A month has gone by since the last earnings report for Skyworks Solutions (SWKS Quick QuoteSWKS - Free Report) . Shares have added about 2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Skyworks due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Skyworks Q1 Earnings Meet Estimates, Revenues Down Y/Y

Skyworks Solutions reported non-GAAP earnings of $1.60 per share in first-quarter fiscal 2025, beating the Zacks Consensus Estimate by 1.91% and declining 18.8% year over year.

Revenues of $1.07 billion dipped 11.1% on a year-over-year basis but surpassed the consensus mark by 0.31%.

Mobile revenues contributed nearly 67% to total revenues and increased 6% sequentially. This growth was primarily driven by multiple successful product launches across top mobile customers. The growing adoption of generative AI in smartphones also contributed to increased RF solution complexity.

The growing adoption of Wi-Fi 6e and 7 systems contributed to increased demand for Skyworks’ RF solutions. These systems support enhanced functionality and higher complexity, driving a multi-year upgrade cycle.

Broad Markets saw modest growth, returning to a year-over-year increase of 2%. Positive momentum in demand signals and backlog improvement helped fuel growth, especially in automotive electrification, edge IoT, and AI data centers.

Skyworks was hurt by high inventory levels, uneven demand across segments, and muted global demand in automotive and industrial markets. These factors may put downward pressure on SWKS’s shares.

SWKS Operating Details

Non-GAAP gross margin contracted 20 basis points (bps) on a year-over-year basis to 46.5%.

Research & development expenses, as a percentage of revenues, increased 380 bps year over year to 16.5%.

Selling, general and administrative expenses increased 120 bps to 7.7% in the reported quarter.

Non-GAAP operating margin contracted 380 bps on a year-over-year basis to 26.7% in the reported quarter.

SWKS Balance Sheet & Cash Flow

As of Dec. 27, 2024, cash & cash equivalents and marketable securities were $1.75 billion compared with $1.57 billion as of Sept. 27, 2024.

As of Dec. 27, 2024, the long-term debt remained steady at $994 million, unchanged sequentially.

Cash generated by operating activities was $377.2 million in the quarter under discussion compared with $476 million in the prior quarter.

Free cash flow was $338.2 million, with a 31.7% free cash flow margin.

Skyworks paid dividends worth $112 million in the reported quarter.

SWKS Initiates 2Q25 Guidance

For the second quarter of fiscal 2025, the company expects revenues between $935 million and $965 million.

Non-GAAP diluted shares are expected to be $1.20 per share at the mid-point of the revenue range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Skyworks has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending downward for the stock, and the magnitude of these revisions looks promising. It's no surprise Skyworks has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.