Skyworks Solutions' Earnings Exceed Expectations: What Lies Beyond the Headlines

Skyworks Solutions reported strong earnings with guidance above consensus, but the stock price only traded modestly higher. The company's value lies in its contribution to Apple's products, and pinpointing the loss at Apple is crucial to understanding Skyworks' true worth.

Skyworks Solutions (SWKS) delivered robust financial results in the third quarter of fiscal year 2025, with revenue and earnings per share (EPS) exceeding analyst expectations. The company reported GAAP revenue of $965 million, surpassing estimates of $940.85 million, and non-GAAP EPS of $1.33, beating non-GAAP EPS estimates of $1.24. Both metrics showed significant year-over-year growth, with revenue increasing by 6.6% and non-GAAP EPS rising by 9.9% [1].

Skyworks' Broad Markets division, which includes automotive, edge IoT, and data center applications, contributed to the strong performance. The company reported new design wins in edge IoT and automotive, such as 5G telematics and in-car infotainment systems for major automakers like BYD, Ford, Geely, and Nissan. These developments highlight the growing demand in these segments, which now account for approximately 15% of total revenue [1].

Despite the positive results, the company's stock price only traded modestly higher, indicating that investors are cautious about the potential impact of a loss at Apple, Skyworks' largest customer. The new CEO, Philip Gordon Brace, acknowledged the uncertainty surrounding the loss, stating that it is "our best guess based on what it is." He noted that the loss could be in the range of 20% to 25% [2].

Looking ahead, Skyworks has provided non-GAAP guidance for the fourth quarter of fiscal year 2025, with revenue expected to range from $1.00 billion to $1.03 billion and non-GAAP EPS expected to be $1.40 at the midpoint. However, investors should monitor the company's cash balance, which has declined due to share buybacks and dividend payments, reducing its financial cushion in the event of a downturn. Additionally, efforts to expand in automotive, enterprise networking, and new connectivity standards such as Wi-Fi 7 represent ongoing diversification and potential avenues for growth [1].

References:

[1] https://www.aol.com/finance/skyworks-swks-q3-revenue-7-105757759.html

[2] https://seekingalpha.com/article/4816191-pinpointing-skyworks-loss-at-apple-and-more