and receive paths, spectrum bands, satellite connectivity, filters, amplifiers and antenna solutions.

Management expects the broader product portfolio to reduce reliance on individual sockets and help create steadier smartphone results. Brace characterized smartphone as a long-term low-single-digit growth business, with premium-device growth and RF content gains offset by normal integration and price compression.

Diversified Growth Markets generated about $2.9 billion in pro forma fiscal 2026 revenue, up approximately 12% year over year, according to the company. The category includes legacy Skyworks broad markets and Qorvo’s High Performance Analog and Connectivity and Sensors Group.

• Physical AI and connected edge: More than $1.6 billion in fiscal 2026 revenue, including Wi-Fi access points, gateways, IoT devices, industrial automation and robotics.
• Defense and aerospace: Approximately $500 million, supported by modernization, space, electronic warfare and satellite constellations.
• Data center and networking infrastructure: Approximately $400 million and identified by management as the company’s fastest-growing market.
• Automotive: Approximately $340 million, benefiting from electrification, connectivity, autonomy and infotainment trends.

Brace said demand in many of these markets exceeds the company’s current ability to supply products. During the September quarter, Skyworks secured additional supply and grew its data center business by about 90% year over year, he said.

December Outlook and Integration Plan

For the December quarter, Skyworks expects combined revenue of $1.8 billion to $1.9 billion, with a midpoint of $1.85 billion. The outlook includes approximately $1.07 billion from legacy Skyworks and approximately $780 million from legacy Qorvo. The company said this will be the last quarter it provides a legacy-company revenue split.

Combined September-quarter revenue was approximately $1.98 billion, including an extra week in Qorvo’s quarter that contributed about $70 million. At the December outlook midpoint, revenue would decline roughly 7% sequentially, or about 3% excluding the extra week.

Skyworks expects smartphone revenue to decline by a low-teens percentage sequentially, reflecting seasonality, Android softness and the prior quarter’s extra week at Qorvo. Diversified Growth Markets revenue is expected to increase by a low-single-digit percentage sequentially despite the extra week, led by data center and defense. The category is expected to represent more than 40% of sales.

The company forecast non-GAAP gross margin of 46% to 48%, non-GAAP operating expenses of $465 million to $505 million, and non-GAAP diluted earnings per share of $1.25 at the revenue midpoint. It expects approximately $50 million of other expense, mainly from a full quarter of interest expense on acquisition financing.

Synergies and Long-Term Targets

Skyworks reiterated its expectation for at least $500 million in annual cost synergies from the Qorvo combination. Roughly two-thirds are expected to come from operating expenses and one-third from cost of goods sold.

Management expects approximately $150 million of operating-expense synergies in fiscal 2027 and an annualized exit run rate of approximately $250 million to $300 million. The majority of earnings benefits are expected in the second half of fiscal 2027. Brace said operating-expense savings should arrive first, while factory consolidation and other manufacturing actions will cause cost-of-goods benefits to build later.

Over the long term, Skyworks is targeting mid- to high-single-digit revenue growth. Within 24 to 36 months of closing the transaction, the company is targeting non-GAAP gross margin of 50% to 55%, non-GAAP operating margin of 30% to 35%, and adjusted EBITDA margin of 35% to 40%.

Chief Financial Officer Philip Carter said the company maintains a bias toward share repurchases while also seeking flexibility to build its cash balance following the acquisition financing. He said Skyworks would remain disciplined on accretive acquisitions that could improve gross margins and diversify its revenue base.

About Skyworks Solutions (NASDAQ:SWKS)

Skyworks Solutions, Inc NASDAQ: SWKS is a semiconductor company that designs and manufactures high-performance analog and mixed-signal products for wireless connectivity applications. Its portfolio includes radio-frequency front-end modules, amplifiers, filters, switches, antenna tuners, and other integrated solutions used to transmit, receive, and manage wireless signals.

The company serves a range of markets, including smartphones and other mobile devices, automotive systems, industrial equipment, home automation, medical devices, aerospace, and defense.

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