Xilinx Reports Third Quarter Fiscal Year 2021 Results

Rhea-AI Summary

Xilinx, Inc. (Nasdaq: XLNX) reported Q3 FY2021 revenues of $803 million, a 5% increase from Q2. GAAP net income stood at $171 million with diluted EPS of $0.69. Non-GAAP metrics reflected net income of $194 million and EPS of $0.78. Key drivers included robust performance in the Wired and Wireless Group and record growth in the Automotive, Broadcast, and Consumer markets. Advanced Products accounted for 72% of total revenue, growing 8% sequentially. Notably, the 7nm Versal ACAP entered production, advancing Xilinx’s role in 5G technology.

Positive

• Q3 revenue growth of 5% quarter-over-quarter and 11% year-over-year.
• Net income increased 6% year-over-year.
• Advanced Products revenue increased 8% sequentially and 15% year-over-year, constituting 72% of total revenue.
• Record performance in Automotive, Broadcast, and Consumer markets.
• Free cash flow of $354 million, representing 44% of revenue.

Negative

• Operating income declined by 16% compared to Q2.
• GAAP net income fell 12% quarter-over-quarter.
• Diluted EPS decreased by 13% sequentially.

Xilinx, Inc. (Nasdaq: XLNX), the leader in adaptive computing, today announced revenues of $803 million for the third quarter of fiscal year 2021.

GAAP net income for the quarter was $171 million, or $0.69 per diluted share. Non-GAAP net income was $194 million, or $0.78 per diluted share.

Additional third quarter of fiscal year 2021 comparisons are provided in the charts below.

Q3 Fiscal 2021 Financial Highlights

(In millions, except EPS)

	GAAP
	Q3		Q2		Q3
	FY2021		FY2021		FY2020		Q-T-Q		Y-T-Y
Net revenues*	$803		$767		$723		5%		11%
Gross margin	$547		$542		$483		1%		13%
Operating income	$172		$205		$159		-16%		8%
Net income	$171		$194		$162		-12%		6%
Diluted earnings per share	$0.69		$0.79		$0.64		-13%		8%
	Non-GAAP
	Q3		Q2		Q3
	FY2021		FY2021		FY2020		Q-T-Q		Y-T-Y
Net revenues*	$803		$767		$723		5%		11%
Gross margin	$554		$548		$492		1%		13%
Operating income	$201		$216		$174		-7%		16%
Net income	$194		$203		$171		-5%		14%
Diluted earnings per share	$0.78		$0.82		$0.68		-5%		15%
* No adjustment between GAAP and Non-GAAP

“Third quarter revenues exceeded the high end of our guidance, delivering both sequential and annual growth, demonstrating strengthening business conditions and solid execution,” said Victor Peng, Xilinx president and CEO. “Our Wired and Wireless Group performed better than expected as 5G deployments ramped more meaningfully in North America. We achieved a record quarter in Automotive, Broadcast and Consumer end markets, driven by the ongoing economic recovery, as demand for automobiles strengthened and live media events returned. In addition, as expected, our first 7nm Versal ACAP has gone into production with a leading wireless OEM. We are excited to see the Versal product portfolio begin to contribute to Xilinx’s long-term growth.”

“Our investments continue to deliver strong returns, with our Advanced Products growing 8% sequentially and representing 72% of total revenue,” said Brice Hill, Xilinx CFO. “We continue to drive our transformation to a platform company as demonstrated by our Zynq platform product revenue growing 24% sequentially, making up 27% of total revenue during the quarter. Our efficient financial model generated significant free cash flow of $354 million, or 44% of Q3 revenue.”

Net Revenues by Geography:
	Percentages							Growth Rates
	Q3		Q2		Q3
	FY2021		FY2021		FY2020			Q-T-Q		Y-T-Y
North America	30%		29%		28%			6%		16%
Asia Pacific	44%		48%		48%			-3%		4%
Europe	19%		18%		16%			12%		28%
Japan	7%		5%		8%			44%		2%
Net Revenues by End Market:
	Percentages							Growth Rates
	Q3		Q2		Q3
	FY2021		FY2021		FY2020			Q-T-Q		Y-T-Y
A&D, Industrial and TME	45%		44%		40%			7%		25%
Automotive, Broadcast and Consumer	19%		16%		19%			27%		14%
Wired and Wireless Group	29%		26%		31%			14%		2%
Data Center Group	7%		14%		9%			-45%		-15%
Channel	0%		0%		1%			NM		NM
Net Revenues by Product:
	Percentages							Growth Rates
	Q3		Q2		Q3
	FY2021		FY2021		FY2020			Q-T-Q		Y-T-Y
Advanced Products	72%		70%		70%			8%		15%
Core Products	28%		30%		30%			-3%		1%

Products are classified as follows:

Advanced Products: Alveo and related products, UltraScale+, UltraScale and 7-series products.

Core Products: Virtex-6, Spartan-6, Virtex‐5, CoolRunner‐II, Virtex-4, Virtex-II, Spartan-3, Spartan-2, XC9500 products, configuration solutions, software & support/services.

Key Statistics:
(Dollars in Millions)
	Q3		Q2		Q3
	FY2021		FY2021		FY2020
Operating Cash Flow	$360		$248		$324
Depreciation Expense (including software amortization)	$31		$30		$26
Capital Expenditures (including software)	$6		$15		$34
Free Cash Flow (1)	$354		$232		$289
Inventory Days (internal)	115		114		124
Revenue Turns (%)	34		38		39

(1) Free Cash Flow = Operating Cash Flow - Capital Expenditures (including software)

Product and Financial Highlights - Fiscal Third Quarter 2021

• Advanced Products represented 72% of total revenue, an 8% increase quarter over quarter and a 15% increase year over year. Zynq platform revenue grew 24% sequentially and 29% year over year, representing 27% of the total revenue. The sequential strength was driven by improvement in the Automotive and Broadcast end markets and the ramp of 5G in the Wireless end market.
• Xilinx shipped its first production 7nm Versal ACAP parts to a leading wireless OEM, enabling the advanced signal processing performance and adaptability needed to deliver the next-generation 5G technologies like beamforming. Xilinx continues to make progress on broadening the Versal portfolio with additional Versal products in late-stage development.
• Xilinx introduced Zynq RFSoC DFE, which combines hardened digital front-end (DFE) blocks and adaptable logic to build high-performance, low-power, and cost-effective 5G NR radio solutions for a broad array of use cases, ranging across low, mid and high-band spectrum.
• Xilinx announced a collaboration with Texas Instruments to develop scalable and adaptable DFE solutions to increase energy efficiency of lower antenna count radios.
• Xilinx and Samsung announced the availability of the Samsung SmartSSD Computational Storage Drive (CSD). Powered by Xilinx’s FPGAs, the SmartSSD CSD provides the performance, customization, and scalability required by data-intensive applications.
• Xilinx announced the acquisition of Falcon Computing Solutions, Inc., a leading provider of high-level synthesis compiler optimization technology for hardware acceleration of software applications.

Commentary on AMD Transaction

As announced on October 27, 2020, Advanced Micro Devices, Inc. (AMD) intends to acquire Xilinx in an all-stock transaction valued at $35 billion. The combination enhances AMD’s leadership position in high performance computing, significantly expanding the breadth of AMD’s product portfolio and customer set across diverse growth markets where Xilinx is an established leader. Due to the pending acquisition, Xilinx will not hold an earnings conference call or provide forward-looking guidance. Also, pursuant to the terms of the Merger Agreement between the Company and AMD, Xilinx will suspend declaration and distribution of its quarterly dividend as well as its open market stock repurchase program.

Non-GAAP Financial Information

Fiscal third quarter 2021 results include financial measures which are not determined in accordance with the United States generally accepted accounting principles (GAAP), as indicated. Non-GAAP measures should not be considered as a substitute for, or superior to, financial measures determined in accordance with GAAP. The presentation of non-GAAP financial measures has been reconciled, in each case, to the most directly comparable GAAP measure, as indicated in the accompanying tables. Xilinx’s (the Company) calculation of such non-GAAP measures may not be comparable to similarly-titled measures used by other companies.

Management uses the non-GAAP financial measures disclosed herein, other than free cash flow, to evaluate the Company's financial results from continuing operations (excluding the impact of acquisitions) and compare to operating performance in past periods. Similarly, Management believes presentation of these non-GAAP measures is useful to investors because it enables investors and analysts to evaluate operating expenses of the Company's core business, excluding the impact of non-core business expenses, such as acquisition-related amortization and non-recurring items, as described below:

M&A related expenses: These expenses mainly consist of legal, advisory and consulting fees associated with acquisition activities, and also include fees and retention compensation related to the Company’s acquisition by AMD. The Company believes these costs do not reflect its current operating performance.

Amortization of acquisition-related intangibles: Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology acquired in connection with business combinations. The non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company’s current operating performance and comparisons to its past operating performance.

Income taxes: The Company excludes the income tax effects of non-GAAP adjustments reflected in operating expenses and other income, as detailed above. It also excludes other significant tax effects of post-acquisition tax integration transactions. The Company believes excluding post-acquisition tax integration items will facilitate a comparable evaluation of its current performance to its past performance.

In addition, free cash flow, which is cash flow from operations adjusted to exclude additions to software, property, plant, and equipment, is used by management when assessing the Company’s sources of liquidity, capital resources, and quality of earnings. The Company believes that this non-GAAP financial measure is helpful in understanding the Company’s capital requirements and provides an additional means to evaluate the cash flow trends of the Company’s business.

Forward-Looking Statements

This release contains forward-looking statements, which can often be identified by the use of forward-looking words such as “expect,” “believe,” “may,” “will,” “could,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project” or other similar expressions. Statements that refer to or are based on uncertain events or assumptions also identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements related to our proposed acquisition by AMD, the semiconductor market, the growth and acceptance of our products, expected revenue growth, the demand and growth in the markets we serve, and opportunity for expansion into new markets. Undue reliance should not be placed on such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update such forward-looking statements. Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties, including, among others, the impact of the ongoing COVID-19 pandemic and related mitigation measures (which, in addition to presenting its own risks and uncertainties, may also heighten the other risks and uncertainties faced by our business and decrease our visibility into all aspects of our business); closing of the proposed transaction with AMD on anticipated timing (including the risk that the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason) and terms (including obtaining the anticipated tax treatment, regulatory approvals, required consents or authorizations); unanticipated difficulties or expenditures relating to the transaction; the response of business partners and retention as a result of the announcement and pendency of the transaction; the diversion of management time on transaction-related matters; customer acceptance of our new products; changing global economic conditions; our dependence on certain customers; trade and export restrictions; the condition and performance of our customers and the end markets in which they participate; our ability to forecast end customer demand; a high dependence on turns business; more customer volume discounts than expected; greater product mix changes than anticipated; fluctuations in manufacturing yields; our ability to deliver product in a timely manner; our ability to successfully manage production at multiple foundries; our reliance on third parties (including distributors); variability in wafer pricing; costs and liabilities associated with current and future litigation (including litigation relating to the proposed transaction with AMD); our ability to generate cost and operating expense savings in an efficient and timely manner; our ability to realize the goals contemplated by our acquisitions and strategic investments; the impact of current and future legislative and regulatory changes; the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof; and other risk factors described in our most recent Forms 10-Q and 10-K and subsequent filings with the U.S. Securities and Exchange Commission.

About Xilinx

Xilinx, Inc. develops highly flexible and adaptive computing platforms that enable rapid innovation across a variety of technologies - from the cloud, to the edge, to the endpoint. Xilinx is the inventor of the FPGA and Adaptive SoCs (including our Adaptive Compute Acceleration Platform, or ACAP), designed to deliver the most dynamic computing technology in the industry. We collaborate with our customers to create scalable, differentiated and intelligent solutions that enable the adaptable, intelligent and connected world of the future. For more information, visit xilinx.com.

Xilinx, the Xilinx logo, Alveo, Artix, Kintex, Spartan, Versal, Vitis, Virtex, Vivado, Zynq, and other designated brands included herein are trademarks of Xilinx in the United States and/or other countries. All other trademarks are the property of their respective owners.

XLNX-F

XILINX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
		Three Months Ended										Nine Months Ended
		January 2, 2021			September 26, 2020				December 28, 2019			January 2, 2021				December 28, 2019
Net revenues		$	803,404		$	766,535			$	723,499		$	2,296,612			$	2,406,497
Cost of revenues:
Cost of products sold			249,529			218,120				233,324			693,753				804,197
Amortization of acquisition-related intangibles			6,875			6,696				6,697			20,268				15,699
Total cost of revenues			256,404			224,816				240,021			714,021				819,896
Gross margin			547,000			541,719				483,478			1,582,591				1,586,601
Operating expenses:
Research and development			235,018			219,647				211,541			664,776				638,621
Selling, general and administrative			136,701			113,793				109,612			355,877				328,633
Amortization of acquisition-related intangibles			2,856			2,862				2,919			8,581				5,488
Total operating expenses			374,575			336,302				324,072			1,029,234				972,742
Operating income			172,425			205,417				159,406			553,357				613,859
Interest and other income (expense), net			3,709			(10,771	)			6,437			(19,215	)			30,378
Income before income taxes			176,134			194,646				165,843			534,142				644,237
Provision for income taxes			5,162			830				3,831			75,517				13,774
Net income		$	170,972		$	193,816			$	162,012		$	458,625			$	630,463
Net income per common share:
Basic		$	0.70		$	0.79			$	0.65		$	1.88			$	2.50
Diluted		$	0.69		$	0.79			$	0.64		$	1.86			$	2.47
Cash dividends per common share		$	0.38		$	0.38			$	0.37		$	1.14			$	1.11
Shares used in per share calculations:
Basic			245,145			244,837				250,546			243,976				252,330
Diluted			248,148			246,763				252,808			246,786				255,758

 

XILINX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
	January 2, 2021			March 28, 2020*
	(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	3,324,425		$	2,267,216
Accounts receivable, net		269,605			273,028
Inventories		300,107			304,340
Other current assets		73,112			64,557
Total current assets		3,967,249			2,909,141
Net property, plant and equipment		351,513			372,574
Other assets		1,430,203			1,411,619
Total Assets	$	5,748,965		$	4,693,334
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	614,227		$	586,421
Current portion of long-term debt		499,865			499,260
Total current liabilities		1,114,092			1,085,681
Long-term debt		1,492,377			747,110
Other long-term liabilities		543,605			545,494
Stockholders' equity		2,598,891			2,315,049
Total Liabilities and Stockholders' Equity	$	5,748,965		$	4,693,334
* Fiscal 2020 balances are derived from audited financial statements.

XILINX, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
(In thousands)
	Three Months Ended									Nine Months Ended
	January 2, 2021			September 26, 2020			December 28, 2019			January 2, 2021			December 28, 2019
SELECTED CASH FLOW INFORMATION:
Depreciation and amortization of software	$	30,818		$	30,249		$	26,331		$	92,816		$	68,882
Amortization - others		17,133			15,316			15,276			47,508			37,326
Stock-based compensation		66,331			58,439			50,157			175,153			142,732
Net cash provided by operating activities		360,137			247,583			323,575			853,191			845,485
Purchases of property, plant and equipment and software		6,009			15,331			34,138			36,801			96,980
Payment of dividends to stockholders		93,155			93,105			92,931			278,674			280,376
Repurchases of common stock		-			-			260,939			53,682			738,184
Taxes paid related to net share settlement of restricted stock units, net of proceeds from issuance of common stock		4,560			30,072			3,565			37,871			55,541
STOCK-BASED COMPENSATION INCLUDED IN:
Cost of revenues	$	3,465		$	2,963		$	2,961		$	9,149		$	8,386
Research and development		40,228			36,110			31,543			106,707			86,119
Selling, general and administrative		22,638			19,366			15,653			59,297			48,227

XILINX, INC.
RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS
(Unaudited)
(In thousands, except per share amounts)
	Three Months Ended									Nine Months Ended
	January 2, 2021			September 26, 2020			December 28, 2019			January 2, 2021			December 28, 2019
GAAP gross margin	$	547,000		$	541,719		$	483,478		$	1,582,591		$	1,586,601
Inventory valuation adjustment		-			-			2,114			-			3,856
Amortization of acquisition-related intangibles		6,875			6,696			6,697			20,268			15,699
M&A related expenses		114			-			-			114			-
Non-GAAP gross margin	$	553,989		$	548,415		$	492,289		$	1,602,973		$	1,606,156
GAAP operating income	$	172,425		$	205,417		$	159,406		$	553,357		$	613,859
Inventory valuation adjustment		-			-			2,114			-			3,856
Amortization of acquisition-related intangibles		9,731			9,558			9,616			28,849			21,187
M&A related expenses		19,150			1,506			3,042			22,219			12,393
Non-GAAP operating income	$	201,306		$	216,481		$	174,178		$	604,425		$	651,295
GAAP net income	$	170,972		$	193,816		$	162,012		$	458,625		$	630,463
Inventory valuation adjustment		-			-			2,114			-			3,856
Amortization of acquisition-related intangibles		9,731			9,558			9,616			28,849			21,187
M&A related expenses		19,150			1,506			3,042			22,219			12,393
Income tax effect of tax-related items		(528	)		-			(3,697	)		56,273			(1,838	)
Income tax effect of non-GAAP adjustments		(5,100	)		(1,470	)		(2,316	)		(8,160	)		(6,133	)
Non-GAAP net income	$	194,225		$	203,410		$	170,771		$	557,806		$	659,928
GAAP diluted EPS	$	0.69		$	0.79		$	0.64		$	1.86		$	2.47
Inventory valuation adjustment		-			-			0.01			-			0.01
Amortization of acquisition-related intangibles		0.04			0.03			0.04			0.12			0.08
M&A related expenses		0.07			0.01			0.01			0.08			0.05
Income tax effect of tax-related items		-			-			(0.01	)		0.23			(0.01	)
Income tax effect of non-GAAP adjustments		(0.02	)		(0.01	)		(0.01	)		(0.03	)		(0.02	)
Non-GAAP diluted EPS	$	0.78		$	0.82		$	0.68		$	2.26		$	2.58
GAAP cash flow from operations	$	360,137		$	247,583		$	323,575		$	853,191

FAQ

What were Xilinx's revenues for Q3 FY2021?

Xilinx reported revenues of $803 million for Q3 FY2021.

How did Xilinx's EPS perform in Q3 FY2021?

Xilinx's diluted EPS for Q3 FY2021 was $0.69, down 13% from the previous quarter.

What are the key growth areas for Xilinx in Q3 FY2021?

Key growth areas included Automotive, Broadcast, and Consumer markets, alongside the Wired and Wireless Group.

What is the significance of the 7nm Versal ACAP for Xilinx?

The 7nm Versal ACAP entering production signifies Xilinx's commitment to advancing 5G technology.

Did Xilinx achieve its revenue guidance in Q3 FY2021?

Yes, Xilinx exceeded the high end of its revenue guidance for Q3 FY2021.