NXP Semiconductors N.V. reported financial results for the second quarter ended July 2, 2017, including: Revenue of $2.202 billion; GAAP Gross margin of 49.2%; and GAAP Operating margin of 2.3%.
“NXP delivered good seasonal results for the second quarter of 2017, with revenue of $2.20 billion, a decline of 7 percent year on year, and flat versus the prior quarter, with both the annual and quarterly period comparisons impacted by the successful divestment of our Standard Products business in early February. HPMS segment revenue was $2.1 billion, an increase of 4 percent year on year and an increase of 4 percent sequentially,” said Richard Clemmer, NXP Chief Executive Officer.
“Within the Automotive group, our second quarter revenue was again a historical record at $938 million, up 9 percent year on year due to strong demand across the product portfolio. We continue to experience exceptional traction with the combination of our automotive microcontroller and advanced analog products, as automotive OEMs increasingly realize the benefit of designing-in our complete system solutions.
“Within the Secure Connected Devices group, our second quarter revenue was $588 million, up 14 percent year on year as all major product lines contributed to a solid quarter, especially demand for our i.MX application processor products.
“In the Secure Interface and Infrastructure group, our second quarter revenue was $438 million, down 1 percent year on year, with exceptionally strong growth in our Interface group, offset by year-on-year declines within both our RF Power and Digital Networking groups.
“Lastly, in our Secure Identification Solutions group, our second quarter revenue was $134 million, down 33 percent versus the same period a year ago, due to a combination of lower overall market demand and aggressive ASP compression, primarily in the global bankcard market,” said Clemmer.
“In summary, our second quarter results are another solid proof point of the successful integration of Freescale and NXP. We continue to see strong adoption of our products across our portfolio, which is an encouraging trend of long-term growth for NXP,” said Clemmer.
“Our second quarter results reflect another quarter of strong execution, as we continue to demonstrate strong margin expansion due to our synergy capture efforts. In the second quarter, our GAAP operating margin was 2.3 percent, a 340-basis point improvement from the second quarter of 2016.” Observed said Dan Durn, NXP Chief Financial Officer.
“On a sequential basis, our GAAP operating margin declined 73.6 percentage points, with the decline due to the one-time benefit associated with the divestment of our Standard Products business in the first quarter of 2017, which was included in our GAAP results in the quarter. Our non-GAAP operating margin was 28.4 percent, representing a 280-basis point improvement compared to the second quarter of 2016 and a 130-basis point improvement sequentially.
“In total, since the first quarter of 2016, the first full quarter after the merger of NXP and Freescale, we have expanded non-GAAP operating margin 510 basis-points, and we continue to drive non-GAAP operating margin improvement far in-excess of the original targets we communicated in past periods. And finally, due to significantly lower gross debt and solid cash generation, our overall financial leverage was reduced to 1.3x,” said Durn.