UPDATED 18:40 EST / FEBRUARY 05 2024

INFRA

NXP barely maintains growth as it beats the Street’s forecasts on earnings and revenue

NXP Semiconductor N.V. posted strong fourth-quarter earnings results today, beating Wall Street’s projections on earnings and revenue.

The beat was enough to send the company’s stock higher in extended trading, with investors remaining bullish on its prospects even as it offered mixed guidance for the current quarter.

The chipmaker reported earnings before certain costs such as stock compensation of $3.71 per share, coming in ahead of the Street’s forecast of just $3.64 per share. Revenue for the period rose just 3% from a year ago, to $3.42 billion, just ahead of the $3.4 billion analyst consensus estimate. All told, the company delivered a net profit of $697 million, down slightly from the $787 million profit it posted one year earlier.

For the full fiscal 2023 year, NXP delivered a net profit of $2.79 billion, while total revenue inched up 1%, to $13.28 billion.

NXP President and Chief Executive Kurt Sievers (pictured) said the company delivered above the midpoint of its own guidance range, closing on a year of “solid results” that reflect its strong execution and consistent gross margin. “We are navigating a soft landing by managing what is in our control, especially limiting over shipment of products to customers,” the CEO said.

Like most chipmakers, NXP sells a wide portfolio of processors to customers in different industries, but it’s best-known for its automotive chips that power everything from in-car infotainment systems to tire pressure monitoring systems and vehicle-to-vehicle communications. Its other businesses include chips for identification, wired and wireless infrastructure, consumer, mobile and computing applications.

The automotive segment remains by far and away the company’s largest, pulling in more than $1.899 billion in revenue during the quarter, up 5% from a year earlier. The Industrial & IoT segment was the strongest performer of the lot, with revenue there growing 9%, to $662 million, followed by the Mobile chips segment, which rose 8%, to $406 million. The company’s Communications, Infrastructure and Other segment was a disappointment, though, with sales declining 19% from a year earlier, to $455 million.

Holger Mueller of Constellation Research Inc. said it is something of a rarity when a chip vendor’s revenue neither grows, nor declines by any significant number. “But that is what has happened at NXP, which has hit something of a plateau with its latest numbers,” the analyst said. “NXP’s automotive segment remained more or less flat, while the communications portfolio dropped 20%, only for those losses to be made up by gains in mobile and industrial IoT. Investors will be looking closely to see which way NXP goes from here — will it be up, or down?”

NXP’s guidance suggests that the latter outcome is more likely, for the company could only muster a somewhat mixed forecast. For the current quarter, NXP is guiding for earnings in a wide range of between $2.97 and $3.38 per share, the midpoint of which is just ahead of the Street’s call for a $3.15 per share profit. In terms of revenue, NXP said it’s looking at a range of between $3.03 billion and $3.23 billion, the midpoint of which falls just short of the analyst consensus of $3.16 billion.

NXP’s stock rose more than 3% on the back of the report in after-hours trading, adding to a gain of just over 2% during the regular session.

Photo: NXP Semiconductor

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