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Non-GAAP earnings of 63 cents per share beat the consensus mark by a couple of cents, and also increased 14.5% sequentially as well as 16.7% year over year. Earnings came within the guided range of 58-64 cents per share.
Non-GAAP revenues of $173.6 million increased 6.3% sequentially and 15.5% from the prior-year quarter. The increase was driven by growth in the IoT, data center and mobile markets. Revenues were within the guided range of $168-$178 million.
Following the third-quarter earnings release, its share price rose 4.9%. Also, shares of Semtech have gained 41.2% on a year-to-date basis against the industry’s decline of 12.1%.
The company’s improved profitability was driven by differentiated growth drivers and diversification strategy. Key growth drivers for Semtech are product differentiation, operational flexibility, along with a specific focus on fast-growing segments and regions.
Let’s delve into the numbers in detail:
Revenues by End Market
Sales to the enterprise computing end market, which represented 30% of its total revenues, were up on a sequential basis.
Also, sales to the high-end consumer market represented 29% of the total revenues, increasing sequentially. Roughly 20% of high-end consumer revenues were attributable to mobile devices and 9% to other consumer systems.
The industrial and communications end markets recorded strong demand, and both increased sequentially, representing 30% and 11% of the total revenues, respectively.
Revenues by Product Group
Signal Integrity Product Group revenues contributed 40% to total sales and increased 2% sequentially. Continued strength in data center demand, PON, base station and video markets contributed to the growth.
Protection Product Group represented 28% of the total revenues and was up 13% sequentially. This was due to increasing use of protection for 10-gig Ethernet ports in enterprise cloud switches, and wireless access points and base stations.
Wireless and Sensing Product Group, which contributed 30% to the total revenues, was up 6% sequentially.
Bookings
Bookings, which accounted for roughly 37% of the shipments, decreased on a sequential basis during the quarter. The book-to-bill ratio was below 1.
Margins and Net Income
Non-GAAP gross margin was 61.7%, up 20 basis points (bps) sequentially and 200 bps from the year-ago quarter.
Semtech’s adjusted operating expenses of $54.3 million increased 2.2% on a year-over-year basis. As a percentage of sales, selling, general and administrative, as well as product development and engineering expenses decreased.
As a result, its operating margin of 30.4% was up 150 bps sequentially and 610 bps year over year.
Balance Sheet & Cash Flow
Semtech ended the quarter with cash and cash equivalents of $312.2 million, up from $311.3 million in the fiscal second quarter. Accounts receivables were $83.8 million, up from $78.4 million in the fiscal second quarter. Long-term debt was $197.4 million, down from $202 million in the fiscal second quarter.
During the quarter, cash flow from operations was $136.4 million, capital expenditure amounted to $3.1 million and free cash flow totaled $48.9 million.
Guidance
For fiscal fourth-quarter 2019, management expects revenues on a non-GAAP basis in the range of $155-$165 million. The Zacks Consensus Estimate for the same is pegged at $165.3 million.
Non-GAAP gross profit margin is expected within 61.5-62.5%. Management projects SG&A expenses within $26.5-$27.5 million, and research and development expenses in the range of $24.5-$25.5 million. Non-GAAP earnings per share are expected in the range of 53-57 cents. The corresponding Zacks Consensus Estimate is pegged at 55 cents.
Semtech Corporation Price, Consensus and EPS Surprise
Long-term earnings growth rate for AMETEK, QuinStreet and Stamps.com is currently pegged at 11.18%, 25% and 15%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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Semtech (SMTC) Q3 Earnings Beat Estimates, Revenues Up Y/Y
Semtech Corporation (SMTC - Free Report) reported strong fiscal third-quarter 2019 results, wherein earnings and revenues beat the Zacks Consensus Estimate.
Non-GAAP earnings of 63 cents per share beat the consensus mark by a couple of cents, and also increased 14.5% sequentially as well as 16.7% year over year. Earnings came within the guided range of 58-64 cents per share.
Non-GAAP revenues of $173.6 million increased 6.3% sequentially and 15.5% from the prior-year quarter. The increase was driven by growth in the IoT, data center and mobile markets. Revenues were within the guided range of $168-$178 million.
Following the third-quarter earnings release, its share price rose 4.9%. Also, shares of Semtech have gained 41.2% on a year-to-date basis against the industry’s decline of 12.1%.
The company’s improved profitability was driven by differentiated growth drivers and diversification strategy. Key growth drivers for Semtech are product differentiation, operational flexibility, along with a specific focus on fast-growing segments and regions.
Let’s delve into the numbers in detail:
Revenues by End Market
Sales to the enterprise computing end market, which represented 30% of its total revenues, were up on a sequential basis.
Also, sales to the high-end consumer market represented 29% of the total revenues, increasing sequentially. Roughly 20% of high-end consumer revenues were attributable to mobile devices and 9% to other consumer systems.
The industrial and communications end markets recorded strong demand, and both increased sequentially, representing 30% and 11% of the total revenues, respectively.
Revenues by Product Group
Signal Integrity Product Group revenues contributed 40% to total sales and increased 2% sequentially. Continued strength in data center demand, PON, base station and video markets contributed to the growth.
Protection Product Group represented 28% of the total revenues and was up 13% sequentially. This was due to increasing use of protection for 10-gig Ethernet ports in enterprise cloud switches, and wireless access points and base stations.
Wireless and Sensing Product Group, which contributed 30% to the total revenues, was up 6% sequentially.
Bookings
Bookings, which accounted for roughly 37% of the shipments, decreased on a sequential basis during the quarter. The book-to-bill ratio was below 1.
Margins and Net Income
Non-GAAP gross margin was 61.7%, up 20 basis points (bps) sequentially and 200 bps from the year-ago quarter.
Semtech’s adjusted operating expenses of $54.3 million increased 2.2% on a year-over-year basis. As a percentage of sales, selling, general and administrative, as well as product development and engineering expenses decreased.
As a result, its operating margin of 30.4% was up 150 bps sequentially and 610 bps year over year.
Balance Sheet & Cash Flow
Semtech ended the quarter with cash and cash equivalents of $312.2 million, up from $311.3 million in the fiscal second quarter. Accounts receivables were $83.8 million, up from $78.4 million in the fiscal second quarter. Long-term debt was $197.4 million, down from $202 million in the fiscal second quarter.
During the quarter, cash flow from operations was $136.4 million, capital expenditure amounted to $3.1 million and free cash flow totaled $48.9 million.
Guidance
For fiscal fourth-quarter 2019, management expects revenues on a non-GAAP basis in the range of $155-$165 million. The Zacks Consensus Estimate for the same is pegged at $165.3 million.
Non-GAAP gross profit margin is expected within 61.5-62.5%. Management projects SG&A expenses within $26.5-$27.5 million, and research and development expenses in the range of $24.5-$25.5 million. Non-GAAP earnings per share are expected in the range of 53-57 cents. The corresponding Zacks Consensus Estimate is pegged at 55 cents.
Semtech Corporation Price, Consensus and EPS Surprise
Semtech Corporation Price, Consensus and EPS Surprise | Semtech Corporation Quote
Zacks Rank and Stocks to Consider
Semtech currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include AMETEK, Inc. (AME - Free Report) , QuinStreet, Inc. (QNST - Free Report) and Stamps.com Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for AMETEK, QuinStreet and Stamps.com is currently pegged at 11.18%, 25% and 15%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>