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InvenSense (INVN) Beats Q1 Earnings & Revenue Estimates - Analyst Blog

InvenSense, Inc.INVN reported first-quarter fiscal 2016 earnings per share of 8 cents which exceeded the Zacks Consensus Estimate by 4 cents.

Revenues

InvenSense reported revenues of $106.3 million, up 7.1% sequentially and 59.4% year over year. Also, revenues beat the Zacks Consensus Estimate of $103.0 million driven by strong demand for smartphones and tablets.

In the first quarter, smartphones and tablets represented 72% of the company's market, while optical image stabilization the other segments, including Internet of Things (IoT), accounted for 16% and 12%, respectively.

Margins

Reported gross margin for the quarter was 42.2%, down 110 basis points (bps) sequentially and 460 bps year over year due to unfavorable mix.

InvenSense reported total operating expenses (SG&A and R&D) of $36.1 million, up 8.3% from $33.3 million incurred in the year-ago quarter. Both SG&A and R&D expenses declined year over year as a percentage of sales. The net result was a GAAP operating margin of 2.2% compared with (6.4%) a year ago.

The quarter's GAAP net income was ($5.8) million or a loss of 6 cents compared with ($4.8) million or a loss of 5 cents in first-quarter fiscal 2015. Excluding all the special items but including stock-based compensation expenses, adjusted net income came in at $7.3 million or earnings per share of 8 cents compared with $4.7 million or 5 cents in the prior quarter.

Balance Sheet

InvenSense ended the first quarter with cash and short-term investments balance of $241.6 million, up from $215.6 million in the prior quarter. Trade receivables were $50.4 million, up from $44.5 million in the last quarter.

During the quarter, cash flow from operations was $25.3 million, capex was $2.3 million and free cash flow was $23.0 million.

Guidance

For the second quarter, InvenSense expects total revenue in the range of $106-$114 million, representing a sequential increase of 3.5% at the mid-point. The Zacks Consensus Estimate is pegged at $114 million. On a non-GAAP basis, gross margin islikely to range within 44%-45%.

The company expects non-GAAP operating expenses to increase slightly on a sequential basis. Non-GAAP earnings per share are likely to be in the range of 13 cents to 15 cents, while GAAP (loss)/earnings per share are expected in the range of (1 cent) to 2 cents. The Zacks Consensus Estimate for the upcoming quarter stands at 9 cents.

Conclusion

InvenSense, the leading provider of MotionTracking (TM) devices, reported a decent first quarter, with both the top line and the bottom line surpassing the respective Zacks Consensus Estimate.

Management also issued decent second-quarter guidance, which indicates improving demand visibility. We believe that the company's new products, strong market share gains, several high-volume customer wins, and strong demand for smartphones and tablets are the positives.

Additionally, with technological advancements, demand for smartphones, tablets, console and portable video gaming devices, digital still and video cameras, smart televisions, 3D mice and navigation devices is growing exponentially. InvenSense's chips target all these categories and hence should experience demand growth, in our opinion.

Currently, InvenSense has a Zacks Rank #3 (Hold). Some stocks that are performing well at the current levels are Active Power Inc. ACPW , Stoneridge Inc. SRI and LightPath Technologies, Inc. LPTH . While Active Power and Stoneridge sport a Zacks Rank #1 (Strong Buy), LightPath has a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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