NXP Semiconductors N.V.

Good day, and thank you for standing by. Welcome to the NXP first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message, advisory hand is raised. To answer a question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Jeff Palmer, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Lisa. Good afternoon, everyone. Welcome to NXP Semiconductor's first quarter earnings call. With me on the call today is Rafael Sotomayor, NXP's President and CEO, and Bill Betts, our CFO. The call today is being recorded and will be available for replay from our corporate website. Today's call will include forward-looking statements that involve risks and uncertainties, that could cause NXP's results to differ materially from management's current expectations. These risks and uncertainties include, but are not limited to, statements regarding the macroeconomic impact on the specific end markets in which we operate, the sale of new and existing products, and our expectations for the financial results for the second quarter of 2026. NXP undertakes no obligation to revise or update publicly any forward-looking statements. For a full disclosure of forward-looking statements, please refer to our press release Additionally, we will refer to certain non-GAAP financial measures, which are driven primarily by discrete events that management does not consider to be directly related to NXP's underlying core performance. Pursuant to Regulation G, NXP has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our first quarter 2026 earnings press release, which will be furnished to the SEC on Form 8K and is available on NXP's website in the investor relations section. Now I'd like to turn the call over to Rafael.

Thank you, Jeff, and good afternoon. We appreciate you joining us today. Our first quarter performance exceeded expectations with broad-based improvements across all our focus and markets, led by our company-specific world drivers, and importantly, with momentum now visibly broadening into the core of our business. What we're seeing today is the compounding result of sustained investment discipline execution, and deepening customer adoption across our differentiated portfolio that is increasingly well-positioned for the most durable secular trends in semiconductors, software-defined vehicles, physical AI, and now with greater visibility than before, data center infrastructure. The remainder of 2026 is set up to be stronger than we anticipated just 90 days ago. Now, I want to walk you through the key drivers behind that improvement. Turning to the quarter, we delivered revenue of $3.18 billion, up 12% year-over-year, and seasonally down 5% sequentially. Oil and markets grew year-over-year. In an aggregate, we outperformed by $31 million, above the midpoint of our guidance. Our company-specific strategic growth drivers across the auto and industrial and IoT markets grew 18% year-over-year and represented roughly one-third of first quarter revenue. Our core businesses encompassing all end markets increased 10% year-over-year, underscoring that momentum is broadening beyond the strategic drivers. Non-GAAP operating margin was about 33%, 120 basis points above last year, and 40 basis points above the midpoint of our guidance. Taken together, we deliver non-GAAP earnings per share of $3.05. $0.08 above the midpoint over guidance. Now, turning to end market performance. In automotive, revenue was $1.78 billion, up 6% year-over-year and in line with expectations. Adjusted for the sales of the MEMS sensor business, automotive growth was 10% year-over-year. During the quarter, the growth was driven primarily by accelerating customer self-defined vehicle programs, improved electrification trends, and continue momentum in radar and connectivity. Together, the auto-accelerator drivers contributed nearly 90% of the year-over-year growth. From a customer adoption perspective, we're seeing strong design wind traction for our S32N and S32K5 products, platforms that will serve as the backbone of our automotive processing franchise for years to come. We also secure new radar awards for our imaging radar solutions along with wins for our 10-gigabit automotive e-center products. These are multi-year platform commitments that expand NXP content per vehicle and deepen the structural relationship with our customers. The automotive opportunity is a long-duration compounding story, and our progress reinforces that trajectory. In industrial and IoT, revenue was $628 million, up 24% year-over-year, and near the high end of our guidance. Growth was driven by our newer industrial processing solutions, including IMX, RT, and MCX. Together, these products grew about 75% year-over-year and contributed nearly half the end market growth versus Q1 2025. Within the end market, industry was strong with notable strength in factory automation, data centers, and energy storage. Looking ahead, The industrial and IoT market is entering a transformative phase as physical AI moves intelligence into real-world systems and robotics. This is creating significant content growth opportunities for NXP, particularly in processing, connectivity, and security. As AI is deployed at the edge, customers need greater processing headroom to future-proof their platforms. As a result, we're seeing customers making deeper multi-generational commitments to NXP because of the strength of our AI-enabled product performance. Now, I want to take a moment to speak directly about our data center exposure, because this is an area that we haven't previously emphasized. In 2025, revenue related to data center applications was about $200 million, and it was reflected evenly in both our industrial and IoT and communication infrastructure and markets. Based on the water programs now ramping, We believe this business will be north of $500 million this year with a similar end market split. We have established meaningful positions in system cooling, power supply, board management, and control plane switching applications. Across these subsystems, customers choose NXP for processing depth and security capabilities. Based on customer engagements, we are reinforcing our IMX application processor family for this opportunity. creating a durable and expanding revenue presence in data centers. With communications infrastructure, revenue was $380 million, up 21% year-on-year, and at the high end of our guidance. Growth was driven by digital networking exposure to data center and continued ramps of our new RFID products. And lastly, Mobile revenue was $391 million, up 16% year-over-year, and in line with guidance, reflecting continuous strength in our secure mobile transactions franchise. Now, turning to the second quarter. Our outlook is better than we anticipated 90 days ago. We are guiding second quarter revenue to $3.45 billion, up 18% year-over-year, and up 8% sequentially. This sequential growth represents an acceleration of our company-specific drivers. We expect all regions and all day markets to be up year-on-year, a reflection of expanded customer adoption of our differentiated portfolio. At the midpoint, we expect the following trends in our business during Q2. Automotive is expected to be up in the low double-digit percent range year-on-year and up in the high single-digit range sequentially. adjusted for the sales of the MEMS sensor business. Our guidance implies a high teams percentage growth year-over-year and 10% sequentially. Industrial and IoT is expected to be up in the high 30% range year-over-year and up in the high teams range sequentially, continuing the acceleration we saw in Q1. Mobile is expected to be up in the low single-digit percent range year-over-year and and down in the low double-digit percent range on a sequential basis. And finally, communications infrastructure and other is suspected to be up in the mid-30% range versus Q2 2025, and up in the mid-teens percent range versus Q1 2026. In summary, our second quarter outlook and our growth trajectory in 2026 reflect the story of breadth, depth, and acceleration Our company-specific core drivers are performing self-designed. Our core business is inflecting. And today, we have made the growth of our data center revenue transparent to support your understanding of our exposure to this important market. Data center revenue is ramping now, and it will more than double in 2026 from a year ago. We remain disciplined in how we invest, how we allocate capital, and how we manage the factors we can control. Our framework is unchanged. invest for growth, pursue targeted M&A to strengthen the portfolio, and return excess cash to dividends and buybacks, consisting with our long-term model. And now, I would like to pass the call to Bill for a review of financial performance.