Wireless chips maker Skyworks Solutions (NASDAQ: SWKS) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 6.6% year on year to $965 million. On top of that, next quarter’s revenue guidance ($1.02 billion at the midpoint) was surprisingly good and 13.9% above what analysts were expecting. Its non-GAAP profit of $1.33 per share was 7% above analysts’ consensus estimates.
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Skyworks Solutions (SWKS) Q2 CY2025 Highlights:
- Revenue: $965 million vs analyst estimates of $940.8 million (6.6% year-on-year growth, 2.6% beat)
- Adjusted EPS: $1.33 vs analyst estimates of $1.24 (7% beat)
- Adjusted Operating Income: $224.4 million vs analyst estimates of $211.7 million (23.3% margin, 6% beat)
- Revenue Guidance for Q3 CY2025 is $1.02 billion at the midpoint, above analyst estimates of $890.8 million
- Adjusted EPS guidance for Q3 CY2025 is $1.40 at the midpoint, above analyst estimates of $0.98
- Operating Margin: 11.5%, down from 14.4% in the same quarter last year
- Free Cash Flow Margin: 26.2%, down from 27.5% in the same quarter last year
- Inventory Days Outstanding: 114, up from 110 in the previous quarter
- Market Capitalization: $10.2 billion
Company Overview
Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Revenue Growth
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. Regrettably, Skyworks Solutions’s sales grew at a sluggish 4.5% compounded annual growth rate over the last five years. This was below our standard for the semiconductor sector and is a poor baseline for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Skyworks Solutions’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 10.1% annually. 
This quarter, Skyworks Solutions reported year-on-year revenue growth of 6.6%, and its $965 million of revenue exceeded Wall Street’s estimates by 2.6%. Adding to the positive news, Skyworks Solutions’s growth inflected positively this quarter, news that will likely give some shareholders hope. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 11.8% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.
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Product Demand & Outstanding Inventory
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, Skyworks Solutions’s DIO came in at 114, which is 16 days below its five-year average. These numbers show that despite the recent increase, there’s no indication of an excessive inventory buildup.
Key Takeaways from Skyworks Solutions’s Q2 Results
We were impressed by Skyworks Solutions’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its inventory levels increased. Zooming out, we think this was a solid print. The stock traded up 7.5% to $72.77 immediately following the results.
Indeed, Skyworks Solutions had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.