NXP Q3 Revenue Rises 19% as Margins and Cash Flow Strengthen

NXP Semiconductors (NASDAQ: NXPI) reported a 19% year-over-year increase in third-quarter revenue, supported by growth across three of its four end markets, while stronger profitability and cash generation accompanied the sales expansion. The chipmaker also projected double-digit year-over-year revenue growth for the fourth quarter at the midpoint of its guidance.

Revenue for the quarter ended September 27, 2026, reached $3.79 billion, up 8% sequentially from $3.50 billion and 19% from $3.17 billion a year earlier. GAAP operating income rose to $1.23 billion from $893 million in the prior-year period, while net income attributable to stockholders increased to $884 million from $631 million. GAAP diluted earnings per share were $3.48, compared with $2.48 a year earlier.

On a non-GAAP basis, gross profit was $2.22 billion and gross margin expanded to 58.6%, from 57.0% in the year-ago quarter and 58.0% in the second quarter. Non-GAAP operating income increased to $1.41 billion, producing a 37.1% operating margin, compared with 33.8% a year earlier. Non-GAAP net income attributable to stockholders was $1.07 billion, or $4.20 per diluted share, up from $790 million, or $3.11 per share, in the third quarter of 2025.

Automotive and communications drive growth

Automotive, NXP’s largest end market, generated $2.07 billion in revenue, rising 7% sequentially and 13% year over year. The company’s longer-term automotive strategy centers on S32 software-defined vehicle products, radar, connectivity and electrification systems. NXP’s presentation continued to target an 8% to 12% automotive revenue compound annual growth rate from 2024 through 2027, with accelerated-growth businesses expected to expand by 15% to 25%.

Industrial and Internet of Things revenue was $802 million, up 6% from the second quarter and 39% from a year earlier. NXP’s longer-term framework calls for 8% to 12% annualized growth in this business from 2024 through 2027, supported by processing, connectivity, analog and security products for intelligent edge systems.

Communication Infrastructure and Other recorded the strongest growth rate, with revenue advancing 11% sequentially and 54% year over year to $503 million. Mobile revenue increased 17% from the preceding quarter to $411 million but remained 4% below the prior-year period, making it the only end market to decline on an annual basis.

Cash flow strengthens

Operating cash flow rose to $1.26 billion from $585 million a year earlier. After $50 million of net capital expenditure, non-GAAP free cash flow reached $1.21 billion, compared with $509 million in the third quarter of 2025. Trailing 12-month non-GAAP free cash flow was $3.50 billion, equivalent to 25% of revenue.

At quarter-end, NXP reported $10.98 billion of short- and long-term debt and $3.94 billion of cash, equivalents and short-term deposits, resulting in net debt of $7.04 billion. Reported net leverage was 1.3 times trailing 12-month adjusted EBITDA. NXP maintains a policy of returning all excess non-GAAP free cash flow, with a dividend target equal to roughly 25% of cash flow from operations.

Fourth-quarter outlook

For the fourth quarter of 2026, NXP expects revenue of $3.75 billion to $3.95 billion. The $3.85 billion midpoint would represent a 2% sequential increase and 15% year-over-year growth.

GAAP gross margin is projected at 57.6% to 58.7%, while non-GAAP gross margin is expected to range from 58.5% to 59.5%. The company forecast a GAAP operating margin of 31.1% to 33.0% and a non-GAAP operating margin of 36.6% to 38.3%.

GAAP diluted earnings per share are expected to be between $3.36 and $3.79. Non-GAAP diluted EPS is projected at $4.14 to $4.58. The outlook assumes approximately 253.8 million diluted shares and includes expected GAAP adjustments related to purchase accounting, share-based compensation, restructuring and other incidental items.

Over the longer term, NXP’s strategy targets high-single-digit organic revenue growth, non-GAAP gross margin above 60% and a doubling of non-GAAP EPS by 2030 or later from the 2024 base of $13.09. Its investment priorities include software-defined vehicles, intelligent edge systems, AI-enabled processing and a hybrid manufacturing model combining internal production with external and joint-venture capacity.

The company cautioned that its outlook remains exposed to semiconductor demand and industry conditions, trade-policy changes and tariffs, export restrictions, supply-chain disruptions, geopolitical conflicts, cybersecurity threats and its ability to align production capacity with demand. Execution also depends on product introductions, access to third-party manufacturing, strategic partnerships and the integration of acquired businesses.