Qorvo (QRVO)

Communications chips maker Qorvo (NASDAQ: QRVO) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 1.1% year on year to $1.06 billion. On top of that, next quarter’s revenue guidance ($985 billion at the midpoint) was surprisingly good and 99,309% above what analysts were expecting. Its non-GAAP profit of $2.22 per share was 5.1% above analysts’ consensus estimates.

Company Overview

Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.

Qorvo’s peers and competitors include Broadcom (NASDAQ:AVGO), Cirrus Logic (NASDAQ:CRUS), MACOM Technology (NASDAQ:MTSI), Qorvo (NASDAQ:QRVO), Qualcomm (NASDAQ:QCOM), Skyworks (NASDAQ:SWKS) and Texas Instruments (NASDAQ:TXN).

Chips need to keep getting smaller in order to advance on Moore’s law, and that is proving increasingly more complicated and expensive to achieve with time. That has caused most digital chip makers to become “fabless” designers, rather than manufacturers, instead relying on contracted foundries like TSMC to manufacture their designs. This has benefitted the digital chip makers’ free cash flow margins, as exiting the manufacturing business has removed large cash expenses from their business models. Read More. The semiconductor industry is broadly divided into analog and digital semiconductors. Digital chips are what most people think of as the brains of almost every electronic device. Their primary purpose is to either store (memory chips) or process (CPUs/GPUs) data. Digital chips derive their processing power from the number of transistors that can be packed on an individual chip. In chip design, nanometers or “nm” refers to the length of a transistor gate – the smaller the gate the more processing power that can be packed into a given space. In 1965, Intel’s founder Gordon Moore famously predicted a doubling of transistors on a chip every two years. The concept, known as Moore’s Law, was based on his belief that the technology used to create semiconductors would improve continuously, allowing chips to become ever smaller and ever more powerful.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Qorvo struggled to consistently increase demand as its $3.66 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and suggests it’s a low quality business. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Qorvo’s annualized revenue growth of 8.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Qorvo reported modest year-on-year revenue growth of 1.1% but beat Wall Street’s estimates by 1.9%. Adding to the positive news, Qorvo’s growth inflected positively this quarter, news that will likely give some shareholders hope. Company management is currently guiding for a 107,396% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 4.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Qorvo’s DIO came in at 98, which is 20 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.

Gross profit margin is a key metric to track because it shows how much money a semiconductor company gets to keep after paying for its raw materials, manufacturing, and other input costs.

Qorvo’s gross margin is well below other semiconductor companies, indicating a lack of pricing power and a competitive market. As you can see below, it averaged a 41.6% gross margin over the last two years. That means Qorvo paid its suppliers a lot of money ($58.41 for every $100 in revenue) to run its business.

Qorvo produced a 47% gross profit margin in Q3, marking a 4.2 percentage point increase from 42.7% in the same quarter last year. Qorvo’s full-year margin has also been trending up over the past 12 months, increasing by 4.8 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Qorvo was profitable over the last two years but held back by its large cost base. Its average operating margin of 3.6% was weak for a semiconductor business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Qorvo’s operating margin decreased by 20.3 percentage points over the last five years. Qorvo’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q3, Qorvo generated an operating margin profit margin of 14.9%, up 14 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Qorvo, its EPS declined by 3.5% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

We can take a deeper look into Qorvo’s earnings to better understand the drivers of its performance. As we mentioned earlier, Qorvo’s operating margin expanded this quarter but declined by 20.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Qorvo reported adjusted EPS of $2.22, up from $1.88 in the same quarter last year. This print beat analysts’ estimates by 5.1%. Over the next 12 months, Wall Street expects Qorvo’s full-year EPS of $6.17 to grow 6.8%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Qorvo has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 17.2% over the last two years, slightly better than the broader semiconductor sector.

Taking a step back, we can see that Qorvo’s margin dropped by 11.1 percentage points over the last five years. Continued declines could signal it is in the middle of an investment cycle.

Qorvo’s free cash flow clocked in at $42.2 million in Q3, equivalent to a 4% margin. The company’s cash profitability regressed as it was 5.1 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Qorvo historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 7.8%, somewhat low compared to the best semiconductor companies that consistently pump out 35%+.

Qorvo reported $1.10 billion of cash and $2.35 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $850.5 million of EBITDA over the last 12 months, we view Qorvo’s 1.5× net-debt-to-EBITDA ratio as safe. We also see its $44.11 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by Qorvo’s strong improvement in inventory levels. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. On the other hand, next quarter's EPS guidance missed. Zooming out, we think this was a mixed print. The stock remained flat at $94 immediately following the results.

Updated: December 4, 2025 at 9:16 PM EST

Before deciding whether to buy Qorvo or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

We see the value of companies furthering technological innovation, but in the case of Qorvo, we’re out. To kick things off, its revenue growth was uninspiring over the last five years. On top of that, Qorvo’s declining operating margin shows the business has become less efficient, and its cash profitability fell over the last five years.

Qorvo’s P/E ratio based on the next 12 months is 13.8x. This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $101.78 on the company (compared to the current share price of $88.84).