Globalfoundries Inc. ((GFS)) has held its Q3 earnings call. Read on for the main highlights of the call.
Meet Your ETF AI Analyst
- Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions
- Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow.
Globalfoundries Inc. recently held its earnings call, showcasing a robust performance in several key growth areas. The sentiment was largely positive, with notable achievements in silicon photonics and automotive sectors. However, the company faced challenges with declines in smart mobile devices and IoT revenue, alongside a sequential dip in automotive revenue.
Strong Financial Performance
Globalfoundries Inc. delivered a strong third quarter, with revenue, gross margin, operating margin, and earnings per share all hitting the high end of guidance ranges. The company reported a year-over-year gross margin expansion of 130 basis points, highlighting its solid financial standing.
Silicon Photonics Growth
The company is making significant strides in silicon photonics, on track to achieve over $200 million in revenue by 2025, nearly doubling year-over-year. This growth is supported by three new optical networking design wins, projected to bring in over $150 million in lifetime revenue.
Automotive Market Expansion
Globalfoundries’ automotive sector showed a 20% year-over-year revenue increase, now making up about a quarter of the company’s wafer revenue. The company anticipates this segment to approach $1.5 billion in annual revenue by 2025.
Record Design Wins
In the third quarter, Globalfoundries secured nearly 150 new design wins, marking a more than 50% increase from the same period last year. This achievement underscores the company’s growing influence and success in the market.
Onshoring Initiatives
The company announced a significant $16 billion investment to expand its US manufacturing and advanced packaging capabilities. This initiative is backed by major customers like Apple and AMD, reflecting strong industry support.
Decline in Smart Mobile Device Revenue
Despite the overall positive performance, Globalfoundries experienced a 13% year-over-year decline in smart mobile device revenue, primarily due to one-time pricing adjustments.
Home and Industrial IoT Revenue Decline
The Home and Industrial IoT segment saw a 16% year-over-year revenue decrease, mainly due to reduced wafer revenue from aerospace and defense applications.
Automotive Revenue Sequential Decline
The company reported a 17% sequential decline in automotive revenue, attributed to customer shipment timings, which impacted the quarterly results.
Forward-Looking Guidance
Looking ahead, Globalfoundries provided guidance for the fourth quarter of fiscal 2025, expecting total revenue to be approximately $1.8 billion. Non-wafer revenue is anticipated to comprise around 13% of total revenue. The company projects a gross margin of approximately 28.5%, with operating expenses expected to be around $210 million. Diluted earnings per share are forecasted to be $0.47, reflecting a focused approach on capital allocation and reinvesting in the business.
In summary, Globalfoundries Inc.’s earnings call highlighted a strong performance in key growth areas, despite some challenges in specific segments. The company’s strategic investments and design wins position it well for future growth, with a positive outlook for the upcoming quarter.