rfmd-20231230

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to _____

Commission File Number 001-36801

Qorvo, Inc.

(Exact name of registrant as specified in its charter)


Delaware		46-5288992
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7628 Thorndike Road
Greensboro,	North Carolina	27409-9421
(Address of principal executive offices)		(Zip Code)

(336) 664-1233

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

QRVO

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of January 25, 2024, there were 96,548,458 shares of the registrant’s common stock outstanding.

Table of Contents

QORVO, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


			Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Operations			5
Condensed Consolidated Statements of Comprehensive (Loss) Income			6
Condensed Consolidated Statements of Stockholders' Equity			7
Condensed Consolidated Statements of Cash Flows			9
Notes to Condensed Consolidated Financial Statements			10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			30
Item 4. Controls and Procedures.			30

PART II — OTHER INFORMATION

Item 1A. Risk Factors.			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			31
Item 5. Other Information.			31
Item 6. Exhibits.			32

SIGNATURES			33

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1.

QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)


	December 30, 2023		April 1, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,071,987	$	808,757
Accounts receivable, net of allowance of $432 and $369 as of December 30, 2023 and April 1, 2023, respectively	483,810		304,519
Inventories	726,687		796,596
Prepaid expenses	39,575		46,684
Other receivables	30,855		26,535
Other current assets	75,454		46,703
Total current assets	2,428,368		2,029,794
Property and equipment, net of accumulated depreciation of $2,017,964 and $1,900,317 as of December 30, 2023 and April 1, 2023, respectively	1,039,439		1,149,806
Goodwill	2,540,461		2,760,813
Intangible assets, net	499,963		537,703
Long-term investments	24,714		20,406
Other non-current assets	166,443		193,381
Total assets	$	6,699,388	$	6,691,903
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	282,954	$	210,701
Accrued liabilities	327,485		222,463
Current portion of long-term debt	479,964		310
Other current liabilities	189,930		122,289
Total current liabilities	1,280,333		555,763
Long-term debt	1,550,438		2,048,073
Other long-term liabilities	230,270		185,273
Total liabilities	3,061,041		2,789,109
Commitments and contingent liabilities (Note 7)
Stockholders’ equity:
Preferred stock, $.0001 par value; 5,000 shares authorized; no shares issued and outstanding	—		—
Common stock and additional paid-in capital, $.0001 par value; 405,000 shares authorized; 96,680 and 98,649 shares issued and outstanding at December 30, 2023 and April 1, 2023, respectively	3,730,577		3,821,474
Accumulated other comprehensive income (loss)	102		(3,175)
(Accumulated deficit) retained earnings	(92,332)		84,495
Total stockholders’ equity	3,638,347		3,902,794
Total liabilities and stockholders’ equity	$	6,699,388	$	6,691,903

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	December 30, 2023		December 31, 2022		December 30, 2023		December 31, 2022
Revenue	$	1,073,861	$	743,281	$	2,828,518	$	2,936,696
Cost of goods sold	685,983		475,230		1,721,880		1,754,468
Gross profit	387,878		268,051		1,106,638		1,182,228

Operating expenses:
Research and development	164,329		149,472		502,366		486,204
Selling, general and administrative	86,914		76,269		296,033		275,836
Other operating expense	178,204		33,581		246,516		48,038
Total operating expenses	429,447		259,322		1,044,915		810,078
Operating (loss) income	(41,569)		8,729		61,723		372,150

Interest expense	(17,581)		(17,066)		(51,963)		(51,222)
Other income, net	15,359		5,562		34,286		2,714
(Loss) income before income taxes	(43,791)		(2,775)		44,046		323,642

Income tax expense	(83,147)		(13,156)		(117,103)		(82,074)
Net (loss) income	$	(126,938)	$	(15,931)	$	(73,057)	$	241,568

Net (loss) income per share:
Basic	$	(1.31)	$	(0.16)	$	(0.75)	$	2.34
Diluted	$	(1.31)	$	(0.16)	$	(0.75)	$	2.33

Weighted-average shares of common stock outstanding:
Basic	97,152		100,943		97,905		103,039
Diluted	97,152		100,943		97,905		103,812

See accompanying Notes to Condensed Consolidated Financial Statements.

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QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	December 30, 2023		December 31, 2022		December 30, 2023		December 31, 2022
Net (loss) income	$	(126,938)	$	(15,931)	$	(73,057)	$	241,568
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, including intra-entity foreign currency transactions that are of a long-term investment nature	13,714		30,403		3,286		(16,623)
Reclassification adjustments, net of tax:
Amortization of pension actuarial (gain) loss	(3)		8		(9)		26
Other comprehensive income (loss)	13,711		30,411		3,277		(16,597)
Total comprehensive (loss) income	$	(113,227)	$	14,480	$	(69,780)	$	224,971

See accompanying Notes to Condensed Consolidated Financial Statements.

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QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)


				Accumulated Other Comprehensive Income (Loss)		(Accumulated Deficit) Retained Earnings
	Common Stock
Three Months Ended	Shares	Amount						Total
Balance, September 30, 2023	97,506	$	3,796,189	$	(13,609)	$	34,606	$	3,817,186
Net loss	—	—		—		(126,938)		(126,938)
Other comprehensive income	—	—		13,711		—		13,711
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	19	(847)		—		—		(847)
Issuance of common stock in connection with employee stock purchase plan	217	15,865		—		—		15,865
Repurchase of common stock, including transaction costs and excise tax	(1,062)	(100,812)		—		—		(100,812)
Stock-based compensation	—	20,182		—		—		20,182
Balance, December 30, 2023	96,680	$	3,730,577	$	102	$	(92,332)	$	3,638,347

Balance, October 1, 2022	102,061	$	3,915,969	$	(41,776)	$	447,947	$	4,322,140
Net loss	—	—		—		(15,931)		(15,931)
Other comprehensive income	—	—		30,411		—		30,411
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	41	(321)		—		—		(321)
Issuance of common stock in connection with employee stock purchase plan	150	11,276		—		—		11,276
Repurchase of common stock, including transaction costs	(2,231)	(85,610)		—		(116,023)		(201,633)
Stock-based compensation	—	18,626		—		—		18,626
Balance, December 31, 2022	100,021	$	3,859,940	$	(11,365)	$	315,993	$	4,164,568

See accompanying Notes to Condensed Consolidated Financial Statements.

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QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)


				Accumulated Other Comprehensive Income (Loss)		(Accumulated Deficit) Retained Earnings
	Common Stock
Nine Months Ended	Shares	Amount						Total
Balance, April 1, 2023	98,649	$	3,821,474	$	(3,175)	$	84,495	$	3,902,794
Net loss	—	—		—		(73,057)		(73,057)
Other comprehensive income	—	—		3,277		—		3,277
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	616	(25,010)		—		—		(25,010)
Issuance of common stock in connection with employee stock purchase plan	479	35,045		—		—		35,045
Repurchase of common stock, including transaction costs and excise tax	(3,064)	(198,208)		—		(103,770)		(301,978)
Stock-based compensation	—	97,276		—		—		97,276
Balance, December 30, 2023	96,680	$	3,730,577	$	102	$	(92,332)	$	3,638,347

Balance, April 2, 2022	106,303	$	4,035,849	$	5,232	$	512,137	$	4,553,218
Net income	—	—		—		241,568		241,568
Other comprehensive loss	—	—		(16,597)		—		(16,597)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	550	(21,502)		—		—		(21,502)
Issuance of common stock in connection with employee stock purchase plan	345	30,169		—		—		30,169
Repurchase of common stock, including transaction costs	(7,177)	(274,020)		—		(437,712)		(711,732)
Stock-based compensation	—	89,444		—		—		89,444
Balance, December 31, 2022	100,021	$	3,859,940	$	(11,365)	$	315,993	$	4,164,568

See accompanying Notes to Condensed Consolidated Financial Statements.

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QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	December 30, 2023		December 31, 2022
Cash flows from operating activities:
Net (loss) income	$	(73,057)	$	241,568
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	146,841		155,132
Intangible assets amortization	92,308		99,476
Deferred income taxes	62,365		(2,557)
Goodwill impairment	221,414		—
Stock-based compensation expense	99,253		86,911
Other, net	24,453		95,459
Changes in operating assets and liabilities:
Accounts receivable, net	(179,315)		201,823
Inventories	66,190		(98,882)
Prepaid expenses and other assets	(10,312)		42,979
Accounts payable and accrued liabilities	183,091		(85,321)
Income taxes payable and receivable	(9,408)		(17,281)
Other liabilities	7,022		58,481
Net cash provided by operating activities	630,845		777,788
Cash flows from investing activities:
Purchase of property and equipment	(94,514)		(124,853)
Proceeds from sales of property and equipment	47,446		581
Other investing activities	23,777		6,914
Net cash used in investing activities	(23,291)		(117,358)
Cash flows from financing activities:
Repurchase of common stock, including transaction costs	(300,043)		(711,732)
Proceeds from the issuance of common stock	26,358		20,828
Tax withholding paid on behalf of employees for restricted stock units	(26,318)		(22,687)
Repurchase of debt	(17,914)		—
Other financing activities	(9,933)		(422)
Net cash used in financing activities	(327,850)		(714,013)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	3,340		(280)
Net increase (decrease) in cash, cash equivalents and restricted cash	283,044		(53,863)
Cash, cash equivalents and restricted cash at the beginning of the period	808,943		972,805
Cash, cash equivalents and restricted cash at the end of the period	$	1,091,987	$	918,942

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	1,071,987	$	918,758
Restricted cash included in "Other current assets" and "Other non-current assets"	20,000		184
Total cash, cash equivalents and restricted cash	$	1,091,987	$	918,942

Supplemental disclosure of cash flow information:
Capital expenditures included in liabilities	$	77,704	$	26,597

See accompanying Notes to Condensed Consolidated Financial Statements.

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QORVO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements of Qorvo, Inc. and Subsidiaries (together, the "Company" or "Qorvo") have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of these financial statements requires management to make estimates and assumptions, which could differ materially from actual results. In addition, certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed, or omitted, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). In the opinion of management, the financial statements include all adjustments (which are of a normal and recurring nature) necessary for the fair presentation of the results of the interim periods presented. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in Qorvo’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023.

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company operates under three segments, High Performance Analog ("HPA"), Connectivity and Sensors Group ("CSG") and Advanced Cellular Group ("ACG").

Certain prior period amounts have been reclassified to conform to the fiscal 2024 presentation.

The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to March 31 of each year. Each fiscal year, the first quarter ends on the Saturday closest to June 30, the second quarter ends on the Saturday closest to September 30 and the third quarter ends on the Saturday closest to December 31. Fiscal years 2024 and 2023 are 52-week years.

2. INVENTORIES

The components of inventories, net of reserves, are as follows (in thousands):


	December 30, 2023		April 1, 2023
Raw materials	$	214,530	$	264,367
Work in process	372,554		345,545
Finished goods	139,603		186,684
Total inventories	$	726,687	$	796,596

3. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill are as follows (in thousands):


	HPA		CSG		ACG		Total
Balance as of April 1, 2023 (1)	$	501,602	$	525,351	$	1,733,860	$	2,760,813
Goodwill impairment	—		(221,414)		—		(221,414)
Effect of changes in foreign currency exchange rates	—		1,062		—		1,062
Balance as of December 30, 2023 (1)	$	501,602	$	304,999	$	1,733,860	$	2,540,461

(1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs totaling $903.4 million and $682.0 million as of December 30, 2023 and April 1, 2023, respectively, which were recognized in fiscal years 2009, 2013, 2014, 2022, 2023 and 2024.

During the second quarter of fiscal 2024, the Company completed an interim test for goodwill impairment as management determined, based on revisions to long-term forecasts, it was more likely than not that the fair value of a reporting unit within the CSG segment was below its carrying amount. The quantitative analysis, which considered the income approach and the market approach to estimate the reporting unit's fair value, resulted in a goodwill impairment charge of approximately $48.0 million. In the third quarter of fiscal 2024, the Company concluded that an impairment triggering event occurred for this same

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QORVO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

reporting unit within the CSG segment as new information was received regarding slower than expected market adoption for one of CSG's new technologies and lower attach rates for a second CSG technology (resulting in further revisions to the long-term forecasts of this reporting unit). The Company concluded that it was more likely than not that the fair value of this reporting unit was below its carrying amount, and a quantitative analysis was performed. The quantitative analysis, which considered the income approach and the market approach to estimate the reporting unit's fair value, resulted in a goodwill impairment charge of approximately $173.4 million. These goodwill impairment charges are recorded in "Other operating expense" in the Condensed Consolidated Statements of Operations.

The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets (in thousands):


	December 30, 2023				April 1, 2023
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Developed technology	$	876,285	$	462,259	$	872,106	$	382,448
Customer relationships	87,040		62,872		104,616		67,485
Technology licenses	54,287		2,128		1,664		513
Trade names	910

SEC Form 10-Q filed by Qorvo Inc.