On Thursday after market close, Cypress Semiconductor Corporation (CY) announced first-quarter 2018 results, highlighting the semiconductor design and manufacturing specialist's successful efforts to target markets that are growing faster than the overall semiconductor industry.
Let's dig deeper to see what Cypress had to say, as well as what we should be watching over the next few months.
IMAGE SOURCE: CYPRESS SEMICONDUCTOR.
Cypress Semiconductor results: The raw numbers
| Metric |
Q1 2018 |
Q1 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
GAAP revenue |
$582.2 million |
$531.9 million |
9.5% |
|
GAAP net income (loss) |
$9.1 million |
($43.0 million) |
N/A |
|
GAAP earnings (loss) per diluted share |
$0.02 |
($0.13) |
N/A |
DATA SOURCE: CYPRESS SEMICONDUCTOR.
What happened with Cypress this quarter?
- Revenue arrived within Cypress latest guidance, which called for a range of $565 million to $595 million.
- Adjusted for one-time items, Cypress' non-GAAP net income soared to $100.3 million, or $0.27 per diluted share -- above guidance for $0.22 to $0.26, and up from $45.9 million, or $0.13 per share in last year's first quarter.
- Adjusted gross margin increased 660 basis points year over year to 45.9%, also above guidance for 44.5% to 45.5%.
- Microcontroller and connectivity division (MCD) revenue increased 6% year over year to $336.7 million.
- Within that total, automotive revenue grew 15%.
- Memory products division (MPD) revenue climbed 15% year over year to $245.5 million.
- New products and solutions this quarter include:
- the introduction of the ModusToolbox software suite, a streamlined development platform to enable designers to create "winning [Internet of Things] products in record time."
- the introduction of the Excelon family of high-performance memory products, designed for data-logging applications in the automotive space such as Advanced Driver-Assistance Systems.
- the expansion of sensing solutions with the PSoC 4700S microcontroller series, which enables new design possibilities by using inductive sensing to detect inputs on metal surfaces.
What management had to say
Cypress CEO Hassane El-Khoury elaborated:
Cypress continued its solid execution this quarter with strong financial results and business performance. Our focus on the Cypress 3.0 strategy resulted in revenue increasing 9.5% and earnings per share more than doubling year over year. During the quarter, we expanded our embedded solutions portfolio with the introduction of several hardware and software innovations. These empowered Cypress, and our partners, to solve problems for consumer, industrial and automotive customers of all sizes, while also enhancing our ability to cross-sell our entire portfolio. The strength of our innovation muscle is clearly illustrated by our track record of winning with market movers, while simultaneously driving a significant increase in our overall customer count supporting our go-broad efforts.
Looking forward
For the second quarter of 2018, Cypress anticipates revenue of $605 million to $630 million, with adjusted gross margin of 45.5% to 46.5% and adjusted earnings per share of $0.27 to $0.31. For perspective -- and though we don't usually lend much credence to Wall Street's expectations -- the midpoints of each of these ranges are roughly in line with consensus estimates.
So apart from Cypress Semiconductor's slight bottom-line outperformance to start the year, there were no big surprises from the company this quarter. But make no mistake, that's not a bad thing as Cypress expands its enviable product portfolio, capturing incremental sales from the high-growth markets like automotive solutions and the Internet of Things along the way. As long as it can continue delivering on that goal, I think investors should be more than happy.
