U.S. Markets open in 6 hrs 17 mins

5G Drives Xilinx's Double-Digit Growth

Timothy Green, The Motley Fool

Semiconductor provider Xilinx (NASDAQ: XLNX) reported fiscal fourth-quarter results after the market closed on April 24. Revenue surged by nearly 30%, as 5G drove demand for the company's communications products. Xilinx sees 5G as a huge opportunity, much bigger than 4G.

Here's what investors need to know about Xilinx's fourth-quarter results and its guidance for the first quarter of fiscal 2020.

Xilinx results: The raw numbers

Metric

Q4 2019

Q4 2018

Year-Over-Year Change

Revenue

$828.4 million

$638.2 million

29.8%

Non-GAAP earnings per share

$0.94

$0.70

34.3%

Data source: Xilinx. GAAP = generally accepted accounting principles.

What happened with Xilinx this quarter?

  • Core product revenue declined by 4% year over year, accounting for 32% of total revenue. Advanced product revenue grew by 55% year over year, accounting for 68% of total revenue.
  • Broken down by end markets, communications revenue jumped 74% year over year, accounting for 41% of total revenue; data center and test, measurement, and emulation revenue was down 7% year over year, accounting for 18% of total revenue; automotive, broadcast, and consumer revenue was up 20% year over year, accounting for 14% of total revenue; industrial, aerospace, and defense revenue was up 1% year over year, accounting for 27% of total revenue.
  • The Asia Pacific region was Xilinx's largest and fastest-growing geography, with revenue growing by 56% year over year, accounting for 47% of total revenue.
  • North America revenue was up 13% year over year, accounting for 27% of total revenue.
  • Europe revenue was up 12% year over year, accounting for 18% of total revenue.
  • Japan revenue was up 20% year over year, accounting for 8% of total revenue.
  • Alongside the earnings report, Xilinx announced that it had reached an agreement to acquire Solarflare Communications, a privately held provider of high-performance, low-latency networking solutions.
A Xilinx multi-processor system-on-a-chip.

A Xilinx multi-processor system-on-a-chip. Image source: Xilinx.

What management had to say

During the earnings call, Xilinx CEO Victor Peng discussed the 5G opportunity:

5G deployments began earlier than our expectations at the start of FY '19. We were exceptionally well-positioned at this early stage of what's a historic 5G cycle, which we believe will be multiple times larger than 4G ... Our opportunity in 5G is particularly strong because the complexity of the new standard drives the need for significantly more radios that in 4G.

Peng also talked about the company's acquisition of Solarflare:

Combining our industry-leading FPGAs, MPSoC and soon ACAP solutions with Solarflare's high-speed NIC technology and onload application acceleration software will create a powerful converged SmartNIC platform. Solarflare's software and networking expertise is an excellent complement to our silicon, IP and development tools leadership.

Looking ahead

Xilinx provided the following guidance for the first quarter of fiscal 2020:

  • Revenue between $835 million and $865 million, up 24.3% year over year at the midpoint.
  • Gross margin of approximately 66%, both GAAP and non-GAAP.
  • Operating expenses of approximately $315 million on a GAAP basis and $308 million on a non-GAAP basis.
  • Other income of approximately $15 million.
  • A tax rate between 7% and 9%.
  • Using the midpoint of Xilinx's guidance ranges, non-GAAP earnings per share are expected to be approximately $0.96.

Xilinx sees 5G as being "factors larger than 4G over its entirety," according to Peng. Communications is the company's largest segment, so Xilinx is well-positioned to benefit in the long run.

More From The Motley Fool

Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Xilinx. The Motley Fool has a disclosure policy.