Good afternoon, and welcome to Skyworks Solutions, Inc. First Quarter Fiscal Year 2026 Earnings Call. This call is being recorded. At this time, I will turn the call over to Rajvindra Gill, Vice President of Investor Relations for Skyworks Solutions, Inc. Mr. Gill, please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Skyworks Solutions, Inc.'s first fiscal quarter 2026 conference call. With me today for our prepared remarks is Philip Brace, our Chief Executive Officer and President, and Philip Carter, Senior Vice President and Chief Financial Officer for Skyworks Solutions, Inc. This call is being broadcast over the web and can be accessed from the Investor Relations section of the company's website at skyworksinc.com. In addition, the company's prepared remarks will be made available on our website promptly after their conclusion during the call. 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-Ks, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, today's discussion will include 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 over to Philip Brace.

Thanks, Rajvindra, and welcome, everyone. Before turning to the quarter, I want to briefly address our previously announced combination with Corwell. We believe this transaction is highly strategic and transformative, bringing greater scale, deeper R&D, and a broader technology portfolio. Together, this combination is expected to reduce historical mobile volatility, strengthen our competitive position, enhance our broad market capabilities, and expand our TAM into dispense and aerospace, while creating a clear path to more than $500 million of synergies over time. As highlighted in our investor presentation on October 28, we believe this combination will deliver substantial financial benefits. We expect to achieve healthy gross margin through the cycles, in the 50% to 55% range, supported by significant operating leverage and enhanced earnings power. The combined company will generate robust free cash flow, underpinned by an extremely favorable capital structure with expected net leverage of approximately one at close. These advantages position us to drive long-term value for our shareholders and customers and support continued investment in innovation and growth. Since announcing the transaction on October 28, we've made solid progress. We've completed our initial regulatory filings, a shareholder vote has been scheduled, and our teams have begun integration planning. As is typical for a transaction of this scale, we expect a comprehensive regulatory review, and we are working closely with regulators around the world. We still expect the transaction to close in early calendar year 2027, subject to the receipt of required regulatory approvals, approval of both company shareholders, and the satisfaction of other customary closing conditions. I'd also like to recognize the Qorvo team for the constructive and collaborative approach brought to the integration planning process. We're off to a great start and excited about the opportunity ahead when we come together as one stronger organization. I want…

Thanks, Philip. Skyworks Solutions, Inc. delivered revenue of $1.035 billion, exceeding the high end of our guidance range. During the quarter, our largest customer accounted for approximately 67% of revenue, consistent with the prior quarter. Mobile represented 62% of total revenue and came in higher than our expectations, driven by healthy sell-through at our top customer. Broad markets also outperformed expectations, growing 4% sequentially and 11% year over year, driven by growth across edge IoT, data center and cloud infrastructure, and automotive. Gross profit was $482 million with a gross margin of 46.6%. Operating expenses were $230 million at the low end of our guidance range, reflecting disciplined cost control while continuing to invest in priority growth areas. Operating income was $252 million, translating to an operating margin of 24.3%. Other income was $6 million, and our effective tax rate was 10%, resulting in net income of $232 million and diluted earnings per share of $1.54, $0.14 above the midpoint of our guidance. We generated $396 million of operating cash flow, capital expenditures of $57 million, resulting in free cash flow of $339 million or a 33% free cash flow margin. We ended the quarter with approximately $1.6 billion in cash and investments, and $1 billion in debt, maintaining a strong balance sheet and ample flexibility to support our strategic and financial priorities. Looking ahead to 2026, we expect revenue to range between $875 million to $925 million. We anticipate mobile to decline approximately 20% sequentially, consistent with seasonality. We expect broad markets to be flat sequentially, representing 44% of sales, and up high single digits year over year. Gross margin is projected to be approximately 44.5% to 45.5%, reflecting seasonally lower volume. We expect operating expenses to be between $230 million and $240 million as we continue to fund key R&D initiatives while maintaining tight control over discretionary spending. Below the line, we anticipate approximately $4 million in other income, an effective tax rate of 10%, and a diluted share count of 151 million shares. At the midpoint of our revenue outlook of $900 million, this equates to expected diluted earnings per share of $1.40. With that, I'll turn it back over to Philip Brace for closing remarks.

Thank you, Philip. Before we wrap up, a heartfelt thank you to our employees, customers, and partners. Your dedication fuels our success and sets the stage for continued leadership and growth. Operator, let's open the line for questions.

Thank you. If your question has been answered and you'd like to remove yourself from the queue, please press 11 again. Given time constraints, please limit yourselves to one question and one follow-up. Our first question comes from Harsh Kumar with Piper Sandler. Your line is open.

Yeah. Hey. First of all, congratulations, guys. We know this is a tough environment, but you guys are doing really well in mobile, specifically. Phil, I had a question for you. You mentioned things. You said you won't take specific questions on the deal, but you mentioned you will see increased scale, deeper R&D capability, broader technology suite, etcetera. Was wondering if you could hit upon what maybe specifically are color-wise what you expect to see out of this deal on these kinds of fronts.

Yeah. You know what I'm really excited about? Thanks for the question. You know, look. What's always impressed me is the complementary nature of our portfolios. In fact, it's pretty clear. I mean, Qorvo does a lot of the intensified of the house, which we don't really have at all. So I'm really excited about bringing those complementary technologies together. Particularly in the RF side, it should result in reduced volatility. It should increase our scale on the RF side, giving us the opportunity to innovate across the RF chain. Brings us lots of engineers that we think are highly valuable. And I just think there's just the future is super bright in how we do that. And then we bring the, you know, the combination together brings a fantastic, you know, broad market synthesis as well. So, you know, super, super bullish about that, and I hope that answered your question.

No. It does. Thank you for the color. And then as my follow-up, if I can ask you, you know, you will have a pretty broad set of auto products to address your largest customer need. I think that's the biggest customer around that you want to be playing with and, you know, you'll have kind of a pretty broad portfolio. So the question was, how do you see the combined company having the right kind of portfolio? What will you be focused on within that portfolio to address your customers' needs?

You know, look, I think that we bring a tremendous scale all the way from a lot of the antenna areas all the way back to the pads and a number of different critical RF technologies. And when we see the RF complexity evolving as AI workloads look more to the edge, there's more transmit capability coming down the pipe. From what we can see, having the broadest RF portfolio in the industry is going to be a really powerful opportunity for us. And then also, I think, keep in mind, it gives us an opportunity to innovate in a variety of other areas too. We talk about Wi-Fi, or some of the other areas as well. The world is connected wirelessly. There are billions of devices connected wirelessly, and I think it continues to give us a platform to invest in that for the future going forward.

Thank you. Our next question comes from Karl Ackerman with BNP Paribas. Your line is open.

Yes. Thank you, gentlemen. Two, if I may. Your guide implies broad markets will grow on a year-over-year basis for, I think, at least six consecutive quarters. I think you said you eight on a sequential basis. Could you discuss you spoke a little bit about some of the design wins particularly around Wi-Fi driving demand for edge. But could you also address where you're seeing the most strength of broad markets in March? And then which areas of this business do you see that you have the most confidence in that can drive growth? Your long-term growth over the next two or three years? I have a follow-up, please.

Yeah. Thanks. I mean, look, you're at this mark, sir. Eighth consecutive quarter of sequential growth with double-digit year-over-year revenue expansion. So we feel really good about that. When I look at kind of underneath the covers, what you asked for, I would I guess, I would point to three major areas. Right? The first would be Wi-Fi. Right? Wi-Fi 7 adoption continues to be very strong. And there are some reasons for that. The increased bandwidth, the increased security, as really as AI moves continues to move out there to the edge, we see Wi-Fi continuing to be a major platform for that. And, you know, demand there remains robust. And, certainly, see a long, you know, push of innovation that leads out to Wi-Fi 8 and beyond. So I'm particularly excited about that one. You know, on the automotive stuff, for us, that's also been an area where we've seen good growth. And there's a lot of headlines in the news about auto markets, but we actually tend to be kind of in the sweet spot of the growth area because we're talking about vehicle-to-vehicle connectivity. We're talking about infotainment. And power isolation products, which are really kind of independent of the kind of combustion engine you use. And we've seen pretty broad-based wins across the board globally on that. So that seems to be some tailwind for us. And then finally, on the power and timing, which is really related to the data center side, I mean, we're seeing tremendous uptick in our activity, design wins, particularly as we have a really strong lead in what we call jitter attenuating clocks. Which are really important as the frequencies continue to go up to 800 gig or 1.6 terabytes. And then some of our power isolation products which really have to do with as the servers move to higher and higher voltage, you need to isolate the power that's coming in from the low voltage power of the actual silicon devices. So, I mean, I would characterize Wi-Fi, automotive, and then data center with power and timing as kind of being three tailwind things we have in our broad markets we're excited about.

Got it. Thank you for that, Phil. You know, during the prepared comments, you spoke about how you're seeing strengthening position, your 5G position in premium Android handsets, including the upcoming Galaxy S26 launch. At the same time, you spoke about how your overall content should be stable, if not maybe a little bit better than that, going forward. Having said that as kind of a backdrop, I guess, should we expect that, you know, fiscal 2025 should be the trough in content at your largest customer? And I guess more broadly, could you describe your positioning at your largest customer and whether AgenTik AI could drive higher RF content gains in its devices than in prior seller technology upgrade cycles as well? Thank you.

Yes. Thanks. Good question. Look, I think what I would say, look, we compete for business every single year at our large customer. I don't expect that to change. I'm pleased we defended our major sockets at all the mobile platforms. So I'm pleased we did that. I'm not satisfied that we did because I have the we have the opportunity to do even better than that. But I'm pleased we defended the sockets, and I think you know, I think some of our prepared remarks and from our largest customer suggest there's a strong tailwind with both upgrade cycles, AI demand pushing things to the edge. And we continue to see very strong demand cycles, not just on the mobile side, but pretty much broad-based right now as well. We're keeping a close eye on it just some of the commentary around component prices and things. But right now, we continue to see a very strong tailwind of unit demand.

Thank you. Our next question comes from Edward Snyder with Charter Equity Research. Your line is open.

Great. Thank you. A little confused, guys. Ed, we're having some difficulty hearing you.

Sorry. Is that any better? Yeah. Guys. Yeah. So I'm a little confused. You mentioned that you defended your stock stock. You've got some good content gains, but you think they may offset by mix. And given what we know about basically, the mix here, I would've thought you'd have a little bit more of a tailwind in the second half of this year just from the sheer fact that you know, you've gained back some content and the mix of modems at least is favoring you over what you did last year. I thought two to I thought last year would be your trough. But and I know since CES, there's been a lot of you know, a lot of discussion about, oh, the worst is yet to come, etcetera. So maybe you can help clarify why do you think MiX is gonna offset your content gains?

Think, Ed, thanks for the question. I think that we've to be careful. It's difficult for us to really comment on specific models and launch timings and things like that. But I think that you know, suffice to say, some of the content varies between particular models, and it's really hard for us to predict what ones are gonna sell, when they're gonna launch, and how they're gonna do. So I think our best guess right now is our blended content should be flat. We defended our key sockets. We gained back some more architecture changes, and we think net overall could be flat. We do expect some tailwind with respect to some of the demand we're seeing. Right? I mean, it's very strong demand across the board. I'm happy that we did that. I'm not satisfied that we did. But I'm happy we did that, and we've got some more opportunities ahead. So hopefully, that we try our best to kinda answer that. That's kinda why we're projecting a blended flat. At this point.

Okay. And then if I could just ask, do you have a socket in Japan? I know you're underutilized in a couple of your factories. Specifically with the filter factory in Osaka. Is that gonna improve in the second half of the year substantially, or should we expect you know, kinda status quo maybe a little bit better?

Yeah. Look. I think right now, it really depends on the technology base. We're not gonna talk about specific loading of specific factories. I would say that in general, in the products that are being utilized, we are definitely we are at capacity. Right? We are definitely hand to mouth from that. We are we're scrambling to meet the REIT demands. And right now, our demand exceeds our supply. And so we're continuing to work that. There are pockets of areas where, you know, we talked about example, a specific facility, and that really has to do with more technology changes than anything like that. So know, I think that our gross margin guide, if you're kinda going there, that really reflects what we have best knowledge today of balancing mix, costs, prices, and things where we wanna go. Right? It's something we keep a close eye on, and we're gonna continue to work that going forward.

Thank you. Our next question comes from Timothy Arcuri with UBS. Your line is open.

Thanks a lot. I think you have about a $1 billion left on your repo authorization. The stock has obviously come in. I think, you know, you sound super confident on these synergies and the deal, you know, closure being on track. So can you buy back stock? I think you can repo stock with Qorvo management approval. Was that right? Can you kind of talk about that?

Hey, Tim. Yeah. This is Philip Carter here. Yeah. So our free cash flow this quarter was $339 million, 33% margin, sitting with $1.6 billion in cash. A billion dollars in debt, we do have ample opportunity and cash to buy the stock. During the pendency period, there are some requirements but we are you know, we're constantly looking on how we can deploy our cash. We did announce the press release that we are paying a 71¢ dividend to our shareholders. But we are constantly looking at the optionality. We do have to go to the debt markets the next twelve months or so anticipation of closing this deal. So we do want to maintain some level of financial prudence as well.

Okay. Thanks, Phil. And then there was a huge amount of focus on the earnings call for your biggest customer around, you know, memory pricing and, you know, for their margins. So it seems like maybe it's a risk that they push back on you on pricing. So you talk about that as a risk? You said content's flat, but is your price locked in with them? Because I would think that they are gonna try to you know, take everything out of all their suppliers that they can given these, you know, memory cost headwinds. Thanks.

Yeah. No. I think the I mean, first off, you know, when we talk about some of those wild swings in we've heard about the market, there's simply no way for any company like Skyworks Solutions, Inc. to be able to dampen that kind of volatility out there. So the short answer is no. There's always competitive pricing dynamics at our largest customer. You know? Having said that, as I mentioned, we are hand to mouth. We are scrambling for every part we can build at this point. And so, you know, we're not seeing any pressure associated with that. And, you know, I wouldn't really expect to either. Now could that change going forward? Maybe, but we're not seeing it right now.

Thank you. Our next question comes from Peter Peng with JPMorgan. Your line is open.

Hey, guys. Thanks for taking my question. Just in terms of your the overall unit assumptions I should be thinking, think you talked about a pretty strong upgrade cycle going. At the same time, I think there's a lot of concerns about memory, and you guys historically have talked about low single-digit unit growth. Is that still the base case to assume for this year or because of some of the memory constraints that, you know, this could be more of a flat market? Maybe just you know, you can share some color on what you're seeing.

Well, look. I think that we're only really guiding one quarter out. But I would say, I think, consistent with what has been said publicly on prior calls, I mean, we are seeing very strong unit demand. And we're certainly seeing that. That's reflected in our numbers certainly about seasonality. And we're seeing very strong demand. So I'll leave it at that. I don't think we want to project demand going forward because we really don't know. We just take the input from the customers and go look at it there. So but we do expect to see stronger unit demand than perhaps you've seen publicly talked about before.

Got it. Thank you. That's very helpful. And then just on in terms of seasonality, given the, you know, potential, you know, different set of launches, and you guys have historically had a bigger footprint in certain screens. How do we think about seasonalities, you know, through, like, in the year? Is it we kinda just model based on historical seasonality or because of some of the different launch timing that, you know, we might just skew the seasonality a little bit.

Yeah. Obviously, we can't really talk about launch timing of our customers and what to do. I know there's been a lot of industry chatter on that, and that's not really something we are prepared to talk about nor, frankly, do we really know. Honest. It's not something they don't review their none of our customers review their particular plans with us. But I would say that, you know, as we look in the out quarters, I mean, I don't think we're kind of what I would characterize it as fairly normal. We're not seeing anything abnormal with respect to that. So I would just you know, nothing abnormal, just strong demand, and I wouldn't say there's anything not seeing anything unusual respect to that.

Thank you. Our next question comes from James Schneider with Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking my question. Following on the prior comment, realizing you can't comment on your customers' product launch plans. But in principle, would what impact would seasonally more muted business cycle or product launch cycle have on the company operational, either in terms of production, factory loadings, overall gross margins or otherwise?

Well, gee, I you know, let me and look. Overall, I think obviously, being our large customer, right, any sort of swings in demand are impactful for us in terms of how we manage that. You know, right now, we are very constrained across the board. We're fighting hand to mouth for product and we continue to do that. I think we've done an effective job operationally managing that. I mean, having some peaks and valleys with respect to demands is not unusual for that customer as they ramp up and down through the cycles. And so you know, right now, I think that we tend to be in a situation where the demand is just very strong, and we've seen these situations before, and we're doing our best to manage them. And should signals change, then we'll deal with that accordingly. I mean, I'm not sure I can give you a better answer than that.

That's fair enough. Thank you. And then maybe just as a quick follow-up. You talked about the sort of recovery in broad markets, I think is kind of consistent with what your peers have reported. Can you maybe talk about any sort of idiosyncratic product areas that you took as a drive sort of outsized market growth relative to the market for you this year?

Thank you. Yeah. I think I kinda mentioned them before. I mean, I know. Some of the areas that I'm excited about. I mean, we talked about Wi-Fi being a big driver there. We talked about being in the auto segment growing faster. The data center spiced with power and our timing products continues to be a good one. You know, longer term, you know, it doesn't that's not yet big enough to talk about, but I'm excited about what we're doing in satellite comms too. I mean, I just think we've got exposure in a number of areas. I mean, I just I try and remind everybody that I talk to. The world is connected wirelessly. We're in a very good spot for that, and some of our products that play in the data center, including timing and power, are also seeing a bit of tailwind. So, you know, I think we've got a lot of great stuff going on, and our broad markets continue to grow and continue to perform at a better and corporate average. I think that'll help that'll help us continue to get outsized earnings out in the future.

Thank you. Our next question comes from Gary Mobley with Loop Capital. Your line is open.

Hey, guys. Thanks for getting me in. I had just one question. In early December, you filed form S-4 in which you gave a revenue forecast specific to Skyworks Solutions, Inc.'s business out through 2030. And I believe that predates your down selection with your largest customer. Next-generation launch. So you know, given what you know today, on sort of your content in the upcoming launch, you still stand behind those revenue forecasts outlined in the S-4 filing? For 2026 and 2027.

Yeah. For the question. It's obviously difficult for me to, for a lot of reasons, can't specifically comment on specific filings moving back then. I just would say that I continue to be incredibly bullish about that combination going forward. I continue to believe in the strategic and financial benefits for that. We are committed to closing the transaction. Frankly, I can't wait to get it closed.

Alright. Thank you.

Thank you. Our next question comes from Christopher Rolland with Susquehanna. Hi, thank you for the question. This is Yasha on Christopher Rolland. And I had a question on gross margins. So maybe just looking forward a couple of quarters, are there any gross margin puts and takes we should consider just given the memory dynamics that was expressed by our largest customer? Any trends in mix, pricing, any additional color there would be helpful.

Yeah. So this is Carter. We don't give any guidance beyond one quarter. As we look to the next quarter guidance, we did guide margin down 160 basis points, and that's mostly due to typical seasonality, in mobile and lower volume in March. As well as a slightly higher mix of Android. We also have had three quarters in a row of exceeding the high end of our guidance range. And as a result, you know, you can imagine you're getting a little bit more input costs on expedite fees and things like that to meet our on-time delivery targets with our customers. But, yeah, other than that, I would say, you know, we're not seeing anything abnormal from typical seasonality.

Thank you. And then for Android, I believe last call, you provided a color. It was a little less than $100 million. So any update to that revenue and how should we think about seasonality here through the year?

Say for the current quarter, as we look at Android, it's down quarter to quarter. We are anticipating an increase from the current quarter Q1 into Q2. And so, yeah, as we look at that, it'll be actually double-digit growth from Q1 to Q2. But we do anticipate that to moderate as we go throughout the year, so we're not seeing huge Android growth throughout the year as we're very selective on the devices that we choose. Plan.

Thank you. And our last question comes from Liam Pharr of BofA. Your line is open.

Hi, guys. Thank you so much for taking my question. Really appreciate it. I just wanted to have a quick clarification. When you said that your content gains at your largest customer offset by mix, do you mean that you know, that offset is from the 17 becoming a greater part of the overall mix or by expected shifts between models of the same generation?

It's really did said it could be potentially moderate by mix because we don't really know. I mean, the issue is that we don't really know, and I don't even think the customer knows how the models are gonna sell, and that won't be clear for some time. And so I think that we're trying to give guidance one quarter at a time. We defended our key sockets. We made progress where we could. We're just making the best prediction of what we think we can, and we'll give guidance along the way as we go there. We think our content should be stable on a blended basis, and how it actually gets quarter to quarter is really gonna depend on how the models do, and we'll just continue to keep an eye on that as we go forward.

Makes sense. Thank you. And then shifting to broad markets, I was wondering if you could touch on just in terms of data center progress. Is it still, you know, any any you know, is it growing faster or slower than the overall, you know, segment average? And in Wi-Fi, maybe, you know, I don't want you to touch talk too much about the deal, but in terms of how complementary those portfolios are and whether there's any for competition, you know, naturally between your two portfolios as you combine them?

Yeah. On the data center side, you know, one of the yes. The short answer is yes. That is growing faster than our overall broad markets. And let me give you an example of some of the power isolation products we have to put in context. Power isolation products, what they do is they provide they basically isolate the very high voltage from the actual lower voltage microcontroller. Controllers and GPUs and things. And so as you all the trends of the respect to having higher and higher voltage on the data center side, you need to have very specialty products that basically isolate those powers. Because you can imagine if you put four or 800 volt DC, a GPU, that's probably not gonna last very long. And so all of those products so we're getting lots of demand in that space. And then the timing products really around one point about 800 gig and 1.6 terabit with their low jitter jitter attenuating clocks are doing really well as well. So right now, right, those are going definitely faster than corporate average. The margins are better than the corporate average. We just wish there'd be a lot bigger. So we're continuing to work that and invest in those. Those are continuing to be core investment areas for us. You know, with respect to Wi-Fi, you asked about the combination. Right? I think that both of the products, you know, have their unique positions to do that. We'll evaluate that going forward in terms of what we wanna do. What we told the customers is, you know, we're continuing to, you know, keep our commitments to them going forward in time, and we're gonna make the best decisions on how we do that going forward.

Thanks very much.

Thank you. Ladies and gentlemen, that concludes today's question and answer session. I'll now turn the call back over to Mr. Brace for any closing comments.

Great. Thank you very much for joining the call today, and I look forward to seeing you in person at some of the upcoming conferences. Thanks again.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.