NXP Semiconductors N.V. NXPI recently provided an update on third-quarter 2020 guidance. The company is set to report third-quarter results on Oct 26.
It now anticipates third-quarter revenues of $2.27 billion, up from the prior guided range of $1.9-$2.1 billion, citing strength in end markets served, particularly automotive and mobile.
The current guidance indicates a 25% increase from the prior quarter. The Zacks Consensus Estimate for the same is currently pegged at $2.01 billion.
On a non-GAAP basis, the company expects gross profit to be $1.14 billion versus prior expectation of $980 million. Gross margin is expected to be 50.1% versus 49% provided earlier.
Moreover, management anticipates non-GAAP operating income to be $586 million versus $444 million in the prior quarter. Operating margin is expected to be 25.8% versus 22.2% provided earlier.
NXP Semiconductors N.V. Price and Consensus
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Strength in End Markets: A Key Catalyst
NXP is optimistic about third-quarter earnings. The company believes that the business environment has improved more than expected due to the strength in end markets served.
It has witnessed a material improvement in demand across all end markets, particularly in Automotive and Mobile. Additionally, the company expects improved demand in both direct and distribution channels.
Therefore, it expects a broad-based increase in revenues and gross margin for the to-be-reported quarter.
NXP’s president and CEO, Kurt Sievers said, “Relative to the mid-point of our guidance, we experienced material improvement in demand across all end markets, but particularly in the Automotive and Mobile end markets.”
Notably, the company has been continuously making efforts to develop an improved 5nm design strategy with an aim of increasing software performance required in future cars.
The growing adoption of NXP’s offerings is expected to strengthen the company’s presence in the automotive market.