NXP Semiconductors N.V.

Good day and thank you for standing by. Welcome to NXP second quarter 2026 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 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 morning, everyone. Welcome to NXP's second quarter earnings call. With me on the call today is Rafael Sotomayor, NXP's President and CEO, Bill Betz, our CFO, and Mike Luccarelli, our incoming Head of Investor Relations. 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 third quarter of 2026. NSP 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 NSP's underlying core operating performance. Pursuant to Regulation G, NSP has provided reconciliations of the non-GAAP Thank you, Jeff, and good afternoon. Our second quarter performance exceeded expectations once again, as the strong momentum we saw in the first quarter continued into Q2.

Setting the stage for a strong second half. Demand improved across all end markets, highlighted by strength in both our company-specific growth drivers and core business. This combination of secular and cyclical growth is enabling a durable revenue stream that expands margins and drives strong earnings growth. Second quarter revenue was $3.5 billion, up 19% year over year. Non-Gap Operating Margin of 35% and Non-Gap EPS of $3.61, all exceeding the midpoint of our guidance. All-in markets and regions grew versus the prior year. Our company-specific growth drivers grew in the mid-20% range year-over-year and represented roughly one-third of second quarter revenue. In addition, our core businesses increased in the high-teens range year-over-year, growing The broad-based momentum is also contributing to our growth. Now, turning to end-market performance. In automotive, revenue was $1.94 billion, up 12% year-over-year, and slightly above expectations. Adjusted for the sales of the MEMS sensor business earlier this year, automotive growth was up 17% year-over-year. The company's specific road drivers grew in the low 20% range year-on-year and represented 47% of the auto business. Growth was driven primarily by software-defined vehicle electrification and connectivity. SDV processor design wins continue to accelerate, including S32N and S32K series platforms. Additionally, we secure new design awards for our next-generation multi-gigabit Ethernet switches. Purpose-built for SDV in-vehicle network architectures. These are multi-year platform commitments that expand NXP's content per vehicle. In industrial and IoT, revenue was $755 million, up 38% year-over-year and in line with our guidance. The company-specific grow drivers, which include our newest processing portfolio of I.MX and RT and MCX, grew at 40% year-on-year and represented 36% of the industrial and IoT business. Communication infrastructure revenue was $452 million, up 41% year-on-year at the high end of guidance. Growth was driven by digital networking exposure to data center and continued ramps of our U-code RFID products. And lastly, mobile revenue was $351 million, up 6% year-over-year and in light with guidance, reflecting normal mid-year seasonal trends in our secure mobile transactions franchise. Now, turning to our data center exposure. 90 days ago, we quantified this exposure for the first time. To recap, 2025 revenue was approximately $200 million, and we expect to exceed $500 million in 2026. Our position is squarely in the control plane of AI infrastructure, The same domain where NXP has built deep expertise across vehicles and factories for decades, now operating at hyperscale infrastructure, specifically in two franchises. First, top of rack switching and smart net control, anchored by our Layerscape family, which is ramping across leading hyperscalers. With every new data plane switch generation, as speed increases, The control plane performance must also increase as there is simply more to manage, monitor, and secure. Hence, we are accelerating our layerscape roadmap to deliver the control plane performance each new generation demands. Customer engagement gives us confidence that these programs materially broaden our addressable content and extend the franchise well into the future. Second, the processes that control, monitor, cool, and secure every component within a rack. Data Center Infrastructure is converging towards industrial grade principles, where reliability, real-time monitoring, control, and zero tolerance for downtime is critical. NXP is uniquely positioned as these functions thrive on key industrial processing attributes where our portfolio is differentiated. Now, I want to address something fundamental. AI is moving from the cloud to the physical world, into vehicles, factories, and robots. It is moving directly into the markets where NXP already has leadership positions. Intelligence deployed at the edge demands real-time performance, ultra-low power, and designing safety and security. True physical intelligence also requires distributing AI workloads across multiple layers of the system, an architecture we call the neural axis, which is the foundation for deterministic and safe operation of physical AI. These are capabilities Again, NXP has spent decades building. Our differentiated position rests in three areas. First, NXP offers the industry's broadest and most differentiated edge AI compute platform. Our portfolio places the right intelligence at the right layer, from high-performance reasoning and coordination in our i.MX and S32N processors to real-time reflexive control in our S32K and i.MX RT families, all unified under our EIQ software environment. This is already translated into measurable growth. We estimate AI-enabled processors will represent approximately 15% of industrial IoT processor revenue in 2026, more than doubling from last year. Second, physical AI is a system problem, not just a computer problem. Intelligent machines must sense, connect, and act in real time. NXP is the only company that delivers all of this in one integrated, trusted platform, something no computer-only competitor can replicate. Third, winning in physical AI requires reaching a highly fragmented market at scale. Unlike cloud AI, the edge spans thousands of applications and customers across automotive, industrial, and IoT markets. NXP's ecosystem of distribution partners, reference designs, and field support gives us unmatched reach into this market. Taken together, compute, system, and reach, physical AI is already showing up in our revenue and we expect it to accelerate. Now, turning to the third quarter, the operational metrics we track to assess business health continue to strengthen and our outlook is better than we anticipated 90 days ago. We are guiding third quarter revenue to $3.75 billion, up 21% year-over-year adjusted for the MEMS sensor cell and up 7% sequentially. We expect all regions and all the markets to be up sequentially, a reflection of expanded customer adoption of our differentiated portfolio. At the midpoint, we expect the following trends in our business during Q3, automotive, is suspected to be up in the low double-digit percent range over year-over-year and up in the mid-single-digit range sequentially. Adjusted for the sales of the MEMS sensor business, our guidance implies a high team's percentage growth year-over-year. Industrial and IoT is suspected to be up in the high 30% range year-over-year and up in the mid-single-digit range sequentially, continuing the strength we saw in Q2. Mobile is suspected to be down in the mid single-digit percent range year-over-year and up in the mid-teens digit range on a sequential basis. And finally, communications infrastructure and other is suspected to be up about 50% year-over-year and up in the high single-digit range versus Q2 2026. What you saw this quarter, double-digit growth driven by company-specific road drivers and a 35% operating margin is the compounding result of staying disciplined on the right priorities. And now, I would like to pass the call to Bill for a review of our financial performance.